PHOENIX RESTAURANT GROUP, INC.
MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into as of the 26th day of January, 2001 by
and between Desert Management, LLC, an Arizona Limited Liability Company
(hereinafter referred to as "Manager"), and Phoenix Restaurant Group, Inc.,
a Georgia Corporation (hereinafter referred to as "PRG").
WHEREAS, PRG owns and operates a Xxxxx'x restaurant franchise consisting
of seventy-five (75) units in various locations; and
WHEREAS, PRG wishes to retain Manager to provide operational oversight
for the Denny's restaurants; and
WHEREAS, PRG wishes to retain Manager to assist it in various projects
related to the operations and divestiture of its Denny's Restaurants; and
WHEREAS, Manager agrees to accept such duties;
NOW, THEREFORE, in consideration of the above stated premises, the
mutual covenants contained herein and other good and valuable consideration,
the parties agree as follows:
Section 1
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Term
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The term of this agreement shall be ninety (90) days commencing as of
January 26, 2001, (the "Effective Date") and terminating ninety (90) days
thereafter (the "Term").
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Section 2
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Retention of Authority
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Throughout the Term of this Agreement, PRG shall retain all authority
and control over the strategic, accounting and professional functions and
decisions of PRG's operations of its Denny's restaurants. PRG shall
communicate any necessary corporate policies and directives to Manager, and
Manager shall be entitled to rely on and assume the validity of
communications from, and shall report to, the Chief Executive Officer ("CEO")
of PRG. The relationship between the parties, for the purposes of this
Agreement, is not that of partners or joint venturers; but rather, Manager is
acting as the independent contractor of PRG in discharging Manager's duties
hereunder.
Section 3
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Duties of Manager
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Manager shall be responsible for the operational oversight for PRG's
seventy-five (75) Denny's restaurants (the "Denny's Restaurants"), which are
listed on Exhibit A attached hereto and incorporated herein by reference.
Specifically, Manager shall have the following duties:
3.1 Management. Manager shall have the authority and responsibility to
oversee the day-to-day operations of the Denny's Restaurants, and for
providing such services as are required for the efficient operation of the
Denny's Restaurants. Manager shall carry out its duties at the direction of
the CEO of PRG and keep the CEO of PRG informed as to all major decisions
affecting PRG. Manager shall make no material policy changes without the
prior approval of PRG. In this connection, Manager shall have all reasonable
discretion in the operations of the Denny's Restaurants, and shall exercise
its reasonable judgment in the management and operations of the Denny's
Restaurants in the absence of direction from the CEO of PRG.
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3.2 Personnel. The selection of Personnel "above store level" and
their replacements shall be subject to PRG's approval. Manager shall consult
with PRG in determining the number and qualifications of employees required
for the efficient operation of the Denny's Restaurants, and in establishing
and revising in-service training programs, staffing schedules and job
descriptions, all in order to accomplish the goals and objectives of PRG and
Manager.
PRG shall be solely responsible for the payment of all such
compensation, including fringe benefits, payable with respect to such
employees. PRG shall also be responsible for the employer's contribution of
FICA, unemployment compensation and other employment taxes, worker's
compensation, group life and accident and health insurance premiums and other
similar benefits which may be payable by PRG with respect to its employees.
3.3 Accounting. PRG shall establish and administer accounting
procedures and controls in accordance with generally accepted accounting
principles for the Denny's Restaurants.
3.4 Charges. PRG has the exclusive right to determine all fees and
charges for the Denny's Restaurants.
3.5 Revenues. All revenues from any source generated by PRG in
connection with the operation of the Denny's Restaurants shall be considered
revenues of PRG and not the revenues of Manager.
3.6 Insurance. Insurance will be obtained and maintained by PRG at
PRG's expense, for such purposes and with such limits of liability as PRG's
CEO shall deem reasonably advisable. All such policies, except worker's
compensation insurance policies, shall have the ability to be written or
amended to include Manager, its agents, servants, employees, officers and
members as additional named insureds. Manager shall also be named as an
additional insured on the liability policy.
