Location: {{HOTELADDRESS1}}
{{HOTELADDRESS2}}
ID Number: {{IDNUMBER}}
Date: ___________________________
HAWTHORNE SUITES LICENSE AGREEMENT
BETWEEN
HAWTHORN SUITES FRANCHISING, INC.
AND
{{ENTITYNAMECAPS}}
TABLE OF CONTENTS
RECITALS PAGE
1. THE LICENSE ..................................................1
2. GRANT OF LICENSE ..............................................2
3. LICENSEE'S RESPONSIBILITIES ...................................2
4. LICENSOR'S RESPONSIBILITIES ...................................5
5. PROPRIETARY RIGHTS ............................................7
6. RECORDS AND AUDITS ............................................7
7. INDEMNITY AND INSURANCE ......................................8
8. TRANSFER .....................................................9
9. CONDEMNATION AND CASUALTY ....................................12
10. TERMINATION .................................................13
11. AGREEMENT IS RENEWABLE .......................................16
12. RELATIONSHIP OF PARTIES .....................................16
13. MISCELLANEOUS ................................................17
GUARANTY
ATTACHMENT A
ATTACHMENT B
ATTACHMENT C
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LICENSE AGREEMENT
Dated , between Hawthorn Suites Franchising, Inc. ("Licensor" or
"HFI") and {{ENTITYNAMECAPS}}, a {{ENTITYTYPE}} ("Licensee"), whose address is
{{ENTITYADDRESS}}.
PARTIES AGREE AS FOLLOWS:
1. The License.
Licensor has been licensed by Hawthorn Suites Associates ("HSA"), under the
terms of an agreement dated March 26, 1996 (the "HSA Agreement"), the right to
use and license others to use a unique concept and system relating to the
establishment and operation of certain hotels that operate under the name
"HAWTHORN SUITES" ("Hawthorn Hotels" or the "Hotel System"). Hawthorn Hotels
are all-suites hotels in which the lodging units each contain sleeping
quarters, bath, living room, and kitchen. You have independently investigated
the risks of the business to be operated hereunder, including current and
potential market conditions, competitive factors and risks, and have read
Licensor's "Offering Circular for Prospective Franchisees", and have made an
independent evaluation of all such facts. Aware of the relevant facts, you
desire to enter into this agreement ("Agreement") in order to obtain a license
to use the Hotel System in the operation of a Hawthorn Suites hotel located
at {{HOTELADDRESS1}}, {{HOTELADDRESS2}} (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
currently includes the facilities listed on Attachment A hereto. No change in
the number of approved standard suites or guest rooms (which are hereinafter
referred to collectively as "Suites") and no other significant change in the
Hotel shall be made without Licensor's approval. Redecoration and minor
structural changes that comply with Licensor's standards and specifications
shall not be considered significant. You represent that you are entitled to
possession of the Hotel during the entire License Term, as defined in
Paragraph 2 hereof, without restrictions that would interfere with any of
your obligations under this Agreement.
B. The Hotel System. The Hotel System is composed of elements, as
designated from time to time by Licensor, designed to identify Hawthorn
Suites hotels to the consuming public and/or to contribute to such
identification and its association with quality standards. The Hotel System
at present includes, without limitation, the trade names, trademarks, and
service marks, "HAWTHORN SUITES" and such other trade names, trademarks, and
service marks as are now designated (and may hereafter be designated by
Licensor in writing) as part of the Hotel System (hereinafter "Proprietary
Marks"); prototypical architectural plans, designs, and layouts, including,
without limitation, site plan, floor plan, and lobby plan; access to a
centralized reservation system; a national Hawthorn Suites directory (the
"National Directory"); management and personnel training, and training
programs and materials; management and operational procedures and techniques
as prescribed in the Confidential Manual (hereinafter the "Manual"); standards
and specifications for construction, equipment, and furnishings, as described
in the Manual; advertising, marketing, and promotional programs; and such
other improvements that Licensor may make from time to time.
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2. Grant of License. Licensor hereby grants to you a license (the "License")
to use the Hotel System only at the Hotel, only in connection with the
operation of the Hotel and, only in accordance with this Agreement, beginning
with the date hereof and terminating as provided in Paragraph 10 hereof (the
"License Term"). During the License Term, neither Licensor nor any affliate of
Licensor nor any franchisee, shall develop, license, or permit any authorized
Hawthorn Hotel within the territorial boundaries as defined in Attachment B
hereto (the "Territory"). Your rights to the Territory shall automatically
terminate if the Hotel's Quality Assurance Score (defined in Paragraph 4.C.
hereof) falls below 425, or its then-current equivalent, and you are unable
to increase the score to 425 within sixty (60) days of the inspection, or if
this Agreement is otherwise terminated in accordance with Section 10 hereof.
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 Hotel System or any part thereof at any location outside of the
Territory. Further, Licensor, or its parent, subsidiary, division or
affiliate may conduct any business activity or license other hospitality
concepts under brands other than the Proprietary Marks outside and within the
Territory. You acknowledge that Licensor, its parent, subsidiaries, divisions
and affiliates are and may in the future be engaged in other business
activities including activities related to transient lodging, which may be or
may be deemed to be competitive with the Hotel System; that facilities,
programs, services and/or personnel used in connection with the Hotel System
may also be used in connection with such other business activities of
Licensor, its parent, subsidiaries, divisions or affiliates; and that you are
acquiring no rights hereunder other than the right to use the Hotel System in
connection with a Hawthorn 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, you shall:
(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 twenty four (24) hours a day, every day;
(5) strictly comply in all respects of the Hotel System and the Manual and
with all other policies, procedures and requirements of Licensor which
may be from time to time communicated to you;
(6) strictly comply with Licensor's reasonable requirements to use only
reliable sources of supplies for the Hotel including any suppliers
approved by Licensor;
(7) strictly comply with Licensor's requirements as to:
(a) the types of services, products, and amenities that may be used,
promoted or offered at the Hotel;
(b) use, display, style and type of signage;
(c) directory and reservation service listings of the Hotel;
(d) training of persons to be involved in the operation of the Hotel,
including all expenses incurred by you associated therewith;
(e) 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 Hotel System;
(f) maintenance, appearance and condition of the Hotel; and
(g) quality and type of service offered to customers at the Hotel.
