EXHIBIT 10.18
ELEPHANT & CASTLE INTERNATIONAL, INC.
0000 Xxxxxxx Xxxxx
Xxxx Xxxxxxx, Xxxxxxxxx 00000
(000) 000-0000
Fax: (000) 000-0000
ALAMO GRILL-TM- RESTAURANT
FRANCHISE AGREEMENT
FRANCHISEE FRANCHISED LOCATION
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Name Street
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Street City State Zip Code
( )
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City State Zip Code Area Code Telephone
( ) ( )
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Area Code Telephone Area Code Fax
( )
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Area Code Fax E-Mail Address
------------------------------------ Franchised Restaurant No......
E-Mail Address
_____________________
Date of Franchise Agreement
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
ELEPHANT & CASTLE INTERNATIONAL, INC.
ALAMO GRILL-TM- RESTAURANT
FRANCHISE AGREEMENT INDEX
Page
ARTICLE 1 DEFINITIONS.........................................................2
1.1 Designated Market Area......................................2
1.2 Dollars.....................................................2
1.3 Franchise...................................................2
1.4 General Manager.............................................3
1.5 Gross Sales.................................................3
1.6 Marks.......................................................3
1.7 Ownership Interest..........................................3
1.8 Owner.......................................................4
1.9 Restaurant System...........................................4
1.10 Week........................................................4
ARTICLE 2 GRANT OF FRANCHISE..................................................4
2.1 Franchised Location.........................................4
2.2 Exclusive Area..............................................4
2.3 Undetermined Franchised Location............................5
2.4 Lease or Purchase of Franchised Location....................5
2.5 Relocation..................................................5
2.6 Conditions..................................................6
2.7 Personal License............................................6
ARTICLE 3 TERM OF AGREEMENT...................................................6
3.1 Term........................................................6
3.2 Term of Lease...............................................6
3.3 Reacquisition Option........................................6
3.4 Terms of Option.............................................7
ARTICLE 4 INITIAL FEE; APPROVAL OF FRANCHISEE.................................8
4.1 Initial Fee.................................................8
4.2 Termination of Franchise....................................8
4.3 Refund of Initial Fee.......................................9
ARTICLE 5 CONTINUING FEE......................................................9
5.1 Amount of Continuing Fee; Date Payable......................9
5.2 Interest on Unpaid Continuing Fees..........................9
5.3 Reports.....................................................9
5.4 Franchisee's Obligation to Pay.............................10
5.5 Pre-Authorized Bank Debits.................................10
ARTICLE 6 LOCAL ADVERTISING..................................................11
6.1 Local Advertising Expenditure..............................11
6.2 Reports of Local Advertising Expenditures..................11
6.3 Telephone Directory Listings...............................11
6.4 Grand Opening Advertising..................................11
ARTICLE 7 FINANCIAL STATEMENTS...............................................12
7.1 Monthly Reports and Financial Statements...................12
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT i 475250.5
7.2 Due Date; Verification of Monthly Reports and Financial
Statements.................................................12
7.3 Substantiation of Monthly Reports and Financial
Statements.................................................12
7.4 Sales and Income Tax Returns...............................12
7.5 Audit Rights...............................................13
7.6 Payment of Audit Costs.....................................13
7.7 Refusal to Submit Records or Permit Audit..................13
ARTICLE 8 QUALITY CONTROL, UNIFORMITY AND STANDARDS..........................14
8.1 Quality and Service Standards..............................14
8.2 Identification of Restaurant...............................14
8.3 Compliance with Standards..................................14
8.4 Alterations to Restaurant..................................15
8.5 Prohibited Sales...........................................15
8.6 Other Business.............................................15
8.7 Franchisee's Name..........................................15
8.8 Operation of Alamo Grill-TM- Restaurant.....................15
8.9 Business Hours.............................................16
8.10 Personnel..................................................16
8.11 Standards of Service.......................................16
8.12 Alcoholic Beverages........................................16
8.13 Vending Machines and Entertainment Devices.................16
8.14 Gambling Machines; Tickets.................................16
8.15 Standard Attire or Uniforms................................17
8.16 Credit Cards...............................................17
8.17 Gift Certificates and Coupons..............................17
8.18 Music and Music Selection..................................17
8.19 Approved Advertising.......................................17
8.20 Compliance with Applicable Law.............................17
8.21 Payment of Taxes...........................................18
8.22 "Franchise" and Other Taxes................................18
8.23 Payments to Creditors......................................18
8.24 Security Interest in Franchise Agreement...................18
8.25 Inspection Rights..........................................18
8.26 Default Notices and Significant Correspondence.............19
ARTICLE 9 PRODUCTS AND SERVICES..............................................19
9.1 Limitations on Products and Services.......................19
9.2 Limitation on Sales........................................20
9.3 Approved Suppliers and Distributors........................20
9.4 Designated Suppliers.......................................21
9.5 Use of Rebates from Suppliers..............................21
9.6 Limitation on Branding, Development and Sale of Products...22
9.7 Independent Shopping Services..............................22
ARTICLE 10 STANDARD OPERATIONS MANUAL........................................22
10.1 Compliance with Manual.....................................22
10.2 Revisions to Manual........................................23
10.3 Confidentiality of Manual..................................23
10.4 Confidentiality of Other Information.......................23
ARTICLE 11 BUSINESS PREMISES.................................................24
11.1 Site Location..............................................24
11.2 Site Location Criteria.....................................24
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT ii 475250.5
11.3 Construction and Remodeling Costs..........................25
11.4 Compliance with Specifications.............................25
11.5 Inspection During Construction or Renovation...............25
11.6 Maintenance................................................26
11.7 Remodeling of Business Premises............................26
ARTICLE 12 SIGNS.............................................................26
12.1 Approved Signs.............................................26
12.2 Payment of Costs and Expenses..............................27
12.3 Modifications; Inspection..................................27
ARTICLE 13 TELECOMMUNICATION AND COMPUTER EQUIPMENT..........................27
13.1 Telecommunication Equipment................................27
13.2 Satellite and Cable Television.............................27
13.3 Computer Hardware..........................................28
13.4 Software...................................................28
13.5 Access to Computer Data....................................28
13.6 Internet Provider..........................................28
13.7 E-Mail Address.............................................28
ARTICLE 14 INSURANCE.........................................................29
14.1 General Liability Insurance................................29
14.2 Liquor Liability Insurance.................................29
14.3 Automobile Liability Insurance.............................29
14.4 Property Insurance.........................................29
14.5 Building Insurance.........................................30
14.6 Umbrella Liability.........................................30
14.7 Insurance Required by Law..................................30
14.8 Insurance Companies; Evidence of Coverage..................30
14.9 Defense of Claims..........................................30
14.10 Rights of E & C............................................30
ARTICLE 15 LICENSING OF MARKS AND RESTAURANT SYSTEM..........................31
15.1 Right to License Marks.....................................31
15.2 Conditions to License of Marks.............................31
15.3 Franchisee's Use of Marks..................................31
15.4 Adverse Claims to Marks....................................32
15.5 Defense or Enforcement of Rights to Marks..................32
15.6 Tender of Defense..........................................33
15.7 Franchisee's Right to Participate in Litigation............33
ARTICLE 16 TRAINING PROGRAM; OPENING ASSISTANCE..............................33
16.1 Training...................................................33
16.2 Changes in Personnel.......................................34
16.3 Initial Training of New Personnel..........................34
16.4 Payment of Salaries and Expenses...........................35
16.5 Opening Assistance.........................................35
16.6 Advisory Assistance........................................35
16.7 Hiring and Training of Employees by Franchisee.............36
ARTICLE 17 ASSIGNMENT........................................................36
17.1 Assignment by E & C........................................36
17.2 Assignment by Franchisee to Owned or Controlled Entity.....36
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT iii 475250.5
17.3 Assignment by Individual Franchisee in Event of Death or
Permanent Disability.......................................36
17.4 Sale of Ownership Interests to Public......................37
17.5 E & C's Warrant............................................38
17.6 Assignment by Franchisee...................................38
17.7 Acknowledgment of Restrictions.............................39
17.8 Transfer Fee...............................................39
17.9 Transfer to Competitor Prohibited..........................40
ARTICLE 18 TERMINATION RIGHTS OF E & C.......................................40
18.1 Conditions of Breach.......................................40
18.2 Notice of Breach...........................................41
18.3 Arbitration................................................42
18.4 Notice of Termination......................................42
18.5 Immediate Termination Rights of E & C......................42
18.6 Notice of Immediate Termination............................43
18.7 Other Remedies.............................................43
ARTICLE 19 FRANCHISEE'S TERMINATION RIGHTS...................................44
19.1 Conditions of Breach.......................................44
19.2 Notice of Breach...........................................44
19.3 Arbitration................................................44
19.4 Waiver.....................................................45
19.5 Injunctive Relief..........................................45
ARTICLE 20 FRANCHISEE'S OBLIGATIONS UPON TERMINATION.........................46
20.1 Termination of Use of Marks; Other Obligations.............46
20.2 Alteration of Franchised Location..........................46
20.3 Cancellation of Telephone Directory Listings...............46
20.4 Continuation of Obligations................................47
ARTICLE 21 FRANCHISEE'S COVENANTS NOT TO COMPETE.............................47
21.1 Consideration..............................................47
21.2 In-Term Covenant Not to Compete............................48
21.3 Post-Term Covenant Not to Compete..........................48
21.4 Injunctive Relief..........................................48
21.5 Severability...............................................49
ARTICLE 22 INDEPENDENT CONTRACTORS; INDEMNIFICATION..........................49
22.1 Independent Contractors....................................49
22.2 Indemnification............................................50
22.3 Payment of Costs and Expenses..............................50
22.4 Continuation of Obligations................................51
ARTICLE 23 ARBITRATION.......................................................51
23.1 Mediation..................................................51
23.2 Disputes Subject to Arbitration............................51
23.3 Notice of Dispute..........................................51
23.4 Demand for Arbitration.....................................51
23.5 Venue and Jurisdiction.....................................52
23.6 Powers of Arbitrator(s)....................................52
23.7 Disputes Not Subject to Arbitration........................53
23.8 No Collateral Estoppel or Class Actions....................53
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT iv 475250.5
23.9 De Novo Hearing on Merits..................................53
23.10 Confidentiality............................................54
23.11 Performance During Arbitration of Disputes.................54
ARTICLE 24 ENFORCEMENT.......................................................54
24.1 Injunctive Relief..........................................54
24.2 Severability...............................................55
24.3 Waiver.....................................................55
24.4 Payments to E & C..........................................55
24.5 Effect of Wrongful Termination.............................56
24.6 Cumulative Rights..........................................56
24.7 Binding Agreement..........................................56
24.8 Joint and Several Liability................................56
24.9 No Oral Modification.......................................56
24.10 Entire Agreement...........................................56
24.11 Headings; Terms............................................57
24.12 Venue and Jurisdiction.....................................57
24.13 Federal Arbitration Act....................................57
24.14 Contractual Statute of Limitations.........................57
ARTICLE 25 NOTICES...........................................................58
ARTICLE 26 DISCLAIMER; ACKNOWLEDGMENTS.......................................58
26.1 Disclaimer.................................................58
26.2 Acknowledgments by Franchisee..............................58
26.3 Other Franchisees..........................................59
26.4 Receipt of Agreement and Uniform Franchise
Offering Circular..........................................59
26.5 Elephant & Castle-R- Restaurants............................59
ARTICLE 27 FRANCHISEE'S LEGAL COUNSEL........................................60
ARTICLE 28 GOVERNING LAW; STATE MODIFICATIONS................................60
28.1 Governing Law; Severability................................60
28.2 Applicable State Laws......................................60
28.3 State Law Modifications....................................61
28.4 Severability...............................................65
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT v 475250.5
The following information will have to be completed by E & C and the Franchisee
prior to the time that this Agreement is signed by the parties:
PERSON
COMPLETING
ARTICLE PAGE INFORMATION REQUIRED COMPLETED INFORMATION
------- ---- ------------------------------------ --------- -----------
N/A F-1 Date of Agreement _________ ___________
N/A F-1 Name of Franchisee _________ ___________
N/A F-1 Business Structure of Franchisee _________ ___________
2.1 F-4 Franchised Location _________ ___________
27 F-44 Name, address and telephone _________ ___________
number of Franchisee's attorney
or advisor
N/A F-49 Signature of E & C _________ ___________
N/A F-49 Signature(s) of Franchisee _________ ___________
N/A F-49 Signature(s) of Owners and _________ ___________
percentage of Ownership
Interest (if applicable)
N/A F-51 Signature(s) of Personal Guarantors _________ ___________
and percentage of Ownership
Interest (if applicable)
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT vi 475250.5
ELEPHANT & CASTLE INTERNATIONAL, INC.
ALAMO GRILL-TM- RESTAURANT
FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT (this "Agreement") is made, entered into and effective
this day of ____________, 199_, by and between Elephant & Castle International,
Inc., a Texas corporation, with its principal office at 0000 Xxxxxxx Xxxxx,
Xxxx Xxxxxxx, Xxxxxxxxx 00000 (hereinafter referred to as "E & C"), and
_________________________________ a(n) _______________________________________
(hereinafter referred to as the "Franchisee");
RECITALS
ALAMO GRILL-TM- RESTAURANT SYSTEM. E & C has developed over time at significant
cost and investment a distinctive restaurant system for operating and
franchising restaurants under the name "Alamo Grill-TM-" which are casual full
service mid-priced Southwestern style steakhouse restaurants with a distinctive
and novel Southwestern decor, and which serve a wide variety of high-quality
food and beverage items at moderate prices featuring American and Southwestern
dishes (the "Restaurant System"). The Restaurant System contains distinctive
concepts including, without limitation, special seasonings, recipes and menu
items; unique cooking styles and methods; food line management systems;
distinctive building and interior design, decor and furnishings; specific
standards, specifications and procedures for operations; quality, consistency
and uniformity requirements for the foods, beverages, products and services
offered to the public; methods, procedures and requirements for operations,
quality and inventory control, and training and assistance; and advertising and
promotional programs.
E & C MARKS. E & C has widely and extensively publicized the name "Alamo
Grill-TM-" to the public as an organization of restaurant businesses operating
under the Restaurant System. E & C has the right and authority to license the
use of the name "Alamo Grill-TM-" the Alamo Grill logo, and other trademarks,
trade names, service marks, logos, commercial symbols, phrases, slogans and tag
lines which are now owned or which will be developed by E & C (hereinafter
referred to as the "Marks"). E & C will continue to develop, use, and control
the use of the Marks in order to identify for the public the source of foods,
products and services marketed under the Restaurant System, and to represent to
the public the high standards of quality, appearance, cleanliness and service of
the Restaurant System.
OPERATION OF ALAMO GRILL-TM- RESTAURANT. The Franchisee desires to develop, own
and operate an Alamo Grill-TM- restaurant (hereinafter referred to as the "Alamo
Grill-TM- Restaurant" or the "Restaurant") at the location set forth in Article
2 in compliance with the Restaurant System and with all of the quality,
consistency and uniformity standards and specifications
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
as established and promulgated from time to time by E & C. The Franchisee
understands and acknowledges the importance of the high standards of quality,
appearance, cleanliness and service established by E & C, and the necessity
of operating the Franchisee's Restaurant in strict conformity with the
standards and specifications established by E & C.
RIGHT TO USE MARKS AND RESTAURANT SYSTEM. E & C is willing to provide the
Franchisee with the recipes, cooking and food preparation techniques, food line
management systems, menu content and design, decor and color schemes,
intellectual property, and other operational, marketing, advertising,
promotional and business information, experience and "know how" related to the
Restaurant System. The Franchisee acknowledges that it would take substantial
capital and human resources to develop a restaurant business similar to the
Alamo Grill-TM- Restaurant and, consequently, the Franchisee desires to acquire
the right to use the Marks and the Restaurant System and to own and operate an
Alamo Grill-TM- Restaurant pursuant to the terms and conditions set forth in
this Agreement. The Franchisee acknowledges that E & C would not grant the Alamo
Grill-TM- Restaurant Franchise to the Franchisee or provide the Franchisee with
the business information and "know how" about the Restaurant System unless the
Franchisee agreed to comply with all of the terms and conditions of this
Agreement and agreed to pay the Initial Fee, the Continuing Fees and all other
fees specified in this Agreement.
REVIEW OF AGREEMENT. The Franchisee has had a full and adequate opportunity to
read and review this Agreement and to be thoroughly advised of the terms and
conditions of this Agreement by an attorney or other personal representative,
and has had sufficient time to evaluate and investigate the Restaurant System,
the financial requirements and the risks associated with the Restaurant System.
Pursuant to the above Recitals and in consideration of the mutual promises and
covenants set forth in this Agreement, E & C and the Franchisee agree and
contract as follows:
DEFINITIONS
For purposes of this Agreement, the following words will have the following
definitions:
DESIGNATED MARKET AREA
"Designated Market Area" will mean each television market exclusive of another
based upon a preponderance of television viewing hours as defined by the X.X.
Xxxxxxx ratings service or such other ratings service as may be designated by
E & C.
DOLLARS
"Dollars" will mean United States of America dollars.
FRANCHISE
"Franchise" will mean the right granted by E & C to the Franchisee authorizing
the Franchisee to operate an Alamo Grill-TM- Restaurant at the Franchised
Location in conformity with the Restaurant System using the name "Alamo
Grill-TM-" and the other Marks.
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
GENERAL MANAGER
"General Manager" will mean the individual responsible for the overall
management and operation of the Franchisee's Alamo Grill-TM- Restaurant
including, but not limited to, administration, basic operations, marketing,
customer and community relations, record keeping, employee staffing and
training, inventory control, hiring and firing, food preparation and maintenance
of the Franchised Location.
GROSS SALES
"Gross Sales" will mean the total dollar sales from all customers of the
Franchisee's Alamo Grill-TM- Restaurant, and will include all cash and credit
sales made by the Franchisee of every kind and nature made at, from, by or in
connection with the Franchisee's Alamo Grill-TM- Restaurant business
including, but not limited to, all dollars and income received from the sale
of: (a) foods, food products and food items; (b) alcoholic and non-alcoholic
beverages and drinks; (c) admission or cover charges; (d) telephones, vending
machines, pool tables, dart board machines, video games and all other
amusement games; (e) slot machines and gaming machines; (f) net fees received
from automated teller machines; (g) lotteries, lottery tickets and pull tabs;
(h) hats, shirts, T-shirts, sweatshirts and other clothing; (i) cigars,
cigarettes, tobacco products, candies and gum; catering; (j) room service;
(k) banquets; (l) carry-out items; (m) any and all other foods, products,
products and services; (n) all off-premises sales of foods, food products and
all other products and services offered in connection with the Franchisee's
Alamo Grill-TM- Restaurant; and (o) all sales, use or gross receipts tax
rebates. "Gross Sales" will not include any sales, use or gross receipts tax
imposed by any federal, state, municipal or governmental authority directly
upon sales, if the amount of the tax is added to the selling price and is
charged to the customer, a specific record is made at the time of each sale
of the amount of such tax, and the amount of such tax is paid to the
appropriate taxing authority by the Franchisee; the amount of all discounts
and coupons issued to the public by the Franchisee and which are taken or
redeemed at the Franchisee's Alamo Grill-TM-Restaurant provided that a
specific record is made each time a customer takes a discount or redeems a
coupon of the amount of the reduction in the menu price as a result of such
discount taken or coupon redeemed; and, the amount of all employee meal
discounts (e.g., manager meals) taken by employees of the Franchisee at the
Franchisee's Alamo Grill-TM- Restaurant provided that a specific record is
made each time an employee takes an employee meal discount of the amount of
the reduction in menu price as a result of such discount.
MARKS
"Marks" will include the name "Alamo Grill-TM-" and such other trademarks, trade
names, service marks, logos, commercial symbols, phrases, slogans, and tag lines
as E & C has or may develop for use in connection with Alamo Grill-TM-
Restaurants.
OWNERSHIP INTEREST
"Ownership Interest" will mean the share(s) of capital stock if
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
the Franchisee is a corporation, a membership interest if the Franchisee is a
limited liability company, a partnership interest if the Franchisee is a
partnership, limited or general partnership interests if the Franchisee is a
limited partnership and will include all other types and means of ownership
of the Franchisee.
OWNER
"Owner" will mean any person or entity that owns shares of capital stock in the
Franchisee if the Franchisee is a corporation, a membership interest in the
Franchisee if the Franchisee is a limited liability company, a partnership
interest in the Franchisee if the Franchisee is a partnership, a limited or
general partnership interest if the Franchisee is a limited partnership and will
include all other persons or entities owning any other type or means of
Ownership Interest.
RESTAURANT SYSTEM
"Restaurant System" will mean the distinctive foods, beverages, food products,
and other products and services which are associated with the trademarks, trade
names, service marks, copyrights, distinctive interior and exterior building
designs, decor, furnishings, menus, uniforms, slogans, signs, logos, commercial
symbols and color combinations of Alamo Grill-TM- Restaurants. "Restaurant
System" will include all of the quality, consistency and uniformity
requirements; the standards, specifications and procedures for product and
services, operations, cleanliness, sanitation, control, training, advertising
and promotion, service, appearance; and, all instructions, procedures, methods
and specifications promulgated by E & C.
WEEK
"Week" or "weekly" will mean a period of seven (7) consecutive days from Monday
through Sunday.
GRANT OF FRANCHISE
FRANCHISED LOCATION
E & C hereby grants the Franchisee the personal right to operate one Alamo
Grill-TM- Restaurant in conformity with the Restaurant System using the name
"Alamo Grill-TM-" and other specified Marks at the following single location:
_____________________________________________________________________________
which is referred to as the "Franchised Location."
