▇▇▇▇▇▇ VENTURES, LLC
DEVELOPMENT AGREEMENT
DATED: December 19, 1998
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DEVELOPMENT AGREEMENT
12/23/98
TABLE OF CONTENTS
1. COMPANY ORGANIZATION AND GOVERNANCE ................................... 1
2. DEVELOPMENT OF BISTRO CONCEPT ......................................... 3
3. SITE SELECTION AND DEVELOPMENT ........................................ 7
4. ROLL-UP RIGHTS ........................................................ 10
5. SINGLE RESTAURANT PURCHASES ........................................... 17
6. COMPLIANCE WITH LAWS .................................................. 18
7. ADVERTISING AND MARKETING ............................................. 18
8. CONFIDENTIAL INFORMATION .............................................. 18
9. CORPORATE REQUIREMENTS ................................................ 20
10. COVENANTS ............................................................. 20
11. NOTICES ............................................................... 22
12. INDEPENDENT CONTRACTOR ................................................ 23
13. APPROVALS AND WAIVERS ................................................. 24
14. SEVERABILITY AND CONSTRUCTION ......................................... 24
15. APPLICABLE LAW; REMEDIES .............................................. 25
16. MEDIATION AND ARBITRATION PROVISIONS .................................. 25
18. ENTIRE AGREEMENT ...................................................... 28
19. PURSUANT TO OTHER INTERESTS ........................................... 28
20. ACKNOWLEDGMENTS ....................................................... 28
EXHIBIT A-CERTIFICATE OF FORMATION .................................. 25
EXHIBIT B-OPERATING AGREEMENT ....................................... 26
EXHIBIT C-PROPRIETARY MARKS ......................................... 27
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▇▇▇▇▇▇ BISTRO
DEVELOPMENT AGREEMENT
THIS DEVELOPMENT AGREEMENT ("Agreement") is entered into on December 19,
1998, between Boston Restaurant Associates, Inc., a Delaware corporation
("BRA"), and Italian Ventures, LLC, a Kentucky limited liability company
("Ventures").
WHEREAS, BRA and its affiliates currently operate both food court kiosks
specializing in the sale of high-quality pizza under the name "Pizzeria ▇▇▇▇▇▇"
and full service, casual restaurants specializing in Italian cuisine under the
name "Polcari's"; and
WHEREAS, BRA desires to develop and introduce a new concept which
incorporates both its high quality "Pizzeria ▇▇▇▇▇▇" pizza and its broader
"Polcari's" menu items in a full-service bistro environment (the "Bistro
Concept") within North America (the "Development Areas"); and
WHEREAS, Ventures wishes to assist BRA in the development of the Bistro
Concept and the implementation and operation of restaurants under the Bistro
Concept ("Bistro Restaurants"); and
WHEREAS, BRA and Ventures desire to pursue a business arrangement
through shared ownership in a to-be-formed Massachusetts limited liability
company to be known as "▇▇▇▇▇▇ Ventures, LLC" (the "LLC") for the purpose of
developing, promoting and implementing the Bistro Concept in North America.
NOW, THEREFORE, the parties agree as follows:
1. COMPANY ORGANIZATION AND GOVERNANCE
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1.1. Upon execution of this Agreement BRA and Ventures shall form the
LLC as a limited liability company pursuant to the laws of the Commonwealth of
Massachusetts under the name "▇▇▇▇▇▇ Ventures, LLC". Formation of the LLC shall
be effectuated by filing the Certificate of Organization attached as Exhibit A
hereto with the Massachusetts Secretary of State.
1.2. BRA shall subscribe to a 51% voting membership interest in the LLC
for an initial capital contribution of $102,000 in cash, and Ventures shall
subscribe to a 49% voting membership interest in the LLC for an initial capital
contribution of $98,000 in cash. Additional capital contributions shall be made
by BRA and Ventures on an as-needed basis in proportion to their respective
ownership interests in the LLC, all in accordance with and subject to the terms
and conditions of the Operating Agreement (as hereinafter defined).
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1.3 The regulations governing the operation and management of the LLC
shall be as provided in the Operating Agreement attached as Exhibit B hereto, as
it may be amended from time to time by mutual agreement of BRA and Ventures (the
"Operating Agreement"). Ventures shall provide general board-level supervision
of (i) the design and establishment of the LLC's management and operational
systems and (ii) the monitoring of their implementation, applying its
full-service restaurant experience for the benefit of the LLC for no
compensation (other than reimbursement of out-of-pocket expenses as provided in
Section 2.4 hereof); provided, however, the parties acknowledge that, except as
provided in this Agreement as to the services of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and BRA, all
management and operational activities of the LLC will be conducted by employees
or agents of the LLC at the LLC's expense. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, the president of
Ventures, shall provide, as reasonably necessary to fulfill Ventures duties
hereunder, his personal services to the LLC in his capacity as an officer of
Ventures and as an officer of the LLC, for no compensation, provided that it is
expressly acknowledged that Ventures, the LLC, the Bistro Concept, and the
Bistro Restaurants, in the aggregate, represent only one aspect of ▇▇▇▇▇▇▇
▇▇▇▇▇▇' business activities and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will not in any event devote his
full time or attention to the business of Ventures and/or the LLC or to the
development or management of the Bistro Concept and/or the Bistro Restaurants.
Ventures and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall perform such services at the direction and
subject to the general supervision of the LLC. In the event ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇ is terminated as the chief executive officer of BRA or any successor
thereof, by a vote of BRA's (or such successor's) Board of Directors which
includes the vote to do so by a majority of those members of BRA's (or such
successor's) Board of Directors who are neither a member or affiliate of
Ventures or the LLC, Ventures shall have the immediate and continuous right to
exercise its Put option in accordance with Article 4 hereof; provided, however,
that Venture's right to exercise its Put option by reason of such event (but not
by reason of any other event as provided under Article 4) shall terminate sixty
(60) days after written notice is given by BRA to Ventures advising Ventures of
the appointment of a successor chief executive officer of BRA. In the event
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ at any time ceases to be the president of Ventures, BRA shall
have the immediate and continuous right to exercise its Call option in
accordance with Article 4 hereof; provided, however, that BRA's right to
exercise its Put option by reason of such event (but not by reason of any other
event as provided under Article 4) shall terminate sixty (60) days after written
notice is given by Ventures to BRA advising BRA of the appointment of a
successor president of Ventures.
1.3 Ventures shall have immediate and continuous right to exercise its
Put option in accordance with Article 4 hereof in the event of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇▇ at any time ceases to be the chief executive officer of BRA or any
successor thereof for any reason, including, but not limited to, his death,
Disability (as defined in Section 4.5) or termination of employment or other
cessation as chief executive officer implemented by a vote (or written action
in lieu of a vote) by BRA's (or any successor's) Board of Directors unless such
vote (or written action in lieu of a vote) includes votes cast in favor of (or
the written consent to) such cessation by a majority of those members of BRA's
(or such successor's) Board of Directors who are neither a member or affiliate
of Ventures or the LLC; provided, however, that Venture's right to exercise its
Put option by reason of such event (but not by reason of any other event as
provided under Article 4) shall terminate sixty (60) days after written notice
is given by BRA to Ventures advising Ventures of the appointment of a successor
chief executive officer of BRA. In the event ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ at
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any time ceases to be the president of Ventures for any reason, including, but
not limited to, his death, Disability, or termination of employment, BRA shall
have the immediate and continuous right to exercise its Call option in
accordance with Article 4 hereof; provided, however, that BRA's right to
exercise its Put option by reason of such event (but not by reason of any other
event as provided under Article 4) shall terminate sixty (60) days after written
notice is given by Ventures to BRA advising BRA of the appointment of a
successor president of Ventures.
1.4. The purpose of the LLC shall be to develop, implement, operate,
franchise, license, market and promote the Bistro Concept within the Development
Area. All activities in connection with such purpose shall be subject to the
terms and conditions of the Operating Agreement and this Agreement and shall be
conducted through the LLC except as expressly provided herein. Further, except
as expressly provided herein or under the Operating Agreement, neither BRA nor
Ventures shall have any authority to bind or act for, or assume any obligations
or responsibilities on behalf of, the LLC or the other party. The LLC shall not
be responsible or liable for any indebtedness or obligation of BRA or Ventures
or otherwise relating to the Bistro Concept incurred or arising either before or
after the execution of this Agreement except as to those responsibilities,
liabilities, indebtedness or obligations incurred after the date of this
Agreement pursuant to and as limited by this Agreement and the Operating
Agreement. This Agreement shall not be deemed to create a general partnership
between BRA and Ventures with respect to any activities within the scope and
purposes of the LLC or any other activities.
1.5. TERM OF THE AGREEMENT
---------------------
1.5.1. The Initial Term of this agreement shall be twenty (20) years
commencing on the date hereof (the "Initial Term").
1.5.2. Either party may elect to extend the Initial Term and the then
prevailing terms of this Agreement or to renegotiate the terms of this Agreement
pursuant to written notice thereof to the other party at least one hundred
eighty (180) days prior to the end of the Initial Term (a "Renegotiation
Notice"). If the parties do not agree to extend and are unable to renegotiate
the terms of this Agreement on mutually satisfactory terms within one hundred
twenty (120) days thereafter (the "Negotiation Period"), BRA shall buy the
equity interest of Ventures in the LLC together with the assets of Ventures and
its affiliates (excluding any cash, accounts receivable or other cash
equivalent) used in any Bistro Restaurant or full-service sit-down restaurant
developed by Ventures, or any affiliate of Ventures, in accordance with Sections
4.1.1, 4.1.2, 4.1.3, 4.2, 4.3, 4.4, and 4.7.
