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EXHIBIT 10.17
MODIFICATION AND
RESTRUCTURING AGREEMENT
THIS MODIFICATION AND RESTRUCTURING AGREEMENT (this "Agreement") is
effective as of the 9th day of May, 2006, by and between XXXXXXX XXXXXXX, an
individual ("Xxxxxxx"), BUSINESS RETAIL GROUP, LLC, a Utah limited liability
company owned and/or controlled by Xxxxxxx ("BRG"), SPEAKING ROSES
INTERNATIONAL, INC., a Utah corporation ("SRI"), and SPEAKING ROSES DEVELOPMENT
CORPORATION, a Utah corporation and a wholly-owned subsidiary of SRI ("SRDC").
Xxxxxxx, BRG, SRI and SRDC are collectively referenced to herein as the
"Parties", and each may individually be referred to herein as a "Party".
RECITALS
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A. SRI and Xxxxxxx are parties to that certain Development and
Employment Agreement dated as of June 1, 2005 (the "Development Agreement"),
pursuant to which Xxxxxxx agreed (i) to act as an area development agent on
behalf of SRI and its affiliates for the development of franchised operations
throughout the State of Utah and in Xxxxx County, Nevada (the "Territory") using
a comprehensive retail floral business operating system (the "System"), and (ii)
to provide certain services to SRI and SRI's affiliates as an employee of SRI.
B. In furtherance of Xxxxxxx'x rights under the Development
Agreement, Xxxxxxx caused BRG to become a franchisee of SRDC (which holds the
exclusive right to franchise the System) pursuant to the terms of SRDC's
standard franchise agreement dated October 26, 2005 (the "Franchise Agreement").
C. BRG's business operations under the System (the "Xxxxxxx
Franchise") are operated from an approximately 1,300 square foot leased
store-front located at 0000 Xxxxx 000 Xxxx, Xxxx Xxxx Xxxx, Xxxx (the
"Premises").
D. The parties desire to amend certain terms and conditions of
the Development Agreement and to terminate the Franchise Agreement, by entering
into this Agreement.
AGREEMENT
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NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:
1. Amendments Relating to Employment Relationship. The term of
the employment relationship between SRI and Xxxxxxx described in Section 1 of
the Development Agreement is hereby amended to provide for an extension of that
term from June 1, 2006, through and including June 30, 2007, and shall continue
thereafter as mutually agreed upon by SRI and Xxxxxxx. Xxxxxxx'x salary and
benefits, as described in Section 1.1 of the Development Agreement, shall remain
unchanged through the extended term and Xxxxxxx shall be entitled to receive the
benefits generally provided to similarly situated executives of SRI; provided,
however, that SRI may terminate Xxxxxxx'x employment prior to the expiration of
the extended term if: (i) Xxxxxxx fails to perform his duties under Section 2 of
the Development Agreement; (ii) Xxxxxxx is guilty of willful misconduct (as that
action is defined and determined by SRI's Board of Directors in its sole
discretion); (iii) Xxxxxxx is guilty of fraud, misappropriation, embezzlement or
other acts of unlawful conduct or criminal conduct involving moral turpitude;
(iv) Xxxxxxx willfully and repeatedly fails to comply with a lawful written
direction of SRI's Board of Directors; or (v) Xxxxxxx is absent from his duties
for a continued period, where not excused by illness or disability.
2. Purchase of Area Development Rights. Xxxxxxx'x rights under
the provisions of Section 3 of the Development Agreement (the "Development
Rights") are hereby purchased by SRDC, and, except as otherwise specifically set
forth herein, Xxxxxxx hereby relinquishes, disclaims and waives any rights in
and to the Development Rights and any consideration that would otherwise accrue
to him under the terms of the Development Rights, whether before or after the
date hereof.
(a) Associated Foods Rights. SRI and Xxxxxxx hereby
acknowledge that, as a result of the purchase of the Development Rights, Xxxxxxx
has relinquished, waived and disclaimed any right to any contracts, negotiations
or other arrangements to provide floral services to or for Associated Foods,
Inc. (the "Associated Food Rights")
(b) Associated Foods Rights Management Obligation.
Xxxxxxx shall act as manager on behalf of SRI (or its designee affiliate) of any
point of sale locations arising from the Associated Foods Rights. Xxxxxxx'x
management obligations with respect to the Associated Foods Rights shall be
deemed part of Xxxxxxx'x employment obligations, as set forth in Section 2 of
the Development Agreement (which section is hereby amended and modified to
provide for such management obligations), and Xxxxxxx shall not be entitled to,
and hereby waives, any additional consideration arising from such management
obligations, either under the purchased Development Rights, or otherwise.
