Exhibit 99.14
TIME SHARING AGREEMENT
This agreement, made and entered into this 15th day of October, 1997 (the
"Effective Date") by and between Manor Care, Inc., a Delaware corporation with
principal offices at 11555 Darnestown Road, Gaithersburg, MD 20878, (together
with its successors and permitted assigns, "LESSOR"), and Choice Hotels
International, Inc., a Delaware corporation (to be renamed Sunburst Hospitality
Corporation) with principal offices at 10770 Columbia Pike, Silver Spring,
Maryland 20901 (together with its successors and permitted assigns, "LESSEE").
W I T N E S S E T H
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WHEREAS, LESSOR leases two civil AIRCRAFT bearing the United States Registration
Number N697MC, a Cessna Citation III (serial #C650-097), and United States
Registration N6885P, a Cessna Conquest I (serial #C452-0143) (hereinafter
collectively referred to as "AIRCRAFT"); and
WHEREAS, LESSOR employs a fully qualified flight crew to operate the AIRCRAFT;
and
WHEREAS, LESSOR and LESSEE desire to lease said AIRCRAFT and flight crew on a
TIME SHARING basis as defined in Section 91.501(c)(1) of the Federal Aviation
Regulations (FAR); and
WHEREAS, LESSOR is a member of the National Business Aircraft Association and is
authorized to operate the AIRCRAFT under the provisions of Exemption 1637, as
amended.
NOW THEREFORE, LESSOR AND LESSEE, declaring their intention to enter into and be
bound by this TIME SHARING AGREEMENT, and for the good and valuable
consideration set forth below, hereby covenant and agree as follows:
1. LESSOR agrees to lease the AIRCRAFT to LESSEE from time to time as
LESSEE shall require, pursuant to the provisions of FAR 91.501 9 (c)(1) and to
provide a fully qualified flight crew for all operations, subject to the LESSOR
maintaining its ownership of AIRCRAFT. The term of this Agreement shall
commence on the Effective Date and shall remain in effect through the end of the
first full fiscal year of LESSEE immediately following the Effective Date.
Unless terminated pursuant to the terms hereof, the Agreement shall
automatically renew each fiscal year thereafter for the extended term of said
fiscal year but shall not extend past the last day of the thirtieth (30th) month
following November 1, 1996; provided, however, that either party may terminate
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this Agreement or any services provided hereunder at any time for any reason or
no reason by sending written notice to the other party upon sixty (60) days'
prior written notice.
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2. For each flight conducted under this Agreement LESSEE shall pay LESSOR
the actual expenses for each such flight as authorized by FAR Part 91.501 (d).
These expenses are the following:
(a) Fuel, oil, lubricants, and other additives.
(b) Travel expenses of the crew, including food, lodging and ground
transportation.
(c) Hangar and tie down costs away from the AIRCRAFT's base of operation.
(d) Insurance obtained for the specific flight.
(e) Landing fees, airport taxes, and similar assessments.
(f) Customs, foreign permit, and similar fees directly related to the
flight.
(g) In-flight food and beverages.
(h) Passenger ground transportation.
(i) Flight planning and weather contract services.
(j) An additional charge equal to 100% of the expenses listed in
subparagraph (a) of this paragraph.
3. In addition to the flight expenses described above in paragraph 2,
LESSEE shall be fully responsible for the payment of all IRC 4261 excise taxes.
4. LESSOR will pay all expenses related to the operation of the AIRCRAFT
when incurred, and will provide an invoice and bill LESSEE for the expenses
enumerated in paragraph 2 and the excise taxes referred to in paragraph 3 above
on the last day of the month in which any flight or flights for the account of
LESSEE occur LESSEE shall pay LESSOR for said expenses within 30 days of
receipt of the invoice and bill thereof.
5. LESSEE will provide LESSOR with requests for flight time and proposed
flight schedule as far in advance of any given flight as possible. Requests for
flight time shall be in a form, whether oral or written, mutually convenient to,
and agreed upon by the parties. In addition to proposed schedules and flight
times LESSEE shall provide at least the following information for each proposed
flight at some time prior to scheduled departure as required by the LESSOR's
flight crew:
a) proposed departure point;
b) destination;
c) date and time of flight;
d) the name of anticipated passengers;
e) the nature and extent of luggage and/or cargo to be carried;
f) the date and time of return flight, if any; and
g) any other information concerning the proposed flight that may be
pertinent or required by LESSOR or LESSOR's flight crew.
