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Exhibit (10) (b)
TRANSFER AGREEMENT
This Agreement is made and entered into on January 12, 2001 between The
Xxxxxxx Restaurant Group, Inc. , a Michigan corporation ("LRG"), Xxxxxxx
Restaurant Enterprises LLC, a Michigan limited liability company (LRE") (LRG and
LRE are hereafter collectively referred to as "Xxxxxxx"), and Xxxxxx'x
Restaurants, Inc. ("Frisch's), an Ohio corporation.
RECITALS
A. LRG has entered into a certain Asset Purchase Agreement dated
October 18, 2000 (the "Xxxxx Purchase Agreement") with Xxxxx Xxxxxxxx
Restaurants, Inc. ("Xxxxx") to purchase certain assets of Xxxxx (the "Xxxxx
Asset Package"), including all of Xxxxx' right, title and interest in certain
trademarks, copyrights, trade names and service marks used by Xxxxx as
franchisor of Big Boy restaurants and by its franchisees of Big Boy restaurants
including but not limited to the trademarks listed on Schedule I attached (the
"Big Boy Rights");
B. The sale of the Xxxxx Asset Package to LRG (and its affiliates,
including Xxxxxxx) was approved by the United States Bankruptcy Court for the
Eastern District of Michigan, Southern Division (the "Court"). LRG and its
affiliates and Xxxxx closed the Xxxxx Purchase Agreement on or about December
28, 2000, to be effective December 21, 2000.
X. Xxxxxx'x is the exclusive franchisee of the Big Boy Rights in the
states of Kentucky, Indiana and in portions of Ohio and Tennessee, as more fully
described on Exhibit A hereto, ("Frisch's Core Region"), and is the primary
franchisee in Florida, Oklahoma, Texas and portions of Kansas, as more fully
described on Exhibit B hereto (the "Expanded Territory");
X. Xxxxxx'x also has certain franchisee rights in North Carolina, South
Carolina, Alabama, Arkansas, Mississippi, Louisiana and Missouri, as more fully
described on Exhibit C hereto which, together with the Expanded Territory, are
the "Reconveyed Territories";
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E. LRE is an affiliate of LRG and has been designated by LRG under the
Asset Purchase Agreement as the party to whom Xxxxx is to convey the Big Boy
Rights at closing;
X. Xxxxxx'x and Xxxxxxx wish to provide for the transfer of ownership
of the Big Boy Rights in Frisch's Core Territory to Frisch's and the transfer of
ownership of the Big Boy Rights in the Reconveyed Territories to Xxxxxxx, to
take effect if and when Xxxxxxx acquires the Big Boy Rights from Xxxxx.
AGREEMENT
Therefore, in consideration of the respective promises contained herein
and other good and valuable consideration, Frisch's and Xxxxxxx agree as
follows:
1.(a) Frisch's Core Territory. At the Closing, as defined hereafter in
Section 5, Xxxxxxx shall convey to Frisch's complete, absolute, perpetual and
irrevocable ownership of the Big Boy Rights within Frisch's Core Territory.
