EXHIBIT 10.46
Master - Base
(SCC)
Revised 10/26/99
SEATTLE'S BEST COFFEE
DEVELOPMENT AGREEMENT
(Exclusive)
Between
SEATTLE'S BEST COFFEE, LLC.
and
_______________________________
Dev. Agr. No.:________
No. Options:__________
Date:_________________
[_]Exclusive [_] Non-Exclusive
SEATTLE'S BEST COFFEE, LLC.
SEATTLE'S BEST COFFEE
DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
I. DEFINITIONS..................................................... 2
II. GRANT........................................................... 2
III. DEVELOPMENT FEE................................................. 3
IV. DEVELOPMENT SCHEDULE............................................ 3
V. DEVELOPMENT PROCEDURES.......................................... 4
VIV. DEFAULT AND TERMINATION......................................... 10
VII. TRANSFERABILITY OF INTEREST..................................... 10
VIII. CONFIDENTIAL INFORMATION........................................ 14
IX. COVENANTS....................................................... 14
X. NOTICES......................................................... 15
XI. NON-WAIVER...................................................... 16
XII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION...................... 16
XIII. APPROVALS....................................................... 17
XIV. ACKNOWLEDGMENT.................................................. 17
XV. SEVERABILITY AND CONSTRUCTION................................... 17
XVI. ENTIRE AGREEMENT AND APPLICABLE LAW............................. 18
EXHIBIT A - DEVELOPMENT SCHEDULE
EXHIBIT B - TERRITORY
EXHIBIT C - FRANCHISE AGREEMENT
EXHIBIT 10.46
SEATTLE'S BEST COFFEE, LLC.
SEATTLE'S BEST COFFEE
DEVELOPMENT AGREEMENT
THIS AGREEMENT (the "Agreement"), made this ______ day of
__________________________, 20___, by and between SEATTLE'S BEST COFFEE, LLC., a
Washington limited liability company, with its principal place of business at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇.▇. ("Franchisor")
and ________________________________________________ ("Developer").
WITNESSETH:
WHEREAS, Franchisor has developed and owns a unique and distinctive
system for the development, establishment and operation of retail Cafes {"SBC
Cafes") and Kiosks ("SBC Kiosks") ( collectively, "SBC Units" or "SBC Retail
Units") that feature proprietary Seattle's Best Coffee Brand specialty coffee,
coffee products and other menu items developed and owned by Franchisor; (the
"SEATTLE'S BEST COFFEE System", "SBC System" or "System").
WHEREAS, the distinguishing characteristics of the SBC System include,
without limitation, the name "SEATTLE'S BEST COFFEE"; distinctive interior and
exterior design and layouts, decor, color schemes, and furnishings; confidential
food formulae and recipes used in the preparation of food products, formulas and
specifications for preparing specialty coffee drinks and other coffee and non-
coffee based products; specialized menus; standards and specifications for
equipment, equipment layouts, products, operating procedures, and management
programs, all of which may be changed, improved, and further developed by
Franchisor from time to time;
WHEREAS, Franchisor identifies the SBC System by means of certain
trade names, service marks, trademarks, logos, emblems, and other indicia of
origin, including, but not limited to, the marks "SEATTLE'S BEST COFFEE", "SBC"
and such other trade names, service marks, trademarks and trade dress as are
now, or may hereafter, be designated by Franchisor for use in connection with
the SBC System (collectively referred to as the "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 in the SBC System and to represent the
SBC System's high standards of quality, appearance, and service;
WHEREAS, Developer wishes to be assisted, trained and licensed by
Franchisor as a developer and franchisee of SBC Retail Units, and licensed to
use, in connection therewith, the SBC System;
WHEREAS, Developer understands the importance of the SBC System and
SBC's high and uniform standards of quality, cleanliness, appearance, and
service, and the necessity of opening and operating Developer's SBC Retail Units
in conformity with the SBC System; and
WHEREAS, Developer wishes to obtain the right to develop SBC Retail
Units ("Franchised Units") in the area described in this Agreement and to use
the SBC System in connection with those Franchised Units;
NOW, THEREFORE, the parties hereto agree as follows:
I. DEFINITIONS
1.01. For the purposes of this Agreement, the following terms shall be
deemed to have the definitions set forth below:
1. "SBC Cafe" shall mean a free-standing or in-line SBC Retail Unit
incorporating the full SBC Cafe design and trade-dress and
offering the full SBC Cafe menu with dedicated seating for
customers;
2. "SBC Kiosk" shall mean a self-contained SBC Retail Unit,
incorporating less than the full SBC Cafe design and trade-dress,
with no dedicated seating for customers (i.e. , food court,
kiosk, etc.).
II. GRANT
2.01. Franchisor hereby grants the Developer, subject to the terms and
conditions of this Development Agreement and as long as Developer shall not be
in default of this Agreement or any other development, franchise or other
agreement between Developer and Franchisor, development rights to obtain
franchises to establish and operate ________ SBC Retail Units, and to use the
SBC System solely in connection therewith, at specific locations to be
designated in separate franchise agreements ("Franchise Agreements"), executed
as provided in Section 4.01 hereof, and pursuant to the schedule set forth in
Exhibit A to this Agreement ("Development Schedule"). Developer must have a
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minimum of two (2) SBC Cafes open and in operation in the Territory before
developing any SBC Kiosks in the Territory. At no time during the term of this
Development Agreement shall the total number of SBC Kiosks exceed 33.33% of the
total number of Franchised Units owned and/or operated by Developer in the
Territory. Each Franchised Unit developed pursuant hereto shall be located in
the area described in Exhibit B hereto "(Development Area").
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2.02. Subject to the terms and conditions herein, Franchisor shall neither
establish nor license anyone other than Developer to establish an SBC Retail
Unit in the Development Area until sixty (60) days after the commencement of
operations of the final Franchised Unit under this Agreement, without
Developer's prior written consent. Notwithstanding the foregoing, nothing in
this Agreement shall be deemed in any way to limit Franchisor's right to sell
SBC coffee and related coffee products anywhere in the Territory or elsewhere,
including, but not limited to, sales on the Internet, by mail order, or through
wholesale distribution channels, including, but not limited to independent
coffee retailers, department stores, food marts, and grocery stores, during and
after the term of this Agreement (hereinafter "Wholesale Accounts"). Wholesale
Accounts of Franchisor may, in turn, sell SBC coffee and related SBC products in
the Territory or elsewhere under the same or different trademarks.
2.03. Each Franchised Unit 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 3.01
hereof.
2.04. This Agreement is not a franchise agreement, and does not grant the
Developer any right to use Franchisor's Proprietary Marks or the SBC System, but
merely sets forth the terms and conditions under which Developer will be
entitled to obtain a franchise agreement.
2.05. Developer shall have no right under this Agreement to license others
under the Proprietary Marks or to use the SBC System.
