EXHIBIT 10.11
MASTER LICENSE AGREEMENT FOR THE TERRITORY OF:
DOMINION OF CANADA
AGREEMENT DATE: SEPTEMBER 30, 1996
BETWEEN
TRAVELODGE HOTELS, INC., AS LICENSOR
AND
CHARTWELL CANADA HOSPITALITY CORP., AS MASTER LICENSEE
TABLE OF CONTENTS
Page
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1: GENERAL DEFINITIONS........................................ 1
2: MASTER LICENSE.............................................. 6
2.1 GRANT OF MASTER LICENSE.............................. 6
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2.2 EXCLUSIVE RELATIONSHIP............................... 7
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2.3 TERM................................................. 7
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2.4 INTENTIONALLY DELETED................................ 8
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2.5 REPRESENTATIONS AND WARRANTIES OF MASTER LICENSEE.... 8
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2.6 REPRESENTATIONS AND WARRANTIES OF COMPANY............ 9
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2.7 EXISTING FRANCHISE AGREEMENTS........................ 9
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3: DEVELOPMENT OBLIGATIONS OF MASTER LICENSEE................. 10
3.1 DEVELOPMENT SCHEDULE................................. 10
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3.2 SITE SELECTION....................................... 10
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3.3 UNIT SITE PLANS...................................... 11
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3.4 (INTENTIONALLY DELETED.)............................. 11
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3.5 COMPANY APPROVED FRANCHISEES......................... 11
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3.6 AREA AGREEMENTS...................................... 11
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4: SERVICES AND OBLIGATIONS................................... 12
4.1 INITIAL SERVICES OF COMPANY.......................... 12
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4.2 INITIAL AND CONTINUING TRAINING...................... 12
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4.3 CONTINUING SERVICES OF COMPANY....................... 13
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4.4 OPENING INSPECTION OF NEW AND CONVERSION UNITS....... 14
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4.5 RESERVATION CENTER................................... 14
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4.6 MARKETING PROGRAMS................................... 16
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4.7 ANNUAL BUDGET AND DEVELOPMENT PLAN................... 16
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4.8 FRANCHISE MARKETING AND SERVICES..................... 17
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4.9 ADDITIONS AND MODIFICATIONS TO THE TRAVELODGE SYSTEM. 17
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4.10 ITEMS USED BY UNITS.................................. 17
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4.11 COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES..... 18
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5: FEES........................................................ 18
5.1 DEVELOPMENT FEE...................................... 18
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5.2 COMPANY INITIAL FEES................................. 18
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5.3 COMPANY CONTINUING FEES.............................. 19
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5.4 (INTENTIONALLY DELETED.)............................. 19
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5.5 FRANCHISE SALES COMMISSIONS.......................... 19
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5.6 RESERVATION FEES..................................... 19
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5.7 COMPANY MARKETING CONTRIBUTIONS...................... 20
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5.8 TRANSFER FEE......................................... 20
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5.9 (INTENTIONALLY DELETED.)............................. 20
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5.10 TERMINATION AND SIMILAR FEES......................... 21
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5.11 INTEREST ON LATE PAYMENTS............................ 21
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5.12 WITHHOLDING TAXES.................................... 21
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5.13 CURRENCY AND PLACE OF PAYMENT........................ 21
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5.14 PAYMENT APPROVALS.................................... 21
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6: SYSTEM STANDARDS/MANUALS.................................... 22
6.1 SYSTEM STANDARDS AND DEVELOPMENT OF TERRITORY SYSTEM
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STANDARDS MANUAL.................................... 22
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6.2 MODIFICATION OF THE TERRITORY SYSTEM STANDARDS MANUAL 22
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7: MARKS....................................................... 23
7.1 OWNERSHIP OF THE MARKS............................... 23
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7.2 REGISTRATION......................................... 23
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7.3 LICENSING OF FRANCHISEES............................. 24
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7.4 REGISTRATION OF AUTHORIZED USER INSTRUMENTS.......... 24
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7.5 INFRINGEMENTS........................................ 24
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7.6 USE OF THE MARKS..................................... 24
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7.7 LOCAL MARKS.......................................... 25
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8: INSURANCE OBLIGATION........................................ 25
9: CONFIDENTIAL INFORMATION.................................... 26
10: RELATIONSHIP OF THE PARTIES/INDEMNIFICATION............... 27
10.1 INDEPENDENT CONTRACTORS............................. 27
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10.2 MASTER LICENSEE'S INDEMNIFICATION OF COMPANY AND THE
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MARKS OWNER........................................ 27
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10.3 SPECIAL INDEMNITY................................... 28
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10.4 COMPANY'S INDEMNIFICATION OF MASTER LICENSEE........ 28
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11: FRANCHISE AGREEMENTS...................................... 28
11.1 FRANCHISE AGREEMENTS UTILIZED BY MASTER LICENSEE.... 28
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11.2 TERMINATION/EXPIRATION OF FRANCHISES................ 29
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11.3 ENFORCEMENT, INSPECTION AND ASSISTANCE BY MASTER
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LICENSEE........................................... 29
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11.4 UNITS OPERATED BY AFFILIATES........................ 30
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11.5 FRANCHISE SERVICES.................................. 30
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11.6 GUEST ROOM REGISTRATION FORMS....................... 30
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12: REPORTS.................................................... 31
13: INSPECTIONS AND AUDITS..................................... 31
14: ASSIGNMENTS................................................ 32
14.1 ASSIGNMENT BY COMPANY............................... 32
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14.2 ASSIGNMENT BY MASTER LICENSEE....................... 32
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14.3 ASSIGNMENT TO AN AFFILIATE.......................... 32
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15: TERMINATION................................................ 33
15.1 BY COMPANY.......................................... 33
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15.2 BY MASTER LICENSEE.................................. 33
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15.3 IN THE EVENT OF WAR................................. 33
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16: RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION...... 34
16.1 PAYMENT OF AMOUNTS DUE TO COMPANY................... 34
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16.2 CHANGE OF IDENTIFICATION............................ 34
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16.3 DISCONTINUANCE OF USE OF TRAVELODGE SYSTEM.......... 35
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16.4 COVENANT NOT TO COMPETE............................. 35
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16.5 RIGHTS UPON TERMINATION OR EXPIRATION............... 35
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16.6 CLOSING............................................. 35
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16.7 PRICE FOR ASSIGNMENT OF FRANCHISES.................. 35
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16.8 (INTENTIONALLY DELETED.)............................ 36
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16.9 CONTINUING OBLIGATIONS.............................. 36
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16.10 EARLY TERMINATION BY MASTER LICENSEE................ 36
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17: GENERAL PROVISIONS........................................ 36
17.1 SEVERABILITY........................................ 36
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17.2 SUBSTITUTION OF VALID PROVISION..................... 37
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17.3 FORCE MAJEURE....................................... 37
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17.4 CUMULATIVE REMEDIES................................. 37
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17.5 ATTORNEYS' FEES..................................... 37
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17.6 GOVERNING LAW....................................... 38
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17.7 INTERPRETATION...................................... 38
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17.8 INFORMAL DISPUTE RESOLUTION......................... 38
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17.9 ARBITRATION......................................... 38
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17.10 DELIVERY OF NOTICES AND PAYMENTS.................... 39
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17.11 WAIVER.............................................. 40
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17.12 U.S. GOVERNMENT REGULATIONS......................... 40
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EXHIBITS ATTACHED:
A LIST OF MARKS
B GUARANTY
C FORM OF ASSIGNMENT AND ASSUMPTION AGREEMENT
D TRADEMARK LICENSE AGREEMENT
E FORM OF UNIT SOFTWARE LICENSE AGREEMENT
I INITIAL AGREEMENTS
EXHIBITS TO BE ATTACHED:
F ANNUAL BUDGET AND DEVELOPMENT PLAN
G FRANCHISE AGREEMENT FORM
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MASTER LICENSE AGREEMENT FOR ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
THIS AGREEMENT is made and entered into as of September 30, 1996 (the
"AGREEMENT DATE"), by and between TRAVELODGE HOTELS, INC., a corporation
organized under the laws of the State of Delaware, U.S.A., with its office at
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇.▇.▇. ▇▇▇▇▇ ("COMPANY"), and
CHARTWELL CANADA HOSPITALITY CORP., a corporation organized under the laws of
Delaware, with its principal office at ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ("MASTER LICENSEE").
WITNESSETH:
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WHEREAS, Company has developed a system for providing and marketing lodge,
hotel, suite, resort and lodging services and related ancillary services under
the name and style Travelodge(R) Hotel, Travelodge(R) Motor Hotel, Travelodge(R)
Motel, Travelodge(R) Suites Hotel, Travelodge(R) Suites Motel and Thriftlodge(R)
facilities. Company franchises the operation of hotel, suite, resort and
lodging facilities worldwide in accordance with such System, which is referred
to as the Travelodge System (as more particularly defined below); and
WHEREAS, Company desires to expand through the development of lodge, hotel,
suite, and resort facilities (which are sometimes collectively referred to
herein as "lodging facilities") operated under the Travelodge System and the
Marks in the Territory defined below; and
WHEREAS, Master Licensee recognizes the distinctiveness, confidentiality,
and value of the Travelodge System; the advantages which may be obtained by
using the Travelodge System in, and, if necessary, by adapting it to, the
Territory; and desires to acquire a master license to use and, if necessary, to
adapt the Travelodge System and the Marks for the purpose of franchising lodging
facilities in the Territory.
NOW, THEREFORE, in consideration of the premises, covenants and agreements
contained herein and other good and valuable consideration, the parties agree as
follows:
ARTICLE 1: GENERAL DEFINITIONS
Unless defined below, terms used in this Agreement are defined and
construed in the context in which they appear. As used in this Agreement, the
following terms shall have the meanings defined in this Article 1 unless a
different meaning is plainly required by the context:
1.1 "AFFILIATES" shall mean and include partnerships, corporations and
other legal entities that directly or indirectly control, are controlled by or
are under common control with either of the parties hereto.
1.2 "AGREEMENT YEAR" shall mean the twelve month period commencing on
January 1 of each calendar year, except that the first Agreement Year shall
commence on the Agreement Date and conclude on the December 31 following the
Agreement Date.
1.3 "AREA AGREEMENT" shall mean any area development or similar agreement
between Master Licensee and a third party (including its affiliates) providing
for the grant of exclusive or non-exclusive rights to develop or operate Units
within any area, region or political jurisdiction within the Territory.
1.4 "AREA CONTINUING FEES" shall mean all fees periodically paid to Master
Licensee under an Area Agreement with respect to Gross Room Revenues of Units or
on another basis relating to such Area Agreement.
1.5 "AREA FEES" shall mean, collectively, the Area Initial Fees and the
Area Continuing Fees.
1.6 "AREA FRANCHISEE" shall mean the party with which Master Licensee
enters into an Area Agreement.
1.7 "AREA INITIAL FEE" shall mean the fee payable by an Area Franchisee in
connection with the execution of an Area Agreement comparable to fees paid by a
Franchisee as described in Paragraph 1.23.
1.8 "CENTRAL RESERVATION SYSTEM" shall mean the computer system used by
Company to accept, store and communicate reservations for System Units
generally, or its technological equivalent.
1.9 (Intentionally Deleted)
1.10 "COMPANY CONTINUING FEES" shall mean the fees that Master Licensee
shall pay to Company on a monthly basis pursuant to Paragraph 5.3 as
consideration for the services Company shall provide to Master Licensee and for
the license of the Marks to Master Licensee.
1.11 "COMPANY INITIAL FEE" shall mean the fee that Master Licensee shall
pay to Company pursuant to Paragraph 5.2 for each Unit as consideration for the
services Company shall provide in connection with the development and opening of
such Unit.
1.12 "COMPANY MARKETING CONTRIBUTION" shall mean the contribution Master
Licensee shall make to Company pursuant to Paragraphs 4.6 and 5.6 as
consideration for certain advertising and marketing services provided to Master
Licensee as described therein.
1.13 "COMPANY RESERVATION FEES" shall mean the Franchise Reservation Fees
that Master Licensee collects from Franchisees that are payable to Company on a
monthly basis for certain services of the Central Reservation System provided by
Company pursuant to Paragraph 5.6 and which are not included in the Company
Marketing Contribution.
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1.14 "CONTINUING FRANCHISE FEE" shall mean the monthly fee that each
Franchisee shall pay to Master Licensee pursuant to its Franchise Agreement,
which fee shall be based on a percentage of Gross Room Revenues of the
Franchisee's Unit and paid as consideration for the services Master Licensee
shall provide to Franchisee and for the use of the Marks licensed under the
Franchise Agreement.
1.15 (Intentionally Deleted.)
1.16 "DEVELOPMENT FEE" shall mean the non-refundable initial development
and service fee that Master Licensee shall pay to Company pursuant to Paragraph
5.1 as consideration for Company's grant of the master license to Master
Licensee for the Territory and the services Company shall provide to Master
Licensee.
1.17 "DOLLARS" or "$" shall mean the legal currency of Canada, unless the
legal currency of the United States is specified.
1.18 "FRANCHISE AGREEMENT" shall mean each franchise agreement to be
entered into and used by Master Licensee to grant franchises to Franchisees as
approved by Company pursuant to Paragraph 11.1 hereof.
1.19 "FRANCHISEE" shall mean the party authorized by a Franchise Agreement
to operate a Unit, including Affiliates of Master Licensee, which term shall, to
the greatest extent possible, also include Area Franchisees unless the context
clearly otherwise requires.
1.20 "FRANCHISE FEES" shall collectively refer to the fees payable by
Franchisees to Master Licensee pursuant to the Franchise Agreements, including,
without limitation, Initial Franchise Fees, Franchise Reservation Fees,
Franchise System Fees and Continuing Franchise Fees. This term does not include
management fees paid to Master Licensee or an Affiliate for management services
actually performed in addition to the services provided to a Franchisee under a
Franchise Agreement.
1.21 "FRANCHISE RESERVATION FEES" shall mean the monthly fees that each
Franchisee shall pay to Master Licensee pursuant to its Franchise Agreement, for
charges and commissions in addition to the Franchise System Fees, as described
in Paragraph 5.6.
1.22 "FRANCHISE SYSTEM FEES" shall mean the monthly fees paid by each
Franchisee for marketing and reservation services based on a percentage of Gross
Room Revenues or a fixed amount pursuant to the terms of the applicable
Franchise Agreement, as described in Paragraph 4.6 hereof.
1.23 "GROSS ROOM REVENUES" shall mean all gross revenues (from both cash
and credit transactions) from the use, occupancy or rental of guest rooms at
Units, excluding food and beverage charges, entertainment charges, banquet and
meeting room charges, incidental service charges (valet, telex, facsimile,
concierge service charges and the like), telephone service fees and charges and
sales, occupancy, use and value-added taxes.
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charges and sales, occupancy, use and value-added taxes.
1.24 (Intentionally Deleted.)
1.25 "INITIAL FRANCHISE FEE" shall mean certain non-refundable fees paid
by a Franchisee to Master Licensee as follows: (a) the initial franchise fee, in
consideration for the grant of a franchise to operate a Unit; (b) a transfer or
relicense fee, in consideration for the authorization to transfer or relicense
the Unit, the franchise or assign the Franchise Agreement to a new owner; (c)
the renewal fee, if any, in consideration for the extension, modification or
renewal of the Franchise Agreement; and (d) the license fee paid by the licensee
of the Unit Reservation Software.
1.26 "LEGAL REQUIREMENTS" shall mean all laws, ordinances, regulations,
rules, administrative orders, decrees and policies of any Territory government,
governmental agency or department.
1.27 "LIBOR" shall mean, in respect of any relevant sum or any relevant
period, the rate shown on page "3750" (or any equivalent successor page thereto)
on the Telerate Monitor Screen as being the rate per annum at which Dollar
deposits are offered for one month at or about 11:00 a.m. (London time) on the
day before the first day of such period.
1.28 "LOCAL MARKS" shall mean the trademarks, service marks, trade names,
logos, slogans and commercial symbols developed or acquired from time to time by
Master Licensee (whether any such Local Marks are registered or not), as
approved by Company pursuant to Paragraph 7.7, for use in the Territory to
identify Units and the services and products offered, sold or used therein.
1.29 "MARKS" shall mean the trademarks, service marks, trade names, logos,
slogans and commercial symbols listed on Exhibit A hereto (whether any such
Marks are registered or not), as the same shall be amended from time to time,
and such other trademarks, service marks, trade names, logos, slogans and
commercial symbols as Company may authorize for use from time to time to
identify Units and the services and products offered, sold or used therein.
1.30 "MARKS OWNER" shall mean Company or its successors and assigns as
owner of
the Marks in the Territory.
1.31 "STAR RATING" shall mean the five star hotel rating system as used by
the tourism ministry of the national government of the Territory, or its
functional equivalent as selected by Company in its sole discretion.
1.32 "SYSTEM STANDARDS" shall mean the standards specified in writing from
time to time by Company as the same may be amended, modified, supplemented or
deleted from time to time, including, without limitation, standards relating to:
(a) "QUALITY STANDARDS" for Units, which include the design standards and other
standards for cleanliness, maintenance, supplies, types of
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permitted concessions, food and beverage services, vending machines, uniforms,
staffing, employee training, employee language capability, furniture, fixtures
and equipment, decor, guest services, operations, guest comfort and the like;
(b) "MARKS STANDARDS" for interior and exterior ▇▇▇▇-bearing signs, china,
linens, utensils, glassware, uniforms, stationery, supplies, advertising
materials and other items, including the right to specify which items shall omit
or bear the Marks and how the Marks are displayed thereon; (c) "DESIGN
STANDARDS" for new, conversion, upgraded or modified facilities, including
standards for all aspects of unit design, construction materials, landscaping,
interior decor, original and replacement furniture, fixtures and equipment,
uniforms, amenities, supplies and the like; and (d) "TECHNOLOGY STANDARDS" for
communications, point of sale terminals and computer hardware and software for
various applications, including, without limitation, rooms management, records
maintenance, marketing data collection and storage, accounting, budgeting and
reservation system access.
1.33 "TERRITORY" shall mean the Dominion of Canada ("CANADA") subject to
Paragraph 3.1.
1.34 "TERRITORY RESERVATION SYSTEM" shall mean the computer system or its
technological equivalent to be operated by Company or Master Licensee that
functions to accept, store and communicate lodging reservations either
originated in the Territory or intended for Units in the Territory, as described
in Paragraph 4.5.
1.35 "TERRITORY SYSTEM STANDARDS" shall mean the System Standards, as
adapted to the Territory by Master Licensee and approved by Company in
accordance with the procedure described in Paragraph 6.1 hereof.
1.36 "TRAVELODGE SYSTEM" shall mean a comprehensive system for providing
lodging facility services which at present includes: (a) the Marks; (b) other
intellectual property, including copyrights, confidential information, "System
Standards Manuals" and know-how; (c) advertising, publicity and other marketing
materials and programs; (d) design, construction operations, guest service,
technology and appearance standards defined as "System Standards" below; (e)
training programs and materials; (f) quality assurance standards, inspection
methods and scoring systems and other programs intended to establish, measure
and report on the quality of units and services provided to guests; (g) a
computerized central guest room reservation system; (h) consulting programs; and
(i) operating guidelines, specifications and policies.
1.37 "UNIT" shall mean a hotel, suites or resort lodging facility located
in the Territory approved and authorized by Master Licensee or Company to
operate as a Travelodge or Thriftlodge facility that meets Territory System
Standards and is subject to an executory Franchise Agreement.
1.38 "UNIT RESERVATION SOFTWARE" shall mean the computer software or its
technological equivalent licensed by Master Licensee to Franchisees that permits
each Unit to communicate with the Territory Center or the Central Reservation
System.
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ARTICLE 2: MASTER LICENSE
2.1 GRANT OF MASTER LICENSE. (a) Subject to all of the terms and
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conditions hereof, Company grants to Master Licensee, for and during the Term,
the exclusive right within the Territory to grant Travelodge System franchise,
license, area development and franchise brokerage rights, for the construction,
conversion, development, operation and marketing (subject to Article IV) of
Units in the Territory. Master Licensee may not license or franchise any other
party to grant subfranchises or sublicenses. Except as otherwise provided
herein, including, without limitation, Paragraphs 3.4 and 3.5 hereof, and
provided that Master Licensee is in compliance with this Agreement, Company and
its Affiliates, and Company's direct and indirect subsidiaries shall not
develop, manage or locate, or grant a license or franchise for, any Travelodge
System lodging facility in the Territory; provided, however, Company and other
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Travelodge System area, master and unit licensees and franchisees having units
located outside the Territory may advertise within the Territory. Nothing
contained in this Agreement restricts or affects the rights of Company to grant
Travelodge System franchises and licenses outside the Territory, or the rights
of Company and Company's Affiliates and their licensees the right to grant any
franchise or license of any kind or nature whatsoever other than Travelodge
System franchises, licenses, area development and franchise brokerage rights,
within the Territory.
(b) Master Licensee shall not enter into any Area Agreement for any area,
region or political jurisdiction within the Territory without the prior written
consent of Company, which will not be unreasonably withheld.
(c) Master Licensee's right and license to grant franchises is subject to
the execution by each Franchisee and Area Franchisee of a legally binding
acknowledgment (in the form prescribed by Company stating that, if the rights of
Master Licensee under the Franchise Agreement or Area Agreement become vested in
Company, Company is entitled to exercise all of such rights of Master Licensee
(including any rights of termination) in accordance with the Franchise Agreement
or Area Agreement and may enforce same against Franchisee or the Area Franchisee
without the consent of or reference to Master Licensee.
