<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 27, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________________
Commission file number 1-9573
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UNO RESTAURANT CORPORATION
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(Exact name of registrant as specified in its charter)
DELAWARE 04-2953702
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 CHARLES PARK ROAD, WEST ROXBURY, MASSACHUSETTS 02132
--------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(617) 323-9200
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(Registrant's telephone number, including area code)
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
As of July 30, 1999, 10,173,378 shares of the registrant's Common
Stock, $.01 par value, were outstanding.
<PAGE>
UNO RESTAURANT CORPORATION
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS............................3
Consolidated Balance Sheets --
June 27, 1999 and September 27, 1998............3
Consolidated Statements of Income --
Thirteen and thirty-nine weeks ended
June 27, 1999 and June 28, 1998.................4
Consolidated Statements of Cash Flows --
Thirty-nine weeks ended June 27, 1999 and
June 28, 1998...................................5
Notes to Consolidated Financial
Statements......................................6
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.......................8
ITEM 3. QUANTITATIVE AND QUALITATIVE
DISCLOSURE ABOUT MARKET RISKS..................14
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...............15
</TABLE>
2
<PAGE>
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except share data)
<TABLE>
<CAPTION>
June 27, Sept.27,
1999 1998
--------- ---------
(Unaudited)
ASSETS
<S> <C> <C>
CURRENT ASSETS
Cash $ 1,311 $ 2,030
Accounts receivable, net 1,804 1,784
Inventory 2,449 2,296
Prepaid expenses and other assets 289 815
--------- ---------
TOTAL CURRENT ASSETS 5,853 6,925
PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS
Land 18,373 16,874
Buildings 30,115 27,823
Leasehold improvements 99,526 93,324
Equipment 56,962 52,536
Construction in progress 1,964 3,309
--------- ---------
206,940 193,866
Less allowance for depreciation and amortization 77,858 68,543
--------- ---------
129,082 125,323
OTHER ASSETS
Deferred income taxes 8,337 7,450
Royalty fee 93 157
Liquor licenses and other assets 3,988 3,340
--------- ---------
$147,353 $143,195
--------- ---------
--------- ---------
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 6,430 $ 6,589
Accrued expenses 9,452 7,949
Accrued compensation and taxes 3,051 2,666
Income taxes payable 1,355 995
Current portion of long-term debt and capital
lease obligations 4,090 4,081
--------- ---------
TOTAL CURRENT LIABILITIES 24,378 22,280
Long-term debt, net of current portion 38,958 38,676
Capital lease obligations, net of current portion 521 666
Other liabilities 8,427 7,904
SHAREHOLDERS' EQUITY
Preferred Stock, $1.00 par value, 1,000 shares
authorized, none issued
Common Stock, $.01 par value, 25,000 shares authorized, 13,807 and 13,776
shares issued and outstanding in Fiscal Years 1999 and 1998, respectively 138 138
Additional paid-in capital 54,129 53,944
Retained earnings 47,628 42,203
--------- ---------
101,895 96,285
Treasury Stock (3,728 and 3,175 shares at cost,in
Fiscal Years 1999 and 1998, respectively) (26,826) (22,616)
--------- ---------
TOTAL SHAREHOLDERS' EQUITY 75,069 73,669
--------- ---------
$147,353 $143,195
--------- ---------
--------- ---------
</TABLE>
3
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands except per share data)
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED THIRTY-NINE WEEKS ENDED
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
REVENUES
Restaurant sales $ 49,766 $ 45,288 $141,417 $130,171
Consumer product sales 2,533 2,475 7,400 7,083
Franchise income 1,249 1,190 3,729 3,349
-------- -------- -------- --------
53,548 48,953 152,546 140,603
COSTS AND EXPENSES
Cost of sales 13,292 12,311 39,397 35,477
Labor and benefits 16,197 14,940 46,617 43,236
Occupancy 7,267 7,065 21,598 21,025
Other operating costs 4,627 4,567 13,315 13,369
General and administrative 4,313 3,487 11,518 9,824
Depreciation and amortization 3,276 3,059 9,442 9,136
-------- -------- -------- --------
48,972 45,429 141,887 132,067
-------- -------- -------- --------
OPERATING INCOME 4,576 3,524 10,659 8,536
OTHER EXPENSE 861 963 2,561 2,821
-------- -------- -------- --------
Income before income taxes 3,715 2,561 8,098 5,715
Provision for income taxes 1,227 844 2,673 1,886
-------- -------- -------- --------
Net income before cumulative effect
of change in accounting principle $ 2,488 $ 1,717 $ 5,425 $ 3,829
Cumulative effect of change in
accounting principle for preopening
costs net of income taxes 636
-------- -------- -------- --------
NET INCOME $ 2,488 $ 1,717 $ 5,425 $ 3,193
-------- -------- -------- --------
-------- -------- -------- --------
Basic and Diluted Earnings per Share:
Net income $ .24 $ .16 $ .52 $ .35
Cumulative effect of change in
accounting principle (.06)
-------- -------- -------- --------
Net income $ .24 $ .16 $ .52 $ .29
-------- -------- -------- --------
-------- -------- -------- --------
Weighted average shares outstanding:
Basic 10,159 10,895 10,317 10,930
Diluted 10,279 10,990 10,416 10,989
</TABLE>
4
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
<TABLE>
<CAPTION>
THIRTY-NINE WEEKS ENDED
June 27, June 28,
1999 1998
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $5,425 $3,193
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting principle 636
Depreciation and amortization 9,530 9,222
Deferred income taxes (887) (904)
Provision for deferred rent 266 396
(Gain)Loss on disposal of equipment (7) (6)
Changes in operating assets and liabilities, net of effects from business
acquisitions:
Accounts receivable (20) 1,010
Inventory (153) 81
Prepaid expenses and other assets (150) (942)
Accounts payable and other liabilities 2,070 (882)
Income taxes payable 360 (1,037)
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 16,434 10,767
INVESTMENT ACTIVITIES
Additions to property, equipment and
leasehold improvements (13,281) (8,574)
Proceeds from sale of fixed assets 7 8
-------- --------
NET CASH USED FOR INVESTING ACTIVITIES (13,274) (8,566)
FINANCING ACTIVITIES
Proceeds from revolving credit agreement 59,223 41,565
Principal payments on revolving credit agreement
and capital lease obligations (59,077) (42,222)
Purchase of Treasury Stock (4,210) (898)
Exercise of stock options 185 95
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (3,879) (1,460)
--------- --------
INCREASE (DECREASE) IN CASH (719) 741
CASH AT BEGINNING OF PERIOD 2,030 1,486
-------- --------
CASH AT END OF PERIOD $1,311 $2,227
-------- --------
-------- --------
</TABLE>
Certain amounts in fiscal 1998 have been reclassified to permit comparison.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited, consolidated financial statements have been prepared
in accordance with instructions to Form 10-Q and, therefore, do not include all
information and footnotes normally included in financial statements prepared in
conformity with generally accepted accounting principles. They should be read in
conjunction with the financial statements of the company for the fiscal year
ended September 27, 1998.
The accompanying financial statements include all adjustments (consisting only
of normal recurring accruals) that management considers necessary for a fair
presentation of its financial position and results of operations for the interim
periods presented.
NOTE B - EARNINGS PER SHARE
Basic earnings per share represents net income divided by weighted average
shares of common stock outstanding during the period. Weighted average shares
used in diluted earnings per share include common stock equivalents arising from
stock options using the treasury stock method.
The following table sets forth the computation of basic and diluted earnings per
share.
<TABLE>
<CAPTION>
Thirteen Weeks Ended Thirty-nine Weeks Ended
June 27, June 28, June 27, June 28,
1999 1998 1999 1998
----------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Numerator for Basic Earnings
per Share:
Weighted average shares
outstanding 10,159,372 10,894,964 10,316,931 10,930,142
Common Stock equivalents:
Stock options 119,407 95,497 99,247 58,713
---------- ---------- ---------- ----------
Numerator for Diluted Earnings
per Share:
Weighted average shares
outstanding including common
stock equivalents 10,278,779 10,990,461 10,416,178 10,988,855
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Net Income before cumulative
effect of change in
accounting principle $2,488,000 $1,717,000 $5,425,000 $3,829,000
Cumulative effect of change
in accounting principle for
preopening costs net of
income taxes (636,000)
---------- ----------- ----------- ----------
Net Income $2,488,000 $1,717,000 $5,425,000 $3,193,000
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Basic and Diluted Earnings per Share:
Net Income before cumulative
effect of change in
accounting principle $ .24 $ .16 $ .52 $ .35
Cumulative effect of change in
accounting principle (.06)
---------- ---------- ---------- ----------
Net Income $ .24 $ .16 $ .52 $ .29
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONT.)
NOTE C - PRE-OPENING COSTS
In 1998, the Accounting Standards Executive Committee of the American Institute
of Certified Public Accountants (AICPA) issued Statement of Position 98-5 ("SOP
98-5") entitled "Reporting on the Costs of Start-up Activities." The SOP 98-5
requires companies to expense as incurred all start-up and pre-opening costs
that are not otherwise capitalizable as long lived assets. This new accounting
standard is effective for fiscal years beginning after December 15, 1998 with
early adoption encouraged. The Company elected early implementation of the
accounting standard at the beginning of fiscal 1998. The cumulative effect of
this change in accounting principle was $636,000, net of income taxes.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SAFE HARBOR CAUTIONARY STATEMENT
From time to time, information and statements provided by the Company in filings
with the Securities and Exchange Commission, shareholder reports, press releases
and oral statements may include forward-looking statements which reflect the
Company's current views with respect to future events and financial performance.
Forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Investors are cautioned
that all forward-looking statements involve risks and uncertainties, which could
cause actual results to differ materially from historical results or those
anticipated. The Company undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information, future
events or otherwise. Risks and uncertainties include, without limitation, the
Company's ability to open new restaurants and operate new and existing
restaurants profitably, changes in local, regional and national economic
conditions, especially economic conditions in the areas in which the Company's
restaurants are concentrated, increasingly intense competition in the restaurant
industry, increases in food, labor, employee benefits and similar costs, and
other risks detailed from time to time in the Company's news releases, reports
to shareholders and periodic reports filed with the Securities and Exchange
Commission.
The following tables set forth the percentage relationship to total revenues,
unless otherwise indicated, of certain items included in the Company's income
statements and operating data for the periods indicated:
THIRTEEN WEEKS ENDED JUNE 27, 1999 COMPARED TO THIRTEEN WEEKS ENDED
JUNE 28, 1998
<TABLE>
<CAPTION>
13 WEEKS ENDED
--------------
6/27/99 6/28/98
------- -------
<S> <C> <C>
REVENUES:
Restaurant sales 93.0% 92.5%
Consumer product sales 4.7 5.1
Franchise income 2.3 2.4
------ ------
Total 100.0% 100.0%
------ ------
COSTS AND EXPENSES:
Cost of food & beverages (1) 25.4% 25.8%
Labor and benefits (1) 31.0 31.3
Occupancy costs (1) 13.9 14.8
Other operating costs (1) 8.8 9.6
General and administrative 8.1 7.1
Depreciation and Amortization (1) 6.3 6.4
------ ------
Operating income 8.5 7.2
Other expense 1.6 2.0
------ ------
Income before taxes 6.9 5.2
Provision for income taxes 2.3 1.7
------ ------
Net income 4.6% 3.5%
------ ------
------ ------
</TABLE>
(1) Percentage of restaurant and consumer product sales
NUMBER OF RESTAURANTS AT END OF QUARTER:
<TABLE>
<S> <C> <C>
Company-owned Uno's - full service 99 94
Franchised Uno's - full service 67 62
</TABLE>
8
<PAGE>
Total revenue increased 9.4% to $53.5 million from $49.0 million last year.
Company-owned restaurant sales rose 9.9% to $49.8 million from $45.3 million
last year due primarily to an increase in comparable-store sales for the third
quarter which were up 6.1% from the same period last year. Average weekly sales,
which includes sales at comparable stores as well as new units, increased 6.2%
during the third quarter. Growth in operating weeks of full-service Pizzeria Uno
units was up 3.8% resulting from the addition of five restaurants during the
past four quarters, one of which was opened in the third quarter of fiscal 1999.
Consumer product sales were up 2.3% for the third quarter this year at
$2,533,000 from $2,475,000 last year. Sales in the food service category grew
25.1% as shipments to hotels, cinemas and corporate dining accounts increased.
Sales in the supermarket category, which include Uno branded, private label and
club store sales, declined 27.0%, primarily due to the loss of a major club
store sales account.
Franchise income, which includes royalty income and initial franchise fees,
increased 5.0% to $1,249,000 versus $1,190,000 last year. Royalty income
increased 11.6% to $1,224,000 this year compared to $1,097,000 last year. The
increase in royalty income was primarily due to a 6.4% increase in average
weekly sales for full-service franchised restaurants. Franchise fees of $25,000
were recorded this year compared to $93,000 last year. One full-service
franchise restaurant opened during the third quarter of fiscal 1999.
Operating income was $4,576,000, which represents an operating margin of 8.5%.
Operating income for last year was $3,524,000, which represents an operating
margin of 7.2%.
Cost of food and beverage as a percentage of restaurant and consumer product
sales decreased to 25.4% compared to 25.8% last year. This decrease was due
in part to operational efficiency gains this year versus inefficiencies
absorbed last year due to the rollout of a new menu initiative. In addition,
slight price increases have partially offset higher cheese costs which were
up approximately 6% over last years levels. The Company has signed an
agreement with its cheese supplier to fix the cost of mozzarella cheese for
the balance of calendar 1999 and expects to realize year over year benefits
for the balance of the calendar year. Labor costs were down slightly to 31.0%
from 31.3% last year as a percentage of restaurant and consumer product sales
as an increase in the average wage rate was absorbed by a higher check
average and increased operating leverage from higher sales volumes. Occupancy
costs declined as a percentage of restaurant and consumer product sales to
13.9% from 14.8% due to operating leverage generated from higher unit
volumes. Other operating costs were down to 8.8% as a percentage of
restaurant and consumer product sales from 9.6% last year on lower
advertising expense as well as operating leverage gains from higher unit
volumes. General and administrative expenditures as a percentage of total
revenues increased to 8.1% from 7.1% last year on higher salary and related
wage expense associated with field support staffing increases designed to
improve restaurant operations, and non-recurring legal and professional
expenses associated with Company's recapitalization efforts. Depreciation and
amortization expense as a percentage of restaurant and consumer product sales
were down to 6.3% versus 6.4% last year due to increased sales leverage.
Other expense of $861,000 decreased from $963,000 last year. Interest expense
declined to $810,000 from $912,000 last year due to a slightly lower borrowing
rate and a reduced level of debt. The effective tax rate of 33% for the quarter
remained the same as last year.
9
<PAGE>
THIRTY-NINE WEEKS ENDED JUNE 27, 1999 COMPARED TO THIRTY-NINE WEEKS ENDED
JUNE 28, 1998
<TABLE>
<CAPTION>
39 WEEKS ENDED
--------------
6/27/99 6/28/98
------- -------
<S> <C> <C>
REVENUES:
Restaurant sales 92.7% 92.6%
Consumer product sales 4.9 5.0
Franchise income 2.4 2.4
------ ------
Total 100.0% 100.0%
------ ------
COSTS AND EXPENSES:
Cost of food & beverages (1) 26.5% 25.8%
Labor and benefits (1) 31.3 31.5
Occupancy costs (1) 14.5 15.3
Other operating costs (1) 8.9 9.7
General and administrative 7.6 7.0
Depreciation and amortization (1) 6.3 6.7
------ ------
Operating income 7.0 6.0
Other expense 1.7 2.0
------ ------
Income before taxes 5.3 4.0
Provision for income taxes 1.7 1.3
------ ------
Net income before cumulative effect
of change in accounting principle 3.6 2.7
Cumulative effect of change in
accounting principle for pre-opening
costs net of income taxes .4
------ ------
Net income 3.6% 2.3%
------ ------
------ ------
</TABLE>
(1) Percentage of restaurant and consumer product sales
Total revenue increased 8.5% to $152.5 million from $140.6 million last year.
Company-owned restaurant sales rose 8.6% to $141.4 million from $130.2 million
last year due primarily to an increase in comparable-store sales for the first
three quarters of the year which were up 5.3% from the same period last year.
Average weekly sales, which includes sales at comparable stores as well as new
units, increased 5.8% during the first three quarters of the year as the latest
variation of the new prototype units generated sales volumes approximately 9%
higher than our non-prototype store average. Growth in operating weeks of
full-service Pizzeria Uno units was up 3.1% resulting from the addition of five
restaurants during the past four quarters, all of which were opened in the first
three quarters of fiscal 1999.
Consumer product sales increased 4.5% for the first three quarters of this year
to $7,400,000 from $7,083,000 last year. Sales in the contract food service
category grew 27.4%, primarily bolstered by increased shipments to hotels and
corporate dining accounts. Sales in the supermarket category decreased 19.6%
over the same period last year as a 6.4% increase in Uno branded sales to retail
grocers was offset by the loss of a large account and a reduction in club store
sales.
Franchise income, which includes royalty income and initial franchise fees,
increased 11.3% to $3,729,000 versus $3,349,000 last year. Royalty income
increased 10.5% to $3,599,000 this year compared to $3,256,000 last year. The
increase in royalty income was primarily due to an 8.2% increase in average
weekly sales for full-service franchised restaurants. Franchise fees of $130,000
were recorded this year compared to $93,000 last year. Seven full-service
franchise restaurants opened and three full-service franchise restaurants closed
during the first three quarters of fiscal 1999.
Operating income was $10,659,000, which represents an operating margin of 7.0%.
Operating income for last year was $8,536,000, which represents an operating
margin of 6.0%.
Cost of food and beverage as a percentage of restaurant and consumer product
sales increased to 26.5% compared to 25.8% last year. This increase was due in
part to cost increases associated with the company-wide rollout of the new menu
initiative
10
<PAGE>
and higher cheese costs, which were up approximately 14% over last years levels.
Labor costs were down slightly to 31.3% from 31.5% last year as a percentage of
restaurant and consumer product sales as an increase in the average wage rate
was absorbed by a higher check average and lower consumer product labor expense.
Occupancy costs declined as a percentage of restaurant and consumer product
sales to 14.5% from 15.3% due to operating leverage generated from higher unit
volumes. Other operating costs declined to 9.0% as a percentage of restaurant
and consumer product sales from 9.7% last year on lower advertising and
pre-opening expense. General and administrative expenditures as a percentage of
total revenues increased to 7.6% from 7.0% last year on higher salary and wage
expense, increased trainee labor expense and costs associated with the
non-recurring legal and professional expenses associated with the Company's
recapitalization efforts. Depreciation and amortization expense as a percentage
of restaurant and consumer product sales was down to 6.3% versus 6.7% last year
due to increased sales leverage.
Other expense of $2,561,000 decreased from $2,821,000 last year. Interest
expense decreased to $2,409,000 from $2,699,000 last year due to a slightly
lower borrowing rate and a lower debt level. The effective tax rate of 33% for
the first three quarters of fiscal 1999 remained the same as last year.
Net income increased to $5,425,000 from $3,193,000 last year based on the
factors noted above, as 1998 results reflect the adoption of SOP 98-5 "Reporting
on the Costs of Start-up Activities" retroactive to the beginning fiscal 1998.
The cumulative effect of this change in accounting principle was $636,000, net
of income taxes.
LIQUIDITY AND SOURCES OF CAPITAL
The following table presents a summary of the Company's cash flows for the
period ended June 27, 1999.
<TABLE>
<CAPTION>
(IN THOUSANDS)
--------------
<S> <C>
Net cash provided by operating activities $16,434
Net cash used in investing activities (13,274)
Net cash provided by financing activities (3,879)
--------
Increase (Decrease) in cash $ (719)
--------
--------
</TABLE>
Historically, the Company had leased most of its restaurant locations and
pursued a strategy of controlled growth, financing its expansion principally
from operating cash flow, public equity offerings, the sale of senior, unsecured
notes, and revolving lines of credit. During the first nine months of fiscal
1999, the Company's investment in property, equipment and leasehold improvements
was $13.3 million.
The Company currently plans to open approximately five restaurants in fiscal
1999, all of which were opened in the first nine months of fiscal 1999. The
average cash investment required to open a full service Pizzeria Uno restaurant,
excluding land and pre-opening costs, is approximately $1.6 million.
As of June 27, 1999, the Company had outstanding indebtedness of $38.2 million
under its $55 million credit facility, $0.7 million in capital lease obligations
and $4.6 million under its mortgage financing. Advances under the revolving
credit facility will accrue interest at the lender's prime rate plus 0-50 basis
points, or alternatively, 100-175 basis points above LIBOR. The Company
anticipates using the revolving credit facility in the future for the
development of additional restaurants, and for working capital.
In September 1998, the Board of Directors of the Company authorized the
repurchase of 1.0 million shares of the Company's Common Stock through a "Dutch
Auction" tender offer. The terms of the tender offer provided that the Company
would purchase up to 1,000,000 shares (subject to increase under certain
circumstances) of its Common Stock at prices, not in excess of $7.00 nor less
then $5.75 per share, specified by tendering stockholders. On October 30, 1998,
the Company completed the repurchase of 274,721 shares at a price of $7.00 per
share. The total number of shares purchased represented approximately 3% of the
shares outstanding at the time. The Company used a portion of its $55 million
credit facility to purchase the shares tendered.
On April 14, 1999, the Board of Directors extended the previous one million
share stock repurchase program announced on April 22, 1998, for an additional
twelve months. To date under this authorization, the company has repurchased
640,246 shares,
11
<PAGE>
of which 308,350 have been purchased during fiscal 1999.
The Company believes that existing cash balances, cash generated from operations
and borrowing under its revolving line of credit will be sufficient to fund the
Company's capital requirements for the foreseeable future.
The Company is currently obligated under 94 leases, including 91 leases for
Company-owned restaurants, two leases for its executive offices and one lease
for a mill shop. The Company is currently negotiating the renewal of a lease for
an office building containing one of its restaurants and continues to pay rent
on a tenancy at will basis in the interim.
YEAR 2000 COMPLIANCE
The Company has completed its initial assessment of its computer
systems to identify the systems that could be affected by the "Year 2000" issue
and has developed an implementation and compliance plan to resolve the issue.
The Company's current plan calls for implementation to be completed during
fiscal year 1999. The Year 2000 problem is a result of computer programs being
written using two digits rather than four to define the applicable year. Any of
the Company's programs that have time sensitive software may recognize the date
using "00" as the year 1900 rather than the year 2000, which could result in
system failures or miscalculations using existing software.
In addition to the assessment of in-house computer systems, the Company
is in the process of assessing the readiness of its vendors, franchise partners
and non-information technology equipment for the Year 2000 issue. The Company
has received assurance from its major food distributor regarding their Year 2000
compliance plans and has verified that its credit card processing vendor is Year
2000 compliant. The Company has sent out questionnaires to its business-critical
vendors and franchise partners to assess their Year 2000 readiness. Contingency
plans will be developed in the event that business-critical vendors or franchise
partners do not provide the Company with satisfactory evidence of their Year
2000 readiness. The Company intends to make every reasonable effort to assess
the Year 2000 readiness of these critical business partners and to create action
plans to address the identified risks. The Company has determined that the most
reasonably likely worst case scenario would result from the inability to acquire
food supplies from our foodservice distributors. The Company is currently
assessing this possibility and will develop a contingency plan to assure that
there is adequate inventory on-hand to provide service until an alternative
source of supplies becomes available. The Company believes its operations will
not be significantly disrupted if other third parties with whom the Company has
relationships with are not year 2000 compliant. The Company also believes that
it will not have any material liability to third parties as a result of any
potential noncompliance with Year 2000 issues.
All maintenance and modification costs will be expensed as incurred,
while the cost of new software, if material, is being capitalized and
depreciated over its expected useful life. Testing and remediation of all the
Company's systems and applications is expected to cost approximately $150,000,
of which approximately $135,000 has been incurred as of the end of the third
quarter of fiscal 1999. Of the expected total cost of testing and remediation
approximately $60,000 relates to repair issues and the remainder to replacement
of equipment. All estimated costs have been budgeted and are expected to be
funded by cash flows from operations. No information technology projects have
been deferred due to Year 2000 compliance efforts. The Company is not pursing
independent verification of its systems as it believes that any effort would be
as costly as the remediation effort and is not warranted at this time.
The Company does not believe the costs related to the Year 2000
compliance project will be material to its financial position or results of
operations. However, the costs of the project and the date on which the Company
plans to complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions of future events
including the continued availability of certain resources, third party
modification plans, and other factors. Unanticipated failures by critical
vendors, franchise partners, as well as the failure by the Company to execute
its own remediation efforts could have a material adverse effect on the cost of
the project and its completion date. As a result, there can be no assurance that
these forward-looking estimates will be achieved and
12
<PAGE>
the actual cost and vendor compliance could differ materially from those plans,
resulting in material financial risk.
IMPACT OF INFLATION
Inflation has not been a major factor in the Company's business for the last
several years. The Company believes it has historically been able to pass on
increased costs through menu price increases, but there can be no assurance that
it will be able to do so in the future. Future increases in local area
construction costs could adversely affect the Company's ability to expand.
SEASONALITY
The Company's business is seasonal in nature, with revenues and, to a greater
degree, operating income being lower in its first and second fiscal quarters
than its other quarters. The Company's seasonal business pattern is due to its
concentration of units in the Northeast, and the resulting lower winter volumes.
13
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISKS
The Company has market risk exposure to interest rates on its fixed and variable
rate debt obligations and manages this exposure through the use of interest rate
swaps. The Company does not enter into contracts for trading purposes. The
information below summarizes the Company's market risk associated with debt
obligations and derivative financial instruments as of June 27, 1999. For debt
obligations, the table presents principal cash flows and related average
interest rates by expected fiscal year of maturity. For variable rate debt
obligations, the average variable rates are based on implied forward rates as
derived from appropriate quarterly spot rate observations as of the fiscal
quarter end. For interest rate swaps, the table presents the notional amounts
and related weighted average interest rates by fiscal year of maturity. The
average variable rates are the implied forward rates as derived from appropriate
quarterly spot rate observations as of the fiscal quarter end.
Expected Fiscal Year of Maturity
(US$ in millions)
<TABLE>
<CAPTION>
Fair
Value
1999 2000 2001 2002 2003 THEREAFTER 06/27/99
---- ---- ---- ---- ---- ---------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
Liabilities:
Fixed Rate $0.0 $0.2 $0.2 $0.3 $0.3 $3.6 $4.6
Average Interest Rate 8.75% 8.75% 8.75% 8.75% 8.75%
Variable rate $0.9 $3.7 $3.7 $3.7 $14.5 $8.5 $38.2
Average Interest Rate 6.93% 7.45% 7.90% 8.04% 8.18%
Interest Rate Swaps:
Receive Variable/
Pay Fixed $30.0 $30.0 $30.0 $(0.1)
Weighted Average
Pay Rate 5.96% 5.96% 5.84% - - -
Average Receive Rate 5.43% 5.95% 6.38%
</TABLE>
14
<PAGE>
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10(d) Form of Franchise Agreement and Area Franchise Agreement.
10(p) Third Amendement to Promissory Note and Revised Debt
Agreement between the Company and Craig S. Miller dated
August 3, 1999.
(b) REPORTS ON FORM 8-K
Uno Restaurant Corporation did not file any Reports on
Form 8-K during the quarter ended June 27, 1999.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNO RESTAURANT CORPORATION
(Registrant)
Date: AUGUST 6, 1999 By: /s/ CRAIG S. MILLER
------------------ ----------------------------------
Craig S. Miller
Chief Executive Officer
(Principal Executive Officer)
Date: AUGUST 6, 1999 By: /s/ ROBERT M. VINCENT
------------------ ---------------------------------
Robert M. Vincent
Senior Vice President-Finance,
and Chief Financial Officer
(Principal Financial Officer)
16
<PAGE>
EXHIBIT 10(d)
PIZZERIA UNO CORPORATION
INFORMATION FOR PROSPECTIVE FRANCHISEES REQUIRED
BY THE FEDERAL TRADE COMMISSION
To protect you, we've required your Franchisor to give you this information. We
haven't checked it and don't know if it's correct. It should help you make up
your mind. Study it carefully. While it includes some information about your
contract, don't rely on it alone to understand your contract. Read all of your
contract carefully. Buying a franchise is a complicated investment. Take your
time to decide. If possible, show your contract and this information to an
advisor, like a lawyer or an accountant. If you find anything you think may be
wrong or anything important that has been left out, you should let us know about
it. It may be against the law.
There may also be laws about franchising in your state. Ask your state agencies
about them.
FEDERAL TRADE COMMISSION
WASHINGTON, D.C. 20580
Date of Issuance: January 5, 1999
Control No.________________
<PAGE>
FRANCHISE OFFERING CIRCULAR
FOR FULL-SERVICE RESTAURANT
[LOGO]
Pizzeria Uno Corporation
1209 Orange Street
Wilmington, Delaware 19801
Registered Agent: CT Corporation
and
100 Charles Park Road
West Roxbury, Massachusetts 02132-4985
(617) 323-9200
You will operate a casual theme pizza restaurant.
The initial franchise fee is $35,000. The initial development fee is
$22,500 for each restaurant to be developed, $17,500 of which will be applied to
the initial franchise fee for each franchise agreement described in a
development schedule contained in the development agreement. The estimated
initial investment (3 months) for a single restaurant ranges from $771,600 to
$2,067,000.
Risk factors:
1. THE FRANCHISE AGREEMENT AND DEVELOPMENT AGREEMENT PERMIT THE
FRANCHISEE TO SUE US ONLY IN MASSACHUSETTS. OUT OF STATE LITIGATION
MAY FORCE YOU TO ACCEPT A LESS FAVORABLE SETTLEMENT FOR DISPUTES. IT
MAY ALSO COST MORE TO SUE US IN OTHER THAN YOUR HOME STATE. STATE
FRANCHISE REGISTRATION AND RELATIONSHIP LAWS MAY AFFECT THE
ENFORCEABILITY OF CHOICE OF VENUE PROVISIONS (SEE UNIFORM UFOC
ADDENDUM AND STATE AMENDMENTS TO THE FRANCHISE AGREEMENT).
2. THE FRANCHISE AGREEMENT AND DEVELOPMENT AGREEMENT STATE THAT
MASSACHUSETTS LAW GOVERNS THE AGREEMENTS, AND THIS LAW MAY NOT
PROVIDE THE SAME PROTECTIONS AND BENEFITS AS LOCAL LAW. YOU MAY WANT
TO COMPARE THESE LAWS. STATE FRANCHISE REGISTRATION AND RELATIONSHIP
LAWS OFTEN PROVIDE THAT CHOICE OF LAW PROVISIONS ARE VOID OR
SUPERSEDED TO THE EXTENT THAT CHOICE OF A DIFFERENT STATE'S LAW
WOULD DENY A FRANCHISEE OR DEVELOPER THE PROTECTIONS IT WOULD BE
ENTITLED TO UNDER LOCAL LAW. YOU SHOULD INVESTIGATE WHETHER YOUR
PURCHASE OF THE FRANCHISE FALLS UNDER THE
<PAGE>
JURISDICTION OF A STATE FRANCHISE REGISTRATION OR RELATIONSHIP LAW
(SEE UNIFORM UFOC ADDENDUM AND STATE AMENDMENTS TO THE FRANCHISE
AGREEMENT AND THE DEVELOPMENT AGREEMENT).
3. THERE MAY BE OTHER RISKS CONCERNING THIS FRANCHISE.
Information comparing franchisors is available. Call the state
administrators listed in Attachment E or your public library for sources of
information.
Registration of this franchise by a state does not mean that the state
recommends it or has verified the information in this offering circular. If you
learn that anything in the offering circular is untrue, contact the Federal
Trade Commission and the applicable state authority listed in Attachment E.
Date of Issuance: January 5, 1999. This Offering Circular may be
registered in certain states which require the pre-sale registration of
franchise offerings. The effective date in those states in which this offering
is registered is listed on a Uniform Franchise Offering Circular Addendum
following this page.
<PAGE>
PIZZERIA UNO CORPORATION
UNIFORM UFOC ADDENDUM
The following states have statutes which may supersede the Franchise
Agreement, the Development Agreement, and other related agreements in your
relationship with us. These statutes may affect the enforceability of provisions
in the agreements relating to termination; transfer; renewal; covenants not to
compete; choice of law; jurisdiction; venue selection; execution of waivers and
releases of claims under the statutes; injunctive relief; waiver of rights to
jury trial; punitive and liquidated damages, and other remedies; arbitration;
and discrimination between franchisees: Ark. Code Ann. ss. 4-72-201 Michie
1993); Cal. Corp. code ss.ss. 31000 - 31516 (West 1994); Cal. Bus. & Prof. Code
ss.ss. 20000 - 20043 (West 1994); Conn. Gen. Stat. ss. 42-133e (1994); Del. Code
Ann. tit. 6 ss. 2552 (1993) Haw. Rev. Stat. ss. 482E-1 - 482E-12 (1993); Ill.
Rev. Stat. ch. 815 para. 705/1 - 705/44 (1994); Ind. Code ss.ss. 1 - 51 (1994);
Ind. Code Ann. ss. 23-2-2.7 (West. 1994); Iowa Code ss. 523H.1 - 523H.17 (1994);
Md. Code Ann., Bus. Reg. ss.ss. 14-201 - 14-233 (1994); Mich. Comp. Laws ss.ss.
445.1501 - 445.1545 (1994); Minn. Stat. ss.ss. 8OC.01 - 8OC.22 (1994); Minn.
Stat. ss.ss. 80C.01 - 80C.14 (1994); Miss. Code Ann. ss. 75-24-51 (1993) Mo.
Ann. Stat. ss. 407.400 (Vernon 1994); Neb. Rev. Stat. ss. 87-401 (1993); N.J.
Stat. Ann. ss. 56:10-1 (West 1994); N.Y. Gen. Bus. Law ss.ss. 680 - 695 (1994);
N.D. Cent. Code ss. 51-19-01 (1993); Or. Rev. Stat. ss.ss. 650.005 - 650.085;
R.I. Gen. Laws ss.ss. 19-28.1-1 - 19-28.1-34 (1993); S.D. Codified Laws Ann.
ss.ss. 37-5A-1 - 37-5A-87 (1994); Tex. Rev. Civ. Stat. Ann. art. 16.01 (1994);
Va. Code Ann. ss.ss. 13.1-557 - 13.1-574; Wa. Rev. Code ss.ss. 19.100.010 -
19.100.940 (1994); Wis. Stat. ss.ss. 553.01 - 553.78 (1994); Wis. Stat. ss.ss.
135.01 - 135.07 (1984). These and other states may have fair practice laws and
other civil statutes affecting contracts. There may also be state and federal
court decisions that affect the enforcement of provisions in the Franchise
Agreement, the Development Agreement, and other related agreements.
A provision in the Franchise Agreement and the Development Agreement which
terminates these agreements upon your bankruptcy may not be enforceable under
Title 11, United States Code Section 101.
This Offering Circular is registered, on file or exempt from registration
in the following states with franchise registration and disclosure laws:
California Effective date: December 4, 1998
Hawaii Effective date:
Illinois Effective date:
Indiana Effective date: January 5, 1999
Maryland Effective date: January 21, 1999
Michigan Effective date: March 16, 1999
Minnesota Effective date: January 12, 1999
New York Effective date: January 5, 1999
North Dakota Effective date: March 24, 1999
Rhode Island Effective date: January 12, 1999
South Dakota Effective date: January 14, 1999
Texas Effective date: January 3, 1989
Virginia Effective date: January 8, 1999
Washington Effective date: January 26, 1999
Wisconsin Effective date: January 8, 1999
<PAGE>
ADDENDUM FOR THE STATE OF HAWAII
THESE FRANCHISES WILL BE/HAVE BEEN FILED UNDER THE FRANCHISE INVESTMENT LAW OF
THE STATE OF HAWAII. FILING DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR
ENDORSEMENT BY THE DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS OR A FINDING BY THE
DIRECTOR OF COMMERCE AND CONSUMER AFFAIRS THAT THE INFORMATION PROVIDED HEREIN
IS TRUE, COMPLETE AND NOT MISLEADING.
THE FRANCHISE INVESTMENT LAW MAKES IT UNLAWFUL TO OFFER OR SELL ANY FRANCHISE IN
THIS STATE WITHOUT FIRST PROVIDING TO THE PROSPECTIVE FRANCHISEE, OR
SUBFRANCHISOR, AT LEAST SEVEN DAYS PRIOR TO THE EXECUTION BY THE PROSPECTIVE
FRANCHISEE, OF ANY BINDING FRANCHISE OR OTHER AGREEMENT, OR AT LEAST SEVEN DAYS
PRIOR TO THE PAYMENT OF ANY CONSIDERATION BY THE FRANCHISE, OR SUBFRANCHISOR,
WHICHEVER OCCURS FIRST, A COPY OF THE OFFERING CIRCULAR, TOGETHER WITH A COPY OF
ALL PROPOSED AGREEMENTS RELATING TO THE SALE OF THE FRANCHISE.
THIS OFFERING CIRCULAR CONTAINS A SUMMARY ONLY OF CERTAIN MATERIAL PROVISIONS OF
THE FRANCHISE AGREEMENT. THE CONTRACT OR AGREEMENT SHOULD BE REFERRED TO FOR A
STATEMENT OF ALL RIGHTS, CONDITIONS RESTRICTIONS AND OBLIGATIONS OF BOTH THE
FRANCHISOR AND THE FRANCHISEE.
Registered agent in the state authorized to receive service of process is
listed in Attachment A.
SUPPLEMENTAL INFORMATION PAGE FOR
PIZZERIA UNO CORPORATION
REQUIRED BY THIS STATE
1. Registration Information
A. This proposed filing is not effective or exempt from
registration in any state.
B. This proposed filing is or will shortly be on file in
California, Hawaii, Illinois, Indiana, Maryland, Michigan,
Minnesota, New York, North Dakota, Rhode Island, South Dakota,
Virginia, Washington and Wisconsin.
<PAGE>
C. No states have refused, by order or otherwise, to register
these franchises.
D. No states have revoked or suspended the right to offer these
franchises.
E. The registration of these franchises has not been withdrawn in
any state.
2. Source of Funds for Establishing New Franchises
Franchisor estimates that it costs approximately $25,000 to perform its
obligations in connection with establishing each franchisee. These expenses are
covered by general operating revenues which include income from royalties and
franchise fees. Production of advertising materials, menus and certain marketing
expenses are covered by the Business Coop Fee.
<PAGE>
ADDENDUM TO PIZZERIA UNO CORPORATION
OFFERING CIRCULAR
FOR THE STATE OF MICHIGAN
THE STATE OF MICHIGAN PROHIBITS CERTAIN UNFAIR PROVISIONS THAT ARE
SOMETIMES IN FRANCHISE DOCUMENTS. IF ANY OF THE FOLLOWING PROVISIONS ARE IN
THESE FRANCHISE DOCUMENTS, THE PROVISIONS ARE VOID AND CANNOT BE ENFORCED
AGAINST YOU:
(A) A PROHIBITION ON THE RIGHT OF A FRANCHISEE TO JOIN AN ASSOCIATION OF
FRANCHISEES.
(B) A REQUIREMENT THAT A FRANCHISEE ASSENT TO A RELEASE, ASSIGNMENT,
NOVATION, WAIVER, OR ESTOPPEL WHICH DEPRIVES A FRANCHISEE OF RIGHTS AND
PROTECTIONS PROVIDED IN THIS ACT. THIS SHALL NOT PRECLUDE A FRANCHISEE, AFTER
ENTERING INTO A FRANCHISE AGREEMENT, FROM SETTLING ANY AND ALL CLAIMS.
(C) A PROVISION THAT PERMITS A FRANCHISOR TO TERMINATE A FRANCHISE PRIOR
TO THE EXPIRATION OF ITS TERM EXCEPT FOR GOOD CAUSE. GOOD CAUSE SHALL INCLUDE
THE FAILURE OF THE FRANCHISEE TO COMPLY WITH ANY LAWFUL PROVISION OF THE
FRANCHISE AGREEMENT AND TO CURE SUCH FAILURE AFTER BEING GIVEN WRITTEN NOTICE
THEREOF AND A REASONABLE OPPORTUNITY, WHICH IN NO EVENT NEED BE MORE THAN 30
DAYS, TO CURE SUCH FAILURE.
(D) A PROVISION THAT PERMITS A FRANCHISOR TO REFUSE TO RENEW A FRANCHISE
WITHOUT FAIRLY COMPENSATING THE FRANCHISEE BY REPURCHASE OR OTHER MEANS FOR THE
FAIR MARKET VALUE AT THE TIME OF EXPIRATION, OF THE FRANCHISEE'S INVENTORY,
SUPPLIES, EQUIPMENT, FIXTURES, AND FURNISHINGS. PERSONALIZED MATERIALS WHICH
HAVE NO VALUE TO THE FRANCHISOR AND INVENTORY, SUPPLIES, EQUIPMENT, FIXTURES,
AND FURNISHINGS NOT REASONABLY REQUIRED IN THE CONDUCT OF THE FRANCHISE BUSINESS
ARE NOT SUBJECT TO COMPENSATION. THIS SUBSECTION APPLIES ONLY IF: (i) THE TERM
OF THE FRANCHISE IS LESS THAN 5 YEARS; AND (ii) THE FRANCHISEE IS PROHIBITED BY
THE FRANCHISE OR OTHER AGREEMENT FROM CONTINUING TO CONDUCT SUBSTANTIALLY THE
SAME BUSINESS UNDER ANOTHER TRADEMARK, SERVICE MARK, TRADE NAME, LOGOTYPE,
ADVERTISING, OR OTHER COMMERCIAL SYMBOL IN THE SAME AREA SUBSEQUENT TO THE
EXPIRATION OF THE FRANCHISE OR THE FRANCHISEE DOES NOT RECEIVE AT LEAST 6 MONTHS
ADVANCE NOTICE OF FRANCHISOR'S INTENT NOT TO RENEW THE FRANCHISE.
(E) A PROVISION THAT PERMITS THE FRANCHISOR TO REFUSE TO RENEW A FRANCHISE
ON TERMS GENERALLY AVAILABLE TO OTHER FRANCHISEES OF THE SAME CLASS OR TYPE
UNDER SIMILAR CIRCUMSTANCES. THIS SECTION DOES NOT REQUIRE A RENEWAL PROVISION.
(F) A PROVISION REQUIRING THAT ARBITRATION OR LITIGATION BE CONDUCTED
OUTSIDE THIS STATE. THIS SHALL NOT PRECLUDE THE FRANCHISEE FROM ENTERING INTO AN
AGREEMENT, AT THE TIME OF ARBITRATION, TO CONDUCT ARBITRATION AT A LOCATION
OUTSIDE THIS STATE.
(G) A PROVISION WHICH PERMITS A FRANCHISOR TO REFUSE TO PERMIT A TRANSFER
OF OWNERSHIP OF A FRANCHISE, EXCEPT FOR GOOD CAUSE. THIS SUBDIVISION DOES NOT
PREVENT A FRANCHISOR FROM EXERCISING A RIGHT OF FIRST REFUSAL TO PURCHASE THE
FRANCHISE. GOOD CAUSE SHALL INCLUDE, BUT IS NOT LIMITED TO:
(i) THE FAILURE OF THE PROPOSED TRANSFEREE TO MEET THE FRANCHISOR'S
THEN CURRENT REASONABLE QUALIFICATIONS OR STANDARDS.
(ii) THE FACT THAT THE PROPOSED TRANSFEREE IS A COMPETITOR OF THE
FRANCHISOR OR SUBFRANCHISOR.
-1-
<PAGE>
(iii) THE UNWILLINGNESS OF THE PROPOSED TRANSFEREE TO AGREE IN
WRITING TO COMPLY WITH ALL LAWFUL OBLIGATIONS.
(iv) THE FAILURE OF THE FRANCHISEE OR PROPOSED TRANSFEREE TO PAY ANY
SUMS OWING TO THE FRANCHISOR OR TO CURE ANY DEFAULT IN THE FRANCHISE AGREEMENT
EXISTING AT THE TIME OF THE PROPOSED TRANSFER.
(H) A PROVISION THAT REQUIRES THE FRANCHISEE TO RESELL TO THE FRANCHISOR
ITEMS THAT ARE NOT UNIQUELY IDENTIFIED WITH THE FRANCHISOR. THIS SUBDIVISION
DOES NOT PROHIBIT A PROVISION THAT GRANTS TO A FRANCHISOR A RIGHT OF FIRST
REFUSAL TO PURCHASE THE ASSETS OF A FRANCHISE ON THE SAME TERMS AND CONDITIONS
AS A BONA FIDE THIRD PARTY WILLING AND ABLE TO PURCHASE THOSE ASSETS, NOR DOES
THIS SUBDIVISION PROHIBIT A PROVISION THAT GRANTS THE FRANCHISOR THE RIGHT TO
ACQUIRE THE ASSETS OF A FRANCHISE FOR THE MARKET OR APPRAISED VALUE OF SUCH
ASSETS IF THE FRANCHISEE HAS BREACHED THE LAWFUL PROVISIONS OF THE FRANCHISE
AGREEMENT AND HAS FAILED TO CURE THE BREACH IN THE MANNER PROVIDED IN
SUBDIVISION (C).
(I) A PROVISION WHICH PERMITS THE FRANCHISOR TO DIRECTLY OR INDIRECTLY
CONVEY, ASSIGN, OR OTHERWISE TRANSFER ITS OBLIGATIONS TO FULFILL CONTRACTUAL
OBLIGATIONS TO THE FRANCHISEE UNLESS PROVISION HAS BEEN MADE FOR PROVIDING THE
REQUIRED CONTRACTUAL SERVICES.
THE FACT THAT THERE IS A NOTICE OF THIS OFFERING ON FILE WITH THE ATTORNEY
GENERAL DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE
ATTORNEY GENERAL.
-2-
<PAGE>
PIZZERIA UNO CORPORATION
OFFERING CIRCULAR
TABLE OF CONTENTS
Page
----
ITEM 1 THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES....................1
ITEM 2 BUSINESS EXPERIENCE................................................4
ITEM 3 LITIGATION.........................................................6
ITEM 4 BANKRUPTCY.........................................................8
ITEM 5 INITIAL FRANCHISE FEE..............................................8
ITEM 6 OTHER FEES.........................................................9
ITEM 7 INITIAL INVESTMENT................................................13
ITEM 8 RESTRICTIONS ON SOURCES
OF PRODUCTS AND SERVICES..........................................15
ITEM 9 FRANCHISEE'S OBLIGATIONS..........................................21
ITEM 10 FINANCING.........................................................22
ITEM 11 FRANCHISOR'S OBLIGATIONS..........................................24
ITEM 12 EXCLUSIVE AREA OR TERRITORY.......................................35
ITEM 13 TRADEMARKS........................................................40
ITEM 14 PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION...................43
ITEM 15 OBLIGATIONS TO PARTICIPATE IN THE
ACTUAL OPERATION OF THE FRANCHISE BUSINESS........................45
ITEM 16 RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL......................48
- i -
<PAGE>
Page
----
ITEM 17 RENEWAL, TERMINATION,
TRANSFER AND DISPUTE RESOLUTION...................................49
ITEM 18 PUBLIC FIGURES....................................................56
ITEM 19 EARNINGS CLAIMS...................................................56
ITEM 20 FRANCHISED OUTLETS................................................62
ITEM 21 FINANCIAL STATEMENTS..............................................66
ITEM 22 CONTRACTS.........................................................66
ITEM 23 RECEIPTS
ATTACHMENTS
A. Agents for Service of Process
B. Table of Contents for Manuals
C. Financial Statements
D. Contracts
E. State Administrators
F. List of Franchisees
G. Closed Franchised Restaurants
- ii -
<PAGE>
ITEM 1
THE FRANCHISOR, ITS PREDECESSORS AND AFFILIATES
The Franchisor
Pizzeria Uno Corporation ("we" or "us") was incorporated in the State of
Delaware on September 29, 1989 and maintains its principal place of business at
1209 Orange Street, Wilmington, Delaware, 19801, and an administrative office at
100 Charles Park Road, West Roxbury, Massachusetts 02132-4985. We conduct
business under our corporate name and the Proprietary Marks (defined below)
only.
Since our incorporation, we have offered franchises for the establishment
and operation of casual theme pizza restaurants under the service mark "Pizzeria
Uno Chicago Bar & Grill" ("Restaurants"). Although we do not own or operate
these restaurants, as described below, our affiliates do so. We have not offered
franchises in any other line of business, but we have offered franchises for
smaller quick-service versions of Restaurants ("Takeries," as described below).
Our agents for service of process are listed in Attachment A.
Our Predecessors and Affiliates
From October 3, 1979 until our incorporation in Delaware on September 29,
1989, Pizzeria Uno Corporation operated as a Massachusetts corporation ("our
Predecessor"). For the purpose of changing its state of incorporation, our
Predecessor formed a wholly owned Delaware subsidiary on September 29, 1989,
called Pizzeria Uno Delaware Corporation ("Uno Delaware"). On that same date,
our Predecessor merged into Uno Delaware and Uno Delaware changed its name to
Pizzeria Uno Corporation. Until the merger, when it ceased to exist, our
Predecessor maintained its offices at 100 Charles Park Road, West Roxbury,
Massachusetts 02132-4985. Our Predecessor has not conducted a casual theme pizza
restaurant business.
We are a wholly owned subsidiary of URC Holding Company, Inc., a Delaware
corporation. URC Holding Company, Inc. is the sole, wholly owned subsidiary of
Uno Restaurant Corporation, a Delaware corporation.
From January 1980 through September 29, 1989, our Predecessor offered
franchises for the establishment and operation of casual theme pizza
restaurants. As of September 27, 1998, our affiliates and our Predecessor's
affiliates operate 99 casual theme pizza restaurants. 97 of these restaurants
operate under the mark "Pizzeria Uno" and one operates under the mark "Pizzeria
Due." In addition, one of these restaurants is a smaller, limited-service
version of Restaurant, known as a "Takery." The Takeries are further described
in Item 12. Our affiliate, Uno Foods Inc., has offered licenses for the
establishment of Uno bakeries located in supermarkets (15 units), movie theaters
(63 units), hotels (255 units), and corporate dining facilities (90 units). We
have also offered a license
<PAGE>
for one Uno slice shop (a limited-service version of a Restaurant which is
designed to operate in airport terminals and within food courts located on
tollways and major thoroughfares). Our affiliates also own restaurants that
operate under concepts other than the System (as defined below), and one
affiliate sells refrigerated and frozen consumer foods bearing the Uno brand to
commercial customers (approximately 900 U.S. supermarkets and 85 club stores as
of September 30, 1998). (See Item 12.) Our Predecessor and affiliates do not
offer and except as described above have not offered franchises or licenses in
any other line of business. They do not provide products or services to our
franchisees, except as described below. Uno Restaurants, Inc., our affiliate,
offers certain software support services to our franchisees. See Item 11. Uno
Restaurants, Inc. maintains its principal place of business at the same address
as our corporate offices. Our Predecessor and affiliates have not offered
franchises in any other line of business and has not owned or operated casual
theme pizza restaurants.
The Franchise Offered
We will offer to individuals, partnerships, corporations and other
entities ("you") a franchise agreement (the "Franchise Agreement") which grants
you the right to establish and operate one Restaurant (the "Restaurant") at a
location approved by us. We do not engage in any other business activities.
As a result of the expenditure of time, skill, effort, and money, we have
developed and own a distinctive system (the "System") relating to the
establishment and operation of casual theme restaurants featuring "Chicago
Style" deep dish pizza and other products. The restaurants offer full bar
service, subject to applicable law, as described below. The distinguishing
characteristics of the System include distinctive exterior and interior design,
decor, color schemes, and furnishings, special recipes and menu items, uniform
standards, specifications and procedures for operations; quality and uniformity
of products and services offered; procedures for inventory, management and
financial controls; training and assistance; and advertising and promotional
programs; all of which we may change, improve, and further develop. We identify
the System by means of our trade names, service marks, trademarks, emblems and
indicia of origin, including the marks "Pizzeria Uno(R)," "Uno(R)," and such
other trade names, service marks and trademarks as we designate (or may later
designate in writing) for use in connection with the System ("Proprietary
Marks").
The Restaurant will offer food and beverage items primarily for
on-premises consumption. The Restaurant will occupy approximately 5,000 to 7,000
square feet and seat approximately 150-205 customers. It will offer alcoholic
and non-alcoholic beverages and a full line of menu items.
We also offer the right to enter into an agreement to develop multiple
Restaurants within a specifically described geographic area (the "Development
Agreement"). The form of Development Agreement you will sign is attached in
Attachment D to this Offering Circular. We will determine the geographic area
(the "Territory") and describe it in the Development Agreement before you sign
it (see Item 12). The Development Agreement requires you to establish more than
one Restaurant within the Territory according to a development schedule (the
"Development Schedule"), and to sign
- 2 -
<PAGE>
a separate Franchise Agreement for each Restaurant you establish (see Item 12).
The form of Franchise Agreement for the first Restaurant you develop is attached
in Attachment D to this Offering Circular. For each additional Restaurant you
develop under the Development Agreement, you must sign the form of Franchise
Agreement that we offer to new franchisees at that time. The size of the
Territory will vary depending on local market conditions and the number of
Restaurants to be developed (see Item 12).
Under the Development Agreement and Franchise Agreement (collectively, the
"Agreements"), we have characterized certain parties as "Developer's Principals"
or "Franchisee's Principals," as applicable. We refer to those persons or
entities as "your Principals" in this Offering Circular. The Agreements are
signed by us, by you, and by those of your Principals whom we designate as
Controlling Principals. In most instances, we will designate your principal
equity owners and executive officers as Controlling Principals. By signing the
Agreements, your Controlling Principals agree to be individually bound by
certain obligations in the Agreements, including covenants concerning
confidentiality and noncompetition, and to personally guarantee your performance
under the Agreements (see Item 15). Unless otherwise stated, any reference in
this Offering Circular to "Franchisee" includes Franchisee both as a developer
under the applicable Development Agreement, if any, and as a franchisee under
all Franchise Agreements.
You must also designate an "Operating Principal." Your Operating Principal
will be the individual primarily responsible for your business. If you are an
individual, you will be the Operating Principal. If you are not an individual,
the person you designate as your Operating Principal must have and maintain an
equity interest in you. The Operating Principal must sign the Agreements as the
Operating Principal and as one of your Controlling Principals.
The services and products offered by you will be sold primarily to the
general public. The market for Restaurant services is highly developed.
Restaurants will be in competition with other businesses providing similar pizza
products and casual theme services, including a large number of national,
regional, and local restaurants.
Industry-Specific Regulations
The restaurant/bar industry is regulated on the Federal, state, and local
levels. The preparation and handling of food is federally regulated by the Pure
Food and Drugs Act of 1906; the Federal Food, Drug, and Cosmetic Act; and by
rules and policies of the Food and Drug Administration. State requirements
relating to food safety typically pertain to sanitation and handling. Local
inspectors may also enforce sanitation and handling rules created on the state
and/or local level. Many state and local authorities also regulate the sale of
alcoholic beverages, and all restaurants must be licensed for such sale. The
location of a Restaurant may also be affected by a variety of state and local
zoning, use and planning regulations.
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<PAGE>
There may be other laws, rules, or regulations which affect the
Restaurant, including zoning, minimum wage, and labor laws. We recommend that
you consult with your attorney for an understanding of them.
ITEM 2
BUSINESS EXPERIENCE
For purposes of this Item 2 only, references to "us" and "we" refer to our
Predecessor for periods prior to September 29, 1989.
Aaron D. Spencer: Director
Mr. Spencer has been a Director since 1986. Mr. Spencer served as our
President from January 1979 to October 1996. Mr. Spencer has also served as
Chairman of Uno Restaurant Corporation since October 1996 and as Uno Restaurant
Corporation's Chief Executive Officer from October 1986 to September 1996.
Craig S. Miller: President, Chief Executive Officer and Director
Mr. Miller joined us in June 1984, was elected a Vice President in
February 1985, has been a Director since October 1, 1985, and has been our
President since October 1, 1986. In October 1996 he became our Chief Executive
Officer and Chief Operating Officer and served as Chief Operating Officer until
November 30, 1998. Mr. Miller also has been President, Chief Operating Officer,
and a Director of Uno Restaurant Corporation since October 1986; he was also
appointed Chief Executive Officer as of September 30, 1996.
Robert M. Brown: Senior Vice President - Development, Chief Administrative
Officer and Director
Mr. Brown served as our Senior Vice President - Development and Chief
Administrative Officer since July 1997 and as Director since March 1987. Prior
to July 1997 he served as our Senior Vice President - Finance since February
1990, and our Treasurer since October 1988. From March 1987 to February 1990, he
served as our Vice President-Finance. Mr. Brown has also served as Senior Vice
President - Finance, Chief Financial Officer, Treasurer, and Director of Uno
Restaurant Corporation since October 1988.
Alan Fox: President (Uno Foods Inc.); Senior Vice President, Purchasing (Uno
Restaurant Corporation)
Since May 1990, Mr. Fox has served as President of Uno Foods Inc. (a
wholly-owned subsidiary of URC Holding Company) and since October 1990, he has
served as Senior Vice President - Purchasing, of Uno Restaurant Corporation.
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<PAGE>
Damon M. Liever: Senior Vice President - Marketing and Business Development
Mr. Liever has served as our Senior Vice President - Marketing and
Business Development since January 1994. Since March 1993, he has also served as
Vice President-Marketing of Uno Restaurant Corporation. From March 1993 to
January 1994, Mr. Liever was our Vice President.
Paul MacPhail: Executive Vice President and Chief Operating Officer - (Uno
Restaurant Corporation)
Mr. MacPhail has served as our Executive Vice President and Chief
Operating Officer since November 30, 1998. Prior to that he served as Senior
Vice President - Operations for Uno Restaurant Corporation from January 1997 to
November 30, 1998. He has been employed by Uno Restaurant Corporation since
August 1990 and has served as Division Vice President of Operations from October
1994 to January 1997 and Regional Director of Operations from November 1992 to
October 1994.
Robert M. Vincent: Senior Vice President - Finance, Chief Financial Officer and
Treasurer
Mr. Vincent has served as our Senior Vice President - Finance, Chief
Financial Officer and Treasurer since July 1997. From April 1992 to June 1997,
he served as our Vice President - Controller.
Allan Afrow: Vice President, General Counsel, and Secretary
Mr. Afrow has served as our Vice President, General Counsel and Secretary
since August, 1997. From January 1995 to August 1997 he served as Vice
President, General Counsel and Clerk for Trend-Lines, Inc., in Revere,
Massachusetts. From January 1982 to November 1994 he served in various
capacities with Cumberland Farms, Inc., located in Canton, Massachusetts,
including General Counsel.
Randy M. Clifton: Vice President - Worldwide Franchising
Mr. Clifton has served as Vice President - Worldwide Franchising since
October 1997. From September 1996 to October 1997 he was Vice President -
Development of Arnold Palmer Golf Management Co., located in Orlando, Florida.
From November 1979 to September 1996 he served as Senior Vice President,
Development of Carlson Companies.
Diane Gallucci: Vice President - Purchasing (Uno Restaurant Corp.)
Ms. Gallucci has served as Vice President - Purchasing for Uno Restaurant
Corporation since February 1997. She has also served as Senior Vice
President-Sales and Director of Purchasing for Uno Foods Inc., our affiliate,
since September of 1995, having served as Vice President since May
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<PAGE>
1993. She has also served as Senior Vice President - Sales for Uno Foods, Inc.
since September 1995 and prior to that as Vice President of Sales.
Alan LaBatte: Vice President - Information Systems (Uno Restaurant Corporation)
Mr. LaBatte has served as Uno Restaurant Corporation's Vice President -
Information Systems since March 1994. From March 1991 to March 1994, Mr. LaBatte
was Director Information Services of Uno Restaurant Corporation.
Maurice D. Molod: Senior Director of Real Estate
Mr. Molod has served as our Senior Director of Real Estate since April
1995. From June 1986 to April 1995, he was General Manager - Holyoke Mall at
Ingleside for Pyramid Management Group, Inc., located in Holyoke, Massachusetts.
ITEM 3
LITIGATION
On October 23, 1996, Uno Restaurant Corporation, Uno Restaurants, Inc.,
and Pizzeria Uno Corporation (collectively the "Uno Companies") agreed to a
proposed Consent Order with the Federal Trade Commission (the "FTC") which
became final on March 22, 1997. Because the FTC did not actually file its
Complaint, there is no title, case number or filing date for this matter.
The Consent Order is based on a Complaint that describes a print
advertisement which ran once and a television commercial which ran for two weeks
in the Boston market. Although, the FTC did not claim that the Uno Companies
intended any deception, it contended that portions of each advertisement
misrepresented that all of the Uno Companies' thin crust pizzas were low fat.
The Uno Companies disputed the FTC's interpretation of the commercial, and
believed that it had a reasonable basis for the advertising claims in question,
based on opinions of an outside consultant they had hired for substantiating
analysis. Rather than contest this matter further, the Uno Companies have chosen
to enter into the proposed Consent Order, which, among other things, imposes no
fine, orders the Uno Companies not to misrepresent the existence or amount of
total fat or any other nutrient or substance in any food provided containing a
baked crust, and requires the Uno Companies to maintain substantiation for
nutrition claims for its pizza products, which would be the Uno Companies'
intended procedure regardless of the order.
On January 23, 1997, a class action-complaint was filed against the Uno
Companies (D'Ambrosio et al. v. Uno Restaurant Corporation et al., Suffolk
Superior Ct., (Mass.) Case No. 97- 0417). The Complaint alleges that the Uno
Companies, through its advertisements, made false and misleading representations
about the fat content of the thin crust pizzas. The plaintiffs, prior Uno
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<PAGE>
Restaurant patrons, seek to have the action maintained as a class action and
seek to recover unspecified damages allegedly sustained by the plaintiff and the
other members of the class. The class is alleged to include all purchasers of
"Thinzettas"(R) thin crust pizzas who relied on, and sustained damage as a
result of, the alleged misrepresentations. The parties are engaged in settlement
negotiations.
Our affiliate, Uno Restaurants, Inc. ("URI"), was named a defendant in an
action entitled Grayborn Enterprises, Inc. vs. Uno Restaurants, Inc. (Case No.
CI 96-2063) brought in the Circuit Court of the Ninth Judicial Circuit for
Orange County, Florida by Complaint dated March 18, 1996. The Plaintiff is a
franchisee who alleged a breach of franchise Agreement by our affiliate, URI.
Plaintiff alleged that URI located a restaurant within a three mile territory
provided to Plaintiff by contract. The Plaintiff seeks an award of unspecified
damages and injunctive relief which would close the location operated by URI.
URI disputes the measurement by which Plaintiff's experts conclude an invasion
of the three mile territory equal to four hundred feet, and URI contends that no
negative impact has occurred to Plaintiff's restaurant, which is in a downtown
trade area separate from the airport where URI is located.
On January 22, 1997, URI was named a defendant in an action entitled
Grayborn Altamonte, Inc. v. Uno Restaurants, Inc., (Case No. 97-171-CA-16-W)
brought in the Circuit Court of the Eighteenth Judicial Circuit for Seminole
County, Florida. The plaintiff is a franchisee who alleged a breach of Florida
Statute 817.416 caused by URI's nondisclosure and/or misrepresentation of its
alleged efforts to oversaturate the market. The plaintiff sought compensatory
damages in an unspecified amount.
On February 6, 1998, the parties entered into a settlement agreement to
resolve the Grayborn Enterprises and Grayborn Altamonte cases. Under the
settlement agreement, we agreed to, among other things, purchase certain
restaurant assets (e.g., equipment, fixtures and furniture) from Grayborn
Altamonte, Inc. for a purchase price of $100,000, to withdraw and extend certain
compliance demands, and to modify a covenant not to compete with respect to Mr.
Jeffrey Grayson, owner of the plaintiff entities. The plaintiffs acknowledged
our right to develop additional Pizzeria Uno restaurants in the market and to
dismiss the above-described lawsuits. In February 1998, the suits were dismissed
by the Court.
Our Predecessor was named as a defendant in an action entitled Pizzeria
Uno of Madison, Inc. v. Pizzeria Uno Corporation, brought in United States
District Court for the Western District of Wisconsin on August 10, 1989 (Case
No. 89-C-07395). The plaintiff alleged that our Predecessor, among other things,
violated the Wisconsin Fair Dealership Law by (a) substantially changing the
competitive circumstances of a dealership which it claims to have entered into
with our Predecessor and (b) our Predecessor's alleged failure to provide notice
of the change. The plaintiff sought compensation in an amount that was not
definitively alleged in the lawsuit. Our Predecessor denied the existence of an
Agreement and filed a counterclaim against the plaintiff for contractual
interference. The case was settled by an Agreement dated November 29, 1989. The
settlement
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<PAGE>
Agreement provided for, among other things, a mutual release of all claims and
dismissal of the suit. In accordance with the settlement Agreement, the
plaintiff subsequently applied for and was granted an area franchise Agreement
for a limited area in Wisconsin.
Other than these five actions, no litigation is required to be disclosed
in the Offering Circular.
ITEM 4
BANKRUPTCY
Except as described below, no person previously identified in Items 1 or 2
of this offering circular has been involved as a debtor in proceedings under the
U.S. Bankruptcy Code, or a comparable foreign bankruptcy law, required to be
disclosed in this Item.
In May 1992, Cumberland Farms, Inc. filed for Chapter 11 protection in the
U.S. Bankruptcy Court for the District of Massachusetts Western Division
92-41305, JFQ, In re Cumberland Farms, Inc. Allan Afrow, our Vice President,
General Counsel and Secretary served as General Counsel of Cumberland Farms at
the time. In November 1993, Cumberland Farms, Inc. was discharged as a debtor.
ITEM 5
INITIAL FRANCHISE FEE
You must pay to us an initial franchise fee of $35,000, at the time you
sign the Franchise Agreement. The initial franchise fee is not refundable, and
is uniform for all franchisees.
You must also pay to us, when you sign the Development Agreement, an
amount equal to $22,500 for each Restaurant described in the Development
Schedule. The development fee is not refundable, and is uniform for all
developers. $17,500 of this amount will be applied to the initial franchise fee
for each Restaurant described in the Development Schedule.
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<PAGE>
ITEM 6
OTHER FEES
<TABLE>
<CAPTION>
====================================================================================================================================
NAME OF FEE AMOUNT DUE DATE REMARKS
====================================================================================================================================
<S> <C> <C> <C>
Royalty Fee 5% of Gross Sales, but not less Payable monthly on or before the
than $1,000 per month.(1) 15th day of the next month.
- ------------------------------------------------------------------------------------------------------------------------------------
Business Coop Fee(2) Up to 1% of Gross Sales. Same as Royalty Fee. This covers your share of
advertising and marketing costs
that we incur for the benefit of
the System. See Item 11.
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Minimum Local 2% of Gross Sales. Annually. You must spend at least 2% of
Advertising Expense Gross Sales annually on local
advertising, public relations,
and promotions of your choice,
subject to our approval.
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System Wide Media Fund Up to 1% of Gross Sales. Same as Royalty Fee. Contributions you make to this
Fee(3) Fund will offset your minimum
local advertising expense
requirements. See Item 11.
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Advertising Association As determined by Association, if As determined by Association. Contributions will offset your
Fees one is applicable to your area. minimum local advertising
expense requirements. See Item
11.
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Interest lesser of 1 1/2% per month or On demand. Interest may be charged on all
highest rate allowed by overdue amounts.
applicable law.
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Advertising and As determined by us. On demand. We develop advertising and
Promotional Materials Fee promotional materials from time
to time that we make available
for your use. We may charge you
a reasonable fee for the
materials.
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Transfer Fee $10,000 or any greater amount Submitted before transfer No fee is charged to an
necessary to reimburse us for approval. individual or partnership
our reasonable costs and franchisee that transfers its
expenses in reviewing the rights to a corporation
transfer application. controlled by the same interest
holders. A transfer fee of a
similar amount is charged under
both the Franchise Agreement and
the Development Agreement.
- ------------------------------------------------------------------------------------------------------------------------------------
Public Offering $10,000 or any greater amount When billed. This amount is to reimburse our
necessary to reimburse us for costs to review your proposed
our reasonable costs and securities offering. The
expenses in reviewing the offering fee is the same amount
proposed securities offering. under both the Franchise
Agreement and the Development
Agreement.
- ------------------------------------------------------------------------------------------------------------------------------------
Renewal Fee 25% of then current initial On signing renewal franchise You must give us at least 7
franchise fee. Agreement. months notice and meet other
conditions for renewal (see Item
17).
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Site Evaluation Expenses. (Estimated to range When billed. We provide one on-site
from $0-$1500). evaluation without charge. For
additional site selection visits
we may charge our costs (see
Items 5 & 11).
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</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
NAME OF FEE AMOUNT DUE DATE REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Employment Fee Compensation paid to employer in Before employment. If you or any of the Controlling
an amount equal to the previous Principals, during the term of
12 months of employee's salary. the Agreements, designate as
General Manager or employ an
individual who is at the time,
or has been within the preceding
12 months, employed by another
Pizzeria Uno franchisee or
developer in a restaurant
managerial position, a
multi-unit supervisory position
or headquarters staff position
(e.g., officer or director level
personnel, management
information systems personnel or
human resources personnel) or
key hourly employee position
(e.g., trainers, training team
members, and opening team
members) by us or any of our
affiliates, then you or the
Controlling Principal must
compensate the former employer.
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Additional Training Reasonable fee and travel. When billed. Applies if we provide you with
additional trained
representatives who provide on-
site remedial training.
- ------------------------------------------------------------------------------------------------------------------------------------
Insurance Fee To be determined by us. On demand. If you fail to procure or
maintain the insurance required
by the Franchise Agreement, we
have the right to procure it and
charge the same to you. We may
also charge you a fee for our
expenses in so doing.
- ------------------------------------------------------------------------------------------------------------------------------------
Construction or Reasonable costs and expenses. On demand. If you request, or we deem that
Remodeling Inspections more than 1 on-site inspection
is necessary during construction
or remodeling, you must pay all
costs and expenses for
additional visits. We may
conduct an inspection within a
reasonable time after completion
of construction or remodeling.
You must pay all reasonable
costs and expenses we incur
relating to the inspection.
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Deficiency Correction To be determined by us. On demand. We have the right to correct
Costs deficiencies in your operation
of the Restaurant if you have
not corrected them within a
reasonable time after receiving
notice from us. We may charge
you a reasonable fee for our
expenses in so acting.
- ------------------------------------------------------------------------------------------------------------------------------------
Training and Assistance Reasonable costs and expenses, When billed. We provide initial training for
Fees plus per diem for employees your Operating Principal (or his
providing services. designee), the General Manager
and other managers which we
select without additional charge
for your first Restaurant. If we
provide additional training or
assistance for additional or
replacement personnel, we have
the right to charge a reasonable
fee (see Item 11).
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
NAME OF FEE AMOUNT DUE DATE REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Manual Replacement Fee Reasonable Replacement Costs. Before replacement. We provide you with one copy of
Our current charge is $150. the Manuals without charge. If
we must replace your Manuals,
you must pay the replacement
fee.
- ------------------------------------------------------------------------------------------------------------------------------------
Force majeure Minimum 2% of Gross Sales based on the When billed. Applies if your Restaurant is
Fee/Reopening Fee prior 12 months of operation; closed because of a force
plus travel, salary and related majeure or other reason.
costs incurred by us and our
designee associated with
reopening the Restaurant.
- ------------------------------------------------------------------------------------------------------------------------------------
Product Inspection and Cost of inspection or testing. When billed. We may require you to pay us or
Testing an independent laboratory for
the cost of inspection or
testing if you purchase or lease
items used in the Restaurant
from sources we have not
previously approved (see Item
8).
- ------------------------------------------------------------------------------------------------------------------------------------
Legal Fees and Varies according to cost or loss On demand. You must pay our legal costs if
Indemnification incurred. we incur legal fees in
connection with your breach of
the Agreements and indemnify us
when certain of your actions
result in loss to us under the
Agreements (see Item 9).
- ------------------------------------------------------------------------------------------------------------------------------------
Audit Fee Cost of audit. When billed. Payable only if we find, after
an audit, that you have
understated any amount owed to
us by 2% or more, or Gross Sales
of 5% or more.
- ------------------------------------------------------------------------------------------------------------------------------------
Extension Fees 1/12 the average annual Paid with extension request. If you are unable to develop the
royalties then payable by a number of Restaurants required
franchised Restaurant during the under the Development Agreement
prior year. within the time periods
required, we may permit you to
pay an extension fee instead of
terminating the Development
Agreement (see Item 17).
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Convention Registration As determined by us. In 1997, Prior to convention. You must pay this registration
Fee our registration fee was $125 fee regardless of whether you or
per person. a substitute attends the
convention.
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Opening Date Fees Costs and expenses. On demand. If you open the Restaurant on a
date other than the Opening Date
on Attachment A of the Franchise
Agreement, and you have not
provided 30 days written notice
of the actual Opening Date, you
must reimburse us for our costs
and expenses incurred as a
result, including costs to amend
our travel arrangements for
training personnel.
- ------------------------------------------------------------------------------------------------------------------------------------
Software Upgrade and To be determined by us depending When billed. See Item 11
Enhancement Fee on cost and number of upgrades
or enhancements.
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
====================================================================================================================================
NAME OF FEE AMOUNT DUE DATE REMARKS
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Liquidated Damages $500,000 under the Development On demand.
Agreement/$250,000 under the
Franchise Agreement per
occurrence for breach of
confidentiality covenants;
$5,000 per day for breach of
noncompetition covenants.
- ------------------------------------------------------------------------------------------------------------------------------------
Liquidated Damages 2 times the average annual 5 days from receipt of notice. You may be required to pay
royalty fees payable by you for liquidated damages to us if you
the 2 year period immediately fail to obtain our consent to a
preceding the breach or a transfer under Section XIII.B.
greater amount as determined by of the Franchise Agreement.
us.
====================================================================================================================================
</TABLE>
(1) Gross Sales means the total selling price of all services and products and
all income of every other kind and nature related to the Restaurant (including,
income related to catering, delivery, and any other sales of food products or
food preparation services provided from or related to the Restaurant), whether
for cash or credit and regardless of collection in the case of credit. Under no
circumstances will your expenses, including third party delivery expenses, be
deducted from Gross Sales. Gross Sales will, however, expressly exclude the
following:
(1) Receipts from the operation of any public telephone installed in the
Restaurant, sales from vending or gaming machines located at the
Restaurant, except for any amount representing your share of such
revenues;
(2) Sums representing sales taxes collected directly from customers by you
in the operation of the Restaurant, and any sales, value added or other
tax, excise or duty charged to customers which is levied or assessed
against you by any Federal, state, municipal or local authority, based on
sales of specific merchandise sold at or from the Restaurant, provided
that such taxes are actually transmitted to the appropriate taxing
authority;
(3) Tips, gratuities or service charges paid directly by your customers to
your employees paid to you and promptly and to the extent turned over to
such employees by you in lieu of direct tips or gratuities;
(4) The exchange of merchandise among your Restaurants, if more than one
Restaurant is operated by Franchisee, where such exchanges are made solely
for the convenient operation of the your business;
(5) Returns to shippers or manufacturers;
(6) Proceeds from isolated sales of trade fixtures not constituting any
part of your products and services offered for resale at the Restaurant
nor having any material effect on the ongoing operation of the Restaurant;
and
(7) The value of any meal discount furnished to your employees as an
incident to their employment;
We may, from time to time, authorize certain other items to be excluded
from Gross Sales. Any such permission may be revoked or withdrawn at any time in
writing by us in our discretion. In addition to the above, the following are
included within the definition of "Gross Sales" described except as noted below:
(i) all proceeds from the sale of coupons, gift certificates, or vouchers issued
by us will not be included in Gross Sales; however, the full value of such
coupons, gift certificates or vouchers once redeemed for payment from us will be
included within Gross Sales during the month in which such coupon, gift
certificate or voucher is redeemed for payment from for the purpose of
determining the amount of Gross Sales on which the royalty fee is due. If you
issue any coupons, gift certificates, or vouchers, the full value of all
proceeds from the sale of those coupons, gift certificates or vouchers will be
included in Gross Sales during the month in which such coupon, gift certificate
or voucher was sold, and you will receive a credit to Gross Sales for the value
of that coupon, gift certificate, or voucher in the month in which such is
redeemed for the purpose of determining the amount of Gross Sales on which the
royalty fee is due; and (ii) the full value of any complimentary and promotional
food dispensed from the Restaurant will not be included in Gross Sales to the
extent such are dispensed in accordance with our standards for such programs, as
set forth in the Manuals or otherwise in writing.
(2) The Business Coop Fee covers your share of advertising, production,
marketing, training and inspection costs that we incur for the benefit of the
System. These costs include the following: salaries for people who are dedicated
to ad development, marketing and production support for the System; assessments
for administrative costs and overhead for such people; costs for marketing,
advertising, and production activities; training films; inspections; and related
functions benefiting the System.
(3) The System Wide Media Fund has not yet been implemented, but is designed to
facilitate media market spending in a way that benefits the System on a local,
regional or national basis through cooperative purchasing of print, radio or
television media.
* * *
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<PAGE>
All fees, except certain Minimum Local Advertising Expenses, are imposed,
collected by, and paid to us. All fees are non-refundable.
As of the date of this Offering Circular, there are no advertising
cooperatives. There is one advertising association in Philadelphia,
Pennsylvania. Contributions to the Philadelphia association are determined by a
vote of the members, with one vote per Restaurant. There are 10 member
Restaurants and we or our affiliates own two of these Restaurants.
ITEM 7
INITIAL INVESTMENT
<TABLE>
<CAPTION>
==========================================================================================================================
Method of To Whom
Cost or Expense Amount Payment When Due Paid
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Initial Franchise Fee $35,000 Lump Sum At Signing of Franchise Us
Agreement
- --------------------------------------------------------------------------------------------------------------------------
Initial Development Fee (1) $5,000 per Unit Lump Sum At Signing of Development Us
Agreement
- --------------------------------------------------------------------------------------------------------------------------
Leasehold Improvements $350,000 to $1,100,000 As Arranged As Arranged Contractor
- --------------------------------------------------------------------------------------------------------------------------
Furniture, Fixtures and $250,000 to $350,000 As Arranged As Arranged Suppliers
Equipment (2)
- --------------------------------------------------------------------------------------------------------------------------
Initial Inventory (Food, $10,000 to $20,000 As Arranged As Arranged Suppliers
Paper, Beverages)
- --------------------------------------------------------------------------------------------------------------------------
Point of Sale Computer $20,000 to $30,000 As Arranged As Arranged Suppliers
Hardware and Software
- --------------------------------------------------------------------------------------------------------------------------
Pre-Opening Salaries $10,000 to $25,000 As Arranged As Arranged Suppliers
Travel, Lodging, Meals
- --------------------------------------------------------------------------------------------------------------------------
Supplies (stationery, $1,000 to $5,000 As Arranged As Arranged Suppliers
business cards, etc.) (for 3
months)
- --------------------------------------------------------------------------------------------------------------------------
Business Permits $1,000 to $26,000 Lump Sum As Arranged Licensing Authorities
- --------------------------------------------------------------------------------------------------------------------------
Liquor License(3) $100 to $200,000 Lump Sum As Arranged Licensing Authorities
- --------------------------------------------------------------------------------------------------------------------------
Insurance deposits and $12,000 to $30,000 Lump Sum As Arranged Insurers
Premiums (for first year)
- --------------------------------------------------------------------------------------------------------------------------
Architect Fees $10,000 to $30,000 As Arranged As Arranged Architect
- --------------------------------------------------------------------------------------------------------------------------
Other Professional Fees $2,500 to $8,000 As Arranged As Arranged Attorneys, Accountants,
etc.
- --------------------------------------------------------------------------------------------------------------------------
Site Lease(4) $15,000 to $70,000 Lump Sum Monthly Landlord
- --------------------------------------------------------------------------------------------------------------------------
Utility Deposits $1,000 to $8,000 Lump Sum Monthly Utility Companies
- --------------------------------------------------------------------------------------------------------------------------
Advertising and $4,000 to $10,000 As Arranged As Arranged Suppliers, Media, etc.
Promotion
==========================================================================================================================
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
==========================================================================================================================
Method of To Whom
Cost or Expense Amount Payment When Due Paid
- --------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Additional Funds (3 $50,000 to $120,000 As Incurred As Incurred Employees, Suppliers
months)(5)
- --------------------------------------------------------------------------------------------------------------------------
Total (6) $771,600 to $2,067,000
==========================================================================================================================
</TABLE>
Note 1. When you sign a Development Agreement, you must pay $22,500 for
each Restaurant to be developed under the Development Schedule; however, $17,500
of this amount is applied to the initial franchise fee for each Restaurant to be
developed.
Note 2. The furniture, fixtures and equipment will vary, depending on the
size and seating capacity of the Restaurant. We require a standard interior
decor style, but may allow the Restaurant to reflect the location, market, and
your tastes within certain parameters prescribed and approved by us. We
recommend our prototype design for "pad locations" that do not have a building
already on them.
Note 3. Liquor licenses range widely in cost. This variation reflects the
fact that some states issue only a limited number of new liquor licenses each
year, or none at all, and it may therefore be necessary to purchase an existing
license at its fair market value, which amount may be substantial.
Note 4. This represents sums to be expended for rent and other charges
during the first three months of services. If you do not already own suitable
restaurant space, the premises must be purchased or leased. We anticipate that
most franchisees will lease the premises. We require a restaurant space of from
5,000 to 6,350 square feet. We prefer that you lease or purchase a lot of
approximately 1 1/2 acres that is 150 feet or more wide. The cost of leasing or
purchasing space will vary, depending on location and other factors, and cannot
be accurately projected by us.
Note 5. This represents your initial start up expenses primarily for labor
and supplies. These expenses include payroll costs. These figures are estimates
and we cannot guarantee that you will not have additional expenses starting the
business. Your costs will depend on factors such as: how much you follow our
methods and procedures; your management skill, experience and business acumen;
local economic conditions; the prevailing wage rate; competition and the sales
level reached during the initial period.
Note 6. The Totals do not include the Initial Development Fee which is
required only if a Development Agreement is signed.
To our knowledge, the costs or expenses described above are not
refundable.
As described in Item 10, we have arranged for STI Credit Corporation a/k/a
Sun Trust Credit. ("STI") to offer financing for the establishment of
Restaurants. STI will offer financing for up to 75% of the total cost of a
qualified franchisee's assets in the Restaurant, exclusive of the unit franchise
fee, not to exceed $500,000 for new franchisees and $750,000 for multi-unit
operators. STI will quote their standard rate at the time, which will vary
depending on, among other things, the term and amount of the loan and the amount
of advance payments. The term of the financing is five to seven years with the
rate fixed for the first five years then reset at month 61 to the standard rate
in effect at that time for the balance of the payments. (see Item 10 ).
We anticipate that your expenses to develop Restaurants under the
Development Agreement will be primarily as described in the chart above,
multiplied by the number of units in the Development Schedule.
- 14 -
<PAGE>
ITEM 8
RESTRICTIONS ON SOURCES
OF PRODUCTS AND SERVICES
You must maintain the Restaurant in a high degree of sanitation, repair
and condition, and make such additions, alterations, repairs and replacements
(but no others without our prior written consent) as may be required for that
purpose, including, such periodic repainting or replacement of obsolete signs,
furnishings, equipment and decor as we may reasonably direct, at your cost and
expense. You must also obtain, at your expense, any new or additional equipment,
fixtures, supplies and other products and materials which we may reasonably
require for you to offer and sell new menu items or to provide the Restaurant's
services by alternative means. Except as may be expressly provided in the
Manuals, no alterations or improvements or changes of any kind in design,
equipment, signs, interior or exterior decor items, fixtures or furnishings will
be made in or about the Restaurant or its premises without our prior written
consent.
You must on our request, make other improvements to modernize the
Restaurant premises, equipment (including electronic cash register or computer
hardware and software systems), signs, interior and exterior decor items,
fixtures, furnishings, supplies and other products and materials required for
the operation of the Restaurant, to our then-current standards and
specifications. Notwithstanding the above, you must make such capital
improvements or modifications described if we so request at the earlier of: (i)
10 years after the execution of the Franchise Agreement, or (ii) such time that
a majority of the Restaurants then operated by us or our affiliates in the
United States have made or have initiated such improvements or modifications.
You must comply with all of our standards and specifications relating to
the purchase of all food and beverage items, ingredients, supplies, materials,
fixtures, furnishings, equipment (including electronic cash register or computer
hardware and software systems) and other products used or offered for sale at
the Restaurant. Except as otherwise provided in the Franchise Agreement, you
must obtain such items from suppliers (including manufacturers, distributors and
other sources) who continue to demonstrate the ability to meet our then-current
standards and specifications for food and beverage items, ingredients, supplies,
materials, fixtures, furnishings, equipment and other items used or offered for
sale at Restaurants and who possess adequate quality controls and capacity to
supply your needs promptly and reliably; and who have been authorized in writing
by us prior to any purchases by you from any such supplier; and who have not
thereafter been rejected by us. If you desire to purchase, lease or use any
products or other items from an unauthorized supplier, you must submit to us a
written request for our consent, or must request the supplier itself to do so.
You must not purchase or lease from any supplier until and unless such supplier
has been authorized in writing by us. We will have the right to require that our
representatives be permitted to inspect the supplier's facilities, and that
samples from the supplier be delivered, either to us or to an independent
laboratory designated by us for testing. You must pay the expenses incurred by
us or our designee in connection with the test and the actual cost of the test.
We reserve the right, at our option, to re-inspect from
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<PAGE>
time to time the facilities and products of any supplier previously consented to
by us and to revoke our consent on the supplier's failure to continue to meet
any of our then-current criteria. Nothing above will be construed to require us
to consent to any particular supplier.
You must operate the Restaurant in strict conformity with our standards
and specifications and the restrictions on the use of the Proprietary Marks
described in the Franchise Agreement. In particular, you must:
1. Maintain in sufficient supply and to use and sell at all times only
such food and beverage items, ingredients, products, materials, supplies and
paper goods that conform to our standards and specifications.
