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Exhibit 10.40
THE PRINCETON REVIEW FRANCHISE AGREEMENT
AGREEMENT made in the City of New York, State of New York, by and
between Princeton Review Management Corp., a Delaware Corporation (hereinafter
referred to as "Franchisor"), and Xxxxxx Xxxx, Xxxxxxx XxXxxxxx, Xxxxx Xxxxxxxx,
whose address is 0000 Xxxx Xxx #0, Xxxxxxx, Xxxxx 00000 (hereinafter referred to
as "Franchisee").
WITNESSETH:
RECITALS
Franchisor has developed and acquired a comprehensive method known as
The Princeton Review ("TPR") Method for conducting, operating, and marketing a
test preparation business which prepares students to take college and graduate
school admission tests and other courses ("the business"). The TPR Method,
consisting, in part, of confidential and proprietary educational materials,
teaching aids, techniques, systems, and formats was developed through
considerable expenditures of time, effort and money, and is identified by and
with certain proprietary names and marks owned by Franchisor.
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Franchisor is in the business of licensing and franchising others, who
desire to engage in the business, rights to use the TPR Method, the Franchisor's
proprietary names and marks associated with it, and teaching aids and materials
as currently developed and as expanded and improved in the future. In order to
assist Franchisees to use the TPR Method efficiently and effectively in the
operation of the business, and to provide high quality and uniform standards of
service, Franchisor provides or makes available to Franchisees various initial
and continuing training and services.
Franchisee desires to use the Princeton Review Method in the operation
of a franchised The Princeton Review test preparation business under a franchise
granted from Franchisor by, and in conformance with the terms of, this
Agreement, at a location or locations within a territory hereafter described.
Franchisee also desires to obtain and to derive the benefits of Franchisor's
initial and continuing services, training, guidance, expertise, know-how and
information for its use in operating and managing the business.
Franchisee acknowledges as essential conditions of this Agreement and
the rights granted hereunder, and as consideration exchanged by and for the
mutual benefit of all licensed users of the TPR Method and name, that Franchisee
adhere to the uniform standards of quality, procedure and format prescribed by
the TPR Method; preserve the confidentiality of the TPR Method; and comply fully
with the obligations hereafter set forth.
In consideration of the foregoing recitals, of the mutual promises
hereafter set forth, and of other good and valuable consideration, Franchisor
and Franchisee hereby agree as follows:
X. XXXXX, TERRITORIAL RIGHTS, AND TERM
X. Xxxxx of Franchise. Franchisor hereby grants to Franchisee, and
Franchisee hereby
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accepts from Franchisor a franchise and license for the term
and upon the conditions and terms hereafter set forth:
1. To use the TPR Method in connection with the operation of a
franchised Princeton Review test preparation business at specific,
approved site locations within the following geographical area: all
counties in Texas. Franchisor shall not unreasonably withhold approval
of specific site locations proposed by Franchisee. As used herein, the
term "site locations" means the place or places at which Franchisee
conducts courses available under the TPR Method. For so long as this
Agreement continues in effect, Franchisor itself shall not, nor will it
franchise or license any other party or parties to, nor will it permit
any officer of Franchisor to, establish and operate a similar test
preparation business under any name or xxxx at any location within the
geographical area above described, except to the extent provided by
Subparagraph VI. B. l. c. of this Agreement.
2. To use confidential and proprietary educational materials,
trade secrets and techniques, operating manuals and bulletins, and
other business methods and know-how disclosed by Franchisor, solely in
connection with the operation of the business conducted at the
locations heretofore described and in accordance with the terms of this
Agreement;
3. To use Franchisor's proprietary names, marks, and methods
franchised and licensed hereunder only in the above described
geographical area (except with respect to media advertising or with
Franchisor's advance written consent), and only in the manner provided
by this Agreement, and only for so long as this Agreement shall remain
in effect and Franchisee is in compliance with its terms;
B. Term, Commencement of Operations, and Renewal. The term of this
Agreement
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and of the franchise and license granted herein shall be for a period
of twenty (20) years commencing on September 15, 1986, and ending on September
14, 1996, unless sooner terminated in accordance with the terms of this
Agreement. Franchisee hereby agrees to commence operations hereunder no later
than no calendar days following the execution of this Agreement. For purposes of
this Agreement, Franchisee's fiscal year shall begin on the first day of January
and end on the last day of December for so long as this Agreement remains in
effect, unless changed with the written consent of Franchisor.
Franchisee shall have the option to renew the license granted herein
for successive ten (10) year terms provided all of the following conditions have
been fulfilled:
1. Franchisee gives written notice to Franchisor of
Franchisee's intention to so renew no later than one hundred eighty
(180) days, nor earlier than one (1) year, prior to the expiration of
this or any renewal term of this Agreement and this Agreement has not
otherwise been previously terminated; and
2. At the scheduled date of renewal, there is no pending
uncured default or breach of this Agreement constituting cause for
termination under Paragraph XIII. hereof; and
3. Franchisee executes no later than one hundred twenty (120)
days prior to the expiration of the term of this Agreement or any
renewal or extension hereof a renewal agreement on the terms and
conditions then being offered to new licensees, except that (a) no
initial license fee shall be payable by Franchisee upon renewal; (b)
periodic payments shall be of no higher percentages nor payable more
frequently than those provided by this Agreement; and (c) reporting
and/or record keeping requirements shall be
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no more extensive or frequent than those provided by this Agreement;
and
4. Franchisee, either in the year immediately preceding the
expiration date of the renewal option hereby provided, or on an annual
basis averaged over the last three (3) years preceding the expiration
date of the renewal option hereby provided, has made royalty payments
to Franchisor of no less than thirty percent (30%) of Franchisee's
initial franchise fee hereunder adjusted to correspond with changes
(not to exceed 25%) in the national consumer/price index or makes a
supplemental cash payment in the amount of the difference between
actual payments made and the percentage payments provided herein.
II. INITIAL FRANCHISE FEE
In consideration of the franchise and license granted by this
Agreement, Franchisee shall pay to Franchisor the sum of $150,000 as an initial
franchise fee payable in consecutive, non-interest bearing installment payments
as follows: 15% upon execution of this Agreement; 15% within each and every 180
day period following thereafter for five payments; and, a final payment of the
full balance remaining outstanding within the next succeeding 180 day period.
Each installment payment of the initial franchise fee shall be deemed
fully earned by Franchisor upon payment thereof, and no installment payment of
the initial fee shall be refundable, in whole or in part, at any time under any
circumstances except as provided by Paragraph VI. A. l. of this Agreement.
