Exhibit 10(b)
EXHIBIT B
(TO AREA MARKETER FRANCHISE OFFERING CIRCULAR)
PAK MAIL CENTERS OF AMERICA, INC.
AREA MARKETING AGREEMENT
(2/23/99)
PAK MAIL CENTERS OF AMERICA, INC.
AREA MARKETING AGREEMENT
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Territory
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Date
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Area Marketer
PAK MAIL CENTERS OF AMERICA, INC.
AREA MARKETING AGREEMENT
TABLE OF CONTENTS
Section Number Page Number
1. BACKGROUND AND PURPOSE.............................................1
2. DEFINITIONS........................................................1
2.1. Territory.................................................1
2.2. Sales Year................................................1
2.3. Franchise Agreement.......................................1
2.4. A.M. P.M. MOVERS Program..................................2
2.5. Franchisee................................................2
2.6. System Manual.............................................2
3. SCOPE OF APPOINTMENT...............................................2
3.1. Appointment of Marketer/Scope of Operations...............2
3.2. Rights and Limitations to Territory.......................2
3.3. Franchisor's Reservation of Rights........................3
4. FRANCHISE SALES PROCEDURES.........................................3
4.1. Sales Goals...............................................3
4.2. Franchise Registration and Disclosure.....................3
4.3. Advertising, Recruiting and Screening.....................4
4.4. Franchisor's Approval of Prospective Franchisees..........4
5. PAYMENTS TO THE FRANCHISOR.........................................4
5.1. Initial Area Marketing Fee................................4
6. PAYMENTS TO THE AREA MARKETER......................................5
6.1. Commissions on Sales Services.............................5
6.2. Commissions on Transfers of Franchises....................5
6.3. Service Fees..............................................5
6.4. Application of Payments...................................6
6.5. Setoffs...................................................6
7. TRAINING ASSISTANCE................................................6
7.1. Area Marketer Training....................................6
7.2. Length of Training........................................7
7.3. Additional Training.......................................7
7.4. Seminars and Ongoing Training.............................7
8. FRANCHISOR'S OPERATING ASSISTANCE..................................7
8.1. System Manual.............................................7
8.2. Operating Assistance......................................8
9. AREA MARKETER'S OBLIGATIONS........................................8
9.1. Hiring and Training of Employees of Area Marketer.........8
9.2. Commencement of Business..................................8
9.3. Sales Services............................................8
9.4. Pre-Opening Support Services..............................8
9.5. Ongoing Support Services..................................9
9.6. Compliance with Franchise Agreement.......................9
9.7. Area Marketer's Inspections..............................10
10. MARKS.............................................................10
10.1 Ownership and Goodwill of Marks .........................10
10.2 Limitations on Use ......................................10
10.3 Discontinuance of Use of Marks...........................11
10.4 Notification of Infringements and Claims.................11
10.5 Indemnification..........................................11
11. CONFIDENTIAL INFORMATION..........................................11
11.1 Confidential Information.................................11
11.2 Confidentiality and Noncompetition Agreement.............12
12. EXCLUSIVE RELATIONSHIP............................................12
12.1 Exclusive Relationship.................................. 12
13. OPERATING STANDARDS...............................................13
13.1 Standards of Service.....................................13
13.2 Compliance with Laws and Good Business Practices........ 13
13.3 Accuracy of Information..................................13
13.4 Notification of Litigation...............................13
13.5 Ownership and Management of Business.....................14
13.6 Conflicting Interests....................................14
13.7 Insurance................................................14
13.8 Proof of Insurance Coverage..............................14
13.9 Advertising in Territory.................................15
13.10 Approval of Advertising..................................15
13.11 Accounting, Bookkeeping and Records......................15
13.12 Reports..................................................15
13.13 Late Charges.............................................16
13.14 Compliance with Third Party Agreements...................16
14. INSPECTIONS AND AUDITS............................................16
14.1 Inspections and Audits...................................16
15. TRANSFERS.........................................................16
15.1 Transfers by the Franchisor..............................16
15.2 Transfers by the Marketer................................16
15.3 Conditions for Approval of Transfer......................17
15.4 Transfer to an Entity....................................18
15.5 Franchisor's Approval of Transfer........................18
15.6 Death or Disability of Area Marketer.....................18
16. TERM AND EXPIRATION...............................................18
16.1 Term.....................................................18
16.2 Rights Upon Expiration...................................18
16.3 Exercise of Option for Successor Area Marketer Rights....19
16.4 Conditions of Refusal....................................19
17. TERMINATION.......................................................19
17.1 By the Marketer..........................................19
17.2 By the Franchisor........................................19
17.3 Rights and Obligations of the Area Marketer Upon
Termination or Expiration...............................20
17.4 Confidential Information.................................21
17.5 Covenant Not to Compete..................................21
17. No Further Right to Payment..............................22
17.7 Continuing Obligations...................................22
17.8 State and Federal Law....................................22
18. RELATIONSHIP OF THE PARTIES.......................................22
18.1 Relationship of the Parties..............................22
18.2 Payment of Third Party Obligations.......................22
18.3 Independent Contractors..................................23
18.4 Indemnification..........................................23
19. MISCELLANEOUS PROVISIONS..........................................23
19.1 Governing Law/Consent to Venue and Jurisdiction..........23
19.2 Severability.............................................23
19.3 Modification.............................................24
19.4 Attorneys' Fees..........................................24
19.5 Injunctive Relief........................................24
19.6 No Waiver................................................24
19.7 No Right to Set Off......................................24
19.8 Effective Date...........................................24
19.9 Review of Agreement......................................24
19.10 Entire Agreement.........................................25
19.11 Notices..................................................25
19.12 Acknowledgment...........................................25
EXHIBITS
Exhibit I Rider to Area Marketing Agreement
Exhibit II Franchise Agreement
Exhibit III Amendment to Franchise Agreement (A.M. P.M. MOVERS Program)
Exhibit IV Guaranty and Assumption of Area Marketer's Obligations
Exhibit V Statement of Ownership
PAK MAIL CENTERS OF AMERICA, INC.
AREA MARKETING AGREEMENT
THIS AGREEMENT is made this ___ day of ________________, 199____, between
PAK MAIL CENTERS OF AMERICA, INC., a Colorado corporation, with its principal
offices at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
("Franchisor") and _______________________________
_____________________________________________ whose principal address is
__________________ _______________________________________________________
("Marketer"), who on the basis of the following understandings and in
consideration of the following promises, agree as follows:
1. BACKGROUND AND PURPOSE
1.1. The Franchisor has developed methods for establishing, operating and
promoting stores offering a variety of packaging, shipping, crating, freight
forwarding, mailing, communications and information services ("PAK MAIL Centers"
or "Centers"). These methods feature the use and license of the service ▇▇▇▇
"PAK MAIL" and related service marks and trademarks (all referred to in this
Agreement as the "Marks") and the Franchisor's distinctive plans for the
establishment, operation and promotion of PAK MAIL Centers and related licensed
methods of doing business (the "Licensed Methods").
1.2. The Franchisor grants to qualified individuals, or to entities with which
such individuals are affiliated, the right and license to develop and operate
Centers using the Marks and Licensed Methods.
1.3. The Marketer desires to act as a special agent to the Franchisor within a
certain geographic area, enabling the Marketer to sell franchises for PAK MAIL
Centers and to develop, support and provide services to PAK MAIL Centers within
such geographical area, under the terms and conditions which are contained in
this Agreement ("Marketer Business" or "Business").
1.4. The Franchisor is willing to grant the right to Marketer to serve as an
area marketer, enabling the Marketer to sell franchises for PAK MAIL Centers and
to provide site selection and support services to PAK MAIL Centers within a
certain geographical area, under terms and conditions which are contained in
this Agreement.
2. DEFINITIONS
2.1. Territory.
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"Territory" shall mean the geographical area described in Exhibit I
attached hereto and incorporated herein by reference.
2.2. Sales Year.
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"Sales Year" shall mean each period of time defined as a Sales Year in the
attached Exhibit I.
2.3. Franchise Agreement.
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"Franchise Agreement" shall mean the forms of agreements (including,
without limitation, franchise agreement and any exhibits, riders, collateral
assignments of lease or sublease, and personal guarantees used in connection
therewith) used by the Franchisor from time to time in the granting of
franchises for the ownership and operation of PAK MAIL Centers. Attached to this
Agreement as Exhibit II and incorporated herein by reference, is the
Franchisor's current form of Franchise Agreement. The Marketer acknowledges that
the Marketer will use the Franchisor's then current form of franchise agreement
and that the Franchisor, in its sole discretion, may from time to time modify or
amend in any respect the form of franchise agreement and related agreements,
including but not limited to, modifying fees customarily charged in granting PAK
MAIL Center franchises.
2.4. A.M. P.M. MOVERS Program.
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"A.M. P.M. MOVERS Program" shall mean the program that the Franchisor may
offer to Franchisees of the Franchisor whereby local moving services for
individuals and small business customers are either provided by the Franchisee
or arranged by the Franchisee with a third party, using the A.M. P.M. MOVERS
▇▇▇▇. Those Franchisees approved to participate in the A.M. P.M. MOVERS Program
must execute the Amendment to Franchise Agreement (A.M. P.M. MOVERS Program),
the current form of which is attached to this Agreement as Exhibit III and
incorporated herein by reference ("A.M. P.M. MOVERS Amendment"). The Marketer
acknowledges that the Marketer will use the Franchisor's then current form of
A.M. P.M. MOVERS Amendment and that the Franchisor, in its sole discretion, may
from time to time, modify or amend in any respect the form of A.M. P.M. MOVERS
Amendment.
2.5. Franchisee.
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"Franchisee" shall mean any person, corporation, partnership or other
entity who has entered into a Franchise Agreement with the Franchisor.
2.6. System Manual.
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"System Manual" means the manuals, technical bulletins or other written
materials covering the proper operating and marketing techniques of a Marketer
Business and standards and specifications for implementing the Licensed Methods.
3. SCOPE OF APPOINTMENT
3.1. Appointment of Marketer/Scope of Operations.
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The Franchisor appoints the Marketer, and the Marketer agrees to perform
its obligations, as a special agent of the Franchisor in accordance with the
terms and conditions of this Agreement, and only within the Territory, to
solicit prospective Franchisees for PAK MAIL Centers to be located in the
Territory ("Sales Services") as described in Section 9.3 below, to perform
certain site acquisition services and to render support and other services
("Support Services") to Centers located within the Territory as those services
are described in Sections 9.4 and 9.5 below.
