Franchise Agreement
Sample Franchise Agreement
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(1) The proposed transferee (and if the proposed
transferee is other than an individual, such owners of an interest in the
proposed transferee as we may request) must demonstrate that it has extensive
experience in high quality restaurant operations of a character and complexity
similar to Rubio's Stores; meets the managerial, operational, experience,
quality, character and business standards for a franchisee promulgated by us
from time to time; possesses a good character, business reputation and credit
rating; has an organization whose management culture is compatible with our
management culture; and has adequate financial resources and working capital to
meet the obligations under this Agreement.
(2) The sales price shall not be so high, in our
reasonable judgment, as to jeopardize the ability of the transferee to develop,
maintain, operate and promote the Rubio's Store and meet financial obligations
to us, third party suppliers and creditors. Our decision with respect to a
proposed Transfer shall not create any liability on our part: (A) to the
transferee, if we approves the Transfer and the transferee experiences financial
difficulties; or (B) to the transferor or the proposed transferee, if we
disapprove the Transfer pursuant to this Section 14.2.B.(2) or for other
legitimate business reasons. We have the right, in the exercise of our
reasonable business judgment and without any liability to the transferor or the
proposed transferee, to communicate and counsel with the transferor and the
proposed transferee regarding any aspect of the proposed Transfer.
(3) All of your accrued monetary obligations to
us and Rubio's Affiliates (whether arising under this Agreement or otherwise)
and all other outstanding obligations related to the Rubio's Store (including,
but not limited to, bills from suppliers, taxes, judgments and any required
governmental reports, returns, affidavits or bonds) have been satisfied or, in
our reasonable judgment, adequately provided for. We reserve the right to
require that a reasonable sum of money be placed in escrow to ensure that all of
these obligations are satisfied.
(4) You are not then in material default of any
provision of this Agreement or any other agreement between you and us and/or
Rubio's Affiliates, are not in default beyond the applicable cure period under
any real estate lease, equipment lease or financing instrument relating to the
Rubio's Store and are not in default beyond the applicable cure period with any
vendor or supplier to the Rubio's Store.
(5) You and all guarantors of your obligations
to us execute a General Release.
C. If we approve a proposed Transfer, prior to the
Transfer becoming effective:
(1) The transferor shall pay us a nonrefundable
Transfer fee in an amount not to exceed $5,000 in connection with our review of
the Transfer application.
(2) You and the proposed transferee shall
execute, as directed by us, either an assignment agreement and any amendments to
this Agreement deemed necessary or desirable by us to reflect the Transfer or
our then-current standard form of franchise agreement for a term ending on the
expiration of the Initial Term. In either event, a guarantee of the type
required by Section 13.6. shall be executed by those individuals identified in
Section 13.6. with an interest in the proposed transferee.
(3) The transferor shall remain liable for all
obligations to us incurred before the date of the Transfer and shall execute any
and all instruments reasonably requested by us to evidence that liability.
D. If you are an individual or a partnership and desire
to Transfer this Agreement to a corporation (or limited liability company)
formed for the convenience of ownership, the requirements of Section 14.2.B.
shall apply to such a Transfer, however, you will not be required to pay a
Transfer fee. Notwithstanding such a Transfer, the individual or individuals
that comprise Franchisee shall continue to be jointly and severally bound by,
and personally liable for the timely and complete performance and breach of each
and every provision of this Agreement. Approval by us also will be conditioned
on the following: (1) the corporation (or limited liability company) must be
newly organized; (2) prior to the Transfer, we must receive a copy of the
documents specified in Section 13.2. and the transferee shall comply with the
remaining provisions of Section 13; and (3) you must own all voting securities
of the corporation (or membership interests of the limited liability
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company) or, if you are comprised of more than one individual, each person shall
have the same proportionate ownership interest in the corporation (or the
limited liability company) as prior to the Transfer.
E. On your death or permanent disability or, if
Franchisee is a corporation, limited liability company or partnership, on the
death or permanent disability of the owner of a controlling interest in
Franchisee, the executor, administrator, conservator, guardian or other personal
representative of such person will Transfer his or her interest in this
Agreement and the Franchise, or such interest in Franchisee, to a third party
subject to our approval and all of the provisions of this Section 14.2. Such
disposition of this Agreement and the Franchise, or such interest in Franchisee
(including, without limitation, Transfer by bequest or inheritance), will be
completed within a reasonable time, not to exceed 6 months from the date of
death or permanent disability and will be subject to all the terms and
conditions applicable to Transfers contained in this Section 14.2. Failure to so
Transfer the interest in this Agreement and the Franchise, or such interest in
Franchisee, within said period of time will constitute a breach of this
Agreement. A person shall be deemed to have a "permanent disability" if his
personal, active participation in management of the Rubio's Store is for any
reason curtailed for a continuous period of 6 months.
F. Notwithstanding the provisions of Section 14.2.B.,
the issuance of options or the exercise of options pursuant to a qualified stock
option plan or a qualified employee stock ownership plan shall not be considered
a Transfer and shall not require our prior written approval; provided no more
than a total of 49% of your outstanding voting securities are subject to the
qualified stock option plan or qualified employee stock ownership plan.
G. If you were a publicly-held entity as of the date of
the first franchise-related agreement between you and us, Section 14.2.B. shall
be applicable to transfers of ownership interests in you only if the proposed
Transfer would result in either: (1) 50% or more of your voting securities or
membership interests being held by different owners than as of the date of the
first franchise-related agreement between you and us or any Rubio's Affiliate;
or (2) any change in ownership of your voting securities whereby any existing
owner acquires an additional 10% or more of your voting securities or membership
interests; or (3) any change in the membership of the Control Group.
H. Securities or partnership interests in you may be
sold, by private or public offering, only with our prior written consent
(whether or not our consent is required under any other provision of this
Section), which consent shall not be unreasonably withheld. In addition to the
requirements of Section 14.2.B., prior to the time that any public offering or
private placement of securities or partnership interests in you are made
available to potential investors, you, at your expense, shall deliver to us a
copy of the offering documents. You, at your expense, also shall deliver to us
an opinion of your legal counsel and an opinion of one other legal counsel
selected by us (both of which shall be addressed to us and in a form acceptable
to us) that the offering documents properly use the Marks and accurately
describe your relationship with us and Rubio's Affiliates. The indemnification
provisions of Section 19.5. shall also include any losses or expenses incurred
by us and Rubio's Affiliates in connection with any statements made by or on
behalf of you in any public offering or private placement of your securities.
I. If any party holding any interest in you or in this
Agreement receives a bona fide offer (as determined by us in our reasonable
discretion) from a third party or otherwise desires to undertake any Transfer
that would require our approval (other than a Transfer for convenience of
ownership pursuant to Section 14.2.D.), it shall notify us in writing of the
terms of the proposed Transfer, and shall provide such information and
documentation relating to the proposed Transfer as we may reasonably require. We
or our designee may elect to purchase the interest that the seller proposes to
Transfer any time within 30 days after receipt of written notification, and all
documents and other information required by Section 14.2.B. by sending written
notice to the seller that we or our designee intend to purchase the seller's
interest on the same terms and conditions offered by the third party (except
that we or our designee shall not be obligated to pay any finder's or broker's
fees). In purchasing the interest, we or our designee shall be entitled to set
off any monies owed to us or Rubio's Affiliates by you and we or our designee
shall be entitled to all customary representations and warranties that the
assets are free and clear (or, if not, accurate and complete disclosure) as to:
(1) ownership, condition and title; (2) liens and encumbrances; (3)
environmental and hazardous substances; and (4) validity of contracts inuring to
the purchaser or affecting the assets, whether contingent or otherwise.