If prior to the completion of Franchisee's first three (3) years of
operation hereunder, Franchisee is by law required to cease conducting the
business franchised and conducted pursuant to the terms of this Agreement by
reason of any unlawful act of Franchisor, Franchisee shall, as liquidated
damages therefor, be released and discharged from any obligation to make any
future
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unpaid initial fee installment payment.
The initial fee is in addition to the periodic royalty-service fee
payable pursuant to Paragraph III., the advertising fee payable under Paragraph
V., and any other fee or payment which Franchisee may incur or owe to Franchisor
from time to time under this or any other Agreement.
III. CONTINUING ROYALTY-SERVICE FEES
A. Amount and Payment of Periodic Fees. In further consideration of the
rights and entitlements granted under this Agreement, Franchisee agrees to pay
to Franchisor monthly, within ten (10) days after the last day of each and every
calendar month ("monthly payment periods") during the term of this Agreement, a
combined royalty-service fee in the amount equal to eight percent (8%) of
Franchisee's gross receipts collected during the preceding monthly payment
period. For purposes of this Paragraph III.A., gross receipts means the total
revenues received by Franchisee for sale of goods or services made by or from
Franchisee's franchised The Princeton Review test preparation business or
businesses, and shall include all revenues that have been received by Franchisee
for purchases of goods or services similar or of the same nature as those
offered by the TPR Method made by current or former students of Franchisee's The
Princeton Review business. There shall be excluded from gross receipts taxes
added to the sales price and collected from the customer, credit card charges,
and bona fide refunds.
B. Throughout the term of this Agreement, Franchisee shall pay to
Franchisor a minimum annual royalty service fee calculated in accordance with
the following schedule:
1st Year of Operation -- 5% of Initial Franchise Fee
$7,500.00
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2nd Year of Operation -- 10% of Initial Franchise Fee
$15,000.00
3rd and Subsequent Years of Operation -- 15% of Initial Franchise Fee
$22,500.00
Beginning with the fourth year of this Agreement, the dollar amount of the
minimum annual royalty-service fee shall be adjusted as of the anniversary date
of this Agreement to correspond to any change in the national consumer-price
index for the preceding year. If at the end of each year of this Agreement,
total royalty-service fee payments made during the year total less than the
aforesaid minimum annual royalty-service fee due for such year, Franchisee shall
pay Franchisor the difference within thirty (30) days following the end of such
year.
Royalty-service fee payments received by Franchisor under this
Agreement shall be under no restriction whatever but shall be considered general
funds of Franchisor for all purposes.
When, in any same calendar year, a majority of individual TPR
franchises fails to attain the minimum fee, the minimum fee percentage
applicable to such year will be reduced to the percentage actually attained by a
majority of franchisees.
IV. REPORTS AND RECORDS
A. Franchisee shall submit to Franchisor, at the time each monthly
payment of royalty-service fee is due, an accurate and complete statement of
gross receipts (as defined in Paragraph III. A.) on forms specified, approved or
provided by Franchisor and completed according to their terms.
B. Within thirty (30) days after each quarterly period of Franchisee's
fiscal year during the term of this Agreement, Franchisee shall submit to
Franchisor a statement of financial
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condition (a balance sheet) and a statement of income and expense relating to
the business as of and for the period ending on such quarterly period, on forms
specified, approved, or provided by Franchisor and completed according to their
terms in accordance with generally accepted accounting practices.
C. Within sixty (60) days after the close of Franchisee's fiscal year,
Franchisee shall furnish to Franchisor a year-end income and expense statement
in the form requested, and certified to by Franchisee, including an entry
showing the total gross receipts for the said previous fiscal year. If this
statement shows that there has been any underpayment of royalty-service fees for
such fiscal year based on gross receipts as finally adjusted and reconciled
after the closing and review of Franchisee's books and records, Franchisee shall
pay to Franchisor, at the time of submitting such statement, the amount of any
such underpayment. Any overpayment shall be refunded to Franchisee within thirty
(30) days.
Franchisor shall provide Franchisee with a computer program designed to
generate the financial information required to be supplied by Franchisee under
Subparagraphs IV. B. or C. If said computer program, when used according to
Franchisor's instruction or direction, is defective and fails to generate the
financial information herein required, Franchisee shall be under no obligation
to provide such information during the time such defective condition persists.
D. Franchisee shall maintain appropriate books and records in such a
manner as to clearly and accurately show gross receipts as defined herein. All
such books and records, and income tax returns applicable to the test
preparation business of Franchisee shall be open at all reasonable times to
inspection and verification by Franchisor or its duly authorized
representatives. Franchisor shall be entitled at any time during normal business
hours to have
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Franchisee's books and records examined or audited at Franchisor's expense upon
seventy-two (72) hours' notice and Franchisee shall cooperate fully with the
parties making such examination or audit on behalf of Franchisor. Franchisee
shall promptly pay to Franchisor or Franchisor shall refund to Franchisee, as
the case may be, any under or overpayment or royalty-service fees revealed by
the examination or audit. If an examination or audit is performed due to
Franchisee's failure to submit statements of gross receipts or to maintain books
and records as provided herein, or in the event that the gross receipts reported
by Franchisee for any period of twelve consecutive months are more than five
percent (5%) below the actual gross receipts of Franchisee for such period as
determined by any such examination or audit, then Franchisee shall within
fifteen (15) days following notice, pay to Franchisor the reasonable and
customary cost of such an examination or audit as well as all additional amounts
of royalty-service fee charges, advertising charges, and any other charges or
fees shown to be due. Payment and acceptance of such amounts shall not waive or
prejudice any right of Franchisor to exercise any other remedy of this
Agreement, including termination in accordance with Paragraph XIII of this
Agreement. Any delinquent royalty-service fee or other fees or charges due
Franchisor from Franchisee shall bear interest at the annual rate of eighteen
percent (18%) from thirty (30) days after the date such amount was due until
paid.
V. PROMOTION AND ADVERTISING
In addition to, and along with, the Royalty-Service fee provided
herein, Franchisee shall pay monthly to Franchisor an advertising fee equal to
two percent (2%) of Franchisee's gross receipts as heretofore defined for the
preceding month. All Franchisor-owned TPR test preparation business units shall
make a monthly contribution to the advertising fund in an amount
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equal to two percent (2%) of their gross receipts for the preceding month, and
Franchisor shall use all such funds it receives hereunder for the development,
placement, and distribution of regional and national consumer advertising
designed in its discretion to promote consumer demand for services and products
available from The Princeton Review franchises under the TPR Method.
Franchisor shall deposit and maintain all unexpended advertising funds
collected from franchisees in an appropriately identified bank account separate
and distinct from any other and used for no other purpose. In the months of
January and July of each year throughout the term of this Agreement, Franchisor
shall distribute to Franchisee a report disclosing receipts of advertising funds
collected and specifically how such funds were expended during the preceding
six-month period.
