VEHICLE LEASE AGREEMENT
THIS VEHICLE LEASE AGREEMENT (hereinafter the "Agreement") is made as
of the 1st day of November, 1996, by and between MANOR CARE, INC. (hereinafter
"Lessor"), a Delaware corporation, and CHOICE HOTELS HOLDINGS, INC. (hereinafter
"Lessee"), a Delaware corporation (to be renamed Choice Hotels International,
Inc.).
NOW, THEREFORE, in consideration of the mutual covenants and provisions
herein contained, Ten Dollars ($10.00) in hand paid by Lessee to Lessor, and
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. Lease. Lessor hereby leases to Lessee, and Lessee leases from
Lessor, those certain Vehicles (the "Vehicles") listed on Schedule 1 which
schedule is attached hereto and is a part hereof. Lessor shall have no
responsibility for replacing any Vehicles nor for furnishing any substitute
Vehicles.
2. Use of Vehicles. The Lessee shall maintain each of the Vehicles in
good condition and repair, ordinary wear and tear excepted. The Lessee shall use
the Vehicles in the trade and business of the Lessee and the Lessee's wholly
owned subsidiaries and affiliates and only for lawful purposes within the United
States. In no event shall any Vehicle be used (i) for towing any property other
than in accordance with the Vehicle manufacturer's specifications, or (ii) for
transporting explosive, radioactive, flammable, or hazardous materials. The
Lessee shall comply with (i) all applicable requirements of law relating to the
registration, leasing, insurance, use, and operation of the Vehicles, including
operators' licensing requirements, and (ii) all conditions of the policies of
insurance on the Vehicle. The Lessor shall not be responsible for loss or damage
to any goods or other property placed or carried in any Vehicle arising from any
cause whatsoever. Each Vehicle shall be operated by a safe, competent and duly
licensed driver, selected, employed and under the supervision of Lessee.
3. Sublease or Assignment. The Lessee shall not sublease or assign any
Vehicle.
4. Disclaimer of Warranties. The Lessor hereby assigns, and will
otherwise make available to the Lessee, all of the Lessor's rights, if any,
under the manufacturers' and vendors' warranties on each Vehicle. Acceptance of
delivery of the Vehicles by the Lessee shall constitute the Lessee's
acknowledgment that the Lessee has inspected each Vehicle and is satisfied
therewith. THE LESSOR MAKES NO REPRESENTATIONS OR WARRANTIES OF ANY KIND
WHATSOEVER, EXPRESS OR IMPLIED, WITH RESPECT TO THE VEHICLES, AND THERE IS NO
IMPLIED WARRANTY OF MERCHANTABILITY OR OF FITNESS FOR A PARTICULAR PURPOSE. IN
NO EVENT SHALL LESSOR BE LIABLE FOR CONSEQUENTIAL, SPECIAL, INDIRECT OR
INCIDENTAL DAMAGES. THE VEHICLES ARE LEASED ON AN AS IS WHERE IS BASIS WITH ALL
FAULTS.
5. Term. The term of this Agreement shall commence on November 1, 1996
(the "Distribution Date") and shall remain in effect through the end of the
first full Fiscal Year immediately following the Distribution Date. Unless
terminated pursuant to the terms hereof, the Agreement shall automatically renew
each Fiscal Year thereafter for the extended term of said Fiscal Year and shall
not extend past the last day of the thirtieth (30th) month following the
Distribution Date; provided, however, that either party may terminate this
Agreement at any time for any reason or no reason upon thirty (30) days' prior
written notice to the other party. This Agreement may also be terminated in the
event of a
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default (past the expiration of any applicable cure period provided herein) in
accordance with the provisions of this Agreement.
6. Expenses, Fees, and Taxes. The Lessee shall pay all costs, expenses,
fees, and charges whatsoever incurred in connection with the titling and
registration of the Vehicles and the ownership, use and operation of the
Vehicles during the lease term, including, but not limited to, fuel, lubricants,
replacement parts and accessories, repairs, maintenance, storage, parking,
tolls, fines, registration fees, license fees, tags, and all taxes whatsoever by
whomsoever payable (except any tax measured by the net income of the Lessor) on
or relating to each of the Vehicles and their purchase, sale, rental, use, or
operation. Without limiting the generality of the foregoing, the Lessee shall be
solely responsible for fines and penalties arising out of the use or operation
of the Vehicles. Lessee shall also pay any and all additional costs and expenses
which Lessor may incur for the express purpose of providing services to Lessee.
The Lessee shall reimburse the Lessor the amount of any such costs, expenses,
fees, fines, penalties, charges, and taxes paid by the Lessor on account of the
Vehicles.
7. Insurance. The Lessee shall comply with the insurance requirements
set forth in Schedule 2, which schedule is attached hereto and is a part hereof.
If at any time the Lessee is unable to or fails to provide required insurance
coverages, Lessor shall have the right, but not the obligation, to secure such
insurance and Lessee shall reimburse Lessor, upon demand, for all fees, costs,
expenses, and charges associated therewith.
8. Termination. Upon any termination of this Agreement, title to all
Vehicles shall pass to Lessee. Lessee shall be responsible for promptly
transferring all Vehicle titles and all Vehicle registrations. Should Lessee
desire to sell any Vehicle, title to such Vehicle shall be first transferred to
Lessee. The provisions of the Disclaimer of Warranties section of this Agreement
shall apply to all such sales or transfers. The Lessee shall not be entitled to
return any Vehicle to Lessor for any reason whatsoever.
