License Agreement - La Salsa Franchise Inc., La Salsa Holding Co. and Fuddruckers Inc.
LA SALSA
LICENSE AGREEMENT
(FUDDRUCKERS)
<PAGE>
LA SALSA
LICENSE AGREEMENT
(FUDDRUCKERS)
TABLE OF CONTENTS
SECTION 1: GRANT OF LICENSE
1.1 Grant
1.2 Development and Operation
1.3 Additional Restaurants; Relocation
SECTION 2: TERM
2.1 Term
2.2 Removal; Termination Without Cause
SECTION 3: RESTAURANT SYSTEM AND PROCEDURES
3.1 Openings
3.2 Operation
3.3 The Manuals
3.4 Changes to the Manuals
3.5 Products and Services
3.6 Confidentiality
3.7 LSF Property
3.8 Covenants
3.9 Employees
3.10 Approved Suppliers
3.11 Proprietary Ingredients
SECTION 4: TRAINING
4.1 Initial Training
4.2 Certified Training
4.3 Training Employees
4.4 Continuing Training
4.5 Expenses
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SECTION 5: MAINTENANCE; MODERNIZATION
5.1 Repairs and Maintenance
5.2 Modernization
SECTION 6: FEES
6.1 Fees
6.2 No Fees Refundable
6.3 Payment of Fees
SECTION 7: MARKETING AND ADVERTISING
7.1 Marketing, Promotion and Advertising Programs
7.2 Local or Regional Advertising
7.3 Marketing Fund
7.4 Marketing Fund Policy
7.5 Temporary Investment
7.6 Advertising Co-op
7.7 Approval of Advertising
SECTION 8: ACCOUNTING AND RECORD KEEPING
8.1 Records
8.2 Sales Reports
8.3 Other Reports
SECTION 9: AUDITS AND INSPECTIONS
9.1 Audit Rights
9.2 Inspection
9.3 Books and Records
SECTION 10: INDEMNIFICATION
10.1 Indemnification
SECTION 11: INSURANCE
11.1 Insurance
11.2 Certificates
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SECTION 12: COVENANTS
12.1 Debts and Taxes
12.2 Compliance with Laws
SECTION 13: TRADEMARKS
13.1 Ownership
13.2 Goodwill
13.3 Use of Marks
13.4 Changes in Marks; Protection
13.5 Infringements
SECTION 14: TRANSFER
14.1 Personal Contracts; Definition
14.3 FUDDRUCKERS Franchisees
14.4 Assumption
14.5 Definition of "Change of Control"
SECTION 15: EXPIRATION AND TERMINATION
15.1 Termination for Cause
15.2 Requirements Upon Termination
SECTION 16: MISCELLANEOUS
16.1 No Effect
16.2 Right and Remedies
16.3 Consents
16.4 Partial Invalidity
16.5 Arbitration; Jurisdiction
16.6 Attorneys' Fees
16.7 Governing Law
16.8 Notices
16.9 Terms and Headings
16.10 Entire Agreement
16.11 Amendment or Modification
16.12 Counterparts
16.13 Facsimile Signatures
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LA SALSA
LICENSE AGREEMENT
THIS LICENSE AGREEMENT is made and executed as of February 14, 1996
("Effective Date") by and between La Salsa Franchise, Inc., a California
corporation with its principal place of business at Los Angeles, CA ("LSF") and
La Salsa Holding Co., a Delaware corporation ("Holding"), on the one hand, and
Fuddruckers, Inc., a Texas corporation, on behalf of itself and its subsidiaries
("Fuddruckers"), and DAKA International, Inc., a Delaware corporation ("DAKA"),
on the other hand.
RECITALS:
A. LSF and its parent Holding have developed a distinctive concept and
type of fresh Mexican grill restaurant featuring Mexican style food and related
items and beverages under the name "LA SALSA" (LA SALSA Restaurants").
B. Holding has authorized LSF to license others to use the various
trademarks and service marks employed in LA SALSA Restaurants, including the
federally registered mark "LA SALSA" (referred to together as the "Marks") and
to use the recipes, procedures and other techniques involved in operating a LA
SALSA Restaurant (the "Operating System").
C. Fuddruckers, a wholly-owned subsidiary of DAKA, has developed and
operates a chain of gourmet hamburger restaurants under the name "FUDDRUCKERS,"
which are well known and established on a national basis ("Restaurants").
D. DAKA and Fuddruckers desire that Fuddruckers obtain a license to use
the marks and Operating System in the operation of fresh Mexican grills (the
"Grills") to be included as part of the continued operation of certain
company-owned FUDDRUCKERS Restaurants which are now, and others which will be in
the future, mutually agreed upon by LSF and Fuddruckers.
E. LSF and Fuddruckers anticipate that in the future FUDDRUCKERS
franchisees will be offered the right to operate Grills as part of their
franchised FUDDRUCKERS restaurants under one or more additional agreements.
F. LSF is willing to grant a license to Fuddruckers upon the terms and
conditions set forth herein.
NOW THEREFORE, in consideration of the mutual promises contained in
this Agreement, the parties hereby agree as follows:
SECTION 1: GRANT OF LICENSE
1.1 Grant. LSF hereby grants Fuddruckers a limited license to use the
Marks and the Operating System solely in direct connection with the sale of LA
SALSA food, beverage and other products from Grills contained within Restaurants
identified and mutually agreed upon between LSF and Fuddruckers. The first
twenty Restaurants will be identified by the parties within six months after the
date of this Agreement and specified on Exhibit A-2 attached hereto and
incorporated herein by reference. A partial list is currently attached as
Exhibit A-1. Fuddruckers expressly acknowledges and agrees that LSF has granted
franchise development territories and franchise locations which include
protected territory provisions that may prevent the development and/or operation
of any Grills by Fuddruckers within such protected territories.
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1.2 Development and Operation.
(a) Fuddruckers agrees to use its best efforts to open and
operate Grills at such twenty Restaurants as soon as possible after execution of
this Agreement and in any event within six months after the date of this
Agreement. These Grills will be opened and operated by Fuddruckers as test units
which will contain the image, signage, size, menu items, equipment, fixtures,
personnel, point of sale systems and other aspects of LA SALSA operations as LSF
and Fuddruckers may agree upon as to each Grill.
(b) Prior to developing additional Grills beyond the first
twenty and before the end of the Initial Term (defined below), the parties will
set forth in writing the plans and specifications to be used by Fuddruckers in
opening and operating such additional Grills and will sign and attach such
document to this Agreement as Exhibit B. The parties will also specify on
Exhibit B the mutually acceptable procedures for selecting additional
Restaurants for installing Grills and for relocating Grills to other
Restaurants. Fuddruckers agrees to comply with all of such plans, specifications
and procedures unless it has received the prior written consent of LSF.
(c) Only company-owned FUDDRUCKERS restaurants operated by
Fuddruckers and its subsidiaries in the United States will be operated pursuant
to this Agreement. A current list of the addresses of the company-owned
FUDDRUCKERS Restaurants to which the parties anticipate a Grill may be added is
attached hereto and incorporated herein by reference as Exhibit C. Fuddruckers
may add additional Restaurants to such list with the prior written approval of
LSF which approval will not be unreasonably withheld. Prior to the end of the
initial Term (as defined below), and from time to time thereafter, Fuddruckers
will delete any Restaurant from such list whenever it concludes that no Grill
will be added to such Restaurant.
(d) DAKA agrees to cause Fuddruckers to meet all of its
obligations under this Agreement.
1.3 Additional Restaurants; Relocation. Fuddruckers may add one or more
Restaurant Grills to this Agreement by written agreement signed in each case by
both Fuddruckers and LSF prior to opening of the Grill for such Restaurant.
Fuddruckers will not relocate a Grill or any other part of the program from any
of the Restaurants without the prior written consent of LSF, which consent will
not be unreasonably withheld.
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1.4 Protected Territory.
(a) "Protected Territory" for purposes of this Agreement shall
mean the area within three existing city blocks of any Restaurant located in a
central business district or within a one-mile radius of any Restaurant located
elsewhere.
(b) During the term of this Agreement, neither LSF nor Holding
will own, operate or grant any franchise or license to own or operate a LA SALSA
Restaurant within the Protected Territory around a Restaurant containing a
Grill.