(d) The master license herein granted is limited to the Territory and
confers no rights upon Master Licensee to use or license the use of the
Travelodge System or the Marks outside the Territory, or to operate or franchise
others to operate Units outside the Territory. Master Licensee shall use the
Travelodge System only in the Territory in connection with the franchising and
marketing of Units. Master Licensee will not, directly or indirectly: use any
part of the Travelodge System outside the Territory (except for advertising
outside the Territory in accordance with the terms hereof); communicate any part
of the Travelodge System to any other natural or legal person except Master
Licensee's employees and Franchisees for use inside or outside the Territory; or
seek to establish or obtain proprietary rights, registration of any of the Marks
or other evidence of Travelodge System ownership anywhere in the world except as
expressly authorized by Company in writing in advance. Master Licensee shall
cause Affiliates,
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Area Franchisees and Franchisees to strictly comply with the restrictions
described in the foregoing sentence.
(e) The master license and the Travelodge System does not include a
purchasing, procurement, preferred vendor program of the type operated by
Company's Affiliate, HFS Incorporated under the trade name "HFS Purchasing
Services." Such purchasing, procurement, preferred vendor program is reserved
for such Affiliate and must be offered and licensed to another party which holds
the rights for the name and ▇▇▇▇ "HFS Purchasing" in the Territory. Company
reserves the right to designate its Affiliate or the Affiliate's Licensee as an
"Approved Supplier" for Units in the Territory, and to designate preferred
vendors in the Territory. Nothing contained in this Agreement shall prevent or
prohibit Master Licensee from offering its own purchasing service program to
Franchisees. Master Licensee shall have the right to designate the exclusive
purchasing source for ▇▇▇▇-bearing items and promotional items bearing Marks or
the "Sleepy Bear" for Units in the Territory.
(f) To induce Company to enter into this Agreement, Master Licensee shall
cause CHARTWELL LEISURE INC., a Canadian corporation (the "GUARANTOR") to
execute and deliver a guaranty of Master Licensee's performance and payment
obligations under this Agreement in the form of that certain Guaranty and
Assumption of Master Licensee's Obligations attached hereto as Exhibit B. To the
extent obligations are imposed on Affiliates in the Agreement, Master Licensee
shall cause Affiliates to perform such obligations as described herein.
2.2 EXCLUSIVE RELATIONSHIP. Master Licensee shall devote reasonable time,
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resources, energies and attention to the conduct of business as contemplated by
and pursuant to the terms of this Agreement but may engage in any other trade,
business, profession or endeavor.
2.3 TERM. The initial term of this Agreement shall commence on the
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Agreement Date and expire on December 31, 2026 (the "INITIAL TERM"). Master
Licensee shall have the right to automatic renewal of the master license for
renewal terms (each a "RENEWAL TERM") of fifteen (15) years as long as the
following conditions are satisfied as of and at all times after the date which
is six (6) months before the expiry of the Term (the "NOTICE DATE"): (a) Master
Licensee is in existence; (b) all required governmental approvals have been
obtained; (c) No valid notice of default delivered by Company to Master Licensee
under Paragraph 15.1 remains uncured at the expiration date of the Initial or
any Renewal Term, provided that if a default notice has been issued under
Paragraph 15.1, the expiry of the Term will be extended to match the expiry of
the cure period described in the default notice, but not more than ninety (90)
days after the original expiry of the Term; (e) At least five (5) Units are open
and operating at the expiry of the Initial or Renewal Term; and (f) The Renewal
Term is not prohibited under applicable Legal Requirements then in effect.
Company shall give written notice to Master Licensee if it determines that the
conditions for renewal will not be satisfied as of, or at any time after the
Notice Date. Master Licensee shall obtain all required governmental approvals
for the Initial and all Renewal Terms. The Initial Term and the Renewal Terms
are collectively referred to herein as the "TERM". Master Licensee may give
Company written notice of its intent not to renew not more than eighteen (18)
months and not less than twelve (12) months prior to the expiration of the
Initial Term or any Renewal Term. Company may commence remarketing the master
license
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rights to the Territory and may enter into a replacement master license to take
effect upon the expiry of the Term after receipt of the notice of non-renewal
from Master Licensee, or after the Notice Date if Company determines that there
is a reasonable prospect that Master Licensee will be unable or unwilling to
satisfy the conditions for renewal.
2.4 INTENTIONALLY DELETED.
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2.5 REPRESENTATIONS AND WARRANTIES OF MASTER LICENSEE. Master Licensee
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hereby represents and warrants to Company as follows:
(a) Master Licensee is duly organized, validly existing and in good
standing under the laws of Canada, has all necessary power and authority to
enter into and perform its obligations under this Agreement and all documents
executed in connection herewith, and to carry on its business and to own and
lease its properties, as presently conducted, owned and leased.
(b) There are no proceedings pending seeking to dissolve or to liquidate
Master Licensee, and no action has been taken by the Board of Directors or the
shareholders of Master Licensee authorizing any such proceedings.
(c) The persons executing this Agreement and all other documents executed
in connection herewith on behalf of Master Licensee have been duly authorized to
perform such actions on behalf of Master Licensee. This Agreement and all other
documents executed in connection herewith constitute the valid, legal and
binding obligations of Master Licensee and, to the best knowledge of Master
Licensee, are enforceable in accordance with their respective terms, subject to
applicable bankruptcy laws and general principles of equity.
(d) Neither the execution, delivery or performance of this Agreement or
any other document executed in connection herewith, nor the consummation of the
transactions contemplated therein, will violate Master Licensee's Articles of
Incorporation or By-laws, or constitute or create a violation of or default
under, with the giving of notice, the passage of time or both, or result in the
creation or imposition of any lien, security interest or encumbrance under, any
contract, agreement, loan, note, mortgage, security agreement, deed to secure
debt, guarantee, lease (capital or operating) or any other document or
instrument, or any law, rule, regulation, ordinance, or any judicial or
administrative decree, rule or order to which Master Licensee is a party or by
which it or its properties is or may be bound.
(e) There is no arbitration, litigation or administrative proceeding
pending, or to the knowledge of Master Licensee, threatened, in which Master
Licensee is or may be a party, or which may affect Master Licensee or its
property, which would adversely affect the ability of Master Licensee to enter
into or perform its obligations under this Agreement or any other document
executed in connection herewith, or have a material adverse effect on the
business, prospects or finances of Master Licensee if determined adversely to
Master Licensee. Master Licensee is not the subject of any pending bankruptcy,
insolvency, receivership or similar proceeding, and is not a party to, subject
to, or in default in any material respect with, any writ, injunction, decree,
judgment, award, determination, direction or demand of any arbitrator, court or
governmental agency or instrumentality.
8
(f) All information provided to Company regarding Master Licensee, its
directors, shareholders and officers is true, complete and correct. All capital
stock of Master Licensee now outstanding has been validly issued, is fully paid
and non-assessable, and the shareholder's equity amount shown on any balance
sheet provided to Company has actually been received or earned by Master
Licensee.
(g) Master Licensee is not in default under, and no event has occurred
which, with the giving of notice, the passage of time or both, would constitute
or create a default under, any deed of trust, mortgage, lease, security
agreement, note, preferred stock, bond, indenture, guaranty or other instrument
issued by Master Licensee.
2.6 REPRESENTATIONS AND WARRANTIES OF COMPANY. Company hereby represents
-----------------------------------------
and warrants to Master Licensee as follows:
(a) Company is duly organized, validly existing and in good standing under
the laws of the State of Delaware, has all necessary power and authority to
enter into and perform its obligations under this Agreement and all other
documents executed in connection herewith and to carry on its business and to
own and lease its properties, as presently conducted, owned and leased.
(b) There are no proceedings pending seeking to dissolve or to liquidate
Company, and no action has been taken by the Board of Directors or the
shareholders of Company authorizing any such proceedings.
(c) The persons executing this Agreement and all other documents executed
in connection herewith on behalf of Company have been duly authorized to perform
such actions on behalf of Company. This Agreement and all other documents
executed in connection herewith constitutes the valid, legal and binding
obligations of Company and, to the best knowledge of Company, are enforceable in
accordance with their respective terms, subject to applicable bankruptcy laws
and general principles of equity.
(d) Neither the execution, delivery or performance of this Agreement or
any document executed in connection herewith, nor the consummation of the
transactions contemplated therein, will violate Company's Articles of
Incorporation or By-laws, or constitute or create a violation of or default
under, with the giving of notice, the passage of time or both, or result in the
creation or imposition of any lien, security interest or encumbrance under, any
contract, agreement, loan, note, mortgage, security agreement, deed to secure
debt, guarantee, lease (capital or operating) or any other document or
instrument, or any law, rule, regulation, ordinance, or any judicial or
administrative decree, rule or order to which Company is a party or by which it
or its properties is or may be bound.
(e) Except for pending administrative actions in respect of applications
for registration of the Marks, there is no arbitration, litigation or
administrative proceeding pending, or to the knowledge of Company, threatened,
in which Company is or may be a party, or which may affect Company or its
property, which would adversely affect the ability of Company to enter into or
perform its obligations under this Agreement.
9
(f) All information provided to Master Licensee regarding Company, its
directors, officers and shareholders is true and correct.
2.7 EXISTING FRANCHISE AGREEMENTS. There are as of the date of this
-----------------------------
Agreement twenty-four (24) Units listed on Exhibit I-A (the "GROUP A UNITS");
twenty-five Units listed on Exhibit I-B (the "GROUP B UNITS"); and twenty-five
Units listed Exhibit I-C (the "GROUP C UNITS") (collectively, the "INITIAL
AGREEMENTS"). Effective as of 11:59 pm, New York time, September 30, 1996,
Company assigns and Master Licensee assumes the Initial Agreements. The
assignment of each Initial Agreement shall be accomplished by means of an
Assignment and Assumption Agreement in substantially the form of Assignment and
Assumption Agreement attached hereto as Exhibit C, completed and signed by
Company as Assignor and Master Licensee as Assignee. The income, cash, and
accrued Franchise Fees under the Group A Initial Agreements accruing through
September 30, 1996 shall belong to Company. Franchise Fees collected by Master
Licensee in respect of each Group A Initial Agreement on and after October 1,
1996 shall be remitted to Company until Company's receivables accrued with
respect to such Initial Agreement as of September 30, 1996 have been liquidated.
The parties shall account for Franchise Fees under the other Initial Agreements
accrued as of September 30, 1996 under the terms of the Franchise Development
Agreement in effect through the Agreement Date. Master Licensee shall indemnify
and hold Company and its parent corporation harmless from and against any
claims, liabilities, damages, judgments, settlements, costs of defense and
investigation arising from the Initial Agreements, provided that the
transactions or occurrence giving rise to such claims occurs after the date of
this Agreement. Company likewise shall indemnify and hold Master Licensee and
its parent corporations harmless from and against any claims, liabilities,
damages, judgments, settlements, costs of defense and investigation arising from
the Initial Agreements, provided that the transactions or occurrence giving rise
to such claims occurs before the date of this Agreement. In the event a claim
arises in which the transactions or occurrence happened before and after the
date of this Agreement, the parties shall split the cost of defense and
resolution equally, unless and until an arbitration proceeding pursuant to
Paragraph 17.09 apportions the costs of defense and resolution differently based
on the comparative fault of the parties, as determined by the arbitrator.
Nothing contained in this Agreement shall modify the liabilities of any third
party under any indemnification agreement associated with the acquisition of the
Initial Agreements by Company.
ARTICLE 3: DEVELOPMENT OBLIGATIONS OF MASTER LICENSEE
3.1 DEVELOPMENT SCHEDULE. Master Licensee must maintain in effect
--------------------
Franchise Agreements such that at least five (5) Units are open and operating at
any time during the Term. A room shall be considered "open" when it meets
Territory System Standards for immediate rental to and occupancy by Unit guests.
If and for so long as fewer than five (5) Units are open at any time, then
Company may, at its discretion, terminate this Agreement upon written notice to
Master Licensee.
3.2 SITE SELECTION. Master Licensee shall be responsible for the selection
--------------
or approval of suitable sites for Units, of proposed franchisees and the Units.
Master Licensee shall submit to Company such site information, franchisee
application materials and other information as Master
10
Licensee uses for consideration of each proposed site, franchisee and Unit. If
Company finds, in its reasonable discretion, that Master Licensee has
demonstrated that it is unable to select and approve sites that result in the
construction or conversion and opening of a Unit within a reasonable time after
the Franchise Agreement is signed, then Company may by written notice to Master
Licensee require prior approval of sites by Company. For the purpose of this
Paragraph, Company may require such prior approval if less than seventy percent
(70%) of the guest rooms scheduled to open in any Agreement Year pursuant to
Franchise Agreements signed by Master Licensee actually open within 60 days of
their required opening dates as established in the respective Franchise
Agreements.
3.3 UNIT SITE PLANS. All Units shall be newly constructed facilities or
---------------
conversions of existing facilities renovated to meet Territory System Standards.
Master Licensee shall prepare or cause Franchisees to prepare "SITE PLANS,"
consisting of a site plan and architectural plans and specifications for each
new construction Unit, or photographs, renovation plans, color boards and a list
of improvements and replacements for each conversion Unit. Such Site Plans or a
summary must be submitted to Company, at its request, and shall be reviewed,
commented upon and approved by Master Licensee prior to the commencement of any
construction or renovation. If Company finds, in its reasonable discretion,
that Master Licensee demonstrates that it is unable to review, comment upon and
approve Site Plans that meet Territory System Standards from time to time, then
Company may by written notice to Master Licensee require prior approval of Unit
Site Plans by Company. Where Company has required its approval prior of Unit
Site Plans, if Master Licensee has not received written disapproval, comments or
modifications from Company within thirty (30) days after the date of receipt (as
shown by courier delivery and receipt records) by Company at its headquarters in
the United States or such other location as Company may designate, of such Unit
Site Plans, Company shall be deemed to have approved such plans. Master
Licensee will develop, operate or franchise only those Units for which Site
Plans have been approved by Company. Company may, in its sole discretion,
delegate in writing sole responsibility for approval of Unit Site Plans to
Master Licensee.
3.4 (INTENTIONALLY DELETED.)
------------------------
3.5 COMPANY APPROVED FRANCHISEES. Notwithstanding any rights granted to
----------------------------
Master Licensee under this Agreement, Company shall have the right to require
that Master Licensee enter into a Franchise Agreement with any person or entity
that Company specifies in writing; provided that (i) such proposed Franchisee
--------
meets the qualifications and standards for Franchisees, if any, established by
Master Licensee and approved by Company prior thereto, (ii) the location of the
proposed Unit does not conflict with any territorial rights granted to a
Franchisee or Area Franchisee, and (iii) the location of the proposed Unit does
not violate the encroachment or impact policy, if any, adopted by Master
Licensee for the Territory. Master Licensee, in granting any such Franchise
Agreement to a Company-specified Franchisee, will not unreasonably withhold,
delay or condition its consent to any variations from the terms of Master
Licensee's then current form of Franchise Agreement. Any such Units will be
counted toward satisfaction of the obligations of Master Licensee under
Paragraph 3.1 regarding the number of open Units.
3.6 AREA AGREEMENTS. Master Licensee may enter into Area Agreements with
---------------
the consent of Company, which will not be unreasonably withheld or delayed.
Master Licensee shall submit
11
the final form of Area Agreement to Company for its approval as a condition
precedent to its effectiveness. Each Area Agreement shall provide for the
execution of a Franchise Agreement for each Unit opened under the Area
Agreement. Area Fees payable by an Area Franchisee in connection with the
execution of an Area Agreement or without regard to whether any Units relating
to such Area Agreement are open shall be deemed Area Initial Fees and a share
paid to Company as Company Initial Fees according to Paragraph 5.2. Periodic
payments payable to Master Licensee under an Area Agreement relating to the
Gross Room Revenues of a related Unit or on another basis accruing after the
Opening of the Unit shall be deemed Area Continuing Fees and a share paid to
Company as Company Continuing Fees according to Paragraph 5.3. Master Licensee
shall diligently monitor and strictly enforce development and other obligations
of an Area Franchisee as set forth in the Area Agreement. No failure of an Area
Franchisee to perform its development obligations shall excuse or extend the
time for compliance with the Development Schedule requirements of Paragraph 3.1.
Within ten (10) days after execution of any Area Agreement, Master Licensee
shall provide Company with a copy thereof. Master Licensee hereby covenants that
during the Term it shall not accept an equity or other investment in itself, any
Affiliate or any other entity in lieu or substitution of, in whole or in part,
any Area Initial Fee or Area Continuing Fee. Except as provided in the preceding
sentence, equity investments made by third parties in Master Franchisee, any
Affiliate or any other entity shall not be included in the determination of Area
Initial Fees or Area Continuing Fees hereunder.
ARTICLE 4: SERVICES AND OBLIGATIONS
4.1 INITIAL SERVICES OF COMPANY. Company shall instruct and consult with
---------------------------
Master Licensee's personnel on adaptation of the Travelodge System to the
operation of lodging facilities in the Territory and the development, operation
and franchising of Units. Such instruction and consultation shall be
communicated through written and other means and shall relate to: (a) site
selection; (b) lodging facility design, engineering, site planning, interior
design, layout, decor and lighting; (c) furniture, fixtures and equipment; (d)
reservation and room sales management; (e) lodging facility security and safety
procedures and standards; (f) product supply; (g) employee and Franchisee
training and employee utilization; (h) Unit periodic reports; (i) advertising,
promotion, public relations, and marketing; J) auditing, inspection, franchise
services, guest services, and other Unit services; (k) operating procedures; (L)
franchise marketing and compliance programs and procedures; and (m) reservation
center computer hardware and software systems and programs. Instruction and
consultation by Company personnel shall be provided solely in the U.S. (other
than in connection with initial certification inspections of new Units) through
the initial training program described in Paragraph 4.2 and by telephone,
facsimile transmission, telex and correspondence.
4.2 INITIAL AND CONTINUING TRAINING. Master Licensee, within sixty (60)
-------------------------------
days after execution of this Agreement, shall designate and notify Company in
writing of at least one (1) trainee, up to a limit of five (5) trainees, to
attend an initial training program devised by Company. The first trainee Master
Licensee sends to attend Company's initial training program must commence
training within one hundred twenty (120) days after execution hereof, provided
that Company shall have at least thirty (30) days' prior written notice of the
date Master Licensee desires its first trainee to commence training. All wages
and travel and living expenses incurred
12
by trainees shall be the sole responsibility of Master Licensee. Company shall
offer lodging and meals to such trainees on the same basis as offered to other
Travelodge System trainees. Master Licensee personnel shall have the right to
attend, on a space-available basis, subsequent regular training programs
conducted by Company at a location Company selects in the U.S., without fees or
other charges. All wages and travel and living expenses such personnel incur
shall be the sole responsibility of Master Licensee. The initial training
program shall be provided over a period not to exceed ninety (90) days and shall
consist of instruction at Company's headquarters and may include an internship
at one or more system units in the U.S. The training program shall cover, among
other things, the subjects described in Paragraph 4.1 hereof. Upon completion of
the instruction of Master Licensee's trainees, Company shall determine, in its
sole discretion, which of such trainees have successfully completed the
instruction program and shall issue to Master Licensee certificates of
completion for such trainees ("CERTIFIED EMPLOYEES") as of that date. Master
Licensee will employ at least one (1) Certified Employee beginning with the
third Agreement Year, provided, however, that there may be no Certified
--------
Employee for a reasonable period of time in the event that the Certified
Employee terminates his employment with Master Licensee without adequate notice
or is summarily terminated by Master Licensee and no Company training programs
for his replacement are immediately available. Such Certified Employee shall be
responsible for implementing mandatory training programs for Unit personnel in
accordance with training standards and procedures prescribed by Company from
time to time. Upon the implementation of such training programs by such
Certified Employee(s) to Company's satisfaction, Company shall not object to
certification by a Certified Employee of Unit personnel who successfully
complete such training programs.
4.3 CONTINUING SERVICES OF COMPANY. To the extent relevant to the
------------------------------
Territory, Company shall periodically furnish to Master Licensee the results of
any research, development and testing programs undertaken in the U.S. (and, to
the extent deemed relevant by Company, in other countries) relating to one or
more of: (a) new product or service development; (b) lodging facility design,
layout, fixtures, equipment, lighting and construction; (c) lodging facility
image, decor, logo design and trademarks; (d) pricing strategies; (e)
advertising and marketing concepts and programs; (f) lodging facility
operations; (g) services to Franchisees; and (h) Franchisee and employee
training. Company personnel shall be available for periodic consultation with
personnel of Master Licensee. The parties agree that, to the extent possible,
such consultation shall be by telephone, facsimile transmission, telex and
correspondence. Company shall conduct, through employees, agents or
consultants, an annual visit, to include a quality assurance and operational
inspection of each Unit in existence or under development at such time,
consultation with Master Licensee on development, operations, marketing,
reservations and other matters of mutual interest, and review of the annual
budget and development plan then in effect or proposed under Paragraph 4.7.
Such annual visit shall be scheduled by Company (at Company's request to
coincide with Unit inspections) and Master Licensee at a mutually convenient
time. If Master Licensee cannot offer a mutually convenient time during a sixty
(60) day period selected by Company, then Company shall determine the schedule
for the visit. Other than the annual inspection, Company personnel shall have
no further obligation to travel to the Territory. However, Company shall have
the right, through employees, agents or consultants, to visit and inspect Units
at any time during the Term. With respect to up to two (2) visits during any
Agreement Year (including the annual visit), Master Licensee (or Franchisees)
shall provide to Company without charge lodging at Units for up to three (3)
Company employees, agents or
13
consultants for each such Unit visited. Except with respect to the visits
otherwise described in this Paragraph 4.3, Master Licensee shall not be
obligated to reimburse Company for any expenses relating to any visit to the
Territory by Company's employees, agents or consultants not at the request of
Master Licensee. If Master Licensee requests that Company personnel travel to
the Territory other than for a single day visit by Company's executive officers
to attend the grand opening celebration of a Unit, Master Licensee shall pay all
travel, meal and lodging expenses of such personnel and a per diem fee
established by Company from time to time.
14
4.4 OPENING INSPECTION OF NEW AND CONVERSION UNITS. (a) Master Licensee
----------------------------------------------
shall, and Company may, in its discretion, inspect each Unit before its opening.
