EXHIBIT 10.3
XXXxxxx.xxx
REZcity Plus
A Division of Rezconnect Technologies, Inc.
AREA REPRESENTATIVE AGREEMENT
EXHIBIT C TO THE OFFERING CIRCULAR
THIS CONTRACT IS SUBJECT TO ARBITRATION
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TABLE OF CONTENTS
X. XXXXX...................................................................2
II. DEVELOPMENT TERRITORY...................................................2
III. DEVELOPMENT FEE AND SCHEDULE............................................3
IV. TERM....................................................................5
V. PAYMENTS TO AREA REPRESENTATIVE.........................................6
VI. TRAINING AND OPERATING ASSISTANCE.......................................8
VII. AREA REPRESENTATIVE'S OBLIGATIONS.......................................9
VIII. USE OF SYSTEM AND MARKS................................................12
IX. RELATIONSHIP OF THE PARTIES............................................13
X. INSURANCE..............................................................14
XI. TRANSFERABILITY OF INTEREST............................................16
XII. RESTRICTIONS CONCERNING COMPETITIVE BUSINESSES.........................18
XIII. DEFAULT AND TERMINATION................................................19
XIV. RIGHTS AND OBLIGATIONS OF THE PARTIES UPON EXPIRATION OR TERMINATION...21
XV. FRANCHISOR'S REMEDIES UPON TERMINATION OR EXPIRATION...................22
XVI. NOTICES................................................................22
XVII. ENTIRE AGREEMENT.......................................................23
XVIII. APPLICABLE LAW.........................................................23
XIX. SETTLEMENT OF DISPUTES.................................................24
XX. COST OF ENFORCEMENT OR DEFENSE.........................................25
XXI. SEVERABILITY AND CONSTRUCTION..........................................25
XXII. DEFINITIONS............................................................26
XXIII. CAVEAT.................................................................26
XXIV. ACKNOWLEDGMENTS........................................................26
EXHIBITS
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A. MAP OF DEVELOPMENT TERRITORY
B. GUARANTY AND ASSUMPTION OF OBLIGATIONS
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XxxXxxx.xxx
REZcity Plus
A Division of RezConnect Technologies, Inc.
AREA REPRESENTATIVE AGREEMENT
This Area Representative Agreement (this "Agreement"), made this ____
day of ___________, 20___ by and dbetween RezConnect Technologies, Inc., a
company operating under the laws of the State of New York, and having its
principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxxxxx Xxxxxx, Xxx Xxxxxx
00000 (hereinafter referred to as "XxxXxxx.xxx" or "Franchisor"), and
______________________, an individual/partnership/corporation/limited liability
company established in the State of ____________, whose principal address is
__________________________________________________ (hereinafter referred to as
"Area Representative").
W I T N E S S E T H:
WHEREAS, Franchisor has developed a system ("System"), identified by
the Xxxx "XxxXxxx.xxx" relating to the establishment, development and operation
of a business specializing in the sale of Internet based marketing tools such as
banner advertisements on the home page and calendar pages of the XXXxxxx.xxx
website, content licensing, creating websites with unlimited pages featuring a
shopping cart order system and other forms of Internet Advertising. In addition
to the services described, the franchisee can elect to operate a consignment
business online and provide and auction model through the eBAY Marketplace.
(Herein referred to as "REZcity Plus Franchise") We also provide tolls such as
real-time reservations, confirmations and appointment scheduling,
business-to-consumer negotiating of retail products and services. Other services
include search engine submission and domain name site registration. All of these
services are designed to be sold to small to medium sized businesses, community
organizations and not-for-profit organizations. Our travel services feature
online 24/7 reservations/bookings for Airlines, Hotels, Cars, Limos, Tours and
Cruise products with over 55 book able engines; and
WHEREAS, the distinguishing characteristics of the System include,
without limitation, the XxxXxxx.xxx home page located at xxxx://xxx.xxxxxxx.xxx
featuring "city guides" for over fifty three thousand (53,000) cities and
communities; the proprietary Internet marketing package which includes the
Services, the XxxXxxx.xxx Confidential Operations Manual ("Manual"); methods for
recruiting, hiring and training employees; inventory, cost controls, record
keeping, all of which may be changed, improved and further developed by
Franchisor from time to time; and
WHEREAS, Franchisor is the owner of the right, title and interest,
together with all the goodwill connected thereto, in and to the trademark
"XxxXxxx.xxx" and "XxxXxxxxxx.xxx" and other trademarks, domain names, service
marks and trade dress, associated logos, commercial symbols, trade names,
trademarks, service marks and trade dress as are now, or in the future,
designated as an integral part of the System (the "Xxxx[s]"); and
WHEREAS, Franchisor is willing to grant Area Representative the right
to serve as a special agent enabling Area Representative to locate and recruit
potential franchisees known as "Individual Franchisees" as well as "REZcity Plus
Franchisees" and to provide support services to Individual Franchisees and
REZcity Plus Franchises within the geographical area under the terms and
conditions contained in this Agreement; and
WHEREAS, Area Representative desires to act as a special agent for
Franchisor within the geographical area enabling Area Representative to offer
franchises for, and to develop, support, and provide services to, Individual
Franchises and REZcity Plus Franchises within the geographical under the terms
and conditions contained in this Agreement; and
WHEREAS, Area Representative understands and acknowledges the
importance of Franchisor's high and uniform standards of quality, operations and
service and the necessity of operating the Franchised Business in strict
conformity with Franchisor's standards and specifications; and
WHEREAS, Franchisor is the licensee of certain proprietary software
from 000xxx.xxx, Inc., with the right to sub-license the software to its
franchisees; and
WHEREAS, Franchisor expressly disclaims the making of and Area
Representative acknowledges that it has not received nor relied upon any
warranty or guarantee, express or implied, as to the revenues, profits or
success of the business venture contemplated by this Agreement. Area
Representative acknowledges that it has read this Agreement and Franchisor's
Uniform Franchise Offering Circular and that it has no knowledge of any
representation by Franchisor or its officers, directors, shareholders, employees
or agents that are contrary to the statements made in Franchisor's Uniform
Franchise Offering Circular or to the terms hereof.
NOW, THEREFORE, the parties, in consideration of the undertakings and
commitments of each party to the other set forth in this Agreement, hereby agree
as follows:
X. XXXXX
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A Franchisor hereby grants to Area Representative, subject to
the terms and conditions hereof, a license to offer, negotiate, establish and
develop XxxXxxx.xxx Individual Franchises and REZcity Plus Franchises within the
territory hereinafter described. The Area Representative shall recruit persons
and entities to act as franchisees within the Development Territory and will
perform initial training and supervise the development and operations of
Individual Franchises and REZcity Plus Franchises within the Development
Territory in compliance with the terms and conditions of this Agreement.
B In consideration of the payments received and the mutual
covenants contained in this Agreement, Franchisor hereby grants to Area
Representative, and Area Representative hereby accepts, a license for the
Development Territory hereinafter described. Franchisor hereby grants to Area
Representative, and Area Representative hereby accepts the right, license and
privilege of using "XxxXxxx.xxx," "XXXxxxxxxx.xxx," "XxxxxxXxxxXx.xxx" and other
Marks of Franchisor solely and only upon and in connection with activities
authorized under this Agreement, including the right to sublicense the Marks to
Individual Franchisees in the Development Territory hereinafter described. Area
Representative agrees not to make or authorize any use, direct or indirect, of
the Marks for any other purpose or in any other way. Area Representative
acknowledges that Franchisor may grant other licenses for the use of the Marks
or utilize the Marks in any manner whatsoever subject to the provisions of this
Agreement.
II. DEVELOPMENT TERRITORY
---------------------
The Development Territory of the Area Representative Franchise granted
shall be as described on Exhibit A (hereinafter the "Development Territory").
During this Agreement term, Franchisor will not establish or license any other
area representatives to act as a special agent to provide sales or support
services to franchisees within the Development Territory; provided, however,
that Franchisor shall retain the right:
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A to establish Individual Franchises and REZcity Plus
Franchises, at any location inside and outside of the Development Territory, as
Franchisor, in its sole discretion, deems appropriate; provided, however, that
Franchisor shall not establish nor grant territorial rights to any business
providing Internet advertising services, online auction services and any other
services which may conflict with any territorial rights previously granted by
its Area Representative to Individual Franchisees;
B to establish additional area representatives outside of the
Development Territory as Franchisor deems appropriate in its sole discretion;
C to specifically approve the grant of any XxxXxxx.xxx
Individual Franchises or REZcity Plus Franchises. Such approval shall be within
the sole discretion of Franchisor;
D to establish or license additional area representatives within
the Development Territory if Area Representative fails to comply with the
Development Schedule contained in Paragraph IV. of this Agreement; and
E to contract with sales organizations and other "Sales
Consultant(s)" to allow the Sales Consultants and its sales force to engage in
the sale of Internet advertising including the Services; provided, however, that
Sales Consultants shall not be licensed to utilize the XxxXxxx.xxx trademark as
its principal trade name under which it operates, but may be permitted to
identify itself as a "XxxXxxx.xxx Authorized Dealer" provided further that the
Area Representative shall receive a commission based upon the sale of Services
by each Sales Consultant occurring in Area Representative's Development
Territory in accordance with Section V.
III. DEVELOPMENT FEE AND SCHEDULE
----------------------------
A........As consideration for the license granted herein, Area
Representative shall pay to Franchisor, upon execution of this Agreement, a fee
of _____________________________ DOLLARS ($_________) ("Development Fee"). The
Development Fee is fully earned and nonrefundable for the granting of the rights
as Area Representative for the Development Territory.
At Franchisor's option, the initial fees for an Area Representative
Franchise shall be 10% of the sum of the Franchise Fees for Individual
Franchises that the Area Representative has available in the Development
Schedule in this Agreement. Franchisor anticipates that the Development Fee for
an Area Representative will range from $30,000 to $500,000. Franchisor will
permit Area Represenstative to pay 50% of the gross revenues earned from its
territory whether from franchise sales or product or service commissions that it
receives. If at the end of three (3) years there remains a balance due on the
Sales Agreement, Area Representative has the right to pay the balance in full
and retain the remaining territory or return the unsold territory to Franchisor
without further obligation.
