Area Development Agreement
Sample Area Development Agreement
EXHIBIT C
COOKIES BY DESIGN, INC. FRANCfflSE OFFERING CmCULAR
AREA DEVELOPMENT AGREEMENT (INCLUDING STATE SPECIFIC ADDENDA)
Area Development Agreement Exhibit C to Offering Circular 1225005 6.DOC
SHOPPE NO.:_ FRANCHISEE: CITY/STATE:
AREA DEVELOPMENT AGREEMENT
BY AND BETWEEN
COOKIES BY DESIGN, INC.
AND
(Name of Developer)
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f
Section
TABLE OF CONTENTS
Page No.
1. Grant of Development Rights...................................................................................................1
2. Term................................................................................................................................................2
3. Development and Other Fees....................................................................................................3
4. Development Schedule...............................................................................................................3
5. Franchise Licensing Agreement(s)...........................................................................................4
6. Your Obligations.........................................................................................................................4
7. Use of Licensed Marks................................................................................................................5
8. Confidential Information..........................................................................................................5
9. Default...........................................................................................................................................6
10. Transfer and Assignment...........................................................................................................7
11. Covenants and Representations............................................................................................11
12. Severability; Additional Assurances; Construction.......................................................14
13. Miscellaneous............................................................................................................................15
14. acknowledgments.....................................................................................................................17
15. Superseding State and Federal Law......................................................................................19
State Addenda
Illinois Indiana Maryland Minnesota New York North Dakota Rhode Island South Dakota Washington
Attachments
A Franchise Licensing Agreement
B Defined Territory
C Development Schedule
D Acknowledgment Regarding Controlling Persons
E Guaranty of Developer's Undertakings
F Special Stipulations/State and Federal Laws
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1
AREA DEVELOPMENT AGREEMENT
THIS AREA DEVELOPMENT AGREEMENT (the "Agreement") is made, executed and
delivered this _______ day of_____________________, 2002, by and between COOKIES BY
DESIGN, INC., a Texas corporation (referred to in this Agreement as "CBDF) with its principal place of business at 1865 Summit Avenue, Suite 605, Piano, Texas 75074 and
___________________________________________________(referred to in this Agreement as "You")
with your principal place of business at___________________________________________. Certain
capitalized terms are used in this Agreement with the meanings assigned in the Glossary of Terms, which is appended to this Agreement. That glossary is incorporated into, and made an integral part of, this Agreement by reference.
WITNESSETH;
WHEREAS, CBDI owns the rights to license the Licensed Marks as more fully set forth in the Franchise Licensing Agreement, a form of which is attached to this Agreement as Attachment A and made a part of this Agreement; CBDI has developed the System and certain Confidential Information for the operation of Shoppes, which System is more fully described in the Franchise Licensing Agreement; and
WHEREAS, You have operated at least one Shoppe in compliance with CBDI's Confidential Manuals for at least six months, and during that period, your Shoppe exceeded applicable Minimum Performance Standards by at least 20%; and
WHEREAS, You desire, upon the terms and conditions set forth in this Agreement, to develop Shoppes throughout the Defined Territory, to select locations and upon review of the locations by CBDI, to enter into an individual Franchise Licensing Agreement for each location and for which You will be licensed an individual Franchise to use the System, the Licensed Marks and the Confidential Information, to establish and operate a retail Shoppe in accordance with the high standards of CBDI; and
WHEREAS, CBDI is willing, upon the terms and conditions set forth in this Agreement, to authorize You to develop the Defined Territory and the Shoppes;
NOW, THEREFORE, in consideration of the mutual agreements and covenants set out in this Agreement, the parties to this Agreement agree as follows:
1. Grant of Development Rights.
(a) Subject to and upon all the terms and conditions set forth in this Agreement and each individual Franchise Licensing Agreement executed in connection herewith, CBDI grants to You and You hereby accept, pursuant to the terms and conditions of this Agreement, the right and obligation to develop the specified number of retail Shoppes within the Defined Territory in accordance with the Development Schedule, set forth in Attachment C to this Agreement.
(b) During the term of this Agreement and so long as You are not in default under this Agreement, any Franchise Licensing Agreement executed in connection with any Shoppe established pursuant to this Agreement, or any other agreement with CBDI or an affiliate of CBDI, CBDI will not operate, nor will it grant a license to others to operate a Shoppe within the Defined Territory except as provided in Section 2(b) of this Agreement. Provided however, if You are not in compliance with the standards of operation with respect to any developed Shoppes or if You are in default under this Agreement or any Franchise Licensing Agreement or other agreement with CBDI or its affiliates, CBDI
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has the right to establish and operate a Shoppe or Shoppes in the Defined Territory and to license others to establish and operate a Shoppe or Shoppes or permit other franchisees to provide any services or products or enter into any transaction or use the Licensed Marks in the Defined Territory. You expressly acknowledge and agree as follows:
(i) You have no right to develop Shoppes or operate outside of the Defined Territory; and
(ii) CBDI reserves all rights to use the Licensed Marks in any manner whatsoever and anywhere, except as limited with respect to the development of Shoppes in this Section 1(b).
(c) You acknowledge that this Agreement does not permit You to operate or function as a master franchisee, sub-franchisor or franchise broker (meaning that You may not franchise Shoppes to any other entity or person or otherwise delegate your duties under this Agreement either within the Defined Territory or elsewhere).
(d) If You are a corporation, partnership, limited liability company or trust and not an individual, then all of the following persons must execute a Guaranty of Developer's Undertakings as a material inducement for the grant of the development rights to You by CBDI: 1) all principals, officers, directors, partners, limited partners, managers, and holders of a beneficial or legal interest of 5% or more in the corporation, partnership, limited liability company or other form of legal entity comprising You, and their spouses; (2) all officers, directors, partners, managers, and holders of a beneficial or legal interest of 5% or more in any corporation, partnership, limited liability company or trust directly or indirectly owning an interest in You, along with their spouses; (3) the officers, directors, partners, managers, and holders of a beneficial or legal interest of 5% or more of the equity interests in any corporation, partnership, limited liability company or trust which controls, directly or indirectly, any corporation, partnership, limited liability company or trust owning an interest in You, and their spouses; and (4) the beneficiaries of the trust and their spouses, if You are a trust.
(e) The Shoppes and Franchises to be developed according to this Agreement will operate under the trade name and utilize the service mark_________________________.
(f) For the purpose of this Agreement, the opening of a Satellite or Kiosk does not constitute development of a Shoppe for any purpose including, but not limited to, determination of the expiration of this Agreement, compliance with the Development Schedule or compliance with the terms of this Agreement. The opening of a Satellite or Kiosk is purely voluntary and optional; it is a marketing tool for your use.
2. TERM.
(a) This Agreement will take effect upon its execution by all parties to this Agreement, and, unless terminated earlier, this Agreement and all development rights granted under this Agreement will expire on the date on which the last Shoppe listed in Column IV of the "Development Schedule" is to open for business or, if earlier, the date on which the last Shoppe to be established according to the Development Schedule actually begins doing business with the public (the "Initial Term").
(b) Provided You have complied with the Development Schedule in a timely manner and are then in compliance with the terms and conditions of this Agreement, all Franchise Licensing Agreements and all other agreements between You and CBDI and if CBDI determines that it is desirable to establish additional Shoppes in the Defined Territory after the Initial Term, You will have the right of first opportunity to obtain development rights to the additional Shoppes in the Defined Territory under the terms and conditions as are then determined by CBDI. The terms and conditions may include a different
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form of franchise licensing agreement with different fee structure(s), terms and performance standards and a different form of Area Development Agreement with an additional initial fee and different terms. You must advise CBDI in writing of your interest in obtaining the additional development rights on a date which is after the date on which the next-to-last Shoppe which is to be developed according to this Agreement actually opens to the public for business but before the expiration date specified in Section 2(a) of this Agreement, otherwise your right of first opportunity will automatically expire. If You notify CBDI of your interest in obtaining the additional development rights in a timely manner and CBDI determines that it is desirable to develop additional Shoppes in the Defined Territory, CBDI will advise You in writing of the terms and conditions for the acquisition of the development rights for the additional Shoppes. You must notify CBDI in writing within 30 days of the receipt of CBDI's notice whether You wish to acquire the development rights to the additional Shoppes in the Defined Territory under the terms and conditions offered to You. If You do not exercise this option, CBDI may license the development or franchise rights to the additional Shoppes to any other person or persons on terms and conditions no more favorable than those offered to You, or CBDI itself may elect to establish any of the additional Shoppes.
3. Development and Other Fees.
(a) In consideration of the rights granted in this Agreement, You have paid CBDI upon
execution of this Agreement the Development Fee in the sum of $____________. The Development Fee
equals the full amount of the franchise fee for the first Shoppe described under Column I of Attachment C to this Agreement plus 25% of the total amount of initial franchise fees required to be paid by You to CBDI for the other Shoppe(s) to be developed, which are listed in Column II of Attachment C. If You execute a Franchise Licensing Agreement for a specific Shoppe listed on Attachment C in a timely manner and in accordance with this Agreement and the Development Schedule, a credit against the initial franchise fee will be given to You for that Shoppe in an amount equal to the difference between the total initial franchise fee for the Shoppe (Column II of the Development Schedule) and the balance of the initial franchise fee due upon execution of the Franchise Licensing Agreement (Column HI of the Development Schedule). The balance of the initial franchise fee due with respect to the Shoppe, if any, is listed in Column III of Attachment C and will be payable upon execution of the Franchise Licensing Agreement with respect to the Shoppe. The Development Fee will be deemed fully earned and nonrefundable by CBDI upon execution of this Agreement in consideration of CBDI's previous development of the System and for other development opportunities lost by CBDI as a result of the rights granted in this Agreement, regardless of the method for calculating the Development Fee set out in this Section 3 or your performance under the Development Schedule.
(b) Any Satellite or Kiosk established in accordance with Section 4(d) shall be subject to the Satellite and Kiosk fees set out in the applicable Franchise Licensing Agreement.
4. Development Schedule.
(a) Subject to your compliance in a timely manner and in accordance with the terms and conditions of this Agreement, CBDI has granted to You and You have accepted the right and obligation to develop within the Defined Territory the total number of Shoppes set forth in Column I of Attachment C.
(b) You agree with CBDI that You will open each Shoppe for business by the date set forth in Column IV of Attachment C and that throughout the term of this Agreement You will maintain in operation at least the cumulative number of Shoppes then required to have been opened which are specified in Column V of Attachment C. Any failure by You to comply with the Development Schedule will be a default under this Agreement.
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(c) If You fail to comply with the Development Schedule, You will have the right on only one occasion during the term of this Agreement to cure the default in order to avoid termination of this Agreement by CBDI by:
(i) Paying the balance (set forth in Column III of Attachment C) of the initial
franchise fee for the unopened Shoppe which is due to be opened as set forth in Column II of Attachment C; and
(ii) Paying to CBDI a monthly continuing fee equal to $500.00 until the unopened Shoppe actually opens for business.
If You fail to cure the first failure to comply with the Development Schedule or if a second failure to comply with the Development Schedule occurs, CBDI may terminate your rights under this Agreement without further notice to You.
