EXHIBIT 10.15
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DEVELOPMENT ADVANCE AGREEMENT
between
CHARTWELL LEISURE INC.
and
HFS INCORPORATED
Dated: As of October 15, 1996
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TABLE OF CONTENTS
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Page
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1. Definitions ............................................. 1
2. The Advance ............................................. 2
3. Conversion and Development of Properties ................. 2
4. Credits against the Advance ............................. 2
5. Mandatory Repayment of the Advance ...................... 3
6. Events of Default ....................................... 3
7. Repayment ............................................... 4
8. Construction of Agreements .............................. 4
9. Authority of Chartwell .................................. 4
10. Authority of HFS ........................................ 4
11. Parties Bound ........................................... 4
12. No Oral Change .......................................... 4
13. Governing Law ........................................... 5
14. Severability ............................................ 5
15. Notices ................................................. 5
Exhibit A - HFS Flags
Exhibit B - Definitions
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DEVELOPMENT ADVANCE AGREEMENT
This Agreement made as of October 15, 1996 between Chartwell Leisure
Inc., a Delaware general partnership ("Chartwell") and HFS Incorporated,
a Delaware corporation ("HFS");
PRELIMINARY STATEMENT:
A. Chartwell is in the business of owning, operating, acquiring and
developing hotel properties in the United States, Mexico and Canada;
B. HFS operates, through its various subsidiaries (each an "HFS
Subsidiary") national hotel/motel franchise lodging brands as more particularly
set forth in Exhibit A (collectively, the "HFS Flags").
C. At the request of Chartwell, HFS has agreed to fund to Chartwell a
development advance in the principal amount of $2,800,000 (the "Advance") to
finance a portion of the costs incurred by Chartwell in connection with the
acquisition or development of future hotel properties (the "Properties").
NOW, THEREFORE, in consideration of ten dollars ($10) and other good and
valuable consideration, the receipt of which is hereby acknowledged, HFS and
Chartwell hereby covenant and agree as follows:
1. Definitions. All capitalized terms as used in this Agreement shall,
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unless otherwise defined in the main body of this Agreement, have the meaning
given to such terms in Exhibit B.
2. The Advance. The Advance shall be made by HFS to Chartwell on
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December 16, 1996 in accordance with the disbursement instructions to be
delivered by Chartwell to HFS not later than two (2) days prior to such date.
3. Conversion and Development of Properties. Chartwell shall have the
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right, but not the obligation, from time to time as it acquires or develops new
Properties, to cause such Properties to be operated under an HFS Flag, pursuant
to a franchise agreement entered into between Chartwell or its affiliate holding
title to such Property and the HFS Subsidiary operating the applicable HFS Flag
in substantially the form then offered by the applicable HFS Subsidiary under
its then current Uniform Franchise Offering Circular but modified to delete all
rights of first refusal in favor of the HFS Subsidiary and to contain such other
modifications as shall be agreed to by Chartwell and HFS (such franchise
agreements are hereinafter called the "Conversion Franchise Agreements"). HFS
and Chartwell agree that they shall negotiate the standard form of Conversion
Franchise Agreement to be entered into in accordance with the provisions of this
Agreement in good faith and HFS agrees that it shall, upon request of Chartwell,
grant to Chartwell such concessions, flexibility, grace and cure periods, policy
and procedure waivers and other negotiated provisions, as are granted by HFS to
its most favored licensees. All Conversion Franchise Agreements entered into in
accordance with the provisions of this Agreement will be entered into on
substantially the form of the standard franchise agreement approved by HFS and
Chartwell in accordance with the provisions of this paragraph.
4. Credits against the Advance. Chartwell shall receive a credit against
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repayment of the Advance, and the outstanding balance of the Advance shall be
reduced, on a dollar for dollar basis for each dollar of Qualifying Fees paid to
any HFS Subsidiary with respect to any Property for which Chartwell or its
affiliate enters into a Conversion Franchise Agreement after the date hereof
with an HFS Subsidiary (other than (i) ▇▇▇▇▇▇▇ Inns, (ii) a
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Property which is already operating under an HFS Flag at the time the Conversion
Franchise Agreement is signed, or (iii) a Property which is subject to either
that certain Conversion Agreement dated as of November 17, 1992 between
Chartwell Hotels Associates and HFS Brands, Inc. or that certain Conversion
Agreement dated May 11, 1993 between Chartwell Hotels II Associates and HFS
Brands, Inc., as the same have been amended).
5. Mandatory Repayment of the Advance. The outstanding balance of the
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Advance shall become due and payable on December 31, 2000.