2. DEVELOPMENT OF BISTRO CONCEPT.
------------------------------
2.1. BRA and Ventures, acting through and on behalf of the LLC, shall
assume joint responsibility for the development and design of the Bistro Concept
within the Development Area. BRA shall further provide assistance to the LLC
with respect to food ingredients, menu items and menu design. The Bistro Concept
shall be based on a casual dining, full-service approach and shall include, to
the extent deemed advisable by the LLC, menu items which incorporate certain of
BRA's Proprietary Products (as defined in BRA's Uniform Franchise Offering
Circular), including without limitation BRA's proprietary dough, sauce, cheese,
tomato
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and spice packs, and proprietary brick ovens, which shall be purchased, in the
case of Proprietary Products, or leased, in the case of ovens, by the LLC from
BRA in accordance with BRA's standard intercompany costing methods (which
methods are designed so as to result in a breakeven or very low profit to BRA
from such commissary or supply activities). The Bistro Concept may also include,
to the extent deemed advisable by the LLC, use of certain proprietary marks
owned by BRA, which marks are identified on Exhibit C hereto, and any future
proprietary marks created for the Bistro Concept which are based on, or derived
from, any of the proprietary marks owned by BRA (the "Proprietary Marks"). In
addition, BRA hereby licenses to the LLC and will make available for the LLC's
use in connection with the development and operation of the Bistro Concept and
the Bistro Restaurants, to the extent deemed advisable by the LLC, all of BRA's
menu descriptions, and other confidential information, systems, trade secrets,
proprietary technology and know-how regarding the "Pizzeria ▇▇▇▇▇▇" concept and
operations and the "Polcari's" concept and operations, but expressly excluding
BRA's recipes for Proprietary Products. Ventures and the LLC shall maintain the
confidentiality of all such information in accordance with the provisions of
Section 8 hereof.
2.2. Following development of the Bistro Concept, Ventures shall use its
reasonable best efforts to implement the Bistro Concept within the Development
Area, but without any obligation to build a specific number of restaurants,
unless specified in a writing, fully executed by both BRA and Ventures; provided
that, it is expressly acknowledged that Ventures, the LLC, the Bistro Concept,
and the Bistro Restaurants, in the aggregate, represent only one aspect of
▇▇▇▇▇▇▇ ▇▇▇▇▇▇' business activities and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ will not in any event
devote his full time or attention to the business of Ventures and/or the LLC or
to the development or management of the Bistro Concept and/or the Bistro
Restaurants. In furtherance thereof and in accordance with the other terms and
conditions of this Agreement, Ventures shall, on behalf of the LLC and at the
LLC's expense: (i) identify and select site locations for Bistro Restaurants,
subject to BRA's approval; (ii) negotiate with landlords for site locations;
(iii) supervise restaurant build-outs; (iv) develop promotional and marketing
materials; (v) recruit, hire and train Bistro Restaurant employees; (vi) develop
and implement ongoing quality assurance programs; (vii) select, secure and
maintain an office in Louisville, Kentucky, which is reasonably satisfactory to
BRA and from which the LLC's operations will be conducted, it being acknowledged
that Ventures' current office identified in Section 11 below is satisfactory;
and (viii) perform other duties ancillary to the foregoing or as otherwise
specified herein, in each case in a manner which conforms with the standard
practices of BRA as in effect from time to time (as such standard practices
shall be communicated to Ventures). Subject to the other terms and provisions of
this Agreement (including those which may be restrictive), Ventures, as an
authorized representative of the LLC, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, as an officer of the
LLC, shall be delegated by the Manager of the LLC such power and authority to
act for and in the name of, and to bind and obligate, the LLC as are reasonably
necessary to enable them to carry out the foregoing duties and obligations;
provided that Ventures and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall consult with the Manager prior
to undertaking any of the foregoing actions which Ventures or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
acting reasonably and in good faith, deems to be significant and material from a
financial or operational standpoint and shall consider the Manager's input with
respect thereto; and further provided that, the decisions and actions of
Ventures and/or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall be subject to the Mediation and Arbitration
Provisions set forth in Section 16 hereof. Ventures agrees to refrain from any
business or advertising practiced
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which it should reasonably anticipate might be injurious to the business of BRA,
the Bistro Concept, the Bistro Restaurants, the Proprietary Marks or the good
will of any of the foregoing and shall immediately cease any advertising
practice at the request of BRA which BRA believes is injurious to the business
or goodwill of BRA, the Bistro Concept, the Bistro Restaurants or the
Proprietary Marks. To the extent that Ventures, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or any affiliate
of theirs may incur costs or expenses which relate to more than merely the
business activities of the LLC or the development of the Bistro Concept and the
Bistro Restaurants, such as overhead or administrative costs, they shall
equitably allocate such costs and expenses among the LLC and the other
businesses benefited thereby; provided, however, that any relocation expenses
incurred by Ventures upon its relocation from its current office location shall
be borne by Ventures or other businesses benefited thereby and not by the LLC,
except to the extent of any relocation expenses directly attributable to the
relocation of employees, furniture, or equipment of the LLC located in the same
offices as those of Ventures.
2.3. The LLC shall serve as the entity through which BRA and Ventures
shall co-develop and co-finance Bistro Restaurants in the Development Area. All
revenues (other than reimbursements of costs and expenses) derived by Ventures
or BRA in connection with the codevelopment of Bistro Restaurants through the
LLC (as opposed to revenues derived from the development of Bistro Restaurants
independently by either Ventures or BRA as provided under Section 3 of this
Agreement) shall be attributed to and paid over to the LLC. All related expenses
incurred directly by the LLC or by Ventures or BRA with respect to the
development of the LLC's Bistro Restaurants shall be charged to and paid by the
LLC; provided that, without the consent of a Majority-in-Interest of the Members
of the LLC (as defined in the Operating Agreement of the LLC), neither Ventures
nor BRA shall incur any single cost or expense, or group of related costs or
expenses, in the aggregate, during any budget period in excess of $500 in the
name or on behalf of the LLC if the incurrence of such cost or expense would
result in the aggregate amount incurred by the LLC for all similar expenses
exceeding the amount provided for in the approved budget contemplated by Section
2.4 hereof for such expenses during such budget period. To the extent Bistro
Restaurants are developed independently by BRA or Ventures as provided in
Section 3 hereof, such restaurants shall be subject to BRA's standard franchise
agreements and procedures set forth therein and the payment of territorial and
other fees as specified in Section 3 hereof. All revenues from the operation of
Bistro Restaurants developed independently by BRA or Ventures shall be realized
by and be the sole property of, and all expenses with respect to the
development, opening and operation of such restaurants (including, but not
limited to, any applicable territorial, franchise or other fees and royalties)
shall be borne by, BRA or Ventures, as applicable, depending upon which entity
develops such restaurants. No fees or other amounts shall be paid by the LLC to
BRA except as expressly contemplated by this Agreement.
2.4. BRA shall prepare an initial six (6) month budget for the Bistro
Concept within a reasonable time after formation of the LLC, which budget shall
be submitted to and subject to the approval of the Manager and Members of the
LLC. Thereafter, BRA shall prepare a budget for each Bistro Restaurant opening
and, after the first year of the LLC's operations, annual budgets for the LLC,
all of which budgets shall be similarly submitted to and subject to the approval
of the Manager and Members of the LLC. BRA shall also provide to the LLC all
necessary cash
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management and accounting/bookkeeping services with respect to the operation of
the LLC and the operation of its Bistro Restaurants. BRA shall charge the LLC
$1,000 per restaurant per month for such services (the "Monthly Fee"). BRA shall
also charge the LLC for all travel expenses reasonably incurred in connection
with such services. An annual audit of the LLC shall be performed by BRA's
nationally recognized, independent certified public accountants (the
"Accountants") in accordance with generally accepted accounting principles in
effect in the United States ("GAAP"). The cost of such audits shall be borne by
the LLC and shall be independent of the Monthly Fee. To the extent that BRA or
any affiliate of BRA may incur out-of-pocket costs or expenses (other than for
outside bookkeeping expenses, all of which expenses shall be borne solely by BRA
without right of reimbursement) which relate to more than merely the business
activities of the LLC and the development of the Bistro Concept and the Bistro
Restaurants (such as travel or other costs incurred with respect to both the
Bistro Concept and Bistro Restaurants, on the one hand, and the Pizzeria
Regina's concept and restaurants, on the other hand), they shall equitably
allocate such costs and expenses among the LLC and the other businesses
benefited thereby (provided, however, that any relocation expenses incurred by
BRA upon its relocation from its current office location shall be borne by BRA
or other businesses benefited thereby and not by the LLC, except to the extent
of any relocation expenses directly attributable to the relocation of employees,
furniture, or equipment of the LLC located in the same offices as those of BRA).
2.5. Notwithstanding anything herein to the contrary, except to the
extent such expense is authorized under a budget in accordance with Section 2.4
hereof, any single direct out-of-pocket expense to be incurred by Ventures or
BRA, or any group of related expenses to contemporaneously incurred by Ventures
or BRA, in the aggregate, in excess of $500 for which reimbursement will be
sought from the LLC must be submitted to the Members of the LLC for approval by
a Majority-in-Interest (as defined in the Operating Agreement of the LLC) of the
Members prior to the incurring of such expense. Any such expense which is not so
approved by the Members or authorized by an approved budget shall be borne by
the party incurring such expense. Any approved direct out-of-pocket expense
shall be promptly reimbursed by the LLC upon submission of appropriate
supporting documentation to the LLC.
