Development Agreement

EXHIBIT 10.13


PAPA JOHN'S


DEVELOPMENT AGREEMENT


Developer: Extra Cheese, Inc.
Address: P.O. Box 61115
Birmingham, Alabama 35261


Number of Restaurants: Four (4)
Development Area: Cullman, Jasper, Sylacauga
and Talladega, Alabama


TABLE OF CONTENTS
Page
1. Grant................................................................... 2


2. Development Fee......................................................... 2


3. Development of Restaurants; Schedule for Completion..................... 3


4. Term.................................................................... 5


5. Construction or Remodeling.............................................. 6


6. Your Organization, Operation and Ownership.............................. 6


7. Your Covenants.......................................................... 7


8. Principal Operator...................................................... 9


9. Default and Termination................................................. 10


10. Assignment or Transfer.................................................. 12


11. No Grant of Franchise or Franchise Rights............................... 12


12. Notices................................................................. 12


13. Independent Contractor; Indemnification................................. 13


14. Enforcement............................................................. 14


15. Acknowledgements........................................................ 18


16. Miscellaneous........................................................... 19


DEVELOPMENT AGREEMENT
---------------------


THIS DEVELOPMENT AGREEMENT ("Agreement") is made and entered into this _____ day of April, 1995, by and between PAPA JOHN'S INTERNATIONAL, INC., a Delaware corporation ("we", "us" or "Papa John's"), and EXTRA CHEESE, INC., an Alabama corporation ("you"). If you are a corporation, limited liability company or partnership certain provisions of the Agreement also apply to your owners and will be noted.


RECITALS:
--------


A. We and our Affiliates (defined below) have expended time, money and effort to develop a unique system for operating retail restaurants devoted primarily to carry-out and delivery of pizza and other food items. The chain of current and future Papa John's restaurants are referred to as the "Papa John's Chain" or the "Chain".


B. The Chain is characterized by a unique system which includes special recipes and menu items; distinctive design, decor, color scheme and furnishings; software and programs; standards, specifications and procedures for operations; procedures for quality control; training assistance; and advertising and promotional programs all of which we may improve, amend and further develop from time to time (the "System").


C. We identify our goods and services with certain service marks, trade names and trademarks, including but not limited to, "Papa John's", "Papa John's Pizza" and "Pizza Papa John's Delivering the Perfect Pizza!" as well as certain other trademarks, service marks, slogans, logos and emblems which have been and which we may designate for use in connection with the System from time to time (the "Marks").


D. You desire to obtain certain rights to develop one or multiple Papa John's Pizza restaurant(s) in the "Development Area" (as defined below) in accordance with the terms of this Agreement.


E. We have agreed to grant you such rights;


NOW, THEREFORE, the parties agree as follows:


1. GRANT.

(a) Subject to the terms and conditions of this Agreement and your continuing faithful performance, we hereby grant to you the right and obligation to establish four Papa John's restaurant(s) (at specific locations we approve) in the areas specified on attached Exhibit A. (The Papa John's restaurants you develop pursuant to this Agreement are collectively referred to as the "Restaurants" and individually as a "Restaurant"; the areas specified on Exhibit A are collectively referred to as the "Development Area").


(b) Each Restaurant shall be established and operated pursuant to a separate "Franchise Agreement" to be entered into between you and us. As used herein, the term "Franchise Agreement" shall mean the form of Papa John's Franchise Agreement (for the initial Restaurant) or Short Form Franchise Agreement (for each subsequent Restaurant) to be executed for each Restaurant developed under this Agreement and all attachments and exhibits thereto.


(c) Except as may be otherwise provided herein or in the Franchise Agreements, we shall not locate, nor license another to locate, a Papa John's restaurant in the Development Area during the "Term" (as defined in Section 4).


(d) This Agreement is not a franchise agreement and we do not grant you any franchise rights or other rights to use the Marks or System under this Agreement.


(e) You have no right to license or subfranchise others to use the Marks or the System, or to enter into any agreement with respect to the Marks or System.


2. DEVELOPMENT FEE. You have paid to us a development fee of Fourteen Thousand Dollars ($14,000) ("Development Fee") (i.e Three Thousand Five Hundred Dollars ($3,500) for


each Restaurant to be developed), receipt of which we acknowledge. The Development Fee was fully earned by us when paid, is non-refundable and is not contingent upon our rendering any further performance. The Development Fee is in consideration of, among other things, the development rights granted to you, the reservation of the Development Area, the development opportunities lost or deferred as a result of the rights granted to you in this Agreement and the administrative and other expenses we have incurred. However, $3,500 of the Development Fee will be credited against each Initial Franchise Fee at the time it is paid, as provided in Section 3.(f).


3. DEVELOPMENT OF RESTAURANTS; SCHEDULE FOR COMPLETION.


(a) You shall have the number of Restaurants open and operating within the time frame set forth in subsection 3.(e). below, and you shall exercise each such development right only at locations within the Development Area which we have approved.


