ASSIGNMENT AND ASSUMPTION AGREEMENT
This "Agreement" is made and entered into as of April 24, 1997 by and
among ELBE PROPERTIES, a General Partnership ("Assignor"), JANUS INDUSTRIES,
INC., a Delaware corporation ("Assignee"), and DAYS INNS OF AMERICA, INC., a
Delaware corporation (the "Company").
Recitals. Assignor is the Licensee under a License Agreement, Reservation
Equipment Agreement, Declaration of License Agreement, and Satellite
Communications Agreement all dated September 1, 1994 (collectively, the
"Agreements") with the Company. The Agreements are attached to this Agreement as
Exhibit A and relate to the granting of a Days Inn System license for a lodging
facility designated as Xxxx Xx. 0000, located at 00000 Xxxxxxx Xxxx,
Xxxxxxxxxxx, Xxxx 00000 (the "Facility"). Assignor is conveying the Facility to
Assignee. Assignor desires to assign the Agreements to Assignee, which desires
to assume and accept the rights and obligations under the Agreements, effective
as of the date of this Agreement.
IN CONSIDERATION of the premises, the mutual promises in this Agreement,
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties, it is agreed as follows:
1. Assignor assigns, transfers, bargains, sells, and delegates to Assignee
all of its rights, title and interest in and to the Agreements, and its
obligations existing and arising in the future, under the Agreements.
2. Assignee accepts and assumes the rights, benefits and obligations of
the Licensee under the Agreements, effective as of the date of this Agreement,
including all existing and future obligations to pay and perform under the
Agreements. Assignor shall remain secondarily liable for payment and performance
of the Agreements. The owners of Assignee have executed the Guaranty attached to
this Agreement.
3. To induce the Company to consent to this Agreement and the assignment
of the Agreements, Assignee adopts and makes to the Company the representations
and warranties of Licensee set forth in the License Agreement as of the
effective date of this Agreement. Assignee is the owner of fee simple title to
the Facility as of the effective date of this Agreement. Assignee's owners are
shown on Exhibit "B" attached to this Agreement.
4. Assignee will deliver, together with this Agreement, evidence of
insurance meeting System Standards, as contemplated under the Agreements and the
Days Inn System Standards Manuals.
5. This Agreement shall be deemed a supplement to and modification of the
Agreements. All references to "the Agreement" contained therein shall mean and
refer to the original form of License Agreement or Reservation Equipment
Agreement as the case may be, as modified by any prior amendments and addenda
and this Agreement. Except as expressly stated, no further supplements to or
modifications of the Agreements are contemplated by the parties. There are no
oral or other written arrangements between the Company and Assignor except as
expressly stated in the Agreements and
any written amendment or addendum thereto included as part of Exhibit "A". The
Agreements, as previously modified, are incorporated by this reference.
6. Assignor and Assignee acknowledge that the Company has not participated
in the negotiation and documentation of the transfer transaction between the
parties, and has not made any representation or warranty, nor furnished any
information to either party. Assignee waives any and all claims against the
Company and its officers, directors, shareholders, affiliated corporations,
employees and agents arising out of the transfer of the Facility. Assignee
expressly acknowledges that the Company was not a participant in such
transaction and that the Company has no liability in connection therewith.
Assignee acknowledges that it has made such investigations of Assignor and the
Facility as it believes appropriate.
7. Any notice required under the Agreements to be sent to Assignee shall
be directed to:
Janus Industries, Inc.
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxxxx Xxxxxx
8. The Company consents to the assignment and assumption of the Agreements
as provided in this Agreement. No waivers of performance or extensions of time
to perform are granted or authorized. The Company will treat Assignee as the
Licensee under the Agreements.
(THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK}
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement effective as of the date first above written.
THE COMPANY:
DAYS INNS OF AMERICA, INC.
By: Attest:
------------------------------ ------------------------------
Xxxxxxx X. Xxxxxxxxxx
Vice President
Franchise Administration
ASSIGNOR:
ELBE PROPERTIES,
By: /s/ Xxxxx X. Xxxx Attest: [ILLEGIBLE]
------------------------------ ------------------------------
Xxxxx X. Xxxx Ass't Secretary
Title: Partner
ASSIGNEE:
JANUS INDUSTRIES, INC.
By: /s/ Xxxxx X. Xxxx Attest: /s/ Xxxxx X. Xxxxxx
------------------------------ ------------------------------
Xxxxx X. Xxxx Ass't Secretary
Title: President Chairman
Exhibit "A" - License Agreement and related Agreements.
Exhibit "B" - Owners of Assignee
Guaranty
EXHIBIT A
THE AGREEMENTS
Copies of the License Agreement and other related documents follow this page.
Location: Cincinnati-Sharonville, Ohio
Entity No. 17665
Unit No.: 6451
DAYS INNS OF AMERICA, INC.
LICENSE AGREEMENT
THIS LICENSE AGREEMENT ("Agreement"), dated ____________, 1994, is between
DAYS INNS OF AMERICA, INC., a Delaware corporation ("we", "our" or "us"), and
ELBE PROPERTIES, a General Partnership ("you"). The definitions of capitalized
terms are found in Appendix A. In consideration of the following mutual
promises, the parties agree as follows:
This transaction represents the renewal of the License for an existing
Chain Facility first granted to you in a License Agreement dated August 11, 1981
(the "Prior Agreement"). You must perform any and all of your obligations
(financial and otherwise) under the Prior Agreement remaining as of the date of
this Agreement and correct any uncured defaults, other than as expressly
superseded by this Agreement.
1. License. We have the exclusive right to license and franchise to you the
distinctive "Days Inn" System for providing transient guest lodging services. We
grant to you and you accept the License, effective and commencing on the Opening
Date and ending on the earliest to occur of the Term's expiration, a Transfer or
a Termination. You will call the Facility a "Days Inn." You may adopt additional
or secondary designations for the Facility with our prior written consent, which
we may withhold, condition, or withdraw on written notice in our sole
discretion.
2. Days Inns Franchisee Advisory Association. You will be eligible to
participate in the Days Inn Franchisee Advisory Association, a Delaware
corporation that is the organization of Days Inn System licensees, in accordance
with the Bylaws and Certificate of Incorporation of the Association, as amended,
so long as you are not in default under this Agreement.
3. Your Improvement and Operating Obligations. Your obligations to improve,
operate and maintain the Facility are:
3.1 Improvements. You select and acquire the Location and acquire, equip and
supply the Facility in accordance with System Standards. You must begin
renovation of the Facility no later than thirty (30) days after the Effective
Date. The deadline for completing the pre-opening phase of conversion and
renovation, when the Facility must score at least 400 points under our quality
assurance inspection system and be ready to open for business under the System,
is ninety (90) days after the Effective Date. All renovations will comply with
System Standards, any Approved Plans and any Punch List attached to this
Agreement. Your general contractor or you must carry the insurance required
under this Agreement during renovation. You must complete
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the pre-opening renovation specified on the Punch List and the Facility must
pass its pre-opening quality assurance inspection with a score of at least 400
points before we consider the Facility to be ready to open under the System. You
must continue renovation and improvement of the Facility after the Opening Date
as the Punch List requires so that the Facility scores at least 425 points on a
quality assurance inspection within six (6) months after the Opening Date. If
you do not commence or complete the conversion and renovation of the Facility by
the dates specified in this Section 3, or the Facility does not meet the
pre-opening or post-opening quality assurance inspection standards, or complete
the post-opening improvements specified in the Punch List after the Opening
Date, then we may, in our sole discretion, terminate this Agreement by giving
written notice to you. Time is of the essence for the Improvement Obligation. We
may, however, in our sole discretion, grant one or more extensions of time to
perform any phase of the Improvement Obligation. You will pay us a
non-refundable extension fee of $2.00 per room for each day of any extension of
the deadline for completing pre-opening improvements. This fee will be payable
to us after each 30 days of the extension. You will pay us the balance of the
extension fee outstanding when the Facility opens under the System 10 days after
the Opening Date. The grant of an extension will not waive any other default
existing at the time the extension is granted.
3.2 Improvement Plans. You will create plans and specifications for the work
described in Section 3.1 (based upon the System Standards and this Agreement) if
we so request and submit them for our approval before starting improvement of
the Location. We will not unreasonably withhold or delay our approval, which is
intended only to test compliance with System Standards, and not to detect errors
or omissions in the work of your architects, engineers, contractors or the like.
