Development Agreement - ShowBiz Pizza Time Inc.
SHOWBIZ PIZZA TIME, INC.
DEVELOPMENT AGREEMENT
--------------------------------
[TERRITORY]
4441 West Airport Freeway
P.O. Box 152077
Irving, TX 75062
TABLE OF CONTENTS
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . .1
2. GRANT OF RIGHTS . . . . . . . . . . . . . . . . . . . . . .4
2.1 Grant. . . . . . . . . . . . . . . . . . . . . . . . .4
2.2 Exclusivity. . . . . . . . . . . . . . . . . . . . . .4
2.3 Right of First Refusal . . . . . . . . . . . . . . . .4
2.4 Limitation of Rights . . . . . . . . . . . . . . . . .5
3. FEES. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
3.1 Development Fee. . . . . . . . . . . . . . . . . . . .5
3.2 Franchise Fees . . . . . . . . . . . . . . . . . . . .5
3.3 Payment and Taxes. . . . . . . . . . . . . . . . . . .5
4. DEVELOPMENT SCHEDULE. . . . . . . . . . . . . . . . . . . .5
4.1 Development Schedule . . . . . . . . . . . . . . . . .5
4.2 Ownership Interest . . . . . . . . . . . . . . . . . .6
4.3 Site Location and Approval . . . . . . . . . . . . . .6
4.4 Operational Date . . . . . . . . . . . . . . . . . . .6
4.5 Extensions . . . . . . . . . . . . . . . . . . . . . .6
5. REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . .6
5.1 Representations, Warranties and Covenants of Developer6
5.1.1 Due Incorporation. . . . . . . . . . . . . .6
5.1.2 Authorization. . . . . . . . . . . . . . . .7
5.1.3 Execution and Performance. . . . . . . . . .7
5.1.4 Corporate Documents. . . . . . . . . . . . .7
5.1.5 Non-Competition during Term of Agreement . .7
5.1.6 Non-Competition after Termination or
Non-renewal of Agreement . . . . . . . . 7
5.1.7 Additional Covenants . . . . . . . . . . . .8
5.1.8 Guaranty . . . . . . . . . . . . . . . . . .8
5.2 Representations, Warranties and Covenants of Franchisor8
5.2.1 Due Incorporation. . . . . . . . . . . . . .8
5.2.2 Authorization. . . . . . . . . . . . . . . .8
5.2.3 Execution and Performance. . . . . . . . . .8
6. PROPRIETARY INFORMATION . . . . . . . . . . . . . . . . . .9
6.1 Confidential Information . . . . . . . . . . . . . . .9
6.1.1 Confidentiality Agreements . . . . . . . . .9
6.1.2 Improvements . . . . . . . . . . . . . . . .9
6.2 Proprietary Marks. . . . . . . . . . . . . . . . . . .9
7. TRANSFER OF INTEREST. . . . . . . . . . . . . . . . . . . .9
7.1 Transfer by Franchisor . . . . . . . . . . . . . . . .9
7.2. Transfer by Franchisee . . . . . . . . . . . . . . . .9
8. INSURANCE AND INDEMNITY . . . . . . . . . . . . . . . . . 10
8.1 Insurance. . . . . . . . . . . . . . . . . . . . . . 10
8.2 Indemnities. . . . . . . . . . . . . . . . . . . . . 11
8.2.1 Indemnification. . . . . . . . . . . . . . 11
8.2.2. Notice and Counsel . . . . . . . . . . . . 11
8.2.3 Settlement and Remedial Actions. . . . . . 11
8.2.4 Expenses . . . . . . . . . . . . . . . . . 12
8.2.5 Third Party Recovery . . . . . . . . . . . 12
8.2.6 Survival . . . . . . . . . . . . . . . . . 12
9. TERM AND TERMINATION. . . . . . . . . . . . . . . . . . . 12
9.1 Term . . . . . . . . . . . . . . . . . . . . . . . . 12
9.3 Termination with Notice. . . . . . . . . . . . . . . 13
10. REMEDIES AND LIQUIDATED DAMAGES . . . . . . . . . . . . . 13
10.1 Remedies . . . . . . . . . . . . . . . . . . . . . . 13
10.1.1 Reduction of Exclusivity . . . . . . . . . 13
10.1.2 Cure . . . . . . . . . . . . . . . . . . . 13
10.1.3 Specific Enforcement . . . . . . . . . . . 14
10.2 Liquidated Damages . . . . . . . . . . . . . . . . . 14
11. DUE DILIGENCE AND ASSUMPTION OF RISK. . . . . . . . . . . 14
12. DISPUTE RESOLUTION. . . . . . . . . . . . . . . . . . . . 15
12.1 Mediation. . . . . . . . . . . . . . . . . . . . . . 15
12.2 Applicable Law . . . . . . . . . . . . . . . . . . . 15
12.3 Jurisdiction and Venue . . . . . . . . . . . . . . . 15
13. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . 15
13.1 Independent Contractors. . . . . . . . . . . . . . . 15
13.2 Entire Agreement . . . . . . . . . . . . . . . . . . 15
13.3 No Waiver. . . . . . . . . . . . . . . . . . . . . . 16
13.4 Severability . . . . . . . . . . . . . . . . . . . . 16
13.5 Notice . . . . . . . . . . . . . . . . . . . . . . . 16
13.6 Counterparts . . . . . . . . . . . . . . . . . . . . 17
13.7 Headings . . . . . . . . . . . . . . . . . . . . . . 17
13.8 Further Assurances . . . . . . . . . . . . . . . . . 17
13.9 Compliance with Laws . . . . . . . . . . . . . . . . 17
ATTACHMENT "A" - FRANCHISE AGREEMENT . . . . . . . . . . . . . 21
ATTACHMENT "B" - DEVELOPER'S PRINCIPALS
CONFIDENTIALITY AGREEMENT22 . . . . . . . . . .
