EXHIBIT 10.8
FORM OF CHILI'S GRILL & BAR(R) RESTAURANT
DEVELOPMENT AGREEMENT #2
(Successor Agreement)
CHILI'S GRILL & BAR(R) RESTAURANT
DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
PAGE
▇. ▇▇▇▇▇..............................................................2
II. DEVELOPMENT FEE....................................................2
III. SCHEDULE AND MANNER FOR EXERCISING DEVELOPMENT RIGHTS..............3
IV. SITE SELECTION AND CONSTRUCTION....................................4
V. TERM...............................................................7
VI. DUTIES OF THE PARTIES..............................................8
VII. DEFAULT...........................................................13
VIII. TRANSFER OF INTEREST..............................................15
IX. COVENANTS.........................................................22
X. NOTICES...........................................................24
XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION........................25
XII. APPROVALS.........................................................27
XIII. NON-WAIVER........................................................28
XIV. SEVERABILITY AND CONSTRUCTION.....................................28
XV. ENTIRE AGREEMENT; APPLICABLE LAW..................................29
XVI. ACKNOWLEDGEMENTS..................................................31
GUARANTY
ATTACHMENT A - FRANCHISE AGREEMENT
ATTACHMENT B - AGREEMENT FOR PROTECTION OF TRADE SECRETS REGARDING THE
DEVELOPMENT AND/OR OPERATION OF A RESTAURANT USING THE
CHILI'S SYSTEM
ATTACHMENT C - STATEMENT OF OWNERSHIP INTERESTS
CHILI'S GRILL & BAR(R) RESTAURANT
DEVELOPMENT AGREEMENT
This Development Agreement is made and entered into as of the 17th day
of May, 1994, between ▇▇▇▇▇▇▇ INTERNATIONAL, INC., a Delaware corporation
(hereinafter "Franchisor"), and NE RESTAURANT COMPANY LIMITED PARTNERSHIP, a
Massachusetts limited partnership (hereinafter "Developer").
W I T N E S S E T H:
WHEREAS, Franchisor, as the result of the expenditure of time, skill,
effort and money, has developed and owns a unique and distinctive system
(hereinafter "System") relating to the establishment and operation of
full-service restaurants featuring a specialized menu and full-bar service;
WHEREAS, the distinguishing characteristics of the System include,
without limitation, distinctive exterior and interior design, decor, color
scheme and furnishings; special recipes and menu items; uniform standards,
specifications and procedures for operations; quality and uniformity of products
and services offered; procedures for inventory and management control; training
and assistance; and advertising and promotional programs; all of which may be
changed, improved and further developed by Franchisor from time to time;
WHEREAS, Franchisor identifies the System by means of certain trade
names, service marks, trademarks, emblems and indicia of origin, including but
not limited to the ▇▇▇▇ "Chili's" and such other trade names, service marks and
trademarks as are now designated (and may hereafter be designated by Franchisor
in writing) for use in connection with the System (hereinafter referred to as
"Proprietary Marks");
WHEREAS, Franchisor continues to develop, use and control the use of
such Proprietary Marks in order to identify for the public the source of
services and products marketed thereunder and under the System, and to represent
the System's high standards of quality, appearance and service;
WHEREAS, Developer wishes to obtain certain development rights to
operate Chili's Grill & Bar restaurants (hereinafter "Restaurants" or
"franchised businesses") under the System in the territory described in this
Development Agreement;
NOW, THEREFORE, the parties in consideration of the undertakings and
commitments of each party to the other party set forth herein, hereby agree as
follows:
▇. ▇▇▇▇▇
A. Franchisor hereby grants to Developer and Developer accepts,
pursuant to the terms and conditions of this Development Agreement, development
rights to obtain licenses to establish and operate fifteen (15) Restaurants, and
to use the System solely in connection therewith, at specific locations to be
designated in separate Chili's Grill & Bar Restaurant franchise agreements
(hereinafter "Franchise Agreements") executed as provided in Section III.A.
hereof, and pursuant to the development schedule set forth in Section III.B.
hereof. Each Restaurant developed hereunder shall be located in the area
described below (hereinafter "Territory").
The States of Connecticut, New Hampshire, Maine, Massachusetts, Rhode
Island, and Vermont in their entirety, and the County of Westchester
in the State of New York.
B. Each of the fifteen (15) new Restaurants for which a development
right is granted hereunder shall be established and operated pursuant to a
Franchise Agreement to be entered into between Developer and Franchisor in
accordance with Section III.A. hereof.
C. Subject to Developer's compliance with the terms and conditions of
this Agreement and any Franchise Agreement (as defined in Section III) and
except as otherwise provided in this Agreement, Franchisor shall not establish,
nor license anyone other than Developer to establish, a Restaurant under the
System in the Territory during the term of this Agreement. Notwithstanding the
foregoing, Franchisor, any franchisee of franchisor and any other authorized
person or entity may, at any time, advertise or promote the System and fulfill
customer orders in the Territory. Franchisor may also offer and sell to the
public or authorize any person or entity to offer and sell products and services
in the Territory to the public, other than through a Chili's Grill & Bar
restaurant, which may be similar to those offered by the Restaurants, under the
Proprietary Marks (e.g., prepackaged food items, T-shirts and other Chili's
memorabilia) or under other names and marks.
D. This Agreement is not a franchise agreement, and does not grant to
Developer any right to use Franchisor's Proprietary Marks or System.
E. Developer shall have no right under this Agreement to license
others under the Proprietary Marks or System.
II. DEVELOPMENT FEE
In consideration of the development rights granted herein Developer
shall pay to Franchisor on or before the Commencement Date (as defined in
PARAGRAPH V of this Agreement) a non-refundable Development Fee of One Hundred
Fifty Thousand Dollars ($150,000.00) representing payment of Ten Thousand
Dollars ($10,000) for each Restaurant to be developed hereunder. The Development
Fee shall be fully earned by Franchisor upon the Commencement Date of this
Agreement, for administrative and other expenses incurred by Franchisor and for
the development opportunities lost or deferred as a result of the rights granted
Developer herein.
III. SCHEDULE AND MANNER FOR EXERCISING DEVELOPMENT RIGHTS
A. Developer shall exercise each development right granted herein only
by executing a separate Franchise Agreement for each Restaurant at a site
approved by Franchisor in the Territory as hereinafter provided. The Franchise
Agreement for each development right exercised hereunder shall be in the form of
the franchise agreement attached hereto as Attachment A. The initial franchise
fee to be paid by Developer shall be Forty Thousand Dollars ($40,000) for each
Franchise Agreement executed by Developer for any Restaurant to be located in
the Territory during the term of this Agreement.
B. Recognizing that time is of the essence, Developer agrees to
exercise each of the development rights granted hereunder in the manner
specified in Section III.A. hereof, and to satisfy the development schedule set
forth below:
Cumulative Total Number
of Restaurants Which Developer
Shall Have Open and in Operation
(Including 15 Restaurants Currently
BY (DATE) OPEN FOR BUSINESS)
--------- ----------------------------------
Commencement Date 25
Commencement Date & 1 year 28
Commencement Date & 2 years 31
Commencement Date & 3 years 34
Commencement Date & 4 years 37
Commencement Date & 5 years 40
If Developer fails to adhere to the development schedule, Developer will pay a
late fee designed to compensate Franchisor for its lost fees and royalties
otherwise payable pursuant to separate Franchise Agreements in an amount equal
to Two Hundred Twenty Dollars ($220) per day multiplied by the amount by which
the cumulative total number of Restaurants set forth above exceeds the actual
number of Restaurants which Developer has in operation. This late fee shall be
payable by Developer to Franchisor weekly and in immediately available funds for
one hundred eighty (180) days or until Developer has met the development
schedule set forth above, whichever first occurs. Failure by Developer to adhere
to the development schedule within such one hundred eighty (180) day period
shall constitute a material event of default under this Agreement as provided in
Section VII.D. hereof.
IV. SITE SELECTION AND CONSTRUCTION
A. Developer assumes all cost, liability, expense and responsibility
for locating, obtaining and developing sites for Restaurants, and for
constructing and equipping Restaurants at such sites. The development of a
Restaurant at any site must be approved by Franchisor, which approval shall not
be unreasonably withheld or delayed, in accordance with the then existing site
approval procedures including, but not limited to, the procedures set forth
below. Developer acknowledges that Franchisor's approval of a prospective site
and the rendering of assistance in the selection of a site does not constitute a
representation, promise, warranty or guarantee by Franchisor that a Restaurant
operated at that site will be profitable or otherwise successful.
(1) Prior to acquisition by lease or purchase of a site for a
Restaurant in the Territory, Developer shall submit to Franchisor for each
Restaurant, in the form prescribed by Franchisor, a description of the site, a
market feasibility study for the site which shall include, but not be limited
to, demographic information, traffic counts, site plans and other information
reasonably requested by Franchisor, and such other information or materials as
Franchisor may reasonably require, together with a letter of intent or other
evidence satisfactory to Franchisor which confirms Developer's favorable
prospects for obtaining the site. Recognizing that time is of the essence,
Franchisee agrees that it must submit such information and materials for each
proposed site to Franchisor in writing for its approval. Franchisor shall have
thirty (30) days after receipt of such information and materials from Developer
to approve or disapprove the proposed site as the location for a Restaurant,
which approval shall not be unreasonably withheld. No site shall be deemed
approved unless it has been expressly approved in writing by Franchisor.
(2) After the location for a Restaurant is approved by Franchisor
and leased or acquired by Developer in accordance with the requirements of this
Section IV., Developer shall execute a Franchise Agreement relating to the
Restaurant and its street address shall be recorded in Attachment A to the
applicable Franchise Agreement.
B. If the Developer will purchase the premises for any Restaurant,
Developer shall submit the contract of sale prior to its execution to Franchisor
for its written approval and shall furnish to Franchisor a copy of the executed
contract of sale within ten (10) days after execution thereof. If the Developer
will occupy the premises of any Restaurant under a lease, Developer shall
furnish to Franchisor a copy of the executed lease within ten (10) days after
execution thereof. Prior to such execution, Developer shall submit the lease to
Franchisor for its written approval. Unless Developer has obtained Franchisor's
written consent to the exclusion of a required provision, the lease shall
include the following terms and conditions. Notwithstanding the foregoing, in
the case of the provision set forth in Section IV.B. (6) below, Developer shall
use its best efforts to include such provision into the lease and shall provide
Developer with written notice of any failure to so include such provision in the
lease.