3. Termination of BRG Relationship. Subject to the consummation
of the Purchase, as described in Section 4 below, and pursuant to the provisions
of, inter alia, Section 24 of the Franchise Agreement, upon the closing of the
Purchase, the Franchise Agreement shall be deemed terminated, and all of the
rights, preferences, privileges, duties and obligations of SRDC and Xxxxxxx
under the Franchise Agreement (other than those obligations and duties which, by
the terms of the Franchise Agreement, survive the termination of the Franchise
Agreement) shall terminate.
(a) Waiver of Release Obligation. BRG and Xxxxxxx hereby
acknowledge that, pursuant to the provisions of Section 18.12 of the Franchise
Agreement, they are required to execute such documents, instruments and
agreements as SRDC may reasonably request relating to the termination of the
Franchise Agreement, and that such documents, instruments and agreements may
include releases by BRG and Xxxxxxx of any and all claims against SRDC and its
affiliates, including SRI relating to the Franchise Agreement. In further
reliance upon Xxxxxxx'x and BRG's representations to SRDC regarding the lack of
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any knowledge of BRG or Xxxxxxx of any claims against SRDC or its affiliates
arising under the Franchise Agreement, and in reliance upon the anticipated
continuing relationship between and among SRI, SRDC and Xxxxxxx, SRDC (on behalf
of itself and its affiliates, including SRI) hereby waives any requirement for
the execution by Xxxxxxx and/or the BRG of such releases at the closing of the
Purchase.
(b) Limitations on Waiver. The waiver set forth in
Section 3(a) shall be deemed to be a waiver by SRI under the provisions of
Section 18.12 of the Franchise Agreement only as of the date of closing of the
Purchase, and shall not prohibit, limit or otherwise modify SRDC's right to
request such releases at a later date.
4. The Purchase. On or before the 1st of June 2006, SRDC, or its
assignee (the "Purchaser"), shall acquire from BRG all of BRG's right, title and
interest in and to the business and assets comprising the operations of the
Franchise, including the BRG's interest in all assets, inventory, accounts
receivable, the lease for the premises (which, in Purchaser's sole discretion,
shall be in the form of either a sublease or assignment of BRG's rights in the
lease to the Premises), contracts and all other assets comprising the business
operations of the Franchise (the "Purchased Assets") in exchange for the payment
by Purchaser of the sum of (i) One Hundred Thirty-Five Thousand Dollars
($135,000), plus (ii) the difference between Forty Thousand Dollars ($40,000)
and the amount contained in the operating account of BRG on May 31, 2006, (less
any amounts owing SRDC by BRG pursuant to the Franchise Agreement or other
agreements as of the date hereof, plus any amounts owing to BRG by SRDC pursuant
to the Franchise Agreement, other agreements, or the employment relationship
between SRI and Xxxxxxx, as said amounts are set forth in Exhibit "A"), plus
(iii) the assumption by Purchaser of the liabilities set forth on Exhibit "B"
hereto relating to the continuing operation of such assets (the "Purchase").
(a) Terms of Purchase. As of the closing of the Purchase,
BRG represents and warrants to Purchaser, with the understanding the Purchaser
is relying on the same and entering into this Agreement with respect to the
Purchase as follows:
(i) BRG has taken all actions required by law,
or otherwise, to authorize the execution, delivery and
performance of this Agreement with respect to the Purchase;
(ii) The consummation of the transactions
contemplated by the Purchase and the compliance by the BRG
with its obligations to effect the Purchase will not, with or
without giving of notice or the lapse of time, or both,
conflict with or result in a breach of any agreement to which
BRG is a party or by which it is bound relating to the assets
to be so acquired, or result in the creation of any lien or
charge on such assets, or the termination of, or give any
contracting party the right to terminate, any agreements
affecting those assets;
(iii) The sale of the assets pursuant to the terms
of the Purchase do not require the consent or approval of any
third party;
(iv) At the closing of the Purchase, BRG will
deliver to the Purchaser good and marketable title to the
assets so acquired, free and clear of all liens, taxes,
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mortgages, security interests, charges, demands, encumbrances,
exceptions or adverse claims. At such closing, all of the
assets will be located at the Premises and will be free from
all defects or damage and in good operating condition, having
been acquired and maintained by BRG in accordance with normal
and good business practices. The accounts receivable portion
of the assets arose in the ordinary course of the conduct of
the BRG's business, are valid and enforceable, subject to no
valid defense or offset, and can be collected in their full
amount;
(v) There is no pending or threatened action,
claim, proceeding or investigation against or relating to BRG,
the assets being sold pursuant to the Purchase or the
transactions being contemplated by the Purchase;
(vi) Purchaser will not be responsible for any
fee or commission payable to any person acting on behalf of or
for BRG in connection with the transactions contemplated by
the Purchase; and
(vii) The assets that are the subject of the
Purchase comprise all of the assets, materials, rights,
contracts (other than the Franchise Agreement) and
relationships used by BRG in the conduct of the Franchise
business under the System as of the date of the closing of the
Purchase.
