EXHIBIT 10 (40)
EMBASSY SUITES, INC.
6800 Poplar Avenue, Suite 200
Memphis, TN 38138
EMBASSY SUITES(R)
SHORT-TERM LICENSE AGREEMENT
Dated __________________________________________, 19__, between Embassy Suites,
Inc., a Delaware corporation ("Licensor"), and ________________________________
resident
a ___________________________________________ corporation ("Licensee"), whose
partnership
address is
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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 "Embassy
Suites" (the "System"). High standards established by Licensor are the essence
of the System. Future investments may be required of Licensee under this
Embassy Suites License Agreement (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. Neither Licensor nor any other person
on Licensor's behalf has made any representation to Licensee concerning this
Agreement not fully set forth herein. 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 hotel (the "Hotel") located at
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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 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 suites and no 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 (as hereinafter
defined) 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 "Embassy 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
trademark "Embassy Suites" and such other service marks and 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.
2. Grant of License.
Licensor hereby grants to Licensee a non-exclusive license (the "License") to
use the System only at the Hotel, only in accordance with the terms and
conditions of this Agreement and only during the term of this Agreement (the
"License Term") beginning with the date hereof and terminating under
paragraph 12 hereof. This Agreement applies to the specified location 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 the
System or any part thereof or to engage in or license any business activity
at any other location. Licensee acknowledges that Licensor, its divisions,
subsidiaries and affiliates and parent 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 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
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 and adopts System-wide (including use in its own hotels), 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) strictly comply with all requirements, improvements or changes to the
System as may be from time to time designated by Licensor;
(11) strictly comply with all governmental requirements, including but not
limited to 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, its parent or their
respective divisions, subsidiaries and affiliates;
(15) use every reasonable means to encourage use of Embassy Suites
facilities everywhere by the public;
(16) upon request by Licensor provide to Licensor statistics on hotel
operations in the form specified by Licensor and using definitions
specified by Licensor;
(17) in all respects use Licensee's best efforts to reflect credit upon
and create favorable public response to the name "Embassy Suites";
(18) promptly pay to Licensor all amounts due Licensor, its parent,
subsidiaries, divisions and affiliates as royalties or fees or for goods or
services purchased by Licensee; and
(19) comply with Licensor's requirements concerning confidentiality of
information.
B. 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 of 4% of the gross revenues attributable to or payable
for rental of guest suites at the Hotel with no deductions except for
sales and room taxes ("Gross Suites Revenue"); and
(b) a "Marketing and Reservation Contribution" of 3.5% of Gross Suites
Revenue (but no less then $1.75 per guest suite per night), this
contribution being subject to change by Licensor from time to time if
approved by a majority of members (which shall be counted on the basis
of one suite, one vote) of the "ESOA" (the Embassy Suites Owners'
Association or successor sanctioned as such by Licensor) who represent a
majority of the suites to be subject to the increase, at an annual ESOA
meeting or at a meeting of System Licensees as may be convened by
Licensor upon no less than 45 days' advance notice or by mail ballot
with no less than forty-five day deadline to cast ballot.
(i) Licensor may, in its sole discretion upon 30 days prior written
notice, increase this Contribution by an amount not to exceed .5% of
Gross Suites Revenue and such increase shall be effective for a period
that shall not exceed 12 months. Licensor may not implement any
additional discretionary increase(s) within 24 months after the
expiration of such increase; and
(c) an amount equal to any sales, gross receipts or similar tax imposed
on Licensor and calculated solely on payments 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 Suites Revenue
of the Hotel consistent with sound marketing and industry practice and
will not engage in any conduct which reduces Gross Suites Revenue of the
Hotel in order to further other business activities.
(2) A standard initial fee as set forth in Licensor's current "Offering
Circular for Prospective Franchisees"
will be charged by Licensor upon application for any guest suites to be
added to the Hotel.
(3) Additional royalties may be charged by Licensor 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
Embassy Suites name or other aspects of the System; or
(b) it is designed or developed by or for Licensor.
(4) 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.
(5) If Licensee chooses to participate in any optional program available
through Licensor or its parent, or any other program certified by Licensor,
for payment of travel agent commissions, Licensee will pay to Licensor or
its designated agent by the 15th of the month following receipt of a
statement therefor, all amounts due.
(6) Each payment under this paragraph 3.B. shall be accompanied by the
monthly statement referred to in paragraph 8.A. Licensor may apply any
amounts received under this paragraph 3.B. to any amounts due under this
Agreement. If any amounts are not paid when due such nonpayment 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% per month but not to exceed the maximum interest
permitted by applicable law.