3.2. Rights and Limitations to Territory.
------------------------------------
The Franchisor will not establish and license any other area marketers to
act as special agents to perform Sales Services or to thereafter render Support
Services to Franchisees within the Territory; provided, however, that the
Franchisor shall retain such rights in the Territory as described in Section 3.3
below.
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3.3. Franchisor's Reservation of Rights.
-----------------------------------
The Marketer acknowledges that its franchise rights granted hereunder are
nonexclusive and the Franchisor (on behalf of itself, its affiliates and
designees), retains the rights, among others:
a. to use, and to license others to use, the Marks and Licensed Methods for
the operation of other area marketer businesses at any location outside of the
Territory;
b. to solicit prospective Franchisees and to grant other persons franchises
to operate PAK MAIL Centers at such locations within and outside of the
Territory and on such terms and conditions as the Franchisor deems appropriate
and to itself own and operate such PAK MAIL Centers within the Territory;
c. to use and license the use of other proprietary marks or methods in
connection with the sale of products and services similar to those which
Franchisees who operate PAK MAIL Centers sell, whether in alternative channels
of distribution or in connection with the operation of packaging and mailing
businesses which are the same as, or similar to, or different from PAK MAIL
Centers, at any location, within and outside of the Territory, on any terms and
conditions as the Franchisor deems advisable; an
d. to use the Marks to identify services and products other than those sold
by Franchisees who operate PAK MAIL Centers, promotional and marketing efforts
or related items, or to identify services and products similar to those offered
by Franchisees who operate PAK MAIL Centers, made available through alternative
channels of distribution, at any location, within and outside of the Territory.
4. FRANCHISE SALES PROCEDURES
4.1. Sales Goals.
------------
The Marketer agrees that during the term of this Agreement, the Marketer
will meet and maintain the franchise sales goals ("Sales Goals") set forth in
Exhibit I to this Agreement.
4.2. Franchise Registration and Disclosure.
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Neither the Marketer nor any employee or representative of the Marketer
shall solicit prospective Franchisees of PAK MAIL Centers until the Franchisor
has registered in the applicable jurisdiction and has provided the Marketer with
the requisite documents, or at any time when the Franchisor notifies the
Marketer that its registration is not then in effect or its documents are not
then in compliance with applicable law. If the Marketer's activities pursuant to
this Agreement require the preparation, amendment, registration or filing of
information or any disclosure or other documents, all requisite offering
circulars, ancillary documents and registration applications shall be prepared
and filed by the Franchisor or its designee, and registration secured before the
Marketer may solicit prospective Franchisees of PAK MAIL Centers. Costs of such
registration applicable to the Marketer shall be borne by the Marketer. In
particular, the Marketer shall:
a. prepare and forward to the Franchisor verified financial statements of
the Marketer in such form and for such periods as shall be designated by the
Franchisor, including audited financial statements if necessary and appropriate
to comply with applicable legal disclosure, filing or other legal requirements;
b. promptly provide all information reasonably required by the Franchisor
to prepare all requisite offering circulars and ancillary documents for the
offering of franchises throughout the Territory;
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c. execute all documents required by the Franchisor for the purpose of
registering the Marketer and the Franchisor to offer franchises throughout the
Territory; and
d. pay to the Franchisor, or its designee, upon demand, the costs of
registering and preparing those portions of all such offering circulars and
ancillary documents which are applicable to the Marketer.
The Marketer agrees to review all information pertaining to the Marketer
prepared to comply with legal requirements for selling franchises in the
Territory and verify its accuracy if so requested by the Franchisor. The
Marketer acknowledges that the Franchisor, its affiliates or its designees,
shall not be liable to the Marketer for any errors, omissions or delays which
may occur in the preparation of such materials.
4.3. Advertising, Recruiting and Screening.
--------------------------------------
The Marketer shall be responsible for advertising for, recruiting,
screening and interviewing prospects for PAK MAIL Centers franchises within the
Territory. The Marketer shall provide prospective Franchisees with written
information regarding a PAK MAIL Center franchise approved by the Franchisor, or
via the telephone, face-to-face meetings or by visiting other PAK MAIL Centers
within the Territory. The Marketer shall submit each qualified applicant
("Applicant") for a PAK MAIL Center franchise to the Franchisor for approval.
The Marketer further agrees that all Applicants submitted to the Franchisor by
the Marketer, if an individual, or the Principal Owner of the Applicant, if the
Applicant is not an individual, shall be individuals who are of good character,
have adequate financial resources and meet the Franchisor's criteria for
Franchisees or Principal Owners of Franchisees. A "Principal Owner" is defined
in Section 7.1 below. Each application for a franchise received by the Marketer
shall be submitted to the Franchisor with all information respecting the
Applicant, the Principal Owner of the Applicant, if applicable, the Applicant's
proposed franchise location, if known, and all other information then
customarily required by the Franchisor concerning Applicants, including such
financial statements and other information as the Franchisor may reasonably
require. The Marketer shall assist the Applicant in the preparation of financial
and other required information.
4.4. Franchisor's Approval of Prospective Franchisees.
-------------------------------------------------
By delivery of written notice to the Marketer, the Franchisor shall approve
or disapprove Applicants to become PAK MAIL Center Franchisees. The Franchisor
agrees to exert its best efforts to deliver such notification to the Marketer
within 30 days after the later of: (a) receipt by the Franchisor of a complete
application, financial statement and other materials regarding the Applicant
requested by the Franchisor; or (b) the personal interview of Applicant by the
Franchisor, if any. If the Franchisor, in its sole discretion, determines that
the Applicant possesses sufficient financial and managerial capability and meets
the other criteria then utilized by the Franchisor in the grant of franchises,
the Franchisor shall offer to the Applicant a franchise for the operation of a
PAK MAIL Center. The grant of the franchise shall be effected only upon and
after the full execution of the then current Franchise Agreement by the
Franchisor and the Applicant.
5. PAYMENTS TO THE FRANCHISOR d
5.1. Initial Area Marketing Fee.
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The initial area marketing fee ("Marketing Fee") payable to the Franchisor
by the Marketer in consideration for the Marketer's appointment as exclusive
Marketer within the Territory shall be calculated and set forth in the attached
Exhibit I. Unless otherwise agreed, the Marketing Fee is payable in full upon
execution of this Agreement. The Marketing Fee is fully earned by the Franchisor
upon receipt and is nonrefundable once paid. The Marketer acknowledges that the
Marketing Fee does not include payment of any initial franchise fees for
individual PAK MAIL Centers.
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6. PAYMENTS TO THE AREA MARKETER d
6.1. Commissions on Sales Services.
------------------------------
During the term of this Agreement, the Marketer shall be paid a commission
based on a percentage of initial franchise fees paid by Franchisees for the
purchase of a franchise for a PAK MAIL Center to be located within the
Territory, upon fulfillment of the following conditions ("Franchise Sales
Conditions"):
a. The Franchisee shall have executed a Franchise Agreement with the
Franchisor and an initial franchise fee shall have been paid and actually
received by the Franchisor (the Franchisor shall not be deemed to have received
any fees paid into escrow, if applicable, until such fees have actually been
remitted to the Franchisor);
b. The sale for which the initial franchise fee has been paid is not a
resale of any existing PAK MAIL Center, or any interest therein;
c. The Franchisee shall have successfully completed the Franchisor's
initial training program; and
d. The Marketer has complied with all other of its obligations under this
Agreement with respect to such sale and has verified the same to the Franchisor,
in writing in a form prescribed by the Franchisor.
Commissions on Sales Services shall be paid to the Marketer in the amount
of 40% of the total initial franchise fees paid to the Franchisor, payable to
the Marketer within 45 days after the Franchise Sale Conditions have been
fulfilled. The Marketer shall not receive any commission on Sales Services for
PAK MAIL Centers owned and operated by the Franchisor, its affiliates or
designees ("Company Owned Centers") in the Territory.
6.2. Commissions on Transfers of Franchises.
---------------------------------------
If, during the term of this Agreement, a PAK MAIL Center located within the
Territory or an interest therein is resold to a different Franchisee and the
sale results in the execution of a Franchise Agreement and the payment of a
transfer fee, then the Marketer will not be paid a commission on any transfer
fee paid to the Franchisor, but the Marketer will be paid Service Fees in
accordance with Section 6.3 below.
6.3. Service Fees.
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The Franchisor shall pay to the Marketer, within 45 days after the end of
each month, a service fee ("Service Fee") consisting of 50% of the royalty fees
(which excludes advertising fees) which each Franchisee located in the Territory
paid to the Franchisor during the applicable month pursuant to their Franchise
Agreement ("Royalty Fees"). Notwithstanding the foregoing:
a. If the Marketer has failed to conduct the quarterly inspections
described in Section 9.5 below and file a written report or failed to perform in
any material respect the other services to be provided to Franchisees located in
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the Territory described in Article 9 below during any applicable month with
respect to one or more Franchisees located in the Territory, the Marketer shall
not be entitled to receive Service Fees with respect to such Franchisees for the
period during which reports or services were not provided.
b. The Marketer shall not be entitled to share or receive any Service Fees
from any fees paid to the Franchisor by Franchisees in the Territory prior to
the time the Marketer completes the initial Marketer training program and
commences full performance of the services set forth in Article 9 of this
Agreement.
c. If there are franchised Centers operating in the Territory at the time
the Marketer signs this Agreement, then the Marketer shall receive Service Fees
from those Centers during the term of this Agreement.
d. The Marketer shall not receive any Service Fees with respect to any PAK
MAIL Centers in the Territory owned and operated by the Franchisor or its
affiliates, unless those Centers are operating under Franchise Agreements and
pay Royalty Fees to the Franchisor.
6.4. Application of Payments.
------------------------
The Franchisor's payments to the Marketer shall be based on amounts
actually collected from Franchisees, not on payments accrued, due or owing. In
the event of termination of a Franchise Agreement for a PAK MAIL Center within
the Territory under circumstances entitling the Franchisee to the return of all
or part of the initial franchise fee or Royalty Fees (or in the event that the
Franchisor becomes legally obligated or decides in its sole discretion, to
return part or all of the initial franchise fee or Royalty Fees), the Franchisor
may deduct the portion of the amount to be returned to Franchisee in the same
proportion as the Marketer shared in the initial franchise fee or Royalty Fees
from any future amounts owed the Marketer. The Franchisor shall apply any
payments received from a Franchisee to any past due indebtedness of that
Franchisee for Royalty Fees, advertising contributions, purchases from the
Franchisor or its affiliates, interest or any other indebtedness of that
Franchisee to the Franchisor or its affiliates. To the extent that such payments
are applied to a Franchisee's overdue Royalty Fee payments, the Marketer shall
be entitled to its pro rata share of such payments, less its pro rata share of
the costs of collection paid to third parties.
