[OBJECT OMITTED]
BALTIMORE-BWI AIRPORT, MARYLAND
PROMUS HOTELS, INC
000 XXXXXXXXX XXXX
XXXXXXX, XXXXXXXXX 00000
99-hom/co
HOMEWOOD SUITES
LICENSE AGREEMENT
DATED DECEMBER 8, 1999 BETWEEN PROMUS HOTELS, INC., A DELAWARE CORPORATION
("LICENSOR"), AND APPLE SUITES MANAGEMENT, INC., A VIRGINIA CORPORATION
("LICENSEE"), WHOSE ADDRESS IS 000 XXXX XXXX XXXXXX, XXXXXXXX, XXXXXXXX 00000.
THE PARTIES AGREE AS FOLLOWS:
1. THE LICENSE.
Licensor owns, operates and licenses a system designed to provide a
distinctive, high quality hotel service to the public under the name
"Homewood Suites" (the "SYSTEM"). High standards established by
Licensor are the essence of the System. Future investments may be
required of Licensee under this License Agreement ("AGREEMENT").
Licensee has independently investigated the risks of the business to be
operated hereunder, including current and potential market conditions,
competitive factors and risks, has read Licensor's "Franchise Offering
Circular," and has made an independent evaluation of all such facts.
Aware of the relevant facts, Licensee desires to enter into this
Agreement in order to obtain a license to use the System in the
operation of a Homewood Suites hotel located at 0000 XXXXXXXXX XXXX,
XXXXXXXXX, XXXXXXXX 00000 (the "HOTEL") subject to the terms of this
Agreement.
A. THE HOTEL. The Hotel comprises all structures, facilities,
appurtenances, furniture, fixtures, equipment, and entry, exit,
parking and other areas from time to time located on the site
approved for the Hotel and acknowledged by Licensor in
anticipation of the execution of this Agreement, or located on any
land from time to time approved by Licensor for additions, signs
or other facilities. No change in the number of approved guest
suites ("GUEST SUITES") reflected on Attachment B (the "RIDER")
and no other significant change in the Hotel may be made without
Licensor's prior approval. Redecoration and minor structural
changes that comply with Licensor's standards and specifications
will not be considered significant. Licensee represents that it is
entitled to possession of the Hotel during the entire License Term
without restrictions that would interfere with anything
contemplated in this Agreement.
B. THE SYSTEM. The System is composed of elements, as designated from
time to time by Licensor, designed to identify "Homewood Suites
hotels" to the consuming public and/or to contribute to such
identification and its association with quality standards. The
System at present includes the service xxxx "Homewood Suites" and
such other service marks and such copyrights, trademarks and
similar property rights as may be designated from time to time by
Licensor to be part of the System; access to a reservation
service; distribution of advertising, publicity and other
marketing programs and materials; the furnishing of training
programs and materials, standards, specifications and policies for
construction, furnishing, operation, appearance and service of the
Hotel, and other requirements as stated or referred to in this
Agreement and from time to time in the Manual (as defined herein)
or in
other communications to Licensee; and programs for inspecting the
Hotel and consulting with Licensee. Licensor may add elements to
the System or modify, alter or delete elements of the System
(including the trade name and/or brand name of the Hotel) at its
sole discretion from time to time. Licensee is only authorized to
use "Homewood Suites" service marks and trademarks at or in
connection with the Hotel.
C. THE MANUAL. Licensee acknowledges the receipt of a current
Homewood Suites Standards Manual ("MANUAL"). The Manual contains,
among other matters, minimum standards and requirements for
constructing, equipping, furnishing, supplying, operating,
maintaining and marketing the Hotel. Licensor shall have the right
to change the Manual from time to time and Licensee agrees to
abide by the Manual as changed. The Manual shall at all times
remain the sole property of Licensor. Licensee shall use all
reasonable efforts to maintain the confidentiality of the Manual.
Licensee shall not make or distribute copies of the Manual or any
portion thereof.
D. APPLICATION OF MANUAL. All hotels operated within the System will
be subject to the Manual, as it may from time to time be modified
or revised by Licensor. Licensor may, in its sole discretion,
grant limited exceptions from compliance with the Manual which may
be made based on local conditions or special circumstances. Each
material change in the Manual will be explained in writing to
Licensee at least 30 days before it goes into effect. Licensee is
responsible for the costs of implementing all changes required
because of modification to the Manual.
Licensor may require that particular models or brands of
furniture, fixtures, equipment, food, and other items
(collectively, the "SUPPLIES") be used in the operation of the
Hotel or be purchased from Licensor or from a source designated by
Licensor. Otherwise, Licensee may purchase all Supplies from any
source as long as the standards and specifications in the Manual
are met, which standards and specifications may be changed by
Licensor from time to time. Licensee will be responsible for the
costs, if any, associated with the purchase of Supplies or
changing brands, models or sources of supply.
2. GRANT OF LICENSE.
Licensor hereby grants to Licensee a nonexclusive license (the
"LICENSE") to use the System only at the Hotel, only in connection with
the operation of a Homewood Suites hotel, only in accordance with this
Agreement and only during the "License Term" beginning with the date
hereof and terminating as provided in Paragraph 13. The License applies
to the location of the Hotel specified herein and no other. This
Agreement does not limit Licensor's right, or the rights of any parent,
subsidiary, division or affiliate of Licensor ("ENTITIES"), to use or
license to others the System or any part thereof or to engage in or
license any business activity at any other location. Licensee
acknowledges that Licensor and its Entities are and may in the future
be engaged in other business activities including activities involving
transient lodging and related activities which may be or may be deemed
to be competitive with the System; that facilities, programs, services
and/or personnel used in connection with the System may also be used in
connection with such other business activities of Licensor and its
Entities; and that Licensee is acquiring no rights hereunder other than
the non-exclusive right to use the System in connection with a Homewood
Suites hotel as specifically defined herein in accordance with the
terms of this Agreement.
3. LICENSOR'S RESPONSIBILITIES.
A. TRAINING. During the License Term, Licensor will specify required
and optional training programs and provide these programs at
various locations. Licensee may be charged for (i) required
training services and materials and (ii) for optional training
services and materials if provided to Licensee. Travel, lodging
and other expenses of Licensee and its employees will be borne by
Licensee.
B. RESERVATION SERVICES. During the License Term, so long as Licensee
is in full compliance with the obligations set forth in this
Agreement, Licensor will afford Licensee access to reservation
services for the Hotel.
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C. CONSULTATION. Licensor will, from time to time at Licensor's sole
discretion, make available to Licensee consultation and advice in
connection with operations, facilities and marketing. Licensor
shall have the right to establish fees in advance for its advice
and consultation on a project-by-project basis.
D. ARRANGEMENTS FOR MARKETING, ETC. Licensor will use the
Marketing/Reservation Contribution for costs associated with
advertising, promotion, publicity, market research and other
marketing programs and related activities, including reservation
programs and services. Licensor may enter into arrangements for
development, marketing, operations, administrative, technical and
support functions, facilities, programs, services and/or personnel
with any other entity and may use any facilities, programs,
services and/or personnel used in connection with the System in
connection with any business activities of its Entities. Licensor
is not obligated to expend funds for marketing or reservation
services in excess of the amounts received from Licensees using
the System. Licensor and its designees shall have no obligation in
administering any marketing and reservation activities to make
expenditures for Licensee which are equivalent or proportionate to
Licensee's payments, or to ensure that any particular hotel
benefits directly or proportionately from such expenditures.
E. INSPECTIONS/COMPLIANCE ASSISTANCE. Licensor has the right to
inspect the Hotel at any time, with or without notice to Licensee,
to determine if the Hotel is in compliance with the standards and
rules of operation set forth in the Manual. If the Hotel fails to
comply with such standards and rules of operation, Licensor may,
at its option and at Licensee's cost, require an action plan to
correct the deficiencies. Licensee must then take all steps
necessary to correct any deficiencies within the times established
by Licensor. Licensor's approval of an action plan does not waive
any rights it may have under this Agreement nor does it relieve
Licensee of any obligations under this Agreement.
4. PROPRIETARY RIGHTS.
A. OWNERSHIP OF THE SYSTEM. Licensee acknowledges and will not
contest, either directly or indirectly, Licensor's (or its
affiliates , as the case may be) unrestricted and exclusive
ownership of the System and any element(s) or component(s)
thereof, and acknowledges that Licensor has the sole right to
grant licenses to use all or any element(s) or component(s) of the
System. Licensee specifically agrees and acknowledges that
Licensor (or its affiliates) is the owner of all right, title and
interest in and to the service xxxx "Homewood Suites", its
distinguishing characteristics, trade names, service marks,
trademarks, logos, copyrights, slogans, etc., and all other marks
associated with the System ("MARKS") together with the goodwill
symbolized thereby and that Licensee will not contest directly or
indirectly the validity or ownership of the Marks either during
the term of this Agreement or at any time thereafter. All
improvements and additions whenever made to or associated with the
System by the parties to this Agreement or anyone else, and all
service marks, trademarks, copyrights, and service xxxx and
trademark registrations at any time used, applied for or granted
in connection with the System, and all goodwill arising from
Licensee's use of the Marks shall inure to the benefit of and
become the property of Licensor (or its applicable affiliate).