Master Licensee shall provide at least thirty (30) days prior written notice to
Company of the proposed opening date of a Unit; provided, however, that Master
Licensee shall give Company more notice if required to obtain governmental
travel authorization. Master Licensee shall use its best efforts to obtain all
governmental visas, permits, licenses and travel authorizations of all
appropriate governmental agencies to allow Company's inspectors to visit and
inspect Units in the Territory.
(b) Master Licensee shall assign a Certified Employee to inspect each Unit
before opening to certify that it complies with Territory System Standards and
has been constructed or converted in accordance with any plans and
specifications approved by Master Licensee and the Franchise Agreement. Company
will inspect the first five (5) Units to open after this Agreement is executed
after Master Licensee completes its opening inspection in order to evaluate
Master Licensee's opening inspections. Master Licensee shall make its
inspection prior to the Unit's scheduled opening. Master Licensee and Company
shall each furnish their opening inspection results to the other. Company will
not furnish the results to the Franchisee directly unless Master Licensee
requests Company to do so. If Master Licensee has performed the opening
inspections to Company's reasonable satisfaction, then Company will not continue
its opening inspections. If Master Licensee has not performed the opening
inspections to Company's reasonable satisfaction, then Company inspectors will
accompany Master Licensee's inspectors on opening inspections until the Company
is reasonably satisfied that Master Licensee can perform opening inspections in
a manner consistent with Territory System Standards and the System. After the
first ten (10) opening inspections performed by Company, Master Licensee shall
reimburse Company for the travel and lodging expenses of one Company inspector
incurred in conducting such opening inspection in excess of $1,500.
(c) If the Unit is certified for opening, it shall open no later than
fifteen (15) days after such inspection. If the Unit is not certified for
opening, the inspecting party shall prepare and deliver to the other party and
after consultation between Company and Master Licensee, Master Licensee shall
deliver to the Franchisee of the Unit a list of items to be completed before or
after opening and Master Licensee shall take, or shall cause the Franchisee to
take, all reasonably necessary action to cure the deficiencies as and when
specified on such list. Master Licensee shall not authorize the opening of any
Unit until certified for opening by Company or Master Licensee, or until the
Franchisee completes all items specified by Company or Master Licensee to be
completed prior to opening.
4.5 RESERVATION CENTER. (a) Company or an Affiliate shall establish and
------------------
maintain the Territory Reservation System at a location serving the Territory
(the "TERRITORY CENTER") which Company, Master Licensee, Franchisees and
potential Travelodge customers and Units may utilize for telephone and local
computer reservation inquiries. Company will be responsible for paying all
expenses of establishing and maintaining the Territory Center, including, but
not limited to, the costs of purchasing or leasing computer hardware, telex,
facsimile transmission, telephone and electronic communications equipment and
services; programming services; training and employment of Territory Center
personnel; and linkage between the Territory Reservation System and the Central
Reservation System. The Territory Center will offer its consumer callers the
opportunity to communicate with reservation agents in English or in French, at a
caller's
15
preference. Company may, in its sole discretion, utilize the Central Reservation
System as the Territory Reservation System. All communications from Units,
Franchisees and their customers to Company relating to reservations shall be
communicated through the Territory Reservation System. Company shall cause the
Territory Reservation System to be connected to the Central Reservation System
using real time linkage via datalink or such other system Company specifies in
writing, and to be capable of promptly transmitting reservations to the Central
Reservation System for units located outside the Territory and of receiving
reservations from outside the Territory for Units.
(b) The Territory Center shall provide for a toll-free telephone number
within the Territory and/or such technological substitutes and/or supplements as
Company may require from time to time at its sole discretion for consumers to
use to make room reservations. Company may eliminate toll-free consumer
reservations telephone numbers if communications costs exceed the funds
available to pay the same from Franchise System Fees, consistent with the
practices then observed in the Territory and the United States by lodging
franchise systems of similar size and call volume owned or licensed by Company's
Affiliates. The Central Reservation System shall be capable of receiving
reservations in the English language from Units and promptly transmitting
English language reservations from outside the Territory for Units. All
reservation data shall quote room rates in the currency of the country where the
Unit is located. The long distance telephony fees of transmitting reservations
and inquiries, whether by telephone, telex, facsimile transmission or other
similar electronic or telephonic technology, shall be borne by Company.
(c) The fees for Central Reservation System services are described in
Paragraph 5.6.
(d) The parties acknowledge that as of the Agreement Date, the Territory
Center is open for business.
(e) In the event the Unit Reservation System Software is rendered obsolete
or superseded by other means of operating or communicating data with a
reservation system, Company shall replace such software with the same substitute
or technological equivalent as it uses in the United States, if available in the
Territory, to allow continued functioning of reservation services to be provided
to consumers and Units in the Territory.
(f) Except as otherwise may be agreed between the parties, Master Licensee
shall not use the Territory Center to refer customers or prospective customers,
directly or indirectly, to any lodging facility other than a Travelodge System
unit.
(g) Master Licensee shall duplicate and cause each Franchisee to execute
and deliver at the time its Franchise Agreement is signed a license for the
Franchisee to use the Unit Reservation Software. The form of license agreement
(the "SOFTWARE LICENSE AGREEMENT") shall be substantially the same form as
Company uses for franchisees in the United States, provided that Company may
modify the form of Software License Agreement from time to time at its
discretion. The licenses for the software initially shall be granted pursuant
to the terms of the Software License Agreement attached hereto as Exhibit E.
Master Licensee will establish a fee for the Reservation Software license (the
"SOFTWARE LICENSE FEE") to be paid by Franchisees at the time the Software
License Agreement is signed or when the Reservation Software is delivered, from
16
which the Company will receive, as part of Company Reservation Fees, a "COMPANY
SOFTWARE FEE" equal to the greater of one-half of the Software License Fee
collected by Master Licensee or $250.00. The fixed dollar amount of this formula
may be adjusted from time to time by Company so that it is never less than 120%
of the actual cost of producing and delivering to Master Licensee the
Reservation Software and related documentation for each Unit. Master Licensee
shall establish a reasonable procurement procedure for Franchisees to acquire
the computer hardware needed to operate the Reservation Software and to test or
certify that the Reservation Software will function and operate within normal
specifications on such hardware. Upon notice to Master Licensee, Company may
discontinue offering Reservation Software itself and may direct that Franchisees
obtain such software from other sources, consistent with Company's practice in
the United States. Master Licensee may charge reasonable separate training and
certification fees that will not be included in the Software License Fee.
4.6 MARKETING PROGRAMS. Master Licensee shall be responsible for assisting
------------------
Company in developing and implementing local, national and regional marketing
programs in the Territory and shall provide Company with advice and
consultation, and timely and constructive comments on samples for adaptation for
local usage, for such programs. Master Licensee will cooperate with other
Travelodge System master licensees in developing and implementing joint
marketing programs as Company directs. "MARKETING PROGRAMS" shall include,
without limitation, all forms of advertising, publicity, promotion, market
research and public relations activities. Company may request submission of
comments on all major marketing programs and related materials developed by
Company prior to implementation and use in the Territory. Master Licensee shall
give Company written comments and suggested modifications within thirty (30)
days after receipt of Company's request. If Company receives no comments from
Master Licensee after confirming receipt of such materials, then such materials
shall be deemed acceptable. Master Licensee shall collect from each of its
Franchisees monthly Franchise System Fees, formerly called "TTIMA Fees", which
shall be in the same percentage of Gross Room Revenues and with the same
components as Company then charges in the United States, unless a different fee
has been negotiated as part of the Franchise Agreement. Master Licensee shall
pay to or for the benefit of Company the Company Marketing Contribution, from
the Franchise System Fees collected by Master Licensee, as described in
Paragraph 5.7 hereof, according to an annual budget provided by Company or as
otherwise directed by Company, less any amount authorized by Company to be
retained by Master Licensee for use solely in connection with Marketing Programs
in the Territory. Such Franchise System Fees collected and held by Master
Licensee shall be trust funds held for the benefit of Company. Company will
utilize the Company Marketing Contribution for system-wide marketing programs,
including the TRAVELODGE HOTELS Directory which will list all Units. Company
will expend, when added to amounts retained by Master Licensee for Marketing
Programs in the Territory, at least one-half of one percent of Unit Gross Room
Revenues for marketing programs, sales and advertising in the Territory. In
addition, any portion of Franchise System Fees based on a charge per room per
day or per month shall be used solely to fund a room sales program for the
benefit of Units in the Territory. Master Licensee will cause the Units to
recognize and participate in system-wide marketing programs utilized as a part
of the Travelodge System, such as frequent traveler plans, age and affinity-
group clubs and other programs intended to increase overall patronage of all
System Units.
17
4.7 ANNUAL BUDGET AND DEVELOPMENT PLAN. No later than ninety (90) days
----------------------------------
prior to the commencement of each Agreement Year except for the first Agreement
Year, Master Licensee shall furnish to Company a budget and development plan
(the "ANNUAL BUDGET AND DEVELOPMENT PLAN")for each such Agreement Year in a
summary format developed by Master Licensee setting forth a franchise marketing
plan and a rooms marketing plan for the Territory, with summary budgets and
other information concerning the planned development of and promotion and
marketing programs for Units. Company shall provide Master Licensee advice and
consultation about the Annual Budget and Development Plan and shall have thirty
(30) days to review it before notifying Master Licensee of its suggested
modifications thereto. For the first Agreement Year, the Annual Budget and
Development Plan shall be attached hereto as Exhibit F within one hundred twenty
(120) days after the Agreement Date after submission to Company for review and
comment. Master Licensee shall submit the first Annual Budget and Development
Plan for Company's review and comment within ninety (90) days after the
Agreement Date.
4.8 FRANCHISE MARKETING AND SERVICES. Within one hundred twenty (120) days
--------------------------------
after the Agreement Date, Master Licensee shall formulate and implement a
franchise marketing strategy, which will include, among other things,
preparation of offering materials for dissemination to prospective Franchisees,
procedures for responding promptly to requests for information from prospective
Franchisees, evaluation and qualification of prospective Franchisees, and proper
documentation of the grant of franchises consistent with Paragraph 11.1 hereof.
No later than execution of the first Franchise Agreement by Master Licensee,
Master Licensee shall also implement a franchise services program under which
Master Licensee shall be required to provide services to Franchisees comparable
to the initial and continuing services and training provided by Company to
Master Licensee under this Agreement.
4.9 ADDITIONS AND MODIFICATIONS TO THE TRAVELODGE SYSTEM. Company reserves
----------------------------------------------------
the right, from time to time, by adoption or amendment of System Standards, to
add, amend, modify, delete or enhance any portion of the Travelodge System
(including any of the Marks and System Standards) as may be necessary in the
judgment of Company to change, maintain, or enhance the Marks or the reputation,
efficiency, competitiveness and/or quality of the Travelodge System, or to adapt
to it new conditions, materials or technology, or to better serve the public.
Company will disclose to Master Licensee, to the extent Company deems relevant
to the Territory, additions and modifications to the Travelodge System made
anywhere in the world and which have been developed by or are otherwise
available to Company. Master Licensee shall, if requested by Company, use any
such additions and modifications which Company has approved for use in the
operation and franchising of Units. Master Licensee shall disclose to Company
all ideas, concepts, methods, improvements, services, techniques and products
relating to the operation of Units conceived by Master Licensee and Franchisees
during the Term and grants to Company a perpetual, non-exclusive, royalty-free
and world-wide right and license to incorporate same in the Travelodge System
for use in all Travelodge System lodging facilities franchisees licensed or
franchised world-wide, and to assign or license the same to Company's
Affiliates, to the extent permitted by applicable Legal Requirements. Any
proprietary training, operations and marketing programs of Master Licensee
developed for its owned Units, managed Units and its Franchisees as part of
Master Licensee's support and franchise service activities, for which a separate
fee is being charged by the Master Licensee, shall remain the separate property
of Master Licensee.
18
4.10 ITEMS USED BY UNITS. Master Licensee shall be responsible for
-------------------
purchasing or procuring sources for fixtures, furniture, equipment, amenities,
supplies and materials necessary for use by Units. Company may, to the extent
feasible, assist Master Licensee in purchasing or procuring items appropriate
for use in the Territory from sources of supply located in the U.S. Company may
prescribe minimum product standards for fixtures, furniture, equipment,
amenities, supplies or materials for use in the Territory. Company shall
consider local factors and con ditions in prescribing such standards. Master
Licensee shall only recommend reputable suppliers (which may include Company,
Master Licensee or Affiliates) for fixtures, furniture, equipment, amenities,
supplies and materials to Franchisees; provided that Master Licensee and its
--------
Affiliates shall not be the sole approved supplier available to Franchisees for
such items unless the terms of sale and prices for goods and services are
competitive with the terms offered to licensees of other hotel chains in the
Territory for similar goods and services. If Master Licensee or any Affiliate is
an approved supplier, Master Licensee shall maintain in force, at its sole
expense, adequate product liability and other insurance in connection with such
distribution activities in accordance with the terms of Article 8 of this
Agreement.
4.11 COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES. Master Licensee
------------------------------------------------
shall secure and maintain in force, and shall require Franchisees to secure, all
required licenses, permits and certificates relating to the operation of Units.
Master Licensee shall conduct its operations hereunder in full compliance with
all applicable Legal Requirements. Master Licensee shall in all dealings with
Company, its Franchisees, customers, suppliers, and public officials adhere to
the highest standards of honesty, integrity, fair dealing and ethical conduct.
All advertising and promotion by Master Licensee shall be complete and accurate
as to all claims of fact, in good taste in the judgment of Company, and shall
conform to the highest standards of ethical advertising. Master Licensee will
refrain from any business or advertising practice which may be injurious to the
business of Company and the good will associated with the Marks. Master
Licensee shall notify Company within five (5) days after commencement of any
action, suit or proceeding, and of the issuance of any order, writ, injunction,
award or decree of any court, agency or other governmental instrumentality,
which names Company as defendants, and provide written notice and copies of any
such pleadings or process received.
ARTICLE 5: FEES
5.1 DEVELOPMENT FEE. Master Licensee shall pay the Development Fee to
---------------
Company in the amount of Three Hundred Fifty Thousand U.S. Dollars
(US$350,000.00). The Development Fee shall be paid in five (5) installments of
Seventy Thousand U.S. Dollars (US$70,000.00) each, payable concurrently with the
execution of this Agreement by Master Licensee and on the second, third, fourth
and fifth anniversaries of the execution date.
5.2 COMPANY INITIAL FEES. Master Licensee shall collect the Initial
--------------------
Franchise Fee from each Franchisee. After Master Licensee has entered into
Franchise Agreements, in addition to the Initial Agreements, for twenty (20)
Units, Master Licensee shall pay to Company the Company Initial Fee in an amount
equal to Fifteen Hundred ($1,500) Dollars for each additional Unit under a
Franchise or Area Agreement. Master Licensee shall pay the Company Initial Fee
at the earlier to occur of thirty (30) days after Master Licensee's receipt of
the Initial Franchise Fee or Area Initial Fee or concurrently with Master
Licensee's next payment of Company
19
Continuing Fees after receipt of such Initial Franchise Fee or Area Initial Fee.
20
5.3 COMPANY CONTINUING FEES. Master Licensee shall establish the
-----------------------
Continuing Franchise Fees required to be paid by each Franchisee. In respect of
each Franchise Agreement and Area Agreement under which Area Continuing Fees are
paid in lieu of Continuing Franchise Fees, Master Licensee will pay to Company
within twenty (20) days after the end of each calendar month, as "COMPANY
CONTINUING FEES", an amount equal to the sum of (a) the royalties payable under
the Franchise Agreements of Group A Units, net of Franchise System Fees
determined as provided in Paragraph 5.7, less One percent (1.00%) of the Gross
Room Revenues of Group A Units accruing during the preceding month; plus (b) Two
percent (2.00%) of Gross Room Revenues of Group B Units accruing during the
preceding month; plus (c) One percent (1.00%) of Gross Room Revenues of Group C
Units accruing during the preceding month; plus (c) one percent (1%) of Gross
Room Revenues of all Units for which a Franchise Agreement is first executed
after the date of this Agreement. Renewals and replacements of Group A and
Group B Units will continue to pay Company Continuing Fees at the percentages
applicable to Group A and Group B Units. Master Licensee shall timely pay to
Company all Company Continuing Fees for each Unit operated by Master Licensee or
an Affiliate of Master Licensee, whether or not the Affiliate pays the relevant
fee to Master Licensee. With respect to Units operated by Franchisees other
than Master Licensee and its Affiliates, Master Licensee shall not be required
to pay Company Continuing Fees in an amount greater than the Continuing
Franchise Fees and Area Continuing Fees actually received from any such third
party Franchisee or Area Franchisee; provided that Company and Master Licensee
shall share underpaid Continuing Franchise Fees or Area Continuing Fees on a pro
rata basis, in the same proportion as Company Continuing Fees bear to Continuing
Franchise Fees or Area Continuing Fees under the applicable Franchise Agreement
or Area Agreement.
5.4 (INTENTIONALLY DELETED.)
------------------------
5.5 FRANCHISE SALES COMMISSIONS. In the event a salesperson or broker
---------------------------
refers a prospective franchisee to Master Licensee in writing, or a salesperson
or broker operating in the Territory refers a prospective franchisee to Company
or an Affiliate of Company in the United States in writing, and a sale to such
prospective franchisee, respectively, is consummated within one (1) year after
the date of such referral, the referring party shall be entitled to a sales
commission of One Thousand Dollars ($1,000). Master Licensee or Company (or
Company's United States Affiliate), as the case may be, shall pay such amount to
the other, as receiving agent for such referring party, within thirty (30) days
after execution of such Franchise Agreement or franchise agreement,
respectively, and receipt of the initial franchise fee payable thereunder.
5.6 RESERVATION FEES. Company will send invoices to Franchisees directly,
----------------
and Master Licensee shall assist Company in collecting from Franchisees, Company
Reservation Fees, in accordance with Company's standard billing and payment
practices, in addition to the Franchise System Fees, consisting of: (a) its
standard Global Distribution System ("GDS") origination fee (currently $4.50)
for each reservation communicated through a third party reservation system; and
(b) its standard travel agent/general sales agent override and commission, which
is currently up to fifteen (15%) of the Gross Room Revenue from each reservation
originated by a travel agent
21
in an area served by a general sales agent, plus any applicable service or
processing charge levied by Company for all System Units. Master Licensee shall
remit, at the time it pays Company Continuing Fees each month, Company Software
Fees payable in respect of Software License Fees collected the preceding month
pursuant to Software License Agreements. Master Licensee shall provide in the
Franchise Agreements for Franchisees to pay to Company directly such GDS fees
and travel agent commissions as part of Franchise Reservation Fees under the
Franchise Agreements. Company Reservation Fees will be restructured, and Master
Licensee and Company shall negotiate in good faith to determine fee structure
appropriate to pay the anticipated and actual cost of operating a Territory
Center and providing Central Reservation System service to the Units and the
Territory Center if Master Licensee commences operation of its own Territory
Center. Master Licensee shall charge Franchisees Franchise Reservation Fees
sufficient to pay the Company Reservation Fees when due. Company will establish
reasonable billing procedures for Company Reservation Fees. If Master Licensee
operates the Territory Center, Master Licensee will pay the costs of
communication between the Territory Center and the Central Reservation System,
as provided in Paragraph 4.5.
5.7 COMPANY MARKETING CONTRIBUTIONS. As described in Paragraph 4.6
-------------------------------
hereof, Master Licensee will pay to Company the Company Marketing Contribution,
payable concurrently with its monthly payment of Company Continuing Fees, equal
to the aggregate of the Franchise System Fees collected from each Franchisee in
respect of the preceding month, less any authorized retention for Territory
marketing as provided in Paragraph 4.6. Franchise System Fees for each
Franchisee shall be determined under the Franchise Agreement, and shall be
deemed to be, unless the Franchise Agreement provides for a different fee
arrangement, the lesser of either (x) one half of the total monthly Continuing
Franchise Fees based on a percentage of Gross Room Revenues or the monthly
payment of a specific Dollar amount established under the Franchise Agreement,
or (y) Company's then current formula for its "SYSTEM ASSESSMENT FEE" charged
System licensees in the United States. As of the Agreement Date, the System
Assessment Fee formula is four percent (4.00%) (inclusive of the equivalent of
the Franchise System Fees) of the monthly Gross Room Revenues of a Unit during
the preceding month, plus a supplemental fee of $.10 per room for the first 100
guest rooms at the Unit and $.05 for each additional guest room. The Franchise
System Fee described in clause (y) shall be calculated using the same formula as
the System Assessment Fee charged by Company for System units in the United
States from time to time.
5.8 TRANSFER FEE. Beginning after the date on which the final installment
------------
of the Development Fee is due, if Master Licensee obtains Company's prior
written approval of the transfer of this Agreement or a controlling ownership
interest in Master Licensee pursuant to Paragraph 14.2 hereof, then Master
Licensee shall pay to Company on or before the date such transfer becomes
effective a Transfer Fee in an amount equal to $175,000. No Transfer Fee will
be payable if the transferee is Royco Hotels & Resorts Ltd., a Canadian
corporation, or its Affiliate ("Royco").
5.9 (INTENTIONALLY DELETED.)
------------------------
22
5.10 TERMINATION AND SIMILAR FEES. Master Licensee shall pay to Company a
----------------------------
share of any and all actual damages (and any other amounts) awarded by a court
or an arbitrator, termination fees, liquidated damages and negotiated settlement
amounts that are paid to Master Licensee by a Franchisee or Area Franchisee by
reason of the early termination of one or more Franchise Agreements by such
Franchisee, or one or more Area Agreements by such Area Franchisee, in the same
proportion as the Franchise Agreement's Continuing Franchise Fees are split
between Company and Master Licensee. Master Licensee shall pay such amount to
Company within thirty (30) days after receipt thereof and shall be net of Master
Licensee's documented and reasonable costs of collection (including attorneys'
fees).
5.11 INTEREST ON LATE PAYMENTS. All fees and other payments due under this
-------------------------
Agreement shall bear interest from and after the due date at an annual rate
which is the 365 day equivalent of four percent (4%) over LIBOR.
