PURCHASE AND SALE AGREEMENT
BETWEEN
FRIENDLY ICE CREAM CORPORATION
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
AND
FRIENDCO RESTAURANTS, INC.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
DATED
July 10, 1997
TABLE OF CONTENTS
Section Page
1. Assets Purchased 1
A. Franchise Rights 2
B. Management Rights 2
C. Development Rights 2
D. Equipment and Tenant Improvements 3
E. Software Rights 3
F. Trademark and Service Xxxx Rights 3
G. Inventory and Restaurant Cash 3
2. Purchase Price and Allocation 4
3. Purchase Price Refunded on Loss
of Franchised Restaurant 5
4. Holdback of Portion of Purchase
Price 6
A. Creation of Escrow Account 6
B. Application of Escrow 7
C. Notice of Claims 8
D. Disbursement by Escrow Agent 9
5. Closing 9
A. Time and Place 9
B. Documents Executed at Closing 10
C. Documents Delivered at Closing 10
D. Real Estate Closing 11
E. Documents Executed at Real
Estate Closing 11
F. Documents Delivered at
Post-Real Estate Closing 11
6. Conditions of F.I.C.C.'s
Obligation to Close 12
A. Board of Director Approval 12
B. Approval of Non-Disturbance
Agreement
By Voting Majority of
Lending Group 12
C. Representations and Warranties 13
D. Opinion of FriendCo's Counsel 13
E. Evidence of Payment 13
7. Conditions of FriendCo's
Obligation to Close 13
A. Board of Director Approval of
FriendCo and
DavCo Restaurants, Inc 14
B. Receipt of Executed
Non-Disturbance
Agreement 14
C. Representations and Warranties 14
8. Representations and Warranties
of F.I.C.C. 14
A. Organization 14
B. Authorization 15
C. No Violations 15
D. Title to Assets 16
E. Joint Inspection 16
F No Brokers 16
G. Post Closing 17
9. Representations and Warranties
of FriendCo 17
A. Organization 17
B. Authorization 17
C. No Violations 18
D. No Conflict with Wendy's
International 18
E. No Brokers 19
F. Offer of Employment 19
10. Indemnification 19
A. Pre-Effective Date 19
B. Post-Effective Date Expenses 20
C. General Indemnification 20
D. Environmental Indemnification 20
11. Definitions 21
12. Choice of Law and Jurisdiction 23
A. Governing Law and Forum 23
B. Arbitration of Minor Disputes 23
C. Award of Costs and Attorney's
Fees 23
13. Survival of Terms,
Representations and Warranties 24
14. Severability 24
15. Notices 25
EXHIBITS: SCHEDULES:
Exhibit A: Franchise Agreement Schedule A: List of Franchised Restaurants
Exhibit B: Management Agreement Schedule B: List of Managed Restaurants
Exhibit C: Development Agreement Schedule C: List of Exempted Equipment
Exhibit D: Software License
Agreement
Exhibit E: Trademark License
Agreement
Exhibit F: Escrow Agreement
Exhibit G: Non-Disturbance Agreement
Exhibit H: Guaranty
PURCHASE AND SALE AGREEMENT
THIS AGREEMENT is dated ______________ , 1997
by and between Friendly Ice Cream
Corporation, a Massachusetts corporation ("F.I.C.C.")
and FriendCo Restaurants, Inc., a Maryland
corporation ("FriendCo").
WHEREAS, F.I.C.C. owns and operates 51
Friendly's Restaurants in Delaware, Maryland and
certain counties of Northern Virginia; and
WHEREAS, F.I.C.C. desires to achieve
additional market penetration in the above-mentioned
territory, and FriendCo desires to operate Friendly's
Restaurants and to construct new Friendly's
Restaurants;
NOW, THEREFORE, in consideration of the
exchange of mutual covenants and the consideration
contained herein, F.I.C.C. hereby agrees to sell, and
FriendCo hereby agrees to buy, the following rights
and assets pursuant to the terms and conditions of this
Agreement.
1. ASSETS PURCHASED
Upon the Effective Date of this Agreement,
FriendCo will acquire from F.I.C.C. and its relevant
subsidiaries all right, title and interest in the following
assets:
A. Franchise Rights.
FriendCo will receive the right to operate the thirty-four (34)
Friendly's Restaurants identified in Schedule A
pursuant to the terms of a Franchise Agreement with
Friendly's Restaurants Franchise, Inc. ("F.R.F.I.") in
the form attached hereto as Exhibit A.
B. Management Rights.
FriendCo will receive the right to manage fourteen
(14) Friendly's Restaurants identified in Schedule B
pursuant to the terms of a Management Agreement
with F.I.C.C. in the form attached hereto as Exhibit B.