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If the offer you receive involves assets in addition to this Agreement,
the Rubio's Store at the Premises and other Rubio's Stores operated by you, the
notice to us shall state the cash value of that portion of the offer received by
you relating to this Agreement, the Rubio's Store at the Premises and those
other Rubio's Stores. If the proposed Transfer provides for payment of
consideration other than cash or it involves intangible benefits, we or our
designee may elect to purchase the interest proposed to be sold for the
reasonable equivalent in cash. If the parties are unable to agree within 30 days
on the reasonable equivalent in cash of the non-cash part of the offer received
by you, or the cash value of the offer received by you relating to this
Agreement, the Rubio's Store at the Premises and other Rubio's Stores operated
by you, the amount shall be determined by two professionally certified
appraisers, you selecting one and we or our designee selecting one. If the
amounts set by the 2 appraisers differ by more than 10%, the 2 appraisers shall
select a 3rd professionally certified appraiser who also shall determine the
amount. The average value set by the appraisers (whether 2 or 3 appraisers as
the case may be) shall be conclusive and we or our designee may exercise the
right of first refusal within 30 days after being advised in writing of the
decision of the appraisers. The cost of the appraisers shall be shared equally
by the parties.
Our failure to exercise the right of first refusal shall not constitute
approval of the proposed Transfer nor a waiver of any other provision of this
Section 14.2. with respect to a proposed Transfer. If we do not exercise the
right of first refusal, you may not thereafter Transfer the interest at a lower
price or on more favorable terms than those that have been offered to us. We
shall again be given a right of first refusal if a transaction does not close
within 6 months after we elected not to exercise our right of first refusal. In
no event shall you offer the interest for sale or transfer at public auction,
nor at any time shall an offer be made to the public to sell, transfer or
assign, through any advertisement, either in the newspapers or otherwise,
without first having obtained our written approval to the auction or
advertisement.
J. Our consent to any Transfer shall not constitute a
waiver of any claims we may have against the transferring party, nor shall it be
deemed a waiver of our right to demand exact compliance with any of the terms of
this Agreement by the transferee, nor will it be deemed a waiver of our right to
give or withhold approval to future Transfers.
15. COVENANTS
15.1. CONFIDENTIALITY. You acknowledge and agree that we own all
right, title and interest in and to the System. You also acknowledge and agree
that: (A) the System consists of trade secrets and confidential and proprietary
information and know-how that gives us a competitive advantage; (B) we have
taken all measures necessary to protect the trade secrets and the
confidentiality of the proprietary information and know-how comprising the
System; (C) all material or other information now or hereafter provided or
disclosed to you regarding the System is disclosed in confidence; (D) you have
no right to disclose any part of the System to anyone who is not your employee;
(E) you will disclose to your employees only those parts of the System that an
employee needs to know; (F) you will have a system in place to ensure your
employees keep confidential our trade secrets and confidential and proprietary
information and, if requested by us, you shall obtain from those of your
employees reasonably designated by us an executed confidential disclosure
agreement in the form we prescribe; (G) you will not acquire any interest in the
System; and (H) the use or duplication of the System or any part of the System
in any other business would constitute an unfair method of competition, for
which we would be entitled to all legal and equitable remedies, including
injunctive relief, without posting a bond.
You shall not, during the term of this Agreement or at any time
thereafter, communicate or disclose any trade secrets or confidential or
proprietary information or know-how of the System to any unauthorized person, or
do or perform, directly or indirectly, any other acts injurious or prejudicial
to the Marks or the System. Any and all information, knowledge, know-how and
techniques, including all drawings, materials, equipment, specifications,
recipes, techniques and other data that we designate as confidential shall be
deemed confidential for purposes of this Agreement.
15.2. RESTRICTIONS. You acknowledge and agree that: (A) pursuant to
this Agreement, you will have access to valuable trade secrets, specialized
training and confidential information from us regarding the development,
operation, purchasing, sales and marketing methods and techniques of the System;
(B) the System and the
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opportunities, associations and experience established and acquired by you under
this Agreement are of substantial and material value; (C) in developing the
System, we have made and continue to make substantial investments of time,
technical and commercial research and money; (D) we would be unable adequately
to protect the System and our trade secrets and confidential and proprietary
information against unauthorized use or disclosure and would be unable
adequately to encourage a free exchange of ideas and information among Rubio's
Stores if franchisees were permitted to hold interests in competitive
businesses; and (E) restrictions on your right to hold interests in, or perform
services for, competitive businesses will not hinder your activities.
Accordingly, you covenant and agree that during the term of this
Agreement and for a period of 24 months following its expiration or earlier
termination, you shall not, either directly or indirectly, for yourself, or
through, on behalf of, or in conjunction with, any person, firm, partnership,
corporation, or other entity, own, maintain, operate, engage in, advise, help,
make loans to, or have any interest in, either directly or indirectly, any: (1)
quick casual or quick service Mexican-themed restaurant; or (2) any restaurant
at which fish tacos comprise more than 10% of sales. During the term of this
Agreement, there is no geographical limitation on this restriction. Following
the expiration or earlier termination of the term of this Agreement, this
restriction shall apply at the Premises and within a 10 mile radius of the
Premises, except as we otherwise approve in writing. This restriction shall not
apply to your existing restaurant operations, if any, which are identified in
Exhibit 1.
If any part of these restrictions is found to be unreasonable in time
or distance, each month of time or mile of distance may be deemed a separate
unit so that the time or distance may be reduced by appropriate order of the
court to that deemed reasonable. If we file arbitration or litigation to enforce
the post-termination portion of these restrictions, the 24-month period shall
begin running upon the entry of a final, non-appealable judgment.
15.3. MODIFICATION. We shall have the right, in the exercise of our
reasonable business judgment, to reduce the scope of any covenant in this
Section 15 effective immediately upon your receipt of written notice, and you
agree that you shall comply forthwith with any covenant as so modified, which
shall be fully enforceable notwithstanding the provisions of Section 19.10.
15.4. APPLICABILITY. The restrictions contained in this Section 15
apply to you and all guarantors of your obligations to us, but do not apply to
ownership of less than a 3% legal or beneficial ownership in the outstanding
equity securities of any publicly held corporation by you or any guarantor. The
existence of any claim you or any guarantor may have against us or any Rubio's
Affiliate, whether or not arising from this Agreement, shall not constitute a
defense to the enforcement by us of the provisions of this Section 15.
16. TERMINATION
16.1. GROUNDS FOR TERMINATION. In addition to the grounds for
termination that may be stated elsewhere in this Agreement, we may terminate
this Agreement, and the rights granted by this Agreement, upon written notice to
you without an opportunity to cure upon the occurrence of any of the following
events:
A. You cease to continuously operate your Rubio's Store
for a period in excess of 5 consecutive days, unless the closing is due to an
act of God, fire or other natural disaster or is approved in writing in advance
by us.
B. Execution is levied against your business or
property; suit to foreclose any lien or mortgage against the Premises or
equipment of your Rubio's Store is instituted against you and is not dismissed
(or a bond posted) within 60 days; or the real or personal property of your
Rubio's Store is sold after levy thereupon by any sheriff, marshal or constable.
C. You are insolvent or unable to pay your creditors
(including us); file a petition in bankruptcy, an arrangement for the benefit of
creditors or a petition for reorganization; there is filed against you a
petition in bankruptcy, an arrangement for the benefit of creditors or petition
for reorganization, which is not
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dismissed within 60 days of the filing; you make an assignment for the benefit
of creditors; or a receiver or trustee is appointed for you and not dismissed
within 60 days of the appointment.
D. There is a material breach of any obligation under
Section 15.
E. Any Transfer that requires our prior written consent
occurs without you having obtained that prior written consent.
F. We discover that you made a material
misrepresentation or omitted a material fact in the information that was
furnished to us in connection with our decision to enter into this Agreement.
G. You knowingly falsify any report required to be
furnished to us or make any material misrepresentation in your dealings with us.
H. You fail to open your Rubio's Store for business
within 60 days after we first authorize the opening of your Rubio's Store.
I. We make a reasonable determination that continued
operation of your Rubio's Store by you will result in an imminent danger to
public health or safety.
J. You lose possession of the Premises through your own
fault or your failure to extend the lease for the Premises through the Initial
Term of this Agreement.
K. You or any member of the Control Group are convicted
of, or plead no contest to, a felony charge; a crime involving moral turpitude;
or any other crime or offense that is reasonably likely, in our sole opinion to
adversely affect us or the System.
