EXHIBIT 10 (42)
HAMPTON INN HOTEL DIVISION
6800 POPLAR AVENUE, SUITE 200
MEMPHIS, TENNESSEE 38138
HAMPTON INN & SUITESsm
LICENSE AGREEMENT
Dated _________________________________________________, 19__ between Hampton
Inn Hotel Division of Embassy Suites, Inc., a Delaware corporation ("Licensor"),
and
resident
a _________________________________________ corporation ("Licensee"), whose
partnership
address is
---------------------------------------------------------------------
- -----------------------------------------------------------------.
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 "Hampton
Inn" and "Hampton Inn & Suites" (the "System"). High standards established by
Licensor are the essence of the System. Future investments may be required of
Licensee under this 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 "Offering
Circular for Prospective Franchisees," 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 Hampton Inn & Suites hotel located at
____________________________________________________________________
________________________________________________________________ (the "Hotel").
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 land identified on the plot plan
most recently submitted to 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. The Hotel now
includes the facilities listed on Attachment A hereto. No change in the
number of approved guest rooms and/or suites (guest rooms and suites
hereinafter collectively referred to as "Guest Rooms") and no other
significant change in the Hotel may be made without Licensor's 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 "Hampton Inn" hotels and
"Hampton Inn & 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 marks "Hampton Inn" and "Hampton Inn &
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 Licensor's Standards Manual (the "Manual") 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 at its sole discretion from time to
time. Licensee is only authorized to use the "Hampton Inn & Suites" service
----
marks and trademarks at or in connection with the Hotel.
2. Grant of License.
Licensor hereby grants to Licensee a nonexclusive license (the "License") to
use the System only at the Hotel, but only in connection with the operation of a
Hampton Inn & Suites hotel and only in accordance with this Agreement and only
during the "License Term" beginning with the date hereof and terminating as
provided in Paragraph 10. 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, 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, its parent, subsidiaries, divisions, and affiliates 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, its parent, subsidiaries, divisions
or affiliates; and that Licensee is acquiring no rights hereunder other than the
right to use the System in connection with a Hampton Inn & Suites hotel as
specifically defined herein in accordance with the terms of this Agreement.
3. Licensee's Responsibilities.
a. Operational and Other Requirements. During the License Term, Licensee
will:
(1) maintain a high moral and ethical standard and atmosphere at the
Hotel;
(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 may be used, promoted or
offered at the Hotel;
(b) the types and quality of services and products that, to supplement
services listed on Attachment A, must be used, promoted or offered at
the Hotel;
(c) use, display, style and type of signage;
(d) directory and reservation service listings of the Hotel;
(e) training of persons to be involved in the operation of the Hotel;
(f) participation in all marketing, reservation service, advertising,
training and operating programs designated by Licensor as System-wide
(or area-wide) programs in the best interests of hotels using
the System;
(g) maintenance, appearance and condition of the Hotel; and
(h) quality and type of service offered to customers at the Hotel.
(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, 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, 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, pay all taxes, and maintain 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) promote the Hotel on a local or regional basis subject to Licensor's
requirements as to form, content and prior approvals;
(14) insure that no part of the Hotel or the System is used to further or
promote a competing business or other lodging facility, except as Licensor
may approve for those competing businesses or lodging facilities owned,
licensed, operated or otherwise approved by Licensor or its parent,
divisions, subsidiaries and/or affiliates;
(15) use every reasonable means to encourage use of Hampton Inn and
Hampton Inn & Suites facilities everywhere by the public;
(16) in all respects use Licensee's best efforts to reflect credit upon
and create favorable public response to the names "Hampton Inn" and
"Hampton Inn & Suites";
(17) promptly pay to Licensor all amounts due Licensor, its parent,
divisions, subsidiaries and/or affiliates as royalties or fees or for goods
or services purchased by Licensee; and
(18) comply with Licensor's requirements concerning confidentiality of
information.
b. Upgrading of the Hotel. Licensor may at any time during the term hereof
require substantial modernization, rehabilitation and other upgrading of the
Hotel. 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 3.b. cause Licensee undue hardship, Licensee may
terminate this Agreement by paying a fee computed according to Paragraph
10.f.
c. Fees.
