PROMOTION AGREEMENT
THIS PROMOTION AGREEMENT (this "Agreement"), dated as of February 4, 1997, is
entered into by and between REDNECK FOODS, INC., a Delaware corporation
("Company"), and XXXX XXXXXXXXX, an individual ("Xxxxxxxxx") with reference
to the following:
Simultaneously with the execution and delivery of this Agreement, (i)
Company, Xxxxxxxxx and Xxxxx Xxxxxx ("Xxxxxx") are entering into a Series A
Convertible Preferred Stock Purchase Agreement (the "Stock Purchase
Agreement") providing for, among other things, the acquisition by Xxxxxxxxx
of certain shares of Series A Convertible Preferred Stock (the "Preferred
Stock") of Company upon the terms and subject to the conditions set forth
therein.
As partial consideration for the Preferred Stock purchased pursuant to the
Stock Purchase Agreement, Xxxxxxxxx desires to provide Company with certain
promotional appearances and services pursuant to the terms provided herein.
NOW, THEREFORE, in consideration of the obligations and agreements contained
herein and in the Stock Purchase Agreement and the Transaction Documents, the
parties hereto agree as follows:
1. DEFINITIONS. All capitalized terms used but not otherwise defined
herein shall have the meanings given to them in the Stock Purchase Agreement.
2. PROMOTIONAL SERVICES.
2.1. Promotional Commercials.
(a) Agreement to Perform. During the Term (as defined in Section 3),
Xxxxxxxxx agrees to serve, without charge, but subject to applicable union
and guild minimums, as the feature actor in four (4) commercials per year
promoting the Restaurants and the Franchise. Each such commercial shall be
no longer than sixty (60) seconds in length and shall be produced in no more
than two (2) variations. The commercials may be aired on local or national
television or radio, or both.
(b) Consultation and Approval Rights. Company shall consult with Xxxxxxxxx
with respect to the nature, content (including all audio and visual elements)
and use of any commercial proposed by Company, and Xxxxxxxxx shall have the
right to approve in his sole and absolute discretion such nature, content and
use. If Xxxxxxxxx approves a use, such approvals as to use shall, where
practicable, be made with a general description of approved uses. Further,
Xxxxxxxxx shall have the right, in his sole and absolute discretion, to
decline to perform in any commercial proposed by Company if he reasonably
believes that the content of such commercial would be detrimental to the
value of the Licensed Material (as defined in the License Agreement) or to
his image or reputation. In addition, Company shall not broadcast a
completed commercial until such commercial has been submitted to Xxxxxxxxx
for his review and Xxxxxxxxx has in his sole and absolute discretion approved
the completed form of the commercial and the intended broadcast forum. A
commercial shall not count as one of the four (4) commercials per year
required of Xxxxxxxxx under Section 2.1(a) unless such commercial is actually
broadcast.
(c) Scheduling and Expenses. Company shall provide Xxxxxxxxx with at least
ninety (90) days advance notice of scheduling of proposed commercials, and
such scheduling shall be subject to Xxxxxxxxx'x professional availability.
All expenses associated with the production of the commercials, including the
first-class travel, hotel and incidental expenses of Xxxxxxxxx and one
companion, and the purchasing of commercial air time shall be paid by
Company.
2.2. Appearance at Annual Franchise Meeting. Each year during the Term,
Xxxxxxxxx agrees, subject to Xxxxxxxxx'x professional availability, to appear
and give a short promotional speech at the annual meeting hosted by Company
for all franchisees of the Franchise. All expenses associated with
Xxxxxxxxx'x appearance at such meeting, including the first-class travel,
hotel and incidental expenses of Xxxxxxxxx and one companion, shall be paid
by Company.
2.3. Additional Promotional Activities. From time to time during the Term,
Company may request that Xxxxxxxxx provide other promotional services for the
Restaurants in addition to those set forth herein. Xxxxxxxxx may decline or
accept these requests in his sole and absolute discretion.
3. TERM AND TERMINATION. The term of this agreement (the "Term") shall be
five (5) years beginning with the opening of the first Restaurant unless
sooner terminated by the occurrence of any of the following:
(a) A material breach by Company of this Agreement, the Stock Purchase
Agreement or any of the Transaction Documents, which breach has not been
cured within thirty (30) days of receipt from Xxxxxxxxx of written notice
thereof;
(b) At the option of Xxxxxxxxx, upon a material breach by Xxxxx Xxxxxx of
his obligations under the Xxxxxx Employment Agreement within the first three
(3) years after the opening of the first Restaurant which breach has not been
cured within thirty (30) days of receipt from Xxxxxxxxx of written notice
thereof;
(c) Upon receipt of written notice from Xxxxxxxxx if, as the result of (i)
any act or omission of Company, (ii) any claim or charge against Company or
(iii) any other occurrence or circumstances involving Company, the continued
association of Xxxxxxxxx with Company would be detrimental to the value of
the Licensed Material or to Xxxxxxxxx'x image or reputation;
(d) The failure of Company to continually operate the Restaurants and
manage the Franchise according to the policies, practices and standards
agreed to by the parties pursuant to the terms of the Stock Purchase
Agreement;
(e) The failure of Company and/or Xxxxxx to raise the Investment Capital
pursuant to the terms provided in the Stock Purchase Agreement; or
(f) The failure of Company to comply with any laws and regulations, the
consequences of which are materially adverse to Company.