5.12 WITHHOLDING TAXES. If payments due under this Agreement are subject
-----------------
to withholding or other income taxes under applicable Legal Requirements or U.S.
laws, the withholding party will promptly deliver to the other party receipts of
tax authorities for all taxes paid or withheld. Master Licensee shall use its
reasonable commercial endeavors to take all steps required by Company to enable
Company to obtain any tax credit, exemptions or refunds which may be due to
Company with respect to any withholding or other taxes.
5.13 CURRENCY AND PLACE OF PAYMENT. All payments payable by Master
-----------------------------
Licensee to Company under this Agreement shall be paid in Dollars, unless
Company, at its option, permits or directs payment in United States Dollars at
the exchange rate prevailing on the date of remittance to Company at a bank of
recognized international standing specified by Company (the "EXCHANGE RATE").
If Company directs payment in United States Dollars, the costs of exchange from
the currency of the Territory to the other currency may be deducted from the
payment, provided that reasonable supporting documentation of such costs are
provided to Company with the payment.
5.14 PAYMENT APPROVALS. Master Licensee undertakes to use its best
-----------------
efforts to obtain and maintain in full force and effect all governmental
authorizations and approvals and to obtain or effect any new or additional
governmental authorizations or approvals, as may be required or advisable in
respect of Master Licensee's obligation to make payments in Dollars as required
hereunder. In the event Master Licensee cannot make any payment in Dollars
because any such authorization or approval is not available under applicable
Legal Requirements or has been withdrawn for reasons other than the misconduct
of Master Licensee, Company shall have the right in its sole discretion to: (a)
require Master Licensee to pay Dollar amounts due through account(s) maintained
by Master Licensee in a country from which Dollar payments may be made; or (b)
allow Master Licensee to suspend performance of its obligation to make payment
in Dollars hereunder until such authorization or approval becomes available or
is reinstated; provided, however, that during such suspension period (1) Master
--------
Licensee shall pay all amounts due and owing to Company under this Agreement in
local currency to an account maintained by Company
23
in the Territory and (2) Master Licensee may propose to Company countertrade
transactions in respect of such local currency, which Company may accept or
reject. As soon as possible after such authorization or approval becomes
available or is reinstated Master Licensee shall resume making payments in
Dollars hereunder. Notwithstanding the foregoing, if the suspension period
referred to herein remains in effect for more than five (5) years, Company shall
have the right, in its sole discretion, to terminate this Agreement upon ninety
(90) days written notice to Master Licensee without penalty or the obligation to
purchase any Franchise Agreement.
ARTICLE 6: SYSTEM STANDARDS/MANUALS
6.1 SYSTEM STANDARDS AND DEVELOPMENT OF TERRITORY SYSTEM STANDARDS MANUAL.
---------------------------------------------------------------------
(a) Master Licensee covenants that it shall comply with all System Standards
applicable to master licensees of Company and all Territory System Standards.
Within fifteen (15) days after execution of this Agreement, Company shall
furnish to Master Licensee a copy of the Travelodge U.S. System Standards
manuals and other materials which are typically furnished to U.S. Travelodge
System franchisees to familiarize such franchisees with the Travelodge System.
Company may designate mandatory life safety, technology and other design
features in System Standards even if not commonly found in lodging facilities in
the Territory having the same rating. Master Licensee shall submit for review
and approval by Company, at least ninety (90) days prior to the execution of the
first Franchise Agreement for a Unit, and within one hundred and eighty (180)
days after the Agreement Date proposed Territory System Standards. Master
Licensee shall also submit simultaneously therewith for Company's review and
approval a written quality assurance inspection and enforcement program.
Company will notify Master Licensee in writing of Company's acceptance or
rejection of such proposed Territory System Standards and programs, specifying
the reasons for any rejections. Master Licensee shall make such changes
specified by Company and resubmit the Territory System Standards and programs
until approved by Company.
(b) The Travelodge System, modified as hereinabove provided, shall be
reflected in a development and operations manual (which may consist of one or
more volumes) for the Territory containing Territory System Standards for the
development and operation of Units (the "Territory System Standards Manual").
To the extent that Company modifies or enhances the System Standards as it deems
appropriate from time to time, Master Licensee will modify the Territory System
Standards and the Territory System Standards Manual to conform to such
modifications and enhancements. Company from time to time may establish minimum
standards for Units based on the System Standards and such other standards as
Company deems appropriate for the commercial success of Units. These minimum
standards may be enhanced by Master Licensee and Master Licensee shall develop
and specify its own standards, provided that such standards shall be subject to
Company's review and approval.
6.2 MODIFICATION OF THE TERRITORY SYSTEM STANDARDS MANUAL. Company, in its
-----------------------------------------------------
judg ment, may periodically deem it necessary or advisable to modify the
Territory System Standards Manual to comply with Company's minimum standards for
Units and Master Licensee will
24
implement such modifications promptly after written notification from Company.
In the event of a dispute relative to the contents or meaning of the Territory
System Standards Manual, the version maintained by Company at its principal
offices shall be controlling. In all Franchise Agreements that Master Licensee
executes for the operation of Units, it will reserve such rights as are
necessary to implement modifications to the Travelodge System and Territory
System Standards Manual, as herein contemplated, to cause Franchisees to comply
therewith, and to preserve the confidentiality of the Confidential Information.
ARTICLE 7: MARKS
7.1 OWNERSHIP OF THE MARKS. Company or the Marks Owner is the current
----------------------
owner of all rights in and to the Marks in the Territory and may transfer
ownership of such marks to its Affiliate. Company will, or shall cause the
Marks Owner to, enter into that certain Trademark License Agreement with Master
Licensee, the form of which is attached hereto as Exhibit D. Master Licensee
acknowledges that neither Master Licensee, its Affiliates or Franchisees have
any, nor will they acquire any, proprietary interest whatsoever in the Marks and
that the rights of Master Licensee and Franchisees to use the Marks are derived
solely from the Trademark License Agreement entered into between the Marks Owner
and Master Licensee and are limited to the franchising of Units pursuant to and
in compliance with this Agreement and applicable Territory System Standards
prescribed in the Territory System Standards Manual. Unauthorized use of the
Marks by Master Licensee or Franchisees shall constitute a breach hereof and an
infringement of the rights of the Marks Owner in and to the Marks. All usage of
the Marks by Master Licensee and Franchisees, and any goodwill established
thereby, shall inure to the exclusive benefit of the Marks Owner. This
Agreement does not confer any goodwill or ownership interests in the Marks upon
Master Licensee or Franchisees. In addition to its obligations under Paragraph
7.5 hereof, Master Licensee will take all necessary steps to preserve the
goodwill and prestige of the Marks. Master Licensee acknowledges that upon
expiration or termination hereof, no monetary value shall be attributable to any
goodwill associated with the use of the Marks by Master Licensee or Franchisees.
7.2 REGISTRATION. As permitted by Legal Requirements, Company or the Marks
------------
Owner has registered some or all of the Marks in the Territory, or Company shall
cause the Marks Owner to apply for registration of certain of the Marks, as
indicated in Exhibit A and as specified in the Trademark License Agreement (the
"PRINCIPAL MARKS") with the appropriate governmental agencies in the Territory
and will bear the cost thereof. Neither Company nor the Marks Owner represent
or warrant to Master Licensee that the Marks are registerable in the Territory.
The Marks Owner shall pay for all costs associated with registration and renewal
of the Marks in the Territory. Master Licensee will cooperate with the Marks
Owner in obtaining Marks registrations. Company shall have the right to
designate a supplemental or substitute trademark or trademarks to identify Units
and such supplemental or substitute trademarks shall be included in the
definition of Marks. In the event that any of the Principal Marks have been
registered in the Territory by a third party prior to the ▇▇▇▇ Owner's
application for registration thereof,
25
Company shall cause the Marks Owner to exercise its commercially reasonable
efforts to reach agreement with such third party which will allow the use of
such Principal ▇▇▇▇ by Master Licensee and Franchisees. As and when a new ▇▇▇▇
is added to the Travelodge System, Company will add such ▇▇▇▇ to marks unless
(a) reserve for domestic use in the United States, or (b) Company determines in
good faith that such ▇▇▇▇ is potentially infringing on the intellectual property
of a third party.
7.3 LICENSING OF FRANCHISEES. If and to the extent that Company determines
------------------------
that sublicensing of the Marks presents risks of diminution or loss of rights to
the Marks under the Legal Requirements, the Marks Owner shall have the right to
enter into a direct trademark license agreement with each Franchisee that
operates a Unit and Master Licensee shall delete from Franchise Agreements that
it enters into with Franchisees all relevant references to the Marks and the
licensing or sublicensing thereof, except to incorporate such trademark license
agreement and to provide for cross default provisions in both agreements.
7.4 REGISTRATION OF AUTHORIZED USER INSTRUMENTS. As permitted or required
-------------------------------------------
by Legal Requirements, Company shall cause the Marks Owner to execute separate
instruments to enable Master Licensee to register with appropriate government
agencies and departments the rights of Master Licensee to use the Marks and the
rights of Franchisees as authorized users of the Marks, and Master Licensee will
exercise its best efforts to cause such instruments to be registered with such
government agencies and departments.
7.5 INFRINGEMENTS. Master Licensee shall notify Company immediately of any
-------------
infringement of or challenge to the use of any ▇▇▇▇ within the Territory, or any
claim of any rights in any ▇▇▇▇, or any confusingly similar trademark, within
the Territory, of which Master Licensee becomes aware. Master Licensee shall
exercise its best efforts to protect the Marks within the Territory and, upon
written direction from the Marks Owner or Company, take such action as shall be
necessary or advisable to protect and maintain the Marks. The Marks Owner shall
pay all costs including but not limited to costs of investigations,
consultations and administrative, judicial and arbitration proceedings, relating
to maintenance and protection of the Marks in the Territory, up to a maximum
amount of One Hundred Thousand Dollars ($100,000.00) per annum or one-half of
the amount of Company Continuing Fees received during the preceding Agreement
Year, whichever is less. If the expense of protecting the Marks from
infringement exceeds the maximum that Company is obligated to spend in any
Agreement Year, and the Marks Owner elects not to proceed, Master Licensee may
proceed in the Marks Owner's stead, at Master Licensee's own expense. Master
Licensee may recover its actual, reasonable and necessary costs of prosecuting
an infringement action by applying such costs as a credit against fifty percent
(50%) of the Company Continuing Fees thereafter accruing under this Agreement
until the credit is exhausted.
7.6 USE OF THE MARKS. Master Licensee shall use commercially reasonable
----------------
efforts to cause Franchisees to use only the Marks to identify their Units.
Master Licensee and Franchisees shall not incorporate any ▇▇▇▇ as part of any
corporate or entity name or with any prefix, suffix
26
or other modifying trademarks, logos, words, terms, designs or symbols, or in
any modified form, or use any ▇▇▇▇ in connection with the sale of any
unauthorized product or service or in any other manner not expressly authorized
under this Agreement or Franchise Agreements approved by Company. Master
Licensee and Franchisees shall display the Marks and give notices of trademark
registrations in the manner prescribed in the Territory System Standards Manual
and obtain such licenses, permits and authorizations relating thereto as may be
necessary or advisable under applicable Legal Requirements. A Franchisee may
incorporate a ▇▇▇▇ and a geographic designator as its trade name for its Unit.
Master Licensee may use the name "TH Canada" or "Travelodge Canada Corp." as its
entity or trade name, provided that such use ceases immediately upon termination
or expiration of this Agreement.
7.7 LOCAL MARKS. Master Licensee may develop or acquire one or more Local
-----------
Marks, to be used in connection with the franchising and operation of Units in
the Territory. Prior to the development or acquisition of a proposed Local ▇▇▇▇,
Master Licensee shall submit to Company a written proposal containing complete
information regarding the Local ▇▇▇▇. If Company does not reject such Local ▇▇▇▇
within ninety (90) days of receipt of Master Licensee's written proposal, it
shall be deemed approved. Master Licensee grants to Company, the Marks Owner and
other Travelodge System licensees and franchisees a perpetual, non-exclusive,
world-wide and royalty-free license to use all approved Local Marks in
connection with the operation of the Travelodge System.
ARTICLE 8: INSURANCE OBLIGATION
Master Licensee shall at all times during the Term maintain in force, at
its sole expense, comprehensive public liability or commercial general
liability, innkeeper liability, product liability, motor vehicle liability and
alcoholic beverage liability insurance against claims for bodily and personal
injury, death and property damage caused by or occurring in conjunction with the
conduct of business by Master Licensee, Area Franchisees and Franchisees
pursuant to this Agreement. Such insurance coverage shall be maintained under
one or more policies of insurance containing minimum liability coverage of One
Million Five Hundred Thousand Dollars ($1,500,000.00) per occurrence. Master
Licensee shall also purchase and maintain worldwide insurance coverage providing
for the defense of claims brought against Company and its Affiliates outside the
Territory that arise in connection with personal injuries or property damage
suffered in connection with any action or inaction on the part of Master
Licensee, any Area Franchisee, any Franchisee or at any Unit, having minimum
liability protection of Four Million Dollars ($4,000,000.00) per occurrence.
All such insurance policies shall be issued by an insurance carrier or carriers
reasonably acceptable to Company. All such liability insurance policies shall
name Company and the Marks Owner as additional insureds, shall contain a waiver
of the insurance company's right of subrogation against Company and the Marks
Owner and shall provide that each such entity will receive thirty (30) days
prior written notice of termination, expiration or cancellation of any such
policy. Company may increase the minimum liability protection requirement
annually to reflect inflation and other relevant factors. Further, Company
27
may require, at any time, on reasonable prior notice to Master Licensee,
different or additional kinds of insurance to reflect inflation, changes in
standards of liability or higher damage awards in innkeeper, public, product or
motor vehicle liability litigation or other relevant changes in circumstances.
Master Licensee shall submit to Company annually a copy of the certificate of or
other evidence of the renewal or extension of each such insurance policy. If
Master Licensee fails or refuses to maintain required insurance coverage, or to
furnish satisfactory evidence thereof, Company, at its option and in addition to
its other rights and remedies hereunder, may obtain such insurance coverage on
behalf of Master Licensee and Master Licensee shall fully cooperate with Company
in its effort to obtain such insurance policies, promptly execute all forms or
instruments required to obtain or maintain any such insurance, allow any
inspections of any Units which are required to obtain or maintain such insurance
and pay to Company, on demand, any costs and premiums incurred by Company in
this regard. Master Licensee's obligation to obtain and maintain the insurance
described herein shall not be limited in any way by reason of any insurance
maintained by Company, nor shall Master Licensee's performance of such
obligations relieve Master Licensee of any obligations under Paragraph 10.2 of
this Agreement.
ARTICLE 9: CONFIDENTIAL INFORMATION
Company possesses confidential information which shall be furnished to
Master Licensee and designated at or before the time of disclosure as
confidential (hereinafter referred to as the "CONFIDENTIAL INFORMATION").
Company and Master Licensee agree that the Confidential Information shall be
used by Master Licensee only in the operation and franchising of Units and shall
not be disclosed to others, provided that disclosure of Confidential Information
by Master Licensee to its Franchisees in the Territory shall be deemed
authorized disclosure. Master Licensee: (a) shall not use the Confidential
Information in any other business or capacity; (b) shall maintain the
confidentiality of the Confidential Information during and after the Term and
shall not disclose the Confidential Information to its shareholders or any
natural or legal person that is not (1) an employee of Master Licensee or of an
Affiliate; or (2) a party to or bound by this Agreement or a Franchise Agreement
which is issued pursuant to this Agreement; (c) shall not make unauthorized
copies of any portion of the Confidential Information disclosed in written,
videotape or other form; and (d) shall adopt and implement all reasonable
procedures prescribed from time to time by Company to prevent unauthorized use
or disclosure of the Confidential Information. Notwithstanding anything to the
contrary contained in this Agreement, and provided Master Licensee shall have
obtained Company's prior written consent, the restrictions on Master Licensee's
disclosure and use of the Confidential Information shall not apply to the
following: (x) information, concepts, methods, procedures or techniques which
are or become generally known in the lodging facility business in the Territory,
or known to Master Licensee, other than through disclosure (whether deliberate
or inadvertent) by Master Licensee; (y) the disclosure of the Confidential
Information in judicial or administrative proceedings to the extent that Master
Licensee is legally compelled to disclose such information, provided Master
Licensee shall have used its best endeavors to obtain, and shall have afforded
Company the opportunity to obtain an assurance satisfactory to Company of
confidential treatment for the information required to be so
28
disclosed; and (z) Master Licensee's consultants, advisors and professionals
reviewing such information who are subject to appropriate confidentiality and
disclosure restrictions or who agree to maintain the confidentiality of such
information in accordance with the terms hereof. Master Licensee will cause its
directors, officers, employees, agents and Franchisees to maintain the
confidentiality of all Confidential Information of the Travelodge System and to
agree not to use Confidential Information in any business or commercial activity
other than the operation of Units pursuant to this Agreement. Company will treat
information provided by Master Licensee and designated as confidential at the
time of disclosure with the same undertaking of confidentiality as required for
Master Licensee with respect to Confidential Information, and subject to the
same exceptions.
ARTICLE 10: RELATIONSHIP OF THE PARTIES/INDEMNIFICATION
10.1 INDEPENDENT CONTRACTORS. Company and Master Licensee are and shall
-----------------------
be independent contractors and nothing herein is intended to make either party a
general or special agent, legal representative, subsidiary, joint venturer,
partner, fiduciary, employee or servant of the other for any purpose. Master
Licensee will indicate its status as an independent contractor. Neither Company
nor Master Licensee shall make any express or implied agreements, guaranties or
representations, or incur any debt, in the name of or on behalf of the other or
represent that their relationship is other than a franchise relationship, and
neither Company nor Master Licensee shall be obligated by or have any liability
under any agreements or representations made by the other, nor shall Company be
obligated for any damages to any person or property directly or indirectly
arising out of the operation of a Unit, including that which is caused by the
negligent or willful action or failure to act of Master Licensee, Affiliates or
Franchisees.
10.2 MASTER LICENSEE'S INDEMNIFICATION OF COMPANY AND THE MARKS OWNER.
----------------------------------------------------------------
Master Licensee will indemnify and hold Company and the Marks Owner harmless
against, and will reimburse Company and the Marks Owner, and their respective
officers, directors, employees, agents and affiliates (collectively the "COMPANY
INDEMNITEES") for any loss, liability or damages (actual or consequential) or
taxes (other than income and withholding taxes imposed on amounts paid by Master
Licensee to Company or the Marks Owner), and all reasonable costs and expenses
of defending any claim brought or tax levied against any one or more of the
Company Indemnitees in any judicial, administrative or arbitration proceeding in
which any one or more of the Company Indemnitees is named as a party, which any
Company Indemnitee may suffer, sustain or incur from and after the Agreement
Date by reason of, arising from or in connection with the ownership,
development, operation or franchising of Units by Master Licensee or
Franchisees, except to the extent any such claim arises out of the grossly
negligent, reckless or intentional acts or omissions of Company, the Marks Owner
or the affected Company Indemnitee. Company will give Master Licensee prompt
written notice of any such claim made against any Company Indemnitee and will
offer Master Licensee a reasonable opportunity to assume the defense thereof.
The indemnities and assumptions of liabilities and obligations relating to the
Initial Agreements herein shall continue in full force and effect subsequent to
and notwithstanding the expiration or
29
termination of this Agreement, provided that the cause of action accrues during
the Term or in connection with post-termination obligations of Master Licensee.
30
10.3 SPECIAL INDEMNITY. Company will indemnify, defend and hold Master
-----------------
Licensee harmless, to the fullest extent permitted by law, from and against all
losses and expenses incurred by Master Licensee in any action or claim alleging
that the use of the System in the Territory and any property Company licenses to
Master Licensee is an infringement of a third party's rights to any trade
secret, patent, copyright, trademark, service ▇▇▇▇ or trade name. Master
Licensee will promptly notify Company in writing when it becomes aware of any
alleged infringement or an action is filed against Master Licensee. Master
Licensee will cooperate with the defense and resolution of the claim. Company
may resolve the matter by obtaining a license of the property for Master
Licensee at Company's expense, or by requiring that Master Licensee discontinue
using the infringing property or modify its use to avoid infringing the rights
of others, provided that such discontinuance or modification does not materially
and adversely affect the conduct of the franchising business in the Territory.
The indemnities herein shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement, provided that
the cause of action accrues during the Term.
10.4 COMPANY'S INDEMNIFICATION OF MASTER LICENSEE. Company will indemnify
--------------------------------------------
and hold Master Licensee and the Guarantor harmless against, and will reimburse
Master Licensee, the Guarantor and their respective officers, directors,
employees, agents and affiliates (collectively, the "LICENSEE INDEMNITEES") for
any loss, liability or damages (actual or consequential) or taxes (other than
income and withholding taxes imposed on amounts paid by Company to Master
Licensee or Guarantor), and all reasonable costs and expenses of defending any
claim brought or tax levied against any one or more of the Licensee Indemnitees
in any judicial, administrative or arbitration proceeding brought by a third
party not affiliated with Master Licensee or Guarantor against the Indemnitee in
which any one or more of the Licensee Indemnitees is named as a party, which any
Licensee Indemnitee may suffer, sustain or incur by reason of, arising from or
in connection with personal injuries and property damage attributable to
Company's negligence, except to the extent any such claim arises out of the
grossly negligent, reckless or intentional acts or omissions of or the affected
Licensee Indemnitee. The Licensee Indemnitee must give Company prompt written
notice of any such claim made against any Licensee Indemnitee and to offer
Company a reasonable opportunity to assume the defense thereof. The indemnities
herein shall continue in full force and effect subsequent to and notwithstanding
the expiration or termination of this Agreement, provided that the cause of
action accrues during the Term.