(1) That the premises shall be used for the operation of the
Restaurant;
(2) That the lessor consents to the use of such Proprietary Marks
and signs, decor, color scheme and related components of the System as
Franchisor may prescribe for the franchised business;
(3) That the lessor agrees to furnish Franchisor with copies of
any and all letters and notices sent to Developer pertaining to the lease and
the premises, at the same time that such letters and notices are sent to
Developer;
(4) That Developer may not sublease or assign all or any part of
its occupancy rights, or extend the term of or renew the lease, without
Franchisor's prior written consent, which shall not be unreasonably withheld;
(5) That Franchisor shall have the right to enter the premises to
make any modification necessary to protect Franchisor's Proprietary Marks or to
cure any default under the lease or under this Agreement or the Franchise
Agreement;
(6) That Developer may assign the lease to Franchisor without the
lessor having any right to impose conditions on such assignment or to obtain
payment in connection therewith and that Franchisor shall have the option to
assume Developer's occupancy rights, and the right to sublease, for all or any
part of the term of the lease; and
(7) That Developer and lessor shall not amend or otherwise modify
the lease in any manner that would materially affect any of the foregoing
requirements without Franchisor's prior written consent.
C. Before commencing any construction of the Restaurants, Developer,
at its expense, shall comply, to Franchisor's reasonable satisfaction, with all
of the following requirements:
(1) Developer shall employ a qualified architect or engineer who
is reasonably acceptable to Franchisor to prepare, for Franchisor's approval,
preliminary plans and specifications for site improvement and construction of
each Restaurant based upon prototype drawings furnished by Franchisor.
(2) Developer shall be responsible for obtaining all zoning
classifications and clearance which may be required by the state or local laws,
ordinances, or regulations or which may be necessary or advisable owing to any
restrictive covenants relating to each Restaurant location. After having
obtained such approvals and clearances, Developer shall submit to Franchisor,
for Franchisor's approval, final plans for construction based upon the
preliminary plans and specifications. Franchisor shall approve or provide
comments to such final plans within fifteen (15) business days after it has
received such final plans from Developer. Once approved by Franchisor, such
final plans shall not thereafter be materially changed or modified without the
prior written permission of Franchisor.
(3) Developer shall obtain all permits and certifications
required for the lawful construction and operation of each Restaurant and shall
certify in writing to Franchisor that all such permits and certifications have
been obtained.
(4) Developer shall employ a qualified licensed general
contractor who is reasonably acceptable to Franchisor to construct each
Restaurant and to complete all improvements. Developer shall obtain and maintain
in force during the entire period of construction Builder's Risks insurance in
form and amount and written by a carrier or carriers reasonably satisfactory to
Franchisor.
D. (1) Developer shall commence or make every diligent attempt
toward commencement of construction of a Restaurant including acquisition of
all necessary permits and licenses within one hundred fifty (150) days after
approval by Franchisor of Developer's site or, if the approved location is
occupied by an existing tenant on the date of execution of the lease for the
premises, then immediately upon obtaining possession of the premises.
(2) Developer shall provide written notice to Franchisor of the
date construction of each Restaurant commenced within ten (10) days after
commencement. For the purposes of this Agreement and the Franchise Agreement,
construction shall be deemed to commence on the date on which excavation for
footings is begun. Developer agrees that Franchisor and its agents shall have
the right to inspect the construction at all reasonable times for the purpose of
ascertaining that all work complies with the final plans approved by Franchisor.
(3) Developer shall maintain reasonably continuous construction
of each Restaurant and its premises and shall complete construction (including
all exterior and interior carpentry, electrical, painting, and finishing work,
and installation of all furniture, fixtures, equipment and signs) in accordance
with the approved final plans, at Developer's expense, within two hundred ten
(210) days after commencement of construction (exclusive of time lost by reason
of strikes, lockouts, fire, other casualties, acts of God, weather and other
factors beyond the reasonable control of Developer).
(4) Developer shall notify Franchisor of the date it makes
application for a certificate of occupancy for the Restaurant and, within five
(5) business days thereafter, Franchisor shall at its option conduct a final
inspection of each Restaurant and its premises. Developer acknowledges and
agrees that Developer shall not open a Restaurant for business without the
express written authorization of Franchisor, and that Franchisor's authorization
to open shall be conditioned upon Developer's strict compliance with the
specifications of the approved final plans and with the standards of the System.
Franchisor shall grant such authorization or set forth in writing why such
authorization is being withheld, within five (5) business days after receipt of
the written notice of the making of the application for a certificate of
occupancy for the Restaurant. The failure by Franchisor to grant such
authorization, or set forth in writing why such authorization is being withheld
within the five (5) business day period set forth above, shall be deemed to
grant Developer the authority to open the Restaurant for business as if
Franchisor's authorization had been granted. Notwithstanding the foregoing, the
failure by Franchisor to grant such authorization within such five (5) business
day period shall not be construed as a waiver by Franchisor of its rights to
inspect the Restaurant and to require compliance of all parts of the Restaurant
with the standards for the System, whether such rights are exercised before or
after the opening of the Restaurant.
(5) Upon such authorization by Franchisor, Developer shall
promptly open a Restaurant for business after the completion of construction.
The parties agree that time is of the essence in the construction and opening of
each Restaurant.
V. TERM
A. Unless sooner terminated in accordance with the provisions of this
Agreement, the term of this Agreement and all rights granted by Franchisor
hereunder shall commence upon the date on which Developer successfully, in a
timely manner, completes the Development Schedule contained in the Development
Agreement dated October 8, 1991 (the "Commencement Date"), and shall expire on
the date on which Developer successfully and in a timely manner has completed
the development schedule set forth in Section III.B. hereof.
B. Rights of Renewal:
Provided and upon condition that:
i) Developer, its principals, successors, assigns and affiliates,
complies with all obligations of this Agreement, all
obligations of any franchise agreements, and any other
agreements with Franchisor; and,
ii) Developer provides Franchisor with written notice that
Developer is exercising its rights of renewal hereunder, upon
the earlier of, a) 24 months prior to the expiration of this
Development Agreement, or b) completion of the 37th restaurant
under this Development Agreement.
Developer shall have the right to one renewal of this Agreement
for a period of 15 years upon substantially the same terms and conditions as
contained herein except that Attachment A to the Development Agreement shall be
the Franchisor's then-current standard franchise agreement and the development
schedule pursuant to Section III-B shall be as follows:
Cumulative Total Number
of Restaurants Which Developer
Shall Have Open and in Operation
(Including 15 Restaurants Currently
BY (DATE) OPEN FOR BUSINESS)
--------- -----------------------------------
Commencement Date 40
Commencement Date & 1 year 43
Commencement Date & 2 years 46
Commencement Date & 3 years 49
Commencement Date & 4 years 52
Commencement Date & 5 years 55
VI. DUTIES OF THE PARTIES
A. Franchisor shall furnish to Developer the following:
(1) Site selection guidelines and criteria, and such site
selection counseling and assistance as Franchisor may deem advisable. Franchisor
will from time to time, at its option, make available to Developer reports
containing demographic and market data and real estate analyses at a reasonable
cost.
(2) Such on-site evaluation as Franchisor may deem advisable in
response to Developer's requests for site approval; provided, however, that
Franchisor shall not provide on-site evaluation for any proposed site prior to
the receipt of all required information and materials concerning such site
prepared pursuant to Section IV. hereof. Franchisor will provide at no
additional charge to Developer an on-site evaluation for the first Restaurant to
be developed by Developer pursuant to Section III.B. of this Agreement.
Thereafter, if additional on-site evaluation is requested by Developer,
Developer shall pay a reasonable fee for each such evaluation and shall
reimburse Franchisor for all reasonable expenses incurred by Franchisor in
connection with such on-site evaluation, including, without limitation, the cost
of travel, lodging and meals.
(3) Standard plans and specifications for the construction of a
Restaurant and for the exterior and interior design and layout, fixtures,
furnishings and signs. Developer shall adapt, at Developer's expense, the
standard plans and specifications to each Restaurant location approved pursuant
to Section IV. of this Agreement.
(4) Such initial and continuing training as Franchisor deems
advisable, at the times and places designated by Franchisor.
B. Developer makes the following representations, warranties and
covenants and accepts the following obligations:
(1) Developer shall comply with all terms and conditions set
forth in this Agreement.
(2) In the event Developer is a corporation or a partnership,
Developer represents, warrants and covenants that:
(a) Developer is duly organized and validly existing under
the state law of its formation;
(b) Developer is duly qualified and is authorized to do
business in each jurisdiction in which its business activities or the nature of
the properties owned by it require such qualification;
(c) Developer's corporate charter or written partnership
agreement shall at all times provide that the activities of Developer are
confined exclusively to the development of Restaurants unless otherwise
consented to by Franchisor in writing;
(d) The execution of this Agreement and the transactions
contemplated hereby are within Developer's corporate power, or if Developer is a
partnership, permitted under Developer's written partnership agreement;
(e) If Developer is a corporation, copies of Developer's
Articles of Incorporation, Bylaws, other governing documents and any amendments
thereto, including the resolution of the Board of Directors authorizing entry
into and performance of this Agreement have been furnished to Franchisor; or, if
Developer is a partnership, copies of Developer's written partnership agreement,
other governing documents and any amendments thereto have been furnished to
Franchisor, including evidence of consent or approval of the entry into and
performance of this Agreement by the requisite number or percentage of partners,
if such approval or consent is required by Franchisee's written partnership
agreement;
(f) If Developer is a corporation or a partnership, all
interests in Developer are owned as set forth in Attachment F hereto. In
addition, if Developer is a corporation, Developer shall maintain a current list
of all owners of record and all beneficial owners of any class of voting
securities of the corporation; or if Developer is a partnership, Developer shall
maintain a current list of all owners of an interest in the partnership. Such
lists shall be furnished to Franchisor upon request. Developer shall execute an
addendum to Attachment F as deemed necessary by Franchisor in order to ensure
the information contained in Attachment F is true, accurate and complete at all
times;
(g) If Developer is a corporation, Developer shall maintain
stop-transfer instructions against the transfer on its records of any equity
securities and each stock certificate of the corporation shall have
conspicuously endorsed upon its face a statement in a form satisfactory to
Franchisor that it is held subject to and that further assignment or transfer
thereof is subject to all restrictions imposed upon assignments by this
Agreement; provided, however, that the requirements of this Section VI.B. (2)
(g) shall not apply to a publicly-held corporation as defined in Section VIII.B.