2. Grant us and our agents the right to enter on the Restaurant premises
at any time for the purpose of conducting inspections; cooperate with our
representatives in such inspections by rendering such assistance as they may
reasonably request; and, on notice from us or our agents, take such steps as may
be necessary to correct immediately any deficiencies detected during any such
inspection. Should you, for any reason, fail to correct such deficiencies within
a reasonable time as we determine, we will have the right and authority
(without, however, any obligation to do so) to correct such deficiencies and
charge you a reasonable fee for our expenses in so acting, payable by you
immediately on demand. You must permit us or our agents, at any reasonable time,
to remove a reasonable number of samples of food or non-food items from your
inventory, or from the Restaurant, without payment, in amounts reasonably
necessary for testing by us or an independent laboratory to determine whether
such samples meet our then-current standards and specifications. We may require
you to bear the cost of such testing if the supplier of the item has not
previously been consented to by us or if the sample fails to conform with our
specifications.
3. Purchase or lease, install and maintain, at your expense, all fixtures,
furnishings, equipment (including electronic cash register or computer hardware
and software systems), decor items, signs, delivery vehicles, and related items
as we may reasonably direct from time to time in the Manuals or otherwise in
writing; and refrain from installing or permitting to be installed on or about
the Restaurant premises, without our prior written consent, any fixtures,
furnishings, equipment, delivery vehicles, decor items, signs, games, vending
machines or other items not previously authorized as meeting our standards and
specifications. Such maintenance includes such computer hardware and software
upgrades, repairs, and replacements as we may direct from time to time. If any
of the property described above is leased by you from a third party, you must
submit a copy of the proposed lease to us for written consent prior to its
execution and shall furnish to us a copy of the executed lease within 10 days
after execution. No lease for the Restaurant premises will be approved by us
unless a rider to the lease, prepared by us and executed by us, you and the
lessor, in substantially the form attached as Attachment B to the Franchise
Agreement, is attached to the lease and incorporated therein. Attachment B
provides, among other things, that:
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<PAGE>
(a) During the term of the Franchise Agreement, the leased premises
must be used only for the operation of the Restaurant.
(b) The landlord consents to your use of the Proprietary Marks and
signs, interior and exterior decor items, color schemes, plans, specifications
and related components of the System as we may prescribe for the Restaurant.
(c) The landlord agrees to furnish us with copies of any and all
letters and notices sent to you pertaining to the lease and the premises at the
same time that such letters and notices are sent to you.
(d) We have the right to enter the premises to make any modification
or alteration necessary to protect the System and Proprietary Marks or to cure
any default under the Franchise Agreement or any development agreement entered
into between us and you or under the lease, without being guilty of trespass or
any other crime or tort, and the landlord will not be responsible for any
expense or damages arising from our action.
(e) If you default under the terms of the lease, we may cure the
default and assume the lease in our name.
(f) You will be permitted to assign the lease to us or our
affiliates on the expiration or earlier termination of the Franchise Agreement
and the landlord consents to such assignment and agrees not to impose or assess
any assignment fee or similar charge or accelerate rent under the lease
regarding the assignment, or require us to pay any past due rent or other
financial obligations of you to the landlord. The landlord will look solely to
you for any rents or other financial obligations owed to the landlord prior to
such assignment. We are not a party to the lease and have no liability under the
lease, unless and until the lease is assigned to, or assumed by, us.
(g) We are authorized, without the consent of the lessor, to sublet
the premises to an authorized franchisee, provided such subletting is
specifically subject to the terms of this lease and further provided we remain
liable for the performance of the terms of the lease and provided you expressly
assume all obligations of the lease.
(h) You may not assign the lease or renew or extend its term without
our prior written consent.
We will have 30 days after receipt of the proposed contract of sale or
proposed lease to either consent to or reject such documentation prior to its
execution.
4. Play in the Restaurant such recorded or programmed music as we may from
time to time require in the Manuals or otherwise in writing and to obtain such
copyright licenses as may be necessary to authorize the playing of such recorded
music.
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<PAGE>
5. Install and maintain certain computer equipment (see Item 11).
We have and may continue to develop for use in the System certain
products, including products which are prepared from highly confidential recipes
and which are our trade secrets. Because of the importance of quality and
uniformity of production and the significance of such products in the System, it
is to the mutual benefit of us and you that we closely control the production
and distribution of such products. Accordingly, if such products become a part
of the System, you must use only our confidential recipes and other proprietary
products, and must purchase solely from us or authorized suppliers designated by
us all of your requirements for such products. If we make available to you
certain promotional merchandise identifying the System as we may require such as
T-shirts, sweatshirts and caps, you must purchase from us or from a source
designated by us for resale to your customers such merchandise in amounts
sufficient to satisfy your customer demand.
You must require all advertising and promotional materials, signs,
decorations, paper goods (including menus and all forms and stationery used in
the Restaurant), and other items which we may designate to bear the Proprietary
Marks in the form, color, location and manner prescribed by us.
Any vehicle which you use to deliver Restaurant products and services to
customers must meet our standards and specifications with respect to appearance
and ability to satisfy the requirements imposed on you. You must place such
signs and decor items on the vehicle as we require and must at all times keep
such vehicle clean and in good working order. You must not engage or utilize any
individual in the operation of a motor vehicle in connection with providing
services under the Franchise Agreement who does not meet the minimum
requirements to operate a motor vehicle under the laws of the state in which you
provide such services. You must require each such individual to comply with all
laws, regulations and rules of the road and to use due care and caution in the
operation and maintenance of motor vehicles. Except as noted above, we do not
set forth any requirements or exercise control over any motor vehicle which you
utilize.
We will promptly furnish to you, on your written request, our then current
standards and specifications applicable to any equipment, supplies, trademarked
paper goods, or other products required by us, provided that we will not be
obligated to disclose any of our trade secrets. In addition, we will promptly
furnish to you, on your written request, the names and addresses of all
manufacturers, currently approved by us, from whom such equipment, supplies,
trademarked paper goods, and other products may be purchased.
Our specifications for products are generally issued through written
communications and are available to franchisees and approved suppliers. To
obtain approval of a product, you must submit a written request and provide
additional information which we may request. We often test products at
restaurants owned by our affiliates as part of our evaluation. Except as
described above, we do not impose a fee for product approval requests and
generally process requests from between one day to three months after we receive
them.
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<PAGE>
We have offered design services for a fee to assist in implementing
approved premises alterations requested by franchisees. These fees have ranged
from $500 to $3,500 during our last fiscal year. Otherwise, neither we nor our
affiliates are approved suppliers of goods or services.
You must procure, on execution of the Franchise Agreement, and must
maintain in full force and effect at all times during the term of the Franchise
Agreement, at your expense, an insurance policy or policies protecting you and
us and our affiliates and their respective affiliates, successors and assigns
and each such entity's respective officers, directors, shareholders, partners,
agents, representatives, independent contractors and employees against any
demand or claim with respect to personal injury, death or property damage, or
any loss, liability or expense whatsoever arising or occurring on or in
connection with the Restaurant.
These policy or policies must be written by a responsible carrier or
carriers reasonably acceptable to us (e.g., having been assigned an "A" rating
or its equivalent by a recognized insurance rating service) who are duly
licensed by the appropriate governmental authorities and must include, at a
minimum (except as additional coverages and higher policy limits may reasonably
be specified by us from time to time and such other changes or modifications to
such coverages and limits as we deem appropriate, in accordance with standards
and specifications set forth in writing), the following:
1. Comprehensive General Liability Insurance, including broad form
contractual liability, broad form property damage, personal injury, advertising
injury, completed operations, products liability, business interruption, and
fire damage coverage, in the amount of $5,000,000 combined single limit.
2. Liquor Legal Liability Insurance in the amount of $5,000,000 combined
single limit.
3. Special form coverage (including earthquake and flood, if applicable)
for the full cost of replacement of the Restaurant premises and all other
property in which we may have an interest with no coinsurance clause.
4. An "umbrella" policy providing excess coverage with limits of not less
than $5,000,000, except that if you own five or more Restaurants, you must
maintain coverage with limits of not less than $10,000,000.
5. Automobile liability coverage, including coverage of owned, non-owned
and hired vehicles, with coverage in amounts not less than $1,000,000 combined
single limit.
6. Workers' Compensation insurance in amounts provided or described by
applicable law and employers' liability insurance with coverage limits of not
less than: $1,000,000, each bodily injury by accident; $1,000,000, bodily injury
by disease; and $1,000,000, each employee for bodily injury by disease;
provided, however, if the state or locality in which the Restaurant is located
and operated does not require Workers' Compensation insurance, or if such
insurance is required but coverage
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<PAGE>
limits are not specified, then you must obtain comparable insurance coverage in
coverage amounts as are reasonably required by us.
7. Such other insurance as may be required by the state or locality in
which the Restaurant is located and operated.
8. You may, with our prior written consent, elect to have reasonable
deductibles in connection with the coverage required above. Such policies must
also include a waiver of subrogation in favor of us and our directors, officers,
shareholders, partners, employees, representatives, independent contractors and
agents.
In connection with any construction, renovation, refurbishment or
remodeling of the Restaurant, you must maintain insurance covering the completed
value of the construction and commercial general liability insurance in forms
and amounts, and written by a carrier or carriers, reasonably satisfactory to
us.
Your obligation to obtain and maintain the above policy or policies in the
amounts specified will not be limited in any way by reason of any insurance
which we may maintain, nor will your performance of that obligation relieve your
liability under the indemnity provisions set forth in the Franchise Agreement.
All public liability and property damage policies must contain a provision
that we and our directors, officers, shareholders, partners, employees,
representatives, independent contractors and agents, although named as insureds,
will nevertheless be entitled to recover under such policies on any loss
occasioned to us or our servants, agents or employees by reason of the
negligence of you or your servants, agents or employees.
On execution of the Franchise Agreement, and thereafter in accordance with
the Franchise Agreement and 30 days prior to the expiration of any such policy,
you must deliver to us Certificates of Insurance or other evidence of the
existence and continuation of proper coverage with limits not less than those
required under the Franchise Agreement. All insurance policies required, with
the exception of workers' compensation or its equivalent, must name us and any
parent or affiliate, and their respective directors, officers, shareholders,
partners, employees, representatives, independent contractors and agents, as
additional insureds, and must expressly provide that any interest of them will
not be affected by your or your Controlling Principals' breach by of any policy
provisions. All required insurance policies must expressly provide that no less
than 30 days' prior written notice will be given to us in the event of a
material alteration to or cancellation of the policies.
Should you, for any reason, fail to procure or maintain the insurance
required by the Franchise Agreement, as such requirements may be revised from
time to time by us in writing, we will have the right and authority (without,
however, any obligation to do so) to procure such insurance and to
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<PAGE>
charge you, which charges, together with a reasonable fee for our expenses in so
acting, will be payable by you immediately on notice.
During our last fiscal year, we did not derive any revenue from our
franchisees' purchases or leases from third parties. We currently do not receive
any rebates or discounts from suppliers as a result of purchases by our
franchisee, that are not remitted to our franchisees.
We estimate that the required purchases described above will represent 80%
- - 90% of all the purchases necessary to establish a Restaurant, and 80% - 90% of
all purchases necessary to operate a Restaurant.
As of the date of this Offering Circular, there is one purchasing or
distribution cooperative. The cooperative, which purchases advertising for the
Philadelphia market, consists of 10 Restaurants, two of which are owned by us or
our affiliates. Franchisees' contributions to the cooperative are determined by
a vote of cooperative members, with each member receiving one vote per
Restaurant.
We do not provide material benefits to franchisees based on their use of
designated or approved sources.
ITEM 9
FRANCHISEE'S OBLIGATIONS
THIS TABLE LISTS YOUR PRINCIPAL OBLIGATIONS UNDER THE FRANCHISE AND OTHER
AGREEMENTS. IT WILL HELP YOU FIND MORE DETAILED INFORMATION ABOUT YOUR
OBLIGATIONS IN THESE AGREEMENTS AND IN OTHER ITEMS OF THIS OFFERING CIRCULAR.
<TABLE>
<CAPTION>
==================================================================================================================================
Item in
Obligation Section in Agreement Offering Circular
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Site selection and acquisition/lease Section III of Franchise Agreement Items 8 and 11
- ----------------------------------------------------------------------------------------------------------------------------------
Pre-opening purchases/leases Sections VI and XI of Franchise Agreement Items 5, 6, 7, 8 and 11
- ----------------------------------------------------------------------------------------------------------------------------------
Site development and other pre-opening Section III of Franchise Agreement, Section IV Items 6, 7 and 11
requirements of Development Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Initial and ongoing training Section XI of Franchise Agreement Items 6, 7, 8 and 11
- ----------------------------------------------------------------------------------------------------------------------------------
Opening Sections III and XI, and Attachment A of Item 11
Franchise Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Fees Sections IV, VI, and VII of Franchise Items 5 and 6
Agreement, Section VI of the Development
Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Compliance with standards and policies/Manuals Sections II, III, VI, VII, VIII, IX, X, XI, XII, Items 11 and 14
and XVI of Franchise Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
==================================================================================================================================
Item in
Obligation Section in Agreement Offering Circular
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Trademarks and proprietary information Sections VIII, XII, XVIII and Attachment D of Items 13 and 14
Franchise Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Restrictions on products/services offered Section VI of Franchise Agreement Items 8 and 16
- ----------------------------------------------------------------------------------------------------------------------------------
Warranty and customer service requirements Section VII of Franchise Agreement Item 8
- ----------------------------------------------------------------------------------------------------------------------------------
Territorial development and sales quotas Section IV of Development Agreement Item 12
- ----------------------------------------------------------------------------------------------------------------------------------
Ongoing product/service purchases Section VI of Franchise Agreement Items 6 and 8
- ----------------------------------------------------------------------------------------------------------------------------------
Maintenance, appearance and remodeling Sections III, VI, X and XIII of Franchise Items 8 and 11
requirements Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Insurance Section X of Franchise Agreement Items 7 and 8
- ----------------------------------------------------------------------------------------------------------------------------------
Advertising Section VII of Franchise Agreement Items 6, 8 and 11
- ----------------------------------------------------------------------------------------------------------------------------------
Indemnification Section XVIII of Franchise Agreement, Item 6
Section XII of Development Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Owner's participation/management/staffing Sections XI, XIII and XVIII of Franchise Items 1, 11 and 15
Agreement, Section V of Development
Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Records and reports Sections IV, VI and IX of Franchise Item 6
Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Inspections and audits Sections III, VI and IX of Franchise Items 6, 8 and 11
Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Transfer Section XIII of Franchise Agreement, Section Items 6 and 17
VIII of the Development Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Renewal or Extension of Rights Section II of Franchise Agreement, Section IV Items 6 and 17
of Development Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Post-termination obligations Section XVII of Franchise Agreement, Section Items 6 and 17
XI of the Development Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Noncompetition covenants Section XII and Attachment D of Franchise Item 17
Agreement, Section VII and Attachment B of
the Development Agreement
- ----------------------------------------------------------------------------------------------------------------------------------
Dispute resolution Section XIX of Franchise Agreement, Section Items 6 and 17
XIII of the Development Agreement
==================================================================================================================================
</TABLE>
ITEM 10
FINANCING
Except as described below, we do not offer direct or indirect financing
for franchisees or developers, nor do we guarantee notes, leases, or other
obligations for franchisees or developers.
We have arranged for STI Credit Corporation a/k/a Sun Trust Credit, a
third party lender which is not affiliated with us ("STI") to offer financing
for the establishment of Restaurants. STI
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<PAGE>
offers furniture, fixtures and equipment financing for up to 75% of the total
cost of a qualified franchisee's assets in the Restaurant, exclusive of the unit
franchisee fee, not to exceed $500,000 for new franchisees and $750,000 for
multi-unit operators. STI will quote their standard rate at the time, which will
vary depending on, among other things, the term and amount of the loan and the
amount of advance payments. The term of the financing is five to seven years
with the rate fixed for the first five years then reset at month 61 to the
standard rate in effect at that time for the balance of the payments. The
following are two sample rate quotes which were in effect on January 1, 1999:
Non-Real Estate Loan Program Rates with One Advanced Payment as of January 1,
1999.
Months $75,001-$150,000 $150,001-$350,000 $350,000-$500,000
- ------ ---------------- ----------------- -----------------
48 months 11.30% 11.00%
60 months 11.65% 11.45% 11.11%
72 months 11.50% 11.30% 10.87%
84 months 11.06% 10.86% 10.66%
Non-Real Estate Fair Market Value Equipment Lease, Stream of Payment Program
Rates with One Advanced Payment as of January 1, 1999.
Months $75,001-$150,000 $150,001-$350,000 $350,000-$500,000
- ------ ---------------- ----------------- -----------------
48 months 9.03% 8.82%
60 months 9.50% 9.29% 9.09%
72 months 9.95% 9.75% 9.56%
84 months 10.19% 10.00% 9.80%
These rate are subject to change. The loan will be secured by a first priority
security interest in all accounts receivable, contract rights, inventory,
machinery, equipment, furniture, fixtures, and certain other assets. STI will
require that you (or if a corporation or partnership will execute the Franchise
Agreement, that the shareholders and partners) guarantee the financing. The
financing may be prepaid, but you will be required to pay a prepayment fee of
2.5% of the remaining principal balance. Your potential liabilities on default
of the financing include an accelerated obligation to pay the entire amount due
and an obligation to pay all costs of collection, including attorney's fees.
These terms are included in the Promissory Note, which is attached, along with
other financing documents, to Item 22 of this Offering Circular. We may
guarantee the financing with STI.
We do not have any past or present practice or intent to sell, assign, or
discount to a third party, all or part of the financing arrangement, but reserve
the right to do so. Neither we nor our affiliates receive payments for the
placement of financing with STI or any other lender.
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<PAGE>
ITEM 11
FRANCHISOR'S OBLIGATIONS
Except as listed below, we need not provide any assistance to you.
Pre-Opening Obligations
Prior to the opening of the Restaurant to the public, we will offer
certain services to you pursuant to the Franchise Agreement. The Development
Agreement confers development rights only and does not require us to provide any
services to you. The services we make available under the Franchise Agreement
are as follows:
1. Our Site Selection Handbook and such site selection assistance as we
may deem advisable, as well as such on-site evaluation as we may deem necessary
on our own initiative or in response to your reasonable request for evaluation
of a site; provided, however, that we will not provide an on-site evaluation for
any proposed site prior to the receipt of all required information and materials
concerning such site. (Franchise Agreement ss. V.A.)
2. On loan, a set of prototypical architectural and design plans and
specifications for a Restaurant. You must independently, and at your expense,
have such architectural and design plans and specifications adapted for
construction of the Restaurant in accordance with the Franchise Agreement,
including such adaptations required in order to comply with the regulations and
standards required under applicable state or local laws where the Restaurant is
located. No such plans and specifications may be modified in any material
respect without our prior written consent, which consent will not be
unreasonably withheld. (Franchise Agreement ss. V.B.)
3. On loan, one (1) set of Manuals. (Franchise Agreement ss. V.C.)
4. An initial training program for Franchisee's Operating Principal (or
designee), General Manager and other Restaurant personnel and other training
programs, as described below. (Franchise Agreement ss. V.H.)
5. On-site pre-opening assistance at the Restaurant in accordance with the
provisions of the Franchise Agreement, as described below. (Franchise Agreement
ss. V.I.)
Continuing Obligations
After the opening of the Restaurant to the public, we will offer
additional services to you pursuant to the Franchise Agreement. The Development
Agreement does not require us to provide any services to you. The services
available after opening are as follows:
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<PAGE>
1. If available as determined by us, we will license to you certain
computer software used in the operation of the Restaurants. Such software may
require connection to (at your expense) and operation of computers designated by
us. We will make available to you at a reasonable cost any upgrades,
enhancements or replacements to the software that are developed from time to
time by or on are behalf. We will provide to you, for a reasonable fee, such
support services relating to the software as we deem advisable. (Franchise
Agreement ss. V.D.)
2. Visits to the Restaurant and evaluations of the products sold and
services rendered in it from time to time as reasonably determined by us, as
more fully described in the Franchise Agreement. (Franchise Agreement ss. V.E.)
3. Certain advertising and promotional materials and information developed
by us from time to time for your use in marketing and conducting local
advertising for the Restaurant. We may charge you a reasonable fee for such
advertising and promotional materials. We may review and consent to or reject
all advertising and promotional materials that you propose to use. (Franchise
Agreement ss. V.F.)
4. Advice and written materials concerning techniques of managing and
operating the Restaurant from time to time developed by us, including new
developments and improvements in Restaurant equipment and food products, source
specifications and the packaging and preparation. (Franchise Agreement ss. V.G.)
5. On-site pre-opening and post-opening assistance at the Restaurant in
accordance with the provisions of the Franchise Agreement, as described below.
(Franchise Agreement ss. V.G.)
* * *
Advertising Programs
Advertising Associations (Franchise Agreement ss. VII.B.)
We have the right, in our discretion, to designate any geographical area
(e.g., an area of dominant influence or "ADI") as a region for purposes of
establishing an advertising association ("Association"). An Association may be
composed of one or more Pizzeria Uno restaurants operated by us and/or one or
more Pizzeria Uno restaurants operated by you or another of our franchisees. If
an Association has been established for the geographic area in which the
Restaurant is located at the time you commence business, you must immediately
execute the documentation we require to become a member of the Association. If
an Association applicable to the Restaurant is established at any later time,
you must execute the documentation we require to become a member of the
Association no later than 30 days after the date on which the Association
commences operation as provided below:
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<PAGE>
(a) Each Association must be organized and governed in a form and
manner, and must commence operation on a date we approve in advance and in
writing.
(i) Each Association must be organized for the purposes of,
and all contributions to the Association and any earnings on those contributions
must be used exclusively to meet any and all costs for, maintaining, directing
and preparing advertising and/or promotional activities (including, among other
things, the cost of preparing and conducting television, radio, magazine and
newspaper advertising campaigns, direct mail and outdoor billboard advertising;
marketing surveys and other public relations activities; employing advertising
agencies; and providing promotional brochures and other marketing materials to
the outlets operated under the System) in connection with regional advertising.
These monies may also be used to defray our reasonable administrative costs and
overhead as we may incur in activities reasonably related to the administration
or direction of the Association or related to any advertising program conducted
by or on behalf of the Association. The Association is operated solely as a
conduit for the collection and expenditure of advertising contributions for the
purposes stated in the Franchise Agreement.
(ii) No advertising or promotional plans or materials may be
used by an Association or furnished to its members without our prior approval.
All such plans and materials must be submitted to us in accordance with the
procedures in the Franchise Agreement.
(iii) You must contribute to the Association an amount
prescribed by the Association, at the times and in the manner prescribed by the
Association, and must submit to the Association and to us other statements or
reports as may be required by us or by the Association with our prior written
approval.
(b) We, in our sole discretion, may grant to any franchisee, an
exemption for any length of time from the requirement of membership in an
Association, on written request from the franchisee stating reasons supporting
the exemption. Our decision concerning the request for exemption will be final.
As described in Item 8, there is one local advertising association, in
Philadelphia, Pennsylvania. For all Associations, member franchisees' required
contributions will be determined by a vote of the members. We or someone we
designate will be responsible for administration of the Associations. The
Associations must prepare annual or periodic financial statements, which will be
available for your review. We have the power to require Associations to be
formed (subject to the above), changed, dissolved, or merged.
Any action or advertising programs undertaken by any Association will not
diminish your obligations to pay the Business Coop Fee, but any expenditures for
these actions or programs will count toward Minimum Local Advertising Expense
obligations described in Item 6 above. (Franchise Agreement ss. VII.C.)
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System Wide Media Fund (Franchise Agreement ss. VII.H.)
We also reserve the right to assess you for contributions to a system wide
media fund which will be designed to facilitate media market spending in a way
that benefits the System through cooperative purchasing of media (the "System
Wide Media Fund"). The System Wide Media Fund can be implemented on either a
local, regional, or national basis. Fees paid to this Fund, if established, will
be counted toward satisfaction of your Minimum Local Advertising Expense. We
have not, as of the date of this offering, circular established this Fund.
Advertising for the System Wide Media Fund may be prepared by our in-house
advertising department or an advertising agency. On our establishment of the
System Wide Media Fund, your obligations will be as follows:
(a) On the 15th day of each month during the term of the Agreement,
you must contribute an amount we designate, but not more than 1% of your Gross
Revenues for the preceding month.
(b) We, or our designee, will maintain and administer the System
Wide Media Fund as follows:
(i) We will oversee all advertising and promotional programs
with sole discretion to approve or disapprove the creative concepts, materials
and media used in these programs, and the placement and allocation of them. The
System Wide Media Fund is intended to maximize general public recognition and
acceptance of the Intellectual Properties for the benefit of the System on a
local, regional or national basis.
(ii) The System Wide Media Fund, all contribution to it, and
any earnings on it will be used exclusively by us to purchase radio, television
or print media on a local, regional or national basis.
(iii) You must contribute to the System Wide Media Fund by
separate check made payable to the System Wide Media Fund. All sums paid by you
to the System Wide Media Fund will be maintained in an account separate from our
other monies and will not be used to defray any of our expenses, except for
costs incurred for media that benefits any part of the System. The System Wide
Media Fund and its earnings will not otherwise inure to our benefit. We or our
designee will maintain separate bookkeeping accounts for the System Wide Media
Fund.
(iv) It is anticipated that all contributions to and earnings
of the System Wide Media Fund will be expended for advertising and/or
promotional purposes during the taxable year within which the contributions and
earnings are received. If, however, excess amounts remain in the System Wide
Media Fund at the end of the taxable year, all expenditures in the following
taxable year(s) will be made first out of accumulated earnings from previous
years, next out of earnings in the current year, and finally from contributions.
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(v) The System Wide Media Fund will not be our or our
designee's asset. The System Wide Media Fund is operated solely as a conduit for
the collection and expenditure of advertising contributions. A statement of the
operations of the System Wide Media Fund as shown on our or our designee's books
will be prepared annually and will by made available to you on your request.
(vi) Although the System Wide Media Fund is intended to be of
perpetual duration, we maintain the right to terminate the System Wide Media
Fund. The System Wide Media Fund will not be terminated, however, until all
monies in the System Wide Media Fund have been expended for advertising and/or
promotional purposes.
We will not have a fiduciary obligation in connection with our maintenance
or administration of the System Wide Media Fund.
Business Coop, Minimum Advertising Expenses, and Other Advertising
Programs
The Business Coop program, the Minimum Advertising Expense, signage
requirements, and telephone directory requirements are described in Items 6, 8
and 9.
The Business Coop program (and any voluntary advertising program) may
place advertising in print, audio, television, or other media, and it is
utilized for ad production, menu production, sanitation and service inspections
and other services benefiting the System (e.g., premises inspections, and supply
and supplier inspections). The coverage of Business Coop advertising may be
local, regional, or national in scope. There are also voluntary promotional
programs developed for use by all Pizzeria Uno restaurants, but participation is
optional. Advertising for these programs is developed both internally by us, and
by an outside advertising agency.
The Business Coop Program is administered by us, unaudited financial
statements are prepared annually, and the annual financial statements are
available for review by franchisees. In the most recently concluded fiscal year
the Business Coop program spent its funds in the following percentages: 36% on
production; 36% on media placement; 20% on administrative expenses; and 8% on
other (including 2% on training manuals, 2% on shopper/customer satisfaction
surveys, 2% on sanitation inspections and 2% on research and development).
Neither we or our affiliates receive payment for providing goods or services to
the Business Coop program.
For the Business Coop program, we are not obligated to spend any amount on
advertising in the area or territory where you are located. If fees are not
spent in the fiscal year in which they accrue, the fees will be carried forward
into the following fiscal year. Except as described above, we have no obligation
to prepare or provide an accounting of how advertising fees are spent. No funds
are used for advertising that is principally a solicitation for the sale of
franchises. There is no advertising council composed of franchisees, but there
is a Franchise Advisory Board (the "FAB"), through which you may make comments
on advertising policy or programs. The FAB acts in an
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advisory capacity only. Members are selected by a vote of franchisees (one vote
per franchisee), and we reserve the right to change, reform or dissolve the FAB.
* * *
Both franchised and company-owned Restaurants contribute to the
advertising programs described above. Company-owned Restaurants contribute on
the same basis as franchisees. The amount which you must contribute is described
in Item 6, and is the same for all franchisees.
You must submit a sample of each type of advertising material to us prior
to use, and, on receipt of the material, we will have 10 working days to approve
or disapprove the material. If we take no action within 10 days, you may use the
material submitted. We may disapprove if, in our sole discretion, the material
is offensive, inaccurate, strategically inappropriate, potentially harmful to
the Intellectual Properties or otherwise injurious to us or franchisees. Any
expenditures for advertising that we have not approved will not be counted
toward satisfaction of your Minimum Local Advertising Expense, as described in
Item 6. (Franchise Agreement ss. VII.D.)
Electronic Cash Register and Computer Programs
You must install and maintain equipment in accordance with our standards
and specifications to permit us to access and retrieve by telecommunication any
information we are entitled to obtain which is stored on electronic cash
registers (or other computer hardware and software). You must install and
utilize at the Restaurant premises (a) such equipment and software as specified
in the Manuals to permit us to inspect and monitor electronically information
concerning your Restaurant, Gross Sales and such other information as may be
contained or stored in such equipment and software; and (b) a telephone line and
modem in accordance with our specifications to permit us to access by telephone
the electronic cash register system (or other computer hardware and software)
that you are required to utilize at the Restaurant as specified in the Manuals.
We will have telephone access at such times and in such manner as we from time
to time specify. It will be a material default under the Franchise Agreement if
you fail to maintain such equipment and lines in operation and accessible to us
at all times. (Franchise Agreement ss. VI.E.(9).)
If we make available to you the computer software described in the
Franchise Agreement, you must enter into a software license agreement with us in
substantially the form attached to the Franchise Agreement for the license of
such proprietary computer software provided by us for the operation of the
Restaurant. (Franchise Agreement ss. VI.E.(10).)
We may designate new or upgraded systems. There is no contractual
limitation on the frequency or cost of your obligation of purchased new systems
or to upgrade your existing systems.
As of the date of this Offering Circular, we have designated the NCR 7450
POS System (the "POS System") for use by our franchisees. The POS System is a
combined hardware and software
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system, which is manufactured by NCR Corporation and is commonly used in the
restaurant industry. NCR Corporation is located at 1700 South Patterson Blvd.,
Dayton, Ohio 45479. Its telephone number is (513) 297-5700. The POS System has
been in continuous use by us and our franchisees since February of 1995. The POS
System controls sales transactions and is capable of generating a wide variety
of reports including: terminal totals listings, cashier totals listings, server
totals listings, and menu item sales analysis.
The POS System is the proprietary property of NCR Corporation, of which we
are not affiliated. You may purchase the POS System from any approved supplier.
Neither we, our affiliates, or a third party has the contractual right or
obligation to provide ongoing maintenance, repairs, upgrades or updates. The
annual cost of any optional maintenance and support contracts, upgrades and
updates is dependent on the number of terminals in the Restaurant. Attached to
this Offering Circular as Attachment D is the Uno Restaurants, Inc. Software
Support Maintenance Agreement, under which our affiliate, Uno Restaurants, Inc.
will provide certain software support services.
Operating Manuals
The table of contents of our Manuals are attached to this Offering
Circular as Attachment B. The attachment describes the number of pages devoted
to each subject. The total number of pages in each of the Manuals appears in the
tables of contents of Attachment B.
Site Selection
You assume all cost, liability, expense and responsibility for locating,
obtaining and developing the site for, and for constructing and equipping, the
Restaurant. You must comply with the minimum guidelines for site selection that
we prescribe in the Site Selection Handbook or otherwise in writing, including
the following:
1. Before you acquire by lease or purchase a site for the Restaurant, you
must locate a site for the Restaurant that satisfies the site selection
information in the Site Selection Handbook and you must submit to us in the form
specified in the Site Selection Handbook a description of the site, including
evidence satisfactory to us that the site satisfies our site selection
information, together with such other information and materials as we may
reasonably require, including, but not limited to, a letter of intent or other
evidence satisfactory to us which confirms your favorable prospects for
obtaining the site. If not previously submitted, you must submit the information
and materials for the proposed site to us for our consent no later than 6 months
after you sign the Franchise Agreement. (Franchise Agreement ss. III.A.(1).)
2. We may, in our discretion, direct one or more of our representatives to
visit the site if the visit is necessary and appropriate in our discretion (on
our own initiative or at your request) and subject to the availability of our
representative(s). We will not direct our representative(s) to make any visit
prior to the receipt of all information and materials concerning such site, as
described above.
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The first site visit will be without additional charge to you. For all
subsequent site visits, regardless of whether undertaken at our initiative or at
your request, you must promptly reimburse us for all costs and expenses we
incur, including lodging, meals, travel, and wages incurred or related to the
site visit(s). (Franchise Agreement ss. III.A.(2).)
3. We have 30 days after receipt of this information and materials to
consent to or reject, in our discretion, the proposed site as the location for
the Restaurant. No site may be used for the location of the Restaurant unless
you first receive our consent in writing. Our consent to a site is not deemed to
be a representation or warranty that the site will be successful or attain a
level or range of performance. (Franchise Agreement ss. III.A.(3).)
4. After our consent to a location for the Restaurant is received and you
have acquired the site, the location will be described in Attachment A of the
Franchise Agreement. (Franchise Agreement ss. III.A.(4).)
Within 60 days after we have consented to the site for the Restaurant as
described above, you must acquire by purchase or lease, at your expense, the
site for the Restaurant. (Franchise Agreement ss. III.B.)
If you purchase the premises for the Restaurant, you must submit a copy of
the proposed contract for sale to us for our written consent prior to signing it
and you must furnish to us a copy of the signed contract of sale within 10 days
after signing. If you will occupy the premises of the Restaurant under a lease,
you must submit a copy of the proposed lease to us for our written consent prior
to signing it and must furnish to us a copy of the fully executed lease within
10 days after signing. No lease for the Restaurant premises will be approved by
us unless a rider to the lease, prepared and signed by us, you and the lessor,
in substantially the form attached to the Franchise Agreement as Attachment B,
is attached to the lease and incorporated therein. The terms of the lease rider
are described in Item 8 of this Offering Circular. We have 30 days after receipt
of the proposed contract of sale or proposed lease to either consent to or
reject the documentation prior to the parties signing it. (Franchise Agreement
ss. III.C.)
You must obtain all zoning classifications and clearances which may be
required by applicable state or local laws, ordinances or regulations or which
may be necessary as a result of any restrictive covenants relating to the
Restaurant premises. Before beginning the construction of the Restaurant, you
must obtain all approvals, clearances, permits and certifications required for
the lawful construction or remodeling and operation of the Restaurant, and
certify in writing to us that the insurance coverage specified the Franchise
Agreement is in full force and effect and that all required approvals,
clearances, permits and certifications have been obtained. On request, you must
provide to us additional copies of your certificates of insurance and copies of
all the approvals, clearances, permits and certifications. (Franchise Agreement
ss. III.D.)
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You must obtain any architectural, engineering and design services
necessary for the construction or conversion of the Restaurant at your own
expense from an architectural design firm approved by us in writing. You must
adapt the prototypical architectural and design plans and specifications for
construction of the Restaurant provided to you by us in accordance with the
Franchise Agreement as necessary for the construction of the Restaurant and must
submit such adapted plans to us for review. If we determine, in our discretion,
that any plans do not satisfy our architectural or design standards and
specifications or are not consistent with the best interests of the System, we
may prohibit the implementation of the plans, and will notify you of any
objection(s) within 30 days of receiving the plans, including a reasonably
detailed list of changes necessary to make the plans acceptable. If we fail to
notify you of an objection to the plans within this time period, you may use the
plans. We will, on a resubmission of the plans with such changes, notify you
within 15 days of receiving the resubmitted plans whether the plans are
acceptable. If the changes are not acceptable, we must notify you of the
objections as described above, and you must similarly resubmit the plans until
the plans are acceptable to us. If we fail to notify you of any objection within
the time period, you may use the resubmitted plans. Acceptance by us of the
plans does not constitute a representation, warranty, or guarantee, express or
implied, by us that the plans are free of architectural or design errors and we
will have no liability to you or any other party regarding them. (Franchise
Agreement ss. III.E.)
You must begin and diligently pursue construction or remodeling (as
applicable) of the Restaurant. During construction or remodeling, you must
provide us with periodic reports regarding the progress of the construction or
remodeling as may be reasonably requested by us. In addition, we must make
on-site inspections as we may deem reasonably necessary to evaluate your
progress. If you request or we deem that more than one on-site inspection is
necessary, you must pay all costs and expenses incurred by us in connection with
the additional visits, including lodging, meals, travel and wages. If during the
inspections we identify instances where your construction or remodeling is
inconsistent with, or does not meet, our standards, we will notify you in
writing of the deficiencies, and you must correct the deficiencies before
opening. You must notify us of the scheduled date for completion of construction
or remodeling no later than 30 days before the date of completion. Within a
reasonable time after the date of completion of construction or remodeling, we
may, at our option, conduct an inspection of the completed Restaurant. You must
pay all reasonable costs and expenses incurred by us in connection with the
inspection, including lodging, meals, travel and wages. (Franchise Agreement ss.
III.F.)
The typical length of time between the signing of the Franchise Agreement
and the opening of a Restaurant is estimated to be approximately 10 to 12
months. Factors which may affect this time period include your ability to
identify a proper location, obtain a lease, obtain necessary zoning and building
permits, and obtain financing, as well as the availability of your contractor.
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Training Program
You, the Operating Principal, the General Manager and other personnel must
receive the training that we may require, as follows:
1. The Operating Principal (or his designee), the General Manager and the
other managers we determine must attend and complete our initial training
program to our satisfaction. Those persons must have completed the initial
training program not later than 8 weeks before the opening date of the
Restaurant. Initial training will be conducted by us at a company-operated
restaurant or such other location as we designate. We will determine, in our
discretion, whether the Operating Principal (or his designee), General Manager
and other managers have satisfactorily completed the initial training program.
We will provide instructors and training materials for the initial training
program of those persons at no additional charge to you. (Franchise Agreement
ss. XI.E.(1)(a).)
2. If the initial training program is not satisfactorily completed by the
Operating Principal (or his designee), General Manager or any other manager or
if we in our reasonable judgment determine that the initial training program
cannot be satisfactorily completed by these person(s), you must designate a
replacement(s) to satisfactorily complete the training. Any Operating Principal
(or designee), General Manager or other manager, subsequently designated by you
must also receive and complete the initial training program. We reserve the
right to charge a reasonable fee for any initial training provided by us to any
initial replacement Operating Principal, General Manager or other manager if you
are not authorized by us to provide such training. (Franchise Agreement ss.
XI.E.(1)(b).)
3. Notwithstanding the above, on our request and at all times subject to
our consent, you must, at your expense, conduct the initial training program and
other training programs prescribed by us for any General Manager or other
managers for the Restaurant if the Restaurant constitutes your second or
subsequent Restaurant developed by you and for any replacement or successor
Operating Principal, any designee, General Manager and any other Restaurant
personnel. In that case, you must cause any person trained by you to receive our
training certification. (Franchise Agreement XI.E.(1)(c).)
4. You are responsible for any and all expenses incurred by you or the
Operating Principal, any designee, General Manager and other managers, regarding
any initial training program, including costs of travel, lodging, meals and
wages. (Franchise Agreement ss. XI.E.(1)(d).)
The Operating Principal, General Manager and such other Restaurant
personnel as we designate must attend such additional training programs and
seminars as we may offer from time to time. For all of these programs and
seminars, we will provide the instructors and training materials. You will be
responsible for any and all expenses incurred by you or the Operating Principal,
General
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Manager, managers, and other Restaurant personnel in connection with additional
training, including costs of travel, lodging, meals and wages. (Franchise
Agreement ss. XI.E.(2).)
In connection with the opening of your first Restaurant, we will provide
you with an opening crew composed of our trained representatives. The number of
opening crew representatives and the time period in which such assistance will
be provided are determined by us in our discretion. If the Restaurant is the
second or third Restaurant opened by you, then we and you will each provide part
of the opening crew members in the numbers designated by us in our discretion.
Any opening crew members provided by you must be approved by us. The opening
crew provided by us will provide on-site pre-opening and opening training,
supervision, and assistance to you. You will be responsible for any and all
expenses incurred by you or the Operating Principal, General Manager, managers
and other Restaurant personnel. If the Restaurant is your fourth or subsequent
Restaurant, at our election, the opening crew will either be provided as
described above with respect to the second and third Restaurant opening by you
or you will be responsible for providing all of the opening crew for the
Restaurant. We may provide, at our option and in our discretion, a
representative to observe and provide limited assistance to you in connection
with the opening of the fourth and each subsequent Restaurant. (Franchise
Agreement ss. XI.E.(3).)
On your reasonable request or as we deem appropriate, we will, subject to
the availability of personnel, provide you with additional trained
representatives who will provide on-site remedial training to your Restaurant
personnel. You must pay the cost of travel incurred by the representatives and a
reasonable fee.
The initial training program for managers consists of 35 hours of
classroom instruction held in the corporate training facility. Training for
management employees will also consist of no less than 45 days of in store
operations training. Successful completion of the competency-based training
program will be determined by culmination of each module of the management
training program and certification contingent on the successful completion of
the accomplishment recaps, projects, workbooks and examinations which accompany
each module of the management training program. The classroom instruction
includes certification of each trainee by the National Restaurant Association in
Serving Safe Food. The subjects in the classroom training program are as
follows:
================================================================================
HOURS OF
SUBJECT CLASSROOM TRAINING
================================================================================
Employee Supervision 8
- --------------------------------------------------------------------------------
Quality Food Management and Cost Control 7
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Employment Law 4
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Service and Guest Relations 4
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Serving Safe Food 4
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Employee Selection, Performance Appraisals and Training 6.5
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Facilities Management 1.5
================================================================================
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The classroom training classes are held on an as needed basis. Instructional
materials include manuals, books, videos, slides, checklists and tests. The
training program and materials will be provided to you free of charge. The
training also features role-playing demonstration and group discussion.
On-the-job training, which is conducted by our opening crew, is currently
provided for the following employees: servers (40 hrs), cooks (60 hrs), hosts
(30 hrs), food preparation personnel (20 hrs), bar (40 hrs), dishwashers (5
hrs), and bus personnel (5 hrs). All training activities will be overseen by
Roger C. Ahlfeld, Director of Training and his staff of training specialists
with the assistance of company Regional Directors of Operations. Mr. Ahlfeld has
served as our Director of Training since January 1997. He began his career with
us in April 1992 as Assistant Manager of Operations in one of our affiliate's
Restaurants. He has worked with us continuously since that time, except when Mr.
Ahlfeld was attending graduate school. Mr. Ahlfeld holds an Master of
Professional Studies degree in Hospitality Administration from the Cornell
University School of Hotel Administration and a B.B.A. degree in Hotel and
Restaurant Management from James Madison University. The instructors include:
Mr. Roger Ahlfeld, Director of Training
Ms. Allyson Bradford, Training Specialist
Mr. Jason Plass, Training Specialist
Mr. Alton Jackson, Manager of Kitchen Training
Other instructors include various other corporate employees and company
executives.
ITEM 12
EXCLUSIVE AREA OR TERRITORY
Franchise Agreement
The Franchise Agreement grants you the right to operate a Restaurant at a
single location that you select and that we approve. Attachment A to the
Franchise Agreement lists the specific street address of the approved location.
You must operate the Restaurant only at the approved location and you may not
relocate the Restaurant without first obtaining our written consent. You may not
offer or sell any products or services at or from another location. You may not
establish or operate another Restaurant unless you enter into a separate
Franchise Agreement for that Restaurant.
Your approved location must be within an Assigned Area. We will describe
the Assigned Area in Attachment A to the Franchise Agreement by boundary streets
or highways, city limit or county line boundaries, by an area encompassed within
a radius of a specific distance (or a range of distances) or by any other
method. We will determine the Assigned Area based on various market and economic
factors such as an evaluation of market demographics, the market penetration of
the System and similar businesses, the availability of appropriate sites and the
growth trends in the
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market. The Assigned Area (granted under the Franchise Agreement) will be
smaller than the Territory granted under the Development Agreement.
During the term of the Franchise Agreement, if you and your Controlling
Principals are in compliance with the Franchise Agreement, and any other
agreements you or your affiliates may have with us or our affiliates, we and our
affiliates will not establish or authorize any other person or entity to
establish a Restaurant within the Assigned Area. The license granted to you by
the Franchise Agreement is only to operate a Restaurant, and we, and our
affiliates may (or authorize a third party to) conduct the following activities:
(1) advertise and promote the System, and fill customer orders by
providing catering and delivery services in the Assigned Area;
(2) offer and sell collateral and ancillary products and services which
may be similar to those offered by the Restaurants in the Assigned Area under
the Marks if offered and sold other than through a Restaurant, such as
pre-packaged food products, wearables and Pizzeria Uno memorabilia;
(3) offer and sell such products and services under the Proprietary Marks
in the Assigned Area through any permanent, temporary or seasonal food service
facility (e.g., a kiosk, concession, or multi-brand facility) that will provide
a limited number or representative sample of the products and services normally
offered by, and be located in a smaller facility than the Restaurant, including
theater concessions, Takeries, and food court operations, (b) institutional food
service sites (e.g., in- flight meals, hospital food services, school
cafeterias), and (c) hotel restaurants and in-room hotel dining ("Alternative
Distribution Sites");
(4) operate a Restaurant in any Reserved Area (as defined below);
(5) offer and sell products and services under any other names and marks;
and
(6) establish or operate a Restaurant anywhere outside of the Assigned
Area regardless of proximity to the Assigned Area or your Restaurant.
A Reserved Area is defined as any school campuses and facilities,
transportation facilities (e.g., airports, train stations, bus terminals, port
authorities), hospitals and other health care facilities, and temporary or
periodic mass gathering locations or events designated by Franchisor.
Development Agreement
Under the Development Agreement, we assign you the Territory within which
you must develop two or more Restaurants in accordance with the Development
Schedule. The Development Schedule contains a number of interim time periods
during which Restaurants must be established ("Development Periods"). The
Development Agreement also contains a schedule which describes
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the projected opening date of each Restaurant and the execution date for each
Franchise Agreement. The Territory will be described in Attachment D of the
Development Agreement typically by boundary streets or highways, city limit or
county line or state boundaries, by an area encompassed within a radius of a
specific distance (or a range of distances) or of a distance sufficient to
encompass a specified population (or range of populations), or by any other
method of delineation that we determine is appropriate under the circumstances.
We will determine the Territory and number of Restaurants that you will commit
to develop, before you sign the Development Agreement, based on various market
and economic factors such as those described above regarding the Assigned Area.
As long as you or your Controlling or other Principals are not and have
not been in violation or breach of the Development Agreement or any Franchise
Agreement or other Agreement between you or your affiliates and us or our
affiliates neither we nor our affiliates will establish or authorize any other
person or entity, other than you, to establish a Restaurant in the Territory
during the term. We and our affiliates operate restaurants under the mark
"Pizzeria Uno(R)" and under other names and marks, and the right granted by the
Development Agreement is only for the operation of a Restaurant. We and our
affiliates retain all other rights, including the right to at any time conduct
(or authorize a third party to conduct) the following activities, regardless of
proximity to, or the competitive effect on, the Territory or the Assigned Area
of any Restaurant operated by you: (1) advertise and promote the System and fill
customer orders by providing catering and delivery services in the Territory;
(2) offer and sell collateral and ancillary products and services which may be
similar to those offered by the Restaurants in the Territory if offered and sold
other than through a Restaurant, including, without limitation, pre-packaged
food products, wearables and other Pizzeria Uno memorabilia; (3) offer and sell
such products and services under the Proprietary Marks in the Territory through
any Alternative Distribution Sites; (4) operate a Restaurant in any Reserved
Area; (5) offer and sell products and services under any other names and marks;
and (6) establish and operate a Restaurant anywhere outside the Territory.
You may exercise the development rights granted the Development Agreement
only by entering into a separate Franchise Agreement with us for each Restaurant
for which a development right is granted. The Franchise Agreement will be the
then-current form offered by us.
During any of the Development Periods, subject to the terms and conditions
of the Development Agreement, you may develop, with our prior written consent
(which consent may be withheld in our sole discretion), more than the total
minimum number of Restaurants which you are required to develop during that
Development Period. Any Restaurants developed during a Development Period in
excess of the minimum number of Restaurants required to be developed on
expiration of that Development Period will be applied to satisfy your
development obligation during the next succeeding Development Period, if any.
You may open, with our prior written consent (which consent may be
withheld in our sole discretion), additional Restaurants if (i) you develop and
have open and operating all of the Restaurants required to be developed under
the Development Schedule prior to the expiration of the
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last Development Period; (ii) you notify us of your desire to open additional
Restaurants prior to completion of the development and opening of all of the
Restaurants required to be developed under the Development Schedule; (iii) you
and we agree on a projected opening date for each additional Restaurant; (iv)
you open at least one additional Restaurant during 12 month period following
completion of the development and opening of all of the Restaurants required to
be developed under the Development Schedule; (v) any additional Restaurant is
open prior to expiration of last Development Period; and (vi) you pay to us, at
the time you notify us of your desire to open any additional Restaurant, an
additional non-refundable pre-paid initial franchise fee of $35,000 for each
additional Restaurant.
If, during the Development Agreement, you cease to operate any Restaurant
developed under the Development Agreement for any reason, you must develop a
replacement Restaurant to fulfill your obligation to have open and in operation
the required number of Restaurants as required. The replacement Restaurant must
be open and operating on a date to be agreed on by the parties; provided,
however, in no event will such date exceed 180 days after the date of closing of
the Restaurant to be replaced. The replacement Restaurant must be operated under
the same Franchise Agreement as executed for the Restaurant which you ceased to
operate and the term of such Franchise Agreement will not be extended except as
otherwise consented to in writing by us in our sole discretion. You must pay the
travel and other expenses incurred by us or our designee associated with the
"reopening" of such replacement Restaurant (see Item 6). From the date any
Restaurant ceases to operate until the date the replacement Restaurant opens for
business, you must pay to us a monthly fee of 2% of the average monthly Gross
Sales of the closed Restaurant during the 12 month period (or such shorter
period if the Restaurant was open less than 12 months) prior to closing. You
must also pay to us a replacement fee to reimburse Franchisor for its costs
related to such replacement Restaurant in an amount specified by us, which
amount will not be less than $5,000.
You must open each Restaurant and commence business in accordance with the
Development Schedule. If you wish to obtain an extension of the Development
Period, you may, subject to our consent, obtain from us not more than two
extensions of any Development Period as may be necessary to complete
construction and commence operation of such Restaurant. Each extension will be
for an additional 30 day period commencing on the expiration of the applicable
Development Period, including any previous extensions. If an extension of a
Development Period is granted by us, the projected opening date will be extended
to the extension date, if necessary. No extension of any Development Period will
affect the duration of any other Development Period or any of your other
development obligations. If an extension is requested in the final Development
Period, the term of the Development Agreement will not be extended. To request
such an extension, you must notify us in writing at least 60 days prior to the
projected opening date of the Restaurant for which you will be unable to
complete construction and commence operation by the expiration date of the
Development Period in which such Restaurant was to have been opened. In such
notice you must include a description of the reasons for such failure to develop
in a timely manner and the expected date of completion of construction and
opening. At the same time you provide us with such notice,
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you must pay an extension fee equal to a 12th of the average annual royalties
payable by a franchised Restaurant immediately during the preceding calendar
year.
You must satisfy each of the conditions described below before our grant
to develop each Restaurant becomes effective. If we determine, in our sole
discretion, that you and the Controlling Principals have satisfied all of the
conditions, then we will grant to you the right to develop each Restaurant
pursuant to the Development Schedule:
1. Operational: You and your affiliates must be in compliance with the
Development Schedule, the Development Agreement and any other development
Agreement between you or your affiliates and you or our affiliates. You must be
conducting the operation of your existing Restaurants, if any, and be capable of
conducting the operation of the proposed Restaurant (a) in accordance with the
terms and conditions of the Development Agreement, (b) in accordance with the
provisions of the respective Franchise Agreements, and (c) in accordance with
the standards, specifications, and procedures set forth and described in the
Manuals.
2. Financial: You and your Controlling Principals satisfy our then-current
financial criteria for developers and controlling principals of Restaurants with
respect to your operation of your existing Restaurants, if any, and the proposed
Restaurant. No event of default relating to any monetary obligations owed to us
or our affiliates under the Development Agreement, any Franchise Agreement or
other Agreement between you or any of your affiliates and us or any of our
affiliates either has (i) occurred and is continuing or (ii) occurred during the
12 months preceding your request for consent, whether or not such event of
default was cured or curable.
3. Legal: You have submitted to us, in a timely manner, all information
and documents requested by us prior to and as a basis for the issuance of
individual licenses or pursuant to any right granted to you by the Development
Agreement or by any Franchise Agreement, and have taken such additional actions
as may be requested by us from time to time. You and the Controlling Principals
have been and are faithfully performing all terms and conditions of the
Development Agreement, each of the existing Franchise Agreements and any other
Agreement among us, you or any of our or your respective affiliates.
4. Ownership: Neither you nor any of your Controlling Principals (as
applicable) have transferred a controlling interest in you. You and the
Controlling Principals on whom we have relied to perform the duties under the
Development Agreement must continue to own and exercise control over a
controlling interest in you.
If you fail to adhere to the Development Schedule (including any
extensions approved by us in writing) or to adhere to any time period for
developing a replacement Restaurant, it will constitute a material event of
default under the Development Agreement, for which we may, among other things:
terminate the Development Agreement; modify your territorial rights; reduce the
area of any
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territorial rights; reduce the number of Restaurants which you may establish; or
pursue any other remedy we may have at law or in equity.
* * *
The territorial rights granted to you under the Franchise Agreement or the
Development Agreement are not dependent on your achieving certain sales volumes,
market penetration or other contingency, and the Territory may not be altered
before the Development Agreement expires or terminates, except as stated above
regarding your compliance with the Development Schedule. Also, except as
specifically described above, we generally do not grant rights of first refusal.
We or our affiliates currently sell and plan to sell refrigerated and
frozen consumer foods to commercial customers. These foods include Uno brand and
private label pizza and other products. They are sold or will be sold to grocery
stores, hotels, movie theaters, corporate dining facilities, air carriers (for
in-flight meals) and other outlets which are not owned or operated by us or our
affiliates and which may be located in the Territory or the Area Development
Territory. These products are sold under the Proprietary Marks and private label
brands, such as "North End" and "Autentico." We have no established timetable
for further future development of these plans, and do not anticipate that these
plans will conflict with your rights under the Franchise Agreement.
We are also currently operating two concepts known respectively as an
"Uno's Takery," and an "Uno's Slice Shop." Uno's Takeries and Uno's Slice shops
are smaller-sized Uno restaurants which are identified by the Intellectual
Properties. Takeries are designed to fill markets in which the System already
maintains a significant presence. Slice Shops are designed to operate in airport
terminals and within food courts for tollways and major thoroughfares. Both
offer a limited line of menu items and only non-alcoholic beverages. Our
affiliates currently operate one Takery and one Slice Shop. We may, in the
future, choose to offer franchises for Takeries and Slice Shops. We have not yet
established a timetable for the plan. If we offer these franchises, we do not
anticipate that there will be conflict with full-service franchises regarding
territory, customers, or franchisor support.
Our affiliates have offered licenses for the establishment of businesses
which offer food items similar to those to be offered by the Restaurant. The
businesses utilize the Proprietary Marks and are located in grocery stores and
movie theaters.
Our affiliate, Su Casa, Inc., also operates one Mexican restaurant, in
Chicago, Illinois. We do not believe that the products or services offered by
these restaurants are part of the same product or service market.
ITEM 13
TRADEMARKS
We have registered the following principal marks with the United States
Patent and Trademark Office. Except as otherwise indicated, the marks are
registered on the Principal Register:
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================================================================================
NAME REGISTRATION DATE REGISTRATION NUMBER
================================================================================
PIZZERIA UNO 4/11/78 1,089,458
- --------------------------------------------------------------------------------
UNO 4/2/85 1,329,014
- --------------------------------------------------------------------------------
UNO'S 3/6/90 1,586,246
- --------------------------------------------------------------------------------
UNO 10/2/90 1,615,917
- --------------------------------------------------------------------------------
UNO 3/9/93 1,757,093
- --------------------------------------------------------------------------------
UNO 12/28/93 1,814,299
- --------------------------------------------------------------------------------
UNO & DESIGN 7/19/94 1,846,019
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UNO (for clothing) 6/4/96 1,978,609
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PIZZERIA UNO, 8/11/98 2,179,797
CHICAGO BAR & GRILL & DESIGN
- --------------------------------------------------------------------------------
CHICAGO GRILL AND BREWERY 8/25/98 2,185,189
(Supplemental Register)
================================================================================
We have filed all required affidavits in relation to the marks described
above. We have renewed the registrations for the mark "Pizzeria Uno," described
above. We have not renewed any of the other registrations described above as
none are due for renewal until 2000.
We have filed an application for the following mark, with the United
States Patent and Trademark Office. As of the date of this Offering Circular,
this application is pending:
================================================================================
NAME APPLICATION DATE SERIAL NUMBER
- --------------------------------------------------------------------------------
PIZZERIA UNO CHICAGO 5/16/97 (Intent to use) 75/293,562
GRILL AND BREWERY
================================================================================
There are no currently effective determinations of the United States
Patent and Trademark Office, the Trademark Trial and Appeal Board, the trademark
administrator of this state or any court, any pending interference, opposition
or cancellation proceeding and any pending material litigation involving the
marks described above which are relevant to their use in the state.
Except as described below, there are no agreements currently in effect
which significantly limit our rights to use or license the use of the marks in
any manner material to the franchise. There is an independent chain of pizza
restaurants, Numero Uno, Inc., doing business in the state of California under
the name "Numero Uno." That chain has agreed not to use the names "Numero Uno"
or "Uno" in the United States, outside California. Under the same Agreement,
dated June 24, 1981, we have agreed not to use the name "Numero Uno" in
California in our advertising or printed materials
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(except as a description of a menu item), or as the name of a restaurant. The
Agreement is of perpetual duration and may not be unilaterally canceled or
modified. Additionally, under an Agreement dated October 2, 1990, between us and
our affiliates and Uno's Pizza, Inc. and its principals ("Uno's Pizza, Inc."),
Uno's Pizza, Inc. (an unaffiliated third party) retains the right to use the
mark "UNO's" in a small non-exclusive area in West Seneca, New York. Uno's
Pizza, Inc. has agreed not to expand the use of the name to other sites and not
to transfer the name to any third party. The Agreement is of perpetual duration
and may not be unilaterally canceled or modified. Also, on May 22, 1995, we
entered into an Agreement with International Games, Inc. whereby our superior
right to the marketing of clothing in our restaurants has been acknowledged and
we allowed International Games, Inc. to market game-related clothing bearing the
mark "UNO" within their channels of trade. The Agreement is of perpetual
duration and may not be canceled or modified.
We are aware of a pizza restaurant in Platteville, Wisconsin operating
under the name "Pizzeria Uno"; a restaurant in Lagrangeville, New York, using
the name "Numero Uno"; a restaurant in Oak Forest, Illinois, using the name
"Pizzeria Numero Uno"; a restaurant in San Juan, Puerto Rico, using the name
"Restaurant Uno"; and a restaurant in Astoria, New York, using the name "Gyro-
Uno." There are no other infringing uses actually known to us which could
materially affect your use of the Proprietary Marks. We have also licensed Film
Roman, Inc., a Hollywood, California company, to use in cartoons the name "Bruno
the Kid." We utilize a Bruno character for restaurant novelties, such as
coloring books and cups.
Except as described above, we know of no superior prior rights or
infringing use which could materially affect your use of the marks except as
noted above.
You must notify us immediately by telephone, and thereafter in writing, of
any apparent infringement of or challenge to your use of any Proprietary mark,
of any claim by any person of any rights in any Proprietary Mark, and you and
your Controlling Principals must not communicate with any person other than us
or any affiliate which we designate, their counsel and your counsel in
connection with any such infringement, challenge or claim. We will have complete
discretion to take such action as we deem appropriate in connection with the
foregoing, and the right to control exclusively, or to delegate control to any
of our affiliates of, any settlement, litigation or Patent and Trademark Office
or other proceeding arising out of any such alleged infringement, challenge or
claim or otherwise relating to any Proprietary Mark. You must execute any and
all instruments and documents, render such assistance, and do such acts or
things as may, in our opinion, reasonably be necessary or advisable to protect
and maintain the interests of us or any affiliate in any litigation or other
proceeding or to otherwise protect and maintain the interests of us or any other
interested party in the Proprietary Mark.
We are not obligated by the Franchise Agreement, the Development Agreement
or otherwise to protect any rights which you have to use the marks. If, at any
time, we choose to modify or discontinue the use of any mark, you must comply
with our directions at your expense.
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ITEM 14
PATENTS, COPYRIGHTS AND PROPRIETARY INFORMATION
Patents, Copyrights and Intellectual Properties
Except as described below, we do not own any registered patents that are
material to the franchise. Although we have not filed applications for copyright
registration, we claim copyrights on all our menus, point of purchase materials
and all like materials used in the System. Item 11 describes limitations on your
use of this material.
Aaron Spencer, our Director, has obtained, and permits us and our
affiliates to use, a patent for a unique take-out box. The box has a cup and lid
retainer and is utilized by Uno restaurants. The patent was granted on February
28, 1986 and assigned patent number 4,572,423. The patent runs for 17 years from
the date it was granted. Although you will not be granted the right to use the
patent, the Restaurant will utilize the take-out box. There are no currently
effective determinations of the U.S. Patent and Trademark Office or any court;
pending infringement, opposition, or cancellation proceeding; or pending
material litigation involving this patent.
Neither you nor the Controlling Principals may take any action that would
prejudice or interfere with the validity of our rights with respect to the
Proprietary Marks. Any and all goodwill arising from your use of the Proprietary
Marks and the System will inure solely and exclusively to our benefit, and on
expiration or termination of the Franchise Agreement, no monetary amount will be
assigned as attributable to any goodwill associated with your use of the
Proprietary Marks. You must not contest the validity of our or any of our
affiliates' interest in the Proprietary Marks or assist others to contest the
validity of our or any of our affiliates' interest in the Proprietary Marks.
Any unauthorized use of the Proprietary Marks will constitute an
infringement of our rights in the Proprietary Marks and a material event of
default under the Franchise Agreement. You must provide us with all assignments,
affidavits, documents, information and assistance we reasonably request to fully
vest in us all such rights, title and interest in and to the Proprietary Marks,
including all such items requested by us to register, maintain and enforce such
rights in the Proprietary Marks.
We reserve the right to substitute different Proprietary Marks for use in
identifying the System and the Restaurant if our current Proprietary Marks no
longer can be used, or if we, in our sole discretion, determines that
substitution of different Proprietary Marks will be beneficial to the System. In
such event, we may require you, at your expense, to discontinue or modify your
use of any of the Proprietary Marks or to use one or more additional or
substitute Proprietary Marks.
With respect to your licensed use of the Proprietary Marks: (1) unless
otherwise required by us, you must operate and advertise your Restaurant only
under the name "Pizzeria Uno" without prefix or suffix; (2) during the term of
the Franchise Agreement, you must identify yourself as the
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owner of your Restaurant, and a franchisee of us, in conjunction with any use of
the Proprietary Marks, including uses on invoices, order forms, receipts and
contracts, as well as the display of a notice in such content and form and at
such conspicuous locations on the premises of your Restaurant or any Restaurant
delivery vehicle or electronic media as we may designate in writing; (3) you
must not use the Proprietary Marks to incur any obligation or indebtedness on
behalf of us; (4) you must comply with our instructions in filing and
maintaining the requisite trade name or fictitious name registrations, and must
execute any documents deemed necessary by us or our counsel to obtain protection
of the Proprietary Marks or to maintain their continued validity and
enforceability; and (5) you must cooperate in all respects with us to prove the
continuous and effective use of the Proprietary Marks and with respect to any
renewal of any registration of the Proprietary Marks; such cooperation includes
cooperation with us in the placement and use of the Proprietary Marks.
Confidential Manuals
Under the Franchise Agreement, we will loan to you a copy of the Pizzeria
Uno Recipe Manual, the Bar Manual, the Host Manual, the Server Manual, the Dish
and Maintenance Manual, the Prep Manual, the Saute/Pizza Manual, the Management
Training Program Manual, the Quality Assurance Manual, the HazMat Manual, the
Management Administration Guide: Certified Trainer Program, and the Confidential
Operating Manual, also known as the Management Operations Manual, (together,
known as the "Manuals"). The Manuals are our sole property.
You must operate the Restaurant in accordance with the standards and
procedures specified in the Manuals. You and the Controlling Principals must
treat the Manuals and any other materials we create or approve for use in
operating the Restaurant, and the information contained in them, as
confidential. You and the Controlling Principals must also use all reasonable
efforts to maintain this information as secret and confidential, and must make
the materials available only to those of your employees that must have access to
it in order to operate the Restaurant, or to such other persons we authorize in
writing. You must not copy, record or otherwise reproduce these materials, or
make them available to any unauthorized person. The Manuals remain our sole
property and must be kept in a secure place on the Restaurant premises.
We may revise the contents of the Manuals and you must comply with each
new or changed standard. You must also keep the Manuals current at all times. If
there is a dispute as to the contents of the Manuals, the terms of the master
copy we maintain at our home office will control.
Confidential Information
We claim proprietary rights in certain of our recipes which are included
in the Manuals and which are our trade secrets. You and each of your Controlling
Principals are prohibited, during and after the term of the Franchise Agreement,
from communicating, or using for the benefit of any other person or entity, any
confidential information, knowledge or know-how concerning the methods of
operation of the Restaurant that may be communicated to you or any of your
Controlling Principals
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or that you may learn about, including these trade secrets. Also, after the term
of the Franchise Agreement, you and each of your Controlling Principals are
prohibited from using for your or their own benefit any of the confidential
information, knowledge or know-how concerning the methods of operating the
Restaurant described above. You and each of your Controlling Principals can
divulge this confidential information only to your employees who must have
access to it to operate the Restaurant. Neither you nor your Controlling
Principals are permitted at any time, without first obtaining our written
consent, to copy, record or otherwise reproduce the materials or information, or
make them available to any unauthorized person. Any and all information,
knowledge, know-how and techniques related to the System that we communicate to
you, including the Manuals, plans and specifications, marketing information and
strategies and site evaluation, selection guidelines and techniques, recipes,
and other information communicated in writing and through other means, including
electronic media (e.g., CD Rom, Internet, computer disk or video and audio tape)
are considered confidential.
You must have your General Manager and any of your other personnel who
receive or will have access to confidential information, sign similar covenants
(see Item 17). The covenants will be substantially as provided in Attachment D
to the Franchise Agreement and Attachment B to the Development Agreement. Your
Principals, other than the Controlling Principals who must sign the Franchise
and Development Agreement, also must sign these covenants.
If you or your Controlling Principals develop any new concept, process,
product, recipe or improvement in operating or promoting the Restaurant
(including computer software enhancements), you must promptly notify us and give
us all necessary information, free of charge. You and your Controlling
Principals must acknowledge that any of these concepts, processes, products,
recipes or improvements will become our property and we may give the information
to other franchisees.
Software
If we provide you Software, you must also treat that as confidential
information. You are prohibited from copying, or otherwise reproducing or making
it available to any unauthorized person. Any Software provided must be returned
to us if the Franchise Agreement is terminated or expires. If we provide you any
Software, we will require you to sign a software license Agreement (as described
in Item 11) that will state your obligations of confidentiality regarding the
Software.
ITEM 15
OBLIGATIONS TO PARTICIPATE IN THE
ACTUAL OPERATION OF THE FRANCHISE BUSINESS
When the Franchise Agreement is signed, you must designate and retain an
individual to serve as the "Operating Principal" of the Restaurant. If you are
an individual, you must perform all
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obligations of the Operating Principal. The Operating Principal must
continuously meet our qualifications.
The Operating Principal must, at your option, either serve as the General
Manager, or, subject to our approval, designate another individual (the
Operating Principal's designee) to serve as the General Manager of the
Restaurant. In our discretion, any individual designated by the Operating
Principal to serve as the General Manager may also perform the duties and
obligations of Operating Principal; provided, that the Operating Principal must
take all necessary action to ensure that the designee conducts and fulfills all
of the obligations in accordance with the terms of the Franchise Agreement, and,
provided further, that the Operating Principal must remain fully responsible for
the performance of the designee.
The Operating Principal must sign the Franchise Agreement as one of the
Controlling Principals, and must be individually, jointly and severally, bound
by all your, the Operating Principal's and the Controlling Principals'
obligations under the Franchise Agreement.
You and the Operating Principal (or his designee, if applicable) must
devote substantial full time and best efforts to supervising and conducting the
Restaurant. The Operating Principal (and his designee, if applicable) must meet
our standards and criteria for that individual, as we provide in the Manuals or
otherwise in writing.
If, during the term of the Franchise Agreement, the Operating Principal or
any designee is not able to continue to serve or no longer qualifies to act as
the Operating Principal, you must promptly notify us and designate a replacement
within 30 days after the Operating Principal or the designee ceases to serve or
be so qualified. The replacement is subject to the same qualifications and
restrictions listed above. You must provide for interim management of the
activities contemplated under the Franchise Agreement until you designate a
replacement. You must conduct the interim management in accordance with the
Franchise Agreement.
You must designate and retain at all times a general manager ("General
Manager") to direct the operation and management of the Restaurant. You must
designate your General Manager at the same time you execute the Franchise
Agreement. The General Manager will be responsible for the daily operation of
the Restaurant. The General Manager may be, but need not be, one of the
Controlling Principals. The General Manager must, during the entire period he
serves as General Manager, meet our qualifications.
The General Manager must satisfy our educational and business experience
criteria as described in the Manuals or otherwise in writing by us. The General
Manager must devote full time and best efforts to the supervision and management
of the Restaurant. The General Manager must be an individual acceptable to us.
The General Manager must satisfy the training requirements stated in the
Franchise Agreement. If, during the term of the Franchise Agreement, the General
Manager is not able to continue to serve in that capacity or no longer qualifies
to do so, you must promptly
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notify us and designate a replacement within 30 days after the General Manager
ceases to serve. The replacement must meet the same qualifications listed above.
You must provide for interim management of the Restaurant until the replacement
is so designated. You must conduct the interim management consistent with the
terms of the Franchise Agreement.
You must also obtain covenants not to compete, including covenants
applicable on the termination of the person's relationship with you, from your
General Manager and any of your other personnel who receive or will have access
to our training and any holder of a beneficial interest in you who is not
designated as a Controlling Principal and does not sign the Franchise Agreement
as a Controlling Principal. At our request, you must require any of your
personnel, if applicable, to sign covenants that they will maintain the
confidentiality of information they receive or have access to based on their
relationship with you (see Item 14). These covenants will be in substantially
the same form attached to the Franchise Agreement and the Development Agreement.
We reserve the right to decrease the period of time or geographic scope of the
noncompetition covenants described in the attachments or eliminate the
noncompetition covenants altogether for any party that is required to sign an
Agreement as described in this paragraph (see Item 17).
As described in Item 1, we have identified certain persons under the
Franchise Agreement and Development Agreement that we refer to in this Offering
Circular as your Principals. If you are an individual, your Principals include
your spouse, if you are married. If you are not an individual, your Principals
include those of your officers and directors (including the officers and
directors of your general partner, if applicable) whom we designate as your
Principals and all holders of an ownership interest in you, and in any entity
that directly or indirectly controls you, and any other person or entity
controlling, controlled by, or under common control with you.
In addition, we may designate certain of your Principals as Controlling
Principals. Those persons designated as Controlling Principals must sign the
Franchise Agreement and Development Agreement, as applicable, and agree to be
individually bound by certain obligations under the Agreements, including
confidentiality and non-competition covenants and to personally guarantee your
performance under the Agreements. We typically designate your principal equity
owners and executive officers, as well as any other affiliated entities that
operate Restaurants, as Controlling Principals.
If you or any of the Controlling Principals, during the term of the
Agreements, designate as General Manager or employ any individual who is at the
time, or has been within the preceding 12 months, employed in a restaurant
managerial position, a multi-unit supervisory position or headquarters staff
position (e.g., officer or director level personnel, management information
systems personnel or human resources personnel) or key hourly position (e.g.,
trainers, training team members, and opening team members) by us or any of our
affiliates, including, individuals employed to work in restaurants operated by
us or any affiliate, or by any other franchisee or developer, then the former
employer of that individual is entitled to be compensated for the reasonable
costs and expenses incurred by that employer in training that employee (see Item
6).
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ITEM 16
RESTRICTIONS ON WHAT THE FRANCHISEE MAY SELL
You must comply with all of our standards and specifications relating to
the purchase of all food, food products and beverage items, ingredients,
supplies, materials, fixtures, furnishings, equipment (including electronic cash
register, computer hardware and software), and other products used or sold at
the Restaurant (see Item 8). You must comply with all applicable laws and
regulations and obtain all appropriate governmental approvals relating to the
Restaurant.
You must operate the Restaurant in strict conformity with the Standards
and Specifications and the restrictions on the use of the Proprietary Marks
described in the Franchise Agreement. In particular, you must:
1. sell or offer for sale all menu items, products and services required
by us and in the manner and style prescribed by us, including, but not limited
to, dining-in, carry-out, catering and delivery services, as expressly consented
to by us in writing in the Manuals or otherwise, and execute such documents or
instruments that we may deem necessary to facilitate the providing of such
services;
2. sell and offer for sale only the menu items, products and services that
have been expressly authorized for sale in writing by us; and refrain from
deviating from the Standards and Specifications without our prior written
consent; and discontinue selling and offering for sale any menu items, products
or services, or providing such menu items, products or services in any manner or
through any method of distribution, which may, in our sole discretion,
disapprove or reject in writing at any time; and
3. maintain in sufficient supply and use and sell at all times only such
food and beverage items, ingredients, products, materials, supplies and paper
goods that conform to the Standards and Specifications; prepare all menu items
in accordance with our recipes and procedures for preparation contained in the
Manuals or other written directives and refrain from deviating from the
Standards and Specifications.
You must maintain in sufficient supply and use and sell only the food and
beverage items, ingredients, products, materials, supplies, and paper goods that
conform to our standards and specifications. You must prepare all menu items
with our recipes and procedures for preparation contained in the Manuals or
other written instructions. You must not deviate from our standards and
specifications by using or offering nonconforming items or differing amounts of
any items, without first obtaining our written consent.
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You must maintain the Restaurant to our cleanliness standards and keep it
in good repair and condition. You must make any additions, alterations, repairs
and replacements to the Restaurant that we require for that purpose, including,
periodic repainting or replacement of obsolete signs, furnishings, equipment
(including, electronic cash register or computer hardware and software systems),
and decor as we may reasonably direct. You must obtain and pay for any new or
additional equipment, including electronic cash registers, computer hardware and
software, fixtures, supplies and other products and materials that we require
you to have to offer and sell new menu items from the Restaurant or to provide
the Restaurant's services by alternative means, such as through carry-out,
catering or delivery arrangements, if we authorize you to do so. Except as may
be expressly provided in the Manuals, you may not make any alterations or
improvements or changes of any kind in design, equipment, signs, interior or
exterior decor items, fixtures or furnishings to the Restaurant or its premises
without obtaining our written approval first.
You must maintain a competent, conscientious and trained staff to operate
the Restaurant in accordance with the Franchise Agreement and the Manuals and
take the steps necessary to ensure that your employees preserve good customer
relations, and comply with our dress codes.
You have complete discretion over the prices you charge to customers for
the sale of any menu items, products, merchandise and services. We do not impose
any other restrictions in the Franchise Agreement or otherwise, as to the goods
or services that you may sell or as to the customers to whom you may offer (see
Item 8).
ITEM 17
RENEWAL, TERMINATION,
TRANSFER AND DISPUTE RESOLUTION
THIS TABLE LISTS CERTAIN IMPORTANT PROVISIONS OF THE FRANCHISE AGREEMENT.
YOU SHOULD READ THESE PROVISIONS IN THE AGREEMENT ATTACHED TO THIS OFFERING
CIRCULAR.
<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Length of the term of the Sections I and II.A. of the Term continues for 15 years unless
franchise Franchise Agreement terminated earlier.
- ---------------------------------------------------------------------------------------------------------
Renewal or extension of the Sections I and II.D. of the Agreement may be renewed at your
term Franchise Agreement option for 1 additional consecutive
10 year terms.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
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<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Requirements to renew or Section II.D. of the Requirements include, among others:
extend Franchise Agreement You must give at least 7 months
notice, repair and update equipment
and Restaurant premises, not be in
breach of any Agreement with us or
our affiliates, have the right to
remain in possession of Restaurant
premises, have satisfied all
monetary obligations to us and our
affiliates, pay renewal fee, sign
current Agreement and general
release, and comply with current
qualification and training
requirements.
- ---------------------------------------------------------------------------------------------------------
Termination by Franchisee Not Applicable Not Applicable
- ---------------------------------------------------------------------------------------------------------
Termination by Franchisor Not Applicable Not Applicable
without cause
- ---------------------------------------------------------------------------------------------------------
Termination by Franchisor Section XVI of the Each of your obligations under the
with "cause" Franchise Agreement Franchise Agreement is a material
and essential obligation, the
breach of which may result in
termination.
- ---------------------------------------------------------------------------------------------------------
"Cause" defined - curable Section XVI of the Curable defaults include, among
defaults Franchise Agreement others: If you or your affiliates
fail to pay any monies owed to us
or our affiliates (including under
any financing arrangements that we
guarantee) and do not cure within
10 days after notice (or other
period provided), fail to obtain
execution of the covenants and
related agreements required in the
Franchise Agreement within 30 days
after a request, fail to procure
and maintain required insurance
within 7 days after notice, use the
Proprietary Marks in an
unauthorized manner and fail to
cure within 24 hours after notice,
fail to comply with any term and
condition of any sublease or
related Agreement and have not
cured the default within the given
cure period or fail to cure any
other default that is susceptible
of cure within 30 days after
notice.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- 50 -
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
"Cause" defined - defaults Sections XVI.A.(2) and Noncurable defaults include, among
which cannot be cured (3) of the Franchise others: If you become insolvent,
Agreement make a general assignment for
benefit of creditors, file a
petition or have a petition
initiated against you under federal
bankruptcy laws, have outstanding
judgments against you for over 30
days, are adjudicated bankrupt or
insolvent, or execution has been
levied against you, or suit to
foreclose any lien or mortgage
against the premises or equipment
has been instituted and not
dismissed within 30 days, sell
unauthorized products or services,
fail to comply with the covenants
and related agreements required in
the Franchise Agreement, disclose
or divulge any confidential
information, fail to acquire an
approved location within time
required, fail to construct or
remodel when required, fail to open
the Restaurant when required,
abandon or lose right to the
Restaurant premises, are convicted
of a felony or other crime that may
have an adverse affect on the
System or Marks, breach any of the
representations, warranties and
covenants contained in the
Franchise Agreement, transfer any
interest without our consent or
maintain false books or records, a
threat to health or safety results
from your operation of the
Restaurant, or you fail to comply
with any term and condition of any
sublease or related Agreement and
have not cured the default within
the given cure period.
- ---------------------------------------------------------------------------------------------------------
Franchisor's obligations on Section XVII of the Obligations include, among others:
termination/non-renewal Franchise Agreement You must cease operating the
Restaurant and using the Marks and
System and completely deidentify
the business, pay all amounts due
to us or our affiliates, return all
Manuals and software and other
proprietary materials, comply with
confidentiality requirements, and
at our option, sell or assign to us
your rights in the Restaurant
premises and the equipment and
fixtures used in the business.
- ---------------------------------------------------------------------------------------------------------
Assignment of contract by Section XIII.A. of the We have the right to transfer or
Franchisor Franchise Agreement assign the Franchise Agreement to
any person or entity without
restriction.
- ---------------------------------------------------------------------------------------------------------
"Transfer" by Franchisee- Section XIII.B.(1) of the Includes sale, assignment,
defined Franchise Agreement conveyance, pledge, mortgage or
other encumbrance of any interest
in the Franchise Agreement, the
Restaurant or you (if you are not a
natural person).
- ---------------------------------------------------------------------------------------------------------
Franchisor approval of Section XIII.B.(2) of the You must obtain our consent before
transfer by Franchisee Franchise Agreement transferring any interest in the
assets of the Restaurant, the
Franchise Agreement, or in you (if
you are not a natural person).
- ---------------------------------------------------------------------------------------------------------
Conditions for Franchisor Section XIII.B.(2) of the Conditions include, among others:
approval of transfer Franchise Agreement You must pay all amounts due us or
our affiliates, not otherwise be in
default, sign a general release,
and pay a transfer fee. Transferee
must meet our criteria, assume all
obligations, attend training ,
renovate or modernize the
Restaurant, and sign current
Franchise Agreement.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Franchisor's right of first Section XIII.D. of the Within 30 days after notice, we
refusal to acquire Franchise Agreement have the option to purchase the
Franchisee's business transferred interest on the same
terms and conditions.
- ---------------------------------------------------------------------------------------------------------
Franchisor's option to Sections XIII.D. and Other than on termination,
purchase Franchisee's XVII.J. of the Franchise nonrenewal or right of first
business Agreement refusal, we have no right or
obligation to purchase your
business.
- ---------------------------------------------------------------------------------------------------------
Death or disability of Section XIII.E. of the If you or a Controlling Principal
Franchisee Franchise Agreement are a natural person, on death or
permanent disability, distributee
must be approved by us, or license
must be transferred to someone
approved by us within 12 months
after death or 6 months after
notice of permanent disability.
- ---------------------------------------------------------------------------------------------------------
Non-competition covenants Section XII.C.(1) of the You and your Controlling Principal
during the term of the Franchise Agreement may not: (a) divert, or attempt to
franchise divert, any business or customer of
the Restaurant to any competitor,
by direct or indirect inducement or
otherwise, or do or perform,
directly or indirectly, any other
act injurious or prejudicial to the
goodwill associated with the
Proprietary Marks and the System;
or (b) own, maintain, operate,
engage in, or have any financial or
beneficial interest in (including
any interest in corporations,
partnerships, trusts,
unincorporated associations or
joint ventures), advise, assist or
make loans to, any business at any
location within the United States
or any foreign jurisdiction where
we or our Affiliates have
registered or sought to register
any of the Proprietary Marks, that
is of a character and concept
similar to the Restaurant,
including (i) a casual dining
restaurant business, as such market
segment is defined pursuant to
then-current industry standards,
and (ii) any food service business
which offers pizza as a primary
menu item.
- ---------------------------------------------------------------------------------------------------------
Non-competition covenants Section XII.C.(2) of the Covenants include, among others:
after the franchise is Franchise Agreement You and your Controlling Principals
terminated or expires are prohibited from engaging in the
conduct described above with
respect to a business which is
located, or is intended to be
located within a 10-mile radius of
any Pizzeria Uno Restaurant in
existence, under construction,
where land has been purchased or a
lease has been executed as of the
earlier of (i) the expiration or
termination of, or the transfer of
all of your interest in, the
Franchise Agreement or (ii) the
time a Controlling Principal ceases
to satisfy the definition of a
Controlling Principal, as
applicable.
- ---------------------------------------------------------------------------------------------------------
Modification of the Sections XII.A.(4), You must comply with Manuals as
Agreement XII.C.(4)(a) and XXIII of amended. Franchise Agreement may
the Franchise Agreement not be modified unless mutually
agreed to in writing, except we may
reduce scope of covenants.
- ---------------------------------------------------------------------------------------------------------
Integration/merger clause Section XIII of the Only the terms of the Franchise
Franchise Agreement Agreement and other related written
agreements are binding (subject to
applicable state law). No other
representations or promises will be
binding.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- 52 -
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Dispute resolution by Section XIX of the All disputes must be mediated
arbitration or mediation Franchise Agreement before litigation may be brought.
- ---------------------------------------------------------------------------------------------------------
Choice of forum Sections XIX.B. and C. The venue for all proceedings
of the Franchise related to or arising out of the
Agreement Franchise Agreement is the State
Court of Suffolk County,
Massachusetts and the Federal
District Court of Massachusetts,
First Circuit; unless otherwise
brought by us. (See State Offering
Circular Addendum and State
Amendments to the Franchise and
Development Agreement.)
- ---------------------------------------------------------------------------------------------------------
Choice of law Section XIX.B. of the Disputes and claims relating to the
Franchise Agreement Franchise Agreement, and any claims
arising out of the relationship
created by the Franchise Agreement,
are to be governed and enforced
under the law of Massachusetts,
except for Massachusetts choice of
law rules. (See State Offering
Circular Addendum and State
Amendments to the Franchise and
Development Agreement.)
=========================================================================================================
</TABLE>
THIS TABLE LISTS CERTAIN IMPORTANT PROVISIONS OF THE DEVELOPMENT
AGREEMENT. YOU SHOULD READ THESE PROVISIONS IN THE AGREEMENT ATTACHED TO THIS
OFFERING CIRCULAR.
<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Length of the term Section IV.A. of the Term continues until you have
Development Agreement completed your development
obligations in accordance with the
Development Schedule.
- ---------------------------------------------------------------------------------------------------------
Renewal or extension of the Not Applicable Not Applicable.
term
- ---------------------------------------------------------------------------------------------------------
Requirements for Developer Not Applicable Not Applicable.
to renew or extend
- ---------------------------------------------------------------------------------------------------------
Termination by Developer Not Applicable Not Applicable
- ---------------------------------------------------------------------------------------------------------
Termination by Franchisor Not Applicable Not Applicable
without cause
- ---------------------------------------------------------------------------------------------------------
Termination by Franchisor Section XI of the Each of your obligations under the
with "cause" Development Agreement Development Agreement is a material
and essential obligation, the
breach of which may result in
termination.
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- 53 -
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
"Cause" defined - curable Sections XI.B.(1), (6), Curable defaults include, among
defaults (9), (11), (12), (13) and others: If you or your affiliates
XI of the Development fail to pay any monies owed to us
Agreement or our affiliates (including under
any financing arrangements we
guarantee) and do not cure within 5
days after notice (or other period
provided), fail to obtain execution
of the covenants contained in the
Development Agreement within 30
days after a request, use the
Proprietary Marks in an
unauthorized manner and fail to
cure within 24 hours after notice,
fail to comply with any term and
condition of any sublease or
related Agreement and have not
cured the default within the given
cure period or fail to cure any
other default that is susceptible
of cure within 30 days after
notice. A default under a Franchise
Agreement is a default under the
Development Agreement.
