EXHIBIT 2.4
WORLDWIDE AREA DEVELOPMENT AGREEMENT
THIS AGREEMENT is entered into this ___ day of _______, 1996, by and
between CD Warehouse Inc., a Delaware corporation, (the "Company"), and Xxxx
Xxxx, a resident of the State of Texas, individually, ("Developer").
W I T N E S S E T H :
WHEREAS, The Company is the franchisor of a retail music system ("CD
Warehouse System") under which compact discs and related products are sold to
the public from retail stores operated under the name "CD Warehouse"; and
WHEREAS, Developer desires to obtain the right to: (i) select proposed
sites on which to develop CD Warehouse stores, (ii) submit the same to the
Company for its acceptance of each proposed site, and (iii) enter into a License
Agreement with the Company on a store site by store site basis to develop, own
and operate a number of CD Warehouse store(s) upon the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the foregoing and of the covenants
herein contained, the parties, intending to be legally bound, hereby agree as
follows:
1. AREA EXCLUSIVITY AND DEVELOPMENT SCHEDULE
(a) Subject to the terms and conditions of this Agreement, the Company
hereby grants to the Developer, the exclusive right to develop CD Warehouse
Stores beyond and outside of the legal boundaries of the United States, Canada
and Mexico, (hereinafter referred to as the "Franchised Area") for a period
extending from the effective date hereof through December 1, 2006.
(b) During the term hereof, Developer agrees to develop and to put In
Operation a minimum of one hundred (100) CD Warehouse stores within the
Franchised Area in accordance with the following development and performance
schedule (hereinafter the "Performance Schedule"):
NUMBER OF STORES IN OPERATION ON OR BEFORE
---------------- -------------------------
five (5) December 1, 1997
ten (10) December 1, 1998
fifteen (15) December 1, 1999
ten (10) December 1, 2000
ten (10) December 1, 2001
ten (10) December 1, 2002
ten (10) December 1, 2003
ten (10) December 1, 2004
ten (10) December 1, 2005
ten (10) December 1, 2006
--------
one hundred (100)
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(c) For the purposes of this Agreement, a store shall be deemed to be "In
Operation" once a License Agreement (as hereinafter set forth) has been executed
by Developer and the Company has opened to the public.
2. TERM
The term of this Agreement and all Developmental Rights granted hereunder
shall expire on the date the last of the CD Warehouse Stores to be developed
pursuant to the Performance Schedule set forth in Section 1 hereof is opened for
business, unless sooner terminated in accordance with the terms of this
Agreement.
3. RENEWAL
This Agreement shall not be subject to renewal under the terms of this
document. Renewal of this Agreement, as amended, and the underlying store site
license agreement(s) will be considered at the conclusion of the primary term
of this Agreement.
4. TIMELY PERFORMANCE
Developer hereby acknowledges that its timely development of the CD
Warehouse Stores in the Franchised Area in accordance with the Performance
Schedule is of material importance to the Company and Developer, and agrees, as
a condition of the continuance of the rights granted hereunder, to: (i) develop
and open the CD Warehouse Stores within the Franchised Area in accordance with
the Performance Schedule; (ii) operate such stores pursuant to the terms of the
Unit License Agreements and (iii) maintain all such stores (or the requisite
number of stores) in operation continuously.
5. CONSIDERATION FOR EXCLUSIVE RIGHTS
As consideration for this Agreement, Developer will pay an amount to be
jointly determined between the Company and Developer on a country by country
basis. Company and Developer agree that the fee/royalty amount to be determined
will not be lower than a franchise fee of $3,000 per store, one percent (1%) of
the royalty based on individual store sales volume and twenty percent (20%) of
the total fee received by Developer.
6. SITE SELECTION
(a) Due to the nature of this Agreement, the Company will not be requiring
formal site selection criteria be maintained. The Company will not provide
assistance to the Developer, third party, or any agent in the evaluation of site
selection.
(b) Developer acknowledges that no officer, employee or agent of the
Company has any authority to approve or accept any proposed site and any other
representations, whether oral or written, shall be of no effect; Developer
further acknowledges that the Company's acceptance of said site does not
constitute any representation, warranty or
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guarantee by the Company that said site will be a successful location for a
CD Warehouse Store.
(c) The store/site License Agreements for all units will be the standard
form of license agreement at the time of execution. Within thirty (30) days
after the receipt of a store/site License Agreement from the Company, Developer
shall execute said store/site License Agreement in accordance with the Company's
instructions and return the same along with the applicable license fee to the
Company.
7. FRANCHISE SERVICES
In consideration of the reduced fee/royalty arrangement contemplated by
the parties, Developer understands and agrees that the Company is not obligated
to provide all of the standard franchise services that are generally provided to
domestic locations of CD Warehouse Stores. Developer will also insure that
notification of the lack of franchise services will be properly provided in
writing to any third party or agent that may have an interest in joining
Developer to open CD Warehouse Stores internationally.
8. LIMITATION OF AGREEMENT
Developer acknowledges and agrees that:
(a) This Agreement does not include the grant of a license by the
Company to Developer of any rights to use the Proprietary Marks, the CD
Warehouse System, or to open or operate any CD Warehouse Store with the
Franchised Area. Developer shall obtain the license to use such additional
rights at each CD Warehouse Store upon the execution of each store/site License
Agreement by both Developer and the Company and only in accordance with the
terms of each License Agreement.
(b) The Developmental Rights granted hereunder are personal to Developer
and cannot be sold, assigned, transferred or encumbered, in whole or in part,
except as set forth in Section 12 hereof.
(c) Developer shall have no right to use in its name the name CD Warehouse
or any other names or Proprietary Marks used by the Company.
(d) Except as provided in Section 1 hereof, the Developmental Rights
granted hereunder are nonexclusive, and the Company retains the right, in its
sole discretion:
(i) To continue to construct and operate other CD Warehouse
Stores outside the Franchised Area and to use the CD Warehouse System and
Proprietary Marks at any location outside the Franchised Area, and to license
other to do so.
(ii) To develop, use and franchise the rights to any trade names,
trademarks, service marks, trade symbols, emblems, signs, slogans, insignia or
copyrights not designated by the Company as Proprietary Marks, for use with
similar or different franchise systems for the sale of the same, similar or
different products or services other
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than in connection with the CD Warehouse System at any location, on such
terms and conditions as the Company may deem advisable and without granting
Developer any rights herein.
(e) Because complete and detailed uniformity under many varying conditions
may not be possible or practical, the Company specifically reserves the right
and privilege, at its sole discretion and as it may deem in the best interests
of all concerned in any specific instance, to vary any standards for any
Developer based upon the peculiarities of a particular site or circumstance,
density of population, business potential, population of trade area, existing
business practices or any other condition which the Company deems to be of
importance to the successful operation of such Developer's business. Developer
shall not be heard to complain on account of any variation from standard
specifications and practices granted to any franchise owner and shall not be
entitled to require the Company to grant Developer a like or similar variation
hereunder.
(f) Developer has sole responsibility for the performance of all
obligations arising out of the operations of its business pursuant to this
Agreement, including, but not limited to, the payment when due of any and al
taxes levied or assessed by reason of such operation.
(g) In all public records, in its relationship with other persons, and in
any offering circular, prospectus or similar document, Developer shall indicate
clearly the independent ownership of Developer's business and that the
operations of said business are separate and distinct from the operation of the
Company's business.
(h) Developer agrees to indemnify and hold harmless the Company from any
liability or damage the Company may incur, including reasonable attorney fees,
as a result of claim, demands, costs or judgments of any kind or nature by
anyone whomsoever arising out of or otherwise connected with this Agreement, the
Developmental Rights, the acquisition of any retail music site or ownership,
maintenance or operation of any CD Warehouse Store by Developer.
9. SERVICES BY THE COMPANY
The Company shall, at its expense, make available to Developer the
following:
(a) Such standard construction plans, specifications and layouts for the
structure, equipment, decor and signs identified with the CD Warehouse as the
Company makes available to all new licensees from time to time.
(b) Such periodic continuing individual or group advise, consultation and
assistance, rendered by personal visit or telephone, or by newsletters or
bulletins made available from time to time to all Developers of the Company, as
the Company deem necessary or appropriate.
(c) Such bulletins, brochures and reports as may from time to time be
published by the Company regarding its plans, policies, research, developments
and activities.
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(d) Such other resources and assistance as may hereafter be developed and
offered by the Company to its licensees.
10. DEFAULT; TERMINATION
(a) The occurrence of any of the following events shall constitute a
default under this Agreement:
(i) If Developer shall, in any respect, fail to meet the Performance
Schedule, unless such failure is due to extraordinary events beyond the control
of the Developer (such as acts of God, war and the like, but exclusive of
matters involving the financial wherewithal of the Developer).
(ii) If Developer shall use the CD Warehouse System or Proprietary
Marks, or any other names, marks, systems, insignia, symbols or rights which are
the property of the Company except pursuant to, and in accordance with, a valid
and effective Unit License Agreement.
(iii) If Developer, or persons controlling, controlled by or under
common control with Developer, shall have any interest, direct or indirect, in
the ownership or operation of any retail music store engaged in the sales of
compact discs or related products within the Franchised Area or in any retail
music store which looks like, copies or imitates CD Warehouse Stores or operates
in a manner tending to have such effect other than in accordance with any Unit
License Agreement.
(iv) If Developer shall fail to remit to the Company any payments
pursuant to this Agreement when the same are due.
(v) If Developer shall purport to effect any assignment other than in
accordance with Section 12 hereof.
(vi) Except as provided in Section 12 (a) hereof, if Developer
attempts to sell, assign, transfer or encumber this Agreement.
(vii) If Developer makes, or has made, any misrepresentation to
the Company in connection with obtaining this Worldwide Area Development
Agreement or any Unit License Agreement.
(viii) If Developer defaults in the performance of any other
obligation under this Agreement.
(ix) If Developer defaults in the performance of any obligation under
any store/site License Agreement with the Company, regardless of whether or not
said store/site License Agreement is terminated as a result of such default.
(x) If Developer, or any person controlling, controlled by or under
common control with Developer, shall become insolvent by reason inability to pay
its debts
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as they mature; or if a receiver, permanent or temporary, of the business,
assets or property of Developer or any such person, or any part thereof, is
appointed by a court of competent authority; or if Developer or any such
person requests the appointment of a receiver or
makes a general assignment for the benefit of creditors or if a final
judgment against Developer or any such person in the of $15,000 or more
remains unsatisfied or record for thirty (30) days or longer following the
exhaustion of all appeals; or if the bank accounts, property or receivables
of Developer or any such person are attached and such attachment proceedings
are not dismissed with a thirty (30) day period; or if execution is levied
against the business or property of Developer or any such person or suit to
foreclose any lien (excluding mechanic's and materialman's liens) or mortgage
against any of the CD Warehouse Stores, the premises thereof or equipment
thereon is instituted and not dismissed with thirty (30) days.
(xi) If Developer, or any person controlling, controlled by, or under
common control with Developer, shall be convicted under any law providing for
criminal penalties (excluding misdemeanors).
(b) Upon occurrence of any of the events set forth in Section 11(a), the
Company may, without prejudice to any other rights or remedies contained in this
Agreement or provided by law or equity, terminate this Agreement. Such
termination shall be effective thirty (30) days after written notice (or such
other notice as may be required by applicable state law) is given by the Company
to Developer of any of the events set forth in Subparagraphs (i) through (ix) of
Section 11(a) if such defaults are not cured with such period. Termination
shall be effective immediately and without notice, however, upon occurrence of
any of the events specified in Subparagraphs (x) and (xi) of Section 11(a),
except where prohibited by state law.
(c) Upon termination of this Agreement for any reason, or upon expiration
of the term hereof, Developer agrees as follows:
(i) To cease immediately any attempts to select or develop sites on
which to operate CD Warehouse Stores, and
(ii) To cease immediately to hold itself out in any way as a Developer
of CD Warehouse or to do anything which would indicate any relationship between
it and the Company except to the extent permitted pursuant to Section 11(d).
(d) Termination of this Agreement shall not affect the rights of Developer
to operate CD Warehouse Stores in accordance with the terms of any Unit License
Agreement with the Company until and unless such Unit License Agreements, or any
of them, are terminated in accordance with their terms.
If any of the provisions of this contract governing termination or
nonrenewal are inconsistent with Oklahoma law, then the laws of the State of
Delaware shall apply.
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11. ASSIGNMENT, CONDITIONS AND LIMITATIONS
(a) Developer shall neither sell, assign, transfer nor encumber this
Agreement, the Developmental Rights, or any other interest hereunder, nor suffer
or permit any such assignment, transfer or encumbrance to occur by operation of
law or otherwise, except as provided in this Section 12.
(b) In the event of the death, disability or permanent incapacity of
Developer, the Company shall not unreasonably withhold its consent to the
transfer of all of the interest of Developer to his spouse, heirs or relatives,
by blood or marriage, whether such transfer is made by will or by operation of
law, provided that the requirements of Section 12(c) hereof have been met. In
the event that Developer's heirs do not obtain the consent of the Company as
prescribed herein, the personal representative of Developer shall have a
reasonable time to dispose of Developer's interest hereunder, which disposition
shall be subject to all the terms and conditions for transfers under this
Agreement.
(c) In the event Developer chooses to assign, transfer, or convey its
interest, the Company shall have the right of first refusal to consider
Developer's offer. Beginning three years from the date of grant and on an
annual basis for seven years thereafter, the Company will have the right to
cancel and rescind the Worldwide Area Development Agreement and acquire all of
the Developer's interest owned or controlled by the Developer pursuant to the
Worldwide Area Development Agreement (the exercise of which right is referred
to as the "Election"). The purchase price payable upon the Election will be
paid in cash at closing and will be determined by multiplying the quotient
derived from dividing (a) $3,200,000 by (b) a number equal to (i) cumulative
after tax net profit derived from the Contracts being conveyed pursuant to the
Asset Purchase Agreement (the "Agreement"), dated October 1, 1996 by and
between the Company, Compact Disc International, Ltd and Developer, (a copy of
which Agreement is attached hereto as Exhibit A) for the twelve month period
ending December 31, 1996 less (ii) $250,000 in salary expense, times the
consolidated, annualized after-tax net profit of the CD Warehouse Franchise
Operations developed pursuant to the Worldwide Area Development Agreement,
wherever located and whatever state of development. The consolidated, annualized
after-tax net profit of the CD Warehouse Franchise Operations is to be computed
in accordance with generally accepted accounting principles, consistently
applied. Any countries taxes that have been incurred but not paid will be
reserved for and deducted from the net profit computation. Additionally, if the
net income computation does not contain an allowance for Developer's salary an
expense deduction of $150,000 will be made. For purposes of the Election, any
net profit calculation which is for a period shorter than 365 days will be
annualized by dividing such net profit by the number of days in such period and
multiplying the average per-day profit by 365. Developer will provide Company
with consolidated financial statements for the CD Warehouse Operations developed
pursuant to the Worldwide Area Development Agreement during each of the seven
years during which the Election may be made, within ninety (90) days after the
end of each calender year (December 31). Company may make the Election, during
each of the seven years during which the Election may be made, by giving written
notice to Developer during the period beginning 90 days after the end of the
fiscal year of the CD Warehouse Franchise Operations (such fiscal year end is
referred to as the "Election Year End") and ending 180 days after the Election
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Year End. The closing of the transaction made pursuant to the Election will
occur at a time and place mutually agreed upon by Company and Developer
within 180 days after written notice of the Election is delivered to Seller
(unless extended by agreement between Company and Developer); if such closing
does not occur, however, Company's right to make an Election thereafter will
terminate and become null and void.
(d) In the event Developer assigns, transfers, or conveys its interest
hereunder other than pursuant to the provisions of Section 12(b) of this
Section 12, such assignment, transfer or conveyance shall be void unless carried
out in accordance with this subsection (d).
(i) At least thirty (30) days prior to any such proposed assignment,
conveyance or transfer, Developer shall give written notice to the Company of
such proposed assignment conveyance or transfer, setting forth the name of the
person to whom the rights or obligations are to be granted, information related
to the business background and creditworthiness of the assignee or transferee,
and any other information which the Company may ordinarily require to approve a
franchisee.
(ii) Developer shall disclose (and submit written proof of such
disclosure to the Company) to his assignee or transferee that information
required to be disclosed pursuant to Federal Trade Commission regulations for
subfranchises and any other state laws or regulations applicable to such
assignment or transfer. In the event such assignee or transferee waives its
right to receive such information, both the Developer and his transferee or
assignee shall waive in writing all rights or claims they have against the
Company in connection with such subfranchising by Developer. Regardless of
whether assignee or transferee does waive such rights, the Developer hereby
agrees to indemnify and hold harmless any rights or claims against the Company
brought by Developer's assignee or transferee or by any administrative or
regulatory agency of any state or federal government, or any subdivision
thereof. Such indemnification shall include any attorney's fees, court costs or
judgments rendered against the Company in connection with the transfer or
conveyance by Developer.
(iii) Developer has represented to the Company that he is entering
into this Worldwide Development Agreement with intention of complying with the
terms and conditions himself and not for the purpose of resale of the
Development Rights hereunder. Therefore, Developer agrees that any attempt to
assign this Agreement in whole or in part pursuant to this Section 12(d) within
ten years of the date of this Agreement shall be deemed an event of default
hereunder.
(iv) Developer hereby represents and agrees that to the extent his
assignee or transferee does not perform in accordance with this Agreement,
Developer shall perform and insure that the obligations hereunder are
accomplished.
(v) Developer agrees that the Company may determine to its
satisfaction that any franchise or securities laws in the state of the
transferee/assignee will be complied with in the event Developer transfers,
conveys or assigns any interest herein. In the event the regulatory authorities
of such state require that any interest under this agreement be
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registered with such authorities, Developer agrees to bear the expense of any
such registration and provide the necessary information to the Company to
insure that any such applications or registrations with regulatory
authorities are filed in an accurate and complete manner.
(d) In the event Developer or its successor is a corporation or
partnership or similar entity, it is agreed as follows:
(i) The Partnership Agreement, voting stock of or other ownership
interest therein ("Securities") shall reflect that the Securities are restricted
by the terms of this Agreement. Developer shall furnish the Company at the time
of execution of this Agreement or assignment to the corporation or partnership,
an agreement executed by all stockholders or partners of the Developer, stating
that no stockholder or partner will sell, assign or transfer voluntarily or by
operation of law any Securities of the Developer to any person or entity without
the written consent of the Company. All Securities issued by Developer will
bear the following legend which shall be printed legibly and conspicuously on
each stock certificate or other evidence of ownership interest:
"The transfer of these securities is subject to the terms
and conditions of a Worldwide Area Development with CD
Warehouse Inc. dated October 16, 1996, and certain Unit
License Agreements executed thereunder. Reference is made
to said Worldwide Area Development Agreement and to the
restrictive provisions of the Articles and By-Laws of this
corporation."
A stop transfer order shall be in effect against the transfer of any
securities on the Developer's records during the term of this agreement, unless
the transferee is approved in accordance with Section 12 (c) above.
(e) The Company's consent to a transfer of Developer's interest under
Section 11(b) is expressly conditioned upon the continuing personal guarantee of
the obligations of Developer under this Agreement by all transferees and the
execution by said transferees of personal guarantees of each Unit License
Agreement entered into pursuant to this Agreement.
(f) Developer acknowledges and agrees that the restrictions on transfer
imposed herein are reasonable and are necessary to protect the Developmental
Rights, the CD Warehouse System and the Proprietary Marks, as well as the
Company's excellent reputation and image, and are for the protection of the
Company, Developer and other licensees. Any assignment or transfer permitted by
this Section 12 shall not be effective until the Company receives a completely
executed copy of all transfer documents, and consents in writing.
(g) This Agreement shall inure to the benefit of the Company, its
successors and assigns, and the Company shall have the right to transfer or
assign all or any part of its interest herein to any person or legal entity.
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12. NOTICES
All notices hereunder shall be in writing and shall be duly given if hand
delivered or sent by registered or certified mail, postage prepaid, addressed:
(a) If to the Company at: CD Warehouse Inc.
X.X. Xxx 000
Xxxxxx, XX 00000-0000
(b) If to Developer at: Xxxx X. Xxxx
0000 Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
or at such other address as the Company or Developer shall have specified by
notice to the other party hereunder.
13. NO JOINT VENTURE
Nothing herein contained or done pursuant to this Agreement shall be deemed
to constitute Licensee as an agent, partner, or joint venturer of the Company
and neither party shall have the authority to act for the other in any manner to
create obligations or debts which would be binding on the other; neither party
shall be responsible for any obligations or expenses whatsoever of the other.
14. GOVERNING LAW
This Agreement shall be deemed to have been made and entered into in the
State of Delaware and all rights and obligations of the parties hereto shall be
governed by and construed in accordance with the laws of the State of Delaware.
15. REMEDIES CUMULATIVE; WAIVER; CONSENTS
All rights and remedies of the Company and of Developer enumerated in this
Agreement shall be cumulative and, except as specifically contemplated otherwise
by this Agreement, none shall exclude any other right or remedy allowed at law
or in equity and said rights or remedies may be exercised and enforced
concurrently. No waiver by the Company or by Developer of any covenant or
condition or the breach of any covenant or condition of this Agreement to be
kept or performed by the other party shall constitute a waiver by the waiving
party of any subsequent breach or nonobservance on any other occasion of the
same or any other covenant or condition of this Agreement. Subsequent
acceptance by the Company of any payments due to it hereunder shall not be
deemed to be a waiver by the Company of any preceding breach by Developer of any
terms, covenants or conditions of this Agreement.
Whenever this Agreement requires the Company's prior approval or consent,
Developer shall make a timely written request to the Company therefor and such
approval
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shall be obtained in writing. The Company will also consider granting, in
its sole discretion, other reasonable requests individually submitted by
Developer in writing for the Company's prior waiver of any obligation imposed
by this Agreement. The Company make no warranties or guarantees upon which
Developer may rely, and assumes no liability or obligation to Developer, by
providing any waiver, approval, consent, or suggestion to Developer in
connection with this Agreement, or by reason of any neglect, delay or denial
of any request therefor. Any waiver granted by the Company shall be subject
to the Company's continuing review, may subsequently be revoked for any
reason effective upon Developer's receipt of ten (10) days prior written
notice, and shall be without prejudice to any other rights the Company may
have.
