<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Ridgewood Hotels, Inc.
- --------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, $.01 Par Value
Series A Convertible Preferred Stock, $.01 Par Value
- --------------------------------------------------------------------------------
(Title of Class of Securities)
Common Stock: 766234 10 8
Series A Convertible Preferred Stock: None
- --------------------------------------------------------------------------------
(CUSIP Number)
Mr. Sheldon E. Misher, Secretary
Ridgewood Hotels, Inc.
2859 Paces Ferry Road, Suite 700
Atlanta, Georgia 30339
- --------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications)
January 10, 2000
- --------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box [ ].
Note: Schedules filed in paper format shall include a signed original and five
copies of the Schedule, including all exhibits. See Rule 13d-7(b) for other
parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
The Exhibit Index is located on page 13
Page 1 of 14
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SCHEDULE 13D
- ----------------------- ---------------------
CUSIP No. 766234 10 8 Page 2 OF 14 Pages
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Fountainhead Development Corp., Inc.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
WC, OO
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Georgia
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
None.
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
Common Stock: 3,065,000
OWNED BY Series A Convertible Preferred Stock: 450,000
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
None.
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10 Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Common Stock: 79.3%
Series A Convertible Preferred Stock: 100.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
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Page 2 of 14
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SCHEDULE 13D
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CUSIP No. 766234 10 8 Page 3 of 14 Pages
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Fountainhead Holdings, Ltd.
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
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CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Bermuda
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
None.
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
Common Stock: 3,065,000
OWNED BY Series A Convertible Preferred Stock: 450,000
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
None.
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10 Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Common Stock: 79.3%
Series A Convertible Preferred Stock: 100.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
CO
- ------------------------------------------------------------------------------
Page 3 of 14
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP No. 766234 10 8 Page 4 of 14 Pages
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Donald E. Panoz
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Ireland
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
None.
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
Common Stock: 3,065,000
OWNED BY Series A Convertible Preferred Stock: 450,000
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
None.
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10 Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Common Stock: 79.3%
Series A Convertible Preferred Stock: 100.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
Page 4 of 14
<PAGE>
SCHEDULE 13D
- ----------------------- ---------------------
CUSIP No. 766234 10 8 Page 5 of 14 Pages
- ----------------------- ---------------------
- ------------------------------------------------------------------------------
NAME OF REPORTING PERSON
1 I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS (ENTITIES ONLY)
Nancy C. Panoz
- ------------------------------------------------------------------------------
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
2 (a) [_]
(b) [_]
- ------------------------------------------------------------------------------
SEC USE ONLY
3
- ------------------------------------------------------------------------------
SOURCE OF FUNDS*
4
AF
- ------------------------------------------------------------------------------
CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) or 2(e) [_]
5
- ------------------------------------------------------------------------------
CITIZENSHIP OR PLACE OF ORGANIZATION
6
Ireland
- ------------------------------------------------------------------------------
SOLE VOTING POWER
7
NUMBER OF
None.
SHARES -----------------------------------------------------------
SHARED VOTING POWER
BENEFICIALLY 8
Common Stock: 3,065,000
OWNED BY Series A Convertible Preferred Stock: 450,000
-----------------------------------------------------------
EACH SOLE DISPOSITIVE POWER
9
REPORTING
None.
PERSON -----------------------------------------------------------
SHARED DISPOSITIVE POWER
WITH 10 Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11
Common Stock: 3,065,000
Series A Convertible Preferred Stock: 450,000
- ------------------------------------------------------------------------------
CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
12
[_]
- ------------------------------------------------------------------------------
PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13
Common Stock: 79.3%
Series A Convertible Preferred Stock: 100.0%
- ------------------------------------------------------------------------------
TYPE OF REPORTING PERSON*
14
IN
- ------------------------------------------------------------------------------
Page 5 of 14
<PAGE>
Item 1. Security and Issuer.
This statement is being filed jointly by and on behalf of each of
Fountainhead Development Corp., Inc. ("Fountainhead"), Fountainhead Holdings,
Ltd. ("Holdings"), Donald E. Panoz and Nancy C. Panoz and relates to shares of
the common stock, designated as Common Stock, par value $.01 per share (the
"Common Stock"), and shares of the only series of preferred stock issued and
outstanding, designated as Series A Convertible Preferred Stock, par value $.01
per share (the "Preferred Stock"), of Ridgewood Hotels, Inc. (the "Issuer").
The Issuer's principal executive offices are located at 2859 Paces Ferry
Road, Suite 700, Atlanta, Georgia 30339.
Item 2. Identity and Background.
Fountainhead Development Corp., Inc.
Fountainhead is a Georgia corporation. Fountainhead's principal business
is the ownership and operation of hotel, resort and other real estate
properties. The address of Fountainhead's principal business and its principal
office is 1394 Broadway Avenue, Braselton, Georgia 30517.
Fountainhead's executive officers and directors, and their principal
occupations, are as follows:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------
Name Title Principal Occupation
- -------------------------------------------------------------------------------------------
<S> <C> <C>
Donald E. Panoz Chairman Chairman, Fountainhead; Chief Executive
Officer of the Issuer; and Chairman of
Elan Motor Sports Technologies, Inc., an
auto racing designer, developer and
manufacturer
- -------------------------------------------------------------------------------------------
Nancy C. Panoz Vice President and Vice President and Director of
Director Fountainhead and President of Nanco
Holdings, Inc., the owner of a water
bottling plant
- -------------------------------------------------------------------------------------------
Henk H. Evers President and Chief President and Chief Executive Officer of
Executive Officer Fountainhead
- -------------------------------------------------------------------------------------------
Anthony J. Mastandrea Chief Financial Chief Financial Officer of Fountainhead
Officer and Treasurer
- -------------------------------------------------------------------------------------------
</TABLE>
During the last five years, neither Fountainhead, nor any of its executive
officers or directors, has been (1) convicted in a criminal proceeding, or (2) a
party
Page 6 of 14
<PAGE>
to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any of them was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Mr. and Mrs. Panoz are citizens of Ireland. Mr. Evers is a citizen of The
Netherlands. Mr. Mastandrea is a citizen of the United States.
Fountainhead Holdings, Ltd.
Holdings is a Bermuda corporation. Holdings' is principally engaged in the
business of investing in other businesses. The address of Holdings' principal
business and its principal office is P.O. Box HM 666, Clarendon House, Church
Street, Hamilton, HM CX, Bermuda.
Holdings' executive officers and directors, and their principal
occupations, are as follows:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------
Name Title Principal Occupation
- ------------------------------------------------------------------------------------------
<S> <C> <C>
Donald E. Panoz President and Director Chairman, Fountainhead; Chief Executive
Officer of the Issuer; and Chairman of
Elan Motor Sports Technologies, Inc.,
an auto racing designer, developer and
manufacturer
- ------------------------------------------------------------------------------------------
Nancy C. Panoz Vice President and Vice President and Director of
Director Fountainhead and President,
Nanco Holdings, Inc., the
owner of a water bottling plant
- ------------------------------------------------------------------------------------------
Anthony J. Mastandrea Chief Financial Chief Financial Officer of Fountainhead
Officer and Treasurer
- ------------------------------------------------------------------------------------------
David J. Doyle Director Associate, Conyers Dill & Pearman,
Clarendon House, #2 Church Street, HM
11, Bermuda
- ------------------------------------------------------------------------------------------
James M. Macdonald Director Partner, Conyers Dill & Pearman,
Clarendon House, #2 Church Street, HM
11, Bermuda
- ------------------------------------------------------------------------------------------
Clement Talbot Director Vice President, Bank of Bermuda, 6
Front Street, Hamilton, HM 11, Bermuda
- ------------------------------------------------------------------------------------------
</TABLE>
During the last five years, neither Holdings, nor any of its executive
officers or directors, has been (1) convicted in a criminal proceeding, or (2) a
party to a civil proceeding of a judicial or administrative body of competent
jurisdiction as a result of which any of them was or is subject to a judgment,
decree or final order enjoining
Page 7 of 14
<PAGE>
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Mr. and Mrs. Panoz are citizens of Ireland. Mr. Mastandrea is a citizen of
the United States. Each of Messrs. Doyle, Macdonald and Talbot are citizens of
Bermuda.
Donald E. Panoz and Nancy C. Panoz
The business address of both Donald E. Panoz and Nancy C. Panoz is 1394
Broadway Avenue, Braselton, Georgia 30517. Mr. Panoz's principal occupation is
serving as Chairman of Fountainhead, Chief Executive Officer of the Issuer and
Chairman of Elan Motor Sports Technologies, Inc., an auto racing designer,
developer and manufacturer, the address of which is 1394 Broadway Avenue,
Braselton, Georgia 30517.
Mrs. Panoz's principal occupation is serving as Vice President and Director
of Fountainhead and as President of Nanco Holdings, Inc., the owner of a water
bottling plant in Blairsville, Georgia. The address of Nanco Holdings, Inc. is
1394 Broadway Avenue, Braselton, Georgia 30517.
During the last five years, neither Mr. nor Mrs. Panoz has been (1)
convicted in a criminal proceeding, or (2) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction as a result of which
any of them was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Mr. and Mrs. Panoz together beneficially own all of the voting stock in
Holdings. Although they meet the definition of beneficial ownership, they have
no economic benefit in such shares of Holdings. Mr. and Mrs. Panoz are husband
and wife and are citizens of Ireland.
Item 3. Source and Amount of Funds or Other Consideration.
Chateau Elan Management Agreement
On January 10, 2000, the Issuer entered into an Agreement and a Management
Agreement, each between Fountainhead and the Issuer (together, the "Management
Agreement"), pursuant to which Fountainhead retained the Issuer to perform
management services at Chateau Elan Winery and Resort, one of Fountainhead's
properties, for a period of five years. Fountainhead has agreed to pay the
Issuer a base management fee equal to 2% of the property's gross revenues, plus
an annual
Page 8 of 14
<PAGE>
incentive management fee that will be determined based upon a calculation of the
property's profitability during the previous fiscal year.
In consideration of Fountainhead's agreement to enter into the Management
Agreement and a payment of $10,000 by Fountainhead to the Issuer, on January 10,
2000, the Issuer issued to Fountainhead 1,000,000 shares of Common Stock. The
Management Agreement has a term of five years but is terminable upon the
transfer by Fountainhead of all or a material portion of the properties covered
by the Management Agreement. If the Management Agreement is terminated upon
such a transfer or upon the occurrence of an event of default by Fountainhead,
Fountainhead shall pay to the Issuer a portion of the projected base and
incentive management fees, adjusted for the term of the Management Agreement
remaining. Fountainhead may elect to surrender to the Issuer shares of Common
Stock in lieu of a cash payment. Fountainhead has been granted demand
registration rights with respect to the shares of Common Stock it received
pursuant to the Management Agreement.
Pursuant to the Management Agreement, the Issuer agreed to expand the size
of the Board of Directors of the Company from three to seven directors and
appoint certain individuals designated by Fountainhead, including Mr. and Mrs.
Panoz, to fill the resulting vacancies on the Board of Directors. In addition,
the current members of the Board of Directors have agreed generally not to take
any action as directors until the appointment of the directors designated by
Fountainhead becomes effective.
Walden Stock Purchase Agreement
On January 11, 2000, one of the principal shareholders of the Issuer, N.
Russell Walden, entered into a Common Stock Purchase Agreement (the "Walden
Agreement"), dated January 11, 2000, with Fountainhead. Pursuant to the terms
of the Walden Agreement, on January 11, 2000, Mr. Walden sold to Fountainhead
650,000 shares of Common Stock (the "Walden Shares") for total consideration of
$1,300,000, of which $780,000 was paid in cash from Fountainhead's working
capital and $520,000 was paid by issuing to Mr. Walden two promissory notes,
each in the amount of $260,000. These notes bear interest at a rate of 6% per
year, and become due and payable on January 11, 2001, and January 11, 2002,
respectively. These notes are unsecured obligations of Fountainhead.
In the Walden Agreement, Mr. Walden also granted to Fountainhead an option
to purchase 65,000 shares of Common Stock (the "Walden Option") held by Mr.
Walden, exercisable at a price of $2.00 per share. However, if Mr. Walden
desires to sell any of the shares of Common Stock covered by the Walden Option,
Mr. Walden must first provide Fountainhead with the opportunity to purchase such
shares of Common Stock from Mr. Walden at a price of $2.00 per share. If
Fountainhead does not elect to purchase such shares, Mr. Walden would be
permitted to sell such
Page 9 of 14
<PAGE>
shares, and any of such shares sold by Mr. Walden would cease to be subject to
the Walden Option.
ADT Stock Purchase Agreement
On January 11, 2000, another of the principal shareholders of the Issuer,
ADT Security Services, Inc. ("ADT"), entered into a Stock Purchase Agreement
with Fountainhead (the "ADT Agreement"), dated January 11, 2000. Pursuant to
the terms of the ADT Agreement, ADT sold to Fountainhead 450,000 shares of
Series A Convertible Preferred Stock (the "ADT Shares") for $1,650,000 in cash,
which was paid by Fountainhead from its working capital. However, Fountainhead
may be required under certain circumstances to return the ADT Shares to ADT.
See "Item 4. Purpose of Transaction -- Acquisitions or Dispositions of
Securities of the Issuer."
Item 4. Purpose of Transaction.
Acquisitions or Dispositions of Securities of the Issuer
Pending Litigation. Litigation is pending among the Issuer, ADT and
certain other shareholders of the Issuer in Delaware Chancery Court. Pursuant to
the ADT Agreement, if ADT is required by the Delaware Chancery Court to return
the ADT Shares to the Issuer, Fountainhead will return such shares to ADT (or
any shares of Common Stock received upon conversion of the ADT Shares), and ADT
has agreed to return to Fountainhead all of the consideration paid to ADT under
the ADT Agreement, pending the outcome of any appeals. Pursuant to the ADT
Agreement, Fountainhead would also be required to purchase from ADT all of such
shares of Common Stock, if any, that ADT may receive from the Issuer in exchange
for the ADT Shares pursuant to a final and non-appealable court order. At this
time, Fountainhead believes that the Delaware Chancery Court has not issued a
ruling in this litigation.
Conversion of Preferred Stock. Fountainhead may convert each share of
Preferred Stock into three shares of Common Stock at any time, or an aggregate
of 1,350,000 shares of Common Stock if Fountainhead converts its Preferred Stock
in full.
Exercise of Walden Option. The Walden Option is immediately exercisable
until April 11, 2001, and pursuant to that option, Fountainhead may purchase up
to 65,000 shares of Common Stock from Mr. Walden at a price of $2.00 per share.
Right of First Refusal. If Mr. Walden desires to sell any of the shares of
Common Stock covered by the Walden Option, Mr. Walden must first provide
Fountainhead with the opportunity to purchase such shares of Common Stock at
Page 10 of 14
<PAGE>
$2.00 per share. If Fountainhead does not elect to purchase such shares, then
Mr. Walden would be permitted to sell such shares. Any shares sold by Mr.
Walden to a third party in this manner would reduce the number of shares
available for purchase by Fountainhead under the Walden Option.
Change in the Board of Directors and Management
Pursuant to the Management Agreement, the Issuer agreed to expand the size
of the Board of Directors of the Company from three to seven directors and
appoint four individuals designated by Fountainhead: Donald E. Panoz, Nancy C.
Panoz, Henk H. Evers and Sheldon E. Misher. Mr. Misher presently serves as an
advisor to Fountainhead and is associated with Commonwealth Associates, a
broker-dealer located in New York, New York. Such individuals will take office
ten days after the filing by the Issuer of an information statement with the
Securities and Exchange Commission pursuant to section 14(f) of the Securities
Exchange Act of 1934, as amended.
In addition, the following persons have been elected, as of January 11,
2000, to serve in the following capacities as officers of the Issuer:
Donald E. Panoz -- Chief Executive Officer
Henk H. Evers -- President and Chief Operating Officer
Sheldon E. Misher -- Secretary
Changes in Capitalization
Upon conversion of all of the shares of Preferred Stock into Common Stock,
no shares of Preferred Stock will remain outstanding. However, pursuant to the
Issuer's Certificate of Incorporation, the Board of Directors of the Issuer has
the power to issue, without further stockholder approval, classes or series of
preferred stock with such rights, preferences and powers as may be determined by
the Board of Directors.
If Fountainhead is required by the Delaware Chancery Court to return the
ADT Shares to ADT, the court may also order ADT to return the ADT Shares to
the Issuer in exchange for shares of Common Stock. In this event, no shares of
Preferred Stock would remain outstanding. See " -- Acquisitions or Dispositions
of Securities of the Issuer."
Page 11 of 14
<PAGE>
Other Plans or Proposals
Other than as indicated in Items 3 and 4 hereof, none of the Reporting
Persons listed in Item 2 above presently has any plans or proposals that relate
to or would otherwise result in:
(a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or any
of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy of
the Issuer;
(f) Any other material change in the Issuer's business or corporate
structure, including, but not limited to, if the Issuer is a registered closed-
end investment company, any plans or proposals to make any changes in its
investment policy for which a vote is required by section 13 of the Investment
Company Act of 1940;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control of the
Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to section 12(g)(4) of the Securities
Exchange Act of 1934; or
(j) Any action similar to those enumerated above.
Page 12 of 14
<PAGE>
Item 5. Interest in Securities of the Issuer.
(a) See Boxes 11 and 13 of each of cover pages 2-5 and see Item 4.
(b) See Boxes 7, 8, 9, and 10 of each of pages 2-5.
(c) See Items 3 and 4.
(d) Not applicable.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer.
See Items 3 and 4.
Item 7. Material to Be Filed as Exhibits.
Exhibit A Agreement, dated January 10, 2000, by and between Fountainhead and the
Issuer.
Exhibit B Management Agreement, dated January 10, 2000, by and between
Fountainhead and the Issuer.
Exhibit C Agreement, dated January 11, 2000, by and between the directors of the
Issuer and Fountainhead.
Exhibit D Promissory Note, dated January 11, 2000, from Fountainhead as
maker.
Exhibit E Promissory Note, dated January 11, 2000, from Fountainhead as maker.
Exhibit F Stock Purchase Agreement, dated January 11, 2000, by and between
Fountainhead and N. Russell Walden.
Exhibit G Stock Purchase Agreement, dated January 11, 2000, by and between
Fountainhead and ADT.
Exhibit H Joint Filing Agreement pursuant to Rule 13d-1(k)(1)(iii) under the
Securities Exchange Act of 1934, as amended, among Fountainhead,
Holdings, Donald E. Panoz and Nancy C. Panoz.
Page 13 of 14
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
January 20, 2000
--------------------
(Date)
Fountainhead Development Corp, Inc.
By: /s/ Henk H. Evers
-------------------------------------
Name: Henk H. Evers
-----------------------------------
Its: Chief Executive Officer
-------------------------------------
Fountainhead Holdings, Ltd.
By: /s/ Donald E. Panoz
--------------------------------------
Name: Donald E. Panoz
-----------------------------------
Its: Chairman
-------------------------------------
/s/ Donald E. Panoz
-------------------------------------
Donald E. Panoz
/s/ Nancy C. Panoz
-------------------------------------
Nancy C. Panoz
Page 14 of 14
<PAGE>
EXHIBIT A
---------
AGREEMENT
THIS AGREEMENT (this "Agreement") is entered into as of the 10th day of
January 2000, between Fountainhead Development Corp., Inc., a Georgia
corporation ("Fountainhead"), and Ridgewood Hotels, Inc., a Delaware corporation
("Ridgewood").
W I T N E S S E T H:
WHEREAS, pursuant to a Management Agreement, dated as of January 10, 2000
between the parties hereto (the "Management Agreement"), Ridgewood has agreed to
serve as manager of certain hotel and resort properties owned by Fountainhead
and set forth on Exhibit A hereto (the "Managed Properties"); and
---------
WHEREAS, in consideration of payment by Fountainhead to Ridgewood of
$10,000 (representing the par value of the Shares (as defined below)) and
Fountainhead's agreement to allow Ridgewood to act as the manager of the Managed
Properties in accordance with the terms and conditions of the Management
Agreement, Ridgewood desires to issue to Fountainhead 1,000,000 shares of the
common stock, $.01 par value per share, of Ridgewood;
NOW, THEREFORE, for and in consideration of the mutual agreements and
promises contained herein (the mutuality, adequacy and sufficiency of which are
hereby acknowledged) and intending to be legally bound hereby, the parties agree
as follows:
1. Sale of Stock. Notwithstanding any provision in the Management
-------------
Agreement to the contrary, immediately upon execution of the Management
Agreement and upon payment by Fountainhead to Ridgewood of $10,000 (representing
the par value of the Shares), Ridgewood shall issue to Fountainhead a
certificate or certificates representing 1,000,000 shares of its common stock,
$.01 par value per share (the "Shares"). Ridgewood represents and warrants that
the Shares shall be validly issued, fully paid and non-assessable and free of
all liens, claims and restrictions other than restrictions imposed by applicable
federal and state securities laws.
2. Board of Directors. In connection with the execution of the
------------------
Management Agreement, the Board of Directors of Ridgewood shall take all
necessary action to increase the size of the Board by four directors and shall
take all necessary action to approve the appointment of four new directors
approved by Fountainhead, to take office ten days after the filing with the
Securities and Exchange Commission and the delivery to the shareholders of
Ridgewood of an information statement pursuant to Section 14f-1 of the
Securities Exchange Act of 1934, as amended. Prior to or upon the execution of
the Management Agreement, the Board of Directors of Ridgewood shall also take
all necessary action to approve the appointment of Donald Panoz as Chief
Executive Officer of Ridgewood, Henk Evers as President and Chief Operating
Officer of Ridgewood and Sheldon Misher as Secretary of Ridgewood, and the
current members of the Board of Directors of Ridgewood shall agree in writing
not to take any Board action until the new directors take office. Upon
execution of the Agreement, Ridgewood shall deliver to Fountainhead a
certificate of the Secretary of Ridgewood.
3. Purchase for Investment. In connection with the issuance of the
-----------------------
Shares by Ridgewood, Fountainhead represents and warrants that Fountainhead is
acquiring the Shares for
<PAGE>
its own account, to hold for investment, and with no intention of dividing its
participation with others or reselling or otherwise participating, directly or
indirectly, in a distribution of the Shares, and that Fountainhead shall not
make any sale, transfer or other disposition of the Shares in violation of any
applicable state securities laws (the "State Acts") or the Securities Act of
1933 as amended (the "1933 Act").
