EXHIBIT 10.17
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EXCLUSIVE JOINT VENTURE AGREEMENT
by and between
PROMUS HOTELS, INC.
and
VISTANA DEVELOPMENT, LTD.
Dated: as of December 24, 1996
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Executed
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EXCLUSIVE JOINT VENTURE AGREEMENT
THIS EXCLUSIVE JOINT VENTURE AGREEMENT (the "Agreement"), dated as of
December 24th, 1996, is entered into by and between Promus Hotels, Inc., a
Delaware corporation ("PHI"), and Vistana Development, Ltd., a Florida limited
partnership ("Vistana").
RECITALS
A. PHI and its Affiliates (as defined herein), among other things,
(i) engage in the acquisition, development, operation, management, sale and
franchising of vacation ownership resorts ("Vacation Resorts") under the brand
name "Embassy Vacation Resorts" and (ii) contemplate engaging in the
acquisition, development, operation, management, sale and franchising of
Vacation Resorts under the brand names "Hampton Vacation Resorts" and "Homewood
Vacation Resorts" (all brand names in (i) and (ii), including all derivations
thereof, the "PHI Brand Names"). For purposes of this Agreement, the term
"Vacation Resort" shall include any resort having vacation ownership interests,
interval ownership interests, timeshare estates, timeshare licenses, vacation
club, right-to-use or any other form of vacation ownership program ("Vacation
Ownership Interests").
B. Vistana and its Affiliates engage in the acquisition,
development, operation, management and sale of Vacation Resorts under the name
"Vistana" (the "Vistana Name") and under brand names owned by others (but not
any Multi-Hotel Brand Name), either alone or in combination with the Vistana
Name, including, without limitation, PGA Vacation Resort by Vistana and Vistana
Resort at World Golf Village (the "Other Brand Business") and contemplate
engaging in the acquisition, development, operation, management, and sale of
Vacation Resorts located at or in combination with hotel brand properties other
than properties operated under any Multi-Hotel Brand Names (together with the
Other Brand Business, the "Non-Multi-Hotel Brand Business"). For purposes of
this Agreement, a "Multi-Hotel Brand Name" shall mean substantially the same
brand name or derivations thereof used in the operation of more than three (3)
hotels.
C. The parties desire jointly to acquire, develop, manage, market,
and sell Vacation Resorts in North America (as defined herein). Such Vacation
Resorts are to be developed, marketed and operated under the PHI Brand Names.
D. The parties hereto desire to enter into an agreement setting
forth their respective rights and obligations jointly to develop Vacation
Resorts as set forth in Recital C hereof.
AGREEMENT
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NOW THEREFORE, in consideration of the respective covenants and
promises contained herein and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
1. Definitions. The following terms shall have the meanings ascribed
thereto in the Sections set forth below:
TERM SECTION
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Acceptance Notice Section 6(b)
Affiliate Section 4
Agreement Preamble
Approval Date Section 15(a)(ii)
Claim Section 12(a)
Confidential Information Section 9
Existing Franchisee Section 4(a)
Five Year Plan Section 3
Franchise Agreement Section 5(d)
GAAP Section 5(c)(i)
Homeowners Association
Management Agreement Section 5(f)
Identified Project Section 5
Initial Term Paragraph 2
Initiating Party Section 6(a)
Multi-Hotel Brand Name Recital B
Net Sales Revenue Section 5(c)(i)
Non-Multi-Hotel Brand Business Recital B
Non-Venture Franchise Agreement Section 6(c)(i)
Non-Venture Management Agreement Section 6(c)(i)
North America Section 3
Offer Section 6(a)
Other Brand Business Recital B
Other Party Section 6(a)
PHI Preamble
PHI Brand Names Recital A
PHI Indemnitees Section 12(b)
PHI Management Agreement Section 5(e)
PHI Third Party Agreements Section 5(b)
RCI Section 8(a)
Rental Revenues Section 5(b)(ii)
Renewal Period Section 2
Sales and Marketing Agreement Section 5(c)
Selected Markets Section 3
Term Section 2
Transaction Documents Section 11(b)(i)
Vacation Ownership Interest(s) Recital A
Vacation Resort Recital A
Venture Section 5(a)
Venture Agreement Section 5(a)
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Vistana Preamble
Vistana Indemnitees Section 12(a)
Vistana Name Recital B
Vistana Third Party Agreements Section 5(b)
2. Term. This Agreement shall have an initial term (the "Initial
Term") beginning as of the date hereof and ending December 31, 2001, unless
earlier terminated pursuant to the provisions of Section 15 hereof.
Concurrently with each extension of the Five Year Plan as provided in Section 3,
this Agreement shall be renewed automatically for a period (each, a "Renewal
Period") expiring on the fifth (5th) annual anniversary of the date of such
extension of the Five Year Plan, unless earlier terminated pursuant to the
provisions of Section 15. The Initial Term, together with all Renewal Periods,
is sometimes referred to herein as the "Term".