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3.7 Agency. In the performance of its duties as the Manager for PRG,
Manager shall act solely as the agent of PRG. All debts and liabilities to
third parties incurred by Manager, other than for expenses that are
reimbursable pursuant to Section 4.1, shall be the debts and liabilities of
Manager and PRG shall not be liable for any such debts or liabilities.
Further, the debts and liabilities to third parties incurred by PRG shall be
the debts and liabilities of PRG and Manager shall not be liable for any such
debts or liabilities. Nothing contained in this Agreement shall be construed
to create a joint venture or partnership between PRG and Manager, for the
purposes of this Agreement.
3.8 Confidentiality. Manager shall not disclose or otherwise use in an
unauthorized manner, while this Agreement is in effect or after it is
terminated, any confidential business information or documents of PRG without
the express prior written consent of PRG's CEO.
3.9 Quality Control. Manager shall assist PRG in the evaluation of all
quality control aspects of PRG and its operation of the Denny's Restaurants,
and the implementation of quality control programs designed to bring about a
high standard of professional service in accordance with PRG's policies and
resources available.
Section 4
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Compensation of a Manager
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4.1 Reimbursement for Out-of-Pocket Expenses. Manager shall receive
reimbursement for all necessary direct out-of-pocket expenses reasonably
incurred by it in the management of PRG's Denny's Restaurants. These
expenses will include, without limitation:
4.1.1 All itemized long-distance calls attributable to
Manager's activities in furtherance of the
operation of the Denny's Restaurants; and
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4.1.2 All other direct out-of-pocket expenses, except
normal overhead expenses, provided such expenses
have been approved in advance by the CEO of PRG.
4.2 Compensation for Management Services. For management services
rendered hereunder, Manager shall receive:
4.2.1 A management fee of One Hundred Thousand and No/100
Dollars ($100,000.00), payable upon the execution
of this Agreement. Provided, however, if this
Agreement is extended pursuant to Section 6.1
hereof, the terms and provisions of said Section
shall prevail for any extension agreed upon by the
parties.
4.2.2 Manager shall receive the office furniture and
supplies listed on Exhibit B, which is attached
hereto and incorporated herein by reference.
Section 5
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Default Remedies
----------------
5.1 Default by PRG. It shall constitute an event of default under this
Agreement (an "Event of Default") by PRG if PRG:
5.1.1 Fails to pay for services rendered hereunder within
ten (10) days after such payment is due and
payable;
5.1.2 Fails to observe, keep or perform any other
material provision of this Agreement required to be
observed, kept or performed by PRG and fails to
remedy, cure or remove such failure in payment
within ten (10) days after receipt of written
notice from Manager.
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5.1.3 Fails to maintain adequate insurance coverage
pursuant to the terms of this Agreement; or
5.1.3 Fails timely to indemnify Manager pursuant to the
Terms of this Agreement.
5.2 Right to Cure. Except for a Default under Section 5.1 above, PRG
shall have fifteen (15) days from the receipt of written notice of a Default
under this Section to remedy such Default before Manager may exercise its
remedies provided herein.
5.3 Manager's Remedies. If an event of Default by PRG shall occur,
Manager shall have the right to exercise any one or more of the following
remedies:
5.3.1 Terminate this Agreement; or
5.3.2 Pursue any other remedy at law or in equity.
Notwithstanding any action which Manager may take, PRG shall be and remain
liable for the full performance of all obligations on the part of PRG to be
performed under this Agreement.
5.4 Default by Manager. It shall constitute an Event of Default by
Manager under this Agreement if Manager:
5.4.1 Commits fraud, misappropriation, embezzlement or
the like, of PRG's assets or property;
5.4.2 Commits or engages in gross negligence, willful
misconduct or any intentional breach of its
fiduciary duty to PRG; or
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5.4.3 Materially fails to provide the services called for
hereunder, which material failure continues for ten
(10) days after it shall receive written notice of
a Default under this Section.