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(8) use such automated guest service and/or hotel management and/or
telephone system(s) as Licensor shall specify, including any
additions, enhancements, supplements or variants developed during the
term hereof;
(9) participate in and use the those reservation services as Licensor
shall specify, including any additions, enhancements, supplements or
variants thereof which may be developed during the term hereof;
(10) adopt improvements or standard changes to the Hotel System as may be
from time to time designated by Licensor, which improvements are not
intended to cause undue hardship;
(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
Hotel 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) insure that no part of the Hotel or the Hotel 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;
(14) in all respects use your best efforts to reflect credit upon and
create favorable public response to the Proprietary Marks;
(15) 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 you;
(16) comply with Licensor's requirements concerning confidentiality of
information, and, specifically: treat the Manual and all supplements
and revisions as confidential; use all reasonable efforts to keep the
information confidential; not copy the Manual in any way, nor make it
available to any unauthorized person; disclose information contained
in the Manual only to persons who must have access to it in
connection with their employment with you; and obtain each such
person's agreement to keep such information confidential; and
(17) conduct your advertising in a dignified manner and conform to the
standards and requirements as Licensor may specify from time to time
in writing; submit samples of all advertising and promotional
materials to Licensor for approval; and discontinue use of any
disapproved material upon receipt of such written notice.
B. Performance of the Work. You agree to perform the construction and
renovation and/or conversion work on the property including, without
limitation, the purchase of furniture, fixtures, and equipment set forth on
Attachment C hereto and incorporated herein by reference (the "Work"). You
acknowledge that your agreement to perform the Work is an essential element
of the consideration relied upon by Licensor in entering into the Agreement.
Your failure to perform the Work in accordance with Licensor's requirements
and specifications (including the progress, milestone completion and other
dates specified in Attachment "C") shall constitute a material breach of your
obligations under this License. Licensee may not commence operation of the
Hotel as a Hawthorn Hotel without Licensor's written authorization.
Notwithstanding any consent by Licensor to the authorized conditional opening
of the Hotel, all upgrading shall be completed and the Hotel shall otherwise
be in compliance with the Agreement no later than the date contained in
Attachment C.
C. Upgrading of the Hotel. Licensor shall review the Quality Assurance
Scores (as defined in Paragraph 4.C. hereof) of the Hotel upon each five (5)
year anniversary of the opening of the Hotel. If over the previous five (5)
year period, the Hotel has failed to maintain an average score of four
hundred fifty
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(450) or greater out of a possible five hundred (500) (or its then-current
equivalent), Licensor may require modernization of the Hotel, softgood
rehabilitation (including but not limited to carpet, drapes, bedspreads) or
other upgrading of the Hotel. If the upgrading requirements contained in this
Paragraph 3.C. cause you undue hardship, you may terminate this Agreement by
paying a fee computed according to Paragraph l0.E
D. Fees.
(1) For each month (or part of a month) during the License Term, you shall
pay to Licensor by the tenth (10th) of the following month:
(a) a royalty fee equal to five percent (5%) of the Gross Room
Revenues of the Hotel, with deductions for sales and room taxes
only ("Gross Room Revenues");
(b) an "Advertising Fund Contribution" of 2.5 percent of Gross Rooms
Revenue. The Advertising Fund Contribution payments do not include
the cost, installation or maintenance of reservation services
equipment or training. Licensor may, in its sole discretion and at
any time, increase the Advertising Fund Contribution amount above
by no more than ten percent (10%) per year provided that
Licensee's Advertising Fund Contributions shall not exceed a
maximum of three percent (3.0%). Licensee hereby acknowledges any
such increase shall not be imposed unless a similar increase is
imposed on all licensees operating under the Hotel System
according to license agreements that contain provisions similar to
this Paragraph 3(D)(l)(b) providing for such increased
contributions by licensees; 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.
(2) "Gross Room Revenues" shall mean the gross receipts attributable to or
payable for the rental of Suites at the Hotel, including, without
limitation, the net proceeds (after deduction of the expenses of
adjustment and collection) of use and occupancy, or for business
interruption, rent loss, or similar insurance with respect to the
Hotel (provided that insurance proceeds shall be included in Gross
Room Revenues only when and to the extent actually received). Gross
Room Revenues shall not include gratuities to employees or service
charges levied in lieu of such gratuities, which, in either case, are
payable to employees, or federal, state, and local taxes or fees
collected by you for transmittal to the appropriate taxing
authorities.
(3) All monthly payments required by this Agreement shall be submitted to
Licensor together with all reports required under this Agreement.
Licensor may require that all monthly payments required under this
Agreement shall be made by telegraphic transfer, automatic debit
arrangement, or other means as Licensor may specify from time to time,
to a bank account designated by Licensor. In the event such
arrangements are made, Licensor shall be responsible for the cost of
connection to such service and you shall maintain sufficient funds in
your bank account to pay all such debited obligations. Any payment or
report not actually received by Licensor on or before such date shall
be deemed overdue, or, if an automatic debit or similar arrangement is
utilized and funds are insufficient to cover your payment obligation,
any amounts unpaid on or before such date shall be deemed overdue. If
any payment is overdue, you shall pay to Licensor, in addition to the
amount overdue, interest on such amount from the day it was due until
paid at one and a half percent (1.5%) per month or the maximum rate
permitted by law, whichever is less. Entitlement to such interest
shall be in addition to any of the remedies Licensor may have.
