SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission file number 0-14019
Ridgewood Properties, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 58-1656330
- ------------------------------- ------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia
30339
- -------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(404) 434-3670
----------------------------------------------------
(Registrant's telephone number, including area code)
N/A
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes __X__ No _____
Common stock, par value $.01 per share - 963,480 shares outstanding
at November 30, 1995.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
NOVEMBER 30, 1995 AND AUGUST 31, 1995
-------------------------------------
($000'S omitted, except per share data)
---------------------------------------
<CAPTION>
(Unaudited)
November 30, August 31,
ASSETS 1995 1995
------ ----------- -----------
<S> <C> <C>
Real Estate Investments:
Real Estate Properties
Operating Properties $ 1,438 $ 1,461
Land Held for Sale or
Future Development 9,891 10,104
------------ ------------
11,329 11,565
Mortgage Loans 7 44
------------ ------------
Total real estate investments 11,336 11,609
Allowance for Possible Losses (4,700) (4,700)
------------ ------------
Net real estate investments 6,636 6,909
Investment in Limited Partnership 232 232
Cash and Cash Equivalents 1,567 1,880
Other Assets 682 652
------------ ------------
$ 9,117 $ 9,673
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED BALANCE SHEETS
---------------------------
NOVEMBER 30, 1995 AND AUGUST 31, 1995
-------------------------------------
($000's omitted, except per share data)
---------------------------------------
<CAPTION>
(Unaudited)
November 30, August 31,
LIABILITIES AND SHAREHOLDERS' INVESTMENT 1995 1995
---------------------------------------- ------------ ------------
<S> <C> <C>
Accounts Payable $ 56 $ 102
Accrued Salaries, Bonuses and
Other Compensation 748 737
Accrued Property Tax Expense 119 146
Accrued Interest and Other Liabilities 233 280
Term Loans 2,790 2,796
------------ ------------
Total Liabilities 3,946 4,061
------------ ------------
Commitments and Contingencies
Shareholders' Investment
Series A Convertible Preferred Stock,
$1 par value, 1,000,000 shares authorized, 450,000
shares issued and outstanding at November 30, 1995
and August 31, 1995, liquidation preference
and callable at $3,600,000. 450 450
Common Stock, $.01 par value, 5,000,000
shares authorized, 963,480 shares issued and
outstanding at November 30, 1995 and
August 31, 1995. 10 10
Paid-in Surplus 16,151 16,196
Accumulated Deficit since December 30, 1985 (11,440) (11,044)
------------ ------------
5,171 5,612
------------ ------------
$ 9,117 $ 9,673
============ ============
<FN>
The accompanying notes are an integral part of these consolidated
financial statements.
</FN>
<PAGE>
</TABLE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
STATEMENTS OF CONSOLIDATED LOSS
-------------------------------
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1995 AND NOVEMBER 30, 1994
------------------------------------------------------------------
($000's omitted, except per share data)
---------------------------------------
<CAPTION>
For the Three Months Ended
-----------------------------
November 30, November 30,
1995 1994
------------ ------------
<S> <C> <C>
REVENUES:
Operating revenues from real estate properties..... $ 520 $ 756
Revenues from hotel management .................... 58 --
Sales of real estate properties ................... 235 --
Income from loans and temporary investments ....... 23 39
Other ............................................. -- 3
------------- -------------
836 798
------------- -------------
COSTS AND EXPENSES:
Expenses of real estate properties ................ 549 738
Expenses of hotel management ...................... 44 --
Expenses of real estate sales ..................... 180 --
Allowance for possible losses ..................... -- 50
Depreciation ...................................... 39 118
Interest expense .................................. 85 116
General, administration and other ................. 295 342
Business development .............................. 40 --
------------- -------------
1,232 1,364
------------- -------------
NET LOSS BEFORE INCOME TAX EXPENSE .................... $ (396) $ (566)
------------- -------------
INCOME TAX EXPENSE .................................... $ -- $ 75
------------- -------------
NET LOSS .............................................. $ (396) $ (641)
============= =============
LOSS PER SHARE ........................................ $ (0.46) $ (0.70)
============= =============
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
-------------------------------------------
CONSOLIDATED STATEMENT OF CASH FLOWS
------------------------------------
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1995 AND NOVEMBER 30, 1994
------------------------------------------------------------------
Decrease in Cash and Cash Equivalents
-------------------------------------
($000's Omitted)
----------------
<CAPTION>
1995 1994
---------- ----------
<S> <C> <C>
Cash flows from operating activities:
Net loss ...................................................... $ (396) $ (641)
Adjustments to reconcile net loss to net
cash used by operating activities:
Depreciation and amortization ............................. 35 126
Increase in allowance for possible losses ................. -- 50
Gain from sales of real estate property ................... (55) --
Decrease (increase) in other assets ....................... (35) 119
Decrease in accounts payable and
accrued liabilities ..................................... (109) (279)
---------- ----------
Total adjustments ......................................... (164) 16
---------- ----------
Net cash used by operating activities ..................... (560) (625)
Cash flows from investing activities:
Principal payments received on mortgage loans ............... 37 --
Proceeds from sales of real estate .......................... 275 --
Additions to real estate properties ......................... (14) (49)
---------- ----------
Net cash received (used) from investing activities ........ 298 (49)
Cash flows from financing activities:
Repayments of notes payable ................................. (6) (543)
Dividend payment ............................................ (45) (36)
---------- ----------
Net cash used by financing activities ..................... (51) (579)
---------- ----------
Net decrease in cash and cash equivalents ....................... $ (313) $ (1,253)
Cash and cash equivalents at beginning of period ................ 1,880 2,804
---------- ----------
Cash and cash equivalents at end of period ...................... $ 1,567 $ 1,551
========== ==========
<FN>
The accompanying notes are an integral part of these consolidated financial statements.
</FN>
</TABLE>
<PAGE>
RIDGEWOOD PROPERTIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOVEMBER 30, 1995 AND NOVEMBER 30, 1994
(Unaudited)
1. GENERAL:
Ridgewood Properties, Inc. (the "Company") is primarily
engaged in the business of acquiring, developing, operating and
selling real estate property in the Southeast and "Sunbelt" areas.
Additionally, the Company, through its investment in a limited
partnership, is engaged in acquiring and managing hotel properties in
the Southeast. Currently, the Company's only operating property is
the hotel in Longwood, Florida. All of the Company's other
properties are land properties held for sale, and no additional
development is currently anticipated for the land. The Company was
incorporated under the laws of the State of Delaware on October 29,
1985. Prior to December 31, 1985, the Company operated under the
name CMEI, Inc.
The Company's common stock is currently listed in the
broker-dealer "Pink Sheets" and trades in the over-the-counter
market. In December 1995, the Company purchased a hotel management
company by issuing 125,000 shares of the Company's common stock. Of
the Company's issued and outstanding shares of common stock (before
the issuance of shares related to the purchase described above),
approximately 42% of the common stock is owned by the Company's
President, N. Russell Walden. After issuance of the shares related
to the purchase of the hotel management company, approximately 37% of
the common stock is owned by the Company's President. All of the
Company's issued and outstanding shares of preferred stock are owned
by Triton Group, Ltd.
The accompanying financial statements of the Company
present the historical cost basis amount of assets, liabilities and
shareholders' investment of the real estate business for the periods
presented. The consolidated financial statements include the
accounts of the Company, its wholly-owned subsidiaries and its joint
venture investments after the elimination of all intercompany
amounts.
2. BASIS OF PRESENTATION:
The accompanying consolidated financial statements have
been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission. In the
opinion of management, the consolidated financial statements reflect
all adjustments, consisting of normal recurring adjustments, which
are necessary to present fairly the financial position, results of
operations and changes in cash flow for the interim periods covered
by this report. Although certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations,
management believes that the disclosures are adequate to make the
information presented not misleading. These financial statements
should be read in conjunction with the audited consolidated financial
statements and notes thereto included in the Company's annual report
for the fiscal year ended August 31, 1995. The results of operations
for the three months ended November 30, 1995 are not necessarily
indicative of the results to be expected for the fiscal year ending
August 31, 1996.
The Company is currently generating net operating loss
carryforwards for both book and tax purposes which may be used to
offset future taxable income. In September 1993, the Company adopted
SFAS 109. The adoption of SFAS 109 did not have a material effect on
the Company's consolidated financial position or results of
operations.
For the purpose of the Statement of Cash Flows, cash
includes cash equivalents which are highly liquid investments with
maturity of three months or less.
3. ALLOWANCE FOR POSSIBLE LOSSES:
No additional allowance for possible losses was necessary
for the three months ended November 30, 1995. The allowance for
possible losses increased by $50,000 for the three months ended
November 30, 1994. The additional reserve was to reflect the net
realizable value on a residential lot in Atlanta, Georgia.
4. COMMITMENTS AND CONTINGENCIES:
In August 1991, each executive officer was offered a
Post-Employment Consulting Agreement (the "Consulting Agreement(s)")
whereby the officer agrees that if he or she is terminated by the
Company for other than good cause, the officer will be available for
consulting at a rate equal to their annual compensation immediately
prior to termination. All officers have chosen to enter into
Consulting Agreements. In addition, one other employee was offered
and has chosen to enter into a one year Consulting Agreement. The
executive, upon termination, agrees to sign an unconditional release
of all claims and liability in exchange for a one year (two
employees) or two year (two employees) consulting fee arrangement,
depending upon the years of service as an officer or the designation
as a senior executive officer.
On May 2, 1995 a complaint was filed in the Court of Chancery
of the State of Delaware (New Castle County) entitled WILLIAM N.
STRASSBURGER V. MICHAEL M. EARLY, LUTHER A. HENDERSON, JOHN C.
STISKA, N. RUSSELL WALDEN, AND TRITON GROUP, LTD., DEFENDANTS, AND
RIDGEWOOD PROPERTIES, INC., NOMINAL DEFENDANT, C.A. NO. 14267 (the
"Complaint"). The plaintiff is an individual shareholder of the
Company who purports to file the Complaint individually,
representatively on behalf of all similarly situated shareholders,
and derivatively on behalf of the Company. The Complaint challenges
the actions of the Company and its directors in consummating the
Company's August 1994 repurchase of its common stock held by Triton
Group, Ltd. and Hesperus Partners Ltd. in five counts, denominated
Waste of Corporate Assets, Breach of Duty of Loyalty to Ridgewood,
Breach of Duty of Good Faith, Intentional Misconduct, and Breach of
Duty of Loyalty and Good Faith to Class.
The Complaint seeks (a) permission of the court to proceed
as a class action with respect to one count; (b) rescission of the
repurchase of Triton's Ridgewood common stock, together with recovery
(to Ridgewood) of the approximately $8 million in cash and the shares
of the preferred stock received by Triton in the repurchase, or in
the alternative, unspecified restitution or damages to Ridgewood
resulting from the Triton repurchase; (c) unspecified restitution or
damages to Ridgewood resulting from the Hesperus repurchase; (d)
unspecified damages to Ridgewood resulting from the alleged breaches
of the defendants' duties of loyalty and good faith and their alleged
intentional misconduct; (e) unspecified damages for any separate
injury allegedly suffered by members of the purported class; and (f)
the plaintiff's costs and expenses of this litigation, including
attorneys' fees.
The Company has answered the Complaint, denying all
allegations of wrongdoing either on its part or that of its
directors. The Company's management believes the claims made in the
Complaint are without merit, and that the shareholders of Ridgewood
benefited from the challenged transactions. Management intends to
vigorously contest this matter.
As more fully described in Note 7, the Company is required
to fund certain capital contributions to RW Hotel Partners, L.P. as
the partnership acquires hotels.
5. SHAREHOLDERS' INVESTMENT:
Loss Per Common Share --
Loss per common share is calculated based upon the
weighted average number of shares outstanding of approximately
963,000 for the three months ended November 30, 1995 and 1994.
Stock Option Plan --
On March 30, 1993, the Company granted options to purchase
378,000 shares of common stock at a price of $1.83 per share to its
key employees and one director under the Ridgewood Properties, Inc.
Stock Option Plan (the "Plan"). The options will vest over a four
year period in 25% increments. All options expire ten years from the
date of grant, unless earlier on account of death, disability,
termination of employment, or for other reasons outlined in the Plan.
As of November 30, 1995, approximately 284,000 options are currently
exercisable.
On January 28, 1994, the Company granted options to
purchase 375,000 and 75,000 shares of common stock at a price of
$1.00 per share to its President and Chief Financial Officer,
respectively, under the Plan. The options are exercisable
immediately and expire on January 31, 1997.
On January 4, 1995, the shareholders of the Company
approved an increase in the number of authorized shares reserved for
the Company's stock option plan from 900,000 to 1,200,000.
6. NOTES PAYABLE:
In November 1989, the Company entered into a $15,000,000
Revolving Line of Credit with a commercial bank. Effective December
31, 1991, the Company's Revolving Line of Credit expired and the
outstanding principal balance of $15,000,000 was converted to a term
loan. In January 1992, the term loan was amended to postpone
principal payments for seven months. Under the amended agreement,
the interest accrued at the rate of one percent (1%) per annum above
the prime rate of the lender. Under the term loan agreement, the
Company was required to make interest payments on the outstanding
principal balance of the note, which payments commenced on February
1, 1992, and monthly thereafter through December 1, 1996. Commencing
on September 1, 1992, and thereafter on the first day of each month
through December 1, 1996, the outstanding principal amount of the
note shall be repaid in equal monthly payments. In June 1994, the
loan agreement was amended whereby proceeds from future sales of
property securing the term loan will serve to reduce the remaining
monthly amortization thereby reducing the monthly payment rather than
reducing the remaining principal due at the end of the term loan. On
January 1, 1997, the remaining outstanding principal balance was to
be payable in full. The entire loan was repaid in full in June 1995.
In June 1995, the Company entered into a loan with a
commercial lender to refinance the Ramada Inn in Longwood, Florida.
The loan proceeds are $2,800,000. The loan is for a term of 20 years
with an amortization period of 25 years, at the rate of 10.35%.
Principal and interest payments are approximately $26,000 per month
beginning August 1, 1995. In addition, the Company is required to
make a repair escrow payment comprised of 4% of estimated revenues,
as well as real estate tax and insurance escrow payments. The total
amount for these items will be a payment of approximately $20,000 per
month and can be adjusted annually. The escrow funds will be used as
tax, insurance and repair needs arise. As of November 30, 1995,
there was approximately $200,000 of escrowed funds related to this
loan agreement. Also, commitment fees and loan costs of
approximately $159,000 are being amortized over 20 years. The
balance of this loan as of November 30, 1995 was approximately
$2,796,000.
Maturities of long-term debt during the Company's next five
fiscal years are as follows: 1996 - $25,000; 1997 - $28,000; 1998 -
$31,000; 1999 - $35,000; 2000 - $38,000.
7. INVESTMENT IN LIMITED PARTNERSHIP:
On August 16, 1995, RW Hotel Partners, L.P. was organized
as a limited partnership (the "Partnership") under the laws of the
State of Delaware. Concurrently, the Company formed Ridgewood
Hotels, Inc., a Georgia corporation ("Ridgewood Hotels") which became
the sole general partner in the Partnership with RW Hotel
Investments, L.L.C. ("Investor") as the limited partner. Ridgewood
Hotels has a 1% base distribution percentage versus 99% for the
Investor. However, distribution percentages do vary depending on
certain defined preferences and priorities pursuant to the
Partnership Agreement ("Agreement") which are discussed below. The
partnership was formed to acquire a hotel property in Louisville,
Kentucky. The terms of this partnership will serve as a guideline
for other potential acquisitions with the Investor or its affiliates.
The Partnership Agreement was amended and restated on
September 8, 1995. Distributable Cash is defined as the net income
from the property before depreciation plus any net sale proceeds and
net financing proceeds less capital costs. Distributions of
Distributable Cash shall be made as follows:
- First, to the Investor until there has been distributed
to the Investor an amount equal to a 15% cumulative internal rate of
return on the Investor's investment.
- Second, to Ridgewood Hotels until the aggregate amount
received by Ridgewood Hotels equals the aggregate cash contributions
made by Ridgewood Hotels to the Partnership (as of 8/31/95, Ridgewood
Hotels contributed approximately $232,000).
- Third, 12% to Ridgewood Hotels and 88% to the Investor
until there has been distributed to the Investor an amount equal to a
25% cumulative internal rate of return on Investor's investment.
- Fourth, 75% of the residual to the Investor and 25% to
Ridgewood Hotels.
A Management Agreement exists between the Partnership and
the Company as Manager ("Manager") for the purpose of managing a
hotel in Louisville, Kentucky. The Manager shall be entitled to the
following property management fees:
(1) 2.5% of the gross revenues from the hotel property.
(2) 1% of the gross revenues from the hotel property as an
incentive fee if distributable cash equals or exceeds 13.5% of
certain aggregate acquisition costs. No management fees are payable
with respect to the first 12-month period of management of this
hotel.
A Construction Management Agreement exists between the
Partnership and the Manager for the purpose of managing future
improvements to the property.
The Company currently has approximately $232,000 invested
in the Partnership. The Partnership purchased a hotel in Louisville,
Kentucky for approximately $16,000,000. In December 1995, the
Partnership purchased four hotel properties in Georgia for
approximately $15,000,000. The Company's capital contribution to the
Partnership in conjunction with the purchases was approximately
$500,000, and the Company was reimbursed for approximately $73,000 of
due diligence costs related to the hotels. See the Subsequent Events
footnote below. One other hotel is under contract to be purchased by
the partnership for an aggregate cost of approximately $4,000,000,
and would require approximately $40,000 in additional capital
contribution to the Partnership by the Company. The Company also has
approximately $11,000 of due diligence costs incurred for the hotel
under contract that will be reimbursed to the Company upon the
closing of the hotel. These costs are reflected in Other Assets.
The Company may make future capital contributions to the Partnership.
Management expects to fund such capital contributions through
available cash or from loans from the Partnership. Additionally, the
Company may invest in other partnerships to acquire hotels in the
future.
8. SUBSEQUENT EVENTS:
In December 1995, the Company purchased a hotel management
company by issuing 125,000 shares of the Company's common stock. The
purpose of this wholly-owned subsidiary is to acquire hotel
management contracts and/or interests in hotels around the country.
The subsidiary is currently operating at breakeven. In conjunction
with the Company's purchase of the hotel management company, two
executive officers of the management company were offered a Post-
Employment Consulting Agreement (the "Consulting Agreement(s)")
whereby the officer agrees that if he is terminated by the Company
for other than good cause, the officer will be available for
consulting at a rate equal to his annual compensation immediately
prior to termination. Both officers have chosen to enter into
Consulting Agreements. The executive, upon termination, agrees to
sign an unconditional release of all claims and liability in exchange
for a one year consulting fee arrangement, depending upon the years
of service as an officer or the designation as a senior executive
officer.
In December 1995, RW Hotel Partners, L.P. (of which one of
the Company's subsidiaries is the general partner -- see Note 7)
acquired four additional hotel properties in Georgia for
approximately $15,000,000. The purchases required approximately
$500,000 in capital contribution to the Partnership by the Company.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THREE MONTHS ENDED NOVEMBER 30, 1994
COMPARED TO THREE MONTHS ENDED NOVEMBER 30, 1993
LIQUIDITY AND CAPITAL RESOURCES --
In June 1995, the Company entered into a loan with a
commercial lender to refinance the Ramada Inn in Longwood, Florida.
The loan proceeds are $2,800,000. The loan is for a term of 20 years
with an amortization period of 25 years, at the rate of 10.35%.
Principal and interest payments are approximately $26,000 per month
beginning August 1, 1995. In addition, the Company is required to
make a repair escrow payment comprised of 4% of estimated revenues,
as well as real estate tax and insurance escrow payments. The total
amount for these items will be a payment of approximately $20,000 per
month and can be adjusted annually. The escrow funds will be used as
tax, insurance and repair needs arise. As of November 30, 1995,
there was approximately $200,000 of escrowed funds related to this
loan agreement.
During the first three months of fiscal year 1996, the Company sold land
in Ohio and Georgia for net proceeds of approximately $204,000 and $10,000,
respectively. Also, in September 1995, the Company was refunded its entire
investment of $61,000 in its joint venture for the purpose of developing a
subdivision lot in Atlanta, Georgia.
On August 16, 1995, RW Hotel Partners, L.P. was organized
as a limited partnership (the "Partnership") under the laws of the
State of Delaware. Concurrently, the Company formed Ridgewood
Hotels, Inc., a Georgia corporation ("Ridgewood Hotels") which became
the sole general partner in the Partnership with RW Hotel
Investments, L.L.C. ("Investor") as the limited partner. Ridgewood
Hotels has a 1% base distribution percentage versus 99% for the
Investor. However, distribution percentages do vary depending on
certain defined preferences and priorities pursuant to the
Partnership Agreement ("Agreement") which are discussed below. The
partnership was formed to acquire a hotel property in Louisville,
Kentucky. The terms of this partnership will serve as a guideline
for other potential acquisitions with the Investor or its affiliates.
The Partnership Agreement was amended and restated on
September 8, 1995. Distributable Cash is defined as the net income
from the property before depreciation plus any net sale proceeds and
net financing proceeds less capital costs. Distributions of
Distributable Cash shall be made as follows:
- First, to the Investor until there has been distributed
to the Investor an amount equal to a 15% cumulative internal rate of
return on the Investor's investment.
- Second, to Ridgewood Hotels until the aggregate amount
received by Ridgewood Hotels equals the aggregate cash contributions
made by Ridgewood Hotels to the Partnership (as of 8/31/95, Ridgewood
Hotels contributed approximately $232,000).
- Third, 12% to Ridgewood Hotels and 88% to the Investor
until there ha been distributed to the Investor an amount equal to a
25% cumulative internal rate of return on Investor's investment.
- Fourth, 75% of the residual to the Investor and 25% to
Ridgewood Hotels.