Upon expiration or termination of this Agreement, no monetary
amount shall be assigned as attributable to any goodwill
associated with Licensee's use of the System or any element(s) or
component(s) of the System including the name or Marks.
B. USE OF NAME. Licensee will not use the word "Homewood" or
"Homewood Suites" or any similar word(s) in its corporate,
partnership, business or trade name, or in any Internet related
name (including a domain name) except as provided in this
Agreement or the Manual, nor authorize or permit such word(s) to
be used by anyone else.
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5. TRADEMARK AND SERVICE XXXX.
A. TRADEMARK DISPUTES. Licensor will have the sole right and
responsibility to handle disputes with third parties concerning
use of all or any part of the System, and Licensee will, at its
reasonable expense, extend its full cooperation to Licensor in all
such matters. All recoveries made as a result of disputes with
third parties regarding use of the System or any part thereof
shall be for the account of Licensor. Licensor need not initiate
suit against alleged imitators or infringers and may settle any
dispute by grant of a license or otherwise. Licensee will not
initiate any suit or proceeding against alleged imitators or
infringers or any other suit or proceeding to enforce or protect
the System.
B. PROTECTION OF NAMES AND MARKS. Both parties will make every effort
consistent with the foregoing to protect and maintain the Marks
and name "Homewood Suites" and its distinguishing characteristics
as standing for the System and only the System. Licensee agrees to
execute any documents deemed necessary by Licensor or its counsel
to obtain protection for Licensor's Marks or to maintain their
continued validity and enforceability. Licensee agrees to use such
names and Marks only in connection with the operation of a
Homewood Suites hotel and in the manner authorized by Licensor.
Licensee acknowledges that any unauthorized use of the names or
Marks shall constitute infringement of Licensor's rights. Licensee
must notify Licensor immediately, in writing, of any infringement
or challenge to Licensee's use of the Marks or of any unauthorized
use or possible misuse of Licensor's Marks or Licensor's
proprietary information.
6. LICENSEE'S RESPONSIBILITIES.
A. OPERATIONAL AND OTHER REQUIREMENTS. During the License Term,
Licensee will:
(1) promptly pay to Licensor all amounts due Licensor and its
Entities as royalties or fees or for goods or services
purchased by Licensee;
(2) maintain the Hotel in a clean, safe and orderly manner and
in first class condition;
(3) provide efficient, courteous and high-quality service to the
public;
(4) operate the Hotel 24 hours a day every day, except as
otherwise permitted by Licensor based on special
circumstances;
(5) strictly comply in all respects with the Manual and with all
other policies, procedures and requirements of Licensor
which may be from time to time communicated to Licensee;
(6) strictly comply with Licensor's reasonable requirements to
protect the System and the Hotel from unreliable sources of
supply;
(7) strictly comply with Licensor's requirements as to:
(a) the types of services and products that either must or
may be used, promoted or offered at the Hotel;
(b) use, display, style and type of signage;
(c) directory and reservation service listings of the
Hotel;
(d) training of persons to be involved in the operation of
the Hotel;
(e) participation in all marketing, reservation service,
advertising, training and operating programs designated
by Licensor as System-wide (or area-wide) programs
based on Licensor s assessment of the long-term best
interests of hotels using the System, considering the
interest of the System overall;
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(f) maintenance, appearance and condition of the Hotel;
(g) quality and types of services offered to customers at
the Hotel, and
(h) its 100% Satisfaction Guarantee rule of operation, and
any similar rules of operation designed to maintain or
improve relationships with past, present and potential
guests and other hotel customers, as such rule or rules
are in effect or as they may be established or revised
hereafter;
(8) use such automated guest service and/or hotel management
and/or telephone system(s) which Licensor deems to be in
the best interests of the System based on Licensor's
assessment of the long-term best interests of hotels using
the System, considering the interests of the System
overall, including any additions, enhancements, supplements
or variants thereof which may be developed during the term
hereof;
(9) participate in and use those reservation services which
Licensor deems to be in the best interests of the System
based on Licensor's assessment of the long-term best
interests of hotels using the System, considering the
interests of the System overall, including any additions,
enhancements, supplements or variants thereof which may be
developed during the term hereof;
(10) adopt improvements or changes to the System as may be from
time to time designated by Licensor;
(11) strictly comply with all governmental requirements,
including the filing and maintenance of any required trade
name or fictitious name registrations, paying all taxes,
and maintaining all governmental licenses and permits
necessary to operate the Hotel in accordance with the
System;
(12) permit inspection of the Hotel by Licensor's
representatives at any time and give them free lodging for
such time as may be reasonably necessary to complete their
inspections;
(13) upon request by Licensor, provide to Licensor statistics on
Hotel operations in the form specified by Licensor and
using definitions specified by Licensor;
(14) promote the Hotel on a local or regional basis subject to
Licensor's requirements as to form, content and prior
approvals;
(15) ensure that no part of the Hotel or System is used to
further or promote another lodging facility or any business
that competes with any business Licensor or an affiliate
engages in at any time during the Agreement (including, but
not limited to, the timeshare resort or vacation ownership
business), except for those approved by Licensor, its
parent, subsidiaries or affiliates;
(16) use every reasonable means to encourage use of Homewood
Suites facilities everywhere by the public; provided,
however, this will not prohibit Licensor from requiring
Licensee s participation in programs designed to refer
prospective customers to other hotels (in the System or
otherwise);
(17) in all respects use Licensee's best efforts to reflect
credit upon and create favorable public response to the
name "Homewood Suites";
(18) comply with Licensor's requirements concerning
confidentiality of information;
(19) not at any time during the term of this Agreement, through
itself or any member of an affiliated group (as defined by
the Internal Revenue Code) own, in whole or in part, or be
the licensor of, a hotel brand, tradename, system or chain
without the
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written consent of Licensor in its sole discretion.
Hereafter, any entity that, through itself or any
affiliate, owns in whole or in part, or is the licensor of
a hotel brand, tradename, system or chain shall be referred
to as a COMPETITOR; and
(20) maintain possession and control of the Hotel and Hotel
site.
B. UPGRADING OF THE HOTEL. Licensor may at any time during the
License Term require substantial modernization, rehabilitation and
other upgrading of the Hotel to meet the then current standards
specified in the Manual as long as those standards apply to a
majority of the hotels operated by Licensor and its licensees in
the same brand or category as the Hotel. Nothing in this paragraph
shall be construed to relieve Licensee from the obligation to
maintain acceptable product quality ratings at the Hotel and
maintain the Hotel in accordance with the Manual at all times
during the Agreement. Limited exceptions from those standards may
be made by Licensor based on local conditions or special
circumstances. If the upgrading requirements contained in this
Paragraph 6b cause Licensee undue hardship, Licensee may terminate
this Agreement by paying a fee computed according to Paragraph
13f.
C. STAFF AND MANAGEMENT. Licensee is at all times responsible for the
management of the Hotel's business. Licensee may fulfill this
responsibility by retaining a third party management company
("Manager"); provided, however, Licensee shall not enter into any
lease, management agreement or other similar arrangement for the
operation of the Hotel or any part thereof with any entity without
the prior written consent of Licensor in Licensor s sole
discretion (there being no obligation on the part of Licensor to
approve a third party management company). Licensee understands
that Licensor will not normally approve a Competitor to manage the
Hotel, or any entity that (through itself or an affiliate) is the
exclusive manager for a Competitor. If a Manager becomes a
Competitor at any time during the term of the Agreement, Licensee
shall have 90 days to retain a substitute manager suitable to
Licensor. As a prerequisite for Licensor s approval of a Manager,
the proposed management agreement must provide (1) that the
Manager has authority for the day-to-day management of the Hotel;
(2) that the Manager has the authority to perform the obligations
of the Licensee under this Agreement; and (3) that in the case of
any conflict between this Agreement and the management agreement,
this Agreement prevails.
7. FEES.
A. Commencing on the opening date of the Hotel as a Homewood Suites
hotel and continuing for the full term of this Agreement, for each
month (or part of a month), Licensee will pay to Licensor by the
15th of the following month:
(1) a royalty fee equal to 4 percent of the gross revenues
attributable to or payable for rental of Guest Suites at
the Hotel with deductions for sales and room taxes only
("GROSS SUITES REVENUE"); and
(2) a "MARKETING/RESERVATION CONTRIBUTION" equal to 4 percent
of Gross Suites Revenue. The Marketing/Reservation
Contribution is subject to change by Licensor from time to
time, which Marketing/Reservation Contributions do not
include the cost, installation or maintenance of
reservation services equipment or training; and
(3) all amounts due Licensor for any other miscellaneous fees
or invoices or for goods or services purchased by or
provided to Licensee or paid by Licensor on Licensee's
behalf; and
(4) an amount equal to any sales, gross receipts or similar tax
imposed on Licensor for the receipt of the payments
required in (1), (2) and (3) of this Paragraph above,
unless the tax is an optional alternative to an income tax
otherwise payable by Licensor.