III. DEVELOPMENT FEE
3.01. In consideration of the development rights granted herein, Developer
has paid to the Franchisor upon execution of this Agreement a non-refundable
development fee ("Development Fee") of __________________________________
Dollars ($_____________) which Development Fee shall be fully earned by
Franchisor upon execution of this Development 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. Developer shall
execute a separate Franchise Agreement for each Franchised Unit which Developer
opens pursuant to this Development Agreement, and shall pay the Franchise Fees
set forth in Section 3.02 below in connection therewith. The Development Fee
shall be non-refundable. Provided Developer is not otherwise in default under
the terms of this Development Agreement and/or any other agreement between
Developer and Franchisor, Developer shall receive a credit in the amount of Ten
Thousand Dollars and NO/CENTS ($10,000.00) towards the Franchise Fee payable
under the Franchise Agreement for the first Franchised Unit developed hereunder
and Five Thousand Dollars ($5,000.00) for each additional Franchised Unit
developed hereunder until the total amount of the credits equals the Development
Fee paid by Developer hereunder. In no event shall the total amount of such
credits exceed the Development Fee paid by Developer to Franchisor hereunder.
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3.02 In consideration of the establishment of each Franchised Unit to be
developed hereunder and the assistance and services which will be received by
Developer under the franchise agreements, Developer shall pay to Franchisor a
non-refundable franchise fee as follows:
A. Thirty Thousand Dollars (U.S. $30,000) for the first SBC Cafe
developed hereunder, payable no later than execution of the
franchise agreement for such SBC Cafe, as described in Section IV
hereof, and
B. Twenty Thousand U.S. Dollars (U.S. $20,000) for each additional SBC
Cafe to be developed hereunder, payable no later than execution of
the franchise agreement for each such SBC Cafe, as described in
Section IV hereof.
C. Fifteen Thousand U.S. Dollars (U.S. $15,000) for each SBC Kiosk to
be developed hereunder, payable no later than execution of the
franchise agreement for each such SBC Kiosk, as described in Section
IV hereof. Notwithstanding anything to the contrary set forth
herein, in the event the first Franchised Unit developed hereunder
is an SBC Kiosk, the Franchise Fee for such Kiosk shall be Twenty
Thousand Dollars and No/100 ($20,000) payable upon execution of the
franchise agreement for such SBC Kiosk, as described in Section IV
hereof.
The franchise fees shall be non-refundable.
IV. DEVELOPMENT SCHEDULE
4.01. Developer shall exercise each development right granted herein only
by executing a Franchise Agreement for each Franchised Unit for a site accepted
by the Franchisor in the Development Area as hereinafter provided. Developer's
right to execute such a Franchise Agreement shall be contingent upon Developer's
continuous performance of all of the terms and conditions of this Agreement and
any other development, franchise or other agreements between Developer and
Franchisor. The Franchise Agreement for each Franchised Unit developed pursuant
to this Agreement shall be in the form of the Franchise Agreement attached
hereto as Exhibit C.
4.02. Recognizing that time is of the essence in this Agreement, Developer
agrees to exercise the development rights granted hereunder in the manner
specified in Section IV hereof and to satisfy the Development Schedule. Failure
by Developer to adhere to the Development Schedule shall constitute a default
under this Agreement, as provided in Section 6.03. hereof.
4.03. In addition to the development fee required by Section III hereof,
Developer shall, upon execution of the Franchise Agreement for each Franchised
Unit issued hereunder, pay an initial franchise fee in the amount referred to in
Section 3.02 hereof, all of which amount shall be non-refundable and fully
earned by Franchisor upon execution of the Franchise Agreement for such
Franchised Unit.
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V. DEVELOPMENT PROCEDURES
5.01. Developer assumes all cost, liability and expense for locating,
obtaining and developing the site for each Franchised Unit. Developer shall not
make any binding commitments to lease and/or purchase a proposed site until the
site has been accepted by Franchisor, in writing.
5.02 Franchisor will provide Developer with the following site selection
assistance: (1) SBC site-selection guidelines and, as Developer may request, a
reasonable amount of consultation with respect thereto; and (2) such on-site
evaluation as Franchisor may deem advisable as part of its evaluation of
Developer's request for site acceptance. Developer agrees that Franchisor will
incur no liability to Developer for site selection assistance provided by
Franchisor, except for gross negligence or willful misconduct.
5.03 Site Selection.
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A. Franchisor establishes, from time to time, site selection
criteria for demographic characteristics, traffic patterns,
parking, character of the neighborhood, competition from other
businesses in the area, the proximity to other businesses
(including other SBC Retail Units), the nature of other
businesses in proximity to the site and other commercial
characteristics (including the purchase price, rental
obligations and other lease terms for the proposed site) and
the size, appearance, other physical characteristics, and a
site plan of the premises. Developer shall select proposed
sites that it reasonably believes to conform to the site
selection criteria and submit to Franchisor a complete real
estate site package (containing that information as Franchisor
may reasonably require) for each proposed site (hereinafter a
"Site Acceptance Request" or "SAR").
B. Developer acknowledges that, in order to preserve and enhance
the reputation and goodwill of all SBC Retail Units and the
goodwill of the Proprietary Marks, all SBC Retail Units must be
properly developed, operated and maintained. Accordingly,
Developer agrees that Franchisor may refuse to accept a site
for a proposed Franchised Unit unless Developer demonstrates
sufficient financial capabilities, in Franchisor's sole
judgment, applying standards consistent with criteria
Franchisor uses to establish SBC Retail Units in other
comparable market areas, to properly develop, operate and
maintain the proposed Franchised Unit. To this end, Developer
shall furnish Franchisor with such financial statements and
other information regarding Developer and the development and
operation of the proposed Franchised Unit, including, without
limitation, investment and financing plans for the proposed
Franchised Unit, as Franchisor reasonably may require.
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5.04 Site Acceptance
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A. Within 45 days after Franchisor's receipt of the information
described in Section 5.03, Franchisor shall advise Developer in
writing whether it has accepted a particular site for development
of a Franchised Unit. Franchisor may accept a site subject to
certain conditions which Franchisor shall specify in writing. If
Franchisor does not accept a completed Site Acceptance Request
within 45 days, Franchisor shall be deemed to have denied
acceptance of the proposed site for the Franchised Unit.
Franchisor's acceptance or denial of acceptance of a proposed
site for a Franchised Unit may be subject to reasonable
conditions as determined in its sole discretion.