4. No Registration. Fountainhead acknowledges that it has been advised
---------------
that the Shares are not being registered under any applicable State Acts on the
grounds that this transaction is exempt from registration thereunder, or under
the 1933 Act on the grounds that this transaction is exempt from registration
under Section 4(2) of the 1933 Act as not involving any public offering, and
that reliance by Ridgewood on such exemptions is predicated in part on its
representations set forth in this Agreement. In addition, Fountainhead
acknowledges that the certificate or certificates received by it shall bear a
legend in substantially the following form, in addition to any other legend
required by law or otherwise:
"The securities represented hereby have not been registered under the
Securities Act of 1933 (the "Act") or any state securities acts and
may not be sold, transferred or otherwise disposed of unless a
registration statement under the Act and any applicable state
securities acts with respect to such securities is effective or unless
the Company is in receipt of an opinion of counsel satisfactory to it
to the effect that such securities may be sold without registration
under the Acts and such state acts."
5. Securities Laws. Ridgewood may refuse to permit Fountainhead to sell,
---------------
transfer or dispose of the Shares unless there is in effect a registration
statement under any applicable State Acts and the 1933 Act covering such
transfer or Fountainhead furnishes an opinion of counsel, reasonably
satisfactory to counsel for Ridgewood, to the effect that such registration is
not required and also agrees that stop transfer instructions will be noted on
the appropriate records of Ridgewood or given to Ridgewood's transfer agent.
6. Limitations. Representatives of Fountainhead have carefully read this
-----------
Agreement and discussed its requirements and other applicable limitations upon
Fountainhead's resale of the Shares with counsel and, to the extent necessary,
counsel for Ridgewood, and has had an opportunity to ask questions and receive
answers about Ridgewood and to obtain additional information for verification
purposes.
7. No Obligation to Register. Fountainhead understands that Ridgewood is
-------------------------
under no obligation to register the Shares or take any other action necessary in
order to make compliance with an exemption from registration available, except
as provided in the Management Agreement.
8. No Public Solicitation. Fountainhead acknowledges and agrees that it
----------------------
has received no public solicitation or advertisement concerning an offer to sell
the Shares.
9. High Degree of Risk. Fountainhead acknowledges and understands that
-------------------
the purchase of the Shares involves a high degree of risk and acknowledges that
it is able to bear the economic risk of its investment in the Shares.
2
<PAGE>
10. Accredited Investor. Fountainhead acknowledges that it is an
-------------------
"accredited investor" as defined in Rule 501(a) of Regulation D promulgated
under the Securities Act of 1933, as amended.
11. Access to Information. Fountainhead acknowledges that it has either
---------------------
been supplied with or has had access to information to which a reasonable
investor would attach significance in making investment decisions and has had
the opportunity to ask questions and receive answers from knowledgeable
individuals concerning Ridgewood, its business and the Shares so that as a
reasonable investor, it has been able to make an informed decision to purchase
the Shares. In determining to proceed with this investment, Fountainhead has
relied solely on the results of its independent investigation with respect to
the Shares, Ridgewood and upon the representations and statements of Ridgewood
set forth herein. Such representations and statements by Ridgewood constitute
the sole and exclusive representations, warranties, covenants and statements of
Ridgewood and its officers, directors, shareholders and other affiliates to it
in connection with this investment.
12. Validity and Enforceability. Ridgewood has all necessary corporate
---------------------------
power and authority, and has taken all action required, to execute, deliver and
perform this Agreement and the Management Agreement and sell and deliver the
Shares. This Agreement, the Management Agreement and all other documents and
instruments executed by Ridgewood pursuant hereto, when delivered, are and will
be duly authorized, valid and binding obligations of Ridgewood, enforceable
against it in accordance with their respective terms, subject to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
equitable principles. The sale of the Shares by Ridgewood in accordance herewith
is not subject to preferential rights or similar statutory or contract rights
that have not heretofore been waived and does not give rise to any rights or
obligations to third parties arising pursuant to any agreement or instruments to
which Ridgewood is a party or which are otherwise binding on Ridgewood.
13. Litigation. Except as set forth on Schedule 13, there is no action,
---------- -----------
suit, proceeding or investigation pending or, to Ridgewood's knowledge,
threatened against Ridgewood that might call into question the validity of, or
hinder the enforceability or performance of, this Agreement or the Management
Agreement or the validity of the Shares, or any action taken or to be taken
pursuant hereto. Ridgewood is not in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
government agency by which Ridgewood is bound that might affect the Shares.
14. No Violations. Neither the execution, delivery and performance by
-------------
Ridgewood of this Agreement, the Management Agreement and any documents or
instruments delivered, executed and performed in connection herewith, the
consummation of the transactions contemplated hereby (including the sale and
delivery of the Shares), nor the compliance with the provisions hereof will
violate any provision of law, or any order of any court or other agency of
government or indenture, agreement or other instrument to which Ridgewood is
bound, or result in the creation or imposition of any lien, charge or security
interest upon any of the Shares.
15. Material Adverse Change. Except as set forth on Schedule 15, since
----------------------- -----------
September 30, 1999, Ridgewood has conducted its business only in the ordinary
course of
3
<PAGE>
business, and there has not been any material adverse change in the business,
financial condition, operations, affairs, properties, assets or results of
operations of Ridgewood or any of its subsidiaries.
16. SEC Filings. All of the documents (the "SEC Documents") filed by
-----------
Ridgewood with the Securities and Exchange Commission (the "Commission") in
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended
(collectively, the "Securities Acts"), and all information supplied by Ridgewood
to Purchaser in connection with any and all securities filings required by the
consummation of the transactions contemplated hereby, conformed in all material
respects to the requirements of the Securities Acts and the rules and
regulations of the Commission thereunder, and none of such documents contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
17. Derivative Action. The status of the derivative action against
-----------------
Ridgewood styled as Strassburger v. Early et al. is as set forth on Schedule 17
---------------------------- -----------
hereto.
18. Survival of Representations and Warranties. The representations and
------------------------------------------
warranties contained in this Agreement shall continue in full force and effect
following the execution of this Agreement and the Management Agreement and
issuance and delivery of the Shares.
19. Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon Fountainhead and Ridgewood, their successors and assigns.
This Agreement may not be assigned by Ridgewood without the prior written
consent of Fountainhead. Nothing in this Agreement, express or implied, is
intended or shall be construed to confer upon any person other than the parties
hereto any right, remedy or claim under or by reason of this Agreement.
20. Entire Agreement. This Agreement, together with the Management
----------------
Agreement, sets forth the entire agreement between the parties as to the subject
matter of this Agreement and supersedes all prior agreements, commitments,
representations, writings and discussions between them, whether written or oral,
with respect to the subject matter hereof. Except as otherwise expressly
provided in this Agreement, this Agreement may not be amended or terminated
except in writing and signed by the proper and duly authorized representative of
the party to be bound thereby.
21. Waivers. No party shall be deemed to have waived any right, power or
-------
privilege under this Agreement or any provision hereof unless such waiver shall
have been duly executed in writing and acknowledged by the party to be charged
with such waiver. The failure of any party to enforce at any time any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions nor in any way affect the validity of this Agreement or any part
thereof, or the right of any party to thereafter enforce each and every such
provision.
22. Severability. If any provision of this Agreement or its application
------------
to any person or circumstance is adjudged invalid or unenforceable by any court
of competent jurisdiction, then the remainder of this Agreement or the
application of such provision to other persons or
4
<PAGE>
circumstances shall not be affected thereby; provided, however, that if any
provision or application hereof is invalid or unenforceable, then a suitable and
equitable provision shall be substituted therefor in order to carry out, so far
as may be valid and enforceable, the intent and purpose of this Agreement
including the invalid or unenforceable provision.
23. Governing Law. This Agreement shall be governed by and interpreted in
-------------
accordance with the laws of the State of Georgia, except the rules relating to
conflicts of laws.
24. Counterparts. This Agreement may be executed in any number of
------------
counterparts, and each such counterpart shall be deemed an original instrument.
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
RIDGEWOOD HOTELS, INC.
By: /s/ N. Russell Walden
---------------------------------
Name: N. Russell Walden
----------------------------
Title: President
---------------------------
FOUNTAINHEAD DEVELOPMENT
CORP., INC.
By: /s/ Donald Panoz
---------------------------------
Name: Donald Panoz
-------------------------------
Title: Chairman
------------------------------
<PAGE>
EXHIBIT A
Managed Properties
------------------
Chateau Elan
(The Lodge Spa and Conference Facilities)
7
<PAGE>
DISCLOSURE SCHEDULES
OF
RIDGEWOOD HOTELS, INC.
PROVIDED PURSUANT TO AND AS A PART OF
AN AGREEMENT
BY AND BETWEEN
FOUNTAINHEAD DEVELOPMENT CORP., INC.
and
RIDGEWOOD HOTELS, INC.
DATED AS OF JANUARY 10, 2000
(the "Agreement")
Unless the context otherwise requires, all capitalized terms in the following
Disclosure Schedules shall have the meanings defined in the Agreement.
<PAGE>
SCHEDULE 13
LITIGATION
See Schedule 17.
<PAGE>
SCHEDULE 15
MATERIAL ADVERSE CHANGE
None.
<PAGE>
SCHEDULE 17
DERIVATIVE ACTION
The case 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,
- --------------------------------------------------------------
Delaware Chancery Court, Newcastle County, remains pending. On March 19, 1998,
the Court dismissed all class claims, leaving only the derivative claims
remaining for trial. The case was tried to Vice Chancellor Jacobs during the
period February 1-3, 1999. All post-trial briefing and oral argument has been
concluded, and the case has been submitted for decision by the Court.
<PAGE>
Exhibit B
---------
Management Agreement
between
Fountainhead Development Corp., Inc.,
as Owner,
and
Ridgewood Hotels, Inc.,
as Manager
dated as of January 10, 2000.
<PAGE>
MANAGEMENT AGREEMENT
--------------------
This Management Agreement (the "Agreement"), dated as of January 10,
2000, by and between Fountainhead Development Corp., Inc., a Georgia corporation
with an address at 1375 Broadway Avenue, Braselton, Georgia 30517 (the "Owner")
and Ridgewood Hotels, Inc., a Delaware corporation with an address 2859 Paces
Ferry Road, Suite 700, Atlanta, Georgia 30339 (the "Manager").
Recitals:
A. The Owner is the owner of the Conference Center Facilities (as
defined in Section 1.01 below) located at Chateau Elan, Braselton, Georgia.
B. The Owner desires to have the Manager manage, operate and assist
in the marketing of the Conference Center, as an independent contractor, and the
Manager is willing to perform such services for the account of the Owner,
subject to the terms and conditions set forth herein.
Agreement:
The parties agree as follows:
Article I - Definition of Terms
- -------------------------------
1.01 Definition of Terms. (a) The following terms when used in the
-------------------
Agreement shall have the meanings indicated:
"Accounting Period" shall mean the Manager's monthly accounting period
-----------------
beginning on the first day of each month and ending on the last day of each
month.
"Affiliate" shall mean, as to any Person, any other Person that, directly
---------
or indirectly, controls, is controlled by or is under common control with such
first Person. For purposes of this definition, the term "control" (including
the terms "controlling", "controlled by" and "under common control with") of a
Person means the possession, directly or indirectly, of the power to vote 15% or
more of the voting stock of such Person or to direct or cause the direction of
the management and policies of such Person, whether through the ownership of
securities, by contract or otherwise.
"Appurtenance" shall mean and include all installations necessary or
------------
appropriate for the operation of the Properties (including without limitation,
lighting and electrical, plumbing, heating and air conditioning fixtures and
elevators).
"Available Cash Flow" shall mean an amount, with respect to each Fiscal
-------------------
Year or portion thereof during the Term, equal to the excess, if any, of the
Operating Profit over the Owner's
<PAGE>
Priority for such Fiscal Year or portion thereof.
"Base Management Fee" shall mean an amount, with respect to each Fiscal
-------------------
Year or portion thereof during the Term, equal to 2% of Gross Revenues for each
Fiscal Year or portion thereof.
"Charge" shall mean a fee established by the Manager for goods or services
------
provided by the Manager, which fee shall be consistent with fees then being
charged by non-affiliated Persons for similar goods and services being furnished
in Atlanta, Georgia or comparable geographic areas to the Properties.
"Chateau Elan" facilities shall mean the golf course facilities, golf club
------------
pro shop, equestrian center, winery facilities, retail wine and merchandise
shop, and other facilities and services existing from time to time, owned by or
in affiliation with the Owner, in or about the Chateau Elan resort complex and
not managed by the Manager pursuant to the terms of this Agreement.
"Conference Center Facilities" shall mean the inn and conference center,
----------------------------
lodge, spa, golf villas, the restaurant at the golf course and the retail stores
at Chateau Elan, and any relevant ancillary facilities operated in conjunction
therewith.
"Effective Date" shall mean the first day of the Term, which shall be March
--------------
1, 2000.
"FF&E" shall mean all of the furniture, furnishings, fixtures and equipment
----
located on or used in connection with the Properties, including, without
limitation, motor vehicles, all equipment required for the operation of
kitchens, dining rooms, bars, laundries, dry cleaning facilities, office
equipment (including all audio-visual equipment and all computer and other
equipment required for reservation systems and property management systems and
all other electronic systems required from time to time) and similar systems
based on other technologies that may be developed in the future, and material
handling equipment other than Inventories, Fixed Asset Supplies and
Appurtenances.
"Fiscal Year" shall mean the fiscal year (i.e., the 12-month period) that
-----------
ends at midnight on March 31 in each calendar. A partial Fiscal Year between
the end of the last full Fiscal Year and Termination shall, for purposes of the
Agreement, constitute a separate Fiscal Year. If a Fiscal Year is hereafter
changed, appropriate adjustment to this Agreement's reporting and accounting
procedures shall be made; provided, that no such change or adjustment shall
alter the term of this Agreement or reduce the distributions of Operating Profit
or other payments due to the Owner hereunder.
"Fixed Asset Supplies" shall mean supply items included within "Property
--------------------
and Equipment" under the Uniform System of Accounts, including, without
limitation, linen, china,
3
<PAGE>
glassware, silver, uniforms, and similar items.
"GAAP" means United States generally accepted accounting principles,
----
consistently applied, as in effect from time to time.
"Governmental Authority" means any government, government agency or
----------------------
authority or quasi-governmental or regulatory authority having jurisdiction over
the Properties, the Owner or the Manager.
"Gross Revenues" shall mean all revenues and receipts derived from
--------------
operating the Properties, including, without limitation, income (from both cash
and credit transactions), after deducting commissions and discounts for prompt
or cash payments, from rental of rooms, stores, offices, conference, function or
sales space of every kind; license, lease and concession fees and rentals (but
not including gross receipts of licensees, lessees and concessionaires); income
from vending machines; health club membership fees; food and beverage sales;
wholesale and retail sales of merchandise, service charges, and proceeds, if
any, from business interruption or other loss of income insurance (after
deducting therefrom necessary expenses in connection with the adjustment or
collection thereof); provided, that Gross Revenues shall not include (i)
gratuities to employees, (ii) federal, state or municipal excise, sales or use
taxes or similar impositions collected directly from patrons or guests or
included as part of the sales price of any goods or services required to be
remitted to any Governmental Authorities; (iii) security deposits or other
amounts received and retained from tenants or guests; (iv) proceeds from
mortgage or other financing or refinancing, proceeds from the sale, exchange,
condemnation or other disposition of all or any part of the Properties or any
interest therein or the owner or owners thereof, or any other similar items that
in accordance with applicable federal income tax regulations are attributable to
capital; (v) due bills and script; (vi) revenues from or funds collected on
behalf of the Chateau Elan facilities; (vii) interest or other income derived
from the investment of surplus funds or reserves; (viii) rebates, discounts or
credits of a similar nature; (ix) insurance proceeds from insurance not listed
above; (x) proceeds from the sale of FF&E; (xi) any amounts recovered in any
litigation against third parties except for amounts awarded to compensate for
lost revenues otherwise includable in the Gross Revenues as defined herein and
(xii) any other amounts received from time to time in connection with the
Properties other than those included in Gross Revenue as set forth above in this
definition.
"Incentive Management Fee" shall mean an annual amount payable to Manager
------------------------
in respect of each Fiscal Year equal to 20% of Available Cash Flow in respect of
such Fiscal Year.
"Independent Public Accountant" shall mean KPMG Peat Marwick or any other
-----------------------------
nationally-recognized qualified and experienced public accounting firm that has
experience in the hospitality industry appointed by the Owner to perform any of
the accounting or auditing functions described in this Agreement.
4
<PAGE>
"Inventories" shall mean "Inventories" as defined in the Uniform System of
-----------
Accounts, and other expensed supplies and similar consumable and expendable
items used in the day-to-day operation of the Properties.
"Operating Expenses" shall mean the operating expenses associated with the
------------------
ownership and management of the Properties.
"Operating Loss" for any applicable period in which Operating Expenses
--------------
exceed Gross Revenues shall mean the difference between Gross Revenues and
Operating Expenses.
"Operating Profit" for any applicable period shall mean the excess of Gross
----------------
Revenues over Operating Expenses for such period.
"Owner's Priority" shall mean an amount equal to $6.5 million per Fiscal
----------------
Year (prorated for any partial Fiscal Year); provided, that after the first
Fiscal Year following the commencement of the Term, the Owner's Priority shall
be increased for each succeeding Fiscal Year to give effect to any increases in
capital, including, without limitation, capital expenditures (in the form of
debt or equity) provided by the Owner or its Affiliates or other Persons in the
Properties, such that such $6.5 million shall be increased by an amount equal to
15% of the aggregate amount of such incremental capital.
"Person" means an individual, partnership, corporation, company, limited
------
liability company, joint venture, Government Authority, trustee, trust, estate,
any unincorporated organization or any other entity.
"Prime Rate" shall mean the "base rate" of interest announced by Morgan
----------
Guaranty Trust Company of New York in New York City from time to time.
"Properties" shall mean each of the Chateau Elan and the Conference Center
----------
Facilities but exclude the golf course, winery, and equestrian center
facilities.
"Termination" shall mean the expiration or earlier cessation or termination
-----------
of this Agreement.
"Term Year" or "Term Years" shall mean each 365-day period commencing on
--------- ----------
the Effective Date for the duration of the Term (as defined in Section 4.01(a));
it being understood that the Term contains five Term Years.
"Uniform System of Accounts" shall mean the latest edition (as amended from
--------------------------
time to time) of the Uniform System of Accounts for Conference Centers, as
revised and adopted by the International Association of Conference Centers.
5
<PAGE>
"Working Capital" shall mean current assets that are reasonably necessary
---------------
for the efficient day-to-day operation of the Properties' business, including,
without limitation, amounts sufficient for the maintenance of change and petty
cash funds, operating bank accounts, accounts receivable, payrolls, prepaid
expenses and funds required to maintain Inventories, less accounts payable and
other current liabilities, all as determined in accordance with GAAP and all as
approved by the Owner on an annual basis within 60 days of the commencement of
any Fiscal Year.
(b) The following terms shall have the meanings set forth in the
corresponding Sections below:
Term Section
---- -------
Accounting Period Statement 6.01A
Annual Operating Projection 6.03
Events of Default 13.01A
Impositions 10.01A
Operating Accounts 6.02A
Renewal Term 4.01(a)
Term 4.01(a)
Article II - Manager Functions
------------------------------
2.01 Appointment. The Owner hereby appoints and employs the Manager as
-----------
an independent contractor with exclusive authority to supervise, direct and
control the management and operation of the Properties for the Term. The
Manager accepts such appointment and agrees to manage the Properties during the
Term in accordance with the terms and conditions of this Agreement.
2.02 Delegation of Authority.
-----------------------
A. Authority. The operation of the Properties shall be under the
---------
exclusive supervision and control of the Manager who, subject to this Agreement,
shall be responsible for the proper and efficient operation of the Properties in
the exercise of its reasonable discretion; provided, however, that the Owner may
participate in such supervision and control of the Properties at its discretion.
B. Management Responsibilities. The Manager shall perform on an
---------------------------
exclusive basis all necessary and appropriate management services in accordance
with this Agreement with a view to obtaining the best possible operation of the
Properties, including, without limitation, the Conference Center Facilities as
first-class conference center facilities in accordance with the standards of
other first-class conference center facilities.
6
<PAGE>
C. Sales and Marketing. The Manager, in consultation with the Owner,
-------------------
shall institute operational sales and marketing activities for the Properties,
implementing the Manager's sales and marketing policies and practices,
including, without limitation, the establishment of an annual marketing plan and
the performance of the appropriate advertising and promotion services for the
Properties, including, without limitation, the Conference Center Facilities.
2.03 Limitations on Authority.
------------------------
(a) The Manager shall not, without prior written approval of the
Owner, which approval the Owner may withhold in its sole discretion: (i) acquire
any land or interest therein; (ii) acquire any capital asset or interest therein
except FF&E and Inventories (to the extent they constitute capital assets) in
the ordinary course of business; (iii) sell (other than the dispositions of FF&E
and Inventories in the ordinary course of business as expressly provided for in
this Agreement, including Section 2.02 above), or otherwise transfer, any part
of the Properties; or (iv) in the event of a total or partial condemnation,
consent to any award or participate in any condemnation proceeding.
(b) The Manager shall not conduct in or about the Properties any
other activities, except for subsidiary and complementary activities that are
normally connected with this type of operation.
2.04 Covenants, Conditions and Restrictions. As of the Effective Date,
--------------------------------------
the Manager hereby consents to all existing covenants, conditions, restrictions,
and/or agreements to which the Owner is a party; it being understood that all
costs, expenses and charges which are imposed on the Properties under such
covenants, conditions, restrictions, and/or agreements shall be paid as
Operating Expenses.
Article III - The Properties
----------------------------
3.01 Ownership of the Properties. The Owner hereby represents that it
---------------------------
holds good and marketable fee title to the Properties and other customary liens
encumbrances (including financing encumbrances) or charges previously disclosed
to the Manager, and that it will keep and maintain such title in the Properties
free and clear of any and all liens, encumbrances or other charges, except as
follows:
1. Liens, encumbrances or charges described above in this Section
3.01;
2. Easements or other encumbrances (other than those described
below) that
7
<PAGE>
do not materially adversely affect the operation of the Properties by the
Manager;
3. Reciprocal easements, licenses or rights appurtenant that do not
affect the utility of the Properties;
4. Mortgages, deeds of trust, deeds to secure debt, or similar
security instruments; and
5. Liens for taxes, assessments, levies or other public charges not
yet due or that are being contested in good faith.
3.02 No Interest in Real Estate. This Agreement shall not be deemed at
--------------------------
any time to be an interest in real estate or a lien or security interest of any
nature against the Properties, including the Conference Center Facilities.
Neither party shall cause this Agreement or a memorandum hereof to be recorded;
any attempt at such recordation shall constitute a material breach hereunder.