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B. Licensee will operate the Hotel so as to maximize Gross Suites
Revenue consistent with sound marketing and industry practice and
will not engage in any conduct which is likely to reduce Gross
Suites Revenue in order to further other business activities.
C. Royalties may be charged on revenues (or upon any other basis, if
so determined by Licensor) from any activity conducted at the
Hotel if added by mutual agreement and if: (i) not now offered at
hotels within the System generally and is likely to benefit
significantly from or be identified significantly with the
Homewood Suites name or other aspects of the System or (ii)
designed or developed by or for Licensor.
D. Licensor may charge for optional products or services accepted by
Licensee from Licensor either in accordance with current practice
or as developed in the future.
E. A Guest Suite addition fee for guest suite additions to a hotel
set forth in Licensor's then current "FRANCHISE OFFERING CIRCULAR"
shall be paid by Licensee to Licensor on Licensee's submission of
an application to add any Guest Suites to the Hotel. As a
condition to Licensor granting its approval of such application,
Licensor may require Licensee to upgrade the Hotel, subject to
Paragraph 6b.
F. Local and regional marketing programs and related activities may
be conducted by Licensee, but only at Licensee's expense and
subject to Licensor's requirements. Reasonable charges may be made
by Licensor for optional advertising materials ordered or used by
Licensee for such programs and activities.
G. Licensee shall participate in Licensor's travel agent commission
program(s) as it may be modified from time to time and shall
reimburse Licensor on or before the 15th of each month for call
costs associated with such programs including, but not limited to,
travel agent commissions and third party reservation service
charges (such as airline reservation systems).
H. Each payment paid by Licensor under this Paragraph 7 shall be
accompanied by the monthly statement referred to in Paragraph 8.
Licensor may apply any amounts received under this Paragraph 7 to
any amounts due under this Agreement. If any amounts are not paid
when due, such non-payment shall constitute a breach of this
Agreement and, in addition, such unpaid amounts will accrue a
service charge beginning on the first day of the month following
the due date of 1 1/2 percent per month but not to exceed the
maximum amount permitted by applicable law.
8. RECORDS AND AUDITS.
A. DAILY AND MONTHLY REPORTS. At the request of Licensor, Licensee
shall prepare and deliver daily reports to Licensor, which reports
will contain information reasonably requested by Licensor on a
daily basis, such as daily rate and room occupancy, and which may
be used by Licensor for its reasonable purposes. At least monthly,
Licensee shall prepare a statement which will include all
information concerning Gross Suites Revenue, other revenues
generated at the Hotel, suite occupancy rates, reservation data
and other information required by Licensor (the "DATA"). The Data
will be permanently recorded and retained as may be reasonably
required by Licensor. By the 15th of each month, Licensee will
submit to Licensor a statement setting forth the Data for the
previous month and reflecting the computation of the amounts then
due under Paragraph 7. The statement will be in such form and
detail as Licensor may reasonably request from time to time, and
may be used by Licensor for its reasonable purposes.
B. MAINTENANCE OF RECORDS. Licensee shall, in a manner and form
satisfactory to Licensor and utilizing accounting and reporting
standards as reasonably required by Licensor, prepare on a current
basis (and preserve for no less than four years), complete and
accurate records concerning Gross Suites Revenue and all
financial, operating, marketing and other aspects of the Hotel,
and maintain an accounting system which fully and accurately
reflects all financial aspects of the Hotel and its business. Such
records shall
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include books of account, tax returns, governmental reports,
register tapes, daily reports, and complete quarterly and annual
financial statements (profit and loss statements, balance sheets
and cash flow statements).
C. AUDIT. Licensor may require Licensee to have the Gross Suites
Revenue or other monies due hereunder computed and certified as
accurate by a certified public accountant. During the License Term
and for two years thereafter, Licensor and its authorized agents
shall have the right to verify information required under this
Agreement by requesting, receiving, inspecting and auditing, at
all reasonable times, any and all records referred to above
wherever they may be located (or elsewhere if reasonably requested
by Licensor). If any such inspection or audit discloses a
deficiency in any payments due hereunder, Licensee shall
immediately pay to Licensor (i) the deficiency, (ii) a service
charge thereon as provided in Paragraph 7h, and (iii) all
inspection and audit costs (including travel, lodging, meals,
salaries and other expenses of the inspecting or auditing
personnel). Licensor's acceptance of Licensee's payment of any
deficiency as provided for herein shall not waive Licensor's right
to terminate this Agreement as provided for herein in Paragraph
13. If the audit discloses an overpayment, Licensor shall refund
the overpayment to Licensee within 30 days.
D. ANNUAL FINANCIAL STATEMENTS. Licensee will submit to Licensor
complete year-end financial statements for the Hotel, Licensee
and/or any guarantors as soon as available but not later than 90
days after the end of Licensee's fiscal year. Licensee will
certify them to be true and correct and to have been prepared in
accordance with generally accepted accounting principles
consistently applied, and any false certification will be a breach
of this Agreement.
E. All of the information provided to Licensor pursuant to this
paragraph or any other part of this Agreement, or pursuant to any
agreement ancillary to this Agreement (including agreements
relating to the System 21 business system or other property
management system provided by Licensor) (the "Information"), shall
be the property of Licensor. HOWEVER, NOTWITHSTANDING ANYTHING TO
THE CONTRARY IN THIS AGREEMENT, INFORMATION, SUCH AS FINANCIAL
STATEMENTS, PREPARED FOR THE HOTEL, LICENSEE AND/OR GUARANTORS,
WHICH ANY SUCH PARTIES ARE REQUIRED BY LAW OR BY THEIR NORMAL
BUSINESS PRACTICES TO USE FOR OTHER PURPOSES (SUCH AS IN FILINGS
WITH THE SECURITIES AND EXCHANGE COMMISSION OR OTHER GOVERNMENTAL
AUTHORITIES OR FOR TRANSMISSION TO SHAREHOLDERS) MAY BE USED BY
THEM FOR SUCH PURPOSES, AND SUCH PARTIES SHALL RETAIN OWNERSHIP IN
SUCH INFORMATION TO THE EXTENT NECESSARY TO PERMIT SUCH USE.
NEVERTHELESS, LICENSOR SHALL OWN THE COPIES OF ANY SUCH
INFORMATION PROVIDED BY ANY SUCH PARTIES IN ACCORDANCE WITH THE
TERMS OF THIS AGREEMENT. Licensor will use reasonable efforts to
sort, categorize, classify and otherwise analyze the information
to help licensees market their hotels. The Information will remain
the proprietary information of Licensor which Licensor will share
with licensees only as determined by Licensor in its sole
discretion. Licensor and its affiliates may use the Information
for any reason whatsoever, including an earnings claim in
Licensor's offering circular.
9. INDEMNITY.
SUBJECT TO THE PROVISIONS OF ANY MANAGEMENT AGREEMENT BETWEEN LICENSOR
(AS MANAGER THEREUNDER) AND LICENSEE (AS OWNER THEREUNDER), Licensee
will indemnify, during and after the term of this Agreement, Licensor
and its affiliates, and their respective officers, directors,
employees, agents, predecessors, successors and assigns ("INDEMNIFIED
PARTIES") against, hold them harmless from, and promptly reimburse them
for, all payments of money (fines, damages, legal fees, expenses, etc.)
by reason of any claim, demand, tax, penalty, or judicial or
administrative investigation or proceeding (even where negligence of
Licensor and/or its Entities and/or their Indemnified Parties is actual
or alleged) arising from any claimed occurrence at the Hotel or arising
from, as a result of, or in connection with the development or
operation of the Hotel (including, but not limited to, the design,
construction, financing, furnishing, equipment, acquisition of supplies
or operation of the Hotel in any way), or any other of Licensee's acts,
omissions or obligations or those of anyone associated or affiliated
with Licensee or the Hotel in any way arising out of or related to
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this Agreement. At the election of Licensor, Licensee will also
defend Licensor and/or its Entities and/or their Indemnified
Parties against the same. In any event, Licensor will have the
right, through counsel of its choice, to control any matter to the
extent it could directly or indirectly affect Licensor and/or its
Entities and/or their Indemnified Parties financially. Licensee
will also reimburse Licensor for all expenses, including
attorneys' fees and court costs, reasonably incurred by Licensor
to protect itself and/or its Entities and/or their Indemnified
Parties from, or to remedy Licensee's defaults or to collect any
amounts due under this Agreement.