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6. LESSOR shall have final authority over the scheduling of the AIRCRAFT,
provided however, that LESSOR will use its best efforts to accommodate LESSEE's
needs to avoid conflicts in scheduling.
7. LESSOR shall be solely responsible for securing maintenance,
preventative maintenance and required or otherwise necessary inspections on the
AIRCRAFT, and shall take such requirements into account in scheduling the
AIRCRAFT. No period of maintenance, preventive maintenance or inspection shall
be delayed or postponed for the purpose of scheduling the AIRCRAFT, unless said
maintenance or inspection can be safely conducted at a later time in compliance
with all applicable laws and regulations, and within the sound discretion of the
Pilot in Command. The Chief Pilot and Pilot in Command shall have final and
complete authority to cancel any flight for any reason or condition which in his
judgment would comprise the safety of the flight.
8. LESSOR shall employ, pay for and provide for LESSEE a qualified flight
crew for each flight undertaken under this Agreement.
9. In accordance with applicable Federal Aviation Regulations, the
qualified flight crew provided by LESSOR will exercise all of its duties and
responsibilities in regard to the safety of each flight conducted hereunder.
LESSEE specifically agrees that the flight crew, in its sole discretion, may
terminate any flight, refuse to commence any flight, or take other action which
in the considered judgment of the Pilot in Command is necessitated by
considerations of safety. No such action of the Pilot in Command shall create
or support any liability for loss, injury, damage or delay to LESSEE or any
other person. The parties further agree that LESSOR shall not be liable for
delay or failure to furnish the AIRCRAFT and crew pursuant to this Agreement
when such failure is caused by government regulation or authority, mechanical
difficulty, war, civil commotion, strikes or labor disputes, weather conditions,
or acts of God.
10. LESSOR shall cause LESSEE to be named as an additional insured on
LESSOR's aircraft liability policy for damage to third parties.
11. LESSEE warrants that:
(a) It will use the AIRCRAFT for and on account of his own business
only, and will not use the AIRCRAFT for the purposes of providing
transportation of passengers or cargo in air commerce for compensation
or hire. The AIRCRAFT shall carry for LESSEE only such passengers and
cargo as may be legally carried under FAR Part 91. The number of
passengers carried for LESSEE shall not exceed the number of seats
legally available on the AIRCRAFT, and the AIRCRAFT shall not be
loaded beyond its certified capacity.
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(b) It shall refrain from incurring any mechanics or other liens in
connection with inspection, preventative maintenance, maintenance or
storage of the AIRCRAFT, whether permissible or impermissible under
this Agreement, nor shall there be any attempt by any party hereto to
convey, mortgage, assign, lease or any way alienate the AIRCRAFT or
create any kind of lien or security interest involving the AIRCRAFT or
do anything to take any action that might mature into such lien.
(c) During the term of this Agreement, it will abide by and conform
to all such laws, governmental and airport orders, rules and
regulations, as shall from time to time be in effect relating in any
way to the operation and use of the AIRCRAFT by a TIME SHARING Lessee.
LESSEE will not allow carriage of any contraband or illegal controlled
substance.
(d) Smoking shall be prohibited in the Aircraft; the Pilot in command
shall have authority to enforce this requirement.
12. For the purposes of this Agreement, the permanent base of operation of
the AIRCRAFT shall be Baltimore Washington International Airport. Lessor shall
have the right to change the permanent base of operation at its sole discretion.
13. Neither this Agreement nor any party's interest herein shall be
assignable to any other party whatsoever. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, their heirs, representatives
and successors.
14. CONTROL OF AIRCRAFT. It is expressly agreed and understood by the
parties that, for all flights for Lessee under this Agreement, Lessor shall have
possession, command, and control of the Aircraft, and shall maintain and
exercise operational control over the Aircraft, all pilots, all servicing and
loading of the Aircraft, and all Maintenance performed on the Aircraft.
