Exhibit 10.17
STERLING HOUSE
LICENSE AGREEMENT
DEVON DEVELOPMENT, LIMITED
Licensee
Date of Agreement
STERLING HOUSE
LICENSE AGREEMENT
TABLE OF CONTENTS
Item Page
▇. ▇▇▇▇▇ of License
1.01 Grant of License 2
1.02 Retention of Certain Rights 2
1.03 Improvements to System 3
1.04 Agreement to Operate 3
II. Development and Opening of the Residence
2.01 Architectural Plans 3
2.02 Furnishings, Fixtures, Signs and Equipment 4
2.03 Operations Manual 4
III. Marks
3.01 Ownership of Goodwill and Marks 4
3.02 Limitations on Licensee's Use of Marks 5
3.03 Infringement 5
3.04 Discontinuance of Use of Marks 6
IV. Relationship of the Parties/Indemnification
4.01 Independent Status 6
4.02 Additional Limitations on Licensee's Use of Marks 6
4.03 Limitations on Liability 6
4.04 Indemnification 7
V. Confidential Information
5.01 Limitation on Interest in Confidential Information 7
5.02 Confidential Use of Confidential Information 8
5.03 Exception to Restrictions on Confidential Information 9
5.04 Insurance 9
VI. Annual Reviews, Inspections, and Audits
6.01 Company's Right to Inspect the Residence 10
VII. Transfer
7.01 By Company 11
7.02 Licensee May Not Transfer Without Approval of Company 11
7.03 Definition of "Transfer" 11
7.04 Conditions for Approval of Transfer 12
7.05 Excepted Transfers 12
7.06 Death or Disability of Licensee 12
7.07 Effect of Consent to Transfer 13
VIII. Termination of Agreement by Licensee
8.01 Termination for Good Cause 13
IX. Termination of the License
9.01 Grounds for Termination 14
9.02 Efforts to Resolve Termination Disputes Other
Than by Termination 15
X. Rights and Obligations of Company and Licensee
Upon Termination or Expiration of the License
10.01 Payment of Amounts Owed to Company 15
10.02 Marks 15
10.03 Modification of Residence Design and Decor 16
10.04 Cessation of Use of Confidential Information 16
10.05 Continuing Obligations 16
XI. Casualty Loss or Condemnation
11.01 Casualty Loss 16
11.02 Condemnation Proceedings 17
XII. Enforcement
12.01 Severability and Substitution of Valid Provisions 17
12.02 Waiver of Obligations 18
12.03 Limitations on Liability 19
12.04 Specific Performance/Injunctive Relief 19
12.05 Rights of Parties are Cumulative 20
12.06 Governing Law/Consent to Jurisdiction 20
12.07 Binding Effect/Modification 20
12.08 Construction 20
12.09 Definitions 21
12.10 Counterparts 21
XIII. Notices and Payments 21
LICENSE AGREEMENT
NOW, on this day of , 1997, this Agreement
is made,
BY AND BETWEEN STERLING HOUSE CORPORATION,
a Kansas corporation,
hereinafter referred to as
"Company,"
AND DEVON DEVELOPMENT, LIMITED
an Ohio limited liability company,
hereinafter referred to as
"Licensee."
W I T N E S S E T H:
WHEREAS, Company owns certain confidential information relating to, and has
designed, instituted, developed and promoted a unique assisted living
residential
concept for which substantial goodwill has been created. Such facilities are
intended to provide the frail elderly with privacy and companionship in a
comfortable, moderately-priced, non-institutional living environment, are
operated under the trade name STERLING HOUSE , and are operated with uniform
formats, systems, methods, specifications, standards, procedures and trade dress
(hereinafter referred to as the "System"), all of which may be improved, further
developed, or otherwise modified by Company from time to time. Company uses,
promotes, and licenses the proprietary service ▇▇▇▇ ▇▇▇▇▇▇▇▇ HOUSE (and
associated designs) and other trademarks, service marks, logos, and commercial
symbols in connection therewith (hereinafter referred to as the "Marks"); and
WHEREAS, Company grants to persons who meet Company's qualifications and
are willing to undertake the requisite investment and effort to establish and
develop STERLING HOUSE assisted living facilities (hereinafter referred to as
"Residence" or "Residences"), licenses to operate Residences utilizing the
System and the Marks; and
WHEREAS, Company is willing to grant this License in consideration for the
issuance of a membership interest to an affiliate of the Company and other good
and valuable consideration, the receipt of which is hereby acknowledged.
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree as
follows:
▇.
▇▇▇▇▇ OF LICENSE
1.01 Grant of License. Licensee has applied for a License to own and
operate one (1) Residence to be located at/in ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇ (the actual physical location of said Residence wherever situated
hereinafter referred to as the "Premises") and such application has been
approved by Company in reliance upon all of the representations made herein.
Company hereby grants to Licensee, subject to all of the terms, provisions, and
conditions contained herein, a non-exclusive License (the "License") to operate
a Residence solely at the Premises, and to use the System and Marks in the
operation thereof, for a term of fifteen (15) years commencing on the opening of
the Residence unless sooner terminated, as provided in ARTICLES VIII and IX
herein. Termination or expiration of this Agreement shall constitute a
termination or expiration of the License.
