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Exhibit 10.1
AMENDMENT NO. 5
TO
LICENSE AGREEMENT
THIS AMENDMENT NO. 5 TO LICENSE AGREEMENT (the "Amendment") is entered
into this 25th day of October, 1996, by and between SHONEY'S INVESTMENTS, INC.,
a Nevada corporation with offices at Suite 1400, 000 Xxxxx Xxxxxx Xxxxxx, Xxx
Xxxxx, Xxxxxx 00000 ("Licensor"), and SHOLODGE FRANCHISE SYSTEMS, INC.
(formerly known as Shoney's Lodging, Inc.), a Tennessee corporation with
offices at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx 00000 ("Licensee").
SHOLODGE, INC. (formerly known as Gulf Coast Development, Inc.), a Tennessee
corporation with offices at 000 Xxxx Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxx 00000 and
the parent corporation of Licensee ("ShoLodge"), is executing this Amendment
for the purposes set forth in the Existing License Agreement (as hereinafter
defined) as amended hereby.
W I T N E S S E T H:
WHEREAS, Licensor and Licensee entered into that certain License
Agreement on October 25, 1991 (the "Original License Agreement") pursuant to
which Licensor granted to Licensee a license to use the service xxxx XXXXXX'X
INN (and design) which was registered on February 16, 1982 with the United
States Patent and Trademark Office (the "USPTO") at Registration No. 1,190,289;
and
WHEREAS, Licensor and Licensee entered into that certain Amendment No.
1 to License Agreement on September 16, 1992 (the "First Amendment") pursuant
to which Licensor added the service xxxx XXXXXX'X INN (block letters) which was
registered by Licensor on August 4, 1992 with the USPTO at Registration No.
1,705,676 to be licensed to Licensee pursuant to the terms and conditions of
the Original License Agreement; and
WHEREAS, Licensor and Licensee entered into that certain Amendment No.
2 to License Agreement on March 18, 1994 (the "Second Amendment") pursuant to
which certain Tennessee counties were added to the "Territory" covered by the
Original License Agreement; and
WHEREAS, Licensor and Licensee entered into that certain Amendment No.
3 to License Agreement on March 31, 1995 (the "Third Amendment") pursuant to
which Licensor added the service xxxx
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SHONEY'S SUITES (block letters) for which an intent-to-use application was
filed with the USPTO on January 23, 1995 and the service xxxx XXXXXX'X INN &
SUITES (block letters) for which an intent-to-use application was filed with
the USPTO on February 6, 1995 to be licensed to Licensee pursuant to the terms
and conditions of the Original License Agreement; and
WHEREAS, Licensor and Licensee entered into that certain
Amendment No. 4 to License Agreement on June 26, 1996 (the "Fourth Amendment")
(the Original License Agreement as amended by the First Amendment, the Second
Amendment, the Third Amendment and the Fourth Amendment is hereinafter referred
to as the "Existing License Agreement") pursuant to which, among other things,
the parties revised certain provisions of Section 4.5(d) of the Original
License Agreement regarding the provision of food items to guests at Motels
operated or licensed by Licensee;
WHEREAS, the parties hereto desire to modify and amend the Existing
License Agreement in certain other respects as set forth herein;
NOW, THEREFORE, in consideration of the premises and covenants
contained herein and in the Existing License Agreement, the payment by Licensee
to Licensor of the sum of Five Million Two Hundred Fifty Thousand and No/100
Dollars ($5,250,000) on even date herewith, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Licensor and Licensee agree as follows:
1. The Existing License Agreement is hereby amended by:
(a) deleting the existing Section 1.5 in its entirety.
(b) deleting the existing Section 4.1 in its entirety.
(c) deleting the existing Section 4.2 in its entirety.
(d) deleting the text of existing Section 4.4(a) in its
entirety and inserting in lieu thereof the
following:
(a) Licensee shall display and
shall require that its franchisees display
the Licensed Xxxx only in the styles,
shapes,
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colors and forms set forth in
Schedule 1, attached hereto and
incorporated herein by reference, in all
signs, literature, packages, labels,
artwork, advertising or promotional
materials prepared by or for Licensee or
its franchisees. Any alteration or
deviation from the displays set forth in
Schedule 1 must be approved in advance by
Licensor. Licensor shall have thirty (30)
days to approve or disapprove such
alterations or deviations. If Licensor
fails to notify Licensee in writing of its
objection to such alterations or deviations
within such thirty (30) day period, such
alterations or deviations shall be deemed
to have been approved. Licensee shall
require that each of its franchisees agree
to allow Licensor or its authorized
representative at any time to enter upon
the premises of any Motel and remove any
signs or advertising materials that display
the xxxx in a manner that has not been
approved. Licensee agrees to refrain, and
to require its franchisees to refrain, from
using the Licensed Xxxx in any fashion
which would cast disfavor upon the
Licensor. Licensee will permit, and require
its franchisees to permit, Licensor or its
authorized representatives to inspect the
premises of all Motels during business
hours for the purpose of ascertaining or
determining compliance with the terms of
the Agreement.