In order to calculate the Area Representative Fee, multiply the number of towns
or cities within the designated geographic area by the minimum initial franchise
fee of $1,500 and then add to that total the amount of additional fees in excess
of this minimum, which is calculated by multiplying $0.06 by the number of
people in each of the towns or cities that are above 25,000 in population. Then
add this extra surcharge to the total revenue potential and multiply this amount
by 10% with the minimum Area Representative Fee being $30,000. For example, if
the designated geographic area has 300 towns or cities as shown in the REZcity
data base on-line, then the basic fee would be $450,000 (300 X $1500). If 100 of
those towns or cities contained a population in excess of 25,000 for a total of
1,000,000 collectively in excess , then that amount would be multiplied by $0.06
per person, adding that result of $60,000 ($0.06 X 1,000,000) to the base
revenue of $60,000, arriving at a gross fee potential of $500,000. That amount
would then be multiplied by 10%, resulting in an initial Area Representative Fee
of $51,000, but since the minimum initial Area Representative Fee is $30,000,
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Area Representative would be pay the minimum or $30,000 in this example. The
Franchisor then would permit the Area Representative to pay the balance of the
fee ($21,000) over three years by permitting Franchsior to deduct 50% off all
fees that it pays to Area Representative , until the amount is paid in full. If
Area Representative does not pay the balance within the three year period, Area
Representative shall have the right to pay the balance in full and retain the
remaining territory or return the unsold territory to Franchisor and have no
further obligations.
B The Development Fee is in addition to the Individual Franchise
fee required pursuant to any Individual Franchise Agreement which Area
Representative executes. Nothing in this Agreement prohibits Area Representative
from owning an Individual XxxXxxx.xxx Franchised Business or REZcity Plus
Franchised Business as long as all of the requirements for owning an Individual
XxxXxxx.xxx Franchised Business or REZcity Plus Franchise Business are met.
Should Area Representative receive Franchisor's approval to develop and operate
one (1) or more XxxXxxx.xxx Individual Franchised Businesses in the Development
Territory, such development shall be commenced only upon Franchisor's prior
written approval and Area Representative shall pay to Franchisor the
then-current Individual Franchise Fee for each such additional franchise, in
addition to the Development Fee as provided in Paragraph III.A. of this
Agreement.
C The Area Representative acknowledges and agrees that a
material provision of this Agreement is that the following number of Individual
Franchisees must be opened and continuously operating in the Development
Territory during the term of this Agreement in accordance with the following
Development Schedule ("Development Schedule"):
As an Area Representative, you will, in turn, receive 40% of the
initial Franchise Fee ("Sales Commission") paid by each Individual Franchisee in
your Development Territory within 30 days after such Fees are received by
Franchisor.
In addition, Area Representative will receive a 10% commission on the
net revenue earned on xxxxxxxx from the sale of Products and Services and other
Internet advertising including REZcity Plus auction sales which occurs within
the Development Territory excluding revenues that the franchisee earns from the
on-line travel agency located on the local portal.
Under the terms of the Area Representative Agreement, the
Development Fee is fully earned and non-refundable under any circumstances.
Except as stated above, the initial fees are uniform to all franchisees
under this offering.
------------------------------------ -------------------------------------- --------------------------------------
Number of Franchises Cumulative Number of
Required to be Opened and Franchises Required to be
Continuously Operating for Opened and Continuously
Business in the Development Operating for Business in the
Year Territory during the Year Development Territory
------------------------------------ -------------------------------------- --------------------------------------
After the 3rd 20% of the Towns must be sold 20% of the towns sold or 20% of the
or 20% of the total franchise fee total franchise fee potential as
potential as described in the described in the addendum of the
addendum of the agreement agreement
------------------------------------ -------------------------------------- --------------------------------------
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------------------------------------ -------------------------------------- --------------------------------------
Number of Franchises Cumulative Number of
Required to be Opened and Franchises Required to be
Continuously Operating for Opened and Continuously
Business in the Development Operating for Business in the
Year Territory during the Year Development Territory
------------------------------------ -------------------------------------- --------------------------------------
After the 5th 20% of the Towns must be sold 40% of the Towns must be sold
or revenue earned or revenue earned
------------------------------------ -------------------------------------- --------------------------------------
After the 10th 20% of the Towns must be sold or 60% of the towns must be sold or
20% of the total franchise fee 60% of the total franchise fee
potential as described in the potential as described in the
agreement agreement
------------------------------------ -------------------------------------- --------------------------------------
The year period shall be determined from the date of this Agreement, so
that the first year of the development schedule set forth above shall be twelve
(12) months from the date this Agreement is executed.
D. The Area Representative represents that it has conducted its own
independent investigation and analysis of the prospects for the establishment of
Individual Franchises and REZcity Plus Franchises within the Development
Territory, approves of the foregoing development schedule as being reasonable
and viable and recognizes that failure to achieve the results described in the
foregoing Development Schedule constitutes a material breach of this Agreement,
and in that event, Franchisor shall have the right to terminate this Agreement
as provided herein. Termination of this Agreement as a result of the Area
Representative's failure to meet the Development Schedule set forth above shall
not affect the Individual Franchise Agreements of the franchisees who are
operating Individual Franchises in the Development Territory; however, upon
termination, all rights granted to the Area Representative under this Agreement
shall forthwith revert to Franchisor.
IV. TERM
----
This Agreement shall be effective and binding from the date of its
execution, and the term of this license shall continue for ten (10) years
thereafter, unless sooner terminated as herein provided. At the end of said
term, Area Representative may renew its license for one successive term of ten
(10) years as a Area Representative:
A. At least sixty (60)days prior to expiration of the term, executes
the form of Area Representative Agreement then in use by Franchisor, which
agreement may contain terms materially different from those in this Agreement;
provided that Area Representative shall not be required to pay a new Development
Fee and the Development Territory will not be altered;
B. Has substantially complied with all provisions of this Agreement
during the initial term, including the payment on a timely basis of all fees
due;
C. I s not in default or under notification of breach of this
Agreement at the time it gives notice of intent to renew;
D. Executes a general release, in a form satisfactory to Franchisor,
of any and all claims against Franchisor and its affiliates, and their
respective shareholders, officers, directors, employees, and agents, arising out
of or relating to this Agreement; and
E. Has agreed on a new Development Schedule for the additional term.
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V. PAYMENTS TO AREA REPRESENTATIVE
-------------------------------
A. During the term of this Agreement, Area Representative shall be
paid a commission, as set forth in this Section, based on a percentage of
initial franchise fees paid by Individual or REZcity Plus Franchisees for the
purchase of Individual Franchises or REZcity Plus Franchises("Sales Services
Commission") to be located within the Development Territory, subject to
fulfillment of the following conditions:
1. Individual and REZcity Plus Franchisee executes a Franchise
Agreement with Franchisor, and an initial franchise fee has been paid to and
actually received by Franchisor (Franchisor shall not be deemed to have received
any fees paid into escrow, if applicable, until such fees actually have been
remitted to Franchisor);
2. The sale for which the initial franchise fee has been paid
is not a resale of any existing Individual or REZcity Plus Franchise or any
interest in such a business; and
3. Area Representative has complied with all of its other
obligations under this Agreement with respect to such sale and has verified the
same to Franchisor in writing in a form prescribed by Franchisor; provided,
however, that Area Representative shall not be entitled to any Sales Services
Commission with respect to any Individual or REZcity Plus Franchises established
in the Development Territory in connection with which Area Representative
performed no sales services.
B. Franchise Sales Commissions shall be an amount equal to forty
percent (40%) of the total initial franchise fees paid to Franchisor and will be
payable to Area Representative within twenty (20) days after the franchise sales
conditions have been fulfilled. Area Representative shall not receive any Sales
Services Commissions for any businesses owned and operated by Franchisor or its
affiliates or designees in the Development Territory, if any.
C. If, during the term of this Agreement, an Individual or REZcity
Plus Franchisee located within the Development Territory or an interest in the
business is resold to a different franchisee and the sale results in the
execution of a Franchise Agreement and the payment of a transfer fee, then Area
Representative will not be paid a commission.
D. Franchisor shall pay to Area Representative, within twenty (20)
days after the end of each period determined by Franchisor, a ten percent (10%)
commission for the sale of each Product Services, eBAY Product Auctions, and
other Internet advertising services actually received by Franchisor from each
Individual and REZcity Plus Franchisee, Sales Consultant or directly from the
end user located in the Development Territory during the applicable period
pursuant to their Franchise Agreement ("Sales Commissions") excluding online
travel agency sales.
Notwithstanding the foregoing:
1. If Area Representative has failed to conduct the periodic
inspections described in Paragraph VII.E.13. and to file a written report or
failed to perform, in any material respect, with respect to one (1) or more
Individual or REZcity Plus Franchisees located in the Development Territory, the
other services described in Section VII. be provided to Franchisees located in
the Development Territory during any applicable month, Area Representative shall
not be entitled to receive commissions based upon sales of Services with respect
to such Franchisees for the period during which reports or services were not
provided.
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2. Area Representative shall not be entitled to share in or
receive any Sales Commissions paid to Franchisor by Franchisees in the
Development Territory prior to the time Area Representative completes the
initial Area Representative training program and commences full performance of
the services of Area Representative.
3. Area Representative shall not be entitled to share in or
receive any Sales Commissions paid to Franchisor by Franchisees that would
otherwise be payable by any Franchisor owned business from any business in the
Development Territory that was opened or operated under a Franchise Agreement
entered into prior to the effective date of this Agreement.
E. All payments under this Paragraph shall immediately and
permanently cease after the expiration or termination of this Agreement,
although Area Representative shall receive all amounts which have accrued to
Area Representative as of the effective date of expiration or termination.
F. Franchisor's payments to Area Representative shall be based on
amounts actually collected from Individual and REZcity Plus Franchisees, not on
payments accrued, due or owing. In the event of termination of a Franchise
Agreement for an Individual or REZcity Plus Franchise within the Development
Territory under circumstances entitling Franchisee to the return of all or part
of the initial franchise fee or other fees (or in the event that Franchisor
becomes legally obligated or decides to return part or all of the initial
franchise fee or other fees), Franchisor may deduct the portion of the amount to
be returned to Franchisee in the same proportion as Area Representative shared
in the initial franchise fee or other fees from any future amounts owed Area
Representative. Franchisor shall apply any payments received from an Individual
or REZcity Plus Franchisee to any past due indebtedness of that Individual or
REZcity Plus Franchisee for purchases from Franchisor or its affiliates,
interest or any other indebtedness of that Individual Franchisee to Franchisor
or its affiliates. To the extent that such payments are applied to an Individual
Franchisee's overdue payments, Area Representative shall be entitled to its pro
rata share of such payments, less its pro rata share of the costs of collection
paid to third parties.