FriendCo will also receive the right to convert any
managed restaurant to a franchised restaurant during
the term of the Management Agreement at FriendCo's
sole option (subject only to landlord consent to lease
assignment or subletting, if necessary) upon notice to
F.I.C.C., payment of an initial franchise fee, execution
of a Franchise Agreement, execution of a sublease in
substantially the form of the subleases employed the
parties pursuant to this transaction and payment to
F.I.C.C. of an amount equal to a 5.3 multiple of the
restaurant earnings before interest, taxes, depreciation
and amortization (hereinafter "Restaurant EBITDA")
as measured on a trailing twelve (12) month basis from
the last day of the last full month preceding the notice
to F.I.C.C. (but in no event shall the payment be less
than the amount of the depreciated book value of the
restaurant equipment, cash and inventory).
C. Development Rights.
FriendCo will receive the right to construct and
operate up to one hundred (100) additional Friendly's
Restaurants in an exclusive territory consisting of the
States of Delaware and Maryland, the District of
Columbia, and certain
counties of Northern Virginia, all as is more
specifically set forth in the Development Agreement
between F.R.F.I. and FriendCo, in the form attached
hereto as Exhibit C.
D. Equipment and Tenant Improvements.
FriendCo will receive all of
F.I.C.C.'s rights, title and interest to the equipment and
tenant improvements (but not fixtures) in each of the
thirty-four (34) Friendly's Restaurants identified in
Schedule A, with the sole exception of such
equipment identified in Schedule C, attached hereto.
E. Software Rights.
FriendCo will receive the rights to use all current
F.I.C.C. operating software in all franchised restaurants, and
will be entitled to receive all improvements and
upgrades to such software, pursuant to the terms of a
Software License Agreement with F.I.C.C. in the form
attached hereto as Exhibit D.
F. Trademark and Service Xxxx Rights.
FriendCo will receive the non-exclusive
rights to utilize for the benefit of each
franchised or managed restaurant all valid Trademarks
and Service Marks owned or licensed by F.I.C.C.
pursuant to the terms of the Franchise Agreements
with F.R.F.I. and a Trademark License Agreement
with F.I.C.C. in the form attached hereto as Exhibit E.
G. Inventory and Restaurant Cash.
FriendCo will receive on the Effective Date the
rights to all inventory and restaurant cash for each of
the thirty-four (34) franchised restaurants identified in
Schedule A.
2. PURCHASE PRICE AND ALLOCATION
A. With respect to the assets listed
in subparagraphs 1.A., 1.B., 1.C., 1.D., 1.E. and 1.F.,
the purchase price shall be Seven Million Five
Hundred Fifty-Six Thousand Dollars ($7,556,000.00),
representing approximately a 5.3 times multiple of the
represented Restaurant EBITDA of the thirty-four
(34) restaurants identified in Schedule A.
B. With respect to the assets listed
in category 1.G., the purchase price shall be an amount
agreed upon by F.I.C.C. and FriendCo following the
conclusion of an Inventory and Restaurant Cash audit
performed jointly by F.I.C.C. and FriendCo on the
Effective Date.
C. The purchase price set forth in
subparagraph 2.A. shall be allocated as follows: first,
in the amount of Eight Hundred Sixty Thousand
Dollars ($860,000.00) to initial franchise fees for the
thirty-four (34) franchised restaurants; second, in the
amount of Two Million Seven Hundred Thousand
Dollars ($2,700,000.00) to equipment and tenant
improvements in the thirty-four (34) franchised
restaurants; third, in the amount of Three Million Four
Hundred Ninety-Six Thousand Dollars
($3,496,000.00) to goodwill; and fourth in the amount
of Five Hundred Thousand Dollars ($500,000.00) to
franchise development rights for the States of
Delaware and Maryland, the District of Columbia and
Northern Virginia.
3. PURCHASE PRICE REFUNDED
ON LOSS OF FRANCHISED
RESTAURANT
A. For any of the thirty-four (34)
franchised restaurants being acquired by FriendCo
from F.I.C.C., if the right to occupy and operate such
restaurant is terminated by a landlord, lender or
governmental agency or if primary access to such
restaurant is lost due to a defect in title existing as of
the Effective Date, within ten (10) years of the
Effective Date hereof, and such termination was
neither caused nor contributed to by FriendCo but
results from the loss or denial of a Certificate of
Occupancy, or the loss of the right to occupy or
access the property other than through an eminent
domain proceeding which provides FriendCo with
compensation for its loss of business at such location,
then for each such terminated restaurant, an allocable
portion of the purchase price will be refunded to
FriendCo by F.I.C.C. in accordance with the following
formula:
1) For each full year less than ten
(10) years of occupancy lost
through such termination,
F.I.C.C. shall refund 10% of
the allocable portion of the
restaurant purchase price (i.e.
5.3 times the restaurant's 1996
E.B.I.T.D.A.) to FriendCo.