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(4) A standard initial fee for additional Suites equal to the higher of
(a) Four Hundred Dollars ($400) per room; or (b) the then-current per
room charge for the Application Fee per room, shall be paid by you to
Licensor on your submission of an application to add any Suites to the
Hotel. As a condition to Licensor granting its approval of such
application, Licensor may require you to upgrade the Hotel, subject to
Paragraph 3.C.
(5) Local and regional marketing programs and related activities may be
conducted by you, but only at your expense and subject to Licensor's
requirements. Reasonable charges may be made by Licensor for optional
advertising materials ordered or used by you for such programs and
activities.
(6) Licensee shall pay all fees for travel agent commissions and global
distribution systems (e.g., Sabre, Apollo, or other online
distribution system, whether processed through Licensor, Licensor's
reservation system, third party reservation systems, or directly to
Licensee).
4. Licensor's Responsibilities.
A. Training. During the License Term, Licensor shall continue to specify
and provide required and optional training programs at various locations that
Licensor shall designate. Reasonable charges may be made for required
training materials. Travel, lodging and other expenses of you and your
employees shall be borne by you. If such training is held at your Hotel, you
must provide Licensor's representatives lodging at the Hotel at no cost to
Licensor.
B. Reservation Services. Provided that Licensee is in full compliance with
its material obligations under this Agreement, Licensor will afford Licensee
access to reservation services for the Hotel.
C. Consultation on Operations, Facilities and Marketing. If a new
development, Licensor shall provide you with a set a confidential
prototypical plans and specifications, which must be adapted by your
architects and engineers. Licensor will review your site layout and working
drawings prepared by your architects, and any other related plans and
specifications. In addition Licensor shall, from time to time at Licensor's
sole discretion, make available to you consultation and advice in connection
with operations, facilities and marketing, including lists of suppliers for
Hotel fixtures, furnishings, signs, and other equipment. Licensor shall also
periodically evaluate the performance of the Hotel, but in any case at least
once each year, by assessing the quality of the Hotel's facility and services
according to certain criteria developed by Licensor (the "Quality Assurance
Score").
D. Use of Advertising Fund Contribution. The Advertising Fund Contribution
shall be used by Licensor for costs associated with advertising, promotion,
publicity, market research and other marketing programs and related
activities, cost of maintaining and producing a National Directory, as well
as reservations programs, services and overhead for individuals directly
related to national and local marketing and reservations. For the purpose of
this Paragraph, overhead shall be limited to individuals directly related to
the Reservation or Marketing departments such as the Vice President of
Marketing and costs related to the financial management of the fund. Licensor
shall not use any of the funds in the Advertising Fund Contribution to pay
for marketing directly related to the sale of franchises. Licensor is not
obligated to expend funds for marketing or reservation services in excess of
the amounts received from licensees using the Hotel System. In the event
excess amounts remain at the end of any taxable year, all expenditures in the
following taxable year(s) shall be made first out of accumulated earnings
from previous years, next out of earnings in the current year, and finally
from contributions. Advertising Fund Contribution shall not be an asset of
Licensor, and an audit of the operation of the Advertising Fund Contribution
shall be prepared
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annually by an independent certified public accountant selected by Licensor
and shall be made available to you on request. Licensor shall maintain the
National Directory, listing the address and telephone number of all Hawthorn
Suites operating under the Hotel System.
E. Application of Manual. Licensor shall provide you, on loan, one (1)
copy of the Manual. All hotels operated within the Hotel System shall be
subject to the Manual, as it may from time to time be modified or revised by
Licensor, including limited exceptions which may be made by Licensor based on
local conditions or special circumstances. Each change in the Manual must be
explained in writing to you at least thirty (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 Hotel System in
connection with any business activities of its parent, subsidiaries,
divisions or affiliates.
G. Inspections/Compliance Assistance. Licensor has the right to inspect
the Hotel at any time, with or without notice to you, to determine if the
Hotel is in compliance with the standards and rules of operation set forth in
the Manual. If the Hotel fails to comply with such standards and rules of
operation, Licensor may, at its option and at your cost, require an action
plan to correct the deficiencies. You must then take all steps necessary to
correct any deficiencies within the times established by Licensor. Licensor's
approval of an action plan does not waive any rights it has or may have under
this Agreement nor does it relieve you of any obligations under this
Agreement.
5. Proprietary Rights.
A. Ownership of the Hotel System and Proprietary Marks. You acknowledge
and shall not contest, either directly or indirectly, Licensor's unrestricted
and exclusive right to license the Hotel System and any element(s) or
component(s) thereof, and acknowledge that Licensor has the sole right to
grant licenses to use all or any element(s) or component(s) of the Hotel
System. You specifically agree and acknowledge that HSA is the owner of all
right, title and interest in and to the Proprietary Marks together with the
goodwill symbolized thereby and that you shall 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 Hotel System by the parties to this
Agreement or anyone else, and all Proprietary Marks, and all goodwill arising
from your use of Licensor's marks shall inure to the benefit of and become
the property of HSA. Upon expiration or termination of this Agreement, no
monetary amount shall be assigned as attributable to any goodwill associated
with your use of the Hotel System or any element(s) or component(s) of the
Hotel System including the name or marks.
B. Trademark Disputes. Licensor and/or HSA shall have the sole right and
responsibility to handle disputes with third parties concerning use of all or
any part of the Hotel System, and you shall, at your reasonable expense,
extend your full cooperation to Licensor and/or HSA in all such matters. All
recoveries made as a result of disputes with third parties regarding use of
the Hotel System or any part thereof shall be for the account of Licensor
and/or HSA. Neither Licensor nor HSA need initiate suit against alleged
imitators or infringers and may settle any dispute by grant of a license or
otherwise. You shall not initiate any suit or proceeding against alleged
imitators or infringers or any other suit or proceeding to enforce or protect
the Hotel System.