B. Franchisor's acceptance of a site for a Franchised Unit is not a
representation or a promise by Franchisor that a Franchised Unit
at that location will achieve any particular sales volume or that
it will be profitable. Similarly, Franchisor's acceptance of a
site and its refusal to accept other sites is not a
representation or a promise that the accepted site will have a
higher sales volume or be more profitable than a site which
Franchisor did not accept. Franchisor assumes no liability or
responsibility for: (1) inspection of any structure on a proposed
site for asbestos or other toxic or hazardous materials; (2)
compliance with the Americans With Disabilities Act ("ADA"); or
(3) compliance with any other applicable law. It is Developer's
sole responsibility to obtain satisfactory evidence and/or
assurances that the proposed site (and any structures thereon) is
free from environmental contamination and in compliance with the
requirements of the ADA.
5.05 Franchisor has the right, from time to time, to delegate the
performance of any portion or all of its obligations and duties under this
Agreement to designees, whether agents of Franchisor or independent contractors
with which Franchisor has contracted to provide this service.
5.06. Site Acquisition
----------------
A. Within ninety (90) days after notice of Franchisor's
acceptance of a proposed site, Developer shall submit,
in writing to Franchisor, satisfactory proof to
Franchisor that Developer:
(i) owns the accepted site; or
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(ii) has leased the accepted site for a term which,
with renewal options, is not less than the
initial term of the Franchise Agreement; or
(iii) has entered into a written agreement to purchase
or to lease the accepted site on terms provided
herein, subject only to obtaining necessary
governmental permits.
The proof required by this Section includes, but is not limited to,
submission of executed copies of all leases and deeds, as well as all
governmental approvals if effectiveness of the leases or deeds is
conditioned thereon.
B. If Developer proposes to lease or sublease the accepted
site, Developer shall provide Franchisor with a copy of
the fully-executed lease for the accepted site within
90 days after Franchisor's acceptance of the proposed
site, but, in any event, prior to the commencement of
construction at the site. The lease or sublease shall
not contain any covenants, use clauses or other
obligations that would prevent Developer from
performing its obligations under the Franchise
Agreement. Any lease, sublease, letter of intent or
lease memorandum for the Franchised Location shall
contain provisions that satisfy the following
requirements during the entire term of the lease,
including any renewal terms:
1. The landlord consents to Developer's use of the proprietary
signs, distinctive designs and layouts of the SBC System,
the Proprietary Marks, and upon expiration or the earlier
termination of the lease, consents to permit Developer, at
Developer's expense, to remove all such items and other
trade fixtures, so long as Developer makes repairs to the
building caused by such removal.
2. The landlord agrees to provide Franchisor (at the same time
sent to Developer) a copy of all amendments and assignments
and notices of default pertaining to the lease and the
leased premises.
3. Franchisor shall have the right to enter the leased premises
to make any modifications or alterations, at its own cost,
necessary to protect the Proprietary Marks and the SBC
System and to cure, within the time periods provided by the
lease, any default under the lease, all without being guilty
of trespass or other tort, and to charge Developer for these
costs.
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4. The landlord agrees that Developer shall be solely
responsible for all obligations, debts and payments under
the lease.
5. The landlord agrees that, following the expiration or
earlier termination of the Franchise Agreement, Developer
shall have the right to make those alterations and
modifications to the premises as may be necessary to clearly
distinguish to the public the premises from an SBC
Franchised Unit and also make those specific additional
changes as Franchisor reasonably may request for that
purpose. The landlord also agrees that, if Developer fails
to promptly make these alterations and modifications,
Franchisor shall have the right to do so without being
guilty of trespass or other tort so long as Franchisor makes
repairs to the building caused by such removal.
6. The landlord agrees not to amend or otherwise modify the
lease in any manner that would affect any of the foregoing
requirements without the prior written consent of
Franchisor, which consent shall not be unreasonably
withheld.
7. Developer may assign the lease to Franchisor or its designee
with landlord's consent (which consent shall not be
unreasonably withheld) and without payment of any assignment
fee or similar charge or increase in any rentals payable to
the landlord.
5.07 Construction of the Franchised Unit
A. Franchised Unit Development
---------------------------
1. Developer assumes all cost, liability and expense for
developing, constructing and equipping each Franchised Unit.
Franchisor will furnish to Developer prototypical plans and
specifications for an SBC Retail Unit, including
requirements for dimensions, design, image, interior layout,
decor, fixtures, equipment, signs, furnishings, storefront
and color scheme. It shall be Developer's responsibility to
have prepared all required construction plans and
specifications to suit the shape and dimensions of the
accepted site and Developer must ensure that these plans and
specifications comply with applicable ordinances, building
codes and permit requirements and with lease requirements
and restrictions. Developer shall use only registered
architects, registered engineers, and professional and
licensed contractors.
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2. Within ninety (90) days after notice of Franchisor's
acceptance of a proposed site, Developer shall:
(a) submit proposed construction plans, specifications and
drawings for the Franchised Unit ("Plans") to
Franchisor which must be in conformity with
Franchisor's then-current standards and specifications
for SBC Retail Units, as set out in the current
Confidential Operating Standards Manual (as defined in
the Franchise Agreement) or otherwise in writing, and
shall, upon the request of Franchisor, submit all
revised or "as built" Plans during the course of such
construction. Franchisor will approve or refuse to
approve the Plans and notify Developer within 30 days
after Franchisor receives the Plans. (Approval shall
not be unreasonably withheld.). The Plans shall
include, but are not limited to, floor plans, equipment
layouts, decor, and interior and exterior elevations.
Once Franchisor has approved the Plans, no substantial
change shall be made to the Plans without the prior
approval of Franchisor, which shall not to be
unreasonably withheld. If, in the course of
construction, any such change in the Plans is
contemplated, the approval of Franchisor must first be
obtained before proceeding. Franchisor shall approve or
disapprove Plan changes within 10 business days of
receipt; and
(b) execute the Franchise Agreement and pay all fees
required thereunder. If Developer is a partnership,
each general partner shall, and if Developer is a
corporation, each stockholder holding a beneficial
interest of five percent (5%) or more of the securities
with voting rights of Developer or any corporation
directly or indirectly controlling Developer shall,
guarantee the performance of the Franchise Agreement by
executing the Franchisor's Franchise Agreement
Guarantee form. Franchisor shall not approve the final
construction plans until the Franchise Agreement is
executed and all fees are paid by Developer.
3. Developer may not commence construction of any Franchised Unit
prior to receiving written notification from Franchisor that
it has approved the Plans for each Franchised Unit. All
construction must be in accordance with Plans approved by
Franchisor and must comply in all respects with applicable
laws, ordinances and local rules and regulations. The
Franchised Unit may not open if construction has not been
performed in substantial compliance with Plans approved by
Franchisor, and this Agreement may be terminated if such non-
compliance is not cured within a commercially reasonable
amount of
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time. Franchisor may furnish guidance to Developer in developing
the Franchised Unit and may periodically inspect the premises
during its development.