(d) Once you have opened your first Shoppe, You may test or prepare the remaining market within the Defined Territory prior to the opening of a Shoppe by opening Satellites and Kiosks provided, however, You must follow CBDI guidelines for the opening of any such Satellite or Kiosk, and You must pay the applicable fees. The opening of any Satellite or Kiosk is purely voluntary and optional on your part and is not a substitute for development of Shoppes in accordance with the Development Schedule. Any Satellite or Kiosk opened pursuant to this section shall be deemed to have been opened under the last executed Franchise Licensing Agreement executed by You in connection with the development of a Shoppe hereunder and will operate under that Franchise Licensing Agreement until a Shoppe is opened in a Primary Marketing Area in which any Satellite or Kiosk is located. At that point, any Satellites or Kiosks in that Primary Marketing Area will be governed by the Franchise Licensing Agreement governing the Shoppe located in such Primary Marketing Area.
5. Franchise Licensing agreement(s).
(a) Upon the execution and delivery of each Franchise Licensing Agreement, the provisions of this Agreement, other than the requirements of the Development Schedule, will cease to apply to the Shoppe covered by the Franchise Licensing Agreement and all rights and obligations in connection with the Shoppe, to the extent they are inconsistent with this Agreement, will be governed by the applicable Franchise Licensing Agreement unless otherwise specifically provided in this Agreement, however, CBDI will only be obligated to provide You with the on-Premises pre-opening or opening assistance specified in Section 3(a)(iv) of the Franchise Licensing Agreement with respect to the first Shoppe established by You pursuant to the Development Schedule, regardless of any provision to the contrary in this Agreement or in any Franchise Licensing Agreement entered into after the first Franchise Licensing Agreement executed between You and CBDI.
6. Your Obligations.
During the term of this Agreement, You agree that You will:
(a) open Shoppes within the Defined Territory in accordance with the Development Schedule set out in Attachment C to this Agreement;
(b) if You elect to open Satellites or Kiosks, comply with the terms and conditions for opening and operating any such Satellite or Kiosk as may be required by this Agreement, any applicable Franchise Licensing Agreement and the Confidential Manuals;
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(c) comply with all terms and conditions set forth in this and all other agreements between You and CBDI;
(d) comply with all requirements of federal, state and local laws, rules and regulations; and
(e) have sole and direct responsibility for, and be actively and personally involved in, the development of Franchised Businesses hereunder. If You are a corporation or other business association, an owner holding a majority of the equity and voting control of You will personally participate in the direct operation of all Shoppes developed according to this Agreement or will designate a Manager.
7. USE OF LICENSED MARKS.
Any individual Franchise Licensing Agreement entered into by and between You and CBDI will grant to You a license to use the Licensed Marks and will govern your use thereof.
8. Confidential Information.
(a) You acknowledge that You may receive Confidential Information regarding the development of the Defined Territory, and the establishment of the Shoppes under this Agreement.
(b) You acknowledge that the unauthorized use or disclosure of CBDI's Confidential Information will cause irreparable injury to CBDI and that damages are not an adequate remedy. CBDI has invested significant amounts of time and resources to develop, acquire, and protect Confidential Information relating to the System and the cookie industry that is not generally known by CBDI's competitors or the general public and which give CBDI a valuable advantage over its competition. As additional consideration for the rights granted by this Agreement You agree:
(i) To take all necessary precautions to keep confidential the Confidential
Information and any trade secrets or other materials, goods or information created or used by CBDI and provided to You in connection with this Agreement. You also agree not to disclose the Confidential Information to your employees except on a need-to-know basis, and only after the employee has been advised of the confidential nature of the information and has executed a confidentiality agreement in the form set out in the Operations Manual.
(ii) If You are a corporation, partnership, limited liability company or trust, You will not disclose any Confidential Information or make the Confidential Manuals available to any shareholder, director, officer, member or general partner of the entity to whom the development rights are granted, unless he or she is also an employee of the entity to whom the development rights are granted and actively and regularly involved in performing your obligations under this Agreement and who have been advised of the confidential nature of the information and have executed a confidentiality agreement.
(iii) You accordingly agree that You will not, and You will not permit others to, at any time, without CBDI's prior written consent, disclose, use, permit the use of (except as may be required by applicable law or authorized by this Agreement), copy, duplicate, record, transfer, transmit or otherwise reproduce all or any part of the Confidential Information, in any form or by any means, or otherwise make the information or materials available to any unauthorized person or source.
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9. Default.
(a) You will be deemed to be in default under this Agreement, and all rights granted to You in this Agreement will automatically terminate without notice to You or affording You any opportunity to cure, if You become insolvent or make a general assignment for the benefit of creditors; or if a proceeding for the appointment of a receiver or other custodian for You or your business or assets is filed or consented to by You; or if a receiver or other custodian (permanent or temporary) of your assets or property, or any part of your assets or property, is appointed by any court of competent jurisdiction; or if proceedings for a composition with creditors under any state or federal law should be instituted by or against You; or if a final judgment remains unsatisfied or of record for 30 days or longer (unless a supersedeas bond is filed); or if execution is levied against your business or property; or if the real or personal property of your business is foreclosed or sold after levy on that property by any sheriff, marshal, or constable. (References to "You" and "your" include any guarantor of your obligations under this Agreement.)
(b) You will be in default under this Agreement, and CBDI may, at its option, terminate this Agreement and all rights granted to You under this Agreement, without affording You any opportunity to cure the default, effective immediately upon receipt of notice of the occurrence of any of the following events, which are acknowledged by You to be detrimental to the System, and the goodwill of CBDI:
(i) if You are convicted of a felony, a crime involving moral turpitude, or any other
crime or offense that is reasonably likely, in the sole opinion of CBDI, to adversely affect the System, any Shoppe, the Licensed Marks or the associated goodwill; (References to "You" and "your" include any guarantor of your obligations under this Agreement);
(ii) if You fail to pay when due any financial obligation required under the terms of this Agreement within five days of the date on which CBDI gives written notice of the delinquency;
(iii) if You transfer or attempt to transfer by operation of law or otherwise, any rights or obligations under this Agreement without CBDI's prior written consent, contrary to the terms of Section 10 of this Agreement;
(iv) if You disclose or divulge to any unauthorized person any Confidential Information or trade secrets provided to You by CBDI;
(v) if You receive from CBDI on three or more occasions a notice to cure the same default or similar defaults under this Agreement during the term of this Agreement (regardless of whether or not the defaults are, in fact, cured) and the defaults are not of the type explicitly made a grounds for termination under another provision or clause of this Agreement (however, this ground for termination of this Agreement does not create an obligation on the part of CBDI to give any additional notice of default or opportunity to cure any default);
(vi) if You fail to comply with the covenants in Section 11 of the Development Agreement; or
(vii) if You have defaulted in any agreement, note, lease or sub-lease with CBDI, including any Franchise Licensing Agreement, and have not cured the default in accordance with the terms of the other agreement or instrument evidencing the other agreement.
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(viii) if You fail to comply with any of the obligations, covenants or requirements imposed by this Agreement, the Development Schedule, or failure to carry out the terms of this Agreement in good faith.
(c) Except as provided in Sections 4(b), 9(a) and 9(b) above, You will have 15 days after
receipt from CBDI of a written notice of default within which to cure any default under this Agreement and to provide evidence of the cure to CBDI. If any default is not cured within that time or the longer period as applicable law may require, this Agreement will terminate without further notice to You, effective immediately upon the expiration of the 15 day period or the longer period as applicable law may require. In addition to exercising its option to terminate as provided, herein, CBDI may, at its option and in its sole discretion, do any one or more of the following:
(i) require payment of all sums owing or to become owing to CBDI under this Agreement. Upon termination for any default by You, the sums will include actual and consequential damages, costs and expenses (including reasonable attorneys' fees) incurred by CBDI as a result of the default.
herein;
(ii) terminate or modify any territorial rights or territorial protection granted to You
(iii) reduce the area of such territorial rights;
(iv) reduce the number of Shoppes which You may establish pursuant to this Agreement;
(v) terminate or modify any right of first opportunity granted to You herein; or
(vi) pursue any other remedy CBDI may have at law or in equity.
(d) Upon termination of this Agreement, You will have no right to establish additional Shoppes. No default under this Agreement, however, will constitute a default under any Franchise Licensing Agreement between the parties to this Agreement unless the default also constitutes a default under the Franchise Licensing Agreement.
(e) No right or remedy granted or reserved in this Agreement to CBDI is exclusive of any other right or remedy provided or permitted by law or equity.
(f) You may not terminate this Agreement before the expiration of its term except through legal process resulting from CBDI's breach of this Agreement or otherwise with CBDI's written consent. If You claim that CBDI has failed to meet any obligation under this Agreement, You will provide CBDI with written notice of the claim, specifically enumerating all alleged deficiencies and providing CBDI with an opportunity to cure, the time period for which will be reasonable in light of the alleged deficiencies and which will not be less than 30 days from the date of receipt of the notice by CBDI from You. All of your covenants, agreements and obligations in this Agreement are independent covenants, and agreements and obligations, not conditioned upon CBDI's satisfaction of its obligations under this Agreement, except to the extent otherwise specifically provided in this Agreement.
10. Transfer and Assignment.
(a) CBDI will have the right to transfer all or any part of its rights or obligations under this Agreement to any person or legal entity.
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(b) You understand and acknowledge that the rights and duties created by this Agreement are personal to You, and that CBDI has entered into this Agreement in reliance on many factors, including, without limitation, the individual or collective character, skill, aptitude and business and financial capacity of You and your principals. Accordingly, neither You nor any person owning any direct or indirect equity or voting interest in any entity to whom development rights have been granted under this Agreement or operating any Franchised Business developed hereunder will, without CBDI's prior written consent, directly or indirectly sell, assign, transfer, convey, give away, pledge, mortgage or otherwise encumber any interest in this Agreement or any portion or aspect of this Agreement, or any voting or equity interest in You. If You are a corporation, the stock of the corporation will not be publicly sold or traded on any securities exchange or in the over-the-counter market, without the express prior written consent of CBDI, which consent may be given or denied in CBDI's sole discretion. Any assignment or attempted assignment occurring by operation of law or otherwise, including any assignment by a trustee in bankruptcy, without CBDI's prior written consent will be a material default of this Agreement.
(c) CBDI will not unreasonably withhold its written consent, however, the determination of compliance with the conditions set out in Section 10(f) will be vested in CBDI's sole and subjective discretion. If You are a corporation, all shares of the corporation, whether already issued or issued by You at a later time, will from and after the date of this Agreement bear a legend sufficient under applicable law to constitute notice of the restrictions on the stock contained in this Agreement and to allow the restrictions to be enforceable. The legend will appear in substantially the following form:
The sale, transfer, pledge or hypothecation of this stock is restricted pursuant to Section
10 of an Area Development Agreement dated_____________________, 200___by and
between Cookies by Design, Inc. and the corporation which is the issuer of these shares.
(d) You represent that as of the execution of this Agreement, the equity interests in and voting control of the entity to whom the development rights were granted hereunder are as shown in Attachment D. attached to this Agreement and made a part of this Agreement by this reference. If You, or any approved successor of You, are a partnership, privately-held corporation, trust or limited liability company You will submit to CBDI before any proposed transfer of an equity, voting or beneficial interest in the entity to whom the development rights are granted hereunder, and at any other time upon written request, a list of all holders of direct or indirect equity, voting or beneficial interests of record reflecting their respective present and/or proposed direct or indirect interests in You, in the form that CBDI may require.
