EX-20.10
TREATS
NATIONAL MARKETING AGREEMENT
FOR THE
TERRITORY OF
THE UNITED STATES OF AMERICA
Rev.03/02/98
TABLE OF CONTENTS
1. PREAMBLES1
2. DEFINITIONS 2
A. Definition Of Area Development Agreement 2
B. Definition Of TREATS Franchise Agreement 2
C. Definition Of A Corporate STORE 3
3. ASSIGNMENT AND EXCLUSIVITY 3
A. Assignment Of Marks And System 3
B. Reversion Of Interest In Marks And System 4
C. Exclusive Rights of LICENSEE 6
D. Modification Of Marks and System 6
E. Covenants Not To Compete 6
1. Of LICENSEE 6
2. Of LICENSOR 7
4. STORE DEVELOPMENT REQUIREMENTS 8
A. Schedule of STORES 8
B. LICENSEE's Failure To Meet STORE Development
Obligations 8
5. TRAINING8
A. Training Program 8
Training Program Outline 9
B. Satisfactory Completion Of Training 10
C. Training Assistance 10
6. GRANT OF REGIONAL STORE FRANCHISES 10
7. OPERATING ASSISTANCE 11
A. STORE Opening 11
B. Guidance 12
8. REGIONAL MANUAL, STORE MANUAL AND OTHER INFORMATION 12
9. RIGHTS AND OBLIGATIONS OF LICENSEE 12
A. Term and Right to Renew 12
B. Compliance By DEVELOPERS and Franchisees 13
C. LICENSEE's Obligation to Develop Each Regional
Franchise in the Exclusive Territory 13
D. Assistance To DEVELOPERS 14
E. Reports 14
F. Records And Financial Statements 14
G. Advertising 15
H. Insurance 16
I. Collateral Assignments 16
J. Compliance With Laws 16
K. Prudent Business Practices 16
10. INITIAL PAYMENTS TO LICENSOR 17
11. SERVICE FEES 17
A. Amount And Payment Of Regional Franchise
Development Service Fee 17
B. Amount And Payment Of STORE Development
Service Fee 18
C. Amount And Payment Of Operations Service Fee 18
D. Definition Of Net Sales 19
E. Interest on Late Payments 19
F. Application of Payments 19
12. NATIONAL ADVERTISING 20
13. MARKS 20
A. Quality Standards 20
B. Notification Of Infringements And Claims 20
C. Public Offering 21
D. Warranty And Indemnification 21
14. TRADE SECRETS 22
15. EVENTS OF XXXXXXX 00
00. EFFECT ON DEFAULT - TERMINATION 23
A. Xxxxxxxxxxx 00
X. Xxxxxxxx Not To Compete 24
C. Franchise And Area Development Agreements 24
D. LICENSOR Has Right To Purchase Corporate
STORES 25
17. ASSIGNMENT 27
A. By Either Party 27
B. LICENSOR's Right Of First Refusal 27
18. ARBITRATION 28
19. ENFORCEMENT 29
A. Severability and Substitution Of Valid
Provisions 29
B. Waiver Of Obligations 30
C. Specific Performance/Rights Of Parties
Are Cumulative 31
D. Governing Law 32
E. Binding Effect 32
F. Construction 32
20. RELATIONSHIP OF THE XXXXXXX/XXXXXXXXXXXXXXX 00
00. NOTICES AND PAYMENTS 35
22. ACKNOWLEDGEMENTS 35
A. Inquiries Outside Of The Exclusive Territory 35
B. Working Capital Of LICENSEE 36
C. Independent Investigation 36
D. No Warranty or Guarantee 37
ATTACHMENT A 38
APPROVED SUPPLIERS AND SUPPLIES 38
SCHEDULE A 39
STORE DEVELOPMENT SCHEDULE 39
National Marketing Agreement
THIS AGREEMENT is made and entered into this 1ST day of DECEMBER, 1997
by and between TREATS CANADA CORPORATION
a corporation incorporated under the laws of Canada, with its
principal office at 000 Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxx, Xxxxxx,
X0X 0X0. ("LICENSOR")
and
EMC GROUP, INC. a Florida corporation, with its principal office
at 000 Xxxxxxx Xxxxx, Xxxxxxxx, Xxxxxxx, X.X.X., 00000-00000.
("LICENSEE").
1. PREAMBLES
The LICENSOR has experience, special skills, knowledge, ability and
know-how in the development, opening and operation of retail Treats
stores (the "STORE" or "STORES"). The LICENSOR has developed a standard,
unique and uniform system (the "System") for the establishment of the
STORES in specially designed shop premises with distinctive fixtures,
equipment, interior and exterior accessories, color schemes and
comprehensive management assistance, which System is identified by the
trademarks and trade names as detailed in Schedule A attached and such
other trademarks, trade names, designs, copyrights and logos (
the "Marks") as may be hereafter designated by LICENSOR as part of the
System.
By maintenance of uniformity and high standards of quality and
services, LICENSOR and its affiliates have established a reputation,
demand and goodwill for the STORES operated under the Marks. LICENSEE
has experience, skills, knowledge, ability and experience in the design,
development and implementation of franchise systems and/or a variety of
businesses in the United States of America.
LICENSEE desires to establish and develop a Treats National Franchise
Network (the "Network") within the United States of America and its
Territories (the "Exclusive Territory"), and pursuant thereto desires
to adapt the Marks and the System to the prevailing market conditions
of the Exclusive Territory to sell individual franchises ("Franchises"),
to sell, develop and license Treats Agreements to Area Developers
(" AREA DEVELOPERS") and to own and operate corporately owned STORES
("CORPORATE STORES"), in the Exclusive Territory utilizing the Marks
and System developed by LICENSOR.
2. DEFINITIONS
A. Definition Of Area Development Agreement
For the purposes of this Agreement, the "Area Development Agreement" is
defined as being the agreements and area development agreements used in
connection therewith by LICENSOR from time to time in granting Area
Development Agreements to DEVELOPERS pursuant to the terms thereof, a
copy of the current form of which is attached to this Agreement as
Exhibit 1. The LICENSEE is not permitted to have any direct or indirect
financial interest in an Area Development Agreement. The fees
stipulated in the Area Development Agreement to be charged for service,
initial franchise fee, royalties, advertising and other fees are not
required to be charged by LICENSEE to DEVELOPERS.
B. Definition Of TREATS Franchise Agreement
For the purposes of this Agreement, the "TREATS Franchise
Agreement" is defined as being the agreement (including any exhibits,
riders, preliminary agreements and STORE development agreements used in
connection therewith) used by LICENSOR and recommended by LICENSOR for
use by DEVELOPERS from time to time in recruiting franchises for the
operation of STORES to franchisees ("FRANCHISES") pursuant to the terms
thereof, a copy of the current form of which is attached to this
Agreement as Exhibit 2. The fees stipulated in the Area Development
Agreement to be charged for service, initial franchise fee, royalties,
advertising and other fees, only represent suggested fees to be charged,
but theses amounts are not required to be charged by Licensor to
FRANCHISEES.
C. Definition Of A Corporate STORE
For the purpose of this Agreement, a CORPORATE STORE is defined as
being a STORE which is owned and controlled 100% by LICENSEE. Any
CORPORATE STORE must be operated pursuant to the terms of the TREATS
Franchise Agreement or any modification thereof adopted by LICENSEE for
the grant of franchises for the operation of STORES to others in the
Exclusive Territory whether or not a TREATS Franchise Agreement has
been entered into by LICENSEE with itself. Any CORPORATE STORE shall
not conduct any business other than the operation of a Treats STORE.