10. INSURANCE.
A. Licensee will comply with Licensor's specifications for insurance
as to amount and type of coverage as may be reasonably specified
by Licensor from time to time in writing and will in any event
maintain as a minimum the following insurance underwritten by an
insurer approved by Licensor:
(1) employer's liability and workers' compensation insurance as
prescribed by applicable law; and
(2) liquor liability insurance, if applicable, naming Licensor
and its then current Entities and their predecessors,
successors and assigns as additional insureds with
single-limit coverage for personal and bodily injury and
property damage of at least $10,000,000 for each
occurrence; and
(3) commercial general liability insurance (with products,
completed operations and independent contractors coverage)
and comprehensive automobile liability insurance, all on an
occurrence and per location basis naming Licensor, its
Entities and their predecessors, successors and assigns as
additional insureds and underwritten by an insurer approved
by Licensor, with single-limit coverage for personal and
bodily injury and property damage of at least $10,000,000
for each occurrence; and
(4) in connection with all construction at the Hotel during the
License Term, Licensee will cause the general contractor to
maintain with an insurer approved by Licensor commercial
general liability insurance (with products, completed
operations, and independent contractors coverage including
workers' compensation and automobile liability insurance
for such independent contractors) in at least the amount of
$10,000,000 for each occurrence for personal and bodily
injury and property damage with Licensor, its Entities and
their predecessors, successors and assigns as additional
insureds.
B. EVIDENCE OF INSURANCE/CHANGES. This coverage shall be evidenced by
original certificates of insurance submitted to Licensor
simultaneously herewith, annually hereafter and each time a change
is made in any insurance or insurance carrier, Licensee will
furnish to Licensor certificates of insurance including the term
and coverage of the insurance in force, the persons insured, and a
statement that the coverage may not be cancelled, altered or
permitted to lapse or expire without 30 days advance written
notice to Licensor. Licensor will send Licensee notice of any
policy or coverage which Licensor, in its sole discretion, finds
unacceptable and upon receipt of such notice, Licensee will
promptly undertake to change such policy or coverage.
C. If Licensee fails or neglects to obtain or maintain the insurance
or policy limits required by this Agreement, Licensor shall have
the option, without notice, to obtain and maintain such insurance
for Licensee, and Licensee shall pay immediately upon demand
therefore, the premiums and the cost incurred by Licensor in
taking such action.
11. TRANSFER.
A. TRANSFER OF THIS AGREEMENT BY LICENSOR. Licensor shall have the
right to transfer or assign this Agreement or any of Licensor's
rights, obligations, or assets under this
9
Agreement to any person or legal entity provided that the
transferee assumes all of Licensor's obligations to Licensee under
this Agreement.
B. TRANSFERS BY LICENSEE.
(1) General Statement of Explanation and Intent.
This Agreement is not transferable by Licensee, and a
change in ownership of the Hotel or the licensed business
(i.e., either this Agreement, the Licensee or any indirect
ownership interest in the Licensee) is not allowed under
this Agreement. Certain intra-family transfers of interest
and (in the case of corporate licensees) corporate
restructurings are permitted as long as the requirements
described below are met. However, Licensor has entered into
this Agreement with a particular Licensee or its owners. If
the Licensee wants to transfer the Hotel or its interest in
the licensed business, such a transfer will constitute a
"change of ownership". If the transferee wants to continue
to operate the Hotel as a Homewood Suites hotel, the
transferee will have to apply for a new license which, if
approved, will last at most for the balance of the term of
this Agreement. If the change of ownership is not approved,
or if the transferee does not want to continue to operate
the Hotel as a Homewood Suites hotel, Licensor may refuse
to consent to the termination of this Agreement. If
Licensor does consent to termination, this Agreement will
terminate and Licensee will owe liquidated damages. In
addition, if the transfer is to a Competitor, Licensor has
the right to buy the Hotel. The foregoing explanation is
more fully described and qualified by the following
specific provisions.
(2) Licensee understands and acknowledges that the rights and
duties set forth in this Agreement are personal to
Licensee, and that Licensor has entered into this Agreement
in reliance on the business skill, financial capacity, and
personal character of Licensee (if Licensee is an
individual), and that of the partners, members, or
stockholders of Licensee (if Licensee is a partnership,
company, corporation, or other legal entity). Accordingly,
no direct or indirect interest in the Hotel or in this
Agreement, and no direct or indirect Equity Interest (as
defined herein) in Licensee may be sold, leased, assigned,
or transferred, (such instances hereafter referred to
collectively as a "TRANSFER"), without the consent of the
Licensor. Nothing herein shall require Licensor's approval
for any pledge, mortgage, or hypothecation of all or any
part of the assets of the licensed business (other than
this Agreement or any Equity Interest in Licensee) to banks
or other lending institutions.
(3) Any purported Transfer, by operation of law or otherwise,
not in accordance with the provisions of this Agreement
shall be null and void and shall constitute a breach of
this Agreement, for which Licensor may terminate this
Agreement upon notice without opportunity to cure pursuant
to Paragraph 13d, and as a result of which Licensee will
owe liquidated damages.
(4) References in this Agreement to "EQUITY INTERESTS" shall
mean any direct or indirect beneficial interest in Licensee
(an "INDIRECT" interest is an interest in an entity other
than the Licensee that either itself, or through others,
has an interest in the Licensee). In addition,
"PUBLICLY-TRADED EQUITY INTEREST" shall mean any Equity
Interest which is traded on any securities exchange or is
quoted in any publication or electronic reporting service
maintained by the National Association of Securities
Dealers, Inc. or any of its successors. In computing
changes of Equity Interests, limited partners will not be
distinguished from general partners. Licensor's judgment
will be final if there is any question as to the definition
of Equity Interest or as to the computation of relative
Equity Interests, the principal considerations being:
direct and indirect (i) power to exercise control over the
affairs of Licensee; (ii) right to share in Licensee's
profits; and (iii) exposure to risk in the Licensee's
business.
10
(5) Licensee represents that the Equity Interests are
directly and (if applicable) indirectly owned as
shown on the Rider.
C. PROCEDURES FOR TRANSFERS. Licensee must provide written notice to
Licensor in advance of any proposed Transfer stating the identity
of the prospective transferee, purchaser, or lessee and the terms
and conditions of the conveyance. As a condition to consenting to
the transfer, Licensor may require any one or more of the
following to be met:
(1) Licensee will upon request provide a copy of any proposed
agreement of transfer and all other information with
respect thereto which Licensor may reasonably require;
(2) Licensee will upon request provide documents showing
ownership structure of the Licensee, site control by the
Licensee, possession or management control by the Licensee,
financial statements of any participants, and any other
documents reasonably requested by Licensor;
(3) Licensee will upon request pay a processing fee to Licensor
of up to $5,000 to cover Licensor's costs to review and
consent to the Transfer; provided however, in the case of a
transfer of Equity Interests which require registration
under any federal or state securities law, Licensee will
pay a processing fee that will not exceed $25,000;
(4) Licensee and all participants in any proposed public
offering (including the sale of partnership or membership
interests) (i) agree to fully indemnify Licensor in
connection with the registration, (ii) furnish Licensor
with all information requested, and (iii) avoid using
Licensor's service marks or trademarks or otherwise
implying Licensor's participation in or endorsing of any
public offering;
(5) Licensee will at all times adequately provide for the
management of the Hotel during any Transfer; or
(6) Licensor may require the transferee to promptly execute a
new license agreement on Licensor's then current license
agreement for the unexpired term of this Agreement, and
Licensor may require the guarantee of the new license
agreement by the same guarantors of this Agreement (or
substitute guarantors approved by Licensor in its sole
discretion).
D. PERMITTED TRANSFERS. Licensor will not unreasonably withhold
consent to any of the following Transfers provided Licensee
complies with all the requirements specified by Licensor pursuant
to Subparagraph c above (it being understood that if Licensee is
in default of any of its obligations under the Agreement, it will
not be unreasonable for Licensor to refuse to consent to any of
these Transfers):
(1) Equity Interests which are not publicly-traded may be
transferred, if after the transaction, Xxxxx X. Xxxxxx
owns, directly or indirectly, a beneficial interest in the
general partner of Licensee and controls the management and
policies of such general partner and not less than 50% of
all Equity Interests are owned, directly or indirectly, by
Xxxxx X. Xxxxxx and, in the case of any such permitted
transfer, the requirements of clauses (3) and (6) of
subparagraph c. above need not be complied with by
Licensee.
(2) Publicly-traded equity interests may be transferred
(without Licensor's consent and without notification) if
such transfer is exempt from registration under federal
securities law and if immediately before and after the
transfer, the transferor and transferee respectively each
own less than 25 percent of the Equity Interests in
Licensee.
11
(3) Licensee, if a natural person, may transfer its interest in
the License or Equity Interest in the Licensee to one or
more of Licensee's spouse, parents, siblings, nephews,
descendants or spouses' descendants or to a corporation
entirely owned by Licensee ("PERMITTED TRANSFEREES").