(e) CBDI may require, as a condition of its written approval of any proposed transfer, satisfaction of the requirements set forth in Section 10(f) if the following occurs:
(i) If You are a publicly-held corporation approved by CBDI pursuant to Section
10(b) and the proposed transfer, alone or together with any and all other previous, simultaneous and/or proposed transfers, would have the effect of transferring a direct or indirect controlling interest (as reasonably determined by CBDI) in You;
(ii) If You are a partnership, privately-held corporation or limited liability company and the proposed transfer, alone or together with any and all other previous, simultaneous and/or proposed transfers, would have the effect of reducing to less than 51% the percentage of voting or equity interest owned in You by the initial equity owners identified in Attachment D, or
(iii) If You are a natural person and the proposed transfer, alone or together with any and all other simultaneous and/or proposed transfers, would have the effect of reducing your voting or equity interest in this Franchise to less than 51%.
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In computing the percentages of equity interest owned in You for purposes of this Section, general partnership interests will not be distinguished from limited partnership interests.
(f) The requirements for all the transfers under Section 10(e) are as follows:
(i) You must submit to CBDI, together with the request for written consent to the transfer, a transfer fee in the amount of $2,500.
(ii) You, as transferor, and CBDI will have executed a mutual general release, under seal if required, in a form satisfactory to CBDI, of any and all claims against each other and your respective parent(s), subsidiaries, affiliates and their officers, directors, attorneys, shareholders, and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules, and ordinances related to or connected with the performance of this Agreement except that such release shall not release CBDI or any other persons or entities from liability arising under applicable state franchise registration and disclosure laws.
(iii) The transferee will execute CBDI's then current form of Area Development Agreement, which may require that individual Shoppes subsequently be developed under terms and conditions different from those found herein (except for the Development Schedule of the remaining Shoppes to be developed) and operated according to a form of franchise agreement different than the Franchise Licensing Agreement attached to this Agreement as Attachment A.
(iv) The transferee will demonstrate to CBDI's sole satisfaction that it meets all of CBDI's requirements for becoming a developer, including, without limitation, that it meets CBDI's managerial and business standards then in effect for similarly situated developers; possesses a good moral character, business reputation, and satisfactory credit rating; will comply with all instruction and training requirements of CBDI and has the aptitude and ability to develop the Defined Territory (as may be evidenced by prior related business experience or otherwise); and has adequate financial resources and capital to develop and operate the Shoppes in the Defined Territory.
(v) The transfer must include all of your interest in the Shoppes developed pursuant to this Agreement and then operating under a Franchise Licensing Agreement.
(g) Within 12 months of the death or finding of mental incompetency (as reasonably determined by an independent third party such as a licensed doctor) of any person with any direct or indirect interest in You, the executor, administrator, or personal representative of that person will transfer that person's interest to a third party approved in writing by CBDI. CBDI will respond with its approval or disapproval within 30 days of receiving a written request for approval. The transfers will be subject to the same conditions as any other transfers under this Agreement. If there is a death or finding of mental incompetency of any person(s) holding a direct or indirect controlling interest (as reasonably determined by CBDI) in You, pending the completion of any transfer requiring CBDI's prior written approval, You hereby grant to CBDI the right to take any steps necessary to manage your business for your account and to receive a reasonable fee for the management services.
(h) If You or any person or entity holding any direct or indirect interest in this Agreement, or in the entity to whom the development rights are granted hereunder desires to sell or transfer either an interest in this Agreement or in You, You or the person or entity will first notify CBDI in writing of the intention and offer to sell or transfer the interest to CBDI upon the same terms and conditions as offered to any other party, net of any applicable real estate and/or business brokerage commissions, or the cash
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equivalent of those commissions, at CBDI's option. CBDI will have 30 days from and after the receipt of written notice of any offer (including all the terms and conditions) from You to exercise a right of first refusal to match the offer. If CBDI notifies You of its election to purchase, the purchase will be closed on or before 90 days from and after the date notice of the election to purchase is given in writing to You. If CBDI notifies You that it does not want to acquire the interest under the terms and conditions set out in the notice, You may sell or transfer the interest to a bona fide third party; however, the sale or transfer must be made within 120 days after the expiration of any offer to CBDI, the sale or transfer must be made at a net price and on terms no more favorable than those offered in writing to CBDI, and all applicable requirements of Section 10 of this Agreement must be met. Failure of CBDI to exercise the right of first refusal afforded by this Section 10(h) will not constitute a waiver of any other provision of this Agreement including all requirements of this Section 10(h), with respect to a proposed transfer. Transfers to family members do not require payment of a transfer fee. Further, as limited in this Section 10(h), You or any person owning an equity interest in the entity to whom the development rights are granted hereunder may transfer your/their interests for estate planning purposes to the spouse or adoptive or natural lineal descendants of the transferor or to a trust for the benefit of the transferor or for the benefit of the spouse or adoptive or natural lineal descendants of the transferor (and if such transfer is in trust, the trustee, upon termination of the trust, may transfer the interest to the beneficial owner). As a condition, however, of any transfer of this type, You or the original equity owners of the entity operating the Franchised Business, if You are a corporation, partnership, limited liability company or trust, must retain a 51% ownership interest in the entity operating the Franchised Business at all times. Transfers to family members for estate planning purposes as outlined in this Section 10(h) will not require the written consent of CBDI nor will they trigger a right of first refusal but You must notify CBDI of any transfer at the time it occurs.
(i) You understand that if You are an individual, after written notice to CBDI, You may
assign and delegate this Agreement and your rights and obligations under this Agreement on one occasion to a corporation, partnership or limited liability company organized by You for that purpose only and at least 51% of all the issued and outstanding shares of voting equity interests of which will be owned and voted continuously by You (a "successor company"). CBDI will be given written notice of the assignments and delegation, and at which time the successor company will have all of the rights and obligations of this Agreement, and the term "You" as used in this Agreement will refer to the successor company, however, the assignment will in no way affect the obligations under this Agreement of the individual above-designated "You," who will remain fully bound by and responsible for the performance of all of obligations under this Agreement, jointly and severally with the successor company. The successor company will at no time engage in any business or activities other than the exercise of the rights licensed in this Agreement to You, the performance of its obligations as You under this Agreement, and the activities permitted to You as a franchisee under any individual Franchise Licensing Agreement with CBDI. CBDI requires the holders of any voting equity interests in the successor company formed under the terms of this Section 10(i) to execute a Guaranty of Developer's Undertakings guaranteeing payment and performance of all of your obligations on the terms and conditions noted in Attachment E as a condition of a transfer under this Section 10(i).
(j) CBDI's written consent to a transfer of any interest in You permitted in this Agreement
will not constitute a waiver of any claims it may have against the transferring party, nor will it be deemed a waiver of CBDI's right to demand exact compliance with any of the terms of this Agreement by You or the transferee.
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11. Covenants and Representations.
(a) As used in this Section 11, the term "You" will include, collectively and individually: You, if You are an individual; any guarantors) of your obligations under this Agreement; if You are a corporation, the owner or owners of any stock or voting or beneficial interest in You; if You are a limited liability company, the members or equity owners; any general or limited partner, if You are a partnership or any beneficiary, if You are a trust. You acknowledge that the elements comprising the System are unique and distinctive and have been developed by CBDI at great effort, time and expense; that You and other Chain franchisees and area developers comprise a unique, single, interdependent system; that You have regular and continuing access to valuable and Confidential Information and trade secrets regarding the System; and that You recognize your obligation to take all necessary precautions to keep the Confidential Information and trade secrets confidential; and to develop the Defined Territory under the System. You accordingly agree as follows:
(i) During the term of this Agreement, You will not, except with the prior written consent of CBDI, either directly or indirectly, for yourself, or through, for, or in conjunction with any person, entity or organization, divert or attempt to divert any business or customer of the System to any competitor which produces cookies, decorated cookies and/or fanciful cookie arrangements and related products by direct or indirect inducement referral, recommendation or otherwise.
(ii) During the term of this Agreement, not to engage as a developer, owner, operator, or in any capacity or to assist others in any manner, with or without compensation, in any business which carries on the same or a similar business to a Franchised Business other than as a Chain franchisee, however, You will not be prohibited from owning equity securities of any business that carries on the same or a similar business to a Franchised Business, whose shares are traded on a stock exchange or on the over-the-counter market if your ownership interest represents only 2% or less of the total number of outstanding shares of that business.
(iii) If this Agreement is transferred (in any manner contemplated by Section 10 of this Agreement), terminated, expires, or is not renewed, You agree, for two years after that transfer, termination, expiration or non-renewal, not to engage as a developer, owner, operator, or in any capacity, or to assist others in any manner, with or without compensation, or be financially interested in, directly or indirectly, any business which carries on the same or a similar business to a Franchised Business. As material consideration for this covenant, CBDI agrees to provide You with specialized training and Confidential Information relating to the System and the cookie industry. This covenant applies within the Primary Marketing Area and within a 20 mile radius of the former Premises or of any other Shoppe, Satellite or Kiosk within the Chain in the planning stage or in existence on the date of the transfer, termination, expiration or non-renewal, other than as an authorized Chain franchisee. This provision will survive termination of this Agreement. You agree that this noncompetition covenant is ancillary to an otherwise enforceable agreement, including but not limited to this Agreement. You also agree that the terms are reasonable and are necessary to protect the legitimate business interest of CBDI.
(iv) During the term of this Agreement and after its transfer (as contemplated by Section 10 of this Agreement), termination, expiration or non-renewal, You agree not to communicate directly or indirectly, disclose to or use for your benefit or the benefit of any other person or legal entity, any trade secrets or Confidential Information which are proprietary to CBDI or any other information, knowledge or know-how deemed confidential under this Agreement, except as permitted in writing by CBDI. If this Agreement is transferred, terminated, expires or is not renewed, You agree that You will not use CBDFs Confidential Information,
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trade secrets, methods of operation or any components of the System in the design, development or operation of any business which carries on the same or a similar business to a Franchised Business or otherwise for your own benefit or for the benefit of any other person or entity. You agree that if You are engaged as a developer, owner, operator or in any capacity or assist others in any manner, with or without compensation, in any same or similar business, You will assume the burden of proving that You have not used CBDFs Confidential Information, trade secrets, methods of development, operation or any components of the System. The protection provided under this Agreement will be in addition to and not instead of all other protections for Confidential Information and trade secrets as may be afforded in law or in equity. In addition, to the extent permitted by law, You agree to require your employees to execute appropriate confidentiality agreements as provided in the Confidential Manuals which will prohibit disclosure by your employees to any other person or legal entity of any Confidential Information and may prohibit competition by those persons for two years after termination of their employment with You in any business which carries on the same or a similar business to a Franchised Business, which covenant will apply within a 20 mile radius of the Premises or of any other Shoppe, Satellite or Kiosk within the Chain in the planning stage or in existence on the date of their termination or resignation and which will also prohibit disclosure by your employees to any other person or legal entity of any trade secrets or any other information, knowledge or know-how considered confidential by CBDI concerning the operation of the Franchised Business. CBDI will expressly be made a third party beneficiary of all confidentiality agreements. You agree to maintain a file of confidentiality agreements executed by each of your employees for a period of five years following the termination or resignation of each employee and to provide copies to CBDI upon request. This provision will survive the termination, expiration or any transfer contemplated by Section 10 of this Agreement. This provision will survive the termination of this Agreement. It is understood and agreed that the purpose of this covenant is not to deprive You of a means of livelihood and will not do so, but is rather to protect the goodwill and interest of CBDI and the System.
