MANAGEMENT AGREEMENT BETWEEN TRC ACQUISITION CORPORATION AND HARTAN, INC.
This Management Agreement made this 17th day of July, 1998 between TRC
Acquisition Corp., a Georgia Corporation (Manager) and Hartan, Inc., a Texas
Corporation (Developer), a wholly-owned subsidiary of Harvest Restaurant Group,
Inc., a Texas Corporation.
"PRELIMINARY STATEMENT"
-----------------------
A. Pursuant to that certain Market Development Agreement dated July 17, 1998,
between Hartan, Inc., a Texas Corporation as Developer and Licensee, and
TRC Acquisition Corporation, a Georgia Corporation as licensor (the "Market
Development Agreement"), Developer has been granted the right to use the
"Xxxx Xxxxxx'x" System (hereinafter defined) and to develop and operate up
to five (5) "Xxxx Xxxxxx'x" Restaurants (hereinafter defined) as the
Franchised Sites (hereinafter defined); and
B. Developer and Manager desire that Manager develop up to five (5)
Restaurants and manage the restaurants in accordance with the terms set
forth in the Market Development Agreement and this Management Agreement.
C. NOW, THEREFORE, Developer and Manager agrees as follows:
"ARTICLE 1"
-----------
DEFINITIONS
1.1 The following terms when capitalized in this Agreement shall have the
specific meaning defined in this Article:
1.1.1 Affiliate - means any business entity which controls, is
controlled by, or is under common control with a party.
1.1.2 Budgets - the reports, forecasts and projections developed
pursuant to Section 4.2.
1.1.3 Developer - Hartan, Inc. or the successor of Developer's interest
with respect to this Agreement.
1.1.4 Franchised Sites - real property to be selected and developed by
Manager with approval of Developer and Licensor pursuant to the
Market Development Agreement and one or more Unit Franchise
Agreements.
1.1.5 Gross Revenues - amounts actually received or receivable from all
sales of every kind and nature from the Franchised Sites,
including but not limited to, the sale of food, beverages and
services, whether sold for consumption on or off the Premises,
and receipts from food catering and any proceeds and/or
condemnation awards received for loss of sales of business, all
whether or a cash or charge sale, paid or unpaid, collected or
uncollected, and further including sales from vending or
amusement or entertainment machines. "Gross Revenues" shall not
include (I) sales taxes, excise tax or cigarette or tobacco taxes
collected from customers and paid to the appropriate taxing
authority; or (ii) customer refunds, adjustments or credits; or
(iii) free food and beverages provided at the Restaurants.
1.1.6 Impositions - all taxes assessments, water, sewer or other
similar rents, rates and charges, levies, licenses fees,
inspection fees and other authorization fees and charges, which
at any time may be assessed, levied, confined or imposed on the
Restaurants or the operation thereof.
1.1.7 Improvements - the buildings, structures (surface and subsurface)
and other improvements now or hereafter located, on the Premises.
1.1.8 Legal Requirements - all public laws, statutes, ordinances,
orders, rules, regulations, permits, licenses, authorizations,
directives and requirements of all governments and governmental
authorities which now or hereafter, may be applicable to the
Premises and the operation of the Restaurants.
1.1.9 Manager - TRC Acquisition Corporation, or its successors with
respect to this Agreement
1.1.9 Management Fee - as defined in Section 6.1
1.1.10 Operating Fund - a fund set up by Developer in the amount of
$1,450,000 to be deposited in an account under the name of
Developer to be used exclusively by Manager, in accordance with
Budgets approved by Developer and Manager, for the licensing,
construction, pre-opening expenses and operation of the
Restaurants, pursuant of the Market Development Agreement and
this Agreement.
1.1.11 Operating Period - the period beginning with the opening of the
first Restaurant and ending upon the expiration or termination
this Agreement.
1.1.12 Operating Year - the Operating Year shall coincide with and be
identical to, the calendar year, except that the first Operating
Year shall be partial year beginning on the Commencement Date and
ending on the following December 31, and if this Agreement shall
be terminated effective on a date other than December 31 in any
2
year, then the partial year from January 1 of the year in which
such termination occurs to such effective date of termination
shall be treated as an Operating Year; references to "full
Operating Years" shall mean those Operating Years which are
coextensive with full calendar years and shall exclude any
partial Operating Year at the beginning or the end of the term of
this Agreement.
1.1.13 Outside Commencement Date - July 27, 1998
1.1.14 Premises - a collective term for the Franchised Sites and all
Improvements, and Developer's interest therein, and any greater
estate or interest hereafter acquired, together with all
entrances, exists, rights of ingress and egress, easements, and
appurtenances belonging or pertaining thereto.
1.1.15 Pre-operating Budget - as defined in Section 3.5.
1.1.16 Pre-operating Period - the period from the date hereof to the
date of opening of each Restaurant.