G. Area Representative shall not be allowed to set off amounts owed
to Franchisor for fees or other amounts due under this Agreement against any
monies owed to Area Representative by Franchisor, which right of set off is
hereby expressly waived by Area Representative. Franchisor shall be allowed to
set off against amounts owed to Area Representatives for commissions or other
amounts due under this Agreement any monies owed to Franchisor by Area
Representative, including setting off amounts owed to Area Representative
against monies owed to Franchisor for commissions on sales services which were
paid to Area Representative before a Franchisee failed to successfully complete
Franchisor's initial training program.
H. Area Representative recognizes that from time to time hereafter,
Franchisor may change or modify the System including, without limitation, the
adoption and use of new or modified Marks or copyrighted materials, new computer
hardware and software, equipment or new techniques and that Area Representative
will accept and use for the purpose of this Agreement any such changes in the
System as if they were part of this Agreement at the time of execution hereof.
Area Representative will make such expenditures as such changes or modifications
in the System may reasonably require. Area Representative shall not change the
System in any way without written permission of Franchisor.
I. Franchisor or Franchisor's representative shall make periodic
visits to the Franchised Business for an additional fee of $150 per day and all
travel expenses for the purposes of consultation, assistance and guidance of
Area Representative in various aspects of the operation and management of the
Franchised Business. Franchisor and Franchisor's representatives who visit the
Franchised Business may prepare, for the benefit of both Franchisor and Area
Representative, written reports with respect to such visits outlining any
suggested changes or improvements in the operations of the Franchised Business
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and detailing any defaults in such operations which become evident as a result
of any such visit. A copy of any such written report may be provided to Area
Representative.
VI. TRAINING AND OPERATING ASSISTANCE
---------------------------------
A. Franchisor shall make training available to Area Representative, who
shall successfully complete such training and familiarization course conducted.
Said training program shall cover aspects of the sale and operation of
XxxXxxx.xxx Franchised Business, and of the XxxXxxx.xxx Area Representative
franchise and conducted in three (3) phases ("Phase[s] I - III"):
PhaseI This Phase is a self-study course lasting several days
depending upon Area Representative's technical background
and time spent each day reviewing materials.. Area
Representative must pass a proficiency examination over the
Internet via an online tutorial program to successfully
complete Phase I.
PhaseII This Phase lasts three (3) business days and Area
Developers must attend a mandatory training at XXXxxxx.xxx's
corporate headquarters in Englewood Cliffs, NJ or at another
location Franchisor designates. Area Developers will learn
about the REZcity Franchise Program, The REZcity Plus
Franchise Program, how to sell the franchise and how to
support franchises once they are operational in the chosen
territory.
PhaseIII Prior to beginning operation, Franchisor shall provide
Area Representative with counseling and offer its experience
and knowledge on pertinent issues Area Representative has in
setting up the Area Representative Franchise. Franchisor
shall be available during normal business hours and can be
reached by fax, telephone and/or the Internet.
All expenses of attendance at such program by Area Representative and
its employees including, without limitation, travel, and room and board
expenses, shall be the sole responsibility of Area Representative.
B. Franchisor will make available a telephone line which Area
Representative may use to communicate with Franchisor during normal business
hours to request advice regarding sales matters, business or technical issues.
C. Franchisor may provide and may require that previously trained
and experienced area representatives or their managers or employees attend and
successfully complete refresher training programs or seminars; provided,
however, that attendance will not be required at more than two (2) such programs
in any calendar year.
D. Franchisor will loan to Area Representative during the term of
the franchise one (1) copy of the Confidential Operations Manual ("Confidential
Operations Manual" or "Manual") containing mandatory and suggested
specifications, standards, operating procedures and rules prescribed from time
to time by Franchisor for Individual Franchises which shall also include a
module and information relative to the Area Representative. The Confidential
Operations Manual contains proprietary information of Franchisor and shall be
kept confidential by Area Representative both during the term of the Franchise
and subsequent to the expiration or termination of the Area Representative
Agreement. Franchisor shall have the right to add to and otherwise modify the
Confidential Operations Manual from time to time to reflect changes in the
specifications, standards, operating procedures and rules prescribed by
Franchisor, provided that no such addition or modification shall alter Area
Representative's fundamental status and rights under this Agreement.
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E. The Confidential Operations Manual shall at all times remain the
sole property of Franchisor and shall promptly ("promptly" herein defined as
within fifteen [15] days) be returned upon the expiration or other termination
of this Agreement.
F. Area Representative shall at all times insure that its copy of
the Confidential Operations Manual is kept current and up-to-date, and in the
event of any dispute as to the contents of the Confidential Operations Manual,
the terms of the master copy of the Confidential Operations Manual maintained by
Franchisor at Franchisor's home office shall be controlling.
VII. AREA REPRESENTATIVE'S OBLIGATIONS
---------------------------------
A. Within two (2) months from the date of this Agreement, or as
otherwise approved in writing by Franchisor, Area Representative, at its option,
shall have acquired and taken occupancy of an office premises ("Premises")
within the Development Territory. If approved by Franchisor, the Premises may be
an office located in Area Representative's principal residence. Additionally,
Area Representative shall have by such time acquired a business telephone and
hired such staff as may be reasonably necessary to operate the business.
B. Area Representative shall solicit and identify prospective
Franchisees for XxxXxxx.xxx Franchised Businesses to be located within the
Development Territory. Area Representative will submit completed forms and
reports to Franchisor as prescribed by Franchisor from time to time, including
applications and other pre-opening assistance forms and reports related to
prospective franchisees' personal qualifications and evaluations.
C. In accordance with Area Representative's obligation to provide
the initial training and support services in the Development Territory, Area
Representative covenants and agrees as follows:
1. The Area Representative shall provide the training,
services, supervision and assistance for all Franchised
Business in the Development Territory in strict compliance
with the terms of the Franchise Agreement signed by each
Individual and REZcity Plus Franchisee in the Development
Territory. The Area Representative is required to set-up the
site for initial training of each new franchisee that is
sold in their territory and will follow our training
procedures as to the day to day items to be covered. It is
agreed that in the early stages of development we will allow
the Area Representative to send the Franchisee to
XXXxxxx.xxx's corporate headquarters training sessions,
either online or in New Jersey. It is up to us to decide
when the Area Representative should start doing training
within development territory.
2. The Area Representative shall, at all times during the term
of this Agreement, require each Individual and REZcity Plus
Franchisee within the Development Territory to be developed,
operated and managed in accordance with Franchisor's Manuals
and the terms of the Franchise Agreement signed by each
Individual and REZcity Plus Franchisee in the Development
Territory.
3. The Area Representative shall keep accurate records
concerning all transactions and communications between
Franchisor, the Area Representative and all Individual and
REZcity Plus Franchisees relating to the operation of the
franchises in the Development Territory, and Franchisor's
duly authorized representative shall have the right to
examine and copy all such records during reasonable business
hours. All such records shall be maintained and made
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available to Franchisor for at least five (5) years after
expiration or termination of this Agreement.
4. On or before the fifteenth (15th) of each month, the Area
Representative shall furnish Franchisor with monthly written
reports regarding the operation of the XxxXxxx.xxx
Franchised Businesses located within the Development
Territory in the form and manner prescribed by Franchisor in
writing.
5. The Area Representative will make any changes specified by
Franchisor to the Manuals, technical data, System, signs,
advertising materials and the Franchise Agreement upon
receiving written notice from Franchisor. No changes to
these materials may be made by the Area Representative
without the prior written approval of Franchisor. No changes
to these materials may be made by the Area Representative
without the prior written approval of Franchisor, which may
be withheld by Franchisor in its sole discretion. Franchisor
will make any necessary changes or suggest changes to Area
Representative who will not bear any expense.
6. Franchisor shall have the right to: (i) approve all Internet
advertising and use of the Services and other services to be
offered for sale by the Area Representative and its
franchisees; (ii) determine and approve standards of quality
for all services and Internet advertising sold by the Area
Representative and its franchisees. All such approvals must
be in writing by Franchisor.
7. Area Representative shall provide guidance in implementing
advertising and marketing programs, operating and sales
procedures, and bookkeeping and accounting programs for
Individual and REZcity Plus Franchisees.
8. Upon the reasonable request of an Individual or REZcity Plus
Franchisee, Area Representative shall provide telephone
consultation regarding the continuing operation and
management of the Franchised Business and advice regarding
advertising services, product quality control and customer
relations issues.
9. Area Representative shall provide advice and assistance to
Individual and REZcity Plus Franchisees in connection with
developing and improving the Franchised Business.
10. Area Representative shall provide access to advertising and
promotional materials developed by Franchisor from time to
time.
11. Area Representative shall, at Franchisor's written request,
establish an advertising cooperative for all Individual and
REZcity Plus Franchises located in the Development Territory
using forms and procedures supplied by Franchisor.
12. Area Representative shall ascertain through field audits,
review and inspections that each Individual Franchisee in
the Development Territory has complied satisfactorily with
all of the terms and conditions of the Franchise Agreement,
specifications, standards, operating procedures, and the
Franchisee's Manual and shall promptly notify Franchisee, in
writing, with a copy and evaluation report to Franchisor of
any deficiencies; provided, however Area Representative
understands and acknowledges that its inspections and
10
reports are advisory only and that Franchisor shall have (i)
all of the rights to inspect and ascertain compliance of all
Individual Franchisees as if this Agreement were not in
effect; (ii) the sole right to send notices of default to
Individual Franchisees; (iii) the sole right to terminate an
Individual Franchise Agreement for failure to cure such
defaults (if an opportunity to cure is granted); and (iv)
the sole right to take any legal action with respect to any
violation of a Franchise Agreement. If Area Representative
believes that any Individual or REZcity Plus Franchisee in
the Development Territory has breached a Franchise Agreement
with Franchisor, Area Representative shall document in
writing all facts related to the alleged breach and request
in writing that Franchisor investigate such alleged breach.
If, as a result of Franchisor's investigation, Franchisor
determines that there is a breach by Individual or REZcity
Plus Franchisee of its Franchise Agreement with Franchisor,
Franchisor may take such action as it deems appropriate.
13. Area Representative acknowledges that it is being delegated
certain responsibilities of Franchisor under the Franchise
Agreement to Franchisees in the Development Territory. The
responsibilities to Franchisees are to be performed by Area
Representative as described in this Agreement or as set
forth in the Manual or other reasonable standards and
specifications provided by Franchisor from time to time, and
the responsibilities to Franchisees will not materially
change during the term of this Agreement. In providing
services to Franchisees of Franchised Businesses located in
the Development Territory, Area Representative shall in all
respects comply with the terms and conditions of any
Franchise Agreement or other agreement in effect between
Franchisee and Franchisor. Area Representative understands,
however, that its rights as an Area Representative are only
by virtue of this Agreement and that it is not in any manner
a party, third party beneficiary, or holder of any other
right or title to or interest in any Franchise Agreement.
