RESTAURANT DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
INTRODUCTION
ARTICLE 1 - GRANT
1.1 Exclusive Rights
1.1 Exceptions
1.2.1 U.S. Military Establishments
1.2.2 Institutional Locations
1.2.3 Hotel Chains
1.3 Definition of Development Area
1.4 Preservation of Exclusivity
ARTICLE II - TERM
2.1 Initial Term
2.2 No Other Rights
ARTICLE III - DEVELOPMENT SCHEDULE
3.1 Development Obligations
3.1.1 Development Schedule
3.1.2 Development Units
3.1.3 Rate of Development
3.1.4 Strict Adherence
3.2 Force Majeure
ARTICLE IV - DEVELOPMENT PROCEDURE
4.1 The Nature of Agreement
4.2 Franchise Approval
4.2.1 Franchise Approval Criteria
4.2.2 Disapproval
4.2.3 Target Area
4.3 Site Approvals; Plans and Specifications
4.3.1 Real Estate Interests
4.3.2 Building, Plan Approval / Construction
4.3.3 No Franchise Without Site and Building Plan Approvals
4.3.4 No Representation Regarding Site
ARTICLE V - FEES AND FRANCHISE AGREEMENTS
5.1 Development Fee
5.2 Franchise Fee
5.3 Royalty and Ad Contribution
5.3.1 Standard Fees
5.3.2 (SUBJECT TO A PENDING REQUEST FOR CONFIDENTIAL TREATMENT)
5.4 Duration of Franchise Agreement
5.5 Other Terms
5.6 Execution of Franchise Agreement
5.7 Change in Laws
ARTICLE VI - TRAINING, DIRECTOR OF OPERATIONS, SOURCES OF SUPPLY
6.1 Director of Operations
6.2 Substitute Director of Operations
6.3 Training Requirement
6.4 Cost of Training
6.5 Managing Director
6.6 Covenants
6.6.1 Confidentiality
6.6.2 Stock Ledger
6.7 Sources of Supply
6.7.1 Authorized Suppliers
6.7.2 Proprietary Limits
6.7.3 Self-Supply
6.7.4 Limits on BKC Responsibility
6.7.5 Developer's Responsibilities
6.7.6 Developer's Supply Manager
6.7.7 Additional Representations
ARTICLE VII - DEFAULT
7.1.1 Events of default by Developer
7.1.2 Event of BKC Default
7.2 BKC Remedies
7.3 Developer Remedies
ARTICLE VIII - TERMINATION
8.1 Effect of Termination
8.2 Rights Upon Termination
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ARTICLE IX - DISPUTE RESOLUTION
9.1 Dispute Resolution
(a) Termination; Limited Remedy
(b) Enforcement
(c) Non-Termination Disputes
(d) Site of Arbitration
(e) Arbiters
(f) Language
(g) Costs
(h) Proceedings
(i) Binding Nature
(j) Other Relief
ARTICLE X - SECRECY OF PROPERTY
ARTICLE Xl - ASSIGNMENT AND TRANSFER
11.1 Transfer of Interest by Developer
11.2 Transfer of Interest by Principal
ARTICLE XII - SEVERABILITY
ARTICLE XIII - ENTIRE AGREEMENT
ARTICLE XIV - NOTICES
ARTICLE XV - NON-WAIVER
ARTICLE XVI - HEADINGS AND ARTICLE TITLES
ARTICLE XVII - RELATIONSHIP OF PARTIES
ARTICLE XVIII - INTERPRETATION
ARTICLE XIX - BROKER
ARTICLE XX - GOVERNING LAW/JURISDICTION
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ARTICLE XXI - TRADEMARKS AND TRADE NAMES
21.1 Disclaimer of Interest
21.2 Notice of Challenge
21.3 Registered User Agreement
21.4 No Unauthorized Use
21.5 Trademark Applications
21.6 Assistance to BKC
ARTICLE XXII - COMPETITION
ARTICLE XXIII - TAXES
ARTICLE XXIV - GOVERNMENTAL APPROVAL
ARTICLE XXV - SURVIVAL
ARTICLE XXVI - THE PRINCIPAL(S)
26.1 Stock Ownership
26.2 Guaranty
ARTICLE XXVII - INDEPENDENT ADVICE
ARTICLE XXIII - FORCE MAJEURE
ARTICLE XXIX - CONTROLLING LANGUAGE
ARTICLE XXX - DEFINITIONS
EXHIBIT A - PRINCIPALS OF THE DEVELOPER
EXHIBIT B - DEVELOPMENT UNITS
EXHIBIT C - INTERNATIONAL BURGER KING RESTAURANT FRANCHISE
AGREEMENT
EXHIBIT D - APPLICATIONS FOR BURGER KING MARKS IN POLAND
SCHEDULE 1 - DEVELOPMENT SCHEDULE
SCHEDULE 2 - TERMS FOR SECTION 5.3.1(a)
SCHEDULE 3 - TERMS FOR SECTION 5.3.1(b)
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RESTAURANT DEVELOPMENT AGREEMENT
THIS AGREEMENT is made and entered into in Miami, Florida as of the 14th
day of March, 1997 by and among BURGER KING CORPORATION, a company organized
under the laws of Florida having its principal place of business at 00000 Xxx
Xxxxxx Xxxx, Xxxxx, Xxxxxxx, X.X.X. ("BKC") of the first part, and INTERNATIONAL
FAST FOOD CORPORATION, a company organized under the laws of Florida, having its
principal place of business at 0000 Xxxxxxx Xxxx, Xxxxx 000, Xxxxx Xxxxx,
Xxxxxxx 00000 (the "Developer").
INTRODUCTION
A. BKC has developed and acquired specialized knowledge, techniques,
skill and experience in the development and operation of limited menu
restaurants (the "Burger King System") known as "Burger King Restaurants"
throughout the United States and other countries.
B. The Developer possesses knowledge and market information concerning
the operation and development of Burger King Restaurants in the Republic of
Poland and the Developer recognizes the benefits to be derived from being
identified with and franchised to operate limited menu restaurants utilizing the
Burger King System within the development area described in this Agreement and
utilize the name Burger King(R) and such other marks as may be authorized from
time to time for use in connection with Burger King Restaurants (the "Burger
King Marks").
C. The Developer acknowledges and represents to BKC that it is entering
into this Agreement after having made an independent investigation of BKC and
its operations and of market and economic conditions in the Republic of Poland.
The Developer represents that BKC has not made, and that the Developer is not
relying upon, any representation as to the profits and/or sales volumes which
Developer might be expected to realize, or costs or levels of costs which the
Developer might be expected to incur, or the prospects of success for the
Developer or Burger King, Restaurants in Poland, or the level or extent of the
awareness of the Burger King Marks or the Burger King System or brand in Poland
or the likelihood that any such awareness can or will be established in Poland,
or as to the availability of local sources of supply in Poland or the ability of
any such local sources of supply to meet standards for approval by BKC. The
Developer further represents and agrees that BKC and persons acting on its
behalf have not made, and the Developer is not relying upon, any representations
or promises that are not contained in this Agreement.
D. Those persons with a substantial direct or indirect legal or
beneficial ownership interest in the Developer who are undertaking certain
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obligations under this Agreement as a principal of the Developer (each of whom
is a "Principal") are set forth on Exhibit "A" to this Agreement, together with
a description of their ownership interest in the Developer.
E. The Developer and BKC wish to set forth the terms of their agreement
for the development of new Burger King Restaurants in the Republic of Poland
(meaning the area comprised within the present de facto boundaries of the
Republic of Poland) hereinafter referred to as the "Development Area."
F. BKC and the Developer recognize that at the time of execution of
this Agreement by International Fast Food Corporation as the Developer, no party
or parties are entering into this Agreement as Principals. However, in the event
of an assignment by the Developer with BKC's prior written consent, the
provisions of this Agreement applying to Principals would apply to the extent
that the assignee, Developer or another party expressly assume the obligations
of Principals under this Agreement.
In consideration of the mutual undertakings and covenants contained in
this Agreement and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows.
ARTICLE I
GRANT
1.1 Exclusive Rights. The Developer is hereby granted the exclusive
right to develop and, subject to the full satisfaction of the terms and
conditions of this Agreement, to be franchised to operate all forms of Burger
King Restaurants (as more fully defined below) within the Development Area upon
the terms and conditions of this Agreement and the franchise agreements which
shall be entered into for each Burger King Restaurant. For purposes of this
Section 1.1 and this Agreement generally, the terms Burger King Restaurant and
"Restaurants" shall include kiosks, in-line mall units, double drive-
thru/limited seating units, mobile units, traditional freestanding Burger King
Restaurants, and all other fast food hamburger concepts offered to franchisees
from time to time by BKC. Provided, however, that only those Burger King
Restaurants described in Section 3.1.2 shall count against the Developer's
development obligations under Article III of this Agreement.
