AREA DEVELOPER AGREEMENT
TABLE OF CONTENTS
l. Acknowledgements....................................................2
2. Organization........................................................3
3. Appointment and Acceptance of Area Developer........................4
4. Area Developer's Obligations, Duties and Responsibilities...........5
5. Pretzel Time's Responsibilities.....................................5
6. Territory...........................................................8
7. Reservation of Rights...............................................9
8. Area Developer's Fee...............................................11
9. Failure to Meet Development Obligations............................12
10. Establishment of Company-Owned Stores..............................13
11. Area Developer Expenses............................................14
12. Term...............................................................14
13. Execution of Franchise Agreement...................................14
14. Management of Area Developer Business..............................15
15. Insurance..........................................................16
16. Records and Reports................................................17
17. Change of Ownership................................................18
18. Termination........................................................19
19. Termination For No Cause...........................................21
20. Further Assurances.................................................22
21. Noncompetition.....................................................22
22. Confidentiality....................................................22
23. Restrictions.......................................................23
24. Exclusive Relationship.............................................24
25. Restricted Person..................................................26
26. Marks..............................................................26
27. Refrain from Disparagement.........................................28
28. Limitation of Liability............................................28
29. Independent Contractors............................................28
30. No Liability For Acts of Other Party...............................29
31. Taxes..............................................................29
32. Indemnification....................................................30
33. Injunctive Relief..................................................31
34. Rights of Parties are Cumulative...................................31
35. Costs and Attorneys' Fees..........................................31
36. Continuing Obligations.............................................32
37. Grant Of Franchisees...............................................32
38. Modification.......................................................32
39. Pretzel Time's Option To Purchase Pretzel Time Units...............32
40. Death or Disability of Franchisee. . . . . . . . . . . . . .. . .. 33
41. Public or Private Offerings . . . . . . . . . . . . . . . . . . . 33
42. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
43. Restrictive Covenants. . . . . . . . . . . . . . . . . . . . . . ..35
44. No Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . 35
45. Rights of Parties are Cumulative . . . . . . . . . . . . . . . . 36
46. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . . . 36
47. Waiver of Punitive Damages . . . . . . . . . . . . . . . . . . . 37
48. Exclusive Jurisdiction . . . . . . . . . . . . . . . . . . . . . 37
49. Limitations of Claims . . . . . . . . . . . . . . . . . . . . . . 38
50. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 38
51. Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
52. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
53. Public and Private Offering . . . . . . . . . . . . . . . . . . . 38
54. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 39
55. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
56. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . 40
57. Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . 40
58. Time Is of The Essence . . . . . . . . . . . . . . . . . . . . . 40
59. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . 40
60. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
61. Terminology . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
62. Invalid or Unenforceable Provisions . . . . . . . . . . . . . . . 45
63. National Contracts . . . . . . . . . . . . . . . . . . . . . . . 46
64. Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRETZEL TIME, INC.
AREA DEVELOPER AGREEMENT
This Area Developer Agreement (herein sometimes referred to as "Agreement") is
made effective , 1996 by and between Pretzel Time, Inc. a Pennsylvania
corporation with its principal place of business at 0000 Xxxxxxxxxxx Xxxx, Xxxxx
000, Xxxxxxxxxx, Xxxxxxxxxxxx 00000 (hereinafter referred to as"Pretzel Time")
and , an with the principal place of business at (herein referred to as "Area
Developer"). WITNESSETH: WHEREAS, Pretzel Time has developed a franchise system
for the retail manufacture and sale of hand-rolled, soft pretzels, and other
food items at Shopping Malls and other mall retail outlets; and WHEREAS, Area
Developer is desirous of marketing and servicing the franchise system developed
by Pretzel Time in Shopping Malls located in Area Developer's Territory; and
WHEREAS, the parties hereto desire that this Agreement shall not apply to the
sale of Pretzel Time Products and other related products at other venues other
than Shopping Malls and that this Agreement shall not apply to any other outlets
or means of sale (other than Shopping Malls) and that this Agreement shall not
apply to the manufacture of the Pretzel Time Products or any part thereof;
WHEREAS, the parties desire to set forth their mutual rights and obligations in
writing. NOW THEREFORE, in consideration of $10 and of the parties' mutual
promises and covenants and intending to be legally bound hereby it is agreed to,
by and between the parties as follows: l. Acknowledgements. Area Developer
acknowledges that Area Developer has read this Agreement and Pretzel Time's
Offering Circular and that Area Developer understands and accepts the terms,
conditions and covenants contained in this Agreement as being reasonably
necessary to maintain Pretzel Time's and Pretzel Time's Affiliates' standards of
quality and service and the uniformity of those standards at all Pretzel Time
Units franchised by Pretzel Time and thereby to protect and preserve the
goodwill of the Marks, as that term is defined in Section 59 of this Agreement.
Area Developer acknowledges that Area Developer has conducted an independent
investigation of the business venture contemplated by this Agreement and
recognizes that, like any other business, the nature of the business conducted
by Pretzel Time Units may evolve and change over time, largely dependent upon
Area Developer's business abilities, Area Developer's time devoted to the
business and Area Developer's efforts. Information relating to the sales,
profits or cash flows of Pretzel Times Units operated by Pretzel Time or Pretzel
Time's franchisees that is contained in Pretzel Time's Offering Circular, if
any, is intended only to be an indication of historical performance of Pretzel
Time, and NOT of potential future financial performance, Pretzel Time expressly
disclaims the making of, and Area Developer acknowledges that Area Developer has
not received or 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 Developer acknowledges and agrees that Pretzel Time's officers,
directors, employees and agents act only in a representative capacity and not a
personal capacity in connection with their dealings with Area Developer. Area
Developer further acknowledges that Area Developer has not received or relied on
any representations about Pretzel Time or Pretzel Time's franchising program or
policies made by Pretzel Time, or its officers, directors, employees or agents,
that are contrary to the statements made in Pretzel Time's Offering Circular or
to the terms of this Agreement. Area Developer further represents to Pretzel
Time, as an inducement to Area Developer's entry into this Agreement, that all
statements in Area Developer's application for the development rights granted
herein are accurate and complete and that Area Developer has made no
misrepresentations or material omissions in obtaining such development rights.
2. Organization. If Area Developer is a corporation or general or limited
partnership, Area Developer represents and warrants to Pretzel Time the
following: (a) that Area Developer is duly organized or formed; (b) validly
existing in good standing under the laws of the state of its incorporation or
formation; (c) is qualified to do business in all states in which Area Developer
is required to qualify; and (d) has the authority to execute, deliver and carry
out all the terms of this Agreement. Each shareholder of or general partner in
Area Developer at the time of the signing of this Agreement or at any time
during the term of this Agreement shall execute an "Owner's and Guarantor's
Undertaking And Assumption of Obligations" (which is attached hereto as Exhibit
A and incorporated herein by reference) or such other agreement that Pretzel
Time prescribes from time to time, undertaking to be bound jointly and severally
by all provisions of this Agreement. Area Developer shall furnish to Pretzel
Time upon request, in such form as Pretzel Time may require, a list of Area
Developer's shareholders (of record and beneficially) (which is attached hereto
as Exhibit B and incorporated herein by reference ) reflecting their respective
interests in Area Developer. 3. Appointment and Acceptance of Area Developer.
