AMENDED AND RESTATED
BASIC AGREEMENT
(Holiday Inn Hurstbourne, Louisville, Kentucky)
THIS AGREEMENT is made as of August 14, 1995, by and among
RIDGEWOOD PROPERTIES, INC., a Delaware corporation ("Operator"),
RIDGEWOOD HOTELS, INC., a Georgia corporation ("Operator
Subsidiary"), RW HOTEL INVESTMENT PARTNERS, L.P., a Delaware limited
partnership ("Investor"). Operator and Operator Subsidiary are
sometimes herein individually and collectively called "Developer".
R E C I T A L S:
A. Developer has expertise in acquiring, refurbishing,
operating and selling Holiday Inn hotels.
B. Developer has entered into that certain agreement (the
"Purchase Agreement") captioned "CONTRACT FOR THE PURCHASE AND SALE
OF PROPERTY", dated July 7, 1995, by and among Operator, as
purchaser, Fox Fire L.L.C., an Arizona limited liability company, as
seller, and Lawyers Title Insurance Corporation, as escrow agent,
providing for the sale of a Holiday Inn known as the "Holiday Inn
Hurstbourne" and located near Louisville, in Jefferson County,
Kentucky, a copy of which agreement is attached as Exhibit "A".
C. Developer and Investor desire to form a partnership and to
cause such partnership to acquire, refurbish, operate and sell such
hotel, all upon and subject to the terms and conditions hereinafter
set forth.
IN VIEW OF THE FOREGOING FACTS, and in consideration of the
respective undertakings of the parties hereto, it is hereby agreed
as follows:
ARTICLE I FORMATION AND FINANCING OF PARTNERSHIP
Section 1.1 Formation of Partnership. On the "Closing Date"
(as hereinafter defined), Operator Subsidiary, Developer and
Investor shall enter into a partnership agreement (the "Partnership
Agreement") of RW Hotel Partners, L.P., a Delaware limited
partnership (the "Partnership"), in substantially the form of
Exhibit "B", which shall be effective, if at all, if and only if the
"Closing" (as hereinafter defined) occurs.
Section 1.2 Business Plan and Budgets. The Partnership
Agreement contemplates a "Business Plan", an "Operating Budget" and
a "Rehab Budget". Such items are to be completed and attached as an
exhibit to the Partnership Agreement, but have not yet been
completed as of the date hereof. Developer shall use diligent
efforts to prepare such items for submission to Investor for its
approval and to finalize the same as promptly as possible in a
manner satisfactory to all parties hereto.
Section 1.3 Obligation to Seek Credit Facility. Developer
shall use diligent efforts to obtain on behalf of the Partnership a
credit facility in accordance with the terms (the "Required
Financing Terms") set forth on Exhibit "C". A credit facility that
complies with each of the Required Financing Terms (excluding any
deviation therefrom specifically approved in writing by Investor) is
herein called a "Qualified Credit Facility". However, no
application, commitment or other loan document obligating the
Partnership or its partners to pay any fees, costs or other amounts
shall be executed without the prior written consent of Investor. If
the Partnership obtains a Qualified Credit Facility, it shall be
herein called the "Project Financing".
ARTICLE II ACQUISITION OF PROPERTY
Section 2.1 Incorporation of Definitions From Purchase
Agreement. The following terms shall have the meanings specified
for the same in the Purchase Agreement: "Closing Date" (except that
the Closing Date under this Agreement shall not include any
extension of the Closing Date under the Purchase Agreement that has
not been approved in writing by Investor), "Escrow Agent",
"Examination Period", "Deposit", "Property" and "Seller".
Section 2.2 Other Definitions.
"Closing" means the closing of the purchase under the Purchase
Agreement and the closing of the transactions contemplated by this
Agreement.
Section 2.3 Existing Documents re Deposit. The following
documents have been entered into in connection with the Deposit:
A. That certain agreement (the "Deposit Agreement") captioned
"DEPOSIT AGREEMENT", dated as of July 10, 1995, between Operator and
Farallon Capital Partners, a California limited partnership ("FCP"),
as amended by a letter agreement dated August 11, 1995; and
B. That certain promissory note (the "Deposit Note")
captioned "PROMISSORY NOTE", in the original principal amount of
$200,000, dated as of July 10, 1995.
Section 2.4 Action Taken Under Purchase Agreement. With
respect to the Purchase Agreement, the following provisions shall
apply:
A. Generally. At all times between the date hereof and the
Closing, Developer shall not give any notice, take any action or
waive any matter under the Purchase Agreement except with the prior
written consent of Investor. The parties will use reasonable
efforts to cooperate in order to meet any time deadlines for
consents by the "Buyer" under the Purchase Agreement. Developer and
Investor agree to cooperate in their due diligence efforts, and
without limitation on the foregoing, Developer shall supply Investor
with such information relating to the Property as Investor may
reasonably request from time to time (to the extent obtainable).
B. Due Diligence. During the Examination Period, Developer
shall perform such environmental, land use, financial, operational,
physical, legal, title, survey, contractual and other due diligence
as is customarily done by an institutional purchaser (and, without
limitation, such due diligence shall be conducted with a view
towards satisfying a provider of a Qualified Credit Facility). Such
due diligence shall include each of the items described on Exhibit
"D" and, without limitation on the foregoing, an inspection and
review of all books and records of the Property (including financial
records for 1993, 1994 and 1995 year to date), an inspection and
review of all required licenses and permits and their assignability,
a physical inspection of the condition of the Property, an analysis
of the demographics in the area, an inspection and review of the
hotel servicing and administrative operations, and an interview of
the personnel at the hotel. Developer shall complete its due
diligence and report its findings to Investor in writing at least
five business days prior to the end of the Examination Period. All
such due diligence shall be conducted in a professional manner in
compliance with the Purchase Agreement and the "Requirements" (as
defined in the Partnership Agreement) and Developer shall indemnify
and defend Investor and the Partnership, and each of them, from any
claims (and resulting liability, costs and expenses including
attorneys' fees) arising from the manner in which such due diligence
is conducted by them (such as claims for property damage, physical
injury and claims for indemnification by the seller under the
Purchase Agreement) to the extent the same are not fully covered by
the Partnership's insurance.
C. Pre Formation Due Diligence Costs. Developer shall
advance all reasonable due diligence costs incurred pursuant to this
Agreement prior to the execution of the Partnership Agreement and
the closing of the acquisition of the Property by the Partnership.
Upon any such acquisition, Developer shall be reimbursed at the
closing for the reasonable due diligence costs associated with the
Property. If the Property is not acquired by the Partnership
pursuant to this Agreement for any reason, Developer shall be solely
responsible for all due diligence and other costs incurred in
connection with the Property.
