EXHIBIT 10.1
GRAND THEME HOTEL ASSOCIATION
MEMBERSHIP AGREEMENT
This ASSOCIATION MEMBERSHIP AGREEMENT (this "Agreement") is made and
entered into by and between GRAND THEME HOTELS, LTD., a Florida limited
partnership ("GTH") having as its sole general partner Grand Theme Hotels, Inc.
and LAKE BUENA VISTA PARTNERS, LTD., a Florida limited partnership ("LBVP") as
of this 22nd day of October, 1996.
W I T N E S S E T H:
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WHEREAS, GTH has created an association (the "Association") of hotel
property owners who have subscribed for property theme identification, marketing
and reservation system support by GTH as GTH themed hotel properties; and
WHEREAS, LBVP desires to become a member in the Association and to
submit its property currently known as the Days Inn Lake Buena Vista Resort &
Suites (the "Hotel") to the GTH regime for theme hotels.
NOW THEREFORE, for and in consideration of ten and no/100 dollars
($10.00) and other good and valuable consideration, LBVP and GTH do hereby
covenant and agree as follows:
1.
MEMBERSHIP. In consideration for the payment of a membership fee (the
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"Membership Fee") to GTH in the total amount of $100,000.00 payable in full on
the date hereof.
2.
LICENSE FOR ROYAL SAFARI Resort As a member in the Association and in
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consideration of payment of the license fee in the total amount of
$1,200,000.00, GTH hereby grants to LBVP the irrevocable right and license to
adopt the "Royal Safari Resort"' theme as developed by GTH at the Hotel. LBVP
shall pay GTH the license fee in five installments as follows: (i) a payment of
$300,000 shall be due and
payable on or before December 26, 1996; (ii) a payment of $150,000 shall be due
and payable on or before March 26, 1997; (iii) a payment of $150,000 shall be
due and payable on or before June 26, 1997; (iv) a payment of $300,000 shall be
due and payable on or before September 26, 1997; and (v) a final payment of
$300,000 shall be due and payable on or before December 26, 1997.
In consideration of the payment of the license fee pursuant to this
Paragraph 2, LBVP shall have the exclusive right to use the name Royal Safari
Resort' and the Royal Safari Resort" concept and theme operation in the Orlando,
Florida, Statistical Market Service Area ("SMSA") as defined by the U.S. Census
Bureau. The acquisition of this license includes the (i) exclusive right to
adopt the Royal Safari Resort theme at other member hotels owned by LBVP or an
entity controlling, controlled by or under common control with LBVP in the
Orlando, Florida SMSA, subject to the execution of an Association membership
agreement for such additional hotel property on the prevailing terms and
conditions for Association member hotels, and (ii) the non-exclusive right to
adopt the Royal Safari Resort' theme at other member hotels owned by LBVP or any
entity controlling, controlled by or under common control with LBVP outside of
the Orlando, Florida SMSA, subject to the execution of an Association membership
agreement for such additional hotel property on the prevailing terms and
conditions for Association member hotels; provided, however, that GTH makes no
representation or warranty regarding the availability of the "Royal Safari
Resort" name and theme in any particular locale and shall not be liable for any
damages, costs or expenses incurred by LBVP as a result of the use of the "Royal
Safari Resort" name or theme.
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3.
MARKETING PROGRAM. GTH shall provide a regional marketing program to
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market theme hotels in the Association in the southeast region of the United
States. The Hotel shall be included in all such regional marketing materials
and promotions. All such materials and promotions shall be developed and
implemented in the sole discretion of GTH. GTH may from time to time offer
members participation in marketing programs on a voluntary basis.
LBVP shall pay a marketing assistance fee commencing January 1, 1998,
in an amount equal to 0.25 % times monthly gross room revenues generated at the
Hotel. The marketing assistance fee shall be due and payable on or before the
thirtieth (30th) day of the month following the month in which the room revenues
were generated. GTH hereby covenants that it shall use the monthly marketing
assistance fee solely for marketing the Hotel and other member hotels.
RESERVATION SYSTEM. GTH shall provide a reservation system for the
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Association. The reservation system shall feature a toll free number. Members
shall pay a one time $50,000.00 fee (the "Reservation System Fee") which shall
be due and payable on or before December 26, 1997.
4.
THEME OF HOTEL.