6. Events of Default. HFS shall have the right, upon twenty (20) days
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written notice, to declare the Advance due and payable upon the occurrence of
any one or more of the following events (collectively, "Events of Default");
(a) if Chartwell shall make an assignment for the benefit of
creditors;
(b) if a court of competent jurisdiction enters a decree or order
for relief with respect to Chartwell under Title 11 of the United States
Code as now constituted or hereafter amended or under any other applicable
Federal or state bankruptcy law or other similar law, or if such court
enters a decree or order appointing a receiver, liquidator, assignee,
trustee, sequestrator (or similar official) of Chartwell, or of any
substantial part of their respective properties, or, if such court decrees
or orders the winding up or liquidation of the affairs of Chartwell and
such decree or order is not dismissed, discharged or vacated of record
within sixty (60) days after the same has been entered; or
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(c) if Chartwell files a petition or consent seeking relief under
Title 11 of the United States Code as now constituted or hereafter amended,
or under any other applicable Federal or state bankruptcy law or other
similar law, or if Chartwell consents to the institution of proceedings
thereunder or to the filing of any such petition or to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of Chartwell or of any substantial
part of their respective properties.
7. Prepayment. Chartwell shall have the right, but not the obligation,
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to prepay the Advance in whole or in part at any time without premium or
penalty.
8. Construction of Agreements. The titles and heading of the
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paragraphs of this Agreement have been inserted for convenience of reference
only and are not intended to summarize or otherwise describe the subject matter
of such paragraphs and shall not be given any consideration in construction of
this Agreement.
9. Authority of Chartwell. Chartwell has full power, authority and
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legal right to execute this Agreement and to keep and observe all of the terms
of this Agreement on the part of Chartwell to be kept and observed.
10. Authority of HFS. HFS has full power, authority and legal right to
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execute this Agreement and to keep and observe all of the terms of this
Agreement on the part of HFS to be kept and observed.
11. Parties Bound. This Agreement shall be binding upon and inure to
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the benefit of Chartwell and HFS and their respective successors and assigns.
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12. No Oral Change. This Agreement may only be modified, amended or
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change by an agreement in writing signed by Chartwell and HFS.
13. Governing Law. This Agreement is and shall be deemed to be a
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contract entered into pursuant to the laws of the State of New York and shall in
all respects be governed, construed, applied and enforced in accordance with the
laws of the State of New York.
14. Severability. If any term, covenant or provision of this Agreement
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shall be held to be invalid, illegal or unenforceable in any respect, this
Agreement shall be construed without such term, covenant or provision.
15. Notices. Any notice, request, demand, statement, authorization,
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approval or consent made hereunder shall be in writing and shall be hand
delivered or sent by Federal Express, or other reputable courier service, or by
postage pre-paid registered or certified mail, return receipt requested, and
shall be deemed given (i) when received at the following addresses if hand
delivered or sent by Federal Express, or other reputable courier service, and
(ii) three (3) business days after being postmarked and addressed as follows if
sent by registered or certified mail, return receipt requested:
If to HFS:
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
If to Chartwell:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
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With a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, Esq.
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
IN WITNESS WHEREOF, Chartwell and HFS have duly executed this Agreement
the day and year first above written.
HFS INCORPORATED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
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CHARTWELL LEISURE INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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With a copy to:
Battle ▇▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, Esq.
Each party may designate a change of address by notice to the other party, given
at least fifteen (15) days before such change of address is to become effective.
IN WITNESS WHEREOF, Chartwell and HFS have duly executed this Agreement
the day and year first above written.
HFS INCORPORATED
By: ________________________
CHARTWELL LEISURE INC.
By: ________________________
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EXHIBIT A
HFS FLAGS
Days Inn
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Knights Inn
Ramada
Super 8 Motel
Travelodge
Villager Lodge
▇▇▇▇▇▇▇ Inn
A-1
EXHIBIT B
DEFINITIONS
Advance: The term "Advance" is defined in
------- preliminary statement C of this Agreement.
Chartwell: The term "Chartwell" is defined in the
--------- preamble of this Agreement.
Conversion Franchise Agreement: The term "Conversion Franchise Agreement"
------------------------------ is defined in paragraph 3 of this
Agreement.
HFS Flags: The term "HFS Flags" is defined in
--------- preliminary statement B of this Agreement.
HFS Subsidiary: The term "HFS Subsidiary" is defined in
-------------- preliminary statement B of this Agreement.
Qualifying Fees: The term "Qualifying Fees" shall mean the
---------------- aggregate of (a) the royalty fees paid
under such Conversion Franchise Agreement
and (b) the initial fees paid in cash
under such Conversion Franchise Agreement
(but excluding any amounts paid on account
of interest which may be paid with respect
to such initial fees if financed by HFS).
For purposes of this Agreement, the
"royalty fee" shall mean that portion of
any franchise fees paid under such
Conversion Franchise Agreement
attributable to the use of applicable
marks and systems, and not including any
marketing and reservation fees.
B-1