(4) If Licensee is a natural person, upon the Licensee's death,
the License or Licensee's Equity Interest in the Licensee
will pass in accordance with Licensee's will, or, if
Licensee dies intestate, in accordance with laws of
intestacy governing the distribution of the Licensee's
estate, as the case may be, provided the transferee is one
or more of the decedent's Permitted Transferees (excluding
corporations formerly owned by the Licensee) and within one
year after the death the Permitted Transferees meet all
Licensor's normal requirements of an approved applicant.
(5) Licensee may sell or lease the Hotel, the Hotel site, or
any portion thereof if, in the reasonable judgment of
Licensor, after such transfer, Licensee will retain
possession and control of the Hotel site and management
control of the Hotel operations (which may be via third
party management contract pursuant to Paragraph 6c). If, in
the reasonable judgment of Licensor, the transfer of the
Hotel will result in the loss of possession or control of
the Hotel or Hotel site or management of the Hotel, the
transfer will constitute a change of ownership as described
in Subparagraph e.
E. CHANGE OF OWNERSHIP.
(1) Any Transfer that does not qualify as a permitted transfer
under Subparagraph d above shall constitute a change of
ownership. If in the case of a change of ownership, the
transferee desires to continue to operate the Hotel as a
Homewood Suites hotel, the transferee must submit an
application for a new license agreement. The new license,
if approved, will be at most for the unexpired term of this
Agreement. The transferee shall be responsible for all
normal fees and costs (including application fees and costs
of improvements to the Hotel).
(2) Licensor shall process such change of ownership application
in good faith and in accordance with Licensor's then
current procedures, criteria and requirements regarding
upgrading of the Hotel, credit, operational abilities and
capabilities, prior business dealings, market feasibility,
guarantees, and other factors deemed relevant by Licensor.
If such change of ownership application is approved,
Licensor and the new owner shall, upon surrender of this
Agreement, enter into a new license agreement. The new
license agreement shall be on Licensor's then current form
and contain Licensor's then current terms (except for
duration), and if applicable, the new license agreement
will contain specified upgrading and other requirements. If
the application is approved, Licensee submits a voluntary
termination of this Agreement and signs a release (in a
form satisfactory to Licensor) of all claims against
Licensor, and the proposed new owner executes a new license
within 30 days of the sale of the Hotel, no liquidated
damages described in Paragraph 13 will be owed by Licensee
for the termination of this Agreement.
(3) If a change of ownership application for the proposed
transferee is not approved by Licensor or the transferee
does not want to continue to operate the Hotel as a
Homewood Suites hotel, Licensor may refuse consent to the
transfer and reserve all remedies; if Licensee does consent
and the Transfer occurs, then this Agreement shall
terminate pursuant to Paragraph 13d hereof and Licensor
shall be entitled to all of its remedies including
liquidated damages.
F. TRANSFER TO COMPETITOR. Notwithstanding any of the foregoing, if
the Licensee receives a bona fide offer from a Competitor to
purchase or lease the Hotel or to purchase Licensee or any entity
that controls Licensee, or to purchase an interest in either, and
Licensee or any
12
person or entity that owns or controls Licensee wishes to accept
such offer, Licensee shall give written notice thereof to
Licensor, stating the name and full identity of the prospective
purchaser or tenant, as the case may be, including the names and
addresses of the owners of the capital stock, partnership
interests or other proprietary interests of such prospective
purchaser or tenant, the price or rental and all terms and
conditions of such proposed transaction, together with all other
information with respect thereto which is requested by Licensor
and reasonably available to Licensee. Within 60 days after receipt
by Licensor of such written notice from Licensee, Licensor shall
elect by written notice to Licensee one of the following four
alternatives:
(1) If the proposed transaction is a sale or lease of the
Hotel, Licensor (or its designee) shall have the right to
purchase or lease the Hotel premises and related property
at the same price or rental and upon the same terms and
conditions as those set forth in such bona fide offer from
a Competitor. In such event Licensee and Licensor (or its
designee) shall promptly enter into an agreement for sale
or lease at the price or rental and on terms consistent
with such bona fide offer.
(2) If the proposed transaction is a purchase of all or a
portion of the stock or assets (which includes the Hotel)
of Licensee or the person that owns or controls Licensee,
Licensor (or its designee) shall have the right to purchase
the Hotel premises and related property. If the parties are
unable to agree as to a purchase price and terms within
thirty days of Licensor s election, the fair market value
of the Hotel premises and related property shall be
determined by arbitration as follows: Either party may by
written notice to the other appoint an arbitrator.
Thereupon, within 15 days after the giving of such notice,
the other shall by written notice to the former appoint
another arbitrator, and in default of such second
appointment the arbitrator first appointed shall be the
sole arbitrator. When any two arbitrators have been
appointed as aforesaid, they shall, if possible, agree upon
a third arbitrator and shall appoint him by notice in
writing, signed by both of them in triplicate, one of which
triplicate notices shall be given to each party hereto; but
if 15 days shall lapse without the appointment of the third
arbitrator as aforesaid, then such third arbitrator shall
be appointed by the American Arbitration Association from
its qualified panel of arbitrators, and shall be a person
having at least ten (10) years' recent professional
experience as to the subject matter in question. Upon
appointment of the third arbitrator (whichever way
appointed as aforesaid), the three arbitrators shall meet
and render their decision. The decision of a majority of
the arbitrators so chosen shall be conclusive. Licensor (or
its designee) shall have the right, at any time within 30
days of being notified in writing of the decision of the
arbitrators as aforesaid, to purchase the Hotel premises
and related property at the valuation fixed by the
arbitrators. The parties shall share equally the expense of
such arbitration.
(3) To terminate this Agreement, in which event Licensee shall
be obligated to pay to Licensor liquidated damages pursuant
to a Special Termination as set forth in Paragraph 13f.
(4) To refuse to consent to the Transfer, reserving all
remedies under the applicable law.
G. FINANCING. The construction and/or operation of the Hotel may not
be financed by a public offering of any right, title or interest
in the Hotel, the property upon which it is built or the receipts
from its operation without the prior review and approval of the
applicable documentation by Licensor. Licensee shall submit a
non-refundable $25,000 fee with said documentation.
12. CONDEMNATION AND CASUALTY.
A. CONDEMNATION. Licensee shall, at the earliest possible time, give
Licensor notice of any proposed taking by eminent domain. If
Licensor agrees that the Hotel or a substantial part
13
thereof is to be taken, Licensor may, in its sole discretion and
within a reasonable time of the taking (within four months)
transfer this Agreement to a nearby location selected by Licensee.
If Licensor approves the new location and authorizes the transfer
and if within one year of the closing of the Hotel Licensee opens
a new hotel at the new location in accordance with Licensor's
specifications, then the new hotel will be deemed to be the Hotel
licensed under this Agreement. If a condemnation takes place and a
new hotel does not, for whatever reason, become the Hotel under
this Agreement in strict accordance with this paragraph (or if it
is reasonably evident to Licensor that such will be the case),
this Agreement will terminate immediately upon notice thereof by
Licensor to Licensee, without the payment of liquidated damages as
calculated in Paragraph 13f.
B. CASUALTY. If the Hotel is damaged by fire or other casualty,
Licensee will expeditiously repair the damage. If the damage or
repair requires closing the Hotel, Licensee will immediately
notify Licensor, will repair or rebuild the Hotel according to
Licensor's standards, will commence reconstruction within four
months after closing, and will reopen the Hotel for continuous
business operations as soon as practicable (but in any event
within one year after the closing of the Hotel), giving Licensor
ample advance notice of the date of reopening. If the Hotel is not
reopened according to this Paragraph, this Agreement will
terminate immediately, upon notice thereof by Licensor to
Licensee, with the payment of liquidated damages as calculated in
Paragraph 13f, provided however, if Licensee's insurer fails to
pay the applicable insurance policy proceeds to Licensee, or if
Licensee's lender, pursuant to a valid agreement with Licensee,
refuses to allow the insurance proceeds to be used for repair or
rebuilding, the Agreement may be terminated by Licensee without
payment of the liquidated damages in Paragraph 13f. In such case
Licensee shall notify Licensor and provide any reasonable proof
requested by Licensor.
C. NO EXTENSIONS OF TERM. Nothing in this Paragraph 12 will extend
the License Term but Licensee shall not be required to make any
payments pursuant to Paragraph 7 for periods during which the
Hotel is closed by reason of condemnation or casualty.
13. TERMINATION.
A. EXPIRATION OF TERM. Unless terminated earlier, this Agreement will
expire without notice 20 YEARS FROM THE EFFECTIVE DATE OF THIS
AGREEMENT, AS DEFINED ON ATTACHMENT B HEREIN.
B. PERMITTED TERMINATION PRIOR TO EXPIRATION OF TERM. Licensee may
terminate this Agreement on the tenth or fifteenth anniversary
date of the opening of the Hotel by giving at least 12 but not
more than 15 months advance notice to Licensor accompanied by the
payment as provided in Paragraph 13f herein.