A Management Agreement exists between the Partnership and
the Company as Manager ("Manager") for the purpose of managing a
hotel in Louisville, Kentucky. The Manager shall be entitled to the
following property management fees:
(1) 2.5% of the gross revenues from the hotel property.
(2) 1% of the gross revenues from the hotel property as an
incentive fee if distributable cash equals or exceeds 13.5% of
certain aggregate acquisition costs. No management fees are payable
with respect to the first 12-month period of management of this
hotel.
A Construction Management Agreement exists between the
Partnership and the Manager for the purpose of managing future
improvements to the property.
The Company currently has approximately $232,000 invested
in the Partnership. The Partnership purchased a hotel in Louisville,
Kentucky for approximately $16,000,000. In December 1995, the
Partnership purchased four hotel properties in Georgia for
approximately $15,000,000. The Company's capital contribution to the
Partnership in conjunction with the purchases was approximately
$500,000, and the Company was reimbursed for approximately $73,000 of
due diligence costs related to the hotels. One other hotel is under
contract to be purchased by the partnership for an aggregate cost of
approximately $4,000,000, and would require approximately $40,000 in
additional capital contribution to the Partnership by the Company.
The Company also has approximately $11,000 of due diligence costs
incurred for the hotel under contract that will be reimbursed to the
Company upon the closing of the hotel. The Company may make future
capital contributions to the Partnership. Management expects to fund
such capital contributions through available cash or from loans from
the Partnership. Additionally, the Company may invest in other
partnerships to acquire hotels in the future.
Since the Company is not currently generating sufficient
operating cash to cover overhead and debt service, the Company must
continue to sell real estate, seek alternative financing or otherwise
recapitalize the Company. The Company also intends to aggressively
pursue the acquisition of hotels and hotel management contracts which
would provide additional cash flow.
RESULTS OF OPERATIONS --
The Company had gains from real estate sales of $55,000 for
the three months ended November 30, 1995. During the three months
ended November 30, 1994, the Company did not sell any real estate.
Gains or losses on sales are dependent upon the specific assets sold
in a particular period and the terms of each sale.
Operating revenues from real estate properties decreased
approximately $236,000, or 31%, for the three months ended November
30, 1995, compared to the three months ended November 30, 1994. The
decrease was primarily a result of the sale of the Company's weekly
rental hotel in Orlando, Florida during fiscal year 1995.
Approximately $74,000 of the decrease was also attributed to the
Company's hotel in Longwood, Florida.
Revenues from hotel management increased approximately
$58,000 for the three months ended November 30, 1995 compared to the
three months ended November 30, 1994 due to the acquisition of a
hotel management company. In turn, expenses of hotel management
increased approximately $44,000 for the three months ended November
30, 1995 compared to the three months ended November 30, 1994.
Operating expenses during the three months ended November
30, 1995 decreased $189,000, or 26%, compared to the three months
ended November 30, 1994 due primarily to the sale of the Company's
weekly rental hotel in Florida. Expenses decreased by approximately
$17,000 at the Company's remaining hotel in Florida for the three months
ended November 30, 1995 compared to the three months ended November 30, 1994.
No provision for possible losses was necessary for the
three months ended November 30, 1995. The provision of $50,000 for
possible losses in fiscal year 1995 pertains to a land parcel in
Atlanta, Georgia which has been sold.
Interest expense decreased approximately $31,000 for the
three months ended November 30, 1995 compared to the three months
ended November 30, 1994 due to the decrease in outstanding debt.
Interest expense during the first three months of fiscal year 1996
and 1995 reflects no capitalized interest.
General, administration and other expenses decreased
approximately $47,000, or 14%, for the three months ended November 30,
1995 compared to the three months ended November 30, 1994 as a result
of reduced overhead due to a smaller business entity.
Due to the Company's aggressive movement into the business
of acquiring, developing, operating and selling hotel properties
throughout the country, the Company incurred business development
costs of $40,000 during the first three months of fiscal year 1996.
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K:
A. Exhibits:
10 Agreement and Plan of Merger Between and Among
Ridgewood Properties, Inc., Ridgewood Acquisition
Corp., Wesley Hotel Group, Inc., Wayne
McAteer and Samuel King dated December 7,
1995
27 Financial Data Schedule
B. Reports on Form 8-K:
No reports on Form 8-K were filed during the
the three months ended November 30, 1995.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
RIDGEWOOD PROPERTIES, INC.
By: /s/ N. R. Walden__________
N. Russell Walden
President
By: /s/ Karen S.
Hughes_______
Karen S. Hughes
Vice President,
Chief Accounting Officer
Date: January 12, 1996
AGREEMENT AND PLAN OF MERGER
between and among
RIDGEWOOD PROPERTIES, INC.,
RIDGEWOOD ACQUISITION CORP.,
WESLEY HOTEL GROUP, INC.,
WAYNE McATEER and SAMUEL KING
dated
December 7, 1995
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (the "Agreement") is
dated as of December 7, 1995, between and among Ridgewood
Properties, Inc. ("Purchaser"), a Delaware corporation; Ridgewood
Acquisition Corp. ("Merger Sub"), a Georgia corporation; Wesley
Hotel Group, Inc. (the "Company"), a Georgia corporation; Wayne
McAteer ("McAteer"), an individual resident of the State of
Georgia, and Samuel King ("King") (collectively with McAteer, the
"Shareholders" and, each individually, a "Shareholder"), an
individual resident of the State of Georgia.
W I T N E S S E T H:
WHEREAS, McAteer owns 800 shares of the Company's common
stock, par value $1.00 per share ("Company Stock"); and
WHEREAS, King owns 200 shares of Company Stock; and
WHEREAS, the Company Stock owned by the Shareholders
constitutes 100% of the issued and outstanding shares of Company
Stock; and
WHEREAS, Purchaser owns all of the outstanding capital
stock of Merger Sub; and
WHEREAS, the respective Boards of Directors of Purchaser,
Merger Sub and the Company have approved this Agreement and the
transactions contemplated hereby in accordance with the require-
ments of applicable law and the Articles or Certificate of
Incorporation and the Bylaws of such party; and
WHEREAS, Purchaser, as the sole shareholder of Merger Sub,
has approved this Agreement and the transactions contemplated
hereby pursuant to action taken by written consent in accordance
with the requirements of applicable law and the Articles of Incor-
poration and Bylaws of each of Merger Sub and Purchaser; and
WHEREAS, the Shareholders of the Company have approved this
Agreement, and the transactions contemplated hereby pursuant to
action taken by unanimous written consent in accordance with the
requirements of applicable law and the Articles of Incorporation
and the Bylaws of the Company; and
WHEREAS, pursuant to Section 368 of the Internal Revenue
Code of 1986, as amended, Purchaser desires to acquire by merger of
Merger Sub into the Company the business of the Company upon the
terms and conditions set forth below;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, the parties hereto hereby agree as
follows:
ARTICLE I
THE MERGER
SECTION 1.1 The Surviving Corporation. Subject to the
terms and conditions of this Agreement and the Georgia Business
Corporation Code (the "GBCC"), at the Effective Time (as herein-
after defined), Merger Sub shall be merged with and into the
Company (the "Merger"), and the separate corporate existence of
Merger Sub shall cease. The Company shall be the surviving
corporation in the Merger (hereinafter sometimes called the
"Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Georgia.
SECTION 1.2 Articles of Incorporation. The Articles of
Incorporation of the Surviving Corporation shall be amended and
restated at and as of the Effective Time to read as did the
Articles of Incorporation of Merger Sub immediately prior to the
Effective Time (except that the name of the Surviving Corporation
will remain unchanged).
SECTION 1.3 Bylaws. The Bylaws of the Surviving Corporation
shall be amended and restated at and as of the Effective Time
to read as did the Bylaws of Merger Sub immediately prior to the
Effective Time (except that the name of the Surviving Corporation
will remain unchanged).
SECTION 1.4 Directors. The directors of Merger Sub
immediately prior to the Effective Time shall become the directors
of the Surviving Corporation, such directors to hold office from
the Effective Time until their respective successors are duly
elected and qualified.
SECTION 1.5 Officers. The officers of the Surviving
Corporation shall consist of McAteer (as President), King (as Vice
President), and such other officers as shall be duly elected and
qualified, such officers to hold office from the Effective Time
until their respective successors are duly elected and qualified.
SECTION 1.6 Effective Time. If all the conditions set
forth herein shall have been fulfilled or waived in accordance with
the terms hereof and this Agreement shall not have been terminated
in accordance with Article V hereof, the parties hereto shall cause
a Certificate of Merger meeting the requirements of the GBCC (the
"Merger Certificate") to be properly executed and filed on the
Closing Date (as hereinafter defined) with the Secretary of State
of the State of Georgia. The Merger shall become effective as of
the time of filing of the properly executed Merger Certificate.
The date and time when the Merger becomes effective is herein
referred to as the "Effective Time".
SECTION 1.7 Conversion of the Shares. As of the Effective Time,
by virtue of the Merger and without any action on the
part of any holder thereof:
(a) Company Stock. Each share of Company Stock issued and
outstanding immediately prior to the Effective Time shall be
converted into one hundred twenty-five (125) shares of common
stock, par value $.01 per share, of Purchaser ("Purchaser Stock")
(the ratio of 125 shares of Purchaser Stock to one share of Company
Stock is referred to herein as the "Conversion Ratio"); provided,
however, that the Conversion Ratio shall be subject to adjustment
in the event of any stock split, stock dividend, reverse stock
split, or other change in the number of shares of Company Stock
outstanding.
(b) Merger Sub Stock. Each share of capital stock, par
value $.01 per share, of Merger Sub that is issued and outstanding
immediately prior to the Effective Time shall be converted into one
share of the Company Stock.
(c) Treasury Stock. Each share of common stock issued and
outstanding immediately prior to the Effective Time that is then
held in the treasury of the Company shall be cancelled and retired,
without any conversion thereof or payment of any consideration
therefor.
(d) Warrants, Stock Options, etc. Each warrant, stock
option or other right, if any, to purchase shares of Company Stock
issued and outstanding immediately prior to the Effective Time
shall be cancelled (whether or not such warrant, option or other
right is then exercisable) and all rights in respect thereof shall
cease to exist, without any conversion thereof or payment of any
consideration therefor.
SECTION 1.8 Exchange of Shares.
(a) Exchange.
At the Closing, subject to the terms and
conditions hereof, upon surrender by each Shareholder of all certi-
ficates that immediately prior to the Effective Time represented
shares of Company Stock held by such Shareholder ("Certificates"),
Purchaser shall deliver to such Shareholder one or more certifi-
cates as requested by such Shareholder (properly issued, executed
and countersigned, as appropriate) representing the aggregate
number of shares of Purchaser Stock to which such Shareholder shall
have become entitled pursuant to the provisions of Section 1.7
hereof. From the Effective Time until surrender in accordance with
the provisions of this Section 1.8 each Certificate shall represent
for all purposes only the right to receive the consideration pro-
vided for herein.
(b) No Transfers after Effective Time. After the
Effective Time, there shall be no transfers on the stock transfer
books of Surviving Corporation of the shares of Company Stock that
were outstanding immediately prior to the Effective Time.
SECTION 1.9 Adjustment Event.
(a) Adjustment Event. In the event of any change in
Purchaser Stock between the date of this Agreement and the Effec-
tive Time by reason of any stock dividend, stock split, stock
issuance without consideration, subdivision, reclassification,
recapitalization, combination, exchange of shares or the like (an
"Adjustment Event"), the Conversion Ratio shall be appropriately
adjusted so that each Shareholder shall receive the same propor-
tionate amount of outstanding Purchaser Stock that such Shareholder
would have been entitled to receive if the Effective Time had been
immediately prior to such Adjustment Event.
SECTION 1.10 Closing.
(a) Closing. The Merger shall be consummated (the
"Closing") on the second business day following the day on which
the last of the conditions (other than those conditions which by
their terms are to occur only at the Closing) set forth in Article
I hereof shall have been satisfied or, if permissible, waived (the
"Closing Date"), at the offices of Purchaser or Purchaser's counsel
in Atlanta, Georgia, or at such other place and time and/or on such
other date as the parties may hereafter agree in writing.
(b) Deliveries. At the Closing, the Shareholder shall
execute and deliver to Purchaser the Certificates, duly endorsed in
blank, or with separate notarized stock powers attached thereto and
signed in blank, free and clear of all liens, security interests,
claims, restrictions, and any other encumbrances whatsoever, in
exchange for the delivery by Purchaser of certificates to the
Shareholders representing Purchaser Stock as set forth in Sections
1.7, 1.8 and 1.9 hereof.
(c) Corporate Matters. At the Closing, the Shareholders
will deliver to Purchaser the written resignations of all of the
directors and officers of the Company, effective as of the Closing,
except for the officers described in Section 1.5, and shall cause
to be made available to the successor directors and officers all
minute books, stock record books, books of account, corporate
seals, contracts and other documents, instruments and papers be-
longing to the Company and shall cause full possession and control
of all of the assets of the Company and of all other things and
matters pertaining to the operation of its business to be trans-
ferred and delivered to the directors and officers of the Surviving
Corporation. At the Closing, the Shareholders shall also deliver
to Purchaser, and Purchaser shall deliver to the Shareholders, the
certificates, opinions and other instruments and documents referred
to herein.
SECTION 1.11 Additional Conditions to Purchaser's Obligations.
In addition to the conditions in Section 1.10 hereof, the
obligation of Purchaser to consummate the Merger shall be subject
to satisfaction or waiver by Purchaser of the following conditions
prior to or on the Closing Date:
(a) Representations and Warranties. The representations
and warranties of the Shareholders and the Company, as set forth in
Section 2.1 hereof, shall be true and correct on the Closing Date
as if made at such date.
(b) Performance of Obligations. The Shareholders and the
Company shall have performed in all material respects all of their
respective obligations hereunder to be performed by them on or
prior to the Closing Date.
(c) Certificates. Purchaser shall have been furnished
with a certificate signed by the President of the Company, and
certificates signed by the Shareholders, each dated the Closing
Date, certifying to the fulfillment of the conditions specified in
clauses (a) and (b) of this Section 1.11.
(d) Litigation. There shall not have been instituted by
any governmental, regulatory or administrative agency or instrumen-
tality, nor shall there be pending, any action or proceeding before
any court or governmental regulatory or administrative agency or
instrumentality which challenges the legality or validity of the
transactions contemplated hereby.
(e) Resolutions. Purchaser shall have received a certified
copy of resolutions duly adopted by the Board of Directors of
the Company and the Shareholders approving this Agreement and the
Merger.
(f) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body required in connection
with the Company's and the Shareholders' respective execution,
delivery and performance of this Agreement shall have been obtained
or made, except for filing of the Merger Certificate and any docu-
ments required to be filed after the Effective Time and except
where the failure to have obtained or made any such consent,
authorization, order, approval, filing or registration would not
have a material adverse effect on the business of the Company
following the Effective Time.
(g) Opinion of the Company's Counsel. At Closing,
Purchaser shall have received from Altman, Kritzer & Levick a
written opinion dated the Closing Date in the form attached as
Exhibit 1.11(g).
(h) Liabilities. As of the Closing Date, the Company
shall have satisfied all of its liabilities (including contingent
liabilities) except for those liabilities set forth and the
Company's performance of its obligations under those contracts
described on Schedule 1.11(h) hereof.
(i) Completion of Due Diligence. Purchaser shall have
completed its due diligence examination of the Company and the
results of such examination shall have been reasonably satisfactory
to Purchaser.
SECTION 1.12 Additional Conditions to the Company's and
Shareholders' Obligations. In addition to the conditions in
Section 1.10 hereof, the obligation of the Company and the
Shareholders to consummate the Merger shall be subject to the
satisfaction or waiver by them of the following conditions prior to
or on the Closing Date:
(a) Representations and Warranties. The representations
and warranties of Purchaser and Merger Sub, as set forth in Section
2.2 hereof, shall be true and correct on the Closing Date as if
made at such date.
(b) Performance of Obligations. Purchaser and Merger Sub
shall have performed in all material respects all of their respec-
tive obligations hereunder to be performed by them on or prior to
the Closing Date.
(c) Certificates. The Shareholders shall have been
furnished with certificates signed by the President of each of
Purchaser and Merger Sub, each dated the Closing Date, certifying
to the fulfillment of the conditions specified in clauses (a) and
(b) of this Section 1.12.
(d) Litigation. There shall not have been instituted by
any governmental regulatory or administrative agency or instru-
mentality, nor shall there be pending, any action or proceeding
before any court or governmental regulatory or administrative
agency or instrumentality that challenges the legality or validity
of the transactions contemplated hereby.
(e) Resolutions. The Shareholders shall have received a
certified copy of resolutions duly adopted by the Board of
Directors of Purchaser and the Board of Directors and shareholders
of Merger Sub approving this Agreement and all of the transactions
contemplated hereby.
(f) Other Agreements. Purchaser shall have executed and
delivered the agreements set forth in Section 1.13 hereof.
(g) Consents. All consents, authorizations, orders and
approvals of (or filings or registrations with) any governmental
commission, board or other regulatory body acquired in connection
with the Purchaser's and the Merger Sub's execution, delivery and
performance of this Agreement shall have been obtained or made,
except for filing of the Merger Certificate and any documents
required to be filed after the Effective Time except where the
failure to have obtained or made any such consent, authorization,
order, approval, filing or registration would not have a material
adverse effect on the business of the Purchaser or Merger Sub
following the Effective Time.
(h) Opinion of Purchaser's Counsel. The Shareholders
shall have received a written opinion from Rogers & Hardin dated
the Closing Date in the form attached as Exhibit 1.12(h).
SECTION 1.13 Other Agreements. Purchaser and the
Shareholders agree that at the Closing:
(a) Post-Employment Consulting Agreements.
(i) Purchaser and McAteer shall execute and deliver a
post-employment consulting agreement substantially in the form
attached hereto as Exhibit 1.13(a)(i).
(ii) Purchaser and King shall execute and deliver a
post-employment consulting agreement substantially in the form
attached hereto Exhibit 1.13(a)(ii).
(b) Registration Rights Agreement. Purchaser and the
Shareholders shall execute and deliver a registration rights agree-
ment substantially in the form attached hereto as Exhibit 1.13(b).
ARTICLE II
REPRESENTATIONS AND WARRANTIES
SECTION 2.1 Representations and Warranties by Shareholders and
the Company. The Shareholders and the Company jointly
and severally represent and warrant to Purchaser as follows:
(a) Ownership of Shares. Each Shareholder is the record
and beneficial owner of the shares of the Company Stock attributed
to such Shareholder on Schedule 2.1(a) hereof and, at the Closing,
will own all such shares free and clear of any liens, claims,
options, charges, encumbrances or rights of others.
(b) Consents. Subject to the filing and recordation of
the Merger Certificate, each Shareholder and the Company may enter
into this Agreement and perform his obligations under this
Agreement without the necessity of obtaining any consent from
anyone, including any governmental authority.
(c) Organization and Qualification. The Company is a corporation
duly incorporated, validly existing and in good standing
under the laws of the State of Georgia. The Company has all
requisite corporate power and corporate authority to own or lease
and operate its properties and assets and to carry on its business
as, and in the places where, such properties and assets are now
owned or leased and operated and such business is now being con-
ducted. Attached hereto as Schedule 2.1(c)(i) is a true and
complete copy of the Articles of Incorporation and Bylaws of the
Company, as amended. The Company is duly qualified as a foreign
corporation to do business, and is in good standing, in each
jurisdiction, other than California, in which the failure to be so
qualified would have a material adverse effect on the assets,
liabilities, results of operations, financial condition, business
or prospects of the Company. The Company is currently undertaking
to qualify as a foreign corporation authorized to transact business
within the State of California. Schedule 2.1(c)(ii) contains a
true and correct list of the jurisdictions in which the Company is
qualified to do business as a foreign corporation. The Company has
delivered to Purchaser for inspection its respective minute books
and stock records. Except as set forth in Schedule 2.1(c)(iii),
the Company has no subsidiaries. Each of the subsidiaries set
forth on Schedule 2.1(c)(iii) is a corporation duly incorporated,
validly existing and in good standing under the laws of the state
of its incorporation and has all requisite corporate power and
authority to own or lease and operate its properties and assets and
to carry on its business as, and in the places where, such
properties and assets are now owned or leased and operated and such
business is now being conducted. For purposes of this Section, the
term "subsidiary" shall mean any corporation or other business
entity of which the Company owns a majority of the outstanding
voting securities entitled to vote for the election of directors or
an equivalent equity interest.
(d) Continuity of Interest. There is no plan or intention
by the Shareholders to sell, exchange or otherwise dispose of a
number of shares of Purchaser Stock received in the Merger that
would reduce the Shareholders' ownership of the Purchaser Stock
received in the Merger to a number of shares having a value, as of
the Effective Time, of less than fifty percent (50%) of the value
of all of the formerly outstanding Company Stock as of the Effec-
tive Time.
(e) Capitalization of the Company. The authorized capital
stock of the Company consists of 10,000 shares of Company Stock of
which 1,000 shares are validly issued and outstanding, all of which
are fully paid and nonassessable and free of preemptive rights.
Except as set forth on Schedule 2.1(e), there are no outstanding
options, warrants, convertible securities or other rights, agree-
ments, arrangements or commitments obligating the Company or any
Shareholder to issue or sell any shares of capital stock of the
Company. Except as contemplated under Article II hereof, no
dividends shall have been declared prior to Closing with respect to
any shares of capital stock of the Company which shall not have
been paid prior to Closing.
(f) Authority Relative to Agreement; Non-Contravention.
