EXHIBIT 10.25 2003 AMENDMENT TO FRANCHISE AGREEMENT

 

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EXHIBIT 10.25

 

                         2003 AMENDMENT

                     TO FRANCHISE AGREEMENT

 

     This 2003 Amendment to Franchise Agreement (this

"Amendment") is entered into as of December 17, 2003 by and

between Ryan's Properties, Inc. ("Ryan's") and Family Steak

Houses of Florida, Inc. ("FSH").

 

     WHEREAS, Ryan's and FSH are parties to that certain

Franchise Agreement, dated as of September 16, 1987, as amended

prior to the date hereof (the "Existing Franchise Agreement";

the Existing Franchise Agreement as amended by this Amendment

shall be referred to as the "Franchise Agreement") (all

capitalized terms used herein that are not otherwise defined

herein to have the meanings ascribed to them in the Existing

Franchise Agreement); and

 

     WHEREAS, FSH has informed Ryan's that FSH does not expect

to have in operation at December 31, 2003 a number of

Restaurants (defined as restaurants of FSH operating as Ryan's

Family Steak Houses) equal to at least 80% of the number of

Restaurants required to be in operation as of that date pursuant

to the terms of the Existing Franchise Agreement; and

 

     WHEREAS, Section XV (Termination and Defaults) of the

Existing Franchise Agreement provides, among other matters, that

FSH shall be in default under the Existing Franchise Agreement

if "at the end of any calendar year the number of Restaurants in

operation is less than 80% of the number of Restaurants required

to be in operation as of that date pursuant to the terms of this

Agreement, as amended"; and

 

     WHEREAS, the parties desire to wind down and terminate the

franchise relationship under the Existing Franchise Agreement in

an amicable manner that minimizes unnecessary disruption;

 

     NOW, THEREFORE, for valuable consideration, the receipt and

sufficiency of which are acknowledged by each of the parties

hereto, the parties hereto agree as follows:

 

     1.     Termination or Conversion of Restaurants.

 

            (a)     FSH agrees that, in accordance with the

schedule set forth on the attached Exhibit A, FSH shall complete

as to each and every one of FSH's Restaurants:

 

                    (i) its sale to an unaffiliated third party

to be operated as a restaurant with a name and logo (immediately

upon consummation of such sale) that differs sufficiently from

"Ryan's Family Steak House" and "Fire Mountain" to avoid any

reasonable likelihood of confusion;

 

                    (ii) the termination of its operation as a

restaurant of any sort; and/or

 

                    (iii) the conversion of that Restaurant from

a "Ryan's Family Steak House" to a restaurant with a name and

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logo that differs sufficiently from "Ryan's Family Steak House"

and "Fire Mountain" to avoid any reasonable likelihood of

confusion between any of FSH's restaurants and any of Ryan's

restaurants; provided further, that, if at any time FSH changes

the exterior facade or interior design of any such Restaurant

(or former Restaurant), FSH shall cause the new exterior facade

or interior design (as applicable) to differ sufficiently from

Ryan's "Fire Mountain" and the `lodge look' of "Ryan's Family

Steak House" to avoid any reasonable likelihood of confusion

between any of FSH's restaurants and any of Ryan's restaurants.

 

            (b)     FSH shall cause each such Restaurant sale,

termination or conversion to be accomplished in as commercially

reasonable a manner as possible consistent with the requirements

of this Amendment.

 

            (c)     No later than five (5) business days after

the completion of the sale, termination or conversion of a

Restaurant pursuant to this Amendment, FSH shall certify that

fact in writing to Ryan's.  Ryan's may request any and all such

information, and may make any and all such inspections, as may

be reasonably necessary to verify the sale, termination or

conversion of any or all Restaurants in accordance with this

Amendment.

 

            (d)     The Continuing Services and Royalty Fee set

forth in the Existing Franchise Agreement shall continue to

apply to the total gross receipts from each of FSH's Restaurants

until the date the sale, termination or conversion as

contemplated by this Amendment of such Restaurant is completed. 

Payment of any unpaid Continuing Services and Royalty Fee for

any sold, terminated or converted Restaurant shall be made in

accordance with the Existing Franchise Agreement.

 

            (e)     From and after January 1, 2004, (i) Ryan's

shall have no further obligations under Paragraphs II

(Location), IV (Training and Assistance), Subparagraph B of

Paragraph V (Advertising) or Subparagraph D of Paragraph VI

(Confidential Operating Manual) of the Franchise Agreement, and

(ii) Attachment 1 to the July 13, 1992 letter agreement amending

the Franchise Agreement shall no longer be in effect.  From and

after the date that the sale, termination or conversion as

contemplated by this amendment of an FSH Restaurant is

completed, Ryan's shall have no further obligations under any

provision of the Franchise Agreement with respect to such

Restaurant.  Without limiting the preceding provisions, from and

after the earlier of (i) the date that all Restaurants are sold,

terminated or converted or (ii) June 30, 2005, FSH shall not be

entitled to receive supplies that are proprietary to Ryan's. 

Nothing contained herein, however, shall impede FSH from

continuing to use recipes obtained from Ryan's and now used at

the Restaurants in its converted restaurants; provided, however,

that FSH shall remain obligated under Paragraph XIV.D and, to

the extent applicable, Paragraph VI.B with respect to such

recipes.

 

            (f)     FSH acknowledges that the deadlines set

forth in Exhibit A are of the essence.  Accordingly, if FSH

fails to complete the sale, termination or conversion as

contemplated by this Amendment of the cumulative number of

Restaurants as contemplated by this Amendment by any applicable

date set forth on Exhibit A:

 

                    (i)     (A)     if such failure is with

respect to the requirement that all of the Restaurants be sold,

terminated or converted by June 30, 2005, such failure shall

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constitute a default under the Franchise Agreement, and, without

the necessity of any notice (including without limitation any

"Notice to Cure" or "Notice of Cure"), Ryan's shall have all

remedies available under the Franchise Agreement, at law and/or

in equity by reason of such breach; or

 

                            (B)     if such failure is with

respect to the cumulative number of Restaurants require by this

Amendment to be sold, terminated or converted by any date other

than June 30, 2005, such failure shall constitute a default

under the Franchise Agreement if such failure is not fully cured

within one hundred eighty (180) days after the occurrence of

such failure, and in such event, without the necessity of any

notice (including without limitation any "Notice to Cure" or

"Notice of Cure"), Ryan's shall have all remedies available

under the Franchise Agreement, at law and/or in equity by reason

of such breach; and

 

                     (ii)     without limiting clause (i) in any

way, during any quarterly period (except for the first thirty

(30) days of such quarterly period, if immediately prior to such

period FSH was in compliance with the Franchise Agreement) that

more FSH's Restaurants are in operation than permitted by this

Amendment (such excess number of Restaurants at any time being

hereinafter referred to as the "Excess Number"), the Continuing

Service and Royalty Fee during that quarter shall be equal to

the sum of (A) 4% of the total gross receipts of all of FSH's

Restaurants in operation, plus (B) the produce of (x) 2% of the

total gross receipts of all of FSH's Restaurants in operation,

multiplied by (y) the quotient of (1) the Excess Number, divided

by (2) the total number of FSH's Restaurants in operation.

 

Each of subparagraphs (i) (A), (i)(B) and (ii) of this paragraph

(f) is independent of the other, and Ryan's rights under any of

such subparagraphs shall not be affected by whether or not

Ryan's then has rights under the terms of any of the other such

subparagraphs.

 

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