(1). If Developer is a partnership, its written partnership agreement shall
provide that ownership of an interest in the partnership is held subject to and
that further assignment or transfer is subject to all restrictions imposed upon
assignments by this Agreement. If Developer is a limited partnership, its
Agreement of Limited Partnership may not provide for more than one (1) general
partner and if such general partner is a corporation, such corporation shall
comply with the provisions of Section VI.B.(2)(e) and the first sentence of this
Section VI.B.(2)(g);
(h) If any Developer's Principal (as defined in Section
XIV.F.), officer or director of Developer shall cease to serve as such or any
individual shall become a Developer's Principal subsequent to the execution of
this Agreement, Developer agrees to provide Franchisor with notice thereof
within ten (10) days subsequent to such change. Any new Developer's Principal
shall execute an addendum to this Agreement agreeing to be individually bound by
all obligations of Developer's Principals hereunder. If Developer is a limited
partnership having a corporation as its sole general partner, then those
individuals who would be Developer's Principals if such corporation was the
Developer hereunder shall comply with all of the provisions of this Section
VI.B.(2)(h);
(i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇
(collectively, the "Guarantors") shall jointly and severally guarantee
Developer's performance hereunder and shall bind themselves to the terms of this
Agreement pursuant to the terms and conditions of the Guaranty attached hereto;
and
(j) Developer acknowledges and agrees that the
representations, warranties and covenants set forth above at Sections VI.B. (2)
(a) - (i) are continuing obligations of Developer and that any failure to comply
with such representations, warranties and covenants shall constitute a material
event of default under Section VII.D. of this Agreement. Developer shall
cooperate with Franchisor in any efforts made by Franchisor to verify compliance
with such representations, warranties and covenants.
(3) Developer shall designate and retain an individual to serve
as the "Operating Principal" of Developer. The Operating Principal shall meet
the following qualifications:
(a) (i) If Developer is a corporation, the Operating
Principal shall, at all times during which he serves as Operating Principal, be
entitled, under its governing documents, to cast a sufficient number of votes to
require such corporation to take or omit to take any action which such
corporation is required to take or omit to take under the express terms of this
Agreement. The Operating Principal must, directly or indirectly, at all times
during which he serves as Operating Principal, own at least five percent (5%) of
each class of Developer's capital stock issued and outstanding. Direct or
indirect ownership shall include, but not be limited to (a) shares in Developer
owned by a partnership consisting solely of the Operating Principal and his or
her relatives, or (b) shares in Developer owned by a trust established by the
Operating Principal for the benefit of his or her spouse and/or children,
provided that, in the case of (a), the Operating Principal has voting control
over all such shares and, in the case of (b), the ownership interest of such
trust in Developer is not more than five-tenths percent (0.5%). Upon the written
request of Franchisor, the Operating Principal shall provide evidence reasonably
satisfactory to Franchisor of the ownership and voting control described in this
Section VI.B.(3)(a)(i).
(ii) If Developer is a partnership, the Operating
Principal shall, at all times during which he serves as Operating Principal, be
entitled under the partnership agreement or applicable law to act on behalf of
the partnership [ (x) in his individual capacity by being either (A) the sole
managing partner of a general partnership, or (B) the sole general partner of a
limited partnership, or (y) by being the sole shareholder of a corporation which
is the sole general partner of a limited partnership] without the approval or
consent of any other partners of the partnership or be able to cast a sufficient
number of votes to require such partnership to take or omit to take any action
which such partnership is required to take or omit to take under the express
terms of this Agreement. The Operating Principal must, directly or indirectly,
at all times during which he serves as Operating Principal, own at least five
percent (5%) of the partnership interests in such partnership (unless the
limited partnership interests of the Operating Principal are diluted on a
pro-rata basis with all of the other limited partners in the partnership
pursuant to a transaction described in Section VIII.B.3. (iii) hereof) and must
own and control all of the issued and outstanding capital stock of the corporate
general partner or corporate managing partner of such partnership. Direct or
indirect ownership shall include, but not be limited to (a) partnership
interests in Developer owned by a partnership consisting solely of' the
Operating Principal and his or her relatives, or (b) partnership interests in
Developer owned by a trust established by the Operating Principal for the
benefit of his or her spouse and/or children, provided that, in the case of (a),
the Operating Principal has voting control over all such partnership interests
and, in the case of (b), the ownership interest of such trust in Developer is
not more than five-tenths percent (0.5%). Upon the written request of
Franchisor, the Operating Principal shall provide evidence reasonably
satisfactory to Franchisor of the ownership and voting control described in this
Section VI.B.(3)(a)(ii).
(iii) Except as may otherwise be provided in this
Agreement, the Operating Principal's interest in Developer shall be and shall
remain free of any pledge, mortgage, hypothecation, lien, charge, encumbrance,
voting agreement, proxy, security interest or purchase right or options.
(b) The Operating Principal or such other designee of
Developer approved or rejected in writing by Franchisor in its sole and absolute
discretion ("Operating Designee"), shall devote full time and best efforts to
the supervision and conduct of the development activities contemplated
hereunder, shall execute this Agreement, and shall be individually bound by all
obligations of Developer and the Operating Principal hereunder. ▇▇▇▇▇▇ ▇▇▇▇▇
shall initially be the approved Operating Designee acting on behalf of Developer
and Operating Principal. The Operating Designee must, directly or indirectly, at
all times during which he serves as Operating Designee, own at least
three-tenths percent (.3%) of (i) each class of Developer's capital stock issued
and outstanding, or (ii) the partnership interests in Developer (unless the
limited partnership interests of the Operating Designee are diluted on a
pro-rata basis with all of the other limited partners in the partnership
pursuant to a transaction described in Section VIII.B.3. (iii) hereof). The
Operating Principal shall be responsible for insuring that the obligations of
the Operating Principal as provided herein are fully performed in accordance
with this Agreement by the Operating Principal or the Operating Designee, as
applicable.
(c) The Operating Principal shall be a person acceptable to
both Developer and Franchisor. The granting or withholding by Franchisor of
approval of a proposed Operating Principal shall be within the sole and absolute
discretion of Franchisor. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be the initial Operating
Principal.
If, at any time or for any reason, the Operating Principal, or the Operating
Designee if applicable, no longer qualifies to act as such, Developer shall
promptly designate another Operating Principal or a successor Operating
Designee, as appropriate, subject to the approval of Franchisor and to the
satisfaction of the qualifications listed above. Any sale, transfer or
assignment of the Operating Principal's or Operating Designee's interest in
Developer, or any portion thereof shall be subject to the restrictions on
transfer described in Section VIII. hereof, and any failure to comply with such
requirements shall be deemed a material event of default by Developer under
Section VII.D. hereof.
(4) Developer, the Operating Principal, or the Operating
Designee, shall complete, to Franchisor's satisfaction, all initial and
continuing training required by Franchisor hereunder or in Section V.F. of the
Franchise Agreement attached hereto as Attachment A and shall bear all expenses
(including travel, lodging and food) of such training. Developer, the Operating
Principal, or the operating Designee may attend such optional training as
Franchisor may offer from time to time, subject to Developer's payment of a
reasonable training fee to Franchisor upon request, in addition to the expenses
described above.
(5) Neither Developer, the Operating Principal, the Operating
Designee, nor Developer's Principals shall, during the term of this Agreement or
thereafter, communicate, divulge or use for the benefit of any other person,
persons, partnership, association or corporation any confidential information,
knowledge or know-how concerning the Restaurants which may be communicated to
Developer, the Operating Principal, the Operating Designee, or Developer's
Principals or of which they may be apprised under this Agreement. Developer, the
Operating Principal, the Operating Designee, and Developer's Principals shall
disclose such confidential information only to such of Developer's employees or
agents who must have access to it in connection with their employment and who
are either the Operating Principal, the Operating Designee, a Developer's
Principal, or who have signed an agreement substantially in the form attached
hereto as Attachment B, C, D, or E. Any and all information, drawings,
knowledge, know-how, and techniques used in or related to the System which
Franchisor communicates in writing, or otherwise to Franchisee, including but
not limited to, software licensed or provided by Franchisor, the MOD Manual (as
defined in the Franchise Agreement), recipes, plans and specifications,
marketing information and strategies, and site evaluation and selection
techniques, shall be deemed confidential for the purposes of this Agreement.
Neither Developer nor Developer's Principals shall at any time, without
Franchisor's prior written consent, information, in whole or in part, nor
otherwise make the same available to any unauthorized person. Failure by
Developer or Developer's Principals to comply with the requirements of this
Section VI.B. (5) shall constitute a material event of default under this
Agreement as provided in Section VII.D. hereof.
(a) Developer shall require its restaurant managers, members
of its advisory board or Board of Directors (except for Developer's Principals),
any other person or entity having access to any confidential information of
Franchisor, and any corporation directly or indirectly controlling Developer, if
Developer is a corporation (or of any corporate general partner and any
individual or corporation directly or indirectly controlling a general partner
of Developer, if Developer is a partnership), to execute covenants that they
will maintain the confidentiality of information they receive in connection with
their relationship with Developer. Such covenants shall be substantially in the
form contained in Attachment B for Developer's restaurant managers and other
persons having access to confidential information of Franchisor.
(b) Developer, the Operating Principal and Developer's
Principals acknowledge that any failure to comply with the requirements of this
Section VI.B. (5), or the willful and knowing aiding or abetting of a third
party in an action which would be a breach of Section VI.B. (5) or a breach of
the agreement attached hereto as Attachment B if such third party had been a
party to either this Agreement, or the agreement attached hereto as Attachment
B, respectively, shall constitute a material event of default under Section
VII.D. and will cause Franchisor irreparable injury; and, therefore, Developer,
the Operating Principal, the Operating Designee, and Developer's Principals
agree to pay all court costs and reasonable attorneys' fees incurred by
Franchisor in obtaining specific performance of, or an injunction against
violation of, the requirements of this Section.
(6) Developer shall comply with all requirements of federal,
state and local laws, rules and regulations.
VII. DEFAULT
A. Developer acknowledges and agrees that each of the Developer's
obligations described in this Agreement is a material and essential obligation
of Developer; that nonperformance of such obligations will adversely and
substantially affect the Franchisor and the System; and agrees that the exercise
by Franchisor of the rights and remedies set forth herein are appropriate and
reasonable.