C. TERMINATION OR SUSPENSION BY LICENSOR ON ADVANCE NOTICE. This
Agreement may be terminated if Licensee fails to satisfy any
obligations under this Agreement or any attachment hereto. Except
in the case of an immediate termination as provided in
subparagraph 13d below, this Agreement shall terminate if Licensee
fails to cure an Event of Default after the Licensor furnishes
adequate notice of termination based on the Event of Default.
(1) An "EVENT OF DEFAULT" shall occur if the Licensee fails to
satisfy or comply with any of the requirements, conditions,
or terms set forth in (i) this Agreement or any attachment
including, but not limited to, any provisions regarding:
any transfer of the Hotel, or any direct or indirect
interest in the Agreement or Licensee, any representation
or warranty, any fee obligation, any operational
requirements (including the standards in the Manual);
trademarks usage; maintenance of records, insurance and
indemnity; or (ii) any other agreement between Licensor (or
an affiliate) and Licensee relating to the Hotel,
including, but not limited to, any property management
system agreement, such as the System 21 business system
agreement, or any agreement to manage the Hotel.
14
(2) Notice of termination shall be adequate, if mailed thirty
(30) days (or such longer period required by applicable
law) in advance of the termination date.
(3) Licensor's notice of termination shall not relieve Licensee
of its obligations under this Agreement or any attachment.
(4) As a result of Licensee's efforts to comply with the terms
and conditions contained on Attachment A and elsewhere in
this Agreement, Licensee will incur substantial expense and
expend substantial time and effort. Licensee acknowledges
and agrees that Licensor shall have no liability or
obligation to Licensee for any losses, obligations,
liabilities or expenses incurred by Licensee if (i)
Licensee commits an Event of Default as described in
Paragraph 13c(1); (ii) the Hotel is not authorized by
Licensor to Open as defined in Attachment A or (iii) this
Agreement is terminated because Licensee has not complied
with the terms and conditions of this Agreement.
(5) Notwithstanding the foregoing, following an Event of
Default, Licensor may at any time, in its sole discretion,
suspend its obligations under this Agreement (including
reservation services).
D. IMMEDIATE TERMINATION BY LICENSOR. Notwithstanding the foregoing
paragraph, this Agreement may be immediately terminated (or
terminated at the earliest time permitted by applicable law) if
one or more of the following material breaches to this Agreement
or any Attachment occur:
(1) Any Event of Default where a prior Event of Default had
also occurred during the preceding 12 months, but the
License was not terminated because Licensee cured the prior
Event of Default;
(2) Licensee or any guarantor of Licensee's obligations
hereunder shall:
(a) generally not pay its debts as they become due or shall
admit in writing its inability to pay its debts, or
shall make a general assignment for the benefit of
creditors; or
(b) commence any case, proceeding or other action seeking
reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization
or relief of debtors, or seeking appointment of a
receiver, trustee, custodian or other similar official
for it or for all or any substantial part of its
property; or
(c) take any corporate or other action to authorize any of
the actions set forth above in Paragraphs (a) or (b).
(3) Any case, proceeding or other action against Licensee or
any such guarantor shall be commenced seeking to have an
order for relief entered against it as debtor, or seeking
reorganization, arrangement, adjustment, liquidation,
dissolution or composition of it or its debts under any law
relating to bankruptcy, insolvency, reorganization or
relief of debtors, or seeking appointment of a receiver,
trustee, custodian or other similar official for it or for
all or any substantial part of its property, and such case,
proceeding or other action (i) results in the entry of an
order for relief against it which is not fully stayed
within seven business days after the entry thereof or (ii)
remains undismissed for a period of 45 days; or
(4) an attachment remains on all or a substantial part of the
Hotel or of Licensee's or any such guarantors assets for 30
days; or
15
(5) Licensee or any such guarantor fails within 60 days of the
entry of a final judgment against Licensee in any amount
exceeding $50,000 to discharge, vacate or reverse the
judgment, or to stay execution of it, or if appealed, to
discharge the judgment within 30 days after a final adverse
decision in the appeal; or
(6) Licensee loses possession or the right to possession of all
or a significant part of the Hotel or Hotel site; or
(7) Licensee fails to continue to identify the Hotel to the
public as a Homewood Suites hotel; or
(8) Licensee contests in any court or proceeding Licensor's
ownership of the System or any part of the System, or the
validity of any service marks or trademarks associated with
Licensor's business; or
(9) Any action is taken toward dissolving or liquidating
Licensee or any such guarantor, if it is a corporation or
partnership, except for death of a partner; or
(10) Licensee or any of its principals is, or is discovered to
have been convicted of a felony (or any other offense if it
is likely to adversely reflect upon or affect the Hotel,
the System, the Licensor and/or its Entities in any way; or
(11) Licensee maintains false books and records of accounts or
submits false reports or information to Licensor.
(12) Licensee becomes a Competitor (as defined in Paragraph
6a(19).
E. DE-IDENTIFICATION OF HOTEL UPON TERMINATION. Upon termination or
expiration of the term, Licensee will take whatever action is
necessary to assure that no use is made of any part of the System
(including but not limited to the Marks) at or in connection with
the Hotel or otherwise. Licensee shall return to Licensor the
Manual and all other proprietary materials, remove all distinctive
System features of the Hotel, including the primary freestanding
sign down to the structural steel, and take all other actions
("DE-IDENTIFICATION ACTIONS") required to preclude any possibility
of confusion on the part of the public that the Hotel is still
using all or any part of the System or is otherwise holding itself
out to the public as a Homewood Suites hotel. If within 30 days
after termination of this Agreement Licensee fails to comply with
this paragraph, Licensor or its agents at Licensee's expense, may
enter the premises of the Hotel to perform the De-identification
Actions. The preceding sentence shall not in any way limit
Licensor's other rights or remedies under this Agreement.
F. LIQUIDATED DAMAGES. The parties recognize the difficulty of
ascertaining damages to Licensor resulting from premature
termination of this Agreement, and have provided for liquidated
damages, which represent the parties' best estimate as to the
damages arising from the circumstances in which they are provided
and which are only damages for the premature termination of this
Agreement, and not as a penalty or as damages for breaching this
Agreement or in lieu of any other payment. If this Agreement is
terminated other than by the expiration of the term described in
Paragraph 13a, Licensee will pay Licensor, within 10 days of
termination, liquidated damages in an amount determined as
follows:
(1) an amount equal to the amount payable under Paragraph 7
(regarding Fees) for the three years prior to termination;
or
(2) if the Hotel opened but has been Open for less than three
years, an amount equal to the greater of: (i) 36 times the
monthly average payable under Paragraph 7, or (ii) 36 times
the amount payable under Paragraph 7 for the last full
month prior to termination; or
(3) if the Hotel opened, but has not been in operation for one
full month, an amount equal to $3,000 per Guest Suite in
the Hotel; or
16
(4) if the Agreement is terminated before the commencement of
construction or of the Work (as described in the applicable
attachment), an amount equal to the initial application fee
that would be due for a license application according to
Licensor s then current franchise offering circular (in
addition to any initial application fee already paid); or
(5) if the Agreement is terminated after commencement of
construction or of the Work but before opening of the
Hotel, an amount equal to two times the initial application
fee; or
(6) if the Agreement is terminated pursuant to Paragraph 13b
(permitted termination after 10th or 15th year) only, an
amount equal to the amount payable under Paragraph 7 for
the two years prior to notice of termination.
Furthermore, Licensee recognizes the additional harm by way of
confusion with respect to national accounts, greater difficulty in
re-entering the market, and damage to goodwill of the Marks that
Licensor will suffer in the case of (i) a Licensee who terminates
two or more license agreements with Licensor at approximately the
same time (between either itself or its affiliates and Licensor)
or (ii) a license that terminates as a result of the Hotel or
Licensee being acquired by a Competitor, and the Licensor is
unable or elects not to buy the Hotel pursuant to Paragraph 11f
(each of these will be referred to as a "SPECIAL TERMINATION").
Licensee agrees that in the case of a Special Termination, the
amount of liquidated damages as calculated above will be doubled.
14. RENEWAL.
This Agreement is non-renewable.
15. RELATIONSHIP OF PARTIES.
A. NO AGENCY RELATIONSHIP. Licensee is an independent contractor.
Neither party is the legal representative or agent of, or has the
power to obligate (or has the right to direct or supervise the
daily affairs of) the other for any purpose whatsoever. Licensor
and Licensee expressly acknowledge that the relationship intended
by them is a business relationship based entirely on, and defined
by, the express provisions of this Agreement and that no
partnership, joint venture, agency, fiduciary or employment
relationship is intended or created by reason of this Agreement.
B. LICENSEE'S NOTICES TO PUBLIC CONCERNING INDEPENDENT STATUS.
Licensee will take all necessary steps including those reasonably
requested by Licensor to minimize the chance of a claim being made
against Licensor for anything that occurs at the Hotel, or for
acts, omissions or obligations of Licensee or anyone associated or
affiliated with Licensee or the Hotel. Such steps may, for
example, include giving notice in Guest Suites, public rooms and
advertisements, on business forms and stationery, etc., making
clear to the public that Licensor is not the owner or operator of
the Hotel and is not accountable for what happens at the Hotel.
