EXHIBIT 10.43
MANAGEMENT AND LICENSE AGREEMENT
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This Management and License Agreement ("Agreement") is entered into by and
between Shells Seafood Restaurants, Inc., a Florida corporation maintaining its
business office at 00000 Xxxxx Xxxx Xxxxx, Xxxxx 000, Xxxxx, Xxxxxxx, 00000 (the
"Owner") and Best Que, LLC, a Kentucky limited liability company, maintaining
its business office at 000 Xxx Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (the
"Manager").
BACKGROUND INFORMATION
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The Owner, the Manager, Famous Dave's Ribs, Inc. and The Lark Group LLC
are parties to that certain agreement dated April 17, 2001, as amended on July
__, 2001 (together with the exhibits and schedules thereto, the "Letter
Agreement"), pursuant to which, among other things, the Manager agreed to
operate certain restaurants of the Owner pursuant to the terms and conditions of
the Letter Agreement and a license agreement to be entered into between the
parties. This Agreement constitutes the license agreement contemplated by the
Letter Agreement and the Owner hereby appoints the Manager as its agent to
operate the Restaurant on the terms and conditions contained herein.
Accordingly, in consideration of the covenants and agreements contained herein,
the Owner and the Manager agree as follows:
OPERATIVE PROVISIONS
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ARTICLE 1.
APPOINTMENT OF MANAGER: KEY TERMS AND CONDITIONS
Section 1.01. Appointment of Manager; License of Proprietary
Information. Owner hereby appoints and employs Manager to act as the Owner's
exclusive agent for the supervision, direction and control of the operation and
management of the restaurants listed on Schedule A hereto (each a "Restaurant"
and collectively, the "Restaurants") as a "Shells" restaurant, all upon the
terms and conditions hereinafter set forth.
Section 1.02. Key Terms. The following are certain of the key terms
of this Agreement, cross-referenced to the sections of this Agreement in which
they are more fully discussed:
(a) Original Term: Twelve (12) months. [See Section 2.02].
(b) Renewal Term: Six (6) months. [See Section 2.03].
(c) License Fee: The License Fee shall equal two percent (2%) of
Gross Sales, as set forth in Section 3.01 below.
ARTICLE 2.
THE TERM
Section 2.01. The Term. The "Term" of this Agreement shall mean, the
Original Term and any Renewal Terms (as defined below).
Section 2.02. Original Term. The Original Term of this Agreement
commenced on April 17, 2001 (the "Commencement Date"), and shall continue for
the period set forth in Subsection 1.02(a) hereof.
Section 2.03. Renewal Term. The Manager shall be entitled at its
election to renew this Agreement for an additional six (6) months upon written
notice (the "Renewal Notice") to the Owner to that effect, such notice to be
given at least three months prior to the expiration of the Original Term. The
same terms and conditions as are set forth herein shall apply during the Renewal
Term. As consideration for the renewal of the Original Term, the Manager shall
pay to the Owner an amount of $5,000 per Restaurant, such amount to be paid to
the Owner within 5 (five) days after the date of the Renewal Notice.
ARTICLE 3.
COMPENSATION OF MANAGER
Section 3.01. License Fee. As consideration for the rights granted
to Manager hereunder, including, but not limited to use of the Shells
proprietary items, including, but not limited to Trademarks, Trade Secrets and
Indicia of Ownership (as defined in Section 10 below) hereunder, the Manager
shall pay to the Owner a license fee (the "License Fee") equal to two percent
(2%) of monthly Gross Sales (as defined below).
(a) The term "Gross Sales" as used herein shall mean all sales made
(and not refunded or returned) at or from the Restaurants and/or revenues
derived from or in connection with the operation of the Restaurants including,
without limitation, all sales of food, beverages, merchandise or services at or
from the Restaurants. Sales made at less than the stated menu price shall be
included in Gross Sales only in the amount paid by the customer, and the amount
of any discount or promotional allowance shall not be included in Gross Sales.
In computing the License Fee, there shall be excluded from Gross Sales (or there
shall be deducted from Gross Sales to the extent previously included) the
following:
(i) Any gratuities or service charges added to a customer's
xxxx or statement in lieu of gratuities, which are
payable to a Restaurant's employees;
(ii) All sales taxes, excise taxes, gross receipt taxes,
occupational license taxes, admission taxes,
entertainment taxes, tourist taxes or similar charges
(but the License Fee shall be computed before the payment
of federal, state or municipal income or franchise
taxes); and
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(iii) All sums and credits received in settlement of claims for
loss or damage to furnishings, equipment of a Restaurant
or to the building where such Restaurant is located.
