TABLE OF CONTENTS
1. GRANT 3
2. TERM AND RENEWAL 6
3. SUBLICENSE AGREEMENTS 7
4. FEES 8
5. RIGHTS AND OBLIGATIONS OF FRANCHISOR 12
6. RIGHTS AND OBLIGATIONS OF MASTER LICENSOR 15
7. PROPRIETARY MARKS 21
8. CONFIDENTIAL MANUALS 26
9. CONFIDENTIAL INFORMATION 27
10. ACCOUNTING AND RECORDS 28
11. INSURANCE 30
12. TRANSFER OF INTEREST 32
13. DEFAULT AND TERMINATION 42
14. OBLIGATIONS UPON TERMINATION OR EXPIRATION 47
15. COVENANTS 51
16. TAXES 55
17. INDEPENDENT CONTRACTOR AND INDEMNIFICATION 57
18. APPROVALS AND WAIVERS 58
19. NOTICES 59
20. ENTIRE AGREEMENT 60
21. SEVERABILITY AND CONSTRUCTION 61
22. APPLICABLE LAW 62
23. ARBITRATION 64
24. ACKNOWLEDGMENTS 64
MOTO PHOTO, INC.
MASTER LICENSE AGREEMENT
This Master License Agreement (the "Agreement") is made and entered into as
of December 31, 1998, by and between MOTO PHOTO, INC., a Delaware corporation
("Franchisor"), and CANADIAN INDUSTRIAL SERVICES, LTD., an Ontario corporation
("Master Licensor").
The Agreement is based on the following understandings:
1. Franchisor, as the result of the expenditure of time, skill, effort,
and money, has developed and owns a unique and distinctive system (the "System")
relating to the establishment and operation of photo processing stores which
feature quality fast photo processing and related imaging services and which
offer for sale photo-related products.
2. The distinguishing characteristics of the System include, without
limitation, uniform and distinctive methods for selling and advertising photo
processing and related imaging services; interior and exterior color and design
schemes, furnishings, and other identifying characteristics; specifications and
procedures for installation of equipment and fixtures; standards and
specifications for inventory, chemicals, photographic paper, and supplies;
customized accounting and other recordkeeping procedures; and training
procedures relating to the use of photo processing equipment, customer service,
and business management; all of which may be changed, improved, and further
developed by Franchisor from time to time.
3. Franchisor identifies the System by means of certain trade names,
service marks, trademarks, logos, emblems and indicia of origin, including but
not limited to the marks "MOTOPHOTO" and "ONE HOUR MOTOPHOTO" and design, and
such other trade names, service marks, and trademarks as are now designated (and
may hereafter be designated or substituted by Franchisor) for use in connection
with the System (the "Proprietary Marks").
4. Franchisor continues to develop, use, and control the use of such
Proprietary Marks in order to identify for the public the source of services and
products marketed the Proprietary Marks and the System, and to represent the
System's high standards of quality, appearance, and service.
5. Master Licensor has been acting as Master Licensor for Franchisor in
Ontario, Canada pursuant to a Master License Agreement and Sub-License
Development Agreement dated as of February 20, 1987 ("the MLA"). Master
Licensor wishes to obtain the right to license others ("Sublicensees") to
operate MotoPhotoSM stores (the "Stores" or "sublicensed businesses") under the
System in other areas of Canada and to license additional stores in Ontario.
6. Master Licensor understands and acknowledges the importance of
Franchisor's high and uniform standards of quality, service, and appearance, and
the necessity of ensuring the maintenance of those high standards by all
Sublicensees of Master Licensor.
NOW, THEREFORE, the parties mutually agree as follows:
1. GRANT
1.01 Franchisor grants to Master Licensor, upon the terms and conditions
set forth in this Agreement, the right to grant an unlimited number of
sublicenses for the use in Canada ("the Designated Area") of Franchisor's
Proprietary Marks and the System, as such may be changed, improved, and amended
from time to time, and a license to use the Proprietary Marks and the System in
connection with such sublicensing. Franchisor represents that the marks
"MOTOPHOTO" and "ONE HOUR MOTOPHOTO" and design have been registered in Canada.
Franchisor will take all steps necessary to extend the registration of such
marks in Canada so long as Master Licensor is still actively working with the
System pursuant to this Agreement.
1.02 Except as otherwise provided in this Agreement, Franchisor shall not
establish, nor license anyone other than Master Licensor to sublicense or
establish, any Store under the System in the Designated Area during the term of
this Agreement or any renewal hereof. Prior to the expiration of the term of
this Agreement, Franchisor retains the right to acquire or otherwise affiliate
entities which own stores, which franchise stores, or which both own and
franchise stores at any location, within or outside of the Designated Area, and
which operate under proprietary marks other than those used in connection with
the System for the sale of the same, similar, or different services and products
("Non-System Stores") on any terms and conditions Franchisor may deem advisable
and, except as provided in Section 1.03 hereof, without granting Master Licensor
any rights in such entities or such Non-System Stores. Notwithstanding the
foregoing, Franchisor agrees that it shall not acquire nor solicit such entities
to sell their Non-System Stores to Franchisor or to otherwise affiliate with
Franchisor unless Master Licensor is in default under this Agreement.
1.03 It is Franchisor's intent to assist Master Licensor in expanding the
System in the Designated Area and to that end Franchisor may elect to purchase
and to convert more Non-System Stores to Stores under the System; provided,
however, that Franchisor may purchase and convert only chains of Non-System
Stores with eleven (11) or more stores. If Franchisor desires to effect such a
conversion prior to the expiration of the term of this Agreement, Master
Licensor shall have the right and option to purchase and convert all of the Non-
System Stores being acquired by Franchisor in the Designated Area and/or in the
United States. Master Licensor may exercise this right only if Master Licensor
is in good standing under this Agreement at the time of exercise and only during
the first three (3) years following the date Franchisor acquires the Non-System
Stores.
Master Licensor shall exercise such right by closing on such purchase and
executing Franchisor's then-current form of franchise agreement (which shall not
require payment of any initial franchise fee) for each such store in the United
States which Master Licensor is purchasing and/or by establishing a sublicense
arrangement as provided in Section 3.03 of this Agreement for any Non-System
Store acquired in the Designated Area.
The purchase price to be paid by Master Licensor for the Non-System Stores
shall be the greater of (a) 3.5 times the pre-debt cash flow for the Non-System
Stores which Master Licensor is purchasing and (b) the cash equivalent of the
acquisition costs, the consideration paid by Franchisor for the Non-System
Stores (or, if Master Licensor is purchasing fewer than all of the Non-System
Stores purchased by Franchisor, the cash equivalent of Franchisor's
proportionate per store cost), and any new investment Franchisor has made in the
Non-System Store(s) Master Licensor is purchasing. In the event that the
parties cannot agree on the cash equivalent for the Non-System Stores within a
reasonable time, an independent appraiser shall be designated by each party, and
the two (2) independent appraisers so designated shall select a third
independent appraiser. The determination of the cash equivalent by the majority
of appraisers so chosen shall be binding. Franchisor and Master Licensor shall
bear the costs of the appraisal on an equal basis.
Franchisor shall have no right to add stores to the chain(s) of stores
acquired and converted by Franchisor as provided in this Agreement.
1.04 Master Licensor may establish a Store or Stores only as provided in
Section 3.03 of this Agreement.
2. TERM AND RENEWAL
2.01 Except as otherwise provided, the term of this Agreement shall be for
ten (10) years from the date of its execution.
2.02 Master Licensor may, at its option, renew this Agreement for
additional terms of ten years each, provided that at the end of the applicable
term:
2.02.1 Master Licensor has given Franchisor written notice of such
election to renew not less than nine (9) months nor more than twelve (12) months
prior to the end of the initial term.
2.02.2 Master Licensor is not in material breach of any material
provision of this Agreement, any amendment hereof or successor to this
Agreement, or any other agreement between Master Licensor and Franchisor, or
Franchisor's subsidiaries or affiliates, and has substantially complied with all
of the terms and conditions of such agreements during their terms.
2.02.3 Master Licensor has satisfied all monetary obligations owed by
Master Licensor to Franchisor and its subsidiaries and affiliates and has timely
met these obligations throughout the term of this Agreement.
2.02.4 Master Licensor shall execute upon renewal a new Master
License Agreement for the renewal term as set out in Section 2.02 and such other
ancillary agreements as Franchisor may require, which agreements shall supersede
this Agreement in all respects, and the terms of which may differ from the terms
of this Agreement; provided, however, that the Designated Area shall remain the
same, the percentage of royalty, transfer, renewal, and sublicense fees payable
by Master Licensor to Franchisor shall remain the same, and that Master Licensor
shall pay a renewal fee of Five Thousand United States Dollars (US $5,000).
2.02.5 Master Licensor shall execute a general release, in a form
prescribed by Franchisor, of any and all claims against Franchisor and its
subsidiaries and affiliates, and their respective officers, directors, agents,
and employees.
2.02.6 Master Licensor shall comply with Franchisor's then-current
qualification and training requirements.
2.02.7 Franchisor is still seeking to sell franchises in the United
States.
3. SUBLICENSE AGREEMENTS
3.01 Master Licensor shall grant the right to operate a Store only
pursuant to a sublicense agreement in a form approved by Franchisor (the
"Sublicense Agreement" or "Sublicense Agreements"), to which the Sublicensee,
Master Licensor, and Franchisor shall be parties.
3.02 Master Licensor shall make no material modification to any Sublicense
Agreement without Franchisor's prior consent, except that Master Licensor shall,
in its sole discretion, determine the initial sublicense fee and the continuing
royalty fee to be paid pursuant to the Sublicense Agreements, as well as the
transfer and renewal fees, if any, to be paid. No Sublicense Agreement shall be
for more than one Store.
3.03 This Agreement does not grant Master Licensor the right to operate a
Store or Stores in the Designated Area; however, nothing in this Agreement shall
be deemed to prohibit Master Licensor from executing a Sublicense Agreement with
an entity in which Master Licensor has an interest, for a Store to be located in
the Designated Area. In any such case, the Sublicense Agreement shall provide
that Franchisor shall have a right of first refusal in the event that any person
or entity owning a controlling interest in such entity, in the assets of such
entity, or in such Sublicense Agreement wishes to sell such interest.