ARTICLE 11: FRANCHISE AGREEMENTS
11.1 FRANCHISE AGREEMENTS UTILIZED BY MASTER LICENSEE. The form of
------------------------------------------------
Franchise Agreements used by Master Licensee to grant franchises to Franchisees
for the operation of Units shall be substantially in the form of Exhibit H to be
attached hereto, or such other form as shall be approved or supplied by Company,
in its sole discretion. Company shall supply the U.S. standard form unit
franchise agreement to Master Licensee and Master Licensee shall modify such
agreement to conform to Legal Requirements and other commercially necessary
requirements. Among other things, Master Licensee will use English as the
language for all Franchise
31
Agreements, and shall adhere to the fee structure used by Company in Company's
U.S. standard form unit franchise agreement (that is, application fee, initial
franchise fee, reservation fee, continuing fees and marketing fund
contributions) to the extent permitted by local law; provided that Master
Licensee shall have complete discretion to establish the amount of such fees.
Master Licensee shall promptly notify Company of any variations from such fee
structure and shall report to Company all Franchise Fees and all other fees,
payments, rentals, compensation or other consideration paid by its Franchisees
and Affiliates. If a form of Franchise Agreement is approved in writing by
Company, Master Licensee will make or permit no material changes or
modifications to the approved form Franchise Agreement without the prior written
consent of Company, which will not be unreasonably withheld. A copy of each
executed Franchise Agreement and any ancillary documents between Master Licensee
and its Franchisees and Affiliates shall be provided to Company within ten (10)
days after execution of the Franchise Agreement. All non-material and Company
approved material changes or modifications from the approved form Franchise
Agreement shall be highlighted by Master Licensee when submitted to Company.
11.2 TERMINATION/EXPIRATION OF FRANCHISES. Upon the termination or
------------------------------------
expiration of a franchise for the operation of a Unit, Master Licensee shall
require the Franchisee, to the extent permissible by law, to promptly and
expeditiously: (a) either vacate the premises or modify the premises and
operation of the Unit operated by the former Franchisee to remove its
identification as a Unit, and refrain from any use, in any manner or for any
purpose, of the Marks or the Travelodge System; (b) deliver to Master Licensee
all copies of the Territory System Standards Manual and all other materials
relating to the Travelodge System which Master Licensee or Company have
designated Confidential Information; and (c) deliver to Master Licensee or
provide evidence of complete destruction of all signs, advertising materials,
forms and other materials containing the Marks or otherwise identifying or
relating to Units. Each Franchise Agreement shall provide that in the event
this Agreement terminates pursuant to Paragraph 15. 1, the Franchisee shall
attorn to Company or its designee, and their successors and assigns as the
successor in interest to Master Licensee, and, that the Franchisee, or the
successor in interest to Master Licensee if the combined rates of the Continuing
Franchise Fee and the Franchise System Fee under the Franchise Agreement are
less than four and one-half percent (4.5%) of Gross Room Revenues or an
equivalent fixed Dollar amount, may terminate the Franchise Agreement without
penalty or compensation to the other party upon six months prior written notice
given after the third and before the fourth anniversary of the effective date of
termination of this Agreement.
11.3 ENFORCEMENT, INSPECTION AND ASSISTANCE BY MASTER LICENSEE. Master
---------------------------------------------------------
Licensee shall strictly enforce each and every Franchise Agreement for a Unit
and shall require that Franchisees strictly comply with all of the terms and
conditions of such Franchise Agreements. Master Licensee shall demand
Franchisee compliance with all Territory System Standards and shall, in a
diligent and reasonable manner, supervise and monitor the operation of all Units
operated by Franchisees, including, without limitation, periodically inspecting
Units for compliance with Quality Standards, preparing quality assurance
inspection reports, furnishing assistance to Franchisees and Unit managers to
correct deficiencies in operations or capital items,
32
conducting follow-up inspections, diligently enforcing Franchisee reporting and
payment obligations, auditing Franchisees to assure proper record-keeping and
Gross Room Revenue reporting, assisting Franchisees to transfer ownership of
their Units and franchises and, when necessary, terminating franchises and
enforcing termination and post-termination rights against non-complying
Franchisees. Master Licensee must issue a notice of default or similar formal
notice of noncompliance if a Franchisee's account is more than sixty (60) days
past due. Either Master Licensee or Company may suspend reservation system
service to any Unit in default under this Agreement or its Franchise Agreement.
Company will consult with Master Licensee before suspending reservation system
service to Unit not owned or operated by Master Licensee or an Affiliate. Master
Licensee must terminate a Franchise Agreement (or the franchise granted
thereunder), subject to Legal Requirements, if the default is not cured or a
reasonable plan to cure (under which the default is cured within 90 days after
the date the original cure period expires) is not adopted with Master Licensee's
consent within sixty (60) days after the notice to cure is sent by Master
Licensee. Master Licensee's enforcement obligations under each Franchise
Agreement may include the pursuit of legal remedies available under local law
and cooperation with Company if Company seeks enforcement of any Franchise
Agreement on behalf of Company or Master Licensee. In addition, Master Licensee
shall require, and strictly enforce the requirement, that each Unit be equipped
with a battery-operated or hard-wired smoke and fire alarm system and secure
guest room locking and building access system. Master Licensee shall further
require, and strictly enforce the requirement, that each Unit comply with
applicable building and safety codes and insurance requirements.
11.4 UNITS OPERATED BY AFFILIATES. Master Licensee must enter into a
----------------------------
Franchise Agreement approved by Company with Master Licensee or its Affiliate
for each Unit operated by Master Licensee or such Affiliate. Master Licensee
will cause each Unit operated by its Affiliates to comply strictly with the
terms and conditions of the Franchise Agreement and with the Territory System
Standards Manual. All Franchise Fees payable by Master Licensee and its
Affiliates will be deemed paid when due under their respective Franchise
Agreements, whether or not received by Master Licensee, for the purpose of
computing amounts due under Paragraphs 5.2, 5.3, 5.6, and 5.10.
11.5 FRANCHISE SERVICES. All services and assistance to be provided to
------------------
Franchisees by the franchiser under Franchise Agreements in connection with the
development and operation of Units shall be provided by Master Licensee and such
obligation of Master Licensee shall not be transferred, delegated or
subcontracted to any other person or entity without Company's prior written
approval, provided that Master Licensee shall remain ultimately responsible for
all necessary assistance and services to be provided Franchisees under the
Franchise Agreement. Master Licensee acknowledges that Company's approval in
such case will be subject to, among other things, a proper accounting of all
Franchise Fees and other payments made by Franchisees for such services and
assistance and provision for payment to Company of its allocable portion of such
Franchise Fees or other payments by Franchisees as determined by Company in its
sole discretion.
33
11.6 GUEST ROOM REGISTRATION FORMS. Master Licensee shall include in all
-----------------------------
Franchise Agreements, and shall vigorously enforce by appropriate means, a
requirement that all guest room registration forms utilized by Units of Master
Licensee, Affiliates and Franchisees contain (a) an acknowledgment on the part
of the guest that all claims arising out of the guest's stay at the Unit shall
be brought in the courts of the Territory, and (b) a disclaimer of liability and
responsibility on the part of Company and its Affiliates. Such acknowledgment
and disclaimer shall be disclosed prominently in English and the official
language of the appropriate political jurisdiction in which the Unit is located
on each registration form, and shall be approved by Company prior to use.
ARTICLE 12: REPORTS
Master Licensee shall furnish to Company:
(a) within thirty (30) days after the end of each calendar month a report
in the form prescribed by Company and signed by an officer of Master Licensee
(1) stating the Gross Room Revenues of and Franchise Fees and Franchise System
Fees paid by each Unit during such month and calculation of Company Initial
Fees, Company Continuing Fees, Company Reservation Fees, and Company Marketing
Contributions; (2) a current list of all Franchisees by location and all Units
under development, opened, closed and transferred to a different Franchisee
during the month; and
(b) such other reports and information relating to the operation of Units
by Franchisees in such form and for such periods and at such times, as Company
from time to time reasonably prescribes. Master Licensee will reserve
sufficient rights, and will exercise reasonable diligence to obtain, all
statements, reports and information from Franchisees which are required to
comply with this Agreement.
ARTICLE 13: INSPECTIONS AND AUDITS
Company and its agents shall have the right at any time during regular
business hours to inspect Master Licensee's headquarters and Units operated by
Master Licensee's Affiliates and after reasonable notice to audit the books and
records of any such Unit and relevant books and records of Master Licensee and
its Affiliates. Master Licensee hereby authorizes entry by Company and its
agents to Master Licensee's headquarters and any Unit operated or owned by
Master Licensee or an Affiliate. Master Licensee and its Affiliates shall
cooperate fully, and Master Licensee shall obligate Franchisees in the Franchise
Agreements to cooperate fully, and use commercially reasonable efforts to
promote and compel such cooperation, with representatives and agents of Company
making inspections and audits of Franchisees' Units and shall permit
representatives and agents of Company to take photographs, movies or videotapes
of such Units, to interview employees thereof and to make copies of such books
and records. Reasonable notice shall be given three (3) business days in
advance of the scheduled arrival date of the persons performing any audit on
behalf of Company under this Article 13. Company will notify Master
34
Licensee 24 hours in advance of any inspection to be performed on a Unit not
owned or operated by Master Licensee or any Affiliate.
ARTICLE 14: ASSIGNMENTS
14.1 ASSIGNMENT BY COMPANY. Company may assign this Agreement without
---------------------
restriction provided that the assignee succeeds to all of the rights and
obligations of Company hereunder. Company will give Master Licensee written
notice of any assignment of this Agreement, other than a collateral assignment,
after which the assignee shall have sole responsibility for performance of the
Company's duties and responsibilities under this Agreement and Company shall be
relieved from same. Company shall then be liable only for its obligations
arising under this Agreement prior to the assignment.
14.2 ASSIGNMENT BY MASTER LICENSEE. Master Licensee acknowledges that the
-----------------------------
rights and duties created by this Agreement are personal to Master Licensee and
that Company has entered into this Agreement on the basis of the collective
character, business ability and financial capacity of Master Licensee and its
owners. Neither this Agreement (or any interest in it), any material assets of
Master Licensee or material portion thereof, nor any part or all of the
ownership interest in Master Licensee may be voluntarily or involuntarily,
directly or indirectly, sold, assigned or otherwise transferred by Master
Licensee or its owners except to Royco, without the prior written approval of
Company, whether by merger, consolidation, reorganization, issuance or
redemption of capital stock or other corporate action, which approval will not
be unreasonably withheld. Any sale, assignment or transfer without such
approval shall constitute a breach hereof and convey no rights to or interest in
this Agreement; provided, however, if Master Licensee is a public company, then
Company's prior written approval shall be required only for the sale, assignment
or other transfer of this Agreement, or all or a material portion (35% or more
at GAAP value) of the assets of Master Licensee. Master Licensee shall be
required to pay to Company the Transfer Fee specified in Paragraph 5.8 for any
sale, assignment or other transfer of this Agreement or a "CONTROLLING OWNERSHIP
INTEREST" in Master Licensee, meaning fifty percent (50%) or more of the voting
equity of Master Licensee other than to Royco; provided, however, if Master
Licensee sells voting equity interests in Master Licensee to the public, then
Company shall have the right to require Master Licensee to pay Company the
transfer fee specified in Paragraph 5.8 only if, Master Licensee sells voting
equity interests in Master Licensee through an initial public offering or one or
more additional public offerings such that its owners as of the Agreement Date,
or Royco, shall no longer own a controlling ownership interest in Master
Licensee. If the transfer of a controlling interest occurs, Company will offer
to the transferee the opportunity to undergo the initial training program
described in Paragraph 4.2 for no additional fee paid to Company, provided that
the Transfer Fee is paid to Company before such training commences.
14.3 ASSIGNMENT TO ROYCO OR AN AFFILIATE. Master Licensee shall have the
-----------------------------------
right to assign its rights and obligations under this Agreement to an Affiliate
or to Royco, which assignment shall be permitted upon delivery of written notice
to Company. Such assignment shall also be
35
conditioned upon: (a) the execution by the assignee and Master Licensee and
delivery to Company of a written instrument of assignment and assumption
acceptable to Company; (b) guaranty of all obligations of such assignee under
this Agreement, substantially in the form attached hereto as Exhibit B by the
assignee's owner; (c) the assignee's execution
36
and delivery to Company of a written certificate that it has, as of five (5)
days prior to the assignment, and will maintain during the Term, the insurance
coverage specified in Article 8 hereof and (except with respect to Royco) a net
worth at least as good as the net worth of Master Licensee at the time of the
assignment; and (d) the assignee's execution and delivery to Company of an
officers' certificate within thirty (30) days prior to the date of transfer
giving to Company representations and warranties with regard to the transferee
identical in form to Master Licensee's representations and warranties in
Paragraph 2.5 and making the statements set forth in the officers' certificate
that Master Licensee shall deliver upon signing of this Agreement, except that
the assignee's officers' certificate shall provide additional information
concerning any and all lines of business conducted by the assignee and its
affiliates.
ARTICLE 15: TERMINATION
15.1 BY COMPANY. Company may terminate this Agreement, effective upon
----------
delivery of written notice of termination to Master Licensee in the event that:
(a) Master Licensee violates Paragraph 14.2 by making an assignment without
Company's approval; (b) Master Licensee suffers any bankruptcy, examinership,
receivership, liquidation, dissolution, insolvency, or experiences an inability
to pay debts as they become due or winding up of Master Licensee; (c) at any
time Master Licensee fails to comply with the Development Schedule requirements
as described in Paragraph 3.1 hereof; (d) Master Licensee or any of its
principal executive officers or managing directors are convicted of a felony or
other indictable criminal offense; (e) substantially all of the assets of Master
Licensee or any Affiliate are condemned, expropriated or otherwise taken over by
a governmental authority; (f) an audit performed by or on behalf of Company
reveals a material, intentional misrepresentation by Master Licensee of any
accounting or financial information, or information regarding quality assurance
or marketing programs, or reservation system operations; (g) Master Licensee or
any Affiliate challenges the validity of the Marks or Company's or the Marks
Owner's rights to or ownership of the Marks; (h) (intentionally deleted); (i)
(intentionally deleted); or j) Master Licensee materially breaches any other
material provision of this Agreement or of the exhibits hereto and does not cure
such breach, or furnish evidence of diligent and continuing action undertaken by
Master Licensee to cure such breach, within ninety (90) days after written
notice of such breach is delivered to Master Licensee.
15.2 BY MASTER LICENSEE. Master Licensee shall have the right to
------------------
terminate this Agreement if Company materially breaches any material provision
of this Agreement and does not cure such breach or furnish evidence of diligent
and continuing action undertaken by Company to cure such breach, within ninety
(90) days after written notice of such breach is delivered to Company.
15.3 IN THE EVENT OF WAR. If war is declared by the government of the
-------------------
Territory or armed hostilities exist which render all or a substantial part of
the Territory uninhabitable or unsafe for travel: (a) so long as all sums
payable to Company pursuant to this Agreement are paid as and when they come
due, this Agreement shall continue in full force and effect; (b) if as a result
of such war or armed hostilities any sum due Company hereunder is not paid when
37
due, either party (the "SUSPENDING PARTY") may, upon giving the other party at
least ninety (90) days written notice, suspend performance of its obligations
hereunder until such war or hostilities have ceased; provided, however, that
--------
Master Licensee shall remain liable for the amount of any payment it failed to
make prior to the date on which suspension takes effect; and (c) within ninety
(90) days after such war or hostilities have ceased, the suspending party shall
give the other party notice of its intention to either resume performance of its
obligations hereunder or terminate this Agreement, whereupon the suspending
party shall resume its performance or this Agreement shall terminate. During
the suspension period, Master Licensee shall use diligent efforts to discontinue
use and display of the Marks by itself and Franchisees.
ARTICLE 16: RIGHTS AND OBLIGATIONS UPON TERMINATION OR EXPIRATION
16.1 PAYMENT OF AMOUNTS DUE TO COMPANY. Upon termination or expiration of
---------------------------------
this Agreement, Master Licensee will pay to Company all Company Initial Fees,
Company Continuing Fees, Company Marketing Contributions and any other amounts
due Company at the date of such termination or expiration which are unpaid but
which are then due and payable in accordance with this Agreement. Master
Licensee shall act diligently to collect Franchise Fees and promptly remit
Company's share of such Fees . Such payments shall be made within thirty (30)
days after the amounts due Company are determined in accordance herewith.
Master Licensee shall contemporaneously with such payments furnish a complete
accounting of all Company Initial Fees, Company Continuing Fees, Company
Marketing Contributions and any other amounts due Company. Amounts due Company
shall be offset against the amounts payable under Paragraph 16.7.
16.2 CHANGE OF IDENTIFICATION. After termination of this Agreement
------------------------
pursuant to Paragraph 5.14, if Company so directs, and whenever a Franchise
Agreement terminates, Master Licensee shall promptly undertake (including
without limitation the commencement and diligent prosecution of judicial and
arbitration proceedings against Franchisees), all reasonable efforts to cause
each affected Franchisee to: (a) cease all use of the Marks at the affected
Unit, and thereafter refrain from identifying the lodging facility as a current
or former Unit or franchisee of, or otherwise associated with, Company, and
refrain from any other use of the Marks, or any colorable imitation thereof, in
any manner or for any purpose; (b) remove all signs and sign faces from both the
interior and exterior of the affected Unit; (c) deliver to Company all copies in
the possession of Franchisee of the Territory System Standards Manual, all other
manuals and materials relating to the Travelodge System and all advertising
materials, forms, and other materials containing the Marks or otherwise
identifying or relating to the Unit; (d) cease using room supplies, printed
materials, linens, credit card imprinters and other items bearing the Marks; (e)
take such action as may be required to change its legal name to another name not
using the words "Travelodge," Thriftlodge or equivalent words in the language of
the Territory or otherwise confusingly similar to "Travelodge" or "Thriftlodge,"
and shall cancel all fictitious name or equivalent authorizations relating to
use by the affected Franchisee of the Marks and file with the appropriate
government agencies and departments instruments terminating registered user
rights of the affected Franchisee; and (f) furnish to Company, within ninety
(90) days after the effective date of termination or expiration, evidence
reasonably satisfactory to Company of
38
compliance by the affected Franchisee with the foregoing obligations.
16.3 DISCONTINUANCE OF USE OF TRAVELODGE SYSTEM. Upon termination or
------------------------------------------
expiration of this Agreement, except as noted in Paragraph 16.10, Master
Licensee and Affiliates shall immediately cease to use in any business or
otherwise any portion of the Travelodge System, including the Confidential
Information to the extent commercially feasible, and otherwise comply with the
obligations described in Paragraph 16.2 to the extent applicable, returning the
Systems Standards Manuals and other Confidential Materials to Company.
16.4 COVENANT NOT TO COMPETE. Except as otherwise provided herein, if
-----------------------
prior to its expiration: (a) this Agreement is terminated by Company in
accordance with the provisions of Paragraph 15.1 hereof for non-payment of any
amount due under this Agreement, or (b) this Agreement is terminated by Master
Licensee other than in accordance with Paragraph 15.2 hereof, for a period of
one (1) year, commencing on the effective date of termination, Master Licensee
and its Affiliates engaged in the operation, ownership, management or leasing of
a Unit or former Unit shall not enter into or perform any agreement to
affiliate, franchise, license or promote any other brand or chain franchise
system or hotel cooperative located anywhere in the Territory.
16.5 RIGHTS UPON TERMINATION OR EXPIRATION. In addition to and not in lieu
-------------------------------------
of the parties' rights and obligations under Paragraphs 16.1, 16.2, 16.3 and
16.4 hereof, upon termination or expiration of this Agreement:
(a) Master Licensee shall assign to Company or its designee all of its
rights under this Agreement, the Trademark License Agreement, and any approval,
registration, authorization or filing with any governmental authority in the
Territory and held or made in the name of Master Licensee, or the Licensee under
the Trademark License Agreement, whereupon Company (or its designee) shall
expressly assume the obligations of Master Licensee under this Agreement, of the
Licensee under the Trademark License Agreement, and as required under the
governmental authorizations described above; and
(b) In consideration of the payment described in Paragraph 16.7, Master
Licensee shall assign to Company or its designee the Area Agreements and
Franchise Agreements for Units operated by Franchisees whereupon Company shall
expressly assume the obligations of Master Licensee under such Area Agreements
and Franchise Agreements.
16.6 CLOSING. Company shall have at least ninety (90) days to prepare for
-------
closing the transaction described in Paragraph 16.5, and all Franchise
Agreements must be transferred free and clear of any liens, charges and
encumbrances. Master Licensee shall take any and all actions as may be required
by the Legal Requirements, and shall use its best efforts to obtain any
governmental authorizations or approvals, to ensure the effectiveness of any
assignment made hereunder, as between Master Licensee and Company and as against
all third parties, including without limitation, Franchisees.
39
16.7 PRICE FOR ASSIGNMENT OF FRANCHISES. The payment to be made by
----------------------------------
Company for the assignments provided for in Paragraph 16.5(a) hereof shall be an
amount equal to the aggregate Area Continuing Fees and Continuing Franchise Fees
(excluding Franchise System Fees and Franchise Reservation Fees) paid to Master
Licensee by Area Franchisees and Franchisees under the applicable Franchise
Agreements for: (a) the last twelve (12) complete months preceding the date of
expiration of the Term without renewal, less the aggregate Company Continuing
Fees paid and payable to Company for such period; or (b) the last twelve (12)
complete months preceding the date of termination, in the event of a termination
by Company pursuant to Paragraph 15.1, less the aggregate Company Continuing
Fees paid to Company for such period. If Master Licensee terminates this
Agreement other than in accordance with Paragraph 15.2, at the Company's option,
Company shall not be required to make any payment to Master Licensee under this
Paragraph 16.7, but such payment, if Company elects to make same, shall be in
lieu of any damage claim that could be made by Company against Master Licensee
for lost profits or Company Continuing Fees that would accrue after the
termination. If Master Licensee terminates this Agreement in accordance with
Paragraph 15.2, the amount of the payment to be made by Company under Paragraph
16.5(a) shall be determined first by informal dispute resolution as provided in
Paragraph 17.8, and failing that, by arbitration as provided in Paragraph 17.9.