Our review does not cover technical, architectural or engineering factors, or
compliance with federal, state or local laws, regulations or code requirements.
We will not be liable to your lenders, contractors, employees, guests, others,
or you on account of our review or approval of your plans, drawings or
specifications, or our inspection of the Facility before, during or after
renovation or construction. Any material variation from the Approved Plans
requires our prior written approval. You will promptly provide us with copies of
permits, job progress reports, and other information as we may reasonably
request. We may inspect the work while in progress without prior notice.
3.3 Pre-Opening. You may identify the Facility as a Chain Facility prior to the
Opening Date, or commence operation of the Facility under a Xxxx and using the
System, only after first obtaining our approval, or as permitted under and
strictly in accordance with the System Standards Manual.
3.4 Operation. You will operate and maintain the Facility continuously after the
Opening Date on a year-round basis as required by System Standards and offer
transient guest lodging and other related services of the Facility to the public
in compliance with the law and System Standards. You will keep the Facility in a
clean, neat, and sanitary condition. You will clean, repair, replace, renovate,
refurbish, paint, and redecorate the Facility and its FF&E as and when needed to
comply with System Standards. The Facility will accept payment from guests by
all credit and
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debit cards we designate in the System Standards Manual. You may add to or
discontinue the amenities, services and facilities described in Schedule B, or
lease or subcontract any service or portion of the Facility only with our prior
written consent, which we will not unreasonably withhold or delay.
3.5 Training. You (or a person with executive authority if you are an entity)
and the Facility's manager will attend the training programs described in
Section 4.1 we designate as mandatory for licensees or managers, respectively.
You will train or cause the training of all Facility personnel as and when
required by System Standards and this Agreement. You will pay for all travel,
lodging, meals and compensation expenses of the people you send for training
programs, the cost of training materials and other reasonable charges we may
impose for training under Section 4.1, and all travel, lodging, meal and
facility and equipment rental expenses of our representatives if training is
provided at the Facility. You will direct the Facility staff to attend the
Property Training Program described in Section 4.1.2.
3.6 Marketing. You will participate in System marketing programs, including the
Directory and the Reservation System. You will obtain and maintain the computer
and communications service and equipment we specify to participate in the
Reservation System. You will comply with our rules and standards for
participation, and will honor reservations and commitments to guests and travel
industry participants. You may implement, at your option and expense, your own
local advertising. Your advertising materials must use the Marks correctly, and
must comply with System Standards or be approved in writing by us prior to
publication. You will stop using any non-conforming, out-dated or misleading
advertising materials if we so request.
3.6.1 You may participate in any regional marketing, training or management
alliance or cooperative of Chain licensees formed to serve the Chain Facilities
in your area. We may assist the cooperative collect contributions. You may be
excluded from cooperative programs and benefits if you don't participate in all
cooperative programs according to their terms, including making payments and
contributions when due.
3.7 Governmental Matters. You will obtain as and when needed all governmental
permits, licenses and consents required by law to construct, acquire, renovate,
operate and maintain the Facility and to offer all services you advertise or
promote. You will pay when due or properly contest all federal, state and local
payroll, withholding, unemployment, beverage, permit, license, property, ad
valorem and other taxes, assessments, fees, charges, penalties and interest, and
will file when due all governmental returns, notices and other filings.
3.8 Inspections and Audits. You will permit our representatives to perform
quality assurance inspections of the Facility and audit your financial and
operating books and records (including tax returns) relating to the Facility and
any related business, with or without prior notice of the inspection or audit.
The inspections and audits will commence during normal business hours, although
we may observe Facility operation and accounting activity at any time. You, the
Facility staff and your other agents and employees will cooperate with our
inspectors and auditors in the
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performance of their duties. You will pay us any underpayment of, and we will
pay you or credit your Recurring Fee account for any overpayment of, Recurring
Fees discovered by an audit. You will pay the reasonable travel, lodging and
meal expenses of our reinspection or audit and any reinspection fee we may
impose if the Facility does not pass an inspection, you refuse to cooperate with
our auditors or inspectors, or the audit reveals that you paid us less than 97%
of the correct amount of Recurring Fees. We may publish or disclose the results
of quality assurance inspections.
3.9 Reports and Accounting. You will prepare and submit timely Monthly Reports
containing the information we require about the Facility's performance during
the preceding month. You will prepare and submit other reports and information
about the Facility as we may reasonably request from time to time or in the
System Standards Manual. You will maintain accounting books and records in
accordance with generally accepted accounting principles and the American Hotel
& Motel Association Uniform System of Accounts for Hotels, as amended, subject
to this Agreement and other reasonable accounting standards we may specify from
time to time. You will prepare and submit to us if we so request your annual and
semi-annual financial statements. We do not require that your financial
statements be independently audited, but you will send us a copy of your audited
statements if you have them audited and we ask for them.
3.10 Insurance. You will obtain and maintain during the Term of this Agreement
the insurance coverage required under the System Standards Manual from insurers
meeting the standards established in the Manual.
3.11 Conferences. You (or your representative with executive authority if you
are an entity) will attend each annual Chain conference and pay the Conference
Fee we set for the Chain licensees, if and when we determine to hold an annual
Chain conference. Mandatory recurrent training for licensees and managers
described in Section 4.1.3 may be held at a conference. The fee will be the same
for all Chain Facilities that we license in the United States. You will receive
reasonable notice of a Chain conference.
3.12 Purchasing. You will purchase or obtain certain items we designate as
proprietary or that bear Marks from suppliers we approve. You may purchase any
other items for the Facility from any competent source you select, so long as
the items meet or exceed System Standards.
3.13 Good Will. You will use reasonable efforts to protect, maintain and promote
the name "Days Inn" and its distinguishing characteristics, and the other Marks.
You will not permit or allow your officers, directors, principals, employees,
representatives, or guests of the Facility to engage in, conduct which is
unlawful or damaging to the good will or public image of the Chain or System.
You will participate in Chain-wide guest service and satisfaction guaranty
programs we require in good faith for all Chain Facilities. You will follow
System Standards for identification of the Facility and for you to avoid
confusion on the part of guests, creditors, lenders, investors and the public as
to your ownership and operation of the Facility, and the identity of your
owners.
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3.14 Facility Modifications. You may materially modify, diminish or expand the
Facility (or change its interior design, layout, FF&E, or facilities) only after
you receive our prior written consent, which we will not unreasonably withhold
or delay. You will pay our Rooms Addition Fee then in effect for each guest room
you add to the Facility. If we so request, you will obtain our prior written
approval of the plans and specifications for any material modification, which we
will not unreasonably withhold or delay. You will not open to the public any
material modification until we inspect it for compliance with the Approved Plans
and System Standards.
3.15 Courtesy Lodging. You will provide lodging at the "Employee Rate"
established in the System Standards Manual from time to time, (but only to the
extent that adequate room vacancies exist) to our representatives traveling on
business, but not more than three standard guest rooms at the same time.
3.16 Minor Renovations. Beginning three years after the Opening Date, we may
issue a "Minor Renovation Notice" to you that will specify reasonable Facility
upgrading and renovation requirements (a "Minor Renovation") to be commenced no
sooner than 60 days after the notice is issued, having an aggregate cost for
labor, FF&E and materials estimated by us to be not more than the Minor
Renovation Ceiling Amount. You will perform the Minor Renovations as and when
the Minor Renovation Notice requires. We will not issue a Minor Renovation
Notice within three years after the date of a prior Minor Renovation Notice, or
if the three most recent quality assurance inspection scores of the Facility
averaged at least 425 points or equivalent and the most recent quality assurance
inspection score for the Facility was at least 400 points or equivalent when the
Facility is otherwise eligible for a Minor Renovation.
4. Our Operating and Service Obligations. We will provide you with the following
services and assistance:
4.1 Training. We will offer hospitality management training, property opening,
recurrent training and supplemental training.