B. The rights granted to Developer in this Agreement have been granted
in reliance on Developer's representations and assurances, among others, that
the conditions set forth in Sections I., III. and IV. of this Development
Agreement will be met by Developer in a timely manner.
C. Developer shall be deemed to be in default under this Agreement,
and all rights granted herein shall automatically terminate without notice to
Developer, if Developer shall become insolvent or make a general assignment for
the benefit of creditors; or if Developer files a voluntary petition under any
section or chapter of federal bankruptcy laws or under any similar law or
statute of the United States or any state thereof, or admits in writing its
inability to pay its debts when due; or if Developer is adjudicated a bankrupt
or insolvent in proceedings filed against Developer under any section or chapter
of federal bankruptcy laws or under any similar law or statute of the United
States or any state thereof; or if a ▇▇▇▇ in equity or other proceeding for the
appointment of a receiver of Developer or other custodian for Developer's
business or assets is filed and consented to by Developer; or if a receiver or
other custodian (permanent or temporary) of Developer's assets or property, or
any part thereof, is appointed by any court of competent jurisdiction; or if
proceedings for a composition with creditors under any state or federal law
should be instituted by or against Developer and are not dismissed within thirty
(30) days; or if a final judgment remains unsatisfied or of record for thirty
(30) days or longer (unless supersedeas bond is filed); or if Developer is
dissolved; or if execution is levied against Developer's business or property
and such execution is not lifted, released, or dismissed within thirty (30)
days; or if suit to foreclose any lien or mortgage against the premises or
equipment of any Restaurant developed hereunder is instituted against Developer
and not dismissed within thirty (30) days; or if the real or personal property
of any Restaurants developed hereunder shall be sold after levy thereupon by any
sheriff, marshal or constable; or if any legal entity affiliated with Developer
(or having the same or substantially similar management and ownership
composition to Developer) which is the developer under a separate Development
Agreement with Franchisor, is in default under any similar provision or
provisions of such other Development Agreement. If Developer is a limited
partnership, all of the events of default described in this Section VII.C. shall
be read to include similar events involving Developer's general partner.
D. If Developer fails to comply with the development schedule set
forth in Section III.B. hereof; Developer fails to lease or purchase and
construct and open each Restaurant pursuant to the time limits as provided in
Section IV. hereof; Developer fails to comply with the terms of Section VI.B.
(2); Developer fails to comply with requirements regarding the Operating
Principal, the Operating Designee, or their replacements as set forth under
Section VI.B. (3); Developer, the Operating Principal, the Operating Designee,
or Developer's Principals fails to comply with the restrictions on confidential
information set forth in Section VI.B. (5) or the requirements of Section IX.
concerning certain other covenants (including in-term covenants not to compete);
Developer or any partner or shareholder in Developer makes or attempts to make a
transfer or assignment in violation of Section VIII. hereof; Developer or any
parent company, affiliate, subsidiary or other principal of Developer, fails to
comply with any terms and conditions of the Franchise Agreement or the terms of
any other franchise agreements or any other development agreement (including the
Development Agreement dated October 8, 1991) between Developer and Franchisor.
Upon such default, Franchisor, in its discretion, may do any one or more of the
following:
(1) Terminate this Agreement and all rights granted hereunder
without affording Developer any opportunity to cure the default, effective
immediately upon notice to Developer;
(2) Reduce the number of Restaurants which Developer may
establish pursuant to Section I. of this Agreement;
(3) Terminate or modify any territorial exclusivity granted
Developer in Section I.C. hereof;
(4) Reduce the area of territorial exclusivity granted Developer
hereunder; or
(5) Accelerate the development schedule set forth in Section
III.B. hereof.
E. (1) Upon termination of this Agreement, Developer shall have no
right to establish or operate any Restaurant for which a Franchise Agreement
has not been executed by Franchisor and delivered to Developer at the time of
termination;
(2) If Franchisor elects to terminate the territorial exclusivity
granted to Developer in Section I.C., modify such territorial exclusivity or
reduce the area of territorial exclusivity, Developer shall continue to develop
Restaurants in accordance with the development schedule set forth in Section
III.B., except insofar as the number of Restaurants which Developer is required
to develop is reduced by Franchisor pursuant to Section VII.D.(2);
(3) If Franchisor exercises any of its rights in D.(2), (3) or
(4) above, Franchisor shall be entitled to establish, and to license others to
establish, Restaurants in the Territory or in the portion thereof no longer part
of the Territory or pursuant to any other modifications of Developer's
territorial exclusivity, except as may be otherwise provided under any Franchise
Agreement which is then in effect between Franchisor and Developer.
F. Franchisor's exercise of its options under Section VII.D. (2), (3),
(4) or (5) shall not, in the event of a default, constitute a waiver by
Franchisor to exercise its option to terminate this Agreement at any time with
respect to any subsequent event of default of a similar or different nature.
G. No default under this Development Agreement shall thereby
constitute a default under any Franchise Agreement between the parties hereto.
H. No right or remedy herein conferred upon or reserved to Franchisor
is exclusive of any other right or remedy provided or permitted by law or in
equity.
VIII. TRANSFER OF INTEREST
A. TRANSFER BY FRANCHISOR
Franchisor shall have the right to transfer or assign this Agreement
and all or any part of its rights or obligations herein to any person or legal
entity. Specifically, and without limitation to the foregoing, Developer agrees
that Franchisor may sell its assets, the Proprietary Marks or the System to a
third party; may offer its securities or be acquired by another corporation; may
undertake a refinancing, recapitalization, leveraged buyout or other economic or
financial restructuring; and with regard to any or all of the above sales,
assignments and dispositions, Developer expressly and specifically waives any
claims, demands, or damages against Franchisor arising from or related to the
transfer of the Proprietary Marks (or any variation thereof) or the System from
Franchisor to any other party. Nothing contained in this Agreement shall require
Franchisor to offer any services or products, whether or not bearing the
Proprietary Marks, to Developer if Franchisor assigns its rights in this
Agreement.
B. TRANSFER BY DEVELOPER
(1) Developer understands and acknowledges that the rights and
duties set forth in this Agreement are personal to Developer, and that
Franchisor has granted such rights in reliance on the business skill, financial
capacity, and personal character of Developer and any guarantor of Developer.
Accordingly, neither Developer nor any initial or subsequent successor or assign
to any part of Developer's interest in this Agreement, nor any individual,
partnership, corporation, or other entity which directly or indirectly has or
owns any interest in this Agreement or in Developer shall sell, assign,
transfer, convey, give away, pledge, mortgage, or otherwise encumber any direct
or indirect interest in this Agreement or in any entity which owns this
Agreement without the prior written consent of Franchisor; provided, however,
that Franchisor's prior written consent shall not be required for a transfer of
less than a one per cent (1%) interest in a publicly-held corporation, and
further, Franchisor's prior written consent for a Minority Interest Transfer (as
hereinafter defined) shall be exclusively based upon the requirements enumerated
in Section VIII.B.(3) hereof. A publicly-held corporation is a corporation
having its securities registered pursuant to Section 12 under the Securities
Exchange Act of 1934, as amended, or a corporation subject to the reporting
requirements of Section 15(d) under the Securities Exchange Act of 1934, as
amended. Any purported assignment or transfer, by operation of law or otherwise,
not having the written consent of Franchisor required by this Section VIII.B.(1)
shall be null and void and shall constitute a material breach of this Agreement.
(2) Franchisor shall not unreasonably withhold its consent to a
transfer of any interest in Developer or in this Agreement. Franchisor may, in
its sole discretion, require any or all of the following as conditions of its
approval:
(a) All of Developer's accrued monetary obligations and all
other outstanding obligations to Franchisor, its subsidiaries, and its
affiliates shall have been satisfied;
(b) Developer is not in default of any provision of this
Agreement, any amendment hereof or successor hereto, or any other agreement
between Developer and Franchisor, or its subsidiaries and affiliates;
(c) The transferor shall have executed a general release, in
a form satisfactory to Franchisor, of any and all claims against Franchisor and
its officers, directors, shareholders, and employees, in their corporate and
individual capacities, including, without limitation, claims arising under this
Agreement and federal, state, and local laws, rules, and ordinances;
(d) If the transferee is the Operating Principal or the
Operating Designee, then the requirements of Section VI.B. (3) shall be
satisfied by such transferee;
(e) If the transferee is a Developer's Principal, then the
requirements of Section VI.B. (2) (h) shall be satisfied by such transferee;
(f) The transferee shall enter into a written agreement, in
a form satisfactory to Franchisor, assuming full, unconditional, joint and
several liability for and agreeing to perform from the date of the transfer, all
obligations, covenants and agreements contained in this Agreement which the
transferor was obligated to perform. If, however, the transferee is to become an
Operating Principal, Operating Designee, or Developer's Principal, such
transferee shall be required to enter into a written agreement, in a form
reasonably satisfactory to Franchisor, assuming full, unconditional, joint and
several liability for and agreeing to perform from the date of the transfer, all
obligations, covenants, and agreements contained in this Agreement;
(g) The transferee shall demonstrate to Franchisor's
satisfaction that transferee meets the criteria considered by Franchisor when
reviewing a prospective developer's application for development rights,
including but not limited to Franchisor's educational, managerial and business
standards; transferee's good moral character, business reputation and credit
rating; transferee's aptitude and ability to conduct the business contemplated
hereunder (as may be evidenced by prior related business experience or
otherwise); that transferee has adequate financial resources and capital to meet
the development schedule set forth in Section III.B. hereof; and the geographic
proximity of other Chili's Grill & Bar restaurants owned or operated by
transferee and the territories or areas with respect to which transferee is
obligated to develop Chili's Grill & Bar restaurants pursuant to any development
agreement between Franchisor and Franchisee, in relation to development of the
Restaurants.
(h) The transferee shall execute (and/or, upon Franchisor's
request, shall cause all interested parties to execute), the standard form
development agreement then being offered to new System developers or form of
this Agreement, as Franchisor determines, and such other ancillary agreements as
Franchisor may require, which agreements shall supersede this Agreement and its
ancillary documents in all respects and the terms of which agreements may differ
from the terms of this Agreement;
(i) At the transferee's expense, the transferee, the
transferee's manager, the transferee's Operating Principal, and the transferee's
Operating Designee, if applicable, shall complete any training programs then in
effect for System developers upon such terms and conditions as Franchisor may
reasonably require;
(j) Developer shall pay a transfer fee in an amount
sufficient to reimburse Franchisor for its reasonable costs and expenses
associated with reviewing the application to transfer, including, without
limitation, legal and accounting fees; and
(k) If transferee is a corporation or a partnership,
transferee shall make and will be bound by any or all of the representations,
warranties and covenants set forth at Section VI.B.(2) as Franchisor requests.