Similarly, no Individual or REZcity Plus Franchisee is a
third party beneficiary of this Agreement of any other
agreement between Franchisor and Area Representative. Area
Representative agrees that it may not under any
circumstances sell any products, services or other items to,
or collect any money for any reason from, Franchisees
without Franchisor's prior written consent.
D. Area Representative shall at all times give prompt, courteous
and efficient service to Individual and REZcity Plus Franchisees in the
Development Territory. Area Representative shall, in all dealings with
franchisees, prospective franchisees, and the public, adhere to the highest
standards of honesty, integrity, fair dealing and ethical conduct.
E. Area Representative shall secure and maintain in force all
required licenses, permits and certificates relating to Area Representative's
activities under this Agreement and operate in full compliance with all
applicable laws, ordinances and regulations. Area Representative acknowledges
being advised that many jurisdictions have enacted laws concerning the
advertising, sale, renewal, and termination of, and continuing relationship
between parties to, a franchise agreement, including, without limitation, laws
concerning disclosure requirements. Area Representative agrees promptly to
become aware of, and to comply with, all such laws and legal requirements in
force in the Development Territory and to utilize only Offering Circulars that
Franchisor has approved for use in the applicable jurisdiction.
F. Area Representative shall notify Franchisor in writing within
five (5) days after the commencement of any action, suit, arbitration,
proceeding, or investigation, or the issuance of any order, writ, injunction,
award, or decree, by any court, agency, or other governmental agency which
11
concerns the operation or financial condition of Area Representative's
franchise, or any Individual or REZcity Plus Franchisee in the Development
Territory.
G. Area Representative's business shall at all times be under the
direct, day-to-day, full-time supervision of Area Representative (or, if Area
Representative is a partnership, corporation, or limited liability company, a
holder of a legal and beneficial interest greater than fifty percent [50%] in
the Area Representative entity).
H. Area Representatives, shall contribute monthly an amount equal to
FIVE HUNDRED DOLLARS ($500.00) to an advertising fund for the purpose of
developing franchise leads. All funds will be deposited into a segregated
account. This sum will be directed toward solicitation of new franchisees from
national promotions, advertising or other media. Area Representative may obtain
an accounting at year end, upon request. In addition to the above amount,
Franchisor reserves the right to require Area Representative to participate, at
Area Representative's expense, in a maximum of two (2) trade shows each year,
such trade shows to be selected by Franchisor. Area Representative agrees to
list its business telephone numbers in the white pages and in the yellow or
classified telephone directories distributed in the Development Territory.
I. With respect to any promotional materials or advertising
permitted hereunder, Area Representative shall not use in advertising or any
other form of promotion, the copyrighted materials, trademarks, copyrights,
service marks or commercial symbols of Franchisor without appropriate (C) or (R)
registration marks or the designations TM or SM where applicable.
VIII. USE OF SYSTEM AND MARKS
-----------------------
A. Area Representative acknowledges that the name "XxxXxxx.xxx,"
"XXXxxxxxxx.xxx," "XxxxxxXxxxXx.xxx" and the Marks licensed hereunder are owned
by Franchisor and Area Representative further acknowledges that valuable
goodwill is attached to such trade names, trademarks and service marks and that
Area Representative will use same only in the manner and to the extent specified
by this Agreement.
B. Area Representative acknowledges, and will not contest,
Franchisor's or any affiliate's exclusive ownership and rights to each and every
aspect of the System. Area Representative's right to market the System and
establish XxxXxxx.xxx Individual and REZcity Plus Franchised Businesses is
specifically limited to the Development Territory, and is subject to the
supervision and control of Franchisor as provided herein. Said right shall
terminate upon the expiration or termination of this Agreement.
C. Area Representative acknowledges that Franchisor's Marks
constitute a significant aspect of the System. Without Franchisor's written
approval, Area Representative agrees that such Marks will not be used as the
name, or part of any name, of any corporation, partnership or any entity of
proprietorship under which Area Representative, or any Individual or REZcity
Plus Franchisees within the Development Territory, transacts any business. Area
Representative's use of the Marks are subject to the control and approval of
Franchisor in every other respect.
D. If a claim is asserted by others of a prior use of the Marks with
respect to a similar business within the Development Territory, Franchisor may
require Area Representative to participate in the defense of such claims, at
Franchisor's expense. Area Representative shall give written notice to
Franchisor within five (5) days of acquiring knowledge concerning the use by
others within the Development Territory of the same or confusingly similar names
and Marks.
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E. If Franchisor at any time,in its sole discretion, determines that
it is advisable for Area Representative and/or Individual or REZcity Plus
Franchisees to modify or discontinue use of any Marks, and/or use one or more
additional or substantive trade names, trademarks, service marks or other
commercial symbols, Area Representative agrees to comply therewith within a
reasonable time after notice thereof by Franchisor, and further, Area
Representative agrees to utilize best efforts to cause the Individual
Franchisees within the Development Territory to comply likewise.
F. Area Representative shall not establish a Website on the Internet
using any domain name containing the words "XxxXxxx.xxx" or any variation
thereof without prior written consent from Franchisor. Franchisor retains the
sole right to advertise on the Internet and create a Website using the
"XxxXxxx.xxx" domain name. Area Representative acknowledges that Franchisor is
the owner of all right, title and interest in and to such domain names as
Franchisor shall designate in the Manual. Franchisor retains the right to
pre-approve Area Representative's use of linking and framing between Area
Representative's Web pages and all other Websites. If requested by Franchisor,
Area Representative shall, within five (5) days, dismantle any frames and links
between Area Representative's Web pages and any other Websites.
G. Franchisor possesses certain proprietary confidential information
consisting of methods, techniques, formats, specifications, procedures,
information, systems, methods of business management, sales and promotion
techniques, and knowledge of and experience in operating a Franchised Business
(the "Confidential Information"). Franchisor shall disclose the Confidential
Information in the training program, the Manual, and in guidance furnished to
Area Representative during this Agreement's term. Area Representative shall not
acquire any interest in the Confidential Information, other than the right to
utilize it in performing its duties during the term of this Agreement, and Area
Representative acknowledges that the use or duplication of the Confidential
Information in any other business venture would constitute an unfair method of
competition. Area Representative acknowledges and agrees that the Confidential
Information is proprietary, includes Franchisor's trade secrets, and is
disclosed to Area Representative solely on the condition that Area
Representative (and its shareholders, partners, members and managers, if Area
Representative is a corporation, partnership or limited liability company) does
hereby agree that it: (a) shall not use the Confidential Information in any
other business or capacity; (b) shall maintain the absolute confidentiality of
the Confidential Information during and after the term of this Agreement; (c)
shall not make unauthorized copies of any portion of the Confidential
Information disclosed in written or other tangible form; and (d) shall adopt and
implement all reasonable procedures prescribed from time to time by Franchisor
to prevent unauthorized use or disclosure of the Confidential Information. All
ideas, concepts, techniques or materials concerning the Franchised Business,
whether or not protectable intellectual property and whether created by or for
Area Representative or its owners or employees, must be promptly disclosed to
Franchisor and will be deemed Franchisor's sole and exclusive property, part of
the System and works made-for-hire for Franchisor. To the extent any item does
not qualify as a "work made-for-hire" for Franchisor, Area Representative shall
assign ownership of that item, and all related rights to that item, to
Franchisor and must sign whatever assignment or other documents Franchisor
requests to show ownership or to help Franchisor obtain intellectual property
rights in the item.
IX. RELATIONSHIP OF THE PARTIES
---------------------------
A. The appointment of Area Representative pursuant to this Agreement
does not make Area Representative a general agent or employee of Franchisor.
Area Representative shall not have the right to bind Franchisor, to transact any
business, or make any promises or representations on behalf of Franchisor,
except as herein expressly provided in this Agreement. Area Representative shall
at all times represent itself to third parties only as an independent contractor
who has been appointed and licensed as a Area Representative. Neither this
13
Agreement nor the relationship between the parties hereto shall constitute a
partnership or a joint venture between Area Representative and Franchisor.
B. Area Representative covenants and agrees to indemnify and hold
Franchisor harmless against and from any and all claims, demands, judgments,
damages, suits, losses, penalties, expenses, costs, settlements and liabilities
of any kind or nature (including reasonable attorneys' fees) arising or
resulting from any default in the observance, performance or breach of any
representation, warranty, covenant or agreement made by Area Representative, or
required to be performed under this Agreement. The indemnification issued from
Area Representative to Franchisor will provide the same protection as the
Franchisor to the Area Representative.
C. Area Representative covenants and agrees to indemnify and hold
Franchisor harmless against and from any and all claims, demands, judgments,
damages suits, losses, penalties, expenses, costs, settlements and liabilities
of any kind or nature (including reasonable attorneys' fees) resulting from this
Agreement when the action that occurs was created by the Area Representative and
not authorized by the Franchisor.
D. Area Representative further covenants and agrees to indemnify and
hold Franchisor harmless from and against any and all claims, demands,
judgments, damages, suits, losses, penalties, expenses, costs, settlements and
liabilities of any kind or nature (including reasonable attorneys' fees) arising
or resulting from the Area Representative's dealings with prospective, existing
or former Individual Franchisees within the Development Territory including, but
not limited to, all lawsuits or other proceedings involving the Area
Representative and one (1) or more of its franchisees in which Franchisor is a
named party.
E. Area Representative will pay all costs and expenses, including
reasonable attorneys' fees, incurred by Franchisor in enforcing any term,
condition or provision of this Agreement or in seeking to enjoin any violation
of this Agreement by the Area Representative. In the event the Area
Representative decides to take action via Arbitration the Area Representative
will be responsible for all costs and if Franchisor takes action against Area
Representative Franchisor will be responsible for all costs.
F. The indemnification and other obligations contained herein shall
continue in full force and effort subsequent to and notwithstanding the
expiration or termination of this Agreement.
X. INSURANCE
---------
A. Area Representative shall procure at its expense and maintain in
full force and effect during the term of this Agreement, an insurance policy or
policies protecting Area Representative and Franchisor, its officers, directors,
partners and employees, against any loss, liability, personal injury, death,
property damage or expense whatsoever arising or occurring upon or in connection
with Area Representative's business, as Franchisor may reasonably require for
its own and Area Representative's protection. Franchisor shall be named an
Additional Named Insured in such policy or policies.