1.2 Exceptions.
1.2.1 U.S. Military Establishments. Specifically excluded from this
grant are any existing or hereafter established U.S. military establishments.
including their adjacent housing areas and support areas. Developer acknowledges
that BKC has no control over or ability to stop development of new Burger King
Restaurants on such U.S. military establishments and hereby releases BKC and its
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directors, officers, parent, subsidiaries, affiliates, employees, successors and
assigns from all claims or liability relating to the existence or opening of a
Burger King Restaurant on such a U.S. military establishment, including without
limitation any claim or encroachment or breach of existing or future franchise
agreements, from the date of this Agreement forward.
1.2.2 Institutional Locations. In the event that an opportunity
arises for the development of one or more Burger King Restaurants in airports,
train stations, hotels, hospitals, stadiums, public buildings, schools,
factories, turnpikes, toll roads, universities, corporate headquarters and
branch offices, BKC shall notify the Developer of such opportunity and allow the
Developer 60 days from the date of such notification or such earlier time period
as is reasonably dictated by commercial circumstances (e.g., public bid or
concession award) in which to enter into a concession or other arrangement with
the owner of such outlet(s). In the event that Developer either notifies BKC
that it is not interested in pursuing the opportunity or is unable or unwilling
to obtain such a concession or make such an arrangement with the owner of the
outlet(s) within the time period set forth above, BKC or its affiliates shall be
free to negotiate for and open Burger King Restaurants in such outlet(s) or to
license third parties to do so.
1.2.3 Hotel Chain. Notwithstanding, the foregoing, BKC shall be free
to develop Burger King, within hotels operation, under a uniform brand within an
international chin without first offering the Developer the opportunity to
negotiate with the hotel as provided in Paragraph 1.2.2 above. Instead, where
BKC negotiates or wishes to negotiate with the brand or chain owners or members,
BKC shall merely inform the Developer that such negotiations are in progress
and/or such deal has been entered into.
1.3 Definition of Development Area. In the event of conflict or
confusion as to the exact boundaries of the Development Area, BKC's sole
decision shall control.
1.4 Preservation of Exclusivity, Subject to the above, BKC agrees that
so long as this Agreement is in effect, BKC shall not grant development rights
or franchise agreements to any other franchisees or any other persons within the
Development Area nor shall BKC directly or indirectly develop company owned
Burger King Restaurants within the Development Area during the term hereof.
ARTICLE II
TERM
2.1 Term. Unless terminated earlier pursuant to the terms of Article 7
hereof, the term of this Agreement shall expire on September 30, 2007 (the
"Term").
2.2 No Other Rights. The developer has no right to any other extension
or renewal beyond the Term.
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ARTICLE III
DEVELOPMENT SCHEDULE
3.1 Development Obligations.
3.1.1 Development Schedule. The Developer agrees to develop and open
for business a minimum of Forth-Five (45) Development Units (as defined below)
during the Term and within the Development Area in strict accordance with the
development schedule set forth on Schedule 1 hereto (the "Development
Schedule").
3.1.2 Development Units. The term "Development Unit" is defined on
Exhibit B to this Agreement. Moreover, only the opening of a new Burger King
restaurant in one of the forms set forth on Exhibit B hereto will be applied
against the Developer's obligations under this Article III. No more than four
(4) Burger King Kiosk Restaurants (as that term is defined in Exhibit B hereto)
can be developed and opened for business during any single Development year of
the Development Schedule for purposes of meeting Developers development
obligations under this Article III.
3.1.3 Rate of Development. The Developer is free to develop Burger
King Restaurants at a faster rate than that outlined above, provided that each
Burger King Restaurant is developed in accordance with the franchise and
location procedures described in this Agreement. If in any one or more periods,
the total of Development Units opened falls short of the number required for
such period or periods but the total number of Development Units opened prior to
and during that period and operating at the end of that period is equal to or
exceeds the required total for the period from the start of the Development
Schedule, to the end of that period, the Developer shall have complied with its
obligation.
3.1.4 Strict Adherence. Strict adherence to each and every one of
the above requirements is the essence of this Agreement. Failure to adhere to
any of the above requirements of Article III shall result in the automatic
termination of this Agreement pursuant to Paragraph 7.1(b).
3.2 Force Majeure. Notwithstanding the foregoing, if delay in meeting
the Development Schedule is caused by acts of God, labor strikes, civil unrest,
or other causes beyond Developer's reasonable control, then Developer shall
notify BKC accordingly and BKC after an examination of the facts shall allow a
reasonably necessary extension to the required opening date for the Burger King
Restaurant in question, provided, however, that in the event that the reasonably
necessary extension exceeds one hundred eighty (180) days, BKC shall have the
right to terminate this Agreement, whereupon all rights granted to Developer
under this Agreement shall terminate, without liability to BKC.
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ARTICLE IV
DEVELOPMENT PROCEDURE
4.1 The Nature of Agreement. The Developer understands and agrees that
this Agreement is not a franchise for the operation of Burger King Restaurants,
but is intended by the parties to set forth the terms and conditions which, if
fully satisfied, would entitle the Developer to apply for and receive individual
franchises for each Restaurant to be developed under this Agreement. Upon
Developer's compliance with each of the requirements set forth in this
Agreement, including, without limitation, Sections 4.2 and 4.3.2 below, BKC
shall offer to Developer (or, at Developer's request, and with BKC's prior
written approval, to a controlled subsidiary or affiliate of Developer) a
Franchise Agreement in the form attached hereto as Exhibit "C".
4.2 Franchise Approval.
4.2.l Franchise Approval Criteria. With respect to each Restaurant
to be established pursuant to this Agreement, the Developer must first apply for
and obtain franchise approval ("Franchise Approval") from BKC through BKC's
standard franchise approval procedures, including without limitation, submitting
the then current form of Multiple Franchise Application, Management Commitment
Form, Capitalization Plan, and Preliminary Agreement. Notwithstanding any
provision in this Agreement to the contrary, the Developer understands and
agrees that, as a condition to the granting of a Franchise Approval, the
Developer must have met all of BKC's then current operational, financial, legal,
and other approval criteria at the time of application for a franchise (the
"Expansion Criteria"). BKC may, in its sole and absolute discretion, waive
Developer's non-compliance with any one or all of the Expansion Criteria with
regard to any Restaurants developed under this Agreement. Franchise Approval
shall not be unreasonably withheld. If Franchise Approval is not den fed by BKC
by no later shall twenty (20) business days from the date on which BKC receives
a written application from Developer which complies in all respects to the
requirements in this Section 4.2.1, then Franchise Approval shall be deemed to
have been given to Developer. The terms "operational," "financial" and "legal"
as used in this Agreement shall include without limitation the following:
(a) Operational. The Developer must conduct each and every one of
its Burger King Restaurant businesses presently existing and hereafter
constructed in accordance with the terms and conditions of this Agreement, the
provisions of the respective franchise agreements and the standards,
specifications and procedures set forth and described in the Manual of Operating
Data, as amended, including, the maintenance of the interior and exterior of the
Restaurants to reflect an acceptable Burger King image in the time period
required under the applicable Franchise Agreement. The Developer understands
that changes in said standards, specifications and procedures may become
necessary from time to time. The Developer agrees to accept, as reasonable, said
changes and the Developer further agrees that it is within the sole discretion
of BKC to make said changes.
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(b) Financial. The Developer must satisfy all BKC's financial
requirements for a franchise which will normally include the submission of a
certified financial statement (balance sheet and profit and loss statement) for
the Developer's latest fiscal year, a current financial statement on the
Developer and an acceptable capitalization plan showing that the Developer will
meet BKC's then current financial ratio requirements. Developer shall also be
current in all monetary obligations owed to BKC and its affiliates.
(c) Legal. The Developer has submitted to BKC, in a timely manner as
requested, all BKC standard form information and documents reasonably requested
by BKC prior to and as a basis for the issuance and consummation of individual
franchises, has taken such additional action as may be requested from time to
time consistent with this Development Agreement, the franchise agreements and
the legal relationships contemplated therein, and is in compliance with all
obligations under all agreements with BKC and its affiliates.
4.2.2 Disapproval. The Developer's failure to meet operational,
financial and/or legal standards shall constitute grounds for BKC refusing to
grant a Franchise Approval or withdrawing a Franchise Approval and shall not
extend, modify or reduce the development requirements and schedules in Article
III. BKC agrees to give the Developer written notice of its failure to receive
Franchise Approval, and such notice shall provide the Developer with reasonable
detail regarding the relevant deficiencies and the manner in which they may be
remedied (a "Disapproval Notice"). BKC will not unreasonably delay its decision
on whither to grant or deny Franchise Approval after receiving all documents and
information required by BKC. A Disapproval Notice shall not be a notice of
default under Section 7.1 above unless BKC specifically so states.