2.6. In the event BRA or Ventures, with the consent of a
Majority-in-Interest of the Members of the LLC, seeks financing for the purpose
of funding the operations of the LLC and the development of the Bistro Concept
and/or any Bistro Restaurant owned and operated by the LLC, such financing shall
be obtained by the LLC for the benefit and burden of the Members in accordance
with their respective equity interests in the LLC. In the event BRA or Ventures
seeks financing for any purpose other than the foregoing, including the
development and operation of any Bistro Restaurant not developed and owned by
the LLC, either BRA or Ventures, as the case may be depending on whether BRA or
Ventures is seeking such financing, shall obtain such financing in its own name
and on its own behalf and neither the other party nor the LLC shall have any
liability with respect thereto nor shall the equity interests or Capital
Accounts in the LLC be affected by such financing.
2.7. This Agreement does not grant Ventures any right to use the
Proprietary Marks or the Bistro Concept except in connection with the
fulfillment of Ventures' express obligations
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hereunder or the independent development of Bistro Restaurants by Ventures in
accordance with the provisions of Section 3 hereof and BRA's standard form
franchise agreement. Ventures acknowledges that it will have no right under this
Agreement to franchise any person or legal entity to use the Proprietary Marks
or the Bistro Concept.
3. SITE SELECTION AND DEVELOPMENT.
-------------------------------
3.1. BRA shall approve each site proposed by Ventures for each Bistro
Restaurant to be developed hereunder in the Development Area subject to
standards approved by BRA. Before committing to a site, Ventures shall submit to
BRA such information and materials as BRA may reasonably request to evaluate the
site. After receipt of such information and materials, BRA, in its sole
discretion, shall approve or refuse to approve the proposed site. BRA shall
either approve or reject a proposed site not later than ten (10) days after
receipt of all information and materials requested pursuant to this Section 3
and after expiration of the period specified in Section 3.2, if applicable. No
site shall be deemed to have received BRA's approval unless it has been approved
in writing by BRA.
3.1.1. If BRA approves a site proposed by Ventures, the Bistro
Restaurant on the proposed site shall be developed by the LLC with all economic
benefits and burdens of such restaurant inuring and accruing to the LLC. No
territorial, franchise, site, license, royalty or other such fees shall be
payable to BRA with respect to such restaurant.
3.1.2. If BRA does not approve a site proposed by Ventures,
Ventures may, at its option, develop a Bistro Restaurant on the proposed site,
subject to (i) executing and delivering to BRA BRA's standard form franchise
agreement for the Bistro Restaurant to be developed on the proposed site and
(ii) paying the LLC $5,000 (or the then prevailing amount if different) per
Bistro Restaurant to be opened as an initial installment of the total $10,000
territorial fee (or the then prevailing total standard territorial fee if
different) to be paid with respect to each Bistro Restaurant.
3.1.3. If BRA sells a territory within the Development Area to a
third party, upon sale of such territory, BRA shall credit and pay upon receipt
of funds to the LLC's account for each Bistro Restaurant site to be opened in
the territory, the initial installment of the territorial fee equal to $5,000
(or the then prevailing amount if different) per Bistro Restaurant to be opened
as an initial installment of the total $10,000 territorial fee (or the then
prevailing total standard territorial fee if different) to be paid with respect
to each Bistro Restaurant. Each such Bistro Restaurant shall pay a royalty to be
determined by BRA of not less than 5% of sales to BRA, and the entire royalty
fee paid by such Bistro Restaurant shall be paid over by BRA to the LLC by the
10th day of the calendar month following receipt by BRA of such royalty. Any
franchisee who proposes to open a Bistro Restaurant within a territory shall be
subject to the prior written approval of the LLC, which approval shall be
granted or withheld in writing within ten (10) days of the request for approval.
3.1.4. For any site on which a store will be opened in a
territory within the Development Area which has not yet been designated as a
Bistro Restaurant or otherwise, BRA
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shall pay $5,000 (or the then prevailing amount if different) into an escrow
account held by the LLC until such designation has been made, at which point
such amount shall be credited to the LLC or returned to BRA as appropriate
depending upon whether the site is ultimately designated a Bistro Restaurant or
otherwise. The payment of $5,000 (or the then prevailing amount if different)
per Bistro Restaurant to be opened shall represent the first installment of the
total $10,000 territorial fee (or the prevailing total standard territorial fee,
if different) to be paid with respect to each Bistro Restaurant to be opened.
Any Bistro Restaurant developed pursuant to Sections 3.1.1, 3.1.2, 3.1.3, this
3.1.4, 3.2 and 3.3 shall be included in the Roll-Up Transaction (as hereinafter
defined) when either the Put or the Call is exercised as provided in Section 4
hereof.
3.1.5. In the event BRA proposes a site for a Bistro Restaurant
and Ventures declines to participate with BRA by having the LLC develop such
site, BRA shall have the right to sell a franchise for a Bistro Restaurant at
the proposed site in conjunction with its sale of Pizzeria ▇▇▇▇▇▇ franchises (a
"Bistro Franchise") or BRA may elect to develop the site itself. Ventures shall
indicate its desire to have the LLC develop or decline the right to participate
in the development of the Bistro Restaurant on a proposed site not later than
ten (10) days after such proposal by BRA. If BRA develops the site itself, BRA
shall pay to the LLC $5,000 (or the then prevailing amount if different) as an
initial installment of the total $10,000 territorial fee (or the then prevailing
total standard territorial fee, if different) with respect to such Bistro
Restaurant. The balance of the territorial fee will be paid by BRA to the LLC as
provided in BRA's standard form franchise agreement. If BRA sells a Bistro
Franchise or a territory to a franchisee, upon sale of such territory, BRA shall
charge such franchisee, depending upon whether the site is ultimately designated
a Bistro Restaurant or otherwise, $5,000 (or the then prevailing amount if
different) per Bistro Franchise or Bistro Restaurant to be opened in the
applicable territory as an initial installment of the total territorial fee per
site. For any site on which a store will be opened in a territory which has not
yet been designated as a Bistro Restaurant, BRA shall pay $5,000 (or the then
prevailing amount if different) into an escrow account held by the LLC until
such designation has been made, at which point such fee shall be credited to the
LLC or returned to BRA as appropriate, depending upon whether the site is
ultimately designated a Bistro Restaurant or otherwise. Such $5,000 (or the then
prevailing amount if different) shall represent the first installment of the
total $10,000 (or the then prevailing total standard territorial fee if
different) to be paid with respect to each Bistro Restaurant. BRA shall account
to the LLC for such territorial fees, and upon receipt, shall immediately remit
such amounts to the LLC. BRA shall further account to the LLC for, and upon
receipt, shall immediately remit to the LLC, all site and royalty fees
thereafter paid by such franchisee on account of such Bistro Restaurants. The
proportionate share of territorial, site and royalty fees paid by such
franchisee that relate to the Pizzeria ▇▇▇▇▇▇ concept shall be retained by BRA.
3.1.6. In the event BRA proposes a site for a Bistro Restaurant
which is agreeable to Ventures, the Bistro Restaurant developed on such site
shall be developed through the LLC with all economic benefits and burdens of
such restaurant inuring and accruing to the LLC. No territory, franchise, site,
license, royalty or other such fees shall be payable with respect to such
restaurant.
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3.2. In the event Ventures proposes to develop a Bistro Restaurant at a
site within a territory which BRA has previously sold to a franchisee, such
franchisee shall have a right of first refusal with respect to such Bistro
Restaurant as hereafter provided. If the site for the proposed Bistro Restaurant
is located in a mall, such franchisee shall have the right to develop, own and
operate a Bistro Restaurant at the specifically proposed site. If the site for
the proposed Bistro Restaurant is not located in a mall, such franchisee shall
have the right to develop, own and operate a Bistro Restaurant on the proposed
site or other similar site located within a one-half mile radius of the site
proposed by Ventures. In either case, development and operation shall be in
accordance with the applicable franchise agreement. Following written notice of
a proposed site from Ventures, BRA shall notify the franchisee, if any, who
holds a franchise for the applicable territory of such proposal, which notice
shall give such franchisee twenty (20) days within which to notify BRA of such
franchisee's election to exercise its right of first refusal with respect to the
proposed site. If such franchisee elects to exercise such right to develop a
Bistro Restaurant on the proposed site approved by BRA,
(i) the active design and planning aspects of such development must
commence within three (3) months after such exercise and be
diligently pursued thereafter,
(ii) construction of the Bistro Restaurant must be commenced within
six (6) months after such exercise and be diligently pursued
thereafter, and
(iii) the Bistro Restaurant must be open and actively conducting
business within twelve (12) months after such exercise. If
development or construction has not commenced or if such Bistro
Restaurant has not opened within such time frame, the LLC or, if
declined by the LLC, Ventures, shall have the right to develop a
Bistro Restaurant on the proposed site or other site approved by
BRA. If such franchisee declines to exercise its right of first
refusal, such franchisee shall have no further rights of first
refusal to develop Bistro Restaurants within the territory,
provided, that such franchisee may continue to develop other
concept fast-food restaurants in accordance with BRA's Uniform
Franchise Offering Circular.
3.3. In the event BRA proposes to develop a "▇▇▇▇▇▇▇'▇" restaurant
within the Development Area, the LLC shall have a right of first refusal to
develop, own and operate such restaurant. Ventures shall have the exclusive
right to determine whether the LLC will exercise such right of first refusal.