Franchisee may in its own right and at its own expense promote and
advertise its franchised business, provided that all such promotional materials
and advertising proposed to be used shall prior to use or publication be
submitted to and approved by Franchisor in the interest of maintaining the
integrity, force, quality, image and goodwill associated with the proprietary
names and marks of Franchisor. Unless Franchisor disapproves proposed
advertising within seven (7) days following its receipt thereof, approval
hereunder shall be deemed to have been given.
VI. OBLIGATIONS OF FRANCHISOR
A. Undertakings Prior to Commencement of Operations. Prior to
Franchisee's commencement of operations hereunder Franchisor shall:
1. Training: Conduct a training program for Franchisee
covering the TPR Method and courses currently available thereunder. The
training program will be at such
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location and time as Franchisor shall designate, and shall be at no
extra charge for not more than two (2) persons designated by Franchisee
and acceptable to Franchisor. All expenses of travel, lodging, meals
and other living expenses incurred by Franchisee's personnel in
attending such program shall be borne and paid for by Franchisee.
The grant of the franchise herein is conditioned upon
successful completion of the training program by Franchisee or its
personnel as determined by Franchisor. If during the course of the
training program or within fifteen (15) days thereafter Franchisor
concludes that Franchisee or its designee has not exhibited the
aptitude, abilities, or personal characteristics necessary or desirable
to operate successfully a test preparation business in accordance with
the standards and procedures of the Princeton Review Method and as a
Franchisee of Franchisor, Franchisor may, in its sole discretion and
judgement, cancel this Agreement and all rights hereunder, where
permitted by applicable law, by giving notice to Franchisee and
tendering to Franchisee a refund of its initial franchise fee.
Franchisee agrees that such refund shall be the full extent of
Franchisor's liability and responsibility in the event of such
cancellation, and that upon cancellation Franchisee shall return to
Franchisor all materials, manuals, information and all other items that
Franchisee received from Franchisor, including all copies thereof and
notes thereon which Franchisee may have or control. Franchisee further
agrees to maintain strictly the confidentiality of all information
received relating to the TPR Method and not to use in the operation of
a test preparation or similar business, any trade secrets or
confidential information obtained from Franchisor in the course of the
training program or otherwise.
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2. Materials. Lend in trust to Franchisee the computer
software and data and other course materials needed to conduct the
franchised business in accordance with the TPR Method which Franchisor
may revise from time to time to reflect changes, additions and
improvements to suggested and required course offerings, procedures,
policies, standards and specifications. Such material shall at all
times remain the property of Franchisor.
Franchisee agrees to follow the procedures and adhere to the
policies set forth in any operating manuals or bulletin, and to
maintain their confidentiality. Upon expiration or termination of this
Agreement, or upon reasonable request of Franchisor, Franchisee shall
return such materials to Franchisor.
3. Provide assistance in locating, selecting and equipping the
specific business premises within the Franchisee's geographical area
suitable for conducting the franchised business activities.
B. Continuing Undertakings. Franchisor shall provide the following
continuing services for the benefit of Franchisee:
1. Method Improvements and Program Additions.
a. Make available to Franchisee from time to time all
improvements and additions to the TPR Method that are
circulated generally to all other franchisees, and, except as
otherwise provided hereunder, to Franchisor-owned TPR test
preparation businesses. Franchisor shall exercise due
diligence to keep materials current.
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b. New, additional, or improved course programs
developed by Franchisor which are designed to prepare students
for college or graduate school admissions tests will be
offered exclusively for marketing by Franchisees. After any
such program has been tested by Franchisor for a period of at
least one year, Franchisee shall be required to accept and put
into use such program in the franchised business. They may be
subject to a fee or charge based only on the Franchisor's
costs for providing Franchisee's personnel with training
necessary to incorporate and implement such programs in
Franchisee's business. Franchisee shall not be required to
accept more than two (2) new programs in any calendar year.
c. Any new course developed by Franchisor other than
one provided for in subparagraph b. above will be offered to
Franchisee on a first option basis before being offered to any
other party. Until any such program has been tested by
Franchisor for a period of at least one year, and Franchisee
has been extended a written option notice by Franchisor,
Franchisee shall have the first option right to exclusively
market each program within the geographical area described in
Paragraph I.A.1. of this Agreement. The first option right
herein provided shall be exercised by Franchisee by giving
Franchisor written notice of its election to do so within
thirty (30) days following Franchisee's receipt of a statement
of Franchisor describing the program, reciting Franchisee's
right to obtain exclusive marketing rights in said
geographical area, and setting forth the fee or charge payable
by Franchisee to secure such right and program. The fee or
charge payable shall be
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based on Franchisee's pro rata share of Franchisor's costs to
develop the course and program. As used herein, the term "pro
rata share" means the proportionate value of the formula
amount of Franchisee's initial franchise fee calculated on the
basis of factors existing as of a date six (6) months prior to
the date the option offer is made ("the adjusted initial fee
value") in relation to the total adjusted initial franchise
fee value on such date of all TPR franchises and of all
Franchisor-owned TPR units assuming they were franchises.
In the event Franchisee does not exercise the first
option rights herein provided, Franchisor shall have the right
to grant said marketing rights to any other party or parties
within the aforesaid geographical area, but only under a name
or xxxx other than THE PRINCETON REVIEW or any other
proprietary name or xxxx hereunder licensed to Franchisee.
(Except as otherwise agreed, Franchisor unilaterally
represents that (i) it will not market any computer or
videotape programs purporting to prepare students for a
college or graduate school admissions test, but nothing herein
shall be understood to preclude Franchisor from publishing
and/or marketing any book designed to prepare students for the
school admissions process including any admissions or
qualifications test; and, (ii) it will not engage in any
business under any other name similar to or competitive with
the business franchised hereunder.)
As used herein, a program "tested by Franchisor" must
have included, but is not limited to, conducting the new
program among no less than 100 participants, checking the
results, and making the results available to Franchisee.
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2. Software Warranty. If Franchisee notifies Franchisor of the
existence of an error in computer software that has been provided to
Franchisee by Franchisor which materially impairs Franchisee's ability
to properly conduct its franchised TPR business, Franchisor warrants to
correct or rectify such error within five (5) days following its
receipt of written notice from Franchisee ("the grace period"). If any
such computer software error is not corrected or rectified by
Franchisor within the said grace period, Franchisor will waive, or
refund, payment of royalty-service fees otherwise payable in accordance
with the following formula: 1/60 x D x R, where D represents the number
of days elapsing between the expiration of the grace period and the day
on which the error was corrected, and R represents the royalty-service
fees payable by Franchisee to Franchisor for the specific test in which
the error occurred for the year in which the error occurred.