L. You or any member of the Control Group remain in
default beyond the applicable cure period under any other agreement with us or
any Rubio's Affiliate; provided that, if the default is by a member of the
Control Group, you receive written notice of the default and a 30 day period to
cure the default.
M. You fail or refuse to comply with any other provision
of this Agreement and do not correct the failure or refusal within 30 days (10
days for monetary defaults) after receiving written notice of default. Except
for monetary defaults, if the default cannot be corrected within 30 days, you
shall have that additional time to correct the default as reasonably required
(not to exceed 90 days) provided that you begin taking the actions necessary to
correct the default during the 30-day cure period and diligently and in good
faith pursue those actions to completion. You will be in default under this
Section 16.1M. for any failure to materially comply with any of the requirements
imposed by this Agreement, or to carry out the terms of this Agreement in good
faith. If you have received 2 or more notices of default pursuant to this
Section 16.1.M. within the previous 12 months, we shall be entitled to send you
a notice of termination upon your next default under this Section 16.1.M. in
that 12-month period without providing you an opportunity to remedy that
default.
16.2. TERMINATION FOLLOWING INSPECTION. We have the right to
periodically conduct inspections of your Rubio's Store to evaluate your
compliance with the System and this Agreement. Following each inspection, we
will provide you an inspection report listing your score on the inspection and
those conditions at your Rubio's Store that must be rectified. If you fail to
achieve a passing Systems Standards Score on an inspection, the inspection
report shall constitute a notice of default. If you fail to achieve a passing
Systems Standards Score on the next inspection (which shall be conducted at
least 30 days after your receipt of the inspection report for the prior
inspection), we may terminate this Agreement, without opportunity to cure, by
providing you written notice of termination along with the inspection report.
16.3. STATUTORY LIMITATIONS. If any valid, applicable law or
regulation of a competent governmental authority with jurisdiction over this
Agreement requires a notice or cure period prior to termination longer than set
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forth in this Section, this Agreement will be deemed amended to conform to the
minimum notice or cure period required by the applicable law or regulation.
16.4. EXTENDED CURE PERIOD. Notwithstanding anything contained
herein to the contrary, where we have the right to terminate this Agreement, we
shall have the right, to be exercised in the exercise of our reasonable business
judgment, to grant to you an extended period of time to cure the breach which
gave rise to our right to terminate. You acknowledge that our election to grant
such an extended cure period shall not operate as a waiver of any of our rights
hereunder and that, in consideration for and at the time of such an extension,
you and all guarantors of your obligations to us will execute a General Release.
16.5. OUR RIGHT TO DISCONTINUE PRODUCTS/SERVICES TO YOU AFTER
ISSUANCE OF NOTICE OF DEFAULT. If we issue a notice of default, we and each
Rubio's Affiliate will have the right, in addition to our other rights and
remedies, to discontinue selling and/or providing any goods and/or services to
you until you have cured all defaults and we and/or Rubio's Affiliates may cease
providing such items to you or require you to pay cash on delivery by certified
check until such time as you correct this problem.
17. OBLIGATIONS ON TERMINATION OR EXPIRATION
Upon termination or expiration of this Agreement:
17.1. Since your ownership of the Franchise is controlled by the
provisions of this Agreement, you will have no equity or other continuing
interest in the Franchise, any goodwill associated with it or otherwise, or any
right to compensation, return of amounts paid or otherwise.
17.2. You immediately shall pay us and each Rubio's Affiliates all
sums due and owing us and each Rubio's Affiliate pursuant to this Agreement.
17.3. You promptly shall return to us the Manuals, any copies of the
Manuals and all other materials and information furnished by us or a Rubio's
Affiliate and you promptly shall return to us, in good condition and repair
excepting normal wear and tear, all computer software, disks, tapes and other
magnetic storage media.
17.4. You and all persons subject to the covenants contained in
Section 15 shall continue to abide by those covenants and shall not, directly or
indirectly, take any action that violates those covenants. If the noncompetition
covenant contained in Section 15.2. is unenforceable or is reduced to a level
which we, in the exercise of our reasonable business judgment, find
unacceptable, we may, in the alternative, require you to pay a fee (either on a
present value basis or over time, as we select) of 1/2 of the royalty fees which
would be payable if the business in question was a franchised Rubio's Store, for
a period of 24 months after termination, expiration or repurchase, such amount
having been jointly selected by you and us as fair and appropriate damages and
in consideration of: (A) the difficulty of accurately predicting actual damages;
(B) the fact you will inevitably benefit in the operation of such business from
your training and experience as a Rubio's franchisee; (C) the possible impact on
the expansion and operation of the System, including the expense and difficulty
of a sale of a franchise in the area of operation of such a business; and (D)
you not having any rights, nor we having any obligations, under this Agreement
or otherwise during such period.
17.5. You immediately shall discontinue all use of the Marks in
connection with your Rubio's Store and of any and all items bearing the Marks;
remove the Marks from your Rubio's Store and from clothing, signs, materials,
motor vehicles and other items owned or used by you in the operation of your
Rubio's Store; cancel all advertising for your Rubio's Store that contains the
Marks (including telephone directory listings); and take such action as may be
necessary to cancel any filings or registrations for your Rubio's Store that
contain any Marks.
17.6. You promptly shall make such alterations and modifications to
the Premises as may be necessary to clearly distinguish to the public the
Premises from its former appearance and also make those specific additional
changes as us may request for that purpose. If you fail to promptly make these
alterations and modifications, us shall
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have the right (at your expense, to be paid upon your receipt of an invoice from
us) to do so without being guilty of trespass or other tort.
17.7. You shall furnish us, within 30 days after the effective date
of termination or expiration, evidence (certified to be true, complete, accurate
and correct by your chief executive officer) reasonably satisfactory to us of
your compliance with Sections 17.2. through 17.6.
17.8. You shall not, except with respect to a restaurant franchised
by us or a Rubio's Affiliate which is then open and operating pursuant to an
effective franchise agreement: (A) operate or do business under any name or in
any manner that might tend to give the public the impression that you are
connected in any way with us or Rubio's Affiliates or have any right to use the
System or the Marks; (B) make use or avail yourself of any of the materials or
information furnished or disclosed by us or a Rubio's Affiliate under this
Agreement or disclose or reveal any such materials or information or any portion
thereof to anyone else; or (C) assist anyone not licensed by us or Rubio's
Affiliates to construct or equip a foodservice outlet substantially similar to a
Rubio's Store.
18. OPTION TO PURCHASE
18.1. Upon the expiration or termination of this Agreement for any
reason, we shall give written notice to you, within 30 days after the effective
date of termination or expiration, if we intend to exercise our option to
purchase from you some or all of the assets used in your Rubio's Store
("Assets"). As used in this Section 18, "Assets" shall mean and include, without
limitation, leasehold improvements, equipment, vehicles, furnishings, fixtures,
signs and inventory (non-perishable products, materials and supplies) used in
your Rubio's Store, and the real estate fee simple or the lease or sublease for
the Premises. We shall have the unrestricted right to assign this option to
purchase the Assets. We or our assignee shall be entitled to all customary
representations and warranties that the Assets are free and clear (or, if not,
accurate and complete disclosure) as to: (A) ownership, condition and title; (B)
liens and encumbrances; (C) environmental and hazardous substances; and (D)
validity of contracts and liabilities inuring to us or affecting the Assets,
whether contingent or otherwise.
18.2. The purchase price for the Assets ("Purchase Price") shall be
their fair market value, (or, for leased assets, the fair market value of your
lease) determined as of the effective date of purchase in a manner that accounts
for reasonable depreciation and condition of the Assets; provided, however, that
the Purchase Price shall take into account the termination of this Agreement.
Further, the Purchase Price for the Assets shall not contain any factor or
increment for any trademark, service mark or other commercial symbol used in
connection with the operation of your Rubio's Store nor any goodwill or "going
concern" value for your Rubio's Store. We may exclude from the Assets purchased
in accordance with this Section any equipment, vehicles, furnishings, fixtures,
signs, and inventory that are not approved as meeting then-current standards for
a Rubio's Store or for which you cannot deliver a Bill of Sale in a form
satisfactory to us.