(b) Payment of the License Fee. The License Fee shall be paid in
arrears on or before the fifteenth (15th) day of the immediately succeeding
calendar month in the amount set forth on the Monthly Statement prepared in
accordance with Section 5.02 hereof. The monthly License Fee payments shall
constitute installment payments of the License Fee, subject to reconciliation
based on the Monthly Statement prepared in accordance with Section 5.02 hereof.
Any overpayment or underpayment shall be adjusted by payment or refund, as
appropriate, within thirty days after the preparation of the Monthly Statement.
ARTICLE 4.
DUTIES OF THE MANAGER
Section 4.01. Standard of Operations. The Manager shall manage and
operate the Restaurants in a manner consistent with, at a minimum, the standards
of quality that are characteristic of the "Shells" chain as of the date of this
Agreement. There shall apply to the Restaurants the same policies, practices and
procedures as apply generally to "Shells" restaurants with respect to restaurant
management, operations, accounting, purchasing, control of operating expenses
and general administration including, without limitation, menu items, prices,
portions, recipes, food handling procedures, product specifications, uniforms,
cash handling procedures, purchasing, design and decor, maintenance, employment,
standards of operation, quality of service, marketing and promotional
activities, and other matters affecting customer opinion of the Restaurant and
its operation. Exceptions to general policies, practices and procedures may be
made by the Manager to deal with exceptional circumstances affecting a
particular store if, in the Manager's reasonable judgment, there is an adequate
business justification for doing so and if the Restaurant is not treated in an
arbitrary or discriminatory manner. Subject to such justified exceptions, the
Manager shall use its best efforts to achieve, and to balance, the objectives of
increasing sales, optimizing profits, maintaining standards, maintaining and/or
improving the level of customer service and quality of product, and other
objectives that apply to the "Shells" chain of restaurants generally. The
Manager shall periodically review the Restaurant's operations and performance
with the Owner at a mutually convenient time and place. At such times, the
Manager shall review with the Owner the results of any pertinent financial
planning, forecasting, sales budgeting or other reports or analyses that may be
prepared by the Manager for the Restaurants.
Section 4.02. Personnel. The Manager has arranged for the employees
of the Restaurants to become employees or affiliates of the Manager with effect
from April 17, 2001. Accordingly, the Manager is solely responsible for hiring,
supervising, directing the work of, promoting, discharging and determining the
compensation and other benefits of all personnel working in the Restaurants. The
Manager shall be solely liable for the wages, salaries, benefits and other
compensation of its personnel, including but not limited to management personnel
such as district or regional managers employed to oversee the Restaurants.
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Section 4.03. Permits and Licenses. The Manager shall be responsible
for obtaining, maintaining and renewing all licenses and permits that may be
required for the renovation and operation of the Restaurant, including bar,
restaurant, and sign licenses and permits and a liquor license in respect of the
Restaurant located in Florence, Kentucky. The Manager shall pursue such
responsibility with due diligence and in good faith, and the Owner shall in good
faith cooperate with the Manager as may reasonably be required to obtain such
licenses and approvals.
Pursuant to Paragraph 8 of the Letter Agreement, the Owner and the Manager
are working together to cause the liquor licenses with respect to the
Restaurants (other than the Restaurant located in Florence, Kentucky) to be
transferred to the Manager. After the transfer of the liquor licenses, the
Manager shall be responsible for maintaining and renewing the liquor licenses
and shall comply with the obligations thereunder. The Manager shall be
responsible for all reasonable out-of-pocket costs and expenses with respect to
such liquor license transfers upon presentation by the Owner of supporting
invoices therefor.
Section 4.04. Contracts. The Manager, as agent of the Owner, shall
have authority to enter into such concessionaire, service and other contracts or
agreements, which are in the ordinary course of business, as are in the
Manager's reasonable professional judgment necessary for the operation, supply
and maintenance of the Restaurants as required by this Agreement, provided,
that, any contract not in the ordinary course of business, that requires an
expenditure in excess of $10,000 per year, shall not be entered into by the
Manager, without the prior written consent of the Owner. Within the forty-five
(45) day period following the end of each fiscal quarter, the Manager shall
inform the Owner of material contracts in the ordinary course of business that
were entered into during the preceding quarter.
Section 4.05. Maintenance. Subject to the limitations set forth in
Section 4.04, the Manager, at its expense, shall be responsible for maintaining
the Restaurants in good condition and repair consistent with the standards
applicable to "Shells" restaurants generally, including, without limitation, all
necessary repairs and replacements of the furniture, fixtures and equipment used
in connection with the Restaurants.