4. FEES
4.01 Master Licensor shall pay Franchisor, subject to prevailing
withholding taxes or other taxes, the following:
4.01.1 A master license fee of One Hundred Fifty Thousand Canadian
Dollars ($150,000.00). The master license fee shall be paid by execution of a
promissory note substantially in the form attached to this Agreement as Exhibit
A. Upon payment of any portion of the master license fee under the promissory
note, such portion shall be deemed fully-earned and non-refundable in
consideration for the administrative and other expenses incurred by Franchisor
in granting this license and for the development opportunities lost or deferred
by Franchisor as a result of the right granted Master Licensor in this
Agreement.
4.01.2 For each Sublicense Agreement executed pursuant to this
Agreement, a sublicense fee equal to sixteen and one-half percent (16.5%) of the
sublicense or franchise fee paid to Master Licensor pursuant to executed
Sublicense Agreements.
4.01.3 A continuing royalty fee during the term of this Agreement in
an amount equal to twenty-five percent (25%) of the royalty fee paid to Master
Licensor by Sublicensees.
4.01.4 A fee in the amount of sixteen and one-half percent (16.5%) of
each renewal fee and/or transfer fee, if any, paid by any Sublicensee.
4.01.5 In the event that any payment(s) which Master Licensor must
make to Franchisor pursuant to this Agreement cannot be delivered in Dayton,
Ohio, Master Licensor shall deposit such payment(s) in Canada as Franchisor
shall direct.
4.02 Master Licensor shall collect renewal fees, transfer fees, sublicense
fees, and continuing royalty fees owed pursuant to the Sublicense Agreements
between Master Licensor and Sublicensees within the Designated Area and shall
provide Franchisor with a monthly report by the last day of each month on the
amounts collected during the preceding month, along with the payments due
Franchisor from such amounts. Master Licensor shall have sole discretion as to
the terms and conditions of collections from Sublicensees, including the right
to defer or refund sublicense, renewal, transfer, and royalty fees. In no event
shall any such deferred payments become payable to Franchisor by Master Licensor
until, and unless, such fees are paid to Master Licensor by Sublicensees. If
Master Licensor finances any portion or all of the sublicense, renewal, or
transfer fee for a Sublicensee, Master Licensor shall pay to Franchisor when
received, in accordance with this Section 4.02, Franchisor's proportionate share
of the principal and interest paid by the Sublicensee. If Master Licensor
refunds amounts collected, Master Licensor shall have the right to deduct from
any payments due Franchisor Franchisor's portion of any amount so refunded.
Master Licensor shall have no liability to Franchisor for payments under this
Section 4.02 with respect to any payment which a Sublicensee, for any reason,
fails to pay to Master Licensor.
Notwithstanding the foregoing, Master Licensor shall have no right to defer
or refund sublicense, renewal, transfer, and/or royalty fees payable pursuant to
a Sublicense Agreement executed by an entity in which Master Licensor has an
interest. Payment of such fees shall be made to Franchisor at the time
specified in this Agreement for payment of royalties, regardless of collection
from the Sublicensee.
4.03 All payments shall be made together with any reports or statements
required under Section 10.02 of this Agreement. Any payment or report not
actually received by Franchisor on or before such date shall be deemed overdue
if not postmarked at least five (5) days before the due date. If any payment is
overdue, Master Licensor shall pay Franchisor, in addition to the overdue
amount, interest on such amount from the date it was due until paid at the
equivalent of two percent (2%) per month calculated on a daily basis, or the
maximum rate permitted by law, whichever is less. Entitlement to such interest
shall be in addition to any other remedies Franchisor may have.
4.04 As used in this Agreement, "gross sales" shall include all revenue
received by Sublicensees from the sale (including retail and wholesale sales) of
all services and products, and all other income of every kind related to the
sublicensed businesses, whether for cash or credit, less any discounts given or
sales tax or Value Added Tax or equivalent tax collected from customers by
Sublicensees for transmittal to the appropriate taxing authority.
4.05 As further consideration for the license granted by Franchisor, upon
execution of this Agreement Master Licensor shall grant to Franchisor an option,
exercisable the first time Master Licensor makes a public offering of equity
securities and/or securities convertible into equity securities, to purchase up
to twenty percent (20%) of such securities at a price equal to the selling price
for each issue less a twenty percent (20%) discount ("the Exercise Price");
provided, however, that the Exercise Price shall not be less than the net book
value calculated immediately prior to the offering/placement. The foregoing is
subject to compliance with prevailing Canadian and provincial securities laws.
5. RIGHTS AND OBLIGATIONS OF FRANCHISOR
In addition to any other rights and obligations specified in this
Agreement, Franchisor shall have the following rights and obligations:
5.01 Franchisor shall provide initial training at its corporate
headquarters for managers of Stores operated by Sublicensees in the Designated
Area, subject to the terms set forth in Section 6.07 of this Agreement.
Franchisor shall not be obligated to provide initial training to more than two
persons per Store.
5.02 Franchisor has made available at no charge to Master Licensor plans
and specifications for the construction of the first Store opened pursuant to a
Sublicense Agreement and for the exterior and interior design and layout,
fixtures, furnishings and signs. At its own expense, Master Licensor may
reproduce and distribute such plans and specifications, all of which are
Franchisor's property, to its Sublicensees in connection with its performance
under the Sublicense Agreements. If Franchisor shall change such plans and
specifications, Franchisor shall make the new plans and specifications available
at no charge to Master Licensor.
5.03 Franchisor has provided on loan to Master Licensor one (1) copy of
its Confidential Operations Manual and associated manuals (collectively, the
"Manuals"), other operating systems, information systems, training programs, and
other materials which Franchisor may develop for use in connection with the
System and which it deems relevant. Franchisor shall provide revisions of such
materials as it deems appropriate. Franchisor shall charge Master Licensor only
for such materials as Franchisor normally charges its franchisees.
5.04 Franchisor shall provide to Master Licensor copies of all relevant
materials provided to Franchisor's franchisees, area developers, franchise
consultants, and shareholders. Master Licensor shall have the right to
reproduce such materials at Master Licensor's expense and distribute them to its
Sublicensees, as Master Licensor deems advisable; provided, however, that all
such materials shall be marked as the property of Franchisor, shall be made
available to Sublicensees on loan only, and shall be distributed to Sublicensees
only subject to the confidentiality provisions of the Sublicense Agreements.
5.05 Franchisor shall make available from time to time, at Master
Licensor's expense, promotional materials for advertising by Master Licensor
and/or its Sublicensees and shall have the right to review all advertising and
promotional material which Master Licensor proposes to use or to furnish to its
Sublicensees for their use. Franchisor shall charge Master Licensor only for
such materials as Franchisor normally charges its franchisees.
5.06 Franchisor's executives and/or operational managers shall be
available to visit and consult with Master Licensor's executives at their
reasonable request. At its own expense, Franchisor shall send one
executive/operational manager to Master Licensor's business premises in Canada
once each year to assist in planning. Master Licensor shall pay any reasonable
travel expenses associated with such visits. There shall be no charge for the
time of Franchisor's corporate executives. Franchisor's corporate executives/
managers shall also be available for consultation by telephone.
5.07 Franchisor shall invite Master Licensor's officers and directors to
participate in Franchisor's national advisory group, to attend Franchisor's
franchisee convention, and to attend the appropriate regional meetings of
Franchisor's area developers and/or franchise consultants. Master Licensor, its
directors, and/or its employees shall be responsible for any and all expenses
incurred by them in connection with attending any such events, including,
without limitation, the cost of transportation, lodging, meals, and wages.
5.08 Franchisor shall provide such additional training and programs as
Franchisor shall deem advisable. Master Licensor or its employees shall be
responsible for any and all expenses incurred by them in connection with
attending any such events, including, without limitation, the cost of
transportation, lodging, meals, and wages.
5.09 Franchisor shall, where possible, assist Master Licensor in
negotiating with suppliers for equipment, paper, chemicals, and merchandise.
5.10 Franchisor shall continue its efforts to maintain the standards of
quality, professionalism, and service of the System and, to that end, may
conduct inspections of any business premises operated under this Agreement by
Master Licensor and monitor Master Licensor's performance under the Sublicense
Agreements with Sublicensees. Such monitoring may include, without limitation,
contacting Sublicensees, visiting Store premises, and monitoring training
programs conducted by Master Licensor's personnel.
5.11 All of the obligations of Franchisor arising under this Agreement are
to Master Licensor. No other party is entitled to rely on, enforce, or obtain
relief from any breach of such obligations either directly or by subrogation.
6. RIGHTS AND OBLIGATIONS OF MASTER LICENSOR
Master Licensor understands and acknowledges that strict conformity to
System standards of the business contemplated under this Agreement and of the
sublicensed businesses is important to Master Licensor, Franchisor, System
franchisees and Sublicensees in order to develop and maintain high and uniform
operating standards, to increase the demand for System franchisees and
Sublicensees, and the demand for services sold by System franchisees and
Sublicensees, and to protect Franchisor's reputation and the goodwill associated
with the Proprietary Marks and the System. In addition to any other rights and
obligations specified in this Agreement, Master Licensor shall have the
following rights and obligations:
6.01 Master Licensor shall comply with all terms and conditions set forth
in this Agreement and in any and all Sublicense Agreements executed pursuant to
this Agreement and shall fully enforce all material provisions of such
Sublicense Agreements.
6.02 During the term of this Agreement, Master Licensor shall promote
diligently the sublicensing of Stores throughout the Designated Area,
recognizing that rapid market penetration by Stores is crucial to the success of
the System in the Designated Area.
6.03 Master Licensor understands and acknowledges the importance of
selecting only highly-qualified Sublicensees and the importance of ensuring that
all of Master Licensor's Sublicensees produce quality photo processing and
related imaging services, achieve maximum sales levels, make maximum efforts to
control costs, and fully conform to Franchisor's policies and procedures as set
forth in Franchisor's Manuals.
6.04 Before executing a Sublicense Agreement, Master Licensor shall obtain
Franchisor's written approval of any material changes to such agreement. Upon
execution of any Sublicense Agreement by Master Licensor and a prospective
Sublicensee, Master Licensor shall send to Franchisor two executed copies of the
Sublicense Agreement, together with a check for Franchisor's portion of the
initial sublicense fee. Franchisor shall promptly execute the Sublicense
Agreements and return one executed copy to Master Licensor.
6.05 Master Licensor shall cooperate with Franchisor in preparing and
filing with the appropriate authorities any filings required by law and in
obtaining any necessary governmental approvals.