Transferee shall provide to Franchisor evidence satisfactory to Franchisor that
the terms of Section VI.B.(2) have been satisfied and are true and correct on
the date of transfer.
(3) Franchisor will apply the transfer requirements set forth in
Section VIII.B.(2) to all transfers requiring Franchisor's consent except a
Minority Interest Transfer (as hereinafter defined). Franchisor shall not
unreasonably withhold its consent to a transfer of any interest in Developer or
in this Agreement. Minority Interest Transfer shall be defined as a transfer or
transfers by an interest holder or holders in Developer wherein such interest
holder(s) do not include the Operating Principal and the Operating Designee.
Notwithstanding the foregoing, the Operating Principal and the Operating
Designee shall be permitted to transfer any direct or indirect ownership
interest in Developer provided that the voting control and minimum ownership
requirements set forth in Section VI.B. (3) of this Agreement continue to be
satisfied. Minority Interest Transfer shall be defined further to exclude any
transfer by an interest holder or holders in Developer, which transfer(s) is/are
reasonably calculated to be made in conjunction with, as a part of, reasonably
contemporaneous with, or in the same transaction with, any transfer by the
Operating Principal or Operating Designee. Franchisor may, in its sole
discretion, require any or all of the following as conditions of its approval of
a Minority Interest Transfer (except for a Minority Interest Transfer or a
series of Minority Interest Transfers (i) from Holdings Group, Inc. to an
investment partnership controlled by the controlling shareholder of Tiger
Management Corporation, (ii) in which, in the aggregate, ten percent (10%) or
less of the interest of the transferor is to be transferred to (x) a partnership
consisting solely of the transferor and his or her relatives, or (y) a trust
established by the transferor for the benefit of his or her spouse or children),
or (iii) in which additional limited partnership interests in Developer are
issued to certain key employees of, or consultants to, Developer pursuant to
Section 2.2 of Developer's Agreement of Limited Partnership in an amount not to
exceed fifteen percent (15%) of the aggregate limited partnership interests in
Developer (after taking such issuance into consideration), provided that each
such transferee is already a limited partner in Developer and will not become
the operating Principal, Operating Designee, or a Developer's Principal:
(a) All of Developer's accrued monetary obligations and all
other outstanding obligations to Franchisor, its subsidiaries, and its
affiliates shall have been satisfied;
(b) Developer is not in material default of any provision of
this Agreement, any amendment hereof or successor hereto, or any other agreement
between Developer and Franchisor, or its subsidiaries and affiliates;
(c) The transferor shall have executed a general release, in
a form satisfactory to Franchisor, of any and all claims against Franchisor and
its officers, directors, shareholders, and employees, in their corporate and
individual capacities, including, without limitation, claims arising under this
Agreement and federal, state, and local laws, rules, and ordinances;
(d) The transferee, if such person is to become the
Operating Principal or the Operating Designee, or if a person or entity
described in Section VI.B.(5)(a) of this Agreement (and, upon Franchisor's
request, all interested parties) , shall enter into a written agreement, in a
form satisfactory to Franchisor, assuming full, unconditional, joint and several
liability for and agreeing to perform from the date of the transfer the
obligations, covenants, and agreements contained in Section VI.B. (5) and
Section IX.B-H of this Agreement;
(e) The transferee shall demonstrate to Franchisor's
satisfaction the following: that transferee meets the criteria considered by
Franchisor when reviewing a prospective developer's application for development
rights, including, but not limited to, Franchisor's educational, managerial, and
business standards; that transferee possesses a good moral character, business
reputation, and credit rating; that transferee (if such transferee is to serve
as the Operating Principal, the operating Designee, or as a Developer's
Principal) has the aptitude and ability to conduct the business contemplated
hereunder (as may be evidenced by prior related business experience or
otherwise); and that transferee (if such transferee is to serve as the operating
Principal, the Operating Designee, or as a Developer's Principal) has adequate
financial resources and capital to meet the development schedule set forth in
Section III.B. hereof;
(f) The transferor shall pay a transfer fee in an amount
sufficient to reimburse Franchisor for its actual and reasonable costs and
expenses associated with reviewing the application to transfer, including,
without limitation, legal and accounting fees; and
(g) If transferee is a corporation or a partnership,
transferee shall make and will be bound by any or all of the representations,
warranties and covenants set forth at Section VI.B.(2) as Franchisor requests.
Transferee shall provide to Franchisor evidence satisfactory to Franchisor that
the terms of Section VI.B. (2) have been satisfied and are true and correct on
the date of transfer.
(4) Developer acknowledges and agrees that each condition which
must be met by the transferee is reasonable and necessary to assure such
transferee's full performance of the obligations hereunder.
C. TRANSFER FOR CONVENIENCE OF OWNERSHIP
In the event the proposed transfer is to a corporation or partnership
formed solely for the convenience of ownership, Franchisor's consent may be
conditioned upon any of the requirements set forth at Section VIII.B.(2), except
that the requirements set forth at Sections VIII.B.(2)(c), (g), (h), (i) and (j)
shall not apply. With respect to a transfer to a corporation or partnership
formed for the convenience of ownership, Developer shall be the owner of all of
the voting stock or interest of the corporation and if Developer is more than
one individual, each individual shall have the same proportionate ownership
interest in the corporation as he had in Developer prior to the transfer.
D. RIGHT OF FIRST REFUSAL
(1) Any party holding any interest in Developer or in this
Agreement and who desires to accept any BONA FIDE offer from a third party to
purchase such interest shall promptly notify Franchisor in writing of each such
offer, and shall provide such information and documentation relating to the
offer as Franchisor may require. Franchisor shall have the right and option,
exercisable within thirty (30) days after receipt of such written notification,
to send written notice to the seller that Franchisor intends to purchase the
seller's interest on the same terms and conditions offered by the third party.
In the event that Franchisor elects to purchase the seller's interest, closing
on such purchase must occur within thirty (30) days from the date of notice to
the seller of the election to purchase by Franchisor.
Any material change in the terms of any offer prior to closing shall constitute
a new offer subject to the same rights of first refusal by Franchisor as in the
case of an initial offer. Failure of Franchisor to exercise the option afforded
by this Section VIII.D. shall not constitute a waiver of any other provision of
this Agreement, including all of the requirements of this Section VIII., with
respect to a proposed transfer.
(2) In the event an offer from a third party provides for payment
of consideration other than cash or involves certain intangible benefits,
Franchisor may elect to purchase the interest proposed to be sold for the
reasonable equivalent in cash. If the parties cannot agree within a reasonable
time on the reasonable equivalent in cash of the non-cash part of the offer,
then Franchisor shall appoint an independent appraiser and Developer shall
appoint an independent appraiser. In the event both parties do not select the
same appraiser, the two appraisers shall select a third appraiser which shall,
within thirty (30) days of appointment, determine the fair market value of the
non-cash-part of the offer and its determination shall be binding. If, however,
due to the comparative tax consequences of such transactions, Franchisor's cash
offer compares unfavorably to an offer made by a third party including, in whole
or in part, non-cash consideration, then Developer may elect to rescind its
acceptance of such third party offer and Franchisor shall have no right of first
refusal with respect to such offer.
(3) Notwithstanding anything in this Section VIII.D. to the
contrary, Franchisor agrees to waive the right of first refusal described herein
with respect to Minority Interest Transfers and transfers by the Operating
Principal and Operating Designee if the Operating Principal and the Operating
Designee will continue to satisfy the voting control and minimum ownership
requirements set forth in Section VI.B.(3) of this Agreement.
E. TRANSFER UPON DEATH OR PERMANENT DISABILITY
(1) Upon the death of any person with an interest in this
Agreement or in Developer (the "Deceased") , the executor, administrator or
other personal representative of the Deceased shall transfer such interest to a
third party approved by Franchisor and meeting the requirements set forth in
this Agreement within twelve (12) months after the death. If no personal
representative is designated or appointed or no probate proceedings are
instituted with respect to the estate of the Deceased, then the distributee of
such interest must be approved by Franchisor. If the distributee is not approved
by Franchisor, then the distributee shall transfer such interest to a third
party approved by Franchisor within twelve (12) months after the death of the
Deceased.
(2) Upon the permanent disability of any person with an interest
in this Agreement or in Developer, Franchisor may, in its sole discretion,
require such interest to be transferred to a third party meeting the
requirements set forth in this Agreement in accordance with the conditions
described in this Section VIII. within twelve (12) months after notice to
Developer. "Permanent disability" shall mean any physical, emotional or mental
injury, illness or incapacity which would prevent a person from performing the
obligations set forth in this Agreement, or in the Guaranty attached to this
Agreement, for at least ninety (90) consecutive days and from which condition
recovery within ninety days from the date of determination of disability is
unlikely. Permanent disability shall be determined by a licensed practicing
physician selected by Franchisor upon examination of the person; or if the
person refuses to submit to an examination, then such person shall be
automatically deemed permanently disabled as of the date of such refusal for the
purpose of this Section VIII. The costs of any examination required by this
Section VIII.E.(2) shall be paid by Franchisor.
(3) Upon the death or claim of permanent disability of any person
with an interest in this Agreement or in Developer, Developer or a
representative of Developer must promptly notify Franchisor of such death or
claim of permanent disability. Any transfer upon death or permanent disability
shall be subject to the same terms and conditions as described in Section VIII.
for any INTER VIVOS transfer. If an interest is not transferred upon death or
permanent disability as required in this Section VIII.E., in accordance with the
terms and conditions of Section VIII., Franchisor may terminate this Agreement.
F. NON-WAIVER OF CLAIMS
Franchisor's consent to a transfer of any interest in Developer or in
this Agreement shall not constitute a waiver of any claims it may have against
the transferring party, nor shall it be deemed a waiver of Franchisor's right to
demand exact compliance with any of the terms of this Agreement by the
transferee.