4.1.1 Management Training. Between 60 days before and 90 days after the
projected Opening Date, we will offer at a location in the United States we
designate, and you or a person with executive authority if you are an entity and
a Facility manager (usually the general manager) must complete, a training
program to our satisfaction. The training program will not exceed two weeks in
duration and will cover such topics as System Standards, services available from
us, and operating a Chain Facility. We may charge you a reasonable fee for
materials for each manager trainee. Any replacement general manager of the
Facility must complete the training program within the time specified in the
System Standards Manual. No tuition will be charged for your first participation
in this training but you must pay for your representative's travel, lodging,
meals, incidental expenses, compensation and benefits. We may charge you
reasonable tuition for training for replacement general managers.
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4.1.2 Property Opening Training. We will provide at the Facility or another
agreed location, a "Property Training Program" (at our discretion as to length
and scheduling) to assist you in opening the Facility. There is no charge for
the Property Training Program other than for the reasonable expenses for travel,
room, board and other out-of-pocket costs of our Company's representatives.
4.1.3 Recurrent Training. We will provide training for you and the Facility's
manager if we determine that additional training for licensees and managers is
necessary from time to time. Training will be held in our U.S. training center
or other locations. You will pay for your representative's travel, lodging,
meals, incidental expenses, compensation and benefits for this training. This
training may be held in conjunction with a Chain conference.
4.1.4 Supplemental Training. We may offer optional training programs without
charge or for tuition. We may offer or sell to you video tapes, computer discs
or other on-site training aids and materials, or require you to buy them at
reasonable prices.
4.1.5 Licensee Orientation Training. We may conduct, and you (or a person with
executive authority if you are an entity) will attend a licensee orientation
program to familiarize you with the System, the Chain, and our services before
or within 30 days after the Opening Date. The program will be no longer than
three days.
4.1.6 We may charge you a reasonable cancellation fee if you cancel your
training program commitments or reservations within 30 days (or such shorter
period as we may specify) before the start of any training program at which you
or your representative has a reservation. We may charge you tuition for your
representatives to attend mandatory sessions other than those people we require
to attend the training and fees for instructional materials.
4.2 Reservation System. We will operate and maintain (directly or by
subcontracting with an affiliate or one or more third parties) a computerized
Reservation System or such technological substitute(s) as we determine, in our
discretion. We will use the Basic Reservation Charge for the acquisition,
development, support, equipping, maintenance, improvement and operation of the
Reservation System. We will provide software maintenance for the software we
license to you to connect to the Reservation System if your Recurring Fee
payments are up to date. The Facility will participate in the Reservation
System, commencing with the Opening Date for the balance of the Term. We have
the right to provide reservation services to lodging facilities other than Chain
Facilities or to other parties. We will not offer callers to our general
consumer toll free reservation telephone number the opportunity to make
reservations for other lodging chains in the United States.
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4.3 Marketing.
4.3.1 We will promote public awareness and usage of Chain Facilities by
implementing advertising, promotion, publicity, market research and other
marketing programs, training programs, and related activities, production and
distribution of Chain publications and directories of hotels. We will determine
in our discretion: (i) The nature and type of media placement; (ii) The
allocation (if any) among international, national, regional and local markets;
and (iii) The nature and type of advertising copy, other materials and programs.
We or an affiliate may be reimbursed for the reasonable direct and indirect
costs, overhead or other expenses of providing marketing services. We are not
obligated to supplement or advance funds available from System licensees to pay
for marketing activities. We do not promise that the Facility or you will
benefit directly or proportionately from marketing activities.
4.3.2 We may, at our discretion, implement special international, national,
regional or local promotional programs (which may or may not include the
Facility) and may make available to you (to use at your option) media
advertising copy and other marketing materials for prices which reasonably cover
the materials' direct and indirect costs.
4.3.3 We will publish the Chain Directory. We will include the Facility in the
Chain Directory after it opens if you submit the information we request on time,
and you are not in default under this Agreement at the time we must arrange for
publication. We will supply Directories to you for display at locations
specified in the System Standards Manual or policy statements. We may assess you
a reasonable charge for the direct and indirect expenses (including overhead) of
producing and delivering the Directories.
4.4 Purchasing. We may offer optional assistance to you with purchasing items
used at or in the Facility. Our affiliates may offer this service on our behalf.
We may restrict the vendors authorized to sell proprietary or Xxxx-bearing items
in order to control quality, provide for consistent service or obtain volume
discounts. We will maintain and provide to you lists of suppliers approved to
xxxxxxx Xxxx-bearing items, or whose products conform to System Standards.
4.5 The System. We will control and establish requirements for all aspects of
the System. We may, in our discretion, change, delete from or add to the System,
including any of the Marks or System Standards, in response to changing market
conditions. We may, in our discretion, permit deviations from System Standards,
based on local conditions and our assessment of the circumstances.
4.6 Consultations and Standards Compliance. We will assist you to understand
your obligations under System Standards by telephone, mail, during quality
assurance inspections, through the System Standards Manual, at training sessions
and during conferences and meetings we conduct. We will provide telephone and
mail consultation on Facility operation and marketing through our
representatives.
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4.7 System Standards Manual and Other Publications. We will specify System
Standards in the System Standards Manual, policy statements or other
publications. We will lend you one copy of the System Standards Manual promptly
after we sign this Agreement. We will send you any System Standards Manual
revisions and/or supplements as and when issued. We will send you all other
publications for Chain licensees and all separate policy statements in effect
from time to time.
4.8 Inspections and Audits. We have the unlimited right to conduct unannounced
quality assurance inspections of the Facility and its operations, records and
Xxxx usage to test the Facility's compliance with System Standards and this
Agreement, and the audits described in Section 3.8. We have the unlimited right
to reinspect if the Facility does not achieve the score required on an
inspection. We may impose a reinspection fee and will charge you for our
reasonable costs of travel, lodging and meals for any reinspection, or for an
audit if you pay less than 97% of the correct amount of Recurring Fees. Our
inspections are solely for the purposes of checking compliance with System
Standards.
5. Term. The Term begins on the Effective Date and expires on the day prior to
the fifteenth anniversary of the Opening Date. Some of your duties and
obligations will survive termination or expiration of this Agreement. You will
execute and deliver to us with this Agreement a notarized Declaration of License
Agreement in recordable form. We will countersign and return one copy of the
Declaration to you. We may, at our option, record the Declaration in the real
property records of the county where the Facility is located. The Declaration
will be released at your request and expense when this Agreement terminates or
expires and you perform your post-termination obligations. NEITHER PARTY HAS
RENEWAL RIGHTS OR OPTIONS.
6. Initial Fees.
6.1 Application and Initial Fees. We should receive from you a non-refundable
Application Fee of $1,000.00. You will pay us a non-refundable Initial Fee in
the amount of $12,000.00, when you sign this Agreement, which is fully earned
when we sign this Agreement.
7. Recurring Fees, Taxes and Interest.
7.1 You will pay us certain "Recurring Fees" accruing from the Opening Date
until the end of the Term, payable in U.S. dollars (or such other currency as we
may direct if the Facility is outside the United States) ten days after the
month in which they accrue, without billing or demand. Recurring Fees include
the following:
7.1.1 A "Royalty" equal to six and five-tenths percent (6.5%) of Gross Room
Revenues of the Facility accruing during the calendar month.
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7.1.2 A "Reservation System User Fee" including a "Basic Reservation Charge" for
participation in the Reservation System as set forth in Schedule C, and the
charges and fees referred to in Schedule C or Section 4.2 of this Agreement. We
reserve the right to increase or modify the Reservation System User Fees for all
Chain Facilities, and to add other fees and charges for new services, at our
sole discretion as to amount or formula, from time to time, but with at least 30
days prior written notice, by substituting a new Schedule C or otherwise, to
reflect changes in the fully allocated costs of providing Reservation
System-related services, and to add, drop or modify the types of reservation
services we offer. You will also pay or reimburse us for travel agent
commissions paid for reservations at the Facility and other fees levied to pay
for reservations for the Facility originated or processed through other
reservation systems and networks. We may charge Facilities using the System
outside the United States for reservation service using a different formula.
7.2 You will pay to us "Taxes" equal to any federal, state or local sales, gross
receipts, use, value added, excise or similar taxes assessed against us on the
Recurring Fees by the jurisdictions where the Facility is located, but not
including any income tax, franchise or other tax for the privilege of doing
business by us in your State. You will pay Taxes to us when due.
7.3 "Interest" is payable when you receive our invoice on any past due amount
payable to us under this Agreement at the rate of 1.5 % per month or the
maximum rate permitted by applicable law, whichever is less, accruing from the
due date until the amount is paid.