3. ASSIGNMENT AND EXCLUSIVITY
A. Assignment Of Marks And System
As of the date hereof, LICENSOR grants to LICENSEE the right to sell,
develop and grant Area Development Agreements and Franchises for the
operation of STORES within the Exclusive Territory under the Marks and
all other rights, title and interest of LICENSOR in and to the Marks and
the System within the Exclusive Territory. LICENSOR agrees to execute
all documents which LICENSEE or its counsel reasonably deems necessary
to perfect such assignment under applicable Federal or Provincial/State
law.
B. Reversion Of Interest In Marks And System
In the event of any breach or default of LICENSEE under the terms of
this Agreement, all rights, title and interest of LICENSEE in and to the
Marks and the System within the Exclusive Territory assigned herein to
LICENSEE, and all modifications to the System made by LICENSEE, shall
revert to LICENSOR, provided that such breach or default is not cured
within sixty days of receipt by LICENSEE of notice of such breach or
default; and provided further that the interest of LICENSOR in and to
the Marks and the System following any such reversion shall be subject
to any franchises or licenses of the Marks and the System granted by
LICENSEE. In the event of any such reversion, LICENSOR acknowledges
and agrees that it will assume LICENSEE's rights and obligations from
and after the date of such reversion under all TREATS Franchise
Agreements, Area Development Agreements or license agreements for the
Marks or the System entered into by LICENSEE, in accordance with
Section 16 hereof.
In order to secure the performance of its obligations hereunder,
LICENSEE agrees to deposit, with a mutually acceptable escrowee located
in Canada (the "Escrowee"), an undated reassignment of the Marks and
System to LICENSOR (the "Reassignment"). In the event of breach or
default LICENSOR will send a notice to the Escrowee, (the "Notice")
which Notice shall specify the nature of the breach or default and
shall demand delivery of the Reassignment. Upon receipt of the Notice,
Escrowee shall send a copy thereof to LICENSEE by registered or
certified mail, return receipt requested or in the alternative via
courier or facsimile.
In the event LICENSEE disputes the allegation of default set forth in
the Notice, LICENSEE shall, within sixty (60) days of receipt of the
Notice, deliver to Escrowee a sworn affidavit (the "Affidavit") stating
either that no default has occurred or that such default has been
cured.
In the event Escrowee receives such Affidavit in accordance herewith,
he shall send a copy thereof to LICENSOR and any disputes between the
parties hereto shall be submitted to arbitration pursuant to Section 18
hereof. In the event Escrowee does not receive such affidavit within
said sixty (60) day period, or in the event of a determination by an
arbitrator in favor of LICENSOR pursuant hereto, or in the event of
the written consent of both LICENSOR and LICENSEE, Escrowee shall date
the Reassignment as of the date of the Notice and shall deliver the
Reassignment to LICENSOR. The costs of any such escrow shall be borne
equally by LICENSOR and LICENSEE.
The Escrowee shall be protected in acting upon any written notice,
request, waiver, consent, receipt, or other paper or document furnished
to it, not only in assuming its due execution and the validity and
effectiveness of its provisions but also as to the truth and
acceptability of any information therein contained, which it in good
faith believes to be genuine and what it purports to be.
In no event shall Escrowee be liable for any act or failure to act
under the provisions of the Reassignment except where its acts are the
result of its gross negligence or malfeasance. Escrowee shall have no
duties except those which are expressly set forth herein, and it shall
not be bound by any notice of a claim, or demand with respect thereto,
or any waiver, modification, amendment, termination, or rescission of
this Agreement, unless in writing received by it, and, if its duties
herein are affected, unless it shall have given its prior written
consent thereto.
Escrowee shall not assume any responsibility or liability for any
transactions between LICENSOR and LICENSEE other than for the
performance of its obligations with respect to the Reassignment held
by it in accordance with this Agreement. The party pursuant to whose
directions Escrowee acts, shall indemnify and hold harmless Escrowee
from reasonable attorneys' fees which may be sustained or incurred by
Escrowee as a result of the taking of such action.
LICENSEE agrees that, in the event of any reversion of the Marks
pursuant to this Paragraph, it will change its corporate name to any
name not containing any Xxxx.
C. Exclusive Rights of LICENSEE
LICENSOR agrees that it will not have any right to operate or grant
a franchise or license for the operation of a STORE to be located
within the Exclusive Territory or grant a Treats Area Development
agreement for all or any part of the Exclusive Territory so long as
no reversion has occurred pursuant to Paragraph B of this Section 3.
D. Modification Of Marks and System
LICENSEE desires to maximize the success of the Network by adapting
the Marks and the System to market conditions prevailing in the
Exclusive Territory. Therefore, LICENSEE shall have the right in its
discretion at any time and from time to time to modify the System and
the Marks, and to use other trademarks, trade names, designs,
copyrights and logos in connection with the System and the Marks, as
may reasonably be necessary to adapt the System and the Marks to
market conditions prevailing in the Exclusive Territory. From time to
time LICENSEE shall assign to LICENSOR at no cost to LICENSOR the
exclusive rights to use and to license others to use any such
modification of the System and Marks outside the Exclusive Territory
in connection with LICENSOR's use and franchising of the System and
Marks.
E. Covenants Not To Compete
1. Of LICENSEE
LICENSEE acknowledges that LICENSOR has made the foregoing assignment
to LICENSEE in part in consideration of and in reliance upon LICENSEE's
agreement to refrain from engaging in activities that may detract from
the LICENSEE's ability to develop the Network. Accordingly, LICENSEE
agrees that, during the term of this Agreement ("Term" as defined in
Paragraph A of Section 9, hereof), neither LICENSEE nor any
shareholders, directors, officers or employees of LICENSEE will have
any interest as an owner (except of publicly held securities traded on
a stock exchange or on the over counter market representing less than
five percent (5%) of the equity or control thereof), director,
officer, employee, consultant, representative or agent, or in any
other capacity, in any other business, whether inside or outside of
the Exclusive Territory, offering products usually sold in Treats
STORES or offering products and/or services similar to those sold in
Treats STORES. LICENSEE further agrees that it will at all times
faithfully, honestly and diligently perform its
obligations hereunder and that it will continuously exert its best
efforts to promote and enhance the development of Area Development
Agreements and STORES within the Exclusive Territory.
2. Of LICENSOR
LICENSOR acknowledges that the value of the System and the Marks to
LICENSEE would be substantially impaired in the event LICENSOR were to
utilize its know-how to compete in the Exclusive Territory with
LICENSEE.
Therefore, in consideration of the initial and recurring payments to
be made to LICENSOR hereunder and all other covenants of LICENSEE
contained herein, LICENSOR agrees that, so long as LICENSEE is not in
breach or in default under this Agreement, neither LICENSOR nor any
shareholders, directors, officers or employees of LICENSOR will have
any interest as an owner (except of publicly held securities traded on
a stock exchange or on the over the counter market representing less
than five percent (5%) of the equity or control thereof), director,
officer employee, consultant, representative or agent, or in any other
capacity in any other business in the Exclusive Territory offering
products or services similar to those sold in Treats STORES for sale
at retail, or any business licensing or franchising such business in
the Exclusive Territory.
4. STORE DEVELOPMENT REQUIREMENTS
A. Schedule of STORES
LICENSEE agrees to have open, under construction or subject to a
fully executed Franchise Agreement, the cumulative number of STORES for
which Franchise Agreements have been duly executed in accordance with
Schedule A attached to this Agreement.