6.5. Setoffs.
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The Marketer shall not be allowed to set off amounts owed to the Franchisor
for fees or other amounts due hereunder, against any monies owed to the Marketer
by the Franchisor, which right of set off is hereby expressly waived by the
Marketer. The Franchisor shall be allowed to set off amounts owed to the
Marketer for commissions, Service Fees or other amounts due hereunder, against
any monies owed to the Franchisor by the Marketer, including, setting off
amounts owed to the Marketer for commissions or Service Fees against monies owed
to the Franchisor for commissions on Sales Services which were paid to the
Marketer before the Franchisee failed to successfully complete the Franchisor's
initial training program.
7. TRAINING ASSISTANCE
7.1. Area Marketer Training.
-----------------------
Within 90 days after the date of execution of this Agreement, the
Franchisor shall furnish, and the Marketer (or if the Marketer is a partnership,
corporation, or other entity, an individual designated by the Marketer who owns
at least 25% of the ownership interest in the Marketer and who has been approved
by the Franchisor, who shall be designated as the "Principal Owner") shall
attend, at the Marketer's sole cost and expense, an initial training program, to
consist of the training program applicable to the Franchisor's Franchisees and
such further training which may include topics such as marketing, franchise
sales, franchise law compliance, site selection and store opening procedures, as
the Franchisor in its sole discretion deems advisable, furnished at such place
and time as the Franchisor may designate.
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7.2. Length of Training.
-------------------
The first portion of the initial Marketer training program will last up to
10 days and will consist of the initial training program applicable to the
Franchisor's Franchisees. The second portion of the initial Marketer training
consists of up to 3 days of on the job instruction at the Marketer's Business
location. Other than the Marketing Fee, no tuition or fee shall be charged for
the initial training. However, the Marketer shall be responsible for all travel
and living expenses which are incurred in connection with attendance at the
initial training program.
7.3. Additional Training.
--------------------
The initial training program will be made available to replacement or
additional Principal Owners and other management personnel during the term of
this Agreement. The Franchisor reserves the right to charge a tuition or fee in
an amount payable in advance, commensurate with the then current published
prices of the Franchisor for such training. The Marketer will be responsible for
all travel and living expenses incurred by its personnel in connection with
attendance at the training program. Further, the availability of the training
programs will be subject to space considerations and prior commitments to new
PAK MAIL Franchisees and Marketers.
7.4. Seminars and Ongoing Training.
------------------------------
From time to time, the Franchisor may present seminars, conventions or
continuing development programs for the benefit of the Marketer. The Marketer or
its Principal Owner shall be required to attend any ongoing mandatory seminars,
industry conventions or programs as may be offered by the Franchisor. The
Franchisor shall give the Marketer at least 30 days prior written notice of any
seminar, convention or program which is deemed mandatory. The Franchisor will
not require that the Marketer attend any ongoing training more often than a
total of five working days each calendar year. The Marketer will be responsible
for all travel and living expenses which are associated with attendance at any
ongoing training program.
8. FRANCHISOR'S OPERATING ASSISTANCE
8.1. System Manual.
--------------
The Franchisor shall, in addition to the Marketer training program, loan to
the Marketer during the term hereof one copy of its System Manual to assist the
Marketer and its employees in the conduct of the business contemplated by this
Agreement. The Franchisor may prescribe mandatory and suggested standards and
operating procedures for the Marketer in the System Manual, which may be
modified from time to time by the Franchisor. The Marketer shall keep its copy
of the System Manual current. In the event of a dispute relating to the System
Manual, the master copy that the Franchisor maintains at its principal office
shall be controlling. The Marketer may not at any time copy any part of the
System Manual, unless approved in writing by the Franchisor. In the event the
Marketer's copy of the System Manual is lost, destroyed or damaged, the Marketer
shall be obligated to obtain from the Franchisor, at the Franchisor's then
applicable charge, a replacement copy of the System Manual. The System Manual
and other writings communicated to the Marketer shall constitute material
provisions of this Agreement as if fully set forth herein.
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8.2. Operating Assistance.
---------------------
The Franchisor will make available the following services during the term
of this Agreement:
a. Upon the reasonable request of the Marketer, consultation by telephone
regarding advice related to franchise sales, Franchisee support and assistance;
and
b. Access to franchise sales advertising and promotional materials as may
be developed by the Franchisor, which reasonable cost may be passed on to the
Marketer at the Franchisor's option.
9. AREA MARKETER'S OBLIGATIONS
9.1. Hiring and Training of Employees of Area Marketer.
--------------------------------------------------
The Marketer shall hire all of the Marketer's employees, shall be
exclusively responsible for the terms of their employment and compensation and
shall implement a training program for employees to ensure their compliance with
the Franchisor's requirements; provided that the Marketer shall not employ any
person whom the Franchisor, in its sole discretion, has determined to be unfit
to represent the Franchisor in the marketing of PAK MAIL Center franchises or in
furnishing services to Franchisees.
9.2. Commencement of Business.
-------------------------
Unless otherwise agreed to in writing by the Franchisor and the Marketer,
the Marketer has 120 days from the date of this Agreement within which to
complete its initial training and commence operation of its PAK MAIL Marketer
Business. The Franchisor will extend the time within which the Marketer has to
commence operations for a reasonable period of time, in the event that factors
beyond the Marketer's reasonable control prevent the Marketer from meeting this
development schedule, so long as the Marketer has made reasonable and continuing
efforts to comply and the Marketer requests in writing, an extension of time in
which to have its Business established before the development period lapses. The
obligations of the Marketer, including Sales Services, shall commence at the
earlier of the date the Marketer or its Principal Owner has satisfactorily
completed the Franchisor's initial training program or 120 days from the date of
this Agreement.
9.3. Sales Services.
---------------
The Marketer shall solicit and identify prospective franchisees for PAK
MAIL Centers to be located within the Territory.-
9.4. Pre-Opening Support Services.
-----------------------------
The Marketer shall perform the following pre-opening Support Services on
behalf of the Franchisor with respect to Franchisees of PAK MAIL Centers located
in the Territory:
a. Assist with Center location selection for each Franchisee, which shall
consist of providing each Franchisee with criteria for a satisfactory site and
assisting each Franchisee in completing a site report (containing such
demographic, commercial and other information and photographs as the Franchisor
may reasonably require) for each location at which the Franchisee proposes to
establish and operate a PAK MAIL Center and which Marketer reasonably believes
conform to the Franchisor's site selection criteria;
8
b. Provide information about required, recommended or acceptable terms and
conditions to be included in the Franchisee's lease for the Center premises;
c. To the extent required by the Franchisor, assist a Franchisee in
securing financing;
d. Provide standards and specifications for the build out, interior design,
layout, floor plan, signs, designs, color and decor of the Center as prescribed
from time to time by the Franchisor;
e. Provide on-site assistance for not less than 24 hours in the opening of
PAK MAIL Centers located in the Territory; and
f. Provide guidance in implementing advertising and marketing programs,
operating and sales procedures and bookkeeping and accounting programs.
9.5. Ongoing Support Services.
-------------------------
With respect to Franchisees of PAK MAIL Centers located in the
Territory, the Marketer shall perform the following ongoing Support Services on
behalf of the Franchisor:
a. Initiate not fewer than two consultations by telephone with each
Franchisee each month regarding the continuing operation and management of the
Center and advice regarding services offered and related issues;
b. Conduct seminars for Franchisees to provide on-going updates of
information regarding new services and products, the shipping business in
general, marketing and business techniques and updated Licensed Methods,
including without limitation, information about special programs or new services
of the Franchisor, such as the A.M. P.M. MOVERS Program;
c. Provide advice and assistance to the Franchisee in connection with the
development of and improvements to the Franchisee's Center;
d. Conduct at least one field inspection of each PAK MAIL Center in the
Territory every calendar quarter in the manner as required by the Franchisor
from time to time, said inspections to be verified by written reports;
e. Provide access to advertising and promotional materials as may be
developed by the Franchisor from time to time and assist Franchisees in
implementing advertising and promotional campaigns;
f. At the Franchisor's written request, establish a toll-free telephone
number for all PAK MAIL Centers located in the Territory to consult with
Franchisees during regular business hours;
g. Submit monthly reports to the Franchisor on activities in the Territory,
using procedures and forms prescribed and supplied by the Franchisor; and
h. Use best efforts to cause Franchisees in the Territory to timely pay all
amounts due to the Franchisor and collect past due amounts from Franchisees.
9.6. Compliance with Franchise Agreement.
------------------------------------
The Marketer acknowledges that it is being delegated certain
responsibilities of the Franchisor under the Franchise Agreement to Franchisees
in the Territory. The responsibilities to Franchisees are to be performed by the
9
Marketer as described herein or as may in the future be set forth in the System
Manual or other reasonable standards and specifications as may be provided by
the Franchisor from time to time, and the Marketer's responsibilities to
Franchisees will not materially change during the term of this Agreement. In the
performance of services to Franchisees of PAK MAIL Centers located in the
Territory, the Marketer shall in all respects comply with the terms and
conditions of any Franchise Agreement or other agreement in effect between the
Franchisee and the Franchisor. The Marketer understands, however, that its
rights as an area marketer are only by virtue of this Agreement and that it is
not in any manner a party, third party beneficiary or holder of any other right,
title or interest in or to any Franchise Agreement, unless it is a Franchise
Agreement in which the Marketer is the Franchisee.
9.7. Area Marketer's Inspections.
----------------------------
The Marketer shall ascertain through field audits, reviews and inspections,
that each Franchisee in the Territory has complied satisfactorily with all of
the terms and conditions of the Franchise Agreement, specifications, standards,
operating procedures, and the Franchisee Operations Manual, and shall promptly
notify the Franchisee in writing, with a copy and evaluation report to the
Franchisor, of any deficiencies; provided, however, the Marketer understands and
acknowledges that its inspections and reports are advisory only and that the
Franchisor shall have: (a) all of the rights to inspect and ascertain compliance
of all Franchisees as if this Agreement were not in effect; (b) the sole right
to send notices of default to the Franchisee; (c) the sole right to terminate a
Franchise Agreement for failure to cure such defaults (if an opportunity to cure
is granted); and (d) the sole right to take any legal action with respect to any
default or any violation of a Franchise Agreement. If the Marketer believes that
any Franchisee in the Territory has breached a Franchise Agreement with the
Franchisor, the Marketer shall document in writing all facts related to the
alleged breach and shall request in writing that the Franchisor investigate such
alleged breach. If, as a result of the Franchisor's investigation, the
Franchisor determines that there is a breach by the Franchisee of its Franchise
Agreement with the Franchisor, the Franchisor shall, in its sole discretion,
take such action as it deems appropriate.