5.5 PRG's Remedies. If an Event of Default by Manager shall occur, PRG
shall have the right, in addition to its other remedies, to terminate this
Agreement upon ten (10) days' prior written notice thereof setting forth with
particularity the Event of Default committed by Manager giving rise to the
termination, in which case all of PRG's obligations to Manager shall cease as
of the effective date of such termination. Any compensation paid to Manager
pursuant to this Agreement shall be refunded to PRG on a pro rata basis,
based upon the number of days remaining under this Agreement.
Section 6
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Term of the Agreement
---------------------
6.1 Term. This Agreement shall be effective as of the date first set
out above and shall continue for ninety (90) days. The term for this
Agreement may be automatically extended by PRG at its sole discretion for one
additional period of ninety (90) days upon notice to Manager within at least
thirty (30) days prior to the expiration of the then current term and payment
to Manager of an additional fee to be determined based on the number of
Denny's Restaurants then owned by PRG and to be mutually agreed upon by the
parties. Either party may choose not to extend the Agreement upon written
notice at least thirty (30) days prior to the expiration of the then current
term.
6.2 Delivery of Property. Upon termination of this Agreement for any
reason, Manager shall promptly deliver to PRG all proprietary information,
including administrative, accounting and personnel policy and procedure
manuals prepared by PRG, and all computer software systems owned by PRG.
Manager shall cooperate with PRG to effect the termination and transition to
another management company if one is appointed by PRG to succeed Manager.
Upon termination, Manager shall deliver to PRG all funds controlled by or in
the possession of Manager as agent for PRG.
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Section 7
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Miscellaneous
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7.1 Indemnification by PRG. PRG shall indemnify Manager and hold it
harmless from any and all liability, including reasonable attorneys' fees,
caused by or resulting from any grossly negligent or willful misconduct of
PRG or any officer, director, agent, or employee thereof.
7.2 Indemnification by Manager. Manager shall indemnify PRG and hold
it harmless from any and all liability, including reasonable attorneys' fees,
caused by or resulting from the grossly negligent or willful misconduct of
Manager or any officer, member, agent or employee thereof.
7.3 Disclaimer for Employment of PRG Employees. No person employed by
PRG shall be or be deemed to be an employee of Manager, and Manager shall
have no liability for payment of their wages, payroll taxes and other
expenses of employment, except that Manager shall have the obligation to
exercise reasonable care in its management of the Denny's Restaurants.
7.4 Non-Assumption of Liabilities. Manager shall not, solely by virtue
of entering into and performing this Agreement, become liable for, and PRG
shall indemnify and hold Manager harmless for, from and against, any of the
existing or future obligations, liabilities, debts, or expenses (including
attorneys' fees) incurred by Manager in connection with performing its
obligations hereunder, unless due to Manager's gross negligence or willful
misconduct. Manager shall, in its role as manager, have only an obligation to
exercise reasonable care in overseeing the operation of the Denny's
Restaurants.
7.5 Access to Records; Confidentiality of Records. Manager shall,
during the Term hereof, be given reasonable and necessary access to PRG, its
records, offices and
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facilities in order to carry out its obligations hereunder, subject to the
confidentiality requirements stated herein in Section 3.8. Manager shall use
its best efforts to maintain the confidentiality of all files and records of
PRG, disclosing the same only as directed by law or by PRG in any particular
instance.
7.6 Successors. All the provisions herein contained shall be binding
upon and inure to the benefit of the successors (including resulting
corporations in a merger, consolidation or other reorganization) and assigns
of Manager and PRG to the same extent as if each successor and assign were in
each case named as a party to this Agreement.
7.7 Rights Cumulative; No Waiver. No right or remedy herein conferred
upon or reserved to either of the parties hereto is intended to be exclusive
of any other right or remedy, and each and every right and remedy shall be
cumulative and in addition to any other right or remedy given hereunder, or
now or hereafter legally existing upon the occurrence of an Event of Default
hereunder. The failure of any party to insist at any time upon the strict
observance or performance of any of the provisions of this Agreement or to
exercise any right or remedy as provided in this Agreement, shall not impair
any such right or remedy or be construed as a waiver or relinquishment
thereof with respect to subsequent defaults. Every right and remedy given by
this Agreement to the parties hereto may be exercised from time to time and
as often as may be deemed expedient by the parties, as the case may be.