G. OFFERINGS BY DEVELOPER
Securities or partnership interests in Developer may be offered to the
public, by private offering or otherwise, only with the prior written consent of
Franchisor (whether or not Franchisor, s consent is required under Section
VIII.B. hereof) , which consent shall not be unreasonably withheld. All
materials required for such offering by federal or state law shall be submitted
to Franchisor for a limited review as discussed below prior to their being filed
with any government agency; and any materials to be used in any exempt offering
shall be submitted to Franchisor for such review prior to their use. No
Developer offering shall imply (by use of the Proprietary Marks or otherwise)
that Franchisor is participating in an underwriting, issuance, or offering of
Developer's or Franchisor's securities; and Franchisor's review of any offering
shall be limited solely to the subject of the relationship between Developer and
Franchisor. Franchisor may, at its option, require Developer's offering
materials to contain a written statement prescribed by Franchisor concerning the
limitations described in the preceding sentence. Developer and the other
participants in the offering must fully indemnify Franchisor in connection with
the offering. For each proposed offering, Developer shall pay to Franchisor a
nonrefundable fee of Five Thousand Dollars ($5,000), or such greater amount as
is necessary to reimburse Franchisor for its reasonable costs and expenses
associated with reviewing the proposed offering, including, without limitation,
legal and accounting fees. Developer shall give Franchisor written notice at
least thirty (30) days prior to the date of commencement of any offering or
other transaction covered by this Section VIII.G.
IX. COVENANTS
A. Developer and the Operating Principal covenant that during the term
of this Agreement except as otherwise approved in writing by Franchisor,
Developer, and either the Operating Principal or the Operating Designee shall
devote full time, energy, and best efforts to the management and operation of
the business contemplated hereunder.
B. Developer, the Operating Principal, the Operating Designee, and
Developer's Principals specifically acknowledge that, pursuant to this
Agreement, Developer, the Operating Principal, the Operating Designee, and
Developer's Principals will receive valuable trade secrets and confidential
information, including, without limitation, information regarding the site
selection and marketing methods and techniques of Franchisor and the System
which is beyond the present skills and experience of Developer, the Operating
Principal, the Operating Designee, and Developer's Principals and Developer's
managers and employees, and that Developer has the exclusive right and the
obligation, arising from this Agreement, to identify sites and develop the
Territory for the benefit of the System. Developer, the Operating Principal, the
Operating Designee, and Developer's Principals acknowledge that such trade
secrets and confidential information provide a competitive advantage and will be
valuable to them in the development of the franchised businesses, and that
gaining access to such trade secrets and confidential information is, therefore,
a primary reason why they are entering into this Agreement. In consideration for
such trade secrets, confidential information and rights, Developer, the
Operating Principal, the Operating Designee, and Developer's Principals covenant
that during the term of this Agreement (or, with respect to the Operating
Principal, during the term of this Agreement for so long as such person owns any
interest in Developer; or, with respect to the Operating Designee, during the
term of this Agreement for so long as such person serves as the Operating
Designee on behalf of Developer and the Operating Principal; or, with respect to
each of Developer's Principals, during the term of this Agreement for so long as
such individual or entity satisfies the definition of "Developer's Principals"
as described in Section XIV.F. of this Agreement), and for a continuous
uninterrupted period commencing upon the expiration or termination of this
Agreement, regardless of the cause for termination (or, with respect to the
Operating Principal and each of Developer's Principals, commencing upon the
earlier of: (i) the expiration or termination of this Agreement or (ii) with
respect to the Operating Principal, the termination of all of such person's
interest in Developer; or, with respect to the Operating Designee, during the
term of this Agreement for so long as such person serves as the Operating
Designee on behalf of Developer and the Operating Principal; or, with respect to
each of Developer's Principals, the time such individual or entity ceases to
satisfy the definition of "Developer's Principals" as described in Section
XIV.F. of this Agreement) and continuing for two (2) years thereafter (except in
the case of restaurant managers, to whom such two (2) year period shall not be
applicable), and as otherwise approved in writing by Franchisor, neither
Developer, the Operating Principal, the Operating Designee, nor Developer's
Principals shall, directly or indirectly, for themselves, or through, on behalf
of, or in conjunction with any person, persons, partnership, or corporation:
(1) Divert or attempt to divert any business or customer of the
franchised businesses to any competitor, 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 Franchisor's Proprietary Marks and
the System.
(2) Employ or seek to employ any person who is at that time
employed by Franchisor or by any other developer or franchisee of Franchisor, or
otherwise directly or indirectly induce such person to leave his or her
employment.
(3) Own, maintain, operate, engage in, or have any interest in
any business in the United States which is in the full-service casual dining
market segment of the restaurant industry having as a primary menu item any of
the following: hamburgers or other sandwiches, salads, barbecue ribs, fajitas
and other Southwestern and Mexican-style cuisine. The current seven percent (7%)
ownership interest of ▇▇▇▇▇▇ ▇▇▇▇▇ in Uno Concepts, Inc. shall not be deemed to
be a violation of this Section IX.B.(3) although no new or additional
investments in Uno Concepts, Inc. or in any other restaurant business except
through Developer, its successors or assigns, shall be permitted by ▇▇▇▇▇▇
▇▇▇▇▇.
C. Section IX.B.(3) shall not apply to ownership of less than ten
percent (10%) beneficial interest in the outstanding equity securities of any
publicly-held corporation.
D. The parties agree that each of the foregoing covenants shall be
construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Section IX. is held unreasonable or
unenforceable by a court or agency having valid jurisdiction in an unappealed
final decision to which Franchisor is a party, Developer, the operating
Principal, the Operating Designee, and Developer's Principals expressly agree to
be bound by any lesser covenant subsumed within the terms of such covenant that
imposes the maximum duty permitted by law, as if the resulting covenant were
separately stated in and made a part of this Section IX.
E. Developer, the Operating Principal, the Operating Designee, and
Developer's Principals understand and acknowledge that Franchisor shall have the
right, in its sole discretion, to reduce the scope of any covenant set forth in
Section IX.B. in this Agreement, or any portion thereof, without their consent,
effective immediately upon notice to Developer; and Developer, the Operating
Principal, the Operating Designee, and Developer's Principals agree that they
shall comply forthwith with any covenant as so modified, which shall be fully
enforceable notwithstanding the provisions of Section XV. hereof.
F. Developer, the Operating Principal, the Operating Designee, and
Developer's Principals expressly agree that the existence of any claims they may
have against Franchisor, whether or not arising from this Agreement, shall not
constitute a defense to the enforcement by Franchisor of the covenants in this
Section IX. If either Franchisor or Developer institutes any action or
proceeding seeking legal or equitable relief in connection with enforcement of
this Section IX. then the nonprevailing party in such action or proceeding shall
reimburse the prevailing party for its reasonable expenses, attorneys' fees,
investigation costs, and all costs and disbursements incurred herein by the
prevailing party, including without limitation, any such reasonable fees, costs,
or disbursements incurred on any appeal from such action or proceeding.
G. Failure to comply with the requirements of this Section IX. shall
constitute a default under this Agreement as provided in Section VII.D. hereof.
Developer, the Operating Principal, the Operating Designee, and Developer's
Principals acknowledge that a violation of the terms of this Section IX. or the
willful and knowing aiding and abetting of a third party in an action which
would be a violation of this Section IX. If such third party was a party to this
Agreement would result in irreparable injury to Franchisor for which no adequate
remedy at law may be available, and Developer, the Operating Principal, the
Operating Designee, and Developer's Principals accordingly consent to the
issuance of an injunction prohibiting any conduct by Developer, the Operating
Principal, the Operating Designee, or Developer's Principals in violation of the
terms of this Section IX.
H. At Franchisor's request, Developer shall require and obtain
execution of covenants similar to those set forth in this Section IX. (including
covenants applicable upon the termination of a person's relationship with
Developer) from its restaurant managers, members of its advisory board, any
other person or entity who has received or will receive training or confidential
information from Franchisor, and any corporation directly or indirectly
controlling Developer, if Developer is a corporation (or of any corporate
general partner and any individual or corporation directly or indirectly
controlling a general partner of Developer, if Developer is a partnership) . The
covenants required by this Section IX.H. shall be substantially in the form
contained in Attachment B for Developer's restaurant managers and other persons
having access to confidential information of Franchisor, Attachment C for ▇▇▇
▇▇▇▇▇▇▇ (and his successors on Developer's advisory board), Attachment D for
▇▇▇▇ ▇▇▇▇▇▇▇▇, and Attachment E for ▇▇▇▇▇▇ ▇▇▇▇▇▇. Failure by Developer to
obtain execution of the covenants required by this Section IX.H. shall
constitute a default under Section VII.D. hereof.
X. NOTICES
Any and all notices required or permitted under this Agreement shall
be in writing and shall be personally delivered or mailed by expedited delivery
service or certified or registered mail, return receipt requested, or sent by
prepaid telex or facsimile (provided the sender confirms the telex or facsimile
by sending an original confirmation copy thereof by certified or registered mail
or expedited delivery service within three (3) business days after transmission
thereof) 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 Franchisor: Brinker International, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Notices to Developer and NE Restaurant Company Limited
Developer's Principals: Partnership
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Any notice shall be deemed to have been given at the time of personal
delivery or, in the case of facsimile or telex, upon receipt (provided
confirmation is sent as described above) or, in the case of expedited delivery
service or registered or certified mail, three (3) business days after the date
and time of mailing. Business day for the purpose of this Section X. excludes
Saturday, Sunday, and the following national holidays: New Year's Day, ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇ Day, Washington's Birthday, Memorial Day, Independence Day, Labor
Day, Columbus Day, Veterans' Day, Thanksgiving, and Christmas.
XI. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
A. It is understood and agreed by the parties hereto that this
Agreement does not create a fiduciary relationship between them, that Developer
is an independent contractor, and that nothing in this Agreement is intended to
constitute either party an agent, legal representative, subsidiary, joint
venturer, partner, employee, or servant of the other for any purposes
whatsoever.
B. Developer shall hold itself out to the public to be an independent
contractor operating pursuant to this Agreement. Developer agrees to take such
actions as shall be necessary to that end.
C. Developer understands and agrees that nothing in this Agreement
authorizes Developer or any of Developer's Principals to make any contract,
agreement, warranty, or representation on Franchisor's behalf, or to incur any
debt or other obligation in Franchisor's name, and that Franchisor shall in no
event assume liability for, or be deemed liable hereunder as a result of, any
such action, or by reason of any act or omission of Developer or Developer's
Principals or any claim or judgment arising therefrom against Developer, any of
Developer's Principals or Franchisor.