7.4 If a transfer occurs, your transferee or you will pay us our then current
Application Fee and a "Relicense Fee" equal to the Initial Fee we would then
charge a new licensee for the Facility.
8. Indemnifications.
8.1 Independent of your obligation to procure and maintain insurance, you will
indemnify, defend and hold the Indemnitees harmless, to the fullest extent
permitted by law, from and against all Losses and Expenses, incurred by any
Indemnitee for any investigation, claim, action, suit, demand, administrative or
alternative dispute resolution proceeding, relating to or arising out of any
transaction, occurrence or service at, or involving the operation of the
Facility, any breach or violation of any contract or any law, regulation or
ruling by, or any act, error or omission (active or passive) of, you, any party
associated or affiliated with you or any of the owners, officers, directors,
employees, agents or contractors of you or your affiliates, including when the
active or passive negligence of any Indemnitee is alleged or proven. You have no
obligation to indemnify an Indemnitee for damages to compensate for property
damage or personal injury if a court of competent jurisdiction makes a final
decision not subject to further appeal that the Indemnitee engaged in willful
misconduct or intentionally caused such property damage or bodily injury. This
exclusion from the obligation to indemnify shall not, however, apply if the
property damage or bodily injury resulted from the use of reasonable force by
the Indemnitee to protect persons or property.
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8.2 You will respond promptly to any matter described in the preceding
paragraph, and defend the Indemnitee. You will reimburse the Indemnitee for all
costs of defending the matter, including attorneys' fees, incurred by the
Indemnitee if your insurer or you do not assume defense of the Indemnitee
promptly when requested. We must approve any resolution or course of action in a
matter that could directly or indirectly have any adverse effect on us or the
Chain, or could serve as a precedent for other matters.
8.3 We will indemnify, defend and hold you harmless, to the fullest extent
permitted by law, from and against all Losses and Expenses incurred by you in
any action or claim arising from your proper use of the System alleging that
your use of the System and any property we license to you is an infringement of
a third party's rights to any trade secret, patent, copyright, trademark,
service xxxx or trade name. You will promptly notify us in writing when you
become aware of any alleged infringement or an action is filed against you. You
will cooperate with our defense and resolution of the claim. We may resolve the
matter by obtaining a license of the property for you at our expense, or by
requiring that you discontinue using the infringing property or modify your use
to avoid infringing the rights of others.
9. Your Assignments, Transfers and Conveyances.
9.1 Transfer of the Facility. This Agreement is personal to you (and your owners
if you are an entity). We are relying on your experience, skill and financial
resources (and that of your owners and the guarantors, if any) to sign this
Agreement with you. You may finance the Facility and xxxxx x xxxx, security
interest or encumbrance on it without notice to us or our consent. If a Transfer
is to occur, the transferee or you must comply with Section 9.3. Your License
terminates when the Transfer occurs. If the transferee does not sign a
replacement license agreement with us before you give the transferee ownership
or possession of the Facility, then the License terminates when you transfer
ownership or possession of the Facility. The transferee may not operate the
Facility under the System, and you are responsible for performing the
post-termination obligations in Section 13. You and your owners may, only with
our prior written consent and after you comply with Sections 9.3 and 9.6,
assign, pledge, transfer, delegate or grant a security interest in all or any of
your rights, benefits and obligations under this Agreement, as security or
otherwise. Transactions involving Equity Interests that are not Equity Transfers
do not require our consent and are not Transfers.
9.2 Public Offerings and Registered Securities. You may engage the first
registered public offering of your Equity Interests only after you pay us a
public offering fee equal to $15,000. Your Equity Interests (or those of a
person, parent, subsidiary, sibling or affiliate entity, directly or indirectly
effectively controlling you), are freely transferable without the application of
this Section if they are, on the Effective Date, or after the public offering
fee is paid, they become, registered under the federal Securities Act of 1933,
as amended, or a class of securities registered under the Securities Exchange
Act of 1934, as amended, or listed for trading on a national securities exchange
or the automated quotation system of the National Association of Securities
10
Dealers, Inc. (or any successor system), provided that any tender offer for at
least a majority of your Equity Interests will be an Equity Transfer subject to
Section 9.1.
9.3 Conditions. We may, to the extent permitted by applicable law, condition and
withhold our consent to a Transfer when required under this Section 9 until the
transferee and you meet certain conditions. If a Transfer is to occur, the
transferee (or you, if an Equity Transfer is involved) must first complete and
submit our Application, qualify to be a licensee in our sole discretion, given
the circumstances of the proposed Transfer, provide the same supporting
documents as a new license applicant, pay the Application and Relicense Fees
then in effect, sign the form of License Agreement we then offer in conversion
transactions and agree to renovate the Facility as if it was an existing
facility of similar age and condition converting to the System, as we reasonably
determine. We must also receive general releases from you and each of your
owners, and payment of all amounts then owed to us and our affiliates by you,
your owners, your affiliates, the transferee, its owners and affiliates, under
this Agreement or otherwise. We will require renovations if the three most
recent quality assurance inspection scores of the Facility before our approval
of the Transfer is requested average no more than 425 points (or its then
equivalent). Our consent to the transaction will not be effective until these
conditions are satisfied.
9.4 Permitted Transferee Transactions. You may transfer an Equity Interest or
effect an Equity Transfer to a Permitted Transferee without obtaining our
consent, renovating the Facility or paying a Relicense Fee or Application Fee.
No Transfer will be deemed to occur. You also must not be in default and you
must comply with the application and notice procedures specified in Sections 9.3
and 9.6. Each Permitted Transferee must first agree in writing to be bound by
this Agreement, or at our option, execute the License Agreement form then
offered prospective licensees. No transfer to a Permitted Transferee shall
release a living transferor from liability under this Agreement or any guarantor
under any Guaranty of this Agreement. You must comply with this Section if you
transfer the Facility to a Permitted Transferee. A transfer resulting from a
death may occur even if you are in default under this Agreement.
9.5 Attempted Transfers. Any transaction requiring our consent under this
Section 9 in which our consent is not first obtained shall be void, as between
you and us. You will continue to be liable for payment and performance of your
obligations under this Agreement until we terminate this Agreement, all your
financial obligations to us are paid and all System identification is removed
from the Facility.
9.6 Notice of Transfers. You will give us at least 30 days prior written notice
of any proposed Transfer or Permitted Transferee transaction. You will notify us
when you sign a contract to Transfer the Facility and 10 days before you intend
to close on the transfer of the Facility. We will respond to all requests for
our consent and notices of Permitted Transferee transactions within a reasonable
time not to exceed 30 days. You will notify us in writing within 30 days after a
change in ownership of 25% or more of your Equity Interests that are not
publicly held or that is not an Equity Transfer, or a change in the ownership of
the Facility if you are not its owner.
11
You will provide us with lists of the names, addresses, and ownership
percentages of your owner(s) at our request.
10. Our Assignments. We may assign, delegate or subcontract all or any part of
our rights and duties under this Agreement, including by operation of law,
without notice and without your consent. We will have no obligations to you
after you are notified that our transferee has assumed our obligations under
this Agreement except those that arose before we assign this Agreement.
11. Default and Termination.
11.1 Default. You will be in default under this Agreement if (a) you do not pay
us when a payment is due, (b) you do not perform any of your other obligations
when this Agreement and the System Standards Manual require, or (c) if you
otherwise breach this Agreement. If your default is not cured within ten days
after you receive written notice from us that you have not filed your monthly
report, paid us any amount that is due or breached your obligations regarding
Confidential Information, or within 30 days after you receive written notice
from us of any other default (except as noted below), then we may terminate this
Agreement by written notice to you. We will not exercise our right to terminate
if you have completely cured your default, or until any waiting period required
by law has elapsed. In the case of quality assurance default, if you have acted
diligently to cure the default but cannot do so and have entered into a written
improvement agreement with us within 30 days after the failing inspection, you
may cure the default within 90 days after the failing inspection. We may
terminate the License if you do not perform that improvement agreement.