Section 4.06. Alterations to the Restaurants. The Manager shall have
the right to make such alterations, additions or improvements in or to the
Restaurants as it deems necessary, including, without limitation, (a)
alterations, additions or improvements to the Restaurant's buildings, provided,
that, the applicable consent of the landlord has been obtained pursuant to the
terms of the applicable lease and the consent of the Owner has been obtained,
and (b) additions to the fixed asset list of furniture, fixtures and equipment
used at the Restaurants; provided that the Manager shall not make any
discretionary alterations or additions (i.e. those for which there is not an
operational necessity) or expend in excess of $10,000 without the prior written
approval of the Owner. The cost of such alterations, additions or improvements
shall be charged directly to current expenses or capitalized on the books of
account of the Restaurants in accordance with the Manager's standard accounting
practices. The Manager will furnish the Owner substantiating documentation for
capitalized expenditures. In the event that, at any time during the Term of this
Agreement, repairs or alterations to any of the Restaurants shall be required by
reason of any laws, ordinances, rules or regulations now or hereafter in force,
or by
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order of any governmental or municipal power, department, agency, authority or
officer, such repairs or changes shall be made by Manager on Owner's behalf and
at Manager's expense. Any fixed assets which require replacement or repair by
Manager must be repaired or replaced by fully functional fixed assets of equal
or better quality and working condition.
Section 4.07. Compliance With Laws. The Manager shall make good
faith and reasonable efforts to comply with all applicable statutes, ordinances,
rules and regulations of federal, state and local governmental bodies having
jurisdiction over the Restaurants or their operation including, without
limitation, laws governing the sale of alcoholic beverages ("Governing Laws").
Notwithstanding anything herein to the contrary, the Manager may contest the
application of any Governing Laws to a Restaurant in the event the Manager deems
it prudent to do so. The cost of any such contest shall be included in the
operating expenses of the Restaurant. The Manager, at its own expense, shall
institute, defend and settle litigation and claims affecting the Restaurant for
which the cause of action arose on or after April 17, 2001; provided that any
settlement in excess of $10,000 shall be subject to Owner's reasonable approval
unless the cost of such settlement is to be paid by an insurance carrier under
any policy of insurance covering the Restaurant. No settlement involving
injunctive relief against, or prohibiting any act on the part of, the Owner
shall be entered into by the Manager, without the express prior written approval
of the Owner.
Section 4.08. Arms-Length Transactions. The Manager shall not enter
into any contracts with any entity that is affiliated with the Manager unless
the same are at market rates and on competitive terms. Except as expressly
permitted in this Agreement, the Manager shall not add any markup, profit or
other add-on charge to the cost of any items purchased by the Manager for the
Restaurants. The Restaurants shall receive the benefit of any discounts or
rebates that are netted out by the vendor against the price of items that are
purchased for the Restaurant. The Restaurants shall be treated the same as the
other restaurants owned or managed by the Manager with respect to the allocation
or other disposition of any savings resulting from the Manager's "buying power"
in the marketplace, quantity discounts, rebates and promotional allowances or
other cost reductions or advantages that are not netted out against the price of
the item purchased.
Section 4.09. Compliance with Leases. Until such time as the leases
listed on Schedule B hereto have been assigned to Famous Dave's Ribs Inc. as
contemplated by Paragraph 6 of the Letter Agreement, the Manager shall ensure
that the obligations of the Owner, as Lessee, under the leases described on
Schedule B hereto (the "Leases") are complied with in all material respects.
Section 4.10. Operating Expenses. With effect from the Commencement
Date, the Manager shall be solely responsible for all operating expenses of
whatsoever nature incurred in connection with the operation of the Restaurants
contemplated by this Agreement and/or the Letter Agreement.
Section 4.11. Insurance. The Manager shall, at its sole cost and
expense, keep the insurance coverages listed on Schedule C hereto in full force
and effect during the Term hereof.
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ARTICLE 5.
ACCOUNTING
Section 5.01. Standards. The Manager, at its own cost and expense,
shall maintain books and records of account relating to the Manager's operation
and management of each Restaurant, and shall prepare and deliver to Owner the
statements required under Section 5.02 hereof. The books and records for each
Restaurant shall be kept substantially in accordance with the systems utilized
by the Manager for its company owned "Shells" restaurant operations. The Owner
and its designees shall have the right, upon ten (10) days prior written notice
to the Manager, to examine said books and records at the Manager's corporate
headquarters at any reasonable time during regular business hours.
Section 5.02. Monthly Statement. Within twenty-one (21) days of the
end of each month, the Manager shall provide the Owner with a consolidated
balance sheet and a unit-level profit and loss statement in respect of each
Restaurant showing each Restaurant's financial position as of the date of the
balance sheet and the operating results for the preceding fiscal month and
fiscal year to date (collectively, the "Monthly Statement").
