MANAGEMENT AND LICENSE AGREEMENT
This
Management and License Agreement (“Agreement”) is entered into this 26th day of
June, 2008, by and between Shells Seafood Restaurants, Inc. (the “Manager”), a
Delaware corporation maintaining its business office at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, and Rock Beach Grill of Pembroke Pines, LLLP
(the
“Owner”), a Florida limited liability limited partnership, maintaining its
business offices at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇.
BACKGROUND
INFORMATION
Pursuant
to that certain Limited Partnership Agreement of Owner of even date herewith
by
and among the Manager, Rock Beach Holdings, LLC, a Florida limited liability
company, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (each a “Investor Limited
Partner”) (the “Partnership Agreement”), the Owner owns and operates a former
Shells restaurant located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇
(the
“Restaurant”). The Manager currently acts as the exclusive manager for all
existing Shells restaurants and has agreed to manage the Restaurant and license
certain proprietary information to the Owner, but only on the terms and
conditions contained herein. The Owner desires to employ the Manager as its
agent to operate the Restaurant and to license the proprietary information.
Accordingly, in consideration of the covenants and agreements contained herein,
the Owner and the Manager agree as follows:
OPERATIVE
PROVISIONS
ARTICLE
1.
APPOINTMENT
OF MANAGER; LICENSE: KEY TERMS AND CONDITIONS
Section
1.1. Appointment
of Manager; License of Proprietary Information.
Owner
hereby appoints and employs Manager to act as the Owner’s exclusive agent for
the supervision, direction and control of the operation and management of the
Restaurant and in connection with such management, the Manager hereby
acknowledges he is applying to register the service ▇▇▇▇ “Rock Beach Grill” and
thereafter, regardless of the success of said registration, will license such
service ▇▇▇▇ to the Owner as well as certain other proprietary information
(the
“Proprietary Information”) necessary to operate the Restaurant, all upon the
terms and conditions hereinafter set forth. The location of the Restaurant
may
not be changed without the prior written consent of the Manager, which consent
may not be unreasonably withheld.
Section
1.2. Key
Terms.
The
following are certain of the key terms of this Agreement, cross-referenced
to
the sections of this Agreement in which they are more fully
discussed:
|
(a)
|
Original
Term:
|
30
years.
|
|
(b)
|
Renewal
Terms:
|
An
indefinite number of five year terms.
|
|
(c)
|
Management
and License Fee:
|
Six
percent (6.0%) of Gross
Sales.
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ARTICLE
2.
THE
TERM
Section
2.1. The
Term.
The
term of this Agreement shall mean the Original Term and any Renewal Terms,
as
such terms are defined below.
Section
2.2. Original
Term.
The
original term of this Agreement (the “Original Term”) shall commence on the day
following the last day of operation of Shells of Pembroke Pines as a Shells
restaurant (the “Commencement Date”) and shall continue for 30 years
thereafter.
Section
2.3. Renewal
Terms.
The
Original Term of this Agreement shall automatically be extended by an unlimited
number of five year renewal terms (the “Renewal Terms”), unless the Manager
gives the Owner written notice at least 90 days prior to the expiration of
the
Original or any Renewal Term, as applicable, of the Manager’s intent not to
extend this Agreement beyond the end of such Original or Renewal Term. The
terms
and conditions set forth in this Agreement shall continue to apply during all
Renewal Terms.
ARTICLE
3.
COMPENSATION
OF MANAGER
Section
3.1. Management
and License Fee.
In
consideration for the services rendered by Manager hereunder, as well as the
Owner’s use of the Proprietary Information in connection with the Restaurant’s
operations, the Owner agrees to pay Manager a management and license fee (the
“Management and License Fee”) as follows:
(a) Fee
Structure.
The
amount of the Management and License Fee shall be six percent (6%) of the
Restaurant’s Gross Sales, as such term is defined below.
(b) Definition
of Gross Sales.
The
term “Gross Sales” as used herein shall mean all sales made (and not refunded or
returned) at or from the Restaurant and/or revenues derived from or in
connection with the operation of the Restaurant including, without limitation,
all sales of food, beverages, merchandise or services at or from the Restaurant.
Sales made at less than the stated menu price shall be included in Gross Sales
only in the amount paid by the customer, and the amount of any discount or
promotional allowance shall not be included in Gross Sales. In computing the
Management and License Fee, there shall be excluded from Gross Sales (or there
shall be deducted from Gross Sales to the extent previously included) the
following:
| (i) |
Any
gratuities or service charges added to a customer’s ▇▇▇▇ or statement in
lieu of gratuities, which are payable to the Restaurants’
employees;
|
| (ii) |
All
sales taxes, excise taxes, gross receipt taxes, occupational license
taxes, admission taxes, entertainment taxes, tourist taxes or similar
charges (but the Management and License Fee shall be computed before
the
payment of federal, state or municipal income or franchise
taxes);
|
2
| (iii) |
All
sums and credits received in settlement of claims for loss or damage
to
furnishings, equipment of the Restaurant or to the building where
the
Restaurant is located;
|
| (iv) |
Gain
or loss from the sale of any capital assets or furniture, fixtures
and
equipment used in connection with the
Restaurant;
|
| (v) |
Any
compensation payments or insurance proceeds for claims against third
parties arising out of or during the course of the operation of the
Restaurant;
|
| (vi) |
The
proceeds of any financing or refinancing of the Restaurant or any
improvements, fixtures or equipment used in connection with the
Restaurant;
|
| (vii) |
Proceeds
from the condemnation, sale or other disposition of the Restaurant;
and
|
| (viii) |
Proceeds
from intercompany transactions.
|
(c) Payment
of the Management and License Fee.
The
Management and License Fee shall be paid at the end of every monthly accounting
period (on a 4-4-5 basis), in arrears, in the amount set forth on the Monthly
Statement prepared in accordance with Section 7.2 hereof. The monthly Management
and License Fee payments shall constitute installment payments of the Management
and License Fee, subject to reconciliation based on the Annual Statement
prepared in accordance with Section 7.4 hereof. Any overpayment or underpayment
shall be adjusted by payment or refund, as appropriate, within 30 days after
the
preparation of the Annual Statement.
ARTICLE
4.
DUTIES
OF
THE MANAGER
Section
4.1. Standard
of Operations.
The
Manager shall manage and operate the Restaurant in a manner consistent with
the
standards of quality that are characteristic of the other Shells restaurants
managed by Manager. There shall apply to the Restaurant the same policies,
practices and procedures as apply generally such other Shells restaurants with
respect to restaurant management, operations, accounting, purchasing, control
of
operating expenses and general administration; provided that (a) the Manager
shall otherwise have sole discretion to establish all policies for the
Restaurant, including, without limitation, menu items, prices, purchasing,
design and decor, maintenance, employment, standards of operation, quality
of
service, marketing and promotional activities, and other matters affecting
customer opinion of the Restaurant and its operation, and (b) exceptions to
general policies, practices and procedures may be made by the Manager at the
Restaurant or other Shells restaurants managed by Manager to deal with
exceptional circumstances affecting a particular store if, in the Manager’s
reasonable judgment, there is an adequate business justification for doing
so
and if the Restaurant is not treated in an arbitrary or discriminatory manner.