11.2 Termination. We may terminate the License, or this Agreement if the Opening
Date has not occurred, effective when we send written notice to you or such
later date as required by law or as stated in the default notice, when (1) you
do not cure a default as provided in Section 11.1, (2) you discontinue operating
the Facility as a "Days Inn", (3) a guarantor on whom we are relying to enter
into this Agreement dies or becomes incapacitated, (4) you lose possession or
the right to possession of the Facility, (5) you (or any guarantor) suffer the
termination of another license or franchise agreement with us or one of our
affiliates, (6) you intentionally maintain false books and records or submit a
materially false report to us, (7) you (or any guarantor) generally fail to pay
debts as they come due in the ordinary course of business) (8) you, any
guarantor or any of your Owners or agents misstated to us or omitted to tell us
a material fact to obtain or maintain this Agreement with us, (9) you receive
two or more notices of default from us in any one year period (whether or not
you cure the defaults), (10) a violation of Section 9 occurs, or a Transfer
occurs before the relicensing process is completed, (11) you contest in court
the ownership or right to franchise or license all or any part of the System or
the validity of any of the Marks, (12) you, any guarantor or the Facility is
subject to any voluntary or involuntary bankruptcy, liquidation, dissolution,
receivership, assignment, reorganization, moratorium, composition or a similar
action or proceeding that is not dismissed within 60 days after its filing, or
(13) you maintain or operate the Facility in a manner that endangers the health
or safety of the Facility's guests.
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11.3 Casualty and Condemnation.
11.3.1 You will notify us promptly after the Facility suffers a Casualty that
prevents you from operating in the normal course of business, with less than 75%
of guest rooms available. You will give us information on the availability of
guest rooms and the Facility's ability to honor advance reservations. You will
tell us in writing within 60 days after the Casualty whether or not you will
restore, rebuild and refurbish the Facility to conform to System Standards and
its condition prior to the Casualty. This restoration will be completed within
180 days after the Casualty. You may decide within the 60 days after the
Casualty, and if we do not hear from you, we will assume that you have decided,
to terminate this Agreement, effective as of the date of your notice or 60 days
after the Casualty, whichever comes first. If this Agreement so terminates, you
will pay all amounts accrued prior to termination and follow the
post-termination requirements in Section 13. You will not be obligated to pay
Liquidated Damages if the Facility will no longer be used as an extended stay or
transient lodging facility after the Casualty.
11.3.2 You will notify us in writing within 10 days after you receive notice of
any proposed Condemnation of the Facility, and within 10 days after receiving
notice of the Condemnation date. This Agreement will terminate on the date the
Facility or a substantial portion is conveyed to or taken over by the condemning
authority.
11.4 Other Remedies. We may suspend the Facility from the Reservation System for
any default or failure to pay or perform under this Agreement, discontinue
Reservation System referrals to the Facility for the duration of such
suspension, and may divert previously made reservations to other Chain
Facilities after giving notice of non-performance, non-payment or default. We
may deduct points under our quality assurance inspection program for your
failure to comply with this Agreement or System Standards. Reservation service
will be restored after you have fully cured any and all defaults and failures to
pay and perform. We may omit the Facility from the Directory if you are in
default on the date we must determine which Chain Facilities are included in the
Directory. You recognize that any use of the System not in accord with this
Agreement will cause us irreparable harm for which there is no adequate remedy
at law, entitling us to injunctive and other relief. We may litigate to collect
amounts due under this Agreement without first issuing a default or termination
notice. Our consent or approval may be withheld if needed while you are in
default under this Agreement or may be conditioned on the cure of all your
defaults.
12. Liquidated Damages.
12.1 Generally. If we terminate the License under Section 11.2, or you terminate
this Agreement (except under Section 11.3 or as a result of our default which we
do not cure within a reasonable time after written notice), you will pay us
within 30 days following the date of termination, as Liquidated Damages, an
amount equal to the sum of accrued Royalties and Basic Reservation Charges
during the immediately preceding 24 full calendar months (or the number of
months remaining in the unexpired Term at the date of termination, whichever is
less). If the
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Facility has been open for less than 24 months, then the amount shall be the
average monthly Royalties and Basic Reservation Charges since the Opening Date
multiplied by 24. You will also pay any applicable Taxes assessed on such
payment. Liquidated Damages will not be less than the product of $2,000.00
multiplied by the number of guest rooms in the Facility. If we terminate this
Agreement under Section 3 before the Opening Date, you will pay us within 10
days after you receive our notice of termination Liquidated Damages equal to
one-half the amount payable for termination under Section 11.2. Liquidated
Damages are paid in place of our claims for lost future Recurring Fees under
this Agreement. Our right to receive other amounts due under this Agreement is
not affected.
12.2 Condemnation Payments. In the event a Condemnation is to occur, you will
pay us Recurring Fees for a period of one year after we receive the initial
notice of condemnation described in Section 11.3, or until the Condemnation
occurs, whichever is longer. You will pay us Liquidated Damages equal to the
average daily Royalties and Basic Reservation Charges for the one year period
preceding the date of your condemnation notice to us multiplied by the number of
days remaining in the one year notice period if the Condemnation is completed
before the one year notice period expires. This payment will be made within 30
days after Condemnation is completed (when you close the Facility or you deliver
it to the condemning authority). You will pay no Liquidated Damages if the
Condemnation is completed after the one year notice period expires, but
Recurring Fees must be paid when due until Condemnation is completed.
13. Your Duties At and After Termination. When the License or this Agreement
terminates for any reason whatsoever:
13.1 System Usage Ceases. You will immediately stop using the System to operate
and identify the Facility. You will remove all signage and other items bearing
any Marks and follow the other steps detailed in the System Standards Manual for
changing the identification of the Facility. You will promptly paint over or
remove the Facility's distinctive System trade dress, color schemes and
architectural features.
13.2 Other Duties. You will pay all amounts owed to us under this Agreement
within 10 days after termination. You will owe us Recurring Fees on Gross Room
Revenues accruing while the Facility is identified as a "Days Inn", including
the Reservation System User Fees for so long as the Facility receives service
from the Reservation System. We may immediately remove the Facility from the
Reservation System and divert reservations as authorized in Section 11.4. We may
also, to the extent permitted by applicable law, and without prior notice enter
the Facility, and any other parcels, remove software (including archive and
back-up copies) for accessing the Reservation System, all copies of the System
Standards Manual, Confidential Information, equipment and all other personal
property of ours, and paint over or remove and purchase for $10.00, all or part
of any interior or exterior Xxxx-bearing signage (or signage face plates),
including billboards, whether or not located at the Facility, that you have not
removed or obliterated within five days after termination. You will promptly pay
or reimburse us for our cost
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of removing such items, net of the $10.00 purchase price for signage. We will
exercise reasonable care in removing or painting over signage. We will have no
obligation or liability to restore the Facility to its condition prior to
removing the signage. We shall have the right, but not the obligation, to
purchase some or all of the Facility's Xxxx-bearing FF&E and supplies at the
lower of their cost or net book value, with the right to set off their aggregate
purchase price against any sums then owed us by you.
13.3 Advance Reservations. The Facility will honor any advance reservations,
including group bookings, made for the Facility prior to termination at the
rates and on the terms established when the reservations are made and pay when
due all related travel agent commissions.
13.4 Survival of Certain Provisions. Sections 3.8, 3.9, 3.13, 7, 8, 11.4, 12,
13, 15, 16 and 17 survive termination of the License and this Agreement, whether
termination is initiated by you or us, even if termination is wrongful.
14. Your Representations and Warranties. You expressly represent and warrant to
us as follows:
14.1 Quiet Enjoyment and Financing. You own, or will own prior to commencing
improvement, or lease, the Location and the Facility. You will be entitled to
possession of the Location and the Facility during the entire Term without
restrictions that would interfere with your performance under this Agreement,
subject to the reasonable requirements of any financing secured by the Facility.
You have, when you sign this Agreement, and will maintain during the Term,
adequate financial liquidity and financial resources to perform you obligations
under this Agreement.