1.02 Retention of Certain Rights. Notwithstanding anything to the
contrary, Company retains, for itself and its affiliates, the right in its sole
discretion to:
A) operate Residences at such locations as Company, in its sole
discretion, deems appropriate;
B) utilize the System, or any portions thereof, in the operation of
other assisted living facilities, nursing homes, residential care facilities,
and other forms of congregate housing wherever located and operated by
whomever, as determined by Company in its sole discretion; and
C) grant other licenses for licensed Residences at such locations as
Company, in its sole discretion, deems appropriate.
1.03 Improvements to System. Notwithstanding anything herein to the
contrary, any and all improvements to the System developed by Licensee
(including
any and all Plans), shall be and become the sole and absolute property of
Company, and Company may incorporate the same into the System and shall have the
sole and exclusive right to copyright, register and protect such improvements in
Company's own name to the exclusion of Licensee. Licensee's rights and
obligations toward the use of such improvements shall be limited to its rights
and obligations regarding Confidential Information as provided for herein.
1.04 Agreement to Operate. Licensee agrees that it will at all times
faithfully, honestly and diligently perform its obligations hereunder, that it
will continuously exert its best efforts to promote and enhance the business of
the Residence.
II.
DEVELOPMENT AND OPENING OF
THE RESIDENCE
2.01 Architectural Plans. Company shall furnish its copyrighted plans,
specifications and drawings, including, without limitation, architectural,
mechanical, electrical, structural, civil engineering, and landscape, for a
prototype Residence reflecting Company's requirements for its design, materials,
layout, equipment, fixtures, furniture, furnishings, signage and decoration (the
"Plans"). The Plans and all modifications thereof, additions and/or deletions
thereto are and shall remain the proprietary property of Company regardless of
the use of the Plans by the Licensee or Licensee's agents. Licensee shall cause
all construction and equipping of the Residence licensed hereunder to be done in
strict compliance with the Plans, and no deviations therefrom shall be made by
Licensee or its contractor(s) without the express written approval of the
Company. Company shall have the right to inspect all construction. Licensee
acknowledges that Company's exercise of its rights to inspect the construction
of the Residence shall be solely for the purpose of assuring compliance with the
terms and conditions of this Agreement, and Company shall have no liability or
obligation with respect to the construction of the Residence.
2.02 Furnishings, Fixtures, Signs and Equipment. Licensee agrees to use
in the development and operation of the Residence only those brands, types, or
models of equipment, fixtures, furniture, furnishings and signs, which Company
has approved as meeting its specifications and standards for quality, design,
appearance, warranties, and function. All such items, if any, designated by
Company from time to time, shall be purchased only from vendors, contractors,
and suppliers approved by Company.
2.03 Operations Manual. Company shall loan to Licensee for use during the
term of the License one (1) set of Company's confidential operations manuals
(the "Operations Manual"). The Operations Manual may be modified from time
to time.
Licensee shall keep its copy of the Operations Manual current, making only the
amendments and deletions to the Operations Manual as Company may direct.
Licensee shall not at any time without the written consent of Company, copy,
duplicate, record or otherwise reproduce any part of the Operations Manual, nor
otherwise make the same available to any unauthorized person. Licensee shall
maintain the Operations Manual in a safe and secure location and shall
immediately report the theft or loss of the Operations Manual, or any portion
thereof, to Company.
III.
MARKS
3.01 Ownership of Goodwill and Marks. Licensee acknowledges that
Licensee's right to use the Marks is derived solely from this Agreement and is
limited to the conduct of business by Licensee pursuant to and in compliance
with this Agreement. Any unauthorized use of the Marks by Licensee shall
constitute a breach of this Agreement and an infringement of the rights of
Company in and
to the Marks. Licensee acknowledges and agrees that all usage of the Marks by
Licensee and any goodwill established thereby shall inure to the exclusive
benefit of Company and that this Agreement does not confer any goodwill or other
interests in the Marks upon Licensee other than the right to operate a Residence
at the Premises in compliance with this Agreement. All provisions of this
Agreement applicable to the Marks shall apply to any additional proprietary
trade
and service marks, and commercial symbols hereafter authorized for use by and
licensed to Licensee by Company.
3.02 Limitations on Licensee's Use of Marks. Licensee shall use the Marks
as the sole identification of the Residence, provided that Licensee shall
identify itself as the independent owner thereof in the manner prescribed by
Company. Licensee shall not use any ▇▇▇▇ as part of any corporate or trade name
or with any prefix, suffix, or other modifying words, terms, designs, or symbols
(other than logos licensed to Licensee hereunder), or in any modified form, nor
may Licensee use any ▇▇▇▇ in connection with the performance or sale of any
unauthorized services or products or in any other manner not expressly
authorized
in writing by Company. Licensee agrees to prominently display the Marks at the
Residence on all signage, displays, and/or materials as may be designated by
Company from time to time, and in connection with any and all advertising and
marketing materials, as may be designated by Company. All Marks shall only be
displayed and/or utilized in the manner prescribed by Company. Licensee agrees
to give all notices of trade and service ▇▇▇▇ registrations as Company
specifies
and to obtain all fictitious or assumed name registrations as may be required
under applicable law.