Article IV - Term
-----------------
4.01 Term. (a) The term (the "Term", which term shall include the Renewal
----
Terms, if applicable) of this Agreement shall commence on the Effective Date
and, unless earlier terminated pursuant to this Agreement, shall continue for a
period of five Fiscal Years from the Effective Date. Thereafter, such term shall
automatically be renewed for successive periods of two additional Fiscal Years
(each, a "Renewal Term"), unless the Owner shall have provided at least 30 days'
written notice of termination prior to the last day of any Renewal Term. Absent
such notice, the next Renewal Term shall commence and be deemed to be part of
the Term. The Owner shall have the right to Terminate this Agreement during any
Renewal Term on at least 90 days' written notice to the other party; it being
understood and agreed that Termination shall be effective on the date specified
in such termination notice.
(b) It is understood and agreed that during the period of time between the
date hereof and the Effective Date, the Manager will take all the appropriate
steps, including, without limitation, those measures necessary to effect the
transition from the current manager to it, so that it will be able to begin its
duties, as set forth herein, on the Effective Date.
Article V - Compensation of the Manager
---------------------------------------
5.01 Management Fees. The Manager shall be paid, in accordance with
---------------
Section 5.02 below, (i) the Base Management Fee, which shall be retained by the
Manager from the Gross Revenues; and (ii) the Incentive Management Fee, which
shall be retained by the Manager from the Operating Profit in accordance with
Sections 5.02 and 7.01 below; in each case, subject to the
8
<PAGE>
Owner's audit and review and all other rights and remedies contained in this
Agreement.
5.02 Operating Profit and Payments to the Parties. (a) Prior to payment
--------------------------------------------
of any Incentive Management Fee, the Owner's Priority shall be paid to the Owner
in full. Thereafter, the Incentive Management Fee, if any, shall be paid to the
Manager before the remaining portion of the Operating Profit is paid to the
Owner.
(b) To the extent Operating Profit is available for each Accounting Period
and within the time period set forth in Section 7.01.A below, the Manager shall
distribute a prorated portion of the Owner's Priority to the Owner for such
Accounting Period, and shall be entitled to retain a prorated portion of the
Incentive Management Fee for such Accounting Period based on its good faith
estimate of the Incentive Management Fee for the full Fiscal Year. Such
payments shall be made after consultation with the Owner, and subject to the
prior approval of the Owner, which approval shall not be unreasonably withheld.
(c) Notwithstanding any other provision of this Article V, no Incentive
Management Fee shall be paid to the Manager in respect of any Fiscal Year or
Accounting Period within any Fiscal Year to the extent that there is any unpaid
Owner's Priority from any preceding Fiscal Year; it being understood and agreed
that such Owner's Priority from such preceding Fiscal Year shall be paid in full
prior to the payment of any Incentive Management Fees for any Fiscal Year.
Article VI -- Consideration of the Owner
----------------------------------------
6.01 Owner's Consideration. In consideration for the Owner entering into
---------------------
this Agreement, the Manager shall issue to the Owner 1,000,000 shares of the
Manager's common stock, par value $0.01 per share (the "Registrable
Securities"), on the Effective Date, which shares, when issued in accordance
with this Agreement, will be duly and validly issued, fully paid and non-
assessable, and will not be issued in violation of any preemptive or similar
rights. It is understood and agreed that the consideration to be paid to the
Owner pursuant to this Section 6.02 shall have no bearing or in any way limit
any other benefits or compensation the Owner shall receive as a result of
entering into this Agreement.
6.02 Registration on Request. Following the first anniversary of the
-----------------------
Effective Date, the Owner may require on no more than three occasions, upon
written notice to the Manager, that the Manager effect the registration under
the Securities Act of 1933, as amended (the "Securities Act"), of all or part of
the Registrable Securities held by Owner. Upon such notice by the Owner of its
desire to register the Registrable Securities pursuant to this Section 6.02, the
Manager shall use its best efforts to effect, on the earliest possible date, the
registration under the Securities Act for public sale (in accordance with the
method of disposition specified in the notice from the requesting Holder) of the
Registrable Securities that the Manager has been requested to register by the
Owner.
9
<PAGE>
(a) Limitations. The Manager shall not be required to effect a
-----------
registration pursuant to this Section 6.03:
(i) within 90 days after the effective date of a registration
statement (a "Registration Statement") filed by the Manager with the Securities
and Exchange Commission (the "Commission") for a public offering and sale of
equity securities of the Manager (other than a registration of securities
pursuant to a Registration Statement on Form S-8 or Form S-4 or any similar form
or any successor form to any thereof (a "Special Registration Statement"));
provided, that the Manager shall use its best efforts to achieve effectiveness
of a registration requested hereunder promptly following such 90-day period if
such request is made during such 90-day period; provided, further, such 90-day
period shall be increased to no more than 180 days if requested in writing by
the managing underwriter of a firm commitment underwritten offering;
(ii) on more than three occasions;
(iii) if the Manager shall furnish to the Owner a certificate
signed by a senior executive officer of the Manager stating that, in the good
faith judgment of the board of directors of the Manager, it would be seriously
detrimental to the Manager or its stockholders for a Registration Statement to
be filed in the near future, in which case the Manager's obligations to use best
efforts to register Registrable Securities pursuant to this Section 6.02 shall
be deferred for a period not to exceed 90 days from the receipt of the written
notice to the Manager from the Owner;
(iv) covering any security other than Registrable Securities;
and
(v) registering a best efforts underwriting.
(b) Effective Registration Statement. A registration requested
--------------------------------
pursuant to this Section 6.02 shall not be deemed to have been effected if after
it has become effective, such registration is interfered with by any stop order,
injunction or other order or requirement of the Securities and Exchange
Commission or other governmental agency or court for any reason not attributable
to the Owner.
Article VII - Accounting
------------------------
7.01 Accounting, Distributions and Annual Reconciliation.
---------------------------------------------------
A. Within 20 days after the close of each Accounting Period, the Manager
shall deliver an interim accounting (the "Accounting Period Statement") to the
Owner setting forth Gross Revenues, Operating Expenses, Operating Profit or
Operating Loss, and applications and distributions thereof for the preceding
Accounting Period. The Manager shall transfer to the Owner, with each
Accounting Period Statement, any interim amounts due to the Owner, subject
10
<PAGE>
to Working Capital needs, and shall retain any interim amounts due to the
Manager.
B. Calculations and payments of the Incentive Management Fee, the Base
Management Fee, and distributions of Operating Profit made with respect to each
Accounting Period within a Fiscal Year shall be accounted for cumulatively.
Within 90 days after the end of each Fiscal Year, the Manager shall deliver to
the Owner a statement in reasonable detail summarizing the operations of the
Properties for the immediately preceding Fiscal Year and a certificate of the
Manager's chief accounting officer certifying that such year-end statement is
true and correct. The parties shall, within 10 business days after the Owner's
receipt of such statement, make any adjustments, by cash payment, in the amounts
paid or retained for such Fiscal Year that are needed because of the final
figures set forth in such statement. Such final accounting shall be controlling
over the Accounting Period Statements.
C. To the extent there is an Operating Loss for any Accounting Period,
additional funds in the amount of any such Operating Loss shall be provided by
the Owner within 60 days after the Manager has delivered written notice thereof
to the Owner. If the Owner does not so fund such Operating Loss within the 60-
day time period, the Manager shall have the right (without affecting the
Manager's other remedies under this Agreement) to withdraw an amount equal to
such Operating Loss from future distributions of funds otherwise due to the
Owner.
7.02 Account Expenditures.
--------------------
A. All funds derived from the operation of the Properties shall be
deposited by the Manager in bank accounts (the "Operating Accounts") in a bank
or banks designated by the Manager, subject to the Owner's approval.
Withdrawals from such Operating Accounts shall be made solely by representatives
of the Manager whose signatures have been authorized and approved by the Owner.
Reasonable petty cash funds shall be maintained on the Properties.
B. All payments made by the Manager hereunder shall be made from the
Operating Accounts, petty cash funds, or from Working Capital. The Manager
shall not be required to make any advance or payment with respect to the
Properties, except out of such funds, and the Manager shall not be obligated to
incur any liability or obligation with respect to the Properties.
7.03 Annual Operating Projection. The Manager shall deliver to the Owner
---------------------------
for its review, at least 60 days prior to the beginning of each Fiscal Year
after the first Fiscal Year, an Annual Operating Projection (each, an "Annual
Operating Projection"). Each Annual Operating Projection shall project the
estimated Gross Revenues, departmental profits, Operating Expenses, and
Operating Profit or Operating Loss for the succeeding Fiscal Year. The Manager
shall diligently pursue feasible measures to operate the Properties in
accordance with the Annual Operating Projection; provided, that the parties
acknowledge that the Annual Operating Projection is an estimate and that
unforeseen circumstances such as, but not limited to, the costs of labor,
material, services and supplies, casualty, operation of law, or economic and
market
11
<PAGE>
conditions, may make adherence to the Annual Operating Projection impracticable,
and the Manager shall be entitled to depart therefrom (with the approval of the
Owner, such approval not to be unreasonably withheld or delayed) as a result of
causes of the foregoing nature.
7.04 Working Capital. The Owner shall, from time to time during the
---------------
Term, promptly, but no later than 30 days after receipt of written request by
the Manager, advance any additional funds, as mutually agreed upon by the Owner,
necessary to maintain Working Capital at levels determined by the Manager to be
reasonably necessary to satisfy the needs of the Properties as its operation may
from time to time require. All funds so advanced for Working Capital shall be
utilized by the Manager for the purposes of this Agreement. Upon Termination,
the Manager shall, except as otherwise provided in this Agreement, return the
outstanding balance of the Working Capital to the Owner.
7.05 Fixed Asset Supplies. The Owner shall, within 30 days after
--------------------
request by the Manager, provide funds that are necessary to increase the level
of Fixed Asset Supplies to levels determined by the Manager, in its good faith
judgment and as mutually agreed upon by the Owner, to be necessary to satisfy
the needs of the Properties as its operation may, from time to time, require.
The cost of Fixed Asset Supplies consumed in the operation of the Conference
Center shall constitute Operating Expenses. Fixed Asset Supplies shall remain
the property of the Owner throughout the Term and upon Termination.
Article VIII - Repairs, Maintenance and Replacements
----------------------------------------------------
8.01 Routine Repairs and Maintenance. The Manager shall maintain the
-------------------------------
Properties in good repair and condition and in conformity with applicable laws
and regulations, insurance requirements and, with respect to the Conference
Center Facilities, in accordance with the standards for other first-class
conference center facilities and shall make or cause to be made such routine
maintenance, repairs and minor alterations, the cost of which can be expensed
under GAAP as it deems necessary or appropriate. The cost of such maintenance,
repairs and alterations shall be paid from Gross Revenues and shall be treated
as an Operating Expense. The cost of non-routine repairs and maintenance, either
to the Properties buildings or their FF&E, shall be paid for in the manner
described in Sections 8.02 and 8.03 below.
8.02 Repairs and Equipment Budget.
----------------------------
A. The Manager shall prepare a budget of the expenditures necessary for
(1) replacements, repairs and renewals to the Properties' FF&E, and (2) repairs
to the Properties during the ensuing Fiscal Year and shall submit such budget to
the Owner for approval at the same time it submits the Annual Operating
Projection in accordance with the provisions of Section 7.05 above.
12
<PAGE>
B. If the estimate of repairs and equipment prepared in good faith by
the Manager exceeds 5% of the Gross Revenues, the Manager will seek the Owner's
consent to increase the annual percentage set forth in this Section 8.02B to
provide the additional funds required, which consent may be withheld in the
exercise of the Owner's sole discretion.
C. The Manager shall from time to time make such (1) replacements and
renewals to the FF&E, and (2) repairs to the Properties' buildings, in each
case, to the extent set forth in the budget prepared and agreed to pursuant to
the provisions of Section 8.02.A to maintain the Properties in good operating
repair and condition and, with respect to the Conference Center Facilities, in
accordance with the standards for other first-class conference center facilities
or as required pursuant to applicable laws, regulations or insurance
requirements. No expenditures will be made in excess of said budgeted amount
without the approval of the Owner. In the event the Manager fails within a
reasonable time to undertake any replacements, renewal or repairs for which it
is responsible pursuant to this Section 8.02.C, the Owner may, upon 10 days
prior written notice to the Manager, undertake to complete the same. Any monies
advanced by the Owner to perform such replacements, renewal or repairs shall be
deducted from the funds available to the Manager pursuant to the budget prepared
in accordance with Section 8.02A. At the end of each Fiscal Year, any amounts
remaining in such budget shall be carried forward to the next fiscal year.
8.03. Building Alterations, Improvements, Renewals, and Replacements. The
--------------------------------------------------------------
Manager shall not make any expenditures for major repairs, alterations,
improvements, renewals or replacements to the Properties without the prior
written consent of the Owner. The cost of all such major repairs, alterations,
improvements, renewals or replacements shall be included in Operating Expenses.
8.04 Liens. The Manager and the Owner shall use their respective best
-----
efforts to prevent any liens, charges or encumbrances from being filed against
the Properties which arise from any maintenance, repairs, alterations,
improvements, renewals or replacements in or to the Properties. The Manager and
the Owner shall use their respective commercially reasonable efforts to obtain
the release of any such liens, and the cost thereof. If the lien, charge or
encumbrance was not occasioned by the fault of either party, it shall be treated
the same as the cost of the matter to which to relates. If the lien, charge or
encumbrances arise as a result of the fault of the Owner or the Manager, then
the party at fault shall bear the cost of obtaining the lien release.
8.05 Ownership of Replacements. All repairs, alterations, improvements,
-------------------------
renewals or replacements made pursuant to this Article VIII shall be the
property of the Owner.
Article IX - Trademarks, Trade Names and Service Marks.
------------------------------------------------------
13
<PAGE>
9.01 Trademarks, Trade Names and Service Marks. During the Term, the
-----------------------------------------
Manager shall have a limited license to use the Properties' name, trademarks,
service marks, trade names, symbols, logos or designs solely in connection with
the operation, including the marketing and promotion, of the Properties, and for
no other purpose. The Properties' name, and all trademarks, service marks, trade
names, symbols, logos and designs related to the operation, including the
marketing and promotion of the Properties, shall at all times remain the sole
and exclusive property of the Owner.
9.02 Breach of Covenant. The Owner shall be entitled, in case of any
------------------
breach of the covenants of this Article VIII by the Manager, to injunctive
relief and to any other right or remedy available at law. This Article IX shall
survive Termination.
Article X - Insurance
---------------------
10.01 The Manager's Insurance Responsibilities. The Manager shall, during
----------------------------------------
the term of the Agreement, procure and maintain for its own account as well as
for the account of the Owner, a minimum of the following insurance, the cost of
which should be provided out of the Operating Expenses:
A. Workers' compensation and employer's liability insurance as may be
required under applicable laws covering all of the Manager's employees at the
Properties, such insurance to include an alternate employer endorsement naming
the Owner as the alternate employer; and
B. Fidelity bonds, with reasonable limits satisfactory to the Owner,
covering its employees in job classifications normally bonded in other similar
conference center facilities and properties or as otherwise required by law, and
comprehensive crime insurance to the extent the Manager and the Owner mutually
agree it is necessary for the Properties.
10.02 The Owner's Insurance Responsibilities. The Owner shall procure and
--------------------------------------
maintain the following insurance: property insurance on the Properties'
buildings and contents against loss or damage by fire, lightning and all other
risks covered by the usual extended coverage endorsement; business interruption
insurance covering loss of profits and necessary continuing expenses of
interruptions caused by fire, explosion, storm, water, hurricane, and by any
occurrence of a type; and general liability insurance against claims for bodily
injury, death or property damage occurring on, in, or about the Properties, and
automobile liability insurance on vehicles operated in conjunction with the
Properties (owned, non-owned, and hired) and liquor liability.
10.03 General Insurance Provisions.
----------------------------
14
<PAGE>
A. The forgoing insurance shall be in amounts and with coverage
reasonably acceptable to the Owner and the Manager.
B. The policies of insurance required under Section 10.02 shall include
the Manager as a named insured or an additional insured, as its
interest may appear.
10.04 Waiver of Recovery. Each party hereto waives its rights and the
------------------
rights of its insurers, subsidiaries and affiliates to recover from the other
party hereto and its insurers, subsidiaries and Affiliates for loss or damage to
such party's building, equipment, improvements and other property of every kind
and description resulting from fire, explosion or other cause normally covered
in standard broad form property insurance policies.
Article XI - Taxes
------------------
11.01 Real Estate and Personal Property Taxes.
---------------------------------------
A. All real estate and personal property taxes, levies, assessments and
similar charges on or relating to the Properties (collectively, "Impositions")
during the Term shall be paid by the Manager from Gross Revenues, before any
fine, penalty, or interest is added thereto or lien placed upon the Properties
or upon this Agreement. Any such payments shall be included as an Operating
Expense. Either the Owner or the Manager acting at the direction of the Owner
(in which case the Owner agrees to sign the required applications and otherwise
cooperate with the Manager in expediting the matter) may initiate proceedings to
contest any negotiations or proceedings with respect to any Imposition, and all
reasonable costs of any such contest shall be paid from Gross Revenues and shall
be included as an Operating Expense. The Manager shall, as part of its contest
or negotiation of any Imposition, be entitled, on the Owner's behalf, to waive
any applicable statute of limitations in order to avoid paying the Imposition
during the pendency of any proceedings or negotiations with applicable
authorities.
Article XII - The Properties' Employees
---------------------------------------
12.01 The Properties' Employees.
-------------------------
A. All personnel employed at the Properties shall at all times be the
employees of the Manager. The Manager shall have discretion to hire, promote,
supervise, direct and train all employees at the Properties, to fix their
compensation and, generally, establish and maintain all policies relating to
employment, in each case subject to the consent and approval of the Owner.
Notwithstanding the foregoing , (i) the Manager shall use reasonable diligence
and due care in
15
<PAGE>
the selection, hiring, training, supervision, and replacement of all such and
employees; and (ii) the general hiring policies and the discharge of employees
at the Properties shall in all respects comply with all "Equal Employment
Opportunity" and other applicable laws and regulations. The employment policies
applicable to the Properties shall be subject to the approval of the Owner, and
the Manager shall not change such policies in any material respect without the
consent of the Owner, which consent may be granted or withheld in the Owner's
sole discretion.
Article XIII - Damage and Condemnation
--------------------------------------
13.01 Damage and Repair.
-----------------
A. If, during the Term, any portion of the Properties is damaged or
destroyed by fire, casualty or other cause, the Owner shall, at its cost and
expense and with all reasonable diligence, repair or replace the damaged or
destroyed portion of the Properties to the same condition as existed previously.
To the extent available, proceeds from the insurance described in Section 10.02
above shall be applied to such repairs or replacements.
B. Notwithstanding the forgoing, if, in connection with any casualty,
(i) the costs and expenses of restoring the Properties shall equal or exceed 25%
of the replacement cost of the Properties immediately prior to such casualty or
(ii) either the Properties are substantially or entirely damaged or destroyed,
then the Owner may elect not to restore the Properties, as applicable, and to
terminate this Agreement. The Owner shall exercise its election by written
notice to the Manager prior to a date which is 180 days after the occurrence of
any such casualty or 90 days after the Owner has been apprised of the amount of
insurance proceeds that will be available for restoration, whichever date is
later.
13.02 Condemnation.
------------
B. In the event all or substantially all of the Properties shall be
taken in any eminent domain, condemnation, compulsory acquisition, or similar
proceeding by any competent authority for any public or quasi-public use or
purpose, or in the event a portion of the Properties shall be so taken, but the
result is that it is unreasonable in the sole discretion of the Owner to
continue to operate the Properties, this Agreement shall Terminate. The Manager
shall have no right to participate in any proceeding initiated by the Owner to
recover any damages or compensation in respect of such taking.
Article XIV - Defaults
----------------------
14.01 Defaults.
--------
A. The following shall constitute "Events of Default":
16
<PAGE>
1. The filing of a voluntary petition in bankruptcy or insolvency or
a petition for reorganization under any bankruptcy law by either party, or the
admission by either party that it is unable to pay its debts as they become due;
2. The consent to an involuntary petition in bankruptcy or the
failure to vacate, within 90 days from the date of entry thereof, any order
approving an involuntary petition by either party;
3. The entering of an order, judgement or decree by any court of
competent jurisdiction, on the application of a creditor, adjudicating either
party as bankrupt or insolvent or approving a petition seeking reorganization or
appointing a receiver, trustee, or liquidator of all or a substantial part of
such party's assets, and such order, judgement or decree's continuing unstayed
and in effect for any period of 90 days;
4. The failure of either party to make any payment required to be
made in accordance with the terms hereof within 10 days after receipt of written
notice from the other party that such payment has not been made; or
5. The failure of either party to perform, keep or fulfill any of
the covenants, undertakings, obligations or conditions set forth in the
Agreement, and the continuance of such default for a period of 30 days after
receipt of notice from the other party of such failure.
B. Notwithstanding any other provisions herein, in the event of any Event
of Default by the Owner pursuant to the terms of this Agreement, the Manager
shall look only to the Owner's estate and interest in the Properties for the
satisfaction of a money judgment against the Owner resulting from such Event of
Default, and no other properties or assets of the Owner or of its Affiliates, or
of the Owner's partners, officers, directors shareholders or principals, shall
be subject to levy, execution or other enforcement procedure for the
satisfaction of such judgment.
Upon the occurrence of any Event of Default, the non-defaulting party may
give the defaulting party notice of its intention to Terminate the Agreement,
and if the default has not been cured prior to such notice, this Agreement shall
terminate. If, however, upon receipt of such notice, the defaulting party shall
promptly (if such default is susceptible of being cured within an additional 10
days) commence to cure the default, and shall thereafter diligently pursue such
efforts to completion, then such notice shall be of no force or effect;
provided, that such default is actually cured within such 10-day period.
Upon the occurrence of an Event of Default, the non-defaulting party shall
have, in addition to the right to Terminate, as set forth above, all applicable
rights and remedies hereunder and under applicable law or at equity, including
without limitation, the right to seek damages
17
<PAGE>
resulting from such Event of Default.