D. Developer and each of Developer's Principals shall, at all times,
indemnify and hold harmless to the fullest extent permitted by law Franchisor,
its subsidiaries, affiliates, successors and assigns and their respective
officers, directors, shareholders, partners, agents, representatives,
independent contractors and employees ("Indemnitees"), from all "losses and
expenses" (as defined in Section XI.G(2) below) incurred in connection with any
action, suit, proceeding, claim, demand, investigation or inquiry (formal or
informal), or any settlement thereof (whether or not a formal proceeding or
action has been instituted) which arises out of or is based upon any of the
following:
(1) The infringement, alleged infringement, or any other
violation or alleged violation by Developer or any of Developer's Principals of
any patent, ▇▇▇▇ or copyright or other proprietary right owned or controlled by
third parties;
(2) The violation, breach or asserted violation or breach by
Developer or any of Developer's Principals of any federal, state or local law,
regulation, ruling, standard or directive or any industry standard;
(3) Libel, slander or any other form of defamation of Franchisor,
the System or any developer or franchisee operating under the System, by
Developer or by any of Developer's Principals;
(4) The violation or breach by Developer or by any of Developer's
Principals of any warranty, representation, agreement or obligation in this
Agreement or in any other agreement between Developer, its subsidiaries and
affiliates and Franchisor, its subsidiaries and affiliates or the officers,
directors, shareholders, partners, agents, representatives independent
contractors and employees thereof; and
(5) Acts, errors, or omissions of Developer, any of Developer's
subsidiaries or affiliates and any of Developer's Principals and the officers,
directors, shareholders, partners, agents, representatives, independent
contractors and employees of Developer and its subsidiaries and affiliates in
connection with the development and construction of any Restaurant.
E. Developer and each of Developer's Principals agree to give
Franchisor notice of any such action, suit, proceeding, claim, demand or
investigation. At the expense and risk of Developer and each of Developer's
Principals, Franchisor may elect to assume (but under no circumstance is
obligated to undertake) or associate counsel of its own choosing with respect
to, the defense and/or settlement of any such action, suit, proceeding, claim,
demand, inquiry or investigation. Such an undertaking by Franchisor shall, in no
manner or form, diminish the obligation of Developer and each of Developer's
Principals to indemnify the Indemnitees and to hold them harmless.
F. In order to protect persons or property, or its reputation or
goodwill, or the reputation or goodwill of others, Franchisor may, at any time
and without notice, as it, in its judgment deems appropriate, consent or agree
to settlements or take such other remedial or corrective actions it deems
expedient with respect to the action, suit, proceeding, claim, demand, inquiry
or investigation if, in Franchisor's sole judgment, there are reasonable grounds
to believe that:
(1) any of the acts or circumstances enumerated in Section
XI.D(l)-(4) above have occurred; or
(2) any act, error, or omission as described in Section XI.D(5)
may result directly or indirectly in damage, injury, or harm to any person or
any property.
G. (1) All losses and expenses incurred under this Section XI.
shall be chargeable to and paid by Developer or any of Developer's Principals
pursuant to its obligations of indemnity under this Section, regardless of any
actions, activity or defense undertaken by Franchisor or the subsequent success
or failure of such actions, activity, or defense.
(2) As used in this Section XI. , the phrase "losses and
expenses" shall include, without limitation, all losses, compensatory, exemplary
or punitive damages, fines, charges, costs, expenses, lost profits, reasonable
attorney's fees, court costs, settlement amounts, judgments, compensation for
damages to the Franchisor's reputation and goodwill, costs of changing,
substituting or replacing the same, and any and all expenses of recall, refunds,
compensation, public notices and other such amounts incurred in connection with
the matters described.
H. The Indemnitees do not assume any liability whatsoever for acts,
errors, or omissions of those with whom Developer, any of Developer's
Principals, Developer's subsidiaries and affiliates or any of the officers,
directors, shareholders, partners, agents, representatives, independent
contractors and employees of Developer, its subsidiaries or affiliates may
contract, regardless of the purpose. Developer and each of Developer's
Principals shall hold harmless and indemnify the Indemnitees for all losses and
expenses which may arise out of any acts, errors or omissions of Developer,
Developer's Principals, Developer's subsidiaries and affiliates, the officers,
directors, shareholders, partners, agents, representatives, independent
contractors and employees of Developer and its subsidiaries and affiliates and
any such other third parties without limitation and without regard to the cause
or causes thereof or the negligence of Franchisor or any other party or parties
arising in connection therewith, and whether such negligence be sole, joint or
concurrent, or active or passive.
I. Under no circumstances shall the Indemnitees be required or
obligated to seek recovery from third parties or otherwise mitigate their losses
in order to maintain a claim against Developer or any of Developer's Principals.
Developer and each of Developer's Principals agree that the failure to pursue
such recovery or mitigate loss will in no way reduce the amounts recoverable
from Developer or any of Developer's Principals by the Indemnitees.
J. Developer and Developer's Principals expressly agree that the terms
of this Section XI. shall survive the termination, expiration or transfer of
this Agreement or any interest herein.
XII. APPROVALS
A. Whenever this Agreement requires the prior approval or consent of
Franchisor, Developer shall make a timely written request to Franchisor
therefor, and except as may be otherwise expressly provided herein, any approval
or consent granted shall be in writing.
B. Franchisor makes no warranties or guarantees upon which Developer,
the Operating Principal, the Operating Designee, or Developer's Principals may
rely and assumes no liability or obligation to Developer or any third party to
which it would not otherwise be subject, by providing any waiver, approval,
advice, consent, or services to Developer, the Operating Principal, the
Operating Designee, or Developer's Principals in connection with this Agreement,
or by reason of any neglect, delay, or denial of any request therefor.
XIII. NON-WAIVER
No failure of Franchisor to exercise any power reserved to it in this
Agreement or to insist upon compliance by Developer, the Operating Principal,
the Operating Designee, or Developer's Principals 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 Franchisor's rights
to demand exact compliance with the terms of this Agreement. Waiver by
Franchisor of any particular default shall not affect or impair Franchisor's
right with respect to any subsequent default of the same or of a different
nature; nor shall any delay, forbearance, or omission of Franchisor to exercise
any power or right arising out of any breach or default by Developer, the
Operating Principal, the Operating Designee, or Developer's Principals of any of
the terms, provisions, or covenants of this Agreement affect or impair
Franchisor's rights; nor shall such constitute a waiver by Franchisor of any
rights hereunder or rights to declare any subsequent breach or default.
XIV. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary herein, each portion,
section, part, term, and/or provision of this Agreement shall be considered
severable; and if, for any reason, any section, part, term, and/or provision
herein 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 shall not impair the operation of, or have any other effect
upon, such other portions, sections, parts, terms, and/or provisions of this
Agreement as may remain otherwise intelligible, and the latter shall continue to
be given full force and effect and bind the parties hereto; and said invalid
portions, sections, parts, terms, and/or provisions shall be deemed not to be
part of this Agreement.
B. 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 Developer, Franchisor, Franchisor's officers, directors,
and employees, and such of Developer's and Franchisor's respective successors
and assigns as may be contemplated (and, as to Developer, permitted) by Section
VIII. hereof, any rights or remedies under or by reason of this Agreement.
C. Developer, the Operating Principal, the Operating Designee, and
Developer's Principals, as applicable, expressly agree to be bound by any
promise or covenant imposing the maximum duty permitted by law which is subsumed
within the terms of any provision hereof, as though it were separately
articulated in and made a part of this Agreement, that may result from striking
from any of the provisions hereof any portion or portions which a court may hold
to be unreasonable and unenforceable in a final decision to which Franchisor is
a party, or from reducing the scope of any promise or covenant to the extent
required to comply with such a court order.
D. All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.
E. All references herein to the masculine, neuter, or singular shall
be construed to include the masculine, feminine, neuter, or plural, where
applicable; and, without limiting the obligations individually undertaken by the
Operating Principal and Developer's Principals hereunder, all acknowledgments,
promises, covenants, agreements, and obligations herein made or undertaken by
Developer shall be deemed jointly and severally undertaken by all those
executing this Agreement on behalf of Developer.
F. The term "Developer's Principals" as used in this Agreement shall
include, collectively or individually, Developer's spouse, if Developer is an
individual; all officers and directors of, and all other holders of a beneficial
interest of fifteen percent (15%) or more of the securities of, Developer and
any corporation directly or indirectly controlling Developer, if Developer is a
corporation; the general partners of Developer and the officers and directors
of, and all other holders of a beneficial interest of fifteen percent (15%) or
more of the securities of, a corporate general partner of Developer and any
individual or corporation which controls, directly or indirectly, any general
partner, if Developer is a partnership; and members of Developer's advisory
board. For purposes of this definition, the Operating Principal, the operating
Designee, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇, and Holdings Group, Inc. shall not be
considered to be Developer's Principals.
G. This Agreement may be executed in triplicate, and each copy so
executed shall be deemed an original.
H. If at any time during the term of this Agreement either Franchisor
or Franchisee shall institute any action or proceeding against the other
relating to the provisions of this Agreement or any default hereunder, the
non-prevailing party in such action or proceeding shall reimburse the prevailing
party for its reasonable expenses, attorneys' fees, investigation costs, and all
costs and disbursements incurred herein by the prevailing party, including
without limitation any such reasonable fees, costs, or disbursements incurred on
any appeal from such action or proceeding.
XV. ENTIRE AGREEMENT; APPLICABLE LAW
A. This Agreement, the documents referred to herein, and the
Attachments hereto, constitute the entire, full, and complete agreement between
Franchisor and Developer concerning the subject matter hereof and shall
supersede any and all prior agreements. Except for those permitted to be made
unilaterally by Franchisor hereunder, no amendment, change, or variance from
this Agreement shall be binding on either party unless mutually agreed to by the
parties and executed by their authorized officers or agents in writing.