(1) For each month (or part of a month) during the License Term, Licensee
will pay to Licensor by the 15th of the following month:
(a) a royalty fee of 4 percent of the gross revenues attributable to or
payable for rental of Guest
Rooms at the Hotel with deductions for sales and room taxes only ("Gross
Rooms Revenue");
(b) a "Marketing/Reservation Contribution" of 4 percent of Gross Rooms
Revenue, this contribution being subject to change by Licensor from time
to time, which payments do not include the cost, installation or
maintenance of reservation services equipment or training; and
(c) an amount equal to any sales, gross receipts or similar tax imposed
on Licensor and calculated solely on payment required hereunder, unless
the tax is an optional alternative to an income tax otherwise payable by
Licensor.
Licensee will operate the Hotel so as to maximize Gross Rooms Revenue of
the Hotel consistent with sound marketing and industry practice and will
not engage in any conduct which reduces Gross Rooms Revenue of the Hotel in
order to further other business activities.
(2) Additional royalties may be charged on revenues (or upon any other
basis, if so determined by Licensor) from any activity if it is added at
the Hotel by mutual agreement and:
(a) it is not now offered at System hotels generally and it is likely
to benefit significantly from or be identified significantly with the
Hampton Inn and/or the Hampton Inn & Suites name or other aspects of the
System; or
(b) it is designed or developed by or for Licensor.
(3) Charges may be made by Licensor for optional products or services
accepted by Licensee from Licensor either in accordance with current
practice or as developed in the future.
(4) A standard initial fee for Guest Room additions to a hotel as set
forth in Licensor's then current "Offering Circular for Prospective
Franchisees" shall be paid by Licensee to Licensor on Licensee's submission
of an application to add any Guest Rooms 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 3.b.
(5) 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.
(6) 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 travel agent commissions
paid by Licensor.
(7) Each payment under this Paragraph 3.c. shall be accompanied by the
monthly statement referred to in Paragraph 6. Licensor may apply any
amounts received under this paragraph 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 interest beginning on the first day of the month following the
due date at 1 1/2 percent per month but not to exceed the maximum interest
permitted by applicable law.
4. Licensor's Responsibilities.
a. Training. During the License Term, Licensor will continue to specify and
provide required and optional training programs at various locations.
Reasonable charges may be made for required training services and materials.
Charges may also be made by Licensor for optional training services and
materials 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 its material obligations hereunder, Licensor will afford
Licensee access to reservation services for the Hotel.
c. Consultation on Operations, Facilities and Marketing. 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. Use of Marketing/Reservation Contribution. The Marketing/Reservation
Contribution will be used by Licensor for costs associated with advertising,
promotion, publicity, market research and other marketing programs and
related activities, including reservation programs and services. Licensor is
not obligated to expend funds for marketing or reservation services in excess
of the amounts received from licensees using the System.
e. Application of Manual. All hotels operated under the System will be
subject to the Manual, as it may from time to time be modified or revised by
Licensor, including limited exceptions from compliance which may be made
based on local conditions or special circumstances. Each change in the
Manual must be explained in writing to Licensee at least 30 days before it
goes into effect.
f. Other Arrangements for Marketing, Etc. 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 parent, subsidiaries, divisions or
affiliates.
g. Compliance Assistance. If the Hotel fails to comply with the standards
and rules of operation set forth in the Manual, Licensor may, at its option
and at Licensee's cost, meet with the Licensee at the Hotel to develop a plan
to ensure that the Hotel thereafter complies with the standards and rules of
operation set forth in the Manual.
5. Proprietary Rights.
a. Ownership of System. Licensee acknowledges and will not contest, either
directly or indirectly, Licensor's 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 is the owner of all right, title and interest in and to the
service marks "Hampton Inn, "Hampton Inn & Suites" and all other marks
associated with the System 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 mark 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 Licensor's marks
shall inure to the benefit of and become the property of Licensor. 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. 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.
c. Protection of Name and Marks. Both parties will make every effort
consistent with the foregoing to protect and maintain the names and marks
"Hampton Inn," "Hampton Inn & Suites," and their distinguishing
characteristics (and the other service marks, trademarks, slogans, etc.,
associated with 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 the names
and marks associated with the System only in connection with the operation of
a Hampton Inn & Suites hotel and in the manner authorized by Licensor and
Licensee acknowledges that any unauthorized use thereof shall constitute
infringement of Licensor's rights.