EXCLUSIVE AREA
Except as provided to the contrary in this Article, the Franchisee will receive
an "Exclusive Area" consisting of the area within a three (3) mile radius of the
Franchised Location; provided, however, that if the Franchisee's Alamo Grill-TM-
Restaurant is located in any of the top forty (40) Metropolitan
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
Statistical Areas in the United States as determined by the United States
Department of Commerce, then the Franchisee will receive an Exclusive Area
consisting of the area within a one-half (1/2) mile radius of the Franchised
Location. The Franchisee's Exclusive Area is exclusive to the extent that E &
C will not franchise, license, develop, own or operate ("develop") an Alamo
Grill-TM-Restaurant in the Exclusive Area. Notwithstanding the foregoing, E &
C will have thE absolute right to: (a) develop other restaurant business
concepts under other brand names even if the locations for the concepts are
within the Exclusive Area; (b) develop Alamo Grill-TM- Restaurants in the
Exclusive Area if they are located at or within an airport terminal, a
stadium or arena or other venue for semi-professional or professional sports,
or a college or university campus; (c) market, distribute and sell, on a
wholesale or retail basis, clothing, goods, foods, products or any other
items sold under any of the Marks, by direct sale, mail order, infomercials,
telemarketing or by any other marketing or distribution method, even if such
sales take place in, or are to distributors, retailers, or consumers who are
located in the Exclusive Area; and (d) advertise, promote and participate in
special events and promotional activities which take place in the Exclusive
Area including, without limitation, parades, holiday celebrations, cooking,
recipe or restaurant competitions, sporting events, and fund-raising and
charitable events, and sell any product or service, including any product or
service sold under any of the Marks, in connection with such participation.
UNDETERMINED FRANCHISED LOCATION
If the Franchised Location has not yet been determined as of the date of this
Agreement, then the geographic area in which the Franchisee's Restaurant is to
be located will be described or otherwise defined in an exhibit signed by the
parties and attached to this Agreement. When the address of the Franchised
Location is determined, it will be inserted into this Agreement and initialed by
the parties.
LEASE OR PURCHASE OF FRANCHISED LOCATION
The Franchisee will not sign any lease, purchase agreement or obtain any related
rights to possession, occupancy or ownership of the Franchised Location prior to
the date set forth on Page F-1 of this Agreement. If the Franchisee leases the
Franchised Location, then the Franchisee will use its best efforts to negotiate
a lease term that coincides with the term of this Agreement.
RELOCATION
The Franchisee may, with the prior written approval of E & C, relocate the
Franchised Location if (a) the proposed new location does not compete with any
Alamo Grill-TM- Restaurant operated by E & C or any other franchisee, (b) the
proposed new location is within the Franchisee's Exclusive Area, and (c) the
proposed new location does not infringe upon and is not located within the
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
exclusive area of another Alamo Grill franchisee, area franchisee, master
franchisee or subfranchisee. The new location of the Restaurant, including
the real estate and the building, must comply with all applicable provisions
of this Agreement and with the then-current image, decor and specifications
of E & C. Within ten (10) days after receipt by the Franchisee of E & C's
written approval of the relocation of the Franchised Location, the Franchisee
will pay to E & C a relocation fee of five thousand dollars ($5,000).
CONDITIONS
The Franchisee hereby undertakes the obligation to operate the Alamo Grill-TM-
Restaurant using the Restaurant System at the Franchised Location in strict
compliance with the terms and conditions of this Agreement for the entire term
of this Agreement. The rights and privileges granted to the Franchisee by E & C
under this Agreement are applicable only to the single location designated as
the Franchised Location, are personal in nature, and may not be used elsewhere
or at any other location by the Franchisee.
PERSONAL LICENSE
The Franchisee will not have the right to franchise, subfranchise, license or
sublicense its rights under this Agreement. The Franchisee will not have the
right to pledge, assign or transfer this Agreement or its rights under this
Agreement, except as specifically provided for in this Agreement.
TERM OF AGREEMENT
TERM
The term of this Agreement will be for twenty (20) years, commencing on the date
set forth on Page F-1 of this Agreement. This Agreement will not be enforceable
until it has been signed by both the Franchisee and E & C.
TERM OF LEASE
If the term of the lease for the Franchised Location (excluding any renewal
terms) is for a term that is longer than the term of this Agreement, then the
term of this Agreement will be automatically extended to coincide with the
initial term of the Franchisee's lease for the Franchised Location; provided,
however, that if the Franchisee, or any of the Franchisee's Owners, owns, either
directly or indirectly, the Franchised Location, including the business
premises, the real estate or the building, then the term of this Agreement will
be for twenty (20) years.
REACQUISITION OPTION
At the end of the term of this Agreement, the Franchisee will have the right and
option to reacquire the Franchise for the Franchised Location for one additional
ten (10) year term,
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
provided that the Franchisee has complied with all material terms and
conditions of this Agreement and has agreed to and has complied in all
respects with the following conditions: (a) the Franchisee has given E & C
written notice at least one (1) year prior to the end of the term of this
Agreement of its intention to reacquire the Franchise for the Franchised
Location; (b) all monetary obligations owed by the Franchisee to E & C have
been paid or satisfied prior to the end of the term of this Agreement, and
have been timely met throughout the term of this Agreement; (c) the
Franchisee has agreed, in writing, to remodel, modernize and redecorate the
Franchised Location, and to replace and modernize the signs, furniture,
fixtures, supplies and equipment used in the Franchisee's Restaurant so that
the Franchisee's Restaurant will reflect the image portrayed by the
then-current image, decor and specifications of E & C for Alamo Grill-TM-
Restaurants (the "Modernization") and has agreed to make such capital
expenditures as are necessary to complete the required Modernization; (d) as
of the date the Franchisee exercises its option to reacquire the Franchise
for the Franchised Location, the Franchisee either owns the Franchised
Location, or the Franchisee has the right to lease the Franchised Location
for a term that coincides with the term of the then-current standard Alamo
Grill franchise agreement; (e) the Franchisee (or the Franchisee's Operating
Partner), the Franchisee's General Manager and the Franchisee's Chef have
completed the required training designated by E & C for new Alamo Grill
franchisees to ensure that the Franchisee is in conformity with the
then-current qualifications and operational requirements established by E &
C; and (f) the Franchisee agrees to execute and comply with the then-current
standard franchise agreement being offered to new franchisees by E & C,
subject further to the provisions of Article 3.4 of this Agreement.
TERMS OF OPTION
The Franchisee will have the option to reacquire the Franchise for the
Franchised Location under the same terms and conditions as are then being
offered to other franchisees under the then-current standard Alamo Grill
franchise agreement; provided, however, that the term of the franchise agreement
executed by the Franchisee to reacquire the Franchise will be for ten (10)
years, as specified in Article 3.3 of this Agreement. The Franchisee will be
required to pay E & C a reacquisition fee equal to twenty-five percent (25%) of
the Initial Fee specified in the then-current standard Alamo Grill franchise
agreement, which will be payable in full on the date the Franchisee signs the
then-current standard franchise agreement executed pursuant to this option. The
reacquisition fee is payment, in part, to E & C for: (a) training at the time of
the reacquisition for the
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
Franchisee (or the Franchisee's Operating Partner), the Franchisee's General
Manager and the Franchisee's Chef (but not payment for the travel, lodging,
and living expenses, salaries, and all other expenses of any persons
attending such training, which will be paid by the Franchisee); (b) providing
the Franchisee with the then-current standards relating to the image of Alamo
Grill-TM- Restaurants, including decor, fixtures, furniture and sign
specifications; (c) providing the Franchisee with the then-current
specifications for the supplies and equipment to be used in the operation of
the Restaurant; and (d) administrative and out-of-pocket expenses incurred by
E & C in connection with the reacquisition, including employee salaries,
attorneys' fees and long-distance telephone calls. The Franchisee will be
required to pay the Continuing Fee and all other fees at the rates specified
in the then-current standard franchise agreement. The Franchisee will also
pay any additional fees specified or provided for by the terms of the
then-current standard franchise agreement. The Franchisee acknowledges that
the terms, conditions and economics of future Alamo Grill franchise
agreements of E & C may, at that time, vary in substance and form from the
terms, conditions and economics of this Agreement.
INITIAL FEE; APPROVAL OF FRANCHISEE
INITIAL FEE
The Franchisee will pay E & C an Initial Fee of thirty-five thousand dollars
($35,000), which will be payable in full on the date the Franchisee signs
this Agreement. The Initial Fee payable by the Franchisee is payment, in
part, to E & C for the costs incurred by E & C to operate its business,
including costs for general sales and administrative expenses, travel, long
distance telephone calls, training, opening costs, marketing costs, legal and
accounting fees, compliance with franchising and other laws, and the initial
services rendered to the Franchisee as described in this Agreement.
TERMINATION OF FRANCHISE
E & C will have the right to terminate this Agreement at any time within one
hundred twenty (120) days after the date of this Agreement if: (a) any required
or other financial, personal or other information provided by the Franchisee to
E & C is materially false, misleading, incomplete or inaccurate; (b) the
Franchisee has not purchased or leased a site for the Franchised Location or has
done so in a manner not in compliance with Article 2.4 and Article 11 of this
Agreement; (c) the Franchisee fails to apply for and obtain a valid license for
the service of food for its Alamo Grill-TM- Restaurant from the appropriate
governmental agencies; (d) the Franchisee fails to apply for and obtain a valid
liquor license for its Alamo Grill-TM- Restaurant from the
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
appropriate governmental authorities; or (e) the Franchisee (or its Operating
Partner), the Franchisee's General Manager and the Franchisee's Chef fail to
complete the training program described in Article 16.1 of this Agreement.
REFUND OF INITIAL FEE
If this Agreement is terminated by E & C pursuant to Article 4.2, then E & C
will retain fifty percent (50%) of the Initial Fee paid by the Franchisee as
payment for the administrative and out-of-pocket expenses incurred by E & C
including, but not limited to, executives' and employees' salaries,
salespersons' commissions, attorneys' fees, accountants' fees, travel expenses,
training costs, legal compliance, marketing costs and long distance telephone
calls.
CONTINUING FEE
AMOUNT OF CONTINUING FEE; DATE PAYABLE
In addition to the Initial Fee payable by the Franchisee, the Franchisee will
pay E & C a weekly Continuing Fee equal to the greater of: (a) five percent (5%)
of the Franchisee's weekly Gross Sales for the preceding week; or (b) one
thousand two hundred and fifty dollars ($1,250). The weekly Continuing Fee will
be paid to E & C by the Franchisee by Wednesday of each week for the preceding
week. The minimum weekly Continuing Fee of one thousand two hundred and fifty
dollars ($1,250) will not be applicable until the first full week of the seventh
month after the date of this Agreement, and beginning on Wednesday of that week,
the Franchisee will pay the greater of the amounts set forth above.
INTEREST ON UNPAID CONTINUING FEES
If the Franchisee fails to remit the Continuing Fee due to E & C as provided for
in Article 5.1, then the amount of the unpaid and past due Continuing Fee will
bear simple interest at the lesser of the maximum legal rate allowable by
applicable law or eighteen percent (18%) simple interest per annum. The
Franchisee will pay E & C an administrative fee of seventy-five dollars ($75)
for each delinquent Continuing Fee payment within ten (10) days after the
delinquent Continuing Fee was due. The Franchisee will also reimburse E & C for
any and all costs incurred by E & C in the collection of unpaid and past due
Continuing Fee payments including, but not limited to, attorneys' fees,
deposition costs, expert witness fees, investigation costs, accounting fees,
filing fees and travel expenses.
REPORTS
The Franchisee will maintain an accurate written record of the weekly Gross
Sales for the Franchisee's Alamo Grill-TM- Restaurant and other information
specified by E & C, and will submit weekly reports for the Franchisee's
Restaurant using the forms and formats that E & C prescribes in writing. The
weekly reports will
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
be e-mailed or faxed to E & C by Wednesday of each week for the preceding
week. The weekly reports will be signed by the Franchisee and will include
the Franchisee's weekly Gross Sales, the weekly Continuing Fee payment as
calculated by the Franchisee, and such other information as may be required
by E & C.
FRANCHISEE'S OBLIGATION TO PAY
The Continuing Fee payable to E & C under this Article will be calculated and
paid to E & C by the Franchisee each week during the entire term of this
Agreement, and the Franchisee's failure to pay the weekly Continuing Fee to
E & C will be deemed to be a material breach of this Agreement. The
Franchisee's obligation to pay E & C the Continuing Fee pursuant to the terms
of this Agreement will be absolute and unconditional, and will remain in full
force and effect until the term of this Agreement has expired or until this
Agreement has been terminated in accordance with the terms and conditions set
forth in this Agreement and applicable law. The Franchisee will not have the
"right of offset" and, as a consequence, the Franchisee will timely pay all
Continuing Fees due to E & C under this Agreement regardless of any claims or
allegations the Franchisee may allege against E & C.
PRE-AUTHORIZED BANK DEBITS
The Franchisee will, from time to time during the term of this Agreement,
execute such documents as E & C may request to provide the Franchisee's
unconditional and irrevocable authority and direction to its bank authorizing
and directing the Franchisee's bank to pay and deposit directly to the account
of E & C, and to charge to the account of the Franchisee, the amount of the
weekly Continuing Fee payable by the Franchisee pursuant to this Agreement on
Wednesday of each week for the Continuing Fee due for the preceding week. The
authorizations will be in the form prescribed by a bank specified by E & C and
will permit E & C to designate the amount to be debited or drafted from the
Franchisee's account and to adjust such amount from time to time to the amount
of the weekly Continuing Fee payable to E & C by the Franchisee, as calculated
by the Franchisee in the report of weekly Gross Sales submitted by the
Franchisee pursuant to Article 5.3 of this Agreement. If the Franchisee fails at
any time to provide the weekly reports required under Article 5.3, then E & C
will have the absolute right to debit the Franchisee's bank account for the same
amount as the most recent debit to the Franchisee's bank account that was based
on actual Gross Sales provided by the Franchisee. The Franchisee will, at all
times during the term of this Agreement, maintain a balance in its account at
its bank sufficient to allow the appropriate amount to be debited from the
Franchisee's account for payment of the
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
Continuing Fee payable by the Franchisee for deposit in the account of E & C.
LOCAL ADVERTISING
LOCAL ADVERTISING EXPENDITURE
Each quarter for the entire term of this Agreement, the Franchisee will spend at
a minimum for approved local advertising for its Alamo Grill-TM- Restaurant an
amount equal to two percent (2%) of the quarterly Gross Sales of the
Franchisee's Alamo Grill-TM- Restaurant (the "Local Advertising Expenditure").
For the purposes of this Article, local advertising will include television,
radio, newspaper, billboards, magazine, direct mail and other print advertising,
which has been approved by E & C prior to broadcast, publication or
distribution.
REPORTS OF LOCAL ADVERTISING EXPENDITURES
Within 10 (ten) days after the end of each quarter, the Franchisee will, in a
form prescribed by E & C, furnish E & C with an accurate accounting of the
Franchisee's Local Advertising Expenditure during the quarter just ended. If the
Franchisee has failed to spend the required amount for the Local Advertising
Expenditure, then the Franchisee will deposit with E & C the difference between
the amount that should have been spent by the Franchisee for the Local
Advertising Expenditure and the amount actually spent, and this amount will be
spent by E & C for advertising and promotion in the Franchisee's Designated
Market Area in a manner deemed appropriate by E & C in its sole discretion.
TELEPHONE DIRECTORY LISTINGS
The Franchisee will continually list and advertise in the "Yellow Pages" in the
Franchisee's market area under the heading "Restaurant" and/or other listings
designated by E & C in writing. The format, size and content of the listings and
advertising will conform in all respects to the standards established by E & C
and specified in the Standard Operations Manual. The Franchisee will also take
all steps necessary to be listed in the "White Pages" for the Franchisee's
market area. Expenditures made by the Franchisee for Yellow Pages or White Pages
advertising may be applied to the Local Advertising Expenditure set forth in
Article 6.1 of this Agreement.
GRAND OPENING ADVERTISING
The Franchisee will spend, within the period of time from ninety (90) days prior
to the day of the grand opening to 11:00 p.m. on the day of the grand opening, a
minimum of fifteen thousand dollars ($15,000) for grand opening advertising of
the Franchisee's Alamo Grill-TM- Restaurant. Payments, rebates, or allowances
received by the Franchisee from vendors and used by the Franchisee in connection
with advertising and promoting the
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
grand opening of the Franchisee's Alamo Grill-TM- Restaurant may be applied
to the minimum grand opening expenditure requirement set forth in this
Article. The Franchisee's expenditures for grand opening advertising will not
be applied to the Local Advertising Expenditure requirement set forth in
Article 6.1 of this Agreement.
FINANCIAL STATEMENTS
MONTHLY REPORTS AND FINANCIAL STATEMENTS
The Franchisee will, at its expense, prepare a monthly and year-to-date balance
sheet and profit and loss statement for the Franchisee's Restaurant (the
"Monthly Report"). The Franchisee will also prepare, at its expense, annual
financial statements, consisting of a balance sheet, profit and loss statement,
statement of cash flows and explanatory footnotes, for the Franchisee's
Restaurant (the "Financial Statements"). All Monthly Reports and Financial
Statements provided to E & C pursuant to this Article will be in substantially
the form prescribed by E & C in writing, will conform to the standard chart of
accounts prescribed by E & C and will be prepared in accordance with generally
accepted accounting principles applied on a consistent basis.
DUE DATE; VERIFICATION OF MONTHLY REPORTS AND FINANCIAL STATEMENTS
The Monthly Report for the Franchisee's Restaurant will be delivered to E & C
within twenty (20) days after the end of the month. The Franchisee's Financial
Statements will be delivered to E & C within ninety (90) days after the
Franchisee's fiscal year end. The Franchisee's Monthly Reports and Financial
Statements must be verified by the Franchisee's Chief Financial Officer.
SUBSTANTIATION OF MONTHLY REPORTS AND FINANCIAL STATEMENTS
Within three (3) business days after receiving a written request from E & C, the
Franchisee will provide E & C with originals or exact copies of all documents,
records and other materials including, but not limited to, cash register tapes,
customer checks, point-of-sale system records, payroll records and purchasing
and expense records, requested by E & C to substantiate the Monthly Reports and
Financial Statements submitted by the Franchisee pursuant to this Article. E & C
will maintain the confidentiality of all information, documents, records and
other materials submitted by the Franchisee to E & C pursuant to this Article.
However, if the information, documents, records or other materials are relevant
to any issue in any mediation, arbitration or court proceeding between E & C and
the Franchisee, then E & C may disclose the information, documents, records or
other materials in such proceeding.
SALES AND INCOME TAX RETURNS
Within fifteen (15) days after receipt of a written request from
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
E & C, the Franchisee will furnish E & C with exact copies of all state sales
tax returns and all state and federal income tax returns filed by the
Franchisee relating to the operation of the Franchisee's Alamo Grill-TM-
Restaurant.
AUDIT RIGHTS
Within three (3) business days after receiving written notice from E & C, the
Franchisee and the Franchisee's accountants will make all of their computer and
hand prepared records and ledgers, the sales ledger, work papers, books, bank
statements, federal and state income tax returns, federal and state sales tax
returns, daily cash register tapes, accounts, and other financial information
relating to Gross Sales, food and liquor costs, and labor costs (the "Financial
Records") available to E & C during business hours for review and audit by E & C
or its designee. If the Financial Records are computerized, then the Franchisee
will grant E & C or its designees the absolute right to access the Franchisee's
computer and software programs containing the Financial Records and the absolute
right to copy the Financial Records to a computer disk or to any portable or
other computer owned or controlled by E & C. The Financial Records for each
fiscal year will be kept in a secure place by the Franchisee and will be
available for audit by E & C for at least five (5) years. The Franchisee will
provide E & C with adequate facilities to conduct the audit. E & C will maintain
the confidentiality of all information, documents, records and other materials
reviewed or copied by E & C during an audit conducted by E & C pursuant to this
Article. However, if the information, documents, records or other materials are
relevant to any issue in any mediation, arbitration or court proceeding between
E & C and the Franchisee, then E & C may disclose the information, documents,
records or other materials in such proceeding.
PAYMENT OF AUDIT COSTS
If an audit of the Franchisee's Financial Records reveals any deficiencies in
the Continuing Fees payable to E & C, then the Franchisee will, within five (5)
days after receipt of an invoice from E & C indicating the amounts owed, pay to
E & C any deficiency owed to E & C, together with interest as provided for
herein. If an audit by E & C results in a determination that the Franchisee's
Gross Sales were understated by more than one percent (1%) in any year or in any
month, then the Franchisee will, within fifteen (15) days after receipt of an
invoice from E & C, pay E & C all costs and expenses (including employee
salaries, travel costs, room and board, and audit fees) that E & C incurred for
the audit of the Franchisee's Financial Records.
REFUSAL TO SUBMIT RECORDS OR PERMIT AUDIT
The Franchisee's failure or refusal to provide the documents, records or other
materials requested by E & C to substantiate the Monthly Reports or Financial
Statements in accordance with Article 7.3 or to produce the Financial Records in
accordance
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with Article 7.5 will be grounds for the immediate termination of this
Agreement by E & C.
QUALITY CONTROL, UNIFORMITY AND STANDARDS
QUALITY AND SERVICE STANDARDS
E & C will develop, from time to time, uniform standards of quality, cleanliness
and service regarding the business operations of the Franchisee's Alamo
Grill-TM- Restaurant to protect and maintain (for the benefit of E & C and all
of its Alamo Grill franchisees) the distinction, valuable goodwill and
uniformity represented and symbolized by the Marks and the Restaurant System.
Accordingly, to ensure that all Alamo Grill franchisees will maintain and adhere
to the uniformity requirements and quality standards for the foods, products and
services associated with the Marks and the Restaurant System, the Franchisee
agrees to maintain the uniformity and quality standards required by E & C for
all foods, products and services associated with the Marks and the Restaurant
System and agrees to the terms and conditions contained in this Article to
assure the public that all Alamo Grill-TM- Restaurants will be uniform in nature
and will sell and dispense quality foods, products and services.
IDENTIFICATION OF RESTAURANT
The Franchisee will operate the Restaurant so that it is clearly identified and
advertised as an Alamo Grill-TM- Restaurant. The style and form of the words
"Alamo Grill-TM-" and the other Marks used in any advertising, marketing, public
relations or promotional program must have the prior written approval of E & C.
The Franchisee will use the name "Alamo Grill-TM-", the approved logos and all
graphics commonly associated with the Restaurant System and the Marks which now
or hereafter may form a part of the Restaurant System, on all paper supplies,
furnishings, advertising, public relations and promotional materials, signs,
stationery, business cards, linens, towels, napkins, aprons, menus, food and
beverage containers, placemats, uniforms, clothing and other materials in the
identical combination and manner as may be prescribed by E & C in writing. The
Franchisee will, at its expense, comply with all legal notices of registration
required by E & C or its attorneys and will, at its expense, comply with all
trademark, trade name, service xxxx, copyright, patent or other notice markings
that are required by E & C or by applicable law.