14.2 This Transaction. You have received, at least 10 business days prior to
execution of this Agreement and making any payment to us, our current Uniform
Franchise Offering Circular for prospective licensees. Neither we nor any person
acting on our behalf has made any oral or written representation or promise to
you that is not written in this Agreement on which you are relying to enter into
this Agreement. You release any claim against us or our agents based on any oral
or written representation or promise not stated in this Agreement. You and the
persons signing this Agreement for you have full power and authority and have
been duly authorized, to enter into and perform or cause performance of your
obligations under this Agreement. You have obtained all necessary approvals of
your owners, Board of Directors and lenders. Your execution, delivery and
performance of this Agreement will not violate, create a default under or breach
of any charter, bylaws, agreement or other contract, license, permit,
indebtedness, certificate, order, decree or security instrument to which you or
any of your principal owners is a party or is subject or to which the Facility
is subject. Neither you nor the Facility is the subject of any current or
pending merger, sale, dissolution, receivership, bankruptcy, foreclosure,
reorganization, insolvency, or similar action or proceeding on the date you
execute this Agreement and was not within the three years preceding such date,
except as disclosed in the Application. You will submit to us the documents
about the Facility, you, your owners and your finances that we request in the
License Application (or after our review of your initial submissions) before or
within 30 days after you sign this Agreement.
15
14.3 No Misrepresentations or Implied Covenants. All written information you
submit to us about the Facility, you, your owners, any guarantor, or the
finances of any such person or entity, was or will be at the time delivered and
when you sign this Agreement, true, accurate and complete, and such information
contains no misrepresentation of a material fact, and does not omit any material
fact necessary to make the information disclosed not misleading under the
circumstances. There are no express or implied covenants or warranties, oral or
written, between we and you except as expressly stated in this Agreement.
15. Proprietary Rights.
15.1 Marks and System. You will not acquire any interest in or right to use the
System or Marks except under this Agreement. You will not apply for governmental
registration of the Marks, or use the Marks or our corporate name in your legal
name, but you may use a Xxxx for an assumed business or trade name filing.
15.2 Inurements. All present and future distinguishing characteristics,
improvements and additions to or associated with the System by us, you or
others, and all present and future service marks, trademarks, copyrights,
service xxxx and trademark registrations used and to be used as part of the
System, and the associated good will, shall be our property and will inure to
our benefit. No goodwill shall attach to any secondary designator that you use.
15.3 Other Locations and Systems. We and our affiliates each reserve the right
to own, in whole or in part, and manage, operate, use, lease, finance, sublease,
franchise, license (as licensor or licensee), provide services to or joint
venture (i) distinctive separate lodging or food and beverage marks and other
intellectual property which are not part of the System, and to enter into
separate agreements with you or others (for separate charges) for use of any
such other marks or proprietary rights, (ii) other lodging, food and beverage
facilities, or businesses, under the System utilizing modified System Standards,
and (iii) a Chain Facility at or for any location other than the Location. There
are no territorial rights or agreements between the parties. You acknowledge
that we are affiliated with or in the future may become affiliated with other
lodging providers or franchise systems that operate under names or marks other
than the Marks. We and our affiliates may use or benefit from common hardware,
software, communications equipment and services and administrative systems for
reservations, franchise application procedures or committees, marketing and
advertising programs, personnel, central purchasing, approved supplier lists,
franchise sales personnel (or independent franchise sales representatives), etc.
15.4 Confidential Information. You will take all appropriate actions to preserve
the confidentiality of all Confidential Information. Access to Confidential
Information should be limited to persons who need the Confidential Information
to perform their jobs and are subject to your general policy on maintaining
confidentiality as a condition of employment or who have first signed a
confidentiality agreement. You will not permit copying of Confidential
Information (including, as to computer software, any translation, decompiling,
decoding, modification or other alteration of the source code of such software).
You will use Confidential Information only for
16
the Facility and to perform under this Agreement. Upon termination (or earlier,
as we may request), you shall return to us all originals and copies of the
System Standards Manual, policy statements and Confidential Information "fixed
in any tangible medium of expression," within the meaning of the U.S. Copyright
Act, as amended. Your obligations under this subsection commence when you sign
this Agreement and continue for trade secrets (including computer software we
license to you) as long as they remain secret and for other Confidential
Information, for as long as we continue to use the information in confidence,
even if edited or revised, plus three years. We will respond promptly and in
good faith to your inquiry about continued protection of any Confidential
Information.
15.5 Litigation. You will promptly notify us of (i) any adverse or infringing
uses of the Marks (or names or symbols confusingly similar), Confidential
Information or other System intellectual property, and (ii) or any threatened or
pending litigation related to the System against (or naming as a party) you or
us of which you become aware. We alone handle disputes with third parties
concerning use of all or any part of the System. You will cooperate with our
efforts to resolve these disputes. We need not initiate suit against imitators
or infringers who do not have a material adverse impact on the Facility, or any
other suit or proceeding to enforce or protect the System in a matter we do not
believe to be material.
16. Relationship of Parties.
16.1 Independence. You are an independent contractor. You are not our legal
representative or agent, and you have no power to obligate us for any purpose
whatsoever. We and you have a business relationship based entirely on and
circumscribed by this Agreement. No partnership, joint venture, agency,
fiduciary or employment relationship is intended or created by reason of this
Agreement. You will exercise full and complete control over and have full
responsibility for your contracts, daily operations, labor relations, employment
practices and policies, including, but not limited to, the recruitment,
selection, hiring, disciplining, firing, compensation, work rules and schedules
of your employees.
16.2 Joint Status. If you comprise two or more persons or entities
(notwithstanding any agreement, arrangement or understanding between or among
such persons or entities) the rights, privileges and benefits of this Agreement
may only be exercised and enjoyed jointly. The liabilities and responsibilities
under this Agreement will be the joint and several obligations of all such
persons or entities.
17. Legal Matters.
17.1 Partial Invalidity. If any part of this Agreement, for any reason, is
declared invalid or unenforceable, the remainder shall not be effected. However,
if in our judgment such decision substantially impairs the value of this
Agreement to us, then we may at any time terminate this Agreement by written
notice to you without penalty or compensation owed by either party.
17
17.2 Waivers, Modifications and Approvals. If we allow you to deviate from this
Agreement, we may insist on strict compliance at any time after written notice.
Our silence or inaction will not be or establish a waiver, consent, course of
dealing, implied modification or estoppel. All modifications, waivers, approvals
and consents of or under this Agreement by us must be in writing and signed by
our authorized representative to be effective.
17.3 Notices. Notices will be effective if in writing and delivered by facsimile
transmission with confirmation original sent by first class mall, postage
prepaid, by delivery service, with proof of delivery, or by first class, prepaid
certified or registered mail, return receipt requested, to the appropriate party
at its address stated below or as may be otherwise designated by notice. Notices
shall be deemed given on the date delivered or date of attempted delivery, if
refused.
ELBE PROPERTIES:
Your address: 0000 Xxxxx Xxxxxxxxxx Xxxx, Xxxxx, Xxxx 00000, Attention: Xxxxx X.
Xxxx
Days Inns of America, Inc.:
Our address: 000 Xxxxxxxxx Xxxx, X.X. Xxx 000, Xxxxxxxxxx, Xxx Xxxxxx
00000-0000, Fax No. (000) 000-0000, Attention: Vice President-Franchise
Compliance
17.4 Remedies. Remedies specified in this Agreement are cumulative and do not
exclude any remedies available at law or in equity. The non-prevailing party
will pay all costs and expenses, including reasonable attorneys' fees, incurred
by the prevailing party to enforce this Agreement or collect amounts owed under
this Agreement. You consent and waive your objection to the non-exclusive
personal jurisdiction of and venue in the New Jersey state courts situated in
Xxxxxx County, New Jersey and the United States District Court for the District
of New Jersey for all cases and controversies under this Agreement or between we
and you.
17.5 Miscellaneous. This Agreement will be governed by and construed under the
laws of the State of New Jersey. The New Jersey Franchise Practices Act will not
apply to any Facility located outside the State of New Jersey. This Agreement is
exclusively for the benefit of the parties. There are no third party
beneficiaries. No agreement between us and anyone else is for your benefit. The
section headings in this Agreement are for convenience of reference only. We may
unilaterally revise Schedule C under this Agreement. This Agreement, together
with the exhibits and schedules attached, is the entire agreement (superseding
all prior representations, agreements and understandings, oral or written) of
the parties about the Facility.
18. Special Stipulations. The following special stipulations apply to this
Agreement and supersede any inconsistent or conflicting provisions. These are
personal to you and are not transferable or assignable except to a Permitted
Transferee.