D. Business Plan/Budgets. During the Examination Period,
Developer shall prepare a draft Business Plan, a draft Operating
Budget and a draft Rehab Budget for the Property and submit the same
to Investor for its approval, and shall use diligent efforts to
finalize the same in a manner satisfactory to all parties.
E. Deposit. Investor has previously advanced to Developer
$200,000 which has been used to fund the Deposit pursuant to the
Purchase Agreement. The Deposit under the Purchase Agreement shall
be invested in a federally insured money market account or such
other investments as may be approved in writing by Investor. Prior
to the end of the Examination Period, Developer shall cause such
amount to be refunded to Investor in the event Investor elects not
to proceed with the transaction under the Purchase Agreement. In
the event that the Closing shall occur, the Deposit shall be deemed
applied against the Deposit Note and then credited against
Investor's initial contribution obligation under the Partnership
Agreement. The Deposit is to be applied and treated by Seller as
provided in the Purchase Agreement. Developer shall not default or
take or fail to take any action that would result in a forfeiture or
delay in the return of the Deposit. The Buyer's right under the
Purchase Agreement to terminate the transaction and receive a refund
of the deposit thereunder shall be exercised by Operator at the
election of Investor or any partner in the Partnership (which
election may be made in its sole discretion); provided, however,
that no such termination shall be permitted if it does not result in
a refund of the deposit (unless such termination without a refund
has been expressly approved or directed in writing by Investor). In
the event of a refund of the Deposit, such refund shall be returned
to Investor and applied against the Deposit Note. If the
transactions contemplated by this Agreement are not consummated on
the Closing Date because a condition in Section 5.1 has not been
satisfied, then in addition to any other rights and remedies that
Investor may have under this Agreement, FCP may recover the
outstanding balance of the Deposit Note from Developer.
ARTICLE III ADDITIONAL MATTERS
Section 3.1 Additional Transaction Documents. Upon the
closing of the acquisition of the Property pursuant to the Purchase
Agreement, the following additional agreements shall be executed and
delivered:
A. Management Agreement. The Partnership, as owner
("Owner"), and Operator, as manager ("Manager"), shall enter into an
agreement (a "Management Agreement") meeting the parameters set
forth in Exhibit "E".
B. Construction Management Agreement. The Partnership, as
owner, and Operator, as construction manager, shall enter into a
construction management agreement (a "Construction Management
Agreement") meeting the parameters set forth in Exhibit "F".
C. Assignment of Pre Formation Agreement. The Purchase
Agreement shall be assigned to the Partnership, as of the closing of
the acquisition thereunder, by an assignment ("Assignment") in form
reasonably satisfactory to the parties (under which the Partnership
shall assume the obligations of the Buyer thereunder first arising
from and after the date of such assignment), whereupon the
Partnership shall have the benefit of all of the right, title and
interest of the "Buyer" in and to the Purchase Agreement (including
the benefit of all of Seller's covenants, representations and
warranties thereunder). Developer shall obtain the prior written
consent of Seller to such assignment (to the extent required under
the Purchase Agreement) prior to the end of the Examination Period.
Section 3.2 Closing Contributions. Concurrently with the
Closing, each of Investor and Developer shall make the initial
contributions to the Partnership required of it under the
Partnership Agreement; provided, however, the obligations of
Investor to form the Partnership and to make the contributions
required of it under the Partnership Agreement are subject to the
satisfaction of the conditions set forth in this Agreement.
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Parties. Each
party hereby represents and warrants to the other parties and the
Partnership, and each of them, now and as of the Closing Date, as
follows: This Agreement and all agreements, instruments and
documents herein provided to be executed or to be caused to be
executed by it is and on the Closing Date will be duly authorized,
executed and delivered by and are and will be binding upon the same.
It is a corporation or partnership as indicated in the preamble,
duly organized and validly existing under the laws of the State of
its formation, as indicated in the preamble. It is duly authorized
and qualified to enter into and do all things required of it under
the agreements it is executing in connection with this transaction.
Neither this Agreement nor any agreement, document or instrument
executed or to be executed in connection with the same, nor anything
provided in or contemplated by this Agreement or any such other
agreement, document or instrument, breaches, invalidates, cancels,
makes inoperative or interferes with, or results in the acceleration
or maturity of, or requires any consent or authorization that has
not been obtained under, any contract, agreement, lease, easement,
right or interest, law or regulation to which it is subject
(excluding, in the case of Investor, any of the same to which
Investor will become subject upon the Closing by reason of this
Agreement).
Section 4.2 Additional Representations and Warranties of
Developer. Developer represents and warrants to Investor and the
Partnership, and each of them:
A. Purchase Agreement. Attached hereto as Exhibit "A" is
a true, complete and correct copy of the Purchase Agreement and all
amendments, supplements, waivers, extensions and other modifications
thereto. There are no oral modifications or understandings with
respect to the Purchase Agreement and, without limitation, the
"Buyer" thereunder has not delivered to Seller, and has not received
from Seller, any notice or demand under or in connection with the
Purchase Agreement that is not included in Exhibit "A" hereto.
There is no material breach or default by the Buyer under the
Purchase Agreement and to the knowledge of Developer, there is no
material breach or default by Seller under the Purchase Agreement
(where, for purposes of this sentence, it is assumed that Seller has
knowledge of all information relating to the Property that is known
to Developer). Operator is the holder of all right, title and
interest to the Buyer's interest under the Purchase Agreement and,
upon the Closing Date, the Partnership will acquire all such right,
title and interest.
B. Actions Previously Taken Under the Purchase Agreement.
(1) Leases. To the knowledge of Developer, no leases
affect the Property other than the following leases (which shall be
identified by parties, date and premises, and dates of all
amendments), each of which has been delivered to and approved by
Investor: the leases (the "Leases") described in Exhibits "C" and
"D" to the Purchase Agreement.
(2) Contracts. To the knowledge of Developer, no
agreements (other than the Leases) affect the Property other than
the following agreements (which shall be described by parties, date
and subject matter and dates of all amendments), each of which has
been delivered to and approved in writing by Investor: the
Contracts described on Exhibit "B" to the Purchase Agreement.
(3) Due Diligence. To the knowledge of Developer, there
is no basis for any claim by Seller for indemnification under the
Purchase Agreement (including any claim based on Buyer's due
diligence activities).
(4) Physical Reports. All physical and environmental
reports received by Developer or its affiliates respecting the
Property from any source have previously been delivered to Investor.
C. Information Acquired From Due Diligence. Neither
Developer nor any of its affiliates has received any written notice
or has any other actual knowledge of any change contemplated in any
laws, ordinances or restrictions affecting the Property, or any
judicial or administrative action, or any action by adjacent
landowners with respect to the Property, and neither Developer nor
any of its respective affiliates has received any written notice or
has any other actual knowledge of any other fact, circumstance or
condition, financial or otherwise, which would prevent, limit,
impede or render more costly the acquisition, refurbishment,
operation and sale of the Property in accordance with the Business
Plan.