Subject to such justified exceptions, the Manager shall make the same efforts
at
the Restaurant as it does at other Shells restaurants to achieve, and to
balance, the objectives of increasing sales, optimizing profits, maintaining
standards, maintaining and/or improving the level of customer service and
quality of product, and other objectives that apply to the Shells chain of
restaurants generally. The Manager shall periodically review the Restaurant’s
operations and performance with the Owner at a mutually convenient time and
place. At such times, the Manager shall review with the Owner the results of
any
pertinent financial planning, forecasting, sales budgeting or other reports
or
analyses that may be prepared by the Manager for the Restaurant (which shall
be
done for the Restaurant on the same general basis as for all other Shells
restaurants). It is understood that as part of such a review the Owner may
make
suggestions or recommendations relating to the operation of the Restaurant.
The
Manager shall give such suggestions or recommendations its reasonable
consideration, but the Manager shall not be obligated to adopt or implement
them.
3
Section
4.2. Personnel.
The
Manager shall be responsible for hiring, supervising, directing the work of,
promoting, discharging and determining the compensation and other benefits
of
all personnel working in the Restaurant. With the exception of the Restaurant’s
general manager and assistant manager(s), all personnel of the Restaurant shall
be considered the employees of the Owner, provided that the compensation and
benefits of all Restaurant personnel, including the Restaurant’s general manager
and assistant manager(s), shall be considered a Restaurant expense and an
obligation of the Owner. The salaries, other compensation and benefits of such
personnel shall be consistent with those that apply at other Shells restaurants
(with appropriate allowance for factors that may affect the labor market serving
the Restaurant). The Manager may incur, at the Owner’s expense, reasonable and
customary employment agency fees and employee relocation expenses for employees
of the Restaurant. The Owner shall also bear the financial burden of the wages
and other compensation of any management personnel, such as area directors,
who
are employed to oversee the Restaurant, on a pro rata basis1 For
example, if a area director supervised eight restaurants in a geographical
area,
one of which was the Restaurant, the Owner would bear 12.5% of the expenses
associated with the employment and expenses incurred by such area
director..
The
Owner shall not hire or solicit any of Manager’s on-site managers or assistant
managers for a period of two years after the termination of this Agreement,
unless this Agreement is terminated due to a breach by the Manager.
Section
4.3. Permits
and Licenses.
The
Manager, at the Owner’s expense, shall be responsible for obtaining, maintaining
and renewing all licenses and permits that may be required for the renovation
and operation of the Restaurant, including liquor, bar, restaurant, and sign
licenses and permits. The Manager shall pursue such responsibility with due
diligence and in good faith, and the Owner shall in good faith cooperate with
the Manager as may reasonably be required to obtain such licenses and
approvals.
Section
4.4. Contracts.
The
Manager, as agent of the Owner, shall have authority to enter into such
concessionaire, service and other contracts or agreements, which are in the
ordinary course of business, as are in the Manager’s reasonable professional
judgment necessary for the operation, supply and maintenance of the Restaurant
as required by this Agreement.
Section
4.5. Maintenance.
Subject
to the limitations set forth in Section 4.4, the Manager, at the Owner’s
expense, shall be responsible for maintaining the Restaurant in good condition
and repair consistent with the standards applicable to the other Shells
restaurants managed by Manager, including without limitation, all necessary
repairs and replacements of the furniture, fixtures and equipment used in
connection with the Restaurant. The Manager will, at Owner’s expense, insure
that the Owner will comply with the Owner’s leasehold maintenance
obligations.
________________
| 1 |
For
example, if a area director supervised eight restaurants in a geographical
area, one of which was the Restaurant, the Owner would bear 12.5%
of the
expenses associated with the employment and expenses incurred by
such area
director.
|
4
Section
4.6. Alterations
to the Restaurant.
The
Manager shall have the right to make such alterations, additions or improvements
in or to the Restaurant as it deems necessary, including without limitation
(a)
alterations, additions or improvements to the Restaurant’s buildings and (b)
additions to the fixed asset list of furniture, fixtures and equipment used
at
the Restaurant; provided that such alterations, additions or improvements are
consistent with what the Manager is doing in other Shells restaurants managed
by
the Manager. The cost of such alterations, additions or improvements shall
be
charged directly to current expenses or capitalized on the books of account
of
the Restaurant in accordance with the Manager’s standard accounting practices.
The Manager will furnish the Owner substantiating documentation for capitalized
expenditures.
In
the
event that, at any time during the Term of this Agreement, repairs or
alterations to the Restaurant shall be required by reason of any laws,
ordinances, rules or regulations now or hereafter in force, or by order of
any
governmental or municipal power, department, agency, authority or officer,
such
repairs or changes may be made by Manager on, Owner’s behalf and at Owner’s
expense.
Section
4.7. Professional
Services.
The
Manager may, at the Owner’s expense, hire independent contractors to provide
such legal, accounting, and other professional or technical service as the
Manager reasonably deems advisable for the management, operation and maintenance
of the Restaurant. During the Term of this Agreement, the professional and
technical services of the Manager’s corporate staff shall be provided to the
Restaurant to the same extent as they are provided to other Shells restaurants
managed be the Manager. The Management and License Fee shall cover such
services, except that any out-of-pocket expenses incurred in performing such
services shall be reimbursed to the Manager as an operating expense of the
Restaurant. It is understood and agreed that the basic functions performed
by
the Manager in consideration of the Management and License Fee shall remain
substantially the same as they are as of the date of this Agreement, but it
is
acknowledged and agreed that there may be changes in the allocation of certain
tasks as between corporate overhead (covered by the Management and License
Fee)
and the Restaurant (paid out of Working Capital, as such term is defined
herein); provided that (a) there is a reasonable business justification for
the
change, (b) the change is not being made solely for the benefit of the Manager
and is not detrimental to the Owner, and (c) the Restaurant is treated the
same
as the other Shells restaurants managed by the Manager. The Manager may use
outside contractors to provide services that are covered by the Management
and
License Fee; provided that the quality of the services rendered to the
Restaurant is not reduced and the cost to the Owner is not
increased.
Section
4.8. Compliance
With Laws.
The
Manager shall make good faith and reasonable efforts to comply with all
applicable statutes, ordinances, rules and regulations of federal, state and
local governmental bodies having jurisdiction over the Restaurant or its
operation including, without limitation, laws governing the sale of alcoholic
beverages (“Governing Laws”). Notwithstanding anything herein to the contrary,
the Manager may contest the application of any Governing Laws to the Restaurant
in the event the Manager deems it prudent to do so. The cost of any such contest
shall be included in the operating expenses of the Restaurant. The Manager,
at
Owner’s expense, may institute, defend and settle litigation and claims
affecting the Restaurant. No settlement involving injunctive relief against,
or
prohibiting any act on the part of, the Owner shall be entered into by the
Manager, without the prior written approval of the Owner.
Section
4.9. Arms-Length
Transactions.