B. LICENSEE's Failure To Meet STORE Development Obligations
If during any Agreement Year, LICENSEE fails to meet its STORE
development obligations as provided in Schedule A of this Agreement,
LICENSOR shall have the right to terminate this Agreement pursuant to
Section 16 hereof. LICENSOR shall have the right to modify or reduce
LICENSEE's STORE development obligations for any Agreement Year but
such modification or reduction shall not constitute a waiver of
LICENSEE's STORE development obligations for any subsequent Agreement
Year(s).
5. TRAINING
A. Training Program
LICENSEE agrees that at least one of its principals or designated
managing executive or full-time senior manager ("Trainee") will attend
LICENSOR's training program on the establishment, development and
operation for the Area Development Franchises ("Area Development
Training") and in the operation of Treats STORES ("Store Training")
which shall be provided at a location specified by LICENSOR. LICENSOR
shall provide such training without charge, provided that LICENSEE
shall be solely responsible for his costs of transportation and living
expenses in connection with attendance at such training program.
LICENSEE may elect to have all or part of the training program to
take place at and during the opening of LICENSEE's first STORE (
"Alternative Training"). In the event LICENSEE elects Alternative
Training, LICENSEE agrees that it is responsible for the
transportation, accommodation and meals of LICENSOR'S designated
training manager. LICENSOR is responsible for the salary and benefits
of the designated training manager.
The training program will be conducted over a two (2) to four (4)
week consecutive period and will cover, but will not be limited to,
the following subject matter:
Training Program Outline
a) establishing and organizing the Area Development Franchises;
b) recruiting Area DEVELOPERS;
c) plans and specifications for STORE construction;
d) STORE equipment and fixture purchase and installation;
e) accounting and bookkeeping systems for the Area Development
Franchises and STORES;
f) financing arrangements for STORE development;
g) advertising and promotional plans and programs;
h) inventory ordering, stocking and merchandising;
i) ordering and stocking supplies;
j) insurance requirements;
k) negotiation and execution of STORE leases, subleases and TREATS
Franchise Agreements;
l) recruiting STORE franchisees;
m) management and operation of STORES; and
n) training and supervision of Area Developers and STORE franchisees.
B. Satisfactory Completion Of Training
LICENSEE's designated Trainee shall be required to complete the
training program to the satisfaction of LICENSOR. If LICENSOR (acting
reasonably) determines in its sole discretion that LICENSEE's designee
is unable to satisfactorily complete the training program, and if
LICENSEE is unable to hire a designee who satisfactorily completes
the training program, LICENSOR shall have the right to terminate
this Agreement, pursuant to Section 16 hereof.
C. Training Assistance
LICENSOR agrees to permit the first three (3) AREA DEVELOPERS or
STORE FRANCHISEES of LICENSEE to attend LICENSOR's AREA DEVELOPMENT or
STORE Training programs, as may be applicable, at no charge to LICENSEE
or said DEVELOPERS/STORE FRANCHISEES, provided that said DEVELOPERS/
STORE FRANCHISEES shall be solely responsible for their costs of
transportation and living expenses in connection with attendance at
such training programs.
6. GRANT OF STORE FRANCHISES
LICENSEE agrees that it will not directly own or operate any Area
Development Franchises or STORES (except CORPORATE STORES as provided
in this Agreement) in the Exclusive Territory. LICENSEE may grant an
Area Development Franchise or STORE Franchise to any corporation,
partnership, proprietorship or other entity that is separate and
distinct from LICENSEE, including, without limitation, an affiliate or
subsidiary of LICENSEE.
If LICENSEE grants an Area Development Franchise or STORE Franchise
to an entity which is directly or indirectly related to or an affiliate
or subsidiary of or otherwise controlled by LICENSEE or LICENSEE's
owners, such Area Development Franchise or STORE Franchise shall be
operated under LICENSOR's then prescribed form of Area Development
Agreement or TREATS Franchise Agreement and on such terms and
conditions as are then being offered by LICENSEE to prospective
DEVELOPERS or FRANCHISEES.
7. OPERATING ASSISTANCE
A. STORE Opening
LICENSOR will supply LICENSEE with personnel to assist LICENSEE in
the opening of STORES in the Exclusive Territory. LICENSOR's personnel
will be made available at no charge, exclusive of travel and living
expenses, to LICENSEE at the opening of the first STORE in the
Exclusive Territory. At all subsequent STORE openings, LICENSOR's
personnel will be made available to LICENSEE at the then applicable
per diem charge per person plus travel and living expenses.
B. Guidance
LICENSOR shall furnish LICENSEE with guidance and assistance with
respect to the establishment, development and operation of STORES;
management and operation of Area Development Franchises; and
administration of the national and regional advertising funds. Such
guidance shall be furnished, as is from time to time deemed appropriate
in the sole discretion of LICENSOR, in the form of LICENSOR's
Confidential Operating Manual for AREA DEVELOPERS (the "Area
Development Manual"), LICENSOR's Confidential Operating Manual for
the STORES ("the Store Manual"), bulletins or other written materials,
telephone consultations and/or consultation at LICENSOR's offices or
the offices of LICENSEE.
8. REGIONAL MANUAL, STORE MANUAL AND OTHER INFORMATION
LICENSOR will provide to LICENSEE two (2) copies of the Area
Development Manual, two (2) copies of the STORE Manual, two (2) copies
of the Treats Design Kit which includes plans and specification for a
STORE (including requirements for dimensions, design, image, interior
layout, finish materials, equipment, fixtures, signs and color scheme),
two (2) copies of a disclosure document for Treats Area Development
Franchises which utilizes the Uniform Franchise Offering or similar
format, sales and promotional material developed and used by LICENSOR,
and such modifications and revisions thereto as LICENSOR may from time
to time develop. Such Regional and STORE Manuals, plans and
specifications and other materials are deemed to be elements of and
embodiments of the System, and shall be returned to LICENSOR by
LICENSEE in the event of a reversion pursuant to Paragraph B of Section
3 of this Agreement.
LICENSOR shall also provide to LICENSEE such other documents and
information (including without limitation audited financial statements)
as may be requested by LICENSEE from time to time to enable it to
comply with any applicable franchise registration and disclosure laws
in effect in the Exclusive Territory.
9. RIGHTS AND OBLIGATIONS OF LICENSEE
A. Term and Right to Renew
Subject to the provisions contained herein, the term of this
Agreement and the rights granted hereunder shall be twenty (20) years
commencing on the date of this Agreement. ("Term"). Provided the
LICENSEE is substantially in compliance with the terms of this
Agreement, LICENSEE will have the right to renew this Agreement for a
further term of ten (10)years, based on the LICENSOR's then current
form of National License Agreement ("Renewal").
B. Compliance By DEVELOPERS and Franchisees
LICENSEE shall take such steps as may be reasonably necessary to
enforce the terms and conditions of its Franchise Agreements with each
FRANCHISOR and FRANCHISEE, including without limitation:
1.) that all signs, equipment, fixtures, supplies and merchandise are
approved by LICENSEE for use in STORES and are purchased from
approved suppliers; (See Attachment A.)
2) that sales reports, financial statements, records and other
information are submitted as required by the TREATS Franchise
Agreements as amended from time to time (or such modifications
thereof, if any, as may be adopted by LICENSEE);
3) that each STORE is inspected by DEVELOPERS on a periodic basis to
ensure compliance with the terms and conditions of the TREATS
Franchise Agreements (or such modifications thereof, if any, as may
be adopted by LICENSEE); and
4) that all specifications, standards and operating procedure
requirements of the STORE Manual as amended from time to time (
or such modification thereof, if any, as may be adopted by LICENSEE)
are fully complied with by all STORES in the Exclusive Territory.