6. Records and Audits.
a. Monthly Reports. At least monthly, Licensee shall prepare a statement
which will include all information concerning Gross Rooms Revenue, other
revenues generated at the Hotel, room occupancy rates, reservation data and
other information required by Licensor that may be useful in connection with
marketing and other functions of Licensor, its parent, subsidiaries,
divisions or affiliates (the "Data"). The Data shall be the property of
Licensor. 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 3.c.
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. Daily 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.
c. Preparation and 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 Rooms 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 include but not be limited to 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).
d. Audit. Licensor may require Licensee to have the Gross Rooms 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 the
deficiency and Licensee shall also immediately pay to Licensor the entire
cost of the inspection and audit, including but not limited to, 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 10. If the audit discloses an
overpayment, Licensor shall immediately refund it to Licensee.
e. Annual Financial Statements. Licensee will submit to Licensor as soon as
available but not later than 90 days after the end of Licensee's fiscal year,
complete financial statements for such 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.
7. Indemnity and Insurance.
a. Indemnity. Licensee will indemnify, during and after the term of this
Agreement, Licensor, its parent, and their respective subsidiaries, divisions
and affiliates and their officers, directors, employees, agents, successors
and assigns 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
parent, and/or their subsidiaries, divisions and affiliates and/or their
officers, directors, employees, agents, successors and assigns is actual or
alleged) arising from any claimed occurrence at the Hotel or arising from, as
a result of or in connection with the design, construction, furnishings,
equipment and acquisition of supplies or any other of
Licensee's acts, omissions or obligations or those of anyone associated or
affiliated with Licensee or the Hotel. At the election of Licensor, Licensee
will also defend Licensor and/or its parent, and their subsidiaries,
divisions and affiliates and/or their officers, directors, employees, agents,
successors and assigns against 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 parent, and their
subsidiaries, divisions and affiliates and their officers, directors,
employees, agents, successors and assigns 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 parent,
and their subsidiaries, divisions and affiliates and/or their officers,
directors, employees, agents and their successors and assigns from, or to
remedy Licensee's defaults under this Agreement.
b. Insurance. During the License Term, Licensee will comply with all
insurance requirements of any lease or mortgage covering the Hotel, and
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, Embassy
Suites, Inc. and The Promus Companies Incorporated 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) comprehensive general liability insurance (with products, completed
operations and independent contractors coverage) and comprehensive
automobile liability insurance, all on an occurrence basis naming Licensor,
Embassy Suites, Inc. and The Promus Companies Incorporated 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. In connection with all
significant construction at the Hotel during the License Term, Licensee
will cause the general contractor to maintain with an insurer approved by
Licensor comprehensive general liability insurance (with products,
completed operations and independent contractors coverage) in at least the
amount of $10,000,000 for each occurrence with Licensor, Embassy Suites,
Inc. and The Promus Companies Incorporated named as additional insureds.
c. Changes in Insurance. 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 the fact that
the coverage may not be cancelled, altered or permitted to lapse or expire
without 30 days advance written notice to Licensor.
8. Transfer.
a. Transfer by Licensor. Licensor shall have the right to transfer or
assign this Agreement or any of Licensor's rights or obligations hereunder to
any person or legal entity.
b. Transfer by Licensee. 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 or stockholders of Licensee (if
Licensee is a partnership or corporation). Accordingly, neither Licensee nor
any immediate or remote successor to any part of Licensee's interest in this
Agreement, nor any individual, partnership, corporation, or other legal
entity which directly or indirectly owns an equity interest (as that term is
defined herein) in Licensee, shall sell, assign, transfer, convey, pledge,
mortgage, encumber, or give away any direct or indirect interest in this
Agreement or equity interest in Licensee, except as provided in this
Agreement. Any purported sale, assignment, transfer, conveyance, pledge,
mortgage, or encumbrance, by operation of law or otherwise, of any interest
in this Agreement or any equity interest in Licensee not in accordance with
the provisions of this Agreement, shall be null and void and shall constitute
a material breach of this Agreement, for which Licensor may terminate this
Agreement upon notice without opportunity to cure pursuant to Paragraph
10.d.(4).