The Company and the Shareholders have all requisite power and
authority to enter into this Agreement and to perform their
respective obligations hereunder. The execution and delivery of
this Agreement by the Company and the Shareholders and the per-
formance by the Company and the Shareholders of its obligations
hereunder and the consummation of the Merger and the other trans-
actions provided for herein have been duly and validly authorized
by all necessary action on the part of the Company and the Share-
holders. This Agreement has been duly executed and delivered by
the Company and the Shareholders and (i) constitutes the valid and
binding obligation of the Company and the Shareholders, enforceable
against the Company and the Shareholders in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance or
other laws relating to or affecting the enforcement of creditors'
rights or the collection of debtors' obligations in general or by
general equitable principles, and (ii) does not (A) conflict with
any provision of the Articles of Incorporation or Bylaws of the
Company or (B) to the Shareholders' knowledge, result in any
violation of or default under, or permit the acceleration of any
obligation under, any mortgage, indenture, lease, agreement or
other instrument, permit, concession, grant, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regula-
tion applicable to the Company or the Shareholders or their respec-
tive assets and properties or any agreement or understanding
between any administrative or regulatory authority or any rules or
regulations of any trade association or organization of which the
Company or the Shareholders are members, if such conflict, viola-
tion, default or acceleration would have a material adverse effect
on the assets, liabilities, results of operations or financial
condition, business or prospects of the Company taken as a whole.
(g) Financial Statements. Attached to Schedule 2.1(g)(i)
are true, correct and complete copies of (i) the balance sheets of
the Company as of December 31, 1994 (the "Latest Year-End Balance
Sheet") and 1993, and the related statements of income, stock-
holders' equity, and cash flows for the years then ended, together
with the report thereon of [accountant]. Also attached to Schedule
2.1(g) is a true, complete and correct copy of the unaudited
balance sheet of the Company at November 30, 1995 and the related
unaudited statement of income and retained earnings for the period
from the Latest Year-End Balance Sheet Date to November 30, 1995.
All of the foregoing financial statements (the "Financial State-
ments") were prepared in accordance with generally accepted
accounting principles ("GAAP") and, subject to any qualifications
set forth in the applicable notes and schedules, to the Share-
holders' knowledge present fairly the financial position and
results of operations of the Company at the dates and for the
periods covered thereby. To the Shareholders' knowledge, the
Company has no liability or obligation of any nature whatsoever,
whether accrued, absolute, contingent or otherwise, other than (x)
current liabilities and obligations which are recurring in nature
and not overdue on their terms, (y) liabilities and obligations
reflected and adequately provided for on the latest Balance Sheet
and (z) liabilities and obligations arising in the ordinary course
of business of the Company since the date of the Latest Year-End
Balance Sheet. Schedule 2.1(g)(iii) sets forth a true and complete
list of each loss contingency of the Company exceeding $5,000, if
it is "probable" (within the meaning of SFAS 5) that future events
will confirm the loss or impairment of an asset or the incurrence
of a liability.
(h) Books of Account; Returns and Reports; Taxes. To the
Shareholders' knowledge, the books of account of the Company fairly
reflect (i) all transactions relating to the Company and (ii) all
items of income and expense, assets and liabilities and accruals
relating to the Company. The Company has not engaged in any
transaction, maintained any bank account or used any corporate
funds except for transactions, bank accounts and funds which have
been and are reflected in the normally maintained books and records
of the Company. For taxable years beginning on and after May 1,
1988, the Company has continuously been (and currently is) an "S"
corporation within the meaning of Section 1361 of the Code and the
equivalent provisions of all applicable state income tax statutes.
To the Shareholders' knowledge, the Company has duly filed all
federal, state, local and foreign tax returns required to be filed
by it through the last date hereof and has duly paid or made
adequate provision for the payment of all taxes which are due and
payable for taxable years ending on or before the date immediately
preceding the Closing Date. To the Shareholders' knowledge, the
liability for taxes reflected in the Latest Year-End Balance Sheet
(excluding any reserve for deferred taxes or portion thereof which
is attributable to differences between the timing of income or
deductions for tax and financial accounting purposes) is sufficient
for the payment of all accrued but unpaid taxes, whether or not
disputed, for the period then ended and for all years and periods
ended prior thereto. All deficiencies asserted as a result of any
examinations conducted by the IRS or any other taxing authority
prior to the date hereof have been paid, fully settled or ade-
quately provided for in the Latest Year-End Balance Sheet. There
are no pending claims asserted for taxes of the Company or out-
standing agreements or waivers extending the statutory period of
limitation applicable to any tax return of the Company for any
period. The Company has made all estimated income tax deposits
through the date hereof and all other required tax payments or
deposits and has complied for all prior periods in all material
respects with the tax withholding provisions of all applicable
federal, state, local, foreign and other laws. The Company has
made available to Purchaser true, complete and correct copies of
its federal income tax returns for the last three (3) taxable years
and made available such other tax returns as have been requested by
Purchaser.
(i) No Default or Litigation.
(i) The business of the Company is being conducted in
compliance with, and the Company has made (or has caused to be
made) all material filings required by, the laws, orders,
regulations, policies and guidelines of all applicable govern-
mental entities (including, without limitation, applicable
laws, orders and regulations relating to labor relations or
environmental protection).
(ii) The Company is not in default under the terms of
any outstanding contract, agreement, lease or other commitment
and there does not currently exist under any such contract,
agreement, lease or commitment any condition or event that,
with notice or lapse of time or both, would constitute a
default.
(iii) Except as set forth on Schedule 2.1(i)(iii),
there are no actions at law, suits in equity, administrative
proceedings or claims pending or threatened against or affect-
ing the Company or its assets or properties.
(iv) The Company has not received written notice that
it has been charged by any governmental entity with any viola-
tion of any applicable law, order or regulation and the Company
is not threatened by any governmental entity with a charge of
any violation of, any applicable law, order or regulation.
(v) The Company is not subject to any judgment, order,
writ, injunction, decree or award of any court, arbitrator or
governmental department, agency, board, bureau or instrumen-
tality issued or entered in a proceeding to which the Company
is or was a party which is binding upon the Company.
(vi) Neither the Company nor the Shareholders are aware
of any issue that, if discovered upon audit by any governmental
or accounting agency, would have a material adverse effect on
the assets, liabilities, results of operations, financial
condition, business or prospects of the Company.
(j) Licenses, Permits and Authorizations. The Company has
validly and legally obtained and duly holds all material approvals,
licenses or other permits of all governmental or regulatory
agencies, whether federal, state or local, which are required for
the operation of its business as it is presently being conducted.
(k) Labor Controversies. Except for that certain
Collective Bargaining Agreement identified in Schedule 3.9 (the
"Union Agreement"), the Company is not a party to any collective
bargaining agreement with respect to any of its employees. Except
as set forth in Schedule 2.1(k), there are no labor controversies
presently pending or, to the best of the Company's and the
Shareholders' knowledge, threatened against the Company.
(l) Employee Benefit Plans.
(i) Except as required under the Union Agreement,
neither the Company nor any Affiliate contributes to any multi-
employer pension plan as defined in Section 3(37) of the
Employment Retirement Income Security Act of 1974 ("ERISA").
Except as set forth on Schedule 2.1(l) or under the Union
Agreement:
(a) There is no "employee welfare benefit plan" (as
defined in Section 3(l) of ERISA maintained by the Company
or any corporate or other trade or business under common
control of the Company (hereinafter, an "Affiliate"),
within the meaning of Section 414 of the Internal Revenue
Code of 1986, as amended (the "Code"), or to which the
Company or any Affiliate thereof contributes or is required
to contribute (such plans being hereinafter collectively
referred to as "Employee Welfare Benefit Plans") for
employees or for former employees of the Company.
(b) There is no "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) maintained by the Company
or any Affiliate, and there is no such plan to which the
Company or any Affiliate contributes, is required to
contribute or has contributed (such employee benefit plans
being hereinafter collectively referred to as the "Employee
Pension Benefit Plans"). Neither the Company nor or any
Affiliate maintains or contributes to any pension plan
(including any multi-employer pension plan as defined in
Section 3(37) of ERISA) which is subject to the provision
of Part 3 of Title I or Title IV of ERISA.
(c) Neither the Company nor any Affiliate maintains
any tax-qualified plans within the meaning of Section 401
of the Code.
(d) Neither the Company nor any Affiliate is a
party to or obligated under any agreement, plan, contract
or other arrangement pursuant to which the Company or any
Affiliate or Purchaser is or might be required to make
payments that would not be deductible or capitalizable for
federal income tax purposes by reason of the application of
Section 280G of the Code. Further, the consummation of the
transactions contemplated by this Agreement will not by
their occurrence result in any employee becoming entitled
to severance payments from the Company or any Affiliate.
(e) The Company and all Affiliates have complied
with the requirements of Section 162(k) of the Code
regarding continuation of health care coverage under any
group health plans.
(f) Except as contemplated in Article III hereof,
there are no material liabilities (in excess of $5,000
individually or $50,000 in the aggregate), absolute or
contingent, of the Company, or of any employee, officer,
director or any person which may have indemnity rights or
contribution rights or other recourse against the Company
with respect thereto, to any employee benefit plan, pro-
gram, practice, arrangement, agreement or understanding,
whether written or oral, except for liabilities which have
been fully accrued on the most recent Financial Statements.
(ii) Neither the Company nor any Affiliate currently
has any liability to make any withdrawal liability payment to
any pension or welfare benefit plan that is a "multiemployer
plan" within the meaning of Section 400(a)(3) of ERISA (a
"Multiemployer Plan"). Neither the Company nor any Affiliate
is delinquent in making contributions required to be paid to
any Multiemployer Plan. There is no pending dispute between
the Company or any Affiliate and any Multiemployer Plan
concerning payment of contributions or withdrawal liability
payment.
(iii) Neither the Company nor any Affiliate (a) has
incurred (or has experienced any event that will, within the
ensuing twelve months, result in) a withdrawal, either complete
or partial (as defined in Section 4203 or 4205 of ERISA), from
any Multiemployer Plan, or (b) has incurred a decline in con-
tributions to any Multiemployer Plan such that, if the current
state of contributions continues, a seventy-percent decline in
contributions (as defined in Section 4205 of ERISA) will occur
within the next three plan years. Neither the Company nor any
Affiliate has received any notice of any failure by a Multi-
employer Plan to satisfy the minimum funding requirements of
Section 412 of the Code, or of any application for or receipt
of a waiver of such minimum funding requirements with respect
to any Multiemployer Plan.
(iv) For each Multiemployer Plan (including each
welfare benefit plan which, pursuant to its trust agreement,
operating rules, or otherwise, imposes any post-withdrawal
liability of contribution obligations upon employers with-
drawing from such plan) to which the Company or an Affiliate
has an obligation to contribute (or otherwise is regarded as an
employer in relation to such plan within the meaning of Section
3(5) of ERISA), the Multiemployer Plan has no unfunded vested
benefits for withdrawal liability purposes as of the date
hereof and the Company would not be subject to withdrawal
liability imposed by such Multiemployer Plan if the Company
were to withdraw from the Multiemployer Plan in a complete
withdrawal as of the date hereof.
(m) Environmental Matters. There has been no release
of a hazardous substance, as that term is defined in the Com-
prehensive Environmental Response, Compensation and Liability
Act of 1980, 42 U.S.C. Section 9601(14), or any petroleum product by
the Company into the environment at any property ever owned,
leased, managed or used by the Company (the "Premises"), in-
cluding, without limitation, any such release in the soil or
groundwater underlying the Premises and, to the best knowledge
of the Company and the Shareholders, there has been no such
release by any other party at any of the Premises. The Company
has not disposed of any material at any hazardous waste treat-
ment or disposal facility and has not disposed of any hazardous
substances (as defined above) at any location. The Company has
not received notice of any violation of any Environmental Law
nor has it been advised of any claim or liability pursuant to
any Environmental Law brought by any governmental agency or
private party. There are no Environmental Liabilities (as
defined below) of the Company. As used in this Agreement,
"Environmental Laws" means any and all federal, state, local
and foreign statutes, laws, judicial decisions, regulations,
ordinances, rules, judgments, orders, decrees, codes, plans,
injunctions, permits, concessions, grants, franchises, licen-
ses, agreements and governmental restrictions, whether now or
hereafter in effect, relating to human health, the environment
or to emissions, discharges or releases of pollutants, contami-
nants, Hazardous Substances or wastes into the environment,
including without limitation ambient air, surface water, ground
water or land, or otherwise relating to the manufacture, pro-
cessing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation
thereof. "Environmental Liabilities" with respect to any
person means any and all liabilities of or relating to such
person or any of its subsidiaries (including any entity which
is, in whole or in part, a predecessor of such Person or any of
its subsidiaries), whether vested or unvested, contingent or
fixed, actual or potential, known or unknown, which (i) arise
under or relate to matters covered by Environmental Laws and
(ii) relate to actions occurring or conditions existing on or
prior to the Closing Date. "Hazardous Substances" means any
toxic, radioactive, caustic or otherwise hazardous substance,
including asbestos, petroleum, its derivatives, by-products and
other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing characteristics,
including, without limitation, any substance regulated under
Environmental Laws.
(n) Intellectual Property. Schedule 2.1(n) sets forth a
complete and correct list of (i) each patent, patent application,
trademark (whether or not registered), trademark application, trade
name, service mark, copyright and proprietary intellectual property
(including, without limitation, proprietary computer software,
whether in object or source form, but excluding computer software
routinely licensed to the public for use on personal computers)
(collectively, "Intellectual Property") that is owned, used or
licensed by the Company and that is material to its business and a
description of whether such Intellectual Property is owned or
licensed by the Company. Except as noted on Schedule 2.1(n), the
Company has the right to use such Intellectual Property and the
current use by the Company of such Intellectual Property does not
infringe upon the rights of any other person. To the best of the
Company's and the Shareholders' knowledge, no other person is
infringing upon the rights of the Company in any such Intellectual
Property.
(o) Title to Properties; Absence of Liens and Encum-
brances, Etc. The Company does not own, nor has it at any time
owned, any real property. All real and personal property leased to
or managed by the Company is described in Schedule 2.1(o) hereof.
Except as set forth in Schedule 2.1(o), the Company has good and
marketable title to all its properties and assets, real, personal
and mixed, used in its business free and clear of any liens,
charges, pledges, security interests or other encumbrances, except
for liens with respect to (i) those items shown on Schedule 2.1(o)
hereto; (ii) statutory liens arising or incurred in the ordinary
course of business with respect to which the underlying obligations
are not delinquent; and (iii) liens for taxes not yet due. All
leases under which the Company is the lessee of any real or per-
sonal property, and all contracts under which the Company is
manager of any real property, are valid and binding on the lessors,
or the owners, as the case may be, thereunder in accordance with
their respective terms.
(p) Contracts and Commitments. Except as set forth on
Schedule 2.1(p) or Schedule 2.1(l) or as contemplated under Article
III, the Company is not a party to or subject to any liabilities
arising from:
(i) any management or employment contract, special
termination agreement or other contract for personal services
with an officer, consultant, director, employee or other person
that is not terminable by the Company on not more than one (1)
month's notice without penalty;
(ii) any single contract to sell goods or any single
contract to purchase goods which exceeds $5,000 in price which
was not incurred in the ordinary course of business;
(iii) except for the Union Agreement, any agreement
providing for liability for severance pay, labor contracts, or
labor or personnel policies;
(iv) any contract, agreement, or instrument, not
reflected in the Financial Statements, evidencing or relating
to any outstanding indebtedness for borrowed money or the
deferred purchase price of property, or any direct or indirect
guarantee of any such indebtedness or deferred purchase price;
(v) except as noted under Schedule 2.1(n) or 3.9 or as
contemplated under Article III, any agreement that restricts
the right of the Company to engage in any line of business,
solicit employees or customers or otherwise compete in any line
of business;
(vi) any contract, commitment, or agreement that
involves (A) any single capital expenditures by the Company in
excess of $5,000 which expenditure is not in the ordinary
course of the Company's business or (B) except as contemplated
in Article III, the disposition of any assets reflected in the
Financial Statements not in the ordinary course of business
consistent with past practices;
(vii) except as contemplated under Article III, any
contract, commitment, or agreement between (A) the Company and
(B) any shareholder, officer or director (or any of their
affiliates) of the Company;
(viii) except for that certain Agreement of Limited
Partnership of Wesley Hotel Group, Ltd. dated April 18, 1988,
as amended (the "Partnership Agreement"), and that certain
Certificate of Limited Partnership of Wesley Hotel Group, Ltd.
dated April 18, 1988, as amended, any partnership agreement in
which the Company is a partner; or
(ix) except for the Partnership Agreement, any joint
venture contract or arrangement or any other agreement that
involves a sharing of profits.
Complete and correct copies (in the case of any of the
foregoing that are in writing) or descriptions (in the case of any
of the foregoing that are not in writing) of each of the foregoing
have been delivered to Purchaser.
(q) Insurance. The Company has been and is insured with
respect to its properties and the conduct of its business in such
amounts and against such risks as are reasonable in relation to its
business and will maintain such insurance at least through the
Effective Time. The Company has heretofore provided to Purchaser
a true and complete list of its current insurance coverages,
including names of carriers, amounts of coverage and premiums
therefor. The Company has made available to Purchaser true and
complete copies of all insurance policies covering the Company, its
properties, assets, employees and operations.
(r) Absence of Certain Changes.
(i) Since the Latest Year-End Balance Sheet Date,
except as described on Schedule 2.1(r) or contemplated under
Article III, there has not been (A) to the Shareholders' knowl-
edge, any material adverse change in the assets, liabilities,
results of operations, financial condition, business or pro-
spects of the Company, (B) any damage, destruction, loss or
casualty to property or assets of the Company, whether or not
covered by insurance, which property or assets are material to
the operations or business of the Company, (C) except as con-
templated under Article III, any declaration, setting aside or
payment of any dividend or distribution (whether in cash, stock
or property) in respect of the capital stock of the Company or
any redemption or other acquisition by the Company of any of
the capital stock of the Company or any split, combination or
reclassification of shares of capital stock declared or made by
the Company, or (D) to the Shareholders' knowledge, any
agreement to do any of the foregoing.
(ii) Except as set forth on Schedule 2.1(r), since the
Latest Year-End Balance Sheet Date, there have not been, with
respect to the Company (A) any material assets mortgaged,
pledged or made subject to any lien, charge or other encum-
brance, (B) any material liability or obligation (absolute,
accrued or contingent) incurred or any material bad debt,
contingency or other reserve increase suffered, except, in each
such case, in the ordinary course of business and consistent
with past practice, (C) any material claims, liabilities or
obligations (absolute, accrued or contingent) paid, discharged
or satisfied, other than the payment, discharge or satisfac-
tion, in the ordinary course of business and consistent with
past practice, of claims, liabilities and obligations reflected
or reserved against in the Financial Statements or incurred in
the ordinary course of business and consistent with past prac-
tice since the date of the Latest Year-End Balance Sheet Date,
(D) any material guarantees, checks, notes or accounts receiv-
able written off as uncollectible, except write-offs in the
ordinary course of business and consistent with past practice,
(E) any material write down of the value of any asset or invest-
ment on the Company's books or records, except for depreciation
and amortization taken in the ordinary course of business and
consistent with past practice, (F) to the Shareholders' knowl-
edge, any cancellation of any material debts or waiver of any
material claims or rights of substantial value, or sale,
transfer or other disposition of any material properties or
assets (real, personal or mixed, tangible or intangible) of
su1bstantial value, except, in each such case, in transactions
in the ordinary course of business and consistent with past
practice and which in any event do not exceed $50,000 in the
aggregate, (G) any single capital expenditure or commitment in
excess of $5,000 for additions to property or equipment, or
aggregate capital expenditures and commitments in excess of
$50,000 (on a combined basis) for additions to property or
equipment, (H) any other material transactions entered into
other than in the ordinary course of business, (I) any agree-
ments to do any of the foregoing, or (J) any other events,
developments or conditions of any character that have had or
are reasonably likely to have a material adverse effect on the
assets, liabilities, results of operations, financial condi-
tion, business or prospects of the Company.
(s) Accounts Receivable. All accounts receivable of the
Company as set forth on the Latest Year-End Balance Sheet or
arising since the Latest Year-End Balance Sheet Date (i) have
arisen only in the ordinary course of business consistent with past
practice for goods sold and delivered or services performed and
(ii) to the Shareholders' knowledge are collectible at the recorded
amounts thereof (free of any, and subject to no, defenses, setoffs
or counterclaims) in the ordinary course of business (without
resort to litigation or assignment to a collection agency), net of
(in the case of accounts receivable set forth on the Latest Year-
End Balance Sheet) any allowance for doubtful accounts reflected in
the Latest Year-End Balance Sheet and net of (in the case of
accounts receivable arising since the Latest Year-End Balance Sheet
Date) an allowance for doubtful accounts established on a basis
consistent with the allowance reflected in the Latest Year-End
Balance Sheet. Nothing contained in this Paragraph shall consti-
tute any guarantee or assurance by the Shareholders that any such
accounts receivable shall be collectible by the Company or Pur-
chaser and the Shareholders shall have no liability from the
Company's or Purchaser's failure or inability to collect any such
accounts.
(t) Accuracy of Statements. No representation or warranty
made herein, and no statement, exhibit certificate or schedule
furnished, or to be furnished, by the Company or the Shareholders
to Purchaser pursuant hereto, or in connection with the transac-
tions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or
therein not misleading.
(u) Affiliates. For purposes of Rule 145 under the
Securities Act of 1933, as amended (the "Securities Act"), there
are no persons (other than the Shareholders) who are "affiliates"
of the Company.
(v) Qualification of Shareholders. Each Shareholder, with
respect to himself and not with respect to the other Shareholders,
represents and warrants that he (i) is acquiring the Purchaser
Stock to be issued in the Merger for his own account and not with
a view to, or for resale in connection with, any distribution
thereof; (ii) understands and acknowledges that such Purchaser
Stock has not been registered under the Securities Act or any state
securities laws by reason of certain exemptions from the registra-
tion provisions thereof which depend upon, among other things, the
bona fide nature of such Shareholder's investment intent as ex-
pressed herein; (iii) is able to bear the economic risk of invest-
ment in such Purchaser Stock and has such knowledge and experience
in financial and business matters that he is capable of evaluating
the risks and merits of such Purchaser Stock; and (iv) understands
and acknowledges that such Purchaser Stock will be "restricted
securities" as that term is defined in Rule 144 under the Securi-
ties Act and that the certificate representing such Purchaser Stock
will bear a legend restricting transfer unless (A) the transfer is
exempt from the registration requirements under the Securities Act
and any applicable state securities law and an opinion of counsel
reasonably satisfactory to Purchaser that such transfer is exempt
therefrom is delivered to Purchaser or (B) the transfer is made
pursuant to an effective registration statement under the Securi-
ties Act and any applicable state securities law
SECTION 2.2 Representations and Warranties by Purchaser.