6.06 Within thirty (30) days after execution of this Agreement, at least
two (2), and up to four (4), as Franchisor shall direct, of Master Licensor's
managers and\or corporate executives shall attend and complete to Franchisor's
satisfaction initial training at Franchisor's corporate headquarters.
Franchisor shall provide instructors and training materials for all required
training programs, and Master Licensor or its employees shall be responsible for
any and all other expenses incurred by them in connection with any training
programs, including, without limitation, the cost of transportation, lodging,
meals, and wages.
6.07 Master Licensor shall pay to Franchisor a training fee of Three
Hundred Canadian Dollars ($300.00) per Store for Franchisor's providing initial
training at Franchisor's corporate headquarters pursuant to Section 5.01 of this
Agreement, provided, however, that Franchisor shall not be obligated to provide
initial training to more than two (2) persons per Store. Franchisor shall
provide instructors and training materials for all required training programs,
and the Sublicensee or its employees shall be responsible for any and all other
expenses incurred by them in connection with any training programs, including,
without limitation, the cost of transportation, lodging, meals, and wages.
6.08 In dealing with prospective and actual Sublicensees, Master Licensor
shall:
6.08.1 Comply at all times with all applicable laws, rules, and
regulations affecting or governing commercial transactions and/or the
advertising, promotion, and sale of franchises or business opportunities,
including, without limitation, those relating to registration, disclosure, and
unfair practices.
6.08.2 Comply at all times with Franchisor's standards and procedures
as prescribed in this Agreement, the Manuals, or otherwise in writing.
6.08.3 Use only materials provided by, or previously approved in
writing by, Franchisor in sales presentations to prospective Sublicensees and
make no misrepresentations about Franchisor, Master Licensor, the Sublicensed
Businesses, or representations in conflict with the terms and conditions of the
Sublicense Agreement, the Confidential Operating Manual for Sublicensees, and/or
other related documents.
6.09 Master Licensor shall approve as suppliers of equipment, paper,
chemicals and merchandise to Sublicensees only those suppliers who demonstrate
to the continuing reasonable satisfaction of Franchisor the ability to meet
Franchisor's reasonable standards and specifications for such items, who possess
adequate quality controls and capacity to supply the Sublicensees' needs
promptly and reliably, and who have been approved in writing by Franchisor and
not thereafter disapproved. If Master Licensor desires to recommend to its
Sublicensees any supplier which has not been approved by Franchisor, it shall
submit to Franchisor a written request for such approval or request the supplier
itself to do so. Franchisor shall have the right to require that its
representatives be permitted to inspect the supplier's facilities and that
samples from the supplier be delivered, at Franchisor's option, either to
Franchisor or to an independent testing laboratory designated by Franchisor for
testing. A charge not to exceed the reasonable costs of inspection and actual
costs of the test shall be paid by Master Licensor or the supplier. Franchisor
reserves the right, at its option, to reinspect the facilities and products of
such approved supplier and to revoke its approval upon the supplier's failure to
continue to meet any of Franchisor's criteria. In taking action pursuant to
this Section 6.09, Franchisor shall act in a reasonable manner, taking into
consideration Master Licensor's competitive circumstances; provided, however,
that Franchisor may exclude any type or category of merchandise which
Franchisor, in its sole discretion, determines is unsuitable for System
franchisees to offer.
6.10 On a quarterly basis, or more frequently as it deems advisable,
Master Licensor shall perform reviews of the Stores in accordance with System
requirements and shall promptly send a copy of each store review report to
Franchisor.
6.11 Master Licensor shall have the right to send a reasonable number of
potential Sublicensees to visit Franchisor. Master Licensor shall pay all travel
expenses associated with such visits; Franchisor shall pay certain hospitality
expenses of such visitors and shall make its employees available to meet with
such visitors at no cost to Master Licensor.
6.12 Master Licensor shall employ sufficient numbers and categories of
employees necessary to fulfill its obligations under this Agreement and under
the Sublicense Agreements to be executed pursuant to this Agreement and shall
assure that all of its employees maintain the highest quality standards of
professionalism and integrity. Master Licensor shall screen carefully all
employees prior to employment and shall employ only those who have sufficient
education and previous work experience to perform competently and who have a
good moral character and reputation.
6.13 If Master Licensor is a corporation, the following requirements shall
also apply to Master Licensor:
6.13.1 Master Licensor shall promptly furnish to Franchisor copies of
Master Licensor's Articles of Incorporation, Bylaws, and other governing
documents, and any amendments to such documents, including the resolution of the
Board of Directors authorizing entry into this Agreement.
6.13.2 Master Licensor shall maintain instructions against the
transfer on its records of any equity securities; and each stock certificate of
Master Licensor shall have conspicuously endorsed upon its face a statement in a
form satisfactory to Franchisor that it is held subject to, and that further
assignment or transfer of it is subject to, all restrictions imposed upon
assignments by this Agreement; provided, however, that the requirements of this
Section 6.13.2 shall not apply to a publicly-held corporation, as such term is
defined in Section 12.02.3 of this Agreement.
6.13.3 Master Licensor shall maintain a current list of all owners of
record and all beneficial owners of any class of voting securities of Master
Licensor and shall furnish the list to Franchisor upon request.
6.13.4 All shareholders of Master Licensor shall jointly and
severally guarantee Master Licensor's performance under this Agreement and shall
bind themselves to the terms of this Agreement; provided, however, that the
requirements of this Section 6.13.4 shall not apply to a publicly-held
corporation as defined in Section 12.02.3 of this Agreement and provided further
that Franchisor may exempt certain individuals or classes of individuals from
such requirement. So long as Canadian Industrial Services Ltd. guarantees the
obligations of Master Licensor under this Agreement, Franchisor specifically
exempts all shareholders of Master Licensor from the requirements of this
Section 6.13.4.
6.14 If Master Licensor is a partnership, the following requirements shall
also apply to Master Licensor:
6.14.1 Master Licensor shall furnish Franchisor with its partnership
agreement as well as such other documents as Franchisor may reasonably request,
and any amendments to such documents.
6.14.2 Master Licensor shall prepare and furnish to Franchisor, upon
request, a list of all general and limited partners in Master Licensor.
7. PROPRIETARY MARKS
7.01 Franchisor represents with respect to the Proprietary Marks that:
7.01.1 Franchisor is the owner of all right, title, and interest in
and to the Proprietary Marks.
7.01.2 Franchisor has taken and will take all steps reasonably
necessary to preserve and protect the ownership and validity in and to the
Proprietary Marks.
7.01.3 Franchisor will use and permit Master Licensor and
Franchisor's franchisees to use the Proprietary Marks only in accordance with
the System and the standards and specifications attendant to the System which
underlie the goodwill associated with and symbolized by the Proprietary Marks.
7.02 With respect to Master Licensor's licensed use of the Proprietary Marks
pursuant to this Agreement, Master Licensor agrees that:
7.02.1 Master Licensor shall use only the Proprietary Marks
designated by Franchisor.
7.02.2 Master Licensor shall use the Proprietary Marks without prefix
or suffix and only in the manner authorized and permitted by Franchisor.
Franchisor recognizes that Canadian law may require translation of the
Proprietary Marks into French in connection with certain uses of the Proprietary
Marks. Franchisor expressly permits Master Licensor to make and use such
translations, provided, however, that Master Licensor first provides to
Franchisor the usage in French and a translation of such usage into idiomatic
English.
7.02.3 Master Licensor shall use the Proprietary Marks only for the
operation of the business licensed under this Agreement and shall sublicense the
use of the Proprietary Marks only pursuant to Sublicense Agreements as provided
in this Agreement and only in relation to services in accordance with the
standards set by Franchisor from time to time.
7.02.4 During the term of this Agreement and any renewal of this
Agreement, Master Licensor shall identify itself as a Registered User of the
Proprietary Marks and as the owner of the business operated under this Agreement
in conjunction with any use of the Proprietary Marks, including, but not limited
to, on advertisements and promotional pieces, as well as at such conspicuous
locations at the offices used for the operation of Master Licensor's business as
Franchisor shall designate in writing. The identification shall be in the form
which specifies Master Licensor's name, followed by the term "Master Licensor of
MotoPhotoSM," or such other identification Franchisor shall approve.
7.02.5 Master Licensor's right to use the Proprietary Marks is
limited to such uses as are authorized under this Agreement, and any
unauthorized use thereof shall constitute an infringement of Franchisor's
rights.
7.02.6 Master Licensor shall not use the Proprietary Marks to incur
any obligation or indebtedness on behalf of Franchisor.
7.02.7 Master Licensor shall not use the Proprietary Marks as part of
its corporate or other legal name.
7.02.8 Master Licensor shall comply with Franchisor's instructions in
filing and maintaining trade name or fictitious name registrations, if any, and
shall execute any documents deemed necessary by Franchisor or its counsel to
obtain protection for the Proprietary Marks or to maintain their continued
validity and enforceability.
7.02.9 If litigation involving the Proprietary Marks is instituted or
threatened against Master Licensor or, to Master Licensor's knowledge, any of
its Sublicensees, Master Licensor shall promptly notify Franchisor and shall
cooperate fully in defending or settling such litigation. If such litigation
arises from Master Licensor's use of the Proprietary Marks in strict accordance
with Franchisor's instructions, Franchisor shall indemnify Master Licensor from
all damages, costs and expenses arising from such litigation.
7.03 Master Licensor expressly understands and acknowledges that:
7.03.1 As between the parties to this Agreement, Franchisor has the
exclusive right and interest in and to the Proprietary Marks and the goodwill
associated with and symbolized by them.
7.03.2 The Proprietary Marks serve to identify the System and those
who are franchised or sublicensed under the System.
7.03.3 Master Licensor shall not directly or indirectly contest the
validity or Franchisor's ownership of the Proprietary Marks.
7.03.4 Master Licensor's use of the Proprietary Marks pursuant to
this Agreement does not give Master Licensor any ownership interest or other
interest in or to the Proprietary Marks, except the license granted in this
Agreement.
7.03.5 Any and all goodwill arising from Master Licensor's use of the
Proprietary Marks in its licensed operation under this Agreement shall inure
solely and exclusively to Franchisor's benefit, and upon expiration or
termination of this Agreement and the license in this Agreement granted, no
monetary amount shall be assigned as attributable to any goodwill associated
with Master Licensor's use of the Proprietary Marks.
