Management Agreement
between
Fountainhead Development Corp., Inc.,
as Owner,
and
Ridgewood Hotels, Inc.,
as Manager
dated as of January __, 2000.
MANAGEMENT AGREEMENT
This Management Agreement (the "Agreement", dated as of
January __, 2000, by and between Fountainhead Development Corp.,
Inc., a Georgia corporation with an address at ▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Owner") and Ridgewood
Hotels, Inc., a Delaware corporation with an address ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (the"Manager".
Recitals:
A.The Owner is the owner of the Conference Center Facilities
(as defined in Section 1.01 below) located at Chateau Elan, Braselton,
Georgia.
B.The Owner desires to have the Manager manage, operate and
assist in the marketing of the Conference Center, as an
independent contractor, and the Manager is willing to
perform such services for the account of the Owner, subject
to the terms and conditions set forth herein.
Agreement:
The parties agree as follows:
Article I - Definition of Terms
1.01 Definition of Terms. (a) The following terms when
used in the Agreement shall have the meanings indicated:
"Accounting Period" shall mean the Manager's monthly
accounting period beginning on the first day of each month and
ending on the last day of each month.
"Affiliate" shall mean, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is
under common control with such first Person. For purposes of
this definition, the term "control" (including the terms
"controlling", "controlled by" and "under common control with")
of a Person means the possession, directly or indirectly, of the
power to vote 15% or more of the voting stock of such Person or
to direct or cause the direction of the management and policies
of such Person, whether through the ownership of securities, by
contract or otherwise.
"Appurtenance" shall mean and include all installations
necessary or appropriate for the operation of the Properties
(including without limitation, lighting and electrical, plumbing,
heating and air conditioning fixtures and elevators).
"Available Cash Flow" shall mean an amount, with respect to
each Fiscal Year or portion thereof during the Term, equal to the
excess, if any, of the Operating Profit over the Owner's Priority
for such Fiscal Year or portion thereof.
"Base Management Fee" shall mean an amount, with respect to
each Fiscal Year or portion thereof during the Term, equal to 2%
of Gross Revenues for each Fiscal Year or portion thereof.
"Charge" shall mean a fee established by the Manager for
goods or services provided by the Manager, which fee shall be
consistent with fees then being charged by non-affiliated Persons
for similar goods and services being furnished in Atlanta,
Georgia or comparable geographic areas to the Properties.
"Chateau Elan" facilities shall mean the golf course
facilities, golf club pro shop, equestrian center, winery
facilities, retail wine and merchandise shop, and other
facilities and services existing from time to time, owned by or
in affiliation with the Owner,in or about the Chateau Elan
resort complex and not managed by the Manager pursuant to the
terms of this Agreement.
"Conference Center Facilities" shall mean the inn and
conference center, lodge, spa, golf villas, the restaurant at the
golf course and the retail stores at Chateau Elan, and any
relevant ancillary facilities operated in conjunction therewith.
"Effective Date" shall mean the first day of the Term, which
shall be March 1, 2000.
"FF&E" shall mean all of the furniture, furnishings,
fixtures and equipment located on or used in connection with the
Properties, including, without limitation, motor vehicles, all
equipment required for the operation of kitchens, dining rooms,
bars, laundries, dry cleaning facilities, office equipment
(including all audio-visual equipment and all computer and other
equipment required for reservation systems and property
management systems and all other electronic systems required from
time to time) and similar systems based on other technologies
that may be developed in the future, and material handling
equipment other than Inventories, Fixed Asset Supplies and
Appurtenances.
"Fiscal Year" shall mean the fiscal year (i.e., the 12-month
period) that ends at midnight on March 31 in each calendar. A
partial Fiscal Year between the end of the last full Fiscal Year
and Termination shall, for purposes of the Agreement, constitute
a separate Fiscal Year. If a Fiscal Year is hereafter changed,
appropriate adjustment to this Agreement's reporting and
accounting procedures shall be made; provided, that no such
change or adjustment shall alter the term of this Agreement or
reduce the distributions of Operating Profit or other payments
due to the Owner hereunder.
"Fixed Asset Supplies" shall mean supply items included
within "Property and Equipment" under the Uniform System of
Accounts, including, without limitation, linen, china, glassware,
silver, uniforms, and similar items.
"GAAP" means United States generally accepted accounting
principles, consistently applied, as in effect from time to time.
"Governmental Authority" means any government, government
agency or authority or quasi-governmental or regulatory authority
having jurisdiction over the Properties, the Owner or the
Manager.
"Gross Revenues" shall mean all revenues and receipts
derived from operating the Properties, including, without
limitation, income (from both cash and credit transactions),
after deducting commissions and discounts for prompt or cash
payments, from rental of rooms, stores, offices, conference,
function or sales space of every kind; license, lease and
concession fees and rentals (but not including gross receipts of
licensees,lessees and concessionaires); income from vending
machines; health club membership fees; food and beverage sales;
wholesale and retail sales of merchandise, service charges, and
proceeds, if any, from business interruption or other loss of
income insurnce (after deducting therefrom necessary expenses in
connection with the adjustment or collection thereof); provided,
that Gross Revenues shall not include (i) gratuities to
employees, (ii) federal, state or municipal excise, sales or use
taxes or similar impositions collected directly from patrons or
guests or included as part of the sales price of any goods or
services required to be remitted to any Governmental Authorities;
(iii) security deposits or other amounts received and retained
from tenants or guests; (iv) proceeds from mortgage or other
financing or refinancing, proceeds from the sale, exchange,
condemnation or other disposition of all or any part of the
Properties or any interest therein or the owner or owners
thereof, or any other similar items that in accordance with
applicable federal income tax regulations are attributable to
capital; (v) due bills and script; (vi) revenues from or funds
collected on behalf of the Chateau Elan facilities; (vii)
interest or other income derived from the investment of surplus
funds or reserves; (viii) rebates, discounts or credits of a
similar nature; (ix) insurance proceeds from insurance not listed
above; (x) proceeds from the sale of FF&E; (xi) any amounts
recovered in any litigation against third parties except for
amounts awarded to compensate for lost revenues otherwise
includable in the Gross Revenues as defined herein and (xii) any
other amounts received from time to time in connection with the
Properties other than those included in Gross Revenue as set
forth above in this definition.
"Incentive Management Fee" shall mean an annual amount
payable to Manager in respect of each Fiscal Year equal to 20% of
Available Cash Flow in respect of such Fiscal Year.
"Independent Public Accountant" shall mean KPMG Peat Marwick
or any other nationally-recognized qualified and experienced
public accounting firm that has experience in the hospitality
industry appointed by the Owner to perform any of the accounting
or auditing functions described in this Agreement.
"Inventories" shall mean "Inventories" as defined in the
Uniform System of Accounts, and other expensed supplies and
similar consumable and expendable items used in the day-to-day
operation of the Properties.