4.2.3 Target Area. If granted, Franchise Approval may be for a
specific address or a specific geographic area, at BKC's sole discretion, and
shall constitute the Developer's authorization to attempt to locate a site for a
Burger King Restaurant at that address or in that area.
4.3 Site Approvals; Plans and Specifications. After obtaining Franchise
Approval, the Developer shall submit to BKC a completed site approval
application package in the form then prescribed by BKC. The Developer
acknowledges receipt of BKC's current site approval application package forms.
Approval of the proposed site by BKC ("Site Approval") is a prerequisite to the
Developer's authorization to construct a Burger King Restaurant at a particular
location. BKC shall not unreasonably withhold Site Approval. IF BKC does not
deny Site Approval of a proposed site within twenty (20) business days from the
date on which BKC receives a completed site approval application package from
Developer for such site, Site Approval shall be deemed to have been given to the
Developer. The Developer shall not, except at the Developer's own risk, enter
into any legal binding commitments with vendors or lessors of potential site
property until the Developer has received Site Approval. After obtaining Site
Approval, the following requirements relating to site acquisition and
construction shall apply.
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4.3.1 Real Estate Interests. The Developer assumes all cost,
liability, expense and responsibility in locating, acquiring and developing the
real estate sites and of construction of the Restaurants to be developed.
4.3.2 Building Plan Approval Construction. All Restaurants shall be
constructed, equipped and furnished in accordance with plans and specifications
approved by BKC, which approval shall not be unreasonably withheld or delayed.
Developer acknowledges that BKC does not have standard architectural plans and
specifications for in-line restaurants (i.e., restaurants constructed in
existing structures or buildings. On written request of Franchisee, BKC will
make available to the Developer for its information in its standard plans and
specifications for freestanding Burger King Restaurants in whatever form or
language those plans and specifications are maintained. If, and to the extent
that, the Developer requires architectural and engineering services, it will
contract for those services independently at its own expense. The Developer
shall, as a condition precedent to the development of each restaurant, obtain
from BKC written architectural and design approval of the Developer's plans by
BKC ("Building Plan Approval"), which approval shall not he unreasonably
withheld. The building design, style, size and interior decor, as well as the
type of equipment, service format and e equipment arrangement for any future
Restaurant may be changed, amended or modified by BKC from time to time. Any
Building Plan Approval shall be for BKC's own benefit. If BKC does not deny
Building Plan Approval within twenty (20) business days after receiving
Developer's completed plans and all information reasonably requested by BKC in
connection with the Developer's building plans, Building Plan Approval shall be
deemed to have been given by BKC.
4.3.3 No Franchise Without Site and Building Plan Approvals. Nothing
in this Agreement shall be construed as obligating BKC to grant a franchise
agreement for any site which has not received Site Approval and Building Plan
Approval from BKC.
4.3.4 No Representation Regarding Site. The Developer agrees that the
approval of any site by or on behalf of BKC or the approval of any
specifications or of any other matter relating to the development by or on
behalf of BKC does not amount to a representation or warranty relating directly
or indirectly to the success or viability of the Restaurant and no reliance
shall be placed on any warranty, representation or advice that may be given by
any person by or on behalf of BKC directly or indirectly relating to the success
or viability of the Restaurant, unless such representation, warranty or advice
is given in writing by a board director of BKC. Developer further agrees that
BKC may, in its sole discretion not make a physical, on-site inspection and
evaluation of any proposed new Restaurant location in deciding whether to grant
Site Approval for any such location, it being understood and agreed that BKC's
review and approval of a new location is for BKC's own benefit only.
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ARTICLE V
FEES AND FRANCHISE AGREEMENTS
5.1 Development Fee. Subject to the conditions set forth below, the
Developer shall pay to BKC in the U.S.A. a total of One Million U.S. Dollars
(U.S. $1,000,000.00) (the "Development Fee").
(a) Developer shall not be obligated to pay the Development Fee if
Developer satisfies each of the following conditions:
(i) Developer complies with the Development Schedule
obligation through a date which is thirty (30) months from the date of this
Agreement set forth above ("Due Date"); and
(ii) Developer achieves actual Gross Sales (as defined in the
form of Franchise Agreement attached as Exhibit "C" hereto) at its properly
licensed Burger King Restaurants totalling an amount which is the equivalent
(using the conversion rate in effect at the time of each monthly report to BKC
under the relevant Franchise Agreement) of U.S. Eleven Million Dollars (U.S.
$11,000,000) during the twelve months immediately preceding the Due Date.
Provided, however, that if as of the Due Date the Developer has satisfied the
conditions set forth in (i) of this Section 5.1(a) but has failed to satisfy the
conditions set forth in (ii) of this Section 5.1(a) in that the Developer has
achieved actual Gross Sales of less than U.S. Eleven Million Dollars (U.S.
$11,000,000) during the twelve months immediately preceding the Due Date, and
further provided that Developer has achieved actual Gross Sales of greater than
U.S. Nine Million Dollars (U.S. $9,000,000) during the twelve months immediately
preceding the Due Date, then the Developer, at its election, may pay to BKC on
the Due Date the sum of U.S. Two Hundred and Fifty Thousand Dollars (U.S.
$250,000) in immediately available funds as a "Reduced Development Fee." If the
Developer is entitled to, but fails to pay said Reduced Development Fee, then
the Development Fee shall remain due and owing.
(b) If the Developer is obligated to pay the Development Fee
pursuant to Section 5.1 (a) above, and BKC has elected not to terminate this
Agreement pursuant to the terms of Article VII below, then the Developer shall,
at its election by delivery of written notice to BKC on or before the Due Date,
either;
(i) pay the Development Fee to BKC on the Due Date in
immediately available funds; or
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(ii) deliver with the notice referenced above, the written
binding undertaking of Xxxxxxxx Xxxxxxxx (in a form reasonably acceptable to
BKC) that the "Xxxxxxxx Group" (as defined below) shall, within six (6) months
of the Due Date, forever divest itself of all direct or indirect (through
Principal or otherwise) legal or beneficial interest in the Developer and the
Burger King Restaurants opened or operated by the Developer or its successors
and/or assigns and of the rights under this Agreement or any of the Franchise
Agreements to a party not related to Xxxxxxxx, including any of his family
members or any entity controlled by any such family members. For purposes of
this Section 5.1, the "Xxxxxxxx Group" shall mean Xxxxxxxx, and any trust,
partnership limited liability company), corporation or other legal entity
wherein he or they directly or indirectly own on the aggregate an interest of
ten percent (10%) or more of the legal or beneficial equity interests (a
"Xxxxxxxx Entity"), and any parent, subsidiary or affiliate of a Xxxxxxxx
Entity. Nothing in this Agreement is intended to constitute an admission by
Xxxxxxxx Xxxxxxxx that members of his family are controlled by or affiliated
with him.
(c) If the Developer proceeds under - Section 5.1(b)(ii) above and:
(i) The divestiture contemplated in Section 5.1(b)(ii) is
closed within such six (6) month period, then the Developer shall have no
obligation to pay the Development Fee; or
(ii) Some or all of the conditions and undertakings in Section
5.1(b)(ii) are not met within such six (6) month period, then the Developer
shall pay the Development Fee to the first (1st) day after the expiration of
such six (6) month period in immediately available funds.
(d) In the event that this Agreement is terminated by the Developer
pursuant to Section 7.3 below, the Developer shall have no further obligation to
pay the Development Fee and such non-payment shall not limit or otherwise affect
such termination or the Developer's other rights under Article VII and Article
VIII of this Agreement.
(e) In the event that this Agreement is terminated by the Developer
or its representatives for any reason other than pursuant to Section 7.3 below
and failure to divest, the Development Fee shall become immediately due and
payable in immediately available funds without limiting, or otherwise affecting
such termination or BKC's other rights under Article VII and Article VIII of
this Agreement.
(f) Payment of the Development Fee by the Developer has been
guaranteed by Xxxxxxxx pursuant to that certain Guaranty dated March 14, 1997.
5.2 Franchise Fee. Upon the execution of each franchise agreement
covering a Burger King Restaurant to be opened during the Term of this
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being understood and agreed that BKC's review and approval of a new location is
for BKC's own benefit only. also pay to BKC in the U.S.A. a Franchise Fee of
Forty Thousand U.S. Dollars ($40,000 U.S.D.) for franchise agreements with a
term of 20 years and a Franchise Fee of Twenty-Five Thousand U.S. Dollars
($25,000 U.S.D.) for franchise agreements with a term of 10 years (the
"Franchise Fee"). In the event that such payment in U.S. Dollars is prohibited
by law, Developer shall pay to BKC the amount of Zlotys necessary to convert at
the free market rate in effect at the time of payment, to the U.S. Dollar
Franchise Fee.