For the purpose of this Agreement, operational control shall include,
without limitation, exclusive control over:
(a) all pilots;
(b) determinations whether any particular flight may be safely operated;
(c) initiation and termination of flights
(d) directions to pilots to conduct flights;
(e) dispatch or release of flights;
(f) servicing the Aircraft; and
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(g) airworthiness and performance of maintenance.
15. The laws of the State of Maryland, without reference to its conflicts
of laws, principles, shall govern the interpretation, validity, performance and
enforcement of this Agreement.
16. The terms and provisions of this Agreement are intended to reflect
commercially reasonable terms and conditions (including, but not limited to,
pricing) that are at least as favorable and as competitive to LESSEE as the
terms and conditions LESSOR would grant or require of third parties for
substantially similar goods and services.
17. This Agreement constitutes the entire Agreement between the parties to
this Agreement, and supersedes all oral and written agreements entered before or
at the same time as this Agreement concerning the subject matter of the
Agreement, including the November 1, 1996 Agreement between LESSOR and LESSEE.
IN WITNESS WHEREOF, the parties hereto have caused the signature of their
authorized representatives to be affixed below on the day and year first above
written. The persons signing below warrant their authority to sign.
TRUTH IN LEASING STATEMENTS UNDER SECTION 91.23 (FORMERLY 91.54) OF THE FEDERAL
AVIATION REGULATIONS.
(a) MANOR CARE, INC. (LESSOR), HEREBY CERTIFIES THAT THE AIRCRAFT HAS BEEN
INSPECTED AND MAINTAINED WITHIN THE 12 MONTH PERIOD PRECEDING THE DATE OF
THIS AGREEMENT IN ACCORDANCE WITH THE PROVISIONS OF FAR PART 91 AND ALL
APPLICABLE REQUIREMENTS FOR THE MAINTENANCE AND INSPECTION THEREUNDER HAVE
BEEN MET.
(b) THOMAS OWEN MARTIN, CHIEF PILOT, WHOSE ADDRESS IS 11555 DARNESTOWN
ROAD, GAITHERSBURG, MARYLAND, 20878, AS AGENT FOR MANOR CARE, INC.,
(LESSOR), AGREES, CERTIFIES AND KNOWINGLY ACKNOWLEDGES THAT WHEN THE
AIRCRAFT IS OPERATED UNDER THIS AGREEMENT, LESSOR SHALL BE KNOWN AS,
CONSIDERED, AND SHALL IN FACT BE THE OPERATOR OF THE AIRCRAFT AND IS
CONSIDERED RESPONSIBLE FOR THE OPERATIONAL CONTROL OF THE AIRCRAFT AND
FURTHER CERTIFIES THAT LESSOR WILL OPERATE THE AIRCRAFT IN COMPLIANCE WITH
ALL APPLICABLE FEDERAL AVIATION REGULATIONS.
Signature of Thomas Martin: /s/ Thomas Martin
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(c) THE PARTIES UNDERSTAND THAT AN EXPLANATION OF FACTORS AND
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PERTINENT FEDERAL AVIATION REGULATIONS BEARING ON OPERATIONAL CONTROL CAN
BE OBTAINED FROM THE GLEN BURNIE/BWI FAA FLIGHT STANDARDS DISTRICT OFFICE
OR FROM ANY OTHER FAA FLIGHT STANDARD DISTRICT OFFICE, GADO OR ACDO. LESSEE
AND LESSOR ACKNOWLEDGE THAT A TRUE COPY OF THIS EXECUTED AGREEMENT MUST BE
SENT TO: FLIGHT STANDARDS TECHNICAL DIVISION, P.O. BOX 25724, OKLAHOMA
CITY, OKLAHOMA 73125, WITHIN 24 HOURS OF ITS EXECUTION, AS PROVIDED BY FAR
91.23(c)(1).
WITNESS: LESSOR:
MANOR CARE, INC.
/s/ Leo H. Phillips, Jr. BY: /s/ James H. Rempe
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TITLE: Senior Vice President
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WITNESS: LESSEE:
CHOICE HOTELS INTERNATIONAL,
INC. (SUNBURST HOSPITALITY CORPORATION)
/s/ Pamela Williams
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BY: /s/ Edward A. Kubis
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TITLE: Senior Vice President
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A copy of this Agreement must be carried in the AIRCRAFT while being operated
hereunder.
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