ATTACHMENT "C" - EMPLOYEE CONFIDENTIALITY AGREEMENT. . . . . . 23
ATTACHMENT "D" - GUARANTY. . . . . . . . . . . . . . . . . . . 24
<PAGE>
SHOWBIZ PIZZA TIME, INC.
DEVELOPMENT AGREEMENT
This Development Agreement is entered into as of this ----day
of , 1997, by and between ShowBiz Pizza Time, Inc., a Kansas
corporation ("Franchisor"), and ---------- a -----------
corporation ("Developer").
RECITALS
1. Franchisor has developed and is the owner of a System for the
establishment, development and operation of family-oriented pizza
restaurants;
2. Franchisor has developed and is the owner of, or licensee with
rights to sublicense, certain Animated Entertainment and
Proprietary Marks which are utilized in connection with and
identify the System;
3. Developer desires to obtain from Franchisor certain rights to
use the System, the Animated Entertainment and the Proprietary
Marks to develop and establish Franchised Restaurants in the
Territory; and
4. Franchisor desires to grant to Developer certain rights to use
the System, the Animated Entertainment and the Proprietary Marks to
develop and establish Franchised Restaurants in the Territory.
NOW THEREFORE, Franchisor and Developer in consideration of the
undertakings and commitments set forth herein, agree as follows:
1. DEFINITIONS
As used in this Agreement and the above Recitals, the
following capitalized terms shall have the meanings attributed to
them in this Section:
1.1 "Action" means any cause of action, suit, proceeding, claim,
demand, investigation or inquiry (whether a formal proceeding or
otherwise) with respect to which Developer's indemnity applies.
1.2 "Agreement" means this Development Agreement and all
attachments.
1.3 "Animated Entertainment" means the computer hardware and
software, artistic designs, scripts and musical scores, staging and
lighting techniques and configurations, plans, manuals and
specifications, manufacturing know-how and other intellectual
property relating to video display entertainment and to three
dimensional computer controlled animated characters, including
present and future improvements, patents, trademarks, copyrights
and other intellectual and artistic property.
1.4 "Change in Control" means a transfer of an Equity Interest in
Developer which, directly or indirectly, causes a change in the
number of Persons which can vote more than fifty percent (50%) of
the total Equity Interest in Developer.
1.5 "Competing Business" means a business which operates a
restaurant or food service outlet in combination with entertainment
in the form of video games, video displays or computer controlled
animated characters.
1.6 "Confidential Information" means the terms of the Development
Agreement and Franchise Agreement and any amendments thereto, the
System, the Animated Entertainment, manuals, written directives and
all drawings, equipment, recipes, and all other information know-how,
techniques, materials and data imparted or made available by
Franchisor which is (i) designated as confidential, (ii) known by
Developer to be considered confidential by Franchisor or (iii) by
its nature inherently or reasonably considered confidential.
1.7 "Developer" means -------------------------.
1.8 "Developer's Principals" means Developer's spouse, if
Developer is an individual, all officers and directors of Developer
and all holders of an ownership interest in Developer and of any
entity directly or indirectly controlling Developer, all as listed
on Schedule 1.7 attached hereto.
1.9 "Development Schedule" means the schedule pursuant to which
the Developer will establish Franchised Restaurants as set forth in
Section 4.
1.10 "Equity Interest" means a direct or indirect ownership
interest in the capital stock of, partnership or membership
interest in, or other equity or ownership interest in Developer
(including the right to vote) any type of legal entity.
1.11 "Execution Date" means the date upon which a Franchise
Agreement is duly executed between a franchisee and Franchisor.
1.12 "Franchise Agreement" means the then-current form of franchise
agreement approved by Franchisor and to be executed with
franchisees in accordance with this Agreement, the current form of
which is attached as Attachment "A."
1.13 "Franchised Restaurant" means a Restaurant opened pursuant to
the Development Schedule and operated (i) at a Site approved by
Franchisor pursuant to this Agreement and (ii) pursuant to a duly
executed Franchise Agreement.
1.14 "Franchisee" means any person or legal entity approved by
Franchisor to enter into a Franchise Agreement and to establish a
Franchised Restaurant.
1.15 "Franchisor" means ShowBiz Pizza Time, Inc. or any person or
legal entity to which ShowBiz Pizza Time, Inc. assigns or otherwise
transfers its rights and obligations contained in this Agreement.
1.16 "Indemnitees" means Franchisor and is subsidiaries and
affiliates, and directors, officers, employees, shareholders,
affiliates, successors and assigns.
1.17 "Losses and Expenses" means compensatory, exemplary or
punitive damages, fines, penalties, charges, assessments and fees
(including reasonable attorneys', experts', accountants' and
consultants' fees); interest, court costs, settlement or judgment
amounts and other similar amounts incurred, charged against or
suffered by the Indemnitees in connection with any Action.
1.18 "Minority Interest" means a direct or indirect ownership
interest of less than five percent (5%) of the capital stock of,
partnership interest in, or other equity interest in (including the
right to vote) any type of legal entity.
1.19 "Operational" used in reference to a Franchised Restaurant,
means a Franchised Restaurant that is fully constructed and
finished out as approved by Franchisor and is legally permitted to
render its services to the general public pursuant to a duly
executed Franchise Agreement.
1.20 "Person" means an individual, corporation, limited liability
company, partnership, association, joint stock company, trust or
trustee thereof, estate or executor thereof, unincorporated
organization or joint venture, court or governmental unit or any
agency or subdivision thereof, or any other legally recognizable
entity.