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C. Protection of Name and Marks. Both parties shall make every effort
consistent with the foregoing to protect and maintain the Proprietary Marks
and their distinguishing characteristics. You agree to execute any documents
deemed necessary by Licensor, HSA or their respective counsel to obtain
protection for Licensor's marks or to maintain their continued validity and
enforceability. You agree to use the names and marks associated with the
Hotel System only in connection with the operation of a Hawthorn Hotel and in
the manner authorized by Licensor and you acknowledge that any unauthorized
use thereof shall constitute infringement of Licensor's and HSA's rights. You
must notify Licensor immediately, in writing, of any infringement or
challenge to your use of Licensor's marks or of any unauthorized use or
possible misuse of Licensor's marks or Licensor's proprietary information.
6. Records and Audits.
A. Monthly Reports. At least monthly, you shall prepare a statement which
shall 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. By the tenth (10th) of each month, you shall 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.D hereof. The statement
shall 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. Licensor
shall not willingly or knowingly provide Data on your property as an
inducement to develop other hotel brands in your market area.
B. Preparation and Maintenance of Records. You 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 (4) 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).
C. Audit. Licensor or its designated agents shall have the right at any
time to examine and copy, at its expense, all books, records, and your tax
returns related to the Hotel and, at its option, to have an independent audit
made. If an inspection or audit should reveal that payments have been
understated in any report to Licensor, then you shall immediately pay to
Licensor the amount understated upon demand, in addition to interest from the
date such amount was due until paid, at one and one half percent (1.5%) per
month or the maximum rate permitted by law, whichever is less. In such event,
Licensor shall also have the right to require that all your future financial
statements related to the Hotel be audited at your expense for each fiscal
year by an independent certified public accounting firm selected by you and
approved by Licensor. If an inspection discloses an underpayment to Licensor
of five percent (5%) or more of the total amount that should have been paid
to Licensor during any six (6) month period, you shall, in addition to
repayment of such understated amount, with interest, reimburse Licensor for
any and all costs and expenses incurred in connection with the inspection or
audit (including, without limitation, reasonable accounting and attorneys'
fees). The foregoing remedies shall be in addition to any other remedies
Licensor may have, including, without limitation the remedies for default.
D. Annual Financial Statements. At Licensor's request, you shall submit to
Licensor as soon as available but not later than ninety (90) days after the
end of your fiscal year, complete financial
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statements for such year. You shall 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 shall be a
breach of this Agreement. Licensor may also request, from time to time, gross
operating profits percentages and certain operating statistics (i.e. energy
and repairs costs) which you must provide.
7. Indemnity and Insurance.
A. Indemnity. It is understood and agreed that nothing in this Agreement
authorizes either party to make any contract, agreement, warranty or
representation on the other's behalf, or to incur any debt or other
obligation in the other's name, and that neither party shall in any event
assume liability for, or be deemed liable hereunder as a result of, any such
action, or by reason of any act or omission of the other party or any claim
or judgement arising therefrom. You shall indemnify and hold Licensor and
HSA, their parents, affiliates, subsidiaries, officers, directors, agents,
and employees, harmless against any and all claims arising directly or
indirectly from, as a result of, or in connection with, your operation of the
Hotel, including claims of intentional or negligent conduct by you, and any
claims of acts or omissions by Licensor or HSA relating to the operation of
the Hotel System (even though Neither HSA nor Licensor is actively involved
in the operation or supervision of the Hotels), as well as the costs,
including reasonable attorneys' fees, of defending against them. You agree
that all of the obligations of Licensor under this Agreement are to you, and
no other party is entitled to rely on, enforce, or obtain relief for breach
of such obligations either directly or indirectly or by subrogation. Licensor
shall not indemnify or hold you harmless against any action or claim by any
third party based upon Licensor's exercise of any of its rights in accordance
with the terms of this Agreement.
B. Insurance. During the License Term, you shall 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 shall 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) 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 then current parent, subsidiaries, divisions,
affiliates and their successors and assigns as additional insureds
and underwritten by an insurer approved by Licensor, with
single-limit coverage for personal and bodily injury and property
damage of at least Ten Million Dollars ($10,000,000) for each
occurrence. In addition, Dram Shop/Liquor Liability insurance shall
also be provided for the same named insureds and under the same
limits and coverage amounts. In connection with all significant
construction at the Hotel during the License Term, you shall 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 Ten Million Dollars ($10,000,000) for each
occurrence with Licensor and its then current parent, subsidiaries,
divisions, affiliates and their successors and assigns 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, you shall
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
8
may not be cancelled, altered or permitted to lapse or expire without thirty
(30) days' advance written notice to Licensor.
8. Transfer.
A. Transfer by Licensor. Licensor shall have the right to transfer or
assign all or any part of its rights or obligations in this Agreement to any
person or legal entity, and you hereby consent to such transfer.
B. Transfer by Licensee.
(1) You understand and acknowledge that the rights and duties set forth
in this Agreement are personal to you, and that Licensor has
entered into this Agreement in reliance on your business skill,
financial capacity, and character, and that of your partners or
shareholders. Accordingly, neither you nor any immediate or remote
successor to any part of your interest in this Agreement, nor any
individual, partnership, corporation, or other legal entity which
directly or indirectly owns any interest in this Agreement or in
you shall sell, sign, transfer, convey, give away, mortgage, or
otherwise encumber any direct or indirect interest in this
Agreement (including any ownership interest in you), the Hotel, or
a substantial portion of the assets (including building and real
estate) of the Hotel without the prior written consent of Licensor.
Licensor's written consent shall not be required to mortgage the
building and real estate on the site of the Hotel premises to a
bank or other financial institution, provided that you remain the
mortgagor.
(2) If the transfer is equal to less than a fifty percent (50%) equity
interest in you and does not have the effect of transferring
control (as described in Paragraphs (3) and (4) below), the
transfer shall not require the prior approval of Licensor, provided
that you notify Licensor in writing of such transfer within thirty
(30) days following such transfer.