The LLC shall indicate in writing whether it desires to develop such restaurant
not later than ten (10) days after such written proposal by BRA. If the LLC
elects to develop such restaurant, no territory, franchise, site, license,
royalty or other such fees shall be payable with respect thereto. If the LLC
does not elect to develop such restaurant site, BRA may, in its sole discretion
without seeking the approval of the LLC or Ventures, develop such restaurant
site as a ▇▇▇▇▇▇▇'▇ Restaurant subject to payment to the LLC of a monthly fee
equal to five percent (5%) of gross revenues generated by such restaurants.
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DEVELOPMENT AGREEMENT Page 9
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3.3.1. Notwithstanding the foregoing, without prior written consent of
Ventures, which consent may be withheld with or without reason, BRA shall not,
in any part of the Development Area other than in the Boston Metropolitan area,
develop, acquire, own, operate, maintain, engage in, be employed by, or
otherwise become actively involved with, directly or indirectly, for itself or
through, on behalf of or in conjunction with any person or legal entity, any
"Polcari's" concept or other full-service Italian restaurants whose sales of
pizza or Italian food exceed, or are likely to exceed, fifteen percent (15%) of
its total sales by annual dollar volume or which use brick ovens, so long as
either
(i) Ventures is a Member of the LLC or
(ii) Ventures, or any affiliate of Ventures, owns, operates,
or manages any Bistro Restaurants. The limitation set
forth in the immediately preceding sentence shall not
apply to ownership by BRA of a less than five percent
(5%) beneficial interest in the outstanding equity
securities or any corporation.
3.4. Subject to Section 3.5 hereof, BRA shall furnish to Ventures the
following:
3.4.1. Site selection guidelines and criteria, and such site
selection counseling and assistance as BRA, the LLC, and/or Ventures may
deem advisable;
3.4.2. Such on-site evaluations, if any, as BRA may deem
advisable in response to Ventures' request for BRA's approval of a
proposed site; and
3.4.3. Preliminary plans and specifications for construction of
a prototype Bistro Restaurant including exterior and interior design and
layout plans, which plans shall be detailed but shall not be certified
architectural drawings.
3.5. Ventures shall use its reasonable best efforts to identify sites
which it believes will be acceptable to BRA with the objective of operating
through the LLC as many Bistro Restaurants in the Development Area as is
reasonably feasible from an operations, logistics, financial and strategic
planning standpoint.
3.6. All out-of-pocket costs and expenses incurred by BRA or Ventures in
connection with the development and operation of the Bistro Concept and the
LLC's Bistro Restaurants, including without limitation, those related to concept
design, menu design, logo design, legal, accounting, marketing, site selection,
site development, management, supervision and operations, but excluding the
costs of its executive employees and its overhead, shall be deemed to be
expenses of the LLC and, subject to Section 2.4 hereof, shall be charged by BRA
and Ventures to the LLC.
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DEVELOPMENT AGREEMENT Page 10
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4. ROLL-UP RIGHTS
--------------
4.1. BRA shall have the perpetual right at any time after thirty-six
(36) months, to buy (the "Call"), and Ventures shall have the perpetual right at
any time after sixty (60) months to cause BRA to buy (the "Put" and together
with the Call, the "Roll-Up Rights") the equity interest in the LLC owned by
Ventures together with the assets of Ventures and its affiliates (excluding any
cash, accounts receivable or other cash equivalents) used in any Bistro
Restaurants or full service, sit down restaurants developed by Ventures or any
affiliates of Ventures as provided herein (the "Ventures Locations").
4.1.1. Either party may exercise their respective Roll-Up Rights
pursuant to this Section 4.1 by written notice to the other party. In either
case, BRA shall pay to Ventures and/or Ventures' affiliates, as applicable, the
following consideration (in the aggregate, the "Roll-Up Amount"):
(a) BRA shall pay to Ventures, in consideration of Ventures'
equity interest in the LLC, a purchase price equal to 49% of the sum of:
(i) the product of:
(A) the aggregate Adjusted After-Tax Net
Earnings (as hereinafter defined) of all
of the restaurants of the LLC except
those retained or excluded pursuant to
the provisions of Section 4.2 hereof,
times
(B) a multiple (the "Multiple") equal to
two-thirds of the price/earnings
multiple (based on BRA's earnings for
its most recent past fiscal year and
provided that in no event shall the
Multiple be greater than 22 or less than
13) that BRA's common stock is then
trading at on the National Association
of Securities Dealers Automated
Quotation System, or other national
securities exchange, on average, for the
twenty (20) consecutive trading days
immediately preceding the Call or Put as
the case may be,
minus
(ii) the aggregate amount of all outstanding debt of
the LLC (all of which debt shall either be
assumed by BRA or remain in the LLC provided
that Ventures shall have no further liability
with respect thereto),
plus
(iii) the aggregate amount of all cash, cash
equivalents, accounts receivable, prepaid
expenses, and similar current liquid
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DEVELOPMENT AGREEMENT Page 11
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assets of the LLC, but not of any Ventures
locations, acquired by BRA at the closing (the
"Closing") of the purchase and sale transaction
consummated pursuant to exercise of the Roll-Up
Rights (the "Roll-Up Transaction"),
(b) BRA shall pay to Ventures or Ventures' affiliates, as
applicable, in consideration of each Ventures Location acquired by BRA, a
purchase price equal to the sum of:
(i) the product of:
(A) the aggregate Adjusted After-Tax Net
Earnings generated by such Ventures
Location, times
(B) the Multiple,
plus
(ii) file aggregate amount of all prepaid expenses
and similar current liquid assets of Ventures
and/or Ventures' affiliates, as applicable, used
in such Ventures Location, but not including any
cash, accounts receivable, cash equivalents or
similar liquid assets which are retained by
Ventures or the Ventures' affiliates in
accordance with the terms and conditions of this
agreement.
4.1.2. For all purposes of this Agreement, the term "Adjusted After-Tax
Net Earnings" shall mean
(a) the sum of:
(i) with respect to each restaurant of the LLC, Ventures or
any affiliate of Ventures included in a Roll-Up
Transaction (but excluding those restaurants of the LLC,
Ventures or any affiliate of Ventures retained or
excluded pursuant to the provisions of Section 4.2
hereof) an amount equal to the net earnings of such
restaurant during the trailing four (4) fiscal quarters
of the LLC, Ventures or the affiliate of Ventures, as
applicable, immediately preceding the "Determination
Date" (which is the date on which the Put or Call is
exercised) with respect to the Roll-Up Transaction,
determined after allocating the general and
administrative expenses of the LLC, Ventures or the
affiliate of Ventures, as applicable, on a pro rata
basis among all of the restaurants of the LLC, Ventures
or the affiliate of Ventures, as applicable (whether
such restaurants are
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DEVELOPMENT AGREEMENT Page 12
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included in the Roll-Up Transaction or are excluded or
retained pursuant to the provisions of Section 4.2
hereof) based on the number of such restaurants open and
owned by such entity during such period,
plus
(ii) with respect to the franchising and licensing of the
Bistro Concept and Bistro Restaurants, all development,
territorial, license and similar fees (all of which
shall be taken into income and be deemed fully earned
when received by the LLC or by BRA subject to the
obligation to remit such amounts to the LLC pursuant to
this Agreement) and all royalties and similar amounts
based upon a percentage of sales with respect to each
franchised or licensed bistro restaurant that have been
or should have been paid over by BRA to the LLC during
the trailing four (4) fiscal quarters of the LLC
immediately preceding the Determination Date with
respect to the Roll-Up Transaction, determined after
allocating the general and administrative expenses
associated with such franchise revenues,
reduced in each case by
(b) a tax amount based on the applicable combined Federal, state and
local tax rate which would have been applied with respect to
such earnings if they had been the only net earnings of BRA
during such fiscal year, exclusive, however, of any loss carry
forwards; provided, however, that (x) the net earnings of any
restaurant of the LLC or Ventures which was open for fewer than
fifteen (15) months by the end of such four (4) fiscal quarters
shall be determined by excluding the net earnings of such
restaurant for any of its first three (3) months of operation
which are included in such four (4) fiscal quarters and
annualizing its net earnings based on the remaining months of
its operation which are included in such four (4) fiscal
quarters (based on the product of the restaurant's average
monthly net earnings during such remaining months times 12) and
(y) any territory, franchise, site, license, royalty or other
such fees paid by the LLC or Ventures to BRA, or by Ventures to
the LLC, as the case may be, shall be disregarded in determining
the net earnings of such restaurant; further provided, however,
that in calculating Adjusted After Tax Net Earnings, there shall
be no deduction for interest paid by the LLC on its debts or by
Ventures or its affiliates with respect to the debt on its and
its affiliates' restaurants (nor shall such interest be deducted
for income tax
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DEVELOPMENT AGREEMENT Page 13
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purposes), (x) inasmuch as the outstanding debt of the LLC and
that on the restaurants of Ventures and its affiliates will be
deducted (as to the LLC), or not taken into account (as to
restaurants of Ventures or its affiliates), in computing the
Roll-Up Amount.
4.1.3. For all purposes of this Agreement, all liability for
future payments due under any lease of the LLC (whether with respect to real or
personal assets and whether accounted for as a "true" lease or as a "capital" or
"finance" lease)
(i) shall either be assumed by BRA at the Closing of the
Roll-Up Transaction or shall remain in the LLC provided
that Ventures shall have no further liability with
respect thereto, and
(ii) shall not be commuted, discounted, or otherwise taken
into account in any way in determining the debt of the
LLC, Ventures, or any affiliate of Ventures for purposes
of calculating the Roll-Up Amount.