5.3 Royalty and Ad Contribution.
5.3.1 Standard Fees. Each franchise agreement for a Burger King
Restaurant to be opened during, the Term of this Agreement shall provide for
payment of a royalty equal to five percent (5%) of "Gross Sales" (as defined in
the form of Franchise Agreement attached as Exhibit C) and for payment of an
advertising contribution equal to six percent (6%) of "Gross Sales".
5.3.2 (SUBJECT TO A PENDING REQUEST FOR CONFIDENTIAL TREATMENT)
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5.4 Duration of Franchise Agreement. The term of each franchise
agreement issued hereunder shall commence on the date the Restaurant opens for
business and shall expire at midnight on the date preceding the twentieth
anniversary (or tenth anniversary, if BKC has granted a 10 year franchise
agreement) of such opening.
5.5 Other Terms. All other terms and conditions of the franchise
agreements to be entered into under this Agreement shall be the terms and
conditions of the form of franchise agreement attached hereto as Exhibit (the
"Franchise Agreement"). BKC may change the form of Franchise Agreement at its
sole discretion without liability to BKC and upon prior notice to Developer for
purposes of complying with local law, as BKC deems reasonably necessary.
5.6 Execution of Franchise Agreement. No less than twenty (20) days
prior to the opening of each Restaurant, the Developer shall execute the form of
Franchise Agreement and deliver it to BKC together with the Franchise Fee.
5.7 Change in Laws. BKC shall not be under any obligation to grant any
franchise agreement under this Development Agreement in the event that there
exists any exchange control or governmental regulation or practice or any law
which prohibits or restricts the payment to BKC of the amounts due to BKC under
the proposed or existing franchise agreements or the repatriation of those
amounts to the U.S., or if such a restriction is in BKC's reasonable opinion
about to be imposed or likely to be imposed within 12 months.
ARTICLE Vl
TRAINING, DIRECTOR OF OPERATIONS, SOURCES OF SUPPLY
6.1 Managing Director. The Developer shall designate, subject to BKC's
approval, an individual as the "Managing Director" who shall be responsible for
the overall management of the Developer. The Managing Director and the Director
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of Operations may be the same individual. BKC hereby approves Xx. Xxxx
Xxxxxxxxxx ("Xxxxxxxxxx") as the Managing Director provided that Xxxxxxxxxx
during a time period of six (6) months from the date of this Agreement,
completely divests himself of all managerial responsibility and active
participation in any non-Burger King business so that Xxxxxxxxxx'x full time and
best efforts will be devoted to the operation and management of the Restaurants.
Notwithstanding, the foregoing, Xxxxxxxxxx shall be allowed to retain nominal or
ministerial responsibilities for businesses not related to the operation and
management of the Restaurants so long as those responsibilities do not impair
his ability to act as Managing Director and are not otherwise prohibited under
this Agreement or the Franchise Agreements.
6.2 Director of Operations. The Developer shall designate, with the
approval of BKC, a "Director of Operations" who shall devote his or her full
time and best efforts to the running of the Burger King Restaurants contemplated
to be developed herein. The Developer will designate a Director of Operations
acceptable to BKC. The Developer agrees to evidence a Managerial Employment
Agreement indicating such Director of Operations' level of authority to control
the Burger King Restaurants as contemplated therein. BKC hereby approves Xxxxxx
Xxxxxxxx as the Director of Operations.
6.3 Substitute Managing Director and Director of Operations. Should the
positions of Managing Director and/or Director of Operations subsequently become
vacant the Developer shall with the minimum delay but in any event within six
(6) months of such vacancy designate a replacement who shall be submitted to BKC
for its approval who shall be required to complete the training requirements as
outlined below.
6.4 Training Requirements. As a condition precedent to the opening of
the Developer's restaurants under this Agreement, the Developer's Director of
Operations and all senior restaurant managers as designated for restaurants as
and when developed under this Agreement shall undertake and successfully
complete BKC's then current required training program for such positions which
training program shall be conducted at BKC's training school and Burger King
Restaurants located in Miami Dade County Florida U.S.A. or in such other place
as BKC may designate. ln addition to the training requirements set forth above
within six (6) months after the date of this Agreement the Director Of
Operations and the Managing Director must have successfully completed the
following two (2) training courses conducted by BKC at BKC's training facilities
and Burger King Restaurants located in Miami Dade County Florida USA: (1)
Business Management Training and (2) Advanced Restaurant Operations. BKC will
offer these two courses at no charge to the Director of Operations and the
Managing Director during said six (6) month period, however, Developer shall be
responsible for all related and incidental costs and expenses as provided in
Section 6.5 below.
6.5 Cost of Training. The Developer must be financially prepared to meet
support requirements for restaurant managers during all phases of training.
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Personal expenses for travel, food, lodging and other costs incurred during any
phase of training are the responsibility of the Developer. Each Restaurant
operated by the Developer shall utilize the services of at least one full time
restaurant manager who has completed BKC's then current basic operations
training course.
6.6 Covenants. The Developer hereby covenants and agrees with BKC as
follows:
6.6.1 Confidentiality. The Developer shall use its best efforts to
ensure that any present Director of Operations Managing Director and Developer's
Supply Manager or any individuals who may hold those or similar positions in the
future or any other employees involved in the operation of Burger King
Restaurants by virtue of their position shall be bound by an obligation of
confidentiality to BKC.
6.6.2 Stock Ledger. The Developer covenants in this regard to
furnish to BKC annually a certified copy of its stock ledger showing the
complete ante accurate list of shareholders.
6.7 Sources of Supply.
6.7.1 Authorized Suppliers. BKC may require that any item required
for or used in the operation of any Restaurant shall be previously approved by
BKC in its sole and absolute discretion and that the supplier and the
distributor of such items also be previously approved by BKC in its sole and
absolute discretion. The Developer shall in such case purchase only from
BKC-authorized suppliers and distributors. Should the Developer propose an
alternative supplier and/or distributor BKC shall evaluate such supplier and/or
distributor against its then current approval criteria and either approve or
disapprove such supplier and/or distributor. BKC shall disclose its confidential
and proprietary product specifications to suppliers and/or distributors proposed
by the Developer provided that such suppliers or distributors sign a suitable
confidentiality undertaking before BKC's confidential and proprietary product
specifications are disclosed. In approving or disapproving suppliers and
distributors, the Developer acknowledges and agrees that BKC may devote such
resources and time as BKC may reasonably determine is necessary to evaluate any
such supplier or distributor in its sole discretion. BKC agrees that it will
apply those criteria in good faith toward the Developer. If BKC denies
Developer's request for approval of a supplier or distributor BKC shall advise
the Developer of the reasons for its decision. If BKC does not deny Developer's
request for approval of a supplier or distributor within thirty (30) business
days then approval shall be deemed to have been given. Approval of any supplier
or distributor by BKC is subject to revocation in its sole discretion. Any such
revocation shall be in writing, and shall specify the reasons for such
revocation.
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6.7.2 Self-Supply. Developer may, upon prior written notice to BKC
invest in BKC-approved suppliers and/or distributors to the Restaurants or
request approval from BKC to become an approved supplier, andlor distributor to
the Restaurants. BKC shall not unreasonably withhold its approval of Developer
as a supplier or distributor to the Restaurants. Developer expressly
acknowledges and agrees, however, that Developer must meet BKC's then current
conditions for supplier and/or distribution agreements.
6.7.3 Limits on BKC Responsibility. BKC shall not be responsible for
the following:
(a) Arranging, assuring, or facilitating the delivery or
availability of labor, food, paper, equipment, furniture, fixtures, or any other
goods or services in connection with the operation of the Restaurants.
(b) Arranging, assuring, or facilitating the delivery or
availability of labor, food, paper, equipment, furniture, fixtures, or any other
goods or services in connection with the operation of the Restaurants at a
reasonable or at any particular cost (whether stated as a percentage of sales or
otherwise) to the Restaurants or to the Developer.
6.7.4 Developer's Responsibilities. Developer shall be responsible
for locating, and submitting to BKC for approval pursuant to Section 6.7.1
above, suppliers and distributors capable of manufacturing and/or delivering all
BKC-required goods and services to the restaurants on a consistent and reliable
basis.