Purchaser represents and warrants to the Company and the Share-
holders as follows:
(a) Organization of Purchaser. Purchaser is a corporation
duly incorporated and validly existing and in good standing under
the laws of the State of Delaware and has all requisite corporate
power and corporate authority to own or lease and operate its
properties and assets and to carry on its business as, and in the
places where, such properties and assets are now owned or leased
and operated and such business is now being conducted. Merger Sub
is duly incorporated and validly existing and in good standing
under the laws of the State of Georgia and has all requisite power
and authority to carry on its business as such business is now, and
at the time of Closing, will be conducted. Purchaser has delivered
to the Company a true, correct and complete copy of the Certificate
or Articles of Incorporation and Bylaws of Purchaser and Merger
Sub, and all amendments thereto, as in effect on the date hereof.
Purchaser is duly qualified and authorized to transact business in
the State of Georgia.
(b) Authority Relative to Agreements; Non-Contravention.
Purchaser and Merger Sub have all requisite corporate power and
corporate authority to enter into this Agreement and to perform
their obligations hereunder. The execution, delivery and perfor-
mance of this Agreement have been duly authorized by the Board of
Directors of Purchaser and the Board of Directors and the share-
holders of Merger Sub. This Agreement and has been duly executed
and delivered by Purchaser and Merger Sub and (i) constitutes a
valid and binding obligation of Purchaser and Merger Sub, enforce-
able against Purchaser and Merger Sub in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance or other laws
relating to or affecting the enforcement of creditors' rights or
the collection of debtors' obligations in general or by general
equitable principles, and (ii) do not (A) conflict with any pro-
vision of the Articles or Certificate of Incorporation or Bylaws of
Purchaser or Merger Sub or (B) result in any violation of or
default under, or permit the acceleration of any obligation under,
any material mortgage, indenture, lease, agreement or other instru-
ment, permit, concession, grant, franchise, license, judgment,
order, decree, statute, law, ordinance, rule or regulation applic-
able to Purchaser or Merger Sub or their respective properties or
any material agreement or understanding between any administrative
or regulatory authority or any rules or regulations of any trade
association or organization of which Purchaser or Merger Sub is a
member, if such conflict, violation, default, or acceleration would
have a material adverse effect on the assets, liabilities, results
of operations, financial condition, business or prospects of Pur-
chaser and its subsidiaries (including Merger Sub) taken as a
whole. Merger Sub has not previously conducted any business and is
not a party to any material contract other than this Agreement.
For purposes of this Agreement, the term "subsidiary," when used
with respect to Purchaser, shall mean any corporation or other
business entity of which Purchaser owns a majority of the outstand-
ing securities entitled to vote for the election of directors or an
equivalent equity interest.
<c) Financial Statements. Purchaser's Form 10-K for the
fiscal year ended August 31, 1995 filed with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934
(the "Form 10-K") is true and correct and fairly presents the
financial position and results of operations of the Company for the
period covered thereby.
(d) Issuance of Purchaser Stock. Purchaser has duly
authorized the issuance of the shares of Purchaser Stock that will
be issued in the Merger and, when the certificates representing
such shares of Purchaser Stock are delivered pursuant to the terms
of this Agreement, such shares of Purchaser Stock will be duly and
validly issued, fully paid and non-assessable. All shares of
capital stock of Purchaser issued prior to the Closing have been
duly and validly issued and are fully paid and nonassessable.
(e) Consents. Except for the filing and recordation of
the Merger Certificate, Purchaser and Merger Sub have obtained each
approval or consent of, and have made each filing with or notice
to, each governmental and regulatory body and each other third
party required in connection with the execution and delivery by
Purchaser and Merger Sub of this Agreement, the consummation by
Purchaser and Merger Sub of the transactions contemplated hereby
and the performance by Purchaser and Merger Sub of their respective
obligations hereunder.
(f) Capital Stock. The authorized capital stock of
Purchaser consists of 5,000,000 shares of Purchaser Stock and
1,000,000 shares of preferred stock, par value $1.00 ("Preferred
Stock"), of which 963,480 shares of Purchaser Stock are issued and
outstanding on the date hereof and _____ shares of Preferred Stock
are issued and outstanding as of the date hereof. Purchaser has
____ options outstanding as of the date hereof. All of the issued
and outstanding shares of capital stock of Merger Sub are owned by
Purchaser.
(g) Certain Matters Relating to Treatment of the Merger as
a Reorganization. (i) Following the closing of the merger, the
Surviving Corporation will hold at least 90% of the fair market
value of its net assets and at least 70% of the fair market value
of its gross assets and at least 90% of the fair market value of
the net assets and at least 70% of the fair market value of the
gross assets of Merger Sub; for purposes of the foregoing, amounts
used by the Surviving Corporation or Merger Sub to pay expenses of
the Merger and all redemptions and distributions (except for regu-
lar, normal dividends) made by the Surviving Corporation will be
included as assets of the Surviving Corporation or the Merger Sub,
respectively, immediately prior to the consummation of the Merger;
(ii) prior to the consummation of the Merger, Purchaser will be in
control of Merger Sub within the meaning of Section 368(c)(1) of
the Code; (iii) Purchaser has no plan or intention to cause the
Surviving Corporation to issue additional shares of the Surviving
Corporation's capital stock that would result in Purchaser losing
control of the Surviving Corporation within the meaning of Section
368(c)(1) of the Code; (iv) Purchaser has no plan or intention to
reacquire any of its capital stock that will be issued in the
Merger; (v) Purchaser has no plan or intention to liquidate the
Surviving Corporation, to merge the Surviving Corporation with or
into any corporation other than the Merger Sub, to sell or other-
wise dispose of any of the capital stock of the Surviving Corpora-
tion except for transfers of stock to corporations controlled by
Purchaser that would not result in Purchaser losing control of the
Surviving Corporation within the meaning of Section 368(c)(1) of
the Code, or to cause the Surviving Corporation to sell or other-
wise dispose of any of its assets or of any of the assets acquired
from the Merger Sub, except for dispositions made in the ordinary
course of business or transfers of assets to a corporation con-
trolled by Surviving Corporation; and (vi) following the consumma-
tion of the Merger, Purchaser will cause the Surviving Corporation
to continue its historic business or to use a significant portion
of its historic business assets in a business. All parties intend
for the Merger and all transactions contemplated herein to con-
stitute a tax-free reorganization under Section 368 of the Internal
Revenue Code of 1986, as amended, and in this regard, Purchaser and
Merger Sub will file all reports consistent with such intention and
shall undertake all actions and do all things reasonably necessary
to comply with such intention.
(h) Accuracy of Statements. No representation or warranty
made by Purchaser herein, and no statement, exhibit certificate or
schedule furnished, or to be furnished, to the Company or the
Shareholders pursuant hereto, or in connection with the transac-
tions contemplated hereby, contains or will contain any untrue
statement of a material fact or omits or will omit to state a
material fact necessary to make the statements contained herein or
therein not misleading.
(i) Taxes and Solvency. Each of Purchaser and Merger
Sub has paid or adequately provided for the payment of any and all
taxes applicable to Purchaser, Merger Sub, their respective
operations or their respective assets and have timely filed all
reports and returns relating to any such taxes. Each of Purchaser
and Merger Sub is solvent in that it has assets in excess of its
liabilities and is able to pay its debts and meets its obligations
as the same become due and payable.
(j) No Default or Litigation.
(i) The business of Purchaser is being conducted in
compliance with, and Purchaser has made (or has caused to be
made) all material filings required by the laws, orders,
regulations, policies and guidelines of all applicable govern-
mental entities (including, without limitation, applicable
laws, orders and regulations relating to labor relations or
environmental protection).
(ii) The Purchaser is not in default under the terms
of any outstanding contract, agreement, lease or other commit-
ment and there does not currently exist under any such con-
tract, agreement, lease or commitment any condition or event
that, with notice or lapse of time or both, would constitute a
default.
(iii) Except as set forth on the Form 10-K, there are
no actions at law, suits in equity, administrative proceedings
or claims pending or threatened against, or affecting the
Purchaser which could have a material adverse effect on the
financial condition of the Purchaser.
(iv) The Company has not received written notice that
it has been charged by any governmental entity with any viola-
tion of any applicable law, order or regulation and the
Purchaser is not threatened by any governmental entity with a
charge of any violation of, any applicable law, order or
regulation.
(v) The Purchaser is not subject to any judgment,
order, writ, injunction, decree or award of any court, arbi-
trator or governmental department, agency, board, bureau or
instrumentality issued or entered in a proceeding to which the
Purchaser is or was a party which is binding upon the Pur-
chaser.
(vi) The Purchaser is not aware of any issue that, if
discovered upon audit by any governmental or accounting agency,
would have a material adverse effect on the assets, liabi-
lities, results of operations, financial condition, business or
prospects of the Purchaser.
(k) Licenses, Permits and Authorizations. The Purchaser
has validly and legally obtained and duly holds all material appro-
vals, licenses or other permits of all governmental or regulatory
agencies, whether federal, state or local, which are required for
the operation of its business as it is presently being conducted.
(l) Environmental Matters. There has been no release of
a hazardous substance, as that term is defined in the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601(14), or any petroleum product by the Purchaser into
the environment at any property ever owned, leased, managed or used
by the Purchaser (the "Premises"), including, without limitation,
any such release in the soil or groundwater underlying the Premises
and, to the best knowledge of the Purchaser, there has been no such
release by any other party at any of the Premises. The Purchaser
has not disposed of any material at any hazardous waste treatment
or disposal facility and has not disposed of any hazardous sub-
stances (as defined above) at any location. The Purchaser has not
received notice of any violation of any Environmental Law nor has
it been advised of any claim or liability pursuant to any
Environmental Law brought by any governmental agency or private
party. There are no Environmental Liabilities (as defined below)
of the Purchaser. As used in this Agreement, "Environmental Laws"
means any and all federal, state, local and foreign statutes, laws,
judicial decisions, regulations, ordinances, rules, judgments,
orders, decrees, codes, plans, injunctions, permits, concessions,
grants, franchises, licenses, agreements and governmental restric-
tions, whether now or hereafter in effect, relating to human
health, the environment or to emissions, discharges or releases of
pollutants, contaminants, Hazardous Substances or wastes into the
environment, including without limitation ambient air, surface
water, ground water or land, or otherwise relating to the manufac-
ture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous
Substances or wastes or the clean-up or other remediation thereof.
"Environmental Liabilities" with respect to any person means any
and all liabilities of or relating to such person or any of its
subsidiaries (including any entity which is, in whole or in part,
a predecessor of such Person or any of its subsidiaries), whether
vested or unvested, contingent or fixed, actual or potential, known
or unknown, which (i) arise under or relate to matters covered by
Environmental Laws and (ii) relate to actions occurring or condi-
tions existing on or prior to the Closing Date. "Hazardous
Substances" means any toxic, radioactive, caustic or otherwise
hazardous substance, including asbestos, petroleum, its deriva-
tives, by-products and other hydrocarbons, or any substance having
any constituent elements displaying any of the foregoing charac-
teristics, including, without limitation, any substance regulated
under Environmental Laws.
(m) Absence of Certain Changes. Since August 31, 1995,
there has not been (A) to the Purchaser's knowledge any material
adverse change in the assets, liabilities, results of operations,
financial condition, business or prospects of the Purchaser, (B)
any damage, destruction, loss or casualty to property or assets of
the Purchaser, whether or not covered by insurance, which property
or assets are material to the operations or business of the Pur-
chaser, (C) any declaration, setting aside or payment of any
dividend or distribution (whether in cash, stock or property) in
respect of the capital stock of Purchaser or any redemption or any
other acquisition by Purchaser of any of the capital stock of
Purchaser or any split, combination or reclassification of shares
of capital stock declared or made by Purchaser, or (D) to the
Purchaser's knowledge any agreement to do any of the foregoing.
(n) Voting Rights of Purchaser Stock. The Purchaser Stock
received by McAteer and King pursuant to this Agreement in
conversion for their respective shares of Company Stock carries
with it full and complete voting rights with regard to Purchaser
and its operations, which voting rights are not inferior to the
voting rights of any other class of stock or securities issued by
the Purchaser.
SECTION 2.3 Acknowledgement of Parties. The parties
mutually agree that as of the date hereof, the parties have in good
faith determined the fair market value of the Purchaser Stock to be
Five and 74/100s ($5.74) Dollars per share. Neither party shall
have any liability or obligation to any other party hereto by
reason of the accuracy of inaccuracy of such determination, nor
shall any provision of this Section 2.3 constitute a representation
or warranty by any party as to the value of any consideration
received or relinquished pursuant to this Agreement.
ARTICLE III
COVENANTS
SECTION 3.1 Preparation for Closing. The parties agree
to use their best efforts to bring about the fulfillment of the
conditions precedent to the Closing.
SECTION 3.2 Conduct of Business. From the date hereof to
the Closing Date, except as expressly provided for or contemplated
by this Agreement, as set forth on Schedule 3.2, and as otherwise
consented to by Purchaser in writing, the Company will, and the
Shareholders will cause the Company to:
(a) except as contemplated under Article III, carry on its
business in, and only in, the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and, to the
extent consistent with prudent management of its business, use
reasonable efforts to preserve intact its present business organi-
zation, keep available the services of its present customers,
suppliers and others having business dealings with them;
(b) use reasonable efforts to maintain all of the material
structures, equipment and other tangible personal property used in
its business in good repair, order and condition in all material
respects except for depletion, depreciation, ordinary wear and tear
and damage by unavoidable casualty;
(c) to the extent consistent with the prudent management
of its business, keep in full force and effect insurance comparable
in amount and scope of coverage to insurance now carried in respect
of its business;
(d) perform in all material respects all of its obliga-
tions under agreements, contracts and instruments relating to or
affecting its business;
(e) maintain the books of account and records of its
business in the usual, regular and ordinary manner;
(f) comply in all material respects with all statutes,
laws, ordinances, rules and regulations applicable to its business;
(g) not enter into or assume any agreement, contract or
commitment of the character referred to in clauses (i) thru (ix) of
Section 2.1(p) except in the ordinary course of business;
(h) except for the Company's acquisition of all outstand-
ing stock in each of (i) California Eta Hotel Corp., (ii) Capital
Alpha Hotel Corp., and (iii) Florida Beta Hotel Corp., the Company
shall not merge or consolidate with, or agree to merge or consoli-
date with, or purchase substantially all of the assets of, or
otherwise acquire any business or any corporation, partnership,
association or other business organization or division thereof;
(i) except as contemplated under Article III hereof, to
the extent not consistent with the prudent management of its
business, permit or suffer to be taken, any action that, had it
occurred since the Latest Year-End Balance Sheet Date, would have
been required to be disclosed on Schedule 2.1(r) pursuant to
Section 2.1(r) hereof;
(j) not grant any stock option or issue any shares of
capital stock or securities convertible into or exercisable or
exchangeable for any capital stock of the Company.
In connection with the continued operation of the business
of the Company between the date of this Agreement and the Effective
Time, McAteer shall confer in good faith on a regular and frequent
basis with one or more representatives of Purchaser designated in
writing to report on operational matters and the general status of
ongoing operations of the Company. The Shareholders acknowledge
that Purchaser does not and will not waive any rights it may have
under this Agreement as a result of such consultations, except to
the extent such consultations cause Purchaser to have knowledge
that, pursuant to Section 4.2(a)(i) hereof, limits the Share-
holders' indemnification obligations under Article IV hereof. the
Company shall also provide Purchaser as soon as available, but in
no event later than 30 days after the end of each month, unaudited
interim combined financial statements of the Company as at the end
of the portion of their fiscal year then elapsed prepared in the
same manner as the unaudited combined balance sheets referred to in
Section 2.1(g) were prepared.
SECTION 3.3 Public Announcements; No Trading. No party
will, at any time, without the prior written consent of the other
parties, make any announcement, issue any press release or make any
statement to any third party (other than legal, financial or
accounting advisors for such party) with respect to this Agreement
or any of the terms or conditions hereof except as may be necessary
to comply with any law, governmental regulation or order and then
only after prior written notice to the other parties of the timing,
context and content of such announcement, press release or state-
ment. Purchaser, the Company and the Shareholders shall not
purchase or otherwise acquire any interest in any Purchaser Stock
from the date hereof through the Closing Date.
SECTION 3.4 No Solicitation. The Company and the Share-
holders each undertake and agree that between the date of the
execution of this Agreement and the Closing or termination of this
Agreement, neither the Company, the Shareholders or their respec-
tive officers, directors, representatives and agents, will indi-
rectly or directly solicit, encourage or initiate the submission of
proposals or offers from, or provide any confidential information
to, or participate in discussions or negotiations or enter into any
agreement or understanding with, any corporation, partnership,
person or other entity or group (other than Purchaser and its
officers, employees, directors, representatives and agents) con-
cerning the sale of any shares of Company Stock (whether by the
Company or by Shareholders), or any merger, combination, sale of
assets, or similar transactions. The Company and the Shareholders
each agree to immediately cease any discussions or communications
with any parties conducted prior hereto with respect to any of the
foregoing. The Company and the Shareholders each will promptly
notify Purchaser in the event any of them receives any proposals,
offers or invitations to discuss any of the foregoing.
SECTION 3.5 Access. Between the date of this Agreement
and the Effective Time, the Company and the Shareholders will
provide Purchaser and its accountants, counsel and other authorized
representatives full access, during reasonable business hours and
under reasonable circumstances, to any and all of its premises,
properties, contracts, commitments, books, records and other
information (including tax returns filed and those in preparation)
and will cause its respective officers to furnish to Purchaser and
its authorized representatives any and all financial, technical and
operating data and other information pertaining to its business, as
Purchaser shall from time to time reasonably request. Subject to
the requirements of applicable law, Purchaser will keep confiden-
tial all information and documents it obtains from the Company or
the Shareholders in connection herewith except as otherwise con-
sented to by the Company or the Shareholders; provided, however,
that neither Purchaser nor Merger Sub shall be precluded from
making any disclosure which it deems required by applicable law in
connection with the transactions contemplated by the Agreement.
SECTION 3.6 Supplements to Schedules. From time to time
prior to the Effective Time, the Company, the Shareholders and
Purchaser will each promptly supplement or amend the respective
schedules which they have delivered pursuant to this Agreement with
respect to any matter hereafter arising which, if existing or
occurring at the date of this Agreement, would have been required
to be set forth or described in any such schedule or which is
necessary to correct any information in any such schedule which has
been rendered inaccurate thereby. No supplement or amendment to
any such schedule shall have any effect for the purpose of deter-
mining satisfaction of the conditions set forth in Article I of
this Agreement.
SECTION 3.7 Reasonable Efforts; Further Assurances;
Cooperation. Subject to the other provisions of this Agreement,
the parties hereto shall each use their reasonable, good faith
efforts to take, or cause to be taken, or do, or cause to be done,
all things necessary, proper or advisable under applicable law to
satisfy all conditions to the obligations of the parties under this
Agreement and to cause the Merger herein to be effected on or prior
to December 15, 1995 in accordance with the terms hereof and shall
cooperate fully with each other and their respective officers,
directors, employees, agents, counsel, accountants and other desig-
nees in connection with any steps required to be taken as a part of
their respective obligations under this Agreement, including, with-
out limitation:
(a) The Company, the Shareholders and Purchaser shall
promptly make their filings and submissions and shall take, or
cause to be taken, all actions and do, or cause to be done, all
things necessary, proper or advisable under applicable laws and
regulations to obtain any required approval of any foreign,
federal, state or local governmental agency or regulatory body with
jurisdiction over the transactions contemplated by this Agreement.
(b) In the event any claim, action, suit, investigation or
other proceeding by any governmental body or regulatory authority
is commenced which questions the validity or legality of the Merger
or any of the other transactions contemplated hereby or seeks
damages in connection therewith, the parties agree to cooperate and
use all reasonable efforts to defend against such claim, action,
suit, investigation or other proceedings and, if an injunction or
other order is issued in any such action, suit or other proceeding,
to use all reasonable efforts to have such injunction or other
order lifted, and to cooperate reasonably regarding any other
impediment to the consummation of the transactions contemplated by
this Agreement.
(c) Each party shall give prompt written notice to the
other of (i) the occurrence, or failure to occur, of any event
which occurrence or failure would be likely to cause any represen-
tation or warranty of the Company, the Shareholders, Purchaser or
Merger Sub, as the case may be, contained in this Agreement to be
untrue or inaccurate in any material respect at any time from the
date hereof to the Effective Time or that will or may result in the
failure to satisfy any of the conditions specified in Article I
hereof and (ii) any failure of the Company, the Shareholders,
Purchaser or Merger Sub, as the case may be, to comply with or
satisfy any covenant, condition or agreement to be complied with or
satisfied by any of them hereunder.
(d) Without the prior written consent of Purchaser, the
Company will not terminate any employee if such termination would
result in the payment of any amounts pursuant to "change in
control" provisions of any employment agreement or arrangement.