3. Development of Five Year Plan. The parties agree to use their
respective reasonable best efforts jointly to develop a five (5) year plan (the
"Five Year Plan") which sets forth (a) the markets in North America in which the
parties will explore jointly acquiring, developing, managing, and marketing
Vacation Resorts during the Term of this Agreement (the "Selected Markets"), (b)
the number, types and sizes of Vacation Resorts to be developed jointly during
the Term of this Agreement, and (c) an anticipated capital plan for such joint
developments during the Term of this Agreement. The parties shall use their
respective reasonable best efforts to update and extend the Five Year Plan for
an additional year on a mutually agreeable annual basis. For purposes hereof,
"North America" shall mean all states, provinces, and territories of Canada, the
United States of America (including Hawaii), Mexico and all other continental
countries located north of the Panama Canal.
4. Exclusive Development Agreement.
(a) PHI. During the Term, PHI hereby agrees that neither it nor any
PHI Affiliate shall enter into any other development agreement of a similar
nature to this Agreement relating to Vacation Resorts in North America with any
other person or entity engaged, directly or through an Affiliate, in the
acquisition, development, sale or management of Vacation Resorts. During the
Term, PHI further agrees that neither it nor any PHI Affiliate shall: (i) enter
into a joint venture with any other person or entity to acquire, develop,
operate, manage or sell any Vacation Resort in North America, (ii) franchise any
Vacation Resort in North America under any of the PHI Brand Names (other than
franchising Embassy Vacation Resorts with Signature Resorts, Inc. (the "Existing
Franchisee") in areas outside the Selected Markets), (iii) franchise any Embassy
Vacation Resort with the Existing Franchisee in any of the Selected Markets or
(iv) acquire, develop, operate, manage or sell any Vacation Resort within the
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Selected Markets, without in each case first offering Vistana the opportunity
jointly to acquire or develop such Vacation Resort pursuant to Section 6 hereof.
Notwithstanding the foregoing, no provision of this Agreement shall limit,
restrict or prohibit, in any manner, PHI or its Affiliates from (x) conducting
its hotel business (exclusive of its Vacation Resorts business) in any manner it
determines in its sole discretion to be necessary or advantageous to it, (y)
acquiring, developing, operating, marketing, managing, selling, or franchising
any hotel, resort or, to the extent not expressly restricted hereby, any
Vacation Resort, or (z) operating any existing Vacation Resort as a franchise
with the Existing Franchisee in any manner it determines in its sole discretion
to be necessary or advantageous to it.
(b) Vistana. During the Term, Vistana hereby agrees that neither
it nor any Vistana Affiliate shall enter into any other development agreement
relating to Multi-Hotel Brand Name Vacation Resorts in North America of a
similar nature to this Agreement with any other person or entity engaged
(directly or through an Affiliate) in the acquisition, development, sale and
management of Multi-Hotel Brand Name hotels or resorts. During the Term, Vistana
further agrees that neither it nor any Vistana Affiliate shall: (i) acquire,
develop, operate, manage or sell any Vacation Resort in North America under any
Multi-Hotel Brand Name (other than the PHI Brand Names), or (ii) acquire,
develop, operate, manage or sell a Vacation Resort under the Vistana Name within
any of the Selected Markets without first offering PHI the opportunity jointly
to develop such Vacation Resort pursuant to Section 6 hereof. Notwithstanding
the foregoing, no provision of this Agreement shall limit, restrict or prohibit,
in any manner, Vistana or any Vistana Affiliates from (x) conducting its Non-
Multi-Hotel Brand Business in any manner it determines in its sole discretion to
be necessary or advantageous to it, (y) conducting its Vistana Name business in
areas outside the Selected Markets, or operating, managing or selling a Vistana
Name Vacation Resort existing as of the date hereof or acquired or developed
hereafter in accordance with the terms of this Agreement within a Selected
Market, or (z) developing, operating, marketing, managing or selling any
Vacation Resort to the extent not expressly restricted hereby.
(c) Affiliates. For purposes hereof, with respect to any person
or entity the term "Affiliate" shall mean an entity controlling, controlled by
or under common control with such person or entity.
5. Joint Development of Vacation Resorts. The parties agree that
they jointly shall attempt to identify Vacation Resort projects to be developed
in accordance with the Five Year Plan and in accordance with Section 6 hereof
(each, an "Identified Project").