To determine whether each STORE in the Exclusive Territory is in
compliance with the terms and conditions of the TREATS Franchise
Agreement, LICENSEE shall periodically inspect the STORES and conduct,
supervise or observe a physical inventory of the STORES.
C. LICENSEE's Obligation to Develop Each Franchise in the Exclusive
Territory
LICENSEE agrees that it will exert its best efforts to develop each
and every Franchise in the Exclusive Territory to the extent necessary
to prepare such Franchise for opening on the terms and conditions
specified in the Franchise Agreement or such modification thereof, if
any, as may be adopted by LICENSEE with LICENSOR's approval.
D. Assistance To DEVELOPERS
LICENSEE shall provide each DEVELOPER with such guidance any
assistance as is required under the Area Development Agreement or such
modification thereof, if any, as may be adopted by LICENSEE as approved
by LICENSOR..
E. Reports
LICENSEE shall mail to LICENSOR a copy of the sales reports for each
STORE postmarked no later than fifteen (15) days after each calendar
month. LICENSEE shall provide LICENSOR with a STORE by STORE monthly
(or period) sales report no later than fifteen (15) days after the end
of each month (or period). LICENSEE shall provide LICENSOR with such
other Regional Franchise and STORE financial statements, reports and
records as may be required or requested from time to time by LICENSOR.
F. Records And Financial Statements
During the Term and any Renewal thereof, LICENSEE agrees, at its
expense, to maintain at its principal office and preserve for three (3)
years from the date of their preparation or such greater period as may
be required by applicable law, full, complete and accurate books,
records, and accounts prepared pursuant to generally accepted
accounting methods, utilizing the standard chart of account furnished
or required by LICENSOR, including, without limitation, employee
records, sale invoices, cash receipts, purchase records, accounts
payable, cash disbursement records, inventory records general ledgers,
itemized bank deposit slips and bank statements, copies of sales tax
returns, copies of such portions of LICENSEE's Federal, Provincial/
State Income Tax returns as reflect the operation of the LICENSEE's
business under this Agreement.
LICENSEE, at its expense, shall furnish to LICENSOR (or its agents)
for inspection or audit, such forms, reports, records, financial
statements and other information as LICENSOR may require. LICENSEE
shall make such financial and other information available at such
locations as LICENSOR may reasonably request (including LICENSOR's
principal office), and shall allow LICENSOR (or its agents) full and
free access thereto at LICENSEE's principal offices during regular
business hours. LICENSOR (or its agents) shall have the right to
communicate freely with LICENSEE's employees, DEVELOPERS and
FRANCHISEES, and to make extracts from, and copies of, all such
information.
LICENSEE shall prepare and furnish to LICENSOR, within one hundred
twenty (120) days after the end of each fiscal year, an audited
statement of profit and loss and a balance sheet as of the end of each
fiscal year of LICENSEE, prepared and certified by the Certified Public
Accountant or firm of Certified Public Accountants then usually and
normally engaged by LICENSEE in accordance with generally accepted
accounting principles consistently applied.
G. Advertising
LICENSEE shall maintain and administer a national advertising fund
substantially as described in the Area Development Agreement. LICENSEE
shall provide LICENSOR with such financial reports, statements and
records pertaining to the advertising fund as LICENSOR from time to
time may require.
LICENSOR will provide LICENSEE with a copy of all existing and new
advertising material it has available, on computer disk whenever
possible, at no charge to LICENSEE.
H. Insurance
LICENSOR shall be named as an additional insured on all liability i
insurance policies applicable to LICENSEE and such policies shall
provide that LICENSOR receive thirty (30) days prior written notice of
termination, expiration or cancellation of any such policy.
I. Collateral Assignments
LICENSEE shall deliver to LICENSOR one (1) duplicate original
executed copy of each Franchise Agreement and each Area Development
Agreement.
LICENSEE shall execute and deliver to LICENSOR, in the form required by
LICENSOR, collateral assignments of each such Franchise and/or Area
Development Agreement, which collateral assignments shall become
operable only upon LICENSOR's termination with cause of this Agreement
pursuant to the terms hereof. The effectiveness of such collateral
assignment shall not constitute a waiver or forgiveness of any debts
or liabilities of LICENSEE to LICENSOR.
J. Compliance With Laws
K. Prudent Business Practices
Nothing contained in this Section 9 shall be deemed or construed to
require LICENSEE shall comply with all local, Federal or Provincial/
State laws, ordinances, rules and regulations, including, without
limitation, all Federal or Provincial/State franchise registration and
disclosure laws and any Federal Trade Commission Trade Regulation Rule
regarding Disclosure requirements and Prohibitions Concerning
Franchising and Business Opportunity Ventures ("Franchise Laws").
LICENSEE shall further be responsible for LICENSOR's compliance with
applicable Franchise Laws, if any. LICENSEE to take or omit to take any
action if such action or omission would in its context be contrary to
prudent business practices and sound business judgment.
10. INITIAL PAYMENTS TO LICENSOR
LICENSEE agrees to pay LICENSOR the amount of TWO MILLION, SEVEN
HUNDRED THOUSAND US DOLLARS ( $2,700,000.00US) payable to the LICENSOR,
forthwith upon execution of this Agreement, by way of the issuance to
the LICENSOR of TWO MILLION, SEVEN HUNDRED THOUSAND ($2,700,000)
Convertible Preference Shares of EMC GROUP INC.
It is further agreed that, in the event the payments referred to above
are not made on the due dates, LICENSEE shall be deemed to have breached
this Agreement for purposes of Paragraph B of Section 3 and LICENSOR may
terminate this Agreement in accordance with Section 16 hereof.
11. SERVICE FEES
In consideration of the ongoing training, guidance and assistance to
be provided to LICENSEE by LICENSOR hereunder:
A. Amount And Payment Of Area Development Service Fee
LICENSEE agrees to pay LICENSOR a non refundable Area Development
Service Fee in an amount equal to ten percent (10%) of the Regional
Franchise Development Fee being charged AREA DEVELOPERS by LICENSEE,
for every Area in the Exclusive Territory payable to LICENSOR forthwith
upon the execution of each Area Development Agreement.
LICENSEE agrees to pay LICENSOR a non refundable STORE Development
Service Fee in an amount equal to ten percent (10%) of the Franchise
Development Fee being charged AREA DEVELOPERS by LICENSEE, for every
Area in the Exclusive Territory payable to LICENSOR forthwith upon
the execution of each TREATS Franchise Agreement, whether sub-
franchised or corporately operated.
B. Amount And Payment Of STORE Development Service Fee
LICENSEE agrees to pay LICENSOR a STORE Development Service Fee in an
amount equal to ten percent (10%) of the STORE franchise fee being
charged FRANCHISEES by LICENSEE, for every STORE in the Exclusive T
territory payable to LICENSOR and non-refundable upon the execution of
the TREATS Franchise Agreement for each STORE.
In the event that LICENSEE operates a CORPORATE STORE, LICENSEE
agrees to pay to LICENSOR an amount equal to ten percent (10%) of the
highest STORE franchise fee charged in the calendar year during which
the STORE opens.