"Operating Expenses" shall mean the operating expenses
associated with the ownership and management of the Properties.
"Operating Loss" for any applicable period in which
Operating Expenses exceed Gross Revenues shall mean the
difference between Gross Revenues and Operating Expenses.
"Operating Profit" for any applicable period shall mean the
excess of Gross Revenues over Operating Expenses for such period.
"Owner's Priority" shall mean an amount equal to $6.5
million per Fiscal Year (prorated for any partial Fiscal Year);
provided, that after the first Fiscal Year following the
commencement of the Term, the Owner's Priority shall be increased
for each succeeding Fiscal Year to give effect to any increases
in capital, including, without limitation, capital expenditures
(in the form of debt or equity) provided by the Owner or its
Affiliates or other Persons in the Properties, such that such
$6.5 million shall be increased by an amount equal to 15% of the
aggregate amount of such incremental capital.
"Person" means an individual, partnership, corporation,
company, limited liability company, joint venture, Government
Authority, trustee, trust, estate, any unincorporated
organization or any other entity.
"Prime Rate" shall mean the "base rate" of interest
announced by ▇▇▇▇▇▇ Guaranty Trust Company of New York in New
York City from time to time.
"Properties" shall mean each of the Chateau Elan and the
Conference Center Facilities but exclude the golf course, winery,
and equestrian center facilities.
"Termination" shall mean the expiration or earlier cessation
or termination of this Agreement.
"Term Year" or "Term Years" shall mean each 365-day period
commencing on the Effective Date for the duration of the Term (as
defined in Section 4.01(a)); it being understood that the Term
contains five Term Years.
"Uniform System of Accounts" shall mean the latest edition
(as amended from time to time) of the Uniform System of Accounts
for Conference Centers, as revised and adopted by the
International Association of Conference Centers.
"Working Capital" shall mean current assets that are
reasonably necessary for the efficient day-to-day operation of
the Properties' business, including, without limitation, amounts
sufficient for the maintenance of change and ▇▇▇▇▇ cash funds,
operating bank accounts, accounts receivable, payrolls, prepaid
expenses and funds required to maintain Inventories, less
accounts payable and other current liabilities, all as determined
in accordance with GAAP and all as approved by the Owner on an
annual basis within 60 days of the commencement of any Fiscal
Year.
(b) The following terms shall have the meanings set forth
in the corresponding Sections below:
Term Section
Accounting Period Statement 6.01A
Annual Operating Projection 6.03
Events of Default 13.01A
Impositions 10.01A
Operating Accounts 6.02A
Renewal Term 4.01(a)
Term 4.01(a)
Article II - Manager Functions
2.01 Appointment. The Owner hereby appoints and employs the
Manager as an independent contractor with exclusive authority to
supervise, direct and control the management and operation of the
Properties for the Term. The Manager accepts such appointment and
agrees to manage the Properties during the Term in accordance with
the terms and conditions of this Agreement.
2.02 Delegation of Authority.
A. Authority. The operation of the Properties shall be
under the exclusive supervision and control of the
Manager who, subject to this Agreement, shall be
responsible for the proper and efficient operation of the
Properties in the exercise of its reasonable discretion;
provided, however, that the Owner may participate in such
supervision and control of the Properties at its
discretion.
B. Management Responsibilities. The Manager shall perform
on an exclusive basis all necessary and appropriate
management services in accordance with this Agreement
with a view to obtaining the best possible operation of
the Properties, including, without limitation, the
Conference Center Facilities as first-class conference
center facilities in accordance with the standards of
other first-class conference center facilities.
C. Sales and Marketing. The Manager, in consultation with
the Owner, shall institute operational sales and
marketing activities for the Properties, implementing the
Manager's sales and marketing policies and practices,
including, without limitation, the establishment of an
annual marketing plan and the performance of the
appropriate advertising and promotion services for the
Properties, including, without limitation, the Conference
Center Facilities.
2.03 Limitations on Authority.
(a) The Manager shall not, without prior written
approval of the Owner, which approval the Owner may
withhold in its sole discretion: (i) acquire any land or
interest therein; (ii) acquire any capital asset or interest
interest therein except FF&E and Inventories (to the extent
they constitute capital assets) in the ordinary course of business;
(iii) sell (other than the dispositions of FF&E and Inventories in
the ordinary course of business as expressly provided for
in this Agreement, including Section 2.02 above), or
otherwise transfer, any part of the Properties; or (iv)
in the event of a total or partial condemnation, consent
to any award or participate in any condemnation proceeding.
(b) The Manager shall not conduct in or about the
Properties any other activities, except for subsidiary and
complementary activities that are normally connected with
this type of operation.
2.04 Covenants, Conditions and Restrictions. As of the
Effective Date, the Manager hereby consents to all
existing covenants, conditions, restrictions, and/or
agreements to which the Owner is a party; it being
understood that all costs, expenses and charges which are
imposed on the Properties under such covenants,
conditions, restrictions, and/or agreements shall be paid
as Operating Expenses.
Article III - The Properties
3.01 Ownership of the Properties. The Owner hereby
represents that it holds good and marketable fee title to
the Properties and other customary liens encumbrances
(including financing encumbrances) or charges previously
disclosed to the Manager, and that it will keep and
maintain such title in the Properties free and clear of any
and all liens, encumbrances or other charges, except as
follows:
1. Liens, encumbrances or charges described above in
this Section 3.01;
2. Easements or other encumbrances (other than those
described below) that do not materially adversely affect the
operation of the Properties by the Manager;
3. Reciprocal easements, licenses or rights
appurtenant that do not affect the utility of the Properties;
4. Mortgages, deeds of trust, deeds to secure debt,
or similar security instruments; and
5. Liens for taxes, assessments, levies or other
public charges not yet due or that are being contested in good
faith.
3.02 No Interest in Real Estate. This Agreement shall not
be deemed at any time to be an interest in real estate or a
lien or security interest of any nature against the
Properties, including the Conference Center Facilities.
Neither party shall cause this Agreement or a memorandum
hereof to be recorded; any attempt at such recordation shall
constitute a material breach hereunder.
Article IV - Term
4.01 Term. (a) The term (the "Term", which term shall
include the Renewal Terms, if applicable) of this
Agreement shall commence on the Effective Date and,
unless earlier terminated pursuant to this Agreement,
shall continue for a period of five Fiscal Years from the
Effective Date. Thereafter, such term shall automatically
be renewed for successive periods of two additional
Fiscal Years (each, a ARenewal Term@), unless the Owner
shall have provided at least 30 days' written notice of
termination prior to the last day of any Renewal Term.
Absent such notice, the next Renewal Term shall commence
and be deemed to be part of the Term. The Owner shall
have the right to Terminate this Agreement during any
Renewal Term on at least 90 days' written notice to the
other party; it being understood and agreed that
Termination shall be effective on the date specified in
such termination notice.
