Exhibit 10.32
PAPA JOHN'S
DEVELOPMENT AGREEMENT
Developer: Pizza Caribe, Inc.
Address: 0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
Number of Restaurants: Twenty (20)
Development Area: Puerto Rico
TABLE OF CONTENTS
Page
1. Grant.....................................................................2
2. Development Fee...........................................................3
3. Development of Restaurants; Schedule for Completion.......................4
4. Term......................................................................7
5. Construction or Remodeling................................................7
6. Your Organization, Operation and Ownership................................7
7. Your Covenants............................................................8
8. Principal Operator.......................................................10
9. Default and Termination..................................................11
10. Assignment or Transfer...................................................13
11. No Grant of Franchise or Franchise Rights................................13
12. Notices..................................................................13
13. Independent Contractor; Indemnification..................................14
14. Enforcement..............................................................15
15. Acknowledgements.........................................................20
16. Miscellaneous............................................................21
DEVELOPMENT AGREEMENT
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THIS DEVELOPMENT AGREEMENT ("Agreement") is made and entered into this
2nd day of June, 1998, by and between PAPA JOHN'S INTERNATIONAL, INC., a
Delaware corporation ("we", "us" or "Papa John's"), and PIZZA CARIBE, INC., a
Delaware corporation ("you"). If you are a corporation, limited liability
company or partnership, certain provisions of the Agreement also apply to your
owners and will be noted.
RECITALS:
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A. We and our Affiliates (defined below) have expended time, money and
effort to develop a unique system for operating retail restaurants devoted
primarily to carry-out and delivery of pizza and other food items. The chain of
current and future Papa John's restaurants are referred to herein as the "Papa
John's Chain" or the "Chain".
B. The Chain is characterized by a unique system which includes special
recipes and menu items; distinctive design, decor, color scheme and furnishings;
software and programs; standards, specifications and procedures for operations;
procedures for quality control; training assistance; and advertising and
promotional programs all of which we may improve, amend and further develop from
time to time (the "System").
C. We identify our goods and services with certain service marks, trade
names and trademarks, including but not limited to, "Papa John's", "Papa John's
Pizza," "Pizza Papa John's Delivering the Perfect Pizza!" and "Better
Ingredients. Better Pizza." as well as certain other trademarks, service marks,
slogans, logos and emblems that have been and may be designated for use in
connection with the System from time to time (the "Marks").
D. You desire to obtain certain rights to develop one or multiple Papa
John's Pizza restaurant(s) in the "Development Area" (as defined below) in
accordance with the terms of this Agreement.
E. We have agreed to grant you such rights;
NOW, THEREFORE, the parties agree as follows:
1. Grant.
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(a) Subject to the terms and conditions of this Agreement and your
continuing faithful performance, we hereby grant to you the right and obligation
to establish 20 Papa John's restaurant(s) (at specific locations we approve) in
the areas specified on attached Exhibit A. (The Papa John's restaurants that you
develop pursuant to this Agreement are collectively referred to as the
"Restaurants" and individually as a "Restaurant"; the areas specified on Exhibit
A are collectively referred to as the "Development Area"). Notwithstanding the
foregoing, enclosed malls, institutions (such as hospitals or schools),
airports, parks (including theme parks), and sports arenas (individually a
"Special Site" and collectively "Special Sites") shall be excluded from the
Development Area unless otherwise agreed by us in writing, and absent such
agreement, we may open Papa John's restaurants, or franchise the right to open
Papa John's restaurants to other persons at any of these locations, regardless
of where they are located. However, if we propose to develop or license another
to develop a Papa John's restaurant at any Special Site located within the
boundaries of the Development Area, we will provide you with the opportunity to
develop such Special Site restaurant, provided, that (i) you understand,
acknowledge and agree that circumstances of a particular Special Site that are
beyond our reasonable control may preclude you from developing or operating a
Papa John's restaurant at such Special Site; and (ii) you must be in compliance
with your obligations under this Agreement and all Franchise Agreements then in
effect. Unless we otherwise agree in writing, a Papa John's restaurant operated
at a Special Site shall not count towards your development obligations as set
forth in Sections 1.(a) and 3.(e) of this Agreement.
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(b) Each Restaurant shall be established and operated pursuant to a
separate "Franchise Agreement" to be entered into between you and us. As used
herein, the term "Franchise Agreement" shall mean the form of Papa John's
Franchise Agreement (for the initial Restaurant) or Short Form Franchise
Agreement (for each subsequent Restaurant) to be executed for each Restaurant
developed under this Agreement and all attachments and exhibits thereto.
(c) Except as may be otherwise provided herein or in the Franchise
Agreements, we shall not locate, nor license another to locate, a Papa John's
restaurant in the Development Area during the "Term" (as defined in Section 4).
(d) This Agreement is not a franchise agreement and we do not grant
you any franchise rights or other rights to use the Marks or System under this
Agreement.
(e) You have no right to license or subfranchise others to use the
Marks or the System, or to enter into any agreement with respect to the Marks or
System.
