<PAGE>
EXHIBIT 10.89
"SBC COFFEE"
DEVELOPMENT AGREEMENT
BETWEEN
CINNABON, INC., SUCCESSOR IN INTEREST TO
SEATTLE'S BEST COFFEE, LLC
AND
__________________________
FOR
__________________________
Contract No:_________________________
No. of Options:______________________
Date:________________________________
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"SBC COFFEE"
DEVELOPMENT AGREEMENT
(INTERNATIONAL)
THIS AGREEMENT (the "Agreement") is made this ____ day of
__________,
20__ , by and between CINNABON, INC.,
SUCCESSOR IN INTEREST TO SEATTLE'S BEST
COFFEE, LLC, a Washington corporation, with
offices at Six Concourse Parkway,
Suite 1700, Atlanta, Georgia, 30328-5352
U.S.A. ("Franchisor" or "SBC") and
________, having its principal address at
________________ ("Developer").
WITNESSETH:
WHEREAS, Seattle's Best Coffee, LLC has developed, in the
United
States, and owns a unique system for
opening and retail operating cafes, kiosks
and custom mobile carts specializing in the
preparation and sale of proprietary,
specialty coffee, beverages, coffee-based
products and other menu items
developed and owned by Franchisor (the "SBC
COFFEE System", "SBC System" or
"System");
WHEREAS, the distinguishing characteristics of Franchisor's SBC
COFFEE
System, in the United States, include,
without limitation, the names "SBC", "SBC
COFFEE" and "SEATTLE'S BEST COFFEE";
specially designed buildings, distinctive
interior and exterior layouts, decor, color
schemes, and furnishings;
confidential formulas and recipes used in
the preparation of SBC Coffee
products; specialized menus; standards and
specifications for equipment; and
equipment layouts, products, operating
procedures, and management programs, all
of which may be changed, improved, and
further developed by Franchisor from time
to time;
WHEREAS, Franchisor identifies the SBC COFFEE System by means
of
certain trade names, service marks,
trademarks, logos, emblems, and indicia of
origin, including, but not limited to, the
marks "SBC", "SBC COFFEE", "SEATTLE'S
BEST COFFEE" and such other trade names,
service marks, trademarks, and trade
dress as are now, or may hereafter, be
designated by Franchisor for use in
connection with the SBC COFFEE System
("Proprietary Marks");
WHEREAS, pursuant to a Master License Agreement and First
Amendment
thereto, both dated July 13, 2003, by and
between Cinnabon Inc., SBC and Seattle
Coffee Company, SBC granted a license to
CBI for the use of the SBC System and
proprietary marks in performing its
obligations under this Agreement;
WHEREAS, Franchisor continues to develop, use, and control the use
of
such Proprietary Marks in order to identify
for the public the source of
services and products marketed thereunder
in the SBC COFFEE System and to
represent the SBC COFFEE System's high
standards of quality, appearance, and
service;
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WHEREAS, Developer wishes to obtain the development rights as
described
herein for the area described on Exhibit A
attached hereto and made a part
hereof (the "Territory"), in order to enter
into franchise agreements with
Franchisor to open and operate retail
cafes, kiosks and custom mobile carts
using the SBC System and the Proprietary
Marks ("Franchised Units" or "SBC
Retail Units") in the Territory;
WHEREAS, Franchisor has applied for registration of, or may
have
registered, certain of the Proprietary
Marks in the Territory; and
WHEREAS, Developer understands the importance of the SBC COFFEE
System
and Franchisor's high and uniform standards
of quality, cleanliness, appearance,
and service, and the necessity of opening
and operating SBC Retail Units in
conformity with the SBC COFFEE System.
NOW, THEREFORE, the parties hereto agree as follows:
I.
DEFINITIONS
1.01
For the purposes of this Agreement, the following terms shall
be deemed to have the definitions set forth
below:
A. "SBC
Cafe" shall mean a free standing or in-line SBC
Retail Unit incorporating the full SBC Cafe design
and trade-dress and offering the full SBC Cafe menu;.
B. "SBC
Kiosk"" shall mean a self contained SBC Retail
Unit, incorporating less than the full SBC Cafe
design and trade-dress, with no dedicated seating for
customers (ie food court, kiosk, etc)
C. "SBC
Mobile Cart" shall mean a self-contained, mobile
cart, occupying a space of less than 20 square
meters, offering a limited number of proprietary SBC
coffee products under the Proprietary Marks and the
SBC System.