(v) You agree to pay to CBDI the amount of any damage or expense, including attorneys' and experts' fees and costs, which CBDI may sustain or incur as a result of your violation of this Section 11.
(vi) You will indemnify and hold harmless the Indemnified Parties from any and all liability, damages and expenses, including attorneys' fees, incurred by CBDI as a result of claims, demands or rights of action that may be asserted at any time against CBDI, by anyone arising out of or resulting from your actions or inactions or arising out of or connected with this Agreement, the acquisition or leasing of any Shoppe site or maintenance or operation of any Shoppe. IT IS intended that the indemnities contained in this section shall include claims, demands, liabdlntes, losses, damages, causes of action, judgments, penaltd2s, costs and expenses (including, without limitation, reasonable attorneys' fees) resulting from the negligence or claims of negligence of any indemndted Party and any strict liabdlity, but not the gross negligence or wdllful misconduct of any indemndted party.
(vii) The parties agree that each of the foregoing covenants, provisions and agreements in Sections 8 and 11(a) will be construed as being enforceable independently of any other agreement or provision of this Agreement. Should any part of these provisions, for any reason, be declared by a court to be invalid or unenforceable by virtue of its scope in terms of area, business activity prohibited or length of time, and should that part be capable of being made enforceable by reduction of any or all of the provision, You and CBDI agree that the provision will not be invalidated in its entirety, but will be observed and performed by the parties to the extent the provision is valid and enforceable. The parties agree that any invalidated provision
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will be deemed to be altered and amended to the extent necessary to effect the validity and enforceability of the provision. The running of any period of time specified in this Section 11 will be tolled and suspended for any period of time in which You are found by a court of competent jurisdiction to have been in violation of any of these agreements. CBDI may, unilaterally, at any time, in its sole discretion, revise any of the agreements in this Section to reduce your obligations under this Section 11. You also expressly agree that the existence of any claim You may have against CBDI whether or not the claim arises from this Agreement, will not constitute a defense to the enforcement by CBDI of the agreements in this Section 11.
(b) You agree, at the request of CBDI, to (I) promptly correct any defect, error or omission in this Agreement or any other document executed in connection with or related to this Agreement or the Franchised Business and (ii) execute, acknowledge and deliver any additional documents as may be necessary, desirable or proper to carry out the purposes of this Agreement.
(c) If You are a corporation, limited liability company or a partnership, You represent that:
(i) You are duly organized and validly existing under the State of your organization;
(ii) You are duly qualified and authorized to do business in each jurisdiction in which your business activities or the nature of the properties owned by You require qualification;
(iii) Your corporate charter, articles of organization or written partnership agreement will at all times provide that your activities are confined exclusively to operating the Franchised Business;
(iv) The execution of this Agreement and the transactions contemplated in this Agreement are within your corporate power, or, if You are a limited liability company or partnership, permitted under your constituent documents or written partnership agreement;
(v) If You are a corporation, copies of your articles of incorporation, bylaws, other governing documents and any amendments to those documents including the resolution of the Board of Directors authorizing entry into and performance of this Agreement will be promptly provided to CBDI; if You are a limited liability company, copies of your organizational or constituent documents and any amendments to those documents including a resolution or consent authorizing entry into and performance of this Agreement or, if You are a partnership, copies of your written partnership agreement, other governing documents and any amendments thereto will be promptly furnished to CBDI including evidence of written consent or written approval of the entry and performance of this Agreement by the required number or percentage of partners, if written approval or written consent is required by your written partnership agreement;
(vi) If You are a corporation, You will maintain a current list of all owners of record and all beneficial owners of any class of voting securities of the corporation; if You are a limited liability company, You will maintain a current list of all members of record or, if You are a partnership, You will maintain a current list of all owners of an interest in the partnership. The lists will be furnished to CBDI upon written request;
(vii) If You are a corporation, you will maintain stock-transfer instructions against the transfer on your records of any equity securities and each stock certificate of the corporation will bear the legend set out in Section 10(c); if You are a limited liability company, your membership agreement will provide that membership interests are held subject to and that any assignment or transfer is subject to all restrictions imposed upon assignment by this Agreement; or if you are a partnership, your written partnership agreement will provide that ownership of an interest in the
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partnership is held subject to and that any assignment or transfer is subject to all restrictions imposed upon assignment by this Agreement;
(viii) All shareholders, members, partners, beneficiaries or other investors in the Franchised Business, as applicable and as specifically set out in Section 1(d), together with their spouses shall jointly and severally guarantee performance of the obligations under this Agreement and will bind themselves to the terms of this Agreement to the extent required in this Agreement; and
(xi) You acknowledge and agree that the representations set forth above are continuing obligations and that any failure to comply with these representations will constitute an event of default under this Agreement.
(d) If You are a trust, You represent that:
(i) You are a trust duly organized and validly existing;
(ii) You have all requisite power and authority to enter into this Agreement;
(iii) the trustee whose name appears on the signature page of this Agreement is the duly appointed and acting trustee and has full power and authority to execute and deliver this Agreement on behalf of You and to complete the transaction contemplated by this Agreement on behalf of You;
(iv) all beneficiaries of the trust shall jointly and severally guarantee performance of the obligations under this Agreement and will bind themselves to the terms of this Agreement to the extent required in this Agreement; and
(v) You acknowledge and agree that the representations set forth above are continuing obligations and that any failure to comply with these representations will constitute an event of default under this Agreement.
12. SEVERABILITY; ADDITIONAL ASSURANCES: CONSTRUCTION.
(a) Should any part of this Agreement, for any reason, be declared invalid by a court of competent jurisdiction, the decision or determination will not affect the validity of any remaining portion, and the remaining portion will remain in full force as if this Agreement had been executed with the invalid portion eliminated; however, if a provision is declared invalid, the affected provision will not be invalidated in its entirety, but will be observed and performed by the parties to the extent the provision is valid and enforceable. The parties agree that any invalidated provision will be deemed to be altered and amended to the extent necessary to effect the validity and enforceability of the provision. Each party agrees to execute and deliver to the other any further documents which may be reasonably required to modify the provisions accordingly. You understand and acknowledge that CBDI will have the right, in its sole discretion, to reduce the scope of any provision of this Agreement binding upon You, or any portion of this Agreement, without your written consent, effective immediately upon receipt by You of written notice of the modification; and You agree that You will comply with any provision as modified, which will be fully enforceable.
(b) This Agreement may be executed in any number of counterparts, each of which when executed and delivered will be deemed an original, but the counterparts together will constitute one instrument.
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(c) The headings and captions contained in this Agreement are for the purposes of convenience and reference only and are not to be construed as a part of this Agreement. All terms and words used in this Agreement will be construed to include the number and gender as the context of this Agreement may require. The parties agree that each section of this Agreement will be construed independently of any other section or provision of this Agreement.
(d) All exhibits referred to in this Agreement are incorporated in and made a part of this Agreement by reference to them in the body of this Agreement.
(e) All references in this Agreement to "You" include your successors, assigns, and legal representatives; and all acknowledgments, promises, covenants, agreements and obligations made in this Agreement or undertaken by You will be considered jointly and severally undertaken by them.
13. MISCELLANEOUS.
(a) Governing Law. This Agreement is accepted by CBDI in the State of Texas and, unless prohibited by applicable law or otherwise determined by a court of competent jurisdiction, will be governed by and construed in accordance with the laws of the State of Texas (excluding its conflict of laws provisions).
(b) Dispute Resolution. The parties to this Agreement agree that it is in their best interests to resolve disputes between them in an orderly fashion and in a consistent manner. Therefore, the parties hereby agree as follows:
(i) The parties agree to use their best efforts to resolve and settle by direct, private
negotiation any Dispute. Both parties may seek the advice and assistance of legal counsel in connection with any such negotiation.
(ii) If the parties cannot resolve and settle a Dispute by private negotiation with 60 days after one party gives the other written notice that a Dispute exists, the parties mutually agree to submit the Dispute to non-binding mediation, as follows:
(1) Mediation shall occur in Dallas, Texas, before a single mediator, using the facilities and mediation rules of Mediation Organization. If the parties cannot agree on a Mediation Organization, they will use the facilities and mediation rules of the AAA.
(2) The parties shall jointly select a mediator from the panel of mediators maintained by the Mediation Organization. The mediator must be a person experienced in franchising who has no prior business or professional relationship with either party. If the parties are unable to agree on a mediator within 30 days after the Dispute is submitted to mediation, the Mediation Organization will select a mediator who possesses the indicated qualifications.
(3) The parties will share the mediation filing fee equally, but will otherwise separately bear their own costs and expenses (including legal fees) of participating in the mediation process. Each party agrees to send at least one representative to the mediation conference who has authority to enter into binding contracts on that party's behalf. Each party further agrees to sign a confidentiality agreement which prohibits the mediator from disclosing, orally or in writing, any information the other party discloses to the mediator in confidence at any stage of the mediation process.
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(4) Either party's failure or refusal to participate in mediation in accordance with this Section 13(b)(ii) shall be considered a Dispute subject to binding arbitration in accordance with Section 13(b)(iii).
(iii) If the parties cannot fully resolve and settle a Dispute through mediation within 30 days after the mediation conference concludes, all unresolved issues involved in the Dispute shall be submitted to binding arbitration, as follows:
(1) Either party may make a demand for arbitration.
(2) Unless otherwise required by applicable law, arbitration proceedings shall be conducted in Dallas, Texas, before a single arbitrator, using the facilities and commercial arbitration rules of the Mediation Organization or another professional dispute-resolution organization selected by CBDI and reasonably acceptable to You (the "Arbitration Organization"). If CBDI selects an Arbitration Organization other than the Mediation Organization and You reasonably object to CBDI's choice, the parties will use the AAA's facilities and commercial arbitration rules.
(3) The Arbitration Organization's expedited arbitration procedure shall apply to the arbitration proceedings. To the greatest extent permitted by law, CBDI and You waive the application of all rules of discovery and evidence the Arbitration Organization's expedited procedure does not expressly make applicable.
(4) The parties shall jointly select an arbitrator from the panel of arbitrators maintained by the Arbitration Organization. The arbitrator must be an attorney experienced in the practice of franchise law who has no prior business or professional relationship with either party and who agrees to follow and apply the express provisions of this Agreement in determining his or her award. If the parties are unable to agree on an arbitrator within 30 days after the arbitration demand is filed, the Arbitration Organization will select a arbitrator who possesses the indicated qualifications.
(5) The arbitrator's award shall be final and binding on all parties, and neither party shall have any right to contest or appeal the arbitrator's award except on the grounds expressly provided by the Arbitration Act. The party who demands arbitration shall pay the arbitration filing fee, but the parties will otherwise separately bear their own costs and expenses (including legal fees) of participating in the arbitration process. Responsibility for the arbitrator's fees and expenses shall be determined as part of the arbitrator's award.
(6) The procedures contemplated by and the enforceability of this Section 13(b)(iii) shall be governed by the Arbitration Act and shall be interpreted and enforced in accordance with United States federal judicial interpretations of the Arbitration Act.