2. Development Fee. You have paid to us a development fee of One Hundred
Thousand Dollars ($100,000) ("Development Fee") (i.e. Five Thousand Dollars
($5,000) for each Restaurant to be developed), receipt of which we acknowledge.
The Development Fee was fully earned by us when paid, is non-refundable and is
not contingent upon our rendering any further performance. The Development Fee
is in consideration of, among other things, the development rights granted to
you, the reservation of the Development Area, the development opportunities
lost or deferred as a result of the rights granted to you in this Agreement and
the administrative and other expenses that we have incurred. However, $5,000 of
the Development Fee will be credited against each Initial Franchise Fee at the
time it is paid, as provided in Section 3.(f).
3. Development of Restaurants; Schedule for Completion.
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(a) You shall have the number of Restaurants open and operating within
the time frame set forth in subsection 3.(e). below, and you shall exercise each
such development right only at locations that we have approved within the
Development Area.
(b) With respect to each proposed location, you shall submit a
completed site evaluation form, together with such other information and
materials as we may reasonably request. We shall have 30 days after receipt of
such information to accept or reject each proposed location. If we fail to
respond within such 30 day period, the location submitted by you shall be deemed
to be approved. We will not unreasonably withhold our approval of a location. In
approving or disapproving any proposed site, we will consider such matters as we
deem material, including, without limitation, demographic characteristics of the
proposed site, traffic patterns, parking, the predominant character of the
neighborhood, competition from other businesses providing similar services
within the area (including other Papa John's Restaurants), the proximity to
other businesses, the rights granted to our other franchisees, the nature of
other businesses in proximity to the site, and other commercial characteristics
(including the purchase price or rental obligations and other lease terms for
the proposed site) and the size of the premises, appearance, and other physical
characteristics of the proposed site. Approval of a site by us does not
constitute an assurance, representation or warranty of any kind, expressed or
implied, as to the successful operation of a Papa John's Restaurant, or for any
other purpose. Our approval of a site indicates only that we believe the site
complies with an acceptable minimum criteria that we establish solely for our
purposes as of the time period encompassing the evaluation. You acknowledge that
application of criteria that have been effective with respect to other sites and
premises may not be predictive of potential for all sites. Further, demographic
and/or economic factors included in our criteria could change and other relevant
factors that might alter the potential of a site may be excluded from our
criteria. The uncertainty and instability of such criteria are beyond our
control. We are not responsible if a site that we approve fails to meet your
expectations as to potential revenue or operational criteria or for your failure
to locate the required number of suitable sites in the Development Area. You
further acknowledge and agree that your acceptance of a Franchise for the
operation of a Papa John's Restaurant at a site is based on your own independent
investigation of the suitability of a site. Any proposed lease shall include an
addendum in the form
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of Exhibit A to the Franchise Agreement, or shall contain terms and conditions
substantially similar to those contained in Exhibit A to the Franchise
Agreement. Any changes in the language set forth in Exhibit A must be approved
by us in advance in writing.
(c) We shall deliver the Franchise Agreement to you within 20 days
after you provide the address and telephone number for an approved location that
you have leased or purchased. The Franchise Agreement for such location must be
signed by you and submitted to us along with payment of the initial franchise
fee within 10 days after it is delivered to you.
(d) The approval of a location and the delivery of a Franchise
Agreement by us shall be conditioned upon a determination by us, in our
reasonable judgment, that:
(i) You have the financial and operational capacity to develop
and operate the Restaurant;
(ii) the site that you propose for the Restaurant is within the
Development Area and is a suitable site based upon criteria that we establish
from time to time; and
(iii) You and your owners are in compliance with this Agreement
and all Franchise Agreements executed pursuant to this Agreement.
(e) Notwithstanding any provision of any Franchise Agreement entered
into between us and you, you shall exercise each development right as follows:
DEVELOPMENT SCHEDULE
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Dates on Which Each Cumulative Number of
Restaurants
Restaurant Shall be Open to be Open and
Operating*
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December 31, 1998 1
February 21, 1999 2
April 25, 1999 3
July 25, 1999 4
October 24, 1999 5
January 23, 2000 6
April 23, 2000 7
July 23, 2000 8
October 22, 2000 9
January 28, 2001 10
April 29, 2001 11
July 29, 2001 12
October 28, 2001 13
January 27, 2002 14
April 28, 2002 15
July 28, 2002 16
October 27, 2002 17
January 26, 2003 18
April 27, 2003 19
July 27, 2003 20
[* - Includes only those Restaurants to be developed pursuant to this
Development Agreement.]
(f) The Initial Franchise Fee to be paid by you for each Restaurant
shall be $20,000; provided that $5,000 of the Development Fee shall be credited
against the Initial Franchise Fee. The net amount of the Initial Franchise Fee
($15,000) shall be paid at the time each Franchise Agreement is executed.
(g) It shall be your responsibility to ensure that each Restaurant is
constructed or remodeled, and equipped and operated in compliance with all laws,
ordinances and governmental rules and regulations and the Franchise Agreement,
and you shall obtain all necessary permits and licenses relating thereto.