COMPLIANCE WITH STANDARDS
The Franchisee will use the Marks and the Restaurant System in strict compliance
with the moral and ethical standards, quality standards, health standards,
operating procedures, specifications, requirements and instructions required by
E & C, which may be amended and supplemented by E & C from time to time.
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
ALTERATIONS TO RESTAURANT
The Franchisee will not install or permit to be installed in, on or above the
Restaurant, without the prior written consent of E & C, any fixtures,
furnishings, equipment, decor, signs or other items not previously approved by
E & C.
PROHIBITED SALES
The Franchisee will offer for sale at the Franchised Location only those menu
items, food products and other products approved in writing by E & C. E & C will
provide the Franchisee with a sample of the standard Alamo Grill menu and all
subsequent modifications to the menu.
OTHER BUSINESS
The Franchisee will use the Franchised Location solely for the operation of an
Alamo Grill-TM- Restaurant and will not directly or indirectly operate or engage
in any other business or activity from the Franchised Location without the prior
written consent of E & C. The Franchisee will not participate in any dual
branding program, or in any other program, promotion or business pursuant to
which a trademark, service xxxx, trade name, logo, slogan, or commercial symbol
owned by any person or entity other than E & C is displayed, featured or used in
connection with the Franchisee's Alamo Grill-TM- Restaurant without the prior
written consent of E & C.
FRANCHISEE'S NAME
The Franchisee will not use the name "Alamo Grill-TM-", or any derivative
thereof in its corporate, partnership or sole proprietorship name. The
Franchisee will hold itself out to the public as an independent contractor
operating its Alamo Grill-TM- Restaurant pursuant to a Franchise from E & C. The
Franchisee will file for a certificate of assumed name in the manner required by
applicable state law to notify the public that the Franchisee is operating its
Alamo Grill-TM- Restaurant as an independent contractor pursuant to this
Agreement.
OPERATION OF ALAMO GRILL-TM- RESTAURANT
The Franchisee will be totally and solely responsible for the operation of its
Alamo Grill-TM- Restaurant, and will control, supervise and manage all the
employees, agents and independent contractors who work for or with the
Franchisee. The Franchisee will be responsible for the acts of its employees,
agents, and independent contractors and will take all reasonable business
actions necessary to ensure that its employees, agents and independent
contractors comply with all applicable federal, state, city, local and municipal
laws, statutes, ordinances, rules and regulations. E & C will not have any
right, obligation or responsibility to control, supervise or manage the
Franchisee's employees, agents or independent contractors.
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BUSINESS HOURS
The Franchisee's Alamo Grill-TM- Restaurant will be open from 11:00 a.m. to
11:00 p.m. every day of the week, or during such other normal business hours as
otherwise may be specified by E & C in the Standard Operations Manual.
PERSONNEL
The Franchisee will at all times during business hours have management personnel
on duty who are responsible for supervising the employees and the business
operations of the Franchisee's Restaurant. The Franchisee will maintain a
competent, conscientious and adequately trained staff with enough personnel to
operate the Restaurant in a professional and competent manner and to guarantee
efficient service to the Franchisee's customers. The Franchisee will take such
steps as are necessary to ensure that its employees develop and preserve good
customer relations, render competent, prompt, courteous and knowledgeable
service and meet the quality and service standards established by E & C.
STANDARDS OF SERVICE
The Franchisee will at all times give prompt, courteous and efficient service to
its customers. The Franchisee will, in all dealings with its customers,
suppliers and the public, adhere to the highest standards of honesty, integrity,
fair dealing and ethical conduct.
ALCOHOLIC BEVERAGES
The Franchisee will serve beer, wine and alcoholic beverages at its Alamo
Grill-TM- Restaurant. The Franchisee will comply with all federal, state, city,
local and municipal licensing, insurance and other laws, regulations and
requirements applicable to the sale of alcoholic beverages by the Franchisee.
The Franchisee will comply with the liquor liability insurance requirements set
forth in Article 14 of this Agreement.
VENDING MACHINES AND ENTERTAINMENT DEVICES
Other than those items which the Franchisee must procure and place in the
premises of the Franchised Location as specified in the Standard Operations
Manual, the Franchisee will not permit any jukebox, video and electronic games,
vending machines (including cigarette, gum and candy machines), newspaper racks,
rides or other mechanical or electronic entertainment devices or coin or token
operated machines (including pinball) to be used on the premises of the
Franchised Location without the prior written approval of E & C.
GAMBLING MACHINES; TICKETS
The Franchisee will not permit any gambling machines or other gambling devices
to be used on the premises of the Franchised Location, except with the prior
written approval of E & C. The Franchisee will not keep or offer for sale or
allow employees to offer for sale at or near the Franchised Location any
tickets,
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subscriptions, pools, chances, raffles, lottery tickets or pull tabs,
except with the prior written approval of E & C.
STANDARD ATTIRE OR UNIFORMS
The Franchisee will require its employees to wear the standard attire or
uniforms described in the Standard Operations Manual. All employees of the
Franchisee will wear clean and neat attire or uniforms and will practice good
personal hygiene.
CREDIT CARDS
The Franchisee will honor all credit, charge, courtesy or cash cards or other
credit devices required or approved by E & C in writing. The Franchisee must
obtain the written approval of E & C prior to honoring any unapproved credit,
charge, courtesy or cash cards or other credit devices.
GIFT CERTIFICATES AND COUPONS
The Franchisee will offer the gift certificates issued by E & C for use by its
Alamo Grill franchisees. The Franchisee will not have the right to sell or issue
gift certificates except those that have been obtained from E & C. The
Franchisee will not issue coupons or discounts of any type, except as may be
approved in advance in writing by E & C. Such coupons will clearly state that
they are redeemable only at the Franchisee's Alamo Grill-TM- Restaurant, and not
at any other Alamo Grill-TM- Restaurant.
MUSIC AND MUSIC SELECTION
In order to maintain the image and ambiance associated with the Restaurant
System, the Franchisee will only play the music and music selections that have
been approved by E & C as set forth in the Standard Operations Manual.
APPROVED ADVERTISING
The Franchisee will not conduct any advertising and/or promotion for its Alamo
Grill-TM- Restaurant business unless and until E & C has given the Franchisee
prior written approval for all concepts, materials and media proposed for any
such advertising and/or promotion. The Franchisee will not permit any third
party to advertise its business, services or products on the premises of the
Franchisee's Alamo Grill-TM- Restaurant without the prior written approval of E
& C.
COMPLIANCE WITH APPLICABLE LAW
The Franchisee will, at its expense, comply with all applicable federal, state,
city, local and municipal laws, statutes, ordinances, rules and regulations
pertaining to the construction or remodeling of the Franchised Location and the
operation of the Franchisee's Alamo Grill-TM- Restaurant including, but not
limited to, all health, food service and liquor licensing laws, all health and
safety regulations, all environmental laws, all laws relating to employees,
including all wage and hour laws, employment laws, workers' compensation laws,
discrimination laws, sexual harassment laws, and disability discrimination laws.
The
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
Franchisee will, at its expense, be solely and exclusively responsible for
determining the licenses and permits required by law for the Franchisee's Alamo
Grill-TM- Restaurant, for obtaining and qualifying for all such licenses and
permits, and for complying with all applicable laws.
PAYMENT OF TAXES
The Franchisee will be absolutely and exclusively responsible and liable for
filing all required tax returns and for the prompt payment of all federal,
state, city and local taxes including, but not limited to, individual and
corporate income taxes, sales and use taxes, franchise taxes, gross receipts
taxes, employee withholding taxes, F.I.C.A. taxes, inventory taxes, liquor
taxes, personal property taxes and real estate taxes (hereinafter referred to as
"taxes") payable in connection with the Franchisee's Alamo Grill-TM- Restaurant
business. E & C will have no liability for these or any other taxes which arise
or result from the Franchisee's Restaurant business and the Franchisee will
indemnify E & C for any such taxes that may be assessed or levied against E & C
which arise out of or result from the Franchisee's Restaurant.
"FRANCHISE" AND OTHER TAXES
If any "franchise" or other tax which is based upon the Gross Sales, receipts,
sales, business activities or operation of the Franchisee's Alamo Grill-TM-
Restaurant is imposed upon E & C by any taxing authority, then the Franchisee
will reimburse E & C in an amount equal to the amount of such taxes and related
costs imposed upon and paid by E & C. The Franchisee will be notified in writing
when E & C is entitled to reimbursement for the payment of such taxes and, in
that event, the Franchisee will pay E & C the amount specified in the written
notice within ten (10) days after receipt of the written notice.
PAYMENTS TO CREDITORS
The Franchisee will timely pay all of its obligations and liabilities due and
payable to E & C suppliers, lessors and its creditors.
SECURITY INTEREST IN FRANCHISE AGREEMENT
This Agreement and the Franchise granted to the Franchisee hereunder may not be
used as collateral or be the subject of a security interest, lien, levy,
attachment or execution by the Franchisee's creditors or any financial
institution, except with the prior written approval of E & C.
INSPECTION RIGHTS
The Franchisee will permit E & C or its representatives to enter, remain on, and
inspect the Franchised Location, whenever E & C reasonably deems it appropriate
and without prior notice, to interview the Franchisee's employees and customers,
to take photographs and videotapes of and to examine the interior and
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
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exterior of the Franchised Location, to examine representative samples of the
foods, beverages and other products sold or used at the Franchisee's
Restaurant and to evaluate the quality of the foods, beverages, products and
services provided by the Franchisee to its customers. E & C will also have
the right to send a representative of E & C to dine at the Franchisee's Alamo
Grill-TM- Restaurant to evaluate the operations of the Franchisee's Alamo
Grill-TM- Restaurant and the quality of the foods and services provided by
the Franchisee to its customers. E & C will have the right to use all
interviews, photographs and videotapes of the Franchisee's Alamo Grill-TM-
Restaurant for such purposes as E & C deems appropriate including, but not
limited to, use in advertising, marketing and promotional materials. The
Franchisee will not be entitled to, and hereby expressly waives, any right
that it may have to be compensated by E & C, its advertising agencies, and
other Alamo Grill franchisees for the use of such photographs or videotapes
for advertising, marketing and promotional purposes.
DEFAULT NOTICES AND SIGNIFICANT CORRESPONDENCE
The Franchisee will deliver to E & C, immediately upon receipt by the Franchisee
or delivery at the Franchised Location, an exact copy of all: (a) notices of
default received from the landlord of the Franchised Location or any mortgagee,
trustee under any deed of trust, contract for deed holder, lessor, or any other
party with respect to the Franchised Location; (b) notifications or other
correspondence relating to any legal proceeding or lawsuit relating in any way
to the Franchisee's Restaurant or to the Franchised Location; (c) consumer
lawsuits, complaints or claims filed with or served upon the Franchisee or a
better business bureau; (d) employee lawsuits, complaints or claims; and (e)
inspection reports or any other notices, claims, reports, warnings or citations
from or by any governmental authority, including any health or safety authority.
Upon a written request from E & C, the Franchisee will provide such additional
information as may be required by E & C regarding the subject matter of the
correspondence or other documents received by the Franchisee.
PRODUCTS AND SERVICES
LIMITATIONS ON PRODUCTS AND SERVICES
The Franchisee will sell only those foods, beverages, food products, clothing,
and services and other items approved by E & C in writing and will offer for
sale all foods, beverages, food products, clothing, services and other items
prescribed by E & C or approved by E & C in writing. Prior to the opening of the
Alamo Grill-TM- Restaurant, E & C will provide the Franchisee with a written
schedule of all foods, food products, beverages,
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
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clothing, and other items for sale, and the fixtures, supplies and equipment
necessary and required to commence operation of the Franchisee's Restaurant.
The Franchisee will maintain sufficient inventories of foods, beverages, food
products, clothing, and other items to realize the full potential of the
Restaurant. The Franchisee will conform to all customer service standards
prescribed by E & C in writing. The Franchisee will have the absolute right
to sell all foods, beverages, food products, clothing, services and other
items at whatever prices and on whatever terms it deems appropriate.
LIMITATION ON SALES
The Franchisee will offer for sale and sell those foods, beverages, food
products, clothing, services and other items offered for sale in connection with
the Franchisee's Alamo Grill-TM- Restaurant or which are sold under any oF the
Marks only on a retail basis at the Franchisee's Franchised Location. The
Franchisee will not offer for sale or sell on a wholesale or retail basis at any
other location or in any other premises, or by means of the Internet, catalogue
or mail order sales, telemarketing, or by any other method of sales or
distribution, any of the foods, beverages, food products, clothing, services or
other items offered for sale or sold in connection with the Franchisee's Alamo
Grill-TM- Restaurant or which are sold under any of the Marks.
APPROVED SUPPLIERS AND DISTRIBUTORS
The Franchisee will purchase from suppliers and distributors approved in writing
by E & C those foods, food items, beverages, recipe ingredients, goods,
products, clothing, merchandise, supplies, sundries, uniforms, machinery, signs,
furniture, fixtures, equipment and services (sometimes referred to in this
Agreement as "products and services") designated in writing by E & C which are
to be used or sold by the Franchisee and which E & C determines must meet the
standards of quality and uniformity required to protect the valuable goodwill
and uniformity symbolized by and associated with the Marks and the Restaurant
System and/or to protect the health and safety of the Franchisee's employees,
customers and guests. E & C will provide the Franchisee with a list of the
approved suppliers and distributors for these products and services. The
Franchisee will have the right and option to purchase these products and
services from other or outside suppliers and distributors provided that such
products and services conform in quality to the standards and specifications of
E & C and provided that E & C determines that the supplier's or distributor's
business reputation, quality standards, delivery performance, credit rating, and
other factors determined by E & C are satisfactory. If the Franchisee desires to
purchase any products or services from such other suppliers
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and distributors, then the Franchisee must, at its expense, submit samples
and specifications, and other business and product information as requested,
to E & C for review and/or product testing to determine whether the supplier
or distributor and its products and services are satisfactory to E & C and
comply with E & C's standards and specifications. E & C will also have the
right to inspect the facilities of the proposed supplier or distributor. The
Franchisee will reimburse E & C for the costs and expenses incurred by E & C
to conduct an inspection of the facilities of the unapproved supplier or
distributor within thirty (30) days after the Franchisee's receipt of an
invoice for such costs and expenses from E & C. E & C will complete all
product testing within thirty (30) days after E & C receives the samples and
other requested information from the Franchisee, and will notify the
Franchisee of its determination within fifteen (15) days after completion of
the testing process. The written approval of E & C must be obtained by the
Franchisee before any previously unapproved products and services are sold by
or used by the Franchisee or any previously unapproved supplier or
distributor is used by the Franchisee.
DESIGNATED SUPPLIERS
The Franchisee will purchase from designated suppliers those proprietary
seasonings and other foods, food items and recipe ingredients, and clothing
items designated in writing by E & C which are to be used or sold by the
Franchisee and which E & C determines must meet the standards of quality and
uniformity required to protect the valuable goodwill and uniformity symbolized
by and associated with the Marks and the Restaurant System. In addition, the
Franchisee will purchase and use in its Restaurant operations all the brand name
products required by E & C. Such required brand name products may be purchased
from any commercial supplier of such products.
USE OF REBATES FROM SUPPLIERS
Any rebates or other payments paid to E & C by a supplier as a result of the
Franchisee's purchases from the supplier will be used by E & C for the creation,
development and production of advertising and promotional materials, marketing
or related research and development, advertising and marketing expenses, product
and food research and development, advertising materials, production costs,
brochures, ad slicks, radio, film and television commercials, videotapes,
newspaper, magazine and other print advertising, direct mail pieces,
photographer costs, photographs, pictures, designs, services provided by
advertising agencies, public relations firms or other marketing, research or
consulting firms or agencies, market research and marketing surveys, menu design
and graphics, customer incentive programs, sponsorships, marketing meetings,
sales incentives, development
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of Home Pages on the Internet, Internet access provider costs, Internet/World
Wide Web programming and advertising, subscriptions to industry newsletters
or magazines, marketing or industry studies, books and research materials,
administrative costs or salaries for marketing support personnel.
LIMITATION ON BRANDING, DEVELOPMENT AND SALE OF PRODUCTS
Nothing in this Agreement gives the Franchisee the right to, and the Franchisee
will not: (a) use or display the Marks on or in connection with any product or
service other than those products and services prescribed or approved by E & C;
(b) acquire, develop or manufacture any product using the name "Alamo Grill-TM-"
or any of the Marks, or direct any other person or entity to do so; (c) acquire,
develop or manufacture any product that has been developed or manufactured by or
for E & C for use in the Restaurant System and which is sold under any of the
Marks, or direct any other person or entity to do so; and (d) use, have access
to, or have any rights to any proprietary formulas, ingredients, or recipes for
any product created by or at the direction of E & C and sold under the name
"Alamo Grill-TM-" or any of the Marks.
INDEPENDENT SHOPPING SERVICES
E & C will have the right to hire an independent shopping service to visit, dine
at and evaluate the Franchisee's Alamo Grill-TM- Restaurant and the quality of
the foods, beverages and services provided to customers by the Franchisee's
Alamo Grill-TM- Restaurant. E & C will determine the number and frequency of the
visits the shopping service will make to the Franchisee's Alamo Grill-TM-
Restaurant and the form of the reports the shopping service will provide to E &
C. The fees charged by the shopping service for visiting and evaluating the
Franchisee's Alamo Grill-TM- Restaurant will be paid by E & C. E & C will
provide the Franchisee with copies of all reports prepared by the shopping
service evaluating the Franchisee's Alamo Grill-TM- Restaurant.
STANDARD OPERATIONS MANUAL
COMPLIANCE WITH MANUAL
In order to protect the reputation and goodwill of E & C, and to maintain the
uniform operating standards under the Marks and the Restaurant System, the
Franchisee will at all times conduct its business and operate its Alamo
Grill-TM- Restaurant in compliance with E & C's confidential and copyrighted
Standard Operations Manual (sometimes referred to as the "Manual") which is
incorporated herein and made part of this Agreement. The Franchisee will conform
to the common image and identity created by the foods, beverages, products,
music, food portions, recipes, ingredients, cooking techniques and processes,
cleanliness, sanitation and services associated with the Alamo Grill-TM-
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Restaurant which are portrayed and described by the Manual. The Franchisee
acknowledges having received on loan from E & C one copy of the Manual.
REVISIONS TO MANUAL
E & C reserves the right to and may from time to time revise the Standard
Operations Manual. The Franchisee will, as promptly as reasonably possible,
modify the operations of the Restaurant to implement all changes, additions and
supplements made by E & C to the Restaurant System which are reflected by the
Manual. The Franchisee will implement all operational changes to the Restaurant
System deemed necessary by E & C to: (a) improve the standards of service or the
food, food items, beverages, and products offered for sale under the Restaurant
System; (b) protect the goodwill associated with the Marks; (c) improve the
operation of the Franchisee's Restaurant; or (d) protect the health and safety
of the Franchisee's employees, customers or guests. The Franchisee will at all
times keep its copy of the Manual current and up-to-date, and in the event of
any dispute regarding the Manual, the terms of the master copy of the Manual
maintained by E & C will be controlling in all respects.
CONFIDENTIALITY OF MANUAL
The Standard Operations Manual, and all revisions thereto, will at all times
during the term of this Agreement and thereafter remain the sole and exclusive
property of E & C, which will own all copyright and other interests related to
the Manual. The Franchisee will at all times during the term of this Agreement
and thereafter treat the Manual and any other manuals created for or approved
for use in the operation of the Franchisee's Alamo Grill-TM- Restaurant as
secret and confidential, and the Franchisee will use all reasonable means to
keep such information secret and confidential. Neither the Franchisee nor any
employees of the Franchisee will make any copy, duplication, record or
reproduction of the Manual, or any portion thereof, available to any
unauthorized person. The Franchisee will not use the Manual or any information
contained therein in connection with the operation of any other business or for
any purpose other than in conjunction with the operation of the Franchisee's
Alamo Grill-TM- Restaurant.
CONFIDENTIALITY OF OTHER INFORMATION
E & C and the Franchisee expressly understand and agree that E & C will be
disclosing and providing to the Franchisee certain confidential and proprietary
information concerning the Restaurant System and the procedures, operations,
technology and data used in connection with the Restaurant System. The
Franchisee will not, during the term of this Agreement or thereafter,
communicate, divulge or use for the benefit of any other person or entity any
such confidential and proprietary
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
information, knowledge or know-how concerning the methods of operation of the
Alamo Grill-TM- Restaurant which may be communicated to the Franchisee, or of
which the Franchisee may be apprised by virtue of this Agreement. The
Franchisee will divulge such confidential and proprietary information only to
its employees who must have access to it in order to operate the Franchisee's
Alamo Grill-TM- Restaurant. Any and all information, knowledge and know-how
including, without limitation, drawings, client lists, materials, equipment,
technology, methods, procedures, techniques, recipes, specifications,
computer programs, systems and other data which E & C copyrights or
designates as confidential or proprietary will be deemed confidential and
proprietary for the purposes of this Agreement.
BUSINESS PREMISES
SITE LOCATION
The Franchisee will be solely responsible for selecting the site of the
Franchised Location for the Franchisee's Alamo Grill-TM- Restaurant, regardless
of whether the Franchised Location is owned or leased by the Franchisee. The
Franchisee will retain an experienced commercial real estate broker or
salesperson who has at least five (5) years experience in locating restaurant
sites to advise the Franchisee and to locate, acquire, purchase or lease the
site for the Franchisee's Alamo Grill-TM- Restaurant. Accordingly, no provision
in this Agreement will be construed or interpreted to impose any obligation upon
E & C to locate a site for the Franchised Location, to assist the Franchisee in
the selection of a suitable site for the Franchised Location, or to provide any
assistance to the Franchisee in the purchase or lease of the Franchised
Location.