(b) It is understood and agreed that during the period of
time between the date hereof and the Effective Date, the Manager
will take all the appropriate steps, including, without
limitation, those measures necessary to effect the transition
from the current manager to it, so that it will be able to begin
its duties, as set forth herein, on the Effective Date.
Article V - Compensation of the Manager
5.01 Management Fees. The Manager shall be paid, in
accordance with Section 5.02 below, (i) the Base Management
Fee, which shall be retained by the Manager from the Gross
Revenues; and (ii) the Incentive Management Fee, which shall
be retained by the Manager from the Operating Profit in
accordance with Sections 5.02 and 7.01 below; in each case,
subject to the Owner=s audit and review and all other rights
and remedies contained in this Agreement.
5.02 Operating Profit and Payments to the Parties. (a)
Prior to payment of any Incentive Management Fee, the
Owner's Priority shall be paid to the Owner in full.
Thereafter, the Incentive Management Fee, if any, shall
be paid to the Manager before the remaining portion of
the Operating Profit is paid to the Owner.
(b) To the extent Operating Profit is available for each
Accounting Period and within the time period set forth in Section
7.01.A below, the Manager shall distribute a prorated portion of
the Owner's Priority to the Owner for such Accounting Period, and
shall be entitled to retain a prorated portion of the Incentive
Management Fee for such Accounting Period based on its good faith
estimate of the Incentive Management Fee for the full Fiscal
Year. Such payments shall be made after consultation with the
Owner, and subject to the prior approval of the Owner, which
approval shall not be unreasonably withheld.
(c) Notwithstanding any other provision of this Article V, no
Incentive Management Fee shall be paid to the Manager in respect
of any Fiscal Year or Accounting Period within any Fiscal Year to
the extent that there is any unpaid Owner's Priority from any
preceding Fiscal Year; it being understood and agreed that such
Owner's Priority from such preceding Fiscal Year shall be paid in
full prior to the payment of any Incentive Management Fees for
any Fiscal Year.
Article VI - Consideration of the Owner
6.01 Owner's Consideration. In consideration for the Owner
entering into this Agreement, the Manager shall issue to the
Owner 1,000,000 shares of the Manager's common stock, par
value $0.01 per share (the "Registrable Securities"), on the
Effective Date, which shares, when issued in accordance with
this Agreement, will be duly and validly issued, fully paid
and non-assessable, and will not be issued in violation of
any preemptive or similar rights. It is understood and
agreed that the consideration to be paid to the Owner
pursuant to this Section 6.02 shall have no bearing or in
any way limit any other benefits or compensation the Owner
shall receive as a result of entering into this Agreement.
6.02 Registration on Request. Following the first
anniversary of the Effective Date, the Owner may require
on no more than three occasions, upon written notice to
the Manager, that the Manager effect the registration
under the Securities Act of 1933, as amended (the
"Securities Act"), of all or part of the Registrable
Securities held by Owner. Upon such notice by the Owner
of its desire to register the Registrable Securities
pursuant to this Section 6.02, the Manager shall use its
best efforts to effect, on the earliest possible date,
the registration under the Securities Act for public sale
(in accordance with the method of disposition specified
in the notice from the requesting Holder) of the
Registrable Securities that the Manager has been
requested to register by the Owner.
(a) Limitations. The Manager shall not be required to
effect a registration pursuant to this Section 6.03:
(i) within 90 days after the effective date of a
registration tatement (a "Registration Statement") filed by the
Manager with the Securities and Exchange Commission (the
"Commission") for a public offering and sale of equity securities
of the Manager (other than a registration of securities pursuant
to a Registration Statement on Form S-8 or Form S-4 or any
similar form or any successor form to any thereof (a "Special
Registration Statement")); provided, that the Manager shall use
its best efforts to achieve effectiveness of a registration
requested hereunder promptly following such 90-day period if such
request is made during such 90-day period; provided, further,
such 90-day period shall be increased to no more than 180 days if
requested in writing by the managing underwriter of a firm
commitment underwritten offering;
(ii) on more than three occasions;
(iiii) if the Manager shall furnish to the
Owner a certificate signed by a senior executive officer of the
Manager stating that, in the good faith judgment of the board of
directors of the Manager, it would be seriously detrimental to
the Manager or its stockholders for a Registration Statement to
be filed in the near future, in which case the Manager's
obligations to use best efforts to register Registrable
Securities pursuant to this Section 6.02 shall be deferred for a
period not to exceed 90 days from the receipt of the written
notice to the Manager from the Owner;
(iv) covering any security other than Registrable
Securities; and
(v) registering a best efforts underwriting.
(b) Effective Registration Statement. A registration
requested pursuant to this Section 6.02 shall not be deemed to
have been effected if after it has become effective, such
registration is interfered with by any stop order, injunction or
other order or requirement of the Securitie and Exchange
Commission or other governmental agency or court for any reason
not attributable to the Owner.
Article VII - Accounting
7.01 Accounting, Distributions and Annual Reconciliation.
A. Within 20 days after the close of each Accounting Period,
the Manager shall deliver an interim accounting (the
"Accounting Period Statement") to the Owner setting forth
Gross Revenues, Operating Expenses, Operating Profit or
Operating Loss, and applications and distributions
thereof for the preceding Accounting Period. The Manager
shall transfer to the Owner, with each Accounting Period
Statement, any interim amounts due to the Owner, subject
to Working Capital needs, and shall retain any interim
amounts due to the Manager.
B. Calculations and payments of the Incentive Management
Fee, the Base Management Fee, and distributions of
Operating Profit made with respect to each Accounting
Period within a Fiscal Year shall be accounted for
cumulatively. Within 90 days after the end of each
Fiscal Year, the Manager shall deliver to the Owner a
statement in reasonable detail summarizing the operations
of the Properties for the immediately preceding Fiscal
Year and a certificate of the Manager's chief accounting
officer certifying that such year-end statement is true
and correct. The parties shall, within 10 business days
after the Owner's receipt of such statement, make any
adjustments, by cash payment, in the amounts paid or
retained for such Fiscal Year that are needed because of
the final figures set forth in such statement. Such
final accounting shall be controlling over the Accounting
Period Statements.
C. To the extent there is an Operating Loss for any
Accounting Period, additional funds in the amount of any
such Operating Loss shall be provided by the Owner within
60 days after the Manager has delivered written notice
thereof to the Owner. If the Owner does not so fund such
Operating Loss within the 60-day time period, the Manager
shall have the right (without affecting the Manager's
other remedies under this Agreement) to withdraw an
amount equal to such Operating Loss from future
distributions of funds otherwise due to the Owner.