II. GRANT
2.01
Franchisor hereby grants the rights to Developer, and
Developer accepts the obligations, pursuant
to the terms and conditions of this
Development Agreement and as long as
Developer shall not be in a default of this
Agreement or any other development
agreement, franchise agreement, or other
agreement between Developer (or any parent,
subsidiary or affiliate of
Developer) and Franchisor, (or any parent,
subsidiary or affiliate of
Franchisor) to establish and operate an
aggregate of ________Franchised Units,
and to use the SBC System and
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Proprietary Marks solely in connection
therewith, at specific locations to be
designated in and in accordance with the
terms and conditions set forth in
separate franchise agreements ("Franchise
Agreements") executed as provided in
Section 3.03 hereof, and pursuant to the
schedule set forth in Exhibit B to this
Agreement ("Development Schedule"). Each
Franchised Unit established pursuant
hereto shall be located within the
Territory at locations approved by Franchisor
in accordance with this Agreement. No more
than ___ Franchised Units developed
hereunder may be Kiosks and no more than
___ Franchised Units may be SBC Carts.
Developer must develop a minimum of ___ SBC
Cafes hereunder prior to developing
any Kiosks and/or SBC Carts.
2.02
Subject to the terms and conditions hereof, Franchisor shall
neither open and operate, nor license
anyone other than Developer to open and
operate an SBC Retail Unit in the Territory
prior to the last date specified in
the Development Schedule attached hereto as
Exhibit B, without Developer's prior
written consent.
2.03. This
Agreement is not a franchise agreement, and does not
grant Developer any right to use the
Proprietary Marks, but merely sets forth
the terms and conditions under which
Developer will be entitled to obtain a
franchise agreement.
2.04.
Developer shall have no right under this Agreement to license
others to use the Proprietary Marks or the
SBC COFFEE System.
2.05
Franchisor reserves and retains the development rights to
establish and operate, and to license
others to establish and operate, SBC
COFFEE Retail Units in the Territory at
United States military bases or other
non-U.S. military facilities, which are
now, or may at any time hereafter, be
located within the Territory; hospitals;
schools; mass transportation vehicles,
including, without limitation, airplanes,
trains, buses, and ferries and ships;
travel facilities, including, without
limitation, airports, train stations, bus
terminals, highway travel plazas, and port
facilities; sports facilities and
entertainment facilities, and related
events, including, without limitation,
stadia, arenas, amphitheaters, theme parks,
amusement parks, zoos, concert
venues, and drive-ins and theaters;
governmental cooperatives; institutional
facilities and government facilities,
including, without limitation, those
related to education, health care, the
military, and any facility owned by,
operated by, or under contract with any
government agency.
2.06.
Franchisor represents that it has applied for or is applying
for the Proprietary Marks described in
Exhibit C hereto. Developer acknowledges
that Franchisor has applied for, but may
have not received as of the date of
this Agreement, registration in the
Territory of certain of the Proprietary
Marks described in Exhibit C attached
hereto; that Franchisor may be unable to
obtain registration of some or all of the
Proprietary Marks for which
application has been made; and that
Franchisor shall incur no liability to
Developer for any failure to obtain such
registration. Developer acknowledges
Franchisor's right to require such
modification, amendment, discontinuance, and
substitution of proprietary marks as
described in Section V of the Franchise
Agreement.
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2.07.
Developer agrees to:
A.
cooperate with Franchisor, to the extent reasonably requested
by
Franchisor, in the registration and maintenance of its
trademarks,
service marks and trade names in the Territory. Developer shall
promptly advise Franchisor, in writing, of any potentially
infringing
uses or claims made by others within the Territory of which
Developer
has knowledge, and Franchisor shall take such actions with
respect
thereto which it, in its sole discretion, deems advisable; and
B.
execute and record any documents that are deemed necessary by
Franchisor to obtain protection for the Proprietary Marks or to
maintain their continued validity and enforceability by Franchisor
in
the Territory. However, Developer agrees not to make any
application
for registration
in the Territory, or in any other country of the
Proprietary Marks, or any trademarks or service marks
confusingly
similar thereto, or used by Franchisor in any country unless
Franchisor
directs, in writing, Developer to do so.
2.08
Provided Developer is not otherwise in default under this
Development Agreement any Franchise
Agreement issued hereunder and/or any other
agreement between Developer (or any parent,
subsidiary or affiliate of
Developer), and Franchisor (or any parent,
subsidiary or affiliate of
Franchisor), and except as otherwise set
forth herein, Franchisor shall not,
directly or indirectly sell any SBC coffee
or coffee products to any retail
account located within the Territory whose
sale of coffee beverages by the cup
constitutes greater than 50% of such
account's total coffee sales (a "Wet Coffee
Account") until the date upon which
Developer has open and in operation at least
ten percent (10%) of the total number of
Franchised Units required to be
developed hereunder in accordance with the
Development Schedule attached hereto.