The
Manager shall not enter into any contracts with any entity that is affiliated
with the Manager unless the same are at market rates and on competitive terms.
Except as expressly permitted in this Agreement, the Manager shall not add
any
markup, profit or other add-on charge to the cost of any items purchased by
the
Manager for the Restaurant. The Restaurant shall receive the benefit of any
discounts or rebates that are netted out by the vendor against the price of
items that are purchased for the Restaurant. The Restaurant shall be treated
the
same as the other Shells restaurants managed by the Manager with respect to
the
allocation or other disposition of any savings resulting from the Manager’s
buying power in the marketplace, quantity discounts, rebates and promotional
allowances or other cost reductions or advantages that are not netted out
against the price of the item purchased.
5
Section
4.10. Compliance
with Leases.
The
Manager shall, subject to the availability of funds therefor, cause the Owner
to
remain in compliance with its leasehold obligations.
ARTICLE
5.
OWNER’S
FINANCIAL OBLIGATIONS
Section
5.1. Obligations
of Owner and Manager.
All
cost and expense of operating the Restaurant, including without limitation
the
funding of operating deficits and working capital and other obligations and
liabilities hereunder (“Owner’s Financial Obligations”) shall be the sole and
exclusive responsibility and obligation of Owner, except where it is expressly
and specifically stated in this Agreement that such item shall be at the
Manager’s expense. It is understood that statements herein indicating that
Manager shall “furnish,” “provide” or otherwise supply items or perform services
hereunder shall not be interpreted or construed to mean that the Manager shall
be obligated to pay for such items or services unless it is expressly and
specifically so provided. Owner’s Financial Obligations shall include, without
limitation, the following:
| (a) |
The
Working Capital (as defined in Section 6.1
hereof);
|
| (b) |
Capital
Expenditures (as defined in Section 6.2
hereof);
|
| (c) |
The
operating expenses of the Restaurant including, without limitation,
Restaurant employee payroll and benefits, food and beverage inventory,
supplies, repair and maintenance, contract services, professional
services, training, advertising, marketing, and
insurance;
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| (d) |
The
cost of all licenses and permits required for the occupancy or operation
of the Restaurant including, without limitation, any certificate
of
occupancy, health permit, food service license, liquor license or
the
like;
|
| (e) |
Bank
charges and processing fees charged by the local depository bank
for the
Restaurant or by credit card companies for the processing of credit
card
sales made at the Restaurant;
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| (f) |
All
taxes applicable to the Restaurant, including, without limitation,
real
estate taxes, franchise taxes, gross receipts taxes, rent taxes or
income
taxes (other than any income taxes payable by the Manager on the
Management and License Fee);
|
| (g) |
Occupancy
costs of the Restaurant, including, without limitation, depreciation,
amortization, interest, rent, common area charges, impact fees, user
fees,
parking charges, dues or assessments and the like;
and
|
| (h) |
The
Management and License Fee.
|
6
The
Manager
shall have complete and absolute control of the receipts from the Restaurant
and
the bank accounts into which such receipts are to be deposited. The above
mentioned obligations of the Owner shall be paid by the Manager on behalf
of the
Owner out of the Working Capital and/or from the current distributions payable
to Owner pursuant to Section 6.3 hereof, to the extent
available.
The
following services shall be provided by the Manager during the Term of this
Agreement in consideration of the Management and License Fee and shall not
be
charged as operating expenses of the Restaurant: (i) supervisory operations
management, above the store level, exclusive of the Restaurant’s pro rata
expense of the district and regional manager, which is borne, in part, by the
Owner as set forth above; (ii) accounting performed out of the Manager’s
corporate accounting department, including accounts payable, accounts
receivable, fixed assets, financial reporting, record keeping, revenue/cost
variance analysis, financial analysis and forecasting; (iii) payroll and
corporate-level personnel and benefits administration; (iv) corporate-level
data
processing services; (v) tax administration; (vi) corporate legal services;
(vii) corporate support, including real estate, architectural and
construction-related support services; (viii) corporate facilities department
support services regarding maintenance, repair and capital alterations and
additions; (ix) corporate marketing administration; (x) multi-unit procurement
services; and (xi) research and development.
Section
5.2. Manager
Not Obligated to Advance Funds.
Except
as otherwise provided in the Partnership Agreement, the Manager shall have
no
obligation to pay for any of the Owner’s Financial Obligations. Except as
otherwise provided in the Partnership Agreement, subject to the consolidation
of
certain payables and receivables of the Restaurant with those of other Shells
restaurants managed by the Manager, the Manager shall not be obligated to
advance any of its own funds to or for the account of the Owner or to incur
on
its own account any liability with respect to the Restaurant.
Section
5.3. Consolidated
Payables and Receivables.
The
cash flow and accounting functions for the Restaurant will be handled by
Manager, to the extent reasonably practicable, in the same manner that they
are
handled for other Shells restaurants managed by the Manager and on a
consolidated basis with such other stores; provided, however, that separate
books and records (with appropriate substantiating documentation) showing the
revenues and expenses of the Restaurant on an unconsolidated basis shall be
maintained by the Manager as provided in Article 7 hereof; and provided further
that any discounts or rebates obtained as a result of such consolidation shall
be subject to the provisions of Section 4.9 hereof. The Manager shall not impose
any additional fees or add-on charges as a result of any such consolidation.
As
a general rule, to the extent reasonably practicable, the following items will
be handled on a consolidated basis:
(a) The
processing of revenues from sales made through the use of credit
cards;
(b) The
payment of vendors who sell to other Shells restaurants in addition to the
Restaurant.
Payables
that relate solely to the Restaurant, including without limitation the payroll
for the Restaurant, shall, to the extent of available funds belonging to the
Owner, be paid out of the Manager’s corporate office by the Manager’s corporate
check, subject to the Manager’s right to be reimbursed out of the Working
Capital of the Restaurant as provided in Article 6 hereof. It is understood
that
payment directly by the Restaurant may be required in the case of certain
vendors or local service contractors. Regardless of whether payment in the
first
instance is made directly by the Restaurant or by the Manager’s corporate check,
the Owner shall bear any loss arising out of any breach of contract, breach
of
warranty or other failure to perform any contract with any vendor, supplier
or
contractor of the Restaurant.
7
ARTICLE
6.
WORKING
CAPITAL AND DISTRIBUTIONS TO OWNER
Section
6.1. Working
Capital
. The
Owner shall maintain with the Manager sufficient working capital for the ongoing
operation of the Restaurant (“Working Capital”). Working Capital shall consist
of the following: (a) an amount that approximates the average value of the
food
and beverage inventory of the Restaurant carried at cost, (b) the cash balance
in the Restaurant account at the Restaurant local depository bank, (c) the
cash
on hand at the Restaurant, and (d) an amount determined by the Manager to be
adequate for the operation of the Restaurant based upon the Manager’s estimate
of the reasonably foreseeable income and expenses of the Restaurant, including,
without limitation, capitalized expenditures for the replacement of furniture,
fixtures and equipment, which is initially estimated to be $50,000. It is the
intention of the parties to operate on a “pay as you go” basis to the extent
possible, without the retention by the Manager of any reserves or contingency
funds except for immediately foreseeable needs. The Owner shall fund any deficit
in the Working Capital within 30 days after the Owner’s receipt of written
notice from the Manager of the need for additional Working Capital; provided
that the Owner shall use its best efforts to fund such a deficit within three
days or as soon thereafter as possible. If the Owner fails to do so, then in
addition to any other right or remedy that the Manager may otherwise have,
the
Manager shall have the right to deduct such amount from any amount payable
to
the Owner hereunder.