7.02 Account Expenditures.
A. All funds derived from the operation of the Properties
shall be deposited by the Manager in bank accounts (the
"Operating Accounts") in a bank or banks designated by the
Manager, subject to the Owner's approval. Withdrawals from such
Operating Accounts shall be made solely by representatives of the
Manager whose signatures have been authorized and approved by the
Owner. Reasonable ▇▇▇▇▇ cash funds shall be maintained on the
Properties.
B. All payments made by the Manager hereunder shall be
made from the Operating Accounts, ▇▇▇▇▇ cash funds, or from
Working Capital. The Manager shall not be required to make any
advance or payment with respect to the Properties, except out of
such funds, and the Manager shall not be obligated to incur any
liability or obligation with respect to the Properties.
7.03 Annual Operating Projection. The Manager shall deliver
to the Owner for its review, at least 60 days prior to the
beginning of each Fiscal Year after the first Fiscal Year,
an Annual Operating Projection (each, an "Annual Operating
Projection"). Each Annual Operating Projection shall
project the estimated Gross Revenues, departmental profits,
Operating Expenses, and Operating Profit or Operating Loss
for the succeeding Fiscal Year. The Manager shall
diligently pursue feasible measures to operate the
Properties in accordance with the Annual Operating
Projection; provided, that the parties acknowledge that the
Annual Operating Projection is an estimate and that
unforeseen circumstances such as, but not limited to, the
costs of labor, material, services and supplies, casualty,
operation of law, or economic and market conditions, may
make adherence to the Annual Operating Projection
impracticable, and the Manager shall be entitled to depart
therefrom (with the approval of the Owner, such approval not
to be unreasonably withheld or delayed) as a result of
causes of the foregoing nature.
7.04 Working Capital. The Owner shall, from time to time
during the Term, promptly, but no later than 30 days
after receipt of written request by the Manager, advance
any additional funds, as mutually agreed upon by the
Owner, necessary to maintain Working Capital at levels
determined by the Manager to be reasonably necessary to
satisfy the needs of the Properties as its operation may
from time to time require. All funds so advanced for
Working Capital shall be utilized by the Manager for the
purposes of this Agreement. Upon Termination, the
Manager shall, except as otherwise provided in this
Agreement, return the outstanding balance of the Working
Capital to the Owner.
7.05 Fixed Asset Supplies. The Owner shall, within
30 days after request by the Manager, provide funds
that are necessary to increase the level of Fixed Asset
Supplies to levels determined by the Manager, in its
good faith judgment and as mutually agreed upon by the
Owner, to be necessary to satisfy the needs of the
Properties as its operation may, from time to time,
require. The cost of Fixed Asset Supplies consumed in
the operation of the Conference Center shall constitute
Operating Expenses. Fixed Asset Supplies shall remain
the property of the Owner throughout the Term and upon
Termination.
Article VIII - Repairs, Maintenance and Replacements
8.01 Routine Repairs and Maintenance. The Manager
shall maintain the Properties in good repair and
condition and in conformity with applicable laws and
regulations, insurance requirements and, with
respect to the Conference Center Facilities, in
accordance with the standards for other first-class
conference center facilities and shall make or cause
to be made such routine maintenance, repairs and
minor alterations, the cost of which can be expensed
under GAAP as it deems necessary or appropriate.
The cost of such maintenance, repairs and
alterations shall be paid from Gross Revenues and
shall be treated as an Operating Expense. The cost
of non-routine repairs and maintenance, either to
the Properties buildings or their FF&E, shall be
paid for in the manner described in Sections 8.02
and 8.03 below.
8.02 Repairs and Equipment Budget.
A. The Manager shall prepare a budget of the expenditures
necessary for (1) replacements, repairs and renewals to
the Properties' FF&E, and (2) repairs to the Properties
during the ensuing Fiscal Year and shall submit such
budget to the Owner for approval at the same time it
submits the Annual Operating Projection in accordance
with the provisions of Section 7.05 above.
B. If the estimate of repairs and equipment prepared in good
faith by the Manager exceeds 5% of the Gross Revenues,
the Manager will seek the Owner's consent to increase the
annual percentage set forth in this Section 8.02B to
provide the additional funds required, which consent may
be withheld in the exercise of the Owner's sole
discretion.
C. The Manager shall from time to time make such (1)
replacements and renewals to the FF&E, and (2) repairs to
the Properties' buildings, in each case, to the extent set
forth in the budget prepared and agreed to pursuant to the
provisions of Section 8.02.A to maintain the Properties in
good operating repair and condition and, with respect to the
Conference Center Facilities, in accordance with the
standards for other first-class conference center
facilities or as required pursuant to applicable laws,
regulations or insurance requirements. No expenditures will
be made in excess of said budgeted amount without the
approval of the Owner. In the event the Manager fails
within a reasonable time to undertake any replacements,
renewal or repairs for which it is responsible pursuant to
this Section 8.02.C, the Owner may, upon 10 days prior
written notice to the Manager, undertake to complete the
same. Any monies advanced by the Owner to perform such
replacements, renewal or repairs shall be deducted from the
funds available to the Manager pursuant to the budget
prepared in accordance with Section 8.02A. At the end of
each Fiscal Year, any amounts remaining in such budget shall
be carried forward to the next fiscal year.
8.03. Building Alterations, Improvements, Renewals, and
Replacements. The Manager shall not make any
expenditures for major repairs, alterations,
improvements, renewals or replacements to the Properties
without the prior written consent of the Owner. The cost
of all such major repairs, alterations, improvements,
renewals or replacements shall be included in Operating
Expenses.
8.04 Liens. The Manager and the Owner shall use
their respective best efforts to prevent any liens,
charges or encumbrances from being filed against the
Properties which arise from any maintenance, repairs,
alterations, improvements, renewals or replacements in
or to the Properties. The Manager and the Owner shall
use their respective commercially reasonable efforts to
obtain the release of any such liens, and the cost
thereof. If the lien, charge or encumbrance was not
occasioned by the fault of either party, it shall be
treated the same as the cost of the matter to which to
relates. If the lien, charge or encumbrances arise as a
result of the fault of the Owner or the Manager, then
the party at fault shall bear the cost of obtaining the
lien release.
8.05 Ownership of Replacements. All repairs,
alterations, improvements, renewals or replacements
made pursuant to this Article VIII shall be the
property of the Owner.
Article IX - Trademarks, Trade Names and Service Marks.
9.01 Trademarks, Trade Names and Service Marks.
During the Term, the Manager shall have a limited
license to use the Properties' name, trademarks,
service marks, trade names, symbols, logos or
designs solely in connection with the operation,
including the marketing and promotion, of the
Properties, and for no other purpose. The
Properties' name, and all trademarks, service marks,
trade names, symbols, logos and designs related to
the operation, including the marketing and promotion
of the Properties, shall at all times remain the
sole and exclusive property of the Owner.