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LBVP intends to implement an "African" theme at the Hotel and
incorporate the following items in support of that theme:
(i) Plaques provided by GTH identifying the Hotel as a
member of the Association and not exceeding 100 square
inches in size prominently displayed in the lobby of
the Hotel;
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(ii) Exterior and interior architectural design elements;
(iii) Background music;
(iv) Tasteful lighting;
(v) Uniforms worn by front desk, xxxx staff and restaurant
employees;
(vi) Landscape design elements.
It is LBVP's intent to implement a theme which will incorporate the
above items. GTH has the right to periodically review theme implementation at
the Hotel and provide comments directly to the executive management of LBVP
regarding its findings and observations. Notwithstanding the foregoing, GTH
expressly acknowledges that LBVP may, in its sole discretion, elect at any time
during the "Tenn" (as herein defined) to modify, amend, suspend or terminate the
Hotel's theme without default or liability for liquidated damages hereunder, so
long as LBVP continues to pay all monetary sums due to GTH hereunder.
5.
CONSTRUCTION CONSULTATION FEE. GTH shall provide consulting services
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to implement the theme and aid in the construction of the theme and renovation
of the Hotel. GTH shall be paid a fee for such services in the total amount of
$300,000 (the "Construction Consultation Fee"), payable in five equal
installments in the amount of $60,000 each as follows: (i) the first installment
shall be due upon the execution of this Agreement, and (ii) the remaining four
installments shall be due on the 26th day of November, 1996, December, 1996,
January 1997 and February, 1997.
6.
COVENANTS OF THE MEMBER AND GTH. By its execution of this Agreement
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and acceptance of the rights and duties of a member pursuant to this Agreement,
LBVP hereby covenants and agrees to comply with the terms and provisions of this
Agreement. GTH hereby covenants and agrees that GTH shall not permit the use of
the theme by person or entity, other than a member of the Association.
7.
CONTINUING ASSOCIATION FEE. As a member of the Association,
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commencing on January 1, 1998, LBVP will pay in addition to the membership fee
set forth in Section I hereof, an Association fee as follows:
(i) A base Association fee of one percent (1%) of room revenues
shall be paid monthly in arrears on the thirtieth 30th) day
of the month following the month in which the room revenues
were generated.
(ii) Additional Association fees may be due and payable during
the "Term" of this Agreement as follows: If during any
rolling twelve (12) consecutive month period during the
"Term" (as herein defined), gross room revenues exceed the
"Base Revenues" (defined below), an additional Association
fee equal to the Applicable Percentage (defined below) of
all gross room revenues during the month subsequent to such
rolling twelve (12) month period shall be paid by LBVP to
GTH on the thirtieth (30th) day of the month following such
subsequent month. As used herein, "Base Revenues" shall mean
gross room revenues of $13.0 million, as such
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number may be increased during the Term as a result of
an increase in the Consumer Price Index for Urban
Consumers, All Cities ("CPI-U"). Commencing February
1998, and for every month thereafter during the Term,
Base Revenues shall mean the sum of (i) $13.0 million
plus (ii) an amount equal to 75% of the product of
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$13.0 million times the percentage increase in the CPI-
U Since January 1998. As used herein the term
"Applicable Percentage" shall mean the sum of (a) 0.5%
plus (b) 0.5% times a fraction, the numerator of which
is the difference between the actual gross room
revenues during such prior twelve (12) consecutive
month period and the Base Revenues (but in no event
exceeding $2.0 million) and the denominator of which is
$2.0 million. It is understood that the additional
Association fee will range from 0.5% to 1.0%. If the
gross room revenues during any particular rolling
twelve (12) consecutive month period shall not exceed
the Base Revenues (adjusted as provided above), no
additional Association fees shall be payable in the
months subsequent to such rolling twelve (12) month
period until the month subsequent to a rolling twelve
(12) month period during which the gross room revenues
shall again exceed the Base Revenues.
As used herein, the term "gross room revenues" shall not include any sales or
use taxes thereon.
8.