(7) 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.
4. Licensor's Responsibilities.
A. Training. During the License Term, Licensor will continue to specify
and provide required 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
at no charge 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 and Reservation Contribution. The Marketing and
Reservation Contribution will be used by and at the sole discretion of
Licensor for costs associated with advertising, promotion, publicity, market
research and other systemwide marketing programs and related activities and
for reservation programs and related activities. Licensor will make
available and use for the same purposes marketing and reservation funds
computed on the basis generally applicable to licensees of the System.
Licensor is not obligated to expend funds for marketing or reservation
services in excess of the amounts received by Licensor from licensees using
the System and those funds made available by Licensor as set out hereinabove.
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.
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 or personnel used in connection with the System in connection with
any business activities of its parent, subsidiaries, divisions or affiliates.
G. If the Hotel fails to comply with the standards and rules of operation
set forth in the Manual, the Licensor
may, at the Licensee's written request and cost, meet with the Licensee or
the Licensee's representative at the Hotel to develop an action plan to
correct the deficiencies. The Licensee's failure to develop an approved plan
within 30 days of receipt of notice of noncompliance or to timely perform the
requirements of the plan shall be an additional ground for declaring Licensee
to be in breach of the Agreement. Licensor's participation in the
development of an action plan and approval of such plan shall not be a
condition precedent for Licensor declaring Licensee to be in breach of this
Agreement based on the failure of the Hotel to comply with standards and
rules of operation set forth in the Manual.
5. Appeals, Changes in the Manual.
A. Appeals. Decisions, other than termination notices, made on behalf of
Licensor specifically with reference to the Hotel may be appealed to
Licensor's Franchise Committee if done promptly after Licensee has diligently
sought relief through Licensor's normal channels of authority. With the
approval in writing of any member of the Franchise Committee, the decision
may be further appealed to the members of the ESOA Executive Committee who
are also officers of Licensor or its Embassy Suites Hotel Division.
B. Changes in the Manual. Any change in the Manual must be explained in
writing to Licensee at least 30 days before it goes into effect. Any change
in the Manual that is shown to be arbitrary or capricious will be rescinded
by Licensor. A committee designated by Licensor which includes its Chief
Executive Officer or its Chief Operating Officer must determine that the
change was formulated in good faith in the best interests of the System, and
that it was approved by Licensor's Franchise Committee after seeking the
advice and counsel of the Operations Standards Subcommittee of the ESOA.
After it has been in effect 60 days, but less than 180 days, a change in the
Manual may be appealed to the members of the ESOA Executive Committee who are
also officers of Licensor or its Embassy Suites Hotel Division by members
representing at least 30% of the hotels authorized to use the System.
C. Decision on Appeal. Licensor shall have the right to decide appeals
under this paragraph solely in its discretion and may require that such
appeals be made solely on the basis of written submissions. No appeal will
suspend a decision or change until and unless the appeal is successful.
D. Limitation on Appeal Rights. Licensee will not be arbitrary, capricious
or unreasonable in exercising its appeal (or any other) rights under this
Agreement, and will use them only for the purposes for which intended.
6. ESOA.
A. Eligibility. Licensee, other licensees of the System, and Licensor are
eligible for membership in the ESOA in accordance with the By-laws of the
ESOA and are entitled to vote at its meetings on the basis of one open suite,
one vote. The purposes of the ESOA will be to consider and discuss, and make
recommendations on, common problems relating to the operation of System
hotels. Licensor will seek the advice and counsel of the ESOA Executive
Committee and its subcommittees.
B. Function of Committees. ESOA committees, their functions and their
members will be subject to approval in writing by Licensor, which approval
will not be unreasonably withheld. Recognizing that the ESOA must function
in a manner consistent with the best interests of all persons using the
System, the Licensee and Licensor will use their best efforts to cause the
governing rules of the ESOA to be consistent with this Agreement.
7. Proprietary Rights.
A. Ownership of System. The 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, or 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
mark "Embassy Suites" and all other marks associated with the System together
with the goodwill symbolized thereby and that Licenses will not contest
directly or indirectly the validity or ownership of the marks either during
the License Term or after its termination. 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. Both parties will make every
effort consistent with the foregoing to protect, maintain, and promote the
name "Embassy Suites" and its distinguishing characteristics (and the other
service marks, trademarks, slogans, etc., associated with the System) as
standing for the System and only the System; provided, however, both parties
acknowledge that Licensor may allow certain hotels which had written
franchise commitments or licenses in the Granada Royale Hometel franchise
system to use the name "Embassy Suites" and other related marks of the
System.