(e) deleting the existing Section 4.4(b) in its
entirety.
(f) deleting the existing Section 4.4(c) in its
entirety.
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(g) deleting the phrase "subject to the limitations set
forth below" as it appears in the second sentence
of Section 4.4(d).
(h) deleting the fourth sentence of Section 4.4(d) in
its entirety and inserting the following in lieu
thereof:
Licensor shall not object to a form of
agreement, offering circular or other
promotional items because of the fees,
royalties, advertising fees or similar
financial obligations proposed to be
charged thereunder.
(i) inserting the words "Upon Licensor's request" at
the beginning of the first sentence in Section
4.5(a).
(j) deleting the words "their execution" as they appear
in the first sentence of Section 4.5(a) and
inserting in lieu thereof the words "such request."
(k) deleting the second, third, fourth and fifth
sentences of Section 4.5(a).
(l) deleting the words "no more than three (3)
breakfast `breads' such as donuts, bagels, muffins,
sweet rolls, danish and similar items and one bowl
containing one type of fresh whole fruit, and (iii)
so long as Licensee or its franchisee (as
applicable) shall have first offered the catering
work to the adjacent `Shoney's Restaurant' operator,
if any," as they appear in the second sentence of
Section 4.5(d) and inserting the following language
in lieu thereof:
"hot or cold continental breakfast foods
consisting of breads, fruits, cereals,
waffles, pancakes, poptarts and other items
popularly known as `continental breakfast'
foods; provided, however, that, except as
provided above, in no event shall the term
`continental
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breakfast foods' be deemed to include any
other hot breakfast foods including,
without limitation: (a) any meat or meat
products (including pork and pork
products); and (b) eggs, and (iii)"
(m) deleting the third sentence in Section 4.5(d) in
its entirety and inserting in lieu thereof the
following:
No food products showing brand names (such
as Dunkin' Donuts) shall be allowed,
although brand name products may be used as
long as the brand name itself is not
displayed.
(n) deleting the fifth sentence in Section 4.5(d) in
its entirety and inserting in lieu thereof the
following:
Licensee agrees, and shall require its
franchisees to agree, to place menus for
the adjacent "Shoney's Restaurant," if any,
(which must be approved by Licensor and any
expense borne by the adjacent restaurant
operator) in each guest room of all Motels
and shall not allow any other restaurant or
food service organization to place
promotional material in the guest rooms of
any Motels adjacent to a "Shoney's
Restaurant" without the prior written
consent of Licensor. For purposes of this
Section 4.5(d) the term "adjacent to" shall
mean within a one mile radius."
(o) deleting the text of existing Section 4.10 in its
entirety and inserting in lieu thereof the
following:
Section 4.10. Assignment.
(a) Licensee shall not sublicense
(except to a franchisee as permitted
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herein), sell, assign, transfer, convey or
encumber its rights and obligations
hereunder or suffer or permit any such
assignment, transfer or encumbrance to
occur by operation of law without the prior
express written consent of Licensor. In the
event Licensee is a corporation, limited
partnership, business trust, partnership or
similar association, the shareholders,
limited partners, beneficiaries, partners
or investors, as the case may be, may not
sell, assign or otherwise transfer their
shares or interests in such corporation,
limited partnership, business trust,
partnership or similar association, without
the prior written consent of Licensor. In
the event Licensee is a corporation, all
stock certificates shall have conspicuously
endorsed upon them a legend in
substantially the following form:
"A transfer of this stock is
subject to the terms and
conditions of a License
Agreement between Shoney's
Investments, Inc. and ShoLodge
Franchise Systems, Inc. (then
known as Shoney's Lodging,
Inc.) dated the 25th day of
October, 1991, as amended.
Licensor agrees that it will not
unreasonably withhold its consent to a
sale, assignment, transfer or conveyance
contemplated by this paragraph to a person
or entity who has experience in the
operation of motels and who is, in the sole
judgment of Licensor, of good character and
reputation and capable, financially and
otherwise, of performing the duties and
obligations of Licensee hereunder. Any
approval by Licensor of
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such transfer or assignment shall be
subject to the assignee's agreement in
writing to assume and perform all of the
transferor's duties and obligations
hereunder.
(b) In the event of the death of
the Licensee or if the Licensee is a
corporation or similar entity, then in the
event of the death of any stockholder,
investor or similar person of Licensee,
Licensor shall not unreasonably withhold
its consent to a transfer or assignment of
Licensee's interest herein, or if Licensee
is a corporation, the transfer of the
deceased stockholder's stock in such
corporation to a descendant, heir or
legatee of the decedent, who shall in the
sole judgment of Licensor be capable of
performing the duties and obligations of
Licensee hereunder, or to a responsible
bona fide purchaser acceptable to Licensor.
Any approval by Licensor of such transfer
or assignment shall be subject to the
assignee's agreement in writing to assume
and perform all of the transferor's duties
and obligations hereunder.