D. Update. On the date that is three business days prior
to the end of the Examination Period under the Purchase Agreement,
Developer shall execute and deliver by facsimile to Investor a
certificate in form reasonably satisfactory to Investor under which
Developer shall represent and warrant that the representations and
warranties contained in this Agreement are true and correct without
exception as of such date as if made on and as of such date (or,
specifying in reasonable detail such exceptions, if any, which then
exist). Developer shall not take any action or omit to take any
action, which action or omission would result in any such exception.
ARTICLE V CONDITIONS
Section 5.1 Conditions to Investor's Obligations. Investor's
obligations to perform its undertakings provided in this Agreement
(including its obligation to execute the Partnership Agreement and
to make the contributions provided in the Partnership Agreement) are
conditioned on the following:
A. Performance by Developer and Operator. The due
performance by each of Developer and Operator in all material
respects of each and every undertaking and agreement to be performed
by it hereunder (including the delivery to Investor of the items
specified in Section 6.3) and the truth of each representation and
warranty in all material respects made by it in this Agreement or
any document executed in connection herewith at the time as of which
the same is made and as of the Closing Date as if made on and as of
the Closing Date. Without limitation on the foregoing, there shall
be no exceptions noted in the Closing Certificate.
B. No Bankruptcy or Dissolution. That at no time on or before
the Closing Date shall any of the following ("Banktuprcy/Dissolution
Event") have been done by, against or with respect to Seller,
Developer, Operator or any of their respective constituent entities
or principals: (1) the commencement of 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 a trustee or receiver of any property
interest; (3) an assignment for the benefit of creditors; (4) an
attachment, execution or other judicial seizure of a substantial
property interest; (5) the taking of, failure to take, or submission
to any action indicating an inability to meet its financial
obligations as they accrue; or (6) a dissolution or liquidation.
C. Plans/Budgets. That on or before the Closing Date, the
parties shall have agreed in writing upon the Business Plan,
Operating Budget and Rehab Budget for the Property.
D. Satisfaction of Conditions Under Purchase Agreement. That
each and all the conditions to the obligation of the "Buyer" to
purchase the Property under the Purchase Agreement shall have been
satisfied in full or waived with the written consent of Investor on
or before the Closing Date.
E. Title Insurance. The Partnership shall receive on the
Closing Date an ALTA (Form B) (1970, amended 10/17/70) extended
coverage owner's title insurance policy with respect to the Property
or an irrevocable and unconditional written commitment to issue the
same (herein called the "Title Policy"), insuring the Partnership,
as owner of the Property, as of the date and time the deed to the
Partnership is recorded, including such endorsements as Investor may
reasonably request and otherwise meeting the requirements
hereinafter set forth in this Section. The Title Policy shall be
issued by Escrow Agent. The Title Policy shall cover the Property
and shall show that fee simple title in and to the Property and any
easements appurtenant thereto is vested in the Partnership, subject
only to exceptions approved in writing by Investor. The Title
Policy shall be in the form of the pro forma title policy attached
to the "Closing Procedure Letter" (as hereinafter defined), and
Developer shall use diligent efforts to deliver to the Escrow Agent
such instruments and agreements as the Escrow Agent shall reasonably
require from Seller, and shall deliver to the Escrow Agent such
instruments and agreements as the Escrow Agent shall reasonably
require of Developer, in order to issue the Title Policy. The
endorsements to the Title Policy shall include the following
endorsements: (1) access (CLTA Form 103.7), (2) contiguity (CLTA
Form 116.4), (3) limited liability company treated as a corporation
for "Fairway" purposes, (4) owner's comprehensive (CLTA Form 100
[Owner's Modified]), (5) encroachment (CLTA Form 103.9), and (6)
survey (CLTA Form 116.1).
Section 5.2 Waiver of Conditions. Any party may at any time
or times, at its election, waive any of the conditions to its
obligations hereunder, but any such waiver shall be effective only
if contained in a writing signed by such party. No such waiver
shall reduce the rights or remedies of a party by reason of any
breach by the other party hereunder.
ARTICLE VI CLOSING CONFERENCE
The closing (the "Closing") of the transactions herein provided
shall be consummated through a closing conference (the "Closing
Conference") which shall be held on the Closing Date at the offices
of Pircher, Xxxxxxx & Xxxxx, 0000 Avenue of the Stars, Xxxxx 0000,
Xxx Xxxxxxx, Xxxxxxxxxx 00000 or such other place as the parties
hereto may hereafter agree upon.
Section 6.1 Closing Date. As used herein, the "Closing Date"
means August 16, 1995, or such other date as the parties may agree
upon in writing.
Section 6.2 Escrow. The deliveries to be made under this
Article shall be made in accordance with and subject to an escrow
letter (the "Closing Procedure Letter") from the parties to the
Escrow Agent being executed concurrently herewith.
Section 6.3 Deliveries. On the Closing Date, the parties
shall deliver the following items:
A. Items to be Delivered by Investor. Investor shall deliver
or cause to be delivered:
(1) Funds. The amount required to be contributed by it
to the Partnership on the Closing Date under the Partnership
Agreement.
(2) Partnership Agreement. Four original counterparts of
the Partnership Agreement, duly executed by Investor.
B. Items to be Delivered by Operator and Operator Subsidiary.
Operator and Operator Subsidiary shall deliver or cause to be
delivered:
(1) Funds; Demand Notes; Pledge Agreements. The funds
and demand notes required to be contributed by Operator Subsidiary
to the Partnership on the Closing Date under the Partnership
Agreement and the collateral (including the demand notes from
Operator to Operator Subsidiary) and duly executed endorsements and
pledge agreements therein required to be delivered in connection
therewith.
(2) Partnership Agreement. Four original counterparts of
the Partnership Agreement, duly executed by Operator Subsidiary.
(3) Management Agreement. Four originals of a Management
Agreement, duly executed by Operator Subsidiary, as a partner of the
Partnership, and Operator, as manager, with respect to the Property
acquired by the Partnership on the Closing Date.
(4) Construction Management Agreement. Four originals of
a Construction Management Agreement, duly executed by Operator
Subsidiary, as a partner of the Partnership, and Operator, as
construction manager, with respect to the Property acquired by the
Partnership on the Closing Date.
(5) Assignment. Four originals of the Assignment, duly
executed by Operator, with respect to the Purchase Agreement.