Section
6.2. Capital
Expenditures.
Capital
expenditures during the Term for furniture, fixtures and equipment and capital
improvements at the Restaurant shall, to the extent possible, be paid for out
of
the Working Capital.
Section
6.3. Distributions
to Owner.
Any
amount in the Restaurant’s account held by the Manager in excess of (a) the
amount of Working Capital required pursuant to Section 6.1 above, (b) the amount
of the Management and License Fee payable to Manager and (c) the operating
expenses of the Restaurant (including allocations for insurance, marketing
and
management training), less the amount of any offsets or deductions provided
for
hereunder, shall be distributed to the Owner within 30 days after the end of
each fiscal month. The monthly distributions to the Owner shall constitute
prepayments subject to reconciliation based on the Annual Statement for the
fiscal year in which such monthly distributions are made, with the payment
for
the final fiscal month being adjusted as may be necessary.
ARTICLE
7.
ACCOUNTING
Section
7.1. Standards.
The
Manager, at the Manager’s own cost and expense, shall maintain books and records
of account relating to the Manager’s operation and management of the Restaurant
and prepare and deliver to Owner the statements required under Sections 7.2,
7.3
and 7.4 hereof. The books and records for the Restaurant shall be kept
substantially in accordance with the systems utilized by the Manager for the
other Shells restaurants managed by the Manager. The Owner and its designees
shall have the right, upon 10 days prior written notice to the Manager, to
examine said books and records at the Manager’s corporate headquarters at any
reasonable time during regular business hours. Such books and records of account
shall be in sufficient detail to show compliance with the requirements of Rule
7A-3.0141(2)(a), Florida Administrative Code, or any successor regulation,
with
regard to the percentage of food and non-alcoholic beverage sales.
Section
7.2. Monthly
Statement.
Within
30 days of the end of each month, the Manager shall provide the Owner with
a
balance sheet and a profit and loss statement showing the Restaurant’s financial
position as of the date of the balance sheet and the operating results for
the
preceding fiscal month and fiscal year to date (collectively the “Monthly
Statement”).
Section
7.3. Quarterly
Statement.
Within
45 days of the end of each fiscal quarter, the Manager shall provide the Owner
a
balance sheet, profit and loss statement, and statement of cash flows, and
supporting schedules, showing the Restaurant’s financial position as of the date
of the balance sheet and the operating results and statement of cash flows
for
the preceding fiscal quarter and fiscal year to date (collectively the
“Quarterly Statement”).
Section
7.4. Annual
Statement.
Within
90 days following the end of each fiscal year, the Manager shall provide the
Owner a statement showing the Restaurant’s operating results for the preceding
fiscal year (the “Annual Statement”). The Annual Statement shall contain a
balance sheet, profit and loss statement, statement of cash flows and supporting
schedules, and shall be certified as true and correct by the Manager’s Chief
Financial Officer.
8
Section
7.5. Adjustments.
Any
adjustment required to make up an underpayment or to refund an overpayment
by
the Owner or the Manager shall be made within 30 days after completion of the
statement that shows the need for an adjustment. Adjustments based on the Annual
Statement shall be made during the first month following completion of the
Annual Statement. Adjustments made upon the expiration or termination of this
Agreement shall be made through payment or refund, as required, within 30 days
after the end of the Term of this Agreement.
Section
7.6. Right
to Audit.
At any
time during the two year period following the Owner’s receipt of an Annual
Statement, the Owner shall have the right, upon 10 days’ prior written notice to
the Manager, at Owner’s expense, to have an accountant selected by the Owner
audit the Manager’s books and records relating to the Restaurant for the period
covered by such Annual Report. If there is a discrepancy between such financial
statements and the findings of Owner’s accountant or any other dispute between
the parties regarding the financial statements, the Manager’s accountants and
the Owner’s accountant shall attempt to resolve such discrepancy, and their
mutual decision shall be binding upon Owner and Manager. If the accountants
for
the parties are unable to resolve the discrepancy, the matter shall be referred
to an arbitration panel composed of the Owner’s independent CPA, the Manager’s
independent CPA, and a third independent CPA selected by the parties’
independent CPA’s, and the decision of such arbitration panel shall be binding
upon Owner and Manager. The cost of conducting an independent audit of the
Restaurant’s financial statements shall be paid by the Owner unless the audit
shows an underpayment to Owner in excess of three percent of the amount that
should have been distributed to Owner; in such case Manager shall bear the
cost
of the audit. In the event that the actual amount is resolved in favor of the
Owner, the Manager shall pay the amount due plus interest thereon at the
Interest Rate specified in Section 16.13.
Section
7.7. Fiscal
Year.
The
fiscal year of the Restaurant shall be the fiscal year used by Manager for
its
company-owned restaurants. As of the date of this Agreement, the Manager
proposes using a fifty-two (52) or fifty-three (53) week period ending on the
Sunday nearest to December 31.
Section
7.8. GAAP.
All
financial statements to be prepared by the Manager hereunder shall be prepared
in accordance with generally accepted accounting principles.
ARTICLE
8.
INSURANCE
AND INDEMNITY
Section
8.1. Required
Coverage.
Except
for such coverage otherwise maintained by the landlord of the Restaurant under
the lease agreement with such landlord, the following forms of insurance
coverage shall be maintained by the Restaurant:
(a) Property
Insurance:
Property
insurance covering the interior and exterior improvements made by the Owner.
Property insurance shall insure against any and all risks of direct physical
loss to the Restaurant and its furniture, fixtures and equipment, with limits
of
not less than the full replacement cost thereof, subject to the same deductible
that applies to other Shells restaurants managed by the Manager;
9
(b) Business
Interruption:
All Risk
Business Interruption insurance with a limit sufficient to reimburse the Owner
for loss of income resulting from the Owner’s inability to continue operations
due to the Restaurant’s sustaining a loss from an insured peril. The limit shall
also include sufficient insurance to ensure that the Owner will be able to
meet
its monetary obligations to the Manager under this Agreement, including Section
9.1 hereof;
(c) General
Liability:
Comprehensive general liability insurance, including product and liquor
liability coverage, with a combination of primary and excess limits of not
less
than $3,000,000, each occurrence, bodily injury and property damage combined,
including dram shop insurance or similar coverage if required by applicable
statute or rule;
(d) Employers’
Liability:
Workers’
Compensation and Employers’ Liability insurance, as well as other insurance as
may be required by law, in such amounts as may be required by applicable statute
or rule; provided that the Employer’s Liability insurance shall carry a limit of
not less than $500,000;
(e) Fidelity
Coverage:
Comprehensive Dishonesty, Disappearance and Destruction (3-d) Coverage, insuring
employee dishonesty and depositors forgery; and
(f) Additional
Coverage:
Such
additional coverages and higher policy limits as may reasonably be required
from
time to time by the Manager for Shells restaurants managed by the
Manager.