18.1 Special Royalty. Notwithstanding Section 7.1, the Royalty rate on Gross
Room Revenues accruing during the following periods will be as follows:
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18.1 Special Royalty. Notwithstanding Section 7.1, the Royalty rate on Gross
Room Revenues accruing during the following periods will be as follows:
18.1.1 The Royalty shall be four and five-tenths percent (4.5%) of Gross Room
Revenues for the first License Year; and
18.1.2 The Royalty shall be at the rate specified in Section 7.1 after the first
License Year.
18.1.3 The Royalty rate changes set forth in this Section automatically
terminate without notice or opportunity to cure, and the Royalty shall reset to
the rate specified in Section 7.1, if and as of the date (i) a Termination
occurs, (ii) we send you a notice of default and you fail to cure the default
within the time specified, if any, in the notice of default or, (iii) after you
satisfy the Improvement Obligation, the Facility receives a quality assurance
inspection score of less than 425 (or its then equivalent) and the Facility
fails to achieve a quality assurance inspection score of at least 425 in a
reinspection to be performed not less than 30 days after the initial inspection.
{THE BALANCE OF THIS PAGE IS INTENTIONALLY BLANK}
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first stated above.
WE:
DAYS INNS OF AMERICA, INC.:
By: /s/ Xxxxxxx X. Xxxxxxxxxx Attest: /s/ [ILLEGIBLE]
------------------------------ ------------------------------
Xxxxxxx X. Xxxxxxxxxx Assistant Secretary
Vice President
Franchise Compliance
YOU, as Licensee:
ELBE PROPERTIES
By: /s/ Xxxxx X. Xxxx Witness: /s/ [ILLEGIBLE]
------------------------------ ------------------------------
Xxxxx X. Xxxx
General Partner
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APPENDIX A
DEFINITIONS
Agreement means this License Agreement.
Application Fee means the fee you pay when you submit your Application under
Section 6.
Approved Plans means your plans and specifications for constructing or improving
the Facility initially or after opening, as approved by us under Section 3.
Approved Supplier means a vendor authorized by us to provide proprietary or
Xxxx-bearing items, or whose goods and services are deemed to meet applicable
System Standards.
Casualty means destruction or significant damage to the Facility by act of God
or other event beyond your reasonable anticipation and control.
Chain means the network of Chain Facilities.
Chain Facility means a lodging facility we own, lease, manage, operate or
authorize another party to operate using the System and identified by the Marks.
Condemnation means the taking of the Facility for public use by a government or
public agency legally authorized to do so, permanently or temporarily, or the
taking of such a substantial portion of the Facility that continued operation in
accordance with the System Standards, or with adequate parking facilities, is
commercially impractical, or if the Facility or a substantial portion is sold to
the condemning authority in lieu of condemnation.
Conference Fee means the fee we charge for your attendance at a conference for
Chain Facilities and their licensees when and if held.
Confidential Information means any trade secrets we own or protect and other
proprietary information not generally known to the lodging industry including
confidential portions of the System Standards Manual or information we otherwise
impart to you and your representatives in confidence. Confidential Information
includes the "Rules of Operation Manual" and all other System Standards manuals
and documentation, including those on the subjects of employee relations,
finance and administration, field operation, purchasing and marketing, the
Reservation System software and applications software.
Declaration means the Declaration of License Agreement you and we sign under
Section 5.
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Design Standards mean standards specified in the System Standards Manual from
time to time for design, construction, renovation, modification and improvement
of new or existing Chain Facilities, including all aspects of facility design,
number of rooms, rooms mix and configuration, construction materials,
workmanship, finishes, electrical, mechanical, structural, plumbing, HVAC,
utilities, access, life safety, parking, systems, landscaping, amenities,
interior design and decor and the like for a Chain Facility.
Directory means the general purpose directory we publish listing the names and
addresses of Chain Facilities, and at our discretion, other Days Inn facilities
located outside the United States, Canada and Mexico.
Effective Date means the date on which we and you have executed of this
Agreement, or the date we insert in the Preamble of this Agreement.
Equity Interests shall include, without limitation, all forms of equity
ownership of you, including voting stock interests, partnership interests,
limited liability company membership or ownership interests, joint and tenancy
interests, the proprietorship interest, trust beneficiary interests and all
options, warrants, and instruments convertible into such other equity interests.
Equity Transfer means any transaction in which your owners or you sell, assign,
transfer, convey, pledge, or suffer or permit the transfer or assignment of, any
percentage of your Equity Interests that will result in a change in control of
you to persons other than those disclosed on Schedule B, as in effect prior to
the transaction. Unless there are contractual modifications to your owners'
rights, an Equity Transfer of a corporation or limited liability company occurs
when either majority voting rights or beneficial ownership of more than 50% of
the Equity Interests changes. An Equity Transfer of a partnership occurs when a
newly admitted partner will be the managing, sole or controlling general
partner, directly or indirectly through a change in control of the Equity
Interests of an entity general partner. An Equity Transfer of a trust occurs
when either a new trustee with sole investment power is substituted for an
existing trustee, or a majority of the beneficiaries convey their beneficial
interests to persons other than the beneficiaries existing on the Effective
Date. An Equity Transfer does not occur when the Equity Interest ownership among
the owners of Equity Interests on the Effective Date changes without the
admission of new Equity Interest owners. An Equity Transfer occurs when you
merge, consolidate or issue additional Equity Interests in a transaction which
would have the effect of diluting the voting rights or beneficial ownership of
your owners' combined Equity Interests in the surviving entity to less than a
majority.
Facility means the Location, together with all improvements, buildings, common
areas, structures, appurtenances, facilities, entry/exit rights, parking,
amenities, FF&E and related rights, privileges and properties existing at the
Location on the Effective Date or afterwards.
FF&E means furniture, fixtures and equipment.
22
FF&E Standards means standards specified in the System Standards Manual for FF&E
and supplies to be utilized in a Chain Facility.
Food and Beverage means any restaurant, catering, bar/lounge, entertainment,
room service, retail food or beverage operation, continental breakfast, food or
beverage concessions and similar services offered at the Facility.
Gross Room Revenues means gross revenues attributable to or payable for rentals
of guest rooms at the Facility, including all credit transactions, whether or
not collected, but excluding separate charges to guests for Food and Beverage,
room service, telephone charges, key forfeitures and entertainment; vending
machine receipts; and federal, state and local sales, occupancy and use taxes.
Improvement Obligation means your obligation to either (i) renovate and upgrade
the Facility, or (ii) construct and complete the Facility, in accordance with
the Approved Plans and System Standards, as described in Section 3.
Indemnitees means us, our direct and indirect parent, subsidiary and sister
corporations, and the respective officers, directors, shareholders, employees,
agents and contractors, and the successors, assigns, personal representatives,
heirs and legatees of all such persons or entities.
Initial Entry Charge means the fee you are to pay for gaining access to the
Reservation System when you sign this Agreement and on the first and second
anniversaries of the Effective Date under Section 6.2.
Initial Fee means the fee you are to pay for signing this Agreement as stated in
Section 6.1.
License means the non-exclusive license to operate the type of Chain Facility
described in Schedule B only at the Location, using the System and the Xxxx we
designate in Section 1.
License Year means the one-year period beginning on the Opening Date and each
subsequent anniversary of the Opening Date and ending on the day preceding the
next anniversary of the Opening Date.
Liquidated Damages means the amounts payable under Section 12, set by the
parties because actual damages will be difficult or impossible to ascertain on
the Effective Date and the amount is a reasonable pre-estimate of the damages
that will be incurred and is not a penalty.
Location means the parcel of land situated at , as more fully described in
Schedule A.
23
Losses and Expenses means all payments or obligations to make payments either
(i) to or for third party claimants by any and all Indemnitees, including guest
refunds, or (ii) incurred by any and all Indemnitees to investigate, respond to
or defend a matter, including without limitation investigation and trial
charges, costs and expenses, attorneys' fees, experts' fees, court costs,
settlement amounts, judgments and costs of collection.
Maintenance Standards means the standards specified from time to time in the
System Standards Manual for repair, refurbishment and replacement of FF&E,
finishes, decor, and other capital items and design materials in Chain
Facilities.
Marks means, collectively (i) the service marks associated with the System
published in the System Standards Manual from time to time including, but not
limited to, the name, design and logo for "Days Inn" and other marks (U.S. Reg.