Pretzel Time hereby appoints Area Developer and Area Developer hereby accepts
appointment, as the Area Developer for Pretzel Time for Shopping Malls in the
territory specified in Section 6 of this Agreement as further detailed in
Exhibit C attached hereto and incorporated herein by reference (which territory
is herein sometimes referred to as "Area Developer's territory", or
"Territory"). Area Developer hereby agrees to market the franchise system
developed by Pretzel Time for Shopping Malls within Area Developer's Territory
and shall not market to persons or entities located outside the Area Developer's
Territory for any reason. Further, Area Developer hereby agrees not to market to
persons located inside Area Developer's Territory unless they are located in
Shopping Malls. Area Developer herein acknowledges and agrees that Pretzel Time
is relying exclusively upon the Area Developer for the marketing, servicing and
support of its franchise system in Shopping Malls within the Area Developer's
Territory. Area Developer acknowledges that Pretzel Time may enter into other
agreements with respect to other territories on similar terms. Further, Area
Developer acknowledges that Pretzel Time may enter into other agreements with
respect to locations that are not in Shopping Malls but are located in Area
Developer's Territory. Simultaneous with the execution of this Agreement and
bearing even date herewith, Pretzel Time and the Area Developer shall enter into
an agreement for the purchase and sale of the area developer rights for Area
Developer's Territory. The sales and purchase agreement is incorporated herein
by reference. As used in this Agreement, the term "Shopping Mall(s)" shall
include and be limited to enclosed regional shopping malls (or enclosed super
regional shopping malls) that are anchored by at least three Anchor Tenants and
contain various other in line tenants. As used herein the term "Anchor Tenants"
includes such types of tenants as full service department stores (for example,
Xxxxx, X.X. Xxxxxx, Dillards, etc...) and related anchor type tenants. 4. Area
Developer's Obligations, Duties and Responsibilities. The total number of
Pretzel Time Units which the Area Developer is obligated to open and operate in
Area Developer's Territory (referred to as "Development Obligations") and the
specific number of Pretzel Time Units the Area Developer must have open and in
operation in Area Developer's Territory and the required opening dates for each
of the Pretzel Time Units within a specified time (referred to as "Development
Schedule") is set forth in Exhibit "C" attached hereto and incorporated herein
by reference. Further, Area Developer shall have the obligations, duties and
responsibilities as hereafter set forth in this Section 4 and as otherwise set
forth in this Agreement. (a) Area Developer shall timely satisfy the Development
Obligations set forth on Exhibit "C." Area Developer agrees during the term of
this Agreement that Area Developer will at all times faithfully, honestly and
diligently perform Area Developer's obligations hereunder and continuously exert
Area Developer's best efforts to promote and enhance the development of Pretzel
Time Units within the Area Developer's Territory. Without limiting the foregoing
obligation, Area Developer agrees to open, and to operate in compliance with
Pretzel Time franchise agreements therefor, the cumulative number of Pretzel
Time Units set forth in Exhibit "C" by the end of each Development Period set
forth therein. If an operating Pretzel Time Unit at a Shopping Mall in Area
Developer's Territory is closed during the second (2nd) half of a Development
Period due to casualty, condemnation, loss of lease or other reason, without
fault of Area Developer, or with Pretzel Time's written approval, such Pretzel
Time Unit shall be deemed open and in operation as of the end of such
Development Period, but not thereafter. (b) Area Developer shall be responsible
for and shall use Area Developer's best efforts to promote, recommend, market
and develop the franchise system and to provide regular and consistent support
and service to franchisees and prospective franchisees in Shopping Malls in Area
Developer's Territory. Area Developer acknowledges that the development of
franchises shall be at the prices and terms specified by Pretzel Time as set
forth in the franchise agreements and offering circulars provided by Pretzel
Time from time to time. Area Developer's marketing and support efforts shall
include but not be limited to the compiling and filing of weekly written status
reports with Pretzel Time of all potential contacts made, current negotiations,
and monthly written status reports of projected units to open, status of units
under construction, franchisee operations' current status, and projected results
of current contract negotiations. Area Developer shall further assist
franchisees with new unit openings and training programs as deemed reasonably
necessary by Pretzel Time. If the Area Developer fails to use Area Developer's
best efforts consistent with Area Developer's Territory and demand, then Pretzel
Time may terminate this Agreement in accordance with Section 18 of this
Agreement. The Area Developer agrees to maintain a strong market position by
promoting Pretzel Time and provide adequate support coverage to all franchisees
for Shopping Malls within Area Developer's Territory. (c) Area Developer shall
personally visit each franchise within Area Developer's Territory once per month
and on such further occasions as are deemed reasonably necessary by Pretzel Time
when circumstances so require. The mystery shopper program may be substituted
for certain locations at Area Developer's expense with Pretzel Time's prior
written approval; provided that Area Developer shall make monthly visits at
lease once per calendar quarter. Written evaluations of each visit shall be
forwarded to and received by Pretzel Time by the fifteenth day of each month for
the immediately preceding month. Area Developer shall also cause the Pretzel
Time "mystery shopper" program to be complied with within Area Developer's
Territory. Area Developer shall contact all franchisees in writing concerning
ongoing problems issues and violations and Area Developer shall cause copies of
all such written materials to be delivered to Pretzel Time at or near the time
said are delivered to the franchisee. (d) Area Developer shall coordinate with
Pretzel Time on all matters relevant to maintaining efficient sales and support
services. Area Developer agrees to also conduct other activities and perform
other duties as reasonably requested by Pretzel Time including but not limited
to those activities, duties, and responsibilities listed in Exhibit "D" attached
hereto and incorporated herein by this reference the same as if fully copied and
set forth at length. (e) Area Developer shall not be responsible to support,
assist, or visit company- owned units or any other unit from which Area
Developer is not earning fees unless otherwise agreed to in writing by the
parties hereto. (f) The Area Developer, (or, if the Area Developer is a
partnership or corporation, Area Developer's managing partner or chief operating
officer) and the Area Developer's senior management personnel shall attend such
training programs and sales and operations meetings as Pretzel Time may offer
during the term of this Agreement and any extensions. The Area Developer shall
be responsible for all expenses incurred in attending such meetings and
programs. Pretzel Time will not charge for the programs and meetings. However,
all incidental expenses relative to the required programs and meetings,
including travel expenses, hotel/motel expenses, and meals shall be the sole
responsibility of the Area Developer. (g) Area Developer shall be responsible
for training franchisees in Shopping Malls in Area Developer's Territory as
Pretzel Time may direct. 5. Pretzel Time's Responsibilities. Pretzel Time agrees
to train Area Developer in the Pretzel Time franchise system and to loan written
marketing materials, disclosures, franchise agreements, etc. to Area Developer.
Area Developer agrees not to use any other written documents or materials in
marketing Pretzel Time's franchises without the prior written consent of Pretzel
Time. Pretzel Time agrees to cooperate with the Area Developer to refer all
inquiries regarding franchise opportunities for Shopping Malls within Area
Developer's Territory to the Area Developer. Pretzel Time shall have the
ultimate approval rights over all franchises and sites within Shopping Malls in
the Area Developer's Territory. Area Developer hereby acknowledges that Area
Developer will take no action in the Area Developer's Territory without the
express written consent and approval of Pretzel Time (which consent and/or
approval shall be given or denied in Pretzel Time's sole discretion). 6.
Territory. Commencing on the effective date of this Agreement the Area
Developer's Territory shall include those traditional, franchised retail Pretzel
Time Units situated in Shopping Malls, (except as herein provided), located
within the areas of ________________________________ in the State of , or area
of (herein sometimes referred to as "Area Developer's Territory"). The Area
Developer's Territory shall not include: (a) company owned Pretzel Time Units
(stores, carts, or kiosks);
(b) Pretzel Time Units licensed to the Marriott Corporation, its
affiliates, or subsidiaries;
(c) Pretzel Time Units licensed to any other corporation, national or
international or enterprise, in which Pretzel Time enters into a
national or international contract;
(d) Pretzel Time Units which are not located in super regional and
regional malls;
(e) Pretzel Time Units which are not located in Shopping Malls; and
(f) other Non-traditional Pretzel Time Units.
Accordingly, no fees shall be paid on the aforementioned Pretzel Time Units,
unless otherwise mutually agreed upon by Pretzel Time and Area Developer in a
written agreement executed by the parties.
7. Reservation of Rights.
Notwithstanding anything in this Agreement, Pretzel Time (directly or
through Pretzel Time's Affiliates) retains the right to: (a) offer for sale and
sell, either within or outside the Area Developer's Territory, and license and
franchise others to offer for sale and sell, either within or outside the Area
Developer's Territory, the products and services offered by Pretzel Time Units
under the Marks and other trademarks and service marks, through Pretzel Time
Units and through outlets in retail grocery, convenience, or other stores or
outlets, pursuant to any terms and conditions Pretzel Time deems appropriate;
(b) offer for sale and sell, and license and franchise others to offer for sale
and sell, any other products or services under the Marks (including such items
as refrigerated frozen pretzels, frozen bagels, other frozen products and other
food products sold through various outlets); (c) own, operate and grant to
others the right to own and operate Pretzel Time Units or other desert and snack
food businesses at such locations outside the Area Developer's Territory and on
such terms and conditions as Pretzel Time, in Pretzel Time's sole discretion,
deems appropriate; provided, however that Area Developer shall have the first
option to operate such kiosks and pretzel carts in Shopping Malls in the Area
Developer's Territory (other than Pretzel Time carts and kiosks associated with
Pretzel Time Units); (d) own, operate and grant to others the right to own and
operate kiosks and carts designed to prepare, offer for sale and sell the
Pretzel Time products at such locations within and outside the Area Developer's
Territory; (e) continue to own or operate any Pretzel Time outlets within the
Area Developer's Territory as are in existence on the date of this Agreement and
which are not purchased by Area Developer and to maintain license and franchise
agreements with others for Pretzel Time outlets within the Area Developer's
Territory as are in effect on the date of this Agreement (and to extend or renew
such licenses and franchises or grant successor licenses and franchises pursuant
to such license and franchise agreements); (f) own, operate and grant to others
the right to own and operate Pretzel Time stores or other businesses at such
locations within the Area Developer's Territory that are not located in Shopping
Malls; (g) enter into other agreements with respect to other territories on
similar terms; (h) enter into other agreements with respect to locations that
are not in Shopping Malls but are located in Area Developer's Territory; and (i)
establish Pretzel Time company- owned units and/or other franchisee-owned units
within Area Developer's Territory, provided that Area Developer is given a first
right of refusal for the franchise at that site described in this Subsection
7(i). The Area Developer shall have thirty (30) days to exercise his rights of
first refusal granted in Subsection 7(i) which shall begin when the Area
Developer receives written notice of its right to develop a site. If Area
Developer does not exercise Area Developer's right of first refusal described in
Subsection 7(i) within thirty (30) days, the Area Developer shall sign a waiver
releasing any rights to develop the site.
8. Area Developer's Fee.
(a) Concurrently with the execution of this Agreement, Area Developer
shall pay to Pretzel Time a development fee of Dollars ($ ) which shall be
deemed fully earned by Pretzel Time upon execution of this Agreement and shall
be non-refundable. Additionally, Area Developer shall pay an initial franchise
fee of Twenty-Five Thousand Dollars ($25,000.00) for each franchise for a
Pretzel Time Store to be developed pursuant to Section 4 of the franchise
agreement, payable upon execution of the franchise agreement for each Pretzel
Time Unit.
(b) Pretzel Time agrees to pay Area Developer a sum equal to
two-sevenths (2/7) of the franchise royalty (not including the advertising fees)
received by Pretzel Time from all franchises operating in Shopping Malls within
Area Developer's Territory as defined in Section 6 of this Agreement. Pretzel
Time agrees to pay Area Developer a sum equal to 25% of the franchise royalty
(not including the advertising fees) received by Pretzel Time pursuant to the
Yogurt Product Addendum for all franchises operating in Shopping Malls within
Area Developer's Territory as defined in Section 6 of this Agreement. Area
Developer shall not be paid any fees for Pretzel Time Units that are not in
Shopping Malls.
(c) Pretzel Time also agrees to pay Area Developer Twenty-Five Percent
(25%) of the franchise fee for each new franchisee opening a new unit in
Shopping Malls in Area Developer's Territory and Twenty-Five Percent (25%) of
the franchise fees for each additional unit opened by existing franchisees in
Shopping Malls in Area Developer's Territory. Area Developer acknowledges that
all franchise fees paid pursuant to or relating to the Yogurt Product Addendum
shall be payable in full to Pretzel Time and Area Developer shall not receive a
percentage thereof. Area Developer shall not be paid any initial fees for units
owned and operated by Pretzel Time, in whole or in part. Area Developer shall
not be paid any initial fees for Pretzel Time Units that are not in Shopping
Malls.
(d) There is no other financial consideration agreed to by the parties,
except as may be otherwise provided for in any franchise agreement.
