FRANCHISE DISCLOSURE DOCUMENT HAMPTON INNS ...

payment to the former franchisee as part of the settlement. The court entered an Order of Dismissal
with Prejudice on July 12, 2006.
Hilton Hotels Corporation and Promus Hotels, Inc. v. TSP Hotels, Inc.; Balwantsinh D. Thakor;
Lataben B. Thakor; Nitin Shah; Dilipkumar M. Patel; Ramla Dilip Patel Shailendra Devdhara; and
Does 1 through 10, Superior Court of State of California, County of Alameda, Docket No.
RG04149793.
On April 7, 2004, HHC (now Hilton Worldwide) and Promus filed suit against a former Hampton Inn
franchisee and its individual owners and guarantors to collect unpaid franchise fees and to obtain
reimbursement for costs, attorneys fees and other expenses associated with the resolution of a third
party personal injury suit, Bridget Bray v. TSP Hotels, Inc., Promus Hotels, Inc., Hilton Hotels Corp.,
and S&S Security Services. The franchisee, TSP Hotels, Inc., failed to secure and maintain adequate
insurance coverage required to defend and indemnify HHC (now Hilton Worldwide) and Promus for
the third party action. In addition, the franchisee failed to pay its franchise fees. The license
agreement was terminated on January 5, 2004 for failure to pay franchise fees, among other reasons.
This collection action against the franchisee and the individual guarantors seeks the recovery of
approximately $1,500,000.00 in combined damages. The defendants filed a cross complaint on May
28, 2004 making insurance-related allegations against third parties unaffiliated with Hilton Worldwide
and Promus (the “insurance parties”) and a counterclaim against Hilton Worldwide and Promus
alleging wrongful termination, breach of the implied covenant of good faith and fair dealing,
promissory estoppel, tortious interference and fraudulent misrepresentations that Promus would
refrain from terminating the license agreement. The cross-complaint sought in excess of $1,000,000
in combined damages and attorneys’ fees, expenses and costs from Hilton Worldwide, Promus and
the insurance parties. Hilton Worldwide and Promus filed a Demurrer seeking dismissal of the crosscomplaint
on the basis that the defendants’ claims against Hilton Worldwide and Promus are legally
without merit based upon the clear language in the license agreement. The matter was settled on
December 31, 2005 pursuant to a settlement agreement whereby the franchisee agreed to pay Hilton
Worldwide and Promus $550,000 and dismiss their cross-complaint and counterclaim in exchange for
Hilton Worldwide’s and Promus’s agreement to dismiss the complaint in its entirety.
Palacio del Rio, Ltd. v. Hilton Hotels Corporation, et al., District Court of Bexar County, Texas, 407th
Judicial District, Case No. 2000-CI-13691.
This action was filed on September 19, 2000 by Palacio del Rio, Ltd. (“Palacio”), the owner of the
Palacio del Rio in San Antonio, Texas. The Palacio del Rio is a hotel managed by HHC (now Hilton
Worldwide) pursuant to a management agreement. The petition alleges that by acquiring Promus
Hotel Corporation and its subsidiaries, Hilton Worldwide violated a territorial restriction in the
management contract prohibiting it from owning or operating other hotels within the restricted territory,
specifically with respect to five managed hotels, seven franchised hotels, and a yet-to-be built
Embassy Suites managed hotel. The petition named as defendants (i) Hilton Worldwide, Promus
Hotel Corporation, Promus Operating Company, Inc., Promus, Doubletree Corporation, Doubletree
Hotels Corporation, and Hampton Inns, Inc. (collectively, the “Hilton Parties”) and (ii) Riverton Suites,
Ltd. (“Riverton”) and HPI Suites, Inc. (“HPI”) (the developers of the Embassy Suites hotel). The
petition was later amended on or about December 5, 2000 to add Doubletree Hotel Systems, Inc. as
an additional defendant. As amended, the petition sets forth claims for breach of contract, breach of
fiduciary duty, breach of confidential relationship, unfair competition, tortious interference with contract
and prospective contractual relationships, civil conspiracy, temporary and permanent injunctive relief,
attorneys’ fees, and disgorgement of fees and profits.
{000011-999987 00174938.DOC; 2}
March 31, 2011 Hampton
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