16. SEVERABILITY
If any provision of this Agreement or the application of any provision to
any person or to any circumstances shall be determined to be invalid or
unenforceable, then such determination shall not affect any other provision of
this Agreement or the application of such provision to any other person or
circumstance, all of which other provisions shall remain in full force and
effect, and it is the intention of the Company and Developer that if any
provision of this Agreement is susceptible of two or more constructions, one of
which would render the provision enforceable and the other or others of which
would render the provision unenforceable, then the provision shall have the
meaning which renders it enforceable.
17. ENTIRE AGREEMENT
This Agreement together with all Unit License Agreements executed hereunder
and previous Asset Purchase Agreement constitutes the entire agreement between
the Company and Developer in respect of the subject matter hereof. No officer,
employee or other servant or agent of the Company or Developer is authorized to
make any representation, warranty or other promise not contained in this
Agreement. No change, termination or attempted waiver of any of the provisions
of this Agreement shall be binding upon the Company or Developer unless in
writing and signed by the Company and Developer.
18. JOINT AND SEVERAL OBLIGATION
If the Developer consists of more than one person, their liability under
this Agreement shall be deemed to be joint and several.
19. COUNTERPART; PARAGRAPH HEADINGS; PRONOUNS
This Agreement may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument. The section headings in this Agreement are for convenience
of reference only and shall not be deemed to alter or affect any provision
thereof. Each pronoun used herein shall be deemed to include the other number
and genders.
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20. ACKNOWLEDGMENTS
Developer acknowledges that:
(a) It has conducted an independent investigation of the business
contemplated by this Agreement and recognizes that it involves business risks
making the success of the venture largely dependent upon the business abilities
of Developer. The Company expressly disclaims the making, and Developer
acknowledges that it has not received or relied upon, any warranty or guarantee,
expressed or implied, as to the potential volume, profits or success of the
business venture contemplated by this Agreement.
(b) It has no knowledge of any representations by the Company or its
officers, directors, shareholders, employees, agents or servants about the
business contemplated by this Agreement, that are contrary to the terms of this
Agreement or the documents incorporated herein, and further represents to the
Company, as an inducement to its entry into this Agreement, that it has made no
misrepresentations in obtaining this Agreement.
(c) It has received, read and understood this Agreement: the Company has
fully and adequately explained the provisions of each to its satisfaction; and
the Company has accorded it ample time and opportunity to consult with advisors
of its own choosing about the potential benefits and risks of entering into this
Agreement.
(d) It is aware of the fact that some present licensees of the Company may
operate under different forms of agreement and consequently, that the Company's
obligations and rights in respect to its various franchise owners may differ
materially in certain circumstances.
21. ARBITRATION CLAUSE
Each party to this Agreement agrees that any dispute or controversy arising
between any of the parties to this Agreement, or any person or entity in privity
therewith, out of the transactions effected and relationships created pursuant
to this Agreement and each other agreement created in connection herewith,
including any dispute or controversy regarding the formation, terms, or
construction of this Agreement, regardless of kind or character, must be
resolved through binding arbitration. Each party to this Agreement agrees to
submit such dispute or controversy to arbitration before the American
Arbitration Association in Dallas, Texas, and further agrees to be bound by the
determination of any arbitrator or arbitration panel empaneled by the American
Arbitration Association to adjudicate the dispute. Judgment on any arbitration
award may be entered in any court of competent jurisdiction. Any party to this
Agreement may bring an action, including a summary or expedited proceeding, to
compel arbitration of any such dispute or controversy in a court of competent
jurisdiction and, further, may seek provisional or ancillary remedies including
temporary or injunctive relief in connection with such dispute or controversy in
a court of competent jurisdiction, provided that the dispute or controversy is
ultimately resolved through binding arbitration conducted in accordance with the
terms and conditions of this Section.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
THE COMPANY: CD WAREHOUSE INC.
By:
--------------------------------------
Xxxxx X. Xxxxxxx, President
ATTEST:
-----------------------------
Secretary
DEVELOPER: XXXX X. XXXX
By:
--------------------------------------
Xxxx X. Xxxx
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