Section 5.03. Adjustments. Any adjustment required to make up an
underpayment or to refund an overpayment of license fee by the Manager shall be
made within thirty (30) days after completion of the statement that shows the
need for an adjustment. Adjustments based on the Monthly Statement shall be made
during the first month following completion of the Monthly Statement.
Adjustments made upon the expiration or termination of this Agreement shall be
made through payment or refund, as required, within thirty (30) days after the
end of the Term of this Agreement.
Section 5.04. Right to Audit. At any time during the one month
period following the Owner's receipt of a Monthly Statement, the Owner shall
have the right, upon ten (10) days' prior written notice to the Manager, at
Owner's own expense, to have an accountant selected by the Owner audit the
Manager's books and records relating to the Restaurant for the period covered by
such Monthly Report. If there is a discrepancy between such financial statements
and the findings of Owner's accountant or any other dispute between the parties
regarding the financial statements, the Manager's accountants and the Owner's
accountant shall attempt to resolve such discrepancy, and their mutual decision
shall be binding upon Owner and Manager. If the accountants for the parties are
unable to resolve the discrepancy, the matter shall be referred to an
arbitration panel composed of the Owner's independent CPA, the Manager's
independent CPA, and a third independent CPA selected by the parties'
independent CPA'S, and the decision of such arbitration panel shall be binding
upon Owner and Manager. The cost of conducting an independent audit of a
Restaurant's financial statements shall be paid by the Owner unless the audit
shows an underpayment to Owner in excess of three percent of the amount that
should have been distributed to Owner; in such case Manager shall bear the cost
of the audit. In the event that the actual amount is resolved in favor of the
Owner, the Manager shall pay the amount due plus interest thereon at the
Interest Rate specified in Section 13.13.
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Section 5.05. GAAP. All financial statements to be prepared by the
Manager hereunder shall be prepared in accordance with generally accepted
accounting principles.
ARTICLE 6.
DAMAGE AND DESTRUCTION
Section 6.01. Owner to Restore. If during the Term of this
Agreement, any Restaurant or part thereof shall be damaged or destroyed by fire
or other insured casualty, then except as provided in Section 6.02 below, the
Owner shall repair, restore, or rebuild the Restaurant. The proceeds of any
insurance payable with respect to such damage or destruction shall be used to
pay for restoring the Restaurant, and, at the Owner's election, such restoration
shall be managed and supervised by the Manager as agent of the Owner for a fee
to be negotiated. The restoration of the Restaurant shall be carried out with
due diligence by the Owner and the Manager. During any period in which the
Restaurant is unable to operate due to damage and destruction, the Owner shall
be entitled to receive from the proceeds of any Business Interruption insurance
payable as a result of the damage an amount equal to the average License Fee
paid to the Manager under this Agreement for the three months preceding the
damage or destruction, prorated over the period in which the Restaurant is
unable to operate.
Section 6.02. Limitation on Restoration. Subject to the Owner's
rights and duties under the Leases, if during the Term of this Agreement any
Restaurant shall be totally destroyed or damaged in excess of fifty percent of
its cost of replacement, the Owner shall have the right and option not to
rebuild such Restaurant.
ARTICLE 7.
REPRESENTATIONS AND WARRANTIES
Section 7.01. Operation of the Restaurant. The Owner represents and
warrants that there is no legal impediment to the operation of any of the
Restaurants by the Manager as contemplated by this Agreement; that the Owner
shall not create or suffer to exist any condition that materially interferes
with the normal use of any Restaurant; and that the Owner shall not interfere
with the Manager's operation of the Restaurants pursuant to this Agreement or
give, or attempt to give, orders or instructions to personnel employed at any of
the Restaurants.
Section 7.02. Authority of Owner and Manager. The Owner represents
and warrants that it has full right, power and lawful authority to execute and
deliver this Agreement and to perform its obligations hereunder in the manner
and upon the terms contained herein, with no other person needing to join in the
execution of this Agreement in order for it to be binding upon all persons. The
person(s) executing this Agreement on behalf of the Owner represent and warrant
that they are the only person(s) required to execute this Agreement in order to
bind the Owner. The Manager represents and warrants that it has full right,
power and lawful authority to execute and deliver this Agreement and to perform
its obligations hereunder in the manner and upon the terms contained herein. The
person(s) executing this Agreement on behalf of the
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Manager represent and warrant that they are the only person(s) required to
execute this Agreement in order to bind the Manager.