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(a) Independent Ventures. Promptly following such time that the
parties agree to develop an Identified Project, the parties shall form a new
limited liability company or a limited partnership (each a "Venture") under the
laws of the State of Delaware or such other jurisdiction as the parties may
mutually agree and pursuant to a limited liability company agreement or
partnership agreement substantially in the form to be agreed to by the parties
on or before the Approval Date (a "Venture Agreement") for the sole purpose of
developing such Identified Project. Each of PHI and Vistana shall be fifty
percent (50%) members or partners of each Venture; provided, however, Vistana
shall be the managing member or partner of each Venture unless otherwise agreed
by the parties. The parties shall be required on an equal basis to contribute
development capital (in excess of available financing) to each Venture in
accordance with the terms of each Venture Agreement, and the parties shall share
equally in all distributions, profits and losses of each Venture.
(b) Marketing Support. Subject to Section 9 hereof and subject
to any restrictions on the dissemination of a third party's proprietary
information provided to Vistana (or an Affiliate of Vistana) by such third party
as are or may be set forth in any agreement with a marketing partner in its
Vistana Name business or its Non-Multi-Hotel Brand Business to which Vistana or
any Affiliate of Vistana is or may be a party ("Vistana Third Party
Agreements"), Vistana will agree in its Sales and Marketing Agreements (as
defined below) to make available to each Venture all of its customer and
database information generated from its Non-Multi-Hotel Brand Business and the
Vistana Name business. Subject to Section 9 hereof, and subject to any
restrictions on the dissemination of a third party's proprietary information
provided to PHI (or an Affiliate of PHI) as are or may be set forth in any
agreement with a third party in its Vacation Resort and other hotel business to
which PHI or any Affiliate of PHI is or may be a party ("PHI Third Party
Agreements"), PHI shall agree in its Franchise Agreements or PHI Management
Agreements (each as defined below) to make available to each Venture all of its
customer and database information generated from its Vacation Resort and other
hotel businesses. PHI and Vistana shall use their respective reasonable best
efforts to prevent any restrictions on the dissemination of proprietary
information from arising after the date hereof other than restrictions
protecting proprietary information as described above pursuant to Vistana Third
Party Agreements or PHI Third Party Agreements. PHI and Vistana acknowledge and
agree that once a Venture is formed and customer lists are generated therefor,
each of PHI and Vistana will have permanent and unrestricted access to the
customer and database information generated by each such Venture. In addition
PHI and Vistana shall agree in their respective Sales and Marketing Agreement,
Franchise Agreement and/or PHI Management Agreement with each Venture to provide
other marketing support to each Venture such as brand expertise,
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reservation services and solicitation opportunities (without charge except as
may be mutually agreed to by the parties).
(c) Sales and Marketing Agreement. Each Venture shall enter into
a Sales and Marketing Agreement substantially in the form to be agreed to by the
parties on or before the Approval Date (a "Sales and Marketing Agreement") with
Vistana (or an Affiliate of Vistana) pursuant to which Vistana will be
responsible for sales and marketing of Vacation Ownership Interests at the
Venture's Vacation Resort. Vistana will be paid the following fees pursuant to
each Sales and Marketing Agreement (which fees will be the same for each Sales
and Marketing Agreement and will be the fees set forth in the form of Sales and
Marketing Agreement to be approved as provided in Section 15(a)(ii) hereof):
(i) an amount equal to an agreed to percentage of all Net
Sales Revenue. The term "Net Sales Revenue" shall mean, for any
period of time, the aggregate dollar amount of Vacation Ownership
Interest Sales (net of cancellations and rescissions) during such
period of time as are attributable thereto under generally
accepted accounting principles as in effect for the period of
determination, including the statements and interpretations of
the United States Financial Accounting Standards Board and any
predecessor or successor entity, consistently applied ("GAAP").
The term "Vacation Ownership Interest Sale" shall refer to the
sales price for each Vacation Ownership Interest sold by the
Venture less all consumer discounts required to be deducted from
the sales price in reporting the sales revenues of the Venture in
accordance with GAAP.
(ii) a sales and marketing fee equal to an agreed to
percentage of all Rental Revenues. For purposes hereof, "Rental
Revenues" shall mean all revenues of the Venture without
deductions of any kind whatsoever generated from the rental of
any unit or other living quarters or accommodations in the
Vacation Resort; and
(iii) Vistana will also be reimbursed by the Venture for
its fully-loaded cost thereof without profit or xxxx-up ("fully
loaded cost") of providing such services as mutually agreed.
All such fees and reimbursements to Vistana shall be paid prior to the payment
of any other costs and expenses of each Venture other than fees paid to PHI in
accordance with Section 5(d) hereof which shall be paid on a pari passu basis
with such fees to Vistana. At Vistana's option, services to be provided and
fees to be earned
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under the Sales and Marketing Agreement may be provided and earned, in part,
under an advisory or other agreement with an Affiliate of Vistana.