16.8 (INTENTIONALLY DELETED.)
------------------------
16.9 CONTINUING OBLIGATIONS. All obligations of Company and Master
----------------------
Licensee which expressly or by their nature survive the expiration or
termination of this Agreement shall continue in full force and effect subsequent
to and notwithstanding its expiration or termination and until they are
satisfied or by their nature expire.
16.10 EARLY TERMINATION BY MASTER LICENSEE. If this Agreement is
------------------------------------
terminated in accordance with Paragraph 15.2 above, Master Licensee and
Franchisees may continue to use the Marks and the Territory System Standards in
effect at the time of termination in accordance with Paragraph 6.1 (a) and
Article 7 until the earlier to occur of four (4) years thereafter or thirty (30)
days after Master Licensee's written notice of discontinuance of use thereof
without any obligation to pay Company any Company Continuing Fees during such
period. Master Licensee and its Franchisees may during such period continue to
participate in system-wide marketing programs administered by Company and obtain
reservation system services if it continues to pay Company Marketing
Contributions and Company Reservation Fees when due hereunder.
ARTICLE 17: GENERAL PROVISIONS
17.1 SEVERABILITY. Except as expressly provided to the contrary herein,
------------
each section, paragraph, term and condition of this Agreement shall be
considered severable and if, for any reason, any provision of this Agreement is
held to be invalid, contrary to, or in conflict with any applicable present or
future law or regulation in a final, unappealable ruling issued by any court,
arbitrator, agency or tribunal with competent jurisdiction in a proceeding to
which Company is
40
a party, that ruling shall apply only to the jurisdiction of such court,
arbitrator, agency or tribunal and shall not impair the operation of, or have
any other effect upon, such other terms and conditions of this Agreement as may
remain otherwise intelligible, which shall continue to be given full force and
effect and bind the parties hereto, although any provision held to be invalid
shall be deemed not to be a part of this Agreement in such jurisdiction from the
earlier of the date on which the time for appeal expires or receipt by Company
or Master Licensee of a notice of non-enforcement thereof Notwithstanding the
foregoing, either party may terminate this Agreement if a provision is held
invalid or unenforceable that materially and adversely affects the rights or
obligations of the party, or substantially diminishes the fundamental benefits
of this Agreement for the party.
17.2 SUBSTITUTION OF VALID PROVISION. If, under any applicable and binding
-------------------------------
law or rule, any provision of this Agreement is invalid or unenforceable, the
parties shall modify such invalid or unenforceable provision to the extent
required to be valid and enforceable. The parties agree to be bound by any
promise or covenant imposing the maximum duty permitted by law which is subsumed
within the terms of any provision hereof, as though it were separately
articulated in and made a part of this Agreement, that may result from striking
from any of the provisions hereof any portion or portions which are held to be
unenforceable in a final, unappealable ruling, or from reducing the scope of any
promise or covenant to the extent required to comply with such ruling.
17.3 FORCE MAJEURE. Subject to Paragraph 15.3, neither Company nor Master
-------------
Licensee shall be liable for loss or damage or deemed to be in breach of this
Agreement if its failure to perform its obligations results from: (a)
windstorms, rains, floods, earthquakes, typhoons, mudslides or other similar
natural causes; (b) fires, strikes, embargoes, or riot; (c) legal restrictions;
or (d) any other similar event or cause beyond the control of the party
affected. Any delay resulting from any of such causes shall extend performance
accordingly or excuse performance, in whole or in part, as may be reasonable,
except that no such cause other than a governmental or judicial order shall
excuse payment of amounts owed at the time of such occurrence or payment of
Company Continuing Fees, and other amounts due to Company subsequent to such
occurrence. In the event of war or armed hostilities affecting the Territory,
Paragraph 15.3 shall be controlling.
17.4 CUMULATIVE REMEDIES. The rights of Company and Master Licensee
-------------------
hereunder are cumulative and no exercise or enforcement by Company or Master
Licensee of any right or remedy hereunder shall preclude the exercise or
enforcement by Company or Master Licensee of any other right or remedy hereunder
or which Company or Master Licensee is entitled by law to enforce.
17.5 ATTORNEYS' FEES. If a claim for amounts owed by Master Licensee to
---------------
Company is asserted in any proceeding before a court of competent jurisdiction
or arbitrator, or if Company or Master Licensee is required to enforce this
Agreement in a judicial or arbitration proceeding, the party prevailing in such
proceeding shall be entitled to reimbursement of its expenses, including
reasonable accounting and legal fees.
41
42
17.6 GOVERNING LAW. This Agreement and the validity, performance,
-------------
construction and effect of this Agreement shall be governed by the laws of the
Province of Ontario and the Federal laws of Canada.
17.7 INTERPRETATION. The preambles to this Agreement are a part of this
--------------
Agreement, which constitutes the entire agreement of the parties (all prior
representations, negotiations and agreements being merged into this Agreement),
and there are no other oral or written understandings or agreements between
Company and Master Licensee relating to the subject matter of this Agreement.
Except as otherwise expressly provided herein, nothing in this Agreement is
intended, nor shall be deemed, to confer any rights or remedies upon any person
or legal entity not a party hereto. References to statutory provisions shall be
construed as references to those provisions as replaced, amended, modified or
re-enacted from time to time. The headings of the several sections and
paragraphs hereof are for convenience only and do not define, limit or construe
the contents of such sections or paragraphs. This Agreement shall be executed
in one (1) or more counterparts, each of which shall be deemed an original.
References to statutory provisions shall be construed as references to those
provisions as replaced, amended, modified or re-enacted from time to time.
17.8 INFORMAL DISPUTE RESOLUTION. Prior to filing any arbitration
---------------------------
proceeding pursuant to Paragraph 17.9, the party intending to file such a
proceeding shall be required to notify the other party in writing of the
existence and the nature of any dispute. Within fifteen (15) business days
after the other party's receipt of such notice, the Chief Executive Officer or
other senior executive officer of both Company and Master Licensee shall meet in
Toronto, Ontario or by video conference, in order to attempt to resolve the
dispute amicably. If such informal dispute resolution attempts prove to be
unsuccessful, either party may initiate an arbitration proceeding as described
in Paragraph 17.9.
17.9 ARBITRATION. (a) All controversies, disputes or claims arising in
-----------
connection with, from or with respect to this Agreement which are not resolved
within fifteen (15) days after either party shall notify the other in writing of
such controversy, dispute or claim, shall be subject to binding arbitration.
The arbitration shall be conducted in accordance with the UNCITRAL Arbitration
Rules in effect on the Agreement Date, as an enacted in Ontario as the
International Commercial Arbitration Act, R.S.O. 1990, Chapter I.9.
(b) The case shall be administered by the New York, New York office of the
American Arbitration Association in accordance with its "Procedures for Cases
Under the UNCITRAL Arbitration Rules." The arbitration proceeding shall be
conducted in Toronto, Ontario in the English language. The Rules of Evidence of
the Ontario General Court shall apply to the arbitration hearing. The American
Arbitration Association shall be the appointing authority. A single neutral
arbitrator shall be appointed for proceedings with an amount in controversy,
determined by the demand for arbitration and the response, is less than
CN$500,000 or its then equivalent in United States Dollars, and three neutral
arbitrators if the amount in controversy exceeds such amount. The arbitrator
shall be a citizen of the United States or Canada and shall
43
be experienced in the hospitality business or in franchising and distribution
law or business.
(c) The arbitrator shall have the right to award or include in the award
any relief which is deemed proper under the circumstances, including without
limitation, money damages (with interest on unpaid amounts from date due),
specific performance and injunctive relief. The arbitrator shall issue a
written opinion explaining the reasons for the decision and award. The award
and decision of the arbitrator shall be conclusive and binding upon all parties
hereto and judgment upon the award may be entered in any court of competent
jurisdiction. The parties acknowledge and agree that any arbitration award may
be enforced against either or both of them in a court of competent jurisdiction
and each waives any right to contest the validity or enforceability of such
award. The parties further agree to be bound by the provisions of any statute
of limitations which would be otherwise applicable to the controversy, dispute
or claim which is the subject of any arbitration proceeding initiated hereunder.
(d) Without limiting the foregoing, the parties shall be entitled in any
such arbitration proceeding to the entry of an order by a court of competent
jurisdiction pursuant to an opinion of the arbitrator for specific performance
of any of the requirements of this Agreement. This provision shall continue in
full force and effect subsequent to and notwithstanding expiration or
termination of this Agreement.
(e) The parties each may conduct pre-hearing discovery limited to two (2)
requests for production of documents and up to ten (10) examinations for
discovery, in conformance to the Rules of Practice of the Ontario General Court
relating thereto. The arbitrator shall establish a reasonable discovery
schedule not to exceed 45 days for each party. Failure to produce a document in
response to a request for production makes the document inadmissible in the
arbitration. Failure to produce a witness at the scheduled time for his or her
examination renders the witness ineligible to appear at the arbitration hearing
or provide testimony by affidavit.
(f) Either party may apply to a court of competent jurisdiction for
injunctive relief to preserve the status quo pending the outcome of the
arbitration, to prevent the disclosure of confidential information, to enjoin
the unauthorized use and display of Marks or the System, and to allow the
conduct of an inspection or audit pursuant to Article 13.
17.10 DELIVERY OF NOTICES AND PAYMENTS. All notices, reports and other
--------------------------------
information and supporting records permitted or required to be delivered by the
provisions of this Agreement shall be delivered to:
COMPANY: TRAVELODGE HOTELS, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
(▇.▇.▇.) ▇▇▇▇▇; Attn: Executive Vice President and General Counsel, Fax: (201)
▇▇▇-▇▇▇▇.
MASTER LICENSEE: CHARTWELL CANADA HOSPITALITY CORP., 500, ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ ▇▇▇; Fax: (▇▇▇) ▇▇▇-▇▇▇▇; Attention:
President.
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq., Brans, Lehun, ▇▇▇▇▇▇▇ & Champagne, Suite
1701,
44
Richmond Adelaide Centre, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇
▇▇▇; Fax (▇▇▇) ▇▇▇-▇▇▇▇; and a copy to General Counsel, Chartwell Leisure Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇; Fax (▇▇▇) ▇▇▇-▇▇▇▇.
The address and designee for notices may be modified from time to time by either
party with written notice to the other party. Company shall not be obligated to
give any notice to any Affiliate or Franchisee, and notice to Master Licensee
shall constitute sufficient notice to each Affiliate and Franchisee of Master
Licensee to which such notice is applicable. Notices shall be deemed so
delivered at the time delivered personally by the party giving same to the other
party, one (1) business day after sending by telex, cable or comparable
electronic system and two (2) business days after sending by air courier
service.
17.11 WAIVER. Company and Master Licensee may, by written instrument,
------
unilaterally waive or reduce any obligation of or restriction upon the other
under this Agreement, effective upon delivery of written notice thereof to the
other or such other effective date stated in the notice of waiver. Any waiver
granted by either party shall be without prejudice to any other rights such
party may have, will be subject to continuing review by that party, and may be
revoked, in that party's sole discretion, at any time and for any reason,
effective ten (10) days after delivery of written notice to the other party.
Company and Master Licensee shall not be deemed to have waived or impaired any
right, power or option reserved by this Agreement (including, without
limitation, the right to demand exact compliance with every term, condition and
covenant herein, or to declare any breach thereof to be a default and to
terminate this Agreement prior to the expiration of its term), by virtue of any
custom or practice of the parties at variance with the terms hereof; any
failure, refusal or neglect of Company or Master Licensee to exercise any right
under this Agreement or to insist upon exact compliance by the other with its
obligations hereunder, including, without limitation, any mandatory
specification, standard or operating procedure; any waiver, forbearance, delay,
failure or omission by Company or Master Licensee to exercise any right, power
or option, whether of the same, similar or different nature, with respect to any
other Travelodge facility; or the acceptance by Company of any payments from
Master Licensee after any breach by Master Licensee of this Agreement.
17.12 U.S. GOVERNMENT REGULATIONS. Master Licensee shall not, without the
---------------------------
prior written consent of Company, disclose, sublicense or sell any of the
information or rights it receives from Company under this Agreement to any
person, or any government agency of any nation, if such disclosure, sublicense
or sale would be regarded by any governmental agency or department of the U.S.
as a breach of the Foreign Assets Control Regulations, 31 C.F.R. Section 500 et
--
seq. (1988), or the Transaction Control Regulations, 31 C.F.R. Section 505 et
--- --
seq. (1988). Master Licensee shall obtain a similar commitment from each of its
---
Franchisees. Master Licensee shall refrain from making any payments to third
parties which would cause Company to be in violation of the U.S. Foreign Corrupt
Practices Act, 15 U.S.C. Sections 78dd-1, 78dd-2 (1988).
45
IN WITNESS WHEREOF, the parties hereto have executed, sealed and delivered
this Agreement in one (1) or more counterparts on the Agreement Date.
COMPANY:
ATTEST: TRAVELODGE HOTELS, INC.
__________________________ By:____________________________
Title:____________________ Title:_________________________
MASTER LICENSEE:
ATTEST: CHARTWELL CANADA HOSPITALITY CORP.
__________________________ By:__________________________
Title:____________________ Title:_______________________
46
ACKNOWLEDGEMENTS
Before me, the undersigned notary public, personally appeared
_______________________________________, and ____________________________, to me
known, who executed this instrument in the capacities stated above as the free
act and deed of CHARTWELL CANADA HOSPITALITY CORP., a Delaware corporation at
__________________________, _______________________,
__________________________________.
(Notary Seal)
___________________________________
My Commission expires:___________________
Before me, the undersigned notary public, personally appeared
______________________________________ and ___________________________, to me
known, who executed this instrument in the capacities stated above as the free
act and deed of TRAVELODGE HOTELS, INC. at Parsippany, ▇▇▇▇▇▇ County, New
Jersey, United States of America.
(Notary Seal)
__________________________________
My Commission expires:_________________________
47
EXHIBIT A
---------
LIST OF MARKS
UNITED STATES
-------------
▇▇▇▇ REG. NO. REG. DATE
---- -------- ---------
Travelodge 1,474,602 Jan. 26, 1988
Travelodge 1,869,185 Dec. 27, 1994
Travelodge & Design 1,879,457 Feb. 21, 1995
Travelodge & Design 1,868,724 Dec. 20, 1994
Travelodge Preferred Traveler 1,213,615 Oct. 19, 1982
Thriftlodge 1,539,812 May 16, 1989
Sleepy with Sleepy Bear Design 848,208 April 30, 1968
Sleepy Bear 1,868,761 Dec. 20, 1994
Sleepy Bear Club 1,895,437 May 23, 1995
Bear Silhouette Design 1,006,905 March 18, 1975
Bear Silhouette App. 74/439,019 Sept. 23, 1993
Sleepy App. 74/647,861 Mar. 17, ▇▇▇▇
▇-▇
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇ REG. NO. DATE CLASS
---- -------- ---- -----
Sleepy 270706 11/2/82 16,21,25,34,42
Bear Silhouette
Design 270705 7/2/82 16,21,25,34,35,42
Sleepy Bear 448622 10/6/95 42
Sleepy Bear
Club 756431 42
Travelodge 117776 4/29/60 42
Travelodge 352092 2/24/89 42
Viscount 291703 6/8/84 42
Travelodge UCA42384 3/17/50 24
Travelodge
Viscount 294589 8/31/84 42
A-2
EXHIBIT B
TO THE MASTER LICENSE AGREEMENT
GUARANTY AND ASSUMPTION OF
MASTER LICENSEE'S OBLIGATIONS
-----------------------------
In consideration of and as an inducement to the execution by TRAVELODGE
HOTELS, INC. ("Company") of that certain Master License Agreement for the
Dominion of Canada (the "Agreement") with CHARTWELL CANADA HOSPITALITY CORP., a
Delaware corporation ("Master Licensee"), the undersigned, ("GUARANTOR"), hereby
personally and unconditionally: (A) guarantees to Company and its successors and
assigns, for the term of the Agreement and thereafter as provided in the
Agreement, that Master Licensee shall punctually pay and perform each and every
undertaking, agreement and covenant set forth in the Agreement; and (B) agrees
to be personally bound by, and personally liable for the breach of, each and
every provision in the Agreement.
The undersigned waives:
a) acceptance and notice of acceptance of the foregoing undertakings;
b) notice of demand for payment of any indebtedness or nonperformance of any
obligations hereby guaranteed, provided that the undersigned is provided with a
copy of the notice of non-performance or demand for payment sent to Master
Licensee;
c) protest and notice of default to any party with respect to the indebtedness
or nonperformance of any obligations hereby guaranteed;
d) any right it may have to require that an action be brought against Master
Licensee or any other person as a condition of liability; and
e) any and all other notices and legal or equitable defenses to which it may be
entitled as a guarantor.
The undersigned consents and agrees that:
a) it shall render any payment or performance required under the Agreement upon
demand if such Master Licensee fails or refuses punctually to do so;
b) such liability shall not be contingent or conditioned upon pursuit by
Company of any remedies against Master Licensee or any other person, it being
understood that this Guaranty is a suretyship under local law; and
c) such liability shall not be diminished, relieved or otherwise affected by
any extension of time, credit or other indulgence which Company may from time to
time grant to Master Licensee or to any other person, including, without
limitation, the acceptance of any partial payment or performance, or the
compromise or release of any claims, none of which shall in any way modify or
amend this guaranty, which shall be continuing and irrevocable during the term
of the Agreement.
B-1
The undersigned further covenants with Company to require Master Licensee to
change its legal name in accordance with Paragraph 16.2 of the Agreement within
30 days after it terminates.
IN WITNESS WHEREOF, the undersigned has executed this Guaranty and Assumption
of Obligations on the ___ day of September, 1996.
GUARANTOR:
CHARTWELL LEISURE INC.
By:__________________________
President
Before me, the undersigned notary public, personally appeared
___________________, to me known, who executed this instrument stated above as
the free act and deed of the entity represented by such person.
(Notary Seal) ___________________________
My Commission expires:___________________
B-2
Licensee: (Licensee Name)
Location: (Location)
Unit Number: (Unit No.)
ASSIGNMENT AND ASSUMPTION AGREEMENT
This "Assignment" is made and entered into as of September 30, 1996 by and
among TRAVELODGE HOTELS, INC., a Delaware corporation ("Assignor") and CHARTWELL
CANADA HOSPITALITY CORP., a Delaware corporation ("Assignee").
Recitals. Assignor is the Licensor under a License Agreement and certain
--------
other agreements relating to a Travelodge franchise granted to the referenced
Licensee, (collectively, the "Agreements"). The Agreements, which are
incorporated by reference into this Assignment, authorize the operation of a
Travelodge franchise assigned the referenced Unit Number (the "Facility") at the
location described above. Assignor is conveying the Agreements to Assignee
pursuant to that certain Master License Agreement dated of even date herewith
(the "Master License Agreement"). Assignee has agreed to assume and accept the
rights and obligations of the Licensor under the Agreements, effective as of the
date of this Assignment.
IN CONSIDERATION of the premises, the mutual promises in this Assignment,
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by the parties, it is agreed as follows:
1. Assignor bargains, sells, transfers, assigns, delegates and conveys to
Assignee, and Assignee accepts and assumes, all of Assignor's right, title and
licensor's interest in and to the Agreements, subject to Section 3 below.
2. Assignee accepts and assumes the rights, benefits, burdens and
obligations of the licensor under the Agreements, effective as of the date of
this Assignment, including all existing and future obligations of Assignor to
pay and perform under the Agreements.
3. Assignor shall be entitled to collect and retain the franchise fees
accruing through September 30, 1996, as provided in Paragraph 2.7 of the Master
License Agreement. Assignor's computation of amounts due to it under the
Agreements shall be binding and conclusive in the absence of manifest error.
4. Assignor shall deliver the original of its hard copy franchise files
containing the Agreements and all related correspondence filed therein and a
copy of its 1996 accounting records relating to the Agreements to the location
designated by Assignee within 10 days after the date this Assignment is
effective. Assignor may retain its original accounting records and copies of
its franchise records.
5. The Master License Agreement contains additional terms relating to
this transaction.
1
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Assignment effective as of the date first above written.
ASSIGNOR:
TRAVELODGE HOTELS, INC.
Attest:______________________________
Assistant Secretary
By:________________________________
Vice President
ASSIGNEE:
CHARTWELL CANADA HOSPITALITY CORP.
Attest:_____________________________
Secretary
By:_____________________________
(Vice) President
2
EXHIBIT D
TRADEMARK LICENSE AGREEMENT
THIS AGREEMENT is made and entered as of September 30, 1996 by and between
TRAVELODGE HOTELS, INC., a corporation organized under the laws of the State of
Delaware, U.S.A. ("LICENSOR"), and CHARTWELL CANADA HOSPITALITY CORP., a
corporation organized under the laws of the State of Delaware, U.S.A.
("LICENSEE").
WITNESSETH:
-----------
WHEREAS, Licensor warrants that it currently owns or has the exclusive
right to license and sublicense certain trademarks, service marks, tradenames,
logos and other commercial symbols, including without limitation, those listed
on the Schedule attached hereto (whether any such are registered or not), as the
same shall be amended from time to time (collectively, the "MARKS"), used in the
operation of Travelodge and Thriftlodge motels, hotels, suites, motor hotels and
lodging facilities (collectively, "TRAVELODGE UNITS");
WHEREAS, Licensee and Licensor, have entered into that certain Master
License Agreement dated as of the date hereof (the "MASTER AGREEMENT"), for the
purpose of owning, operating and franchising Travelodge and Thriftlodge Units in
Canada (the "TERRITORY"); and
WHEREAS, Licensor desires to grant to Licensee, and Licensee desires to
obtain from Licensor, the right to use the Marks in connection with owning,
operating and franchising Travelodge Units in the Territory on the terms and
conditions contained herein and in the Master Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements and obligations set forth herein, the parties hereto agree as
follows:
1. GRANT OF LICENSE. Subject to earlier termination in accordance with
----------------
the terms hereof and of the Master Agreement, Licensor hereby grants to Licensee
upon the terms and conditions hereinafter set forth, for a term commencing on
the date hereof and expiring on December 31, 2026 (subject to renewal on the
terms described in the Master Agreement), the exclusive license to use the Marks
in connection with owning, operating and franchising Travelodge Units in the
Territory and to license the Marks to franchisees in connection with the
operation of Travelodge Units in the Territory. Except as otherwise provided
herein and provided that Licensee is in compliance with this Agreement, Licensor
shall not grant a license for use of the Marks for owning, operating or
franchising Travelodge Units in the Territory during the term of this Agreement.