(c) In the event that a sale,
assignment, transfer or conveyance of the
stock of Licensee by the shareholder of
Licensee is approved in accordance with
Section 4.10(a) above, Licensor will (i)
amend this Agreement to delete (A) the
provisions of Section 7.2 hereof pertaining
to defaults caused by Gulf (now known as
ShoLodge, Inc.) and (B) all other references
to Gulf, including, without limitation,
those in Sections 6.1, 6.2, 6.4, 6.6, and
7.3 hereof, and to make conforming
amendments in connection with such
deletions, and (ii) terminate and cancel
the Guaranty Agreement except for
obligations guaranteed by Gulf thereunder
relating to events occurring
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prior to the effective date of such sale,
assignment, transfer or conveyance.
(p) deleting the phrase "that consent may be given by
any of Licensor's representatives to the board of
directors of Gulf or Licensee" as it appears in
Section 4.11(b) and inserting in lieu thereof the
words "a request for consent shall be made by
Licensee in writing addressed to the Secretary of
Licensor's parent corporation Shoney's, Inc. and
written approval may be given by the Secretary,
Treasurer or Chief Financial Officer of Licensor's
parent corporation Shoney's, Inc."
(q) deleting the existing Section 5.1 in its entirety.
(r) deleting the date "October 27, 1991" as it appears
in Section 5.2 and inserting in lieu thereof the
date "October 25, 1996."
(s) inserting the words ", as amended" immediately
following the words "attached hereto" as they appear
in the second line of Section 5.3.
(t) deleting the existing Section 5.4 in its entirety.
(u) deleting the existing Section 5.5 in its entirety.
(v) inserting the words "subject to the provisions of
Section 4.10" immediately before the words "Gulf
will continue" as they appear in the third line of
Section 6.1 and deleting the parenthetical "(except
any security interests granted to Licensor herein)"
as it appears in the sixth and seventh lines of
Section 6.1.
(w) deleting the second and third sentences of Section
6.3.
(x) deleting Section 6.5 in its entirety.
(aa) deleting the words ", as modified by Section 5.1
hereof" as they appear in the last line of Section
6.6.
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(bb) deleting the words "(except for the payment of any
royalty fees) or any other agreement between
Licensor and Licensee (including, without
limitation, the Security Agreement) executed
contemporaneously with the execution of this
Agreement" as they appear in Section 7.1(a).
(cc) deleting the existing Section 7.1(f) in its
entirety.
(dd) deleting the existing Section 7.1(g) in its
entirety.
(ee) deleting the word "report" as it appears in Section
7.1(h) and inserting in lieu thereof the word
"document."
(ff) deleting the term "ten (10)" as it appears in
Section 7.1(j) and inserting the term "thirty (30)"
in lieu thereof.
(gg) deleting the words "and the Stock Pledge Agreement"
as they appear in the parenthetical in the fourth
line of Section 7.2(a).
(hh) deleting the existing Section 7.2(f) in its
entirety.
(ii) deleting the existing Section 7.2(g) in its
entirety.
(jj) deleting the term "ten (10)" as it appears in
Section 7.2(i) and inserting the term "thirty (30)"
in lieu thereof.
(kk) deleting the parenthetical "(with the exception of
those set forth in Section 7.4(f) hereof)" as it
appears in the third and fourth lines of Section
7.4(a).
(ll) deleting the words "assignment of all agreements
then existing between Licensee and any franchisee,
assignment of any leases for Motels in existence on
the date hereof and" as they appear in the
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parenthetical in the last sentence of Section
7.4(a).
(mm) deleting the existing Section 7.4(c) in its
entirety.
(nn) deleting the existing Section 7.4(d) in its
entirety.
(oo) deleting the existing Section 7.4(f) in its
entirety.
(pp) deleting the address for Licensor as it appears in
Section 8.6 and inserting the following address in
lieu thereof:
Shoney's Investments, Inc.
Suite 1400
000 Xxxxx Xxxxxx Xxxxxx
Xxx Xxxxx, Xxxxxx 00000
2. Except as herein specifically amended, all terms and
provisions of the Existing License Agreement shall remain in full
force and effect.
3. This Amendment may be executed simultaneously in two (2) or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4. The terms of this Amendment shall be interpreted and
construed in accordance with the laws of the State of Nevada.
5. The parties hereto agree that the termination of the royalty
payment obligation created by this Amendment pertains only to future royalties
accruing after the date of this Amendment and that Licensee and ShoLodge shall
be liable for the payment of all royalties accrued through and including
October 25, 1996 in accordance with the terms of the Existing License
Agreement. Licensee shall pay such royalties to Licensor in such amounts, at
such times and otherwise in accordance with the terms of the Existing License
Agreement.
[SIGNATURES APPEAR ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the undersigned have executed this Amendment all
as of the day and date first above written.
LICENSOR:
SHONEY'S INVESTMENTS, INC.
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Title: Assistant Secretary
LICENSEE:
SHOLODGE FRANCHISE SYSTEMS, INC.
By: /s/ Xxxx Xxxxx
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Title: President
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SHOLODGE, INC.
By: /s/ Xxxx Xxxxx
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Title: President
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