(b) Actions Pending Purchase. Pending of the Closing of
the Purchase, BRG and the Purchaser agree to cooperate to satisfy the following
conditions precedent to such closing:
(i) The absence of any material adverse changes
in the number, type, term or condition (financial or
otherwise) of the assets that are the subject of the Purchase,
or make up or condition of such assets between the date of
this Agreement and the closing of the Purchase, and the
absence of any material misrepresentations of BRG under this
Section 4 relating to the Purchase.
(ii) Between the date of this Agreement and the
closing of the Purchase, BRG not entering into any agreements
or contracts which would materially and adversely affect such
assets or their value;
(iii) No order of any court or administrative or
regulatory body restraining, enjoining or otherwise preventing
the consummation of the Purchase or the sale of the assets
subject to the terms of the Purchase;
(iv) BRG not incurring any obligations or
liabilities (contingent or otherwise) or any brokerage or
finder's fee or agent's commission or other similar payments
in connection with the Purchase for which Purchaser will have
any liability;
(v) BRG conducting the business in its ordinary
course, consistent with past practice (including, in
compliance with the terms of the Franchise Agreement) and not
entering into any negotiations or binding commitments or
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agreements with any other person or entity regarding the sale
of such assets (the effect of which would materially and
adversely affect the Purchaser's interest in acquiring the
assets pursuant to the Purchase), or the sale by the BRG or
other disposition or encumbrance of any of the assets to any
person except for the sale of the portions of the assets
constituting inventory in the ordinary and normal course of
business and consistent with past practice. BRG shall not
engage any special activities which promote the sales of the
inventory of the business on highly discounted terms or
otherwise change the sales price of the inventory of the
business, or discount or otherwise change its collection
practices with respect to its accounts receivable, or violate,
amend or otherwise change in any way the terms of the lease
for the Premises or commence a lawsuit relating to or
involving the assets, other than for routine collection of
accounts receivable or for breach of this Agreement relating
to the Purchase.
(c) Purchase Price. Unless otherwise agreed to by BRG and
Purchaser, the cash portion of the purchase price for the Purchase shall be paid
at the closing of the transactions contemplated by this Section 4.
5. Consideration. In consideration of the purchase of the
Development Rights under Section 2 above, SRDC shall pay to Xxxxxxx the
following:
(a) Warrant. SRI shall issue to Xxxxxxx a warrant to
acquire one hundred fifty thousand common shares of SRI at an exercise price of
seventy-five cents ($.75) per share, which warrant shall vest on the first
anniversary of the date hereof and shall expire on the tenth anniversary of the
date hereof. The warrant, when prepared, shall be attached hereto as Exhibit
"C."
(b) Area Development Payments. Upon the sale by SRDC of
the area developments rights with respect to Xxxxx County, Nevada, and Beaver,
Emery, Garfield, Grand, Iron, Kane, Millard, Piute, San Xxxx, Xxxxxx, Washington
and Xxxxx Counties, Utah (the "Retained County Rights"), SRDC shall pay BRG
fifteen thousand dollars ($15,000) in cash or other immediately available funds,
and shall issue to BRG a promissory note in the amount of $60,000 (the "Note").
The Note shall be due and payable on the first anniversary of the date thereof;
provided, however, that SRDC shall pay to BRG pursuant to the Note an amount
equal to ten percent (10%) of the proceeds received by SRDC pursuant to the sale
of area development rights during the period commencing on the date of the Note
through and including the first anniversary of the date of the Note (as and when
received by SRDC and following the lapse of any periods during which SRDC's
receipt of those amounts is restricted, including as a result of SRDC's
obligation to comply with certain franchising requirements).