7.03.6 The right and license of the Proprietary Marks granted under
this Agreement to Master Licensor is nonexclusive except as provided in Section
1 of this Agreement, and Franchisor thus has and retains the rights among
others:
7.03.6.1 Except in the Designated Area unless otherwise
permitted by this Agreement, to grant other licenses for the Proprietary Marks,
in addition to those licenses already granted to existing area developers,
master licensors, and franchisees;
7.03.6.2 To use the Proprietary Marks in connection with selling
products and services;
7.03.6.3 To develop and establish other systems and programs for
the same or similar Proprietary Marks, or any other Proprietary Marks, and grant
licenses or franchises to such Proprietary Marks without providing any rights in
such licenses or franchises to Master Licensor.
7.03.6.4 Franchisor agrees that, should it develop and establish
franchise systems for different products and services under the Proprietary
Marks or for similar products and services under other trademarks, Franchisor
will give Master Licensor the opportunity to act as master licensor for such
system in the Designated Area if Master Licensor is then in compliance with, and
throughout the term of this Agreement has been in substantial compliance with,
the material terms of this Agreement.
7.04 Franchisor shall have the right to substitute other Proprietary Marks
for use by its franchisees and/or by Master Licensor and its Sublicensees if
Franchisor, in its sole discretion, believes it to be in the best interest of
the System.
8. CONFIDENTIAL MANUALS
8.01 In order to protect the reputation and goodwill of Franchisor and to
maintain uniform standards of operation under the Proprietary Marks, Master
Licensor shall conduct its business in accordance with the Manuals, one (1) copy
of each of which Master Licensor acknowledges having received on loan from
Franchisor for the term of this Agreement.
8.02 Master Licensor shall at all times treat the Manuals, any other
manuals created for or approved for use in the operation of Master Licensor's
business or the sublicensed businesses, and the information contained in any
such manuals as confidential and shall use all reasonable efforts to maintain
such information as secret and confidential. Master Licensor shall not at any
time copy, duplicate, record, or otherwise reproduce the foregoing materials, in
whole or in part, nor otherwise make the same available to any unauthorized
person. Notwithstanding the foregoing, Master Licensor is authorized to
reproduce at Master Licensor's costs the Manuals and any manuals created or
approved for use in the operation of the sublicensed businesses and distribute
one copy, on loan, to each Sublicensee upon execution of a Sublicense Agreement.
8.03 The Manuals, any other manuals created for or approved for use in the
operation of Master Licensor's business and/or the sublicensed businesses, and
all copies of such manuals, shall at all times remain the sole property of
Franchisor.
8.04 Franchisor may from time to time revise the contents of the Manuals
and Master Licensor expressly agrees to comply with and furnish to each
Sublicensee each new or changed standard. The cost of printing any single
change to any outstanding version of any manual shall not exceed Five Hundred
Canadian Dollars ($500.00), provided, however, that Franchisor may from time to
time, but not more often than every three (3) years, issue a new version of the
Manuals which incorporates all previous changes and that there shall be no limit
on the cost of reproducing such new version.
8.05 Master Licensor shall at all times maintain the Manuals at its
business premises and insure that the Manuals are kept current and up-to-date.
In the event of any dispute as to the contents of the Manuals, the terms of the
master copy of the Manuals maintained by Franchisor at Franchisor's home office
shall be controlling.
9. CONFIDENTIAL INFORMATION
9.01 Master Licensor shall not, during the term of this Agreement or
thereafter, communicate, divulge, or use for the benefit of any other person,
persons, partnership, association, or corporation (other than, pursuant to this
Agreement and to any Sublicense Agreement, to Sublicensees) any confidential
information, knowledge, or know-how concerning the methods of operation of the
System which may be communicated to Master Licensor, or of which Master Licensor
may be apprised, by virtue of Master Licensor's operation under the terms of
this Agreement. Master Licensor shall divulge such confidential information only
to its Sublicensees and to such of its employees as must have access to it in
order to operate the business licensed under this
Agreement and who have signed a confidentiality agreement in a form approved by
Franchisor. Disclosure of such confidential information to Sublicensees shall
be made solely pursuant to and strictly in accordance with the provisions of the
Sublicense Agreements. Any and all information, knowledge, know-how, and
techniques which Franchisor designates as confidential shall be deemed
confidential for purposes of this Agreement, except information which Master
Licensor can demonstrate came to its attention prior to its disclosure by
Franchisor or which, at or after the time of disclosure by Franchisor to Master
Licensor, had become or becomes publicly known by way of publication or
communication by others.
10. ACCOUNTING AND RECORDS
10.01 Master Licensor shall maintain during the term of this Agreement and
shall preserve for at least five (5) years from the dates of their preparation,
full, complete, and accurate books, records, and accounts in accordance with
generally accepted accounting principles and in the form and manner prescribed
by Franchisor from time to time in the Manuals or otherwise in writing.
10.02 Master Licensor shall submit to Franchisor, with each royalty
payment to Franchisor during the term of this Agreement, a report in the form
prescribed by Franchisor, accurately reflecting all gross sales by Sublicensees
during the period since the last report and such other data or information as
Franchisor may require.
10.03 Master Licensor shall, at its expense, prepare a balance sheet and a
profit and loss statement, in accordance with generally accepted accounting
principles, each quarter of Master Licensor's fiscal year. Such statement shall
be provided to Franchisor, in a form prescribed by Franchisor, within thirty
(30) days from the end of each quarter and shall be signed by Master Licensor
attesting that it is true and correct.
10.04 Master Licensor shall, at its expense, provide to Franchisor a
profit and loss statement, a balance sheet, and statement of changes in
financial position prepared in accordance with generally accepted accounting
principles, within sixty (60) days after the end of each fiscal year of the
licensed business during the term hereof, showing the results of operations of
the licensed business during such fiscal year. Such statement shall be signed
by Master Licensor attesting that it is true and correct.
10.05 Master Licensor shall provide to Franchisor on a monthly basis,
together with its royalty report, a report listing the following information for
the preceding month: new Sublicense Agreements which have been signed,
including the name of the Sublicensee and the date of the Sublicense Agreement;
stores opened, including the Store address and the date the Store opened; Store
relocations; and all transferred, renewed and terminated Sublicense Agreements,
showing the date of the action taken, the new Sublicensee, if any, and, in the
case of termination of the Sublicense Agreement, the reason for termination.
10.06 Master Licensor shall also submit to Franchisor, for review or
auditing, such other forms, reports, records, information, and data as
Franchisor may reasonably designate, in the form and at the times and places
reasonably required by Franchisor, upon request and as specified from time to
time in the Manuals or otherwise in writing.
10.07 Franchisor or its designated agents shall have the right at all
reasonable times to examine and copy, at Franchisor's expense, the books,
records, and tax returns of Master Licensor. Franchisor shall also have the
right, at any time, to have an independent audit made of the books of Master
Licensor. If an inspection should reveal that any payments have been
understated in any report to Franchisor, then Master Licensor shall immediately
upon demand pay Franchisor the amount understated, in addition to interest from
the date such amount was due until paid, at two percent (2%) per month
calculated on a daily basis, or the maximum rate permitted by law, whichever is
less. If an inspection discloses an understatement in any report of two percent
(2%) or more, Master Licensor shall, in addition, reimburse Franchisor for any
and all costs and expenses connected with the inspection (including, without
limitation, reasonable accounting and attorneys' fees). The foregoing remedies
shall be in addition to any other remedies Franchisor may have.
11. INSURANCE
11.01 Before commencing any operations under this Agreement, Master
Licensor shall procure, at Master Licensor's expense, and maintain in full force
and effect during the term of this Agreement an insurance policy or policies
protecting Master Licensor and Franchisor, and their officers, directors,
partners, and employees, against any loss, liability, personal injury, death,
property damage, or expense whatsoever arising or occurring upon or in
connection with Master Licensor's business, as well as such other insurance
applicable to such other special risks, if any, as Franchisor may reasonably
require for its own and Master Licensor's protection.
11.02 Such policy or policies shall be written by an insurance company
satisfactory to Franchisor in accordance with standards and specifications set
forth in writing by Franchisor and shall include, at a minimum, the following:
11.02.1 Comprehensive general liability insurance, including errors
and omissions, personal liability and property damage coverage with limits
equivalent to not less than One Million United State Dollars (US $1,000,000)
combined single limit, and automobile liability coverage for both owned and non-
owned vehicles in an amount equivalent to Five Hundred Thousand United States
Dollars (US $500,000) combined single limit, and naming Franchisor as an
additional insured in each such policy or policies.
11.02.2 Worker's compensation and employer's liability insurance, as
well as such other insurance as may be required by statute or rule of the
province or nation in which the business licensed under this Agreement is
located and operated.
11.02.3 Fire, vandalism, and extended coverage insurance with primary
and excess limited of not less than the full replacement value of the business
premises operated by Master Licensor and any equipment, furniture, and fixtures
within such premises.
11.03 Master Licensor's obligation to obtain and maintain the foregoing
policy or policies in the amounts specified shall not be limited in any way by
reason of any insurance which may be maintained by Franchisor, nor shall Master
Licensor's performance of that obligation relieve it of liability under the
indemnity provisions set forth in Section 17.03 of this Agreement.
11.04 Upon obtaining the insurance required for this Agreement, and on
each policy date thereafter, Master Licensor shall promptly submit evidence of
satisfactory insurance and proof of payment for such insurance to Franchisor,
together with, upon request, copies of all policies and policy amendments. The
evidence of insurance shall include a statement by the insurer that the policy
or policies will not be cancelled or materially altered without at least thirty
(30) days' prior written notice to Franchisor.
11.05 Should Master Licensor for any reason, fail to procure or maintain
the insurance required by this Agreement, as revised from time to time by the
Manuals or otherwise in writing, Franchisor shall have the right and authority
(without, however, any obligation to do so) immediately to procure such
insurance and to charge the same to Master Licensor. Such charges, together
with a reasonable fee for Franchisor's expenses in so acting, shall be payable
by Master Licensor immediately upon notice.
12. TRANSFER OF INTEREST
12.01 Transfer by Franchisor:
Franchisor shall have the right to transfer or assign all or any part of
its rights or obligations in this Agreement to any person of legal entity.
12.02 Transfer by Master Licensor:
12.02.1 Master Licensor understands and acknowledges that the rights
and duties set forth in this Agreement are personal to Master Licensor and that
Franchisor has entered into this Agreement in reliance on the business skill,
financial capacity, and personal character of Master Licensor's principals.