6.7.5 Developer's Supply Manager. On a one-time basis only, BKC'
shall, at its cost and expense, provide training in the area of supply and
quality assurance, to an individual ("Developer's Supply Manager") mutually
acceptable to BKC and Developer. Such training shall be for a period of no
longer than three (3) months and shall be at such locations as are reasonably
acceptable to BKC and Developer. The training will focus on the identification
and development of local suppliers and on auditing of ' the suppliers'
compliance with BKC standards and specifications. Upon completion of such
training program, Developer shall hire or retain Developer's Supply Manager for
the purpose of developing local suppliers and conducting quality audits of such
suppliers on behalf of the Developer. It is understood and agreed that the
Developer Supply Manager shall not have authority o approve suppliers and shall
comply with the terms set forth in Section 6.7.1 above. BKC shall provide, at
Developer's request and expense, similar training to a replacement to
Developer's Supply Manager. Developer may, at its discretion and risk, eliminate
the position of Developer's Supply Manager.
6.7.6 Additional Representations. Developer acknowledges that there
currently are no suppliers in Poland for variety of menu items served generally
in Burger King Restaurants and that the specification of the ingredients in all
Burger King menu items is subject to the approval of the local governmental
heath and other authorities. Developer agrees that:
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(a) BKC shall have no responsibility to obtain governmental
approvals for menu items;
(b) BKC may in it sole discretion permit a supplier to the
Restaurants to manufacture and sell menu items that do not meet BKC's
specifications provided that such supplier provides documentary evidence to BKC
that such item(s) comply with local governmental requirements;
(c) BKC may in its sole discretion approve a supplier or
distributor to the Restaurants even if such sup plier or distributor does not
meet all of BKC's standard approval criteria; and
(d) A request by Developer to BKC for approval of any product
supplier or distributor for or to the Restaurants shall constitute Developer's
consent to the use of such product, supplier or distributor but shall not bind
BKC to approve such product supplier or distributor for use at the Restaurants.
6.7.7 Product Specifications. BKC shall provide Developer with a
copy of BKC's confidential and propriety product specifications for such
products as BKC has approved for sale in Poland. Developer shall use such
specifications for the sole purpose of Developer identifying and developing
local sources of supply in Poland. Developer shall keep and maintain BKC's
product specifications strictly confidential a nd shall not disclose same to any
third party including any suppliers without BKC's prior written consent nor
without first obtaining a suitable confidentiality undertaking from such third
party a form of which shall be supplied by BKC.
ARTICLE VII
DEFAULT
7.1.1 Events of DeFault by Developer. Developer shall be in default
under this Agreement upon the occurrence of any of the following events or
conditions (individually an "Event of Default " and collectively the "Events of
Default"):
(a) The Developer fails to obtain Site Approval or any other
approval required from BKC prior to the commencement of construction.
(b) The Developer fails to adhere to the agreed development
schedules in accordance with Article II of this Agreement.
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(c) The Developer consistently fails over a period of nine (9)
months to meet and satisfy fully the operational financial and legal
requirements set forth in Article IV, whether for the purpose of seeking
franchise approval or in the day to day operation of a licensed Burger King
Restaurant, and does not cure such failure within thirty days of receipt of
written notice from BKC.
(d) The Developer fails to pay any amount when due under this
Agreement and does not cure such failure within ten (10) days of written notice
from BKC.
(e) Dissolution, termination of existence, or insolvency of either
the Developer or any of the Principals, or the appointment of a custodian or
receiver of any part of the property of the Developer or any of the Principals,
or a trust mortgage or an assignment for the benefit of creditors by either the
Developer or any of the Principals; or the recording or existence of any lien
for past due taxes, or the commencement by or against either the Developer or
any of the Principals of any proceeding under any bankruptcy or insolvency laws;
or service on BKC or any writ, summons or process designed to affect any account
or property of either the Developer or any of the Principals, any of which is
not released, dismissed, discharged, bonded or otherwise adequately reserved
against within thirty (30) days.
(f) The Developer fails to obtain or renew any licenses or permits
necessary for the performance of the Developer's obligations under this
Agreement and does not cure such failure within thirty days of written notice
from BKC.
(g) The Developer opens a Burger King Restaurant without franchise
approval, site approval, payment of all franchise fees and other fees, and/or
execution of all required agreements and documents.
(h) The Developer or any Principal challenges the validity of any of
the trademarks or names, copyrights or other industrial property right of Burger
King Corporation.
(i) The Developer defaults under any franchise or other agreement
with BKC or its Affiliates, fails to cure such default within any applicable
cure period, and BKC terminates any such franchise or other agreement in
accordance with its terms.
(j) The occurrence of a change in laws or regulations as set forth
in Article V, Paragraph 5.7.
(k) The occurrence of any event which is contrary to the provisions
of Article X hereof.
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(l) The Developer or any Principal fails to comply with any of the
other terms, provisions or conditions of this Agreement and does not cure such
failure within thirty (30) days of receipt of written notice from BKC.
(m) The Developer fails to maintain a Net Worth of at least Seven
and One-Half Million U.S. Dollars ($7,500,000) at all times beginning on June 1,
1999, and continuing until the expiration or earlier termination of this
Agreement "Net Worth" shall mean on a consolidated basis the amount by which the
Developer's assets exceed the Developer's liabilities determined in accordance
with generally accepted accounting principles in the United States consistently
applied.
(n) In the event that thirty-five percent (35%) or more of the
voting Stock of the Developer or any Principal is owned by a party that is
either a franchisee, franchisor or owner of a Fast Food Hamburger Restaurant as
that term is defined Article XXII.
7.1.2 Event of BKC Default. BKC shall be in default under this
Agreement if BKC fails to comply with any of its obligations under this
Agreement and does not cure such failure within thirty (30) days of receipt of
written notice from the Developer.
7.2 BKC Remedies. Subject to the provisions of Article IX herein BKC's
sole and exclusive remedy upon the occurrence of an Event of Default under
Section 7.1.1 shall be to deliver written notice to the Developer that this
Agreement is thereby immediately terminated.
7.3 Developer Remedies. Subject to the provisions of Article IX herein
Developer's sole and exclusive remedy upon the occurrence of an Event of BKC
Default under Section 7.1.2 shall be to deliver written notice to BKC that this
Agreement is thereby immediately terminated.
ARTICLE VIII
TERMINATION
8.1 Effect of Termination. Upon termination of this Agreement due to the
expiration of the term of this Agreement or pursuant to Section 7.3 all rights
granted to the Developer under this Agreement with the exception of Franchise
Approvals for Restaurants not yet opened shall terminate. Upon termination of
this Agreement pursuant to Section 7.2 above all rights granted to the Developer
under this Agreement and all Franchise Approvals for Restaurants not yet opened
shall terminate.
8.2 Rights Upon Termination. Upon termination of this Agreement, whether
resulting from an Event of Default under Section 7.1.1 or from expiration of the
term of this Agreement, BKC shall have the unrestricted right to license others
to develop and operate Burger King Restaurants in the Development Area, or to do
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so itself. Developer agrees to cooperate with BKC in obtaining any government
approvals necessary to this end. Upon termination of this Agreement pursuant to
Section 7.2 above BKC shall, subject to the provisions of Article IX below, have
the right to claim lost franchise fees royalties and advertising contributions
and shall also have all other rights and remedies available under applicable
law. Subject to the provisions of Article IX below the rights of the parties set
forth in this Section 8.2 shall be in addition to any other rights the parties
may have under applicable law.
ARTICLE IX
DISPUTE RESOLUTION
9.1 Dispute Resolution.
(a) Subject to subparagraph (b) below, all controversies disputes or
claims arising between the Developer, any Principal, the Guarantor, any of their
permitted assignees any of their respective subsidiaries and their respective
shareholders, officers, directors, agents and employees (in their respective
capacity) (collectively the "Developer Parties") and BKC arising out of or
related to the relationship of the parties hereto, this Agreement or any
provision hereof, any related agreement (including any Franchise Agreement) the
validity of this Agreement or any provision hereof or the operation of the
Burger King Restaurants shall be submitted to and settled by arbitration in the
City of New York in accordance with the Commercial Arbitration Rules of the
American Arbitration Association ("AAA") then obtaining it. Such arbitration
proceedings shall be conducted before a panel of three (3) arbitrators. The
Developer parties shall appoint one arbitrator between them, BKC shall appoint
one arbitrator, and the two arbitrators so appointed shall appoint a third
arbitrator to act as Chairman. If said two arbitrators fail to nominate the
Chairman within thirty (30) days from the date of appointment of the second
arbitrator to be appointed, the Chairman shall be appointed by the AAA. Unless
otherwise provided in this Paragraph, all matters within the scope of the
Federal Arbitration Act of the United States of America (9 U.S.C.ss.ss.1 et
seq.) shall be governed by it. The arbitrators shall have the right to award or
include in their award any relief which they deem proper in the circumstances,
including without limitation, money damages (with interest on unpaid amounts
from date due), specific performance, injunctive relief, legal fees and costs,
provided that the arbitrators shall not award exemplary or punitive damages, and
provided further, the arbitrators shall not under any circumstances, award
damages for any failure by Developer to meet the Development Schedule. The award
and decision of the arbitrators shall be conclusive and binding upon the
Developer Parties and BKC and judgment upon the award may be entered in any
court of competent jurisdiction. The Developer Parties and BKC further expressly
agree and consent to the jurisdiction of the courts of the State of New York or
the parties hereto for the purpose of entering judgment upon any such award of
the arbitrators. The Developer Parties and BKC further agree to be bound by the
provisions of any applicable limitation on the period of time in which claims
must be brought under applicable law or this Agreement, whichever is less. The
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Developer Parties and BKC further agree that in connection with any such
arbitration proceeding, each shall submit or file any claim which would
constitute a compulsory counterclaim (as defined by Rule 13 of the United States
Federal Rules of Civil Procedure) within the same proceeding as the claim to
which it relates. Any such claim which is not submitted or filed as described
above shall be barred. This provision shall continue in full force and effect
subsequent to and notwithstanding expiration or termination of this Agreement.