9.02 Breach of Covenant. The Owner shall be
entitled, in case of any breach of the covenants of
this Article VIII by the Manager, to injunctive
relief and to any other right or remedy available at
law. This Article IX shall survive Termination.
Article X - Insurance
10.01 The Manager's Insurance Responsibilities. The
Manager shall, during the term of the Agreement, procure and
maintain for its own account as well as for the account of
the Owner, a minimum of the following insurance, the cost of
which should be provided out of the Operating Expenses:
1. Workers'compensation and employer's liability insurance as
may be required under applicable laws covering all of the
Manager's employees at the Properties such insurance to include
an alternate employer endorsement naming the Owner as the
alternate employer; and
2. Fidelity bonds, with reasonable limits satisfactory to the
Owner, covering its employees in job classifications normally
bonded in other similar conference center facilities and
properties or as otherwise required by law, and comprehensive
crime insurance to the extent the Manager and the Owner mutually
agree it is necessary for the Properties.
10.02 The Owner's Insurance Responsibilities. The Owner
shall procure and maintain the following insurance:
property insurance on the Properties' buildings and
contents against loss or damage by fire, lightning and
all other risks covered by the usual extended coverage
endorsement; business interruption insurance covering
loss of profits and necessary continuing expenses of
interruptions caused by fire, explosion, storm, water,
hurricane, and by any occurrence of a type; and general
liability insurance against claims for bodily injury,
death or property damage occurring on, in, or about the
Properties, and automobile liability insurance on
vehicles operated in conjunction with the Properties
(owned, non-owned, and hired) and liquor liability.
10.03 General Insurance Provisions.
A. The forgoing insurance shall be in amounts and with coverage
reasonably acceptable to the Owner and the Manager.
B. The policies of insurance required under Section 10.02 shall
include the Manager as a named insured or an additional insured,
as its interest may appear.
10.04 Waiver of Recovery. Each party hereto waives its
rights and the rights of its insurers, subsidiaries and
affiliates to recover from the other party hereto and its
insurers, subsidiaries and Affiliates for loss or damage
to such party's building, equipment, improvements and
other property of every kind and description resulting
from fire, explosion or other cause normally covered in
standard broad form property insurance policies.
Article XI - Taxes
11.01 Real Estate and Personal Property Taxes.
A. All real estate and personal property taxes, levies,
assessments and similar charges on or relating to the Properties
(collectively, AImpositions@) during the Term shall be paid by
the Manager from Gross Revenues, before any fine, penalty, or
interest is added thereto or lien placed upon the Properties or
upon this Agreement. Any such payments shall be included as an
Operating Expense. Either the Owner or the Manager acting at the
direction of the Owner (in which case the Owner agrees to sign
the required applications and otherwise cooperate with the
Manager in expediting the matter) may initiate proceedings to
contest any negotiations or proceedings with respect to any
Imposition, and all reasonable costs of any such contest shall be
paid from Gross Revenues and shall be included as an Operating
Expense. The Manager shall, as part of its contest or
negotiation of any Imposition, be entitled, on the Owner=s
behalf, to waive any applicable statute of limitations in order
to avoid paying the Imposition during the pendency of any
proceedings or negotiations with applicable authorities.
Article XII - The Properties' Employees
12.01 The Properties' Employees.
A. All personnel employed at the Properties shall at all
times be the employees of the Manager. The Manager shall have
discretion to hire, promote, supervise, direct and train all
employees at the Properties, to fix their compensation and,
generally, establish and maintain all policies relating to
employment, in each case subject to the consent and approval of
the Owner. Notwithstanding the foregoing, (i) the Manager shall
use reasonable diligence and due care in the selection, hiring,
training, supervision, and replacement of all such and employees;
and (ii) the general hiring policies and the discharge of
employees at the Properties shall in all respects comply with all
"Equal Employment Opportunity" and other applicable laws and
regulations. The employment policies applicable to the
Properties shall be subject to the approval of the Owner, and the
Manager shall not change such policies in any material respect
without the consent of the Owner, which consent may be granted or
withheld in the Owner's sole discretion.
Article XIII - Damage and Condemnation
13.01 Damage and Repair.
A. If, during the Term, any portion of the Properties is
damaged or destroyed by fire, casualty or other cause,
the Owner shall, at its cost and expense and with all
reasonable diligence, repair or replace the damaged or
destroyed portion of the Properties to the same condition
as existed previously. To the extent available, proceeds
from the insurance described in Section 10.02 above shall
be applied to such repairs or replacements.
B. Notwithstanding the forgoing, if, in connection with any
casualty, (i) the costs and expenses of restoring the
Properties shall equal or exceed 25% of the replacement
cost of the Properties immediately prior to such casualty
or (ii) either the Properties are substantially or
entirely damaged or destroyed, then the Owner may elect
not to restore the Properties, as applicable, and to
terminate this Agreement. The Owner shall exercise its
election by written notice to the Manager prior to a date
which is 180 days after the occurrence of any such
casualty or 90 days after the Owner has been apprised of
the amount of insurance proceeds that will be available
for restoration, whichever date is later.
13.02 Condemnation.
A. In the event all or substantially all of the Properties
shall be taken in any eminent domain, condemnation, compulsory
acquisition, or similar proceeding by any competent authority for
any publc or quasi-public use or purpose, or in the event a
portion of the Properties shall be so taken, but the result is
that it is unreasonable in the sole discretion of the Owner to
continue to operate the Properties, this Agreement shall
Terminate. The Manager shall have no right to participate in any
proceeding initiated by the Owner to recover any damages or
compensation in respect of such taking.
Article XIV - Defaults
14.01 Defaults.
A. The following shall constitute "Events of Default":
1. The filing of a voluntary petition in bankruptcy or
insolvency or a petition for reorganization under any
bankruptcy law by either party, or the admission by
either party that it is unable to pay its debts as they
become due;
2. The consent to an involuntary petition in bankruptcy or
the failure to vacate, within 90 days from the date of
entry thereof, any order approving an involuntary
petition by either party;
3. The entering of an order, judgement or decree by any
court of competent jurisdiction, on the application of
a creditor, adjudicating either party as bankrupt or
insolvent or approving a petition seeking
reorganization or appointing a receiver, trustee, or
liquidator of all or a substantial part of such party=s
assets, and such order, judgement or decree's
continuing unstayed and in effect for any period of 90
days;
4. The failure of either party to make any payment
required to be made in accordance with the terms hereof within 10
days after receipt of written notice from the other party that
such payment has not been made; or
5. The failure of either party to perform, keep or
fulfill any of the covenants, undertakings, obligations or
conditions set forth in the Agreement, and the continuance of
such default for a period of 30 days after receipt of notice from
the other party of such failure.