B. Commencement and Completion of Construction
-------------------------------------------
1. No more than thirty (30) days after the Franchisor approves
Developer's Plans, Developer shall commence construction or
renovation of the Franchised Unit. If commencement of
construction or renovation is delayed by a cause beyond the
reasonable control of Developer, the date upon which commencement
of construction or renovation is to begin may be extended by
obtaining written approval of Franchisor. Prior to the
commencement of construction, Developer shall: (1) eliminate or
otherwise satisfy all of the conditions set forth in writing by
Franchisor; (2) if not previously paid, pay Franchisor the
balance of the initial fees required by this Agreement; and (3)
provide Franchisor, if Developer leases the premises of the
Franchised Unit, a copy of the fully-executed lease for the
premises or, if Developer owns the premises, proof of Developer's
ownership interest and (4) procure the insurance coverage
provided for in Section XI of the Franchise Agreement, and
maintain such insurance coverage throughout the term of the
Franchise Agreement.
2. Upon commencement of construction or renovation of the
Franchised Unit, Developer shall notify Franchisor on such form
as Franchisor may prescribe.
3. Notwithstanding the occurrence of any events, except events
constituting Force Majeure, construction shall be completed and
the Franchised Unit shall be furnished, equipped and shall
otherwise be ready to open for business in accordance with this
Agreement not later than 180 days after the earlier to occur of
(i) Franchisor's acceptance of the site of the Franchised Unit or
(ii) the date of execution of the Franchise Agreement ("the
Opening Date"). If events constituting Force Majeure cause a
delay in the commencement of construction of the Franchised Unit,
Franchisor shall proportionately extend the Opening Date for the
Franchised Unit.
4. Developer agrees, at its sole expense, to do or cause to be
done the following, by the Opening Date:
(a) Obtain and maintain all required building, utility,
sign, health, sanitation, business and other permits and
licenses applicable to the Franchised Unit.
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(b) Construct all required improvements to the premises and
decorate the interior of the Franchised Unit in
compliance with the Plans approved by Franchisor.
(c) Purchase or lease and install all specified and
required fixtures, equipment, furnishings and signs
required for the Franchised Unit.
(d) Purchase an opening inventory for the Franchised Unit
of only authorized and approved products and other
materials and supplies.
C. Acquisition of Necessary Furnishings, Fixtures and Equipment
------------------------------------------------------------
1. Developer agrees to use in the development and operation of
the Franchised Unit only those fixtures, furnishings, equipment
and signs that Franchisor has approved for SBC Retail Units as
meeting its specifications and standards for quality, design,
appearance, function and performance. Developer further agrees to
place or display at the Franchised Unit only those signs,
emblems, lettering, logos and display materials that Franchisor
approves in writing from time to time.
2. Developer shall purchase or lease approved brands, types or
models of fixtures, furnishings, equipment and signs only from
suppliers designated or approved by Franchisor, which may include
Franchisor. If Developer proposes to purchase, lease or otherwise
use any fixtures, furnishings, equipment or signs which have not
been approved by Franchisor, Developer shall first notify
Franchisor in writing and shall, at its sole expense, submit to
Franchisor upon its request sufficient specifications,
photographs, drawings and/or other information or samples for a
determination as to whether those fixtures, furnishings,
equipment and/or signs comply with the specifications and
standards of Franchisor. Franchisor will, in its sole discretion,
approve or disapprove the items and notify Developer within 30
days after Franchisor receives the request.
3. If Developer builds any portion of the Franchised Unit not
in compliance with the approved plans and/or the SBC System
specifications without receiving prior written consent of
Franchisor, Franchisor shall have the right to delay the opening
of the Franchised Unit until Developer, at its sole expense,
brings the Franchised Unit's development within full compliance
of the specifications.
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D. Inspection, Cooperation
-----------------------
During the course of construction and/or renovation of the
Franchised Unit, Developer shall (and shall cause Developer's
architect, engineer, contractors, and subcontractors to)
cooperate fully with Franchisor and its designees for the purpose
of permitting Franchisor and its designees to inspect the
premises of the Franchised Unit and the course of construction
and/or renovation of the Franchised Unit in order to determine
whether construction and/or renovation is proceeding according to
the Plans. Without limiting the generality of the foregoing,
Developer, and Developer's architect, engineer, contractors and
subcontractors shall: (1) supply Franchisor or its designees with
samples of construction and/or renovation materials, due
diligence environmental studies, supplies, equipment and other
material and reports, if any such tests, studies or reports
indicate there may be material problems or as Franchisor or its
designees may request; and (2) afford representatives of
Franchisor and its designees access to the Franchised Location
and to the construction and/or renovation work in order to permit
Franchisor and its designees to carry out inspections.
5.08. Limitation of Liability. Notwithstanding the right of Franchisor to
------------------------
approve the Plans and to inspect the construction and/or renovation of the
Franchised Unit, Franchisor and its designees shall have no liability or
obligation with respect to the premises of the Franchised Unit, the design,
construction or renovation of the Franchised Unit or the furnishings, fixtures
and equipment to be required; the rights of Franchisor being exercised solely
for the purpose of ensuring compliance with the terms and conditions of this
Agreement.
5.09 Right to Open the Franchised Unit
1. Developer shall notify Franchisor in writing at least 30 days
prior to the date Developer expects construction and/or
renovation of each Franchised Unit to be completed and a
certificate of occupancy issued. Franchisor reserves the right,
after receiving Developer's notice, to conduct a final inspection
of the Franchised Unit and its premises to determine if Developer
has complied with this Agreement. Franchisor shall not be liable
for delays or loss occasioned by its inability to complete its
investigation and to make a determination within this period.
Developer shall not open the Franchised Unit for business without
the express written authorization of Franchisor, which will not
be granted unless Developer has satisfied the following
conditions:
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1. Developer is not in material default under this Agreement or any
other agreements with Franchisor; Developer is not in default
beyond the applicable cure period under any real estate lease,
equipment lease or financing instrument relating to the
Franchised Unit (or any other Franchised Unit), Developer is not
in default beyond the applicable cure period with any vendor or
supplier to the Franchised Unit (or any other Franchised Unit)
and, for the previous 6 months, Developer has not been in default
beyond the applicable cure period under any agreement with
Franchisor.
2. Developer has executed the Franchise Agreement for the Franchised
Unit (and all other Franchised Units), is current on all
obligations due Franchisor and has paid Franchisor the balance of
the initial fees required by this Agreement (and all other
Agreements).
3. Franchisor is satisfied that the Franchised Unit was constructed
and/or renovated substantially in accordance with the Plans
approved by Franchisor and state and local codes.
4. If the premises of the Franchised Unit is leased, Franchisor has
received a copy of the fully-executed lease.
5. Developer has obtained a certificate of occupancy and any other
required health, safety or fire department certificates. If
requested by Franchisor, Developer shall submit a copy of the
certificate of occupancy to Franchisor.