1.21 "Proprietary Marks" means the trademarks, trade names, service
marks, logos, emblems and other indicia of origin as designated
from time to time by Franchisor, which may be owned by Franchisor
or licensed to Franchisor with sublicensing rights, including, but
not limited to, the marks: "Chuck E. Cheese" and "ShowBiz Pizza
Time."
1.22 "Restaurant" means a family-oriented pizza restaurant operated
utilizing the System, the Proprietary Marks and the Animated
Entertainment.
1.23 "Site" means the location for the construction and operation
of a Franchised Restaurant which has been approved as per Section
4 of this Agreement.
1.24 "System" means the unique system developed and owned by
Franchisor for the establishment, development, and operation of
family-oriented pizza restaurants, the distinguishing
characteristics of which include without limitation, Animated
Entertainment; separate areas with a variety of rides, amusement
games and other attractions; characteristic decorations,
furnishings and materials; specially-designed equipment and
equipment layouts; trade secret food products and other special
recipes, menus and food and beverage designations; food and
beverage preparation and service procedures and techniques;
operating procedures for sanitation and maintenance; methods and
techniques for inventory and cost controls, record keeping and
reporting, personnel training and management, and advertising and
promotional programs; cornerstones of operation; and operational
policies; all of which may be changed, improved or further
developed by Franchisor from time to time.
1.25 "Territory" means ------------ in which the Developer develop
the System in accordance with the terms and conditions of this
Agreement.
1.26 "Transfer" means the sale, assignment, conveyance, pledge,
mortgage or other encumbrance, whether direct or indirect, in whole
or in part, or in one or a series of related transactions or
occurrences, of (i) this Agreement, (ii) any Franchise Agreement
between Franchisor and Developer, (iii) any Equity Interests in
Developer, or (iv) in the assets of Developer.
2. GRANT OF RIGHTS
2.1 Grant Franchisor hereby grants to Developer the right, and
Developer undertakes the obligation, pursuant to the terms and
conditions of this Agreement, to establish and operate ----------
(---) Franchised Restaurants at duly approved Sites in the
Territory and pursuant to duly executed Franchise Agreements.
2.2 Exclusivity For so long as Developer is in compliance with
this Agreement, Franchisor will not, without Developer's prior
written consent, establish or operate, or license anyone other than
Developer to establish or operate Franchised Restaurant in the
Territory prior to the last date specified in the Development
Schedule.
2.3 Right of First Refusal For a period of two (2) years after
the successful and timely completion of the Development Schedule,
if Franchisor proposes to establish any additional Franchised
Restaurants in the Territory, Developer shall have the right to
enter into a new Development Agreement and/or Franchise Agreement
to establish such additional Franchised Restaurants under the terms
and conditions of the then-current form of Development and/or
Franchise Agreements. If the Developer and Franchisor have not
executed a new Development and/or Franchise Agreement within a
period of thirty (30) days after Franchisor provides written notice
to Developer of Franchisor's desire to further develop the
Territory, Franchisor will have the right, to the exclusion of
Developer, to further develop or establish additional Franchised
Restaurant in the Territory on its own or with others.
2.4 Limitation of Rights Notwithstanding Section 2.2, Franchisor
reserves the right to sell, market, and distribute goods and
services, without obtaining the prior approval of Developer, under
any marks (including the Proprietary Marks) through any retail,
wholesale, or other channel of distribution, regardless of whether
the goods or services are: (i) now existing or hereinafter
developed; (ii) part of the System; or (iii) now or at any time
hereafter authorized for use or sale at any Franchised Restaurant.
This Agreement is not a Franchise Agreement, and Developer
shall have no right to use, or to license to others in any manner,
the Proprietary Marks, the Animated Entertainment or the System by
virtue hereof.
3. FEES
3.1 Development Fee Upon the execution of this Agreement,
Franchisor shall deliver a nonrefundable development fee of ----------Dollars
($-------) in consideration for the administrative and
other expenses incurred by Franchisor and for the development
opportunities lost or deferred as a result of Franchisor's entering
into this Agreement with Developer.
3.2 Franchise Fees Upon the execution of this Agreement,
Developer shall deliver a non-refundable franchise fee of Fifteen
Thousand Dollars ($15,000) for the first Franchise Agreement to be
executed pursuant to the Development Schedule. Such non-refundable
fee, which shall be deemed earned by Franchisor when received, is
in consideration for administrative and other expenses incurred by
Franchisor and for the development opportunities lost or deferred
as a result of Franchisor's entering into this Agreement with
Developer. The Developer will deliver all future franchise fees
upon the execution of and in accordance with the terms (including
franchise fee amounts) and conditions of the respective Franchise
Agreement.
3.3 Payment and Taxes All payments made by Developer to
Franchisor pursuant to this Agreement will be in United States
dollars and will be made free and clear of any tax, deduction,
offset or withholding of any kind. All taxes and penalties on any
payment made by Developer pursuant to this Agreement now or in the
future will be fully borne by Developer.
4. DEVELOPMENT SCHEDULE
4.1 Development Schedule The Developer agrees to execute a
Franchise Agreement and establish Franchised Restaurants at Sites
in the Territory in accordance with the following Development
Schedule:
Execution Date:
Number of Franchised Restaurants
Operated by Developer Directly:
Number of Franhised Restaurants
operated by an Entity in which
Developer has a Majority Equity Interest:
Total Number of Franchised Restaurants:
4.2 Ownership Interest Franchisor and Developer agree that the
Developer shall enter into a Franchise Agreement and establish and
operate the Franchised Restaurants either directly or by using
subsidiaries in which it has a majority Equity Interest.