B. Such policy or policies shall be written by an insurance company
licensed in the state in which Area Representative operates and having at least
an "A" Rating Classification as indicated in A.M. Best's Key Rating Guide in
accordance with standards and specifications set forth in the Manual or
otherwise in writing, and shall include, at a minimum (except as different
coverage and policy limits may reasonably be specified for all franchisees from
time to time by Franchisor in the Manual or otherwise in writing), the
following:
14
1. "All Risks" or "Special Form" coverage insurance on all
furniture, fixtures, equipment, supplies and other property used in the
operation of the Franchised Business (which coverage will include flood and/or
earthquake coverage, where there are known exposures to either peril, and theft
insurance) for full repair as well as replacement value of the equipment,
improvements and betterments, except that an appropriate deductible clause not
to exceed ONE THOUSAND DOLLARS ($1,000.00) will be permitted.
2. Workers' Compensation and Employer's Liability insurance as
well as any other insurance required by statute or rule of the state or county
in which the Franchised Business is located and operated.
3. Comprehensive General Liability insurance, including a per
premises aggregate with the following coverage: broad form contractual
liability; personal injury; medical payments and fire damage liability; insuring
Company and you against all claims, suits, obligations, liabilities and damages,
including attorneys' fees, based upon or arising out of actual or alleged
personal injuries or property damage resulting from or occurring in the course
of, or on about or otherwise concerning the Franchised Business, including
General Aggregate coverage in the following limits:
Minimum Limits
Recommended Coverage of Coverage
-------------------- -----------
General Aggregate..............................................$500,000
Personal Injury................................................$500,000
Each Occurrence................................................$500,000
Fire Damage (any one fire)......................................$50,000
Medical Expense (any one person).................................$5,000
Automobile Liability Insurance (including owned, hired
and non-owned coverage).....................................$500,000
Also, you must maintain such insurance and types of coverage as Company
may require.
Area Representative can also purchase an Error and Omissions policy from
Franchisor at the price of $75.00 per year, based upon Franchisor's current
contract.
C. The insurance afforded by the policy or policies respecting
liability shall not be limited in any way by reason of any insurance which may
be maintained by Franchisor. Within ninety (90) days of the signing of this
Agreement, an Accord Form Certificate of Insurance showing compliance with the
foregoing requirements shall be furnished by Area Representative to Franchisor
for approval. Such certificate shall state that said policy or policies shall
not be canceled or altered without at least thirty (30) days' prior written
notice to Franchisor and shall reflect proof of payment of premiums. Maintenance
of such insurance and the performance by Area Representative of the obligations
under this Paragraph shall not relieve Area Representative of liability under
the indemnity provision set forth in this Agreement. Minimum limits as required
above may be modified from time to time, as conditions require, by written
notice to Area Representative.
D. Should Area Representative, for any reason, not procure and
maintain such insurance coverage as required by this Agreement, Franchisor shall
have the right and authority (without, however, any obligation to do so)
immediately to procure such insurance coverage and to charge same to Area
Representative, which charges, together with a reasonable fee for expenses
incurred by Franchisor in connection with such procurement, shall be payable by
Area Representative immediately upon notice.
15
XI. TRANSFERABILITY OF INTEREST
---------------------------
A. This Agreement and all rights hereunder can be assigned and
transferred by Franchisor and, if so, shall be binding upon and inure to the
benefit of Franchisor's successors and assigns.
B. If Area Representative is in full compliance with this Agreement,
Area Representative may transfer this Agreement with Franchisor's prior written
approval, which approval shall not be unreasonably withheld, to a corporation or
other entity of which Area Representative owns not less than two-thirds (2/3) of
the ownership interest. The transfer fee described in Paragraph XI.E. will be
waived by Franchisor, and all owners of such entity must sign a Guaranty and
Assumption of Obligations attached as Exhibit B.
C. In the event of the death or permanent disability of the Area
Representative (if the Area Representative is an individual or a holder of a
legal or beneficial interest of fifty percent (50%) or more in the Area
Representative entity), then this Agreement may be assigned, transferred or
bequeathed by the Area Representative or a personal representative to any person
or beneficiary. However, the assignment of this Agreement to the transferee,
assignee or beneficiary shall not be valid or effective until Franchisor has
received the properly executed legal documents which its legal counsel deems
necessary to properly and legally document the transfer, assignment or bequest
of this Agreement, and until the transferee, assignee or beneficiary agrees to
be unconditionally bound by the terms and conditions of this Agreement and to
personally guarantee the performance of the Area Representative's obligations
under this Agreement. Such disposition shall be completed within a reasonable
time, not to exceed one hundred eighty (180) days from the date of death or
permanent disability and shall be subject to all terms and conditions applicable
to transfers contained in this Section.
D. Franchisor shall not unreasonably withhold its consent to any
transfer of an interest in the Area Representative or in this Agreement,
providing the Area Representative complies with the following conditions:
1. The transferee(s) shall be of good moral character and
reputation and shall have a good credit rating and competent business
qualifications reasonably acceptable to Franchisor. Area Representative shall
provide Franchisor with such information as Franchisor may require to make such
determination concerning each such proposed transferee(s).
2. The transferee(s) or such other individual(s) as shall be
the actual manager of the franchise shall have successfully completed and passed
the training course then in effect for Area Representatives, or otherwise
demonstrated to Franchisor's satisfaction, sufficient ability to operate the
Area Representative's Business being transferred.
3. Area Representative, prior to the transfer, shall execute a
general release, in a form prescribed by Franchisor, of any and all claims
against Franchisor and its subsidiaries and affiliates, and their respective
officers, directors, agents and employees, except such claims as are not
permitted to be waived under applicable law.
4. All accrued money obligations of Area Representative to
Franchisor, its subsidiaries, affiliates or assignees, shall be satisfied prior
to assignment or transfer, and Area Representative shall not be in default under
the terms of this Agreement.
5. Area Representative has executed a written agreement in a
form satisfactory to Franchisor, in which the Area Representative covenants to
remain primarily liable under this Agreement and to observe all applicable
post-term obligations and covenants contained in this Agreement.
16
6. The transferee Area Representative agrees to be personally
liable to discharge all of the Area Representative's obligations under this
Agreement, and shall enter into a written agreement in a form satisfactory to
Franchisor assuming and agreeing to discharge all of the Area Representative's
obligations and covenants under this Agreement.
7. The transferee Area Representative shall execute, upon
Franchisor's request, and cause all parties having a legal or beneficial
interest in the transferee Area Representative to execute, the then-current
standard Area Representative Agreement for a term ending with the term of this
Agreement, and such other ancillary agreements as Franchisor may require for the
Franchised Business. The transferee Area Representative shall not be required to
pay a Development Fee; however, the transferee Area Representative shall be
required to pay any additional fees not provided for in this Agreement but which
are required to be paid to Franchisor by other Area Representatives pursuant to
the terms of the then-current standard Area Representative Agreement.
E. The transferee Area Representative or transferor Area
Representative shall have paid to Franchisor a transfer fee equal to twenty
(20%) percent of the then current minimum Area Representative fee being paid,
for the training, supervision, administrative costs, overhead, attorneys' fees,
accounting and other Franchisor expenses in connection with the transfer. This
transfer fee does not apply to an assignment of interest to a corporation or
limited liability company under Paragraph XI.B. of this Agreement.
F. Should Area Representative, at a future date, desire to make
either a public or a private offering of its securities, prior to such offering
and sale, and prior to the public release of any statements, data or other
information of any kind relating to the proposed offering of Area
Representative's securities, Area Representative shall secure the written
approval of Franchisor, which approval shall not be unreasonably withheld. Area
Representative shall secure Franchisor's prior written approval of any and all
press releases, news releases and any and all other publicity, the primary
purpose of which is in the public interest in its offering. Only after written
approval has been given by Franchisor may Area Representative proceed to file,
publish, issue, and release and make public any said data, material and
information regarding its securities offering or the Franchised Businesses. It
is specifically understood that any review by Franchisor is solely for its own
information, and its approval shall not constitute any kind of authorization,
acceptance, agreement, endorsement approval or ratification of same, either
expressly or implied; and Area Representative shall make no oral or written
notice of any kind whatsoever indicating or implying that Franchisor and/or
related corporations or persons have any interest in the relationship whatsoever
to the proposed offering other than acting as Franchisor. Area Representative
agrees to indemnify and hold harmless Franchisor and its subsidiaries and their
owners, directors, officers, employees, successors and assigns, from all claims,
demands, costs, fees, charges, liability or expense (including attorneys' fees)
of any kind whatsoever arising from Area Representative's offering or
information published or communicated in actions taken with regard thereto.
G. In the event Area Representative (or, if applicable, an owner)
wishes to sell, transfer, gift, assign, or otherwise dispose of any interest in
this Agreement, a controlling interest in the Area Representative entity, or all
or a substantial portion of the assets of the business, Area Representative
agrees to grant to Franchisor a thirty (30) day right of first refusal to
purchase such rights, interest, or assets on the same terms and conditions as
are contained in the written offer to purchase submitted to Area Representative
by a bona fide proposed purchaser; provided, however, the following additional
terms and conditions shall apply:
1. Area Representative shall notify Franchisor of such offer by
sending a written notice to Franchisor enclosing a copy of the written offer
signed by the bona fide proposed purchaser;
17
2. The thirty (30) day right of first refusal period will run
concurrently with the period in which Franchisor has to approve or disapprove
the proposed transferee;
3. Such right of first refusal arises for each proposed
transfer, and any material change in the terms or conditions of the proposed
transfer, even if to the same bona fide proposed purchaser, shall be deemed a
separate offer for which a new thirty (30) day right of first refusal shall be
given to Franchisor;
4. If the consideration or manner of payment offered by a third
party is such that Franchisor could not reasonably be expected to furnish the
same, then Franchisor may purchase the interest which is proposed to be sold for
the reasonable cash equivalent. If the parties cannot agree within a reasonable
time on the cash consideration, an independent appraiser shall be designated by
Franchisor, whose determination will be binding upon the parties. All expenses
of the appraiser shall be paid for equally by Franchisor and Area
Representative; and
5. If Franchisor chooses not to exercise its right of first
refusal, Franchisee shall be free to complete the sale, transfer, or assignment,
subject to compliance with this Section. Absence of a reply to Area
Representative's notice of a proposed sale within the thirty (30) day period is
deemed a waiver of such right of first refusal but not a waiver of the required
compliance with this Section.
XII. RESTRICTIONS CONCERNING COMPETITIVE BUSINESSES
----------------------------------------------
A. During the term of this Agreement, no holder of a legal or
beneficial interest in Area Representative shall, without the express written
consent of Franchisor, directly or indirectly, own, operate, have any interest
in, or be connected with any other business within the Development Territory or
in any business specializing in providing Internet advertising services or other
services the same as or similar to those sold or provided in the System. The
restriction excludes the travel business.