10. MARKS
10.1. Ownership and Goodwill of Marks.
--------------------------------
The Marketer acknowledges that its rights to use the Marks are derived
solely from this Agreement, unless such rights are granted under a separate
written agreement with the Franchisor, and are limited to operating as an
Marketer pursuant to and in compliance with this Agreement. Any unauthorized use
of the Marks by the Marketer shall constitute a breach hereof and an
infringement of the Franchisor's rights in and to the Marks. The Marketer
acknowledges and agrees that its usage of the Marks and any goodwill established
thereby shall inure to the Franchisor's exclusive benefit and that this
Agreement does not confer any goodwill or other interest in the Marks upon the
Marketer.
10.2. Limitations on Use.
-------------------
The Marketer shall not use any ▇▇▇▇ as part of any corporate or trade name
or with any prefix, suffix or other modifying words, terms, designs or symbols
(other than logos licensed to the Marketer hereunder), or in any modified form,
nor may the Marketer use any ▇▇▇▇ in connection with unauthorized services or
products or in any other manner not expressly authorized in writing by the
Franchisor. The Marketer agrees to give such notices of trademark and service
▇▇▇▇ registration as the Franchisor specifies and to use and obtain such
fictitious or assumed name registrations as may be required by the Franchisor or
under applicable law. The Marketer further agrees that no service ▇▇▇▇ other
than "PAK MAIL" or such other Marks as may be specified by the Franchisor shall
be used in the marketing, promotion or operation of the Marketer's Business.
10
Except as may be permitted in the System Manual, the Marketer agrees not to use
any of the Marks as part of an electronic mail address or on any sites on the
Internet or on the World Wide Web and the Marketer agrees not to use or register
any of the Marks as a domain name on the Internet.
10.3. Discontinuance of Use of Marks.
-------------------------------
If it becomes advisable at any time, in the Franchisor's sole discretion,
for the Franchisor and/or the Marketer to modify or discontinue use of any ▇▇▇▇
and/or use one or more additional or substitute trade or service marks, the
Marketer agrees, at its own expense, to comply with the Franchisor's directions
to do so within a reasonable time after notice thereof.
10.4. Notification of Infringements and Claims.
-----------------------------------------
The Marketer shall immediately notify the Franchisor of any apparent
infringement of or challenge to the Marketer's use of any ▇▇▇▇, or claim by any
person of any rights in any ▇▇▇▇, and the Marketer shall not communicate with
any person other than the Franchisor or its counsel in connection with any such
matter. The Marketer may not settle any claim without the Franchisor's written
consent. The Franchisor shall have sole discretion to take such action as it
deems appropriate and the right to control exclusively any litigation, U.S.
Patent and Trademark Office proceeding or any other administrative proceeding
arising out of any such infringement, challenge or claim or otherwise relating
to any ▇▇▇▇. The Marketer agrees to execute any and all instruments and
documents, render such assistance and perform such acts as, in the opinion of
the Franchisor's counsel, may be necessary or advisable to protect and maintain
the Franchisor's interest in the Marks.
10.5. Indemnification.
----------------
The Franchisor agrees to indemnify the Marketer against and to reimburse
the Marketer for all damages for which the Marketer is held liable in any
proceeding arising out of its authorized use of any ▇▇▇▇ pursuant to and in
compliance with this Agreement and for all costs reasonably incurred by the
Marketer in defending any such claim or any proceeding in which the Marketer is
named as a party, provided that the Marketer has timely notified the Franchisor
of such claim or proceeding and has otherwise complied with this Agreement. The
Franchisor, at its option, shall be entitled to defend and control the defense
of any proceeding arising out of the Marketer's use of any ▇▇▇▇ pursuant to and
in compliance with this Agreement.
11. CONFIDENTIAL INFORMATION
11.1. Confidential Information.
-------------------------
The Franchisor possesses certain proprietary confidential information
consisting of the methods, techniques, formats, specifications, procedures,
information, systems, methods of business management, sales and promotion
techniques and knowledge of and experience in the operation and franchising of
PAK MAIL Centers (the "Confidential Information"). The Franchisor shall disclose
the Confidential Information to the Marketer in the training program, the System
Manual and in guidance furnished to the AD during the term hereof. The Marketer
will not acquire any interest in the Confidential Information, other than the
right to utilize it in the Territory in the execution of the Marketer's duties
hereunder during the term of this Agreement, and the Marketer acknowledges that
the use or duplication of the Confidential Information in any other business
venture would constitute an unfair method of competition. The Marketer
acknowledges and agrees that the Confidential Information is proprietary,
includes trade secrets of the Franchisor and is disclosed to the Marketer solely
on the condition that the Marketer agrees, and the Marketer (and its
shareholders, officers, directors, partners, members, managers and equivalents
if the Marketer is an entity) does hereby agree that the Marketer: (a) shall not
11
use the Confidential Information in any other business or capacity; (b) shall
maintain the absolute confidentiality of the Confidential Information during and
for two years after the term of this Agreement; (c) shall not make unauthorized
copies of any portion of the Confidential Information disclosed in written or
other tangible form; and (d) shall adopt and implement all reasonable procedures
prescribed from time to time by the Franchisor to prevent unauthorized use or
disclosure of the Confidential Information. The Marketer agrees that the
Franchisor shall have the perpetual right to use and authorize other PAK MAIL
Center Franchisees and area marketers to use, and the Marketer shall fully and
promptly disclose to the Franchisor, all ideas, concepts, methods and techniques
relating to the development and/or operation of a PAK MAIL Center or the
Marketer's activities howsoever conceived or developed by the Marketer and/or
its employees and/or the franchised PAK MAIL Centers serviced by the Marketer
during the term of this Agreement. The Marketer acknowledges that any such
ideas, concepts, methods and techniques shall be the property of the Franchisor
and the Franchisor may utilize or disclose such information to Franchisees or
other agents as it determines to be appropriate.
11.2. Confidentiality and Noncompetition Agreement.
---------------------------------------------
The Franchisor reserves the right to require that the Marketer cause each
of its shareholders, officers, directors, partners, employees, members, managers
and equivalents, or if the Marketer is an individual, the Marketer's spouse, to
execute a Confidentiality and Noncompetition Agreement in a form approved by the
Franchisor.
12. EXCLUSIVE RELATIONSHIP
12.1. Exclusive Relationship.
-----------------------
The Franchisor is entering into this Agreement with the Marketer on the
condition that the Marketer will deal exclusively with the Franchisor. The
Marketer acknowledges and agrees that the Franchisor would be unable to protect
its Confidential Information and would be unable to encourage a free exchange of
ideas and information among area marketers and the Franchisor if area marketers
were permitted to hold interests in any Competitive Business, as defined below.
The Marketer therefore agrees that, during the term hereof, neither the
Marketer, the Marketer's officers, directors, shareholders, members, managers,
partners and equivalents who participate in the management of the Marketer, nor
the Marketer's spouse, and, if applicable, the Principal Owner, shall:
a. have any direct or indirect interest as a disclosed or beneficial owner
in a "Competitive Business," which shall be defined as a business operating or
granting franchises or licenses to others to operate, a packaging, crating,
freight forwarding and/or mailing business or any similar business deriving more
than 10% of its gross receipts (excluding PAK MAIL Centers operated under
franchise agreements with the Franchisor) from the sale of packaging and mailing
products or services;
b. have any direct or indirect controlling interest as a disclosed or
beneficial owner in a Competitive Business;
c. perform services as a director, officer, manager, employee, consultant,
representative, agent or the equivalent for a Competitive Business; or
d. divert or attempt to divert any business related to, or any customer or
account of, the Marketer Business, the Franchisor's business or any other PAK
MAIL area marketer's or Franchisee's business, by direct inducement or
otherwise, or divert or attempt to divert the employment of any employee of the
Franchisor or another area marketer or Franchisee licensed by the Franchisor to
any Competitive Business by any direct inducement or otherwise.
12
Notwithstanding the foregoing, the Marketer shall not be prohibited from owning
securities in a Competitive Business if such securities are listed on a stock
exchange or traded on the over-the-counter market and represent 2% or less of
that class of securities issued and outstanding.
13. OPERATING STANDARDS
13.1. Standards of Service.
---------------------
The Marketer shall at all times give prompt, courteous and efficient
service to PAK MAIL Center Franchisees in the Territory. The Marketer shall, in
all dealings with Franchisees, prospective franchisees and the public, adhere to
the highest standards of honesty, integrity, fair dealing and ethical conduct.
13.2. Compliance with Laws and Good Business Practices.
-------------------------------------------------
The Marketer shall secure and maintain in force all required licenses,
permits and certificates relating to the Marketer's activities hereunder and
shall operate in full compliance with all applicable laws, ordinances and
regulations. The Marketer acknowledges being advised that many jurisdictions
have enacted laws concerning the advertising, sale, renewal, termination and
continuing relationship between parties to a franchise agreement, including
without limitation, laws concerning disclosure requirements. The Marketer agrees
promptly to become aware of, and to comply with, all such laws and legal
requirements in force in the Territory and to utilize only offering circulars
that the Franchisor has approved for use in the applicable jurisdiction.
13.3. Accuracy of Information.
------------------------
Before it offers or sells any franchise, the Marketer shall each time take
reasonable steps to confirm that the information contained in any written
materials, agreements and other documents related to the offer or sale of
franchises is true, correct and not misleading at the time of such offer or
sale, and the offer or sale of such franchise will not at that time be contrary
to or in violation of any applicable state law related to the registration of
the franchise offering. The Franchisor shall provide the Marketer with any
changes to its disclosure documents and other agreements on a timely basis, and
shall, upon request, provide the Marketer with confirmation that the information
contained in any written materials, agreements or documents being used by the
Marketer is true, correct and not misleading, except for information
specifically relating to disclosures regarding the Marketer. If the Marketer
notifies the Franchisor of an error in any information in the Franchisor's
documents, the Franchisor shall have a reasonable period of time to attempt to
correct any deficiencies, misrepresentations or omissions in such information.
13.4. Notification of Litigation.
---------------------------
The Marketer shall notify the Franchisor in writing within five days of the
commencement of any action, suit, proceeding or investigation, and of the
issuance of any order, writ, injunction, award or decree, by any court, agency
or other governmental body which concerns the operation or financial condition
of the Marketer, the Marketer's Business or any Franchisee in the Territory.