The
Manager shall be named as an additional insured and loss payee in all policies
required hereunder, and all such policies shall be primary to any policies
which
either of the parties hereto may carry on its own. The limits set forth above
in
this Section 8.1 shall be subject to adjustment periodically (annually if
reasonably possible) to reflect current costs and availability.
Section
8.2. Responsibility
For Obtaining Coverage.
Although the Owner shall bear the financial responsibility for the insurance
coverage required under Section 8.1 hereof, the Manager shall negotiate, obtain
and be responsible for obtaining such policies on behalf of the Owner. The
Manager will make an annual presentation of proposed insurance programs to
the
Owner and the Owner shall have at least 45 days to obtain alternative
coverage.
Section
8.3. Evidence
of Coverage.
Upon a
request from the Owner, the Manager shall cause to be delivered to the Owner
a
certificate of insurance to evidence that the foregoing insurance coverage
requirements have been complied with by the Manager. Such evidence shall include
a statement by the insurer that the policy or policies will not be canceled
or
materially altered without at least 30 days prior written notice to Owner and
Manager.
10
Section
8.4.Indemnity.
(a) Owner’s
Indemnification of Manager.
The
Owner agrees to indemnify, defend and hold the Manager free and harmless from
any liability for injury or death to persons or damage or destruction of
property, as a result of the Manager’s performance of its duties in accordance
with this Agreement, as well as the performance by the Manager’s agents,
officers, directors or employees. Notwithstanding the foregoing, the Owner
shall
not be obligated to indemnify and hold the Manager harmless or to reimburse
the
Manager or to defend the Manager from any liability which results from the
negligence, fraud or willful misconduct of the Manager, its agents, employees,
officers or directors, or any action by the Manager, its agents, employees,
officers or directors in violation of any provision of this
Agreement.
(b) Manager
Indemnification of Owner.
The
Manager agrees to indemnify, defend and hold the Owner free and harmless from
any liability for injury or death to persons or damage or destruction of
property arising out of the operation of the Restaurant by the Manager or
resulting from any act of the Manager, its agents, officers, directors or
employees in violation of any provision of this Agreement, and from any
liability resulting from any breach of any law, rule or ordinance, including
by
way of example, but not limitation, any “employment” violations, antitrust
action, any liquor license violations or any other matter within the control
of
the Manager. Notwithstanding the foregoing, the Manager shall not be obligated
to indemnify and hold the Owner harmless or to reimburse the Owner or to defend
the Owner from any liability that results from the negligence, fraud or willful
misconduct of the Owner, its agents, employees, officers or directors, or any
action of the Owner, its agents, employees, officers or directors in violation
of any provision of this Agreement.
Section
8.5. Waiver
of Subrogation.
Each
party hereto (the “Releasing Party”) hereby releases the other (the “Released
Party”) from any liability which the Released Party would, but for this
paragraph, have had to the Releasing Party arising out of or in connection
with
any accident or occurrence or casualty (a) which is or would be covered by
a
property damage policy (with fire, extended coverage, vandalism and malicious
mischief endorsement included) or by a sprinkler leakage or water damage policy
regardless of whether or not such coverage is being carried by the Releasing
Party, and (b) to the extent of recovery under any other casualty or property
damage insurance being carried by the Releasing Party at the time of such
accident or occurrence or casualty, which accident or occurrence or casualty
may
have resulted in whole or in part from any act or neglect of the Released Party,
its officers, agents or employees; provided, however, the release hereinabove
set forth shall become inoperative and null and void if the Releasing Party
contracts for insurance with an insurance company which (i) takes the position
that the existence of such release vitiates or would adversely affect any policy
so insuring the Releasing Party in a substantial manner and notice thereof
is
given to the Released Party, or (ii) requires the payment of a higher premium
by
reason of the existence of such release, unless in the latter case the Released
Party within 10 days after notice thereof from the Releasing Party pays such
increase in premium.
ARTICLE
9.
[RESERVED]
11
ARTICLE
10.
REPRESENTATIONS
AND WARRANTIES
Section
10.1. Title
to the Restaurant and/or Leasehold Interests.
Except
as otherwise provided in the lease agreement for the lease of the Restaurant
premises, the Owner covenants that it has, and that throughout the Term of
this
Agreement it will maintain, (i) either full ownership of the location where
the
Restaurant is located or a valid leasehold estate in the building where the
Restaurant is located, and (ii) full ownership of or a valid leasehold estate
in
the furniture, equipment and operating supplies that are used in the Restaurant.
The Owner represents and warrants that there is and shall be no material
conflict between this Agreement and any provision of any lease or deed, mortgage
or deed of trust, restrictive covenant or other agreement affecting the
Restaurant. The Owner further agrees that throughout the Term of this Agreement,
it will keep, observe and perform all terms, covenants, conditions and
obligations to be kept, observed or performed by the Owner under the Owner’s
lease or any concession or other agreement or security instrument in respect
of
the Restaurant, and the furniture, fixtures and equipment in the Restaurant. The
Owner agrees that it will not amend or modify any provision of a lease that
has
a material effect on this Agreement or the operation of the Restaurant, without
in each instance obtaining the prior written consent of the Manager, which
must
be granted or withheld by the Manager within 30 days after the Manager’s receipt
of the Owner’s request for consent. The Owner hereby agrees to indemnify the
Manager and hold the Manager harmless from and against any loss, cost or damage
incurred by the Manager as a result of the Owner’s breach of any of the
foregoing representations, warranties or covenants or as a result of any claim
made against the Manager by any landlord, mortgagee or other party in privity
with the Owner.
Section
10.2. Liquor
License.
The
Owner represents and warrants that the jurisdictions in which the Restaurant
is
located permit the sale of alcoholic beverages at tables and a stand-up bar
seven (7) days per week and that the Restaurant is not located in an area in
which the issuance of the appropriate licenses or permits would be prohibited.
The Owner shall use reasonable efforts and all due diligence to maintain the
liquor license for the Restaurant. The Owner and the Manager shall cooperate
with each other and with the licensing authority in renewing the liquor license
for the Restaurant.
Section
10.3. Operation
of the Restaurant.
The
Owner represents and warrants that there is no legal impediment to the operation
of the Restaurant by the Manager as contemplated by this Agreement; that the
Owner shall not create or suffer to exist any condition that materially
interferes with the normal use of the Restaurant, including without limitation
the accessways, parking areas, lighting, service areas and utilities serving
the
Restaurant; and that the Owner shall not interfere with the Manager’s operation
of the Restaurant or give, or attempt to give, orders or instructions to
personnel employed at the Restaurant.
Section
10.4. Authority
of Owner and Manager.