B. Area Representative specifically acknowledges that, pursuant to
this Agreement, Area Representative will receive valuable training and
confidential information including, without limitation, information regarding
the promotional, operational, sales, and marketing methods and techniques of
Franchisor along with other trade secrets and confidential information which is
a part of the System. Accordingly, Area Representative covenants that, except as
otherwise approved in writing by Franchisor, Area Representative shall not,
during the term of this Agreement and for a period of one (1) year after the
expiration or termination of this Agreement, regardless of the cause of
termination, either directly or indirectly, for itself, or through, on behalf
of, or in conjunction with any person, persons, partnership or corporation, or
other entity, own, maintain, engage in or have any interest in any business
specializing, in whole or in part, in providing Internet advertising services or
the sale of related services the same as or similar to those sold or provided
through the System within a fifty (50) mile radius of the Development Territory
or within a radius of fifty (50) miles of the location of any other business
using the System, whether franchised or owned by Franchisor.
C. Area Representative shall not, during the term of this Agreement
or after its termination or non-renewal, employ or seek to employ any person who
is at that time employed by Franchisor or any of its affiliates, or by any other
franchisee of Franchisor, or otherwise, directly or indirectly induce or seek to
induce such person to leave his or her employment. In the event that Area
Representative breaches this provision, Franchisor may terminate this Agreement
and seek all available legal remedies.
D. Area Representative shall not, during the term of this Agreement
or after its termination or non-renewal, communicate or divulge to any other
person, persons, partnership or corporation, except to such of its employees,
18
agents or contractors as must know for purposes of operating the Franchised
Business, any information or knowledge concerning the methods of service,
promotion, sale, method, techniques or procedure used in a XxxXxxx.xxx franchise
nor shall Area Representative disclose or divulge in whole or in part, any trade
secrets, confidential information, marketing techniques, patterns or processes
of Franchisor or its affiliated companies. Area Representative shall require
each of its employees, agents and contractors with access to such information to
execute a non-disclosure and non-compete agreement in a form approved by
Franchisor.
E. Area Representative acknowledges that a violation of any covenant
in this Section will cause irreparable harm to Franchisor, the exact amount of
which may not be subject to reasonable or accurate ascertainment, and therefore,
Area Representative does hereby consent that in the event of such violation,
Franchisor shall be entitled to seek injunctive relief to protect certain trade
secrets and confidential information. Such remedies, however, shall be
cumulative and in addition to any other remedies to which Franchisor may then be
entitled. In the event Franchisor prevails in any suit to enforce any provision
hereof, Franchisor shall be entitled to receive, in addition to any relief or
remedy granted, the cost of bringing such suit, including reasonable attorneys'
fees. The covenants set forth in this Paragraph shall survive the termination or
expiration of this Agreement. Area Representative acknowledges that the covenant
not to compete is fair and reasonable and will not impose any undue hardship on
Area Representative since Area Representative has other considerable skills,
experience and education which will afford him or her the opportunity to derive
income from other endeavors.
F. The parties agree that each of the foregoing covenants shall be
construed as independent of any other covenant or provision of this Agreement.
If all or any portion of a covenant in this Paragraph XII. is held unreasonable
or unenforceable by a court or agency having valid jurisdiction in any
unappealed final decision to which Franchisor is a party, Area Representative
expressly agrees to be bound by any lesser covenant subsumed within the terms of
such covenant that imposes the maximum duty permitted by law, as if the
resulting covenant were separately stated in and made a part of this Paragraph.
G. Area Representative and all holders of a legal and beneficial
interest in the legal entity acting as Area Representative expressly agree to be
bound by all the covenants contained in Paragraph XII. during the term of this
Agreement and further, they agree to be bound by the covenants set forth which
shall survive the termination or expiration of this Agreement.
XIII. DEFAULT AND TERMINATION
-----------------------
A. If Area Representative is in substantial compliance with this
Agreement and Franchisor materially breaches this Agreement and fails to cure or
begin to cure such breach within a reasonable time after written notice thereof
is delivered to Franchisor, Area Representative may terminate this Agreement.
Such termination shall be effective thirty (30) days after delivery to
Franchisor of notice that such breach has not been cured and Area Representative
elects to terminate this Agreement.
B. This Agreement shall terminate automatically upon delivery of
notice of termination to Area Representative, if Area Representative or a holder
of a legal or beneficial interest:
1. Has made any material misrepresentation or omission in its
application for the franchise;
2. Fails to satisfactorily complete the training program as
provided in Paragraph VI.A.;
19
3. Is convicted of or pleads no contest, where such plea is
applicable, to a felony or other crime or offense that is likely to adversely
affect the reputation of Area Representative or any of the Marks;
4. Makes any unauthorized use, disclosure or duplication of the
Confidential Operations Manual or duplicates or discloses or uses in any
unauthorized manner any portion of the confidential information or any trade
secrets provided to Area Representative by Franchisor;
5. Surrenders or transfers control of the operation of a
Franchised Business, makes an unauthorized direct or indirect assignment of a
franchise or an ownership interest in Area Representative or fails or refuses to
assign the interest in Area Representative of a deceased or incapacitated
controlling owner thereof as herein required;
6. Commits any affirmative act of insolvency, or files any
petition or action of insolvency, or for appointment of a receiver or trustee,
or makes any assignment for the benefit of creditors, or fails to vacate or
dismiss within sixty (60) days after filing any such proceedings commenced
against Area Representative by a third party;
7. Is adjudicated as bankrupt, commits any affirmative act of
insolvency or files any action or petition of insolvency, or if a receiver
(permanent or temporary) of its property or any part thereof is appointed by a
court of competent authority, or if it makes a general assignment for the
benefit of its creditors, or if a final judgment remains unsatisfied of record
for thirty (30) days or longer (unless supersedes bond is filed), or if
execution is levied against any of Area Representative's business or property,
or if suit to foreclose any lien or mortgage against its Premises or equipment
is instituted against Area Representative and not dismissed within thirty (30)
days, or is not in the process of being dismissed; provided, however, that
Franchisor reserves the right to be named as trustee or receiver in any
voluntary petition for bankruptcy or insolvency filed by Area Representative;
8. Materially misuses or makes an unauthorized use of any Marks
or commits any act which can reasonably be expected to materially impair the
goodwill associated with any Marks;
9. Fails to comply with the Development Schedule;
10. Fails or refuses to make payments of any amounts due
Franchisor or its affiliates for portions of any Individual or REZcity Plus
Franchise Fees due Franchisor, purchases from Franchisor or its affiliates or
any other amounts due to Franchisor or its affiliates, and does not correct such
failure or refusal within thirty (30) days after written notice of such failure
is delivered to Area Representative; or
11. Fails or refuses to comply with any other provision of this
Agreement, or any mandatory specification, standard or operating procedure
prescribed by Franchisor or otherwise in writing, and does not correct such
failure within thirty (30) days (or provide proof acceptable to Franchisor that
it has made all reasonable efforts to correct such failure and will continue to
make all reasonable efforts to cure until a cure is effected if such failure
cannot reasonably be corrected within thirty [30] days) after written notice of
such failure to comply is delivered to Area Representative.
C. Upon termination of this Agreement, Area Representative shall
have no further right to receive any portion of the Franchise Fee or Sales
Commission or other compensation received by Franchisor from Individual
Franchises, as provided in Section V. herein.
20
D. To the extent that the provisions of this Agreement provide for
periods of notice less than those required by applicable law, or provide for
termination, cancellation, non-renewal or the like other than in accordance with
applicable law, such provisions shall, to the extent such are not in accordance
with applicable law, not be effective, and Area Representative shall comply with
applicable law in connection with each of these matters.
XIV. RIGHTS AND OBLIGATIONS OF THE PARTIES UPON EXPIRATION OR
---------------------------------------------------------
TERMINATION
-----------
A. Area Representative agrees that upon termination or expiration of
this Agreement, Area Representative shall:
1. Pay, within ten (10) days after the effective date of
termination or expiration, all amounts due and owing to Franchisor under this
Agreement;
2. Not directly or indirectly at any time or in any manner
identify any business as a current or former XxxXxxx.xxx franchise, or as a
franchisee, licensee or dealer of or as otherwise associated with Franchisor, or
use any Marks, any colorable imitation thereof or other indicia of a XxxXxxx.xxx
business in any manner or for any purpose, or utilize for any purpose any trade
name, trademark, service xxxx or other commercial symbol that suggests or
indicates a connection or association with Franchisor or its affiliates and
franchisees;
3. Promptly return to Franchisor all signs, sign faces,
Confidential Operations Manuals, catalogs, advertising materials, forms,
invoices and other materials containing any Marks or otherwise identifying or
relating to a XxxXxxx.xxx business and allow Franchisor, without liability, to
remove all such items from the Franchised Business;
4. Promptly take such action as may be required to cancel all
fictitious or assumed name or equivalent registrations relating to its use of
any Marks;
5. Promptly notify the appropriate telephone company and all
telephone directory listing agencies of the termination or expiration of Area
Representative's right to use any telephone number and any regular, classified
or other telephone directory listings associated with any Marks and authorize
transfer of same to or at the direction of Franchisor. Area Representative
agrees to execute undated letters of assistance to telephone companies and
telephone directory listing agencies directing termination and/or transfer of
Area Representative's right to use telephone numbers associated with the Marks,
which Franchisor may hold until termination or expiration hereof. Area
Representative acknowledges that as between Franchisor and Area Representative,
Franchisor has the sole right to and interest in all telephone numbers and
directory listings associated with any Marks. Area Representative authorizes
Franchisor, and hereby appoints Franchisor and any officer of Franchisor as its
attorney in fact, to direct the appropriate telephone company and all listing
agencies to transfer same to Franchisor or at its direction, should Area
Representative fail or refuse to do so, and the appropriate telephone company
and all listing agencies may accept such direction or this Agreement or Area
Representative's letter of direction held by Franchisor as conclusive of the
exclusive rights of Franchisor in such telephone numbers and directory listings
and its authority to direct their transfer;
6. Immediately deliver to Franchisor all past and present
franchise sales leads and records and all contracts, acknowledgment of receipt
and other information and records related to Franchisees of Franchisor in the
Development Territory; and
21
7. Promptly take such action necessary to withdraw Area
Representative's effective and pending state franchise and business opportunity
registrations and filings.