6. Developer has certified to Franchisor in writing that the
installation of all items of furnishings, fixtures, equipment,
signs, computer terminals and related equipment, supplies and
other items has been accomplished and that Developer has hired
and properly trained its staff.
7. Franchisor has determined that the Franchised Unit has been
constructed and/or renovated and equipped substantially in
accordance with the requirements of this Agreement and that
Developer has hired and trained a staff in accordance with the
requirements of this Agreement and the Franchise Agreement.
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8. Franchisor has been furnished with copies of all insurance
policies required by Section XI of the Franchise Agreement
or such other evidence of insurance coverage and payment of
premiums as Franchisor reasonably may request.
B. If the Franchised Unit is Developer's first Franchised Unit
opened hereunder, Franchisor shall provide a representative to be present
at the opening. The Franchised Unit shall not be opened unless such
representative is present. Should commencement of operation of the
Franchised Unit be delayed by the failure of Franchisor to provide such a
representative, the date upon which commencement of operation of the
Franchised Unit is required pursuant to Exhibit A of this Agreement, shall
be extended until such time as such assistance is provided by Franchisor.
VI. DEFAULT AND TERMINATION
6.01. The rights granted to Developer in this Agreement have been granted
based upon Developer's representations and assurances, among others, that the
conditions set forth in Sections IV and V of this Development Agreement will be
met by Developer in a timely manner.
6.02. 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; if a petition in bankruptcy is filed by Developer or
such a petition is filed against Developer and not opposed by Developer; or if
Developer is adjudicated bankrupt or insolvent; 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 the applicable law of any
jurisdiction should be instituted by or against Developer; or if a final
judgment remains unsatisfied or of record for thirty (30) days or longer (unless
a supersedeas bond is filed); or if Developer is dissolved; or if execution is
levied against Developer's property or business; or if suit to foreclose any
lien or mortgage against the premises or equipment of any Franchised Unit
developed hereunder is instituted against the Developer and not dismissed within
thirty (30) days; or if the real or personal property of any Franchised Unit
developed hereunder shall be sold after levy thereupon by any sheriff, Marshall,
or constable.
6.03. If Developer fails to comply with the Development Schedule or any
other terms of this Agreement, or fails to obtain Franchisor's approval of a
site or construction plans and specifications prior to commencement of
construction, or fails to comply with any terms or conditions of any franchise
agreement covering a Franchised Unit established hereunder, or any other
agreement between Developer or any affiliate of Developer and Franchisor or any
affiliate of Franchisor, such action shall constitute a default under this
Development Agreement. Upon such
14
default, Franchisor, in its discretion, may, effective immediately upon the
mailing of written notice by Franchisor to Developer, do any one or more of the
following:
A. Terminate this Agreement and all rights granted hereunder without
affording the Developer any opportunity to cure the default;
B. Reduce the number of Franchised Units which Developer may establish
pursuant to Section 1.01 of this Agreement;
C. Terminate the territorial exclusivity granted Developer in Section
1.01 hereof or reduce the area of territorial exclusivity granted
Developer hereunder;
D. Withhold evaluation or approval of site proposal packages and
refuse to permit the opening of any Franchised Unit then under
construction or otherwise not ready to commence operations; or
E. Accelerate the Development Schedule set forth in Exhibit A hereto.
In addition to the foregoing, Franchisor shall be entitled to pursue any
other remedies available hereunder or at law or in equity.
6.04. Upon termination of this Agreement, Developer shall have no right
to establish or operate any Franchised Unit for which a Franchise Agreement has
not been executed by Franchisor and delivered to Developer at the time of
termination; and Franchisor shall be entitled to establish, and to license
others to establish, Franchised Units in the Development Area, except as may be
provided under any other agreement which is then in effect between Franchisor
and Developer.
6.05. A default in the Development Schedule under this Development
Agreement shall not constitute a default under any existing Franchise Agreement
between the parties hereto.
VII. TRANSFERABILITY OF INTEREST
7.01. Transfer by Franchisor. This Agreement shall inure to the benefit
----------------------
of the successors and assigns of Franchisor. Franchisor shall have the right to
transfer or assign its interest in this Agreement to any person, persons,
partnership, association, or corporation. If Franchisor's assignee assumes all
the obligations of Franchisor hereunder and sends written notice of the
assignment so attesting, Developer agrees promptly to execute a general release
of Franchisor, and any affiliates of Franchisor, from claims or liabilities of
Franchisor under this Agreement.
7.02. Transfer by Developer. Developer understands and acknowledges that
---------------------
the rights and duties set forth in this Agreement are personal to Developer, and
that Franchisor has granted this
15
Agreement in reliance on Developer's business skill and financial capacity.
Accordingly, neither (i) Developer, nor (ii) any immediate or remote successor
to Developer, nor (iii) any individual, partnership, corporation or other legal
entity which directly or indirectly owns any interest in the Developer or in
this Development Agreement, shall sell, assign, transfer, convey, donate,
pledge, mortgage, or otherwise encumber any direct or indirect interest in this
Agreement or in Developer without the prior written consent of Franchisor. Any
purported assignment or transfer, by operation of law or otherwise, not having
the written consent of Franchisor, shall be null and void, and shall constitute
a material breach of this Agreement, for which Franchisor may then terminate
without opportunity to cure pursuant to Section 6.03. of this Agreement.
Notwithstanding anything in this Agreement to the contrary, Developer
understands and acknowledges that individual development rights to obtain
franchises to establish and operate Franchised Units may not be transferred
except in connection with a transfer of this Development Agreement, together
with all remaining development options due to be developed under this Agreement,
in accordance with the conditions set forth herein.