2) For any partial year of
occupancy lost through such
termination, F.I.C.C. shall
refund an amount equal to
.00274 times the number of
days lost in such partial year
times the allocable portion of
the restaurant purchase price
(i.e. 5.3 times the restaurant's
1996 E.B.I.T.D.A.) to
FriendCo.
3) In addition, FriendCo shall be
entitled to recover from
F.I.C.C. FriendCo's reasonable
expenses incurred in attempting
to prevent the termination of its
right to occupy and operate
such restaurant only, if F.I.C.C.
does not elect to attempt to
prevent the termination of such
rights itself.
B. No refund shall be due to
FriendCo for any of the thirty-four (34) franchised
restaurants lost or terminated after ten (10) years of
occupancy by FriendCo, for any franchised restaurant
lost or terminated due to any action or inaction
specifically attributable to FriendCo, or for any newly
constructed restaurant beyond the original thirty-four
(34) franchised restaurants.
C. The sole exceptions to the ten
(10) year period of occupancy and operation required
under this Paragraph shall be for the expiration of the
lease for restaurant numbered 751 and 461, which the
parties hereby acknowledge expire on January 31,
2006 and February 28, 2007.
4. HOLDBACK OF PORTION OF
PURCHASE PRICE
A. Creation of Escrow Account.
F.I.C.C. and FriendCo agree to the
creation of an Escrow Account at First National Bank
of Maryland pursuant to the terms of an Escrow
Agreement, in the form attached hereto as Exhibit F,
to be funded by the
holdback of Two Hundred Fifty Thousand Dollars
($250,000.00), which amount shall be deposited into
the Escrow Account.
B. Application of Escrow.
1) Subject to subparagraph 4.B.2),
below, the parties hereto agree that the amounts in the
Escrow Account shall be used to indemnify and hold
harmless FriendCo from and against losses relating to
cash, inventory and restaurant conditions existing as of
the Effective Date in the manner set forth in Paragraph
4 of this Agreement and in the Escrow Agreement.
All such amounts shall be disbursed out of the Escrow
Account in accordance with the terms of the Escrow
Agreement, and any such amounts distributed to
FriendCo shall be deemed to reduce the goodwill
portion of the Purchase Price as set forth in Paragraph
2 of this Agreement.
2) FriendCo may not make any
claim for losses (other than for Restaurant Cash
Losses or Inventory Losses) pursuant to this
Paragraph 4 unless the claim relates to a condition
which existed as of the Effective Date and such claim
amounts to Ten Thousand Dollars ($10,000.00) for a
loss relating to an individual item, occurrence or event
or Twenty Thousand Dollars ($20,000.00) for a claim
arising out of or relating to a series of items,
occurrences or events or related items occurrences or
events (collectively, the "Threshold Amount"). A
claim for each of Restaurant Cash Losses or Inventory
Losses may not be made unless such claim exceeds
One Hundred Dollars ($100.00) on an individual
restaurant basis.
C. Notice of Claims.
1) For any claims relating to
Restaurant Cash Losses or Inventory Losses,
FriendCo shall have thirty (30) days from the Effective
Date hereof to send written notice of the claim(s)
simultaneously to the Escrow Agent and to F.I.C.C.
Such written notice shall identify the franchised
restaurant(s) to which the claim applies and shall state
the factual basis for the claim and well as the exact
amount of the claim.
2) For any other claims for losses
which exceed the Threshold Amount, FriendCo shall
have ninety (90) days from the Effective Date to send
written notice of such claims(s) simultaneously to the
Escrow Agent and to F.I.C.C. Such written notice
shall identify the franchised restaurant(s) to which the
claim applies and shall state the factual basis for the
claim as well as the exact amount of the claim or an
estimate of the amount of the claim if the exact
amount is not determinable at the time written notice
is given.
3) If F.I.C.C. shall object to either
the claim or the amount claimed in the written notice,
F.I.C.C. shall send written notice of its objection
simultaneously to the Escrow Agent and FriendCo
within thirty (30) days of its receipt of the written
notice of the claim. If no objection is provided within
such thirty (30) day period, F.I.C.C. shall be deemed
to have acknowledged the validity of the amount
claimed, and the Escrow Agent shall thereafter transfer
to FriendCo in immediately available funds an amount
equal to the claim, pursuant to the terms of the
Escrow Agreement.
4) If F.I.C.C. shall have sent a
written objection to FriendCo and the Escrow Agent
within the thirty (30) day period for objection, F.I.C.C.
and FriendCo shall have a period of thirty (30) days
thereafter to resolve or compromise the claim. If a
resolution or compromise is reached, the parties shall
jointly send to the Escrow Agent a notice of
resolution, and the Escrow Agent shall make such
distribution(s) as are specified in the notice of
resolution. If F.I.C.C. and FriendCo are unable to
resolve or compromise the claim within the thirty (30)
day period, then the Escrow Agent shall retain an
amount equal to the amount in dispute between the
parties, and either F.I.C.C. or FriendCo shall have the
right to refer the disputed claim(s) to arbitration
pursuant to Paragraph 12.B, infra.