12.02.2 As used in this Section 12.02, "transfer" shall be deemed to
include the voluntary or involuntary sale, assignment, conveyance, pledge,
mortgage or other encumbrance of (1) all or a significant portion of the assets
of the business licensed under this Agreement or (2) any interest in Master
Licensor or in this Agreement, by Master Licensor or any successor to any part
of Master Licensor's interest in this Agreement (including any rights or
obligations of Master Licensor under this Agreement) or in any individual,
partnership, corporation, or other legal entity which directly or indirectly
owns any interest in this Agreement or controls Master Licensor.
12.02.3 All transfers shall require Franchisor's prior written
consent except the transfer of less than a two percent (2%) interest in a
publicly-held corporation if the effect of the transfer would not be a transfer
of control or of a controlling interest in Master Licensor or in the licensed
business or of all or a significant portion of the assets of the licensed
business. A publicly-held corporation is a corporation which has total assets
exceeding $1,000,000 and a class of equity securities held of record by five
hundred or more persons. A "transfer of control" shall be deemed to have
occurred when the ownership of a majority interest in Master Licensor, in the
licensed business, or in any entity with a majority ownership interest in Master
Licensor shall reside in a different party than before the transfer or when a
different party, which may own less than a majority interest in Master Licensor
and/or in the licensed business and/or its assets, exercises control over the
licensed business and/or over Master Licensor including, but not limited to, by
actively managing the licensed business. A "transfer of control" shall not be
deemed to have occurred if Master Licensor makes a public offering of its equity
securities, provided Xxx Xxxxx and/or Xxxx Xxxxx retain at least thirty-one
percent (31%) of the voting power of such securities as well as active
management of the licensed business. Any purported assignment or transfer, by
operation of law or otherwise, not having the written consent of Franchisor
required by this Section 12.02.3 shall be null and void and shall constitute a
material breach of this Agreement, for which Franchisor may then terminate
without opportunity to cure, pursuant to Section 13.02 of this Agreement. Such
termination shall be in addition to any other remedies Franchisor may have under
this Agreement, at law or in equity, including, without limitation, the
obtaining of injunctive relief.
12.02.4 Franchisor shall not unreasonably withhold its consent to a
transfer; provided, however, that it shall be reasonable for Franchisor to
withhold consent to a transfer of all or substantially all of the assets of
Master Licensor, any interest in Master Licensor, any interest in the license
granted by this Agreement, and/or any or all rights under this Agreement if:
12.02.4.1 Such transfer is not made in conjunction with a
simultaneous transfer of all comparable rights held by the transferor in all
Sublicense Agreements executed pursuant to this Agreement; or
12.02.4.2 Master Licensor would retain less than fifty-one
percent (51%) of the voting power in any entity to which such interest would be
transferred if such entity is not a public corporation; or
12.02.4.3 Master Licensor would retain less than fifty-one
percent (51%) of the voting power in any entity to which such interest would be
transferred if such entity is a public corporation, unless Master Licensor
retains at least thirty-one percent (31%) of the voting power in such entity as
well as active management of the licensed business.
If a transfer, alone or together with other previous, simultaneous, or
proposed transfers, would have the effect of transferring all or a significant
portion of the assets of Master Licensor, of the business licensed under this
Agreement, or of a controlling interest in Master Licensor or in this Agreement,
Franchisor may, in its sole discretion, require as a condition of its approval
that:
12.02.4.1 All of Master Licensor's accrued monetary obligations
to Franchisor and all other outstanding obligations related to Master Licensor's
business shall have been satisfied.
12.02.4.2 Master Licensor shall not be not in material default
of any material provision of this Agreement, any amendment hereof or successor
to this Agreement, or any other agreement between Master Licensor and
Franchisor, or its subsidiaries and affiliates.
12.02.4.3 The transferor shall have executed a general release,
in a form satisfactory to Franchisor, of any and all claims against Franchisor
and its officers, directors, shareholders, and employees, in their corporate and
individual capacities, including, without limitation, claims arising under
United States, Canadian, and/or provincial laws, rules, and ordinances.
12.02.4.4 The transferee shall enter into a written assignment,
in a form satisfactory to Franchisor, acting reasonably, assuming and agreeing
to discharge all of Master Licensor's obligations under this Agreement.
Franchisor may require that the transferee and/or its principals and/or
shareholders guarantee the performance of all such obligations in writing in a
form satisfactory to Franchisor.
12.02.4.5 The transferee shall demonstrate to Franchisor's
satisfaction, acting reasonably, that it meets Franchisor's education,
managerial, and business standards; possesses a good moral character, business
reputation, and credit rating; has the aptitude and ability to conduct the
business contemplated in this Agreement (as may be evidenced by prior related
business experience or otherwise); and has adequate financial resources and
capital to meet its obligations under this Agreement.
12.02.4.6 At Franchisor's option, the transferee shall execute
(and/or, upon Franchisor's request, shall cause all interested parties to
execute) a new master license agreement and such other ancillary agreements as
Franchisor may require for the licensed business, which agreements shall
supersede this Agreement in all respects and the terms of which agreements may
differ from the terms of this Agreement; provided, however, that the percentage
of royalty, transfer, renewal and sublicense fees payable to Franchisor under
this Agreement and the term of the agreement shall remain the same.
12.02.4.7 Master Licensor shall remain liable for all
obligations of the business before the effective date of transfer and shall
execute any and all instruments reasonably requested by Franchisor to evidence
such liability.
12.02.4.8 At the transferee's expense, the transferee or the
transferee's manager shall complete any training programs then in effect for
franchisees or sublicensees, upon such terms and conditions as Franchisor may
reasonably require.
12.02.4.9 Master Licensor shall pay a transfer fee as follows:
(a) In the case of a transfer to a corporation formed for the convenience
of ownership, there shall be no transfer fee.
(b) In the case of a transfer of a limited partner's interest in Master
Licensor or a transfer of this entire Agreement or any rights under this
Agreement to a System franchisee/sublicensee, the transfer fee shall be Five
Hundred Canadian Dollars ($500.00).
(c) In the case of a transfer of all or substantially all of the assets of
the licensed business or of this entire Agreement or any rights under this
Agreement to an individual or entity not then a System franchisee/sublicensee,
the transfer fee shall be Fifty Thousand Canadian Dollars ($50,000.00).
12.02.5 Master Licensor shall grant no security interest in the
licensed business or in any of its assets unless the secured party agrees that
in the event of any default by Master Licensor under any documents related to
the security interest, Franchisor shall have the right and option to purchase
the rights of the secured party upon payment of all sums then due to such
secured party.
12.02.6 Master Licensor acknowledges and agrees that each condition
which must be met by the transferee is necessary to assure such transferee's
full performance of the obligations under this Agreement.
12.02.7 If the transferee is a publicly-held corporation, then the
controlling shareholder and/or controlling manager of such corporation must be
approved by Franchisor as provided in Section 12 of this Agreement.
12.03 Right of First Refusal:
12.03.1 Any party holding an interest in Master Licensor or in this
Agreement and who desires to accept any bona fide offer to purchase such
interest shall notify Franchisor in writing of each such offer and provide
Franchisor with the information set forth in Section 12.03.3. Franchisor shall
have the right and option, exercisable within thirty (30) days after receipt of
such information, to send written notice to the seller that Franchisor intends
to purchase the seller's interest on the same terms and conditions contained in
the bona fide offer. If Franchisor elects to purchase the seller's interest,
closing on such purchase must occur within thirty (30) days from the date of
notice to the seller of the election to purchase by Franchisor. Any material
change in the terms of any offer before closing shall constitute a new offer
subject to the same rights of first refusal by Franchisor as in the case of an
initial offer.
12.03.2 If the consideration, terms, and/or conditions contained in
the bona fide offer are such that Franchisor may not reasonably be required to
furnish the same consideration, terms, and/or conditions, then Franchisor may
purchase the interest in Master Licensor or in this Agreement proposed to be
sold for the reasonable equivalent in cash. If the parties cannot agree within
a reasonable time on the reasonable equivalent in cash of the consideration,
terms and/or conditions contained in the bona fide offer, an independent
appraiser shall be designated by Franchisor and that appraiser's determination
shall be binding.
12.03.3 No offer shall be deemed to be bona fide unless there is a
writing, signed by the intended purchaser, setting forth the basic terms and
conditions of the offer. The seller shall provide Franchisor with the following
information: a copy of the offer signed by the intended purchaser; current
financial statements of the licensed business; business and personal financial
statements of the intended purchaser; a list and terms of all liabilities
relating to the licensed business, including, but not limited to, outstanding
debt, equipment leases and premises leases. If Franchisor declines or fails to
exercise the option afforded by this Section 12.03, the seller may sell its
interest, provided that such sale and the transferee meet all of the conditions
for transfer set forth in Section 12.02 of this Agreement.
12.04 Transfer Upon Death or Mental Incompetency:
Upon the death or mental incompetency of any person with a controlling
interest in this Agreement or in Master Licensor, the executor, administrator,
or personal representative of such person shall transfer his interest to a third
party approved by Franchisor (which approval shall not be unreasonably withheld)
within six (6) months after such death or mental incompetency. Such transfers,
including, without limitation, transfers by devise or inheritance, shall be
subject to the same conditions as any inter vivos transfer, as set forth in
Section 12.02 of this Agreement. However, in the case of transfer by devise or
inheritance, if the heirs or beneficiaries of any such person are unable to meet
the conditions in this Section 12, the personal representative of the deceased
person shall have a reasonable time to dispose of the deceased's interest in
Master Licensor or in this Agreement, which disposition shall be subject to all
the terms and conditions for transfers contained in this Agreement. If the
interest is not disposed of within a reasonable time, Franchisor may terminate
this Agreement. Any transfer from the estate of Xxx Xxxxx to Xxxx Xxxxx, or the
estate of Xxxx Xxxxx to Xxx Xxxxx, shall be deemed approved.
12.05 Offerings by Master Licensor
Securities or partnership interests in Master Licensor may be offered to
the public by Master Licensor only with the prior written consent of Franchisor
(regardless of whether Franchisor's consent is required under Section 12.02 of
this Agreement), which consent shall not be unreasonably withheld. All
materials required for such offering by United States, Canadian, or provincial
law shall be submitted to Franchisor for review prior to their being filed with
any government agency; and any materials to be used in any exempt offering shall
be submitted to Franchisor for review prior to their use. No Master Licensor
offering shall imply (by use of the Proprietary Marks or otherwise) that
Franchisor is participating in an underwriting, issuance, or offering of Master
Licensor or Franchisor securities; and Franchisor's review of any offering shall
be limited solely to the subject of the relationship between Master Licensor and
Franchisor. Master Licensor and the other participants in the offering must
fully indemnify Franchisor in connection with the offering. For each proposed
offering, Master Licensor shall pay Franchisor such amount as is necessary to
reimburse Franchisor for its reasonable costs and expenses associated with
reviewing the proposed offering, including, without limitation, legal and
accounting fees. Master Licensor shall give Franchisor written notice at least
fifteen (15) days prior to the date of commencement of any offering or other
transaction covered by this Section 12.05.