Section 7.03. Confidentiality. Each party recognizes that due to the nature of
this Agreement and the Letter Agreement, it will have access to information of a
proprietary nature owned by another party and/or affiliates of another party
including but not limited to the Proprietary Items (as defined in Section
10.03), documents and programs (whether or not completed or in use), operating
manuals or similar materials that constitute systems, policies and procedures,
methods of doing business, administrative, advertising or marketing techniques,
financial affairs, trade secrets, and other proprietary information
(collectively the "Confidential Information"). Consequently, each party
acknowledges and agrees that the other party and the affiliates of the other
party, respectively, have a proprietary interest in such Confidential
Information and that all such information constitutes confidential and
proprietary information and/or trade secret property of the respective party or
parties. Each party hereby expressly and knowingly waives any and all right,
title and interest in and to the other party's confidential information and
agrees to return all copies of Confidential Information to the provider(s) of
such information at the party's expense upon the expiration or earlier
termination of this Agreement. Notwithstanding the aforegoing, any Confidential
Information used by the parties after the expiration or earlier termination of
this Agreement shall remain confidential and proprietary and shall not be shown
or disclosed to persons other than the party's affiliates without the prior
written consent of the party furnishing the Confidential Information or except:
(i) as required in governmental filings or judicial, administrative or
arbitration proceedings, or (ii) as otherwise required by law (including but not
limited to in response to a subpoena from a court or authorized governmental
agency ("hereinafter the "Confidentiality Exception"). Each party further
acknowledges and agrees that the other party and other parties' affiliates are
entitled to prevent their respective competitors from obtaining and utilizing
the Confidential Information. Therefore, each party agrees to hold the
Confidential Information in strictest confidence and to not disclose such
information or allow such information to be disclosed, whether directly or
indirectly, during and after the term of this Agreement to any person or entity
other than those persons or entities who are legal and financial advisors or
employees of, or are otherwise affiliated with, a party or an affiliate of a
party, on a need to know basis, without the prior written consent of the party
or parties furnishing the confidential information unless a Confidentiality
Exception occurs. Further, each party shall require its representatives that
receive the Confidential Information to abide by the terms of this Section 7.03.
Neither a party nor any of its representatives shall use Confidential
Information in any manner other than in connection with the performance of its
obligations under this Agreement. In addition, after the termination of this
Agreement, no party shall disclose to anyone or use any Confidential Information
obtained by the party, or an affiliate of a party, other than with the prior
written consent of the party furnishing the Confidential Information, unless a
Confidential Exception applies. The restrictions set forth above shall not apply
to any information which becomes publicly known through no fault of the parties
and their affiliates which received or was given access to such information by
the other party or parties.
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ARTICLE 8.
DEFAULT, TERMINATION AND REMEDIES
Section 8.01. Breach. Either party may terminate this Agreement in
the event of a material breach of this Agreement by the other party which is not
cured within fifteen (15) days of written notice thereof given by the first
party; provided, however, that failure to terminate this Agreement in the event
of a breach shall not constitute a waiver of any breach of this Agreement.
Section 8.02. Negligence. The Owner may terminate this Agreement
upon 5 (five) days' written notice in the event of the Manager's negligence or
wilful malfeasance materially impacting the performance of its duties under this
Agreement; provided that the Owner has given the Manager written notice of its
negligence or wilful malfeasance and the Manager has not cured such negligence
or wilful malfeasance within 5 (five) days of receipt of such notice.
Section 8.03. Automatic Termination. This Agreement shall
automatically terminate if the Letter Agreement is terminated pursuant to the
provisions of Paragraph 13 thereof. If a Conversion Closing occurs in accordance
with Paragraph 8 of the Letter Agreement, this Agreement shall terminate with
respect to such converted restaurant.
Section 8.04. Consequences of Termination. Upon cancellation or
termination of this Agreement for any reason whatsoever, the Manager shall (i)
immediately cease to have the rights, powers and duties set out in this
Agreement (including but not limited to the rights granted to it pursuant to
Section 10 hereof, and the Owner shall immediately be entitled to manage and
conduct the Restaurants in its own name and on its own behalf except in the case
of a Conversion Closing pursuant to Paragraph 8 of the Letter Agreement, (ii)
immediately hand over all records and information pertaining to the Restaurants
except in the case of a Conversion Closing pursuant to Paragraph 8 of the Letter
Agreement, and (iii) not be entitled to any compensation of whatever nature in
consequence of the termination of this Agreement. Upon cancellation or
termination of this Agreement for any reason whatsoever, all further obligations
of the parties hereunder shall terminate and neither party shall have any claim
against the other as a consequence of such termination other than any claim
resulting from a breach of this Agreement.
ARTICLE 9.