SITE LOCATION CRITERIA
E & C may require that the Franchisee provide to E & C for its review site
information relating to, among other things, accessibility, visibility,
potential traffic flows, population trends, household income and financial
statistics, lease terms and other demographic information. The review of the
site conducted by E & C will not be deemed to be a warranty, representation or
guaranty by E & C that if the Franchisee's Alamo Grill-TM- Restaurant is opened
and operated at that site, it will be a financial success. E & C will have the
right to require the Franchisee to obtain, at the Franchisee's expense, an
economic feasibility and demographics study for the proposed site of the
Franchised Location. Any feasibility and demographics study required by E & C
will be completed by a real estate or marketing expert mutually agreed upon in
writing by E & C and the Franchisee.
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
CONSTRUCTION AND REMODELING COSTS
The Franchisee will, at its cost, retain a licensed architect and will be
responsible for the preparation of the floor plans, layouts, working drawings
and construction plans and architectural plans and specifications for the
Franchisee's Alamo Grill-TM- Restaurant. The Franchisee will be responsible for
the accuracy of such floor plans, layouts, drawings, plans and specifications.
The Franchisee will, at its expense, be solely responsible for all costs and
expenses incurred for the construction, renovation or remodeling of the
Franchisee's Alamo Grill-TM- Restaurant at the Franchised Location including,
but not limited to, all costs for architectural plans and specifications, all
modifications to the floor plans and layouts necessitated by the structure,
construction or layout of the Franchised Location, building permits, site
preparation, demolition, construction of the parking lot, landscaping, heating,
ventilation and air conditioning, interior decorations, furniture, fixtures,
equipment, leasehold improvements, labor, architectural and engineering fees,
electricians, plumbers, general contractors and subcontractors.
COMPLIANCE WITH SPECIFICATIONS
The Franchised Location and the Franchisee's Restaurant will conform to all
specifications for decor, furniture, fixtures, equipment, exterior and interior
decorating designs and color schemes established by E & C. The Franchisee will
obtain and pay for the furniture, fixtures, supplies and equipment required by E
& C and used by the Franchisee for the operation of its Alamo Grill-TM-
Restaurant. The furniture, fixtures and equipment used in the Franchisee's Alamo
Grill-TM- Restaurant must be installed and located in accordance with the floor
plans approved by E & C, and must conform to the quality standards and
uniformity requirements established by E & C.
INSPECTION DURING CONSTRUCTION OR RENOVATION
The Franchisee will be solely responsible for inspecting the Franchised Location
during construction or renovation to confirm that the Franchised Location is
being constructed or renovated in a workmanlike manner and according to the
specifications established by E & C. The Franchisee will be solely responsible
for complying with all applicable local, state and federal laws, ordinances,
statutes and building codes, and for acquiring all licenses and building and
other permits required by all federal, state, city, municipal and local laws in
connection with the construction or renovation of the Franchisee's business
premises at the Franchised Location. E & C will have no responsibility to the
Franchisee or any other party if the Franchised Location is not constructed or
renovated by the Franchisee or its architect or contractor: (a) according to the
standard specifications
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established by E & C; (b) in compliance with all applicable federal, state or
local laws or ordinances; or (c) in a workmanlike manner. The Franchisee will
not open the Restaurant for business without the prior written approval of E
& C.
MAINTENANCE
The Franchisee will, at its expense, repair, paint and keep in a clean and
sanitary condition the interior, the exterior, the parking lot, signage,
exterior lighting, and the grounds of the Franchised Location and the
Franchisee's Restaurant, and will replace all floor covering, wall coverings,
light fixtures, curtains, blinds, shades, furniture, room furnishings, wall
hangings, signs, fixtures and other decor items as they become worn-out, soiled
or in disrepair. All mechanical equipment, including ventilation, heating and
air conditioning, must be kept in good working order by the Franchisee at all
times. All replacement equipment, decor items, furniture, fixtures, signs,
supplies and other items used in the Restaurant by the Franchisee must comply
with the then-current standards and specifications of E & C.
REMODELING OF BUSINESS PREMISES
The Franchisee will make the reasonable capital expenditures necessary to
extensively remodel, modernize, redecorate and renovate ("remodel" or
"remodeling") the Franchisee's Restaurant and to replace and modernize the
furniture, fixtures, supplies and equipment ("FF&E") so that the Franchisee's
Restaurant will reflect the then-current image of an Alamo Grill-TM- Restaurant.
All remodeling and all replacements for the FF&E must conform to the
then-current specifications of E & C. The Franchisee will commence remodeling
the Franchised Location within four (4) months after the date the Franchisee
receives written notice from E & C specifying the required remodeling, and will
diligently complete such remodeling within a reasonable time after its
commencement. Except as provided for in Article 11.6 of this Agreement, the
Franchisee will not be required to remodel the Restaurant, or to replace and
modernize its FF&E more than once every five (5) years during the term of this
Agreement.
SIGNS
APPROVED SIGNS
The signs used at the Franchised Location (the "Signs") must comply with the
standard sign plans and specifications established by E & C. E & C will provide
the Franchisee with a copy of the standard sign plans and specifications and the
Franchisee will, at its expense, prepare or cause the preparation of complete
and detailed plans and specifications for the Signs and will submit such plans
and specifications to E & C for its written approval. E & C will have the
absolute right to inspect,
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examine, videotape and photograph the Signs for any reason at any time during
the term of this Agreement.
PAYMENT OF COSTS AND EXPENSES
The Franchisee will, at its expense, be responsible for any and all installation
costs, sign costs, architectural fees, engineering costs, construction costs,
permits, licenses, repairs, maintenance, utilities, insurance, taxes,
assessments and levies in connection with the construction, erection,
maintenance or use of the Signs including, if applicable, all electrical work,
construction of the base and foundation, relocation of power lines and all
required soil preparation work. The Franchisee will comply with all federal,
state and local laws, regulations, building codes and ordinances relating to the
construction, erection, maintenance and use of the Signs.
MODIFICATIONS; INSPECTION
The Franchisee may not alter, remove, change, modify, or redesign the Signs
unless approved by E & C in writing. E & C will have the unequivocal and
unilateral right to redesign the plans and specifications for the Signs during
the term of this Agreement without the approval or consent of the Franchisee.
Within thirty (30) days after receipt of written notice from E & C, the
Franchisee must, at its expense, either modify or replace the Signs so that the
Signs displayed at the Franchised Location will comply with the redesigned plans
and specifications as issued by E & C. The Franchisee will not be required to
modify or replace the Signs more than once every five (5) years.
TELECOMMUNICATION AND COMPUTER EQUIPMENT
TELECOMMUNICATION EQUIPMENT
The Franchisee will, at its sole expense, obtain and maintain at all times
during the term of this Agreement, the telephone answering equipment, electronic
telephone facsimile ("fax") equipment, and such other telecommunications
equipment as may from time to time be required by E & C for use in the operation
of the Franchisee's Alamo Grill-TM- Restaurant business. At all times during the
term of this Agreement, all telecommunication and fax equipment must be in
compliance with the then-current standards and specifications established by E &
C, and must be in operation to send and receive information at such times as may
be required by E & C.
SATELLITE AND CABLE TELEVISION
The Franchisee will, at its sole expense, obtain, maintain and provide for
viewing by the customers in the Franchisee's Restaurant, those cable and
satellite television stations, networks and/or systems as may be specified in
writing from time to time by E & C. The Franchisee will, at its sole expense,
obtain and maintain all services and equipment necessary to
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receive and display such cable and satellite television stations in
accordance with the Standard Operations Manual.
COMPUTER HARDWARE
The Franchisee will, at its sole expense, purchase the computer hardware and
peripherals, including printers, monitors, modems and networking equipment (the
"Computer Equipment") that will serve as, or integrate with, the Franchisee's
point-of-sale cash register. All Computer Equipment must meet the standards and
specifications established by E & C and must be compatible with the software
described in Article 13.4. The Franchisee will update the Computer Equipment as
may from time to time be required by E & C. The Franchisee will purchase a
maintenance agreement for on-site maintenance of the Franchisee's point-of-sale
cash register.
SOFTWARE
The Franchisee will purchase the computer software and operating system
specified by E & C, including software for accounting and cost control, which
meets the specifications described in the Standard Operations Manual. The
Franchisee will, from time to time, update the computer software to meet the
then-current standards and specifications issued by E & C.
ACCESS TO COMPUTER DATA
E & C will, at all times during the term of this Agreement, have the right to
directly access all sales, financial, marketing, management and other business
information and all other data maintained and stored by the Franchisee in its
computer databases ("Data and Information"). The Franchisee will, at its
expense, configure its computer and maintain the communications software and
hardware necessary to permit E & C to access the Data and Information by modem
and telephone lines and to upload and download the Data and Information and
other business information from and to the Franchisee's computers, computer data
bases and software programs.
INTERNET PROVIDER
The Franchisee will, at all times during the term of this Agreement, at the
Franchisee's expense, have access to the Internet through the Microsoft Network,
America Online, Prodigy, CompuServe or other Internet access provider designated
or approved by E & C.
E-MAIL ADDRESS
The Franchisee will, at all times during the term of this Agreement, maintain an
e-mail address on the Internet. The Franchisee's e-mail address will be provided
to E & C and will be used as a method for the Franchisee and E & C to
communicate with each other and to transmit documents and other information. The
Franchisee will not use the words "Alamo Grill-TM-" as any part of its e-mail
address or its domain name if a Home Page is
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maintained by the Franchisee on the Internet. The Franchisee will review its
e-mail at least once a day and will respond to all e-mails within twenty-four
(24) hours, except for weekend e-mails, which will be answered every Monday.
INSURANCE
GENERAL LIABILITY INSURANCE
The Franchisee will procure and maintain in full force and effect, at its sole
cost and expense, a general liability insurance policy with coverage of at least
one million dollars ($1,000,000) per occurrence insuring the Franchisee, E & C
and their respective officers, directors, agents and employees from and against
any and all loss, liability, claim or expense of any kind whatsoever, including
bodily injury, personal injury, food poisoning or other sickness, death,
property damage, products liability and all other occurrences resulting from the
condition, operation, use, business or occupancy of the Franchisee's Restaurant
and the Franchised Location, including the surrounding premises or area, the
parking area and the sidewalks of the Franchised Location.
LIQUOR LIABILITY INSURANCE
The Franchisee will procure and maintain in full force and effect, at its sole
cost and expense, liquor liability insurance with coverage of at least two
million dollars ($2,000,000) per occurrence insuring the Franchisee, E & C and
their respective officers, directors, agents and employees from any and all
loss, liability, claim or expense of any kind whatsoever, including bodily
injury, personal injury, death, property damage and all other occurrences
resulting from the sale of liquor by the Franchisee or any of the Franchisee's
employees in connection with the Franchisee's Restaurant.
AUTOMOBILE LIABILITY INSURANCE
The Franchisee will procure and maintain in full force and effect, at its sole
cost and expense, automobile liability insurance with coverage of at least one
million dollars ($1,000,000) per occurrence insuring the Franchisee, E & C and
their respective officers, directors, agents and employees from any and all
loss, liability, claim or expense of any kind whatsoever resulting from the use,
operation or maintenance of all automobiles or vehicles owned by the Franchisee
or used by the Franchisee or any of the Franchisee's employees (including
automobiles owned or leased by any employee of the Franchisee) in connection
with the Franchisee's Restaurant.
PROPERTY INSURANCE
The Franchisee will procure and maintain in full force and effect, at its sole
cost and expense, "all risks" property insurance coverage, which will include
fire and extended
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
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coverage, for the inventory, machinery, equipment, fixtures and furnishings
owned or leased by the Franchisee and used by the Franchisee at the
Franchised Location. The Franchisee's property insurance policy (including
fire and extended coverage) must have coverage limits equal to at least
"replacement" cost.
BUILDING INSURANCE
If the Franchisee, or any of the Franchisee's Owners, owns, either directly or
indirectly, the building or the business premises at the Franchised Location,
then the Franchisee will insure the building or the business premises for and
against all risk, loss and damages in an amount equal to at least "replacement"
cost. If the Franchised Location is either partially or completely destroyed by
fire or any other catastrophe, then the Franchisee will use the insurance
proceeds to repair or reconstruct the Franchised Location and recommence
business as soon as reasonably possible.
UMBRELLA LIABILITY
The Franchisee will, at its sole cost and expense, purchase and maintain
umbrella liability insurance in the amount of one million dollars ($1,000,000)
that will provide liability insurance coverage for any liability incurred by the
Franchisee in excess of the primary general liability, liquor liability,
automobile liability and other liability insurance coverage carried by the
Franchisee.
INSURANCE REQUIRED BY LAW
The Franchisee will, at its sole cost and expense, procure and maintain all
other insurance required by state or federal law, including workers'
compensation insurance for its employees.
INSURANCE COMPANIES; EVIDENCE OF COVERAGE
All insurance companies providing coverage to the Franchisee must be acceptable
to and approved by E & C, and must be licensed in the state where coverage is
provided. The Franchisee will provide E & C with certificates of insurance
evidencing the insurance coverage required of the Franchisee pursuant to this
Article no later than the date the Franchisee opens for business, and the
Franchisee will immediately provide, upon expiration, change or cancellation, a
new certificate of insurance to E & C.
DEFENSE OF CLAIMS
All liability insurance policies procured and maintained by the Franchisee in
connection with the Franchisee's Restaurant will require the insurance company
to provide and pay for attorneys to defend any legal actions, lawsuits or claims
brought against the Franchisee, E & C, and their respective officers, directors,
agents and employees.
RIGHTS OF E & C
All insurance policies procured and maintained by the Franchisee pursuant to
this Article will name E & C as an additional
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
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insured, will contain endorsements by the insurance companies waiving all
rights of subrogation against E & C, and will stipulate that E & C will
receive copies of all notices of cancellation, nonrenewal, or coverage
reduction or elimination at least thirty (30) days prior to the effective
date of such cancellation, nonrenewal or coverage change.
LICENSING OF MARKS AND RESTAURANT SYSTEM
RIGHT TO LICENSE MARKS
E & C warrants that, except as otherwise provided for herein, it has the right
to grant the Franchise and to license the Marks and the Restaurant System to the
Franchisee. Any and all improvements made by the Franchisee to the Marks or the
Restaurant System will be the sole and absolute property of E & C, which will
have the exclusive right to register and protect all such improvements in its
name in accordance with applicable law. The Franchisee's right to use and
identify with the Marks and the Restaurant System will exist concurrently with
the term of this Agreement and such use by the Franchisee will inure exclusively
to the benefit of E & C.
CONDITIONS TO LICENSE OF MARKS
E & C hereby grants to the Franchisee the nonexclusive personal right to use the
Marks and the Restaurant System in accordance with the provisions of this
Agreement. The Franchisee's nonexclusive personal right to use "Alamo Grill-TM-"
as the name of the Franchisee's Restaurant and its right to use the Marks and
the Restaurant System applies only to the Franchisee's Restaurant at the
Franchised Location and such rights will exist only so long as the Franchisee
fully performs and complies with all of the conditions, terms and covenants of
this Agreement. "Nonexclusive," for the purposes of this Article, will mean that
E & C has or will grant franchises to other franchisees authorizing such
franchisees to operate Alamo Grill-TM- Restaurants in conformity with the
Restaurant System using the name "Alamo Grill-TM-" and the other Marks, and that
E & C, its affiliates and/or subsidiaries havE operated and will operate Alamo
Grill-TM- Restaurants.
FRANCHISEE'S USE OF MARKS
The Franchisee will only use the Marks designated by E & C and only in the
manner authorized and permitted by E & C. The Franchisee's right to use the
Marks is limited to the uses set forth in this Agreement and any unauthorized
use will constitute an infringement of the rights of E & C under this Agreement
and under the Xxxxxx Act (15 U.S.C. Section 1051, ET SEQ.). The Franchisee will
not have or acquire any rights in any of the Marks or thE Restaurant System
other than the right of use as provided herein. The Franchisee will have the
right to use the Marks and the
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
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Restaurant System only in the manner prescribed, directed and approved by E &
C in writing and will not have the right to use the Marks in connection with
the sale of any products or services other than those prescribed or approved
by E & C for sale by the Franchisee. If, in the judgment of E & C, the acts
of the Franchisee infringe upon or demean the goodwill, uniformity, quality
or business standing associated with the Marks or the Restaurant System, then
the Franchisee will, upon written notice from E & C, immediately modify its
use of the Marks or the Restaurant System in the manner prescribed by E & C
in writing.
ADVERSE CLAIMS TO MARKS
If there are any claims by any third party that its rights to any or all of the
Marks are superior to those of E & C and if the attorneys for E & C are of the
opinion that such claim by a third party is legally meritorious, or if there is
an adjudication by a court of competent jurisdiction that any party's rights to
the Marks are superior to those of E & C, then upon receiving written notice
from E & C, the Franchisee will, at its sole expense, immediately adopt and use
the changes and amendments to the Marks that are specified by E & C. If so
specified, the Franchisee will immediately cease using the Marks specified by E
& C, and will, as soon as reasonably possible, commence using the new
trademarks, trade names, service marks, logos, designs and commercial symbols
designated by E & C in writing at the Franchised Location, and in connection
with all advertising, marketing and promotion of the Franchisee's Restaurant.
The Franchisee will not make any changes or amendments whatsoever to the Marks
or the Restaurant System unless specified or approved in advance by E & C in
writing.
DEFENSE OR ENFORCEMENT OF RIGHTS TO MARKS
The Franchisee will have no right to and will not defend or enforce any rights
associated with the Marks or the Restaurant System in any court or other
proceedings for or against imitation, infringement, prior use or for any other
claim or allegation. The Franchisee will give E & C immediate written notice of
any and all claims or complaints made against or associated with the Marks and
the Restaurant System and will, without compensation for its time and at its
expense, cooperate in all respects with E & C in any lawsuits or other
proceedings involving the Marks and the Restaurant System. E & C will have the
sole and absolute right to determine whether it will commence or defend any
litigation involving the Marks and/or the Restaurant System, and the cost and
expense of all litigation incurred by E & C, including attorneys' fees,
specifically relating to the Marks or the Restaurant System will be paid by E &
C.
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
TENDER OF DEFENSE
If the Franchisee is named as a defendant or party in any action involving the
Marks or the Restaurant System and if the Franchisee is named as a defendant or
party solely because the plaintiff or claimant is alleging that the Franchisee
does not have the right to use the Marks or the Restaurant System licensed by E
& C to the Franchisee at the Franchised Location pursuant to this Agreement,
then the Franchisee will have the right to tender the defense of the action to E
& C and E & C will, at its expense, defend the Franchisee in the action provided
that the Franchisee has tendered defense of the action to E & C within seven (7)
days after receiving service of the pleadings or the Summons and Complaint
relating to the action. E & C will indemnify and hold the Franchisee harmless
from any damages assessed against the Franchisee in any actions resulting solely
from the Franchisee's proper and authorized use of the Marks and the Restaurant
System at the Franchised Location if the Franchisee has timely tendered defense
of the action to E & C.
FRANCHISEE'S RIGHT TO PARTICIPATE IN LITIGATION
The Franchisee may, at its expense, retain an attorney to represent it
individually in all litigation and court proceedings involving the Marks or the
Restaurant System, and may do so with respect to matters involving only the
Franchisee (i.e., not involving E & C or its interests); however, E & C and its
attorneys will control and conduct all litigation involving the Marks or the
Restaurant System and the rights of E & C. Except as expressly provided for
herein, E & C will have no liability to the Franchisee for any costs that the
Franchisee may incur in any litigation involving the Marks or the Restaurant
System, and the Franchisee will pay for all costs, including attorneys' fees,
that it may incur in any litigation or proceeding arising as a result of matters
referred to under this Article, unless it tenders the defense to E & C in a
timely manner pursuant to and in accordance with Article 15.6.
TRAINING PROGRAM; OPENING ASSISTANCE
TRAINING
E & C will provide a training program for the Franchisee (or the Franchisee's
Operating Partner), the Franchisee's General Manager and the Franchisee's Chef
at an approved training site designated by E & C, to educate, familiarize and
acquaint them with the Restaurant System and the operations of the Alamo
Grill-TM- Restaurant. The Alamo Grill training program will include on-the-job
instruction on basic business procedures, equipment operation and maintenance,
hiring and training of employees, scheduling, advertising and promotion,
purchasing procedures, food preparation, food safety, food presentation, food
quality,
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food portions, liquor service, food and beverage inventory and cost control,
customer service, janitorial service, general maintenance and other topics
selected by E & C. The Franchisee (or the Franchisee's Operating Partner),
the Franchisee's General Manager and the Franchisee's Chef must successfully
complete the Alamo Grill training program and be certified in writing by E &
C prior to commencing the business operations of the Franchisee's Restaurant.
The training program will be scheduled by E & C in its sole discretion and
will be for a minimum of five (5) consecutive days for the Franchisee (or the
Franchisee's Operating Partner), and for a minimum of thirty (30) consecutive
days for the Franchisee's General Manager and for the Franchisee's Chef. The
Franchisee (or the Franchisee's Operating Partner), the Franchisee's General
Manager and the Franchisee's Chef must begin training within ninety (90) days
after the date of this Agreement, unless the parties agree in writing to a
different date due to conflicts with the construction or opening schedule for
the Restaurant. If the Franchisee (or the Franchisee's Operating Partner),
the Franchisee's General Manager or the Franchisee's Chef do not successfully
complete the required training program within one hundred twenty (120) days
after the date of this Agreement, then such person(s) will not be permitted
or authorized to participate in the operations of the Franchisee's
Restaurant, and E & C will have the right to terminate this Agreement
pursuant to Article 4.2.
CHANGES IN PERSONNEL
The Franchisee must at all times employ General Managers and Chefs who have
successfully completed the prescribed training program and, consequently, have
been certified in writing by E & C to participate in the operation of the
Franchisee's Alamo Grill-TM- Restaurant. The Franchisee will immediately notify
E & C in writing of any personnel changes in the positions of General Manager or
Chef of the Franchisee's Restaurant. If the Franchisee hires a new General
Manager or a new Chef who has not successfully completed the required Alamo
Grill training program, then that person must begin the training program within
thirty (30) days after the date of hire by the Franchisee, and must attend and
successfully complete the training program. If, in the judgment of E & C, the
new General Manager or the new Chef does not successfully complete the required
Alamo Grill training program, then the Franchisee will not permit that person to
continue to participate in the operation of the Franchisee's Restaurant.