C. The withdrawal of any license or permit that is material to the
operation of the Properties in accordance with standards applicable to first-
class conference facilities, where such revocation (i) is not due to the fault
of either the Manager or the Owner and (ii) is not otherwise within the
reasonable control of either the Manager or the Owner, shall not be an Event of
Default under this Article XIV. The Manager and the Owner shall each, in good
faith, use all commercially reasonable efforts (including the diligent pursuit
of all available appeals), during the 120-day period following such withdrawal
or revocation, to have such license or permit reinstated. If, notwithstanding
such efforts, such license or permit is not reinstated prior to the expiration
of the aforesaid period of 120 days, either the Owner or the Manager shall have
the right, at its option, to terminate this Agreement, upon not less than 60
days' notice to the other party; provided, that the terminating party shall
deliver such notice of termination to the other party by no later than 90 days
after the expiration of such 120-day period; and provided further, that no such
termination shall be effective if, prior to the effective date of such
termination, such license or permit is reinstated or such withdrawal or
revocation of such license or permit is stayed.
Article XV - Waiver and Partial Invalidity
------------------------------------------
15.01 Waiver. The failure of either party to insist upon a strict
------
performance of any of the terms or provisions of this Agreement, or to exercise
any option, right or remedy herein contained, shall not be construed as a waiver
or as a relinquishment for the future of such term, provision, option, right or
remedy, but the same shall continue and remain in full force and effect. No
waiver by either party of any term or provision hereof shall be deemed to have
been made unless expressed in writing and signed by such party.
15.02 Partial Invalidity. If any portion of this Agreement shall be
------------------
declared invalid by order, decree or judgement of a court of competent
jurisdiction, this Agreement shall be construed as if such portion had not been
inserted herein except when such construction would operate as an undue hardship
on the Manager or the Owner or constitute a substantial deviation from the
general intent and purpose of said parties as reflected herein.
Article XVI - Assignment
------------------------
16.01 Assignment.
----------
A. Neither party shall assign or transfer or permit the assignment or
transfer of this Agreement or any interest herein, without the prior written
consent of the other, except that the Owner at any time may assign its interest
in this Agreement without requiring the consent of the
18
<PAGE>
Manager; provided, that such assignee has agreed to assume all of the Owner's
obligations with respect to the Agreement. The Owner shall be relieved of any
and all obligations or liability under or with regard to this Agreement,
relating to the period after the effective date of such assignment.
Nothing contained herein shall prevent the transfer of this Agreement in
connection with a merger or consolidation or a sale of all or substantially all
of the assets of either party or their respective Affiliates.
B. In the event either party consents to an assignment of the Agreement
by the other, no further assignment shall be made without the express written
consent of such party, unless such assignment may otherwise be made without such
consent pursuant to the terms of the Agreement, subject to the provisions of
Section 16.01.A above. Except as otherwise set forth herein, an assignment by
either the Owner or the Manager of its interest in the Agreement shall not
relieve the Owner or the Manager, as the case may be, from their respective
obligations under the Agreement, and shall inure to the benefit of, and be
binding upon, their respective successors, heirs, legal representatives, or
assigns.
3.2 Transfer of the Properties. (a) If the Owner determines directly or
--- --------------------------
indirectly to transfer all or a material portion of the Properties to an
unaffiliated Person, the Owner shall provide written notice thereof to the
Manager at least 10 days before the date on which such transfer is proposed to
be effected. Such notice shall set forth (i) the name, address, and business of
the proposed transferee and (ii) whether or not it is proposed by the Owner that
this Agreement remain in effect.
(b) In the event that the Owner desires to terminate this Agreement on the
sale of all or a material portion of the Properties and so notifies the
Manager, this Agreement will terminate upon the consummation of such
transaction.
(c) In the event that the Owner desires the Manager to continue managing
the Properties following the sale of all or a material portion of the
Properties, the Owner and the Manager shall use reasonable efforts to cause the
transferee to enter into a management agreement with the Manager on terms and
conditions that the Manager and such transferee may agree.
Article XVII - Termination
--------------------------
17.01 Payment Upon Termination. (a) Upon Termination (provided, that
------------------------
there shall not be any Event of Default by the Manager at such time), the Owner
shall immediately pay to the Manager all sums and amounts due and owing to the
Manager pursuant to the terms of this Agreement as of the date of the
Termination.
19
<PAGE>
(b) Upon Termination, the Manager shall, within 90 days after Termination,
prepare and deliver to the Owner a final accounting statement with respect to
the Properties, along with a statement of any sums due from the Owner or the
Manager pursuant hereof, dated as of the date of Termination. Within 30 days of
receipt by the Owner of such final accounting statement, the parties will make
any cash adjustments that are necessary pursuant to such final statement. The
cost of preparing such final statement shall be paid as an Operating Expense,
unless Termination occurs as a result of an Event of Default by either party, in
which case the defaulting party shall pay such cost. The Manager and the Owner
acknowledge that there may be certain adjustments for which information will not
be available at the time of the final accounting and the parties agree to
readjust such amounts and make the necessary cash adjustments when such
information becomes available; provided, however, that all accounts shall be
deemed final as of the 12-month anniversary of the effective date of
Termination.
(c) Upon Termination pursuant to Section 16.02 (b) above or an Event of
Default by the Owner (provided, that there shall not be any Event of Default by
the Manager at such time) and within 60 days thereof, the Owner shall provide
the Manager written notice as to whether it shall, in its discretion, either (i)
pay immediately the balance of the as-adjusted projected Base Management Fee
and the as-adjusted Incentive Management Fee, which are set forth on Schedule A
----------
hereto, as of the date of Termination, in accordance with the following formula:
[ 365 - A x B] + [365 - A x C] + D
------- -------
[ 365 ] [ 365 ]
where
A = That number of days remaining in the Term
Year during which this Agreement is
Terminated
B = The dollar amount of the as-adjusted
projected Base Management Fee that
corresponds to the Term Year during which
this Agreement is Terminated
C = The dollar amount of the as-adjusted
projected Incentive Management Fee that
corresponds the Term Year during which this
Agreement is Terminated
20
<PAGE>
D = the sum of the as-adjusted projected Base
Management Fee and the as-adjusted projected
Incentive Management Fee for each whole Term Year
remaining in the Term without aggregating the
respective amounts corresponding to the Term Year
during which the Agreement is Terminated and each
preceding year thereof
; or pay, as of the date of Termination, on a quarterly basis for the duration
of the Term, any amounts due pursuant to the formula contained in this Section
17.01(c)(i) as calculated with the actual (rather than the as-adjusted)
projected Base Management Fee and the actual (rather than the as-adjusted)
projected Base Incentive Fee figures set forth on Schedule A hereto; provided,
that such quarterly payments shall not exceed one-fourth of the aggregate amount
due for each Term Year;
or, (ii) surrender to the Manager that number of shares of the Manager's common
stock, which shares were issued pursuant to Section 6.01 hereof, as determined
in accordance with the following formula:
[
1825 - E x 1,000,000
------------
1825
]
where
E = the aggregate number of days remaining of the
Term as of the date of Termination
; provided that the aggregate number of shares to be surrendered pursuant to
this Section 17.01(c)(ii) shall not exceed a maximum of 1,000,000 shares of
common stock.
(d) Upon Termination pursuant to Section 13.01B or Section 13.02A above,
and within 60 days thereof, the Owner shall provide the Manager written notice
as to whether it shall, in its discretion, either (i) pay an amount in cash
equal to the product of $2,000,000 and a fraction, the numerator of which shall
be equal to the difference between 1825 and the number of days then remaining in
the Term and the denominator of which shall be 1825, which cash amount shall not
exceed $2,000,000; or (ii) surrender that number of shares of common stock
issued pursuant to Section 6.01 hereof in accordance with the formula set forth
in Section 17.01(c)(ii) hereof.
21
<PAGE>
17.02 Procedures Upon Termination. Upon Termination for any reason:
---------------------------
A. The Manager shall have 30 days after Termination to remove its own
property from the Properties;
B. The Manager shall leave the Properties in a clean and orderly
condition;
C. The Manager shall, in connection with Termination, surrender (and
assign, if permitted) to the Owner, and shall reasonably cooperate with the
Owner in the surrendering (and assignment, if permitted) and/or procuring of,
any and all licenses, permits and/or other authorizations on property required
for the operation of the Properties in accordance with the directions of the
Owner and with applicable governmental laws, regulations, orders, or other
provisions;
D. The Manager shall deliver to the Owner any and all materials,
supplies or equipment required for the operation of the Properties and/or
required to be developed, maintained, or kept by the Manager pursuant to the
terms and conditions of this Agreement. Without limiting the foregoing, the
Manager shall assign and deliver to the Owner all utility contracts, service
contracts, leases, licenses (including liquor and restaurant licenses, if any)
and other contracts entered into in connection with the operation of the
Properties and all warranty contracts, warranty cards, operating instructions,
and other information and guarantees concerning all equipment installed in or
used in connection with the operation of the Properties. Any and all contracts,
leases, licenses, warranties, guarantees, bank accounts, and other Properties
assets which are held in the Manager's name shall be assigned by the Manager to
the Owner and the Manager agrees to execute and deliver such instruments of
assignment in connection therewith in such form and in such descriptions as may
be from time to time reasonably requested by the Owner after Termination; and
E. The Manager shall deliver to the Owner all cash on hand at the
Properties and shall at the option of the Owner either deliver to the Owner
checks for the balances in the Operating Accounts or join in the execution of
appropriate instruments which eliminate all the Manager personnel as signatories
on such account.
Article XVIII - Responsibility for Claims, Etc.
-----------------------------------------------
A. All debts and liabilities arising in connection with the use,
occupancy or operation of the Properties (including, without limitation, all
such liabilities under or with respect to environmental laws hazards or claims)
during the Term are and shall be the obligation of the Owner, and Manager shall
not be liable or otherwise responsible for any such debts or liabilities by
reason of its management, supervision and operation of the Properties during
said Term, except that Manager shall be responsible for any such debt or
liability that arises because of
22
<PAGE>
Manager's fraud, gross negligence or willful misconduct in failing to comply
with the terms of this Agreement and/or in performing its duties hereunder.
Manager shall defend, indemnify and hold harmless Owner and its Affiliates, and
their respective agents, officers, employees, directors and shareholders from
and against any and all losses, costs, liabilities, expenses and claims (whether
administrative or judicial), including, without limitation, reasonable
attorneys' fees and expenses (all foregoing being referred to as "Losses"),
arising from any matter for which Manager is responsible under this Article 18.
The act or omission of an employee of the Manager who is not an executive
employee, which act or omission is willful or constitutes fraud or gross
negligence on the part of such employee, shall not constitute fraud, gross
negligence or willful misconduct on the part of Manager unless Manager's home
office or regional staff, or an executive employee of the Manager, acted with
gross negligence in employing, training, supervising or continuing the
employment of such employee.
B. Except as to specific acts or omissions for which Manager has agreed
to indemnify Owner in Article 18 (a) above, Owner hereby agrees to defend,
indemnify and hold Manager and its Affiliates, and their respective agents,
officers, employees, directors and shareholders, harmless from and against
Losses occurring out of or by reason of this Agreement and or otherwise arising
in connection with the ownership, use, occupancy or operation of the Properties.
Manager shall, at Owner's cost, provide reasonable assistance to Owner in
defending or otherwise resolving any claims related to the operation of the
Properties.
C. No person or entity shall be deemed to be a third party beneficiary
of any term or provision of this Agreement, including, without limitation, the
terms and provisions of this Article 18, and no person or entity shall have any
rights of subrogation or similar rights under this Article 18, other than
Affiliates of Owner and Manager, respectively, entitled to indemnification
pursuant to the provisions of this Article 18. All indemnification obligations
under this Agreement and the provisions of this Article 18 shall survive the
expiration and any termination of this Agreement.
Article XIX - Miscellaneous
---------------------------
19.01 Right to Make Agreement. Each party warrants, with respect to
-----------------------
itself, that neither the execution of this Agreement nor the finalization of the
transactions contemplated hereby shall violate any provision of law or judgment,
writ, injunction, order or decree of any court or governmental authority having
jurisdiction over it; result in or constitute a breach or default under any
indenture, contract, other commitment or restriction to which it is a party or
by which it is bound; or require any consent, vote or approval which has not
been taken, or at the time of the transaction involved shall not have been given
or taken. Each party covenants that it has and will continue to have throughout
the term of this Agreement and any extensions hereof, the full right to enter
into this Agreement and perform its obligations hereunder.
23
<PAGE>
19.02 Consents and Cooperation. Wherever in this Agreement the consent
------------------------
or approval of the Owner or the Manager is required, such consent or approval at
the request of either party shall be in writing and shall be executed by a duly
authorized officer or agent of the party granting such consent or approval.
19.03 Manager Status. In the performance of its duties in the
--------------
administration, management and operation of the Properties, the Manager shall
act solely as an independent contractor. Nothing herein shall constitute or be
construed to be or create a partnership or joint venture between the Owner and
the Manager, or be construed to appoint or constitute the Manager as an agent of
the Owner for any purpose, or construed to create a lease by the Manager of the
Properties. It is expressly covenanted that this Agreement is no more than an
agreement for the rendering of services by the Manager in the operation and
management of the Properties. The covenants benefiting the Manager are not
covenants running with the land, and are personal to the parties hereto and
their respective successors.
19.04 Confidentiality. The parties hereto agree that the matters set
---------------
forth in this Agreement are strictly confidential and each party will make every
effort to ensure that the information is not disclosed to any outside Person
(including the press or other media) without the prior written consent of the
other party, except as may be required by applicable law or judicial or
administrative process and as may be reasonably necessary to obtain licenses,
permits and other public approvals necessary for the refurbishment or operation
of the Properties, or in connection with the Owner's financing of the Properties
or the Owner's business relations.
19.05 Applicable Law; Etc. This Agreement shall be construed under and
-------------------
shall be governed by the substantive laws of the State of Georgia without regard
to conflicts of laws principles. Except to the extent otherwise provided herein
relating to arbitration, any and all disputes hereunder shall be adjudicated in
any federal or state court sitting in Atlanta, Georgia, to whose jurisdiction
the parties consent on an exclusive basis. The Manager consents to the entry of
injunctive and other equitable relief in respect of any breach or threatened
breach of the provisions hereof, without the requirement of posting a bond or
other collateral or security.
19.06 Headings. Headings of Articles and Sections are inserted only for
--------
convenience and are in no way to be construed as a limitation on the scope of
the particular Articles or Sections to which they refer.
19.07 Notices. Notices, statements and other communications to be given
-------
under the terms of this Agreement shall be in writing and delivered by
telecopier or hand against receipt or by nationally recognized overnight courier
(such as Federal Express) or sent by certified or registered mail, postage
prepaid, return receipt requested:
To Owner: Fountainhead Development Corp., Inc.
Attention: Donald E. Panoz
24
<PAGE>
6060 Golf Club Drive
Braselton, Georgia 30517
Fax: (770) 867-0902
With a copy to: Brock Silverstein LLC
800 Third Avenue, 21st Floor
New York, New York 10022
Attention: David Robbins, Esq.
Fax: (212) 371-5500
To The Manager: Ridgewood Hotels, Inc.
2859 Paces Ferry Road
Suite 700
Atlanta, Georgia 30339
Attention: President
With a copy to: Rogers and Hardin LLP
2700 International Tower, Peachtree Center
229 Peachtree Street, N.E.
Atlanta, Georgia 30303
Attention: Michael Rosenzweig, Esq.
Fax: (404) 525-2224
or at such other address as is from time to time designated by the party
receiving the notice. All notices shall be deemed to have been delivered and
received (i) in the case of mailing, on the fifth business day after the posting
thereof, (ii) in the case of personal delivery or delivery by telecopier, on the
date of such delivery and (iii) in the case of dispatch by nationally recognized
overnight courier, on the second business day following such dispatch.
19.08 Security. The Manager shall provide limited, passive security at
--------
the Properties in accordance with policies and procedures established by the
Owner and shall coordinate with a representative designated by the parties. The
Manager shall notify the Owner of any disturbance or other security matter that
comes to the Manager's attention. The Owner shall indemnify and hold the
Manager, its subsidiaries and affiliates harmless from and against all claims,
damages, liabilities and expenses, including attorneys' and court costs, arising
out of or in connection with the provision of security.
19.09 Competitive Market Area. The Manager covenants and agrees that
-----------------------
during the Term the Manager shall not own in whole or in part, lease, operate or
manage any hotel, motel, conference center, resort, or similar lodging facility
located within a 50-mile radius of the Properties. The parties agree that this
restriction shall not apply to (i) any operations currently
25
<PAGE>
conducted by the Manager within the restricted area, (ii) any operations within
the restricted area obtained by the Manager as part of the acquisition of all or
substantially all of the assets or stock of a separate entity, (iii) any
operations where the Manager's interest in such business is conducting food and
beverage services; it being understood and agreed that any of the restrictions
contained in this Section 19.09 may be waived by the Owner.
19.10 Estoppel Certificates. Each party to this Agreement shall at any
---------------------
time and from time to time, upon not less than 10 days' prior notice from the
other party, execute, acknowledge and deliver to such other party, or to any
third party specified by such other party, a statement in writing: (a)
certifying that this Agreement is unmodified and in full force and effect (or if
there have been modifications, that the same, as modified, is in full force and
effect and stating the modifications); (b) stating whether or not to the best
knowledge of the certifying party (i) there is a continuing Event of Default by
the non-certifying party in the performance or observance of any covenant,
agreement or condition contained in this Agreement, or (ii) there shall have
occurred any event which, with the giving of notice or passage of time or both,
would become an Event of Default, and, if so, specifying each such Event of
Default or occurrence of which the certifying party may have knowledge; and (c)
stating such other information as the non-certifying party may reasonably
request. Such statement shall be binding upon the certifying party and may be
relied upon by the non-certifying party and/or such third party specified by the
non-certifying party as aforesaid. The obligations set forth in this Section
19.10 shall survive Termination (e.g., each party shall, on request, within the
time period described above, execute and deliver to the non-certifying party and
to any such third party a statement certifying that this Agreement has been
terminated).
19.11 Entire Agreement. This Agreement, together with other writings
----------------
signed by the parties expressly stated to be supplemental hereto and together
with any instruments to be executed and delivered pursuant to this Agreement,
constitutes the entire agreement between the parties and supersede all prior
understandings and writings between the parties relating to the subject matter
hereof, and may be changed only by a writing signed by the parties hereto.
19.12. Counterparts and Facsimile. This Agreement may be executed in any
--------------------------
number of counterparts, and each such counterpart hereof shall be deemed to be
an original instrument, but all such counterparts together shall constitute one
agreement. In addition, this agreement may be signed and delivered to the other
party by facsimile transmission; such transmission shall be deemed a valid
signature.
26
<PAGE>
In witness whereof, the parties hereto have caused this Agreement to
be executed as of the day and year first written above.
Fountainhead Development Corp., Inc.
By: /s/ Donald E. Panoz
--------------------------------------
Name: Donald E. Panoz
Title: Chairman
Ridgewood Hotels, Inc.
By: /s/ N. Russell Walden
--------------------------------------
Name: N.Russell Walden
Title: President
<PAGE>
Schedule A
----------
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------------
Projected Base Projected Incentive
-------------- -------------------
Term Year Management Fee Management Fee
--------- -------------- --------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
As Adjusted (giving effect As Adjusted (giving effect to
Actual to a 8% discount Actual an 18% discount)
------ ---------------- ------ ----------------
1 $750,000 $690,000 $335,000 $274,700
2 772,000 710,240 384,000 314,880
3 796,000 732,320 435,000 356,700
4 820,000 754,400 487,000 399,340
5 844,000 776,480 540,000 442,800
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT C
---------
January 11, 2000
Fountainhead Development Corp., Inc.
100 Tour de France
Braselton, Georgia 30517
The undersigned directors of Ridgewood Hotels, Inc., a Delaware corporation
("Ridgewood"), each hereby agrees to refrain from taking any action as a member
of the Board of Directors of Ridgewood, including without limitation the
appointment of any additional directors, the removal or appointment of any new
or additional officers or the issuance of any shares other than those issued to
Fountainhead Development Corp., Inc., until the effectiveness of the election of
Henk Evers, Sheldon Misher, Nancy Panoz and Donald Panoz to the Board of
Directors of Ridgewood, except to the extent any such action shall be essential
for the continued operation of the business of Ridgewood.
/s/ N. Russ Walden
------------------------------------
N. Russ Walden
/s/ Luther J. Henderson
------------------------------------
Luther J. Henderson
/s/ Michael Earley
------------------------------------
Michael Earley
<PAGE>
EXHIBIT D
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES ACTS AND MAY NOT
---
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES ACTS WITH
RESPECT TO SUCH SECURITY IS EFFECTIVE OR UNLESS THE MAKER IS IN RECEIPT OF
AN OPINION OF COUNSEL SATISFACTORY TO IT TO THE EFFECT THAT SUCH SECURITY
MAY BE SOLD WITHOUT REGISTRATION UNDER THE ACTS AND SUCH STATE ACTS.
PROMISSORY NOTE
$260,000 January 11, 2000
FOR VALUE RECEIVED, the undersigned, Fountainhead Development Corp., Inc.,
a Georgia corporation (the "Borrower"), hereby unconditionally promises to pay
to the order of N. Russell Walden, an individual resident of the State of
Georgia (the "Lender"), at 3190 Ridgewood Road, N.W., Atlanta, Georgia 30327, or
at such other place as the holder of this Note may from time to time designate
in writing, in lawful money of the United States of America and in immediately
available funds, the principal sum of TWO HUNDRED SIXTY THOUSAND DOLLARS
($260,000).
The principal amount hereof shall be due and payable by Borrower in full no
later than January 11, 2001.
Interest on the outstanding unpaid principal amount hereof shall accrue at
a rate per annum equal to six percent (6%) and shall be payable on a quarterly
basis, commencing March 31, 2000 and due on the last day of every calendar
quarter thereafter for the term of this Note. Interest shall be computed on the
basis of a 360-day year for the actual number of days elapsed in the period
during which it accrues.
The Borrower shall have the right to prepay without penalty the outstanding
principal amount hereof in whole at any time or in part from time to time after
the date hereof. On the date of any such prepayment, the Borrower shall pay
outstanding accrued interest on the amount so prepaid to the date of prepayment.
Any such prepayment in part shall be applied to the installments due hereunder
in inverse order of maturity. The Borrower shall have the right to set off
against any amounts due under this Note any amounts due from the Lender to the
Borrower, whether under the Purchase Agreement of even date herewith between the
Borrower and Lender or otherwise.
<PAGE>
In no contingency or event whatsoever shall interest charged hereunder,
however such interest may be characterized or computed, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that the Lender has received interest hereunder in excess of the
highest rate applicable hereto, such excess interest shall, to the extent
permitted by law, (a) be applied as a credit against the outstanding principal
balance hereof or accrued and unpaid interest hereon, or (b) refunded to the
Borrower.