SUCCESSORS AND ASSIGNS
Section 9.01. Assignment by the Manager. The Manager may, without
the Owner's consent, assign its interest in this Agreement to an Affiliate (as
defined below) of the Manager, provided that the Restaurants continue to be
operated as "Shells" restaurants and the Manager continues to remain fully
liable under this Agreement. Other than as set forth in the immediately
preceding sentence, the Manager shall not assign all or any part of its interest
in, or delegate its obligations under, this Agreement to any person without the
express prior written consent of the Owner. The Manager shall furnish the Owner
with any information regarding the
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proposed assignee that is reasonably requested by the Owner. In addition, the
Owner's consent to the assignment of this Agreement shall be required if there
is a change in control of the Manager, other than through a public offering of
the Manager's common stock. In a case in which the Owner's consent to an
assignment is required, the Owner shall not unreasonably withhold its consent to
the Manager's transfer of its interest in this Agreement.
Section 9.02. Assignment by the Owner. The Owner may, without the
Manager's consent, (i) make a collateral assignment of this Agreement to Owner's
lender, or (ii) assign Owner's interest in this Agreement, in whole or in part,
to (x) an Affiliate of the Owner, provided that the Owner continues to be fully
liable under this Agreement, or (y) a purchaser of the Owner's entire interest
in a Restaurant; or (z) a purchaser of a majority of the capital stock of the
Owner or of all or substantially all of the assets of the Owner. The Owner shall
be entitled to assign (in whole or in part) its right to the payment of the
License Fee hereunder to any third party without the consent of the Manager.
Other than as expressly set forth herein, the Owner shall not assign all or any
part of its interest without the prior written consent of the Manager. In a case
in which the Manager's consent to an assignment is required, the Manager shall
not unreasonably withhold its consent to the Owner's transfer of its interest in
this Agreement.
For the purposes hereof, the term "Affiliate" as used herein shall mean
any parent, subsidiary, affiliated or related corporation or other entity of the
Owner or the Manager, respectively, or of any said parent, subsidiary,
affiliated or related corporation or other entity.
Section 9.03. Parties Bound. The terms, provisions, covenants,
undertakings, agreements, obligations and conditions of this Agreement shall be
binding upon and shall inure to the benefit of the successors-in-interest and
assigns of the parties hereto with the same effect as if mentioned in each
instance where the party hereto is named or referred to, except that no
assignment, transfer, pledge, mortgage, lease or sublease made by either the
Owner or the Manager in violation of this Agreement shall vest any rights in the
assignee, transferee, mortgagee, pledge, lessee, sublessee or occupant.
ARTICLE 10.
PROPRIETARY ITEMS: TRADEMARKS, TRADE SECRETS
AND INDICIA OF OWNERSHIP
Section 10.01. Trademarks. The Owner hereby grants to the Manager
the right to use the registered marks "Shells" and the Shells "jumping fish"
logo (collectively, the "Trademarks") during the Term of this Agreement in
connection with the operation of the Restaurants pursuant to this Agreement.
Section 10.02. Trade Secrets. In connection with the operation of
the Restaurants, the Owner shall to the extent necessary provide the Manager
with certain information (the "Trade Secrets") relating to the management and
operation of a "Shells" restaurant, including, without limitation, the standards
and specifications for design, construction, furniture, fixtures and equipment,
decor, operating procedures, recipes, and management, marketing, training and
accounting programs and materials. The Owner hereby
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grants to the Manager the right to use the Trade Secrets during the Term of this
Agreement in connection with the operation of the Restaurants pursuant to this
Agreement.
Section 10.03. Indicia of Ownership. In addition, the Owner hereby
grants to the Manager the right to use the indicia of ownership ("Indicia of
Ownership") that characterize the Restaurants including, without limitation, (i)
certain unique features of concept, design, appearance, and decor, which form
the trade dress for "Shells" restaurants; and (ii) certain concepts,
presentations and menu items during the Term of this Agreement in connection
with the operation of the Restaurants pursuant to this Agreement.
Section 10.04. Ownership By the Manager. The Manager expressly
acknowledges the Owner's exclusive right, title and interest in and to the
Trademarks, the Indicia of Ownership and the Trade Secrets (collectively, the
"Proprietary Items"), both collectively and individually, and agrees not to
represent in any manner that the Manager has any ownership rights therein. The
Manager further agrees that use of the Proprietary Items at the Restaurant shall
not create in Manager's favor any right, title or interest or other attributes
of ownership in or to the Proprietary Items. The Manager acknowledges and
expressly agrees that any and all goodwill associated with the Proprietary Items
and "Shells" system for developing and operating restaurants shall inure
exclusively to the benefit of the Owner. The Manager shall have no claim for
compensation for any part of the goodwill attributable to the use of the
Proprietary Items at the Restaurant or to the Manager's performance of its
duties under this Agreement.