B. Upon termination or expiration of this Agreement, or any
extension or renewal hereof, Franchisor shall have an option to purchase from
Area Representative all or any part of the assets of the Area Representative, if
any, used in the operation of the Area Representative franchise, including
inventory, signs, equipment, marketing materials and other indicia bearing
Franchisor's Marks, and any other chattels, real estate leases and equipment
leases, at fair market value. Franchisor may exercise said option by giving Area
Representative written notice thereof within thirty (30) days after termination
or not less than thirty (30) days prior to expiration, as the case may be. The
fair market value purchase price shall be determined by agreement of Area
Representative and Franchisor or by arbitration as herein provided for the
settlement of disputes.
C. Area Representative agrees that upon termination or expiration of
the Franchise it shall immediately cease to use the confidential information in
any business or otherwise and shall return to Franchisor all copies of the
Confidential Operations Manual which have been loaned to it by Franchisor.
D. All obligations of Franchisor and Area Representative which
expressly or by their nature survive the expiration or termination of this
Agreement shall continue in full force and effect subsequent to and
notwithstanding its expiration or termination and until they are satisfied in
full or by their nature expire.
XV. FRANCHISOR'S REMEDIES UPON TERMINATION OR EXPIRATION
Area Representative acknowledges that its failure (except as otherwise
provided herein) to cease all activities as Area Representative within the
Development Territory, upon the termination or expiration of this Agreement or
any portion thereof, will result in immediate and irreparable damage to
Franchisor and to the rights of any subsequent area representative. Area
Representative acknowledges that there is no adequate remedy at law for such
failure to cease activities, and Area Representative agrees that in the event of
such failure, Franchisor shall be entitled to seek equitable relief by way of
temporary and permanent injunctions and such other and further relief as any
court with jurisdiction may deem just and proper. Resort to any remedies
referred to herein shall not be construed as a waiver of any other rights and
remedies to which Franchisor is entitled under this Agreement or otherwise.
XVI. NOTICES
Any and all notices required or permitted under this Agreement shall be
in writing and shall be personally delivered, delivered by messenger or delivery
services, mailed by certified mail return receipt requested, or facsimile
transmission, and shall be effective when received or confirmation of receipt is
acknowledged to the respective parties at the following addresses unless and
until a different address has been designated by written notice to the other
party:
Notices to Franchisor: RezConnect Technologies, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxx, Xxx Xxxxxx 00000
Attention: Xxxxxxx Xxxxx, President
Fax No.: 000-000-0000
22
With a copy to: Xxxxxx X. Xxxxxxxxxx, Esq.
EAB Plaza, Xxxx Xxxxx, 00xx Xxxxx
Xxxxxxxxx, Xxx Xxxx 00000
Fax No.: (000) 000-0000
Notices to Area Representative:
------------------------------------
------------------------------------
------------------------------------
Fax No.:
-------------------
With a copy to:
------------------------------------
------------------------------------
------------------------------------
Fax No.:
-------------------
XVII. ENTIRE AGREEMENT
----------------
This Agreement constitutes the entire agreement of the parties with
respect to the XxxXxxx.xxx Franchise herein granted and supersedes any prior
agreements or understandings between them, whether oral or written. The terms of
this Agreement may not be waived or modified except by an express agreement in
writing signed by both parties. There are no representations, promises,
warranties, covenants or undertakings other than those contained in this
Agreement. The failure of either party hereto to enforce, or the delay by either
party in enforcing, any of its rights under this Agreement shall not be deemed a
continuing waiver or modification thereof, and either party may, within the time
permitted by applicable law, commence appropriate legal proceedings to enforce
any or all of such rights.
XVIII. APPLICABLE LAW
--------------
A. THIS AGREEMENT AND THE RIGHTS OF THE PARTIES HEREUNDER TAKE
EFFECT UPON ACCEPTANCE AND EXECUTION BY FRANCHISOR AND SHALL BE INTERPRETED AND
CONSTRUED UNDER THE LAWS OF NEW JERSEY, WHICH LAWS SHALL PREVAIL IN THE EVENT OF
ANY CONFLICT OF LAW, EXCEPT TO THE EXTENT GOVERNED BY FEDERAL LAW INCLUDING,
WITHOUT LIMITATION, THE UNITED STATES TRADEMARK ACT OF 1946, AS AMENDED (XXXXXX
ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.) AND THE FEDERAL ARBITRATION ACT (9 U.S.C.
SECTION 1 ET SEQ.).
B. AREA REPRESENTATIVE ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT
IS ENTERED INTO IN BERGEN COUNTY, NEW JERSEY, AND THAT ANY ACTION SOUGHT TO BE
BROUGHT FOR THE PURPOSE OF ENFORCING THE TERMS AND PROVISIONS HEREOF SHALL BE
BROUGHT IN THE APPROPRIATE STATE OR FEDERAL COURT LOCATED IN BERGEN COUNTY, NEW
JERSEY, AND THE PARTIES DO HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION
OR VENUE FOR THE PURPOSES OF CARRYING OUT THIS PROVISION.
23
C. NO RIGHT OR REMEDY CONFERRED UPON OR RESERVED TO FRANCHISOR OR
AREA REPRESENTATIVE BY THIS AGREEMENT IS INTENDED TO BE, NOR SHALL BE DEEMED,
EXCLUSIVE OF ANY OTHER RIGHT OR REMEDY HEREIN OR BY LAW OR EQUITY PROVIDED OR
PERMITTED, BUT EACH SHALL BE CUMULATIVE OF EVERY OTHER RIGHT OR REMEDY.
D. NOTHING HEREIN CONTAINED SHALL BAR FRANCHISOR'S RIGHT TO OBTAIN
INJUNCTIVE RELIEF AGAINST THREATENED CONDUCT THAT WILL CAUSE IT LOSS OR DAMAGES,
UNDER THE USUAL EQUITY RULES, INCLUDING THE APPLICABLE RULES FOR OBTAINING
RESTRAINING ORDERS, PRELIMINARY AND PERMANENT INJUNCTIONS.
E. IN THE EVENT THAT THE AREA REPRESENTATIVE ENACTS ACTION AGAINST
FRANCHISOR, ARBITRATION MEETING WILL BE HELD IN NJ. IN THE EVENT THAT THE
FRANCHISOR ENACTS ACTION AGAINST THE AREA REPRESENTATIVE, ARBITRATION MEETING
WILL BE HELD IN THE STATE IN WHICH THE BUSINESS RESIDES OF THE AREA
REPRESENTATIVE.
XIX. SETTLEMENT OF DISPUTES
----------------------
A. This Agreement is a written agreement evidencing a transaction
involving commerce and is, therefore, subject to the terms and provisions of the
Federal Arbitration Act, Title 9 of the United States Code. Except for a
controversy or claim relating to the ownership of any of Franchisor's service
marks, trade names and logotypes, any other controversy or claim arising out of
or relating to this Agreement, or to any other agreements between the parties or
with regard to their interpretation, formation or breach, shall be settled by
binding arbitration conducted in Bergen County, New Jersey, according to the
commercial rules of the American Arbitration Association as modified herein
below.
B. In the event of any controversy or claim as set forth above,
either party shall send written notice to (1) the other party; and (2) the
appropriate Regional Office of the American Arbitration Association for invoking
the binding arbitration provisions of this Agreement. In the event that either
party shall make demand for arbitration, such arbitration shall be conducted in
Bergen County, New Jersey. The American Arbitration Association shall forward to
the parties a written list of proposed arbitrators each of whom shall have
established experience and knowledge in franchise law. Each party shall have ten
(10) days from the date of mailing by the American Arbitration Association of
the written list of proposed arbitrators within which to return said written
list with the party's choice of arbitrators to the American Arbitration
Association. If either party fails to return the written list of proposed
arbitrators to the American Arbitration Association with that party's choice
within said ten (10) days, it shall be conclusively determined that said party
has approved the appointment of any arbitrator named in the written list. The
parties further consent to the jurisdiction of any appropriate court to enforce
the provisions of this section and/or to enter a judgment upon any award
rendered by the arbitrator.
C. In the event that any controversy r claim arising from this
Agreement as explained above also involves any officer, director, employee,
representative, or agent of either party, then any such controversy or claim
shall also be submitted to binding arbitration in the same manner as explained
above. In the event any controversy or claim is submitted to binding arbitration
as explained above, the parties further agree that discovery prior to
arbitration shall be restricted solely to exchanging lists of those witnesses
and documents which are to be presented at the hearing before the arbitrator,
unless the parties mutually agree in writing to expand the scope of discovery.
Except as limited by this Agreement, the arbitrator shall have the
right to award or include in the arbitration award any relief deemed proper in
the circumstances including, without limitation, money damages (with interest on
unpaid amounts from the date due), specific performance, injunctive relief and
attorney fees and costs provided that the arbitrator shall not have the
authority to award exemplary or punitive damages.
24
D. Although all controversies and claims are to be settled by
binding arbitration, Franchisor expressly reserves the right, at its sole
discretion, to seek temporary injunctive relief pending completion of the
arbitration proceedings from a court of competent jurisdiction to enforce Area
Representative's post termination covenants not to compete and to enjoin Area
Representative from any existing or threatened conduct which Franchisor believes
could cause any harm or damage to Franchisor or to its franchise System. In the
event Franchisor files a lawsuit to seek temporary injunctive relief as
described above, the filing shall not constitute, nor be deemed by anyone to
constitute, a waiver by Franchisor of its right to invoke the binding
arbitration provisions of this Agreement.
E. The parties agree that the arbitration of any disputes between them
shall be conducted on an individual basis and such disputes shall not be
arbitrated on a class-wide basis nor shall any of these disputes be consolidated
with the arbitration of any other disputes which might arise between Franchisor
and any of its other area representatives or other franchisees.
AREA REPRESENTATIVE EXPRESSLY ACKNOWLEDGES THAT AREA REPRESENTATIVE HAS
READ THE TERMS OF THIS BINDING ARBITRATION PROVISION AND SPECIFICALLY AFFIRMS
THAT THIS PROVISION IS ENTERED INTO WILLINGLY AND VOLUNTARILY AND WITHOUT ANY
FRAUD, DURESS OR UNDUE INFLUENCE ON THE PART OF FRANCHISOR OR ANY OF
FRANCHISOR'S AGENTS OR EMPLOYEES.
XX. COST OF ENFORCEMENT OR DEFENSE
------------------------------
A. In the event that Franchisor is required to employ legal counsel
or to incur other expenses to enforce any obligation of Area Representative
hereunder, or to defend against any claim, demand, action or proceeding by
reason of the Area Representative's failure to perform any obligation imposed by
this Agreement, Area Representative shall be responsible for the amount of all
reasonable attorneys' fees of such counsel and all other expenses incurred in
enforcing such obligation or in defending against such claim, demand, action or
proceeding, whether incurred prior to, or in preparation for, or in
contemplation of the filing of such action or thereafter except where prohibited
by law.