4.3 Site Location and Approval Developer agrees that prior to or
within one hundred and twenty (120) days after the execution of
a Franchise Agreement, it will locate or cause the franchisee under
the Franchise Agreement in question to locate a Site within the
Territory for the establishment and operation of the respective
Franchised Restaurant. Within the same one hundred and twenty
(120) day period, Developer also agrees that it will cause the
franchisee under the respective Franchise Agreement to obtain the
approval for such Site from the Franchisor as per the terms and
conditions of the respective Franchise Agreement.
4.4 Operational Date Developer agrees that, within a period of -----
- ---------- (---) days from the approval by Franchisor of the
Site, it will cause the respective Franchised Restaurant to be
fully Operational.
4.5 Extensions Developer shall at all times comply with the
Development Schedule. However, Franchisor, at its sole discretion
and without obligation, may grant a written extension or
extensions to Developer for the period of time that the Developer
requests. In the event Franchisor grants an extension, Developer
agrees to pay Franchisor a non-refundable extension fee of
US$________ (_____) for every seven (7) day period of the
extension.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS
5.1 Representations, Warranties and Covenants of Developer
5.1.1 Due Incorporation Developer is a corporation,
limited liability company, or limited or general partnership duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with all requisite power and
authority to enter into this Agreement and perform the obligations
contained herein.
5.1.2 Authorization. The execution, delivery and
performance by Developer of this Agreement and all other agreements
contemplated herein has been duly authorized by all requisite
actions on the part of Developer and no further actions are
necessary to make this Agreement or such other agreements valid and
binding upon it and enforceable against it in accordance with their
respective terms.
5.1.3 Execution and Performance Neither the execution,
delivery nor performance by Developer of this Agreement or any
other agreements contemplated hereby will conflict with, or result
in a breach of any term or provision of Developer's charter, by-laws,
articles of organization, or partnership agreement and/or
other governing documents and any amendments thereto, any
indenture, mortgage, deed of trust or other material contract or
agreement to which Developer is a party or by which it or any of
its assets are bound, or breach any order, writ, injunction or
decree of any court, administrative agency or governmental body.
5.1.4 Corporate Documents Certified copies of Developer's
charter, by-laws, articles of organization, partnership agreement
and/or other governing documents and any amendments thereto,
including board of director's or partner's resolutions authorizing
this Agreement have been delivered to Franchisor. Any amendments
or changes to such governing or charter documents subsequent to the
date of this Agreement, shall not be undertaken without
Franchisor's prior written consent.
5.1.5 Non-Competition during Term of Agreement Unless
approved by Franchisor in writing, during the term of this
Agreement, Developer and Developer's Principals shall not, directly
or indirectly:
(a) Divert or attempt to divert business of any
Franchised Restaurant established pursuant to a Franchise Agreement
to any competitor, or do or perform any other act injurious or
prejudicial to the goodwill associated with Franchisor's
Proprietary Marks, the Animated Entertainment and the System;
(b) Employ or seek to employ any person who is employed
by Franchisor or by any other franchisee or developer of
Franchisor; and
(c) Except as provided for herein, own, maintain, engage
in, or have an Equity Interest in a Competing Business; provided
that this provision shall not apply to any Minority Interest
collectively held by Developer or Developer's Principals in any
publicly-held corporation listed on a national stock exchange.
5.1.6 Non-Competition after Termination or Non-renewal
of Agreement Unless approved by Franchisor in writing, for a
period of one (1) year after the expiration transfer by Developer
of its interest in this Agreement, Developer and Developer's
Principals shall not, directly or indirectly:
(a) Divert or attempt to divert business of any
Franchised Restaurant established pursuant to a Franchise Agreement
to any competitor, or do or perform any other act injurious or
prejudicial to the goodwill associated with Franchisor's
Proprietary Marks, the Animated Entertainment and the System;
(b) Employ or seek to employ any person who is employed
by Franchisor or by any other franchisee or developer of
Franchisor; and
(c) Except as provided for herein, own, maintain, engage
in, or have an Equity Interest in a Competing Business within
twenty five (25) miles from the outer boundaries of the Territory;
provided that this provision shall not apply to any Minority
Interest collectively held by Developer or Developer's Principals
in any publicly-held corporation.
5.1.7 Additional Covenants At Franchisor's request,
Developer shall require and obtain for the benefit of Franchisor
execution of covenants similar to those set forth in this Section
from any and all of its employees having access to materials or
information furnished or disclosed to Developer by Franchisor.
5.1.8 Guaranty As an inducement and as a condition to
Franchisor execution and acceptance of this Agreement, Franchisor
may require any or all of Developer's Principals to execute a
Guaranty in the form of Attachment D hereto.
5.2 Representations, Warranties and Covenants of Franchisor
5.2.1 Due Incorporation Franchisor is a corporation duly
organized, validly existing and in good standing under the laws of
the jurisdiction of its organization with all requisite power and
authority to enter into this Agreement and perform the obligations
contained herein.
5.2.2 Authorization The execution, delivery and
performance by Franchisor of this Agreement and all other
agreements contemplated herein has been duly authorized by all
requisite corporate actions and no further actions are necessary to
make this Agreement or such other agreements valid and binding upon
it and enforceable against it in accordance with their respective
terms.
5.2.3 Execution and Performance Neither the execution,
delivery nor performance by Franchisor of this Agreement or any
other agreements contemplated hereby will conflict with, or result
in a breach of any term or provision of Franchisor's articles of
incorporation or by-laws, or any indenture, mortgage, deed of trust
or other contract or agreement to which Franchisor is a party or by
which it or any of its assets are bound, or breach any order, writ,
injunction or decree of any court, administrative agency or
governmental body.