B. Notwithstanding any other provisions herein, in the event
of any Event of Default by the Owner pursuant to the
terms of this Agreement, the Manager shall look only to
the Owner's estate and interest in the Properties for the
satisfaction of a money judgment against the Owner
resulting from such Event of Default, and no other
properties or assets of the Owner or of its Affiliates,
or of the Owner's partners, officers, directors
shareholders or principals, shall be subject to levy,
execution or other enforcement procedure for the
satisfaction of such judgment.
Upon the occurrence of any Event of Default, the non-
defaulting party may give the defaulting party notice of
its intention to Terminate the Agreement, and if the
default has not been cured prior to such notice, this
Agreement shall terminate. If, however, upon receipt of
such notice, the defaulting party shall promptly (if such
default is susceptible of being cured within an
additional 10 days) commence to cure the default, and
shall thereafter diligently pursue such efforts to
completion, then such notice shall be of no force or
effect; provided, that such default is actually cured
within such 10-day period.
Upon the occurrence of an Event of Default, the non-
defaulting party shall have, in addition to the right to
Terminate, as set forth above, all applicable rights and
remedies hereunder and under applicable law or at equity,
including without limitation, the right to seek damages
resulting from such Event of Default.
C. The withdrawal of any license or permit that is material
to the operation of the Properties in accordance with
standards applicable to first-class conference
facilities, where such revocation (i) is not due to the
fault of either the Manager or the Owner and (ii) is not
otherwise within the reasonable control of either the
Manager or the Owner, shall not be an Event of Default
under this Article XIV. The Manager and the Owner shall
each, in good faith, use all commercially reasonable
efforts (including the diligent pursuit of all available
appeals), during the 120-day period following such
withdrawal or revocation, to have such license or permit
reinstated. If, notwithstanding such efforts, such
license or permit is not reinstated prior to the
expiration of the aforesaid period of 120 days, either
the Owner or the Manager shall have the right, at its
option, to terminate this Agreement, upon not less than
60 days' notice to the other party; provided, that the
terminating party shall deliver such notice of
termination to the other party by no later than 90 days
after the expiration of such 120-day period; and provided
further, that no such termination shall be
effective if, prior to the effective date of such
termination, such license or permit is reinstated or such
withdrawal or revocation of such license or permit is
stayed.
Article XV - Waiver and Partial Invalidity
15.01 Waiver. The failure of either party to insist upon a
strict performance of any of the terms or provisions of this
Agreement, or to exercise any option, right or remedy herein
contained, shall not be construed as a waiver or as a
relinquishment for the future of such term, provision,
option, right or remedy, but the same shall continue and
remain in full force and effect. No waiver by either party
of any term or provision hereof shall be deemed to have been
made unless expressed in writing and signed by such party.
15.02 Partial Invalidity. If any portion of this
Agreement shall be declared invalid by order, decree or
judgement of a court of competent jurisdiction, this
Agreement shall be construed as if such portion had not
been inserted herein except when such construction would
operate as an undue hardship on the Manager or the Owner
or constitute a substantial deviation from the general
intent and purpose of said parties as reflected herein.
Article XVI - Assignment
16.01 Assignment.
A. Neither party shall assign or transfer or permit the
assignment or transfer of this Agreement or any interest herein,
without the prior written consent of the other, except that the
Owner at any time may assign its interest in this Agreement
without requiring the consent of the Manager; provided, that such
assignee has agreed to assume all of the Owner's obligations with
respect to the Agreement. The Owner shall be relieved of any and
all obligations or liability under or with regard to this
Agreement, relating to the period after the effective date of
such assignment.
Nothing contained herein shall prevent the transfer of this
Agreement in connection with a merger or consolidation or a sale
of all or substantially all of the assets of either party or
their respective Affiliates.
B. In the event either party consents to an assignment of
the Agreement by the other, no further assignment shall be made
without the express written consent of such party, unless
such assignment may otherwise be made without such consent
pursuant to the terms of the Agreement, subject to the
provisions of Section 16.01.A above. Except as otherwise
set forth herein, an assignment by either the Owner or
the Manager of its interest in the Agreement shall not relieve
the Owner or the Manager, as the case may be, from their
respective obligations under the Agreement, and shall inure to
the benefit of, and be binding upon, their respective successors,
heirs, legal representatives, or assigns.
16.02 Transfer of the Properties. (a) If the Owner
determines directly or indirectly to transfer all or a material
portion of the Properties to an unaffiliated Person, the Owner
shall provide written notice thereof to the Manager at least 10
days before the date on which such transfer is proposed to be
effected. Such notice shall set forth (i) the name, address, and
business of the proposed transferee and (ii) whether or not it is
proposed by the Owner that this Agreement remain in effect.
(b) In the event that the Owner desires to terminate this
Agreement on the sale of all or a material portion of the
Properties and so notifies the Manager, this Agreement will
terminate upon the consummation of such transaction.
(c) In the event that the Owner desires the Manager to
continue managing the Properties following the sale of all
or a material portion of the Properties, the Owner and the
Manager shall use reasonable efforts to cause the transferee
to enter into a management agreement with the Manager on
terms and conditions that the Manager and such transferee
may agree.
Article XVII - Termination
17.01 Payment Upon Termination. (a) Upon Termination
(provided, that there shall not be any Event of Default by
the Manager at such time), the Owner shall immediately pay
to the Manager all sums and amounts due and owing to the
Manager pursuant to the terms of this Agreement as of the
date of the Termination.
(b) Upon Termination, the Manager shall, within 90 days
after Termination, prepare and deliver to the Owner a
final accounting statement with respect to the
Properties, along with a statement of any sums due from
the Owner or the Manager pursuant hereof, dated as of the
date of Termination. Within 30 days of receipt by the
Owner of such final accounting statement, the parties
will make any cash adjustments that are necessary
pursuant to such final statement. The cost of preparing
such final statement shall be paid as an Operating
Expense, unless Termination occurs as a result of an
Event of Default by either party, in which case the
defaulting party shall pay such cost. The Manager and the
Owner acknowledge that there may be certain adjustments
for which information will not be available at the time
of the final accounting and the parties agree to readjust
such amounts and make the necessary cash adjustments when
such information becomes available; provided, however,
that all accounts shall be deemed final as of the 12-
month anniversary of the effective date of Termination.