4.2. The Roll-Up Amount may be paid by BRA in cash, common stock of BRA
("Roll-Up Shares"), or a combination of both, at the discretion of BRA; provided
that BRA shall pay to Ventures as part of the Roll-Up Amount at least that much
cash which is sufficient to cover all tax liabilities which will be incurred by
Ventures and/or its Members by reason of the Roll-Up Transaction assuming
maximum Federal, state and local tax brackets and no offsetting losses from
unrelated activities (the "Tax-Related Portion"). The Closing of any Roll-Up
Transaction pursuant to exercise of the Roll-Up Rights shall take place within
one hundred and eighty (180) days after the date that the Put or Call is
exercised (the "Closing Date") and BRA shall notify Ventures in writing within
one hundred and twenty (120) days after the Determination Date whether BRA will
pay the Roll-Up Amount in cash and/or Roll-Up Shares or a combination of both.
All calculations pursuant to this Section 4 shall be determined by the
Accountants in accordance with GAAP and FASB within ninety (90) days after the
Determination Date. Such calculations shall be made by the Accountants with the
assistance and cooperation of Ventures and BRA. In addition, Ventures shall
furnish the Accountants with any necessary financial information concerning any
Ventures Locations included in the Roll-Up Transaction and any information
reasonably necessary to calculate the Tax Related Portion. If any restaurant of
the LLC or Ventures is operating at a loss or on a break-even basis, or if the
portion of the Roll-Up Amount based on such restaurant's Adjusted After-Tax Net
Earnings would equal an amount which is less than the total investment by the
LLC or Ventures, as the case may be, in such restaurant, then Ventures or its
Members shall have the right to retain, or obtain from the LLC, ownership of
such restaurant (for no consideration to the LLC other than the assumption of
all debt, leases, accrued payables and accrued employee obligations associated
with such restaurant plus the payment to the LLC of fifty-one percent (51%) of
any amounts the LLC invested in such restaurant) and withhold it from the
Roll-Up Transaction (through a spin-off, split-off, or distribution-in-kind by
the LLC, or otherwise, as Ventures and BRA may reasonably deem advisable);
provided that Ventures shall reimburse the LLC for any costs, including tax
liabilities, directly related to such spin-off, split-off or
distribution-in-kind and Ventures and/or its Members shall operate such
restaurants after the Closing subject to BRA's standard form franchise
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DEVELOPMENT AGREEMENT Page 14
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agreement. At the Closing, Ventures shall transfer its equity interests in the
LLC, and Ventures and its affiliates shall transfer their ownership interests in
the assets of any Bistro Restaurants owned by Ventures or its affiliates which
are included in the Roll-Up Transaction to BRA free and clear of any security
interests, mortgages, liens, claims, charges or other encumbrances, and this
Agreement shall cease to be of any further effect except with respect to Bistro
Restaurants which were retained, or obtained from the LLC, by Ventures or any of
its affiliates and except for the provisions of Sections 4.7, 8, 10, 11, 14, 15,
16 and 18. During the period from the Determination Date through the Closing
Date, the LLC shall continue to operate in a manner consistent with the manner
in which it generally operated prior to the Determination Date.
4.3. In the event BRA elects to pay the Roll-Up Amount in Roll-Up Shares
or a combination of Roll-Up Shares and cash, the Roll-Up Amount shall be paid on
the Closing Date pursuant to section 4.2. In the event BRA elects to pay all or
a portion of the Roll-Up Amount in the form of Roll-Up Shares, the number of
Roll-Up Shares subject to the Roll-Up Amount shall be determined based on the
current market price per share of BRA's common stock. The current market price
per share, if traded on a national securities exchange, on any date shall be the
average of the closing bid prices on such exchange (as adjusted for any stock
dividend, split combination or reclassification that takes effect after the date
hereof) for the twenty (20) consecutive trading days immediately prior to the
Determination Date or, if a weekend or holiday, on the last day the principal
national securities exchange on which the BRA's common stock is listed or
admitted to trading was open. If not traded on a national securities exchange,
the current market price per share shall be determined by appraisal paid for
equally by BRA and Ventures. The Roll-Up Amount shall be paid by BRA as provided
in Section 4.2 above. Notwithstanding the foregoing, BRA may elect to pay any
cash portion of the Roll-Up Amount (other than the Tax Related Portion) over a
period of five (5) years in equal installments bearing interest at the then
prevailing applicable Federal rate, adjusted annually, as defined in Section
1274(d) of the Internal Revenue Code; provided that BRA posts collateral for
such obligation which is reasonable in light of the obligation and is reasonably
acceptable to BRA and Ventures.
4.4. In the event Ventures receives any Roll-Up Shares and BRA
subsequently determines to register any shares of its common stock under the Act
and, in connection therewith, BRA may lawfully register any of the Roll-Up
Shares, other than pursuant to a registration statement on Form ▇-▇, ▇-▇ or any
comparable form or filed in connection with an exchange offering of securities
solely to BRA's existing shareholders, BRA will promptly give written notice
thereof to Ventures. Upon the written request of Ventures within thirty (30)
days after receipt of any such notice from BRA, BRA will, except as herein
provided, cause all of the Roll-Up Shares which Ventures has requested to be
registered to be included in such registration statement, all to the extent
requisite to permit the sale or other disposition of the Roll-Up Shares on the
exchange or system on which BRA shares are regularly traded. However, nothing
herein shall prevent BRA from at any time abandoning or delaying any
registration in its entirety. If any Roll-Up Shares registered pursuant to this
Section 4.4 shall be included in an underwritten public offering in whole or in
part, BRA may require that the Roll-Up Shares requested for inclusion thereunder
be included in the underwriting on the same terms and conditions as the
securities otherwise being sold, through the underwriters are being sold. If and
in the event that the managing underwriter of such public offering shall be of
the good faith opinion that inclusion of all of the Roll-Up
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DEVELOPMENT AGREEMENT Page 15
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Shares would adversely affect the marketing of the securities to be sold by BRA
therein, then the number of Roll-Up Shares otherwise to be included in the
underwritten public offering may be reduced on a pro rata basis with the shares
proposed to be included in such offering by any other selling shareholder
(exclusive of BRA); provided, however, that the number of Roll-Up Shares which
would otherwise be included in the underwritten public offering shall not be
reduced below 15% of the total number of shares included in such public offering
(through BRA or otherwise) pursuant to the foregoing limitation unless the
managing underwriter of such public offering shall be of the good faith opinion
that inclusion of even such amount of the Roll-Up Shares would materially and
adversely affect the marketing of the securities to be sold by BRA therein. In
the event any Roll-Up Shares are included in a public offering, Ventures and its
officers, directors and members shall enter into such so-called "lock-up"
agreements as the managing underwriters shall reasonably in good faith require.
Anything herein to the contrary notwithstanding, BRA shall not be obligated to
provide the foregoing so-called "piggyback" registration rights on more than
four (4) separate occasions (provided, however, that if the number of Roll-Up
Shares included in an underwritten public offering has been limited in
accordance with the terms and conditions set forth in the immediately preceding
sentence hereof, such that less than 75% of the Roll-Up Shares requested to be
included in a public offering are included, or if BRA does not complete and "go
effective" with such registration such public offering or notice by BRA to
Ventures shall not constitute one of such four (4) occasions).
4.5. BRA may exercise its Call right within the first thirty-six (36)
months after the date of this agreement in the event of the death or Disability
(as hereinafter defined) of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ during such thirty-six (36) month
period or in the event that, during such thirty-six (36) month period, ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ceases to own at least ten percent (10%) of the equity interests of
Ventures or ceases to be the chief executive officer or managing member of
Ventures; provided that ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ shall have the right to transfer his
ownership interest in Ventures to an irrevocable trust of which any one or more
of his spouse and/or children are the sole beneficiaries during their lives. In
the event of such exercise, the Roll-Up Amount shall be an equal to the greater
of
(i) an amount equal to the Roll-Up Amount as computed pursuant to
the foregoing provisions of this Section 4 or
(ii) an amount equal to the total amount invested, in the aggregate,
by Ventures and its affiliates in the LLC and the Ventures
Locations.
For purposes hereof, "Disability' shall mean the inability of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to
perform his duties on behalf of himself and Ventures as required hereunder, as
determined by a physician mutually selected by BRA and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, for a
period of ninety (90) consecutive days or one hundred and twenty (120) days
during any twelve (12) month period.
4.6. Ventures and its affiliates may exercise their Put Right within the
first sixty (60) months after the date of this Agreement in the event of
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DEVELOPMENT AGREEMENT Page 16
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(i) the sale or other transfer of all or substantially all
of operating assets of BRA (without regard to BRA's
interests in the LLC) to any party other than a
wholly-owned subsidiary of BRA,
(ii) if any one person or entity and their affiliates and
associates in the aggregate acquire more than 50% of the
current equity interests of BRA,
(iii) the merger or consolidation of BRA with any entity, in
which BRA is not the surviving entity, other than a
wholly-owned subsidiary of BRA, or
(iv) the discontinuance of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ as the chief
executive officer of BRA for any reason (subject,
however, to the provisions of Section 1.3 with respect
to any such discontinuance implemented by vote of BRA's
(or any successor's) Board of Directors), including, but
not limited to, his death, disability (as defined in
Section 4.5) or termination of employment (subject to
Section 1.3). In the event of such exercise, the Roll-Up
Amount shall be an equal to the greater of (i) the
Roll-Up Fee as computed pursuant to the foregoing
provisions of this Section 4 or (ii) an amount equal to
the total amount invested, in the aggregate, by Ventures
and its affiliates in the LLC and the Ventures
Locations.