4. NO COMPETITIVE PROMOTIONS. During the Term, Xxxxxxxxx shall not
directly or indirectly (whether for compensation or otherwise), provide
promotional appearances or services to any business which competes with
Employer's business of owning and managing restaurants that feature barbecue
style as their primary cuisine and marketing and selling barbecue-related
food products. The foregoing restriction will not prevent Xxxxxxxxx from
providing other promotional activities and services, including providing such
activities and services for restaurants that do not feature barbecue style as
their primary cuisine and food products other than barbecue-related food
products. Furthermore, the foregoing restriction will not apply after
January 1, 1999 unless there are at least five (5) Restaurants open for
business as of such date, and will not apply after January 1, 2000 unless
there are at least ten (10) Restaurants open for business as of such date.
For purposes of the foregoing, any Restaurant that has been opened for
business either by Company or by any of its franchisees and is operating as
of such date will be considered "open for business."
5. REPRESENTATIONS AND WARRANTIES.
5.1. Representations and Warranties of Company. Company represents and
warrants to Xxxxxxxxx as follows:
(a) Company has the corporate power to enter into this Agreement and to
carry out its obligations hereunder. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby have
been duly authorized by its Board of Directors and no other corporate
proceedings on the part of Company are necessary to authorize this Agreement
and the transactions contemplated herein.
(b) This Agreement has been executed and delivered by Company and is the
valid and binding obligation of Company enforceable in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy laws or
similar laws affecting creditors' rights generally, and except in so far as
the availability of equitable remedies may be limited by applicable law from
time to time in effect.
5.2. Representations of Xxxxxxxxx. Xxxxxxxxx represents and warrants to
Company as follows:
(a) Xxxxxxxxx hereby has the right and power to grant to Company the rights
described herein and is free to enter into this Agreement and to carry out
his obligations hereunder.
(b) Xxxxxxxxx warrants that, during the Term, he will not commit any act
which brings Company into public disrepute or scandal, or which shocks,
insults or offends a substantial portion or group of the community or
reflects unfavorably on Company.
6. INDEMNIFICATION.
6.1. Indemnification Obligation. Company shall indemnify, defend and hold
harmless Xxxxxxxxx from and against any and all claims arising out of or in
connection with Xxxxxxxxx'x appearance in commercials and performance of
other promotional activities in accordance with this Agreement.
6.2. Indemnification Procedure. Promptly after receipt by Xxxxxxxxx of
notice of the commencement of any action involving a claim referred to in
Section 6.1, Xxxxxxxxx will give written notice to Company of the
commencement of such action. If any such action is brought against
Xxxxxxxxx, Company will be entitled to participate in and to assume the
defense thereof, with counsel reasonably satisfactory to Xxxxxxxxx, and after
notice from Company to Xxxxxxxxx of its election to assume the defense
thereof and to pay any and all costs relating thereto, Company shall not be
responsible for any legal or other expenses subsequently incurred by
Xxxxxxxxx if Xxxxxxxxx engages separate counsel in connection with the
defense thereof; provided, however, that Xxxxxxxxx shall have the right to
retain his own counsel, with the reasonable fees and expenses to be paid by
Company, if Xxxxxxxxx shall have reasonably concluded that representation of
Xxxxxxxxx by the counsel retained by Company would be inappropriate due to
actual or potential differing interests between Company and Xxxxxxxxx in such
proceeding.
7. MISCELLANEOUS.
7.1. Effectiveness of Agreement. This Agreement shall become effective on
and as of the date of execution of the Stock Purchase Agreement.
7.2. Successors and Assigns. This Agreement shall bind and inure to the
benefit of Company and Xxxxxxxxx and their respective successors, permitted
assigns, heirs and legal representatives (as the case may be) of Company and
Xxxxxxxxx.
7.3. Further Assurances. The parties shall duly acknowledge, execute,
deliver, and/or procure the due execution and delivery of any and all further
instruments which may be appropriate, necessary, or expedient to carry out,
confirm, or effectuate the purpose and intent of this agreement and the grant
of rights made hereunder.
7.4. Assignment. Company may not assign its rights under this Agreement to
any purchaser or transferee without the prior written consent of Xxxxxxxxx.
7.5. Entire Agreement. This Agreement, the Stock Purchase Agreement and
the other Transaction Documents (as defined in the Stock Purchase Agreement)
contain the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto.
7.6. Notices. All notices and other communications pursuant to this
Agreement shall be made in accordance with the Stock Purchase Agreement at
the address set forth therein for the Company and Xxxxxxxxx.
7.7. Amendment and Modification; Waiver. Except as otherwise provided
herein, this Agreement may be amended, modified and supplemented and the
application of any provision of this Agreement or any rights or obligations
of any party hereunder may be waived (either retroactively or prospectively)
only by written agreement of the parties hereto affected by such amendment,
modification, supplement or waiver. Further, any waiver shall be effective
only in the specific instance and for the specific purpose stated in such
writing.
7.8. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute but
one agreement.
7.9. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be
a part of this Agreement.
7.10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
7.11. Arbitration. Any and all disputes arising hereunder shall be subject
to resolution by arbitration as provided in the Arbitration Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Promotion Agreement
to be executed and delivered as of the date first above written.
REDNECK FOODS, INC.,
a Delaware corporation
By
XXXX XXXXXXXXX
Title: ________________________