The
Owner represents and warrants that it has full right, power and lawful authority
to execute and deliver this Agreement and to perform its obligations hereunder
in the manner and upon the terms contained herein, with no other person needing
to join in the execution of this Agreement in order for it to be binding upon
all persons. The person(s) executing this Agreement on behalf of the Owner
represent and warrant that they are the only person(s) required to execute
this
Agreement in order to bind the Owner. The Manager represents and warrants that
it has full right, power and lawful authority to execute and deliver this
Agreement and to perform its obligations hereunder in the manner and upon the
terms contained herein. The person(s) executing this Agreement on behalf of
the
Manager represent and warrant that they are the only person(s) required to
execute this Agreement in order to bind the Manager.
12
Section
10.5. Confidentiality.
The
Owner represents and warrants that it shall at all times treat as confidential
any proprietary information, trade secrets, knowledge or know-how relating
to
the Restaurant that the Owner may acquire in connection with this Agreement
or
otherwise, including, without limitation, any financial information relating
to
the revenues, costs or profits of the Restaurant; personnel policies or
procedures; budgets and compensation figures; operating systems and methods;
and
recipes or training materials (referred to collectively as “Confidential
Information”); and that it shall use its best efforts to keep any Confidential
Information secret and confidential, both during and after the Term of this
Agreement. The Owner may disclose pertinent information relating to the
Restaurant on an as-needed basis to lenders, joint ventures, accountants,
attorneys, and potential purchasers; provided that the Owner shall use
reasonable efforts to ensure that such information is disseminated on a “need to
know” basis only. The Manager represents and warrants that it shall at all times
treat as confidential any proprietary information, trade secrets, knowledge
or
know-how relating to the Owner or the Owner’s business that the Manager may
acquire in connection with this Agreement or otherwise.
ARTICLE
11.
DEFAULT,
TERMINATION AND REMEDIES
Section
11.1. Default,
Notice and Cure.
If
either party hereto shall default in the performance of any of its obligations
under this Agreement and
such
default is a result of that party’s gross negligence, gross abuse of authority,
fraud or criminal misconduct, and such default is not cured within 40 days
after
written notice from the non-defaulting party then the party who delivered the
notice of such default shall have, in addition to its rights at law or in
equity, the right to terminate this Agreement.
Section
11.2. Limitation
of Liability.
Notwithstanding anything to the contrary, the Manager shall in no event have
any
liability, directly or indirectly, for:
|
(i)
|
Any
liability of the Owner under the Owner’s lease or any damages payable to
the landlord; or
|
|
(ii)
|
Any
liability of the Owner to any mortgagee or lender of the Owner or
any
damages payable to any such mortgagee or
lender;
|
provided
that the limitation of liability set forth in this Section 11.2 shall not limit
the Manager’s liability with respect to any of the insurance coverage for which
the Manager is responsible to obtain on the Owner’s behalf under Article 8
hereof and shall not limit the Manager’s liability for negligence or other
tortious or unlawful conduct. Each party to this Agreement shall be bound to
make reasonable efforts to mitigate any damages incurred as the result of any
breach of this Agreement by the other party.
13
ARTICLE
12.
SUCCESSORS
AND ASSIGNS
Section
12.1. Assignment
by the Manager.
The
Manager may, without the Owner’s consent, assign its interest in this Agreement
to (i) an affiliate of the Manager, provided that the Restaurant continues
to be
operated as a Shells restaurant and the Manager continues to remain fully liable
under this Agreement; or (ii) a successor of the Manager that may result from
a
merger, reorganization, consolidation or acquisition, provided that the
surviving or acquiring entity acquires all or substantially all of the assets
of
the Manager relating to the Shells restaurants owned and/or managed by the
Manager; otherwise the Manager shall not assign all or any part of its interest
in this Agreement to any person without the prior written consent of the Owner.
The Manager shall furnish the Owner with any information regarding the proposed
assignee that is reasonably requested by the Owner.
Section
12.2. Assignment
by the Owner.
The
Owner may, without the Manager’s consent, make a collateral assignment of this
Agreement to Owner’s lender or assign Owner’s interest in this Agreement to (i)
an affiliate of the Owner, provided that the Owner continues to be fully liable
under this Agreement, or (ii) a purchaser of the Owner’s entire interest in the
Restaurant; otherwise the Owner shall not assign all or any part of its interest
in this Agreement to any person or entity without the prior written consent
of
the Manager. In a case in which the Manager’s consent to an assignment is
required, the Manager shall not unreasonably withhold its consent to the Owner’s
transfer of its interest in this Agreement, but the Manager’s consent to such a
transfer may be conditioned upon the following:
| (a) |
All
of the Owner’s accrued monetary obligations to the Manager and all other
outstanding obligations related to the Restaurant shall have been
satisfied;
|
| (b) |
The
Owner shall have executed a general release, in a form satisfactory
to the
Manager, of any and all claims against the Manager and its affiliates
and
their shareholders and employees, in their corporate and individual
capacities;
|
| (c) |
The
transferee shall enter into a written assumption agreement, in a
form
satisfactory to the Manager, assuming and agreeing to discharge all
of the
Owner’s obligations under this Agreement and reducing to writing any
custom, usage or course of dealings that has been accepted in practice
by
the Owner and the Manager without having been memorialized in a formal
amendment to this Agreement;
|
| (d) |
The
transferee shall demonstrate to the Manager’s satisfaction that it meets
the Manager’s managerial and business standards; has a good business
reputation and credit rating; meets the criteria relating to character,
reputation and the like that apply in connection with the issuance,
and/or
renewal of liquor licenses and other licenses or permits required
for the
Restaurant; and has the requisite financial resources and capital
to fund
the operation of the Restaurant as required by this
Agreement;
|
| (e) |
The
Owner shall not be in default under this Agreement, any amendments
thereto
or any other agreements with the Manager, its subsidiaries or affiliates;
or
|
| (f) |
The
assignee must have been approved as a licensee of a liquor license
suitable for use at the Restaurant before the assignment is binding
upon
the Manager.
|
14
Section
12.3. Transfer
to Affiliates.
Transfers of a party’s interest in this Agreement to an affiliate (as defined
below) shall not require the consent of the other party provided that the
transferor remains fully liable under this Agreement. The term “affiliate” as
used herein shall mean any parent, subsidiary, affiliated or related corporation
or other entity of the Owner or the Manager, respectively, or of any said
parent, subsidiary, affiliated or related corporation or other
entity.
Section
12.4. Parties
Bound.
The
terms, provisions, covenants, undertakings, agreements, obligations and
conditions of this Agreement shall be binding upon and shall inure to the
benefit of the successors-in-interest and assigns of the parties hereto with
the
same effect as if mentioned in each instance where the party hereto is named
or
referred to, except that no assignment, transfer, pledge, mortgage, lease or
sublease made by either the Owner or the Manager in violation of this Agreement
shall vest any rights in the assignee, transferee, mortgagee, pledge, lessee,
sublessee or occupant.
ARTICLE
13.
PROPRIETARY
ITEMS: TRADEMARKS, TRADE SECRETS AND
INDICIA
OF OWNERSHIP
Section
13.1. Trademarks.
The
Owner understands that the Manager uses certain proprietary names, trademarks,
service marks and other terms and notations (collectively referred to as the
“Trademarks”) in its operation of Shells restaurants, including, without
limitation, the registered marks “Shells” and the “jumping fish
logo”.