4. Term. Unless sooner terminated as provided in this Agreement, this
Agreement shall expire on the earlier to occur of: (a) the date on which all
the Restaurants have been developed, or (b) 12:00 midnight on the last date set
forth on the Development Schedule (the
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"Term"). Upon the termination or expiration of this Agreement, all unexercised
development rights shall expire.
5. Construction or Remodeling. You shall, at your own expense, construct
or remodel the Restaurant at each location in accordance with the then-current
specifications and standards established for the System and the terms of the
Franchise Agreement. You shall allow us and our agents and employees access to
all areas of the premises of each Restaurant at such times as we or they may
reasonably request and you shall cooperate fully with us and our agents and
employees in preparing specifications applicable to the location of each
Restaurant to be developed hereunder. However, it shall be your obligation to
have plans drawn showing the layout of all equipment, signs and leasehold
improvements, and such plans shall be subject to our approval, which approval
shall not be unreasonably withheld. You shall not begin construction or
remodeling on any Restaurant until the Franchise Agreement has been fully signed
and we have approved the plans for such Restaurant.
6. Your Organization, Operation and Ownership. If you are a corporation,
partnership, limited liability company or other entity:
(a) If we request from time to time, you shall furnish us with your
Articles of Incorporation, Articles of Organization, Operating Agreement, By-
Laws and other governing documents (and any amendments or modifications
thereof), minutes and resolutions and all agreements or other documents, records
and information pertaining to your existence and operation.
(b) You shall confine your business activities exclusively to the
establishment, management and operation of Papa John's restaurants pursuant to
agreements with us.
(c) You shall, at the same time you execute this Agreement, and at
such other times as we may request, disclose the name and address of each person
or entity owning a
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beneficial interest in you, and you shall not issue any additional securities,
nor allow the "transfer" (as defined in Section 10) of any of your outstanding
securities, except as provided in Section 10.
(d) You shall at all times comply with all applicable laws,
ordinances, rules and regulations of governmental bodies.
(e) You shall cause all persons or entities owning any interest in you
to sign the Owner Agreement in the form we provide.
7. Your Covenants.
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(a) Covenant Not-to-Compete. You covenant and agree that during the
Term and for a period of two years after the expiration or termination of this
Agreement, regardless of the cause for such expiration or termination (the
"Restricted Period"), you shall not, anywhere within either (1) the boundaries
of the Development Area including, for purposes of this Section 7 only, any
locations excluded from the Development Area by the operation of Section 1.(a);
or (2) a 10-mile radius of any business location at which you, we or our
Affiliate or our franchisee then conducts a Papa John's business, engage in any
of the following activities:
(i) directly or indirectly enter into the employ of, render any
service to or act in concert with any person, partnership, limited liability
company, corporation or other entity that owns, operates, manages, franchises or
licenses any business that (A) sells pizza or other non-pizza products
(excluding soft drinks) that are the same as those sold by Papa John's
restaurants on a delivery or carry-out basis, including, without limitation,
business formats such as Domino's, Pizza Hut, Xx. Xxxxx'x, Sbarro and Little
Caesars, or (B) derives 20% or more of its gross revenues, at the retail level,
from the sale of pre-cooked, ready-to-eat food products on a delivery basis (a
"Competitive Business"); or
(ii) directly or indirectly engage in any such Competitive
Business on your own account; or
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(ii) become interested in any such Competitive Business directly or
indirectly as a partner, member, shareholder, principal, agent, consultant or in
any other relationship or capacity; provided, that the purchase of a publicly
traded security of a corporation engaged in such business or service shall not
in itself be deemed violative of this Agreement so long as you do not own,
directly or indirectly, more than 1% of the securities of such corporation.
To the extent required by the laws of the state in which the Restaurants are to
be developed, the duration or the geographic areas included within the foregoing
covenants, or both, shall be deemed amended in accordance with Section 7.(f).
(b) Appropriation and Disclosure of Information. Except as permitted
by the Franchise Agreement, you will not at any time use, copy or duplicate the
System or any aspect thereof, or any of our trade secrets, recipes, methods of
operation, processes, formulas, advertising, marketing, designs, trade dress,
plans, know-how or other proprietary ideas or information, nor will you convey,
divulge, make available or communicate such information to any third party or
assist others in using, copying or duplicating any of the foregoing.
(c) Infringement. You will not at any time commit any act that would
infringe upon or impair the value of the System or the Marks, nor will you
engage in any business or market any product or service under a trade-name,
trademark, service xxxx, logo or design that is confusingly or deceptively
similar to any of the Marks.
(d) Solicitation of Employees. You agree that from and after the date
of this Agreement, you will not solicit, entice or induce, directly or
indirectly, any employee of us or an Affiliate or our franchisees to leave their
employment to work with you or with any person or entity with whom you are or
become affiliated.
(e) Reasonableness of Scope and Duration. You agree that the covenants
and agreements contained herein are, taken as a whole, reasonable with respect
to the activities
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covered and their geographic scope and duration, and you shall not raise any
issue of the reasonableness of the areas, activities or duration of any such
covenants in any proceeding to enforce any such covenants. You acknowledge and
agree that you have other skills and resources and that the restrictions
contained in this Section 7 will not hinder your activities or ability to make a
living either under this Agreement or in general.