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ROYALTY. As a member in the Association, LBVP will pay GTH a royalty
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as set forth herein. The royalty will be based on a percentage of net operating
income ("NOI"). For purposes hereof, NOI shall be calculated on an accrual
basis and shall mean (1) all revenues derived from any and all sources
whatsoever in connection with the operation of the Hotel, including, without
limitation, all sums paid as gross room revenues of any nature or type
whatsoever, food and beverage revenues, telephone, television, facsimile and all
other services provided to Hotel guests; provided that revenues shall not
include payments made and received pursuant to that certain Guaranty of Minimum
Cash Flow and Escrow Agreement of even date herewith exclusive of (x) all rents
under tenant leases including all "minimum" or "base" rent and all "percentage
rent", all sums, if any, specifically designated under the tenant leases for
reimbursement of common area maintenance expenses, and (y) all net revenues
derived from transactions with respect to the two (2) outparcels of the Hotel
contemplated for restaurant development (hereinafter referred to collectively as
"Gross Income"); less (2) all costs and expenses of a non-capital nature
incurred in connection with the operation and management of the Hotel,
including, without limitation; (i) all sales and use taxes levied on such gross
revenues, (ii) all costs and expenses incurred in connection with the
advertising and promotion of the Hotel, (iii) all administrative costs and
expenses, (iv) the cost of all utilities serving the Hotel, (v) the premium cost
of any and all insurance covering the Hotel or the operation thereof, including,
without limitation, fire and extended coverage insurance, liability insurance,
rent loss insurance and worker's compensation insurance, (vi) all real estate
taxes and assessments and all personal property taxes applicable to the Hotel or
to any personal property situated thereon, (vii) all
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attorneys' and accountants' fees, (viii) any management fee paid in connection
with the management agreement for the Hotel (herein referred to as the
"Management Agreement") in an amount not to exceed three and one half percent
(3.5 %) of total revenue, (ix) all costs and expenses incurred in connection
with the performance of management functions set forth in the Management
Agreement, (x) an FF&E reserve in an amount not to exceed four percent (4%) of
Gross Income, and (xi) all sums paid under any franchise or license agreement
for the Hotel (including Association fees, marketing fees and recurring
reservation fees, if any, payable pursuant to this Agreement. The royalty shall
be paid annually within thirty (30) days after the end of the applicable twelve
(12) month period. The royalty shall be paid in accordance with the following
schedule:
(iii) Ten percent (10%) of that portion of NOI between $6.0
million to $7.0 million;
(iv) Fifteen percent (15%) of that portion of NOI between
$7.0 million to $8.0 million;
(v) Twenty percent (20%) of that portion of NOI between
$8.0 million to $9.0 million; and
(vi) Twenty-five percent (25%) of that portion of NOI over
$9.0 million.
GTH acknowledges and agrees that this royalty contemplates LBVP
receiving a fifteen percent (15%) annual return on LBVP's total investment of
$40.0 million. In the event LBVP or any lessee of the Hotel, after initial
expenditures to design and implement the theme, invests additional capital after
application of the cumulative four percent (4%) of total revenue reserve, the
NOI benchmarks will be increased to account for such additional capital
investment. This
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adjustment to the NOI benchmarks is demonstrated by the following example:
assume $12.0 million of additional capital investment and a $2.0 million
replacement reserve. LBVP applies the $2.0 million replacement reserve and
funds $10.0 million of additional capital. The threshold NOI benchmarks for
payment of the royalty to GTH is now increased to $7.5 million from $6.0 million
based on a total investment of $50.0 million net of the reserve times a fifteen
percent (15%) annual return. Based on these assumptions, royalties as a
percentage of NOI would be adjusted as follows:
(i) Ten percent (10%) of that portion of NOI between $7.5
million to $8.5 million;
(ii) Fifteen percent (15%) of that portion of NOI between
$8.5 million to $9.5 million;
(iii) Twenty percent (20%) of that portion of NOI between
$9.5 million to $10.5 million; and
(iv) Twenty-five percent (25%) of that portion of NOI over
$10.5 million.
All royalties shall be paid within thirty (30) days after the end of
the applicable twelve (12) month period in which the NOI benchmarks are
attained.
9.
TERM. The term (the "Term") of this Agreement shall be for the period
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commencing on the date hereof and expiring on the later to occur of the (i)
twelfth (12th) anniversary of the date of this Agreement; or (ii) the date of
the termination or expiration of the Lease Agreement dated the date hereof
affecting the Hotel between LBVP, as lessor, and AGH Leasing, L.P., as lessee
(the "Participating Lease").
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10.