4.7. At the Closing of the Roll-Up Transaction, BRA shall agree to
indemnify Ventures and its principals from and against all liabilities, leases,
claims, actions, obligations, payables, lawsuits, damages, losses, and the like
including attorneys fees (collectively, "Damages") relating to the post-closing
operation of the business and operations of the LLC, and of or pertaining to the
post-closing business and operations of the Ventures' Locations acquired by BRA,
except to the extent resulting from the gross negligence or misconduct of
Ventures or any of its employees, officers, directors or members. Similarly, at
the Closing of the Roll-Up Transaction, Ventures shall agree to indemnify BRA,
the LLC and their respective officers, directors, and Members from and against
all Damages relating to the pre-closing operations of the Ventures Locations
acquired by BRA and the pre and post-closing operations of any Ventures
Locations retained by Ventures. Except to the extent resulting from the gross
negligence or misconduct of BRA or any of its employees, officers, directors or
members or any post-Closing operations of the LLC. Such indemnification shall be
pursuant to an Indemnification Agreement, in form and substance reasonably
satisfactory to Ventures' and BRA's counsel, to be executed and delivered by BRA
and Ventures at the Closing of the Roll-Up Transaction.
5. SINGLE RESTAURANT PURCHASES
---------------------------
BRA shall have the right to cause the LLC or Ventures, as applicable, to
sell any Bistro Restaurant operated by the LLC or independently by Ventures as a
franchisee, in connection with BRA's sale of a franchise for the territory in
which such restaurant is located. The purchase price for such restaurant shall
be determined and payable in the same way as the Roll-Up Amount would be
determined and paid under Section 4 hereof; provided, however, that neither
Ventures nor its members shall have the right to retain, or obtain from the LLC,
ownership of such
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DEVELOPMENT AGREEMENT Page 17
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restaurant as otherwise provided under Section 4.2 hereof, but in the event such
restaurant is operating at a loss or on a break-even basis, or if the purchase
price which would be paid with respect to such restaurant pursuant to this
Section 5 would equal an amount which is less than the investment by the LLC or
Ventures, as the case may be, in such restaurant, then the Adjusted After-Tax
Net Earnings of such restaurant shall be conclusively deemed to be, for the
purpose of computing the Roll-Up Amount of such restaurant, an amount equal to
the average Adjusted After-Tax Net Earnings of all of the restaurants of the LLC
and Ventures which have been open for more than fifteen (15) months by the end
of the last of the four (4) fiscal quarters with respect to which the Roll-Up
Amount is calculated.
6. COMPLIANCE WITH LAWS
-------------------
Each of Ventures and BRA shall use its reasonable best efforts to
secure, maintain, enforce and comply in all material respects with, and cause
the LLC to secure, maintain, enforce and comply in all material respects with,
all applicable laws and all required licenses, permits, franchises and
certificates relating to the marketing, promotion, sale and implementation of
each Bistro Restaurant or full-service restaurant developed by Ventures, BRA or
the LLC, as applicable, including, without limitation, all government
regulations relating to food service businesses, franchising, licensing,
withholding of income taxes, social security taxes, sales taxes, value added
taxes, and other taxes.
7. ADVERTISING AND MARKETING
-------------------------
Ventures and BRA shall together, on behalf of, in the name of, and at
the expense of, the LLC, develop marketing and promotional materials for use in
the marketing and promotion of the Bistro Concept and the Bistro Restaurants.
All advertising and promotion by Ventures, BRA and the LLC shall be subject to
Section 2.4 hereof, shall be completely factual and shall conform to
commercially acceptable standards of ethical advertising. None of Ventures, BRA
or the LLC will incur any liability on behalf of any other of them, nor make any
claims, warranties or representations with respect to the Bistro Concept or the
Bistro Restaurants, except for those which have been previously approved in
writing by BRA and Ventures. If BRA or Ventures reasonably disapproves of any
such advertising or promotion, Ventures, BRA and the LLC shall cease the use or
authorization of such advertising.
8. CONFIDENTIAL INFORMATION
------------------------
8.1. Except in connection with their development and operation of Bistro
Restaurants solely in accordance with this Agreement, neither Ventures nor the
LLC shall, during the term of this Agreement or at any time thereafter,
communicate, divulge, or use for the benefit of itself or any other person or
entity any confidential information, knowledge, criteria analysis and systems,
trade secrets, proprietary technology or know-how of BRA or the LLC which may be
communicated to Ventures or the LLC or of which Ventures or the LLC may be
apprised by virtue of Ventures' or the LLC's activities under this Agreement
("BRA Confidential Information"). Furthermore, in connection with their
development and operation of Bistro Restaurants, Ventures and the LLC may only
divulge such BRA Confidential Information to
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employees, agents or independent contractors of Ventures or the LLC on a
need-to-know basis. At BRA's request, prior to any disclosure, Ventures and the
LLC shall inform BRA as to whom they wish to disclose any BRA Confidential
Information and require its employees and any other similar person to whom
Ventures or the LLC wishes to disclose any confidential information of BRA to
execute covenants that they will maintain the confidentiality of such
information. Such covenants shall be in a form reasonably satisfactory to BRA,
including, without limitation, specific identification of BRA as a third-party
beneficiary with the independent right to enforce the covenants. All
information, knowledge, trade secrets, know-how, techniques, and other data
which BRA designates as confidential shall be deemed BRA Confidential
Information for purposes of this Agreement except information which Ventures or
the LLC can demonstrate came to its attention by lawful means prior to
disclosure thereof by BRA, or which, at or after the time of disclosure by BRA
to Ventures or the LLC, had become or later becomes a part of the public domain,
through publication or communication by others. The foregoing limitations shall
not prevent Ventures or the LLC, or any of their employees, agents, or
independent contractors, from disclosing BRA Confidential Information pursuant
to any court order or judicial or administration summons or subpoena; provided,
however, that in such event notice shall be given to BRA as to the required
disclosure so as to allow BRA, at BRA's expense, to seek any desired protective
order.
8.2. Except in connection with their development and operation of Bistro
Restaurants in accordance with this Agreement, neither BRA nor the LLC shall,
during the term of this Agreement or at any time thereafter, communicate,
divulge, or use for the benefit of itself or any other person or entity any
confidential information, knowledge, criteria analysis and systems, trade
secrets, proprietary technology or know-how of Ventures, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or the
LLC which may be communicated to BRA or the LLC or of which BRA or the LLC may
be apprised by virtue of BRA's or the LLC's activities under this Agreement
("Ventures Confidential Information"). Furthermore, in connection with their
development and operation of Bistro Restaurants, BRA and the LLC may only
divulge such Ventures Confidential Information to employees, agents or
independent contractors of BRA or the LLC on a need-to-know basis. At Venture's
request, BRA and the LLC shall require its employees and any other person to
whom BRA or the LLC wishes to disclose any Confidential Information of Ventures
or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to execute covenants that they will maintain the
confidentiality of such information. Such covenants shall be in a form
reasonably satisfactory to Ventures, including, without limitation, specific
identification of Ventures and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ as third-party beneficiaries, each
with the independent right to enforce the covenants. All information, knowledge,
trade secrets, know-how, techniques, and other data which Ventures or ▇▇▇▇▇▇▇
▇▇▇▇▇▇ designates as confidential shall be deemed Ventures Confidential
Information for purposes of this Agreement except information which BRA or the
LLC can demonstrate came to its attention by lawful means prior to disclosure
thereof by Ventures or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, or which, at or after the time of
disclosure by Ventures or ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ to BRA or the LLC, had become or later
becomes a part of the public domain, through publication or communication by
others. The foregoing limitations shall not prevent BRA or any of its employees,
agents, or independent contractors, from disclosing Ventures Confidential
Information pursuant to any court order or judicial or administration summons or
subpoena; provided, however, that in such event notice shall be given to
Ventures as to the required disclosure so as to allow Ventures, at Ventures's
expense, to seek any desired protective order.
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9. CORPORATE REQUIREMENTS
----------------------
If Ventures is a corporation, limited liability company or partnership
during the term of this Agreement, Ventures shall furnish BRA with a copy of its
charter documents, memoranda of association, Bylaws, and any other corporate
governing documents.
10. COVENANTS
----------
10.1. Each of BRA and Ventures covenants that during the term of this
Agreement, it shall not either directly or indirectly, for itself or through, on
behalf of or in conjunction with any person or legal entity, divert or attempt
to divert any present or prospective franchisee or customer of a Bistro
Restaurant to any other casual full-service Italian dining concept by direct or
indirect inducement or otherwise, or do or perform, directly or indirectly, any
other act injurious or prejudicial to the goodwill associated with BRA's
Proprietary Marks and the Bistro Concept.
10.2. Ventures hereby covenants that, except for Bistro Restaurants or
as otherwise approved in writing by BRA, Ventures shall not, during the term of
this Agreement and, during a period of two (2) years following the expiration or
termination of this Agreement or the Closing of a Roll-Up Transaction, either
directly or indirectly, for itself or through, on behalf or in conjunction with
any person or legal entity, own, maintain, operate, engage in, be employed by,
provide assistance to, or have any interest in any business whose sales of pizza
or Italian food exceed fifteen percent (15%) of its total sales by annual dollar
volume, and further, that Ventures shall not use brick ovens, including without
limitation, the proprietary ovens of the LLC or BRA or any derivations thereof
in connection with its business. This Section 10.2 shall not apply to ▇▇▇▇▇▇▇▇▇
Brewery Company provided ▇▇▇▇▇▇▇▇▇ Brewery Company primarily serves American
food and that the combination of Italian food and/or pizza does not account for
more than twenty percent (20%) of ▇▇▇▇▇▇▇▇▇ Brewery Company's total sales by
annual dollar value.