(iv) Notwithstanding Section 13(b)(ii) and CBDI will not be obligated to mediate or arbitrate any claim arising from your alleged infringement of the Licensed Marks or disclosure of the Confidential Information. The parties agree that any action based on infringement of any of the Licensed Marks shall be governed by and interpreted and enforced in accordance with the United States Trademark (Lanham) Act or the United States Copyright Act, as applicable, and shall be litigated in any federal District Court sitting in Dallas County, Texas. The parties further agree to submit to the jurisdiction and venue of any such federal District Court and that service of process by certified mail, return receipt requested, shall be sufficient to confer in personam jurisdiction over them in connection with any such trademark or copyright litigation. Further,
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You and CBDI agree that the provisions of this Section 13 shall not be applicable to the exercise of rights and remedies under any other agreements and contracts executed by and between You and any third parties or affiliates of CBDI in connection with or relating to the Franchised Business (such as any real, personal property or equipment leases) unless expressly provided in such agreements and contracts.
(c) Waiver. The failure of either party to exercise any power given them under this Agreement or to insist upon strict compliance by either party with its obligations under this Agreement will not, and no custom or practice of the parties at variance with the terms of this Agreement will constitute a waiver of either party's existing or future right to demand exact compliance with the terms of this Agreement.
(d) Time. Time is of the essence of this Agreement.
(e) Survival of Covenants. The covenants and agreements made by You under this Agreement will survive the expiration of this Agreement.
(f) Notices. All notices under this Agreement will be in writing and will be sent by certified mail, return receipt requested, or delivered by a recognized courier service, receipt acknowledged, addressed:
(i) If to CBDI, at 1865 Summit Avenue, Suite 605, Piano, Texas 75074, Attn:
President.
(ii) If to You, at___; or
(iii) at any other address as CBDI or You will have specified by written notice to the other party under this Agreement.
Notice given as set out above will be considered received on the date of mailing if sent by certified mail, return receipt requested, or on the date of receipt if sent otherwise.
(g) Entire Agreement. This Agreement, together with the Franchise Licensing Agreements to be executed in accordance with this Agreement, constitute the entire agreement between CBDI and You which supersedes all prior negotiations, commitments, representations and undertakings of the parties with respect to the subject matter of this Agreement. No change, modification, amendment, termination or attempted waiver of any provisions of this Agreement will be binding upon the parties to this Agreement unless in writing and signed by CBDI and You.
14. ACKNOWLEDGMENTS. You hereby acknowledge the following:
(a) YOU HAVE CONDUCTED AN INDEPENDENT INVESTIGATION OF THE BUSINESS CONTEMPLATED BY THIS AGREEMENT AND RECOGNIZE THAT IT INVOLVES *
BUSINESS RISKS MAKING THE SUCCESS OF THE VENTURE LARGELY DEPENDENT UPON !
YOUR BUSINESS ABILITIES AND PARTICIPATION, AND CBDI EXPRESSLY DISCLAIMS THE MAKING OF AND YOU ACKNOWLEDGE THAT YOU HAVE NOT RECEIVED OR RELIED UPON, ANY WARRANTY OR GUARANTEE, EXPRESS OR IMPLIED, AS TO THE POTENTIAL VOLUME, PROFITS OR SUCCESS OF THE BUSINESS VENTURE CONTEMPLATED BY THIS AGREEMENT OR THAT ANY SHOPPE SITE REVIEWED BY CBDI WILL BE A SUCCESSFUL !
LOCATION FOR A SHOPPE.
Initials_______
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(a) You have no knowledge of any representations by CBDI or CBDI's officers, directors, shareholders, employees, agents or servants, about the business contemplated by this Agreement that are contrary to the terms of this Agreement or the documents incorporated into the Agreement. You represent as an inducement to CBDI's entry into this Agreement that You have made no misrepresentations in obtaining this Agreement.
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(b) You, together with your advisors, have sufficient knowledge and experience in financial and business matters to make an informed investment decision with respect to matters contemplated by this Agreement.
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(c) You are aware of the fact that other present or future area developers and franchisees of CBDI may operate under different forms of agreement(s), and consequently that CBDI's obligations and rights with respect to its various developers and franchisees may differ materially in certain circumstances.
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(d) You acknowledge that You are responsible for pursuing any rights You may have against any third parties or other Chain franchisee for interfering in any way with the development rights granted to You under this Agreement, and that CBDI is not obligated to pursue your rights on your behalf, nor is it responsible for any losses that You may incur in connection therewith.
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(e) You acknowledge that all provisions of this Agreement are imposed solely and exclusively for the benefit of CBDI, its successors and assigns, that no other person will, under any circumstances, be deemed a third party beneficiary of any provision of this Agreement, that You will have ho recourse against CBDI on account of its failure to enforce any provision of this Agreement against any other Chain developer or franchisee and that any such failure to enforce will not, under any circumstances, be deemed a waiver of CBDI's rights with respect to You under this Agreement or any other Chain developer or franchisee under any applicable area developer agreement or franchise licensing agreement.
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(f) The acknowledgments contained in this Section 14 are not intended to be, nor shall they act as, a release, estoppel or waiver of any liability arising under applicable state franchise registration and disclosure laws.
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15. Superseding State and Federal Law. Certain federal laws and, in certain states, an applicable state statute may regulate aspects of the relationship between CBDI and You and affect some of the provisions contained in the preceding sections of this Agreement. If a statute applies to this Agreement, then a reference to the statute and a description of the way the statute changes, modifies, supplements or otherwise affects the provisions contained in the preceding sections of this Agreement, are set forth in the applicable state addendum, if any, and on Attachment F. which is attached to this Agreement and incorporated by reference. All of the other terms and provisions of this Agreement are subject to the provisions set forth in such addendum and on Attachment F.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement on the date first written above.
CBDI:
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: ________ ______
YOU:
(Corporate, LLC or Partnership Developer)
a(n)
By: _____________________________
Name:_______________________
Title:_________________________
(Individual Developer)
Name:
Name:
[Select the appropriate Developer signature lines and mark out the unused signature block]
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GLOSSARY OF TERMS
AAA means the American Arbitration Association.
ARBITRATION Act means the United States Arbitration Act.
ARBITRATION ORGANIZATION means a professional dispute-resolution organization selected by CBDI and reasonably acceptable to You.
CHAIN means all of the franchises, franchised businesses and shoppes operating under the Licensed Marks and using the System.
CONFIDENTIAL INFORMATION means any information, data or know-how, including, without limitation, information and data generated by computer programs relating to Franchise and Shoppe operations, recipes, formulas, designs, marketing, promotions, advertising, training, inventory control, techniques, processes, procedures, inventions, customer lists, products, pricing, methods of operation, financial information, identities of supplies and suppliers, accounting, store designs and layouts, and quality control procedures of CBDI, a Licensor (as defined in the Franchise Licensing Agreement), any CBDI franchise, and/or the System, including any such information which may be developed, created or generated by You in connection with the operation of your Franchised Business or disclosed under circumstances that reasonably indicate that it is considered confidential. Confidential Information may be disclosed to You orally or in writing, or contained in any compilation of information, presentation, instruction, memoranda, newsletter, video tape, electronic or computerized media, form, agreement, correspondence, book, record, plan, report, addendum, revision, or supplement, and includes all information contained in any manual created by CBDI or a Licensor and provided or made available to You in connection with CBDI's business, the Chain or the System, now or in the future, including specifically, but not limited to, the Confidential Manuals and data generated by computer programs.
CONFIDENTIAL MANUAL means the written instructions and confidential manuals including specifically, but not limited to, (I) the Operations Manual; any computer operations manual developed by or on behalf of CBDI; Site, Design and Construction Manual; Baking Manuals; Cookie Cutter, Holiday, Spring and other Design Manuals; employee and other policy manuals, Supplier Information Manual; Training Workbook; (ii) Cookie Crumbs® newsletters and Cookie Dough® newsletters; (iii) Planning Effectively for the Holidays; Determining Production Capacity; Sales & Assembly, the Learning Journey and other publications; (iv) sales brochures, that CBDI loans to You or otherwise delivers to You, each as may be modified or amended from time to time; and (v) manuals, written instructions and other materials or information provided for use with a Sublicense (as defined in the Franchise Licensing Agreement).
DEFINED TERRITORY means the area more fully described on Attachment B to this Agreement.
DEVELOPMENT FEE means the fee paid pursuant to Section 3(a) in consideration of the rights licensed in this Agreement.
DEVELOPMENT SCHEDULE attached to this Agreement as Attachment C and made a part of the Agreement by this reference.
DISPUTE means any claim, controversy or dispute which arises under or in relation to this Agreement or
which concerns the relationship created by this Agreement.
FRANCHISE means the rights and obligations licensed to You under the Franchise Licensing Agreement.
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FRANCHISE LICENSING AGREEMENT means the agreement executed in connection with the licensing of a franchise to You substantially in the form set forth in Attachment A.
FRANCHISED BUSINESS means a business owned by You that will use, pursuant to the license granted to You in the applicable Franchise Licensing Agreement, the Licensed Marks, Confidential Information and the System, including any Satellite and/or Kiosk opened in connection with a Shoppe developed hereunder.
Guaranty of Developer's Undertakings means the guaranty attached to this Agreement as Attachment E.
INDEMNIFIED PARTD2S means CBDI and its directors, officers, agents, employees, attorneys, shareholders, parent and affiliates.
Initial Term see Section 2(a).
KIOSK means a retail sales location, cart or booth operated within the Defined Territory and meeting the specifications in the Confidential Manuals. A Kiosk cannot be opened or operated unless You have first opened and are operating a Shoppe in accordance with the Franchise Licensing Agreement.
LICENSED MARKS means certain trade names, trademarks and service marks identified in Section 1(e) and any other trade names, trademarks, service marks, Trade Dress, logos, symbols, proprietary marks and other indicia of origin that are now or later designated by CBDI (and as may later be designated by CBDI in writing to You) for your use.
MANAGER means a full-time employee responsible for your obligations under this Agreement and who will be previously approved in writing and not later disapproved, by CBDI as meeting its qualifications for managerial personnel, which qualifications will include completion of training provided by CBDI in its methods, systems and procedures for the development and operation of Shoppes.
MEDIATION ORGANIZATION a professional dispute-resolution organization selected by CBDI and reasonably acceptable to You.
CBDI means Cookies by Design, Inc.
OPERATIONS MANUAL means the specific manual titled "Operations Manual" that will be loaned to You by CBDI, as it may be modified or amended from time to time. The Operations Manual sets forth the policies and procedures for the operation and marketing of the Shoppes within the Chain. The Table of Contents of the Operations Manual was included as Exhibit H to the Franchise Offering Circular for Prospective Franchisees reviewed by You.
PREMISES means the address set out in Section 1(a) of a Franchise Licensing Agreement executed in connection with the development of a Shoppe hereunder where You intend to conduct a Franchised Business.
PRIMARY MARKETING AREA means the territory described in Paragraph 1 of Attachment A to a Franchise Licensing Agreement executed in connection with the development of a Shoppe hereunder.
SATELLITE means a miniaturized version of a Shoppe operating within the Defined Territory and meeting the specifications in the Confidential Manuals. A Satellite cannot be opened or operated unless You have first opened and are operating a Shoppe in accordance with the Franchise Licensing Agreement.