(c) During the three years following the Effective Date,
neither LSF nor Holding will own, operate or grant any franchise or license to
own or operate a LA SALSA Restaurant within the Protected Territory around a
Restaurant listed on Exhibit C or added to Exhibit C pursuant to either Sections
1.2(c) or 1.3.
(d) Fuddruckers and Daka acknowledge and agree that LSF will
during the term hereof continue the development of LA SALSA company and
franchise Restaurants within areas adjacent to such Protected Territories and
expects to grant franchise area development rights to third parties covering
such areas.
(e) If Fuddruckers gives written notice of cancellation during
the Initial Term under Section 2.1(a) below, LSF and Holding shall have no
continuing obligation under this Section 1.4.
SECTION 2: TERM
2.1 Term.
(a) This Agreement will be effective as of the Effective Date
set forth above and will continue for an initial term ending one year after the
Effective Date (the "Initial Term"), subject to earlier termination as expressly
provided for in this Agreement. Unless Fuddruckers gives written notice of
cancellation to LSF on or before thirty days prior to the end of the Initial
Term, this Agreement will automatically continue after the Initial Term for a
period ending on the tenth of the Effective Date.
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(b) Each Grill opened by Fuddruckers during each calendar year
may operate under the terms of this Agreement until December 31 of the calendar
year set forth in the following table:
Calendar Expiration
Year of Opening Date of License
1996 December 31, 2006
1997 December 31, 2007
1998 December 31, 2008
1999 December 31, 2009
2000 December 31, 2010
2001 December 31, 2006
2002 December 31, 2006
2003 December 31, 2006
2004 December 31, 2006
2005 December 31, 2006
2006 December 31, 2006
(c) Prior to the end of the ten-year term of this Agreement,
the parties may enter into an additional ten-year License Agreement regarding
Grills upon terms and conditions mutually satisfactory to the parties. So long
as the following conditions are met, Fuddruckers may at its option by written
notice to LSF extend this Agreement to operate the Grills for an additional
period for each Grill of ten years from the expiration date set forth in the
above table and add additional Grills under this Agreement for an extended
period ending on December 31, 2016 (the "Extended Term"), so long as it meets
the following conditions:
(i) Fuddruckers must give LSF written notice of extension not less than ninety
days before the end of the initial ten-year term;
(ii) Fuddruckers must not at the time of its written notice of extension be in
material default (as defined hereafter) of this Agreement without having
cured such default within the applicable cure period;
(iii)Fuddruckers must agree to make within a reasonable period agreed to by
Fuddruckers and LSF all required changes as set forth in a written notice
from LSF, including as examples, (A) additional training requirements and
(B) modernization of the Grills and their equipment such as redecorating
certain Grills and installing new equipment to reflect the then current LA
SALSA standards and image as set forth in the Manuals or in writings issued
by LSF; and
(iv) Fuddruckers and LSF will adjust to their satisfaction the amount of the
Fees referred to in Section 6.1 in order to reflect changes in such fees
charged by LSF at that time.
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(d) For purposes of this Agreement unless otherwise
specifically provided, "material default" shall be defined as a Grill's material
deviation from LA SALSA's recipes, basic menu, decor and trade dress as
described in Exhibit B.
2.2 Removal; Termination Without Cause.
(a) LSF agrees that after the Initial Term Fuddruckers may at
any time and from time to time upon thirty (30) days written notice to LSF
remove any Restaurant from this Agreement.
(b) LSF further agrees that after the initial Term Fuddruckers
may at any time upon thirty (30) days written notice to LSF terminate this
Agreement in full without cause.
(c) Fuddruckers agrees that upon the effectiveness of any such
removal or such termination, LSF and Holding shall have no further obligation
under Section 1.4 above as to any Restaurant to which such removal or
termination applies.
SECTION 3: RESTAURANT SYSTEM AND PROCEDURES
3.1 Openings. LSF will advise and assist Fuddruckers in opening and
operating each Grill, including attendance at each of the first three Grill
openings. LSF representatives will assist Fuddruckers in coordinating the
pre-opening activities for each Grill and will be available to assist with its
operations for up to five (5) days during the opening week or as reasonably
requested by Fuddruckers. Fuddruckers agrees to reimburse LSF or Holding
promptly following invoice for all of their reasonable travel, lodging and other
costs incurred in connection with living expenses in providing this in-store
training and assistance for each Grill opening. Fuddruckers will carry out an
advertising program designed for the opening of each Grill, as mutually agreed
upon between Fuddruckers and LSF.
3.2 Operation.
(a) Fuddruckers agrees that it will identify and appoint an
individual who will be its representative in managing the Restaurants, Grills
and who will devote his or her best efforts and personal attention to the day to
day operation of the Grills (the "Representative") Fuddruckers may change to
another Representative from time to time following written notice to LSF.
(b) Fuddruckers hereby authorizes and appoints the
Representative with full authority to act on behalf of Fuddruckers and DAKA in
regard to performing or administering this Agreement. LSF may deal completely
with the Representative in such regard unless and until its actual receipt of
written notice from Fuddruckers of cancellation of such authority.
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(c) Fuddruckers agrees that it will operate each LA SALSA
Grill in accordance with the LA SALSA standards of high quality and friendly
service which will at no time be less than the same degree of high quality and
friendly service that Fuddruckers otherwise requires at the operation of its own
FUDDRUCKERS restaurants, recognizing that an integral part of the Operating
System includes vary friendly treatment of customers.
(d) Without limitation, Fuddruckers specifically agrees to
comply with all health, safety and other laws applicable to the operation of
each Grill.
3.3 The Manuals. LSF will furnish Fuddruckers with one copy of its
current LA SALSA operations Manuals ("Manuals") for each Restaurant prior to the
opening of each Grill. Fuddruckers acknowledges and agrees that because the
recipes and procedures set forth in the Manuals are fundamental to the Operating
System and the way the public identifies the Marks with the LA SALSA food
products, it will strictly follow such procedures and recipes at all times and
will use only high quality ingredients in preparing such products consistent
with the same level of quality used in its own food products.
3.4 Changes to the Manuals.
(a) Fuddruckers specifically agrees that the Manuals are an
integral, necessary and material element of the Operating System and that it
will be necessary for LSF, in order to maintain the high quality of the
Operating System and maximize its competitive position, to revise and update the
Manuals from time to time. LSF has the right at any time and from time to time,
in the good faith exercise of its reasonable business judgment, to revise,
delete from and add to the materials contained in the Manuals. Subject to the
limitations described below, Fuddruckers expressly agrees to comply promptly
with all such changes to the Manuals that are applicable system-wide to LA SALSA
outlets. LSF will furnish Fuddruckers from time to time portions or all of the
Manuals as and when they are updated, and Fuddruckers will keep each of the
Manuals current at all times.
(b) In light of the limited menu to be served at the Grills
and their location within FUDDRUCKERS Restaurants, the parties agree that: (i)
during the Initial Term Fuddruckers will not be required to make any
expenditures of more than $1,000.00 per Grill to comply with changes to the
Manuals; and (ii) after the Initial Term, Fuddruckers will not more than once
during any twelve (12) month period be obligated to make expenditures of more
than $5,000.00 per Grill to comply with changes in the Manuals or to make any
such change if Fuddruckers and LSF agree in the reasonable exercise of their
business judgment that the expenditures would not be commercially reasonable in
light of the remaining term of this Agreement.
3.5 Products and Services. Fuddruckers agrees to offer for sale from
the Grill at each Restaurant the food, beverages and other products described in
Exhibit B unless Fuddruckers and LSF agree in writing to any exceptions to
Exhibit B.
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3.6 Confidentiality.
(a) Fuddruckers and DAKA each agree that Holding and LSF are
the owners of all rights in and to the Operating System, including the
information and materials described or contained in the Manuals, and that the
Operating System and Manuals contain trade secrets and themselves constitute
trade secrets of LSF which have been or will be revealed to Fuddruckers and/or
DAKA in confidence. Fuddruckers and DAKA each agree not to disclose, duplicate,
license, sell or reveal any portion thereof to any other person, except an
employee of Fuddruckers required by his or her work to be familiar with such
information. Fuddruckers and DAKA each agree to keep and respect all
confidential information received from LSF, to obtain from the Representative an
agreement to keep and respect all such confidences and to be responsible for
compliance by the Representative with such agreement.