1.1.17 Restaurants - a collective term for the real and personal
property, including accounts of any kind, comprising the
development and operation of up to five (5) "Xxxx Xxxxxx'x
Original Grill" rotisserie chicken restaurants to be located and
operated at the Franchised Sites.
1.1.18 "Xxxx Xxxxxx'x" System - system developed by TRC Acquisition
Corporation, a Georgia corporation for the opening and operating
of restaurants under franchise or license of the "Xxxx Xxxxxx'x"
name and associated system.
"ARTICLE II"
------------
TERM
2.1 Term. The term of the Agreement shall commence no later than July 27, 1998
upon the full execution and delivery of this Agreement and funding of the
Operating Fund (the "Commencement Date"). This Agreement shall have a Term
until the earlier of (a) the completion of the merger between TRC
Acquisition Corporation and Harvest Restaurant Group, Inc. and (b) the
fifth anniversary date of the Commencement Date unless extended or sooner
terminated as hereinafter provided. The last day on which this Agreement is
in effect is called the "Term" or "Expiration Date".
3
"ARTICLE III"
-------------
MANAGER'S DUTIES - CONSTRUCTION AND PRE-OPENING
3.1 Manager Duties - Manager shall apply the Operating Fund substantially in
accordance with the Capital Budget and Pre-Opening Budgets approved by
Developer and so far as practicable in accordance with the individual store
budgets and Sources and Uses of Funds forecast submitted to Developer as
required under Section 4.2. Expenditures from the Operating Fund by Manager
shall include expenditures for all necessary site procurement expenses,
deposits, insurance, licenses and permits in connection with the
Restaurants and this Agreement, construction of the Restaurants and
implementation of pre-opening procedures such as training, testing,
procurement and promotion as directed or required under Article III of this
Agreement and the Unit Franchise Agreements for each such Restaurant and,
together with funds from operations, for the continuous operation of the
Restaurants under Article IV of this Agreement.
3.2.1 Construction of Improvements.
3.2.1.1 Manager shall cause the Improvements to be constructed at the
Franchise Site in accordance with Developer approved plans and
Budgets to be charged against the Operating Fund. Upon approval
of the Plans by the Manager and Developer, each party shall date
and initial the Plans. Any material changes not reflected in the
Plans shall require approval by Developer and Manager.
3.2.1.2 Manager shall obtain from contractors and vendors guarantees upon
all materials, equipment and workmanship of the Improvements
found to be defective within one (1) year following the date of
substantial completion.
3.2.1.3 Developer shall have the right to participate in all progress
meetings during the development and construction of the
Restaurants and shall have access to all construction documents
with respect to the Restaurants.
3.3 Construction Insurance and Indemnification - Manager shall cause all
contractors and subcontractors to purchase and maintain in full force and
effect, such insurance in addition to that otherwise required of Developer
and Manager under this Agreement, as may be necessary to protect Developer
and Manager from claims under worker's compensation acts and other
employees benefits acts, for claims because of bodily injury, including
death, and from claims for damage to property which arise out of the
construction of the Improvements on or about the Premises.
4
3.4 Pre-opening Programs and Organization - In order to prepare the Restaurants
for full operations, Manager shall render the following services to
Developer during the Pre- opening Period, in substantial conformity to an
approved Pre-opening Budget:
3.4.1 Prepare and put into effect plans for the organization and
effective operation for each Restaurant;
3.4.1 Put into effect programs to secure approved vendors and suppliers
to the Restaurants;
3.4.3 Recruit and train the initial staff of the Restaurants through
such training programs and other training techniques as shall be
approved under the Unit Franchise Agreements;
3.4.5 Prepare and carry out a program for the opening promotion for
each Restaurant; and
3.4.6 Coordinate operation of the Restaurants in order to maintain
compliance with terms of Developer Agreement and the Unit
Franchise Agreements.
3.5 Pre-Opening Budget - Manager shall prepare and submit for Developer's
approval a pre- opening budget (the "Pre-opening Budget") covering (i)
compensation of the employees of the Restaurants during the Pre-opening
Period, (a) the training program during the Pre- opening Period, (iii) the
sale and promotion program during the Pre-opening Period (iv) opening
festivities, and (v) all other pre-opening costs and expenses. Unless
otherwise authorized by Developer, Manager shall not exceed the amounts
budgeted provided that Manager shall be entitled to allocate the amount
budgeted with respect to any item in the Pre-opening Budget to other items
budgeted therein. All costs and expenses shall be charged against the
Operating Fund, it being understood that some of the said costs and
expenses may be or may have been paid by Manager in which case Manager will
be entitled to immediate reimbursement.
"ARTICLE IV"
------------
MANAGER'S DUTIES - OPERATING PERIOD
4.1 Authority and Duties of Manager - Manager shall have the sole and exclusive
right, authority, and obligation to develop, manage and operate the
Restaurants as agent on behalf of Developer pursuant to the terms of the
Agreement. Manager agrees that it shall manage and operate the Restaurants
in a professional manner, generally in keeping with the standards of other
"Xxxx Xxxxxx'x" restaurants, taking into account the size, location and
character of the facility. Manager shall have authority and responsibility,
subject to the provisions of the Agreement, the Market Development
Agreement and Unit Franchise Agreements to (I) designate operating policy,
standards of operation, quality of service, the maintenance and physical
5
appearance of the Restaurants and any other matters affecting operations
and management; (ii) supervise and direct all phases of advertising, sales
and business promotions for the Restaurants and (iii) carry out all
programs contemplated by the Budgets approved by Developer. Developer
agrees that it will cooperate reasonably with Manager to permit and assist
Manager to carry out its duties hereunder. Nonetheless, Manager shall have
the right and authority to appoint an employee manager, to manage the
day-to-day operations of the Restaurants under the supervisory control of
Manager.
4.2 Forecasts and Budgets - Manager will provide within 25 days of Commencement
Date an overall plan for the expenditure of $1,450,000 Operating Fund
pursuant to certain Budgets. These Budgets will include:
4.2.1 a comprehensive Development Plan for up to five (5) "Xxxx
Xxxxxx'x" Restaurants;
4.2.2. Capital Budget required to implement the Market Development
Agreement;
4.2.3 an Operating Profit and Loss pro forma Budget for the operating
Year;
4.2.4 a Source and Use of Funds forecast the next Operating Year; and
4.2.5 individual Store Budgets (after the initial Operating Year).
4.3 Future Budgets - Manager shall submit to Developer, no less than forty-five
(45) days in advance of each Operating Year after the first Operating Year
supplementary Budgets for such Operating Year.
4.4 Approval of Budgets - Developer shall have the right to review and approve
plans and Budgets within twenty-five (25) days of delivery. Unless
Developer delivers written comments or criticisms within such time such
submitted plan and/or Budgets shall be deemed approved.
4.5 Compliance with Budgets - Unless otherwise agreed by Developer, Manager
shall at all times substantially comply with the applicable Budgets,
provided, however, that Manager shall be entitled to allocate amounts
budgeted with respect to any items in such approved Budget to another item
budgeted therein so long as the total authorized expenditures authorized
are not exceeded.
4.6 Personnel - All hourly store personnel will be employees of the Manager,
provided that all direct expenses of such personnel shall be charged
against the Operating Account.
6
4.7 Additional Responsibilities of Manager - Manager shall, in its own name or
that of Developer, perform the following additional services, or cause the
same to be performed for the Restaurants as a change against the Operating
Account.
4.7.1 enter into such contracts for furnishing of utilities and
maintenance and other services to the Premises, as shall be
reasonably necessary for the proper operation and maintenance
thereof;
4.7.2 subject to compliance with applicable Budgets make all repairs,
decoration, revisions, alterations and improvements to the
Restaurants as shall be reasonably necessary for the proper
maintenance thereof in good order, condition and repair;
4.7.3 purchase such operating equipment and supplies as shall be
reasonably necessary for the proper operation of the Restaurants;
4.7.4 apply for, and use its best effort to obtain and maintain all
license and permits required of the Developers and/or Manager in
connections with the operation and management of the Restaurants.
Developer agrees to execute and deliver any and all applications
and other documents as shall be reasonably required and to
otherwise cooperate with Manager in applying for, obtaining and
maintaining such licenses and permits;
4.7.5. use its reasonable best efforts or cause to be done all such acts
and things in and about the Restaurants as shall be reasonably
necessary to comply with Legal Requirements, the terms of all
insurance policies, and the Unit Franchise Agreements;
4.7.6 pay all Impositions and insurance premiums, when due;
4.7.7 subject to the prior written approval of Developer, retain or
employ legal counsel for the Restaurants which legal counsel
shall perform legal services under the direction of Manager and
Developer.
ARTICLE V
---------
INSURANCE
---------
5.1 Coverage
5.1.1 Required Insurance - The following insurance shall be secured and
maintained by Manager with respect to the Restaurants at all
times during the times during the term of this Agreement;
7
5.1.1.1 All property insurance including fire, windstorm, flood,
earthquake and other risks covered by extended coverage
endorsements on the Improvements equal to the full replacement
value thereof;
5.1.1.2 All risks business interruption insurance, including fire,
windstorm, flood, earthquake and other risks covered by extended
coverage endorsements in amount no less than $50,000.00;
5.1.1.3 Insurance against loss from the explosion of boilers, air
conditioning systems, including refrigeration and operating
appliances, pressure vessels and pressure pipes in an amount
equal to the full replacement value of each item;
5.1.1.4 Business interruption insurance against loss from accidental
damage to, or from the explosion of, boilers, air conditioning
systems including refrigeration and heating appliances, pressure
vessels and pressure pipes in the amount not less than
$50,000.00;
5.1.1.5. Commercial general liability insurance including coverage for
personal injury and liquor liability, in an amount not less than
$1,000,000.00 combined single limits per occurrence;
5.1.1.6 Comprehensive crime insurance an amount equal to not less than
$250,000.00;
5.1.1.7 Statutory worker's compensation benefits and employee liability
insurance;
5.1.1.8 Insurance against such other insurable risks as Developer may,
from time to time, reasonably require;
5.1.2 Pre-opening Period - During Pre-opening Period the required
insurance coverages shall be modified where appropriate (e.g. the
policy required under clause (a) shall be a "builder's" all risk
policy"), or shall be eliminated if the risks is not present
during such period.
5.2 Policies and Endorsements
5.2.1 Policies - All insurance provided for under the above Section 5.1
shall be effected by policies issued by insurance companies of
sound and adequate financial responsibility. The party procuring
such insurance shall deliver to the other party certificates of
coverage with respect to all of the policies of insurance
including existing, additional and renewal policies, and in the
8
case of insurance about to expire, shall deliver certificates of
insurance with respect to the renewal policies to the other party
not less than thirty (30) days after the respective dates of
expiration. If Developer shall elect to procure any portion of
the property insurance, it shall also deliver to Manager full
copies of the policies under which such insurance is provided.
5.2.2 Endorsements - All policies of insurance provided for under this
Article shall have attached thereto to the extent available (i)
an endorsement that such policy shall not be canceled or
materially changed without at least thirty (30) days prior
written notice to Developer and Manager, and (b) endorsement to
the effect that no act or omission of Developer or Manager shall
affect the obligation of the insurer to pay the full amount of
any loss. All insurance policies required under Sections 5.1.1.5,
5.1.1.6 and 5.1.1.7 shall include and endorsement to the effect
that such insurance shall be primary to any similar insurance
carried by Manager.
5.3 Waiver of Liability - Neither Manager and Developer shall assert against
the other, and do hereby waive with respect to each other, against any
other entity or person named as additional insured on any policies carried
under this Article any claim for any losses, damages, liability or expenses
(including attorneys fees) incurred or sustained by either of them on
account of injury to persons or damages to property to the extent that they
are covered by the insurance required under this Article. Each policy of
insurance shall contain specific waiver of subrogation reflecting the
provisions of this Section 5.3, and a provision to the effect that the
insurance of the preceding waiver shall not effect the validity of any each
policy or the obligation of the insurer to pay the full amount of any loss
sustained.
ARTICLE VI
----------
MANAGEMENT FEE
--------------
6.1 Management Fee
In consideration for the performance whom direct set forth in the
Agreement, Manager shall receive a management fee in an amount of (i) five
percent (5%) of Gross Revenues ( "Management Fee"). The Management Fee shall be
payable to Manager monthly, in arrears, the first payment becoming due and
payable on the 15th day of the month following opening of the first Restaurant
after the Commencement Date.
9
ARTICLE V II
------------
ACCOUNTS WORKING FUNDS: RECORDS AND REPORTS
-------------------------------------------
7.1 Application of Operating Fund - Manager shall have authority to draw upon
the Operating Fund for such purposes and in such amounts as shall have been
approved by Developer under the applicable Budgets and for initial
expenditures for the specific purpose of retaining suitable Premises
locations approved by Developer provided such discretionary expenditures do
not exceed an aggregate amount of $100,000.00.
7.2 Bank Accounts - Bank accounts for each Restaurant will be established at
banking institutions mutually approved by Developer and Manager, such
accounts to be in the name of Developer on which Manager shall have
exclusive signature authority. Manager will deposit in such Restaurant
Accounts all monies received from the operation of each Restaurant and
shall disburse the same for the purposes set forth in the Budgets.
Notwithstanding the foregoing, Manager shall be entitled to maintain such
funds as it and Developer reasonably deem proper in house banks or in xxxxx
cash funds at the Restaurant. Manager may transfer funds from the
Restaurant operating accounts to the Operating Fund from time to time for
support of other Restaurants of Developer under this Agreement.
7.3 Audit or Review - Manager and Developer shall hire a firm of independent
certified public accountants of recognized standing in the restaurant
industry to review the assets employed in the operation of the Restaurants
and the liabilities incurred in connection therewith and the results of the
operations, and cash flows of the Restaurants during each year of this
Agreement.
7.3 Developer's Right to Inspect and Review - Manager shall accord to
Developer, its accountants, attorney and agents, the right to enter upon
any part of the Restaurants at all times during the term of this Agreement
for the purpose of examining or inspecting the same or examining and making
extracts of the financial books and records of the Restaurants or for any
other purpose which the Developer, in its discretion, shall deem necessary
or advisable but same shall be done without materia disruption to the
operation and business of the Restaurants..
10
ARTICLE VIII
------------
TERMINATION RIGHTS
------------------
8.1 Termination by Developer - If any one of the following events shall happen:
8.1.1 if Manager shall fail to keep, observe or perform any material
covenant, agreement, term or provision this Agreement to be kept,
observed performed by Manager, and such default shall continue
for a period of thirty (30) days after notice thereby Developer
to Manager;
8.1.2 if Manager shall apply for or consent to the appointment of a
receiver, trustee or liquidator of Manager or of all or a
substantial part of its assets, file a voluntary petition in
bankruptcy, or admit in writing its inability to pay debts as
they some due , make a general assignment for the benefit of
creditors, file a petition or an answer seeking reorganization or
arrangement with creditors or take advantage of any insolvency
law, or file answer admitting the material allegations of a
petition filed against manager in any bankruptcy, reorganization
or insolvency proceeding, or if any order, judgment or decree
shall be entered by any court of completion jurisdiction, on the
application of a creditor, adjudicating Manager a bankruptcy or
insolvent or approving petition seeking reorganization of Manager
or appointing a receiver, trustee or liquidator of Manager or all
or a substantial part of its assets, and such order, judgment or
decree shall continue unstayed and effect for any period of sixty
(60) consecutive days; or
8.1.3 if a right of termination on the part of Developer shall have
arisen under section 8.1 or 8.2; then Developer shall have the
right to terminate this Agreement upon written notice to Manager
given at any time following the occurrence of such event or if a
period of grace is provided, then following the expiration of the
applicable grace period, and if such event shall continuing, and
this Agreement shall terminate upon the date specified therein.
8.2 Termination by Manager - If any one of the following events shall happen;
8.2.1 the Developer shall fail to fund the Operating Fund by the
Commencement Date or thereafter fail to transfer additional funds
advanced to Developer for such purpose within five (5) days after
such funds are available or thereafter fails or is unable upon 30
days written notice from Manager to fund all amounts necessary,
in Manager's reasonable judgment, to continue the operations of
any Restaurant as a going concern;
8.2.2 the Developer shall fail to keep, observe or perform any other
material covenant, agreement, term or provision of the Agreement
be kept observed or performed by Developer, and such default
shall continue for a period of thirty (30) days after notice
thereof by Manager to Developer;
11
8.2.3 if for any reason not caused by the act or omission of Manager,
any required licenses for the sale of alcoholic beverages are at
any time suspended, terminated or revoked and such suspension,
termination or revocation shall continue for a period of sixty
(60) consecutive days, or if, for any reason not caused by the
act or omission of Manager the right to serve alcoholic beverages
in any Restaurant shall otherwise be suspended for a period of
sixty (60) consecutive days;
8.2.4 if the Developer shall default under any mortgage, lease or
similar encumbrance upon a Premises or apply for or consent to
the appointment of a receiver, trustee or liquidator of Developer
or of its assets, file a voluntary petition in bankruptcy, or
admit in writing its inability to pay debts as they some due,
make a general assignment for the benefit of creditors, file a
petition or an answer seeking reorganization or arrangement with
creditors or take advantage of any insolvency law, or file answer
admitting the material allegations of a petition filed against
manager in any bankruptcy, reorganization or insolvency
proceeding, or if any order, judgment or decree shall be entered
by any court of competent jurisdiction, on the application of a
creditor, adjudicating Developer a bankruptcy or insolvent or
approving petition seeking reorganization of Developer or
appointing a receiver, trustee or liquidator of Developer or all
or a substantial part of its assets; or
8.2.5 if any claim is made successfully prosecuted to the effect that
the Developer is liable for the obligations of its parent
corporation shareholder;
8.3 Curing Defaults - Any default of Manager under clause (a) of Section 8.1 or
the Developer under Section 8.2, as the case may be, which is susceptible
of being cured, shall not constitute a basis or termination if the nature
of such default shall not permit it to be cured within the grace period
allotted, provide that within such grace period other Manager or Developer
shall have commenced to cure such default and shall proceed to complete the
same with reasonable diligence.
8.4 Option to Terminate Agreement or Transfer Restaurants upon Failure of
Merger or Developer Default.