10.3. Section 10.2 shall not apply to ownership by Ventures of a less
than five percent (5%) beneficial interest in the outstanding equity securities
of any publicly held corporation.
10.4. Ventures understands and acknowledges that BRA shall have the
right at its option, to reduce the scope of any covenant of Ventures set forth
in Section 10.1 and/or 10.2 of this Agreement effective immediately upon receipt
by Ventures of written notice thereof such that thereafter Ventures shall no
longer be prohibited from engaging in the identified activity; provided that,
Ventures agrees that the balance of the covenants contained in said Sections
shall be fully enforceable notwithstanding anything to the contrary contained in
this Agreement. BRA understands and acknowledges that Ventures shall have the
right at its option, to reduce the scope of any covenant of BRA set forth in
Section 3.3 and/or Section 10.1 of this Agreement effective immediately upon
receipt by BRA of written notice thereof such that thereafter BRA shall no
longer be prohibited from engaging in the identified activity; provided that,
BRA agrees that the balance of the covenants contained in said Sections shall be
fully enforceable notwithstanding anything to the contrary contained in this
Agreement.
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10.5. Ventures agrees that the existence of any claims it may have
against BRA, whether or not arising from or under this Agreement, shall not
constitute a defense to the enforcement by BRA of the covenants of Ventures set
forth in this Section 10.
10.6. BRA agrees that the existence of any claims it may have against
Ventures, whether or not arising from or under this Agreement, shall not
constitute a defense to the enforcement by Ventures of the covenants of BRA set
forth in this Section 10.
10.7. Ventures acknowledges that Venture's violation of the terms of its
covenants under this Section 10 would result in irreparable injury to BRA for
which no adequate remedy at law may be available, and Ventures accordingly
consents to the issuance of an injunction prohibiting any conduct by Ventures in
violation of the terms of this Section 10. Such injunctive relief shall be in
addition to any other remedies BRA may have.
10.8. BRA acknowledges that BRA's violation of the terms of its
covenants under Section 3.3 or this Section 10 would result in irreparable
injury to Ventures for which no adequate remedy at law may be available, and BRA
accordingly consents to the issuance of an injunction prohibiting any conduct by
BRA in violation of the terms of Section 3.3 or this Section 10. Such injunctive
relief shall be in addition to any other remedies Ventures may have.
10.9. At BRA's request Ventures shall obtain and furnish to BRA executed
covenants similar in substance to those set forth in this Section 10 (including
covenants applicable upon the termination of an individual's relationship with
Ventures) from any or all executive management (above the unit level including
area managers), officers and holders of a direct or indirect beneficial interest
of five percent (5%) or more of the securities of Ventures. Every covenant
required by this Section 10.9 shall be in a form reasonably satisfactory to BRA,
including, without limitation, specific identification of BRA as a third party
beneficiary with the independent right to enforce the covenant.
10.10. At Ventures' request BRA shall obtain and furnish to Ventures
executed covenants similar in substance to those set forth in Section 3.3 or
this Section 10 (including covenants applicable upon the termination of an
individual's relationship with BRA) from any or all executive management (above
the unit level including area managers), officers and holders of a direct or
indirect beneficial interest of five percent (5%) or more of the securities of
BRA. Every covenant required by this Section 10.10 shall be in a form reasonably
satisfactory to Ventures, including, without limitation, specific identification
of Ventures as a third party beneficiary with the independent right to enforce
the covenant.
10.11. Ventures understands, covenants and agrees that the brick ovens
used in the Bistro Restaurants contain proprietary technology which Ventures
shall have no right to use, sell or divulge except in connection with the Bistro
Restaurants in accordance with this Agreement. Ventures fully agrees that such
brick ovens will be leased to the LLC and Ventures, in accordance with BRA's
standard costing methods, and title to the brick ovens will be returned to BRA
upon termination of the applicable lease.
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11. NOTICES
-------
All notices pursuant to this Agreement shall be in writing and shall be
personally delivered, sent by registered mail, or delivered or sent by another
method which affords the sender evidence of receipt or attempted delivery, to
the respective parties at the following addresses, unless and until a different
address has been designated by written notice to the other party:
Notices to BRA:
Boston Restaurant Associates, Inc.
Stonehill Corporate Center
▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Chief Executive Officer
Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Gesmer, P.C.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esquire
Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
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Notices to Ventures:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Italian Ventures, LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: 502426-4084
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esquire
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ PLLC
3300 National City Tower
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇
and:
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇
First Trust Centre, Suite 300 South
▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Tel: ▇▇▇ ▇▇▇-▇▇▇▇
Fax: ▇▇▇ ▇▇▇-▇▇▇▇ (with an additional copy faxed to 502-451-1805)
Any notice sent or delivered which affords the sender evidence of
receipt or attempted delivery shall be deemed to have been given and received at
the date and time of receipt or attempted delivery.
12. INDEPENDENT CONTRACTOR
----------------------
12.1. It is understood and agreed by the parties that this Agreement
does not create a fiduciary relationship between them; that each of Ventures and
BRA is an independent contractor; and that nothing in this Agreement is intended
to make either party an agent legal representative, subsidiary, joint venturer,
partner, employee, or servant of the other for any purpose whatsoever.
12.2. Each of Ventures and BRA shall hold itself out to the public to be
an independent contractor operating pursuant to this Agreement, except when they
are specifically acting on behalf of the LLC in accordance with the terms and
provisions of this Agreement and of the
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DEVELOPMENT AGREEMENT Page 23
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Operating Agreement of the LLC. Each of Ventures and BRA agrees to take such
actions as shall be necessary to that end.
13. APPROVALS AND WAIVERS
---------------------
13.1. Whenever this Agreement requires the prior approval or consent of
any party, the party seeking such approval or consent shall make a timely
written request to the party from whom such approval or consent is sought, and,
except as may be otherwise expressly provided herein, such approval or consent
must be given or refused in writing and signed by an officer or other duly
authorized representative of the party from whom such approval or consent is
sought within seven (7) days of being received.
13.2. No failure of any party to exercise any right reserved to it in
this Agreement or to insist upon strict compliance by any other party with any
obligation or condition in this Agreement and no custom or practice of the
parties at variance with the terms hereof shall constitute a waiver of any
party's right to exercise its right or to demand exact compliance with any of
the terms of this Agreement. Waiver by any party of any particular default by
any other party shall not affect or impair the waiving party's rights with
respect to any subsequent default of the same, similar, or different nature; nor
shall any delay, forbearance, or omission of any party to exercise any power or
right arising out of any breach or default by any other party of any of the
terms, provisions, or covenants of this Agreement affect or impair such party's
right to exercise the same; nor shall such constitute a waiver by such party of
any rights hereunder or rights to declare any subsequent breach or default and
to terminate this Agreement prior to the expiration of its term.
14. SEVERABILITY AND CONSTRUCTION
-----------------------------
14.1. If for any reason, any provision of this Agreement is determined
to be invalid and contrary to, or in conflict with, any existing or future law
or regulation by a court or agency having valid jurisdiction, such invalidity
shall only apply in the jurisdiction holding such provision invalid and shall
not impair the operation of or have any other effect upon, such other provisions
of this Agreement as may remain otherwise intelligible. The latter shall
continue to be given full force and effect and bind the parties hereto, and the
invalid provision(s) shall be deemed not to be a part of this Agreement.
14.2. Except as expressly provided to the contrary herein, nothing in
this Agreement is intended, nor shall be deemed, to confer upon any person or
legal entity other than Ventures and BRA (and the LLC upon adoption of this
Agreement), any rights or remedies under or by reason of this Agreement.
14.3. Any provision or covenant of this Agreement which expressly or by
reasonable implication imposes obligations after the expiration or termination
of this Agreement shall survive such expiration or termination.
14.4. Each party agrees to be bound by any promise or covenant imposing
the maximum duty permitted by law which is subsumed within the terms of any
provision of this Agreement as
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though it were separately articulated in and made a part of this Agreement that
may result (i) from striking from any of the provisions hereof any portion or
portions which a court or agency having valid jurisdiction may hold to be
unreasonable and unenforceable in an unappealed final decision in a court of
competent jurisdiction, or (ii) from reducing the scope of any promise or
covenant to the extent required to comply with such a court or agency order.
15. APPLICABLE LAW; REMEDIES
------------------------
15.1. This Agreement shall be executed and accepted on behalf of BRA in
the Commonwealth of Massachusetts by a duly authorized officer, only following
signature by a duly authorized representative of Ventures, and shall be governed
by the laws of the Commonwealth of Massachusetts. BRA and Ventures consent to be
bound by the provisions of such laws.
15.2. Subject to the Mediation and Arbitration Provisions (as
hereinafter defined), no right or remedy conferred upon or reserved to BRA or
Ventures by this Agreement is intended to be, nor shall be deemed, exclusive of
any other right or remedy herein or by law or equity provided or permitted, but
each shall be cumulative of every other right or remedy.
15.3. Nothing herein contained shall bar any party's right to obtain
emergency temporary injunctive relief against threatened conduct that will cause
it loss or damages, under the usual equity rules, including the applicable rules
for obtaining temporary restraining orders and preliminary injunctions, pending
implementation of the Mediation and Arbitration Provisions to address such issue
and determine what temporary or permanent relief is in order.
16. MEDIATION AND ARBITRATION PROVISIONS
------------------------------------
16.1. Actions and Disputes Subject to the Mediation and Arbitration
Provisions.