C. Amount And Payment Of Operations Service Fee
LICENSEE agrees to pay to LICENSOR an operations service fee
("Operations Service Fee") for each STORE in the Exclusive Territory
in an amount equal to one percent (1%) of the net sales of each STORE
and/or CORPORATE STORE, and one percent (1%) of the net sales for
STORES operating under an Area Development Agreement. Such fee shall
be payable within fifteen (15) days after the conclusion of each
monthly accounting period and shall be payable within such period
whether or not LICENSEE has collected royalty and service fees from
FRANCHISOR or FRANCHISEES.
D. Definition Of Net Sales
As used in this Agreement, the term "net sales" shall mean and
include the actual gross charges for all products sold to customers of
the STORES, for cash or credit, at or from the STORE, including
catalogue and mail order sales, but excluding revenue for sales, use,
service or excise taxes collected from customers and paid to the
appropriate taxing authority and customer refunds and adjustments.
E. Interest On Late Payments
All service fees and other amounts owed to LICENSOR by LICENSEE
pursuant to this Agreement shall bear interest after due date at the
rate of three percent (3%) per annum over prime rate of Citibank in
the United States.
LICENSEE acknowledges that this Paragraph F shall not constitute
LICENSOR's agreement to accept such payments after same are due or a
commitment by LICENSOR to extend credit to or otherwise finance
LICENSEE's operation. Further, LICENSEE acknowledges that its failure
to pay all amounts when due shall constitute a default under this
Agreement for purposes of Paragraph B of Section 3 and Section 16,
notwithstanding the provisions of this Paragraph F of Section 11.
G. Application Of Payments
LICENSOR shall have sole discretion to apply any payments by
LICENSEE to any past due indebtedness of LICENSEE for Operations
Service Fees, Area Development Service Fees, STORE Development Service
Fees, interest, or any other indebtedness.
12. NATIONAL ADVERTISING
Recognizing the value of national advertising and promotion of the
goodwill and public image of the STORES, LICENSEE agrees to maintain
and administer a national advertising fund (the "National Fund") for
such national advertising programs substantially as described in the
Area Development Agreement.
13. MARKS
A. Quality Standards
In order to protect LICENSOR's interest in the Marks outside the
Exclusive Territory, LICENSEE agrees that it will maintain, and will in
its agreements with DEVELOPERS and FRANCHISEES require its DEVELOPERS
and FRANCHISEES to maintain standards of quality, cleanliness and
service at least equal to the standards required by LICENSOR of its
DEVELOPERS and FRANCHISEES and licensees or LICENSEES of the Marks and
the System outside the Exclusive Territory. LICENSEE agrees that any
changes made by LICENSEE in the System pursuant to Paragraph D of
Section 3 will not result in a diminution of its standards of quality,
cleanliness and service.
B. Notification Of Infringements And Claims
LICENSEE shall immediately notify LICENSOR of any apparent
infringement of or claim by any person of any rights in any Xxxx or
any variation or limitation thereof.
C. Public Offering
In the event LICENSEE shall attempt to raise or secure funds by the
sale of securities (inclusive of common or preferred stock, bonds or
indentures) subject to the provisions of Section 17, LICENSEE,
recognizing that registration statements, prospectuses and/or offering
circulars and other documents and materials used in connection
therewith may reflect upon LICENSOR, agrees to submit any such
documents and materials to LICENSOR and to obtain the written approval
of LICENSOR as to the method of financing prior to any offering or sale
of any such securities. Further, in no event shall the LICENSEE make
any public offer to sell, lease, transfer or assign its rights and
interests under this Agreement through any public medium without first
obtaining the written consent of LICENSOR. The consent or approval of
LICENSOR hereunder shall not be unreasonably withheld or delayed.
D. Warranty And Indemnification
LICENSOR represents and warrants to LICENSEE that LICENSOR owns all
rights, title and interest in and to the Marks in the Exclusive
Territory. LICENSOR agrees to indemnify LICENSEE against all claims,
suits, causes of action, losses, costs, damages, liabilities or
expenses which LICENSEE may suffer, sustain or incur as a result of
any breach of this Warranty; provided that LICENSOR shall not be
required to indemnify LICENSEE to the extent such claims, suits,
causes, losses, costs, damages, liabilities or expenses result from
LICENSEE's modification of the Marks and provided further that
LICENSEE shall put forth its best efforts to mitigate the damages
or other amounts for which LICENSOR shall be liable, pursuant to this
Warranty and Indemnification.
14. TRADE SECRETS
LICENSOR and LICENSEE acknowledge that certain of the information,
including, without limitation, the contents of the Operations Manuals,
the STORE Manual and architectural plans and specifications, or
modifications thereto made by LICENSOR or LICENSEE (the "Confidential
Information"), that will be disclosed or furnished by one party hereto
to another pursuant to the Agreement is proprietary, confidential and
a trade secret of the respective owners thereof and shall remain the
property of such owner (or if assigned to LICENSEE pursuant hereto,
shall become and remain the property of LICENSEE unless reassigned
pursuant to Paragraph B of Section 3 hereof). Each party agrees that
it and each of its owners, directors, officers and employees will
maintain the absolute confidentiality of all such Confidential
Information during and after the Term, that they and each of them will
not use any Confidential Information in any other business or in any
manner not specifically authorized or approved in writing by the owner
and that all such Confidential Information will be disclosed only to
employees of LICENSOR or LICENSEE, to DEVELOPERS and to FRANCHISEES
and only to the extent required for such individuals to properly
perform their duties. LICENSOR and LICENSEE, respectively, shall
protect such Confidential Information by causing any of its officers,
directors, shareholders and employees who have access to the
Confidential Information to sign appropriate non-disclosure agreements
prior to disclosure thereof, which non-disclosure agreements shall
provide for the maintenance of the confidentiality of the
Confidential Information for a period of time at least coterminous
with the period of time set forth in the Covenant Not to Compete
contained in Paragraph B of Section 16 hereof, and shall in all other
respects contain the terms and provisions set forth in Exhibit 3.
15. EVENTS OF DEFAULT
In addition to those events described in Paragraph B of Section 4,
in Paragraph B of Section 5, Section 10 and Section 11 hereof, the
following events shall constitute events of default for purposes of
this Agreement:
(1) If either party becomes insolvent by reason of its inability to
pay its obligations as they become due or makes an assignment
for the benefit of creditors;
(2) If either party files a voluntary petition in bankruptcy or
any pleading seeking any re-organization, liquidation,
dissolution or composition or other settlement with creditors
under any law, or admitting or failing to contest the material
allegations of any such pleading filed against it, or is
adjudicated a bankrupt or insolvent or a receiver or other
custodian is appointed for a substantial part of the assets of
LICENSEE or a final judgment remains unsatisfied or of record
for ninety (90) days or longer (unless supersedes bond is
filed), or if execution is levied against any substantial part
of the assets of LICENSEE, or the claims of creditors of
LICENSEE are abated or subject to a moratorium under any law;
(3) If either party fails or refuses to comply with any provision
of this Agreement and does not correct such failure or refusal
within sixty (60) days after written notice thereof (which
notice shall describe the corrective action that the defaulting
party must take) is delivered to the defaulting party, provided
that if a failure to comply cannot reasonably be corrected
within sixty (60) days, to initiate within such sixty (60) day
period, and thereafter continue, such action as will correct
such failure within a reasonable time;
(4) If either party or any of its directors or executive officers is
convicted of or pleads no contest to a felony, a crime involving
moral turpitude or any other crime or offense that is likely to
adversely affect the reputation of the STORES and the goodwill
associated with the Marks.
16. EFFECT ON DEFAULT - TERMINATION
A. Termination
In the event of a default or breach of this Agreement by either
party, the other party may, at its option, terminate this Agreement,
provided that all obligations of LICENSOR or LICENSEE which expressly
or by their nature survive the expiration or termination of this
Agreement shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement and
until they are satisfied in full or by their nature expire.