9. Failure to Meet Development Obligations.
Subject to the terms of Section 18 of this Agreement, if Area Developer
fails to meet Area Developer's Development Obligations as further set forth in
Section 4(a) and Exhibit C of this Agreement as of the end of a Development
Period, Area Developer will not be deemed to be in default of Area Developer's
Development Obligations under this Agreement for that Development Period if:
(a) Area Developer agrees that the royalty fee on all existing
franchise agreements and any future franchise agreements shall be increased by
one (l) percentage point, effective as of the end of that Development Period,
until such time as sufficient Pretzel Time Units have been opened to cure any
deficiencies in the number of Pretzel Time Units to be opened by Area Developer
during that Development Period; and,
(b) Area Developer either:
i. offers to forfeit a contiguous portion of Area Developer's Territory and
Pretzel Time, in Pretzel Time's sole discretion, accepts such offer; or,
ii. pays to Pretzel Time:
A. the initial license fee due on each unopened
Pretzel Time Unit by the thirtieth (30th) day
following the expiration of such Development Period;
and, B. a monthly fee for each unopened Pretzel Time
Unit equal to Two Thousand Dollars ($2,000.00) on or
before the first day of each month, commencing with
the second (2nd) month following the expiration of
such Development Period and continuing each month
thereafter during the remaining term of this
Agreement until Area Developer complies with Area
Developer's Development Obligations under this
Agreement, or Pretzel Time elects to terminate the
Agreement pursuant to Section 18 of this Agreement.
The monthly fee for each unopened Pretzel Time Unit
shall be increased by four percent (4%) per annum.
Each Pretzel Time Unit opened during a Development
Period shall first be applied toward curing any
deficiencies in the number of Pretzel Time Units to
be opened by Area Developer in prior Development
Periods, thereby reducing the number of Pretzel Time
Units for which the monthly fee described in this
paragraph must be paid.
10. Establishment of Company-Owned Stores.
Area Developer acknowledges Pretzel Time shall have the right to
establish company- owned units within Area Developer's Territory. Any
company-owned units that Pretzel Time establishes within the Area Developer's
Territory shall be applied to the quota of Pretzel Time Units to be achieved by
Area Developer. A company-owned unit (or sometimes in this Agreement referred to
as "company owned stores") shall mean any Pretzel Time Unit owned, directly or
indirectly, by Pretzel Time or by a corporation in which Pretzel Time is the
majority shareholder. 11. Area Developer Expenses.
Area Developer acknowledges that Area Developer may incur no cost or
expenses on behalf of Pretzel Time without obtaining Pretzel Time's prior
written approval in each instance, if any.
12. Term.
The term of this Agreement shall be one year commencing on the
Effective Date and shall renew automatically from year to year thereafter unless
otherwise terminated in accordance with Sections 18 and/or 19 of this Agreement.
Each one year period shall be considered a Development Period as further set
forth on Exhibit "C." 13. Execution of Franchise Agreement.
Area Developer acknowledges that all franchisees in Shopping Malls in
the Area Developer's Territory shall execute a franchise agreement in form and
substance acceptable to Pretzel Time, as determined in Pretzel Time's sole
discretion. A copy of the Pretzel Time Franchise Agreement (including exhibits,
riders, shareholder guarantees, preliminary agreements and other agreements)
that Pretzel Time currently uses in granting franchises for the ownership and
operation of Pretzel Time Stores in the state in which Area Developer's
Territory is located is attached hereto as Exhibit "E" and incorporated herein
by reference the same as if fully copied and set forth at length. Further, Area
Developer hereby agrees to execute a franchise agreement for each Pretzel Time
unit that Area Developer opens, which form and substance of the franchise
agreement shall be acceptable to Pretzel Time in Pretzel Time's sole discretion.
Further, Area Developer hereby agrees to be bound by the terms, covenants,
conditions and provisions of each Pretzel Time franchise agreement executed by
the Area Developer.
14. Management of Area Developer Business.
a. Area Developer (or, if Area Developer is a partnership or
corporation the managing partner or chief operating officer) shall devote
substantial efforts to the fulfillment of Area Developer's obligations hereunder
and shall not engage in any other business or activity, directly or indirectly,
that involves obligations, activities, management responsibility, or time
commitments that would conflict or interfere with Area Developer's obligations
hereunder. Area Developer (or if Area Developer is a partnership or corporation,
Area Developer's managing partner or chief operating officer) shall supervise
the development and operation of Pretzel Time Units franchised pursuant hereto.
b. Area Developer (or, if Area Developer is a partnership or
corporation the managing partner or chief operating officer) and Area
Developer's senior management personnel shall attend such training programs and
sales and operations meetings that Pretzel Time may offer during the term of
this Agreement. Area Developer must have at all times a certified supervisor or
person who is in charge of all units at all times for the Territory and such
person shall be required to attend training classes at least once every 24
months. Area Developers shall bear all expenses incurred in attending such
meetings and programs.
c. Area Developer shall hire and maintain the number and level of
management personnel required for adequate management and supervision of all
Pretzel Time Units operated by Area Developer pursuant to this Agreement in
accordance with guidelines Pretzel Time establishes from time to time. Area
Developer shall keep Pretzel Time advised of the identities of such personnel
and shall be responsible for ensuring that such personnel are properly trained
to perform their duties. Pretzel Time shall provide training free of charge to
the Area Developer and those multi-unit managers and/or manager hired by the
Area Developer to manage the Pretzel Time Units; provided that Area Developer
will be responsible for all salaries, and travel and living expenses incurred by
the managers in connection with Pretzel Time's training program. All unit
managers shall be required to complete all phases of the training program to
Pretzel Time's satisfaction. Area Developer shall replace management personnel
whom Pretzel Time determines to be unqualified to manage a Pretzel Time Unit.
d. Area Developer shall comply with such area developer's handbook as
Pretzel Time shall require. 15. Insurance.
During the term of this Agreement, in addition to insurance required
to be maintained pursuant to franchise agreements, Area Developer shall maintain
in force, under policies of insurance issued by carriers that Pretzel Time
approves, comprehensive public liability insurance against claims for bodily and
personal injury, death and property damage caused by or occurring in conjunction
with Area Developer's conduct of business pursuant to this Agreement, under one
or more policies of insurance containing such minimum liability coverage that
Pretzel Time prescribes from time to time. Each insurance policy shall name
Pretzel Time as an additional named insured, contain a waiver of all subrogation
rights against Pretzel Time and Pretzel Time's affiliates and their successors
and assigns, and provide for thirty (30) days' prior written notice to Pretzel
Time of any material modification, cancellation or expiration of such policy.
Area Developer shall furnish to Pretzel Time annually a copy of the certificate
of insurance or other evidence Pretzel Time requests that such insurance
coverage is in force. 16. Records and Reports.
Area Developer agrees, at Area Developer's expense, to maintain and
preserve at Area Developer's principal office full, complete and accurate
records and reports pertaining to the development and operation of Pretzel Time
Units within the Area Developer's Territory and Area Developer's performance of
Area Developer's obligations under this Agreement, including, but not limited
to, records and information on the following: site reports, leases for Pretzel
Time Units, franchise agreements relating to all Pretzel Time Units located in
Area Developer's Territory, supervisory reports on the operation of Pretzel Time
Units, records reflecting Area Developer's financial condition and such other
records and reports as Pretzel Time may prescribe from time to time. Area
Developer shall deliver to Pretzel Time in the form Pretzel Time prescribes from
time to time:
a. Within thirty (30) days after the end of each quarter of
Area Developer's fiscal year, a quarterly balance sheet for Area Developer and
an income statement for such quarter and year to date;
b. Within ninety (90) days after the end of Area Developer's
fiscal year, a fiscal year end balance sheet for Area Developer and income
statement for such fiscal year (which Pretzel Time may require to be
independently audited or reviewed); and,
c. Upon Pretzel Time's request, such other date, reports,
information and supporting records as Pretzel Time may from time to time
prescribe.
Each such report and financial statement submitted by Area Developer
shall be verified as correct and signed by Area Developer in the manner Pretzel
Time prescribes. Area Developer shall immediately report to Pretzel Time any
events or developments which may have a material adverse impact on the operation
of any Pretzel Time Unit, Area Developer's performance under this Agreement or
the goodwill associated with the Marks and Pretzel Time Units. 17. Change of
Ownership.
(a) Area Developer has been determined by Pretzel Time to have
the unique qualifications necessary to adequately promote and sell Pretzel
Time's hand-rolled, soft pretzel franchise system in Shopping Malls in Area
Developer's Territory. When the ownership of Area Developer is to be changed, it
is necessary for Pretzel Time to determine whether the new party can and will
adequately represent Pretzel Time. Therefore, Pretzel Time retains the right,
without incurring any liability to Area Developer, to terminate Pretzel Time's
relationship with Area Developer in the event that there is a change in the
ownership or in the direct or indirect control of Area Developer without the
prior written approval of Pretzel Time.
(b) If Area Developer plans a change in ownership or in the direct or
indirect control of the Area Developer and the new owner or controlling parties
wish(es) to continue as a Area Developer, the existing Area Developer and the
proposed new owner or controlling party should each notify Area Developer in
writing at least sixty (60) days before the proposed change. This written notice
should describe the proposed change in ownership, control, and management and
should request that, following the change, the Area Developer be permitted to
continue as Pretzel Time's Area Developer. In the notice, the new owner or
controlling parties shall agree to follow the Pretzel Time's policies as
currently in effect and as changed from time to time by the Pretzel Time. The
new owner or controlling parties must also agree to execute the current area
developer agreement as provided by Pretzel Time. 18. Termination.