- ---------------------------------------------------------------------------------------------------------
"Cause" defined - defaults Sections XI.A. and B.(2)- Noncurable defaults include, among
which cannot be cured (5), (7), (8), (10) and others: If you become insolvent,
(13) of the Development make a general assignment for
Agreement benefit of creditors, file a
petition or have a petition
initiated against you under federal
bankruptcy laws or similar state
laws, are adjudicated bankrupt or
insolvent, have outstanding
judgments against you for over 30
days, fail to comply with the
Development Schedule or
Supplemental Development Schedule,
fail to comply with the covenants
and related agreements required in
the Development Agreement, are
convicted of a felony or other
crime that may have an adverse
effect on the System or Proprietary
Marks, breach any of the
representations, warranties and
covenants contained in the
Development Agreement, transfer or
attempt to transfer any interest
without our consent, or execution
has been levied against you, or
suit to foreclose any lien or
mortgage against the premises or
equipment has been instituted and
not dismissed within 30 days.
- ---------------------------------------------------------------------------------------------------------
Developer's obligations on Sections XI.D. and E. of Obligations include, among others:
termination/non-renewal the Development You must cease developing
Agreement Restaurants or, on a partial
termination of territorial or
development rights, must continue
to develop only in accordance with
any modified Development Schedule
or Supplemental Development
Schedule, and must comply with all
applicable confidentiality and
noncompetition covenants.
- ---------------------------------------------------------------------------------------------------------
Assignment of contract by Section VIII.A. of the We have the right to transfer or
Franchisor Development Agreement assign the Development Agreement to
any person or entity without
restriction.
- ---------------------------------------------------------------------------------------------------------
"Transfer" by Developer - Section VIII.B.(1) of the Includes sale, assignment,
defined Development Agreement conveyance, gift, pledge, mortgage
or other disposal or encumbrance of
any direct or indirect interest in
the Agreement or you (if you are
not a natural person).
- ---------------------------------------------------------------------------------------------------------
Franchisor approval of Section VIII.B.(2) of the You must obtain our consent before
transfer by Developer Development Agreement transferring any interest in the
Development Agreement or you (if
you are not a natural person).
- ---------------------------------------------------------------------------------------------------------
</TABLE>
- 54 -
<PAGE>
<TABLE>
<CAPTION>
=========================================================================================================
Category Section in Agreement Summary
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
Conditions for Franchisor Sections VIII.B.(2)(a)-(j) Conditions include, among others:
approval of transfer of the Development You must pay all amounts due us and
Agreement our affiliates, not otherwise be in
default, sign a general release,
remain liable for pre-transfer
obligations, have completed the
development of all Restaurants
required to be developed during the
first 3 Development Periods of the
Development Schedule, and pay a
transfer fee. Transferee must meet
our criteria, assume post-transfer
obligations, sign our then-standard
Agreement and attend training.
- ---------------------------------------------------------------------------------------------------------
Franchisor's right of first Section VIII.D. of the Within 60 days after notice, we
refusal to acquire Development Agreement have the option to purchase the
Developer's business transferred interest on the same
terms and conditions offered by a
third party.
- ---------------------------------------------------------------------------------------------------------
Franchisor's option to Section XI.H. of the Other than on termination,
purchase Franchisee's Development Agreement nonrenewal or right of first
business refusal, we have no right or
obligation to purchase your
business.
- ---------------------------------------------------------------------------------------------------------
Death or disability of Section VIII.E. of the If you or a Controlling Principal
Developer Development Agreement are a natural person, on death or
permanent disability, distributee
must be approved by us, or interest
must be transferred to someone
approved by us within 12 months
after death or 6 months after
notice of permanent disability.
- ---------------------------------------------------------------------------------------------------------
Non-competition covenants Section VII.C. of the Same as described above regarding
during the term of the Development Agreement the Franchise Agreement.
Development Agreement
- ---------------------------------------------------------------------------------------------------------
Non-competition covenants Section IX.D. of the Same as described above regarding
after the Development Development Agreement the Franchise Agreement.
Agreement is terminated or
expires
- ---------------------------------------------------------------------------------------------------------
Modification of the Sections XII.G. and XVI Development Agreement may not be
Agreement of the Development modified unless mutually agreed to
Agreement in writing, except we may reduce
scope of covenants.
- ---------------------------------------------------------------------------------------------------------
Integration/merger clause Section XVI.A. of the Only the terms of the Development
Development Agreement Agreement and other related written
agreements are binding (subject to
applicable state law). No other
representations or promises will be
binding.
- ---------------------------------------------------------------------------------------------------------
Dispute resolution by Section XIII of the Same as described above regarding
arbitration or mediation Development Agreement the Franchise Agreement.
- ---------------------------------------------------------------------------------------------------------
Choice of forum Section XIII.B. of the Same as described above regarding
Development Agreement the Franchise Agreement.
- ---------------------------------------------------------------------------------------------------------
Choice of law Section XIII.B. of the Same as described above regarding
Development Agreement the Franchise Agreement.
=========================================================================================================
</TABLE>
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<PAGE>
ITEM 18
PUBLIC FIGURES
We do not use any public figure to promote our franchise.
ITEM 19
EARNINGS CLAIMS
Except as described below, no representations or statements of actual,
average, projected, or forecasted sales, profits, or earnings are made to
franchisees or developers. We do not furnish or authorize our salespersons to
furnish any oral or written information concerning the actual, average,
projected, forecasted, or potential sales, costs, income or profits of your
business.
We specifically instruct our sales personnel, agents, employees, and
officers that they are not permitted to make such claims or statements as to the
earnings, sales or profits, or prospects or chances of success, nor are they
authorized to represent or estimate dollar figures as to a franchisee's or
developer's operation. We will not be bound by allegations of any unauthorized
representations as to earnings, sales, profits, or prospects or chances for
success.
Actual results vary from franchise to franchise, and we cannot estimate
the results of a particular franchise. We recommend that prospective franchisees
and developers make their own independent investigation to determine whether or
not the franchise may be profitable, and consult with an attorney and other
advisors prior to executing the Franchise Agreement or the Development
Agreement.
Analysis of Average Sales and Expenses
For Franchisor-Operated Full-Service Uno Restaurants
Bases and Assumptions
The sales information which follows was aggregated from affiliate-owned
and franchised restaurants open for the entire fiscal year ended September 27,
1998. The expense information which follows was aggregated from affiliate-owned
restaurants only, since expense data is not available for franchised
restaurants. The Table included in the analysis contains the number and
percentage of affiliate-owned Uno restaurants which, during the period September
29, 1997 to September 27, 1998, reported annual gross sales within the following
ranges: under $1,500,000; $1,501,000 to $1,800,000; $1,801,000 to $2,100,000;
and over $2,100,000. This analysis was constructed using the arithmetic mean
(average) annual sales and expenses of all 90 restaurants that were open and
operated by us during the entire aforementioned period. However, certain charges
which you will
- 56 -
<PAGE>
be required to pay to us under the Franchise Agreement (see Items 5 and 6) and
other differences in the expenses of a franchised Uno restaurant are included in
the table, as noted below.
The affiliate-owned restaurants used in this analysis are substantially
similar to the franchised Uno restaurants. However, the amount of sales and
expenses incurred will vary from restaurant to restaurant. In particular, the
sales and expenses of your Restaurant will be directly affected by factors which
include the Restaurant's geographic location; competition in the market;
presence of other Uno restaurants; the quality of both management and service at
the Restaurant; contractual relationships with lessors and vendors; the extent
to which you finance the operation of a restaurant; your legal, accounting and
other professional fees; federal, state and local income taxes, gross profits
taxes or other taxes; cost of any automobile used in the business; other
discretionary expenditures; accounting methods used and certain benefits and
economics of scale which we may derive as a result of operating Uno restaurants
on a consolidated basis. A NEW FRANCHISEE'S INDIVIDUAL FINANCIAL RESULTS ARE
LIKELY TO DIFFER FROM THE RESULTS DESCRIBED BELOW.
As of the 1998 fiscal year end, the average time in operation of the
affiliate-owned restaurants included in this analysis is 7.6 years. The
restaurants included in this analysis are located in the following states:
Number of Restaurants
---------------------
Colorado 3
Connecticut 6
Florida 5
Illinois 6
Maine 1
Maryland 4
Massachusetts 24
Missouri 1
New Hampshire 3
New Jersey 1
New York 18
Ohio 1
Pennsylvania 3
Rhode Island 1
Vermont 1
Virginia 10
Washington, D.C. 2
Total 90
- 57 -
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
Statement of Average Sales (in thousands) for all
Full-Service Restaurants for the
Fiscal Year ended September 27, 1998
- ------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
(1) (2) (3) (4)
1) Annual Sales Range
Under $1,500 $1,501- $1,801- Over $2,100
$1,800 $2,100
- ------------------------------------------------------------------------------------------------------
2) Number of restaurants
within the range/% of 28/31.1 19/21.1 17/18.9 26/28.9
total affiliate-owned
restaurants within the
range
- ------------------------------------------------------------------------------------------------------
3) Number of franchised
restaurants within the 24/41.4 15/25.9 7/12.1 12/20.7
range/% of total
franchised restaurants
within the range
- ------------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------
Uno Restaurant Corporation
Statement of Average Sales and Expenses
of Affiliate-Owned Full Service
Pizzeria Uno Restaurants for the Fiscal Year Ended September 27, 1998
- ----------------------------------------------------------------------------------------------------------------------------
Profit & Loss
Period 12 ended 09-27-98
Consolidated Earnings Claims Disclosure
Pro Forma Per Store Estimates
- ----------------------------------------------------------------------------------------------------------------------------
($s IN THOUSANDS) UNDER $1,500 $1,501-$1,800 $1,801-$2,100 OVER $2,100
(GROSS SALES LEVEL)
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
SALES 1,331.6 100% 1,661.6 100.0% 1,933.9 100% 2512.2 100.0%
(1) Net Sales
(2) TOTAL COST OF SALES 364.2 27.4% 441.0 26.5% 512.0 26.5% 637.6 25.4%
Food and Beverage Costs
LABOR
(3) Direct Labor 281.3 21.1% 333.8 20.1% 372.7 19.3% 453.1 18.0%
(4) Management Salary 115.8 8.7% 121.1 7.3% 138.3 7.2% 155.1 6.2%
(5) Payroll Taxes & Benefits 71.0 5.3% 78.0 4.7% 89.7 4.6% 110.6 4.4%
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------
($s IN THOUSANDS) UNDER $1,500 $1,501-$1,800 $1,801-$2,100 OVER $2,100
(GROSS SALES LEVEL)
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Total Labor 468.1 35.2% 532.9 32.1% 600.7 31.1% 718.8 28.6%
GROSS PROFIT 499.2 37.5% 687.8 41.4% 821.1 42.5% 1,155.8 46.0%
CONTROLLABLES
(6) Paper Goods 16.7 1.3% 21.3 1.3% 24.3 1.3% 31.1 1.2%
(7) Smallwares 10.9 0.8% 12.5 0.8% 15.0 0.8% 19.4 0.8%
(8) Other Controllables 31.8 2.4% 34.2 2.1% 38.7 2.0% 43.4 1.7%
- -------------------------------------------------------------------------------------------------------------------------
TOTAL CONTROLLABLES 59.4 4.5% 68.0 4.1% 78.0 4.0% 93.9 3.7%
INCOME AFTER
CONTROLLABLES 439.9 33.0% 619.8 37.3% 743.1 38.4% 1,061.9 42.3%
OTHER EXPENSES
(9) Advertising & Business Co-op 39.9 3.0% 49.8 3.0% 58.0 3.0% 75.4 3.0%
(10) Royalties 66.6 5.0% 83.1 5.0% 96.7 5.0% 125.6 5.0%
(11) Legal & Accounting 5.0 0.4% 5.0 0.3% 5.0 0.3% 5.0 0.2%
(12) Repairs & Maintenance 42.3 3.2% 46.1 2.8% 48.4 2.5% 55.8 2.2%
(13) Utilities 65.7 4.9% 60.9 3.7% 68.7 3.6% 73.5 2.9%
(14) Other Noncontrollables 20.1 1.5% 22.8 1.4% 26.7 1.4% 31.3 1.2%
(15) Occ. Costs Excl. Rent & Taxes 19.7 1.5% 20.8 1.2% 25.0 1.3% 32.3 1.3%
- -------------------------------------------------------------------------------------------------------------------------
Total Other Expenses 259.3 19.5% 288.5 17.4% 328.6 17.0% 398.9 15.9%
Earnings before rent, depr. & interest 180.6 13.6% 331.3 19.9% 414.5 21.4% 663.0 26.4%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Each of the 90 affiliate-owned Uno restaurants utilized a uniform accounting
system and the data pertaining to such restaurants was prepared on a basis
consistent with generally accepted accounting principles during the covered
period. The information contained in this analysis has generally not been
audited. The following notes should assist in interpretation of the foregoing
table of results.
1. Net Sales (Line 1). The net sales are based on the average volume of the
restaurants that fall into each revenue range.
2. Total Cost of Sales (Line 2). You will have the opportunity to take advantage
of volume discounts on particular items negotiated by us; however, availability
of such volume discounts is generally limited to geographic areas in which our
affiliates currently operate Uno restaurants. The cost of items such as produce,
which are often purchased locally, may vary according to the location of the
Restaurant. Additionally, freight and shipping costs and the amount of mark-up
imposed by suppliers will also vary.
3. Direct Labor (line 3). Labor for a Restaurant generally necessitates a range
of 40-80 employees, including both full-time and part-time workers.
4. Management Salary (line 4). This category assumes one designated general
manager, 1 manager and 1 assistant manager and includes an amount for bonuses.
- 59 -
<PAGE>
5. Payroll Taxes and Benefits (line 5). This category includes amounts for
worker's compensation, group insurance expenses, payroll taxes, and vacation
pay. The amounts stated reflect administrative costs incurred by Uno restaurants
and exclude all other general and administrative costs incurred for payroll
matters which are handled by our corporate or regional office. The costs of
labor and related payroll expenses may vary substantially depending on the
geographic location of the Restaurant.
6. Other Controllables (line 8). Other controllable expenses include the
following costs: janitorial service; office supplies; entertainment; laundry;
telephone; cash shortages; and miscellaneous.
7. Advertising and Business Coop (line 9). These expenses represent the
advertising and business coop contributions you are required to pay to us as
described in Item 6. Specifically, you are required to pay a monthly fee of up
to 1% of Gross Revenues, for business coop services. This fee includes your
share of costs that are incurred by us for the benefit of the System. Article 7
of the Franchise Agreement further details and explains this expense. You are
also required to expend a minimum of 2% of Gross Revenues on local marketing as
described in Item 6. We have not accounted for the impact of a System wide Media
Fund Fee of up to 1% of Gross Revenues, because the fee has never yet been
actually implemented.
8. Royalties (line 10). You will be required to pay a continuing royalty fee of
5% of Gross Revenues as described in Item 6.
9. Other Non-Controllables (line 14). This category of expenses includes amounts
for bank processing charges, dues, licenses, subscriptions, menus, guest checks,
and recruitment.
10. Occupancy Costs excluding Rent and Taxes (line 15). This category includes
insurance, security, trash services, and extermination. We may have derived a
benefit in the form of lower premiums for insurance based on the number of Uno
restaurants owned by our affiliates and our loss control programs. You should
inquire about the cost of insurance, which may vary substantially depending on
the geographic location of the Restaurant.
11. Other Information. We are also presenting in the following paragraphs a
comparison of certain financial information received from our franchisees along
with the average financial results of the 90 affiliate-owned Uno restaurants.
However, while we suggest that our franchisees utilize a uniform accounting
system in reporting, which is consistent with generally accepted accounting
principles, it should be expressly noted that we cannot attest to (i) the
accuracy of the information received from our franchisees or (ii) whether such
information was actually prepared in accordance with generally accepted
accounting principles.
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<PAGE>
The numbers and percents indicated in the first table in lines (2) and (3)
relate to the 90 affiliate-owned restaurants and 58 franchised restaurants open
during all of fiscal year 1998 (September 29, 1997 to September 27, 1998). In
addition, the average annual sales volume for all affiliate-owned restaurants as
described above was $1,856,092. This sales volume was attained or surpassed by
40 (or 44.4%) of the affiliate-owned restaurants and 19 (or 32.8%) of the
franchised restaurants.
The highest annual sales volume of an affiliate-owned restaurant was
$3,345,810. The lowest annual sales volume of an affiliate-owned restaurant was
$885,362. The highest annual sales volume of a franchised restaurant was
$3,550,437. The lowest annual sales volume of a franchised restaurant was
$651,999.
Substantiation of the data used in preparing the earnings claim described
above will be made available to you on reasonable request.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
- 61 -
<PAGE>
ITEM 20
FRANCHISED OUTLETS
FRANCHISED FULL SERVICE
STORE STATUS SUMMARY
FOR FISCAL YEARS 1998/1997/1996
<TABLE>
<CAPTION>
========================================================================================================================
Franchised
Total From Uno
the 5 Restaurants
Closed, Reacquired Left the immediate Operating
Canceled or Not by us or our System Left at Year
State Opened Transfers Terminated Renewed affiliates Other Columns End
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Arizona 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 2/2/2
- ------------------------------------------------------------------------------------------------------------------------
California 1/0/1 0/0/0 1/1/0 0/0/0 0/0/0 0/0/0 2/1/0 10/10/10
- ------------------------------------------------------------------------------------------------------------------------
Connecticut 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0
- ------------------------------------------------------------------------------------------------------------------------
District of 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/1/1
Columbia
- ------------------------------------------------------------------------------------------------------------------------
Florida 0/0/0 0/0/0 0/0/1 0/0/0 0/0/0 0/0/0 0/0/1 3/3/3
- ------------------------------------------------------------------------------------------------------------------------
Hawaii 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0
- ------------------------------------------------------------------------------------------------------------------------
Illinois 0/0/0 0/0/0 0/0/1 0/0/0 0/0/0 0/0/0 0/0/1 0/0/0
- ------------------------------------------------------------------------------------------------------------------------
Indiana 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 2/2/2
- ------------------------------------------------------------------------------------------------------------------------
Kentucky 0/1/1 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 1/1/1 2/3/2
- ------------------------------------------------------------------------------------------------------------------------
Maryland 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/1/1
- ------------------------------------------------------------------------------------------------------------------------
Massachusetts 0/0/0 0/0/0 0/1/0 0/0/0 0/0/0 0/0/0 0/1/0 2/2/3
- ------------------------------------------------------------------------------------------------------------------------
Michigan 0/1/1 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 1/2/1 2/3/3
- ------------------------------------------------------------------------------------------------------------------------
Minnesota 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 2/2/2
- ------------------------------------------------------------------------------------------------------------------------
Nevada 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/1/1
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
- 62 -
<PAGE>
<TABLE>
<CAPTION>
========================================================================================================================
Franchised
Total From Uno
the 5 Restaurants
Closed, Reacquired Left the immediate Operating
Canceled or Not by us or our System Left at Year
State Opened Transfers Terminated Renewed affiliates Other Columns End
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
New Jersey 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 4/4/4
- ------------------------------------------------------------------------------------------------------------------------
New York 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 2/2/2
- ------------------------------------------------------------------------------------------------------------------------
Ohio 1/0/1 1/0/0 1/0/0 0/0/0 0/0/0 0/0/0 3/0/0 7/7/7
- ------------------------------------------------------------------------------------------------------------------------
Oklahoma 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/1/1
- ------------------------------------------------------------------------------------------------------------------------
Oregon 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 1/0/0
- ------------------------------------------------------------------------------------------------------------------------
Pennsylvania 0/3/0 0/0/0 2/0/0 0/0/0 0/0/0 0/0/0 2/3/0 7/9/6
- ------------------------------------------------------------------------------------------------------------------------
Tennessee 0/0/1 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/1 1/0/1
- ------------------------------------------------------------------------------------------------------------------------
Texas 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 4/4/4
- ------------------------------------------------------------------------------------------------------------------------
Washington 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 1/0/0
- ------------------------------------------------------------------------------------------------------------------------
Wisconsin 0/0/0 0/0/0 1/0/0 0/0/0 0/0/0 0/0/0 1/0/0 3/4/4
- ------------------------------------------------------------------------------------------------------------------------
Subtotals 4/5/5 2/0/0 7/2/2 0/0/0 0/0/0 0/0/0 13/8/5 59/61/59
- ------------------------------------------------------------------------------------------------------------------------
Korea 0/1/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/1/0 0/1/0
- ------------------------------------------------------------------------------------------------------------------------
San Juan, PR 1/0/0 0/0/0 0/0/0 0/0/0 0/0/0 0/0/0 1/0/0 3/2/2
- ------------------------------------------------------------------------------------------------------------------------
Toronto, Ont. 0/0/0 0/0/0 0/0/1 0/0/0 0/0/0 0/0/0 0/0/0 0/0/1
========================================================================================================================
TOTALS 5/6/5 2/0/0 7/2/3 0/0/0 0/0/0 0/0/0 14/9/5 62/64/62
========================================================================================================================
</TABLE>
Note: The numbers in the "Total" column may exceed the number of restaurants
affected because certain events may have affected the same restaurant. For
example, the same restaurant may have had multiple owners.
- 63 -
<PAGE>
AFFILIATE-OWNED FULL SERVICE AND TAKERY STORES STATUS SUMMARY
FOR FISCAL YEARS 1998/1997/1996
<TABLE>
<CAPTION>
==============================================================================================================================
Stores Closed Stores Opened Total Stores
State During Year During Year Operating at Year End
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Colorado 1/0/0 0/1/1 3/4/3
- ------------------------------------------------------------------------------------------------------------------------------
Connecticut 0/0/0 0/0/1 6/6/6
- ------------------------------------------------------------------------------------------------------------------------------
District of Columbia 0/0/0 0/0/0 2/2/2
- ------------------------------------------------------------------------------------------------------------------------------
Florida 0/1/0 1/0/2 6/5/6
- ------------------------------------------------------------------------------------------------------------------------------
Illinois 0/0/0 1/4/0 9/8/4
- ------------------------------------------------------------------------------------------------------------------------------
Maine 0/0/0 0/0/0 1/1/1
- ------------------------------------------------------------------------------------------------------------------------------
Maryland 0/0/0 1/0/0 6/5/5
- ------------------------------------------------------------------------------------------------------------------------------
Massachusetts 1/0/1 0/1/1 25/26/25
- ------------------------------------------------------------------------------------------------------------------------------
Missouri 0/0/0 0/0/0 1/1/1
- ------------------------------------------------------------------------------------------------------------------------------
New Hampshire 0/0/0 0/0/0 3/3/3
- ------------------------------------------------------------------------------------------------------------------------------
New Jersey 0/0/0 1/0/0 2/1/1
- ------------------------------------------------------------------------------------------------------------------------------
New York 0/0/0 0/0/1 19/19/19
- ------------------------------------------------------------------------------------------------------------------------------
Ohio 0/0/0 1/1/0 2/1/1
- ------------------------------------------------------------------------------------------------------------------------------
Pennsylvania 0/0/0 0/0/2 3/3/3
- ------------------------------------------------------------------------------------------------------------------------------
Rhode Island 0/0/0 0/0/0 1/1/1
- ------------------------------------------------------------------------------------------------------------------------------
Virginia 0/0/0 0/1/1 9/9/8
- ------------------------------------------------------------------------------------------------------------------------------
Vermont 0/0/0 0/1/0 1/1/0
==============================================================================================================================
TOTALS 2/1/1 5/9/9 99/96/89
==============================================================================================================================
</TABLE>
Note: As described in Item 1, we do not own or operate any restaurants. All
"company-owned" restaurants are owned by our affiliates. As of September 27,
1998, only 1 of the above-referenced "company-owned" restaurants was a Takery.
The Massachusetts facility that closed in 1996 was a Takery.
PROJECTED OPENINGS DURING THE ONE YEAR
PERIOD ENDING OCTOBER 1, 1999
<TABLE>
<CAPTION>
=====================================================================================================
Projected
Franchise Agreements Signed Projected Franchised Company/Affiliate
State or Territory But Restaurant Not Opened New Restaurant Owned Openings
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Arizona 1 1 0
- -----------------------------------------------------------------------------------------------------
California 4 4 0
- -----------------------------------------------------------------------------------------------------
Florida 1 1 1
- -----------------------------------------------------------------------------------------------------
</TABLE>
- 64 -
<PAGE>
<TABLE>
<CAPTION>
=====================================================================================================
Projected
Franchise Agreements Signed Projected Franchised Company/Affiliate
State or Territory But Restaurant Not Opened New Restaurant Owned Openings
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Illinois 0 0 2
- -----------------------------------------------------------------------------------------------------
Kansas 1 1 0
- -----------------------------------------------------------------------------------------------------
Maine 0 0 1
- -----------------------------------------------------------------------------------------------------
Maryland 0 0 1
- -----------------------------------------------------------------------------------------------------
Massachusetts 0 0 1
- -----------------------------------------------------------------------------------------------------
New York 1 1 0
- -----------------------------------------------------------------------------------------------------
New Mexico 1 1 0
- -----------------------------------------------------------------------------------------------------
Ohio 1 1 1
- -----------------------------------------------------------------------------------------------------
Oregon 1 1 0
- -----------------------------------------------------------------------------------------------------
Puerto Rico 2 2 0
- -----------------------------------------------------------------------------------------------------
South Carolina 1 1 0
- -----------------------------------------------------------------------------------------------------
Texas 1 1 0
- -----------------------------------------------------------------------------------------------------
Washington 1 1 0
- -----------------------------------------------------------------------------------------------------
Subtotals 16 16 7*
- -----------------------------------------------------------------------------------------------------
Dubai, U.A.E. 1 1 0*
- -----------------------------------------------------------------------------------------------------
Indonesia 1 0 0
- -----------------------------------------------------------------------------------------------------
Korea 1 1 0
- -----------------------------------------------------------------------------------------------------
Pakistan 1 0 0
=====================================================================================================
TOTALS 20 18 7*
=====================================================================================================
</TABLE>
* We have not yet selected all of the markets in which each of these
restaurants will be established.
The names, addresses and telephone numbers of our franchisees and their
restaurants as of December 7, 1998 are listed on Attachment F to this Offering
Circular. The restaurants identified by an asterisk ("*") are owned by persons
listed in Item 2, or members of their immediate families, by business entities
owned by them, or by others closely.
The names and last known home addresses and telephone numbers of every
franchisee who has had an outlet terminated, canceled, not renewed, or otherwise
voluntarily or involuntarily ceased to do business under the franchise Agreement
during the most recently completed fiscal year or who has not communicated with
us within 10 weeks of the date of this Offering Circular are listed on
Attachment G to this Offering Circular.
- 65 -
<PAGE>
ITEM 21
FINANCIAL STATEMENTS
The financial statements entitled "Audited Financial Statements, Pizzeria
Uno Corporation, year ended September 27, 1998," (for the fiscal years 1996,
1997 and 1998) are attached hereto as Attachment C. Also attached are our
unaudited financial statements for the period ending November 29, 1998.
ITEM 22
CONTRACTS
The following contracts are attached to this Offering Circular as
Attachment D. These are the only contracts which we will require you to enter
into:
a. Franchise Agreement (with Guarantee and exhibits)
b. Development Agreement
c. Financing Agreements (if applicable)
a. letter agreement
b. guarantee
c. corporate resolution
d. collateral assignment, acceptance and consent
e. promissory note (60 months)
f. promissory note (72 and 84 month)
g. interim funding promissory note
h. security agreement
i. assignment of lease
j. consent to assignment as collateral security
k. landlord disclaimer and waiver of interest
l. affidavit of identity
m. Pizzeria Uno program franchisor approval
n. certificate of acceptance of property
o. interim funding request
p. electronic payment plan
q. pledge agreement
r. financing statement
d. Uno Restaurants, Inc. Software Support Maintenance Agreement
- 66 -
<PAGE>
ITEM 23
RECEIPT
THIS OFFERING CIRCULAR SUMMARIZES CERTAIN PROVISIONS OF THE FRANCHISE AGREEMENT
AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS OFFERING CIRCULAR AND ALL
AGREEMENTS CAREFULLY.
IF WE OFFER YOU A FRANCHISE, WE MUST PROVIDE THIS OFFERING CIRCULAR TO YOU BY
THE EARLIEST OF:
(1) THE FIRST PERSONAL MEETING TO DISCUSS OUR FRANCHISE; OR
(2) TEN BUSINESS DAYS BEFORE THE SIGNING OF A BINDING AGREEMENT; OR
(3) TEN DAYS BEFORE A PAYMENT TO US.
YOU MUST ALSO RECEIVE A FRANCHISE AGREEMENT CONTAINING ALL MATERIAL TERMS AT
LEAST 5 BUSINESS DAYS BEFORE YOU SIGN A FRANCHISE AGREEMENT.
IF WE DO NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR IF IT CONTAINS A FALSE OR
MISLEADING STATEMENT, OR MATERIAL OMISSION, A VIOLATION OF FEDERAL AND STATE LAW
MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE FEDERAL TRADE COMMISSION,
WASHINGTON, D.C. 20580 AND THE APPLICABLE STATE AGENCY LISTED IN ATTACHMENT E.
I have received a Pizzeria Uno Corporation Uniform Franchise Offering Circular
dated January 5, 1999. This Offering Circular includes the following
Attachments:
A. Agents for Service of Process
B. Table of Contents for Manuals
C. Financial Statements
D. Contracts
1. Franchise Agreement (with Guarantee and exhibits)
2. Development Agreement
3. Financing Agreements
(a) letter agreement
(b) guarantee
(c) corporate resolution
(d) collateral assignment, acceptance and consent
(e) promissory note (60 months)
(f) promissory note (72 and 84 month)
(g) interim funding promissory note
(h) security agreement
(i) assignment of lease
(j) consent to assignment as collateral security
(k) landlord disclaimer and waiver of interest
(l) affidavit of identity
(m) Pizzeria Uno Program Franchisor Approval
(n) certificate of acceptance of property
(o) interim funding request
(p) electronic payment plan
(q) pledge agreement
(r) financing statement
4. Uno Restaurants, Inc. Software Support Maintenance Agreement
E. State Administrators
F. List of Franchisees
G. Closed Franchised Restaurants
_____________________ ____________________________________________
Date Franchisee
[RETAIN THIS COPY FOR YOUR RECORDS]
<PAGE>
ITEM 23
RECEIPT
THIS OFFERING CIRCULAR SUMMARIZES CERTAIN PROVISIONS OF THE FRANCHISE AGREEMENT
AND OTHER INFORMATION IN PLAIN LANGUAGE. READ THIS OFFERING CIRCULAR AND ALL
AGREEMENTS CAREFULLY.
IF WE OFFER YOU A FRANCHISE, WE MUST PROVIDE THIS OFFERING CIRCULAR TO YOU BY
THE EARLIEST OF:
(1) THE FIRST PERSONAL MEETING TO DISCUSS OUR FRANCHISE; OR
(2) TEN BUSINESS DAYS BEFORE THE SIGNING OF A BINDING AGREEMENT; OR
(3) TEN DAYS BEFORE A PAYMENT TO US.
YOU MUST ALSO RECEIVE A FRANCHISE AGREEMENT CONTAINING ALL MATERIAL TERMS AT
LEAST 5 BUSINESS DAYS BEFORE YOU SIGN A FRANCHISE AGREEMENT.
IF WE DO NOT DELIVER THIS OFFERING CIRCULAR ON TIME OR IF IT CONTAINS A FALSE OR
MISLEADING STATEMENT, OR MATERIAL OMISSION, A VIOLATION OF FEDERAL AND STATE LAW
MAY HAVE OCCURRED AND SHOULD BE REPORTED TO THE FEDERAL TRADE COMMISSION,
WASHINGTON, D.C. 20580 AND THE APPLICABLE STATE AGENCY LISTED IN ATTACHMENT E.
I have received a Pizzeria Uno Corporation Uniform Franchise Offering Circular
dated January 5, 1999. This Offering Circular includes the following
Attachments:
A. Agents for Service of Process
B. Table of Contents for Manuals
C. Financial Statements
D. Contracts
1. Franchise Agreement (with Guarantee and exhibits)
2. Development Agreement
3. Financing Agreements
(a) letter agreement
(b) guarantee
(c) corporate resolution
(d) collateral assignment, acceptance and consent
(e) promissory note (60 months)
(f) promissory note (72 and 84 month)
(g) interim funding promissory note
(h) security agreement
(i) assignment of lease
(j) consent to assignment as collateral security
(k) landlord disclaimer and waiver of interest
(l) affidavit of identity
(m) Pizzeria Uno Program Franchisor Approval
(n) certificate of acceptance of property
(o) interim funding request
(p) electronic payment plan
(q) pledge agreement
(r) financing statement
4. Uno Restaurants, Inc. Software Support Maintenance Agreement
E. State Administrators
F. List of Franchisees
G. Closed Franchised Restaurants
_____________________ ____________________________________________
Date Franchisee
[RETURN THIS COPY TO US]
<PAGE>
PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
December 27, 1998
<PAGE>
<PAGE>
TABLE OF CONTENTS
I. DEFINITIONS............................................................1
II. GRANT, TERM AND RENEWAL................................................5
III. SITE SELECTION, PLANS AND CONSTRUCTION................................ 6
IV. FEES AND PAYMENTS......................................................8
V. FRANCHISOR'S OBLIGATIONS...............................................9
VI. RESTAURANT OPERATIONS.................................................10
VII. ADVERTISING AND RELATED FEES..........................................13
VIII. PROPRIETARY MARKS.....................................................15
IX. BOOKS AND RECORDS.....................................................16
X. INSURANCE.............................................................17
XI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF FRANCHISEE...............19
XII. CONFIDENTIALITY AND NONCOMPETITION COVENANTS..........................23
XIII. TRANSFER OF INTEREST..................................................25
XIV. CONSENTS AND NONWAIVER................................................29
XV. INDEPENDENT CONTRACTOR................................................29
XVI. DEFAULT, REMEDIES AND TERMINATION.....................................29
XVII. POST-TERM OBLIGATIONS.................................................31
XVIII. INDEMNIFICATION.......................................................34
XIX. MEDIATION AND LITIGATION..............................................35
XX. NOTICES...............................................................37
XXI. FORCE MAJEURE.........................................................37
XXII. SEVERABILITY AND CONSTRUCTION.........................................38
XXIII. ENTIRE AGREEMENT......................................................39
XXIV. ACKNOWLEDGMENTS.......................................................39
1
<PAGE>
<TABLE>
<S> <C>
Attachment A - Site, Assigned Area and Opening Date.....................................A-1
Attachment B - Lease Rider..............................................................B-1
Attachment C - Statement of Ownership Interests and Franchisee's Principals.............C-1
Attachment D - Confidentiality Agreement and Ancillary Covenants not to Compete.........D-1
Attachment E - Software License Agreement...............................................E-1
Attachment F - Electronic Fund Transfer Authorization...................................F-1
Attachment G - Guaranty.................................................................G-1
Attachment H - Chronological Table of Selected Events...................................H-1
</TABLE>
2
<PAGE>
PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
THIS FRANCHISE AGREEMENT (the "Agreement") is made and entered into this
____ day of __________________, 19__, by and between Pizzeria Uno Corporation, a
Delaware corporation ("Franchisor"), and _______________________________________
("Franchisee").
WITNESSETH:
WHEREAS, Franchisor, as the result of the expenditure of time, skill,
effort and money, has developed and owns a distinctive System (as hereinafter
defined) relating to the establishment and operation of food service facilities
featuring "Chicago Style" deep dish pizza and other products;
WHEREAS, the distinguishing characteristics of the System include, without
limitation, distinctive exterior and interior design, decor, color schemes, and
furnishings; special recipes and menu items; uniform standards, specifications,
and procedures for operations; quality and uniformity of products and services
offered; procedures for inventory, management and financial controls; training
and assistance; and advertising and promotional programs; all of which may be
changed, improved, and further developed by Franchisor in its sole discretion
from time to time;
WHEREAS, Franchisor identifies the System by means of the Proprietary
Marks (as hereinafter defined);
WHEREAS, Franchisor continues to develop, use and control the use of such
Proprietary Marks in order to identify for the public, the source of services
and products marketed thereunder and under the System, and to represent the
System's high standards of quality, appearance and service;
WHEREAS, Franchisee understands and acknowledges the importance of
Franchisor's high standards of quality, cleanliness, appearance and service and
the necessity of operating the business licensed hereunder in conformity with
the Standards and Specifications (as hereinafter defined); and
WHEREAS, Franchisee desires to use the System in connection with the
operation of the Restaurant at the location specified in Attachment A hereto, as
well as to receive the training and other assistance provided by Franchisor in
connection therewith;
NOW, THEREFORE, the parties, in consideration of the mutual undertakings
and commitments set forth herein, the receipt and sufficiency of which are
hereby acknowledged, agree as follows:
I. DEFINITIONS
"Affiliate" - Any entity that is, directly or indirectly, controlled by,
controlling or under common control with a referenced person or entity.
"Alternative Distribution Site" - (a) A permanent, temporary or seasonal
food service facility (e.g., a kiosk, concession, or multi-brand facility) that
will provide a limited number or representative sample of the products and
services normally offered by, and be located in a smaller facility than, the
Restaurant, including, without limitation, theater concessions, and food court
operations, (b) institutional food service sites (e.g., in-flight meals,
hospital food services, school cafeterias), and (c) hotel restaurants and
in-room hotel dining.
"Assigned Area" - The geographic area set forth in Attachment A.
"Attachments" - Attachments A, B, C, D, E, F, G, H, and I to this
Agreement.
1
<PAGE>
"Business Day" - For the purpose of this Agreement, any day other than
Saturday, Sunday or holidays provided for under U.S. law.
"Confidential Information" - Any and all information, knowledge, know-how,
methods, trade secrets, techniques, and materials used in or related to the
Restaurants or the System which Franchisor may provide to Franchisee in
connection with this Agreement including, but not limited to, the Manuals, plans
and specifications, marketing information and strategies, and site evaluation,
selection information and techniques, recipes, and other information
communicated in writing and through other means, including without limitation
electronic media (e.g., CD Rom, Internet, computer disk or video and audio
tape).
"Controlling Interest" - (a) If Franchisee is a corporation, that the
Controlling Principals, either individually or cumulatively, (i) directly or
indirectly own at least fifty-one percent (51%) of the shares of each class of
Franchisee's issued and outstanding capital stock and (ii) be entitled, under
its governing documents and under any agreements among the shareholders, to cast
a sufficient number of votes to require such corporation to take or omit to take
any action which such corporation is required to take or omit to take under this
Agreement, or (b) if Franchisee is a partnership, that the Controlling
Principals, either individually or cumulatively, (i) own at least a fifty-one
percent (51%) interest in the operating profits and operating losses of the
partnership as well as at least a fifty-one percent (51%) ownership interest in
the partnership (and at least a fifty-one percent (51%) interest in the shares
of each class of capital stock of any corporate general partner) and (ii) be
entitled under its partnership agreement or applicable law to act on behalf of
the partnership without the approval or consent of any other partner or be able
to cast a sufficient number of votes to require the partnership to take or omit
to take any action which the partnership is required to take or omit to take
under this Agreement.
"Controlling Principals" - Includes, collectively and individually, the
Franchisee's Principals who have been designated by Franchisor as Controlling
Principals hereunder. The initial Controlling Principals shall be listed on
Attachment C.
"Deceased" - Franchisee (if a natural person) or any Controlling Principal
(if a natural person) if such person has died during the Term.
"Event of Default" - Violation or breach by Franchisee or any of the
Principals, including the Controlling or other Principals, as applicable, of any
warranty, representation, agreement or obligation described in this Agreement,
any amendment hereof or successor hereto or any other agreement between
Franchisee or its Affiliates and Franchisor or its Affiliates. Events of Default
include, but are not limited to, those described in Sections XVI.A.(2) and (3).
"Fee Report" - Report itemizing the Gross Sales for the preceding month.
"Force Majeure" - Acts of God, strikes, lockouts or other industrial
disturbances, war, riot, epidemic, fire or other natural catastrophe or other
forces beyond Franchisee's control.
"Former Employer" - Franchisor, its Affiliates or any developer or
franchisee operating under the System which, at the time or in the previous
twelve (12) months, employed an individual in a restaurant managerial position,
a multi-unit supervisory position, headquarters staff position (e.g., officer or
director level personnel, management information systems personnel or human
resources personnel), or key hourly employee position (e.g. trainers, training
team members, and opening team members) who was subsequently hired by Franchisee
or a Controlling Principal.
"General Manager" - An individual who may, but need not be, one of the
Controlling Principals, designated and retained by Franchisee for the operation
and management of the Restaurant.
"Gross Sales" - The total selling price of all services and products and
all income of every other kind and nature related to the Restaurant (including,
without limitation, income related to catering, delivery, and any other sales of
food products or food preparation services provided from or related to the
Restaurant), whether for cash or credit and regardless of collection in the case
of credit. Under no circumstances shall Franchisee expenses, including third
party delivery expenses, be deducted from Gross Sales. If a cash shortage
occurs, the amount of Gross Sales shall be determined based
2
<PAGE>
on the records of the electronic cash register system or point-of-sale system
and any cash shortage shall not be considered in the determination of Gross
Sales. Gross Sales shall, however, expressly exclude the following:
(1) Receipts from the operation of any public telephone installed in
the Restaurant, sales from vending or gaming machines located at the Restaurant,
except for any amount representing Franchisee's share of such revenues;
(2) Sums representing sales taxes collected directly from customers
by Franchisee in the operation of the Restaurant, and any sales, value added or
other tax, excise or duty charged to customers which is levied or assessed
against Franchisee by any Federal, state, municipal or local authority, based on
sales of specific merchandise sold at or from the Restaurant, provided that such
taxes are actually transmitted to the appropriate taxing authority;
(3) Tips, gratuities or service charges paid directly by Restaurant
customers to employees of Franchisee or paid to Franchisee and promptly and to
the extent turned over to such employees by Franchisee in lieu of direct tips or
gratuities;
(4) The exchange of merchandise among Franchisee's Pizzeria Uno
restaurants, if more than one Restaurant is operated by Franchisee, where such
exchanges are made solely for the convenient operation of the Franchisee's
business;
(5) Returns to shippers or manufacturers;
(6) Proceeds from isolated sales of trade fixtures not constituting
any part of Franchisee's products and services offered for resale at the
Restaurant nor having any material effect upon the ongoing operation of the
Restaurant required under this Agreement; and
(7) The value of any meal discount furnished to Franchisee's
employees as an incident to their employment;
Franchisor may, from time to time, authorize certain other items to be
excluded from Gross Sales. Any such permission may be revoked or withdrawn at
any time in writing by Franchisor in its discretion. In addition to the
foregoing, the following are included within the definition of "Gross Sales"
described except as noted below: (i) all proceeds from the sale of coupons, gift
certificates, or vouchers issued by Franchisor shall not be included in Gross
Sales; however, the full value of such coupons, gift certificates or vouchers
once redeemed for payment from Franchisor shall be included within Gross Sales
during the month in which such coupon, gift certificate or voucher is redeemed
for payment from Franchisor for the purpose of determining the amount of Gross
Sales upon which the royalty fee is due. If Franchisee issues any coupons, gift
certificates, or vouchers, the full value of all proceeds from the sale of those
coupons, gift certificates or vouchers shall be included in Gross Sales during
the month in which such coupon, gift certificate or voucher was sold, and
Franchisee shall receive a credit to Gross Sales for the value of that coupon,
gift certificate, or voucher in the month in which such is redeemed for the
purpose of determining the amount of Gross Sales upon which the royalty fee is
due; and (ii) The full value of any complimentary and promotional food dispensed
from the Restaurant shall not be included in Gross Sales to the extent such are
dispensed in accordance with Franchisor's standards for such programs, as set
forth in the Manuals or otherwise in writing.
"Guaranty" - The guaranty of Franchisee's obligations under this Agreement
by Controlling Principals, jointly and severally, as described on the
Controlling Principals' signature page.
"Indemnitees" - Franchisor, its Affiliates, successors and assigns and
each of such entity's respective officers, directors, shareholders, partners,
employees, agents, representatives and independent contractors.
"Initial Franchise Fee" - Thirty Five Thousand Dollars ($35,000).
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"Initial Term" - The time period commencing on the date stated on the
first page of this Agreement and expiring fifteen (15) years after the Opening
Date.
"Losses and Expenses" - Includes, without limitation, all losses,
compensatory, exemplary, incidental, consequential or punitive damages, fines,
charges, costs, expenses, lost profits, legal fees, court costs, settlement
amounts, judgments, compensation for damages to Franchisor's reputation and
goodwill, costs of or resulting from delays, financing, costs of advertising
material and media time/space and costs of changing, substituting or replacing
the same, and any and all expenses of recall, refunds, compensation, public
notices and other such amounts incurred in connection with the matters
described.
"Manuals" - The confidential operations manuals and such other manuals and
written materials as Franchisor shall have developed for use in the Restaurant
(as the same may be revised by Franchisor from time to time).
"Opening Date" - The date the Restaurant opens for business to the public
set forth in Attachment C.
"Operating Principal" - The individual designated by Franchisee to serve
as the Operating Principal of Franchisee and any replacement, who Franchisee
acknowledges and agrees shall act as Franchisee's representative, and shall have
the authority to act on behalf of Franchisee during the Term. The initial
Operating Principal shall be listed on Attachment C.
"Franchisee's Principals" - Includes, collectively and individually,
Franchisee's spouse (if Franchisee is an individual), all officers and directors
(including the officers and directors of any general partner) and all holders of
an ownership interest in Franchisee and in any entity directly or indirectly
controlling Franchisee or its Affiliates. The initial Franchisee's Principals
shall be listed on Attachment C.
"Payments" - Any amount, including, but not limited to, fees,
contributions and reimbursements that Franchisee is required to pay to
Franchisor under this Agreement.
"Permanent Disability" - Any physical, emotional or mental injury, illness
or incapacity which would prevent a person from performing the obligations set
forth in this Agreement or in the Guaranty made part of this Agreement for at
least ninety (90) consecutive days and from which condition recovery within
ninety (90) days from the date of determination of disability is unlikely.
"Proprietary Marks" - Certain trade names, service marks, trademarks,
emblems and indicia of origin, including, but not limited to, the marks
"Pizzeria Uno(R)", "Uno(R)" and such other trade names, service marks and
trademarks as are now designated (and may hereafter be designated by Franchisor
in writing) for use in connection with the System.
"Publicly-Held Corporation" - A corporation whose equity securities (or a
portion of them) are currently being publicly traded on any recognized stock
exchange or otherwise pursuant to applicable law.
"Renewal Term" - One (1) additional consecutive term of ten (10) years.
"Reserved Area" -Any school campuses and facilities, transportation
facilities (e.g., airports, train stations, bus terminals, port authorities),
hospitals and other health care facilities, and temporary or periodic mass
gathering locations or events designated by Franchisor.
"Restaurant" - The full-service Pizzeria Uno restaurant identified by the
Proprietary Marks and System and established pursuant to this Agreement.
"Royalty Fee" - Five percent (5%) of Gross Sales, but not less than One
Thousand Dollars ($1,000) per month (or a pro-rata portion thereof for any
partial month of operation).
"Site" - The location of the Restaurant.
"Site Selection Handbook" - Franchisor's written site selection
information.
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"Standards and Specifications" - Such standards and specifications
established by Franchisor from time to time in the Manuals or otherwise in
writing. Standards and Specifications may include, but are not limited to,
products specified by name or brand.
"System" - Franchisor's distinctive system relating to the establishment
and operation of food service facilities featuring "Chicago Style" deep dish
pizza and other products identified by the Proprietary Marks.
"Taxes" - Any withholding, value-added, remittance or other taxes, duties
or other amounts (except taxes measured by Franchisor's net income) that may be
imposed upon payments to be made by Franchisee to Franchisor or its Affiliates.
"Term" - Initial Term plus, if properly exercised, the Renewal Term.
"Transfer" - Any sale, assignment, transfer, conveyance, pledge,
hypothecation or encumbrance, of any interest in this Agreement, in Franchisee
(including any existing or new securities) or Franchisee's assets, whether
directly or indirectly made, attempted or completed.
"Two-Year Time Period" - With respect to Franchisee, two (2) years
commencing upon the date of expiration, termination (regardless of the cause for
termination) or Transfer of this Agreement; or, with respect to Controlling
Principals, two (2) years commencing upon the earlier of: (i) the expiration,
termination of, or Transfer of this Agreement or (ii) the time such individual
or entity ceases to satisfy the definition of Controlling Principals under this
Agreement.
II. GRANT, TERM AND RENEWAL
A. In reliance on the representations and warranties of Franchisee and its
Controlling Principals hereunder, Franchisor hereby grants to Franchisee, upon
the terms and conditions in this Agreement, the right and license, and
Franchisee hereby accepts the right and obligation, to operate the Restaurant.
Unless sooner terminated as provided in Section XVI. hereof, the duration of the
Initial Term shall be as stated in the definition of Initial Term set forth in
Section I. hereof.
B. The specific street address of the Restaurant location shall be set
forth in Attachment A. Franchisee shall not relocate the Restaurant without the
express prior written consent of Franchisor. This Agreement does not grant to
Franchisee the right or license to operate the Restaurant or to offer or sell
any products or services described under this Agreement at or from any other
location.
C. Except as provided in this Agreement, for so long as no Event of
Default has occurred and is continuing, neither Franchisor nor its Affiliates
shall establish or authorize any other person or entity, other than Franchisee,
to establish a Restaurant in the Assigned Area during the Term. Notwithstanding
the above, Franchisee and Controlling Principals acknowledge and agree that
Franchisor and its Affiliates operate restaurants under the mark "Pizzeria
Uno(R)" and under other names and marks, and further agree and acknowledge that
the right granted hereby is only for the operation of a Restaurant. Franchisor
and its Affiliates retain all other rights, including the right to at any time
conduct (or authorize a third party to conduct) the following activities,
regardless of the proximity to, or the competitive effect on, the Assigned Area
or any Pizzeria Uno restaurant operated by Franchisee: (1) advertise and promote
the System, and fill customer orders by providing catering and delivery services
in the Assigned Area; (2) offer and sell collateral and ancillary products and
services which may be similar to those offered by the Pizzeria Uno restaurants,
in the Assigned Area, if offered and sold other than through a Pizzeria Uno
restaurant, including, without limitation, pre-packaged food products, wearables
and other Pizzeria Uno memorabilia; (3) offer and sell such products and
services under the Proprietary Marks in the Assigned Area through Alternative
Distribution Sites; (4) operate a Pizzeria Uno restaurant in any Reserved Area;
(5) offer and sell products and services under any other names and marks; and
(6) establish and operate a Pizzeria Uno restaurant anywhere outside the
Assigned Area.
D. Franchisee may, at its option, renew the rights under this Agreement
for the Renewal Term, subject to any or all of the following conditions which
must, in Franchisor's discretion, be met prior to and at the time of renewal:
(1) Franchisee shall give Franchisor written notice of Franchisee's election to
renew not less than seven (7) months nor more
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than twelve (12) months prior to the end of the Initial Term or any Renewal
Term, as applicable; (2) Franchisee shall repair, replace, or acquire, at
Franchisee's cost and expense, equipment, signs, interior and exterior decor
items, fixtures, furnishings, delivery vehicles, if applicable, supplies and
other products and materials required for the operation of the Restaurant as
Franchisor may reasonably require to offer and sell new menu items or to provide
the Restaurant's services by alternative means, and shall otherwise modernize
the Restaurant premises, equipment, signs, interior and exterior decor items,
fixtures, furnishings, delivery vehicles, if applicable, supplies and other
products and materials required for the operation of the Restaurant, as
reasonably required by Franchisor to reflect the then-current standards and
image of the System as contained in the Manuals or otherwise provided in writing
by Franchisor; (3) no Event of Default shall have occurred and be continuing, or
occurred during the twelve (12) months prior to Franchisee's request, whether
such Event of Default was cured or curable; (4) Franchisee shall have satisfied
all monetary obligations owed by Franchisee to Franchisor and its Affiliates
under this Agreement and any other agreement between Franchisee or its
Affiliates and Franchisor or its Affiliates and shall have substantially and
timely met those obligations throughout the terms thereof; (5) Franchisee shall
present satisfactory evidence that Franchisee has the right to remain in
possession of the Restaurant premises for the duration of the Renewal Term; (6)
Franchisee and the Controlling Principals shall execute Franchisor's
then-current form of franchise agreement, which shall supersede this agreement
and which may differ from the terms of this agreement, including the payment of
higher fees; provided, however, that in lieu of paying a new initial franchise
fee, Franchisee shall pay to Franchisor a renewal fee in an amount equal to
twenty five percent (25%) of the then-current initial franchise fee being
charged by Franchisor; (7) Franchisee and the Controlling Principals shall
execute a general release of any and all claims against Franchisor and its
Affiliates, and each such entity's respective officers, directors, shareholders,
partners, agents, representatives, independent contractors, servants and
employees, in their corporate and individual capacities, including, without
limitation, claims arising under this Agreement or under any federal, state or
local laws, rules, regulations or orders; and (8) Franchisee shall comply with
Franchisor's then-current qualification and training requirements.
III. SITE SELECTION, PLANS AND CONSTRUCTION
A. Franchisee assumes all cost, liability, expense and responsibility for
locating, obtaining and developing the Site for, and for constructing and
equipping, the Restaurant. Franchisee shall comply with the minimum guidelines
for Site selection prescribed by Franchisor in the Site Selection Handbook or
otherwise in writing, including the following:
(1) Prior to acquiring by lease or purchase a Site for the
Restaurant, Franchisee shall locate a Site for the Restaurant that satisfies the
site selection information set forth in the Site Selection Handbook and shall
submit to Franchisor in the form specified in the Site Selection Handbook a
description of the Site, including evidence satisfactory to Franchisor that the
Site satisfies Franchisor's site selection information, together with such other
information and materials as Franchisor may reasonably require, including, but
not limited to, a letter of intent or other evidence satisfactory to Franchisor
which confirms Franchisee's favorable prospects for obtaining the Site. If not
previously submitted, recognizing that TIME IS OF THE ESSENCE, Franchisee agrees
that it will submit such information and materials for the proposed Site to
Franchisor for its consent no later than six (6) months after the execution of
this Agreement.
(2) Franchisor may, in its sole discretion, direct one or more of
its representatives to visit the Site if such a visit is deemed necessary and
appropriate by Franchisor (on its own initiative or at Franchisee's request) and
subject to the availability of such representative(s); provided, however, that
Franchisor shall not direct its representative(s) to make any such visit prior
to the receipt of all information and materials concerning such Site, as
described in Section III.A.(1). The first such Site visit shall be without
additional charge to Franchisee. For all subsequent such Site visits, regardless
of whether undertaken at Franchisor's initiative or at Franchisee's request,
Franchisee shall promptly reimburse Franchisor for all costs and expenses
incurred by Franchisor in connection therewith, including lodging, meals,
travel, and wages incurred or related to such Site visit(s) .
(3) Franchisor shall have thirty (30) days after receipt of this
information and materials to consent to or reject, in its sole discretion, the
proposed Site as the location for the Restaurant. No Site may be used for the
location of the Restaurant unless it is first receives Franchisor's consent in
writing. Franchisee and the Controlling Principals agree and acknowledge that
Franchisor's consent to a Site shall not be deemed to be a representation or
warranty that the Site will be successful or attain a level or range of
performance.
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(4) After Franchisor's consent to a location for the Restaurant is
received and the Site acquired by Franchisee, the location shall be described in
Attachment A.
B. Within sixty (60) days after Franchisor has consented to the Site for
the Restaurant as described above, Franchisee shall acquire by purchase or
lease, at Franchisee's expense, such Site for the Restaurant.
C. If Franchisee will purchase the premises for the Restaurant, Franchisee
shall submit a copy of the proposed contract for sale to Franchisor for written
consent prior to its execution and shall furnish to Franchisor a copy of the
executed contract of sale within ten (10) days after execution. If Franchisee
will occupy the premises of the Restaurant under a lease, Franchisee shall
submit a copy of the proposed lease to Franchisor for written consent prior to
its execution and shall furnish to Franchisor a copy of the executed lease
within ten (10) days after execution. No lease for the Restaurant premises shall
be approved by Franchisor unless a rider to the lease, prepared by Franchisor
and executed by Franchisor, Franchisee and the lessor, in substantially the form
attached as Attachment B, is attached to the lease and incorporated therein.
Franchisor shall have thirty (30) days after receipt of the proposed contract of
sale or proposed lease to either consent to or reject such documentation prior
to its execution.
D. Franchisee shall obtain all zoning classifications and clearances which
may be required by applicable state or local laws, ordinances or regulations or
which may be necessary as a result of any restrictive covenants relating to the
Restaurant premises. Prior to beginning the construction of the Restaurant,
Franchisee shall obtain all approvals, clearances, permits and certifications
required for the lawful construction or remodeling and operation of the
Restaurant, and certify in writing to Franchisor that the insurance coverage
specified in Section X. is in full force and effect and that all required
approvals, clearances, permits and certifications have been obtained. Upon
request, Franchisee shall provide to Franchisor additional copies of
Franchisee's certificates of insurance and copies of all such approvals,
clearances, permits and certifications.
E. Franchisee shall obtain any architectural, engineering and design
services necessary for the construction or conversion of the Restaurant at its
own expense from an architectural design firm approved by Franchisor in writing.
Franchisee shall adapt the prototypical architectural and design plans and
specifications for construction of the Pizzeria Uno restaurants provided to
Franchisee by Franchisor in accordance with Section V.B. as necessary for the
construction of the Restaurant and shall submit such adapted plans to Franchisor
for review. If Franchisor determines, in its sole discretion, that any such
plans do not satisfy Franchisor's architectural or design standards and
specifications or are not consistent with the best interests of the System,
Franchisor may prohibit the implementation of such plans, and in this event will
notify Franchisee of any objection(s) within thirty (30) days of receiving such
plans, including a reasonably detailed list of changes necessary to make the
plans acceptable. If Franchisor fails to notify Franchisee of an objection to
the plans within this time period, Franchisee may use such plans. Franchisor
shall, upon a resubmission of the plans with such changes, notify Franchisee
within fifteen (15) days of receiving the resubmitted plans whether the plans
are acceptable. If such changes are not acceptable, Franchisor shall notify
Franchisee of such objections as described above, and Franchisee shall similarly
resubmit such plans until such plans are acceptable to Franchisor. If Franchisor
fails to notify Franchisee of any objection within such time period, Franchisee
may use the resubmitted plans. Franchisee acknowledges that acceptance by
Franchisor of such plans does not constitute a representation, warranty, or
guarantee, express or implied, by Franchisor that such plans are free of
architectural or design errors and thus, Franchisor shall have no liability to
Franchisee or any other party with respect thereto.
F. Franchisee shall commence and diligently pursue construction or
remodeling (as applicable) of the Restaurant. During construction or remodeling,
Franchisee shall provide Franchisor with such periodic reports regarding the
progress of the construction or remodeling as may be reasonably requested by
Franchisor. In addition, Franchisor shall make such on-site inspections as it
may deem reasonably necessary to evaluate such progress. If Franchisee requests
or Franchisor deems that more than one on-site inspection is necessary,
Franchisee shall pay all costs and expenses incurred by Franchisor in connection
with such additional visits, including lodging, meals, travel and wages. If
during such inspections Franchisor identifies instances where Franchisee's
construction or remodeling is inconsistent with, or does not meet, Franchisor's
standards, Franchisor shall notify Franchisee in writing of such deficiencies,
and Franchisee shall correct such deficiencies prior to opening. Franchisee
shall notify Franchisor of the scheduled date for completion of construction or
remodeling no later than thirty (30) days prior to such date. Within a
reasonable time after the date of completion of
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construction or remodeling, Franchisor may, at its option, conduct an inspection
of the completed Restaurant. Franchisee shall pay all reasonable costs and
expenses incurred by Franchisor in connection with such inspection, including
lodging, meals, travel and wages.
G. Prior to opening the Restaurant, Franchisee shall obtain a full-service
liquor license and any additional alcohol and liquor licenses necessary for the
lawful operation of the Restaurant.
H. Franchisee acknowledges and agrees that Franchisee will not open the
Restaurant for business without the written authorization of Franchisor and that
authorization to open shall be conditioned upon Franchisee's strict compliance
with this Agreement.
I. Franchisee acknowledges that TIME IS OF THE ESSENCE. Subject to
Franchisee's compliance with the conditions stated below, Franchisee shall open
the Restaurant and commence business by the Opening Date shown on Attachment A,
which date shall be listed on Attachment A at the same time the location of the
Restaurant is described on Attachment A, as provided in Section III.A.(4). If
Franchisee opens the Restaurant to the public on a date prior to that date set
forth in Attachment A, Franchisee shall provide not less than thirty (30) days
prior written notice to Franchisor of such actual Opening Date and Franchisor
shall amend Attachment A to reflect such actual Opening Date. In the event the
Restaurant opens for business on a date other than the Opening Date set forth in
the thirty-day notice described above, Franchisee shall immediately reimburse
Franchisor for all of its costs and expenses incurred as a result of thereof,
including without limitation, costs to amend any travel arrangements for
training personnel. Prior to opening, Franchisee shall complete all exterior and
interior preparations for the Restaurant, including installation of equipment,
fixtures, furnishings and signs, pursuant to the plans and specifications
accepted by Franchisor, and shall comply with all other pre-opening obligations
of Franchisee. If Franchisee fails to comply with any of such obligations,
Franchisor shall have the right to prohibit Franchisee from commencing business.
IV. FEES AND PAYMENTS
A. Franchisee shall pay to Franchisor the Initial Franchise Fee upon
execution of this Agreement. The Initial Franchise Fee when so paid shall be
deemed fully earned and nonrefundable.
B. (1) During the Term of this Agreement, Franchisee shall pay to
Franchisor, in partial consideration for the rights herein granted, the Royalty
Fee. Such Royalty Fee and any other monthly fee required by the Agreement shall
be due and payable on the fifteenth (15th) day of each month, provided that such
day is a Business Day, based on the Gross Sales for the preceding month (the
first such month beginning on the date the Restaurant commences operations and
ending on the last day of such month).
(2) Each payment of the Royalty Fee shall be accompanied by a Fee
Report for the preceding month and any other reports required by Franchisor.
Notwithstanding the foregoing, Franchisee shall provide Franchisor with such
Gross Sales information on the fifteenth (15th) day of each month by electronic
data communication, facsimile transmission or, if not available, by telephone,
or such other method Franchisor may reasonably direct.
C. Each Payment to be made to Franchisor hereunder shall be made free and
clear and without any deduction whatsoever for any Taxes.
D. Franchisee shall pay such other fees in the amounts and in the manner
described in this Agreement.
E. Franchisee shall not withhold Payments due Franchisor under this
Agreement on grounds of alleged nonperformance by Franchisor hereunder nor shall
Franchisee set off any such payments against amounts owing or allegedly owing by
Franchisor to Franchisee. Any Payment or report not actually received by
Franchisor on or before such date shall be deemed overdue. TIME IS OF THE
ESSENCE with respect to all Payments to be made by Franchisee to Franchisor. All
unpaid obligations under this Agreement shall bear interest from the date due
until Payment is received by Franchisor, at one and one-half percent (1 1/2%)
per month, or the maximum rate allowed by applicable law, whichever is less.
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Notwithstanding anything to the contrary contained herein, no provision of this
Agreement shall require the payment or permit the collection of interest in
excess of the maximum rate allowed by applicable law. If any excess of interest
in such respect is herein provided for, or shall be adjudicated to be so
provided in this Agreement, the provisions of this paragraph shall govern and
prevail, and neither Franchisee nor its Principals shall be obligated to pay the
excess amount of such interest. If for any reason interest in excess of the
maximum rate allowed by applicable law shall be deemed charged, required or
permitted, any such excess shall be applied as a payment and reduction of any
other amounts which may be due and owing hereunder, and if no such amounts are
due and owing hereunder then such excess shall be repaid to the party that paid
such interest.
F. By executing this Agreement, Franchisee agrees that in the event
Franchisee shall become delinquent in any payment due Franchisor for more than
thirty (30) days, Franchisor, at its option, shall thereafter, have the right to
withdraw funds from Franchisee's designated bank account each month by
electronic funds transfer ("EFT") in the amount of the Royalty Fee or any other
amounts due to Franchisor and for all subsequent payments due to Franchisor.
With respect to royalty fees, provided such day is a Business Day (and if not a
Business Day on the next succeeding Business Day), such withdrawals shall be
made on the fifteenth (15th) day after the end of each month for the amount of
the Royalty Fee due based on Franchisee's Gross Sales for the preceding month,
as evidenced by the Fee Report. If the Fee Report has not been received within
the time period required by this Agreement, then Franchisor may process, in its
sole discretion, an EFT for the Royalty Fee for the month in which the Fee
Report was not received, based on (a) information regarding Franchisee's Gross
Sales for the preceding month obtained by Franchisor in the manner contemplated
by Section VI.E.(9) of this Agreement, (b) the monthly Gross Sales reports
transmitted to Franchisor by Franchisee pursuant to Section IV.B.(2), or (c) the
most recent Fee Report provided to Franchisor by Franchisee; provided that if a
Fee Report for the subject month is subsequently received and reflects (i) that
the actual amount of the Royalty Fee due was more than the amount of the EFT by
Franchisor, then Franchisor shall be entitled to withdraw additional funds
representing the amount of the difference from Franchisee's designated bank
account by EFT; or (ii) the actual amount of the Royalty Fee due was less than
the amount of the EFT by Franchisor, then Franchisor shall credit the excess
amount to the payment of Franchisee's future royalty obligations. For any other
monetary obligation, Franchisor shall have the right to withdraw such amounts on
the day they become due, provided such day is a Business Day (and if not a
Business Day, on the next succeeding Business Day.) Franchisor shall, upon
execution of this Agreement or at any time thereafter at Franchisor's request,
execute such documents or forms as Franchisor determines are necessary for
Franchisor to process EFTs from Franchisee's designated bank account for the
payments due hereunder, including Attachment F to this Agreement. Franchisor
agrees that (i) it shall be responsible for any EFT transfer fee or similar
charge imposed by the bank, and (ii) should any EFT not be honored by
Franchisee's bank for any reason, for that payment plus any service charge
applied by Franchisor and/or the bank. Franchisee further agrees that it shall
at all times throughout the term of this Agreement maintain a minimum balance of
Ten Thousand Dollars ($10,000) in the Franchisee's bank account against which
such EFTs are to be drawn for the Restaurant operated by Franchisee under this
Agreement. If Royalty Fees and other payments are not received when due,
interest may be charged by Franchisor in accordance with Section IV.E, above.
Upon written notice by Franchisor to Franchisee, Franchisee shall execute such
other documents that Franchisor or Franchisee's bank may require to implement
the foregoing procedure. It shall be a material event of default if Franchisee
closes such designated bank account without Franchisor's consent, or upon
Franchisor's approval, fails to establish another account, and execute all
documents necessary for Franchisor to process such payments by EFT for such new
designated account.
V. FRANCHISOR'S OBLIGATIONS
Franchisor agrees to provide the services described below with regard to
the Restaurant:
A. Franchisor's Site Selection Handbook and such site selection assistance
as Franchisor may deem advisable, as well as such on-site evaluation as
Franchisor may deem necessary on its own initiative or in response to
Franchisee's reasonable request for evaluation of a Site; provided, however,
that Franchisor shall not provide an on-site evaluation for any proposed Site
prior to the receipt of all required information and materials concerning such
Site prepared pursuant to Section III.
B. On loan, a set of prototypical architectural and design plans and
specifications for a Pizzeria Uno restaurant. Franchisee shall independently,
and at Franchisee's expense, have such architectural and design plans and
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specifications adapted for construction of the Restaurant in accordance with
Section III, including such adaptations required in order to comply with the
regulations and standards required under applicable state or local laws where
the Restaurant is located. No such plans and specifications will be modified in
any material respect without the prior written consent of Franchisor, which
consent will not be unreasonably withheld.
C. On loan, one (1) set of Manuals as more fully described in Section
XII.A.
D. If available as determined by Franchisor, certain computer software
used in the operation of the Pizzeria Uno restaurants will be licensed to
Franchisee by Franchisor pursuant to Section VI.E.(10), such software may
require connection to (at Franchisee's expense) and operation of computers
designated by Franchisor. Franchisor will make available to Franchisee at a
reasonable cost any upgrades, enhancements or replacements to the software that
are developed from time to time by or on behalf of Franchisor. Franchisor shall
provide to Franchisee, for a reasonable fee, such support services relating to
the software as Franchisor deems advisable.
E. Visits to the Restaurant and evaluations of the products sold and
services rendered therein from time to time as reasonably determined by
Franchisor, as more fully described in Section VI.E.(4).
F. Certain advertising and promotional materials and information developed
by Franchisor from time to time for use by Franchisee in marketing and
conducting local advertising for the Restaurant. Franchisor shall have the right
to charge Franchisee a reasonable fee for such advertising and promotional
materials. Franchisor shall have the right to review and consent to or reject
all advertising and promotional materials that Franchisee proposes to use,
pursuant to Section VII.
G. Advice and written materials concerning techniques of managing and
operating the Restaurant from time to time developed by Franchisor, including
new developments and improvements in restaurant equipment and food products,
source specifications and the packaging and preparation thereof.
H. An initial training program for Franchisee's Operating Principal (or
designee), General Manager and other Restaurant personnel and other training
programs in accordance with the provisions of Section XI.E.(1), (2) and (5).
I. On-site pre-opening and post-opening assistance at the Restaurant in
accordance with the provisions of Section XI.E.(3).
VI. RESTAURANT OPERATIONS
A. Franchisee understands the importance of maintaining uniformity among
all of the Pizzeria Uno restaurants and the importance of complying with all of
the Standards and Specifications relating to the operation of the Restaurant.
B. Franchisee shall maintain the Restaurant in a high degree of
sanitation, repair and condition, and in connection therewith shall make such
additions, alterations, repairs and replacements thereto (but no others without
Franchisor's prior written consent) as may be required for that purpose,
including, without limitation, such periodic repainting or replacement of
obsolete signs, furnishings, equipment and decor as Franchisor may reasonably
direct, at Franchisee's cost and expense. Franchisee shall also obtain, at its
expense, any new or additional equipment, fixtures, supplies and other products
and materials which may be reasonably required by Franchisor for Franchisee to
offer and sell new menu items or to provide the Restaurant's services by
alternative means. Except as may be expressly provided in the Manuals, no
alterations or improvements or changes of any kind in design, equipment, signs,
interior or exterior decor items, fixtures or furnishings shall be made in or
about the Restaurant or its premises without the prior written consent of
Franchisor.
C. Franchisee shall, upon the request of Franchisor, make other
improvements to modernize the Restaurant premises, equipment (including
electronic cash register or computer hardware and software systems), signs,
interior and exterior decor items, fixtures, furnishings, supplies and other
products and materials required for the operation of the
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Restaurant, to Franchisor's then-current Standards and Specifications.
Notwithstanding the above, Franchisee agrees that it will make such capital
improvements or modifications described in this Section VI.C. if so requested by
Franchisor at the earlier of: (i) ten (10) years after the execution of this
Agreement by Franchisor, or (ii) such time that a majority of the Pizzeria Uno
restaurants then operated by Franchisor or its Affiliates in the United States
have made or are in the process of making such improvements or modifications.
D. Franchisee shall comply with all of the Standards and Specifications
relating to the purchase of all food and beverage items, ingredients, supplies,
materials, fixtures, furnishings, equipment (including electronic cash register
or computer hardware and software systems) and other products used or offered
for sale at the Restaurant. Except as otherwise provided herein, Franchisee
shall obtain such items from suppliers (including manufacturers, distributors
and other sources) who continue to demonstrate the ability to meet Franchisor's
then-current Standards and Specifications for food and beverage items,
ingredients, supplies, materials, fixtures, furnishings, equipment and other
items used or offered for sale at Pizzeria Uno restaurants and who possess
adequate quality controls and capacity to supply Franchisee's needs promptly and
reliably; and who have been authorized in writing by Franchisor prior to any
purchases by Franchisee from any such supplier; and who have not thereafter been
rejected by Franchisor. If Franchisee desires to purchase, lease or use any
products or other items from an unauthorized supplier, Franchisee shall submit
to Franchisor a written request for such consent, or shall request the supplier
itself to do so. Franchisee shall not purchase or lease from any supplier until
and unless such supplier has been authorized in writing by Franchisor.
Franchisor shall have the right to require that its representatives be permitted
to inspect the supplier's facilities, and that samples from the supplier be
delivered, either to Franchisor or to an independent laboratory designated by
Franchisor for testing. Franchisee shall pay the expenses incurred by Franchisor
or its designee in connection with the test and the actual cost of the test.
Franchisor reserves the right, at its option, to re-inspect from time to time
the facilities and products of any supplier previously consented to by
Franchisor and to revoke its consent upon the supplier's failure to continue to
meet any of Franchisor's then-current criteria. Nothing in the foregoing shall
be construed to require Franchisor to consent to any particular supplier.
E. Franchisee shall operate the Restaurant in strict conformity with the
Standards and Specifications and the restrictions on the use of the Proprietary
Marks described in Section VIII.C. In particular, Franchisee also agrees:
(1) To sell or offer for sale all menu items, products and services
required by Franchisor and in the manner and style prescribed by Franchisor,
including, but not limited to, dining-in, carry-out, catering and delivery
services, as expressly consented to by Franchisor in writing in the Manuals or
otherwise, and to execute such documents or instruments that Franchisor may deem
necessary to facilitate the providing of such services.
(2) To sell and offer for sale only the menu items, products and
services that have been expressly authorized for sale in writing by Franchisor;
to refrain from deviating from the Standards and Specifications without
Franchisor's prior written consent; and to discontinue selling and offering for
sale any menu items, products or services, or providing such menu items,
products or services in any manner or through any method of distribution, which
Franchisor may, in its sole discretion, disapprove or reject in writing at any
time.
(3) To maintain in sufficient supply and to use and sell at all
times only such food and beverage items, ingredients, products, materials,
supplies and paper goods that conform to the Standards and Specifications; to
prepare all menu items in accordance with Franchisor's recipes and procedures
for preparation contained in the Manuals or other written directives and to
refrain from deviating from the Standards and Specifications.
(4) To grant Franchisor and its agents the right to enter upon the
Restaurant premises at any time for the purpose of conducting inspections; to
cooperate with Franchisor's representatives in such inspections by rendering
such assistance as they may reasonably request; and, upon notice from Franchisor
or its agents, to take such steps as may be necessary to correct immediately any
deficiencies detected during any such inspection. Should Franchisee, for any
reason, fail to correct such deficiencies within a reasonable time as determined
by Franchisor, Franchisor shall have the right and authority (without, however,
any obligation to do so) to correct such deficiencies and charge Franchisee a
reasonable fee for Franchisor's expenses in so acting, payable by Franchisee
immediately upon demand. To permit Franchisor or its agents, at any reasonable
time, to remove a reasonable number of samples of food or non-food items from
Franchisee's inventory, or from the Restaurant, without payment therefor, in
amounts reasonably necessary for testing by Franchisor or an
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independent laboratory to determine whether such samples meet Franchisor's
then-current Standards and Specifications. Franchisor may require Franchisee to
bear the cost of such testing if the supplier of the item has not previously
been consented to by Franchisor or if the sample fails to conform with
Franchisor's specifications.
(5) To purchase or lease, install and maintain at Franchisee's
expense, all fixtures, furnishings, equipment (including electronic cash
register or computer hardware and software systems), decor items, signs,
delivery vehicles, and related items as Franchisor may reasonably direct from
time to time in the Manuals or otherwise in writing; and to refrain from
installing or permitting to be installed on or about the Restaurant premises,
without Franchisor's prior written consent, any fixtures, furnishings,
equipment, delivery vehicles, decor items, signs, games, vending machines or
other items not previously authorized as meeting the Standards and
Specifications. Such maintenance shall include such computer hardware and
software upgrades, repairs, and replacements as Franchisor shall direct from
time to time. If any of the property described above is leased by Franchisee
from a third party, such lease shall be consented to by Franchisor, in writing,
prior to execution. Franchisor's consent shall be conditioned upon such lease
containing a provision which permits any interest of Franchisee in the lease to
be assigned to Franchisor upon the termination or expiration of this Agreement
and which prohibits the lessor from imposing an assignment or related fee upon
Franchisor in connection with such assignment.
(6) To maintain a competent, conscientious, trained staff and to
take such steps as are necessary to ensure that its employees preserve good
customer relations and comply with such dress code as Franchisor may prescribe.
(7) To maintain in sufficient supply and prominently display and
make available such customer satisfaction forms as Franchisor may require and to
forward all completed customer satisfaction forms to Franchisor or to
Franchisor's designee at such times as Franchisor may direct.
(8) To play in the Restaurant such recorded or programmed music as
Franchisor may from time to time require in the Manuals or otherwise in writing
and to obtain such copyright licenses as may be necessary to authorize the
playing of such recorded music.
(9) To install and maintain equipment in accordance with
Franchisor's standards and specifications to permit Franchisor to access and
retrieve by telecommunication any information Franchisor is entitled to obtain
which is stored on electronic cash registers (or other computer hardware and
software). Franchisee is required to install and utilize at the Restaurant
premises (a) such equipment and software as specified in the Manuals to permit
Franchisor to inspect and monitor electronically information concerning
Franchisee's Restaurant, Gross Sales and such other information as may be
contained or stored in such equipment and software; and (b) a telephone line and
modem in accordance with Franchisor's specifications to permit Franchisor to
access by telephone the electronic cash register system (or other computer
hardware and software) that Franchisee is required to utilize at the Restaurant
as specified in the Manuals. Franchisor shall have telephone access as provided
herein at such times and in such manner as Franchisor shall from time to time
specify. It shall be a material default under this Agreement if Franchisee fails
to maintain such equipment and lines in operation and accessible to Franchisor
at all times throughout the term of this Agreement.
(10) If Franchisor makes available to Franchisee the computer
software described in Section V.D., Franchisee shall enter into a software
license agreement with Franchisor in substantially the form attached as
Attachment E for the license of such proprietary computer software provided by
Franchisor for the operation of the Restaurant.
F. Franchisee acknowledges and agrees that Franchisor has and may continue
to develop for use in the System certain products, including products which are
prepared from highly confidential recipes and which are trade secrets of
Franchisor. Because of the importance of quality and uniformity of production
and the significance of such products in the System, it is to the mutual benefit
of the parties that Franchisor closely control the production and distribution
of such products. Accordingly, Franchisee agrees that if such products become a
part of the System, Franchisee shall use only Franchisor's confidential recipes
and other proprietary products, and shall purchase solely from Franchisor or
authorized suppliers designated by Franchisor all of Franchisee's requirements
for such products. If Franchisor makes available to Franchisee certain
promotional merchandise identifying the System as Franchisor shall require such
as T-shirts, sweatshirts and caps, Franchisee further agrees to purchase from
Franchisor or from a source designated by Franchisor for resale to Franchisee's
customers such merchandise in amounts sufficient to satisfy Franchisee's
customer demand.
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G. Franchisee shall require all advertising and promotional materials,
signs, decorations, paper goods (including menus and all forms and stationery
used in the Restaurant), and other items which may be designated by Franchisor
to bear the Proprietary Marks in the form, color, location and manner prescribed
by Franchisor.
H. Franchisee shall process and handle all consumer complaints connected
with or relating to the Restaurant, and shall promptly notify Franchisor by
telephone and in writing of all of the following complaints: (i) safety or
health violations, (ii) claims exceeding Ten Thousand Dollars ($10,000), (iii)
dram shop violations, (iv) liquor license violations, and (v) any other any
material claims against or losses suffered by Franchisee. Franchisee shall
maintain for Franchisor's inspection any inspection reports affecting the
Restaurant or equipment located in the Restaurant during the Term of this
Agreement and for thirty (30) days after the expiration or earlier termination
hereof. Franchisee shall notify Franchisor in writing within five (5) days of
the commencement of any action, suit or proceeding and of the issuance of any
order, writ, injunction, award or decree of any court, agency or other
governmental instrumentality, which may adversely affect the operation or
financial condition of the Restaurant.
I. Upon the execution of this Agreement or at any time thereafter,
Franchisee shall, at the option of Franchisor, execute such forms and documents
as Franchisor deems necessary to appoint Franchisor its true and lawful
attorney-in-fact with full power and authority for the purpose of assigning to
Franchisor all rights to the telephone numbers of the Restaurant and any related
and other business listings upon the termination or expiration of this Agreement
as required under Section XVII.K.
J. Any vehicle used by Franchisee to deliver Restaurant products and
services to customers shall meet Standards and Specifications with respect to
appearance and ability to satisfy the requirements imposed on Franchisee
hereunder. Franchisee shall place such signs and decor items on the vehicle as
Franchisor requires and shall at all times keep such vehicle clean and in good
working order. Franchisee shall not engage or utilize any individual in the
operation of a motor vehicle in connection with providing services hereunder who
does not meet the minimum requirements to operate a motor vehicle under the laws
of the state in which Franchisee provides such services. Franchisee shall
require each such individual to comply with all laws, regulations and rules of
the road and to use due care and caution in the operation and maintenance of
motor vehicles. Except as noted above, Franchisor does not set forth any
requirements or exercise control over any motor vehicle utilized by Franchisee.
K. In the event of any bona fide dispute as to Franchisee's liability for
taxes assessed or other indebtedness, Franchisee may contest the validity or the
amount of the tax or indebtedness in accordance with the procedures of the
taxing authority or applicable law. However, in no event shall Franchisee permit
a tax sale or seizure by levy of execution or similar writ or warrant or
attachment by a creditor, to occur against the premises of the Restaurant or any
improvements thereon.
L. Franchisee shall comply with all federal, state and local laws, rules
and regulations and shall timely obtain and maintain any and all permits,
certificates or licenses necessary for the full and proper conduct of the
Restaurant, including, without limitation, licenses to do business, fictitious
name registrations, sales tax permits, a full-service liquor license, fire
clearances, health and safety permits and certificates of occupancy, and any
permits, certificates or licenses required by any environmental law, rule, or
regulation.
VII. ADVERTISING AND RELATED FEES
A. Upon the opening of the Restaurant for business, and during the entire
Initial Term, Franchisee shall pay a non-refundable fee (the "Business Co-op
Fee") to Franchisor in an amount determined by Franchisor in its sole
discretion, but not more than one percent (1%) of Gross Sales of the Restaurant.
This fee shall cover Franchisee's share of advertising and marketing costs that
are incurred by Franchisor for the benefit of the System. These costs shall
include, without limitation, the following: salaries for people who are
dedicated to ad development, marketing and production support for the System;
assessments for administrative costs and overhead for such people; costs for
marketing, advertising, and production activities; training films; inspections
and related functions benefiting the System (e.g. premises inspections, and
supply and supplier inspections). Such payments will be made at the same time
and in the same manner as Royalty Fee payments. Franchisee recognizes that
Franchisor is under no obligation to ensure that expenditures to benefit the
System
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are proportionate to contributions of Franchisee for any given market and that
the manner in which these funds are spent shall be at the sole discretion of
Franchisor. Franchisor shall have no obligation to prepare or provide and
accounting of such expenditures.
B. Franchisee agrees that Franchisor shall have the right, in its
discretion, to designate any geographical area (e.g., an area of dominant
influence or "ADI") as a region for purposes of establishing an advertising
association ("Association"). An Association may be composed of one or more Uno
restaurants operated by Franchisor and/or one or more Uno restaurants operated
by Franchisee or another franchisee of Franchisor. If an Association has been
established for the geographic area in which Franchisee's Restaurant is located
at the time Franchisee commences business hereunder, Franchisee shall
immediately execute such documentation as required by Franchisor to become a
member of such Association. If an Association applicable to the Franchisee's
Restaurant is established at any later time during the term of this Agreement,
Franchisee shall execute such documentation as required by Franchisor and become
a member of the Association no later than thirty (30) days after the date on
which the Association commences operation as provided below:
(1) Each Association shall be organized and governed in a form and
manner, and shall commence operation on a date, approved in advance by
Franchisor in writing.
(a) Each Association shall be organized for the purposes of,
and all contributions pursuant to Section VII.B.(1)(c) and any earnings thereon
shall be used exclusively to meet any and all costs for, maintaining, directing
and preparing advertising and/or promotional activities (including, among other
things, the cost of preparing and conducting television, radio, magazine and
newspaper advertising campaigns, direct mail and outdoor billboard advertising;
marketing surveys and other public relations activities; employing advertising
agencies to assist therein; and providing promotional brochures and other
marketing materials to the Restaurant operated under the System) in connection
with regional advertising. Such monies shall also be used to defray Franchisor's
reasonable administrative costs and overhead as Franchisor may incur in
activities reasonably related to the administration or direction of the
Association or related to any advertising program conducted by or on behalf of
the Association. The Association is operated solely as a conduit for the
collection and expenditure of advertising contributions for the purposes stated
herein.
(b) No advertising or promotional plans or materials may be
used by an Association or furnished to its members without the prior approval of
Franchisor. All such plans and materials shall be submitted to Franchisor in
accordance with the procedure set forth in Section VII.D. hereof.
(c) Franchisee shall contribute to the Association such amount
as prescribed by the Association, at such times and in such manner as prescribed
by the Association, and shall submit to the Association and to Franchisor such
other statements or reports as may be required by Franchisor or by the
Association with Franchisor's prior written approval. Franchisee's obligation to
provide such statements or reports shall be subject to Section IV.
(2) Franchisor, in its sole discretion, may grant to any franchisee
an exemption for any length of time from the requirement of membership in an
Association, upon written request of such franchisee stating reasons supporting
such exemption. Franchisor's decision concerning such request for exemption
shall be final.
C. No action taken by any Association shall diminish Franchisee's
obligations to pay the Business Co-op Fee or any other fee due to Franchisor
hereunder, but shall count toward Franchisee's Minimum Local Advertising Expense
obligations, as described in Section VII.G.
D. Franchisee shall submit a sample of each type of advertising material
to Franchisor prior to use, and, upon receipt of such material, Franchisor shall
have ten (10) working days to approve or disapprove the material. If Franchisor
takes no action within said ten (10) days, Franchisee may use the material
submitted. Franchisor may disapprove if, in its sole discretion, the material is
offensive, inaccurate, strategically inappropriate, potentially harmful to the
System or the Proprietary Marks or otherwise injurious to the Franchisor or
franchisees. Any expenditures for advertising that Franchisor has not approved
shall not be counted toward satisfaction of Franchisee's Minimum Local
Advertising Expense.