B. Covenant Not To Compete
If this Agreement is terminated by LICENSOR in accordance with the
provisions of this Agreement or by LICENSEE, LICENSEE agrees that
neither it nor its owners, directors or officers will, for a period
of two (2) years, commencing on the effective date of termination, or
the date on which LICENSEE ceases to conduct the business conducted
pursuant to this Agreement, whichever is later, have any interest as
an owner (except of publicly traded securities representing less than
five percent (5%) of the equity of control thereof), partner, director,
officer, employee, consultant, representative or agent, or in any
other capacity, in any business offering products normally sold in
Treats STORES for sale at retail or wholesale within or outside of the
Exclusive Territory.
C. Franchise And Area Development Agreements
If this Agreement is terminated by LICENSOR with cause pursuant to
the terms hereof, the Franchise Agreements and Area Development
Agreements in LICENSEE's Exclusive Territory shall automatically and
without further assignment, consent or other action by LICENSEE become
the property of LICENSOR. In such event, LICENSOR shall succeed to
all of the rights and obligations of LICENSEE under such Franchise
Agreements and Area Development Agreements pursuant to the terms of
the collateral assignments referred to in Paragraph H of Section9
hereof. LICENSEE agrees that, in such event, LICENSOR shall be
entitled to rely upon such collateral assignments and DEVELOPERS and
FRANCHISEES in the Exclusive Territory shall also be entitled to rely
upon such collateral assignments without liability to LICENSEE.
D. LICENSOR Has Right To Purchase Corporate STORES
If this Agreement is terminated by LICENSOR in accordance with its
provisions or by LICENSEE without cause, then LICENSOR shall have the
option, exercisable by giving notice within six (6) months from the
date of such termination, to purchase from LICENSEE all the assets
(including inventory of saleable products, supplies, equipment and
fixtures) of all CORPORATE STORES. LICENSOR shall have the
unrestricted right to assign this option to purchase.
The purchase price for the assets of the CORPORATE STORES shall be
the sum of the "book value factor" and the "earnings factor", as
determined below; provided, however, LICENSOR shall have the right to
set off against and reduce the purchase price by any and all amounts
owed by LICENSEE to LICENSOR or any of its affiliates.
The "book value factor" shall consist of the book value of the
assets of the CORPORATE STORES as disclosed by the balance sheet in
the financial statement of the CORPORATE STORES prepared by LICENSEE
and submitted to LICENSOR as provided under Paragraph E of Section9
of this Agreement prior to such termination or expiration, which
financial statement shall be final and binding, with appropriate
adjustments for the time period that has elapsed since the date of
such financial statement; provided, however, that LICENSOR may exclude
from the assets purchased and the "book value factor" any fixtures,
equipment, furniture, signs, merchandise, products or supplies of the
CORPORATE STORES that have not been acquired in compliance with the
TREATS Franchise Agreement or any modification thereof adopted by
LICENSEE for use in the granting of franchises for the operation of
STORES where the CORPORATE STORES are located.
The "earnings factor" shall consist of fifteen percent (15%) of the
annual net sales of the CORPORATE STORES as disclosed in the last
annual financial statement of CORPORATE STORES prepared by LICENSEE,
which financial statement shall be final and binding, and on which
LICENSEE has paid the service fees provided under Paragraph C of
Section 11.
The purchase price shall be paid in cash at the closing of the
purchase, which shall take place no later than forty-five (45) days
after receipt by LICENSEE of LICENSOR's notice to purchase the
CORPORATE STORES, at which time LICENSEE shall: (1) deliver instruments
transferring good and merchantable title to the assets purchased , free
and clear of all liens and encumbrances, to LICENSOR or its nominee with
all sales and other transfer taxes paid by LICENSEE; and (2) transfer
or assign all licenses or permits which may be assigned or transferred.
In the event that LICENSEE cannot deliver clear title to all the
purchased assets as aforesaid, or in the event there shall be other
unresolved issues, the closing of the sale shall be accomplished
through an escrow. Further, LICENSEE and LICENSOR shall, prior to
closing, comply with the applicable Bulk Sales provisions of the Uniform
Commercial Code as enacted in the State, Province or Territory where
the CORPORATE STORES are located.
After such termination, and pending the time period in which LICENSOR
may exercise its option to purchase the CORPORATE STORES and the closing
of such purchase of the CORPORATE STORES and the closing of such
purchase of the CORPORATE STORES by LICENSOR, LICENSOR shall have the
right to operate the corporate STORES for the account of LICENSEE,
provided that LICENSOR shall only have a duty to utilize its best
efforts in the operation of the CORPORATE STORES and shall not be
liable to LICENSEE for any losses incurred by the CORPORATE STORES, or
to any creditor of LICENSEE for any merchandise, supplies, or services
purchased by the CORPORATE STORES during any period in which it is
managed by LICENSOR. Alternatively, LICENSOR may require LICENSEE
to close the CORPORATE STORES during such time period without removing
therefrom any assets of the CORPORATE STORES.
17. ASSIGNMENT
A. By Either Party
This Agreement is fully assignable by either party and shall enure to
the benefit of any LICENSEE or other legal successor to the interests of
LICENSOR or LICENSEE herein, provided that the assigning party shall,
subsequent to any such assignment, remain liable for the performance of
its obligations under this Agreement. If LICENSOR or LICENSEE no longer
remains either an active or legally existing entity as a result of such
assignment, such assigning party shall require its successors and
assigns to assume the obligations and liability for the performance of
its obligations under this Agreement.
B. LICENSOR's Right Of First Refusal
If LICENSEE or its owner(s) shall at any time determine to sell any
interest in its rights hereunder or an ownership interest in LICENSEE,
the written approval of LICENSOR (which approval not be unreasonable
withheld) must be obtained prior to any such sale. If LICENSEE or its
owner(s) shall at any time determine to sell any interest in its
hereunder or an ownership interest in LICENSEE, LICENSEE or its owner(s)
shall obtain a bona fide, executed written offer from a responsible and
fully disclosed purchaser and shall submit an exact copy of such offer
to LICENSOR, who shall, for a period of thirty (30) days from the date
of delivery of such offer, have the right, exercisable by written notice
to LICENSEE or its owner(s), to purchase such interest in LICENSEE for
the price and on the terms and conditions in such offer, provided that
LICENSOR may substitute cash for any form of payment proposed in such
offer.
LICENSOR shall have not less than thirty (30) days to prepare for
closing. If LICENSOR does not execute its right of first refusal,
LICENSEE or its owner(s) may complete the sale to such purchaser
pursuant to and on the terms of such offer, subject to LICENSOR's
approval of the purchaser as provided in this Paragraph B., provided
that if the sale to such purchaser is not completed within one hundred
and twenty (120) days after delivery of such offer to LICENSOR, or
there is a material change in the terms of the sale, LICENSOR shall
again have the right of first refusal herein provided.
18. ARBITRATION
Except as specifically otherwise provided in this Agreement, the
parties agree that any and all disputes between them and any claim by
either party that cannot be amicably settled, shall be determined
solely and exclusively by arbitration in accordance with the United
States Arbitration Act (9 U.S.C. Section 1 et seq.) if applicable,
and the rules of the American Arbitration Association and its office
nearest the home office of LICENSEE.