3.03 Infringement. Licensee shall immediately notify Company in writing
of any apparent infringement of, or challenge to Licensee's use of any ▇▇▇▇, or
claim by any person of any rights in any ▇▇▇▇ or similar trade name, trademark,
or service ▇▇▇▇ of which Licensee becomes aware. Licensee shall not communicate
with any person other than Company, its counsel, or Licensee's counsel in
connection with any infringement, challenge, or claim. Company shall have sole
discretion to take such action as it deems appropriate and the right to
exclusively control any litigation, U.S. Patent and Trademark Office proceeding,
or other administrative proceeding arising out of any infringement, challenge,
or claim or otherwise relating to any ▇▇▇▇ or the System. Licensee shall make
no claim against Company and shall hold Company harmless from any and all direct
or indirect costs, damages, demands, expenses, losses or liabilities suffered by
Licensee as a result of any modification of the System necessitated by any claim
or challenge relating to the Marks or the System, including the costs of
altering
the appearance, design, or format of the Residence, or any reduction in sales
revenues or profits, or increased capital expenditures or operating costs
resulting from such modification and occasioned by any litigation arising out of
any claim or challenge relating to Licensee's use of any ▇▇▇▇ or right to
use the
System, or any part thereof. Licensee agrees to and shall execute any and all
instruments and documents, render such assistance and do such acts and things as
may, in the opinion of Company's counsel, be reasonably necessary or advisable
to protect and maintain the interests of Company in any litigation, U.S. Patent
and Trademark Office proceeding, other administrative proceeding, or to
otherwise
protect and maintain the interests of Company in the Marks and the System.
3.04 Discontinuance of Use of Marks. If it becomes advisable at any time
in Company's sole discretion for Company and/or Licensee to modify or
discontinue
use of any ▇▇▇▇, and/or to use one (1) or more additional or substitute trade or
service marks, Licensee agrees to and shall comply with Company's direction to
modify or otherwise discontinue the use of such ▇▇▇▇ within a reasonable time
after notice by Company.
IV.
RELATIONSHIP OF THE PARTIES/INDEMNIFICATION
4.01 Independent Status. It is understood and agreed by the parties
hereto that this Agreement does not create a fiduciary relationship between
them,
that Company and Licensee shall be independent contractors, and that nothing in
this Agreement is intended to make either party a general or special agent,
joint
venturer, partner, or employee of the other for any purpose. Licensee shall
conspicuously identify itself in all dealings with tenants/residents, suppliers,
public officials, and others as the owner of the Residence under a License with
Company.
4.02 Additional Limitations on Licensee's Use of Marks. Company has not
authorized or empowered Licensee to use the Marks except as provided by this
Agreement and Licensee shall not employ any of the Marks in signing any
contract,
check, purchase agreement, negotiable instrument, legal obligation, application
for any license or permit, or in a manner that may result in liability of
Company
for any indebtedness or obligation of Licensee. Except as expressly authorized
by this Agreement, neither Company nor Licensee shall make any express or
implied
agreements, warranties, guarantees or representations, or incur any debt, in the
name of or on behalf of the other or represent that their relationship is other
than licensor and licensee, respectively.
4.03 Limitations on Liability. Neither Company nor Licensee shall be
obligated by or have any liability under any agreements or for any
representations made by the other that are not expressly authorized hereunder,
nor shall Company be obligated for any damages to any person or property
directly
or indirectly arising out of the operation of the Residence, or Licensee's
business authorized by or conducted pursuant to the License, whether caused by
Licensee's negligent or willful action or failure to act to the relative extent
such damages do not arise out of Company's negligence, wrongful act or improper
failure to act. Company shall have no liability for any sales, use, occupation,
excise, gross receipts, income, property or other taxes, whether levied upon
Licensee, the Residence, or Licensee's property, or upon Company, in connection
with the business conducted by Licensee or payments to Company remitted pursuant
to this Agreement.
4.04 Indemnification. Licensee shall indemnify and hold harmless Company,
Company's affiliates, and their shareholders, directors, officers, employees,
agents, and assignees against any liability for any claims arising out of the
operation of the Residence. For purposes of this indemnification, "claims"
shall
mean and include all obligations, actual and consequential damages, taxes, and
costs reasonably incurred by Company in the defense of any claim against Company
or in any action in which Company is named as a party, including, without
limitation, reasonable accountants', attorneys' and expert witness fees, costs
of investigation and proof of facts, court costs, and other litigation expenses,
including travel and living expenses. Company shall have the right to defend
any
claim asserted against it or the persons delineated herein. This indemnity
shall
continue in full force and effect subsequent to and notwithstanding the
expiration or earlier termination of this Agreement.
V.
CONFIDENTIAL INFORMATION
Company possesses certain types of confidential information, including, but
not limited to, architectural plans, designs, and layouts, as well as the
methods, techniques, formats, specifications, procedures, information, systems,
and knowledge of and experience in the operation of Residences (hereinafter
referred to as "Confidential Information"). Company will disclose the
Confidential Information to Licensee under the terms of this Agreement,
including
by way of example, furnishing the Operations Manual and the Plans.
