FRANCHISE DISCLOSURE DOCUMENT HAMPTON INNS ...

(iii) fraud against Mr. Klein and aiding and abetting fraud against Hilton Worldwide and Mr. Lalvani;
(iv) breach of fiduciary duty against Messrs. Klein and Lalvani and aiding and abetting breaches of
fiduciary duty against Hilton Worldwide; (v) misappropriation of trade secrets, unfair competition,
theft/conversion, unjust enrichment, and violation of the Computer Fraud and Abuse Act against all
defendants; (vi) inducing breach of contract and tortious interference with contract against Messrs.
Klein and Lalvani; (vii) fraud against Hilton Worldwide and Mr. Lalvani, and (viii) aiding and abetting
fraud against Mr. Klein.
Starwood sought preliminary and permanent injunctive relief, enjoining all defendants and their
respective officers, agents and employees from: (i) using Starwood property and information, which it
claims is proprietary, confidential and trade secrets; (ii) pursuing certain hotel owners in designated
locations identified by Starwood or negotiating with investors with whom Starwood has current
management contracts; (iii) “purging” from all material and websites information Starwood claims is
proprietary, confidential and/or trade secrets and preliminary and permanent injunctive relief, enjoining
all defendants and their respective officers, agents and employees from using such information; (iv)
requiring Hilton Worldwide to make certain disclosures to property owners and industry professionals;
(v) appointing a monitor or monitors over Hilton Worldwide’s compliance with any injunctions; (vi)
preliminarily and permanently enjoining Hilton Worldwide for a reasonable period of time from
expanding its luxury and lifestyle brands; (vii) the destruction of all information relating to the launch
and promotion of the Denizen Hotel brand; (viii) findings of contempt against all defendants and (ix)
compensatory and punitive damages against all defendants.
On April 23, 2009, the court entered a preliminary injunction, with the consent of all defendants,
requiring that the defendants and anyone acting in concert with them: i) cease all development of the
Denizen brand; ii) cease using any documents or information that originated from Starwood; and ii)
return any such information to Starwood.
In December 2010, the parties entered into a Settlement Agreement (the “Agreement”) resolving this
action. Pursuant to the terms of the Agreement, Hilton Worldwide and Messrs Klein and Lalvani have
consented to the entry of a court-ordered permanent injunction (the “Injunction”) enjoining the use or
distribution of Starwood’s proprietary, confidential or trade secret information, and imposing other
restrictions on Hilton Worldwide’s business activities in the lifestyle hotel or branded boutique space
for two years. In addition to consenting to the entry of the Injunction, Hilton Worldwide will make a
cash payment to Starwood in the amount of $75,000,000 on or before December 31, 2010 as well as
furnish other contingent guarantees and consideration to Starwood. Hilton Worldwide’s management
believes that it is unlikely that the guarantees and other consideration will result in any future cash
payments from Hilton. Hilton Worldwide’s management also believes that any such guarantees or
consideration will not have a material adverse effect on Hilton's business, financial condition or results
of operations. The Agreement provides for mutual releases of the parties and this action is being
stayed during the term of the Injunction.
B. CONCLUDED ACTIONS– INVOLVING OUR PREDECESSOR
Marathon Resort & Marina, Ltd., v. Promus Hotels, Inc., Circuit Court of the 16th Judicial District in
and for Monroe County, Florida Case No. CAM 02-275.
This action was filed on September 30, 2002 by Marathon Resort & Marina, LTD. (“Marathon”). On
May 22, 1998, Marathon and Promus entered into a License Agreement for a Hampton Inn & Suites in
Marathon, Florida. On August 29, 2002, Promus terminated the License Agreement for a continual
failure to pay fees. Marathon then filed this action asserting claims for breach of contract, breach of
implied covenant of good faith and fair dealing, rescission and promissory estoppel. Promus filed a
{000011-999987 00174938.DOC; 2}
March 31, 2011 Hampton
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