(c) Appointment as Designated Trainer. SRDC shall appoint
BRG, for a period of five years from the date hereof (subject to termination
provisions to be hereafter mutually agreed upon by BRG and SRDC), as its
exclusive training provider under the System, and BRG shall be entitled to
receive (either directly from a prospective franchisee or license under the
System or from SRDC, as determined by the terms of the Franchise Agreement or
License Agreement for the prospective party in question) ninety percent (90%) of
the training fees payable by such prospective franchisee, minus all costs
incurred by SRDC pursuant to its obligations under this Section 5(c). BRG shall
not cause such services to be performed by any person other than BRG or Xxxxxxx,
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whether by subcontract or otherwise. BRG shall be entitled to use SRDC's
facilities for such training, free of cost. All training materials used,
developed or employed by Xxxxxxx in such training shall be deemed the property
of SRDC and BRG shall, at SRDC's request, execute such documents or conveyances
as shall be appropriate in SRDC's opinion to vest title in such materials in
SRDC. Any amounts to be paid by SRDC to BRG under this Section 5(c) shall be due
on the tenth (10th) business day following their receipt by SRDC.
(d) SRI Option. SRI will maintain and provide to Xxxxxxx
periodic grants under equity incentive plans providing for stock option grants
(and that may provide for restricted stock, stock appreciation rights and other
equity-based awards) on terms and conditions at least as favorable in all
respects as SRI's historical practice. Xxxxxxx will participate in those plans
on a basis appropriate for his position and at least equivalent to peer
executives in XXXX.
6. Payment Review Rights. Concurrently with the delivery of any
payment to Xxxxxxx under the provisions of Section 5(a) or 5(b), SRDC shall
deliver to Xxxxxxx a report showing the basis for the calculation of such
payment. Xxxxxxx shall have the right, at his sole cost and expense, to review
SRDC's books and records to verify the accuracy of any such reports. If any such
review shows a deficiency in such payments (or if SRDC fails to timely make a
payment in accordance with the provisions of Sections 5(a) or 5(b)), interest
shall accrue on the unpaid amount from the due date thereof and until its
payment date at the prime rate (as determined by reference to the Wall Street
Journal (Western Edition)) on the date of the application of the interest rate
to the unpaid portion, plus two percent (2%).
7. Utah Area Purchase Option. Upon the occurrence of the Purchase
Event described below, BRG shall have the right, but not the obligation, to
acquire from SRDC the development rights for the System for the State of Utah to
the extent not theretofore sold by SRDC to an unaffiliated third party (the
"Utah Rights"). The Utah Rights shall be limited to the right to employ business
operations similar to the operations conducted by a Franchise operator under the
System but shall include the right to utilize the Proprietary Marks, as
described in the Franchise Agreement. Upon any acquisition by BRG of the Utah
Rights, SRDC shall terminate its development activities for franchises or
licenses within the State of Utah (provided, however, that SRDC shall not, after
BRG's acquisition of the Utah Rights, be prohibited from taking any action with
respect to the sale of embossed floral products within the State of Utah as is
permitted under SRDC's franchise or license agreements (as then in effect),
including with respect to National Accounts and Alternative Sales, as those
terms are defined in the franchise and license agreements).
(a) Rights are Non-Exclusive. BRG acknowledges that the
Utah Rights shall be subject to the rights of any then-existing rights of
franchisees or licensees of SRDC within the State of Utah, including with
respect to the Proprietary Marks and/or the System, and that the use of the
Proprietary Marks and the System may not be exclusive to BRG. The purchase price
for the Utah Rights shall be equal to the product of three (3) multiplied by
EBITDA, as hereinafter defined, which shall be payable by BRG in cash at the
closing of the purchase of the Utah Rights unless otherwise agreed to by SRDC.
As used herein, "EBIDTA" means the net income of SRDC attributable to the Utah
Rights during the most recent twelve month period preceding the date of
calculation, plus the sum (without duplication) of any provision made by SRDC
for the payment of taxes attributable to the Utah Rights with respect to such
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period, depreciation and amortization attributable to the Utah Rights recognized
by SRDC, any interest expensed by SRCD attributable to the Utah Rights, and any
extraordinary, non-operating or non-cash loss or expenses paid or incurred by
SRDC attributable to the Utah Rights.