8.4.1. In the event of uncured default by Developer under this Agreement
or the Market Development Agreement or Unit Franchise Agreements
for the Restaurants, Manager shall have the option to purchase
the Restaurants and the associated Premises at a price equal to
the aggregate funds deposited in the Operating Fund plus
Manager's indemnification of Developer from liabilities directly
12
associated with the Restaurants. The exercise of such option
shall be without limitation upon other remedies provided for in
this Agreement, the Market Development Agreement or Unit
Franchise Agreements for the Restaurants. Such option shall be
exercised by written notice within 15 days after the earlier of
termination of merger discussions or a binding merger agreement
or expiration of the time for consummation of such agreement
without such a merger or expiration of the period for cure of any
default by Developer under this Agreement. If such option is
exercised, such transfers shall be closed within 30 days after
notice of exercise. Such option may be exercised, at Manager's
option, against the assets of the Restaurants and associated
Premises or all stock of the Developer, for which limited purpose
the shareholder of Developer joins in this Agreement.
8.4.2. In the event that Manager and Harvest Restaurant Group, Inc.
shall not complete a proposed merger on or before the outside
date for consummation set forth in a binding merger agreement,
including any permitted or agreed extensions, Developer shall
have the option to require Manager to purchase the Restaurants
and the associated Premises at a price equal to the aggregate
funds deposited in the Operating Fund plus Manager's
indemnification of Developer from liabilities directly associated
with the Restaurants after the date of such transfer. Such option
shall be exercised by written notice within 15 days after the
earlier of termination of merger discussions or a binding merger
agreement or expiration of the time for consummation of such
agreement without such a merger. If such option is exercised,
such transfers shall be closed within 30 days after notice of
exercise. Such option may be exercised, at Manager's option,
against the assets of the Restaurants and associated Premises or
all stock of the Developer, for which limited purpose the
shareholder of Developer joins in this Agreement.
8.5 Effect of Termination - The termination of this Agreement under the
provisions of this Article VIII shall not affect the rights of the
terminating party with respect to any damages it has suffered as result of
any breach of this Agreement, nor shall it affect the rights of either
party with respect to liability or claims accrued, or arising out of event
recurring prior to the date of termination nor under any other agreement to
which they or either of them are a party.
8.6 Remedies Cumulative - Neither the right of termination nor the right to xxx
for damages nor any other remedy available to either party hereunder shall
be exclusive of any other remedy given hereunder or now or hereafter
existing at law or in equity.
13
8.7 Developer Financial Responsibility.
8.7.1 By Developer - Developer shall be responsible for and shall
indemnify and hold harmless Manager, and its Affiliates harmless
from all costs, expenses, claims and liabilities, including
reasonable attorneys' fees arising or resulting from the expenses
of constructing and operating the Restaurants to the extent not
covered by the Operating Fund and funds from operations and from
breach of Developer's requirements as outlined in this Agreement.
9.2 Assignment
9.2.1 Prohibited Assignments - Except as provided in the following
Section 9.2.2, and as otherwise provided herein, Manager may not
assign this Agreement without the prior written consent of the
Developer, which consent may not be unreasonably withheld. It is
understood and agreed that any consent granted by the Developer
to any such assignment shall not be deemed a waiver of the
covenant herein against assignment in any subsequent case. Except
as otherwise provided in Section 9.2.2, no assignment of this
Agreement shall operate to release Manager from any of its
obligations under this Agreement. Except as provided in the
following Section 9.2.2, and as otherwise provided herein,
Developer may not assign this Agreement without the prior written
consent of the Manager, which consent may be withheld by the
Manager's sole discretion. It is understood and agreed that any
consent granted by the Manager to any such assignment shall not
be deemed a waiver of the covenant herein against assignment in
any subsequent case. Except as otherwise provided in Section
9.2.2, no assignment of this Agreement shall operate to release
Manager or Developer from any of their respective obligations
under this Agreement
9.2.2 Permitted Assignments - Manager or Developer, without the consent
of the other, shall have the right to assign this Agreement to
any Affiliate or to any entity which may become an Affiliate as a
result of a related transaction, or to any successors or assigns
that may result from any merger, consolidation, reorganization,
or to a corporation or other entity which shall acquire all or
substantially all of the business and assets of Manager or
Developer, or to any company or entity which shall succeed to
Manager's or Developer's business in respect to managing and
operating restaurants provided that such successor or assignee
has a net worth of at least $1,000,000.00.
9.4 Successor and Assigns - subject to the foregoing, this Agreement shall
inure to the benefit of and be binding upon the parties herein their heirs,
legal representatives, successors and assigns.
14
ARTICLE X
---------
DAMAGE, DESTRUCTION
-------------------
10.1 In the event of casualty to the Premises, Manager shall have authority to
adjust losses and shall repair or rebuild to the extent necessary or proper
to continue operation of the effected Premises provided (a) Developer shall
approve any such expenditure that shall exceed the sum of proceeds of
insurance payable upon the loss plus budgeted capital improvements and
repairs for such Premises, (b) sums approved by Developer, proceeds of
insurance upon the loss and budgeted capital improvements and repairs are
sufficient to accomplish such repairs or restoration, and (c) such repairs
or restoration can be accomplished in compliance with the terms of the
terms of the Unit Franchise Agreement and any applicable mortgage, lease,
ground lease or similar encumbrance affecting such Premises.
