What is the role of the Covenantor in relation to the Belocal Franchisee?

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RECITALS

• A. Franchisor has the right to use and license the use of a system ("System") for the establishment and operation of franchised businesses that (i) sell print advertising for publications, (ii) sell digital advertising services, (iii) facilitate publishing of a print publication, (iv) solicit and compile content for a publication, and (v) organize local events, all under the Marks ("Franchised Business").
• B. The System is identified by certain Marks and includes certain Confidential Information which provides economic advantages to Franchisor and licensed users of the System.
• C. Covenantor desires to become involved with Franchisee in the capacity of an Owner of the Franchised Business.
• D. In connection with his or her duties, it will be necessary for Covenantor to have access to some or all of the Confidential Information, to use the Marks, and to obtain valuable knowledge and experience about the Franchised Business, including through training.
• E. Franchisor and Franchisee have agreed on, and Covenantor acknowledges, the importance of restricting the use, access, and dissemination of the Confidential Information and otherwise protecting the goodwill, the Marks, and other legitimate business interests of the Franchisor; and Covenantor has agreed to enter into a written agreement protecting the Confidential Information, further protecting the legitimate interests of the Franchised Business, and protecting the System against unfair competition.
• F. Covenantor acknowledges that receipt of and the right to use the Confidential Information, the Marks, the training, and goodwill constitutes independent valuable consideration for the representations, promises, and covenants made by Covenantor herein.

NOW, THEREFORE, in consideration of the mutual covenants and obligations contained herein, the parties agree as follows:

AGREEMENT

Confidentiality/Non-Disclosure

• 1. Covenantor will at all times maintain the confidentiality of the Confidential Information and will use and disclose such Confidential Information only in the course of his or her work with or performance of services for the Franchisee in connection with the operation of the Franchised Business under the Franchise Agreement.
• 1. Covenantor will not at any time make copies of any of the Confidential Information for any purpose that is not directly related to the Franchised Business.

• 1. Covenantor will return and surrender any material containing any Confidential Information to Franchisee or Franchisor, upon request, or upon termination of Covenantor's business relationship with the Franchised Business.
• 1. Without limiting the foregoing in any way, Covenantor acknowledges that the Franchise Brand Standards Manual is Confidential Information; that Franchisor grants Franchisee, and therefore Covenantor, access to the Franchise Brand Standards Manual for limited purposes only; and that the Franchise Brand Standards Manual remains the property of Franchisor. Covenantor agrees that no Franchise Brand Standards Manual may be reproduced, in whole or in part, without Franchisor's written consent.

Covenants Not to Compete

• 1. In order to protect the Confidential Information, the Marks, the goodwill of the System, and the legitimate business interests of the Franchised Business, Covenantor agrees that, during the term of his or her business relationship with the Franchisee or the Franchised Business, and for a period of two years following the earlier of (A) the termination of Covenantor's business relationship with Franchisee (regardless of the reason for such termination), or (B) the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement (regardless of the reason for termination, expiration, or transfer), Covenantor will not, without Franchisor's prior written consent or as permitted under a valid franchise agreement with Franchisor:
  • (i) own, operate, or manage any Competitive Business; or
• (ii) engage in, provide, or assist others in engaging in or providing, Competitive Services; or
• (iii) perform any activities for or relating to a Competitive Business, the performance of which is reasonably likely to involve the use or disclosure of Confidential Information, which activity is similar to any activity Covenantor engaged in during the twelve-month period prior to the termination of Covenantor's business relationship with Franchisee or the termination, expiration, or transfer of Franchisee's interest in the Franchise Agreement; provided, however, that nothing herein shall prohibit Covenantor from owning, solely as an investment, securities of any Person traded on any national securities exchange if neither Franchisee nor any Covenantor controls, or is a member of a group which controls, such Person and does not, directly or indirectly, own 5% or more of any class of securities of such Person.