Nos.: 1,160,430; 1,160,431; 1,420,612; 1,469,518; and 1,003,834) and (ii)
trademarks, trade names, trade dress, logos and derivations, and associated good
will and related intellectual property interests.
Marks Standards means standards specified in the System Standards Manual for
interior and exterior Xxxx-bearing signage, advertising materials, china,
linens, utensils, glassware, uniforms, stationery, supplies, and other items,
and the use of such items at the Facility or elsewhere.
Minor Renovation means the repairs, refurbishing, repainting, and other
redecorating of the interior, exterior, guest rooms, public areas and grounds of
the Facility and replacements of FF&E we may require you to perform under
Section 3.16.
Minor Renovation Ceiling Amount means $3,000.00 per guest room.
Minor Renovation Notice means the written notice from us to you specifying the
Minor Renovation to be performed and the dates for commencement and completion
given under Section 3.16.
Opening Date means the date on which we authorize you to open the Facility for
business identified by the Marks and using the System.
Operations Standards means standards specified in the System Standards Manual
for cleanliness, housekeeping, general maintenance, repairs, concession types,
food and beverage service, vending machines, uniforms, staffing, employee
training, guest services, guest comfort and other aspects of lodging operations.
24
Permitted Transferee means (i) any entity, natural person(s) or trust receiving
from the personal representative of an owner any or all of the owner's Equity
Interests upon the death of the owner, if no consideration is paid by the
transferee or (ii) the spouse or adult issue of the transferor, if the Equity
Interest transfer is accomplished without consideration or payment, or (iii) any
natural person or trust receiving an Equity Interest if the transfer is from a
guardian or conservator appointed for an incapacitated or incompetent
transferor.
Punch List means the list of upgrades and improvements attached as part of
Schedule B, which you are required to complete under Section 3.
Recurring Fees means fees paid to us on a periodic basis, including without
limitation, Royalties, Reservation System User Fees, Taxes and Interest as
stated in Section 7.
Relicense Fee means the fee your transferee or you pay to us under Section 7
when a Transfer occurs.
Reservation System User Fees means the fees you pay to us under Section 7 and
Schedule C for reservation services, including the Basic Reservation Charge and
any other fees we charge for services provided by or through the Reservation
System.
Reservation System or "Central Reservation System" means the system for offering
to interested parties, booking and communicating guest room reservations for
Chain Facilities described in Section 4.2.
Rooms Addition Fee means the fee we charge you for adding guest rooms to the
Facility.
Royalty means the monthly fee you pay to us for use of the System under Section
7(a). "Royalties" means the aggregate of all amounts owed as a Royalty.
System means a comprehensive system for providing guest lodging facility
services as we specify which at present includes: (a) the Marks; (b) other
intellectual property, including Confidential Information, System Standards
Manual and know-how; (c) marketing, advertising, publicity and other promotional
materials and programs; (d) System Standards; (e) training programs and
materials; (f) quality assurance inspection and scoring programs; and (g) the
Reservation System.
System Standards means the standards for the participating in the System
published in the System Standards Manual, including but not limited to Design
Standards, FF&E Standards, Marks Standards, Operations Standards, Technology
Standards and Maintenance Standards and any other standards, policies, rules and
procedures we promulgate about System operation and usage.
System Standards Manual means the Operating Policies Manual, the Planning and
Design Standards Manual and any other manual we publish or distribute specifying
the System Standards.
25
Taxes means the amounts payable under Section 7.3 of this Agreement.
Technology Standards means standards specified in the System Standards Manual
for local and long distance telephone communications services, telephone,
telecopy and other communications systems, point of sale terminals and computer
hardware and software for various applications, including, but not limited to,
front desk, rooms management, records maintenance, marketing data, accounting,
budgeting and interfaces with the Reservation System to be maintained at the
Chain Facilities.
Term means the period of time during which this Agreement shall be in effect, as
stated in Section 5.
Termination means a termination of the License under Sections 11.1 or 11.2 or
your termination of the License or this Agreement.
Transfer means (1) an Equity Transfer, (2) you assign, pledge, transfer,
delegate or grant a security interest in all or any of your rights, benefits and
obligations under this Agreement, as security or otherwise without our consent
as specified in Section 9.2, (3) you assign (other than as collateral security
for financing the Facility) your leasehold interest in (if any), lease or
sublease all or any part of the Facility to any third party, (4) you engage in
the sale, conveyance, transfer, or donation of your right, title and interest in
and to the Facility, (5) your lender or secured party forecloses on or takes
possession of your interest in the Facility, directly or indirectly, or (6) a
receiver or trustee is appointed for the Facility or your assets, including the
Facility. A Transfer does not occur when you pledge or encumber the Facility to
finance its acquisition or improvement, you refinance it, or you engage in a
Permitted Transferee transaction.
"You" and "Your" means and refers to the party named as licensee identified in
the first paragraph of this Agreement and its Permitted Transferees.
"We", "Our" and "Us" means and refers to Days Inns of America, Inc., a Delaware
corporation, its successors and assigns.
26
EXHIBIT B
Schedule "B" of the Franchise Agreement is hereby amended as follows:
1. Owners** (names, addresses and percentage equity interests; attach
separate exhibit if necessary):
Of Assignee: Type of Ownership Ownership %
------------ ----------------- -----------
Name: Xxxxx X. Xxxx equity 27.6%
Address: 0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
Name: Xxxxx Xxxxxx equity 9.9%
Address: 0000 Xxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxx 00000
----------
** The table above sets information with regard to each person that owns
more than 10% of the capital stock of the Assignee. There are approximately
3,566 beneficial owners of the remaining capital stock of the Assignee.
SCHEDULE C
RESERVATION SYSTEM USER FEES
January 1995
The Basic Reservation Charge is equal to 2.3% of Gross Room Revenues.
The airline reservation system charge described in Section 7 is $4.00 per
gross reservation. The travel agent commission described in Section 7 is 10% of
the Gross Room Revenues generated by each reservation originated by the agent.
We reserve the right to increase or modify the Basic Reservation Charge
and any other Reservation System User Fees for all Chain Facilities in the
United States and to add other fees and charges for new services, at its sole
discretion as to amount or formula from time to time but with at least 30 days
prior written notice, to reflect changes in its fully allocated costs of
providing Reservation System-related services, and to add, drop or modify the
types of reservation services offered.
29
GUARANTY
As an inducement to Days Inns of America, Inc. (the "Company") to execute
the foregoing Assignment and Assumption Agreement, the undersigned, jointly and
severally, hereby irrevocably and unconditionally (i) warrant to the Company and
its successors and assigns that all of Assignee's representations and warranties
in the Assignment and Assumption Agreement are true and correct as stated, and
(ii) guaranty that all of Assignee's obligations as the substituted Licensee
(hereinafter referred to as "Licensee") under the License Agreement, including
any amendments thereto whenever made (the "Agreement"), will be punctually paid
and performed.
Upon default by Licensee and notice from the Company, the undersigned will
immediately make each payment and perform or cause Franchisee to perform, each
obligation required of Franchisee under the Agreement. Without affecting the
obligations of the undersigned under this Guaranty, the Company may without
notice to the undersigned extend, modify or release any indebtedness or
obligation of Franchisee, or settle, adjust or compromise any claims against
Franchisee. The undersigned waive notice of amendment of the Agreement, the
giving of notice or demand by the Company for payment or performance by
Franchisee, which also applies to this Guaranty.
Upon the death of an individual guarantor, the estate of such guarantor
will be bound by this guaranty but only for defaults and obligations hereunder
existing at the time of death, and the obligations of all other guarantors will
continue in full force and effect.
The undersigned will not seek or accept indemnity, reimbursement or
subrogation against Licensee for any amount paid under this instrument unless
and until 367 days have elapsed from the date the Company receives payment of
such amount.
IN WITNESS WHEREOF, each of the undersigned has signed this Guaranty as of
the date of the above Agreement.
WITNESSES: GUARANTORS:
/s/ [ILLEGIBLE] /s/ Xxxxx X. Xxxx (Seal)
--------------------------- -------------------------------------
Xxxxx X. Xxxx
/s/ [ILLEGIBLE] /s/ Xxxxx X. Xxxxxx (Seal)
--------------------------- -------------------------------------
Xxxxx X. Xxxxxx
(Seal)
--------------------------- -------------------------------------