(f) Enforceability. You agree that we may not be adequately
compensated by damages for a breach by you of any of the covenants and
agreements contained in this Section, and that we shall, in addition to all
other remedies, be entitled to injunctive relief and specific performance. The
covenants and agreements contained in this Section shall be construed as
separate covenants and agreements, and if any court shall finally determine that
the restraints provided for in any such covenants and agreements are too broad
as to the area, activity or time covered, said area, activity or time covered
may be reduced to whatever extent the court deems reasonable, and such covenants
and agreements shall be enforced as to such reduced area, activity or time.
8. Principal Operator. You shall designate an individual to serve as your
"Principal Operator." The Principal Operator shall meet the following
qualifications:
(a) The Principal Operator shall devote full time and best efforts to
the supervision and conduct of the development and operation of the Restaurants
contemplated under this Agreement and shall agree to be bound by the
confidentiality and non-competition provisions of the Owner Agreement.
(b) The Principal Operator shall be a person we reasonably approve who
shall successfully complete our initial training requirements and who shall
participate in and successfully complete all additional training as we may
reasonably designate.
If, at any time or for any reason, the Principal Operator no longer
qualifies to act as such, you shall promptly designate another Principal
Operator subject to the same qualifications listed
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above. You shall immediately notify us of the termination of the Principal
Operator's employment with you, whether voluntary or involuntary.
9. Default and Termination.
(a) Automatic Termination. You shall be in default under this
Agreement, and this Agreement and all rights granted in it shall automatically
terminate without notice to you, (i) if you make a general assignment for the
benefit of creditors or if a petition in bankruptcy is filed by you; or (ii)
such a petition is filed against and not opposed by you; or (iii) if you are
adjudicated as bankrupt or insolvent; or (iv) if a xxxx in equity or other
proceeding is filed for the appointment of a receiver or other custodian for
your business or assets is filed and consented to by you; or (v) if a receiver
or other custodian (permanent or temporary) of your assets or property, or any
part thereof, is appointed by any court of competent jurisdiction; or (vi) if
proceedings for a composition with creditors under any state or federal law are
instituted by or against you; or (vii) if a final judgment remains unsatisfied
or of record for thirty (30) days or longer (unless supersedeas bond is filed);
or (viii) if you are dissolved; or (ix) if any portion of your interest in any
Papa John's franchise becomes subject to an attachment, garnishment, levy or
seizure by any creditor or any other person claiming against or in your rights;
or (x) if execution is levied against your business or property; or (xi) if the
real or personal property of any Restaurant shall be sold after levy thereupon
by any sheriff, marshal, or constable.
(b) Without Notice. You shall be in default under this Agreement, and
we may, at our option, terminate this Agreement and all rights granted under it
without affording you any opportunity to cure such default, effective upon the
earlier of (1) receipt of the notice of termination by you, or (2) five days
after mailing of such notice by us, upon the occurrence of any of the following
events:
(i) if you fail to strictly comply with the development schedule
set forth in Section 3;
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(ii) if any Franchise Agreement entered into pursuant to this
Agreement or otherwise is terminated as a result of your breach or default;
(iii) if you make or attempt to make any transfer, whether
voluntary or involuntary, of this Agreement or any interest herein, or of any
rights or obligations arising under this Agreement, or of any interest in you,
or of any material portion of your assets, without our prior written consent,
except as otherwise provided under the Franchise Agreement; or
(iv) if you fail to comply with any of your covenants set forth
in Section 7 of this Agreement.
(c) With Notice. For any other breach or default under this Agreement,
we will provide you with written notice of default and 15 days to cure or, if a
default cannot be reasonably be cured within 15 days, to initiate within that
time substantial and continuing action to cure such default and to provide us
with evidence of such actions. If the defaults specified in such notice are not
cured within the 15 day period, or if substantial and continuing action to cure
has not been initiated, we may, at our option, terminate this Development
Agreement and all rights granted to you under it by giving written notice of
such termination to you. The notice of termination shall be effective on the
earlier of (i) the date of reception of the notice by you or (ii) five days
after the mailing of such notice by us.
(d) Effect of Termination. Upon termination of this Agreement, all
your rights under it shall terminate and you shall have no further right to
establish any Restaurants. In addition, upon termination of this Agreement, we
shall have the right to open and operate, or to franchise others to open and
operate, Papa John's restaurants anywhere within the Development Area, except
that we may not locate or franchise another to locate a Papa John's restaurant
within the "Territory" provided for in any Franchise Agreement that remains in
effect after the date of termination.
10. Assignment or Transfer.
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(a) Transfer by Us. We may transfer this Agreement or any portion of
it, or any or all of our rights, obligations or interests under it, without
restriction. Upon any transfer or assignment of this Agreement by us, we shall
be released from all obligations and liabilities arising or accruing in
connection with this Agreement after the date of such transfer or assignment.