Unless required by law, Licensee will not use the words
"Homewood", "Homewood Suites" or any other names or xxxx
associated with the System to incur any obligation or indebtedness
on behalf of Licensor. Licensee shall not enter into or execute
any contracts in the name "Homewood Suites hotel", and all
contracts for the Hotel's operations and services at the Hotel
shall be in the name of Licensee or Licensee's management company.
Likewise, the words "Homewood", "Homewood Suites", or any similar
words will not be used to name or identify developments adjacent
to or associated with the Hotel, nor will Licensee use such names
in its general business in any manner separated from the business
of the Hotel.
17
16. MISCELLANEOUS.
A. SEVERABILITY AND INTERPRETATION. The remedies provided in this
Agreement are not exclusive. If any provision of this Agreement is
held to be unenforceable, void or voidable as being contrary to
the law or public policy of the jurisdiction entitled to exercise
authority hereunder, all remaining provisions shall nevertheless
continue in full force and effect unless deletion of such
provision(s) impairs the consideration for this Agreement in a
manner which frustrates the purpose of the parties or makes
performance commercially impracticable. The provisions of this
Agreement shall be interpreted based on the reasonable intention
of the parties in the context of this transaction without
interpreting any provision in favor of or against any party
whether or not such party was the drafting party or by such
party's position relative to the other party. Any covenant, term
or provision of this Agreement which, in order to effect the
intent of the parties, must survive the termination of this
Agreement, shall survive any such termination.
B. CONTROLLING LAW. This Agreement shall become valid when signed by
the parties hereto. It shall be deemed made and entered into in
the State of Tennessee and shall be governed and construed under
and in accordance with the laws of the State of Tennessee. In
entering into this Agreement, Licensee acknowledges that it has
sought, voluntarily accepted and become associated with Licensor
who is headquartered in Memphis, Tennessee, and that this
Agreement contemplates and will result in business relationships
with Licensor's headquarter's personnel. The choice of law
designation permits, but does not require that all suits
concerning this Agreement be filed in the State of Tennessee.
C. EXCLUSIVE BENEFIT. This Agreement is exclusively for the benefit
of the parties hereto, and it may not give rise to liability to a
third party, except as otherwise specifically set forth herein. No
agreement between Licensor and anyone else is for the benefit of
Licensee.
D. ENTIRE AGREEMENT. Licensor and the Licensee each acknowledge and
warrant to each other that they wish to have all terms of this
business relationship defined in this written agreement. Neither
Licensor nor Licensee wishes to enter into a business relationship
with the other in which any terms or obligations are the subject
of alleged oral statements or in which oral statements serve as
the basis for creating rights or obligations different than or
supplementary to the rights and obligations set forth in this
Agreement. Accordingly, Licensor and Licensee agree that this
Agreement and any Attachments hereto and the documents referred to
herein, shall be construed together and shall supersede and cancel
any prior and/or contemporaneous discussions or writings (whether
described as representations, inducements, promises, agreements or
any other term) between Licensor or anyone acting on its behalf
and Licensee or anyone acting on his, her or its behalf, which
might be taken to constitute agreements, representations,
inducements, promises or understandings (or any equivalent to such
terms) with respect to this Agreement or the relationship between
the parties and Licensor and Licensee each agree that they have
placed, and will place, no reliance on any such discussions or
writings. This Agreement (including any Attachments and the
documents referred to herein), is the entire agreement between the
parties and contains all of the terms, conditions, rights and
obligations of the parties with respect to the Hotel or any other
aspect of the relationship between the parties. No future license
or offer of a license for additional locations or any other
business activity have been promised to Licensee and no such
license or offer shall come into existence, except by means of a
separate writing, executed by Licensor's officer or such other
entity granting the license and specifically identified as a
License Agreement. No change, modification, amendment or waiver of
any of the provisions of this Agreement will be effective and
binding upon Licensor unless it is in writing, specifically
identified as an amendment to this Agreement and signed by
Licensor's officer.
E. LICENSOR'S WITHHOLDING CONSENT. Licensor may withhold its consent,
wherever required under this Agreement, if any default or breach
by Licensee exists under this Agreement. Approvals and consents by
Licensor will not be effective unless evidenced by a writing duly
executed on behalf of Licensor.
F. NOTICES. Any notice must be in writing and will be effective on
either (1) the day it is sent via facsimile with a confirmation of
receipt; or (2) the third day after it is mailed by first class
18
mail; or (3) the day it is delivered by express delivery service;
or (4) the third day after it is sent by certified mail to the
appropriate party at its address first stated above or to such
person and at such address as may be designated by notice
hereunder.
G. GENERAL RELEASE. Licensee and its respective heirs,
administrators, executors, agents, representatives and their
respective successors and assigns, hereby release, remise, acquit
and forever discharge Licensor and its Entities and their
officers, directors, employees, agents, representatives and their
respective successors and assigns from any and all actions,
claims, causes of action, suits, rights, debts, liabilities,
accounts, agreements, covenants, contracts, promises, warrants,
judgments, executions, demands, damages, costs and expenses,
whether known or unknown at this time, of any kind or nature,
absolute or contingent, if any, at law or in equity, on account of
any matter, cause or thing whatsoever which has happened,
developed or occurred at any time from the beginning of time to
and including the date of Licensee's execution and delivery to
Licensor of this Agreement and that they will not institute any
suit or action at law or otherwise against Licensor directly or
indirectly relating to any claim released hereby by Licensee. This
release and covenant not to xxx shall survive the termination of
this Agreement. Licensee shall take whatever steps are necessary
or appropriate to carry out the terms of this release upon
Licensor's request.
H. DESCRIPTIVE HEADINGS. The descriptive headings in this Agreement
are for convenience only and shall not control or affect the
meaning or construction of any provision in this Agreement.
I. WARRANTIES. Licensee warrants, represents and agrees that all
statements made by Licensee in the Application submitted to
Licensor in anticipation of this Agreement and all other documents
and information submitted by Licensee are true, correct and
complete as of the date hereof and will continue to be updated so
that they are true, correct and complete. This warranty and
representation shall survive the termination of this Agreement.
J. TIME. Time is of the essence in this Agreement.
K. INCLUDING. Including shall mean including, without limitation.
L. COUNTERPARTS. This Agreement may be executed in counterparts, and
each copy so executed and delivered shall be deemed an original.
M. AMENDMENTS. If an amendment to this Agreement is required prior to
its execution, said amendment shall be made a part of this
Agreement as an Attachment. If an amendment to this Agreement is
necessary after its execution, said amendment shall be made a part
of this Agreement in the form of a separate document.
N. PERFORMANCE REQUIREMENTS/RESPONSIBILITIES. Attachment A is hereby
incorporated by reference and made a part of this Agreement to set
forth certain of Licensee's performance conditions and
requirements.
O. BUSINESS JUDGMENT. The parties hereto recognize, and any mediator
or judge is affirmatively advised, that certain provisions of this
Agreement describe the right of Licensor to take (or refrain from
taking) certain actions in the exercise of its assessment of the
long-term best interests of hotels using the System, considering
the interests of the System overall. Where such decisions have
been taken by Licensor and are supported by the business judgment
of Licensor, neither a mediator nor a judge nor any other person
reviewing such decisions shall substitute his, her or its judgment
for the judgment so exercised by Licensor.
19
17. EXPIRATION OF OFFER.
This Agreement constitutes an offer which must be accepted by the
Licensee named on the signature page hereof by dating, executing and
returning to Licensor two copies hereof (and all attachments hereto,
including, if required, the Guaranty) on or before the date specified
on the Rider.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.
LICENSEE: LICENSOR:
APPLE SUITES MANAGEMENT, INC. PROMUS HOTELS, INC.
BY: /S/ XXXXX X. XXXXXX BY:
----------------------- ------------------------------
NAME: XXXXX XXXXXX NAME: XXXXXX X. XXXXXX
----------------------- ------------------------------
TITLE: CHIEF EXECUTIVE OFFICER TITLE: SR. VICE PRESIDENT-DEVELOPMENT
----------------------- ------------------------------
WITNESS: /S/ XXX X. REMPPIES WITNESS:
----------------------- ------------------------------
DATE: DATE:
----------------------- ------------------------------
20
GUARANTY
Location: 0000 XXXXXXXXX XXXX, XXXXXXXXX, XXXXXXXX 00000
---------------------------------------------------------------------
As an inducement to Promus Hotels, Inc. ("LICENSOR") to execute the above
License Agreement, the undersigned, jointly and severally, hereby
unconditionally warrant to Licensor and its successors and assigns that all of
Licensee's representations in the License Agreement and the application
submitted by Licensee to obtain the License Agreement are true and guarantee
that all of Licensee's obligations under the above License Agreement, including
any amendments thereto whenever made (the "AGREEMENT"), will be punctually paid
and performed.