6. PROPRIETARY INFORMATION
6.1 Confidential Information The Developer and the Developer's
Principals shall only communicate, disclose or use the Confidential
Information as expressly permitted herein or as required by law.
Developer and Developer's Principals shall disclose the
Confidential Information only to such of Developer's employees,
agents, or independent contractors who must have access to it in
connection with their employment.
6.1.1 Confidentiality Agreements Developer shall cause
Developer's Principals and employees having access to the
Confidential Information to execute confidentiality agreements
substantially in the form of Attachments B and C stating that they
will preserve in confidence all Confidential Information. Neither
Developer, Developer's Principal's or their respective employees
may at any time, without Franchisor's prior written consent, copy,
duplicate, record or otherwise reproduce the Confidential
Information, in whole or in part, nor otherwise make the same
available to any unauthorized person.
6.1.2 Improvements If Developer makes any improvements
(as determined by Franchisor) to the Confidential Information,
Developer and the Developer's Principals shall each execute an
amendment to this Agreement reflecting such improvements and
Franchisor's exclusive ownership thereof. All such improvements,
which are hereby assigned to Franchisor, shall be considered
Confidential Information.
6.2 Proprietary Marks Developer acknowledges Franchisor's
exclusive ownership of the Proprietary Marks and shall neither
directly or indirectly contest or impair Franchisor's exclusive
ownership of, and/or license with respect to, the Proprietary
Marks.
7. TRANSFER OF INTEREST
7.1 Transfer by Franchisor Franchisor shall have the right to
transfer or assign this Agreement, its rights to the Proprietary
Marks, and all or any part of its rights or obligations herein to
any person or legal entity without the consent of Developer or
Developer's Principals. Upon such transfer by Franchisor, any
transferee or assignee of Franchisor shall become solely
responsible for all obligations of Franchisor under this Agreement
from the date of transfer or assignment.
7.2. Transfer by Franchisee Developer and Developer's Principals
understand and acknowledge that the rights and duties set forth in
this Development Agreement are personal to Developer and are
granted, in part, in reliance upon the skill, aptitude, business
and financial capacity of Developer and Developer's Principals and
their intention of complying with its terms and conditions.
Therefore, if the Developer and/or Developer's Principals desire to
Transfer any interest in this Agreement, they must first obtain the
prior written approval of Franchisor.
Prior to authorizing such Transfer, Franchisor may require,
among other things, satisfaction of the following:
(a) Developer shall be in compliance with all of the terms
and conditions of this Agreement;
(b) Developer and/or any Developer's Principal shall remain
liable for the performance of its obligations contained in this
Agreement through the date of transfer and shall execute all
instruments reasonably requested by Developer to evidence such
liability;
(c) The transferee shall satisfy, in Franchisor's judgment,
Franchisor's then existing criteria for a developer including,
without limitation: (i) education; (ii) business skill, experience
and aptitude; (iii) character and reputation; and (iv) financial
resources;
(d) The transferee and all owners of any record or beneficial
interest in the capital stock (or other interest) of transferee
shall execute all instruments (including a new development
agreement and guarantee) reasonably requested by Franchisor to
evidence acceptance and assumption of all of the terms and
conditions of this Agreement; and
(e) If the Developer does not have a majority Equity Interest
(as reasonably determined by Franchisor) in the transferee,
Franchisor may request a transfer fee equal to one-half (1/2) of the
development fee contained herein.
8. INSURANCE AND INDEMNITY
8.1 Insurance During the entire term of this Agreement, Developer
must maintain comprehensive general liability insurance (including
property damage), and personal injury coverage, workers'
compensation and employer's liability insurance, automobile
liability insurance, and other insurance that is required or
customary in the Territory. The insurance must be underwritten by
an insurance company satisfactory to Franchisor and name Franchisor
as an additional insured party. The insurance policies must
provide that they may not be canceled or changed without at least
thirty (30) days prior written notice to Franchisor. Developer
must furnish Franchisor with evidence that Developer has obtained
the required insurance before the first Franchised Restaurant is
opened, and each year afterwards, and at any other time a carrier
or coverage is changed. Franchisor may, in its sole discretion,
require Developer to increase its insurance coverage amounts by
providing thirty (30) days prior written notice. If Developer
fails to obtain the insurance required by this Section, Franchisor
may (but is not required to) purchase insurance on Developer's
behalf at Developer's sole cost and expense.
8.2 Indemnities
8.2.1 Indemnification Developer and Developer's
Principals agree to and hereby, jointly and severally, indemnify,
defend (by counsel chosen by Franchisor) and agree to hold harmless
each Indemnitee from all Losses and Expenses alleged, incurred or
assessed in connection with:
(a) Developer's or any Developer's Principal's alleged
infringement or alleged violation of any trademark
or other proprietary name, mark, or right allegedly
owned or controlled by a third party;
(b) The violation, breach or asserted violation or
breach, by Developer or any of Developer's
Principals, of any federal, state or local law,
regulation, ruling, standard or directive or any
industry standard;
(c) Libel, slander or any other form of defamation of
Franchisor, the System or any developer or
franchisee operating under the System, by Developer
or by any of Developer's Principals;
(d) The violation or breach by Developer or any of
Developer's Principals, of any warranty,
representation, agreement or obligation in this
Agreement or in any other agreement, between
Developer, its subsidiaries and affiliates and
Franchisor, its subsidiaries and affiliates or the
officers, directors, shareholders, partners,
agents, representatives, independent contractors
and employees thereof; and
(e) Acts, errors, or omissions of Developer, any of
Developer's subsidiaries or affiliates or any of
Developer's Principals and the officers, directors,
shareholders, partners, agents, representatives,
independent contractors and employees of Developer
and its subsidiaries and affiliates in connection
with the development activities contemplated under
this Agreement or the operation of a Franchised
Restaurant.