(b) Purchase Event. For purposes of this Section 7, the
term "Purchase Events" shall mean the occurrence of SRDC becoming a debtor in a
proceeding under the U.S. Bankruptcy Code, which proceeding is not opposed by
SRCD or is not extinguished within sixty (60) days of its filing, or SRDC being
adjudicated bankrupt, or if a xxxx in equity or other proceeding for the
appointment of a receiver of SRDC or other custodian for SRDC's business or
assets is filed and consented to by SRDC or approved by any court of competent
jurisdiction, or if SRDC dissolves and its assets and operations are not assumed
by an SRDC affiliate.
(c) Election and Closing. Xxxxxxx may exercise the
purchase right granted under this Section 7 by providing notice of such election
to SRDC, in writing, and in accordance with the provisions for notice set forth
below. If Xxxxxxx elects to exercise the purchase rights, the closing of that
purchase shall occur within sixty (60) days after SRDC receives the notice of
that election or, if longer, on such timetable as is contained in the notice
from Xxxxxxx to SRDC regarding the election (but in no such event shall the
closing occur more than ninety (90) days following SRDC's receipt of notice).
(d) Purchase Period. The purchase right described in this
Section 7 may be exercised by Xxxxxxx only during the period beginning as of the
date of his receipt from SRDC of notice of the occurrence of a Purchase Event
and for the ninety (90) day period thereafter ("Purchase Period"). SRDC shall
provide prompt notice to Xxxxxxx of, and upon, the occurrence of any Purchase
Event.
8. Notices. Any and all notices required or permitted under this
Agreement shall be in writing and shall be (i) personally delivered, (ii) sent
by registered mail, (iii) sent by a recognized overnight delivery service, or
(iv) delivered by other means which affords the sender evidence of delivery, or
of rejected delivery, to the respective party at the addresses shown on the
signature lines of this Agreement. Any Party may designate a different address
for notice hereunder by written notice to the other Parties. Any notice by a
means which affords the sender evidence of delivery, or rejected delivery, shall
be deemed to have been given at the date and time of receipt or rejected
delivery.
9. Entire Agreement and Amendment. This Agreement and the
documents referred to herein constitute the entire, full, and complete agreement
among the Parties concerning the subject matter hereof, and supersede all prior
agreements. No other representations have the Parties to execute this Agreement.
No amendment, change, or variance from this Agreement shall be binding on any
Party unless mutually agreed to by the Parties affected by such amendments,
changes or variance and executed by their authorized officers or agents in
writing.
10. Ratification. SRI and Xxxxxxx hereby ratify and affirm the
Development Agreement, as modified by this Agreement.
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11. Severability And Construction.
(a) Severability. If any of the provisions of this
Agreement may be construed in more than one way, one of which would render the
provision illegal or otherwise voidable or unenforceable, such provision shall
have the meaning which renders it valid and enforceable. The language of all
provisions of this Agreement shall be construed according to its fair meaning
and not strictly against any party. If any court or other government authority
shall determine any provision in this Agreement is not enforceable as written,
the parties agree that the provision shall be amended so that it is enforceable
to the fullest extent permissible under the laws and public policies of the
jurisdiction in which enforcement is sought and affords the parties the same
basic rights and obligations and has the same economic effect. If any provision
in this Agreement is held invalid or otherwise unenforceable by any court or
other government authority or in any arbitration proceeding, such findings shall
not invalidate the remainder of Agreement.
(b) Stricken Provisions. Each Party expressly agrees to
be bound by any promise or covenant imposing the maximum duty permitted by law
which is subsumed within the terms of any provision hereof, as though it were
separately articulated in and made a part of this Agreement, that may result
from striking from any of the provisions hereof any portion or portions which a
court or arbitrator may hold to be unenforceable in a final decision to which
the Party is a party, or from reducing the scope of any promise or covenant to
the extent required to comply with such a court order.
(c) Captions. All captions in this Agreement are intended
solely for the convenience of the parties, and none shall be deemed to affect
the meaning or construction of any provision hereof.
(d) Survival. All provisions of this Agreement which, by
their terms or intent, are designed to survive the expiration or termination of
this Agreement, shall so survive the expiration and/or termination of this
Agreement.
12. Applicable Law And Dispute Resolution.
(a) Applicable Law. This Agreement shall be interpreted
and construed under the laws of the State of Utah.