(d) Franchise Agreement. Each Venture shall enter into a
Franchise Agreement substantially in the form to be agreed to by the parties on
or before the Approval Date (a "Franchise Agreement") with PHI pursuant to which
PHI shall license to the Venture the agreed-to PHI Brand Name to be used at the
Identified Project and PHI shall provide such other brand name support as is
customarily provided by PHI in its franchise agreements. PHI will be paid the
following fees pursuant to each Franchise Agreement (which fees will be the same
for each Franchise Agreement and will be the fees set forth in the form of
Franchise Agreement to be approved as provided in Section 15(a)(ii) hereof):
(i) a franchisee assessment equal to an agreed to percentage
of all Net Sales Revenues;
(ii) a franchisee assessment equal to an agreed to
percentage of all Rental Revenues; and
(iii) a reservation fee equal to an agreed to percentage of
any Rental Revenues booked through PHI's central reservation
system.
All such fees to PHI shall be paid prior to the payment of any other costs
and expenses of each Venture other than fees paid to Vistana in accordance with
Section 5(c) hereof which shall be paid on a pari passu basis with such fees to
PHI.
(e) Management Agreement. Each Venture shall enter into a
Management Agreement substantially in the form to be agreed to by the parties on
or before the Approval Date (a "PHI Management Agreement") with PHI pursuant to
which PHI shall be responsible for managing the Vacation Resort developed by the
Venture (other than any homeowner's association), provide all brand lead
generation and marketing support, manage all rental marketing and reservations,
and manage all other hospitality-related activities, including, without
limitation, food and beverage sales. PHI will be reimbursed by the Venture for
its "fully-loaded" cost of providing such services as mutually agreed. At PHI's
option, services to be provided and fees to be earned under the PHI Management
Agreement may be provided and earned, in part, under an advisory or other
agreement with an Affiliate of PHI.
(f) Homeowners Association Management Agreement. Each Venture
requiring management of any homeowners association operated at a Venture's
Vacation Resort shall enter into a Homeowners Association Management Agreement
(a "Homeowners Association Management Agreement") with such homeowners
association pursuant to which the Venture or an Affiliate of the Venture will
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be responsible for management of such homeowners association. It is anticipated
that each Homeowners Association Management Agreement will provide for the
Venture to be paid a management fee equal to an agreed to percentage of all
assessments required to be collected by such homeowners association. In the
event a Venture enters into a Homeowners Association Management Agreement, it is
anticipated that Vistana will provide on behalf of the Venture (through a sub-
management agreement or other arrangement) required homeowners association
services and PHI will provide on behalf of the Venture (through a sub-management
agreement or other arrangement) required hospitality services. In the event
Vistana and PHI provide their respective services as provided above, the parties
will receive from the Venture the following amounts:
(i) each of PHI and Vistana will be reimbursed by the
Venture for their "fully-loaded" costs of providing such
services; and
(ii) any fees received from the homeowners association
shall be allocable fifty percent (50%) to PHI and fifty percent
(50%) to Vistana.
Notwithstanding the foregoing, following such time as fifty percent (50%)
of the Vacation Ownership Interests at the Vacation Resort have been sold, PHI
shall receive a fee equal to an agreed to percentage of all homeowner
association assessments (or in lieu thereof an agreed amount per Vacation
Ownership Interest) to be used to offset the costs of conducting property
inspections and implementing a guest satisfaction rating system.
(g) Other Services. Any other services provided to a Venture by
either of the parties as may be agreed to by the parties shall be at the fully
loaded cost thereof or as otherwise agreed to between the parties.
6. Rights of First Opportunity. Either PHI or Vistana may initiate
a decision to form a Venture to develop a Vacation Resort in accordance with
this Agreement, but no such Venture shall be formed unless each party in its
sole discretion elects to proceed with such Identified Project in accordance
with the provisions of this Section 6.
(a) Right of First Offer. During the Term, (1) if PHI desires to
acquire, develop or franchise a Vacation Resort in a Selected Market, (2) if
Vistana desires to acquire or develop a Vacation Resort in a Selected Market
(other than pursuant to its Non-Multi-Hotel Brand Business), or (3) if either
party, at its option, desires to propose Vacation Resort property outside of the
Selected Markets as a Venture opportunity, such party (the "Initiating Party")
shall submit a written offer (each an "Offer") to the other party (the "Other
Party") to form a Venture to acquire or develop such Vacation Resort. Each
Offer shall (i) be specific
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to a single Vacation Resort, (ii) set forth a proposed development budget and
financial projections, (iii) provide a proposed business and marketing plan for
the Vacation Resort, (iv) contain a term sheet with all material terms and (v)
provide any other terms and conditions that the Initiating Party desires to
include. The Other Party shall have forty-five (45) days following receipt of
an Offer to elect in its sole discretion either to accept or reject such Offer.