This Agreement may be terminated in accordance with the following
provisions:
(a) By the Area Developer. If Area Developer is in compliance with this
Agreement, Area Developer may terminate this Agreement effective ten
(10) days after delivery to Pretzel Time of notice thereof, if Pretzel
Time materially breaches this Agreement and fails within thirty (30)
days after each written notice thereof is delivered to Pretzel Time,
either to correct such failure or, if such failure cannot reasonably be
corrected within thirty (30) days, to provide proof acceptable to Area
Developer of efforts which are reasonably calculated to correct such
failure within a reasonable time, which shall in no event be more than
sixty (60) days after such notice. A termination of this Agreement by
Area Developer for any other reason or without such notice shall be
deemed a termination by Area Developer without cause and in violation
of this Agreement. (b) By Pretzel Time. Pretzel Time may terminate this
Agreement, at Pretzel Time's option and without prejudice to any other
rights or remedies provided for hereunder or by law and without any
further responsibility or liability to the Area Developer under this
Agreement, except for any unpaid area developer fees due Area Developer
until the date of default: (i) pursuant to Section 17(a) and (ii) upon
the occurrence of an event of default, provided that Pretzel Time has
given Area Developer written notice of the default and remedies to be
undertaken to cure said default, and Area Developer fails to cure the
event of default within thirty (30) days after the date of receipt of
written notice from Pretzel Time of the event of default. Pretzel Time
may elect to be relieved from any obligations imposed on Pretzel Time
by this Agreement until such default is cured, including but not
limited to payment of Area Developer fees. Pretzel Time shall prior to
such termination, provide written notice setting forth the reasons, if
any, for such termination at least thirty (30) days in advance.
(c) An " event of default" is defined as the following:
(i) Area Developer's material breach or failure to perform any
provision of this Agreement by Area Developer including but
not limited to failure to perform any of Area Developer's
responsibilities as indicated on Exhibit D attached hereto;
(ii) Breach of any franchise agreement by Area Developer;
(iii) Area Developer's failure to fulfill duties to the
franchise community as indicated to Pretzel Time by a majority
of franchisees within Area Developer's Territory; (iv) Area
Developer's failure to timely submit the written reports
required herein on two occasions out of twelve consecutive
months; (v) If Area Developer is a corporation and is
dissolved by action of Area Developer's shareholders or forced
to liquidate by action of Area Developer's creditors; (vi) If
Area Developer without the prior written consent of Pretzel
Time changes ownership or control or assigns this Agreement;
(vii) Conviction of Area Developer in a court of competent
jurisdiction of an indictable offense directly related to the
business conducted pursuant to this Agreement and the
franchise system; (viii) Area Developer's insolvency, the
institution of voluntary bankruptcy or receivership
proceedings concerning Area Developer; (ix) Area Developer's
default in payment of any obligation under any sublease or
lease agreement in which Area Developer is a party; (x) Area
Developer's loss of the right to occupy the premises from
which the Area Developer operates a franchise; (xi) Area
Developer's failure to timely meet the Development Obligations
set forth as Exhibit "C" attached hereto; or (xii) If on three
(3) occasions during the term of this Agreement, Area
Developer fails to comply with this Agreement, whether or not
such failures to comply are corrected after notice thereof is
delivered to Area Developer.
19. Termination For No Cause.
This Agreement may be terminated by Pretzel Time for any reason or no
reason at all by giving Area Developer written notice of termination to be
effective five (5) years after the Effective Date. Further, this Agreement may
be terminated by Pretzel Time for any reason or no reason at all giving Area
Developer written notice of termination to be effective on any subsequent
anniversary date of the effective date of this Agreement if this Agreement has
been renewed pursuant to Section 12 of this Agreement and the termination date
is at least five (5) years after the Effective Date.
20. Further Assurances. Each of the parties hereto hereby agrees to execute and
deliver any further instruments, certificates and documents as may be reasonably
requested by the other party hereto to carry out the terms, conditions and
responsibilities of this Agreement.
21. Noncompetition.
Area Developer agrees that for a term of one (1) year after the
termination or expiration of this Agreement, neither Area Developer nor Area
Developer's shareholders, directors or officers will engage directly or
indirectly, whether individually or in partnership or in conjunction with any
person, firm, associations, syndicate or corporation, as principal, agent,
shareholder, employee, consultant or in any other manner whatsoever, in any
business activity competitive with the business of Pretzel Time within three (3)
miles of any Pretzel Time Unit. Area Developer agrees that the limitations set
forth above are reasonable in time and geographic scope. If any provision hereof
is held invalid or unenforceable, the remainder shall nevertheless remain in
full force and effect. It is the intention of the parties that this Agreement
shall not be terminated thereby but shall be deemed to have been amended to the
extent required to render this Agreement valid and enforceable, such amendment
to apply only with respect to the jurisdiction of the court making such
adjucation.
22. Confidentiality.
Both Pretzel Time and the Area Developer recognize that during the
course of this Agreement, Pretzel Time may loan to the Area Developer, Area
Developer's shareholders, officers, employees and agents valuable, confidential
and proprietary information pertaining to Pretzel Time's operations. Area
Developer agrees to hold in a fiduciary capacity for the benefit of Pretzel
Time, Pretzel Time's subsidiaries, successors, and assigns all secret and
confidential information, including but not limited to: trade secrets;
knowledge; techniques of doing business; franchisee lists; legal agreements;
site selection criteria; disclosures; sales figures; manufacturers;
distributors; business plans; credit terms; manufacturing processes; methods,
techniques, formats, specifications, systems, procedures, sales and marketing
techniques and knowledge of and experience in the development and operation of
Pretzel Time Stores; marketing programs for Pretzel Time; knowledge of
specifications for and suppliers of certain products, materials, supplies,
equipment, furnishings and fixtures; knowledge of operating results and
financial performance of Pretzel Time Units; Products lists; methods for
preparation of the Products; Products; formulas; recipes or data involving
Pretzel Time and any of Pretzel Time's subsidiaries, successors and assigns
obtained by the Area Developer during the terms of this Agreement and will not
during the terms of this Agreement or after the termination of this Agreement,
communicate or divulge any such information, knowledge or data to any person,
firm or corporation other than the Pretzel Time or persons, firms, partnerships,
corporations, designated by the Pretzel Time. Area Developer further agrees not
to disclose the terms of this Agreement to any person during the term of this
Agreement or thereafter for eighteen months. Upon termination of this Agreement,
Area Developer shall return to Pretzel Time the originals and all copies of any
such information or materials. Nothing contained in this Agreement shall
restrict Area Developer's ability to disclose information during the term of
this Agreement with Pretzel Time where such disclosure is necessary for the
effective discharge of Area Developer's duties and responsibilities.
23. Restrictions.
Area Developer acknowledges and agrees that Area Developer will not
acquire any interest in Confidential Information, other than the right to
utilize Confidential Information disclosed to Area Developer in the development
and operation of Pretzel Time Units during the term of this Agreement, and that
the use of duplication of any Confidential Information in any other business
would constitute an unfair method of competition. Area Developer acknowledges
and agrees that Confidential Information is proprietary, includes trade secrets
of Pretzel Time and is disclosed to Area Developer solely on the condition that
Area Developer agrees, and Area Developer does hereby agree, that Area
Developer:
(a) Will not use Confidential Information in any other business or capacity;
(b) Will maintain the confidentiality of Confidential Information during and
after the term of this Agreement;
(c) Will not make unauthorized copies of any portion of Confidential Information
disclosed in written or other tangible form; and,
(d) Will adopt and implement all reasonable procedures that Pretzel Time
prescribes from time to time to prevent unauthorized use or disclosure of
Confidential Information, including, without limitation, restrictions on
disclosure thereof to Area Developer's employees.
24. Exclusive Relationship.
Area Developer acknowledges and agrees that Pretzel Time would be
unable to protect Confidential Information against unauthorized use or
disclosure and would be unable to encourage a free exchange of ideas and
information among Pretzel Time Units if area developer and franchised owners of
Pretzel Time Units were permitted to hold interests in or perform services for a
competitive business. Area Developer further acknowledges that Pretzel Time has
granted development rights to Area Developer in consideration of and reliance
upon Area Developer's agreement to deal exclusively with Pretzel Time. Area
Developer therefore agrees that during the term of this Agreement, no Restricted
Person (as defined below) shall:
(a) Have any direct or indirect interest as a disclosed or
beneficial owner in a Competitive Business located or operating within
the Area Developer's Territory, except other Pretzel Time Units
operated under franchise agreements with Pretzel Time or Pretzel Time's
Affiliates;
(b) Have any direct or indirect interest as a disclosed or
beneficial owner in a Competitive Business located or operating within
three (3) miles of the boundaries of the Area Developer's Territory,
except other Pretzel Time Units operated under franchise agreements
with Pretzel Time or Pretzel Time's Affiliates;
(c) Have any direct or indirect interest as a disclosed or
beneficial owner in a Competitive Business, located or operating within three
(3) miles of any Pretzel Time Units, except Pretzel Time Units operated under
franchise agreements with Pretzel Time or Pretzel Time's Affiliates:
(d) Have any direct or indirect controlling interest as a
disclosed or beneficial owner in a Competitive Business, except Pretzel
Time Units operated under franchise agreements with Pretzel Time or
Pretzel Time's Affiliates; or
(e) Perform services as a director, officer, manager,
employee, consultant, representative, agent or otherwise for a Competitive
Business, except Pretzel Time Units operated under franchise agreements with
Pretzel Time or Pretzel Time's Affiliates.
Notwithstanding the foregoing, Restricted Persons shall not be prohibited from
owing securities in a company if such securities are listed on a stock exchange
or traded on the over-the-counter market and represent two percent (2%) or less
of that class of securities.
25. Restricted Person. For the purposes of this Agreement, "Restricted
Person" shall mean and include:
(a) Area Developer;
(b) Each of Area Developer's direct or indirect shareholders or partners (if
Area Developer is a corporation or partnership);
(c) Each member of Area Developer's immediate family;
(d) Each member of the immediate families of Area Developer's shareholders or
partners (if Area Developer is a corporation or partnership);
(e) Each Controlled Affiliate;
(f) Each shareholder or partner of a Controlled Affiliate;
(g) Each member of the immediate families of a Controlled Affiliate,
shareholders or partners; and
(h) Each person or entity affiliated with Area Developer or Area Developer's
shareholders or partners. References to "immediate family" shall mean parents,
spouses, natural and adopted children and siblings.