5.01 Limitation on Interest in Confidential Information. Licensee
acknowledges and agrees that, although Licensee has the right to use same,
Licensee shall not acquire any interest in the Confidential Information, other
than the right to utilize it in the operation of the Residence at the Premises
during the term of this Agreement, and that the use or duplication of the
Confidential Information in the operation of any other business or commercial
enterprises would constitute an unfair method of competition.
5.02 Confidential Use of Confidential Information. Licensee acknowledges
and agrees that the Confidential Information is proprietary, may involve trade
secrets of Company, and is disclosed to Licensee solely on the express condition
that Licensee agrees, and Licensee does hereby agree, that Licensee:
A) Shall not use the Confidential Information in the operation of any
other business, commercial enterprise, or capacity (including any other business
or commercial enterprises engaged in providing housing and/or care to the frail
elderly);
B) Shall maintain the absolute confidentiality of the Confidential
Information during and after the term of this Agreement;
C) Shall not make any unauthorized copy, duplicate, record, or
otherwise reproduce all or any portion of the Confidential Information disclosed
by Company in written, electronic, other tangible or verbal form;
D) Shall never contest the validity of Company's exclusive ownership of and
rights to the System or the Confidential Information; and
E) Shall adopt and implement all reasonable procedures prescribed from
time to time by Company to prevent unauthorized use or disclosure of the
Confidential Information, including without limitation, restrictions on
disclosure thereof to employees, officers, members and managers of the Licensee
and the use of non-disclosure and non-competition clauses as prescribed by
Company in any agreements with any persons who may hereafter have access to the
Confidential Information.
5.03 Exception to Restrictions on Confidential Information.
Notwithstanding anything herein to the contrary, the restrictions on Licensee's
disclosure and use of the Confidential Information shall not apply to the
following:
A) Information, processes, or techniques which, in the opinion of
Company, are or become generally known and used in the frail elderly
housing and/or care industry, other than through disclosure (whether deliberate
or inadvertent) by Licensee;
B) Disclosure of the Confidential Information in judicial or
administrative proceedings to the extent that Licensee is legally compelled to
disclose such information, provided Licensee shall have used its best efforts
and
shall have afforded Company the opportunity to obtain an appropriate protective
order, or other assurance satisfactory to Company, of confidential treatment for
the information required to be so disclosed; and
C) Disclosure to Licensee's employees to the extent necessary for the
proper operation of the Residence.
5.04 Insurance. During the term of this Agreement, Licensee shall
maintain in full force under policies of insurance issued by carriers approved
by Company:
A) Comprehensive public and product liability insurance against claims
for bodily and personal injury, death, and property damage caused by or
occurring
in conjunction with the operation of the Residence or otherwise in conjunction
with the conduct of business by Licensee pursuant to the License;
B) Broad form fire and extended coverage, vandalism, and malicious
mischief insurance on the Residence licensed under this Agreement and its
contents;
C) Workers' compensation and employer's liability insurance as well as
such other insurance as may be required by statute or rule of the state or
locality in which the Premises are located; and
D) Automobile liability insurance, where applicable.
Such insurance coverage shall be maintained in such amounts as Company
determines periodically to be necessary. Not less than ten (10) days prior to
each anniversary date for each policy, Licensee shall provide Company with
certificates of insurance evidencing that the insurance has been secured and
paid
for the then ensuing year. Company may periodically increase the amounts of
coverage required under any insurance policies and require different or
additional kinds of insurance at any time, including excess liability insurance,
to reflect inflation, identification of new risks, changes in law or standards
of liability, higher damage awards, or other relevant changes in circumstances.
All insurance policies shall insure Licensee and Company and shall provide for
thirty (30) days prior written notice to Company of any material modification,
cancellation, or expiration of a policy.
In connection with any construction, renovation, refurbishing, or
remodeling of the Residence licensed under this Agreement, Licensee shall cause
the general contractor to maintain with a reputable insurer (i) comprehensive
general liability insurance (with comprehensive automobile liability coverage
for
vehicles used by the Licensed business for both owned and non-owned vehicles,
builder's risk, product liability, completed operations and independent
contractors coverage) in such amounts as Company determines periodically to be
necessary and with Company named as an additional insured, (ii) workers'
compensation insurance, (iii) employer's liability insurance, as well as (iv)
such other insurance as may be required by law.
VI.
ANNUAL REVIEWS, INSPECTIONS,
AND AUDITS
6.01 Company's Right to Inspect the Residence. To determine whether
Licensee and the Residence licensed under this Agreement are complying with this
Agreement, Company or its designated agents shall have the right at any
reasonable time and without prior notice to Licensee to:
A) Inspect the Premises;
B) Observe Licensee, and the employees of the Residence;
C) Interview or survey the employees of the Residence; and
D) Interview tenants/residents of the Residence.
VII.
TRANSFER
7.01 By Company. This Agreement and the License are fully transferable
by Company and shall inure to the benefit of any transferee or other legal
successor to the interest of Company herein.