(b) Notwithstanding subparagraph (a) above BKC shall be entitled to seek
the entry of temporary or preliminary injunctions, restraining orders and orders
of specific performance enforcing the provisions of this agreement or any
Franchise Agreement relating to BKC's Marks or proprietary information by any of
the Developer Parties upon the termination or expiration of this Agreement or
any Franchise Agreement. The only remedy of any of the Developer Parties if an
injunction is so entered will be the dissolution of that injunction if warranted
upon due hearing all other claim s being subject to arbitration under
subparagraph (a) above.
ARTICLE X
SECRECY OF PROPERTY
The Developer and each Principal shall at all times both during the term
of this Agreement and following the termination of this Agreement, maintain in
strict confidence BKC's operational manuals, marketing information and methods,
and all information and knowledge relating to the methods of operating and the
functional know-how relating to Burger King Restaurants revealed by BKC to the
Developer. The Developer and the Principals shall not disclose this proprietary
information of BKC to any third party nor shall the Developer use or permit any
third party to use this proprietary information or any part thereof for any
purpose whatsoever, except that during the term of this Agreement or any Burger
King Franchise Agreement executed pursuant to this Agreement, the Developer may
disclose to the Developer's employees such of BKC's proprietary information as
may be necessary for carrying out the Developer's obligations under this
Agreement or the Burger King Franchise Agreement and for the operation of
licensed Burger King Restaurants. The restrictions contained in this Article X
shall cease to apply to any information which is or comes with the public domain
except where this results from a breach by the Developer or the Principal of
this Article. The oblige ions of the Developer and the Principals under this
Article shall survive the termination of this Agreement.
ARTICLE XI
ASSIGNMENT AND TRANSFER
11.1 Transfer of Interest by Developer. The Developer shall not (a)
directly or indirectly sell, assign, convey, give away, mortgage, pledge,
hypothecate, or otherwise transfer or encumber its rights or obligations under
this Agreement, or (b) sell, transfer, convey, give away, offer, issue or
otherwise grant or deliver additional equity interests in the Developer, without
the prior written consent of BKC, which consent may not be unreasonably withheld
by BKC.
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11.2 Transfer of Interest by Principal. No Principal shall directly or
indirectly sell, assign, convey, give away, mortgage, pledge, hypothecate, or
otherwise transfer or encumber any legal or beneficial equity interest in the
Developer without the prior written consent of BKC, which consent may not be
unreasonably withheld by BKC.
11.3 Exception to Applicability. The provisions of Subsection 11.1(b)
above shall not apply to International Fast Food Corporation so long as it is
the Developer under this Agreement; provided, however, that in the event of an
assignment (with BKC's consent) of this Agreement by International Fast Food
Corporation as the Developer to its controlled subsidiary International Fast
Food Polska SP Z0.0, the assignee shall, as the new Developer, be bound by the
provisions of Subsection 11.1(b) above.
ARTICLE XII
SEVERABILITY
If any of the provisions of this Agreement may be construed in more than
one way, one of which would render the provision illegal or otherwise voidable
or unenforceable, such provision shall have the meaning which renders it valid
and enforceable. The language of all provisions of this Agreement shall be
construed according to its fair meaning and not strictly against any party. In
the event any court or other government authority shall determine any provision
in this Agreement is not enforceable as written, the parties agree that the
provision shall be amended so that it is enforceable to the fullest extent
permissible under the laws and public policies of the jurisdiction in which
enforcement is sought and affords the parties the same basic rights and
obligations and has the same economic effect. If any provision in this Agreement
is held invalid or otherwise unenforceable by any court or other government
authority, such findings shall not invalidate the remainder of the agreement
unless in the reasonable opinion of the affected party the effect of such
determination has the effect of frustrating the purpose of this Agreement,
whereupon such party shall have the right by notice in writing to the other
party to immediately terminate this Agreement.
ARTICLE XIII
ENTIRE AGREEMENT
This Agreement embodies the entire agreement and understanding between the
parties with respect to the development and franchising of Burger King
Restaurants and cancels and supersedes all prior negotiations, understandings
and agreements written or oral, relating to the development and franchising of
Burger King restaurants. The parties acknowledge that they are not relying upon
any representation, warranty, condition, agreement or understanding, written or
20
oral, except as herein specified. Neither this Agreement nor any term or
provision of it may be changed, waived, discharged or modified orally. The only
changes waivers discharges or modifications that will be effective will be those
which are in writing signed by all of the parties to this Agreement.
ARTICLE XIV
NOTICES
Any notice demand request consent approval designation specification or
other communication given or made or requires to be given or made hereunder
shall be in writing and shall bc hand-delivered by courier or sent by registered
airmail postage fully prepaid addressed as follows:
If to BKC: BURGER KING CORPORATION
P.O. Box 020783
General Mail Facility
Xxxxx, Xxxxxxx 00000-0000
Attn: General Counsel
If to the Developer:
INTERNATIONAL FAST FOOD CORPORATION
0000 Xxxxxxx Xxxx Xxxxx 000
Xxxxx, Xxxxxxx 00000
Attn: Xx. Xxxxxxxx Xxxxxxxx
with a copy to:
Xxxx Xxxxxxxxxx, P.A.
Xxxxxxx Center, 2600 Xxxxxxx Road
Penthouse One
Xxxxx Xxxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxxxxxx, Esq.
Or to such other address or person Is either party may hereafter designate in
writing. All such notices shall be effective upon actual receipt.
ARTICLE XV
NON-WAIVER
Failure of any party hereto to insist upon strict performance of any of
the terms or provisions of this Agreement shall not be deemed a waiver of any
subsequent breach or default of the terms or provisions of this Agreement, nor
21
shall acceptance by BKC of any money paid on behalf of the Developer under this
Agreement or under any Burger King franchise agreement after any breach or any
Burger King franchise agreement, whether before or after notice to or knowledge
of the breach or default by BKC, constitute a waiver by BKC of such breach or
default.
No full or partial waiver of any standard or requirement by BKC, and no
approval by BKC, whether express, impled or occurring by the passage of time,
shall be construed as a breach or derogation of any duty of BKC to the
Developer.
ARTICLE XVI
HEADINGS AND ARTICLE TITLES
The headings as to contents of particular articles are inserted only for
convenience and reference and are in no way to be construed a part of this
Agreement or as a limitation on the scope of any of the terms or provisions of
this Agreement.
ARTICLE
RELATIONSHIP OF PARTIES
Nothing in this Agreement shall be construed to make the parties to this
Agreement partners or joint venturers. The Developer is not in any way the agent
of BKC and must not hold themselves out as such
ARTICLE XVVIII
INTERPRETATION
18.1 Currency. Unless otherwise indicated, all references to monies shall
be considered to be in U.S. currency.
18.2 Grammar. Unless repugnant to or inconsistent with the context,
wherever the singular is used in this Agreement it shall include the plural and
vice versa; the masculine shall include the feminine and neuter, and the neuter
the masculine and feminine; reference to persons shall include corporations and
vice versa.
18.3 Successors and Assigns. The expressions "BKC" and "the Developer"
shall include their successors in title and assigns.
18.4 Good Faith. No term or condition shall be implied into this
Agreement in derogation of, or in a manner which is inconsistent with or alters,
the express terms set forth in this Agreement.
18.5 Use of Developer Information. All information, reports, applications
and documents to be provided by Developer to BKC under this Agreement are being
22
provided solely for BKC's own benefit, information and use. BKC shall have no
responsibility to use or to analyze such information for the benefit of the
Developer or to communicate to the Developer any options, beliefs or ideas BKC
may develop using information provided by the Developer. BKC shall use
reasonable efforts to keep such non-public information of Developer
confidential.