INITIAL TRAINING OF NEW PERSONNEL
The initial training program for new General Managers and new Chefs, as required
by Article 16.2 of this Agreement, will be conducted by E & C either at the
Franchised Location or at
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another location designated by E & C at the sole discretion of the E & C. If
E & C provides the initial training program for a new General Manager or a
new Chef at the Franchised Location, then the Franchisee will pay E & C the
then-current per day on-site training fee and reimburse E & C for all
expenses it incurs in connection with providing the training at the
Franchised Location, including travel, lodging, food, and automobile rental
costs. If the initial training program of new personnel is provided by E & C
at another site designated by E & C other than the Franchised Location, then
there will be no per day training fee and the Franchisee will not be required
to reimburse E & C for its expenses.
PAYMENT OF SALARIES AND EXPENSES
The Franchisee will pay the salaries, fringe benefits, payroll taxes,
unemployment compensation, workers' compensation insurance, lodging, food,
automobile rental, travel costs and all other expenses for all persons who
attend any type of training program on behalf of the Franchisee.
OPENING ASSISTANCE
After the Franchisee (or the Franchisee's Operating Partner), the Franchisee's
General Manager and the Franchisee's Chef have successfully completed the Alamo
Grill training program and have been certified, E & C will arrange for a
training coordinator, a host/hostess trainer, a barkeeping trainer, four (4)
kitchen staff trainers, and five (5) service staff trainers to be at the
Franchised Location for a period of not less than fourteen (14) consecutive days
to provide opening assistance to the Franchisee. The opening assistance will
include implementing internal controls, assistance with training employees, and
implementing the Franchisee's initial business operations. The Franchisee will
pay E & C an Opening Assistance Fee of twenty thousand dollars ($20,000) within
five (5) days after the date the Franchisee opens its Restaurant for business.
The Franchisee will accept and fully cooperate with the opening assistance
provided by E & C, and will not open and commence initial business operations
until E & C has given the Franchisee written approval to open the Franchisee's
Restaurant.
ADVISORY ASSISTANCE
If, after the opening of the Franchisee's Restaurant, E & C provides any
advisory management, operations or other assistance to the Franchisee at the
Franchised Location, then within five (5) days after receipt of an invoice from
E & C specifying the amount owed, the Franchisee will pay E & C the then-current
per diem fees charged by E & C and reimburse E & C for the expenses E & C
incurred in connection with providing the advisory assistance to the Franchisee
at the Franchised Location, including travel costs, lodging, food and automobile
rental
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costs.
HIRING AND TRAINING OF EMPLOYEES BY FRANCHISEE
The Franchisee will hire all employees of the Restaurant, will be exclusively
responsible for the terms of their employment and compensation, and will
implement a training program for employees of the Restaurant in compliance with
the Standard Operations Manual. The Franchisee will at all times maintain a
staff of trained employees sufficient to efficiently operate the Restaurant in
compliance with E & C's standards.
ASSIGNMENT
ASSIGNMENT BY E & C
This Agreement may be unilaterally assigned by E & C to a person or entity
without the approval of the Franchisee and will inure to the benefit of the
successors and assigns of E & C. E & C will provide the Franchisee with written
notice of any such assignment, and the assignee will be required to fully
perform all obligations of E & C under this Agreement.
ASSIGNMENT BY FRANCHISEE TO OWNED OR CONTROLLED ENTITY
If the Franchisee is an individual or a partnership, this Agreement may be
transferred by the Franchisee to a corporation or limited liability company that
is owned or controlled by the Franchisee without paying any transfer fee,
provided that: (a) the Franchisee and the shareholders who own the voting
capital stock of the assignee corporation or the members who own the membership
interests of the assignee limited liability company sign or have signed a
personal guaranty in the form attached to this Agreement; (b) the Franchisee
furnishes prior written proof to E & C substantiating that the assignee
corporation or limited liability company will be financially able to perform all
of the terms and conditions of this Agreement; and (c) none of the shareholders
or members operate, franchise, develop, manage or control any restaurant concept
that is in any way similar to or competitive with the Franchisee's Alamo
Grill-TM- Restaurant. The Franchisee will give E & C fifteen (15) days prior
written notice of the assignment of this Agreement to a corporation or limited
liability company owned or controlled by the Franchisee; however, the assignment
of this Agreement will not be valid or effective until E & C has received the
documents which its attorneys deem reasonably necessary to properly and legally
document the assignment of this Agreement to the corporation or limited
liability company as provided herein.
ASSIGNMENT BY INDIVIDUAL FRANCHISEE IN EVENT OF DEATH OR PERMANENT DISABILITY
If the Franchisee is an individual, then in the event of the death or permanent
disability of the Franchisee, this Agreement may be assigned, transferred or
bequeathed by the Franchisee to
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any designated person or beneficiary without the payment of any transfer fee.
However, the assignment of this Agreement to the transferee, assignee or
beneficiary of the Franchisee will be subject to the applicable provisions of
Article 17.6, and will not be valid or effective until E & C has received the
properly executed legal documents which its attorneys deem necessary to
properly and legally document the transfer, assignment or bequest of this
Agreement. The transferee, assignee or beneficiary must agree to be
unconditionally bound by the terms and conditions of this Agreement and to
personally guarantee the performance of the Franchisee's obligations under
this Agreement. Furthermore, the transferee, assignee or beneficiary must
complete the initial training program as set forth in Article 16.1 of this
Agreement. The training will be conducted by E & C at a location designated
by E & C. There will be no charge to the transferee, assignee or beneficiary
for the initial training program, but that person's salary and expenses will
be paid in accordance with Article 16.4 of this Agreement.
SALE OF OWNERSHIP INTERESTS TO PUBLIC
If the Franchisee is a corporation or limited liability company and intends to
sell any Ownership Interests to the public under any foreign, federal or state
securities laws, then the Franchisee will provide E & C with written notice of
the proposed public offering and with a copy of the proposed placement
memorandum, offering circular or prospectus for its review at least twenty (20)
days prior to the time that any such document is filed with any foreign or state
securities commission or the Securities and Exchange Commission. The
Franchisee's Owner(s), prior to the public offering will, at all times, retain
ownership of at least a fifty-one percent (51 %) of the Ownership Interests of
the Franchisee. E & C will have the absolute right to attend all "due diligence"
meetings held in preparation for the offer to sell Ownership Interests to the
public, and the Franchisee will give E & C at least five (5) business days prior
written notice of such meetings. The Franchisee will pay E & C twenty thousand
dollars ($20,000) for the legal, accounting and related due diligence costs
incurred by E & C in connection with any public offering. This amount will be
payable in full within thirty (30) days after the date on which the Franchisee
provides written notice of the proposed public offering to E & C and will be
payable even if the Franchisee is unable to complete the public offering. The
Franchisee will not offer any Ownership Interests using or under the name "Alamo
Grill-TM-," or any similar name. The Franchisee will not have the right to sell
any Ownership Interests to the public or to any other person or entity until the
Franchisee has complied in all respects with the applicable provisions of this
Agreement.
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
E & C'S WARRANT
The Franchisee hereby agrees to grant to E & C, effective upon the sale of any
Ownership Interests to the public, a warrant or an option (a "Warrant") to
purchase for a period of five (5) years up to five percent (5%) of the Ownership
Interests purchased in such offering at an exercise price equal to the purchase
price of the Ownership Interests in such offering. The Warrant will contain
customary anti-dilution provisions, incidental or "piggyback" registration
rights and a cashless conversion right whereby E & C will have the right to
require the Franchisee to convert the Warrant into Ownership Interests using the
current market value of the Ownership Interests without payment by E & C of any
cash exercise price at any time prior to its expiration as provided for in this
provision.
ASSIGNMENT BY FRANCHISEE
This Agreement and the rights granted to the Franchisee pursuant to this
Agreement may be sold, assigned or transferred by the Franchisee only with the
prior written approval of E & C. E & C will not unreasonably withhold its
written consent to any sale, assignment or transfer of this Agreement, if the
sale, assignment or transfer does not violate Article 17.9 of this Agreement and
if the Franchisee and/or the transferee franchisee comply with the following
conditions: (a) the Franchisee has provided written notice to E & C of the
proposed sale, assignment or transfer of this Agreement at least ninety (90)
days prior to the transaction; (b) all of the Franchisee's monetary obligations
due to E & C have been paid in full, and the Franchisee is not otherwise in
default under this Agreement; (c) the Franchisee has executed a written
agreement, in a form satisfactory to E & C, in which the Franchisee agrees to
observe all applicable provisions of this Agreement, including the provisions
with obligations and covenants that continue beyond the expiration or
termination of this Agreement, which includes the covenants not to compete
contained in Article 21 of this Agreement; (d) E & C and the Franchisee have
executed a joint and mutual release, in a form satisfactory to E & C, of any and
all claims against E & C or the Franchisee and of any and all claims against
their officers, directors, shareholders, Owners, agents and employees, in their
corporate and individual capacities arising from, in connection with, or as a
result of this Agreement or the Franchisee's purchase of the Franchise
including, without limitation, all claims arising under any federal or state
franchising laws or any other federal, state or local law, rule or ordinance;
provided, however, that E & C and the Franchisee may exclude from the coverage
of the release any prior or concurrent written agreements between them; (e) the
transferee franchisee has demonstrated to the satisfaction of E & C that he, she
or it
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
meets the managerial, financial and business standards required by E & C for
new franchisees, possesses a good business reputation and credit rating, and
possesses the aptitude and ability to operate the Alamo Grill-TM- Restaurant
in an economic and businesslike manner (as may be evidenced by prior related
business experience or otherwise); (f) the transferee franchisee and all
parties having a legal or beneficial interest in the transferee franchisee
including, if applicable, the transferee franchisee's Owners and the Personal
Guarantors, execute the transfer and assignment agreement between E & C, the
Franchisee and the transferee franchisee and such other ancillary agreements
as E & C or its legal counsel may require for the transfer of this Agreement
for the Franchisee's Alamo Grill-TM- Restaurant to the transferee franchisee;
(g) the transferee franchisee has purchased the Franchised Location, acquired
the lease for the Franchised Location or otherwise acquired possession of and
access to the Franchised Location for a term consistent with the remaining
term of this Agreement; (h) the transferee franchisee has purchased or
otherwise acquired a valid liquor license and a valid food service license
for the Alamo Grill-TM-Restaurant at the Franchised Location; and (i) the
transferee franchisee has successfully completed the initial training program
as set forth in Article 16.1 of this Agreement.
ACKNOWLEDGMENT OF RESTRICTIONS
The Franchisee acknowledges and agrees that the restrictions on transfer imposed
herein are reasonable and necessary to protect the Restaurant System and the
Marks, as well as the reputation and image of E & C, and are for the protection
of E & C, the Franchisee and all other franchisees who own and operate Alamo
Grill-TM- Restaurants. Any assignment or transfer permitted by this Article will
not be effective until E & C receives a completely executed copy of all transfer
documents and E & C consents to the transfer in writing. Any attempted
assignment or transfer made without complying with the requirements of this
Article will be void.
TRANSFER FEE
If this Agreement is assigned, transferred or bequeathed to another person or
entity, or if the Franchisee's Owner(s) transfers in the aggregate controlling
interest in the Franchisee to a third party, then except as provided for in
Article 17.2 or Article 17.3, the Franchisee will pay E & C on or before the
date of transfer a transfer fee of five thousand dollars ($5,000) to cover the
costs incurred by E & C in connection with the transfer, including attorneys'
fees, accountants' fees, out-of-pocket expenses, long distance telephone calls,
administrative costs and the time of its employees and officers. The transfer
fee also covers the cost to E & C to provide the initial training
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
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program to the transferee franchisee in a location designated by E & C.
However, the transfer fee does not cover the salary of or expenses incurred
by the transferee franchisee in connection with attending the initial
training program, and salary and expenses of that person will be paid in
accordance with Article 16.5 of this Agreement.
TRANSFER TO COMPETITOR PROHIBITED
The Franchisee and the Franchisee's Owners will not sell, assign or transfer
this Agreement or their Ownership Interests in the Franchisee or in the
Franchise to any person, partnership, corporation or entity that owns, operates,
franchises, develops, consults with, manages, is involved in, or controls any
restaurant business that is in any way competitive with an Alamo Grill-TM-
Restaurant. If E & C refuses to permit a transfer of this Agreement under this
Article, then the Franchisee's and the Franchisee's Owners only remedy will be
to have an arbitrator determine whether the proposed transferee is a competitor
of E & C.
TERMINATION RIGHTS OF E & C
CONDITIONS OF BREACH
In addition to its other rights of termination contained in this Agreement, E &
C will have the right to terminate this Agreement if: (a) the Franchisee fails
to open and commence operations of its Alamo Grill-TM- Restaurant within twelve
(12) months after the date of this Agreement or when the Franchised Location is
ready for the Franchisee's occupancy, whichever is earlier; (b) the Franchisee
violates any material provision, term or condition of this Agreement including,
but not limited to, the failure to timely pay the Initial Fee, the Opening
Assistance Fee, any Continuing Fees, or any other monetary obligations or fees
due pursuant to this Agreement; (c) the Franchisee or any of its directors,
officers or majority Owners are convicted of, or plead guilty to or no contest
to, a charge of violating any law relating to the Franchisee's Alamo Grill-TM-
Restaurant, or any felony; (d) the Franchisee fails to timely pay any of its
obligations or liabilities due and owing to E & C, suppliers, banks, purveyors,
other creditors or to any federal, state or municipal government (including, if
applicable, federal and state income, sales, property, withholding and
unemployment taxes); (e) the Franchisee is determined to be insolvent within the
meaning of applicable state or federal law, any involuntary petition for
bankruptcy is filed against the Franchisee, or the Franchisee files for
bankruptcy or is adjudicated a bankrupt under applicable state or federal law;
(f) the Franchisee makes an assignment for the benefit of creditors or enters
into any similar arrangement for the disposition of its assets for the
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
benefit of creditors; (g) any check issued by the Franchisee is dishonored
because of insufficient funds (except where the check is dishonored because
of an error in bookkeeping or accounting) or closed accounts; (h) the
Franchisee voluntarily or otherwise abandons the franchised Restaurant; (i)
the Franchisee is involved in any act or conduct which materially impairs the
goodwill associated with the name "Alamo Grill-TM-" or any other Marks or the
Restaurant System; (j) the lease for the Franchised Location is terminated or
canceled for nonpayment of rent or other legal reasons, or the Franchisee
otherwise loses possession of all or a significant portion of the Franchised
Location; (k) the Franchisee's food service license or liquor license for the
Franchised Location is terminated or canceled for any reason, or the
Franchisee otherwise loses the food service license or liquor license for its
Alamo Grill-TM- Restaurant; (l) the Franchisee fails to timely file any
federal or state income or sales tax return or fails to timely pay any
federal or state income or sales taxes, or (m) the Franchisee fails or
refuses to provide the documents, records and other materials requested by E
& C to substantiate the Monthly Reports and Financial Statements pursuant to
Article 7.3 or to produce and permit E & C to audit the Franchisee's
Financial Records in accordance with Article 7.5 of this Agreement.
NOTICE OF BREACH
Except as provided in Article 4.2, Article 18.5 and Article 18.6 of this
Agreement, E & C will not have the right to terminate this Agreement until: (a)
written notice setting forth the alleged breach in detail has been delivered to
the Franchisee by E & C; and (b) after receiving the written notice, the
Franchisee fails to correct the alleged breach within the period of time
specified by applicable law. If applicable law does not specify a time period to
correct an alleged breach, then the Franchisee will have thirty (30) days after
receipt of the written notice to correct the alleged breach, except where the
written notice states that the Franchisee is delinquent in the payment of any
Initial Fees, Continuing Fees or other fees payable to E & C pursuant to this
Agreement, in which case the Franchisee will have ten (10) days after receipt of
written notice to correct the breach by making full payment (including
administrative fees and interest as provided for herein) to E & C. If the
Franchisee fails to correct the alleged breach set forth in the written notice
within the applicable period of time, then this Agreement may be terminated by E
& C as provided for in this Agreement. For the purposes of this Agreement, an
alleged breach of this Agreement by the Franchisee will be deemed to be
"corrected" if both E & C and the Franchisee agree in writing that the alleged
breach has been corrected.
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ARBITRATION
If the Franchisee notices arbitration in accordance with Article 23 of this
Agreement within the time period established in Article 18.2 for correcting the
alleged breach, then E & C will not have the right to terminate this Agreement
until the facts of the alleged breach have been submitted to arbitration, the
arbitrator determines that the Franchisee has breached this Agreement and the
Franchisee fails to correct the breach within the applicable time period. If the
arbitrator determines that the Franchisee has violated or breached this
Agreement as alleged by E & C in the written notice given to the Franchisee,
then unless applicable law specifies otherwise, the Franchisee will have thirty
(30) days from the date the arbitrator issues a written determination on the
matter to correct the specified breach or violation of this Agreement, except
where the Franchisee's breach is for failure to pay any fees or other payments
to E & C, in which case the Franchisee will have ten (10) days to make full
payment, including all interest and administrative fees, to E & C. If the
Franchisee does timely correct the specified breach or violation of this
Agreement, then this Agreement will remain in full force and effect. For the
purpose of this Agreement, any controversy or dispute on the issue of whether
the Franchisee has timely corrected the specified breach or violation of this
Agreement will also be subject to arbitration as provided for herein. The time
limitations set forth in this Article within which the Franchisee may demand
arbitration of a dispute or controversy relating to the right of E & C to
terminate this Agreement for an alleged breach are mandatory. If the Franchisee
fails to comply with the time limitations set forth in this Article, then E & C
may terminate this Agreement as provided for herein.
NOTICE OF TERMINATION
Except as provided in Article 18.5 and Article 18.6, if E & C has complied with
the provisions of Article 18.2 and the Franchisee has not corrected the alleged
breach set forth in the written notice within the time period specified in this
Agreement, then E & C will have the absolute right to terminate this Agreement
by giving the Franchisee written notice stating to the Franchisee that this
Agreement is terminated and in that event the effective date of termination of
this Agreement will be the day the written notice of termination is received by
the Franchisee.
IMMEDIATE TERMINATION RIGHTS OF E & C
E & C will have the absolute right, unless precluded by applicable law, to
immediately terminate this Agreement if: (a) the Franchisee or any of its
directors, officers or majority Owners are convicted of, or plead guilty to or
no contest to a charge of violating any law relating to the Franchisee's Alamo
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Grill-TM- Restaurant, or any felony; (b) the Franchisee is deemed insolvent
within the meaning of applicable state or federal law, any involuntary
petition for bankruptcy is filed against the Franchisee, or the Franchisee
files for bankruptcy or is adjudicated a bankrupt under applicable state or
federal law; (c) the Franchisee makes an assignment for the benefit of
creditors or enters into any similar arrangement for the disposition of its
assets for the benefit of creditors; (d) the Franchisee voluntarily or
otherwise abandons the Restaurant; (e) the Franchisee fails or refuses to
provide the documents, records and other materials requested by E & C to
substantiate the Monthly Reports and Financial Statements pursuant to Article
7.3 or to produce and permit E & C to audit the Franchisee's Financial
Records in accordance with Article 7.5 of this Agreement; (f) the Franchisee
is involved in any act or conduct which materially impairs the goodwill
associated with the Marks of E & C or with the Restaurant System and the
Franchisee fails to correct the breach within twenty-four (24) hours after
receipt of written notice from E & C of the breach; or (g) the Franchisee
violates any provision, term or condition of this Agreement three (3) or more
times during a twelve (12) month period, without regard to whether the
violations were of a similar or different nature or whether the violations
were corrected within the prescribed cure period after receipt of written
notice of the violations.
NOTICE OF IMMEDIATE TERMINATION
Except as set forth in Article 18.5(f), if this Agreement is terminated by E & C
pursuant to Article 18.5 above, then E & C will give the Franchisee written
notice by personal service or prepaid registered or certified mail that this
Agreement is terminated and in that event the effective date of termination of
this Agreement will be the day the written notice of termination is received by
the Franchisee. If this Agreement is terminated by E & C pursuant to Article
18.5(f), then this Agreement will terminate on the first minute of the
twenty-fifth hour after receipt of the written notice of termination if the
Franchisee fails to correct the alleged breach within twenty-four (24) hours
after receiving the written notice of termination.
OTHER REMEDIES
Nothing in this Article will preclude E & C from seeking other remedies or
damages under state or federal laws, common law, or under this Agreement against
the Franchisee including, but not limited to, attorneys' fees, punitive damages
and injunctive relief. If this Agreement is terminated by E & C pursuant to this
Article, or if the Franchisee breaches this Agreement by a wrongful termination
or a termination that is not in strict compliance with the terms and conditions
of Article 19 of this Agreement, then E & C will be entitled to all damages from
the
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Franchisee that E & C has sustained and will sustain in the future as a
result of the Franchisee's breach of this Agreement.
FRANCHISEE'S TERMINATION RIGHTS
CONDITIONS OF BREACH
The Franchisee will have the right to terminate this Agreement, as provided
herein, if E & C violates any material provision, term or condition of this
Agreement, or fails to timely pay any material uncontested obligations due and
owing to the Franchisee.
NOTICE OF BREACH
The Franchisee will not have the right to terminate this Agreement or to
commence any action, lawsuit or proceeding against E & C for breach of this
Agreement, injunctive relief, violation of any state, federal or local law
(including alleged violations of franchise laws), violation of common law
(including allegations of fraud and misrepresentation), rescission, general or
punitive damages, or termination, unless and until: (a) written notice setting
forth the alleged breach or violation in detail has been delivered to E & C by
the Franchisee; and (b) E & C fails to correct the alleged breach or violation
within thirty (30) days after receipt of the written notice. If E & C fails to
correct the alleged breach or violation within thirty (30) days after receiving
written notice, then this Agreement may be terminated by the Franchisee as
provided for in this Agreement. For the purposes of this Agreement, an alleged
breach or violation of this Agreement by E & C will be deemed to be "corrected"
if both E & C and the Franchisee agree in writing that the alleged breach or
violation has been corrected.