18.3. If we and you are unable to agree on the fair market value of
the Assets within 30 days after your receipt of our notice of intent to exercise
our option to purchase the Assets, the fair market value shall be determined by
2 professionally certified appraisers, you selecting one and we selecting one.
If the valuations set by the two appraisers differ by more than 10%, the 2
appraisers shall select a 3rd professionally certified appraiser who also shall
appraise the fair market value of the Assets. The average value set by the
appraisers (whether 2 or 3 appraisers as the case may be) shall be conclusive
and shall be the Purchase Price.
18.4. The appraisers shall be given full access to your Rubio's
Store, the Premises and your books and records during customary business hours
to conduct the appraisal and shall value the leasehold improvements, equipment,
furnishings, fixtures, signs and inventory in accordance with the standards of
this Section 18. The appraisers' fees and costs shall be borne equally by us and
you.
18.5. Within 10 days after the Purchase Price has been determined,
we may exercise our option to purchase the Assets by so notifying you. The
Purchase Price shall be paid in cash or cash equivalents at the closing of the
purchase ("Closing"), which shall take place no later than 60 days after our
receipt of the valuations set by the appraisers. At the Closing, you shall
deliver instruments transferring to us or our assignee: (A) good and
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merchantable title to the Assets purchased, free and clear of all liens and
encumbrances (other than liens and security interests acceptable to us or our
assignee), with all sales and other transfer taxes paid by you; (B) all licenses
and permits for your Rubio's Store that may be assigned or transferred, with
appropriate consents, if required; and (C) the lease or sublease for the
Premises, with appropriate consents, if required. If you cannot deliver clear
title to all of the purchased Assets as indicated in this Section, or if there
are other unresolved issues, the Closing shall be accomplished through an
escrow.
18.6. Prior to Closing, you and we shall comply with all applicable
legal requirements, including the bulk sales provisions of the Uniform
Commercial Code of the state in which your Rubio's Store is located and the bulk
sales provisions of any applicable tax laws and regulations. You shall, prior to
or simultaneously with the Closing, pay all tax liabilities incurred in
connection with the operation of your Rubio's Store prior to Closing. We shall
have the right to set off against and reduce the Purchase Price by any and all
amounts owed by you to us, and the amount of any encumbrances or liens against
the Assets or any obligations assumed by us.
18.7. If we or our assignee exercises the option to purchase,
pending the Closing, we shall have the right to appoint a manager to operate
your Rubio's Store, effective upon your receipt of the notice from us pursuant
to Section 18.5. Alternatively, we may require you to close your Rubio's Store
during such time period without removing any Assets from the Rubio's Store. You
shall maintain in force all insurance policies required under this Agreement
until the Closing. If the Premises are leased, we agree to use reasonable
efforts to effect a termination of the existing lease for the Premises. If the
lease for the Premises is assigned to us or we sublease the Premises from you,
we will indemnify and hold you harmless from any ongoing liability under the
lease from the date we assume possession of the Premises, and you will indemnify
and hold us harmless from any liability under the lease prior to and including
that date. If you own the Premises, we, at our option, will either purchase the
fee simple interest or, upon purchase of the other Assets, enter into a standard
lease with you on terms comparable to those for which similar commercial
properties in the area are then being leased. The initial term of this lease
with you shall be at least 10 years with 4 options to renew of 5 years each and
the rent shall be the fair market rental value of the Premises. If you and we
cannot agree on the fair market rental value of the Premises, then the rental
value shall be determined by appraisers (selected in the manner described in
Section 18.3.).
19. GENERAL MATTERS
19.1. NO WAIVER. Our failure to exercise any power reserved to us,
or our failure to insist upon compliance by you (or anyone else) with any
obligation or condition in this Agreement, any other agreement, any Manuals or
otherwise, and no custom or practice of the parties at variance with the terms
of this Agreement, shall constitute a waiver of our right to demand exact
compliance with the terms of this Agreement, any other agreement, any Manuals or
otherwise. Waiver by us of any of our rights in connection with any particular
default by you (or anyone else) shall not affect or impair our rights with
respect to any subsequent or other default of the same or a different nature,
nor shall any delay, forbearance or omission by us to exercise any power or
rights arising out of any breach or default by you (or anyone else) of any of
the terms, provisions or covenants of this Agreement, any other agreement, any
Manuals or otherwise, affect or impair our rights, nor shall such constitute a
waiver by us of any rights hereunder or the right to declare any subsequent
breach or default.
Acceptance by us of any payments due to us, and/or our failure to
insist on compliance with any required signing, payment and/or opening or other
date, shall not be deemed to be a waiver by us of that, or any preceding or
other, breach by you of any terms, covenants or conditions of this Agreement or
otherwise. Our failure to give notice of default or to pursue any remedy for a
breach of this or any other agreement shall not affect our right to give notice
of termination upon subsequent defaults or to pursue any remedy upon subsequent
similar or other breaches, under this or any other agreement or in the case of
any other area developer or franchisee.
19.2. CONSENTS. Whenever this Agreement requires our prior approval
or consent, you shall make a timely written request to us; and any approval or
consent received, in order to be effective and binding upon us, must be obtained
in writing and be signed by one of our authorized officers. We make no
warranties or guarantees upon which you may rely by providing any waiver,
approval, consent or suggestion to you in connection with this
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Agreement, and we assume no liability or obligation to you in that regard, or by
reason of any neglect, delay, or denial of any request therefor. We shall not,
by virtue of any approvals, advice or services provided to you, assume
responsibility or liability to you or to any third parties to which we would not
otherwise by subject.
19.3. RELATIONSHIP OF THE PARTIES. The relationship between us and
you is that of franchisor and franchisee only, the parties have dealt with each
other at arm's length and as businesspersons with equivalent bargaining power
and no other relationship is intended or created hereby. You are in no sense an
agent of ours and all obligations to you are those of Rubio's Restaurants, Inc.
only, no other entity or individual having any obligations to you under this
Agreement or otherwise. Neither you nor any person employed by you shall be, or
shall at any time represent or hold itself out as being, our employee, partner,
joint venturer, subsidiary, subfranchisor, agent or affiliate. You will be an
independent contractor and are in no way authorized to make any contract,
agreement, warranty or representation on behalf of us, or to create any
obligation, express or implied, on behalf of us. You are and shall remain an
independent business entity and nothing in this Agreement or otherwise shall be
construed to create an agency or fiduciary or trust relationship, a partnership
or joint venture, between you and us or any other entity or individual (neither
you nor we intending to create, and expressly disavowing, any such or similar
relationships) and there does not, and will not, exist any fiduciary, trust or
similar special relationship between you and us. Neither you nor we shall act as
the agent of the other, and neither you nor we shall guarantee or become in any
way responsible for the obligations, debts or expenses of the other.
We are not entitled to share in your profits nor obligated to share in
your losses or liabilities, nor do we have any ownership or equity interest in
you nor can we regulate the hiring or firing of your employees (other than as
specified in this Agreement or any Manuals issued by us) or other persons
performing functions on your behalf nor regulate working conditions or determine
whom you shall accept as customers, except to the extent necessary to protect
our Marks and the goodwill associated therewith. The conduct of your business
shall be determined by your own independent reasonable business judgment and
discretion, subject only to the provisions of this Agreement and the Manuals.
Each of the rights and benefits of this Agreement which apply to us
shall also apply to all Rubio's Affiliates. The restrictions, obligations and
requirements of this Agreement applying to you will also apply to each Affiliate
of yours, together with each of your owners (if you are a business entity). Any
default by any Affiliate of yours in any obligation to us may be regarded as a
default by you under this Agreement and you will not use any Affiliate or other
means to avoid your obligations to us. In any case, any rights held by us under
this Agreement or otherwise may be exercised, and will benefit, each Rubio's
Affiliate and any other persons/entities we designate.