B. THE PARTIES AGREE TO SUBMIT ANY CLAIM, CONTROVERSY OR DISPUTE
ARISING OUT OF OR RELATING TO THIS AGREEMENT (AND ATTACHMENTS) OR THE
RELATIONSHIP CREATED BY THIS AGREEMENT TO NONBINDING MEDIATION PRIOR TO BRINGING
SUCH CLAIM, CONTROVERSY OR DISPUTE IN A COURT. THE MEDIATION SHALL BE CONDUCTED
THROUGH EITHER AN INDIVIDUAL MEDIATOR OR A MEDIATOR APPOINTED BY A MEDIATION
SERVICES ORGANIZATION OR BODY, EXPERIENCED IN THE MEDIATION OF FOOD SERVICE
BUSINESS DISPUTES, AGREED UPON BY THE PARTIES AND, FAILING SUCH AGREEMENT WITHIN
A REASONABLE PERIOD OF TIME AFTER EITHER PARTY HAS NOTIFIED THE OTHER OF ITS
DESIRE TO SEEK MEDIATION OF ANY CLAIM, CONTROVERSY OR DISPUTE (NOT TO EXCEED
FIFTEEN (15) DAYS) , BY THE AMERICAN ARBITRATION ASSOCIATION IN ACCORDANCE WITH
ITS RULES GOVERNING MEDIATION, AT FRANCHISOR'S CORPORATE HEADQUARTERS IN DALLAS,
TEXAS. THE COSTS AND EXPENSES OF MEDIATION, INCLUDING COMPENSATION OF THE
MEDIATOR, SHALL BE BORNE BY THE PARTIES EQUALLY. IF THE PARTIES ARE UNABLE TO
RESOLVE THE CLAIM, CONTROVERSY OR DISPUTE WITHIN NINETY (90) DAYS AFTER THE
MEDIATOR HAS BEEN APPOINTED, THEN EITHER PARTY MAY BRING A LEGAL PROCEEDING
UNDER SECTION XV.C BELOW TO RESOLVE SUCH CLAIM, CONTROVERSY OR DISPUTE UNLESS
SUCH TIME PERIOD IS EXTENDED BY WRITTEN AGREEMENT OF THE PARTIES.
NOTWITHSTANDING THE FOREGOING, FRANCHISOR MAY BRING AN ACTION (1) FOR MONIES
OWED, (2) FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF, OR (3) INVOLVING THE
POSSESSION OR DISPOSITION OF, OR OTHER RELIEF RELATING TO, REAL PROPERTY IN A
COURT HAVING JURISDICTION AND IN ACCORDANCE WITH SECTION XV.C BELOW, WITHOUT
SUBMITTING SUCH ACTION TO MEDIATION.
C. WITH RESPECT TO ANY CLAIMS, CONTROVERSIES OR DISPUTES WHICH ARE NOT
FINALLY RESOLVED THROUGH MEDIATION OR AS OTHERWISE PROVIDED ABOVE, DEVELOPER AND
DEVELOPER'S PRINCIPALS HEREBY IRREVOCABLY SUBMIT THEMSELVES TO THE JURISDICTION
OF THE STATE COURTS OF DALLAS COUNTY, TEXAS AND THE FEDERAL DISTRICT COURT FOR
THE NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION. DEVELOPER AND DEVELOPER'S
PRINCIPALS HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION FOR THE PURPOSE
OF CARRYING OUT THIS PROVISION. DEVELOPER AND DEVELOPER'S PRINCIPALS HEREBY
IRREVOCABLY AGREE THAT SERVICE OF PROCESS MAY BE MADE UPON ANY OF THEM IN ANY
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE RELATIONSHIP
CREATED BY THIS AGREEMENT BY ANY MEANS ALLOWED BY TEXAS OR FEDERAL LAW.
DEVELOPER AND DEVELOPER'S PRINCIPALS AGREE THAT VENUE FOR ANY PROCEEDING
RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE IN DALLAS COUNTY, TEXAS;
PROVIDED, HOWEVER, WITH RESPECT TO ANY ACTION (1) FOR MONIES OWED, (2) FOR
INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF OR (3) INVOLVING POSSESSION OR
DISPOSITION OF, OR OTHER RELIEF RELATING TO, REAL PROPERTY, FRANCHISOR MAY BRING
SUCH ACTION IN ANY STATE OR FEDERAL DISTRICT COURT WHICH HAS JURISDICTION. WITH
RESPECT TO ALL CLAIMS, CONTROVERSIES, DISPUTES OR ACTIONS, THIS AGREEMENT SHALL
BE INTERPRETED AND CONSTRUED UNDER TEXAS LAW (WITHOUT REGARD TO TEXAS CHOICE OF
LAW RULES).
D. DEVELOPER AND FRANCHISOR ACKNOWLEDGE THAT THE PARTIES' AGREEMENT
REGARDING CHOICE OF APPLICABLE STATE LAW AND FORUM SET FORTH IN SECTION XV.C.
ABOVE PROVIDE EACH OF THE PARTIES WITH THE MUTUAL BENEFIT OF UNIFORM
INTERPRETATION OF THIS AGREEMENT AND ANY DISPUTE ARISING OUT OF THE PARTIES'
RELATIONSHIP CREATED BY THIS AGREEMENT. EACH OF DEVELOPER AND FRANCHISOR FURTHER
ACKNOWLEDGE THE RECEIPT AND SUFFICIENCY OF MUTUAL CONSIDERATION FOR SUCH
BENEFIT.
E. DEVELOPER AND FRANCHISOR ACKNOWLEDGE THAT THE EXECUTION OF THIS
AGREEMENT BY FRANCHISOR OCCURRED IN DALLAS, TEXAS AND FURTHER ACKNOWLEDGE THAT
THE PERFORMANCE OF CERTAIN OBLIGATIONS OF DEVELOPER ARISING UNDER THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO THE PAYMENT OF MONIES DUE HEREUNDER,
SHALL OCCUR IN DALLAS, TEXAS.
XVI. ACKNOWLEDGEMENTS
A. Developer, the Operating Principal, the Operating Designee, and
Developer's Principals acknowledge that they have conducted an independent
investigation of the business venture contemplated by this Agreement and
recognize that such business involves substantial business risks and that
Developer's success will be largely dependent upon the ability of Developer, the
Operating Principal, the Operating Designee, and its Developer's Principals as
independent business people. Franchisor expressly disclaims the making of, and
Developer, the Operating Principal, the Operating Designee, and Developer's
Principals acknowledge 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.
B. Developer acknowledges that Developer has received, read, and
understood this Agreement, the Attachments hereto, and agreements relating
hereto, if any; and that Franchisor has accorded Developer ample time and
opportunity to consult with advisors of Developer's own choosing about the
potential benefits and risks of entering into this Agreement.
C. Developer acknowledges that it received a complete copy of this
Agreement, the Attachments hereto, and agreements relating hereto, if any, at
least five (5) business days prior to the date on which this Agreement was
executed. Developer further acknowledges that it has received the disclosure
document required by the Trade Regulation Rule of the Federal Trade Commission
entitled "Disclosure Requirements and Prohibitions Concerning Franchising and
Business Opportunity Ventures" at least ten (10) business days prior to the date
on which this Agreement was executed.
[THE REMAINDER OF THIS PAGE IS LEFT BLANK INTENTIONALLY.]
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and
delivered this Agreement in triplicate on the day and year first above written.
▇▇▇▇▇▇▇ INTERNATIONAL, INC.,
a Delaware corporation
SEAL
___________________________ By:_______________________________
Assistant Secretary Title: Executive Vice President,
General Counsel and Secretary
NE RESTAURANT COMPANY LIMITED
PARTNERSHIP a Massachusetts limited
partnership
By: NE Restaurant Company, Inc.
a Massachusetts corporation, in
its individual capacity and as
general partner
SEAL
_____________________________ By:__________________________
Secretary ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chairman of the Board
_____________________________ ____________________________________
Witness ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Operating Principal
_____________________________ ____________________________________
Witness ▇▇▇▇▇▇ ▇▇▇▇▇, Operating Designee
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of this Development
Agreement;
(2) Each is included in the term "Developer's Principals" as described
in Section XIV.F. of this Development Agreement; and
(3) Each individually, jointly and severally makes all of the
covenants, representations and agreements of Developer's Principals set forth in
this Development Agreement and is obligated to perform thereunder.
ATTEST:
DEVELOPER'S PRINCIPALS
_____________________________ ____________________________________
Witness ▇▇▇▇ ▇▇▇▇▇▇▇▇
_____________________________ ____________________________________
Witness ▇▇▇▇▇▇ ▇▇▇▇▇
NE RESTAURANT COMPANY, INC., a
Massachusetts corporation
__________________________ By:_________________________________
Witness ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
Chairman of the Board
GUARANTY
As an inducement to ▇▇▇▇▇▇▇ INTERNATIONAL, INC. ("Franchisor") to
execute the foregoing Development Agreement, including the Attachments thereto
of even date, the undersigned, jointly and severally, hereby agree to be bound
by all the terms and conditions of the above Development Agreement including any
amendments or modifications thereto whenever made (hereinafter the "Agreement")
and unconditionally and irrevocably guarantee to Franchisor and its successors
and assigns that all of Developer's obligations under the Agreement will he
punctually paid and performed.
Upon default by Developer or notice from Franchisor, the undersigned
will immediately make each payment and perform each obligation required of
Developer under this Agreement. Without affecting the obligations of the
undersigned under this Guaranty, Franchisor may, without notice to the
undersigned, renew, extend, modify, amend, or release any indebtedness or
obligation of Developer, or settle, adjust, or compromise any claims against
Developer.
The undersigned waive all demands and notices of every kind with
respect to this Guaranty and the Agreement, including, without limitation,
notice of: the amendment or modification of this Guaranty or the Agreement, the
demand for payment or performance by Developer, any default by Developer or any
guarantor, and any release of any guarantor or other security for the Agreement
or the obligations of Developer.
Franchisor may pursue its rights against the undersigned without first
exhausting its remedies against Developer and without joining any other
guarantor hereto and no delay on the part of Franchisor in the exercise of any
right or remedy shall operate as a waiver of such right or remedy, and no single
or partial exercise by Franchisor of any right or remedy shall preclude the
further exercise of such right or remedy.
Upon receipt by Franchisor of notice of the death of an individual
guarantor, the estate of such guarantor will be bound by this Guaranty but only
for defaults and obligations hereunder existing at the time of death, and the
obligations of the other guarantors hereunder will continue in full force and
effect.
Notwithstanding anything herein to the contrary, this Guaranty shall
terminate and have no further force and effect as of one (1) year from the date
of execution of this Guaranty and the joint and several liability of the
undersigned for payments hereunder is limited to a total of Two Hundred Thousand
and No/100 Dollars ($200,000.00) (I. E., the aggregate liability for all of the
undersigned for payments hereunder is limited to $200,000).
IN WITNESS WHEREOF, the undersigned have signed this Guaranty this
______ day of ______________, 199__.
GUARANTORS:
ATTEST/WITNESS:
By:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
ATTEST/WITNESS:
By:
--------------------------- --------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇
ATTEST/WITNESS:
By:
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