ARBITRATION
If E & C notices arbitration in accordance with Article 23 of this Agreement
within thirty (30) days after the date E & C receives written notice of any
alleged breach of this Agreement from the Franchisee, then the Franchisee will
not have the right to terminate this Agreement until the facts of the alleged
breach have been submitted to arbitration, the arbitrator determines that E & C
has breached this Agreement and Franchisee fails to timely correct the breach as
set forth in this Agreement. If the arbitrator determines that E & C has
violated or breached this Agreement as alleged by the Franchisee in the written
notice given to E & C, then E & C will have thirty (30) days after the date the
arbitrator issues a written determination on the matter to correct the specified
breach or violation of this Agreement, then this Agreement will remain in full
force and effect. If E & C does timely correct the specified breach or violation
of this Agreement, then this Agreement will remain in full force and effect. If
E & C does not correct the specified breach or violation of this Agreement, then
the Franchisee will have the
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right to terminate this Agreement by giving E & C written notice by personal
service or prepaid registered or certified mail that this Agreement is
terminated and in that event the effective date of termination of this
Agreement will be the day the written notice of termination is received by E
& C. For the purpose of this Agreement, any controversy or dispute on the
issue of whether E & C has timely corrected the specified breach or violation
of this Agreement will also be subject to arbitration as provided for herein.
The time limitation set forth in this Article within which E & C may demand
arbitration of a dispute or controversy relating to the right of the
Franchisee to terminate this Agreement for an alleged breach is mandatory. If
E & C fails to comply with the time limitation set forth in this Article,
then the Franchisee may terminate this Agreement as provided for herein.
WAIVER
The Franchisee must give E & C immediate written notice of any alleged breach or
violation of this Agreement after the Franchisee has knowledge of, believes,
determines, is of the opinion, or becomes aware of facts and circumstances
reasonably indicating that there has been an alleged breach or violation of this
Agreement by E & C. If the Franchisee fails to give written notice to E & C as
provided for herein of any alleged breach or violation of this Agreement within
one (1) year after the date that the Franchisee has knowledge of, believes,
determines, is of the opinion that, or becomes aware of facts and circumstances
reasonably indicating that the Franchisee may have a claim under any state law,
federal law or common law because there has been an alleged breach or violation
by E & C, then the alleged breach or violation by E & C will be deemed to be
condoned, approved and waived by the Franchisee, the alleged breach or violation
by E & C will not be deemed to be a breach or violation of this Agreement by E &
C, and the Franchisee will be barred from commencing any action against E & C
for that specific alleged breach or violation.
INJUNCTIVE RELIEF
Notwithstanding any of the foregoing provisions, if the Franchisee gives E & C
written notice of an alleged breach or violation of this Agreement or of any
federal or state laws that give rise to a claim that the Franchisee has the
right to terminate this Agreement, then E & C will have the absolute right to
immediately commence legal action against the Franchisee to enjoin and prevent
the termination of this Agreement by the Franchisee without giving the
Franchisee any notice and without regard to any waiting period that may be
contained in this Agreement. If E & C commences such legal action against the
Franchisee, then the Franchisee will not have the right to
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terminate this Agreement, unless and until a court of competent jurisdiction
has ruled on the merits that E & C has breached this Agreement in the manner
alleged by the Franchisee, and then only if E & C fails to begin the actions
necessary to correct the breach or violation within sixty (60) days after a
final judgment has been entered against E & C and all time for appeals by E &
C has expired.
FRANCHISEE'S OBLIGATIONS UPON TERMINATION
TERMINATION OF USE OF MARKS; OTHER OBLIGATIONS
If this Agreement is canceled or terminated for any reason or this Agreement
expires, then the Franchisee will: (a) within five (5) days after termination,
pay all Continuing Fees, other fees and other amounts due and owing under this
Agreement or under any other contract, promissory note or other obligation due
and owing by the Franchisee to E & C; (b) immediately return to E & C by first
class prepaid United States mail the Manual, menus, advertising materials and
all other printed materials pertaining to the Restaurant; and (c) comply with
all other applicable provisions of this Agreement. Upon termination or
expiration of this Agreement for any reason, the Franchisee's right to use
"Alamo Grill-TM-" the other Marks and the Restaurant System will terminate
immediately.
ALTERATION OF FRANCHISED LOCATION
If this Agreement expires or is terminated for any reason or if the Franchised
Location ever ceases to be used for the Franchisee's Alamo Grill-TM- Restaurant,
then within thirty (30) days after the date of the expiration or termination of
this Agreement, the Franchisee will, at its expense, alter, modify and change
both the exterior and interior appearance of the building and the Franchised
Location so that it will be clearly distinguished from the standard appearance
of an Alamo Grill-TM- Restaurant. At a minimum, such changes and modifications
to the Franchised Location will include: (a) repainting and, where applicable,
recovering both the exterior and interior walls of the Franchised Location with
totally different colors, including removing any distinctive colors, designs and
paneling from the walls; (b) removing all furniture, fixtures and decor items
associated with an Alamo Grill-TM- Restaurant and replacing them with other
decor items not of the general type and appearance customarily used in Alamo
Grill-TM- Restaurants; (c) removing all exterior and interior Alamo Grill-TM-
signs; and (d) immediately discontinuing use of the approved wall decor items
and window decals, and refraining from using any items which may be confusingly
similar to those used in an Alamo Grill-TM- Restaurant.
CANCELLATION OF TELEPHONE DIRECTORY LISTINGS
Upon termination or expiration of this Agreement, or if E & C
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acquires the Franchisee's Alamo Grill-TM- Restaurant pursuant to this
Agreement, E & C will have the absolute right to notify the telephone company
and all listing agencies of the termination or expiration of the Franchisee's
right to use all telephone numbers and all classified and other directory
listings for the Restaurant and to authorize the telephone company and all
listing agencies to transfer to E & C or its assignee all telephone numbers
and directory listings of the Franchisee's Alamo Grill-TM- Restaurant. The
Franchisee acknowledges and agrees that E & C has the absolute right and
interest in and to all telephone numbers and directory listings associated
with the Marks, and the Franchisee hereby authorizes E & C to direct the
telephone company and all listing agencies to transfer the Franchisee's
telephone numbers and directory listings to E & C or to an assignee of E & C,
if this Agreement expires or is terminated or if E & C acquires the
Franchisee's Alamo Grill-TM- Restaurant. The telephone company and all
listing agencies may accept this Agreement as evidence of the exclusive
rights of E & C to such telephone numbers and directory listings and this
Agreement will constitute the authority from the Franchisee for the telephone
company and listing agency to transfer all such telephone numbers and
directory listings to E & C. This Agreement will constitute a release of the
telephone company and listing agencies by the Franchisee from any and all
claims, actions and damages that the Franchisee may at any time have the
right to allege against them in connection with this Article.
CONTINUATION OF OBLIGATIONS
The indemnities and covenants contained in this Agreement will continue in full
force and effect subsequent to and notwithstanding the expiration or termination
of this Agreement.
FRANCHISEE'S COVENANTS NOT TO COMPETE
CONSIDERATION
The Franchisee, the Owners and the Personal Guarantors acknowledge that the
Franchisee, its officers, executives and employees will receive specialized
training, marketing and advertising plans, business strategies, confidential
recipe, cooking, and food preparation information, and trade secrets from E & C
pertaining to the Restaurant System and the operation of the Alamo Grill-TM-
Restaurant. In consideration for this information, the Franchisee, the Owners
and the Personal Guarantors will comply in all respects with the provisions of
this Article. E & C has advised the Franchisee that this provision is a material
provision of this Agreement, and that E & C will not sell an Alamo Grill-TM-
Restaurant Franchise to any person or entity that owns or intends to own,
operate or be involved in any business that competes directly or indirectly
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with an Alamo Grill-TM- Restaurant; provided however, that E & C may, under
certain circumstances, exclude from the coverage of Article 21.2 and Article
21.3 existing operational restaurant(s) owned and operated by the Franchisee
as of the date of this Agreement, and the Franchisee may, with the written
consent of E & C, continue to own and operate such restaurants during the
term of this Agreement and thereafter.
IN-TERM COVENANT NOT TO COMPETE
The Franchisee, the Owners and the Personal Guarantors will not, during the term
of this Agreement, on their own account or as an employee, agent, consultant,
affiliate, licensee, partner, officer, director, or shareholder of any other
person, firm, entity, partnership or corporation, own, operate, lease,
franchise, conduct, engage in, be connected with, have any interest in, or
assist any person or entity engaged in any restaurant concept that is in any way
similar to or competitive with an Alamo Grill-TM- Restaurant, except with the
prior written consent of E & C.
POST-TERM COVENANT NOT TO COMPETE
The Franchisee, the Owners and the Personal Guarantors will not, for a period of
twelve (12) months after the termination or expiration of this Agreement on
their own account or as an employee, principal, agent, independent contractor,
consultant, affiliate, licensee, partner, officer, director or shareholder of
any other person, firm, entity, partnership or corporation, own, operate, lease,
franchise, conduct, engage in, be connected with, have any interest in or assist
any person or entity engaged in any restaurant concept that is in any way
similar to or competitive with an Alamo Grill-TM- Restaurant and which is
located within ten (10) miles of the Franchised Location or any other Alamo
Grill-TM- Restaurant, or within any exclusive area granted by E & C or any
affiliate of E & C pursuant to a Development Agreement or other territorial
agreement. The Franchisee, the Owners and the Personal Guarantors expressly
agree that the time and geographical limitations set forth in this provision are
reasonable and necessary to protect E & C and its franchisees if this Agreement
expires or is terminated by either party for any reason, and that this covenant
not to compete is necessary to permit E & C the opportunity to resell and/or
develop a new Alamo Grill-TM- Restaurant at or in the area near the Franchised
Location.
INJUNCTIVE RELIEF
The Franchisee, the Owners and the Personal Guarantors agree that the provisions
of this Article are necessary to protect the legitimate business interest of E &
C and its franchisees including, without limitation, preventing the unauthorized
dissemination of marketing, promotional and other confidential information to
competitors of E & C and its franchisees,
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protecting recipes, cooking and food preparation techniques and other trade
secrets, protecting the integrity of the franchise system of E & C,
preventing duplication of the Restaurant System by unauthorized third
parties, and preventing damage to and/or loss of goodwill associated with the
Marks. The Franchisee, the Owners and the Personal Guarantors also agree that
damages alone cannot adequately compensate E & C if there is a violation of
this Article by the Franchisee, the Owners or the Personal Guarantors, and
that injunctive relief against the Franchisee is essential for the protection
of E & C and its franchisees. The Franchisee, the Owners and the Personal
Guarantors agree, therefore, that if E & C alleges that the Franchisee, the
Owners or the Personal Guarantors have breached or violated this Article,
then E & C will have the right to petition a court of competent jurisdiction
for injunctive relief against the Franchisee, the Owners and the Personal
Guarantors, in addition to all other remedies that may be available to E & C.
E & C will not be required to post a bond or other security for any
injunctive proceeding. If E & C is granted ex parte injunctive relief against
the Franchisee, the Owners or the Personal Guarantors, then the Franchisee,
the Owners or the Personal Guarantors will have the right to petition the
court for a hearing on the merits at the earliest time convenient to the
court.
SEVERABILITY
It is the desire and intent of the parties to this Agreement, including the
Owners and the Personal Guarantors, that the provisions of this Article be
enforced to the fullest extent permissible under the laws and public policy
applied in each jurisdiction in which enforcement is sought. Accordingly, if any
part of this Article is adjudicated to be invalid or unenforceable, then this
Article will be deemed to modify or delete that portion thus adjudicated to be
invalid or unenforceable, such modification or deletion to apply only with
respect to the operation of this Article in the particular jurisdiction in which
the adjudication is made. Further, to the extent any provision of this Article
is deemed unenforceable by virtue of its scope or limitation, the parties to
this Agreement, including the Owners and the Personal Guarantors, agree that the
scope and limitation provisions will nevertheless, be enforceable to the fullest
extent permissible under the laws and public policies applied in such
jurisdiction where enforcement is sought.
INDEPENDENT CONTRACTORS; INDEMNIFICATION
INDEPENDENT CONTRACTORS
E & C and the Franchisee are each independent contractors and, as
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a consequence, there is no employer-employee or principal-agent relationship
between E & C and the Franchisee. The Franchisee will not have the right to
and will not make any agreements, representations or warranties in the name
of or on behalf of E & C or represent that their relationship is other than
that of franchisor and franchisee. Neither E & C nor the Franchisee will be
obligated by or have any liability to the other under any agreements or
representations made by the other to any third parties.
INDEMNIFICATION
E & C will not be obligated to any person or entity for any damages arising out
of, from, in connection with, or as a result of the Franchisee's negligence, the
Franchisee's wrongdoing or the operation of the Franchisee's Alamo Grill-TM-
Restaurant. Therefore, the Franchisee will indemnify and hold E & C harmless
against, and will reimburse E & C for, all damages for which E & C is held
liable and for all costs incurred by E & C in the defense of any claim or action
brought against E & C arising from, in connection with, arising out of, or as a
result of the Franchisee's negligence, the Franchisee's wrongdoing or the
operation of the Franchisee's Alamo Grill-TM- Restaurant including, without
limitation, attorneys' fees, investigation expenses, court costs, deposition
expenses, and travel and living expenses. The Franchisee will indemnify E & C,
without limitation, for all claims and damages arising from, out of, in
connection with, or as a result of: (a) any personal injury, property damage,
commercial loss or environmental contamination resulting from any act or
omission of the Franchisee or its employees, agents or representatives; (b) any
failure on the part of the Franchisee to comply with any requirement of any laws
or any governmental authority; (c) any failure of the Franchisee to pay any of
its obligations to any person or entity; (d) any failure of the Franchisee to
comply with any requirement or condition of this Agreement or any other
agreement with E & C; (e) any misfeasance or malfeasance by the Franchisee; and
(f) any tort. E & C will have the right to defend any claim made against it
arising from, as a result of, in connection with or out of the Franchisee's
negligence or the operation of the Franchisee's Alamo Grill-TM- Restaurant.
PAYMENT OF COSTS AND EXPENSES
The Franchisee will indemnify E & C for all costs and expenses incurred by E & C
in enforcing any term, condition or provision of this Agreement or in enjoining
any violation of this Agreement by the Franchisee including, without limitation,
attorneys' fees, expert witness fees, costs of investigation, court costs,
litigation expenses, arbitration fees, costs and expenses, and travel and living
expenses.
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CONTINUATION OF OBLIGATIONS
The indemnification and other obligations contained herein will continue in full
force and effect subsequent to and notwithstanding the expiration or termination
of this Agreement.
ARBITRATION
MEDIATION
E & C and the Franchisee acknowledge that resolving disputes prior to commencing
arbitration hearings or court proceedings is in the best interests of both
parties. Therefore, the Franchisee and E & C will, when practical, attempt to
resolve disputes by non-binding mediation. The parties agree that they will act
in good faith to settle any dispute between them; however, either party will
have the right to decline to mediate the dispute.
DISPUTES SUBJECT TO ARBITRATION
Except as expressly provided to the contrary in Article 23.7 of this Agreement,
all disputes and controversies, including allegations of fraud,
misrepresentation and violation of any state or federal laws or regulations,
arising under, as a result of, or in connection with this Agreement, the
Franchised Location, the Franchisee's Restaurant business or the Personal
Guaranty attached to this Agreement are subject to and will be resolved
exclusively by arbitration conducted in accordance with the Commercial Rules and
Regulations of the American Arbitration Association.
NOTICE OF DISPUTE
The party alleging the dispute must provide the other party with written notice
setting forth the alleged dispute in detail. The party who receives written
notice alleging the dispute will have thirty (30) days after receipt of the
written notice to resolve the dispute specified in the written notice. If the
written notice alleges that the Franchisee is delinquent in the payment of any
fees or other payments payable to E & C, the Franchisee will have ten (10) days
to make full payment (including interest and administrative fees as provided for
herein) to E & C.
DEMAND FOR ARBITRATION
If the dispute alleged by either party has not been corrected, settled or
compromised within the time period provided for in this Agreement, then either
party may demand arbitration by giving the other party written notice. Within
ten (10) days after a written demand for arbitration has been delivered by the
party demanding arbitration, either party will have the right to request the
office of the American Arbitration Association in Minneapolis, Minnesota to
initiate the procedures necessary to appoint an arbitrator. Either party will
have the right to demand that the arbitration hearings be conducted by three (3)
arbitrators. The arbitrator(s) will be appointed as provided
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herein within sixty (60) days after a written demand for arbitration has been
made in accordance with the Rules and Regulation of the American Arbitration
Association.
VENUE AND JURISDICTION
All arbitration hearings will take place exclusively in Hennepin County,
Minnesota or at the general offices of E & C, and will be held no earlier than
ninety (90) days after the arbitrator(s) has (have) been selected. E & C and the
Franchisee, its officers and directors, and the Owners and Personal Guarantors
do hereby agree and submit to personal jurisdiction in the State of Minnesota in
connection with any arbitration hearings hereunder and any suits brought to
enforce the decision of the arbitrator(s), and do hereby waive any rights to
contest venue and jurisdiction in the State of Minnesota and any claims that
venue and jurisdiction are invalid.
POWERS OF ARBITRATOR(S)
The authority of the arbitrator(s) will be limited to making a finding,
judgment, decision and award relating to the interpretation of or adherence to
the written provisions of this Agreement. The Federal Rules of Evidence (the
"Rules") will apply to all arbitration hearings and the introduction of all
evidence, testimony, records, affidavits, documents and memoranda in any
arbitration hearing must comply in all respects with the Rules and legal
precedents interpreting the Rules. Both parties will have the absolute right to
cross-examine any person who has testified against them or in favor of the other
party. The arbitrator(s) will have no authority to add to, delete or modify in
any manner the terms and provisions of this Agreement. All findings, judgments,
decisions and awards of the arbitrator(s) will be limited to the dispute set
forth in the written demand for arbitration, and the arbitrator(s) will have no
authority to decide any other issues. The arbitrator(s) will not have the right
or authority to award punitive damages to either E & C or the Franchisee or
their officers, directors, shareholders, Owners and Personal Guarantors, and E &
C and the Franchisee and their officers, directors, shareholders or Owners, and
the Personal Guarantors expressly waive their rights to plead or seek punitive
damages. All findings, judgments, decisions and awards by the arbitrator(s) will
be in writing, will be made within sixty (60) days after the arbitration
hearings have been completed, and will be final and binding on E & C and the
Franchisee, except as provided for in Article 23.9. The written decision of the
arbitrator(s) will be deemed to be an order, judgment and decree and may be
entered as such in any court of competent jurisdiction by either party thirty
(30) days thereafter, unless any party elects to pursue its rights under Article
23.9.
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
DISPUTES NOT SUBJECT TO ARBITRATION
The following disputes between E & C and the Franchisee will not be subject to
arbitration: (a) any disputes arising between E & C and the Franchisee which are
set forth in Article 24.1; (b) any dispute involving the Marks or which arise
under or as a result of Article 15 of this Agreement; (c) any dispute involving
immediate termination of this Agreement by E & C pursuant to Article 18.5 and
Article 18.6 of this Agreement; and (d) any dispute involving enforcement of the
covenants not to compete contained in Article 21 of this Agreement.
NO COLLATERAL ESTOPPEL OR CLASS ACTIONS
Except as provided by Article 23.9, all arbitration findings, conclusions,
orders and awards made by the arbitrator(s) will be final and binding on E & C
and the Franchisee; however, such arbitration findings, conclusions, orders and
awards may not be used: (a) to collaterally estop either the Franchisee or E & C
from raising any like or similar issue or defense in any subsequent arbitration,
litigation, court hearing or other proceeding involving third parties, including
other franchisees; or (b) by any third party or other franchisee to establish
any fact, action, finding, violation or otherwise used by any third party or
other franchisee as evidence, in any arbitration, litigation, court hearing or
other proceeding involving E & C or the Franchisee. In any arbitration between
them, neither E & C nor the Franchisee may introduce as evidence, or otherwise
use to establish any fact, action, finding or violation, any findings,
conclusions, orders or awards resulting from any prior arbitration, litigation,
court hearing or other proceeding involving the Franchisee and a third party, or
E & C and a third party or other franchisees. No party except E & C, the
Franchisee, and their officers, directors, shareholders or Owners and the
Personal Guarantors will have the right to join in any arbitration proceeding
arising under this Agreement, and therefore, the arbitrator(s) will not be
authorized to permit class actions or to permit any other party to be involved
in any arbitration proceeding brought by either party under this Agreement.
DE NOVO HEARING ON MERITS
If the arbitrator(s) awards either E & C or the Franchisee damages (including
actual damages, costs and attorneys' fees) in excess of one hundred thousand
dollars ($100,000) in any arbitration proceeding commenced pursuant to this
Agreement, then the party who has been held liable by the arbitrator(s) will
have the right to a de novo hearing on the merits by commencing an action in a
court of competent jurisdiction in accordance with the provisions of this
Agreement. If the party held liable by the arbitrator(s) commences a court
action as provided for herein,
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then neither party will have the right to introduce the arbitrator's(s')
decision or findings in any such court action and the arbitrator's(s')
decision and findings will be of no force and effect and will not be final or
binding on either E & C or the Franchisee. If the party who has been held
liable by the arbitrator(s) for over one hundred thousand dollars ($100,000)
in damages fails to commence a court action within thirty (30) days after
receiving the arbitrator's(s') written award, then the arbitrator's(s')
findings, judgments, decisions and awards will be final and binding on E & C,
the Franchisee and all other parties and may be entered as an order decree
and judgment in any court of competent jurisdiction by any party.
CONFIDENTIALITY
All evidence, testimony, records, documents, findings, decisions, judgments and
awards pertaining to any arbitration hearing between E & C and the Franchisee
will be secret and confidential in all respects. E & C and the Franchisee will
not disclose the decision or award of the arbitrator(s) and will not disclose
any evidence, testimony, records, documents, findings, orders, or other matters
from the arbitration hearing to any person or entity except as required by law.
Nothing herein will prevent either party from disclosing or using any
information presented in any arbitration proceeding in any subsequent court
hearing brought pursuant to Article 23.9.
PERFORMANCE DURING ARBITRATION OF DISPUTES
E & C and the Franchisee will fully comply with all of the terms and conditions
of this Agreement and will fully perform their respective obligations under this
Agreement during the entire time of the arbitration process.