7.02 Licensee May Not Transfer Without Approval of Company. Licensee
understands and acknowledges that the rights and duties created by this
Agreement
are personal to Licensee or its owner(s) and that Company has granted the rights
set forth herein to Licensee in reliance upon the individual or collective
character, skill, aptitude, attitude, business ability, and financial capacity
of Licensee or its owner(s). Any Residence developed pursuant to this Agreement
(or any interest therein), or any License (or any interest therein) granted
pursuant to this Agreement, may not be transferred without the prior written
approval of Company, and any such transfer without such approval shall
constitute a breach hereof and convey no rights to or interests in this
Agreement, Licensee,
the Residence licensed under this Agreement or the License.
7.03 Definition of "Transfer." As used in this Agreement, the term
"transfer" shall mean and include the voluntary, involuntary, direct or indirect
assignment, sale or other transfer by Licensee or its owner of any interest in
this Agreement, any part or all of the ownership of Licensee, the Residence
licensed under this Agreement or any interest in the Residence, or the License
or any interest therein granted pursuant to this Agreement, including, without
limitation: (i) the transfer of ownership of capital stock or partnership
interest; (ii) merger or consolidation, or issuance of additional securities
representing an ownership interest in Licensee; (iii) sale of common stock,
limited liability company interests, or partnership interests, of Licensee sold
pursuant to a private placement or registered public offering; (iv) transfer of
interest in Licensee, the License granted pursuant hereto, or the Residence
licensed under this Agreement, in a divorce proceeding or otherwise by operation
of law; or (v) transfer of any interest in Licensee, the License granted
pursuant hereto, or the Residence licensed under this Agreement, in the event
of the death
of Licensee or an owner of Licensee by will, declaration of or transfer in
trust, or under the laws of intestate succession.
7.04 Conditions for Approval of Transfer. If Licensee and its owners are
in full compliance with this Agreement, Company shall not unreasonably withhold
its approval of a transfer that meets all the applicable requirements of this
Section 7.04. The proposed transferee or its owner must be an individual of
good moral character and otherwise meet Company's then applicable standards for
licensees. A transfer of ownership in the Residence licensed under this
Agreement may only be made in conjunction with a transfer of this Agreement. If
the transfer is of a controlling interest in Licensee, or is one (1) of a series
of transfers which in the aggregate constitute the transfer of a controlling
interest in Licensee, as a bare minimum, and without in any way limiting its
discretion, Company may require prior to its consent that all of the following
conditions must be satisfied prior to, or concurrently with, the effective date
of the transfer: (i) the transferee must have sufficient business experience,
aptitude, and financial resources to develop the Premises and operate the
Residence; (ii) all obligations of Licensee and its owner incurred in connection
with this Agreement and the License granted hereby must be assumed by the
transferee; (iii) Licensee must pay any and all other amounts of whatever nature
owed to Company or its affiliates which are then due and unpaid; (iv) the
lessors of the Premises must have consented to the assignment or sublease of
the Premises to the transferee; (v) the transferee must agree to be bound by
all terms and
conditions of this Agreement; (vi) Licensee or the transferee must reimburse
Company for all expenses (including legal fees) reasonably incurred by Company
in connection with the transfer; (vii) Licensee and its transferring owner must
execute a general release, in form satisfactory to Company, of any and all
claims
against Company, its affiliates and their officers, directors, employees and
agents; and (viii) Company must approve the material terms and conditions of the
transfer, including, without limitation, a determination that the price and
terms
of payment are not so burdensome as to adversely affect the future development
and operation of the Residence licensed under this Agreement by the transferee.
7.05 Excepted Transfers. If the proposed transfer will not result in a
change of control and is to or among owners of Licensee or to or among the
immediate family members of Licensee, Sub-Sections (i), (ii) and (iv) of Section
7.04 shall not apply.
7.06 Death or Disability of Licensee. Upon the death or permanent
disability of Licensee or, if Licensee is a corporation, limited liability
company, or partnership, the owner of a controlling interest in Licensee, the
executor, administrator, conservator, or other personal representative of such
person shall transfer its interest in this Agreement or such interest in
Licensee
to either a fellow shareholder, member or partner, as the case may be, or a
third
party upon approval of such transferee by Company. The disposition of this
Agreement or such interest in Licensee (including, without limitation, transfer
by bequest or inheritance) shall be completed within a reasonable time, not to
exceed twelve (12) months from the date of death or permanent disability and
shall be subject to all the terms and conditions applicable to transfers
contained herein. Failure to dispose of this Agreement or the interest in
Licensee within said period of time shall constitute a breach of this Agreement.
7.07 Effect of Consent to Transfer. Company's consent to a transfer of
this Agreement or any interest in Licensee subject to the restrictions of this
ARTICLE VII shall not constitute a waiver of any claims it may have against
Licensee, nor shall it be deemed a waiver of Company's rights to demand exact
compliance with any of the terms or conditions of this Agreement by any
transferee. Further, Licensee for itself and on behalf of its transferee does
acknowledge and agree that Company's approval shall not be deemed to constitute
a guaranty or warranty as to transferee's success in conducting the business
contemplated herein.
VIII.