6. Definitions.

• (A) The term "Restricted Territory" means the following divisible and severable territorial divisions:
• (i) the territories of, and a ten-mile radius around the perimeter of the territory of, any publication business owned by Franchisor, its affiliates, or its franchisees (including the territory of the Franchised Business); or
• (ii) only in the event the foregoing is determined to be too broad by a court of law or arbitrator, the territories of any publication business owned by Franchisor, its affiliates, or its franchisees (including the territory of the Franchised Business); or

• (iii) only in the event the foregoing is determined to be too broad by a court of law or arbitrator, the territories of any of Franchisor's franchisees (including the territory of the Franchised Business); or
• (iv) only in the event the foregoing is determined to be too broad by a court of law or arbitrator, a ten-mile radius around the perimeter of the territory of the Franchised Business and the territory of the Franchised Business; or
• (v) only in the event the foregoing is determined to be too broad by a court of law or arbitrator, the territory of the Franchised Business.
• (B) The term "Competitive Business" includes the following divisible and severable business lines or services (each, a "Competitive Service") which the Franchisee's Franchised Business of which Covenantor is a part provided (i) for covenants applicable during the term of the Covenantor's business relationship with Franchisee or the Franchised Business, at any time during that relationship and (ii) for covenants applicable after the term of the Covenantor's relationship with Franchisee or the Franchised Business, at any time within the twelve-month period prior to the termination of the Covenantor's business relationship with the Franchised Business or the termination, expiration, or transfer of the Franchisee's Franchise Agreement:
  • (i) selling digital and/or print advertising to businesses for publication in or related to digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
  • (ii) publishing and/or facilitating the publishing of digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
  • (iii) developing relationships among members of Communities within the Territory, or members of Industry Groups within the Territory and within ten miles of the Territory, for the purpose of selling or marketing digital or print publications that compete with any N2 publication(s), including BELOCAL publications;
  • (iv) organizing, sponsoring, or hosting events for advertisers in the Publication or members of Communities within the Territory, or members of Industry Groups within the Territory and within ten miles of the Territory, for the purpose of selling or marketing digital or print publications, or digital or print advertising in digital or print publications, that compete with any N2 publication(s); or
  • (v) offering or selling digital marketing and advertising services which are offered or sold by Franchisor or its affiliates or are or were offered and sold by Franchisee.
• (C) The term "Confidential Information" means information and know-how, oral, visual, or written, and documents relating to Franchisor, its affiliates, the Franchised Business, and any publication Furnished by Franchisor or its affiliates, or representatives of Franchisor, to Covenantor. Franchisor's Confidential Information includes, without limitation, all trademarks, trade names, service marks, emblems, and indicia of origin used by Franchisor in connection with the operation of the Franchised Business, and all trade secrets or know-how, including, but not limited to, research, plans, products, services, customer lists, supplier information, advertisers, business plans, marketing data and materials, software, electronic code, forms, processes, methods of operation, strategic information, financial information, manuals, and other business information disclosed to Covenantor by Franchisor or its representatives, as well as any data stored on or within the information technology systems of Franchisor or any of its affiliates.

Miscellaneous

8. Covenantor agrees that:

• (A) Each of the covenants herein contain reasonable limitations as to time, geographical area, and scope of activity to be restrained and do not impose a greater restraint than is necessary to protect the goodwill or other business interests of Franchisor.
• (B) Each of the foregoing covenants shall be construed as independent of any other covenant or provision of this Agreement. If all or any portion of a covenant in this Agreement is held unreasonable or unenforceable by a court or agency having valid jurisdiction in any unappealed final decision to which Franchisor is a party, Covenantor shall be bound by any lesser covenant subsumed within the terms of such covenant that imposes the maximum duty permitted by law, as if the resulting covenant were separately stated in and made a part of this Agreement. No term of this Agreement shall be deemed to restrict Covenantor's ability to communicate with government agencies and officials regarding the Franchised Business.

Source: Item 22 — CONTRACTS (FDD page 71)