D. Disbursement by Escrow Agent.
If the Escrow Agent shall not have received
any written notice of claim(s) by the ninety-third
(93rd) day following the Effective Date of this
Agreement, or if the total amount of all claims
received does not equal or exceed the amount of the
Escrow Account, the Escrow Agent shall thereafter
proceed to disburse to F.I.C.C. the amount by which
the Escrow Account exceeds the amount of any claims
in immediately available funds, pursuant to the terms
of the Escrow Agreement.
5. CLOSING
A. Time and Place. The Closing
on this Purchase and Sale Agreement will take place at
the offices of DavCo Restaurants, Inc., 0000 Xxxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxxxx, 00000 on Thursday,
July 10, 1997, or at such time and place as the parties
hereto may agree. Any documents necessary to
effectuate the Closing on this Purchase and Sale
Agreement may be executed in two (2) or more
original counterparts, any one of which need not
contain the signatures of more than one (1) party, but
all such counterparts taken together will constitute one
and the same agreed document.
B. Documents Executed at Closing.
The following documents shall be executed
by all such necessary parties at the Closing:
1) Purchase and Sale
Agreement
between F.I.C.C. and FriendCo
2) Development Agreement
between F.R.F.I. and FriendCo
3) 34 Individual Restaurant
Franchise Agreements
between F.R.F.I. and FriendCo
4) Trademark License
Agreement
between F.I.C.C. and FriendCo
5) Software License Agreement
between F.I.C.C. and FriendCo
6) Escrow Agreement
between F.I.C.C., FriendCo and
First National Bank of Maryland
7) Letter Agreement regarding
Maryland Science Center
restaurant
between F.I.C.C. and FriendCo
C. Documents Delivered at
Closing.
The following documents shall be delivered
by the designated party at Closing:
1) Non-Disturbance Agreement
between Lender's of F.I.C.C.,
FriendCo and
DavCo Restaurants (F.I.C.C.)
2) Opinion of Counsel of FriendCo
D. Real Estate Closing.
The Closing on all necessary Real Estate Documents will
take place at the offices of DavCo Restaurants, Inc.,
0000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxx, 00000,
at 11:00 a.m. on the Effective Date, or at such time
and place as the parties hereto may agree. Any
documents necessary to effectuate the Real Estate
Closing may be executed in two (2) or more original
counterparts, any one of which need not contain the
signatures of more than one (1) party, but all such
counterparts taken together will constitute one and the
same agreed document.
E. Documents Executed at Real Estate Closing.
The following documents
shall be executed by all necessary parties at the Real
Estate Closing:
1) 13 Prime Leases
between F.I.C.C. and FriendCo
2) 21 Subleases
between F.I.C.C. and FriendCo
F. Documents Delivered Post-Real Estate Closing.
The following documents shall be delivered by
F.I.C.C. to FriendCo within six
(6) months of the Effective Date, pursuant to
paragraph 8.G.:
1) 11 Landlord Consents to
Sublease (F.I.C.C.)
2) Lease Extensions on
Restaurants
Nos. 404, 411, 751 and 813
3) Evidence of Financing
4) 34 Memoranda of Lease or
Sublease
between F.I.C.C. and FriendCo
5) 21 Estoppel Certificates on
Subleases
6) 21 Non-Disturbance
Agreements
from Lenders of Subleased
Properties
6. CONDITIONS OF F.I.C.C.'S
OBLIGATION TO CLOSE
The obligations of F.I.C.C. to close on this
Purchase and Sale Agreement shall be subject to the
fulfillment at or prior to the Closing of each of the
following conditions:
A. Board of Director Approval.
The Board of Directors of F.I.C.C. shall
have approved the transactions contemplated under
this Purchase and Sale Agreement and shall have
authorized its execution by F.I.C.C.
B. Approval of Non-Disturbance Agreement By Voting Majority of
Lending Group.
F.I.C.C. shall have received the
approval of a majority of the votes of the Lending
Group for the Non-Disturbance Agreement between
the Lenders, FriendCo and DavCo Restaurants, as
evidenced by the signature of the Collateral Agent on
the Non-Disturbance Agreement.
C. Representations and Warranties.
The representations and warranties of
FriendCo set forth in Paragraph 9 shall be true and
correct in all material respects as of the date of this
Agreement and as of the Effective Date.