(b) Fuddruckers and DAKA will pursuant to this Agreement
disclose to LSF and Holding confidential, proprietary and trade secret
information regarding Fuddruckers and DAKA. LSF agrees that it and Holding will
keep and respect all confidential information received from Fuddruckers and DAKA
and will not disclose, duplicate, license, sell or reveal any portion thereof to
any person, except any employee of LSF or Holding required by his or her work to
be familiar with such information.
3.7 LSF Property. The Manuals and all other confidential materials
furnished to Fuddruckers hereunder are on loan only, will remain the property of
LSF and are required to be returned to LSF immediately for any Grill which is no
longer being operated under this Agreement.
3.8 Covenants.
(a) Fuddruckers and DAKA each agree that LA SALSA Restaurants
must compete (by among other things introducing new products, conducting
advertising programs and establishing alternative distribution outlets) against
similar businesses which may have far greater financial resources and may be
better established in the restaurant industry. Therefore, Fuddruckers and DAKA
agree to use their best efforts to assure compliance throughout the term of this
Agreement with this Section 3.8.
(b) LSF recognizes and agrees that (i) FUDDRUCKERS Restaurants
currently sell certain Mexican style food items, (ii) that other DAKA
subsidiaries and affiliates sell unbranded Mexican style food items at
institutional and other retailer specialty outlets and (iii) that other DAKA
subsidiaries and affiliates are franchisees of other restaurant chains that
feature Mexican style food items.
(c) DAKA and Fuddruckers agree that during the term of this
Agreement and any extension and for a period of one year after its expiration or
termination, Fuddruckers will not (i) use the LA SALSA Marks, trade dress,
recipes and other proprietary parts of the Operating System without the prior
express written consent of LSF, (ii) do any act which is injurious or
prejudicial to the goodwill associated with the LA SALSA chain, the Operating
System or the value of the marks, (iii) operate under a different name any
restaurant chain similar to the LA SALSA chain of restaurants which feature
primarily Mexican style food and related items under a "taqueria" or "fresh
Mexican grill" concept.
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(d) Fuddruckers and DAKA each agree that any violation of this
Section 3.8 would result, in irreparable injury to LSF and its Operating system
and that LSF would be without an adequate remedy at law. Fuddruckers and DAKA
each therefore agree that in the event of a breach or threatened breach of any
such covenant, LSF may obtain, in addition to any other remedies which it may
have hereunder or at law or in equity, a temporary and/or permanent injunction
and a decree for specific performance of the terms of this section 3.8 without
the necessity of showing actual or threatened damage.
(e) The parties agree that each of the foregoing covenants
will be construed as independent of each other and of any other covenant or
provision of this Agreement. If all or any portion of a covenant in this section
3.6 is held unenforceable by a court having valid jurisdiction in a final
decision between the parties hereto and from which no appeal has or may be
taken, Fuddruckers expressly agrees to be bound by the remaining portion of such
covenant.
3.9 Employees. The parties each hereby agree that such party will not
knowingly recruit and hire any person employed by the other party or by any
other LA SALSA franchisee without first obtaining such other party's written
consent. The parties agree that in the event of a breach of this covenant,
actual damages would be extremely difficult to compute, and accordingly, in the
event of such a breach, the breaching party agrees to pay the prior employer of
such person liquidated damages equal to the greater of (a) such person a prior
annual salary or (b) the annual salary and any bonus and other benefits paid or
to be paid by the breaching party to such person during the first year of
employment.
3.10 Approved Suppliers. Fuddruckers agrees to purchase all products
for sale at the Grille from suppliers who are then approved in writing by LSF as
an approved LA SALSA supplier. If Fuddruckers wants to purchase any products
from a supplier who is not so approved, Fuddruckers will notify LSF of such
supplier and instruct the proposed supplier to contact LSF and follow LSF's
procedures for becoming an approved LA SALSA supplier. LSF may charge a $250.00
fee for the fees and costs involved in these approval procedures. LSF agrees
upon request by Fuddruckers to expedite the approval process if Fuddruckers
demonstrates that it has been unable to purchase sufficient supplies from
approved suppliers on a timely basis to meet its needs.
3.11 Proprietary Ingredients. Fuddruckers agrees to buy to the extent
required by the Manuals certain proprietary ingredients from LSF or a designated
approved supplier (which may be an affiliate of LSF). Fuddruckers understands
and agrees that such ingredients are prepared pursuant to secret, proprietary
recipes and/or procedures belonging to LSF or its affiliates. LSF agrees that if
reasonably requested by Fuddruckers, it will use its best efforts to have such
proprietary ingredients made available for sale by additional designated
approved suppliers, subject to strict confidentiality requirements and
reasonable fees which may be charged by LSF to such suppliers for approval and
regular inspections for compliance.
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SECTION 4: TRAINING
4.1 Initial Training. LSF will make available to the Representative and
those persons identified to act as Grill Training managers the LA SALSA
Restaurant operations Training Course. Fuddruckers agrees that the
Representative and each Grill Training Manager must attend and complete LSF's
Restaurant Operations Training Course to the reasonable satisfaction of LSF. All
or a portion of the Restaurant Operations Training Course may be waived in
writing by LSF.
4.2 Certified Training. LSF will make available to Fuddruckers a LA
SALSA Operations Training Course program for purposes of training Fuddruckers,
Grill Training Managers. Certification training will be conducted by a LA SALSA
training manager either at a Holding Restaurant or an operating Grill which has
been certified by LSF for training. Upon successful completion of the Training
Course to LSF's satisfaction, LSF will certify each such Training Manager for
the purpose of training other employees of Fuddruckers. It is expressly
understood and agreed that each certified Training Manager and each certified
training Grill must continue to meet, on an ongoing basis, LSF's established
criteria to maintain such status as certified for LA SALSA training.
4.3 Training Employees. Except as set forth specifically herein,
Fuddruckers will be responsible for the initial and continuing training of all
Grill employees.
4.4 Continuing Training. The Representative and such other employees as
LSF may designate will, from time to time as reasonably required by LSF,
personally attend and complete LSF-provided refresher courses in LA SALSA
operations and food preparation and any training sessions held for the purpose
of introducing new products or procedures.
4.5 Expenses. Fuddruckers agrees to pay LSF $2,500.00 for each
Fuddruckers employee who enrolls in the LA SALSA initial Restaurant Operations
Training Course and for each Certified Training Manager trained by LSF or
Holding. Such payment will be paid prior to each such person's commencement of
training. Operations refresher courses and new product or new procedure training
sessions will be tuition-free to Fuddruckers and Fuddruckers, eligible
employees. All other training costs and expenses will be the responsibility of
Fuddruckers, such as the cost of travel, lodging, meals and other related and
incidental expenses.
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SECTION 5: MAINTENANCE; MODERNIZATION
5.1 Repairs and Maintenance. Fuddruckers agrees to maintain each Grill
and other portions of each Restaurant consistent with its own high quality and
service standards applicable to all FUDDRUCKERS restaurants as well as with LA
SALSA's standards as set forth in the Manuals. Except as may be expressly
provided in Exhibit B or the manuals, no changes of any kind in design,
equipment or decor will be made in any Grill without the prior written approval
of LSF in each instance.
5.2 Modernization.
(a) Subject to the limitations sct forth below, Fuddruckers
agrees, from time to time as reasonably required by LSF (taking into
consideration cost and the then remaining term of this Agreement), to modernize
each Grill to LSF's then current standards and specifications. Fuddruckers
understands and agrees that this obligation is in addition to the need to make
repairs, maintain equipment and purchase new equipment. No such modernization
will be required by LSF unless and until LSF, Holding and their wholly owned
affiliates ("Affiliates") have at that time implemented such standards and
specifications in at least twenty-five percent (25%) of the LA SALSA Restaurants
operated by them in the continental United States. No such modernization will be
required of Fuddruckers during the last two years of any Grill's operation under
this Agreement.