3. Assistance. Provide telephone counseling to Franchisee at
reasonable times and frequency with respect to the operation and
management of the business, and make available to it the benefit of
Franchisor's information, advice, expertise and know-how.
4. Advertising. Make available to Franchisee from time to
time, national and/or regional TPR advertising programs as they are
developed with advertising funds collected pursuant to Paragraph V.
hereof and generally circulated. In the months of January and July of
each year during the term of this Agreement, Franchisor shall
distribute to Franchisee a report disclosing receipts of advertising
funds collected and specifically how such funds were expended during
the preceding six-month period.
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5. Continuing Training. Provide, at the option of Franchisor,
mandatory training program/meetings. Franchisee agrees to attend (or to
cause its designated employees to attend) one mandatory
training/program meeting per year, but failure to attend because of
illness or other physical incapacity shall not be a default hereunder.
All mandatory training/program meetings will be held at a location
within the continental United States designated by Franchisor.
Franchisor will not charge Franchisee a fee for mandatory meetings, but
all travel, living, and personal expenses incurred by Franchisee in
connection with meeting attendance will be the sole obligation of
Franchisee.
VII. OBLIGATIONS OF FRANCHISEE
A. Promotion of The Princeton Review Method and Business.
1. Franchisee agrees during the term of this Agreement to
promote at all times the sale of test preparation services available
from Franchisee pursuant to the TPR Method, using its best efforts to
develop and enlarge Franchisee's market for such services. Franchisee
agrees to accept new, additional, and improved course programs
developed by Franchisor and designed to prepare students for college or
graduate school admissions tests, and to pay to Franchisor a new
program training fee based on Franchisor's costs for providing such
training for each such program to personnel of the Franchisee as is
reasonably necessary to incorporate and implement such programs in
Franchisee's business, provided, that Franchisor has tested such
program (in the manner required under Paragraph VI.B.1. hereof) for a
period of at least one (1) year.
New courses or programs developed by Franchisor for inclusion
in the TPR Method other than those designed to prepare students for
college or graduate school
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admissions tests will be offered to Franchisee on a first option basis
as provided by Paragraph VI.B. of this Agreement.
2. Franchisee hereby agrees to operate its franchised business
in accordance with methods and procedures prescribed by Franchisor in
its operating manual or other bulletins, as revised from time to time,
and to equip the franchised business in accordance with the standards
of the Franchisor, including, specifically, those items listed on
Appendix A of this Agreement.
B. Management Responsibility and Business Conduct.
1. Franchisee agrees that at all times during the term of this
Agreement Rob Case, or a successor, shall devote substantial time and
effort in the active management and operation of its test preparation
business, shall be responsible for the management and operation
thereof, and shall act on behalf of Franchisee in all dealings with
Franchisor. The person herein identified may be changed upon giving
written notice to Franchisor.
Franchisee understands, hereby acknowledges, and agrees that
the kinds and extent of business results achieved, and the financial
returns and profits, if any, expected or realized from the investment
in, and the operation of, the business franchised hereunder depend
principally and substantially on Franchisee's direct, personal and
active continuous participation in the management, administration and
operation of such business.
2. Franchisee will at all times give efficient service to the
public meeting the performance standards set forth in Appendix B of
this Agreement. Franchisor and Franchisee shall adhere to high
standards of business ethics, integrity and fair dealing, and do
nothing which would tend to discredit or in any manner damage the
reputation and
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good will of Franchisor, the TPR Method, Franchisee or other
Franchisees of Franchisor. Franchisee will in a reasonably timely
manner provide Franchisor with reports and information concerning the
identities, test scores and other results of enrolled students in the
form and manner requested.
3. Franchisee shall make all payments and reports provided
herein, and pay all debts owed to Franchisor, when they shall become
due.
4. Franchisee shall conduct its business in accordance with
all applicable laws and regulations, and at its own expense shall
obtain and maintain all permits, certificates, and licenses required to
engage in the test preparation business franchised hereunder.
5. Franchisee warrants and covenants that during the term of
this Agreement it will not engage in any capacity (a) in any
educational business activity with high school or college students
except as provided herein, or (b) in any test preparation service
business with any person, without the advance, written consent of
Franchisor.
C. Mandatory Attendance at Training/Program meetings. Franchisor shall
have the right at its option to require Franchisee or its duly authorized
management representative to attend one training/program meeting per year, and
Franchisee agrees it or its representative will attend one such meeting at
Franchisee's sole expense for all travel, living and incidental costs. Failure
to attend because of illness or other physical incapacity shall not be a default
hereunder. The Franchisor shall charge Franchisee no fee for mandatory meetings.
D. Insurance. Franchisee alone shall be responsible for all loss or
damage arising out of or relating to the operation of Franchisee's business or
arising out of the acts or omissions of Franchisee or any of its agents,
employees, servants, or contractors in connection with services
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offered or rendered by Franchisee, and for all claims for damage to property of
for injury or death of any persons directly or indirectly resulting therefrom,
and Franchisee agrees to indemnify and hold Franchisor harmless against and from
any and all such claims, loss, and damage, including costs and reasonable
attorneys fees, except for acts of the Franchisor or those committed at its
direction. Franchisee at its own cost and expense shall obtain and at all times
during the term of this agreement maintain in full force and effect automobile
and public liability insurance with limits of liability for death and bodily
injury of not less than $1,000,000.00 for each person injured and $50,000.00 for
property damages on each occurrence or a combined single limit of $1,000,000.00.
Said policies of insurance shall be on forms, upon terms and with
insurers reasonably satisfactory to Franchisor.
Said policies of insurance shall expressly insure and protect both
Franchisee and Franchisor. Franchisee shall furnish to Franchisor a certified
copy of certificate with respect to each such policy which provides that such
policy shall not be canceled or modified except upon 30 days prior written
notice to Franchisor. If Franchisee fails to obtain or maintain in force any
insurance as provided herein or to furnish the certificates required hereunder,
Franchisor may, in addition to other remedies it may have, maintain or obtain
such insurance and/or certificates, and Franchisee shall promptly reimburse
Franchisor for all premiums and other costs incurred thereby.
VIII. PROPRIETARY MARKS
A. Validity and Use. The franchise granted hereunder and the Princeton
Review Method are operated in connection with and through the use of various
trademarks, trade names, and service marks along with certain related words,
slogans, letters, and symbols (all of which are
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hereafter collectively referred to as "the Propriety Marks"). The Proprietary
Marks include, but are not limited to, those registered, or which may become
registered, in the United States Patent and Trademark Office.
The following comprise the proprietary names and marks licensed and
protected hereunder: THE PRINCETON REVIEW; TPR.