26. Marks.
a. Area Developer acknowledges that Pretzel Time and/or Pretzel Time's
Affiliates own the Marks and the Area Developer's right to use the Marks is
derived solely from franchise agreements entered into between Area Developer and
Pretzel Time for the purpose of operating Pretzel Time Units. Area Developer
agrees that Area Developer's usage of the Marks and any goodwill established
thereby shall inure to Pretzel Time's exclusive benefit. Area Developer further
agrees that, after the termination or expiration of this Agreement, Area
Developer will not at any time or in any manner identify itself or any business
as a franchisee or former franchisee of or as otherwise associated with Pretzel
Time or use in any manner or for any imitation thereof, except with respect to
Pretzel Time Units then operated by Area Developer pursuant to franchise
agreements with Pretzel Time.
b. Area Developer shall not use any Xxxx as part of any corporate or
trade name or with any prefix, suffix or other modifying words, terms, designs
or symbols, or in any modified form, nor may Area Developer use any Xxxx in
connection with any business or activity other than the business conducted by
Area Developer pursuant to franchise agreements with Pretzel Time or in any
other manner not explicitly authorized in writing by Pretzel Time.
c. Area Developer shall immediately notify Pretzel Time in writing of
any apparent infringement of or challenge to Area Developer's use of any Xxxx or
any claim by any person of any rights in any Xxxx or similar trade name,
trademark or service xxxx of which Area Developer becomes aware. Area Developer
shall not communicate with any person other than Pretzel Time and Pretzel Time's
Affiliates and their legal counsel in connection with any such infringement,
challenge or claim. Pretzel Time and Pretzel Time's Affiliates shall have the
sole discretion to take such action as Pretzel Time deems appropriate and the
right to control exclusively any litigation, U.S. Patent and Trademark Office
proceeding or other administrative proceeding arising out of any such
infringement, challenge or claim or otherwise relating to any Xxxx. Area
Developer agrees to execute any and all instruments and documents, render such
assistance and do such acts and things as, in the opinion of Pretzel Time's and
Pretzel Time's Affiliates' legal counsel, may be necessary or advisable to
protect and maintain Pretzel Time and Pretzel Time's Affiliates interest in any
such litigation or U.S. Patent and Trademark Office or other proceeding or
otherwise to protect and maintain Pretzel Time's and Pretzel Time's Affiliates'
interest in the Marks. 27. Refrain from Disparagement.
Both Pretzel Time and Area Developer agree not to malign, harass or in
any way interfere with the other party or their employees, franchisees, or
agents with respect to their reputation and good will, or the conduct of the
other party's business. The parties further agree to not make any public
statements which would tend to damage the reputation or harm the business
interests of the other or their employees, franchisees, and agents.
28. Limitation of Liability.
In no event shall Pretzel Time be liable to Area Developer for any loss
of profits, indirect, special or consequential damages arising out of any breach
of Pretzel Time's obligations under this Agreement.
29. Independent Contractors.
It is understood and agreed by the parties hereto that this Agreement
does not create a fiduciary relationship between them, that Pretzel Time and
Area Developer are and shall be independent contractors and that nothing in this
Agreement is intended to make either party a general or special agent, joint
venturer, partner or employee for the other for any purpose. Area Developer
shall conspicuously identify itself in all dealings as the owner of development
rights granted under a development agreement with Pretzel Time and shall place
such other notices of independent ownership on such forms, business cards,
stationery, advertising and other materials as Pretzel Time may require from
time to time. Further, this Agreement does not, and shall not be construed to,
create an employer-employee relationship, joint venture or partnership between
Pretzel Time and Area Developer. Neither the Area Developer nor Pretzel Time
shall have any authority to act for or to bind the other in any way, to alter
any of the terms or conditions of any of Pretzel Time's standard forms or
invoices, purchase orders, warranties, franchise agreements, subleases or
otherwise, or to warrant or to execute agreements on behalf of the other or to
represent that the other is in any way responsible for the acts, debts,
liabilities or omissions of the other. The Area Developer shall be an
independent contractor only. 30. No Liability For Acts of Other Party.
Area Developer shall not employ any of the Marks in signing any
contract or applying for any license or permit or in a manner that may result in
Pretzel Time's liability for any indebtedness or obligations of Area Developer,
nor may Area Developer use the Marks in any way not expressly authorized by
Pretzel Time. Except as expressly authorized in writing, Pretzel Time shall not
be obligated for any damages to any person or property directly or indirectly
arising out of the operation of the Area Developer's business authorized by or
conducted pursuant to this Agreement. 31. Taxes.
Pretzel Time shall have no liability for any sales, use, service,
occupation, excise, gross receipts, income, property or other taxes, whether
levied upon Area Developer or Area Developer's assets or upon Pretzel Time,
arising in connection with the business conducted by Area Developer pursuant to
this Agreement or franchise agreement. Payment of all such taxes shall be Area
Developer's responsibility.
32. Indemnification.
Area Developer agrees to indemnify, defend and hold harmless Pretzel
Time, Pretzel Time's parent company, subsidiaries and affiliates and their
shareholders, directors, officers, employees, agents successors and assignees
(the "Indemnified Parties") against and to reimburse them for any claims,
liabilities, lawsuits, demands, actions, damages and expenses arising from or
out of: (1) any breach of the agreements, covenants, representations, or
warranties of Area Developer contained in this Agreement or franchise agreement;
(2) any damages or injury to any person, including, but not limited to,
employees of Area Developer or a Controlled Affiliate, employees of Pretzel
Time, customers of Area Developer or a Controlled Affiliate, and members of the
public, suffered or incurred on or about any Pretzel Time Store owned or
operated by Area Developer or a Controlled Affiliate; (3) product liabilities
claims or defective manufacturing of the products by Area Developer or a
Controlled Affiliate; or (4) the activities hereunder or under any franchise
agreement of Area Developer or a Controlled Affiliate or any of their officers,
owners, directors, employees, agents or contractors. For purposes of this
indemnification, claims shall mean and include all obligations, actual and
consequential damages and costs reasonably incurred in the defense of any claim
against the Indemnified Parties, including, without limitation, reasonable
accountants', arbitrators', and attorneys' and expert witness fees, costs of
investigation and proof of facts, court costs, other litigation expenses and
travel and living expenses. Pretzel Time shall have the right to defend any such
claim against Pretzel Time. This indemnity shall continue in full force and
effect subsequent to and notwithstanding the expiration or termination of this
Agreement.
33. Injunctive Relief.
Pretzel Time and Area Developer shall each have the right in a proper
case to obtain specific performance, temporary, preliminary or permanent
injunctive relief from a court of competent jurisdiction without bond and
without proof of damages. 34. Rights of Parties are Cumulative.
Pretzel Time's and Area Developer's rights hereunder are cumulative
and their exercise or enforcement of any right or remedy hereunder shall not
preclude their exercise or enforcement of any other right or remedy hereunder
which they are entitled by law to enforce. 35. Costs and Attorneys' Fees.
If a claim for amounts owed by Area Developer to Pretzel Time or
Pretzel Time's affiliates is asserted in any arbitration or judicial proceeding
or appeal thereof, or if Pretzel Time or Area Developer is required to enforce
this Agreement in an arbitration or judicial proceeding or appeal thereof, the
party prevailing in such proceedings shall be entitled to reimbursement of its
costs and expenses, including reasonable arbitrators', accounting and legal
fees, whether incurred prior to, in preparation for or in contemplation of the
filing of any written demand, claim, suit, action, hearing or proceeding to
enforce the obligations of this Agreement. If Pretzel Time incurs expenses in
connection with Area Developer's failure to pay when due amounts owing to
Pretzel Time, to submit when due any reports, information or supporting records
or otherwise to comply with this Agreement, including, but not limited to legal
arbitrators' and accounting fees, Area Developer shall upon demand reimburse
Pretzel Time for any such costs and expenses which Pretzel Time incurs.
36. Continuing Obligations.
All of Pretzel Time's and Area Developer's obligations under this
Agreement 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 the expiration or termination of this Agreement until
they are satisfied in full or by their nature expire. 37. Grant Of Franchisees.
Upon termination or expiration (without execution of a successor
Development Agreement) of this Agreement for any reason, Area Developer's rights
under this Agreement will terminate. Pretzel Time will thereafter have no
further obligation to grant Area Developer additional franchises for Pretzel
Time Units and will be free to operate or grant other persons franchises to
operate Pretzel Time Units within the Area Developer's Territory. 38.
Modification.
This Agreement may not be modified except in writing signed by the
parties hereto.
39. Pretzel Time's Option To Purchase Pretzel Time Units.
Area Developer acknowledges that Pretzel Time has certain rights
pursuant to the franchise agreements for the Pretzel Time Units located within
Area Developer's Territory that grant Pretzel Time the right to purchase the
Pretzel Time Stores along with all assets related thereto if the respective
franchise agreement is terminated or expires (pursuant to Section 20 of the
franchise agreement). Area Developer agrees that Pretzel Time shall have the
right to purchase the Pretzel Time Units along with all assets related thereto
as provided for in the respective franchise agreement (s) (pursuant to Section
20 of the respective franchise agreement) which is hereby incorporated herein by
reference. 40. Death Or Disability Of Franchisee.
Upon the death or permanent disability of Area Developer or, if Area
Developer is a corporation or partnership, the owner of a "Controlling
Interest"(as defined in Section 59 of this Agreement) in Area Developer, the
executor, administrator, conservator, guardian or other personal representative
of such Owner shall transfer Area Developer's interest in this Agreement or such
interest in Area Developer to Pretzel Time. Such disposition of this Agreement
or such interest in Area Developer shall be completed within a reasonable time,
not to exceed six (6) months from the date of death or permanent disability, and
shall be subject to all the terms and conditions applicable to transfers
contained in Section 44 of this Agreement. Failure to transfer the interest in
this Agreement or such interest in Area Developer within said period of time
shall constitute a breach of this Agreement. 41. Public Or Private Offerings.