13
13.5. Ownership and Management of Business.
-------------------------------------
The Marketer's Business shall at all times be under the direct, day-to-day,
full-time supervision of the Marketer (or, if the Marketer is a partnership,
corporation, limited liability company or other entity, the Principal Owner who
shall have been approved by the Franchisor and who shall have satisfactorily
completed the Franchisor's training program). The Marketer shall at all times
during the term of this Agreement own and control the Business authorized
hereunder. Upon the request of the Franchisor, the Marketer shall promptly
provide satisfactory proof of such ownership. The Marketer represents that the
Statement of Ownership, attached to this Agreement as Exhibit V and incorporated
herein by reference, is true, complete, accurate and not misleading. The
Marketer shall promptly provide the Franchisor with written notification if the
information contained in the Statement of Ownership changes at any time during
the term of this Agreement and shall comply with the applicable transfer
provision contained in Article 15 of this Agreement. If the Marketer is not an
individual, an individual or individuals designated by the Franchisor shall
execute the Guaranty and Assumption of Marketer's Obligations attached hereto as
Exhibit IV and incorporated herein by reference.
13.6. Conflicting Interests.
----------------------
The Marketer shall at all times faithfully, honestly and diligently perform
its obligations hereunder and continuously exert its best efforts to promote,
enhance and service PAK MAIL Centers in the Territory. The Marketer shall not
engage in any other business or other activity, directly or indirectly, that
requires any significant management responsibility, time commitments, or
otherwise may conflict with the Marketer's obligations hereunder, without the
prior written approval of the Franchisor
13.7. Insurance.
----------
The Marketer shall at all times during the term of this Agreement maintain
in force, at the Marketer's sole expense, comprehensive, public and motor
vehicle liability insurance against claims for bodily and personal injury, death
and property damage caused by or occurring in conjunction with the operation of
the Marketer's Business under this Agreement. Such insurance coverage shall be
maintained under one or more policies of insurance containing minimum liability
protection of $1,000,000 per occurrence for bodily and personal injury and death
and $500,000 per occurrence for property damage. All such insurance policies
shall be issued by insurance carriers acceptable to the Franchisor. All of the
required insurance policies shall name the Franchisor as an additional insured,
contain a waiver of the insurance company's right of subrogation against the
Franchisor and provide that the Franchisor will receive 30 days' prior written
notice of termination, expiration or cancellation of any such policy. The
Franchisor has the right to change the minimum amount of insurance the Marketer
is required to maintain by giving the Marketer prior reasonable notice, giving
due consideration to what is reasonable and customary in similar businesses.
13.8. Proof of Insurance Coverage.
----------------------------
The Marketer will provide proof of insurance to the Franchisor prior to
commencement of operations of its Marketer Business. This proof will show that
the insurer has been authorized to inform the Franchisor in the event any
policies lapse or are cancelled. The Marketer shall submit to the Franchisor
annually a copy of the certificates or other evidence of the renewal or
extension of each required insurance policy. Noncompliance with the insurance
provisions set forth herein shall be deemed a material breach of this Agreement;
and in the event of any lapse in insurance coverage, in addition to all other
remedies, the Franchisor shall have the right to demand that the Marketer cease
operations of the Marketer Business until coverage is reinstated, or, in the
alternative, pay any delinquencies in premium payments and charge the same back
to the Marketer. The Marketer's obligation to obtain and maintain required
insurance policies shall not be limited in any way by reason of any insurance
maintained by the Franchisor, nor shall the Marketer's compliance with the
insurance provisions in this Agreement relieve the Marketer of its obligations
under Section 18.4 of this Agreement.
14
13.9. Advertising in Territory.
-------------------------
The Marketer is required to spend during each calendar quarter a certain
specified amount ("Advertising Expenditure") to advertise and promote the offer
and sale of franchises for PAK MAIL Centers in the Territory. The amount of the
Advertising Expenditure shall be designated in Exhibit I attached hereto. The
Marketer shall submit to the Franchisor an accounting of its Advertising
Expenditures within 20 days following the end of each calendar quarter during
the term of this Agreement. The Franchisor reserves the right to withhold the
payment of Service Fees due to the Marketer for any calendar quarter until such
time as the Franchisor receives the Marketer's Advertising Expenditure report
for all previous quarters. All advertising and promotion by the Marketer shall
be completely factual and conform to the highest standards of ethical
advertising. The Marketer agrees to refrain from any business or advertising
practice that may be injurious to the Franchisor, the goodwill associated with
the Marks or PAK MAIL Centers.
13.10. Approval of Advertising.
------------------------
Prior to their use by the Marketer, samples of all advertising and
promotional materials not prepared or previously approved by the Franchisor,
including, without limitation, Internet advertising on the World Wide Web or
other similar network, shall be submitted to the Franchisor for approval, which
approval shall not be unreasonably withheld. If written disapproval is not
received by the Marketer within 15 business days from the Franchisor's receipt
of proposed advertising materials, the Franchisor shall be deemed to have given
its approval. The Marketer shall not use any advertising or promotional
materials that the Franchisor has disapproved. The Marketer acknowledges and
understands that certain states require the filing of franchise sales
advertising materials with the appropriate state agency prior to dissemination.
The Marketer agrees to fully and timely comply with such filing requirements at
the Marketer's own expense unless such advertising has been previously filed
with the state by the Franchisor.
13.11. Accounting, Bookkeeping and Records.
------------------------------------
The Marketer shall maintain at its Business premises in the Territory all
original invoices, receipts, checks, contracts, licenses, acknowledgement of
receipt forms and bookkeeping and business records as the Franchisor may require
from time to time. The Marketer shall furnish to the Franchisor, within 90 days
after the end of the Marketer's fiscal year, a balance sheet and profit and loss
statement for the Marketer's Business for such year (or monthly or quarterly
statements if required by the Franchisor, in which case such statements shall
also reflect year-to-date information). In addition, upon request of the
Franchisor, within 10 days after such returns are filed, exact copies of federal
and state income, sales and any other tax returns and such other forms, records,
books and other information as the Franchisor may periodically require regarding
the Marketer's Business shall be furnished to the Franchisor. The Marketer shall
maintain all records and reports of the Business conducted pursuant to this
Agreement for at least two years after the date of termination or expiration of
this Agreement.
13.12. Reports.
--------
The Marketer shall, as often as required by the Franchisor, deliver to the
Franchisor a written report of its Business activities during such periods as
required in Sections 9.4, 9.5 and 9.7 above, in such form and in such detail as
the Franchisor may from time to time specify, including information about
efforts to solicit prospective Franchisees, the status of pending real estate
transactions and the status of the Centers in the Territory. The Marketer shall,
as often as required by the Franchisor, during the term of this Agreement,
deliver to the Franchisor the field inspection reports required in Section 9.5
above, for each Franchisee in the Territory, in such form and in such detail as
the Franchisor may from time to time specify.
15
13.13. Late Charges.
-------------
The Franchisor reserves the right to automatically assess a $50 late charge
for any report or financial statement required under the terms of this Agreement
which is not timely filed by the Marketer. Such late charge shall continue to
accrue each month that the late report or financial statement remains unfiled
and shall be due and payable in full upon demand by the Franchisor. In the event
any late charge is not paid upon demand, the Franchisor may elect to pursue all
of its available remedies
13.14. Compliance with Third Party Agreements.
---------------------------------------
The Marketer shall comply with all agreements with third parties related to
the Marketer Business including, in particular, all provisions of any premises
lease.
14. INSPECTIONS AND AUDITS
14.1. Inspections and Audits.
-----------------------
To determine whether the Marketer is complying with this Agreement, the
Franchisor or its designee shall have the right at any time during normal
business hours, and without prior notice to the Marketer, to enter onto the
premises in which the Marketer is then keeping its business records and inspect,
and conduct an audit of, the business records, bookkeeping and accounting
records, invoices, payroll records, time cards, check stubs, bank deposits,
receipts, sales tax records and returns and other business records and documents
of the Marketer's Business. The Marketer and its employees shall fully cooperate
with representatives of the Franchisor making, conducting, supervising or
observing any such inspection or audit. The Franchisor may require the Marketer
to purchase a computer and modem and to join and pay for an electronic network
connection to facilitate the Franchisor's communication with the Marketer and
among all Marketers and Franchisees and to allow the Franchisor unlimited
electronic access to the Marketer's Business records.
15. TRANSFERS
15.1. Transfers by the Franchisor.
----------------------------
This Agreement is fully transferable by the Franchisor and shall inure to
the benefit of any transferee or other legal successor to the Franchisor's
interests herein.
15.2. Transfers by the Marketer.
--------------------------
The Marketer agrees that the rights and duties created by this
Agreement are personal to the Marketer (or its officers, directors,
shareholders, managers, members, partners or equivalents if the Marketer is an
entity) and that the Franchisor has entered into this Agreement in reliance upon
the Franchisor's perceptions of the individual or collective character, skill,
aptitude, attitude, business ability and financial capacity of the Marketer (or
its officers, directors, shareholders, members, managers or partners).
Accordingly, without the prior written consent of the Franchisor, which consent
will not be unreasonably withheld, neither this Agreement (or any interest
therein), nor any of the assets of the Business, nor any part or all of the
ownership of the Marketer may be transferred. Any unauthorized transfer shall
constitute a breach hereof and be void and of no effect. As used in this
Agreement, the term "transfer" shall mean and include the voluntary,
16
involuntary, direct or indirect assignment, sale, subfranchise, gift or other
disposition by the Marketer (or any of its owners) of any interest in: (1) this
Agreement; (2) 30% or more of the ownership interests in the Marketer; or (3)
the assets of the Business.
15.3. Conditions for Approval of Transfer.
------------------------------------
If the Marketer (and its officers, directors, managers, owners and
equivalents if the Marketer is an entity) are in full compliance with this
Agreement, the Franchisor shall not unreasonably withhold its approval of a
transfer that meets all the applicable requirements of this Section. The
proposed transferee and its officers, directors, managers and owners must be
individuals of good moral character and otherwise meet the Franchisor's then
applicable standards for area marketers. If the transfer is of this Agreement, a
30% or more ("Controlling Interest") interest in the Marketer, or all or a
substantial portion of the assets of the Business, or is one of a series of
transfers which in the aggregate constitute the transfer of this Agreement, a
Controlling Interest in the Marketer or all or a substantial portion of the
assets of the Business, all of the following conditions must be met prior to or
concurrently with the effective date of the transfer:
a. The transferee shall have sufficient business experience, aptitude and
financial resources to act as a Marketer, agree to be bound by all of the terms
and conditions of this Agreement and the transferee and/or its Principal Owner
must have completed the Franchisor's training program to the Franchisor's
satisfaction;
b. The Marketer shall have paid all fees due hereunder, all amounts owed
for purchases from the Franchisor and all other amounts owed to the Franchisor
or its affiliates and third party creditors and submit to the Franchisor all
required reports and statements;
c. The Marketer or the transferee shall have paid the Franchisor a transfer
fee in the amount of $2,500 to defray expenses the Franchisor incurs in
connection with the transfer;
d. The Marketer (and/or its transferring owners) executes a general
release, in form satisfactory to the Franchisor, of any and all claims against
the Franchisor and its affiliates and their respective officers, directors,
employees and agents;
e. The transferee shall execute an Area Marketing Agreement in the form
then currently offered by the Franchisor, the term of which will end on the
expiration date of this Agreement, and which shall supersede this Agreement in
all respects. The Marketer acknowledges that the terms of a new Area Marketing
Agreement may differ from the terms of this Agreement;
f. The Franchisor shall have approved the material terms and conditions of
such transfer, including, without limitation, that the price and terms of
payment are not so burdensome as to affect adversely the transferee's business
as a Marketer of the Franchisor;
g. If the Marketer (and/or the transferring owners) finances any part of
the sale price of the transferred interest, the Marketer and/or its owners shall
have agreed that all obligations of the transferee under any promissory notes,
agreements or security interests shall be subordinate to the transferee's
obligations to pay fees, and other amounts due to the Franchisor, its affiliates
and designees and otherwise to comply with this Agreement; and
h. The Marketer (and/or its transferring owners) shall have executed a
noncompetition covenant in favor of the Franchisor and the transferee with terms
the same as those set forth in Section 17.5 below.