Franchisor reserves the right to alter, change or amend the Proprietary
Marks referred to herein and to add proprietary names and marks to those
licensed hereunder. Franchisor does not warrant the availability or validity of
said marks. In the event that the right to use any name or proprietary xxxx
granted to franchisee in connection herewith is threatened by anyone else, or if
a registration application for any such name or xxxx is denied or invalidated,
Franchisor at its option shall have the right to either:
a. defend against any such claim or action which threatens use
of the name or xxxx at Franchisor's sole expense; or
b. substitute a different name or xxxx nationally with all
franchisees, in which case the substituted name or xxxx shall be
accorded the same treatment as provided herein; or
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c. discontinue use of the name or xxxx only with respect to
Franchisee hereunder, in which event the parties agree that this
Agreement shall be modified to provide that, and to limit the extent of
liability to, a reduction of the royalty rate payable hereunder by
Franchisee under Paragraph III. A. from eight percent (8%) to four
percent (4%), and the elimination of Franchisee's obligation to pay any
advertising fee to Franchisor whatsoever.
As between the parties hereto, Franchisee acknowledges the validity of
the Proprietary Marks and acknowledges that they are the property of Franchisor.
Franchisee hereby agrees to use the Proprietary Marks only for so long as the
franchise and license granted herein remain in force, and only in connection and
in accord with the Princeton Review Method, and in compliance with this
Agreement and guidelines and bulletins issued by Franchisor relating to the
proper use of the Proprietary Marks.
Franchisee shall not, either during or after the term of this
Agreement, do anything, or aid or assist any other party to do anything, which
would infringe upon, harm, dilute or contest the rights of Franchisor in any of
the Proprietary Marks or in any other xxxx or name which incorporates the name
Princeton Review. Franchisee acknowledges and agrees that all rights, benefits
and goodwill that may develop in the Proprietary Marks shall inure and accrue to
the full and exclusive benefit of Franchisor.
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B. Firm Name. Franchisee shall operate, advertise, and promote the
business and its services under the name The Princeton Review, and shall
designate in conjunction therewith that Franchisee is an independent franchisee.
Franchisee shall not, however, use the name The Princeton Review, or any other
name containing such name, or any of the Proprietary Marks in or as part of the
firm or corporate name of Franchisee. Franchisee shall, upon request of
Franchisor at any time, immediately stop the use of any such name or word in its
firm or corporate name, and shall promptly take such steps as may be necessary
or appropriate in the judgment of Franchisor to remove any such name or word
from Franchisee's firm or corporate name.
C. Unauthorized Use. Franchisee shall promptly report to Franchisor any
unauthorized use of the Proprietary Marks that come to its attention in any
manner whatever. Upon request of Franchisor, Franchisee agrees to cooperate with
Franchisor in preventing unauthorized use of the Proprietary Marks, or any
confusingly similar xxxx, at the sole expense of Franchisor.
IX. CONFIDENTIALITY OF THE PRINCETON REVIEW METHOD
Franchisee hereby acknowledges that only Franchisor can license rights
in and to the Princeton Review Method and any parts thereof, including all
material and information divulged to Franchisee relating to the Method.
Franchisee further acknowledges that all parts of the Method whether or not
trade secrets, and which are not generally known to the public, constitute
confidential business information of Franchisor which are revealed to Franchisee
in trust and in confidence, solely for the purpose of enabling Franchisee to
establish and operate the test preparation business franchised by this
Agreement. Such confidential information includes, but is not limited to,
educational software programs, training aids, data, and written materials;
business
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procedures and processes; supplies, equipment and material lists; instructor
lists; customer information; training and operations manuals; teaching
techniques; promotion and marketing aids; business forms and accounting
procedures; and informational bulletins. Franchisee agrees that during and after
the term of this Agreement, it will not reveal any of such information to any
other person or firm, except to employees of Franchisee, and then only in trust
and in confidence, and only to the extent such knowledge is necessary to perform
the duties of their employment, and Franchisee agrees, further, that it will not
use any of such confidential business information in any manner in connection
with any business or venture in which it has or may acquire any interest, direct
or indirect, in any capacity whatever, other than in connection with the
operation of the business franchised hereunder. Nothing herein shall be
understood as prohibiting Franchisee from selling any of its mailing lists to
any other party.
X. IMPROVEMENTS TO THE METHOD
In order to assure maximum uniformity of quality, performance and
service, nationally in all courses conducted by all franchisees. Franchisee
agrees to follow the procedures prescribed by the Princeton Review Method. As
Franchisor develops or learns of improvements, and adopts them for the method,
it will inform franchisees and authorize their use in Franchisee's business. In
return and in consideration therefore, Franchisee agrees that any idea or
suggested innovation or variation, which may tend to enhance or improve the
efficiency or effectiveness of test preparation services compatible with the
Princeton Review Method, that Franchisee discovers or otherwise becomes aware of
during the term of this Agreement shall be submitted to Franchisor for its
evaluation for adoption and use and Franchisee agrees that all proprietary
rights to such ideas, innovations or variations created or acquired by
Franchisee or any of its employees may be
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adopted and used by Franchisor and may be made available to other franchisees.
XI. RIGHTS AND LIMITATIONS ON ASSIGNABILITY BY FRANCHISEE
A. Assignment of Franchise Rights. The franchise rights granted
hereunder are personal in nature to the Franchisee who is a party to this
Agreement. Franchisee hereby agrees not to sell, assign, transfer, convey, or
encumber this Agreement or any right or interest therein or thereunder, or to
suffer or permit any such sale, assignment, transfer, conveyance or encumbrance
to occur by operation of law, without the prior written consent of Franchisor.
Such consent shall not be unreasonably withheld, may not require that there be
any change in the terms of this Agreement or any extension thereof, and shall be
determined on the bases of the personal, business, and financial qualifications
of the proposed transferee, and its acceptance of the obligations and terms of
this Agreement. Franchisor will not charge a transfer fee. Franchisor will
respond to Franchisee's request for assignment with final answer within fourteen
(14) days following receipt of relevant information.
B. Franchisor's First Option to Acquire. In the event of any proposal
to sell, assign, or transfer any right or interest in the business for which
Franchisee is hereunder franchised to use the Princeton Review Method (except
for Franchisor-approved advertising for offers to purchase), there shall first
be submitted to Franchisor a copy of any bona fide written offer made or
received, or if none, a statement in writing of all the terms of the proposed
purchaser, assignee or transferee. Thereafter, Franchisor shall have the
irrevocable first right and option to purchase or acquire any such right or
interest on the same terms as stated in the offer or statement, and Franchisor
may exercise such right and option by notifying Franchisee in writing of its
election to do so within thirty (30) days after its receipt of the written offer
or statement.