(b) Transfer by You. This Agreement, and your rights and obligations
under it, are and shall remain personal to you. Any proposed transfer by you or
any of your owners (regardless of the form of transfer) shall be subject to the
same terms and conditions contained in the Franchise Agreement. As used herein,
the term "transfer" shall mean any sale, assignment, gift, pledge, mortgage or
any other encumbrance, transfer by bankruptcy, transfer by judicial order,
merger, consolidation, share exchange, transfer by operation of law or
otherwise, whether direct or indirect, voluntary or involuntary, of this
Agreement or any interest in it, or any rights or obligations arising under it,
or of any material portion of your assets, or of any interest in you.
11. No Grant of Franchise or Franchise Rights. This Agreement does not
grant you a franchise or any rights of a Papa John's franchisee. To the fullest
extent permissible by law, you waive the applicability of any law that would
constitute this Agreement or any rights granted under it as a franchise
agreement or as granting any franchise rights.
12. Notices. All notices, requests, demands and other communications
required or permitted to be given or made under this Agreement shall be in
writing and shall be given (a) by personal delivery or (b) provided such notice,
request, demand or communication is actually received by the party to which it
is addressed in the ordinary course of delivery, by deposit in the United States
mail, postage prepaid, or (c) by registered or certified mail, return receipt
requested, postage prepaid, or by delivery to a nationally-recognized overnight
courier service, in each case, addressed as follows, or to such other person or
entity as either party shall designate by notice to the other in accordance
herewith:
Us: If by Mail:
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X.X. Xxx 00000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
ATTN: General Counsel
If by Courier or Personal Delivery:
00000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000-0000
ATTN: General Counsel
You: 0000 Xxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxx 00000
ATTN: Xxxxxxx X. Xxxxxxxx
Except as otherwise provided herein, a notice shall be deemed to have been
given on the date of personal delivery to a party or the date deposited in the
United States mail or with a nationally-recognized overnight courier.
13. Independent Contractor; Indemnification.
(a) Independent Contractor. It is understood and agreed by the parties
that this Agreement creates only a contractual relationship between the parties
subject to the normal rule of contract law. This Agreement does not create a
fiduciary relationship between us and you and you are and shall remain an
independent contractor. Nothing in this Agreement is intended to constitute
either party an agent, legal representative, subsidiary, joint venturer,
partner, employee, or servant of the other for any purpose whatsoever. You agree
to hold yourself out to the public as an independent contractor, separate and
apart from us. You agree that you shall not make any contract, agreement,
warranty, or representation on our behalf without our prior written consent, and
you agree that you shall not incur any debt or other obligation in our name.
This Agreement shall not be deemed to confer any rights or benefits to any
person or entity not expressly named herein.
(b) Business Management. You agree and acknowledge that: (i) we will
have no responsibility for the day-to-day operations of any Restaurant developed
under this Agreement or the management of your business; and (ii) you shall
independently control the operation of your
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business and the results of your operations will depend almost exclusively on
your business acumen and promotional and managerial efforts.
(c) Indemnification. We shall not be liable by reason of any act or
omission of you in your development, construction or conduct of the Restaurants
or for any claim, cause of action or judgment arising therefrom against you or
us. You agree to hold harmless, defend and indemnify us and our affiliates,
officers, directors, agents, and employees, from and against any and all losses,
expenses, judgments, claims, attorney fees and damages arising out of or in
connection with any claim or cause of action in which we shall be a named
defendant and that arises, directly or indirectly, out of the operation of, or
in connection with, your Restaurants, other than a claim resulting directly from
our negligence.
14. Enforcement.
(a) ARBITRATION. EXCEPT FOR CONTROVERSIES, DISPUTES OR CLAIMS RELATED
TO OR BASED ON (1) YOUR USE OF THE MARKS AFTER THE EXPIRATION OR TERMINATION OF
THIS AGREEMENT OR, AT OUR OPTION, YOUR VIOLATION OF ANY PROVISION OF SECTION 7
HEREOF; OR (2) ANY ACTION ARISING OUT OF OR RELATING TO ANY FINANCING PROVIDED
TO YOU BY US OR OUR AFFILIATES AND THE AGREEMENTS, NOTES, LIENS AND SECURITY
INTERESTS RELATED THERETO AND THE ENFORCEMENT, INTERPRETATION OR COLLECTION
THEREOF, ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN US (INCLUDING OUR
AFFILIATES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES) AND YOU
(INCLUDING YOUR OWNERS, GUARANTORS, AFFILIATES AND EMPLOYEES, IF APPLICABLE)
ARISING OUT OF OR RELATED TO:
(i) THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN YOU AND US OR
ANY PROVISION OF ANY SUCH AGREEMENT;
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(ii) OUR RELATIONSHIP WITH YOU, INCLUDING ISSUES RELATING TO OUR
DECISION TO TERMINATE THAT RELATIONSHIP;
(iii) THE VALIDITY OF THIS AGREEMENT OR ANY OTHER AGREEMENT
BETWEEN YOU AND US OR ANY PROVISION OF ANY SUCH AGREEMENT; OR
(iv) ANY STANDARD, SPECIFICATION OR OPERATING PROCEDURE RELATING
TO THE DEVELOPMENT, ESTABLISHMENT OR OPERATION OF THE RESTAURANTS
WILL BE SUBMITTED FOR BINDING ARBITRATION TO THE LOUISVILLE, KENTUCKY
OFFICE OF THE AMERICAN ARBITRATION ASSOCIATION ON DEMAND OF EITHER PARTY. SUCH
ARBITRATION PROCEEDING WILL BE CONDUCTED IN LOUISVILLE, KENTUCKY AND, EXCEPT AS
OTHERWISE PROVIDED IN THIS AGREEMENT, WILL BE HEARD BY ONE ARBITRATOR IN
ACCORDANCE WITH THE THEN CURRENT FRANCHISING ARBITRATION RULES, IF ANY,
OTHERWISE THE THEN CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN
ARBITRATION ASSOCIATION. ALL MATTERS RELATING TO ARBITRATION WILL BE GOVERNED
BY THE FEDERAL ARBITRATION ACT (9 U.S.C. (S)(S) 1 ET SEQ.) AND NOT BY ANY STATE
ARBITRATION LAW.