17
15.4. Transfer to an Entity.
----------------------
If the Marketer is in full compliance with this Agreement, the Marketer may
transfer this Agreement to a corporation or other entity in which the Marketer
owns all of the ownership interest with the Franchisor's prior written approval,
which approval shall not be unreasonably withheld. The transfer fee described in
Section 15.3(c) above will be waived by the Franchisor and all owners of such
entity shall sign a Guaranty and Assumption of the Marketer's Obligations,
attached hereto as Exhibit IV.
15.5. Franchisor's Approval of Transfer.
----------------------------------
The Franchisor has 30 days from the date of the written notice to approve
or disapprove in writing, of the Marketer's proposed transfer. Written notice
shall mean and include all documentation necessary to evaluate the transferee.
The Marketer acknowledges that the proposed transferee shall be evaluated for
approval by the Franchisor based on the same criteria as is currently being used
to assess new marketers of the Franchisor and that the proposed transferee shall
be provided, if appropriate, with such disclosures as may be required by state
or federal law.
15.6. Death or Disability of Area Marketer.
-------------------------------------
Upon the death or permanent disability of the Marketer (or a Principal
Owner of or the owner of a Controlling Interest in the Marketer), the executor,
administrator, conservator, guardian or other personal representative of such
person shall transfer his or her interest in this Agreement or such interest in
the Marketer to an approved third party. Such disposition of this Agreement or
such interest (including, without limitation, transfer by bequest or
inheritance) shall be completed within a reasonable time, not to exceed six
months from the date of death or permanent disability, and shall be subject to
all the terms and conditions applicable to transfers contained in this Article.
Failure to transfer the interest in this Agreement or such interest in the
Marketer within said period of time shall constitute a breach of this Agreement.
For purposes hereof, the term "permanent disability" shall mean a mental or
physical disability, impairment or condition that prevents the Marketer, a
Principal Owner or an owner of a Controlling Interest in the Marketer from
performing the essential functions of the Marketer.
16. TERM AND EXPIRATION
16.1. Term.
-----
The term of this Agreement is for a period of 5 years from the date of this
Agreement, unless sooner terminated as provided herein.
16.2. Rights Upon Expiration.
-----------------------
At the end of the initial term, the Marketer shall have the option to renew
its area marketer rights for an additional term as set forth in the then current
form of Area Marketing Agreement, by acquiring successor area marketer rights,
if the Franchisor authorizes a successor area marketer franchise in accordance
with Section 16.3 below, and if the Marketer:
a. At least 60 days prior to expiration of the term, executes the form of
Area Marketing Agreement then in use by the Franchisor. The Marketer
acknowledges that such agreement may contain terms which are materially
different from those in this Agreement, including commission percentages and
territories;
18
b. Has complied with all provisions of this Agreement during the current
term, including the payment on a timely basis of all fees due hereunder.
"Compliance" shall mean, at a minimum, that the Marketer has not received
written notification from the Franchisor of breach hereunder more than three
times during the term hereof;
c. Executes a general release, in a form satisfactory to the Franchisor, of
any and all claims against the Franchisor and its affiliates, and their
respective officers, directors, employees, successors, assigns and agents
arising out of or relating to this Agreement; and
d. Has agreed with the Franchisor on new Sales Goals for the additional
term at least 60 days prior to expiration of the term.
16.3. Exercise of Option for Successor Area Marketer Rights.
------------------------------------------------------
The Marketer may exercise its option for successor area marketer rights by
giving written notice of such exercise to the Franchisor not less than 120 days
nor more 180 days prior to the scheduled expiration of this Agreement. The
Marketer's successor area marketer rights shall become effective by signing the
Area Marketing Agreement then currently being offered by the Franchisor;
however, if the Marketer fails to sign the general release and the Area
Marketing Agreement within 60 days after delivery thereof to the Marketer,
Marketer shall be deemed to have elected not to acquire a successor area
marketing franchise.
16.4. Conditions of Refusal.
----------------------
The Franchisor shall not be obligated to offer the Marketer successor area
marketer rights upon the expiration of this Agreement if the Marketer fails to
comply with any of the above conditions of renewal. In such event, except for
failure to execute the then current Area Marketing Agreement, the Franchisor
shall give the Marketer notice of expiration not more than 90 days after the
Franchisor receives the Marketer's notice, and such notice shall set forth the
reasons for such refusal to offer successor area marketer rights. Upon the
expiration of this Agreement, the Marketer shall comply with the provisions of
Section 17.3 below.
17. TERMINATION
17.1. By the Marketer.
----------------
The Marketer may terminate this Agreement at any time during the term
hereof with 90 days advance written notice to the Franchisor.
17.2. By the Franchisor.
------------------
The Franchisor shall have the right to terminate this Agreement effective
upon delivery of written notice of termination to the Marketer, unless otherwise
noted below (subject to any state laws to the contrary, where state law shall
prevail) if the Marketer (and/or any of its shareholders, members, managers,
Principal Owners, partners or the equivalent):
a. Fails to satisfactorily complete the training program as provided in
Section 7.1 of this Agreement;
b. Has made any material misrepresentation or omission in its application
to be a Marketer;
c. Fails to meet the Sales Goals set forth in Exhibit I;
19
d. Fails to comply with any other provision of this Agreement or any
mandatory specification, standard or operating procedure prescribed by the
Franchisor and does not correct such failure within 30 days after written notice
of such failure to comply is delivered to the Marketer;
e. Surrenders, transfers control of or makes an unauthorized transfer of
this Agreement or an ownership interest in the Marketer;
f. Is convicted by a trial court of or pleads no contest to a felony, or to
any other crime or offense that is, in the opinion of the Franchisor, likely to
adversely affect the goodwill associated with the Marks, or engages in any
conduct which may adversely affect the reputation of PAK MAIL Centers or the
goodwill associated with the Marks;
g. Is declared bankrupt or insolvent or voluntarily institutes a bankruptcy
proceeding under the Bankruptcy Code or is adjudicated bankrupt as a result of
an involuntary petition in bankruptcy being filed against it. (This provision
may not be enforceable under federal bankruptcy law, 11 ▇.▇.▇.▇▇.▇▇. 101 et
seq.);
h. Abandons or ceases to operate the Marketer Business for a period of 15
consecutive days or any shorter period that indicates an intent by the Marketer
to discontinue operation of the Marketer Business unless precluded from doing so
by an event beyond the Marketer's reasonable control, other than for financial
reasons;
i. Has received three notices of default from the Franchisor within a 12
month period, regardless of whether the defaults were cured by the Marketer;
j. Makes any unauthorized use of the Marks or unauthorized use or
disclosure of the Confidential Information, or uses, duplicates or discloses any
part of the System Manual; or
k. Has terminated a franchise agreement between the Franchisor and the
Marketer, or if the Franchisor has terminated such a franchise agreement.
17.3. Rights and Obligations of the Area Marketer Upon Termination or
Expiration.
----------------------------------------------------------------
Upon termination of this Agreement, whether pursuant to Section 17.1, 17.2
or upon expiration of this Agreement pursuant to Article 16 above, the Marketer
agrees:
a. To pay the Franchisor within 15 days after the effective date of
termination or expiration of this Agreement, or such later date that the amounts
due to the Franchisor are determined, such fees, amounts owed for purchases by
the Marketer from the Franchisor, its affiliates or designees, interest due on
any of the foregoing and all other amounts owed to the Franchisor, its
affiliates or designees which are then unpaid;
b. To refrain from, directly or indirectly at any time or in any manner
(except with respect to PAK MAIL Center franchises owned and operated by the
Marketer) identifying itself or any business as a current or former PAK MAIL
Marketer or authorized agent of the Franchisor or its affiliates, use any ▇▇▇▇,
any colorable imitation thereof or other indicia of a PAK MAIL Center in any
manner or for any purpose or utilize for any purpose any trade name, trademark
or service ▇▇▇▇ or other commercial symbol that suggests or indicates a
connection or association with the Franchisor or its affiliates;
c. To immediately deliver to the Franchisor all past and present franchise
sales leads and records and all contracts, acknowledgements of receipt, and
other information and records related to Franchisees of the Franchisor in the
Territory;
20
d. To immediately deliver to the Franchisor all advertising materials, the
System Manual, all other manuals, forms, offering circulars, franchise sales
brochures and other materials containing any ▇▇▇▇ or otherwise identifying or
relating to the sale or service of PAK MAIL Centers;
e. To refrain from communicating, in any manner, with Franchisees, except
as expressly authorized by the Franchisor;
f. To take such action as may be required to cancel all fictitious or
assumed names or equivalent registrations relating to the Marketer's use of any
▇▇▇▇;
g. To notify the telephone company and all telephone directory publishers
of the termination or expiration of the Marketer's right to use any telephone
number and any regular, classified or other telephone directory listings
associated with any ▇▇▇▇ and to authorize transfer thereof to the Franchisor or
its designee. The Marketer acknowledges that, as between it and the Franchisor,
the Franchisor has the sole rights to and interest in all telephone, telecopy or
facsimile machine numbers and directory listings associated with any ▇▇▇▇. The
Marketer authorizes the Franchisor, and hereby appoints the Franchisor and any
of its officers as the Marketer's attorney-in-fact, to direct the telephone
company and all telephone directory publishers to transfer any telephone,
telecopy or facsimile machine numbers and directory listings relating to the
Marketer's Business to the Franchisor at its direction, should the Marketer fail
or refuse to do so, and the telephone company and all telephone directory
publishers may accept such direction or this Agreement as conclusive evidence of
the Franchisor's exclusive rights in such telephone numbers and directory
listings and the Franchisor's authority to direct their transfer; and
h. Furnish the Franchisor, within 30 days after the effective date of
termination or expiration, with evidence satisfactory to the Franchisor of the
Marketer's compliance with the foregoing obligations.
