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Exhibit 10.5
PARTNERSHIP SERVICES AGREEMENT
This Partnership Services Agreement (this "Agreement") is made
and entered into as of November 8, 1996 by and among Doubletree Corporation, a
Delaware corporation ("Parent"), Red Lion Hotels, Inc., a Delaware corporation
("RLI") and Red Lion, a California Limited Partnership (the "Partnership") and
the undersigned affiliates of the Partnership (the "Affiliates" and together
with the Partnership, "Partnership Group").
RECITALS
WHEREAS, pursuant to a Contribution Agreement dated August 1,
1995 between the Partnership and RLI, the Partnership retained certain
interests in the hotels described in Exhibit A hereto (the "Retained Hotels");
WHEREAS, pursuant to the RLH Partnership, L.P. Contribution
Agreement dated August 1, 1995 between the Partnership and RLH Partnership,
L.P., a Delaware limited partnership ("Newpart"), the Partnership transferred
to Newpart certain interests in the Retained Hotels;
WHEREAS, pursuant to the Lease dated August 1, 1995 between
Newpart and RLI (the "Master Lease"), Newpart has leased the Retained Hotels to
RLI;
WHEREAS, RLI provides certain services to the Partnership
Group with respect to the Retained Hotels pursuant to that certain Service
Agreement dated August 1, 1995 (the "Service Agreement");
WHEREAS, the Partnership Group has guarantied performance and
payment of certain obligations of RLI to third parties set forth on Exhibit B
hereto; and
WHEREAS, as a result of the merger of RLH Acquisition Corp., a
wholly owned subsidiary of Parent ("Merger Sub") with and into RLI, effective
as of the date hereof, the parties to the Service Agreement now desire to
terminate the Service Agreement and replace it with this Agreement.
AGREEMENT
NOW, THEREFORE, in acknowledgement of the foregoing recitals
and in consideration of the mutual agreements expressed herein and other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereby agree as follows.
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1. Termination of Services Agreement. RLI and the
Partnership Group agree to terminate the Service Agreement effective as of the
date hereof, without affecting RLI's right to be paid all sums due and owing
under the Service Agreement prior to the date hereof, all of which shall be
paid promptly after the date hereof. Notwithstanding the fact that the Service
Agreement provides for quarterly payouts of the fee due thereunder, for
purposes of calculating the amount due to RLI pursuant to this Section 1, if
the Service Agreement is terminated on any day other than the last day of the
quarter, then that portion of the fee that would be due for such quarter shall
be prorated based on the number of days that have lapsed in such quarter prior
to the date of the termination of the Service Agreement.
2. Support Services.
The Partnership Group may request that Parent provide
reasonable support services, including but not limited to, legal, accounting,
financial or tax services, and Parent agrees to provide such requested services
at such times and for such payments to Parent as the Partnership Group and
Parent shall mutually agree.
Parent shall, or shall cause RLI to, (i) make available to the
Partnership, RLI's agents and employees and its books, ledgers, files, reports,
plans, drawings and operating records of every kind maintained by RLI
pertaining to its business ("books and records") (and the assistance of RLI's
employees responsible for such books and records) during regular business hours
and (ii) maintain and preserve all such books and records for a period of 9
years after the date hereof. Upon Parent's request, the Partnership shall
reimburse Parent for any extraordinary costs or expenses incurred by RLI or
Parent in connection with complying with this paragraph.
3. Indemnities and Guaranties of Parent.
(a) Parent agrees to indemnify and hold harmless the
Partnership, Newpart, and each of their respective partners and affiliates, and
all of such person's officers, directors, employees, shareholders and agents,
and any of the foregoing's successors and assigns (collectively, the
"Indemnified Parties") from and against all liabilities, costs, losses, claims,
damages and expenses ("Damages") incurred in connection with, arising out of,
or resulting from any of the guaranties provided by any Indemnified Party for
the benefit of RLI as set forth on Exhibit B hereto.
(b) Parent agrees to guaranty the punctual payment and
performance of any and all liabilities and obligations of RLI and its
subsidiaries owed to the Indemnified Parties arising out of or related to (i)
any contract, agreement, instrument or document set forth on Section 3.17 of
the Disclosure Schedule to the Agreement and Plan of Merger dated September 12,
1996 by and among Parent, RLI and Merger Sub, other than RLI's liabilities and
obligations under the Master Lease which are guarantied by Parent pursuant to a
Guaranty of Lease Obligations dated of even date herewith, and (ii) RLI's
business (the
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"Obligations"). Parent hereby waives diligence, presentment, demand of
payment, notice of dishonor or nonpayment, protest and notice of protest of any
such Obligation, suit or taking other action by the Indemnified Parties
against, and giving any notice of default or other notice to, or making any
demand on, RLI or its subsidiaries with respect to the Obligations, except such
rights to diligence, presentment, demand of payment, notice of dishonor or
nonpayment, protest and notice of protest, notices and/or grace periods as are
available to RLI or its subsidiaries, as the case may be, in connection with
any such Obligation. Subject to this Section 3, Parent's guaranty is a
guarantee of payment and not of collection only, is a primary obligation and is
an absolute, unconditional, continuing and irrevocable guaranty of performance
and payment. In determining Parent's liability hereunder, Parent shall have
the right to assert or take advantage of any right or defense, and to assert
any right to offset or claimed offset related to such right or defense, in each
case then available to RLI or its subsidiaries, as the case may be, in
connection with the Obligation that is subject to such right or defense,
provided that Parent may not assert any right or defense of RLI or its
subsidiaries, as the case may be, that may arise in connection with any event
set forth in the last sentence of this paragraph. To the extent enforceable by
law, Parent will not assert, plead or enforce against the Indemnified Parties
any defense of waiver, release, discharge or disallowance in bankruptcy,
anti-deficiency statute, or unenforceability which may be available to Parent.