7.8 Headings. The section and paragraph captions and headings
contained in this Agreement are included for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
7.9 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original document and
all of which, taken together, shall be deemed to constitute but a single
original document.
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7.10 Notices. All notices, offers, requests, demands and other
communications pursuant to this Agreement shall be given in writing by
personal delivery, by prepaid first class registered or certified mail
properly addressed with appropriate postage paid thereon, telegram, telex,
telecopier, facsimile transmission and shall be deemed to be duly given and
received on the date of delivery if delivered personally, on the second day
after the deposit in the United States mail if mailed, upon acknowledgement
of receipt for electronic transmission if sent by telecopier or facsimile
transmission, or on the first day after delivery to the telegraph office if
given by prepaid telegraph. Notices shall be sent to the parties at the
following addresses:
If to PRG: Phoenix Restaurant Group, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxx
Xxxxx X, Xxxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Mr. W. Xxxxx Xxxxxx
If to Manager: Desert Management, LLC
000 X. 00xx Xxxxxx
Xxxxx, XX 00000
Attention: Xx. Xxxxxx X. Xxxxx
or to such other address as any party may have furnished to the others in
writing in accordance herewith, except that notices of change of address
shall only be effective upon receipt.
7.11 Entire Agreement. This Agreement, including any exhibits,
schedules, lists and other documents and writings referred to herein or
delivered pursuant hereto, all of which form a part hereof, contains the
entire understanding of the parties with respect to its subject matter. It
merges and supersedes all prior and/or contemporaneous agreements and
understandings between the parties, written or oral, with respect to its
subject matter and there are no restrictions, agreements, promises,
warranties, covenants
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or undertakings between the parties with respect to the subject matter hereof
other than those expressly set forth herein. This Agreement may be amended
only by a written instrument duly executed by all parties or their respective
heirs, successors, assigns or legal personal representatives.
7.12 Severability. In the event that any provision of this Agreement,
or the application thereof to any person or circumstance, is held by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other portion of this Agreement, or the application of the invalid, illegal
or unenforceable provision to any other circumstance, and this Agreement
shall then be construed as if such invalid, illegal or unenforceable
provision had not been contained in this Agreement, but only to the extent of
such invalidity, illegality or unenforceability.
7.13 Governing Law; Forum; Service of Process; Venue. This Agreement
shall be governed by and construed in accordance with the laws of the State
of Arizona. This Agreement and its subject matter have substantial contacts
with Arizona, and all actions, suits, or other proceedings with respect to
this Agreement shall be brought only in a court of competent jurisdiction
sitting in Maricopa County, Arizona, or in the Federal District Court having
jurisdiction over that County. In any such action, site or proceeding, such
court shall have personal jurisdiction over all the parties hereto, and the
service of process upon them under any applicable statutes, laws and rules
shall be deemed valid and good.
7.14 Corporate Authorization. Each individual executing this Agreement
on behalf of a corporate entity represents and warrants that he or she is
duly authorized to execute and deliver this Agreement on behalf of said
corporate entities; that this Agreement is binding on said corporate entity
in accordance with its terms; and that this Agreement is not in violation of
or inconsistent or contrary to provisions of any other agreement to which
said corporate entity is a party.
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7.15 Terminology. All personal pronouns used in this Agreement,
whether used in the masculine, feminine or neuter gender, shall include all
other genders; and the singular shall include the plural, and vice versa.
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be
executed by themselves or their duly authorized representative as of the day
and year first written above.
DESERT MANAGEMENT, LLC PHOENIX RESTAURANT GROUP, INC.
By: /s/ Xxxxxxx Xxx By: /s/ Xxxxxx Xxxxxxxx
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Its: Managing Member Its: Chief Executive Officer
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