TERMINATION OF AGREEMENT BY LICENSEE
8.01 Termination for Good Cause. Nothing herein shall be construed to
prevent Licensee from terminating this Agreement for good cause. For purposes
of this Agreement, the term "good cause" shall be deemed to mean a material
breach of this Agreement by Company which is not cured within thirty (30) days
after Company actually receives written notice required hereunder from Licensee,
or in the event such default cannot be cured within such thirty (30) day period,
Company shall not have commenced to cure such default within thirty (30) days
and diligently continued thereafter to attempt to cure such default.
IX.
TERMINATION OF THE LICENSE
9.01 Grounds for Termination. This Agreement shall terminate
automatically upon delivery of notice of termination to Licensee, if Licensee or
its owner (or any shareholder, member or partner, if Licensee is a corporation,
limited liability company or partnership):
A) Abandons or fails to actively operate the Residence licensed under
this Agreement;
B) Surrenders or transfers control of the operation of the Residence
licensed under this Agreement;
C) Files a Certificate/Articles of Dissolution, makes a general
assignment for the benefit of its creditors, applies for or consents to the
appointment of a receiver, trustee, or liquidator of all or a substantial part
of its assets, files a voluntary petition in bankruptcy, has an involuntary
petition in bankruptcy filed against it (which is not released within ninety
[90]
days), or fails to pay its debts and obligations as they mature in accordance
with normal business practices;
D) Makes an unauthorized assignment or transfer of this Agreement, the
License, the Residence licensed under this Agreement, or an
ownership interest in Licensee; or
E) Makes any unauthorized use of the Marks or unauthorized use or
disclosure of the Confidential Information or any portion thereof.
This Agreement shall terminate without further action by Company or notice
to Licensee, if Licensee or its owner:
A) Fails to timely comply with any provision of this Agreement and does
not:
1) correct such failure within fifteen (15) days after written
notice of such failure to comply is delivered to Licensee; or
2) if such failure cannot reasonably be corrected within fifteen
(15) days after written notice of such failure to comply is delivered to
Licensee, Licensee fails to undertake efforts to correct such failure and
furnish
proof acceptable to Company of such efforts and the date of their expected
completion, within ten (10) days after written notice is delivered to Licensee.
B) If Company or an affiliate of Company is no longer a shareholder,
member, or partner of Licensee.
9.02 Efforts to Resolve Termination Disputes Other Than by Termination.
Any acts of Company undertaken in the course of efforts to resolve a termination
dispute, or a dispute for which termination is a possible remedy, shall be
deemed
to have been undertaken without prejudice to the rights asserted by Company and
shall not constitute a waiver or relinquishment of those rights. In the event
Licensee continues to engage in Licensed operations while a dispute is pending,
that fact shall not constitute a waiver or relinquishment of Company's rights.
Company may, at its option and without waiving its right to terminate, seek any
form of relief or remedy available to it under common law or statute for any
breach of this Agreement including, but not limited to, the right to damages,
injunctive relief, declaratory orders or specific performance.
X.
RIGHTS AND OBLIGATIONS OF COMPANY AND LICENSEE UPON
TERMINATION OR EXPIRATION OF THE LICENSE
10.01 Payment of Amounts Owed to Company. Licensee shall pay to
Company within fifteen (15) days after the effective date of termination or
expiration of this Agreement, or such later date when the amounts due to Company
are determined, all amounts owed to Company or its affiliates which are then
unpaid.
10.02 Marks. After the termination or expiration of this Agreement,
Licensee shall:
A) Not directly or indirectly at any time or in any manner identify
itself or any business as a current or former Residence operator, or as a
licensee of or as otherwise associated with Company (other than under other
license agreements with Company), or use any of the Marks, any colorable
imitation thereof, or other indicia of a Residence in any manner or for any
purpose, or utilize for any purpose any trade dress, trade name, trade or
service
▇▇▇▇ or other commercial symbol that suggests or indicates a connection or
association with Company;
B) Remove all signs, sign faces, and deliver to Company all marketing
materials, and other materials containing any ▇▇▇▇ or otherwise identifying or
relating to a Residence;
C) Remove all Marks, if any, affixed to uniforms;
D) Take all action as may be required to cancel all fictitious or assumed
name or equivalent registrations relating to Licensee's use of any ▇▇▇▇; and
E) Furnish to Company, within thirty (30) days after the effective date
of termination or expiration, evidence satisfactory to Company of Licensee's
compliance with the foregoing obligations.
10.03 Modification of Residence Design and Decor. Upon expiration
or termination of this Agreement without renewal, Licensee shall modify the
interior and exterior design (which may include removal of the building's
cupola), decor, and color scheme of the Residence licensed under this Agreement
in a manner acceptable to Company so that it no longer suggests or indicates a
connection with the System or any rights and privileges granted by this
Agreement.
10.04 Cessation of Use of Confidential Information. Upon termination
or expiration of this Agreement, Licensee will immediately cease to use any
Confidential Information disclosed to Licensee pursuant to this Agreement in the
operation of the Residence licensed under this Agreement, or any business or
commercial enterprise engaged in any competitive business, or other similar
business, or capacity and shall return to Company all copies of the Operations
Manual and any other confidential materials which may have been loaned to
Licensee by Company.