The liability of Parent under this guaranty shall not be affected or impaired
by any voluntary or involuntary liquidation, dissolution, sale or other
disposition of all or substantially all the assets, marshalling of assets and
liabilities, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of, or
other similar event or proceeding affecting RLI or any of its subsidiaries or
any of their respective assets.
4. Management of Leased Properties.
Parent agrees not to, and agrees to cause RLI not to, take any
action which would result in the breach of Section 7.03 of the Credit Agreement
among RLH Partnership, L.P., various lending institutions and Credit Lyonnais
New York Branch as Administrative Agent dated as of July 31, 1995.
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5. Non-Recourse.
Notwithstanding any provisions hereof, none of the obligations
of the Partnership or Newpart under or contemplated by this Agreement shall be
an obligation of any officer, director, stockholder, limited partner, general
partner or owner of the Partnership or Newpart or any of their respective
officers, directors, stockholders, limited partners, general partners or
owners, or successors or assigns. Any monetary liability of the Partnership or
Newpart under this Agreement shall be satisfied solely out of the assets of the
Partnership. Each of the Partnership and Newpart hereby irrevocably waives any
right it may have against any such officer, director, stockholder, general
partner, owner, successor or assign identified above as a result of the
performance of the provisions under or contemplated by this Agreement. This
provision shall survive any termination of this Agreement.
6. Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit
of the successors and assigns of the parties.
7. Amendment.
This Agreement may be amended only by a written agreement
signed by the parties.
8. Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of Arizona.
9. Specific Performance.
RLI and Parent agree that monetary damages would not be
adequate compensation for any loss incurred by the Partnership Group by reason
of a breach of the provisions of this Agreement by RLI or Parent. Therefore,
Partnership Group shall be entitled to specific performance of the provisions
of this Agreement and RLI and Parent each hereby waives the claim or defense
that there exists an adequate remedy at law to redress the nonperformance or
other breach of this Agreement.
10. Agreement to Perform Necessary Acts.
Each party agrees to perform any further acts and to execute
and deliver any documents that may be reasonably necessary to carry out the
provisions of this Agreement.
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11. Invalid Provision.
The invalidity or unenforceability of any particular provision
of this Agreement shall not affect the other provisions, and this Agreement
shall be construed in all respects as if the invalid or unenforceable provision
were omitted.
12. No Waiver of Breach.
No failure by the Partnership Group to insist upon the strict
performance of any covenant, agreement, term or provision of this Agreement, or
to exercise any right or remedy consequent upon a breach thereof, shall
constitute a waiver of any such breach or subsequent breach of such covenant,
agreement, term or provision. No waiver of any breach shall affect or alter
this Agreement and this Agreement shall remain in full force and effect.
13. Entire Agreement.
This instrument evidences the entire agreement of the parties
with respect to the matters covered herein, and supersedes all prior oral or
written agreements or other understandings, including the Service Agreement.
14. Counterparts.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
"Parent" Doubletree Corporation, a Delaware
corporation
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By:
Its:
"RLI" Red Lion Hotels, Inc., a Delaware
corporation
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By:
Its:
"Partnership" Red Lion, a California Limited
Partnership
By: RLA-GP, Inc., a Delaware
corporation
Its: General Partner
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By:
Its:
"Affiliate" Red Lion G.P., Inc., a Delaware
corporation
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By:
Its:
"Affiliate" RLH Partnership, L.P., a Delaware
limited partnership
By: Red Lion G.P., Inc., a
Delaware corporation
Its: General Partner
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______________________
By:
Its:
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EXHIBIT A: RETAINED HOTELS
Red Lion's Sacramento Inn
1401 Arden Way
Sacramento, California 95815
Red Lion Hotel, Sonoma County
One Red Lion Hotel Drive
Rohnert Park, California 94928
Red Lion Hotel
7450 Hazard Center Drive
San Diego, California 92108
Red Lion Inn
501 Camino Del Rio
Durango, Colorado 81301
Red Lion Hotel, Boise Downtowner
1800 Fairview
Boise, Idaho 83702
Red Lion Inn
700 West Broadway
Missoula, Montana 59802
Red Lion Inn
400 Industry Street
Astoria, Oregon 97103
Red Lion Inn/North
1415 N.E. Third Street
Bend, Oregon 97701
Red Lion Inn
1313 North Bayshore Drive
Coos Bay, Oregon 97420
Red Lion Inn
205 Coburg Road
Eugene, Oregon 97401
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Red Lion Inn
200 North Riverside
Medford, Oregon 97501
Red Lion Inn
304 S.E. Nye Avenue
Pendleton, Oregon 97801
Red Lion Hotel Salt Lake
255 South West Temple
Salt Lake City, Utah 84101
Red Lion Inn
510 Kelso Drive
Kelso, Washington 98626
Red Lion Hotel, Seattle Airport
18740 Pacific Highway South
Seattle, Washington 98188
Red Lion Inn At The Quay
100 Columbia Street
Vancouver, Washington 98660
Red Lion Inn
1225 North Wenatchee Avenue
Wenatchee, Washington 98801
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EXHIBIT B: THIRD PARTY GUARANTIES
1. Unconditional Guarantee of Payment and Performance, dated as of August 1,
1995, by and between Red Lion, a California Limited Partnership and La Posada
Resort Hotel Limited Partnership.