Each party shall select one arbitrator, and the two so designated
shall select a third arbitrator. If either party shall fail to
designate an arbitrator within seven (7) days after arbitration is
required, or if the two arbitrators shall fail to select a third
arbitrator within fourteen (14) days after arbitration is requested,
then an arbitrator shall be selected by the American Arbitration
Association upon application of either party. Arbitration
proceedings shall be conducted in accordance with the rules then
prevailing of the American Arbitration Association. Judgment upon
an award of the majority of the arbitrators shall be binding and
shall be entered in a court of competent jurisdiction.
Nothing herein contained shall bar the right of either party to
obtain injunctive relief against threatened conduct that will cause
loss or damages under the usual equity rules, including the applicable
rules for obtaining preliminary injunctions, provided an appropriate
bond against damages be provided.
19. ENFORCEMENT
A. Severability and Substitution Of Valid Provisions
Except as expressly provided to the contrary herein, each section,
paragraph, term and provision of this Agreement, and any portion
thereof, shall be considered severable and if for any reason any such
portion of this Agreement is held to be invalid, contrary to, or in
conflict with any applicable present or future law or regulation in a
final, unappealable ruling issued by any court, agency or tribunal with
competent jurisdiction in a proceeding to which LICENSOR is a party,
that ruling shall not impair the operation of, or have any other effect
upon, such other portions of this Agreement as may remain otherwise
intelligible, which shall continue to be given full force and effect
and bind the parties hereto, although any portion held to be invalid
shall be deemed not to be a part of this Agreement from the date the
time for appeal expires, if LICENSEE is a party thereto, or upon
LICENSEE's receipt of a notice of nonenforcement thereof from LICENSOR.
If any applicable and binding law or rule of any jurisdiction
requires a greater prior notice of the termination of or refusal to
renew this Agreement than is required hereunder, or the taking of some
other action not required hereunder, or if under any applicable and
binding law or rule of any jurisdiction, any provision of this
Agreement is invalid or unenforceable, the prior notice and/or other
action required by such law or rule shall be substituted for the notice
requirements hereof, and LICENSOR shall have the right, in its sole
discretion, to modify such invalid or unenforceable provision to the
extent required to be valid and enforceable.
Such modifications to this Agreement shall be effective only in such
jurisdiction, unless LICENSOR elects to give them greater applicability
and shall be enforced as originally made and entered into an all other
jurisdictions.
B. Waiver Of Obligations
LICENSOR and LICENSEE may by written instrument unilaterally waive
or reduce any obligation of or restriction upon the other under this
Agreement, effective upon delivery of written notice thereof to the
other or such other effective date stated in the notice of waiver.
Whenever this Agreement requires LICENSOR's prior approval or
consent, LICENSEE shall make a timely written request therefor, and
such approval shall be obtained in writing.
LICENSOR makes no warranties or guarantees upon which LICENSEE may
rely, and assumes no liability or obligation to LICENSEE, by granting
any waiver, approval of consent to LICENSEE, or by reason of any
neglect, delay or denial of any request thereof.
Any waiver granted by LICENSOR shall be without prejudice to any
other rights LICENSOR may have, will be subject to continuing review
by LICENSOR, and may be revoked, in LICENSOR's sole discretion, at any
time and for any reason, effective upon receipt by LICENSEE of ten
(10) days prior written notice.
No failure, refusal or neglect of LICENSOR or LICENSEE to exercise
any right under this Agreement, or to insist upon full compliance by
the other with its obligations hereunder, shall constitute a waiver of
any provision of this Agreement.
LICENSOR and LICENSEE shall not be deemed to have waived or
impaired any right, power or option reserved by this Agreement
(including, without limitation, its right to demand exact compliance
with every term, condition and covenant herein, or to declare any
breach thereof to be a default and to terminate this Agreement prior
to the expiration of its term) by virtue of any custom or practice of
he parties at variance with the terms hereof; any failure by LICENSOR
or LICENSEE to demand strict compliance with Agreement; any waiver,
forbearance, delay, failure or omission by LICENSOR to exercise any
right, power or option, whether of the same, similar or different
nature, against licensees or LICENSEES of the Marks of the System
outside the Exclusive Territory; or the acceptance by LICENSOR of any
payment due from LICENSEE after any breach of this Agreement.
Neither LICENSOR nor LICENSEE shall be liable for loss or damage due
to delay in its performance of its obligations resulting from
transportation shortages, inadequate supply of labor, material or
energy, or the voluntary foregoing of the right to acquire or use any
of the foregoing in order to accommodate or comply with the orders,
requests, regulations, recommendations or instructions of any Federal,
State, or Municipal Government or department of agency thereof; acts
of God; acts or omissions of the other party; fires; strikes;
embargoes; wars, riot or any other similar event or cause. Any delay
resulting from any of said causes shall extend performance accordingly
or excuse performance, in whole in part, as may be reasonable.
C. Specific Performance/Rights Of Parties Are Cumulative
Nothing herein contained shall bar LICENSOR's or LICENSEE's right to
obtain specific performance of the provisions of this Agreement or
injunctive relief against threatened conduct that will cause its loss
r damages under customary equity rules, including applicable rules for
obtaining restraining orders and preliminary injunctions.
The rights of LICENSOR and LICENSEE hereunder are cumulative and no
exercise or enforcement by LICENSOR or LICENSEE of any right or remedy
hereunder shall preclude the exercise or enforcement by LICENSOR or
LICENSEE of any other right or remedy hereunder or which LICENSOR or
LICENSEE is entitled by law to enforce.
D. Governing Law
Except to the extent governed by the United States Trademark Act of
1946 (Xxxxxx Act, 15 U.S.C. Section 1051 et seq.) this Agreement shall
be governed by the laws of Canada.
E. Binding Effect
This Agreement is binding upon the parties hereto and their
respective executors, administrators, heirs, assigns and successors in
interest, and shall not be modified except by written agreement signed
by both LICENSEE and LICENSOR.
F. Construction
The preambles and Exhibit(s) are a part of this Agreement, which
constitutes the entire agreement of the parties, and there are no other
oral or written understandings or agreements between LICENSOR and
LICENSEE relating to the subject matter of this Agreement.
Nothing in this Agreement is intended, nor shall be deemed, to confer
any rights or remedies upon any person or legal entity not a party
hereto.
The headings of the several sections and paragraphs hereof are for
convenience only and do not define, limit or construe the contents of
such sections or paragraphs.
The term LICENSEE as used herein is applicable to a corporation.
The singular usage includes the plural and the masculine and neuter
usages include the other and the feminine.
References to LICENSEE, "LICENSEE" and "transferee" which are
applicable to an individual or individuals shall mean the principal
owner of owners of the equity or operating control of LICENSEE, or
any such LICENSEE or transferee, if LICENSEE or such other LICENSEE
or transferee is a corporation or partnership.
This Agreement shall be executed in multiple copies, each of which
shall be deemed an original.
Time is of the essence of this Agreement.
20. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION
It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them, that LICENSOR
and LICENSEE shall be independent contractors and that nothing in this
agreement is intended to make either party a general or special agent,
legal representative, subsidiary, joint venturer, partner, employee or
servant of the other for any purpose.
LICENSEE shall conspicuously identify himself at his office and in
all dealings with contractors, suppliers, public officials and others
as the owner of the Marks and the System in the Exclusive Territory and
shall place such other notices of independent ownership on such forms,
stationary, advertising and other materials as LICENSOR may require
from time to time.
Neither LICENSOR nor LICENSEE shall make any express or implied
agreements, warranties or representations, or incur any debt, in the
name of or on behalf of the other or represent that their
relationship is other than LICENSOR or LICENSEE and neither LICENSOR
or LICENSEE shall be obligated by or have any liability under any
agreement or representations made by the other, nor shall LICENSOR
be obligated for any damages to any person or property directly or
indirectly arising out of the business authorized by or conducted
pursuant to this Agreement, whether caused by LICENSEE's negligent
or willful action or failure to act.
LICENSOR shall have no liability for any sales, use, excise, gross
receipts, income, property or other taxes, whether levied upon LICENSEE
or upon LICENSOR, in connection with the business conducted by
LICENSEE.
LICENSEE agrees to indemnify and hold LICENSOR, its subsidiaries,
affiliates, stockholders, directors, officers, employees, agents and
LICENSEES harmless against, and to reimburse them for, all such
obligations, actual and consequential damages and taxes for which any
of them is held liable and for all costs reasonably incurred by any of
them in the defense of any such claim brought against any of them or
in any action in which any of them is named as a party, including
without limitation reasonable accountants and attorneys and expert
witness fees, costs of investigation and proof of facts, court costs,
other litigation expenses and travel and living expenses. LICENSOR
shall have the right to defend any such claim against it, provided
that LICENSEE shall have the right to participate in and, to the
extent LICENSEE deems necessary, to control any litigation
proceeding which could result in liability or expense to LICENSOR
subject to such indemnification.
LICENSOR agrees to indemnify LICENSEE against and to reimburse
LICENSEE for any obligations or liability for damages attributable
to agreements, representations, warranties of or authorized by
LICENSOR, or caused by the gross negligence or willful action of
LICENSOR, and for costs (as hereinabove defined) reasonably incurred
by LICENSEE in the defense of any such claim brought against him or
in any action in which he is named as a party, provided that LICENSOR
shall have the right to participate in and, to the extent LICENSOR
deems necessary, to control any litigation or proceeding which could
result in liability of or expense to LICENSEE subject to such
indemnification.
The indemnities and assumptions of liabilities and obligations
herein shall continue in full force and effect subsequent to and
notwithstanding the expiration or termination of this Agreement.
21. NOTICES AND PAYMENTS
All written notice permitted or required to be delivered by the
provisions of this Agreement shall be deemed so delivered by hand, one
(1) day after sending by telegraph or facsimile or four (4) days after
placed in the mail by Registered or Certified Mail, Return Receipt
Requested and addressed to the party to be notified at its most current
principal business address of which the notifying party has been
notified.
All payments required by this Agreement shall be directed to
LICENSOR at the address notified to LICENSEE from time to time, or
to such other persons and places as LICENSOR may direct from time to
time.
22. ACKNOWLEDGEMENTS
A. Inquiries Outside Of The Exclusive Territory
In the event LICENSEE receives inquiries from prospective AREA
DEVELOPERS for the operation of a Treats license or franchise outside
of the Exclusive Territory ("Referral") LICENSEE agrees to communicate
such Referral immediately to LICENSOR. If as a result of such Referral
LICENSOR receives a bona fide offer to purchase a license of the rights
to use, franchise or sublicense the System and Marks outside of Canada
or the Exclusive Territory ("Offer") which LICENSOR is prepared to
accept, then and in such event LICENSOR shall give notice to LICENSEE
("Notice") of such Offer and LICENSEE shall have a first right of
refusal, exercisable in writing within seven (7) days of receipt of
such Notice from LICENSOR, to purchase such license on the same terms
and conditions as contained in the Offer, failing which this right of
first refusal shall be null and void and of no further effect.
B. Working Capital Of LICENSEE
LICENSEE shall at all times maintain working capital adequate in the
opinion of LICENSOR to properly conduct the business covered under this
Agreement. For the purposes of interpretation of this Agreement,
adequate working capital shall be defined as capital sufficient enough
in any given month to enable LICENSEE to meet its monthly fixed
overhead and expenses without receiving any income from franchise
sales or royalties.
C. Independent Investigation
LICENSEE acknowledges that he has conducted an independent
investigation of the business contemplated by this Agreement and
recognizes that it involves business risks which make the success
of the venture largely dependent upon the business abilities of
LICENSEE.
D. No Warranty or Guarantee
LICENSOR expressly disclaims the making of, and LICENSEE
acknowledges that it has not received or relied upon, any warranty
or guarantee, express or implied, as to the potential revenues,
profits or success of the business venture contemplated by this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed, sealed, and
delivered this Agreement in duplicate counterparts on the day and year
first above written.
LICENSOR
TREATS CANADA CORPORATION
/s/Xxxxxxx Xxxxx By: /s/ Xxxx Xxxxxx
WITNESS XXXX X. XXXXXX, PRESIDENT
LICENSEE
EMC GROUP, INC.
_________________ By: /s/ Xxxxxx Xxxxxx
WITNESS XXXXXX XXXXXX, PRESIDENT
ATTACHMENT A
APPROVED SUPPLIERS AND SUPPLIES
Approved suppliers ("Suppliers" or "Supplier") are those who are
approved from time to time by LICENSOR to provide goods and services to
the System, either directly or indirectly. LICENSEE may apply to have
companies designated as Suppliers and LICENSOR will, acting reasonably,
at its sole discretion grant or deny Supplier status.
SCHEDULE A
STORE DEVELOPMENT SCHEDULE
At the end of each subsequent Agreement Year for the next five (5)
years THIRTY (30) additional STORES shall be opened in the Exclusive
Territory. At no time after the tenth (10th) year from the date
hereof shall there be less than FOUR HUNDRED AND FIFTY (450) STORES
opened and in operation in the Exclusive Territory. Each Agreement
Year shall end on the day before the anniversary date of this Agreement.
If LICENSEE develops and opens during any Agreement Year a greater
number of STORES than are required to meet its obligation hereunder
for new STORES, LICENSEE may apply such excess against its obligation
for any succeeding Agreement.
EXHIBIT 1
Area Development Agreement
NOTICE TO READERS: The material components of the area developer
agreement were disclosed and filed by reference in the Company's 10-SB.
The terms and conditions with respect to all other matters are
substantially the same as in a Treats Franchise Agreement. The Treats
Franchise Agreement was filed by reference as an exhibit to the
Form 10-SB on May 16, 2001
EXHIBIT 2
TREATS Franchise Agreement
TREATS CANADA CORPORATION
NOTICE TO READERS: The Treats Franchise Agreement was filed as an
exhibit to the Form 10-SB on May 16, 2001
EXHIBIT 3
NON-DISCLOSURE AGREEMENT
I____________________________, as an agent, employee, principal or
associate of ______________________ (the "Company") will not at any
time, in any fashion, form or manner whatsoever, either directly or
indirectly divulge, disclose, or communicate to any person, firm and/
or corporation any information of any kind, nature or description
concerning any matters affecting or related to the business of the
Company including but not limited to promotional and merchandising
methods and techniques, potential franchisees, potential clients, or
any other information concerning the business of the Company, its
manner of operation, or its plans, processes, or other data of any
kind, nature or description, including without limitation such
Confidential Information as may be disclosed to the Company by
another entity in connection with its business, without regard to
whether or not all of the foregoing matters would be deemed
confidential, material or important.
The confidentiality obligations hereof will not apply to any
information that becomes known to the general public without fault
or breach on the part of the receiving party; which is customarily
disclosed to others by TREATS CANADA CORPORATION without restriction
or disclosure; or which is known by the receiving party prior to
disclosure.
The foregoing shall apply during affiliation and for two (2) years
after disaffiliation with the Company.
SIGNED this day of , 199
BY:
WITNESS:___________________ Per:________________
-