Xxxxxxx shall retain complete, absolute, perpetual and irrevocable ownership of
the Big Boy Rights outside of Frisch's Core Territory. Xxxxxxx'x and Frisch's
respective ownership of the Big Boy Rights will be further perfected by the
filing with the U.S. Trademark Office of concurrent registration documents
evidencing Frisch's and Xxxxxxx'x ownership of such rights within their
respective territories. Xxxxxxx will cooperate with Frisch's in the preparation
and filing of all necessary documents. Notwithstanding the foregoing, Xxxxxxx
(and its successors and assigns) shall have and/or retain the complete,
absolute, perpetual, exclusive, and irrevocable right to license (or the
substantial equivalent) the Big Boy Rights for use in connection with
non-restaurant operations in Frisch's Core Territory, including without
limitation, merchandise, clothing, product placement through multimedia outlets,
and memorabilia, but excluding Food Products as defined below. Subject to the
limitations hereinafter set forth, Xxxxxxx (and its successors and assigns)
shall also have perpetual and irrevocable right to license (or the substantial
equivalent) the Big Boy Rights in the Frisch's Core Territory for use in
connection with prepackaged food products sold other than in restaurants (such
food items sold or to be sold within the Frisch's Core Territory are hereinafter
referred to
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as "Food Product" or "Food Products"), which sale of Food Products
shall be subject to the following:
(i) Other than ice cream cups, ice cream bars or similar
product (collectively "Ice Cream"), Xxxxxxx shall not
sell any Food Products for a period of two (2) years
from the date hereof ("Initial Period");
(ii) After the Initial Period, Xxxxxxx may sell any Food
Products, provided that with respect to any particular
Food Product (excluding Ice Cream): (a) it does not
compete with any then existing Food Product sold by
Frisch's (for example, Frisch's currently sells tartar
sauce in stores and Xxxxxxx therefore may not sell
tartar sauce in Frisch's Core Territory for so long as
Frisch's continues to sell tartar sauce in stores) and
(b) Xxxxxxx provides Frisch's with written notice of
its intent to sell a particular Food Product and,
unless Frisch's objects in writing to the sale of such
Food Product within 30 days of its receipt of notice
from Xxxxxxx on the basis that Frisch's believes,
exercising reasonable commercial judgement, that the
sale of such Food Product in the Frisch's Core
Territory will detract from the sale of a similar
Frisch's prepared food item or will otherwise have an
adverse impact on Frisch's restaurant operations or
legitimate business interests in the Big Boy Rights.
(For example and without limitation, Frisch's may
determine that the sale of such Food Product [even if
identical to an existing Frisch's food item] would
detract from sales in Xxxxxx'x Big Boy restaurants, or
that such Food Product's taste, packaging, or
presentation does not meet the standard of excellence
for Big Boy products in the Frisch's Core Territory, or
that the sale of such Food Product is inconsistent with
the Big Boy reputation.) In order to make the foregoing
determination, Frisch's shall be allowed to analyze and
sample the contemplated Food Product upon reasonable
notice at Xxxxxxx'x offices/commissary. Any objection
by Frisch's shall be in writing and shall describe in
reasonable detail the underlying basis for its
objection. Upon receipt of such written objection from
Frisch's as aforesaid, Xxxxxxx shall not sell such
objectionable Food Product unless Xxxxxxx first seeks
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and obtains a favorable decision from an arbitrator in
accordance with Section 10 of the Intellectual Property
Use and Non-Compete Agreement of even date between
Frisch's and LRE, otherwise, Xxxxxxx shall not sell
such Food Product. Inadvertent distribution of a Food
Product by either party which is rectified with
reasonable diligence shall not be deemed a breach of
this Agreement;
(iii) Nothing in this Agreement shall be deemed to require
Xxxxxxx or Frisch's to pay any royalty or other
licensing fees to the other on account of sales of Food
Products in the Frisch's Core Territory; and
(b) CONCURRENT USE. Concurrently with the signing of this Agreement,
the parties shall sign the Limited Concurrent Use Consent Agreement attached as
Exhibit D, which is expected to be used as an exhibit by Frisch's in its
application(s) to be filed in the U.S. Trademark Office to register as a
concurrent use registrant of all of the trademarks and service marks contained
in or associated with the Big Boy Rights.
2. ASSIGNMENT OF RIGHTS. At the Closing, LRE shall assign to Frisch's,
all of LRE's rights and responsibilities as franchisor of the Big Boy Rights
within Frisch's Core Territory (including, but not limited to, LRE's rights as
franchisor in any franchise agreements where Frisch's is franchisee), so that
Frisch's shall succeed to LRE's position as franchisor within Frisch's Core
Territory. Upon the transfer of the ownership of the Big Boy Rights within
Frisch's Core Territory, Frisch's shall cease to be a franchisee of LRE and
Frisch's use of the Big Boy Rights within Frisch's Core Territory shall be
unrestricted except to the extent otherwise provided in the "Intellectual
Property Use And Non-Compete Agreement" of even date between Frisch's and LRE.