19.4. TAXES. We'll have no liability for any sales, VAT, GST, use,
service, occupation, excise, gross receipts, income, property or other taxes,
whether levied on you, your Rubio's Store or your property, or on us, in
connection with the sales made and/or business conducted by you (except for any
taxes we are required by law to collect from you with respect to purchases from
us.) Payment of all taxes will be your sole responsibility.
19.5. INDEMNIFICATION. You're the only one responsible for any
damage, loss or other claims arising out of, or related in any way to, any of
your acts, errors or omissions, whether related to you, your employees, agents
or representatives, your operations or ownership of your Rubio's Store or
otherwise arising. You will indemnify and hold harmless us and all Rubio's
Affiliates from all fines, suits, proceedings, claims, demands, actions, loss,
damages, costs, fees (including attorneys' fees and related expenses) and/or any
other expense, obligation and/or liability of any kind or nature (including, but
not limited to, claims of negligence), however arising, growing out of or
otherwise connected with and/or related to any act, error and/or omission of
yours (including, but not limited to, your ownership and/or operation of your
Rubio's Store, any act or omission of your employees and/or agents, and/or any
Transfer of any interest in this Agreement, your Rubio's Store, the Franchise,
Franchisee or otherwise.) We'll have the right to control all litigation, and
defend and/or settle any claim, against and/or including us and/or the Rubio's
Affiliates or affecting our and/or their interests, in such manner as we deem
appropriate in our reasonable discretion, in each case without affecting our
rights under such indemnity.
With respect to anything (goods, services or otherwise) provided,
approved or otherwise by us and/or any
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person/company affiliated in any way with and/or referred/"approved" by us,
other than specific written warranties expressly provided by us in connection
with such items, such items are provided without any warranties, express or
implied, the warranties of merchantability and fitness for a particular purpose
being expressly disclaimed, nor do there exist any express or implied warranties
on the part of us or any Rubio's Affiliate as to the design, condition,
capacity, performance or any other aspect of such items or their material or
workmanship. Any warranty or other responsibility with respect to any Designated
Equipment, Products and/or Services or otherwise will be those of the
manufacturers or service providers only.
19.6. DISCLOSURE. We may, in the exercise of our reasonable business
judgment, disclose, whether in offering circulars or otherwise, any information
relating to your ownership and operation of your Rubio's Store, including (but
not limited to) your name, any address and/or phone number, revenues, expenses,
results of operations or other information but, wherever practicable and legal,
we will make no public disclosures of revenues of your specific Rubio's Store
such that a recipient will be able to match such store-specific revenues with
your ownership of your specific Rubio's Store.
19.7. CAPTIONS. Any titles or captions contained in this Agreement
are for convenience of reference only and shall not be deemed part of the
context of this Agreement.
19.8. SEVERABILITY. If any provision of this Agreement is deemed to
be invalid or unenforceable for any reason and to any extent, the remainder of
this Agreement shall not be affected thereby, but rather shall be enforced to
the greatest extent permitted by law. In the event of any inconsistencies and/or
conflicts between this Agreement and any other agreement and/or document, the
agreement and/or document which gives us (and/or Rubio's Affiliates) the
greatest rights and/or benefits shall control.
19.9. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties with respect to its subject matter and
supersedes any prior understandings and agreements between you and us respecting
its subject matter. You acknowledge that you are a sophisticated businessperson
experienced in franchising, foodservice and/or other businesses, have had the
benefit of advice by your own independent legal counsel (which is strongly
recommended by us), have conducted an independent investigation of the Rubio's
Franchise and business, and recognize that the business venture contemplated by
this Agreement involves speculative business risks and any results will be
primarily dependent upon your ability as an independent businessperson. We
expressly disclaim the making of, and you acknowledge that you have not
received, any representation, promise, warranty or guarantee, express or
implied, as to the potential volume, profits, success or otherwise of any
business venture contemplated by this Agreement. THERE ARE NO REPRESENTATIONS,
WARRANTIES, EARNINGS, REVENUE OR OTHER CLAIMS, AGREEMENTS, PROMISES,
ARRANGEMENTS OR UNDERSTANDINGS, ORAL OR WRITTEN, BETWEEN OR AMONG THE PARTIES
HERETO RELATING TO THE WITHIN SUBJECT MATTER WHICH ARE NOT FULLY EXPRESSED
HEREIN OR WHICH HAVE BEEN RELIED UPON BY THE PARTIES.
19.10. AMENDMENTS. Any modification or change in or to this Agreement
must be in writing and signed by each of the parties thereto and this Agreement
and any modification or change thereto must be approved in a writing signed by a
corporate officer of ours before this Agreement or any modification or change
can take effect or bind us.
19.11. INSOLVENCY. No corporation, firm or person other than you
shall have or acquire any rights awarded to you hereunder by virtue of any
bankruptcy, insolvency or assignment for the benefit of creditors or
reorganization proceedings, or any receivership or other legal process, either
under attachment, execution or otherwise, or in any manner whatsoever growing
out of any proceeding or suit in law or in equity, without our prior written
consent.
19.12. REMEDIES. All rights and remedies of each party will be
cumulative and not alternative, in addition to and not exclusive of any other
rights or remedies which are provided for herein or which may be available at
law or in equity in case of any breach, failure or default or threatened breach,
failure or default of any term, provision or condition of this Agreement or
otherwise.
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20. NOTICES AND PAYMENTS
All notices and reports permitted or required to be delivered by the
provisions of this Agreement shall be in writing. All notices or reports to you
or any guarantors of your obligations to us may be addressed to your Authorized
Agent at the notice address set forth in Exhibit 1 and all notices or reports to
us shall be addressed to us at Rubio's Restaurants, Inc., 1902 Wright Place,
Suite 300, Carlsbad, California, 92008 (or our then-current headquarters), to
the attention of the President. Any party may designate a new address for
notices by giving written notice of the new address pursuant to this Section.
Notices shall be effective upon receipt (or first refusal) and may be: (A)
delivered personally; (B) transmitted by facsimile or electronic mail with
electronic confirmation of receipt; (C) mailed in the United States mail,
postage prepaid, certified mail, return receipt requested; or (D) sent via
commercial courier service. All payments required by this Agreement will be
directed to us at our address as specified above. Any required payment or report
not actually received by us during regular business hours on the date due will
be deemed delinquent. Notice to the Authorized Agent shall be deemed effective
as to you, all persons with an ownership interest in you and all guarantors of
your obligations to us.
21. DISPUTE RESOLUTION
21.1. ARBITRATION. Except as provided in Section 21.2., any monetary
claim arising out of or relating to this Agreement, or any breach of this
Agreement, or any controversies, disputes or claims arising between us and you,
including controversies, disputes or claims regarding: (A) any provision of this
Agreement or any other agreement between the parties related to this Agreement;
(B) the relationship of the parties; (C) the validity of this Agreement or any
other agreement between the parties related to this Agreement; or (D) any
specification, standard or operating procedure relating to the establishment or
operation of your Rubio's Store must be submitted to final and binding
arbitration before the American Arbitration Association ("AAA") as the sole and
exclusive remedy.
The arbitration will be governed by the AAA commercial arbitration
rules in effect on the date the demand for arbitration is filed and shall be
conducted before one neutral arbitrator selected in accordance with the AAA
commercial arbitration rules from the AAA's national or regional arbitrator
lists. The arbitration shall be administered by the AAA office nearest to our
principal offices at the time the demand for arbitration is filed and all
hearings shall take place in the county in which our principal offices are
located at the time the demand for arbitration is filed. Any demand for
arbitration shall specify the amount of damages sought. The arbitrator shall
have no authority to amend or modify the provisions of this Agreement and any
settlement offers made by either party may not be considered by the arbitrator.
The arbitrator may award or otherwise provide for temporary restraining orders,
preliminary injunctions, injunctions, attachments, claim and delivery
proceedings, temporary protective orders, receiverships and other pre-judgment,
equitable and/or interim relief as appropriate pending final resolution by
binding arbitration of a claim, as well as in connection with any such final
resolution, and may issue summary orders disposing of all or part of a claim at
any point. The award and decision of the arbitrator shall be conclusive and
binding upon all parties thereto and judgment upon the award may be entered in
any court of competent jurisdiction, and we and you waive any right to contest
the validity or enforceability of the award.