THE ARBITRATOR WILL HAVE THE RIGHT TO AWARD OR INCLUDE IN THE AWARD ANY
RELIEF THAT THE ARBITRATOR DEEMS PROPER IN THE CIRCUMSTANCES, INCLUDING, WITHOUT
LIMITATION, MONEY DAMAGES (WITH INTEREST ON UNPAID AMOUNTS FROM THE DATE DUE),
SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF AND ATTORNEYS' FEES AND COSTS, PROVIDED
THAT THE ARBITRATOR WILL NOT HAVE THE RIGHT TO DECLARE ANY XXXX GENERIC OR
OTHERWISE INVALID OR, EXCEPT AS OTHERWISE PROVIDED IN THIS AGREEMENT, TO AWARD
EXEMPLARY OR PUNITIVE
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DAMAGES. THE AWARD AND DECISION OF THE ARBITRATOR WILL BE CONCLUSIVE AND BINDING
UPON ALL PARTIES HERETO, AND JUDGMENT UPON THE AWARD MAY BE ENTERED IN ANY COURT
OF COMPETENT JURISDICTION.
WE AND YOU AGREE TO BE BOUND BY THE PROVISIONS OF ANY LIMITATION ON THE
PERIOD OF TIME IN WHICH CLAIMS MUST BE BROUGHT UNDER APPLICABLE LAW OR THIS
AGREEMENT, WHICHEVER EXPIRES EARLIER. WE AND YOU FURTHER AGREE THAT, IN
CONNECTION WITH ANY SUCH ARBITRATION PROCEEDING, EACH PARTY MUST SUBMIT OR FILE
ANY CLAIM THAT WOULD CONSTITUTE A COMPULSORY COUNTERCLAIM (AS DEFINED BY RULE 13
OF THE FEDERAL RULES OF CIVIL PROCEDURE) WITHIN THE SAME PROCEEDING AS THE CLAIM
TO WHICH IT RELATES. ANY SUCH CLAIM THAT IS NOT SUBMITTED OR FILED AS DESCRIBED
ABOVE WILL BE FOREVER BARRED.
WE AND YOU AGREE THAT ARBITRATION WILL BE CONDUCTED ON AN INDIVIDUAL, NOT A
CLASS-WIDE, BASIS, AND THAT AN ARBITRATION PROCEEDING BETWEEN US (INCLUDING OUR
AFFILIATES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS OR EMPLOYEES) AND YOU
(INCLUDING YOUR OWNERS, GUARANTORS, AFFILIATES AND EMPLOYEES, IF APPLICABLE) MAY
NOT BE CONSOLIDATED WITH ANY OTHER ARBITRATION PROCEEDING BETWEEN US AND ANY
OTHER PERSON, CORPORATION, LIMITED LIABILITY COMPANY OR PARTNERSHIP.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS SECTION, WE AND
YOU EACH HAVE THE RIGHT IN A PROPER CASE TO OBTAIN TEMPORARY RESTRAINING ORDERS
AND TEMPORARY OR PRELIMINARY INJUNCTIVE RELIEF FROM A COURT OF COMPETENT
JURISDICTION; PROVIDED, THAT WE AND YOU MUST CONTEMPORANEOUSLY SUBMIT OUR
DISPUTE FOR ARBITRATION ON THE MERITS AS PROVIDED HEREIN
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EXCEPT AS OTHERWISE PROVIDED IN THE FIRST PARAGRAPH OF THIS SECTION 14.(a).
THE PROVISIONS OF THIS SECTION ARE INTENDED TO BENEFIT AND BIND CERTAIN
THIRD PARTY NON-SIGNATORIES AND WILL CONTINUE IN FULL FORCE AND EFFECT
SUBSEQUENT TO AND NOTWITHSTANDING THE EXPIRATION OR TERMINATION OF THIS
AGREEMENT.