Each of the following events shall constitute an Event of Default
hereunder:
(a) if the Borrower fails to pay any principal of or interest on this
Note when the same shall become due and payable and such failure continues
for a period of ten (10) days after the Lender delivers written notice
thereof to the Borrower;
(b) if the Borrower fails to perform any of its duties or obligations
as specified in any agreement now or hereafter existing between the
Borrower and the Lender and such failure continues for a period of thirty
(30) days after the Lender delivers written notice thereof to the Borrower;
(c) if the Borrower shall generally not pay its debts as such debts
become due, or admit in writing its inability to pay its debts generally,
or make a general assignment for the benefit of creditors;
(d) if any proceeding is instituted by or against the Borrower seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debt under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or for any substantial part of its property (and, in the
case of any such proceeding instituted against the Borrower, should the
same remain undismissed or unstayed for a period of sixty (60) days), or
should the Borrower take corporate action to authorize any of the actions
set forth in this clause (d); or
(e) if the Borrower is liquidated or dissolved.
Upon the occurrence of any Event of Default under clauses (d) or (e) of the
preceding paragraph, then all outstanding principal hereof and interest hereon
shall, without notice, demand or any other action on the part of the Lender,
become immediately due and payable. Upon the occurrence of any other Event of
Default, then at the Lender's option, by written notice to the Borrower, all
outstanding principal hereof and interest hereon shall become immediately due
and payable. During any period that the Borrower shall have failed to make
payment of any principal or interest due hereunder or during the existence of
any Event of Default hereunder, then in the Lender's sole discretion, the
interest rate hereon may be increased to a rate per annum equal to seven percent
(7%) until such payment is made or Event of Default is cured by the Borrower or
waived in writing by the Lender.
2
<PAGE>
The Borrower hereby waives demand, presentment, protest, notice of demand,
dishonor, presentment, protest or nonpayment and all other notices in connection
with this Note.
If this Note is collected by or through an attorney-at-law, all costs of
collection, including reasonable attorneys' fees actually incurred, shall be
payable by the undersigned.
THIS NOTE HAS BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT
ATLANTA, GEORGIA AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF GEORGIA.
Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note. Whenever in this Note reference is made to the Lender or the
Borrower, such reference shall be deemed to include, as applicable, a reference
to their respective successors and assigns, provided that the Lender shall not
assign this Note in whole or in part without the prior written consent of the
Borrower, which consent shall not be unreasonably withheld. The provisions of
this Note shall be binding upon and shall inure to the benefit of such
successors and assigns.
3
<PAGE>
WITNESS the hand and seal of the undersigned, as of the date first above
written.
FOUNTAINHEAD DEVELOPMENT
CORP., INC.
By:/s/ Donald Panoz
-----------------------------------
Donald Panoz
Chairman
4
<PAGE>
Exhibit E
---------
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES ACTS AND
---
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES ACTS WITH RESPECT TO SUCH SECURITY IS EFFECTIVE OR UNLESS
THE MAKER IS IN RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO IT
TO THE EFFECT THAT SUCH SECURITY MAY BE SOLD WITHOUT REGISTRATION
UNDER THE ACTS AND SUCH STATE ACTS.
PROMISSORY NOTE
$260,000 January 11, 2000
FOR VALUE RECEIVED, the undersigned, Fountainhead Development Corp., Inc.,
a Georgia corporation (the "Borrower"), hereby unconditionally promises to pay
to the order of N. Russell Walden, an individual resident of the State of
Georgia (the "Lender"), at 3190 Ridgewood Road, N.W., Atlanta, Georgia 30327, or
at such other place as the holder of this Note may from time to time designate
in writing, in lawful money of the United States of America and in immediately
available funds, the principal sum of TWO HUNDRED SIXTY THOUSAND DOLLARS
($260,000).
The principal amount hereof shall be due and payable by Borrower in full no
later than January 11, 2002.
Interest on the outstanding unpaid principal amount hereof shall accrue at
a rate per annum equal to six percent (6%) and shall be payable on a quarterly
basis, commencing March 31, 2000 and due on the last day of every calendar
quarter thereafter for the term of this Note. Interest shall be computed on the
basis of a 360-day year for the actual number of days elapsed in the period
during which it accrues.
The Borrower shall have the right to prepay without penalty the outstanding
principal amount hereof in whole at any time or in part from time to time after
the date hereof. On the date of any such prepayment, the Borrower shall pay
outstanding accrued interest on the amount so prepaid to the date of prepayment.
Any such prepayment in part shall be applied to the installments due hereunder
in inverse order of maturity. The Borrower shall have the right to set off
against any amounts due under this Note any amounts due from the Lender to the
Borrower,
<PAGE>
whether under the Purchase Agreement of even date herewith between the Borrower
and Lender or otherwise.
In no contingency or event whatsoever shall interest charged hereunder,
however such interest may be characterized or computed, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that the Lender has received interest hereunder in excess of the
highest rate applicable hereto, such excess interest shall, to the extent
permitted by law, (a) be applied as a credit against the outstanding principal
balance hereof or accrued and unpaid interest hereon, or (b) refunded to the
Borrower.
Each of the following events shall constitute an Event of Default
hereunder:
(a) if the Borrower fails to pay any principal of or interest on this
Note when the same shall become due and payable and such failure continues
for a period of ten (10) days after the Lender delivers written notice
thereof to the Borrower;
(b) if the Borrower fails to perform any of its duties or obligations
as specified in any agreement now or hereafter existing between the
Borrower and the Lender and such failure continues for a period of thirty
(30) days after the Lender delivers written notice thereof to the Borrower;
(c) if the Borrower shall generally not pay its debts as such debts
become due, or admit in writing its inability to pay its debts generally,
or make a general assignment for the benefit of creditors;
(d) if any proceeding is instituted by or against the Borrower
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debt under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or for any substantial part of its property (and, in the
case of any such proceeding instituted against the Borrower, should the
same remain undismissed or unstayed for a period of sixty (60) days), or
should the Borrower take corporate action to authorize any of the actions
set forth in this clause (d); or
(e) if the Borrower is liquidated or dissolved.
Upon the occurrence of any Event of Default under clauses (d) or (e) of the
preceding paragraph, then all outstanding principal hereof and interest hereon
shall, without notice, demand or any other action on the part of the Lender,
become immediately due and payable. Upon the occurrence of any other Event of
Default, then at the Lender's option, by written notice to the Borrower, all
outstanding principal hereof and interest hereon shall become immediately due
and payable. During any period that the Borrower shall have failed to make
payment of any principal or interest due hereunder or during the existence of
any Event of Default hereunder, then in the
<PAGE>
Lender's sole discretion, the interest rate hereon may be increased to a rate
per annum equal to seven percent (7%) until such payment is made or Event of
Default is cured by the Borrower or waived in writing by the Lender.
The Borrower hereby waives demand, presentment, protest, notice of demand,
dishonor, presentment, protest or nonpayment and all other notices in connection
with this Note.
If this Note is collected by or through an attorney-at-law, all costs of
collection, including reasonable attorneys' fees actually incurred, shall be
payable by the undersigned.
THIS NOTE HAS BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT
ATLANTA, GEORGIA AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF GEORGIA.
Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note. Whenever in this Note reference is made to the Lender or the
Borrower, such reference shall be deemed to include, as applicable, a reference
to their respective successors and assigns, provided that the Lender shall not
assign this Note in whole or in part without the prior written consent of the
Borrower, which consent shall not be unreasonably withheld. The provisions of
this Note shall be binding upon and shall inure to the benefit of such
successors and assigns.
<PAGE>
WITNESS the hand and seal of the undersigned, as of the date first above
written.
FOUNTAINHEAD DEVELOPMENT
CORP., INC.
By: /s/ Donald Panoz
-------------------------
Donald Panoz
Chairman
<PAGE>
Exhibit F
---------
COMMON STOCK PURCHASE AGREEMENT
by
and among
FOUNTAINHEAD DEVELOPMENT CORP., INC.
and
N. RUSSELL WALDEN
dated
January 11, 2000
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
1. PURCHASE AND SALE OF PURCHASED SHARES............................. 1
-------------------------------------
1.1 Agreement to Purchase and Sell............................. 1
------------------------------
1.2 Closing.................................................... 1
-------
1.3 Payment of Purchase Price.................................. 1
-------------------------
1.4 Covenants of the Parties Prior to Closing.................. 1
-----------------------------------------
1.5 Option to Purchase Shares.................................. 2
-------------------------
2. CONDITIONS OF PURCHASE............................................ 2
----------------------
2.1 Representations, Warranties and Agreements................. 2
------------------------------------------
2.2 Authorization; Consents.................................... 2
-----------------------
2.3 All Proceedings Satisfactory............................... 2
----------------------------
2.4 Purchase of Additional Shares.............................. 3
-----------------------------
2.5 No Distributions, Recapitalizations, Etc................... 3
----------------------------------------
2.6 Legal Opinion.............................................. 3
-------------
2.7 Adverse Change............................................. 3
--------------
3. CONDITIONS OF SALE................................................ 3
------------------
3.1 Authorization.............................................. 3
-------------
3.2 Governing Documents........................................ 3
-------------------
3.3 Representations and Warranties............................. 3
------------------------------
3.4 All Proceedings Satisfactory............................... 3
----------------------------
3.5 Financial Statements....................................... 4
--------------------
3.6 Legal Opinion.............................................. 4
-------------
4. REPRESENTATIONS AND WARRANTIES OF SELLER.......................... 4
----------------------------------------
4.1 Validity and Enforceability................................ 4
---------------------------
4.2 Validity and Enforceability................................ 4
---------------------------
4.3 Governmental and Other Consents............................ 4
-------------------------------
4.4 Litigation................................................. 5
----------
4.5 No Violations.............................................. 5
-------------
4.6 No Brokers or Finders...................................... 5
---------------------
4.7 Material Adverse Change.................................... 5
-----------------------
4.8 SEC Filings................................................ 5
-----------
4.9 Derivative Action.......................................... 6
-----------------
4.10 Understanding of Nature of Securities...................... 6
-------------------------------------
4.11 Investment Intent.......................................... 6
-----------------
4.12 Economic Risk.............................................. 6
-------------
4.13 No Claims Against Seller................................... 7
------------------------
4.14 Disclosure................................................. 7
----------
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER....................... 7
-------------------------------------------
5.1 Validity and Enforceability................................ 7
---------------------------
5.2 Understanding of Nature of Securities...................... 7
-------------------------------------
5.3 Investment Intent.......................................... 8
-----------------
5.4 Economic Risk.............................................. 8
-------------
5.5 No Violations.............................................. 8
-------------
5.6 Governmental and Other Consents............................ 8
-------------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C>
5.7 Litigation................................................. 8
----------
5.8 No Brokers or Finders...................................... 9
---------------------
6. CERTAIN ANNOUNCEMENTS............................................. 9
---------------------
7. CERTAIN COVENANTS OF THE PARTIES.................................. 9
--------------------------------
7.1 Investigation.............................................. 9
-------------
7.2 Expenses................................................... 9
--------
7.3 Noncompetition; Nondisclosure.............................. 9
-----------------------------
7.4 Updated Financial Statements............................... 11
----------------------------
8. TERMINATION; SURVIVAL............................................. 11
---------------------
8.1 Termination................................................ 11
-----------
8.2 Effect of Termination...................................... 11
---------------------
8.3 Survival................................................... 12
--------
9. CONFIDENTIALITY................................................... 12
---------------
10. INDEMNIFICATION................................................... 12
---------------
10.1 Indemnification by Seller.................................. 12
-------------------------
10.2 Indemnification by Purchaser............................... 13
----------------------------
10.3 Claims and Procedures...................................... 13
---------------------
(a) Notice............................................... 13
------
(b) Cooperation.......................................... 13
-----------
10.4 Claims Procedure........................................... 13
----------------
(a) Claims............................................... 14
------
(b) Disputes............................................. 14
--------
(c) Payment.............................................. 14
-------
11. MISCELLANEOUS..................................................... 14
-------------
11.1 Good Faith Efforts; Further Assurances; Cooperation........ 14
---------------------------------------------------
11.2 Notices.................................................... 14
-------
11.3 Assignment................................................. 14
----------
11.4 Severability............................................... 15
------------
11.5 Controlling Law; Integration; Amendment; Waiver............ 15
-----------------------------------------------
11.6 Copies..................................................... 15
------
</TABLE>
ii
<PAGE>
DEFINED TERMS
<TABLE>
<S> <C>
Act......................................................................... 6
Agreement................................................................... 1
Closing..................................................................... 1
Closing Date................................................................ 1
Commission.................................................................. 6
Derivative Action........................................................... 6
Indemnified Party........................................................... 14
Indemnifying Party.......................................................... 14
Liens....................................................................... 4
Noncompete Period........................................................... 10
Notice of Contest........................................................... 14
Purchase Price.............................................................. 1
Purchased Shares............................................................ 1
Purchaser................................................................... 1
Purchaser Indemnitees....................................................... 13
Restricted Business......................................................... 10
Ridgewood................................................................... 1
SEC Documents............................................................... 6
Securities Act.............................................................. 6
Securities Acts............................................................. 6
Seller...................................................................... 1
State Acts.................................................................. 6
Territory................................................................... 10
</TABLE>
i
<PAGE>
COMMON STOCK PURCHASE AGREEMENT
January 11, 2000
THIS IS A COMMON STOCK PURCHASE AGREEMENT, dated as of January 11, 2000
(together with any Exhibits and Schedules attached hereto, the "Agreement"),
---------
entered into by and between Fountainhead Development Corp., Inc., a Georgia
corporation, with its current principal place of business at 1394 Broadway
Avenue, Braselton, Georgia 30517 ("Purchaser"), and N. Russell Walden
---------
("Seller"), by which Purchaser and Seller, in consideration of the agreements
------
set forth below and other good and valuable consideration, the mutuality,
receipt and sufficiency of which are hereby acknowledged, hereby agree as
follows:
1. PURCHASE AND SALE OF PURCHASED SHARES.
-------------------------------------
1.1 Agreement to Purchase and Sell. Upon and subject to the terms
------------------------------
set forth in this Agreement, Purchaser shall purchase from Seller, and Seller
shall sell to Purchaser, 650,000 shares of the $.01 par value common stock of
Ridgewood Hotels, Inc., a Delaware corporation ("Ridgewood") (such shares
---------
hereafter referred to as the "Purchased Shares"). The purchase price for the
----------------
Purchased Shares shall be $2.00 times the number of Purchased Shares, or
$1,300,000 in the aggregate (the "Purchase Price").
--------------
1.2 Closing. The consummation of the purchase and sale of the
-------
Purchased Shares (the "Closing") shall occur on January 11, 2000 at the offices
-------
of Sutherland Asbill & Brennan LLP, in Atlanta, Georgia, at 12:00 p.m., or on
such other date and at such time as may be mutually agreed upon by the parties
(the "Closing Date"). At the Closing, Seller shall deliver to Purchaser a
------------
certificate or certificates representing the Purchased Shares, duly endorsed for
transfer or accompanied by a fully executed stock transfer power, and Purchaser
shall deliver to Seller the Purchase Price in the manner set forth in Section
-------
1.3 below.
- ---
1.3 Payment of Purchase Price. Purchaser shall deliver to Seller at
-------------------------
Closing (i) $780,000 in immediately available federal funds, (ii) a promissory
note substantially in the form of Exhibit A hereto, issued by Purchaser in favor
---------
of Seller in the amount of $260,000, payable one year following the Closing Date
and (iii) a promissory note substantially in the form of Exhibit A hereto,
---------
issued by Purchaser in favor of Seller in the amount of $260,000, payable two
years following the Closing Date (referred to collectively as the "Notes"). The
Notes shall bear interest at a rate of six percent per annum. All interest
shall be paid quarterly, commencing March 31, 2000 and continuing for the term
of each Note.
1.4 Covenants of the Parties Prior to Closing. Each of the parties
-----------------------------------------
shall use all reasonable efforts to do all things necessary to fulfill the
conditions set forth in Articles 2 and 3 herein, and take all actions necessary
---------- -
to comply with the applicable
<PAGE>
federal and state securities laws in connection with the purchase and sale of
the Purchased Shares and the issuance of the Notes.
1.5 Option to Purchase Shares. Purchaser shall have the option to
-------------------------
purchase from Seller an additional 65,000 shares of Ridgewood common stock owned
by Seller, which option shall be exercised by written notice from Purchaser to
Seller no later than fifteen months after the Closing Date hereof. Any purchase
by Purchaser pursuant to the option granted herein shall be on the terms and
conditions set forth in this Agreement and at the price set forth in Section 1.1
-----------
hereof, payable in the form of a promissory note substantially in the form of
Exhibit A hereto and payable three years following the Closing Date. In the
- ---------
event Seller desires to sell or otherwise transfer any of the shares of
Ridgewood common stock covered by Purchaser's option herein, Purchaser shall
have a right of first refusal to purchase up to 65,000 of such shares, at the
price set forth in Section 1.1 herein, exercisable within twenty business days
-----------
of receipt of written notice of Seller's offer to sell or proposal to transfer.
In the event Purchaser elects not to exercise its rights of first refusal
hereunder and the sale or transfer initially proposed by Seller is not
consummated on the terms specified in the notice to Purchaser, Purchaser's
rights of first refusal hereunder shall be reinstated without change. Seller
shall not otherwise encumber or create any Lien (as defined below) on the shares
subject to Purchaser's option herein and in no event shall Seller be permitted
to engage in a sale or other transfer in which he retains any interest, legal
or equitable, in the shares being sold or transferred during the fifteen month
period covered by Purchaser's right of first refusal in this Section 1.5.
-----------
2. CONDITIONS OF PURCHASE.
----------------------
Purchaser's obligation to purchase the Purchased Shares hereunder and
consummate the other transactions contemplated hereby shall be subject to
compliance by Seller with its agreements herein contained and to the fulfillment
on or before the Closing of the following conditions:
2.1 Representations, Warranties and Agreements. Each of the
------------------------------------------
representations, warranties and agreements of Seller contained in this Agreement
shall be true and correct on the date hereof and as of the Closing Date, if made
on and as of the Closing Date, and at the Closing, Purchaser shall receive a
certificate to such effect executed by Seller.
2.2 Authorization; Consents. Seller shall have obtained any and all
-----------------------
consents, permits and waivers, and made all filings, necessary or appropriate
for consummation of the transactions contemplated by this Agreement.
2.3 All Proceedings Satisfactory. All proceedings taken prior to or
----------------------------
at the Closing in connection with the transactions contemplated by this
Agreement, and all documents and evidences incident thereto, shall be reasonably
satisfactory in form and substance to Purchaser, and Purchaser shall receive
such copies thereof and other materials as it may reasonably request in
connection therewith.
2
<PAGE>
2.4 Purchase of Additional Shares. The closing of the purchase by
-----------------------------
Purchaser of all shares of Ridgewood stock owned by ADT Security Services, Inc.
shall have been consummated or shall be consummated simultaneously with the
Closing.
2.5 No Distributions, Recapitalizations, Etc. Except as set forth on
-----------------------------------------
Schedule 2.5, from December 31, 1998 through the Closing Date, Ridgewood shall
- ------------
not have declared or paid any dividend or declared, authorized or made any stock
split, recapitalization, reorganization or other similar distribution on or with
respect to, or redeemed or purchased, any shares of its capital stock.
2.6 Legal Opinion. Purchaser shall have received from counsel for
-------------
Ridgewood a legal opinion in substantially the form of Exhibit B hereto.
---------
2.7 Adverse Change. Between the date hereof and the Closing, there
--------------
shall have been no adverse change in the business or the results of operations,
liabilities, prospects or condition, financial or otherwise, of Ridgewood.
3. CONDITIONS OF SALE.
------------------
Seller's obligations to sell and deliver the Purchased Shares hereunder and
consummate the other transactions contemplated hereby shall be subject to the
compliance by Purchaser with its agreements herein contained and to the
fulfillment on or before the Closing of the following conditions:
3.1 Authorization. The Board of Directors of Purchaser shall have
-------------
duly adopted resolutions, or given written consent, authorizing Purchaser to
consummate the transactions contemplated hereby in accordance with the terms
hereof and with applicable law, and Seller shall have received a duly executed
certificate of the Secretary of Purchaser, dated the Closing Date, setting forth
a copy of such resolutions.
3.2 Governing Documents. Purchaser shall have delivered to Seller
-------------------
true and correct copies of its Articles of Incorporation, Bylaws and other
governing documents, all as amended through the Closing Date and each certified
by the Secretary of Purchaser.
3.3 Representations and Warranties. Each of the representations and
------------------------------
warranties of Purchaser set forth in Article 5 shall be true and correct on the
---------
date hereof and as of the Closing Date, if made on and as of the Closing Date,
and at the Closing, Seller shall receive a certificate to such effect executed
by a duly authorized representative of Purchaser.
3.4 All Proceedings Satisfactory. All corporate and other
----------------------------
proceedings taken prior to or at the Closing in connection with the transactions
contemplated by this Agreement, and all documents and evidences incident
thereto, shall be reasonably
3
<PAGE>
satisfactory in form and substance to Seller, and Seller shall receive such
copies thereof as he may reasonably request in connection therewith.
3.5 Financial Statements. Prior to or upon the Closing, and subject
--------------------
to execution and delivery of a confidentiality agreement by Seller, Purchaser
shall have delivered to Seller copies of its most recent audited financial
statements.
3.6 Legal Opinion. Seller shall have received from counsel for
-------------
Purchaser a legal opinion in substantially the form of Exhibit C hereto.
---------
4. REPRESENTATIONS AND WARRANTIES OF SELLER.
----------------------------------------
As a material inducement to Purchaser to enter into this Agreement and to
purchase the Purchased Shares as contemplated hereby, Seller represents and
warrants to Purchaser, as of the date hereof, as follows:
4.1 Ownership of Shares. Seller owns of record and beneficially all
-------------------
of the Purchased Shares. Seller owns all right, title and interest in and to
the Purchased Shares, free and clear of any and all liens, charges, security
interests or other encumbrances (collectively, "Liens"), other than restrictions
-----
on transfers arising out of applicable federal and state securities laws. Prior
to the Closing, Seller owns 780,000 shares of Ridgewood common stock and options
to acquire 150,000 shares of Ridgewood common stock, and no warrants or other
rights relating to, convertible into or exchangeable for shares of Ridgewood
stock. At the Closing, Purchaser will acquire all right, title and interest in
and to the Purchased Shares, free and clear of any and all Liens, other than
restrictions on transfers arising out of applicable federal and state securities
laws. There are no shareholder agreements in effect with respect to the
Purchased Shares, and Seller owns no security of Ridgewood other than as
described in this Section 4.1.