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E. Franchisee shall install and, at all times during the term of this
Agreement, maintain an outdoor sign in a prominent location in accordance with
Franchisor's sign specifications in effect from time to time, or as approved, in
writing, by Franchisor, unless prohibited from doing so by applicable laws and
regulations. Franchisee shall use Franchisee's best efforts to obtain any permit
or variance required in order to allow the installation and maintenance of an
outdoor sign, as described herein.
F. During the Initial Term, Franchisee shall advertise, at all times, in
the classified or yellow pages of the local telephone directory under the
listings of "Restaurants" and "Pizza," using mats approved, in advance, by
Franchisor, and such advertising shall count toward Franchisee's Minimum Local
Advertising Expense obligations.
G. During the Initial Term, Franchisee shall, in addition to the other
requirements of this Section VII, expend, each year, an amount at least equal to
the two percent (2%) of Gross Sales (the "Minimum Local Advertising Expense"),
on local advertising, public relations, and promotion, subject to the
requirements of Section VII.D. The food discount cost of coupons or gift
certificates shall not be counted in calculating dollars spent to satisfy
Minimum Local Advertising Expense. At the request of Franchisor, Franchisee
shall furnish, to Franchisor, an accurate accounting of the previous month's
expenditure on local advertising, public relations, and promotion, in form and
content satisfactory to Franchisor. Franchisor, at its option, may make
available to Franchisee all advertising and promotional materials for other
Restaurants which are used by it, its affiliates, or other franchisees on a
regular basis.
H. Franchisor also reserves the right to assess the Franchisee for
contributions to a system wide media fund which shall be designed to facilitate
media market spending in a way that benefits the System through cooperative
purchasing of media, (the "System Wide Media Fund"). The System Wide Media Fund
can be implemented on a national, local or regional basis. Such assessment, if
made, shall be counted toward satisfaction of Franchisee's Minimum Local
Advertising Expense. Upon establishment of the System Wide Media Fund by
Franchisor, Franchisee's obligations shall be as follows:
(1) On the fifteenth (15th) day of each month during the term of
this Agreement, Franchisee shall contribute an amount designated by Franchisor,
but not to exceed one percent (1%) of Franchisee's Gross Sales for the preceding
month for advertising and promotional purposes in the manner provided in Section
IV.
(2) Franchisee agrees that the System Wide Media Fund shall be
maintained and administered by Franchisor or its designee, as follows:
(a) Franchisor shall oversee all advertising and promotional
programs with sole discretion to approve or disapprove the creative concepts,
materials and media used in such programs, and the placement and allocation
thereof. Franchisee agrees and acknowledges that the System Wide Media Fund is
intended to maximize general public recognition and acceptance of the System and
the Proprietary Marks.
(b) The System Wide Media Fund, all contributions thereto, and
any earnings thereon shall be used exclusively by Franchisor to purchase radio,
television or print media on a local, regional or national basis.
(c) Franchisee shall contribute to the System Wide Media Fund
by separate check made payable to the System Wide Media Fund. All sums paid by
the Franchisee to the System Wide Media Fund shall be maintained in an account
separate from the other monies of Franchisor and shall not be used to defray any
of Franchisor's expenses, except for such reasonable administrative costs and
overhead as Franchisor may incur in activities reasonably related to the
administration or direction of the System Wide Media Fund and advertising
programs for franchisees and the System as set forth in Section VII.H.(2)(b)
hereof. The System Wide Media Fund and its earnings shall not otherwise inure to
the benefit of Franchisor. Franchisor or its designee shall maintain separate
bookkeeping accounts for the System Wide Media Fund.
(d) It is anticipated that all contributions to and earnings
of the System Wide Media Fund shall be expended for advertising and/or
promotional purposes as described herein during the taxable year within which
the contributions and earnings are received. If, however, excess amounts remain
in the System Wide Media Fund at the end of
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such taxable year, all expenditures in the following taxable year(s) shall be
made first out of accumulated earnings from previous years, next out of earnings
in the current year, and finally from contributions.
(e) The System Wide Media Fund shall not be an asset of
Franchisor or its designee. The System Wide Media Fund is operated solely as a
conduit for the collection and expenditure of advertising contributions for the
purposes stated herein. A statement of the operations of the System Wide Media
Fund as shown on the books of Franchisor or its designee shall be prepared
annually by Franchisor and shall be made available to Franchisee upon
Franchisee's request. Franchisor shall not have a fiduciary obligation in
connection with its maintenance or administration of the System Wide Media Fund.
(f) Although the System Wide Media Fund is intended to be of
perpetual duration, Franchisor maintains the right to terminate the System Wide
Media Fund. The System Wide Media Fund shall not be terminated, however, until
all monies in the System Wide Media Fund have been expended for advertising
and/or promotional purposes.
VIII. PROPRIETARY MARKS
A. Franchisor grants Franchisee the right to use the Proprietary Marks
during the Term in accordance with the System and related Standards and
Specifications.
B. Franchisee covenants, understands and acknowledges as follows:
(1) Franchisor is the owner of all right, title and interest in and
to the Proprietary Marks and the goodwill associated with and symbolized by
them. Without limiting any provisions herein, the mark "Pizzeria Uno(R)" is a
U.S. registered mark.
(2) Neither Franchisee nor the Controlling Principals shall take any
action that would prejudice or interfere with the validity of Franchisor's
rights with respect to the Proprietary Marks. Nothing in this Agreement shall
give the Franchisee any right, title, or interest in or to any of the
Proprietary Marks or any of Franchisor's service marks, trademarks, trade names,
trade dress, logos, copyrights or proprietary materials, except the right to use
the Proprietary Marks and the System in accordance with the terms and conditions
of this Agreement.
(3) Any and all goodwill arising from Franchisee's use of the
Proprietary Marks and the System shall inure solely and exclusively to
Franchisor's benefit, and upon expiration or termination of this Agreement and
the license herein granted, no monetary amount shall be assigned as attributable
to any goodwill associated with Franchisee's use of the Proprietary Marks.
(4) Franchisee shall not contest the validity of Franchisor's or any
Affiliates' interest in the Proprietary Marks or assist others to contest the
validity of Franchisor's or any Affiliates' interest in the Proprietary Marks.
(5) Any unauthorized use of the Proprietary Marks shall constitute
an infringement of Franchisor's rights in the Proprietary Marks and a material
event of default hereunder. Franchisee shall provide Franchisor with all
assignments, affidavits, documents, information and assistance Franchisor
reasonably requests to fully vest in Franchisor all such rights, title and
interest in and to the Proprietary Marks, including all such items requested by
Franchisor to register, maintain and enforce such rights in the Proprietary
Marks.
(6) Franchisor reserves the right to substitute different
Proprietary Marks for use in identifying the System and the Restaurant if
Franchisor's current Proprietary Marks no longer can be used, or if Franchisor,
in its sole discretion, determines that substitution of different Proprietary
Marks will be beneficial to the System. In such event, Franchisor may require
Franchisee, at Franchisee's expense, to discontinue or modify Franchisee's use
of any of the Proprietary Marks or to use one or more additional or substitute
Proprietary Marks.
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C. With respect to Franchisee's licensed use of the Proprietary Marks
pursuant to this Agreement, Franchisee further agrees that: (1) Unless otherwise
required by Franchisor, Franchisee shall operate and advertise the Restaurant
only under the name "Pizzeria Uno Chicago Bar & Grill" without prefix or suffix;
(2) During the Term, Franchisee shall identify itself as the owner of the
Restaurant, and a Franchisee of Franchisor, in conjunction with any use of the
Proprietary Marks, including, but not limited to, uses on invoices, order forms,
receipts and contracts, as well as the display of a notice in such content and
form and at such conspicuous locations on the premises of the Restaurant, any
Restaurant delivery vehicle, or electronic media as Franchisor may designate in
writing; (3) Franchisee shall not use the Proprietary Marks to incur any
obligation or indebtedness on behalf of Franchisor; (4) Franchisee shall comply
with Franchisor's instructions in filing and maintaining the requisite trade
name or fictitious name registrations, and shall execute any documents deemed
necessary by Franchisor or its counsel to obtain protection of the Proprietary
Marks or to maintain their continued validity and enforceability; (5) Franchisee
shall cooperate in all respects with Franchisor to prove the continuous and
effective use of the Proprietary Marks and with respect to any renewal of any
registration of the Proprietary Marks; such cooperation shall include
cooperation with Franchisor in the placement and use of the Proprietary Marks.
D. Franchisee shall notify Franchisor immediately by telephone, and
thereafter in writing, of any apparent infringement of or challenge to
Franchisee's use of any Proprietary Mark, of any claim by any person of any
rights in any Proprietary Mark, and Franchisee and the Controlling Principals
shall not communicate with any person other than Franchisor or any designated
Affiliate thereof, their counsel and Franchisee's counsel in connection with any
such infringement, challenge or claim. Franchisor shall have complete discretion
to take such action as it deems appropriate in connection with the foregoing,
and the right to control exclusively, or to delegate control to any of its
Affiliates of, any settlement, litigation or Patent and Trademark Office or
other proceeding arising out of any such alleged infringement, challenge or
claim or otherwise relating to any Proprietary Mark. Franchisee agrees to
execute any and all instruments and documents, render such assistance, and do
such acts or things as may, in the opinion of Franchisor, reasonably be
necessary or advisable to protect and maintain the interests of Franchisor or
any Affiliate in any litigation or other proceeding or to otherwise protect and
maintain the interests of Franchisor or any other interested party in the
Proprietary Marks.
E. The right and license of the Proprietary Marks granted hereunder to
Franchisee is nonexclusive and Franchisor and its Affiliates thus have and
retain the following rights, among others, subject only to the limitations of
Section II.: (1) To grant other licenses for use of the Proprietary Marks, in
addition to those licenses already granted to existing franchisees; (2) To
develop and establish other systems using the Proprietary Marks or other names
or marks and to grant licenses thereto without providing any rights to
Franchisee; and (3) To engage, directly or indirectly, through its employees,
representatives, licensees, assigns, agents and others, at wholesale, retail or
otherwise, in (i) the production, distribution, license and sale of products and
services, and (ii) the use in connection with such production, distribution and
sale, of the Proprietary Marks and any and all trademarks, trade names, service
marks, logos, insignia, slogans, emblems, symbols, designs and other identifying
characteristics as may be developed or used from time to time by Franchisor.
IX. BOOKS AND RECORDS
A. Franchisee shall maintain during the Term, and shall preserve for at
least five (5) years from the dates of their preparation, full, complete and
accurate books, records and accounts, including, but not limited to, sales
slips, coupons, purchase orders, credit card transmission records, payroll
records, employee meal records, check stubs, bank statements, deposit slips,
value added tax and sales tax records and returns, cash receipts and
disbursements, journals and ledgers, records of EFT transactions, and backup or
archived records of information maintained on any computer system, all in
accordance with generally accepted accounting principles or if consented to by
Franchisor, comparable standards, and in the form and manner prescribed by
Franchisor from time to time in the Manuals or otherwise in writing.
B. In addition to the remittance reports required by Sections IV. and VII.
hereof, Franchisee shall, at its expense, submit to Franchisor the following
reports: (1) a monthly profit and loss statement, in the form prescribed by
Franchisor (which may be unaudited) for Franchisee within thirty (30) days after
the end of each month during the Term. Each such statement shall be signed by
Franchisee's Treasurer or Chief Financial Officer attesting that it is true,
complete and correct; (2) a complete audited annual financial statement for
Franchisee prepared by an independent certified public accountant satisfactory
to Franchisor, within ninety (90) days after the end of each fiscal year of
Franchisee during the Term hereof, showing the results of operations of
Franchisee during such fiscal year; and (3) such other forms, reports, records,
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information and data as Franchisor may reasonably request, in the form and at
the times and places reasonably required by Franchisor.
C. Franchisor or its designees shall have the right at all reasonable
times to review, audit, examine and copy any or all books and records of
Franchisee. Franchisee shall make such books and records available to Franchisor
or its designees immediately upon request. If any required Payments are
delinquent, or if an inspection should reveal that such Payments have been
understated in any report to Franchisor, then Franchisee shall immediately pay
to Franchisor the amount overdue or understated upon demand with interest
determined in accordance with the provisions of Section IV.E. If an inspection
discloses an understatement in any report of Payments of two percent (2%) or
more, or Gross Sales of five percent (5%) or more, Franchisee shall, in
addition, reimburse Franchisor for all costs and expenses connected with the
inspection (including, without limitation, reasonable costs of travel to and
from Restaurant and Franchisor's accounting and attorneys' fees, if any).
D. Franchisee understands and agrees that the receipt or acceptance by
Franchisor of any of the statements furnished or Payments to Franchisor (or the
cashing of any checks, or processing of electronic fund transfers) shall not
preclude Franchisor from questioning the correctness thereof at any time. Any
inconsistencies or mistakes discovered shall immediately be rectified and the
appropriate payment shall be made by the Franchisee.
E. Franchisee hereby appoints Franchisor its true and lawful
attorney-in-fact with full power and authority, for the sole purpose of
obtaining any and all returns and reports filed by Franchisee with any federal,
state and/or local taxing authority. This power of attorney shall survive the
expiration or termination of this Agreement.
F. In addition to the information, books, records and reports Franchisee
must provide with respect to the Restaurant and Franchisee described above, the
Controlling Principals shall each provide to Franchisor his annual financial
statements in the form prescribed by Franchisor (which may be unaudited, unless
otherwise requested or required by Franchisor) within ninety (90) days after the
end of Franchisee's fiscal year. Such financial statements shall be prepared in
a manner consistent with those prepared by Franchisee. Any financial statements
provided hereunder shall fairly present the financial position of Franchisee and
each of the Controlling Principals, as applicable, at the dates indicated
therein and with respect to Franchisee, the results of its operations and its
cash flow for the years then ended. Each of the financial statements mentioned
above shall be certified as true, complete and correct by Franchisee's Treasurer
or Chief Financial Officer or the Controlling Principal, as applicable, and
shall have been prepared in conformity with generally accepted accounting
principles (unless otherwise agreed upon by Franchisor, and in such case,
substantially comparable accounting principles) applicable to the respective
periods involved and, except as expressly described in the applicable notes,
applied on a consistent basis.
X. INSURANCE
A. Franchisee shall procure, upon execution of this Agreement, and shall
maintain in full force and effect at all times during the Term at Franchisee's
expense, an insurance policy or policies protecting Franchisee and Franchisor
and its Affiliates and their respective Affiliates, successors and assigns and
each such entity's respective officers, directors, shareholders, partners,
agents, representatives, independent contractors and employees against any
demand or claim with respect to personal injury, death or property damage, or
any loss, liability or expense whatsoever arising or occurring upon or in
connection with the Restaurant.
B. Such policy or policies shall be written by a responsible carrier or
carriers reasonably acceptable to Franchisor (e.g., having been assigned an "A"
rating or its equivalent by a recognized insurance rating service) who are duly
licensed by the appropriate governmental authorities and shall include, at a
minimum (except as additional coverages and higher policy limits may reasonably
be specified by Franchisor from time to time and such other changes or
modifications to such coverages and limits as Franchisor deems appropriate, in
accordance with Standards and Specifications set forth in writing), the
following:
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(1) Comprehensive General Liability Insurance, including broad form
contractual liability, broad form property damage, personal injury, advertising
injury, completed operations, products liability, business interruption, and
fire damage coverage, in the amount of Five Million Dollars ($5,000,000)
combined single limit.
(2) Liquor Legal Liability Insurance in the amount of Five Million
Dollars ($5,000,000) combined single limit.
(3) Special form coverage (including earthquake and flood, if
applicable) for the full cost of replacement of the Restaurant premises and all
other property in which Franchisor may have an interest with no coinsurance
clause.
(4) An "umbrella" policy providing excess coverage with limits of
not less than Five Million Dollars ($5,000,000), except that if Franchisee owns
five (5) or more Pizzeria Uno restaurants, Franchisee shall maintain coverage
with limits of not less than Ten Million Dollars ($10,000,000).
(5) Automobile liability coverage, including coverage of owned,
non-owned and hired vehicles, with coverage in amounts not less than One Million
Dollars ($1,000,000) combined single limit.
(6) Workers' compensation insurance in amounts provided or described
by applicable law and employers' liability insurance with coverage limits of not
less than: One Million Dollars ($1,000,000), each bodily injury by accident; One
Million Dollars ($1,000,000), bodily injury by disease; and One Million Dollars
($1,000,000), each employee for bodily injury by disease; provided, however, if
the state or locality in which the Restaurant is located and operated does not
require Workers' Compensation insurance, or if such insurance is required but
coverage limits are not specified, then Franchisee shall obtain comparable
insurance coverage in coverage amounts as are reasonably required by Franchisor.
(7) Such other insurance as may be required by the state or locality
in which the Restaurant is located and operated.
(8) Franchisee may, with the prior written consent of Franchisor,
elect to have reasonable deductibles in connection with the coverage required
under Sections X.B. hereof. Such policies shall also include a waiver of
subrogation in favor of Franchisor and its directors, officers, shareholders,
partners, employees, representatives, independent contractors and agents.
C. In connection with any construction, renovation, refurbishment or
remodeling of the Restaurant, Franchisee shall maintain insurance covering the
completed value of the construction and commercial general liability insurance
in forms and amounts, and written by a carrier or carriers, reasonably
satisfactory to Franchisor.
D. Franchisee's obligation to obtain and maintain the foregoing policy or
policies in the amounts specified shall not be limited in any way by reason of
any insurance which may be maintained by Franchisor, nor shall Franchisee's
performance of that obligation relieve it of liability under the indemnity
provisions set forth in Section XVIII. of this Agreement.
E. All public liability and property damage policies shall contain a
provision that Franchisor and its directors, officers, shareholders, partners,
employees, representatives, independent contractors and agents, although named
as insureds, shall nevertheless be entitled to recover under such policies on
any loss occasioned to Franchisor or its servants, agents or employees by reason
of the negligence of Franchisee or its servants, agents or employees.
F. Upon execution of this Agreement, and thereafter in accordance with
Section III. hereof and thirty (30) days prior to the expiration of any such
policy, Franchisee shall deliver to Franchisor Certificates of Insurance or
other evidence of the existence and continuation of proper coverage with limits
not less than those required hereunder. All insurance policies required
hereunder, with the exception of workers' compensation or its equivalent, shall
name Franchisor and any Affiliate, and their respective directors, officers,
shareholders, partners, employees, representatives, independent
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contractors and agents, as additional insureds, and shall expressly provide that
any interest of same therein shall not be affected by any breach by Franchisee
or any Controlling Principal of any policy provisions. All insurance policies
required hereunder shall expressly provide that no less than thirty (30) days'
prior written notice shall be given to Franchisor in the event of a material
alteration to or cancellation of the policies.
G. Should Franchisee, for any reason, fail to procure or maintain the
insurance required by this Agreement, as such requirements may be revised from
time to time by Franchisor in writing, Franchisor shall have the right and
authority (without, however, any obligation to do so) to procure such insurance
and to charge same to Franchisee, which charges, together with a reasonable fee
for Franchisor's expenses in so acting, shall be payable by Franchisee
immediately upon notice.
XI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF FRANCHISEE
A. Franchisee and each of the Controlling Principals covenant and agree
that each shall make all commercially reasonable efforts to operate the
Restaurant so as to achieve optimum sales.
B. If Franchisee is a corporation or partnership, Franchisee and the
Controlling Principals, as applicable, represent, warrant and covenant that:
(1) Franchisee is duly organized and validly existing under the law
of its formation;
(2) Franchisee is duly qualified and is authorized to do business in
each jurisdiction in which its business activities or the nature of the
properties owned by it require such qualification;
(3) Franchisee's corporate charter or written partnership agreement
shall at all times provide that the activities of Franchisee are confined
exclusively to the operation of the Restaurant, unless otherwise consented to in
writing by Franchisor;
(4) The execution of this Agreement and the consummation of the
transactions contemplated hereby are within Franchisee's corporate power, if
Franchisee is a corporation, or if Franchisee is a partnership, permitted under
Franchisee's written partnership agreement and have been duly approved by
Franchisee;
(5) If Franchisee is a corporation, copies of Franchisee's Articles
of Incorporation, Bylaws, other governing documents, any amendments thereto,
resolutions of the Board of Directors authorizing entry into and performance of
this Agreement, and any certificates, buy-sell agreements or other documents
restricting the sale or transfer of stock of the corporation, and any other
documents as may be reasonably required by Franchisor shall have been furnished
to Franchisor prior to the execution of this Agreement; or, if Franchisee is a
partnership, copies of Franchisee's written partnership agreement, any buy-sell
agreements or other documents restricting the sale or transfer of interests in
the partnership, and any other governing documents and any amendments thereto
shall have been furnished to Franchisor prior to the execution of this
Agreement, including evidence of consent or approval of the entry into and
performance of this Agreement by the requisite number or percentage of partners,
if such approval or consent is required by Franchisee's written partnership
agreement;
(6) The ownership interests in Franchisee are accurately and
completely described in Attachment C.
(7) If Franchisee is a corporation, Franchisee shall maintain at all
times a current list of all owners of record and all beneficial owners of any
class of voting securities in Franchisee or, if Franchisee is a partnership,
Franchisee shall maintain at all times a current list of all owners of an
interest in the partnership. Franchisee shall immediately provide a copy of the
updated list to Franchisor upon the occurrence of any change of ownership, and
otherwise shall make its list of owners available to Franchisor upon request;
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(8) If, after the execution of this Agreement (subject to the
requirements of Section XIII.), any person ceases to qualify as one of
Franchisee's Principals or if any individual succeeds to or otherwise comes to
occupy a position which would, upon designation by Franchisor, qualify him as
one of Franchisee's Principals, Franchisee shall notify Franchisor within five
(5) days after any such change and, upon designation of such person by
Franchisor as one of Franchisee's Principals or as a Controlling Principal, as
the case may be, Franchisee and the Controlling Principals shall cause such
person to execute such documents and instruments (including, as applicable, this
Agreement) as may be required by Franchisor to be executed by others in such
positions;
(9) If Franchisee is a corporation, Franchisee shall maintain
stop-transfer instructions against the transfer on its records of any of its
equity securities and each stock certificate representing stock of the
corporation shall have conspicuously endorsed upon it a statement in a form
satisfactory to Franchisor that it is held subject to all restrictions imposed
upon assignments by this Agreement; provided, however, that the requirements of
this Section XI.B(9) shall not apply to the transfer of equity securities of a
Publicly-Held Corporation. If Franchisee is a partnership, its written
partnership agreement shall provide that ownership of an interest in the
partnership is held subject to all restrictions imposed upon assignments by this
Agreement;
(10) (i) Franchisee and, at Franchisor's request, each of the
Controlling Principals, have provided Franchisor with the most recent financial
statements of Franchisee and the Controlling Principals, and (ii) No material
liabilities, adverse claims, commitments or obligations of any nature exist as
of the date of this Agreement, whether accrued, unliquidated, absolute,
contingent or otherwise, which are not reflected as liabilities on the financial
statements of Franchisee or the Controlling Principals;
(11) Franchisee shall cause each of Franchisee's Principals, except
the Controlling Principals, to execute and bind themselves to the
confidentiality and noncompetition covenants set forth in the Confidentiality
Agreement and Ancillary Covenants Not to Compete which forms Attachment D to
this Agreement (see Section XII.D.) and shall provide Franchisor with executed
copies of such covenants within thirty (30) days after execution thereof. Each
Controlling Principal shall, jointly and severally, guarantee Franchisee's and
the Controlling Principals performance of all of Franchisee's obligations,
covenants and agreements hereunder pursuant to the terms and conditions of the
Guaranty contained herein, and shall otherwise bind themselves to the terms of
this Agreement as stated herein by executing this Agreement as a Controlling
Principal.
(12) Franchisee shall maintain at all times, during the Term of this
Agreement, sufficient working capital to fulfill its obligations under this
Agreement.
(13) Franchisee shall not use the Proprietary Marks as part of its
corporate or other legal name, and shall obtain the Franchisor's consent to such
corporate or other legal name prior to applying for or filing it with the
applicable government authority.
(14) Franchisee and the Controlling Principals acknowledge and agree
that the representations, warranties and covenants set forth above in Section
XI.B.(1)-(13) are continuing obligations of Franchisee and the Controlling
Principals, as applicable, and that any failure to comply with such
representations, warranties and covenants shall constitute a material Event of
Default under this Agreement. Franchisee will cooperate with Franchisor in any
efforts made by Franchisor to verify compliance with such representations,
warranties and covenants.
C. Upon the execution of this Agreement, Franchisee shall designate and
retain an individual to serve as the Operating Principal. If Franchisee is an
individual, Franchisee shall perform all obligations of the Operating Principal.
(1) The Operating Principal shall, during the entire period he
serves as such, meet the following qualifications: (a) devote substantial full
time and best efforts to the supervision and conduct of the Restaurant; (b) meet
Franchisor's educational, experience, financial and such other reasonable
standards and criteria for such individual, as set forth in the Manuals as
defined herein or otherwise in writing by Franchisor; and (c) either serve as
the General Manager or, subject to the consent of Franchisor, designate another
individual (the Operating Principal's designee) to serve as the General Manager
of the Restaurant. Any individual designated by an Operating Principal to serve
as the General Manager
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also may, subject to Franchisor's consent, perform the duties and obligations of
Operating Principal; provided, that Operating Principal shall take all necessary
action to ensure that such designee conducts and fulfills all of such
obligations in accordance with the terms of this Agreement and that Operating
Principal shall remain fully responsible for such performance.
(2) If, during the Term, the Operating Principal or any designee is
not able to continue to serve in the capacity of Operating Principal or no
longer qualifies to act as such in accordance with this Section XI.C, Franchisee
shall promptly notify Franchisor and designate a replacement within thirty (30)
days after the Operating Principal or such designee ceases to serve or be so
qualified, such replacement being subject to the same qualifications and
restrictions listed above. Franchisee shall provide for interim management of
Franchisee's business in accordance with this Agreement until such replacement
is so designated.
D. Franchisee shall designate and retain at all times a General Manager
and such other management and other personnel as Franchisor deems reasonably
necessary for the operation and management of the Restaurant.
(1) The General Manager shall, during the entire period he serves as
General Manager, meet the following qualifications: (a) satisfy Franchisor's
educational and business experience criteria as set forth in the Manuals as
defined herein or otherwise in writing by Franchisor; (b) devote full time and
best efforts to the supervision and management of the Restaurant; and (c) be an
individual acceptable to Franchisor.
(2) If, during the Term, the General Manager is not able to continue
to serve in such capacity or no longer qualifies to act as such in accordance
with this Section, Franchisee shall promptly notify Franchisor and designate a
replacement within thirty (30) days after the General Manager ceases to serve,
such replacement being subject to the same qualifications listed above.
Franchisee shall provide for interim management of the Restaurant until such
replacement is so designated, such interim management to be conducted in
accordance with the terms of this Agreement.
E. Franchisee agrees that it is necessary to the continued operation of
the System and the Restaurant that Franchisee, Operating Principal, General
Manager and other personnel receive such training as Franchisor may require, and
accordingly agrees as follows:
(1) (a) The Operating Principal (or his designee), the General
Manager and such other managers as determined by Franchisor shall attend and
complete Franchisor's initial training program to Franchisor's satisfaction.
Such persons shall have completed the initial training program not later than
eight (8) weeks prior to the Opening Date set forth in Attachment A. Initial
training shall be conducted by Franchisor at a Franchisor-operated restaurant or
such other location designated by Franchisor. Franchisor shall determine, in its
sole discretion, whether the Operating Principal (or his designee), General
Manager and such other managers have satisfactorily completed the initial
training program. Franchisor shall provide instructors and training materials
for the initial training program of such persons at no additional charge to
Franchisee.
(b) If the initial training program is not satisfactorily
completed by the Operating Principal (or his designee), General Manager or any
other manager or if Franchisor in its reasonable judgment determines that the
initial training program cannot be satisfactorily completed by such person(s),
Franchisee shall designate a replacement(s) to satisfactorily complete such
training. Any Operating Principal (or designee), General Manager or other
manager, subsequently designated by Franchisee shall also receive and complete
such initial training program. Franchisor reserves the right to charge a
reasonable fee for any such initial training provided by Franchisor to any
replacement Operating Principal, General Manager or other manager if Franchisee
is not authorized by Franchisor to provide such training.
(c) Notwithstanding the above, upon the request of Franchisor
and at all times subject to the consent of Franchisor, Franchisee shall, at its
expense, conduct the initial training program and other training programs
prescribed by Franchisor for any General Manager or other managers for the
Restaurant if such Restaurant constitutes Franchisee's second or subsequent
Pizzeria Uno restaurant developed by Franchisee and for any replacement or
successor Operating Principal, designee, General Manager and any other
Restaurant personnel. In such case, Franchisee shall cause any person trained by
Franchisee to receive Franchisor's training certification.
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(d) Franchisee shall be responsible for any and all expenses
incurred by Franchisee or the Operating Principal, any designee, General Manager
and other managers, in connection with any initial training program, including,
without limitation, costs of travel, lodging, meals and wages.
(2) Operating Principal, General Manager and such other Restaurant
personnel as Franchisor shall designate shall attend such additional training
programs and seminars as Franchisor may offer from time to time. For all such
programs and seminars, Franchisor will provide the instructors and training
materials. Franchisee shall be responsible for any and all expenses incurred by
Franchisee or the Operating Principal, General Manager, managers, and other
Restaurant personnel in connection with such additional training, including,
without limitation, costs of travel, lodging, meals, and wages.
(3) In connection with the opening of Franchisee's first Pizzeria
Uno restaurant, Franchisor shall provide Franchisee with an opening crew
composed of trained representatives of Franchisor. The number of opening crew
representatives and the time period in which such assistance will be provided
shall be determined by Franchisor in its discretion. If the Restaurant is the
second or third Pizzeria Uno restaurant opened by Franchisee, then Franchisor
and Franchisee shall each provide part of the opening crew members in the
numbers designated by Franchisor in its sole discretion. Any opening crew
members provided by Franchisee must be approved by Franchisor. The opening crew
provided by Franchisor will provide on-site pre-opening and opening training,
supervision, and assistance to Franchisee. Franchisee shall be responsible for
any and all expenses incurred by Franchisee or the Operating Principal, General
Manager, managers, and other Restaurant personnel. If the Restaurant is
Franchisee's fourth or subsequent Pizzeria Uno restaurant, at Franchisor's
election, the opening crew shall either be provided as described above with
respect to the second and third restaurant opening by Franchisee or Franchisee
shall be responsible for providing all of the opening crew for the Restaurant.
Franchisor may provide, at its option and in its sole discretion, a
representative to observe and provide limited assistance to Franchisee in
connection with the opening of the fourth and each subsequent Restaurant.
(4) Upon the reasonable request of Franchisee or as Franchisor shall
deem appropriate, Franchisor shall, during the Term hereof, subject to the
availability of personnel, provide Franchisee with additional trained
representatives who shall provide on-site remedial training to Franchisee's
Restaurant personnel. Franchisee shall pay the cost of travel incurred by such
representatives and a reasonable fee for such remedial training.
F. Franchisee and the Controlling Principals understand that compliance by
all Franchisees and developers operating under the System with Franchisor's
training, development and operational requirements is an essential and material
element of the System and that Franchisor and Franchisees and developers
operating under the System consequently expend substantial time, effort and
expense in training management personnel for the development and operation of
their respective Pizzeria Uno restaurants. Accordingly, Franchisee and the
Controlling Principals agree that during the Term and the Two- Year Time Period
neither Franchisee nor any Controlling Principal shall designate or employ any
individual who is at the time, or has been within the preceding twelve (12)
months, employed by a Former Employer in a restaurant managerial position, a
multi-unit supervisory position or headquarters staff position (e.g., officer or
director level personnel, management information systems personnel or human
resources personnel) or key hourly employee position (e.g. trainers, training
team members and opening team members).
(1) If Franchisee or any Controlling Principal violates or causes
the violation of this Section XI.F., the Former Employer shall be entitled to be
compensated for the reasonable costs and expenses, of whatever nature or kind,
incurred by the Former Employer related to the training of such employee. The
parties hereto agree that such expenditures may be uncertain and difficult to
ascertain and therefore agree that the compensation specified herein reasonably
represents such expenditures and is not a penalty. Accordingly, the parties
agree that in the event of such violation, Franchisee or Controlling Principals,
as applicable shall pay to Former Employer an amount equal to the compensation
(including, salary, bonuses and benefits) of such employee for the twelve (12)
month period (or such shorter time, if applicable) immediately prior to the
termination of his employment with such Former Employer. Such amount shall be
paid to Former Employer by Franchisee, or the applicable Controlling Principal,
as the case may be within thirty (30) days after written notice, unless
otherwise agreed with such Former Employer. The rights to such payment shall be
in addition to any other remedies Franchisor or the Former Employer may have.
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(2) The parties hereto expressly acknowledge and agree that no
current or former employee of Franchisor, any of its Affiliates, Franchisee, or
of any other entity operating under the System shall be a third party
beneficiary of this Agreement or any provision hereof. Notwithstanding the
above, solely for the purpose of bringing an action to collect any payments due
under this Section, such Former Employer shall be a third-party beneficiary of
this Section XI.F. Franchisor expressly disclaims any representations and
warranties regarding the performance of any employee or former employee of
Franchisor, its Affiliates or any developer or franchisee operating under the
System, who is designated or employed by Franchisee or any Controlling Principal
in any capacity, and Franchisor shall not be liable for any losses, of
whatsoever nature or kind, incurred by Franchisee or any Controlling Principal
in connection therewith.
G. Franchisee shall in all dealings with its customers, suppliers, and
public officials adhere to high standards of honesty, integrity, fair dealing
and ethical conduct and refrain from engaging in any action which will cause
Franchisor to be in violation of any applicable law.
H. The Operating Principal (or a substitute attendee approved by
Franchisor) shall attend all annual Pizzeria Uno franchisee conventions
designated by Franchisor. Franchisee shall be responsible for all expenses of
its Operating Principal (or substitute attendee), including travel, lodging,
food, and wages, and shall pay a reasonable registration fee as determined by
Franchisor.
I. Franchisee and the Controlling Principals represent, warrant and
covenant that they shall comply with all other requirements and perform such
other obligations as provided in this Agreement.
XII. CONFIDENTIALITY AND NONCOMPETITION COVENANTS
A. (1) To protect the reputation and goodwill of Franchisor and to
maintain the Standards and Specifications of operation under Franchisor's
Proprietary Marks and the System, Franchisee shall conduct its business in
accordance with the Manuals, other written directives which Franchisor may issue
to Franchisee from time to time whether or not such directives are included in
the Manuals, and any other manuals and materials created or authorized for use
in the operation of the Restaurant.
(2) The Manuals provided or consented to by Franchisor shall at all
times remain the sole property of Franchisor, shall at all times be kept in a
secure place on the Restaurant premises, and shall be returned to Franchisor
immediately upon request or upon termination or expiration of this Agreement.
(3) The Manuals, any written directives, and any other manuals and
materials issued by Franchisor, including the Site Selection Handbook, and any
modifications to such materials shall supplement this Agreement.
(4) Franchisor may from time to time revise the contents of the
Manuals and the contents of any other manuals and materials created or
authorized for use in the operation of the Restaurant. Franchisee expressly
agrees to comply with each new or changed standard.
(5) Franchisee shall at all times ensure that the Manuals are kept
current and up-to-date. In the event of any dispute as to the contents of the
Manuals, the terms of the master copy of the Manuals maintained by Franchisor at
Franchisor's corporate office shall control.
(6) Franchisor will charge for any replacement Manual requested by
Franchisee a replacement fee in an amount reasonably necessary to reimburse
Franchisor for its costs to prepare and send to Franchisee such replacement
Manual.
B. (1) Neither Franchisee nor any of the Controlling Principals
shall, during the Term or thereafter, communicate, divulge or use for the
benefit of any other person, persons, partnership, association or corporation
and, following the expiration or termination of this Agreement, they shall not
use for their own benefit, any Confidential Information. Neither Franchisee nor
the Controlling Principals shall 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
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same available to any unauthorized person. The covenant in this Section XII.B
shall survive the expiration, termination or Transfer of this Agreement or any
interest herein and shall be perpetually binding upon Franchisee and each of the
Controlling Principals.
(2) If Franchisee or the Controlling Principals develop any new
concept, product, recipe, process or improvement in the operation or promotion
of the Restaurant (including, without limitation, computer software
enhancements), Franchisee is required to promptly notify Franchisor and provide
Franchisor with all necessary related information, without compensation.
Franchisee and the Controlling Principals acknowledge that any such concept,
process or improvement will become the property of Franchisor, and Franchisor
may use or disclose such information to other Franchisees or developers as it
determines to be appropriate.
C. (1) Franchisee and the Controlling Principals acknowledge that,
pursuant to this Agreement, Franchisee and the Controlling Principals will
receive valuable training and Confidential Information which are beyond the
present skills and experience of Franchisee and the Controlling Principal's and
Franchisee's managers and employees. Franchisee and the Controlling Principals
acknowledge that such specialized training and Confidential Information provide
a competitive advantage and will be valuable to them in the operation of the
Restaurant, and that gaining access to such specialized training and
Confidential Information is, therefore, a primary reason why they are entering
into this Agreement. In consideration for such specialized training,
Confidential Information and rights, Franchisee and the Controlling Principals
covenant that with respect to Franchisee, during the Term (or with respect to
each of the Controlling Principals, during the Term for so long as such
individual or entity satisfies the definition of "the Controlling Principals"),
except as otherwise consented to in writing by Franchisor, neither Franchisee
nor any of the Controlling Principals shall, either directly or indirectly, for
themselves or through, on behalf of or in conjunction with any person(s),
partnership or corporation: (a) divert, or attempt to divert, any business or
customer of the Restaurant to any competitor, by direct or indirect inducement
or otherwise, or do or perform, directly or indirectly, any other act injurious
or prejudicial to the goodwill associated with the Proprietary Marks and the
System; or (b) own, maintain, operate, engage in, or have any financial or
beneficial interest in (including any interest in corporations, partnerships,
trusts, unincorporated associations or joint ventures), advise, assist or make
loans to, any business at any location within the United States or any foreign
jurisdiction where Franchisor or its Affiliates have registered or sought to
register any of the Proprietary Marks, that is of a character and concept
similar to the Restaurant, including (i) a casual dining restaurant business, as
such market segment is defined pursuant to then-current industry standards, and
(ii) any food service business which offers pizza as a primary menu item.
(2) During the Two-Year Time Period, neither Franchisee nor any of
the Controlling Principals shall, either directly or indirectly, for themselves
or through, on behalf of or in conjunction with any person(s), partnership or
corporation: (a) divert, or attempt to divert, any business or customer of the
Restaurant hereunder to any competitor, by direct or indirect inducement or
otherwise, or do or perform, directly or indirectly, any other act injurious or
prejudicial to the goodwill associated with the Proprietary Marks and the
System; or (b) own, maintain, operate, engage in, or have any financial or
beneficial interest in (including any interest in corporations, partnerships,
trusts, unincorporated associations or joint ventures), advise, assist or make
loans to, any business that is of a character and concept similar to the
Restaurant, including (i) a casual dining restaurant business, as such market
segment is defined pursuant to then-current industry standards, and (ii) any
food service business which offers pizza as a primary menu item; which business
is, or is intended to be located within the Assigned Area or within a ten
(10)-mile radius of any Pizzeria Uno restaurant or other Pizzeria Uno food
service facility in existence or under construction (or where land has been
purchased or a lease has been executed for the construction of a Pizzeria Uno
restaurant or other Pizzeria Uno food service facility) as of the earlier of:
(i) the expiration or termination of, or the transfer of all of Franchisee's
interest in, this Agreement; or (ii) the time the Controlling Principal ceases
to satisfy the definition of Franchisee's Principal, as applicable.
(3) Sections XII.C.(1)(b) and XII.C.(2)(b) shall not apply to
ownership of less than a one-percent (1%) beneficial interest in the outstanding
equity securities of any Publicly-Held Corporation.
(4) The parties acknowledge and agree that each of the covenants
contained herein are reasonable limitations as to time, geographical area, and
scope of activity to be restrained and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of Franchisor. The
parties agree that each of the covenants herein shall be construed as
independent of any other covenant or provision of this Agreement. If all or any
portion of a
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covenant in this Section is held unreasonable or unenforceable by a court or
agency having valid jurisdiction in an unappealed final decision to which
Franchisor is a party, Franchisee and the Controlling Principals shall be bound
by any lesser covenant subsumed within the terms of such covenant that imposes
the maximum duty permitted by law, as if the resulting covenant were separately
stated in and made a part of this Section. Franchisor shall have the right, in
its sole discretion, to reduce the scope of any covenant set forth in this
Section XII.C. in this Agreement, or any portion thereof, without their consent,
effective immediately upon notice to Franchisee; and Franchisee and the
Controlling Principals agree that they shall comply forthwith with any covenant
as so modified, which shall be fully enforceable notwithstanding the provisions
of Section XXIII. hereof. No claim that Franchisee and any Controlling Principal
may have against Franchisor, whether or not arising from this Agreement, shall
constitute a defense to the enforcement by Franchisor of the covenants in this
Section.
D. At Franchisor's request, Franchisee shall require and obtain execution
of covenants substantially in the form set forth in Attachment D from its
General Manager and any personnel of Franchisee who have received or will have
access to training from Franchisor. All of Franchisee's Principals not required
to sign this Agreement as a Controlling Principal also must execute such
covenants. Franchisee shall provide Franchisor with executed copies of such
covenants within thirty (30) days after execution thereof. At Franchisor's
option and in its sole discretion, such covenants shall either (i) be executed
by Franchisor or (ii) provide that Franchisor is a third party beneficiary with
the independent right to enforce the terms of the covenants. Notwithstanding the
foregoing, Franchisor reserves the right, in its sole discretion, to decrease
the period of time or geographic scope of the noncompetition covenant set forth
in Attachment D or eliminate such noncompetition covenant altogether for any
party that is required to execute such agreement under this Section XII.D.
E. Franchisee and the Controlling Principals acknowledge that a violation
of the terms of this Section XII would result in irreparable injury to
Franchisor for which no adequate remedy at law may be available, and Franchisee
and the Controlling Principals accordingly consent to the issuance of an
injunction prohibiting any conduct by Franchisee or the Controlling Principals
in violation of the terms of this Section XII without the necessity of showing
actual or threatened harm, likelihood of success on the merits of the claims and
without being required to furnish a bond or other security. Franchisee and the
Controlling Principals agree to pay all court costs and reasonable attorneys'
fees incurred by Franchisor in connection with the enforcement of this Section,
including payment of all costs and expenses for obtaining specific performance
of, or an injunction against violation of, the requirements of such Section.
F. For breach of the covenants in Sections XII.A. and XII.B., which are
made in consideration of the specialized training and Confidential Information
described above, and due to the difficulty of establishing the precise amount of
damages for breach of these covenants, in addition to the other remedies
provided for in this Agreement or otherwise available to Franchisor, Franchisee
and Franchisee's Principals who committed such breach jointly and severally
agree to pay Franchisor the amount of Two Hundred Fifty Thousand Dollars
($250,000).
G. For breach of the covenants in Section XII.C., which are made in
consideration of the specialized training and Confidential Information described
above, and due to the difficulty of establishing the precise amount of damages
for breach of these covenants, in addition to the other remedies provided for in
this Agreement or otherwise available to Franchisor, Franchisee and Franchisee's
Principals who committed such breach jointly and severally agree to pay
Franchisor the amount of Five Thousand Dollars ($5,000) per day for each day the
breach continues.
H. Franchisee and Franchisee's Principals agree that each of them shall be
liable under this Section XII regardless of whether the breach was negligently
or willfully caused. The parties agree that the foregoing amounts are a
reasonable estimation of the damages that would be incurred by Franchisor for
breach of such covenants. The parties further agree that Franchisor shall be
entitled to select the damage formulae provided above, or pursue any other right
or remedy provided or permitted by law or this Agreement and that, in any event,
Payment to Franchisor of any amount provided for under this paragraph shall not
constitute an election of remedies by Franchisor or excuse to the performance of
Franchisee's obligations under this Agreement.
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XIII. TRANSFER OF INTEREST
A. (1) Franchisor shall have the right to transfer or assign this
Agreement and all or any part of its rights or obligations herein to any person
or legal entity. Specifically, and without limitation of the foregoing,
Franchisee agrees that Franchisor may sell its assets, the Proprietary Marks or
the System to a third party; may offer its securities privately or publicly; may
merge, spin-off, acquire other corporations or be acquired by another
corporation; may undertake a refinancing, recapitalization, leveraged buy out or
other economic or financial restructuring; and with regard to any or all of the
above sales, assignments and dispositions, Franchisee expressly and specifically
waives any claims, demands, or damages against Franchisor arising from or
related to the transfer of the Proprietary Marks (or any variation thereof) or
the System from Franchisor to any other party. Upon any such transfer, the
transferee shall be solely responsible for all obligations and duties arising
subsequent to such transfer. Nothing contained in this Agreement shall require
Franchisor to offer any services or products, whether or not bearing the
Proprietary Marks, to Franchisee if Franchisor assigns its rights in this
Agreement.
B. (1) Franchisee understands and acknowledges that the rights and duties
set forth in this Agreement are personal to Franchisee, and that Franchisor has
granted rights under this Agreement in reliance on the business skill, financial
capacity and personal character of Franchisee and the Controlling Principals.
Accordingly, neither Franchisee nor any Controlling Principal, nor any successor
or assign of Franchisee or any Controlling Principal shall cause or effectuate a
Transfer of any direct or indirect interest in this Agreement, in the assets of
the Restaurant or in Franchisee without the prior written consent of Franchisor;
provided, however, that such prior written consent shall not be required for a
Transfer of less than a one percent (1%) interest in a Publicly-Held
Corporation. Franchisee and the Controlling Principals acknowledge the
importance of this Section XII.B.(1) and further acknowledge that any deviation
from this Section XII.B.(1) will damage Franchisor and the system, which damage
is difficult to quantify. Accordingly, the parties agree that in the event
Franchisee or the Controlling Principals breach this Section XII.B.(1) shall pay
to Franchisor as liquidated damages and not as a penalty, an amount equal to (i)
two times the average annual royalty fees payable by Franchisee for the two year
period immediately preceding the breach, or Two Hundred Thousand Dollars
($200,000), whichever is greater. Liquidated damages under this Section
XII.B.(1). shall be paid to Franchisor within five (5) days of receipt of notice
from Franchisor. The imposition of liquidated damages pursuant to this Section
XII.B.(1) shall be at Franchisor's option. Franchisor is not required to impose
liquidated damages under this Section XII.B.(1) and may, in addition or in lieu
thereof, pursue other remedies, including termination of this Agreement pursuant
to section XVI.A.(3)(j). Payment to Franchisor of any amount provided for in
this Section XII.B.(1) shall not constitute an excuse for performance of
Franchisee's obligations hereunder.
(2) If Franchisee or any Controlling Principal wishes to cause or
effectuate a Transfer, transferor and the proposed transferee shall apply to
Franchisor for its consent not later than thirty (30) days prior to the
anticipated closing date of the Transfer . Franchisor may, in its sole
discretion, require any or all of the following as conditions of its consent:
(a) All of the accrued monetary obligations of Franchisee and
its Affiliates and all other outstanding obligations to Franchisor and its
Affiliates arising under this Agreement or any other agreement shall have been
satisfied in a timely manner and Franchisee shall have satisfied all trade
accounts and other debts, of whatever nature or kind, in a timely manner;
(b) No Event of Default shall have occurred and be continuing,
and no event shall have occurred which with the giving of notice or lapses of
time, or both, would constitute an Event of Default, and Franchisee shall have
substantially and timely complied with all the terms and conditions of this
Agreement and any other agreement between Franchisor or its Affiliates and
Franchisee or its Affiliates;
(c) The transferor and its principals, if applicable, shall
have executed a general release, in a form satisfactory to Franchisor, of any
and all claims against Franchisor, its Affiliates and each such entity's
respective officers, directors, shareholders, partners, agents, representatives,
independent contractors and employees, in their corporate and individual
capacities, including, without limitation, claims arising under this Agreement
and any other agreement between Franchisor and Franchisee or any of their
Affiliates or under federal, state or local laws, rules and regulations or
orders;
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(d) The transferee shall demonstrate to Franchisor's
satisfaction that transferee meets the criteria considered by Franchisor when
reviewing a prospective franchisee's application for a license, including, but
not limited to, Franchisor's educational, managerial and business standards;
transferee's good moral character, business reputation and credit rating,
aptitude and ability to conduct the business licensed herein, financial
resources and capital for operation of the business; and the geographic
proximity and number of other Pizzeria Uno restaurants owned or operated by
transferee;
(e) The transferee shall (as directed by Franchisor): (i)
execute, for a term ending on the expiration date of this Agreement and with
such renewal term as may be provided by this Agreement, the standard form
franchise agreement then being offered to new system franchisees and other
ancillary agreements as Franchisor may require for the Restaurant, which
agreements shall supersede this Agreement and Attachments in all respects and
the terms of which agreements may differ from the terms of this Agreement,
including, without limitation, a higher percentage Royalty Fee, Business Co-op
Fee, advertising contribution or expenditure requirement; provided, however,
that the transferee shall not be required to pay any Initial Franchise Fee; and,
if transferee is a corporation or a partnership, transferee's shareholders,
partners or other investors, as applicable, shall execute such agreement as
transferee's principals and guarantee the performance of all such obligations,
covenants and agreements; or (ii) enter into a written agreement, in a form
satisfactory to Franchisor, assuming full, unconditional, joint and several
liability for, and agreeing to perform from the date of the transfer, all
obligations, covenants and agreements contained in this Agreement and
Attachments; and, if transferee is a corporation or a partnership, transferee's
shareholders, partners or other investors, as applicable, shall execute such
agreement as transferee's principals and guarantee the performance of all such
obligations, covenants and agreements; and transferee shall provide to
Franchisor any other evidence deemed necessary by Franchisor to determine that
the terms of the agreements described above have been or will be satisfied and
are true and correct on the date of Transfer;
(f) Franchisee shall pay, at the time of the request for
Transfer, a transfer fee of Ten Thousand Dollars ($10,000), or such greater
amount as is necessary to reimburse Franchisor for its reasonable costs and
expenses associated with reviewing the application to Transfer, including,
without limitation, legal and accounting fees; and
(g) The transferee, at its expense, shall renovate, modernize
and otherwise upgrade the Restaurant and, if applicable, any Restaurant delivery
vehicles to conform to the then-current Standards and Specifications of the
System, and shall complete the upgrading and other requirements within the time
period reasonably specified by Franchisor;
(h) The transferor shall remain liable for all of the
obligations to Franchisor in connection with the Restaurant incurred prior to
the effective date of the Transfer and shall execute any and all instruments
reasonably requested by Franchisor to evidence such liability;
(i) At the transferee's expense, the transferee, the
transferee's General Manager and the transferee's Operating Principal (or his
authorized designee), and any other applicable Restaurant personnel, shall
complete any training programs then in effect for Franchisees of Restaurants
upon such terms and conditions as Franchisor may reasonably require; and
Franchisee shall not grant a security interest in the Restaurant or
in any of Franchisee's assets without Franchisor's prior written consent, which
shall not be unreasonably withheld. In connection therewith, the secured party
will be required by Franchisor to agree that in the event of any default by
Franchisee under any documents related to the security interest, Franchisor
shall have the right and option to be substituted as obligor to the secured
party and to cure any default of Franchisee.
(3) Franchisee acknowledges and agrees that each of the above
conditions is reasonable and necessary to assure such transferee's performance
of the obligations hereunder.
C. If the proposed Transfer is to a corporation formed solely for the
convenience of ownership or the transfer of less than a controlling interest in
Franchisee, Franchisor's consent may be conditioned upon any of the requirements
set forth at Section XIII.B.(2), except that the requirements set forth at
Sections XIV.B.(2), (d), (e), (f), (g), (i) and (j) shall not
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apply. With respect to a Transfer to a corporation formed for the convenience of
ownership, Franchisee shall be the owner of all of the voting stock or interest
of the corporation and if Franchisee is more than one individual, each
individual shall have the same proportionate ownership interest in the
corporation as he had in Franchisee prior to the transfer.
D. (1) If Franchisee or a Controlling Principal wishes to cause or
effectuate a Transfer pursuant to any bona fide offer received from a third
party, then such proposed transferor shall promptly notify Franchisor in writing
of each such offer, and shall provide such information and documentation
relating to the offer as Franchisor may require. Franchisor shall have the right
and option, exercisable within thirty (30) days after receipt of such written
notification and copies of all documentation requested by Franchisor describing
the terms of such offer, to notify the transferor in writing that Franchisor
intends to acquire the transferor's interest on the same terms and conditions
offered by the third party. Unless otherwise agreed in writing, closing on
Franchisor's acquisition must occur within the later of sixty (60) days from the
date of notice to the transferor of the Franchisor's election to acquire or
sixty (60) days after the date Franchisor receives and obtains all necessary
permits and approvals to complete such acquisition as determined by Franchisor.
Any material change in the terms of any offer shall constitute a new offer
subject to the same rights and options of Franchisor as in the case of an
initial offer. Failure of Franchisor to exercise the right of first refusal
afforded by this Section XIII.D. shall not constitute a waiver of any other
provision of this Agreement, including all of the requirements of Section XIII.,
with respect to a proposed Transfer.
(2) If the offer from a third party provides for payment of
consideration other than cash or involves certain intangible benefits,
Franchisor may elect to purchase such interest for the reasonable cash
equivalent. If the parties cannot agree within a reasonable time on such a
reasonable equivalent in cash, then such amount shall be determined by two (2)
appraisers, with each party selecting one (1) appraiser, and the average of
their determinations shall be binding. In the event of such appraisal, each
party shall bear its own legal and other costs and shall share equally the
appraisers' fees and the appraisal costs. In the event that Franchisor exercises
its right of first refusal herein provided, it shall have the right to set off
(i) all amounts due from Franchisee for the appraisers' fees and appraisal
costs, and (ii) all amounts due from Franchisee or any of its Affiliates,
against any payment due Franchisor or its Affiliates.
E. (1) Upon the death of Franchisee (if a natural person) or any
Controlling Principal, the executor, administrator or other personal
representative of the Deceased shall transfer such interest to a third party
consented to by Franchisor within twelve (12) months after the death. If no
personal representative is designated or appointed or no probate proceedings are
instituted with respect to the estate of the Deceased, then the distributee of
such interest must be consented to by Franchisor. If the distributee is not
consented to by Franchisor, then the distributee shall transfer such interest to
a third party consented to by Franchisor within twelve (12) months after the
death of the Deceased.
(2) Upon the Permanent Disability of Franchisee (if a natural
person) or any Controlling Principal who is a natural person and who has an
interest in this Agreement, the Restaurant or Franchisee, Franchisor may, in its
sole discretion, require such interest to be transferred to a third party in
accordance with the conditions described in this Section XIII. within six (6)
months after notice to Franchisee. Permanent disability shall be determined by a
licensed practicing physician selected by Franchisor, upon examination of the
person; or if the person refuses to submit to an examination, then such person
automatically shall be deemed permanently disabled as of the date of such
refusal for the purpose of this Section XIII.E. The costs of any examination
required by this Section shall be paid by Franchisor.
(3) Upon the death or claim of Permanent Disability of Franchisee or
any Controlling Principal, Franchisee or a representative of Franchisee must
promptly notify Franchisor of such death or claim of Permanent Disability within
fifteen (15) days of its occurrence. Any Transfer upon death or Permanent
Disability shall be subject to the same terms and conditions as described in
this Section for any inter vivos Transfer. Franchisee, and each Controlling
Principal, shall have the right to seek consent to a Transfer of their
respective interest to a proposed successor prior to the death or claim of
Permanent Disability by Franchisee or the Controlling Principal, as applicable.
If Franchisee or any Controlling Principal, as applicable, desires to obtain
consent to any proposed successor in interest prior to the death or claim of
Permanent Disability, Franchisee or the Controlling Principal, as applicable,
shall submit to Franchisor such information and documentation concerning such
proposed successor required by Franchisor in the Manuals or other written
directives. Further, as a condition to consent, Franchisor may, in its sole
discretion, require compliance with any of the terms and conditions described in
this Section for any inter vivos Transfer.
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F. Franchisor's consent to a Transfer of any interest described herein
shall not constitute a waiver of any claims which Franchisor may have against
the transferring party, nor shall it be deemed a waiver of Franchisor's right to
demand exact compliance with any of the terms of this Agreement by the
transferee.
G. Securities or partnership interests in Franchisee may be offered to the
public by private offering or otherwise, only with the prior written consent of
Franchisor. All materials required for such offering by federal or state law
shall be submitted to Franchisor for a limited review as discussed below prior
to being filed with any governmental agency, official or authority. Any
materials to be used in any exempt offering shall be submitted to Franchisor for
such review prior to their use. No Franchisee offering shall imply (by use of
the Proprietary Marks or otherwise) that Franchisor is participating in an
underwriting, issuance or offering of securities of Franchisee or Franchisor.
Franchisor's review of any offering materials shall be limited solely to the
subject of the relationship between Franchisee and Franchisor and its
Affiliates. Franchisor may, at its option, require Franchisee's offering
materials to contain a written statement prescribed by Franchisor concerning the
limitations described in the preceding sentence. Franchisee, its Principals and
the other participants in the offering shall fully indemnify Franchisor and its
Affiliates, and each of such entity's respective officers, directors,
shareholders, partners, agents, representatives, independent contractors and
employees in connection with the offering. For each proposed offering,
Franchisee shall pay to Franchisor a non-refundable charge of Ten Thousand
Dollars ($10,000), or such greater amount as is reasonably necessary to
reimburse Franchisor for its reasonable costs and expenses associated with
reviewing the proposed offering, including, without limitation, legal and
accounting fees. Franchisee shall give Franchisor written notice at least thirty
(30) days prior to the date of commencement of any offering or other transaction
covered by this Section XIII.G.
H. Franchisee and each of its Controlling Principals, as applicable, may
cause or effectuate a Transfer of their respective interests in Franchisee, by
and amongst themselves with Franchisor's prior written consent. Franchisor's
consent may be conditioned on compliance with Section XIII.B.(2); except that,
such transfer, sale or assignment shall not be subject to Sections
XIII.B.(2)(d), (e), (f), (g) (i) and (j).
I. If any person holding an interest in Franchisee (other than Franchisee
or a Controlling Principal, which parties shall be subject to Section XIII.B.
above) Transfers such interest, then Franchisee shall promptly notify Franchisor
of such proposed transfer in writing and shall provide such information relative
thereto as Franchisor may reasonably request prior to such Transfer. Such
transferee must have good moral character and business reputation, have an
acceptable credit rating, and may not be one of Franchisor's competitors. Such
transferee will be a Franchisee's Principal and as such shall execute a
confidentiality agreement and ancillary covenants not to compete in the form
then required by Franchisor, which form shall be in substantially the same form
attached hereto as Attachment D (see Sections XII.D.). Franchisor also reserves
the right to designate the transferee as one of the Controlling Principals.
XIV. CONSENTS AND NONWAIVER
A. Whenever this Agreement requires the prior approval or consent of
Franchisor, Franchisee shall make a timely written request to Franchisor, and
such approval or consent shall be obtained in writing. Franchisor shall not
unreasonably withhold its consent, except as otherwise provided herein.
B. Franchisor makes no warranties or guarantees upon which Franchisee may
rely and assumes no liability or obligation to Franchisee or any third party to
which it would not otherwise be subject, by providing any waiver, approval,
advice, consent or suggestion to Franchisee in connection with this Agreement,
or by reason of any neglect, delay or denial of any request therefor.
C. No delay, waiver, omission or forbearance on the part of Franchisor to
exercise any right, option, duty or power arising out of any breach or default
by Franchisee or the Controlling Principals under this Agreement shall
constitute a waiver by Franchisor to enforce any such right, option, duty or
power against Franchisee or the Controlling Principals, or as to a subsequent
breach or default by Franchisee or the Controlling Principals. Acceptance by
Franchisor of any Payments due to it hereunder subsequent to the time at which
such Payments are due shall not be deemed to be a waiver by Franchisor of any
preceding breach by Franchisee or the Controlling Principals of any terms,
provisions, covenants or conditions of this Agreement.
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XV. INDEPENDENT CONTRACTOR
A. The parties acknowledge and agree that this Agreement does not create a
fiduciary relationship between them, that Franchisee shall be an independent
contractor, and that nothing in this Agreement is intended to constitute either
party an agent, legal representative, Affiliate, joint venturer, partner,
employee, joint employer or servant of the other for any purpose.
B. During the Term, Franchisee shall hold itself out to the public as an
independent contractor conducting its Restaurant operations pursuant to the
rights granted by Franchisor.
C. Franchisee understands and agrees that nothing in this Agreement
authorizes Franchisee or any of the Controlling Principals to make any contract,
agreement, warranty or representation on Franchisor's behalf, or to incur any
debt or other obligation in Franchisor's name, and that Franchisor shall in no
event assume liability for, or be deemed liable under this Agreement as a result
of, any such action, or for any act or omission of Franchisee or any of the
Controlling Principals or any claim or judgment arising therefrom.
XVI. DEFAULT, REMEDIES AND TERMINATION
A. (1) Franchisee acknowledges and agrees that each of Franchisee's
obligations described in this Agreement is a material and essential obligation
of Franchisee; that nonperformance of such obligations will adversely and
substantially affect the Franchisor and the System; and that the exercise by
Franchisor of the rights and remedies set forth herein is appropriate and
reasonable.
(2) Franchisee shall be deemed to be in default under this
Agreement, and all rights granted herein shall automatically terminate without
notice to Franchisee upon the following Events of Default: (a) if Franchisee
shall become insolvent or makes a general assignment for the benefit of
creditors; (b) If Franchisee files a voluntary petition under any bankruptcy law
or under any similar law or statute, or admits in writing its inability to pay
its debts when due; (c) if Franchisee is adjudicated bankrupt or insolvent in
proceedings filed against Franchisee under any bankruptcy laws or under any
similar law or statute; or if a bill in equity or other proceeding for the
appointment of a receiver of Franchisee or other custodian for Franchisee's
business or assets is filed and consented to by Franchisee; or if a receiver or
other custodian (permanent or temporary) of Franchisee's assets or property, or
any part thereof, is appointed by any court of competent jurisdiction; (d) if
proceedings for a composition with creditors should be instituted by or against
Franchisee; (e) if a final judgment remains unsatisfied or of record for thirty
(30) days or longer (unless an appeal bond is filed); (f) if Franchisee is
dissolved; (g) if execution is levied against Franchisee's business or property;
(h) if suit to foreclose any lien or mortgage against the Restaurant premises or
equipment is instituted against Franchisee and not dismissed within thirty (30)
days; or (i) if the real or personal property of Franchisee's Restaurant shall
be sold after levy thereupon by any sheriff, marshal, constable or other
government official.
(3) Franchisee shall be deemed to be in material default and
Franchisor may, at its option, terminate this Agreement and all rights granted
hereunder, subject only to any opportunity to cure the default provided below,
effective immediately upon notice to Franchisee, upon the occurrence of any of
the following Events of Default: (a) if Franchisee or any of its Affiliates
fails, refuses, or neglects promptly to pay any monies owing to Franchisor or
its Affiliates, when due under this Agreement or any other agreement, or to
submit the financial or other information required by Franchisor under this
Agreement and does not cure such default within ten (10) days following notice
from Franchisor (or such other cure period specified in such other agreement,
unless no cure period is specified or such period is less than ten (10) days, in
which case the ten (10) day cure shall apply); (b) if Franchisee operates the
Restaurant or sells any products or services authorized by Franchisor for sale
at the Restaurant at a location which has not been consented to by Franchisor;
(c) if Franchisee fails to acquire a site for the Restaurant within the time and
in the manner specified in Section III; (d) if Franchisee fails to construct or
remodel the Restaurant in accordance with the plans and specifications provided
to Franchisee under Section V.B. as such plans may be adapted with Franchisor's
consent in accordance with Section III.E.; (e) if Franchisee fails to open the
Restaurant for business by the Opening Date shown on Attachment A; (f) if
Franchisee at any time ceases to operate or otherwise abandons the Restaurant,
or loses the right to possession of the premises, or otherwise forfeits the
right to do or transact business in the jurisdiction where the Restaurant is
located; provided, however, that this provision shall not
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apply in cases of Force Majeure where the premises are damaged or destroyed by
an event of Force Majeure and Franchisee fully complies with the requirements of
Section XXI; (g) if Franchisee or any of the Controlling Principals is convicted
of, or has entered a plea of nolo contendere to, a felony, a crime involving
moral turpitude, or any other crime or offense that Franchisor believes is
reasonably likely to have an adverse effect on the System, the Proprietary
Marks, the goodwill associated therewith, or Franchisor's interests therein; (h)
if a threat or danger to public health or safety results from the construction,
maintenance, or operation of the Restaurant; (i) if Franchisee fails to
designate a qualified replacement or successor Operating Principal (or his
designee, as applicable), or General Manager within the time required under
Sections XI.C.(2) and XI.D.(2) hereof, respectively; (j) if Franchisee or any of
the Controlling Principals causes or effectuates a Transfer of any rights or
obligations under this Agreement, any interest in Franchisee, or the assets of
Franchisee or the Restaurant, without Franchisor's written consent pursuant to
Section XIII.B. or without offering Franchisor a right of first refusal with
respect to such Transfer pursuant to Section XIII.D.; (k) if, contrary to the
terms of Sections XII.A. or XII.B. hereof, Franchisee or any of the Controlling
Principals discloses or divulges any Confidential Information provided to
Franchisee or the Controlling Principals by Franchisor; (l) if Franchisee or any
of the Franchisee's Principals fails to comply with the covenants in Section
XII.C hereof; (m) if Franchisee fails to obtain execution of the covenants and
related agreements required under Section XII.D. within thirty (30) days
following Franchisor's request that Franchisee obtain the execution of such
covenants; (n) if a Transfer upon death or Permanent Disability is not
transferred in accordance with Section XIII.E. within the time periods therein;
(o) if Franchisee maintains false books or records, or submits any false reports
to Franchisor; (p) if Franchisee or any of the Controlling Principals breaches
any of the covenants in any material respect set forth in Section XV. or has
falsely made any of the representations or warranties set forth in Section XI.;
(q) if Franchisee fails to procure and maintain such insurance policies as
required by Section X. and Franchisee fails to cure such default within seven
(7) days following notice from Franchisor; (r) if Franchisee misuses or makes
any unauthorized use of the Proprietary Marks or otherwise materially impairs
the goodwill associated therewith or Franchisor's rights therein; provided that,
notwithstanding the above, Franchisee shall be entitled to notice of such event
of default and shall have twenty-four (24) hours to cure such default; (s) if
Franchisor makes available to Franchisee the computer software described in
Section V.D. and Franchisee fails to comply with the requirements in the
software license agreement executed pursuant to Section VI.E.(10) and the
software license is terminated by Franchisor; (t) if Franchisor makes available
to Franchisee the computer software described in Section V.D. and Franchisee
fails to obtain, install and maintain the hardware, software and communication
lines required pursuant to Section VI.E.(9), and Franchisee fails to cure such
default within twenty-four (24) hours following notice from Franchisor; (u) if
Franchisee or any of the Controlling Principals commit in any twelve (12) month
period during the Term three (3) or more Events of Default under this Agreement
or two (2) Events of Default that relate to the Payment of monies owed to
Franchisor or its Affiliates, whether or not such Events of Default are of the
same or different nature and whether or not such Events of Default are curable
or are cured by Franchisee after notice by Franchisor; or (v) if Franchisee or
any of its Affiliates fails or refuses to comply with any terms and conditions
of any sublease, or related agreement (including any development agreement or
franchise agreement between Franchisor and Franchisee, the Controlling
Principals, or any entity in which one or more of the Controlling Principals
have a controlling interest) between Franchisor or its Affiliates and Franchisee
or its Affiliates, and does not cure such default within any notice and cure
period provided for in such sublease or related agreement following notice from
Franchisor of such default (unless no cure period is specified in the sublease
or other agreement, in which case the notice and cure period provided in Section
XVI.B. shall apply).
B. Except as provided in Sections XVI.A.(2) and (3) of this Agreement,
upon any default by Franchisee which is susceptible of being cured, Franchisor
may terminate this Agreement by giving written notice of termination stating the
nature of such default to Franchisee at least thirty (30) days prior to the
effective date of termination. However, Franchisee may avoid termination by
immediately initiating a remedy to cure such default and curing it to
Franchisor's satisfaction within the thirty-day period and by promptly providing
proof thereof to Franchisor. If any such default is not cured within the
specified time, or such longer period as applicable law may require, this
Agreement shall terminate without further notice to Franchisee effective
immediately upon the expiration of the thirty-day period or such longer period
as applicable law may require. Defaults which are susceptible of cure hereunder
may include, but are not limited to, the following illustrative events: (1) if
Franchisee fails to comply with any of the requirements imposed by this
Agreement, as it may from time to time be amended or reasonably be supplemented
by Franchisor, or fails to carry out the terms of this Agreement in good faith,
(2) if Franchisee fails to maintain or observe any of the Standards and
Specifications or procedures prescribed by Franchisor in this Agreement or
otherwise in writing, and (3) if Franchisee fails, refuses, or neglects to
obtain Franchisor's prior written approval or consent as required by this
Agreement.
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C. No right or remedy herein conferred upon or reserved to Franchisor is
exclusive of any other right or remedy provided or permitted by law or in
equity. All rights and remedies of the parties to this Agreement shall be
cumulative to, and not alternative to or exclusive of, any other rights or
remedies which are 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 or any other
agreement between Franchisee, and its Affiliates, and Franchisor or its
Affiliates. The rights and remedies of the parties to this Agreement shall be
continuing and shall not be 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, and
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, earlier termination or
exercise of Franchisor's rights pursuant to Section XVII. of this Agreement
shall not discharge or release Franchisee or any of the Controlling Principals
from any liability or obligation then accrued, or any liability or obligation
continuing beyond, or arising out of, the expiration, the earlier termination or
the exercise of such rights under this Agreement.
D. Franchisee and the Controlling Principals shall pay to Franchisor all
damages, costs and expenses, including reasonable attorneys' fees, incurred by
Franchisor in connection with obtaining any remedy available to Franchisor for
any violation of this Agreement and subsequent to the termination or expiration
of this Agreement in obtaining injunctive or other relief for the enforcement of
any provisions of this Section XVII.
XVII. POST-TERM OBLIGATIONS
Upon termination or expiration of this Agreement, all rights granted
hereunder to Franchisee shall forthwith terminate, and:
A. Franchisee shall immediately cease to operate the Restaurant under this
Agreement, and shall not thereafter, directly or indirectly, represent to the
public or hold itself out as a present or former franchisee of Franchisor.
B. Franchisee shall immediately and permanently cease to use, in any
manner whatsoever, any Confidential Information, confidential methods, computer
software, procedures, and techniques associated with the System; the marks
"Pizzeria Uno(R)" and "Uno(R)" and all other Proprietary Marks and distinctive
forms, slogans, signs, symbols, and devices associated with the System. In
particular, Franchisee shall cease to use, without limitation, all signs,
advertising materials, displays, stationery, forms and any other articles which
display the Proprietary Marks.
C. Franchisee shall take such action as may be necessary to cancel any
assumed name or equivalent registration which contains the marks "Pizzeria
Uno(R)" and "Uno(R)" or any other service mark or trademark of Franchisor, and
Franchisee shall furnish Franchisor with evidence satisfactory to Franchisor of
compliance with this obligation within five (5) days after termination or
expiration of this Agreement.
D. Franchisee agrees, in the event it continues to operate or subsequently
begins to operate any other business, not to use any reproduction, counterfeit,
copy or colorable imitation of the Proprietary Marks, either in connection with
such other business or the promotion thereof, which is likely to cause
confusion, mistake, or deception, or which is likely to dilute Franchisor's
rights in and to the Proprietary Marks, and further agrees not to utilize any
designation of origin or description or representation which falsely suggests or
represents an association or connection with Franchisor constituting unfair
competition.
E. Franchisee and the Controlling Principals shall promptly pay all sums
owing to Franchisor, its Affiliates, lessors and other trade creditors. Such
sums, until paid in full, shall give rise to a lien in favor of Franchisor
against any and all of the personal property, furnishings, equipment, signs,
fixtures, and inventory owned by Franchisee and on or accessible from the
premises operated hereunder at the time of default.
F. Franchisee shall immediately deliver to Franchisor all Confidential
Information and all agreements, invoices, and any and all other materials
relating to the operation of the Restaurant in Franchisee's possession or
control, and all copies thereof (all of which are acknowledged to be
Franchisor's property), and shall retain no copy, translation or record
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of any of the foregoing, except Franchisee's copy of this Agreement and of any
correspondence between the parties and any other documents which Franchisee
reasonably needs for compliance with law or this Agreement.
G. Franchisee and the Controlling Principals shall comply with the
non-competition covenants and the restrictions on Confidential Information
contained in Section XII. of this Agreement. Any other person required to
execute similar covenants pursuant to Section XII.D. shall also comply with such
covenants.
H. Franchisee shall also immediately furnish Franchisor an itemized list
of all advertising and sales promotion materials (including Internet web sites)
bearing the Proprietary Marks or any of Franchisor's distinctive markings,
designs, labels, or other marks thereon, whether located on Franchisee's
premises or under Franchisee's control at any other location. Franchisor shall
have the right to inspect these materials. Franchisor shall have the option,
exercisable within thirty (30) days after such inspection, to purchase any or
all of the materials at Franchisee's cost, or to require Franchisee to destroy
or properly dispose of such materials. Materials not purchased by Franchisor
shall not be utilized by Franchisee or any other party for any purpose unless
authorized in writing by Franchisor.
I. If Franchisee operates the Restaurant under a lease for the Restaurant
premises with a third party or, with respect to any lease for equipment used in
the operation of the Restaurant, Franchisee shall, at Franchisor's option,
assign to Franchisor any interest which Franchisee has in any lease or sublease
for the premises of the Restaurant or any equipment related thereto. Franchisor
may exercise such option at or within thirty (30) days after either termination
or (subject to any existing right to renew) expiration of this Agreement. If
Franchisor assumes any lease in accordance with this Section XVII.I., Franchisee
shall remove or satisfy any liens or other encumbrances on the Franchisee's
leasehold interest and shall pay in full any amounts due the lessor under such
lease existing at or prior to such assumption, including any such liens or
amounts which arose prior to Franchisor's assumption but became actually known
to Franchisor after such assumption, and shall not be deemed to have assumed any
obligations incurred by Franchisee at or prior to the date of assumption of such
lease by Franchisor. By exercising its right to assume the lease, Franchisor
shall not be deemed to have waived any rights under this Section XVII.I. In the
event Franchisor does not elect to exercise its option to acquire the lease or
sublease for the Restaurant premises, Franchisee shall make such modifications
or alterations to the Restaurant premises as are necessary to distinguish the
appearance of the Restaurant from that of other restaurants operating under the
System and shall make such specific additional changes as Franchisor may
reasonably request. If Franchisee fails or refuses to comply with the
requirements of this Section XVII.I., Franchisor shall have the right to enter
upon the premises of the Restaurant, without being guilty of trespass or any
other crime or tort, to make or cause to be made such changes as may be
required, at the expense of Franchisee, which expense Franchisee agrees to pay
upon demand.
J. (1) Except as provided in Section XVII.I., Franchisor shall have the
option, to be exercised within thirty (30) days after termination or expiration
of this Agreement, to purchase from Franchisee any or all of the furnishings,
equipment (including any electronic cash register or computer hardware and
software systems not licensed by Franchisor), signs, fixtures, motor vehicles,
supplies, and inventory of Franchisee related to the operation of the
Restaurant, at Franchisee's book or fair market value, whichever is less.
Franchisor shall purchase Franchisee's assets only and shall assume no
liabilities whatsoever, unless otherwise agreed to in writing by the parties. If
the parties cannot agree on the fair market value within thirty (30) days of
Franchisor's exercise of its option, fair market value shall be determined by
two (2) appraisers, with each party selecting one (1) appraiser, and the average
of their determinations shall be binding. In the event of such appraisal, each
party shall bear its own legal and other costs and shall split the appraisal
fees equally. If Franchisor elects to exercise any option to purchase herein
provided, it shall have the right to set off all amounts due from Franchisee to
Franchisor or any of its Affiliates (including any appraisers' fees and
appraisal costs) and any costs incurred in connection with any escrow
arrangement (including reasonable legal fees) against any payment therefor and
shall pay the remaining amount in cash.
(2) In addition to the options described above and if Franchisee
owns the Restaurant premises, Franchisor shall have the option, to be exercised
at or within thirty (30) days after termination or expiration of this Agreement,
to purchase the Restaurant premises including any building thereon, if
applicable, for the fair market value of the land and building, and any or all
of the furnishings, equipment, signs, fixtures, vehicles, supplies and inventory
therein at Franchisee's cost or fair market value, whichever is less. Franchisor
shall purchase assets only and shall assume no
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liabilities whatsoever, unless otherwise agreed to in writing by the parties. If
Franchisee does not own the land on which the Restaurant is operated and
Franchisor exercises its option for an assignment of the lease, Franchisor may
exercise this option for the purpose of purchasing the building if owned by
Franchisee and related assets as described above. If the parties cannot agree on
fair market value within thirty (30) days of Franchisor's exercise of its
option, fair market value shall be determined in accordance with appraisal
procedure described above.
(3) With respect to the options described in Sections XVII.I.,
XVII.J.(1) and XVII.J.(2) , Franchisee shall deliver to Franchisor, in a form
satisfactory to Franchisor, such warranties, deeds, releases of lien, bills of
sale, assignments and such other documents and instruments which Franchisor
deems necessary in order to perfect Franchisor's title and possession in and to
the properties being purchased or assigned and to meet the requirements of all
tax and government authorities. If, at the time of closing, Franchisee has not
obtained all of these certificates and other documents, Franchisor may, in its
sole discretion, place the purchase price or rent in escrow pending issuance of
any required certificates or documents.
(4) The time for closing of the purchase and sale of the properties
described in Section XVII.J.(1) and (2) shall be a date not later than sixty
(60) days after the purchase price is determined by the parties or the
determination of the appraisers, or such date Franchisor receives and obtains
all necessary permits and approvals, whichever is later, unless the parties
mutually agree to designate another date. The time for closing on the assignment
of the lease described in Section XVII.I. shall be a date no later than ten (10)
days after Franchisor's exercise of its option thereunder unless Franchisor is
exercising its options under either Section XVII.J.(1) or (2), in which case the
date of the closing shall be on the same closing date prescribed for such
option. Closing shall take place at Franchisor's corporate offices or at such
other location as the parties may agree.
K. Franchisee, at the option of Franchisor, shall assign to Franchisor all
rights to the telephone numbers of the Restaurant and any other business
listings and execute all forms and documents required by Franchisor and any
telephone company at any time to transfer such service and numbers to
Franchisor. Notwithstanding any forms and documents which may have been executed
by Franchisor under Section VI.I., Franchisee hereby appoints Franchisor its
true and lawful agent and attorney-in-fact with full power and authority for the
sole purpose of taking such action as is necessary to complete such assignment.
This power of attorney shall survive the expiration or termination of this
Agreement. Franchisee shall thereafter use different telephone numbers at or in
connection with any subsequent business conducted by Franchisee.
L. For breach of the obligations in Sections XVII.A., B., C., D., F., H.,
I., and K., which are made in consideration of the specialized training and
Confidential Information described above, and due to the difficulty of
establishing the precise amount of damages for breach of these covenants, in
addition to the other remedies provided for in this Agreement or otherwise
available to Franchisor, Franchisee and Franchisee's Principals who committed
such breach jointly and severally agree to pay Franchisor an amount equal to
Five Thousand Dollars ($5,000) per day for each day the breach continues.
XVIII. INDEMNIFICATION
A. Franchisee and each of the Controlling Principals shall, at all times,
defend with counsel of Franchisor's choosing, indemnify and hold harmless to the
fullest extent permitted by law, the Indemnitees from all Losses and Expenses
incurred in connection with any action, suit, proceeding, claim, demand,
investigation or inquiry (formal or informal), or any settlement thereof
(whether or not a formal proceeding or action has been instituted) which arises
out of or is based upon any of the following: (1) the infringement, alleged
infringement, or any other violation or alleged violation by Franchisee or any
of the Franchisee's Principals of any patent, mark or copyright or other
proprietary right owned or controlled by third parties (except as such may occur
with respect to any right to use the Proprietary Marks, any copyrights or other
proprietary information granted hereunder pursuant to Section VIII.); (2) the
violation, breach or asserted violation or breach by Franchisee or any of the
Franchisee's Principals of any federal, state or local law, regulation, ruling,
standard or directive or any industry standard; (3) libel, slander or any other
form of defamation of Franchisor, the System or any developer or franchisee
operating under the System, by Franchisee or by any of the Franchisee's
Principals; (4) the violation or breach by Franchisee or by any of the
Controlling Principals of any warranty, representation, agreement or obligation
in this Agreement or in any other agreement between Franchisee, and its
Affiliates, and Franchisor and its Affiliates, or the officers,
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directors, shareholders, partners, agents, representatives, independent
contractors and employees thereof; (5) Franchisee's failure to obtain the
covenants required by Section XII.D hereof or, if obtained, the breach of such
covenants; and (6) acts, errors, or omissions of Franchisee, any of Franchisee's
Affiliates and any of the Franchisee's Principals and the officers, directors,
shareholders, partners, agents, representatives, independent contractors and
employees of Franchisee and its Affiliates in connection with the establishment
and operation of the Restaurant, including, but not limited to, any acts, errors
or omissions of any of the foregoing in the operation of any motor vehicle. The
parties understand and agree that Franchisor cannot and does not exercise
control over the manner of operation of any motor vehicles used by, or on behalf
of, Franchisee or any employee, agent or independent contractor of Franchisee
and that the safe operation of any motor vehicle is, therefore, Franchisee's
responsibility.
B. Franchisee and each of the Controlling Principals agree to give
Franchisor immediate notice of any such action, suit, proceeding, claim, demand,
inquiry, or investigation. At the expense and risk of Franchisee and each of the
Controlling Principals, Franchisor may elect to assume (but under no
circumstance is obligated to undertake) or designate counsel of its own choosing
(at Franchisee's and the Controlling Principals' expense) with respect to, the
defense and/or settlement of any such action, suit, proceeding, claim, demand,
inquiry or investigation. Such an undertaking by Franchisor shall, in no manner
or form, diminish the obligation of Franchisee and each of the Controlling
Principals to indemnify the Indemnitees and to hold them harmless.
C. In order to protect persons or property, its reputation or goodwill, or
the reputation or goodwill of others, Franchisor may, at any time and without
notice, in its sole judgment and discretion, consent or agree to settlements or
take such other remedial or corrective action as it deems expedient with respect
to the action, suit, proceeding, claim, demand, inquiry or investigation if, in
Franchisor's sole judgment, there are reasonable grounds to believe that: (1)
any of the acts or circumstances enumerated in Section XVIII.A.(1)-(4) above
have occurred; or (2) any act, error, or omission as described in Section
XVIII.A.(5) may result directly or indirectly in damage, injury, or harm to any
person or any property.
D. All Losses and Expenses incurred under this Section XVIII. shall be
chargeable to and paid by Franchisee or any of the Controlling Principals
pursuant to its obligations of indemnity under this Section XVIII, regardless of
any actions, activity or defense undertaken by Franchisor or the subsequent
success or failure of such actions, activity, or defense.
E. The Indemnitees do not assume any liability whatsoever for acts,
errors, or omissions of any third party with whom Franchisee, any of the
Franchisee's Principals, Franchisee's or any Principal's Affiliates or their
respective officers, directors, shareholders, partners, agents, representatives,
independent contractors and employees of Franchisee, or its Affiliates, may
contract, regardless of the purpose. Franchisee and each of the Controlling
Principals shall hold harmless and indemnify the Indemnitees for all Losses and
Expenses which may arise out of any acts, errors or omissions of Franchisee, the
Franchisee's Principals and their respective Affiliates, the officers,
directors, shareholders, partners, agents, representatives, independent
contractors and employees of Franchisee and its Affiliates and any such other
third parties without limitation and without regard to the cause or causes
thereof or the negligence (whether such negligence be sole, joint or concurrent,
or active or passive) or strict liability of Franchisor or any other party or
parties arising in connection therewith.
F. 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 Franchisee or any of the Controlling Principals.
Franchisee and each of the Controlling Principals agree that the failure to
pursue such recovery or mitigate loss will not reduce the amounts recoverable
from Franchisee or any of the Controlling Principals by the Indemnitees.
G. Franchisee and the Controlling Principals expressly agree that the
terms of this Section XVIII. shall survive the termination, expiration or
transfer of this Agreement or any interest herein.
XIX. MEDIATION AND LITIGATION
A. FRANCHISOR, FRANCHISEE AND THE CONTROLLING PRINCIPALS AGREE TO SUBMIT
ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT
(AND ATTACHMENTS) OR THE RELATIONSHIP CREATED BY THIS AGREEMENT TO
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NON-BINDING MEDIATION PRIOR TO COMMENCING LITIGATION OR INITIATING ANY OTHER
PROCEEDING WITH RESPECT TO SUCH CLAIM, CONTROVERSY OR DISPUTE. 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
DISPUTES BETWEEN FRANCHISORS AND FRANCHISEES, AGREED UPON BY THE PARTIES AND,
FAILING SUCH AGREEMENT WITHIN A REASONABLE PERIOD OF TIME AFTER EITHER PARTY HAS
NOTIFIED THE OTHER OF ITS DESIRE TO SEEK MEDIATION OF ANY CLAIM, CONTROVERSY OR
DISPUTE (NOT TO EXCEED FIFTEEN (15) DAYS), BY THE AMERICAN ARBITRATION
ASSOCIATION (OR ANY SUCCESSOR ORGANIZATION) IN ACCORDANCE WITH ITS RULES
GOVERNING MEDIATION, AT FRANCHISOR'S PRINCIPAL PLACE OF BUSINESS. THE COSTS AND
EXPENSES OF MEDIATION, INCLUDING COMPENSATION AND EXPENSES OF THE MEDIATOR
(EXCEPT FOR THE ATTORNEYS' FEES INCURRED BY EITHER PARTY), SHALL BE BORNE BY THE
PARTIES EQUALLY. IF THE PARTIES ARE UNABLE TO RESOLVE THE CLAIM, CONTROVERSY OR
DISPUTE WITHIN NINETY (90) DAYS AFTER THE MEDIATOR HAS BEEN CHOSEN, THEN EITHER
PARTY MAY FILE SUIT IN ACCORDANCE WITH SECTION XIX. B., BELOW. NOTWITHSTANDING
THE FOREGOING, FRANCHISOR MAY BRING AN ACTION: (1) FOR MONIES OWED, (2) FOR
INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF, OR (3) INVOLVING THE POSSESSION OF OR
TO SECURE OTHER RELIEF RELATING TO THE RESTAURANT PREMISES, IN A COURT HAVING
JURISDICTION AND IN ACCORDANCE WITH SECTION XIX.B. BELOW, WITHOUT FIRST
SUBMITTING SUCH ACTION TO MEDIATION.