In the event Area Developer (or any of Area Developer's owners) shall,
subject to the restrictions and conditions of transfer contained in Section 44
of this Agreement, attempt to raise or secure funds by the sale of securities
(including, without limitation, common or preferred stock, bonds, debentures or
general or limited partnership interests) in Area Developer or any affiliate of
Area Developer, Area Developer, recognizing that the written information may
reflect upon Pretzel Time, agrees to submit any such written information used
with respect thereto prior to its inclusion in any registration statement,
prospectus or similar offering circular or memorandum and to obtain Pretzel
Time's written consent to the method of financing prior to any offering or sale
of such securities. Pretzel Time's written consent pursuant to this Section
shall not imply or constitute Pretzel Time's approval with respect to the sale
of the securities, the offering literature submitted to Pretzel Time and any
other aspect of the offering. No information respecting Pretzel Time shall be
included in any disclosure document unless such information has been furnished
by Pretzel Time in writing pursuant to Area Developer's written request, in
which Area Developer states the specific purposes for which the information is
to be used. Should Pretzel Time, in Pretzel Time's sole discretion, object to
any reference to Pretzel Time or Pretzel Time's business or to the relationship
of Area Developer or a Controlled Affiliate in such offering literature or
prospectus, such literature or prospectus shall not be used unless and until
Pretzel Time's objections are withdrawn. Pretzel Time assumes no responsibility
whatsoever for any offering. Area Developer shall pay Pretzel Time's expenses in
connection with the offering or proposed offering.
The prospectus or other literature utilized in any such offering shall
contain the following language in bold-face type on the first textual page
thereof:
PRETZEL TIME, INC. IS NOT DIRECTLY OR INDIRECTLY THE ISSUER OF THE
SECURITIES OFFERED HEREBY AND ASSUMES NO RESPONSIBILITY WITH RESPECT TO
THIS OFFERING AND/OR THE SUFFICIENCY OR ACCURACY OF THE INFORMATION SET
FORTH HEREIN, INCLUDING ANY STATEMENTS WITH RESPECT TO PRETZEL TIME,
INC. PRETZEL TIME, INC. DOES NOT ENDORSE OR MAKE ANY RECOMMENDATION
WITH RESPECT TO THE INVESTMENT CONTEMPLATED BY THIS OFFERING. Area
Developer (and each of Area Developer's owners) agrees to indemnify,
defend, and hold harmless
Pretzel Time, Pretzel Time's parent company, subsidiaries, and Affiliates and
their officers, directors, employees and agents from any and all claims, demands
and liabilities, and all costs and expenses (including, without limitation,
reasonable attorneys' fees) incurred in defending against such claims, demands
or liabilities, arising from the offer or sale of such securities, whether
asserted by a purchaser of any such security or by a governmental agency.
Pretzel Time shall have the right (but not the obligation) to defend any such
claims, demands or liabilities and/or to participate in the defense of any
action to which Pretzel Time is named as a party. 42. Waiver.
The failure of either party to insist upon strict performance of any of
the terms of this Agreement, or the waiver by either party of any breach of any
terms of this Agreement, shall not prevent any subsequent strict enforcement of
such terms nor be deemed a waiver of any subsequent breach, whether similar in
nature or not.
43. Restrictive Covenants.
Area Developer recognizes that the restrictive covenants contained in
this Agreement are essential to protect the business interests and goals of the
Pretzel Time, and that violation of these restrictions will cause irreparable
harm to the Pretzel Time. In the event of a breach or a threatened breach by the
Area Developer, Area Developer thus acknowledges and agrees that should Area
Developer violate the restrictive covenants contained in this Agreement, Pretzel
Time shall be entitled to seek special, preliminary, temporary or permanent
injunctive relief, as well as any other rights or remedies to which the Pretzel
Time shall be entitled.
44. No Assignment.
The Area Developer shall not assign, transfer and/or sell any of Area
Developer's rights or delegate any of Area Developer's obligations hereunder
without the prior written consent of Pretzel Time, which consent may be
arbitrarily withheld by Pretzel Time in Pretzel Time's sole discretion. To the
extent assignable, this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns. Each of the
following shall be deemed to be an assignment:
(a) the transfer of the rights of Area Developer hereunder;
(b) the transfer of fifty percent or more in the aggregate of
the capital stock or voting power of any corporate Area
Developer, Area Developer's parent company or any subsidiary,
controlled affiliate, affiliate, officer, director and/or
shareholder(s); (c) the issuance of stock by a corporate area
developer such that the newly issued shares constitute fifty
percent (50%) or more, in the aggregate of the capital stock
or voting power of the corporate franchisee; or (d) the
transfer of fifty percent (50%) or more in the aggregate
partnership interest of a partnership area developer.
45. Rights Of Parties Are Cumulative.
The rights of Area Developer and Pretzel Time are cumulative and no
exercise or enforcement by Pretzel Time or Area Developer of any right or remedy
hereunder shall preclude the exercise or enforcement by Pretzel Time or Area
Developer of any other right or remedy to which the party is entitled.
46. WAIVER OF JURY TRIAL.
BOTH PRETZEL TIME AND THE AREA DEVELOPER IRREVOCABLY WAIVES TRIAL BY
JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY,
BROUGHT BY EITHER PARTY. THE PARTIES FURTHER AGREE THAT NEITHER SHALL DEMAND A
JURY TRIAL IN THE EVENT OF LITIGATION.
INITIALS
AREA DEVELOPER
PRETZEL TIME
47. Waiver Of Punitive Damages.
Except with respect to Area Developer's obligation to indemnify Pretzel
Time, the parties waive to the fullest extent permitted by law any right to or
claim for any punitive or exemplary damages against the other and agree that, in
the event of a dispute between them, the party making a claim shall be limited
to recovery of any actual damages it sustains.
48. Exclusive Jurisdiction.
Both Pretzel Time and Area Developer agree that any action arising out
of or relating to this agreement, including without limitation, the offer and
sale of the area developer rights hereunder shall be instituted and maintained
only in a state or federal court of general jurisdiction in Dauphin County,
Pennsylvania or the county in which Pretzel Time maintains its principal place
of business. Area Developer irrevocably submits to the jurisdiction of said
court and waives any objection Area Developer may have to either the
jurisdiction or venue of such court.
49. Limitations Of Claims.
Except for claims brought by Pretzel Time with regard to Area
Developer's obligations to make payments to Pretzel Time pursuant to this
agreement or to indemnify Pretzel Time pursuant to this agreement, any and all
claims arising out of or relating to this agreement or the relationship of Area
Developer and Pretzel Time pursuant to this agreement shall be barred unless an
action is commenced within: (a) two (2) years from the date on which the act or
event giving rise to the claim occurred or (b) one (1) year from the date on
which Area Developer or Pretzel Time knew or should have known, in the exercise
of reasonable diligence of the facts given rise to such claims, whichever occurs
first. 50. Governing Law.
This Agreement shall be governed by, construed, and enforced in
accordance with, the laws of the Commonwealth of Pennsylvania without regard to
its principles of conflicts of law.
51. Captions.
The captions and paragraph headings in this Agreement are included for
convenience of reference only and shall not affect or be considered in the
interpretation or construction of any provision of this Agreement.
52. Approvals.
Except where this Agreement expressly obligates Pretzel Time reasonably
to approve or not unreasonably to withhold Pretzel Time's approval of any action
or request by Area Developer, Pretzel Time has the absolute right to refuse any
request by Area Developer or to withhold Pretzel Time's approval of any action
by Area Developer that requires approval by Pretzel Time.
53. Public Or Private Offerings.
If the Area Developer (or any of Area Developer's owners) attempts to
raise or secure funds by the sale of securities, the Area Developer is obligated
to pay Pretzel Time's then current fee to cover Pretzel Time's expenses in
connection with the offering or proposed offering. Currently, that fee is Ten
Thousand Dollars ($10,000.00). Such fee shall be payable by Area Developer to
Pretzel Time in cash upon demand.
54. Severability.
In the event that any provision or part thereof in this Agreement is
held invalid or unenforceable by a court or other tribunal of competent
jurisdiction, then the same shall be deemed severed and separate from the other
provisions of this Agreement which shall remain in full force and effect. To the
extent enforcement is limited, then the provision or provisions so affected
shall be deemed to have been modified to reflect the limitation on enforcement.
55. Notices.
All notices, requests, demands and other communications under this
Agreement (collectively a notice) shall be in writing and shall be deemed to
have been duly given if delivered by hand against written receipt or if mailed
by United States certified or registered mail, return receipt requested, postage
pre-paid, properly addressed as follows, or to such other address as may be
specified in a notice given hereunder.
If to Pretzel Time: If to Area Developer:
Pretzel Time, Inc. ___________________
Attn: Xxxx Xxxxxxx
-------------------
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000 ___________________
Xxxxxxxxxx, XX 00000 ___________________
With a copy to:
Xxxxxxx X. Xxxxxxxx, Esquire
Rashti and Xxxxxxxx
Attorneys at Law
0000 Xxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000
56. Counterparts.
This Agreement may be execute in one or more counterparts, any and or
all of which shall constitute one and the same instrument.
57. Entire Agreement.
This Agreement and the exhibits attached hereto and incorporated herein
by reference sets forth the entire agreement and understanding between the
parties with respect to the subject matter herein and supersedes all other prior
and contemporaneous agreements, understandings, representations and warranties,
whether oral or written, except that neither party shall be relieved from making
payment of any amounts due and owing under any agreement entered into prior to
the date hereof. This Agreement may not be amended, modified or altered or any
of its provisions waived except in writing and signed by the authorized officer
of the party against whom enforcement is sought. 58. Time Is Of The Essence.
Time is of the essence with regards to each provision of this Agreement
as to which time is a factor.