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SHOPPE means a full scale retail outlet more fully described in the Confidential Manuals located in a shopping center, shopping mall, office building or other commercial installation that sells products under the COOKIES BY DESIGN® or COOKIE BOUQUET® name and in association with the Licensed Marks and uses the System.
SYSTEM means the plan and system developed by CBDI for the operation of a business using the Confidential Information and the Licensed Marks which produces cookies, decorated cookies, and fanciful cookie arrangements and related products for retail sale to the general public and includes recipes, designs, equipment selection and layouts, accounting methods, merchandising, advertising, sales and promotional techniques, personnel training, and other matters applicable to the operation and promotion of the Franchised Business.
TRADE DRESS means the printed materials, color combinations, design specifications and other characteristic physical embodiments of the System.
YOU is defined on page 1.
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ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR THE STATE OF DLLINOIS
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached (the "ADA"). Those sections may be contrary to or unenforceable under applicable Illinois law. Accordingly, CBDI will amend each ADA for a Shoppe to be developed or operated in Illinois as follows:
1. Section 4 of the Illinois Franchise Disclosure Act states that "any provision in a franchise agreement that designates jurisdiction or venue in a forum outside of Illinois is void with respect to any cause of action which otherwise is enforceable in Illinois." Accordingly, notwithstanding any other provision in the ADA to the contrary, Section 13(a) of the ADA is amended to read in its entirety:
This Agreement is accepted by CBDI in the State of Texas and shall be governed by and construed in accordance with the laws thereof except to the extent inconsistent with the Illinois Franchise Disclosure Act, which Act shall prevail in the event of any such inconsistency or unless otherwise preempted or prohibited by federal or other applicable state laws.
2. Section 13(g) of the ADA is amended to provide that such Section does not exclude or preclude your reliance on any representations that CBDI makes in the Franchise Offering Circular that it delivers to you pursuant to the Illinois Franchise Disclosure Act.
3. Section 14(a) of the ADA is amended by deleting the phrase: "AND YOU ACKNOWLEDGE THAT YOU HAVE NOT RECEIVED OR RELDZD UPON".
The terms of this Addendum shall govern to the extent this Addendum is found to be inconsistent with any terms or conditions of the ADA or the Exhibits or Attachments thereto.
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IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the________day of___________________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: _________ _____
(Corporate, LLC or Partnership Developer)
By:
Name:_ Title:
(Individual Developer)
Name:
Name:
(Select the appropriate Developer signature lines and mark out the unused signature block)
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ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR THE STATE OF INDIANA
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable Indiana law. Accordingly, CBDI will amend each Agreement for a Shoppe to be developed or operated in Indiana as follows:
1. Delete Section 10(f)(ii) in its entirety and insert the following in its place:
(ii) You, as the transferor, and CBDI will have executed a mutual general release (under seal if required), in a form satisfactory to CBDI, of any and all claims against each other, and your respective parent(s), subsidiaries and affiliates (if applicable) and their officers, directors, attorneys, shareholders, and their officers, directors, attorneys, shareholders and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules, and ordinances, related to, or connected with, the performance of this Agreement except that such release shall not release CBDI or any other persons or entities from liability arising under applicable state franchise registration and disclosure laws, including claims arising under the Indiana Deceptive Franchise Practices Law (the "Law");
2. Re Section 11:
a. Delete the third sentence of Section 1 l(a)(iii), and insert the following in its place:
This covenant applies within the Primary Marketing Area.
b. Delete Section 1 l(a)(v) in its entirety and insert the following in its place:
(v) You agree that CBDI may seek the amount of any damage or expense, including attorneys' and experts' fees and costs which CBDI may sustain or incur as a result of your violation of this Section 11.
c. Delete Section 1 l(a)(vi) in its entirety and insert the following in its place:
(vi) You will indemnify and hold harmless the Indemnified Parties from any and all liability, damages and expenses, including attorneys' fees, incurred by CBDI as a result of claims, demands or rights of action that may be asserted at any time against CBDI, by anyone arising out of or resulting from your actions or inactions or arising out of or connected with this Agreement, the acquisition or leasing of any Shoppe site or maintenance or operation of any Shoppe or You, except with respect to (I) those claims arising under the Law, (ii) claims arising from your proper reliance on the or use of procedures or materials provided by CBDI, or (iii) for claims or damages caused by CBDI's negligence. IT IS INTENDED THAT THE INDEMNITEES CONTAINED IN THIS SECTION SHALL INCLUDE CLAIMS, DEMANDS, LIABHJTEES, LOSSES, DAMAGES, CAUSES OF ACTION, JUDGMENTS, PENALTIES, COSTS AND EXPENSES (INCLUDING, WITHOUT LIMITATION, REASONABLE ATTORNEYS' FEES) RESULTING FROM THE NEGLIGENCE OR CLAIMS OF NEGLIGENCE OF ANY INDEMNDTED PARTY AND ANY STRICT LIABILITY, BUT NOT THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY DSDEMND7IED PARTY EXCEPT WITH RESPECT TO THOSE CLAIMS ARISING UNDER THE LAW.
3. Section 13:
a. Delete Section 13(a) in its entirety and insert the following in its place:
State of Indiana
Addendum to Area Development Agreement
Page 1
1225008 4.DOC
(a) Governing Law. This Agreement is accepted by CBDI in the State of Texas and, unless preempted or prohibited by applicable state and federal law or otherwise determined by a court of competent jurisdiction, will be construed in accordance with the laws of Texas. Indiana law shall govern the enforcement of this Agreement, except where preempted by federal law. Indiana law will prevail if any conflict.
b. Delete Section 13(b)(ii)(l) in its entirety and insert the following in its place:
(ii)(l) Mediation shall occur in a mutually acceptable locale determined at the time of the mediation, mediation shall occur before a single mediator, using the facilities and mediation rules of Mediation Organization. If the parties cannot agree on a Mediation Organization, they will use the facilities and mediation rules of the AAA.
c. Revise Section 13(b)(iii)(2) by adding the following:
(iii)(2) If federal law preempts the requirement to arbitrate in Dallas, Texas, arbitration proceedings shall be conducted in Indiana, or in a mutually acceptable locale determined at the time of the arbitration.
d. Delete Section 13(b)(iv) in its entirety and insert the following in its place:
(iv) Notwithstanding Section 13(b)(ii)(l) and 13(b)(iv) CBDI will not be obligated to mediate or arbitrate any claim arising from your alleged infringement of the Licensed Marks or disclosure of the Confidential Information. The parties agree that any action based on infringement of any of the Licensed Marks shall be governed by and interpreted and enforced in accordance with the United States Trademark (Lanham) Act and, to the extent permitted by applicable state and federal law, shall be litigated in any federal District Court sitting in Indiana. The parties further agree, to the extent permitted by applicable state and federal law, to submit to the jurisdiction and venue of any such federal District Court and that service of process by certified mail, return receipt requested, shall be sufficient to confer in personam jurisdiction over them in connection with any such trademark litigation. Further, You and CBDI agree that the provisions of this Section 13 shall not be applicable to the exercise of rights and remedies under any other agreements and contracts executed by and between You and any third parties or affiliates of CBDI in connection with or relating to the Franchised Business (such as any real, personal property or equipment leases) unless expressly provided in such agreements and contracts.
The terms of this Addendum shall govern to the extent this Addendum is found to be inconsistent with any terms or conditions of the Agreement or Exhibits or Attachments thereto.
1225008 4.DOC
State of Indiana
Addendum to Area Development Agreement
Page 2
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the___________day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _____
Name: Title:
(Corporate, LLC or Partnership Developer)
By: _____
Name: Title:
(Individual Developer)
Name:
Name:
(Select the appropriate Developer signature lines and mark out the unused signature block)
1225008 4.DOC
State of Indiana
Addendum to Area Development Agreement
Page 3
ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR THE STATE OF MARYLAND
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable Maryland law. Accordingly, CBDI will amend each Agreement for a Shoppe to be developed or operated in Maryland as follows:
1. Delete Section 10(f)(ii) in its entirety and insert the following in its place:
(ii) You, as transferor will have executed a general release, under seal if required, in a form satisfactory to CBDI, of any and all claims against CBDI, its parent(s), subsidiaries, affiliates, and their officers, directors, attorneys, shareholders, and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state and local laws, rules, and ordinances related to or connected with the performance of this Agreement except that such release shall not release CBDI or any other persons or entities from liability arising under the Maryland Franchise Registration and Disclosure Law;
2. Modify Section 13(a) to add the following:
Notwithstanding the provisions of this Section 13(a), a Maryland franchisee may bring a lawsuit in Maryland for claims arising under the Maryland Franchise Registration and Disclosure Law.
3. Delete Section 14(g) its entirety and insert the following in its place:
(d) The acknowledgments contained in this Section 14(g) are not intended to be, nor shall they act as, a release, estoppel or waiver of any liability arising under the Maryland Franchise Registration and Disclosure Law.
The terms of this Addendum shall govern to the extent this Addendum is found to be inconsistent with any terms or conditions of the Agreement or Exhibits or Attachments thereto.
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State of Maryland Addendum to Area Development Agreement Page 1 1225008 4.DOC
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the__________day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: __________________________
(Corporate, LLC or Partnership Developer)
By: _____
Name: Title:
(Individual Developer)
Name:
Name:
(Select the appropriate Developer signature lines and mark out the unused signature block)
1225008 4.DOC
State of Maryland
Addendum to Area Development Agreement
Page 2
ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR THE STATE OF MINNESOTA
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable Minnesota law. Accordingly, CBDI will amend each Agreement for a Shoppe to be developed or operated in Minnesota as follows:
1. Modify Section 9(c) by adding after the first sentence the following sentence:
Notwithstanding the foregoing or any other provision of this Section 9, to the extent governed by Minnesota law, CBDI will comply with Minn. Stat. Sect. 80C.14, which requires, except in certain specified cases, that Developer be given 90 days of notice of termination, with 60 days to cure.
2. Modify Section 13(a) by adding after the first sentence the following:
Minn. Stat. §80C21 and Minn Rule 2860.4400J prohibit CBDI from requiring litigation to be conducted outside Minnesota. In addition, nothing in the Offering Circular or any agreement can abrogate or reduce any of your rights as provided for in Minnesota Statutes, Chapter 80C, or your rights to any procedure, forum, or remedies provided for by the laws of the jurisdiction.
The terms of this Addendum shall govern to the extent this Addendum is found to be inconsistent with any terms or conditions of the Agreement or Exhibits or Attachments thereto.
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State of Minnesota Addendum to Area Development Agreement Page 1 1225008_4.DOC
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the__________day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title:
(Corporate, LLC or Partnership Developer)
By:
Name: Title:
(Individual Developer)
Name:
Name:
(Select the appropriate Developer signature lines and mark out the unused signature block)
1225008 4.DOC
State of Minnesota
Addendum to Area Development Agreement
Page 2
ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR THE STATE OF NEW YORK
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable New York law. Accordingly, CBDI will amend each Agreement for a Shoppe to be developed or operated in New York as follows:
1. Delete Section 10(a) and insert the following in its place:
10(a) CBDI will have the right to transfer all or any part of its rights or obligations under this Agreement to any person or legal entity who, in CBDI's good faith judgment, is willing and able to assume CBDI's obligations under this Agreement.