Section
13.2. Trade
Secrets.
The
Owner understands that the Manager from time to time creates or develops
copyright materials and trade secrets in connection with the management and
operation of Shells restaurants (“Trade Secrets”), including, without
limitation, the standards and specifications for design, construction,
furniture, fixtures and equipment, decor, operating procedures, recipes, and
management, marketing, training and accounting programs and
materials.
Section
13.3. Indicia
of Ownership.
The
Owner recognizes that the Shells restaurants and the system used by the Manager
in operating them are characterized by certain indicia of ownership (“Indicia of
Ownership”) including, without limitation, (i) certain unique features of
concept, design, appearance, and decor, which form the trade dress for Shells
restaurants; and (ii) certain concepts, presentations and menu
items.
15
Section
13.4. Ownership
By the Manager.
The
Manager covenants that it owns all right, title and interest in and to the
Trademarks, Trade Secrets and the Indicia of Ownership (referred to collectively
as the “Proprietary Items”) so as to permit their use in connection with the
Restaurant. The Owner expressly acknowledges the Manager’s exclusive right,
title and interest in and to the Proprietary Items, both collectively and
individually, and agrees not to represent in any manner that the Owner has
any
ownership rights therein. The Owner further agrees that use of the Proprietary
Items at the Restaurant shall not create in Owner’s favor any right, title or
interest or other attributes of ownership in or to the Proprietary Items. The
Owner acknowledges and expressly agrees that any and all goodwill associated
with the Proprietary Items and the Manager’s system for developing and operating
Shells restaurants shall inure exclusively to the benefit of the Manager. The
Owner shall have no claim for compensation for any part of the goodwill
attributable to the use of the Proprietary Items at the Restaurant or to the
Owner’s performance of its duties under this Agreement.
Section
13.5. No
Infringement By Owner.
The
Owner acknowledges that use of the Proprietary Items by the Owner without in
each instance obtaining the Manager’s prior written consent shall be an
infringement of the Manager’s exclusive right, title and interest in and to the
Proprietary Items. The Owner expressly covenants that both during and after
the
Term of this Agreement, the Owner shall not, directly or indirectly, (i) commit
an act of infringement, (ii) contest or aid in contesting the validity or
ownership of the Proprietary Items, or (iii) take any other action in derogation
of the Manager’s rights in and to the Proprietary Items. The Owner shall not
hold out or otherwise employ the Proprietary Items to perform any activity
or to
incur any obligation or indebtedness in a manner that might in any way make
the
Manager liable therefor. The Owner shall promptly notify the Manager of any
attempt by any other person, firm or corporation to use the Proprietary Items
or
any colorable variation thereof, and of any claim, demand or cause of action
based upon or arising therefrom. The Owner shall also promptly notify the
Manager of any litigation instituted against the Owner involving the Manager’s
Proprietary Items. The Manager shall use its reasonable efforts, including
prosecution or defense of legal proceedings, to protect the Proprietary Items
against infringement. In the event the Manager undertakes the defense or
prosecution of any litigation relating to the Proprietary Items, the Owner
agrees to execute any and all documents and to do such acts and things as may,
in the opinion of counsel for the Manager, be necessary to carry out such
defense or prosecution; provided that the Manager shall reimburse the Owner
for
any out-of-pocket expenses that the Owner incurs in doing so and the cost of
the
litigation shall be paid by the Manager. If the Owner operates a business other
than the Restaurant, the Owner shall not use the Proprietary Items or any
reproduction, copy or colorable imitation thereof in either the operation or
promotion of such business or otherwise conduct such business in any manner
that
infringes any right of the Manager or constitutes unfair competition with the
Manager.
Section
13.6. Subsequent
Business.
The
Owner understands and agrees that discontinuance of use of the Indicia of
Ownership shall require substantial revision of the decor of the Restaurant
if
the Owner intends to continue to conduct any type of business at the Restaurant
following termination of this Agreement. Within 30 days after termination or
expiration of this Agreement for any reason, including but not limited to the
breach of this Agreement by the Manager, the Owner shall cease using the
Trademarks, Trade Secrets, Indicia of Ownership and any other Proprietary Items
owned by the Manager; and the Owner shall make such modifications or alterations
to the Restaurant as may be necessary to prevent the operation of any business
thereon by Owner or others in derogation of this Article 13; provided that
structural changes to the Restaurant shall not be required except to the extent
specified below in this Section 13.6. In the event the Owner fails or refuses
to
comply with the requirements of this Article 13, the Manager shall have the
right, subject to and in accordance with the terms of the Owner’s lease, to
enter upon the Restaurant premises without being guilty of trespass or any
other
tort, for the purpose of making or causing to be made such changes as may be
required at the expense of the Owner, which expense the Owner agrees to pay
to
the Manager upon demand. The Owner shall alter or remove or cause to be removed
from the Restaurant premises the all Indicia of Ownership, including without
limitation, all signage and all Proprietary Items, such as menus, recipes or
any
other items bearing the Manager’s name or any of the Manager’s
Trademarks.
16
Section
13.7. Purchase
of Proprietary Items.
Upon
termination or expiration of this Agreement, the Manager shall have the option
to purchase from the Owner any or all items in the Restaurant that bear any
of
the Manager’s Trademarks, at Owner’s cost or fair market value, whichever is
less. If the parties cannot agree on fair market value within 30 days after
the
termination of this Agreement, a mutually acceptable independent appraiser
shall
be designated by the parties hereto, and the appraiser’s determination shall be
binding.
ARTICLE
14.
ADVERTISING,
PROMOTION AND TRAINING
Section
14.1. Cost
of Advertising.
The
cost of marketing and advertising for the Restaurant shall be an operating
expense of the Restaurant. The cost of in-store advertising and promotion that
applies only to the Restaurant shall be one category of such expenses. In
addition, the cost of marketing and advertising that is applicable to all Shells
restaurants on a state, regional, or national basis shall be allocated among
all
of the Shells restaurants managed by the Manager, based upon the Manager’s
standard method of allocating such cost. If the Manager provides marketing
or
advertising services within a defined market area that includes the Restaurant
and other Shells restaurants, the cost of such marketing or advertising shall
be
allocated among the Restaurant and such other Shells restaurants within such
market area.
Section
14.2. Promotions.
The
Manager may offer promotions, discounts and other incentives at the Restaurant
in a manner similar to those offered at other Shells restaurants managed by
the
Manager. Sales made in connection with any such promotion, discount or other
incentive shall be included in Gross Sales in the amount paid by the customer
rather than at the menu price. The costs incurred by the Restaurant in
connection with such items shall be included in the operating expenses of the
Restaurant.
Section
14.3. Training.
The
cost of store-level management training for the Restaurant shall be borne by
the
Owner. If the Manager moves store level management of the Restaurant to other
Shells’ restaurants managed by the Manager, other than the initial store level
management of the Restaurant (to which this Section 14.3 shall not apply),
the
recipient store will pay the Owner the sum of $15,000 for a general manager
or
$12,000 for an assistant manager, and if the Restaurant receives store level
management trained at other restaurants managed by the Manager, the Owner shall
pay the transferor store the sum of $15,000 for a general manager or $12,000
for
an assistant manager.