"ARTICLE XI"
------------
INDEMNITIES
-----------
11.1 Indemnities
11.1.1 Indemnification of Manager - Developer shall indemnify and hold
harmless Manager from and against any and all actions, suits,
claims, penalties, losses, damages and expenses including
reasonable attorneys' fees, based upon or arising out of
Manager's performance of its services hereunder, or out of any
occurrence or event happening in or out of the Restaurants or
occurring in connection with the operating or development
thereof, or with respect to the pre-opening activities hereunder,
including any alleged violation of any Legal Requirement
(collectively "Claims"), except to the extent such Claims are
based upon Manager's primary negligence, willful misconduct or
failure to act in good faith, and except to the extent that such
Claims are covered by an insurance policy maintained with respect
to the Restaurants from which proceeds are payable to Manager.
11.1.2 Indemnification of Developer - Manager shall indemnify and hold
Developer harmless from and against any and all Claims which
Developer may suffer, sustain or incur arising from, or based
upon Manager's primary negligence, willful misconduct, failure to
act in good faith, except to the extent such Claims are covered
by any insurance policy maintain with respect to the Restaurants
from which proceeds are payable to Developer.
11.1.3 Indemnified Parties - The indemnities provided in this Section
11.1 shall run to the benefit of both Manager and the Developer
and their respective Affiliates and the directors, partners,
members, agents, officers and employee of the Manager and the
Developer and their respective Affiliates.
15
11.1.4 Expenses Pending Determination - Pending the resolution of any
question as to whether Manager or any of its Affiliates o r any
of its officers, employees, are entitled to indemnification under
this Section 11.1, Manager shall be authorized to pay from the
Restaurant accounts and Operating Fund all expenses or defending
or handling any Claim, provided that Manager will reimburse
Developer for all such expenses to the extent ultimately
determined that such entities or persons are not entitled to
indemnification hereunder.
"ARTICLE XII"
-------------
MISCELLANEOUS
-------------
12.1 Restaurant Names - The Restaurants shall be known as "Xxxx Xxxxxx'x" or by
such trade name as may from time to time be mutually approved by Manager
and Developer Franchise Agreement. In the event of any breach of any
covenant under this Section 12.1, Manager, in addition to any remedies
available to it hereunder, or at law or in equity shall have the right to
an injunction.
12.2 Area Restriction - During the term of this Agreement, Manager and its
Affiliates shall not own, lease, operate, franchise or license any
Restaurant under the "Xxxx Xxxxxx'x" name or otherwise within a five-mile
radius of any Restaurant being managed under this Agreement.
12.3 Manager's Retained Rights - Manager and its Affiliates shall retain the
right to own, have an ownership interest in, develop, operating and
license, sell or rent restaurants, wherever located except as set forth in
Section 12.2 and nothing else in this Agreement or by law shall prohibit or
limit Manager or its Affiliates from engaging in such activities. The
parties expressly agree that Manager shall not be bound to subject to this
Agreement or advise the Developer of any business opportunities whatsoever
under the doctrine of "corporate opportunities" nor shall this agreement be
construed as creating a fiduciary relationship between the parties hereto;
such relationship being strictly contractual in nature.
12.4 Notices - Except as otherwise stated within this Agreement, all notices
hall be given in writing and be delivered personally, by certified, express
or registered mail, by an overnight delivery services e.g., Federal or
Airborne Express, or via telecopier, postage prepaid, addressed to the
party to be notified at the respective addresses set forth ? Each other
16
address or addresses as the parties may from time to time designate in
writing. Notice delivered personally or sent by overnight delivery service
accordance with the foregoing shall be deemed via certified express or
registered mail to accordance with the foregoing shall be deemed days after
being deposited in the U.S. Mail, and notices sent via telecopier shall be
deemed given to :
to Developer:
Harvest Restaurant Group, Inc.
Attention: Xxxxxxx Xxxxxxxxx, Chairman
0000 Xxxxxxxxx Xxxx 000
Xxxxx 000
Xxx Xxxxxxx, Xxxxx 00000
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Rosenberg, Tuggey, Agather, Xxxxxxxxx & Xxxxxxxxx
000 Xxxx Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxxxxx, Xxxxx 00000
to Manager:
"Xxxx Xxxxxx'x" Restaurants
Attention: Xxxxx Xxxx, Chairman and
Xxx Xxxxxxxx, Chief Financial Officer
0000 Xxxxxxx Xxxxxx Xxxx, #000
Xxxxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Dietrick, Evans, Xxxxxx & Xxxxxxxx, LLC
0000 Xxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
12.5 No Lease, Partnership or Joint Venture - Nothing contained in this
Agreement shall be construed to be or create a lese, partnership, joint
venture between the Developer, its successors or assigns, on the one part,
and Manager, its successor and assigns, on the other part.