D. Opinion of FriendCo's Counsel.
F.I.C.C. shall have received an opinion of
FriendCo's counsel, Xxxxx, Xxxxxxxxx & Xxxxxx,
dated as of the Closing Date, as to FriendCo's
authority to execute the Purchase and Sale Agreement,
DavCo Restaurants, Inc.'s authority to execute any
guarantee, and the lack of any conflict between this
transaction and any contracts with Wendy's
International, Inc., whether executed by FriendCo, its
corporate parent, or any affiliate.
E. Evidence of Payment.
F.I.C.C. shall have received by the Real Estate Closing
Date evidence of FriendCo's ability to transfer
sufficient funds to F.I.C.C. to satisfy the purchase
price set forth in Paragraph 2, supra.
7. CONDITIONS OF FRIENDCO'S
OBLIGATION TO CLOSE
The obligations of FriendCo to close on the
Purchase and Sale Agreement shall be subject to the
fulfillment at or prior to the Closing of each of the
following conditions:
A. Board of Director Approval.
of FriendCo and DavCo Restaurants, Inc.
The Boards of Directors of FriendCo and its corporate
parent, DavCo Restaurants, Inc., shall both have
approved of this Purchase and DavCo's guarantee and
shall both have authorized execution.
B. Receipt of Executed Non-Disturbance Agreement.
FriendCo shall have
received an original Non-Disturbance Agreement
between F.I.C.C.'s Lenders, FriendCo and DavCo
Restaurants, Inc., in the form attached hereto as
Exhibit G, executed by the Collateral Agent for
F.I.C.C.'s Lenders.
C . Representations and
Warranties.
The representations and warranties of
F.I.C.C. set forth in Paragraph 8 shall be true and
correct in all material respects as of the date of this
Agreement and the Effective Date.
8. REPRESENTATION AND
WARRANTIES OF F.I.C.C.
F.I.C.C. hereby represents and warrants to
FriendCo as follows:
A. Organization.
F.I.C.C. is a
corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power
and authority to execute all documents contemplated
in this transaction.
B. Authorization.
F.I.C.C. has
full corporate power and authority to perform its
obligations under this Agreement and the documents
to be signed at Closing and all other transactions
contemplated hereby. The execution and delivery of
this Agreement and the consummation of the other
transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action by
F.I.C.C. The Board of Directors of F.I.C.C. has
approved the execution, delivery and performance of
this Agreement and the consummation of all other
transactions contemplated hereby. This Agreement
has been duly executed and delivered by F.I.C.C. and
constitutes the valid and binding agreement of
F.I.C.C., enforceable against F.I.C.C. in accordance
with its terms, subject to applicable bankruptcy,
insolvency and other similar laws affecting the
enforceability of creditors' rights generally, general
equitable principles and the discretion of courts in
granting equitable remedies.
C. No Violations.
The execution,
delivery and performance of this Agreement, the
consummation of the other transactions contemplated
hereby and the fulfillment of a compliance with the
terms and conditions of this Agreement do not and
will not violate or conflict with (i) any terms or
provisions of the Articles of Incorporation or By-laws
of F.I.C.C. or (ii) any judgment, decree, order, statute,
rule or regulation applicable to F.I.C.C. or any of its
assets listed in Paragraph 1, supra, except for such
violations which could not reasonably be expected to
materially impair or delay the ability of F.I.C.C. to
consummate the transactions contemplated hereby.
D. Title to Assets.
Title to all
assets identified in Paragraph 1, supra, which F.I.C.C.
will transfer, lease or license to FriendCo is valid and
transferable by F.I.C.C., except as specifically
excluded. The trademarks and service marks to be
licensed to FriendCo are validly held by F.I.C.C. or
licensed to F.I.C.C. for use without dispute or
challenge. F.I.C.C. maintains current and valid
Certificates of Occupancy for each of the thirty-four
(34) franchised restaurants and fourteen (14) managed
restaurants, the cash flow represented to FriendCo as
the 1996 E.B.I.T.D.A. for the thirty-four (34)
franchised restaurants is correct and accurate to the
best of F.I.C.C.'s knowledge and understanding, and
each of the thirty-four (34) franchised restaurants have
valid and existing primary access as of the Effective
Date, provided, however, any breach of this warranty
of access shall have as its sole remedy the rights
provided under Paragraph 3, supra.
E. Joint Inspection.
Repairs reasonably determined to be necessary to the
Restaurant and Premises to bring them into standard
operating condition through a Joint Inspection will be
made by F.I.C.C. at its sole cost and expense, in a
good and workmanlike manner at a time mutually
convenient to F.I.C.C. and FriendCo.
F. No Brokers.
None ofF.I.C.C., F.R.F.I., or any of their respective executive
officers or directors has employed any broker, finder
or investment banker or incurred any liability for
commissions or finders fees in connection with the
transactions contemplated hereby.