The license granted herein is limited to the Territory and confers no rights
upon Licensee to use the Marks outside of the Territory, except for advertising
purposes approved by Licensor, and provides no restriction on Licensor's use of
the Marks outside of the Territory.
2. ROYALTY. In consideration of the license granted by this Agreement,
-------
Licensee shall pay to Licensor each year, within ninety (90) days of the end of
each calendar year hereunder, for the
D-1
duration of this Agreement, a royalty of Ten Dollars ($10.00) in lawful currency
of the United States of America, net of any applicable taxes. Payment of such
royalty by Licensee shall be credited against the "Company Continuing Fees"
payable by Licensee under the Master Agreement.
3. OWNERSHIP OF MARKS. Licensee disclaims any ownership rights in or to
------------------
the Marks. Licensee's right to use the Marks is derived solely from this
Agreement and the Master Agreement and is limited to use in the Territory, that
all usage of the Marks by Licensee and its affiliates and franchisees and any
goodwill established thereby shall inure to the exclusive benefit of Licensor,
that this Agreement does not confer any goodwill or ownership interests
whatsoever in the Marks upon Licensee, its affiliates or franchisees, and that,
upon termination or expiration hereof, no monetary value shall be attributable
to any goodwill associated with the use of the Marks by Licensee, its affiliates
and franchisees.
4. MARKS REGISTRATION. Licensor has registered or shall apply for
------------------
registration of certain of the Marks (the "PRINCIPAL MARKS")as indicated on
Schedule 1, with the appropriate governmental agencies in the Territory and
shall bear the cost thereof Licensor shall pay for all costs associated with
registration or renewal of the Marks in the Territory. Licensee will cooperate
with Licensor in obtaining registrations of the Principal Marks in the
Territory, as deemed necessary or desirable in the sole discretion of Licensor,
at Licensor's expense. Licensor shall have the right to designate a
supplemental or substitute trademark or trademarks to identify Travelodge Units
in the Territory as provided in the Master Agreement and such supplemental or
substitute trademark shall be included in the definition of Marks.
5. LICENSING OF FRANCHISEES. If and to the extent that Licensor
------------------------
determines that sublicensing of the Marks or franchising agreements contemplated
under the Master Agreement presents risks of diminution or loss of rights to the
Marks under local law in the Territory, Licensor shall have the right and
obligation to enter into a direct trademark license agreement with each
affiliate or franchisee that operates a Travelodge Unit in the Territory, and
Licensee shall in such case amend accordingly any franchise agreement that it
enters into with its franchisees with regard to the Marks and the licensing or
sublicensing of the Marks, and to provide for cross default provisions in both
agreements.
6. REGISTRATION OF AUTHORIZED USER INSTRUMENTS. Licensor shall execute,
-------------------------------------------
where required by local law, separate instruments to enable Licensee to register
with appropriate government agencies and departments the rights of Licensee to
use the Marks and the rights of its affiliates and franchisees as authorized
users of the Marks, and Licensee shall exercise its best efforts to cause such
instruments to be registered with such government agencies and departments.
Also, Licensee, where required by local law or as directed by Licensor, shall
execute separate instruments to enable Licensor to register with appropriate
government agencies and departments the rights of Licensor to the Marks and the
rights of Licensee, its affiliates and franchisees as authorized users of the
Marks.
7. QUALITY CONTROL. Licensee acknowledges the importance to Licensor,
---------------
its reputation and goodwill, and to the public of maintaining high, uniform
standards of quality for the goods and services sold under the Marks. Licensee
shall maintain, and shall require its affiliates and
D-2
franchisees to maintain, standards of quality as may be set by Licensor from
time to time and to follow, and to require its affiliates and franchisees to
follow, the written specifications or standards of Licensor relating to the
type, nature or quality of goods or services sold under the Marks or from a
Travelodge Unit. To determine whether Licensee, its affiliates or franchisees
are complying with this Agreement and the quality controls set forth herein,
Licensor shall have the right at any time during business hours to inspect the
premises of any Travelodge Unit located in the Territory, upon reasonable notice
to Licensee and the Franchisee and so as not to disrupt the Unit's operations.
Licensee shall permit inspection of the premises and fully cooperate with
representatives of Licensor during any such inspection. Licensee shall require
its affiliates and franchisees to agree to submit to similar inspections.
8. INFRINGEMENTS. Licensee shall notify Licensor immediately of any
-------------
infringement of or challenge to the use of any ▇▇▇▇ within the Territory, or any
claim of any rights in any ▇▇▇▇, or any confusingly similar trademark, within
the Territory, of which Licensee becomes aware. Licensor shall have the right
to control the conduct of all acts including all proceedings relating to the
Marks. The decision on whether or not to take and defend any proceedings shall
be at the sole discretion of Licensor after consultation with Licensee. If
Licensor elects not to take or defend such proceeding, Licensee may proceed in
Licensor's stead, at Licensee's own expense. In such case, the Licensor shall
execute such powers of attorney and related documents as Licensee reasonably
requests in order to conduct the infringement action. The cost of defending or
prosecuting the infringement action shall be borne as set forth in the Master
Agreement. Licensee waives its rights under Section 50(3) of the Trade-Marks
Act (Canada).
9. FORM OF USE. Licensee shall use the Marks only in the form and manner
-----------
and with appropriate legends as prescribed from time to time by Licensor, and
not to use any other trademark or service ▇▇▇▇ in combination with the Marks
without prior written approval of Licensor. Licensee, its affiliates and its
franchisees will not incorporate any ▇▇▇▇ as part of any corporate or trade name
or with any prefix, suffix or other modifying trademarks, logos, words, terms,
designs or symbols, or in any modified form, or use any ▇▇▇▇ in connection with
the sale of any unauthorized product or service or in any other manner not
expressly authorized under this Agreement or the Master Agreement, and will
display the Marks and give notices of trademark registrations in the manner
prescribed by Licensor, such as in the Territory System Standards Manual (as
provided under the Master Agreement), as updated from time to time, and obtain
such licenses, permits and authorizations relating thereto as may be necessary
or advisable under applicable local law in the Territory.
10. ASSIGNMENT. Neither this Agreement nor any part or all of the
----------
ownership of Licensee may be voluntarily or involuntarily, directly or
indirectly assigned, sold, pledged, hypothecated or otherwise transferred
without the prior written consent of Licensor (except as permitted by the Master
Agreement) and any such assignment or transfer without such approval shall
constitute a breach hereof and convey no rights or interests in the Marks to
such assignee. This Agreement is fully assignable by Licensor and shall inure
to the benefit of any assignee or other legal successor to the interests of
Licensor.
11. RELATIONSHIP OF THE PARTIES. This Agreement does not create a
---------------------------
fiduciary relationship between Licensor and Licensee, which shall be independent
contractors. Nothing in this
D-3
Agreement is intended to make either party a general or special agent, joint
venturer, partner or employee of the other for any purpose. Furthermore, the
parties hereto shall not accept service of process for each other or their
respective affiliates.
12. TERMINATION BY LICENSOR. Licensor may terminate this Agreement,
-----------------------
effective upon delivery of notice of termination to Licensee: (a) if Licensee
violates Paragraph 10 by making an assignment in violation of this Agreement or
the Master Agreement; (b) if Licensor terminates the Master Agreement; (c) if
Licensee terminates the Master Agreement and is not authorized to continue to
utilize the Marks. Upon termination or expiration of this Agreement, Licensee
shall pay to Licensor all fees and any other amounts due Licensor under this
Agreement at the date of termination or expiration which are unpaid. Such
payments shall be made within thirty (30) days after the amounts due Licensor
are determined in accordance herewith. After the ter mination or expiration of
this Agreement, if Licensor so directs, Licensee will promptly and expeditiously
undertake, and require franchisees and affiliates to promptly and expeditiously
undertake all actions required to be taken by Licensee under Paragraph 16.2 of
the Master Agreement.
13. WAIVER. The waiver by either party of a breach or provision of this
------
Agreement by the other shall not operate or be construed as a waiver of any
subsequent breach by such other party.
14. BINDING EFFECT. This Agreement shall be binding upon the parties
--------------
hereto and shall inure to the benefit of their respective executors,
administrators, heirs and successors in interest.
15. SEVERABILITY. The invalidity, illegality or unenforceability of any
------------
provision hereof shall not in any way affect, impair, invalidate or render
unenforceable this Agreement or any other provision thereof.
16. ATTORNEYS' FEES. If a claim for amounts owed by Licensee to Licensor
---------------
is asserted in any proceeding before a court of competent jurisdiction or
arbitrator, or if Licensor or Licensee is required to enforce this Agreement in
a judicial or arbitration proceeding, the party prevailing in such proceeding
shall be entitled to reimbursement of its expenses, including reasonable
accounting and legal fees.
17. GENERAL. The paragraph headings are for information only and this
-------
Agreement shall not be construed by reference thereto. Except to the extent
governed by the ▇▇▇▇▇▇ Act (15 U.S.C. Section 1051 et seq.), this Agreement and
--------
the validity, performance, construction and effect of this Agreement shall be
governed by the laws of the Province of Ontario and the Federal laws of Canada.
18. INFORMAL DISPUTE RESOLUTION. Prior to filing any arbitration
---------------------------
proceeding pursuant to Paragraph 19, the party intending to file such a
proceeding shall be required to notify the other party in writing of the
existence and the nature of any dispute. Licensor and Licensee each agree that
within fifteen (15) business days of the other party's receipt of such notice,
the Chief Executive Officer or other senior executive officer of both Licensor
and Licensee shall meet in Toronto, Ontario or by video conference, in order to
attempt to resolve the dispute amicably. If
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such informal dispute resolution attempts prove to be unsuccessful, the
notifying party may initiate an arbitration proceeding as described in Paragraph
19.
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19. ARBITRATION. All controversies, disputes or claims arising in
-----------
connection with, from or with respect to this Agreement which are not resolved
within fifteen (15) days after either party shall notify the other in writing of
such controversy, dispute or claim, shall be submitted for arbitration to the
New York, New York office of the American Arbitration Association under its
commercial arbitration rules, with the arbitration proceeding to be conducted in
New York, New York. The arbitrator shall have the right to award or include in
his award any relief which is deemed proper under the circumstances, including
without limitation, money damages (with interest on unpaid amounts from date
due), specific performance and injunctive relief. The arbitrator shall issue a
written opinion explaining the reasons for the decision and award. The award
and decision of the arbitrator shall be conclusive and binding upon all parties
hereto and judgment upon the award may be entered in any court of competent
jurisdiction. The parties acknowledge and agree that any arbitration award may
be enforced against either or both of them in a court of competent jurisdiction
and each waives any right to contest the validity or enforceability of such
award. The parties further agree to be bound by the provisions of any statute
of limitations which would be otherwise applicable to the controversy, dispute
or claim which is the subject of any arbitration proceeding initiated hereunder.
Without limiting the foregoing, the parties shall be entitled in any such
arbitration proceeding to the entry of an order by a court of competent
jurisdiction pursuant to an opinion of the arbitrator for specific performance
of any of the requirements of this Agreement. This provision shall continue in
full force and effect subsequent to and notwithstanding expiration or
termination of this Agreement.
20. DELIVERY OF NOTICES AND PAYMENTS. All notices, reports and other
--------------------------------
information and supporting records permitted or required to be delivered by the
provisions of this Agreement shall be delivered to:
Licensor: TRAVELODGE HOTELS, INC., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇
(U.S.A.) 07054, Attn: Executive Vice President and General Counsel, Fax: (201)
▇▇▇-▇▇▇▇
Licensee: CHARTWELL CANADA HOSPITALITY CORP., 500, 5940 ▇▇▇▇▇▇▇ Trail South,
Calgary, Alberta Canada ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇; Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇, Esq., Brans, Lehun, ▇▇▇▇▇▇▇ & Champagne, Suite
1701, Richmond Adelaide Centre, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇ ▇▇▇; Fax (▇▇▇) ▇▇▇-▇▇▇▇, and to: General Counsel, Chartwell Leisure Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇; Fax (▇▇▇) ▇▇▇-▇▇▇▇.
Either party may change its address and designee for notice from time to time by
written notice to the other party. Licensor shall not be obligated to give any
notice to any affiliate or franchisee or Licensee, and notice to Licensee shall
constitute sufficient notice to each affiliate and franchisee of Licensee to
which such notice is applicable. Notices shall be deemed so delivered at the
time delivered personally by the party giving same to the other party, one (1)
business day after sending by telecopier, telex, cable or comparable electronic
system and two (2) business days after sending by air courier service.
21. ENTIRE AGREEMENT; RELATION TO MASTER AGREEMENT. This Agreement has
----------------------------------------------
been entered into concurrently with the Master Agreement and shall continue in
effect only so long as
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the Master Agreement, including the provisions thereof that permit continued use
of the Marks after termination of the master licensee rights, remains in effect.
In the event of a conflict between the provisions of this Agreement and the
Master Agreement, the provisions of the Master Agreement shall govern. This
Agreement constitutes the entire agreement of the parties relating to the
subject matter of this Agreement, excepting the applicable provisions of the
Master Agreement.
22. LOCAL MARKS. Licensee may develop or acquire one or more "Local
-----------
Marks," as defined in the Master Agreement, to be used in connection with the
franchising and operation of Travelodge Units in the Territory. Prior to the
development or acquisition of a proposed Local ▇▇▇▇, Licensee shall submit to
Licensor a written proposal indicating the Local ▇▇▇▇. If Licensor does not
reject such Local ▇▇▇▇ within ninety (90) days of receipt of Licensee's written
proposal, it shall be deemed approved. Licensee grants to Licensor and other
licensees and franchisees of Travelodge Units a perpetual, non-exclusive and
world-wide royalty-free license to use all approved Local Marks in connection
with the operation of Travelodge Units.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
in counterparts the day and year first written above.
COMPANY:
TRAVELODGE HOTELS, INC.,
By:__________________________________
Title:_________________________________
LICENSEE:
CHARTWELL HOSPITALITY CORP.
By:________________________________
Title:______________________________
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ACKNOWLEDGEMENTS
Before me, the undersigned notary public, personally appeared
__________________, to me known, who executed this instrument in the capacity
stated above as the free act and deed of CHARTWELL CANADA HOSPITALITY CORP. at
_______________________________.
(Notary Seal) ____________________________________
My Commission expires:
Before me, the undersigned notary public, personally appeared,
__________________, to me known, who executed this instrument in the capacity
stated above as the free act and deed of TRAVELODGE HOTELS, INC. at Parsippany,
▇▇▇▇▇▇ County, New Jersey, United States of America.
(Notary Seal) _________________________________
My Commission expires:____________________
▇-▇
▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
-------------
▇▇▇▇ REG. NO. REG. DATE
---- -------- ---------
Travelodge 1,474,602 Jan. 26, 1988
Travelodge 1,869,185 Dec. 27, 1994
Travelodge & Design 1,879,457 Feb. 21, 1995
Travelodge & Design 1,868,724 Dec. 20, 1994
Travelodge Preferred Traveler 1,213,615 Oct. 19, 1982
Thriftlodge 1,539,812 May 16, 1989
Sleepy with Sleepy Bear Design 848,208 April 30, 1968
Sleepy Bear 1,868,761 Dec. 20, 1994
Sleepy Bear Club 1,895,437 May 23, 1995
Bear Silhouette Design 1,006,905 March 18, 1975
Bear Silhouette App. 74/439,019 Sept. 23, 1993
Sleepy App. 74/647,861 Mar. 17, 1995
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SCHEDULE
LIST OF MARKS
DOMINION OF CANADA
▇▇▇▇ REG. NO. DATE CLASS
---- -------- ---- -----
Sleepy 270706 11/2/82 16,21,25,34,42
Bear Silhouette
Design 270705 7/2/82 16,21,25,34,35,42
Sleepy Bear 448622 10/6/95 42
Sleepy Bear
Club 756431 42
Travelodge 117776 4/29/60 42
Travelodge 352092 2/24/89 42
Viscount 291703 6/8/84 42
Travelodge UCA42384 3/17/50 24
Travelodge
Viscount 294589 8/31/84 42
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EXHIBIT E
INITIAL FORM OF SOFTWARE LICENSE AGREEMENT
Location: unit city, state
File No.: unit number
TRAVELODGE HOTELS, INC.
RESERVATION SOFTWARE LICENSE AGREEMENT
--------------------------------------
THIS RESERVATION SOFTWARE LICENSE AGREEMENT ("Agreement"), dated as of
_____________, 19___, is among Travelodge Hotels, Inc., a Delaware corporation
("we", "our" or "us"), Chartwell Canada Hospitality Corp., a Delaware
corporation ("Chartwell") and licensee name~, licensee description~ ("you" or
"your"). The definitions of all capitalized terms are found in Appendix A.
In consideration of the following mutual promises, we and you agree as
follows:
Section 1. Delivery & Installation of Software. (a) HARDWARE. Hardware
-----------------------------------
obtained from an Approved Vendor will be presumed to meet our configuration
requirements as set forth in Schedule A. You may obtain from any other source
your computer hardware and related operating system software. If you obtain
your hardware from any source other than an Approved Vendor, Chartwell must
certify that your hardware meets our configuration requirements and you must pay
Chartwell a Certification Fee when you pay your Software License Fee. We may
modify our configuration requirements from time to time.
(b) DELIVERY. If you buy the Hardware from an Approved Vendor, we will
authorize the Approved Vendor to install the Software. If you obtain your
hardware from another source, the Software will either be delivered to the
Facility or such other address as you specify in writing, or to your hardware
vendor to be installed on the hardware by your vendor. We will not ship you the
Software unless and until your hardware meets the configuration requirements as
provided in Section 1(c).
(c) CERTIFICATION AND INSTALLATION SERVICE. If you do not obtain your
hardware from an Approved Vendor, you must either (1) ship your hardware to
Chartwell for testing and installation of the Software if the hardware meets the
configuration requirements, or (2) contact Chartwell for evaluation of your
hardware purchase by telephone and certification that your hardware meets our
configuration requirements. Chartwell will not perform either service until the
Certification Fee, Training Fee and Software License Fee are paid in full. If
the hardware sent to Chartwell does not meet the configuration requirements,
Chartwell will ship the hardware back to you without installing the Software.
You pay the cost of freight for the shipping of the hardware to Chartwell and to
you F.O.B. Chartwell's office in Calgary, Alberta. You should also obtain
insurance for the shipments as you will bear the risk of loss while the hardware
is in transit.
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(d) LIMITED INSTALLATION WARRANTY. If the Hardware is certified and
Chartwell installs the Software, Chartwell warrants to you for a period of one
year after installation that the Software is properly installed in your
Hardware. If any Software failure is the result of improper installation of the
Software, Chartwell will reinstall the Software properly at its expense and pay
the cost of shipping (freight and insurance) the hardware to and from its
Calgary, Alberta facility. This is your exclusive remedy in the event this
installation warranty is breached. This warranty is in lieu of all other express
and implied warranties for this service. This warranty will be rendered null and
void if the Hardware is subjected to abuse, misuse, improper installation at the
Facility or maintenance by unqualified service personnel, or if the Software is
altered without our consent or direction, used for a purpose not unauthorized
under this Agreement or subjected to a violation of Section 5.
Section 2. Payments for Software. You must pay Chartwell a Software
---------------------
License Fee of CN$1000.00 for the License. You must also pay Chartwell a
Training Fee of $500.00, and if you do not obtain your hardware from an Approved
Vendor, you must pay Chartwell a Certification Fee of $500.00. You will also
pay and indemnify Chartwell and us against all federal, state and local excise,
sales, use, property, value added or similar taxes (but not any income tax or
optional alternative to income tax) due on or in connection with the License.
Neither we nor Chartwell is under any obligation to provide the Software until
you have concluded payment arrangements satisfactory to Chartwell. Chartwell
may apply any amounts received to any outstanding invoices in any order.
Section 3. License of Software and Training Materials. We grant to you a
------------------------------------------
non-transferable, non-exclusive License to use the Software and any Training
Materials, subject to the conditions and limitations in this Agreement, so that
you can participate in the Central Reservation System, effective during the term
described in Section 15. We will provide and you will use, the standard
versions of the Software and the Training Materials we are then releasing at the
time of installation, as such may be modified, updated or replaced from the
versions in use at the time this Agreement is executed. The Software and
Training Materials may be used only in conjunction with the Hardware at the
Facility, and for the sole purpose of obtaining the Service. If the Hardware
malfunctions, the Software and Training Materials may be used on other
substantially identical hardware approved by us on a temporary basis while the
malfunction continues.
Section 4. Title to Software and Training, Materials. Title to and
-----------------------------------------
ownership of the Software and Training Materials shall remain with us or those
entities that have authorized us to sublicense and use them, free from any claim
or right of yours or the holder of any security interest, lien or encumbrance on
the Facility or any of your other property. You will take such steps as may be
necessary to prevent any person from acquiring any rights in the Software or
Training Materials superior to our rights. If any person attempts to establish
any legal right in the Software or Training Materials, you shall promptly notify
us in writing.
Section 5. Software and Training Materials Proprietary. The Software and
-------------------------------------------
Training Materials are proprietary to us and/or our licensor, if any. Neither
you nor any other person will transfer, sublicense, modify, decompile, copy or,
except to your employees as needed for the purposes of this License, disclose
the Software or Training Materials to any other person or entity, without our
prior written consent. The Software and Training Materials are subject to the
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confidential information provisions of the Franchise Agreement, which are
incorporated by reference into this Agreement.