12.06 Non-Waiver of Claims:
Franchisor's consent to a transfer of any interest in this Agreement, of
the assets of the licensed business, or of any interest in Master Licensor shall
not constitute a waiver of any claims it may have against the transferring
party, nor shall it be deemed a waiver of Franchisor's right to demand exact
compliance with any of the terms of this Agreement by the transferee.
12.07 Irreparable Injury:
Master Licensor acknowledges that Master Licensor's violation of the terms
of this Section 12 would result in irreparable injury to Franchisor for which no
adequate remedy at law may be available, and Master Licensor accordingly
consents to the issuance of an injunction prohibiting any conduct by Master
Licensor in violation of the terms of this Section 12.
13. DEFAULT AND TERMINATION
13.01 Master Licensor shall be deemed to be in default under this
Agreement, and all rights granted in this Agreement shall automatically
terminate without notice to Master Licensor upon the occurrence of any of the
following events: if Master Licensor shall become insolvent (within the meaning
of the Bankruptcy and Insolvency Act of Canada) or make a general assignment for
the benefit of creditors; if an assignment in bankruptcy is filed by Master
Licensor or a petition in bankruptcy is filed against, and not opposed by Master
Licensor; if Master Licensor is adjudicated a bankrupt, or insolvent; if a xxxx
in equity or other proceeding for the appointment of a receiver of Master
Licensor or other custodian (permanent or temporary) of Master Licensor's assets
or property, or any part thereof, is appointed by any court of competent
jurisdiction; if proceedings for a composition with creditors under any law
should be instituted by or against Master Licensor; if a final judgment remains
unsatisfied or of record for thirty (30) days or longer (unless supersedeas bond
is filed) or if execution is levied against Master Licensor's business or
property; if suit to foreclose any lien or mortgage against the premises or
equipment is instituted against Master Licensor and not dismissed within thirty
(30) days; if the real or personal property of Master Licensor's business shall
be sold after levy thereupon by any sheriff, marshal, or constable; or if the
equivalent of any of the foregoing under Canadian or provincial law occurs.
13.02 Master Licensor shall be deemed to be in default and Franchisor may,
at its option, terminate this Agreement and all rights granted under this
Agreement without affording Master Licensor any opportunity to cure the default,
effective immediately upon notice to Master Licensor, upon the occurrence of any
of the following events:
13.02.1 If Master Licensor at any time ceases to operate or otherwise
abandons the business contemplated by this Agreement.
13.02.2 If Master Licensor, or any partner or principal shareholder
in Master Licensor who is active in the licensed business, is convicted of a
felony, a crime involving moral turpitude, or any other crime or offense that is
reasonably likely, in the sole opinion of Franchisor, to adversely affect the
System, the Proprietary Marks, the goodwill associated with the System and the
Proprietary Marks, or Franchisor's interest in the System and the Proprietary
Marks.
13.02.3 If Master Licensor or any partner or shareholder in Master
Licensor purports to make a transfer without Franchisor's prior written consent,
contrary to the terms of Section 12 of this Agreement.
13.02.4 If Master Licensor fails to comply with the in-term covenants
in Section 15.02 of this Agreement or fails to obtain, or, as applicable, use
best efforts to obtain, execution of such covenants as are required by Section
15.09 of this Agreement.
13.02.5 If Master Licensor discloses or divulges, contrary to
Sections 8 or 9 of this Agreement, the contents of the Manuals or other trade
secret or confidential information provided to Master Licensor by Franchisor, or
if Master Licensor fails to obtain confidentiality agreements with respect to
such information from Master Licensor's senior employees.
13.02.6 If an approved transfer is not effected within a reasonable
time following the death or mental incompetency of person holding an interest in
Master Licensor, as required by Section 12.04 of this Agreement.
13.02.7 If Master Licensor knowingly maintains false books or
records, or submits any false reports to Franchisor.
13.02.8 If Master Licensor, after curing a default under Section
13.03, engages in the same default whether or not such default is cured after
notice; or
13.02.9 If Master Licensor is repeatedly in default under Section
13.03 of this Agreement for failure to comply substantially with any of the
requirements imposed by this Agreement, whether or not cured after notice.
13.03 Except as provided in Sections 13.01, 13.02, and 13.05 of this
Agreement, Master Franchisor shall have thirty (30) days after its receipt from
Franchisor of a written Notice of Default within which to remedy any default
under this Agreement and provide evidence of such remedy to Franchisor. Master
Franchisor shall be in default under this Agreement for any failure to comply
substantially with any of the material requirements imposed by this Agreement,
as it may from time to time reasonably be supplemented by the Manuals, or to
carry out in good faith the terms of this Agreement or of any Sublicense
Agreement executed pursuant to this Agreement. Such defaults shall include, for
example, without limitation, the occurrence of any of the following events:
13.03.1 If Master Licensor fails, refuses, or neglects promptly to
pay any moneys owing Franchisor or its subsidiaries or affiliates when due, or
to submit the financial information required by Franchisor under this Agreement.
13.03.2 If Master Licensor fails to maintain any of the material
standards or procedures reasonably prescribed by Franchisor in this Agreement,
the Manuals, or otherwise in writing.
13.03.3 Except as otherwise provided in Section 13.02 of this
Agreement, if Master Licensor fails, refuses, or neglects to obtain Franchisor's
prior written approval or consent as required by this Agreement.
13.03.4 If Master Licensor misuses or makes any unauthorized use of
the Proprietary Marks or otherwise materially impairs Franchisor's rights in the
Proprietary Marks or the goodwill associated therewith.
13.03.5 If Master Licensor engages in any business or markets any
service or product under a name or xxxx which, in Franchisor's sole opinion, is
confusingly similar to the Proprietary Marks.
13.04 If any default under Section 13.03 is not cured within thirty (30)
days, Franchisor, in its discretion, may do any one of more of the following:
13.04.1 Terminate this Agreement and all rights granted under this
Agreement, effective immediately upon the mailing of written notice by
Franchisor to Master Licensor.
13.04.2 Perform any or all of Master Licensor's obligations under the
Sublicense Agreements executed pursuant to this Agreement and charge Master
Licensor for its costs in doing so.
13.05 If Master Licensor fails to spend at least $40,000 each year,
exclusive of salaries for salespersons and production costs, on advertising to
solicit sublicensees. The annual dollar amount to be spent by Master Licensor
shall be adjusted upward each year by three percent (3%) to account for
inflation. Master Licensor shall, upon request from Franchisor, provide
Franchisor with confirmation of such expenditures. Failure by Master Licensor
to expend the funds required shall be a default under this Agreement and, upon
written notice to Master Licensor, Franchisor may terminate the grant of
exclusivity set forth in Section 1.03 of this Agreement. Master Licensor's
obligations under this Section 13.05 shall cease when Franchisor deems that the
System has been fully developed in the Designated Area.
13.06 No default under this Agreement shall constitute a default under any
Sublicense Agreement executed as Sublicensee by an entity in which Master
Licensor has an interest.
13.07 No right or remedy in this Agreement conferred upon or reserved to
Franchisor is exclusive of any other right or remedy provided or permitted by
law or in equity.
14. OBLIGATIONS UPON TERMINATION OR EXPIRATION
14.01 Upon termination or expiration, this Agreement and all rights
granted under this Agreement to Master Licensor forthwith terminate, and:
14.01.1 Master Licensor shall immediately cease to operate under this
Agreement and shall not thereafter, directly or indirectly, advertise or
represent to the public or otherwise hold itself out to the public as a present
or former Master Licensor of Franchisor.
14.01.2 At Franchisor's request, Master Licensor shall cooperate with
Franchisor in advising the Sublicensees that the Master License Agreement has
been terminated and that Franchisor will assume the obligations of Master
Licensor under the Sublicense Agreements.
14.01.3 Master Licensor shall immediately turn over to Franchisor all
materials, including without limitation, all software licensed by Franchisor or
by another party on behalf of Franchisor and containing Franchisor-specific
coding and/or instructions, all manuals (including the Manuals), and all
records, files, instructions, correspondence, brochures, agreements, disclosure
statements, and any and all other materials and all copies of all such materials
in Master Licensor's possession related to Master Licensor's operation under
this Agreement and/or the Sublicense Agreements (all of which materials are
acknowledged to be Franchisor's property). Without Franchisor's written
consent, Master Licensor shall retain no copy or record of any of the foregoing,
except Master Licensor's copy of this Agreement and of any correspondence
between the parties and any other documents which Master Licensor reasonably
needs for compliance with any provision of law.
14.01.4 Master Licensor shall immediately and permanently cease to
use, by advertising or in any other manner whatsoever, any confidential methods,
procedures and techniques associated with the System; the Proprietary Xxxx
"MOTOPHOTOSM"; and all other Proprietary Marks and distinctive forms, slogans,
signs, symbols, or devices associated with the System. In particular, Master
Licensor shall cease to use, without limitation, all signs, equipment,
advertising material, stationery, forms, and any other articles which display
the Proprietary Marks associated with the System. Master Licensor acknowledges
that Master Licensor's violation of the terms of this Section 14.01.4 would
result in irreparable injury to Franchisor for which no adequate remedy at law
may be available, and Master Licensor accordingly consents to the issuance of an
injunction prohibiting any conduct by Master Licensor in violation of the terms
of this Section 14.01.4.
14.01.5 Master Licensor shall take such action as may be necessary to
cancel any Registered User, assumed name, or equivalent registration which
contains the "MOTOPHOTOSM" or any other service xxxx or trademark of Franchisor,
and Master Licensor shall furnish Franchisor with evidence satisfactory to
Franchisor of compliance with this obligation within ten (10) days after
termination or expiration of this Agreement.
14.01.6 At Franchisor's option, Master Licensor shall assign to
Franchisor any interest which Master Licensor has in any lease or sublease for
Master Licensor's business premises.
