TGI FRIDAY'S INC.
Main Street and Main Incorporated
Cornerstone Productions, Inc.
Amended and Restated Development Agreement
Dated April 30th, 1997
"Southwest"
TGI FRIDAY'S INC.
AMENDED AND RESTATED DEVELOPMENT AGREEMENT
Main Street and Main Incorporated
TABLE OF CONTENTS
-----------------
RECITALS 1
1. GRANT 2
2. DEVELOPMENT FEE 2
3. SCHEDULE AND MANNER FOR EXERCISING
DEVELOPMENT RIGHTS 2
4. SITE SELECTION 4
5. TERM 5
6. DUTIES OF THE PARTIES 5
7. DEFAULT 9
8. TRANSFER OF INTEREST 11
9. COVENANTS 14
10. NOTICES AND PAYMENTS 17
11. INDEPENDENT CONTRACTOR AND INDEMNIFICATION 18
12. APPROVALS, WAIVERS AND REMEDIES 20
13. SEVERABILITY AND CONSTRUCTION 21
14. ENTIRE AGREEMENT 22
15. APPLICABLE LAW 22
16. ACKNOWLEDGMENTS 22
EXHIBIT A - THE TERRITORY
EXHIBIT B - FRANCHISE AGREEMENT
EXHIBIT C - CONFIDENTIALITY AGREEMENT
EXHIBIT D - CONFIDENTIALITY AGREEMENT AND COVENANT NOT TO COMPETE
EXHIBIT E - NON-DISCLOSURE FORM
"Southwest"
DEVELOPMENT AGREEMENT
This Amended and Restated Development Agreement ("Agreement") is entered
into this 30th day of April, 1997 by and between TGI Friday's Inc., a New York
corporation, with its principal place of business at 0000 XXX Xxxxxxx, Xxxxxx,
Xxxxx 00000 (hereinafter "Franchisor") and Cornerstone Productions, Inc., a
Delaware corporation, with its principal place of business at 0000 Xxxxx 00xx
Xxxxxx, Xxxxx 000 Xxxxxxx, XX 00000 (hereinafter "Developer").
WITNESSETH:
WHEREAS, Franchisor, as the result of the expenditure of time, skill,
effort and money, has developed and owns a unique and distinctive system
(hereinafter "System") relating to the establishment and operation of
full-service restaurants utilizing the trade name T.G.I. Friday's and featuring
a specialized menu and full-bar service;
WHEREAS, the distinguishing characteristics of the System include, without
limitation, distinctive exterior and interior design, decor, color scheme and
furnishings; special recipes and menu items; uniform standards, specifications
and procedures for operations; quality and uniformity of products and services
offered; procedures for inventory and management control; training and
assistance; and advertising and promotional programs; all of which may be
changed, improved and further developed by Franchisor from time to time;
WHEREAS, Franchisor identifies the System by means of certain trade names,
service marks, trademarks, emblems and indicia of origin, including but not
limited to the marks T.G.I. Friday's(R), Friday's(R) and The American Bistro(R)
and such other trade names, service marks and trademarks as are now designated
and may hereafter be designated by Franchisor in writing for use in connection
with the System (hereinafter "Proprietary Marks");
WHEREAS, 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 thereunder and under the System, and to represent the System's
high standards of quality, appearance and services;
WHEREAS, Developer wishes to obtain certain development rights to operate
restaurants utilizing the System (hereinafter "Restaurants" or "franchised
businesses") in the territory described in this Agreement;
NOW, THEREFORE, the parties in consideration of the undertakings and
commitments of each party to the other party set forth herein, hereby agree as
follows:
1. GRANT
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A. Franchisor hereby grants to Developer and Developer accepts, pursuant
to the terms and conditions of this Agreement, development rights to establish
and operate new Restaurants and to use the System solely in connection
therewith, at specific locations to be designated in separate T.G.I. Friday's
franchise agreements (hereinafter "Franchise Agreement") executed as provided in
Subsection 3.A hereof and pursuant to the Development Schedule set forth in
Subsection 3.B hereof. Each Restaurant developed hereunder shall be located in
the area described on Exhibit A (hereinafter "Territory) and outlined on the map
attached hereto as part of Exhibit A. Expressly excluded from the Territory are
airport properties otherwise located within the boundaries of the Territory,
Franchisor reserving the rights to establish or license another party to
establish Restaurants at airport properties even if otherwise located within the
boundaries of the Territory.
B. Each Restaurant for which a development right is granted hereunder
shall be established and operated pursuant to a Franchise Agreement to be
entered into between Developer and Franchisor in accordance with Subsection 3.A
hereof.
C. Except as otherwise provided in this Agreement, Franchisor shall not
establish nor license anyone other than Developer to establish any Restaurant in
the Territory during the term of this Agreement.
D. This Agreement is not a franchise agreement and does not grant to
Developer any right to use Franchisor's Proprietary Marks or the System.
E. Developer shall have no right under this Agreement to license others to
use the Proprietary Marks or the System.
2. SCHEDULE AND MANNER FOR EXERCISING DEVELOPMENT RIGHTS
-----------------------------------------------------
A. Developer shall exercise each development right granted herein only by
executing a Franchise Agreement for each Restaurant at a site consented to by
Franchisor in the Territory as hereinafter provided. The Franchise Agreement for
each Restaurant developed in accordance with the development schedule
hereinafter set forth (and as it may be amended by consent of the parties) shall
be in the form of the franchise agreement attached hereto as Exhibit B. The
franchise fee to be paid by Developer shall be Fifty Thousand Dollars
($50,000.00) for each Restaurant to be located in the Territory during the term
of this Agreement, payable upon execution of the Franchise Agreement for each
Restaurant.
B. Recognizing that time is of the essence, Developer agrees to exercise
each of the development rights granted hereunder in the manner specified in
Subsection 3.A hereof, and to satisfy the development schedule set forth below:
C. Developer shall develop, open, commence operation of and continuously
operate pursuant to the respective Franchise Agreements seven (7) Restaurants in
the Territory, pursuant to the Development Schedule as follows:
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ASSUMES YEAR ENDS DECEMBER 25TH
SOUTHWEST - EXCLUSIVE DEVELOPMENT
--------------------------- -------------------------- -------------------------- --------------------------
Date of Preliminary Site Date Franchise Agreement
Restaurant No. Consent Signed & Fees Paid Date Open & Operating
--------------------------- -------------------------- -------------------------- --------------------------
1 3-25-97 7-25-97 12-25-97
--------------------------- -------------------------- -------------------------- --------------------------
2&3 3-25-98 7-25-98 12-25-98
--------------------------- -------------------------- -------------------------- --------------------------
4 3-25-99 7-25-99 12-25-99
--------------------------- -------------------------- -------------------------- --------------------------
5 3-25-00 7-25-00 12-25-00
--------------------------- -------------------------- -------------------------- --------------------------
6 3-25-01 7-25-01 12-25-01
--------------------------- -------------------------- -------------------------- --------------------------
7 3-25-02 7-25-02 12-25-02
--------------------------- -------------------------- -------------------------- --------------------------
Failure by Developer to adhere to the development schedule shall
constitute a material event of default under this Agreement as provided in
Subsection 7.C hereof. Notwithstanding anything in this Agreement to the
contrary, provided Developer has commenced construction of a Restaurant in a
timely manner so as to adhere to the development schedule and is diligently
pursuing such construction to completion, delays in the opening of such
Restaurant caused by Force Majeure (as defined in the Franchise Agreement) shall
not constitute an event of default under this Agreement.
