TO BE STATED THEREIN OR NECESSARY IN ORDER TO MAKE THE
STATEMENTS THEREIN, IN LIGHT OF THE CIRCUMSTANCES UNDER WHICH THEY ARE MADE, NOT
FALSE OR MISLEADING; OR OMIT TO STATE ANY MATERIAL FACT NECESSARY TO CORRECT ANY
STATEMENT PROVIDED BY THE COMPANY IN ANY EARLIER COMMUNICATION WITH RESPECT TO
THE SOLICITATION OF PROXIES FOR THE PARENT STOCKHOLDERS' MEETING WHICH HAS
BECOME FALSE OR MISLEADING.
IF AT ANY TIME PRIOR TO THE EFFECTIVE TIME, ANY
EVENT RELATING TO THE COMPANY OR ANY OF ITS AFFILIATES, OFFICERS OR DIRECTORS
SHOULD BE DISCOVERED BY THE COMPANY WHICH SHOULD BE SET FORTH IN A SUPPLEMENT TO
THE PROXY STATEMENT, THE COMPANY SHALL PROMPTLY INFORM PARENT. NOTWITHSTANDING
THE FOREGOING, THE COMPANY MAKES NO REPRESENTATION OR WARRANTY WITH RESPECT TO
ANY INFORMATION SUPPLIED BY PARENT OR ANY PERSON OTHER THAN THE COMPANY WHICH IS
CONTAINED IN ANY OF THE FOREGOING DOCUMENTS.
2.25
FRANCHISE MATTERS.
(A)
EXCEPT AS SET FORTH IN SECTION 2.25(A) OF
THE COMPANY SCHEDULE, THERE ARE NO PERSONS AUTHORIZED OR PRIVILEGED TO USE THE
INTELLECTUAL PROPERTY RIGHTS UNDER ANY CONTRACT.
SECTION 2.25(A)(I) OF THE
COMPANY SCHEDULE SETS FORTH THE NAME AND ADDRESS OF EACH FRANCHISEE THAT IS
OPERATING A STORE USING THE INTELLECTUAL PROPERTY RIGHTS AND EACH DEVELOPER WHO
IS AUTHORIZED TO OPEN AND OPERATE A STORE USING THE INTELLECTUAL PROPERTY
RIGHTS. EXCEPT AS SET FORTH IN SECTION 2.25(A)(II) OF THE COMPANY SCHEDULE, THE
ROYALTY FEE PERCENTAGE SPECIFIED IN EACH EXTANT FRANCHISE AGREEMENT REMAINS IN
EFFECT, IS BEING PAID WHEN DUE AND HAS NOT BEEN REDUCED, MODIFIED, WAIVED OR
OTHERWISE AFFECTED BY ANY FRANCHISE AGREEMENT "SIDE LETTER," MODIFICATION,
AMENDMENT, WAIVER OR SUSPENSION, IN WHOLE OR IN PART, AND, TO COMPANY'S
KNOWLEDGE, THERE ARE NO FRANCHISEES WHO ARE IN MATERIAL DEFAULT OF THEIR
FRANCHISE AGREEMENTS. EXCEPT AS SET FORTH IN SECTION 2.25(A)(III) OF THE COMPANY
SCHEDULE, THERE ARE NO AREA DEVELOPERS WHO ARE IN MATERIAL DEFAULT WITH THEIR
DEVELOPMENT OBLIGATIONS UNDER THEIR AREA DEVELOPMENT AGREEMENTS.
(B)
SECTION 2.25(B) OF THE COMPANY SCHEDULE LISTS EACH STATE OR OTHER
JURISDICTION IN WHICH THE COMPANY IS CURRENTLY REGISTERED, OR WITH WHICH THE
COMPANY FILED AN APPLICATION FOR REGISTRATION OR AN EXEMPTION FROM REGISTRATION,
TO SELL FRANCHISES, AND THE EFFECTIVE DATE OF EACH SUCH REGISTRATION. EXCEPT AS
SET FORTH IN SECTION 2.25(B) OF THE COMPANY SCHEDULE, ALL FRANCHISE
REGISTRATIONS REMAIN IN FULL FORCE AND EFFECT AND ARE NOT THE SUBJECT OF ANY
EXISTING OR THREATENED GOVERNMENT OR OTHER ACTION INTENDED, IN WHOLE OR IN PART,
TO RESULT IN THE TERMINATION, REVOCATION, MODIFICATION, SUSPENSION, CONDITIONING
OR DISSOLUTION OF ANY SUCH FRANCHISE REGISTRATION AND/OR ANY OTHER CIRCUMSTANCE
WHICH WOULD REASONABLY BE EXPECTED TO MATERIALLY IMPAIR THE COMPANY'S ABILITY
ROUTINELY TO RENEW OR AMEND ANY SUCH FRANCHISE REGISTRATION AND/OR ENTER INTO
FRANCHISE AGREEMENTS IN ANY JURISDICTION. TO THE KNOWLEDGE OF THE COMPANY, THE
COMPANY IS CURRENTLY IN COMPLIANCE WITH ALL LAWS RELATING TO THE OFFER AND SALE
OF FRANCHISES IN ALL STATES AND COUNTRIES WHERE THE COMPANY IS CONDUCTING
FRANCHISE ACTIVITIES AND HAS, WITHOUT LIMITATION, PREPARED ALL DISCLOSURE
DOCUMENTS AND SECURED