SECTION 3.8. Dividend Distributions. All parties ac-
knowledge and agree that from and after the date hereof until the
Closing, the Company and its subsidiaries will be distributing
dividends to the Shareholders up to, but in no event in excess of,
the "Accrued Surplus" (as hereinafter defined) of the Company and
its subsidiaries. For purposes of this Agreement, the Accrued
Surplus shall mean that amount by which the cash and accrued
revenues and receivables of the Company and its subsidiaries which
are attributable to any period ending or any Company or subsidiary
activities occurring on or before the date of the Closing (the
"Accrued Revenues") exceed the accrued expenses or payables of the
Company and its subsidiaries (exclusive of accrued vacation for
employees of the Company or its subsidiaries other than McAteer and
King) and those promissory notes identified in Section 3.11 which
are attributable to any period ending or any Company or subsidiary
activities occurring on or before the date of the Closing (the
"Accrued Expenses"). All parties further agree that immediately
prior to the Closing, the Company shall declare and may pay a
dividend not in excess of the remaining undistributed Accrued
Surplus determined as of the date of Closing which dividends shall
be distributable by the Company to the Shareholders prior to or
within thirty (30) days from and after the Closing. Additionally,
the parties agree that in the event the Accrued Expenses exceed the
Accrued Revenues as respectively determined on the date of the
Closing, such excess amount shall be paid by the Shareholders to
the Company within thirty (30) days after the Closing. The parties
finally agree that notwithstanding anything contained in this
Agreement to the contrary, any distributions made by the Company or
its subsidiaries to the Shareholders as contemplated under this
Section 3.8 shall not constitute a violation or default under any
other representation, warranty, covenant or other provision of the
Company or the Shareholders contained in this Agreement.
SECTION 3.9. Assumption and Continuation of Contractual
Obligations. All parties acknowledge and agree that the Company
shall, from and after the Merger and the date of the Closing,
remain fully responsible for the complete and timely performance of
all terms and provisions contained within and under (i) those
contractual agreements (collectively the "Continuing Contracts")
more specifically identified on Schedule 3.9 attached hereto and
made a part hereof, and (ii) all other ordinary or necessary
liabilities and obligations of the Company and its subsidiaries
incurred in the normal and customary conduct of its business and
operations. Additionally and specifically, all parties acknowledge
and agree that from and after the date of the Merger and the
Closing, Purchaser shall cause the Company and its subsidiaries to
maintain, or if the Company or its subsidiaries fail for any reason
to so maintain, Purchaser shall maintain insurance (collectively
the "Continuing Insurance") commensurate in type, amount and scope
of coverage to that currently maintained by the Company covering
its operations, assets and properties and the actions, undertak-
ings, omissions and errors of its representatives, including,
without limitation, the Shareholders; provided further, that the
Continuing Insurance shall be maintained with such insurers and
contain such terms and conditions as are reasonably satisfactory to
the Shareholders. Notwithstanding anything contained in this
Agreement to the contrary, the Company's or Purchaser's performance
of any obligation or incurrence of any liability under the Continu-
ing Contract by reason of the continued existence, continued
performance or termination thereof or otherwise pursuant to this
Paragraph from and after the date of the Merger and the Closing
shall in no event be deemed or constitute a violation or default
under any other representation, warranty, covenant or other
provision of the Company or the Shareholders contained in this
Agreement.
SECTION 3.10. Acquisition of Capital Stock. The parties
acknowledge and agree that prior to the Merger, the Company shall
acquire from McAteer all issued and outstanding capital stock owned
by McAteer in each of (i) California Eta Hotel Corp., a California
corporation, (ii) Capitol Alpha Hotel Corp., a corporation formed
under the laws of the District of Columbia, and (iii) Florida Beta
Hotel Corp., a Florida corporation, which acquisition shall result
in the Company constituting the sole shareholder of all of the
aforesaid three (3) corporations, whereupon all such corporations
shall constitute subsidiaries of the Company for purposes of the
application of all provisions of this Agreement. Notwithstanding
anything contained in this Agreement to the contrary, the Company's
acquisition of any of the corporations identified in this Paragraph
shall not be deemed nor constitute a violation or default under any
representation, warranty, covenant or other provision of the
Company or the Shareholders contained in this Agreement.
SECTION 3.11. Special Indemnity. Purchaser acknowledges
and agrees that the Company is primarily liable for the prompt
payment and performance of each of (a) that certain promissory note
dated September 22, 1994 in the original principal amount of
$57,143 made payable from McAteer to Lagrita, Inc., a Georgia
corporation, (b) that certain promissory note dated September 22,
1994 in the original principal amount of $57,142 made payable from
McAteer to Towito, Inc., a Georgia corporation, and (c) that cer-
tain promissory note dated September 22, 1994 in the original
principal amount of $5,715 made payable from McAteer to Amer Corp.,
a Georgia corporation (each of said promissory notes is hereinafter
referred to as a "Subject Note" and collectively referred to as the
"Subject Notes"), (ii) the Company duly and properly assumed full
and exclusive responsibility for the payment of the Subject Notes
from McAteer as of September 22, 1994, and (iii) it was the Com-
pany's intention that McAteer be relieved of any and all individual
responsibility for payment of the Subject Notes at the time of the
Company's assumption thereof without the need or ability of obtain-
ing the release of McAteer from the respective holders of the
Subject Notes. As a result of the foregoing, each of the Purchaser
and the Company jointly and severally agree to indemnify and hold
McAteer harmless from and against any and all responsibility,
liability, obligations, costs, damages, claims or other amounts,
including without limitation reasonable attorney's costs incurred
in defending any one or more of the foregoing, incurred or expended
by McAteer under, in connection with or arising out of the exis-
tence of any one or more of the Subject Notes or the Company's
failure to timely make any payment or timely perform any obligation
thereunder.
SECTION 3.12. Miscellaneous Satisfaction of Obligations.
All parties acknowledge and agree that prior to the Closing, the
Company shall cause to be paid to the Shareholders certain debts
and obligations owed to such Shareholders by the Company, which
debts and obligations shall include, in particular, (i) all amounts
owed to McAteer under that certain Promissory Note dated September
22, 1994, in the original principal amount of $150,000 and (ii) all
accrued employment benefits owed to either McAteer or King attribut-
able to any period ending on or before the Closing Date; provided,
however, that all such payments shall be charged against the
Accrued Revenues in determining the amount of the Accrued Surplus
under Section 3.8 hereof. The parties further agree that notwith-
standing anything contained in this Agreement to the contrary, any
payments made by the Company to the Shareholders as contemplated
under this Section 3.12 shall not constitute a violation or default
under any other representation, warranty, covenant or other provi-
sion of the Company or the Shareholders contained in this Agree-
ment.
ARTICLE IV
INDEMNIFICATION
SECTION 4.1 Definitions. For the purposes of this Article IV:
(a) "Indemnification Claim" shall mean a claim for
indemnification hereunder.
(b) "Indemnitees" shall mean (i) with respect to Indem-
nification Claims asserted under Section 4.2(a), Purchaser, the
Company and their respective agents, representatives, employees,
officers, directors, shareholders, controlling persons and affi-
liates (other than the Shareholders), and (ii) with respect to
Indemnification Claims asserted under Section 4.2(b), the Share-
holders.
(c) "Indemnitor" shall mean each Shareholder, in
connection with Indemnification Claims asserted under Section
4.2(a), and Purchaser in connection with Indemnification Claims
asserted under Section 4.2(b).
(d) "Losses" shall mean any and all demands, claims,
actions or causes of action, assessments, losses, diminution in
value, damages (including special and consequential damages),
liabilities, costs, and expenses, determined on a net after-tax
basis, including, without limitation, interest, penalties, cost of
investigation and defense, and reasonable attorneys' and other
professional fees and expenses.
(e) "Third Party Claim" shall mean any claim, suit or
proceeding (including, without limitation, a binding arbitration or
an audit by any taxing authority) that is instituted against an
Indemnitee by a person or entity other than an Indemnitor and
which, if prosecuted successfully, would result in a Loss for which
such Indemnitee is entitled to indemnification hereunder.
SECTION 4.2 Agreement to Indemnify.
(a) Subject to the terms and conditions of this Article
IV, each Shareholder agrees to severally indemnify, defend, and
hold harmless Indemnitees, and each of them, from, against, for,
and in respect of any and all Losses asserted against, or paid,
suffered or incurred by, an Indemnitee and resulting from, based
upon, or arising out of:
(i) the inaccuracy, untruth, or incompleteness of any
representation or warranty of such Shareholder contained in or
made pursuant to this Agreement or in any certificate, schedule
or exhibit furnished by such Shareholder in connection herewith
that was not known to Purchaser prior to the Effective Time; or
(ii) a breach of or failure to perform any covenant,
undertaking, condition or agreement of such Shareholder made in
this Agreement that was not known to Purchaser prior to the
Effective Time.
Except for Losses relating to or arising out of the repre-
sentations and warranties set forth in Sections 2.1(l) and 2.1(m)
hereof, each Shareholder's indemnification obligations shall be
limited to the fair market value (determined at the time of the
Indemnification Claim) of the shares of Purchaser's stock that such
Shareholder received pursuant to the Merger under Sections 1.7, 1.8
and 1.9 hereof (the "Merger Shares") or, with respect to any Merger
Shares that have been converted, to the value of the consideration
such Shareholder received as a result of the conversion of such
shares (determined at the time of such conversion) and each Share-
holder shall be permitted to satisfy his indemnification obliga-
tions hereunder by transferring to the Indemnitees Merger Shares
and cash (in any combination) having an aggregate fair market value
equal to the amount of the Indemnification Claim.
(b) Subject to the terms and conditions of this Article
IV, Purchaser agrees to indemnify, defend and hold harmless
Indemnitees, and each of them, from, against, for, and in respect
of any and all Losses asserted against, or paid, suffered or
incurred by, an Indemnitee and resulting from, based upon, or
arising out of:
(i) the inaccuracy, untruth or incompleteness of any
representation or warranty of Purchaser or merger Sub contained
in or made pursuant to this Agreement or in any certificate,
schedule or exhibit furnished by Purchaser or Merger Sub in
connection herewith that was not known to the applicable Share-
holder prior to the Effective Time; or
(ii) a breach or failure to perform any covenant,
undertaking, condition or agreement of Purchaser or Merger Sub
made in this Agreement that was not known to the applicable
Shareholder prior to the Effective Time.
Purchaser's indemnification obligations shall be limited to
the fair market value (as of Closing) of the shares of Purchaser's
Stock that the Shareholders received pursuant to the Merger.
SECTION 4.3 Procedures for Indemnification.
(a) An Indemnification Claim shall be made by an Indem-
nitee by delivery of a written notice to the Indemnitor requesting
indemnification and specifying the basis on which indemnification
is sought and the amount of asserted Losses and, in the case of a
Third Party Claim, containing (by attachment or otherwise) such
other information as such Indemnitee shall have concerning such
Third Party Claim.
(b) If the Indemnification Claim involves a Third Party
Claim, the procedures set forth in Section 4.4 hereof shall be
observed by the Indemnitee and the Indemnitor.
(c) If the Indemnification Claim involves a matter other
than a Third Party Claim, the Indemnitor shall have thirty (30)
days to object to such Indemnification Claim by delivery of a
written notice of such objection to such Indemnitee specifying in
reasonable detail the basis for such objection. Failure to timely
so object shall constitute a final and binding acceptance of the
Indemnification Claim by the Indemnitor, and the Indemnification
Claim shall be paid in accordance with subsection (d) hereof.
(d) Upon determination of the amount of an Indemnification
Claim, whether by agreement between the Indemnitor and the Indem-
nitee or otherwise, the Indemnitors shall pay the amount of such
Indemnification Claim within ninety (90) days of the date such
amount is determined.
SECTION 4.4 Third Party Claims. The obligations and
liabilities of the parties hereunder with respect to a Third Party
Claim shall be subject to the following terms and conditions:
(a) The Indemnitee shall give the Indemnitor written
notice of a Third Party Claim promptly after receipt by the
Indemnitee of notice thereof, and the Indemnitor may undertake the
defense, compromise and settlement thereof by representatives of
its own choosing reasonably acceptable to the Indemnitee. Subject
to the provisions of Section 4.7, the failure of the Indemnitee to
notify the Indemnitor of such claim shall not relieve the Indem-
nitor of any liability that it may have with respect to such claim
except to the extent the Indemnitor demonstrates that the defense
of such claim is prejudiced by such failure. If the Indemnitee
desires to participate in, but not control, any such defense, com-
promise and settlement, it may do so at its sole cost and expense.
If, however, the Indemnitor fails or refuses to undertake the
defense of such Third Party Claim within ten (10) days after
written notice of such claim has been given to the Indemnitor by
the Indemnitee, the Indemnitee shall have the right to undertake
the defense, compromise and settlement of such claim with counsel
of its own choosing. In the circumstances described in the
immediately preceding sentence, the Indemnitee shall, promptly upon
its assumption of the defense of such claim, make an Indemnifi-
cation Claim as specified in Section 4.3 which shall be deemed an
Indemnification Claim that is not a Third Party Claim for the
purposes of the procedures set forth herein.
(b) If, in the reasonable opinion of the Indemnitee, any
Third Party Claim or the litigation or resolution thereof involves
an issue or matter which could have a material adverse effect on
the business, operations, assets, properties or prospects of the
Indemnitee (including, without limitation, the administration of
the tax returns and responsibilities under the tax laws of the
Indemnitee), the Indemnitee shall have the right to control the
defense, compromise and settlement of such Third Party Claim
undertaken by the Indemnitor. If the Indemnitee shall elect to
exercise such right, the Indemnitor shall have the right to parti-
cipate in, but not control, the defense, compromise and settlement
of such Third Party Claim at its sole cost and expense.
(c) No settlement or compromise of a Third Party Claim
involving the asserted liability of an Indemnitor under this
Article IV shall be made without the prior written consent by or on
behalf of the Indemnitor, which consent shall not be unreasonably
withheld or delayed. Consent shall be presumed in the case of
settlements of $25,000 or less where the Indemnitor has not
responded within ten (10) business days of notice of a proposed
settlement. If the Indemnitor assumes the defense of such a Third
Party Claim, no compromise or settlement thereof may be effected by
the Indemnitor without the Indemnitee's prior written consent,
which consent shall not be unreasonably withheld or delayed.
(d) In connection with the defense, compromise or settle-
ment of any Third Party Claim, the parties to this Agreement shall
execute such limited powers of attorney as may reasonably be neces-
sary or appropriate to exclusively permit participation of counsel
selected by any party hereto and, as may reasonably be related to
any such claim or action, shall provide access to the counsel,
accountants and other representatives of each party during normal
business hours to all properties, personnel, books, tax records,
contracts, commitments and all other business records of such other
party and will furnish to such other party copies of all such
documents as may reasonably be requested (certified, if requested).
Nothing contained herein shall be deemed to constitute any party's
waiver of any available legal privileges or require the disclosure
of privileged information.
SECTION 4.5 Subrogation. Upon payment in full of any
Indemnification Claim, whether such payment is effected by set-off
or otherwise, or the payment of any judgment or settlement with
respect to a Third Party Claim, the Indemnitors shall be subrogated
to the extent of such payment to the rights of the Indemnitee
against any person or entity with respect to the subject matter of
such Indemnification Claim or Third Party Claim.
SECTION 4.6 Payment. If there should be a dispute as to
the amount of any indemnity obligation owed under this Article IV,
the Indemnitor shall nevertheless pay when due such portion, if
any, of the obligation as shall not be subject to dispute. No
payment under this Article IV shall be due until the final resolu-
tion of any dispute as to whether it is owed. If all or part of
any indemnification obligation under this Agreement is not paid
when due, then the Indemnitor shall pay the Indemnitee interest on
the unpaid amount of the obligation for each day from the date the
amount became due until payment in full, payable on demand, at the
fluctuating rate per annum which at all times shall be the lowest
rate of interest generally charged from time to time by NationsBank
of Georgia, N.A. and publicly announced by such bank as its
so-called "prime rate."
ARTICLE V
TERMINATION
SECTION 5.1. Termination or Amendment. This Agreement may
be terminated at any time prior to the Closing Date (i) by Pur-
chaser or by unanimous written consent of the Shareholders if (A)
such party is not in breach in any material respect of any of such
party's representations, warranties, covenants and agreements in
this Agreement and (B) if the other party has breached a material
provision of this Agreement, but only if such breach (if curable)
has not been cured within fifteen (15) days after notice of it is
given to the breaching party; (ii) by Purchaser or by unanimous
written consent of the Shareholders if the Closing has not occurred
by December 15, 1995, if the terminating party is not then in
breach in any material respect of its obligations hereunder; or
(iii) by mutual agreement of all of the parties hereto.
SECTION 5.2. Specific Performance and Other Remedies. The
parties hereto each acknowledge that the rights of each party to
consummate the transactions contemplated hereby are special, unique
and of extraordinary character, and that, in the event that any
party violates or fails or refuses to perform any covenant or
agreement made by it herein, the non-breaching party may be without
an adequate remedy at law. The parties each agree, therefore, that
in the event that either party violates or fails or refuses to
perform any covenant or agreement made by such party herein, the
non-breaching party or parties may, subject to the terms of this
Agreement and in addition to any remedies at law for damages or
other relief, institute and prosecute an action in any court of
competent jurisdiction to enforce specific performance of such
covenant or agreement or seek any other equitable relief.
SECTION 5.3. Effect of Termination. In the event of
termination of this Agreement pursuant to this Article V, this
Agreement shall forthwith become void and there shall be no
liability on the part of any party or its respective officers,
directors or shareholders, except for obligations under Section
3.3, the last sentence of Section 3.5, Section 6.2 and this Section
5.3, all of which shall survive the termination.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Brokers. Each party hereto represents and
warrants to all other parties that no broker, finder or investment
banker is entitled to any brokerage, finder's or other fee or
%PAGEE
commission in connection with the transactions contemplated hereby
based upon arrangements made by or on behalf of such party.
SECTION 6.2. Expenses. In the event the transactions
herein provided for shall not be consummated, all fees, costs and
expenses incurred in connection with this Agreement and the trans-
actions contemplated hereby shall be paid by the party incurring
same.
SECTION 6.3. Notices. Any notice, request, demand,
waiver, consent, approval or other communication required or
permitted hereunder shall be in writing and shall be deemed given
only if sent by registered or certified mail (postage prepaid),
shipped and receipted by express courier service (charges prepaid),
or mailed first class (postage prepaid):
If to the Company:
211 Prime Point, Building 1-A
Peachtree City, GA 30269
with a copy to:
Altman, Kritzer & Levick, P.C.
6400 Powers Ferry Road, N.W.
Suite 224
Atlanta, GA 30339
Attn: Frank Slover, Esq.
If to McAteer:
450 Birkdale Drive
Fayetteville, GA 30215
with a copy to:
Altman, Kritzer & Levick, P.C.
6400 Powers Ferry Road, N.W.
Suite 224
Atlanta, GA 30339
Attn: Frank Slover, Esq.
If to King:
120 Colonade Drive
Peachtree City, GA 30269
If to Purchaser, Merger Sub or the Surviving Company:
Ridgewood Properties, Inc.
2859 Paces Ferry Road
Suite 700
Atlanta, Georgia 30339
Attn: President
with a copy to:
Rogers & Hardin
2700 Cain Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attn: Michael Rosenzweig, Esq.
or such other address as shall be furnished in writing by any party
to the others prior to the giving of the applicable notice or
communication. Such notice, request, demand, waiver, consent,
approval or other communication will be deemed to have been given
as of the date so delivered or, if mailed, three (3) business days
after the date so mailed.
SECTION 6.4. Counterparts. This Agreement may be executed
in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the
same instrument.
SECTION 6.5. Headings. The headings herein are for
convenience of reference only, do not constitute a part of this
Agreement, and shall not be deemed to limit or affect the
provisions hereof.
SECTION 6.6. Entire Agreement. This Agreement constitutes
the entire agreement between the parties with respect to the
subject matter hereof, and supersedes all prior agreements and
negotiations.
SECTION 6.7. Governing Law. This Agreement shall be
governed by, and construed in accordance with, the substantive laws
of the State of Georgia, without regard to conflicts of laws
principles.
SECTION 6.8. Jurisdiction. Any action, suit or proceeding
seeking to enforce any provision of, or based on any matter arising
out of or in connection with, this Agreement or the transactions
contemplated hereby may be brought against any of the parties in
the United States District Court for the Northern District of
Georgia, or any state court sitting in the City of Atlanta,
Georgia, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate
courts) in any such suit, action or proceeding and waives any
objection to venue laid therein. Process in any such suit, action
or proceeding may be served on any party anywhere in the world,
whether within or without the State of Georgia, without limiting
the foregoing, each of the parties hereto agrees that service of
process upon such party at the address referred to in Section 6.3,
together with written notice of such service to such party, shall
be deemed effective service of process upon such party.
SECTION 6.9. Successors and Assigns. The provisions of
this Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective heirs, legal representa-
tives, successors and assigns, provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations
under this Agreement without the prior written consent of the other
parties hereto.
SECTION 6.10. Schedules and Exhibits. All schedules and
exhibits hereto are hereby incorporated into this Agreement and are
hereby made a part hereof as if set out in full in this Agreement.
SECTION 6.11. Number; Gender. Whenever the context so
requires, the singular number shall include the plural and the
plural shall include the singular, and the gender of any pronoun
shall include the other genders.
SECTION 6.12. Knowledge. As used in this Agreement, the
terms "the best knowledge of" or "known to" or words of similar
import shall mean actual knowledge, together with the knowledge a
reasonable business person would have obtained after making
reasonable inquiry and after exercising reasonable diligence to the
matters at hand.
SECTION 6.13. Survival . All representations and warranties contained
in this Agreement or in any certificate delivered pursuant to this Agreement
shall survive the Closing.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed and
delivered this Agreement or have caused this Agreement to be duly executed
under seal and delivered on its behalf by an officer or representative
thereto duly authorized, all as of the date first above written.
RIDGEWOOD PROPERTIES, INC.
By:_____________________________
Its:__________________________
Attest:_________________________
Its:_________________________
[CORPORATE SEAL]
RIDGEWOOD ACQUISITION CORP.