(1) For the purposes of this Paragraph 8, the term "equity interest" shall
mean any stock or partnership interest in Licensee, the interest of any
partner, whether general or limited, in any partnership with respect to
such partnership, and any stockholder of any corporation with respect to
such corporation, which partnership or corporation is the Licensee
hereunder or which partnership or corporation owns a direct or indirect
beneficial interest in Licensee. References in this Agreement to
"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.
(2) If Licensee is a partnership or corporation, Licensee represents that
the equity interests in Licensee are directly and (if applicable)
indirectly owned as shown in Attachment A hereto.
c. Transfer of Equity Interests that are not Publicly Traded.
(1) Except where otherwise provided in this Agreement, equity interests in
the Licensee that are not publicly traded may be transferred, issued, or
eliminated with Licensor's prior written consent, which will not be
unreasonably withheld, provided that after the transaction:
(a) 50 percent or less of all equity interests in Licensee will have
changed hands since Licensee first became a party to this Agreement, or
(b) 80 percent or less of all equity interests in Licensee will have
changed hands since Licensee first became a party to this Agreement, and
no equity interest will be held by other than those who held them when
Licensee first became a party to this Agreement.
(2) In computing the percentages referred to in Paragraph 8.c.(1) above,
limited partners will not be distinguished from general partners, and
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:
(a) Direct and indirect power to exercise control over the affairs of
Licensee; and
(b) Direct and indirect right to share in Licensee's profits; and
(c) Amounts directly or indirectly exposed to risk in Licensee's
business.
d. Transfers of Publicly-Traded Equity interests.
(1) Except as otherwise provided in this Agreement, publicly-traded equity
interests in the Licensee may be transferred without the Licensor's
consent, but only if:
(a) Immediately before the proposed transfer the transferor owns less
than 25 percent of the equity interest of Licensee; and
(b) Immediately after the transfer the transferee will own less than 25
percent of the equity interest in Licensee; and
(c) The transfer is exempt from registration under federal securities
law.
(2) Publicly-traded equity interests may be transferred with Licensor's
written consent, which may not be unreasonably withheld, if the transfer is
exempt from registration under federal securities law.
(3) The chief financial officer of Licensee shall certify annually to
Licensor that Licensee is in compliance with the provisions of this
Paragraph 8.d. Such certification shall be delivered to Licensor with the
Annual Financial Statements referred to in Paragraph 6.e. hereof.
e. Transfer of the License.
(1) Licensee, if a natural person, may with Licensor's consent, which will
not be unreasonably withheld, transfer the License to Licensee's spouse,
parent, sibling, niece, nephew, descendant, or spouse's descendant provided
that:
(a) Adequate provision is made for management of the Hotel; and
(b) The transferee executes a new license agreement for the unexpired
term of this Agreement, on the standard form then being used to license
new hotels under the System, except that the fees charged then shall be
the same as those contained herein; and
(c) Licensee guarantees, in Licensor's usual form, the performance of
the transferee's obligations under the newly-executed license agreement.
(2) If Licensee is a natural person, he may, without the consent of
Licensor, upon 30 days prior written notice to Licensor, transfer the
License to a corporation entirely owned by him, provided that:
(a) Adequate provision is made for management of the Hotel; and
(b) The transferee executes a new license agreement for the unexpired
term of this Agreement on the standard form then being used to license
new hotels under the System, except that the fees charged then shall be
the same as those contained herein; and
(c) The Licensee guarantees in Licensor's usual form, the performance
of the transferee's obligations under the newly-executed license
agreement.
f. Transfers of the License or Equity Interest in the Licensee Upon Death.
(1) If Licensee is a natural person, upon the Licensee's death, the
License 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, provided that:
(a) Adequate provision is made for management of the Hotel; and
(b) Licensor gives written consent, which consent will not be
unreasonably withheld; and
(c) The transferee is one or more of the decedent's spouse, parents,
siblings, nieces, nephews, descendants, or spouse's descendants; and
(d) Licensee's heirs or legatees, promptly advise Licensor and promptly
execute a new license agreement for the unexpired term of this
Agreement, on the standard form then being used to license new hotels
under the System, except the fees charged thereunder shall be the same
contained herein.