B. WITH RESPECT TO ANY CLAIMS, CONTROVERSIES OR DISPUTES WHICH ARE NOT
FINALLY RESOLVED THROUGH MEDIATION OR AS OTHERWISE PROVIDED ABOVE, FRANCHISEE
AND THE CONTROLLING PRINCIPALS HEREBY IRREVOCABLY SUBMIT THEMSELVES TO THE
JURISDICTION OF THE STATE COURTS OF SUFFOLK COUNTY, MASSACHUSETTS AND THE
FEDERAL DISTRICT COURT OF MASSACHUSETTS, FIRST CIRCUIT. FRANCHISEE AND THE
CONTROLLING PRINCIPALS HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION FOR
THE PURPOSE OF CARRYING OUT THIS PROVISION. FRANCHISEE AND THE CONTROLLING
PRINCIPALS HEREBY AGREE THAT SERVICE OF PROCESS MAY BE MADE UPON ANY OF THEM IN
ANY PROCEEDING RELATING TO OR ARISING OUT THIS AGREEMENT OR THE RELATIONSHIP
CREATED BY THIS AGREEMENT BY ANY MEANS ALLOWED BY MASSACHUSETTS OR FEDERAL LAW.
FRANCHISEE AND THE CONTROLLING PRINCIPALS FURTHER AGREE THAT VENUE FOR ANY
PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE SUFFOLK COUNTY,
MASSACHUSETTS; PROVIDED, HOWEVER, WITH RESPECT TO ANY ACTION (1) FOR MONIES
OWED, (2) FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF OR (3) INVOLVING
POSSESSION OR DISPOSITION OF, OR OTHER RELIEF RELATING TO, REAL PROPERTY,
FRANCHISOR MAY BRING SUCH ACTION IN ANY STATE OR FEDERAL DISTRICT COURT WHICH
HAS JURISDICTION. WITH RESPECT TO ALL CLAIMS, CONTROVERSIES, DISPUTES OR ACTIONS
RELATED TO THIS AGREEMENT OR THE RELATIONSHIP CREATED THEREBY, THIS AGREEMENT
AND ANY SUCH RELATED CLAIMS, CONTROVERSIES, DISPUTES OR ACTIONS SHALL BE
GOVERNED, ENFORCED AND INTERPRETED UNDER MASSACHUSETTS LAW (EXCEPT FOR
MASSACHUSETTS CHOICE OF LAW RULES).
C. FRANCHISEE, THE CONTROLLING PRINCIPALS AND FRANCHISOR ACKNOWLEDGE THAT
THE PARTIES' AGREEMENT REGARDING APPLICABLE STATE LAW AND FORUM SET FORTH IN
SECTION XIX.B ABOVE PROVIDE EACH OF THE PARTIES WITH THE MUTUAL BENEFIT OF
UNIFORM INTERPRETATION OF THIS AGREEMENT AND ANY DISPUTE ARISING OUT OF THIS
AGREEMENT OR THE PARTIES' RELATIONSHIP CREATED BY THIS AGREEMENT. EACH OF
FRANCHISEE, THE CONTROLLING PRINCIPALS AND FRANCHISOR FURTHER ACKNOWLEDGES THE
RECEIPT AND SUFFICIENCY OF MUTUAL CONSIDERATION FOR SUCH BENEFIT AND THAT EACH
PARTY'S AGREEMENT REGARDING APPLICABLE STATE LAW AND CHOICE OF FORUM HAVE BEEN
NEGOTIATED FOR IN GOOD FAITH AND ARE PART OF THE BENEFIT OF THE BARGAIN
REFLECTED BY THIS AGREEMENT.
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D. FRANCHISEE AND THE CONTROLLING PRINCIPALS AGREE THAT NO ACTION,
PROCEEDING OR REQUEST FOR RELIEF ARISING OUT OF OR RELATING TO THIS AGREEMENT
(AND ATTACHMENTS) OR THE RELATIONSHIP CREATED BY THIS AGREEMENT SHALL BE BROUGHT
AGAINST FRANCHISOR'S AFFILIATES, IT BEING THE INTENT THAT SUCH CLAIMS BE
RESOLVED DIRECTLY AND SOLELY WITH FRANCHISOR.
E. FRANCHISEE, THE CONTROLLING PRINCIPALS AND FRANCHISOR ACKNOWLEDGE THAT
THE EXECUTION OF THIS AGREEMENT AND ACCEPTANCE OF THE TERMS BY THE PARTIES
OCCURRED IN WEST ROXBURY, MASSACHUSETTS, AND FURTHER ACKNOWLEDGE THAT THE
PERFORMANCE OF CERTAIN OBLIGATIONS OF FRANCHISEE ARISING UNDER THIS AGREEMENT,
INCLUDING, BUT NOT LIMITED TO, THE PAYMENT OF MONIES DUE HEREUNDER AND THE
SATISFACTION OF CERTAIN TRAINING REQUIREMENTS OF FRANCHISOR, SHALL OCCUR IN WEST
ROXBURY, MASSACHUSETTS.
F. WITHOUT LIMITING ANY OF THE FOREGOING, FRANCHISOR RESERVES THE RIGHT,
AT ANY TIME, TO CREATE A DISPUTE RESOLUTION PROGRAM AND RELATED SPECIFICATIONS,
STANDARDS, PROCEDURES AND RULES FOR THE IMPLEMENTATION THEREOF TO BE
ADMINISTERED BY FRANCHISOR OR ITS DESIGNEES FOR THE BENEFIT OF ALL FRANCHISEES
CONDUCTING BUSINESS UNDER THE SYSTEM. THE STANDARDS, SPECIFICATIONS, PROCEDURES
AND RULES FOR SUCH DISPUTE RESOLUTION PROGRAM SHALL BE MADE PART OF THE MANUALS
AND IF MADE PART OF THE MANUALS, ON EITHER A VOLUNTARY OR MANDATORY BASIS,
FRANCHISEE AND THE CONTROLLING PRINCIPALS SHALL COMPLY WITH ALL SUCH STANDARDS,
SPECIFICATIONS, PROCEDURES AND RULES IN SEEKING RESOLUTION OF ANY CLAIMS,
CONTROVERSIES OR DISPUTES WITH OR INVOLVING FRANCHISOR OR OTHER FRANCHISEES, IF
APPLICABLE UNDER THE PROGRAM. IF SUCH DISPUTE RESOLUTION PROGRAM IS MADE
MANDATORY, THEN FRANCHISEE AND THE CONTROLLING PRINCIPALS AND FRANCHISOR AGREE
TO SUBMIT ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING OUT OF OR RELATING TO
THIS AGREEMENT (AND ATTACHMENTS) OR THE RELATIONSHIP CREATED BY THIS AGREEMENT
FOR RESOLUTION IN ACCORDANCE WITH SUCH DISPUTE RESOLUTION PROGRAM PRIOR TO
SEEKING RESOLUTION OF SUCH CLAIMS, CONTROVERSIES OR DISPUTES IN THE MANNER
DESCRIBED IN SECTIONS XIX.B-E. (PROVIDED THAT THE PROVISIONS OF SECTION XIX
CONCERNING FRANCHISOR'S RIGHT TO SEEK RELIEF IN A COURT FOR CERTAIN ACTIONS
INCLUDING FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF SHALL NOT BE SUPERSEDED
OR AFFECTED BY THIS SECTION XIX.F.) OR IF SUCH CLAIM, CONTROVERSY OR DISPUTE
RELATES TO ANOTHER FRANCHISEE, FRANCHISEE AGREES TO PARTICIPATE IN THE PROGRAM
AND SUBMIT ANY SUCH CLAIMS, CONTROVERSIES OR DISPUTES IN ACCORDANCE WITH THE
PROGRAM'S STANDARDS, SPECIFICATIONS, PROCEDURES AND RULES, PRIOR TO SEEKING
RESOLUTION OF SUCH CLAIM BY ANY OTHER JUDICIAL OR LEGALLY AVAILABLE MEANS.
G. FRANCHISEE AND THE CONTROLLING PRINCIPALS HEREBY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM OF ANY PUNITIVE, EXEMPLARY,
INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES (INCLUDING,
WITHOUT LIMITATION, LOSS OF PROFITS) AGAINST FRANCHISOR, ITS AFFILIATES, AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, AGENTS,
REPRESENTATIVES, INDEPENDENT CONTRACTORS, SERVANTS AND EMPLOYEES, IN THEIR
CORPORATE AND INDIVIDUAL CAPACITIES, ARISING OUT OF ANY CAUSE WHATSOEVER
(WHETHER SUCH CAUSE BE BASED IN CONTRACT, NEGLIGENCE, STRICT LIABILITY, OTHER
TORT OR OTHERWISE) AND AGREE THAT IN THE EVENT OF A DISPUTE, FRANCHISEE AND THE
CONTROLLING PRINCIPALS SHALL BE LIMITED TO THE RECOVERY OF ANY ACTUAL DAMAGES
SUSTAINED BY IT. IF ANY OTHER TERM OF THIS AGREEMENT IS FOUND OR DETERMINED TO
BE UNCONSCIONABLE OR UNENFORCEABLE FOR ANY REASON, THE FOREGOING PROVISIONS OF
WAIVER BY AGREEMENT OF PUNITIVE, EXEMPLARY, INCIDENTAL, INDIRECT, SPECIAL,
CONSEQUENTIAL OR OTHER DAMAGES
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(INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS) SHALL CONTINUE IN FULL FORCE
AND EFFECT.
H. FRANCHISOR, FRANCHISEE AND THE CONTROLLING PRINCIPALS HEREBY AGREE THAT
NO FORM OF PROCEEDING PERMITTED HEREBY WILL BE MAINTAINED BY ANY PARTY TO
ENFORCE ANY LIABILITY OR OBLIGATION OF THE OTHER PARTY, WHETHER ARISING FROM
THIS AGREEMENT OR OTHERWISE, UNLESS BROUGHT BEFORE THE EXPIRATION OF THE LATER
OF: (i) ONE (1) YEAR AFTER THE DATE OF DISCOVERY OF THE FACTS RESULTING IN SUCH
LIABILITY OR OBLIGATION, OR (ii) TWO (2) YEARS AFTER THE DATE OF THE FIRST ACT
OR OMISSION GIVING RISE TO THE ALLEGED LIABILITY OR OBLIGATION.
XX. NOTICES
Any and all notices required or permitted under this Agreement shall be in
writing and shall be personally delivered or sent by expedited delivery service
or certified or registered mail, return receipt requested, first-class postage
prepaid, or sent by prepaid facsimile, telegram or telex (provided that the
sender confirms the facsimile, telegram or telex by sending an original
confirmation copy by certified or registered mail or expedited delivery service
within three (3) Business Days after transmission) to the respective parties at
the following addresses unless and until a different address has been designated
by written notice to the other party:
Notices to Franchisor: Pizzeria Uno Corporation
100 Charles Park Road
West Roxbury, Massachusetts 02132-4985
Attention: General Counsel
Facsimile: (617) 323-7170
Notices to Franchisee and
the Controlling Principals: ____________________________________
____________________________________
Attention:__________________________
Facsimile:__________________________
Any notice shall be deemed to have been given at the time of personal
delivery or receipt, or in the case of facsimile, telegram or telex, upon
transmission (provided confirmation is sent as described above); provided,
however, that if delivery is rejected, delivery shall be deemed to have been
given at the time of such rejection.
XXI. FORCE MAJEURE
A. Upon the occurrence of any event of Force Majeure, the party affected
thereby shall give prompt notice thereof to the other parties, together with a
description of the event, the duration for which the party expects its ability
to comply with the provisions of the Agreement to be affected thereby. Without
limiting the foregoing, if following an event of Force Majeure which has caused
substantial damage to the Restaurant such that Franchisee cannot reasonably
continue to operate, Franchisee shall apply, within thirty (30) days after any
event of Force Majeure, for Franchisor's consent to relocate or reconstruct the
premises (which consent shall not be unreasonably withheld) including a plan for
resuming operation under the Agreement and a reopening date. After obtaining
Franchisor's consent to its plan for resuming operation or for relocation or
reconstruction, Franchisee shall promptly undertake and pursue with due
diligence such plan. In no event shall the occurrence of an event of Force
Majeure, extend the Term of this Agreement or the reopening or relocation of the
Restaurant.
B. Franchisee shall pay all travel, salary, lodging and meal expenses
incurred by Franchisor or its designee associated with the "reopening" of the
Restaurant. During any time period in which the Restaurant is not in operation
beyond such reopening date consented to by Franchisor in accordance with Section
XXI.A. hereof, Franchisee must pay two percent (2%) of Gross Sales based on the
prior twelve (12) months of operation (or such shorter period, if the Restaurant
has not
39
<PAGE>
been open for twelve (12) months). Franchisee shall continue to be obligated to
pay to Franchisor any and all amounts that it shall have duly become obligated
to pay in accordance with the terms of this Agreement prior to the occurrence of
any Force Majeure event. The Indemnitees shall also continue to be indemnified
and held harmless by Franchisee and the Controlling Principals in accordance
with Section XVIII. No event of Force Majeure shall excuse or delay the making
of any Payment in a timely manner.
C. Subject to compliance by Franchisee with the requirements hereof,
Franchisee and where applicable, Franchisor, shall be liable for failure to give
timely notice under this Section XXI only to the extent of damage actually
caused. Except as provided in Section XVI.A.(3)(f) and this Section, none of the
parties hereto shall be held liable for a failure to comply with any terms and
conditions of this Agreement when such failure is caused by an event of Force
Majeure.
XXII. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary herein, each portion,
section, part, term and provision of this Agreement shall be considered
severable; and if, for any reason, any portion, section, part, term or provision
is determined to be invalid and contrary to, or in conflict with, any existing
or future law or regulation by a court or agency having valid jurisdiction, this
shall not impair the operation of, or have any other effect upon, the other
portions, sections, parts, terms or provisions of this Agreement that may remain
otherwise intelligible, and the latter shall continue to be given full force and
effect and bind the parties; the invalid portions, sections, parts, terms or
provisions shall be deemed not to be part of this Agreement; and there shall be
automatically added such portion, section, part, term or provision as similar as
possible to that which was severed which shall be valid and not contrary to or
in conflict with any law or regulation. Notwithstanding the above, and in
addition to Section VIII and XVI of this Agreement, if any of the provisions of
this Agreement concerning the protection of Franchisor's Proprietary Marks is
determined in any manner to be null, void or unenforceable under this Agreement,
Franchisor may terminate this Agreement immediately upon notice to Franchisee.
B. Except as expressly provided to the contrary herein, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than Franchisee, Franchisor, Franchisor's officers, directors and
personnel and such of Franchisee's and Franchisor's respective successors and
assigns as may be contemplated (and, as to Franchisee, authorized by Section
XIII.), any rights or remedies under or as a result of this Agreement.
C. The captions used in connection with the sections and subsections of
this Agreement are inserted only for purpose of reference. Such captions shall
not be deemed to govern, limit, modify or in any other manner affect the scope,
meaning or intent of the provisions of this Agreement or any part thereof nor
shall such captions otherwise be given any legal effect.
D. All references herein to the masculine, neuter or singular shall be
construed to include the masculine, feminine, neuter or plural, where
applicable. Without limiting the obligations individually undertaken by the
Controlling Principals under this Agreement, all acknowledgments, promises,
covenants, agreements and obligations made or undertaken by Franchisee in this
Agreement shall be deemed, jointly and severally, undertaken by all of the
Controlling Principals.
E. This Agreement may be executed in multiple counterparts, each of which
when so executed shall be an original, and all of which shall constitute one and
the same instrument.
F. This Agreement shall not become effective until signed by an authorized
officer of Franchisor.
G. Each reference in this Agreement to a corporation or partnership shall
be deemed to also refer to a limited liability company and any other entity or
organization similar thereto. Each reference to the organizational documents,
equity owners, directors, and officers of a corporation in this Agreement shall
be deemed to refer to the functional equivalents of such organizational
documents, equity owners, directors, and officers, as applicable, in the case of
a limited liability company or any other entity or organization similar thereto.
40
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H. Any obligation of Franchisee or the Controlling Principals that
contemplates performance of such obligation after termination or expiration of
this Agreement or any Transfer shall be deemed to survive such termination,
expiration or Transfer, including the provisions of this Section XXII.
I. FRANCHISEE, THE CONTROLLING PRINCIPALS AND FRANCHISOR ACKNOWLEDGE THAT
VARIOUS PROVISIONS OF THIS AGREEMENT SPECIFY CERTAIN MATTERS THAT ARE WITHIN THE
DISCRETION OR JUDGMENT OF FRANCHISOR OR ARE OTHERWISE TO BE DETERMINED
UNILATERALLY BY FRANCHISOR. IF THE EXERCISE OF FRANCHISOR'S DISCRETION OR
JUDGMENT AS TO ANY SUCH MATTER IS SUBSEQUENTLY CHALLENGED, THE PARTIES TO THIS
AGREEMENT EXPRESSLY DIRECT THE TRIER OF FACT THAT FRANCHISOR'S RELIANCE ON A
BUSINESS REASON IN THE EXERCISE OF ITS DISCRETION OR JUDGMENT IS TO BE VIEWED AS
A REASONABLE AND PROPER EXERCISE OF SUCH DISCRETION OR JUDGMENT, WITHOUT REGARD
TO WHETHER OTHER REASONS FOR ITS DECISION MAY EXIST AND WITHOUT REGARD TO
WHETHER THE TRIER OF FACT WOULD INDEPENDENTLY ACCORD THE SAME WEIGHT TO THE
BUSINESS REASON.
XXIII. ENTIRE AGREEMENT
This Agreement, the documents referred to herein, and the Attachments
hereto, constitute the entire, full and complete agreement between Franchisor
and Franchisee and the Controlling Principals concerning the subject matter
hereof and shall supersede all prior related agreements between Franchisor and
Franchisee and the Controlling Principals. Except for those permitted to be made
unilaterally by Franchisor hereunder, no amendment, change or variance from this
Agreement shall be binding on either party unless mutually agreed to by the
parties and executed by their authorized officers or agents in writing.
XXIV. ACKNOWLEDGMENTS
A. Franchisee and Controlling Principals acknowledge that they have each
conducted an independent investigation of the business venture contemplated by
this Agreement and recognize that the success of this business venture involves
substantial business risks and will largely depend upon the ability of
Franchisee and Controlling Principals. Franchisor expressly disclaims making,
and Franchisee and Controlling Principals acknowledge that they have each not
received or relied on any warranty or guarantee, express or implied, as to the
potential volume, profits, expenses, or success of the business venture
contemplated by this Agreement.
Initials:____/____
B. Franchisee and Controlling Principals acknowledge that they have
received, read and understand this Agreement and the related Attachments and
agreements and that Franchisor has afforded them sufficient time and opportunity
to consult with advisors, attorneys and accountants selected by them about the
potential benefits and risks of entering into this Agreement.
Initials:____/____
C. Franchisee and Controlling Principals acknowledge that they received a
complete copy of this Agreement and all related Attachments and agreements at
least five (5) business days prior to the date on which this Agreement was
executed. Franchisee and Controlling Principals further acknowledge that they
have received the disclosure document required by the Trade Regulation Rule of
the Federal Trade Commission 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.
Initials:____/____
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
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<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise Agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise Agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise Agreement and is obligated to perform thereunder; and
(4) Operating Principal individually, jointly and severally, makes all of
the covenants, representations and agreements of Franchisee and Operating
Principal set forth in the Franchise Agreement and is obligated to perform
hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
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Attachment A
SITE, ASSIGNED AREA AND OPENING DATE
1. SITE
Pursuant to Section II.B. and III.A.(4) of the Franchise Agreement, the
Restaurant shall be located at the following location:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
2. ASSIGNED AREA
Pursuant to Section II.C. of the Franchise Agreement, the Assigned Area
shall be:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
3. OPENING DATE
Pursuant to Section III. of the Franchise Agreement, the Opening Date of
the Restaurant is __________, 19___.
<PAGE>
Attachment B
LEASE RIDER
This Lease Rider is made and entered into this ____ day of ___________,
19__ by and between Pizzeria Uno Corporation, a Delaware corporation
("Franchisor"), ____________________________("Franchisee") and
_________________________("Landlord").
WHEREAS, Franchisor and Franchisee are parties to that certain Franchise
Agreement dated ____________, 19__ ("Franchise Agreement");
WHEREAS, Franchisee and Landlord desire to enter into a lease (the
"Lease") pursuant to which Franchisee will occupy the premises located at
____________________________ ____________________________ (the "Premises") for a
full-service Pizzeria Uno restaurant (the "Restaurant") licensed under the
Franchise Agreement; and
WHEREAS, as a condition to entering into the Lease, the Franchisee is
required under the Franchise Agreement to execute this Lease Rider along with
the Landlord and Franchisor;
NOW, THEREFORE, in consideration of the mutual undertakings and
commitments set forth herein and in the Franchise Agreement, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
(1) During the term of the Franchise Agreement, the Premises shall be used
only for the operation of the Restaurant.
(2) Landlord consents to Franchisee's use of such proprietary marks
("Proprietary Marks") and signs, interior and exterior decor items, color
schemes, plans, specifications and related components of the Pizzeria Uno
restaurant system ("System") as Franchisor may prescribe for the Restaurant.
(3) Landlord agrees to furnish Franchisor with copies of any and all
letters and notices sent to Franchisee pertaining to the Lease and the Premises
at the same time that such letters and notices are sent to Franchisee.
(4) Franchisor shall have the right to enter the Premises to make any
modification or alteration necessary to protect the Pizzeria Uno Restaurant
System and Proprietary Marks or to cure any default under the Franchise
Agreement or any development agreement entered into between Franchisor and
Franchisee or under the Lease, without being guilty of trespass or any other
crime or tort, and the Landlord shall not be responsible for any expense or
damages arising from Franchisor's action in connection therewith.
(5) In the event of Franchisee's default under the terms of the Lease,
Franchisor may, but is not required, to cure the default and may assume the
lease in Franchisor's name. If Franchisor elects to cure the default and assume
the Lease, Franchisor shall notify Landlord of its intent to cure such default
and to assume the Lease. Within thirty (30) days after Franchisor receives
notice of the default, Franchisor shall have the option, in its sole discretion,
to cure the default and, at Franchisor's option, assume the lease. Franchisor
shall cure the default within thirty (30) days of such election or, if the
default cannot be reasonably cured within such thirty (30) day period, then
Franchisor shall commence and proceed to cure the default within such time as is
reasonably necessary to cure the default. If Franchisor elects to assume the
Lease, Landlord agrees to recognize Franchisor as the Tenant under the Lease and
Franchisee shall no longer have any rights thereunder.
(6) Franchisee shall be permitted to assign the Lease to Franchisor or its
Affiliates upon the expiration or earlier termination of the Franchise Agreement
and the Landlord hereby consents to such assignment and agrees not to impose or
assess any assignment fee or similar charge or accelerate rent under the Lease
in connection with such assignment, or require Franchisor to pay any past due
rent or other financial obligation of Franchisee to Landlord, it being
understood that Landlord shall look solely to the Franchisee for any rents or
other financial obligations owed to Landlord prior to such
B-1
<PAGE>
assignment. Landlord and Franchisee acknowledge that Franchisor is not a party
to the Lease and shall have no liability under the Lease, unless and until the
Lease is assigned to, or assumed by, Franchisor.
(7) Except for the Franchisee's obligations to Landlord for rents and
other financial obligations accrued prior to the assignment of the Lease, in the
event of such assignment, Franchisor or any Affiliate designated by Franchisor
will agree to assume from the date of assignment all obligations of Franchisee
remaining under the Lease, and in such event Franchisor or any Affiliate shall
assume Franchisee's occupancy rights, and the right to sublease the Premises,
for the remainder of the term of the Lease.
(8) Notwithstanding anything contained in this Lease, Franchisor is
expressly authorized, without the consent of the Lessor, to sublet the Leased
Premises to an authorized franchisee, provided such subletting is specifically
subject to the terms of this Lease and further provided Franchisor remains
liable for the performance of the terms of this Lease and provided the
franchisee expressly assumes all obligations of the Lease. Franchisor agrees to
notify Lessor as to the name of the franchisee within then (10) days after such
subletting.
(9) Franchisee shall not assign the Lease or renew or extend the
term thereof without the prior written consent of Franchisor.
(10) Landlord and Franchisee shall not amend or otherwise modify the
Lease in any manner that could materially affect any of the foregoing
requirements without the prior written consent of Franchisor.
(11) The terms of this Lease Rider will supersede any conflicting
terms of the Lease.
IN WITNESS WHEREOF, the parties have executed this Lease Rider as of the
date first above written.
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
____________________________ By:_________________________________________
Witness Name:_______________________________________
Title:______________________________________
FRANCHISEE:
_____________________________ ____________________________________________
Witness
By:_________________________________________
Name:_______________________________________
Title:______________________________________
By:_________________________________________
Name:_______________________________________
Title:______________________________________
LANDLORD:
_____________________________ ____________________________________________
Witness
By:_________________________________________
Name:_______________________________________
Title:______________________________________
B-2
<PAGE>
Attachment C
STATEMENT OF OWNERSHIP INTERESTS AND FRANCHISEE'S PRINCIPALS
A. The following is a list of stockholders, partners or other investors in
Franchisee, including all investors who own or hold a direct or indirect
interest in Franchisee, and a description of the nature of their interest:
Name Percentage of Ownership/Nature of Interest
---- ------------------------------------------
B. The following is a list of all of Franchisee's Principals described in and
designated pursuant to Section XI of the Franchise Agreement, except those
who have been designated as Controlling Principals, each of whom shall
execute the Confidentiality Agreement and Ancillary Covenants Not to
Compete substantially in the form set forth in Attachment D (see Section
XII of the Franchise Agreement):
C. The following is a list of all of Franchisee's Controlling Principals
described in and designated pursuant to Section I of the Franchise
Agreement, each of whom shall execute the Franchise Agreement as
Controlling Principals. The Operating Principal is indicated below by an
asterisk.
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Attachment D
CONFIDENTIALITY AGREEMENT AND ANCILLARY COVENANTS NOT TO COMPETE
This Agreement is made and entered into this ____ day of ________________,
19__, between ____________________ ("Franchisee") and
_____________________________________"Covenantor").
RECITALS
WHEREAS, Pizzeria Uno Corporation ("Franchisor"), as a result of the
expenditure of time, skill, effort and money, developed and owns a distinctive
system (the "System") for the development and operation of full-service
restaurants under the name and mark "Pizzeria Uno(R)" ("Restaurants"); and
WHEREAS, the System includes, but is not limited to, certain trade names,
service marks, trademarks, symbols, logos, emblems and indicia of origin,
including, but not limited to, the mark "Pizzeria Uno(R)" and such other trade
names, service marks, trademarks, symbols, logos, emblems and indicia of origin
as Franchisor may develop in the future to identify for the public in certain
countries the source of services and products marketed under such marks
("Proprietary Marks") and under the System and representing the System's high
standards of quality, appearance and service and distinctive exterior and
interior design, decor, color scheme and furnishings, as well as special recipes
and menu items; uniform standards, specifications and procedures for operations;
quality and uniformity of products and services offered; procedures for
inventory and management and financial control; training and assistance; and
advertising and promotional programs ("Trade Secrets"); all of which may be
changed, improved and further developed by Franchisor from time to time and are
used by Franchisor in connection with the operation of the System; and
WHEREAS, the Proprietary Marks and Trade Secrets provide economic
advantages to Franchisor and are not generally known to, and are not readily
ascertainable by proper means by, Franchisor's competitors who could obtain
economic value from knowledge and use of the Proprietary Marks and Trade
Secrets; and
WHEREAS, Franchisor has taken and intends to take all reasonable steps to
maintain the confidentiality and secrecy of the Trade Secrets; and
WHEREAS, Franchisor has granted Franchisee the limited right to operate a
Restaurant using the System and the Trade Secrets for the period defined in the
franchise agreement made and entered into on _________________, 19____
("Franchise Agreement"), by and between Franchisor and Franchisee; and
WHEREAS, Franchisor and Franchisee have agreed in the Franchise Agreement
on the importance to Franchisor and to Franchisee and other licensed users of
the System of restricting the use, access and dissemination of the Trade
Secrets; and
WHEREAS, it will be necessary for certain employees agents, independent
contractors, officers, directors and interest holders of Franchisee, or any
entity having an interest in Franchisee to have access to and to use some or all
of the Trade Secrets in the management and operation of Franchisee's business
using the System; and
WHEREAS, Franchisee has agreed to obtain from those individuals and
entities written agreements protecting the Trade Secrets and the System against
unfair competition; and
WHEREAS, Covenantor wishes to remain, or wishes to become, employed by or
associated with Franchisee; and
WHEREAS, Covenantor wishes and needs to receive and use the Trade Secrets
in the course of his employment or association in order to effectively perform
his services for Franchisee; and
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<PAGE>
WHEREAS, Covenantor acknowledges that receipt of and the right to use the
Trade Secrets constitutes independent valuable consideration for the
representations, promises and covenants made by Covenantor herein;
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, the parties agree as follows:
Confidentiality Agreement
1. Franchisor and/or Franchisee shall disclose to Covenantor some or all
of the Trade Secrets relating to the System. All information and materials,
including, without limitation, any manuals, drawings, specifications, techniques
and compilations of data which Franchisor provides to Franchisee and/or
Covenantor shall be deemed confidential Trade Secrets for the purposes of this
Agreement.
2. Covenantor shall receive the Trade Secrets in confidence and shall, at
all times, maintain them in confidence, and use them only in the course of his
employment by or association with Franchisee and then only in connection with
the development and/or operation by Franchisee of a Restaurant using the System
for so long as Franchisee is licensed by Franchisor to use the System.
3. Covenantor shall not at any time make copies or translations of any
documents or compilations containing some or all of the Trade Secrets without
Franchisor's express written permission.
4. Covenantor shall not at any time disclose or permit the disclosure of
the Trade Secrets except to other employees of Franchisee and only to the
limited extent necessary to train or assist other employees of Franchisee in the
development or operation of a Restaurant using the System.
5. Covenantor shall surrender any material containing some or all of the
Trade Secrets to Franchisee or Franchisor, upon request, or upon termination of
employment by or association with Franchisee, or upon conclusion of the use for
which such information or material may have been furnished to Covenantor.
6. Covenantor shall not at any time, directly or indirectly, do any act or
omit to do any act that would or would likely be injurious or prejudicial to the
goodwill associated with the Trade Secrets and the System.
7. All manuals are loaned by Franchisor to Franchisee for limited purposes
only and remain the property of Franchisor and may not be reproduced, in whole
or in part, without Franchisor's written consent.
Covenants Not to Compete
1. In order to protect the goodwill and unique qualities of the System and
the confidentiality and value of the Trade Secrets, and in consideration for the
disclosure to Covenantor of the Trade Secrets, Covenantor further agrees and
covenants as follows:
a. Not to divert, or attempt to divert, directly or indirectly, any
business, business opportunity, or customer of the Franchisee's Restaurant to
any competitor.
b. Not to employ, or seek to employ, any person who is at the time
(or has been within the preceding twelve (12) months) employed by Franchisor, or
any of its Affiliates, or any Franchisee or developer of Franchisor, or
otherwise directly or indirectly induce such person to leave that person's
employment except as may occur in connection with Franchisee's employment of
such person if permitted under the Franchise Agreement.
c. Except with respect to the Restaurant described in the Franchise
Agreement and other restaurants operated under Franchise Agreements between
Franchisee and its Affiliates, and Franchisor or its Affiliates, not to directly
or indirectly, for himself or through, on behalf of, or in conjunction with any
person, partnership or corporation, without the prior written consent of
Franchisor, own, maintain, operate, engage in, or have any financial or
beneficial interest in
D-2
<PAGE>
(including any interest in corporations, partnerships, trusts, unincorporated
associations or joint ventures), advise, assist or make loans to, any business
at any location, within the United States or any foreign jurisdiction where
Franchisor or its Affiliates have registered or sought to register any of the
Proprietary Marks, that is of a character and concept similar to the Restaurant,
including (i)a casual dining restaurant business, as such market segment is
defined is pursuant to then-current industry standards, and (ii) any food
service business which offers pizza as a primary menu item.
2. In further consideration for the disclosure to Covenantor of the Trade
Secrets and to protect the uniqueness of the System, Covenantor agrees and
covenants that for two (2) years following the earlier of the expiration,
termination or transfer of all of Franchisee's interest in the Franchise
Agreement or the termination of his employment by or association with
Franchisee, Covenantor will not without the prior written consent of Franchisor:
a. Divert, or attempt to divert, directly or indirectly, any
business, business opportunity or customer of the Restaurant to any competitor.
b. Employ, or seek to employ, any person who is at the time (or has
been within the preceding twelve (12) months) employed by Franchisor, or any of
its Affiliates, or any franchisee or developer of Franchisor, or otherwise
directly or indirectly induce such persons to leave that person's employment.
c. Except with respect to other restaurants operated under Franchise
Agreements between Franchisee and its Affiliates, and Franchisor or its
Affiliates, directly or indirectly, for himself or through, on behalf of or in
conjunction with any person, partnership or corporation, own, maintain, operate,
engage in or have any financial or beneficial interest in (including any
interest in corporations, partnerships, trusts, unincorporated associations or
joint ventures), advise, assist or make loans to, any business that is of a
character and concept similar to the Restaurant, including (i) a casual dining
restaurant business, as such market segment is defined pursuant to then-current
industry standards, and (ii) any food service business which offers pizza as a
primary menu item; which business is, or is intended to be, located within the
Assigned Area, as such term is defined in the Franchise Agreement (and as
described in the map attached thereto), or within a ten (10)- mile radius of the
location of any Pizzeria Uno restaurant or other Pizzeria Unto food service
facility in existence or under construction (or where land has been purchased or
a lease executed for the construction of a Pizzeria Uno restaurant or other
Pizzeria Uno food service facility) as of the earlier of (i) the expiration or
termination of, or the transfer of all of Franchisee's interest in, the
Franchise Agreement; or (ii) the time Covenantor ceases to be employed by or
associated with Franchisee, as applicable.
Miscellaneous
1. Franchisee shall make all commercially reasonable efforts to ensure
that Covenantor acts as required by this Agreement.
2. Covenantor agrees that in the event of a breach of this Agreement,
Franchisor would be irreparably injured and be without an adequate remedy at
law. Therefore, in the event of such a breach, or threatened or attempted breach
of any of the provisions hereof, Franchisor shall be entitled to enforce the
provisions of this Agreement and shall be entitled, in addition to any other
remedies which are made available to it at law or in equity, including the right
to terminate the Franchise Agreement, to a temporary and/or permanent injunction
and a decree for the specific performance of the terms of this Agreement,
without the necessity of showing actual or threatened harm, likelihood of
success on the merits of the claims and without being required to furnish a bond
or other security.
3. Covenantor agrees to pay all expenses (including court costs and
reasonable attorneys' fees) incurred by Franchisor and Franchisee in enforcing
this Agreement.
4. Any failure by Franchisor or the Franchisee to object to or take action
with respect to any breach of any provision of this Agreement by Covenantor
shall not operate or be construed as a waiver of or consent to that breach or
any subsequent breach by Covenantor.
D-3
<PAGE>
5. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF MASSACHUSETTS WITHOUT REFERENCE TO CHOICE OF LAW
PRINCIPLES. COVENANTOR HEREBY IRREVOCABLY SUBMITS HIMSELF TO THE JURISDICTION OF
MASSACHUSETTS COURTS LOCATED IN SUFFOLK COUNTY, MASSACHUSETTS. COVENANTOR HEREBY
WAIVES ALL QUESTIONS OF PERSONAL JURISDICTION OR VENUE FOR THE PURPOSE OF
CARRYING OUT THIS PROVISION. COVENANTOR HEREBY AGREES THAT SERVICE OF PROCESS
MAY BE MADE UPON HIM IN ANY PROCEEDING RELATING TO OR ARISING UNDER THIS
AGREEMENT OR THE RELATIONSHIP CREATED BY THIS AGREEMENT BY ANY MEANS ALLOWED BY
MASSACHUSETTS LAW. COVENANTOR FURTHER AGREES THAT VENUE FOR ANY PROCEEDING
RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE SUFFOLK COUNTY,
MASSACHUSETTS; PROVIDED, HOWEVER, WITH RESPECT TO ANY ACTION WHICH INCLUDES
INJUNCTIVE RELIEF OR OTHER EXTRAORDINARY RELIEF, FRANCHISOR OR FRANCHISEE MAY
BRING SUCH ACTION IN ANY COURT WHICH HAS JURISDICTION.
6. The parties acknowledge and agree that each of the covenants contained
herein are reasonable limitations as to time, geographical area, and scope of
activity to be restrained and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of Franchisor. The
parties agree that each of the foregoing covenants shall be construed as
independent of any other covenant or provision of this Agreement. If all or any
portion of a covenant in this Agreement is held unreasonable or unenforceable by
a court or agency having valid jurisdiction in any unappealed final decision to
which Franchisor is a party, Covenantor expressly agrees to be bound by any
lesser covenant subsumed within the terms of such covenant that imposes the
maximum duty permitted by law, as if the resulting covenant were separately
stated in and made a part of this Agreement.
7. This Agreement contains the entire agreement of the parties regarding
the subject matter hereof. This Agreement may be modified only by a duly
authorized writing executed by all parties.
8. All notices and demands required to be given hereunder shall be in
writing and shall be sent by personal delivery, expedited delivery service,
certified or registered mail, return receipt requested, first-class postage
prepaid, facsimile, telegram or telex (provided that the sender confirms the
facsimile, telegram or telex by sending an original confirmation copy by
certified or registered mail or expedited delivery service within three (3)
Business Days after transmission), to the respective parties at the following
addresses unless and until a different address has been designated by written
notice to the other parties.
If directed to Franchisor, the notice shall be addressed to:
Pizzeria Uno Corporation
100 Charles Park Road
West Roxbury, Massachusetts 02132-4985
Attention: General Counsel
Facsimile: (617) 323-7170
If directed to Franchisee, the notice shall be addressed to:
_______________________________________________
_______________________________________________
_______________________________________________
Attention:______________________________
Facsimile:______________________________
D-4
<PAGE>
If directed to Covenantor, the notice shall be addressed to:
_______________________________________________
_______________________________________________
_______________________________________________
Attention:______________________________
Facsimile:______________________________
Any notice shall be deemed to have been given at the time of personal
delivery or receipt, or in the case of facsimile, telegram or telex, upon
transmission (provided confirmation is sent as described above); provided,
however, that if delivery is rejected, delivery shall be deemed to have been
given at the time of such rejection. Any change in the foregoing addresses shall
be effected by giving fifteen (15) days written notice of such change to the
other parties. A "Business Day" for the purpose of this Agreement means any day
other than Saturday, Sunday or holidays provided for under the applicable
federal law. If the date on which such Payment would otherwise be due is not a
Business Day, then Payment shall be due on the next Business Day.
9. The rights and remedies of Franchisor under this Agreement are fully
assignable and transferable and shall inure to the benefit of its respective
Affiliates, successors and assigns. The respective obligations of Franchisee and
Covenantor hereunder may not be assigned by Franchisee or Covenantor, without
the prior written consent of Franchisor.
10. Franchisor shall be a third party beneficiary of this Agreement with
the independent right to enforce the terms hereunder.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
witnessed by their signatures below.
FRANCHISEE:
By:____________________________________________
Name:__________________________________________
Title:_________________________________________
COVENANTOR:
By:____________________________________________
Name:__________________________________________
D-5
<PAGE>
Attachment E
SOFTWARE LICENSE AGREEMENT
This Software License Agreement ("Software License") is entered into
between Pizzeria Uno Corporation ("Franchisor") and
________________________________________("Franchisee") pursuant to a Franchise
Agreement dated ______________, 19__ ("Franchise Agreement") under which
Franchisee will operate a full-service Pizzeria Uno restaurant (the
"Restaurant") located at _____________________________________________.
1. Franchisor hereby grants to Franchisee a nonexclusive, nonassignable
license to use the computer programs, in object code form ("Software"), listed
in the schedule to this Software License. The schedule may be updated from time
to time by Franchisor to include enhancements, upgrades or replacements
("Enhancements") to the Software, which Franchisor will make available to
Franchisee from time to time at a reasonable cost.
2. Franchisee shall use the Software only in the operation of the
Restaurant at the location of the Restaurant indicated above or other locations
approved or designated by Franchisor. Franchisee may not modify, copy,
translate, or reproduce in any form all or any part of the Software without the
prior written consent of Franchisor, and in such event solely to the extent
required for use of the Software in the operation of the Restaurant. Franchisee
shall not make available the Software, the user and operating manuals thereto,
or any copy thereof to any party except as described below in Paragraph 4.
Franchisee shall not reverse assemble, reverse compile or otherwise recreate the
Software.
3. All copies of the Software, including any produced by Franchisee with
Franchisor's consent, are and shall be the sole and exclusive property of
Franchisor or authorized third parties during and after the term of this
Software License. Franchisee acknowledges and agrees that Franchisor may secure
all or any part of the Software from third parties. Franchisee agrees to execute
and deliver to Franchisor any further contracts, agreements or other documents
reasonably required by Franchisor in order to secure its compliance with any
agreement with such other parties.
4. Franchisee understands and acknowledges that the Software contains
Franchisor's trade secrets and agrees, during the term of this Software License
and thereafter, not to communicate, divulge or use the Software other than in
the operation of the Restaurant by Franchisee and its employees. Franchisee
shall divulge and allow access to the Software only to its employees who must
have access to it in connection with their employment in the Restaurant. At
Franchisor's request, Franchisee shall require and obtain execution of covenants
concerning the confidentiality of the Software from any persons employed by
Franchisee who have access to the Software. These covenants shall be in a form
substantially similar to the confidentiality covenants contained in Attachment D
to the Franchise Agreement.
5. Franchisee shall exercise reasonable precautions, no less rigorous than
those Franchisee uses to protect its own Confidential Information, to protect
the confidentiality of the Software and the user and operating manuals thereto,
which precautions shall include, at a minimum, giving instructions to
Franchisee's employees who will have access to the Software and the user and
operating manuals thereto that the same are proprietary to, and the trade
secrets of, Franchisor or such third parties. Franchisee shall not remove or
alter any designations that Franchisor or such third parties have included in
the Software and the user and operating manuals thereto that indicate such
material is the proprietary property of Franchisor or such third parties.
6. Franchisee agrees to notify Franchisor immediately of the existence of
any unauthorized knowledge, possession or use of the Software or of any part
thereof.
7. Franchisee acknowledges and agrees that the Software and user and
operating manuals thereto are the valuable property and trade secrets of
Franchisor or other authorized parties, that any violation by Franchisee of the
provisions of this Software License would cause Franchisor or such other parties
irreparable injury for which they would
E-1
<PAGE>
have no adequate remedy at law, and that, in addition to any other remedies
which Franchisor may have, it shall be entitled to preliminary and other
injunctive relief against any such violation.
8. The term of this Software License shall be co-extensive with the term
of the Franchise Agreement, including any renewal of the Franchise Agreement.
9. Expiration or termination of the Franchise Agreement for whatever
reason shall automatically terminate this Software License and the right granted
by it to use the Software, without notice to Franchisee. If Franchisor's license
to any of the Software secured from third parties should terminate, then this
Software License shall automatically terminate as to such Software and
Franchisee shall comply with the provisions of Paragraph 10 in connection with
such Software. In addition, Franchisor may terminate this Software License upon
the failure by Franchisee to comply with any of the terms and conditions herein,
by giving Franchisee written notice of termination stating the nature of the
breach at least thirty (30) days prior to the effective date of termination;
provided that Franchisee may avoid termination by immediately initiating a
remedy to cure such default and curing it to Franchisor's satisfaction within
the thirty (30)-day period and by promptly providing proof thereof to
Franchisor. If any such default is not cured within that time, or such longer
period as applicable law may require, this Software License shall terminate
without further notice to Franchisee effective immediately upon expiration of
the thirty (30)-day period or such longer period as applicable law may require.
10. Upon the expiration or termination of this Software License or upon
the expiration or termination of the Franchise Agreement, whichever shall occur
earlier, Franchisee shall immediately deliver to Franchisor all copies of the
Software then in Franchisee's possession or control and erase the Software from
Franchisee's computer system, and shall immediately cease to use the Software.
11. Franchisor will replace without charge any copies of the Software
provided under this Software License which have defects in materials and
workmanship that are not caused by Franchisee's misuse or unauthorized
modification of the Software. This replacement shall be Franchisee's sole and
exclusive remedy as to the Software.
12. EXCEPT FOR THE LIMITED WARRANTY DESCRIBED ABOVE, THERE ARE NO
WARRANTIES GRANTED TO FRANCHISEE OR ANY OTHER PERSON OR ENTITY FOR THE SOFTWARE,
EXPRESSED OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, THE IMPLIED WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE; ALL SUCH WARRANTIES ARE
EXPRESSLY AND SPECIFICALLY DISCLAIMED.
13. FRANCHISEE IS SOLELY RESPONSIBLE FOR DETERMINING ITS DESIRED RESULTS
FROM THE USE OF THE SOFTWARE, FOR EVALUATING THE SOFTWARE'S CAPABILITIES AND FOR
SUCCESSFULLY OPERATING THE SOFTWARE. IN NO EVENT SHALL FRANCHISOR BE RESPONSIBLE
FOR ANY DIRECT, INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR OTHER DAMAGES,
OR FOR LOST DATA OR LOST PROFITS TO FRANCHISEE OR ANY OTHER PERSON OR ENTITY,
WHETHER OR NOT DUE TO FRANCHISOR'S NEGLIGENCE, ARISING OUT OF THE USE OR
INABILITY TO USE THE SOFTWARE, EVEN IF FRANCHISOR HAS BEEN ADVISED OF THE
POSSIBILITY OF SUCH DAMAGE OCCURRING. IN THE EVENT THAT ANY OTHER TERM OF THIS
SOFTWARE LICENSE IS FOUND OR DETERMINED TO BE UNCONSCIONABLE OR UNENFORCEABLE
FOR ANY REASON, THE FOREGOING PROVISION OF WAIVER BY AGREEMENT OF DIRECT,
INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR OTHER DAMAGES OR FOR LOST DATA
OR LOST PROFITS SHALL CONTINUE IN FULL FORCE AND EFFECT.
14. THIS SOFTWARE LICENSE SHALL BE GOVERNED BY AND CONSTRUED UNDER THE
LAWS OF MASSACHUSETTS (EXCEPT FOR MASSACHUSETTS CHOICE OF LAW RULES).
15. If any term herein is declared to be void or unenforceable by a court
of competent jurisdiction, such declaration shall have no effect on the other
terms of this Software License, which will remain in effect and fully
enforceable.
E-2
<PAGE>
16. Franchisee agrees to pay any sales, use, ad valorem, personal property
and general intangibles tax and any registration fees arising out of this
Software License and the transactions contemplated herein, except for any taxes
imposed upon the gross income of Franchisor.
17. In the event the operation of the software requires a dial-up
connection to a remote computer designated or approved by Franchisor, Franchisee
shall be responsible for all tele-communication expenses in connection
therewith.
18. Franchisee may not cause or effectuate a Transfer any of its rights
under this Software License without the prior written consent of Franchisor.
19. Notice under this Software License shall be provided as indicated in
Section XX. of the Franchise Agreement.
20. The terms of this Software License are incorporated into the Franchise
Agreement by reference. This Software License and related provisions of the
Franchise Agreement constitute the entire agreement of the parties with respect
to the subject matter hereof, and supersede all related prior and
contemporaneous agreements between the parties.
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Software License on the _______ day of _________________, 19___.
Pizzeria Uno Corporation
By:___________________________________________
Name:_________________________________________
Title:________________________________________
Franchisee:
By:___________________________________________
Name:_________________________________________
Title:________________________________________
E-3
<PAGE>
SCHEDULE TO SOFTWARE LICENSE AGREEMENT
Software
E-4
<PAGE>
Attachment F
ELECTRONIC FUNDS TRANSFER
AUTHORIZATION TO HONOR CHARGES DRAWN BY AND PAYABLE TO
Pizzeria Uno Corporation/Payee BANK NAME ACCOUNT # ABA#
____________ ___________ _____
The undersigned Depositor hereby authorizes and requests the Depository
designated below to honor and to charge to the following designated account,
checks and electronic debits (collectively, "debits") drawn on such account
which are payable to the above named Payee. It is agreed that Depository's
rights with respect to each such debit shall be the same as if it were a check
drawn and signed by the Depositor. It is further agreed that if any such debit
is not honored, whether with or without cause and whether intentionally or
inadvertently, Depository shall be under no liability whatsoever. This
authorization shall continue in force until Depository and Payee have received
at least thirty (30) days written notification from Depositor of its
termination.
The Depositor agrees with respect to any action taken pursuant to the
above authorization:
(1) To indemnify the Depository and hold it harmless from any loss it may
suffer resulting from or in connection with any debit, including, without
limitation, execution and issuance of any check, draft or order, whether or not
genuine, purporting to be authorized or executed by the Payee and received by
the Depository in the regular course of business for the purpose of payment,
including any costs or expenses reasonably incurred in connection therewith.
(2) To indemnify Payee and the Depository for any loss arising in the
event that any such debit shall be dishonored, whether with or without cause and
whether intentionally or inadvertently.
(3) To defend at Depositor's own cost and expense any action which might
be brought by a depositor or any other persons because of any actions taken by
the Depository or Payee pursuant to the foregoing request and authorization, or
in any manner arising by reason of the Depository's or Payee's participation
therein.
Name of Depository:_______________________________________________________
Name of Depositor:________________________________________________________
Designated Bank Acct.:____________________________________________________
(Please attach one voided check for the above account.)
Store Location:____________________________________ Store #______________
For information call:_____________________________________________________
Address:_________________________________________________________
Phone #:_________________________________________________________
Fax #:___________________________________________________________
__________________________________________________________________________
Name of Franchisee/Depositor (please print)
By:_______________________________________________________________________
Signature and Title of Authorized Representative
Date:___________
F-1
<PAGE>
Attachment G
GUARANTY
As an inducement to Pizzeria Uno Corporation, a Delaware corporation
("Franchisor") to execute the foregoing Franchise Agreement with ______________
("Franchisee") dated ____________, 19____, the undersigned jointly and severally
agree to be bound by all the terms and conditions of the above Franchise
Agreement, including any amendments or modifications thereto whenever made (the
"Agreement") and unconditionally and irrevocably guarantee to Franchisor and its
successors and assigns that all of the obligations of franchisee under the
Agreement will be punctually paid and performed.
Upon default by Franchisee or notice from Franchisor, the undersigned will
immediately make each payment and perform each obligation required of Franchisee
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 Franchisee, or
settle, adjust or compromise any claims against Franchisee.
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 Franchisee, any default by Franchisee or any
guarantor, and any release of any guarantor or other security for the Agreement
or the obligations of Franchisee.
Franchisor may pursue its rights against the undersigned without first
exhausting its remedies against Franchisee or any guarantor 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.
THIS GUARANTY SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES
THEREOF. ANY DISPUTE ARISING OUT OF OR UNDER THIS GUARANTY NOT SETTLED BY
AGREEMENT SHALL BE SETTLED IN ACCORDANCE WITH SECTION XIX.B OF THE AGREEMENT.
The undersigned have signed this Guaranty this ____ day of ___________,
199__.
GUARANTORS:
__________________________________________
Name:_____________________________________
__________________________________________
Name:_____________________________________
__________________________________________
Name:_____________________________________
__________________________________________
Name:_____________________________________
__________________________________________
Name:_____________________________________
G-1
<PAGE>
Attachment H
CHRONOLOGICAL TABLE OF SELECTED EVENTS
<TABLE>
<CAPTION>
ITEM TIME SECTION
---- ---- -------
<S> <C> <C>
Payment of Initial Franchise Fee Execution of Franchise Agreement IV.A.
Designation of Operating Principal Execution of Franchise Agreement Attachment C
(and Designee, if applicable);
Designation of General Manager
Acquisition of Insurance Execution of Franchise Agreement X.A.
Submission of Proposed Site 6 months following execution of III.A.(1)
Franchise Agreement
Approval or Disapproval of 30 days after receipt of information III.A.(3)
Proposed Site by Licensor
Execution of Lease or Other 60 days following Franchisor's III.B.
Acquisition of Approved Site approval of the site
Approval or Disapproval of Proposed 30 days after receipt of III.C.
Lease or Contract to Purchase proposed lease or contract
Approval or Disapproval of Proposed 30 days after receipt of plans III.E.
Architectural Plans by Franchisor
Submission of Notice of Completion 30 days prior to scheduled III.F.
of Construction completion of construction
Completion of Initial Training By At least 8 weeks prior to XI.E.(1)
Operating Principal and Managers opening date
Opening of Restaurant As agreed by parties Attachment A
Payment of Royalty Fee and On or before 15th day of each month IV.B.(1); VII.D.
Advertising Fees
Expiration of Term 15 Years from Opening Date or the II.A.
Expiration or Termination of
Operator's Right to Possess the
Restaurant Premises
</TABLE>
H-1
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF CALIFORNIA
This Franchise Agreement between _______________________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
_________________________, 19___ (the "Agreement") shall be amended by the
addition of the following language, which shall be considered an integral part
of the Agreement:
CALIFORNIA LAW MODIFICATIONS
1. The California Department of Corporations requires that certain
provisions contained in franchise documents be amended to be consistent with
California law, including the California Franchise Investment Law, CAL. BUS. &
PROF. CODE Section 31000 et seq., and the California Franchise Relations Act,
CAL. BUS. & PROF. CODE Section 20000 et seq. To the extent that the Agreement
contains provisions that are inconsistent with the following, such provisions
are hereby amended:
a. If the Agreement contains a provision regarding termination
and nonrenewal that is inconsistent with California Business
and Professions Code Sections 20000 through 20043 and the
Federal Bankruptcy Code, these laws will control.
b. If the Agreement requires Franchisee to execute a release of
claims, such release shall exclude claims arising under the
California Franchise Investment Law and the California
Franchise Relations Act.
c. If the Agreement requires Franchisee to pay liquidated damages
that are inconsistent with California Civil Code Section 1671,
such law shall prevail.
d. If the Agreement contains a covenant not to compete which
extends beyond the expiration or termination of the Agreement,
the covenant may be unenforceable under California law.
e. If the Agreement requires litigation, arbitration, or
mediation to be conducted in a forum other than the State of
California, the requirement may be unenforceable under
California law.
f. If the Agreement requires that it be governed by a state's
law, other than the State of California, such requirement may
be unenforceable.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the California law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
-2-
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF HAWAII
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
HAWAII LAW MODIFICATIONS
1. The Director of the Hawaii Department of Commerce and Consumer Affairs
requires that certain provisions contained in franchise documents be amended to
be consistent with Hawaii law, including the Hawaii Franchise Investment Law,
Hawaii Revised Statutes, Title 26, Chapter 482E-1 Through 482E-12 (1988). To the
extent that the Agreement contains provisions that are inconsistent with the
following, such provisions are hereby amended:
a. The Hawaii Franchise Investment Law provides rights to
Franchisee concerning nonrenewal, termination and transfer of
the Agreement. If the Agreement contains a provision that is
inconsistent with the Law, the Law will control. Among those
rights, the Law may require that upon termination or
nonrenewal Franchisor repurchase for fair market value
Franchisee's inventory, supplies, equipment and furnishings
purchased from Franchisor or a supplier designated by
Franchisor, provided that personalized materials which have no
value to Franchisor need not be repurchased. If the
non-renewal or termination is for the purpose of converting
Franchisee's business to one owned and operated by Franchisor,
Franchisor may, additionally, be obligated to compensate
Franchisee for loss of goodwill. Franchisor may deduct all
amounts due from Franchisee and any costs related to the
transportation or disposition of items repurchased against any
payment for those items. If the parties cannot agree on the
fair market value, fair market value shall be determined in
the manner set forth in the Agreement. If the Agreement does
not provide for determination of the fair market value of
assets for purchase by Franchisor, such amount shall be
determined by an independent appraiser approved by both
parties, and the costs of the appraisal shall be shared
equally by the parties.
b. If the Agreement requires Franchisee to execute a release of
claims, such release shall exclude claims arising under the
Hawaii Franchise Investment Law.
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<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the Hawaii Franchise Investment Law
applicable to the provision are met independent of this Amendment. This
Amendment shall have no force or effect if such jurisdictional requirements are
not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
-2-
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT AND OFFERING CIRCULAR
FOR THE STATE OF ILLINOIS
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
ILLINOIS LAW MODIFICATIONS
1. The Illinois Attorney General's Office requires that certain
provisions contained in franchise documents be amended to be consistent
with Illinois law, including the Franchise Disclosure Act of 1987, Ill.
Rev. Stat. ch. 815 para. 705/1 - 705/44 (1994). To the extent that the
Agreement contains provisions that are inconsistent with the following,
such provisions are hereby amended:
a. Illinois Franchise Disclosure Act paragraphs 705/19 and
705/20 provide rights to Franchisee concerning
nonrenewal and termination of the Agreement. If the
Agreement contains a provision that is inconsistent with
such provisions of the Act, the Act will control.
b. If the Agreement requires Franchisee to execute a
release of claims or to acknowledge facts that would
negate or remove from judicial review any statement,
misrepresentation or action that would violate the Act,
or a rule or order under the Act, such release shall
exclude claims arising under the Illinois Franchise
Disclosure Act, and such acknowledgments shall be void
and are hereby deleted with respect to claims under the
Act.
c. If the Agreement requires litigation to be conducted in
a forum other than the State of Illinois, the
requirement shall be void with respect to claims under
the Illinois Franchise Disclosure Act.
d. If the Agreement requires that it be governed by a
state's law, other than the State of Illinois, to the
extent that such law conflicts with the Illinois
Franchise Disclosure Act, the Act will control.
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<PAGE>
e. The second sentence of Section XXIV.A. of the Agreement
is void with respect to claims under the Illinois
Franchise Disclosure Act.
f. Section XXIV.C. of the Agreement is void with respect to
claims under the Illinois Franchise Disclosure Act.
g. The last sentence of the second paragraph in Item 19 is
void in accordance with Section 26 of the Illinois
Franchise Disclosure Act.
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the Illinois Franchise
Disclosure Act, with respect to each such provision, are met independent
of this Amendment. This Amendment shall have no force or effect if such
jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
-2-
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF INDIANA
This Franchise Agreement between __________________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
_____________________, 19___ (the "Agreement") shall be amended by the addition
of the following language, which shall be considered an integral part of the
Agreement:
INDIANA LAW MODIFICATIONS
1. The Indiana Securities Commissioner requires that certain
provisions contained in franchise documents be amended to be consistent
with Indiana law, including the Indiana Franchises Act, Ind. Code Ann.
ss.ss. 1 - 51 (1994) and the Indiana Deceptive Franchise Practices Act,
Ind. Code Ann. ss. 23-2-2.7 (1985). To the extent that the Agreement
contains provisions that are inconsistent with the following, such
provisions are hereby amended:
a. If the Agreement contains a provision regarding
termination and nonrenewal that is inconsistent with
these provisions of the Indiana Deceptive Franchise
Practices Act, the Act will control.
b. If the Agreement requires Franchisee to execute a
release of claims or to acknowledge facts that would
negate or remove from judicial review any statement,
misrepresentation or action that would violate the Act,
or a rule or order under the Act, such release shall
exclude claims arising under the Indiana Deceptive
Franchise Practices Act and the Indiana Franchises Act,
and such acknowledgments shall be void with respect to
claims under the Acts.
c. If the Agreement contains covenants not to compete upon
expiration or termination of the Agreement that are
inconsistent with the Indiana Deceptive Franchise
Practices Act, the requirements of the Act will control.
d. The Indiana Deceptive Franchise Practices Act provides
that substantial modification of the Agreement by
Franchisor requires written consent of the Franchisee.
If the Agreement contains provisions that are
inconsistent with this requirement, the Act will
control.
e. If the Agreement requires litigation to be conducted in
a forum other than the State of Indiana, the requirement
may be unenforceable as a limitation on litigation under
the Indiana Deceptive Franchise Practices Act ss.
23-2-2.7(10).
f. If the Agreement requires that it be governed by a
state's law, other than the State of Indiana, to the
extent that such law conflicts with the Indiana
Deceptive Franchise Practices Act and the Indiana
Franchises Act, the Acts will control.
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the Indiana Deceptive
Franchise Practices Act and the Indiana Franchises Act, with respect to
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
each such provision, are met independent of this Amendment. This Amendment
shall have no force or effect if such jurisdictional requirements are not
met.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representative as of the
date first above written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
-2-
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF MARYLAND
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
MARYLAND LAW MODIFICATIONS
1. The Maryland Securities Division requires that certain provisions
contained in franchise documents be amended to be consistent with Maryland
law, including the Maryland Franchise Registration and Disclosure Law, Md.
Code Ann., Bus. Reg. ss.ss. 14-201 - 14-233 (1994). To the extent that
this Agreement contains provisions that are inconsistent with the
following, such provisions are hereby amended:
a. If the Agreement requires Franchisee to execute a
release of claims or to acknowledge facts that would
negate or remove from judicial review any statement,
misrepresentation or action that would violate the Law,
or a rule or order under the Law, such release shall
exclude claims arising under the Maryland Franchise
Registration and Disclosure Law, and such
acknowledgments shall be void with respect to claims
under the Law.
b. If the Agreement requires litigation to be conducted in
a forum other than the State of Maryland, the
requirement shall not be interpreted to limit any rights
Franchisee may have under Sec. 14-216 (c)(25) of the
Maryland Franchise Registration and Disclosure Law to
bring suit in the state of Maryland.
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the Maryland Franchise
Registration and Disclosure Law, with respect to each such provision,
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<PAGE>
are met independent of this Amendment. This Amendment shall have no force
or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by its duly authorized representative as of the
date first above written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT AND OFFERING CIRCULAR
FOR THE STATE OF MINNESOTA
This Franchise Agreement between _____________________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
_____________________, 19___ (the "Agreement") shall be amended by the addition
of the following language, which shall be considered an integral part of the
Agreement:
MINNESOTA LAW MODIFICATIONS
1. The Commissioner of Commerce for the State of Minnesota requires that
certain provisions contained in franchise documents be amended to be consistent
with Minnesota Franchise Act, Minn. Stat. Section 80.01 et seq., and of the
Rules and Regulations promulgated under the Act (collectively the "Franchise
Act"). To the extent that the Agreement and Offering Circular contain provisions
that are inconsistent with the following, such provisions are hereby amended:
a. The Minnesota Department of Commerce requires that Franchisor
indemnify Minnesota franchisees against liability to third
parties resulting from claims by third parties that the
Franchisees' use of the Intellectual Properties infringes
trademark rights of the third party. If the Agreement contains
a provision that is inconsistent with the Franchise Act, the
provisions of the Agreement shall be superseded by the Act's
requirements and shall have no force or effect.
b. Franchise Act, Sec. 80C.14, Subd. 4., requires, except in
certain specified cases, that a franchisee be given written
notice of a franchisor's intention not to renew 180 days prior
to expiration of the franchise and that the franchisee be
given sufficient opportunity to operate the franchise in order
to enable the franchisee the opportunity to recover the fair
market value of the franchise as a going concern. If the
Agreement contains a provision that is inconsistent with the
Franchise Act, the provisions of the Agreement shall be
superseded by the Act's requirements and shall have no force
or effect.
c. Franchise Act, Sec. 80C.14, Subd. 3., requires, except in
certain specified cases that a franchisee be given 90 days
notice of termination (with 60 days to cure). If the Agreement
contains a provision that is inconsistent with the Franchise
Act, the provisions of the Agreement shall be superseded by
the Act's requirements and shall have no force or effect.
d. If the Agreement requires Franchisee to execute a release of
claims or to acknowledge facts that would negate or remove
from judicial review any statement, misrepresentation or
action that would violate the Franchise Act, such release
shall exclude claims arising under the Franchise Act, and such
acknowledgments shall be void with respect to claims under the
Act.
e. If the Agreement requires that it be governed by a state's
law, other than the State of Minnesota, those provisions shall
not in any way abrogate or reduce any rights of the Franchisee
as provided for in the Franchise Act, including the right to
submit matters to the jurisdiction of the courts of Minnesota.
f. Section 2860.4400J Minn. Rules prohibits Franchisor from
requiring Franchisee, through the Agreement, to waive its
rights to any procedures or remedies provided for by the laws
of Minnesota or to consent to liquidated damages. If the
Agreement contains a provision that is inconsistent with such
Rules, the provisions of the Agreement shall be superseded by
the Rule's requirements and shall have no force or effect.
g. Franchise Act, Sec. 80C.17, Subd. 5 provides that no action
may be commenced under the Franchise Act more than 3 years
after the cause of action accrues. If the Agreement contains a
provision that is inconsistent with the Franchise Act, the
provisions of the Agreement shall be superseded by the Act's
requirements and shall have no force or effect.
<PAGE>
2. Each provision of this Agreement shall be effective only to the extent
that the jurisdictional requirements of the Minnesota law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
-2-
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF NEW YORK
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
NEW YORK LAW MODIFICATIONS
1. The New York Department of Law requires that certain provisions
contained in franchise documents be amended to be consistent with New York
law, including the General Business Law, Article 33, Sections 680 through
695 (1989). To the extent that the Agreement contains provisions that are
inconsistent with the following, such provisions are hereby amended:
a. If the Agreement requires Franchisee to execute a release of
claims or to acknowledge facts that would negate or remove
from judicial review any statement, misrepresentation or
action that would violate the General Business Law, or any
regulation, rule or order under the Law, such release shall
exclude claims arising under the New York General Business
Law, Article 33, Section 680 through 695 and the regulations
promulgated thereunder, and such acknowledgments shall be
void. It is the intent of this provision that non-waiver
provisions of Sections 687.4 and 687.5 of the General Business
Law be satisfied.
b. If the Agreement requires that it be governed by a state's
law, other than the State of New York, the choice of law
provision shall not be considered to waive any rights
conferred upon the Franchisee under the New York General
Business Law, Article 33, Sections 680 through 695.
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<PAGE>
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the New York General
Business Law, with respect to each such provision, are met independent of
this Amendment. This Amendment shall have no force or effect if such
jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF NORTH DAKOTA
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
NORTH DAKOTA LAW MODIFICATIONS
1. The North Dakota Securities Commissioner requires that certain
provisions contained in franchise documents be amended to be consistent
with North Dakota law, including the North Dakota Franchise Investment
Law, North Dakota Century Code Annotated Chapter 51-19, Sections 51-19-01
through 51-19-17 (1993). To the extent that the Agreement contains
provisions that are inconsistent with the following, such provisions are
hereby amended:
a. If the Franchisee is required in the Agreement to
execute a release of claims or to acknowledge facts that
would negate or remove from judicial review any
statement, misrepresentation or action that would
violate the Law, or a rule or order under the Law, such
release shall exclude claims arising under the North
Dakota Franchise Investment Law, and such
acknowledgments shall be void with respect to claims
under the Law.
b. Covenants not to compete during the term of and upon
termination or expiration of the Agreement are
enforceable only under certain conditions according to
North Dakota law. If the Agreement contains a covenant
not to compete which is inconsistent with North Dakota
law, the covenant may be unenforceable.
c. If the Agreement requires litigation to be conducted in
a forum other than the State of North Dakota, the
requirement is void with respect to claims under the
North Dakota Franchise Investment Law.
d. If the Agreement requires that it be governed by a
state's law, other than the State of North Dakota, to
the extent that such law conflicts with the North Dakota
Franchise Investment Law, the North Dakota Franchise
Investment Law will control.
e. If the Agreement requires mediation or arbitration to be
conducted in a forum other than the State of North
Dakota, the requirement may be unenforceable under the
North Dakota Franchise Investment Law. Arbitration
involving a franchise purchased in the State of North
Dakota must be held either in a location mutually agreed
upon prior to the arbitration or if the parties cannot
agree on a location, the location will be determined by
the arbitrator.
f. If the Agreement requires payment of a termination
penalty, the requirement may be unenforceable under the
North Dakota Franchise Investment Law.
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<PAGE>
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the North Dakota Franchise
Investment Law, with respect to each such provision, are met independent
of this Amendment. This Amendment shall have no force or effect if such
jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF RHODE ISLAND
This Franchise Agreement between ("Franchisee") and Pizzeria Uno
Corporation ("Franchisor") dated _____________________, 19___ (the "Agreement")
shall be amended by the addition of the following language, which shall be
considered an integral part of the Agreement:
RHODE ISLAND LAW MODIFICATIONS
1. The Rhode Island Securities Division requires that certain
provisions contained in franchise documents be amended to be consistent
with Rhode Island law, including the Franchise Investment Act, R.I. Gen.
Law. ch. 395 Sec. 19-28.1-1 -19-28.1-34. To the extent that this Agreement
contains provisions that are inconsistent with the following, such
provisions are hereby amended:
a. If this Agreement requires litigation to be conducted in
a forum other than the State of Rhode Island, the
requirement is void under Rhode Island Franchise
Investment Act Sec. 19-28.1-14.
b. If this Agreement requires that it be governed by a
state's law, other than the State of Rhode Island, to
the extent that such law conflicts with Rhode Island
Franchise Investment Act it is void under Sec.
19-28.1-14.
c. If the Franchisee is required in this Agreement to
execute a release of claims or to acknowledge facts that
would negate or remove from judicial review any
statement, misrepresentation or action that would
violate the Act, or a rule or order under the Act, such
release shall exclude claims arising under the Rhode
Island Franchise Investment Act, and such
acknowledgments shall be void with respect to claims
under the Act.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the Rhode Island Franchise
Investment Act, with respect to each such provision, are met independent
of this Amendment. This Amendment shall have no force or effect if such
jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
-2-
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF SOUTH DAKOTA
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
SOUTH DAKOTA LAW MODIFICATIONS
1. The Director of the South Dakota Division of Securities requires
that certain provisions contained in franchise documents be amended to be
consistent with South Dakota law, including the South Dakota Franchises
for Brand-Name Goods and Services Law, South Dakota Codified Laws, Title
37, Chapter 37-5A-1 through 37-5A-87 (1994). To the extent that the
Agreement contains provisions that are inconsistent with the following,
such provisions are hereby amended:
a. If the Franchisee is required in the Agreement to
execute a release of claims or to acknowledge facts that
would negate or remove from judicial review any
statement, misrepresentation or action that would
violate the Law, or a rule or order under the Law, such
release shall exclude claims arising under the South
Dakota Franchises for Brand-Name Goods and Services Law,
and such acknowledgments shall be void with respect to
claims under the Law.
b. Covenants not to compete upon termination or expiration
of the Agreement are generally unenforceable in the
state of South Dakota, except in certain limited
instances as provided by law. If the Agreement contains
a covenant not to compete which is inconsistent with
South Dakota law, the covenant may be unenforceable.
c. Regardless of the terms of the Agreement concerning
termination, if Franchisee fails to meet performance and
quality standards or fails to make any royalty payments
under the Agreement, Franchisee will be afforded thirty
(30) days' written notice with an opportunity to cure
the default before termination.
d. If the Agreement requires payment of liquidated damages
that are inconsistent with South Dakota law, the
liquidated damage clauses may be void under SDCL 53-9-5.
e. If the Agreement requires litigation to be conducted in
a forum other than the State of South Dakota, the
requirement is void with respect to any cause of action
otherwise enforceable under South Dakota Law.
f. If the Agreement requires that it be governed by a state
law, other than the State of South Dakota, matters
regarding franchise registration, employment, covenants
not to compete, and other issues of local concern will
be governed by the laws of the State of South Dakota;
but as to contractual and all other matters, the
Agreement and all provisions of this Amendment will be
and remain subject to the application, construction,
enforcement, interpretation under the governing law set
forth in the Agreement.
g. If the Agreement requires that disputes between
Franchisor and Franchisee be mediated/arbitrated at a
location that is outside the State of South Dakota, the
mediation/arbitration will be conducted at a location
mutually agreed upon by the parties. If the parties
cannot agree on location for the mediation/arbitration,
the location shall be determined by the
mediator/arbitrator selected.
<PAGE>
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the South Dakota Franchise
Investment Law, with respect to each such provision, are met independent
of this Amendment. This Amendment shall have no force or effect if such
jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
-2-
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO
FRANCHISE AGREEMENT
FOR THE STATE OF WASHINGTON
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
WASHINGTON LAW MODIFICATIONS
1. The Director of the Washington Department of Financial Institutions
requires that certain provisions contained in franchise documents be amended to
be consistent with Washington law, including the Washington Franchise Investment
Protection Act, WA Rev. Code ss.ss. 19.100.010 to 19.100.940 (1991). To the
extent that the Agreement contains provisions that are inconsistent with the
following, such provisions are hereby amended:
a. The Washington Franchise Investment Protection Act provides
rights to Franchisee concerning nonrenewal and termination of
the Agreement. If the Agreement contains a provision that is
inconsistent with the Act, the Act will control.
b. If the Agreement requires Franchisee to execute a release of
claims, such release shall exclude claims arising under the
Washington Franchise Investment Protection Act; except when
the release is executed under a negotiated settlement after
the Agreement is in effect and where the parties are
represented by independent counsel. If there are provisions in
the Agreement that unreasonably restrict or limit the statute
of limitations period for claims brought under the Act, or
other rights or remedies under the Act, those provisions may
be unenforceable.
c. If the Agreement requires litigation, arbitration, or
mediation to be conducted in a forum other than the State of
Washington, the requirement may be unenforceable under
Washington law. Arbitration involving a franchise purchased in
the State of Washington, must either be held in the State of
Washington or in a place mutually agreed upon at the time of
the arbitration, or as determined by the arbitrator.
d. If the Agreement requires that it be governed by a state's
law, other than the State of Washington, and there is a
conflict between the law and the Washington Franchise
Investment Protection Act, the Washington Franchise Investment
Protection Act will control.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the Washington law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
FOR THE STATE OF WISCONSIN
This Franchise Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
___________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
WISCONSIN LAW MODIFICATIONS
1. The Securities Commissioner of the State of Wisconsin requires that
certain provisions contained in franchise documents be amended to be consistent
with Wisconsin Fair Dealership Law, Wisconsin Statutes, Chapter 135 ("Fair
Dealership Law"). To the extent that the Agreement contains provisions that are
inconsistent with the following, such provisions are hereby amended:
a. The Wisconsin Fair Dealership Law, among other things, grants
Franchisee the right, in most circumstances, to 90 days' prior
written notice of non-renewal and 60 days within which to
remedy any claimed deficiencies. If the Agreement contains a
provision that is inconsistent with the Wisconsin Fair
Dealership Law, the provisions of the Agreement shall be
superseded by the Law's requirements and shall have no force
or effect.
b. If the Agreement requires that it be governed by a state's
law, other than the State of Wisconsin, to the extent that any
provision of the Agreement conflicts with the Wisconsin Fair
Dealership Law such provision shall be superseded by the law's
requirements.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the Wisconsin law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed by its duly authorized representative as of the date first above
written.
FRANCHISOR:
Pizzeria Uno Corporation,
a Delaware corporation
ATTEST:
By:_________________________________________
____________________________ Name:_______________________________________
Witness Title:______________________________________
FRANCHISEE:
____________________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
By:_________________________________________
_____________________________ Name:_______________________________________
Witness Title:______________________________________
<PAGE>
THE CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Franchise agreement and
acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Franchise agreement are in partial consideration
for, and a condition to, the granting of this license, and that Franchisor would
not have granted this license without the execution of this Guaranty and such
undertakings by each of the undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Franchise agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Franchisee and Operating Principal
set forth in the Franchise agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
____________________________ ____________________________________________
Witness Name:_______________________________________
<PAGE>
PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
<PAGE>
PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
-----------------------------
TABLE OF CONTENTS
Page
----
I. DEFINITIONS............................................................1
II. GRANT AND TERM.........................................................4
III. FEES AND PAYMENTS......................................................5
IV. SCHEDULE AND MANNER FOR EXERCISING DEVELOPMENT RIGHTS..................6
V. PREREQUISITES TO OBTAINING FRANCHISES..................................8
VI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEVELOPER.................8
VII. CONFIDENTIALITY AND NONCOMPETITION COVENANTS..........................11
VIII. TRANSFER OF INTEREST..................................................13
IX. CONSENTS AND NONWAIVER................................................17
X. INDEPENDENT CONTRACTOR................................................17
XI. DEFAULT, REMEDIES AND TERMINATION.....................................17
XII. INDEMNIFICATION.......................................................20
XIII. MEDIATION AND LITIGATION..............................................21
XIV. NOTICES...............................................................23
XV. SEVERABILITY AND CONSTRUCTION.........................................23
XVI. ENTIRE AGREEMENT......................................................24
XVII. ACKNOWLEDGMENTS.......................................................25
ATTACHMENT A - FORM OF FRANCHISE AGREEMENT
ATTACHMENT B - CONFIDENTIALITY AGREEMENT AND ANCILLARY COVENANTS NOT TO
COMPETE
ATTACHMENT C - STATEMENT OF OWNERSHIP INTERESTS AND DEVELOPER'S PRINCIPALS
ATTACHMENT D - TERRITORY
ATTACHMENT E - GUARANTY
<PAGE>
PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
This Development Agreement (the "Agreement") is made and entered into this
____ day of _____________, 19__, between Pizzeria Uno Corporation, a Delaware
corporation ("Franchisor"), and _________________________________ ("Developer").
WITNESSETH:
WHEREAS, Franchisor, as the result of the expenditure of time, skill,
effort and money, has developed and owns a distinctive System (as hereinafter
defined) relating to the establishment and operation of full-service facilities
featuring "Chicago Style" deep dish pizza and other products;
WHEREAS, the distinguishing characteristics of the System include, without
limitation, distinctive exterior and interior design, decor, color schemes and
furnishings; special recipes and menu items; uniform standards, specifications
and procedures for operations; quality and uniformity of products and services
offered; procedures for inventory, management and financial controls; training
and assistance; and advertising and promotional programs; all of which may be
changed, improved and further developed by Franchisor in its sole discretion
from time to time;
WHEREAS, Franchisor identifies the System by means of the Proprietary
Marks (as hereinafter defined);
WHEREAS, Franchisor continues to develop, use and control the use of such
Proprietary Marks in order to identify for the public the source of services and
products marketed thereunder and under the System, and to represent the System's
high standards of quality, appearance and service;
WHEREAS, Developer wishes to obtain certain development rights to operate
Restaurants under the System in the territory described in this Agreement;
NOW, THEREFORE, the parties, in consideration of the mutual undertakings
and commitments set forth herein, the receipt and sufficiency of which are
hereby acknowledged, agree as follows:
I. DEFINITIONS
"Additional Restaurants" - Restaurants developed and opened by Developer
under this Agreement in addition to the cumulative total number of Restaurants
which Developer is required to develop and open under the Development Schedule.
"Affiliate" - Any entity that is, directly or indirectly, controlled by,
controlling or under common control with a referenced person or entity.
"Alternative Distribution Site" -(a) A permanent, temporary or seasonal
food service facility (e.g., a kiosk, concession, or multi-brand facility) that
will provide a limited number or representative sample of the products and
services normally offered by, and be located in a smaller facility than, a
Restaurant, including, without limitation, theater concessions, and food court
operations, (b) institutional food service sites (e.g., in-flight meals,
hospital food services, school cafeterias), and (c) hotel restaurants and
in-room hotel dining.
"Attachments" - Attachments A, B, C, D and E to this Agreement.
"Business Day" - For the purpose of this Agreement, means any day other
than Saturday, Sunday or holidays provided for under applicable Federal law.
"Conditions" - Requirements which must have been met before the grant of
the right by Franchisor to develop each Restaurant shall become effective as
follows:
1
<PAGE>
1. "Operational": Developer and its Affiliates are in compliance with the
Development Schedule, this Agreement and any other development agreement
between Developer or its Affiliates and Franchisor or its Affiliates.
Developer is conducting the operation of its existing Restaurants, if any,
and is capable of conducting the operation of the proposed Restaurant (a)
in accordance with the terms and conditions of this Agreement, (b) in
accordance with the provisions of the respective Franchise Agreements, and
(c) in accordance with the standards, specifications, and procedures set
forth and described in the Manuals (defined in the Franchise Agreement),
as such Manuals may be amended from time to time, or otherwise in writing.
2. "Financial": Developer and the Controlling Principals satisfy
Franchisor's then-current financial criteria for developers and
controlling principals of Pizzeria Uno restaurants with respect to
Developer's operation of its existing Restaurants, if any, and the
proposed Restaurant. No Event of Default relating to any monetary
obligations owed to Franchisor or its Affiliates under this Agreement, any
Franchise Agreement or other agreement between Developer or any of its
Affiliates and Franchisor or any of its Affiliates either has (I) occurred
and is continuing or (ii) occurred during the twelve (12) months preceding
Developer's request for consent, whether or not such Event of Default was
cured or curable.
3. "Legal": Developer has submitted to Franchisor, in a timely manner, all
information and documents requested by Franchisor prior to and as a basis
for the issuance of individual licenses or pursuant to any right granted
to Developer by this Agreement or by any Franchise Agreement, and has
taken such additional actions in connection therewith as may be requested
by Franchisor from time to time. Developer and the Controlling Principals
have been and are faithfully performing all terms and conditions of this
Agreement, each of the existing Franchise Agreements and any other
agreement among Franchisor, Developer or any of their respective
Affiliates.
4. "Ownership": Neither Developer nor any of its Controlling Principals
(as applicable) shall have transferred a Controlling Interest in
Developer. The Developer and Controlling Principals upon whom Franchisor
has relied to perform the duties under this Agreement shall continue to
own and exercise control over a Controlling Interest in Developer.
"Confidential Information" - Any and all information, knowledge, know-how,
methods, trade secrets, techniques, and materials used in or related to the
Restaurants or the System which Franchisor may provide to Developer in
connection with this Agreement, including, but not limited to, the Manuals,
plans and specifications, marketing information and strategies, and site
evaluation, selection information and techniques, recipes, and other information
communicated in writing and through other means, including, without limitation,
electronic media (e.g., CD From, Internet, computer disk or video and audio
tape).
"Controlling Interest" - (a) If Developer is a corporation, that the
Controlling Principals, either individually or cumulatively, (I) directly or
indirectly own at least fifty-one percent (51%) of the shares of each class of
Developer's issued and outstanding capital stock and (ii) be entitled, under its
governing documents and under any agreements among the shareholders, to cast a
sufficient number of votes to require such corporation to take or omit to take
any action which such corporation is required to take or omit to take under this
Agreement, or (b) if Developer is a partnership, that the Controlling
Principals, either individually or cumulatively, (I) own at least a fifty-one
percent (51%) interest in the operating profits and operating losses of the
partnership as well as at least a fifty-one percent (51%) ownership interest in
the partnership (and at least a fifty-one percent (51%) interest in the shares
of each class of capital stock of any corporate general partner) and (ii) be
entitled, under its partnership agreement or applicable law, to act on behalf of
the partnership without the approval or consent of any other partner or be able
to cast a sufficient number of votes to require the partnership to take or omit
to take any action which the partnership is required to take or omit to take
under this Agreement.
"Controlling Principals" - Includes, collectively and individually, the
Developer's Principals who have been designated by Franchisor as Controlling
Principals hereunder. The initial Controlling Principals shall be listed on
Attachment C.
"Deceased" - Developer (if a natural person) or any Controlling Principal
(if a natural person) if such person has died during the Term.
2
<PAGE>
"Developer's Principals" - Includes, collectively and individually,
Developer's spouse, (if Developer is an individual), all officers and directors
of Developer (including the officers and directors of any general partner) whom
Franchisor designates as Developer's Principals and all holders of an ownership
interest in Developer or its Affiliates. The initial Developer's Principals
shall be listed on Attachment C.
"Development Periods" - Time periods designated in the Development
Schedule during which Developer must establish and begin operation of the number
of Restaurants described in the Development Schedule.
"Development Schedule" - Schedule setting forth the Development Periods
and the number of Restaurants which must be established within each Development
Period.
"Event of Default" - Violation or breach by Developer or any of the
Controlling or other Principals, as applicable, of any warranty, representation,
agreement or obligation described in this Agreement, any amendment hereof or
successor hereto or any Franchise Agreement or other agreement between Developer
or its Affiliates and Franchisor or its Affiliates. Events of Default include,
but are not limited to, those described in Sections XI.A. and B. or Attachment
B.
"Extension Date" - Date ending an additional thirty (30) days following
the expiration of the applicable Development Period, including any previous
extensions thereof.
"Former Employer" - Franchisor, its Affiliates or any developer or
operator operating under the System which, at the time or in the previous twelve
(12) months, employed an individual in a restaurant managerial position, a
multi-unit supervisory position or headquarters staff position (e.g., officer or
director level personnel, management information systems personnel or human
resources personnel), or key hourly employee position (e.g., trainers, training
team members, and opening team members) who was subsequently hired by Developer
or a Controlling Principal.
"Guaranty" - The guaranty of Franchisor's obligations under this Agreement
by Controlling Principals, jointly and severally, as described on the
Controlling Principals' signature page.
"Travel Expenses" - Costs and expenses incurred by or assessed in
connection with travel in or activities of Franchisor's employees, agents and/or
representatives in the Territory, including, without limitation, hotel/lodging,
local transportation, meals, and a per diem charge determined by Franchisor in
advance, with respect to other incidental expenses incurred by Franchisor's
employees, agents and/or representatives including, without limitation, laundry
and/or telephone expenses.