(b) Acceptance of Offer. If the Other Party elects to accept
such Offer, the Other Party shall provide written notice of such acceptance (an
"Acceptance Notice") within forty-five (45) days following the Other Party's
receipt of the Offer. Following any such acceptance of an Offer, the Initiating
Party and the Other Party shall enter into a Venture Agreement, a Sales and
Marketing Agreement, a Franchise Agreement and a PHI Management Agreement
(substantially in the forms agreed by the parties pursuant to Section
15(a)(ii)), and, if applicable, a Homeowners Association Management Agreement
with respect to the Identified Project on terms mutually acceptable to the
parties.
(c) Rejection of Offer. If the Other Party rejects the Offer or
fails to accept such Offer in accordance with Section 6(b) hereof, then such
Offer shall be deemed rejected by the Other Party. Following the rejection of
any Offer, the Initiating Party shall have the right to acquire or develop such
Vacation Resort except as set forth in this Section 6 or Sections 4(a) or 4(b)
hereof. Following any such rejection, if the Initiating Party proceeds to
acquire or develop such Vacation Resort to the extent permitted under this
Section 6, the Electing party shall have no further obligations to the Other
Party with respect to such Vacation Resort (other than confidentiality
obligations), and the Other Party shall have no rights under this Agreement to
participate in the operation or management thereof or to receive any
distributions, profits or losses therefrom.
(i) If Vistana is the Initiating Party and an Offer is
rejected, or deemed to have been rejected, by PHI, Vistana in its
sole discretion may, at any time within one (1) year following
such rejection, initiate development of the Vacation Resort in
any manner not otherwise expressly prohibited by Section 4(b)
hereof or, subject to reasonable and customary approval by the
PHI franchise committee, operate the development as a PHI Brand
Name Vacation Resort pursuant to a franchise agreement (a "Non-
Venture Franchise Agreement") in the form to be agreed to by the
parties on or before the Approval Date with PHI and for the fees
set forth in Section 5(d) hereof. If Vistana requests that PHI
provide management services for such a Vacation Resort and PHI
agrees to provide such management
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services, PHI shall enter into a management agreement with
Vistana or an Affiliate of Vistana (a "Non-Venture Management
Agreement") substantially in the form to be agreed to by the
parties on or before the Approval Date. The parties acknowledge
that the compensation to be paid to PHI under a Non-Venture
Management Agreement shall be the same as the compensation
payable to PHI as set forth in Section 5(f) hereof except that
PHI shall be entitled to seventy percent (70%) of the fees
described in Section 5(f)(ii).
(ii) If PHI is the Initiating Party and an Offer is
rejected, or deemed to have been rejected, by Vistana, PHI in its
sole discretion may, at any time within one (1) year following
such rejection, initiate development of the Vacation Resort in
any manner not otherwise expressly prohibited by Section 4(a)
hereof. If the Offer relates to a Selected Market and if PHI
initiates development as provided herein, Vistana shall be
relieved of its obligations under Section 4(b)(ii) hereof with
respect to that Selected Market.
(iii) For purposes of this Section 6, a party shall be
deemed to "initiate development" of a Vacation Resort upon the
occurrence of any one of the following: the execution of a
binding contract to acquire the property (if applicable), the
commencement of construction (if applicable), or the commencement
of sales of Vacation Ownership Interests therein.
(d) Subsequent Vacation Resorts in Selected Markets. Following a
rejection of an Offer pursuant to Section 6(c) hereof, if the Initiating Party
fails to initiate development of the offered Vacation Resort within one (1) year
following such rejection, such Initiating Party may not initiate development of
any Vacation Resort that was subject to the rejected Offer without first
submitting a new Offer to the Other Party and following the procedures set forth
in this Section 6. Except as otherwise provided in the last sentence of Section
6(c)(ii) hereof, neither party may acquire or develop any other Vacation Project
in that Selected Market without first submitting an Offer to the Initiating
Party and following the procedures set forth in this Section 6.
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7. Initial Developments.
(a) Myrtle Beach. Vistana intends to develop a Vacation Resort to
be located in Myrtle Beach, South Carolina and desires to operate such resort
under the Embassy Vacation Resort brand name and to have PHI provide resort
management services. PHI agrees that, subject to the reasonable and customary
approval of the PHI franchise committee, PHI, as franchisor, shall permit
Vistana, as franchisee, to use the Embassy Vacation Resort brand name for such
Vacation Resort. The parties agree to use their reasonable best efforts to
enter into a mutually acceptable Non-Venture Franchise Agreement (which shall
provide for fees as set forth in Section 5(d) hereof) and a Non-Venture
Management Agreement (which shall provide for fees as provided in Section
6(c)(i) hereof), in each case on or before January 31, 1997.