(b) With respect to each proposed location, you shall submit a completed site evaluation form, together with such other information and materials as we may reasonably request. We shall have 30 days after receipt of such information to accept or reject each proposed location. If we fail to respond within such 30 day period, the location submitted by you shall be deemed to be approved. We will not unreasonably withhold our approval of a location. In approving or disapproving any proposed site, we will consider such matters as we deem material, including, without limitation, demographic characteristics of the proposed site, traffic patterns, parking, the predominant character of the neighborhood, competition from other businesses providing similar services within the area (including other Papa John's Restaurants), the proximity to other businesses the rights granted to our other franchisees, the nature of other businesses in proximity to the site, and other commercial characteristics (including the purchase price or rental obligations and other lease terms for the proposed site) and the size of the premises, appearance, and other physical characteristics of the proposed site. Approval of a site by us does not constitute an assurance, representation or warranty of any kind, expressed or implied, as to the successful operation of a Papa John's Restaurant, or for any other purpose. Our approval of a site indicates only that we believe the site complies with an acceptable


minimum criteria we establish solely for our purposes as of the time period encompassing the evaluation. You acknowledge that application of criteria that has been effective with respect to other sites and premises may not be predictive of potential for all sites. Further, demographic and/or economic factors included in our criteria could change and other relevant factors may be excluded from our criteria, which might alter the potential of a site. The uncertainty and instability of such criteria are beyond our control. We are not responsible if a site we approve fails to meet your expectations as to potential revenue or operational criteria or for your failure to locate the required number of suitable sites in the Development Area. You further acknowledge and agree that your acceptance of a Franchise for the operation of a Papa John's Restaurant at a site is based on your own independent investigation of the suitability of a site. Any proposed lease shall include an addendum in the form of Exhibit A to the Franchise Agreement, or shall contain terms and conditions substantially similar to those contained in Exhibit A to the Franchise Agreement. Any changes in the language set forth in Exhibit A must be approved by us in advance in writing.


(c) We shall deliver the Franchise Agreement to you within 20 days after you provide the address and telephone number for an approved location which you have leased or purchased. The Franchise Agreement for such location must be signed by you and submitted to us along with the payment of the initial franchise fee within ten days after it is delivered to you.


(d) The approval of a location and the delivery of a Franchise Agreement by us shall be conditioned upon a determination by us, in our reasonable judgment, that:


(i) You have the financial and operational capacity to develop and operate the Restaurant;


(ii) the site which you propose for the Restaurant is within the Development Area and is a suitable site based upon criteria we establish from time to time; and


(iii) You and your owners are in compliance with this Agreement and all Franchise Agreements executed pursuant to this Agreement.


(e) Notwithstanding any provision of any Franchise Agreement entered into between us and you, you shall exercise each development right as follows:


DEVELOPMENT SCHEDULE


Dates on Which Each Cumulative Number of Restaurants
Restaurant Shall be Open to be Open and Operating*
------------------------ ------------------------

August 31, 1995 1
February 28, 1996 2
August 31, 1996 3
February 28, 1997 4
[* - Includes only those Restaurants to be developed pursuant to this
Development Agreement.]


(f) The Initial Franchise Fee to be paid by you for each Restaurant shall be $18,500; provided that $3,500 of the Development Fee shall be credited against the Initial Franchise Fee. The net amount of the Initial Franchise Fee ($15,000) shall be paid at the time each Franchise Agreement is executed.


(g) It shall be your responsibility to ensure that each Restaurant is constructed or remodeled, and equipped and operated in compliance with all laws, ordinances and governmental rules and regulations and the Franchise Agreement, and you shall obtain all necessary permits and licenses relating thereto.


4. TERM. Unless sooner terminated as provided in this Agreement, this Agreement shall expire on the earlier to occur of: (i) the date on which all the Restaurants have been developed, or (ii) 12:00 midnight on the last date set forth on the Development Schedule (the "Term"). Upon the termination or expiration of this Agreement, all unexercised development rights shall expire.


5. CONSTRUCTION OR REMODELING. You shall, at your own expense, construct or remodel the Restaurant at each location in accordance with specifications we provide and the terms of the Franchise Agreement. You shall allow us and our agents and employees access to all areas of the premises of each Restaurant at such times as we or they may reasonably request and you shall cooperate fully with us and our agents and employees in preparing specifications for each Restaurant to be developed hereunder. However, it shall be your obligation to have plans drawn showing the layout on all equipment, signs and leasehold improvements, and such plans shall be subject to our approval. You shall not begin construction or remodeling on any outlet until the Franchise Agreement has been fully signed and we have approved the plans for such Restaurant.


6. YOUR ORGANIZATION, OPERATION AND OWNERSHIP. If you are a corporation, partnership, limited liability company or other entity:


(a) If we request from time to time, you shall furnish us with your Articles of Incorporation, Articles of Organization, Operating Agreement, By-Laws and other governing documents (and any amendments or modifications thereof), minutes and resolutions and all agreements or other documents, records and information pertaining to your existence and operation.


(b) You shall confine your business activities exclusively to the establishment, management and operation of Papa John's restaurants pursuant to agreements with us.


(c) You shall, at the same time you execute this Agreement, and at such other times as we may request, disclose the name and address of each person or entity owning a beneficial interest in you, and you shall not issue any additional securities, nor allow the "transfer" (as defined in Section 10) of any of your outstanding securities, except as provided in Section 10.


(d) You shall at all times comply with all laws, ordinances, rules and regulations of governmental bodies.


(e) You shall cause all persons or entities owning any interest in you to sign the Owner Agreement in the form we provide.


7. YOUR COVENANTS.

(a) COVENANT NOT-TO-COMPETE. You covenant and agree that during the Term and for a period of two years after the expiration or termination of this Agreement, regardless of the cause for such expiration or termination ( ...