(b) In light of the limited menu to be served at the Grills
and their location within Fuddruckers Restaurants, the parties agree that
Fuddruckers will not more than once during any twelve (12) month period be
obligated to make modernization expenditures of more than $15,000 per Grill or
to make any such change if Fuddruckers and LSF agree in the reasonable exercise
of their business judgment that tho expenditures would not be commercially
reasonable in light of the remaining term of this Agreement. The parties agree
that the foregoing $15,000 limit may be increased during the term hereof by any
increases in the Cost of Living index determined by reference to nationwide
United States governmental statistics as compared to those existing at the date
of this Agreement.
SECTION 6: FEES
6.1 Fees. As partial consideration for the rights granted by LSF,
Fuddruckers will pay LSF:
(a) (i) For each of the first twenty Restaurants at which a
Grill is opened, an "Initial" fee for each Grill in the total amount of
$6,275.00 due on or before the opening of such Grill; and (ii) for any
Restaurants after the first twenty at which a Grill is opened, an "Initial" fee
for each Grill in the total amount of $3,600.00 due on or before the opening of
such Grill;
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(b) A monthly "License Fee" equal to five percent (5%) of
Gross Sales (as defined below) as payment to LSF for the continuing right to use
the LA SALSA Operating System and Marks; and
(c) A "Marketing Fund" Fee for each such month as its
contribution to the Marketing Fund provided for in Section 7.3 below.
6.2 No Fees Refundable. Fuddruckers agrees that the fees referred to
above in Section 6.1 are not refundable in whole or part under any circumstances
and have been fully earned by LSF by the grant of this license.
6.3 Payment of Fees.
(a) Fuddruckers agrees to pay LSF the License Fees and
Marketing Fund Fees provided for above monthly in lump sum so that LSF will
receive all of such Fees within fifteen (15) calendar days after the end each
month. Fuddruckers agrees that TIME IS OF THE ESSENCE regarding payment of all
Fees.
(b) Fuddruckers agrees to pay the License Fees and Fees to LSF
by timely mailing or delivering of a or less of the Restaurants containing
Grills are DAKA or Fuddruckers to a party not a member of the Companies (as
defined below), LSF may by written that the License Fees and Marketing Fund Fees
for paid by automatic direct transfer of funds. Within ten (10) days after
receipt of such notice, the transferee must furnish the information, execute
such forms, make such arrangements and complete such procedures as are
reasonably necessary to establish direct transfers from its account(s) to such
account(s) as LSF may designate in order to pay directly the License and
Marketing Fund Fees within the payment period referred to above. Without
limiting the foregoing, the transferee must obtain a telefax machine and/or
computer point of sale system as designated by LSF and to make timely telefax or
modem reports to LSF of the sales and other information necessary to allow LSF
to cause such transfers to be made and must maintain sufficient funds in its
account(s) to allow timely honoring of each payment to LSF by its bank or other
financial institution. LSF will require the transferee to specifically authorize
LSF to make such direct transfers of the License Fees and Marketing Fund Fees so
long as such transfers are limited to amounts computed with reference to sales
information furnished to LSF or with reference to good faith estimates by LSF.
(c) Notwithstanding when Fees are required to be paid,
Fuddruckers agrees to provide written sales reports to LSF on a weekly basis as
reasonably required by LSF so that LSF may maintain current information
regarding sales information.
(d) License Fees and Marketing Fund Fees which are not paid
when due will bear interest from and after their respective due dates at the
rate of eighteen percent (18%) per annum or the highest rate permitted by law,
whichever is less. Any late payment of any fees must be accompanied by a late
payment administrative charge of $25.00.
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6.4 Gross Sales. The term "Gross Sales" as used in this Agreement will
mean the total of all cash or other form of payment ("Receipts") received by
Fuddruckers for the sale of LA SALSA food, beverages and other products,
including promotional items or for catering services involving LA SALSA
products. Gross Sales will include all sales of LA SALSA items that are
collected through any FUDDRUCKERS Restaurant so long as they are directly
related to the Grill. if a Grill does not collect Receipts directly for the
beverages sold with LA SALSA food products , the allocation of beverages to
Gross Sales shall be computed each month by applying the percentage of sales
from Receipts of LA SALSA food products at the Restaurant to the percentage of
Receipts from all food products at the Restaurant against the total beverage
Receipts received during such month by such Restaurant. Neither Gross Sales nor
Receipts shall include (a) any sums collected and paid out for sales taxes
levied on the sale of food, beverages, property or services, (b) the proceeds
from the sale of a Grill' s used equipment, (c) meals provided to Fuddruckers
employees according to established Fuddruckers policies, (d) sales for which
refunds are made due to customer dissatisfaction or (e) any discounts or coupons
which are applied against the full sales price.
SECTION 7: MARKETING AND ADVERTISING
7.1 Marketing, Promotion and Advertising Programs. Recognizing the
value of marketing, advertising and promotions to enhance the goodwill and
public image of the LA SALSA chain of restaurants, the parties agree that LSF
will develop marketing, promotion and advertising programs designed to promote
and enhance the collective success of all LA SALSA Restaurants including the
Grills. It is expressly agreed that in all respects of such marketing, promotion
and advertising (such as type, quantity, timing, placement and choice of media,
market areas and advertising agencies), the decisions of LSF made in good faith
will be final and binding. In regard to all advertising and sales promotion
programs, both parties agree to cooperate with each other and refrain from any
action which the other party may deem to be harmful to its image.
7.2 Local or Regional Advertising. Fuddruckers agrees to spend on a
quarterly basis a minimum dollar amount equal to two percent (2%) of its Gross
Sales from the Grills in conducting direct advertising and sales promotion
programs for the Grills. All such programs must be approved in advance by LSF in
writing, and such expenditures will not include any overhead related to
marketing or advertising. LSF specifically agrees that Fuddruckers may conduct
advertising that promotes the Grills in conjunction with the Restaurants. LSF
may require Fuddruckers to provide proof of all such marketing, promotion and
advertising expenditures. Payments made to an Advertising Cooperative ("Co-op")
for the area in which a Grill is located, as provided for below, will be applied
towards Fuddruckers, required spending.
<PAGE>
7.3 Marketing Fund.
(a) LSF has established and maintains a marketing Fund, and
Fuddruckers agrees that its purpose is to maximize the general public
recognition and acceptance of LA SALSA Restaurants. Monies from the Marketing
Fund must be used to pay for marketing, promotion and advertising program
development such as, but not limited to, costs and expenses related to the
employment of advertising agencies, payment of talent and residuals, research
and development, design and development of trademarks and logos, creation of
materials, promotions, public relations, market research and clearance of
marketing, advertising and promotional programs.
(b) In addition to the spending required by Section 7.2 above,
Fuddruckers agrees to pay LSF a Marketing Fund Fee of one percent (1%) of Gross
Sales from operating the Grills for each payment period as set forth above in
Section 6.
(c) LSF, at its sole discretion, may at any time increase the
Marketing Fund Fee in any increments so long as the total Marketing Fund Fee
does not exceed a maximum of two percent (2%) of Gross Sales.
(d) LSF, Holding and their wholly-owned Affiliates will also
contribute to the Marketing Fund the same percentage of the Gross Sales from
their operations of LA SALSA Restaurants in the continental United States.
(e) LSF will deposit all Marketing Fund Fees in a separate
Marketing Fund account which is not considered an asset of LSF.
(f) Fuddruckers agrees that LSF has so obligation to make
expenditures for Fuddruckers or others which are equivalent or proportionate to
the contributions made to the Marketing Fund or to ensure that any particular
Grill benefits directly or pro rata from any marketing program or advertising.
(g) It negotiations on behalf of the Marketing Fund result in
payment by suppliers of allowances or rebates designated for the Marketing Fund,
all such funds will be paid promptly into the Marketing Fund.
(h) All monies in the Marketing Fund, including any interest
or other income earned from the investment of such monies, must be spent and
disbursed only in accordance with this Agreement and the Marketing Fund Policy
provided for in Section 7.4 below.
(i) LSF agrees to cause an annual accounting of the Marketing
Fund and to make the results of such accounting available to Fuddruckers upon
request. If such accounting is made by an independent accounting firm, the
expenses thereof shall be paid from the marketing Fund.
<PAGE>
7.4 Marketing Fund Policy. LSF may develop and modify from time to time
as necessary a Marketing Fund Policy which will include procedures and
guidelines for disbursements and expenditures from the Marketing Fund and other
administrative procedures as LSF may deem necessary or appropriate.