D. Franchisor and Developer agree that during the year 2002 and 2007 a new
development schedule will be negotiated providing for the number of additional
Restaurants to be developed during the ensuring five (5) and three (3) year
periods and the schedule for such development. In the event the parties are
unable to agree upon the number of Restaurants to be developed or the schedule
for such development within thirty (30) days after having exerted good faith
efforts to do so, the parties agree to retain an independent third party
("Appraiser") mutually acceptable to both parties to determine such issues. The
decision of such Appraiser shall be binding on Franchisor and Developer. In the
event the parties are unable to agree upon a mutually acceptable Appraiser, the
selection of appraisers and the determination of the issues shall be conducted
using the same procedures set forth at Subsection ss.17.03 of the Franchise
Agreement attached hereto as Exhibit B. Should Developer fail to develop
according to the new development schedule, Developer agrees that it will lose
its rights to further development within the Territory and agrees that
Franchisor shall have the right to develop or license other parties to develop
Restaurants within the Territory. For each of the additional Restaurants to be
developed during the ensuing five (5) and three (3) year periods, Developer
shall execute the standard form of franchise agreement then being offered to new
System franchisees and other ancillary agreements as Franchisor may require for
the franchised business, the terms of which may differ from the terms of the
Franchise Agreement attached to this Agreement, including, without limitation, a
higher franchise fee, percentage royalty rate and advertising contribution.
3. SITE SELECTION
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A. Developer assumes all cost, liability, expense and responsibility for
locating, obtaining and developing sites for Restaurants, and for constructing
and equipping Restaurants at such sites. The development of a Restaurant at any
site must be consented to by Franchisor in accordance with the then existing
site selection procedures including, but not limited to, the following
procedures:
(1) Prior to acquisition by lease or purchase of a site for a
Restaurant in the Territory, Developer shall submit to Franchisor for each
Restaurant, in the form prescribed by Franchisor, a description of the site, a
market feasibility study for the site which shall include, but not be limited
to, demographic information, site plans and such other information or materials
as Franchisor may reasonably require, together with a letter of intent or other
evidence satisfactory to Franchisor which confirms Developer's favorable
prospects for obtaining the site. Recognizing that time is of the essence,
Developer agrees that it must submit such information and materials for each
proposed site to Franchisor in writing for its consent. Franchisor shall have
thirty (30) days after receipt of such information and materials from Developer
to consent to or refuse its consent to use the proposed site as the location for
a Restaurant, which consent shall not be unreasonably withheld. No site shall be
deemed approved unless it has been expressly approved to in writing by
Franchisor.
(2) Developer acknowledges that Franchisor's consent to the use of
a prospective Restaurant site or the rendering of assistance in the selection of
a site for a Restaurant does not constitute a representation, promise or
guarantee by Franchisor that a Restaurant operated at that site would be
profitable or otherwise successful.
(3) After the location for a Restaurant is consented to by
Franchisor and leased or acquired by Developer in accordance with the
requirements of this Section 4, Developer shall execute a Franchise Agreement
relating to the Restaurant and its location shall be recorded in Attachment A to
the applicable Franchise Agreement.
B. If the Developer will occupy the premises of any Restaurant under a
lease, Developer shall furnish to Franchisor a copy of the executed lease within
ten (10) days after execution thereof. Prior to such execution, Developer shall
submit the lease to Franchisor for its written approval. Unless Developer has
obtained Franchisor's written consent to the exclusion of a required provision,
the lease shall include the following terms and conditions:
(1) That the premises shall be used for the operation of the
Restaurant;
(2) That the lessor consents to the use of such Proprietary Marks
and signage as Franchisor may prescribe for the franchised business;
(3) That the lessor agrees to furnish Franchisor with copies of
any and all letters and notices sent to Developer pertaining to the lease and
the premises at the same time that such letters and notices are sent to
Developer;
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(4) That Developer may not sublease or assign all or any part of
its occupancy rights, or extend the term of or renew the lease, without
Franchisor's prior written consent, which shall not be unreasonably withheld;
(5) That Franchisor shall have the right to enter the premises to
make any modification necessary to protect Franchisor's Proprietary Marks or to
cure any default under the lease, this Agreement or the Franchise Agreement;
(6) That the lessor agrees that Developer may assign the lease to
Franchisor; that the lessor will consent to such assignment and may not impose
any assignment fee or similar charge on Franchisor in connection with such
assignment; and that Franchisor may sublease the premises for all or any part of
the remaining term of the lease; and
(7) That the lessor and Developer shall not amend or otherwise
modify the lease in any manner which would materially and adversely affect any
of the foregoing terms and conditions without Franchisor's prior written
consent.
C. Developer shall construct the Restaurant in accordance with the
provisions of the Franchise Agreement.
4. TERM
----
Unless sooner terminated in accordance with the provisions of this
Agreement, the term of this Agreement shall commence on the date hereof and
shall be in effect until December 31, 2010.
5. DUTIES OF THE PARTIES
---------------------
A. Franchisor shall furnish to Developer the following:
(1) Upon execution hereof, one (1) copy of the Development Manual
("Development Manual"), which is a part of the Confidential Operating Manuals
("Manuals") referred to in Section 7 of the Franchise Agreement. The Development
Manual contains the instructions, requirements, standards, specifications and
procedures for the development and construction of a typical Restaurant,
including site selection guidelines and criteria, construction management
techniques and development planning and scheduling methods. The Development
Manual will be delivered to Developer on loan upon execution of this Agreement
and shall be returned to Franchisor immediately upon request or upon termination
or expiration of this Agreement. Developer shall at all times treat the
Development Manual as confidential.
(2) Such site selection counseling and assistance as Franchisor
may deem advisable.
(3) Such on-site evaluation as Franchisor may deem advisable in
response to Developer's requests for site approval; provided, however, that
Franchisor shall not provide on-
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site evaluation for any proposed site prior to the receipt of all required
information and materials concerning such site prepared pursuant to Section 4
hereof.
(4) Upon execution hereof, one (1) set of Franchisor's standard
plans and specifications for the construction of a typical Restaurant including
the exterior and interior design and layout, fixtures, furnishings and signs.
(5) Preopening and opening training and assistance as Franchisor
deems advisable with due regard to the number of trained personnel then employed
by Franchisee and/or its affiliates then operating other Restaurants utilizing
the System.
B. Developer makes the following representations, warranties and covenants
and accepts the following obligations:
(1) Developer shall comply with all terms and conditions set forth
in this Agreement.
(2) Upon execution of this Agreement, Developer shall designate:
(i) an individual who is fully authorized to act on behalf
of Developer in all transactions with Franchisor concerning Developer's
obligations under this Agreement ("Representative"). A qualified Representative
shall be designated at all times during the term of this Agreement by Developer
and Developer shall designate a replacement Representative from time to time as
necessary; and
(ii) an individual meeting Franchisor's reasonable approval
to operate the franchised
business (an "Operator") who will promptly attend and complete Franchisor's
management training program in accordance with the provisions of Subsection
ss.4.03 of the Franchise Agreement. An approved Operator shall be designated at
all times during the term of this Agreement by Developer and Developer shall
designate a replacement Operator from time to time as necessary.
(3) If this Agreement provides for the development of three or
more Restaurants, Developer will be required to designate an individual to
supervise the Restaurants (a "Regional Manager") in accordance with the
provisions of Subsection ss.4.02 of the Franchise Agreement.
(4) Developer and Developer's Principals (as defined in Subsection
13.A hereof) covenant and agree that neither shall, during the term of this
Agreement or thereafter, communicate, divulge or use for the benefit of any
other person, persons, partnership, association or corporation any confidential
information, knowledge or know-how concerning the methods of development and
operation of the Restaurant which may be communicated to Developer or
Developer's Principals or of which they may be apprised by virtue of Developer's
operation under the terms of this Agreement. Developer and Developer's
Principals shall divulge such confidential information only to such of
Developer's employees as must have access to it in connection with their
employment. Any and all information, knowledge, techniques and
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know-how, including without limitation, the Development Manual and all drawings,
materials, equipment, recipes, computer and point of sale programs and output
from such programs, and all other data which Franchisor designates as
confidential shall be deemed confidential for purposes of this Agreement.
Neither Developer nor any of Developer's Principals shall at any time, without
Franchisor's prior written consent, copy, duplicate, record or otherwise
reproduce such materials or information, in whole or in part, or otherwise make
the same available to any unauthorized person. Developer shall be permitted to
disclose confidential information and materials to its legal counsel and its
business, financial and other professional consultants and contractors, but only
to the extent that such disclosure is necessary in order for such parties to
provide services or professional advice related to the franchised business and
this Agreement and then only after such parties have executed non-disclosure
covenants in a form substantially similar to the Non-Disclosure form attached
hereto as Exhibit E. Developer shall be responsible for compliance by such
parties with such covenants.
(5) Developer shall, prior to the disclosure of any confidential
information, require any of its employees who will have access to such
confidential information to execute covenants that they will maintain the
confidentiality of information they receive in connection with their employment
by Developer. Such covenants shall be in a form satisfactory to Franchisor,
including, without limitation, specific identification of Franchisor as a third
party beneficiary of such covenants with the independent right of enforcement.
Such covenants shall be in a form substantially similar to the Confidentiality
Agreement attached hereto as Exhibit C. Developer shall be responsible for
compliance by its employees with such covenants.
(6) If Developer or Developer's Principals develop any new process
or improvement in the development, operation or promotion of the Restaurants,
Developer agrees to promptly notify Franchisor and provide Franchisor with all
necessary information concerning same, without compensation. Developer and
Developer's Principals acknowledge that any such process or improvement shall
become the property of Franchisor and Franchisor may utilize or disclose such
information to other developers as it determines to be appropriate.
(7) Developer and each of Developer's Principals acknowledge
complete ownership by Franchisor of the Proprietary Marks, specifications,
standards, management and accounting methods, operating procedures and other
concepts embodied in and comprising the System, and covenants that during the
term of this Agreement or thereafter, regardless of the cause of termination,
Developer and each of Developer's Principals shall not, either directly or
indirectly, contest or aid others in contesting, the exclusive ownership and
rights of Franchisor in any aspect of the System, or do anything that will
otherwise impair such rights without Franchisor's prior written consent,
including, without limitation, using or reproducing any materials copyrighted by
Franchisor.
(8) Developer and each of Developer's Principals acknowledge and
agree: (a) that any failure to comply with the covenants in this Subsection 6.B
or any failure to obtain execution of the covenants in Subsection 6.B(5) shall
constitute a material event of default under Subsection 7.C; (b) that any such
failure will cause Franchisor irreparable injury for which no adequate remedy at
law may be available; and (c) therefore, Franchisor shall be entitled, in
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addition to any other remedies which it may have hereunder, at law, or in
equity, to obtain specific performance of, or to an injunction against violation
of, the requirements of Subsections 6.B(4), (5) and (7), without the necessity
of showing actual or threatened damage and without being required to furnish a
bond or other security. If Franchisor prevails, Developer agrees to pay all
court costs and reasonable attorneys' fees incurred by Franchisor in connection
with the enforcement of Subsections 6.B(4), (5) and (7), including the
agreements referred to in Subsection 6.B(5).
(9) Developer shall comply with all requirements of federal, state
and local laws, rules and regulations.
C. Developer represents, warrants and covenants that:
(1) Developer is duly organized and validly existing under the
state law of its formation;
(2) Developer is duly qualified and is authorized to do business
in each jurisdiction in which its business activities or the nature of the
properties owned by it require such qualification;
(3) Developer's corporate charter shall at all times permit the
development and operation of the Restaurants;
(4) The execution of this Agreement and the transactions
contemplated hereby are within Developer's corporate power;
(5) Copies of Developer's Articles of Incorporation, Bylaws, other
governing documents and any amendments thereto, including the resolution of the
Board of Directors authorizing entry into and performance of this Agreement,
shall be promptly furnished to Franchisor;
(6) Developer shall maintain a current list of all owners of
record and all beneficial owners known to Developer of any class of voting
securities of the corporation. Such list shall be furnished to Franchisor upon
request;
(7) Developer shall maintain stop-transfer instructions against
the transfer on its records of any equity securities and each stock certificate
of the corporation 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 thereof is subject to all restrictions imposed upon
assignments by this Agreement.
(8) Each of Developer's Principals personally, unconditionally and
irrevocably guarantee to Franchisor and its successors and assigns that all of
Developer's obligations under this Agreement will be punctually paid and
performed. Upon default by Developer or notice from Franchisor, Developer's
Principals will immediately make each payment and perform each
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obligation required of Developer under this Agreement. Without affecting the
obligations of Developer's Principals under this guaranty, Franchisor may,
without notice to Developer's Principals, waive, renew, extend, modify, amend or
release any indebtedness or obligation of Developer, or settle, adjust, or
compromise any claims against Developer. Developer's Principals waive all
demands and notices of every kind with respect to this guaranty including,
without limitation, notice of: presentment, demand for payment or performance by
Developer, any default by Developer or any guarantor, and any release of any
guarantor or other security for this Agreement or the obligations of Developer.
Franchisor may pursue its rights against Developer's Principals without first
exhausting its remedies against Developer and without joining any other
guarantor hereto, and no delay on the part of Franchisor in the exercise of any
right or remedy shall operate as a waiver of such right or remedy. No single or
partial exercise by Franchisor of any right or remedy shall preclude the further
exercise of such right or remedy. Upon receipt by Franchisor of notice of the
death of one of Developer's Principals, the estate of the deceased will be bound
by the foregoing guaranty, but only for defaults and obligations under this
Agreement existing at the time of death; the obligations of the other of
Developer's Principals shall continue in full force and effect.
D. Developer acknowledges and agrees that the representations, warranties
and covenants set forth in Subsection 6.C are continuing obligations of
Developer and that any failure to comply with such representations, warranties
and covenants shall constitute a material event of default under this Agreement
pursuant to Subsection 7.C hereof.
6. DEFAULT
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A. The rights granted to Developer in this Agreement have been granted in
reliance on Developer's representations and assurances, among others, that the
conditions set forth in Sections 1, 3 and 4 of this Agreement will be met by
Developer in a timely manner. Time is of the essence in relation to all
obligations of Developer in this Agreement.
B. Developer shall be deemed to be in default under this Agreement and all
rights granted herein shall automatically terminate without notice to Developer,
if Developer shall become insolvent or make a general assignment for the benefit
of creditors; or if a petition in bankruptcy is filed under any chapter of Title
11 of the United States Code by Developer or such a petition is filed against
Developer and not opposed by Developer; or if a xxxx in equity or other
proceeding for the appointment of a receiver of Developer or other custodian for
Developer's business or assets is filed and consented to by Developer; or if a
receiver or other custodian (permanent or temporary) of Developer's assets or
property, or any part thereof, is appointed by any court of competent
jurisdiction; or if proceedings for a composition with creditors under any state
or federal law should be instituted by or against Developer; or if a final
non-appealable judgment remains unsatisfied or of record for thirty (30) days or
longer (unless supersedes bond is filed); or if Developer is dissolved; or if
execution is levied against Developer's business or property; or if suit to
foreclose any lien or mortgage against the premises or equipment of any
Restaurant developed hereunder is instituted against Developer and not dismissed
or bonded within thirty (30) days; or if the real property (owned by Developer)
of any Restaurants or
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personal property of any Restaurants developed hereunder shall be sold after
levy thereupon by any sheriff, marshal or constable.
C. If Developer fails to comply with the development schedule set forth in
Subsection 3.B hereof or any subsequent development schedule; Developer or
Developer's Principals fail to comply with the restrictions on confidential
information set forth in Subsection 6.B(4) or the requirements of Subsection 9.B
concerning in-term covenants against competition (except where liquidated
damages have been otherwise expressly provided); Developer fails to obtain
execution of the covenants from the persons designated by Franchisor pursuant to
Subsections 6.B(5) and 9.G; Developer breaches the warranties, representations
and covenants set forth in Subsection 6.C; Developer or any partner or
shareholder makes or attempts to make a transfer or assignment in violation of
Section 8 hereof; Developer fails to pay any monies owed to Franchisor within
ten (10) days after written notice from Franchisor that the same has not been
paid; Developer fails to comply with any other terms and conditions of this
Agreement, or the terms of any Franchise Agreements or any other development
agreements between Developer and Franchisor; such action shall constitute a
material event of default under this Agreement. Upon such default, Franchisor,
in its discretion, may do any one or more of the following:
(1) Terminate this Agreement and all rights granted hereunder
without affording Developer any opportunity to cure the default, effective
immediately upon notice to Developer;
(2) Provide Developer a reasonable period of time, not to exceed
thirty (30) days after notice from Franchisor, to cure a default which is
susceptible to cure;
(3) Reduce the number of Restaurants which Developer may
thereafter establish pursuant to Subsection 1.A of this Agreement;
(4) Terminate the territorial exclusivity granted Developer in
Subsection 1.C hereof, or reduce the Territory granted Developer hereunder; or
(5) Accelerate the development schedule set forth in Subsection
3.B hereof.
D. Upon termination of this Agreement, Developer shall have no right to
establish or operate any Restaurant for which a Franchise Agreement has not been
executed by Franchisor and delivered to Developer prior to or at the time of
termination and Franchisor shall be entitled to establish and to license others
to establish Restaurants in the Territory except as may be otherwise provided
under any other agreement which is then in effect between Franchisor and
Developer.
E. No default under this Agreement shall constitute a default under any
Franchise Agreement between the parties hereto, unless Developer's acts or
omissions also violate the terms and conditions of the applicable Franchise
Agreement.
7. TRANSFER OF INTEREST
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A. Franchisor shall have the right to transfer or assign this Agreement
and all or any part of its rights or obligations herein to any person or legal
entity.
B. (1) Developer understands and acknowledges that the rights and duties
set forth in this Agreement are personal to Developer, and that Franchisor has
granted the development rights in reliance on the business skill, financial
capacity and business reputation and character of the Developer. Accordingly,
neither Developer nor any initial or subsequent successor or assign to any part
of Developer's interest in the development rights, shall sell, assign, transfer,
convey, give away, pledge, mortgage or otherwise encumber any direct or indirect
interest in this Agreement or in any entity which owns the development rights
without the prior written consent of Franchisor; provided, however, that
Franchisor's prior written consent shall not be required for a transfer of an
interest in a publicly-held corporation. A "publicly-held corporation" is a
corporation (a) any of the securities of which are registered or quoted on a
national or regional stock exchange, the National Quotation System of the
National Association of Securities Dealers or the "pink sheets" published by the
National Quotation Bureau and (b) which is a reporting corporation pursuant to
Sections 12 and 15 of the Securities Exchange Act of 1934, as amended. Any
purported assignment or transfer, by operation of law or otherwise, not having
the written consent of Franchisor required by this Subsection 8.B shall be null
and void and shall constitute a material event of default for which Franchisor
may terminate this Agreement pursuant to Subsection 7.C hereof.
(2) Franchisor shall not unreasonably withhold its consent to a
transfer of any interest in Developer or in this Agreement. Franchisor may, in
its sole discretion, require any or all of the following as conditions of its
approval:
(a) All of Developer's accrued monetary obligations and all
other outstanding obligations to Franchisor, its subsidiaries and its affiliates
shall have been satisfied;
(b) Developer is not in default of any provision of this
Agreement, any amendment hereof or successor hereto, or any other agreement
between Developer and Franchisor or its subsidiaries and affiliates;
(c) If the transferor shall no longer own an interest in
this Agreement, 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 this
Agreement and federal, state and local laws, rules and ordinances;
(d) The transferee shall enter into a written agreement in
a form satisfactory to Franchisor, assuming full, unconditional, joint and
several liability for and agreeing to perform from the date of the transfer, all
obligations, covenants and agreements of transferor contained in this Agreement;
and as applicable, transferee's shareholders, partners or other investors, shall
also execute such agreement;
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(e) The transferee shall demonstrate to Franchisor's
satisfaction the following: that transferee meets the criteria which Franchisor
considers when reviewing a prospective developer's application for development
rights including Franchisor's educational, managerial and business standards;
that transferee possesses a good moral character, business reputation and credit
rating; that transferee has the aptitude and ability to conduct the franchised
businesses contemplated herein (as may be evidenced by prior related business
experience or otherwise); and that transferee has reasonably adequate financial
resources and capital to develop and operate the franchised businesses;
(f) At Franchisor's option, a transferee of Developers
entire interest in this Agreement shall execute (and/or, upon Franchisor's
request, shall cause all interested parties to execute), the standard form of
development agreement then being offered to new System developers and other
ancillary agreements as Franchisor may require for the development of the
Restaurants, which agreements shall supersede this Agreement and its ancillary
documents in all respects and the terms of which agreements may differ from the
terms of this Agreement; provided, however, that the transferee shall not be
required to pay any initial development fee;
(g) Developer and Developer's Principals shall remain
liable for all of their respective obligations to Franchisor in connection with
this Agreement incurred prior to the effective date of the transfer and shall
execute any and all instruments reasonably requested by Franchisor to evidence
such liability;
(h) Developer shall pay a transfer fee of Five Thousand
Dollars ($5,000.00), or such greater amount as is necessary to reimburse
Franchisor for its reasonable costs and expenses associated with reviewing the
application to transfer, including, without limitation, legal and accounting
fees;
(i) If transferee is a corporation or a partnership,
transferee shall make and will be bound by any or all of the representations,
warranties and covenants set forth at Subsection 6.C as Franchisor requests.
Transferee shall provide to Franchisor evidence satisfactory to Franchisor that
the terms of Subsection 6.C have been satisfied and are true and correct on the
date of the transfer.
(3) Developer acknowledges and agrees that each condition which
must be met by the transferee is reasonable and necessary to assure such
transferee's full performance of the obligations hereunder.
(4) In the event the proposed transfer is to a corporation formed
solely for the convenience of ownership, Franchisor's consent may be conditioned
upon any of the requirements set forth at Subsection 8.B(2), except that the
requirements set forth at Subsections 8.B(2)(c), (e), (f), (h) and (i) shall not
apply. With respect to a transfer to a corporation formed for the convenience of
ownership, the percentage of interest owned in the transferee shall be the same
as that previously owned in the transferor, except as may be required by law.
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12
C. (1) If Developer desires to accept any bona fide offer from a third
party to purchase an interest in the development rights or in this Agreement,
Developer shall promptly notify Franchisor in writing of each such offer, and
shall provide such information and documentation relating to the offer as
Franchisor may require. Franchisor shall have the right and option, exercisable
within thirty (30) days after receipt of such written notification and
documentation, to send written notice to Developer that Franchisor intends to
purchase such interest on the same terms and conditions offered by the third
party. Any material change in the terms of any offer prior to closing shall
constitute a new offer subject to the same rights of first refusal by Franchisor
as in the case of an initial offer. Failure of Franchisor to exercise the option
afforded by this Subsection 8.C shall not constitute a waiver of any other
provision of this Agreement, including all of the requirements of Subsection 8.B
with respect to a proposed transfer.
(2) In the event the offer from the third party provides for
payment of consideration other than cash or involves certain intangible
benefits, Franchisor may elect to purchase the interest 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 non-cash part of the
offer, appraisers shall be designated by Franchisor and Developer in the same
manner as provided at Subsection 17.03 of the Franchise Agreement to determine
such amount and such determination shall be final and binding.
(3) If Franchisor elects to exercise the option described above,
it shall have the right to set off the cost of the appraisal, if any, against
any payment made hereunder.
D. (1) Upon the death of any person with an interest in this Agreement or
in Developer (the "Deceased"), the executor, administrator or other personal
representative of the Deceased shall transfer such interest to a third party
approved by Franchisor within twelve (12) months after the death. If no personal
representative is designated or appointed or no probate proceedings are
instituted with respect to the estate of the Deceased, then the distributee of
such interest must either (a) be approved by Franchisor as a transferee or (b)
transfer such interest to a third party approved by Franchisor within twelve
(12) months after the date of the death of the Deceased.
(2) Upon the permanent disability of any person with an interest
in this Agreement or in Developer, Franchisor may, in its sole discretion,
require such interest to be transferred to a third party approved by Franchisor
within six (6) months after notice to Developer. "Permanent disability" shall
mean any physical, emotional or mental injury, illness or incapacity which would
prevent a person from performing the obligations set forth in this Agreement for
at least ninety (90) consecutive days and from which condition recovery within
ninety (90) days from the date of determination of disability is unlikely.
Permanent disability shall be determined by a licensed practicing physician
selected by Franchisor upon examination of the person; or if the person refuses
to submit to an examination, then such person shall be automatically deemed
permanently disabled as of the date of such refusal for the purpose of this
Subsection 8.D. The costs of any examination required by this Subsection 8.D
shall be paid by Franchisor.
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(3) Upon the death or claim of permanent disability of any person
with an interest in this Agreement or in Developer, Developer or a
representative of Developer must promptly notify Franchisor of such death or
claim of permanent disability. Any transfer upon death or permanent disability
shall be subject to the same terms and conditions as described in Subsection 8.B
for any inter vivos transfer. If an interest is not transferred upon death or
permanent disability as required in this Subsection 8.D, in accordance with the
terms and conditions of Section 8, unless such failure is due to legal
prohibitions or factors outside the control of the representative, such failure
shall constitute a material event of default for which Franchisor may terminate
this Agreement pursuant to Subsection 7.C hereof.
(4) The foregoing provisions of this Subsection 8.D shall not
apply if Developer is a publicly-held corporation as defined at Subsection
8.B(1) hereof.
E. Franchisor's consent to a transfer of any interest in Developer or this
Agreement 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.
8. COVENANTS
---------
A. Developer covenants that during the term of this Agreement except as
otherwise approved in writing by Franchisor, Developer shall devote requisite
time, energy and best efforts to meet its obligations under this Agreement;
shall require its Operator to devote full time, energy and best efforts to the
overall day-to-day management and operation of the franchised business; and
shall require its Regional Manager, if applicable, to devote full time, energy
and best efforts to the management and supervision of the Restaurants.
B. Developer and Developer's Principals specifically acknowledge that they
will receive valuable specialized training, trade secrets and confidential
information, including, without limitation, information regarding the site
selection and other methods and techniques of Franchisor and the System related
to the development of the Restaurants which are beyond the present skills and
experience possessed by Developer, Developer's Principals and Developer's
managers and other employees. Developer and Developer's Principals acknowledge
that such training, trade secrets and confidential information provide a
competitive advantage and will be valuable to them in the development of the
franchised businesses and that gaining access to such training, trade secrets
and confidential information are, therefore, a primary reason why they are
entering into this Agreement. In consideration for such training, trade secrets
and confidential information, Developer and Developer's Principals covenant as
follows:
(1) With respect to Developer, during the term of this Agreement,
or with respect to each of Developer's Principals, during the term of this
Agreement for so long as such individual or entity satisfies the definition of
"Developer's Principal" as described in Subsection 13.A, neither Developer nor
any of Developer's Principals shall, either directly or indirectly, for
themselves, or through, on behalf of, or in conjunction with any person,
persons, partnership or corporation:
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14
(a) Divert or attempt to divert any business or customer of
the franchised businesses 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;
(b) Employ or seek to employ any person who, to Developer's
knowledge, is at that time or has within one (1) year been employed by
Franchisor or by any other developer or franchisee of Franchisor, or otherwise
directly or indirectly to induce such person to leave his or her employment
thereat (for breach of this covenant and due to the difficulty of establishing
the precise amount of damages, for each breach of this covenant Developer agrees
to pay to Franchisor or other developer of Franchisor as appropriate, liquidated
damage in amount equal to the annualized rate of compensation of such person in
the final twelve (12) months of employment with such former employer);
(c) Own, maintain, operate, engage in or have an ownership
interest (including any right to share in revenues or profits) in any food
and/or beverage operations which are the same or substantially similar in
concept, decor or menus to restaurants within the System.
(2) With respect to Developer, for a continuous uninterrupted
period commencing upon the expiration or termination of this Agreement or with
respect to each of Developer's Principals, for a continuous uninterrupted period
commencing upon the earlier of: (i) the expiration or termination of this
Agreement or (ii) the time such individual or entity ceases to satisfy the
definition of "Developer's Principal" as described in Subsection 13.A, and
(a) For one (1) year thereafter neither Developer nor any
of Developer's Principals shall, either directly or indirectly, for themselves,
or through, on behalf of, or in conjunction with any person, persons,
partnership or corporation:
(i) Divert or attempt to divert any business or
customer of the franchised businesses 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;
(ii) Employ or seek to employ any person who, to
Developer's knowledge, is at that time or has within one (1) year been employed
by Franchisor or by any other developer or franchisee of Franchisor, or
otherwise directly or indirectly to induce such person to leave his or her
employment thereat (for breach of this covenant and due to the difficulty of
establishing the precise amount of damages, for each breach of this covenant
Developer agrees to pay to Franchisor or other developer of Franchisor as
appropriate, liquidated damage in amount equal to the annualized rate of
compensation of such person in the final twelve (12) months of employment with
such former employer);
(iii) Own, maintain, operate, engage in or have an
ownership interest (including any right to share in revenues or profits) in any
food and/or beverage operations which
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are the same or substantially similar in concept, decor or menus to restaurants
within the System, which are, or are intended to be, located within the
Territory; and
(b) For one (1) year thereafter neither Developer nor any
of Developer's Principals shall, either directly or indirectly, for themselves,
or through, on behalf of, or in conjunction with any person, persons,
partnership or corporation own, maintain, operate, engage in, or have any
interest (including any right to share in the revenues or profits) in any food
and/or beverage operations which are the same or substantially similar in
concept, decor or menus to restaurants within the System, which business are, or
are intended to be, located within a radius of three (3) miles of any restaurant
in the System.
(3) Subsections 9.B(1)(c), 9.B(2)(a)(iii) and 9.B(2)(b) shall not
apply to an ownership interest of less than five percent (5%) of the outstanding
equity securities of any publicly-held company if such interest is owned for
investment only and not owned by an officer, director, employee or consultant of
such publicly-held company, nor to an ownership interest in any food and/or
beverage operations which are not the same nor substantially similar in concept,
decor or menus, such as Nathan's, McDonalds and other fast food restaurants (as
the same are operated on March 9, 1990), Chi-Chi's, El Chico and other
ethnic-theme restaurants (as the same are operated on March 9, 1990), and The
Tavern on the Green, Windows on the World and other fine dining white tablecloth
restaurants (as the same are operated on March 9, 1990). For the purposes of
comparison only, such Subsections shall preclude involvement as aforesaid in
restaurants such as Bennigans, Houstons, Chilis, Houlihan's and other casual
dining restaurants (as the same are operated on March 9, 1990).
C. 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 9 is held unreasonable or
unenforceable by a court or agency having valid jurisdiction in an unappealed
final decision to which Franchisor is a party, Developer and Developer's
Principals expressly agree 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
9.
D. Developer and Developer's Principals understand and acknowledge that
Franchisor shall have the right, in its sole discretion, to reduce the scope of
any covenant set forth in Subsection 9.B of this Agreement, or any portion
thereof, without their consent, effective immediately upon written notice to
Developer and Developer and Developer's Principals agree that they shall comply
forthwith with any covenant as so modified, which shall be fully enforceable
notwithstanding the provisions of Section 14 hereof.
E. Developer and Developer's Principals expressly agree that the existence
of any claims they 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 9.
F. Developer and each of Developer's Principals acknowledge and agree: (1)
that any failure to comply with the covenants in this Section 9 or any failure
to obtain execution of the
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covenants in Subsection 9.G below shall constitute a material event of default
under Subsection 7.C; (2) that a violation of the requirements of this Section 9
would result in irreparable injury to Franchisor for which no adequate remedy at
law may be available; and (3) therefore, Franchisor shall be entitled, in
addition to any other remedies which it may have hereunder, at law, or in
equity, to obtain specific performance of or an injunction against the violation
of the requirements of this Section 9, without the necessity of showing actual
or threatened damage and without being required to furnish a bond or other
security. If Franchisor prevails, Developer agrees to pay all costs and expenses
(including reasonable attorneys' fees) incurred by Franchisor in connection with
the enforcement of this Section 9, including enforcement of the agreements
referred to in Subsection 9.G below.
G. Developer shall, prior to arranging any training or disclosing any
confidential information, require its Representative, Operator, Regional
Manager, if applicable, and such other supervisory or managerial employees of
Developer as Franchisor shall designate to execute covenants similar to those
set forth in this Section 9 and in Section 6 (including covenants applicable
upon the termination of a person's relationship with Developer). Every covenant
required shall be in a form satisfactory to Franchisor, including, without
limitation, specific identification of Franchisor as a third party beneficiary
of such covenants with the independent right of enforcement. Such covenants
shall be in a form substantially similar to the Confidentiality Agreement and
Covenant Not to Compete attached hereto as Exhibit D. Developer shall be
responsible for compliance by its employees with such covenants.
9. NOTICES AND PAYMENTS
--------------------
All notices required to be given hereunder shall be in writing and shall
be sent by personal delivery or by certified or registered mail, return receipt
requested to the respective parties.
If directed to Franchisor, the notice shall be addressed to TGI Friday's
Inc., attention General Counsel, 0000 XXX Xxxxxxx, Xxxxxx, Xxxxx 00000.
If directed to Developer or Developer's Principals, the notice shall be
addressed to Developer, at the address shown on the first page hereof.
Any notices sent by certified or registered mail shall be deemed given at
the time of mailing. Any change in the foregoing addresses shall be effected by
giving fifteen (15) days written notice of such change to the other party.
Unless otherwise specified, all payments required to be made by Developer
to Franchisor under this Agreement are due and payable immediately upon demand
and/or receipt of any billing therefore and shall be sent by personal delivery
or by mail, postage prepaid, and directed to Franchisor as shown above.
10. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
------------------------------------------
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17
A. It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them, that Developer is an
independent contractor, and that nothing in this Agreement is intended to
constitute either party an agent, legal representative, subsidiary, joint
venturer, partner, employee, employer, joint employer, enterprise or servant of
the other for any purpose whatsoever.
B. Developer shall hold itself out to the public to be an independent
contractor operating pursuant to this Agreement. Developer agrees to take such
actions as shall be necessary to that end.
C. Developer understands and agrees that nothing in this Agreement
authorizes Developer 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 hereunder for any such action; nor shall Franchisor be
deemed liable by reason of any act or omission of Developer in the conduct of
its business pursuant to this Agreement, or for any claim or judgment arising
therefrom. Except as otherwise expressly provided herein to the contrary, this
provision shall apply mutatis mutandis to Franchisor.
D. (1) Developer will, at all times, indemnify and hold harmless to the
fullest extent permitted by law Franchisor, its corporate affiliates, successors
and assigns and the respective directors, officers, employees, agents and
representatives of each (Franchisor and all others hereinafter collectively
"Indemnitees") from all "losses and expenses" (as defined below) incurred in
connection with any action, suit, proceeding, claim, demand, investigation or
inquiry (formal or informal), or any settlement thereof (whether or not a formal
proceeding or action has been instituted) which arises out of or is based upon
any of the following:
(a) The infringement, alleged infringement, or any other
violation or alleged violation by Developer or any of Developer's Principals of
any patent, xxxx or copyright or other proprietary right owned or controlled by
third parties.
(b) The violation, breach or asserted violation or breach
by Developer or any of Developer's Principals of any contract, federal, state or
local law, regulation, ruling, standard or directive or any industry standard.
(c) Libel, slander or any other form of defamation of
Franchisor or the System, by Developer or any of Developer's Principals.
(d) The violation or breach by Developer or any of
Developer's Principals of any warranty, representation, agreement or obligation
in this Agreement.
(e) Acts, errors or omissions of Developer or any of its
agents, servants, employees, contractors, partners, affiliates or
representatives.
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18
The provisions of Subsections 11.D(1)(c), (d) and (e) shall apply mutatis
mutandis to Franchisor.
(2) Developer agrees to give Franchisor notice of any such action,
suit, proceeding, claim, demand, inquiry or investigation. At the expense and
risk of Developer, Franchisor may elect to assume (but under no circumstance is
obligated to undertake), the defense and/or settlement of any such action, suit,
proceeding, claims, demand, inquiry or investigation. Such an undertaking by
Franchisor shall, in no manner or form, diminish the obligation of Developer to
indemnify Franchisor and to hold it harmless.
(3) In order to protect persons or property, or its reputation or
goodwill, or the reputation or goodwill of others, Franchisor may, at any time
and without notice, as it, in its judgment deems appropriate consent or agree to
settlements or take such other remedial or corrective action as it deems
expedient with respect to the action, suit, proceeding, claim, demand, inquiry
or investigation if, in Franchisor's sole judgment, there are reasonable grounds
to believe that:
(a) any of the acts or circumstances enumerated in
Subsection 11.D(1) above have occurred; or
(b) any act, error, or omission of Developer or any of
Developer's Principals may result directly or indirectly in damage, injury or
harm to any person or any property.
(4) (a) All losses and reasonable expenses incurred under this
Section shall be chargeable to and paid by Developer pursuant to its obligations
of indemnity under this Section, regardless of any actions, activity or defense
undertaken by Franchisor or the subsequent success or failure of such actions,
activity or defense.
(b) As used in this Section, the phrase "losses and
expenses" shall include, without limitation, all losses, compensatory, exemplary
or punitive damages, fines, charges, costs, expenses, lost profits, reasonable
attorneys' fees, court costs, settlement amounts, judgments, compensation for
damages to the Franchisor's reputation and goodwill, reasonable costs of or
resulting from delays, financing, costs of advertising material and media
time/space, and costs of changing, substituting or replacing the same, and any
and all reasonable expenses of recall, refunds, compensation, public notices and
other such reasonable amounts incurred in connection with the matters described.
(5) Indemnitees do not assume any liability whatsoever for acts,
errors, or omissions of those with whom Developer or any of Developer's
Principals may contract, regardless of the purpose. Developer shall hold
harmless and indemnify Indemnitees for all losses and expenses which may arise
out of any acts, errors or omissions of these third parties.
(6) Under no circumstances shall Indemnitees be required or
obligated to seek recovery from third parties or otherwise mitigate their losses
in order to maintain a claim against
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Developer or any of Developer's Principals. Developer and each of Developer's
Principals agrees that the failure to pursue such recovery or mitigate loss will
in no way reduce the amounts recoverable by Indemnitees from Developer or any of
Developer's Principals.
11. APPROVALS, WAIVERS AND REMEDIES
-------------------------------
A. Whenever this Agreement requires the approval or consent of Franchisor,
Developer shall make a timely written request to Franchisor for such approval or
consent.
B. Franchisor makes no warranties or guarantees upon which Developer may
rely and assumes no liability or obligation to Developer or any third party to
which it would not otherwise be subject, by providing any waiver, approval,
advice, consent, or services to Developer in connection with this Agreement, or
by reason of any neglect, delay or denial of any request therefor.
C. No failure of Franchisor to exercise any power reserved to it by this
Agreement, or to insist upon strict compliance by Developer or Developer's
Principals with any obligation or condition hereunder, and no custom or practice
of the parties at variance with the terms hereof, shall constitute a waiver or
estoppel of Franchisor's right to demand exact compliance with any of the terms
herein and Developer and each of Developer's Principals warrants and undertakes
that it shall not rely on such failure, custom or practice. Waiver by Franchisor
of any particular default by Developer or any of Developer's Principals shall
not affect or impair Franchisor's rights with respect to any subsequent default
of the same, similar or different nature, nor shall delay, forbearance, or
omission of Franchisor to exercise any power or right arising out of any breach
or default by its other developers or by Developer or any of Developer's
Principals of any of the terms, provisions, or covenants hereof, affect or
impair Franchisor's right to exercise the same, nor shall such constitute a
waiver by Franchisor of any right hereunder, or the right to declare any
subsequent breach or default and to terminate this Agreement prior to the
expiration of its term. Subsequent acceptance by Franchisor of any payments due
to it hereunder shall not be deemed to be a waiver by Franchisor of any
preceding breach by Developer of any terms, covenants or conditions of this
Agreement. Except as otherwise expressly provided herein to the contrary, this
provision shall apply mutatis mutandis to Franchisor.
D. Except as otherwise expressly provided herein to the contrary, all
rights and remedies of the parties hereto shall be cumulative and not
alternative, in addition to and not exclusive of any other rights or remedies
which are provided for herein or which may be available at law or in equity in
case of any breach, failure or default or threatened breach, failure or default
of any term, provision or condition of this Agreement. The rights and remedies
of the parties hereto shall be continuing and shall not be exhausted by any one
or more uses thereof, and may be exercised at any time or from time to time as
often as may be expedient; and any option or election to enforce any such right
or remedy may be exercised or taken at any time and from time to time. The
expiration or earlier termination of this Agreement shall not discharge or
release Franchisor or Developer from any liability or obligation then accrued,
or any liability or obligation continuing beyond, or arising out of, the
expiration or earlier termination of this Agreement.
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E. Nothing herein contained shall bar either party'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.
12. SEVERABILITY AND CONSTRUCTION
-----------------------------
A. The term "Developer's Principals" as used in this Agreement shall
include, collectively and individually: all officers, directors and holders of a
direct or indirect beneficial interest in the securities of Developer (or of any
corporation which directly or indirectly controls Developer).
B. Except as expressly provided to the contrary herein, each portion,
section, part, term and/or provision of this Agreement shall be considered
severable; and if, for any reason, any portion, section, part, term and/or
provision herein 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 affect
upon such other portions, sections, parts, terms and/or provisions of this
Agreement as may remain intelligible, and the latter will continue to be given
full force and effect and bind the parties hereto; and said invalid portions,
sections, parts, terms and/or provisions shall be deemed not to be a part of
this Agreement.
C. Developer and Developer's Principals expressly agree to be bound by any
promise or covenant imposing the maximum duty permitted by law which is subsumed
within the terms of any provision hereof, as though it were separately
articulated in and made a part of this Agreement, that may result from striking
from any of the provisions hereof any portion or portions which a court may hold
to be 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 a court order or to the extent which Franchisor in
its sole discretion may otherwise determine.
D. All captions in this Agreement are intended solely for the convenience
of the parties, and none shall be deemed to affect the meaning or construction
of any provision hereof.
E. All references herein 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 herein made or undertaken by Developer shall be deemed jointly and
severally undertaken by all those executing this Agreement on behalf of
Developer.
F. This Agreement may be executed in several parts, and each copy so
executed shall be deemed an original.
G. Except as expressly provided to the contrary herein, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or entity
other than Developer,
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Franchisor, Franchisor's officers, directors, and employees, and such of
Developer's and Franchisor's respective successors and assigns as may be
contemplated (and, as to Developer, permitted) by Section 8 hereof, any rights
or remedies under or by reason of this Agreement.
H. This Agreement will become effective only upon execution hereof by the
President or a vice president of Franchisor.
13. ENTIRE AGREEMENT
----------------
THIS AGREEMENT, THE DOCUMENTS REFERRED TO HEREIN, AND THE EXHIBITS HERETO
CONSITTURE THE ENTIRE, FULL AND COMPLETE AGREEMENT BETWEEN FRANCHISOR AND
DEVELOPER CONCERNING THE SUBJECT MATTER HEREOF AND SHALL SUPERSEDE ALL PRIOR
AGREEMENTS, NO OTHER REPRESENTATIONS HAVING INDUCED DEVELOPER TO EXECUTE THIS
AGREEMENT. THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, OF FAIR DEALING OR
OTHERWISE, BETWEEN THE PARTIES OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS
AGREEMENT. EXCEPT THOSE PERMITTED TO BE MADE UNILATERALLY BY FRANCHISOR
HEREUNDER, NO AMENDMENT, CHANGE OR VARIANCE FROM THIS AGREEMENT SHALL BE BINDING
ON EITHER PARTY UNLESS MUTUALLY AGREED TO BY THE PARTIES AND EXECUTED IN
WRITING.