(b) Mediation. All controversies, disputes, and claims
arising out of or related to this Agreement (including, but not limited to, any
claim that the Agreement or any of its provisions is invalid, illegal, or
otherwise voidable or void and any claim relating to events before the Agreement
was executed) shall first be subject to non-binding mediation. All
controversies, disputes, and claims not resolved by, or not subject to, the
mediation process shall be resolved in accordance with the arbitration
provisions set forth below. The parties acknowledge and agree that the following
terms, conditions and limitations shall apply to mediation under this Agreement:
(i) If a Party is more than forty five (45) days
past due in any payment to the other, the party to whom
payment is due shall be free to commence or to pursue
litigation at any time without engaging in the mediation
process. Mediation shall not be required with respect to any
claim or controversy that involves: (1) the ownership,
validity, or use of the Proprietary Marks or the Technology
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(as defined in the Franchise Agreement); (2) any action
concerning the enforcement of the covenants set forth in this
Agreement; or (3) mediation is not intended to alter or
suspend the rights or obligations of the parties under this
Agreement or to determine the validity or effect of any
provision of this Agreement, but is intended to furnish the
parties an opportunity to resolve disputes amicably,
expeditiously and in a cost-effective manner on mutually
acceptable terms. Additionally, nothing in this Section 12
shall bar the right of any Party to seek and obtain injunctive
relief from a court of competent jurisdiction in accordance
with applicable law against threatened conduct that will cause
loss or damage, pending completion of the mediation.
(ii) The non-binding mediation provided for
hereunder shall be commenced by the party requesting mediation
(the "complainant"), providing written notice of the request
for mediation (the "request") to the party with whom mediation
is sought (the "respondent"). The request shall specify with
reasonable particularity the matter or matters on which
nonbinding mediation is sought. A copy of the request shall be
given by the complainant simultaneously to any Party is not a
complainant or respondent.
(iii) Non-binding mediation hereunder shall be
conducted by one (1) mediator. If the Parties to the mediation
cannot, within thirty (30) days of the date on which the
request was first provided to the respondent Party, agree in
writing upon the selection of an individual to serve as the
mediator, then SRI shall select and designate an individual to
serve as the mediator. In such event, SRI shall send the other
Parties written notice of its designation of the mediator
within thirty-five (35) days of the date on which the request
was first provided to the respondent.
(iv) Non-binding mediation hereunder shall be
concluded within sixty (60) days of the issuance of the
request or such longer period as may be agreed upon by the
Parties to the mediation in writing (the "mediation
termination date"). All aspects of the mediation process shall
be treated as confidential, shall not be disclosed to others,
and shall not be offered or admissible in any other proceeding
or legal action whatsoever. Complainant and respondent shall
each bear its own costs of mediation, and each shall bear
one-half the cost of the mediator or mediation service.
(c) Arbitration. During the term of this Agreement, any
claim or controversy arising out of or related to this Agreement (including, but
not limited to, any claim that the Agreement or any of its provisions is
invalid, illegal, or otherwise voidable or void and any claim relating to events
before the Agreement was executed), shall be submitted to binding arbitration
pursuant to this Section 12(c). Nothing in this section shall bar the right of
any Party to seek and obtain injunctive relief from a court of competent
jurisdiction in accordance with applicable law against threatened conduct that
will cause loss or damage, pending completion of the arbitration. The parties
acknowledge and agree that any arbitration under this Agreement shall be
conducted in accordance with the JAMS Endispute Arbitration Rules and Procedures
for commercial disputes, which are in effect at the time the demand for
arbitration is served (the "JAMS Procedures"), and the terms, conditions and
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limitations set forth below in this Agreement. In the event of any inconsistency
between the JAMS Procedures and the terms set forth below, the terms set forth
in this Agreement shall control.
(i) All arbitration proceedings shall be
conducted in Utah, within the county in which SRI's principal
place of business is located at the time the demand for
arbitration is served. In rendering the award, the arbitrator
shall determine the rights and obligations of the parties
according to the substantive and procedural laws of Utah. This
provision might not be enforceable under certain state laws;
however, the Parties acknowledge and agree that they fully
intend to enforce the provisions of the arbitration section
contained in this Agreement, including, but not limited to,
the venue and choice of law clauses. The Parties believe that
the Federal Arbitration Act preempts any state law purporting
to limit arbitration. The Parties agree that the arbitration
shall be conducted by one (1) arbitrator, who shall be a
retired federal court judge. The arbitrator shall be selected
in accordance with the JAMS Procedures.