C. Protection of Name and Marks. Both parties will make every effort
consistent with the foregoing to protect and maintain the name and mark
"Embassy Suites" and its 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 the manner authorized by Licensor
and acknowledges that any unauthorized use thereof shall constitute
infringement of Licensor's rights.
8. Records and Audits.
A. Monthly Reports. 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 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.B.
The statement shall be in such form and detail and shall use such definitions
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
suite occupancy, and which may be used by Licensor for its reasonable
purposes.
C. Preparation and Maintenance of Records. Licensee will, 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 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 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
afterward, Licensor and its authorized agents will 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, plus interest thereon as provided in paragraph
3.B.(6). In addition, if the deficiency in any payment for any 12-month
period exceeds 5% of the correct amount and is not offset by overpayments,
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 12. If the audit discloses an overpayment,
Licensor will 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 the Hotel 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.
9. Indemnity and Insurance.
A. Indemnity. Licensee will indemnify Licensor, its parent, and its
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, subsidiaries and affiliates is alleged)
arising from any claimed occurrence at the Hotel or any act, omission or
obligation of Licensee or anyone associated or affiliated with Licensee or
the Hotel. At the election of Licensor, Licensee will also defend Licensor
and/or its parent, subsidiaries, divisions and affiliates and 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, 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, subsidiaries, divisions, affiliates and their officers,
directors, employees, agents and their successors and assigns from, or to
remedy defaults of Licensee 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 increased 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 naming Licensor and its parent 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
and its parent 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 and
its parent 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 copies of the policies of insurance setting forth
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.
10. 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 upon 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
12.C.(4) of this Agreement.
(1) For the purposes of this paragraph 10, 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."
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% or less of all equity interests in Licensee will have changed
hands since Licensee first became a party to this Agreement; or
(b) 80% 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 10.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
interest, the principal considerations being:
(a) Direct and indirect power to exercise control over the affairs of
Licensee;
(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% of the equity interest of Licensee; and
(b) Immediately after the transfer the transferee will own less than
25% 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 10.D. Such certification shall be delivered to Licensor with the
Annual Financial Statements referred to in paragraph 8.E. hereof.
E. Transfer of this Agreement.
(1) Licensee, if a natural person, may with Licensor's consent, which will
not be unreasonably withheld, transfer this Agreement 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
this Agreement 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 this Agreement or Equity Interest in this Agreement Upon
Death.
(1) If Licensee is a natural person, upon the Licensee's death this
Agreement 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) The 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 Licensee's estate provided
that:
(a) Adequate provision is made for management of the Hotel; and
(b) The 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) 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 the 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 indemnity Licensor in connection with
the registration; furnish the Licensor all information requested by
Licensor; avoid any implication of Licensor's participating in, or
endorsing the offering; and use the 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, either directly or
through a management company approved by Licensor. Licensee shall not enter
into any lease, management agreement, or other similar arrangement for the
operation of the Hotel or any part thereof (including without limitation,
food and/or beverage service facilities), 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 receives an offer to purchase or lease the Hotel or any
portion thereof and Licensee, pursuant to the terms of such offer, desires
to sell or lease the Hotel or any portion thereof, Licensee shall give
prompt written notice thereof to Licensor stating the identity of the
prospective purchaser or lessee, the price or rental and furnish a copy of
the proposed agreement concerning said offer and all other information with
respect thereto which may be reasonably requested by Licensor.
(2) If the proposed lessee or transferee desires to operate the Hotel
under the System, the proposed lessee or transferee will, with Licensee's
consent, apply for a new license agreement to replace this Agreement for a
term to be determined by Licensor. Licensor will 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 the 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 not approved by Licensor and Licensee proceeds with the
purchase or lease of the Hotel, then this Agreement shall terminate
pursuant to paragraph 12.C., and Licensor shall be entitled to all of its
remedies. If the application is approved, Licensor and the transferee
will, 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. The new license agreement will be on the standard
form, and contain the standard terms (except for duration) then being used
to license new Hotels under the System.
11. 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
substituting a nearby location selected by Licensee and approved by Licensor
as the Hotel hereunder 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 substitution 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 required by paragraph 12.E.