"Indemnitees" - Franchisor, its Affiliates, successors and assigns and
each of such entity's respective officers, directors, shareholders, partners,
employees, agents, representatives and independent contractors.
"Losses and Expenses" - Includes, without limitation, all losses,
compensatory, exemplary, incidental, consequential or punitive damages, fines,
charges, costs, expenses, lost profits, legal fees, court costs, settlement
amounts, judgments, compensation for damages to Franchisor's reputation and
goodwill, costs of or resulting from delays, financing, costs of advertising
material and media time/space and costs of changing, substituting or replacing
the same, and any and all expenses of recall, refunds, compensation, public
notices and other such amounts incurred in connection with the matters
described.
"Franchise Agreement" - A Pizzeria Uno Corporation Franchise Agreement.
The current form of Franchise Agreement is attached as Attachment A.
"Operating Principal" - The individual or any replacement designated by
Developer to serve as the Operating Principal of Developer who Developer
acknowledges and agrees shall act as Developer's representative, and shall have
the authority to act on behalf of Developer, during the term of this Agreement.
The initial Operating Principal shall be listed on Attachment C.
"Payments" - Any amount, including, but not limited to, fees,
contributions and reimbursements that Developer is required to pay to Franchisor
under this Agreement.
3
<PAGE>
"Permanent Disability" - Any physical, emotional or mental injury, illness
or incapacity which would prevent a person from performing the obligations set
forth in this Agreement or in the Guaranty made part of this Agreement for at
least ninety (90) consecutive days and from which condition recovery within
ninety (90) days from the date of determination of disability is unlikely.
"Projected Opening Date" - The date agreed to by Developer and Franchisor,
as set forth in the applicable Franchise Agreement for the opening of each
Restaurant.
"Proprietary Marks" -Trade names, service marks, trademarks, emblems and
indicia of origin, including, but not limited to, the marks "Pizzeria Uno(R)"
and "Uno(R)" and such other trade names, service marks and trademarks as are now
designated (and may hereafter be designated by Franchisor in writing) for use in
connection with the Restaurants and the System.
"Publicly-Held Corporation" - A corporation whose equity securities (or a
portion of them) are currently being publicly traded on any recognized stock
exchange or otherwise pursuant to applicable law.
"Reserved Area" -Any school campuses and facilities, transportation
facilities (e.g., airports, train stations, bus terminals, port authorities),
hospitals and other health care facilities, and temporary or periodic mass
gathering locations (e.g., stadiums, concert halls) or events designated by
Franchisor.
"Restaurant" - The full-service Pizzeria Uno restaurants identified by the
Proprietary Marks and System and established in accordance with this Agreement.
"System" - Franchisor's distinctive system relating to the establishment
and operation of full-service facilities featuring "Chicago Style" deep dish
pizza and other products.
"Taxes" - Any withholding, value-added, remittance or other taxes, duties
or other amounts (except taxes measured by Franchisor's net income) that may be
imposed upon payments to be made by Developer to Franchisor or its Affiliates.
"Term" - Time period commencing upon the date of this Agreement and
expiring (I) on the date that Developer has successfully developed the
Restaurants in accordance with Sections IV.B.(1) and (3) but (ii) not later than
the expiration of last Development Period.
"Territory" - The area described in Attachment D.
"Transfer" - Any sale, assignment, transfer, conveyance, pledge,
hypothecation or encumbrance of any interest in this Agreement, in Developer
(including any existing or new securities) or Developer's assets, whether
directly or indirectly made, attempted or completed.
"Two-Year Time Period" - With respect to Developer, two (2) years
commencing upon the date of expiration, termination (regardless of the cause for
termination) or Transfer of this Agreement; or, with respect to Controlling
Principals, two (2) years commencing upon the earlier of: (i) the expiration,
termination of, or Transfer of this Agreement or (ii) the time such individual
or entity ceases to satisfy the definition of Controlling Principals under this
Agreement.
II. GRANT AND TERM
A. In reliance on the representations and warranties of Developer and its
Controlling Principals, Franchisor hereby grants to Developer and Developer
hereby accepts, pursuant to the terms and conditions of this Agreement, the
right and obligation to develop a minimum of ( ) Restaurants described in the
Development Schedule solely within the Territory.
B. Except as provided in this Agreement, for so long as no Event of
Default has occurred and is continuing, neither Franchisor nor its Affiliates
shall establish or authorize any other person or entity, other than Developer,
to establish a Restaurant in the Territory during the Term. Notwithstanding the
above, Developer and Controlling Principals acknowledge and agree that
Franchisor and its Affiliates operate restaurants under the mark "Pizzeria
Uno(R)" and under
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other names and marks, and further agree and acknowledge that the right granted
hereby is only for the operation of a Restaurant. Franchisor and its Affiliates
retain all other rights, including the right to at any time conduct (or
authorize a third party to conduct) the following activities, regardless of
proximity to, or the competitive effect on, the Territory or the Assigned Area
(as defined in the Franchise Agreement) of any restaurant operated by Developer:
(1) advertise and promote the System and fill customer orders by providing
catering and delivery services in the Territory; (2) offer and sell collateral
and ancillary products and services which may be similar to those offered by the
Pizzeria Uno restaurants in the Territory if offered and sold other than through
a Pizzeria Uno restaurant, including, without limitation, pre-packaged food
products, wearables and other Pizzeria Uno memorabilia; (3) offer and sell such
products and services under the Proprietary Marks in the Territory through any
Alternative Distribution Sites; (4) operate a Pizzeria Uno restaurant in any
Reserved Area; (5) offer and sell products and services under any other names
and marks; and (6) establish and operate a Pizzeria Uno restaurant anywhere
outside the Territory.
C. Unless sooner terminated or extended in accordance with this Agreement,
the Term and all rights granted by Franchisor under this Agreement shall expire
on the date on which Developer successfully and in a timely manner has exercised
all of the development rights and completed the development obligations under
this Agreement in accordance with Sections IV.B(1) and (3) but not later than
the expiration of last Development Period.
III. FEES AND PAYMENTS
A. Developer shall pay to Franchisor a development fee of ________
($________) immediately upon execution of this Agreement. Seventeen Thousand
Five Hundred Dollars ($17,500) of the development fee shall be applied toward
the initial franchise fee due Franchisor under each Franchise Agreement executed
pursuant hereto, provided, however that in no event shall Franchisor apply the
development fee toward such initial franchise fees for Additional Restaurants.
The development fee is non-refundable and payable in consideration of the costs
and expenses incurred by Franchisor (I) in searching, applying for, prosecuting,
contesting, acquiring and maintaining the Proprietary Marks, and (ii) for
services of attorneys, accountants, brokers, representatives and other
professionals engaged in connection with this Agreement, related agreements and
transactions or other matters related thereto.
B. Developer shall pay to Franchisor immediately upon execution of this
Agreement, a Franchise Agreement fee in the amount of Thirty Five Thousand
Dollars ($35,000) for the first Restaurant to be developed under this Agreement.
Except as otherwise provided herein, all Franchise Agreement fees are deemed
fully earned upon payment thereof and are nonrefundable. Such Franchise
Agreement fee shall be credited to the Franchise Agreement fee due under such
Franchise Agreement.
C. Any Payment to Franchisor hereunder shall be made free and clear and
without deduction for any Taxes.
D. Developer shall not withhold Payments under this Agreement on grounds
of alleged nonperformance by Franchisor hereunder nor shall Developer set off
any such payments against amounts owing or allegedly owing by Franchisor to
Franchisee. Any Payment not actually received by Franchisor on or before the
date due shall be deemed overdue. TIME IS OF THE ESSENCE with respect to all
Payments. All unpaid obligations under this Agreement shall bear interest, from
the date due until Payment is received by Franchisor, at the U.S. federal funds
market interest rate, plus three percent (3%) per annum, or the maximum rate
allowed by applicable law, whichever is less. Such interest shall be in addition
to any other remedies Franchisor may have. Notwithstanding anything to the
contrary contained herein, no provision of this Agreement shall require the
payment or permit the collection of interest in excess of the maximum rate
allowed by applicable law. If any excess of interest is provided for herein, or
shall be adjudicated to be so provided in this Agreement, the provisions of this
paragraph shall govern and prevail, and neither Developer nor its Principals
shall be obligated to pay the excess amount of such interest. If for any reason
interest in excess of the maximum rate allowed by applicable law shall be deemed
charged, required or permitted, any such excess shall be applied as a payment
and reduction of any other amounts which may be due and owing hereunder, and if
no such amounts are due and owing hereunder then such excess shall be repaid to
the party that paid such interest.
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IV. SCHEDULE AND MANNER FOR EXERCISING DEVELOPMENT RIGHTS
A. Developer shall exercise the development rights granted hereunder only
by entering into a separate Franchise Agreement with Franchisor for each
Restaurant for which a development right is granted. Such Franchise Agreement
shall be the then-current form offered by Franchisor. The Franchise Agreement to
be executed for the first Restaurant to be developed by Developer under this
Agreement shall be executed and delivered to Franchisor concurrently with the
execution and delivery of this Agreement and shall be in the form of the
Franchise Agreement attached as Attachment A. All subsequent Restaurants
developed under this Agreement shall be established and operated pursuant to the
form of Franchise Agreement then being used by Franchisor for new franchisees of
Pizzeria Uno restaurants under the System. These franchise agreements shall also
be included in the term "Franchise Agreement" as used in this Agreement and
shall be executed by Developer in accordance with Section IV.C. The then-current
form of Franchise Agreement may differ substantially from the form attached.
B. (1) Acknowledging that TIME IS OF THE ESSENCE, and subject to the
requirements of Section V., Developer shall exercise its development rights
according to Section IV.A. and according to the Development Schedule:
<TABLE>
<CAPTION>
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Cumulative Total Number of Restaurants
Development Located in the Territory Which Developer
Period Expiration Date of Development Period Shall Have Open and in Operation
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<S> <C> <C>
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</TABLE>
(2) During any of the Development Periods, subject to the terms and
conditions of this Agreement, Developer may develop, with Franchisor's prior
written consent (which consent may be withheld in its sole discretion), more
than the total minimum number of Restaurants which Developer is required to
develop during that Development Period. Any Restaurants developed during a
Development Period in excess of the minimum number of Restaurants required to be
developed upon expiration of that Development Period shall be applied to satisfy
Developer's development obligation during the next succeeding Development
Period, if any.
(3) Developer may open, with Franchisor's prior written consent
(which consent may be withheld in its sole discretion), Additional Restaurants
if (i) Developer develops and has open and operating all of the Restaurants
required to be developed under the Development Schedule prior to the expiration
of the last Development Period; (ii) Developer notifies Franchisor of its desire
to open Additional Restaurants prior to completion of the development and
opening of all of the Restaurants required to be developed under the Developmen
t Schedule; (iii) Developer and Franchisor agree upon a Projected Opening Date
for each Additional Restaurant; (iv) Developer opens at least one Additional
Restaurant during each twelve (12) month period following completion of the
development and opening of all of the Restaurants required to be developed under
the Development Schedule; (v) any Additional Restaurant is open prior to
expiration of last Development Period; and (vi) Developer pays to Franchisor, at
the time Developer notifies Franchisor of its desire to open any Additional
Restaurant, an additional non-refundable pre-paid Franchise Agreement fee of
Thirty-Five Thousand Dollars
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($35,000) for each Additional Restaurant. Notwithstanding the above, the Term of
this Agreement shall expire no later than the end of the last Development Period
set forth in the Development Schedule.
(4) If, during the Term, Developer ceases to operate any Restaurant
developed under this Agreement for any reason, Developer shall develop a
replacement Restaurant to fulfill Developer's obligation to have open and in
operation the required number of Restaurants as required. The replacement
Restaurant shall be open and operating upon a date to be agreed upon by the
parties; provided, however, in no event shall such date exceed one hundred
eighty (180) days after the date of closing of the Restaurant to be replaced.
The replacement Restaurant shall be operated pursuant to the same Franchise
Agreement as executed for the Restaurant which Developer ceased to operate and
the Term of such Franchise Agreement shall not be extended except as otherwise
consented to in writing by Franchisor in its sole discretion. Developer shall
pay Travel Expenses incurred by Franchisor or its designee associated with the
"reopening" of such replacement Restaurant. From the date any Restaurant ceases
to operate until the date the replacement Restaurant opens for business,
Developer shall pay to Franchisor a monthly fee of two percent (2%) of the
average monthly Gross Sales (as defined in the Franchise Agreement) of the
closed Restaurant during the twelve (12) month period (or such shorter period if
the Restaurant was open less than twelve (12) months) prior to closing.
Developer shall also pay to Franchisor a replacement fee to reimburse Franchisor
for its costs related to such replacement Restaurant in an amount specified by
Franchisor, which amount shall not be less than Five Thousand Dollars ($5,000).
(5) Developer shall open each Restaurant developed hereunder and
shall commence business in accordance with the Development Schedule. If
Developer wishes to obtain an extension of the Development Period, Developer
may, subject to Franchisor's consent, obtain from Franchisor not more than two
(2) extensions of any Development Period as may be necessary to complete
construction and commence operation of such Restaurant. Each extension shall be
for an additional thirty (30) day period commencing upon the expiration of the
applicable Development Period, including any previous extensions thereof. If an
extension of a Development Period is granted by Franchisor, the Projected
Opening Date shall be extended to the Extension Date, if necessary. No extension
of any Development Period shall affect the duration of any other Development
Period or any of Developer's other development obligations. If an extension is
requested in the final Development Period, the Term shall not be extended. To
request such an extension, Developer shall notify Franchisor in writing at least
sixty (60) days prior to the Projected Opening Date of the Restaurant for which
Developer will be unable to complete construction and commence operation by the
expiration date of the Development Period in which such Restaurant was to have
been opened. In such notice Developer shall include a description of the reasons
for such failure to develop in a timely manner and the expected date of
completion of construction and opening. At the same time Developer provides
Franchisor with such notice, Developer shall pay an extension fee equal to a
twelfth (12th) of the average annual royalties payable by a franchised
Restaurant immediately during the preceding calendar year.
C. Developer acknowledges that the projected opening dates ("Projected
Opening Dates") for each Restaurant set forth below are reasonable and
consistent with the requirements of the Development Schedule and Franchise
Agreements. Subject to Developer's compliance with Section V. hereof, Developer
shall execute a Franchise Agreement for each Restaurant at or prior to the
applicable execution date ("Execution Date") set forth below which Franchisor
and Licensor agree and acknowledge shall be a date no later than twelve (12)
months prior to the Projected Opening Date for the applicable Restaurant.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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Restaurant Projected Opening Date Execution Date
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V. PREREQUISITES TO OBTAINING FRANCHISES
A. Developer and the Controlling Principals understand and acknowledge
that the rights and duties set forth in this Agreement are inextricably
intertwined, are personal to Developer and its Controlling Principals (as
applicable), are non-delegable, and that Franchisor has granted such rights in
reliance on the business skill, financial capacity, personal character of, and
expectations of performance of the duties hereunder by, Developer and the
Controlling Principals. Developer and the Controlling Principals represent to
Franchisor that they have entered this Agreement for the purpose and with the
intention to fully comply with the obligations hereunder and not for the purpose
of reselling the development rights granted herein. Developer and the
Controlling Principals understand and agree that this Agreement does not confer
upon Developer a right to develop or franchise to operate any Restaurant, but is
intended by the parties to set forth the terms and conditions which, if fully
satisfied by Developer, shall entitle Developer to obtain the right to develop
and operate each Restaurant under an Franchise Agreement within the Territory.
B. Developer must satisfy each of the Conditions before the grant of right
by Franchisor to develop each Restaurant shall become effective. If Franchisor
determines, in its sole discretion, that Developer and the Controlling
Principals have satisfied all of the Conditions, then Franchisor shall grant to
Developer the right to develop each Restaurant pursuant to the Development
Schedule. The Conditions shall survive the termination or expiration of this
Agreement and shall apply with respect to any Franchise Agreement executed
pursuant to this Agreement.
VI. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEVELOPER
Developer and the Controlling Principals, as applicable, make the
following representations, warranties and covenants and accept the following
obligations:
A. (1) If Developer is a corporation or a partnership, Developer
represents, warrants and covenants that:
(a) Developer is duly organized and validly existing under the
law of its formation;
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(b) Developer is duly qualified and is authorized to do
business in each jurisdiction in which its business activities or the nature of
the properties owned by it require such qualification;
(c) Developer's corporate charter or written partnership
agreement shall at all times provide that the activities of Developer are
confined exclusively to the development and operation of Pizzeria Uno
restaurants, unless otherwise consented to by Franchisor in writing;
(d) Developer shall not use the Proprietary Marks as part of
its corporate or other legal name, and shall obtain Franchisor's consent to any
change in corporate or other legal name prior to applying for or filing it with
the applicable government authority;
(e) The execution of this Agreement and the performance of the
transactions contemplated hereby are within Developer's corporate power or
permitted under Developer's written partnership agreement, as applicable, and
have been duly authorized by Developer;
(f) If Developer is a corporation, copies of Developer's
Articles of Incorporation, Bylaws, other governing documents, any amendments
thereto, resolutions of the Board of Directors authorizing entry into and
performance of this Agreement, and any certificates, buy-sell agreements or
other documents restricting the sale or Transfer of stock of the corporation,
and any other documents as may be reasonably required by Franchisor, shall have
been furnished to Franchisor prior to the execution of this Agreement; or, if
Developer is a partnership, copies of Developer's written partnership agreement,
any buy-sell agreements or other documents restricting the sale or transfer of
interests in the partnership, and any other governing documents and any
amendments thereto have been furnished to Franchisor, including evidence of
consent or approval of the entry into and performance of this Agreement by the
requisite number or percentage of partners, if such approval or consent is
required by Developer's written partnership agreement;
(g) The ownership interests in Developer are accurately and
completely described in Attachment C;
(h) If Developer is a corporation, Developer shall maintain at
all times a current list of all owners of record and all beneficial owners of
any class of securities in Developer; or, if Developer is a partnership,
Developer shall maintain at all times a current list of all owners of an
interest in the partnership (Developer shall immediately provide a copy of the
updated list to Franchisor upon the occurrence of any change of ownership and
otherwise make its list of owners available to Franchisor upon request);
(i) If, after the execution of this Agreement, any person
ceases to qualify as one of the Developer's Principals or if any individual
succeeds to or otherwise comes to occupy a position which would, upon
designation by Franchisor, qualify him as one of Developer's Principals,
Developer shall notify Franchisor within five (5) days after any such change
and, upon designation of such person by Franchisor as one of Developer's
Principals or as a Controlling Principal, as the case may be, Developer and the
Controlling Principals shall cause such person to execute such documents and
instruments (including, as applicable, this Agreement) as may be required by
Franchisor to be executed by others in such positions;
(j) If Developer is a corporation, Developer shall maintain
stop-transfer instructions against the Transfer on its records of any of its
equity securities and each stock certificate representing stock of the
corporation shall have conspicuously endorsed upon it a statement in a form
satisfactory to Franchisor that it is held subject to all restrictions imposed
upon Transfers by this Agreement; provided, however, that the requirements of
this Section VI shall not apply to the Transfer of equity securities of a
Publicly-Held Corporation. If Developer is a partnership, its written
partnership agreement shall provide that ownership of an interest in the
partnership is held subject to all restrictions imposed upon Transfers by this
Agreement;
(k) (i) Developer and, at Franchisor's request, each of the
Controlling Principals, have provided Franchisor with the most recent financial
statements of Developer and such Controlling Principals. At Franchisor's
request, Developer and each Controlling Principal shall provide an annual
balance sheet and income statement in a form prescribed by Franchisor (which may
be unaudited, unless otherwise requested or required by Franchisor) within
twenty (20) days after Franchisor's request. Developer shall prepare all
financial statements and reports required under this Agreement and any Franchise
Agreement using the same fiscal months and years as used by Franchisor, which
Franchisor may change from time
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<PAGE>
to time upon written notice to Developer. Any financial statements provided
hereunder shall fairly represent the financial position of Developer and each of
the Controlling Principals, as applicable, at the dates indicated therein and
with respect to Developer, the results of its operations and its cash flow for
the year then ended.
(ii) Each of the financial statements mentioned above
shall be certified as true, complete and correct by Developer's Treasurer or
Chief Financial Officer or the Controlling Principal, as applicable, and shall
have been prepared in conformity with generally accepted accounting principles
(unless otherwise agreed upon by Franchisor, and in such case, substantially
comparable to generally accepted accounting principles) applicable to the
respective periods involved and, except as expressly described in the applicable
notes, applied on a consistent basis.
(iii) No material liabilities, adverse claims,
commitments or obligations of any nature exist as of the date of this Agreement,
whether accrued, unliquidated, absolute, contingent or otherwise, which are not
reflected as liabilities on the financial statements of Developer or such
Controlling Principals;
(l) Developer shall maintain at all times, during the Term,
sufficient working capital to fulfill its obligations under this Agreement.
(m) Developer shall cause each of the Developer's Principals,
except the Controlling Principals, to execute and bind themselves to the
confidentiality and noncompetition covenants set forth in the Confidentiality
Agreement and Ancillary Covenants Not to Compete which forms Attachment B to
this Agreement (see Section VII.I.) and shall provide Franchisor with executed
copies of such covenants within thirty (30) days after execution thereof. Each
Controlling Principals shall jointly and severally guarantee Developer's and the
Controlling Principals' performance of all of Developer's obligations, covenants
and agreements described in this Agreement pursuant to the terms and conditions
of the Guaranty contained herein, and shall otherwise bind themselves to the
terms of this Agreement as stated herein by executing this Agreement as a
Controlling Principal.
(n) Developer and the Controlling Principals acknowledge and
agree that the representations, warranties and covenants set forth above in
Section VI.A.(1)(a)-(m) are continuing obligations of Developer and the
Controlling Principals, as applicable, and that any failure to comply with such
representations, warranties and covenants shall constitute a material Event of
Default under this Agreement. Developer will cooperate with Franchisor in any
efforts made by Franchisor to verify compliance with such representations,
warranties and covenants.
(2) (a) Upon the execution of this Agreement, Developer shall
designate and retain an individual to serve as the Operating Principal of
Developer. If Developer is an individual, Developer shall perform all
obligations of the Operating Principal. The Operating Principal shall, during
the entire period he serves as such, meet the following qualifications: (i)
devote substantial full time and best efforts to the supervision and conduct of
the business contemplated by this Agreement, and (ii) meet Franchisor's
educational, experience, financial and such other reasonable standards and
criteria for such individual as set forth in the Manuals (as defined in the
Franchise Agreement) or otherwise in writing by Franchisor.
(b) The Operating Principal may, at its option and subject to
the consent of Franchisor, designate an individual to perform the duties and
obligations of Operating Principal described herein; provided, that Operating
Principal shall take all necessary action to ensure that such designee conducts
and fulfills all of the Operating Principal's obligations in accordance with the
terms of this Agreement and Operating Principal shall remain fully responsible
for such performance.
(c) If, during the Term, the Operating Principal or any
designee is not able to continue to serve in the capacity of Operating Principal
or no longer qualifies to act as such in accordance with this Section VI.(2),
Developer shall promptly notify Franchisor and designate a replacement within
thirty (30) days after the Operating Principal or such designee ceases to serve
or be so qualified, such replacement being subject to the same qualifications
and restrictions listed above and to Franchisor's consent. Developer shall
provide for interim management of Developer's business in accordance with this
Agreement until such replacement is so designated.
(3) Developer and the Controlling Principals understand that
compliance by all developers and operators operating under the System with
Franchisor's training, development and operational requirements is an essential
and material element of the System and that Franchisor and the developers and
operators operating under the System consequently
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expend substantial time, effort and expense in training management personnel for
the development and operation of their respective Pizzeria Uno restaurants.
Accordingly, Developer and the Controlling Principals agree that, during the
Term and the Two-Year Time Period, Developer or any Controlling Principal shall
not designate or employ any individual who is at the time, or was within the
preceding twelve (12) months, employed by a Former Employer in a restaurant
managerial position, a multi-unit supervisory position or headquarters staff
position (e.g., officer or director level personnel, management information
systems personnel or human resources personnel), or key hourly employee position
(e.g., trainers, training team members and opening team members).
(a) If Developer or any Principal violates or causes the
violation of this Section VI.A.(3), the Former Employer shall be entitled to be
compensated for the reasonable costs and expenses, of whatever nature or kind,
incurred by Former Employer related to training such employee. The parties
hereto agree that such expenditures may be uncertain and difficult to ascertain
and, therefore, agree that the compensation specified herein reasonably
represents such expenditures and is not a penalty. Accordingly, the parties
agree that the employing Developer or Controlling Principals shall pay to Former
Employer an amount equal to the compensation (including salary, bonuses and
benefits) of such employee for the twelve (12) month period (or such shorter
time, if applicable) immediately prior to the termination of his employment with
such Former Employer. Such amount shall be paid to Former Employer by Developer
or the applicable Controlling Principal, as the case may be, within thirty (30)
days after written notice, unless otherwise agreed with such Former Employer.
The rights to such payment shall be in addition to any other remedies Franchisor
may have under this Agreement or the Franchise Agreements.
(b) The parties hereto expressly acknowledge and agree that no
current or former employee of Franchisor, its Affiliates, Developer, or of any
other entity operating under the System shall be a third party beneficiary of
this Agreement or any provision hereof. Notwithstanding the above, solely for
purposes of bringing an action to collect any payment due under this Section
VI.A.(3), such Former Employer shall be a third-party beneficiary of this
Section VI.A.(3). Franchisor expressly disclaims any representations and
warranties regarding the performance of any employee or former employee of
Franchisor, its Affiliates, or any developer or operator operating under the
System who is designated or employed by Developer or any Controlling Principal
in any capacity, and Franchisor shall not be liable for any losses, of
whatsoever nature or kind, incurred by Developer or any Controlling Principal in
connection therewith.
B. Developer shall comply with all requirements of Federal, state and
local laws, rules, regulations, and orders. Further, Developer shall in all
dealings with its customers, suppliers, and public officials adhere to high
standards of honesty, integrity, fair dealing and ethical conduct.
C. Developer shall additionally refrain from engaging in any action which
will cause Franchisor to be in violation of any applicable law.
D. The Operating Principal (or a substitute attendee approved by
Franchisor) shall attend all annual franchisee conventions designated by
Franchisor. Developer shall be responsible for all expenses of its Operating
Principal (or substitute attendee), including travel, lodging, food and wages,
and shall pay a reasonable registration fee as determined by Franchisor.
E. Developer and the Controlling Principals represent, warrant and
covenant that they shall comply with all other requirements and perform such
other obligations as provided in this Agreement.
VII. CONFIDENTIALITY AND NONCOMPETITION COVENANTS
A. Developer and the Operating Principal covenant that, during the Term,
except as otherwise approved in writing by Franchisor, Developer and the
Operating Principal (or the approved designee for Operating Principal) shall
devote full time, energy and best efforts to carry out the development
activities contemplated under this Agreement.
B. Neither Developer nor any of the Controlling Principals shall, during
the Term and thereafter, communicate or divulge to, or use for the benefit of,
any other person, persons, partnership, association or corporation, and
following the termination or expiration of this Agreement, shall not use for
their own benefit, any Confidential Information. Neither Developer nor the
Controlling Principals shall at any time, without Franchisor's prior written
consent, copy, duplicate, record or otherwise reproduce any Confidential
Information, in whole or in part, nor otherwise make the same available to any
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unauthorized person. The covenant in this Section VII.B shall survive the
expiration, termination or Transfer of this Agreement or any interest herein and
shall be perpetually binding upon Developer and each of the Controlling
Principals.
C. Developer and the Controlling Principals acknowledge that, pursuant to
this Agreement, Developer and the Controlling Principals will receive valuable
training and Confidential Information which are beyond the present skills and
experience of Developer, the Controlling Principals and Developer's managers and
employees. Developer and the Controlling Principals acknowledge that such
specialized training and Confidential Information provide a competitive
advantage and will be valuable to them in the development and operation of the
Restaurants and that gaining access to such specialized training and
Confidential Information is, therefore, a primary reason for entering into this
Agreement. In consideration for such specialized training, Confidential
Information and rights, Developer and the Controlling Principals covenant that,
except as otherwise consented to in writing by Franchisor, with respect to
Developer during the Term (or with respect to each of the Controlling
Principals, during the Term for so long as such individual or entity satisfies
the definition of "Controlling Principals"), neither Developer nor any of the
Controlling Principals shall, either directly or indirectly, for themselves,
through, on behalf of or in conjunction with any person(s), partnership or
corporation: (1) divert, or attempt to divert, any business or customer of the
business described hereunder to any competitor, by direct or indirect inducement
or otherwise, or do or perform, directly or indirectly, any other act injurious
or prejudicial to the goodwill associated with the Proprietary Marks and the
System; or (2) own, maintain, operate, engage in, or have any financial or
beneficial interest in (including any interest in corporations, partnerships,
trusts, unincorporated associations or joint ventures), advise, assist or make
loans to, any business at any location within the United States or any foreign
jurisdiction where Franchisor or its Affiliates have registered or sought to
register any of the Proprietary Marks, that is of a character and concept
similar to the Restaurant, including (i) a casual dining restaurant business, as
such market segment is defined pursuant to then-current industry standards, and
(ii) any food service business which offers pizza as a primary menu item.
D. During the Two-Year Time Period, neither Developer nor any of the
Controlling Principals shall, either directly or indirectly, for themselves or
through, on behalf of or in conjunction with any person(s), partnership or
corporation: (1) divert, or attempt to divert, any business or customer of the
business described hereunder to any competitor, by direct or indirect inducement
or otherwise, or do or perform, directly or indirectly, any other act injurious
or prejudicial to the goodwill associated with Franchisor's Proprietary Marks
and the System; or (2) own, maintain, operate, engage in or have any financial
or beneficial interest in (including any interest in corporations, partnerships,
trusts, unincorporated associations or joint ventures), advise, assist or make
loans to, any business that is of a character and concept similar to the
Restaurant, including (I) a casual dining restaurant business, as such market
segment is defined pursuant to then-current industry standards, and (ii) any
food service business which offers pizza as a primary menu item; which business
is, or is intended to be, located within the Territory or within a ten (10)-mile
radius of the location of any Pizzeria Uno restaurant or Pizzeria Uno food
service facility in existence or under construction (or where land has been
purchased or a lease has been executed for the construction of a Pizzeria Uno
restaurant or other Pizzeria Uno food service facility) as of the earlier of:
(a) the expiration or termination of, or the transfer of all of Developer's
interest in, this Agreement; or (b) the time the Controlling Principal ceases to
satisfy the definition of Developer's Principal, as applicable.
E. Sections VII.C.(2) and D.(2) shall not apply to ownership of less than
a one percent (1%) beneficial interest in the outstanding equity securities of
any Publicly-Held Corporation.
F. The parties acknowledge and agree that each of the covenants contained
herein are (I) reasonable limitations as to time, geographical area, and scope
of activity to be restrained and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of Franchisor and
(ii) shall be construed as independent of any other covenant or provision of
this Agreement. If all or any portion of a covenant in this Section VII. is held
unreasonable or unenforceable by a court or agency having jurisdiction in an
unappealed final decision to which Franchisor is a party, Developer and the
Controlling Principals shall be bound by any lesser covenant subsumed within the
terms of such covenant that imposes the maximum duty permitted by law, as if the
resulting covenant were separately stated in and made a part of this Section.
G. Franchisor shall have the right, in its sole discretion, to reduce the
scope of any covenant set forth in Section VII., or any portion thereof, without
consent, effective immediately upon notice to Developer. Developer and the
Controlling Principals agree that they shall immediately comply with any
covenant as so modified, which shall be fully enforceable notwithstanding the
provisions of Section XVI.
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H. No claim that Developer and any Controlling Principal may have against
Franchisor, whether or not arising from this Agreement, shall constitute a
defense to the enforcement by Franchisor of the covenants in this Section VII.
I. At Franchisor's request, Developer shall require and obtain execution
of covenants substantially in the form set forth in Attachment B from any
personnel of Developer who have received or will have access to Confidential
Information or training from Franchisor. All of Developer's Principals not
required to sign this Agreement as a Controlling Principal also must execute
such covenants. Developer shall provide Franchisor with executed copies of such
covenants within thirty (30) days after execution thereof. At Franchisor's
option and in its sole discretion, such covenants shall either (I) be executed
by Franchisor or (ii) provide that Franchisor is a third party beneficiary with
the independent right to enforce the terms of the covenants. Notwithstanding the
foregoing, Franchisor reserves the right, in its sole discretion, to decrease
the period of time or geographic scope of the noncompetition covenant set forth
in Attachment B or eliminate such noncompetition covenant altogether for any
party that is required to execute such agreement under this Section VII.
J. Developer and the Controlling Principals acknowledge that a violation
of this Section VII would result in irreparable injury to Franchisor for which
no adequate remedy at law may be available, and Developer and the Controlling
Principals accordingly consent to the issuance of an injunction prohibiting any
conduct in violation of this Section VII without the necessity of showing actual
or threatened harm, likelihood of success on the merits of the claims and
without being required to furnish a bond or other security. Developer and the
Controlling Principals agree to pay all court costs and reasonable legal fees
incurred by Franchisor in obtaining specific performance, injunctive relief or
any other remedy available to Franchisor for any violation of the requirements
of this Section VII.
For breach of the covenants in Section VII.B., which are made in
consideration of the specialized training and Confidential Information described
above, and due to the difficulty of establishing the precise amount of damages
for breach of these covenants, in addition to the other remedies provided for in
this Agreement or otherwise available to Franchisor, Developer and Developer's
Principals who committed such breach jointly and severally agree to pay
Franchisor the amount of Five Hundred Thousand Dollars ($500,000) per
occurrence.
For breach of the covenants in Sections VII.C. and VII.D., which are made
in consideration of the specialized training and Confidential Information
described above, and due to the difficulty of establishing the precise amount of
damages for breach of these covenants, in addition to the other remedies
provided for in this Agreement or otherwise available to Franchisor, Developer
and Developer's Principals who committed such breach jointly and severally agree
to pay Franchisor the amount of Five Thousand Dollars ($5,000) per day for each
day the breach continues.
Developer and Developer's Principals agree that each of them shall be
liable under this Section VII regardless of whether the breach was negligently
or willfully caused. The parties agree that the foregoing amounts are a
reasonable estimation of the damages that would be incurred by Franchisor for
breach of such covenants. The parties further agree that Franchisor shall be
entitled to select the damage formulae provided above, or pursue any other right
or remedy provided or permitted by law or this Agreement and that, in any event,
payment to Franchisor of any amount provided for under this paragraph shall not
constitute an election of remedies by Franchisor or excuse to the performance of
Developer's obligations under this Agreement.
VIII. TRANSFER OF INTEREST
A. Franchisor shall have the right to transfer or assign this Agreement
and all or any part of its rights or obligations herein to any person or legal
entity without Developer's consent. Specifically, and without limitation to the
foregoing, Developer expressly affirms and agrees that Franchisor may sell its
assets, the Proprietary Marks or the System to a third party; may offer its
securities privately or publicly; may merge, spin-off, acquire other
corporations, or be acquired by another corporation; may undertake a
refinancing, recapitalization, leveraged buyout or other economic or financial
restructuring; and, with regard to any or all of the above sales, assignments
and dispositions, Developer expressly and specifically waives any claims,
demands or damages against Franchisor arising from or related to the transfer of
the Proprietary Marks (or any variation thereof) or the System from Franchisor
to any other party. Upon any such transfer, the transferee shall be solely
responsible for all obligations and duties arising subsequent to such transfer.
Nothing contained in this Agreement shall require Franchisor to remain in the
business of operating or licensing the operation of Pizzeria Uno restaurants or
other restaurant businesses or to offer any services or products, whether or not
bearing the Proprietary Marks, to Developer, if Franchisor exercises its rights
hereunder to assign its rights in this Agreement.
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B. (1) Developer and the Controlling Principals understand and acknowledge
that the rights and duties set forth in this Agreement are personal to Developer
and that Franchisor has granted such rights in reliance on the business skill,
financial capacity and personal character of Developer and the Controlling
Principals and with the expectation that the duties and obligations contained in
this Agreement will be performed by Developer and those Controlling Principals
signing this Agreement. Accordingly, neither Developer nor any Controlling
Principal, nor any successor or assign of Developer or any Controlling
Principal, shall cause or effectuate a Transfer of any direct or indirect
interest in this Agreement, any interest in Developer, or the assets of
Developer or the Restaurant, without the prior written consent of Franchisor;
provided, however, that Franchisor's prior written consent shall not be required
for a Transfer of less than a one percent (1%) interest in a Publicly-Held
Corporation. Developer and the Controlling Principals acknowledge the importance
of this Section VIII.B.(1) and further acknowledge that any deviation from this
Section VIII.B.(1) will damage Franchisor and the system, which damage is
difficult to quantify. Accordingly, the parties agree that in the event
Developer or the Controlling Principals breach this Section VIII.B.(1),
Developer and the Controlling Principals shall pay to Franchisor as liquidated
damages and not as a penalty, an amount equal to (I) two times the average
annual royalty fees payable by Developer for the two year period immediately
preceding the breach, or Two Hundred Thousand Dollars ($200,000), whichever is
greater. Liquidated damages under this Section VIII.B.(1) shall be paid to
Franchisor within five (5) days of receipt of notice from Franchisor. The
imposition of liquidated damages pursuant to this Section VIII.B.(1) shall be at
Franchisor's option. Franchisor is not required to impose liquidated damages
under this Section VIII.B.(1) and may, in addition or in lieu thereof, pursue
other remedies, including termination of this Agreement pursuant to Section
XI.B.(8). Payment to Franchisor of any amount provided for in this Section
VII.B.(1) shall not constitute an election of remedies by Franchisor of any
amount provided for in this Section VII.B.(1) or an excuse for performance of
Developer's obligations hereunder.
(2) If Developer or any Controlling Principal wishes to cause or
effectuate a Transfer, transferor and the proposed transferee shall apply to
Franchisor for its consent not later than thirty (30) days prior to the
anticipated closing date of the transfer. Franchisor may, in its sole
discretion, require any or all of the following as conditions of its consent:
(a) All the accrued monetary obligations of Developer and its
Affiliates and all other outstanding obligations to Franchisor and its
Affiliates arising under this Agreement or any Franchise Agreement or other
agreement, and Developer shall have satisfied all trade accounts and other
debts, of whatsoever nature or kind, in a timely manner;
(b) No Event of Default shall have occurred and be continuing,
and no event shall have occurred which with the giving of notice or lapses of
time, or both, would constitute an Event of Default, and Developer shall have
substantially and timely complied with all the terms and conditions of this
Agreement and any Franchise Agreement between Franchisor or its Affiliates and
Developer or its Affiliates;
(c) The transferor and its principals, as applicable, shall
have executed a general release, in a form satisfactory to Franchisor, of any
and all claims against Franchisor, its Affiliates, and each of such entity's
respective officers, directors, shareholders, partners, agents, representatives,
independent contractors and employees, in their corporate and individual
capacities, including, without limitation, claims arising under this Agreement,
any Franchise Agreement and any other agreement between Developer and Franchisor
or any of their Affiliates or under Federal, state or local laws, rules, and
regulations or orders;
(d) The transferee shall demonstrate to Franchisor's
satisfaction that transferee meets the criteria considered by Franchisor when
reviewing a prospective developer's application for development rights,
including, but not limited to, Franchisor's educational, managerial and business
standards, transferee's good moral character, business reputation, credit
rating, aptitude and ability to conduct the business contemplated hereunder,
financial resources and capital for operation of the business, and the
geographic proximity of other territories with respect to which transferee has
been granted development rights or of other Pizzeria Uno restaurants operated by
transferee, if any;
(e) The transferee shall (as directed by Franchisor): (I)
execute the form of development agreement then being offered to new System
developers or a revised form of this Agreement, as Franchisor deems appropriate,
and such other ancillary agreements as Franchisor may require, which agreements
shall supersede this Agreement and Attachments in all respects and the terms of
which agreements may differ from the terms of this Agreement, and if the
transferee is a corporation or partnership, transferee's shareholders, partners
or other investors, as applicable, shall also execute such agreements as
transferee's principals, and guarantee the performance of all such obligations,
covenants and agreements; or (ii) enter into a written agreement, in a form
prescribed by Franchisor, assuming full, unconditional, joint and
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several liability for and agreeing to perform from the date of the transfer, all
obligations, covenants and agreements of Developer in this Agreement and
Attachments; and, if transferee is a corporation or a partnership, transferee's
shareholders, partners or other investors, as applicable, shall also execute
such agreement as transferee's principals, and guarantee the performance of all
such obligations, covenants and agreements; and transferee shall provide to
Franchisor any other evidence deemed necessary by Franchisor to determine that
the terms of the agreements described above have been or will be satisfied and
are true and correct on the date of Transfer;
(f) Developer shall pay, at the time of the request for
Transfer, a transfer fee of Ten Thousand Dollars ( $10,000), or such greater
amount as is reasonably necessary to reimburse Franchisor for its reasonable
costs and expenses associated with reviewing the application to transfer,
including, without limitation, legal and accounting fees;
(g) Developer shall have opened and continue to operate the
Restaurants required to be opened at the time of the proposed Transfer, but not
less than the number of Restaurants required to be opened during the first three
(3) Development Periods of the Development Schedule; and
(h) The transferor shall remain liable for all of the
obligations to Franchisor in connection with this Agreement incurred prior to
the effective date of the Transfer and shall execute any and all instruments
reasonably requested by Franchisor to evidence such liability.
(3) Developer acknowledges and agrees that each of the above
conditions is reasonable and necessary to ensure such transferee's performance
of the obligations hereunder.
C. In the event the proposed Transfer is to a corporation formed solely
for the convenience of ownership, or the transfer of less then a controlling
interest in Developer, Franchisor's consent may be conditioned upon any of the
require ments in Section VIII.B., except that the requirements in Sections
VIII.B.(2)(d), (e), (f) and (g) shall not apply. With respect to a transfer to a
corporation formed for the convenience of ownership, Developer shall be the
owner of all the voting stock or interest of the corporation, and if Developer
is more than one individual, each individual shall have the same proportionate
ownership interest in the corporation as he had in Developer prior to the
transfer.
D. (1) If Developer or a Controlling Principal wishes to cause or
effectuate a Transfer pursuant to any bona fide offer received from a third
party, then such proposed transferor shall promptly notify Franchisor in writing
of each such offer, and shall provide such information and documentation
relating to the offer as Franchisor may require. Franchisor shall have the right
and option, exercisable within sixty (60) days after receipt of such written
notification and copies of all documentation requested by Franchisor describing
the terms of such offer, to notify the transferor in writing that Franchisor
intends to acquire the transferor's interest on the same terms and conditions
offered by the third party. Unless otherwise agreed in writing, closing on
Franchisor's acquisition must occur within the later of sixty (60) days from the
date of notice to the transferor of the Franchisor's election to acquire or
sixty (60) days after the date Franchisor receives and obtains all necessary
permits and approvals to complete such acquisition as determined by Franchisor.
Any material change in the terms of any offer shall constitute a new offer
subject to the same rights and options of Franchisor as in the case of an
initial offer. Failure of Franchisor to exercise the right of first refusal
afforded by this Section VIII.D. shall not constitute a waiver of any other
provision of this Agreement, including all of the requirements of this Section
VIII. relating to a proposed Transfer.
(2) If the offer from a third party provides for payment of
consideration other than cash or involves certain intangible benefits,
Franchisor may elect to purchase such interest for the reasonable equivalent in
cash. If the parties cannot agree within a reasonable time on such a reasonable
equivalent in cash, then such amount shall be determined by two (2) appraisers,
with each party selecting one (1) appraiser, and the average of their
determinations shall be final and binding. In the event of such appraisal, each
party shall bear its own legal and other costs and shall share equally the
appraisers' fees and the appraisal costs. In the event that Franchisor exercises
its right of first refusal herein provided, it shall have the right to set off
(I) all amounts due from Developer for all appraisers' fees and appraisal costs
and (ii) all amounts due from Developer or any of its Affiliates against any
payment due Franchisor or its Affiliates.
E. (1) Upon the death of Developer (if a natural person) or any
Controlling Principal, the executor, administrator or other personal
representative of the Deceased shall transfer such interest to a third party in
accordance with the conditions described in this Section VIII.E. within twelve
(12) months after the death. If no personal representative is designated or
appointed or no probate proceedings are instituted with respect to the estate of
the Deceased, then the
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distributee of such interest must be approved by Franchisor. If the distributee
is not approved by Franchisor, then the distributee shall transfer such interest
to a third party approved by Franchisor within twelve (12) months after the
death of the Deceased.
(2) Upon the Permanent Disability of Developer (if a natural person)
or any Controlling Principal who is a natural person and who has an interest in
this Agreement or in Developer, Franchisor may, in its sole discretion, require
such interest to be transferred to a third party approved by Franchisor within
six (6) months after notice to Developer. Permanent Disability shall be
determined upon examination of the person by a licensed practicing physician
selected by Franchisor; or, if the person refuses to submit to an examination,
then such person shall be automatically deemed permanently disabled as of the
date of such refusal for the purpose of this Section VIII.E. The costs of any
examination required by this Section shall be paid by Franchisor.
(3) Upon the death or claim of Permanent Disability of Developer or
any Controlling Principal, Developer or a representative of Developer shall
notify Franchisor of such death or claim of Permanent Disability within fifteen
(15) days of its occurrence. Any Transfer upon death or Permanent Disability
shall be subject to the terms and conditions described in this Section VIII. for
any inter vivos Transfer. Developer and each Controlling Principal shall have
the right to seek consent to a Transfer of their respective interest to a
proposed successor prior to the death or claim of Permanent Disability by
Developer or the Controlling Principal, as applicable. If Developer or any
Controlling Principal, as applicable, desires to obtain consent to any proposed
successor in interest prior to the death or claim of Permanent Disability,
Developer or the Controlling Principal, as applicable, shall submit to
Franchisor such information and documentation concerning such proposed successor
required by Franchisor in the Manuals or other written directives. Franchisor
may, in its sole discretion, require compliance with any of the terms and
conditions described in this Section for any inter vivos Transfer.
F. Franchisor's consent to a Transfer of any interest in Developer or in
this Agreement shall not constitute a waiver of any claims it may have against
the transferring party, nor shall it be deemed a waiver of Franchisor's right to
demand exact compliance with any of the terms of this Agreement by the
transferee.
G. Securities of, or partnership interests in, Developer may be offered to
the public by private offering or otherwise only with the prior written consent
of Franchisor. All materials required for such offering by Federal or state law
shall be submitted to Franchisor for a limited review prior to being filed with
any governmental agency, official or authority. Any materials to be used in any
exempt offering shall be submitted to Franchisor for such review prior to their
use. No offering by Developer shall imply (by use of the Proprietary Marks or
otherwise) that Franchisor is participating in an underwriting, issuance or
offering of Developer's or Franchisor's securities or the securities of any
Affiliate of Franchisor. Franchisor's review of any offering materials shall be
limited solely to the subject of the relationship between Developer and
Franchisor and its Affiliates. Franchisor may require Developer's offering
materials to contain a written statement prescribed by Franchisor concerning the
limitations described in the preceding sentence. Developer, its Principals and
the other participants in the offering shall indemnify Franchisor, its
Affiliates and each of such entity's respective officers, directors,
shareholders, partners, agents, representatives, independent contractors and
employees in connection with the offering. For each proposed offering, Developer
shall pay to Franchisor a nonrefundable charge of Ten Thousand Dollars
($10,000), or such greater amount as is reasonably necessary to reimburse
Franchisor for its reasonable costs and expenses associated with reviewing the
proposed offering materials, including, without limitation, legal and accounting
fees. Developer shall give Franchisor written notice at least thirty (30) days
prior to the date of commencement of any offering or other transaction covered
by this Section.
H. Developer and each of its Controlling Principals, as applicable, may
cause or effectuate a Transfer by and amongst themselves with Franchisor's prior
written consent. Franchisor's consent may be conditioned on compliance with
Section VIII.B.(2); except that, such Transfer shall not be subject to Sections
VIII.B.(2)(d), (e), (f) and (g).
I. If any person holding an interest in Developer (other than Developer or
a Controlling Principal), which parties shall be subject to the provisions set
forth in Section VIII.B. above, Transfers such interest, Developer shall
promptly notify Franchisor of such proposed Transfer and shall provide such
information relative thereto as Franchisor may reasonably request prior to such
Transfer. Such transferee must have good moral character and business
reputation, have an acceptable credit rating, and may not be one of Franchisor's
competitors. Such transferee will be a Developer's Principal and as such shall
execute a Confidentiality Agreement and Ancillary Covenants Not To Compete in
the form then required by Franchisor,
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which form shall be in substantially the same form attached hereto as Attachment
B (see Section VII.I.). Franchisor also reserves the right to designate the
transferee as one of the Controlling Principals.
IX. CONSENTS AND NONWAIVER
A. Whenever this Agreement requires the prior consent of Franchisor,
Developer shall make a timely written request to Franchisor and such consent
shall be obtained in writing. Franchisor shall not unreasonably withhold its
consent, except as otherwise provided herein.
B. Franchisor makes no warranties or guarantees upon which Developer may
rely and assumes no liability or obligation to Developer or any third party to
which it would not otherwise be subject, by providing any waiver, approval,
advice, consent or suggestion to Developer in connection with this Agreement, or
by reason of any neglect, delay or denial of any request therefor.
C. No delay, waiver, omission or forbearance on the part of Franchisor to
exercise any right, option, duty or power arising out of any breach or default
by Developer or the Controlling Principals under this Agreement shall constitute
a waiver by Franchisor to enforce any such right, option, duty or power against
Developer or the Controlling Principals, or as to a subsequent breach or default
by Developer or the Controlling Principals. Acceptance by Franchisor of any
payments due to it hereunder subsequent to the time at which such payments are
due shall not be deemed to be a waiver by Franchisor of any preceding breach by
Developer or the Controlling Principals of any terms, provisions, covenants or
conditions of this Agreement.
X. INDEPENDENT CONTRACTOR
A. The parties acknowledge and agree that this Agreement does not create a
fiduciary relationship between them, that Developer shall be an independent
contractor and that nothing in this Agreement is intended to constitute either
party an agent, legal representative, subsidiary, joint venturer, partner,
employee, joint employer or servant of the other for any purpose.
B. During the Term, Developer shall hold itself out to the public as an
independent contractor conducting its development operations pursuant to
development rights granted by Franchisor. Developer agrees to take such action
as shall be necessary to that end, including, without limitation, exhibiting a
notice of that fact in a conspicuous place in any Restaurant established under
any Franchise Agreement for the purposes hereunder, the content and form of
which Franchisor reserves the right to specify in writing.
C. Developer understands and agrees that nothing in this Agreement
authorizes Developer or any of the Controlling Principals to make any contract,
agreement, warranty or representation on Franchisor's behalf, or to incur any
debt or other obligation in Franchisor's name and that Franchisor shall in no
event assume liability for, or be deemed liable under this Agreement as a result
of, any such action or for any act or omission of Developer or any of the
Controlling Principals or any claim or judgment arising therefrom.
XI. DEFAULT, REMEDIES AND TERMINATION
A. Developer shall be in material default under this Agreement and all
rights granted herein shall automatically terminate without notice to Developer
upon the following Events of Default: (1) if Developer becomes insolvent or
makes a general assignment for the benefit of creditors or files a voluntary
petition under any bankruptcy law or under any similar law or statute or admits
in writing its inability to pay its debts when due; (2) if Developer is
adjudicated bankrupt or insolvent in proceedings filed against Developer under
any bankruptcy law or any similar law or statute; (3) if a bill in equity or
other proceeding for the appointment of a receiver of Developer or other
custodian for Developer's business or assets is filed and consented to by
Developer, or if a receiver or other custodian (permanent or temporary) of
Developer's assets or property, or any part thereof, is appointed by any court
of competent jurisdiction; (4) if proceedings for a composition with creditors
are instituted by or against Developer; (5) if a final judgment against
Developer remains unsatisfied or of record for thirty (30) days or longer
(unless an appeal bond is filed); (6) if Developer is dissolved; (7) if
execution is levied against Developer's business or property; (8) if suit to
foreclose any lien or mortgage against the premises or equipment of any business
operated hereunder or under any Franchise Agreement is instituted and not
dismissed within thirty (30) days; or
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(9) if the real or personal property of any business operated hereunder or under
any Franchise Agreement shall be sold after levy by any sheriff, marshal,
constable or other government official.
B. Developer shall be in material default and Franchisor may, at its
option, terminate this Agreement and all rights granted hereunder, subject only
to any opportunity to cure provided below, effective immediately upon written
notice to Developer, upon the occurrence of any of the following Events of
Default:
(1) If Developer or any of its Affiliates fails, refuses or neglects
promptly to pay when due any monetary obligation owing to Franchisor or any of
its Affiliates under this Agreement, any Franchise Agreement or any other
agreement and does not cure such default within ten (10) days following notice
from Franchisor (or such other applicable cure period contained in such other
agreement, unless no cure period is stated or such period is less than ten (10)
days, in which case the ten (10) day cure period shall apply);
(2) If Developer fails to comply with the Development Schedule (or
any extension thereof approved by Franchisor in writing), if any, or if
Developer fails to develop a replacement Restaurant as described in Section
IV.B.(4);
(3) If Developer fails to execute each Franchise Agreement in
accordance with Section IV. (or any extension thereof granted by Franchisor in
writing);
(4) If Developer or any of the Controlling Principals is convicted
of, or shall have entered a plea of nolo contendere to, a felony, a crime
involving moral turpitude or any other crime or offense that Franchisor believes
is reasonably likely to have an adverse effect on the System, the Proprietary
Marks, the goodwill associated herewith or Franchisor's interest therein;
(5) If a threat or danger to public health or safety results from
the construction, maintenance or operation of any Restaurant developed under
this Agreement;
(6) If Developer fails to designate a qualified replacement
Operating Principal or designee appointed by Operating Principal all as required
under Section VI.A.(2);
(7) If Developer or any of the Controlling Principals breach in any
material respect any of the representations, warranties and covenants in Section
VI.A.;
(8) If Developer or any of the Controlling Principals causes or
effectuates a Transfer of any rights or obligations under this Agreement, an
interest in Developer, or the assets of Developer, without first obtaining
Franchisor's written consent pursuant to Section VIII.B. or offering Franchisor
a right of first refusal with respect to such Transfer pursuant to Section
VIII.D.;
(9) If Developer or any of the Controlling Principals fails to
comply with the covenants in Section VII., or if Developer fails to obtain the
execution of the covenants required under Section VII.I. within thirty (30) days
following Franchisor's request that Developer obtain the execution of such
covenants;
(10) If an approved Transfer upon death or Permanent Disability is
not effected within the time period and in the manner prescribed by Section
VIII.E.;
(11) If Developer misuses or makes any unauthorized use of the
Proprietary Marks or otherwise materially impairs the goodwill associated
therewith or with the System or Franchisor's rights therein and does not cure
such default within twenty-four (24) hours following notice from Franchisor;
(12) If Developer or any of the Controlling Principals commit in any
twelve (12) month period during the Term three (3) or more Events of Default
under this Agreement or two (2) Events of Default that relate to the payment of
monies owed to Franchisor or its Affiliates, whether or not such Events of
Default are of the same or different nature and whether or not such Events of
Default are curable or are cured by Developer after notice by Franchisor; and
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(13) If Developer or any of Affiliates fails or refuses to comply
with any terms and conditions of any Franchise Agreement between Franchisor or
its Affiliates and Developer or its Affiliates, and does not cure such default
within any notice and cure period provided for in such Franchise Agreement
following notice from Franchisor of such default (unless no cure period is
specified, in which case the notice and cure period in Section XI.C shall apply.
C. Except as provided in Sections XI.A. and B., if Developer fails to
comply with any other term or condition imposed by this Agreement, any Franchise
Agreement or any other development or Franchise Agreement between Developer and
Franchisor, as such may from time to time be amended, Franchisor may terminate
this Agreement by giving written notice of termination stating the nature of
such default to Developer at least thirty (30) days prior to the effective date
of termination; provided, however, that Developer may avoid termination by
immediately initiating a remedy to cure such default and curing it to
Franchisor's satisfaction within the thirty (30) day period and by promptly
providing proof thereof to Franchisor. Subject to Section XI.D., if any such
default is not cured within the specified time, or such longer period as
applicable law may require, Developer's rights under this Agreement shall
terminate without further notice to Developer effective immediately upon the
expiration of the thirty (30) day period or such longer period as applicable law
may require.
D. Upon default by Developer under Section XI.B. or C., Franchisor may, in
its sole discretion, in addition to exercising its option to terminate this
Agreement as provided in Sections XI.B. and C., to do any one or more of the
following: (1) terminate or modify any territorial rights granted to Developer
in Section II.B.; (2) reduce the geographic area in which such territorial
rights have been granted; (3) reduce the number of Restaurants which Developer
may establish pursuant to Section IV.B.(1); or (4) pursue any other remedy
Franchisor may have at law or in equity.
E. (1) Upon the termination or expiration of this Agreement, Developer
shall have no right to establish or operate any Restaurant for which an
Franchise Agreement has not been executed by Franchisor and delivered to
Developer and the Franchise Agreement fee paid by Developer to Franchisor at the
time of termination or expiration of this Agreement.
(2) If Franchisor exercises any of its rights in Section XI.D., or
if this Agreement otherwise expires or terminates, Franchisor shall be entitled
to establish, and to license others to establish, Restaurants in the Territory
or in the portion thereof no longer part of the Territory or pursuant to any
other modification of Developer's territorial rights, except as may be otherwise
provided under any Franchise Agreement which is then in effect between
Franchisor and Developer or any approved Developer's Affiliate.
F. Franchisor's exercise of any of its options under Section XI.D. shall
not constitute a waiver by Franchisor of its option to terminate this Agreement
at any time with respect to an Event of Default of a similar or different
nature.
G. No Event of Default under this Agreement shall constitute a default
under any Franchise Agreement between the parties (including any approved
Developer's Affiliate) hereto, unless the default is also a default under the
terms of such Franchise Agreement.
H. Upon default of Developer and the early termination of this Agreement,
Franchisor shall have the right to purchase the assets of all of the Restaurants
opened pursuant to Franchise Agreements executed under the terms of this
Agreement. The terms and conditions of the purchase transaction, including but
not limited to, the purchase price for the assets of such Restaurants, shall be
determined in accordance with the provisions contained in the applicable
Franchise Agreement permitting the Franchisor to purchase, at its option, such
assets upon termination or expiration of the Franchise Agreement.
I. Upon termination or expiration of this Agreement, Developer and the
Controlling Principals shall comply with the restrictions on Confidential
Information contained in Section VII.B. and the covenants contained in Section
VII.D. Any other person required to execute similar covenants pursuant to
Section VII.I. shall also comply with such covenants.
J. No right or remedy herein conferred upon or reserved to Franchisor is
exclusive of any other right or remedy provided or permitted by law or in
equity. All rights and remedies of the parties to this Agreement shall be
cumulative to, and not alternative to or exclusive of, any other rights or
remedies which are provided for herein or which may be available at law or in
equity. The rights and remedies of the parties shall be continuing and shall not
be 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, earlier
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termination or exercise of Franchisor's rights pursuant to Section XI. of this
Agreement shall not discharge or release Developer or any of the Controlling
Principals from any liability or obligation then accrued, or any liability or
obligation continuing beyond, or arising out of, the expiration, the earlier
termination or the exercise of such rights under this Agreement. Developer and
the Controlling Principals shall pay all court costs and reasonable attorneys'
fees incurred by Franchisor in obtaining any remedy available to Franchisor for
any violation of this Agreement.
XII. INDEMNIFICATION
A. Developer and each of the Controlling Principals shall, at all times,
defend with counsel of Franchisor's choosing, indemnify and hold harmless to the
fullest extent permitted by law the Indemnitees from all Losses and Expenses
incurred in connection with any action, suit, proceeding, claim, demand,
investigation or inquiry (formal or informal), or any settlement thereof
(whether or not a formal proceeding or action has been instituted) which arises
out of or is based upon any of the following: (1) the infringement, alleged
infringement, or any other violation or alleged violation by Developer or any of
the Developer's Principals of any patent, mark, copyright or other proprietary
right owned or controlled by third parties (except as such may occur with
respect to any rights to use the Proprietary Marks, any copyrights or other
proprietary information granted to Developer or its Affiliates under an
Franchise Agreement); (2) the violation, breach or asserted violation or breach
by Developer or any of the Developer's Principals of any federal, state or local
law, regulation, ruling, standard or directive, or any industry standard; (3)
libel, slander or any other form of defamation of Franchisor, the System, or any
developer or operator under the System, by Developer or by any of the
Developer's Principals; (4) the violation or breach by Developer or by any of
the Controlling Principals of any warranty, representation, agreement or
obligation in this Agreement or in any Franchise Agreement or other agreement
between Developer or its Affiliates and Franchisor or its Affiliates, or the
officers, directors, shareholders, partners, agents, representatives,
independent contractors and employees thereof; (5) Developer's failure to obtain
the covenants required by Section VII.I hereof or, if obtained, the breach of
such covenants; (and (6) acts, errors or omissions of Developer, any of
Developer's Affiliates and any of the Developer's Principals and the officers,
directors, shareholders, partners, agents, independent contractors, servants,
employees and representatives of Developer, its Affiliates and Principals in
connection with the performance of the development activities contemplated under
this Agreement or the establishment and operation of any Restaurant pursuant to
an Franchise Agreement.
B. Developer and each of the Controlling Principals shall give Franchisor
immediate notice of any such action, suit, proceeding, claim, demand, inquiry or
investigation. At the expense and risk of Developer and each of the Controlling
Principals, Franchisor may elect to control (but under no circumstance is
obligated to undertake), and designate counsel of its own choosing (at
Developer's and the Controlling Principals' expense) with respect to, the
defense and/or settlement of any such action, suit, proceeding, claim, demand,
inquiry or investigation. Such an undertaking by Franchisor shall, in no manner
or form, diminish the obligation of Developer and each of the Controlling
Principals to indemnify the Indemnitees and to hold them harmless.
C. In order to protect persons or property, its reputation or goodwill, or
the reputation or goodwill of others, Franchisor may, at any time and without
notice, as it, in its judgment deems appropriate, consent or agree to
settlements or take such other remedial or corrective action as it deems
expedient with respect to the action, suit, proceeding, claim, demand, inquiry
or investigation if, in Franchisor's sole judgment, there are reasonable grounds
to believe that: (1) any of the acts or circumstances enumerated in Section
XII.A. above has occurred; or (2) any act, error or omission as described in
Section XII.A.(5) may result directly or indirectly in damage, injury or harm to
any person or any property.
D. All Losses and Expenses incurred under this Section XII. shall be
chargeable to and paid by Developer or any of the Controlling Principals
pursuant to its obligations of indemnity under this Section XII, regardless of
any action, activity or defense undertaken by Franchisor or the subsequent
success or failure of such action, activity or defense.
E. The Indemnitees do not assume any liability whatsoever for acts, errors
or omissions of those with whom Developer, any of the Developer's Principals,
Developer's Affiliates or their respective officers, directors, shareholders,
partners, agents, representatives, independent contractors and employees of
Developer or its Affiliates, may contract, regardless of the purpose. Developer
and each of the Controlling Principals shall hold harmless and indemnify the
Indemnitees for all Losses and Expenses which may arise out of any acts, errors
or omissions of Developer, the Developer's Principals and their respective
Affiliates, or any of the officers, directors, shareholders, partners, agents,
representatives, independent contractors and employees of Developer or its
Affiliates and any such third parties without limitation and
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without regard to the cause or causes thereof or the negligence (whether such
negligence be sole, joint or concurrent or active or passive) or strict
liability of Franchisor or any other party or parties arising in connection
therewith.
F. Under no circumstances shall the Indemnitees be required or obligated
to seek recovery from third parties or otherwise mitigate their losses to
maintain a claim against Developer or any of the Controlling Principals.
Developer and each of the Controlling Principals agree that the failure to
pursue such recovery or mitigate loss will not reduce the amounts recoverable
from Developer or any of the Controlling Principals by the Indemnitees.
G. Developer and the Controlling Principals expressly agree that the terms
of this Section XII. shall survive the termination, expiration or transfer of
this Agreement or any interest herein.
XIII. MEDIATION AND LITIGATION
A. FRANCHISOR, DEVELOPER AND THE CONTROLLING PRINCIPALS AGREE TO SUBMIT
ANY CLAIM, CONTROVERSY OR DISPUTE ARISING OUT OF OR RELATING TO THIS AGREEMENT
(AND ATTACHMENTS) OR THE RELATIONSHIP CREATED BY THIS AGREEMENT TO NON-BINDING
MEDIATION PRIOR TO COMMENCING LITIGATION OR INITIATING ANY OTHER PROCEEDING WITH
RESPECT TO SUCH CLAIM, CONTROVERSY OR DISPUTE. THE MEDIATION SHALL BE CONDUCTED
THROUGH EITHER AN INDIVIDUAL MEDIATOR OR A MEDIATOR CHOSEN BY A MEDIATION
SERVICES ORGANIZATION OR BODY, EXPERIENCED IN THE MEDIATION OF DISPUTES BETWEEN
FRANCHISORS AND FRANCHISEES, AGREED UPON BY THE PARTIES AND, FAILING SUCH
AGREEMENT WITHIN A REASONABLE PERIOD OF TIME AFTER EITHER PARTY HAS NOTIFIED THE
OTHER OF ITS DESIRE TO SEEK MEDIATION OF ANY CLAIM, CONTROVERSY OR DISPUTE (NOT
TO EXCEED FIFTEEN (15) DAYS), THROUGH THE AMERICAN ARBITRATION ASSOCIATION (OR
ANY SUCCESSOR ORGANIZATION) IN ACCORDANCE WITH ITS RULES GOVERNING MEDIATION, AT
FRANCHISOR'S PRINCIPAL PLACE OF BUSINESS. THE COSTS AND EXPENSES OF MEDIATION,
INCLUDING COMPENSATION AND EXPENSES OF THE MEDIATOR (EXCEPT FOR THE ATTORNEYS'
FEES INCURRED BY EITHER PARTY), SHALL BE BORNE BY THE PARTIES EQUALLY. IF THE
PARTIES ARE UNABLE TO RESOLVE THE CLAIM, CONTROVERSY OR DISPUTE WITHIN NINETY
(90) DAYS AFTER THE MEDIATOR HAS BEEN CHOSEN, THEN EITHER PARTY MAY FILE SUIT IN
ACCORDANCE WITH SECTION XIII.B, BELOW. NOTWITHSTANDING THE FOREGOING, FRANCHISOR
MAY BRING AN ACTION (1) FOR MONIES OWED, (2) FOR INJUNCTIVE OR OTHER
EXTRAORDINARY RELIEF, OR (3) INVOLVING THE POSSESSION OF OR TO SECURE OTHER
RELIEF RELATING TO THE RESTAURANT PREMISES, IN A COURT HAVING JURISDICTION AND
IN ACCORDANCE WITH SECTION XIII.G. BELOW, WITHOUT FIRST SUBMITTING SUCH ACTION
TO MEDIATION.
B. WITH RESPECT TO ANY CLAIMS, CONTROVERSIES OR DISPUTES WHICH ARE NOT
FINALLY RESOLVED THROUGH MEDIATION OR AS OTHERWISE PROVIDED ABOVE, DEVELOPER AND
THE CONTROLLING PRINCIPALS HEREBY IRREVOCABLY SUBMIT THEMSELVES TO THE FEDERAL
DISTRICT COURT OF MASSACHUSETTS, FIRST CIRCUIT. DEVELOPER AND THE CONTROLLING
PRINCIPALS HEREBY WAIVE ALL QUESTIONS OF PERSONAL JURISDICTION FOR THE PURPOSE
OF CARRYING OUT THIS PROVISION. DEVELOPER AND THE CONTROLLING PRINCIPALS FURTHER
AGREE THAT VENUE FOR ANY PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT
SHALL BE SUFFOLK COUNTY, MASSACHUSETTS; PROVIDED, HOWEVER, WITH RESPECT TO ANY
ACTION (1) FOR MONIES OWED, (2) FOR INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF OR
(3) INVOLVING POSSESSION OR DISPOSITION OF, OR OTHER RELIEF RELATING TO, REAL
PROPERTY, FRANCHISOR MAY BRING SUCH ACTION IN ANY STATE OR FEDERAL DISTRICT
COURT WHICH HAS JURISDICTION. WITH RESPECT TO ALL CLAIMS, CONTROVERSIES,
DISPUTES OR ACTIONS RELATED TO THIS AGREEMENT OR THE RELATIONSHIP CREATED
THEREBY, THIS AGREEMENT AND ANY SUCH RELATED CLAIMS, CONTROVERSIES, DISPUTES OR
ACTIONS SHALL BE GOVERNED, ENFORCED AND INTERPRETED UNDER MASSACHUSETTS LAW
(EXCEPT FOR MASSACHUSETTS CHOICE OF LAW RULES).
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C. DEVELOPER, THE CONTROLLING PRINCIPALS AND FRANCHISOR ACKNOWLEDGE THAT
THE PARTIES' AGREEMENT REGARDING APPLICABLE STATE LAW AND FORUM SET FORTH IN
SECTION XIII.B ABOVE PROVIDE EACH OF THE PARTIES WITH THE MUTUAL BENEFIT OF
UNIFORM INTERPRETATION OF THIS AGREEMENT AND ANY DISPUTE ARISING OUT OF THIS
AGREEMENT OR THE PARTIES' RELATIONSHIP CREATED BY THIS AGREEMENT. EACH OF
DEVELOPER, THE CONTROLLING PRINCIPALS AND FRANCHISOR FURTHER ACKNOWLEDGES THE
RECEIPT AND SUFFICIENCY OF MUTUAL CONSIDERATION FOR SUCH BENEFIT AND THAT EACH
PARTY'S AGREEMENT REGARDING APPLICABLE STATE LAW AND CHOICE OF FORUM HAVE BEEN
NEGOTIATED FOR IN GOOD FAITH AND ARE PART OF THE BENEFIT OF THE BARGAIN
REFLECTED BY THIS AGREEMENT.
D. DEVELOPER AND THE CONTROLLING PRINCIPALS AGREE THAT NO ACTION,
PROCEEDING OR REQUEST FOR RELIEF ARISING OUT OF OR RELATING TO THIS AGREEMENT
(AND ATTACHMENTS) OR THE RELATIONSHIP CREATED BY THIS AGREEMENT SHALL BE BROUGHT
AGAINST FRANCHISOR'S AFFILIATES OR PARENT CORPORATION(S), IT BEING THE INTENT
THAT SUCH CLAIMS BE RESOLVED DIRECTLY AND SOLELY WITH FRANCHISOR.
E. DEVELOPER, THE CONTROLLING PRINCIPALS AND FRANCHISOR ACKNOWLEDGE THAT
THE EXECUTION OF THIS AGREEMENT AND ACCEPTANCE OF THE TERMS BY THE PARTIES
OCCURRED IN WEST ROXBURY, MASSACHUSETTS, AND FURTHER ACKNOWLEDGE THAT THE
PERFORMANCE OF CERTAIN OBLIGATIONS OF FRANCHISEE ARISING UNDER THIS AGREEMENT,
INCLUDING, BUT NOT LIMITED TO, THE PAYMENT OF MONIES DUE HEREUNDER, SHALL OCCUR
IN WEST ROXBURY, MASSACHUSETTS.
F. WITHOUT LIMITING ANY OF THE FOREGOING, FRANCHISOR RESERVES THE RIGHT,
AT ANY TIME, TO CREATE A DISPUTE RESOLUTION PROGRAM AND RELATED SPECIFICATIONS,
STANDARDS, PROCEDURES AND RULES FOR THE IMPLEMENTATION THEREOF TO BE
ADMINISTERED BY FRANCHISOR OR ITS DESIGNEES FOR THE BENEFIT OF ALL DEVELOPERS
CONDUCTING BUSINESS UNDER THE SYSTEM. THE STANDARDS, SPECIFICATIONS, PROCEDURES
AND RULES FOR SUCH DISPUTE RESOLUTION PROGRAM SHALL BE TRANSMITTED TO DEVELOPER
IN WRITING, ON EITHER A VOLUNTARY OR MANDATORY BASIS, DEVELOPER AND THE
CONTROLLING PRINCIPALS SHALL COMPLY WITH ALL SUCH STANDARDS, SPECIFICATIONS,
PROCEDURES AND RULES IN SEEKING RESOLUTION OF ANY CLAIMS, CONTROVERSIES OR
DISPUTES WITH OR INVOLVING FRANCHISOR OR OTHER DEVELOPERS OR FRANCHISEES, IF
APPLICABLE UNDER THE PROGRAM. IF SUCH DISPUTE RESOLUTION PROGRAM IS MADE
MANDATORY, THEN DEVELOPER AND THE CONTROLLING PRINCIPALS AND FRANCHISOR AGREE TO
SUBMIT ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING OUT OF OR RELATING TO THIS
AGREEMENT (AND ATTACHMENTS) OR THE RELATIONSHIP CREATED BY THIS AGREEMENT FOR
RESOLUTION IN ACCORDANCE WITH SUCH DISPUTE RESOLUTION PROGRAM PRIOR TO SEEKING
RESOLUTION OF SUCH CLAIMS, CONTROVERSIES OR DISPUTES IN THE MANNER DESCRIBED IN
SECTIONS XIII.B-D. (PROVIDED THAT THE PROVISIONS OF SECTION XIII CONCERNING
FRANCHISOR'S RIGHT TO SEEK RELIEF IN A COURT FOR CERTAIN ACTIONS INCLUDING FOR
INJUNCTIVE OR OTHER EXTRAORDINARY RELIEF SHALL BE NOT SUPERSEDED OR AFFECTED BY
THIS SECTION XIX.E.) OR IF SUCH CLAIM, CONTROVERSY OR DISPUTE RELATES TO ANOTHER
DEVELOPER OR FRANCHISEE, DEVELOPER AGREES TO PARTICIPATE IN THE PROGRAM AND
SUBMIT ANY SUCH CLAIMS, CONTROVERSIES OR DISPUTES IN ACCORDANCE WITH THE
PROGRAM'S STANDARDS, SPECIFICATIONS, PROCEDURES AND RULES, PRIOR TO SEEKING
RESOLUTION OF SUCH CLAIM BY ANY OTHER JUDICIAL OR LEGALLY AVAILABLE MEANS.
G. DEVELOPER AND THE CONTROLLING PRINCIPALS HEREBY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO OR CLAIM OF ANY PUNITIVE, EXEMPLARY,
INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES (INCLUDING,
WITHOUT LIMITATION, LOSS OF PROFITS) AGAINST FRANCHISOR, ITS AFFILIATES, AND
THEIR RESPECTIVE OFFICERS, DIRECTORS, SHAREHOLDERS, PARTNERS, AGENTS,
REPRESENTATIVES, INDEPENDENT CONTRACTORS, SERVANTS AND EMPLOYEES, IN THEIR
CORPORATE AND INDIVIDUAL
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CAPACITIES, ARISING OUT OF ANY CAUSE WHATSOEVER (WHETHER SUCH CAUSE BE BASED IN
CONTRACT, NEGLIGENCE, STRICT LIABILITY, OTHER TORT OR OTHERWISE) AND AGREE THAT
IN THE EVENT OF A DISPUTE, DEVELOPER AND THE CONTROLLING PRINCIPALS SHALL BE
LIMITED TO THE RECOVERY OF ANY ACTUAL DAMAGES SUSTAINED BY IT. IF ANY OTHER TEM
OF THIS AGREEMENT IS FOUND OR DETERMINED TO BE UNCONSCIONABLE OR UNENFORCEABLE
FOR ANY REASON, THE FOREGOING PROVISIONS OF WAIVER BY AGREEMENT OF PUNITIVE,
EXEMPLARY, INCIDENTAL, INDIRECT, SPECIAL, CONSEQUENTIAL OR OTHER DAMAGES
(INCLUDING, WITHOUT LIMITATION, LOSS OF PROFITS) SHALL CONTINUE IF FULL FORCE
AND EFFECT.
H. FRANCHISOR, DEVELOPER AND THE CONTROLLING PRINCIPALS HEREBY AGREE THAT
NO FORM OF PROCEEDING PERMITTED HEREBY WILL BE MAINTAINED BY ANY PARTY TO
ENFORCE ANY LIABILITY OR OBLIGATION OF THE OTHER PARTY, WHETHER ARISING FROM
THIS AGREEMENT OR OTHERWISE, UNLESS BROUGHT BEFORE THE EXPIRATION OF THE LATER
OF: (I) ONE (1) YEAR AFTER THE DATE OF DISCOVERY OF THE FACTS RESULTING IN SUCH
LIABILITY OR OBLIGATION, OR (II) TWO (2) YEARS AFTER THE DATE OF THE FIRST ACT
OR OMISSION GIVING RISE TO THE ALLEGED LIABILITY OR OBLIGATION.
XIV. NOTICES
Any and all notices required or permitted under this Agreement shall be in
writing and shall be personally delivered or sent by expedited delivery service
or certified or registered mail, return receipt requested, first-class postage
prepaid, or sent by prepaid facsimile, telegram or telex (provided that the
sender confirms the facsimile, telegram or telex by sending an original
confirmation copy by certified or registered mail or expedited delivery service
within three (3) Business Days after transmission) to the respective parties at
the following addresses unless and until a different address has been designated
by written notice to the other party:
Notices to Franchisor: Pizzeria Uno Corporation
100 Charles Park Road
West Roxbury, Massachusetts 02132-4985
Attention: General Counsel
Facsimile: (617) 323-7170
Notices to Developer and _________________________________
the Controlling Principals: _________________________________
_________________________________
Attention: ______________________
Facsimile: ______________________
Any notice shall be deemed to have been given at the time of personal
delivery or receipt, or, in the case of facsimile, telegram or telex, upon
transmission (provided confirmation is sent as described above); provided,
however, that if delivery is rejected, delivery shall be deemed to have been
given at the time of such rejection.
XV. SEVERABILITY AND CONSTRUCTION
A. Except as expressly provided to the contrary herein, each portion,
section, part, term and provision of this Agreement shall be considered
severable; and if, for any reason, any portion, section, part, term or provision
is determined to be invalid and contrary to, or in conflict with, any existing
or future law or regulation by a court or agency having jurisdiction, this shall
not impair the operation of, or have any other effect upon, the other portions,
sections, parts, terms or provisions of this Agreement that may remain otherwise
intelligible, and the latter shall continue to be given full force and effect
and bind the parties. Any invalid portions, sections, parts, terms or provisions
shall be deemed not to be part of this Agreement and there shall be
automatically added such portion, section, part, term or provision as similar as
possible to that which was severed which shall be valid and not contrary to or
in conflict with any law or regulation. Notwithstanding the above, if any of the
provisions of this Agreement concerning the protection of Franchisor's
Proprietary Marks is
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determined in any manner to be null, void or unenforceable under the Franchise
Agreement, Franchisor may terminate this Agreement immediately upon notice to
Developer.
B. Except as expressly provided to the contrary herein, nothing in this
Agreement is intended, nor shall be deemed, to confer upon any person or legal
entity other than Developer, Franchisor, and such of their respective officers,
directors, personnel successors and assigns as may be contemplated (and, as to
Developer, authorized by Section VIII.), any rights or remedies under or as a
result of this Agreement.
C. All captions in this Agreement are intended solely for the convenience
of the parties and shall not affect the meaning or construction of any provision
of this Agreement. Such captions shall not be deemed to govern, limit, modify or
in any other manner affect the scope, meaning or intent of the provisions of
this Agreement or any part thereof nor shall such captions otherwise be given
any legal effect.
D. All references to the masculine, neuter or singular shall be construed
to include the masculine, feminine, neuter or plural, where applicable. Without
limiting the obligations individually undertaken by the Controlling Principals
under this Agreement, all acknowledgments, promises, covenants, agreements and
obligations made or undertaken by Developer in this Agreement shall be deemed,
jointly and severally, undertaken by all of the Controlling Principals.
E. This Agreement may be executed in counterparts and each copy so
executed shall be deemed an original.
F. This Agreement shall not become effective until signed by an authorized
officer of Franchisor.
G. Each reference in this Agreement to a corporation or partnership shall
be deemed to also refer to a limited liability company and any other entity or
organization similar thereto. Each reference to the organizational documents,
equity owners, directors, and officers of a corporation in this Agreement shall
be deemed to refer to the functional equivalents of such organizational
documents, equity owners, directors, and officers, as applicable, in the case of
a limited liability company or any other entity or organization similar thereto.
H. Any obligation of Developer or the Controlling Principals that
contemplates performance of such obligation after termination or expiration of
this Agreement or any Transfer shall be deemed to survive such termination,
expiration or transfer, including the provisions of this Section XV.
I. DEVELOPER, THE CONTROLLING PRINCIPALS AND FRANCHISOR ACKNOWLEDGE THAT
VARIOUS PROVISIONS OF THIS AGREEMENT SPECIFY CERTAIN MATTERS THAT ARE WITHIN THE
DISCRETION OR JUDGMENT OF FRANCHISOR OR ARE OTHERWISE TO BE DETERMINED
UNILATERALLY BY FRANCHISOR. IF THE EXERCISE OF FRANCHISOR'S DISCRETION OR
JUDGMENT AS TO ANY SUCH MATTER IS SUBSEQUENTLY CHALLENGED, THE PARTIES TO THIS
AGREEMENT EXPRESSLY DIRECT THE TRIER OF FACT THAT FRANCHISOR'S RELIANCE ON A
BUSINESS REASON IN THE EXERCISE OF ITS DISCRETION OR JUDGMENT IS TO BE VIEWED AS
A REASONABLE AND PROPER EXERCISE OF SUCH DISCRETION OR JUDGMENT, WITHOUT REGARD
TO WHETHER OTHER REASONS FOR ITS DECISION MAY EXIST AND WITHOUT REGARD TO
WHETHER THE TRIER OF FACT WOULD INDEPENDENTLY ACCORD THE SAME WEIGHT TO THE
BUSINESS REASON.
XVI. ENTIRE AGREEMENT
This Agreement, the documents referred to herein and the Attachments
hereto, constitute the entire, full and complete agreement between Franchisor
and Developer and the Controlling Principals concerning the subject matter
hereof and shall supersede all prior related agreements between Franchisor and
Developer and the Controlling Principals. Except for those permitted to be made
unilaterally by Franchisor hereunder, no amendment, change or variance from this
Agreement shall be binding on either party unless mutually agreed to by the
parties and executed by their authorized officers or agents in writing.
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XVII. ACKNOWLEDGMENTS
A. Developer and Controlling Principals acknowledge that they have each
conducted an independent investigation of the business venture contemplated by
this Agreement and recognize that the success of this business venture involves
substantial business risks and will largely depend upon the ability of Developer
and Controlling Principals. Franchisor expressly disclaims making, and Developer
and Controlling Principals acknowledge that they have not received or relied on
any warranty or guarantee, express or implied, as to the potential volume,
profits, expenses or success of the business venture contemplated by this
Agreement.
Initials:________/__________
B. Developer and Controlling Principals acknowledge that they have
received, read and understand this Agreement and the related Attachments and
Agreements and that Franchisor has afforded them sufficient time and opportunity
to consult with advisors, attorneys and accountants selected by them about the
potential benefits and risks of entering into this Agreement.
Initials:________/__________
C. Developer and Controlling Principals acknowledge that they received a
complete copy of this Agreement and all related Attachments and agreements at
least five (5) business days prior to the date on which this Agreement was
executed. Developer and Controlling Principals further acknowledge that they
have received the disclosure document required by the Trade Regulation Rule of
the Federal Trade Commission 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.
Initials:________/__________
D. This Agreement is not a franchise or license agreement and does not
grant to Developer any right or license to operate a Restaurant, distribute
goods or services, or any right to use or interest in the Proprietary Marks.
Initials:________/__________
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IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ By:___________________________________
_______________________________ By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_____________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_____________________________ Name:_________________________________
Witness Title:________________________________
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CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
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ATTACHMENT A
PIZZERIA UNO CORPORATION
FRANCHISE AGREEMENT
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ATTACHMENT B
CONFIDENTIALITY AGREEMENT AND ANCILLARY COVENANTS NOT TO COMPETE
This Agreement is made and entered into this ____ day of ________________,
19__, ____________________ ("Developer") and ______________________
("Covenantor").
RECITALS
WHEREAS, Pizzeria Uno Corporation ("Franchisor"), as the result of the
expenditure of time, skill, effort and money, developed and owns a distinctive
system (the "System") for the development and operation of full-service
restaurants under the name and mark "Pizzeria Uno(R) " ("Restaurants"); and
WHEREAS, the System includes, but is not limited to, certain trade names,
service marks, trademarks, symbols, logos, emblems and indicia of origin,
including, but not limited to, the marks "Pizzeria Uno(R)" and "Uno(R)" and such
other trade names, service marks, trademarks, symbols, logos, emblems and
indicia of origin as Franchisor may develop in the future to identify for the
public in certain countries the source of services and products marketed under
such marks ("Proprietary Marks") and under the System and representing the
System's high standards of quality, appearance and service and distinctive
exterior and interior design, decor, color scheme and furnishings, as well as
special recipes and menu items; uniform standards, specifications and procedures
for operations; quality and uniformity of products and services offered;
procedures for inventory and management and financial control; training and
assistance; and advertising and promotional programs ("Trade Secrets"); all of
which may be changed, improved and further developed by Franchisor from time to
time and are used by Franchisor in connection with the operation of the System;
and
WHEREAS, the Proprietary Marks and Trade Secrets provide economic
advantages to Franchisor and are not generally known to, and are not readily
ascertainable by proper means by, Franchisor's competitors who could obtain
economic value from knowledge and use of the Proprietary Marks and Trade
Secrets; and
WHEREAS, Franchisor has taken and intends to take all reasonable steps to
maintain the confidentiality and secrecy of the Trade Secrets; and
WHEREAS, Franchisor has granted Developer the limited right to develop
Restaurants using the System, the Proprietary Marks and the Trade Secrets for
the period defined in the development agreement made and entered into on
_________________, 19____ ("Development Agreement"), by and between Franchisor
and Developer; and
WHEREAS, Franchisor and Developer have agreed in the Development Agreement
on the importance to Franchisor and to Developer and other licensed users of the
System of restricting the use, access and dissemination of the Trade Secrets;
and
WHEREAS, it will be necessary for certain employees, agents, independent
contractors, officers, directors and interest holders of Developer, or any
entity having an interest in Developer to have access to and to use some or all
of the Trade Secrets in the management and operation of Developer's business
using the System; and
WHEREAS, Developer has agreed to obtain from those individuals and
entities written agreements protecting the Trade Secrets and the System against
unfair competition; and
WHEREAS, Covenantor wishes to remain, or wishes to become, employed by or
associated with of Developer; and
WHEREAS, Covenantor wishes and needs to receive and use the Trade Secrets
in the course of his employment or association in order to effectively perform
his services for Developer; and
WHEREAS, Covenantor acknowledges that receipt of and the right to use the
Trade Secrets constitutes independent valuable consideration for the
representations, promises and covenants made by Covenantor herein;
B-1
<PAGE>
NOW, THEREFORE, in consideration of the mutual covenants and obligations
contained herein, the parties agree as follows:
Confidentiality Agreement
1. Franchisor and/or Developer shall disclose to Covenantor some or all of
the Trade Secrets relating to the System. All information and materials,
including, without limitation, any manuals, drawings, specifications, techniques
and compilations of data which Franchisor provides to Developer and/or
Covenantor shall be deemed confidential Trade Secrets for the purposes of this
Agreement.