(3) If a transfer, alone or together with other previous, simultaneous,
or proposed transfers, would have the effect of transferring a
controlling interest in this Agreement, you, the Hotel, or greater
than fifty percent (50%) of the assets (including building and real
estate) of the Hotel, such transfer shall require Licensor's prior
approval, and Licensor may, in its sole discretion, require any or
all of the following as conditions of its approval, which approval
shall not be unreasonably withheld:
(a) all of your accrued monetary obligations to Licensor and its
subsidiaries and affiliates and all other outstanding
obligations related to the Hotel shall have been satisfied and
you are not otherwise in default;
(b) the transferee, and all shareholders in the transferee, shall
demonstrate to Licensor's satisfaction that the transferee and
its shareholders or general partners, as appropriate, meet
Licensor's then current qualifications being applied to new
applicants including, business standards, ability to conduct
the Hotel (as may be evidenced by prior related business
experience or otherwise), and have adequate financial resources
and capital to operate the Hotel;
(c) transferee and the shareholders or general partners in the
transferee shall execute the standard form license agreement
then being offered to new Hotel System licensees and such other
ancillary agreements as Licensor may require for the Hotel and
the general manager shall complete the initial training program
then in effect for new licensees;
9
(d) the Hotel shall be upgraded to conform to the then-current
standards and specifications for hotels operating under the
Hotel System if the most recent Quality Assurance Score was
below four hundred and fifty (450). In any event, all
deficiencies noted on the most recent inspection must be
remedied by the transferee within ninety (90) days of such
transfer. You shall complete any upgrade required under this
Paragraph within the time specified by Licensor;
(e) You shall pay a transfer fee equal to Two Thousand Five Hundred
Dollars ($2,500.00), for a term equal to the balance of the
original term of this License. No fee shall be required for
transfers to the spouse, issue, parent, or sibling of a partner
or shareholder in you, or from one partner or shareholder to
another. If the transferee requests approval of a term greater
than the remaining term of this License, the then-current
standard minimum application fee, prorated according to the
period of time requested which exceeds the original term of
this License, shall be paid to Licensor;
(f) the transferor shall have executed a general release, in a form
satisfactory to Licensor, of any and all claims against
Licensor and its officers, directors, shareholders, and
employees, in their corporate and individual capacities,
including, without limitation, claims arising under federal,
state, and local laws, rules, and ordinances;
(g) the transferee, and all shareholders or general partners in the
transferee, shall enter into a written assignment, in a form
satisfactory to Licensor, assuming and agreeing to discharge
all of your obligations under this Agreement;
(h) you shall remain liable for all obligations to Licensor and its
subsidiaries and affiliates in connection with the Hotel prior
to the effective date of the transfer and shall execute any and
all instruments reasonably requested by Licensor to evidence
such liability.
(4) For the purposes of this Agreement, "control" shall mean the
possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a person, corporation
or other business entity, whether through the ownership of voting
securities, by contract, or otherwise.
(5) Any purported assignment or transfer, by operation of law or
otherwise, not having the prior written consent of Licensor shall
be null and void and shall constitute a material breach of this
Agreement, for which Licensor may then terminate without
opportunity to cure pursuant to Paragraph 10.C. of this Agreement,
and seek injunctive relief as well as monetary damages.
C. Transfers of the License or Equity Interest in Licensee Upon Death.
Upon your death or mental incompetency or of a person owning all or any
interest in you, the executor, administrator, or personal representative of
such person shall transfer within three (3) months after such death or mental
incompetency his interest to a third party approved by Licensor. Such
transfers, including, without limitation, transfers by devise or inheritance,
shall be subject to the same conditions as any inter vivos transfer. However,
in the case of transfer by devise or inheritance, if the heirs or
beneficiaries of any such person are unable to meet the conditions in this
Paragraph 8, the personal representative of the deceased shareholder shall
have reasonable time to dispose of the deceased's interest in you, which
disposition shall be subject to all the terms and conditions for transfers
contained in this Agreement. If the interest is not disposed of within nine
(9) months, Licensor may terminate this Agreement.
D. Registration of a Proposed Transfer of Equity Interests. Securities in
you may be offered to the public only with the prior written consent of
Licensor, which consent shall not be unreasonably
10
withheld. All materials required by federal or state law for the sale of any
interest in you shall be submitted to Licensor for review prior to filing
with any government agency; and any materials to be used and any exempt
offering shall be submitted to Licensor for review prior to their use. No
offering by you shall imply (by use of the Proprietary Marks or otherwise)
that Licensor is participating as an underwriter, issuer, or officer of you
or Licensor's securities; and Licensor's review of any offering shall be
limited solely to the subject of the relationship between you and Licensor.
You and other participants in the offering must fully indemnify Licensor in
connection with the offering. For each proposed offering, you shall pay to
Licensor a non-refundable fee of Five Thousand Dollars ($5,000.00), or such
greater amount as is necessary to reimburse Licensor for its reasonable cost
and expenses associated with reviewing the proposed offering, including,
without limitation, legal and accounting fees.
E. Non-Waiver of Claims. Licensor's consent to a transfer of any interest
in the license granted herein shall not constitute a waiver of any claims it
may have against the transferring party, nor shall it be deemed a waiver of
Licensor's right to demand exact compliance with any of the terms of this
Agreement by the transferee.
