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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
sub