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If Franchisor does not so notify Franchisee within the thirty (30) day
period, then the proposed sale, assignment or transfer of Franchisee's business
may be made to a party other than Franchisor, subject to Franchisor's consent as
provided in Subparagraph XI .A., but only on the terms set forth in the written
offer or statement and only to the party therein identified. Such sale,
assignment or transfer shall constitute a cancellation and termination of all
interest and rights of Franchisee under this Agreement whereupon all obligations
of Franchisee under Paragraph XIV. of this Agreement shall be effective.
If the proposed sale, assignment or transfer is not made within
one-hundred-twenty (120) days after receipt by Franchisor of the written offer
or statement, it shall be deemed withdrawn or rejected and the provisions of
this Paragraph XI.B. shall renew and again be fully applicable.
C. Death or Disability of Franchisee. In the event of the death or
disability of an individual Franchisee, Franchisor will consent to an assignment
and transfer of this Agreement on an interim basis to the personal
representative of Franchisee, and subsequently to an heir, legatee or devisee of
Franchisee, provided that each of the following conditions is fulfilled with
respect to each such assignment and transfer:
1. It shall be demonstrated to the satisfaction of Franchisor
that such personal representative or successor is qualified, on the
bases of character, business experience and capability, credit
standing, health, and financial resources, necessary to successfully
operate Franchisee's business in accordance with the terms of this
Agreement.
2. The person, if any, to be substituted in Paragraph VII .B.
of this Agreement shall have been approved by Franchisor and shall have
successfully completed the training courses then in effect for
franchisees or shall have completed such courses at
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the next earliest time offered by Franchisor.
3. There shall not be an existing default in any of the
obligations of Franchisee which would constitute cause for termination
pursuant to Paragraph XIII. hereunder, and all amounts owed to
Franchisor as of the date of death or disability shall be paid in full.
4. Such personal representative or successor shall have
submitted to Franchisor satisfactory evidence that he has become
entitled to succeed to the rights of Franchisee hereunder, agrees to
assume all obligations of Franchisee hereunder and agrees to be bound
by all the terms and provisions of this Agreement to the same extent
and manner as Franchisee, and executes such personal undertakings as
Franchisor shall reasonably require.
Any consent of Franchisor hereunder shall not constitute consent to any
subsequent assignment or transfer.
XII. ASSIGNABILITY BY FRANCHISOR
This Agreement may be assigned by Franchisor or by any successor, to
any party or corporation which may succeed to the business of Franchisor or of
such successor by sale of assets, merger, or consolidation or otherwise, and may
also be assigned by Franchisor or by such successor to the shareholders thereof
in connection with any distribution of the assets of said party or corporation,
provided, the assignee assumes the responsibilities and obligations of
Franchisor under this Agreement.
XIII. TERMINATION
Termination by Franchisor for cause. Franchisee agrees that Franchisor
may terminate this Agreement prior to the expiration of its term if any of the
following conditions occur by giving
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Franchisee written notice of termination, provided, that wherever a reason for
termination is prohibited by, or a period of notice or a time allowed to cure a
default as stated in this Paragraph XIII. is different from, applicable law in
effect as of the effective date of this Agreement, such reason may be deemed
deleted, and such period or time shall be deemed ended, to conform with such
applicable law:
A. Franchisee fails to make any payment of money owed to Franchisor
when due, or fails to submit to Franchisor when due any report required pursuant
to this Agreement, and such default is not fully cured within fifteen (15) days
after Franchisor gives notice of such default to Franchisee;
B. Franchisee is declared or becomes insolvent or bankrupt or makes an
assignment for the benefit of creditors, or a receiver is appointed for its
assets or business, or a proceeding is commenced by or against Franchisee for
appointment of a receiver or for a reorganization or similar arrangement under
state law or any provisions of Federal bankruptcy law, and, if involuntary, such
proceeding is not dismissed within sixty (60) days of the filing thereof;
C. Franchisee assigns, sells, encumbers, or transfers this Agreement
without Franchisor's prior written consent;
D. Subject to Paragraph XI.C. of this Agreement, Franchisee becomes
unable because of its condition of health to perform the obligations required or
contemplated hereunder for a period of more than thirty (30) days.
E. Franchisee conducts no course authorized by the TPR method during
any consecutive six (6) month period.
F. Franchisee jeopardizes the goodwill of Franchisor's Proprietary
Marks, the
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Franchisee's business, the Princeton Review Method, including failure to meet
minimum standards of performance provided by this Agreement, or the reputation
of Franchisor, and fails to cure to the extent possible such default within
thirty (30) days following notice to Franchisee by Franchisor;
G. Franchisee fails to maintain the confidentiality of the Princeton
Review Method as provided in Paragraph IX. of this Agreement;
H. Franchisee defaults in the performance of the obligations, assumed
under Paragraph VII. of this Agreement and fails to cure any such default within
thirty (30) days following notice to Franchisee by Franchisor;
I. Franchisee fails to maintain an independent contractor relationship
with Franchisor pursuant to Paragraph XVI.F., except if caused by Franchisor;
J. Franchisee is convicted of a felony and has exhausted all available
appeals;
K. Franchisee fails to perform any material obligation assumed by
Franchisee under this Agreement, other than those specifically referred to in
this Paragraph, and such default is not satisfactorily cured within thirty (30)
days after Franchisor gives written notice of such default to Franchisee, or if
Franchisee repeatedly defaults or breaches obligations assumed under this
Agreement;
L. Franchisee fails to conduct its business in accordance with all
applicable laws and regulations. This shall not prevent Franchisee from
contesting in good faith the validity or applicability of any purported legal
obligation to the extent and in the manner permitted by law.
Notwithstanding the foregoing, in the event that Franchisee is given
Notice of Termination by Franchisor for any cause or causes specified in
Subparagraphs XIII. C., D., E., F., G., H., I., J.,
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K., or L. of this Agreement, Franchisee shall, upon its request, be given the
opportunity for a period not to exceed one hundred twenty (120) days following
Franchisee's receipt of the Notice of Termination, to present in writing to
Franchisor the terms of, and the identity of parties to, a bona fide offer to
purchase Franchisee's The Princeton Review business, and such offer shall be
subject to, and processed in accordance with, the provisions of Subparagraphs
XI.A. and XI.B. of this Agreement, provided, that during the said one hundred
twenty (120) day period Franchisee does nothing to discredit Franchisor or the
franchised business, and, provided, further, that if the Notice of Termination
is based on a cause specified in Subparagraph XIII.J. of this Agreement,
Franchisor shall have the option of taking over exclusive management and
operating control of the franchised business during all or any part of the
period following Notice of Termination.
If a proposed sale hereunder is not completed within sixty (60) days
following Franchisor's written consent to the proposed sale, termination shall
immediately thereafter be effective, and the provisions of Paragraph XIV. of
this Agreement shall thereupon apply.