Termination. This Membership Agreement may be terminated by (i) GTH
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in the event of a failure by LBVP to pay the monetary obligations set forth
herein, or (ii) LBVP in the event of a sale, transfer or conveyance of the Hotel
or the ownership interests in LBVP, to a bona fide, third person or entity,
subject to payment of the liquidated damages as set forth herein. In the event
of termination of this Agreement prior to the expiration of the Term hereof,
LBVP shall pay liquidated damages in the following amounts as a reasonable
estimate of the damages suffered by GTH for loss of the value of this Agreement
for the duration of the Tenn and not as a penalty. The liquidated damages shall
be calculated as follows:
(i) Royalties. Royalties shall be paid to GTH in an amount
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equal to the royalties for the remainder of the Term by
discounting to present value for each year of the remainder
of the Term royalties attributable to such year at an annual
discount rate of twelve percent (12%) (for the purposes of
this calculation royalties for each remaining year shall be
equal to royalties attributable to the twelve month period
ending on the termination date (the "Prior Royalties") and
royalties for a year which is less than a full calendar year
(a "Partial Year") shall be prorated by multiplying the
Prior Royalties by
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a fraction, the numerator of which is the number of
days in such Partial Year and the denominator of which
is 365; in the event the Agreement is terminated within
twelve (12) months from date hereof, the Prior
Royalties shall be equal to the royalties attributable
to the period extending from the date hereof to the
termination date, multiplied by the quotient obtained
by dividing 365 by the number of days elapsed from the
date hereof to the termination date); and
(ii) Association Fees and Marking Fees. In the event the Term of
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this Agreement is terminated prior to the fifth (5th)
anniversary date hereof, Association fees and marketing
assistance fees will be paid in the amount of the difference
obtained by subtracting from five (5) the number of years in
which this Agreement has been in force and effect and
multiplying that difference by the Association fees and
marketing fees paid over the twelve (12) months immediately
preceding the date of termination (the "Prior Fees") (for
purposes of this calculation, to the extent such difference
includes a Partial Year, the Prior Fees shall be multiplied
by a fraction, the numerator of which shall be the number of
days in the Partial Year and
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the denominator of which is 365), together with an amount
equal to 3.0 multiplied by the Association fees and
marketing fees paid over the twelve (12) months immediately
preceding the date of termination (in the event the
Agreement is terminated within twelve (12) months from the
date hereof, the Prior Fees shall be equal to the
Association and marketing fees paid over the period
extending from the date hereof to the termination date,
multiplied by the quotient obtained by dividing 365 by the
number of days elapsed from the date hereof to the
termination date). In the event this Agreement is terminated
after the fifth (5th) anniversary date hereof but with more
than three (3) years remaining in the Term, Association fees
and marketing fees will be paid in the amount obtained by
multiplying 3.0 times the Association fees and marketing
fees paid over the immediately preceding twelve (12) month
period. In the event this Agreement is terminated with less
than three (3) years remaining in the Term, Association fees
and marketing fees will be paid in the amount of the number
of years remaining in the Tenn multiplied by the Association
and marketing fees paid over the immediately preceding
twelve (12) month period (for purposes of this calculation,
the
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amount of fees to be paid for a Partial Year shall be equal
to the Prior Fees multiplied by a fraction, the numerator of
which shall be the number of days in the Partial Year and
the denominator of which is 365).
Upon the termination of this Agreement, LBVP shall return to GTH all
marketing materials, plaques and other identification displaying the names Grand
Theme Hotels or Royal Safari Resort- and all other marks or materials furnished
by GTH.
11.
FRANCHISE. Within ninety (90) days of the date hereof, GTH may
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develop formal franchise documentation for the Association at GTH's sole cost
and expense. In the event GTH develops formal franchise documentation which
embodies the terms and provisions, benefits and obligations set forth in this
Membership Agreement, LBVP covenants and agrees to enter into the franchise
documentation so long as the terms and provisions of such documentation are
substantially similar to the terms and provisions of this Membership Agreement.
12.
NOTICES. Any notice provided for by this Agreement and any other
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notice, demand or communication which any party may wish to send to another
shall be in writing and either delivered in person or sent by registered or
certified mail or overnight courier, return receipt requested, in a sealed
envelope, postage prepaid, and addressed to the party for which such notice,
demand
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or communication is intended at such party's address as set forth in this
Section. LBVP's address for all purposes under this Agreement shall be the
following:
Lake Buena Vista Partners, Ltd.
c/o American General Hospitality Corporation
0000 Xxxx Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxxx X. Xxxxx, President
or Xxxxxxx X. Xxxx, Executive Vice President
with a copy in each case to:
Battle Xxxxxx, L.L.P.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esquire
GTH's address for all purposes under this Agreement shall be the following:
The Xxxxxxx Enterprise, Inc.