Notwithstanding the foregoing, Franchisor
shall have the right, from time to
time, to grant third parties the right to
distribute SBC coffee and coffee
products to Wet Coffee Accounts within the
Territory (hereinafter, "Wet Venue
Distribution Rights"), in the event
Franchisor determines, in its sole
discretion, that a significant business
opportunity has presented itself which
would be in the interest of the SBC brand
in the Territory, provided, however,
Developer shall have the right to "apply"
for such Wet Venue Distribution Rights
within thirty (30) days of notice from
Franchisor of its intention to grant such
rights within the Territory ("Developer's
Application Period"). Developer's
Application Period shall be extended by
sixty (60) days, in the event Franchisor
receives Developer's application, in
satisfactory form, within such thirty (30)
day period. Franchisor shall not grant Wet
Venue Distribution Rights in the
Territory to any third party prior to the
expiration of Developer's Application
Period (as it may be extended), unless
Franchisor receives a written waiver from
Developer or disapproves Developer's
application prior to the expiration of such
Period. Franchisor shall have the right, in
its sole discretion, to grant or not
grant the Wet Venue Distribution Rights to
Developer. In the event Developer
fails to apply for the Wet Venue
Distribution Rights within the initial thirty
(30) day period of the Developer's
Application Period, or if Franchisor has
failed to approve Developer's application
within the Developer's Application
Period (as extended), Franchisor shall then
be free to grant
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the Wet Venue Distribution Right to any
third party. For the purposes of this
Section 2.08, the term "Wet Coffee Account"
shall not include any such account
located in (i) any premises owned or
controlled by any governmental or
quasi-governmental authority, or (ii) any
venue described in Section 2.05
hereof.
2.09
Except as otherwise specifically set forth in Section 2.08
above, nothing herein shall be deemed, in
any way, to limit Franchisor's right
to sell SBC coffee and related coffee
products anywhere in the Territory,
including, but not limited to, sales on the
Internet, by mail order, or through
wholesale distribution channels, including,
but not limited to department
stores, food marts, and grocery stores,
during and after the term of this
Agreement.
III.
FEES
3.01
In consideration of the rights granted herein, Developer has
paid to Franchisor, upon execution of this
Agreement, receipt of which is hereby
acknowledged, a territorial fee of
_____________________________________ U.S.
dollars, in United States currency, which
territorial fee has been fully earned
by Franchisor for administrative and other
expenses incurred by Franchisor and
for the development opportunities lost or
deferred as a result of the rights
granted Developer herein. The territorial
fees shall be non-refundable.
3.02
In consideration of the establishment of each SBC Cafe to be
developed hereunder and the assistance and
services which will be received by
Developer under the franchise agreements,
Developer shall pay to Franchisor a
non-refundable, franchise fee of Twenty
Thousand U.S. Dollars (U.S. $20,000) per
SBC Cafe, payable _____________ U.S.
Dollars (U.S. ________) per SBC Cafe upon
execution of this Agreement, and
____________ U.S. Dollars (U.S.___________) per
SBC Cafe, payable no later than execution
of each franchise agreement for an SBC
Cafe, as described in Section IV
hereof.
In consideration of the establishment of each SBC Kiosk to be
developed
hereunder and the assistance and services
which will be received by Developer
under the franchise agreements, Developer
shall pay to Franchisor a
non-refundable, franchise fee of Fifteen
Thousand U.S. Dollars (U.S. $15,000)
per SBC Kiosk, payable _______________ U.S.
Dollars (U.S. ________) per SBC
Kiosk upon execution of this Agreement, and
____________ U.S. Dollars (U.S.
_________) per SBC Kiosk payable no later
than execution of each franchise
agreement for an SBC Kiosk, as described in
Section IV hereof. The franchise
fees shall be non-refundable.
In consideration of the establishment of each SBC Cart to be
developed
hereunder and the assistance and services
which will be received by Developer
under the franchise agreements, Developer
shall pay to Franchisor a
non-refundable, franchise fee of Seven
Thousand Five Hundred U.S. Dollars (U.S.
$7,500) per SBC Cart, payable
_________________ U.S. Dollars (U.S. ________) per
SBC Cart upon execution of this Agreement,
and _____________U.S. Dollars
<PAGE>
(U.S.________ ) per SBC Cart payable no
later than execution of each franchise
agreement for an SBC Cart, as described in
Section IV hereof.
The total franchise fees payable upon execution of this
Development
Agreement shall be ___________ Dollars
($__________) in United States currency.
The franchise fees shall be
non-refundable.
IV.