G. Post Closing.
F.I.C.C. shall employ reasonable and good faith efforts to
expeditiously obtain and deliver to FriendCo all third
party landlord consents to sublet, lease extensions,
estoppel certificates and non-disturbance certificates
for the twenty-one (21) subleased franchised
restaurants. A breach of this warranty shall be deemed
to have occurred upon any third party landlord (or its
successor-in-interest) terminating or attempting to
terminate its lease with F.I.C.C.; however, FriendCo's
sole remedy for a breach of this warranty shall be
pursuant to Paragraph 3, supra.
9. REPRESENTATIONS AND WARRANTIES OF FRIENDCO
FriendCo hereby represents and warrants to
F.I.C.C. as follows:
A. Organization. FriendCo is a
corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power
and authority to execute all documents contemplated
in this transaction.
B. Authorization. FriendCo has
full corporate power and authority to perform its
obligations under this Agreement and the documents
to be signed at Closing and all other transactions
contemplated hereby. The execution and delivery of
this Agreement and the consummation of the other
transactions contemplated hereby have been duly and
validly authorized by all necessary corporate action by
FriendCo. The Board of Directors of FriendCo has
approved the execution, delivery and performance of
this Agreement and
the consummation of all other transactions
contemplated hereby. This Agreement has been duly
executed and delivered by FriendCo and constitutes
the valid and binding agreement of FriendCo,
enforceable against FriendCo in accordance with its
terms, subject to applicable bankruptcy, insolvency
and other similar laws affecting the enforceability of
creditors' rights generally, general equitable principles
and the discretion of courts in granting equitable
remedies.
C. No Violations. The execution,
delivery and performance of this Agreement, the
consummation of the other transactions contemplated
hereby and the fulfillment of a compliance with the
terms and conditions of this Agreement do not and
will not violate or conflict with (i) any terms or
provisions of the Articles of Incorporation or By-laws
of FriendCo or (ii) any judgment, decree, order,
statute, rule or regulation applicable to FriendCo or
any of its assets listed in Paragraph 1, supra, except
for such violations which could not reasonably be
expected to materially impair or delay the ability of
FriendCo to consummate the transactions
contemplated hereby.
D. No Conflict with Wendy's
International. The execution, delivery and
performance of this Agreement and the consummation
of the other transactions contemplated hereby will not
violate or conflict with any agreements, contracts or
obligations between FriendCo or its corporate parent,
DavCo Restaurants, Inc. and Wendy's International,
Inc.
E. No Brokers. Neither FriendCo
nor its respective executive officers or directors has
employed any broker, finder or investment banker or
incurred any liability for commissions or finders fees in
connection with the transactions contemplated hereby.
F. Offer of Employment.
FriendCo agrees to make an offer of employment to
the restaurant level employees at the thirty-four (34)
Friendly's Restaurants identified in Schedule A upon
substantially the same terms as each employee is
presently employed. For purposes of this Paragraph
9F only, restaurant level employees shall include
waiter/waitress, host/hostess, guest services,
supervisor, grill workers, fountain worker, dish
washer, district manager, general manager and
assistant manager.
10. INDEMNIFICATION
A. Pre-Effective Date
Expenses. Except as provided in subparagraph 10.D.
infra, F.I.C.C. will indemnify and hold FriendCo
harmless for any and all expenses of restaurant
occupation or operation which arise or are fully due
prior to the Effective Date hereof. Further, F.I.C.C.
will indemnify and hold FriendCo harmless for
F.I.C.C.'s pro rata portion of any expenses of
restaurant occupation or operation which do not
become due until after the Effective Date hereof.
B. Post-Effective Date Expenses.
Except as provided in subparagraph
10.D., infra, FriendCo will indemnify and hold F.I.C.C.
harmless for any and all expenses of restaurant
occupation or operation which arise or are fully due
after the Effective Date hereof. Further, FriendCo will
indemnify and hold F.I.C.C. harmless for FriendCo's
pro rata portion of any expenses of restaurant
occupation or operation which become due prior to
the Effective Date hereof.
C. General Indemnification.
Except as otherwise provided in this Paragraph 10,
F.I.C.C. and FriendCo will indemnify, defend, and
hold each other harmless from claims, demands and
causes of action asserted against the indemnitee by any
person (including, without limitation, F.I.C.C.'s and
FriendCo's employees, agents, contractors or any third
party) for personal injury or death or for loss of or
damage to property and resulting from the
indemnitor's active or passive negligence or willful
misconduct. Where personal injury, death, or loss of
or damage to property is a result of the joint active or
passive negligence or willful misconduct of F.I.C.C.
and FriendCo, the indemnitor's duty of indemnification
shall be in proportion to its allocable share of joint
active or passive negligence or willful misconduct.
