Common use of TRANSFERABILITY OF INTEREST Clause in Contracts

TRANSFERABILITY OF INTEREST. A. This Agreement and all rights hereunder can be assigned and transferred by Franchisor and, if so, shall be binding upon and inure to the benefit of Franchisor's successors and assigns. B. If Area Representative is in full compliance with this Agreement, Area Representative may transfer this Agreement with Franchisor's prior written approval, which approval shall not be unreasonably withheld, to a corporation or other entity of which Area Representative owns not less than two-thirds (2/3) of the ownership interest. The transfer fee described in Paragraph XI.E. will be waived by Franchisor, and all owners of such entity must sign a Guaranty and Assumption of Obligations attached as Exhibit B. C. In the event of the death or permanent disability of the Area Representative (if the Area Representative is an individual or a holder of a legal or beneficial interest of fifty percent (50%) or more in the Area Representative entity), then this Agreement may be assigned, transferred or bequeathed by the Area Representative or a personal representative to any person or beneficiary. However, the assignment of this Agreement to the transferee, assignee or beneficiary shall not be valid or effective until Franchisor has received the properly executed legal documents which its legal counsel deems necessary to properly and legally document the transfer, assignment or bequest of this Agreement, and until the transferee, assignee or beneficiary agrees to be unconditionally bound by the terms and conditions of this Agreement and to personally guarantee the performance of the Area Representative's obligations under this Agreement. Such disposition shall be completed within a reasonable time, not to exceed one hundred eighty (180) days from the date of death or permanent disability and shall be subject to all terms and conditions applicable to transfers contained in this Section. D. Franchisor shall not unreasonably withhold its consent to any transfer of an interest in the Area Representative or in this Agreement, providing the Area Representative complies with the following conditions: 1. The transferee(s) shall be of good moral character and reputation and shall have a good credit rating and competent business qualifications reasonably acceptable to Franchisor. Area Representative shall provide Franchisor with such information as Franchisor may require to make such determination concerning each such proposed transferee(s). 2. The transferee(s) or such other individual(s) as shall be the actual manager of the franchise shall have successfully completed and passed the training course then in effect for Area Representatives, or otherwise demonstrated to Franchisor's satisfaction, sufficient ability to operate the Area Representative's Business being transferred. 3. Area Representative, prior to the transfer, shall execute a general release, in a form prescribed by Franchisor, of any and all claims against Franchisor and its subsidiaries and affiliates, and their respective officers, directors, agents and employees, except such claims as are not permitted to be waived under applicable law. 4. All accrued money obligations of Area Representative to Franchisor, its subsidiaries, affiliates or assignees, shall be satisfied prior to assignment or transfer, and Area Representative shall not be in default under the terms of this Agreement. 5. Area Representative has executed a written agreement in a form satisfactory to Franchisor, in which the Area Representative covenants to remain primarily liable under this Agreement and to observe all applicable post-term obligations and covenants contained in this Agreement. 6. The transferee Area Representative agrees to be personally liable to discharge all of the Area Representative's obligations under this Agreement, and shall enter into a written agreement in a form satisfactory to Franchisor assuming and agreeing to discharge all of the Area Representative's obligations and covenants under this Agreement. 7. The transferee Area Representative shall execute, upon Franchisor's request, and cause all parties having a legal or beneficial interest in the transferee Area Representative to execute, the then-current standard Area Representative Agreement for a term ending with the term of this Agreement, and such other ancillary agreements as Franchisor may require for the Franchised Business. The transferee Area Representative shall not be required to pay a Development Fee; however, the transferee Area Representative shall be required to pay any additional fees not provided for in this Agreement but which are required to be paid to Franchisor by other Area Representatives pursuant to the terms of the then-current standard Area Representative Agreement. E. The transferee Area Representative or transferor Area Representative shall have paid to Franchisor a transfer fee equal to twenty (20%) percent of the then current minimum Area Representative fee being paid, for the training, supervision, administrative costs, overhead, attorneys' fees, accounting and other Franchisor expenses in connection with the transfer. This transfer fee does not apply to an assignment of interest to a corporation or limited liability company under Paragraph XI.B. of this Agreement. F. Should Area Representative, at a future date, desire to make either a public or a private offering of its securities, prior to such offering and sale, and prior to the public release of any statements, data or other information of any kind relating to the proposed offering of Area Representative's securities, Area Representative shall secure the written approval of Franchisor, which approval shall not be unreasonably withheld. Area Representative shall secure Franchisor's prior written approval of any and all press releases, news releases and any and all other publicity, the primary purpose of which is in the public interest in its offering. Only after written approval has been given by Franchisor may Area Representative proceed to file, publish, issue, and release and make public any said data, material and information regarding its securities offering or the Franchised Businesses. It is specifically understood that any review by Franchisor is solely for its own information, and its approval shall not constitute any kind of authorization, acceptance, agreement, endorsement approval or ratification of same, either expressly or implied; and Area Representative shall make no oral or written notice of any kind whatsoever indicating or implying that Franchisor and/or related corporations or persons have any interest in the relationship whatsoever to the proposed offering other than acting as Franchisor. Area Representative agrees to indemnify and hold harmless Franchisor and its subsidiaries and their owners, directors, officers, employees, successors and assigns, from all claims, demands, costs, fees, charges, liability or expense (including attorneys' fees) of any kind whatsoever arising from Area Representative's offering or information published or communicated in actions taken with regard thereto. G. In the event Area Representative (or, if applicable, an owner) wishes to sell, transfer, gift, assign, or otherwise dispose of any interest in this Agreement, a controlling interest in the Area Representative entity, or all or a substantial portion of the assets of the business, Area Representative agrees to grant to Franchisor a thirty (30) day right of first refusal to purchase such rights, interest, or assets on the same terms and conditions as are contained in the written offer to purchase submitted to Area Representative by a bona fide proposed purchaser; provided, however, the following additional terms and conditions shall apply: 1. Area Representative shall notify Franchisor of such offer by sending a written notice to Franchisor enclosing a copy of the written offer signed by the bona fide proposed purchaser; 2. The thirty (30) day right of first refusal period will run concurrently with the period in which Franchisor has to approve or disapprove the proposed transferee; 3. Such right of first refusal arises for each proposed transfer, and any material change in the terms or conditions of the proposed transfer, even if to the same bona fide proposed purchaser, shall be deemed a separate offer for which a new thirty (30) day right of first refusal shall be given to Franchisor; 4. If the consideration or manner of payment offered by a third party is such that Franchisor could not reasonably be expected to furnish the same, then Franchisor may purchase the interest which is proposed to be sold for the reasonable cash equivalent. If the parties cannot agree within a reasonable time on the cash consideration, an independent appraiser shall be designated by Franchisor, whose determination will be binding upon the parties. All expenses of the appraiser shall be paid for equally by Franchisor and Area Representative; and 5. If Franchisor chooses not to exercise its right of first refusal, Franchisee shall be free to complete the sale, transfer, or assignment, subject to compliance with this Section. Absence of a reply to Area Representative's notice of a proposed sale within the thirty (30) day period is deemed a waiver of such right of first refusal but not a waiver of the required compliance with this Section.