DEVELOPMENT SCHEDULE
4.01 Except as otherwise provided herein, this Agreement shall
expire
on the earlier of (i)
_____________________, or (ii) the opening of the last
Franchised Unit required to be developed
under the Development Schedule (as
defined below).
4.02 Developer shall have open and in operation the cumulative
number
of SBC Retail Units in the Territory in
accordance with the Development Schedule
set forth in Exhibit B hereto.
4.03 Each SBC Retail Unit in the Territory shall be established
and
operated pursuant to a franchise agreement
in substantially the form of the
franchise agreement attached hereto as
Exhibit D; provided, however, that
Franchisor reserves the right, in its sole
discretion, to require that each SBC
Retail Unit be established and operated
pursuant to Franchisor's then-current
standard international franchise agreement,
except that the initial franchise
fee, royalty fee, and required advertising
fees and expenditures shall remain
the same as in the Franchise Agreement
attached hereto. Any franchise agreement
executed pursuant hereto shall be modified
for use by Franchisor, with the
advice of Developer, to conform to the laws
and customs of the Territory, as
appropriate.
4.04 Developer shall have no right to establish an SBC Retail Unit
in
the Territory after the last date specified
in the Development Schedule.
4.05. Recognizing that time is of the essence in this
Agreement,
Developer agrees to exercise the
development rights granted hereunder in the
manner specified in Section IV hereof and
to satisfy the Development Schedule.
Failure by Developer to adhere to the
Development Schedule shall constitute a
default under this Agreement, as provided
in Section 9.03. hereof.
V.
FRANCHISED UNIT OPENINGS
5.01. Before the commencement of construction, Developer shall
submit a
description of each proposed site,
accompanied by the proposed final and
complete plans and specifications for the
construction (or renovation) and
decoration, for each Franchised Unit for
approval by Franchisor. Franchisor
reserves the right to require Developer to
transmit such information by modem or
such other electronic means as Franchisor
designates from time to time. No site
package shall be reviewed or approved by
Franchisor until Developer's
satisfactory completion of the New
Franchisee Orientation Program described in
Section VII hereof. Franchisor shall
evaluate each site package proposed and
shall promptly, but not more than thirty
(30) days after
<PAGE>
receipt of Developer's complete proposal
package, send to Developer (1) written
notice of approval or disapproval of the
site and (2) a Franchise Agreement for
each approved site for execution by
Developer. Franchisor shall not unreasonably
withhold site approval. Such site approval
shall be valid for thirty (30) days
after notice of Franchisor's site approval
and shall automatically expire,
without notice to Developer, if Franchisor
does not receive from Developer,
within such thirty-day period, the items
described in Section 5.02 hereof. If
Franchisor does not approve a site package
within thirty (30) days, such site
package shall be deemed disapproved.
5.02. Within thirty (30) days after notice of Franchisor's site
approval, Developer shall execute the Franchise Agreement, and send
to
Franchisor the executed Franchise Agreement and payment of all
fees
required thereunder.
A. If
Developer is a partnership, each general partner shall, and
if Developer is a corporation, each stockholder holding a
beneficial
interest of five percent (5%) or more of the securities with
voting
rights of Developer or any corporation directly or indirectly
controlling Developer shall, and if Developer is a limited
liability
company, each member shall guarantee the performance of the
Franchise
Agreement by executing the Franchisor's Franchise Agreement
Guaranty
and Indemnification Agreement attached as Exhibit E thereto.
B. If
Developer fails to send the executed Franchise Agreement or
payment of all fees required thereunder within such time
period,
Franchisor shall have the right, at its option, (1) to rescind the
site
approval granted in Section 5.01. hereof or (2) treat such failure
as a
material default under this Agreement, for which Franchisor shall
have
the right to any of the remedies described in Section 9.04.
hereof.
5.03.
Within ninety (90) days after notice of Franchisor's site
approval, Developer shall:
A.
Submit, in writing to Franchisor, satisfactory proof to
Franchisor that Developer:
(i) owns the
approved site;
(ii)
has leased the approved site for a term which, with
renewal options, is not less than the initial term of the
Franchise Agreement; or
(iii) has
entered into a written agreement to purchase or
to lease the approved site on terms provided herein, subject
only to obtaining necessary governmental permits. If Developer
leases the accepted site, the lease must provide: (a) that, in
the event Developer defaults under the lease, notice of the
default shall
<PAGE>
immediately be forwarded to Franchisor; and (b) that
Franchisor shall have the right, upon default under the lease
or other cessation of operation at the accepted site, to make
the modifications and alterations to the Franchised Unit set
forth in Section XVI of the Franchise Agreement.
B.