(2) If an equity interest is owned by a natural person, the equity
interest will pass upon such person's death in accordance with such
person's will or, if such person dies intestate, in accordance with the
laws of intestacy governing the distribution of such person's estate,
provided that:
(a) Adequate provision is made for management of the Hotel; and
(b) Licensor gives written consent, which consent will not be
unreasonably withheld; and
(c) The transferee is one or more of the decedent's spouse, parents,
siblings, nieces, nephews, descendants, or spouse's descendants; and
(d) The transferee assumes, in writing, on a continuing basis, the
decedent's guarantee, if any, of the Licensee's obligations hereunder.
g. Registration of a Proposed Transfer of Equity Interests. If a proposed
transfer of an equity interest in the Licensee requires registration under
any federal or state securities law, Licensee shall:
(1) Request Licensor's consent at least 45 days before the proposed
effective date of the registration; and
(2) Accompany such request with one payment of a nonrefundable fee of
$25,000; and
(3) Reimburse Licensor for expenses incurred by Licensor in connection
with review of the materials concerning the proposed registration,
including without limitation, attorneys' fees and travel expenses; and
(4) Agree, and all participants in the proposed offering subject to
registration shall agree, to fully indemnify Licensor in connection with
the registration; furnish Licensor all information requested by Licensor;
avoid any implication of Licensor's participating in, or endorsing the
offering; and use Licensor's service marks and trademarks only as directed
by Licensor.
h. Management of the Hotel. Licensee must at all times retain and exercise
direct management control over the Hotel's business. 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 independent entity
without the prior written consent of Licensor.
i. Application for New License Agreement upon Transfer of the Hotel.
(1) If Licensee wishes to transfer the Hotel, or any interest of Licensee
in the Hotel, Licensee shall give prompt written notice thereof to
Licensor, stating the identity of the prospective transferee and the terms
and conditions of the transfer, including a copy of any proposed agreement
and all other information with respect thereto, which Licensor may
reasonably require.
(2) If Licensee proposes to transfer the Hotel or any interest of Licensee
in the Hotel to a transferee who desires thereafter to operate the Hotel
under the System, the proposed transferee must, with Licensee's consent,
apply for a new license agreement to replace this Agreement for a term to
be determined by Licensor. Licensor shall process the application in good
faith and in accordance with procedures, criteria and requirements
regarding fees, upgrade of the Hotel, credit, operational abilities and
capabilities, prior business dealings, if any, with Licensor, market
feasibility and other factors deemed relevant by Licensor, then being
applied by Licensor in issuing new licenses to use the System. If the
application is approved, Licensor and the transferee shall, upon surrender
of this Agreement, enter into a commitment agreement to govern the Hotel
until the time specified therein for the new license agreement to be
entered into if the transferee fulfills specified upgrading and other
requirements by that time. The new license agreement shall be on the
standard form, and contain the standard terms (except for duration), then
being used to license new hotels under the System. If the application is
not approved by Licensor, then this Agreement shall terminate pursuant to
Paragraph 10.d. hereof and Licensor shall be entitled to all of its
remedies.
9. Condemnation and Casualty.
a. Condemnation. Licensee shall, at the earliest possible time, give
Licensor full notice of any proposed taking by eminent domain. If Licensor
agrees that the Hotel or a substantial part thereof is to be taken, Licensor
will give due and prompt consideration, without any obligation, to
transferring this Agreement to a nearby location selected by Licensee and
approved by Licensor as promptly as reasonably possible, and in any event
within four months of the taking. If the new location is approved by
Licensor and the transfer authorized by Licensor and if Licensee opens a new
hotel at the new location in accordance with Licensor's specifications within
two years of the closing of the Hotel, the new hotel will thenceforth 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 forthwith upon notice thereof by Licensor to Licensee, without the
payment of liquidated damages hereunder.