D. Environmental Indemnification.
In the event of any leak, spill,
discharge, seepage or other contamination which
occurred or was first present in any of the thirty-four
(34) franchised restaurants or the surrounding leased
or subleased premises prior to the Effective Date, or
which occurred or was present in any of the fourteen
(14) managed restaurants at any time prior to their conversion
to the status of a franchised restaurant, F.I.C.C. shall
indemnify and hold FriendCo harmless from any and
all claims, losses, demands, remediation, testing or
clean-up arising from such leak, spill, discharge,
seepage or other contamination. In the event of any
leak, spill, discharge, seepage or other contamination
which occurred or was first present in any of the
thirty-four (34) franchised restaurants after the
Effective Date, FriendCo shall indemnify and hold
F.I.C.C. harmless from any and all claims, losses,
demands, remediation, testing or clean-up, unless such
leak, spill, discharge, seepage or other contamination
first occurs or is first present after the reversion of
control over such property to F.I.C.C.
11. DEFINITIONS
A. As used in this Agreement, the
following terms shall have the following meanings:
1) "Certificate of Occupancy"
shall mean all documentation
issued from the appropriate state
or county authorities which
permit the occupation and use of
the restaurant as a retail food
service establishment.
2) "Closing"
shall mean the execution of all
documents set forth in Paragraph
5B of this Agreement
3) "Closing Date"
shall mean the date of execution
of all documents set forth in
Paragraph 5B of this Agreement.
4) "Effective Date"
shall mean the date of transfer of
operational control, title to all
assets and right to receive all
income of the thirty-four (34)
franchised Friendly's Restaurants
purchased by FriendCo from
F.I.C.C. and the receipt of the
purchase price by F.I.C.C.
5) "Escrow Agent"
shall mean First National Bank of
Maryland or such affiliated
banking entity as may be designed
by First National Bank of
Maryland.
6) "Inventory"
shall mean all saleable food
products, merchandise, supplies,
flatware, dishes or other items
maintained as restaurant inventory
by F.I.C.C.
7) "Inventory Losses"
shall mean any damaged, missing
or unsaleable food products,
merchandise, unusable, missing or
unservicable supplies.
8) "Joint Inspection"
shall mean F.I.C.C. and FriendCo
shall jointly inspect each
Restaurant and Premises to
determine what if any repairs are
necessary to the Building, the
Outside Areas, the Systems, the
Trade Fixtures or the Equipment
to bring the foregoing into
standard operable condition.
9) "Lending Group" or "Lenders"
shall mean those financial
institutions identified in the
Second Amended and Restated
Revolving Credit.
10) "Restaurant Cash"
shall mean all cash maintained at
any individual restaurant.
11) "Restaurant Cash Losses"
shall mean any shortfall or
negative discrepancy between the
amount of Restaurant Cash
determined to be present upon the
Joint Inspection and paid for by
FriendCo, and the amount of
Restaurant Cash determined to be
present upon the opening of the
restaurant for business by
FriendCo's employees.
12. CHOICE OF LAW AND
JURISDICTION
A. Governing Law and Forum.
This Agreement shall be governed and interpreted in
accordance with the substantive laws (but not the
choice of law provisions) of the State of Delaware.
No party to this Agreement may bring or maintain an
action against, or which includes, another party to this
Agreement except in the federal or state courts located
in the State of Delaware unless the sole and exclusive
forum for such claim lies in another jurisdiction. All
parties to this Agreement expressly waive any defense
of lack of jurisdiction or improper venue to any action
brought in the State of Delaware.
B. Arbitration of Minor Disputes.
For any action or dispute in which the
damages claimed, less costs and attorneys fees, do not
exceed Two Hundred Fifty Thousand Dollars
($250,000.00), the parties expressly agree that the sole
and exclusive forum shall be in arbitration before the
American Arbitration Association, pursuant to its rules
in effect at the time the action or dispute is brought,
with the situs of the arbitration in Wilmington,
Delaware.
C. Award of Costs and Attorney's Fees.
For any action or dispute between
the parties, the forum court or arbitration panel shall
have the power to award costs and attorneys fees
incurred along with a judgment in favor of the
prevailing party.
13. SURVIVAL OF TERMS, REPRESENTATIONS
AND WARRANTIES
None of the terms, obligations, representations
or warranties contained in this Agreement shall be
deemed merged with the Closing of this Agreement or
the execution of any documents contemplated
hereunder but rather shall survive the Closing until the
expiration or termination of such terms, obligations,
representations and warranties by the written action of
all parties hereto.
14. SEVERABILITY
Any provision hereof which is prohibited or
unenforceable in any jurisdiction will, as to such
jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction will not
invalidate or render unenforceable such provision in
any other jurisdiction. To the extent permitted by law,
the parties hereto waive any provision of law which
renders any such provision prohibited or unenforceable
in any respect.