8.2.2. Notice and Counsel Developer and each of
Developer's Principals agree to give Franchisor immediate notice of
any Action. Franchisor may engage, at its expense, separate
counsel to represent the Indemnitees in such Action and/or elect to
assume (but under no circumstance is obligated to undertake) the
defense and/or reasonable settlement of any Action. Franchisor's
election to settle shall not diminish Developer's and each of
Developer's Principal's obligation to defend, indemnify and hold
the Indemnitees harmless from all Losses and Expenses.
8.2.3 Settlement and Remedial Actions In order to protect
persons or property, or its reputation or goodwill, or the
reputation or goodwill of others, Franchisor may, at any time and
without notice, as it, in its sole judgment deems appropriate,
consent or agree to settlements or take such other remedial or
corrective actions it deems expedient with respect to any Action
if, in Franchisor's sole judgment, there are reasonable grounds to
believe that:
(a) any of the acts or circumstances enumerated in
Section 8.2.1 ((a) through (d)) above have occurred;
(b) any act, error, or omission as described in Section
8.2.1 (e) may result directly or indirectly in damage, injury, or
harm to any person or any property.
8.2.4 Expenses All Losses and Expenses incurred under
this Section shall be chargeable to and paid by Developer or any of
Developer's Principals pursuant to Developer's obligations of
indemnity under this paragraph regardless of any actions, activity
or defense undertaken by Franchisor or the subsequent success or
failure of such actions, activity, or defense.
8.2.5 Third Party Recovery Under no circumstances shall
the Indemnitees be required or obligated to seek recovery from
third parties or otherwise mitigate their losses in order to
maintain a claim against Developer or any of Developer's
Principals. Developer and each of Developer's Principals agree
that the failure to pursue such recovery or mitigate loss will in
no way reduce the amounts recoverable from Developer or any of
Developer's Principals by the Indemnitees.
8.2.6 Survival Developer and Developer's Principals
expressly agree that the terms of this Section 8 shall survive the
termination, expiration or transfer of this Agreement or any
interest herein.
9. TERM AND TERMINATION
9.1 Term Unless terminated as provided for herein, the term of
this Agreement and all rights granted hereunder shall expire on the
date on which Developer successfully and in a timely manner
completes the Development Schedule.
9.2 Termination without Notice This Agreement shall automatically
terminate without notice to Developer if:
(a) Developer is adjudicated bankrupt or makes a general
assignment for the benefit of creditors;
(b) A bankruptcy petition is filed against, by or with the
consent of, Developer;
(c) Developer is adjudicated bankrupt, or a bill in equity or
other proceeding for the appointment of a receiver of
Developer or other custodian or Trustee for Developer's
business or assets is filed and consented to by
Developer;
(d) A receiver or other custodian or trustee (permanent or
temporary) of Developer's assets or property, or any part
thereof, is appointed by any court of competent
jurisdiction;
(e) Proceedings for a composition with creditors under any
state or federal law is instituted by or against
Developer, or a final judgment remains unsatisfied or of
record for thirty (30) days or longer (unless a
supersedeas bond is filed);
(f) Execution is levied against Developer's assets or
property, or suit to foreclose any lien or mortgage
against the premises or equipment of any restaurant
established pursuant hereto is instituted against
Developer and not dismissed within thirty (30) days.
9.3 Termination with Notice Franchisor or Developer may terminate
this Agreement upon the breach or non-compliance by the other of
any material obligation contained in this Agreement. Upon such
breach or non-compliance, the non-breaching party will provide the
breaching party with written notice of such breach. The breaching
party shall have a period of thirty (30) working days from the date
of the receipt of the notice to remedy the breach or non-compliance.
If the breach or default is not remedied within the
aforementioned period, this Agreement shall be terminated without
the need for further notice or court order.
10. REMEDIES AND LIQUIDATED DAMAGES
10.1 Remedies Upon the occurrence of an uncured breach and
subsequent termination pursuant to section 9, Franchisor may
exercise one or more of the following remedies or such other
remedies as may be available at law or in equity (each of the
following remedies are nonexclusive and noncumulative):
10.1.1 Reduction of Exclusivity Franchisor, at its sole
discretion, can completely terminate or, alternatively, reduce the
number of Franchised Restaurants that Developer was given the right
to develop and establish pursuant to the Development Schedule or
terminate or reduce the territorial exclusivity granted Developer
pursuant to Section 2 in the understanding that this Agreement will
remain in effect and will be considered to be amended accordingly.
10.1.2 Cure Franchisor, at Franchisor's discretion and
without obligation, may cure such breach at Developer's expense
and, in connection therewith, Developer (i) hereby grants to
Franchisor all rights and powers necessary or appropriate to
accomplish such cure; (ii) shall indemnify and hold the Indemnitees
harmless from and against all costs, expenses (including reasonable
fees of counsel and other engaged professionals), liabilities,
claims, demands and causes of action (including actions of third
parties) incurred by or alleged against any Indemnitee in
connection with Franchisor's cure; and (iii) shall reimburse or pay
such costs or damages within ten (10) days of receipt of
Franchisor's invoice therefor;
10.1.3 Specific Enforcement Franchisor may, in addition to
pursuing any other remedies, specifically enforce Developer's and
Developer's Principal's obligations, covenants and agreements or
obtain injunctive or other equitable relief in connection with the
violation or anticipated violation of such obligations, covenants
and agreements without the necessity of showing (i) actual or
threatened harm; (ii) the inadequacy of damages as a remedy; or
(iii) likelihood of success on the merits, and without being
required to furnish bond or other security. Nothing in this
Agreement shall impair Franchisor's right to obtain equitable
relief.