3. RECONVEYED TERRITORIES. At the Closing, Frisch's shall irrevocably,
completely and perpetually convey to LRE (or its assignee) all of Frisch's
right, title and interest in and to any franchisee rights or other rights of
Frisch's with respect to any Big Boy Rights in the Reconveyed Territories.
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4. PURCHASE PRICE. At the Closing, Xxxxxxx shall pay Frisch's, by wire
transfer, the sum of Two Hundred Thousand Dollars ($200,000) and shall deliver
to Frisch's its noninterest-bearing promissory note for Two Hundred Thousand
Dollars ($200,000) payable in four equal installments on the first, second,
third and fourth anniversary dates of the Closing (the "Note"). The Note shall
bear a default rate of interest of twelve percent (12%) per annum and all
payments shall be accelerated, at Frisch's option, in the event Xxxxxxx fails to
make a payment within 15 business days of notice of a failure to pay. The
foregoing Note may, at the election of any party, be combined with that certain
promissory note of even date in the principal amount of Five Hundred Thirty
Thousand Dollars ($530,000) to be executed by LRE in favor of Frisch's pursuant
to the Intellectual Property Use and Non-Compete Agreement. In addition, the
combined promissory note shall contain a provision granting Frisch's an election
of remedies whereby, upon default by Xxxxxxx, Frisch's shall have the option to
proceed with collection of the balance due under the combined promissory note,
or demand the return of certain portions of the Expanded Territories as
described in section 11 herein.
5. CLOSING. The "Closing" shall take place as soon as is reasonably
possible following Xxxxxxx'x acquisition of the Big Boy Rights from Xxxxx, and
in no event later than one week following such acquisition.
6. EXPENSES. Each party will pay its own expenses of the transactions
contemplated hereby, except that Frisch's shall prepare and pay the cost of
filing the concurrent registration documents.
7. LRE WARRANTY. LRE warrants that at the Closing it shall have and
shall transfer to Frisch's good and marketable title to all of the Big Boy
Rights within Frisch's Core Territory, free and clear of all liens, pledges,
mortgages, security interests, claims and encumbrances of any nature whatsoever.
8. FRISCH'S WARRANTY. Frisch's warrants that at the Closing it shall
have and shall transfer to LRE good and marketable title to all of its
franchisee rights or other rights in any way
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related to the Big Boy Rights in the Reconveyed Territories, free and clear of
all liens, pledges, mortgages, security interests, claims and encumbrances of
any nature whatsoever.
9. NOTICES. Any notice to be given hereunder shall be in writing and
shall be sent by certified mail postage prepaid, or by a recognized national
overnight delivery service, to the party to be notified, addressed to such party
at its address appearing herein or such other address as such party, may, by
written notice, have substituted therefore, and the depositing of such a notice
in the mail or with the delivery service, so addressed, shall constitute the
giving thereof.
IF TO FRISCH'S: Xxxxxx'x Restaurants, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxx, President
IF TO XXXXXXX: Xxxxxxx Restaurant Enterprises LLC
0000 Xxxxx
Xxxxxx, XX 00000-0000
Attn: Xxxxxx Xxxxxxx, President
With a copy to: Xxxxx X. Xxxxxxx, Esq.
Timmis & Xxxxx, LLP
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
10. EXTENSION/WAIVER. Either party may agree to extend the time for the
performance of any of the obligations or other acts of the other party or waive
compliance with any of the agreements contained herein. Any agreement on the
part of a party to any such extension or waiver shall be valid only if set forth
in an instrument in writing signed by the authorized representative of such
party.