(a) Notwithstanding any other provision of this Agreement which
might be construed to the contrary, BRA, Ventures, the LLC, or any of their
affiliates may require that any claims, demands, disputes, controversies,
differences, issues or other matters that arise between or among any of them
concerning any issue relating to (i) the interpretation or enforcement of this
Agreement, or (ii) the rights, privileges, duties, or liabilities of any of them
under this Agreement or under any management, employment, engagement, license,
development, franchise, or cross-indemnification agreement with any one or more
of them, or (iii) the reasonability of any refusal by a party to this Agreement
to consent or approve, or of any delay in such party's granting consent or
approval of, any action which is made subject to the approval or consent of any
party under this Agreement or under the LLC's Operating Agreement (unless such
approval or consent is expressly permitted under this Agreement or under the
LLC's Operating Agreement to be withheld with or without reason), be submitted
to, and controlled by, the mediation and arbitration provisions hereafter set
forth in this Section 16 (the "Mediation and Arbitration Provisions")
(b) For all purposes of this Agreement, (A) any claim, demand,
dispute, controversy, difference, issue, or other matter which may be submitted
to, and controlled by, the
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Mediation and Arbitration Provisions pursuant to this Section 16.1 shall
constitute and is hereinafter be referred to as an "Arbitratable Matter," (B)
the person or persons submitting such Arbitratable Matter to the Mediation and
Arbitration Provisions is hereinafter referred to, collectively, as the
"Petitioner," and (C) the person or persons who have proposed or implemented
(wholly or partially) the action which constitutes the Arbitratable Matter in
issue, or against whom the claim, demand, dispute, controversy, difference,
issue or other matter exists which constitutes the Arbitratable Matter in issue,
as the case may be, is hereinafter referred to, collectively, as the
"Defendant." If more than one person constitutes the Petitioner or Defendant as
to any Arbitratable Matter, as the case may be, they shall act in accordance
with the vote of a majority-in-number of such persons, unless all of such
persons in such group are Members of the LLC, in which case they shall act in
accordance with the vote of a Majority-in-Interest of such persons (as defined
in the LLC's Operating Agreement) held by all of those constituting such group.
16.2. Mediation and Arbitration Provisions as to Arbitratable Matters.
For all purposes of this Agreement, the term "Mediation and Arbitration
Provisions" shall mean the following provisions:
(a) The Petitioner as to any Arbitratable Matter shall, by
written notice to the Defendant with respect to such Arbitratable Matter, demand
that such Arbitratable Matter be submitted within 15 days to nonbinding
mediation proceedings in either Boston, Massachusetts, or Louisville, Kentucky.
Such notice shall state the name and address of the mediator proposed by the
Petitioner. The Defendant may, by written notice to the Petitioner within ten
(10) days after the notice from Petitioner, object to either or both of the
proposed location of the mediation or the proposed mediator to be used for the
mediation. If the Defendant objects to the location proposed by the Petitioner
for such mediation, such mediation shall be held in Washington, D.C. If the
Defendant objects to the mediator for such mediation, the Petitioner and
Defendant shall attempt to agree on a mutually acceptable mediator.
(b) Upon the giving of notice by the Petitioner demanding
mediation, the Defendant shall, to the fullest extent possible, cease and desist
the action or proposed action, or other activities or matters, which are the
subject of the Arbitratable Matter in issue and exercise its reasonable best
efforts to maintain the status quo pending the consideration and resolution of
the Arbitratable Matter pursuant to these Mediation and Arbitration Provisions.
(c) If (A) the parties fail to agree upon a mediator within
ten (10) days after the Defendant's objection to the Petitioner's proposed
mediator, or (B) the mediation does not result in a written agreement between or
among the parties resolving the Arbitratable Matter within thirty (30) days
following the Petitioner's initial notice to the Defendant demanding such
mediation, then the Petitioner may, by written notice to the Defendant with
respect to such Arbitratable Matter, appoint an arbitrator who shall be a person
experienced in serving as an arbitrator under the rules of the American
Arbitration Association ("AAA"). The Defendant as to such Arbitratable Matter
shall, by written notice, within 10 days after receipt of such notice by the
first party, appoint another arbitrator who shall have the same qualifications
as the first arbitrator and, in default of any such appointment by any of such
other parties, the first arbitrator
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DEVELOPMENT AGREEMENT Page 26
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appointed shall be the sole arbitrator. In lieu of the foregoing, the parties to
the Arbitratable Matter may agree upon a single arbitrator, in which case such
arbitrator shall serve as the sole arbitrator. The arbitration hearing(s) shall
take place in the same jurisdiction as was established for the mediation
pursuant to these Mediation and Arbitration Provisions whether or not such
medication was, in fact, conducted (the "Arbitration Jurisdiction").
(d) If two arbitrators have been appointed in accordance with
subsection (c) above, such arbitrators shall, if possible, agree upon one more
arbitrator with the same qualifications as the first and second arbitrator and
shall appoint him or her by written notice signed by each of the initial
arbitrators with a copy mailed to each party to the claim, demand, dispute,
controversy, or difference within 10 days after the appointment of the last of
the initial arbitrators to be appointed. If such 10 day period has elapsed
without notice of appointment of the additional odd-numbered arbitrator, then
any one or more parties to the Arbitratable Matter may, in writing, request any
judge of a state court located in the Arbitration Jurisdiction to appoint a
third arbitrator which appointment shall be conclusively binding.
(e) Within 30 days after the multiple arbitrators or single
arbitrator are appointed as provided for above, such arbitrators or arbitrator
shall hold an arbitration hearing in the Arbitration Jurisdiction and shall
establish from time to time such rules and procedures for such hearing as the
arbitrator(s), in their sole discretion, may deem advisable. At the hearing, the
arbitrator(s) shall allow each party to present that party's case, evidence and
witnesses, if any, in the presence of the other party, and shall render such
decision and award as the arbitrator(s), (by vote of a majority of the
arbitrators if there is more than one), in their sole discretion, may deem just.
(f) The parties request that the arbitrator(s) include in the
decision and award explicit provision for the payment by one or both of the
parties of all arbitration fees and costs and all fees and costs incurred by the
parties in connection therewith, including, but not limited to, attorneys' fees
and other expenses incurred by each of the parties and the arbitrator(s), on
such terms as the arbitrator(s), in their sole discretion, may deem just. If the
decision and award does not include a complete determination with respect to
such fees and costs for any reason, then except to the extent otherwise provided
by the decision and award, (i) the arbitration fees and costs with respect to
any arbitrator shall be borne by the party appointing that arbitrator, (ii) the
arbitration fees and costs with respect to any arbitrator appointed by the two
arbitrators who were appointed by the parties or with respect to the single
arbitrator if there shall be only one arbitrator, as the case may be, shall be
evenly divided between the Petitioner and the Defendant, and (iii) each party
shall otherwise bear such party's own fees and costs, including, but not limited
to, attorneys' fees.
(g) The decision and award of the majority of the multiple
arbitrators, or the decision and award of the sole arbitrator, as the case may
be, shall be binding upon all of the parties to this Agreement, with no right to
appeal with respect to any questions of law or any other issue to any court, and
judgment may be entered on such decision and award in any court having
jurisdiction over any party.
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(h) Except where in conflict with the terms of this Section
16, the rules and procedures of AAA shall govern the arbitration proceedings.
18. ENTIRE AGREEMENT
----------------
This Agreement the documents referred to herein, and the Exhibits
attached hereto constitute the entire agreement between BRA and Ventures
concerning the subject matter hereof and supersede all prior agreements,
negotiations, representations, and correspondence concerning the same subject
matter. Except for those expressly permitted to be made unilaterally by a party
hereunder, no amendment change, or variance from this Agreement shall be binding
on either party unless agreed to in writing by the parties and executed by their
authorized officers or agents.
19. PURSUIT OF OTHER INTERESTS
--------------------------
Except as otherwise provided in this Agreement or in the LLC's Operating
Agreement, each of BRA and Ventures and their respective affiliates may engage
in, or possess an interest in, other business ventures of any nature or
description, independently or with others, including those which may be
considered competitive with the activities of the LLC, and neither the LLC nor
the other of BRA and Ventures, shall have any rights by virtue of this Agreement
or the Operating Agreement of the LLC, in and to such independent ventures, or
to the income or profits derived therefrom. Neither BRA nor Ventures or any of
their respective affiliates, shall be obligated to present any particular
business opportunity of a character which, if presented to the LLC, could be
taken by the LLC, and each of BRA and Ventures shall have the right to take for
its own account or its affiliates' account or to recommend to others any such
particular business opportunity to the exclusion of the LLC and the other.
20. ACKNOWLEDGMENTS
---------------
20.1. Each party acknowledges that the success of the business venture
contemplated by this Agreement involves substantial business risks and is
largely dependent upon the LLC's business skills and financial and other
resources. Each of BRA and Ventures expressly disclaims the making of, and the
other of them acknowledges not having received, any warranty or guarantee,
express or implied, as to the potential volume, profits, or success of the
business venture contemplated by this Agreement.
20.2. Each of BRA and Ventures acknowledges that it has received, read,
and understood this Agreement and the attached Exhibits, and that it has had
ample time and opportunity to consult with advisors of such party's own choosing
about the potential benefits and risks of entering into this Agreement.
21. This document may be executed in multiple counterparts of which
together shall constitute one and the same document. This document is effective
as of the date set forth below.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the
day and year first above written.
BOSTON RESTAURANT ASSOCIATES, INC. ITALIAN VENTURES LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------- ----------------------------
Title: President Title: Manager
------------------------------- ----------------------------
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