2. Delete Section 10(f)(ii) in its entirety and insert the following in its place:
(ii) You, as the transferor, and CBDI will have executed a mutual general release (under seal if required), in a form satisfactory to CBDI, of any and all claims against each other, and your respective parent(s), subsidiaries and affiliates (if applicable) and their officers, directors, attorneys, shareholders, and their officers, directors, attorneys, shareholders and employees, in their corporate and individual capacities, including, without limitation, claims arising under federal, state, and local laws, rules, and ordinances, related to, or connected with, the performance of this Agreement except that such release shall not release CBDI or any other persons or entities from liability arising under applicable state franchise registration and disclosure laws, including claims arising under the non-waiver provisions (Article 33, sections 687.4 and 687.5) of the General Business Laws of the State of New York (the "Law");
The terms of this Addendum shall govern to the extent this Addendum is found to be inconsistent with any terms or conditions of the Agreement or Exhibits or Attachments thereto.
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1225008 4.DOC
State of New York
Addendum to Area Development Agreement
Page 1
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the ■ day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: __________________________
(Corporate, LLC or Partnership Developer)
By: _____
Name:. Title:
(Individual Developer)
Name:
Name:
(Select the appropriate Developer signature lines and mark out the unused signature block)
1225008 4.DOC
State of New York
Addendum to Area Development Agreement
Page 2
ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR STATE OF NORTH DAKOTA
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable North Dakota law. Accordingly, CBDI will amend each Agreement for a Shoppe to be developed in North Dakota as follows:
1. Section ll(a)(iii), relating to post-term covenants not to compete, is subject to Section 9-08-06, N.D.C.C.
2. Delete Section 13(a) in its entirety and insert the following in its place:
(a) Except with respect to interpretation, this Agreement shall be governed by and enforced in accordance with the laws of the State of North Dakota. This Agreement is accepted by CBDI in the State of Texas and, unless prohibited by applicable law or otherwise determined by a court of competent jurisdiction, shall be interpreted under the laws of the State of Texas.
3. Delete Section 13(b)(ii)(l) requiring mediation to occur in Dallas, Texas and insert the following:
(1) Mediation shall occur in a mutually agreed upon locale determined at the time of mediation, before a single mediator, using the facilities and mediation rules of the Mediation Organization. If the parties cannot agree on a Mediation Organization, they will use the facilities and mediation rules of the AAA.
4. Revise Section 13(b)(iii)(2) by adding the following:
(2) If federal law does not preempt the requirement to arbitrate in Dallas, Texas arbitration proceedings shall be conducted in a mutually agreed upon locale determined at the time of arbitration.
5. Delete Section 13(b)(iv) in its entirety and insert the following in its place:
(iv) Notwithstanding Sections 13(b)(ii)(l) and 13(b)(iii)(2), CBDI will not be obligated to mediate or arbitrate any claim arising from your alleged infringement of the Licensed Marks. The parties agree that any action based on infringement of any of the Licensed Marks or disclosure of Confidential Information shall be governed by and interpreted and enforced in accordance with the United States Trademark (Lanham) Act or the United States Copyright Act, as applicable, and shall be litigated in any federal District Court sitting in North Dakota. The parties further agree to submit to the jurisdiction and venue of any such federal District Court and that service of process by certified mail, return receipt requested, shall be sufficient to confer in personam jurisdiction over them in connection with any such trademark or copyright litigation. Further, You and CBDI agree that the provisions of this Section 13 shall not be applicable to the exercise of rights and remedies under any other agreements and contracts executed by and between You and any third parties or affiliates of CBDI in connection with or relating to the Franchised Business (including, without limitation, any notes, guaranties, real property, personal property or equipment leases) unless expressly provided in such agreements and contracts.
The terms of this Addendum shall govern to the extent this Addendum is found to be inconsistent with any terms or conditions of the Agreement or Exhibits or Attachments thereto.
State of North Dakota Addendum to Area Development Agreement Page 1 1225008 4.DOC
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the________day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: __________________________
(Corporate, LLC or Partnership Developer)
By: _____
Name:. Title:
(Individual Developer)
Name:
Name:__________________
(Select the appropriate Developer signature lines and mark out the unused signature block)
1225008 4.DOC
State of North Dakota
Addendum to Area Development Agreement
Page 2
ADDENDUM TO THE AREA DEVELOPMENT AGREEMENT FOR THE STATE OF RHODE ISLAND
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable Rhode Island law. Accordingly, each Development Agreement for a Shoppe to be developed or operated in Rhode Island will be amended as follows:
1. Section 10(f)(ii) is amended by adding the following:
Any release required as a condition of our consent to a transfer shall not release CBDI or any other persons or entities from liability arising under the Rhode Island Franchise Investment Act (the "Act")
2. Section 13(a) is deleted in its entirety and the following is inserted in its place:
(a) Except with respect to interpretation, this Agreement shall be governed by and enforced in accordance with the laws of the State of Rhode Island. This Agreement is accepted by CBDI in the State of Texas and, unless prohibited by applicable law or otherwise determined by a court of competent jurisdiction, shall be interpreted under the laws of the State of Texas.
3. Sections 13(b)(ii)(l) requiring mediation and arbitration to occur in Dallas, Texas is superseded by the following:
(1) Mediation shall occur in a mutually agreed upon locale determined at the time of mediation, before a single mediator, using the facilities and mediation rules of the Mediation Organization. If the parties cannot agree on a Mediation Organization, they will use the facilities and mediation rules of the AAA.
4. Section 13(b)(iii)(2) is deleted in its entirety and the following is inserted in its place:
(2) Arbitration proceedings shall be conducted in a mutually agreed upon locale determined at the time of arbitration, before a single arbitrator, using the facilities and commercial arbitration rules of the Mediation Organization or the Arbitration Organization. If CBDI selects an Arbitration Organization other than the Mediation Organization and You reasonably object to CBDI's choice, the parties will use the AAA's facilities and commercial arbitration rules.
5. Section 13(b)(iv) is deleted in its entirety and the following is inserted in its place:
(iv) Notwithstanding Sections 13(b)(ii)(l) and 13(b)(iii)(2), CBDI will not be obligated to mediate or arbitrate any claim arising from your alleged infringement of the Licensed Marks. The parties agree that any action based on infringement of any of the Licensed Marks or disclosure of Confidential Information shall be governed by and interpreted and enforced in accordance with the United States Trademark (Lanham) Act or the United States Copyright Act, as applicable, and shall be litigated in any federal District Court sitting in Rhode Island. The parties further agree to submit to the jurisdiction and venue of any such federal District Court and that service of process by certified mail, return receipt requested, shall be sufficient to confer in personam jurisdiction over them in connection with any such trademark or copyright litigation. Further, You and CBDI agree that the provisions of this Section 13 shall not be applicable to the exercise of rights and remedies under any other agreements and contracts executed by and between You
State of Rhode Island Addendum to Area Development Agreement Page 1 1225008 4.DOC
and any third parties or affiliates of CBDI in connection with or relating to the Franchised Business (including, without limitation, any notes, guaranties, real, personal property or equipment leases) unless expressly provided in such agreements and contracts.
6. No acknowledgment provision, disclaimer or integration clause or clause having a similar effect
in the Development Agreement shall have any effect on any statement, misrepresentations or actions that would violate the Act or any order under the Act.
To the extent this addendum shall be deemed to be inconsistent with any terms or conditions of said or Exhibits or Attachments thereto, the terms of this addendum shall govern.
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State of Rhode Island Addendum to Area Development Agreement Page 2 1225008 4.DOC
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the_________day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title:__________________________
(Corporate, LLC or Partnership Developer)
By: _____
Name: Title:
(Individual Developer)
Name:
Name:
(Select the appropriate franchisee signature lines and mark out the unused signature block)
1225008 4.DOC
State of Rhode Island
Addendum to Area Development Agreement
Page 3
ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR STATE OF SOUTH DAKOTA
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable South Dakota law. Accordingly, CBDI will amend each Agreement for a Shoppe to be developed in South Dakota as follows:
1. Amend Section 1 l(a)(iii) by adding the following to the end of the paragraph:
Covenants not to compete upon termination or expiration of a development or franchise agreement are generally unenforceable in the State of South Dakota, except in certain instances as provided by law.
2. Delete Section 13(a) in its entirety and insert the following in its place:
The laws of the State of South Dakota shall govern regarding franchise registration, employment, covenants not to compete, and other matters of local concern; but as to contractual and all other matters, the laws of the State of Texas shall govern the construction, enforcement, and interpretation of this Agreement, except where preempted by federal law.
3. Designation of Dallas County, Texas, as the location for litigation is hereby deleted from Section 13 (b)(iv) of the Area Development Agreement.
The terms of this Addendum shall govern to the extent this Addendum is found to be inconsistent with any terms or conditions of the Agreement or Exhibits or Attachments thereto.
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State of South Dakota Addendum to Area Development Agreement Page 1 1225008 4.DOC
IN WITNESS WHEREOF,- each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the________day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: __________________________
(Corporate, LLC or Partnership Developer)
By: _____
Name: Title:
(Individual Developer)
Name:
Name:
(Select the appropriate Developer signature lines and mark out the unused signature block)
State of South Dakota Addendum to Area Development Agreement Page 2 1225008_4.DOC
ADDENDUM TO AREA DEVELOPMENT AGREEMENT FOR STATE OF WASHINGTON
Reference is made to certain sections of the Area Development Agreement to which this Addendum is attached. Those sections may be contrary to or unenforceable under applicable Washington law. Accordingly, CBDI will amend each Agreement for a Shoppe to be developed in Washington as follows:
The State of Washington has a statute, RCW 19.100.180 which may supersede the Area Development Agreement in your relationship with CBDI in the area of termination of your development rights. There may also be court decisions which may supersede the area development in your relationship with CBDI in the area of termination of your development rights.
In any arbitration involving an area development agreement to develop a franchise in Washington, the arbitration site shall be either in the State of Washington, or in a place mutually agreed upon at the time of the arbitration, or in a place mutually agreed upon at the time of the arbitration, or as determined by the arbitrator.
In the event of a conflict of laws, the provisions of the Washington Franchise Investment Protection Act, Chapter 19.100 RCW shall prevail.
A release or waiver of rights executed by You shall not include rights under the Washington Franchise Investment Protection Act except when executed pursuant to a negotiated settlement after the agreement is in effect and where the parties are represented by independent counsel. Provisions such as those which unreasonably restrict or limit the statute of limitations period for claims under the Act, rights or remedies under the Act such as a right to a jury trial may not be enforceable.
Transfer fees are collectable to the extent that they reflect CBDI's reasonable estimated or actual costs in effecting a transfer.
To the extent this Addendum shall be deemed to be inconsistent with any terms or conditions of said Area Development Agreement or Exhibits or Attachments thereto, the terms of this Addendum shall govern.
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State of Washington Addendum to Area Development Agreement Pagel 1225008 4.DOC
IN WITNESS WHEREOF, each of the undersigned hereby acknowledges having read this Addendum, understands and consents to be bound by all of its terms and agrees it shall become effective the________day of______________, 20___.