ARTICLE XIX
BROKER
The Principals and the Developer warrant that they have not appointed and
do not contemplate appointing any broker, agent or other person who would be
entitled to a fee or commission upon the execution of' this Agreement or the
completion of any transactions contemplated by this Agreement. Each Principal
and the Developer agree to hold BKC safe and harmless from any fee or commission
claimed by any person purporting to act for or on this behalf. Nothing in this
Agreement shall be construed as prohibiting either party from employing
attorneys, accountants or patent or trademark agents to advise and carry out
professional services on its behalf.
ARTICLE XX
GOVERNING LAW/JURISDICTION
This Agreement shall be governed by and construed in accordance with the
laws of the State of Florida, U.S.A.; provided however, that it is understood
and agreed that since this Agreement is not a franchise for the operation of
Burger King Restaurants, but is intended by the parties to set forth the terms
and conditions which, if fully satisfied, would entitle the Developer to apply
for and receive individual franchises for each restaurant, if any, developed
under this Agreement, the Florida Franchise Act, Florida Statutes, Section 81
7.416 (1')71). shall not apply to this Agreement. The parties hereto acknowledge
and agree that all disputes arising in connection with this Agreement shall be
finally settled pursuant to the provisions set forth in Article IX of this
Agreement. However, in the event that Section 9.1(b) of this Agreement applies,
then the United States District Court for the Southern District of New York, or,
if such court lacks jurisdiction, the Supreme Court for the State of New York,
County of New York, shall be the venue and exclusive proper forum in which to
adjudicate any case or controversy arising under said Section, and the parties
further agree that in the event of any such litigation in these courts, they
will not contest or challenge the jurisdiction or venue of these courts.
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ARTICLE XXI
TRADEMARKS AND TRADE NAMES
21.1 Disclaimer of Interest. The Developer and the Principals acknowledge
that they have no part in the creation or development of the Burger King Marks,
BKC trademarks or trade names (whether registered or not) therefrom.
21.2 Notice of Challenge. The Developer shall immediately refer any
challenge to the validity, right or usage of the Burger King trademarks, trade
names, patents or copyrights to Burger King Corporation, which shall have the
sole right to defend same.
21.3 Registered User Agreement. The Developer shall at such times as BKC
may require enter into Registered User Agreements in the form prescribed by BKC
authorizing and permitting the use of the Burger King Marks referred to in such
agreement and which Registered User Agreements shall not impose additional
obligation on the Developer. The Developer agrees to comply with all the terms
and conditions and provisions contained in such Registered User Agreements and
to sign and execute any document and/or do such things as may be necessary to
constitute or appoint BKC's designee to make application on the Developer's
behalf for registration of all necessary Registered User Agreements and to
record the cancellation of any Registered User Agreements and to stipulate the
principal place of business of such firm as the place for service of all
communications and notices with respect to such registrations. BKC shall pay its
own costs for the preparation and execution of any Registered User Agreement and
any filing or similar costs associated therewith. Should the Developer choose to
take independent advice in relation to such documents, or incur other costs in
relation to the execution of such documents, such costs shall be borne by the
Developer as the case may be.
21.4 No Unauthorized Use. The Developer shall not use any names,
trademarks or tradenames of BKC or any variations or abbreviations thereof in
any manner without prior written authorization from BKC.
21.5 Registered Marks. Exhibit D lists trademarks registered in Poland;
however, BKC makes no expressed or implied warranty with respect to the validity
of any of the Burger King Marks. The Developer acknowledges the Developers
understanding that the Developer may be conducting business utilizing Burger
King Marks which have not been registered and that registration may not be
granted for unregistered marks and that some of the Burger King Marks may be
subject to use by third parties unauthorized by BKC. Except for the
representation that the trademarks listed on Exhibit D have been registered, no
other warranty as to validity, subsistence or otherwise is made in respect of
said trademarks or any other trademark which may be authorized for use by the
Developer.
21.6 Assistance to BKC. The Developer agrees to join and assist in the
defense of any action relating to the right to use or the validity of the Burger
King marks and BKC agrees to indemnify the Developer for reasonable costs and
expenses reasonably incurred in assisting BKC in defense of such action provided
that BKC shall have the right to select the attorney who will represent tile
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Developer in the action. The Developer shall not institute any legal action or
other kind of proceeding based upon the trademarks which the Developer is
licensed to use under this Agreement without the prior written approval of BKC.
ARTICLE XII
COMPETITION
The Developer and the Principals acknowledge and agree that they have had
arid will continue to have access to information that is not generally available
to those outside the Burger King Restaurant system. The Developer and each
Principal warrant that they have no interest directly or indirectly in any "Fast
Food Hamburger Restaurant" in the Development Area and will not, during the term
of this Agreement, acquire such an interest in any such restaurant in a
territory where it would compete with a restaurant operating under the Burger
King System; provided, that this shall not prevent the Developer and the
Principals from having an interest in an undertaking which competes with the
Burger King System if such interest is not such as to enable them to influence
the affairs of such undertaking. Fur purposes of this Article, "Fast Food
Hamburger Restaurant" shall mean any restaurant which (a) has hamburgers or
hamburger based products which account for 50% or more of total menu items or
total Gross Sales, and (b) does not offer table service as the principal method
of ordering or food delivery. For purposes of this Article, "a direct or
indirect interest" shall include without limitation an interest held by the
Developer a Principal or any of their subsidiaries or affiliates or immediate
family members.
ARTICLE XXIII
TAXES
It is understood and agreed by the parties that the Developer shall be
responsible for any value added tax and that any and all other tax liabilities
arising out of this Agreement will be paid by the party owing such taxes.
Notwithstanding the foregoing, the parties expressly agree that in the event BKC
incurs withholding tax liability in the country in which the Restaurants will be
located, it shall be the responsibility of the Developer to withhold such
withholding taxes as are required by law, pay them on BKC's behalf, and provide
BKC with corresponding receipts from the relevant taxing authorities to evidence
the amounts withheld.
ARTICLE XXIV
GOVERNMENTAL APPROVAL
The Developer shall seek to secure any and all governmental approvals
required for any matter relating to the validity of the relationship
contemplated by this Agreement or any franchise agreements issued pursuant to
the relationship herein established including without limitation all
governmental approvals with regard to the importation and sale of products sold
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in the Restaurants. The Developer shall seek to secure any Central Bank or other
approval required for the payment of any amounts due under any Agreements with
BKC as contemplated herein.
ARTICLE XXV
SURVIVAL
Except as expressly provided in this Agreement the Termination of this
Agreement shall be without prejudice to any rights which shall have accrued to
the parties prior to the date of such termination, shall not affect or diminish
the binding force or effect of any provision of this Agreement which expressly
or by implication shall come into force or continue in force after termination,
shall not release the Developer or Principals from obligations to pay any sums
owed under this Agreement or to pay any franchise fees, royalties or other sums
owed to BKC under franchise agreements or other agreements, and shall not
terminate any franchise agreements entered into pursuant to this Agreement
ARTICLE XXVI
THE PRINCIPAL(S)
26.1 Stock Ownership. If and when applicable the Principals represent and
warrant to BKC that Exhibit A contains a complete list of the shareholders of
the Developer and their respective shareholdings on the date of this Agreement
and that unless otherwise stated the Principals are the beneficial owners of
their respective share.
26.2 Guaranty. If and when applicable, each of the Principals hereby
agrees to jointly, severally, and unconditionally guaranty the payment and
performance of all debts, obligations and liabilities of the Developer to BKC
arising pursuant to this Agreement, or any other agreement with BKC relating
directly or indirectly to the Restaurants (the "BKC Agreements"), together with
all costs of collection, compromise or enforcement, including reasonable
attorneys' fees, incurred with respect to any such debts, obligations or
liabilities or with respect to this or any other guaranty thereof or any
bankruptcy proceeding or other similar action affecting the rights of the
Developer's creditors generally (all of the foregoing being referred to
collectively as the "Obligations"). This guaranty by each of the Principals
shall continue in full force and effect until the Developer has fully paid and
performed all of the Obligations. In connection with the guaranties set forth
above (collectively, the "Guaranties"), each of the parties to this Agreement
hereby agrees as follows:
The Guaranties shall not be impaired by any modification,
supplement, extension or amendment of the BKC Agreements or any of the
Obligations, nor by an! modification, release or other alteration of any of the
Obligations hereby guaranteed, nor by any agreements or arrangements whatever
with the Developer or any one else;
The liability of each of the Principals is primary, direct and
unconditional and may be enforced without requiring BKC first to resort to any
other right, remedy or security;
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No Principal shall have any right of subrogation,
reimbursement or indemnity whatsoever, unless and until the Obligations are paid
or performed in full;
If any Principal should at any time die, become incapacitated,
become insolvent or make a composition, trust mortgage or general assignment for
the benefit of creditors, or if a bankruptcy proceeding or any action under a
similar law affecting the rights of creditors generally shall be filed or
commenced by, against or in respect of any Principal, any and all obligations of
that Principal shall, at BKC's option, immediately become due and payable
without notice;
If any payment or transfer to BKC which has been credited
against any Obligation, is voided or rescinded or required to be returned by
BKC, whether or not il connection with any event or proceeding described in
Section 25.2(d), the Guaranties shall continue in effect or be reinstated as
though such payment, transfer or recovery had not been made;
Except as otherwise provided in this Agreement, each of the
Guaranties shall be construed as an absolute, unconditional, continuing and
unlimited obligation of each Principal without regard to the regularity,
validity or enforceability of any of the Obligations, and without regard to
whether an, Obligation is limited, modified, voided, released or discharged in
any proceeding uncle any law affecting the rights of creditors generally;
Any termination of the Guaranties shall be applicable only to
Obligations accruing prior to termination or having their inception after the
effective date of such termination and shall not affect Obligations having their
inception prior to such date;
The death or incapacity of any Principal hereunder shall not
result in the termination of the Guaranties;
Any and all present and future debts and obligations of the
Developer to any Principal hereunder are hereby waived and postponed in favor of
and subordinated to the full payment and performance of the Obligations; and
Each of the Principals waives to the greatest extent permitted
by law: notice of acceptance hereof; presentment and protest of any instrument,
and notice thereof; notice of default; notice of foreclosure; notice of any
modification, release or other alteration of any of the Obligations or of any
security therefor and all other notices to which any Principal might otherwise
be entitled.