We and you agree that each party will provide discovery to the other in
the form of document production and depositions in accordance with the Federal
Rules of Civil Procedure. We and you also will obtain the agreement of the
arbitrator that: (1) the arbitrator shall provide a written ruling, stating in
separate sections the findings of fact and conclusions of law on which his
ruling is based; and (2) the ruling is due not later then 60 days after the
final hearing. This arbitration provision will be deemed to be self-executing
and if you fail to appear at any properly noticed arbitration proceeding, award
may be entered against you despite your failure to appear.
21.2. RESERVATIONS. Notwithstanding anything to the contrary
contained in Section 21.1., we may file suit with respect to claims or issues
relating primarily to: (A) the validity, or your use, of any of the Marks or our
other intellectual property; (B) our rights to obtain possession of any real
and/or personal property (including any action in unlawful detailer, ejectment
or otherwise); and (C) our rights to obtain a writ of attachment and/or other
pre-judgment remedies. In addition, either we or you may file suit for the entry
of temporary or preliminary injunctive relief, restraining orders and orders of
specific performance, including, without limitation, injunctive relief
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pertaining to your use of the Marks and/or the System. You and we agree that any
judicial actions that either you or we may file: (1) shall, if filed by you, be
filed only in the federal or state court having jurisdiction where our principal
offices are located at the time suit is filed; and (2) may, if filed by us, be
filed in the federal or state court located in the jurisdiction where our
principal offices are located at the time suit is filed or in the jurisdiction
where you reside or do business or where your Rubio's Store is or was located or
where the claim arose.
21.3. PRIOR NOTICE OF CLAIMS BY YOU. Prior to you taking any legal
or other action against us and/or any Rubio's Affiliate, whether for
arbitration, damages, injunctive, equitable or other relief (including but not
limited to rescission) and whether by way of claim, counterclaim,
cross-complaint, raised as an affirmative defense, offset or otherwise, you will
first give us 60 days' prior written notice and opportunity to cure such alleged
act or omission (or, if the alleged act or omission cannot reasonably be cured
within that 60 day period, and we are diligently continuing efforts to attempt
to cure such alleged act or omission, such additional time as reasonably
necessary); provided that any dispute regarding our withholding consent with
respect to a proposed Transfer by you may be immediately submitted to
arbitration as provided in Section 21.1.
Since we and you share a mutual interest in your possible success and
each believe that it's important that any possible business problems be
addressed as soon as possible, we and you agree that if you have any complaint
regarding our failing to perform any obligation to you (including, but not
limited to, training, marketing, operational support, representations by us or
otherwise) you will promptly advise us in writing of such problem within 90 days
of the problem arising, so that we can have an opportunity to correct the
problem. If you fail to so advise us, then, notwithstanding any provision in
this Agreement or otherwise, you'll be forever precluded from taking any legal
or other action against us and/or any of the Rubio's Affiliates, whether for
arbitration, damages, injunctive, equitable or other relief (including but not
limited to rescission) and whether by way of claim, counterclaim,
cross-complaint, raised as an affirmative defense, offset or otherwise, with
regard to the problem.
21.4. PERIODS IN WHICH TO MAKE CLAIMS.
A. No arbitration, action or suit (whether by way of
claim, counterclaim, cross-complaint, raised as an affirmative defense, offset
or otherwise) by either we or you may be filed against the other (nor by you
against any Rubio's Affiliate), whether for damages, rescission, injunctive or
any other legal and/or equitable relief, in respect of any alleged breach of
this Agreement, or any other claim of any type, unless such party will have
commenced such arbitration, action or suit before the expiration of the earlier
of: (1) one year after the date on which the state of facts giving rise to the
cause of action comes to the attention of, or should reasonably have come to the
attention of, such party; or (2) one year after the initial occurrence of any
act or omission giving rise to the cause of action, whenever discovered.
Notwithstanding the foregoing limitations, where any federal, state or
provincial law provides for a shorter limitations period than above described,
whether on notice or otherwise, such shorter period will govern.
B. The foregoing limitations may, where brought into
effect by our failure to commence an action within the time periods specified,
operate to exclude our right to sue for damages but will in no case, even on
expiration or lapse of the periods specified or referenced above, operate to
prevent us from: (1) terminating your rights and our obligations under this
Agreement as provided herein and/or under applicable law nor prevent us from
obtaining any appropriate court judgment, order or otherwise which enforces
and/or is otherwise consistent with such termination; or (2) obtaining and/or
enforcing a temporary restraining order, preliminary injunction, permanent
injunction or other equitable relief (whether by an arbitrator or a court) with
respect to any operational non-compliance by you, irrespective of when such
operational non-compliance occurred or came to our attention, in each case you
agree that such relief is appropriate so that we can, among other things,
protect the goodwill inherent in the Marks and the related investments by us and
all other Rubio's franchisees.
C. The limitations set forth in this Section 21.4. will
not apply to our claims arising from or related to: (1) indemnification by you;
(2) your confidentiality, noncompetition or other exclusive relationship
obligations; and/or (3) your unauthorized use of the Marks.
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21.5. WAIVERS. We and you waive, to the fullest extent permitted by
law, any right or claim of any consequential, punitive or exemplary damages
against each other and agree that, in the event of a dispute between us, we and
you shall be limited to the recovery of actual damages sustained by either we or
you. We and you waive, to the fullest extent permitted by law, the right to
bring, or be a class member in, any class action proceeding (whether in
arbitration or in a judicial proceeding) and the right to trial by jury.
21.6. CHOICE OF LAWS. Except with respect to the applicability of
the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq. and the effect of federal
preemption of state law by that Act and except to the extent governed by the
United States Trademark Act and other federal laws, or as provided elsewhere in
this Agreement, you and we agree that this Agreement (including any claims,
counterclaims or otherwise by you) and all other matters concerning you and us
(and/or you and any Rubio's Affiliate), including your and our/their respective
rights and obligations, will be governed by, and construed and enforced in
accordance with, the laws of the state of Delaware, without regard to the laws
of such state relating to conflicts of laws or choice of law; except that the
provisions of any law of that state regarding franchises (including, without
limitation, registration, disclosure, or relationship, and the regulations
thereunder) shall not apply unless such state's jurisdictional, definitional and
other requirements are met independently of, and without reference to, this
Section.
21.7. SURVIVAL AND CONSTRUCTION. Each provision of this Section 21
will be deemed to be self-executing and continue in full force and effect
subsequent to and notwithstanding the expiration, termination, setting aside,
cancellation, rescission, unenforceability or otherwise of this Agreement (or
any part of it) for any reason, will survive and will govern any claim for
rescission or otherwise. Your noncompetition and confidentiality obligations as
set forth in this Agreement or elsewhere also shall survive the expiration
and/or termination of this Agreement according to their terms, and your
indemnity/hold harmless obligation as set forth in this Agreement or elsewhere
also shall forever survive the expiration and/or termination of this Agreement.
To the maximum extent permitted by law, you waive the effect of any statute of
limitations which would, by lapse of time, limit your duties to observe such
obligations and/or so defend and/or indemnify and/or hold harmless.
Each provision of this Agreement (including but not limited to those
relating to mandatory arbitration, waiver of jury trial, limitation of damages,
prior notice of claims, shortened periods in which to bring claims, costs and
attorneys' fees, or otherwise) will be construed as independent of, and
severable from, every other provision and if any provisions are deemed to be
unenforceable in any way, such provisions will be modified or interpreted to the
minimum extent necessary to have them comply with the law (including making such
provision mutual in effect) and the remaining provisions of this Agreement will
remain in full force and effect, the parties agreeing that the unenforceability
of any provisions of this Section 21 will not affect the remainder of this
Section 21, notwithstanding any statutory or decisional law to the contrary.
The rights and obligations of this Agreement run directly between you
and us, are not intended to create any third-party beneficiary or similar rights
or obligations (except for benefits to Rubio's Affiliates) and we do not have
any duty to take any legal or other actions against, or with respect to, any
other Rubio's franchisees in connection with any alleged violation of their
obligations.