14.01.7 Master Licensor agrees, in the event it continues to operate
or subsequently begins to operate any other business, not to use any
reproduction, counterfeit, copy, or colorable imitation of the Proprietary Marks
either in connection with such other business or the promotion thereof, which is
likely to cause confusion, mistake, or deception, or which is likely to dilute
Franchisor's rights in and to the Proprietary Marks and further agrees not to
utilize any designation of origin or description or representation which falsely
suggests or represents an association or connection with Franchisor so as to
constitute unfair competition. In the event Franchisor does not elect to
exercise its option to acquire the lease or sublease for the premises of the
licensed business pursuant to Section 14.01.6 of this Agreement, Licensor shall
make immediately upon termination or expiration of this Agreement such
modifications or alterations to the premises operated under this Agreement
(including, without limitation, the changing of the telephone number) as may be
necessary to prevent the operation of any business thereon by itself or others
in derogation of this Section 14 and shall make such specific additional changes
the premises as Franchisor may reasonably request for that purpose. In the
event Master Licensor fails or refuses to comply with the requirements of this
Section 14, Franchisor shall have the right to enter upon the Master Licensor's
business premises, without being guilty of trespass or any other tort, for the
purpose of making or causing to be made such changes as may be required at the
expense of Master Licensor, which expense Master Licensor agrees to pay on
demand.
14.01.8 Master Licensor shall promptly pay all sums owing to
Franchisor and its subsidiaries and affiliates. In the event of termination for
any default of Master Licensor, such sums shall include all damages, costs, and
expenses, including reasonable attorney's fees, incurred by Franchisor as a
result of the default, which obligation shall give rise to and remain, until
paid in full, a lien in favor of Franchisor against any and all of the personal
property, equipment, inventory, and fixtures owned by Master Licensor and on all
premises operated under this Agreement at the time of default.
14.01.9 Master Licensor shall pay Franchisor all damages, costs, and
expenses, including reasonable attorney's fees, incurred by Franchisor
subsequent to the termination or expiration of the license in this Agreement
granted in obtaining injunctive or other relief for the enforcement of any
provisions of this Section 14.
14.01.10 At Franchisor's option, within thirty (30) days after the
date of termination or expiration, Master Licensor and Franchisor shall arrange
for an inventory to be made, at Franchisor's cost, of all the personal property,
fixtures, equipment, inventory, and other tangible assets of Master Licensor's
business. Franchisor shall have the option to purchase from Master Licensor any
or all tangible assets at fair market value. In no case will any amounts be
assigned for goodwill associated with the Proprietary Marks or with the System;
however, in the case of the expiration of this Agreement, going concern value,
if any, will be included. If the parties cannot agree on fair market value
within a reasonable time, the parties shall select an appraiser whose
determination of fair market value shall be binding. If the parties cannot
agree on an appraiser within a reasonable time, an independent appraiser shall
be designated by each party, and the two (2) independent appraisers so
designated shall select a third independent appraiser. The determination of
fair market value of the majority of appraisers so chosen shall be binding.
Master Licensor and Franchisor shall bear the costs of the appraisal on an equal
basis. If Franchisor elects to exercise the option to purchase provided in this
Agreement, it shall have sixty (60) days after determination of fair market
value to notify Master Licensor of its exercise of the option to purchase and
shall have the right to set off all amounts due from Master Licensor under this
Agreement against any payment therefor.
14.01.11 Master Licensor shall comply with the covenants contained in
Section 15.03 of this Agreement.
15. COVENANTS
15.01 Master Licensor covenants that, during the term of this Agreement,
except as otherwise approved in writing by Franchisor, Master Licensor or Master
Licensor's manager shall devote full time, energy, and best efforts to the
management and operation of the business contemplated under this Agreement.
15.02 Master Licensor covenants that during the term of this Agreement
except as otherwise approved in writing by Franchisor, Master Licensor shall
not, either directly or indirectly, for itself, or through, on behalf of, or in
conjunction with any person, persons, partnership, corporation, or other entity:
15.02.1 Divert or attempt to divert any business or customer of any
franchised or sublicensed business operated under the System to any competitor,
by direct or indirect inducement or otherwise, or do or perform, directly or
indirectly, any other act injurious or prejudicial to the goodwill associated
with Franchisor's Proprietary Marks and the System.
15.02.2 Employ or seek to employ any person who is at that time
employed by Franchisor or any Sublicensee or by any other master licensor, area
developer or franchisee of Franchisor, or otherwise directly or indirectly
induce such person to leave his or her employment.
15.02.3 Own, maintain, engage in, or have any interest in any
business which sells or offers to sell rapid photo-processing services or any
other service approved by Franchisor for use by System franchisees and/or
Sublicensees.
15.03 Master Licensor covenants that, except as otherwise approved in
writing by Franchisor, Master Licensor shall not, for a continuous uninterrupted
two-year period commencing upon the expiration or termination of this Agreement
or, in the case of a dispute relating to such termination or expiration or to
the covenants contained in this Section 15.03 (which both Master Licensor and
Franchisor shall diligently prosecute), commencing upon the resolution of such
dispute, regardless of the cause for termination, either directly or indirectly,
for itself, or through, on behalf of, or in conjunction with any person,
persons, partnership, corporation, or other entity, or through the receipt of
proceeds from the transfer of all or a significant portion of the assets of the
business licensed under this Agreement, own, maintain, engage in, or have any
interest in any business which as its principal business sells or offers to sell
rapid photo-processing services, portrait services, or any other service
approved by Franchisor for use by System franchisees and/or Sublicensees and
which service constitutes, on average, twenty-five percent (25)% or more of the
gross sales of System franchisees, provided such business is located:
15.03.1 Within the Designated Area; or
15.03.2 Within a radius of five (5) miles from the location of any
System store which is in existence on the date of expiration or termination of
this Agreement.
15.04 Sections 15.02.3 and 15.03 shall not apply to ownership by Master
Licensor of any interest in a System store or of less than five percent (5%)
beneficial interest in the outstanding equity securities of any publicly-held
corporation.
15.05 The parties agree that each of the foregoing covenants shall be
construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Section 15 is held unreasonable or
unenforceable by a court having valid jurisdiction in an unappealed final
decision to which Franchisor is a party, Master Licensor expressly agrees to be
bound by any lesser covenant subsumed within the terms of such covenant that
imposes the maximum duty permitted by law, as if the resulting covenant were
separately stated in and made a part of this Section 15.
15.06 Master Franchisor understands and acknowledges that Franchisor shall
have the right, in its sole discretion, to reduce the scope of any covenant set
forth in Sections 15.02 and 15.03 of this Agreement or any portion of any such
covenant, without Master Licensor's consent, effective immediately upon receipt
by Master Licensor of written notice of such reduction. Master Licensor agrees
that it shall comply forthwith with any covenant as so modified, which shall be
fully enforceable notwithstanding the provisions of Section 20 of this
Agreement.
15.07 Master Licensor expressly agrees that the existence of any claims it
may have against Franchisor, whether or not arising from this Agreement, shall
not constitute a defense to the enforcement by Franchisor of the covenants in
this Section 15. Master Licensor agrees to pay all costs and expenses
(including reasonable attorney's fees) incurred by Franchisor in connection with
the enforcement of this Section 15.
15.08 Master Licensor acknowledges that Master Licensor's violation of the
terms of this Section 15 would result in irreparable injury to Franchisor for
which no adequate remedy at law may be available. Master Licensor accordingly
consents to the issuance of an injunction prohibiting any conduct by Master
Licensor in violation of the terms of this Section 15.
15.09 At the request of Franchisor, Master Licensor shall provide
Franchisor with covenants similar in substance to those set forth in this
Section 15 (including covenants applicable upon the termination of a person's
relationship with Master Licensor) from all officers, directors, and holders of
beneficial interest of five percent (5%) or more in Master Licensor. In
addition, upon Franchisor's request, Master Licensor shall use best efforts to
obtain such covenants from all managers of Master Licensor and any other persons
employed by Master Licensor who have received or will receive training from
Franchisor. If Franchisor has requested that any such person execute such a
covenant, Master Licensor shall not, without Franchisor's written approval,
grant access to any confidential aspect of the System or Master Licensor's
business prior to execution of the covenant. All covenants required by this
Section 15.09 shall be in forms satisfactory to Franchisor, including, without
limitation, specific identification of Franchisor as a third party beneficiary
of such covenants with the independent right to enforce them. Failure by Master
Licensor to obtain execution of a covenant required by this Section 15.09, or,
as applicable, to use best efforts to obtain execution of such a covenant, shall
constitute a material breach of this Agreement.
16. TAXES
16.01 Master Licensor shall promptly pay when due all taxes levied or
assessed, including, without limitation, unemployment and sales taxes, and all
accounts and other indebtedness of every kind incurred by Master Licensor in the
conduct of Master Licensor's business under this Agreement. Master Licensor
shall pay to Franchisor an amount equal to any sales tax, gross receipts tax, or
similar tax imposed on Franchisor with respect to any payments to Franchisor
required under this Agreement, unless the tax is credited against income tax
otherwise payable by Franchisor.
16.02 In the event of any bona fide dispute as to liability for taxes
assessed or other indebtedness, Master Licensor may contest the validity or the
amount of the tax or indebtedness in accordance with procedures of the taxing
authority or applicable law; however, in no event shall Master Licensor permit
a tax sale or seizure by levy of execution or similar writ or warrant, or
attachment by a creditor, to occur against the premises of the licensed business
or any improvements thereon.
16.03 Master Licensor shall comply with all applicable U.S., Canadian and
provincial laws, rules, and regulations, and shall timely obtain any and all
permits, certificates, or licenses necessary for the full and proper conduct of
Master Licensor's business under this Agreement, including, without limitation,
licenses to do business, fictitious name registration, sales tax permits, and
fire clearances.
16.04 Master Licensor shall notify Franchisor in writing within ten (10)
days of the commencement of any action, suit, or proceeding, and of the issuance
of any order, writ, injunction, award, or decree of any court, agency, or other
governmental instrumentality, which may adversely affect the operation or
financial condition of Master Licensor or Master Licensor's business.
17. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
17.01 The parties to this Agreement understand and agree that this
Agreement does not create a fiduciary relationship between them, that Master
Licensor shall be an independent contractor, and that nothing in this Agreement
is intended to constitute either party an agent, legal representative,
subsidiary, joint venturer, partner, employee, or servant of the other for any
purpose whatsoever.