15. NOTICES
All notices, communications and deliveries
hereunder shall be made in writing signed by the party
making the same, shall specify the Paragraph of this
Agreement pursuant to which it is being made or
given, and shall be deemed given or made on (a) the
date delivered if delivered in person or sent by
telecopier, (b) the first business day after the date it is
sent by a nationally recognized courier, or (c) the third
business day after the date it is mailed if mailed by
registered or certified mail, return receipt requested,
with all postage and other fees prepaid, as follows:
To F.I.C.C.:
Friendly Ice Cream
Corporation
0000 Xxxxxx Xxxx
Xxxxxxxxx,
Xxxxxxxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
Chairman
and President
Telecopier: (000)000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esquire
Associate General Counsel
Friendly Ice Cream Corporation
0000 Xxxxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Telecopier: (000)000-0000
To FriendCo:
FriendCo Restaurants, Inc.
0000 Xxxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxxx
Chairman and President
Telecopier: (000)000-0000
with a copy to:
Xxxxx X. Xxxxxx, Esquire
Xxxxx, Xxxxxxxxx and Xxxxxx
0000 Xxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Telecopier: (000)000-0000
IN WITNESS WHEREOF, the parties
hereto have caused their hands and seals to be
subscribed on the day and date first set forth above.
ATTEST: FRIENDLY ICE CREAM CORPORATION
/S/ Xxxxx X. Xxxxxx, III By: /S/ Xxxxxx X.Xxxxx (Seal)
Name: Name: Xxxxxx X. Xxxxx
Title: Title: Chairman and President
FRIENDCO RESTAURANTS, INC.
/S/ Xxxx Xxxxxxxx By: /S/ Xxxxxx Xxxxxxxx (Seal)
Name: Name: Xxxxxx Xxxxxxxx
Title: Title: Chairman and President
EXHIBIT H
GUARANTY
As an inducement to FRIENDLY ICE CREAM
CORPORATION ("Friendly's") to execute the
Purchase and Sale Agreement and all Exhibits
thereto, dated July 10, 1997 between Friendly's and
FRIENDCO RESTAURANTS, INC. ("FriendCo")
and all addenda and amendments thereto (collectively
the "Agreement"), the undersigned, jointly and
severally, hereby unconditionally warrant to Friendly's
and its successors and assigns that all FriendCo's
representations in the Agreement are true and
guarantee that all of FriendCo's obligations and
covenants under the Agreement will be punctually paid
and performed.
Upon notice by Friendly's of a default by
FriendCo the undersigned will within the applicable
cure period make each payment and perform each
obligation required of FriendCo under the Agreement.
Without affecting the obligations of the undersigned,
Friendly's may extend, modify or release any
indebtedness or obligation of FriendCo or any of the
undersigned or settle, adjust or compromise any claims
against FriendCo of any of the undersigned. The
undersigned waive notice of amendment of the
Agreement, notice of demand for payment or
performance by FriendCo, and all other notices or
demands of any nature whatsoever.
The undersigned further agrees that this
Guaranty shall continue to be effective or be reinstated
as the case may be, if at any time payment of any of
the guaranteed obligations is
rescinded or must otherwise be restored or returned by
Friendly's upon the insolvency, bankruptcy, or
reorganization of FriendCo, all as though such
payment has not been made.
The Guarantor specifically waives any
obligation of Friendly's to proceed against FriendCo
on any other money or held by FriendCo or any other
person as collateral security, by way of set-off or
otherwise.
IN WITNESS WHEREOF, the undersigned
has signed this Guaranty as of the date of the
Agreement.
ATTEST: GUARANTOR:
DavCo Restaurants, Inc.
By:
Name:
Title:
SCHEDULE B
Management Agreement Properties (14 Total)
Xx. Xxxx. Xx. Xxxx Xxxxxxx Xxxxx
0 0000 Xxxxxxxxx 6901 Security Boulevard MD
2 0780 Cockeysville 000 Xxxx Xxxxxx XX
0 0000 Xxxxxxxxxxxx 9428 - 30 Liberty MD
4 0905 Laurel 00000 Xxxxxxxxx
Xxxxxxxxxx Xxxx. MD
5 0919 Gaithersburg 000 Xxxxxxx Xxxxxx XX
0 0000 Xxxxxxxxxxxxxx 000 Xxxxxxxxxxxx Xxxx XX
0 0000 Xxxxxxx 0000 Xxxxx Xxxxxxx XX
8 0956 Manassas 0000 Xxxxxxxxxxx Xxxx XX
9 0972 Alexandria 0000-X Xxxxxx Xxxxx Xxxxxxxx XX
10 1013 Columbia 0000 Xxxxxxxx Xxxx MD
11 1028 Xxxx Burnie 0000 Xxxxxxx Xxxxxxx MD
12 0393 Wilmington Concord Xxxx XX
00 0000 Xxxxxx 000 Xxxxxxx Xxxxxx Xxxx XX
14 0835 Woodbridge 00000 Xxxxxxxxx Xxxxx Xxxxxxx XX