Submit to Franchisor, and obtain Franchisor's written approval
of, the final and complete plans and specifications for the
construction (or renovation) and decoration of the Franchised
Unit,
which must
be in conformity with Franchisor's standards and
specifications for Franchised Units, as set out in the current
Confidential Operating Standards Manual (as defined in Section
VI
hereof) or otherwise in writing (hereinafter, the "Construction
Plans"). The final Construction Plans shall include, but are
not
limited to, floor plans, equipment layouts, decor, and interior
and
exterior elevations. Franchisor shall not approve the final
Construction
Plans until Developer submits the executed Franchise
Agreement to Franchisor and all fees have been paid by
Developer.
5.04.
Developer shall procure the insurance coverage provided for in
Section XI of the Franchise Agreement,
prior to commencement of construction of
a Franchised Unit, and shall maintain such
insurance coverage throughout the
term of the Franchise Agreement.
5.05. No
more than thirty (30) days after the Franchisor approves
Developer's Construction Plans, Developer
shall commence construction or
renovation of the Franchised Unit. If
commencement of construction or renovation
is delayed by a cause beyond the reasonable
control of Developer, the date upon
which commencement of construction or
renovation is to begin may be extended by
obtaining written approval of
Franchisor.
5.06. Upon
commencement of construction or renovation of the
Franchised Unit, Developer shall promptly
notify Franchisor.
5.07.
Developer shall have completed construction or renovation and
commenced operation of the Franchised Unit
within one-hundred eighty (180) days
from the date of Franchisor's site approval
described in Section 5.01. hereof.
5.08. At
least thirty (30) days prior to the proposed commencement
of operation of each Franchised Unit,
Developer shall notify Franchisor of such
proposed opening. Franchisor shall provide
a representative to be present at the
opening of the first Franchised Unit for up
to ten (10) working days. The
Franchised Unit shall not be opened unless
such representative is present.
Should commencement of operation of the
Franchised Unit be delayed by the
failure of Franchisor to provide such a
representative, the date upon which
commencement of operation of the Franchised
Unit is required pursuant to Exhibit
B of this Agreement, shall be extended
until such time as such assistance is
provided by Franchisor. Upon Franchisor's
request, Developer
<PAGE>
shall provide to Franchisor prompt
assistance for, and such information, for
obtaining visas for such of Franchisor's
employees to enter the Territory.
VI.
CONFIDENTIAL OPERATING STANDARDS MANUAL
6.01.
Franchisor will loan one (1) copy of the Confidential
Operating Standards Manual ("Manual"), in
the English language, to Developer ,
upon satisfactory completion of the NFOP
training described in Section 7.01
hereof, for the duration of this Agreement,
which Manual contains the standards,
specifications, procedures, and techniques
of the SBC COFFEE System for the
operation of an SBC Retail Unit. The Manual
may consist of one or more volumes.
Within ninety (90) days after completion of
NFOP, Developer shall provide to
Franchisor, a proposed translation of the
Manual into the principal local
language in the Territory and any
adaptations to the Manual to the laws,
customs, and market characteristics of the
Territory. No changes may be made to
the Manual without Franchisor's prior
written approval. Upon completion of
translation of the Manual, the translator
of the Manual shall certify to
Franchisor that its translation of the
Manual is accurate and correct. Developer
shall bear all the cost and expense of
Developer's proposed translation of the
Manual. Franchisor shall use its best
efforts to review any proposed translation
and adaptation of the Manual within thirty
(30) days of Developer's submission
to Franchisor of such translated and/or
adapted Manual. If Franchisor does not
approve any translation and/or adaptation
proposed by Developer within thirty
(30) days of Franchisor's receipt, such
proposed translation and/or adaptation
shall be deemed disapproved. Franchisor
may, in its sole discretion, correct the
proposed translation or adaptation of the
Manual, and, in such event, Developer
shall bear all costs and expenses of such
corrections. Upon request, Developer
shall provide to Franchisor a complete copy
of the translated Manual.
6.02.
Developer shall at all times treat the Manual, any other
manuals created for or approved for use in
the operation of the Franchised
Units, and the information contained
therein, as confidential; and shall use all
reasonable efforts to maintain such
information secret and confidential in
accordance with Section XI hereof.
Developer shall not, at any time, without
Franchisor's prior written consent, copy,
duplicate, record, or otherwise make
the Manual available to any unauthorized
person or source. All requirements
related to the Manual herein shall apply to
the English-language version and the
foreign-language version of the Manual.
6.03. In
order that Developer may benefit from new knowledge gained
by Franchisor as to improved techniques in
the operation of the System,
Franchisor may from time-to-time revise the
Manual.