By:____________________________
Its:________________________
Attest:_________________________
Its:_________________________
[CORPORATE SEAL]
WESLEY HOTEL GROUP, INC.
By:_____________________________
Its:_________________________
Attest:_________________________
Its:____________________________
[CORPORATE SEAL]
__________________________(SEAL)
WAYNE McATEER
__________________________(SEAL)
SAMUEL KING
Exhibit 1.13(a)(i)
POST-EMPLOYMENT CONSULTING AGREEMENT
THIS POST-EMPLOYMENT CONSULTING AGREEMENT (the "Agreement") is made and
entered into this 7th day of December, 1995, by and between RIDGEWOOD
PROPERTIES, INC. Delaware corporation with offices at 2859 Paces Ferry Road,
Suite 700, Atlanta, Georgia 30339 (the "Company"), and WAYNE McATEER, an
individual residing at 450 Birkdale Drive, Fayetteville, Georgia 30215 (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive is employed as an officer of the Company's
wholly-owned Subsidiary, Wesley Hotel Group, Inc., and as such the Board of
Directors of the Company deems it in the best interest of the Company to
offer this Agreement to the Executive; and WHEREAS, the Company and the
Executive wish to provide for the Company's retention of the Executive to
perform certain consulting services following termination of the Executive's
employment by the Company, all upon the terms and conditions hereinafter set
forth;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual
covenants and obligations hereinafter set forth, and other and good valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
14. Events of Termination Triggering Consulting Services.
(1) For purposes of this Section 1, the following definitions apply:
(i) "Cause" shall mean that the Executive: (A) has misappropriated,
stolen or embezzled funds of the Company; or (B) has committed an act of
deceit, fraud, dereliction of duty, or gross or wilful misconduct materially
harmful to the Company; or (C) has been convicted of either a felony or a
crime involving moral turpitude or entered a plea of nolo contendre in
response to an indictment for such crime or felony; or (D) has intentionally
disclosed information of the Company designated by the Company as being
confidential or proprietary in nature and which designation has been
communicated to Executive (hereinafter "Confidential Information") except
when such disclosure is made pursuant to the direction of the Company or in
accordance with company policy; or (E) has engaged in competitive behavior
materially detrimental or damaging as against the Company, has purposely
aided a competitor of the Company to the disadvantage of or damage to the
Company or has misappropriated or aided in misappropriating a material
opportunity of the Company.
(ii) "Good Reason" shall mean, without the written consent of the
Executive: (A) a reduction in the Executive's base salary or a reduction in
the Executive's benefits received from the Company other than in connection
with an across-the-board reduction in salaries and/or benefits for similarly
situated employees of the Company or pursuant to the Company's standard
retirement policy; or (B) the relocation of the Executive's full-time office
to a location greater than fifty (50) miles from the Company's current
corporate office; or (C) a reduction in the Executive's corporate title.
2. The Company shall be obligated to retain the Executive as a
consultant only:
(i) upon the execution by the Executive of a release of the
Company in the form attached to this Agreement or in such other form as may
be deemed necessary by the Company from time to time to provide the Company
with a valid and enforceable unconditional release (the "Release Agreement");
provided, however, that the Executive shall only be obligated to
execute the Release Agreement if the Company agrees, at the time, to execute
such Release Agreement in the form attached to this Agreement or in such
other form that shall contain provisions acceptable to the Executive relating
to the Company's release of the Executive; and
(ii) in the event of a termination of the Executive's employment
with the Company due to one of the following events (hereinafter, a
"Qualifying Termination"): (A) the Company's termination of the Executive's
employment other than for Cause; or (B) the Executive's voluntary termination
of employment with the Company within thirty (30) days of an event qualifying
as Good Reason.
15. Consulting Services. Upon the occurrence of a Qualifying
Termination and the execution by the Executive of the Release Agreement, the
Company shall retain the Executive to perform certain consulting services
(the "Consulting Services"), and the Executive shall perform such services,
all in accordance with the terms and conditions of this Agreement. The
Consulting Services shall consist of the following:
(a) the performance of consulting services to the Company, as and
when reasonably requested, to assist the Company in the transition period
following termination of the Executive's employment and to answer questions,
give testimony and generally cooperate in any Company matters, including
litigation, provided that the Consulting Services shall in no event require
the Executive to dedicate more than twenty (20) hours per calendar week to
the performance thereof;
(b) the general promotion of the goodwill of the Company.
16. Consulting Period.
(a) Subject to the possible extension set forth in subparagraph
(b) below, the Executive shall perform the Consulting services for a period
of time (the "Consulting Period") %PAGEE commencing on the day following a
Qualifying Termination and continuing thereafter until the expiration of
twelve (12) months.
17. Consulting Fee/Benefits.
(a) Subject to the provisions of Sections 5, 6 and 11 hereof, the
Executive shall receive during the Consulting Period, as full compensation
for the Consulting Services, a fee, payable in equal monthly installments (a
"Consulting Fee" and collectively, the "Consulting Fee") equal to the
Executive's annual base salary immediately prior to the Qualifying
Termination divided by twelve (12). The Executive's annual base salary for
purposes of calculating the Consulting Fee shall consist solely of the
Executive's base salary, exclusive of any bonuses, commissions, allowances or
other means of compensation or benefits made available to the Executive as an
employee of the Company. The Consulting Fee for any partial months during
the Consulting Period shall be reduced proportionately. The aggregate amount
of all Consulting Fees to be paid during the full Consulting Period is
sometimes hereinafter referred to as the "Total Consulting Fees."
(b) Subject to the provisions of Section 5 hereof, during the
Consulting Period the Company shall also make available to the Executive such
medical, dental and vision insurance coverage as may be provided to the
Executive by the Company immediately prior to the Qualifying Termination (or
such Company medical insurance coverage which is consistent with the coverage
in place from time to time for comparable executives of the Company). Such
medical insurance coverage shall be provided to the extent available pursuant
to the continuation coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and, if necessary, pursuant to insurance
policies providing comparable benefits to the Executive in the event of the
inapplicability or expiration of COBRA benefits. The Executive will be
charged a premium equal to fifty percent (50%) of the Company's cost for the
medical insurance so provided. Upon expiration of the Consulting Period, the
Company may charge the maximum premium permitted under COBRA for any
remaining continuation coverage to which the Executive is entitled. Group
car and homeowners' insurance, if applicable, may be continued during the
term of the Agreement, provided that the Executive agrees to pay all
applicable premiums.
(c) Subject to the provisions of section 5 hereof, during the
Consulting Period the Company shall also make available to the Executive life
insurance coverage, if any, as may be provided to the Executive by the
Company immediately prior to the Qualifying Termination, provided, however,
that the Executive agrees to pay fifty percent (50%) of the Company's cost of
such coverage.
(d) The Company shall also reimburse the Executive immediately for
pre-approved expenses actually incurred by the Executive at the request of
the Company in performance of the Consulting Services. The Executive shall
not be subject to any obligation to bear or pay any expenses not otherwise
approved by the Company in rendering the Consulting Services hereunder.
18. Effect of Re-Employment/Other Compensation.
(a) If at any time during the Consulting Period, the Executive
enters into employment ("Re-Employment"), the Executive shall immediately
notify the Company in writing of the Executive's monthly compensation to be
received from such ReEmployment and any insurance coverage provided pursuant
thereto, and the following provisions shall apply:
(i) If the Executive's monthly compensation from ReEmployment
is equal to or in excess of the Consulting Fee, the Company shall promptly
pay the Executive, in full satisfaction of all obligations to pay the
Consulting Fees hereunder, an amount equal to fifty percent (50%) of the
remainder of: (A) the Total Consulting Fees less (B) the Consulting Fees
actually paid to the Executive prior to ReEmployment. Notwithstanding
anything herein to the contrary, upon payment by the Company of the amounts
set forth in this Section 5(a)(i), the Company shall cease to have any
obligations under the terms of this Agreement and the Consulting Period shall
be deemed to immediately expire.
(ii) If the Executive's monthly compensation from
Re-Employment is less than the Consulting Fee, the Consulting Fee payable to
the Executive for the remainder of the Consulting Period shall automatically
be reduced by the amount of the Executive's monthly compensation from
Re-Employment; provided, however, that at the end of the Consulting Period
the Company shall pay the Executive an amount equal to fifty percent (50%) of
the remainder of: (A) the Total Consulting Fees less (B) the actual
Consulting Fees paid the Executive during the Consulting Period. The
Executive shall immediately notify the Company of any change in the level of
compensation received from Re-Employment and, if such compensation increases
to a level equal to or in excess of the Consulting Fee, the provisions of
Section 5(a)(i) shall then apply.
(b) Provided COBRA requirements have been met, the Company's
obligation to provide insurance coverage to the Executive under Section 4(b)
hereof shall terminate as to any specific coverage if and when comparable
coverage is made available to the Executive in connection with Re-Employment.
19. Death or Retirement.
(a) If at any time during the Consulting Period during which the
Company remains obligated to pay Consulting Fees to the Executive, the
Executive dies, the Company shall pay the Executive's estate in full
satisfaction of all obligations to the Executive hereunder, an amount equal
to one hundred percent (100%) of the remainder of: (A) the Total Consulting
Fees less (B) the actual Consulting Fees paid the Executive prior to the
Executive's death and less (C) any re-employment compensation received by the
Executive pursuant to Re-Employment as described in Section 5 above.
(b) If at any time during the Consulting Period during which the
Company remains obligated to pay Consulting Fees to the Executive, the
Executive becomes eligible for and receives retirement benefits from the
Company, the Company shall pay monthly to the Executive for the remainder of
the Consulting Period, a reduced amount equal to the monthly Consulting Fee
less any amounts accrued or received by the Executive as retirement payments
for such month.
(c) If at any time during the Consulting Period during which the
Company remains obligated to pay Consulting Fees to the Executive, the
Executive suffers any physical or mental impairment which prohibits the
Executive from performing Consulting Services hereunder for a period in
excess of 30 consecutive days (a "disability"), then the Executive shall not
be required to perform Consulting Services for the duration of such
disability, but shall continue to receive Consulting Fees for the duration of
the Consulting Period. In the event of the Executive's disability, the
Company shall have the right to require, and Executive agrees to be subject
to, an examination by such physicians as the Company requires to verify the
existence of Executive's disability.
20. Status of the Parties.
The Executive, in performance of any Consulting Services hereunder,
shall be acting as an independent contractor and shall not be an employee of
the Company. The Executive shall not be entitled to any compensation or
other benefits given to or provided for the benefit of any employees of the
Company, including, without limitation, the right to participate in or
receive credit for service under any "employee welfare benefit plan" or
"employee pension benefit plan" (as such terms are defined in the Employee
Retirement Income Security Act of 1974) and the Executive shall not in any
form or fashion maintain, hold out, represent, state or imply to any other
individual or entity that an employee/employer relationship exists between
the Company and the Executive.
21. Responsibility for Expenses.
The Executive hereby recognizes, covenants and agrees that it will
be acting as an independent contractor in performing any Consulting Services
hereunder, and that except as specifically set forth to the contrary herein,
the Executive shall be solely responsible and liable for all taxes,
including, without limitation, withholding taxes, social security taxes and
unemployment taxes and shall also be responsible for any other expenses,
costs, liabilities, undertakings, assessments, taxes, insurance and other
obligations voluntarily incurred by the Executive at any time and for any
reason as a result of this Agreement or the performance of the Consulting
Services, including, without limitation, withholding taxes, social security
taxes and state unemployment taxes.
22. Nondisclosure; Ownership of Proprietary Property.
The Executive shall regard and treat each item constituting all or
any portion of the Company trade secrets and all Confidential Information as
strictly confidential and wholly %PAGEE owned by the Company and will not,
for any reason in any fashion, either directly or indirectly use, sell,
disclose or distribute any such item or information to any third party for
any purpose other than in accordance with the Executive's performance of the
Consulting services.
23. Stock Options and Stock Purchase Agreements.
Any agreements for or options to purchase the Company's stock held
by the Executive at the time of any termination of the Executive's employment
with the Company shall be exercisable in accordance with the terms of the
applicable stock purchase agreements or stock option plans.
24. Breach or Default.
Upon the occurrence of any breach or default in the performance of
any of the Executive's duties or responsibilities hereunder, and the
Executive's failure to commence the cure of such breach or default within
seven (7) days of receipt of written notice thereof and thereafter diligently
pursue such cure to completion, all obligations of the Company hereunder to
compensate the Executive or to provide benefits thereto shall immediately be
terminated and rendered null, void and of no further effect, after which the
Company shall be entitled to pursue any and all remedies available, at law or
in equity, to address the Executive's breach or default hereunder.
25. No Right to Continued Employment.
Nothing herein shall be construed as giving the Executive any
rights to continued employment with the Company, and the Company shall
continue to have the right to terminate the %PAGEE Executive with or without
cause.
26. Rights to Indemnification.
Nothing in this Agreement shall be construed as a waiver or
limitation upon any rights or entitlements of the Executive to
indemnification and liability insurance coverage pursuant to any indemnity
agreement, or the Company's certificate of incorporation or Bylaws or the
laws of the State of Delaware, common law or otherwise.
27. Goodwill Covenant.
During the term of this Agreement, the Executive covenants and
agrees to refrain from making detrimental statements or taking any action
detrimental to the business or goodwill of the Company.
28. Representations of Company.
The Company hereby represents and warrants to Executive that (i)
the benefits provided Executive hereunder are commensurate in amount, level
and type to the post employment or severance benefits offered or extended by
the Company to N. Russell Walden, and (ii) the obligations required of
Executive hereunder are no more onerous than the obligations required by the
Company of N. Russell Walden. The Company further agrees that should (a) any
more favorable post employment or severance benefits be offered by the
Company to N. Russell Walden, this Agreement shall be amended to include said
favorable benefits and (b) should the obligations imposed by the Company on
N. Russell Walden as a condition to his receipt of benefits similar to those
extended to Executive hereunder be less onerous than those imposed upon
Executive hereunder, this Agreement shall be amended to eliminate said
onerous obligations hereunder.
29. General Provisions.
(a) Binding Effect and Assignability. The rights and obligations
under this Agreement shall inure to the benefit of and be binding upon the
Executive, the Company and their successors and assigns. Neither this
Agreement, nor any rights or obligations of the Executive herein shall be
transferable or assignable by the Executive without the Company's prior
written consent, and any attempted transfer or assignment hereof by the
Executive not in accordance herewith shall be void.
(b) Notices. Any notices or other communications required or
permitted hereunder shall be deemed to have been duly given on the date of
service if personally served or three (3) days after mailing if mailed by
first class mail, registered or certified, postage prepaid and addressed to
the parties at their addresses as set forth in the most current records of
the Company, or to such other address as shall be designated by written
notice issued pursuant hereto.
(c) Entire Agreement. This Agreement, together with the Release
Agreement, contains the entire agreement of the parties relating to the
subject matter hereof and supersedes any prior agreements or understandings,
oral or written, to the contrary.
(d) Waiver. The waiver of the breach of any term or condition of
this Agreement shall not be deemed to constitute the waiver of any other or
subsequent breach of the same or any other term or condition.
(e) Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia.
(f) Severability. The unenforceability or invalidity of any term,
provision or Section of this Agreement shall not affect the validity or
enforceability of the remaining terms, provisions, or sections hereof, but
such remaining terms, provisions or sections shall be construed and
interpreted in such a manner as to carry out fully the intent of the parties
hereto.
(g) Modification. This Agreement shall not be modified or amended
except by a written instrument signed by an authorized representative of all
parties executing this Agreement.
IN WITNESS WHEREOF, the Executive has executed this Agreement, and the
Company has caused its duly authorized corporate officer to execute this
Agreement and affix its seal hereto, all as of the day and year first above
written.
COMPANY RIDGEWOOD PROPERTIES, INC,
By:___________________________
N. Russell Walden, President
(CORPORATE SEAL)
EXECUTIVE
________________________(SEAL)
Wayne McAteer
UNCONDITIONAL RELEASE OF ALL CLAIMS AND LIABILITY
THIS UNCONDITIONAL RELEASE OF ALL CLAIMS AND LIABILITY (the "Release")
is made and entered into as of this _____ day of ____________________ by
WAYNE McATEER (the "Executive") in favor of RIDGEWOOD PROPERTIES, INC., a
Delaware corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company has, prior to the date hereof, employed the
Executive as a full time employee of the Company, but as of this date the
Executive's status as an employee has terminated; and
WHEREAS, the Company desires to engage the Executive as a consultant for
the Company and the Executive desires to be engaged by the Company as a
consultant pursuant to the terms of the Post-Employment Consulting Agreement,
dated December 7, 1995 between the Company and the Executive (the "Consulting
Agreement"); and
WHEREAS, the Company has required, as a condition precedent to the
engagement of the Executive as a consultant for the Company, that the
Executive execute and deliver this Release in favor of the Company, whereupon
the Company shall execute and deliver this Release in favor of Executive;
NOW, THEREFORE, for and in consideration of the premises, the agreement
of the Company to engage the Executive as a consultant and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereby agrees as follows:
1. Release. Except with respect to the Company's obligations pursuant
to the Consulting Agreement and any vested retirement benefits applicable to
the Executive, the Executive hereby unconditionally remises, releases and
forever discharges, to the fullest extent permitted by law, the Company, its
employees, officers, directors, agents, affiliates, subsidiaries and each of
them from all manner of actions, proceedings, causes of action, claims,
counterclaims, suits, debts, sums, monies, accounts, covenants, agreements,
promises, damages, losses or demands of whatever kind or nature from the
beginning of time to the present, whether known or unknown, in law or in
equity, which in the past, now or in the future arise, may arise or allegedly
arise or are in any way resulting from or in any manner connected with the
Executive's employment by the Company and the termination of such employment
by the Company. In consideration of the benefits payable under the
Consulting Agreement, the Executive waives all claims and causes of action
against the Company and all damages, if any, that may be recoverable. This
release and waiver of all claims and damages includes, but is not limited to,
any tort or claim of contractual restriction relating to Executive's
employment or termination thereof, any claim of wrongful discharge, and all
rights under federal, state or local law prohibiting race, sex, age,
religion, national origin, handicap, disability or other forms of
discrimination, including but not limited to, Title VII of the Civil Rights
Act of 1964, as amended, the Age Discrimination in Employment Act, as
amended, any state or local human rights laws, Workers' Compensation laws,
and the National Labor Relations Act, as amended.
2. Company's Release. Except with respect to the Executive's
obligations pursuant to the Consulting Agreement, the Company hereby
unconditionally remises, releases, and forever discharges, to the fullest
extent permitted by law, the Executive and his heirs, successors, legal
representatives and assigns and each of them from all manner of actions,
proceedings, causes of action, claims, counterclaims, suits, debts, sums,
monies, accounts, covenants, agreements, promises, damages, losses, or
demands of whatever kind or nature from the beginning of time to the present,
whether known or unknown, in law or in equity, which in the past, now or in
future arise, may arise, or allegedly arise or are in any way resulting from
or in any manner connected with the Executive's employment by the Company.
In consideration for Executive's performance of those services under the
Consulting Agreement, the Company waives all claims and causes of action
against the Executive and all damages, if any, that may be recoverable. This
release and waiver of all claims and damages includes, but is not limited to,
any tort or claim of contractual restriction relating to Executive's
employment.
2. Miscellaneous. This Release embodies the entire agreement of the
parties and supersedes all prior agreements between the parties hereto
relating to the subject matter hereof. The unenforceability or invalidity of
any of the terms or provisions of this agreement shall not affect the
validity or enforceability of the remaining terms or provisions which shall
be interpreted and construed in such manner as to carry out fully the
intention of the parties hereto. This Release shall be construed and
enforced in accordance with the laws of the State of Georgia.
Each party understands that by executing this Release, such party is
giving up possible rights that he or it may have, and that such party does
not have to sign this Release. This Release has been voluntarily and
knowingly executed by each party with the express intention of effecting the
extinguishment of any and all obligations and damages that such party may owe
to the other party as provided herein.
THE EXECUTIVE UNDERSTANDS THAT THE EXECUTIVE HAS 21 DAYS TO CONSIDER
WHETHER OR NOT TO EXECUTE THIS RELEASE. THE EXECUTIVE UNDERSTANDS
THAT A PORTION OF THIS RELEASE, SOLELY RELATING TO THE EXECUTIVE'S RIGHTS
UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED, MAY BE
REVOKED BY NOTIFYING THE COMPANY IN WRITING OF SUCH REVOCATION WITHIN 7 DAYS
OF EXECUTION OF THIS RELEASE. THE PORTION OF THIS RELEASE RELATING SOLELY TO
THE EXECUTIVE'S RIGHTS UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT
ACT, AS AMENDED, IS NOT EFFECTIVE UNTIL THE EXPIRATION OF SUCH 7 DAY PERIOD.
ALL PARTS OF THIS RELEASE NOT RELATING TO CLAIMS OF AGE DISCRIMINATION AND
ALLEGED DAMAGES UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED,
ARE EFFECTIVE IMMEDIATELY UPON EXECUTION OF THIS RELEASE, THE EXECUTIVE
UNDERSTANDS THAT UPON THE EXPIRATION OF SUCH 7 DAY PERIOD THIS RELEASE WILL
BECOME BINDING IN ITS ENTIRETY UPON THE EXECUTIVE AND ALL PORTIONS THEREOF
WILL BE IRREVOCABLE.
IN WITNESS WHEREOF, the undersigned have duly executed this Release in
favor of the other party under seal as of the day and year first above
written.
EXECUTIVE:
______________________________
Wayne McAteer
COMPANY:
RIDGEWOOD PROPERTIES, INC.
By: ______________________________
Its President
(CORPORATE SEAL)
Exhibit 1.13(a)(ii)
POST-EMPLOYMENT CONSULTING AGREEMENT
THIS POST-EMPLOYMENT CONSULTING AGREEMENT (the "Agreement") is made and
entered into this 7th day of December, 1995, by and between RIDGEWOOD
PROPERTIES, INC. Delaware corporation with offices at 2859 Paces Ferry Road,
Suite 700, Atlanta, Georgia 30339 (the "Company"), and SAMUEL KING, an
individual residing at 120 Colonade Drive, Peachtree City, Georgia 30269 (the
"Executive").