Section 10.05. No Infringement By Manager. The Manager acknowledges
that use of the Proprietary Items other than solely for the purposes
contemplated herein shall be an infringement of the Owner's exclusive right,
title and interest in and to the Proprietary Items. The Manager expressly
covenants that both during and after the Term of this Agreement, the Manager
shall not, directly or indirectly, (i) commit an act of infringement, (ii)
contest or aid in contesting the validity or ownership of the Proprietary Items
or (iii) take any other action in derogation of the Owner's rights in and to the
Proprietary Items. The Manager shall not hold out or otherwise employ the
Proprietary Items to perform any activity or to incur any obligation or
indebtedness in a manner that might in any way make the Owner liable therefor.
The Manager shall promptly notify the Owner of any attempt by any other person,
firm or corporation to use the Proprietary Items or any colorable variation
thereof, and of any claim, demand or cause of action based upon or arising
therefrom. The Manager shall also promptly notify the Owner of any litigation
instituted against the Manager involving the Proprietary Items.
ARTICLE 11.
ADVERTISING, PROMOTION AND TRAINING
Section 11.01. Cost of Advertising. The cost of marketing and
advertising for the Restaurants shall be an operating expense of the
Restaurants.
Section 11.02. Promotion. The Manager may offer promotions,
discounts and other incentives at the Restaurant in a manner similar to those
offered at other "Shells" restaurants. Sales made in connection with any such
promotion, discount or other incentive shall
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be included in Gross Sales in the amount paid by the customer rather than at the
menu price. The costs incurred by the Restaurants in connection with such items
shall be included in the operating expenses of the Restaurants.
ARTICLE 12.
NOTICES
Section 12.01. Notice Addresses. Written communications between the
Owner and the Manager shall be sent to their respective addresses shown on the
first page of this Agreement ("Notice Address"); provided that the Owner or the
Manager may change its Notice Address by giving written notice of such change to
the other party in accordance with this paragraph.
Section 12.02. Notice. Wherever this Agreement provides for notice,
such notice shall be in writing and shall be delivered to a party at its Notice
Address, either by hand delivery or by United States mail, certified, with
return receipt requested. A hand-delivered notice shall be effective on the date
of receipt by the party being served with the notice. A mailed notice shall be
effective on the earlier of (i) the date of receipt or refusal of receipt, or
(ii) five days after the date of mailing. Either party may, in a written notice
to the other party, designate a reasonable number of third parties to receive a
copy of notices sent under this Agreement. Copies of notices may be sent by
regular U.S. mail.
ARTICLE 13.
GENERAL PROVISIONS
Section 13.01. Relationship of the Parties. The provisions of this
Agreement relating to the determination and payment of license fees hereunder
are included solely for the purpose of providing a method whereby the said fees
can be measured and ascertained. The Manager and the Owner shall not be
construed as joint venturers or partners of each other and neither shall have
the power to bind or obligate the other except as set forth in this Agreement.
Section 13.02. Entire Agreement. This Agreement and the Letter
Agreement supersedes all prior agreements and understandings, whether written or
oral. The Owner and the Manager have neither made nor relied upon any promises,
representations or warranties in connection with this Agreement that are not
expressly set forth in this Agreement or the Letter Agreement. In entering into
this Agreement, the Owner and the Manager have relied on the representations and
warranties contained in this Agreement and the Letter Agreement.
Section 13.03. Modifications and Waiver. This Agreement may not be
modified except by a written agreement signed by the party against whom such
modification is sought to be enforced. No waiver of any condition or covenant in
this Agreement by either party shall be effective unless made in writing, nor
shall any waiver be deemed to imply or constitute a future waiver of the same or
any other condition or covenant of this Agreement.
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Section 13.04. Governing Law. This Agreement shall be construed and
enforced in accordance with the laws of the State of Florida (without regard to
its conflict of law principles).
Section 13.05. Arbitration. The parties hereto agree that any
dispute, disagreement or controversy arising with respect to this Agreement,
except for disputes relating to financial statements which shall be resolved
pursuant to Section 5.04 hereof, that cannot be resolved by the parties hereto
shall promptly be submitted to the American Arbitration Association ("AAA") to
be resolved by binding arbitration in accordance with then current AAA rules.