6.04. The
official text of the Manual shall be an English language
text. Developer shall at all times insure
that its copy of the Manual is kept
current and up-to-date, and in the event of
any dispute as to the contents of
Developer's Manual, the terms of the master
copy of the Manual, in the English
language, maintained by Franchisor at
Franchisor's home office, shall be
controlling.
<PAGE>
VII.
TRAINING AND SUPERVISION
7.01.
Developer, or a partner of Developer if Developer is a
partnership, or a principal shareholder of
Developer if Developer is a
corporation, or a principal member of
Developer if Developer is a limited
liability company, must complete, to
Franchisor's satisfaction, the New
Franchisee Orientation Program ("NFOP")
within thirty (30) days of execution of
the Development Agreement. NFOP shall
consist of up to forty (40) hours of
workshops and seminars conducted at a
training facility in the United States
designated by Franchisor.
7.02. In
addition to completing the NFOP, Developer or a partner,
principal shareholder, or member of
Developer, and up to a minimum of four (4)
designated management employees of
Developer, must attend and complete, to
Franchisor's satisfaction, the SBC Cafe
Management Training program ("CMT"),
thirty (30) days prior to opening each
Franchised Unit. The exact number of
Developer's management employees required
to attend and complete CMT shall be
determined by Franchisor in its sole
discretion, but in no event shall the
number be less than four (4). CMT shall
consist of a minimum of [six (6) weeks]
of in-store cafe operations training at a
facility designated by Franchisor (a
"Certified Training Facility") and certain
classroom and/or self-directed study
programs. A management employee of
Developer that successfully completes CMT
shall be certified by Franchisor as a "CMT
Certified Manager".
7.03. The
cost of conducting the NFOP and CMT programs (instruction
and required materials) shall be borne by
Franchisor. All other expenses during
NFOP and CMT, including meals and lodging,
wages and travel, shall be borne by
Developer. Franchisor may provide
Developer's employees, from time to time, such
additional training programs as Franchisor
may, in its sole discretion, choose
to conduct. Attendance at such training
programs may be mandatory. All of
Developer's SBC Retail Unit managers and
supervisory personnel attending any of
Franchisor's training programs shall be
fluent in the English language.
Franchisor shall have the right to appoint
an interpreter, at Developer's
expense, and for which Developer shall
promptly reimburse Franchisor, if
Franchisor determines any trainee is not
fluent in English.
7.04. Any
employee of Developer replacing a person who has
previously received training under Sections
7.01 or 7.02 hereof shall attend
such training program within thirty (30)
days of employment. Failure to attend
any training program required hereunder for
any reason (including, without
limitation, failure to obtain a visa) shall
constitute a default hereunder. Upon
Developer's request, Franchisor shall
provide reasonable assistance to
Developer's employees in obtaining visas to
enter the United States to attend
NFOP and any other training program.
7.05.
Developer shall
maintain a competent, conscientious, trained
staff, including a fully trained manager
for each Franchised Unit, as provided
in the Franchise Agreement.
<PAGE>
7.06.
Developer shall employ at least one supervisor, who shall meet
such standards as may reasonably be imposed
by Franchisor in the Manual or
otherwise in writing, for every seven (7)
Franchised Units operated by
Developer, to supervise and coordinate the
operation of the Franchised Units.
Such supervisor shall be employed upon the
commencement of operation of every
seventh (7th) Franchised Unit or multiple
thereof.
7.07.
Developer shall provide adequate Worker's Compensation or
comparable insurance applicable in the
United States for all of Developer's
employees prior to such employees'
commencement of any training program offered
by Franchisor and shall provide to
Franchisor written certification or a copy of
such policy.
VIII.
OBLIGATIONS OF CORPORATE, PARTNERSHIP, OR LIMITED LIABILITY
COMPANY DEVELOPER
8.01. If
Developer, or any successor to or assignee of Developer, is
a corporation or limited liability
company:
A.
Developer shall furnish to Franchisor, upon execution or any
subsequent transfer of this Agreement, a copy of the
Developer's Articles of Incorporation, Certificate of
Incorporation, Bylaws, operating agreement, and other
organizational documents, and shall thereafter promptly
furnish Franchisor with a copy of any and all amendments or
modifications thereto;
B.
Developer shall promptly furnish Franchisor, on a regular
basis, with certified copies of such corporate records or
limited liability company records material to Developer's
business as Franchisor may require from time to time in the
Confidential Operating Standards Manual or otherwise in
writing; and
C.
Developer shall maintain stop-transfer instructions against
the transfer, on its records, of any securities with voting
rights, subject to the restrictions of this Agreement, and
each stock certificate of the corporate Developer representing
each share of stock, shall have conspicuously endorsed upon it
the following legend:
"THE TRANSFER OF THIS STOCK IS SUBJECT TO THE TERMS AND
CONDITIONS OF AN SBC COFFEE DEVELOPMENT AGREEMENT
(INTERNATIONAL) WITH SEATTLE'S BEST COFFEE, LLC DATED_______.