(c) Upon Termination pursuant to Section 16.02 (b) above
or an Event of Default by the Owner (provided, that there
shall not be any Event of Default by the Manager at such
time) and within 60 days thereof, the Owner shall provide
the Manager written notice as to whether it shall, in its
discretion, either (i) pay immediately the balance of the
as-adjusted projected Base Management Fee and the as-adjusted
Incentive Management Fee, which are set forth on
Schedule A hereto, as of the date of Termination, in
accordance with the following formula:
[(365 minus A divided by 365) multiplied by B] +
[(365 minus A divided by 365) multiplied by C] +
D
where
A = That number of days remaining
in the Term Year during which
this Agreement is Terminated
B = The dollar amount of the as-
adjusted projected Base
Management Fee that
corresponds to the Term Year
during which this Agreement is
Terminated
C = The dollar amount of the as-
adjusted projected Incentive
Management Fee that
corresponds the Term Year
during which this Agreement is
Terminated
D = the sum of the as-adjusted
projected Base Management Fee
and the as-adjusted projected
Incentive Management Fee for
each whole Term Year remaining
in the Term without
aggregating the respective
amounts corresponding to the
Term Year during which the
Agreement is Terminated and
each preceding year thereo;
or pay, as of the date of Termination, on a quarterly basis for
the duration of the Term, any amounts due pursuant to the formula
contained in this Section 17.01c(i) as calculated with the actual
(rather than the as-adjusted) projected Base Management Fee and
the actual (rather than the as-adjusted) projected Base Incentive
Fee figures set forth on Schedule A hereto; provided, that such
quarterly payments shall not exceed one-fourth of the aggregate
amount due for each Term Year;
or, (ii) surrender to the Manager that number of shares of the
Manager's common stock, which shares were issued pursuant to
Section 6.01 hereof, as determined in accordance with the
following formula:
[(1825 minus E) divided by 1825] multiplied by 1,000,000
where
E = the aggregate number of days
remaining of the Term as of
the date of Termination;
provided that the aggregate number of shares to be surrendered
pursuant to this Section 17.01c(ii) shall not exceed a maximum of
1,000,000 shares of common stock.
(d) Upon Termination pursuant to Section 13.01B or Section
13.02A above, and within 60 days thereof, the Owner shall
provide the Manager written notice as to whether it shall,
in its discretion, either (i) pay an amount in cash equal to
the product of $2,000,000 and a fraction, the numerator of
which shall be equal to the difference between 1825 and the
number of days then remaining in the Term and the
denominator of which shall be 1825, which cash amount shall
not exceed $2,000,000; or (ii) surrender that number of
shares of common stock issued pursuant to Section 6.01
hereof in accordance with the formula set forth in Section
17.01c(ii) hereof.
17.02 Procedures Upon Termination. Upon Termination for
any reason:
A. The Manager shall have 30 days after Termination to
remove its own property from the Properties;
B. The Manager shall leave the Properties in a clean and
orderly condition;
C. The Manager shall, in connection with Termination,
surrender (and assign, if permitted) to the Owner, and shall
reasonably cooperate with the Owner in the surrendering (and
assignment, if permitted) and/or procuring of, any and all
licenses, permits and/or other authorizations on property
required for the operation of the Properties in accordance with
the directions of the Owner and with applicable governmental
laws, regulations, orders, or other provisions;
D. The Manager shall deliver to the Owner any and all
materials, supplies or equipment required for the operation of
the Properties and/or required to be developed, maintained, or
kept by the Manager pursuant to the terms and conditions of this
Agreement. Without limiting the foregoing, the Manager shall
assign and deliver to the Owner all utility contracts, service
contracts, leases, licenses (including liquor and restaurant
licenses, if any) and other contracts entered into in connection
with the operation of the Properties and all warranty contracts,
warranty cards, operating instructions, and other information and
guarantees concerning all equipment installed in or used in
connection with the operation of the Properties. Any and all
contracts, leases, licenses, warranties, guarantees, bank
accounts, and other Properties assets which are held in the
Manager's name shall be assigned by the Manager to the Owner and
the Manager agrees to execute and deliver such instruments of
assignment in connection therewith in such form and in such
descriptions as may be from time to time reasonably requested by
the Owner after Termination; and
E. The Manager shall deliver to the Owner all cash on hand
at the Properties and shall at the option of the Owner either
deliver to the Owner checks for the balances in the Operating
Accounts or join in the execution of appropriate instruments
which eliminate all the Manager personnel as signatories on such
account.
Article XVIII - Responsibility for Claims, Etc.
A. All debts and liabilities arising in connection with the
use, occupancy or operation of the Properties (including, without
limitation, all such liabilities under or with respect to
environmental laws hazards or claims) during the Term are and
shall be the obligation of the Owner, and Manager shall not be
liable or otherwise responsible for any such debts or liabilities
by reason of its management, supervision and operation of the
Properties during said Term, except that Manager shall be
responsible for any such debt or liability that arises because of
Manager's fraud, gross negligence or willful misconduct in
failing to comply with the terms of this Agreement and/or in
performing its duties hereunder. Manager shall defend, indemnify
and hold harmless Owner and its Affiliates, and their respective
agents, officers, employees, directors and shareholders from and
against any and all losses, costs, liabilities, expenses and
claims (whether administrative or judicial), including, without
limitation, reasonable attorneys' fees and expenses (all
foregoing being referred to as "Losses"), arising from any matter
for which Manager is responsible under this Article 18. The act
or omission of an employee of the Manager who is not an executive
employee, which act or omission is willful or constitutes fraud
or gross negligence on the part of such employee, shall not
constitute fraud, gross negligence or willful misconduct on the
part of Manager unless Manager's home office or regional staff,
or an executive employee of the Manager, acted with gross
negligence in employing, training, supervising or continuing the
employment of such employee.
B. Except as to specific acts or omissions for which Manager
has agreed to indemnify Owner in Article 18 (a) above, Owner
hereby agrees to defend, indemnify and hold Manager and its
Affiliates, and their respective agents, officers, employees,
directors and shareholders, harmless from and against Losses
occurring out of or by reason of this Agreement and or otherwise
arising in connection with the ownership, use, occupancy or
operation of the Properties. Manager shall, at Owner's cost,
provide reasonable assistance to Owner in defending or otherwise
resolving any claims related to the operation of the Properties.
C. No person or entity shall be deemed to be a third party
beneficiary of any term or provision of this Agreement,
including, without limitation, the terms and provisions of this
Article 18, and no person or entity shall have any rights of
subrogation or similar rights under this Article 18, other than
Affiliates of Owner and Manager, respectively, entitled to
indemnification pursuant to the provisions of this Article 18.
All indemnification obligations under this Agreement and the
provisions of this Article 18 shall survive the expiration and
any termination of this Agreement.
Article XIX - Miscellaneous
19.01 Right to Make Agreement. Each party warrants, with
respect to itself, that neither the execution of this
Agreement nor the finalization of the transactions
contemplated hereby shall violate any provision of law or
judgment, writ, injunction, order or decree of any court or
governmental authority having jurisdiction over it; result
in or constitute a breach or default under any indenture,
contract, other commitment or restriction to which it is a
party or by which it is bound; or require any consent, vote
or approval which has not been taken, or at the time of the
transaction involved shall not have been given or taken.
Each party covenants that it has and will continue to have
throughout the term of this Agreement and any extensions
hereof, the full right to enter into this Agreement and
perform its obligations hereunder.