ENFORCEMENT
INJUNCTIVE RELIEF
E & C will have the right to petition a court of competent jurisdiction for the
entry of temporary and permanent injunctions and orders of specific performance
enforcing the provisions of this Agreement for any action relating to: (a) the
Franchisee's improper use of the Marks or the Restaurant System; (b) the
obligations of the Franchisee upon termination or expiration of this Agreement;
(c) the sale, transfer or assignment of this Agreement, the Franchisee's
Restaurant or the Ownership Interests of the Franchisee; (d) the Franchisee's
violation of the provisions of this Agreement relating to confidentiality and
the covenants not to compete; and (e) any act or omission by the Franchisee or
the Franchisee's employees that (1) constitutes a violation of any applicable
law, ordinance or regulation, (2) is dishonest or misleading to the guests or
customers of the Franchisee's Restaurant or other Alamo Grill-TM- Restaurants,
(3)
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
constitutes a danger to the employees, public, guests, or customers of the
Franchisee's Restaurant, or (4) may impair the goodwill associated with the
Marks or the Restaurant System.
SEVERABILITY
All provisions of this Agreement are severable and this Agreement will be
interpreted and enforced as if all completely invalid or unenforceable
provisions were not contained herein and partially valid and enforceable
provisions will be enforced to the extent valid and enforceable. If any
applicable law or rule of any jurisdiction requires a greater prior notice of
the termination of this Agreement than is required hereunder or the taking of
some other action not required hereunder, or if under any applicable law or rule
of any jurisdiction, any provision of this Agreement or any specification,
standard or operating procedure prescribed by E & C is invalid or unenforceable
under applicable law, then the prior notice or other action required by such law
or rule will be substituted for the notice requirements hereof, or such invalid
or unenforceable provision, specification, standard or operating procedure will
be modified to the extent required to be valid and enforceable. Such
modifications to this Agreement will be effective only in such jurisdiction.
WAIVER
E & C and the Franchisee may, by written instrument signed by E & C and the
Franchisee, waive any obligation of or restriction upon the other under this
Agreement. Acceptance by E & C of any payment by the Franchisee and the failure,
refusal or neglect of E & C to exercise any right under this Agreement or to
insist upon full compliance by the Franchisee of its obligations hereunder
including, without limitation, any mandatory specification, standard or
operating procedure, will not constitute a waiver by E & C of any provision of
this Agreement. E & C will have the right to waive obligations or restrictions
for other franchisees under their franchise agreements without waiving those
obligations or restrictions for the Franchisee and, except to the extent
provided by law, E & C will have the right to negotiate terms and conditions,
grant concessions and waive obligations for other franchisees of E & C without
granting those same rights to the Franchisee and without incurring any liability
to the Franchisee whatsoever.
PAYMENTS TO E & C
The Franchisee will not, on grounds of the alleged nonperformance by E & C of
any of its obligations under this Agreement, any other contract between E & C
and the Franchisee, or for any other reason, withhold payment of any Continuing
Fees or any other fees or payments due E & C pursuant to this Agreement or
pursuant to any other contract, agreement or obligation to E & C. The Franchisee
will not have the right to "offset" or withhold any
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
liquidated or unliquidated amounts, damages or other funds allegedly due to
the Franchisee by E & C against any Continuing Fees or any other fees or
payments due to E & C under this Agreement.
EFFECT OF WRONGFUL TERMINATION
If either E & C or the Franchisee takes any action to terminate this Agreement
or the Franchisee takes any action to convert its Alamo Grill-TM- Restaurant to
another business, and such actions were taken without first complying with the
terms and conditions of Article 18 or Article 19 of this Agreement, as
applicable, then such actions will not relieve either party of, or release
either party from, any of its obligations under this Agreement, and the terms
and conditions of this Agreement will remain in full force and effect and the
parties will be obligated to fully perform all terms and conditions until such
time as this Agreement expires or is terminated in accordance with the
provisions of this Agreement and applicable law, as determined by arbitration or
a court of competent jurisdiction.
CUMULATIVE RIGHTS
The rights of E & C hereunder are cumulative and no exercise or enforcement by E
& C of any right or remedy hereunder will preclude the exercise or enforcement
by E & C of any other right or remedy hereunder or which E & C is entitled by
law to enforce.
BINDING AGREEMENT
This Agreement is binding upon the parties hereto and their respective
executors, administrators, heirs, assigns and successors in interest.
JOINT AND SEVERAL LIABILITY
If the Franchisee consists of more than one person, their liability under this
Agreement will be deemed to be joint and several.
NO ORAL MODIFICATION
No modification, change, addition, rescission, release, amendment or waiver of
this Agreement and no approval, consent or authorization required by any
provision of this Agreement may be made by any person except by a written
agreement signed by a duly authorized officer or partner of the Franchisee and
the President or a Vice President of E & C.
ENTIRE AGREEMENT
This Agreement supersedes and terminates all prior agreements, either oral or in
writing, between the parties involving the franchise relationship and therefore,
representations, inducements, promises or agreements alleged by either E & C or
the Franchisee that are not contained in this Agreement will not be enforceable.
The Recitals are part of this Agreement, which constitutes the entire agreement
of the parties, and there are no other oral or written understandings or
agreements between E & C
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
and the Franchisee relating to the subject matter of this Agreement. This
Agreement will not supersede any written agreements or contracts that are
signed concurrently with this Agreement.
HEADINGS; TERMS
The headings of the Articles are for convenience only and do not in any way
define, limit or construe the contents of such Articles. The term "Franchisee"
as used herein is applicable to one or more individuals, a corporation, a
limited liability company, a partnership or a limited partnership, as the case
may be, and the singular usage includes the plural, the masculine usage includes
the neuter and the feminine, and the neuter usage includes the masculine and the
feminine. References to "Franchisee," "assignee" and "transferee" which are
applicable to an individual or individuals will mean the Owner or Owners of the
equity or operating control of the Franchisee or any such assignee or transferee
if the Franchisee or such assignee or transferee is a corporation, a limited
liability company, a partnership, or a limited partnership.
VENUE AND JURISDICTION
All litigation, court proceedings, arbitration proceedings, mediation
proceedings, lawsuits, court hearings and other hearings initiated by the
Franchisee or E & C must and will be venued exclusively in Hennepin County,
Minnesota. The Franchisee, each of its officers and directors, and the Owners
and Personal Guarantors do hereby agree and submit to personal jurisdiction in
the State of Minnesota for the purposes of any suit, proceeding or hearing
brought to enforce or construe the terms of this Agreement or to resolve any
dispute or controversy arising under, as a result of, or in connection with this
Agreement, the Franchised Location or the Franchisee's Alamo Grill-TM-
Restaurant, and do hereby agree and stipulate that any such suits, proceedings
and hearings will be exclusively venued and held in Hennepin County, Minnesota.
The Franchisee, each of its officers and directors, and the Owners and Personal
Guarantors waive any rights to contest such venue and jurisdiction and any
claims that such venue and jurisdiction are invalid.
FEDERAL ARBITRATION ACT
Any issue regarding arbitration will be governed by the Federal Arbitration Act
and the federal common law of arbitration.
CONTRACTUAL STATUTE OF LIMITATIONS
Any and all claims and actions arising out of or relating to this Agreement, the
relationship of the Franchisee and E & C, or the Franchisee's operation of the
Restaurant brought by either party against the other, whether in arbitration or
any other proceeding, will be commenced within one (1) year from the occurrence
of the facts giving rise to such claim or action, or
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
such claim or action will be barred.
NOTICES
All notices to E & C will be in writing and will be made by personal service
upon an officer or director of E & C or sent by prepaid registered or certified
mail addressed to Xx. Xxxxxx X'Xxxx, President and Chief Executive Officer of
Elephant & Castle International, Inc., 0000 Xxxxxxx Xxxxx, Xxxx Xxxxxxx,
Xxxxxxxxx 00000 or such other address as E & C may subsequently designate in
writing, with a copy to G. Xxxxxx XxxXxxxxx, XX, Attorney at Law, Xxxxxxx,
Xxxxxxx & Xxxxx, XXX, 0000 AT&T Tower, 000 Xxxxxxxxx Xxxxxx, Xxxxxxxxxxx,
Xxxxxxxxx 00000-0000. All notices to the Franchisee will be made by personal
service upon the Franchisee (or, if applicable, upon an officer or director of
the Franchisee) or sent by prepaid registered or certified mail addressed to the
Franchisee at the Franchised Location, or such other address as the Franchisee
may subsequently designate in writing. For the purposes of this Agreement,
personal service will include service by a recognized overnight delivery service
(such as Federal Express, Airborne Express or UPS) which requires a written
receipt of delivery from the addressee.
DISCLAIMER; ACKNOWLEDGMENTS
DISCLAIMER
E & C does not warrant or guarantee to the Franchisee that the Franchisee will
derive income or profit from the Alamo Grill-TM- Restaurant, or that E & C will
refund all or part of the Initial Fee or the price paid for the Franchisee's
Restaurant or repurchase any of the supplies, products, technology or equipment
supplied or sold by E & C or by an approved or designated supplier if the
Franchisee is in any way unsatisfied with its Restaurant. E & C expressly
disclaims the making of any express or implied representations or warranties
regarding the sales, earnings, income, profits, Gross Sales, business or
financial success, or value of the Franchisee's Restaurant except as contained
in the copy of E & C's Uniform Franchise Offering Circular received by the
Franchisee.
ACKNOWLEDGMENTS BY FRANCHISEE
The Franchisee acknowledges that it has conducted an independent investigation
of the Alamo Grill-TM- Restaurant and recognizes that the business venture
contemplated by this Agreement involves business and economic risks. The
Franchisee acknowledges that the financial, business and economic success of the
Franchisee's Alamo Grill-TM- Restaurant will be primarily dependent upon the
personal efforts of the Franchisee, its management and its employees, and on
economic conditions in the area where the Franchised Location is located and
economic conditions in
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
general. The Franchisee acknowledges that it has not received any estimates,
projections, representations, warranties or guaranties, expressed or implied,
regarding potential sales, Gross Sales, income, profits, earnings, expenses,
financial or business success, value of the Restaurant, or other economic
matters pertaining to the Franchisee's Restaurant from E & C or any of its
agents that were not expressly set forth in the Uniform Franchise Offering
Circular received by the Franchisee from E & C (hereinafter referred to in
this provision as "Representations"). The Franchisee further acknowledges
that if it had received any such Representations, it would not have executed
this Agreement, and that it would have promptly notified the President of E &
C in writing of the person or persons making such Representations, and
provided to E & C a specific written statement detailing the Representations
made.
OTHER FRANCHISEES
The Franchisee acknowledges that other franchisees of E & C have or will be
granted franchises at different times, different locations, under different
economic conditions and in different situations, and further acknowledges that
the economics and terms and conditions of such other franchises may vary
substantially in form and in substance from those contained in this Agreement.
RECEIPT OF AGREEMENT AND UNIFORM FRANCHISE OFFERING CIRCULAR
The Franchisee acknowledges that it received a copy of this Agreement with all
material blanks fully completed at least five (5) business days prior to the
date that this Agreement was executed by the Franchisee. The Franchisee further
acknowledges that it received a copy of E & C's Uniform Franchise Offering
Circular at least ten (10) business days prior to the date on which this
Agreement was executed.
ELEPHANT & CASTLE-Registered Trademark- RESTAURANTS
The Franchisee agrees and acknowledges that the Elephant & Castle-Registered
Trademark- restaurants which are or will be operated or franchised by E & C
("Elephant & Castle-Registered Trademark- Restaurants") are restaurants that
address different markets and thus are not competitive with Alamo Grill-TM-
Restaurants. Further, the Franchisee acknowledges and agrees that, except as
restricted by the terms of the Franchise Agreements with Elephant & Castle
franchisees, E & C will have the absolute right to develop, own, manage,
license and franchise Elephant & Castle-Registered Trademark- Restaurants at
any location in the world, and the Franchisee hereby waives any and all
rights that it may have or allege against E & C or any affiliate of E & C
resulting from the operation of any Elephant & Castle- Registered
Trademark-Restaurants, including those Elephant & Castle- Registered
Trademark-Restaurants that may be in, near or adjacent to the Franchisee's
Exclusive Area or the Franchisee's Alamo Grill-TM- Restaurant.
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
FRANCHISEE'S LEGAL COUNSEL
The Franchisee acknowledges that this Agreement constitutes a legal document
which grants certain rights to and imposes certain obligations upon the
Franchisee. The Franchisee has been advised by E & C to retain an attorney or
advisor prior to the execution of this Agreement to review the Uniform Franchise
Offering Circular, to review this Agreement in detail, to review all legal
documents, to review the economics, operations and other business aspects of the
Alamo Grill-TM- Restaurant, to determine compliance with franchising and other
applicable laws, and to advise the Franchisee on economic risks, liabilities,
obligations and rights under this Agreement and to advise the Franchisee on tax
issues, financing matters, applicable state and federal laws, liquor laws,
health and safety laws, environmental laws, employee issues, insurance,
structure of the Restaurant business, and other business matters. The name of
the Franchisee's attorney or other advisor is:
Attorney's Name:_____________________________________________________________
Name of Firm:________________________________________________________________
Address:_____________________________________________________________________
City, State, Zip Code:__________________
Telephone Number: (___)_________________
Fax Number: (___)_______________________
GOVERNING LAW; STATE MODIFICATIONS
GOVERNING LAW; SEVERABILITY
Except to the extent governed by the United States Trademark Act of 1946 (Xxxxxx
Act, 15 U.S.C. Section 1051, ET SEQ.), this Agreement and the relationship
between E & C and the Franchisee will be governed by the laws of the state in
which the Franchised Location is located. The provisions of this Agreement which
conflict with or are inconsistent with applicable governing law will be
superseded and/or modified by such applicable law only to the extent such
provisions are inconsistent. All other provisions of this Agreement will be
enforceable as originally made and entered into upon the execution of this
Agreement by the Franchisee and E & C.
APPLICABLE STATE LAWS
If applicable, the following states have statutes which may supersede the
provisions of this Agreement in the Franchisee's relationship with E & C in the
areas of termination and renewal of the Franchise: ARKANSAS [Stat. Section
70-807], CALIFORNIA [Bus. & Prof. Code Sections 20000-20043], CONNECTICUT [Gen.
Stat. Section 42-133e, ET SEQ.], DELAWARE [Code Section 2552], HAWAII [Rev.
Stat. Section 482E-1], ILLINOIS [815 ILCS 705/19-20],
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INDIANA [Stat. Section 23-2-2.7], MICHIGAN [Stat. Section 19.854(27)],
MINNESOTA [Stat. Section 80C.14], MISSISSIPPI [Code Section 75-24-51],
MISSOURI [Stat. Section 407.400], NEBRASKA [Rev. Stat. Section 87-401], NEW
JERSEY [Stat. Section 56:10-1], SOUTH DAKOTA [Codified Laws Section 37-5A-51]
, VIRGINIA [Code 13.1-557-574-13.1-564], WASHINGTON [Code Section 19.100.180]
, and WISCONSIN [Stat. Section 135.03]. These and other states may have court
decisions which may supersede the provisions of this Agreement in the
Franchisee's relationship with E & C in the areas of termination and renewal
of the Franchise.
STATE LAW MODIFICATIONS
If the Franchisee's Alamo Grill-TM- Restaurant is located in any one of the
states indicated below in this Article, or if the laws of any such state are
otherwise applicable, then the designated provisions of this Agreement will be
amended and revised as follows:
CALIFORNIA. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
CALIFORNIA, THEN: (1) THE COVENANT NOT TO COMPETE UPON TERMINATION OR EXPIRATION
OF THIS AGREEMENT CONTAINED IN ARTICLE 21.3 MAY BE UNENFORCEABLE, EXCEPT IN
CERTAIN CIRCUMSTANCES PROVIDED BY LAW; AND (2) PROVISIONS OF THIS AGREEMENT
GIVING E & C THE RIGHT TO TERMINATE IN THE EVENT OF THE FRANCHISEE'S BANKRUPTCY
MAY NOT BE ENFORCEABLE UNDER FEDERAL BANKRUPTCY LAWS (11 U.S.C. SEC. 101, ET
SEQ.).
ILLINOIS. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
ILLINOIS, THEN: (1) THE DESIGNATION OF JURISDICTION AND VENUE IN HENNEPIN
COUNTY, MINNESOTA CONTAINED IN ARTICLE 23.5 AND ARTICLE 24.12 OF THIS AGREEMENT
WILL BE INAPPLICABLE; PROVIDED, HOWEVER, THAT SUCH INAPPLICABILITY WILL NOT BE
CONSTRUED TO MEAN THAT SUCH VENUE IS IMPROPER, OR THAT THE FRANCHISEE, ITS
OFFICERS, DIRECTORS, OWNERS AND THE PERSONAL GUARANTORS ARE NOT SUBJECT TO
JURISDICTION IN THE STATE OF MINNESOTA, OR IN ANY OTHER STATE; (2) ARTICLE 24.14
OF THIS AGREEMENT IS HEREBY AMENDED TO PROVIDE THAT SECTION 27 OF THE ILLINOIS
FRANCHISE DISCLOSURE ACT WILL BE APPLICABLE TO ANY ACTION MAINTAINED BY THE
FRANCHISEE TO ENFORCE ANY LIABILITY CREATED BY THE ACT; AND (3) ANY CONDITION,
STIPULATION OR PROVISION OF THIS AGREEMENT REQUIRING THE FRANCHISEE TO WAIVE
COMPLIANCE WITH ANY PROVISION OF THE ILLINOIS FRANCHISE DISCLOSURE ACT IS VOID;
THEREFORE, ANY ACKNOWLEDGMENTS CONTAINED IN ARTICLE 26.2 AND ARTICLE 26.4 OF
THIS AGREEMENT WHICH WAIVE COMPLIANCE WITH THE ILLINOIS FRANCHISE DISCLOSURE ACT
WILL BE DELETED FROM THIS AGREEMENT.
INDIANA. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
INDIANA, THEN: (1) ARTICLE 17.6(d) OF THIS AGREEMENT WILL BE INAPPLICABLE; (2)
THE POST-TERM COVENANT NOT TO COMPETE CONTAINED IN ARTICLE 21.3 OF THIS
AGREEMENT WILL BE ENFORCEABLE ONLY WITHIN THE EXCLUSIVE AREA; (3) ARTICLE 21.4
AND ARTICLE 24.1
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ALAMO GRILL FRANCHISE AGREEMENT 475250.5
OF THIS AGREEMENT WILL BE AMENDED TO PROVIDE THAT A COURT OF COMPETENT
JURISDICTION WILL DETERMINE WHETHER E & C WILL BE ENTITLED TO INJUNCTIVE
RELIEF IN ANY INJUNCTIVE PROCEEDING COMMENCED BY E & C AGAINST THE
FRANCHISEE; (4) THE DESIGNATION OF JURISDICTION AND VENUE IN HENNEPIN COUNTY,
MINNESOTA CONTAINED IN ARTICLE 24.12 OF THIS AGREEMENT IS INAPPLICABLE;
PROVIDED, HOWEVER, THAT SUCH INAPPLICABILITY WILL NOT BE CONSTRUED TO MEAN
THAT SUCH VENUE IS IMPROPER, OR THAT THE FRANCHISEE, ITS OFFICERS, DIRECTORS,
OWNERS AND THE PERSONAL GUARANTORS ARE NOT SUBJECT TO JURISDICTION IN THE
STATE OF MINNESOTA, OR IN ANY OTHER STATE; (5) ARBITRATION HEARINGS WILL BE
CONDUCTED IN INDIANAPOLIS, INDIANA OR AT A MUTUALLY AGREED UPON LOCATION; (6)
THE FRANCHISEE DOES NOT, BY SIGNING THIS AGREEMENT, WAIVE ITS RIGHTS UNDER
INDIANA LAW WITH RESPECT TO ANY REPRESENTATIONS MADE BY E & C PRIOR TO THE
DATE OF THIS AGREEMENT; (7) NOTWITHSTANDING ANY PROVISION OF THIS AGREEMENT
TO THE CONTRARY, THE FRANCHISEE WILL HAVE UP TO TWO YEARS TO BRING AN ACTION
AGAINST E & C FOR A VIOLATION OF THE INDIANA DECEPTIVE FRANCHISE PRACTICES
ACT, AND UP TO THREE YEARS FROM THE DATE OF DISCOVERY TO BRING AN ACTION
AGAINST E & C FOR A VIOLATION OF THE INDIANA FRANCHISE DISCLOSURE LAW; AND
(8) NOTWITHSTANDING ANY PROVISIONS OF THIS AGREEMENT TO THE CONTRARY, A COURT
OF COMPETENT JURISDICTION WILL DETERMINE WHETHER E & C WILL BE REQUIRED TO
POST A BOND OR OTHER SECURITY, AND THE AMOUNT OF SUCH BOND OR OTHER SECURITY,
IN ANY INJUNCTIVE PROCEEDING COMMENCED BY E & C AGAINST THE FRANCHISEE.
MARYLAND. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
MARYLAND, THEN (1) ARTICLE 17.6(d) OF THIS AGREEMENT IS HEREBY AMENDED TO
PROVIDE THAT SUCH RELEASE WILL NOT RELIEVE E & C FROM ANY LIABILITY IMPOSED BY
THE MARYLAND FRANCHISE REGISTRATION AND DISCLOSURE LAW; (2) WITH THE EXCEPTION
OF MEDIATION OR ARBITRATION PROCEEDINGS, THE DESIGNATION OF JURISDICTION AND
VENUE IN HENNEPIN COUNTY, MINNESOTA CONTAINED IN ARTICLE 23.5 AND ARTICLE 24.12
WILL BE INAPPLICABLE; PROVIDED, HOWEVER, THAT SUCH INAPPLICABILITY IN THE STATE
OF MARYLAND WILL NOT BE CONSTRUED TO MEAN THAT VENUE IN HENNEPIN COUNTY,
MINNESOTA IS IMPROPER, OR THAT THE FRANCHISEE, ITS OFFICERS, DIRECTORS, OWNERS
AND PERSONAL GUARANTORS ARE NOT SUBJECT TO JURISDICTION IN HENNEPIN COUNTY,
MINNESOTA, OR IN ANY OTHER STATE; AND (3) THE ACKNOWLEDGMENTS MADE BY THE
FRANCHISEE CONTAINED IN ARTICLE 26 OF THIS AGREEMENT WILL NOT BE CONSTRUED TO
ACT AS A WAIVER OF THE FRANCHISEE'S RIGHTS UNDER THE MARYLAND FRANCHISE
REGISTRATION AND DISCLOSURE LAW.