-----------
4.2 Validity and Enforceability. Seller has all necessary power and
---------------------------
authority, and has taken all action required, to execute, deliver and perform
this Agreement and sell and deliver the Purchased Shares. This Agreement and
all other documents and instruments executed by Seller pursuant hereto, when
delivered, are and will be duly authorized, valid and binding obligations of
Seller, enforceable against him in accordance with their respective terms,
subject to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and equitable principles. The sale of the Purchased
Shares by Seller in accordance herewith is not subject to preferential rights or
similar statutory or contract rights that have not heretofore been waived and
does not give rise to any rights or obligations to third parties arising
pursuant to any agreement or instrument to which Seller or Ridgewood is a party
or which are otherwise binding on Seller or Ridgewood.
4.3 Governmental and Other Consents. No authorization, consent,
-------------------------------
approval, license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign,
4
<PAGE>
or any third party, is or will be necessary for, or in connection with, the
offer, sale or delivery by Seller of the Purchased Shares, or for the
performance by Seller of his obligations under this Agreement.
4.4 Litigation. Except as set forth on Schedule 4.4, there is no
---------- ------------
action, suit, proceeding or investigation pending or, to Seller's knowledge,
threatened against Seller or Ridgewood that might call into question the
validity of, or hinder the enforceability or performance of, this Agreement or
the Purchased Shares, or any action taken or to be taken pursuant hereto.
Neither Seller nor Ridgewood is in default with respect to any order, writ,
injunction, decree, ruling or decision of any court, commission, board or other
government agency by which Seller or Ridgewood is bound that might affect the
Purchased Shares.
4.5 No Violations. Neither the execution, delivery and performance
-------------
by Seller of this Agreement and any documents or instruments delivered, executed
and performed in connection herewith, the consummation of the transactions
contemplated hereby (including the sale and delivery of the Purchased Shares),
nor the compliance with the provisions hereof will violate any provision of law,
or any order of any court or other agency of government or indenture, agreement
or other instrument to which Seller is bound, or result in the creation or
imposition of any Lien upon any of the Purchased Shares.
4.6 No Brokers or Finders. No person has or will have, as a result of
---------------------
the transactions contemplated by this Agreement, any right, interest or valid
claim against or upon Seller for any commission, fee or other compensation as a
finder or broker because of any act or omission by Seller or any agent of
Seller.
4.7 Material Adverse Change. Except as set forth on Schedule 4.7,
----------------------- ------------
since September 30, 1999, Ridgewood has conducted its business only in the
ordinary course of business, and there has not been any material adverse change
in the business, financial condition, operations, affairs, properties, assets or
results of operations of Ridgewood or any of its subsidiaries.
4.8 SEC Filings. All of the documents (the "SEC Documents") filed by
----------- -------------
Ridgewood with the Securities and Exchange Commission (the "Commission") in
----------
accordance with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended
--------------
(collectively, the "Securities Acts"), and all information supplied by Seller or
---------------
Ridgewood to Purchaser in connection with any and all securities filings
required by the consummation of the transactions contemplated hereby, conformed
in all material respects to the requirements of the Securities Acts and the
rules and regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
5
<PAGE>
4.9 Derivative Action The status of the derivative action against
-----------------
Ridgewood styled as Strassburger v. Early et al. (the "Derivative Action") is as
---------------------------- -----------------
set forth on Schedule 4.9 hereto.
------------
4.10 Understanding of Nature of Securities. Seller understands that:
-------------------------------------
(a) The Notes have not been registered under the Securities Act, or
any state securities laws (the "State Acts") and are being issued and sold in
----------
reliance upon certain of the exemptions contained in the Securities Act and the
State Acts, and the representations and warranties of Seller contained herein
are essential to the claim of exemption under the Securities Act and the State
Acts;
(b) Each Note is a "restricted security" as that term is defined in
Rule 144 promulgated under the Securities Act;
(c) The Notes cannot be sold or transferred without registration
under the Securities Act and any applicable State Acts or exemptions therefrom;
(d) The Notes and any documents issued in replacement therefor shall
bear a legend in substantially the following form, in addition to any other
legend required by law or otherwise:
"The security represented hereby has not been registered under the
Securities Act of 1933 (the "Act") or any state securities acts and may
---
not be sold, transferred or otherwise disposed of unless a registration
statement under the Act and any applicable state securities acts with
respect to such security is effective or unless the maker is in receipt
of an opinion of counsel satisfactory to it to the effect that such
security may be sold without registration under the Acts and such state
acts."
(e) Accredited Investor. Seller is an "accredited investor" as that
-------------------
term is defined in Regulation D under the Securities Act; and
(f) Acquisition Intent. Seller's acquisition of the Notes is not a
------------------
transaction (or any element of a series of transactions) that is a part of a
plan or scheme to evade the registration provisions of the Securities Act.
4.11 Investment Intent. Seller is acquiring the Notes for Seller's
-----------------
own account and not on behalf of any other person. Seller is acquiring the
Notes for investment and not with a view to or for sale in connection with any
distribution or with the intent to divide Seller's participation with others or
resell or otherwise participate in a distribution of the Notes, directly or
indirectly.
4.12 Economic Risk Seller acknowledges that he has the ability to
-------------
bear the economic risks of his investment pursuant to this Agreement.
6
<PAGE>
4.13 No Claims Against Ridgewood. Except as set forth on Schedule
--------------------------- --------
4.13, Seller has no claim against Ridgewood, except for accrued compensation for
- ----
the most recent salary payment period and benefits and expenses or similar
obligations incurred in the ordinary course of business (including reimbursement
of medical expenses pursuant to any benefit plan of Ridgewood).
4.14 Disclosure. Neither this Agreement nor any certificate, schedule
----------
or exhibit provided in connection herewith by Seller to Purchaser contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances under which they are or were made.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
-------------------------------------------
As a material inducement to Seller to enter into this Agreement and to sell
the Purchased Shares as contemplated hereby, Purchaser represents and warrants
to Seller, as of the date hereof, as follows:
5.1 Validity and Enforceability. Purchaser has all necessary
---------------------------
corporate power and authority, and has taken all action required, to execute,
deliver and perform this Agreement and purchase the Purchased Shares. This
Agreement and all other documents and instruments executed by Purchaser pursuant
hereto, when delivered, are and will be duly authorized, valid and binding
obligations of Purchaser, enforceable against it in accordance with their
respective terms, subject to laws of general application relating to bankruptcy,
insolvency and the relief of debtors and equitable principles.
5.2 Understanding of Nature of Securities. Purchaser understands
-------------------------------------
that:
(a) The Purchased Shares have not been registered under the
Securities Act, or any State Acts and are being issued and sold in reliance upon
certain of the exemptions contained in the Securities Act and the State Acts,
and the representations and warranties of Seller contained herein are essential
to the claim of exemption by Purchaser under the Securities Act and the State
Acts;
(b) The Purchased Shares are "restricted securities" as that term is
defined in Rule 144 promulgated under the Securities Act;
(c) The Purchased Shares cannot be sold or transferred without
registration under the Securities Act and any applicable State Acts or
exemptions therefrom;
(d) The Purchased Shares and any certificates issued in replacement
therefor shall bear a legend in substantially the following form, in addition to
any other legend required by law or otherwise:
7
<PAGE>
"The securities represented by this certificate have not been registered
under the Securities Act of 1933 (the "Act") or any state securities acts
---
and may not be sold, transferred or otherwise disposed of unless a
registration statement under the Act and any applicable state securities
acts with respect to such securities is effective or unless Purchaser is in
receipt of an opinion of counsel satisfactory to it to the effect that such
securities may be sold without registration under the Acts and such state
acts."
(e) Accredited Investor. Purchaser is an "accredited investor" as
-------------------
that term is defined in Regulation D under the Securities Act; and
(f) Acquisition Intent. Purchaser's acquisition of the Purchased
------------------
Shares is not a transaction (or any element of a series of transactions) that is
a part of a plan or scheme to evade the registration provisions of the
Securities Act.
5.3 Investment Intent. Purchaser is acquiring the Purchased Shares
-----------------
for Purchaser's own account and not on behalf of any other person. Purchaser is
acquiring the Purchased Shares for investment and not with a view to or for sale
in connection with any distribution of the Purchased Shares or with the intent
to divide Purchaser's participation with others or resell or otherwise
participate in a distribution of the Purchased Shares, directly or indirectly.
5.4 Economic Risk. Purchaser acknowledges that it has the ability to
-------------
bear the economic risks of its investment pursuant to this Agreement.
5.5 No Violations. Neither the execution, delivery and performance by
-------------
Purchaser of this Agreement and any documents or instruments delivered, executed
and performed in connection herewith, the consummation of the transactions
contemplated hereby (including the purchase of the Purchased Shares), nor the
compliance with the provisions hereof will violate any provision of law, or any
order of any court or other agency of government or indenture, agreement or
other instrument to which Purchaser is subject or bound.
5.6 Governmental and Other Consents. No authorization, consent,
-------------------------------
approval, license, exemption of or filing or registration with any court or
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, or any third party, is or will be necessary for, or in
connection with, the purchase by Purchaser of the Purchased Shares, or for the
performance by Purchaser of its obligations under this Agreement.
5.7 Litigation. Except as set forth on Schedule 5.7, there is no
---------- ------------
action, suit, proceeding or investigation pending or, to Purchaser's knowledge,
threatened against Purchaser that might call into question the validity of, or
hinder the enforceability or performance of, this Agreement or the Purchased
Shares, or any action taken or to be taken pursuant hereto. Purchaser is not in
default with respect to any order, writ,
8
<PAGE>
injunction, decree, ruling or decision of any court, commission, board or other
government agency by which it is bound that might affect the Purchased Shares.
5.8 No Brokers or Finders. No person has or will have, as a result of
---------------------
the transactions contemplated by this Agreement, any right, interest or valid
claim against or upon Purchaser for any commission, fee or other compensation as
a finder or broker because of any act or omission by Purchaser or any agent of
Purchaser.
6. CERTAIN ANNOUNCEMENTS.
---------------------
Any public announcement with respect to this Agreement and the transactions
contemplated hereby will be issued at such time and in such manner as is
mutually agreed upon by the parties hereto; provided, however, that in the event
a party hereto determines, based upon advice of counsel, that a public
announcement is required by law, the parties shall in good faith make every
effort to agree on any public announcements or statements so required.
7. CERTAIN COVENANTS OF THE PARTIES.
--------------------------------
7.1 Investigation. Purchaser may, prior to the Closing, make or
-------------
cause to be made, such investigation of the business and properties of Ridgewood
and its financial and legal condition as Purchaser deems necessary or advisable
to familiarize itself therewith, provided, that such investigations shall not
unreasonably interfere with normal operations of Ridgewood. No investigation by
Purchaser heretofore or hereafter made shall affect the representations and
warranties of Seller, and each such representation and warranty shall survive
any investigation.
7.2 Expenses. Except as otherwise provided in this Agreement,
--------
whether or not the transactions contemplated hereby are consummated, all costs
and expenses (including any attorney's and accountant's fees) incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such expenses; provided that all fees and expenses
incurred by Seller or his advisors in connection with this Agreement and the
transactions contemplated hereby are the expenses of Seller, and not of
Ridgewood.
7.3 Noncompetition.
---------------
(a) Seller acknowledges that Ridgewood and Purchaser sell services
throughout the States of Georgia, Texas, Kentucky and Florida (the "Territory")
---------
and that Purchaser would not purchase the Purchased Shares without the assurance
that Seller will not engage in the activities prohibited by this Section 7.3 for
-----------
the periods set forth herein. To induce Purchaser to consummate the purchase of
the Purchased Shares, Seller shall restrict his actions throughout the Territory
and otherwise as provided in this Section 7.3. Seller acknowledges that such
-----------
restrictions are reasonable in light of the business of Ridgewood and Purchaser
and the benefits of the transactions contemplated by this Agreement to the
Seller; provided, however, that such restrictions shall not apply to any
9
<PAGE>
activities undertaken by Seller after Closing solely in his capacity as an
employee or consultant of Ridgewood.
(b) Except for any relationship or involvement with Purchaser or
Ridgewood, from and after Closing, Seller will not manage, operate, join,
control or participate in the ownership, management or control of any business
under the name or style of Purchaser or Ridgewood, or any name or style
incorporating any such name or style or any name or style confusingly similar to
such name or style.
(c) During the period commencing on the date of the Closing and
terminating on the third anniversary thereof (the "Noncompete Period"), except
-----------------
on behalf of Ridgewood as a director, consultant or otherwise, Seller will not
directly engage in the business of acquiring, developing, operating or managing
hotel properties (the "Restricted Business") within the Territory, or act as
-------------------
consultant, advisor, independent contractor, officer, manager, director,
executive level employee or principal of any corporation (other than Purchaser,
Ridgewood or any affiliate thereof), partnership, association or agency, or
directly or indirectly own more than five percent of the outstanding capital
stock of any corporation (other than Purchaser, Ridgewood or any affiliate
thereof), which is engaged in the Restricted Business in the Territory during
the Noncompete Period.
(d) During the Noncompete Period, Seller will not induce a "Customer"
(as defined below) (i) to patronize any business entity engaged in the
Restricted Business in the Territory (other than Purchaser, Ridgewood or any
affiliate thereof); or (ii) to withdraw, curtail or cancel such Customer's
business with Purchaser, Ridgewood or any affiliate thereof. As used in this
Section 7.3, "Customer" means any actual customer of Purchaser, Ridgewood or the
- -----------
subsidiaries thereof, or any potential customer of Purchaser, Ridgewood or the
subsidiaries thereof served or solicited by Ridgewood or any subsidiaries
thereof within the 12-month period prior the date of Closing.
(e) During the Noncompete Period, Seller will not request or induce
any employee to terminate his employment with Purchaser, Ridgewood or any
affiliate thereof and accept employment with another business entity engaged in
the Restricted Business in the Territory or hire during the Noncompete Period
any employee, within twelve months after termination of such person's employment
with Purchaser, Ridgewood or any affiliate thereof.
(f) Seller acknowledges that any violation of the provisions of this
Section 7.3 may cause irreparable harm to Purchaser or Ridgewood and that
- -----------
damages are not an adequate remedy. Purchaser or Ridgewood therefore shall be
entitled to an injunction by an appropriate court in the appropriate
jurisdiction, enjoining, prohibiting and restraining Seller from the continuance
of any such violation, in addition to any monetary damages that might occur by
reason of the violation of this Section 7.3. The remedies provided in this
-----------
Section 7.3 are cumulative and shall not exclude any other remedies to which any
- -----------
party to this Agreement may be entitled under this Agreement or
10
<PAGE>
applicable law, and the exercise of a remedy shall not be deemed an election
excluding any other remedy (any such claim by any other party to this Agreement
being hereby waived).
(g) Should any portion, provision or clause of this Section 7.3 be
-----------
deemed too broad to permit enforcement to its full extent, then it shall be
enforced to the maximum extent permitted by law, and such scope may be
judicially modified accordingly in any proceeding brought to enforce such
restriction.
(h) The covenants and agreements set forth in this Section 7.3 shall
-----------
be deemed, and shall be construed as, separate and independent covenants and
agreements, and, should any portion of such covenants or agreements be held
invalid, void or unenforceable by any court of competent jurisdiction, such
invalidity, voidness, or unenforceability shall in no way render invalid, void
or unenforceable any other portion thereof or any separate covenant not declared
invalid, void or unenforceable. This Section 7.3 shall in that case be
-----------
construed as if the void, invalid or unenforceable portions were omitted.
7.4 Updated Financial Statements. Subject to the continuing
----------------------------
effectiveness of a confidentiality agreement between Purchaser and Seller,
Purchaser shall deliver to Seller copies of all audited financial statements
prepared by it during the term of the Notes.
8. TERMINATION; SURVIVAL.
---------------------
8.1 Termination. This Agreement may be terminated at any time prior
-----------
to Closing by: (i) mutual consent of Purchaser and Seller; (ii) Purchaser, if
any of the conditions specified in Article 2 hereof are no longer capable of
---------
being satisfied or shall not have been fulfilled before January 12, 2000 and
shall not have been waived by Purchaser, or if there has been a breach by Seller
of any of the representations and warranties of Seller in Article 4 or any of
---------
the covenants or agreements set forth herein, which breach is not curable or, if
curable, is not cured within five days of written notice to Seller from
Purchaser; (iii) Seller, if any of the conditions specified in Article 3 hereof
---------
are no longer capable of being satisfied or shall not have been fulfilled before
January 12, 2000 and shall not have been waived by Seller, or if there has been
a breach of any of the representations and warranties of Purchaser in Article 5,
---------
or any of the covenants or agreements set forth herein, which breach is not
curable or, if curable, is not cured within five days of written notice to
Purchaser by Seller. In the event of termination of this Agreement by either
Purchaser or Seller pursuant to clause (ii) or (iii) of the immediately
preceding sentence, Purchaser, on the one hand, and Seller, on the other hand,
shall be liable to the other for any breach hereof by such party, which breach
led to such termination.
8.2 Effect of Termination. Except for the provisions of Sections
--------------------- --------
7.1, 7.2, 8.1 and 8.2, which shall survive any termination of this Agreement, in
- ---------------------
the event of the termination and abandonment of this Agreement pursuant to
Article 8, this
- ---------
11
<PAGE>
Agreement shall forthwith become void and have no further effect, without any
liability on the part of any party hereto or its respective officers, directors
or shareholders; provided, however, that, unless this Agreement is terminated
pursuant to Section 8.1, nothing in this Section 8.2 shall prejudice any claim
----------- -----------
any party may have under this Agreement that arises prior to the effectiveness
of such termination.
8.3 Survival. The representations, warranties and agreements made in
--------
this Agreement shall survive the Closing. Each party, acknowledging that the
other is entitled to rely on its or his representations, warranties and
agreements in this Agreement in order to preserve the benefit of the bargain
otherwise represented by this Agreement, agrees that neither the survival of
such representations, warranties and agreements nor their enforceability nor any
remedies for breaches of them shall be affected by any knowledge of a party,
regardless of when or how such party acquired such knowledge.
9. CONFIDENTIALITY.
---------------
Each of the parties hereto shall keep confidential and not disclose to any
other party the discussions, agreements and information with respect to or
concerning the transactions described herein, except to its employees, agents
and advisors on a need-to-know basis. In the event that the transactions
described are not consummated for any reason, then each party shall be bound to
secrecy with respect to all information concerning the other party or the
transactions that has been made known to it as part of these negotiations for a
two year period. None of the parties to this Agreement shall be bound to
secrecy with respect to any information that (i) becomes generally available to
and known by the public (other than as a result of a disclosure directly or
indirectly by any party hereto), (ii) is or becomes available to any party on a
non-confidential basis from a source other than another party, or its advisors,
provided that such source is not and was not bound by a confidentiality
agreement with, or other obligation of secrecy to, a party, or (iii) is or has
already been independently acquired or developed by another party without
violating any confidentiality agreement with, or obligation of secrecy to, a
party. Furthermore, a party shall not be in breach of these provisions if it
discloses information pursuant to a valid order issued by a court or government
agency, provided that the disclosing party notifies the other parties of the
disclosure in advance and provides an opportunity for such party to oppose the
disclosure.
10. INDEMNIFICATION
---------------
10.1 Indemnification by Seller. Seller shall indemnify, defend, save
-------------------------
and hold harmless Purchaser and its officers, directors, employees, agents and
affiliates (collectively, "Purchaser Indemnitees") from and against all demands,
---------------------
claims, allegations, actions or causes of action, assessments, losses, damages,
deficiencies, liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing) asserted against, imposed upon, required
to be paid or incurred by any Purchaser Indemnitees, directly or indirectly, in
connection with, arising out of, or which would not have occurred but for, (i) a
breach of any representation or warranty made by Seller in
12
<PAGE>
this Agreement or in any certificate or document furnished pursuant hereto by
Seller, or (ii) a breach or nonfulfillment of any covenant or agreement made by
Seller in or pursuant to this Agreement.
10.2 Indemnification by Purchaser. Purchaser shall indemnify, defend,
----------------------------
save and hold harmless Seller from and against any and all demands, claims,
allegations, actions or causes of action, assessments, losses, damages,
deficiencies, liabilities, costs and expenses (including reasonable legal fees,
interest, penalties, and all reasonable amounts paid in investigation, defense
or settlement of any of the foregoing) asserted against, imposed upon, required
to be paid or incurred by Seller, directly or indirectly, in connection with,
arising out of, or which would not have occurred but for, (i) a breach of any
representation or warranty made by Purchaser in this Agreement or in any
certificate or document furnished pursuant hereto by Purchaser, or (ii) a breach
or nonfulfillment of any covenant or agreement made by Purchaser in or pursuant
to this Agreement.
10.3 Claims and Procedures.
---------------------
(a) Notice. If any action, suit, proceeding, claim or demand is
------
asserted against an Indemnified Party (the "Indemnified Party") in respect of
-----------------
which the Indemnified Party proposes to demand indemnification, the Indemnified
Party shall notify the indemnifying party (the "Indemnifying Party") thereof
------------------
promptly and within a reasonable time after assertion thereof; provided,
however, that the Indemnified Party's failure or delay in giving such notice
shall not relieve the Indemnifying Party of its obligations under this Article
-------
10 except to the extent that the Indemnified Party unreasonably delayed and the
- --
Indemnifying Party shall have been prejudiced thereby.
(b) Cooperation. The parties shall cooperate fully with each other in
-----------
connection with the mitigation, defense, negotiation or settlement of any legal
proceeding, claim or demand subject hereto, and subject to the provisions
hereof, all parties shall retain the right to participate in the defense of any
such legal proceeding, claim or demand. The Indemnifying Party has the right to
conduct and control, through counsel of its choosing, the defense, compromise or
settlement of any action, suit, proceeding, claim or demand that it agrees in
writing is subject to indemnification hereunder within ten days after receipt of
the notice described in Section 10.3(a); provided, however, that if the
---------------
Indemnifying Party shall have exercised its right to assume such control, the
Indemnified Party may, in its sole discretion, employ counsel to represent it
(in addition to counsel employed by the Indemnifying Party) in any such matter.
If the Indemnifying Party exercises its right to assume such control, (i) the
Indemnifying Party shall not consent to any settlement that does not include as
an unconditional term thereof the giving of a complete release from liability
with respect to such action or suit to the Indemnified Party; and (ii) the
Indemnifying Party shall promptly reimburse the Indemnified Party for the full
amount of its damages, including fees and expenses of counsel.
10.4 Claims Procedure.
----------------
13
<PAGE>
(a) Undisputed Claims. To the extent an Indemnified Party delivers a
-----------------
notice to the Indemnifying Party in accordance with Section 10.3(a) and within
---------------
fifteen business days of the date that such notice was delivered, the
Indemnifying Party has not notified the Indemnified Party in writing of a
dispute with such claim, such Indemnified Party shall be entitled to payment in
full of such claim.