12.6 Modification and Changes - This Agreement cannot be changed or modified
except by another agreement in writing signed by the party to be charged
therewith, or by its duly authorized agent and agreed to by all parties of
the Agreement
17
12.7 Understandings and Agreement - This Agreement constitutes all of the
understandings and agreements whatsoever of any nature between the parties
with respect to Manager's management of the Restaurant. The parties each
acknowledge, represent and agree that in entering into this Agreement, they
are not relying upon any representation, promise or inducement of the other
party (or of any officer, agent, employee, representative or attorney for
any other party). This Agreement is not dependent upon, nor based upon the
inducement of, nor shall it create any implied obligation with respect to a
certain letter of intent regarding a proposed merger between Manager and
the shareholder of Developer, nor any other considerations except as
expressly stated herein.
12.8 Headings - The Article and Section heading contained herein are for
convenience and reference only and are not intended to define, limit or
extend the scope or intent of any provision of this Agreement.
12.9 Consents - Except as specified otherwise provided in this Agreement, each
party agrees that it will not unreasonably withhold any consent approval
requested by the other party pursuant to the terms of the Agreement, and
that any such consent approval shall not be unreasonably delayed or
qualified.
12.10 Survival of Covenants - Any Section of terms or provision of this
Agreement which, in order to be effective, must survive the termination of
this Agreement, shall survive any termination.
12.11 Third Parties - None of the agreements hereunder of either party shall run
to or be enforceable by any party other than a party to or deriving rights
hereunder as a result of an assignment permitted pursuant to the terms
hereof.
12.12 Waivers - No failure by Manager or Developer to insist upon the strict
performance of any covenant, agreement, term, or condition of this
Agreement or to exercise any right or remedy consequent upon the breach
thereof, shall constitute a waiver of any such breach or any subsequent
breach of such covenant, agreement, term or conditions, covenant,
agreement, term or condition of this Agreement and no breach thereof shall
be waiver or modified except by written instrument. No waiver of any breach
shall affect or alter this provision.
12.13 Severability - Any provision of this Agreement prohibited by law or by
court decree in any locality or state shall be ineffective to the event or
with prohibition without in any way invalidating or affecting the remaining
provisions of this Agreement without invalidating or affecting the
provision of this Agreement within the states of localities ? prohibited or
otherwise invalidated by law or by court decree. Further, in the event,
that any provision of this Agreement shall be held unenforceable by virtue
of its scope, but may be made enforceable by duration thereof if, such
provision shall be deemed to be amended to the minimum extent necessary /
enforceable under the laws of the jurisdiction in which enforcement is
sought.
18
12.14 Applicable Law - This Agreement shall be deemed made and accepted in
Georgia and shall also be construed and interpreted, and be governed by,
the laws of the State of Georgia.
12.15 Investment Acknowledgment and Notice - Developer acknowledges that the
rights and interests of the parties to this Agreement, and associated
agreements for development and operation of the Restaurants have not been
registered as a security with the Federal or any state government, that
Developer is a sophisticated investor and has had and fully availed itself
of the opportunity to evaluate the facts and merits of this Agreement and
such other agreements and that to the extent this Agreement, alone or
together with such other agreements, may be construed as an investment
contract or other security, Developer has acquired its interests for
investment for its own account, with the intent of holding such interests
for investment and without the intent of participating directly or
indirectly in a distribution of such securities. To the extent applicable
to this Agreement, alone or in conjunction with other Agreements: THESE
SECURITIES HAVE BEEN ISSUED OR SOLD IN RELIANCE ON PARAGRAPH (13) OF CODE
SECTION 10-5-9 OF THE 'GEORGIA SECURITIES ACT OF 1973,' AND MAY NOT BE SOLD
OR TRANSFERRED EXCEPT IN A TRANSACTION WHICH IS EXEMPT UNDER SUCH ACT OR
PURSUANT TO AN EFFECTIVE REGISTRATION UNDER SUCH ACT.
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the dates set forth below.
- signatures on following page -
19
TRC ACQUISITION CORPORATION
Date: July 17, 1998 By: /s/ Xxxxx X. Xxxx III
----------------- -----------------------------------
Chairman
CORPORATE SEAL
Attest:
-------------------------------
Secretary
HARTAN, INC.
BY: HARVEST RESTAURANT GROUP, INC., as
Incorporator
Date: July 17, 1998 By:
---------------- -----------------------------------
Chairman
CORPORATE SEAL
Attest:
-------------------------------
Secretary
Consent and Agreement to Section 8.4:
HARVEST RESTAURANT GROUP, INC.
Date: July 17, 1998 By:
---------------- -----------------------------------
Chairman
CORPORATE SEAL
Attest:
-------------------------------
Secretary
20