REFERENCE IS MADE TO THE PROVISIONS OF SAID FRANCHISE
AGREEMENT AND TO THE ARTICLES AND BY-LAWS OF THIS
CORPORATION."
<PAGE>
8.02. If
the Developer or any successor to or assignee of Developer,
is a partnership, limited partnership or
limited liability partnership,
Developer shall furnish to Franchisor, upon
execution or any subsequent transfer
of this Agreement, a copy of Developer's
Articles of Partnership, if any, and
Partnership Agreement, and shall thereafter
promptly furnish Franchisor with a
copy of any and all amendments or
modifications thereto.
8.03.
Developer shall, upon execution of this Agreement, furnish to
Franchisor a completed Statement of Legal
Composition attached as Exhibit F
hereto as to all the parties with an
ownership interest in Developer, the amount
of such ownership interests, the
jurisdiction in which Developer is legally
incorporated or organized, and other
information specified. Developer shall
thereafter furnish to Franchisor an updated
Statement of Legal Composition
promptly when requested by Franchisor.
Developer shall promptly advise
Franchisor of any change in such
information. Developer warrants, represents,
and covenants to Franchisor that all of the
information furnished in the
completed Statement of Legal Composition is
true and correct as of the date of
this Agreement, and when subsequently
furnished to Franchisor.
IX.
DEFAULT AND TERMINATION
9.01. The
rights granted to Developer in this Agreement have been
granted based upon Developer's
representations and assurances, among others,
that the obligations set forth in Sections
III and IV of this Agreement will be
met by Developer in a timely manner.
9.02.
Developer shall be deemed to be in default under this
Agreement, and all rights granted herein
shall automatically terminate without
notice to Developer, if Developer shall
become insolvent or make a general
assignment for the benefit of creditors; if
a petition in bankruptcy is filed by
Developer or such a petition is filed
against Developer and not opposed by
Developer; or if Developer is adjudicated
bankrupt or insolvent; or if a
receiver or other custodian (permanent or
temporary) of Developer's assets or
property, or any part thereof, is appointed
by any court of competent
jurisdiction; or if proceedings for a
composition with creditors under the
applicable law of any jurisdiction should
be instituted by or against Developer;
or if a final judgment remains unsatisfied
or of record for thirty (30) days or
longer (unless a supersede as bond is filed
or other steps taken to effectively
stay enforcement of such judgment in the
relevant jurisdiction); or if Developer
is dissolved; or if execution is levied
against a material portion of
Developer's property or business; or if
suit to foreclose any lien or mortgage
against the premises or equipment of any
SBC Retail Unit developed hereunder is
instituted against the Developer and not
dismissed within thirty (30) days; or
if the real or personal property of any SBC
Retail Unit developed hereunder
shall be sold after levy thereupon by any
sheriff, Marshall, constable or other
equivalent governmental authority.
9.03. In
the event any of the following failures by Developer
occurs, such failure shall constitute a
default under this Agreement for which
Franchisor shall have the remedies
described in Section 9.04. hereof:
<PAGE>
A. If
Developer fails to comply with any material terms of this
Agreement (including, without limitation, the Development
Schedule); or
B. If
Developer or any affiliate of Developer fails to obtain
Franchisor's approval of a site or construction plans and
specifications prior to commencement of construction; or
C. If
Developer or any affiliate of Developer fails to comply
with any material term or condition of any franchise agreement
covering
an SBC Retail Unit developed hereunder or any other agreement
between
(i) Developer or an affiliate of Developer and (ii) Franchisor or
any
affiliate of Franchisor; or
D. If
Developer or any affiliate of Developer fails to cure any
default of such agreement after having been provided with a notice
to
cure (in the event of such a failure in Section 8.02.C or D
hereof,
that Franchisor would be entitled, under such agreement's terms,
to
terminate such agreement for default).
9.04. Upon
each such default described in Section 9.03. hereof,
Franchisor, in its discretion, may do any
one or more of the following,
effective immediately upon delivery of
notice of default by Franchisor to
Developer pursuant to Section XII
hereof:
A.
Terminate this Agreement and all rights granted hereunder
without
affording the Developer any opportunity to cure the default;
B.
Reduce the number of Franchised Units which Developer is
required to establish pursuant to Section I of this Agreement;
C.
Terminate the territorial exclusivity granted Developer in
Section I hereof or reduce the area of territorial exclusivity
granted
Developer hereunder;
D.