7.5 Temporary Investment. LSF may temporarily invest any or all of the
monies held in the Marketing Fund from time to time at the sole discretion of
LSF in accordance with the Marketing Fund Policy. All interest or other income
received from such investments will be used by LSF to pay for the expenses of
administering the Marketing Fund pursuant to the Marketing Fund Policy. Interest
or income received from temporary investments that exceed the reasonable
expenses of administering the fund will be considered part of the Marketing
Fund.
7.6 Advertising Co-op.
(a) LSF may from to time at its discretion designate any
geographical area as a basis for an Advertising Co-op for the purpose of
marketing, advertising and promoting LA SALSA Restaurants in that area,
including the restaurants operated by Holding. The Co-op will also serve as a
means of exchanging of ideas, sharing of information and problem solving.
(b) Fuddruckers agrees to become a member of a Co-op at any
time a Grill is located within the designated area for such Co-op.
(c) For each such Co-op, Fuddruckers agrees to execute and
deliver any agreements or undertakings required by such Co-op, to make minimum
contributions as required by its members and to maintain Fuddruckers states as a
member in good standing of such Co-op at all times.
(d) The contribution to a Co-op will be not less than one
percent (it) or more than two percent (21) of Gross Sales unless the Co-op
members agree to additional funding in accordance with established Bylaws.
(e) Fuddruckers agrees that a failure by Fuddruckers to comply
with a properly approved requirement or decision of such Co-op will be a
material default under this Agreement.
7.7 Approval of Advertising.
(a) All advertising copy and other materials used by
Fuddruckers must be in strict compliance with the requirements contained in the
Manuals and otherwise set forth by LSF.
<PAGE>
(b) If Fuddruckers wishes to use other or modified materials,
Fuddruckers must submit to LSF, in each instance and at least 15 business days
prior to first use, the proposed advertising copy and materials for approval in
advance of publication. Fuddruckers may use only advertising materials which
have been approved in writing by LSF.
(c) In no event will Fuddruckers, advertising for Grills
contain any statement or material which may be considered (i) in bad taste or
offensive to the public or to any group of persons or (ii) defamatory of any
person or an attack on any competitor.
7.8 Grand Opening. Fuddruckers agrees to conduct for each Grill a grand
opening promotion as mutually agreed to in each case by LSF and Fuddruckers.
SECTION 8: ACCOUNTING AND RECORD KEEPING
8.1 Records. Fuddruckers will maintain and preserve for a minimum of
three (3) years from the date of preparation full, complete and accurate books,
records and accounts in accordance with generally accepted accounting principles
covering all of the Restaurants at which a Grill is or has been operated. LSF
and DAKA will from time to time as necessary work together in good faith and
agree upon the use by Fuddruckers of the appropriate electronic cash registers,
computer programs, bookkeeping and record keeping forms.
8.2 Sales Reports.
(a) Fuddruckers agrees to provide LSF with weekly Sales
Reports for each Grill using such forms as are mutually agreed upon between
Fuddruckers and LSF. Fuddruckers will transmit such reports by modem or other
electronic means as mutually agreed upon by the parties so that LSF will receive
each report within twenty-four hours after the end of each LSF sales week (which
currently begins on Tuesday and ends at the close of business on the following
Monday).
(b) Fuddruckers will also provide LSF with Sales Reports for
each Grill covering each Fuddruckers accounting period and each Fuddruckers
fiscal year. Such reports will be sent to LSF within thirty (30) calendar days
after each accounting period and ninety (90) calendar days after each fiscal
year, respectively. If the accounting period does not cover the same weeks as
the Weekly Sales Reports, the report will include a reconciliation showing each
week or partial week included in such report.
8.3 Other Reports. In addition, if the ownership of Fuddruckers changes
to the extent that there is a change of control (as defined below), LSF may
require additional reports and documents regarding operation of the Grills and
the Restaurants at which Grills are located similar to what it then requires of
its LA SALSA franchisees, such as:
<PAGE>
(a) Restaurant Profit and Loss Statements, Balance Sheets and
Statements of cash Flows for each accounting period designated by LSF, which
information may be unaudited but must be certified by Fuddruckers to be true and
accurate and which must be received by LSF not later than thirty (30) calendar
days after the end of the accounting period as prescribed by LSF;
(b) Annual Balance Sheet, Profit and Loss statement and
Statements of Cash Flow for each Restaurant, which information may be unaudited
but must be certified by Fuddruckers to he true and accurate and which must be
received by LSF not later than ninety (90) calendar days after the end Of each
fiscal year;
(c) Sales and income tax reports covering the Grills; and
(d) Any amendments or corrections of any of the foregoing,
which must be sent immediately to LSF following preparation.
TIME IS OF THE ESSENCE with respect to completion and submission of
each such document.
SECTION 9: AUDITS AND INSPECTIONS
9.1 Audit Rights. Fuddruckers agrees that LSF will at all times have
the following audit rights:
(a) Representatives of LSF may on a reasonable basis review,
inspect and copy any and all accounting records and other such documents as may
be reasonably necessary to audit Fuddruckers, compliance with this Agreement,
including documents held or maintained by other affiliates of Fuddruckers.
(b) If any such inspection or audit reveals that the Gross
Sales reported in any report or statement are less then the actual Gross Sales
calculated during such inspection, then Fuddruckers will immediately pay LSF the
additional amount of fees owing by reason of the understatement of Gross sales
previously reported, together with interest as provided in Section 6.3. In the
event that any report or statement by Fuddruckers understated gross sales by
more than three percent (3%) of the actual Gross Sales calculated during LSF's
inspection, Fuddruckers will, in addition to paying for the additional fees, pay
and reimburse LSF for any and all expenses incurred in connection with its
inspection, including, but not limited to, reasonable accounting and legal fees,
together with interest if such fees are not timely reimbursed. Such payments
will be without prejudice to any other rights or remedies LSF may have under
this Agreement or otherwise.
(c) In addition to the above, in the event that the ownership
of Fuddruckers changes to the extent there is a change of control (as defined
below), representatives of LSF may inspect and copy such other documents as may
be reasonably necessary to confirm Fuddruckers, compliance with this Agreement.
<PAGE>
9.2 Inspection. LSF will have the right at any time and from time to
time without notice to have its representatives enter the Restaurant premises
for the purpose of inspecting its condition and its operations for compliance
with LSF's requirements contained in this Agreement and in the Manuals, and for
any other reasonable purpose connected with the operation of a Grill.
9.3 Books and Records. Without limiting the generality of Section 9.1,
LSF representatives will have the right at all times during normal business
hours to confer with Restaurant employees and customers and to inspect
Fuddruckers, books, records and sales tax returns or ouch portions thereof as
pertain to the operation of any Grill.
SECTION 10: INDEMNIFICATION
10.1 Indemnification.
(a) Fuddruckers will indemnify LSF, Holding their subsidiaries
and other affiliates and its or their officers, directors, employees, agents,
affiliates, successors and assigns from and against (i) any and all claims based
upon, arising out of or in any way related to the operation or condition of any
part of the Restaurants or Restaurants' premises, the conduct of the
Restaurants, businesses, the ownership or possession of real or personal
property, any negligent act, misfeasance or nonfeasance by Fuddruckers or any of
its agents, contractors, servants or employees, and including, without
limitation, all obligations of Fuddruckers incurred pursuant to any provisions
of this Agreement and (ii) any and all fees (including reasonable attorneys,
fees), costs and other expenses incurred by or on behalf of LSF in the
investigation of or defense against any and all such claims.
(b) LSF and Holding will indemnify DAKA and Fuddruckers, their
subsidiaries and other affiliates and its or their officers, directors,
employees, agents, affiliates, successors and assigns from and against any and
all claims based upon, arising out of or in a any way related to (i) claims that
the operation of any Grill violates territorial exclusivity granted to a LA
SALSA franchisee or developer by LSF or Holding, (ii) claims that the operation
of any Grill breaches an express or implied contractual obligation owed by LSF
or Holding to any LA SALSA franchisee or developer or (iii) claims that the
operation of any Grill constitutes tortious conduct against any such LA SALSA
franchisee or developer so long as the operation of such Grill has been
expressly approved by LSF. such indemnification shall include any and all fees
(including reasonable attorneys' fees), costs and other expenses incurred by or
on behalf of LSF in the investigation of or defense against any and all such
claims.