(6) Closing Certificate. If the Closing Date occurs
after the date of this Agreement, a certificate (the "Closing
Certificate") in a form reasonably agreed upon by the parties and
consistent with this paragraph, dated as of the Closing Date and
duly executed by Developer, representing that the representations
and warranties of Developer contained in this Agreement or any
document executed in connection herewith are true and correct
without exception as of the Closing Date as if made on and as of the
Closing Date (or, specifying in reasonable detail such exceptions,
if any, which then exist). Developer shall not take any action or
omit to take any action, which action or omission would result in
any such exception.
Section 6.4 Closing Authorization. Upon satisfaction of all
the conditions in the Closing Procedure Letter for delivery of the
funds and instruments described in Section 6.3 and receipt of
written advice by the Escrow Agent that such conditions have been
satisfied and that Escrow Agent is prepared to close the escrow,
Investor shall deliver the authorization of Investor to close as
specified in the Closing Procedure Letter.
ARTICLE VII MISCELLANEOUS
Section 7.1 Brokers.
A. Except as provided in subsection B below, each party
represents and warrants to the other party and the Partnership, and
each of them, that no broker or finder has been engaged by it (or
any of its affiliates) in connection with the formation of the
Partnership contemplated by this Agreement or the other transactions
contemplated hereby. In the event of a claim for broker's or
finder's fee or commissions in connection herewith, then each party
shall indemnify and defend the other parties and the Partnership,
and each of them, from the same if it shall be based upon any
statement or agreement alleged to have been made by the indemnifying
party or its affiliates.
B. Developer has engaged Prudential California Realty, Inc.
(as finder), Lullwater Investors, L.P., Xxxxx Xxxxxxx, Xxxxxxx
Xxxxxxx and Xxxxxxx Xxxxxx in connection with the transactions
contemplated by this Agreement, and Developer shall be solely
responsible for all fees and other compensation which it has agreed
to pay such persons and entities and shall indemnify, protect,
defend and hold Investor, the Partnership, and the assets of the
Partnership, and each of them, harmless from and against any and all
"Claims" (as defined in the Partnership Agreement) in any way
arising in connection with any claims made by such persons and
entities in connection with the transactions contemplated hereby.
Section 7.2 Survival. All warranties, representations,
covenants, obligations and agreements contained in this Agreement
shall survive the closing hereunder and the transfer and conveyance
of the Property hereunder and any and all performances hereunder.
All warranties and representations shall be effective regardless of
any investigation made or which could have been made by the party
benefitting from such warranties and representations.
Section 7.3 Further Instruments. Each party will, whenever
and as often as it shall be requested so to do by the other, cause
to be executed, acknowledged or delivered any and all such further
instruments and documents as may be necessary or proper, in the
reasonable opinion of the requesting party, in order to carry out
the intent and purpose of this Agreement.
Section 7.4 Limitation of Liability. No advisor, trustee,
director, officer, partner, employee, beneficiary, shareholder,
participant or agent of or in Investor (including Farallon Capital
Management, Inc.), or of or in Farallon Capital Management, Inc.,
shall have any personal liability, directly or indirectly, under or
in connection with this Agreement or any agreement made or entered
into under or pursuant to the provisions of this Agreement, or any
amendment or amendments to any of the foregoing made at any time or
times, heretofore or hereafter, and each party and its respective
successors and assigns and, without limitation, all other persons
and entities, shall look solely to Investor's assets for the payment
of any claim against, or for any performance by such party, and each
party hereby waives any and all such personal liability. The
limitations of liability provided in this Section are in addition
to, and not in limitation of, any limitation on liability applicable
to Investor provided by law or by any other contract, agreement or
instrument.
Section 7.5 Matters of Construction.
A. Entire Agreement. This Agreement contains the entire
agreement between the parties respecting the matters herein set
forth and supersedes all prior agreements between the parties hereto
respecting such matters. Without limitation on the foregoing, this
Agreement amends and restates and supersedes in its entirety that
certain agreement captioned "BASIC AGREEMENT" dated as of August 14,
1995, by and among the parties hereto. This Agreement may be
amended by written agreement of amendment executed by all parties
hereto, but not otherwise.
B. Time of the Essence. Time is of the essence of this
Agreement.
C. Captions. Article, Section and Exhibit headings shall not
be used in construing this Agreement.
D. Cumulative Remedies. No remedy conferred upon a party in
this Agreement is intended to be exclusive of any other remedy
herein or by law provided or permitted, but each shall be cumulative
and shall be in addition to every other remedy given hereunder or
now or hereafter existing at law, in equity or by statute (except as
otherwise expressly herein provided). Operator and Operator
Subsidiary shall be primarily, jointly and severally liable for each
of the obligations and liabilities of Developer, each of the
obligations and liabilities of Operator, and each and all of the
obligations and liabilities of Operator Subsidiary, under this
Agreement or any other agreement or instrument executed in
connection herewith (including the Partnership Agreement, the
Management Agreement and the Construction Management Agreement and
the certificates required to be rendered under this Agreement or
such other agreements). Each of Operator and Operator Subsidiary
hereby waives any surety or guarantor defenses that might otherwise
apply.
E. No Waiver. No waiver by a party of any breach of this
Agreement or of any warranty or representation hereunder by the
other party shall be deemed to be a waiver of any other breach by
such other party (whether preceding or succeeding and whether or not
of the same or similar nature), and no acceptance of payment or
performance by a party after any breach by the other party shall be
deemed to be a waiver of any breach of this Agreement or of any
representation or warranty hereunder by such other party, whether or
not the first party knows of such breach at the time it accepts such
payment or performance. No failure or delay by a party to exercise
any right it may have by reason of the default of the other party
shall operate as a waiver of default or modification of this
Agreement or shall prevent the exercise of any right by the first
party while the other party continues to be so in default.
F. Governing Law; Venue. This Agreement shall be construed
and enforced in accordance with the laws of the State of California
(without regard to conflicts of law). Each party hereby consents to
the jurisdiction of any state or federal court located within Los
Angeles or San Francisco County, California, waives personal service
of any and all process upon it, consents to service of process by
registered mail directed to it at the address stated in Section 7.8
hereof, and acknowledges that service so made shall be deemed to be
completed upon actual delivery thereof (whether accepted or
refused). In addition, each party consents and agrees that venue of
any action instituted under this Agreement or any agreement executed
in connection herewith shall be proper in Los Angeles or San
Francisco County, California, and hereby waives any objection to
venue.
G. Incorporation of Exhibits. All exhibits attached and
referred to in this Agreement are hereby incorporated herein as
fully set forth in this Agreement.
H. Non Business Days. Whenever action must be taken
(including the giving of notice or the delivery of documents) under
this Agreement during a certain period of time or by a particular
date that ends or occurs on a non business day (i.e., Saturday,
Sunday or a holiday recognized by the U.S. federal government or the
State of New York, Georgia or California), then such period or date
shall be extended until the immediately following business day.