B. Franchisor and Area Representative hereby waive to the fullest
extent permitted by law any right to or claim of any consequential, punitive or
exemplary damages against the other, and agree that in the event of a dispute
between them each shall be limited to the recovery of any actual damages
sustained by it.
XXI. SEVERABILITY AND CONSTRUCTION
-----------------------------
A. Except as expressly provided to the contrary herein, each
section, part, term and/or provision of this Agreement shall be considered
severable; and if, for any reason, any section, part, term and/or provision
herein is determined to be invalid and contrary to, or in conflict with, any
existing or future law or regulation by a court or agency having valid
jurisdiction, such shall not impair the operation of, or have any other effect
upon, such other portions, sections, parts, terms and/or provisions of this
Agreement as may remain otherwise intelligible, and the latter shall continue to
be given full force and effect and bind the parties hereto; and said invalid
sections, parts, terms and/or provisions shall be deemed not to be a part of
this Agreement; provided, however, that if Franchisor determines that such
finding of invalidity or illegality adversely affects the basic consideration of
this Agreement, Franchisor, at its option, may terminate this Agreement.
B. Anything to the contrary herein notwithstanding, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than Franchisor or Area Representative and such of their respective
25
successors and assigns as may be contemplated by Paragraph XXII.A., any rights
or remedies under or by reason of this Agreement.
C. Area Representative expressly agrees to be bound by any promise
or covenant imposing the maximum duty permitted by law which is subsumed within
the terms of any provision hereof, as though it were separately articulated in
and made a part of this Agreement, that may result from striking from any of the
provisions hereof any portion or portions which a court may hold to be
unreasonable and unenforceable in a final decision to which Franchisor is a
party, or from reducing the scope of any promise or covenant to the extent
required to comply with such a court order.
D. All captions in the Agreement are intended solely for the
convenience of the parties, and none shall be deemed to affect the meaning or
construction of any provision hereof.
E. This Agreement may be executed in duplicate and each copy so
executed shall be deemed an original.
XXII. DEFINITIONS
-----------
A. The term "Area Representative" shall include all persons who
succeed to the interest of the original Area Representative by transfer or
operation of law and shall be deemed to include not only the individual or
entity defined as "Area Representative" in the introductory paragraph of this
Agreement, but shall also include all partners of the entity that executes this
Agreement, in the event said entity is a partnership, and all shareholders,
officers and directors of the entity that executes this Agreement, in the event
said entity is a corporation. By their signatures hereto, all partners,
shareholders, officers and directors of the entity that signs this Agreement as
Area Representative acknowledge and accept the duties and obligations imposed
upon each of them, individually, by the terms of this Agreement.
B. As used in this Agreement, the term "affiliate" of a party hereto
shall mean a corporation, partnership, joint venture, association, joint stock
company, trust or unincorporated organization that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with such party.
C. The singular usage includes the plural and the masculine and
neuter usages include the other and the feminine.
XXIII. CAVEAT
------
The success of the business venture contemplated to be undertaken by
Area Representative by virtue of this Agreement is speculative and depends, to a
large extent, upon the ability of Area Representative as an independent
businessman, and his active participation in the daily affairs of the business
as well as other factors.
XXIV. ACKNOWLEDGMENTS
---------------
A. Area Representative represents and acknowledges that it has
received, read and understood this Agreement and Franchisor's Uniform Franchise
Offering Circular; and that Franchisor has accorded Area Representative ample
time and opportunity to consult with advisors of its own choosing concerning
risks of entering into this Agreement.
B. Area Representative acknowledges that it has received a copy of
this Agreement and the attachments thereto, at least five (5) business days
26
prior to the date on which this Agreement was executed. Area Representative
further acknowledges that Area Representative has received the disclosure
document required by the Trade Regulation Rule of the Federal Trade Commission
entitled "Disclosure Requirements and Prohibitions Concerning Franchising and
Business Opportunity Ventures" at least ten (10) business days prior to the date
on which this Agreement was executed.
C. Area Representative has been advised to consult with its own
advisors with respect to the legal, financial and other aspects of this
Agreement, the business franchised hereby and the prospects for that business.
In addition, Area Representative should consult with its attorneys with respect
to specific laws affecting the Franchised Business. Area Representative has
either consulted with such advisors or has deliberately declined to do so.
D. Area Representative acknowledges that the covenants not to compete
set forth in this Agreement are fair and reasonable, and will not impose any
undue hardship on Area Representative, since Area Representative has other
considerable skills, experience and education which afford Area Representative
the opportunity to derive income from other endeavors.
E. Area Representative affirms that all information set forth in
any and all applications, financial statements and submissions to Franchisor is
true, complete and accurate in all respects, with Area Representative expressly
acknowledging that Franchisor is relying upon the truthfulness, completeness and
accuracy of such information.
F. Area Representative has conducted an independent investigation of
the business contemplated by this Agreement and recognizes that, like any other
business, an investment in a XxxXxxx.xxx Franchised Business involves business
risks and that the success of the venture is primarily dependent upon the
business abilities and efforts of Area Representative.
G. Area Representative hereby consents and agrees that any disputes
arising between Franchisor and Area Representative be submitted to arbitration
as provided in Paragraph XIX. of this Agreement.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed and delivered this Agreement in multiple copies the
date and year first above written.
ATTEST: REZCONNECT TECHNOLOGIES, INC.
By:
---------------------------- -----------------------------------------
Title:
---------------------------- --------------------------------------
(in an official capacity only and not
individually or personally)
Date:
---------------------------------------
27
ATTEST:
--------------------------------------------
AREA REPRESENTATIVE
By:
---------------------------- -----------------------------------------
Title:
---------------------------- --------------------------------------
(in an official capacity only and not
individually or personally)
Date:
---------------------------------------
28
EXHIBIT A TO THE AREA REPRESENTATIVE AGREEMENT
----------------------------------------------
MAP OF DEVELOPMENT TERRITORY
RezConnect Technologies, Inc. AREA REPRESENTATIVE:
By: By:
---------------------------- -------------------------------
Title: Title:
------------------------- ----------------------------
Date: Date:
-------------------------- -----------------------------
EXHIBIT B TO THE AREA REPRESENTATIVE AGREEMENT
----------------------------------------------
GUARANTY AND ASSUMPTION OF OBLIGATIONS
THIS GUARANTY AND ASSUMPTION OF OBLIGATIONS is given this________ day
of __________, 20_____, by_______________________________________.
In consideration of, and as an inducement to, the execution of that
certain Area Representative Agreement (the "Agreement") on this date by
REZCONNECT TECHNOLOGIES, INC. ("us", "we", or "our"), each of the undersigned
personally and unconditionally (a) guarantees to us and our successors and
assigns, for the term of the Agreement and afterward as provided in the
Agreement, that _____________________ ("Area Representative") will punctually
pay and perform each and every undertaking, agreement and covenant set forth in
the Agreement and (b) agrees to be personally bound by, and personally liable
for the breach of, each and every provision in the Agreement, both monetary
obligations and obligations to take or refrain from taking specific actions or
to engage or refrain from engaging in specific activities, including the
non-competition, confidentiality and arbitration requirements.
Each of the undersigned consents and agrees that: (1) his or her direct
and immediate liability under this Guaranty will be joint and several; (2) he or
she will render any payment or performance required under the Agreement upon
demand if Area Representative fails or refuses punctually to do so; (3) this
liability will not be contingent or conditioned upon our pursuit of any remedies
against Area Representative or any other person; and (4) this liability will not
be diminished, relieved or otherwise affected by any extension of time, credit
or other indulgence which we may from time to time grant to Area Representative
or to any other person, including, without limitation, the acceptance of any
partial payment of performance of the compromise or release of any claims, none
of which will in any way modify or amend this Guaranty, which will be continuing
and irrevocable during the term of the Agreement.
Each of the undersigned waives all rights to payments and claims for
reimbursement or subrogation which any of the undersigned may have against Area
Representative arising as a result of the undersigned's execution of and
performance under this Guaranty.
IN WITNESS WHEREOF, each of the undersigned has affixed his or her
signature on the same day and year as the Agreement was executed.
GUARANTOR(S)
___________________________ _____________________________
___________________________ _____________________________
___________________________ _____________________________
___________________________ _____________________________
AMENDMENT TO THE AREA REPRESENTATIVE AGREEMENT
RezConnect Technologies, Inc.
FOR THE STATE OF CALIFORNIA
---------------------------
This Amendment to the Area Representative Agreement is agreed to this
____ day of __________, 20___, between RezConnect Technologies, Inc. and
____________________________ to amend and revise said Area Representative
Agreement as follows:
1. In recognition of the requirements of the California Franchise
Investment Law, Cal. Corp. Code ss.ss.31000-3516 and the California Franchise
Relations Act, Cal. Bus. And Prof. Code ss.ss.2000-20043, the Area
Representative Agreement for RezConnect Technologies, Inc. shall be amended as
follows:
o Paragraph XII.B. of the Area Representative Agreement contains a
covenant not to compete which extends beyond the expiration or
termination of the Agreement, the covenant may not be enforceable
under California law.
o Paragraphs IV.D. and XI.D.3. require Area Representative to sign a
general release as a condition of renewal and of transfer of the
franchise, such release shall exclude claims arising under the
California Franchise Investment Law and the California Franchise
Relations Act.
o Paragraph XIII.B.7. in the Area Representative Agreement which
terminates the Area Representative Agreement upon the bankruptcy of
the Area Representative may not be enforceable under federal
bankruptcy law (11 U.S.C. Section 101 et seq.).
o The California Franchise Relations Act provides rights to the Area
Representative concerning termination or non-renewal of the Area
Representative Agreement, which may supersede provisions in the Area
Representative Agreement, specifically Paragraphs IV. and XIII.
o Paragraphs XVIII. and XIX. of the Area Representative Agreement
require litigation or arbitration to be conducted in New Jersey, the
requirement may be unenforceable under California law.
o Paragraph XVIII.A. of the Area Representative Agreement requires
that the franchise be governed by New Jersey law, such a requirement
may be unenforceable.
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the California Law applicable to
the provisions are met independent of this Amendment.
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having
read this Amendment, understands and consents to be bound by all of its terms.
RezConnect Technologies, Inc. AREA REPRESENTATIVE:
By: By:
---------------------------- -----------------------------------
Title: Title:
------------------------- ------------