<PAGE>
SECTION 11: INSURANCE
11.1 Insurance. Fuddruckers agrees to maintain at all times adequate
insurance regarding the operation of each Restaurant at which a Grill is located
consistent with its general policy regarding insurance at all of its
Restaurants. Such policy may include self-insurance so long as it is adequate to
ensure continued operation of the Grills. Fuddruckers will take such action as
is necessary to cause LSF and Holding to be named as additional insureds in all
liability policies covering the Grills so that Fuddruckers, LSF and Holding will
at all times be protected against any and all loss, liability or occurrence,
arising out of or in connection with the construction, condition, operation, use
or occupancy of the Grills, the Restaurants or the Restaurants' premises. In all
events the insurance policy or policies will include (a) comprehensive general
liability insurance, including product liability coverage, in an amount
sufficient to satisfy the requirements of the umbrella liability insurance
policy required below, (b) liquor liability coverage (if any alcoholic beverages
are offered for sale from the Restaurant) , (c) umbrella liability insurance
providing a minimum of $5,000,000 additional coverage, and (d) workers,
compensation insurance as required by applicable law. Fuddruckers obligation to
maintain such insurance will not be limited in any way by reason of any
insurance maintained by LSF. LSF may require additional insurance if there is
any change in control of Fuddruckers or the Grill.
11.2 Certificates. Upon obtaining the insurance required by this
Agreement and on each policy renewal date thereafter, Fuddruckers will deliver
to LSF for its approval certificates of insurance showing compliance with the
requirements of this Section 11. Such certificates must state that the policy or
policies will not be canceled or altered without at least thirty (30) days,
prior written notice to LSF. Maintenance of such insurance and the performance
by Fuddruckers of its obligations under this Section 11 will not relieve
Fuddruckers under the indemnity provisions of this Agreement or limit such
liability.
SECTION 12: COVENANTS
12.1 Debts and Taxes. Fuddruckers will pay promptly when due all debts
and other obligations incurred directly or indirectly in connection with the
Restaurants and their operation; including, without limitation, all taxes and
assessments that may be assessed against the Restaurants' land, building and
other improvements, equipment, fixtures, signs, furnishings and other property,
and all undisputed liens and encumbrances of every kind and character incurred
by or on behalf of Fuddruckers in conducting the Restaurants' business.
Fuddruckers may contest any ouch debt or obligation in good faith so long as
such contest will not result in the loss of the Restaurant premises or
interruption of the Restaurant's operation.
12.2 Compliance with Laws. Fuddruckers will at its own cost and expense
promptly comply with all laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments and appropriate
departments, commissions, boards and offices thereof. Without limiting the
generality of the foregoing, Fuddruckers will abide by all applicable rules and
regulations of any Public Health Department.
<PAGE>
SECTION 13: TRADEMARKS
13.1 Ownership. Fuddruckers agrees that LSF has the sole and exclusive
right (except for rights granted under existing and future franchise or license
agreements) to use the Marks in connection with the products and services to
which they are or may be applied by LSF. Fuddruckers represents, warrants and
agrees that neither during the term of this Agreement nor after its expiration
or other termination will Fuddruckers directly or indirectly contest or aid in
contesting the validity, ownership or use of the Marks by LSF or take any action
whatsoever in derogation of the rights claimed therein by LSF.
13.2 Goodwill. Nothing contained in this Agreement will be construed to
vest in Fuddruckers any right, title or interest in or to the Marks, the
goodwill now or hereafter associated therewith or any right in the design of any
Grill, other than the rights and license expressly granted herein during the
term hereof. Any and all goodwill associated with or identified by the Marks
will inure directly and exclusively to the benefit of LSF, including without
limitation any goodwill resulting from operation and promotion of the Grills.
13.3 Use of Marks. Fuddruckers will not use the Marks in connection
with any statement or material which may, in the judgment of LSF, be in bad
taste or inconsistent with LSF's public image, or tend to bring disparagement,
ridicule or scorn upon LSF, the Marks or the goodwill associated therewith.
13.4 Changes in Marks; Protection. LSF will have the right at any time
and from time to time upon notice to Fuddruckers to make additions to, deletions
from, and changes in the Marks, or any of them, all of which additions,
deletions and changes will be as effective as if they were incorporated in this
Agreement. All such additions, deletions and changes will be made in good faith,
on a reasonable basis and with a view toward the overall beat interest of the LA
SALSA Restaurants. LSF will protect and preserve the integrity and validity of
the marks by taking the actions deemed by LSF in its discretion to be
appropriate in the event of any apparent infringement of the Marks.
13.5 Infringements. Fuddruckers will notify LSF promptly of any claims
or charges of trademark infringement against LSF or Fuddruckers, as well as any
information Fuddruckers may have of any suspected infringement of the Marks.
Fuddruckers will take no action with regard to such matters without the prior
written approval of LSF and will cooperate in a manner expressly approved by
LSF.
<PAGE>
SECTION 14: TRANSFER
14.1 Personal Contracts; Definition.
(a) Fuddruckers agrees that a material part of the
consideration for LSF's entering into this Agreement is the personal confidence
reposed in Fuddruckers and its management. No person will succeed to any of the
rights of Fuddruckers under this Agreement by virtue of any voluntary or
involuntary proceeding in bankruptcy, receivership, attachment, execution,
assignment for the benefit of creditors, other legal process or transfer not
expressly authorized by LSF.
(b) Fuddruckers or DAKA may transfer interests herein among
members of the DAKA Family of Companies so long as DAKA and Fuddruckers remain
fully responsible for compliance with this Agreement and LSF is given prior
written notice of such transfer.
(c) For purposes of this Agreement, the DAKA Family of
Companies is defined as any corporation, partnership, joint venture or other
entity more than fifty percent (50%) of which is owned directly or indirectly by
DAKA.
14.2 Material Breach. Any attempt by Fuddruckers to transfer any of its
rights or interest under this Agreement will constitute a material breach of
this Agreement, and in such event LSF will have the right to terminate this
Agreement upon written notice to Fuddruckers. LSF will not be bound by any
attempted transfer in any manner whatsoever, by law or otherwise, of any of
Fuddruckers, rights or interests under this Agreement.
14.3 FUDDRUCKERS Franchisees. While the parties intend for LSF to grant
Grill licenses to FUDDRUCKERS franchisees as part of this program, the terms and
conditions of such licenses have not been agreed upon between these parties at
the time of this Agreement. The parties will negotiate in good faith during the
Initial Term to reach mutual agreement in regard to such licenses, including any
transfers by Fuddruckers to a franchisee of an existing Restaurant containing a
Grill. No such transfer will be allowed hereunder until such time.
14.4 Assumption. This Agreement and LSF's rights, interests and
obligations hereunder will inure to the benefit of any entity which succeeds to
the business of LSF and assumes the obligations of LSF hereunder. Subject only
to notice thereof, Fuddruckers hereby consents and agrees to any such transfer.
14.5 Definition of "Change of Control". The parties agree that for all
purposes of this Agreement, a "change of control" of ownership shall be defined
as any change of more than fifty percent (50%) of the beneficial or record
ownership of Fuddruckers and Fuddruckers or the surviving entity has a net worth
which is less than that of DAKA on a consolidated basis as of the Effective
Date.
<PAGE>
SECTION 15: EXPIRATION AND TERMINATION
15.1 Termination for Cause.
(a) LSF will have the right to terminate this Agreement
immediately upon written notice to Fuddruckers if a petition in bankruptcy, an
arrangement for the benefit of creditors or a petition for reorganization is
filed by or against Fuddruckers, or if Fuddruckers will make any assignment for
the benefit of creditors, or if a receiver or trustee is appointed for any one
of the Restaurants, unless remedied to the satisfaction of LSF within twenty
(20) days.
(b) In the event of any material failure by Fuddruckers to
make its payment obligations hereunder, LSF may terminate this Agreement in full
following ten (10) days written notice to Fuddruckers and DAKA unless such
delinquency has been cured within such ten day period.