F. Licensor's Right of First Refusal. If in the event that any party
holding any direct or indirect interest in this License, in you, or in all or
substantially all of the assets of the Hotel desires to accept any bonafide
offer from a third party to purchase such interest, you shall notify Licensor
as provided in Paragraph 13.F. hereof, and shall provide such information and
documentation relating to the offer as Licensor may require. Licensor shall
have the right and option, provided the third party wishes to remove the
Hotel from the Hotel System, exercisable within thirty (30) days after
receipt of such written notification, to send written notice to the seller
that Licensor intends to purchase the seller's interest on the same terms and
conditions offered by the third party. If Licensor elects to purchase the
seller's interest, closing on such purchase shall occur within ninety (90)
days from the date of notice to the seller of the election to purchase by
Franchisor. If Licensor elects not to purchase the seller's interest, any
material change thereafter in the terms of the offer from a third party shall
constitute a new offer subject to the same rights of first refusal by
Licensor as in the case of the third party's initial offer (minor changes to
the offer shall not constitute a new offer and shall be subject to the notice
period of the initial offer). Failure of Licensor to exercise the option
afforded by this Paragraph 8.F. shall not constitute a waiver of any other
provision of this Agreement, including all of the requirements of this
Paragraph 8.F., with respect to a proposed transfer. In the event the
consideration, terms, and/or conditions offered by a third party are such
that Licensor may not reasonably be required to furnish the same
consideration, terms, and/or conditions, then Licensor may purchase the
interest proposed to be sold for the reasonable equivalent in cash. If the
parties cannot agree within thirty (30) days on the reasonable equivalent in
cash of the consideration, terms, and/or conditions offered by the third
party, an independent appraiser shall be designated by Licensor at Licensor's
expense, and the appraiser's determination shall be binding.
G. No Right of First Refusal. In the event that you receive an offer from
a third party to purchase the Hotel and the third party wishes to keep the
Hotel in the Hotel System, Licensor shall have no right of first refusal
provided the third party meets the qualifications set forth in Paragraph 8.
9. Condemnation and Casualty.
A. Condemnation. You shall, at the earliest possible time, give Licensor
full notice of any proposed taking of the Hotel by eminent domain. In the
event the Hotel is taken by eminent domain, Licensor shall give due and
prompt consideration, without any obligation, to transferring this Agreement
to a nearby location selected by you and approved by Licensor as promptly as
reasonably possible, and in any event within four (4) months of the taking.
If the new location is approved by Licensor and the transfer
11
authorized by Licensor and if you open a new hotel at the new location in
accordance with Licensor's specifications within two (2) years of the closing
of the Hotel, the new hotel shall 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 shall be the case), this Agreement will terminate
forthwith upon notice thereof by Licensor to you, without the payment of
liquidated damages hereunder.
B. Casualty. If the Hotel is damaged by fire or other casualty, you shall
expeditiously repair the damage. If the damage or repair requires closing the
Hotel, you shall immediately notify Licensor, shall repair or rebuild the
Hotel in accordance with Licensor's standards, shall commence reconstruction
within four (4) months after closing, and shall reopen the Hotel for
continuous business operations as soon as practicable (but in any event
within twenty four (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 9.B., this Agreement shall forthwith
terminate upon notice thereof by Licensor to you, with the payment of
liquidated damages calculated in the manner set forth in Paragraph 10.E.
C. No Extensions of Term. Nothing in this Paragraph 9 shall extend the
License Term but you shall not be required to make any payments pursuant to
Paragraphs 3.D. (1), (2) or (3) for periods during which the Hotel is closed
by reason of condemnation or casualty.
10. Termination.
A. Expiration of Term.
(1) If this Agreement is for a new Development, rather than a Conversion
from another type of existing lodging facility, then the term of this
Agreement shall expire without notice effective 20 years from the
authorized opening date, subject to earlier termination as set forth
herein. The parties shall initial the agreement here is the Agreement
is for a new Development: [if a New Development: initial here] ______.
(2) If this Agreement is for a Hotel to be converted to a Hawthorn Suites
Hotel from another type of existing lodging facility, then the term of
this Agreement shall expire without notice effective 10 years from the
authorized opening date, subject to earlier termination as set forth
herein. The parties shall initial the agreement here is the Agreement
is for a Conversion: [if a Conversion: initial here] ________.
(3) Liquidated Damages. The parties recognize the difficulty of
ascertaining damages to Licensor resulting from premature termination
of this Agreement, and have provided for liquidated damages in
Paragraph 10.E. below, which liquidated damages represent the parties'
best estimate as to the damages arising from the circumstances in
which they are provided.
B. Default with Opportunity to Cure.
(1) Except as provided in Paragraphs 10.C. hereof, you shall have thirty
(30) days (unless otherwise specified herein or in the notice by
Licensor) from receipt of written notice of a default within which to
remedy such default. If any such default is not cured within that
time, or such longer period as applicable law may require (or such
longer period as may be reasonably required by you to cure any
non-monetary default if you immediately commence, diligently and in
good faith pursue, and cure such default), this Agreement shall
terminate without further notice to you effective immediately upon the
expiration of
12
the thirty (30) day period, expiration of any extended period as
described above, or such longer period as applicable law may require.
Alternatively, Licensor may, at its option, suspend your access to the
reservation system until such default has been cured to Licensor's
satisfaction. You shall be in default hereunder for any failure to
comply with any of the requirements imposed by this Agreement, as it
may from time to time reasonably be supplemented by the Manual, or to
carry out the terms of this Agreement in good faith.
(2) If during the twelve (12) months preceding a notice of default in (1)
above you shall have engaged in a violation of this Agreement for
which a notice of default was given and such default was remedied, the
period given to remedy defaults thereafter shall, if and to the extent
permitted by law, be ten (10) days instead of thirty (30).
(3) In any judicial proceeding in which the validity of termination is at
issue, Licensor shall 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 as
described in Section 10(B)(1) shall not relieve you of your
obligations hereunder.