7.03. Conditions for Consent. Franchisor shall not unreasonably withhold
----------------------
its consent to any transfer referred to in this Section hereof for the remainder
of the term hereof, when requested; provided, however, that prior to the time of
transfer:
A. Developer shall not be in default of the Development Schedule;
B. The transfer must be in conjunction with a simultaneous
transfer to the same transferee of all Franchised Units
operated by Developer under the SBC System within the same
DMA('s) as the remaining development options ;
C. All of Developer's accrued monetary obligations to Franchisor
and its subsidiaries and affiliates shall have been satisfied;
D. Developer shall have agreed to remain obligated under the
covenants contained in Sections VII and VIII hereof as if this
Agreement had been terminated on the date of the transfer;
E. The transferee must be of good moral character and reputation,
in the reasonable judgment of the Franchisor;
F. The transferee shall have demonstrated to the Franchisor's
satisfaction, by meeting with the Franchisor or otherwise at
Franchisor's option, that the transferee's qualifications meet
the Franchisor's then current criteria for new developers;
G. The parties must execute a written assignment, in a form
satisfactory to Franchisor, pursuant to which the transferee
shall assume all of the
16
obligations of the individual or entity which is the transferor
under this Agreement and pursuant to which Developer shall
generally release any and all claims it might have against
Franchisor as of the date of the assignment;
H. The transferee must, at Franchisor's option, execute the then-
current form of Development Agreement and such other then-current
ancillary agreements as Franchisor may reasonably require. The
then-current form of Development Agreement may have significantly
different provisions, provided, however, that Exhibits A and B
hereto shall be Exhibits A and B to such development agreement;
I. If the transferee is a partnership, the partnership agreement shall
provide that further assignments or transfers of any interest in
the partnership are subject to all restrictions imposed upon
assignments and transfers in this Agreement;
J. Developer shall, at Franchisor's option and request, execute a
written guarantee of the transferee's obligations under the
Agreement, which such guarantee shall not exceed a period of three
(3) years from the date of transfer; and
K. The Developer or the transferee shall have paid to Franchisor a
transfer fee of Five Thousand Dollars ($5,000), to cover
Franchisor's administrative expenses in connection with the
transfer, but no development fees shall be charged by Franchisor
for a transfer. If the transferee is a corporation formed by
Developer for the convenience of ownership and in which the
Developer is the sole shareholder, no transfer fee shall be
required.
7.04. Grant of Security Interest. Developer shall grant no security
--------------------------
interest in this Agreement unless the secured party agrees that, in the event of
any default by Developer under any documents related to the security interest,
(i) Franchisor shall be provided with notice of default and be given a
reasonable time within which to cure said default, (ii) Franchisor shall have
the right and option to be substituted as obligor to the secured party and to
cure any default of Developer or to purchase the rights of the secured party
upon payment of all sums then due to such secured party, except such amounts
which may have become due as a result of any acceleration of the payment dates
based upon the Developer's default, and (iii) such other requirements as
Franchisor, in its sole discretion, deems reasonable and necessary to protect
the integrity of the Proprietary Marks and the SBC System.
17
7.05. Death or Mental Incapacity. Upon the death or mental incapacity of
--------------------------
any person with an interest in this Agreement or in Developer, the executor,
administrator, or personal representative of such person shall transfer his
interest to a third party approved by Franchisor within twelve (12) months after
such death or mental incapacity. Such transfer, including, without limitation,
transfer by devise or inheritance, shall be subject to the same conditions as
any inter vivos transfer. However, in the case of transfer by devise or
----- -----
inheritance, if the heirs or beneficiaries of any such person are unable to meet
the conditions in this Section VII, the personal representative of the deceased
Developer shall have a reasonable time, but no more than eighteen (18) months
after the death of the Developer, to dispose of the deceased's interest in this
Agreement and the business conducted pursuant hereto, which disposition shall be
subject to all the terms and conditions for assignments and transfers contained
in this Agreement. If the interest is not disposed of within twelve (12) or
eighteen (18) months, whichever is applicable, Franchisor may terminate this
Agreement pursuant to Section 5.03 hereof.
7.06. Right of First Refusal. Any party holding any interest in this
----------------------
Agreement or in Developer, and who desires to accept any bona fide offer from a
---- ----
third party to purchase such interest, shall notify Franchisor in writing of
such offer within ten (10) days of receipt of 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 sixty
(60) 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 7.06 shall not constitute a waiver
of any other provisions of this Agreement, including all of the requirements of
this Section VII, with respect to a proposed transfer.
In the event the consideration, terms, and/or conditions offered by a third
party are such that Franchisor may not reasonably be required to furnish the
same consideration, terms, and/or conditions, then Franchisor may purchase the
interest in this Agreement, Developer, or Developer's business proposed to be
sold for the reasonable equivalent in cash. If the parties cannot agree within
a reasonable time as to the reasonable equivalent in cash of the consideration,
terms, and/or conditions offered by the third party, an independent appraiser
shall be designated by Franchisor, and his determination shall be binding upon
the parties.
7.07. 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, which consent shall not be
unreasonably withheld. All materials required for such offering by federal or
state law shall be submitted to Franchisor for review prior to their being filed
with any governmental agency; and any materials to be used in any exempt
offering shall be submitted to Franchisor for review prior to their use. No
offering of such securities shall imply (by
18
use of the Proprietary Marks or otherwise) that Franchisor is participating in
the underwriting, issuance, or offering of securities by Developer or
Franchisor; and Franchisor's review of any offering shall be limited solely to
the subject of the relationship between Developer and Franchisor. 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 non-refundable 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 any offering
or other transaction covered by this Section 7.07.
VIII. CONFIDENTIAL INFORMATION
8.01. Developer shall not, 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 construction and methods of operation of
any Franchised Unit which may be communicated to Developer, or of which
Developer may be apprised, by virtue of Developer's operation under the terms of
this Agreement. Developer shall divulge such confidential information only to
such employees of Developer as must have access to it in order to exercise the
development rights granted hereunder and to establish and operate the Franchised
Units pursuant to the Franchise Agreement and as Developer may be required by
law, provided, Developer shall give Franchisor prior written notice of any such
required disclosure immediately upon receipt of notice by Developer in order for
Franchisor to have the opportunity to seek a protective order or take such other
actions as it deems appropriate under the circumstances.
8.02. Any and all information, knowledge, and know-how, including, without
limitation, drawings, materials, equipment, recipes, prepared mixtures or blends
of coffees r other food products, and other data, which Franchisor designates as
confidential, and any information, knowledge, or know-how which may be derived
by analysis thereof, shall be deemed confidential for purposes of this
Development Agreement, except information which Developer can demonstrate came
to Developer's attention prior to disclosure thereof by Franchisor or which, at
the time of disclosure thereof by Franchisor to Developer, had become a part of
the public domain, through publication or communication by others or which,
after disclosure to Developer by Franchisor, becomes a part of the public
domain, through publication or communication by others.
8.03. Developer shall require all of Developer's employees, as a condition
of their employment, to execute an employment agreement, as provided in writing
by Franchisor, prohibiting them during the term of their employment, or
thereafter, from communicating, divulging, or using for the benefit of any
person, persons, partnership, association, or corporation any confidential
information, knowledge, or know-how concerning the methods of operation of the
franchised
19
business which may be acquired during the term of their employment with
Developer. A duplicate original of each such agreement shall be provided to
Franchisor upon execution.