9. Loss of or Damage to Vehicles. All risk of loss or damage to the
Vehicles from whatever cause shall be assumed by the Lessee.
10. Indemnification. In addition to the obligations of Lessee to
indemnify, defend and hold Lessor harmless contained in the Distribution
Agreement (hereinafter defined), the following shall also apply. The Lessee
shall at all times be liable to defend, indemnify, and hold harmless the Lessor,
its affiliates and their officers, directors, employees and agents, against all
claims, damages and liabilities of whatever kind or nature and all costs and
expenses, including attorneys' fees, incurred in connection with, relating to,
or arising out of the possession, use, or operation of the Vehicles during the
period from and after the date hereof. This indemnification obligation shall
survive the termination of this Agreement.
11. Default.
(a) In the event (i) the Lessee defaults in the payment of any rental
or other amounts payable under this Agreement, or defaults in the performance of
the covenants or obligations of the Lessee hereunder, and should such default
continue for a period of ten (10) days following receipt by the Lessee of
written notice of a default, (ii) there shall be filed by or against the Lessee
any action under any provision of any state or federal law relating to
insolvency or bankruptcy, and such action is not dismissed within sixty (60)
days of the filing, (iii) a receiver or trustee is appointed for the Lessee's
property, and such appointment is not withdrawn within sixty (60) days of the
date of appointment, or (iv) the Lessee makes an assignment
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for the benefit of creditors, the Lessor may terminate this Agreement, and
thereupon, all of the rights of the Lessee under this Agreement and with respect
to the Vehicles shall immediately terminate.
(b) Any and all remedies available to Lessor under this Agreement: (i)
shall be in addition to any and all other remedies Lessor may have at law or in
equity, (ii) shall be cumulative, and (iii) may be pursued successively or
concurrently as Lessor may elect. The exercise or any remedy by Lessor shall not
be deemed an election of remedies or preclude Lessor from exercising any other
remedies in the future.
12. Notices. All notices and other communications hereunder shall be in
writing and shall be delivered by hand or shall be deemed to have been properly
made and given one (1) business day after being deposited with a reputable
overnight courier service such as Federal Express, Airborne Express or UPS Next
Day Air for next business day delivery or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other addresses for a party as shall be specified by like notice) and shall be
deemed given on the date on which such notice is received:
To Lessor: To Lessee:
Manor Care, Inc. Choice Hotels Holdings, Inc.
Attn: General Counsel Attn: General Counsel
11555 Darnestown Road 10750 Columbia Pike
Gaithersburg, MD 20878 Silver Spring, MD 20901
13. The Distribution Agreement. This Agreement is subject to the
terms, covenants, conditions and obligations contained in the Distribution
Agreement between the parties dated the date hereof (the "Distribution
Agreement"), including without limitation, the indemnities contained therein.
14. Entire Agreement. This Agreement contains the entire agreement and
understanding of the parties with respect to the subject matter hereof and
supersedes all prior oral or written agreements and understandings related
thereto.
15. Waivers, Modifications, Severability. No waiver or modification of
any of the provisions of this Agreement shall be binding unless made in writing
and signed by the parties hereto. Failure of either party at any time to require
performance of any provision of this Agreement shall not affect the right at a
later time to enforce the provision. In the event that any provision of this
Agreement shall be held invalid, illegal, or unenforceable, such invalidity,
illegality, or unenforceability shall not affect any other provisions of this
Agreement.
16. Binding Effect. This agreement shall be binding upon, and shall
inure to the benefit of, the parties hereto and their respective permitted
heirs, executors, successors, and assigns.
17. Headings. The headings of the sections of this Agreement are
inserted for the convenience of the reference only and shall not be deemed to
constitute a part hereof.
18. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Maryland, regardless of the laws
that might be applied under applicable principles of conflicts of laws.
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19. Consent to Jurisdiction. The parties irrevocably submit to the
exclusive jurisdiction of (a) the Courts of the State of Maryland in Montgomery
County, and (b) the United States District Court for the State of Maryland for
the purposes of any suit, action or other proceeding arising out of this
Agreement.
20. Counterparts. The agreement may be executed in counterparts each
of which shall be an original and all of which together shall constitute one and
the same Agreement.
21. Commercially Reasonable Terms and Conditions. The terms and
provisions of this Agreement are intended to reflect commercially reasonable
terms and conditions (including, but not limited to, pricing) that are at least
as favorable and as competitive to Lessee as the terms and conditions Lessor
would grant or require of third parties for substantially similar goods and
services.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
ATTEST: LESSOR:
MANOR CARE, INC.
By: /s/ James H. Rempe
James H. Rempe
Assistant Secretary Title: Senior Vice President
ATTEST: LESSEE:
CHOICE HOTELS HOLDINGS, INC.
(To be renamed Choice Hotels
International, Inc.)
By: /s/ James A. MacCutcheon
James A. MacCutcheon
Assistant Secretary Title: Senior Vice President
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SCHEDULE 1
List of Vehicles
[To be produced by Alice Owens]
SCHEDULE 2
Insurance Requirements
[To be produced by Sherry Terao]