ARTICLE
15.
NOTICES
Section
15.1. Notice
Addresses.
Written
communications between the Owner and the Manager shall be sent to their
respective addresses shown on the first page of this Agreement (“Notice
Address”); provided that the Owner or the Manager may change its Notice Address
by giving written notice of such change to the other party in accordance with
this paragraph.
Section
15.2. Notices.
Wherever this Agreement provides for notice, such notice shall be in writing
and
shall be delivered to a party at its Notice Address, either by hand delivery
or
by United States mail, certified, with return receipt requested. A
hand-delivered notice shall be effective on the date of receipt by the party
being served with the notice. A mailed notice shall be effective on the earlier
of (i) the date of receipt or refusal of receipt, or (ii) five days after the
date of mailing. Either party may, in a written notice to the other party,
designate a reasonable number of third parties to receive a copy of notices
sent
under this Agreement. Copies of notices may be sent by regular U.S.
mail.
17
ARTICLE
16.
GENERAL
PROVISIONS
Section
16.1. Relationship
of the Parties.
The
provisions of this Agreement relating to the determination and payment of
management fees hereunder are included solely for the purpose of providing
a
method whereby the such fees can be measured and ascertained. The Manager and
the Owner shall not be construed as joint venturers or partners of each other
and neither shall have the power to bind or obligate the other except as set
forth in this Agreement.
Section
16.2. Entire
Agreement.
This
Agreement supersedes all prior agreements and understandings, whether written
or
oral. The Owner and the Manager have neither made nor relied upon any promises,
representations or warranties in connection with this Agreement that are not
expressly set forth in this Agreement. In entering into this Agreement, the
Owner and the Manager have relied on the representations and warranties
contained in this Agreement.
Section
16.3. Modifications
and Waiver.
This
Agreement may not be modified except by a written agreement signed by the party
against whom such modification is sought to be enforced. No waiver of any
condition or covenant in this Agreement by either party shall be effective
unless made in writing, nor shall any waiver be deemed to imply or constitute
a
future waiver of the same or any other condition or covenant of this
Agreement.
Section
16.4. Governing
Law.
This
Agreement shall be construed and enforced in accordance with the laws of the
State of Florida.
Section
16.5. Construction.
Whenever a word appears herein in its singular form, such word shall include
the
plural; and the masculine gender shall include the feminine and neuter genders.
This Agreement shall be construed without reference to the titles of Articles,
Sections or Clauses, which are inserted for convenient reference only. This
Agreement shall be construed without regard to any presumption or other rule
permitting construction against the party causing this Agreement to be drafted
and shall not be construed more strictly in favor of or against either of the
parties hereto.
Section
16.6. Severability.
If any
term or provision of this Agreement or the application thereof to any person
or
circumstances shall to any extent be invalid or unenforceable, the remainder
of
this Agreement, or the application of such term or provision to persons or
circumstances other than those as to which it is held invalid or unenforceable,
shall not be affected thereby, and each term and provision of this Agreement
shall be valid and enforceable to the fullest extent permitted by
law.
Section
16.7. Consent
or Approval
.
Whenever it is necessary under the terms of this Agreement for either party
to
obtain the consent or approval of the other party, such consent or approval
shall not be unreasonably withheld or delayed.
Section
16.8. Certificate
of Performance.
The
Owner and the Manager shall, within 20 days after receipt of a written request
from the other, execute, acknowledge and deliver a statement in writing
certifying whether this Agreement is unmodified and in full force and effect
(or
if modified, whether the same is in full force and effect as so modified),
whether any conditions to the full enforceability of this Agreement remain
unsatisfied, and such other facts, including the nature of any claim of default
on the part of the other, as either party may reasonably request.
Section
16.9. Excuse
for Nonperformance.
If
either party hereto shall be delayed or prevented, from the performance of
any
act required hereunder by reason of acts of God, strikes, lockouts, labor
troubles, inability to procure materials, restrictive governmental laws or
regulations, adverse weather, unusual delay in transportation, delay by the
other party hereto or other cause without fault and beyond the control of the
party obligated to perform (financial inability excepted), then upon notice
to
the other party, the performance of such act shall be excused for the period
of
the delay and the period for the performance of such act shall be extended
for a
period equal to the period of such delay; provided, however, the party so
delayed or prevented from performing shall exercise good faith efforts to remedy
any such cause of delay or cause preventing performance.
18
Section
16.10. Disputes.
If a
dispute shall arise as to any amount or sum of money to be paid by one party
to
the other or any work to be performed by either of them under the provisions
hereof, a party shall have the right to make payment or perform such work “under
protest,” without waiver or prejudice to its right to recover from the other
party. If it shall later be determined (by agreement of the parties, arbitration
or litigation) that one party has paid or performed an obligation that should
have been paid or performed by the other party, the party who paid or performed
“under protest” shall be entitled to recover the amount paid or the cost
incurred, plus interest thereon at the Interest Rate specified in Section 16.13
hereof, from the date on which such payment was made until the date on which
reimbursement is received.
Section
16.11. Arbitration.
All
claims, disputes and other matters in question between the parties to this
Agreement arising out of or relating to this Agreement or the breach thereof,
shall be decided by mandatory and binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association (“AAA”) or
as otherwise agreed by the parties in such controversy, and judgement on the
award rendered by the arbitrator(s) may be entered in any court having
jurisdiction thereof.
Section
16.12. Attorney’s
Fees.
If the
Owner or the Manager brings action through arbitration or at law or equity
against the other in order to enforce the provisions of this Agreement or as
a
result of an alleged default under this Agreement, the prevailing party in
such
action shall be entitled to recover from the other party reasonable attorney’s
fees (including paralegals employed by such attorney and costs of litigation
at
the trial and appellate level).
Section
16.13. Interest.
All
monetary obligations under this Agreement shall bear interest from the date
on
which they become due and payable until the date on which payment is received
by
the party entitled to payment. Except where a different rate of interest is
expressly provided for elsewhere in this Agreement, such interest shall be
paid
at an annual rate (the “Interest Rate”) equal to ten percent (10%) per
annum.
Section
16.14. Date
of Agreement.
All
references to the “date of this Agreement,” the “date hereof,” and the like
shall be deemed to be the last date on which this Agreement shall be executed
by
the Owner and by the Manager.
In
witness whereof, the Owner and the Manager do hereby execute this Management
and
License Agreement on the date first appearing in the preamble to this
Agreement.
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SHELLS
SEAFOOD RESTAURANTS, INC.,
a Delaware corporation By:/s/
▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇
▇ ▇▇▇▇▇▇
Title:
President
and CFO
ROCK
BEACH GRILL OF PEMBROKE PINES, LLLP,
a
Florida limited liability limited partnership
By:
ROCK
BEACH HOLDINGS, LLC,
its
general partner
By:
/s/
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name:
▇▇▇▇▇▇
▇ ▇▇▇▇▇▇
Title:
President
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