Upon default by Licensee or notice from Licensor, the undersigned will
immediately make each payment required of Licensee under the Agreement. Without
affecting the obligations of the undersigned under this Guaranty, Licensor may
without notice to the undersigned extend, modify or release any indebtedness or
obligation of Licensee, or settle, adjust or compromise any claims against
Licensee. The undersigned waive notice of amendment of the Agreement and notice
of demand for payment or performance by Licensee.
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 the other guarantors will continue
in full force and effect.
The Guaranty constitutes a guaranty of payment and not of collection, and each
of the guarantors specifically waives any obligation of Licensor to proceed
against Licensee on any money or property held by Licensee or by any other
person or entity as collateral security, by way of set off or otherwise. The
undersigned further agree that this Guaranty shall continue to be effective or
be reinstated as the case may be, if at any time payment or any of the
guaranteed obligations is rescinded or must otherwise be restored or returned by
Licensor upon the insolvency, bankruptcy or reorganization of Licensee or any of
the undersigned, all as though such payment has not been made.
This Guaranty shall be governed and construed under and in accordance with the
laws of the State of Tennessee.
IN WITNESS WHEREOF, each of the undersigned has signed this Guaranty as of the
date of the above Agreement.
Witnesses: Guarantors:
Apple Suites, Inc.
/s/ Xxx X. Remppies By: /s/ Xxxxx X. Xxxxxx
----------------------- ------------------------ (Seal)
Xxxxx Xxxxxx, President
21
ATTACHMENT A - PERFORMANCE CONDITIONS
CHANGE OF OWNERSHIP
I. CONSULTATION. Licensee or its representative(s) shall meet with
Licensor at a location selected by Licensor, within 30 days following
the date of Licensee's receipt of a request from Licensor for
consultation and coordination with the project manager assigned to
Licensee by Licensor.
II. WORK AND PURCHASE REQUIREMENT. Attachment C, the Product Improvement
Plan (the "PIP"), is incorporated by reference, attached to and made a
part of this Agreement. Licensee shall perform the renovation and/or
construction work and purchase the items described on the PIP (the
"WORK") on or before the completion date specified on the Rider.
Whether or not indicated on the PIP, the Work shall include Licensee's
purchasing and/or leasing and installing all fixtures, equipment,
furnishings, furniture, signs, computer terminals and related
equipment, supplies and other items which would be required of a new
Homewood Suites licensee under the Manual and such other equipment,
furnishings and supplies as may be required by Licensor in order to
operate the Hotel. Licensee shall be solely responsible for obtaining
all necessary licenses, permits and zoning variances required for the
Hotel.
III. APPROVAL OF ARCHITECT/ENGINEER AND CONTRACTOR. Licensor shall have the
right to approve the architect/engineer, general contractor and major
subcontractors for the Work. The Work shall not commence until such
approval has been granted, which approvals may be conditioned on
bonding of the contractors. Prior to commencement of the Work, if
requested by Licensor, Licensee shall submit to Licensor, resumes and
financial statements of the architect/engineer, general contractor and
any major sub-contractors for the Work and such additional information
concerning their experience and financial responsibility as Licensor
may request.
IV. APPROVAL OF PLANS. On or before the Plans submission date specified on
the Rider, Licensee shall submit to Licensor, Licensee's plans and
specifications and drawings for the Work, including the proposed
furnishings, fixtures, equipment and signs (collectively, "PLANS") for
approval. Licensor may supply Licensee with representative prototype
Guest Room and public area plans and schematic building plans as a
guide for preparation of plans and specifications for the Hotel. Once
Licensor has approved the Plans, no change shall be made to the Plans
without the advance consent of Licensor. In approving the Plans,
Licensor does not in any manner warrant the depth of its analysis or
assume any responsibility for the efficacy of the Plans or the
resulting construction. Licensee shall cause the Hotel renovation
and/or construction to be in accordance with this Agreement, the
approved Plans, the Manual and the PIP.
V. COMMENCEMENT; COMPLETION. Licensee shall commence the Work on or before
the date specified on the Rider and shall continue the Work
uninterrupted (except for interruption by reason of events constituting
force majeure) until it is completed. Notwithstanding the occurrence of
any events constituting force majeure, or any other cause, the Work
shall be completed and the Hotel shall be furnished, equipped, and
shall otherwise be in compliance with this Agreement not later than the
date specified on the Rider. Licensor shall have the sole right to
determine whether the Work has been completed in accordance with this
Agreement, the approved Plans, the Manual and the PIP.
VI. INSPECTION. During the course of the Work, Licensee shall, and Licensee
shall cause the architect, engineer, contractors, and subcontractors to
cooperate fully with Licensor for the purpose of permitting Licensor to
inspect the Hotel in order to determine whether the Work is being done
in accordance with this Agreement and shall provide Licensor with
samples of construction materials, etc. as Licensor may request.
VII. REPORTS. Licensee shall submit to Licensor each month after the date
hereof (or more frequently if Licensor shall so request) a report
showing progress made toward fulfilling the terms of this Agreement.
Attachment A-1
VIII. ACQUISITION OF EQUIPMENT, FURNISHINGS, AND SUPPLIES/STAFFING. Licensee
shall order, purchase and/or lease and install all fixtures, equipment,
furnishings, furniture, signs, computer terminals and related
equipment, supplies and other items required by Licensor, this
Agreement, the approved Plans, the Manual and the PIP.
In accordance with the Manual and such other instructions as are
furnished to Licensee by Licensor, Licensee shall cause to be hired a
staff to operate the Hotel, and all such personnel shall be trained as
required by the Manual. All costs and expenses incurred directly or
indirectly in hiring and training such staff shall be paid by Licensee,
except as expressly provided otherwise in the Manual.
IX. COST OF CONSTRUCTION AND EQUIPPING. Licensee shall bear the entire cost
of the Work, including the cost of the plans, professional fees,
licenses and permits, equipment, furniture, furnishings and supplies.
X. LIMITATION OF LIABILITY. Notwithstanding the right of Licensor to
approve the Plans, the architect, engineer and certain contractors, and
to inspect the Work and the Hotel, Licensor shall have no liability or
obligation with respect to the Work, or the design and construction of
the Hotel, as the rights of Licensor are being exercised solely for the
purpose of assuring compliance with the terms and conditions of this
Agreement. Licensor does not undertake to approve the Hotel as
complying with governmental requirements or as being safe for guests or
other third parties. Licensee should not rely upon Licensor's approval
for any purpose whatsoever except compliance with Licensor's then
prevailing standards and requirements of the Manual.
XI. CONDITIONAL AUTHORIZATION. Licensor may conditionally authorize
Licensee to continue to operate the Hotel as a Homewood Suites hotel
even though Licensee has not fully complied with the terms of this
Agreement. Under certain circumstances, Licensor may suspend services
to the Hotel (including reservation services) while the Work is being
performed by Licensee.
XII. PERFORMANCE OF AGREEMENT. Licensee agrees to satisfy all of the terms
and conditions of this Agreement, and to equip, supply and staff the
Hotel in accordance with this Agreement and to cooperate with Licensor
in connection therewith. As a result of Licensee's efforts to comply
with the terms and conditions of this Agreement, Licensee will incur
substantial expense and expend substantial time and effort. Licensee
acknowledges and agrees that Licensor shall have no liability or
obligation to Licensee for any losses, obligations, liabilities or
expenses incurred by Licensee if this Agreement is terminated because
Licensee has not complied with the terms and conditions of this
Agreement.
Attachment A-2
ATTACHMENT B
RIDER TO LICENSE AGREEMENT
1. Name and Address of Licensee: Apple Suites Management, Inc.
Attn: Xxxxx X. Xxxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
2. Location of Hotel: 0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
3. Number of Approved Guest Rooms: 147
4. Effective Date of License: Date Apple Suites, Inc. closes
the purchase of and obtains
possession and control of the
Hotel ("Closing")
It shall be a condition precedent
to the validity of this Agreement,
and this Agreement shall be of no
force and effect and Licensee
shall have no rights hereunder
unless and until on or before
December 6, 1999, Licensee shall
have submitted to Licensor,
written verification, in a form
satisfactory to Licensor, that
Closing has occurred. Within five
days of Closing, Licensee shall
submit to Licensor (i) a copy of
the deed, as recorded,
transferring the Hotel to Apple
Suites, Inc., (ii) a copy of the
lease agreement between Licensee
and Apple Suites, Inc., and (iii)
the franchise application fee in
the amount of $66,150
5. Term of License to Expire: 20 years from the date of Closing
6. Plans Submission Dates: as required under the Product
Improvement Plan (Attachment C)
7. Construction or Work Commencement Date: upon Closing
8. Construction or Work Completion Date: within 90 days of Closing but not
later than March 1, 2000
9. Offer Expiration Date [Paragraph 17]: December 6, 1999
10. Ownership of Licensee: Apple Suites Management, Inc. 100%
Stockholder:
Xxxxx Xxxxxx 100%
Attachment B-1