10.05 Continuing Obligations. All obligations of Company and
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 this Agreement's expiration or termination and until they are
satisfied in full or by their nature expire.
XI.
CASUALTY LOSS OR CONDEMNATION
11.01 Casualty Loss. If the Residence licensed hereunder is damaged
by fire or other casualty, Licensee shall, at its cost, expeditiously repair the
damage as soon as possible after the occurrence thereof. In the event the
casualty loss requires the closing of the Residence for more than three (3)
consecutive months, then, unless repair and reconstruction work has commenced in
▇▇▇▇▇▇▇ within the three (3) month period and unless the Residence is re-opened
in full operation no later than one (1) year after the date of the casualty
loss,
this Agreement shall terminate automatically without necessity of notice to
Licensee.
11.02 Condemnation Proceedings. Licensee shall give Company written
notice as soon as it receives any knowledge of any condemnation or exercise of
the power of eminent domain, or threat thereof, by any governmental agency or
authority. If, in the reasonable opinion of Company, a substantial part of the
Residence licensed under this Agreement is to be condemned or taken under
eminent
domain and the portion not so taken or condemned could not be operated
practicably and profitably as a Residence, Company shall give good faith
consideration to transferring the License granted hereunder to another location
reasonably near the condemned Residence which decision shall be made by Company
not more than four (4) months after Company's determination of the impact of the
condemnation. If a transfer of the License is authorized by Company and
Licensee
opens for business at another location within one (1) year of the closing of the
condemned or taken Residence, the substituted Residence shall be deemed to be
open under this Agreement in the same manner and for the same term as was the
previous Residence. In the event Licensee has used its best efforts to
vigorously replace a condemned location but has been unable to do so on account
of its failure to obtain the requisite licenses and permits for another
location,
Company may, but shall not be required to, grant additional time for Licensee to
open another location. If any condemnation or eminent domain proceeding takes
place and no new location, for any reason whatsoever, becomes licensed in strict
accordance with this Section 11.02, then this Agreement shall terminate
automatically without notice to Licensee.
XII.
ENFORCEMENT
12.01 Severability and Substitution of Valid Provisions. Except as
expressly provided to the contrary herein, each part, section, term and
provision of this Agreement, and any portion thereof, 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 ruling issued by any court, agency, or tribunal with competent
jurisdiction
in a proceeding to which Company is a party, that ruling shall not impair the
operation of, or have any other effect upon, such other portions of this
Agreement as may remain otherwise intelligible, which shall then continue to be
given full force and effect and bind the parties hereto. Provided, any portion
held to be invalid shall be deemed not to be a part of this Agreement from the
date the time for appeal expires, if Licensee is a party thereto, or otherwise
upon Licensee's receipt of a notice of non-enforcement thereof from Company. To
the extent that ARTICLE V, or any section, or portion, or clause thereof, is
deemed unenforceable, but same may be made enforceable by amending any or all
thereof, Licensee and Company agree that same shall be enforced to the fullest
extent permissible under the laws and public policies applied in the
jurisdiction
in which enforcement is sought.
Licensee agrees to and shall 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,
or any specification, standard or operating procedure prescribed by Company, any
portion or portions which a court may hold to be unenforceable in a final
decision to which Company is a party, or from reducing the scope of any promise
or covenant to the extent required to comply with any court order. All
modifications to this Agreement shall be effective only in such jurisdiction,
unless Company elects to give them greater applicability, and this Agreement
shall be enforced as originally made and entered into in all other
jurisdictions.
12.02 Waiver of Obligations. Company and Licensee may by written
instrument unilaterally waive or reduce any obligation of or restriction imposed
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.
Whenever this Agreement requires Company's prior approval or consent, Licensee
shall make a timely written request therefor, and such approval shall be
obtained
in writing. Company makes no warranties or guaranties upon which Licensee may
rely, and assumes no liability or obligation to Licensee, by granting any
waiver,
approval, or consent to Licensee or by reason of any neglect, delay, or denial
of any request therefor. Any waiver granted by Company shall be without
prejudice to any other rights Company may have, will be subject to continuing
review by Company, and may be revoked, in Company's sole discretion, at any time
and for any reason, effective upon delivery to Licensee of written notice of the
revocation.
Company and 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 Licensee to exercise any right under this
Agreement or to insist upon exact compliance by the other with its obligations
hereunder, any waiver, forbearance, delay, failure, or omission by Company to
exercise any right, power or option, whether of the same, similar or a different
nature, with respect to the Residence licensed under this Agreement.
12.03 Limitations on Liability. Unless stated to the contrary
elsewhere herein, neither Company nor Licensee shall be liable for any loss or
damage nor deemed to be in breach of this Agreement if its failure to perform
its
obligations results from:
A) Transportation shortages, inadequate supply of equipment,
merchandise, supplies, labor, material, or energy, or the voluntary foregoing of
the right to acquire or use any of the foregoing in order to accommodate or
comply with the orders, requests, regulations, recommendations, or instructions
of any federal, state, or municipal government or any department or agency
thereof;
B) Acts of God;
C) Acts or omissions of the other party;
D) Fires, strikes, embargoes, war, or riot; or
E) Any other similar event or cause.
