What constitutes a material act of default under the Benihana franchise agreement?

, Franchisee shall enter into a separate indemnification agreement based on the foregoing terms directly with any of the persons or entities indemnified hereunder.

ARTICLE 13. DEFAULT; TERMINATION

13.1 If Franchisee commits any act of default under this Agreement, and Franchisee fails to cure the default after any required notice and within the applicable cure period, then this Agreement shall terminate automatically without any requirement of further notice by BNC or to Franchisee. The cure period applicable to any act of default is set forth below; if a cure period for an act of default is not specifically set forth, it shall be thirty (30) days. No cure period is allowed for certain acts of default described below. If any applicable law requires a longer notice period or a longer cure period than is provided in this Agreement, then the period required by law shall be substituted for time period provided below.

• 13.2 The following acts are each a material act of default under this Agreement and shall be good cause for termination:
• (a) If the Restaurant does not open for business to the public by the date that is twelve (12) months from the date of this Agreement, or such later date as approved by BNC in writing.
• (b) Franchisee's failure to commence the design, construction, equipping and process of opening Restaurant with due diligence, or otherwise in accordance with time established by BNC at the time of execution of this Agreement.
• (c) Franchisee files a petition or application seeking any type of relief under United States Bankruptcy Code or any state insolvency or similar law, or a third-party files a petition or application under United States bankruptcy laws or any state insolvency or similar laws seeking to have Franchisee adjudicated a bankrupt, and the petition is not dismissed within ninety (90) days after it is filed. Subject to applicable law, this Agreement shall terminate without notice or cure period upon the occurrence of this act of default as if that date were the expiration date and Franchisee expressly and knowingly waives any rights that Franchisee may have under the provisions of the United States Bankruptcy Code and consents to the termination of this Agreement or any other relief which may be sought in a Complaint filed by BNC to lift the provisions of the automatic stay of the United States Bankruptcy Code. Additionally, Franchisee agrees not to seek an injunctive order from any court in any jurisdiction relating to insolvency, reorganization or arrangement proceedings which would have the effect of staying or enjoining this provision.
• (d) Franchisee becomes insolvent, a receiver or custodian (permanent or temporary) of Franchisee's property or any part thereof is appointed by a court of competent authority, or Franchisee makes a general assignment for the benefit of creditors. There shall be no cure period for an act of default under this provision.
• (e) A final judgment against Franchisee remains unsatisfied of record for thirty (30) days or longer (unless a supersedeas or other appeal bond is filed), execution is levied against Franchisee's business or property at the Location, or a suit to foreclose any lien or mortgage against the Restaurant premises or any furniture, fixtures or equipment at the Restaurant is filed against Franchisee and not dismissed within thirty (30) days. The cure period for an act of default under this provision is five (5) days after notice by BNC following expiration of any other period set forth in the provision.
• (f) Franchisee defaults in the performance of any term, condition, or obligation of payment of any indebtedness to Franchisee's suppliers or others arising out of the purchase or lease of equipment in connection with the Restaurant.
• (g) Franchisee fails to pay when due any Royalties, Advertising Contributions, or other amounts due and payable to BNC under this Agreement. The cure period for an act of default under this provision is ten (10) days after notice by BNC.

• (h) Franchisee fails to submit any Gross Sales Statement or other financial report required under this Agreement, or unintentionally files an inaccurate Gross Sales Statement or other financial report required under this Agreement. The cure period for an act of default under this provision is thirty (30) days after notice by BNC as provided herein.
• (i) Franchisee knowingly submits any false Gross Sales Statement or other financial report required under this Agreement. There shall be no cure period for an act of default under this provision.
• (j) Franchisee fails to operate the Restaurant in accordance with the BENIHANA Standards as to cleanliness, safety, health, and sanitation. The cure period for an act of default under this provision is five (5) days after notice by BNC.
• (k) Franchisee fails to immediately rectify all hazardous situations, and immediately remove and destroy any and all hazardous products. For purposes of the foregoing sentence, "hazardous situations" are those which have the potential to cause injury, illness or death, and "hazardous products" are products which are unfit for human consumption or which have the potential to cause injury, illness or death. There shall be no cure period for an act of default under this provision.
• (l) Franchisee sells products at the Restaurant that are not approved by BNC for sale at the Restaurant or sells products that do not conform to the product specifications established by BNC. The cure period for an act of default under this provision is five (5) days after notice by BNC.
• (m) Franchisee fails to sell or offer for sale at the Restaurant any product that is required by BNC to be sold or offered for sale at the Restaurant. The cure period for an act of default under this provision is five (5) days after notice by BNC.
• (n) Franchisee fails to use at the Restaurant any furniture, fixtures, equipment, or signage required by BNC to be used at the Restaurant.
• (o) Franchisee uses at the Restaurant any furniture, fixtures, equipment, or signage not approved by BNC for use at the Restaurant.
• (p) Franchisee fails to repair and maintain the Restaurant, or the furniture, fixtures, equipment or signage at the Restaurant to the standards required by BNC.
• (q) Franchisee fails to operate the Restaurant in accordance with any BENIHANA Standards (other than those as to cleanliness, safety, health and sanitation) as to operating procedures or system and methods of operation (including, without limitation, standards related to quality and quantity of food products served).
• (r) Franchisee fails to obtain and maintain all insurance required under Article 12 of this Agreement, with all required terms and policy provisions as required by this Agreement. The cure period for an act of default under this provision is ten (10) days after notice by BNC.
  • (s) Franchisee violates any law, ordinance, rule or regulation of a governmental body or

authority in connection with the operation of the Restaurant, and Franchisee fails to correct the violation within twenty (20) days after notification by the governmental body or authority. The cure period for an act of default under this provision is five (5) days from notice by BNC after expiration of the twenty (20) days from notification by the governmental body or authority; provided, however, that the five (5) day cure period shall be stayed if there is a bona fide dispute as to the violation or the legality of the law, ordinance, rule or regulation at issue, and Franchisee takes action in an appropriate court or other forum to contest such violation or legality.

• (t) Franchisee vacates, abandons, ceases to occupy, or loses its right to possession of the Restaurant or the Location. The cure period for an act of default under this provision is five (5) days after notice by BNC.
• (u) Franchisee abandons the franchise and franchise relationship with BNC. It shall be an abandonment of the franchise and franchise relationship with BNC if Franchisee ceases to do business at the Restaurant. The cure period for an act of default under this provision is five (5) days after notice by BNC.
• (v) Franchisee fails to comply with the restrictions on BENIHANA Confidential Information, or any covenants set forth in Article 18 or Article 6 of this Agreement, or if Franchisee misuses or make any unauthorized use of the Marks or any other identifying characteristics of the BENIHANA System, or otherwise materially impairs the goodwill associated therewith or BNC's rights therein. There shall be no cure period for an act of default under this provision.
• (w) Franchise sells, assigns, transfers, encumbers, or licenses any interest in this Agreement or in the franchise or Restaurant without the prior written consent of BNC and otherwise as permitted under this Agreement.

Source: Item 22 — CONTRACTS (FDD pages 73–74)