21.8. ATTORNEYS' FEES.
A. If either party is required to enforce this Agreement
in a judicial or arbitration proceeding, the party prevailing in that proceeding
shall be entitled to reimbursement of costs and expenses, including, but not
limited to, reasonable accountants', attorneys', attorneys' assistants' and
expert witness fees, the cost of investigation and proof of facts, court costs,
other litigation expenses, and travel and living expenses, whether incurred
prior to, in preparation for, or in contemplation of the filing of, any
proceeding. The prevailing party shall be the party that prevails on its claims
regardless of whether judgment is entered in its favor. If there are multiple
claims, the costs and expenses shall be reimbursed accordingly. In any judicial
proceeding, the amount of these costs and expenses will be determined by the
court and not by a jury.
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B. If we are required to utilize legal counsel
(including in-house counsel employed by us or any Rubio's Affiliate) in
connection with any failure by you to comply with this Agreement, you shall
reimburse us for any of the above-listed costs and expenses incurred by us.
22. ACKNOWLEDGMENTS
You and each guarantor of your obligations to us expressly acknowledge
that:
22.1. You have entered into this agreement as a result of your own
independent investigation, after consultation with an attorney or other
advisor(s) of your choice, and not as a result of any representations of Rubio's
Restaurants, Inc., its agents, officers or employees or anyone else, except as
expressly set forth herein.
22.2. The possible success of your Rubio's Store is speculative and
will be largely dependent upon your abilities and efforts and the abilities and
efforts of the guarantors of your obligations, and neither Rubio's Restaurants,
Inc. nor anyone else has made any representation or guarantee to you or any
guarantor that your Rubio's Store will be successful or profitable.
22.3. Neither you nor any guarantor of your obligations has received
or relied on (nor have we or anyone else provided) any oral or written: sales,
income or other projections of any kind or nature or any statements,
representations, data, charts, tables, spreadsheets or mathematical calculations
or otherwise which stated or suggested any level or range of actual or potential
sales, costs, income, expenses, profits, cash flow, tax effects or otherwise
with respect to, and neither we nor anyone else has made, nor have you or any
guarantor relied on, any promises, representations or warranties as to any
profits or otherwise you may realize in the operation of, a Rubio's Store, nor
have you or any guarantor received or relied on any representations regarding
any working capital or other funds necessary to reach any "break-even" or any
other financial level. We can't reliably predict, forecast or project future
performance, revenues, profits or otherwise of any Rubio's Store, even including
one owned and/or operated by us, due to the large number of factors outside our
control, and we certainly can't reliably predict what your results might be. We
are unable, and do not attempt, to predict, forecast or project future
performance, revenues, profits or otherwise of any Rubio's Stores. If any such
information, promises, representations and/or warranties has been provided to
you or any guarantor, they haven't been authorized, they should not be relied
on, we will not be bound by them, and, if you or any guarantor does rely on such
information, promises, representations and/or warranties, you and each guarantor
do so at their own risk.
22.4. A complete ready-to-sign copy of this Agreement as signed by
you was received by you and each guarantor of your obligations at least 5
business days prior to the earlier of its execution by you and each guarantor or
payment of any amounts, and a complete copy of Rubio's Restaurants, Inc.'s
franchise offering circular, together with all exhibits, was received at least
10 business days prior to the earlier of you and each guarantor signing this
agreement or paying any amounts to us.
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IN WITNESS WHEREOF, the undersigned have executed this Agreement to be
effective the day and year first above written.
RUBIO'S:
ATTEST: RUBIO'S RESTAURANTS, INC.
By: By
--------------------------------- ----------------------------
Title: Title
------------------------------ -------------------------
Date:
-------------------------
ATTEST/WITNESS: FRANCHISEE:
------------------------------
------------------------------------ ------------------------------
------------------------------------ ------------------------------
------------------------------------ ------------------------------
------------------------------------ ------------------------------
Date:
-------------------------
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GUARANTEE AND ASSUMPTION OF FRANCHISEE'S OBLIGATIONS
In consideration of, and as an inducement to, the execution of the
Rubio's Restaurants Franchise Agreement dated as of _________________
("Agreement") by Rubio's Restaurants, Inc. ("Rubio's"), entered into with
___________________________________________________________ ("Franchisee"), the
undersigned ("Guarantors"), each of whom is a member of Franchisee's Control
Group, a holder of a legal or beneficial interest in Franchisee of 10% or more
("10% Owner") or an executive officer of Franchisee, hereby personally and
unconditionally: (1) guarantee to Rubio's and its successors and assigns, for
the term of the Agreement and thereafter as provided in the Agreement, that
Franchisee shall punctually pay and perform each and every undertaking,
agreement and covenant set forth in the Agreement; (2) agree personally to be
bound by each and every provision in the Agreement, including, without
limitation, the provisions of Sections 15 and 19.5.; and (3) agree personally to
be liable for the breach of each and every provision in this Agreement,
including, without limitation, Section 15.
Each of the undersigned waives: (A) acceptance and notice of acceptance
by Rubio's of the foregoing undertakings; (B) notice of demand for payment of
any indebtedness or nonperformance of any obligations hereby guaranteed; (C)
protest and notice of default to any party with respect to the indebtedness or
nonperformance of any obligations hereby guaranteed; (D) any right he may have
to require that an action be brought against Franchisee or any other person as a
condition of liability; (E) all rights to payments and claims for reimbursement
or subrogation which any of the undersigned may have against Franchisee arising
as a result of the execution of and performance under this Guarantee by the
undersigned; (F) any law or statute which requires that Rubio's make demand
upon, assert claims against or collect from Franchisee or any others, foreclose
any security interest, sell collateral, exhaust any remedies or take any other
action against Franchisee or any others prior to making any demand upon,
collecting from or taking any action against the undersigned with respect to
this Guarantee; (G) any and all other notices and legal or equitable defenses to
which he may be entitled; and (H) any and all right to have any legal action
under this Guarantee decided by a jury.
Each of the undersigned consents and agrees that: (I) his direct and
immediate liability under this Guarantee shall be joint and several; (II) he
shall render any payment or performance required under the Agreement upon demand
if Franchisee fails or refuses punctually to do so; (III) such liability shall
not be contingent or conditioned upon pursuit by Rubio's of any remedies against
Franchisee or any other person; (iv) such liability shall not be diminished,
relieved or otherwise affected by any amendment of the Agreement, any extension
of time, credit or other indulgence which Rubio's may from time to time grant to
Franchisee or to any other person including, without limitation, the acceptance
of any partial payment or performance or the compromise or release of any
claims, none of which shall in any way modify or amend this Guarantee, which
shall be continuing and irrevocable during the term of the Agreement and for so
long thereafter as there are monies or obligations owing from Franchisee to
Rubio's or its affiliates under the Agreement; and (V) monies received from any
source by Rubio's for application toward payment of the obligations under the
Agreement and under this Guarantee may be applied in any manner or order deemed
appropriate by Rubio's. In addition, if any of the undersigned ceases to be a
member of the Control Group, a 10% Owner or an executive officer of Franchisee
prior to termination or expiration of the Agreement, that person agrees that his
obligations under this Guarantee shall continue to remain in force and effect
unless Rubio's in its sole discretion, in writing, releases that person from
this Guarantee. Notwithstanding the provisions of the previous sentence, unless
prohibited by applicable law, the obligations contained in Section 15.2. shall
remain in force and effect for a period of 2 years after any such release by
Rubio's. A release by Rubio's of any of the undersigned shall not affect the
obligations of any other Guarantor.
If Rubio's is required to enforce this Guarantee in a judicial or
arbitration proceeding, the prevailing party in such proceeding shall be
entitled to reimbursement of its costs and expenses, including, but not limited
to, reasonable accountants', attorneys', attorneys' assistants' and expert
witness fees, cost of investigation and proof of facts, court costs, other
litigation expenses and travel and living expenses, whether incurred prior to,
in preparation for or in contemplation of the filing of any such proceeding. The
prevailing party shall be the party that prevails on its claims regardless of
whether judgment is entered in its favor. If there are multiple claims, the
costs and expenses shall be reimbursed accordingly. In any judicial proceeding,
these costs and expenses shall be determined by the court and not by a jury.