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 in accordance with 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 24 months after closing of the Hotel), giving Licensor ample advance
notice of the date of reopening. If the Hotel is not reopened in accordance
with this paragraph, this Agreement will forthwith terminate, upon notice
thereof by Licensor to Licensee, with the payment of liquidated damages
calculated in the manner set forth in Paragraph 10.f.
c. No Extensions of Term. Nothing in this Paragraph 9 will extend the
License Term but Licensee shall not be required to make any payments pursuant
to paragraphs 3.c.(l), (2) and (3) for periods during which the Hotel is
closed by reason of condemnation or casualty.
10. Termination.
a. Expiration of Term. This Agreement will expire without notice 20 years
from the date hereof, subject to earlier termination as set forth herein.
The parties recognize the difficulty of ascertaining damages to Licensor
resulting from premature termination of this Agreement, and have provided for
liquidated damages in Paragraph 10.f. below, which liquidated damages
represent the parties' best estimate as to the damages arising from the
circumstances in which they are provided.
b. Permitted Termination Prior to Expiration of Term. Licensee may
terminate this Agreement on its 10th or 15th anniversary by giving at least
12 but less than 15 months advance notice to Licensor accompanied by a lump
sum payment (as liquidated damages and not as a penalty or in lieu of any
other payments required under this Agreement) equal to the total of all
amounts required under paragraphs 3.c.(l), (2) and (3) for the 24 calendar
months of operation preceding the notice.
c. Termination by Licensor on Advance Notice.
(1) In accordance with notice from Licensor to Licensee, this Agreement
will terminate (without any further notice unless required by law) or, at
Licensor's sole discretion with notice from Licensor to Licensee, Licensor
may suspend its services hereunder (including reservation services),
provided that:
(a) the notice is mailed at least 30 days (or longer, if required by
law) in advance of the termination date;
(b) the notice reasonably identifies one or more breaches of Licensee's
obligations hereunder; and
(c) the breach(es) are not fully remedied within the time period
specified in the notice.
(2) If during the then preceding 12 months Licensee shall have engaged in
a violation of this Agreement for which a notice of termination was given
and termination failed to take effect because the default was remedied, the
period given to remedy defaults thereafter will, if and to the extent
permitted by law, thereafter be 10 days instead of 30.
(3) In any judicial proceeding in which the validity of termination is at
issue, Licensor will not be limited to the reasons set forth in any notice
sent under this paragraph.
(4) Licensor's notice of termination or suspension of services shall not
relieve Licensee of its obligation hereunder.
d. Immediate Termination by Licensor. This Agreement may be immediately
terminated upon notice from Licensor to Licensee (or at the earliest time
permitted by applicable law) if:
(1) (a) Licensee or any guarantor of Licensee's obligations hereunder
shall 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) Licensee or any such guarantor shall 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) Licensee or any such guarantor shall take any corporate or other
action to authorize any of the actions set forth above in paragraphs (a)
or (b); or
(d) 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
(e) An attachment remains on all or a substantial part of the Hotel or
of Licensee's or any such guarantor's assets for 30 days; or
(f) 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
(2) Licensee loses possession or the right to possession of all or a
significant part of the Hotel, except as otherwise provided in Paragraph 9;
or
(3) Licensee contests in any court or proceeding Licensor's ownership of
the System or any part of it, or the validity of any service marks or
trademarks associated with Licensor's business; or
(4) A breach of Paragraph 8 hereof occurs; or
(5) Licensee fails to continue to identify itself to the public as a
System hotel; or
(6) 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
(7) 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, the Licensor's
parent or its affiliates or subsidiaries in any way); or
(8) Licensee maintains false books and records of account or submits false
reports or information to Licensor.
e. De-identification of Hotel Upon Termination. Licensee will take whatever
action is necessary to assure that no use is made of any part of the System
at or in connection with the Hotel or otherwise after the License Term ends.