I. Severability. If any term or provision of this Agreement
or the application thereof to any person or circumstance shall, to
any extent, be invalid or unenforceable, the remainder of this
Agreement, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each such term and
provision of this Agreement shall be valid and be enforced to the
fullest extent permitted by law.
J. No Third Party Beneficiaries. Except as set forth in
Section 2.4E, with respect to FCP, nothing in this Agreement,
expressed or implied, is intended to confer any rights or remedies
upon any person, other than the parties hereto and, subject to the
restrictions on assignment herein contained, their respective
successors and assigns.
K. Certain Terminology.
(1) 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.
(2) Except as otherwise indicated, all Article, Section
and Exhibit references in this Agreement shall be deemed to refer to
the Articles and Sections in, and the Exhibits to, this Agreement.
L. Consents 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.
Section 7.6 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.
Section 7.7 Successors and Assigns. No party may assign or
transfer any of its rights or obligations under this Agreement
without the prior written consent of the others (in which event such
transferee shall assume in writing all of the transferor's
obligations hereunder, but such transferor shall not be released
from its obligations hereunder). No consent given to any such
transfer or assignment shall be construed as a consent to any other
transfer or assignment. Subject to the foregoing, this Agreement
and the terms and provisions hereof shall inure to the benefit of
and be binding upon the successors and assigns of the parties.
Section 7.8 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 DEVELOPER, OPERATOR OR OPERATOR SUBSIDIARY:
Ridgewood Properties, Inc.
0000 Xxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Mr. N. Xxxxxxx Xxxxxx
Telephone No.: (000) 000 0000
Facsimile No.: (000) 000 0000
With Copy to:
Xxxxxxxx Xxxxxxx
Suite 5200
600 Peachtree Street, N.E.
Xxxxxxx, Xxxxxxx 00000/0000
Attention: Xxxx X. Xxxxx, Esq.
Telephone No.: (000) 000 0000
Facsimile No.: (000) 000 0000
TO INVESTOR:
c/o Farallon Capital Management, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxx
Telephone No.: (000) 000 0000
Facsimile No.: (000) 000 0000
With Copy To:
Pircher, Xxxxxxx & Xxxxx
1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Real Estate Notices (SAC/RCS)
Telephone No.: (000) 000 0000
Facsimile No.: (000) 000 0000
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.
Section 7.9 Counderparts. This Agreement may be executed in
any number of counterparts, provided each of the parties hereto
executes at least one counterpart; each such counterpart hereof
shall be deemed to be an original instrument, but all such
counterparts together shall constitute but one agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as
of the day and year first above written.
INVESTOR:
RW HOTEL INVESTMENT PARTNERS, L.P.
a Delaware limited partnership,
By: RW HOTEL INVESTORS, INC.,
a Delaware corporation,
General Partner
By: ____________________________
Name: __________________________
Title: __________________________
OPERATOR:
RIDGEWOOD PROPERTIES, INC.,
a Delaware corporation
By: ______________________________
Name: ____________________________
Title: ___________________________
OPERATOR SUBSIDIARY
RIDGEWOOD HOTELS, INC.,
a Georgia corporation
By: _____________________________
Name: ___________________________
Title: ___________________________
ASSIGNMENT, ASSUMPTION AND RELEASE
Effective as of September 8, 1995:
1. Assignment. RW Hotel Investment Partners, L.P., a Delaware
limited partnership ("Assignor"), hereby transfers all of the right,
title and interest of "Investor" under the foregoing agreement to RW
Hotel Investment Associates, L.L.C., a Delaware limited liabilty
company ("Assignee").
2. Assumption. Assignee hereby assumes all of the obligations
and liabilities of Investor under the foregoing agreement.
3. Release. Ridgewood Properties, Inc. and Ridgewood Hotels,
Inc. hereby consent to such transfer and assignment and agree that
Assignor and its general partner are hereby released from any and
all liability and obligations under the foregoing agreement or any
document executed in connection therewith.
ASSIGNOR:
RW HOTEL INVESTMENT PARTNERS, L.P.
a Delaware limited partnership,
By: RW HOTEL INVESTORS, INC.,
a Delaware corporation,
General Partner
By: ____________________________
Name: __________________________
Title: _________________________
OPERATOR:
RIDGEWOOD PROPERTIES, INC.,
a Delaware corporation
By: _____________________________
Name: ___________________________
Title: __________________________
OPERATOR SUBSIDIARY
RIDGEWOOD HOTELS, INC.,
a Georgia corporation
By: _____________________________
Name: ___________________________
Title: __________________________
ASSIGNEE:
RW HOTEL INVESTMENT ASSOCIATES,
L.L.C.,
a Delaware limited liability
company
By: FARALLON CAPITAL MANAGEMENT,
INC.,
a Delaware corporation,
Manager
By: ____________________________
Name: __________________________
Title: _________________________
TABLE OF DEFINED TERMS
Term Page
"Agreement" Exh. "C"
"Approved Budget" Exh. "E"
"Approved Rehab Budget" Exh. "F"
"Assignment" 5
"Bankruptcy/Dissolution Event" 8
"Business Plan" 1
"Closing" 2; 9
"Closing Certificate" 10
"Closing Conference" 9
"Closing Date" 9
"Closing Procedure Letter" 9
"Construction Management Agreement" 5
"Contractors" Exh. "F"
"Deposit" 2
"Deposit Agreement" 2
"Deposit Note" 2; 4
"Developer" 1
"Escrow Agent" 2
"Examination Period" 2
"FF&E Reserve" Exh. "E"
"Institutional Investor" Exh. "C"
"Investor" 1
"Management Agreement" 5
"Manager" 5
"Operating Budget" 1
"Operator" 1
"Operator Subsidiary" 1
"Owner" 5
"Partnership" 1
"Partnership Agreement" 1
"Project" Exh. "F"
"Project Financing" 2
"Property" 2
"Proposed Encumbrance" Exh. "C"
"Proposed Lender" Exh. "C"
"Proposed Loan" Exh. "C"
"Purchase Agreement" 1
"Qualified Credit Facility" 2
"Rehab Budget" 1
"Requirements" 3
"Required Financing Terms" 2; Exh. "C"
"Required Improvements" Exh. "F"
"Requirements" 3
"Title Policy" 8
EXHIBIT LIST
A Purchase Agreement
B Form of Partnership Agreement
C Required Financing Terms
D Due Diligence Checklist
E Management Agreement Parameters
F Construction Management Agreement Parameters
EXHIBIT "A"
PURCHASE AGREEMENT
[SEE ATTACHED]
EXHIBIT "B"
FORM OF PARTNERSHIP AGREEMENT
[SEE ATTACHED]
EXHIBIT "C"
REQUIRED FINANCING TERMS
The following requirements constitute the "Required Financing
Terms" referred to in the agreement (this "Agreement") to which this
Exhibit is attached and of which this Exhibit is a part. Except as
otherwise indicated, each capitalized term used herein shall have
the meaning set forth for the same elsewhere in this Agreement.