(b) Kissimmee. Vistana is developing and managing a Vacation
Resort located in Kissimmee, Florida and desires to operate such resort under
the Hampton Vacation Resort brand name. PHI agrees that, subject to the
reasonable and customary approval of the PHI franchise committee and the
execution of a Non-Venture Franchise Agreement, PHI, as franchisor, shall permit
Vistana, as franchisee, to use the Hampton Vacation Resort brand name for such
Vacation Resort. The parties agree to use their reasonable best efforts to
enter into a mutually acceptable Non-Venture Franchise Agreement (which shall
provide for the fees set forth in Section 5(d) hereof) on or before January 31,
1997.
8. Exchange Programs
(a) RCI. Each Venture shall negotiate an exchange agreement with
Resort Condominiums International ("RCI") pursuant to which owners of Vacation
Ownership Interests at each such Venture's Vacation Resorts shall have exchange
rights to use Vacation Ownership Interests at the Vacation Resorts represented
by RCI.
(b) Acknowledgement. The parties shall use their reasonable best
faith efforts to develop and implement mutually acceptable priority exchange
programs between and among the respective Vacation Resorts and any Venture
Vacation Resorts as soon as practicable.
9. Confidential Information. Each party hereby agrees that any
information provided at any time to such party by the other party in connection
with the negotiation, performance or enforcement of this Agreement which has not
been generally disclosed to the public (the "Confidential Information"),
including, without limitation, any information contained in proprietary software
systems, any management techniques, and any customer and database information
provided to each Venture pursuant to Section 5(b) hereof, shall be kept in
confidence; provided,
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however, that any of such information may be disclosed to a party's employees,
agents, attorneys, auditors, accountants, financial advisors, banks or other
financial sources that need to know such Confidential Information (it being
agreed that such representatives or persons will be informed by such party of
the confidential nature of such Confidential Information and directed to treat
such Confidential Information confidentially, that such party will be
responsible for any disclosures of Confidential Information by its
representatives, that Confidential Information of Vistana shall not be disclosed
to the Existing Franchisee and that Confidential Information of PHI shall not be
disclosed to any hotel partner of Vistana engaged in the Non-Multi-Hotel Brand
Business). In the event that a party becomes legally compelled to disclose any
Confidential Information, such party shall provide the other party with prompt
prior written notice of such requirement so that the other party may seek a
protective order or other appropriate remedy unless such notice is prohibited by
law. In the event such protective order or other remedy is not obtained, the
party legally compelled to disclose such Confidential Information agrees to
disclose only that portion of the Confidential Information which, in the opinion
of such party's counsel, is legally required to be disclosed. The parties
acknowledge and agree that, notwithstanding the provisions of this Section 9,
the parties shall be entitled to disclose and use the Agreed Description (as
defined in Section 23 hereof) of the relationship of the parties.
10. Trademarks. Each party hereby agrees and acknowledges that each
party shall continue to own all rights with respect to its respective
trademarks, trade names, service marks and other intellectual property. No
provision of this Agreement shall in any manner, restrict, limit or impair each
such party's rights in connection with the use or protection of its respective
trademarks, trade names, service marks and other intellectual property.
11. Representations and Warranties. As an inducement to each party
to enter into this Agreement and to consummate the transactions contemplated
hereby, each party represents and warrants to the other party and agrees as
follows:
(a) Organization. The party is the form of legal entity
identified in the preamble to this Agreement and is duly formed, validly
existing and in good standing under the laws of the jurisdiction in which it was
organized (as identified in the preamble).
(b) Authority.
(i) The party has full power and authority to enter into
this Agreement and the other agreements and instruments
contemplated by this Agreement to be entered into by it
(collectively, the
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"Transaction Documents") and to consummate the transactions
contemplated hereby and thereby.
(ii) The execution, delivery and performance of the
Transaction Documents by such party and the consummation by such
party of the transactions contemplated hereby and thereby have
been duly authorized by all necessary action on the part of such
party. This Agreement is, and each other Transaction Documents
when executed and delivered will be, the legal, valid and binding
agreement of such party, enforceable against such party in
accordance with its respective terms.
(iii) Neither the execution and delivery of this Agreement
or the other Transaction Documents by such party nor consummation
of the transactions contemplated hereby or thereby or compliance
with or fulfillment of the terms and provisions hereof or thereof
by such party will (x) conflict with, result in a breach of the
terms, conditions or provisions of, or constitute a default, an
event of default or an event creating rights of acceleration,
termination or cancellation or a loss of rights, under the
organizational documents of such party, (y) conflict with, result
in a material breach of any of the material terms, conditions or
provisions of, or constitute a default, an event of default or an
event creating rights of acceleration, termination or
cancellation or a loss of rights, under any instrument,
agreement, contract, mortgage, indenture, deed of trust,
franchise, license, judgment, order, award, decree or other
restriction to which such party is a party or any of its
properties is subject or by which it is bound, or any statute,
other law or regulatory provision affecting such party, or (z)
require the approval, consent or authorization of, or the making
of any declaration, filing or registration with, any third party
or any federal, state or local court, governmental authority or
regulatory body, by or on behalf of such party.