(b) GOVERNING LAW. ALL MATTERS RELATING TO ARBITRATION WILL BE
GOVERNED BY THE FEDERAL ARBITRATION ACT (9 U.S.C. (S)(S)1 ET SEQ). EXCEPT TO
THE EXTENT GOVERNED BY THE FEDERAL ARBITRATION ACT, THE UNITED STATES TRADEMARK
ACT OF 1946 (XXXXXX ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) OR OTHER FEDERAL LAW,
THIS AGREEMENT AND ALL CLAIMS ARISING FROM THE RELATIONSHIP BETWEEN US AND YOU
WILL BE GOVERNED BY THE LAWS OF THE STATE OF KENTUCKY WITHOUT REGARD TO ITS
CONFLICT OF LAWS PRINCIPLES.
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(c) CONSENT TO JURISDICTION AND VENUE. YOU AND YOUR OWNERS AGREE THAT
ALL JUDICIAL ACTIONS BROUGHT BY US AGAINST YOU OR YOUR OWNERS OR BY YOU OR YOUR
OWNERS AGAINST US OR OUR SUBSIDIARIES, SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS
OR EMPLOYEES MUST BE BROUGHT IN A COURT OF COMPETENT JURISDICTION IN JEFFERSON
COUNTY, KENTUCKY OR FEDERAL DISTRICT COURT FOR THE WESTERN DISTRICT OF KENTUCKY
AND YOU (AND EACH OWNER) IRREVOCABLY SUBMIT TO THE JURISDICTION OF SUCH COURTS
AND WAIVE ANY OBJECTION YOU, HE OR SHE MAY HAVE TO EITHER THE JURISDICTION OF OR
VENUE IN SUCH COURTS. NOTWITHSTANDING THE FOREGOING, WE MAY BRING AN ACTION TO
OBTAIN A RESTRAINING ORDER OR TEMPORARY OR PRELIMINARY INJUNCTION, OR ENFORCE AN
ARBITRATION AWARD, IN ANY FEDERAL OR STATE COURT OF GENERAL JURISDICTION IN THE
STATE IN WHICH YOU RESIDE OR IN WHICH THE RESTAURANTS ARE LOCATED.
(d) WAIVER OF PUNITIVE DAMAGES. EXCEPT WITH RESPECT TO YOUR
OBLIGATION TO INDEMNIFY US PURSUANT TO SECTION 13 AND CLAIMS WE BRING AGAINST
YOU FOR YOUR UNAUTHORIZED USE OR DISCLOSURE OF ANY CONFIDENTIAL INFORMATION, WE
AND YOU AND YOUR OWNERS WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT
TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE
THAT, IN THE EVENT OF A DISPUTE BETWEEN US, THE PARTY MAKING A CLAIM WILL BE
LIMITED TO EQUITABLE RELIEF AND TO RECOVERY OF ANY ACTUAL DAMAGES IT SUSTAINS.
(e) WAIVER OF JURY TRIAL. WE AND YOU IRREVOCABLY WAIVE TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT
BY EITHER OF US.
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(f) LIMITATIONS OF CLAIMS. EXCEPT FOR CLAIMS BROUGHT BY US WITH
REGARD TO YOUR OBLIGATIONS UNDER SECTIONS 7.(a), 7.(b) AND 7.(c), AND TO
INDEMNIFY US PURSUANT TO SECTION 13, ANY AND ALL CLAIMS ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE RELATIONSHIP OF YOU AND US PURSUANT TO THIS
AGREEMENT WILL BE BARRED UNLESS AN ACTION IS COMMENCED WITHIN ONE (1) YEAR FROM
THE DATE ON WHICH THE ACT OR EVENT GIVING RISE TO THE CLAIM OCCURRED, OR ONE (1)
YEAR FROM THE DATE ON WHICH YOU OR WE KNEW OR SHOULD HAVE KNOWN, IN THE EXERCISE
OF REASONABLE DILIGENCE, OF THE FACTS GIVING RISE TO SUCH CLAIMS, WHICHEVER
LATER OCCURS.
(g) Costs, Expenses and Attorneys' Fees. Except as provided in
Section 13 each party shall pay its own costs, expenses and attorneys' fees in
any action, claim, suit or proceeding arising out of this Agreement or the
franchise relationship of the parties.
15. Acknowledgements.
----------------
Your Representations. You hereby acknowledge and represent that:
--------------------
(a) All information submitted to us by you or those owning an interest
in you, including all applications, financial statements and other documents and
information, is true and correct in all respects and that it does not omit any
statement or item of material fact necessary to make the statements made therein
not false or misleading;
(b) We have not represented that (i) you will earn, can earn, or are
likely to earn a gross or net profit, (ii) we have knowledge of the relevant
market, or (iii) the market demand will enable you to earn a profit from the
Franchise;
(c) You have read and understood this Agreement and the disclosure
document entitled "Papa John's Franchise Offering Circular" (the "Offering
Circular") required by the
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Federal Trade Commission or the state in which the Development Area will be
located. You understand that we make no representation or warranty regarding
your relevant market or the profitability of business operations under the
System and that no representations have been made by us, or by any of our
Affiliates or our or their officers, directors, shareholders, employees or
agents, that are contrary to or inconsistent with the terms of this Agreement or
with the statements made in the Offering Circular that accompanied a copy of
this Agreement;
(d) You accept the terms, conditions and covenants contained in this
Agreement as being reasonable and necessary to maintain our standards of
quality, service and uniformity and in order to protect and preserve the
goodwill of the Marks. You acknowledge that other franchisees of ours have been
or will be granted franchises at different times and in different situations.