Reduce the size of the Territory granted Developer hereunder;
E.
Withhold evaluation or approval of site proposal packages and
refuse, pending satisfactory cure of any such default, the opening
of
any Franchised Unit then under construction or not otherwise ready
to
commence operations; and
F.
Accelerate the Development Schedule set forth in Exhibit B
hereto.
In addition to the foregoing, Franchisor
shall be entitled to pursue any other
remedies available hereunder or at law or
in equity.
9.05. A
default in the Development Schedule under this Development
Agreement shall not constitute a default
under any existing Franchise Agreement
between the parties hereto.
<PAGE>
9.06. Upon termination or expiration of this Agreement, all
rights
granted herein shall forthwith terminate,
and:
A.
Developer shall immediately cease to operate as an SBC COFFEE
Developer, and Developer shall have no right to establish or
operate
any SBC Retail Unit for which a Franchise Agreement has not
been
executed by the parties thereto at the time of termination.
Upon
termination of this Agreement, Franchisor shall be entitled to
establish, and to license others to establish, SBC Retail Units in
the
Territory, except as may be otherwise provided under any
franchise
agreement which has been executed between Franchisor and Developer,
and
which has not been terminated;
B.
Developer shall immediately pay all sums owing to Franchisor
and its subsidiaries and affiliates; and
C. If
no Franchise Agreement has been executed pursuant hereto,
Developer shall immediately return to Franchisor all copies of
the
Manual. If one or more Franchise Agreements have been executed
pursuant
hereto, the use of such copies of the Manual shall be governed by
the
terms of such Franchise Agreements.
X.
TRANSFERABILITY OF INTEREST
10.01. Transfer
by Franchisor. This Agreement shall inure to the
benefit of the successors and assigns of
Franchisor. Franchisor shall have the
right, without Developer's prior consent,
to transfer or assign its interest in
this Agreement to any person, persons,
partnership, association, or corporation,
and Developer agrees promptly to execute
any documents requested by Franchisor
in connection therewith. If Franchisor's
assignee assumes all the obligations of
Franchisor hereunder and sends written
notice of the assignment so attesting,
Developer agrees promptly to execute a
general release of Franchisor, and any
affiliates of Franchisor, from claims or
liabilities of Franchisor under this
Agreement.
10.02. Transfer
by Developer. Developer understands and acknowledges
that the rights and duties set forth in
this Agreement are unique to Developer,
and that Franchisor has granted this
Agreement in reliance on Developer's
business skill and financial capacity.
Accordingly, neither (i) Developer nor
(ii) any immediate or remote successor to
Developer, nor (iii) any individual,
partnership, corporation or other legal
entity which directly or indirectly owns
any interest in Developer, or in this
Development Agreement, shall sell, assign,
transfer, convey, donate, pledge, mortgage,
or otherwise encumber any rights or
obligations under this Agreement, any
direct or indirect interest in this
Agreement, or in Developer without the
prior written consent of Franchisor. Any
purported assignment or transfer, by
operation of law or otherwise, not having
the prior written consent of Franchisor,
shall be null and void, and shall
constitute a
<PAGE>
material breach of this Agreement, for
which Franchisor may then terminate
without opportunity to cure pursuant to
Section 9.03 of this Agreement.
10.03.
Conditions for Consent. Franchisor shall not unreasonably
withhold its consent to any transfer
referred to in this Section hereof for the
remainder of the term hereof, when
requested; provided, however, that prior to
the time of transfer:
A. All
of Developer's accrued monetary obligations to Franchisor,
its subsidiaries and affiliates shall have been satisfied;
B.
Developer shall have agreed to remain obligated under the
covenants contained in Section XI and XII hereof as if this
Agreement
had been terminated on the date of the transfer;
C. The
transferee must be of good moral character and reputation,
in the sole judgment of the Franchisor;
D. The
transferee shall have demonstrated to Franchisor's
satisfaction, by meeting with the Franchisor or otherwise at
Franchisor's option, that the transferee's qualifications meet
the
Franchisor's then-current criteria for a new developer;
E. The
parties must execute a written assignment, in a form
satisfactory to Franchisor, pursuant to which the transferee
shall
assume all of the obligations of the individual or entity which is
the
transferor under this Agreement and pursuant to which Developer
shall
generally release any and all claims it might have against
Franchisor
as of the date of the assignment;
F. The
parties must, at Franchisor's option, provide Franchisor
with a copy of the purchase and sale agreement and such other
documents
as Franchisor may reasonably request in connection therewith;
G.
Developer must make, in conjunction with the transfer of
Developer's rights and obligations under this Agreement, a
simultaneous
transfer to the same transferee of all comparable interests held
by
Developer in a