MINNESOTA. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
MINNESOTA, THEN: (1) ARTICLE 3 OF THIS AGREEMENT WILL BE AMENDED TO PROVIDE
THAT, EXCEPT IN CERTAIN CIRCUMSTANCES SPECIFIED BY LAW, E & C MUST GIVE THE
FRANCHISEE AT LEAST ONE HUNDRED EIGHTY (180) DAYS PRIOR WRITTEN NOTICE OF
NONRENEWAL OF
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
THE FRANCHISE; (2) ARTICLE 18.2 WILL BE AMENDED TO REQUIRE THAT, EXCEPT AS
SET FORTH IN ARTICLE 18.5 AND 18.6, IN THE EVENT E & C GIVES THE FRANCHISEE
WRITTEN NOTICE THAT THE FRANCHISEE HAS BREACHED THIS AGREEMENT, SUCH WRITTEN
NOTICE WILL BE GIVEN TO THE FRANCHISEE AT LEAST NINETY (90) DAYS PRIOR TO THE
DATE THIS AGREEMENT IS TERMINATED BY E & C, AND THE FRANCHISEE WILL HAVE
SIXTY (60) DAYS AFTER SUCH WRITTEN NOTICE WITHIN WHICH TO CORRECT THE BREACH
SPECIFIED IN THE WRITTEN NOTICE; (3) NOTWITHSTANDING ANY PROVISIONS OF THIS
AGREEMENT TO THE CONTRARY, A COURT OF COMPETENT JURISDICTION WILL DETERMINE
WHETHER E & C WILL BE REQUIRED TO POST A BOND OR OTHER SECURITY, AND THE
AMOUNT OF SUCH BOND OR OTHER SECURITY, IN ANY INJUNCTIVE PROCEEDING COMMENCED
BY E & C AGAINST THE FRANCHISEE, THE OWNERS OR THE PERSONAL GUARANTORS; (4)
ARTICLE 17.6(d) OF THIS AGREEMENT WILL BE INAPPLICABLE; AND (5) IN ACCORDANCE
WITH MINN. STAT. SEC. 80C.17, SUBD. 5, THE FRANCHISEE WILL HAVE NO MORE THAN
THREE YEARS AFTER THE CAUSE OF ACTION ACCRUES TO COMMENCE AN ACTION PURSUANT
TO MINN. STAT. SEC. 80C. 17.
NEW YORK. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF NEW
YORK, THEN (1) ARTICLE 17.1 OF THIS AGREEMENT WILL BE AMENDED TO PROVIDE THAT E
& C MAY NOT ASSIGN THIS AGREEMENT UNLESS, IN ITS REASONABLE JUDGMENT, THE
ASSIGNEE WILL BE ABLE TO PERFORM E & C'S OBLIGATIONS UNDER THIS AGREEMENT; (2)
ARTICLE 22.1 OF THIS AGREEMENT WILL BE AMENDED TO PROVIDE THAT THE FRANCHISEE
WILL NOT BE REQUIRED TO INDEMNIFY E & C AGAINST CLAIMS ARISING OUT OF E & C'S
BREACH OF CONTRACT, NEGLIGENCE OR OTHER CIVIL WRONG; HOWEVER, SUCH AMENDMENT OF
ARTICLE 22.1 WILL NOT AFFECT IN ANY WAY THE FRANCHISEE'S OBLIGATION TO OBTAIN
AND MAINTAIN INSURANCE COVERAGE IN ACCORDANCE WITH ARTICLE 14; (3) ANY
MODIFICATIONS TO THE MANUAL MADE BY E & C WILL NOT UNREASONABLY INCREASE THE
FRANCHISEE'S OBLIGATIONS UNDER THIS AGREEMENT AND WILL NOT PLACE AN EXCESSIVE
ECONOMIC BURDEN ON THE FRANCHISEE'S OPERATIONS; AND (4) ARTICLE 17.6(d) OF THIS
AGREEMENT IS HEREBY AMENDED TO PROVIDE THAT ALL RIGHTS ARISING IN THE
FRANCHISEE'S FAVOR FROM THE PROVISIONS OF ARTICLE 33 OF THE GBL OF THE STATE OF
NEW YORK AND THE REGULATIONS ISSUED THEREUNDER SHALL REMAIN IN FORCE, IT BEING
THE INTENT OF THIS PROVISION THAT THE NON-WAIVER PROVISIONS OF SECTIONS 687.4
AND 687.5 OF THE GBL BE SATISFIED.
NORTH DAKOTA. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
NORTH DAKOTA, THEN: (1) THE COVENANT NOT TO COMPETE UPON TERMINATION OR
EXPIRATION OF THIS AGREEMENT CONTAINED IN ARTICLE 21.3 OF THIS AGREEMENT MAY BE
UNENFORCEABLE, EXCEPT IN CERTAIN CIRCUMSTANCES PROVIDED BY LAW; (2) ARBITRATION
HEARINGS WILL BE CONDUCTED IN FARGO, NORTH DAKOTA OR AT A MUTUALLY AGREED UPON
LOCATION; AND (3) THE CONSENT BY THE FRANCHISEE TO JURISDICTION AND VENUE IN
HENNEPIN COUNTY, MINNESOTA CONTAINED IN
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
ARTICLE 24.12 IS INAPPLICABLE; PROVIDED, HOWEVER, THAT SUCH INAPPLICABILITY
IN THE STATE OF NORTH DAKOTA WILL NOT BE CONSTRUED TO MEAN THAT VENUE IN
HENNEPIN COUNTY, MINNESOTA IS IMPROPER, OR THAT THE FRANCHISEE, ITS OFFICERS,
DIRECTORS, OWNERS AND THE PERSONAL GUARANTORS ARE NOT SUBJECT TO JURISDICTION
IN THE STATE OF MINNESOTA, OR IN ANY OTHER STATE.
RHODE ISLAND. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
RHODE ISLAND, THEN ANY PROVISION OF THIS AGREEMENT WHICH RESTRICTS JURISDICTION
OR VENUE TO A FORUM OUTSIDE THE STATE OF RHODE ISLAND IS VOID WITH RESPECT TO A
CLAIM OTHERWISE ENFORCEABLE UNDER THE RHODE ISLAND FRANCHISE INVESTMENT ACT.
SOUTH DAKOTA. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE
OF SOUTH DAKOTA, THEN: (1) ARTICLE 18 OF THIS AGREEMENT WILL BE AMENDED TO
PROVIDE THAT IF THE FRANCHISEE BREACHES THE PROVISIONS OF THIS AGREEMENT,
INCLUDING THE FAILURE TO MEET PERFORMANCE OR QUALITY STANDARDS OR TO PAY ANY
FEES OR OTHER PAYMENTS PAYABLE TO E & C PURSUANT TO THIS AGREEMENT, E & C
WILL PROVIDE THE FRANCHISEE WITH AT LEAST THIRTY (30) DAYS WRITTEN NOTICE AND
AN OPPORTUNITY TO CURE PRIOR TO THE TERMINATION OF THIS AGREEMENT BY E & C;
(2) THE COVENANT NOT TO COMPETE UPON TERMINATION OR EXPIRATION OF THIS
AGREEMENT CONTAINED IN ARTICLE 21.3 OF THIS AGREEMENT MAY BE UNENFORCEABLE,
EXCEPT IN CERTAIN CIRCUMSTANCES PROVIDED BY LAW; (3) ANY PROVISION OF THIS
AGREEMENT WHICH DESIGNATES JURISDICTION OR VENUE OUTSIDE OF THE STATE OF
SOUTH DAKOTA OR REQUIRES THE FRANCHISEE TO AGREE TO JURISDICTION OR VENUE IN
A FORUM OUTSIDE OF THE STATE OF SOUTH DAKOTA IS VOID WITH RESPECT TO ANY
CAUSE OF ACTION WHICH IS OTHERWISE ENFORCEABLE IN THE STATE OF SOUTH DAKOTA;
(4) PURSUANT TO SDCL SECTIONS 37-5A-86, ANY ACKNOWLEDGMENT PROVISION,
DISCLAIMER, INTEGRATION CLAUSE OR PROVISION HAVING A SIMILAR EFFECT IN THIS
AGREEMENT WILL NOT NEGATE OR ACT TO REMOVE FROM JUDICIAL REVIEW ANY
STATEMENT, MISREPRESENTATION OR ACTION THAT VIOLATES CHAPTER 37-5A OR A RULE
OR ORDER UNDER CHAPTER 37-5A; (5) ARBITRATION HEARINGS WILL BE CONDUCTED IN
SIOUX FALLS, SOUTH DAKOTA, OR AT A MUTUALLY AGREED UPON LOCATION; AND (6)
PROVISIONS OF THIS AGREEMENT WHICH REQUIRE THAT ACTIONS BE COMMENCED WITHIN
ONE YEAR AND THAT LIMIT THE PARTIES' RIGHTS TO RECOVER PUNITIVE, EXEMPLARY,
INCIDENTAL, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES MAY NOT BE ENFORCEABLE
UNDER SOUTH DAKOTA LAW.
WASHINGTON. IF THIS AGREEMENT IS GOVERNED BY THE LAWS OF THE STATE OF
WASHINGTON, THEN: (1) IN THE EVENT OF A CONFLICT OF LAWS, THE PROVISIONS OF THE
WASHINGTON FRANCHISE INVESTMENT PROTECTION ACT, CHAPTER 19.100 RCW, WILL
PREVAIL; (2) A RELEASE OR WAIVER OF RIGHTS EXECUTED BY THE FRANCHISEE WILL NOT
INCLUDE RIGHTS UNDER THE WASHINGTON FRANCHISE INVESTMENT PROTECTION ACT, EXCEPT
WHEN EXECUTED PURSUANT TO A NEGOTIATED SETTLEMENT AFTER THIS AGREEMENT IS IN
EFFECT AND WHERE THE PARTIES ARE REPRESENTED
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
BY INDEPENDENT COUNSEL; (3) ANY PROVISION OF THIS AGREEMENT WHICH
UNREASONABLY RESTRICTS OR LIMITS THE STATUTE OF LIMITATIONS PERIOD FOR CLAIMS
UNDER THE WASHINGTON FRANCHISE INVESTMENT PROTECTION ACT, RIGHTS OR REMEDIES
UNDER THE WASHINGTON FRANCHISE INVESTMENT PROTECTION ACT, SUCH AS A RIGHT TO
A JURY TRIAL, MAY NOT BE ENFORCEABLE; AND (4) TRANSFER FEES ARE COLLECTIBLE
BY E & C TO THE EXTENT THAT THEY REFLECT E & C REASONABLE ESTIMATED OR ACTUAL
COSTS IN EFFECTING A TRANSFER.
SEVERABILITY
The severability provisions of this Agreement will pertain to all of the
applicable laws which conflict with or modify the provisions of this Agreement
including, but not limited to, the provisions of this Agreement specifically
addressed in Article 28.3 above.
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT 475250.5
IN WITNESS WHEREOF, E & C, the Franchisee and the Franchisee's Owners have
respectively signed this Agreement as of the day and year set forth on Page F-1
of this Agreement.
In the Presence of: ELEPHANT & CASTLE INTERNATIONAL, INC.
___________________________________ By _________________________________
Its ________________________________
In the Presence of: "FRANCHISEE"
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
___________________________________ ____________________________________
The undersigned Owners of the Franchisee hereby agree to be bound by the terms
and conditions of this Agreement:
IN THE PRESENCE OF: OWNERS PERCENTAGE
OF OWNERSHIP
______________________ _______________________ ______________________%
______________________ _______________________ ______________________%
______________________ _______________________ ______________________%
______________________ _______________________ ______________________%
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT F-66 475250.5
PERSONAL GUARANTY AND AGREEMENT TO BE BOUND
PERSONALLY BY THE TERMS AND CONDITIONS
OF THE FRANCHISE AGREEMENT
In consideration of the execution of this Agreement by E & C, and for other good
and valuable consideration, the undersigned, for themselves, their heirs,
successors, and assigns, do individually, jointly and severally hereby become
surety and guaranty for the payment of all amounts and the performance of the
covenants, terms and conditions of this Agreement, including the covenants not
to compete, to be paid, kept and performed by the Franchisee.
Further, the undersigned, individually and jointly, hereby agree to be
personally bound by each and every condition and term contained in this
Agreement, including the covenants not to compete, and agree that this Personal
Guaranty should be construed as though the undersigned and each of them executed
an agreement containing the identical terms and conditions of this Agreement.
If any default should at any time be made therein by the Franchisee, then the
undersigned, their heirs, successors and assigns, do hereby, individually,
jointly and severally, promise and agree to pay to E & C the Initial Fee,
Opening Assistance Fee, Continuing Fees and other fees due and payable to E & C
under the terms and conditions of this Agreement.
In addition, if the Franchisee fails to comply with any other terms and
conditions of this Agreement, then the undersigned, their heirs, successors and
assigns, do hereby, individually, jointly and severally, promise and agree to
comply with the terms and conditions of this Agreement for and on behalf of the
Franchisee.
If the Franchisee is at any time in default on any obligation to pay monies to E
& C or any subsidiary or affiliate of E & C, whether for Initial Fees, Opening
Assistance Fees, Continuing Fees, merchandise, products, supplies, furniture,
fixtures, equipment or other products purchased by the Franchisee from E & C or
any subsidiary or affiliate of E & C, or for any other indebtedness of the
Franchisee to E & C or any subsidiary or affiliate of E & C, then the
undersigned, their heirs, successors and assigns, do hereby, individually,
jointly and severally, promise and agree to pay all such monies due and payable
from the Franchisee to E & C or any subsidiary or affiliate of E & C upon
default by the Franchisee.
The maximum individual liability that each Personal Guarantor will incur under
this Personal Guaranty is two hundred fifty thousand dollars ($250,000).
It is further understood and agreed by the undersigned that the provisions,
covenants and conditions of this Personal Guaranty
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT F-67 475250.5
will inure to the benefit of the successors and assigns of E & C. Except as
provided by applicable law, all litigation, actions or proceedings pertaining
to this Personal Guaranty will be brought and venued in accordance with
Article 24.12 of the Franchise Agreement.
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT F-68 475250.5
PERSONAL GUARANTORS
------------------------------------ -------------------------------------
Individually Individually
Percentage of Ownership Interest___% Percentage of Ownership Interest____%
------------------------------------ -------------------------------------
Address Address
------------------------------------ -------------------------------------
City State Zip Code City State Zip Code
( ) ( )
------------------------------------ -------------------------------------
Area Code Telephone Area Code Telephone
------------------------------------ -------------------------------------
Individually Individually
Percentage of Ownership Interest___% Percentage of Ownership Interest____%
------------------------------------ -------------------------------------
Address Address
------------------------------------ -------------------------------------
City State Zip Code City State Zip Code
( ) ( )
------------------------------------ -------------------------------------
Area Code Telephone Area Code Telephone
------------------------------------ -------------------------------------
Individually Individually
Percentage of Ownership Interest___% Percentage of Ownership Interest____%
------------------------------------ -------------------------------------
Address Address
------------------------------------ -------------------------------------
City State Zip Code City State Zip Code
( ) ( )
------------------------------------ -------------------------------------
Area Code Telephone Area Code Telephone
ELEPHANT & CASTLE INTERNATIONAL, INC. 5 GTM/LEH/JAW 042199
ALAMO GRILL FRANCHISE AGREEMENT F-69 475250.5
the image portrayed by the then-current image, decor and specifications of E & C
for Alamo Grill-TM- Restaurants (the "Modernization") and has agreed to make
such capital expenditures as are necessary to complete the required
Modernization; (d) as of the date the Franchisee exercises its option to
reacquire the Franchise for the Franchised Location, the Franchisee either owns
the Franchised Location, or the Franchisee has the right to lease the Franchised
Location for a term that coincides with the term of the then-current standard
Alamo Grill franchise agreement; (e) the Franchisee (or the Franchisee's
Operating Partner), the Franchisee's General Manager and the Franchisee's Chef
have completed the required training designated by E & C for new Alamo Grill
franchisees to ensure that the Franchisee is in conformity with the then-current
qualifications and operational requirements established by E & C; and (f) the
Franchisee agrees to execute and comply with the then-current standard franchise
agreement being offered to new franchisees by E & C, subject further to the
provisions of Article 3.4 of this Agreement.
3.4 TERMS OF OPTION
The Franchisee will have the option to reacquire the Franchise for the
Franchised Location under the same terms and conditions as are then being
offered to other franchisees under the then-current standard Alamo Grill
franchise agreement; provided, however, that the term of the franchise agreement
executed by the Franchisee to reacquire the Franchise will be for ten (10)
years, as specified in Article 3.3 of this Agreement. The Franchisee will be
required to pay E & C a reacquisition fee equal to twenty-five percent (25%) of
the Initial Fee specified in the then-current standard Alamo Grill franchise
agreement, which will be payable in full on the date the Franchisee signs the
then-current standard franchise agreement executed pursuant to this option. The
reacquisition fee is payment, in part, to E & C for: (a) training at the time of
the reacquisition for the Franchisee (or the Franchisee's Operating Partner),
the Franchisee's General Manager and the Franchisee's Chef (but not payment for
the travel, lodging, and living expenses, salaries, and all other expenses of
any persons attending such training, which will be paid by the Franchisee); (b)
providing the Franchisee with the then-current standards relating to the image
of Alamo Grill-TM- Restaurants, including decor, fixtures, furniture and sign
specifications; (c) providing the Franchisee with the then-current
specifications for the supplies and equipment to be used in the operation of the
Restaurant; and (d) administrative and out-of-pocket expenses incurred by E & C
in connection with the reacquisition, including employee salaries, attorneys'
fees and long-distance telephone calls. The Franchisee will be required to pay
the Continuing Fee and all other fees at the rates specified in the then-current
standard franchise agreement. The Franchisee will also pay any additional fees
specified or provided for by the terms of the then-current standard franchise
agreement.
ELEPHANT & CASTLE INTERNATIONAL, INC. 15 GTM/RCA 032999
FRANCHISE AGREEMENT F-70 426304 9
The Franchisee will also pay any additional fees specified or provided for by
the terms of the then-current standard franchise agreement.
The Franchisee acknowledges that the terms, conditions and economics of
future Alamo Grill franchise agreements of E & C may, at that time, vary in
substance and form from the terms, conditions and economics of this Agreement.
ARTICLE 4
INITIAL FEE; APPROVAL OF FRANCHISEE
4.1 INITIAL FEE
The Franchisee will pay E & C a nonrefundable Initial Fee of thirty-five
thousand dollars ($35,000), which will be payable in full on the date the
Franchisee commences business. The Initial Fee payable by the Franchisee is
payment, in part, to E & C for the costs incurred by E & C to operate its
business, including costs for general sales and administrative expenses, travel,
long distance telephone calls, training, opening costs, marketing costs, legal
and accounting fees, compliance with franchising and other laws, and the initial
services rendered to the Franchisee as described in this Agreement.
4.2 TERMINATION OF FRANCHISE
E & C will have the right to terminate this Agreement at any time within one
hundred twenty (120) days after the date of this Agreement if: (a) any required
or other financial, personal or other information provided by the Franchisee to
E & C is materially false, misleading, incomplete or inaccurate; (b) the
Franchisee has not purchased or leased a site for the Franchised Location or has
done so in a manner not in compliance with Article 2.4 and Article 11 of this
Agreement; (c) the Franchisee fails to apply for and obtain a valid license for
the service of food for its Alamo Grill-TM- Restaurant from the appropriate
governmental agencies; (d) the Franchisee fails to apply for and obtain a valid
liquor license for its Alamo Grill-TM- Restaurant from the appropriate
governmental authorities; or (e) the Franchisee (or its Operating Partner), the
Franchisee's General Manager and the Franchisee's Chef fail to complete the
training program described in Article 16.1 of this Agreement.
4.3 PAYMENT OF COSTS
If this Agreement is terminated by E & C pursuant to Article 4.2, then within
ten (10) days after termination, the Franchisee will pay E & C fifty percent
(50%) of the Initial Fee as payment for the administrative and out-of-pocket
expenses incurred by E & C including, but not limited to, executives' and
employees' salaries, salespersons' commissions, attorneys' fees, accountants'
fees, travel expenses, training costs, legal compliance, marketing costs and
long distance telephone calls.
ARTICLE 5
CONTINUING FEE
5.1 AMOUNT OF CONTINUING FEE; DATE PAYABLE
In addition to the Initial Fee payable by the Franchisee, the
ELEPHANT & CASTLE INTERNATIONAL, INC. 15 GTM/RCA 032999
FRANCHISE AGREEMENT F-71 426304 9
Franchisee will pay E & C a weekly Continuing Fee equal to the greater of:
(a) five percent (5%) of the Franchisee's weekly Gross Sales for the
preceding week; or (b) one thousand two hundred and fifty dollars ($1,250).
The weekly Continuing Fee will be paid to E & C by the Franchisee by
Wednesday of each week for the preceding week. The minimum weekly Continuing
Fee of one thousand two hundred and fifty dollars ($1,250) will not be
applicable until the first full week of the seventh month after the date of
this Agreement, and beginning on Wednesday of that week, the Franchisee will
pay the greater of the amounts set forth above.
5.2 INTEREST ON UNPAID CONTINUING FEES
If the Franchisee fails to remit the Continuing Fee due to E & C as provided for
in Article 5.1, then the amount of the unpaid and past due Continuing Fee will
bear simple interest at the lesser of the maximum legal rate allowable by
applicable law or eighteen percent (18%) simple interest per annum. The
Franchisee will pay E & C an administrative fee of seventy-five dollars ($75)
for each delinquent Continuing Fee payment within ten (10) days after the
delinquent Continuing Fee was due. The Franchisee will also reimburse E & C for
any and all costs incurred by E & C in the collection of unpaid and past due
Continuing Fee payments including, but not limited to, attorneys' fees,
deposition costs, expert witness fees, investigation costs, accounting fees,
filing fees and travel expenses.
5.3 REPORTS
The Franchisee will maintain an accurate written record of the weekly Gross
Sales for the Franchisee's Alamo Grill-TM- Restaurant and other information
specified by E & C, and will submit
ELEPHANT & CASTLE INTERNATIONAL, INC. 15 GTM/RCA 032999
FRANCHISE AGREEMENT F-72 426304 9