(b) Disputes. If a claim is to be contested, the Indemnifying Party
--------
shall notify the Indemnified Party in writing within fifteen business days from
the date of receipt of a notice of a claim ("Notice of Contest"). If such
-----------------
dispute is not resolved within 30 days after Notice of Contest is delivered,
then such dispute shall be resolved by an arbitrator, who shall be appointed
within sixty days after the delivery of the Notice of Contest. The arbitrator
shall abide by the rules of the American Arbitration Association and his
decision shall be made within forty-five days from the date of appointment and
shall be final and binding on all parties.
(c) Payment. To the extent applicable, any indemnification payments
-------
owed by Seller to Purchaser shall be made by a decrease in the principal amount
owing under the Note. All indemnification payments under this Article 10 not
----------
covered by a decrease in the principal amount of the Note shall be made promptly
in cash.
11. MISCELLANEOUS.
-------------
11.1 Good Faith Efforts; Further Assurances; Cooperation. The parties
---------------------------------------------------
shall in good faith undertake to perform their obligations in this Agreement, to
satisfy all conditions and to cause the transactions contemplated in this
Agreement to be carried out promptly in accordance with the terms of this
Agreement. Upon the execution of this Agreement and thereafter, each party
shall do such things as may be reasonably requested by another party in order
more effectively to consummate or document the transactions contemplated by this
Agreement. The parties shall cooperate with each other and their respective
counsel, accountants or representatives in connection with any actions required
to be taken as part of their respective rights and obligations under this
Agreement.
11.2 Notices. Each notice, communication and delivery under this
-------
Agreement (i) shall be made in writing, signed by the party making the same,
(ii) shall specify the section of this Agreement pursuant to which it is given,
(iii) shall be given either in person, by a nationally recognized next business
day delivery service or by telecopier (with confirmation of receipt), and (iv)
if not given in person, shall be given to a party at the address set forth below
such party's signature (or at such other address as a party may furnish to the
other parties to this Agreement pursuant to this Section 11.2). If notice is
------------
given pursuant to this Section 11.2 of a permitted successor or assign of a
------------
party, then notice shall also thereafter be given in the manner set forth above
to such successor or assign of such party.
11.3 Assignment. Neither party shall assign or transfer its rights or
----------
obligations under this Agreement, whether by merger, operation of law or
otherwise, except with the prior written consent of the other party, which shall
not be unreasonably withheld.
14
<PAGE>
Purchaser may assign its rights and obligations under this Agreement to a
purchaser of all or a substantial part of its business to which this Agreement
relates, whether such purchase is by purchase of assets, purchase of stock,
merger or otherwise. This Agreement is binding upon the parties and their
successors and assigns and inures to the benefit of the parties and their
permitted successors and assigns and, when appropriate to effect the binding
nature of this Agreement for the benefit of the other parties, of any other
successor or assign.
11.4 Severability. Any determination by any court of competent
------------
jurisdiction of the invalidity, illegality or unenforceability of any provision
of this Agreement that is not essential for accomplishing its purposes shall not
affect the validity, legality or enforceability of any other provision of this
Agreement, which shall remain in full force and effect and which shall be
construed as to be valid under applicable law.
11.5 Controlling Law; Integration; Amendment; Waiver. This Agreement
-----------------------------------------------
is governed by, and shall be construed and enforced in accordance with, the laws
of the State of Georgia (except the laws of that state that would render such
choice of laws ineffective). This Agreement supersedes all prior negotiations,
agreements and understandings among the parties as to its subject matter,
constitutes the entire agreement among the parties as to its subject matter and
may not be altered or amended except in a writing signed by the parties. The
failure of any party at any time or times to require performance of any
provision of this Agreement shall in no manner affect the right to enforce the
same, and no waiver by any party of any provision or of a breach of any
provision of this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed or construed either as a further or continuing waiver
of any such provision or breach or as a waiver of any other provision or of a
breach of any other provision of this Agreement.
11.6 Copies. This Agreement may be executed in two or more copies,
------
each of which shall be deemed an original, and it shall not be necessary in
making proof of this Agreement or its terms to produce or account for more than
one of such copies.
[Signatures begin on next page.]
15
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the
day and year first above written.
FOUNTAINHEAD
DEVELOPMENT CORP., INC.
By: /s/ Donald Panoz
-------------------------------------
Donald Panoz
Chairman
Address: 1394 Broadway Avenue
Braselton, Georgia 30517
SELLER:
/s/ N. Russell Walden
----------------------------------------
N. Russell Walden
Address: 3190 Ridgewood Rd., N.W.
Atlanta, GA 30327
<PAGE>
EXHIBIT A
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES ACTS AND MAY NOT
---
BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A REGISTRATION
STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES ACTS WITH
RESPECT TO SUCH SECURITY IS EFFECTIVE OR UNLESS THE MAKER IS IN RECEIPT OF
AN OPINION OF COUNSEL SATISFACTORY TO IT TO THE EFFECT THAT SUCH SECURITY
MAY BE SOLD WITHOUT REGISTRATION UNDER THE ACTS AND SUCH STATE ACTS.
PROMISSORY NOTE
$260,000 January 11, 2000
FOR VALUE RECEIVED, the undersigned, Fountainhead Development Corp., Inc.,
a Georgia corporation (the "Borrower"), hereby unconditionally promises to pay
to the order of N. Russell Walden, an individual resident of the State of
Georgia (the "Lender"), at 3190 Ridgewood Road, N.W., Atlanta, Georgia 30327, or
at such other place as the holder of this Note may from time to time designate
in writing, in lawful money of the United States of America and in immediately
available funds, the principal sum of TWO HUNDRED SIXTY THOUSAND DOLLARS
($260,000).
The principal amount hereof shall be due and payable by Borrower in full no
later than January 11, 2001.
Interest on the outstanding unpaid principal amount hereof shall accrue at
a rate per annum equal to six percent (6%) and shall be payable on a quarterly
basis, commencing March 31, 2000 and due on the last day of every calendar
quarter thereafter for the term of this Note. Interest shall be computed on the
basis of a 360-day year for the actual number of days elapsed in the period
during which it accrues.
The Borrower shall have the right to prepay without penalty the outstanding
principal amount hereof in whole at any time or in part from time to time after
the date hereof. On the date of any such prepayment, the Borrower shall pay
outstanding accrued interest on the amount so prepaid to the date of prepayment.
Any such prepayment in part shall be applied to the installments due hereunder
in inverse order of maturity. The Borrower shall have the right to set
<PAGE>
off against any amounts due under this Note any amounts due from the Lender to
the Borrower, whether under the Purchase Agreement of even date herewith between
the Borrower and Lender or otherwise.
In no contingency or event whatsoever shall interest charged hereunder,
however such interest may be characterized or computed, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that the Lender has received interest hereunder in excess of the
highest rate applicable hereto, such excess interest shall, to the extent
permitted by law, (a) be applied as a credit against the outstanding principal
balance hereof or accrued and unpaid interest hereon, or (b) refunded to the
Borrower.
Each of the following events shall constitute an Event of Default
hereunder:
(a) if the Borrower fails to pay any principal of or interest on this
Note when the same shall become due and payable and such failure continues
for a period of ten (10) days after the Lender delivers written notice
thereof to the Borrower;
(b) if the Borrower fails to perform any of its duties or obligations
as specified in any agreement now or hereafter existing between the
Borrower and the Lender and such failure continues for a period of thirty
(30) days after the Lender delivers written notice thereof to the Borrower;
(c) if the Borrower shall generally not pay its debts as such debts
become due, or admit in writing its inability to pay its debts generally,
or make a general assignment for the benefit of creditors;
(d) if any proceeding is instituted by or against the Borrower seeking
to adjudicate it a bankrupt or insolvent, or seeking liquidation, winding
up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debt under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or for any substantial part of its property (and, in the
case of any such proceeding instituted against the Borrower, should the
same remain undismissed or unstayed for a period of sixty (60) days), or
should the Borrower take corporate action to authorize any of the actions
set forth in this clause (d); or
(e) if the Borrower is liquidated or dissolved.
Upon the occurrence of any Event of Default under clauses (d) or (e) of the
preceding paragraph, then all outstanding principal hereof and interest hereon
shall, without notice, demand or any other action on the part of the Lender,
become immediately due and payable. Upon the occurrence of any other Event of
Default, then at the Lender's option, by written notice to the Borrower, all
outstanding principal hereof and interest hereon shall become immediately due
and payable. During any period that the Borrower shall have failed to make
payment of any principal or interest due hereunder or during the existence of
any Event of Default hereunder, then in the
2
<PAGE>
Lender's sole discretion, the interest rate hereon may be increased to a rate
per annum equal to seven percent (7%) until such payment is made or Event of
Default is cured by the Borrower or waived in writing by the Lender.
The Borrower hereby waives demand, presentment, protest, notice of demand,
dishonor, presentment, protest or nonpayment and all other notices in connection
with this Note.
If this Note is collected by or through an attorney-at-law, all costs of
collection, including reasonable attorneys' fees actually incurred, shall be
payable by the undersigned.
THIS NOTE HAS BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT
ATLANTA, GEORGIA AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF GEORGIA.
Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note. Whenever in this Note reference is made to the Lender or the
Borrower, such reference shall be deemed to include, as applicable, a reference
to their respective successors and assigns, provided that the Lender shall not
assign this Note in whole or in part without the prior written consent of the
Borrower, which consent shall not be unreasonably withheld. The provisions of
this Note shall be binding upon and shall inure to the benefit of such
successors and assigns.
3
<PAGE>
WITNESS the hand and seal of the undersigned, as of the date first above
written.
FOUNTAINHEAD DEVELOPMENT
CORP., INC.
By:__________________________________
Donald Panoz
Chairman
4
<PAGE>
THE SECURITY REPRESENTED HEREBY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES ACTS AND
---
MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS A
REGISTRATION STATEMENT UNDER THE ACT AND ANY APPLICABLE STATE
SECURITIES ACTS WITH RESPECT TO SUCH SECURITY IS EFFECTIVE OR UNLESS
THE MAKER IS IN RECEIPT OF AN OPINION OF COUNSEL SATISFACTORY TO IT
TO THE EFFECT THAT SUCH SECURITY MAY BE SOLD WITHOUT REGISTRATION
UNDER THE ACTS AND SUCH STATE ACTS.
PROMISSORY NOTE
$260,000 January 11, 2000
FOR VALUE RECEIVED, the undersigned, Fountainhead Development Corp., Inc.,
a Georgia corporation (the "Borrower"), hereby unconditionally promises to pay
to the order of N. Russell Walden, an individual resident of the State of
Georgia (the "Lender"), at 3190 Ridgewood Road, N.W., Atlanta, Georgia 30327, or
at such other place as the holder of this Note may from time to time designate
in writing, in lawful money of the United States of America and in immediately
available funds, the principal sum of TWO HUNDRED SIXTY THOUSAND DOLLARS
($260,000).
The principal amount hereof shall be due and payable by Borrower in full no
later than January 11, 2002.
Interest on the outstanding unpaid principal amount hereof shall accrue at
a rate per annum equal to six percent (6%) and shall be payable on a quarterly
basis, commencing March 31, 2000 and due on the last day of every calendar
quarter thereafter for the term of this Note. Interest shall be computed on the
basis of a 360-day year for the actual number of days elapsed in the period
during which it accrues.
The Borrower shall have the right to prepay without penalty the outstanding
principal amount hereof in whole at any time or in part from time to time after
the date hereof. On the date of any such prepayment, the Borrower shall pay
outstanding accrued interest on the amount so prepaid to the date of prepayment.
Any such prepayment in part shall be applied to the installments due hereunder
in inverse order of maturity. The Borrower shall have the right to set off
against any amounts due under this Note any amounts due from the Lender to the
Borrower,
5
<PAGE>
whether under the Purchase Agreement of even date herewith between the Borrower
and Lender or otherwise.
In no contingency or event whatsoever shall interest charged hereunder,
however such interest may be characterized or computed, exceed the highest rate
permissible under any law that a court of competent jurisdiction shall, in a
final determination, deem applicable hereto. In the event that such a court
determines that the Lender has received interest hereunder in excess of the
highest rate applicable hereto, such excess interest shall, to the extent
permitted by law, (a) be applied as a credit against the outstanding principal
balance hereof or accrued and unpaid interest hereon, or (b) refunded to the
Borrower.
Each of the following events shall constitute an Event of Default
hereunder:
(a) if the Borrower fails to pay any principal of or interest on this
Note when the same shall become due and payable and such failure continues
for a period of ten (10) days after the Lender delivers written notice
thereof to the Borrower;
(b) if the Borrower fails to perform any of its duties or obligations
as specified in any agreement now or hereafter existing between the
Borrower and the Lender and such failure continues for a period of thirty
(30) days after the Lender delivers written notice thereof to the Borrower;
(c) if the Borrower shall generally not pay its debts as such debts
become due, or admit in writing its inability to pay its debts generally,
or make a general assignment for the benefit of creditors;
(d) if any proceeding is instituted by or against the Borrower
seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
winding up, reorganization, arrangement, adjustment, protection, relief or
composition of it or its debt under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or for any substantial part of its property (and, in the
case of any such proceeding instituted against the Borrower, should the
same remain undismissed or unstayed for a period of sixty (60) days), or
should the Borrower take corporate action to authorize any of the actions
set forth in this clause (d); or
(e) if the Borrower is liquidated or dissolved.
Upon the occurrence of any Event of Default under clauses (d) or (e) of the
preceding paragraph, then all outstanding principal hereof and interest hereon
shall, without notice, demand or any other action on the part of the Lender,
become immediately due and payable. Upon the occurrence of any other Event of
Default, then at the Lender's option, by written notice to the Borrower, all
outstanding principal hereof and interest hereon shall become immediately due
and payable. During any period that the Borrower shall have failed to make
payment of any principal or interest due hereunder or during the existence of
any Event of Default hereunder, then in the Lender's sole discretion, the
interest rate hereon may be increased to a rate per annum equal to
6
<PAGE>
seven percent (7%) until such payment is made or Event of Default is cured by
the Borrower or waived in writing by the Lender.
The Borrower hereby waives demand, presentment, protest, notice of demand,
dishonor, presentment, protest or nonpayment and all other notices in connection
with this Note.
If this Note is collected by or through an attorney-at-law, all costs of
collection, including reasonable attorneys' fees actually incurred, shall be
payable by the undersigned.
THIS NOTE HAS BEEN DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE AT
ATLANTA, GEORGIA AND SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES OF THE
PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO
THE CONFLICTS OF LAW PROVISIONS) AND DECISIONS OF THE STATE OF GEORGIA.
Whenever possible, each provision of this Note shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of this Note shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provision or the remaining provisions
of this Note. Whenever in this Note reference is made to the Lender or the
Borrower, such reference shall be deemed to include, as applicable, a reference
to their respective successors and assigns, provided that the Lender shall not
assign this Note in whole or in part without the prior written consent of the
Borrower, which consent shall not be unreasonably withheld. The provisions of
this Note shall be binding upon and shall inure to the benefit of such
successors and assigns.
7
<PAGE>
WITNESS the hand and seal of the undersigned, as of the date first above
written.
FOUNTAINHEAD DEVELOPMENT
CORP., INC.
By:/s/ Donald Panoz
---------------------------------
Donald Panoz
Chairman
8
<PAGE>
DISCLOSURE SCHEDULES
OF
N. RUSSELL WALDEN
PROVIDED PURSUANT TO AND AS A PART OF
COMMON STOCK PURCHASE AGREEMENT
BY AND BETWEEN
FOUNTAINHEAD DEVELOPMENT GROUP, INC.
and
N. RUSSELL WALDEN
DATED AS OF JANUARY 11, 2000
(the "Agreement")
Unless the context otherwise requires, all capitalized terms in the following
Disclosure Schedules shall have the meanings defined in the Agreement.
<PAGE>
SCHEDULE 2.5
NO DISTRIBUTIONS, RECAPITALIZATIONS, ETC.
A dividend was paid on Ridgewood's outstanding preferred stock in February, 1999
<PAGE>
SCHEDULE 4.4
LITIGATION
See Schedule 4.9.
<PAGE>
SCHEDULE 4.7
MATERIAL ADVERSE CHANGE
None.
<PAGE>
SCHEDULE 4.9
DERIVATIVE ACTION
The case 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,
- --------------------------------------------------------------
Delaware Chancery Court, Newcastle County, remains pending. On March 19, 1998,
the Court dismissed all class claims, leaving only the derivative claims
remaining for trial. The case was tried to Vice Chancellor Jacobs during the
period February 1-3, 1999. All post-trial briefing and oral argument has been
concluded, and the case has been submitted for decision by the Court.
<PAGE>
SCHEDULE 4.13
NO CLAIMS AGAINST RIDGEWOOD
Consulting Agreement entered into as of the 5/th/ day of January, 2000, by and
between Ridgewood Hotels, Inc., a Delaware corporation and N. Russell Walden.
<PAGE>
SCHEDULE 5.7
LITIGATION
----------
None.
<PAGE>
Exhibit G
---------
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement") is dated as of the 11th day of
January, 2000, by and among ADT SECURITY SERVICES, INC., a Delaware corporation
(the "Shareholder") and FOUNTAINHEAD DEVELOPMENT CORP., INC., a Georgia
corporation (the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Shareholder owns 450,000 shares (collectively, the "Shares") of the
Series A Convertible Preferred Stock, par value $1.00 per share, of Ridgewood
Hotels, Inc., a Delaware corporation (the "Company"); and
WHEREAS, the Shareholder desires to sell and transfer to the Purchaser all of
the Shares, and the Purchaser wishes to acquire such Shares pursuant to and in
accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
agreements herein set forth, the parties hereto hereby agree as follows:
ARTICLE 1. PURCHASE AND SALE OF SHARES.
---------------------------
1.1 Purchase and Sale.
-----------------
Subject to the terms and conditions of this Agreement, the Purchaser agrees to
purchase from the Shareholder, and the Shareholder agrees to sell, transfer and
convey to the Purchaser, all of the Shares on January 11, 2000 (the "Closing
Date").
<PAGE>
ARTICLE 2. PURCHASE PRICE.
--------------
2.1 Purchase Price.
--------------
The Purchaser on the Closing Date shall pay to the Shareholder the sum of one
million six hundred fifty thousand U.S. Dollars ($1,650,000.00), in cash, in
full consideration for the Shares. The Purchaser shall pay to the Shareholder
the Purchase Price by wire transfer in immediately available funds.
2.2 Transfer Taxes.
--------------
The Shareholder shall be responsible for all transfer and similar taxes assessed
or payable in connection with or as a result of the transfer of the Shares from
the Shareholder to the Purchaser, if any.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES.
------------------------------
3.1 Representations and Warranties of the Shareholder.
-------------------------------------------------
The Shareholder represents and warrants to the Purchaser as follows:
3.1.1 Authorization.
-------------
The Shareholder has all necessary corporate power and authority to enter into
this Agreement and has taken all action required to execute, deliver and perform
its obligations hereunder and to consummate the transactions contemplated
hereby. This Agreement and all other documents and instruments executed by
Shareholder pursuant hereto have been duly executed and delivered by the
Shareholder and are the valid and binding obligations of the Shareholder
enforceable against it in accordance with their terms, except as enforcement may
be limited by equitable principles limiting the right to obtain specific
performance or other equitable remedies, or by applicable bankruptcy or
insolvency laws and related decisions affecting creditors' rights generally.
3.1.2 No Conflict.
-----------
Neither the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) conflict with or
result in a breach of or constitute a
-2-
<PAGE>
default under any provision of the Articles of Incorporation or Bylaws (or other
charter documents) of the Shareholder, (ii) violate or result in a breach of or
constitute a default under any provision of law or any judgment, order, decree,
rule or regulation of any court or governmental agency to which the Shareholder
is subject or (iii) other than any effect arising out of the Litigation, as
defined in Section 5.1.1, violate or result in a breach of or constitute a
default under any contract, agreement, indenture or other instrument to which
Shareholder is bound, or result in the creation or imposition of any lien,
charge, security interest or other encumbrance upon any of the Shares.
3.1.3 Brokers, Finders.
----------------
The Shareholder has not retained any broker or finder in connection with the
transactions contemplated herein and is not obligated and has not agreed to pay
any brokerage or finder's commission, fee or similar compensation.
3.1.4 Title to Shares.
---------------
The Shareholder is the record and beneficial owner of and has good and valid
title to the Shares, free and clear of any liens, pledges, charges, security
interests, and encumbrances, other than any effect arising out of the
Litigation.
3.1.5 Governmental and Other Consents.
--------------------------------
No authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party, is
or will be necessary for, or in connection with, the offer, sale or delivery by
Shareholder of the Shares, or for the performance by Shareholder of its
obligations under this Agreement.
3.1.6 Litigation.
----------
Except for the Litigation, there is no action, suit, proceeding or investigation
pending or, to Shareholder's knowledge, threatened, against Shareholder that
might call into question the validity of, or hinder the enforceability or
performance of, this Agreement or any action taken or
-3-
<PAGE>
to be taken pursuant hereto. Shareholder is not in default with respect to any
order, writ, injunction, decree, ruling or decision of any court, commission,
board or other government agency by which Shareholder is bound that relates to
the Shares.
3.2 Disclaimer of Other Representations and Warranties.
--------------------------------------------------
Except as expressly set forth in Section 3.1 hereof, the Shareholder disclaims
all other representations and warranties, whether expressed or implied.
ARTICLE 4. REPRESENTATIONS AND WARRANTIES OF THE PURCHASER.
-----------------------------------------------
4.1 Representations and Warranties.
------------------------------
The Purchaser represents and warrants to the Shareholder as follows:
4.1.1 No Conflict.
-----------
Neither the execution, delivery and performance of this Agreement nor the
consummation of the transactions contemplated hereby will: (i) conflict with or
result in a breach of or constitute a default under any provision of the
Articles of Incorporation or Bylaws (or other charter documents) of the
Purchaser, (ii) violate or result in a breach of or constitute a default under
any provision of law or any judgment, order, decree, rule or regulation of any
court or governmental agency to which the Purchaser is subject or (iii) other
than any effect arising out of the Litigation, violate or result in a breach of
or constitute a default under any contract, agreement, indenture or other
instrument to which Purchaser is bound, or result in the creation or imposition
of any lien, charge, security interest or other encumbrance upon any of the
Shares.