Without limitation on the other requirements set forth in this
Agreement, any financing (the "Proposed Loan"), as well as the note
(the "Proposed Note") evidencing the same and the deed of trust and
other security instruments (collectively, the "Proposed
Encumbrance") securing the same, must satisfy each of the
requirements set forth in this Exhibit, except for any deviation
therefrom specifically approved in writing by Investor.
1. Proposed Lender. The lender ("Proposed Lender") under
the Proposed Loan must be an "Institutional Investor" (which, as
used herein, means a banking institution, building and loan
association, pension fund, municipal or state employees' or
teachers' retirement fund, real estate investment trust, federal or
state savings and loan association, savings bank or insurance
company) reasonably satisfactory to the Partners.
2. Fees, Points and Other Charges. Any application fees,
xxxxxxx money deposits, commitment fees, points and other charges
must be approved in writing by Investor.
3. Amount. The principal amount of the Proposed Note
must not exceed an amount which, when added to the maximum amount of
any other loans to which the "Partnership Property" (as defined in
the Partnership Agreement") is then subject or is then to be subject
(assuming that any possible achievement or other fundings will in
fact be funded), equals 70% of the then-current fair market value of
the Partnership Property.
4. Debt Service Coverage. The debt service under the
Proposed Loan shall be such that the following debt service coverage
requirement is satisfied (and Developer shall deliver to Investor
evidence reasonably satisfactory to Investor of the satisfaction of
such requirement): The then stabilized net operating income (or, if
less, the then actual net operating income from the Partnership
Property) shall be no less than 150% of the sum of the aggregate
annual amount of monthly payments of principal and interest payable
under the Proposed Loan and any other loans to which the Partnership
Property is then subject or is then to be subject (assuming that any
possible future achievement or other fundings will in fact be
funded).
5. Nonrecourse Loan; Security. The Proposed Loan must be
nonrecourse, and Proposed Lender must expressly agree in the
Proposed Note and the Proposed Encumbrance to look solely to the
Partnership Property for repayment of the Proposed Loan. There may
be customary exceptions from the nonrecourse provisions for fraud or
intentional misrepresentation, intentional misappropriation of
rents, security deposits, casualty and condemnation proceeds or
other proceeds from the Partnership Property, and violations of
environmental laws; however, the Proposed Lender's recourse with
respect to such exceptions shall be limited to the assets of the
Partnership or the general partners thereof (and their respective
constituents and principals). In no event may the Proposed Loan be
secured by real or personal property other than the Partnership
Property; and in no event may the Proposed Loan be guaranteed by any
individual, partnership, corporation or other entity without
Investor's prior written consent.
6. Security Instruments. The Proposed Encumbrance may
include only the following instruments: (a) a first mortgage or
first deed of trust which shall cover only the Partnership Property;
(b) a security agreement covering the personal property included in
the Partnership Property; (c) an assignment of the tenant leases of
space in the building included in the Partnership Property; (d) an
assignment of rents covering the receipts under such tenant leases;
and (e) such other instruments as may be reasonably requested by
Proposed Lender (provided that the terms of such documents otherwise
comply with these Required Financing Terms).
7. Exculpation of Partners. The Proposed Note and
Proposed Encumbrance shall each contain an express provision to the
effect that no personal liability or cost or expense of any kind or
nature may be imposed upon or result to any Partner or any advisor,
member, trustee, director, officer, partner, employee, beneficiary,
shareholder or agent of any Partner or any direct or indirect
partner of any Partner (including Farallon Capital Management,
Inc.), directly or indirectly, by reason of or in connection with
the Proposed Loan, the Proposed Note and Proposed Encumbrance;
provided, however, that the Proposed Note and the Proposed
Encumbrance may contain an exception to the exculpatory provisions
under which the general partners of the Partnership may have
personal liability for fraud or intentional misappropriation of
funds.
8. Dragnets; Cross Defaults. The Proposed Encumbrance
may not secure (and no rights will be exercisable thereunder by
reason of breach or default under) any obligation, indebtedness,
claim or right other than (a) the Proposed Note executed in
connection therewith (including any modifications, extensions or
renewals thereof), and (b) the covenants relating to the Partnership
Property made in such Proposed Encumbrance. Without limitation on
the generality of the foregoing, the Proposed Encumbrance will not
secure any monetary debts or obligations except those evidenced by
the Proposed Note or consisting of costs and charges related to
enforcement of covenants in the Proposed Encumbrance upon default.
9. Changes in Terms of Proposed Loan. The Proposed
Encumbrance must provide that Proposed Lender may not, without the
prior written consent of all Partners, agree to (a) renew or extend
the Proposed Loan or (b) change any economic terms or conditions or
materially change any non economic terms or conditions of the
Proposed Note or Proposed Encumbrance (including any increase in the
amount of the Proposed Loan).
10. No Equity Participation. The Proposed Lender shall
not be given any equity participation. The Proposed Loan may not
permit any interest to accrue without being paid within one month;
and no additional interest, percentage interest or contingent
interest (including any interest based on a percentage or share of
gross or net income or of sale, financing, insurance or condemnation
proceeds) may be payable under or in connection with the Proposed
Loan.
11. Interest. The Proposed Loan must provide for
interest at a rate approved by Investor. There shall be no interest
accruals, any interest being payable monthly on a current basis.
12. Monthly Payments; Amortization. The Proposed Loan
may provide for monthly payments and amortization approved by
Investor.
13. Prepayment. Prepayment must be permitted, in whole
or in part, without premium or penalty (other than a customary
yield maintenance formula that will not apply during the 90 day
period prior to maturity).
14. Term; Maturity. The Proposed Loan must have a term
of not less than 5 years (i.e., the maturity date of the Proposed
Loan must not occur, absent acceleration due to default, prior to
the date which is 5 years after the first funding of the Proposed
Loan). Proposed Lender must have no right to "call" (i.e.,
accelerate without cause) the Proposed Loan without at least nine
months' prior written notice and in no event prior to the end of the
5th year.
15. Notice. The Proposed Encumbrance and the Proposed
Note must provide that before taking any action by reason of any
default under the Proposed Encumbrance or Proposed Note, Proposed
Lender must give not less than five days' written notice to the
Partnership (in the case of a monetary default) and 30 days' written
notice to the Partnership of such default (in the case of
nonmonetary default), and the Partnership shall have the right to
cure the default within the five day period (in the case of monetary
default) and to commence curing the default within such 30-day
period and to thereafter diligently prosecute such cure to
completion (in the case of a nonmonetary default).