10.2 Liquidated Damages Developer acknowledges that its uncured
breach of any of the terms of this Agreement will materially and
adversely affect Franchisor and that the quantum of such damages
may not be easily ascertainable. Accordingly, Developer agrees
that, as liquidated damages for the non-performance of its
obligations under this Agreement, in addition to any other remedy
available to Franchisor, Developer shall pay to Franchisor US$--------
initially and US$------- per month per violation for so long as
each such violation remains uncured; provided, however, that this
provision will only be operative upon material breaches of this
Agreement which are in Developer's or Developer's Principals'
control.
11. DUE DILIGENCE AND ASSUMPTION OF RISK
Developer and Developer's Principals have received, read and
understood this Agreement, the documents referred to herein and the
Attachments and Schedules hereto. Developer and Developer's
Principals further acknowledge that they have received the
disclosure documents required by the Federal Trade Commission trade
regulation rule entitled Disclosure Requirements and Prohibitions
Concerning Franchising and Business Opportunity Ventures, at least
ten (10) business days prior to the date on which this Agreement
was executed. Developer and Developer's Principals: (i) have had
ample time and opportunity to consult with their advisors
concerning the potential benefits and risks of entering into this
Agreement; (ii) have conducted such due diligence and investigation
as they desire; (iii) recognize that the business venture described
herein involves risks; and (iv) acknowledge that the success of
such business venture is dependent upon, among other factors
unrelated to Franchisor, the abilities of Developer and
Developer's Principals. FRANCHISOR EXPRESSLY DISCLAIMS THE MAKING
OF, AND DEVELOPER AND EACH OF DEVELOPER'S PRINCIPALS ACKNOWLEDGE
THAT THEY HAVE NOT RECEIVED OR RELIED UPON, ANY REPRESENTATION OR
WARRANTY, EXPRESS OR IMPLIED, AS TO THE POTENTIAL PERFORMANCE OR
VIABILITY OF THE BUSINESS VENTURE CONTEMPLATED BY THIS AGREEMENT.
12. DISPUTE RESOLUTION
12.1 Mediation Except for infringement of Proprietary Marks,
Animated Entertainment or other violation of Franchisor's
intellectual property rights, regarding which Franchisor may apply
for emergency, special, or injunctive relief, both Franchisor and
Developer will attempt in good faith to settle any dispute related
to this Agreement. If Franchisor and Developer are unable to do
so, they hereby agree to submit to non-binding mediation prior to
bringing such claim, controversy or dispute in a court. The
mediation shall be conducted through either an individual mediator
or a mediator appointed by a mediation services organization or
body, experienced in the mediation of food service business
disputes, as agreed upon by Franchisor and Developer. The costs
and expenses of mediation, including compensation of the mediator,
shall be borne by the parties equally. If the parties are unable
to resolve the claim, controversy or dispute within -------- (---)
days after the mediator has been appointed, unless such time period
is extended by written agreement of the parties, then either party
may bring a legal proceeding under the following to resolve such
claim,
[CONSIDER BINDING ARBITRATION CLAUSE]
12.2 Applicable Law Franchisor and Developer agree that this
Agreement shall be governed, construed and enforced in accordance
with the laws of the State of Texas without regard to its conflicts
of laws provisions.
12.3 Jurisdiction and Venue Franchisor and Developer hereby
irrevocably submit themselves to the jurisdiction of the state
courts of Dallas County, Texas and the Federal District Court for
the Northern District of Texas, Dallas Division. However, with
respect to any action (i) for monies owed, (ii) for injunctive or
other extraordinary relief, or (iii) involving ownership or use of
the Proprietary Marks or the Animated Entertainment, Franchisor may
bring such action in any state or federal district court which has
jurisdiction.
13. MISCELLANEOUS
13.1 Independent Contractors In performing this Agreement, the
parties specifically agree that Franchisor and Developer's
relationship is and always will be solely that of independent
contractors. Neither Franchisor or Developer shall not represent
itself or permit any of its employees, agents, servants, or
representatives to represent itself as an employee, agent, servant,
or joint venturer of the other. Neither party shall have no right
to and shall not attempt to enter into contracts or commitments in
the name of or on behalf of the other in any respect whatsoever.
13.2 Entire Agreement This Agreement and the Attachments hereto
constitute the entire agreement between Franchisor, Developer and
Developer's Principals concerning the subject matter hereof. All
prior agreements, discussions, representations, warranties and
covenants are merged herein. THERE ARE NO WARRANTIES,
REPRESENTATIONS, COVENANTS OR AGREEMENTS, EXPRESS OR IMPLIED,
BETWEEN THE PARTIES EXCEPT THOSE EXPRESSLY SET FORTH IN THIS
AGREEMENT. Except those permitted to be made unilaterally by
Franchisor, any amendments or modifications of this Agreement shall
be in writing and executed by Franchisor and Developer.
13.3 No Waiver Either party's failure to exercise any right or
remedy or to enforce any obligation, covenant or agreement herein
shall not constitute a waiver by, or estoppel of, such party's
right to enforce strict compliance with any such obligation,
covenant or agreement. No custom or practice shall modify or amend
this Agreement. Either party's waiver of, or failure or inability
to enforce, any right or remedy shall not impair such party's
rights or remedies with respect to subsequent default of the same,
similar or different nature. Acceptance of any payment shall not
waive any default.