C. Immediate Termination by Licensor. This Agreement shall immediately
terminate without notice to you if:
(1) (a) you, or any Guarantor of your obligations hereunder (a
"Guarantor"), shall generally not pay your debts as they become due
or shall admit in writing an inability to pay your debts, or shall
make a general assignment for the benefit of creditors; or
(b) you, or any Guarantor, shall commence or consent to any case,
proceeding or other action seeking reorganization, arrangement,
adjustment, liquidation, dissolution or composition of you or your
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) you, or any 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 you 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 (7) business days after the entry thereof or
(ii) remains undismissed for a period of forty-five (45) days; or
(e) an attachment remaining on all or a substantial part of the Hotel
or of your or any Guarantor's assets for thirty (30) days; or
(f) you or any Guarantor fails, within sixty (60) days of the entry of
a final judgment against you in any amount exceeding Fifty
Thousand Dollars ($50,000), to discharge, vacate or reverse the
judgment, or to stay execution of it, or if appealed, to discharge
the judgment within thirty (30) days after a final adverse
decision in the appeal; or
13
(2) you cease to operate the Hotel at the Location or under the
Proprietary Marks, or loses possession or the right to possession of
all or a significant part of the Hotel, except as otherwise provided
in Paragraph 9 hereof; or
(3) you contest in any court or proceeding Licensor's ownership of the
Hotel System or any part of it, or the validity of any of the
Proprietary Marks; or
(4) a breach of Paragraph 8 hereof occurs; or
(5) you fail to continue to identify the Hotel to the public as a Hawthorn
Hotel; or
(6) any action is taken toward dissolving or liquidating you or any
Guarantor, if it is a corporation or partnership, except for death of
a partner; or
(7) you or any of your 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 Hotel System, the
Proprietary Marks and the goodwill associated therewith, the Licensor,
the Licensor's parent or your affiliates or subsidiaries in any way);
or
(8) you knowingly maintain false books and records of account or knowingly
submits false reports or information to Licensor; or
(9) if you intentionally disclose or divulge the contents of the Manual or
other trade secrets or confidential information provided to you by
Licensor to any unauthorized person or fail to exercise reasonable
care to prevent such disclosure; or
(10) if you intentionally or negligently make any material false
statements or omissions to Licensor in connection with your
Application.
D. De-identification of Hotel Upon Termination. You shall take whatever
action is necessary to assure that no use is made of any part of the Hotel
system at or in connection with the Hotel or otherwise after the license term
ends. This shall involve, among other things, returning to Licensor the
Manual and all other materials proprietary to Licensor, removal of all
distinctive signs, changing the telephone listing and removal of all items
bearing the Hawthorn Hotel logo, name, trademarks and/or service marks.
Further, until all modifications required by this Paragraph 10.D. are
completed, you shall (i) maintain a conspicuous sign at the registration desk
in a form specified by Licensor stating that the Hotel is no longer
associated with the Hotel System, and (ii) advise all customers or
prospective customers telephoning the Hotel that it is no longer associated
with the Hotel System. Anything not done by you within thirty (30) days after
the license term ends, may be done at your expense by Licensor or its agents,
who may enter upon the premises of the Hotel for that purpose.
E. Payment of Liquidated Damages. If this Agreement terminates pursuant to
Paragraphs 3.B., 9.B., 10.C. or 10.D. above at any time after the first
twenty four (24) months of operation, you shall promptly pay Licensor (in
addition to any amounts then due to Licensor, and 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 based on the average occupancy rate for the twelve (12) months preceding
the termination as follows:
1. if the occupancy rate was less than fifty percent (50%) then you shall
pay no liquidated damages;
2. if the occupancy rate was fifty percent (50%) to fifty nine and nine
tenths percent (59.9%) then you shall pay an amount equal to twelve
(12) months of fees required under Paragraph 3.D.1;
3. if the occupancy rate was sixty percent (60%) to sixty nine and nine
tenths percent (69.9%) then you shall pay an amount equal to twenty
four (24) months of fees required under Paragraph 3.D.1;
14
4. if the occupancy rate was seventy percent (70%) or greater then you
shall pay an amount equal to thirty six (36) months of fees required
under Paragraph 3.D.1;
5. if this Agreement terminates at any time during the first twenty four
(24) months of operation, you shall promptly pay to Licensor liquidated
damages equal to thirty six (36) times the average monthly payment
under Paragraph 3.D.1.
11. Renewal. Licensee may apply to renew this Agreement for a term of ten
years. Licensor will require submission of a completed application on
Licensor's then current form, submission of an application fee in the amount
equal to the then current fee charged to new licensees, and Licensor's
approval of the application. Licensor's approval of the application will be
granted or denied in Licensor's sole discretion, and may be conditionally
granted based upon satisfaction of certain conditions such as Licensee's
renovation and/or upgrading of the Hotel to then-applicable Hotel System
standards.
12. Relationship of Parties.
A. No Agency Relationship. You are 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 you 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. You shall
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 you or anyone associated or affiliated with you or the Hotel.
Such steps may, for example, include giving notice in private rooms, public
rooms and advertisements, on business forms and stationery, and any other
materials, 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, you shall not use the word "Hawthorn" or any similar
words in your corporate, partnership, or trade name, nor authorize or permit
such use by anyone else. You shall not use the word "Hawthorn" or any other
name or mark associated with the Hotel System to incur any obligation or
indebtedness on behalf of Licensor.
C. Third Party Beneficiary. You hereby acknowledge that HSA is a third
party beneficiary under this Agreement, with the independent right to enforce
your obligations hereunder and to obtain such remedies for any failure on
your part to perform your obligations to the full extent permitted by this
Agreement and in the place of the 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
15
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 Atlanta, Georgia. It shall be deemed made and entered
into in the state of Georgia and shall be governed and construed under and in
accordance with the laws of the state of Georgia. In entering into this
Agreement, you acknowledge that it has been sought, voluntarily accepted and
become associated with Licensor who is headquartered in Atlanta, Georgia, and
that this Agreement contemplates and shall 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 Georgia.
C. Exclusive Benefit. This Agreement is exclusively for the benefit of the
parties hereto and it shall 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 you.