(ii) The Parties shall be entitled to conduct
discovery (i.e., investigation of facts through depositions or
other means), which shall be governed by the Federal Rules of
Civil Procedure (the "Rule" or "Rules") then in effect.
However, the Parties need not comply with obviously
inapplicable Rules (e.g., Rule 16). The response time set
forth in the Rules for all written discovery or motions shall
be reduced by one-half and the Parties shall complete all
discovery within one hundred (100) days from the date the
claimant filed his or its initial arbitration demand;
provided, however, that the arbitrator shall have the
authority, in his discretion, to extend or otherwise modify
the applicable time periods. The arbitrator shall have all
power and authority to order discovery, to modify the specific
requirements and limitations of the Rules for good cause, to
make and enter orders with regard to motions, and to enter a
final and binding judgment. Rules 12 and 56 of the Rules shall
apply to all motion practice conducted in the arbitration. The
Parties further acknowledge and agree that the following
terms, conditions and limitations shall apply to motions
practices and discovery conducted as part of arbitration under
this Agreement:
(1) Any demand for arbitration, answer,
counterclaims, and reply to counterclaims shall be
prepared in accordance with the Rules.
(2) The arbitrator shall have the
authority, in its discretion, to increase the number
of depositions allowed by the Parties beyond the
limits set forth in the Rules.
(3) Depositions of any person,
including an expert witness, who is not a party to
the arbitration shall be limited to seven (7) hours
in duration. There shall not be a time limit on
depositions of Parties to the arbitration.
(iii) The arbitrator shall have the right to award
or include in an award relief in the form of compensatory
damages, injunctive relief, specific performance, attorneys'
fees and costs. The parties waive to the fullest extent
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permitted by law any right to or claim for any punitive or
exemplary damages against the other in any arbitration
proceeding, except for punitive or exemplary damages
authorized by applicable federal law, in which case, the
arbitrator shall have the right to award punitive or exemplary
damages.
(iv) The arbitrator shall produce a written
opinion.
(v) Judgment upon the award may be entered in
any court of competent jurisdiction. The arbitrator shall be
required to follow and apply the applicable law in reaching
his/her decision, including applying the provisions of any
applicable limitation on the period of time in which claims
must be brought.
(vi) In connection with any arbitration
proceeding required under this Agreement, each party shall
submit or file any claim that would constitute a compulsory
counterclaim (as defined by Rule 13 of the Rules) within the
same proceeding as the claim to which it relates. Any
compulsory counterclaim which is not submitted or filed in
such proceeding shall be barred.
(vii) Arbitration shall be conducted on an
individual, not a class-wide, basis. No Party hereto shall be
entitled to consolidation of arbitration proceedings involving
the Parties with those of any third party, nor shall the
arbitrator or any court be empowered to order such
consolidation.
(viii) Except as otherwise required by law, no
Party nor the arbitrator may disclose (to anyone not party to
the arbitration) the existence, content, or results of any
arbitration hereunder, including the record of the arbitration
hearing, without the prior written consent of all the parties
to the arbitration.
(ix) Except as may be provided for to the
contrary in the JAMS Procedures with respect to the costs of
transcriptions of the arbitration hearing, all free and
expenses of the arbitration shall be borne by the Parties to
the arbitration equally. Each party shall bear the expense of
its own counsel, experts, witnesses, and preparation and
presentation of proofs; provided, however, that the arbitrator
shall have the authority, in its discretion, at the conclusion
of the proceeding, to award costs and attorneys' fees to the
prevailing Party or Parties.
(x) Any offer of settlement or compromise by a
Party, whether made before or during the proceeding, shall not
be admissible in the arbitration.
(xi) The arbitration shall be conducted in the
English language.
(xii) This arbitration provision shall continue in
full force and effect subsequent to and notwithstanding the
expiration or termination of this Agreement.
(xiii) The process set forth under the JAMS
Procedures for appeal of the arbitrator's final ruling shall
be available if the Parties elect, under the JAMS Procedures,
to adopt such additional process; provided, however, that the
Parties agree that, notwithstanding anything to the contrary
in the JAMS Procedures, any appeal shall be heard by a single
arbitrator.
11
(d) Additional Terms. The parties further acknowledge and
agree as follows:
(xiv) Any legal action brought in any court by any
Party under this Agreement shall be brought only within the
judicial district in which SRI has its principal place of
business at the time the action or proceeding is initiated.