2. Covenantor shall receive the Trade Secrets in confidence and shall, at
all times, maintain them in confidence, and use them only in the course of his
employment by or association with Developer and then only in connection with the
development and/or operation by Developer of Restaurants using the System for so
long as Developer is licensed by Franchisor to use the System.
3. Covenantor shall not at any time make copies or translations of any
documents or compilations containing some or all of the Trade Secrets without
Franchisor's express written permission.
4. Covenantor shall not at any time disclose or permit the disclosure of
the Trade Secrets except to other employees of Developer and only to the limited
extent necessary to train or assist other employees of Developer in the
development or operation of a Restaurant using the System.
5. Covenantor shall surrender any material containing some or all of
Franchisor's Trade Secrets to Developer or Franchisor, upon request, or upon
termination of employment by or association with Developer, or upon conclusion
of the use for which such information or material may have been furnished to the
Covenantor.
6. Covenantor shall not at any time, directly or indirectly, do any act or
omit to do any act that would or would likely be injurious or prejudicial to the
goodwill associated with the Trade Secrets and the System.
7. All manuals are loaned by Franchisor to Developer for limited purposes
only and remain the property of Franchisor and may not be reproduced, in whole
or in part, without Franchisor's written consent.
Covenants Not to Compete
1. In order to protect the goodwill and unique qualities of the System and
the confidentiality and value of the Trade Secrets, and in consideration for the
disclosure to Covenantor of the Trade Secrets, Covenantor further agrees and
covenants as follows:
a. Not to divert, or attempt to divert, directly or indirectly, any
business, business opportunity, or customer of the Restaurants to any
competitor.
b. Not to employ, or seek to employ, any person who is at the time
(or has been within the preceding twelve (12) months) employed by Franchisor, or
any of its Affiliates, or any operator or developer of Franchisor, or otherwise
directly or indirectly induce such person to leave that person's employment,
except as may occur in connection with Developer's employment of such person if
permitted under the Development Agreement.
*c. Except with respect to Restaurants described in the Development
Agreement and other restaurants operated under Franchise agreements between
Developer or its Affiliates and Franchisor or its Affiliates, not to directly or
indirectly, for himself or through, on behalf of, or in conjunction with any
person, partnership or corporation, without the prior written consent of
Franchisor, own, maintain, operate, engage in or have any financial or
beneficial interest in (including any interest in corporations, partnerships,
trusts, unincorporated associations or joint ventures), advise, assist or make
loans to, any restaurant business at any location within the United States or
any foreign jurisdiction where Franchisor
- --------
* May be deleted if Franchisor does not require Developer to obtain the
execution of this covenant by Covenantor. See Section VII.I. of the Development
Agreement.
B-2
<PAGE>
or its Affiliates have registered or sought to register any of the Proprietary
Marks, that is of a character and concept similar to the Restaurants, including
(i) a casual dining restaurant business, as such market segment is defined
pursuant to then-current industry standards, and (ii) any food service business
which offers pizza as a primary menu item.
2. In further consideration for the disclosure to Covenantor of the Trade
Secrets and to protect the distinctiveness of the system, Covenantor agrees and
covenants that for two (2) years following the earlier of the expiration,
termination or transfer of all of Developer's interest in the Development
Agreement or the termination of his employment by or association with Developer,
Covenantor will not without the prior written consent of Franchisor:
a. Divert or attempt to divert, directly or indirectly, any
business, business opportunity or customer of the Restaurants to any competitor.
b. Employ or seek to employ any person who is at the time (or has
been within the preceding twelve (12) months) employed by Franchisor, or any of
its Affiliates, or any operator or developer of Franchisor, or otherwise
directly or indirectly induce such persons to leave that person's employment.
c. Except with respect to restaurants operated under Franchise
Agreements between Developer or its Affiliates, and Franchisor or its
Affiliates, directly or indirectly, for himself or through, on behalf of or in
conjunction with any person, partnership or corporation, own, maintain, operate,
engage in or have any financial or beneficial interest in (including any
interest in corporations, partnerships, trusts, unincorporated associations or
joint ventures), advise, assist or make loans to, any restaurant business that
is of a character and concept similar to the Restaurants, including (I) a casual
dining restaurant business, as such market segment is defined pursuant to
then-current industry standards, and (ii) any food service business which offers
pizza as a primary menu item; which business is, or is intended to be, located
within the Territory, as such term is defined in the development Agreement (and
as described in the map attached thereto), or within a ten (10) mile radius of
the location of any Pizzeria Uno restaurant or food service facility in
existence or under construction (or where land has been purchased or a lease
executed for the construction of a Pizzeria Uno restaurant or other food service
facility) as of the earlier of (I) the expiration or termination of, or the
transfer of all of Developer's interest in, the Development Agreement; or (ii)
the time Covenantor ceases to be employed or associated with by Developer, as
applicable.
Miscellaneous
1. Developer shall make all commercially reasonable efforts to ensure that
Covenantor acts as required by this Agreement.
2. Covenantor agrees that in the event of a breach of this Agreement,
Franchisor would be irreparably injured and be without an adequate remedy at
law. Therefore, in the event of such a breach, or threatened or attempted breach
of any of the provisions hereof, Franchisor shall be entitled to enforce the
provisions of this Agreement and shall be entitled, in addition to any other
remedies which are made available to it at law or in equity (including any right
to terminate the Development Agreement or any franchise agreement, as provided
therein), to a temporary and/or permanent injunction and a decree for the
specific performance of the terms of this Agreement, without the necessity of
showing actual or threatened harm, likelihood of success on the merits of the
claims and without being required to furnish a bond or other security.
3. Covenantor agrees to pay all expenses (including court costs and
reasonable attorneys' fees) incurred by Franchisor and Developer in enforcing
this Agreement.
4. Any failure by Franchisor or the Developer to object to or take action
with respect to any breach of any provision of this Agreement by Covenantor
shall not operate or be construed as a waiver of or consent to that breach or
any subsequent breach by Covenantor.
5. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF MASSACHUSETTS WITHOUT REFERENCE TO CHOICE OF LAW
PRINCIPLES. COVENANTOR HEREBY IRREVOCABLY SUBMITS HIMSELF TO THE JURISDICTION OF
MASSACHUSETTS AND THE COURTS LOCATED IN SUFFOLK COUNTY, MASSACHUSETTS.
COVENANTOR HEREBY WAIVES ALL QUESTIONS OF PERSONAL JURISDICTION OR VENUE FOR THE
PURPOSE OF CARRYING OUT THIS PROVISION. COVENANTOR HEREBY AGREES THAT SERVICE OF
PROCESS MAY BE MADE UPON HIM IN ANY PROCEEDING RELATING TO OR ARISING UNDER THIS
AGREEMENT OR THE RELATIONSHIP CREATED BY THIS AGREEMENT BY ANY MEANS
B-3
<PAGE>
ALLOWED BY MASSACHUSETTS OR APPLICABLE LAW. COVENANTOR FURTHER AGREES THAT VENUE
FOR ANY PROCEEDING RELATING TO OR ARISING OUT OF THIS AGREEMENT SHALL BE SUFFOLK
COUNTY, MASSACHUSETTS; PROVIDED, HOWEVER, WITH RESPECT TO ANY ACTION WHICH
INCLUDES INJUNCTIVE RELIEF OR OTHER EXTRAORDINARY RELIEF, FRANCHISOR OR
DEVELOPER MAY BRING SUCH ACTION IN ANY COURT WHICH HAS JURISDICTION.
6. The parties acknowledge and agree that each of the covenants contained
herein are reasonable limitations as to time, geographical area, and scope of
activity to be restrained and do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of Franchisor. The
parties agree that each of the foregoing covenants shall be construed as
independent of any other covenant or provision of this Agreement. If all or any
portion of a covenant in this Agreement is held unreasonable or unenforceable by
a court or agency having valid jurisdiction in any unappealed final decision to
which Franchisor is a party, Covenantor expressly agrees to be bound by any
lesser covenant subsumed within the terms of such covenant that imposes the
maximum duty permitted by law, as if the resulting covenant were separately
stated in and made a part of this Agreement.
7. This Agreement contains the entire agreement of the parties regarding
the subject matter hereof. This Agreement may be modified only by a duly
authorized writing executed by all parties.
8. All notices and demands required to be given hereunder shall be in
writing and shall be sent by personal delivery, expedited delivery service,
certified or registered mail, return receipt requested, first-class postage
prepaid, facsimile, telegram or telex (provided that the sender confirms the
facsimile, telegram or telex by sending an original confirmation copy by
certified or registered mail or expedited delivery service within three (3)
Business Days after transmission), to the respective parties at the following
addresses unless and until a different address has been designated by written
notice to the other parties.
If directed to Franchisor, the notice shall be addressed to:
Pizzeria Uno Corporation
100 Charles Park Road
West Roxbury, Massachusetts 02132-4985
Attention: General Counsel
Facsimile: (617) 323-7170
If directed to Developer, the notice shall be addressed to:
__________________________________
__________________________________
__________________________________
Attention:________________________
Facsimile:________________________
If directed to Covenantor, the notice shall be addressed to:
__________________________________
__________________________________
__________________________________
Attention:________________________
Facsimile:________________________
Any notice shall be deemed given at the time of personal delivery or
receipt, or in the case of facsimile, telegram or telex, upon transmission
(provided confirmation is sent as described above); provided; however, that if
delivery is rejected, delivery shall be deemed to have been given at the time of
such rejection. Any change in the foregoing addresses shall be effected by
giving fifteen (15) days written notice of such change to the other parties.
9. The rights and remedies of Franchisor under this Agreement are fully
assignable and transferable and shall inure to the benefit of its respective
Affiliates, successors and assigns. The respective obligations of Developer and
Covenantor hereunder may not be assigned by Developer or Covenantor, without the
prior written consent of Franchisor.
B-4
<PAGE>
10. Franchisor shall be a third party beneficiary of this Agreement with
the independent right to enforce the terms hereunder.
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as
witnessed by their signatures below.
DEVELOPER:
By:_______________________
Name:_____________________
Title:____________________
COVENANTOR:
By:_______________________
Name:_____________________
B-5
<PAGE>
ATTACHMENT C
STATEMENT OF OWNERSHIP INTERESTS AND DEVELOPER'S PRINCIPALS
A. The following is a list of stockholders, partners or other investors in
Developer, including all investors who own or hold a direct or indirect
interest in Developer, and a description of the nature of their interest:
Name Percentage of Ownership/Nature of Interest
---- ------------------------------------------
B. The following is a list of all of Developer's Principals described in and
designated pursuant to Section I of the Development Agreement, each of
whom shall execute the Confidentiality Agreement and Ancillary Covenants
Not to Compete substantially in the form set forth in Attachment B (see
Section VII.I. of the Development Agreement):
C. The following is a list of all of Developer's Controlling Principals
described in and designated pursuant to Section I of the Development
Agreement, each of whom shall execute the Development Agreement as
Controlling Principals. The Operating Principal is indicated below by an
asterisk.
C-Solo Page
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF MARYLAND
This Development Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
MARYLAND LAW MODIFICATIONS
1. The Maryland Securities Division requires that certain provisions
contained in franchise documents be amended to be consistent with Maryland
law, including the Maryland Franchise Registration and Disclosure Law, Md.
Code Ann., Bus. Reg. ss.ss. 14-201 - 14-233 (1994). To the extent that
this Agreement contains provisions that are inconsistent with the
following, such provisions are hereby amended:
a. If the Agreement requires Franchisee to execute a
release of claims or to acknowledge facts that would
negate or remove from judicial review any statement,
misrepresentation or action that would violate the Act,
or a rule or order under the Act, such release shall
exclude claims arising under the Maryland Franchise
Registration and Disclosure Law, and such
acknowledgments shall be void with respect to claims
under the Law.
b. If this Agreement requires litigation to be conducted in
a forum other than the State of Maryland, the
requirement shall not be interpreted to limit any rights
Franchisee may have under Sec. 14-216 (c)(25) of the
Maryland Franchise Registration and Disclosure Law to
bring suit in the state of Maryland.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the Maryland Franchise
Registration and Disclosure Law, with respect to each such provision, are
met independent of this Amendment. This Amendment shall have no force or
effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF NEW YORK
This Development Agreement between ______________________________
("Franchisee ) and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
NEW YORK LAW MODIFICATIONS
1. The New York Department of Law requires that certain provisions
contained in franchise documents be amended to be consistent with New York
law, including the General Business Law, Article 33, Sections 680 through
695 (1989). To the extent that the Agreement contains provisions that are
inconsistent with the following, such provisions are hereby amended:
a. If the Agreement requires Franchisee to execute a release of
claims or to acknowledge facts that would negate or remove
from judicial review any statement, misrepresentation or
action that would violate the General Business Law, or any
regulation, rule or order under the Law, such release shall
exclude claims arising under the New York General Business
Law, Article 33, Section 680 through 695 and the regulations
promulgated thereunder, and such acknowledgments shall be
void. It is the intent of this provision that non-waiver
provisions of Sections 687.4 and 687.5 of the General Business
Law be satisfied.
b. If the Agreement requires that it be governed by a state's
law, other than the State of New York, the choice of law
provision shall not be considered to waive any rights
conferred upon the Franchisee under the New York General
Business Law, Article 33, Sections 680 through 695.
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<PAGE>
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the New York General
Business Law, with respect to each such provision, are met independent of
this Amendment. This Amendment shall have no force or effect if such
jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF NORTH DAKOTA
This Development Agreement between _______________________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
_____________________, 19___ (the "Agreement") shall be amended by the addition
of the following language, which shall be considered an integral part of the
Agreement:
NORTH DAKOTA LAW MODIFICATIONS
1. The North Dakota Securities Commissioner requires that certain
provisions contained in franchise documents be amended to be consistent
with North Dakota law, including the North Dakota Franchise Investment
Law, North Dakota Century Code Annotated Chapter 51-19, Sections 51-19-01
through 51-19-17 (1993). To the extent that the Agreement contains
provisions that are inconsistent with the following, such provisions are
hereby amended:
a. If the Franchisee is required in the Agreement to execute a
release of claims or to acknowledge facts that would negate or
remove from judicial review any statement, misrepresentation
or action that would violate the Law, or a rule or order under
the Law, such release shall exclude claims arising under the
North Dakota Franchise Investment Law, and such
acknowledgments shall be void with respect to claims under the
Law.
b. Covenants not to compete during the term of and upon
termination or expiration of the Agreement are enforceable
only under certain conditions according to North Dakota Law.
If the Agreement contains a covenant not to compete which is
inconsistent with North Dakota Law, the covenant may be
unenforceable.
c. If the Agreement requires litigation to be conducted in a
forum other than the State of North Dakota, the requirement is
void with respect to claims under the North Dakota Franchise
Investment Law.
d. If the Agreement requires that it be governed by a state's
law, other than the State of North Dakota, to the extent that
such law conflicts with the North Dakota Franchise Investment
Law, the North Dakota Franchise Investment Law will control.
e. If the Agreement requires mediation or arbitration to be
conducted in a forum other than the State of North Dakota, the
requirement may be unenforceable under the North Dakota
Franchise Investment Law. Arbitration involving a franchise
purchased in the State of North Dakota must be held either in
a location mutually agreed upon prior to the arbitration or if
the parties cannot agree on a location, the location will be
determined by the arbitrator.
f. If the Agreement requires payment of a termination penalty,
the requirement may be unenforceable under the North Dakota
Franchise Investment Law.
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the North Dakota Franchise Investment
Law, with respect to each such provision, are met independent of this Amendment.
This Amendment shall have no force or effect if such jurisdictional requirements
are not met.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
-2-
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF RHODE ISLAND
This Development Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
RHODE ISLAND LAW MODIFICATIONS
1. The Rhode Island Securities Division requires that certain
provisions contained in franchise documents be amended to be consistent
with Rhode Island law, including the Franchise Investment Act, R.I. Gen.
Law. ch. 395 Sec. 19-28.1-1 -19-28.1-34. To the extent that this Agreement
contains provisions that are inconsistent with the following, such
provisions are hereby amended:
a. If this Agreement requires litigation to be conducted in
a forum other than the State of Rhode Island, the
requirement is void under Rhode Island Franchise
Investment Act Sec. 19-28.1-14.
b. If this Agreement requires that it be governed by a
state's law, other than the State of Rhode Island, to
the extent that such law conflicts with Rhode Island
Franchise Investment Act it is void under Sec.
19-28.1-14.
c. If the Franchisee is required in this Agreement to
execute a release of claims or to acknowledge facts that
would negate or remove from judicial review any
statement, misrepresentation or action that would
violate the Act, or a rule or order under the Act, such
release shall exclude claims arising under the Rhode
Island Franchise Investment Act, and such
acknowledgments shall be void with respect to claims
under the Act.
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<PAGE>
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the Rhode Island Franchise
Investment Act, with respect to each such provision, are met independent
of this Amendment. This Amendment shall have no force or effect if such
jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
A-2
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF SOUTH DAKOTA
This Development Agreement between _______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
_____________________, 19___ (the "Agreement") shall be amended by the addition
of the following language, which shall be considered an integral part of the
Agreement:
SOUTH DAKOTA LAW MODIFICATIONS
1. The Director of the South Dakota Division of Securities requires
that certain provisions contained in franchise documents be amended to be
consistent with South Dakota law, including the South Dakota Franchises
for Brand-Name Goods and Services Law, South Dakota Codified Laws, Title
37, Chapter 37-5A, Sections 37-5A-1 through 37-5A-87 (1994). To the extent
that this Agreement contains provisions that are inconsistent with the
following, such provisions are hereby amended:
a. If the Franchisee is required in this Agreement to execute a
release of claims or to acknowledge facts that would negate or
remove from judicial review any statement, misrepresentation
or action that would violate the Law, or a rule or order under
the Law, such release shall exclude claims arising under the
South Dakota Franchises for Brand-Name Goods and Services Law,
and such acknowledgments shall be void with respect to claims
under the Law.
b. Covenants not to compete upon termination or expiration of the
Agreement are generally unenforceable in the state of South
Dakota, except in certain limited instances as provided by
law. If this Agreement contains a covenant not to compete
which is inconsistent with South Dakota Law, the covenant may
be unenforceable.
c. Regardless of the terms of the Agreement concerning
termination, if Franchisee fails to meet performance and
quality standards or fails to make any royalty payments under
the Agreement, Franchisee will be afforded thirty (30) days'
written notice with an opportunity to cure the default before
termination.
d. If the Agreement requires payment of liquidated damages that
are inconsistent with South Dakota Law, the liquidated damage
clauses may be void under SDCL 53-9-5.
e. If the Agreement requires litigation to be conducted in a
forum other than the State of South Dakota, the requirement is
void with respect to any cause of action otherwise enforceable
under South Dakota Law.
f. If the Agreement requires that it be governed by a state's
law, other than the State of South Dakota, the law regarding
franchise registration, employment, covenants not to compete,
and other matters of local concern will be governed by the
laws of the State of South Dakota; but as to contractual and
all other matters, the Agreement and all provisions of this
Amendment will be and remain subject to the application,
construction, enforcement, interpretation under the governing
law set forth in the Agreement.
<PAGE>
g. If the Agreement requires that disputes between Franchisor and
Franchisee be mediated/arbitrated at a location that is
outside the State of South Dakota, the mediation/arbitration
will be conducted at a location mutually agreed upon by the
parties. If the parties cannot agree on location for the
mediation/arbitration, the location shall be determined by the
mediator/arbitrator selected.
h. If the Agreement provides that the parties waive their right
to claim punitive exemplary, incidental, indirect, special or
consequential damages, these provisions may not be enforceable
under South Dakota law.
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the South Dakota Franchise Investment
Law, with respect to each such provision, are met independent of this Amendment.
This Amendment shall have no force or effect if such jurisdictional requirements
are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF WASHINGTON
This Development Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
WASHINGTON LAW MODIFICATIONS
1. The Director of the Washington Department of Financial Institutions
requires that certain provisions contained in franchise documents be amended to
be consistent with Washington law, including the Washington Franchise Investment
Protection Act, WA Rev. Code ss.ss. 19.100.010 to 19.100.940 (1991). To the
extent that the Agreement contains provisions that are inconsistent with the
following, such provisions are hereby amended:
a. The Washington Franchise Investment Protection Act provides
rights to Franchisee concerning nonrenewal and termination of
the Agreement. If the Agreement contains a provision that is
inconsistent with the Act, the Act will control.
b. If the Agreement requires Franchisee to execute a release of
claims, such release shall exclude claims arising under the
Washington Franchise Investment Protection Act; except when
the release is executed under a negotiated settlement after
the Agreement is in effect and where the parties are
represented by independent counsel. If there are provisions in
the Agreement that unreasonably restrict or limit the statute
of limitations period for claims brought under the Act, or
other rights or remedies under the Act, those provisions may
be unenforceable.
c. If the Agreement requires litigation, arbitration, or
mediation to be conducted in a forum other than the State of
Washington, the requirement may be unenforceable under
Washington law. Arbitration involving a franchise purchased in
the State of Washington, must either be held in the State of
Washington or in a place mutually agreed upon at the time of
the arbitration, or as determined by the arbitrator.
d. If the Agreement requires that it be governed by a state's
law, other than the State of Washington, and there is a
conflict between the law and the Washington Franchise
Investment Protection Act, the Washington Franchise Investment
Protection Act will control.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the Washington law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF WISCONSIN
This Development Agreement between ____________ ___________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
WISCONSIN LAW MODIFICATIONS
1. The Securities Commissioner of the State of Wisconsin requires that
certain provisions contained in franchise documents be amended to be consistent
with Wisconsin Fair Dealership Law, Wisconsin Statutes, Chapter 135 ("Fair
Dealership Law"). To the extent that the Agreement contains provisions that are
inconsistent with the following, such provisions are hereby amended:
a. The Wisconsin Fair Dealership Law, among other things, grants
Franchisee the right, in most circumstances, to 90 days' prior
written notice of non-renewal and 60 days within which to
remedy any claimed deficiencies. If the Agreement contains a
provision that is inconsistent with the Wisconsin Fair
Dealership Law, the provisions of the Agreement shall be
superseded by the Law's requirements and shall have no force
or effect.
b. If the Agreement requires that it be governed by a state's
law, other than the State of Wisconsin, to the extent that any
provision of the Agreement conflicts with the Wisconsin Fair
Dealership Law such provision shall be superseded by the law's
requirements.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the Wisconsin law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
-2-
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
-3-
<PAGE>
ATTACHMENT D
TERRITORY
D-Solo Page
<PAGE>
Attachment E
GUARANTY
As an inducement to Pizzeria Uno Corporation, a Delaware corporation
("Franchisor") to execute the foregoing Development Agreement with
______________ ("Developer") dated ____________, 19__, the undersigned jointly
and severally agree to be bound by all the terms and conditions of the above
Development Agreement, including any amendments or modifications thereto
whenever made (the "Agreement") and unconditionally and irrevocably guarantee to
Franchisor and its successors and assigns that all of the obligations of
Developer 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 or any guarantor 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.
THIS GUARANTY SHALL BE GOVERNED BY AND INTERPRETED IN ACCORDANCE WITH THE
LAWS OF MASSACHUSETTS, WITHOUT GIVING EFFECT TO THE CHOICE OF LAW PRINCIPLES
THEREOF. ANY DISPUTE ARISING OUT OF OR UNDER THIS GUARANTY NOT SETTLED BY
AGREEMENT SHALL BE SETTLED IN ACCORDANCE WITH SECTION XIII.B OF THE AGREEMENT.
E-1
<PAGE>
The undersigned have signed this Guaranty this ____ day of ___________,
199__.
GUARANTORS:
______________________________________
Name:_________________________________
______________________________________
Name:_________________________________
______________________________________
Name:_________________________________
______________________________________
Name:_________________________________
______________________________________
Name:_________________________________
E-2
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF CALIFORNIA
This Development Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
CALIFORNIA LAW MODIFICATIONS
1. The California Department of Corporations requires that certain
provisions contained in franchise documents be amended to be consistent with
California law, including the California Franchise Investment Law, CAL. BUS. &
PROF. CODE Section 31000 et seq., and the California Franchise Relations Act,
CAL. BUS. & PROF. CODE Section 20000 et seq. To the extent that the Agreement
contains provisions that are inconsistent with the following, such provisions
are hereby amended:
a. If the Agreement contains a provision regarding termination
and nonrenewal that is inconsistent with California Business
and Professions Code Sections 20000 through 20043 and the
Federal Bankruptcy Code, these laws will control.
b. If the Agreement requires Franchisee to execute a release of
claims, such release shall exclude claims arising under the
California Franchise Investment Law and the California
Franchise Relations Act.
c. If the Agreement requires Franchisee to pay liquidated damages
that are inconsistent with California Civil Code Section 1671,
such law shall prevail.
d. If the Agreement contains a covenant not to compete which
extends beyond the expiration or termination of the Agreement,
the covenant may be unenforceable under California law.
e. If the Agreement requires litigation, arbitration, or
mediation to be conducted in a forum other than the State of
California, the requirement may be unenforceable under
California law.
f. If the Agreement requires that it be governed by a state's
law, other than the State of California, such requirement may
be unenforceable.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the California law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
-2-
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF HAWAII
This Development Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
HAWAII LAW MODIFICATIONS
1. The Director of the Hawaii Department of Commerce and Consumer Affairs
requires that certain provisions contained in franchise documents be amended to
be consistent with Hawaii law, including the Hawaii Franchise Investment Law,
Hawaii Revised Statutes, Title 26, Chapter 482E-1 Through 482E-12 (1988). To the
extent that the Agreement contains provisions that are inconsistent with the
following, such provisions are hereby amended:
a. The Hawaii Franchise Investment Law provides rights to
Franchisee concerning nonrenewal, termination and transfer of
the Agreement. If the Agreement contains a provision that is
inconsistent with the Law, the Law will control. Among those
rights, the law may require that upon termination or
nonrenewal Franchisor purchase for fair market value
Franchisee's inventory, supplies, equipment and furnishings
purchased from Franchisor or a supplier designated by
Franchisor; provided that personalized materials which have no
value to Franchisor need not be compensated for. If the
non-renewal or termination is for the purpose of converting
the Franchisee's business to one owned and operated by
Franchisor, Franchisor may, additionally, be obligated to
compensate the Franchisee for loss of goodwill. Franchisor may
deduct all amounts due from Franchisee and any costs related
to the transportation or disposition of items purchased
against any payment for those items. If the parties cannot
agree on fair market value, fair market value shall be
determined in the manner set forth in the Agreement. If the
Agreement does not provide for determination of the fair
market value of assets for purchase by Franchisor, such amount
will be determined by an independent appraiser approved by
both parties, and the costs of the appraisal shall be shared
equally by the parties.
b. If the Agreement requires Franchisee to execute a release of
claims, such release shall exclude claims arising under the
Hawaii Franchise Investment Law.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the Hawaii Franchise Investment Law
applicable to the provision are met independent of this Amendment. This
Amendment shall have no force or effect if such jurisdictional requirements are
not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
-2-
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
AND OFFERING CIRCULAR
FOR THE STATE OF MINNESOTA
This Development Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
MINNESOTA LAW MODIFICATIONS
1. The Commissioner of Commerce for the State of Minnesota requires that
certain provisions contained in franchise documents be amended to be consistent
with Minnesota Franchise Act, Minn. Stat. Section 80.01 et seq., and of the
Rules and Regulations promulgated under the Act (collectively the "Franchise
Act"). To the extent that the Agreement and Offering Circular contain provisions
that are inconsistent with the following, such provisions are hereby amended:
a. The Minnesota Department of Commerce requires that Franchisor
indemnify Minnesota franchisees against liability to third
parties resulting from claims that the Franchisees' use of the
Intellectual Properties infringes trademark rights of the
third party. If the Agreement contains a provision that is
inconsistent with the Franchise Act, the provisions of the
Agreement shall be superseded by the Act's requirements and
shall have no force or effect.
b. Franchise Act, Sec. 80C.14, Subd. 4., requires, except in
certain specified cases, that a franchisee be given written
notice of a franchisor's intention not to renew 180 days prior
to expiration of the franchise and that the franchisee be
given sufficient opportunity to operate the franchise in order
to enable the franchisee the opportunity to recover the fair
market value of the franchise as a going concern. If the
Agreement contains a provision that is inconsistent with such
requirement of the Franchise Act, the provisions of the
Agreement shall be superseded by the Act's requirements and
shall have no force or effect.
c. Franchise Act, Sec. 80C.14, Subd. 3., requires, except in
certain specified cases that a franchisee be given 90 days
notice of termination (with 60 days to cure). If the Agreement
contains a provision that is inconsistent with such
requirement of the Franchise Act, the provisions of the
Agreement shall be superseded by the Act's requirements and
shall have no force or effect.
d. If the Agreement requires Franchisee to execute a release of
claims or to acknowledge facts that would negate or remove
from judicial review any statement, misrepresentation or
action that would violate the Franchise Act, such release
shall exclude claims arising under the Franchise Act, and such
acknowledgments shall be void with respect to claims under the
Act.
e. If the Agreement requires that it be governed by a state's
law, other than the State of Minnesota or arbitration or
mediation, those provisions shall not in any way abrogate or
reduce any rights of the Franchisee as provided for in the
Franchise Act, including the right to submit matters to the
jurisdiction of the courts of Minnesota.
f. Section 2860.4400J Minn. Rules prohibits Franchisor from
requiring Franchisee, through the Agreement, to waive its
rights to any procedures or remedies provided for by the laws
of Minnesota or to consent to liquidated damages. If the
Agreement contains a provision that is inconsistent with such
Rules, the provisions of the Agreement shall be superseded by
the Rule's requirements and shall have no force or effect.
g. Franchise Act, Sec. 80C.17, Subd. 5 provides that no action
may be commenced under the Franchise Act more than 3 years
after the cause of action accrues. If the Agreement contains a
provision that is inconsistent with the Franchise Act, the
provisions of the Agreement shall be superseded by the Act's
requirements and shall have no force or effect.
<PAGE>
2. Each provision of this Agreement shall be effective only to the extent
that the jurisdictional requirements of the Minnesota law applicable to the
provision are met independent of this Amendment. This Amendment shall have no
force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
-2-
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF ILLINOIS
This Development Agreement between ______________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
________________ (the "Agreement") shall be amended by the addition of the
following language, which shall be considered an integral part of the Agreement:
ILLINOIS LAW MODIFICATIONS
1. The Illinois Attorney General's Office requires that certain provisions
contained in franchise documents be amended to be consistent with Illinois law,
including the Franchise Disclosure Act of 1987, Ill. Rev. Stat. ch. 815 para.
705/1 - 705/44 (1994). To the extent that the Agreement contains provisions that
are inconsistent with the following, such provisions are hereby amended:
a. Illinois Franchise Disclosure Act paragraphs 705/19 and 705/20
provide rights to Franchisee concerning nonrenewal and
termination of the Agreement. If the Agreement contains a
provision that is inconsistent with such provisions of the
Act, the Act will control.
b. If the Agreement requires Franchisee to execute a release of
claims or to acknowledge facts that would negate or remove
from judicial review any statement, misrepresentation or
action that would violate the Act, or a rule or order under
the Act, such release shall exclude claims arising under the
Illinois Franchise Disclosure Act, and such acknowledgments
shall be void and are hereby deleted with respect to claims
under the Act.
c. If the Agreement requires litigation to be conducted in a
forum other than the State of Illinois, the requirement shall
be void with respect to claims under the Illinois Franchise
Disclosure Act.
d. If the Agreement requires that it be governed by a state's
law, other than the State of Illinois, to the extent that such
law conflicts with the Illinois Franchise Disclosure Act, the
Act will control.
e. The second sentence of Section XVII.A. of the Agreement is
void with respect to claims under the Illinois Franchise
Disclosure Act.
f. Section XVII.C. of the Agreement is void with respect to
claims under the Illinois Franchise Disclosure Act.
-1-
<PAGE>
2. Each provision of this Amendment shall be effective only to the extent
that the jurisdictional requirements of the Illinois Franchise Disclosure Act,
with respect to each such provision, are met independent of this Amendment. This
Amendment shall have no force or effect if such jurisdictional requirements are
not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
-2-
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
-3-
<PAGE>
AMENDMENT TO PIZZERIA UNO CORPORATION
DEVELOPMENT AGREEMENT
FOR THE STATE OF INDIANA
This Development Agreement between ____________________________________
("Franchisee") and Pizzeria Uno Corporation ("Franchisor") dated
_____________________, 19___ (the "Agreement") shall be amended by the addition
of the following language, which shall be considered an integral part of the
Agreement:
INDIANA LAW MODIFICATIONS
1. The Indiana Securities Commissioner requires that certain
provisions contained in franchise documents be amended to be consistent
with Indiana law, including the Indiana Franchises Act, Ind. Code Ann.
ss.ss. 1 - 51 (1994) and the Indiana Deceptive Franchise Practices Act,
Ind. Code Ann. ss. 23-2-2.7 (1985). To the extent that the Agreement
contains provisions that are inconsistent with the following, such
provisions are hereby amended:
a. If the Agreement contains a provision regarding termination
and nonrenewal that is inconsistent with these provisions of
the Indiana Deceptive Franchise practices Act, the Act will
control.
b. If the Agreement requires Franchisee to execute a release of
claims or to acknowledge facts that would negate or remove
from judicial review any statement, misrepresentation or
action that would violate the Act, or a rule or order under
the Act, such release shall exclude claims arising under the
Indiana Deceptive Franchise Practices Act and the Indiana
Franchises Act, and such acknowledgments shall be void with
respect to claims under the Acts.
c. If the Agreement contains covenants not to compete upon
expiration or termination of the Agreement that are
inconsistent with the Indiana Deceptive Franchise Practices
Act, the requirements of the Act will control.
d. The Indiana Deceptive Franchise Practices Act provides that
substantial modification of the Agreement by Franchisor
requires written consent of the Franchisee. If the Agreement
contains provisions that are inconsistent with this
requirement, the Act will control.
e. If the Agreement requires litigation to be conducted in a
forum other than the State of Indiana, the requirement may be
unenforceable as a limitation on litigation under the Indiana
Deceptive Franchise Practices Act ss. 23-2-2.7(10).
f. If the Agreement requires that it be governed by a state's
law, other than the State of Indiana, to the extent that such
law conflicts with the Indiana Deceptive Franchise Practices
Act and the Indiana Franchises Act, the Acts will control.
2. Each provision of this Amendment shall be effective only to the
extent that the jurisdictional requirements of the Indiana Deceptive
Franchise Practices Act and the Indiana Franchises Act, with respect
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
-1-
<PAGE>
to each such provision, are met independent of this Amendment. This Amendment
shall have no force or effect if such jurisdictional requirements are not met.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement on the day and year first above written.
Franchisor:
Pizzeria Uno Corporation
a Delaware corporation
ATTEST:
_______________________________ ______________________________________
By:___________________________________
By:___________________________________
DEVELOPER:
______________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
By:___________________________________
_______________________________ Name:_________________________________
Witness Title:________________________________
-2-
<PAGE>
CONTROLLING PRINCIPALS
Each of the undersigned acknowledges and agrees as follows:
(1) Each has read the terms and conditions of the Development Agreement
and acknowledges that the execution of this Guaranty and the undertakings of the
Controlling Principals in the Development Agreement are in partial consideration
for, and a condition to, the granting of the development rights in the
Development Agreement, and that Franchisor would not have granted such rights
without the execution of this Guaranty and such undertakings by each of the
undersigned;
(2) Each is included in the term "The Controlling Principals;"
(3) Each individually, jointly and severally, makes all of the covenants,
representations, warranties and agreements of the Controlling Principals set
forth in the Development Agreement and is obligated to perform thereunder; and
Operating Principal individually, jointly and severally, makes all of the
covenants, representations and agreements of Developer and Operating Principal
set forth in the Development Agreement and is obligated to perform hereunder.
ATTEST: THE CONTROLLING PRINCIPALS:
____________________________ _________________________________________
Witness *Name:___________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
____________________________ _________________________________________
Witness Name:____________________________________
* Denotes individual who is Developer's Operating Principal
-3-
<PAGE>
FINANCE
<PAGE>
Date
Name
Address
City, State, Zip
Phone
Dear
STI Credit Corporation ("STI") is pleased to inform you that you have qualified
for financing for the _____________ located in ____________________________ up
to a total amount of $___________.
This comitment is subject to conditions as outlined in this letter.
PERMANENT FINANCING
BORROWER: Name
DBA
Address
City, State, Zip
LOAN AMOUNT:
ADVANCE PAYMENTS:
TERM:
REPAYMENT: For the term of the loan the monthly payment shall be
determined by multiplying the amount financed times the rate factor
provided. For your loan, the rate factor is ___________ with a payment of
___________ per month. This payment amount is subject to change depending
on the final loan amount. The initial payment will be due at closing.
Subsequent payments will be due monthly beginning thirty days from
closing.
To further secure STI's position with collateral for the __________ financing,
the following documents must be executed prior to funding:
Promissory Note. This evidences the agreement between STI and yourself as
to the terms of the financing. The note is subject to a prepayment fee.
Security Agreement. This gives STI first priority interest in the
equipment in your
<PAGE>
location at ________________________________.
Landlord Waiver. Landlord grants STI acces to the furniture, fixtures, and
equipment located on the premises.
Consent to Assignment of Lease. Landlord consents to your assignment of
the leased premises to STI.
Assignment of Lease. You assign your rights to the lease to STI in the
event of default.
Uniform Commercial Code, UCC. First Priority Security Interest in all
equipment and fixtures.
Guaranty. The loan will be unconditionally and fully guaranteed by
____________, whose obligations are joint and several with the Borrower
and the other guarantors and shall be on written terms which are
acceptable to STI.
Certificate of Acceptance. Once completed, this form demonstrates that you
have received the property and that it meets your satisfaction.
Error and Omission. If STI makes any error in preparing, executing, etc.
the documents, you agree to correct the documents.
Stock Pledge. The pledge of the stock is for additional collateral.
Assignment of Franchise Rights. You agree to the assignment of your
franchise rights to STI in the event of default.
Prior to STI funding your transaction, the following documents must be provided:
Lease Agreement demonstrating a lease term for at least the term of the
promissory note.
Equipment list containing serial numbers, make, and model.
Certificate of Insurance verifying a property and casualty insurance
policy providing "all risk" physical damage or loss in the amount of
__________ and providing liability coverage for at least $100,000/$300,000
bodily insurance and ____________ property damage (i) naming STI as the
Loss Payee for the term of the loan and (ii) evidence satisfactory to STI
as to the validity, enforceability, and priority of STI's security
interest therein, subject only to prior liens, if any, expressly permitted
in this commitment.
As to collateral for this financing, this loan will be secured by a first
priority security interest in all accounts receivable, contract rights,
inventory, machinery, equipment, furniture, fixtures, and general
intangibles owned currently or hereafter acquired, including all replacements,
substitutions and proceeds thereof, by the Borrower and any other
proprietorship, partnership, or
<PAGE>
corporation which may have ownership rights in the business described above.
Reporting Requirements: So long as Borrower shall be indebted to STI,
1. Borrower will deliver to STI monthly, quarterly, and annual
financial statements presented in conformity with generally accepted
accounting principles, beginning at the time of the acceptance of
this commitment and continuing through the term of the loan.
2. Each of the guarantors shall submit financial statements to STI on
an annual basis or at any other time so requested by STI.
Warranties and Representations. By accepting this commitment Borrower and
its guarantors represent and warrant to STI that
1. The financial date previously submitted to STI is and the financial
date to be submited to STI will be true and accurate in all material
respects and accurately reflect Borrower's and its guarantors'
financial condition and that there have been no material changes in
the financial condition of the parties as of the date of the
acceptance of this commitment.
2. Borrower warrants and represents that all necessary licenses and
permits required by the city, county and state will be current.
3. Borrower is a _________, duly organized, validly existing and in
good standing under the laws of the State of __________ and is
authorized to transact business in all necessary jurisdictions.
Affirmative Covenants: Borrower shall, so long as any funds remain
outstanding or its indebtedness to STI remains unpaid;
1. Pay all taxes when due.
2. Authorize STI to discuss Borrower's business with the franchisor as
may be deemed necessary by STI at its sole discretion.
3. From time to time provide STI with such other information as STI may
reasonably request.
4. Borrower and its guarantors agree to give STI immediate notice of
any change in their financial condition occurring prior to closing
and funding.
5. Will not operate in violation of any city, county, state or federal
laws.
Other Covenants: Borrower shall not, so long as any indebtedness to STI
remains
<PAGE>
unpaid, without the prior written consent of STI;
1. Make or permit any changes in the ownership of Borrower or anyof the
stores existing as of the date of this commitment letter or
contemplated by this commitment letter if such change will be to
cause a diminution of the percentage of ownership control of _______
Dba Or ________ any of the proprietoships, partnerships or
corporations he owns or is a party to, except as expressly approved
by STI.
Default: This commitment will terminate and any amounts outstanding under
any loan contemplated hereby shall become due and payable in the event of the
occurrence of;
1. Failure to make any payments due under any loan on or before its due
date.
2. Any default under any of the notes, security documents, instruments,
agreements, and other documents executed by Borrower or others in
connection with the transactions contemplated by this commitment.
3. Failure to comply with or a breach or failure of any representation,
warranty, covenant or other provision of this commitment letter
(both before and after funding.)
4. Should there be, in the opinion of STI, a material change in the
financial condition of Borrower or any of the guarantors to the
extent that repayment of loans might be adversely affected.
Closing costs and expenses: This transaction shall be without cost to STI.
All expenses including, but not limited to, expenses for appraisals, attorneys
fees, recording costs, title searches, and title insurance premiums shall be
paid by Borrower.
Governing law: This transaction shall be governed by the laws of the State
of Nevada.
Deadline for acceptance of commitment:
Expiration of commitment: __________. In the event the loan is not
completed within the six month commitment period and you wish to extend the
commitment for an additional six month period, you will be requied to submit an
updated financial package and an extension fee equal to one-half percent (1/2%)
of the loan request. This one-half percent will at all times remain the sole
property of STI.
If the terms, and conditions herein set forth are satisfactory, please so
indicate by signing in the space provided below and return this letter to:
STI Credit Corporation
<PAGE>
Mr. Dan Simonton
P.O. Box 11280
Reno, NV 89510-1280
Subject to the deadline set forth above, this commitment shall be considered
accepted upon receipt of this letter signed by Borrower by STI at its office in
Reno, Nevada.
Best regards,
The undersigned hereby accepts and approves the foregoing commitment and has
already submitted a check in the amount of __________ for the applcation fee,
check # _______.
<PAGE>
GUARANTY
STI Credit Corporation
1475 Terminal Way, C-2
Reno, NV 89502
Gentlemen:
In consideration of any loans, advances or financial accommodations previously
now or hereafter granted by you to or for the account of NAME OF BORROWER
("Borrower"), under any agreement or agreement between yourselves and Borrower
heretofore, now or hereafter executed (collectively the "Agreement") or
otherwise, each of the undersigned (collectively the "Guarantors" and
individually a "Guarantor") guarantees (a) the prompt payment to you of all sums
which may in any manner whatsoever by presently due and owing and of all sums
which shall in the future in any manner whatsoever become due and owing to you
from Borrower under the Agreement or otherwise; and (b) the due performance by
Borrower of all its obligations under the agreement and under all other present
and future agreements with you.
Each Guarantor also agrees; to indemnify you and hold you harmless from and
against all obligations, demands and liabilities by whomsoever asserted and
against all losses, in any way suffered, incurred or paid by you as a result or
in any way arising out of, following or consequential to transactions with
Borrower, whether under the Agreement or otherwise, that this Guaranty shall not
be impaired by any modification, supplement, extension nor by any modification,
release or other alteration of any of the obligations hereby guaranteed or of
any security therefore, nor by any agreement or arrangement whatever with the
Borrower or anyone else; that each Guarantor shall be liable to you for all
attorneys fees and costs incurred by you by reason of this Guaranty or in
connection with enforcing any rights granted you hereunder; that the liability
of each Guarantor is direct and unconditional and may be enforced without
requiring you first to resort to any other right, remedy or security; that you
need not exhaust your rights or recourse against Borrower or any other person or
any security you may have at any time before exercising your rights under this
Guaranty against any Guarantor; that no Guarantor shall have any right of
recourse to security for the debts and obligations of the Borrower to you,
unless and until all of said debts and obligations have been paid in full; that
if there is more than one Guarantor and the liability of the Guarantors shall be
joint and several; that if Borrower or any Guarantor shall at any time become
insolvent or make a general assignment or if a petition in bankruptcy or any
insolvency or reorganization proceeding shall be filed or commenced by, against
or in respect of Borrower or any Guarantor, any and all obligations of each
Guarantor shall, at your option, become immediately due and payable without
notice; that your changes and records showing the accounts between you and
Borrower shall be admissible in any action or proceeding, shall be binding upon
each Guarantor for the purpose of establishing the items therein set forth and
shall constitute prima facie proof thereof; that this Guaranty , is, as to each
Guarantor, a continuing Guaranty; that the death of any Guarantor shall not
affect the termination of this Guaranty as to such deceased or as to any other
Guarantor; that termination of the obligations of any Guarantor shall not affect
the continuing liability hereunder of any other of the Guarantors; that nothing
shall discharge or satisfy the liability of any Guarantor hereunder except the
full payment and performance of all Borrower's debts and obligations to you;
that any and all present and future debts and obligations of the Borrower to
each Guarantor are hereby waived and postponed in favor of and subordinated to
the full payment and performance of all present and future debts and obligations
of Borrower to you; and that all sums at any time to the credit of each
Guarantor and any of the
<PAGE>
property of each guarantor any time in your possession maybe held by you as
security for any and all obligations of such Guarantor to you and to pay any of
your affiliated entities, no matter how or when arising, whether absolute or
contingent, whether due or to become due and whether under this Guaranty or
otherwise.
Each Guarantor waives: notice of acceptance hereof; the right to a jury trial in
any action hereunder; presentment, demand and protest of any instrument and
notice thereof; notice of default, and all other notices to which such Guarantor
is or might be entitled; whether by law or otherwise; all right of set off and
counter claims. All actions or proceedings arising directly or indirectly, in
connection with, out of or related to this Guaranty may be litigated, at your
sole discretion and election, if Borrower has breached any of the terms,
provisions or covenants of the Note; such litigation shall not be deemed to be a
waiver by Lender of such breach.
No Assignment or other transfer by Lender or Borrower of any interest, right or
obligation under the Note or assumption by any third party of the obligations of
Borrower under the Note shall extinguish or diminish the unconditional,
absolute, primary and direct liability of the undersigned under this Guaranty.
The undersigned hereby consent to and waive all notice of any such assignment,
transfer or assumption. If this Guaranty is executed by more than one person,
the release of any one Guarantor shall not terminate this Guaranty as to any
other Guarantor.
Any assignee of Lender shall have all of the rights of Lender hereunder and may
enforce this Guaranty against us with the same force and effect as if this
Guaranty were given to such assignee in the first instance. This Guaranty shall
inure to the benefit of Lender, and its successors and assigns, and shall be
binding upon us and our heirs, executors, administrators, personal
representatives, successors and assigns.
The undersigned agree to pay all expenses which may be incurred by Lender in the
enforcement of this Guaranty, including court costs and reasonable attorney's
fees.
If any provision of this Guaranty is prohibited, held to be invalid, or
otherwise found to be unenforceable by reason of any rule of law, or judgement
or decree entered by any court of competent jurisdiction in any state shall, as
to such state, be ineffective to the extent of such prohibition, invalidity or
unenforceability without affecting the remaining provisions hereof.
This guaranty agreement remains fully enforceable irrespective of any defenses
or counterclaims that the borrower may assert on the underlying debt, including
but not limited to failure of consideration, breach of warranty, fraud, payment,
statute of frauds, bankruptcy, infancy, statute of limitations, lender
liability, accord and satisfaction, and usury.
THIS GUARANTY SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEVADA. THE UNDERSIGNED DO HEREBY SUBMIT TO THE
JURISDICTION OF ANY COURT (FEDERAL, STATE OR LOCAL) HAVING SITUS WITHIN THE
STATE OF NEVADA EXPRESSLY WAIVING PERSONAL SERVICE OF PROCESS AND CONSENT TO
SERVICE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
THE LAST KNOWN ADDRESS OF THE UNDERSIGNED, WHICH SERVICE SHALL BE DEEMED
COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF.
<PAGE>
IN WITNESS WHEREOF, the undersigned have executed this Guaranty on the _______
day of _________________ 19__.
GUARANTORS:
____________________________________________________________________
BORROWER
FEDERAL BANK SIGNATURE GUARANTY
<PAGE>
CORPORATE RESOLUTION
I,_____________________________, do hereby certify that I am the duly elected
and qualified Secretary of ___________________________, a corporation of the
state of ___________ and that the following is a true and correct copy of
resolutions duly adopted by the Board of Directors of said Corporation at a
meeting duly convened and held in accordance with applicable law and the Bylaws
of said Corporation on this __________ day of ______________, 1996, and that
said resolutions have not been rescinded and are now in full force and effect:
"RESOLVED, that the President, Vice President, Secretary or Treasurer of
this Corporation are authorized and directed, in accordance with the Promissory
Note presented to this meeting, to negotiate, execute and deliver on behalf of
the Corporation a loan with STI Credit Corporation, and its successors or
assigns, whereby this Corporation will loan funds for the purpose described in
such Note and/or any schedule thereto upon the terms and conditions thereof,
which Note, and the execution thereof, is hereby determined to be in the best
interests of this Corporation."
"RESOLVED, FURTHER, that the Secretary of this Corporation be, and he/she
hereby is, authorized and directed to execute and deliver to STI Credit
Corporation, a certified copy of this and the foregoing resolution."
IN WITNESS WHEREOF, I have signed my name as Secretary of said Corporation to be
hereunto affixed, this the ______ day of ____________, 19_____.
________________________________________
(Authorized Signature/Secretary)
(Seal)
Please attach a copy of Articles of Incorporation.
(If no seal, please check: No Seal )
<PAGE>
COLLATERAL ASSIGNMENT, ACCEPTANCE AND CONSENT
THIS COLLATERAL ASSIGNMENT, ACCEPTANCE AND CONSENT ("Agreement") is
made and entered into by and among Name of Borrower ("The Franchisee"),
STI Credit Corporation ("STI") and Uno Restaurant Corporation, (The
"Franchisor").
W I T N E S S E T H
WHEREAS, the Franchisee and Franchisor have previously entered into a
Standard Franchise Agreement dated ____________________ (the "Franchise
Agreement") whereby the Franchisor granted to the Franchisee the right to open
and operate the Franchise located at _________________________________ (the
"Franchisor") in the location described in the Franchise Agreement; and
WHEREAS, the Franchisee has requested that STI finance to the Franchisee
certain equipment, personal property and real property which the Franchisee uses
in connection with the operation of the Franchise;
WHEREAS, as a condition of STI's agreeing to enter into the such a
contract, STI has required that this Agreement be executed to permit STI to
assume the Franchisee's rights under the Franchise Agreement (the "Franchise
Agreement") and operate the Franchise in the event of a default by the
Franchisee under the Note;
NOW, THEREFORE, for and in consideration of the mutual covenants herein
contained and other good and valuable consideration, the adequacy and
sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:
1. Incorporation of Note. All of the terms and conditions set forth in the
Promissory Note and Security Agreement (the "Note") between the Franchisee and
STI are hereby incorporated into this Agreement by reference.
2. Default Under Note. Upon default by the Franchisee under the Note, STI may,
in addition to the other rights and remedies available to it cause the Franchise
Agreement to be assigned to STI as herein after provided. Upon the occurrence of
a default notice thereof by certified mail, return receipt requested, to the
Franchisee and Franchisor at the address set forth in the Note. If said default
is not cured by the Franchisee or Franchisor to the satisfaction of STI within
thirty (30) days from the date of receipt of the Notice of Default, STI may, at
its sole and exclusive option, give the Franchisee and Franchisor additional
written notice ("Assignment Notice") of the assignment of the Franchise
Agreement by certified mail, return receipt requested. Within three (3) days of
the Franchisee's receipt of the Assignment Notice, the Franchisee shall
completely vacate the Franchise premises, but shall not remove therefrom any of
the equipment, furniture, fixtures, inventory, supplies or other property of any
kind used in connection with the operation of the Franchise.
3. Assignment of Franchise Agreement. Upon receipt of the Assignment Notice by
the Franchisee and Franchisor, without further action by any party, the
Franchise Agreement shall in all respects be irrevocably and unconditionally
assigned and transferred to and vested exclusively in STI, and in such event,
STI shall be deemed to have assumed all of the obligations accruing pursuant to
the Franchise Agreement from the date of such assignment.
4. No Release. The Franchisee shall not be released from performing any of the
obligations of the Franchisee under the Franchise Agreement. The Franchisee
shall be jointly and severally liable with STI for all obligations and
liabilities assumed by STI upon assignment of the Franchise Agreement under the
Franchise Agreement. Payment of any such amounts by STI under the Franchise
Agreement shall be assessable against the Franchisee and shall be paid by the
Franchisee to STI.
5. Consent to Assignment. It is agreed among the parties hereto that the
assignment of the Franchise Agreement by the Franchisee to STI is solely for the
purpose of providing STI with collateral security for the Franchisee's
obligations under the Note. Accordingly, STI agrees to use reasonable efforts to
locate a successor lessee or purchaser of the equipment subject to the Note and
to cooperate with such subsequent lessee or purchaser to assign the Franchise
Agreement to such subsequent lessee or purchaser, all with the consent of the
Franchisor in accordance with the Franchise Agreement.
<PAGE>
6. Counterparts. This Agreement may be executed and delivered in any number of
counterparts and by different parties hereto on separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts taken together shall contitute one and the same
instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on
this ______ day of __________________, 19___.
BORROWER (FRANCHISEE)
By:______________________________________
Borrower
STI Credit Corporation
1475 Terminal Way, C-2
Reno, Nevada 89502
By:_____________________________________
Title:__________________________________
Date:___________________________________
Uno Restaurant Corporation
100 Charles Park Road
West Roxbury, MA
By:_____________________________________
Title:__________________________________
Date:___________________________________
<PAGE>
PROMISSORY NOTE
(60 Months)
FOR VALUE RECEIVED, ____________________________________, a _____________
(the "Maker") promises to pay to the order of STI Credit Corporation (the
"Payee"), at its office at 1475 Terminal Way, C-2, Reno, NV 89502, or such other
place as the holder of this Promissory Note may from time to time designate in
writing, in lawful money of the United States of America, the principal sum of
_____________________00/100 dollars ($________________), together with interest
on the unpaid balance thereof from the date hereof until paid in full at the
rate of ____________ percent (______%) per annum to be paid as follows: in
_________ (______) consecutive monthly payments of ________________ 00/100
dollars ($__________), with the first and last two payments being due upon the
execution of this promissory note and each subsequent payment will be due on the
same calendar day of each month thereafter.
This Promissory Note is executed in connection with a Security Agreement
dated __________, 199__, between the Maker and the STI (the "Security
Agreement") and is secured by certain collateral as more specifically described
and referred to therein, the terms and conditions of said Security Agreement are
hereby incorporated herein by reference. Any default under said Security
Agreement or any other instrument securing this note shall be a default under
this note entitling STI to accelerate the entire indebtedness hereunder upon
notice provided to Maker in accordance with said Security Agreement. Reference
is also made to the Security Agreement for a statement of certain rights of the
Payee following an event of default thereunder.
If any payment provided for herein remains wholly or partially unpaid for
more than ten (10) days after such payment is due and payable, then Makers agree
to pay a late charge of ten percent (10%) of such payments, not to exceed the
maximum amount allowed by the laws of the state of Nevada.
Provided Maker is not in default, Maker may prepay all or part of this
indebtedness at any time and from time to time, plus a prepayment of 2.5% of the
remaining principal balance. All such prepayments shall be applied to the
principal balance owning.
Maker agrees that in the event of default in the payment of the debt
evidenced by this Promissory Note or of any installment of principal provided
herein, the holder hereof shall have the right and option, without further
notice or demand, to declare all unpaid principal and accrued interest to be
immediately due, payable and collectible, time being of the essence of this
contract.
The Maker agrees that in the event the holder hereof fails to exercise any
privilege or option granted to it under this instrument, such failure shall not
constitute a waiver or forfeiture of the right to exercise such option or
privilege for successive breaches of this contract.
Makers, endorsers, sureties, guarantors, and all other persons now or
hereafter liable hereon, waive presentment, demand for payment, protest, notice
of dishonor, and consent that the owner or Holder hereof shall have the right
without notice, to deal in any way at any time for any party hereto, or to grant
to any such party any extensions of time for payment of any said indebtedness,
or any other indulgences or forbearances whatever, without in any way affecting
the personal liability of any parties hereunder.
In the event the Maker defaults in the payment of the debt evidenced
hereby or of any installment or as provided herein, the Maker agrees to pay all
costs of collection, including reasonable attorney's fees if collected by and
through an
<PAGE>
attorney at law.
Notwithstanding anything to the contrary contained herein, no provisions
of this Promissory Note shall require the payment or permit the collection of
interest in excess of the maximum rate permitted by applicable law. If any
excess interest in such respect is provided for, or shall be adjudicated to be
so provided, in this Promissory Note or otherwise in connection with this loan
transaction, the provisions of this paragraph shall govern and prevail, and
neither the Maker nor the sureties, guarantors, successors or assigns of the
Maker shall be obligated to pay the excess amount of such interest, or any other
excess sum paid for the use, forbearance or detention of sums loaned pursuant
hereto. If for any reason interest in excess of the maximum rate shall be deemed
charged, required or permitted by any court of competent jurisdiction, any such
excess shall be applied as a payment and reduction of the principal indebtedness
evidenced by the Promissory Note; and, if the principal amount hereof has been
paid in full, any remaining excess shall forthwith be paid to the Makers. In
determining whether or not the interest paid or payable exceeds the maximum
rate, the Maker and Payee shall, to the extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the indebtedness
evidenced by this Promissory Note so that the interest for the entire term does
not exceed the maximum rate.
This obligation shall be governed by and construed under the laws of the
State of Nevada and the Maker agrees that in the event of default to consent to
and be subject to the jurisdiction of the Courts of the State of Nevada to
enforce the terms of this obligation.
IN WITNESS WHEREOF, ________________________________ executed this
Promissory Note this _______ day of ______________________, 1996.
______________________________ _________________________________
Name and Title Date
Address
City, State and Zip Code
<PAGE>
PROMISSORY NOTE
(72 & 84 MONTH)
FOR VALUE RECEIVED, ______________________________, a ___________________
corporation (the "Maker") promises to pay to the order of STI Credit Corporation
(the "Payee"), at its office at 1475 Terminal Way #C-2, Reno, NV 89502, or such
other place as the holder of this Promissory Note may from time to time
designate in writing, in lawful money of the United States of America, the
principal sum of ___________________________ and 00/100 dollars ($___________),
together with interest on the unpaid balance thereof from the date hereof until
paid in full at the rate of _____________ percent (_______%) per annum to be
paid as follows: in ______________ (_____) consecutive monthly payments of
___________________ dollars ($____________), with the first and last two
payments being due upon the execution of this promissory note and each
subsequent payment will be due on the same calendar day of each month
thereafter. At the end of the sixtith month, the Note may be paid off based on
SDL's pay-off schedule or if the Note has not been past due over sixty (60) days
on more than three (3) occasions, the Note may be renewed for an additional
__________________ (_____) month period at SDL's then current rate.
This Promissory Note is executed in connection with a Security Agreement
dated __________, 199__, between the Maker and the STI (the "Security
Agreement") and is secured by certain collateral as more specifically described
and referred to therein, the terms and conditions of said Security Agreement are
hereby incorporated herein by reference. Any default under said Security
Agreement or any other instrument securing this note shall be a default under
this note entitling STI to accelerate the entire indebtedness hereunder upon
notice provided to Maker in accordance with said Security Agreement. Reference
is also made to the Security Agreement for a statement of certain rights of the
Payee following an event of default thereunder.
If any payment provided for herein remains wholly or partially unpaid for
more than ten (10) days after such payment is due and payable, then Makers agree
to pay a late charge of ten percent (10%) of such payments, not to exceed the
maximum amount allowed by the laws of the state of Nevada.
Maker agrees that in the event of default in the payment of the debt
evidenced by this Promissory Note or of any installment of principal provided
herein, the holder hereof shall have the right and option, without further
notice or demand, to declare all unpaid principal and accrued interest to be
immediately due, payable and collectible, time being of the essence of this
contract.
The Maker agrees that in the event the holder hereof fails to exercise any
privilege or option granted to it under this instrument, such failure shall not
constitute a waiver or forfeiture of the right to exercise such option or
privilege for successive breaches of this contract.
Makers, endorsers, sureties, guarantors, and all other persons now or
hereafter liable hereon, waive presentment, demand for payment, protest, notice
of dishonor, and consent that the owner or Holder hereof shall have the right
without notice, to deal in any way at any time for any party hereto, or to grant
to any such party any extensions of time for payment of any said indebtedness,
or any other indulgences or forbearances whatever, without in any way affecting
the personal liability of any parties hereunder.
Provided Maker is not in default, Maker may prepay all or part of this
indebtedness at any time and from time to time, plus a prepayment of 2.5% of the
remaining principal balance. All such prepayments shall be applied to the
principal balance owning.
<PAGE>
In the event the Maker defaults in the payment of the debt evidenced
hereby or of any installment or as provided herein, the Maker agrees to pay all
costs of collection, including reasonable attorney's fees if collected by and
through an attorney at law.
Notwithstanding anything to the contrary contained herein, no provisions
of this Promissory Note shall require the payment or permit the collection of
interest in excess of the maximum rate permitted by applicable law. If any
excess interest in such respect is provided for, or shall be adjudicated to be
so provided, in this Promissory Note or otherwise in connection with this loan
transaction, the provisions of this paragraph shall govern and prevail, and
neither the Maker nor the sureties, guarantors, successors or assigns of the
Maker shall be obligated to pay the excess amount of such interest, or any other
excess sum paid for the use, forbearance or detention of sums loaned pursuant
hereto. If for any reason interest in excess of the maximum rate shall be deemed
charged, required or permitted by any court of competent jurisdiction, any such
excess shall be applied as a payment and reduction of the principal indebtedness
evidenced by the Promissory Note; and, if the principal amount hereof has been
paid in full, any remaining excess shall forthwith be paid to the Makers. In
determining whether or not the interest paid or payable exceeds the maximum
rate, the Maker and Payee shall, to the extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the indebtedness
evidenced by this Promissory Note so that the interest for the entire term does
not exceed the maximum rate.
This obligation shall be governed by and construed under the laws of the
State of Nevada and the Maker agrees that in the event of default to consent to
and be subject to the jurisdiction of the Courts of the State of Nevada to
enforce the terms of this obligation.
IN WITNESS WHEREOF, ____________________ executed this Promissory Note
this _______ day of ______________________, 1996.
Corporation
_____________________________ _________________________________
Signature Date
_____________________________
Title
<PAGE>
INTERIM FUNDING PROMISSORY NOTE
FOR VALUE RECEIVE, _____________________________ ("Maker") promises to pay
to the order of STI Credit Corporation ("STI"), at its office at Reno, Nevada,
or such other place as the holder of this Promissory Note, prepared this _______
date of ___________________, _____, may from time to time designate, the
principal sum of ___________________ ($_______________) or so much thereof as
may be advanced from time to time hereunder, together with interest to be
determined on the date of the making of the note at the prime rate as quoted in
the Wall Street Journal plus 300 basis points until maturity. After the initial
advance and the interest rate quoted on that date, should there be any
additional increases in the prime rate, the interest on the initial advance as
well as all subsequent advances will be at the amount of the higher rate as of
the date of such rate change or changes.
All principal and interest shall be due and payable in accordance with the
terms of an agreement between the Maker and STI. At the sole and exclusive
option of STI, provided STI is then the holder of this Promissory Note, STI may
accept payment of all amounts due hereunder either in lawful money of the United
States or by due execution and delivery to STI by the maker of a commitment
letter between the Maker and STI dated _____________________. Advances hereunder
shall be made by and at the discretion of STI upon request by Maker in a form
acceptable to STI which shall be accompanied by documentation as may from time
to time be required by STI.
If this obligation, after default, is placed in the hands of an attorney
for collection, the Maker, all guarantors and other persons now or hereafter
liable hereon will be obligated to pay the holder an additional sum as
reasonable sum as reasonable attorney's fees.
This Promissory Note does not represent nor shall Maker be entitled to
utilize this instrument (and the commercial loan it evidences) as a revolving
line of credit.
The Maker hereof and all parties who at the time may be liable hereon in
any capacity, jointly and severally, waive presentment, demand for payment,
protest and notice of dishonor of this Promissory Note.
Notwithstanding anything to the contrary contained herein, no provisions
of this Promissory Note shall require the payment or permit the collection of
interest in excess of the maximum rate permitted by applicable law. If any
excess interest in such respect is provided for, or shall be adjudicated to be
so provided, in this Promissory Note or otherwise in connection with this loan
transaction, the provisions of this paragraph shall govern and prevail, and
neither the Maker nor the sureties, guarantors, successors or assigns of the
Maker shall be obligated to pay the excess amount of such interest, or any other
excess sum paid for the use, forbearance or detention of sums loaned pursuant
hereto. If for any reason interest in excess of the maximum rate shall be deemed
charged, required or permitted by any court of competent jurisdiction, any such
excess shall be applied as a payment and reduction of the principal indebtedness
evidenced by the Promissory Note; and, if the principal amount hereof has been
paid in full, any remaining excess shall forthwith be paid to the Makers. In
determining whether or not the interest paid or payable exceeds the maximum
rate, the Maker and Payee shall, to the extent permitted by applicable law, (i)
characterize any non-principal payment as an expense, fee or premium rather than
as interest (ii) exclude voluntary prepayments and the effects thereof, and
(iii) amortize, prorate, allocate and spread in equal or unequal parts the total
amount of interest throughout the entire contemplated term of the indebtedness
evidenced by this Promissory Note so that the interest for the entire term does
not exceed the maximum rate.
THIS INSTRUMENT HAS BEEN DELIVERED BY THE MAKER IN THE STATE OF NEVADA AND
SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEVADA AND BY
FEDERAL LAWS PREEMPTING OTHERWISE APPLICABLE STATE LAW.
<PAGE>
This Promissory Note may be executed in one or more counterparts and, when
so executed, each counterpart shall be deemed to be an original.
Name of Borrower
________________________
Signature
________________________
Title
________________________
Date
<PAGE>
SECURITY AGREEMENT
This Security Agreement ("Agreement") is made and entered into by and
between _____________________________, a ______________ corporation (the
"Debtor"), and STI Credit Corporation, a Nevada corporation (the "Secured
Party").
Recitals
A. The Debtor is indebted to the Secured Party pursuant to a Promissory
Note dated _________________ (the "Note"), to be converted to a Permanent
Promissory Note by and between Debtor and Secured Party executed and delivered
by the Debtor contemporaneously herewith in the principal amount not to exceed
______________________________ dollars ($.00).
B. To secure repayment of the Note, and as a condition precedent to the
advance of funds by the Secured Party pursuant thereto, the Debtor has agreed to
grant to the Secured Party a security interest in certain property hereinafter
described.
Agreement
1. Security Interest. As collateral security for the payment and
performance of all the Obligations (as that term is defined in Section 2), the
Debtor hereby grants to the Secured Party a first priority, continuing security
interest in all the following collateral (collectively the "Collateral").
(a) All equipment, inventory, fixtures and other goods of any and every
kind whatsoever located at or used in connection with the Pizzeria Uno
restaurant presently located at ________________________________________________
or any successor location, and all general intangibles of any and every kind
whatsoever related thereto, all whether now owned or hereafter acquired by the
Debtor, and all replacements, substitutions and proceeds of all the foregoing;
and
(b) All the Debtor's interest in and rights under that certain franchisee
agreement dated ____________ between the Debtor and Pizzeria Uno Corporation,
and all modifications, extensions, replacement and substitutions thereof, and
all proceeds thereof; and
(c) All the Debtor's interest in and rights under that certain premises
lease agreement dated ________________ between the Debtor and
______________________ with respect to the premises described in Schedule "A"
attached hereto and all modifications, extensions, replacement and substitutions
thereof, and all proceeds thereof; and
(d) All other equipment, inventory, fixtures and other goods of any and
every kind whatsoever, wherever located, all other general intangibles of any
and every kind whatsoever, and all accounts, instruments, documents and chattel
paper of any and every kind whatsoever, all whether now owned or hereafter
acquired by the Debtor, and all replacements, substitutions and proceeds of all
the foregoing.
2. Obligations. The security interest created hereby in the Collateral
constitutes continuing collateral security for the prompt payment and
performance of any and all indebtedness and obligations of the Debtor to the
Secured Party of every kind, character and description, whether now existing or
hereafter incurred, including any and all renewals, extensions and modifications
thereof, howsoever and whensoever arising, whether absolute or contingent, joint
or several, matured or unmatured, direct or indirect, primary or secondary
(collectively, the "Obligations"),
<PAGE>
and including without limitation, all amounts payable under the Note and under
this Agreement.
3. The Debtor's Representation and Warranties. The Debtor represents and
warrants to the Secured Party as follows:
(a) The Debtor's exact legal name, principal place of business,
chief executive office, mailing address, form of business entity and the state
under whose laws the Debtor is organized are accurately set forth in the
introductory paragraph and on the signature page of this Agreement. The Debtor
has not done business in any jurisdiction under any name other than the name
specified herein.
(b) The Debtor has full power, authority and legal right to execute,
deliver and perform this Agreement, and to grant all liens and security
interests provided for herein. The Debtor has taken all necessary action to
authorize the execution, delivery and performance of this Agreement. This
Agreement has been duly authorized, executed and delivered by the Debtor and
constitutes a legal, valid and binding obligation of Debtor, fully enforceable
in accordance with its terms. No consent of any other party and no consent,
license, permit, approval or declaration with any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or the Note, except for the filing of financing
statements with respect to the security interests hereby granted to the Secured
Party.
(c) Upon the filing of any appropriate financing statements, the security
interest granted to the Secured Party hereby will be duly perfected under the
applicable provisions of the Uniform Commercial Code and will constitute a
first, prior and superior, security interest in the Collateral. Except for the
security interest granted to the Secured Party hereby, the Debtor has good and
indefeasible title to the Collateral free from any lien, security interest,
encumbrance or claim of any kind.
(d) All tangible Collateral now existing is, and all tangible Collateral
hereafter existing will be, located at the addresses set forth on Schedule "A"
attached hereto. In the event any of the Collateral constitutes fixtures under
applicable law, the owner of the real property on which such property is located
and the correct legal description of such property is set forth on Schedule "A"
attached hereto.
(e) All information furnished by or on behalf of the Debtor to the Secured
Party, including all financial information, is true and correct and the Debtor
knows of no material facts which have not been disclosed to the Secured Party,
and the Debtor has not omitted to state any material facts to the Secured Party
that might be relevant to the Secured Party's decision to enter into the
transactions contemplated by this Agreement.
(f) The Debtor is in compliance with all laws, rules, regulations, orders
and decrees applicable to the Debtor and its business and properties.
(g) The execution and delivery of this Agreement and the Note by the
Debtor and the performance by the Debtor of its obligations hereunder and
thereunder will not (a) violate, conflict with or contravene any provision of
the articles of incorporation or the bylaws of the Debtor, (b) violate the terms
of, result in a breach of or constitute a default under any instrument,
document, or agreement to which the Debtor is a party or by which any of its
property is bound, (c) result in the creation or imposition of any lien upon the
property or assets of the Debtor except as expressly provided herein, or (d)
violate any statute or law or any judgment, decree, order, regulation or rule of
any court, governmental authority or arbitrator applicable to the Debtor or any
of its assets.
<PAGE>
(h) The Debtor is not in default under any agreement, indenture, mortgage
or obligation to which it is a party or by which any of its properties may be
bound.
(i) There is no action, suit or proceeding before any court, governmental
authority or arbitrator pending or, to the knowledge of the Debtor, threatened
against or affecting the Debtor, which in the best judgment of the Debtor's
management, even if adversely determined, would have a material adverse effect
on the financial condition or operations of the Debtor, the ability of the
Debtor to repay the Obligations or the ability of the Debtor to perform its
obligations under this Agreement or the Note. There are no outstanding judgments
against the Debtor.
(j) The Debtor has filed all tax returns (federal, state and local)
required to be filed, including all income, franchise, employment, property and
sales taxes, and has paid all its tax liabilities. The Debtor knows of no
pending investigation of the Debtor by any taxing authority or of any pending
but unassessed tax liability of the Debtor.
(k) The Debtor has complied with all applicable minimum funding
requirements of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and there are no existing conditions that would give rise to
liability thereunder. No reportable event (as defined in Section 4043 of ERISA)
has occurred in connection with any employee benefit plan that might constitute
grounds for the termination thereof by the Pension Benefit Guaranty Corporation
or for the appointment by the appropriate United States District Court of a
trustee to administer such plan.
(l) The Debtor and its properties are in compliance with all applicable
environmental, health and safety laws, rules and regulations and the Debtor is
not subject to any liability or obligation for remedial action thereunder. The
Debtor has received no notice of any investigation or inquiry by any
governmental authority of the Debtor or any of its properties where any of the
Collateral is or will be located pertaining to any toxic or hazardous waste or
substance, and to the best of the Debtor's knowledge no such investigation or
inquiry is pending or threatened. No toxic or hazardous wastes or substances are
located on or under any of the properties of the Debtor where any of the
Collateral is or will be located. The Debtor has not caused or permitted any
toxic or hazardous waste or substance to be disposed of on or under or released
from any of its properties.
(m) The Secured Party has not at any time exercised or attempted to
exercise, directly or indirectly, any degree of control or influence of any kind
whatsoever over the internal business operations or financial affairs of the
Debtor. The Secured Party has not acted as a business, investment or financial
consultant or advisor to the Debtor and has not given the Debtor any business,
investment, or financial advice. The Secured Party has no fiduciary or similar
duty to the Debtor. The Secured Party has not participated in any type of joint
venture or partnership with the Debtor and the execution and consummation of
this Agreement and the transactions contemplated herein shall not constitute or
amount to a joint venture or partnership. The Secured Party has not acted in any
respect as the agent of the Debtor for any purpose and no agency relationship
shall be created by the execution of this Agreement and the consummation of the
transactions contemplated hereby.
(n) The Secured Party has made no representation or statements of material
fact to the Debtor in connection with the obligations of the Debtor hereunder or
in connection with the negotiation, execution or delivery of this Agreement or
the consummation of the transactions herein contemplated except as expressly set
forth herein.
<PAGE>
(o) No event of default has occurred and no event which, with notice or
the passage of time, or both, would constitute an event of default, has
occurred.
4. The Debtor's Covenants and Further Agreements . So long as any of the
Obligations shall remain outstanding:
(a) The Debtor shall pay to the Secured Party all amounts due under the
Note in accordance with the terms thereof and all other Obligations.
(b) The Debtor shall promptly and properly execute such financing
statements and other documents (and pay the costs of filing or recording all
such documents in all public offices deemed necessary by the Secured Party), and
shall promptly and properly perform such other acts and deeds, all as the
Secured Party might reasonably request, to properly establish and maintain the
valid liens and security interests now or hereafter created in the Collateral
pursuant to this Agreement and to carry out the provisions and purposes of this
Agreement. The Debtor shall, at its sole expense, maintain the Collateral free
and clear of all liens, security interests, encumbrances or claims of any kind,
except the security interest of the Secured Party granted hereby, and defend any
action which might affect the security interest granted to the Secured Party
hereby or the Debtor's title to the Collateral.
(c) The Debtor shall maintain the Collateral in good operating condition
and shall not permit any waste or destruction of the Collateral or any part
thereof. The Debtor shall comply with any and all warranties or maintenance
agreements covering the Collateral. The Debtor shall not use or permit the
Collateral to be used in violation of any law or inconsistently with the terms
of any applicable policy of insurance. The Debtor shall not use or permit the
Collateral to be used in any manner that would impair the value of the
Collateral or expose the Collateral to unusual risk.
(d) The Debtor shall conduct its business in an orderly and efficient
manner consistent with good business practices and in accordance with all laws
applicable to the Debtor.
(e) The Debtor shall use all funds advanced by the Secured Party and all
the Collateral only for lawful business purposes.
(f) The Debtor shall not sell, lease or otherwise dispose of all or any
part of the Collateral, or the real property where such Collateral is located,
without the prior written consent of the Secured Party.
(g) The Debtor shall promptly provide to the Secured Party such reports,
data and financial statements in respect of the Collateral and the Debtor's
business and financial condition, as the Secured Party may from time to time
reasonably require, but no less frequently than annually.
(h) The Debtor shall immediately notify the Secured Party of any material
change occurring in or to the Collateral, of any change in the name, principal
place of business, chief executive office, mailing address or form of business
entity of the Debtor, or of any change in any fact or circumstances warranted or
represented by the Debtor to the Secured Party herein, or if any event of
default occurs.
(i) The Debtor shall keep all of the tangible Collateral, both now owned
and hereafter acquired, at the address of the Debtor set forth on Schedule "A"
attached hereto.
(j) The Debtor shall pay promptly, before delinquent, all property and
other taxes, assessments and governmental charges or levies imposed upon, and
all claims
<PAGE>
(including claims for labor, materials, and supplies) against, the Collateral,
except to the extent the validity thereof is being contested diligently and in
good faith by proper proceedings satisfactory to the Secured Party.
(k) The Debtor shall, at its sole expense, maintain insurance with respect
to the Collateral in such amounts, against such risks, in such form and with
such insurers, as shall be customary for companies engaged in businesses similar
to that of the Debtor, and as shall be satisfactory to the Secured Party. The
Secured Party shall be named as an additional insured or loss payee under such
policies, as the Secured Party may specify. All such policies shall provide for
a minimum of thirty (30) day's prior written notice to the Secured Party prior
to cancellation. The Debtor shall furnish the Secured Party with certificates or
other evidence satisfactory to the Secured Party of compliance with the
requirements of this section.
(l) The Debtor shall preserve and maintain its corporate existence and all
of its leases, privileges, franchises, licenses, permits, qualifications and
rights that are necessary or desirable in the ordinary conduct of its business.
(m) The Debtor shall comply with all minimum funding requirements, and all
other material requirements, of ERISA, if applicable to the Debtor, so as not to
give rise to any liability thereunder. The Debtor shall notify the Secured Party
immediately of any fact, including, but not limited to, any "reportable event"
as that term is defined in Section 4043 of ERISA, arising in connection with any
such plan which might constitute grounds for the termination thereof by the
Pension Benefit Guaranty Corporation or for the appointment by the appropriate
United States District Court of a trustee to administer such plan and furnish to
the Secured Party, promptly upon its request therefor, such additional
information concerning any such plan as may be reasonably requested.
(n) Neither the Debtor nor any person acting on its behalf shall take any
action which might cause this Agreement or the transactions contemplated hereby
to violate any laws, regulations or rules applicable to the Debtor, its business
or its properties, and the Debtor will take all actions necessary to cause
compliance with all laws, regulations and rules applicable to the Debtor, its
business and its properties.
(o) The Debtor shall permit officers, agents and employees of the Secured
Party to examine the Debtor's business premises and records at reasonable times
and under reasonable conditions and to discuss the business, operations and
financial condition of the Debtor with its officers and employees and with its
independent certified public accountants.
(p) The Debtor will promptly notify the Secured Party of (i) the
occurrence of an event of default, or of any event that with notice or lapse of
time or both would be an event of default, (ii) the commencement of any action,
suit or proceeding against the Debtor that might have a material adverse effect
on the business, financial condition or operations of the Debtor, (iii) a change
in the Senior Management of the Debtor, and (iv) any other matter that might
have a material adverse effect on the Collateral or the business, financial
condition or operations of the Debtor.
5. Additional Provisions Concerning the Collateral.
(a) The Debtor hereby authorizes the Secured Party to file, without the
signature of the Debtor where permitted by law, one or more financing or
continuation statements, and amendments thereto, relating to the Collateral as
contemplated by this Agreement.
<PAGE>
(b) If the Debtor fails to perform any agreement contained herein, the
Secured Party may itself perform, or cause performance of, such agreement or
obligation, and the expenses of the Secured Party incurred in connection
therewith shall be payable by the Debtor under Section 8 hereof, and shall be
fully secured hereby.
(c) The powers conferred on the Secured Party hereunder are solely to
protect its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. The Secured Party shall have no duty as to any
Collateral.
(d) The Secured party may at any time during normal business hours enter
upon the premises where the Collateral is located to inspect the Collateral.
6. Events of Default. The occurrence of any of the following events shall
constitute an event of default hereunder and under the Promissory Note:
(a) Following ten (10) days prior written notice thereof, nonpayment of
any installment due and payable under the Note within ten (10) days of the
scheduled due date of such installment.
(b) Following ten (10) days prior written notice thereof, nonpayment of
any other Obligations within ten (10) days of the due date thereof.
(c) Following thirty (30) days prior written notice thereof, failure of
the Debtor to properly, timely and fully perform any covenant, agreement or
promise contained in this Agreement or the Note.
(d) Any statement, representation or warranty of or by the Debtor, whether
set forth in this Agreement or in any credit application, financial statement or
otherwise in connection with the transactions contemplated by this Agreement, to
the Secured Party proves to be untrue or misleading in any respect at any time
prior to the complete repayment of the Obligations.
(e) The Debtor becomes insolvent, is unable to pay its debts as they
become due, makes an assignment for the benefit of creditors, files a petition
for relief under any bankruptcy or insolvency laws or has such a petition filed
against it which is not dismissed within thirty (30) days.
(f) The Debtor shall at any time sell, lease or otherwise dispose of, or
grant any lien or security interest in or otherwise encumber, all or any of the
Collateral.
(g) The Debtor ceases doing business as a going concern.
(h) Any execution or writ of process is issued in connection with any
action or proceeding whereby the Collateral is sought to be taken.
(i) This Agreement, the Note or any other documents delivered to the
Secured Party in connection with this Agreement shall for any reason cease to be
in full force and effect, or shall be declared null or unenforceable in whole or
in part, or the validity or enforceability of any such documents shall be
challenged or denied by any party hereto or thereto excluding the Secured Party.
(j) Any default under any instrument involving the Collateral securing
this Agreement and the Note shall be an event of default.
7. Remedies Upon Default. In addition to all other rights and remedies
provided for herein, the Secured Party shall have all the rights and remedies of
a secured party under the Uniform Commercial Code and other applicable law.
Without limiting the generality of the foregoing, following an event of default
the Secured
<PAGE>
Party may (i) require the Debtor to, and the Debtor hereby agrees that it will
at its sole expense and upon request of the Secured Party, forthwith assemble
all or part of the Collateral as directed by the Secured Party and make it
available to the Secured Party at a place to be designated by the Secured Party
which is reasonably convenient to both parties; (ii) without notice, take
possession of all or part of the Collateral and for that purpose the Secured
Party may enter upon any premises on which the Collateral is located and remove
the Collateral therefrom or render it inoperable; and (iii) without notice
except as specified below, sell, lease or otherwise dispose of the Collateral or
any part thereof in one or more parcels at public or private sale, at any of the
Secured Party's offices or elsewhere, for cash, on credit or for future
delivery, and at such price or prices and upon such other terms as the Secured
Party may deem commercially reasonable. The Debtor agrees that, to the extent
notice of sale shall be required by law, at least five (5) days' notice to the
Debtor of the proposed action shall constitute fair and reasonable notice
thereof. The Secured Party may adjourn any public or private sale from time to
time by announcement at the time and place fixed therefor, and such sale may,
without further notice, be made at the time and place to which it was so
adjourned. The Secured Party may apply the Collateral to payment of the
Obligations in such order and manner as the Secured Party may elect in its sole
discretion, consistent with applicable law. The Debtor shall remain liable for
any deficiency if the proceeds of any sale or disposition of the Collateral are
insufficient to pay all the Obligations in full. The Debtor waives any rights of
marshalling in respect of the Collateral. In the event the Secured Party seeks
to take possession of any or all of the Collateral by judicial process, the
Debtor hereby irrevocably waives any bonds and any surety or security relating
thereto that may be required by applicable law as an incident to such possession
and waives any demand for possession prior to the commencement of any such suit
or action.
8. Indemnity and Expenses.
(a) The Debtor agrees to indemnify the Secured Party from and against any
and all claims, losses and liability growing out of, resulting from or in any
way related to this Agreement (including, without limitation, enforcement of
this Agreement), except claims, losses or liabilities resulting solely and
directly from the Secured Party's gross negligence or willful misconduct.
(b) The Debtor shall reimburse the Secured Party for all its expenses,
including the fees and expenses of its legal counsel, incurred in connection
with the negotiation and preparation of this Agreement and in connection with
the transactions contemplated by this Agreement and in connection with the
enforcement or preservation of the Secured Party's rights under this Agreement.
Such expenses shall be paid promptly upon request by the Secured Party.
9. Notices. All notices and other communications provided for hereunder
shall be in writing and shall be mailed by certified mail, return receipt
requested, or sent by an overnight courier service, to the respective addresses
of the parties set forth on the signature page hereof. All such notices and
other communications shall be effective (i) if mailed, when received or three
(3) days after mailing, whichever is earlier; and (ii) if delivered, upon
delivery.