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ARTICLE XXVII
INDEPENDENT ADVICE
THE DEVELOPER AND THE PRINCIPAL AND EACH PARTY COMPRISING THE PRINCIPAL
ACKNOWLEDGE THAT THEY HAVE BEEN ADVISED BY BKC TO TAKE INDEPENDENT PROFESSIONAL
ADVICE ON ALL ASPECTS OF THIS AGREEMENT AND THE BURGER KING BUSINESS AND THAT
THEY HAVE TAKEN SUCH INDEPENDENT ADVICE AS THEY DEEM NECESSARY AND HAVE
INDEPENDENTLY SATISFIED THEMSELVES ON ALL RELEVANT MATTERS RELATING TO THIS
AGREEMENT AND THE DEVELOPMENT AND OPERATION OF BURGER KING RESTAURANTS BEFORE
ENTERING INTO THIS AGREEMENT.
ARTICLE XXVIII
FORCE MAJEURE
Neither party shall be deemed in de fault as a result of its delay or
failure to perform which arises from force majeure or other causes reasonably
beyond the control of such party including without limitation acts of God, acts
of war, strikes, laws and regulations. If the event of force majeure of other
similar cause lasts more than one (1) year, the party adversely affected by such
cause shall have the right to terminate this Agreement, effective upon notice
thereof to the other.
ARTICLE XXIX
CONTROLLING LANGUAGE
This Agreement is in the English language only, which language shall be
controlling in all respects. No translation if any of this Agreement into any
other language shall be of any force or effect in the interpretation of this
Agreement or in the determination of the intent of either of the parties hereto.
ARTICLE XXX
DEFINITIONS
Each reference in this Agreement to the following terms shall be deemed to
have the following meanings:
Agreement: This agreement, as the same may be modified and/or amended
from time to time or any substitutions or replacements hereof.
Building Plan
Approval: The meaning designated in Section 4.3.2 of this Agreement.
BKC: The meaning designated in the preamble of this Agreement.
28
Burger King Marks: The meaning designated in the preamble of this Agreement.
Burger King Restaurants:The meaning designated in Paragraph A
of the Introduction to this Agreement.
Burger King System: The meaning designated in Paragraph A of the Introduction to
this Agreement.
Developer: The meaning designated in the preamble of this Agreement.
Development Area: The meaning designated in Paragraph E of the Introduction to
this Agreement.
Development Schedule: the schedule for the development and opening of Development
Units set forth on Schedule 1 of this Agreement.
Development Units: The meaning designated on Exhibit B of this Agreement.
Director of Operations: The meaning designated in Section 6.2 to this Agreement.
Events of Default: The meaning designated in Section 7.1 of this Agreement.
Expansion Criteria: The meaning designated in Section 4.2.1 of this Agreement.
Extended Development
Schedule: The extended development schedule attached as Schedule 2
to this Agreement.
Franchise Agreement: The meaning designated in Section 5.5 of this Agreement.
Franchise Approval: The meaning designated in Section 4.2 of this Agreement.
Franchise Fee: The meaning designated in Section 5.2 of this Agreement.
Gross Sales: The meaning designated in Section 3.1 of this Agreement and
in the Franchise Agreement(s).
Term: The meaning designated in Section 2.1 of this Agreement.
Institutional
Locations: The meaning designated in Section 1.2.2 of this Agreement.
Managing Director: The meaning designated in Section 6.1 of this Agreement.
29
Principal(s): The meaning designated in the introduction to this Agreement.
Restaurants: Burger King Restaurants.
Site Approval: The meaning designated in Section 4.3 of this Agreement.
30
This Agreement is executed by the parties as of the day and year indicated
on the first page of this Agreement.
BURGER KING CORPORATION
By: /s/ Xxxx Xxxxxx
-----------------------------------
Senior Vice President
(Corporate Seal)
INTERNATIONAL FAST FOOD
POLSKA SP Z0.0
By: /s/ Xxxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxxxx
Its: President
(Corporate Seal)
INTERNATIONAL FAST FOOD
CORPORATION
By: /s/ Xxxxxxxx Xxxxxxxx
-----------------------------------
Name: Xxxxxxxx Xxxxxxxx
Its: President
(Corporate Seal)
31
EXHIBIT A
TO THE DEVELOPMENT AGREEMENT
PRINCIPALS OF THE DEVELOPER
32
EXHIBIT B
DEVELOPMENT UNITS
DEVELOPMENT UNITS
The Development Units credited to the Developer pursuant to the terms and
conditions set forth in Paragraph 3.1 shall be as follows:
1 If the Restaurant is a Traditional Burger
King Restaurant (as defined below): 1 Unit
2 If the Restaurant is an In-Line Burger
King Restaurant (as defined below): 1 Unit
3 If the Restaurant is a Burger King
Kiosk Restaurant (as defined below): 1/4 Unit
4 If the Restaurant is a Drive-Thru Burger
King Restaurant (as defined below): 1 Unit
DEFINITIONS
1 The term "Traditional Burger King Restaurant" means a freestanding
building, or retail space within a building, with an area of more than 300
square meters or more.
2 The term "In-Line Burger King Restaurant" for purposes of this Exhibit,
means a freestanding building, or retail space within a building, with an
area of 150 to 299 square meters.
3 The term "Burger King Kiosk Restaurant" means a freestanding kiosk, or
retail space within a larger building, with an area of less than 150
square meters.
4 The term "Drive-Thru Burger King Restaurant" means a freestanding building
which has seating capacity of less than 30 customers and two drive-thru
windows.
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EXHIBIT C
BURGER KING
RESTAURANT FRANCHISE AGREEMENT
34
EXHIBIT D
TO DEVELOPMENT AGREEMENT
Poland Trademarks
Marks registered in Poland:
Date of
Classes Reg. No. Registration
------- -------- ------------
Burger King Logo 16,29,30,32,42 7441 18 Feb., 1994
Whopper 16,29,30,32,42 7441 18 Feb., 1994
Burger King Wordmark 16,29,30,42 7442 18 Feb., 1994
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SCHEDULE 1
"DEVELOPMENT SCHEDULE"
Timer Periods Development Units to be opened
during Time Period
Development Year 1 (March 14, 1997 through Sept. 30, 1998) 3
Development Year 2 (Oct. 1, 1998 through Sept. 30, 1999) 4
Development Year 3 (Oct. 1, 1999 through Sept. 30, 2000) 4
Development Year 4 (Oct. 1, 2000 through Sept. 30, 2001) 4
Development Year 5 (Oct. 1, 2001 through Sept. 30, 2002) 5
Development Year 6 (Oct. 1, 2002 through Sept. 30, 2003) 5
Development Year 7 (Oct. 1, 2003 through Sept. 30, 2004) 5
Development Year 8 (Oct. 1, 2004 through Sept. 30, 2005) 5
Development Year 9 (Oct. 1, 2005 through Sept. 30, 2006) 5
Development Year 10 (Oct. 1, 2006 through Sept. 30, 2007) 5
Total 45
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SCHEDULE 2
Section 5.3.1(a)
(SUBJECT TO A PENDING REQUEST FOR CONFIDENTIAL TREATMENT)
37
SCHEDULE 3
Section 5.3.1(b)
(SUBJECT TO A PENDING REQUEST FOR CONFIDENTIAL TREATMENT)
38