You further acknowledge that the provisions of the franchise agreements pursuant
to which such franchises were granted may vary materially from those contained
in this Agreement and that your obligation arising hereunder may differ
substantially from other franchisees; and
(e) You recognize that the System may evolve and change over time and
that the Franchise involves an investment of substantial risk and its success is
dependent primarily upon your business acumen and efforts and other factors
beyond our control. You have conducted an independent investigation of the
Franchise and have had ample time and opportunity to consult with independent
professional advisors (lawyers, accountants, etc.), and have not received or
relied upon any express or implied guarantee as to potential volumes, revenues,
profits or success of the business venture contemplated by the Franchise.
16. Miscellaneous.
-------------
(a) Severability. You agree to be bound to the maximum extent
permitted by law that is subsumed within the terms of any provision hereof, as
though it were separately articulated in and made a part of this Agreement, that
may result from the striking of any provision hereof by a court, or that a court
holds to be unenforceable in a final decision to which we are a party, or that
may result from reducing the scope of any provision to the extent required to
comply
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with a court order or with any state or federal law, whether currently in effect
or subsequently enacted.
(b) Construction. All references herein to the masculine, neuter, or
singular shall be construed to include the masculine, feminine, neuter, or
plural, as the case may require. All acknowledgements, warranties,
representations, covenants, agreements, and obligations herein made or
undertaken by you shall be deemed jointly and severally undertaken by all those
executing this Agreement as you. During any period in which any of the
covenants in Section 7 is being breached or violated, including any period in
which either of the parties seeks judicial enforcement, interpretation or
modification of any such covenant, and all appeals thereof, the restricted
period set forth therein shall toll and be suspended.
(c) Entire Agreement. This Agreement, the documents incorporated
herein by reference and the Exhibit attached hereto, constitute the entire
agreement between the parties, and all prior understandings or agreements
concerning the subject matter hereof are canceled and superseded by this
Agreement. The Exhibit to this Agreement is incorporated herein by reference
and made a part hereof as if set out in full herein.
(d) Affiliate. As used in this Agreement, the term "Affiliate" shall
mean any person or entity that is owned or controlled by us or which owns or
controls us or is under common control with us, either directly or through one
or more intermediaries.
(e) Amendments. Except for those permitted to be made unilaterally by
us, no supplement, amendment or variation of the terms of this Agreement shall
be valid unless made in writing and signed by the parties hereto.
(f) Waivers. No failure by us to exercise any right given to us
hereunder, or to insist upon strict compliance by you with any obligation,
agreement or undertaking hereunder, and no custom or practice of the parties at
variance with the terms hereof shall constitute a waiver of our right to demand
full and exact compliance by you with the terms hereof. Waiver by us of
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any particular default by you shall not affect or impair our rights with respect
to any subsequent default of the same or of a different nature, nor shall any
delay or omission of us to exercise any right arising from such default affect
or impair our rights as to such default or any subsequent default.
(g) Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
(h) Headings. The headings used in this Agreement are for convenience
only, and the paragraphs shall be interpreted as if such headings were omitted.
(i) Time of Essence. You agree and acknowledge that time is of the
essence with regard to your obligations hereunder, and that all of your
obligations are material to us and this Agreement.
IN WITNESS WHEREOF, the parties have signed this Development Agreement as
of the date written above.
PAPA JOHN'S INTERNATIONAL, INC.
By:
-------------------------------------------
Xxxxxx Xxxxxx, Vice President of
International Development
PIZZA CARIBE, INC.
By:
-------------------------------------------
Xxxxxxx X. Xxxxxxxx, President
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PAPA JOHN'S
DEVELOPMENT AGREEMENT
EXHIBIT A
DEVELOPMENT AREA
----------------
June 2, 1998
The areas encompassed on the attached map entitled "PIZZA CARIBE, INC."
shall constitute the "Development Area," as defined in the Papa John's
Development Agreement of even date herewith, by and between PAPA JOHN'S
INTERNATIONAL, INC. and PIZZA CARIBE, INC. (except for locations expressly
excluded from the Development Area under Section 1.(a) of the Development
Agreement).
NUMBER OF RESTAURANTS TO BE DEVELOPED 20
PAPA JOHN'S INTERNATIONAL, INC.
By:
---------------------------------------------
Xxxxxx Xxxxxx, Vice President of
International Development
PIZZA CARIBE, INC.
By:
---------------------------------------------
Xxxxxxx X. Xxxxxxxx, President