IX. COVENANTS
9.01. Developer specifically acknowledges that, pursuant to this
Agreement, Developer will receive valuable specialized training and confidential
information, including, without limitation, information regarding the
operational, sales, promotional, and marketing methods and techniques of
Franchisor and the System. Developer covenants that, during the term of this
Agreement, except as otherwise approved in writing by Franchisor, Developer
(who, unless otherwise specified, shall include for purposes of this Section IX,
collectively and individually, all officers, directors and holders of a
beneficial interest of five percent (5%) or more of the securities with voting
rights of Developer, and of any corporation directly or indirectly controlling
Developer, if Developer is a corporation, and the general partners and any
limited partners, including any corporation and the officers, directors and
holders of beneficial interests of five percent (5%) or more of the securities
with voting rights, of a corporation which controls, directly or indirectly, any
general or limited partner, if Developer is a partnership) shall not, either
directly or indirectly, for Developer or through or on behalf of, or in
conjunction with, any person, persons, partnership, or corporation:
A. Divert or attempt to divert any business or customer of the
Franchised Units to be developed hereunder to any competitor by
direct or indirect inducements or otherwise, or to do or
perform, directly or indirectly, any other act injurious or
prejudicial to the goodwill associated with Franchisor's
Proprietary Marks and the System;
B. Employ or seek to employ any person who is at the time employed
by Franchisor or by any other SEATTLE' BEST COFFEE franchisees
or otherwise, or directly or indirectly induce such person to
leave his or her employment; or
C. Own, maintain, operate, engage in, or have any interest in any
business that prepares, offers, sells, roasts and/or distributes
specialty coffee products and/or any product or service
substantially similar to those sold within the SEATTLE' BEST
COFFEE System (a "Specialty Coffee Shop"); provided, however,
that the term "Specialty Coffee Shop" shall not apply to any
business operated by Franchisee under a franchise agreement with
Franchisor or an affiliate of Franchisor. During the term of
this Agreement, there is no geographical limitation on this
restriction.
9.02. Developer covenants that, except as otherwise approved in writing by
the Franchisor, Developer shall not, either directly or indirectly, for itself
or through or on behalf of, or in
20
conjunction with, any person, persons, partnership or corporation, during the
term hereof or for two (2) years following expiration or termination of this
Agreement, regardless of the cause for termination, own, maintain, engage in, or
have an interest in any Specialty Coffee Shop which is located within a radius
of ten (10) miles of the location of any other SBC Retail Unit, whether owned by
Franchisor or any other SBC franchisee, which is in existence as of the date of
expiration or termination of this Agreement.
9.03. 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 all officers, directors, and holders of a direct or indirect
beneficial ownership interest of five percent (5%) or more in Developer. Every
covenant required by this Section 9.03. shall be in a form satisfactory to
Franchisor, including, without limitation, specific identification of Franchisor
as a third party beneficiary of such covenants with the independent right to
enforce them. Failure by Developer to obtain execution of a covenant required
by this Section 9.03. shall constitute a material breach of this Agreement.
X. NOTICES
Any and all notices required or permitted under this Agreement shall be in
writing and shall be delivered by any means which will provide evidence of the
date received 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: SEATTLE'S BEST COFFEE, LLC.
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
cc: AFC ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Notices to Developer: ________________________
Attention: _____________
All written notices and reports permitted or required to be delivered by
the provisions of this Agreement shall be addressed to the party to be notified
at its most current principal business address of which the notifying party has
been notified and shall be deemed so delivered (i) at the time delivered by
hand; (ii) one (1) business day after sending by telegraph, facsimile or
comparable electronic system; or (iii) if sent by registered or certified mail
or by other means which affords the
21
sender evidence of delivery, on the date and time of receipt or attempted
delivery if delivery has been refused or rendered impossible by the party being
notified.
XI. NON-WAIVER
No failure of Franchisor to exercise any power reserved to it in this
Agreement, or to insist upon compliance by Developer 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 right
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 rights arising out of any breach or default by Developer 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 right to declare any subsequent breach or default.
Subsequent acceptance by Franchisor of any payments due to it shall not be
deemed to be a waiver by Franchisor of any preceding breach by Developer of any
terms, covenants, or conditions of this Agreement.
XII. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
12.01. 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 purpose whatsoever.
12.02. 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.
12.03. Developer understands and agrees that nothing in this Agreement
authorizes the Developer to make any contract, agreement, warranty, or
representation on Franchisor's behalf, or to incur any debt or any 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 any claim or judgement arising
therefrom. Developer shall indemnify and hold Franchisor and Franchisor's
officers, directors, shareholders, and employees, harmless against any and all
such claims arising directly or indirectly from, as a result of, or in
connection with Developer's activities, as well as the cost, including
attorney's fees, of defending against such claims.
12.04. Developer shall indemnify and hold Franchisor harmless for all
costs, expenses, or losses incurred by Franchisor in enforcing the provisions
hereof or in upholding the propriety of any action or determination by
Franchisor pursuant to this Agreement, or arising in any manner from
22
Developer's breach of or failure to perform any covenant or obligation
hereunder, including, without limitation, reasonable attorney's fees incurred by
Franchisor in connection with any litigation relating to any aspect of this
Agreement, unless Developer shall be found, after due legal proceedings, to have
complied with all of the terms, provisions, conditions and covenants hereof.
XIII. APPROVALS
13.01. Whenever this Agreement requires the prior approval of
Franchisor, Developer shall make a timely written request to Franchisor
therefor, and, except as may otherwise be expressly provided herein, any
approval or consent granted shall be in writing.
13.02. Franchisor makes no warranties or guaranties upon which Developer
may rely, and assumes no liability or obligation to Developer or any third party
to which Franchisor would not otherwise be subject, by providing any waiver,
approval, advice, consent, or services to Developer in connection with this
Agreement, or by reason of any neglect, delay, or denial of any request
therefor.
XIV. ACKNOWLEDGMENT
14.01. Developer acknowledges that the success of the business venture
contemplated by this Agreement involves substantial business risks and will be
largely dependent upon the ability of Developer as an independent businessman.
Franchisor expressly disclaims the making of, and Developer acknowledges not
having received, any warranty or guaranty, expressed or implied, as to the
potential volume, profits, or success of the business venture contemplated by
this Agreement.
14.02. Developer acknowledges that Developer has received, read, and
understands this Agreement, the exhibits hereto, and agreements relating hereto,
if any; and the 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.
14.03. Developer acknowledges that Developer has received a complete
copy of this Agreement, the exhibits hereto, and agreements relating hereto, if
any, at least five (5) business days prior to the date upon which this Agreement
was executed. Developer further acknowledges that Developer has received the
Uniform Franchise Offering Circular 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.
23
XV. SEVERABILITY AND CONSTRUCTION
15.01. 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, 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 to bind the parties; and said invalid portions,
sections, parts, terms, and/or provisions shall be deemed not to be part of this
Agreement.
15.02. Except as has been 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 Developer's and Franchisor's respective successors
and assigns as may be contemplated (and, as to Developer, permitted) by Section
VI hereof, any rights or remedies under or by reason of this Agreement.
15.03. Developer expressly agrees to be bound by any covenant or promise
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 will 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 court order.
15.04. 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 the provisions hereof.