(c) Litigation. There are no actions, suits, proceedings,
judgments or court orders or decrees pending or, to the knowledge of such party,
threatened to which such party is a party or any of its properties is subject or
by which it is bound before or by any court or governmental agency which would
reasonably be expected to prevent or hinder the consummation of the transactions
contemplated hereby or in the other Transaction Documents.
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12. Indemnities; Remedies.
(a) PHI. PHI hereby indemnifies and holds harmless Vistana and
its partners and their respective officers, directors, employees,
representatives and Affiliates ("Vistana Indemnitees") against and in respect of
any costs, claims, moneys, expenses, liabilities or damages including, without
limitation, any and all reasonable attorneys' fees and all other legal expenses
(each of the foregoing, a "Claim") incurred or expended by Vistana Indemnitees
that arise from or in connection with any breach or inaccuracy of any
representation or warranty made by PHI hereunder or in connection with any
litigation, conflicts, disputes or alleged violations of any contracts to which
PHI is a party as of the date hereof.
(b) Vistana. Vistana hereby indemnifies and holds harmless PHI
and its officers, directors, employees, representatives and Affiliates ("PHI
Indemnitees") against and in respect of any Claims incurred or expended by PHI
Indemnitees that arise from or in connection with any breach or inaccuracy of
any representation or warranty made by Vistana hereunder or in connection with
any litigation, conflicts, disputes or alleged violations of any contracts to
which Vistana is a party as of the date hereof.
(c) Remedies. In the event either party fails to perform its
obligations hereunder, the other party shall have all rights and remedies
available at law or in equity, including, where appropriate, injunctive relief
without bond or surety (including in the event of a violation of the provisions
of Section 9 hereof in which case the parties acknowledge that monetary damages
would be an inadequate remedy).
13. Assignment. Each party may assign its rights and obligations
hereunder to an Affiliate; provided, however, such assigning party shall not be
released from its obligations hereunder. Vistana shall have the further right
to assign its rights and obligations hereunder to an entity concurrently with
such entity's initial public offering of its stock provided such entity assumes
all of Vistana's obligations hereunder and such entity, directly or indirectly,
owns and controls Vistana, in which case Vistana shall be released from any and
all obligations hereunder arising after such assignment. Except as provided
above, neither this Agreement nor any of the rights or obligations hereunder may
be assigned by any party without the prior written consent of the other party,
which consent may be withheld in its sole discretion. Subject to the foregoing,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns, and no other
person or entity shall have any right, benefit or obligation under this
Agreement as a third party beneficiary or otherwise.
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14. Competing Business. Each party hereto understands that the other
party or its Affiliates may be interested, directly or indirectly, in various
other businesses and undertakings not included in the scope of this Agreement.
Each party hereby agrees that the creation of this Agreement and the creation of
one (1) or more Ventures pursuant to this Agreement, and the assumption by each
party of its duties hereunder and under any Venture Agreements, shall be without
prejudice to its respective rights (or the rights of its Affiliates) to have
such other interests and activities and to receive and enjoy the profits and
compensation therefrom. Each party hereby waives any rights it might otherwise
have, by reason of any duty otherwise arising under this Agreement, otherwise
owed to any Venture or under any Venture Agreement, to prevent or share or
participate in such other interests or activities of the other party or its
Affiliates. Each party and its Affiliates may engage in or possess any interest
in any other business venture of any nature or description independently or with
others, including, without limitation, the ownership, financing, leasing,
operation, management, syndication, brokerage, franchising or development of
real property and hotel and resorts, and neither the other party nor any Venture
shall have any right by virtue of this Agreement or any Venture Agreement or
otherwise to prevent or participate in any such venture or the income or profits
derived therefrom. Notwithstanding the foregoing, neither party nor any of
their respective Affiliates shall engage in any business venture or own or
operate any property to the extent such is prohibited by this Agreement, unless
consented to in writing by the other party.
15. Termination.
(a) Bilateral. Each party shall have the right to terminate this
Agreement by delivery of thirty (30) days written notice thereof to the other
party in the event of the occurrence of any one or more of the following events:
(i) A Venture Agreement has not been entered into between
the parties within thirty-six (36) months after the date hereof;
or
(ii) The Five Year Plan, the form of Venture Agreement, the
form of Sales and Marketing Agreement, the form of Franchise
Agreement, the form of PHI Management Agreement, the form of Non-
Venture Franchise Agreement and the form of Non-Venture
Management Agreement have not been approved by the parties on or
before January 31, 1997 (the "Approval Date"), and the actual
Non-Venture Franchise Agreement and Non-Venture Management
Agreement for the Vacation Resort in Myrtle Beach (if acquired by
Vistana) and the actual Non-Venture Franchise Agreement for the
Vacation Resort in
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Kissimmee have not been executed and delivered by the parties on
or before the Approval Date.