This will involve, among other things, returning to Licensor the Manual and
all other materials proprietary to Licensor, physical changes of distinctive
System features of the Hotel, including removal of the primary freestanding
sign down to the structural steel, and all other actions required to preclude
any possibility of confusion on the part of the public that the Hotel is no
longer using all or any part of the System
or otherwise holding itself out to the public as a Hampton Inn & Suites
hotel. Anything not done by Licensee in this regard within 30 days after
termination of this Agreement may be done at Licensee's expense by Licensor
or its agents, who may enter upon the premises of the Hotel for that purpose.
f. Payment of Liquidated Damages. If this Agreement terminates pursuant to
paragraphs 3.b., 9.b., 10.c. or 10.d. above, Licensee will promptly pay
Licensor (only as liquidated 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) a lump sum equal to the total amounts required
under paragraphs 3.c.(1), (2) and (3) during the 36 full calendar months of
operation preceding the termination; or if the Hotel has not been in
operation in the System for 36 full calendar months, the greater of: (i) 36
times the monthly average of such amounts, or (ii) 36 times such amounts as
are due for the one full calendar month preceding such termination. If the
Hotel has been authorized to open as a Hampton Inn & Suites hotel but has not
been in operation for one full calendar month, the liquidated damages amount
shall be equal to the product of the number of Guest Rooms in the Hotel
multiplied by $3,000.00.
11. Renewal.
This Agreement is non-renewable.
12. 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 such steps as are necessary and such steps as Licensor may from
time to time reasonably request 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 Rooms, 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 word "Hampton" or
any similar words in its corporate, partnership, or trade name, nor authorize
or permit such use by anyone else. Licensee will not use the words
"Hampton," "Hampton Inn," "Hampton Inn & Suites" or any other name or mark
associated with the System to incur any obligation or indebtedness on behalf
of Licensor.
13. Miscellaneous.
a. Severability and Interpretation. The remedies provided in this Agreement
are not exclusive. In the event any provision of this Agreement is held to
be unenforceable, void or voidable as being contrary to the law or public
policy of the United States or any other jurisdiction entitled to exercise
authority hereunder, all remaining provisions shall nevertheless continue in
full force and effect unless deletion of the provision(s) deemed
unenforceable, void or voidable impairs the consideration for this Agreement
in a manner which frustrates the purpose of the parties or makes performance
commercially impracticable. In the event any provision of this Agreement
requires interpretation, such interpretation shall be 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 hereto by reason
of the drafting of the party or its 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. Binding Effect. This Agreement shall become valid when executed and
accepted by Licensor at Memphis, Tennessee. 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. This is the entire Agreement (and supersedes all
previous agreements including without limitation, any commitment agreement
between the parties concerning the Hotel) between the parties relating to the
Hotel. Neither Licensor nor any other person on Licensor's behalf has made
any representation to Licensee concerning this Agreement or relating to the
system which representation is not fully set forth herein or in Licensor's
"Offering Circular for Prospective Franchisees." No change in this Agreement
will be valid unless in writing signed by both parties. No failure to
require strict performance or to exercise any right or remedy hereunder will
preclude requiring strict performance or exercising any right or remedy in
the future.
e. Licensor's Withholding Consent. Licensor's consent, wherever required,
may be withheld if any default 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. Notices will be effective hereunder when and only when they are
reduced to writing and delivered personally or mailed by Federal Express or
other express delivery service or 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 parent, subsidiaries, divisions and affiliates 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 there be, 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. This
release 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.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.
LICENSEE: LICENSOR:
______________________________________ HAMPTON INN HOTEL DIVISION
OF EMBASSY SUITES, INC.
By: _________________________________ By: _________________________________________
Name: ______________________________ Name: _______________________________________
Title: _______________________________ Title: ________________________________________
GUARANTY
Date:
As an inducement to the Hampton Inn Hotel Division of Embassy Suites, 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 and perform each obligation 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 performance 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.
IN WITNESS WHEREOF, each of the undersigned has signed this Guaranty as of
the date of the above Agreement.
Witnesses: Guarantors:
____________________________________________ ________________________________________ (Seal)
____________________________________________ ________________________________________ (Seal)
____________________________________________ ________________________________________ (Seal)
ATTACHMENT A
Facilities and Services (Paragraph 1):
Site-Area and general description:
Fee owners (names and addresses):
Leases (parties, terms, etc.), if any:
Number of approved Guest Rooms:
Parking facilities (number of spaces, description):
Swimming pool:
Other facilities and services:
Ownership of Licensee (Paragraph 8):