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: __________________________
(Corporate, LLC or Partnership Developer)
By:_____
Name: Title:
(Individual Developer)
Name:
Name:
(Select the appropriate Developer signature lines and mark out the unused signature block)
1225008 4.DOC
State of Washington
Addendum to Area Development Agreement
Page 2
ATTACHMENT A
AREA DEVELOPMENT AGREEMENT
BETWEEN COOKIES BY DESIGN, INC.
AND
(Name of Developer)
FRANCfflSE LICENSING AGREEMENT
(See Exhibit B to Offering Circular)
1225008 4.DOC
Attachment A to Area Development Agreement Page 1
ATTACHMENT B
AREA DEVELOPMENT AGREEMENT
BETWEEN COOKIES BY DESIGN, INC.
AND
(Name of Developer)
DEFINED TERRITORY
The "Defined Territory" will be defined as follows:
Attachment B to Area Development Agreement Page 1 1225008 4.DOC
ATTACHMENT C
AREA DEVELOPMENT AGREEMENT
BETWEEN COOKIES BY DESIGN, INC.
AND
(Name of Developer)
DEVELOPMENT SCHEDULE
You agree that You will open for business by the date indicated in Column IV below and have operating at all times after that date during the term of this Agreement at least the minimum number of Shoppes listed in Column V below. Column I below sets forth the maximum number of Shoppes to be developed under this Agreement. Please see Section 4(c) of the Development Agreement relating to failure to adhere to Development Schedule.
i n in rv v
Balance of Franchise Latest Date for Minimum Number
Initial Franchise Fee Due Upon execution Commencement of of Shoppes in
Shoppe Sequence FeeShoppe of Franchise Agreement Business Shoppe Operation
1225008 4.DOC
Attachment C to Area Development Agreement Page 1
ATTACHMENT D
AREA DEVELOPMENT AGREEMENT
BETWEEN COOKIES BY DESIGN, INC.
AND
(Name of Developer)
ACKNOWLEDGMENT REGARDING CONTROLLING PERSONS
You hereby acknowledge that You are a(n): (check one):
individual - State of__________
partnership - State of____________
corporation - State of___________
limited liability company - State of _ other business form___
2. You hereby warrant and represent that the following persons own, either legally or beneficially,
voting control of the Franchise:
Type of Ownership Percentage of
Name (Legal or Beneficial) Interest Owned
3. You hereby acknowledge that CBDI is relying on these representations as a material inducement
and basis for entering into this Agreement and that the information set forth above is true and correct and that there is no information omitted which, if disclosed, would alter or qualify the information set forth in this Attachment D.
1225008 4.DOC
Attachment D to Area Development Agreement Page 1
1225008 4.DOC
You:
(Corporate, LLC or Partnership Developer)
a(n)
By:
Date Name:_
Title:
(Individual Developer)
Date Name:
Date Name:
[Select the appropriate Developer signature lines and mark out the unused signature block]
Attachment D to Area Development Agreement Page 2
ATTACHMENT E
AREA DEVELOPMENT AGREEMENT
BETWEEN COOKIES BY DESIGN, INC.
AND
(Name of Developer)
GUARANTY OF DEVELOPER'S UNDERTAKINGS
In consideration of, and as a material inducement to, the execution of the foregoing Area
Development Agreement (the "Agreement") dated the_______day of__________________, 20___, by
COOKIES BY DESIGN, INC. ("CBDI"), and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the person or persons who have signed this Agreement (the "Guarantor(s)") guarantees by this guaranty (the "Guaranty") to CBDI, the full and timely payment
of and performance by______________________________________________("Developer") of each
and every payment, covenant, agreement and undertaking on the part of Developer (the "Obligations") contained and set forth this Agreement.
CBDI, its successors and assigns, may from time to time, without notice to the Guarantors) (a) resort to the Guarantor(s) for payment of any of the Obligations, whether or not CBDI or its successors have resorted to any property securing any of the Obligations or proceeded against any other of the Guarantor(s) or any party primarily or secondarily liable on any of the Obligations, (b) release or compromise any Obligation of any of the Guarantors) under this Agreement or any Obligation of any party or parties primarily or secondarily liable on any of the Obligations, and (c) extend, renew or credit any of the Obligations for any period (whether or not longer than the original period); alter, amend or exchange any of the Obligations; or give any other form of indulgence, whether under the Agreement or not. This Guaranty is an absolute and irrevocable guarantee of payment and performance and not collectability and is not conditioned nor contingent upon any attempt to collect from any person or entity or resort to any other remedies.
The Guarantor(s) further waives presentment, demand, notice of dishonor, protest, nonpayment and all other notices whatsoever, including, without limitation: notice of acceptance of this Guaranty; notice of all contracts and commitments; notice of the existence or creation of any Obligations under the foregoing Agreement and of the amount and terms of the Agreement; and notice of all defaults, disputes or controversies between Developer and CBDI resulting from the Agreement or otherwise, and the settlement, compromise or adjustment of any default, dispute or controversy. The Guarantors) waives any and all requirements that CBDI institute any action or proceeding, or exhaust any or all of CBDI's rights, remedies or recourses against Developer or anyone else as before to bringing an action against any or all Guarantors upon this Guaranty, it being expressly agreed that the liability of each Guarantor under this Agreement will be primary and not secondary. The Guarantors) waives any defense arising from any disability, insolvency, lack of authority or power, death, insanity, minority, dissolution or any other defense of Developer, any Guarantor or any other surety or guarantor of the Obligations of Developer according to the Agreement, it being agreed that Guarantor will remain liable on this Guaranty regardless of whether Developer or any other person is found not liable under the Agreement for any reason.
The Guarantor(s) agrees to pay all expenses paid or incurred by CBDI in attempting to enforce the Agreement and this Guaranty against Developer and against the Guarantors) and in attempting to collect any amounts due under the Agreement and under this Guaranty, including
Attachment E to Area Development Agreement Page 1 1225008 4.DOC
reasonable attorneys' fees if the enforcement or collection is by or through an attorney-at-law. Any waiver, extension of time or other indulgence granted from time to time by CBDI, its agents, its successors or assigns, with respect to the foregoing Agreement, will in no way modify or amend this Guaranty, which will be continuing, absolute, unconditional and irrevocable.
Each Guarantor hereby agrees with CBDI that all rights, remedies and recourses afforded to CBDI by reason of this Guaranty, or otherwise, (a) are separate and cumulative and may be pursued separately, successively or concurrently, as the occasion may arise, and (b) are non-exclusive and will in no way limit or prejudice any other legal or equitable right, remedy or recourse which CBDI may have.
This Guaranty will be governed by and construed in accordance with the laws of the State of Texas, and it is intended to be performed in accordance with, and only to the maximum extent permitted, by law. If any provision of this Guaranty or the application of the Guaranty to any person or circumstance will, for any reason and to any extent, be invalid or unenforceable, neither the remainder of this Guaranty nor the application of the provision to any other persons or circumstances will be affected by the invalidity or unenforceability, but rather the Guaranty will be enforced to the greatest extent permitted by law. Venue for any litigation for the enforcement of this Guaranty and the collection of any sums due under the Guaranty will lie in Dallas County, Texas.
If this Guaranty is executed by more than one party, it is specifically agreed that CBDI may enforce the provisions of the Guaranty with respect to one or more of the parties without seeking to enforce the Guaranty as to all or any other of the parties, and each of the Guarantors hereby waives any requirement of joinder of all or any other of the parties to this Guaranty in any suit or proceeding to enforce the provisions of the Guaranty. v
If more than one person has executed this Guaranty, the term "the Guarantors)", as used in this Guaranty will refer to each person, and the liability of each of the Guarantor(s) under this Guaranty will be joint and several and primary as sureties.
IN WITNESS WHEREOF, the Guarantors have executed this Guaranty effective as of the date first written above.
_________________________________ _________________________________, Individually
Witness (Not a Guarantor) Printed Name: _________________________________
Address: _________________________________
_________________________________ _________________________________, Individually
Witness (Not a Guarantor) Printed Name:
Address:
_________________________________ _________________________________, Individually
Witness (Not a Guarantor) Printed Name: _______________________________
Address: _______________________________
1225008 4.DOC
Attachment E to Area Development Agreement Page 2
ATTACHMENT F
AREA DEVELOPMENT AGREEMENT
BETWEEN COOKIES BY DESIGN, INC.
AND
(Name of Developer)
SPECIAL STIPULATIONS/STATE AND FEDERAL LAWS
To the extent of any conflicts between the following and the printed provisions of the Area Development Agreement, the following shall control:
1. The following states have statutes which may supersede the Franchise Licensing Agreement in your relationship with CBDl including some or all of the areas of waiver, release, arbitration, transfer fees, jurisdiction, venue, choice of law, termination and renewal of your franchise:
ARKANSAS [Stat. Section 70-807], CALIFORNIA [Bus. & Prof. Code Sections 20000-20043], CONNECTICUT [Gen. Stat. Section 42-133e et seq.}, DELAWARE [Code, Title 6, Chapter 25, Sections 2551-2556], HAWAII [Rev. Stat. Section 482E-1], ILLINOIS [815 ILCS 1704, 1719-1720], INDIANA [Stat. Section 23-2-2.7], MICHIGAN [Stat. Section 19.854(27)], MINNESOTA [Stat. Section 80C.14], MISSISSIPPI [Code Section 75-24-51], MISSOURI [Stat. Section 407.400], NEBRASKA [Rev. Stat. Section 87-401], NEW JERSEY [Stat. Section 56: 10-1], NORTH DAKOTA [North Dakota Century Code Annotated, Title 51, Chapter 51-19, Sections 51-19-01 through 51-19-17, as amended], RHODE ISLAND [General Laws of Rhode Island, 1956, Title 19, Chapter 28, Sections 19-28.1-1 through 19-28.1-34], SOUTH DAKOTA [Codified Laws Section 37-5A-51], VIRGINIA [Code 13.1-557-574-13.1-564], WASHINGTON [Code Sections including 19.100; 19.100.180; and 19.100.220], WISCONSIN [Stat. Section 135.03 and 553.76]. These and other states may have court decisions, laws and regulations which may supersede the Franchise Licensing Agreement in your relationship with CBDl including some or all of the areas of waiver, release, arbitration, transfer fees, jurisdiction, venue, choice of law, termination and renewal of your franchise.
2. The following states have statutes which limit CBDI's ability to restrict your activity after the Franchise Licensing Agreement has ended:
California Business and Professions Code Section 16,600, Florida Statues Section 542.33, Michigan Compiled Laws Section 445.771 et seq., Montana Codes Section 30-14-201, North Dakota Century Code Section 9-08-06, Oklahoma Statutes Section 15-217-19, Washington Code Section 19.86.030. Other states have court decisions, laws, and regulations limiting CBDI's ability to restrict your activity after the Franchise Licensing Agreement has ended
3. The enforceability of Section 9(a) of the Area Development Agreement is a matter governed by Federal Bankruptcy Law and enforceability or unenforceability is subject to that law and rulings of a court of competent jurisdiction.
Attachment F to Area Development Agreement Page 1 1225008 4.DOC
COOKIES BY DESIGN, INC., a Texas corporation
By: _________________________________
Name: __________________________
Title: __________________________
(Corporate, LLC or Partnership Developer)
By: ____________
Name:_______
Title:________
(Individual Developer)
Name:
Name:
1225008 4.DOC
Attachment F to Area Development Agreement Page 2