10. Security Interest Absolute. All rights of the Secured Party, all
security interests and all Obligations of the Debtor shall be absolute and
unconditional irrespective of: (i) any change in the time, manner or place of
payment of, or in any other term in respect of, all or any of the Obligations,
or any other amendment or waiver of or consent to any departure from this
Agreement or any other agreement or instrument relating hereto or thereto; (ii)
any increase in, addition to, or exchange, release or non-perfection of, any
Collateral; (iii) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, the Debtor
4
<PAGE>
in respect of the Obligations or this Agreement; or (iv) the absence of any
action on the part of the Secured Party to obtain payment or performance of the
Obligations from the Debtor or any other party.
11. Miscellaneous.
(a) No amendment of any provision of this Agreement shall be effective
unless it is in writing and signed by the Debtor and the Secured Party, and no
waiver of any provision of this Agreement, and no consent to any departure by
the Debtor therefrom, shall be effective unless it is in writing and signed by
the Secured Party, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
(b) No failure on the part of the Secured Party to exercise, and no delay
in exercising, any right hereunder or under any other instrument or document
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise thereof or the exercise of
any other right. The rights and remedies of the Secured Party provided herein
are cumulative and are in addition to, and not exclusive of, any rights or
remedies provided by law.
(c) Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or invalidity without invalidating the remaining portions
hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
(d) This Agreement shall create a continuing security interest in the
Collateral and shall (i) remain in full force and effect until the payment in
full of all of the Obligations, (ii) be binding on the Debtor and the Debtor's
successors and permitted assigns and shall inure, together with all rights and
remedies of the Secured Party hereunder, to the benefit of the Secured Party and
its respective successors, transferees and assigns. None of the rights or
obligations of the Debtor hereunder may be assigned or otherwise transferred
without the prior written consent of the Secured Party.
(e) Upon the satisfaction in full of all of the Obligations, the Secured
Party will, upon the Debtor's request and at the Debtor's expense, execute and
deliver to the Debtor such documents as the Debtor shall reasonably request to
evidence termination of the security interests herein granted.
(f) This Agreement shall be governed by and construed in accordance with
the laws of the State of Nevada, except as required by mandatory provisions of
law and except to the extent that the validity or perfection of the security
interests created hereby, or remedies hereunder, in respect of any particular
Collateral are governed by the laws of a jurisdiction other than the State of
Nevada.
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
on this ______ day of __________________, 1996.
Name of Borrower
Street Address
City, State, Zip
By: _____________________________
Title: _____________________________
STI Credit Corporation
1475 Terminal Way #C-2
Reno, Nevada 89502
By: _____________________________
Title: _____________________________
<PAGE>
ASSIGNMENT OF LEASE
ASSIGNMENT OF LEASE made this ______ day of ___________, 1996, by and
between _______________________________, with an address of
____________________________ (hereinafter "Borrower") and STI Credit Corporation
(hereinafter "STI").
WHEREAS, STI and Borrower, have entered into a Financing Agreement
pursuant to a Promissory Note and Security Agreement (the "Financing Agreement")
dated ________________________ for the purchase of the Franchise located at
__________________________ (the "Franchise"); and
WHEREAS, Borrower is the assignee under the provisions of that certain lease
between (Name of Borrower) and (Landlord) dated ______________________ (the
"Lease"); and
WHEREAS, pursuant to the terms of the Financing Agreement, and as a condition
therefore, Borrower has agreed to assign its interest in the Lease to STI in the
event of a default under the terms of the Financing Agreement, upon certain
conditions as set forth herein.
NOW THEREFORE, IT IS AGREED:
1. Assignment. Upon occurrence of a default, as set forth in paragraph
2(b) hereof, Borrower assigns to STI all of its right, title and interest in and
to the Lease, subject to the terms and conditions precedent contained herein.
This assignment shall include all right, title and interest in and to the
premises described in the Lease (the "Premises"), easements and rights-of-way
appurtenant thereto, and any Equipment located in the Premises in which STI may
have a security interest pursuant to the terms of the Financing Agreement, and
all rents or income derived from the Lease.
2. Conditions for Assignment.
(a) So long as Borrower is not in default under the terms of the
Financing Agreement, the assignment set forth in paragraph 1
hereof shall be of no force and effect, and Borrower shall
remain in possession of the Premises and the Equipment, and
shall be able to exercise all of its rights pursuant to the
Lease without the interference of STI, subject only to the
restrictions of this Assignment and the Financing Agreement.
(b) Should Borrower default in its obligations under the terms of
the Financing Agreement, and should such default continue
beyond any applicable cure period, STI may, in addition to any
remedies which it may have under the Financing Agreement, and
subject to the
<PAGE>
provisions of paragraph 4 hereof, upon notice in writing given
to Borrower and Landlord at least thirty days prior to the
effective date, receive the assignment of the Lease pursuant
to paragraph 1 hereof, take possession of the Premises and
personal property contained therein, and do such acts
affecting the Premises as STI deems necessary to protect the
value thereof, and may exercise the rights of Borrower under
the Lease with respect to the Premises as assignee thereunder.
3. Acceptance. Upon the occurrence of default as set forth in paragraph
2(b) hereof, the assignment thereunder, and consent of the Landlord, STI shall
be deemed to have accepted the assignment and transfer of the Lease, and shall
pay all rent, additional rent and other sums due thereunder, and faithfully to
perform all covenants, stipulations, agreements and obligations under the Lease
accruing on and after the date of such assignment, or otherwise attributable to
the period commencing on that date and continuing thereafter. The parties
acknowledge that the assignment of the Lease hereunder is solely for the purpose
of providing Stephens with security for the obligations of Borrower under the
Financing Agreement. STI agrees to use reasonable efforts and to cooperate with
Landlord to locate a successor lessee, and to cooperate with such successor
lessee to assign the Lease to such successor lessee.
4. Consent of Landlord. The parties hereto acknowledge that the Lease
contains a provision which authorizes assignment of Borrower interest only upon
the consent and assignment without such consent constitutes a default under the
Lease, and that the Landlord's consent should be obtained by Borrower at the
time of the execution of this. Upon the occurrence of a default as set forth in
paragraph 2(b) hereof and in the event that the consent of the Landlord has not
been obtained, Borrower will cooperate with STI to obtain the consent of the
Landlord of this assignment. However, STI agrees that its rights hereunder are
subject to the Landlord's consent and that in the event of the Landlord's
refusal to consent to the assignment hereunder, Borrower agree that the Note
payments may be accelerated and all remaining payments become due and payable
upon notice from STI.
5. Warranties and Representations. During the term of this assignment,
Borrower agrees:
(a) To keep the Premises in good condition and repair.
(b) To provide and maintain hazard insurance upon the Premises in
an amount satisfactory to STI; provided, however, that
maintenance of insurance in accordance with the terms of the
Lease shall be deemed to be sufficient for purposes of this
Financing Agreement.
(c) To pay, in a timely fashion, all rents,
<PAGE>
taxes, assessments or other charges of any type, kind or
nature whatsoever affecting the Lease or the Premises. Should
Borrower fail to make such payments as herein provided, STI
may, but without obligation to do so, make or do any such
payment or act in such a manner and to such an extent as STI
may deem necessary to protect the security hereof, and to
recover such amounts from Borrower.
(d) Not to amend, change or modify the terms of the Lease without
prior written notice to STI.
(e) Apply all terms and covenants of Lease.
6. Subordination. This Assignment shall be subordinate to any mortgage,
deed of trust, assignment or security interest executed by Landlord covering the
Premises. The subordination provided by this paragraph shall be self-executing
without the necessity of any specific subordination agreement.
7. Purpose. The parties hereto acknowledge that the purpose of this
assignment is to secure the performance of Borrower under the terms of the
Financing Agreement, and the payment of all sums due thereunder, and for no
other reason.
8. Terms and Termination. This Financing Agreement shall be effective the
date stated above, and shall continue in full force and effect until the first
to occur of the following:
(a) Payment in full of all sums due under the provisions of the
Note or Financing Agreement.
(b) Sale of the Equipment to a third party with the consent of
STI.
(c) Assignment of the Lease to a third party with the consent of
STI.
(d) Termination by an Financing Agreement executed by all parties
hereto.
9. Miscellaneous and General.
(a) This Financing Agreement contains all the agreements and
understandings made between the parties hereto with respect to
the subject matter hereof, and may not be modified orally or
in any manner other than by an Financing Agreement in writing
<PAGE>
signed by all the parties hereto or their respective
successors in interest.
(b) This Financing Agreement shall be construed, governed and
enforced in accordance with the laws of the state of Nevada,
with jurisdiction to adjudicate any actions arising hereunder
in the courts and tribunals of said state.
(c) In any provisions of this Financing Agreement shall be held to
be invalid, void or unenforceable, the remaining provisions
hereof shall in no way be in full force and effect.
(d) Captions and titles contained in this Financing Agreement are
for convenience and reference only and are not to be construed
as defining, limiting or modifying the scope or intent of the
various provisions hereof.
(e) Any statement, notice or communication required or permitted
hereunder shall be deemed sufficiently given if sent by
certified or registered mail, addressed as follows:
Borrower's Name and Address
________________________________
________________________________
________________________________
STI
Credit Corporation
1475 Terminal Way, C-2
Reno, NV 89502
Any party may change its address by notice so given to the others.
<PAGE>
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have executed this Financing Agreement the day and year first above
written.
BORROWER
By:____________________________________
Title:_________________________________
Date:__________________________________
STI Credit Corporation
By:____________________________________
Title:_________________________________
Date:__________________________________
<PAGE>
CONSENT TO ASSIGNMENT AS COLLATERAL SECURITY
RECITALS
A. The undersigned is Landlord under a written lease dated _______________
hereinafter referred to as the ("Lease") pursuant to which Landlord leased to
________________________________ as Tenant (hereinafter "Tenant") in the
premises commonly known as ___________________________________.
B. Tenant is desirous of assigning its interests in said Lease to STI Credit
Corporation ("Assignee") as collateral security for a Promissory Note and
Security Agreement to be executed between Assignee and Tenant pursuant to a
letter agreement dated______________________ .
FOR VALUE RECEIVED, the undersigned hereby:
1. Consents to Tenant mortgaging its leasehold interest in the Lease with
Assignee to be designated as Beneficiary;
2. Consents to the Assignment of Lease as Collateral Security and grants to the
Assignee and its successors and assigns the right to cure any default under the
lease; grants the Assignee and its successors and assigns the right to immediate
occupancy of the premises and/or obligation of Tenant to the Assignee; and/or
grants to the Assignee and its successors and assigns the right of substitution
of a third-party tenant in the event of default by Tenant in the terms and/or
conditions of the Lease and/or the obligation of Tenant to the Assignee.
In the event a default occurs under the terms and conditions of the Lease,
undersigned agrees to give to Assignee notice of default within ten (10) days
thereafter by registered or certified mail in order that the default may be
cured.
DATED: ________________________, 19_____.
LANDLORD NAME AND ADDRESS:
_______________________________________
Name
_______________________________________
(Authorized Signature & Title)
______________________________________________________________
Street Address Phone
______________________________________________________________
City, State, Zip
Name of Franchisee/Tenant_____________________________________
<PAGE>
LANDLORD DISCLAIMER AND WAIVER
OF INTEREST IN FINANCED PERSONAL PROPERTY
To: STI CREDIT CORPORATION
1475 TERMINAL WAY, SUITE C-2
RENO, NV 89502
RE: Lease dated _______________, 19___ (hereinafter referred to as the
"Lease"), between ________________________________ (hereinafter referred
to as the "Landlord"), and _________________(hereinafter referred to as
the "Tenant") which is the Guarantor for the Note between _____________
and STI Credit Corporation, demising premises located at
_________________________________ (hereinafter referred to as the "Leased
Premises".)
As an inducement to STI Credit Corporation, a Nevada corporation ("STI"), to
provide certain financing to the __________________ for which Tenant is
Guarantor of such financing, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Landlord hereby
certifies and agrees as follows:
1. The Landlord is the landlord named in the Lease and is duly authorized
to execute and deliver this certificate. A true and complete copy of the Lease
is attached hereto and incorporated herein by reference. This Lease is in full
force and effect. The Tenant is in possession of the Leased Premises. The Tenant
has paid all rents and other amounts required under the Lease and has paid and
performed all of its obligations thereunder. The Landlord is not aware of any
default, or any event or circumstances that with the passage of time or the
giving of notice or both would constitute a default, under the Lease. The Lease
will not be amended, modified, or canceled without STI'S prior written consent.
2. The Landlord agrees that if it asserts at any time any default by the
Tenant in the performance or observance of its obligations under the Lease, it
will provide written notice of such default to STI concurrently with notice of
such default to the Tenant. The Landlord agrees that STI, at its option but
without any obligation to do so, may cure any defaults under the Lease for a
period of thirty (30) days following such notice or for such longer cure period,
if any, provided in the Lease. Such cure period shall be extended for
non-monetary defaults so long as during the original cure period STI commences
to cure and pursues with due diligence to cure such default.
3. The Landlord acknowledges that the Tenant has placed, and in the future
may place, certain trade fixtures, equipment and other goods (collectively, the
"Collateral") on or in the Lease Premise which are or will be subject to a
security interest in favor of STI. The Landlord disclaims any right, title, or
interest in the Collateral. The Landlord agrees that all the Collateral shall at
all times remain personal property. The Landlord waives,
<PAGE>
relinquishes, and subordinates unto STI any and all liens, claims, and rights of
any and every kind whatsoever, whether arising by contract, operation of law or
otherwise, including without limitations the right to levy, distrain, execute,
or sell for unpaid rent, which the Landlord now has or may hereafter have with
respect to any of the Collateral.
4. The Landlord agrees that STI may enter upon the Leased Premises at any
time and from time to time for purposes of enforcing its rights and remedies
with respect to the Collateral, including without limitation the removal of the
Collateral from the Leased Premises. Upon request by STI, the Landlord agrees to
take such actions as are reasonably necessary to provide STI with access to and
possession of the Leased Premises for the purposes of removing the Collateral
therefrom.
5. The exercise by STI of any of its rights hereunder shall not constitute
an assumption of any obligations of the Tenant under the Lease or otherwise
obligate STI to pay rent or any other amounts payable with respect to the Leased
Premises. STI shall have no liability or obligation of any kind with respect to
the Lease or the Leased Premises, except as may be expressly provided in a
written instrument executed by a duly authorized officer of STI.
6. The Landlord acknowledges and agrees that STI would not provide the
financing referred to above if it did not receive this instrument duly executed
by the Landlord.
7. This certificate shall continue in full force and effect until the
Tenant has paid and satisfied all of its debts, liabilities, and other
obligations to STI, including any and all extensions and renewals thereof. This
certificate shall inure to the benefit of STI and its successors and assigns.
8. All notices given pursuant to this certificate shall be deemed
sufficiently given if in writing, sent by registered or certified mail, return
receipt requested, with postage prepaid, addressed to the appropriate party as
follows: (a) if to the Landlord or the Tenant, to the respective addresses set
forth in the Lease, or (b) if to STI, to "STI Credit Corporation, 1475 Terminal
Way #C-2, Reno, Nevada, 89502." Any such notice shall be deemed effective on the
earlier of actual receipt thereof by the addressee or three (3) business days
after depositing the notice with the United States Postal Service as hereinabove
provided. Any party may change its address or purposes of receiving notice
pursuant hereto by giving notice thereof as herein provided.
<PAGE>
IN WITNESS WHEREOF the Landlord has executed and delivered this
certificate as of this ________ day of __________, 19____.
Dated the ______________day of____________________,19______.
LANDLORD
_________________________________________
Authorized Signature
_________________________________________
Title
_________________________________________
Date
<PAGE>
AFFIDAVIT OF IDENTITY
STATE OF ______________________)
COUNTY OF _____________________)
Date: _________________________, 19___
Affiant: _________________________
Affiant on oath swears that the following statements are true:
1) Affiant, ______________________, is the same ______________________, named
in a ______________________ Corporation, _________________________ dba
Franchisor.
2) Affiant's Social Security number is ____________________.
3) Signatures on attached Promissory Note, Security Agreement, Guaranty and
related documents are true and correct signatures of the affiant.
___________________________
ACKNOWLEDGMENT
STATE OF ______________________)
COUNTY OF _____________________)
This instrument was acknowledged before me on this _______ day of _____________
____________, 19 _____, by _____________________________.
__________________________________________
Notary Public, State of __________________
Print Name ____________________________________
Commission Expires _____________________
<PAGE>
PIZZERIA UNO PROGRAM
FRANCHISOR APPROVAL
DATE: _________________________
TO: Dan Simonton
FROM: _________________________
The following franchisee has been approved for financing by Franchisor under the
Franchisor Financing Program. The attached loan is acknowledged and approved to
be covered under the Franchisor Franchise Program and Agreement dated February
5, 1988 and Amendments to the Agreement dated February 12, 1993 and June 29,
1993.
APPLICANT: _________________________________
_________________________________
LOCATION: _________________________________
_________________________________
_________________________________
_________________________________
AMOUNT REQUESTED FOR LOAN $______________________
Franchisor
________________________________
SIGNATURE
________________________________
PRINT NAME
________________________________
TITLE
________________________________
DATE
<PAGE>
CERTIFICATE OF ACCEPTANCE OF PROPERTY
We hereby certify that all of the Property referred to in the attached Exhibit
"A" has been delivered to and has been received by us, and Borrower hereby
accepts the condition of each and every item in the "as is" condition and is in
all respects satisfactory to Borrower, and that the Property is accepted by us
for all purposes under a Promissory Note and Security Agreement dated
______________________ and accordingly hereby authorize Seller to make payment
according to the terms of the aforementioned Promissory Note.
Borrower:
__________________________________________________
Signature
__________________________________________________
Title
__________________________________________________
Date
<PAGE>
INTERIM FUNDING REQUEST
DATE:_______________________________________________________
AMOUNT:_____________________________________________________
PAY TO THE ORDER OF:
___________________________________________
___________________________________________
___________________________________________
___________________________________________
METHOD OF PAYMENT:_____________CHECK___________WIRE TRANSFER
*If payment is to be wire transferred, please include bank name, account number
and bank routing number.
Bank____________________________________
Account #_______________________________
Routing #_______________________________
AUTHORIZED BY_______________________________________________
Form must be signed in the space above. Also attach this form to equipment
invoice or other documentation containing a detailed description of equipment or
services requiring payment. If this request is for reimbursement of costs you
have paid, please attach invoices that are shown as paid or copies of cancelled
checks showing payment.
<PAGE>
ELECTRONIC PAYMENT PLAN
HERE'S HOW IT WORKS:
Each month, prior to the due date on your contract payment, you will receive an
invoice showing the amount due on your contract. Then, on the payment due date,
STI Credit Corporation will electronically draft your bank or savings and loan
account. That's all there is to it! Should you have questions about your
invoice, simply call a Customer Service Representative at STI Credit Corporation
prior to the draft date and discuss it. No funds will be transferred until your
questions are resolved.
I authorize the Bank or Savings and Loan named below to pay my monthly Stephens
Franchise Finance payment and applicable taxes and to make the deduction payable
to STI Credit Corporation and to deduct each payment from my checking/savings
account. I have the right to stop payment of a charge by timely notification to
my Bank or Savings and Loan prior to charging my account. I understand, however,
that either the Bank or Savings and Loan and STI Credit Corporation each
reserves the right to terminate this Electronic Fund Transfer (or my
participation therein).
COMPLETE THIS FORM AND RETURN TO STI CREDIT CORPORATION
AUTHORIZATION TO PAY STI CREDIT CORPORATION
Note Number___________________________________(Office Use Only)
Franchisee Name_______________________________________________________
Phone (____)__________________________________________________________
Address_______________________________________________________________
City______________________________________ State__________ Zip________
Name of Bank or Savings & Loan________________________________________
Address_______________________________________________________________
City__________________________________ State___________ Zip___________
Checking Account Number ______________________________________________ OR
Savings Account Number _______________________________________________
Date you wish payment to be deducted: 1st__________ 15th____________
I authorize you to deduct from my checking or savings account the amount of my
monthly STI Credit Corporation payment and applicable taxes and to make that
deduction payable to STI Credit Corporation I agree to all the terms of this
authorization.
Be sure to include a voided check or deposit slip.
AUTHORIZED SIGNATURE_________________________________ DATE__________
<PAGE>
PLEDGE AGREEMENT
(Certificate of Deposit)
This Pledge Agreement ("Agreement") is made and entered into this
__________ day of ________________, 199__, by and between
____________________________ ("Pledgor"), and STI Credit Corporation, a Nevada
corporation (the "Pledgee").
RECITALS
A. The Pledgor has personally guarantied certain obligations of
__________________________("____________") to the Pledgee (the ) pursuant to the
Pledgor's Guaranty dated _____________, 199___.
B. To secure the obligation of the Pledgor to the Pledgee pursuant to the
Guaranty, the Pledgor has agreed to pledge to the Pledgee Certificate of Deposit
No. _____________________, (the "Bank"), in the name of the Pledgor, in the face
amount of ___________________________________ ($_______________) (the
"Certificate of Deposit").
AGREEMENT
1. Pledge. The Pledgor hereby pledges, assigns and transfers to the
Pledgee, and grants to the Pledgee a continuing security interest in the
Certificate of Deposit as security for the prompt payment to the Pledgee of all
amounts due under the Guaranty. The Pledgor delivers the Certificate of Deposit,
duly endorsed in blank by the Pledgor, to the Pledgee herewith.
2. Term. The Pledgee shall hold the Certificate of Deposit, and any and
all renewals thereof, as security and the Certificate of Deposit shall remain so
pledged to the Pledgee until all obligations under the Guaranty and all
the______________________ are paid in full in accordance with their terms.
3. Default. Upon the occurrence of any default of the Pledgor under the
Guaranty which shall continue for fifteen (15) days or more after notice shall
have been given by the Pledgee, then or at any time thereafter, the Pledgee
shall have the right to endorse, negotiate, redeem, sell, assign and/or transfer
the Certificate of Deposit and collect from the Bank all amounts payable
pursuant to the Certificate of Deposit, either at or prior to the maturity
thereof, at the sole option of the Pledgee, without any consent by or further
notice to the Pledgor or any other person. Thereafter, the Pledgee, after
deducting all its costs or expenses, shall apply the residue of the proceeds of
the Certificate of Deposit to the payment or reduction of the Pledgor's
obligations to the Pledgee under the Guaranty; the surplus, if any, shall be
returned to the Pledgor. The Pledgor acknowledges that the Certificate of
Deposit is subject to substantial penalties for early withdrawal and hereby
consents to the application of the Certificate of Deposit before maturity to the
indebtedness of the Pledgor as herein provided and waives any claims that she/he
may
<PAGE>
have against the Pledgee or against the Certificate of Deposit with respect to
any such penalties.
4. Interest. Prior to presentment of the Certificate of Deposit for
payment by the Pledgee following a default by the Pledgor under the Guaranty as
provided herein, interest payable on account of the Certificate of Deposit may
be paid to the Pledgor. Nothing herein, however, shall give the Pledgor any
right of any kind whatsoever to the principal of the Certificate of Deposit.
5. Waiver. The Pledgor hereby waives any and all notice of acceptance of
this Agreement by the Pledgee and any default under the______________________
and hereby agrees (1) to any extensions of time for payment of
the______________________ without limit as to the number or the aggregate period
of such extensions, (2) to the granting of any other indulgences to Caribbean,
(3) that the Pledgee may make or consent to any form of adjustment, compromise
or composition respecting the______________________ or any collateral securing
the______________________ and may release any or all said collateral, and (4)
that any or all of the foregoing may be without notice to or the further consent
of the Pledgor.
6. Remedies. The rights, powers and remedies given to the Pledgee
hereunder shall be in addition to all rights, powers and remedies given to the
Pledgee by virtue of any statute, rule of law or any other agreement now or
hereafter given in connection with the Guaranty or the______________________.
Any forbearance or failure or delay by the Pledgee in exercising any right,
power or remedy shall not be deemed to be a waiver of any such right, power or
remedy and any single or partial exercise of any right, power or remedy
hereunder shall not preclude the further exercise thereof; and every right,
power and remedy of the Pledgee shall continue in full force and effect until
such right, power or remedy is specifically waived by an instrument in writing
executed by the Pledgee.
7. Benefit. This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto, their heirs, successors and assigns.
8. Law. This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Nevada.
PLEDGOR: ___________________________
By: ________________________________
Title:______________________________
PLEDGEE: STI Credit Corporation
By: ________________________________
Title:______________________________
<PAGE>
BANK ACKNOWLEDGEMENT
1. (The "Bank") hereby acknowledges to the Pledgor and the Pledgee named
above (a) that it has received a duly executed copy of the foregoing Pledge
Agreement, and (b) that the foregoing pledge has been duly and properly recorded
in the Bank's records.
2. The Bank hereby agrees (a) that neither the Pledgor nor any other
person except the Pledgee shall be permitted to negotiate, redeem, sell, assign
and/or transfer the Certificate of Deposit without the prior written consent of
the Pledgee (which written consent shall require the signature of a duly
authorized officer of the Pledgee) and (b) the Pledgee may at any time, upon
presentment of the pledged Certificate of Deposit, duly indorsed by the Pledgee,
redeem said Certificate of Deposit without the consent of or notice to any other
person.
3. The Bank hereby waives any right of off-set or lien it may now or
hereafter have with respect to the Certificate of Deposit.
PLEDGOR
By: ________________________________
Title:______________________________
<PAGE>
FINANCING STATEMENT - FOLLOW INSTRUCTIONS CAREFULLY
This Financing Statement is presented for filing pursuant to the Uniform
Commercial Code and will remain effective, with certain exceptions, for 5 years
from date of filing.
- --------------------------------------------------------------------------------
A. Name & TEL. # OF CONTACT AT FILER (optional)
- --------------------------------------------------------------------------------
B. FILING OFFICE ACCT. # (optional)
- --------------------------------------------------------------------------------
C. RETURN COPY TO: (Name and Mailing Address)
- --------------------------------------------------------------------------------
D. OPTIONAL DESIGNATION (If applicable): [ ] LESSOR/LESSEE
[ ] CONSIGNOR/CONSIGNEE [ ] NON-UCC FILING
================================================================================
1. DEBTOR'S EXACT FULL LEGAL NAME - Insert only one debtor name (1a or 1b)
-----------------------------------------------------------------------------
1a. ENTITY'S NAME
OR
-----------------------------------------------------------------------------
1b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- --------------------------------------------------------------------------------
1c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
- --------------------------------------------------------------------------------
1d. S.S. OR TAX ID.#
- --------------------------------------------------------------------------------
OPTIONAL 1e. TYPE OF ENTITY 1f. ENTITY'S STATE
ADD'NL INFO RE OR COUNTRY OF
ENTITY DEBTOR ORGANIZATION
---------------------------------------------------------------
1g. ENTITY'S ORGANIZATIONAL I.D.#, If any
[ ] NONE
================================================================================
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - Insert only one debtor name
(2a or 2b)
-----------------------------------------------------------------------------
2a. ENTITY'S NAME
OR
-----------------------------------------------------------------------------
2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- --------------------------------------------------------------------------------
2c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
- --------------------------------------------------------------------------------
2d. S.S. OR TAX ID.#
- --------------------------------------------------------------------------------
OPTIONAL 2e. TYPE OF ENTITY 2f. ENTITY'S STATE
ADD'NL INFO RE OR COUNTRY OF
ENTITY DEBTOR ORGANIZATION
---------------------------------------------------------------
2g. ENTITY'S ORGANIZATIONAL I.D.#, If any
[ ] NONE
================================================================================
3. SECURED PARTY'S (ORIGINAL S/P or ITS TOTAL ASSIGNEE) EXACT FULL LEGAL NAME -
Insert only one SECURED PARTY name (3a or 3b)
-----------------------------------------------------------------------------
3a. ENTITY'S NAME
OR
-----------------------------------------------------------------------------
3b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
- --------------------------------------------------------------------------------
3c. MAILING ADDRESS CITY STATE COUNTRY POSTAL CODE
================================================================================
4. This FINANCING STATEMENT covers the following types or items of property:
================================================================================
5. CHECK [ ] This FINANCING STATEMENT is signed by the Secured Party
BOX instead of the Debtor to perfect a security interest (a) in
(If applicable) collateral already subject to a security interest in another
jurisdiction when it was brought into this staet, or when the
Debtor's location was changed to this state, or (b) in
accordance with other statuatory provisions {additional data
may be required)
================================================================================
6. REQUIRED SIGNATURES
- --------------------------------------------------------------------------------
================================================================================
7. If filed in Florida (check one)
[ ] Documentary [ ] Documentary stamp
Stamp tax paid tax not applicable
================================================================================
8. [ ] This FINANCING STATEMENT is to be filed (for record) (or recorded) in the
REAL ESTATE RECORDS
Attache Addendum (If applicable)
================================================================================
9. Check to REQUEST SEARCH CERTIFICATE(S) on Debtor(s)
(ADDITIONAL FEE)
(Optional) [ ] All Debtors [ ] Debtor 1 [ ] Debtor 2
================================================================================
(1) FILING OFFICER COPY - NATIONAL FINANCING STATEMENT
(FORM UCC1) (TRANS) (REV. 12/18/95)
<PAGE>
Uno Restaurants, Inc.
Software Support Maintenance Agreement
For purposes of this document, the franchise store shall be referred to as
"User" and Uno Restaurants, Inc. shall be referred to as "Uno".
Coverage: This support agreement covers the following software:
Liberty System International (LSI), a division of Radiant Hospitality
Systems, Point-of-Sale Software for the NCR 2760, NCR 7450 and NCR 7453
systems.
ReMacs, a division of Radiant Hospitality Systems, Theoretical Food Cost
System
Uno Restaurants Lotus models:
DLYM.WK1 - Daily sales and cash receipt report
DESP.WK1 - Daily labor planning and hourly sales and labor
projections
WESP.WK1 - Weekly sales and labor report with actual to plan
comparison
NCRPROJ.WK1 - Project par bake by meal period and next day dough
needs
INV.WK1 - Inventory worksheet for calculating food and beverage
costs
COUPON.WK1 - Coupon tracking report
BGTM.WK1 - Budget worksheet
P&LM.WK1 - Profit and Loss worksheet
This support does not cover software purchased or provided by any source other
than LSI, ReMacs or Uno. Hardware repair and replacement services are not
covered by this agreement. Uno shall have no duty to correct errors that occur
after User or third party has modified the Software in any way. Any site that
has a support agreement with Uno must have a modem and communication software
(CoSession, PCAnywhere or Carbon Copy) installed on the PC used for Manager Work
Station (MWS).
Definitions: The following defines the terms used in this agreement.
Regular Support Hours: 8 a.m. - 8 p.m. Eastern Time Monday through Friday,
excluding Uno holidays.
Emergency Support Hours: 8 p.m - 8 a.m. Eastern Time Monday through
Friday; All day Saturday and Sunday and Uno holidays
Uno Holidays: New Year's Day, Memorial Day, Forth of July, Labor Day,
Thanksgiving Day and the day after, Christmas Day.
Telephone Support: User may call the Uno technical support telephone
number for assistance according to the following provisions:
User may call for any question relating to the operation of the
point-of-sale system during Regular Support Hours. User may call
during Emergency Support Hours only for emergency problems which
cause an interruption in vital processes of the point-of-sale system
that will result in the loss of business for the User.
Standard Support:
* Installation/support of Uno point-of-sale database and reports
* Installation/support of Uno recipe database for theoretical food
costing (optional)
* Unlimited phone support during Regular Support Hours
* Emergency phone support during Emergency Support Hours
* Free software upgrades
* Access to Uno consulting services for custom requirements
Uno Consulting Services: While technical support is provided to answer questions
and to keep the system running, Uno consulting services are available to help
optimize your use of the system. Consulting work includes but is not limited to
projects such as modifying reports, making menu and pricing changes, setting up
custom tracking programs and completing hardware upgrades (i.e. adding new
terminals and printers). Projects may be scheduled by
<PAGE>
calling Uno technical support. You will receive an estimate of the time it will
take to complete the project and a time schedule for implementation. Local
on-site services is also available. It will be billed at the hourly rate plus
travel expenses.
Pricing:
Standard Support - $850 per year
Standard Support with theoretical food costing - $1000 per year
Consulting Services - $85 per hour
<PAGE>
ATTACHMENT A
AGENTS FOR SERVICE OF PROCESS
<PAGE>
ATTACHMENT A
AGENTS FOR SERVICE OF PROCESS
CALIFORNIA
Commissioner of Corporations
3700 Wilshire Blvd., 6th Floor
Los Angeles, CA 90010
HAWAII
Director,
Hawaii Department of Commerce
and Consumer Affairs
1010 Richards Street
Honolulu, Hawaii 96813
ILLINOIS
Illinois Attorney General
500 South Second Street
Springfield, Illinois 62706
INDIANA
Indiana Secretary of State
201 State House
Indianapolis, Indiana 46204
MARYLAND
Maryland Securities Commissioner
Office of the Attorney General
200 St. Paul Place
20th Floor
Baltimore, Maryland 21202-2020
MICHIGAN
Michigan Department of Commerce,
Corporations and Securities Bureau
670 Law Building
Lansing, Michigan 48913
MINNESOTA
Commissioner of Commerce
133 East Seventh Street
St. Paul, Minnesota 55101
NEW YORK
Secretary of State of
the State of New York
162 Washington Avenue
Albany, New York 12231
NORTH DAKOTA
Securities Commissioner
State of North Dakota
600 East Boulevard, Fifth Floor
Bismarck, North Dakota 58505
OREGON
Director
Department of Consumer and
Business Services
Division of Finance and
Corporate Securities
Labor and Industries Building
Salem, Oregon 97310
<PAGE>
RHODE ISLAND
Director of Department
of Business Regulation
Suite 232
233 Richmond Street
Providence, Rhode Island 02903-4232
SOUTH DAKOTA
Director of Division of Securities
c/o 118 West Capital Avenue
Pierre, South Dakota 57501-2017
VIRGINIA
Clerk of the State
Corporation Commission
1300 East Main Street, 1st Floor
Richmond, Virginia 23219
WASHINGTON
Director of Financial Institutions
Securities Division
210 - 11th Street SW 3rd Floor West
Olympia, Washington 98504
WISCONSIN
Commissioner of Securities
Fourth Floor
345 West Washington Avenue
Madison, Wisconsin 53703
<PAGE>
ATTACHMENT B
TABLE OF CONTENTS FOR MANUALS
Pizzeria Uno Manuals Pertinent to Restaurant Operations Min. Total Pages
1. Management Operations Manual 318
2. Recipe Manual 540
3. Bar Manual 72
4. Host Manual 69
5. Server Manual 64
6. Dish and Maintenance Manual 32
7. Prep Manual 63
8. Saute/Pizza 93
9. Management Training Program Manual 150
10. Quality Assurance Manual 126
11. HazMat Manual 117
12. Management Administration Guide: Certified Training Program 128
<PAGE>
ATTACHMENT C
FINANCIAL STATEMENTS
<PAGE>
-------------------------------------------------
Audited Financial Statements
Pizzeria Uno Corporation
Years ended September 27, 1998,
September 28, 1997 and September 29, 1996
<PAGE>
Pizzeria Uno Corporation
Audited Financial Statements
Years ended September 27, 1998, September 28, 1997
and September 29, 1996
Contents
Report of Independent Auditors ............................................. 1
Audited Financial Statements
Balance Sheets ............................................................. 2
Statements of Income and Retained Earnings ................................. 3
Statements of Cash Flows ................................................... 4
Notes to Financial Statements .............................................. 5
<PAGE>
[LETTERHEAD OF ERNST & YOUNG LLP]
Report of Independent Auditors
Board of Directors and Shareholder
Pizzeria Uno Corporation
We have audited the accompanying balance sheets of Pizzeria Uno Corporation (the
Company), a wholly-owned subsidiary of URC Holding Company, Inc., which is a
wholly-owned subsidiary of Uno Restaurant Corporation, as of September 27, 1998
and September 28, 1997, and the related statements of income and retained
earnings, and cash flows for each of the three years in the period ended
September 27, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Pizzeria Uno Corporation at
September 27, 1998 and September 28, 1997, and the results of its operations and
its cash flows for each of the three years in the period ended September 27,
1998, in conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
November 3, 1998
1
<PAGE>
Pizzeria Uno Corporation
Balance Sheets
September 27 September 28
1998 1997
------------------------------
Assets
Current assets:
Royalties receivable, net of allowances of
$328,016 in 1998 and $396,852 in 1997 $ 368,749 $ 728,108
Other assets 25,259 130,426
Deferred income taxes 725,503 413,307
------------------------------
Total current assets 1,119,511 1,271,841
Other assets:
Due from Uno Restaurant Corporation 19,744,309 30,482,295
Royalty fee, net 156,915 240,916
------------------------------
$21,020,735 $31,995,052
==============================
Liabilities and shareholder's equity
Franchise fee deposits, current $ 486,136 $ 333,992
Franchise fee deposits, noncurrent 1,112,940 600,066
Shareholder's equity:
Common Stock, $.01 par value per share; 3,000
shares authorized; 196 shares issued and
outstanding 2 2
Retained earnings 19,421,657 31,060,992
------------------------------
19,421,659 31,060,994
------------------------------
$21,020,735 $31,995,052
==============================
See accompanying notes.
2
<PAGE>
Pizzeria Uno Corporation
Statements of Income and Retained Earnings
Year ended
-----------------------------------------
September 27 September 28 September 29
1998 1997 1996
-----------------------------------------
Revenues:
Royalty income:
Franchisee-owned units $ 4,415,724 $ 4,333,560 $ 4,101,194
Parent-owned units 9,264,179 8,537,394 8,053,565
Franchise fees 133,250 182,500 162,500
------------------------------------------
13,813,153 13,053,454 12,317,259
Costs and expenses:
General and administrative 3,280,276 3,441,179 3,490,390
------------------------------------------
Operating income 10,532,877 9,612,275 8,826,869
Interest income 3,129,680 2,495,850 1,691,377
------------------------------------------
Income before income taxes 13,662,557 12,108,125 10,518,246
Provision for income taxes 5,301,892 4,676,158 4,103,779
------------------------------------------
Net income 8,360,665 7,431,967 6,414,467
Retained earnings at beginning of
period 31,060,992 23,629,025 17,214,558
Dividends (20,000,000) -- --
------------------------------------------
Retained earnings at end of period $ 19,421,657 $31,060,992 $23,629,025
==========================================
See accompanying notes.
3
<PAGE>
Pizzeria Uno Corporation
Statements of Cash Flows
Year ended
-----------------------------------------
September 27 September 28 September 29
1998 1997 1996
-----------------------------------------
Operating activities
Net income $ 8,360,665 $ 7,431,967 $ 6,414,467
Adjustments to reconcile net income
to net cash provided by operating
activities:
Amortization 84,001 83,163 81,380
Deferred income taxes (312,196) (195,791) (78,583)
Changes in operating assets and
liabilities:
Royalties receivable 359,359 (18,220) 14,728
Other assets 105,167 (18,843) 244,173
Franchise fee deposits 665,018 566,779 109,779
Due from Uno Restaurant
Corporation (9,262,014) (7,849,055) (6,785,944)
----------------------------------------
Net cash provided by operating
activities -- -- --
----------------------------------------
Change in cash -- -- --
Cash at beginning of period -- -- --
----------------------------------------
Cash at end of period $ -0- $ -0- $ -0-
========================================
Supplemental noncash investing and
financing activity:
Dividend declared in exchange
for reduction in amount due
from Uno Restaurant
Corporation $(20,000,000) $ - $ -
========================================
See accompanying notes.
4
<PAGE>
Pizzeria Uno Corporation
Notes to Financial Statements
September 27, 1998
1. Summary of Significant Accounting Policies
Description of Business
The Company offers domestic and international franchises for the establishment
and operation of "Pizzeria Uno...Chicago Bar & Grill" casual dining,
full-service restaurants. The Company franchises 63 units in 19 states, the
District of Columbia, Puerto Rico and Seoul, Korea.
Basis of Presentation
The financial statements include the accounts of Pizzeria Uno Corporation (the
Company), a wholly-owned subsidiary of URC Holding Company, Inc., which is a
wholly-owned subsidiary of Uno Restaurant Corporation (the Parent).
Fiscal Year
The Company's fiscal year ends at the close of business on the Sunday closest to
September 30 in each year.
Revenue Recognition
The Company defers franchise fee deposits until the franchisee opens the
restaurant and all services have been substantially performed; at that time, the
fee is recorded as income. Royalty income is recorded as earned based on the
rates provided by the respective franchise agreements.
A summary of full-service franchise unit activity is as follows:
Year ended
---------------------------------------
September 27 September 28 September 29
1998 1997 1996
---------------------------------------
Units operating at beginning of
year 66 63 59
Units opened 5 6 5
Units closed (8) (3) (1)
---------------------------------------
Units operating at end of year 63 66 63
=======================================
5
<PAGE>
Pizzeria Uno Corporation
Notes to Financial Statements (continued)
1. Summary of Significant Accounting Policies (continued)
Concentrations of Credit Risk
Concentrations of credit risk with respect to royalties receivable are limited
due to the large number of franchisees comprising the Company's franchise base
and their dispersion across many different geographic areas. At September 27,
1998, the Company had no significant concentrations of credit risk.
Due from Uno Restaurant Corporation
The Company charges the Parent interest (approximately 8.75% at September 27,
1998) on the amount Due from Uno Restaurant Corporation. The amount due from the
Parent has been classified as noncurrent because the Company currently has no
intention to demand payment.
Income Taxes
The Company is part of a group that files a consolidated tax return for federal
purposes and in certain states. The Parent's policy is to allocate tax expense
to members of the group based on the Parent's overall federal and state income
tax rate. Any computed income taxes payable are charged to the intercompany
account.
Deferred income taxes are recognized for temporary differences between financial
statement and income tax bases of assets and liabilities for which income tax
benefits and obligations will be realized in future years.
Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards (SFAS) No. 130, Reporting Comprehensive
Income, and SFAS No. 131, Disclosures About Segments of an Enterprise and
Related Information, which are effective for fiscal year 1999. The Company
believes that the adoption of these new accounting standards will not have a
material impact on the Company's financial statements.
Use of Estimates
The preparation of the financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities, and the
disclosure of contingent assets and liabilities, at the date of the financial
statements and the reported amounts of revenues and costs and expenses during
the reporting period. Actual results could differ from those estimates.
6
<PAGE>
Pizzeria Uno Corporation
Notes to Financial Statements (continued)
2. Franchise and Royalty Fee Agreements
The Company has an agreement which provides for, among other things, the
assignment of the trademark "Pizzeria Uno." The fee is being amortized over the
14-year life of the original agreement. Accumulated amortization amounted to
$982,550 and $898,549 at September 27, 1998 and September 28, 1997,
respectively. Royalty amortization expense was $84,001 in 1998, $83,163 in 1997
and $81,380 in 1996.
The Company grants to qualified licensees a nontransferable interest to use the
trademarks and trade names for (1) a fee upon execution of the franchise
agreement, (2) a fee upon the opening of the restaurant and (3) royalties and
advertising fees based on gross sales.
3. Related-Party Transactions
The Parent provides certain management and administrative services for the
Company. Amounts charged for these services amounted to $3,171,273 in 1998,
$3,208,017 in 1997 and $3,235,709 in 1996, based on specific expenses related to
the Company and paid for by the Parent plus an allocation of general corporate
overhead based on relative revenues.
The Company's President and his brother own and operate four franchised
restaurants and pay royalties to the Company under standard franchise
agreements.
4. Contingent Liabilities
The Company, the Parent, URC Holding Company, Inc. and Uno Foods, Inc. have
collectively guaranteed a $55 million credit facility and term note agreement
between Uno Restaurants, Inc. and Saxet Corporation as borrowers and their
primary commercial bank. At September 27, 1998, borrowings were $37,760,000 at
interest rates ranging from 7.16% to 8.75%. The agreement contains certain
financial and operating covenants, including maintenance of certain levels of
net worth and income.
7
<PAGE>
Pizzeria Uno Corporation
Notes to Financial Statements (continued)
5. Income Taxes
Deferred taxes are attributable to the following temporary differences:
September 27 September 28
1998 1997
--------------------------
Deferred tax assets:
Franchise fees $ 620,441 $ 291,078
Allowance for doubtful accounts 127,270 157,669
--------------------------
747,711 448,747
Deferred tax liability:
Royalty fee 22,208 35,440
--------------------------
Net deferred tax assets $ 725,503 $ 413,307
==========================
The provision (credit) for income taxes consisted of the following:
Year ended
-----------------------------------------
September 27 September 28 September 29
1998 1997 1996
-----------------------------------------
Current:
Federal $4,601,385 $3,988,874 $3,382,975
State 1,012,703 883,075 799,387
-----------------------------------------
5,614,088 4,871,949 4,182,362
Deferred:
Federal (255,872) (160,285) (63,270)
State (56,324) (35,506) (15,313)
-----------------------------------------
(312,196) (195,791) (78,583)
-----------------------------------------
Income tax expense $5,301,892 $4,676,158 $4,103,779
=========================================
8
<PAGE>
Pizzeria Uno Corporation
Notes to Financial Statements (continued)
5. Income Taxes (continued)
A reconciliation of the effective tax rates with the federal statutory rates is
as follows:
Year ended
----------------------------------------
September 27 September 28 September 29
1998 1997 1996
----------------------------------------
Federal statutory rate 34.2% 34.0% 34.0%
State income taxes, net of federal
income tax benefit 4.6 4.6 5.0
----------------------------------------
Effective income tax rate 38.8% 38.6% 39.0%
========================================
6. Year 2000 (Unaudited)
The Company has completed its initial assessment of its computer systems to
identify the systems that could be affected by the "Year 2000" issue and has
developed an implementation and compliance plan to resolve the issue. The
Company's current plan calls for implementation to be completed during fiscal
year 1999. The Year 2000 problem is the result of computer programs being
written using two digits rather than four to define the applicable year. Any of
the Company's programs that have time-sensitive software may recognize the date
using "00" as the year 1900 rather than the year 2000, which could result in
system failures or miscalculations using existing software. The Year 2000 issue
is not expected to pose a significant problem for the Company to the extent the
implementation and compliance plan proceed as anticipated.
9
<PAGE>
THESE FINANCIAL STATEMENTS HAVE BEEN PREPARED WITHOUT AN AUDIT. PROSPECTIVE
FRANCHISEES AND AREA REPRESENTATIVES OR SELLERS OF FRANCHISES SHOULD BE ADVISED
THAT NO INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT HAD AUDITED THESE FIGURES OR
EXPRESSED AN OPINION WITH REGARD TO THEIR CONTENT OR FORM.
<PAGE>
Pizzeria Uno Corporation
Balance Sheets
-Unaudited-
November 29
1998
----------------
Assets
Current assets:
Royalties receivable, net of allowances of
$329,329 in 1998 and $396,852 in 1997 $ 501,075
Other assets 60,163
Deferred income taxes 776,061
----------------
Total current assets 1,337,299
----------------
Other assets:
Due from Uno Restaurant Corporation 20,979,357
Royalty fee, net 142,203
----------------
$22,458,859
================
Liabilities and shareholder's equity
Franchise fee deposits, current $ 633,040
Franchise fee deposits, noncurrent 1,097,940
Shareholder's equity:
Common Stock, $.01 par value per share; 3,000
shares authorized; 196 shares issued and
outstanding 2
Retained earnings 20,727,877
----------------
20,727,859
----------------
$22,458,859
================
<PAGE>
Pizzeria Uno Corporation
Statements of Income and Retained Earnings
-Unaudited-
November 29
1998
-------------
Revenues:
Royalty income:
Franchisee-owned units $ 781,884
Parent-owned units 1,544,031
Franchise fees 55,000
-------------
2,380,915
Costs and expenses:
General and administrative 560,566
-------------
Operating income 1,820,359
Interest income 307,728
-------------
Income before income taxes 2,128,087
Provision for income taxes 821,867
-------------
Net income 1,306,220
Retained earnings at beginning of period 19,421,657
-------------
Retained earnings at end of period $ 20,727,877
=============
<PAGE>
ATTACHMENT D
CONTRACTS
1. Pizzeria Uno Corporation Franchise Agreement
2. Various State Amendments to the Franchise Agreement
3. Area Development Agreement
4. Various State Amendments to the Area Development Agreement
5. SunTrust Credit Finance Documents
6. Uno Restaurants, Inc. Software Support Maintenance Agreement
<PAGE>
ATTACHMENT E
STATE ADMINISTRATORS
<PAGE>
ATTACHMENT E
LIST OF STATE ADMINISTRATORS
CALIFORNIA
Commissioner of Corporations
3700 Wilshire Boulevard, 6th Floor
Los Angeles, California 90010
HAWAII
Director
Hawaii Department of Commerce
and Consumer Affairs
1010 Richards Street
Honolulu, Hawaii 96813
ILLINOIS
Illinois Attorney General
500 South Second Street
Springfield, Illinois 62706
INDIANA
Indiana Secretary of State
302 West Washington, Room E-111
Indianapolis, Indiana 46204
MARYLAND
Office of the Attorney General
Maryland Division of Securities
200 St. Paul Place, 20th Floor
Baltimore, Maryland 21202-2020
MICHIGAN
Michigan Department of Commerce
Corporations and Securities Bureau
670 Law Building
Lansing, Michigan 48913
MINNESOTA
Commissioner of Commerce
133 East Seventh Street
St. Paul, Minnesota 55101
NEBRASKA
Nebraska Department of
Banking and Finance
1200 N Street, Suite 311
P.O. Box 95006
Lincoln, Nebraska 68509-5006
NEW YORK
Bureau of Investor Protection and Securities
New York State Department of Law
120 Broadway, 23rd Floor
New York, New York 10271
NORTH DAKOTA
Securities Commissioner
State of North Dakota
Capitol Building
Bismarck, North Dakota 58505
<PAGE>
OREGON
Director
Department of Consumer and
Business Services
Division of Finance and
Corporate Securities
Labor and Industries Building
350 Winter St., NE Room 410
Salem, Oregon 97310
RHODE ISLAND
Director of Department of
Business Regulation
233 Richmond Street, Suite 232
Providence, Rhode Island 02903-4232
WASHINGTON
Department of Financial Institutions
Securities Division
210 - 11th Ave. SW
3rd Floor West
Olympia, Washington 98504
WISCONSIN
Department of Financial Institutions
345 West Washington Avenue, 4th Floor
Madison, Wisconsin 53703
SOUTH DAKOTA
Director of Division of Securities
118 West Capitol Avenue
Pierre, South Dakota 57501-2017
TEXAS
Statutory Document Section
Secretary of State
P.O. Box 12887
Austin, Texas 78711
VIRGINIA
State Corporation Commission
Division of Securities & Retail Franchising
1300 East Main Street, 9th Floor
Richmond, Virginia 23219
<PAGE>
ATTACHMENT F
LIST OF FRANCHISES
<PAGE>
PAGE
----
ARIZONA NICPON, BONUS 2
CALIFORNIA GUNTHER, MILLER, 3
PATEL, TURETZKY 4
FLORIDA GONZALEZ, GRAYSON, WILSON 5
INDIANAS WOODBURN 6
KANSAS WERTH 7
KENTUCKY ARNOLD, BOLLINGER 8
MARYLAND JOHNSON 9
MASSACHUESETTS HURWITZ 10
MICHIGAN EVERAL, ROBERTS 11
MINNESOTA BUSCH 12
NEVADA OFFENBACH 13
NEW JERSEY VIOLA, SPIVAK, WECHSLER 14
NEW MEXICO BONUS 15
NEW YORK BANTA, KEENAN, DOLEH 16
NORTH CAROLINA WULKOWICZ, LEE 17
OHIO GERISH, SILVERMAN 18
WILLIAMS 19
OKLAHOMA DEWINTER 20
PENNSYLVANIA SPIVAK, WECHSLER, DONALDSON 21
BOCK, ROBINSON 22
PUERTO RICO SANCHEZ 23
SOUTH CAROLINA WULKOWICZ, LEE 24
TENNESSEE TRAMMELL 25
TEXAS KIM, JARBOE, LANDAUER,
UDHWANI 26
WASHINGTON, D.C. NATOLI 27
WASHINGTON PATEL 28
WISCONSIN BEACH 29
INTERNATIONAL DUBAI(ALBANNAI), KOREA(SHIM),
INDONESIA(RADJMIN), PAKISTAN(WROBEL) 30
<PAGE>
2
ARIZONA (AZ)
Regional - Bruce Knudson ext. 232
Stanley Nicpon - Principal Matt Vecchio - GM
The Nicpon Group Pizzeria Uno
2105 South Hardy Drive, Suite 10 FAZ01 Arizona Center
Tempe, AZ 85282 455 North 3rd Street, Suite L154
Ph. (602) 894-6700 - Office Phoenix, AZ 85004
Ph. (602) 253-3355
OVERNIGHTS:
The Nicpon Group Janet Barr - GM
1505 E. Los Arboles Drive Pizzeria Uno
Tempe, AZ 85284-2462 690 South Mill Avenue
FAZ02 Tempe, AZ 85281
Ph. (602) 968-1300
Pizzeria Uno
6821 East Superstition Springs Blvd.
Mesa, AZ 85208
Ph. (602)-981-8667
- --------------------------------------------------------------------------------
ROGER BONUS - Principal
770 Loma Verde Lane
Las Cruces, NM 88011 Tucson, AZ
Ph. (505)-522-3933
<PAGE>
3
CALIFORNIA (CA)
Regional - Bruce Knudson ext.232
Arthur & Sharon Gunther
- Principals Tony Burgos - GM
Gunther Restaurant Group Pizzeria Uno
15 Surrey Road 19930 Stevens Creek Blvd.
Palm Beach Gardens, FL 33418 FCA21 Cupertino, CA 95014
Ph. (561) 775-9465 - VM/Office Ph. (408) 973-1466
Ph. (561) 775-7387 - Home
Georgina Hraczky - GM
cc: all correspondence to: Pizzeria Uno
Pizzeria Uno 3720 Mowry Avenue
Attn: Arthur Gunther FCA22 Fremont, CA 94538
2570 El Camino Real Ph. (510) 794-3595
Santa Clara, CA 95051
Brad Weinstein - GM
Pizzeria Uno
2570 El Camino Real
FCA23 Santa Clara, CA 95051
Ph. (408) 241-5152
- --------------------------------------------------------------------------------
Glenn Miller - Principal Krista Arvanitis - GM
Guest Food Services Pizzeria Uno
2920 Union St. #305 FCA03 San Diego #1 - Pacific Beach
San Diego, CA 92103 4465 Mission Boulevard
Ph. (619) 298-8925 San Diego, CA 92109
Ph. (619) 483-4143
Sr. Operations Manager: Chuck Hill, GM
Krista Arvanitis Pizzeria Uno
FCA01 San Diego #2- Fashion Valley
7007 Friars Rd., Ste. 356
San Diego, CA 92108-1282
Ph. (619) 298-1866
OVERNIGHTS:
Pizzeria Uno Paul Kajlwara - GM
7007 Friars Rd. Suite 356 Northridge Fashion Center
San Diego, CA 92108-1282 FCA02 Los Angeles, Northridge
9301 Tampa Ave., Space #9
Northridge, CA 91324
Ph. (818) 882-8667
Pizzeria Uno
555 Broadway, Suite 1076
Chula Vista, CA 91910
<PAGE>
CALIFORNIA (CA) CONTINUED...
Regional - Bruce Knudson ext. 232
Rick Gaines - GM
Pizzeria Uno
8571 Santa Monica Boulevard
FCA04 West Hollywood, CA 90059
Ph. (310) 652-9263
- --------------------------------------------------------------------------------
Herb Turetzky - Principal Pat Amemiya - GM
Pizzeria Uno Pizzeria Uno
2200 Lombard Street FCA12 San Fran #1 - Lombard
San Francisco, CA 94123 2200 Lombard Street
Ph. (415) 563-3144 San Francisco, CA 94123
Ph. (415) 563-3144
Thom Johnston - Operation Kim Guralnik - GM
Pizzeria Uno - Podium
FCA11 San Fran #3 - Embarcadero
Two Embarcadero Center
San Francisco, CA 94111
Ph. (415) 397-8667
John Hughes - GM
Pizzeria Uno
FCA14 San Fran #4 - Oakland
Jack London Square
499 Embarcadero West
Oakland, CA 94607
Ph. (510) 251-8667
- --------------------------------------------------------------------------------
Charles Patel - Principal
Pizzeria WESTUNO, Inc. Ken Sigda - GM
951 Old County Rd, Suite 180 Pizzeria Uno
Belmont, CA 94002 2005 S. Mooney Street
Ph. (650) 596-3471 FCA Visalia, CA 93291
Ph. (209) 622-8667
OVERNIGHTS:
Pizzeria WESTUNO, Inc. FCA42 Pizzeria Uno
751 Laurel Ave. Country Club Shopping Plaza
San Carlos, CA 94070 2316 Watt Avenue
Sacramento, CA 95825
Ph. (916) 487-8667
<PAGE>
5
FLORIDA (FL)
Regional - Mark Rogers - Ext. 626
Ergo I. Gonzalez - Principal
Pizzeria Uno Ergo I. Gonzalez - GM
8202 Mills Drive Pizzeria Uno
Miami, FL 33183 FFL11 S. Miami
Ph. (305) 383-5721 8202 Mills Drive
Thomas Williams - Treasurer
21 McGrath Highway Miami, FL 33183
Quincy, MA 02169 Ph. (305) 274-2424
Ph. (617) 847-4200
- --------------------------------------------------------------------------------
Jeff Grayson - Principal
Grayborn Enterprises, Inc. Noah Reichert - GM
375 Douglas Ave., Ste. 1002 Pizzeria Uno
Altamonte Springs, FL 32714 FFL03 Orlando
Ph. (407) 869-5600 - Office 55 W. Church St., Ste. 248
Orlando, FL 32801
Ph. (407) 839-1800
Paul Rinaldi - Operations
Dennis bugey - GM
Pizzeria Uno
FFL02 Buena Vista
Crossroads Shopping Center
12553 State Rd., #535
Orlando, FL 32819
Ph. (407) 827-1212
- --------------------------------------------------------------------------------
Jean E. Wilson - Principal
Riise Group, Inc.
201 South Orange Avenue, Suite 1060
Orlando, Florida 32801
Ph. (407) 426-7595
Jude Wilson
Riise Group, Inc.
12179 South Apopka Vineland Road,
Suite 535
Orlando, Florida 32836
<PAGE>
6
INDIANA (IN)
Regional - Mark Majors
Bob Woodburn - Principal
Business Office Rick Bazant - GM
1000 East 80th Place Pizzeria Uno
Merrillville, IN 46410 2385 Southlake Mall
Ph. (219) 756-4151 FIN02 Merrillville, IN 46410
Ph. (219) 736-4885
Sam Jones - GM
Pizzeria Uno
Clearwater Crossing
3716 East 82nd Street
FIN01 Indianapolis, IN 46240
Ph. (317) 594-4865
<PAGE>
7
KANSAS (KS)
Regional -
Darrell D. Werth- Principal
3711 Fairway Drive Pizzeria Uno
Hays, KS 67601 3333 Iowa Street
Ph. (785) 628-6356 Home Lawrence, KS 66046
Ph. (785) 628-6014 Office Ph. (785)-830-9500
Chris Werth - Principal & Operator
4821 Innsbrook Drive
Lawrence, KS 66047
Ph. (785)-838-4713
<PAGE>
8
KENTUCKY (KY)
Regional - Mark Majors
Jim Arnold - Principal
Arnold Real Estate Michael Bickett - GM
2549 Richmond Road, Suite 100 Pizzeria Uno
Lexington, KY 40509 2547 Richmond Road
Ph. (606) 266-5708 - Home FKY01 Lexington, KY 40509
Ph. (606) 266-3181 Ph. (606) 266-8667
- --------------------------------------------------------------------------------
John Bollinger - Principal
H.R. Hospitality L.L.C. Patrick Carioli - GM
2906 Whiteway Avenue Pizzeria Uno
Louisville, KY 40205 FKY02 Louisville
Ph. (502) 231-5444 6501 Bardstown Road
Louisville, KY 40291
Ph. (502) 239-0079
<PAGE>
9
MARYLAND (MD)
Regional - Fred Houston - ext. 272
Greig Johnson - Principal
Arrowhead, Inc. Patrick Mitchell - GM
19746 Garrett Highway Pizzeria Uno
Oakland, MD 21550 FMD01 Deep Creek
Ph. (301) 387-4020 19746 Garrett Highway
Oakland, MD 21550
Ph. (301) 387-4866
Dan Hubert - Controller / Operations
M. J. Management Co.
147 Delta Dr.
Pittsburg, PA 15238
Ph. (412) 963-6550
<PAGE>
10
MASSACHUSETTS (MA)
Regional - Steve Denapoli ext. 441
Regional (Takeries) Tom Bard ext 614
Stuart Hurwitz - Principal
American Restaurant Management Corp. John Halpin - GM
80 Fernwood Drive Pizzeria Uno
E. Longmeadow, MA 01028 150 Bridge St.,Columbus Center
Ph. (413) 525-6546 - Office FMA02 Springfield, MA 01103
Ph. (413) 733-1300
Ph. (413) 567-8014 - Home
Dorian Black - GM
Dorian Black - V.P. of Operations Pizzeria Uno
Steve Hurwitz - Operations Holyoke Mall at Ingleside
Mike Hurwitz FMA01 Holyoke, MA 01040
Ph. (413) 534-3000
Judy Cournoyer - GM
Uno's Pizza Takery
FMA05 Springfield Takery
613 Belmont Avenue
Springfield, MA 01108
Ph. (413) 732-8667
<PAGE>
11
MICHIGAN (MI)
Regional - Mark Majors
Richard Roberts - Principal
Pizzeria Uno
12710 Ludlow
Huntington Woods, MI 48070
Ph. (313) 545-4230 - Home
Alex Kessler - GM
Pizzeria Uno
William Everal - Principal FMI02 Bloomfield
9023 Whittlesey Lake Road 6745 Orchard Lake Road
Plymouth, MI 48170 West Bloomfield, MI 48322
Ph. (734) 207-1659 Ph. (248) 737-7242
Tom Calcaterra - Operations
6745 Orchard Lake Rd. Dave Sheehy - GM
West Bloomfield, MI 48322 Pizzeria Uno
Ph. (248)-769-1744 8975 Marketplace Dr,Ste. F600
FMI03 Birch Run, MI 48414
Ph. (517) 624-8667
<PAGE>
12
MINNESOTA (MN)
Regional - Barry Powell - ext. 274
Ron Busch - Principal
Unoco Restaurant Inc.
14105 48th Avenue, North Scott Hallam - GM
Plymouth, MN 55446 Pizzeria Uno
Ph. (612) 723-7565 FMN02 Minneapolis #1 - Ridgedale
12649 Wayzata Boulevard, #23
Minnetonka, MN 55343
Ph. (612) 544-2777
OVERNIGHTS:
Unoco Restaurant Inc.
505 South 24th Ave. Jeff Pearson - GM
Suite 200 Pizzeria Uno
Wausau, WI 54402 6740 France Avenue, South
FMN01 Edina, MN 55435
Ph. (612) 925-5005
<PAGE>
13
NEVADA (NV)
Regional - Bruce Knudson - ext. 232
Jack Offenbach - Principal Todd Offenbach - GM
Ruth's Chris Steakhouse Pizzeria Uno
6 P.P.G. Place Sahara Pavilion (South)
Pittsburgh, PA 15222 2540 South Decatur Blvd., Suite J
Ph. (412) 391-4800 FNV01 Las Vegas, NV 89102
Ph. (702) 876-8667/8267
Home Address:
5319 Pembroke Place
Pittsburgh, PA 15232
Ph. (412) 682-6042
<PAGE>
14
NEW JERSEY (NJ)
Regional -Fred Houston - ext. 272
Bob Spivak - Principal
Grill Concepts David Hartnet - GM
11661 San Vicente Blvd. Pizzeria Uno
Suite 404 4905 Stelton Rd.
Loa Angeles, CA 90019 FNJ12 South Plainfield, NJ 07080
Ph. {310) 820-5559 Office Ph. (908) 561-6053
Randy Pragle - Operations Jennifer Rogers - GM
Grill Concepts Pizzeria Uno
1854 East Marlton Pike 1854 East Marlton Pike
Cherry Hill, NJ 08003 FNJ11 Cherry Hill, NJ 08003
Ph. (609) 489-1766 Ph. (609) 424-8844
Media, PA
FPA01 (See Pennsylvania)
cc: all correspondence to:
Robert Wechsler - Principal &
Randy Pragle - Operations William Shriver III
55 East 72nd St. Grill Concepts Daily Grill
New York, NY 10021 1854 East Marlton Pike 1200 18th Street, N.W.
Ph. (212) 355-7287 Office Cherry Hill, NJ 08003 Washington, D.C. 20036
- --------------------------------------------------------------------------------
Regional - Fred Houston ext. 272
Lou Viola - Principal
Pizzeria Uno Paul Rankin - GM
10 Stuyvesant Ave. Pizzeria Uno
Lyndhurst, NJ 07071 700 Plaza Dr.
Ph. (201) 507-1314 - Office FNJ01 Secaucus, NJ 07094
Ph. (201) 392-9090
Ph. (201) 226-8896 - Home
Kerry Marino - GM
Pizzeria Uno
West Belt Plaza
Building #13, Rte. 23
FNJ02 Wayne, NJ 07470
Ph. (973) 256-0700
<PAGE>
15
NEW MEXICO (NM)
Regional -
ROGER BONUS - Principal
770 Loma Verde Lane
Las Cruces, NM 88011
Ph. (505)-522-3933 Las Cruces, NM 88011
<PAGE>
16
NEW YORK (NY)
Regional - Matthew Sigler-Popkin ext. 689
George & Jerry Banta - Principals
The B Group Don Spohrer - GM
842 Main St. Pizzeria Uno
Poughkeepsie, NY 12603 842A Main St.
Ph. (914) 452-2226 FNY12 Poughkeepsie, NY 12603
Ph. (914) 452-4930
- --------------------------------------------------------------------------------
Greg Keenan - Principal
Pizzeria Uno Haughtin Belnavis - GM
5 The Fenway Pizzeria Uno
Westport, CT 06880 FNY01 White Plains #2
Ph (203) 221-7108 or (617)-451-9000 4 Martine Ave.
White Plains, NY 10606
Ph. (914) 684-7040
Office:
Ph. (203)-336-1233
Fax (203)-336-9812
- --------------------------------------------------------------------------------
Yunes (Joe) K. Doleh - Principal
Food Kingdom
249 Aspinwall St.
Staten Island, NY 10307
Ph. (718) 966-7144
<PAGE>
17
NORTH CAROLINA
Regional -
Gregory Wulkowicz - Principal
B&G Investment Company, LLCl
Signature Place, Suite 130
3200 Northline Avenue
Greensboro, NC 27407
Ph. (336)-808-1332
Home Address:
14 Old Orchard Lane
Greensboro, NC 27455
William Lee - Principal
B&G Investment Company, LLC
Signature Place, Suite 130
3200 Northline Avenue
Greensboro, NC 27408
Home Address:
3613 Buffington Place
Greensboro, NC 27410
Ph. (336)-668-9704
Bert Morales - Director of Operations
B&G Investment Company, LLC
Signature Place, Suite 130
3200 Northline Avenue
Greensboro, NC 27408
<PAGE>
18
OHIO (OH)
Regional - Barry Powell ext. 274
Stan Silverman - Principal
Uno's of Cincinnati, Inc. Scott McCord - GM
P.O. Box 20243 Pizzeria Uno
342 Ludlow Avenue FOH12 Cincinnati #1 Clifton
Cincinnati, OH 45220 P.O. Box 20243
Jim Young (Turtle) - Cincinnati, OH 45220
Assistant to Principal Ph. (513) 281-8667
Lynn Spencer - Administrator
Mark Easton - Director of
Operations
Ph. (513) 281-8988
Kathy Hiltenbeitel - GM
Pizzeria Uno
Cincinnati #2 Beechmont Mall
FOH11 7500 Beechmont Avenue
Overnights: Cincinnati, OH 45255
Uno's of Cincinnati, Inc. Ph. (513) 231-8667
3406 Ormond Ave. 2nd Fl.
Cincinnati, OH 45220
Iain Connell - GM
Pizzeria Uno
FOH Cincinnati #3 Backstage
627 Walnut Street
Cincinnati, OH 45202
Ph. (513) 621-8667
- --------------------------------------------------------------------------------
Jim Gerish - Operations
Snavely Hotel Group Mickey Kelley - GM
2550 Som Center Rd. Pizzeria Uno
Willoughby Hills, OH 44094 FOH05 Cleveland #2 Beachwood
Ph: (440) 585-9091 3750 Orange Place
Beachwood, OH 44122
Ph. (440) 831-0031
Joe Moffa - Operations
Holiday Inn - Beachwood
3750 Orange Place
Beachwood, OH 44122
Ph. (440- 831-0031
<PAGE>
19
OHIO (OH) CONTINUED...
Bob & Jan Williams - Principals Vincent Fichera - GM
725 Swailes Road Pizzeria Uno
Troy, OH 45373 FOH21 Dayton #1
Ph. (937) 335-5848 8361 Old Troy Pike
Huber Heights, OH 45424
Vincent Fichera - V.P. of Operations Ph. (937) 236-2884
Pizzeria Uno
Dayton #2
126 North Main Street
Dayton, OH 45402
<PAGE>
20
OKLAHOMA (OK)
Regional - Bruce Knudson ext. 232
Jim & Linda DeWinter - Principal Michael Johnstone - GM
7403 S. Maplewood Avenue Pizzeria Uno
Tulsa, OK 74136 8221 E. 61st Street, South
FOK01 Tulsa, OK 74133
Ph. (918) 254-6611
<PAGE>
21
PENNSYLVANIA (PA)
Regional - Fred Houston ext. 272
Bob Spivak - Principal
Grill Concepts Loouis Cobb - GM
11661 San Vicente Blvd. Pizzeria Uno
Suite 404 1145 West Baltimore Turnpike
Loa Angeles, CA 90019 FPA01 Media, PA 19063
Ph. {310) 820-5559 Office Ph. (610) 565-7450
cc: all correspondence Robert Wechsler and William Shriver III:
Robert Wechsler - Principal
Grill Concepts
55 East 72nd St.
New York, NY 10021
Ph. (212) 355-7287 - Office
Fax (212) 249-7178
William Shriver III
Daily Grill
1200 18th Street, N.W.
Washington, D.C. 20036
- --------------------------------------------------------------------------------
Robert Donaldson - Principal
Pizzeria Uno Chris Siegel - GM
509-511 South 2nd St. Pizzeria Uno
Philadelphia, PA 19147 FPA11 PA #1 South 2nd St.
Ph. (610) 933-7528 - Home 509-511 South 2nd St.
Ph. (215) 592-0400 - Office Philadelphia, PA 19147
Ph. (215) 592-0400
Tom Hannigan - GM
Joe Manna - Operations Pizzeria Uno
826 West Dekalb Pike
FPA13 King of Prussia, PA 19406
Ph. (610) 337-4060
Bruce Hoffman - GM
Pizzeria Uno
Plymouth Meeting
1009 Ridge Pike
Conshohoken, PA 19428
Ph. (610) 825-3050
<PAGE>
22
PENNSYLVANIA (PA) CONTINUED...
Regional - Fred Houston ext. 272
- --------------------------------------------------------------------------------
Tom Bock - Principal
U. E. I. Jeff Franklin - GM
Don O'Brien - V. P. of Operations Pizzeria Uno
Leigh Wolfe - Controller 198 North Buckstown Rd.
Angella Mania - Marketing Contact Langhorne, PA 19047
2802 A Southampton Rd. FPA21 Ph. (215) 741-6100
Philadelphia, PA 19154
Ph. (215) 856-0522
Home Address
1280 Grenoble Road
Warminster, PA 18974
Rick Walek - GM
Pizzeria Uno
FPA22 Grant Avenue
1619 Grant Ave.
Philadelphia, PA 19115
Don O'Brien - V. P. of Operations Ph. (215) 677-4544
Pgr. (215) 618-0982
Angella Mania Jarrad Frankel - GM
Ph. (215) 942-4875 Pizzeria Uno
FPA23 Doylestown
1661 Easton Rd.
Warrington, PA 18976
Ph. (215) 491-1212
- --------------------------------------------------------------------------------
Joel Ferguson - Principal
Vice President of Business Affairs
RLW, Inc. Pizzeria Uno - Slice Shop
6325 Harrison Drive, Suite #1 Terminal E - Airport
Las Vegas, NV 89120 Tenative Opening 6/00/98 Philadelphia, PA 19153
Ph.(702)-798-3696 Ext. 224 Ph. (Pending)
Peter O'Scanaill -Operations Manager
808 Meadow Crescent
Carmel, Indiana 46032
Ph. (317)-582-1176
<PAGE>
23
Puerto Rico (PR)
Regional - Mark Rogers ext. 626
Federico F. Sanchez, Chairman -
Principal
Uno Franchise Office -
Interfood Corp. Mike Leyva - GM
P. O. Box 363529 Pizzeria Uno
San Juan, PR 00936-3529 FPR01 San Juan#1 (Santurce)
Ph. (787) 753-8455 - Office Centro Europa Local 106
Avenue Ponce DeLeon 1492
Santurce, PR 00907
OVERNIGHTS: Ph. (787) 725-8667
Villas De San Francisco Plaza 1
Suite 209
89 Ave. de Diego Sandra Perez- GM
Rio Piedras, PR 00927 Pizzeria Uno
Ph. (787) 790-4747 - Home FPR02 San Juan #2 (Guaynabo)
Ph. (787) 756-9290 - Office Galeria San Patricio
B-5 Tabonuco St.
Caparra Hills
Guaynabo, PR 00968
Ph. (787) 749 8667
Federico J. Sanchez - President
Don Friedman - Sr. V.P. of
Operations
Hugo Benitez - Director of Human
Resources
Vanessa Cancel - Director of
Operations Jose Pena - GM
Madeline Sosa - Secretary Uno Cafe' Carry Out
FPR05 San Juan Takery
Villas De San Francisco Plaza 1
89 De Diego Ave.
Rio Piedras, PR 00927
Ph. (787) 758-8667
GM-Hector Falcon
FPR06 Pizzeria Uno
Bayamon
Plaza del Sol
501 West Main Ave.
Bayamon, P.R. 00961
Ph. (787)-778-8667
Pizzeria Uno
Carolina
Plaza Escorial
65 Infanteria Km. 6.1 Barrio
San Anton
Carolina, P.R. 00979
Ph. (787)-776-8663
<PAGE>
24
SOUTH CAROLINA
Regional -
Gregory Wulkowicz - Principal
B&G Investment Company, LLC
Signature Place, Suite 130
3200 Northline Avenue
Greensboro, NC 27408
Ph. (336)-808-1332
Home Address:
14 Old Orchard lane
Greensboro, NC 27445
William Lee - Principal
B&G Investment Company, LLC
Signature Place, Suite 130
3200 Northline Avenue
Greensboro, NC 27408
Home Address:
3613 Buffington Place
Greensboro, NC 27410
Ph. (336) 668-9704
Bert Morales - Director of Operations
B&G Investment Company, LLC
Signature Place, Suite 130
3200 Northline Avenue
Greensboro, NC 27408
<PAGE>
25
TENNESSEE (TN)
Regional - Bill Quinn ext. 607
Mack Trammell - Principal
Holiday Inn Medical Center Doni Holmes - GM
Holiday Drive - I -81 Pizzeria Uno
P. O. Box 669 111 Holiday Drive
Bristol, TN 37625 FTN01 Bristol, TN 37620
Ph. (423) 968-1101 Ph. (423) 989-8667
<PAGE>
26
TEXAS (TX)
Regional - Bruce Knudson ext 232
Art Jarboe - Principal Sean McDonald - GM
Southwest Uno's Pizzeria Uno
3413 Morning Star Lane Village at Six Flags
Garland, TX 75043 1301 N. Collins, Suite 201
Ph (972) 240-0362 FTX01 Arlington, TX 76011
Home (972) 240-7213 Ph. (817) 265-9130
Stewart Cockrell - GM
Pizzeria Uno
Sundance West
300 Houston Street
FTX02 Fort Worth, TX 76102
Ph. (817) 885-8667
- --------------------------------------------------------------------------------
Andrew Kim - Principal Dennis Beckford - GM
all correspondence for Andy should Pizzeria Uno - Addison
go to restaurant address below: FTX12 Dallas
4002 Beltline Rd., Suite 100 4002 Beltline Rd., Suite 100
Dallas, TX 75001 Dallas, TX 75001
Ph. (972) 869-4366 Ph. (972) 991-8181
- --------------------------------------------------------------------------------
Robert N. Landauer - Principal
9 Oaklawn Dr.
Houston, TX 77024 Bob Landauer - GM
Ph. (713) 461-3990 - Office Pizzeria Uno
Ph. (713) 461-3902 - Home FTX21 Houston
3401 Kirby Dr.
Houston, TX 77098
Ph. (713) 520-0040
- --------------------------------------------------------------------------------
Mike & Charlie Udhwani - Principals
I.G.M. Enterprises Inc. Pending
6255 I. H. 37
Corn Product Rd.
Corpus Christi, TX 78409
Ph. (512) 289-0991
<PAGE>
27
WASHINGTON, D.C.
Regional - Bill Quinn - ext. 607
Anne Natoli - Principal
Potomac Restaurants Associates Bobby Arianejad - Gm
3211 M Street N.W. Pizzeria Uno
Washington, D.C. 20007 FDC01 Washington, D. C. Gerogetown
Ph. (703) 938-0819 - Home 3211 M Street, N. W.
Washington, D. C. 20007
Ph. (202) 965--6333
- --------------------------------------------------------------------------------
<PAGE>
28
WASHINGTON
Regional - Bruce Knudson ext. 232
Charles Patel - Principal
Pizzeria WESTUNO, Inc. Mike Faiss - GM
951 Old County Rd, Suite 180 FWA01 Pizzeria Uno - Seattle #1
Belmont, CA 94002 Alderwood Mall
Ph. (650) 596-3471 3000 184th St., S.W., Suite 84
Lynnwood, WA 98037-4790
Ph. (425) 774-8667
OVERNIGHTS:
Pizzeria WESTUNO, Inc. Pizzeria Uno
751 Laurel Ave. FWA02 Spokane #1
San Carlos, CA 94070 Spokane Valley Mall
14700 East Indiana
Spokane, WA 99216
Ph. (509)-922-8667
Pizzeria Uno
Spokane #2
Northtown Mall
4750 North Division St.
Spokane, WA
Pizzeria Uno
Northgate Shopping Center
555 Northgate Way
Seattle, WA
<PAGE>
29
WISCONSIN (WI)
Regional - Josh Janovsky ext. 602
Thomas Beach - Principal Ron Lamberty - GM
TMB Development Company Pizzeria Uno
700 Regent St., 1st Floor FWI02 Madison #1 State
Madison, WI 53715 222 W. Gorham Street
Ph. (608) 255-0605 Ext. 12 Madison, WI 53703
Ph. (608) 255-7722
Bill Behling - GM
Earl Richter - Director of Operations Pizzeria Uno
2250 LaFontaine Ct. FWI03 Madison #2 Mineral Point
Brookfield, WI 53045 7601 Mineral Point Road
Ph. (414) 796-0906 Madison, WI 53717
Ph. (608) 833-7200
Accounts Payable
Pizzeria Uno Jim Lubinski - GM
P. O. Box 45590 Pizzeria Uno
Madison, WI 53744-5590 FWI01 Milwaukee
Ph. (608) 232-2913 15280 W. Bluemound Road
Elm Grove, WI 53122
Ph. (414) 821-1755
<PAGE>
30
INTERNATIONAL
- --------------------------------------------------------------------------------
KOREA
Jae H. Shim - Operations
Jae Heuck Yoon - Operations
Kolon Express & Tour Co., Ltd. Jae H. Shim - GM
639-7 Shinsa dong Pizzeria Uno
Kangnam gu 639-7 Shinsa dong
Seoul, Korea Kangnam gu
Ph. 011-82-2-549-9666 OK600 Seoul, Korea
Ph. 011-82-02-549-9666
Pizzeria Uno - TAKERY
40-1 Chamsil-Dong
Songpa-Gu
Seoul, Korea
C.P.O. box 6538
- --------------------------------------------------------------------------------
INDONESIA
Roy Radjamin K - Principal
Pt. Muara Agung Perkasa (Navindo)
J1. Kamal Raya #90-A Jakarta
Tegal Alur, Cengkareng
Jakarata Barat 11820, Indonesia
Ph. 011-62-21-555-0172
- --------------------------------------------------------------------------------
PAKISTAN
Bruce j. Wrobel
Sithe Energies, Inc. Ltd.
450 Lexington Avenue Lahore
New York, NY 10017
Ph. (212)-460-9030
- --------------------------------------------------------------------------------
DUBAI, U.A.E
Faisal Albannai - Principal
Albannai Enterprises Dubai
Dubai World Trade Center, Level 16
P.O. Box 9266
Dubai, U.A.E.
Ph. 011-971-431-8555
Ph. 011-971-444-9966 Home
cc: all correspondence to:
Bruce Raba - Director of Operations
Albannai Enterprises
Dubai World Trade Center, Level 16
P.O. Box 9266
Dubai, U.A.E.
Ph. 011-971-343-9090
<PAGE>
ATTACHMENT G
CLOSED FRANCHISED RESTAURANTS
<PAGE>
STORE CLOSINGS
Updated 10/15/98
John Bollinger - Principal
H.R. Hospitality L.L.C.
2906 Whiteway Avenue Pizzeria Uno
Louisville, KY 40205 9070 Dixie Highway
Ph. (502) 231-5444 Louisville, KY 40258
Ph. (502) 937-5666
- --------------------------------------------------------------------------------
Richard & Jodi Bloom
Ms Restaurants, Inc.
36 Puritian Ave. Marlboro Takery
Swampscott, MA 01907 Pizzeria Uno
Ph. (617) 592-8395 197 H. Boston Post Rd.
Marlboro, MA 01752
Ph. (508)-481-1193
FMA 15
- --------------------------------------------------------------------------------
Richard Roberts - Principal
Pizzeria Uno Pizzeria Uno
12710 Ludlow 1321 South University Avenue
Huntington Woods, MI 48070 Ann Arbor, MI 48104
Ph. (313) 545-4230 - Home FMI01
- --------------------------------------------------------------------------------
Gary Rogalski - Principal
4620 Richmond Road, #398
Warrensville Heights, OH 44128 Pizzeria Uno
Ph. (216) 514-5162 Cleveland #1 N. Olmsted
470 Great Northern Mall
Office (803)-552-0505 N. Olmsted, OH 44070
FOH02
Michael Carsey - Operations
3173 Bates Road Pizzeria Uno
Madison, OH 44057-9727 Cleveland #3 Lyndhurst
5433 Mayfield Rd.
Lyndhurst, OH 44124
<PAGE>
Robert Donaldson - Principal
Pizzeria Uno Pizzeria Uno
509-511 South 2nd Street Rittenhouse Sq.
Philadelphia, PA 19147 229 South 18th St.
Ph. (610) 933-7528 - Home Philadelphia, PA 19103
FPA12
Joe Manna - Operations
- --------------------------------------------------------------------------------
Ronald J. & Jeffery L. Barone - Principal
Quality 1 Dining, Inc.
T/A Pizzeria Uno Chicago Bar & Grill Pizzeria Uno
Willow Grove Park Mall 2500 Moreland Rd.
2500 Moreland Rd. Willow Grove, PA 19090
Willow Grove, PA 19090 FPA31
Ph. (215) 658- 0700
- --------------------------------------------------------------------------------
Thomas Beach - Principal
TMB Development Company
700 Regent St., 1st Floor Pizzeria Uno
Madison, WI 53715 2701 Milton Avenue
Ph. (608) 255-0605 Ext. 12 Janesville, WI 53545
FWI04
Home (608) 244-5186
Page -2-
<PAGE>
Exhibit 10(p)
THIRD AMENDMENT TO PROMISSORY NOTE
AND REVISED DEBT AGREEMENT
This Third Amendment to Promissory Note and Revised Debt Agreement dated
August 3, 1999, does hereby further amend and supplement the terms of that
certain Note dated April 1, 1997, by and between Craig S. Miller, as "Maker"
and Uno Restaurants, Inc., as "Holder," as amended on April 7, 1998 and
September 27, 1998.
For value received, the undersigned parties agree as follows:
1. Section 2.2 of the Note, a copy of which is appended hereto as
Exhibit A for reference, is further amended to provide that the "Maturity
Date" of the Note shall be the earlier to occur of (i) the date on which
Maker's employment with Holder or its affiliates shall terminate, or (ii)
October 1, 2000.
2. In all other respects, the Note is hereby ratified, affirmed and
unchanged.
IN WITNESS WHEREOF, the undersigned parties have evidenced their
agreement by written signatures shown below.
Witness: MAKER:
/s/ Jeffrey A. Barron /s/ Craig S. Miller
- -------------------------------- --------------------------------
Printed Name: Jeffrey A. Barron Craig S. Miller
UNO RESTAURANTS, INC.
By: /s/ Robert M. Vincent
----------------------------
Robert M. Vincent
Senior Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000812075
<NAME> UNO RESTAURANT CORP.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-03-1999
<PERIOD-START> SEP-28-1998
<PERIOD-END> JUN-27-1999
<CASH> 1,311
<SECURITIES> 0
<RECEIVABLES> 1,804
<ALLOWANCES> 0
<INVENTORY> 2,449
<CURRENT-ASSETS> 5,853
<PP&E> 206,940
<DEPRECIATION> 77,858
<TOTAL-ASSETS> 147,353
<CURRENT-LIABILITIES> 24,378
<BONDS> 47,906
0
0
<COMMON> 138
<OTHER-SE> 74,931<F1>
<TOTAL-LIABILITY-AND-EQUITY> 147,353
<SALES> 152,546
<TOTAL-REVENUES> 152,546
<CGS> 39,397
<TOTAL-COSTS> 141,887
<OTHER-EXPENSES> 152
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,409
<INCOME-PRETAX> 8,098
<INCOME-TAX> 2,673
<INCOME-CONTINUING> 5,425
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,425
<EPS-BASIC> 0.52
<EPS-DILUTED> 0.52
<FN>
<F1>Net of Treasury Stock
</FN>
</TABLE>