W I T N E S S E T H:
WHEREAS, the Executive is employed as an officer of the Company's
wholly-owned Subsidiary, Wesley Hotel Group, Inc., and as such the Board of
Directors of the Company deems it in the best interest of the Company to
offer this Agreement to the Executive; and
WHEREAS, the Company and the Executive wish to provide for the Company's
retention of the Executive to perform certain consulting services following
termination of the Executive's employment by the Company, all upon the terms
and conditions hereinafter set forth;
NOW, THEREFORE, FOR AND IN CONSIDERATION of the premises, the mutual
covenants and obligations hereinafter set forth, and other and good valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto hereby agree as follows:
30. Events of Termination Triggering Consulting Services.
(1) For purposes of this Section 1, the following definitions apply:
(i) "Cause" shall mean that the Executive: (A) has misappropriated,
stolen or embezzled funds of the Company; or (B) has committed an act of
deceit, fraud, dereliction of duty, or gross or wilful misconduct materially
harmful to the Company; or (C) has been convicted of either a felony or a
crime involving moral turpitude or entered a plea of nolo contendre in
response to an indictment for such crime or felony; or (D) has intentionally
disclosed information of the Company designated by the Company as being
confidential or proprietary in nature and which designation has been
communicated to Executive (hereinafter "Confidential Information") except
when such disclosure is made pursuant to the direction of the Company or in
accordance with company policy; or (E) has engaged in competitive behavior
materially detrimental or damaging as against the Company, has purposely
aided a competitor of the Company to the disadvantage of or damage to the
Company or has misappropriated or aided in misappropriating a material
opportunity of the Company.
(ii) "Good Reason" shall mean, without the written consent of the
Executive: (A) a reduction in the Executive's base salary or a reduction in
the Executive's benefits received from the Company other than in connection
with an across-the-board reduction in salaries and/or benefits for similarly
situated employees of the Company or pursuant to the Company's standard
retirement policy; or (B) the relocation of the Executive's full-time office
to a location greater than fifty (50) miles from the Company's current
corporate office; or (C) a reduction in the Executive's corporate title.
(2) The Company shall be obligated to retain the Executive as a
consultant only:
(i) upon the execution by the Executive of a release of the
Company in the form attached to this Agreement or in such other form as may
be deemed necessary by the Company from time to time to provide the Company
with a valid and enforceable unconditional release (the "Release Agreement");
provided, however, that the Executive shall only be obligated to execute the
Release Agreement if the Company agrees, at the time, to execute such Release
Agreement in the form attached to this Agreement or in such other form that
shall contain provisions acceptable to the Executive relating to the
Company's release of the Executive; and
(ii) in the event of a termination of the Executive's employment
with the Company due to one of the following events (hereinafter, a
"Qualifying Termination"): (A) the Company's termination of the Executive's
employment other than for Cause; or (B) the Executive's voluntary termination
of employment with the Company within thirty (30) days of an event qualifying
as Good Reason.
31. Consulting Services.
Upon the occurrence of a Qualifying Termination and the execution by the
Executive of the Release Agreement, the Company shall retain the Executive to
perform certain consulting services (the "Consulting Services"), and the
Executive shall perform such services, all in accordance with the terms and
conditions of this Agreement. The Consulting Services shall consist of the
following:
(a) the performance of consulting services to the Company, as and
when reasonably requested, to assist the Company in the transition period
following termination of the Executive's employment and to answer questions,
give testimony and generally cooperate in any Company matters, including
litigation, provided that the Consulting Services shall in no event require
the Executive to dedicate more than twenty (20) hours per calendar week to
the performance thereof;
(b) the general promotion of the goodwill of the Company.
32. Consulting Period.
(a) Subject to the possible extension set forth in subparagraph
(b) below, the Executive shall perform the Consulting services for a period
of time (the "Consulting Period") commencing on the day following a
Qualifying Termination and continuing thereafter until the expiration of
twelve (12) months.
33. Consulting Fee/Benefits.
(a) Subject to the provisions of Sections 5, 6 and 11 hereof, the
Executive shall receive during the Consulting Period, as full compensation
for the Consulting Services, a fee, payable in equal monthly installments (a
"Consulting Fee" and collectively, the "Consulting Fee") equal to the
Executive's annual base salary immediately prior to the Qualifying
Termination divided by twelve (12). The Executive's annual base salary for
purposes of calculating the Consulting Fee shall consist solely of the
Executive's base salary, exclusive of any bonuses, commissions, allowances or
other means of compensation or benefits made available to the Executive as an
employee of the Company. The Consulting Fee for any partial months during
the Consulting Period shall be reduced proportionately. The aggregate amount
of all Consulting Fees to be paid during the full Consulting Period is
sometimes hereinafter referred to as the "Total Consulting Fees."
(b) Subject to the provisions of Section 5 hereof, during the
Consulting Period the Company shall also make available to the Executive such
medical, dental and vision insurance coverage as may be provided to the
Executive by the Company immediately prior to the Qualifying Termination (or
such Company medical insurance coverage which is consistent with the coverage
in place from time to time for comparable executives of the Company). Such
medical insurance coverage shall be provided to the extent available pursuant
to the continuation coverage provisions of the Consolidated Omnibus Budget
Reconciliation Act of 1985 ("COBRA") and, if necessary, pursuant to insurance
policies providing comparable benefits to the Executive in the event of the
inapplicability or expiration of COBRA benefits. The Executive will be
charged a premium equal to fifty percent (50%) of the Company's cost for the
medical insurance so provided. Upon expiration of the Consulting Period, the
Company may charge the maximum premium permitted under COBRA for any
remaining continuation coverage to which the Executive is entitled. Group
car and homeowners' insurance, if applicable, may be continued during the
term of the Agreement, provided that the Executive agrees to pay all
applicable premiums.
(c) Subject to the provisions of section 5 hereof, during the
Consulting Period the Company shall also make available to the Executive life
insurance coverage, if any, as may be provided to the Executive by the
Company immediately prior to the Qualifying Termination, provided, however,
that the Executive agrees to pay fifty percent (50%) of the Company's cost of
such coverage.
(d) The Company shall also reimburse the Executive immediately for
pre-approved expenses actually incurred by the Executive at the request of
the Company in performance of the Consulting Services. The Executive shall
not be subject to any obligation to bear or pay any expenses not otherwise
approved by the Company in rendering the Consulting Services hereunder.
34. Effect of Re-Employment/Other Compensation.
(a) If at any time during the Consulting Period, the Executive
enters into employment ("Re-Employment"), the Executive shall immediately
notify the Company in writing of the Executive's monthly compensation to be
received from such ReEmployment and any insurance coverage provided pursuant
thereto, and the following provisions shall apply:
(i) If the Executive's monthly compensation from ReEmployment
is equal to or in excess of the Consulting Fee, the Company shall promptly
pay the Executive, in full satisfaction of all obligations to pay the
Consulting Fees hereunder, an amount equal to fifty percent (50%) of the
remainder of: (A) the Total Consulting Fees less (B) the Consulting Fees
actually paid to the Executive prior to ReEmployment. Notwithstanding
anything herein to the contrary, upon payment by the Company of the amounts
set forth in this Section 5(a)(i), the Company shall cease to have any
obligations under the terms of this Agreement and the Consulting Period shall
be deemed to immediately expire.
(ii) If the Executive's monthly compensation from
Re-Employment is less than the Consulting Fee, the Consulting Fee payable to
the Executive for the remainder of the Consulting Period shall automatically
be reduced by the amount of the Executive's monthly compensation from
Re-Employment; provided, however, that at the end of the Consulting Period
the Company shall pay the Executive an amount equal to fifty percent (50%) of
the remainder of: (A) the Total Consulting Fees less (B) the actual
Consulting Fees paid the Executive during the Consulting Period. The
Executive shall immediately notify the Company of any change in the level of
compensation received from Re-Employment and, if such compensation increases
to a level equal to or in excess of the Consulting Fee, the provisions of
Section 5(a)(i) shall then apply.
(b) Provided COBRA requirements have been met, the Company's
obligation to provide insurance coverage to the Executive under
Section 4(b) hereof shall terminate as to any specific coverage if and when
comparable coverage is made available to the Executive in connection with
Re-Employment.
35. Death or Retirement.
(a) If at any time during the Consulting Period during which the
Company remains obligated to pay Consulting Fees to the Executive, the
Executive dies, the Company shall pay the Executive's estate in full
satisfaction of all obligations to the Executive hereunder, an amount equal
to one hundred percent (100%) of the remainder of: (A) the Total Consulting
Fees less (B) the actual Consulting Fees paid the Executive prior to the
Executive's death and less (C) any re-employment compensation received by the
Executive pursuant to Re-Employment as described in Section 5 above.
(b) If at any time during the Consulting Period during which the
Company remains obligated to pay Consulting Fees to the Executive, the
Executive becomes eligible for and receives retirement benefits from the
Company, the Company shall pay monthly to the Executive for the remainder of
the Consulting Period, a reduced amount equal to the monthly Consulting Fee
less any amounts accrued or received by the Executive as retirement payments
for such month.
(c) If at any time during the Consulting Period during which the
Company remains obligated to pay Consulting Fees to the Executive, the
Executive suffers any physical or mental impairment which prohibits the
Executive from performing Consulting Services hereunder for a period in
excess of 30 consecutive days (a "disability"), then the Executive shall not
be required to perform Consulting Services for the duration of such
disability, but shall continue to receive Consulting Fees for the duration of
the Consulting Period. In the event of the Executive's disability, the
Company shall have the right to require, and Executive agrees to be subject
to, an examination by such physicians as the Company requires to verify the
existence of Executive's disability.
36. Status of the Parties.
The Executive, in performance of any Consulting Services hereunder,
shall be acting as an independent contractor and shall not be an employee of
the Company. The Executive shall not be entitled to any compensation or
other benefits given to or provided for the benefit of any employees of the
Company, including, without limitation, the right to participate in or
receive credit for service under any "employee welfare benefit plan" or
"employee pension benefit plan" (as such terms are defined in the Employee
Retirement Income Security Act of 1974) and the Executive shall not in any
form or fashion maintain, hold out, represent, state or imply to any other
individual or entity that an employee/employer relationship exists between
the Company and the Executive.
37. Responsibility for Expenses.
The Executive hereby recognizes, covenants and agrees that it will be
acting as an independent contractor in performing any Consulting Services
hereunder, and that except as specifically set forth to the contrary herein,
the Executive shall be solely responsible and liable for all taxes,
including, without limitation, withholding taxes, social security taxes and
unemployment taxes and shall also be responsible for any other expenses,
costs, liabilities, undertakings, assessments, taxes, insurance and other
obligations voluntarily incurred by the Executive at any time and for any
reason as a result of this Agreement or the performance of the Consulting
Services, including, without limitation, withholding taxes, social security
taxes and state unemployment taxes.
38. Nondisclosure; Ownership of Proprietary Property.
The Executive shall regard and treat each item constituting all or any
portion of the Company trade secrets and all Confidential Information as
strictly confidential and wholly owned by the Company and will not, for any
reason in any fashion, either directly or indirectly use, sell, disclose or
distribute any such item or information to any third party for any purpose
other than in accordance with the Executive's performance of the Consulting
services.
39. Stock Options and Stock Purchase Agreements.
Any agreements for or options to purchase the Company's stock held by
the Executive at the time of any termination of the Executive's employment
with the Company shall be exercisable in accordance with the terms of the
applicable stock purchase agreements or stock option plans.
40. Breach or Default.
Upon the occurrence of any breach or default in the performance of any
of the Executive's duties or responsibilities hereunder, and the Executive's
failure to commence the cure of such breach or default within seven (7) days
of receipt of written notice thereof and thereafter diligently pursue such
cure to completion, all obligations of the Company hereunder to compensate
the Executive or to provide benefits thereto shall immediately be terminated
and rendered null, void and of no further effect, after which the Company
shall be entitled to pursue any and all remedies available, at law or in
equity, to address the Executive's breach or default hereunder.
41. No Right to Continued Employment.
Nothing herein shall be construed as giving the Executive any rights to
continued employment with the Company, and the Company shall continue to have
the right to terminate the Executive with or without cause.
42. Rights to Indemnification.
Nothing in this Agreement shall be construed as a waiver or limitation
upon any rights or entitlements of the Executive to indemnification and
liability insurance coverage pursuant to any indemnity agreement, or the
Company's certificate of incorporation or Bylaws or the laws of the State of
Delaware, common law or otherwise.
43. Goodwill Covenant.
During the term of this Agreement, the Executive covenants and agrees to
refrain from making detrimental statements or taking any action detrimental
to the business or goodwill of the Company.
44. Representations of Company.
The Company hereby represents and warrants to Executive that (i) the
benefits provided Executive hereunder are commensurate in amount, level and
type to the post employment or severance benefits offered or extended by the
Company to N. Russell Walden, and (ii) the obligations required of Executive
hereunder are no more onerous than the obligations required by the Company of
N. Russell Walden. The Company further agrees that should (a) any more
favorable post employment or severance benefits be offered by the Company to
N. Russell Walden, this Agreement shall be amended to include said favorable
benefits and (b) should the obligations imposed by the Company on N. Russell
Walden as a condition to his receipt of benefits similar to those extended to
Executive hereunder be less onerous than those imposed upon Executive
hereunder, this Agreement shall be amended to eliminate said onerous
obligations hereunder.
45. General Provisions.
(a) Binding Effect and Assignability. The rights and obligations
under this Agreement shall inure to the benefit of and be binding upon the
Executive, the Company and their successors and assigns. Neither this
Agreement, nor any rights or obligations of the Executive herein shall be
transferable or assignable by the Executive without the Company's prior
written consent, and any attempted transfer or assignment hereof by the
Executive not in accordance herewith shall be void.
(b) Notices. Any notices or other communications required or
permitted hereunder shall be deemed to have been duly given on the date of
service if personally served or three (3) days after mailing if mailed by
first class mail, registered or certified, postage prepaid and addressed to
the parties at their addresses as set forth in the most current records of
the Company, or to such other address as shall be designated by written
notice issued pursuant hereto.
(c) Entire Agreement. This Agreement, together with the Release
Agreement, contains the entire agreement of the parties relating to the
subject matter hereof and supersedes any prior agreements or understandings,
oral or written, to the contrary.
(d) Waiver. The waiver of the breach of any term or condition of
this Agreement shall not be deemed to constitute the waiver of any other or
subsequent breach of the same or any other term or condition.
(e) Governing Law. This Agreement shall be construed and enforced
in accordance with the laws of the State of Georgia.
(f) Severability. The unenforceability or invalidity of any term,
provision or Section of this Agreement shall not affect the validity or
enforceability of the remaining terms, provisions, or sections hereof, but
such remaining terms, provisions or sections shall be construed and
interpreted in such a manner as to carry out fully the intent of the parties
hereto.
(g) Modification. This Agreement shall not be modified or amended
except by a written instrument signed by an authorized representative of all
parties executing this Agreement.
IN WITNESS WHEREOF, the Executive has executed this Agreement, and the
Company has caused its duly authorized corporate officer to execute this
Agreement and affix its seal hereto, all as of the day and year first above
written.
COMPANY
RIDGEWOOD PROPERTIES, INC,
By:____________________________
N. Russell Walden, President
(CORPORATE SEAL)
EXECUTIVE
________________________(SEAL)
Samuel King
UNCONDITIONAL RELEASE OF ALL CLAIMS AND LIABILITY
THIS UNCONDITIONAL RELEASE OF ALL CLAIMS AND LIABILITY (the "Release")
is made and entered into as of this 7th day of December, 1995, by SAMUEL KING
(the "Executive") in favor of RIDGEWOOD PROPERTIES, INC., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the Company has, prior to the date hereof, employed the
Executive as a full time employee of the Company, but as of this date the
Executive's status as an employee has terminated; and
WHEREAS, the Company desires to engage the Executive as a consultant for
the Company and the Executive desires to be engaged by the Company as a
consultant pursuant to the terms of the Post-Employment Consulting Agreement,
dated December 7, 1995 between the Company and the Executive (the "Consulting
Agreement"); and
WHEREAS, the Company has required, as a condition precedent to the
engagement of the Executive as a consultant for the Company, that the
Executive execute and deliver this Release in favor of the Company, whereupon
the Company shall execute and deliver this Release in favor of Executive;
NOW, THEREFORE, for and in consideration of the premises, the agreement
of the Company to engage the Executive as a consultant and for other good and
valuable consideration, the receipt, adequacy and sufficiency of which are
hereby acknowledged, the parties hereby agrees as follows:
1. Release. Except with respect to the Company's obligations pursuant
to the Consulting Agreement and any vested retirement benefits applicable to
the Executive, the Executive hereby unconditionally remises, releases and
forever discharges, to the fullest extent permitted by law, the Company, its
employees, officers, directors, agents, affiliates, subsidiaries and each of
them from all manner of actions, proceedings, causes of action, claims,
counterclaims, suits, debts, sums, monies, accounts, covenants, agreements,
promises, damages, losses or demands of whatever kind or nature from the
beginning of time to the present, whether known or unknown, in law or in
equity, which in the past, now or in the future arise, may arise or allegedly
arise or are in any way resulting from or in any manner connected with the
Executive's employment by the Company and the termination of such employment
by the Company. In consideration of the benefits payable under the
Consulting Agreement, the Executive waives all claims and causes of action
against the Company and all damages, if any, that may be recoverable. This
release and waiver of all claims and damages includes, but is not limited to,
any tort or claim of contractual restriction relating to Executive's
employment or termination thereof, any claim of wrongful %PAGES discharge,
and all rights under federal, state or local law prohibiting race, sex, age,
religion, national origin, handicap, disability or other forms of
discrimination, including but not %PAGEE limited to, Title VII of the Civil
Rights Act of 1964, as amended, the Age Discrimination in Employment Act, as
amended, any state or local human rights laws, Workers' Compensation laws,
and the National Labor Relations Act, as amended.
2. Company's Release. Except with respect to the Executive's
obligations pursuant to the Consulting Agreement, the Company hereby
unconditionally remises, releases, and forever discharges, to the fullest
extent permitted by law, the Executive and his heirs, successors, legal
representatives and assigns and each of them from all manner of actions,
proceedings, causes of action, claims, counterclaims, suits, debts, sums,
monies, accounts, covenants, agreements, promises, damages, losses, or
demands of whatever kind or nature from the beginning of time to the present,
whether known or unknown, in law or in equity, which in the past, now or in
future arise, may arise, or allegedly arise or are in any way resulting from
or in any manner connected with the Executive's employment by the Company.
In consideration for Executive's performance of those services under the
Consulting Agreement, the Company waives all claims and causes of action
against the Executive and all damages, if any, that may be recoverable. This
release and waiver of all claims and damages includes, but is not limited to,
any tort or claim of contractual restriction relating to Executive's
employment.
2. Miscellaneous. This Release embodies the entire agreement of the
parties and supersedes all prior agreements between the parties hereto
relating to the subject matter hereof. The unenforceability or invalidity of
any of the terms or provisions of this agreement shall not affect the
validity or enforceability of the remaining terms or provisions which shall
be interpreted and construed in such manner as to carry out fully the
intention of the parties hereto. This Release shall be construed and
enforced in accordance with the laws of the State of Georgia.
Each party understands that by executing this Release, such party is
giving up possible rights that he or it may have, and that such party does
not have to sign this Release. This Release has been voluntarily and
knowingly executed by each party with the express intention of effecting the
extinguishment of any and all obligations and damages that such party may owe
to the other party as provided herein.
THE EXECUTIVE UNDERSTANDS THAT THE EXECUTIVE HAS 21 DAYS TO CONSIDER
WHETHER OR NOT TO EXECUTE THIS RELEASE. THE EXECUTIVE UNDERSTANDS THAT A
PORTION OF THIS RELEASE, SOLELY RELATING TO THE EXECUTIVE'S RIGHTS UNDER THE
FEDERAL AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED, MAY BE REVOKED BY
NOTIFYING THE COMPANY IN WRITING OF SUCH REVOCATION WITHIN 7 DAYS OF
EXECUTION OF THIS RELEASE. THE PORTION OF THIS RELEASE RELATING SOLELY TO
THE EXECUTIVE'S RIGHTS UNDER THE FEDERAL AGE DISCRIMINATION IN EMPLOYMENT
ACT, AS AMENDED, IS NOT EFFECTIVE UNTIL THE EXPIRATION OF SUCH 7 DAY PERIOD.
ALL PARTS OF THIS RELEASE NOT RELATING TO CLAIMS OF AGE DISCRIMINATION AND
ALLEGED DAMAGES UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED,
ARE EFFECTIVE IMMEDIATELY UPON EXECUTION OF THIS RELEASE, THE EXECUTIVE
UNDERSTANDS THAT UPON THE EXPIRATION OF SUCH 7 DAY PERIOD THIS RELEASE WILL
BECOME BINDING IN ITS ENTIRETY UPON THE EXECUTIVE AND ALL PORTIONS THEREOF
WILL BE IRREVOCABLE.
IN WITNESS WHEREOF, the Executive has duly executed this Release in
favor of the Company under seal as of the day and year first above written.
EXECUTIVE:
______________________________
Samuel King
Exhibit 1.13(a)(iii)
RIDGEWOOD PROPERTIES, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of the 7th day of December, 1995, by and among RIDGEWOOD PROPERTIES,
INC., a Delaware corporation (the "Company"), and WAYNE McATEER, an
individual resident of the State of Georgia ("McAteer") and SAMUEL KING, an
individual resident of the State of Georgia ("King").