(c) LSF may terminate the right of any Grill to operate under
his Agreement in the event of any substantial non-monetary default of this
Agreement as applied to such Grill. Fuddruckers will have the right to cure such
default during the period ending thirty (30) days after receipt from LSF or its
authorized representative of a written notice of default, except that if such
default cannot by its nature reasonably be cured within such thirty-day period,
and so long as Fuddruckers is diligently taking all action reasonably necessary
to effect such cure, the cure period will be extended to a reasonable amount of
time to effect such cure. If such default has not been cured by the end of the
applicable cure period, this Agreement will automatically terminate as to such
Grill.
(d) if a non-monetary default is a material default (as
defined in Section 2.1 above) and that material default has not been cured by
the end of the applicable cure period, this Agreement will automatically
terminate as to such Grill, and Fuddruckers agrees to pay LSF as liquidated
damages the amount of $25,000.00 for each Grill in such material default, with
the parties agreeing that actual damages are extremely difficult to ascertain
for any such default and that the foregoing liquidated damages are a reasonable
estimate thereof and for the costs to LSF of enforcing this Agreement.
(e) if at any time one-fifth (20%) of the Grills operating
under this Agreement have failed during the applicable cure period to cure
material defaults under subsection (d) above or to pay LSF its liquidated
damages thereunder, LSF may immediately terminate this Agreement in full upon
written notice to DAKA and Fuddruckers.
(f) In the event of any termination in full or as to any
Grill, LSF will have no further obligation under Section 1.4 above as to any
Restaurant no which such termination applies.
<PAGE>
15.2 Requirements Upon Termination. Upon the expiration, termination or
cancellation for whatever reason of the operation of a Grill under this
Agreement, Fuddruckers must in regard to each such Grill:
(a) immediately discontinue the use of the marks and the
Operating System, including all LA SALSA recipes;
(b) unless LSF consents to the contrary, remove the Marks
from all buildings, signs, fixtures and furnishings in each Restaurant,
eliminate entirely LSF's trade dress and alter and paint the Grills with a
design and color which is basically different from LSF's authorized design and
painting schemes so that there will no longer be any indication to the public
that the Restaurant was used to sell LA SALSA products. If Fuddruckers fails to
make or cause to be made any such change within thirty (30) days after written
notice, LSF will have the right to enter upon any Restaurant premises, without
being deemed guilty of trespass or any other tort, and make or cause to be made
such changes, and Fuddruckers will reimburse LSF for all of its reasonable
expenses immediately following demand;
(c) return to LSF all copies of the manuals, advertising and
promotional materials and other proprietary information relating to LA SALSA
Restaurants; and
(d) not thereafter use any identifying characteristic that is
in any way associated with LA SALSA or similar to those associated with LA
SALSA, or operate or do business under any name or in any manner that might tend
to give the public the impression that Fuddruckers is or was a licensee of or
otherwise associated with LSF and LA SALSA.
SECTION 16: MISCELLANEOUS
16.1 No Effect. The waiver by either party of any breach or default, or
series of breaches or defaults, of any term, covenant or condition herein or of
any same or similar term, covenant or condition in any other agreement between
LSF and Fuddruckers will not be deemed a waiver of any subsequent or continuing
breach or default of the same or any other terms, covenants or conditions
contained in this Agreement, or in any other agreement between LSF and
Fuddruckers.
16.2 Right and Remedies. All rights and remedies of a party will be
cumulative and not alternative, in addition to and not exclusive of any other
rights or remedies provided for herein or which may be available at law or in
equity in case of any breach, failure or default or threatened breach, failure
or default of any term, provision or condition of this Agreement. All rights and
remedies will be continuing and not exhausted by any one or more uses thereof
and may be exercised at any time or from time to time as often as may be
expedient Any option or election to enforce any such right or remedy may be
exercised or taken at any time and from time to time. The expiration or earlier
termination of this Agreement will not discharge or release Fuddruckers from any
liability or obligation then accrued or any liability or obligation continuing
beyond or arising out of the expiration or earlier termination of this
Agreement.
<PAGE>
16.3 Consents. Whenever the consent of a party is sought or required
hereunder, such consent will not be unreasonably withheld.
16.4 Partial Invalidity. If any part of this Agreement will for any
reason be declared invalid, unenforceable or impaired in any way, the validity
of the remaining portions will not be affected thereby, and such remaining
portions will remain in full force and effect as if this Agreement had been
executed with such invalid portion eliminated. it is hereby declared the
intention of the parties that they would have executed the remaining portion of
this Agreement without including therein any such portions which might be
declared invalid.
16.5 Arbitration; Jurisdiction. Except as set forth in this Section
16.5, any dispute between the parties which involves this Agreement and cannot
be resolved by the parties themselves will be submitted to binding arbitration
in accordance with the rules of the American Arbitration Association applicable
to commercial arbitrations. Such arbitration will be held within either the
county where LSF's executive headquarters are located or the county where DAKA's
executive headquarters are located (the "Home Counties"), and judgment upon the
decision of the arbitrator may be entered in any court having jurisdiction over
the matter. However, arbitration will not be used for any dispute which involves
Fuddruckers, continued usage of any of the Marks or the Operating System or any
issue involving injunctive relief against any party, all of which issues will be
submitted initially to a court within a Home County. The parties expressly
consent to personal jurisdiction in either Home County as set forth above and
agree that such court(s) will have exclusive jurisdiction over any such issues
not subject to arbitration.
16.6 Attorneys' Fees. If either party initiates any arbitration or
other legal proceeding which involves issues arising out of this Agreement, the
prevailing party in such action will be paid its reasonable attorneys, fees and
costs by the other party.
16.7 Governing Law. The parties agree that the law of the State of
California will apply to the construction and enforcement of this Agreement and
govern all questions which arise with reference hereto.
16.8 Notices. All notices and other communications required or
permitted to be given hereunder will be deemed given when delivered in person,
sent by telefax to such person's telefax number, sent by an established
overnight delivery service or mailed by registered or certified mail addressed
to the recipient at the address set forth below, unless that party will have
given such written notice of change of address to the sending party, in which
event the new address so specified will be used. It mailed, such notice shall be
deemed to have been received three days after mailing, and if sent by overnight
delivery, such notice shall be deemed to have been received the day following
sending.
<PAGE>
LSF and La Salsa Franchise, Inc.
Holding: 11601 Santa Monica Blvd.
Los Angeles, CA 90025
ATTN: The President
FUDDRUCKERS: Fuddruckers, Inc.
One Corporate Plaza
55 Ferncroft Road
Danvers, MA 01923-4001
ATTN: General Counsel
DANA: DANA International, Inc.
One Corporate Plaza
55 Ferncroft Road
Danvers, MA 01923-4001
ATTN: Sr. VP & General Counsel
16.9 Terms and Headings. All terms used in this Agreement regardless of
the number and gender in which they are used, will be deemed and construed to
include any other number, singular or plural, and any other gender, masculine,
feminine or neuter, as the context or sense of this Agreement may require, the
same as if such words had been written in this Agreement themselves. The
headings inserted in this Agreement are for reference purposes only and will not
affect the construction of this Agreement or limit the generality of any of its
provisions.
16.10 Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement between the parties and supersede and
cancel any and all prior and contemporaneous agreements, understandings,
representations, inducements and statements, oral or written, of the parties in
connection with the subject matter hereof.
16.11 Amendment or Modification. Except as expressly authorized herein,
no amendment or modification of this Agreement will be binding unless executed
in writing by both LSF and Fuddruckers.
16.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original of this Agreement, but
all of which together shall constitute one and the same instrument.
16.13 Facsimile Signatures. The parties agree that signed copies of
this Agreement sent to the other parties by telefax or other facsimile
transmission will be considered binding on such signing party the same as if
delivered personally. Each party will thereafter send to each of the other
parties an originally signed copy of this Agreement for such party's records.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
FUDDRUCKERS: FUDDRUCKERS, INC.
By
Title:
DAKA: DAKA INTERNATIONAL, INC.
By
Title:
LSF: LA SALSA FRANCHISE, INC.
By
President
HOLDINGS: LA SALSA HOLDING CO.