15.05. All provisions of this Agreement which, by their terms or intent,
are designed to survive the expiration or termination of this Agreement, shall
so survive the expiration and/or termination of this Agreement.
15.06. This Agreement may be executed in multiple originals and each
copy so executed deemed an original.
XVI. ENTIRE AGREEMENT AND APPLICABLE LAW
16.01. This Agreement, the documents referred to herein, and the
exhibits hereto, constitute the entire, full, and complete agreement between
Franchisor and Developer concerning the subject matter hereof and supersede any
and all prior agreements. Except for those permitted to be made unilaterally by
Franchisor hereunder, no amendment, change, or variance from this
24
Agreement shall be binding on either party unless mutually agreed to by the
parties and executed by their authorized officers or agents in writing.
16.02. Applicable Law. This Agreement takes effect upon its acceptance
--------------
and execution by Franchisor and shall be interpreted and construed under the
laws of the State of Georgia which laws shall prevail in the event of any
conflict of law (without regard to, and without giving effect to, the
application of Georgia choice of law or conflict of law rules); provided,
however, that if the covenants in Article IX of this Agreement would not be
enforceable under the laws of Georgia, then such covenants shall be interpreted
and construed under the laws of the State in which the Developer operates the
Franchised Units developed hereunder, or in the State where Developer is
domiciled if Developer, at such time, is not operating any Franchised Units.
Nothing in this Section XVI is intended by the parties to subject this Agreement
to any franchise or similar law, rule, or regulation of the State of Georgia to
which this Agreement would not otherwise be subject.
16.03. The parties agree that any action brought by Developer against
Franchisor in any court, whether federal or state, shall be brought within a
court of competent jurisdiction in Atlanta, Georgia. Any action brought by
Franchisor against Developer in any court, whether federal or state, may be
brought within the state and in the judicial district in which Franchisor has
its principal place of business or within a court of competent jurisdiction in
Atlanta, Georgia. Developer hereby waives all questions of personal jurisdiction
or venue for the purpose of carrying out this provision.
16.04. No right or remedy herein conferred upon or reserved to
Franchisor is exclusive of any other right or remedy herein, or by law or equity
provided or permitted; but each shall be cumulative of any other right or remedy
provided in this Agreement.
16.05. Nothing herein contained shall bar Franchisor's right to obtain
injunctive relief against threatened conduct that will cause it loss or damages,
under the usual equity rules, including the applicable rules for obtaining
restraining orders and preliminary injunctions.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed, sealed, and delivered this Agreement in multiple
originals as of the day and year first above-written.
SEATTLE'S BEST COFFEE, LLC. DEVELOPER:
By:____________________________ By:______________________________
Title:_________________________ Title:___________________________
25
EXHIBIT A
DEVELOPMENT SCHEDULE
CUMULATIVE
NUMBER OF NUMBER OF
FRANCHISED FRANCHISED
UNITS UNITS
TO BE OPENED AND TO BE OPEN AND IN
IN OPERATION DATE OPENED OPERATION
------------ ----------- ---------
TO BE INITIALED BY BOTH PARTIES:
FRANCHISOR: ________ DEVELOPER: _______
26
EXHIBIT B
Description of Development Area
-------------------------------
(The following are specifically excluded from the Development Area: military
bases, public transportation facilities, toll road plazas, universities,
recreational theme parks and the interior-structural confines of shopping
malls).
TO BE INITIALED BY BOTH PARTIES
FRANCHISOR: ________ DEVELOPER:_______
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EXHIBIT C
FRANCHISE AGREEMENT
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EXHIBIT 10.46
AMENDMENT TO DEVELOPMENT AGREEMENT
(Non-Exclusive Development Agreement)
THIS AMENDMENT TO DEVELOPMENT AGREEMENT (this "Amendment") is made and
entered into this ____ day of ___________________, 2000 by and between SEATTLE'S
BEST COFFEE, L.L.C., a Washington limited liability company, with its principal
offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(hereinafter referred to as "Franchisor") and ANTON'S AIRFOODS, INC., a Virginia
corporation, with its principal offices at ▇▇▇▇▇▇ ▇▇▇▇▇▇ National Airport,
Washington, DC 20001 (hereinafter referred to as "Developer").
W I T N E S S E T H:
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WHEREAS, Developer and Franchisor entered into a Seattle's Best Coffee
Development Agreement dated ___________, 2000 (hereinafter the "Development
Agreement"); and
WHEREAS, Developer and Franchisor desire to amend the terms and conditions
of the Development Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto hereby agree to
amend the Development Agreement as follows:
1. This Amendment shall be attached to, incorporated in, and become a part
of, the Development Agreement. The terms and conditions stated in this
Amendment, to the extent they are inconsistent with the terms and conditions
stated in the Development Agreement, shall prevail over the terms of the
Development Agreement.
2. Section 2.01 of the Development Agreement is hereby deleted in its
entirety and the following new provision is inserted in lieu thereof:
"2.01. Franchisor hereby grants the Developer, subject to the terms and
conditions of this Development Agreement and as long as Developer shall not be
in default of this Agreement or any other development, franchise or other
agreement between Developer and Franchisor, non-exclusive development rights to
obtain franchises to establish and operate 2 Franchised Units, and to
----------
use the SBC System solely in connection therewith, at specific locations to be
designated in separate franchise agreements ("Franchise Agreements"), executed
as provided in Section 3.01. hereof, and pursuant to the schedule set forth in
Exhibit A to this Agreement ("Development Schedule"). Each Franchised Unit
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developed pursuant hereto shall be located in the area described in Exhibit B
---------
hereto ("Development Area")."
3. Section 2.02 of the Development Agreement is hereby deleted in its
entirety and the following new provision is inserted in lieu thereof:
"2.02 This Agreement is non-exclusive. Franchisor retains the right at
all times to establish or to license others to establish Franchised
Units in the Development Area."
4. This Amendment and the documents referred to herein, constitute the
entire, full and complete agreement between Franchisor and Developer concerning
the subject matter hereof and supersede any and all prior agreements. No other
representations have induced Developer to execute this Amendment, and there are
no representations, inducements, promises, or agreements, oral or otherwise,
between the parties not embodied herein which are of any force or effect with
reference to this Amendment or otherwise. No amendment, change, or variance
from this Amendment shall be binding on either party unless executed in writing.
5. The Development Agreement and this Amendment shall be governed by the
laws of the State of Georgia, without regard to application of Georgia choice of
law rules.
6. The Development Agreement shall remain in full force and effect except
as specifically amended herein.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound hereby
have executed this Amendment in duplicate on the day and year first written.
WITNESS: FRANCHISOR:
SEATTLE'S BEST COFFEE, L.L.C.
__________________________ By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Authorized Agent and
Assistant General Counsel
WITNESS: DEVELOPER:
ANTON'S AIRFOODS, INC.
__________________________ By: ______________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
President
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