17.4. Confidential Information.
-------------------------
Marketer agrees that, upon termination or expiration of this Agreement, the
Marketer shall immediately cease to use any Confidential Information of the
Franchisor pursuant to this Agreement in any business or otherwise (except in
connection with the operation of a PAK MAIL Center pursuant to a Franchise
Agreement with the Franchisor) and return to the Franchisor all copies of the
System Manual and any other confidential materials which have been loaned to the
Marketer by the Franchisor.
17.5. Covenant Not to Compete.
------------------------
Upon termination or expiration of this Agreement for any reason, the
Marketer (and its shareholders, officers, directors, members, managers and/or
partners if the Marketer is a corporation, partnership, or limited liability
company) agrees that for a period of two years commencing on the effective date
of termination or expiration, or the date on which the Marketer ceases to
conduct business, whichever is later, the Marketer (and its shareholders,
officers, directors, members, managers, partners and/or equivalents if the
Marketer is an entity) shall not have any direct or indirect interest (through a
member of any immediate family of the Marketer or its affiliates, shareholders,
officers, directors, partners, members, managers, equivalents or otherwise) as a
disclosed or beneficial owner, investor, partner, director, officer, employee,
consultant, representative or agent or in any other capacity in any Competitive
Business located or operating within the Territory. The restrictions of this
Section shall not be applicable to the ownership of shares of a class of
securities listed on a stock exchange or traded on the over-the-counter market
that represent 2% or less of the number of shares of that class of securities
issued and outstanding. The Marketer (and its shareholders, officers, directors,
members, managers, partners and/or equivalents) expressly acknowledge that they
possess skills and abilities of a general nature and have other opportunities
for exploiting such skills. Consequently, enforcement of the covenants made in
this Section will not deprive them of their personal goodwill or ability to earn
a living.
21
17.6. No Further Right to Payment.
----------------------------
Upon termination or expiration of this Agreement, the Marketer forfeits all
fees paid to the Franchisor and remains liable to the Franchisor for all amounts
due to the Franchisor on the date of termination or expiration. The Marketer
shall have no further right to receive payment of commissions or Service Fees
from the Franchisor, except for those commissions or Service Fees which have
been fully earned by the Marketer up through the date of such termination or
expiration. For purposes of this Agreement, "fully earned" commissions shall
mean commissions due on franchise sales for which all conditions described in
Section 6.1 of this Agreement have been met or fulfilled for the purchase of a
franchise for a PAK MAIL Center to be located within the Territory by the
Marketer. "Fully earned" Service Fees shall mean those Service Fees which accrue
up through the date of termination which are otherwise owed to the Marketer. The
Franchisor shall have the right to immediately assume control of and manage all
franchise sales in the Territory and to receive all Service Fees from
Franchisees in the Territory. Any fully earned commissions or Service Fees which
are due to the Marketer will be paid by the Franchisor in accordance with the
provisions of Article 6 of this Agreement.
17.7. Continuing Obligations.
-----------------------
All obligations of the Franchisor and the Marketer which expressly or by
their nature survive the expiration or termination of this Agreement shall
continue in full force and effect subsequent to and notwithstanding its
expiration or termination and until they are satisfied or by their nature
expire.
17.8. State and Federal Law.
----------------------
THE PARTIES ACKNOWLEDGE THAT IN THE EVENT THAT THE TERMS OF THIS AGREEMENT
REGARDING TERMINATION OR EXPIRATION ARE INCONSISTENT WITH APPLICABLE STATE OR
FEDERAL LAW, SUCH LAW SHALL GOVERN THE MARKETER'S RIGHTS REGARDING TERMINATION
OR EXPIRATION OF THIS AGREEMENT.
18. RELATIONSHIP OF THE PARTIES
18.1. Relationship of the Parties.
----------------------------
It is understood and agreed by the parties hereto that this Agreement does
not create a fiduciary relationship between them, that the parties are
independent contractors and that the Franchisor appoints the Marketer as its
special agent for a particular purpose and that nothing in this Agreement is
intended to make either party a general agent, subsidiary, joint venturer,
partner, employee or servant of the other for any purpose. The Marketer shall
conspicuously identify itself in all dealings with Franchisees, prospective
Franchisees, lessors, contractors, suppliers, public officials and others as the
owner of its own Business under an Area Marketing Agreement with the Franchisor,
and shall place such other notices of independent ownership on signs, forms,
stationery, advertising and other materials as the Franchisor may require from
time to time.
18.2. Payment of Third Party Obligations.
-----------------------------------
Neither the Franchisor nor the Marketer shall make any express or implied
agreements, guaranties or representations, or incur any debt, in the name of or
on behalf of the other or represent that their relationship is other than
franchisor and special agent, and neither the Franchisor nor the Marketer shall
be obligated by or have any liability under any agreements or representations
22
made by the other that are not expressly authorized hereunder, nor shall the
Franchisor be obligated for any damages to any person or property directly or
indirectly arising out of the operation of the Marketer's Business, whether or
not caused by the Marketer's negligent or willful action or failure to act.
18.3. Independent Contractors.
------------------------
The Marketer may delegate its duties hereunder to independent contractors
provided that the Marketer receives written approval from the Franchisor prior
to any such delegation of duties and complies with all state laws which require
broker registration for such persons. The Franchisor reserves the right to
withdraw the approval of any independent contractor engaged by the Marketer to
fulfill its duties and obligations under this Agreement, at any time.
18.4. Indemnification.
----------------
The Marketer agrees to indemnify and hold the Franchisor and its
subsidiaries, affiliates, stockholders, directors, officers, employees, agents
and assignees harmless against, and to reimburse them for, any loss, liability,
taxes or damages (actual or consequential) and all reasonable costs and expenses
of defending any claim brought against any of them or any action in which any of
them is named as a party (including, without limitation, reasonable
accountants', attorneys' and expert witness fees, costs of investigation and
proof of facts, court costs, other litigation expenses and travel and living
expenses) which any of them may suffer, sustain or incur by reason of, arising
from or in connection with any acts, omissions or activities of the Marketer or
any employee of or independent contractor engaged by the Marketer whether such
acts, omissions or activities are authorized by or are not in accordance with
this Agreement. The Franchisor shall have the right to defend any such claim
against it. This indemnity shall continue in full force and effect, subsequent
to and notwithstanding the expiration or termination of this Agreement.
19. MISCELLANEOUS PROVISIONS
19.1. Governing Law/Consent to Venue and Jurisdiction.
------------------------------------------------
Except to the extent governed by the United States Trademark Act of 1946
(▇▇▇▇▇▇ Act, 15 U.S.C. Sections 1051 et seq.) or other federal law, this
Agreement shall be interpreted under the laws of the state of Colorado and any
dispute between the parties shall be governed by and determined in accordance
with the substantive laws of the state of Colorado, which laws shall prevail in
the event of any conflict of law. The Marketer and the Franchisor have
negotiated regarding a forum in which to resolve any disputes which may arise
between them and have agreed to select a forum in order to promote stability in
their relationship. Therefore, if a claim is asserted in any legal proceeding
involving the Marketer, its officers or directors (collectively, "Marketer
Affiliates") and the Franchisor, its officers, directors or sales employees
(collectively, "Franchisor Affiliates") both parties agree that the exclusive
venue for disputes between them shall be in the state and federal courts of
Colorado and each waive any objection either may have to the personal
jurisdiction of or venue in the state and federal courts of Colorado. The
Franchisor, the Franchisor Affiliates, the Marketer and the Marketer Affiliates
each waive their rights to a trial by jury.
19.2. Severability.
-------------
If any provision of this Agreement is held invalid by any tribunal in a
final decision from which no appeal is or can be taken, such provision shall be
deemed modified to eliminate the invalid element and, as so modified, such
provision shall be deemed a part of this Agreement as though originally
included. The remaining provisions of this Agreement shall not be affected by
such modification.
23
19.3. Modification.
-------------
The Franchisor and/or the Marketer may modify this Agreement only upon
execution of a written agreement between the two parties. The Marketer
acknowledges that the Franchisor may modify its standards and specifications and
operating and marketing techniques set forth in the System Manual unilaterally
under any conditions and to the extent that the Franchisor, in its sole
discretion, deems necessary to protect, promote, or improve the Marks and the
quality of the Licensed Methods, but under no circumstances will such
modifications be made arbitrarily without such determination.
19.4. Attorneys' Fees.
----------------
In the event of any default on the part of either party to this Agreement,
in addition to all other remedies, the party in default will pay the aggrieved
party all amounts due and all damages, costs and expenses, including reasonable
attorneys' fees, incurred by the aggrieved party in any legal action or other
proceeding as a result of such default, plus interest at the highest rate
allowable by law, accruing from the date of such default.
19.5. Injunctive Relief.
------------------
Nothing herein shall prevent the Franchisor or the Marketer from seeking
injunctive relief to prevent irreparable harm, in addition to all other
remedies. If the Franchisor seeks an injunction, the Franchisor will not be
required to post a bond in excess of $500.
19.6. No Waiver.
----------
No waiver of any condition or covenant contained in this Agreement or
failure to exercise a right or remedy by the Marketer or the Franchisor shall be
considered to imply or constitute a further waiver by the Franchisor or the
Marketer of the same or any other condition, covenant, right, or remedy.
19.7. No Right to Set Off.
--------------------
The Marketer shall not be allowed to set off amounts owed to the Franchisor
for fees or other amounts due hereunder, against any monies owed to the
Marketer, nor will the Marketer in any event withhold any amounts due to any
alleged nonperformance by the Franchisor hereunder, which right of set off is
hereby expressly waived by the Marketer.
19.8. Effective Date.
---------------
Regardless of the date first written above, this Agreement shall not be
effective until accepted by the Franchisor as evidenced by dating and signing by
an officer of the Franchisor.
19.9. Review of Agreement.
--------------------
The Marketer acknowledges that it had a copy of the Franchisor's Uniform
Franchise Offering Circular in its possession for a period of time not less than
10 full business days, and this Agreement in its possession for a period of time
not less than 5 full business days, during which time the Marketer has had the
opportunity to submit the same for review and advice by a professional of the
Marketer's choosing prior to freely executing this Agreement.