Arbitration shall be initiated when a party hereto delivers written notice
("Arbitration Notice") to the other parties hereto that a dispute, disagreement
or controversy arising hereunder cannot be resolved notwithstanding the good
faith efforts of the parties thereto to do so. The arbitration tribunal shall be
composed of three (3) arbitrators, one (1) of whom shall be appointed by the
Owner within ten (10) business days of the delivery of an Arbitration Notice and
one (1) of whom shall be appointed by the Manager, as the case may be, within
ten (10) business days of the delivery of an Arbitration Notice. These two (2)
arbitrators shall promptly select a third arbitrator. The arbitrators will be
directed to resolve the dispute, disagreement or controversy as soon as is
practicable. The decision of the arbitrators shall be binding on the parties and
the party against which a finding is made shall be responsible for all costs,
fees and expenses of such arbitration in addition to any damages or other
amounts awarded.
Section 13.06. Construction. Whenever a word appears herein in its
singular form, such word shall include the plural; and the masculine gender
shall include the feminine and neuter genders. This Agreement shall be construed
without reference to the titles of Articles, Sections or Clauses, which are
inserted for convenient reference only. This Agreement shall be construed
without regard to any presumption or other rule permitting construction against
the party causing this Agreement to be drafted and shall not be construed more
strictly in favor of or against either of the parties hereto.
Section 13.07. Severability. If any term or provision of this
Agreement or the application thereof to any person or circumstances shall to any
extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term or provision to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforceable to the fullest extent permitted by law.
Section 13.08. Consent or Approval. Whenever it is necessary under
the terms of this Agreement for either party to obtain the consent or approval
of the other party, such consent or approval shall not be unreasonably withheld
or delayed.
Section 13.09. Certificate of Performance. The Owner and the Manager
shall, within twenty days after receipt of a written request from the other,
execute, acknowledge and deliver a statement in writing certifying whether this
Agreement is unmodified and in full force and effect (or if modified, whether
the same is in full force and effect as so modified), whether any conditions to
the full enforceability of this Agreement remain unsatisfied, and such other
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facts, including the nature of any claim of default on the part of the other, as
either party may reasonably request.
Section 13.10. Excuse for Nonperformance. If either party hereto
shall be delayed or prevented, from the performance of any act required
hereunder by reason of acts of God, strikes, lockouts, labor troubles, inability
to procure materials, restrictive governmental laws or regulations, adverse
weather, unusual delay in transportation, delay by the other party hereto or
other cause without fault and beyond the control of the party obligated to
perform (financial inability excepted), then upon notice to the other party, the
performance of such act shall be excused for the period of the delay and the
period for the performance of such act shall be extended for a period equal to
the period of such delay; provided, however, the party so delayed or prevented
from performing shall exercise good faith efforts to remedy any such cause of
delay or cause preventing performance.
Section 13.11. Disputes. If a dispute shall arise as to any amount
or sum of money to be paid by one party to the other or any work to be performed
by either of them under the provisions hereof, a party shall have the right to
make payment or perform such work "under protest", without waiver or prejudice
to its right to recover from the other party. If it shall later be determined
(by agreement of the parties or arbitration) that one party has paid or
performed an obligation that should have been paid or performed by the other
party, the party who paid or performed "under protest" shall be entitled to
recover the amount paid or the cost incurred, plus interest thereon at the
Interest Rate specified in Section 16.12 hereof, from the date on which such
payment was made until the date on which reimbursement is received.
Section 13.12. Attorney's Fees. If the Owner or the Manager brings
action at law or equity against the other in order to enforce the provisions of
this Agreement or as a result of an alleged default under this Agreement, the
prevailing party in such action shall be entitled to recover from the other
party reasonable attorney's fees (including paralegals employed by such attorney
and costs of litigation at the trial and appellate level).
Section 13.13. Interest. All monetary obligations under this
Agreement shall bear interest from the date on which they become due and payable
until the date on which payment is received by the party entitled to payment.
Except where a different rate of interest is expressly provided for elsewhere in
this Agreement, such interest shall be paid at an annual rate (the "Interest
Rate") equal to the lesser of (i) the prime interest rate charged by First Union
Bank plus two percent (2%), or (ii) the highest interest rate permitted by law.
Section 13.14. Date of Agreement. All references to the "date of
this Agreement," the "date hereof," and the like shall be deemed to be the last
date on which this Agreement shall be executed by the Owner and by the Manager.
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IN WITNESS WHEREOF, the Owner and the Manager do hereby execute this
Management and License Agreement on the dates shown opposite their respective
signatures.
BEST QUE, LLC
By: /s/
Xxxxxxx X. Xxxxxx, XX
Manager
SHELLS SEAFOOD RESTAURANTS, INC.
By: /s/
Xxxxxx X. Xxxxxx
Executive Vice President
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SCHEDULE A
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1. Shells Seafood Restaurant located at 0000 Xxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx
2. Shells Seafood Restaurant located at 0000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxx
3. Shells Seafood Restaurant located at 0000 Xxxx 00xx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx
