TGI FRIDAY'S INC.
AMENDED AND RESTATED DEVELOPMENT AGREEMENT
Main Street California, Inc.
Dated: May 2, 1997
"California"
TGI FRIDAY'S INC.
AMENDED AND RESTATED DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
RECITALS 1
1. GRANT 2
2. PREFERENTIAL RIGHTS 2
3. SCHEDULE AND MANNER FOR EXERCISING
DEVELOPMENT RIGHTS 3
4. SITE SELECTION 5
5. TERM 7
6. DUTIES OF THE PARTIES 7
7. DEFAULT 11
8. TRANSFER OF INTEREST 13
9. COVENANTS 16
10. NOTICES AND PAYMENTS 19
11. INDEPENDENT CONTRACTOR AND INDEMNIFICATION 19
12. APPROVALS, WAIVERS AND REMEDIES 21
13. SEVERABILITY AND CONSTRUCTION 22
14. ENTIRE AGREEMENT 23
15. APPLICABLE LAW 24
16. ACKNOWLEDGMENTS 24
EXHIBIT A - THE TERRITORY
EXHIBIT B - FRANCHISE AGREEMENT
EXHIBIT C - CONFIDENTIALITY COVENANTS
EXHIBIT D - CONFLICT OF INTEREST AND CONFIDENTIALITY COVENANTS
"California"
AMENDED AND RESTATED DEVELOPMENT AGREEMENT
This Amended and Restated Development Agreement ("Agreement") is
entered into this 2nd day of May, 1997 by and between TGI Friday's Inc., a New
York corporation, with its principal place of business in Dallas, Texas
(hereinafter "Franchisor") and Main St. California, Inc., an Arizona
corporation, with its principal place of business at 0000 X. 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 derives its rights in the Proprietary Marks
pursuant to a certain Assignment Agreement dated December 29, 1992 (the
"Assignment Agreement") by and between Franchisor and TGI Friday's of Minnesota,
Inc. a Minnesota corporation ("TGIFM"), pursuant to which Franchisor transferred
to TGIFM all right, title and interest in the Proprietary Marks and TGIFM
granted back to Franchisor the perpetual and exclusive right and license to use
the Proprietary Marks and the right to sub-license the Proprietary Marks to
third parties.
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;
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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
-----
A. Franchisor hereby grants to Developer and Developer accepts,
pursuant to the terms and conditions of this Agreement, development rights to
establish and operate the number of T.G.I. Friday's Restaurants set forth in the
Development Schedule as may be approved by Franchisor in accordance with its
then current Site Consent Procedures, 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 page A-1 and A-2 of Exhibit A attached hereto (hereinafter
"Territory") and outlined on the maps attached hereto as page A-3 and A-4 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. Also excluded from the Territory are any areas contained within a
three (3) mile radius of any T.G.I. Friday's restaurants located within the
boundaries of the Territory as of the date of this Agreement. Unless
specifically set forth in this Agreement, the rights granted herein shall not
include the exclusive right to develop Friday's American Bar locations within
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. PREFERENTIAL RIGHTS
-------------------
During the term in for so long as no default has occurred and
is continuing and no event has occurred which, with the giving of notice or
lapse of time, or both, would constitute a
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default, Franchisor shall, prior to granting any development or franchising
rights in such of the regions as remain subject to this Agreement with respect
to new restaurant concepts developed by Franchisor and which Franchisor
determines, in its discretion, to franchise in such regions, discuss in good
faith with Developer, Developer's acquisition of such development and franchise
rights with respect to such new concepts, including the Friday's American Bar,
upon such terms and conditions as would be acceptable, at the time, to
Franchisor and Developer. Notwithstanding the foregoing, nothing herein shall
require that such discussions result in Franchisor's granting such rights to
Developer or that Developer undertake to develop and franchise such new concepts
in such regions
3. 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 development right exercised hereunder in accordance with each regional
development schedule set forth in Subsection 3.B hereof shall be in the form of
the franchise agreement attached hereto as Exhibit B. The franchise fee to be
paid by Developer for the initial development in accordance with the initial
development schedules set forth in Subsection 3.B hereof shall be Fifty Thousand
Dollars ($50,000.00) for each Restaurant to be located in the Territory, 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 initial development
schedule set forth below:
In the San Francisco Region of the Territory (as defined in Exhibit A)
---------------------- -------------------------- ------------------------- --------------------------
Restaurant No. Date of Preliminary Site Date Franchise Date Open & Operating
Consent Agreement Signed & Fees
Paid
---------------------- -------------------------- ------------------------- --------------------------
---------------------- -------------------------- ------------------------- --------------------------
1 & 2 6/98 9/98 12/15/98
---------------------- -------------------------- ------------------------- --------------------------
3 6/99 9/99 12/15/99
---------------------- -------------------------- ------------------------- --------------------------
4 6/00 9/00 12/15/00
---------------------- -------------------------- ------------------------- --------------------------
5 6/01 9/01 12/15/01
---------------------- -------------------------- ------------------------- --------------------------
6 6/02 9/02 12/15/02
---------------------- -------------------------- ------------------------- --------------------------
Date Open & Operating # Restaurants this Period
--------------------- -------------------------
12/15/98 2
12/15/99 1
12/15/00 1
12/15/01 1
12/15/02 1
Total Restaurants 6
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In the Los Angeles Region of the Territory (as defined in Exhibit A)
---------------------- -------------------------- ------------------------- --------------------------
Restaurant No. Date of Preliminary Site Date Franchise Date Open & Operating
Consent Agreement Signed & Fees
Paid
---------------------- -------------------------- ------------------------- --------------------------
0 12/15/97
---------------------- -------------------------- ------------------------- --------------------------
1 & 2 6/98 9/98 12/15/98
---------------------- -------------------------- ------------------------- --------------------------
3 & 4 6/99 9/99 12/15/99
---------------------- -------------------------- ------------------------- --------------------------
5, 6 & 7 6/00 9/00 12/15/00
---------------------- -------------------------- ------------------------- --------------------------
8, 9 & 10 6/01 9/01 12/15/01
---------------------- -------------------------- ------------------------- --------------------------
11, 12, 13 & 14 6/02 9/02 12/15/02
---------------------- -------------------------- ------------------------- --------------------------
Date Open & Operating # Restaurants this Period
--------------------- -------------------------
12/15/97 0
12/15/98 2
12/15/99 2
12/15/00 3
12/15/01 3
12/15/02 4
Total Restaurants: 14
In the San Diego Region of the Territory (as defined in Exhibit A)
---------------------- -------------------------- ------------------------- --------------------------
Restaurant No. Date of Preliminary Site Date Franchise Date Open & Operating
Consent Agreement Signed & Fees
Paid
---------------------- -------------------------- ------------------------- --------------------------
0 12/15/97
---------------------- -------------------------- ------------------------- --------------------------
1 6/98 9/98 12/15/98
---------------------- -------------------------- ------------------------- --------------------------
2 6/99 9/99 12/15/99
---------------------- -------------------------- ------------------------- --------------------------
3 6/00 9/00 12/15/00
---------------------- -------------------------- ------------------------- --------------------------
4 6/01 9/01 12/15/01
---------------------- -------------------------- ------------------------- --------------------------
5 6/02 9/02 12/15/02
---------------------- -------------------------- ------------------------- --------------------------
Date Open & Operating # Restaurants this Period Total # Restaurants
--------------------- ------------------------- -------------------
12/15/97 0
12/15/98 1
12/15/99 1
12/15/00 1
12/15/01 1
12/15/02 1
Total Restaurants: 5
Notwithstanding the grant of rights herein, the San Diego and Los
Angeles regions may, at Franchisor's election, be co-developed by Franchisor
with company operated restaurants. Franchisor additionally reserves the right to
issue franchises for location within the San Diego and Los Angeles regions to
third parties on a site specific basis, without the issuance of a development
territory or additional development rights.
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Failure by Developer to adhere to the initial or any subsequent
regional development schedule shall constitute a material event of default under
this Agreement as provided in Subsection 7.C hereof with respect to such region.
Failure by Developer to adhere to the initial or any subsequent regional
development schedule with respect to any two of the San Francisco, Los Angeles
or San Diego Regions shall constitute a material event of default as provided in
Subsection 7.C hereof with respect to this Agreement. 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(s) 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 with respect to such development schedule(s).
C. Franchisor and Developer agree that during the years 2002 and 2007
of the term of the Agreement a new development schedule for each region will be
negotiated providing for the number of Restaurants to be developed in such
region during the ensuing five (5) or six (6) (as appropriate) year period 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 in any region 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 factors. 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 necessary factors shall be
conducted using the same procedures set forth at Subsection 16.03 of the
Franchise Agreement attached hereto as Exhibit B. In the event the Appraiser
determines that no Restaurants should be developed during the ensuing five (5)
or six (6) year period in any region(s), either party may terminate this
Development Agreement with respect to such region(s) upon written notice given
to the other party within ninety (90) days from the date such Appraiser renders
its written opinion. In the event this Development Agreement is not so
terminated within such ninety (90) day period, it shall remain in full force and
effect and a new regional development schedule shall be negotiated for the five
(5) year period next following. Should Developer fail to develop according to
the new regional development schedule, Developer agrees that it will lose its
rights to development within such region, and agrees that Franchisor shall have
the right to develop or license other parties to develop Restaurants within such
region. For each of the Restaurants to be developed during each five (5) or (6)
year period, 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.
4. SITE SELECTION
--------------
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:
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(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;
(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;
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(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 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.
5. 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 15, 2013.
6. DUTIES OF THE PARTIES
---------------------
A. Franchisor shall furnish to Developer the following:
(1) One (1) copy of the Development Manual ("Development
Manual"), which is a part of the Confidential Operating Manuals ("Manuals")
referred to in Section 3 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-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) 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.
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(5) Pre-opening 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. Developer currently operates in excess of
seven Restaurants. In accordance with current policy, Franchisor would provide
no more than two NSO Team Members for each opening.
(6) Training programs for the Operator (as hereinafter
defined) in the operation of the Restaurants at such location, as may be
designated by Franchisor from time to time in the Manuals or otherwise in
writing.
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 Section 7.01.B(2) 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 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 7.01.B(3) 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 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
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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.
(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
Covenants 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 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. Developer and each of Developer's Principals agree 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.
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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 provide
that the activities of Developer are confined exclusively to 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 of any class of voting securities of the
corporation. Such list shall be furnished to Franchisor upon request;
(7) If Developer is a corporation, 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) Developer represents that: (a) Xxxxxx Xxxxxxxxx and Xxxx
Xxxxx, Xx. are voting members of the Board of Directors of Developer; (b) that
Xxxxxx Xxxxxxxxx and Xxxx Xxxxx, Xx. (or their approved replacements) shall at
all times during the term of this Agreement be and remain voting members of the
Board of Directors of Developer; and (c) that Developer shall obtain the prior
written approval of Franchisor of any replacement or subsequent replacement for
Xxxxxx Xxxxxxxxx and Xxxx Xxxxx, Xx. in accordance with the provisions of
Section 8 of this Agreement before either of them or any approved replacement is
replaced as a member of the Board.
(9) Each of Developer's Principals unconditionally and
irrevocably guarantees to Franchisor and its successors and assigns that all of
Developer's obligations under this Agreement will be punctually performed. Upon
default by Developer or notice from Franchisor, Developer's Principals will
immediately perform each 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 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
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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.
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.
7. DEFAULT
-------
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 judgment remains unsatisfied or of record for thirty (30) days or
longer (unless supersedeas 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
within thirty (30) days; or if the real or 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 any initial regional development
schedule set forth in Subsection 3.B hereof or any subsequent regional
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 of the date the monies become
due and payable; Developer fails to comply with any other terms and conditions
of this Agreement, or the terms of any Franchise
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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; provided, however, any failure to comply
with the initial (or any subsequent) regional development schedule in any one of
the San Francisco, Los Angeles and San Diego Regions shall constitute a material
event of default only with regard to such Region and Franchisor may terminate
the development rights for such region; and provided further that any failure to
comply with the initial (or any subsequent) regional development schedule in
more than one of the San Francisco, Los Angeles and San Diego Regions shall
constitute a material event of default under this Agreement, and Franchisor
shall have the right to exercise any or all of the remedies set forth in this
Section 7;
(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
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 at the time of termination and
Franchisor shall be entitled to establish and to license others to establish
Restaurants in the region(s) affected or the Territory (as appropriate) 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.
F. All rights and remedies of Franchisor shall be cumulative and in
addition to, and not exclusive of, any other right or remedy provided for herein
or which may be available at law or in equity. The expiration or termination of
this Agreement shall not discharge or release Developer or any Principal from
any liability or obligation then accrued or any liability or obligation
continuing beyond, or arising out of, such expiration or termination.
G. Nothing herein contained shall bar or impair Franchisor's right to
obtain injunctive or other equitable relief.
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8. TRANSFER OF INTEREST
--------------------
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 and Developer's Principals understand and acknowledge
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 registered pursuant to Section 12
under 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) 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 contained in this Agreement;
and as applicable, transferee's spouse, shareholders, partners or other
investors, shall also execute such agreement;
(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
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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, the transferee 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 development fee;
(g) Developer and Developer's Principals shall remain
liable for all of the 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) and (h) 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.
(5) INTENTIONALLY DELETED.
(6) With respect to the approval of a replacement for Xxxxxx
Xxxxxxxxx or Xxxx Xxxxx, Xx. or any subsequently approved replacement as a
voting member of the Board of Directors of Developer, Franchisor, in its sole
discretion, may require, among others, any or all of the following as conditions
of its approval:
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(a) Developer not being in default of any provision
of this Agreement, any amendment hereof or successor hereto, or any other
agreement between Developer and Franchisor, or their subsidiaries and
affiliates;
(b) the replacement shall enter into a written
agreement in a form satisfactory to Franchisor agreeing to assume and perform
the covenants and agreements contained herein to be assumed and performed by
Developer's Principals; and
(c) the replacement shall demonstrate to Franchisor's
satisfaction the following: that the replacement 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 the replacement possesses a good moral character, business
reputation and credit rating; and that the replacement has the aptitude and
ability to conduct the franchised business (as may be evidenced by prior related
business experience or otherwise).
C. (1) Any party holding any interest (including interests required to
be transferred pursuant to Subsection 8.D hereof if such proposed transfer would
constitute the sale to or purchase by a third party of any interests in the
Franchisee, the franchised business or this Agreement) in Developer or in this
Agreement who desires to accept any bona fide offer from a third party to
purchase such interest 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 the seller that Franchisor intends
to purchase the seller's 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, an independent appraiser shall be designated by Franchisor to determine
such amount and his 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. INTENTIONALLY DELETED
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.
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9. 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 and
shall require its Operators and Regional Manager, if applicable, to devote full
time, energy and best efforts to the management, operation and supervision of
the franchised business and 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:
(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.
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(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
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 business offering the same or similar products and services as offered by
restaurants within the System, which business is, or is 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 November 16, 1993), Chi-Chi's, El Chico
and other ethnic-theme restaurants (as the same are operated on November 16,
1993), and The Tavern on the Green, Windows on the World and other fine dining
white tablecloth restaurants (as the same are operated on November 16, 1993).
For purposes of comparison only, such subsections shall preclude involvement as
aforesaid in
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restaurants such as Bennigans, Houstons, Chili's, Houlihan's and other casual
dining restaurants (as same are operated on November 16, 1993).
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 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. Developer and
Developer's Principals agree 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, 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 Conflict of Interest and Confidentiality
Covenants attached hereto as Exhibit D. Developer shall be responsible for
compliance by its employees with such covenants.
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10. NOTICES AND PAYMENTS
--------------------
A. All notices required to be given hereunder shall be in writing and
shall be sent by personal delivery, by next-day delivery service, by electronic
means, or by certified 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 personal delivery, next-day delivery service or by
electronic means shall be deemed given on the next business day after
transmittal. Any notices sent by certified or registered mail shall be deemed
given on the third business day after 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.
B. 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, by next-day delivery service, by electronic means, or by
mail, postage prepaid, and directed to Franchisor as shown above.
11. INDEPENDENT CONTRACTOR AND INDEMNIFICATION
------------------------------------------
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 and each of Developer's Principals 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
"California"
19
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.
The provisions of Subsections 11.D(1)(c), (d) and (e) shall apply
mutatis mutandis to Franchisor.
(2) Developer and each of Developer's Principals agree to give
Franchisor immediate notice of any such action, suit, proceeding, claim, demand,
inquiry or investigation. Provided the exercise of the rights reserved to
Franchisor in this Subsection 11.D. does not materially and adversely affect the
insurance coverage maintained by Developer, at the expense and risk of Developer
and each of Developer's Principals, Franchisor may elect to assume (but under no
circumstance is obligated to undertake), the defense and/or settlement of any
such action, suit, proceeding, claim, demand, inquiry or investigation. If the
exercise of the rights reserved to Franchisor in this Subsection 11.D. would
materially and adversely affect the insurance coverage maintained by Developer,
then in that event Franchisor shall have the right, in place of other rights, to
associate counsel of its own choosing and at Developer's expense, to monitor the
defense and/or settlement of any such action, suit, proceedings, claims, demand,
inquiry or investigation; it being understood, however, that the foregoing is
not intended to limit Franchisor's rights to seek equitable relief by way of
injunction or otherwise or to take reasonable actions to mitigate damage, injury
or harm to persons or property. Any such undertakings by Franchisor shall, in no
manner or form, diminish the obligation of Developer and each of Developer's
Principals to indemnify Franchisor and to hold it harmless.
(3) Subject to the provisions of Subsection 11.D(2) above, 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:
"California"
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(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) Subject to the provisions of Subsection 11.D(2) above:
(a) All losses and expenses incurred under this
Section shall be chargeable to and paid by Developer or any of Developer's
Principals 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, attorneys'
fees, court costs, settlement amounts, judgments, compensation for damages to
the Franchisor's reputation and goodwill, 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 expenses of
recall, refunds, compensation, public notices and other such 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 and each of
Developer's Principals 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 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.
12. 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.
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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 or 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 of 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.
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.
13. SEVERABILITY AND CONSTRUCTION
-----------------------------
A. The term "Developer's Principals" as used in this Agreement shall
mean Main Street and Main Incorporated, a Delaware corporation.
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.
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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.
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, 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.
14. ENTIRE AGREEMENT
----------------
This Agreement, the documents referred to herein, and the Exhibits
hereto constitute 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.
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15. 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 (EXCEPT FOR TEXAS
CHOICE OF LAW RULES) 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 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.
16. ACKNOWLEDGMENTS
---------------
A. Developer and Developer's Principals 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
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DEVELOPER DEVELOPER'S PRINCIPALS ACKNOWLEDGE 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 and Developer's Principals acknowledge 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 and Developer's Principals acknowledge that it has
received, read and understood this Agreement, the documents referred to herein
and the Exhibits attached hereto and that Franchisor has accorded them 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 and Developer's Principals acknowledge 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 and Developer's Principals further
acknowledge 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.
17. RESTATED AGREEMENT
------------------
This Development Agreement amends and restates that certain Development
Agreement dated December 23, 1993 by and between the parties hereto.
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IN WITNESS WHEREOF, the parties hereto have duly executed, sealed, and
delivered this Agreement on the day and year first above written.
WITNESS: TGI FRIDAY'S INC.
SIGNATURE ILLEGIBLE By: /s/ Xxxxxx Xxxxxxx
--------------------- ----------------------------
Name: Xxxxxx Xxxxxxx
--------------------------
Title: Vice President
-------------------------
MAIN ST. CALIFORNIA INC.
Xxxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxx, Xx.
--------------------- ----------------------------
Name: Xxxx X. Xxxxx, Xx.
--------------------------
Title: President
-------------------------
Main Street and Main Incorporated acknowledges and agrees as follows:
(1) it has read the terms and conditions of this Agreement;
(2) it is "Developer's Principal" as described in Subsection 13.A
of this Agreement; and
(3) it is bound as a Developer's Principal as set forth in this
Agreement and is obligated to perform thereunder.
Developer's Principal
MAIN STREET AND MAIN INCORPORATED
Xxxxxxxx X. Xxxxxx By: /s/ Xxxx X. Xxxxx, Xx.
--------------------- ----------------------------
Name: Xxxx X. Xxxxx, Xx.
--------------------------
Title: President
-------------------------
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EXHIBIT A
---------
THE "SAN DIEGO REGION":
-----------------------
In the state of California - The counties of :
Imperial
San Diego
THE "SAN FRANCISCO REGION": The counties of :
---------------------------
In the state of California:
Lake
Marin
Mendocino
Napa
San Francisco
San Mateo
Santa Xxxxx
Sonoma
THE "LOS ANGELES REGION": The counties of :
-------------------------
In the state of California:
Inyo
Orange
Riverside
San Xxxxxxxxxx
Xxxxxxx
Los Angeles county, excluding that portion of the county which is bounded on the
north by Sunset Boulevard to U.S. Hwy. 100, (the Harbor Fwy.), on the south by
I. 10 (the Santa Xxxxxx Frwy.), and on the west by the Pacific Ocean.
"California"