B. Casualty.
(1) If the Hotel is destroyed or substantially destroyed during the
License Term by fire or other casualty and the cost of repairing,
restoring, rebuilding and replacing the same shall exceed the proceeds of
the insurance collectible with respect to such fire or other casualty (for
this purpose the deductible amount under the insurance policy shall be
deemed to be collectible proceeds) and the Hotel
(a) for at least the full twelve month period preceding the casualty,
did not have a positive cash flow after payment of all operating and
ownership costs; or
(b) can be shown by appraisal to have an economic value less than the
total cost to repair, restore, rebuild or replace, Licensee shall have
the right upon notice served upon Licensor within sixty (60) days after
such fire or casualty, to terminate this Agreement without the payment
of liquidated damages required by paragraph 12.E.
(2) If the cost of repairing, restoring, rebuilding or replacing the
damage shall be equal to or less than the proceeds of the insurance
collectible with respect to such fire or other casualty, or, if greater and
the Licensee did not meet (a) or (b) above or, if greater and the Licensee
did meet (a) or (b) above, but did not give notice to Licensor within the
sixty (60) day time period, Licensee shall 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 from Licensor to
Licensee, with the payment of liquidated damages required by paragraph
12.E.
C. No Extensions of Term. Nothing in this paragraph 11 will extend the
License Term but Licensee shall not be required to make any payments pursuant
to paragraphs 3.B.(1), (3) and (4) for periods during which the Hotel is
closed by reason of condemnation or casualty.
12. Termination.
A. Expiration of Term. This Agreement will expire without notice ___ 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 12.E. below, which represent the parties'
best estimate as to the damages arising from the circumstances in which they
are provided.
B. 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 cease to provide 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 the
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 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 obligations under this Agreement.
C. 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
generally does 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)
remaining 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
11; 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 10 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 knowingly maintains false books and records of account or
knowingly submits false reports or information to Licensor.
D. 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, 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 an Embassy
Suites hotel. Anything not done by Licensee in this regard within 30 days
after termination may be done at Licensee's expense by Licensor or its agents
who may enter upon the promises of the Hotel for that purpose.
E. Payment of Liquidated Damages. If the Agreement terminates pursuant to
paragraphs 11.B(2), 12.B or 12.C above, Licensee will promptly pay Licensor
(as liquidated damages for the premature termination only, and not as penalty
or forfeiture, or in lieu of any other payment), a lump sum equal to the
total amounts required under paragraph 3.B(1) and 3.B(3) during the lesser of
the following: (i) 36 months of operation; or (ii) a number of months equal
to one-half of the number of the calendar months remaining prior to the date
of the License expiration set forth in this Agreement, as measured from the
date of termination of this Agreement. The liquidated damages shall then be
calculated by multiplying the applicable number of months (36 months or less)
times the monthly average of the amounts required under paragraph 3.B(1) and
3.B(3) for the 12 months preceding the date of termination, or if the hotel
has not been in operation as an Embassy Suites hotel for 12 months, then the
actual number of months preceding the date of termination.
13. Agreement is Non-Renewable.
This Agreement is nonrenewable, except where otherwise may be provided by
applicable law.
14. 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 circumscribed 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. Licensee shall not enter or execute any contracts in the name
"Embassy 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
approved management company. Unless required by law, Licensee will not use
the word "Embassy," "Embassy Suites," or any similar words in its
corporate, partnership, or trade name, nor authorize or permit such use by
anyone else. Likewise the words "Embassy," "Embassy 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.
Licensee will not use the words "Embassy" or "Embassy Suites" or any other
name or mark associated with the System to incur any obligation or
indebtedness on behalf of Licensor.
15. 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 draftsmanship 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 and 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 lawsuits 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.
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 comparable overnight 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 and Covenant Not to Sue. Licensee and its respective
heirs, administrators, executors, agents, representatives, successors or
assigns, hereby release, remise, acquit and forever discharge Licensor and
its parent, subsidiaries, divisions and affiliates and their officers,
directors, employees, agents, successors or 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,
of any kind or nature, absolute or contingent, if any there be, at law or
in equity from the beginning of time to and including the date this
Agreement is signed by Licensor. Licensee and its respective heirs,
representatives, successors and assigns do hereby covenant and agree 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 sue shall survive the
termination of this Agreement. Licensee shall take whatever steps are
necessary or appropriate to carry out the terms of this release and
covenant not to sue 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:
______________________________________ EMBASSY SUITES, INC.
By: __________________________________ By: _________________________________________________
Name: _______________________________ Name: _______________________________________________
Title: ________________________________ Title: ______________________________________________
Embassy Suites Hotel Division
Witness: _____________________________ Witness: ____________________________________________
Date: ________________________________ Date: _______________________________________________
ATTACHMENT A
Facilities and Services (paragraph 1):
Site-Area and general description:
Fee owners (names and addresses):
Leases (parties, terms, etc.), if any:
Separate parcels for signs:
Number of approved guest suites:
Hotel Management Company:
Restaurant(s) and lounge(s) (number, seating capacity, names and description,
tenant):
Meeting and function space:
Indoor and outdoor recreational facilities (pool, whirlpool, exercise room,
sauna, etc.):
Atrium:
Gift shop:
Other concessions and shops:
Parking facilities (number of spaces, description):
Other facilities and services:
Ownership of Licensee:
Authorized signatories:
GUARANTY
EXECUTED ___________________ , 199__
As an inducement to Embassy Suites, Inc. ("Licensor") to execute the
_________ Agreement dated _________ with ____________ (the "Agreement"), the
undersigned ("Guarantor"), jointly and severally, hereby unconditionally warrant
to Licensor and its successors and assigns that all of Licensee's representa-
tions in the Agreement and the application submitted by Licensee to obtain the
License are true and further guarantee, absolutely, unconditionally and
irrevocably to Licensor that all of Licensee's obligations under the Agreement,
including any amendments thereto whenever made, will be punctually paid and
performed.
Upon default or failure to cure within the time specified in this Agreement
by Licensee or notice from Licensor, the undersigned Guarantor will immediately
make each payment (including reasonable counsel fees) and perform each
obligation required of Licensee under the Agreement. Without affecting the
obligations of Guarantor under this Guaranty, Licensor may without notice to
Guarantor extend, modify or release any indebtedness or obligation of Licensee,
or settle, adjust or compromise any claims against Licensee. Guarantor waives
notice of amendment of the Agreement and notice of demand for payment or
performance by Licensee.
All monies available to the Licensor for application in payment or reduction
of the indebtedness or obligations of Licensee may be applied by the Licensor in
such manner and in such amounts and at such time or times and in such order and
priority as the Licensor may see fit to the payment or reduction of such portion
of the indebtedness or obligations as the Licensor may elect.
Guarantor hereby waives (a) notice of acceptance of this Guaranty and of the
making of the Agreement by the Licensor to the Licensee; (b) presentment and
demand for payment of the indebtedness or obligations under the Agreement or any
portion thereof; (c) protest and notice of dishonor or default to the
undersigned or to any other person or party with respect to the Agreement or any
portion thereof; (d) all other notices to which the undersigned might otherwise
be entitled; and (e) any demand for payment under this Guaranty.
The Guaranty constitutes a guaranty of payment and performance and not of
collection, and each Guarantor 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.
Guarantor further agrees 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.
No delay on the part of the Licensor in exercising any rights hereunder or
under the documents executed in connection with the Agreement or the failure to
exercise the same shall operate as a waiver of such rights; no notice to or
demand on Guarantor shall be deemed to be a waiver of the obligation of
Guarantor or of the right of the Licensor to take further action without notice
or demand as provided herein; nor in any event shall any modification or waiver
of the provisions of this Guaranty be effective unless in writing nor shall any
such waiver be applicable except in the specific instance for which given.
Notwithstanding any payments made by the undersigned pursuant to the
provisions of this Guaranty, Guarantor shall have no right of subrogation in and
to the Agreement or the payment of the obligations thereof until the
indebtedness or performance has been paid in full to the Licensor.
Each reference herein to the Licensor shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guaranty shall
also inure. Each reference herein to Guarantor shall be deemed to include the
heirs, executors, administrators, legal representatives, successors and assigns
of Guarantor, all of whom shall be bound by the provisions of this Guaranty.
Upon the death of an individual Guarantor, the estate of such Guarantor will
be bound by this Guaranty but only for defaults and obligations hereunder
existing at the time of death, and the obligations of the other Guarantors will
continue in full force and effect.
This Guaranty is, and shall be deemed to be, a contract entered into under
and pursuant to the laws of the state of Tennessee and shall be in all respects
governed, construed, applied and enforced in accordance with the laws of said
state.
IN WITNESS WHEREOF, each of the undersigned has signed this Guaranty as
of the date of the above Agreement.
Witnesses: Guarantors:
_______________________________________________ ________________________________________ (Seal)
_______________________________________________ ________________________________________ (Seal)
_______________________________________________ ________________________________________ (Seal)