XIV. OBLIGATIONS UPON TERMINATION
Upon termination, expiration, or cancellation of this Agreement for any
reason or in any manner, Franchisee shall cease to be an authorized The
Princeton Review franchisee, and Franchisee shall:
A. Immediately discontinue the use of the Princeton Review Method in
its entirety, all Proprietary Marks, and any names, masks or signs which may be
confusingly similar thereto, and all other materials which may indicate that
Franchisee is or was an authorized The Princeton Review franchisee or otherwise
associated with Franchisor. Franchisee further agrees to return to Franchisor
all materials containing any reference to Franchisor, and to cancel any pending
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advertising and discontinue future advertising which refers to or connotes any
relationship between Franchisee and Franchisor.
B. Promptly pay to Franchisor all sums owing from Franchisee to
Franchisor. Termination of this Agreement under any circumstances shall not
relieve Franchisee of any debt, obligation, or liability to Franchisor which may
have accrued hereunder, and all obligations and agreements of Franchisee which
expressly or by implication are to be performed after the termination of this
Agreement shall survive such termination.
C. Offer, for a period of acceptance of not less than fifteen (15)
days, to sell to Franchisor at its then market value, all or any portion of
equipment and supplies suitable for use is connection with the Princeton Review
Method, prior to offering the same to any other party.
D. Assist Franchisor in every way possible to bring about an
immediately effective, complete and orderly transfer of Franchisee's test
preparation business and students to Franchisor or to such persons as Franchisor
may designate. Franchisee specifically agrees hereunder to cooperate fully with
Franchisor to assign immediately to Franchisor any and all business telephone
numbers used by Franchisee in the conduct or promotion of the franchised
business, and hereby irrevocably appoints and authorizes Franchisor to act as
Franchisee's attorney-in-fact and agent to effect such assignment.
E. Maintain the confidentiality and not disclose to any person any of
the confidential business or trade secrets furnished to Franchisee by Franchisor
under this Agreement or in connection with the operation of the business
licensed hereunder.
F. Refrain from engaging in, or becoming in any manner financially
interested in, the educational testing or any related business similar to the
franchised business for a period of one
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year following cessation of this Agreement within the geographic territory
described in Section I.A.1 hereunder and within twenty-five (25) miles outside
the boundary lines of such territory.
XV. INDEMNIFICATION
A. By Franchisor. In the event Franchisee is sued for damages in any
suit or action based on grounds of Franchisee's infringing use of any
Proprietary Xxxx licensed to Franchisee by Franchisor, or of Franchisee's
infringing use of materials provided to Franchisee by Franchisor for use in the
franchised The Princeton Review business, Franchisor shall defend the suit or
action and shall indemnify Franchisee for all damages awarded, provided:
Franchisee gives Franchisor immediate notice of any suits or actions instituted
or threatened against Franchisee and reasonably cooperates in its defense, and
Franchisor has the sole right to control the defense of, and the sole discretion
to compromise and settle, any such suit or action.
B. By Franchisee. In the event Franchisor is sued and found liable by
final judgment for damages in any suit or action based on grounds of
Franchisee's acts or conduct not authorized by Franchisor, Franchisee shall
indemnify Franchisor from all damages awarded and reasonable attorneys' fees,
provided, Franchisor gives Franchisee immediate notice of any such suit or
action instituted or threatened against Franchisor, and Franchisee has the right
to participate in the defense of any such suit or action.
XVI. MISCELLANEOUS
A. Grammar. Any personal pronoun shall include the masculine, feminine
and/or the neuter thereof, and the singular of any noun or pronoun shall include
the plural and plural the singular, wherever the context may require.
B. Section Headings. Section headings are for ease of reference only.
They are not a
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part of this Agreement and shall not limit or define the meaning of any
provision.
C. Non-waiver. No failure by Licensor to take action on account of any
default by Franchisee, whether in a single instance or repeatedly, shall
constitute a waiver of any such default or of the performance required of
Franchisee.
D. Invalidity. If any provision of this Agreement shall be invalid or
unenforceable, either in its entirety or partially or because of its application
to particular circumstances, such provision shall, by mutual intention herein
expressed by the parties hereto, be deemed modified to the extent necessary to
render such provision valid or inapplicable, or to be eliminated from this
Agreement, if required, and this Agreement shall be construed and enforced as if
such provision had been originally so modified or eliminated. In the event that
total or partial invalidity or unenforceability of any provision of this
Agreement exists only with respect to the laws of a particular jurisdiction,
this section shall apply only to the extent that the laws of such jurisdiction
are controlling.
E. Entire Agreement. This Agreement constitutes and contains the entire
agreement and understanding of the parties with respect to the subject matter
hereof, and it may be modified only by a written document executed by the party
sought to be bound or obligated. The parties acknowledge hereby that there are
no representations, understandings, agreements, terms or conditions not
contained or referred to in this Agreement, and that this Agreement supersedes
any prior written or oral agreements, representations or inducements.
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F. Relationship of the Parties. This Agreement does cot create the
relationship of principal and agent, joint ventures, or partners between
Franchisor and Franchisee, and in no circumstances shall Franchisee be
considered an agent of Franchisor. Franchisee agrees that it will do nothing to
give the impression that it is an agent of Franchisor or to attempt to create
any obligation on behalf of or in the name of Franchisor.
G. Interpretation of the Agreement. This Agreement shall be interpreted
under the laws of the State of New York except to the extent that the law of the
State in which the Franchisee's business is located requires that it be
interpreted under the laws of such state.
H. Counterparts. This Agreement may be executed in any number of
identical counterparts, and each such counterpart shall be deemed a duplicate
original hereof.
I. Notices. Any notice required or permitted under this Agreement shall
be in writing and either delivered in person or mailed, return receipt
requested, postage fully prepaid and addressed as follows:
1. If to Franchisee, either to the address of Franchisee's
business as set forth heretofore or to Franchisee's residence address;
and.
2. If to Franchisor, the address of its principal offices as
heretofore set forth. Addresses for notices may be changed at any time
upon written notice thereof.
J. Unless otherwise agreed, this agreement shall become effective on
the date upon which it is executed by all parties hereto.
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In witness whereof, Franchisee and Franchisor have executed this
Agreement on the date or dates here below written.
Witness: Franchisee
/s/ Rob Case
/s/ Xxxxxxx X. XxXxxxxx
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxx Xxxxxxxx (SEAL)
---------------------- ----------------------------
Signature
Xxxxx Xxxxxxxx
-------------------
Full Name (Printed)
Date: June 15, 1986
Address and phone number of
Franchisee's residence:
000 Xxxxxxxx
Xxxxxxx, XX 00000
(000) 000-0000 (XxXxxxxx)
Attest: PRINCETON REVIEW MANAGEMENT CORP.