13.4 Severability Should any term, covenant or provision hereof,
or the application thereof, be determined by a valid, final, non-
appealable order to be invalid or unenforceable, the remaining
terms, covenants or provisions hereof shall continue in full force
and effect without regard to the invalid or unenforceable
provision. In such event such term, covenant or provision shall be
deemed modified to impose the maximum duty permitted by law and
such term, covenant or provision shall be valid and enforceable in
such modified form as if separately stated in and made a part of
this Agreement. Notwithstanding the foregoing, if any term hereof
is so determined to be invalid or unenforceable and such
determination adversely affects, in Franchisor's reasonable
judgment, Franchisor's ability to preserve its rights in, or the
goodwill underlying, the Proprietary Marks, the Animated
Entertainment, the System and/or the Confidential Information, or
materially effects Franchisor's other rights hereunder, Franchisor
may terminate this Agreement upon notice to Developer.
13.5 Notice All notices required or desired to be given hereunder
shall be in writing and shall be sent by personal delivery,
expedited delivery service, return receipt requested or facsimile
to the following addresses or such other addresses as designated by
Franchisor or Developer in writing pursuant to this Section:
Notices to FRANCHISOR: Director of Franchising
ShowBiz Pizza Time, Inc.
4441 W. Airport Freeway
Post Office Box 152077
Irving, Texas 75062
Tel.
Fax.
Notices to DEVELOPER:
Tel.
Fax.
Notices posted by personal delivery or given by facsimile
shall be deemed given upon receipt. Notice to Developer shall
constitute notice to Developer's Principals.
13.6 Counterparts This Agreement may be executed in any number of
counterparts each of which when so executed shall be an original,
but all of which together shall constitute one (1) and the same
instrument.
13.7 Headings The section headings in this Agreement are for
convenient reference only and shall be given no substantive or
interpretive effect.
13.8 Further Assurances Franchisor and Developer shall execute and
deliver any and all additional papers, documents, and other
assurances and shall do any and all acts and things reasonably
necessary in connection with the performance of their obligations
hereunder and to carry out the intent of the parties hereto.
13.9 Compliance with Laws Developer agrees to comply at its sole
expense with all laws and regulations applicable to this Agreement
and the operation of the Franchised Restaurants.
[Signatures appear on following pages]
IN WITNESS WHEREOF, the parties hereto have fully executed and
delivered this Agreement on the day and year first above written.
SHOWBIZ PIZZA TIME, INC.
By:
Name:
Title:
STATE OF TEXAS S
S
COUNTY OF DALLAS S
Before me personally appeared------------- who, after being
duly sworn, says that he is the ------------- of ShowBiz Pizza
Time, Inc., a corporation, organized and existing under the laws of
Kansas, and that he has authority to execute under oath and has so
executed the above Agreement for and on behalf of such corporation
for such purposes therein contained.
WITNESS my hand and official seal this ---day of -----------,
19--.
(SEAL)
Notary Public
DEVELOPER:
By:
Name:
Title:
STATE OF S
S
COUNTY OF S
Before me personally appeared ---------- who, after being duly
sworn, says that he is the ---------- of --------, a (corporation)
(partnership), organized and existing under the laws of ----------,
and that he has authority to execute under oath and has so executed
the above Agreement for and on behalf of such (corporation)
(partnership) for the purposes therein contained.
WITNESS my hand and official seal this --- day of -------,
199-.
(seal) Notary Public
SCHEDULE 1.7
SCHEDULED DEVELOPER'S PRINCIPALS
ATTACHMENT "A" - FRANCHISE AGREEMENT
ATTACHMENT "B" - DEVELOPER'S PRINCIPALS CONFIDENTIALITY AGREEMENT
ATTACHMENT "C" - EMPLOYEE CONFIDENTIALITY AGREEMENT
ATTACHMENT "D" - GUARANTY
As an inducement to ShowBiz Pizza Time, Inc. ("Franchisor") to
execute the foregoing Development Agreement and the Attachments,
the undersigned, jointly and severally, hereby agree to be
individually bound by all the terms and conditions of the above
Development Agreement including any amendments or modifications
thereto whenever made (hereinafter the "Agreement") and
unconditionally and irrevocably guarantee to Franchisor and its
successors and assigns that all of Developer's obligations under
the Agreement will be punctually paid and performed.
Upon default by Developer or notice from Franchisor, the
undersigned will immediately make each payment and perform each
obligation required of Developer under the Agreement. Without
affecting the obligations of the undersigned under this Guaranty,
Franchisor may, without notice to the undersigned, renew, extend,
modify, amend or release any indebtedness or obligation of
Developer, or settle, adjust, or compromise any claims against
Developer.
The undersigned waive all demands and notices of every kind
with respect to this Guaranty and the Agreement, including, without
limitation, notice of the amendment or modification of this
Guaranty or the Agreement the demand for payment or performance by
Developer, any default by Developer or any guarantor, and any
release of any guarantor or other security for the Agreement or the
obligations of Developer.
Franchisor may pursue its rights against the undersigned
without first exhausting its remedies against Developer and without
joining any other guarantor hereto and no delay on the part of
Franchisor in the exercise of any right or remedy shall operate as
a waiver of such right or remedy, and no single or partial exercise
by Franchisor of any right or remedy shall preclude the further
exercise of such right or remedy.
Upon receipt by Franchisor of notice of the death of an
individual guarantor, the estate of such guarantor will be bound by
this Guaranty but only for defaults and obligations hereunder
existing at the time of death, and the obligations of the other
guarantors hereunder will continue in full force and effect.
IN WITNESS WHEREOF, each of the undersigned has signed this
Guaranty as of the date of the Agreement.
Witnesses: Guarantors:
STATE OF S
S
COUNTY OF S
Before me personally appeared the following persons, ------------,
- ---------------- who are known to me to be the persons who
executed the foregoing Guaranty and each acknowledged the same to
be his or her free act and deed for the purposes therein
contained.
WITNESS my hand and official seal this ---day of ----------,
199-.
Notary Public in and for
the State of ------------