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Chief Executive Officer
with a copy in each case to:
Xxxx, Xxxxx & Xxxxxx, P.C.
Five Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxx, Esquire
Any address or name specified above may be changed by a notice given by the
addressee to the other party. Any notice, demand or other communication shall
be deemed given and effective as of the date of delivery in person or receipt
set forth on the return receipt. The inability to deliver because of changed
address of which no notice was given, or rejection or other refusal to accept
any notice, demand or other communication, shall be deemed to be
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receipt of the notice, demand or other communication as of the date of such
attempt to delivery or rejection or refusal to accept.
13.
ASSIGNMENT. LBVP shall have the right to transfer and assign this
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Agreement to any subsequent owner or lessee of the Hotel including, but not
limited to, AGH Leasing, L.P.; provided that (i) such transferor or assignee
assumes all the rights, duties and obligations of LBVP hereunder; and (ii) LBVP
shall remain primarily liable for the payment of monetary obligations as a
member hereunder.
LBVP shall have the right to collaterally assign this Agreement to a
third party holding a mortgage covering the Hotel (a "Mortgagee"). GTH hereby
covenants and agrees to provide to any Mortgagee a "Comfort Utter", which shall
provide, inter alia, that upon an event of default on the loan held by a
Mortgagee, GTH will permit such Mortgagee to continue to operate the Hotel under
this Agreement so long as the fees are paid (but not any termination fees or
liquidated damages) or to terminate this Agreement (without the payment of any
termination fees or liquidated damages). Such letter shall also include such
other terms and conditions as such Mortgagee may request and shall provide that
for so long as such Mortgagee pays the sums due to GTH hereunder, GTH shall
perform the services set forth herein. However, Mortgagee shall not be liable
to GTH for damages in the event of Mortgagee's failure to pay any fees due
hereunder, GTH's recourse in such event being limited to (i) the termination of
this Agreement, or (ii) recovery of such
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fees from LBVP. In the event any Mortgagee seeks to terminate this Agreement,
it may do so without payment of any liquidated damages or termination fees set
forth herein; provided, however, that LBVP and its successors and assigns, if
this Agreement has been assigned by LBVP, shall remain primarily liable for
payment of any liquidated damages or termination fees in the event of such
Mortgagee's termination of this Agreement. GTH agrees to execute any estoppel
or other agreement requested by Mortgagee to confirm any of the foregoing or to
aver as to the status of this Agreement.
14.
MISCELLANEOUS. This Agreement shall be governed by the laws of the
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State of Florida. Time is of the essence in this Agreement.
In the event of any dispute in connection with the terms and
provisions of this Agreement, the party prevailing in such dispute shall be
entitled to recover its attorneys' fees and court costs reasonably and actually
incurred from the non-prevailing party.
GTH reserves the right to discontinue any GTH service set forth herein
during the Tenn in GTH's sole discretion provided that the fee associated with
that particular service shall no longer be assessed effective as of the date of
the discontinuance of the service.
In the event that any of the terms and provisions of this Agreement are
deemed to be invalid or unenforceable, the remaining terms and provisions of
this Agreement shall not be affected
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thereby but shall be deemed valid and enforceable notwithstanding the invalidity
or unenforceability of certain other terms and provisions of this Agreement.
This Agreement may be amended only by an agreement in writing signed by
LBVP and GTH.
IN WITNESS WHEREOF, the parties hereto have executed this Association
Membership Agreement as of this 22nd day of October, 1996.
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GRAND THEME HOTELS, LTD.
a Florida limited partnership
By: Grand Theme Hotels, Inc., as its sole general partner
By: /s/ Xxxxxxx X. Xxxxxxx,
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Xxxxxxx X. Xxxxxxx, President
LAKE BUENA VISTA PARTNERS, LTD.,
a Florida limited partnership
By: AGH UPREIT, LLC, as its sole general partner
By: American General Hospitality Corporation, its member
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Executive Vice President
By: American General Hospitality Operating
Partnership, L.P., its member
By: AGH GP, Inc., its sole general partner
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
Executive Vice President
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