59. Certain Definitions.
As used in this Agreement the following terms shall have the following
definitions:
a. The term, "Affiliate," as used in relation to Pretzel Time, shall
mean any person, entity or company that directly or indirectly owns or controls
Pretzel Time, is directly or indirectly owned or controlled by Pretzel Time or
is under common control with Pretzel Time.
b. The term, "Competitive Business" shall mean any business operating
or granting franchises or licenses to others to operate a soft pretzel outlet or
any similar food service business, other than a business, otherwise within the
definition of a Competitive Business, which is (i) owned and operated by Area
Developer, (ii) is in existence on the date of this Agreement, and (iii) has
been disclosed to Pretzel Time in writing prior to execution of this Agreement.
c. The term, "Competitive Business"- A business or enterprise, other
than a Pretzel Time Unit, that:
(i) Offers food products which are the same as or similar to
the products for consumer consumption off premises or other distribution
channels; or
(ii) Grants or has granted franchises or licenses or
establishes or has established joint ventures for the development and/or
operation of a business or an enterprise described in the foregoing clause
subitem 59(c)(i).
d. The term, "Controlled Affiliate" shall mean a corporation or general
or limited partnership that Area Developer is authorized by this Agreement to
form to develop and operate a Pretzel Time Store, provided that:
(i) Area Developer owns not less than fifty percent (50%) of the ownership of
such corporation or partnership;
(ii) Area Developer has at least the percentage of voting
power required under applicable law to authorize a merger, liquidation,
dissolution or transfer of substantially all of the assets of such corporation
or partnership;
(iii) If the Controlled Affiliate is a partnership, Area
Developer is the managing partner; (iv) Area Developer
establishes to Pretzel Time's satisfaction that Area Developer
has, and
during the term of the franchise agreement for the Pretzel Time Unit to be owned
and operated by the Controlled Affiliate will have, the right and power to
control the operation of such Pretzel Time Unit and the sale or other
disposition of such Pretzel Time Unit;
(v) Such corporation or partnership conducts no Competitive Business;
(vi) Area Developer executes an "Owner's and Guarantor's
Undertaking And Assumption of Obligations" (a copy of which is attached hereto
as Exhibit "A") in which Area Developer guarantees performance by the Controlled
Affiliate of the terms and conditions of Area Developer's franchise agreement
and agrees that Area Developer will assume full and unconditional liability for
and agree to perform all obligations, covenants and agreements of the franchisee
contained in the franchise agreement;
(vii) All owners of the issued and outstanding capital stock
or partnership interests of such corporation or partnership have good moral
character; and,
(viii) All principal owners of the issued and outstanding
capital stock or general partnership interests of such corporation or
partnership execute an "Owner's and Guarantor's Undertaking" in which they
assume full and unconditional liability for, guarantee, and agree to perform all
obligations, covenants and agreements of the franchisee contained in the
franchise agreement.
(e) The term, "Controlling Interest" shall mean an interest, the
ownership of which empowers the holder thereof to exercise a controlling
influence over the management, policies or personnel of an entity on any issue
and shall prevent any other person, group, combination, or entity from blocking
voting control on any issue or exercising any veto power. If a limited
partnership, a general partnership interest or such percentage of limited
partnership interests as shall permit the replacement or removal of any general
partner. Without limiting the generality of the foregoing, ownership of ten
percent (10%) or more of the equity or voting securities of a corporation or
ownership of any general partnership interest in a partnership or joint venture
shall be deemed conclusively to constitute a Controlling Interest in the
corporation, partnership, or joint venture, as the case may be.
(f) The term "Marks" shall mean the trademarks, service marks, logos
and other commercial symbols which Pretzel Time authorizes Area Developer to use
to identity the services and/or products offered by Pretzel Time Units,
including the xxxx "Pretzel Time" and the Trade Dress (defined below); provided
that such trademarks, service marks, logos, other commercial symbols and the
Trade Dress are subject to modification and discontinuance at Pretzel Time's
sole discretion and may include additional or substitute trademarks, service
marks, logos, commercial symbols and Trade Dress as provided in this Agreement.
(g) The term "Trade Dress" shall mean the unit design, decor and image
which Pretzel Time authorizes and requires Area Developer to use in connection
with the operation of Pretzel Time Units, as it may be revised and further
developed by Pretzel Time or Pretzel time's Affiliates from time to time and as
further described in Pretzel Time's manuals.
(h) The term "Pretzel Time Unit" shall mean a food service
business that: (1) offers products for consumer consumption
off-premises, provided that
Pretzel Time, may in its sole discretion, authorize and/or require such
business to offer TCBY yogurt products pursuant to a Yogurt Product
Addendum (defined in the Franchise Agreement) or to operate Special
Distribution Arrangements pursuant to a Special Distribution Agreement
(defined in the Franchise Agreement); and
(2) operates using the Pretzel Time System and the Marks; and
DEVEPAG2.3.3.95
(3) is either operated by Pretzel Time or its Affiliates or
pursuant to a valid franchise from Pretzel Time. Pretzel Time Units are
of three types: (1) stores, (2) carts, and (3) kiosks. (i) The term
"Products" shall mean products approved or required by Pretzel Time
from time to time in its sole discretion for sale at or from Pretzel Time Units,
including, without limitation, hand-rolled soft pretzels of various flavors
including, without limitation, chocolate chip, raisin, honey-wheat, and
cinnamon, frozen pretzels and other pretzel-related products and toppings,
bagels, frozen yogurt, beverages, other food products and other Pretzel
Time-approved products, provided that the foregoing products are subject to
modification or discontinuance in Pretzel Time's sole discretion from time to
time and may include additional or substitute products.
(j) As used herein, the term "Non-Traditional Pretzel Time Unit" shall
mean any Pretzel Time Unit not located in a Shopping Mall.
(k) As used herein, the term "Pretzel Time Stores" shall mean "Pretzel
Time Units." (l) As used herein the term "Nontraditional Locations"
shall mean Non-Traditional Pretzel Time
Units that are located in airports, amusement parks, travel plazas, schools,
colleges, universities, hospitals, business offices, office buildings, military
facilities, entertainment facilities and/or entertainment events, sporting
facilities and/or sporting events, grocery stores, convenience stores,
supermarkets, bus stations, train stations, rapid transit stations, toll road
plazas, parks, toll road and/or limited access highway facilities.
(m) As used herein the term "Nontraditional Frozen Pretwisted Products"
shall mean frozen pretwisted pretzel products designated by Pretzel Time to be
sold as "Pretzel Time" products. Area Developer acknowledges that products that
are not sold under the "Pretzel Time" name shall not be governed by this
Agreement. Area Developer acknowledges that Pretzel Time may sell Nontraditional
Frozen Pretwisted Products that are branded and such products that are not
branded under the "Pretzel Time" name in and/or from Area Developer's Territory
without compensation to Area Developer. 60. Successors.
This Agreement shall bind and inure to the benefit of the heirs,
executors, administrators, legal representatives, successors and assigns to the
parties hereto.
61. Terminology.
All terms and words used in this Agreement, regardless of the number
and gender in which they are used, shall be deemed and construed to include any
other number, singular or plural, and any other gender, masculine, feminine, or
neuter, as the context of sense of this Agreement of any section or clause
herein may require, as if such word had been fully and properly written in the
appropriate number and gender.
62. Invalid Or Unenforceable Provisions.
If any provisions of this Agreement, or its application to any person
or circumstance, is deemed invalid or unenforceable by a court of competent
jurisdiction, then the remainder of this Agreement or the application of such
provision to other persons or circumstances shall not be affected thereby,
provided, however, that if any provision or application thereof is invalid or
unenforceable, the court shall substitute a suitable and equitable provision
therefore in order to carry out, so far as may be valid and enforceable, the
intent and purpose of the invalid or unenforceable provision.
63. National Contracts, Nontraditional Locations and Nontraditional Frozen
Pretwisted Products. Concerning: (a) national contracts (including Marriott
Corporation and TCBY Systems Inc.); (b) Nontraditional Locations; and, (c) the
sale of Nontraditional Frozen Pretwisted Products, that directly relate to
income derived by Pretzel Time from the States of _____________, Area Developer
acknowledges that Area Developer shall have no rights concerning said (a)
national contracts (including Marriott Corporation and TCBY Systems Inc.); (b)
Nontraditional Locations; and, (c) sale of Nontraditional Frozen Pretwisted
Products.
IN WITNESS WHEREOF, the parties have hereunto caused this agreement to
be executed the day of ______________________ 1996.
WITNESSES: PRETZEL TIME, INC.
BY:/s/Xxxxxx X. Xxxxxxxxx
NAME:Xxxxxx X. Xxxxxxxxx
TITLE:
AREA DEVELOPER
BY:/s/Xxxxxxx X. Xxxx
NAME:Xxxxxxx X. Xxxx
TITLE:VP
DEVEPAG2.3.3.95
EXHIBITS
Exhibit A .................................. Owners & Guarantor's Undertaking
Exhibit B ............................................. Principle Owners
Exhibit C .................................... Area Developer's Development
Obligations
Exhibit D ................................. Area Developer Responsibilities
Exhibit E ............................................. Franchise Agreement
EXHIBIT D
AREA DEVELOPER RESPONSIBILITIES
This Exhibit is annexed to and forms a part of the Area Developer Agreement
executed on , 199 by and between Pretzel Time, Inc. and .
The parties herein agree that the following is the list of the Area
Developer's duties, obligations and responsibilities:
I. GENERAL RESPONSIBILITIES
1. Secure maximum sales volume from the potential sales in your
territory.
2. Provide adequate and consistent service to the franchise community
in your territory.
3. Develop company goodwill by increasing Pretzel Time prestige
and improve Pretzel Time's relationship with franchisees
wherever possible and conducting yourself in a way that will
reflect Pretzel Time's high integrity.
4. Show a steady growth in ability and self-development by:
a. accepting and using marketing and sales promotion tools and acids;
b. using to good advantage all training techniques and
marketing aids in making the franchisee's business more
profitable; c. improve yourself through company training in
selling and promotion; d. become thoroughly acquainted with
all Pretzel Time's policies, programs and products; and, e.
attending training classes at least once every 24 months.
5. Effectively plan and organize your territory and job to
accomplish the basic objectives of the job of area developer.
6. Acquaint yourself with competition which you will encounter in your
territory.
7. Become conversant about the general economy of your territory.
8. Learn the business history and operations of the franchisees within
the designated territory.
9. Organize your non-promotion tasks to carry out the job of promotion,
training and support by:
DA.AGT2.24.95
D- 4
a. Setting up adequate files for reference in future work;
b. Prepare an overall plan of development in your territory to
use as a reference to accomplish your basic objectives.