16. Due on Sale or Encumbrance. The Proposed Note and
Proposed Encumbrance may not restrict or limit the sale, assignment,
encumbrance or transfer of the Partnership Property (or any portion
thereof) or any interest in the Partnership Property or in the
Partnership, except upon such reasonable conditions as Proposed
Lender may impose.
17. Insurance and Condemnation Proceeds. The Proposed
Encumbrance must provide that insurance and condemnation proceeds
are to be released for the purpose of effecting repairs and
restoration of the Partnership Property connected with the damage,
loss or taking which resulted in such insurance or condemnation
proceeds, subject to such reasonable conditions as Proposed Lender
may impose.
18. Other Terms. The other terms and provisions of the
Proposed Note and Proposed Encumbrance shall be satisfactory to
Investor and may not be more onerous or disadvantageous to the
Partnership than the provisions contained in then market loans under
similar circumstances.
EXHIBIT "D"
DUE DILIGENCE CHECKLIST
I. COLLECTION OF INFORMATION
Collection of information concerning the hotel, including:
A. FINANCIAL.
Audited annual profit and loss statements, with full
supporting schedules, for the past five years.
Most recent year-to-date profit and loss statement with
comparison to previous year.
Monthly profit and loss statements, with full supporting
schedules, for the past three years.
Audited balance sheet for the past five years.
B. OPERATIONS.
1. Occupancy and rates
Occupancy and average rate by month for the past
three years.
Detailed list of advanced reservations and bookings,
including name of party, deposit received, rate
guaranteed, dates, status, and other pertinent
information.
2. Capital Expenditures. Capital expenditures for the
past five years, with any current estimates for
future expenditures, including any PIP expenditures
required by franchisor.
3. Taxes. Real and personal property tax bills for the
past three years.
4. Insurance. List of all insurance coverage, including
cost and expiration.
5. Services and Supplies. List of all purveyors and
sources of supplies and services.
6. Inventory. List of inventory.
7. Payroll. List of employees, including name,
position, salary and wage scale, and benefits to
which they are entitled.
8. Leasing. List of all tenants, rent rolls, deposits,
and terms of leases.
C. FRANCHISE INFORMATION.
Franchise inspection and deficiency reports for the past
two years.
Franchise reservation reports for the past two years.
D. FINANCING.
Copies of all notes and mortgages currently encumbering
the property.
Estoppel (or payoff) letter from any mortgagee.
E. INTELLECTUAL PROPERTY.
Copies of all trademarks, trade names, and copyrights.
F. MARKET INFORMATION.
Copies of all recent (i.e., within the past three years)
appraisals, market studies and marketing plans.
G. PHYSICAL.
Architectural and engineering plans and specifications.
Engineering and soil reports, and environmental audits.
Recent health, fire, building, and elevator inspection
reports.
Physical inventory of FF&E, supplies, consumables, and
inventories.
H. LEGAL.
1. Litigation. Details of any litigation pending
against the hotel.
2. Compliance. Copies of liquor licenses and any other
required licenses, permits or governmental
authorizations.
3. Contracts. Copies of all service contracts, leases,
franchises, employee contracts, permits, management
agreements, union agreements, and any instruments
that the purchaser is expected to assume.
4. Title. Survey (as built), legal description, most
recent title policy, commitment or report and copies
of all documents affecting title.
II. ANALYSIS
Analyze all information collected and, without limitation,
undertake the following:
A. MARKET ANALYSIS.
Conduct or commission an economic market study [and
appraisal].
B. PROPERTY INSPECTION.
Thorough property inspection and evaluation and an
in depth review of all physical components of the
property, including: mechanical, electrical, plumbing,
and structural elements, as well as telephone, electronic,
and computer systems and items of decor. This review
should be performed by an engineer approved by Investor
who is familiar with the industry.
C. FINANCIAL AUDIT.
An audit of operating statements and other financial
information relied upon by the purchaser. This audit
should be performed by an accountant approved by Investor
with experience in the industry.
D. TITLE REVIEW.
A review of the various factors that could affect the
title to a property. A title search should be performed
by a title insurance company approved by Investor and the
documents affecting title and a survey should be reviewed
by counsel approved by Investor.
E. PROPERTY TAX VERIFICATION.
An investigation into the current status of the tax
assessment imposed on the property. When a hotel is sold,
the local taxing jurisdiction is likely to investigate the
terms of the sale and possibly adjust the property's
assessed value upward to reflect the sale price. A new
assessed value (with the resulting increase in property
taxes) could adversely affect the property's future cash
flow. A property tax verification shall be performed by a
knowledgeable property tax consultant approved by Investor
to: (1) provide an accurate estimate of future tax
liabilities; and (2) assist in minimizing any upward
adjustment made by the assessor.
F. ENRIVONMENTAL INSPECTION.
An inspection made by a qualified engineer approved by
Investor to disclose any potential environmental hazards
(e.g. subsurface toxic waste materials) that may exist on
or within the property site.
G. LEGAL VERIFICATIONS.
An investigation undertaken by an attorney approved by
Investor into all the property's licenses, permits,
franchises, and other documents to determine (1) whether
they can be freely transferred from the seller to the
buyer and (2) whether the property is in compliance with
applicable laws (and if such compliance has been waived
because the property is "grandfathered", whether
compliance will be required in the event of substantial
damage or alterations).
EXHIBIT "E"
MANAGEMENT AGREEMENT PARAMETERS
The terms of the Management Agreement shall be as follows (or
as otherwise agreed upon by Investor and Operator):
Term: Until December 31, 2000, subject to early termination
(at the election of Investor on behalf of the
Partnership) for cause, including default,
bankruptcy/dissolution events, change in ownership,
control or operation of Operator, termination of
Operating Subsidiary as the General Partner of the
Partnership, sale, casualty, condemnation of the
Property, or termination of the Partnership.
Obligations: Operator will have all of the customary third party
manager obligations relating to hotel management and
operations and without limitation, will have its own
employees (so that the Partnership will not be
required to hire employees) to carry out its
responsibilities under the Management Agreement
(provided that, to the extent specifically permitted
under the Operating Budget, full time on site
employees may be employed by Ridgewood Hotels, Inc.
so long as their sole responsibilities for Ridgewood
Hotels, Inc. is as on site employees for the Property
and they are not employees of Owner). Such
obligations will include the preparation of an annual
budget and monthly updates (which shall be subject to
the approval of Investor on behalf of the
Partnership, and as approved shall be referred to as
the "Approved Budget"), maintenance of books and
records, maintenance and repair, procuring and
maintaining insurance, advertising and promotions,
leasing rooms and other facilities on a daily basis,
collection of revenue and generation of monthly
reports, the making of payments on behalf of the
Partnership, monitoring compliance with the
obligations of and restrictions upon the Property
(including all obligations under the Holiday Inn or
other franchise agreement applicable to the
Property), negotiating (and presenting them to the
Partnership for approval) contracts and rental
agreements, recommending legal action, and
maintaining and utilizing a furniture, fixtures and
equipment reserve ("FF&E Reserve") for such Property,
which shall be established from monthly available net
cash flow from the Property in an amount equal to 4%
of the monthly gross revenues from the Property (or
such other amount as may be approved by Investor on
behalf of the Partnership).