Any delay resulting from any of the above causes shall extend performance
accordingly or excuse performance, in whole or in part, as may be reasonable.
12.04 Specific Performance/Injunctive Relief. Nothing herein
contained shall bar Company's or Licensee's right to obtain specific performance
of the provisions of this Agreement and to obtain injunctive relief against
threatened conduct that will cause it loss or damages, under customary equity
rules, including applicable rules for obtaining restraining orders and
preliminary injunctions. Licensee agrees that Company may obtain injunctive
relief, without bond, but upon due notice, in addition to all further and other
relief as may be available at equity or law. Licensee further agrees that its
sole remedy in the event of the entry of an injunction, shall be the dissolution
of the injunction, if warranted, upon hearing duly had and all claims for
damages
by reason of the wrongful issuance of any injunction are expressly waived hereby
unless the waiver of damages is against the public policy of the forum in which
the proceeding was brought.
12.05 Rights of Parties are Cumulative. The rights of Company and
Licensee hereunder are cumulative and no exercise nor enforcement by Company or
Licensee of any right or remedy hereunder shall preclude the exercise or
enforcement by Company or Licensee of any other right or remedy hereunder or
which Company or Licensee is entitled by law or equity to enforce.
12.06 Governing Law/Consent to Jurisdiction. Except to the extent
governed by the United States Trademark Act of 1946 (▇▇▇▇▇▇ Act, 15 U.S.C.
Sections 1051, et seq.), this Agreement and the License shall be governed by the
laws of the State of Kansas. Licensee acknowledges that it has and will
continue
to develop a substantial and continuing relationship with Company at its
principal offices in Kansas, where Company's decision-making authority is vested
and License operations are conducted and supervised. Licensee further agrees
that Company may institute any action against Licensee and that Licensee shall
be required to institute any and all legal proceedings arising out of or
relating
to this Agreement in the state or federal courts having jurisdiction therefor in
the State of Kansas, located in Wichita, Kansas, and Licensee irrevocably
submits
to the jurisdiction of such courts and waives any objection it may have to
either
the jurisdiction or venue of that court.
12.07 Binding Effect/Modification. This Agreement is binding upon
the parties hereto and their respective executors, administrators, heirs,
assigns
and successors in interest, and shall not be modified except by written
agreement
signed by both Licensee and Company.
12.08 Construction. The preambles are a part of this Agreement which
constitutes the entire agreement of the parties, and there are no other oral or
written understandings or agreements between Company and Licensee relating to
the subject matter of this Agreement. 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.
The headings of the several articles and sections hereof are for
convenience only and do not define, limit, or construe the contents of any
articles or sections.
12.09 Definitions. In addition to the words and terms defined in the
recitals and elsewhere in this Agreement, the words and terms defined as follows
in this Section 12.09 shall, for all purposes of this Agreement, have the
meanings herein specified, except as otherwise expressly provided or unless the
context otherwise requires:
A) The term "affiliate" as used herein is applicable to any company directly
or indirectly owned or controlled by Company that sells or rents products,
renders services, or otherwise transacts business with Licensee.
B) The term "Licensee" as used herein is applicable to one (1) or more
persons, a corporation, a limited liability company, a limited partnership, or
a general partnership, as the case may be, and the singular usage includes the
plural and the masculine and neuter usages include the other and the feminine.
If two (2) or more persons are at any time the Licensee hereunder, whether or
not
as partners or joint venturers, their obligations and liabilities to Company
shall be joint and several. References to "Licensee," "owner" and "transferee"
which are applicable to an individual or individuals shall mean, unless
expressly made applicable to all shareholders, members and partners, the
owners of Licensee or the transferee (i.e., any person owning of record or
beneficially five percent
[5%] or more of the equity or control of Licensee) if Licensee or the transferee
is a corporation, limited liability company or partnership.
12.10 Counterparts. This Agreement may be executed in multiple
copies, each of which shall be deemed an original.
XIII.
NOTICES AND PAYMENTS
All written notices and reports permitted or required to be delivered by
the provisions of this Agreement shall be deemed to be delivered at the time
delivered by hand, one (1) business day after transmission by telegraph or
comparable electronic system, or three (3) business days after being placed in
the United States Mail by Registered or Certified Mail, Return Receipt
Requested,
postage prepaid and in any event until notified in writing to the contrary
addressed to the respective parties as follows:
If to Company: President
STERLING HOUSE CORPORATION
Suite 500
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Licensee: DEVON DEVELOPMENT, LIMITED
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
ATTN: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
IN WITNESS WHEREOF, the parties hereto have executed, sealed, and delivered
this Agreement in one (1) or more counterparts on the day and year first above
written.
STERLING HOUSE CORPORATION
By
▇▇▇▇▇▇ ▇. ▇▇▇▇, President
"Company"
WITNESS: DEVON DEVELOPMENT, LIMITED
By Coventry Corporation, Manager
By By
R. ▇▇▇▇ ▇▇▇▇▇, Secretary ▇▇▇▇▇▇ ▇. ▇▇▇▇, President
"Licensee"
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