10. Protect the Pretzel Time's trademarks.
II. SPECIFIC RESPONSIBILITIES
1. Completion of Pretzel Time's Management Training Program;
2. Establishment of office space within the designated territory to
conduct business;
3. Representation to others as an agent, not as an employee of Pretzel
Time;
4. Submission of an annual business plan to Pretzel Time
specifying nature of the organization, and manner in which
territory will be developed;
5. Opening a Pretzel Time Unit owned and operated by Area Developer;
6. Compliance with the new unit development procedures outlined below:
a. Franchisees must be approved by Pretzel Time;
b. Prompt completion of site checklist and submission to
Pretzel Time (only when requested by Pretzel Time);
c Initiation of remaining steps in franchise inquiry process;
d. After Pretzel Time approves site, lease negotiations
handled solely by Pretzel Time; and
e. Assist franchisee in unit build-out process and
assist franchisee's plan approval by Pretzel Time or
Pretzel Time's designated agent.
7. No contact is to be initiated with any mall representatives
until a franchisee is approved by Pretzel Time for the
location;
8. Work on site for a minimum of two days immediately preceding
opening day and three days immediately following opening day
at each new unit opening within the Area Developer's
Territory. In the event that a franchise is sold, transferred
or assigned, the Area Developer shall work on site with the
new franchisee for five days beginning when the location is
transferred to the new franchisee;
9. Submit a completed unit opening checklist to Pretzel Time
within 5 days of each new unit opening or a transfer of an
existing franchise within the Area Developer's Territory;
10. Permit units within the Area Developer's Territory to open
only after ensuring Pretzel Time's standards have been
attained in every item of the new unit opening checklist;
11. Fulfill all additional responsibilities as defined in the Area
Developer's Agreement; and
12. Insure that all franchisees within their designated territory
are using Pretzel Time-approved food, beverages, products,
paper goods and supplies.
13. Submission of quarterly financial reports on a calendar year
basis to Pretzel Time, Inc.
FRANCHISOR:
WITNESSES: PRETZEL TIME, INC.
BY:
NAME: ____________________
-------------------
TITLE: ____________________
AREA DEVELOPER:
BY:
NAME: ___________________
-------------------
TITLE: ___________________
DA.AGT2.24.95
EXHIBIT "E"
THE FRANCHISE AGREEMENT
(A COPY OF THE FRANCHISE AGREEMENT IS ATTACHED TO THE OFFERING CIRCULAR AS
EXHIBIT "C" OF THE OFFERING CIRCULAR)
EXHIBIT "C"
TO
DEVELOPMENT AGREEMENT
BEING AREA DEVELOPER'S
DEVELOPMENT OBLIGATIONS
Area Developer hereby agrees to have open and in operation at the end
of each Development Period described below the cumulative total of Pretzel Time
Units shown below as the development obligations (sometimes in this Agreement
referred to as the "Development Obligations") for such Development Period in
Area Developer's Territory:
Development Date Development Development Number of Pretzel Time
Period Period Commences Period Ends Stores to be in Operation
First
Second
Third
Fourth
Fifth
AREA DEVELOPER AGREEMENT
BY AND BETWEEN
PRETZEL TIME, INC.
AND
-----------------------------------
EXHIBIT E
TO THE OFFERING CIRCULAR
OF PRETZEL TIME, INC.
AREA DEVELOPER AGREEMENT
EXHIBIT J
TO THE OFFERING CIRCULAR
OF PRETZEL TIME, INC.
FINANCIAL STATEMENTS
38
"company owned stores") shall mean any Pretzel Time Unit owned, directly or
indirectly, by Pretzel Time or by a corporation in which Pretzel Time is the
majority shareholder.
11. Area Developer Expenses.
Area Developer acknowledges that Area Developer may incur no cost or
expenses on behalf of Pretzel Time without obtaining Pretzel Time's prior
written approval in each instance, if any.
12. Term.
The term of this Agreement shall be one year commencing on the
Effective Date and shall renew automatically from year to year thereafter unless
otherwise terminated in accordance with Sections 18 and/or 19 of this Agreement.
Each one year period shall be considered a Development Period as further set
forth on Exhibit "C." [Note: Pursuant to Maryland Law (COMAR 02.02.08.16L) any
general release required as a condition of renewal and/or assignment/transfer
will not apply to any liability under the Maryland Franchise Registration and
Disclosure Law. Any claims arising under the Maryland Franchise Registration and
Disclosure Law must be brought within 3 years after the grant of the franchise.]
13. Execution of Franchise Agreement.
Area Developer acknowledges that all franchisees in Shopping Malls in
the Area Developer's Territory shall execute a franchise agreement in form and
substance acceptable to Pretzel Time, as determined in Pretzel Time's sole
discretion. A copy of the Pretzel Time Franchise Agreement (including exhibits,
riders, shareholder guarantees, preliminary agreements and other agreements)
that Pretzel Time currently uses in granting franchises for the ownership and
operation of Pretzel Time Stores in the state in which Area Developer's
Territory is located is attached hereto as Exhibit "E" and incorporated herein
by reference the same as if fully copied and set forth at length. Further, Area
Developer hereby agrees to execute a franchise agreement for each Pretzel Time
unit that Area Developer opens, which form and substance of the franchise
agreement shall be acceptable to Pretzel Time in Pretzel Time's sole discretion.
Further, Area Developer hereby agrees to be bound by the
Area Developer and Pretzel Time pursuant to this agreement shall be barred
unless an action is commenced within: (a) two (2) years from the date on which
the act or event giving rise to the claim occurred or (b) one (1) year from the
date on which Area Developer or Pretzel Time knew or should have known, in the
exercise of reasonable diligence of the facts given rise to such claims,
whichever occurs first. 50. Governing Law.
This Agreement shall be governed by, construed, and enforced in
accordance with, the laws of the Commonwealth of Pennsylvania without regard to
its principles of conflicts of law; provided a lawsuit may be brought in
Maryland for claims arising under the Maryland Franchise Registration and
Disclosure Law.
51. Captions.
The captions and paragraph headings in this Agreement are included for
convenience of reference only and shall not affect or be considered in the
interpretation or construction of any provision of this Agreement.
52. Approvals.
Except where this Agreement expressly obligates Pretzel Time reasonably
to approve or not unreasonably to withhold Pretzel Time's approval of any action
or request by Area Developer, Pretzel Time has the absolute right to refuse any
request by Area Developer or to withhold Pretzel Time's approval of any action
by Area Developer that requires approval by Pretzel Time.
53. Public Or Private Offerings.
If the Area Developer (or any of Area Developer's owners) attempts to
raise or secure funds by the sale of securities, the Area Developer is obligated
to pay Pretzel Time's then current fee to cover Pretzel Time's expenses in
connection with the offering or proposed offering. Currently, that
20. Further Assurances. Each of the parties hereto hereby agrees to execute
and deliver any further instruments, certificates and documents as may be
reasonably requested by the other party hereto to carry out the terms,
conditions and responsibilities of this Agreement.
21. Noncompetition.
Area Developer agrees that for a term of one (1) year after the
termination or expiration of this Agreement, neither Area Developer nor Area
Developer's shareholders, directors or officers will engage directly or
indirectly, whether individually or in partnership or in conjunction with any
person, firm, associations, syndicate or corporation, as principal, agent,
shareholder, employee, consultant or in any other manner whatsoever, in any
business activity competitive with the business of Pretzel Time within three (3)
miles of any Pretzel Time Unit. Area Developer agrees that the limitations set
forth above are reasonable in time and geographic scope. If any provision hereof
is held invalid or unenforceable, the remainder shall nevertheless remain in
full force and effect. It is the intention of the parties that this Agreement
shall not be terminated thereby but shall be deemed to have been amended to the
extent required to render this Agreement valid and enforceable, such amendment
to apply only with respect to the jurisdiction of the court making such
adjucation. Covenants not to compete such as those mentioned above are generally
considered unenforceable in the State of North Dakota. 22. Confidentiality.
Both Pretzel Time and the Area Developer recognize that during the
course of this Agreement, Pretzel Time may loan to the Area Developer, Area
Developer's shareholders, officers, employees and agents valuable, confidential
and proprietary information pertaining to Pretzel Time's operations. Area
Developer agrees to hold in a fiduciary capacity for the benefit of Pretzel
Time, Pretzel Time's subsidiaries, successors, and assigns all secret and
confidential information, including
To the extent assignable, this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns. Each
of the following shall be deemed to be an assignment:
(a) the transfer of the rights of Area Developer hereunder;
(b) the transfer of fifty percent or more in the aggregate of
the capital stock or voting power of any corporate Area
Developer, Area Developer's parent company or any subsidiary,
controlled affiliate, affiliate, officer, director and/or
shareholder(s); (c) the issuance of stock by a corporate area
developer such that the newly issued shares constitute fifty
percent (50%) or more, in the aggregate of the capital stock
or voting power of the corporate franchisee; or (d) the
transfer of fifty percent (50%) or more in the aggregate
partnership interest of a partnership area developer.
45. Rights Of Parties Are Cumulative.
The rights of Area Developer and Pretzel Time are cumulative and no
exercise or enforcement by Pretzel Time or Area Developer of any right or remedy
hereunder shall preclude the exercise or enforcement by Pretzel Time or Area
Developer of any other right or remedy to which the party is entitled.
46. WAIVER OF JURY TRIAL.
[INTENTIONALLY DELETED].
47. Waiver Of Punitive Damages.
[INTENTIONALLY DELETED].
48. Exclusive Jurisdiction.
[INTENTIONALLY DELETED].
49. Limitations Of Claims.
[INTENTIONALLY DELETED].
50. Governing Law.
[INTENTIONALLY DELTED].
51. Captions.
The captions and paragraph headings in this Agreement are included for
convenience of reference only and shall not affect or be considered in the
interpretation or construction of any provision of this Agreement.
52. Approvals.
Except where this Agreement expressly obligates Pretzel Time reasonably
to approve or not unreasonably to withhold Pretzel Time's approval of any action
or request by Area Developer, Pretzel Time has the absolute right to refuse any
request by Area Developer or to withhold Pretzel Time's approval of any action
by Area Developer that requires approval by Pretzel Time.
53. Public Or Private Offerings.
If the Area Developer (or any of Area Developer's owners) attempts to
raise or secure funds by the sale of securities, the Area Developer is obligated
to pay Pretzel Time's then current fee to cover Pretzel Time's expenses in
connection with the offering or proposed offering. Currently, that