24
19.10. Entire Agreement.
-----------------
This Agreement, including all Exhibits and addenda, contains the entire
agreement between the parties and supersedes any and all prior agreements
concerning the subject matter hereof. The Marketer agrees and understands that
the Franchisor shall not be liable or obligated for any oral representations or
commitments made prior to the execution hereof or for claims of negligent or
fraudulent misrepresentation and that no modifications of this Agreement shall
be effective except those in writing and signed by both parties. The Franchisor
does not authorize and will not be bound by any representation of any nature
other than those expressed in this Agreement. The Marketer further acknowledges
and agrees that no representations have been made to it by the Franchisor
regarding projected sales volumes, market potential, revenues, profits of the
Marketer's Business, or operational assistance other than as stated in this
Agreement or in any disclosure document provided by the Franchisor or its
representatives.
19.11. Notices.
--------
All notices required to be given under this Agreement shall be given in
writing, by certified mail, return receipt requested, or by an overnight
delivery service providing documentation of receipt, to the addresses set forth
in the first paragraph of this Agreement, or, with respect to notices to the
Marketer, to the address of the Area Marketer Business, or at such other
addresses as the Franchisor or the Marketer may designate from time to time, and
shall be effectively given when deposited in the United States mails, postage
prepaid, or when received via overnight delivery, as may be applicable.
19.12. Acknowledgment.
---------------
BEFORE SIGNING THIS AGREEMENT, THE MARKETER SHOULD READ IT CAREFULLY WITH
THE ASSISTANCE OF LEGAL COUNSEL. THE MARKETER ACKNOWLEDGES THAT:
(A) THE SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED HEREIN INVOLVES
SUBSTANTIAL RISKS AND DEPENDS UPON THE MARKETER'S ABILITY AS AN INDEPENDENT
BUSINESS PERSON AND ITS ACTIVE PARTICIPATION IN THE DAILY AFFAIRS OF THE
BUSINESS, AND
(B) NO ASSURANCE OR WARRANTY, EXPRESS OR IMPLIED, HAS BEEN GIVEN AS TO THE
POTENTIAL SUCCESS OF SUCH BUSINESS VENTURE OR THE EARNINGS LIKELY TO BE
ACHIEVED, AND
(C) NO STATEMENT, REPRESENTATION OR OTHER ACT, EVENT OR COMMUNICATION,
EXCEPT AS SET FORTH IN THIS DOCUMENT, AND IN ANY OFFERING CIRCULAR SUPPLIED TO
THE MARKETER IS BINDING ON THE FRANCHISOR IN CONNECTION WITH THE SUBJECT MATTER
OF THIS AGREEMENT.
25
IN WITNESS WHEREOF, the parties hereto have executed, sealed and delivered
this Agreement in counterparts on the last date written below.
PAK MAIL CENTERS OF AMERICA, INC. AREA MARKETER:
a Colorado corporation
-------------------------------
(Print Name)
By: By:
------------------------------ ---------------------------
Title: Title:
---------------------------- -------------------------
Date: Date:
---------------------------- -------------------------
26
EXHIBIT I
RIDER
TO AREA MARKETING AGREEMENT
BETWEEN PAK MAIL CENTERS OF AMERICA, INC.
AND
-----------------------------------------------
DATED _______________, 19 ________
1. Territory. The Territory referred to in Section 2.1 of the Agreement
shall be the following geographic area:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
2. Marketing Fee. The Marketing Fee payable to the Franchisor by the
Marketer under Section 5.1 of the Agreement shall be an amount equal to the
product of the estimated population within the Territory and the price per
person within the Territory, which shall be no less than $0.06, and adjusted as
follows:
________________________________________________________________________________
and calculated as follows:
A. 1990 Bureau of Census Population Estimate = _________
B. Adjustment to Population Estimate = _________
C. Current Population Within Territory (A+B =) _________
- =========
D. Adjusted Price Per Person = _________
MARKETING FEE (DxC =)
=========
Unless otherwise agreed, the Marketing Fee is payable in cash, certified funds
or by wire transfer. The Franchisor and the Marketer agree that the Marketing
Fee will not be subject to change for any reason, including subsequent revisions
of the Bureau of Census population estimates.
3. Advertising Expenditure. During the term of the Agreement, Marketer
shall be required during each calendar quarter to spend a minimum of $_________
("Advertising Expenditure") to advertise and promote the offer and sale of
franchises for PAK MAIL Centers in the Territory, in accordance with Section
13.9 of the Agreement, based on the following calculation:
A. 1990 Bureau of Census Population Estimate = _________
B. Adjustment to Population Estimate = _________
C. Current Population Within Territory (A+B =) _________
D. Price Per Person = $.001
=========
ADVERTISING EXPENDITURE (D x C =)
=========
The Franchisor and the Marketer agree that the Advertising Expenditure will
not be subject to change for any reason, including subsequent revisions of the
Bureau of Census population estimates.
4. Sales Goals. The Marketer shall meet the following cumulative Sales
Goals by the last day of each twelve-month period ("Sales Year") during the term
of the Agreement:
Cumulative Minimum Number
of New Pak Mail Centers Sold
in the Territory Last Day of Sales
Sales Year Year
First
----------------------------- ----------------,
Second
----------------------------- ----------------,
Third
----------------------------- ----------------,
Fourth
----------------------------- ----------------,
Fifth
----------------------------- ----------------,
TOTAL SALES GOALS
=============================
The first Sales Year commences on the date of the Agreement and expires on the
date shown above. Each subsequent Sales Year commences on the date succeeding
the last day of the preceding Sales Year and expires on the respective date
shown above. The sales made during the term of the Agreement are cumulative.
Therefore, if the Marketer meets its total Sales Goals prior to the end of the
fifth Sales Year, the Marketer's Sales Goals will be satisfied.
PAK MAIL Centers located in the Territory and owned by the Franchisor do not
count toward fulfillment of the Marketer's cumulative Sales Goals.
PAK MAIL CENTERS OF AMERICA, INC. AREA MARKETER
a Colorado corporation
--------------------------------
(Print Name)
By: By:
------------------------------ ---------------------------
Title: Title:
---------------------------- -------------------------
Date: Date:
---------------------------- -------------------------
2
EXHIBIT II
----------
CURRENT FORM OF FRANCHISE AGREEMENT
EXHIBIT III
-----------
CURRENT FORM OF AMENDMENT TO FRANCHISE AGREEMENT
(A.M. P.M. MOVERS PROGRAM)
EXHIBIT IV
----------
GUARANTY AND ASSUMPTION OF
AREA MARKETER'S OBLIGATIONS
In consideration of, and as an inducement to, the execution of the above
Area Marketing Agreement (the "Agreement") by PAK MAIL CENTERS OF AMERICA, INC.
("Franchisor"), each of the undersigned ("Guarantors") personally and
unconditionally (1) guarantees to the Franchisor and its affiliates and their
successors and assigns, for the term of the Agreement and thereafter as provided
in the Agreement, that the Area Marketer defined in the Agreement (the
"Marketer") shall punctually pay and perform each and every undertaking,
agreement and covenant set forth in the Agreement and (2) agrees personally to
be bound by, and personally liable for the breach of, each and every provision
in the Agreement.
1. Waiver. Each of the undersigned waives:
a. acceptance and notice of acceptance by the Franchisor and its
affiliates of the foregoing undertakings;
b. notice of demand for payment of any indebtedness or nonperformance
of any obligations hereby guaranteed;
c. protest and notice of default to any party with respect to the
indebtedness or nonperformance of any obligations hereby guaranteed;
d. any right he or she may have to require that an action be brought
against the Marketer or any other person as a condition of liability; and
e. any and all other notices and legal or equitable defenses to which
he or she may be entitled.
2. Consents. Each of the undersigned consents and agrees that:
a. his or her direct and immediate liability under this guaranty shall
be joint and several;
b. he or she shall render any payment or performance required under
the Agreement upon demand if the Marketer fails or refuses punctually to do
so;
c. such liability shall not be contingent or conditioned upon pursuit
by the Franchisor or its affiliates of any remedies against the Marketer or
any other person;
d. such liability shall not be diminished, relieved or otherwise
affected by any extension of time, credit or other indulgence which the
Franchisor or its affiliates may from time to time grant to the Marketer or
to any other person, including, without limitation, the acceptance of any
partial payment or performance or the compromise or release of any claims,
none of which shall in any way modify or amend this guaranty, which shall
be continuing and irrevocable during the term of the Agreement; and
e. he or she shall be bound by the restrictive covenants and
confidentiality provisions contained in Articles 11 and 12 and Sections
17.4 and 17.5 of the Agreement, and the indemnification provisions
contained in Section 18.4 of the Agreement; and
f. the governing law, consent to jurisdiction and related provisions
contained in Article 19 and the costs and attorneys fees provision
contained in Section 19.4 of the Agreement shall govern this Guaranty and
such provisions are incorporated into this Guaranty by this reference.
IN WITNESS WHEREOF, each of the undersigned has affixed his or her
signature, effective as of the ____ day of ____________________, 199___.
PERCENTAGE OF OWNERSHIP GUARANTOR(S)
INTERESTS IN AREA MARKETER
---------------------------- ------------------------------------
(Print Name)
------------------------------------
Signature
------------------------------------
------------------------------------
------------------------------------
Address
------------------------------------
Telephone Number
---------------------------- ------------------------------------
(Print Name)
------------------------------------
Signature
------------------------------------
------------------------------------
------------------------------------
Address
------------------------------------
Telephone Number
2
---------------------------- ------------------------------------
(Print Name)
------------------------------------
Signature
------------------------------------
------------------------------------
------------------------------------
Address
------------------------------------
Telephone Number
3
EXHIBIT V
---------
STATEMENT OF OWNERSHIP
Area Marketer:
-----------------------------------------------------------------
--------------------------------------------------------------------------------
Trade name (if different from above):
-------------------------------------------
--------------------------------------------------------------------------------
Form of Ownership
(Check One)
_____ Individual _____ Partnership _____ Corporation _____ Limited Liability
Co.
If a Partnership, provide name and address of each partner showing
percentage owned, whether active in management, and indicate the state in which
the partnership was formed.
If a Corporation, give the state and date of incorporation, the names and
addresses of each officer and director, and list the names and addresses of
every shareholder showing what percentage of stock is owned by each.
If a Limited Liability Company, give the state and date of formation, the
name and address of the manager, list the names and addresses of every member
and the percentage of membership interest held by each member.
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Marketer acknowledges that this Statement of Ownership applies to the PAK
MAIL Marketer Business authorized under the Area Marketing Agreement. Use
additional sheets if necessary. Any and all changes to the above information
must be reported to the Franchisor in writing.
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Date Name