Compensation: Operator shall be entitled to the following property
management fees: (1) on the 15th day of each month,
Operator shall be entitled to 2.5% of the gross
revenues from the Property for the prior month, which
will be paid concurrently with the delivery of the
monthly report for the Property; and (2) concurrently
with the delivery of the annual report for the
Property for each whole or partial calendar year
during the term of the Management Agreement, Operator
shall be entitled to an additional incentive fee
equal to 1% of the gross revenues from the Property
for such year, but only if the aggregate "Net
Operating Income" (which, for a particular period,
means the "Distributable Cash", as defined in the
Partnership Agreement, for such period with the
following adjustments: (i) no sale proceeds or
financing proceeds shall be included in Distributable
Cash; (ii) there shall be no deduction for principal
or interest payments under any loan to the
Partnership; (iii) costs that are capitalized and
then included in "Qualified Aggregate Acquisition
Costs" shall not be deducted as expenses; and (iv) no
income or expense from property not owned by the
Partnership at the end of such period shall be taken
into account, on an annualized basis for a particular
year, but in any case after payment of all incentive
management fees contemplated by this clause (2))
equals or exceeds 13.5% of the then "Aggregate
Acquisition Costs" (which, as of a particular date,
means the following costs, to the extent paid or
incurred by the Partnership on or before such date,
by the Partnership: purchase price, due diligence
costs, closing costs, PIP costs and other costs that
would normally be capitalized and are required to be
capitalized under generally accepted accounting
principles as part of the acquisition cost of such
property); provided, however, that the fees described
in clauses (1) and (2) above shall be reduced by any
construction cost overruns that have not been offset
by construction management fees, pursuant to the
Construction Management Agreement. "Qualified
Aggregate Acquisition Costs" as of a particular date
means the aggregate purchase prices actually paid on
or before such date by the Partnership for
Partnership Property then or theretofore owned by the
Partnership as to which all rehabilitation work and
other capital improvements contemplated by the
Business Plan (including any work required by the
Holiday Inn Property Improvement Plan or similar
franchise program) have been completed and paid for
and approved in writing by Holiday Inns Franchising,
Inc. or other applicable franchisor. No other
compensation shall be payable to Operator in
connection with the Management Agreement (including
any leasing or rental commissions or brokerage fees).
Notwithstanding the foregoing, there will be no
property management fees payable pursuant to clauses
(1) or (2) above with respect to the 12-month period
commencing upon the Closing. Operator shall be
entitled to its reasonable, out-of-pocket third party
expenses in connection with the performance of its
duties under the Management Agreement but only to the
extent the same are described in and are within the
limits set forth in the Approved Budget.
Other Terms: The form of the Management Agreement shall
incorporate the foregoing parameters and shall
otherwise be subject to the reasonable approval of
Operator and Investor.
EXHIBIT "F"
CONSTRUCTION MANAGEMENT AGREEMENT PARAMETERS
The terms of the Construction Management Agreement shall be as
follows (or as otherwise agreed upon by Investor and Operator):
Term: The earlier of (a) completion of the improvements which
are the subject of the Construction Management
Agreement, and delivering to Owner evidence (to be
specified) that such completion has occurred in
accordance with the Construction Management Agreement,
subject to early termination (at the election of
Investor on behalf of the Partnership) for cause,
including default, bankruptcy/dissolution events, change
in ownership, control or operation of Operator,
termination of Operating Subsidiary as the General
Partner of the Partnership, sale, casualty, condemnation
of the Property, or termination of the Partnership.
Obligations:Operator will have all of the customary third party
construction management obligations relating to the
planning, development, construction and completion of
certain improvements to the Property, as such
improvements are designated by Investor on behalf of the
Partnership in the Construction Management Agreement
(which such improvements shall include any improvements
required under any franchise agreement applicable to the
Property or any other improvements as may be agreed upon
by the partners in the Partnership, and shall be known
collectively as the "Required Improvements"). Operator
shall be responsible for the preparation of the budget
for such Required Improvements and monthly updates
thereof (which shall be subject to the approval of
Investor on behalf of the Partnership, and as approved
shall be referred to as the "Approved Rehab Budget") .
Operator will have its own employees (so that the
Partnership will not be required to hire employees) to
carry out its responsibilities under the Construction
Management Agreement, but shall retain third party
independent contractors (collectively, "Contractors"),
such as architects, engineers, contractors and
attorneys, interior designers, landscape architects and
other consultants which are necessary or desirable in
connection with the project contemplated by the Approved
Rehab Budget (the "Project"), provided such Contractors
are approved by the Partnership and are contemplated by
the Approved Rehab Budget. Operator is to administer,
supervise and coordinate with the Contractors on behalf
of the Partnership in order to complete the Project in
accordance with the Approved Rehab Budget, all
applicable laws and the plans and specifications for the
Project approved by the Partnership. Operator shall
perform other normal development functions including
negotiating contracts with such Consultants (and
presenting them to the Partnership for approval),
procuring of all governmental permits and approvals,
establishing and maintaining appropriate books and
financial records and cost control systems for the
Project, and making monthly financial reporting to the
Partnership.
Compensation: Operator shall be entitled to a construction
management fee equal to 3.5% of hard and third party
soft construction costs in the Approved Rehab Budget,
which shall be paid upon completion of the Project.
Any cost overruns from the Approved Rehab Budget
shall be netted dollar for dollar against such
construction management fee and, to the extent any
portion of such cost overruns have not been offset,
the same shall be netted dollar for dollar against
the fees under the Management Agreement). However,
any subsequent cost savings shall result in
reimbursement of any fees previously netted in the
amount of or equal to such savings. Notwithstanding
the foregoing, there will be no construction
management fees payable to Operator in connection
with the Project. No other compensation shall be
payable to Operator in connection with any
Construction Management Agreement. Operator shall be
entitled to its reasonable, out of pocket third party
expenses in connection with the performance of its
duties under the Construction Management Agreement
but only to the extent the same are described in and
are within the limits set forth in the Approved
Budget.
Other Terms: The form of the Construction Management Agreement
shall incorporate the foregoing parameters and shall
otherwise be subject to the reasonable approval of
Operator and Investor.