Section 6. Software Enhancements and Modifications; Hardware Changes. We
---------------------------------------------------------
may modify, enhance and rewrite the Software from time to time. So long as you
are not in default under this Agreement or the Franchise Agreement, we will
provide the modified Software to you in accordance with our chain-wide
distribution plan. Either we or Chartwell may offer certain modifications,
features, and enhancements for additional license fees, installation and
training charges, maintenance fees and other terms as we or Chartwell may
establish. You will comply with our installation, use and maintenance
instructions regarding non-optional enhancements and modifications. We may
change the configuration requirements from time to time, and you must obtain
additional or replacement Hardware if necessary, to run enhanced or modified
versions of the Software.
Section 7. Acceptance. Acceptance of the Software occurs upon
----------
installation and successful completion of acceptance testing by your hardware
vendor, you or Chartwell if it performs the Software installation service.
Section 8. Instructions and Manuals. Chartwell will furnish you with
------------------------
instructions and manuals outlining procedures you are to follow to install and
use the Software. Use and maintenance of the Software in other than the
prescribed manner is a breach of this Agreement. We or Chartwell may audit your
records and may at reasonable times enter the Facility to verify conformance
with prescribed procedures.
Section 9. Maintenance.
-----------
(a) HARDWARE. You will obtain all maintenance, repairs or adjustments of
Hardware from the manufacturer of the Hardware or its authorized service
providers. You will perform all user-required maintenance procedures specified
by the manufacturer of the Hardware as and when recommended or required, and
will obtain required maintenance from authorized service providers at
recommended or required intervals. We have no obligation to maintain the
Software unless and until you comply with this paragraph.
(b) SOFTWARE. So long as you are not in default under this Agreement or
the Franchise Agreement, we will cause the Software to function in accordance
with its documentation to enable direct communication with the Central
Reservation System according to the standards, procedures and protocols we
prescribe from time to time.
(c) HARDWARE FAILURE. We will provide a toll-free telephone number for
reporting Software problems. In the event that you are unable to interface with
the Central Reservation System because of hardware malfunction, and you are not
in default of this Agreement or the Franchise Agreement, we will make good faith
efforts to place reservations at the Facility through the use of other means
and/or facilities.
Section 10. Indemnification. You will indemnify and hold harmless us,
---------------
Chartwell, our respective affiliates, successors and assigns and each of the
respective directors, officers and
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employees associated with them against all claims of employees, agents, guests,
and all other persons and entities, arising out of the operation, use or non-use
of the Software. We shall not be liable to you or any other person or entity for
personal injury or property loss, including but not limited to, damage to the
Facility, as a result of the operation, use or non-use of the Software.
Section 11. Software Warranties. We make the following warranties for the
-------------------
Software:
(1) We warrant that following the Acceptance Date, the Software will
perform the functions and operations we specify on your Hardware at the Facility
(but no other hardware), provided you follow our written instructions, install
updates and modifications and make corrections as directed, and are not in
default under this Agreement or the Franchise Agreement. Our sole obligation
under this warranty shall be to remedy any nonperformance of the Software within
a reasonable time after you report it to us. NEITHER WE NOR Chartwell WARRANTS
IN ANY WAY THE PERFORMANCE OR FUNCTIONING OF THE SOFTWARE UNLESS IT IS UTILIZED
AS PART OF HARDWARE CERTIFIED BY Chartwell OR AN APPROVED VENDOR. ALL
WARRANTIES UNDER THIS SUBSECTION ARE CONTINGENT UPON PROPER USE OF THE EQUIPMENT
AND SHALL NOT APPLY IF YOU OR YOUR HARDWARE VENDOR WHO IS NOT AN APPROVED VENDOR
FAIL TO COMPLY WITH THE PROVIDED INSTALLATION AND OPERATING INSTRUCTIONS, MAKE
OR PERMIT THE UNAUTHORIZED ALTERATION OR REPAIR OF THE HARDWARE OR SOFTWARE, OR
FAIL TO IMPLEMENT ALL UPDATES OR CORRECTIONS TO THE SOFTWARE WE MAKE AVAILABLE
TO YOU.
(2) We have the right to license the Software to you under this Agreement
and, to the best of our knowledge, the Software does not infringe any
Intellectual Property Rights of any third party.
Section 12. No Liability for Information. NEITHER WE NOR Chartwell WILL
----------------------------
BE LIABLE FOR ANY CLAIMS OR DAMAGES RESULTING FROM ANY INCORRECT INFORMATION
GIVEN TO US OR TO Chartwell, OR INPUT INTO THE CENTRAL RESERVATION SYSTEM BY ANY
PERSON OTHER THAN US OR Chartwell. IN ADDITION, IF WE PERMIT YOU TO UTILIZE THE
HARDWARE AND/OR CENTRAL RESERVATION SYSTEM TO COMMUNICATE WITH ANY PERSON
BESIDES US, AN AFFILIATE OF OURS, Chartwell, OR OUR FRANCHISEES, WE SHALL NOT BE
LIABLE FOR THE INPUT, FORMAT, TRANSMISSION OR MANIPULATION OF ANY INFORMATION SO
COMMUNICATED, UNLESS IT IS AFFECTED DUE TO OUR GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
Section 13. No Other Warranties. NEITHER WE NOR Chartwell MAKE ANY OTHER
-------------------
REPRESENTATION OR WARRANTY, AND OFFER NO CONDITION WHATSOEVER, EXPRESS OR
IMPLIED, ORAL OR WRITTEN, STATUTORY OR OTHERWISE, INCLUDING, WITHOUT LIMITATION,
ANY WARRANTY OR CONDITION ABOUT THE DESIGN OR CONDITION OF THE SOFTWARE, ITS
MERCHANTABILITY, ITS FITNESS FOR ANY PARTICULAR PURPOSE, OR ITS CONFORMANCE TO
THE PROVISIONS AND SPECIFICATIONS OF ANY ORDER OR DOCUMENTATION RELATING
THERETO.
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Section 14. Damage Limitation. NOTWITHSTANDING ANYTHING TO THE CONTRARY
-----------------
IN THIS AGREEMENT, IN NO EVENT SHALL WE, Chartwell, OR ANY PARTY RELATED OR
AFFILIATED WITH EITHER Chartwell OR US BE LIABLE FOR SPECIAL, INDIRECT,
CONSEQUENTIAL OR EXEMPLARY DAMAGES, INCLUDING, BUT NOT LIMITED TO, LOST PROFITS
OR REVENUES; AND FURTHERMORE, THE LIABILITY OF Chartwell AND US FOR DAMAGES
HEREUNDER SHALL IN NO EVENT EXCEED THE AMOUNTS PREVIOUSLY PAID BY YOU TO
Chartwell FOR THE LICENSE UNDER THIS AGREEMENT.
Section 15. Term. This Agreement will be effective from the date of
-----
execution by you and us and shall continue in full force and effect until
expiration of the term of your license to operate the Facility under the
Franchise Agreement, unless earlier terminated in accordance with this
Agreement. The License of the Software and Training Materials commences on the
Acceptance Date and expires at the same time your license to operate the
Facility under the Franchise Agreements terminates, unless earlier terminated in
accordance with this Agreement.
Section 16. Your Default. If any one of these events occurs, then to the
------------
extent permitted by applicable law, we shall have the right to exercise any one
or more of the remedies set forth below and/or suspend the Service and related
software maintenance service as permitted under the Franchise Agreement: (a) You
fail to make any payment when due under this Agreement or the Franchise
Agreement; (b) You breach any other covenant, warranty or agreement under this
Agreement or the Franchise Agreement and the time to cure the breach expires;
(c) The Software becomes inoperable by your act or omission: or (d) You assign
or transfer, or attempt to assign or transfer the Software without Chartwell's
consent, except as permitted under the Franchise Agreement or to a financier who
leases the Hardware and Software to you immediately after you convey it.
Section 17. Termination. (a) We or Chartwell shall be entitled to
-----------
terminate the License immediately: (a) If you violate or attempt to violate
Section 5 of this Agreement; (b) If you default in a payment required pursuant
to this Agreement or any other agreement between you and Chartwell or us, and
the default continues uncured for a period of 10 days after you are given
written notice of default; (c) If you default under any other obligation under
this Agreement, and the default continues uncured for a period of 30 days after
we give you written notice of default; (d) If the Software is rendered obsolete
in our sole judgment based upon technological advances or improvements, changes
in the Service or any other reason; or (e) If the license granted under the
Franchise Agreement terminates for any reason and is not immediately replaced by
an express written agreement between you and us or Chartwell for a license to
continue operation of the Facility with the Chain.
(b) If this Agreement terminates, you will immediately return to us the
originals and all copies of the Software and Training Materials unencumbered by
any liens or claims. You will certify to Chartwell in writing that the original
and all copies have been returned or destroyed. YOU EXPRESSLY WAIVE ANY RIGHT
TO NOTICE OF OR A HEARING WITH RESPECT TO REPOSSESSION AND CONSENT TO ENTRY INTO
THE FACILITY BY AGENTS OR REPRESENTATIVES REPRESENTING US OR Chartwell OR ANY
PREMISES WHERE THE SOFTWARE AND TRAINING MATERIALS MAY BE LOCATED AND REMOVING
THEM
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WITHOUT JUDICIAL PROCESS. If you fail or refuse to permit the peaceable entry
by these agents to take possession of any Software and Training Materials we
own, you will be liable for rental of the Software and Training Materials at the
rate of $1,000.00 per week from the date of the first attempt to retake it.
Section 18. Costs and Expenses. The non-prevailing party will pay the
------------------
costs and expenses incurred, including reasonable attorneys' fees and the
expenses of retaking the Software and Training Materials, incurred by the
prevailing party to enforce this Agreement.
Section 19. Other Relief. We may obtain the remedy of injunctive relief
------------
without the posting of a bond if you violate your obligations regarding
confidentiality, non-disclosure, transfer or limitations on Software use under
this Agreement.
Section 20. Force Majeure. If performance by you or us is delayed or
-------------
prevented because of strikes, inability to procure labor or materials, defaults
of suppliers or subcontractors, delays or shortages of transportation, failure
of power or telephone transmissions, restrictive governmental laws or
regulations, weather conditions, or other reasons beyond the reasonable control
of the party, then performance of such acts will be excused and the period for
performance will be extended for a period equivalent to the period of such
delay. Delays or failures to pay resulting from lack of funds will not be
deemed delays beyond your reasonable control.
Section 21. Notices. Notices will be effective if reduced to writing and
-------
delivered, by next day delivery service, with proof of delivery, by facsimile
transmission immediately followed by first class mailing of the original
material, or mailed by certified or registered mail, return receipt requested,
to the appropriate party at its address in this Agreement or to such party at
such address as may be designated by notice in accordance with this Section.
Notices will be deemed given on the date delivered or date of attempted
delivery, if service is refused.
Section 22. Your Forms. We are not bound by any terms of your purchase
----------
order forms or notices of acceptance which attempt to impose any conditions at
variance with our terms and conditions included in this Agreement or in our
invoices, standards manuals, technical specifications or elsewhere. Our failure
to object to any provision contained in your printed form is not a waiver of any
provision of this Agreement.
Section 23. Oral Modifications. This Agreement may not be amended,
------------------
modified or rescinded except in writing, signed by both parties and any attempt
to do so shall be void and of no effect.
Section 24. Governing Law/Venue. This Agreement is to be governed by and
-------------------
construed in accordance with the laws of the State of New Jersey. You consent
to the non-exclusive personal jurisdiction of the New Jersey state courts
situated in ▇▇▇▇▇▇ County, New Jersey and the United States District Court for
the District of New Jersey. You waive objection to venue in any such courts.
Section 25. Waiver. If either you or we fail to exercise any right or
------
option at any time under this Agreement, such failure will not be deemed a
waiver of the exercise of such right or
E-6
option at any other time or the waiver of a different right or option.
Termination of this Agreement by either we or you will not waive your obligation
to make any payments to us under this Agreement.
Section 26. Severability. If any provision of this Agreement is
------------
determined to be void or unenforceable, the provision shall be deemed severed
from the Agreement and the remainder of this Agreement shall continue in full
force and effect.
Section 27. Entire Agreement. This Agreement supersedes all prior oral
----------------
and written agreements and understandings and constitutes the entire Agreement
between the parties with respect to the subject matter hereof.
Section 28. No Third Party Beneficiary. This Agreement is intended for
--------------------------
the sole benefit and protection of the named parties, and no other persons or
entities shall have any cause of action or right to payments made or received
under this Agreement except for any owners of the Software who have licensed or
authorized us to sublicense the same to you.
Section 29. Successors and Assigns. This Agreement shall inure to the
----------------------
benefit of and be binding upon the parties, their successors and permitted
assigns. Notwithstanding the above, you may not assign this Agreement without
our express written consent, except as permitted under the Franchise Agreement.
Section 30. Waiver of Jury Trial. The parties waive the right to a jury
--------------------
trial relating to this Agreement or the relationship between the licensor, the
licensee, any guarantor and their respective successors and assigns.
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IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date set forth in the preamble to this Agreement,
TRAVELODGE HOTELS, INC.:
ATTEST:__________________________ BY:_________________________________
(Assistant) Secretary (Vice) President
CHARTWELL CANADA HOSPITALITY CORP.
ATTEST:__________________________ BY:_________________________________
(Assistant) Secretary (Vice) President
LICENSEE:
licensee name-
ATTEST:__________________________ BY:_________________________________
licensee signer
contact title
YOUR ADDRESS: licensee address
ADDRESS FOR DELIVERIES (IF DIFFERENT):
_____________________________________________
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APPENDIX A
"ACCEPTANCE DATE" means the date that the Software is accepted and tested
successfully as set forth in Section 7 of this Agreement.
"AGREEMENT" means this Reservation Software License Agreement between we and
you.
"APPROVED VENDOR" means a vendor of computer hardware that we identify as an
Approved Vendor before your purchase of hardware.
"CENTRAL RESERVATION SYSTEM" means the computerized central reservation system
that we maintain (directly or by subcontracting with an affiliate or one or more
third parties), pursuant to which the Service is provided to you.
"CHAIN" means the guest lodging facilities operating under the Travelodge
System.
"CHARTWELL" means Chartwell Canada Hospitality Corp., a Delaware corporation,
and its successors and assignees as master licensee for Canada under that
certain Master License Agreement, dated as of September 30, 1996 between us and
the Company for Canada.
"EQUIPMENT" means collectively the hardware, the Software and the Training
Materials.
"EVENTS OF DEFAULT" means the events listed in Section 16 of this Agreement
which may give rise to the remedies set forth in Sections 17 through 19.
"FACILITY" means the Travelodge System guest lodging facility which you are
licensed to operate using the Travelodge System under the Franchise Agreement.
"FRANCHISE AGREEMENT" means the License or Franchise Agreement between you and
either us or Chartwell Hotels & Resorts, Ltd. granting to you the non-exclusive
right to operate the Facility under the Travelodge System.
"HARDWARE" means the computer hardware, including the operating system software,
you obtain and dedicate to operation of the Software installed the Facility that
conforms to our configuration requirements.
"INTELLECTUAL PROPERTY" OR "INTELLECTUAL PROPERTY RIGHTS" means any patents,
copyrights, trade secrets or similar property rights owned by any person or
entity in the Software.
"LICENSE" means the non-transferable, non-exclusive right to use the Software
and Training Materials granted to you under this Agreement.
"OPENING DATE" means the date on which we authorize you to open the Facility for
business identified by the Chain's service marks and under the Travelodge
System.
E-9
"SERVICE" means the basic service provided by the Central Reservation System for
placing and receiving lodging reservations within the Chain, as well as such
other services as we may develop and provide in the future, upon conditions
including fees which we, in our sole discretion, may place in effect under the
Franchise Agreement.
"SOFTWARE" means the computer programs in object code form for our proprietary
applications delivered to the hardware vendor or to you from time to time, and
any substituted, modified, updated and enhanced versions, releases and additions
to previously delivered software pursuant to this Agreement that function to
connect the Facility with the Central Reservation System and that may perform
additional functions.
"TRAINING MATERIALS" means the various training modules, written materials and
audio and video tapes, as enhanced from time to time, which are provided to
instruct you in the utilization of the Software.
"WE, "OUR" OR "US" means Travelodge Hotels, Inc., a Delaware corporation, its
successors and assigns.
"YOU" means the person or entity set forth in the introductory paragraph of this
Agreement, its successors and assigns, as permitted in the Franchise Agreement.
E-10
SCHEDULE A
TRAVELODGE HOTELS, INC.
DESCRIPTION OF HARDWARE AND SOFTWARE
QTY DESCRIPTION
--- -----------
1 486 CPU with 120 MB IDE Hard Disk Drive (14 ns or
faster); 4 MB RAM (70 ns or faster); 1.44 mb 3.5"
diskette drive; 2 serial ports (COM1 @ 3F8H IRQ 4, COM2
@ 2F8H IRQ 3); 1 parallel port (LPT 1 @ 378H IRQ 7);
100 watt power supply (UL APPROVED); MS DOS 5.0 or
Higher operating system software.
1 VGA Color Monitor with 1 MB display adapter
1 UDS Fastalk II or U.S. Robotics Sportster 14.4 Modem,
on COM1 with no factory default setting of Auto-Answer.
1 RS232 Serial Cable
1 Okidata 320 Microline Printer or equivalent to emulate
IBM Proprinter or Epson Dot Matrix, with tractor feed.
1 10' Parallel Printer Cable
1 Surge Protector
1 3.5" Computer Cleaning Kit
1 Xcellenet Communications Software
1 IBM Disk Operating System Software 5.0 or
higher
The hardware must not include any additional internal or external devices
such as a CD-ROM drive, sound board, fax modem, or voice mail. No other
applications software should be loaded.
E-11
EXHIBIT F
ANNUAL BUDGET AND DEVELOPMENT PLAN
----------------------------------
to be attached
F-1
EXHIBIT G
FORM OF FRANCHISE AGREEMENT
---------------------------
to be attached
▇-▇
▇▇▇▇▇▇▇ ▇-▇
INITIAL AGREEMENTS
GROUP A UNITS
SITE LOCATION ROOMS
---- -------- -----
▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇. ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇. ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇. ▇▇▇▇ 220
9670 Surrey-King ▇▇▇▇▇▇ Hwy 40
9671 Swift Current 49
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇ ▇▇. ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Lion's Gate 61
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇ ▇▇▇. 38
9679 ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇-▇▇▇▇▇▇ 71
▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇ ▇▇. 115
9754 Calgary ▇▇▇▇▇-▇▇▇▇ ▇▇▇. ▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Crest 86
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇. 34
9766 Salmon Arm-Trans Canada 38
9769 Regina Hotel 200
9779 Niagara Falls-Near the Falls 81
9780 Niagara Falls Bonaventure 115
9786 Medicine Hat 92
I-1
9787 Maple Ridge-Lougheed ▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ Downtown 32
▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇ ▇▇▇. 59
9795 Kenora-Hwy ▇▇ ▇▇▇▇ ▇▇
------- ------------------ -----
24 Total Group A 1,962
I-2
EXHIBIT I-B
GROUP B UNITS
SITE LOCATION ROOMS
------- -------- -----
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ (▇▇▇▇▇▇▇ E.) 156
9668 Skye-Cape ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇. 140
9672 Toronto Airport-Rexdale Blvd. 174
9674 Richmond-Vancouver Airport 160
▇▇▇▇ ▇▇▇▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇. 138
9681 Windsor-Downtown 160
9682 Winnipeg Downtown-Colony 156
9750 ▇▇▇▇▇▇-▇▇▇▇ Dr. 98
9751 Burlington-▇▇▇▇▇▇'▇ Line 116
9752 Calgary Int'l Airport 203
9753 Calgary-▇▇▇▇▇▇▇ Trail 220
9761 Edmonton ▇▇▇▇▇-▇▇▇▇ ▇▇▇. ▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ 181
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ ▇▇. 177
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ ▇▇▇. 120
9777 North ▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇-▇▇▇▇▇▇▇ ▇▇. 100
9784 Mississauga-Toronto West 225
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇▇ ▇▇. South 144
I-3
9791 Laval-Montreal North 175
9793 Kitchener-King St. East 172
9796 ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ East 129
9799 Edmonton West 108
---- ------------- -----
25 Total Group B 3,804
I-4
EXHIBIT I-C
GROUP C UNITS
SITE LOCATION ROOMS
---- -------- -----
7152 Grande Prairie 120
8768 Courtenay-Island ▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇ 199
8770 ▇▇▇▇▇▇▇-▇. ▇▇▇▇▇▇▇▇ ▇▇▇. ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇ Southwest 85
9678 Victoria-Gorge Rd. East 73
9702 ▇▇▇▇▇▇▇▇▇▇▇▇▇-▇▇▇ ▇ & ▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇-▇▇▇ ▇▇. ▇▇▇▇▇▇ 147
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇▇▇ ▇▇▇. 80
9756 ▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇-▇▇▇▇ 1 & 2 131
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇▇ ▇▇. ▇. ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ Int'l Airport/Leduc 65
9762 ▇▇▇▇▇▇▇-▇▇▇▇ ▇▇. ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇▇▇▇ Garden 95
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇-▇▇▇ ▇▇. 37
▇▇▇▇ ▇▇▇ ▇▇▇▇-▇▇▇▇ ▇▇▇. 136
9772 Sault Ste ▇▇▇▇▇ Suite 38
9773 Quebec City-Sainte ▇▇▇ 81
9781 Montreal-Dorval Int'l Airport 108
I-5
9782 Montreal Centre 242
▇▇▇▇ ▇▇▇▇▇▇-▇▇▇▇▇ ▇▇. ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Hotel 66
9798 Gananoque ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ 40
8854 Ottawa 45
---- ------ -----
27 Total Group C 2,441
TOTAL INITIAL AGREEMENTS TOTAL GUEST ROOMS
------------------------ -----------------
74 8,207
I-6