Under what circumstances is an Alloy franchisee deemed in default under the Development Agreement?

• 1. The following provisions apply with respect to default and termination:
  • A. The rights and territorial protection granted to you in this Agreement have been granted in reliance on your representations and warranties, and strictly on the conditions set forth in Sections 2, 4 and 6 of this Agreement, including the condition that you comply strictly with the Development Schedule.
  • B. You will be deemed in default under this Agreement if you breach any of the terms of this Agreement, including the failure to meet the Development Schedule, or the terms of any Franchise Agreement or any other agreement between you or your affiliates and us or our affiliates. All rights granted in this Agreement immediately terminate upon written notice without opportunity to cure if: (i) you become insolvent, commit any affirmative action of insolvency or file any action or petition of insolvency, (ii) a receiver (permanent or temporary) of your property is appointed by a court of competent authority, (iii) you make a general assignment or other similar arrangement

for the benefit of your creditors, (iv) a final judgment remains unsatisfied of record for 30 days or longer (unless supersedeas bond is filed), (v) execution is levied against your business or property, (vi) suit to foreclose any lien or mortgage against the premises or equipment is instituted against you and not dismissed within 30 days, or is not in the process of being dismissed, (vii) you fail to meet the development obligations set forth in the Development Schedule attached as Appendix B (unless we determine that you are on track to become compliant with the Development Schedule within 30 days following the applicable deadline set forth in the Development Schedule), (viii) you fail to comply with any other provision of this Agreement and do not correct the failure within 30 days after written notice of that failure is delivered to you, or (ix) we have delivered to you a notice of termination of a Franchise Agreement or another agreement between you or your affiliates and us or our affiliates in accordance with the terms and conditions of such Franchise Agreement or other agreement.

C. If you fail to comply with the Development Schedule, we may terminate this Agreement, reduce the number of Facilities you have the right to develop hereunder, terminate or reduce the Development Territory, repurchase any Facilities open by you under this Agreement or exercise any other rights and remedies that we may have under the law.

Source: Item 23 — RECEIPTS (FDD pages 69–245)