IN CONSIDERATION of the mutual promises and covenants set forth herein,
and intending to be legally bound, the parties hereto hereby agree as
follows:
1. RESTRICTIONS ON TRANSFERABILITY OF SECURITIES; REGISTRATION RIGHTS
1.1 Certain Definitions . The following terms shall have the meanings
set forth below:
(a) "Holder" shall mean McAteer, King and any holder of
Registrable Securities to whom the rights conferred by this
Agreement have been transferred in compliance with Section 1.2
hereof.
(b) "Other Stockholders" shall mean persons who, by
virtue of agreements with the Company other than this Agreement,
are entitled to include their securities in certain registrations
hereunder.
(c) "Registrable Securities" shall mean shares of the
Company's common stock, $.01 par value per share (the "Ridgewood
Stock") issued to McAteer and King pursuant to that certain
Agreement and Plan of Merger dated as of a date even herewith,
provided that Registrable Securities shall not include any shares
of Ridgewood Stock which have previously been registered or which
have been sold to the public or which have been sold in a private
transaction in which the transferor's rights under this Agreement
are not assigned.
(d) The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of
1933, as amended (the "Securities Act"), and applicable rules and
regulations thereunder and the declaration or ordering of the
effectiveness of such registration statement.
(e) "Registration Expenses" shall mean all expenses
incurred in effecting any registration pursuant to this Agree-
ment, including, without limitation, all registration, qualifi-
cation and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and
expenses, and expenses of any regular or special audits incident
to or required by any such registration, but shall not include
(i) Selling Expenses (as hereafter defined), (ii) fees and
disbursements of counsel for the Holders, (iii) the compensation
of regular employees of the Company, which shall be paid in any
event by the Company, and (iv) blue sky fees and expenses in-
curred in connection with the registration or qualification of
any Registrable Securities in any state, province or other
jurisdiction in a registration pursuant to Section 1.3 hereof to
the extent that the Company shall otherwise be making no offers
or sales in such state, province or other jurisdiction in con-
nection with such registration.
(f) "Restricted Securities" shall mean any Registrable
Securities required to bear the legend set forth in Section
1.2(c) hereof.
(g) "Rule 144" shall mean Rule 144 as promulgated by the
Securities and Exchange Commission (the "SEC") under the Securi-
ties Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the SEC.
(h) "Rule 145" shall mean Rule 145 as promulgated by the
SEC under the Securities Act, as such Rule may be amended from
time to time, or any similar successor rule that may be promul-
gated by the SEC.
(i) "Selling Expenses" shall mean all underwriting
discounts, selling commissions and stock transfer taxes applic-
able to the sale of Registrable Securities.
1.2 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all
or any portion of the Registrable Securities unless and until (i)
there is then in effect a registration statement under the Secu-
rities Act covering such proposed disposition and such disposi-
tion is made in accordance with such registration statement, or
(ii) the transferee has agreed in writing for the benefit of the Company to
be bound by this Section 1.2 (unless waived by the Company) and (A) such
Holder shall have notified the Company of the proposed disposition and shall
have furnished the Company with a detailed statement of the circumstances
surrounding the proposed disposition and (B) if reasonably requested by the
Company, such Holder shall have furnished the Company with an opinion of
counsel, reasonably satisfactory to the Company, that such disposition will
not require registration of such shares under the Securities Act, it being
understood that the Company will not require opinions of counsel for
transactions made pursuant to Rule 144 except in unusual circumstances.
(b) Notwithstanding the provisions of subparagraphs (i)
and (ii) of paragraph (a) above, no such registration statement
or opinion of counsel shall be necessary for a transfer by a
Holder which is (A) a partnership to its partners in accordance
with partnership interests, or (B) to the Holder's family member
or a trust for the benefit of an individual Holder or one or more
of his family members, provided the transferee will be subject to
the terms of this Section 1.2 to the same extent as if he were an
original Holder hereunder.
(c) Each certificate representing Registrable Securities
shall (unless otherwise permitted by the provisions of this
Agreement) be stamped or otherwise imprinted with a legend sub-
stantially similar to the following (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER SUCH ACT OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR
OTHER EVIDENCE, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
(d) The Company shall be obligated to promptly reissue
unlegended certificates at the request of any Holder thereof if
the Holder shall have obtained an opinion of counsel (which
counsel may be counsel to the Company) reasonably acceptable to
the Company to the effect that the securities proposed to be
disposed of may lawfully be so disposed of in compliance with the
Securities Act without registration, qualification or legend.
(e) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instruc-
tions with respect to such securities shall be removed upon
receipt by the Company of an order of the appropriate blue sky
authority authorizing such removal or if the Holder shall request
such removal and shall have obtained and delivered to the Company
an opinion of counsel reasonably acceptable to the Company to the
effect that such legend and/or stop-transfer instructions are no
longer required pursuant to applicable state securities laws.
1.3 Company Registration
(a) Right to Piggyback. If the Company shall determine
to register any of its securities either for its own account or
the account of a security holder or holders, whether or not such
holder or holders are exercising their respective demand regis-
tration rights, other than a registration relating solely to
employee benefit plans, or a registration relating solely to a
Rule 145 transaction, or a registration on any registration form
that does not permit secondary sales, the Company will:
(i) promptly give to each Holder written notice
thereof, which notice briefly describes the Holders' rights
under this Section 1.3 (including notice deadlines); and
(ii) use its best efforts to include in such
registration (and any related filing or qualification under
applicable blue sky laws), except as set forth in Section
1.3(b) below, and in any underwriting involved therein, all
the Registrable Securities specified in a written request or
requests, made by any Holder and received by the Company
within twenty (20) days after the written notice from the
Company described in clause (i) above is mailed or delivered
by the Company, provided that such Holders shall have re-
quested for inclusion in such registration at least fifteen
(15%) of the aggregate number of the Registrable Securities
which have been issued to the Holder prior to the date of
such written request. Such written request may specify all
or a part of a Holder's Registrable Securities.
(b) Underwriting. If the registration of which the
Company gives notice is for a registered public offering involv-
ing an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 1.3(a)(i).
In such event, the right of any Holder to registration pursuant
to this Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the
Company and the other holders of securities of the Company with
registration rights to participate therein distributing their
securities through such underwriting) enter into an underwriting
agreement in customary form with the representative of the under-
writer or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1.3,
if the representative of the underwriters advises the Company in
writing that marketing factors require a limitation on the number
of shares to be underwritten, the representative may (subject to
the limitations set forth below) exclude all Registrable Securi-
ties from, or limit the number of Registrable Securities to be
included in, the registration and underwriting. The Company
shall so advise all Holders of securities requesting registra-
tion, and the number of shares of securities that are entitled to
be included in the registration and underwriting shall be allo-
cated first to the Company for securities being sold for its own
account and thereafter as set forth in Section 1.9. If any person
does not agree to the terms of any such underwriting, he shall be
excluded therefrom by written notice from the Company or the
underwriter. Any Registrable Securities or other securities
excluded or withdrawn from such underwriting shall be withdrawn
from such registration.
If shares are so withdrawn from the registration and if
the number of shares of Registrable Securities to be included in
such registration was previously reduced as a result of marketing
factors, the Company shall then offer to all persons who have
retained the right to include securities in the registration the
right to include additional securities in the registration in an
aggregate amount equal to the number of shares so withdrawn, with
such shares to be allocated among the persons requesting addi-
tional inclusion in accordance with Section 1.9 hereof.
In connection with the preparation and filing of any
registration statement registering Registrable Securities, the
Company will give the Holders and their counsel such opportunity
to participate in the preparation of the registration statement,
any prospectuses included therein and any amendments or supple-
ments thereto as shall, in the reasonable judgment of the
Company, be necessary to afford to the Holders defenses available
to them in actions that may arise under the Securities Act. The
Company will give the Holders and their counsel such access as
may reasonably be requested by the Holders to the books and
records of the Company and the officers and certified public
accountants of the Company as shall, in the reasonable judgment
of the Company, be necessary for the Holders to conduct a reason-
able investigation within the meaning of the Securities Act.
1.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 1.3 hereof shall be borne by the Company. All Selling Expenses
relating to securities so registered shall be borne by the holders of such
securities pro rata on the basis of the number of shares of securities so
registered on their behalf.
1.5 Registration Procedures. In the case of each registration effected
by the Company pursuant to Section 1.3 hereof, the Company will keep each
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will use its best efforts
to:
(a) keep such registration effective for a period of one
hundred twenty (120) days or until the Holder or Holders have
completed the distribution described in the registration state-
ment relating thereto, whichever first occurs, provided that such
120-day period shall be extended for a period of time equal to
the period the Holder refrains from selling any securities in-
cluded in such registration at the request of any underwriter;
(b) prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such
registration statement;
(c) furnish such number of prospectuses and other docu-
ments incident thereto, including any amendment of or supplement
to the prospectus, as a Holder from time to time may reasonably
request;
(d) notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus
relating thereto is required to be delivered under the Securities
Act of the happening of any event as a result of which the pros-
pectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits
to state a material fact required to be stated therein or neces-
sary to make the statements therein not misleading or incomplete
in the light of the circumstances then existing, and at the
request of any such Holder, prepare and furnish to such Holder a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter de-
livered to the purchasers of such Registrable Securities, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not mislead-
ing or incomplete in the light of the circumstances then exist-
ing; provided, however, the Company shall not be obligated to
prepare and furnish any such prospectus supplements or amendments
relating to any material nonpublic information at any such time
as the Board of Directors of the Company has determined that, for
good business reasons, the disclosure of such material nonpublic
information at that time is contrary to the best interests of the
Company in the circumstances and is not otherwise required under
applicable law (including applicable securities laws);
(e) cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange
and/or included in any national quotation system on which similar
securities issued by the Company are then listed or included;
(f) provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such registration
statement and a CUSIP number for all such Registrable Securities,
in each case not later than the effective date of such
registration;
(g) otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available
to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve (12)
months, but not more than eighteen months, beginning with the
first month after the effective date of the registration state-
ment, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act;
(h) in connection with any underwritten offering pursuant
to a registration statement filed pursuant to Section 1.3 hereof,
the Company will enter into an underwriting agreement reasonably
necessary to effect the offer and sale of Registrable Securities,
provided such underwriting agreement contains customary under-
writing provisions and provided further that if the underwriter
so requests the underwriting agreement will contain customary
indemnity and contribution provisions; and
(i) furnish to the Holders a signed counterpart addressed
to the Holders (or specifically stating the Holders may rely
thereon) of one or more "comfort letters" (dated the effective
date of the registration statement, the date of pricing of the
offering and the date of closing of the offering) and a legal
opinion of counsel to the Company (dated the date of the closing
of the offering), in each case covering such matters as are
customarily covered in comfort letters and legal opinions de-
livered to underwriters in underwritten public offerings of
securities.
1.6 Indemnification.
(a) The Company will indemnify each Holder, each of its
officers, directors and partners, legal counsel, and accountants
and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, with respect to which regis-
tration, qualification, or compliance has been effected pursuant
to this Section 1, and each underwriter, if any, and each person
who controls within the meaning of Section 15 of the Securities
Act any underwriter, against all expenses, claims, losses,
damages, and liabilities (or actions, proceedings, or settlements
in respect thereof) arising out of or based on any untrue state-
ment (or alleged untrue statement) of a material fact contained
in any prospectus, offering circular, or other document (includ-
ing any related registration statement, notification, or the
like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or any
violation by the Company of the Securities Act or any rule or
regulation thereunder applicable to the Company or relating to
action or inaction required of the Company in connection with any
such registration, qualification, or compliance, and will reim-
burse each such Holder, each of its officers, directors, part-
ners, legal counsel, and accountants and each person controlling
such Holder, each such underwriter, and each person who controls
any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating and defend-
ing or settling any such claim, loss, damage, liability, or
action, provided that the Company will not be liable in any such
case to the extent that any such claim, loss, damage, liability,
or expense arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company
by such Holder or underwriter and stated to be specifically for
use therein. It is agreed that the indemnity agreement contained
in this Section 1.6(a) shall not apply to amounts paid in settle-
ment of any such loss, claim, damage, liability, or action if
such settlement is effected without the consent of the Company
(which consent has not been unreasonably withheld).
(b) Each Holder will, if Registrable Securities held by
him are included in the securities as to which such registration,
qualification, or compliance is being effected, indemnify the
Company, each of its directors, officers, partners, legal
counsel, and accountants and each underwriter, if any, of the
Company's securities covered by such a registration statement,
each person who controls the Company or such underwriter within
the meaning of Section 15 of the Securities Act, each other such
Holder and Other Stockholder, and each of their officers, direc-
tors, and partners, and each person controlling such Holder or
Other Stockholder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, pros-
pectus, offering circular, or other document, or any omission (or
alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Holders,
Other Stockholders, directors, officers, partners, legal counsel,
and accountants, persons, underwriters, or control persons for
any legal or any other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage,
liability, or action,, in each case to the extent, but only to
the extent, that such untrue statement (or alleged untrue state-
ment) or omission (or alleged omission) is made in such registra-
tion statement, prospectus, offering circular or other document
in reliance upon and in conformity with written information furn-
ished to the Company by such Holder and stated to be specifically
for use therein; provided, however, (i) that the obligations of
such Holder hereunder shall not apply to amounts paid in settle-
ment of any such claims, losses, damages, or liabilities (or
actions in respect thereof) if such settlement is effected with-
out the consent of such Holder (which consent shall not be
unreasonably withheld) and (ii) that in no event shall any in-
demnity under this Section 1.6 exceed the gross proceeds from the
offering received by such Holder.
(c) Each party entitled to indemnification under this
Section 1.6 (the "Indemnified Party") shall give notice to the
party required to provide indemnification (the "Indemnifying
Party") promptly after such Indemnified Party has actual knowl-
edge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of such claim
or any litigation resulting therefrom, provided that counsel for
the Indemnifying Party, who shall conduct the defense of such
claim or any litigation resulting therefrom, shall be approved by
the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the
failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obliga-
tions under this Section 1, to the extent such failure is not
prejudicial. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemni-
fied Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall
be reasonably required in connection with defense of such claim
and litigation resulting therefrom.
(d) If the indemnification provided for in this Section
1.6 is held by a court of competent jurisdiction to be unavail-
able to an Indemnified Party with respect to any loss, liability,
claim, damage, or expense referred to therein, then the Indemni-
fying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim,
damage, or expense in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one
hand and of the Indemnified Party on the other in connection with
the conduct, statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other rele-
vant equitable considerations. The relative fault of the Indem-
nifying Party and of the Indemnified Party shall be determined by
reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Indemnifying
Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information, and opportunity to
correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement entered into by the Indemnifying Party and
the Indemnified Party in connection with the underwritten public
offering are in conflict with the foregoing provisions, the pro-
visions in the underwriting agreement shall control.
1.7 Information by Holder. Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification, or compliance referred to in this Section 1.
1.8 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the SEC that may permit the sale of the
Restricted Securities to the public without registration, the Company agrees
to use its best efforts to:
(a) make and keep public information regarding the
Company available as those terms are understood and defined in
Rule 144 under the Securities Act;
(b) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act
and the Securities Exchange Act of 1934 (the "Exchange Act"); and
(c) so long as a Holder owns any Restricted Securities,
furnish to the Holder forthwith upon written request a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so
filed as a Holder may reasonably request in availing itself of
any rule or regulation of the SEC allowing a Holder to sell any
such securities without registration.
1.9 Allocation of Registration Opportunities . In any circumstance in
which all of the Registrable Securities and other shares of the Company with
registration rights (the "Other Shares") requested to be included in a
registration on behalf of the Holders or Other Stockholders cannot be so
included as a result of limitations of the aggregate number of shares of
Registrable Securities and Other Shares that may be so included, the number
of shares of Registrable Securities and Other Shares that may be so included
shall be allocated among the Holders and Other Stockholders requesting
inclusion of shares pro rata on the basis of the number of shares of
Registrable Securities and Other Shares held by such Holders and Other
Stockholders; provided, however, that such allocation shall not operate to
reduce the aggregate number of Registrable Securities and Other Shares to be
included in such registration. If any Holder or Other Stockholder does not
request inclusion of the maximum number of shares of Registrable Securities
and Other Shares allocated to him pursuant to the above-described procedure,
the remaining portion of his allocation shall be reallocated among those
requesting Holders and Other Stockholders whose allocations did not satisfy
their requests pro rata on the basis of the number of shares of Registrable
Securities and Other Shares which would be held by such Holders and Other
Stockholders, assuming conversion, and this procedure shall be repeated until
all of the shares of Registrable Securities and Other Shares which may be
included in the registration on behalf of the Holders and Other Stockholders
have been so allocated.
1.10 Delay of Registration. No Holder shall have any right to take
any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation
or implementation of this Section 1.
1.11 Other Registration Rights. So long as a Holder owns any
Restricted Securities, the Company shall not grant or afford to N. Russell
Walden or any members of his immediate family or affiliates any rights in
respect of the registration of any Company securities that are in any way
superior to the rights of McAteer and King hereunder.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND McATEER AND KING
2.1 )Representations and Warranties of the Company. The
Company represents and warrants to McAteer and King as follows:
(a) The execution, delivery and performance of this
Agreement by the Company has been duly authorized by all
requisite corporate action and will not violate any provision of
law, any order of any court or other agency of government, the
Certificate of Incorporation or Bylaws of the Company, or any
provision of any material indenture, agreement or other instru-
ment to which it or any of its properties or assets is bound, or
conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any such
material indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of
any nature whatsoever upon any of the properties or assets of the
Company.
(b) This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles, the
discretion of courts in granting equitable remedies and public
policy considerations.
(c) As of the date hereof, the Company has not granted to
any other party any other rights with respect to the registration
of any Company securities.
2.2 Representations and Warranties of McAteer and King.
McAteer and King represent and warrant to the Company as follows:
(a) The execution, delivery and performance of this
Agreement by McAteer and King will not violate any provision of
law, any order of any court or any agency or government, or any
provision of any material indenture or agreement or other instru-
ment to which they or any of their properties or assets are
bound, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under any
such material indenture, agreement or other instrument, or result
in the creation or imposition of any lien, charge, or encumbrance
of any nature whatsoever upon any of the properties or assets of
McAteer or King.
(b) This Agreement has been duly executed and delivered
by McAteer and King and constitutes the legal, valid and binding
obligation of McAteer and King, enforceable against each of them
in accordance with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles, the
discretion of courts in granting equitable remedies and public
policy considerations.
3. MISCELLANEOUS
3.1 Lockup Agreement. In consideration for the Company's
agreeing to its obligations under this Agreement, each Holder
agrees that upon prior notice by the Company to such Holder and
effective upon the request of the underwriters managing a public
offering for sale by the Company of its securities, such Holder
shall be obligated for the lesser of 120 days or the length of
time the Company has agreed to be bound not to sell, loan, grant
any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the regis-
tration and other than to any transferee which agrees to be bound
by this Section 3.1) without the prior written consent of such
underwriters.
3.2 Governing Law . This Agreement shall be governed in all respects
by the laws of the State of Georgia, as if entered into by and between
Georgia residents exclusively for performance entirely within Georgia. %PAGEE
3.3 Successors and Assigns . Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
3.4 Entire Agreement; Amendment; Waiver . This Agreement constitutes
the full and entire understanding and agreement between the parties with
regard to the subject hereof and thereof. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated, except by a
written instrument signed by the Company and the Holders of at least
fifty-one percent (51%) of the Registrable Securities and any such amendment,
waiver, discharge or termination shall be binding on all the Holders, but in
no event shall the obligation of any Holder hereunder be materially
increased, except upon the written consent of such Holder.
3.5 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, or delivered personally by hand or
nationally recognized courier addressed (a) if to a Holder, as indicated in
the stock records of the Company or at such other address as such Holder
shall have furnished to the Company in writing, or (b) if to the Company, at
2859 Paces Ferry Road, Suite 700, Atlanta, Georgia 30339, or at such other
address as the Company shall have furnished to each Holder in writing. All
such notices and other written communications shall be effective on the date
of mailing or delivery.
3.6 Delays or Omissions . No delay or omission to exercise any right,
power or remedy accruing to any Holder, upon any breach or default of the
Company under this Agreement shall impair any such right, power or remedy of
such Holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Holder of any breach or default under this
Agreement or any waiver on the part of any Holder of any provisions or
conditions of this Agreement must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any Holder,
shall be cumulative and not alternative.
3.7 Rights; Severability. Unless otherwise expressly provided herein,
a Holder's rights hereunder are several rights, not rights jointly held with
any of the other Holders. In case any provision of the Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
3.8 Information Confidential. Each Holder acknowledges that the
information received by them pursuant hereto may be confidential and for its
use only, and it will not use such confidential information in violation of
the Exchange Act or reproduce, disclose or disseminate such information to
any other person (other than its employees or agents having a need to know
the contents of such information, and its attorneys), except in connection
with the exercise of rights under this Agreement, unless the Company has made
such information available to the public generally or such Holder is required
to disclose such information by a governmental body.
3.9 Titles and Subtitles. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
3.10 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
3.11 Jurisdiction. Any action, suit or proceeding seeking to enforce
any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby may be brought
against any of the parties in the United States District Court for the
Northern District of Georgia, or any state court sitting in the City of
Atlanta, Georgia, and each of the parties hereby consents to the exclusive
jurisdiction of such courts (and of the appropriate appellate courts) in any
such suit, action or proceeding and waives any objection to venue laid
therein. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the State of Georgia,
without limiting the foregoing, each of the parties hereto agrees that
service of process upon such party at the address referred to in Section 3.5,
together with written notice of such service to such party, shall be deemed
effective service of process upon such party.
IN WITNESS WHEREOF, the parties hereto have duly executed
and sealed this Agreement or have caused this Agreement to be
duly executed under seal on its behalf by an officer or
representative thereto duly authorized, all as of the date first
above written.
RIDGEWOOD PROPERTIES, INC.
By:______________________
ATTEST: Its:__________________________
[CORPORATE SEAL]
By:________________________
________________________(SEAL)
WAYNE McATEER
________________________(SEAL)
SAMUEL KING