19.02 Consents and Cooperation. Wherever in this
Agreement the consent or approval of the Owner or the
Manager is required, such consent or approval at the
request of either party shall be in writing and shall be
executed by a duly authorized officer or agent of the
party granting such consent or approval.
19.03 Manager Status. In the performance of its duties
in the administration, management and operation of the
Properties, the Manager shall act solely as an
independent contractor. Nothing herein shall
constitute or be construed to be or create a
partnership or joint venture between the Owner and the
Manager, or be construed to appoint or constitute the
Manager as an agent of the Owner for any purpose, or
construed to create a lease by the Manager of the
Properties. It is expressly covenanted that this
Agreement is no more than an agreement for the
rendering of services by the Manager in the operation
and management of the Properties. The covenants
benefiting the Manager are not covenants running with
the land, and are personal to the parties hereto and
their respective successors.
19.04 Confidentiality. The parties hereto agree that the
matters set forth in this Agreement are strictly
confidential and each party will make every effort to
ensure that the information is not disclosed to any
outside Person (including the press or other media)
without the prior written consent of the other party,
except as may be required by applicable law or judicial
or administrative process and as may be reasonably
necessary to obtain licenses, permits and other public
approvals necessary for the refurbishment or operation of
the Properties, or in connection with the Owner's
financing of the Properties or the Owner's business
relations.
19.05 Applicable Law; Etc. This Agreement shall be
construed under and shall be governed by the
substantive laws of the State of Georgia without regard
to conflicts of laws principles. Except to the extent
otherwise provided herein relating to arbitration, any
and all disputes hereunder shall be adjudicated in any
federal or state court sitting in Atlanta, Georgia, to
whose jurisdiction the parties consent on an exclusive
basis. The Manager consents to the entry of injunctive
and other equitable relief in respect of any breach or
threatened breach of the provisions hereof, without the
requirement of posting a bond or other collateral or
security.
19.06 Headings. Headings of Articles and Sections
are inserted only for convenience and are in no way
to be construed as a limitation on the scope of the
particular Articles or Sections to which they refer.
19.07 Notices. Notices, statements and other
communications to be given under the terms of this
Agreement shall be in writing and delivered by
telecopier or hand against receipt or by nationally
recognized overnight courier (such as Federal
Express) or sent by certified or registered mail,
postage prepaid, return receipt requested:
To Owner: Fountainhead Development Corp., Inc.
Attention: ▇▇▇▇▇▇ ▇. Panoz
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ LLC
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To The Manager: Ridgewood Hotels, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
With a copy to: ▇▇▇▇▇▇ and ▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, Esq.
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
or at such other address as is from time to time designated by
the party receiving the notice. All notices shall be deemed to
have been delivered and received (i) in the case of mailing, on
the fifth business day after the posting thereof, (ii) in the
case of personal delivery or delivery by telecopier, on the date
of such delivery and (iii) in the case of dispatch by nationally
recognized overnight courier, on the second business day
following such dispatch.
19.08 Security. The Manager shall provide limited, passive
security at the Properties in accordance with policies and
procedures established by the Owner and shall coordinate
with a representative designated by the parties. The
Manager shall notify the Owner of any disturbance or other
security matter that comes to the Manager's attention. The
Owner shall indemnify and hold the Manager, its subsidiaries
and affiliates harmless from and against all claims,
damages, liabilities and expenses, including attorneys' and
court costs, arising out of or in connection with the
provision of security.
19.09 Competitive Market Area. The Manager covenants and
agrees that during the Term the Manager shall not own in
whole or in part, lease, operate or manage any hotel,
motel, conference center, resort, or similar lodging
facility located within a 50-mile radius of the
Properties. The parties agree that this restriction
shall not apply to (i) any operations currently conducted
by the Manager within the restricted area, (ii) any
operations within the restricted area obtained by the
Manager as part of the acquisition of all or
substantially all of the assets or stock of a separate
entity, (iii) any operations where the Manager's interest
in such business is conducting food and beverage
services; it being understood and agreed that any of the
restrictions contained in this Section 19.09 may be
waived by the Owner.
19.10 Estoppel Certificates. Each party to this Agreement
shall at any time and from time to time, upon not less than
10 days' prior notice from the other party, execute,
acknowledge and deliver to such other party, or to any third
party specified by such other party, a statement in writing:
(a) certifying that this Agreement is unmodified and in full
force and effect (or if there have been modifications, that
the same, as modified, is in full force and effect and
stating the modifications); (b) stating whether or not to
the best knowledge of the certifying party (i) there is a
continuing Event of Default by the non-certifying party in
the performance or observance of any covenant, agreement or
condition contained in this Agreement, or (ii) there shall
have occurred any event which, with the giving of notice or
passage of time or both, would become an Event of Default,
and, if so, specifying each such Event of Default or
occurrence of which the certifying party may have knowledge;
and (c) stating such other information as the non-certifying
party may reasonably request. Such statement shall be
binding upon the certifying party and may be relied upon by
the non-certifying party and/or such third party specified
by the non-certifying party as aforesaid. The obligations
set forth in this Section 19.10 shall survive Termination
(e.g., each party shall, on request, within the time period
described above, execute and deliver to the non-certifying
party and to any such third party a statement certifying
that this Agreement has been terminated).
19.11 Entire Agreement. This Agreement, together with
other writings signed by the parties expressly stated to
be supplemental hereto and together with any instruments
to be executed and delivered pursuant to this Agreement,
constitutes the entire agreement between the parties and
supersede all prior understandings and writings between
the parties relating to the subject matter hereof, and
may be changed only by a writing signed by the parties
hereto.
19.12. Counterparts and Facsimile. This Agreement may be
executed in any number of counterparts, and each such
counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall
constitute one agreement. In addition, this agreement may
be signed and delivered to the other party by facsimile
transmission; such transmission shall be deemed a valid
signature.
In witness whereof, the parties hereto have caused this Agreement
to be executed as of the day and year first written above.
Fountainhead Development Corp., Inc.
By:/s/ ▇▇▇▇▇▇ ▇. Panoz
Name: ▇▇▇▇▇▇ ▇. Panoz
Title: Chairman
Ridgewood Hotels, Inc.
By:/s/ ▇. ▇. ▇▇▇▇▇▇
Name: N. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: President
Schedule A
Projected Base Projected Incentive
Term Year Management Fee Management Fee
-------------------------------------------------------------------
As Adjusted As Adjusted
(giving effect (giving effect
to a 8% to an 18%
Actual discount) Actual discount)
------ -------------- ------ --------------
1 $750,000 $690,000 $335,000 $274,700
2 772,000 710,240 384,000 314,880
3 796,000 732,320 435,000 356,700
4 820,000 754,400 487,000 399,340
5 844,000 776,480 540,000 442,800