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 you concerning this Agreement or relating to the Hotel
System, which representation is not fully set forth herein or in Licensor's
"Offering Circular for Prospective Franchisees." No change in this Agreement
shall be valid unless in writing signed by both parties. No failure to
require strict performance or to exercise any right or remedy hereunder shall
preclude requiring strict performance or exercising any right or remedy in
the future.
E. Licensor's Withholding of Consent. Licensor's consent, wherever
required, may be withheld if any default by you exists under this Agreement.
Approvals and consents by Licensor shall not be effective unless evidenced by
a writing duly executed on behalf of Licensor.
F. Notices. Any and all notices required or permitted under this Agreement
shall be in writing and shall be delivered by any means which shall provide
evidence of the date received, to the respective parties at the following
addresses unless and until a different address has been designated by written
notice to the other party:
Notices to LICENSOR: Hawthorn Suites Franchising, Inc.
13 Corporate Square, Suite 250
Atlanta, Georgia 30329
(404) 321-4045
Notices to you: {{ENTITYNAMECAPS}}
{{PCADDRESS1}}
{{PCADDRESS2}}
Atten: {{PCNAME}}
Any notice shall be deemed to have been given at the date and time it is
evidenced to have been received.
G. 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.
16
H. Management of the Hotel. You must at all times retain and exercise
direct management control over the Hotel's business. You 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 consent of Licensor.
17
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first stated above.
LICENSEE:
{{ENTITYNAMECAPS}}
By:
{{SIGNEENAME}}
{{SIGNEETITLE}}
Attest:
Secretary
LICENSOR:
HAWTHORN SUITES FRANCHISING, INC.
By:
Jon Leven
Vice President Franchise Sales and
Development
Attest:
Asst. Secretary
18
GUARANTY
As an inducement to Hawthorn Suites Franchising, 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"),
shall be punctually paid and performed.
Upon default by Licensee or notice from Licensor, the undersigned shall
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 shall 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:
{{GUARANTOR1}}, Legal Signature
{{GUARANTOR2}}, Legal Signature
19
ATTACHMENT A
Facilities (Paragraph 1):
Site-Area and general description: A Hawthorn Suites hotel located at
{{HOTELADDRESS1}},
{{HOTELADDRESS2}}
Number of approved Suites: {{ROOMS}}
Ownership of Licensee (Paragraph 8):
{{ENTITYNAMECAPS}} 100%
20
ATTACHMENT B
TERRITORY
The Territory is defined as that area bordered by:
21
ATTACHMENT C
You acknowledge that every detail of the Hotel System is important to
Licensor and other licensees operating under the Hotel System in order to
develop and maintain the standards and public image of the Hotel System. You
agree to comply with the details of the Hotel System as specified by Licensor
in the Manual, or otherwise in writing, and not to deviate therefrom.
The dates below set forth the development schedule for the Hotel, whether
new development or upgrading an existing facility.
1) You shall submit preliminary plans, including site layout and outline
specifications adapting Licensor's then-prototypical plans on or before
a date 3 months from the date of this License Agreement.
2) You shall submit complete working drawings and specifications for the
Hotel and Hotel premises, including its proposed equipment,
furnishings, facilities and signs with such detail and containing such
information as Licensor may request on or before a date 6 months from
the date of this License Agreement.
The Plans as submitted to Licensor shall conform to then prevailing Hotel
System standards, including the construction standards set forth in the
Manual. Construction shall not begin unless and until Licensor has approved
the Plans. Thereafter, no change shall be made to the Plans without the
advance consent of Licensor. Notwithstanding the foregoing, after the Plans
have been approved, if in the course of actual construction any change in the
Plans occurs, you shall notify Licensor promptly. Licensor shall determine
whether construction has been completed in accordance with the Plans.
3) Construction of the Hotel shall commence on or before a date 9 months
from the date of this License Agreement. Commencement of construction
shall mean excavation and poured footings with a finished building
slab. Once the construction has commenced, it shall continue
uninterrupted (except for interruption by reason of events constituting
force majeure) until construction is completed. You shall, within five
(5) days of the commencement of construction, provide written notice to
Licensor that construction has begun. As used in this License, "force
majeure" means an act of God, war, civil disturbance, government
action, fire, flood, accident, hurricane, earthquake or other calamity,
strike or other labor dispute, or other action beyond the control of
you.
4) The Hotel shall be furnished, equipped and shall otherwise be made
ready to open for business in accordance with the License not later
than a date 15 months from the date of this License Agreement
("Completion Date").
5) If the Hotel shall be a Conversion from an existing lodging facility to
a Hawthorn Suites hotel, following is a required timetable for certain
required changes/upgrades. All Work shall be completed no later than 9
months from the date of this License.
Requirements By (date):
22
You shall, within ten (10) days of the Completion Date, submit a written
request to Licensor for Licensor to conduct a final inspection. Upon receipt
of such request, Licensor shall promptly conduct such final inspection. You
shall open for business within ten (10) days after receipt of Licensor's
authorization to do so. The date upon which you receive authorization to open
for business shall be the "Opening Date". You shall not open for business
until Licensor provides final approval and authorization in writing.
The Hotel shall not be opened for business as a Hawthorn Hotel unless and
until:
(i) Licensor has approved and accepted, in advance, in writing the
construction of the Hotel in accordance with the Plans; the
installation of all items of equipment, furniture, signs, computer
terminals and related supplies; and the hiring and training of staff
necessary to operate the Hotel in accordance with Licensor's
requirements;
(ii) no accounts are past due to Licensor, its parent, divisions,
subsidiaries or affiliated companies by you;
(iii) you are in full compliance with all of the terms of this License
Notwithstanding anything else herein to the contrary, Licensor may authorize
License to open and operate the Hotel even though you have not fully complied
with the terms of this License, provided that you agree to fulfill all
remaining terms of this License on or before the dates designated by
Licensor.
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