14. APPLICABLE LAW
--------------
A. DEVELOPER AND DEVELOPER'S PRINCIPALS ACKNOWLEDGE THAT FRANCHISOR MAY
GRANT NUMEROUS DEVELOPMENT RIGHTS THROUGHOUT THE UNITED STATES ON TERMS AND
CONDITIONS SIMILAR TO THOSE SET FORTH IN THIS AGREEMENT, AND THAT IT IS OF
MUTUAL BENEFIT TO DEVELOPER AND DEVELOPER'S PRINCIPALS AND TO FRANCHISOR THAT
THESE TERMS AND CONDITIONS BE UNIFORMLY INTERPRETED. THEREFORE, THE PARTIES
AGREE THAT TO THE EXTENT THAT THE LAW OF THE STATE OF TEXAS DOES NOT CONFLICT
WITH LOCAL FRANCHISE INVESTMENT STATUTES, RULES AND REGULATIONS, TEXAS LAW SHALL
APPLY TO THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT AND SHALL GOVERN
ALL QUESTIONS WHICH ARISE WITH REFERENCE HERETO. NOTWITHSTANDING THE ABOVE, THE
PARTIES RECOGNIZE THAT THE STATE IN WHICH A POST-TERMINATION OR POST-EXPIRATION
COVENANT AGAINST COMPETITION WILL BE ENFORCED HAS THE SIGNIFICANT PUBLIC POLICY
INTEREST: AND, THEREFORE, WITH RESPECT TO ANY ACTION REGARDING SUCH COVENANTS
CONTAINED IN THIS AGREEMENT, THE LAW OF THE STATE IN WHICH THE COVENANT WOULD BE
ENFORCED SHALL APPLY.
B. THE PARTIES AGREE THAT ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE PERFORMANCE THEREOF WHICH CANNOT BE
AMICABLY SETTLED, EXCEPT AS OTHERWISE PROVIDED HEREIN, SHALL BE RESOLVED BY A
PROCEEDING IN A COURT IN
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DALLAS COUNTY, TEXAS, AND DEVELOPER AND DEVELOPER'S PRINCIPALS EACH IRREVOCABLY
ACCEPT THE JURISDICTION OF THE COURTS OF THE STATE OF TEXAS AND THE FEDERAL
COURTS LOCATED IN DALLAS COUNTY, TEXAS FOR SUCH CLAIMS, CONTROVERSIES OR
DISPUTES; PROVIDED, HOWEVER, WITH RESPECT TO ANY ACTION WHICH INCLUDES
INJUNCTIVE RELIEF, FRANCHISOR MAY BRING SUCH ACTION IN ANY STATE WHICH HAS
JURISDICTION.
C. The parties agree that service of process in any proceeding arising out
of or relating to this Agreement or the performance thereof may be made as to
Developer and Developer's Principals by serving a person of suitable age and
discretion (such as the person in charge of the office) at the address of
Developer specified in this Agreement and as to Franchisor, by serving the
President or a vice president of Franchisor at the address of Franchisor or by
serving Franchisor's registered agent.
15. ACKNOWLEDGMENTS
---------------
A. Developer acknowledges that it has conducted an independent
investigation of the business contemplated by this agreement, and recognizes
that it involves business risks and that the success of the venture is largely
dependent upon the business abilities of developer. Franchisor expressly
disclaims the making of, and developer acknowledges that it has not received or
relied upon, any warranty or guaranty express or implied, as to the potential
volume, profits, or success of the business venture contemplated by this
agreement.
B. Developer acknowledges that Franchisor has made no representations
about the development rights granted herein that are contrary to the terms of
this Agreement or the documents referred to herein and Exhibits attached hereto,
and further represents to Franchisor, as an inducement to its entry into this
Agreement, that Developer has made no misrepresentations in obtaining the
development rights granted herein.
C. Developer acknowledges that it has received, read and understood this
Agreement, the documents referred to herein and the Exhibits attached hereto and
that Franchisor has accorded Developer ample time and opportunity to consult
with advisors of Developer's own choosing about the potential benefits and risks
of entering into this Agreement.
D. Developer acknowledges that it received a complete copy of this
Agreement, the documents referred to herein and the Exhibits attached hereto, at
least five (5) business days prior to the date on which this Agreement was
executed. Developer further acknowledges that it has received the disclosure
document required by the Trade Regulation Rule of the Federal Trade Commission
entitled "Disclosure Requirements and Prohibitions Concerning Franchising and
Business Opportunity Ventures" at least ten (10) business days prior to the date
on which this Agreement was executed.
IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and
delivered this Agreement on the day and year first above written.
"Southwest"
23
WITNESS: TGI FRIDAY'S INC.
By: /S/ Xxxxxx Xxxxxxx
----------------- ------------------------
Name Name: Xxxxxx Xxxxxxx
----------------------
Title: Vice President
---------------------
CORNERSTONE PRODUCTIONS, INC.
By: /S/ Xxxx X. Xxxxx, XX.
------------------------
Name: Xxxx X. Xxxxx, XX.
----------------------
Title: President
---------------------
"Southwest"
24
Each of the undersigned acknowledge and agree as follows:
(1) Each has read the terms and conditions of this Agreement;
(2) Each is included in the term "Developer's Principals" as described
in Subsection 13.A of this Agreement;
(3) Each jointly and severally makes all of the covenants,
representations and agreements of Developer's Principals set forth in this
Agreement and is obligated to perform thereunder; and
(4) Each jointly and severally guarantees Developer's obligations to
Franchisor in accordance with Subsection 6.C(8) of this Agreement.
DEVELOPER'S PRINCIPALS
WITNESS: Main Street and Main Incorporated
By: Xxxx X. Xxxxx, XX.
------------------ ----------------------------
Title: President
-------------------------
EXHIBIT A
---------
The Territory
1) The following counties in the State of Arizona:
Apache South Xxxxxx Navajo
Apache North Xxxxxxxx Pima
Cochise La Paz Pinal
Coconino Maricopa Santa Xxxx
Xxxx Mohave Yavapai
2) The following counties in the State of Nevada:
Xxxxxx City Humboldt Xxx South
Xxxxxxxxx Lander Xxxxxxxx
Xxxxx Lincoln Storey
Xxxxxxx Xxxx Washoe
Xxxxxxxxx Mineral
Eureka Xxx North
2) The following counties in the State of New Mexico:
Bernalillo Xxxxxxx San Xxxx
Xxxxxx Xxxxxxx San Xxxxxx
Xxxxxx Lea North Xxxxxxxx
Cibola Lincoln Santa Fe
Colfax Los Alamos Sierra
Xx Xxxx Xxxx Xxxxxxx
Xxxxx Xxx XxXxxxxx Taos
Xxxx Xxxx Torrance
Xxxxx Xxxxx Xxxxxxxx
Xxxxxxxxx Rio Arriba
2) The following counties in the State of Texas:
Xxxxxxxxx
El Paso
Xxxxxxxx
"Southwest"