At the request of either party, the parties shall acknowledge in writing
satisfaction of the conditions set forth in subparagraphs (i) and/or (ii) above
provided such conditions have been satisfied.
(b) Violation. A party may terminate this Agreement in the event
the other party materially violates the terms of Section 4 hereof and fails to
cure such violation to the reasonable satisfaction of the non-breaching party
within thirty (30) days after written notice thereof from the other party.
(c) Effect. In the event this Agreement is terminated:
------
(i) any Venture then in existence shall remain in existence
and continue to be governed by its Venture Agreement and other
applicable Transaction Documents; and
(ii) the rights to any Identified Projects or other projects
then under consideration by the parties which are not then owned
by Ventures shall be assigned to the parties as mutually agreed
or in accordance with the procedures set forth in Section 6
hereof.
16. Notices. All notices and other communications under this
Agreement shall be in writing and shall be deemed given when delivered
personally or by overnight mail or by fax, or four (4) days after being mailed
(by registered mail, return receipt requested) to a party at the following
address (or to such other address as such party may have specified by notice
given to the other parties pursuant to this provision):
If to PHI: Promus Hotels, Inc.
000 Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxxx 00000
Attention: General Counsel
Facsimile No.: (000) 000-0000
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With a copy to: Xxxxxx & Xxxxxxx
0000 Xxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Vistana: Vistana Development, Ltd.
0000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx, Xx.
Facsimile No.: (000) 000-0000
With copies to: Vistana Development, Ltd.
000 Xxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxx, Esq.
Facsimile: (000) 000-0000
and
Xxxx, Xxxxxx & Xxxxxxxxx
Two Xxxxx XxXxxxx Xxxxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Facsimile No.: (000) 000-0000
17. Governing Law. This Agreement, and the application or
interpretation thereof, shall be exclusively governed by its terms and by the
internal laws of the State of Florida, without regard to principles of conflicts
of laws as applied in the State of Florida or any other jurisdiction which, if
applied, would result in the application of any laws other than the internal
laws of the State of Florida.
18. Entire Agreement; Amendments and Waivers. This Agreement
contains the entire understanding of the parties hereto with regard to the
subject matter contained herein. The parties hereto, by mutual agreement in
writing, may amend, modify and supplement this Agreement. The failure of any
party hereto to enforce at any time any provision of this Agreement shall not be
construed to be a waiver of such provision, nor in any way to affect the
validity of this Agreement or any part hereof or the right of such party
thereafter to enforce each and every such provision. No waiver of any breach of
this Agreement shall be held to constitute a waiver of any other or subsequent
breach.
19. Execution in Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be considered an original counterpart,
and shall become a binding
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agreement when PHI and Vistana each shall have executed one (1) counterpart.
20. Partial Invalidity. In case any one or more of the provisions
contained herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement but the parties hereto
shall use their reasonable good faith efforts to modify or reformulate other
provisions contained herein as necessary or appropriate to implement fully the
provisions contained in this Agreement.
21. No Third Party Beneficiaries. Nothing in this Agreement,
expressed or implied, is intended or shall be construed to confer upon any
Person other than the parties hereto and successors and assigns permitted by
Section 13 hereof any right, remedy or claim under or by reason of this
Agreement.
22. Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only and are not intended to be part of or
to affect the meaning or interpretation of this Agreement.
23. Publicity. Neither party shall issue or make, or allow any
Affiliate to issue or make, any press release or public announcement relating to
the subject matter of this Agreement without the prior approval of the other
party; provided, however, that any party or an Affiliate of any party may make
any public disclosure it believes in good faith is required by applicable law,
any listing or trading agreement concerning its publicly-traded securities or in
connection with any governmental filings (in which case the party which intends
to issue such press release or make such public announcement will advise the
other party prior to making the disclosure and provide the other party
opportunity to comment upon the release or announcement). The parties shall, as
soon as practicable after the date hereof, use their reasonable best efforts to
agree on one or more descriptions of the relationship of the parties hereunder
(an "Agreed Description"). During the Term hereof, the parties shall be
entitled to use an Agreed Description in all communications, advertising,
announcements and other materials used in connection with the conduct of their
respective business.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
or have caused this Agreement to be duly executed on their respective behalf by
their respective officers thereunto duly authorized, as of the day and year
first above written.
PROMUS HOTELS, INC.
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
Title: Senior Vice President
VISTANA DEVELOPMENT, LTD.
By: VISTANA CAPITAL HOLDINGS, INC.,
its general partner
By: /s/ Xxxxxxx X. Xxxxxxx, Xx.
----------------------------
Name: Xxxxxxx X. Xxxxxxx, Xx.
Title: Chairman