By
President
<PAGE>
EXHIBIT A-1
FUDDRUCKERS/LA SALSA LOCATIONS
(February 14, 1996)
1. Park Plaza Center
340 Third Avenue
Chula Vista, CA 91910
2. 5500 Grossmont Center
La Mesa, CA 92041
3. Hastings Ranch Plaza
3883 E. Foothill Boulevard
Pasadena, CA 91107
4. Lakewood Center Mall
5229 North Clark St.
Lakewood, CA 90714
<PAGE>
EXHIBIT A-2
(To Come)
<PAGE>
EXHIBIT B
(To Come)
<PAGE>
EXHIBIT C
FUDDRUCKERS RESTAURANT LOCATIONS
February 14, 1996
ALABAMA
3440 Galleria Circle #135
Birmingham, AL 35244
CALIFORNIA
Rolling Hills Plaza SC #050
2549 Pacific Coast Highway
Torrance, CA 91107
Park Plaza Center #055
340 3rd Avenue
Chula Vista, CA 91941
Lakewood Center Mall #078
5229 North Clark Street
Lakewood, CA 90714
GEORGIA
240 Perimeter Center
Parkway #015
Atlanta, GA 30060
Peachtree Corners #065
3384 Holcombe Bridge Road
Norcross, GA 30092
Northlake Tower Festival
#091
3953 La Vista Road
Tucker, GA 30084
3953 La Vista Road
Tucker, GA 30084
1086 S. Baxter Street #185
Athens, GA 30606
Gwinnett Mall #220
2180 Merchants Way
Duluth, GA 30136
<PAGE>
FUDDRUCKERS RESTAURANT LOCATIONS
January 17, 1996
Town Center Mall #223
2708 Town Center Drive
Kennesaw, GA 30144
6360 Northpoint Parkway #233
Alpharetta, GA 30210
ILLINOIS
1500 Branding Lane #067
Downes Grove N. IL 60515
7731 Lemont Road #129
Downers Grove, S. IL 60515
1000 Rohlwing #188
Addison, IL 60101
4250 Fox Valley Center Drive #201
Aurora, IL 60504
1538 Clavey Road #057
Highland Park, IL 60035
300 Town Center #090
Matteson, IL 60443
1990 River Oaks Drive #105
Calumet City, IL 60409
1151 E. Dundee Road #134
Palatine, IL 60067
15756 South Harlem Avenue #213
Orland Park, IL 60452
(Barrington Road) #240
395 Barrington Road
Schaumburge, IL 60193
<PAGE>
INDIANA
95 West 81st Avenue #226
Merrillville, IN 46410
IOWA
Fuddruckers Express Care #259
1050 Southtown Drive
Waterloo, IA 50702
KENNTUCKY
(Turfway) #239
135 Hansel Avenue
Florence, KY 41042
MARYLAND
Annapolis Restaurant Park #065
175 Jennifer Road
Annapolis, MD 21401
125 Market Street #143
Baltimore, MD 21202
1300 Rockville Pike #174
Rockville, MD 20852
17111 Darnestown Road #218
Gaithersburg, MD 20878
1700 Riverstown Road #247
Pikesville, MD 21208
MASSACHUSETTS
(City Place) #150
27 Stuart Street
Boston, MA 02116
900 Broadway #151
Saugus, MA 01906
<PAGE>
MICHIGAN
4061 28th Street SE #166
Kentwood, MI 49512
MINNESOTA
3801 West 77th Street #043
Bloomington, MN 55435
2740 N. Snelling Avenue #060
Roseville, MN 55113
Park Place W. Office Center #073
6445 Wayzata Boulevard
St. Louis Park, MN 55337
8955 Spring Brook Road #242
Coon Rapids, MN 55433
5800 Shingle Creek Parkway #248
Brooklyn Center, MN 54430
MISSOURI
10752 Sunset Plaza #132
St. Louis, MO 63127
2175 Barrett Station Road #141
St. Louis, MO 63131
12333 Dorsett Road #207
Maryland Heights, MO 63043
OHIO
(Beechmont) #228
7705 Five Mile Road
Cincinati, OH 45230
(Winton Rd) #230
11992 Chaser Plaza Drive
Forest Park, OH 45740
<PAGE>
(Fields Ertel) #237
9996 Escott Drive
Mason, OH 45040
(Glenway) #238
6421 Glenway Avenue
Cincinnati, OH 45211
(Rookwood Pavilion( #245
2692 Madison Road Suite 3K
Norwood, OH 45206
(Crosswoods) #266
121 East Campus View Blvd.
Columbus, OH 43234
TEXAS
8602 Botts Lane #001
San Antonio, TX 78216
3100 Chimney Rock #002
Houston, TX 77056
9845 IH-10 West #003
San Antonio, TX 78230
2700 West Anderon Lane #004
Austin, TX 78757
(Willowbrook) #005
7611 FM 1960 West
Houston, TX 77070
(Greens Road) #007
403 Greens Road
Houston, TX 77060
2040 Nasa Road One #008
Clearlake, TAX 77058
855 Normandy #009
Houston, TX 77015
<PAGE>
(Brodie Oaks) #011
4024 South Lamar
Austin, TX 78704
2475 Kirkwood #013
Houston, TX 77077
11950 Kurland #026
Houston, TX 77034
3644 Irving Mall #063
Irving, TX 75062
115 Alamo Plaza #084
San Antonio, TX 78205
West Park Plaza (Ingram)
#106
6759 N.W. Loop 410
San Antonio, TX 78238
2205 North Central
Expressway #118
Suite 100
Plano, TX 75075
5080 Spectrum Drive #124
Suite 111W
Dallas, TX 75248
2290 Buckthorne Place #024
Woodlands, TX 77381
3301 FM 1960 West #200
Houston, TX 77068
10500 Town & Country #231
Houston, TX 77024
4360 Kingwood Drive #232
Kingwood, TX 77339
13010 N.W. Freeway #246
Houston, TX 77040
<PAGE>
(Copperfield) #269
7250 Highway 6 North
Houston, TX 7095
VIRGINIA
8317 West Broad Street #079
Richmond, VA 23229
4300 Backlick Road #083
Annandale, VA 22003
4625 Virginia Beach Blvd. #114
Virginia Bch., VA 23462
6201 Arlington Blvd., #142
Falls Church, BA 22011
1030 Elden Street #177
Herndon, VA 22070
3575 Chain Bridge Rd. #199
Fairfax, VA 22030
4141C Duke Street #209
Alexandria, VA 22134
1105 Merchants Way #243
Chesapeake, VA 23328
773 South Park Blvd. #249
Colonial Heights, VA 23834
101 Regal Avenue #250
Newport News, VA 23602
101 Midlothian Turnpike #260
Midlothian, VA 23235
2871 Plank Rd. #252
Fredericksburg, VA 22407
<PAGE>
(Potomac Mills) #264
14075 Shoppers Best Way
Woodbridge, VA 22193
WISCONSIN
160 West Bluemound #053
Brookfield, WI 53005
<PAGE>
UNDER DEVELOPMENT
CHESAPEAKE SQUARE, VA
2400 Chesapeake Square Ring Rd., Chesapeake, VA 23321
EDEN PRARIE, MN
11825 Technology Dr., Eden Prarie, MN 55344
CLEVELAND AVE., OH
6146 Cleveland Avenue, Columbus, OH 43231
MAPLE GROVE, MN
14500 Weaver Lake Road, Maple Grove, MN 55231
SUN CENTER, OH
3586 West Dublin Granville Road, Columbus, OH 43235
EAST MAIN, OH
5271 East Main St., Columbus, OH 43213
NO. ANDOVER, MA
Crossroads Shopping Center, Turnpike Street, No. Andover, MA 01845
SNELLVILLE, GA
1915 Scenic Highway (Presidential Market Ctr.), Snellville, GA 30278
AUSTIN, TX
6607 135 Frontage Rd., North Bound, Austin, TX 78752
GREENWAY PLAZA, (Houston) TX
3929 Southwest Freeway, Houston, TX 77027
STOUGHTON, MA
Turnpike Street, Rout 139, Stoughton Crossing, Stoughton, MA (zip N/A)
EAGAN, MN
Eagan Promenade
FREDERICK, MD
Westview Restaurant Park, Frederick, MD
MILFORD, MA
Quarry Square Mall, Milford, MA
COLUMBIA, MD
Lakeside Shopping Center, Columbia, MD
EASTON, OH
Morse Rd. and I-270, Easton, OH