17.02 During the term of this Agreement and any extensions of it, Master
Licensor shall hold itself out to the public as an independent contractor
operating the business pursuant to this Agreement. Master Licensor agrees to
take such affirmative action as may be necessary to do so, including, without
limitation, exhibiting a notice of that fact in a conspicuous place in Master
Licensor's business premises, the content of which notice Franchisor reserves
the right to specify.
17.03 The parties to this Agreement understand and agree that nothing in
this Agreement authorizes Master Licensor to make any contract, agreement,
warranty, or representation on Franchisor's behalf, or to incur any debt or
other obligation in Franchisor's name, and that Franchisor shall in no event
assume liability for, or be deemed liable under this Agreement as a result of,
any such action, or by reason of any act or omission of Master Licensor in its
conduct of the business contemplated under this Agreement or any claim or
judgment arising therefrom against Franchisor.
17.04 Master Licensor shall indemnify and hold Franchisor harmless from
and against any and all claims arising directly or indirectly from, as a result
of, or in connection with from, as a result of, or in connection with Master
Licensor's activities under this Agreement and/or its performance under the
Sublicense Agreements, including the costs, expenses, and attorneys' fees, of
defending against them. In addition, Master Licensor shall pay Franchisor all
damages, costs, and expenses, including attorneys' fees, incurred by Franchisor
in defending successfully against claims of any kind brought by Master Licensor
or in enforcing its claims against Master Licensor arising from Master
Licensor's breach or non-performance of any of its obligations under this
Agreement, and/or Master Licensor's failure to pay Franchisor amounts due under
this Agreement or for merchandise and/or services purchased from Franchisor, or
otherwise. Notwithstanding the foregoing, Master Licensor shall have no
obligation to indemnify Franchisor for claims arising from Master Licensor's
use, in strict accordance with Franchisor's instructions, of the Proprietary
Marks or advertising material prepared by Franchisor, as to which Franchisor
shall indemnify Master Licensor.
18. APPROVALS AND WAIVERS
18.01 Whenever this Agreement requires the prior approval or consent of
Franchisor, Master Licensor shall make a timely written request to Franchisor
for such approval or consent, such approval or consent shall be obtained in
writing, and Franchisor shall not unreasonably withhold or delay its approval or
consent.
18.02 Franchisor makes no warranties or guarantees upon which Master
Licensor may rely and assumes no liability or obligation to Master Licensor by
providing any waiver, approval, consent, or suggestion to Master Licensor in
connection with this Agreement, or by reason of any neglect, delay, or denial of
any request for such waiver, approval, consent, or suggestion.
18.03 No delay, waiver, omission, or forbearance on the part of Franchisor
to exercise any right, option, duty, or power arising out of any breach or
default by Master Licensor or by any other master licensor of any of the terms,
provisions, covenants, or conditions hereof, shall constitute a waiver by
Franchisor to enforce any such right, option, duty, or power as against Master
Licensor or as to subsequent breach or default by Master Licensor. Subsequent
acceptance by Franchisor of any payments due to it under this Agreement shall
not be deemed to be a waiver by Franchisor of any preceding breach by Master
Licensor of any terms, provisions, covenants, or conditions of this Agreement.
19. NOTICES
Any and all notices required or permitted under this Agreement shall be in
writing and shall be personally delivered, delivered by courier service, or
mailed by certified or registered mail, return receipt requested, to the
respective parties at the following addresses unless and until a different
address has been designated by written notice to the other party:
Notices to Franchisor: Xxxxxxx X. Xxxxx
Chairman and C.E.O.
Moto Photo, Inc.
0000 Xxxx Xxxxxx Xxxxx
Xxxxxx, Xxxx 00000
U.S.A.
Notices to Master Licensor: Xxx Xxxxx, P.Eng.
President and C.E.O.
Canadian Industrial Services, Ltd.
0000 Xxxxxxxx Xxxxxx Xxxx
Xxxx #000
Xxx Xxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Notices shall be deemed to have been received as follows: by certified or
registered mail - five days following the date of mailing; by personal
delivery - at the time of delivery; if sent by overnight delivery service - on
the day after the date of delivery to the overnight delivery service.
20. ENTIRE AGREEMENT
This Agreement, the documents referred to in it, and the Attachments to it,
if any, constitute the entire, full, and complete Agreement between Franchisor
and Master Licensor concerning the subject matter of this Agreement and
supersede all prior agreements, no other representations having induced Master
Licensor to execute this Agreement. Except for those permitted to be made
unilaterally by Franchisor under this Agreement, no amendment, change, or
variance from this Agreement shall be binding on either party unless mutually
agreed to by the parties and executed by their authorized officers or agents in
writing. Franchisor authorizes only its Corporate Counsel and any officer at
the level of Senior Vice President or above to execute any such amendment,
change, or variance.
21. SEVERABILITY AND CONSTRUCTION
21.01 Except as expressly provided to the contrary in this Agreement, each
portion, section, part, term, and/or provision of this Agreement shall be
considered severable. If, for any reason, any section, part, term, and/or
provision in this Agreement is determined to be invalid and contrary to, or in
conflict with, any existing or future law or regulation by a court or agency
having valid jurisdiction, such shall not impair the operation of, or have any
other effect upon, such other portions, sections, parts, terms, and/or
provisions of this Agreement as may remain otherwise intelligible, and the
latter shall continue to be given full force and effect and bind the parties to
this Agreement; and the invalid portions, sections, parts, terms, and/or
provisions shall be deemed not to be a part of this Agreement.
21.02 Anything to the contrary in this Agreement notwithstanding, nothing
in this Agreement is intended, nor shall be deemed, to confer upon any person or
legal entity other than Franchisor or Master Licensor and such of their
respective successors and assigns as may be contemplated by Section 12 of this
Agreement, any rights or remedies under or by reason of this Agreement.
21.03 Master Licensor expressly agrees to be bound by any promise or
covenant imposing the maximum duty permitted by law which is subsumed within the
terms of any provision of this Agreement, as though it were separately
articulated in and made a part of this Agreement, that may result from striking
from any of the provisions of this Agreement any portion or portions which a
court may hold to unreasonable and unenforceable in a final decision to which
Franchisor is a party, or from reducing the scope of any promise or covenant to
the extent required to comply with such court order.
21.04 All captions in this Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision of this Agreement.
21.05 All references in this Agreement to the masculine, neuter, or
singular shall be construed to include the masculine, feminine, neuter, or
plural, where applicable, and all acknowledgments, promises, covenants,
agreements, and obligations in this Agreement made or undertaken by Master
Licensor shall be deemed jointly and severally undertaken by all the parties to
this Agreement on behalf of Master Licensor.
21.06 This Agreement may be executed in multiple copies, each of which
shall be deemed an original and all of which, taken together , shall constitute
on instrument.
22. APPLICABLE LAW
22.01 This Agreement takes effect upon its acceptance and execution by
Franchisor in Ohio. This Agreement, the rights and obligations of the parties
to it, and the relationship between the parties shall be construed in accordance
with and governed by the internal laws of the State of Ohio without reference to
its choice of law and conflict of laws rules.
22.02 No right or remedy conferred upon or reserved to Franchisor or
Master Licensor by this Agreement is intended to be, nor shall be deemed to be,
exclusive of any other right or remedy in this Agreement or provided or
permitted by law or equity, but shall be cumulative of every other right or
remedy.
22.03 Nothing in this Agreement contained shall bar Franchisor's right to
obtain injunctive relief against threatened conduct that will cause it loss or
damages, under the usual equity rules, including the applicable rules for
obtaining restraining orders and preliminary injunctions.
22.04 If Master Licensor commences any action against Franchisor arising
out of or related to this Agreement, the dealings or relationship of the parties
under this Agreement, or the rights and obligations of the parties, such action
shall be brought solely in the federal or state judicial district in which
Franchisor's principal place of business is located.
22.05 If Franchisor commences any action in court against Master Licensor
arising out of or related to this Agreement, the dealing or relationship of the
parties under this Agreement, or the rights and obligations of the parties,
Franchisor may, at its option, bring the action in the federal or state judicial
district in which Franchisor's principal place of business is located.
23. ARBITRATION
Except as specifically otherwise provided in this Agreement, the parties
agree that any and all disputes between them (including disputes concerning the
applicability and enforceability of this Section 23) shall be determined solely
and exclusively by arbitration in Dayton, Ohio under the Federal Arbitration Act
as amended and in accordance with the rules then obtaining of the American
Arbitration Association or any successor, unless the parties otherwise agree in
writing. Each party shall select one arbitrator and the two so designated shall
select a third. Judgment upon any award of the majority of the arbitrators
shall be binding and shall be entered in a court of competent jurisdiction. It
is the intent of the parties that any arbitration between Franchisor and Master
Licensor shall be of Master Licensor's individual claim and that the claims
subject to arbitration shall not be arbitrated on a classwide basis.
Notwithstanding the foregoing, Master Licensor agrees that Franchisor may,
at its option, (a) bring a legal action in a court of law as provided in Section
22.05 to collect moneys owed to Franchisor by Master Licensor, and/or (b) submit
to arbitration matters which would otherwise be the subject of a petition for
injunctive relief in court, including, but not limited to, enforcement of the
covenants against competition and enforcement of Franchisor's rights with
respect to the Proprietary Marks.
24. ACKNOWLEDGMENTS
24.01 Master Licensor acknowledges that it has conducted an independent
investigation of the business contemplated under this Agreement and recognizes
that the business venture contemplated by this Agreement involves business risks
and that its success will be largely dependent upon the ability of Master
Licensor as an independent business entity and upon the abilities of the
Sublicensees chosen by Master Licensor. Franchisor expressly disclaims the
making of, and Master Licensor acknowledges that it has not received, any
warranty or guarantee, express or implied, as to the potential volume, profits,
or success of the business venture contemplated by this Agreement.
24.02 Master Licensor acknowledges that it has read and understood the
Agreement, the attachments to this Agreement, if any, and agreements relating
the attachments, if any, and that Franchisor has accorded Master Licensor ample
time and opportunity to consult with advisors of its own choosing about the
potential benefits and risks of entered into this Agreement.
The parties to this Agreement have duly executed and delivered it on the
day and year first written above.
ATTEST: FRANCHISOR:
MOTO PHOTO, INC.
______________________________ By: c/s
Secretary or Assistant Secretary Printed Name:
Title:
ATTEST: MASTER LICENSOR:
CANADIAN INDUSTRIAL SERVICES, LTD.
_____________________________ By: c/s
Secretary or Assistant Secretary Printed Name:
Title:
