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EXHIBIT _____
SONITROL DEALER FRANCHISE AGREEMENT
THIS AGREEMENT, effective this 23 day of December, 1988, by and among
SONITROL CORPORATION, a Delaware corporation, SONITROL SOUTHEAST, INC., a
Indiana corporation, hereinafter referred to as "DISTRIBUTOR," and MASADA
SECURITY LIMITED PARTNERSHIP, d/b/a SONITROL OF MIAMI, a limited partnership,
formed in the State of Delaware, hereinafter referred to as "DEALER."
RECITALS
WHEREAS, SONITROL CORPORATION is the owner of the registered trademark
"SONITROL," and DISTRIBUTOR has been licensed, with the right to sub-license
others, to use the trademark "SONITROL," registered with the United States
Patent Office under the principal register number 12-681, together with all the
goodwill connected therewith; and
WHEREAS, SONITROL CORPORATION has a unique system for the promotion,
sale and delivery of security products and services, which is identified by the
trademark "SONITROL," and which system may be improved, further developed, or
otherwise modified from time to time by SONITROL CORPORATION, hereinafter
referred to as the "Sonitrol Product System;" and
WHEREAS, SONITROL CORPORATION is engaged in the business of granting
franchises for the operation of security businesses using the "SONITROL"
trademark and the system identified therewith; and
WHEREAS, SONITROL CORPORATION has expended time, effort, and money to
obtain knowledge in the field of merchandising, distributing and promoting the
sale of security systems and related products and services, and has established
successfully a reputation, demand and goodwill for such products and services
under the "SONITROL" trademark, which signifies the source and quality of
products and services sold under the "SONITROL" name and the high quality of
management, supervision, and merchandising associated therewith; and
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WHEREAS, the Sonitrol Alarm Product Line, hereinafter referred to as
"Sonitrol Products," consists of products bearing the trademark or trade name
"SONITROL," which products include security system components using Sonitrol
Corporation's premier audio detection technology and components using emerging
technologies for diverse security system requirements, and which in many
applications are monitored by Sonitrol Dealers at central monitoring stations;
and
WHEREAS, Sonitrol Products work effectively as integral components of
security systems as a result of the time, money and effort expended in
developing specifications for Sonitrol Products, and the high standards adhered
to in the testing, quality, production, manufacture, distribution,
installation, and service of Sonitrol Products, all of which is essential to
the goodwill and reputation for quality associated with the "SONITROL"
trademark which Sonitrol Products bear; and
WHEREAS, all of the foregoing having a distinctive and valuable
significance, DEALER acknowledges and understands the importance of
maintaining the goodwill and good reputation of the "SONITROL" trademark, and
DEALER desires to purchase and market equipment and products bearing the
"SONITROL" trademark, and to use and obtain benefits from the Sonitrol Product
System for promoting, leasing, selling and servicing Sonitrol Products, and to
do business using the "SONITROL" trademark and obtain the benefit of the
goodwill inherent therein; and
WHEREAS, DEALER has read this Agreement, and SONITROL CORPORATION's and
DISTRIBUTOR's Franchise Offering Circulars, and understands and accepts the
terms, conditions, and covenants regarding DEALER's operation and acquisition
of supplies set forth herein as being reasonable and necessary to maintain the
high standards of quality and service at all Sonitrol dealerships, and thereby
protect and preserve the goodwill inherent in the "SONITROL" trademark;
NOW, THEREFORE, SONITROL CORPORATION, DISTRIBUTOR and DEALER,
intending to be legally bound in consideration of the mutual agreements,
covenants and promises herein set forth, do hereby agree as follows:
SECTION ONE
LICENSE OF TRADEMARK AND FRANCHISE TERRITORY
1.1 DISTRIBUTOR hereby licenses and grants to DEALER, upon the terms and
conditions set forth herein, the right to, and primary responsibility for,
promoting, leasing, selling, and
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servicing Sonitrol Products bearing the trademark "SONITROL," and to
use solely in connection therewith the "SONITROL" trademark and the Sonitrol
Product System identified with said trademark, within the following area: Dade
County in the State of Florida hereinafter referred to as Area of Primary
Responsibility.
DEALER shall use the name "SONITROL" in the name under which it
conducts business, which name shall be approved in advance by SONITROL
CORPORATION, but not in its corporate or other legal name.
1.2 DEALER agrees that it will not establish a Sonitrol central station or a
business premises outside of DEALER's Area of Primary Responsibility. Further,
DEALER shall not represent itself as a local Sonitrol Dealer in territory
outside its Area of Primary Responsibility unless DEALER has been granted
franchise rights to that other territory under a separate Sonitrol Dealer
Franchise Agreement.
1.3 SONITROL CORPORATION and DISTRIBUTOR agree that they will not license
another DEALER with the right to establish a central station or a business
premises within DEALER's Area of Primary Responsibility except as otherwise
provided in this Agreement and so long as DEALER complies with the terms and
conditions of this Agreement.
1.4 The parties understand and agree that this license is of the registered
trademark "SONITROL," and of the related Sonitrol Product System which SONITROL
CORPORATION has developed as this system presently exists or may hereafter be
modified. DEALER agrees to and shall use the "SONITROL" trademark in
connection with, and exclusively for, the promotion and conduct of the business
to be operated by DEALER under this Agreement, hereinafter referred to as
"Franchise Business," in accordance with such instructions, rules and
procedures as may be prescribed by SONITROL CORPORATION from time to time with
respect thereto.
1.5 DEALER understands and agrees that this Agreement confers upon DEALER no
proprietary right, title or interest in the "SONITROL" trademark and trade
name, or in the Sonitrol Product System, but only the right to the use thereof
during the term of this Agreement. DEALER agrees and covenants that it will not
register or attempt to register such trademark in its own name or that of any
other firm, person or corporation, and that it shall not directly or indirectly
contest or aid in contesting the use, ownership and rights of SONITROL
CORPORATION in and to the "SONITROL" trademark. Further,
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DEALER agrees that it shall not permit, authorize, license or approve others to
use the "SONITROL" trademark for any purpose. Immediately upon the termination
of this Agreement, DEALER agrees and covenants that it shall cease and forever
abstain from using the "SONITROL" trademark and trade name and shall execute
such documents and take such action as SONITROL CORPORATION may deem reasonably
necessary or desirable to evidence the fact that DEALER has ceased using the
trademark and trade name "SONITROL" and that DEALER has no further interest or
right therein whatsoever.
1.6 DEALER agrees that it shall use the "SONITROL" trademark only in
accordance with the terms and conditions of this Agreement and any and all
standards promulgated from time to time by Sonitrol Corporation relating
thereto. DEALER agrees to report to SONITROL CORPORATION any unauthorized use
of the name or trademark "SONITROL" of which it becomes aware in violation of
this Agreement or standards or procedures prescribed by SONITROL CORPORATION
from time to time with respect thereto.
1.7 DEALER shall promptly notify SONITROL CORPORATION of any suspected
infringement of or challenge to the validity of SONITROL CORPORATION's
ownership and rights to its proprietary marks. DEALER acknowledges that
SONITROL CORPORATION shall, in its sole and absolute discretion, institute
proceedings or defend proceedings as it shall deem fit and that SONITROL
CORPORATION alone has the right to control any administrative proceeding or
litigation involving the proprietary marks. If SONITROL CORPORATION undertakes
the defense or prosecution of any litigation relating to the proprietary
marks, DEALER agrees to execute any and all documents and to do whatever acts
and things as may, in the opinion of counsel for SONITROL CORPORATION, be
necessary or advisable to carry out the defense or prosecution. DEALER shall
not, under any circumstances whatsoever, institute or take any legal
proceedings relating to the proprietary marks.
1.8 DEALER shall only use the trademarks affixed or related to Sonitrol
Products on Sonitrol Products purchased from DISTRIBUTOR. DEALER shall not
affix or relate the "SONITROL" trademark or trade name to any product or
equipment which was not purchased from DISTRIBUTOR, or a product approved by
SONITROL CORPORATION, and respecting which SONITROL CORPORATION has authorized
the affixing of such trademark or trade name.
1.9 DEALER understands and agrees that SONITROL CORPORATION reserves the right
to manufacture, sell, promote, lease and service products other than Sonitrol
Products to and through
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other sales organizations within the DEALER's Area of Primary Responsibility
without Compensating DEALER for same. However, such products will not bear the
"SONITROL" name or trademark, unless such products are Sonitrol Products which
DEALER has declined to distribute pursuant to Section Six of this Agreement.
DEALER understands and agrees that SONITROL CORPORATION reserves the right to
manufacture and promote Sonitrol products within DEALER's Area of Primary
Responsibility.
1.10 DEALER further understands and agrees that SONITROL CORPORATION may sell
Sonitrol Products directly to (i) any agency, office or facility of the United
States Government located in DEALER's Area of Primary Responsibility, and (ii)
certain customers located in DEALER's Area of Primary Responsibility when such
sale is part of a package sale to a business with national or regional
locations and such locations are both inside and outside of the Area of Primary
Responsibility. DEALER shall have the option of installing and servicing all
such sales of Sonitrol Products within DEALER's Area of Primary Responsibility
and being compensated for such installation and service. If DEALER chooses not
to be responsible for such installations and service, then SONITROL
CORPORATION, or its designee, shall have the right to provide such installation
and service without compensating DEALER.
SECTION TWO
TERM OF AGREEMENT AND RENEWAL
2.1 The term of this Agreement shall be for a period of ten (10) years from
the date first written above.
2.2 DEALER may, at its option, renew its right to use the "SONITROL"
trademark, purchase and market Sonitrol Products, and use the Sonitrol Product
system for an additional ten (10) year period, provided that at the end of the
initial ten (10) year term:
2.2.1. DEALER has given SONITROL CORPORATION and DISTRIBUTOR written
notice of such election to renew not less than six (6) months nor more
than twelve (12) months prior to the end of the term then in effect;
2.2.2. DEALER is not in default of any provision of this Agreement, any
amendment hereof or successor hereto, or any other agreement between
DEALER, DISTRIBUTOR and SONITROL CORPORATION, its subsidiary or
affiliated corporations, and has substantially complied
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with all the terms, conditions and covenants of such agreements during
the terms thereof;
2.2.3. Upon renewal DEALER shall execute SONITROL CORPORATION's then
standard form of Dealer Franchise Agreement currently in use. In the
event DEALER chooses for any reason not to execute the then standard
current form of Dealership contract, DEALER may renew for an additional
ten years under the terms of this Agreement; however, SONITROL
CORPORATION shall have the right to establish dealers and shall have
the right to sell and market products within DEALER's Area of Primary
Responsibility without compensating DEALER for the same and said
products may bear the SONITROL CORPORATION trademark or trade name.
DEALER shall not be required to pay again the initial franchise fee
provided for, or its equivalent, as a condition of renewal;
2.2.4. DEALER, DISTRIBUTOR and SONITROL CORPORATION shall execute a
mutual general release, in the form of Attachment A, for any and all
claims each party shall have against the other, its parent, subsidiary
and affiliated corporations, and their officers, directors, agents and
employees, excepting only such claims as are precluded from waiver by
applicable law.
SECTION THREE
TRAINING AND ASSISTANCE
3.1 DISTRIBUTOR will provide to DEALER and DEALER will be required to send, at
its expense, its general manager or principal operating person, and any other
employees required by DISTRIBUTOR and SONITROL CORPORATION, to an initial
training program relating to aspects of the franchised business, including
startup, financial matters, business operations, marketing and sales
procedures, and installation, operation and monitoring of security systems
utilizing Sonitrol Products. The initial training program will be conducted
for such period of time as is deemed necessary by SONITROL CORPORATION and
DISTRIBUTOR.
3.2 SONITROL CORPORATION and DISTRIBUTOR will provide DEALER with further
sales and operational training courses from time to time as is available to all
Sonitrol dealers, which courses specified employees of DEALER may be required
to attend.
3.3 Training programs will be conducted at locations selected by SONITROL
CORPORATION and DISTRIBUTOR, and DEALER shall pay
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the costs of travel, living accommodations and salary for its personnel to
attend and the required training fee.
SECTION FOUR
SONITROL, STANDARDS AND PROCEDURES
4.1 The success of the Sonitrol Product System depends on the national
goodwill resulting from consistency among Sonitrol dealers in the sale,
promotion, leasing, and servicing of Sonitrol Products. This conformity can be
achieved only by the rigid adherence by DEALER and by other licensed dealers to
a consistent plan of operation. Consistent therewith, SONITROL CORPORATION
will publish and supply to DEALER manuals, bulletins, handbooks and/or other
written material containing operational standards which may be modified from
time to time by SONITROL CORPORATION. DEALER covenants and agrees to operate
the Franchise Business in strict conformance with the operational standards set
forth in such publications and agrees to be bound by any changes made thereto.
The franchise standards and procedures manual, bulletins, handbooks and
information provided contain trade secrets and confidential information and
will remain the property of SONITROL CORPORATION and therefore DEALER shall
only reveal the contents of these materials to such of DEALER's personnel who
need to know the information for the effective operation of the Franchise
Business, and who sign a statement in the form prescribed by SONITROL
CORPORATION agreeing to not reveal such materials to any other person or
entity. DEALER shall not otherwise reveal the contents of these materials
without SONITROL CORPORATION's prior written authorization.
SECTION FIVE
PURCHASE AND REPAIR OF SONITROL CORPORATION PRODUCTS
RESTRICTION ON SALE OF OTHER PRODUCTS
5.1 During the term of this Agreement, DEALER agrees to purchase and
DISTRIBUTOR will Sell to DEALER the aforementioned Sonitrol Products at
DISTRIBUTOR's list prices for Sonitrol Products as in effect at the time of
such sales, except that DISTRIBUTOR shall not be obligated to sell Sonitrol
Products to DEALER if DEALER is in default of this Agreement. All purchases
from DISTRIBUTOR by DEALER shall be shipped F.O.B. Orlando, Florida, and DEALER
agrees to pay for Sonitrol Products under the terms and conditions set forth in
the Purchase Order or other documents governing the sale.
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5.2 Because repair of Sonitrol Products involves certain trade secrets and
confidential information and procedures, all servicing and repair of Sonitrol
Products shall be performed by SONITROL CORPORATION under the prevailing terms
and conditions. DEALER agrees to pay SONITROL CORPORATION for the cost of such
repair under the terms and conditions in effect at the time of such repair.
DEALER shall ship any Sonitrol Products to be repaired, freight prepaid, to
SONITROL CORPORATION's facility at Orlando, Florida. SONITROL CORPORATION will
return the repaired equipment, F.O.B. Orlando Florida, within a reasonable
period of time. DEALER, or any person authorized by DEALER, may not modify,
repair, or attempt to repair Sonitrol Products. Such modification, repair, or
attempt to repair shall void any and all guarantees and warranties, express or
implied, applicable to Sonitrol Products, and shall constitute a breach of this
Agreement. SONITROL CORPORATION may, in writing, authorize the repair of
certain products in its sole discretion.
5.3 Because the national goodwill inherent in the "SONITROL" trademark and the
Sonitrol Product System depends on the consumer's identification of the
trademark with a high quality product, and because all products sold, promoted,
leased and serviced by DEALER tend to be identified by the consumer as
"SONITROL" trademark products, DEALER shall purchase all products and equipment
which are promoted, leased, sold, installed, or serviced in the operation of
DEALER's business only from DISTRIBUTOR or from manufacturers, suppliers or
distributors designated or approved by SONITROL CORPORATION in writing, which
manufacturers, suppliers, or distributors shall meet in all respects SONITROL
CORPORATION's specifications and standards as to quality, durability,
performance, warranties, finish and appearance for such products and equipment,
and who shall adequately demonstrate the ability, capacity, and facilities to
supply DEALER's needs in the quantities, at the times, and with the reliability
necessary for efficient and high quality operation of DEALER's business.
SECTION SIX
NEW PRODUCT DEVELOPMENT
6.1 SONITROL CORPORATION shall notify DEALER of the development, availability,
and distribution and marketing program of any new subscriber Sonitrol
Product(s), hereinafter "New Products", during the term of this Agreement.
Within ninety (90) days of the receipt of such notice from SONITROL
CORPORATION, DEALER shall, by written notice, agree or decline
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to purchase and distribute such New Products in accordance with the prescribed
marketing plan.
6.2 If DEALER agrees to purchase and distribute such New Products in accordance
and consistent with SONITROL CORPORATION's prescribed marketing plan, then said
New Products shall be considered a Sonitrol Product within the provisions of
this Agreement. If DEALER declines to so purchase and distribute such New
Products, then such New Products shall be excluded from the definition of
Sonitrol Product hereunder and SONITROL CORPORATION and/or DISTRIBUTOR shall
have the right to market said New Products within DEALER's Area of Primary
Responsibility without compensating DEALER for the same, and said New Products
may bear the "SONITROL" trademark or name.
SECTION SEVEN
MINIMUM PURCHASE AND INVENTORY REQUIREMENTS
7.1 At all times during the term of this Agreement, DEALER agrees and covenants
to use its best efforts to fully develop the market for Sonitrol Products and
to effect the widest and best possible distribution of Sonitrol Products within
its Area of Primary Responsibility and to promote the Sonitrol Product system
within DEALER's Area of Primary Responsibility.
7.2 Recognizing the obligation of DEALER set forth in Paragraph 7.1 to effect
the widest and best possible distribution of Sonitrol Products within the Area
of Primary Responsibility granted herein, DEALER agrees:
7.2.1 To purchase from DISTRIBUTOR for sale and installation only within
DEALER'S Area of Primary Responsibility granted by this Agreement, at a
minimum, the following number of Sonitrol Product subscriber systems during
the first through the fifth years of operation, beginning with the date
specified in Paragraph 7.2.3:
Cumulative No. of
Year(s) Subscriber Systems
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One 183
One-Two 390
One-Three 644
One-Four 914
One-Five 1219
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Beginning the sixth year and for each year thereafter for the duration
of this Agreement, DEALER shall purchase each year a number of Sonitrol
Product subscriber systems for installation within its Area of Primary
Responsibility equal to the number of Sonitrol Product subscriber systems
required for the fifth year of operation.
7.2.2 During the first through the fifth years of operation, DEALER
shall install at new subscriber account locations within its Area of
Primary Responsibility a number of Sonitrol Product subscriber systems
equal to the minimum purchase requirements set forth in section 7.2.1.
Beginning the sixth year of operation, and for each year thereafter for the
duration of this Agreement, DEALER shall install at new subscriber account
locations within its Area of Primary Responsibility a number of Sonitrol
Product subscriber systems equal to the minimum purchase requirements for
the fifth year of operation. DEALER shall provide DISTRIBUTOR with monthly
reports setting forth the number of Sonitrol subscriber accounts within
DEALER's Area of Primary Responsibility for the preceding month.
7.2.3 To commence business with, and maintain during the first year of
operation, an inventory of Sonitrol Product subscriber systems equivalent
to two-twelfths of the minimum purchase requirement for that year, and
during the second through fifth years an inventory of Sonitrol Product
subscriber systems equivalent to two-twelfths of the difference between the
cumulative minimum purchase requirement for the pertinent year and the
previous year. Thereafter, DEALER shall maintain an inventory of Sonitrol
Product subscriber systems equivalent to two-twelfths of DEALER'S Sonitrol
Product subscriber system purchases for DEALER'S preceding fiscal year.
7.2.4 To commence sales and marketing efforts of Sonitrol Product
subscriber systems within DEALER'S Area of Primary Responsibility on or
before the 1st day of March, 1989.
7.2.5 To acquire an adequate facility within DEALER'S Area of Primary
Responsibility, purchase from DISTRIBUTOR and complete installation of
Sonitrol Central Station monitoring equipment, and commence monitoring of
subscriber accounts from DEALER'S facility within the Area of Primary
Responsibility within ______ months following the date of this Agreement.
DEALER agrees to submit a purchase order for Sonitrol Central Station
monitoring equipment in a reasonable time to permit delivery and
installation of same prior to the end of the time period specified in
this Paragraph.
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7.3 If DEALER fails to achieve and/or maintain the minimum requirements set
forth in this section, then and in that event, and in addition to those rights
under Sections Twenty-One and Twenty-Two of this Agreement, DISTRIBUTOR and
SONITROL CORPORATION shall have the right, at their option, to establish an
additional dealer or dealers within part or all of DEALER'S Area of Primary
Responsibility.
SECTION EIGHT
FRANCHISE AND ROYALTY FEES
8.1 In consideration of the grant to DEALER of the license to use the
"SONITROL" trademark and the Sonitrol Product System and the services to be
performed by DISTRIBUTOR and SONITROL CORPORATION as set forth in this
Agreement, DEALER agrees to pay to DISTRIBUTOR a non-refundable franchise fee
of $__________, receipt of which is hereby acknowledged.
8.2 DEALER agrees to pay DISTRIBUTOR, on or before the tenth (l0th) day of
each month, a continuing monthly royalty fee calculated at two and one-half
percent (2 1/2%) of DEALER's gross revenue during the preceding calendar month,
except as provided in Subsection 8.4 below. The royalty fee percentage may be
changed by SONITROL CORPORATION upon thirty (30) days written notice to DEALER,
provided that any such change shall not result in more than a one-quarter
percent (.25%) increase over the then-existing rate for any twelve (12) month
period. A service fee of one and one-half percent (1 1/2%) per month will be
assessed on all past due royalty fees.
8.3 The term "Gross Revenue," as used in this section, means the amount of all
revenue received by DEALER from the sale of all products and services, and all
income of every kind or nature, whether direct or indirect, received by DEALER,
related to the DEALER's franchised business which is the subject of this
Agreement; provided, however, that the term "Gross Revenues" shall not include
any sales taxes or other taxes collected by DEALER for transmittal to the
appropriate taxing authority.
8.4 During the first year of operation, beginning with the date set forth in
subsection 7.2.3 above and for one year thereafter, DEALER shall pay
DISTRIBUTOR one-half (1/2) of the monthly royalty fee required by subsection
8.2 above, and the remaining one-half (1/2) of the monthly royalty fee shall be
applied by DEALER to bona fide local advertising in newspapers, magazines,
radio, television, billboard or other promotional and marketing media,
exclusive of a Directory Listing which
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shall be placed with separate funds of DEALER. Within ten (l0) days following
the end of the first year of operation, DEALER shall provide DISTRIBUTOR with
receipts, or other documentation satisfactory to DISTRIBUTOR, reflecting
DEALER's expenditures during that year on bona fide local advertising. If
DEALER's expenditures as reflected on such receipts are less than one-half
(1/2) of the sum of the monthly royalty fees for the first year of operation,
DEALER shall pay DISTRIBUTOR an amount equal to such deficiency within five (5)
days of receipt by DEALER of written notification of such deficiency.
Following the first year of operation, the entire monthly royalty fee shall be
paid by DEALER to DISTRIBUTOR in accordance with subsection 8.2 above.
8.5 At the same time a monthly royalty payment is made pursuant to the terms
and conditions of Paragraph 8.2 above, DEALER shall also submit a monthly
statement to DISTRIBUTOR, in the form prescribed by DISTRIBUTOR, setting forth
the gross revenue of DEALER for the immediately preceding calendar month.
SECTION NINE
ADVERTISING FEES
9.1 DEALER agrees, upon establishment of a Dealer Cooperative Advertising
Council (hereinafter "Council"), to pay SONITROL CORPORATION a monthly
advertising and sales promotion contribution to be placed in a Sonitrol
Advertising Fund (hereinafter "Fund"). DEALER shall pay this contribution by
the tenth (10th) day of each month, and the amount of the contribution shall be
established by SONITROL CORPORATION and the Council, but in no event will it
exceed three percent (3%) of DEALER's gross revenues from the business which is
the subject of this Agreement for the preceding month.
9.2 The Council will direct all advertising programs, it shall have
discretion over the maintenance and allocation of the Fund, and the creative
concepts, materials and media used in advertising programs. The Fund is
intended to maximize general public recognition and acceptance of the
"SONITROL" trademark, and the products and services associated therewith.
SONITROL CORPORATION and the Council undertake no obligation in administering
the Fund to make expenditures for DEALER which are equivalent or proportionate
to DEALER's contributions, or to ensure that DEALER benefits directly or
proportionately from the placement of advertising.
9.3 DEALER agrees that the Fund may be used to meet any and all costs of
maintaining, administering, directing and
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xxxxxxxxx xxxxxxxx, xxxxx or regional advertising materials, programs and
public relations activities. The Fund shall be accounted for separately from
other funds of SONITROL CORPORATION by the Council. SONITROL CORPORATION
assumes no direct or indirect liability or obligation to DEALER with respect to
the maintenance, direction or administration of the Fund.
9.4 The term "Gross Revenues," as used in this Agreement means the amount of
all revenue received by DEALER from the sale of all products and services, and
all income of every kind or nature, whether direct or indirect, received by
DEALER, related to the DEALER's franchised business which is the subject of
this Agreement; provided, however, that the term "Gross Revenues" shall not
include any sales taxes or other taxes collected by DEALER for transmittal to
the appropriate taxing authority.
SECTION TEN
DEALER'S BUSINESS PLAN
10.1 DEALER acknowledges that conformity to the Business Plan prepared by
DEALER and submitted to SONITROL CORPORATION and DISTRIBUTOR prior to execution
of this Agreement, which Business Plan is attached hereto and made a part
hereof as Attachment B, is required for the successful performance by DEALER of
all of the duties and obligations required to be performed, fulfilled and
observed by DEALER under this Agreement, and DEALER agrees to conform to the
Business Plan in the conduct of its business. DEALER hereby certifies that the
Business Plan, including DEALER's representations contained therein, is true
and correct, and DEALER acknowledges and understands that SONITROL CORPORATION
and DISTRIBUTOR rely upon DEALER's Business Plan in entering into this
Agreement.
10.2 DEALER hereby certifies that the total capitalization set forth in
DEALER's Business Plan is true and correct, and that said capitalization is
available as of the date first above written, and DEALER acknowledges and
understands that SONITROL CORPORATION and DISTRIBUTOR rely upon this
certification by DEALER in entering into this Agreement.
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SECTION ELEVEN
TAXES AND INSURANCE
11.1 DEALER shall be responsible for paying and shall discharge all applicable
tax liabilities.
11.2 DEALER shall maintain at its expense insurance against all types of
liability as SONITROL CORPORATION and DISTRIBUTOR may require, including, but
not limited to, comprehensive general liability insurance (covering premises,
products liability, completed operations, blanket contractual and personal
injury liabilities), errors and omissions insurance, worker's compensation
insurance, and automobile insurance. Coverage limits for each type of
insurance shall be in accord with generally accepted and/or statutorily
mandated limits. In any event, DEALER shall maintain a minimum liability limit
of not less than One Million Dollars ($1,000,000.00) for each type of insurance
for which such limits are available. DEALER shall purchase all such insurance
from a responsible and accredited insurer and each such policy shall include
SONITROL CORPORATION and DISTRIBUTOR, or any of their designated subsidiary or
affiliated corporations, as additional insureds and shall also provide that
such policies may not be cancelled or their coverage materially changed without
thirty (30) days prior written notice to all named insureds. DEALER shall
provide SONITROL CORPORATION and DISTRIBUTOR with certificates of insurance on
all policies and evidence that the premiums therefore have been paid.
SECTION TWELVE
PERSONNEL AND BUSINESS APPEARANCE STANDARDS
12.1 DEALER acknowledges that the successful operation of DEALER's business
under this Agreement requires professional management, and DEALER agrees that
the General Manager or principal operating person (hereinafter "Manager") of
DEALER shall be a person who is capable of performing on behalf of the
Franchise Business all of the duties and obligations required to be performed,
fulfilled, and observed by DEALER under this Agreement. DEALER shall keep
SONITROL CORPORATION and DISTRIBUTOR advised of the identity of the Manager and
shall provide SONITROL CORPORATION and DISTRIBUTOR a complete resume of the
Manager together with a statement by DEALER that it has investigated the
qualifications of the Manager and has determined that such person has the
requisite qualifications and is capable of performing the duties and
obligations required of DEALER under this Agreement.
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12.2 DEALER shall keep all records on the installation, servicing and
monitoring of its customers' accounts in the strictest confidence and will
permit only the necessary minimum of trusted employees to have access to such
records. DEALER shall maintain all of its records and files in a secure manner
so as to safeguard its records and files from exposure to criminal elements or
any other unauthorized person(s). SONITROL CORPORATION and DISTRIBUTOR shall
have the right to review DEALER's security procedures and may require
reasonable changes in such procedures to increase DEALER's security.
12.3 DEALER shall adhere to high ethical standards and shall conduct its
business in strict compliance with all applicable laws, regulations, ordinances
and requirements or any federal, state, county, municipal or other government,
and shall obtain all necessary permits, licenses, or other consents for the
operation of DEALER's business.
12.4 DEALER and its employees shall cooperate with all law enforcement agencies
to the fullest extent compatible with its duty to customers. However, no duty
to customers shall require DEALER or its employees to act in violation of the
law.
12.5 Recognizing that a favorable business reputation is difficult to achieve
and thereafter maintain, and that the goodwill inherent in the "SONITROL"
trademark depends upon the identification of the trademark with businesses
operated in accordance with high standards of quality, DEALER agrees:
12.5.1 To keep its business premises, vehicles and furnishings
clean, neat and orderly so as to maintain an attractive appearance;
12.5.2 To keep all equipment used in the conduct of the
business and its inventory stock clean and in a state of good repair;
12.5.3 To maintain reasonable financial stability and credit
standing;
12.5.4 To maintain good customer relations;
12.5.5 To strive to ensure that its employees respond promptly
and courteously to all business and servicing inquiries and
that its employees are neat and well groomed in personal appearance.
12.6 DEALER agrees that DISTRIBUTOR and SONITROL CORPORATION may from time to
time, during the DEALER's course of operation, with or without notice, inspect
the DEALER's business premises
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and operation of business to determine if the business is being operated in
accordance with the standards and procedures set forth herein and in the
franchise standards and procedures manual. SONITROL CORPORATION and
DISTRIBUTOR shall report to DEALER in writing any aspects of DEALER's
operations which are not in conformity with the manual or this Agreement, and
DEALER shall take immediate steps to correct such deficiencies. Failure of the
DEALER to correct any deficiencies within 30 days of receipt of notice of such
deficiencies shall constitute a default of this Agreement and the Agreement may
be terminated pursuant to Section Twenty-Two.
SECTION THIRTEEN
ACCOUNTING AND RECORDS REQUIREMENTS
13.1 DEALER shall maintain true and accurate records, reports, accounts, books
and data which shall accurately reflect all particulars relating to the
Franchise Business in compliance with the standard financial management system
prescribed by SONITROL CORPORATION for record keeping, bookkeeping, accounting
and reporting all business and operation of the Franchise Business, and shall
permit SONITROL CORPORATION's and Distributor's representative to examine and
audit said records, reports, accounts, books and data at all reasonable times
and at SONITROL CORPORATION's and DISTRIBUTOR's expense.
13.2 The DEALER shall provide SONITROL CORPORATION and DISTRIBUTOR with
financial statements relating to the Franchise Business subject to this
Agreement, including a profit and loss statement and balance sheets. The first
financial statement shall be due six (6) months after the effective date of
this Agreement, and semi-annually thereafter. Within four (4) months following
the close of each fiscal year, the DEALER, at its expense, shall provide to
SONITROL CORPORATION and DISTRIBUTOR a financial statement prepared by an
independent Public Accountant. The DEALER shall utilize recognized and
customary accounting procedures.
13.3 DEALER shall deliver to SONITROL CORPORATION and DISTRIBUTOR on or before
the date of this Agreement a complete list of its stockholders, (or if DEALER
is a partnership, a complete list of all its general and/or limited partners)
all of whom shall appear to be of good moral and ethical character so as not to
compromise the Sonitrol Product System, procedures, equipment or trade secrets
to either criminal elements or commercial competition and DEALER shall keep said
list of stockholders (or general or limited partners) current. In the event a
change in the list is proposed under
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circumstances where SONITROL CORPORATION or DISTRIBUTOR has the right to
approve the proposed change pursuant to Section Eighteen of this Agreement,
sufficient advance notice shall be given to SONITROL CORPORATION and
DISTRIBUTOR. This subsection shall not apply to publicly held corporations
having more than thirty (30) stockholders.
13.4 SONITROL CORPORATION and DISTRIBUTOR hereby covenant not to reveal
or communicate designated confidential and proprietary information of DEALER to
any third party without the prior consent and authorization of DEALER and shall
use its best efforts to prevent inadvertent disclosure of such information to
any third party, except as may be appropriate and professionally necessary to
DEALER's and/or SONITROL CORPORATION's and DISTRIBUTOR's accountants,
attorneys and banking sources, or as required by law.
SECTION FOURTEEN
CHAIN ACCOUNTS AND NATIONAL PROGRAMS
14.1 Within such guidelines as are established and promulgated
from time to time by SONITROL CORPORATION, DEALER shall use its best efforts
to secure chain accounts which have their national or regional headquarters
located in DEALER's Area of Primary Responsibility. DEALER shall provide to
SONITROL CORPORATION reports relating to securing said chain accounts.
14.2 Upon request by SONITROL CORPORATION, DEALER agrees to promote,
lease, sell, install and service chain accounts within DEALER's Area of Primary
Responsibility. If DEALER declines to promote, lease, sell, install and
service chain accounts upon request by SONITROL CORPORATION, DEALER agrees
that SONITROL CORPORATION, or DISTRIBUTOR, shall have the right to promote,
lease, sell, install and service chain accounts within DEALER'S Area of Primary
Responsibility without compensating DEALER for same.
14.3 Unless precluded by law, DEALER agrees to promote programs
promulgated at the national level by SONITROL CORPORATION. Such programs
shall be designed to benefit all Sonitrol dealers by ensuring a high level of
quality for the Sonitrol Product system, Sonitrol Products, and services.
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SECTION FIFTEEN
PROTECTION OF TRADE SECRETS
15.1 To further the business relationship among SONITROL CORPORATION,
DISTRIBUTOR and DEALER, it is necessary and desirable that from time to time
SONITROL CORPORATION will disclose to DEALER confidential information
relating to the Sonitrol Product System, hereinafter referred to as
"Sonitrol Information." Sonitrol Information includes, but is not limited
to: current, future, or proposed Sonitrol Products; plans, technologies,
operating and monitoring techniques relating to such products; plans and
information relating to the marketing, merchandising and sale of Sonitrol
Products; and the processes, services, policies, procedures, records and
accounts of SONITROL CORPORATION; excluding only that information which is
generally known throughout the industry or which is within the public domain.
15.2 DEALER recognizes that Sonitrol Information is a valuable trade secret.
DEALER shall only reveal Sonitrol information to such of its personnel who
need to know the information for the effective operation of the Franchise
Business and who sign a statement as provided in Section Four above. DEALER
hereby covenants not to otherwise reveal or communicate Sonitrol Information,
directly or through its employees, agents or representatives, to any third
party, which shall include any parent, subsidiary or affiliated corporation of
DEALER, without the prior written consent and authorization of SONITROL
CORPORATION and shall use its best efforts to prevent inadvertent disclosure of
Sonitrol Information to any third party, except as may be appropriate and
professionally necessary to DEALER's accountants, attorneys and banking
sources, or as required by law.
15.3 DEALER further agrees that the aforesaid duty not to disclose Sonitrol
Information shall continue during the term of this Agreement and any successor
agreements, and for a period of three (3) years following the expiration or
termination of this Agreement and any successor agreements.
SECTION SIXTEEN
RELATIONSHIP OF PARTIES
16.1 DEALER is and shall be considered an independent contractor with entire
control and direction of its business and operations, subject only to the
conditions and obligations established by this Agreement. No agency,
employment or
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partnership is created by this Agreement. DEALER's business is separate and
apart from any that may be operated by SONITROL CORPORATION or DISTRIBUTOR.
16.2 No party to this Agreement shall make any representation tending to
create apparent agency, employment, or partnership. No party will have
authority to act for the other in any manner to create obligations or debts
binding on the other, and no party will be responsible for any obligations or
expenses whatsoever of the other. Neither DEALER, its employees, nor any
person performing any duties or engaged in any work at the request of DEALER
shall be deemed an employee or agent of SONITROL CORPORATION or DISTRIBUTOR.
16.3 In all public records and in its relationship with other persons, on
letterheads and business forms, and invoices, in accordance with SONITROL
CORPORATION's prescribed standards and procedures which DEALER agrees to
follow, DEALER shall indicate its independent ownership of said business, and
that it is a franchise of SONITROL CORPORATION by using the following
language: "An Independent Sonitrol Dealer Franchise." Further, DEALER agrees
to exhibit on its premises in a place designated by SONITROL CORPORATION, a
notification that it is an independent Sonitrol dealer franchise.
SECTION SEVENTEEN
INDEMNITY OF SONITROL CORPORATION AND DISTRIBUTOR
17.1 DEALER agrees, during and after the term of this Agreement, to indemnify
and hold SONITROL CORPORATION and DISTRIBUTOR harmless from and against, and
promptly reimburse them for, any and all loss, damage, liability and attorneys'
fees and other costs and expenses incurred by SONITROL CORPORATION or
DISTRIBUTOR as the result of any violation of this Agreement by, or any act of
omission or commission on the part of DEALER or any of its agents, servants, or
employees, and from all claims, demands, losses, costs, damages, suits,
judgments, penalties, expenses, and liabilities of any kind or nature
whatsoever arising directly or indirectly out of or in connection with the
operation of DEALER's business.
SECTION EIGHTEEN
ASSIGNMENT OF AGREEMENT
18.1 DEALER shall not assign, sell, transfer, or encumber this Agreement, or
any interest in DEALER (including merger into any
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other entity and the sale, transfer or disposition of any stock or partnership
interest in DEALER) affecting control of DEALER, without the prior written
consent and approval of SONITROL CORPORATION and DISTRIBUTOR, which consent
and approval shall not be unreasonably withheld. Control is defined as any
assignment, sale or transfer which, whether as a single transfer or when
aggregated with other transfers that occurred after the date of this Agreement,
results in a transfer of twenty-five percent (25%) or more of the ownership
interest in DEALER.
18.2 Written consent and approval of SONITROL CORPORATION and
DISTRIBUTOR shall not be required for:
18.2.1 Assignments, sales or transfers of DEALER's stock, or DEALER's
interest under this Agreement, to a corporation or partnership which
owns over seventy-five percent (75%) of each class of voting stock (if
a corporation) of DEALER at the time of the execution of this
Agreement, or is the controlling general partner (if a partnership) of
DEALER at the time of the execution of this Agreement, provided DEALER
gives SONITROL CORPORATION and DISTRIBUTOR written notice of such
assignment, sale or transfer.
18.2.2 Assignment of this Agreement to a bank or other financial
institution as collateral for a loan provided that DEALER and the bank
or financial institution enter into an agreement identical in form and
substance to the one attached hereto as Attachment C, and such
agreement is approved by SONITROL CORPORATION and DISTRIBUTOR.
18.2.3 Assignments, sales or transfers of publicly traded stock of
DEALER previously registered under federal securities laws, provided:
(a) the transferor owns less than twenty-five percent (25%) of each
class of the stock of DEALER prior to the transfer, and (b) after the
transfer the transferee will own less than twenty-five percent (25%)
of each class of the stock of DEALER.
18.3 No such assignment, sale or transfer of interest under this Agreement
shall be approved, by SONITROL CORPORATION and DISTRIBUTOR unless DEALER and
its proposed assignee meet the following requirements:
18.3.1 The assignee must be acceptable to SONITROL CORPORATION and
DISTRIBUTOR by the standards then utilized in considering applicants
for new dealerships;
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18.3.2 There shall be no existing default in the performance or
observance of any of DEALER's obligations under this Agreement or any
other agreement with SONITROL CORPORATION, its subsidiary or
affiliated corporations, or DISTRIBUTOR;
18.3.3 DEALER shall have settled all outstanding accounts with
SONITROL CORPORATION, its subsidiary and affiliated corporations,
and DISTRIBUTOR;
18.3.4 DEALER shall execute a mutual general release, in the form of
Attachment A, for any and all claims each party shall have against the
other, its parent, subsidiary and affiliated corporations, and their
officers, directors, agents and employees, excepting only such claims
as are precluded from waiver by applicable law.
18.3.5 DEALER's assignee must execute all agreements that SONITROL
CORPORATION and DISTRIBUTOR then require of new dealers; and
18.3.6 DEALER's assignee shall have paid a transfer fee of Seven
Thousand Five Hundred Dollars ($7,500.00), $2,500 of which sum shall
have been paid to SONITROL CORPORATION and the remainder to
DISTRIBUTOR.
18.4 Since this Agreement limits the transferability of corporate stock
shares, if DEALER is now incorporated or incorporates during the term of this
Agreement, all certificates of shares issued by DEALER shall have endorsed
thereon an appropriate legend to conform with state law, referring to this
Agreement by date and name of parties hereto, and stating, "Transfer of this
certificate is limited," or similar statutorially required language. This
legend shall not be required on certificates representing publicly traded stock
of DEALER previously registered less than twenty-five percent (25%) of each
class of stock of DEALER.
18.5 SONITROL CORPORATION shall have the right to assign this Agreement and
the rights hereunder to any person, firm, association, or corporation, provided
that such transferee shall agree in writing to assume all obligations
undertaken by SONITROL CORPORATION herein.
SECTION NINETEEN
RIGHT OF FIRST REFUSAL
19.1 If at any time during the term of this Agreement, DEALER or any
stockholder, partner or limited partner of DEALER, desires to sell or transfer,
in whole or in part, any of its interest under this Agreement or any interest in
DEALER, whether DEALER is a partnership, corporation, firm or other association
for profit, DEALER, or any selling stockholder, general partner or limited
partner of DEALER, shall first offer such interest to SONITROL CORPORATION and
DISTRIBUTOR by delivering to SONITROL CORPORATION and DISTRIBUTOR a written
offer setting forth the interest to be sold, the purchase price and terms of
payment, together with all other documentation relating or incidental to such
offer to sell.
19.2 During the sixty (60) day period following receipt of such offer to sell,
and related documentation from DEALER, SONITROL CORPORATION and/or DISTRIBUTOR
shall have the right and option to purchase or otherwise acquire such of
DEALER's interest under this Agreement, and all such other property and rights
of DEALER as may be included in such offer to purchase, upon the same terms and
conditions as set forth in such offer to sell. DISTRIBUTOR shall have the
first right and option to purchase, and shall exercise such right and option by
giving written notice to DEALER and SONITROL CORPORATION within thirty (30)
days after receipt of such offer to sell and related documentation from DEALER.
If DISTRIBUTOR does not give written notice as set forth herein or declines to
exercise its purchase option, then SONITROL CORPORATION shall have the sole
right and option to purchase or otherwise acquire DEALER's interest under the
foregoing terms and conditions within the subsequent thirty (30) day period, and
may exercise such right and option by giving written notice to DEALER and
DISTRIBUTOR.
19.3 If SONITROL CORPORATION and DISTRIBUTOR do not accept such offer within
the time period for acceptance set forth in paragraph 19.2 above, subject to
the provisions of Section Eighteen, DEALER shall be free to sell the interest
covered by such written offer to any other person or entity on the condition
that: (i) such interest is sold during the one hundred twenty (120) day period
immediately following the expiration of such sixty (60) day period above; and
(ii) such sale is consummated at a price greater than or equal to that set
forth in such written offer and otherwise on the terms (including payment
terms) set forth in such offer. The interest subject of the right of first
refusal is interest relating only to the subject matter of this Agreement.
19.4 If SONITROL CORPORATION and DISTRIBUTOR do not receive such offer to sell
and related documentation as set forth in paragraph 19.1 above, then SONITROL
CORPORATION and DISTRIBUTOR shall have no obligation to consider or consent to
the prospective transfer of assignment of DEALER's interest(s) under Section
Eighteen of this Agreement.
19.5 SONITROL CORPORATION and DISTRIBUTOR's right of first refusal granted in
subsections 19.1, 19.2, and 19.3 above shall apply only to assignments, sales
or transfers over which SONITROL CORPORATION and DISTRIBUTOR have a right of
consent and approval under Section Eighteen of this Agreement.
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SECTION TWENTY
INCAPACITY OF DEALER'S PRINCIPAL PARTY
20.1 If DEALER is a natural person, in the event of death or incapacity of
DEALER the rights and obligations of DEALER will pass to DEALER'S executors,
representatives, administrators, heirs or legatees ("Legatee") capable of
performing all of the duties and obligations under the Sonitrol Dealer
Franchise Agreement. Legatee must within thirty (30) days of such death or
incapacity assume all of DEALER's obligations under this Agreement in writing.
If SONITROL CORPORATION determines in good faith that Legatee is not capable
of performing all the duties and obligations of DEALER under the Sonitrol
Dealer Franchise Agreement, it will notify Legatee in writing and Legatee shall
have sixty (60) days from the date of notification to locate a bona fide
purchaser and notify SONITROL CORPORATION of the identity of the purchaser
and terms of the purchase. If Legatee fails to find a purchaser, or SONITROL
CORPORATION determines in good faith that the proposed purchaser is not capable
of assuming the duties and obligations of DEALER under this Agreement,
SONITROL CORPORATION may purchase the DEALER's business at fair market value.
20.2 Transfers of this Agreement, or any interest in DEALER, due to the death
or incapacity of any natural person with an ownership interest in DEALER shall
be governed by, and subject to the assignment and right of first refusal
provisions of Sections Eighteen and Nineteen of this Agreement.
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SECTION TWENTY-ONE
DEFAULT
21.1 Any of the following events shall constitute a default of this Agreement:
21.1.1 An affirmative act of insolvency by DEALER, an assignment for
the benefit of creditors or similar disposition of assets by DEALER,
or the filing by DEALER of a petition under any bankruptcy,
reorganization, insolvency, or moratorium law, or any law for the
relief of, or relating to, debtors;
21.1.2 The filing of any involuntary petition under any bankruptcy
statute against DEALER'S or the appointment of any receiver or trustee
to take possession of property of DEALER, unless such petition or
appointment is set aside or withdrawn or ceases to be in effect within
thirty (30) days of such filing or appointment;
21.1.3 A final judgment, or the unappealed decision of a regulatory
officer or agency, that results in temporary or permanent suspension
of any permit or license, possession of which is a prerequisite to
operation of DEALER's business under applicable law;
21.1.4 A criminal conviction of DEALER, or an officer, director,
partner or principal of DEALER, for a felony offense, or any other
crime or act which would substantially impair the goodwill associated
with the "SONITROL" trademark, trade name, or the Sonitrol Product
System;
21.1.5 DEALER's failure, refusal, or neglect to pay to DISTRIBUTOR or
SONITROL CORPORATION, its subsidiary or affiliated corporations, any
monies owing to DISTRIBUTOR or SONITROL CORPORATION, its subsidiary or
affiliated corporations, under the terms of this Agreement or any
other agreement, on the date such monies are due or within such terms
as may be established by SONITROL CORPORATION or DISTRIBUTOR;
21.1.6 Any material misrepresentation or false statement by DEALER,
or made at DEALER's behest, to SONITROL CORPORATION or DISTRIBUTOR, in
connection with the execution of this Agreement or in any accounting,
report or plan that DEALER submits to SONITROL CORPORATION, its
subsidiary or affiliated corporations, or DISTRIBUTOR pursuant to this
Agreement;
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21.1.7 The use in DEALER's business of any products or equipment in
violation of the provisions of Section Five of this Agreement;
21.1.8 Any purported assignment, sale, transfer, or encumbrance by
DEALER of any of its rights, obligations or interests under this
Agreement without having received the prior written consent of
SONITROL CORPORATION and DISTRIBUTOR;
21.1.9 DEALER's failure to comply with, perform or observe any other
lawful obligation imposed upon it under this Agreement; or repeatedly
failing to comply with, perform or observe the lawful provisions of
this Agreement whether or not such noncompliance is corrected after
notice. "Repeatedly" as used in this sub-paragraph shall mean two
(2) or more times within any twelve month period.
21.2 Upon default DEALER agrees to pay all costs and expenses, including
reasonable attorney's fees, incurred by SONITROL CORPORATION and DISTRIBUTOR in
collecting all monies owed by DEALER or in obtaining other relief to enforce the
provisions of this Agreement.
SECTION TWENTY-TWO
TERMINATION
22.1 If conditions exist that constitute a default of this Agreement by one or
more of the sub-paragraphs of Section Twenty-One, in addition to all other
remedies available to SONITROL CORPORATION and DISTRIBUTOR at law or in equity,
all rights granted to DEALER under this Agreement shall terminate effective
upon thirty (30) days written notice to DEALER (or longer if required by
applicable law), provided that DEALER fails to cure all acts of default within
thirty (30) days of such notice. DEALER acknowledges and agrees that
termination due to a default under one or more of the subsections of Section
Twenty-One shall be deemed to be for good cause. The cure provisions under
this Section shall not apply to a default pursuant to Subsection 21.1.9 above
for DEALER repeatedly failing to comply with the provisions of this Agreement.
22.2 Upon any lawful termination or expiration of this Agreement or any
successor agreements hereto, DEALER shall:
22.2.1 Immediately cease to use in any manner whatsoever the
"SONITROL" trademark and trade name and
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any forms, slogans, signs, symbols or devices used in connection with
the operation of a Sonitrol franchise or the Sonitrol Product System;
and will:
(a) Upon request by SONITROL CORPORATION and/or
DISTRIBUTOR, mail to all customers a registered letter,
approved by SONITROL CORPORATION, return receipt requested to
DISTRIBUTOR, informing the customer that the Dealer is no
longer authorized or licensed to operate under the trademark
"SONITROL," and requesting that the customer remove all signs,
decals or other materials bearing the trademark SONITROL from
its premises. This mailing will be completed within thirty
days from the date of the termination of this Agreement.
(b) Within six months from the date of the termination of
this Agreement, remove all signs, decals, or other materials
bearing the trademark "SONITROL" from the DEALER's premises,
and replace all Sonitrol contracts so that they are no longer
in force or effect, and will certify by letter to SONITROL
CORPORATION and DISTRIBUTOR that this has been completed.
22.2.2 Promptly pay to SONITROL CORPORATION, its subsidiary or
affiliated corporations, and DISTRIBUTOR all sums owing from DEALER to
SONITROL CORPORATION, its subsidiary or affiliated corporations, and
DISTRIBUTOR, including all damages, costs and expenses, including
reasonable attorneys' fees incurred by SONITROL CORPORATION, its
subsidiary or affiliated corporations, and DISTRIBUTOR by reason of
any default of this Agreement by DEALER, and further including all
costs and expenses, including reasonable attorneys' fees, incurred by
SONITROL CORPORATION, or its subsidiary or affiliated corporations,
and DISTRIBUTOR in obtaining injunctive or other relief to enforce the
provisions of this Agreement;
22.2.3 Continue to comply with and be bound by all applicable
provisions of this Agreement which survive termination, including, but
not limited to, the noncompetition, and protection of trade secrets
provisions.
22.3 Upon any termination or expiration of this Agreement or any successor
agreements, DISTRIBUTOR shall have the right to repurchase from DEALER all
unused, Current Sonitrol Products of DEALER at the cost to DEALER for such
products, and all stocks
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of supplies and materials bearing the "SONITROL" trademark, paying the cost to
DEALER for such products, supplies and materials. In connection with any such
repurchase, DISTRIBUTOR shall be entitled, but not required, to offset against
the repurchase price any monies owed by DEALER to DISTRIBUTOR pursuant to the
terms of this Agreement or any other agreement between the parties. For
purposes of this subparagraph 22.3, "Current Sonitrol Products" shall mean
those products being manufactured by SONITROL CORPORATION, or its subsidiaries,
at the time of termination or expiration of this Agreement.
22.4 In the event or as a result of termination by SONITROL CORPORATION or
DISTRIBUTOR pursuant to the terms of this Agreement, SONITROL CORPORATION and
DISTRIBUTOR shall not be liable to DEALER for any damages, including
consequential or incidental, and including but not limited to profits on sales
or anticipated sales, on account of expenditures, investments, or commitments
made in connection therewith, in connection with the establishment,
development, and maintenance of the business or goodwill of DEALER. Such
termination shall not, however, affect the rights or liabilities of said
parties with respect to products previously sold hereunder or with respect to
any indebtedness then owing by either party to the other.
22.5 Dealer agrees to pay all costs, including, but not limited to,
attorneys' fees, incurred by SONITROL CORPORATION or DISTRIBUTOR in enforcing
and/or completing any of the above provisions not completed by DEALER on a
timely basis.
SECTION TWENTY-THREE
RESTRICTION ON EFFECT OF WAIVER
23.1 No delay or omission to exercise a right, power, or remedy accorded to
SONITROL CORPORATION or DISTRIBUTOR on any breach or default of DEALER under
this Agreement shall impair any such right, power, or remedy of SONITROL
CORPORATION or DISTRIBUTOR, and it shall not be construed to be a waiver of any
such breach or default, or an acquiescence therein, or of or in any similar
breach or default thereafter occurring; nor shall any waiver of any single
breach or default be deemed a waiver of any other breach or default theretofore
or thereafter occurring.
23.2 Any waiver, permit, consent, or approval of any kind or character on
the part of SONITROL CORPORATION or DISTRIBUTOR of any breach or default under
this Agreement, or any waiver on the part of SONITROL CORPORATION or
DISTRIBUTOR of any
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provision or condition of this Agreement must be in writing and shall be
effective only to the extent specifically allowed by such writing.
23.3 All remedies afforded to SONITROL CORPORATION or DISTRIBUTOR, either
under this Agreement or by law or otherwise, shall be cumulative and not
alternative.
SECTION TWENTY-FOUR
COVENANT NOT TO COMPETE
24.1 Other than pursuant to this Agreement, DEALER (which shall include all
entities owned in whole or in part by DEALER, all parent corporations of
DEALER, all shareholders of DEALER, and if DEALER is a partnership, all general
and limited partners of DEALER), agrees that it will not directly or
indirectly own, manage, operate, join, control, or participate in the
ownership, management, operation or control of, or be connected in any manner
with, any business or engage in any business involving the manufacture,
promotion, sale, or delivery of security products and services. DEALER will not
disclose or reveal to anyone, directly or indirectly, any confidential
information or trade secrets of the business of Sonitrol, including customer
lists, personnel information, and secret processes or other technical data,
which DEALER has obtained as a Sonitral dealer. These restrictions continue so
long as this Agreement is in effect and for a period of three (3) years after
its termination. This restriction shall apply to competing businesses
operating (a) within DEALER's Area of Primary Responsibility, and (b) within a
geographical area of One Hundred (100) miles from the boundary of DEALER's Area
of Primary Responsibility. The foregoing restrictions (a) and (b) are distinct
and severable.
24.2 DEALER further covenants and agrees that during the term of this
Agreement and any successor agreement, DEALER shall not divert or attempt to
divert any business of or any customers of the franchised business to any other
competing business, by direct or indirect inducement or otherwise.
24.3 DEALER acknowledges that any violation of the covenants set forth in
paragraphs 24.1 and 24.2 above would cause SONITROL CORPORATION and DISTRIBUTOR
to suffer irreparable damage, the exact amount of which may not be reasonably
or accurately ascertained, and that the resulting damage to the confidential
nature of the Sonitrol Product System could not be adequately compensated by
money damages, and therefore, in the
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event of such violation occurring, DEALER hereby agrees and consents to the
issuance of an injunction restraining DEALER or anyone acting for or on behalf
of DEALER from violating said covenants or any of them.
24.4 DEALER shall require all of DEALER's directors and officers to agree
in writing, in a form agreeable to SONITROL CORPORATION, to be bound by the
terms and conditions of this Section Twenty-Four.
SECTION TWENTY-FIVE
FORCE MAJEURE
25.1 Neither DEALER, DISTRIBUTOR nor SONITROL CORPORATION shall be held
liable for failure to comply with any of the terms of this Agreement when such
failure has been caused solely by force majeure, fire, labor dispute, strike,
war, insurrection, riot, flood, government restrictions, or act of God beyond
the control and without fault on the part of the party involved, provided such
party uses due diligence to remedy such default.
SECTION TWENTY-SIX
CONSEQUENTIAL DAMAGES
-
26.1 None of the parties shall be liable to the other for consequential or
incidental damages including but not limited to profits or sales or anticipated
sales or on account of expenditure, investments, or commitments made in
connection therewith, or in connection with the establishment, development and
maintenance of the business or goodwill of the other.
SECTION TWENTY-SEVEN
NOTICES
27.1 Any and all notices required or permitted under this Agreement shall
be in writing and shall be personally delivered or mailed, by certified mail -
return receipt requested, to the respective parties at the addresses listed
below unless and until a different address has been designated by written
notice:
29
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SONITROL CORPORATION: SONITROL CORPORATION
000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
DISTRIBUTOR: SONITROL SOUTHEAST, INC
-----------------------------------
000 Xxxxxx Xxxxx
-----------------------------------
Xxxxxxxxxx, Xxxxxxx 00000
-----------------------------------
DEALER:
-----------------------------------
d/b/a Sonitrol of Miami, Inc.
-----------------------------------
-----------------------------------
-----------------------------------
SECTION TWENTY-EIGHT
EFFECTIVE DATE
28.1 This Agreement shall be effective and binding as of the date first
written above when it has been accepted and executed by SONITROL CORPORATION at
SONITROL CORPORATION's corporate headquarters in Alexandria, Virginia.
SECTION TWENTY-NINE
GOVERNING LAW
29.1 This Agreement shall be governed by and construed in accordance with
the laws of the State of Virginia, except to the extent that said laws directly
conflict with and are incompatible with the laws, if any, of the jurisdiction
where DEARLER is located which specifically address and control
franchisor-franchisee relationships and which are applicable to this Agreement.
SECTION THIRTY
CONSENT TO JURISDICTION
30.1 DEARLER consents to jurisdiction in Virginia for the purposes of any
legal proceeding relating to this Agreement or the Sonitrol business granted by
this Agreement.
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SECTION THIRTY-ONE
EFFECT OF PARTIAL INVALIDITY
31.1 The invalidity of any portion of this Agreement will not and shall not
be deemed to affect the validity of any other provision. In the event that any
provision of this Agreement is invalid, the parties agree that the remaining
provisions shall be deemed to be in full force and effect as if they had been
executed by both parties subsequent to expungement of the invalid provision.
SECTION THIRTY-TWO
DESCRIPTIVE HEADINGS
32.1 The descriptive headings of the various sections of this Agreement are
provided solely for ease of reference and shall not be considered in construing
or interpreting this Agreement.
SECTION THIRTY-THREE
ENTIRE AGREEMENT
33.1 This instrument contains the entire agreement of the parties. No
representations, inducements, promises, negotiations or agreements, oral or
otherwise, not embodied herein shall be of any force or effect and shall not
affect the construction of the rights and obligations of the parties created
hereby. This Agreement may be modified only in writing, signed by the parties
hereto, and stating that said writing is a modification or amendment hereto.
Any other attempts at modification, whether by course of conduct, oral or
informally written agreement or whatever, shall be of no effect or force.
SECTION THIRTY-FOUR
ACKNOWLEDGEMENT BY DEALER
34.1 DEALER acknowledges that it has entered into this Agreement after
making an independent investigation and evaluation of SONITROL CORPORATION's
and DISTRIBUTOR's operations and the business venture contemplated herein, and
not as a result of representations or projections as to the venture's potential
for success, if any have been quoted, used illustratively or implied to DEALER.
Neither SONITROL
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- 31 -
CORPORATION nor DISTRIBUTOR makes any representation, guaranty, or warranty,
express or implied, as to the potential success of the business venture
contemplated herein. DEALER acknowledges that it has previously received a
blank copy of this Agreement in time to afford ample opportunity to seek legal
counsel and to review the provisions contained herein. DEALER acknowledges
that successful operation of this franchise will depend upon its best efforts,
capabilities, management, and efficient operation, as well as local marketing
conditions and other factors.
IN WITNESS WHEREOF, each undersigned individual in individual and/or
representative capacity, having read each and every provision herein and
agreeing to the same, and to this contract as a whole, have hereby executed
this Agreement as warranty of the capacity in which they have signed this
Agreement and as evidence of their understanding and ratification hereof, as a
wholly voluntary act.
Dated at Alexandria, Virginia, December 23, 1988.
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SONITROL CORPORATION
ATTEST:
By: /s/ Xxxxxxxxxxx X. Xxxx
-----------------------------------------
By: /s/ Xxxx X. Xxxxxx
----------------------------
Secretary
DEALER:
MASADA SECURITY LIMITED PARTNERSHIP
d/b/a SONITROL OF MIAMI
--------------------------
ATTEST:
By: /s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------------
XXXXX X. XXXXXXXXXXX
Title: President
-------------------------------------
PRESIDENT, Xxxxxxx & Xxxxxxxx Ltd.
By: and partner of Xxxxxxx & Bradford
---------------------------- Investments Limited Partnership as
Secretary General Partner
DISTRIBUTOR:
SONITROL SOUTHEAST INC.
--------------------------------------------
ATTEST:
By: /s/ Xxxxxxx Xxxxxxx
----------------------------------------
Title: Vice President Distribution
-------------------------------------
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Secretary
33
AMENDMENT
SONITROL DEALER FRANCHISE AGREEMENT
SONITROL CORPORATION, a Delaware corporation, hereinafter referred to
as "SONITROL", SONITROL SOUTHEAST, INC., a Indiana corporation, hereinafter
referred to as "DISTRIBUTOR", and Masada Security Limited Partnership, a
Delaware, limited partnership, hereinafter referred to as "DEALER", effective
this 23 day of December, 1988, amend and restate in part that certain Sonitrol
Dealer Franchise Agreement dated December 23, 1988, between SONITROL,
DISTRIBUTOR and DEALER, hereinafter referred to as the "Ageement".
NOW, THEREFORE, SONITROL, DISTRIBUTOR and DEALER, intending to be
legally bound in consideration of the mutual agreements, covenants, and
promises herein set forth, and for good and valuable consideration,
acknowledged and received, do hereby amend and restate in part the Agreement as
follows:
1. In Paragraph 2.2.1 of Section Two of the Agreement, the
words, "provided that DISTRIBUTOR had given written notice to
DEALER not less than twelve (12) months prior to the end of
the initial ten (10) year term that such notice is required by
DEALER" shall be added at the end of the fourth line on the
first sentence after the word "effect" and before the
semicolon.
2. In Paragraph 2.2.3 of Section Two of the Agreement, the words,
"together with those amendments in form and substance
previously agreed upon", are added at the end of the first
sentence.
3. In Paragraph 13.1 of Section of Thirteen of the Agreement, the
words, "and DISTRIBUTOR'S" are deleted at the end of the
seventh line of the first sentence.
4. In Paragraph 5.3 of Section Five of the Agreement, the words,
"of selling, servicing, leasing and promoting Sonitrol systems
and equipment", are added in the eight line following the
words, "DEALER's business", and prior to the words, "only
from".
5. In Paragraph 5.2 of Section Five of the Agreement, the
words, "other then normal in-field servicing of subscriber
accounts" are added after the word "Products" in the third
line of the first sentence.
6. Paragraph 7.2.5 of Section Seven of the Agreement is deleted
in its entirety and restated as follows:
"To maintain an adequate facility within DEALER's area of
primary responsibility for monitoring of subscriber accounts."
34
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7. In Paragraph 8.2 of Section Eight of the Agreement, the words,
"and that such increase shall be applicable to all dealers
with similar royalty fee provisions" are added at the end of
the second sentence.
8. In Paragraph 10.1 of Section Ten of the Agreement, the words,
"So long as the minimum performance standards set forth in
Section 7.2.1 are maintained, failure to meet the sales
projections contained in the Business Plan does not create an
independent right to cancel the franchise" are added at the
end of the paragraph.
9. Section Eighteen of the Agreement is amended to add the
following as Paragraph 18.4:
"18.4 Sales or transfers, in whole or in part, of DEALER's
stock to its subsidiary or sister corporations or to its
parent corporation, and an assignment of this Agreement to a
bank or financial institution provided the DEALER and bank or
financial institution enter into an agreement substantially
in the same form and substance to Exhibit A and obtain the
approval of SONITROL CORPORATION and DISTRIBUTOR thereto,
shall not be subject to the provisions of Paragraphs 18.1,
18.2, and 18.3."
10. Section Nineteen of the Agreement is deleted in its entirety
and amended as follows:
"19.1 If at any time during the term of this Agreement,
DEALER desires to sell its assets, including its rights under
this Agreement, or any shareholder, partner or limited partner
of DEALER, desires to sell or transfer, in whole or in part,
any of its interest in DEALER (the assets of DEALER or an
interest in DEALER being collectively referred to herein as
the "Interest"), DEALER, or any selling stockholder, general
partner or limited partner of DEALER ("Seller"), shall first
offer such Interest to SONITROL CORPORATION and DISTRIBUTOR by
delivering to SONITROL CORPORATION and DISTRIBUTOR a written
offer setting forth the Interest to be sold, the purchase
price and terms of payment.
19.2 During the thirty day period following receipt of such
offer to sell from Seller, SONITROL CORPORATION or DISTRIBUTOR
shall either accept such offer or issue to Seller a
counteroffer in writing setting forth the purchase price and
terms of payment. If SONITROL CORPORATION or DISTRIBUTOR
accept the offer of Seller, the closing of the sale shall
take place within thirty
35
- 3 -
days after notice of acceptance. If SONITROL CORPORATION or
DISTRIBUTOR issues a counteroffer, Seller shall have ninety
days to accept such counteroffer. During such ninety day
period, Seller may offer to sell the Interest to or solicit
offers to buy such Interest from any third party and if a
third party agrees to purchase the Interest within such ninety
day period at a price greater than and at the same or better
terms of payment that contained in the counteroffer of
SONITROL CORPORATION or DISTRIBUTOR, then Seller may
consummate the sale with such third party free of the rights
granted to SONITROL CORPORATION and DISTRIBUTOR contained in
this Section Nineteen.
19.3 As between SONITROL CORPORATION and DISTRIBUTOR,
DISTRIBUTOR shall have the first right and option to accept
the offer to sell or issue the counteroffer.
19.4 If SONITROL CORPORATION and DISTRIBUTOR do not receive
the offer to sell as set forth in Paragraph 19.l above, then
SONITROL CORPORATION and DISTRIBUTOR shall have no obligation
to consider or consent to the prospective transfer
or assignment of DEALER's Interest under Section Eighteen of
this Agreement.
19.5 SONITROL CORPORATION and DISTRIBUTOR's right of first
refusal granted in subsections 19.1, 19.2, and 19.3 above
shall apply only to assignments, sales or transfers over which
SONITROL CORPORATION and DISTRIBUTOR have a right of consent
and approval under Section Eighteen of this Agreement.
19.6 It is clearly understood by DEALER, DISTRIBUTOR and
SONITROL CORPORATION that nothing contained herein affects
DISTRIBUTOR and SONITROL CORPORATION rights under Section
Eighteen of this Agreement."
11. Section Twenty-four of the Agreement is amended by adding the
following subsection:
"24.5 SONITROL CORPORATION and DISTRIBUTOR recognize that
DEALER's shareholders or affiliated companies currently have
an ongoing business in security alarms and sells non-Sonitrol
manufactured or approved security alarms within the Area of
Primary Responsibility granted by this Agreement.
Notwithstanding this recognition, DEALER agrees that in
conducting the Sonitrol business granted by this Agreement it
will use its best efforts to fully develop the market for
Sonitrol Products and shall comply with
36
- 4 -
all the terms and conditions of this Agreement including all
standards and procedures of SONITROL CORPORATION for the
operation of a Sonitrol franchised business. DEALER warrants
and agrees that the marketing, servicing and monitoring
operations of its non-Sonitrol business shall be independent
from and not associated with the operations of the business
granted by this Agreement, even if located in the same
building, and further insures and agrees that the Sonitrol
business granted hereunder will become and remain fully
competitive in the Area of Primary Responsibility. In the
event of DEALER's failure to comply with this Section, in
addition to SONITROL CORPORATION's and DISTRIBUTOR's rights
under Sections Twenty-one and Twenty-two of this Agreement,
SONITROL CORPORATION and DISTRIBUTOR shall after written
notice and provided that dealer fails to cure within thirty
days have the right, at its option, to establish another
dealer or dealers within a part or all of DEALER's Area of
Primary Responsibility."
Except as specifically amended hereby, all terms and conditions of the
Agreement shall remain in full force and effect, and the Agreement shall read
as a single integrated document, incorporating the amendments hereby effected.
IN WITNESS WHEREOF, each undersigned individual in individual and/or
representative capacity, having read each and every provision herein and
agreeing to the same, have hereby executed this Amendment to the Agreement as
warranty of the capacity in which they have signed this Agreement and as
evidence of their understanding and ratification hereof, as a wholly voluntary
act.
37
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DATED at: Alexandria, Virginia, December 23, 1988
SONITROL CORPORATION
By /s/ Xxxxxxxxxxx X. Xxxx
------------------------------------------
Title V.P.
---------------------------------------
ATTEST:
/s/ Xxxx X. Xxxxxx
----------------------------
Secretary
DISTRIBUTOR:
SONITROL SOUTHEAST, INC.
By /s/ Xxxxxxxx Xxxxxxx
-----------------------------------------
Title V.P. Distribution
---------------------------------------
ATTEST:
/s/ Xxxx X. Xxxxxxx
----------------------------
Secretary
DEALER:
MASADA SECURITY LIMITED PARTNERSHIP
dba SONITROL OF MIAMI
---------------------------
By /s/ Xxxxx X. Xxxxxxxxxxx
----------------------------------------
XXXXX X. XXXXXXXXXXX
Title President
-------------------------------------
PRESIDENT, Xxxxxxx & Xxxxxxxx, Ltd.
ATTEST: and partner of Xxxxxxx-& Bradford
Investments Limited
---------------------------- Partnership as General
Secretary Partner