4.1.2 Investment Only.
---------------
The Purchaser is purchasing the Shares solely for its own account for investment
purposes only and not with a view to the distribution or resale thereof. The
Purchaser will not sell or transfer any of the Shares (or any securities issued
in substitution, reclassification or recapitalization) in violation of
applicable federal or state securities laws. The Purchaser is an "accredited
investor" within the meaning of Rule 501 under the United States Securities Act
of 1933, as amended to
-4-
<PAGE>
date (the "Securities Act"). The Purchaser understands that the Shares have not
been registered under the Securities Act by reason of specified exemptions
therefrom which depend upon, among other things, the bona fide nature of its
investment intent as expressed herein and as explicitly acknowledged hereby, or
under any applicable state securities laws. The Purchaser understands that a
legend relating to these matters appears on the back of the certificate for the
Shares, and that the Shareholder has taken no action to cause such legend to be
removed in connection with this agreement.
4.1.3 Brokers, Finders.
----------------
The Purchaser has not retained any broker or finder in connection with the
transactions contemplated herein and is not obligated and has not agreed to pay
any brokerage or finder's commission, fee or similar compensation.
4.1.4 Financial Condition.
-------------------
The Purchaser has the financial capabilities to fully meet and perform all of
its obligations under this Agreement.
4.1.5 Authorization.
-------------
The Purchaser has all necessary power and authority to enter into this Agreement
and has taken all action required to execute, deliver and perform its
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement and all other documents and instruments executed by Purchaser
pursuant hereto have been duly executed and delivered by the Purchaser and are
the valid and binding obligations of the Purchaser enforceable against it in
accordance with their terms, except as enforcement may be limited by equitable
principles limiting the right to obtain specific performance or other equitable
remedies, or by applicable bankruptcy or insolvency laws and related decisions
affecting creditors' rights generally.
4.1.6 Governmental and Other Consents.
--------------------------------
No authorization, consent, approval, license, exemption of or filing or
registration with any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, or any third party, is
or will be necessary for, or in connection with, the purchase by the
-5-
<PAGE>
Purchaser of the Shares, or for the performance by Purchaser of its obligations
under this Agreement.
4.1.7 Litigation.
----------
Except for the Litigation, there is no action, suit, proceeding or investigation
pending or, to Purchaser's knowledge, threatened, against Purchaser that might
call into question the validity of, or hinder the enforceability or performance
of, this Agreement or any action taken or to be taken pursuant hereto.
4.2 Disclaimer of Other Representations and Warranties.
--------------------------------------------------
Except as expressly set forth in Section 4.1 hereof, the Purchaser disclaims all
other representations and warranties, whether expressed or implied.
ARTICLE 5. COVENANTS AND AGREEMENTS.
------------------------
5.1 Agreements Regarding Litigation.
-------------------------------
5.1.1 No Representations.
------------------
The parties acknowledge that certain lawsuit in the Court of Chancery of the
State of Delaware, C.A. No. 14267, William N. Strassburger v. Michael M. Early,
--------------------------------------------
Luther A. Henderson, John C. Stiska, N. Russell Walden, Triton Group, Ltd. and
- ------------------------------------------------------------------------------
Ridgewood Properties, Inc. (the "Litigation"). No representations have been
- --------------------------
made by either party to the other party regarding the outcome of the Litigation.
5.1.2 If Rescission Is Ordered.
------------------------
If the court grants plaintiff's request for rescission of the 1994 stock
repurchase at issue in the Litigation, this section shall apply. "Rescission"
for purposes of this Agreement means a transaction whereby the Company is
entitled to receive Shares, either alone or with cash (other than damages, which
cash payments are addressed in Section 5.1.3) from the Shareholder, whether or
not the Shareholder is also entitled to receive shares of Common Stock of the
Company, par value $0.01 per share ("Common Stock") from the Company.
-6-
<PAGE>
When Rescission Is Required. When the court requires that the Rescission must
- ---------------------------
be completed, the Purchaser agrees to return to the Shareholder, and the
Shareholder agrees to accept from the Purchaser, upon the Shareholder's
completion of such Rescission, the Shares, and the Shareholder agrees to return
to the Purchaser the purchase price set forth in Section 2.1 ($1,650,000). If
the Purchaser has converted all or part of the Shares into Common Stock, all
such shares of Common Stock will be included in such return to the Shareholder
without adjustment to the purchase price being returned as set forth in the
previous sentence.
Simultaneously with the completion of the Rescission, the Purchaser agrees to
purchase from the Shareholder all of the shares of Common Stock received by the
Shareholder from the Company in the Rescission (if any). For these shares, the
Purchaser shall pay an aggregate purchase price in cash equal to (1) $1,650,000,
plus (2) an amount equal to fifty percent of the product of (x) the amount paid
by the Shareholder to the Company in the Rescission minus any amount that the
Company is required to pay pursuant to the court's order to reimburse the
plaintiffs for attorneys fees and expenses, multiplied by (y) the Purchaser's
Ownership Fraction after the completion of such purchase. If no court order
addressing the reimbursement of plaintiffs' attorneys fees and expenses has been
issued prior to making the above payment, then the above payment shall be made
at the time of the Rescission without deducting any amount for such fees and
expenses. If the court subsequently issues an order requiring the Company to
pay any portion of plaintiffs' attorneys fees and expenses, then the Shareholder
shall refund to the Purchaser a portion of the amount paid pursuant to item (2)
above reflecting the calculation of such payment adjusted for such subsequent
order.
The "Ownership Fraction" equals (1) the total number of shares of Common Stock
that the person in question owns or has the right to acquire, whether by
exercise of options or other rights, or conversion of securities, divided by (2)
the total number of outstanding shares of Common Stock, including shares that
may be issued upon exercise of options or other rights, or conversion of
securities.
Pending Appeal, If Any. If a Rescission is ordered, then if the Shareholder
- ----------------------
elects to appeal such order, Shareholder agrees to use its commercially
reasonable efforts to cause such Rescission order to be stayed pending the
outcome of the appeal. Pending such appeal, if the court orders
-7-
<PAGE>
that something must be done with the Shares, then, solely to the extent that the
Shareholder is unable to comply with such order as a result of having
transferred the Shares to Purchaser pursuant to this Agreement, the Purchaser
agrees to, at its option, either (1) take all actions with respect to the Shares
necessary to place the Shareholder in a position to comply with such order or
(2) if such order need not be complied with if the Shareholder posts a bond, not
take the actions described in (1) and reimburse the Shareholder for the cost of
the bond.
5.1.3 If Damages Are Ordered.
----------------------
If as a result of the Litigation the court orders that the Shareholder, Triton
Management Group or any of their respective affiliates (the "Shareholder
Parties") must pay damages to the Company, this section shall apply. This
section shall apply whether or not the court also orders Rescission.
When Payment of Damages Is Required. If the court requires that damages must be
- -----------------------------------
paid (in addition to any cash payment in connection with a Rescission), then as
consideration for its purchase of the Shares, upon the payment of any required
damages by any of the Shareholder Parties (but, if such Shareholder Parties
elect to appeal, only after the court's entry of a final non-appealable order,
and if no appeal is elected, only after the expiration of time after which no
appeal can be taken), the Purchaser shall pay an amount to the Shareholder equal
to fifty percent of (x) such damages minus any amount that the Company is
required to pay pursuant to the court's order to reimburse the plaintiffs for
attorneys fees and expenses, multiplied by (y) the Purchaser's Ownership
Fraction as of the date on which the damages are paid. If no court order
addressing the reimbursement of plaintiffs' attorneys fees and expenses has been
issued prior to making the above payment, then the above payment shall be made
without deducting any amount for such fees and expenses. If the court
subsequently issues an order requiring the Company to pay any portion of
plaintiffs' attorneys fees and expenses, then the Shareholder shall refund to
the Purchaser a portion of the amount paid pursuant to item (2) above reflecting
the calculation of such payment adjusted for such subsequent order. If the
court requires payment of the damages while an appeal is pending and such
payment can be avoided by Shareholder posting a bond, then the Purchaser agrees,
if it requests the Shareholder to post a bond in lieu of payment of the damages
while the appeal is pending, to reimburse the Shareholder for the cost of
posting the bond.
-8-
<PAGE>
Pending Appeal, If Any. If the Shareholder elects to appeal the damages order,
- ----------------------
Shareholder agrees to use its commercially reasonable efforts to cause such
damages order to be stayed pending the outcome of the appeal. If in connection
with the appeal of a damages order, the court orders that something must be done
with the Shares, then, solely to the extent that the Shareholder is unable to
comply with such order as a result of having transferred the Shares to Purchaser
pursuant to this Agreement, the Purchaser agrees to, at its option, either (1)
take all actions with respect to the Shares necessary to place the Shareholder
in a position to comply with such order or (2) if such order need not be
complied with if the Shareholder posts a bond, not take the actions described in
(1) and reimburse the Shareholder for the cost of the bond.
No Force Or Effect Under Certain Circumstances. This Section 5.1.3 shall be of
- ----------------------------------------------
no force or effect if the court orders Rescission and, as part of such order,
Shareholder is not entitled to receive shares of Common Stock from the Company.
5.1.4 If Appeal is Successful.
-----------------------
If the Shareholder is successful on appeal, the parties agree to take all
reasonable steps to undo any actions taken under Sections 5.1.2 and 5.1.3, so
that each party is in the position it was in prior to the taking of such
actions. If the Shareholder is successful in part on appeal, the parties shall
at that time discuss how best to take such reasonable steps as can be taken to
put each party in as similar a position as possible as it was prior to the
taking of such actions under Sections 5.1.2 and 5.1.3.
5.2 Agreement Regarding Dividends.
-----------------------------
Notwithstanding the performance by Shareholder and Purchaser in accordance
herewith, Purchaser shall retain any and all rights to, and interests in, any
dividends accrued, paid or payable with respect to the Shares prior to the date
of such performance by the parties.
5.3 Agreement Regarding Fees of Counsel to the Shareholder.
------------------------------------------------------
The Purchaser agrees to cause the Company to continue its arrangement with the
Shareholder whereby the Company will pay two-thirds of the fees and expenses of
Potter Anderson & Corroon in connection with the Litigation and the Shareholder
will pay one-third of such fees and expenses.
-9-
<PAGE>
ARTICLE 6. CLOSING DATE, CONDITIONS AND TRANSACTIONS.
-----------------------------------------
6.1 Closing Date and Place.
----------------------
The consummation of the sale and purchase of the Shares contemplated by this
Agreement (the "Closing") will take place simultaneously with the execution of
this Agreement or at such other date and time as may be mutually agreeable to
the parties hereto (the "Closing Date").
ARTICLE 7. INDEMNIFICATION.
---------------
7.1 Indemnification by the Shareholder.
----------------------------------
Subject to the limits set forth in this Article 7, the Shareholder agrees to
indemnify, defend and hold the Purchaser and each of the Purchaser's successors
and assigns (the Purchaser and such persons are collectively hereinafter
referred to as the "Purchaser's Indemnified Persons"), harmless from and against
any and all loss, liability, damage or deficiency (including interest,
penalties, costs of preparation and investigation, and reasonable attorneys'
fees) (collectively, "Losses") that the Purchaser's Indemnified Persons may
suffer, sustain, incur or become subject to arising out of or due to: (a) any
inaccuracy of any representation of the Shareholder in this Agreement, any
schedule or exhibit hereto or any certificate or other document delivered
pursuant hereto; (b) the breach of any warranty of the Shareholder in this
Agreement, any schedule or exhibit hereto or any certificate or other document
delivered pursuant hereto; and (c) the nonfulfillment of any covenant,
undertaking, agreement or other obligation of the Shareholder under this
Agreement, any schedule or exhibit hereto or any certificate or other document
delivered pursuant hereto, not otherwise waived by the Purchaser.
7.2 Indemnification by the Purchaser.
--------------------------------
Subject to the limits set forth in this Article 7, the Purchaser agrees to
indemnify, defend and hold the Shareholder and the Shareholder's successors and
assigns (the Shareholder and such persons are hereinafter collectively referred
to as the "Shareholder's Indemnified Persons"), harmless from and against any
and all Losses that the Shareholder's Indemnified Persons may suffer, sustain,
incur or become subject to arising out of or due to: (a) any inaccuracy of any
representation of the Purchaser in this Agreement, any schedule or exhibit
hereto, or any
-10-
<PAGE>
certificate or other document delivered pursuant hereto; (b) the breach of any
warranty of the Purchaser in this Agreement, any schedule or exhibit hereto, or
any certificate or other document delivered pursuant hereto; and (c) the
nonfulfillment of any covenant, undertaking, agreement or other obligation of
the Purchaser under this Agreement, any schedule or exhibit hereto, or any
certificate or other document delivered pursuant hereto not otherwise waived by
the Shareholder.
7.3 Survival of Representations and Warranties; Threshold.
-----------------------------------------------------
Except for the representation and warranty of Shareholder in Section 3.1.4,
which shall survive until the expiration of the applicable statute of
limitations, the several representations and warranties of the parties contained
in this Agreement or in any document delivered pursuant hereto and the parties'
right to indemnity in accordance with this Article 7 for breaches of such
representations and warranties shall survive the Closing Date and shall remain
in full force and effect thereafter for a period of 18 months after the Closing
Date and shall be effective with respect to any inaccuracy therein or breach
thereof, notice of which shall have been duly given within such 18-month period
in accordance with Section 7.4 hereof, after which 18-month period they shall
terminate and be of no further force or effect. Anything to the contrary
contained herein notwithstanding, neither party shall be entitled to any
recovery from the other party with respect to any inaccuracy or breach of such
representations or warranties unless and until the amount of such Losses
suffered, sustained or incurred by the asserting party, or to which such party
becomes subject, by reason of such inaccuracy or breach, shall exceed $50,000
calculated on a cumulative basis and not a per item basis (the "Basket Amount"),
but in no event shall the Shareholder or the Purchaser be liable to the other,
in each case, for breaches of representations and warranties in an aggregate
amount in excess of twenty-five percent (25%) of the Purchase Price (the "Cap"),
except with respect to any breach by Shareholder of the representation and
warranty made in Section 3.1.4, as to which the Cap shall equal $1,650,000. The
covenants and agreements of the parties contained in this Agreement shall
survive according to their respective terms and breaches thereof shall not be
subject to the Cap or the Basket Amount.
7.4 Notice and Opportunity to Defend.
--------------------------------
If there occurs an event which either party asserts is an indemnifiable event
pursuant to Sections 7.1 or 7.2 hereof, the party seeking indemnification (the
"Indemnitee") shall notify the
-11-
<PAGE>
party obligated to provide indemnification (the "Indemnitor") promptly. If such
event involves (a) any claim, or (b) the commencement of any action or
proceeding by a third person, the Indemnitee shall give the Indemnitor written
notice of such claim or the commencement of such action or proceeding. Delay or
failure to so notify the Indemnitor shall only relieve the Indemnitor of its
obligations to the extent, if at all, that it is prejudiced by reasons of such
delay or failure. The Indemnitor shall have a period of 30 days within which to
respond to the Indemnitee's notice, which response will be in writing. If the
Indemnitor accepts responsibility, then the Indemnitor shall be obligated to
compromise or defend, at its own expense and by counsel chosen by the Indemnitor
and reasonably satisfactory to the Indemnitee, such matter, and the Indemnitor
shall provide the Indemnitee with such assurances as may be reasonably required
by the Indemnitee to assure that the Indemnitor will assume and be responsible
for the entire liability at issue, subject to the limitations set forth in
Section 7.5 hereof. If the Indemnitor does not respond within such 30-day period
or rejects responsibility for such matter in whole or in part, the Indemnitee
shall be free to pursue, without prejudice to any of its rights hereunder, such
remedies as may be available to the Indemnitee under applicable law. The
Indemnitee agrees to cooperate fully with the Indemnitor and its counsel in the
defense against any such asserted liability. In any event, the Indemnitee shall
have the right to participate at its own expense in the defense of such asserted
liability. Any compromise of such asserted liability by the Indemnitor shall
require the prior written consent of the Indemnitee and until such consent is
obtained the Indemnitor shall continue the defense of such asserted liability.
In addition, any compromise of such asserted liability shall include as an
unconditional term thereof the giving of a complete release from liability with
respect to such action or claim to the Indemnitee.
7.5 Reduction for Insurance.
-----------------------
The amount which an Indemnitor is required to pay to, for, or on behalf of an
Indemnitee pursuant to this Article 7 shall be reduced (including, without
limitation, retroactively) by any insurance proceeds actually recovered by or on
behalf of the Indemnitee in reduction of the related indemnifiable loss (the
"Indemnifiable Loss"). Amounts required to be paid, as so reduced, are
hereinafter sometimes called an "Indemnity Payment." If an Indemnitee shall
have received, or if an Indemnitor shall have paid on its behalf, an Indemnity
Payment in respect of an Indemnifiable Loss and shall subsequently receive,
directly or indirectly, insurance proceeds in
-12-
<PAGE>
respect of such Indemnifiable Loss, then such Indemnitee shall promptly pay to
the Indemnitor the amount of such insurance proceeds, or, if less, the amount of
the Indemnity Payment. The parties hereto agree that the foregoing shall not
affect the subrogation rights of any insurance companies making payments
hereunder.
ARTICLE 8. MISCELLANEOUS.
-------------
8.1 Expenses.
--------
Except as otherwise set forth in this Agreement, each of the parties hereto
shall pay its own expenses and costs incurred or to be incurred by it in
negotiating, closing and carrying out this Agreement.
8.2 Notices.
-------
All notices, requests, demands and other communications given hereunder
(collectively, "Notices") shall be in writing and delivered personally or by
overnight courier to the parties at the following addresses or sent by
telecopier or telex, with confirmation received, to the telecopy number
specified below:
8.2.1 If to the Shareholder at:
ADT Security Services, Inc.
One Town Center Road
Boca Raton, Florida 33486
Attn: Mr. Dennis Stern, Vice President
Telecopier No.: 561-988-3750
8.2.2 If to the Purchaser at:
Fountainhead Development Corp., Inc.
100 Tour de France
Braselton, Georgia 30517
Attn: President
Telecopier No.: (770) 867-0902
-13-
<PAGE>
8.2.3 With a copy to:
Sutherland Asbill & Brennan LLP
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attn: Mark D. Kaufman
Telecopier No.: (404) 853-8806
8.2.4 All Notices shall be deemed delivered when actually received if
delivered personally or by overnight courier, sent by telecopier or telex
(promptly confirmed in writing), addressed in accordance with Sections 8.2.1 or
8.2.2 hereof, as the case may be. Each of the parties shall hereafter notify
the other in accordance with this Section 8.2 of any change of address or
telecopy number to which notice is required to be mailed or sent.
8.3 Counterparts.
------------
This Agreement may be executed simultaneously in one or more counterparts, and
by different parties hereto in separate counterparts, each of which when
executed shall be deemed an original, but all of which taken together shall
constitute one and the same instrument.
8.4 Entire Agreement.
----------------
This Agreement constitutes the entire agreement and supersedes all prior
agreements and understandings among the parties hereto with respect to the
subject matter hereof.
8.5 Headings.
--------
The headings contained in this Agreement and in the Schedules and Exhibits
hereto are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
8.6 Assignment; Amendment of Agreement.
----------------------------------
This Agreement shall be binding upon the respective successors and assigns of
the parties hereto. This Agreement may not be assigned by any party hereto
without the prior written consent of all other parties hereto, which consent
shall not be unreasonably withheld, except that no consent
-14-
<PAGE>
shall be required if an assignment by a party is solely the result of the
acquisition of that party by a third party or the sale by such party of all or
substantially all of its assets. This Agreement may be amended only by written
agreement of the parties hereto, duly executed and delivered by an authorized
representative of each of the parties hereto.
8.7 Governing Law.
-------------
This Agreement shall be governed by and construed and enforced in accordance
with the internal laws of the State of Delaware applicable to contracts made in
that State, without giving effect to the conflicts of laws principles thereof.
8.8 Further Assurances.
------------------
Each party agrees that it will execute and deliver, or cause to be executed and
delivered, on or after the date of this Agreement, all such other instruments
and will take all reasonable actions as may be necessary to transfer and convey
the Shares to the Purchaser, on the terms herein contained, to consummate the
transactions contemplated hereby, and to effectuate the provisions and purposes
hereof.
8.9 No Third Party Rights.
---------------------
Except as specifically provided herein, this Agreement is not intended and shall
not be construed to create any rights in any parties other than the Shareholder
and the Purchaser and no person shall assume any rights as a third party
beneficiary hereunder.
8.10 Non-Waiver.
----------
The failure in any one or more instances of a party hereto to insist upon
performance of any of the terms, covenants or conditions of this Agreement, to
exercise any right or privilege in this Agreement conferred, or the waiver by
said party of any breach of any of the terms, covenants or conditions of this
Agreement shall not be construed as a subsequent waiver of any such terms,
covenants, conditions, rights or privileges, but the same shall continue and
remain in full force and effect as if no such forbearance or waiver had
occurred.
-15-
<PAGE>
8.11 Severability.
------------
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner to the end that transactions
contemplated hereby are fulfilled to the extent possible.
8.12 Waiver of Jury Trial.
--------------------
EACH OF THE PURCHASER AND THE SHAREHOLDER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING, OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE)
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY.
-16-
<PAGE>
IN WITNESS WHEREOF, the Purchaser and the Shareholder have duly executed and
delivered this Agreement as of the day and year first above written.
ADT SECURITY SERVICES, INC.
---------------------------
By: /s/ [Illegible]
-----------------------------------
Title: Vice President
-----------------------------
FOUNTAINHEAD DEVELOPMENT CORP., INC.
------------------------------------
By: /s/ Donald E Panoz
-----------------------------------
Title: Chairman
-----------------------------
<PAGE>
Exhibit H
---------
Joint Filing Agreement pursuant to Rule 13d-1(k)(1)(iii) under the Securities
Exchange Act of 1934, as amended.
Each of the undersigned hereby agrees to be included in the filing of the
Schedule 13D dated January 10, 2000 with respect to the issued and outstanding
Common Stock of Ridgewood Hotels, Inc. beneficially owned by each of the
undersigned, respectively.
Dated January 20, 2000
Fountainhead Development Corp, Inc.
By: /s/ Henk H. Evers
-------------------------------------
Name: Henk H. Evers
---------------------------------
Its: Chief Executive Officer
-------------------------------------
Fountainhead Holdings, Ltd.
By: /s/ Donald E. Panoz
-------------------------------------
Name: Donald E. Panoz
----------------------------------
Its: Chairman
------------------------------------
/s/ Donald E. Panoz
-------------------------------------
Donald E. Panoz
/s/ Nancy C. Panoz
-------------------------------------
Nancy C. Panoz