The Parties waive all questions of personal jurisdiction and
venue for purposes of carrying out this provision.
(xv) No right or remedy conferred upon or
reserved to any Party by this Agreement is intended to be, nor
shall be deemed, exclusive of any other right or remedy
provided herein or permitted bylaw or equity, but each shall
be cumulative of every other right or remedy.
(xvi) Each Party irrevocably waives trial by jury
in any action, proceeding, or counterclaim, whether at law or
in equity, brought by any of them against the other(s). Any
and all claims and actions arising out of or relating to this
Agreement, the relationship of the Parties, brought by any
Party hereto against the other(s), whether in arbitration or
in court, shall be commenced within two (2) years from the
occurrence of the facts giving rise to such claim or action,
or such claim or action shall be barred.
(xvii) Each Party hereby waives, to the fullest
extent permitted by law, the right to or claim for any
punitive or exemplary damages against the other(s), except for
punitive or exemplary damages authorized by applicable federal
law.
(e) No Waiver of Injunctive Relief. Nothing contained
herein shall bar the right of any Party to seek and obtain injunctive relief
from a court of competent jurisdiction in accordance with applicable law against
threatened conduct that will cause loss or damage, under the usual equity rules,
including the applicable rules for obtaining restraining orders and injunctions.
In any instance where a Party shall seek the remedy of injunctive relief, the
seeking Party shall not be required to post any bond or surety therefore.
12
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered this
Agreement in duplicate on the day and year first above written.
SPEAKING ROSES INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxxxxx
Title: President
: Address:
000 Xxxxxxxx Xx.
Xxxx Xxxx Xxxx, XX 00000
=============================
SPEAKING ROSES DEVELOPMENT CORPORATION.
By: /s/ Xxxx Xxxxxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxxxxx
Title: President
: Address:
000 Xxxxxxxx Xx.
Xxxx Xxxx Xxxx, XX 00000
=============================
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxxxx
: Address:
0000 X. Xxxxxxxx
Xxxx Xxxx Xxxx, XX 00000
-----------------------------
BUSINESS RETAIL GROUP, LLC.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Manager
: Address:
0000 X. Xxxxxxxx
Xxxx Xxxx Xxxx, XX 00000
============================
13
EXHIBIT "A"
AMOUNTS OWED SRDC BY BRG AND AMOUNTS OWED BRG BY SDRC
A-1
Business Retail Group
d/b/a Speaking Roses
0000 Xxxxx 000 Xxxx
Xxxx Xxxx Xxxx, Xxxx 00000
801-466-ROSE
Invoice to Speaking Roses Development Corporation
-------------------------------------------------
Date Item Price
---- ---- -----
Oct Five Advertising Banners $ 350.21
Nov Grand Opening KSL Radio Ads $ 650.00
Nov Grand Opening Banners $ 216.00
Nov U of U Promotion $ 1,250.00
Jan Theater Promotion $ 2,500.00
Nov-May Arrangements to Investors, Partners, Shareholder, etc. $ 2,449.65
Nov-May Marketing Arrangements for PR Events - Xxx Xxxxx $ 1,749.75
Nov-May 1/2 of Invoices Paid by Store to Ensign Floral $ 3,297.51
Feb U of U Promotion $ 1,875.00
Feb 10,000 Coupons for Valentine's Day $ 284.96
Feb Wedding Show, Roses, Valentine's Coupons $ 1,200.00
Feb Newspaper Agency Ad for Valentines $ 1,264.93
Feb KSL Radio Ads and 25 Free Bouquets $ 999.88
Feb KODJ Radio Ads and 10 Free Bouquets $ 1,532.45
Feb Three Banners on Stores $ 326.20
April 34 Bouquets and Elite Vases to Blockbuster Meeting
in Dallas $ 2,719.66
May Mothers' Day Radio Advertising $ 1,075.00
May Mothers' Day Banners $ 216.00
----------
Total Due Business Retail Group $23,957.20
2
EXHIBIT "B"
LIABILITIES ASSUMED IN THE PURCHASE
1. The lease for the Premises including assumption of guarantee.
2. Automobile purchase and lease.
3. ______________________________________________
4. ______________________________________________
5. ______________________________________________
6. ______________________________________________
7. ______________________________________________
8. ______________________________________________
0
XXXXXXX "X"
XXXXXXX FOR XXXXXXX TO ACQUIRE SHARES OF XXXX
4
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