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If Rubio's is required to utilize legal counsel (including in-house
counsel employed by Rubio's or any Rubio's Affiliate) in connection with any
failure by the undersigned to comply with this Guarantee, the undersigned shall
reimburse Rubio's for any of the above-listed costs and expenses incurred by it.
If any of the following events occur, a default ("Default") under this
Guarantee shall exist: (a) failure of timely payment or performance of the
obligations under this Guarantee; (B) breach of any agreement or representation
contained or referred to in this Guarantee; (C) the death of, appointment of a
guardian for, dissolution of, termination of existence of, loss of good standing
status by, appointment of a receiver for, assignment for the benefit of
creditors of, or the commencement of any insolvency or bankruptcy proceeding by
or against, any of the undersigned; and/or (D) the entry of any monetary
judgment or the assessment against, the filing of any tax lien against, or the
issuance of any writ of garnishment or attachment against any property of or
debts due any of the undersigned. If a Default occurs, the obligations of the
undersigned shall be due immediately and payable without notice.
This Guarantee shall inure to the benefit of and be binding upon the
parties and their respective heirs, legal representatives, successors and
assigns. Rubio's interests in and rights under this Guarantee are freely
assignable, in whole or in part, by Rubio's. Any assignment shall not release
the undersigned from this Guarantee.
Sections 21.1. through 21.7. of the Agreement are incorporated by
reference into this Guarantee and all capitalized terms that are not defined in
this Guarantee shall have the meaning given them in the Agreement.
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IN WITNESS WHEREOF, each of the undersigned has hereunto affixed his
signature, under seal.
GUARANTORS(S):
Date:
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% Ownership Interest in Print Name:
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Franchisee:
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Address:
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Date:
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% Ownership Interest in Print Name:
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Franchisee:
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Address:
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Date:
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% Ownership Interest in Print Name:
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Franchisee:
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Address:
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Date:
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% Ownership Interest in Print Name:
-----------------------
Franchisee:
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Address:
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EXHIBIT 1
1 Premises:
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2 Franchisee's Control Group is comprised of the following:
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3 Franchisee's Authorized Agent:
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4 Franchisee's Existing Restaurant Operations:
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5 Franchisee's Notice Address and Facsimile Number:
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FRANCHISEE TO ACKNOWLEDGE RECEIPT OF THIS EXHIBIT BY INITIALING BELOW:
YOUR INITIALS: __________ / __________
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EXHIBIT 2
CURRENT FORM OF RELEASING LANGUAGE
(SUBJECT TO CHANGE)
RELEASE-GENERAL PROVISIONS. Franchisee(s), jointly and severally,
hereby release and forever discharge us and each and all of the Rubio's
Affiliates (as defined below) of and from any and all causes of action, in law
or in equity, suits, debts, liens, defaults under contracts, leases, agreements
or promises, liabilities, claims, demands, damages, losses, costs or expenses,
of any nature whatsoever, howsoever arising, KNOWN OR UNKNOWN, fixed or
contingent, past or present, that Franchisee(s) (or any of them) now has or may
hereafter have against us or all or any of the Rubio's Affiliates by reason of
any matter, cause or thing whatsoever from the beginning of time to the date
hereof ("Claims"), it being the mutual intention of the parties that this
release be unqualifiedly general in scope and effect and that any Claims against
us or any of the Rubio's Affiliates are hereby forever canceled and forgiven.
FRANCHISEE(S) ACKNOWLEDGE THAT THEY ARE FAMILIAR WITH THE PROVISIONS OF
CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR."
FRANCHISEE(S), BEING AWARE OF THIS CODE SECTION, HEREBY EXPRESSLY WAIVE
ALL OF THEIR RIGHTS THEREUNDER AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW
PRINCIPLES OF SIMILAR EFFECT OF ANY APPLICABLE JURISDICTION, INCLUDING, WITHOUT
LIMITATION, CALIFORNIA.
Franchisee(s) expressly assume the risk of any fact or mistake of fact
of which they may be unaware or that the true facts may be other than any facts
now known or believed to exist by Franchisee(s), and it is Franchisee(s)
intention to forever settle, adjust and compromise any and all present and/or
future disputes with respect to all matters from the beginning of time to the
date of this document finally and forever and without regard to who may or may
not have been correct in their understanding of the facts, law or otherwise. All
releases given by Franchisee(s) are intended to constitute a full, complete,
unconditional and immediate substitution for any and all rights, claims, demands
and causes of action whatsoever which exist, or might have existed, on the date
of this document. Franchisee(s) represent and warrant that they have made such
independent investigation of the facts, law and otherwise pertaining to all
matters discussed, referred to or released in or by this document as
Franchisee(s), in Franchisee(s) independent judgment, believe necessary or
appropriate. Franchisee(s) have not relied on any statement, promise,
representation or otherwise, whether of fact, law or otherwise, or lack of
disclosure of any fact, law or otherwise, by us or any of the Rubio's Affiliates
or anyone else, not expressly set forth herein, in executing this document
and/or the related releases.
NO ASSIGNMENT OR TRANSFER OF INTEREST. Franchisee(s) represent and
warrant that there has been, and there will be, no assignment or other transfer
of any interest in any Claims that Franchisee(s) may have against us or any or
all of the Rubio's Affiliates, all Claims having been fully and finally
extinguished, and Franchisee(s) agree to forever indemnify and hold us and the
Rubio's Affiliates harmless from any liability, claims, demands, damages,
losses, costs, expenses or attorneys' fees incurred by us or any of the Rubio's
Affiliates as a result of any person asserting any voluntary, involuntary or
other assignment or transfer, or any rights or claims under such assignment or
transfer. It is the intention of the parties that this indemnity does not
require payment by us or any of the Rubio's Affiliates as a condition precedent
to recovery against Franchisee(s) under this indemnity.
ATTORNEYS' FEES. If Franchisee(s), or anyone acting for, or on behalf
of, Franchisee(s) or claiming to have received, by assignment or otherwise, any
interest in any of the Claims, commence, join in, or in any manner seek relief
through any suit (or otherwise) arising out of, based upon or relating to any of
the Claims released hereunder or in any manner asserts against us or all or any
of the Rubio's Affiliates any of the Claims released hereunder,
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Franchisee(s) agree to pay all attorneys' fees and other costs incurred by us or
any of the Rubio's Affiliates in defending or otherwise responding to said suit
or assertion directly to us or the Rubio's Affiliates incurring such costs.
"RUBIO'S AFFILIATES." Each and all of the following, whether past,
present and/or future: each and all company(ies) and/or person(s) acting by,
through, under, in concert, affiliated and/or associated in any way with us;
each and all of the partners, shareholders, officers, directors, agents,
attorneys, accountants, and/or employees of us; and/or any of the foregoing, as
well as each and all of the successors and/or assigns of us and/or any of the
foregoing.
DATE OF RELEASES, JOINT AND SEVERAL LIABILITY. The releases granted
hereunder shall be deemed effective as of both the date hereof and the date of
any transaction in which they are to be issued. The liabilities and obligations
of each of Franchisee(s) (and any other person/entity providing releases to us
or the Rubio's Affiliates) shall be joint and several.
FRANCHISEE TO ACKNOWLEDGE RECEIPT OF THIS EXHIBIT BY INITIALING BELOW:
YOUR INITIALS: __________ / __________
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RIDER 1
FRANCHISE AGREEMENT EXPIRATION DATE
TO: ______________________________________________________________
The Rubio's Store located at ___________________________________ first
opened for business on
____________________________________________________________. The initial term
of the Franchise Agreement for the Rubio's Store expires on __________________.
If you desire to remain a franchisee for the First Renewal Term, you must give
us notice no earlier than _______________ (240 days before the expiration date
of the Franchise Agreement) and no later than _______________ (180 days before
the expiration date).
RUBIO'S RESTAURANTS, INC.
By:
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Title:
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Date:
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