(Franchisor)
/s/ Xxxx Xxxxxxx By: /s/ Xxxx Xxxxxxx
---------------------------- ----------------------
Title: Chairman
Date: 9/13/86
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THE PRINCETON REVIEW FRANCHISE AGREEMENT
Appendix A (under Paragraph VII. A.)
EQUIPMENT NECESSARY TO CONDUCT THE FRANCHISED BUSINESS:
% An IBM Personal Computer or equivalent, with 256K memory, a 10mg hard
disk, serial and parallel ports.
% A Xxxxx compatible 1200 baud modem (internal or external)
% Two printers: one letter quality and the other dot matrix
% An optical xxxx xxxxxx made by Scantron Corp-option 1 (optional)
% A copying machine
% A telephone answering machine or answering service
The equipment may be purchased from any dealer of such equipment. It may be new
or used, must perform suitably.
/s/ Rob Case
/s/ Xx XxXxxxxxx
------------------
Franchisee
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THE PRINCETON REVIEW FRANCHISE AGREEMENT
APPENDIX B (Under Paragraph VII .B.2. )
Standards of Performance:
The Franchise represents The Princeton Review in its community; a
serious breach would irreparably damage the reputation of the company and all
franchisees in the system. Any legal judgment that a franchisee has helped a
student cheat, or any conviction of a felony, is cause for termination under
Paragraphs XIII .F. and J. of the Franchise Agreement.
The results of students who take the program are also very important,
and will be evaluated in the interest of the success of all involved. The method
by which the performance of franchisees will be judged is as follows.
Results of testing can be measured objectively: the improvement of each
student is the difference between his final test score and his most recent prior
test score. It the student has not previously taken a particular test or
preliminary test before enrolling in the course, a comparison will be made with
the student's first diagnostic test score.
To be satisfactory, a franchisee's students' results for each test
offered must approximate or exceed nationwide results for that particular test.
A franchisee's performance will be deemed unsatisfactory if, for three
successive terms, his students' testing results for a specific test are more
than twenty-five percent (25%) below the average results of all students of all
The Princeton Review site locations for that test for that term.
If a franchise fails to meet the test score standard of satisfactory
performance, the franchisee will be liable to Franchisor for a consultation
charge not to exceed five percent (5%) of gross receipts derived from
Franchisee's substandard test business for the year in which performance was
below standard. In return, the Franchisor, for a reasonable charge not to exceed
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said five percent (5%) will send one or more representatives to the franchisee's
sub-standard location for the purpose of monitoring the operation, diagnosing
the causes of inadequate results, and making recommendations for improvements.
In the event the Franchisee follows the Franchisor's recommendations for
improving performance, and the location's results are not in fact improved, the
full amount of the consultation charge will be refunded.
/s/ Rob Case
/s/ Xx XxXxxxxxx
---------------------
Franchisee
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CONSENT TO ASSIGNMENT OF FRANCHISE AGREEMENT
AGREEMENT made this 15tH day of June, 1986, by and between
Xxxxxx Xxxx, Xxxxxxx XxXxxxxx and Xxxxx Xxxxxxxx (hereinafter referred us as
Elie Franchisee), and Princeton Review Management Corp. (hereinafter referred to
as the Franchisor), WITNESSETH:
WHEREAS, the Franchisee, a natural person, and the Franchisor
have entered into a The Princeton Review Franchise Agreement dated June 15,
1986, and
WHEREAS, said Franchise Agreement provides that the Franchisee
may not assign any right or interest in the said Agreement or in any separate
and independent franchise agreement granted under the terms of the Franchise
Agreement and on Addendum Agreement thereto, and
WHEREAS, the Franchisee desires to obtain in advance the
Franchisor's consent to assign his rights and interests in the aforesaid
Franchise Agreement and in independent, separate The Princeton Review franchise
agreements which may be acquired in the future to a corporation or corporations
in which the Franchisee owns and exercises a controlling stock interest, and
WHEREAS, the Franchisor is willing to give its consent to such
aforesaid assignment or assignment;
NOW THEREFORE, it is hereby agreed as follows:
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In consideration of the foregoing and of the following mutual
promises and undertakings:
1. The Franchisor agrees and consents to the assignment of any The
Princeton Review Franchise Agreement between the Franchisor and the Franchisee,
including the aforesaid Franchise Agreement and any separate and independent
franchise agreement growing out of the provisions of the Addendum thereto, to
either an existing or future corporation in which the Franchisee has and
maintains a controlling stock interest, provided, the Franchisee gives the
Franchisor prior notice of assignment along with a copy of a written agreement
effecting the assignment in which the assignee agrees to assume all obligations
of the assignor under the franchise agreement, and provides the Franchisor with
an accurate and complete listing of all stockholders of the assignee corporation
setting forth their respective stock interests. Upon receipt of the foregoing
notice, copy of written assignment agreement and listing of stockholders, the
Franchisee shall be relieved as of the effective date of the assignment of
personal liability under the assigned franchise agreement except for the
obligations set forth in paragraph 2 of this "Consent to Assignment."
2. The Franchisee promises and agrees:
a. To provide the Franchisor with the information provided in
paragraph 1 of this Agreement and to keep such information current;
b. To remain personally liable following an assignment subject
to this Agreement for the obligations of any assignee corporation for payment of
royalty-service fees and advertising fees currently due and payable at any time
during the term of this Agreement to the Franchisor, and for all currently due
and payable fees or charges for materials, training, inventory, software or
equipment provided to the assignee corporation by the Franchisor; and
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c. To remain personally obligated to comply with all
restrictive covenants provided under said franchise agreements, including use of
the Franchisor's business information, methods and names (under paragraph I.A.2.
& 3. of the Franchise Agreement); use of the proprietary marks (under paragraph
VIII. of the Franchise Agreement); maintenance of confidentiality (under
paragraph IX. of the Franchise Agreement); engaging in conflicting and competing
business activity during the term of the franchise (under paragraph VII. B. 5.
of the Franchise Agreement) and after the term of the franchise (under paragraph
XIV.F. of the Franchise Agreement); and maintaining post-term confidentially
(under paragraph XIV.E. of the Franchise Agreement).
In Witness Whereof, the parties hereto have executed this
Agreement the day and year first above written.
Franchisee
/s/ Xxxxxxx X. XxXxxxxxx
/s/ Rob Case
/s/ Xxxxxxx X. Xxxxxxx /s/ Xxxxx Xxxxxxxx
---------------------------- ----------------------------
Witness
The Princeton Review Management
Corp. Franchisor
Attest:
/s/ Xxxx Xxxxxxx By: /s/ Xxxx Xxxxxxx
---------------------------- ----------------------------