11. REMEDIES. In the event of a breach by a party of its obligations
under this Agreement, the other party shall be entitled to all remedies provided
by law or in equity, including, without limitation, the right to obtain an
injunction to specially enforce this Agreement. The parties specifically
acknowledge that the failure of either of them to effect the transfers
contemplated by sections 1, 2 and 3 above would cause irreparable damage not
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compensible by money damages and therefore each of them agrees that the remedy
for such failure to transfer shall be specific performance. Except as herein
expressly limited, the remedies provided herein shall be cumulative and shall
not preclude the assertion by any party hereto of any other rights or the
seeking of any other remedies against the other hereto. In the event Xxxxxxx
defaults under the combined promissory note contemplated by section 4 above,
then Frisch's shall have the option to proceed with collection of the balance
due under the combined promissory note, or in the alternative, to demand the
return of portions of the Expanded Territory, as its sole remedy, as follows:
(i) if at the time of default the outstanding principal balance due under the
combined promissory note is greater than one half (1/2) of the original
principal balance, then Frisch's shall have the right to demand the return of
two (2) parts of the Expanded Territory (e.g., Texas and Florida); (ii) if at
the time of default the outstanding principal balance due under the combined
promissory note is less than or equal to one half (1/2) of the original
principal balance, then Frisch's shall have the right to demand the return of
one (1) part of the Expanded Territory (e.g., Texas only, or Florida only). If
Frisch's exercises its option to demand the return of some portion of the
Expanded Territory, then Xxxxxxx shall be obliged to convey such territory
forthwith, subject to any existing franchise agreements, area development
agreements, or other franchise or development rights (the "Existing Rights") as
have been granted by Xxxxxxx its successors and assigns, which Existing Rights
and any agreements or instruments related thereto shall remain in full force and
effect.
12. ENTIRE AGREEMENT. This Agreement, together with the Concurrent Use
Consent Agreement and the Intellectual Property Use and Non-Compete Agreement,
set forth the entire integrated understanding and agreement of the parties with
respect to the subject matter hereof and supersedes all prior agreements whether
written or verbal. This Agreement may not be modified, amended or terminated
except in writing signed by all of the parties hereto.
13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original instrument, but
all such counterparts together shall constitute the same instrument.
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14. MICHIGAN LAW GOVERNS. This Agreement is being made in and shall be
governed by and construed and enforced in accordance with the laws of the State
of Michigan without regard to conflict of laws principles. Frisch's and Xxxxxxx
consent to the jurisdiction of the Federal District Court for the Eastern
District of Michigan (Detroit) and the Xxxxxxx Xxxxxxxx Xxxxx Xxxxxxxx Xxxxxxxx
(Xxxx) and they each waive any objection to forum or venue and agree to accept
service of process by mail in any action arising out of this Agreement.
Notwithstanding the foregoing, the parties hereto agree that both parties have
equally participated in the drafting of this Agreement and that if any term,
condition or provision of this Agreement is deemed or construed to be ambiguous
or vague, such ambiguity or vagueness shall not be construed in favor of or
against any party to this Agreement.
15. SEVERABILITY. Should any terms, provision or clause hereof or of
any other agreement or document which is required by this Agreement, be held to
be invalid, such invalidity shall not affect or render invalid any other
provisions or clauses hereof or thereof the consideration or mutuality of which
can be given effect without such invalid provision, and all of which shall
remain in full force and effect. If any provision of this Agreement is so broad
as to be unenforceable, such provision shall be interpreted to be only so broad
as is enforceable under applicable law.
16. EXHIBITS. The exhibits referenced in this Agreement and attached
hereto shall be deemed to be a part of this Agreement and are incorporated
herein by this reference.
17. RECITALS. Each of the above-stated Recitals shall be deemed a part
of this Agreement and they are incorporated herein by reference.
18. BINDING EFFECT. This Agreement shall be binding upon the parties,
their successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on the date first above written.
XXXXXXX RESTAURANT GROUP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Title: Chairman
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XXXXXXX RESTAURANT ENTERPRISES LLC
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Title: Chairman
--------------------------
XXXXXX'X RESTAURANTS, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------
Title: President
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Schedule 1 (List of trade marks)
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EXHIBIT A
INDIANA
KENTUCKY
OHIO (except for the following counties: Cuyahoga, Lorain, Xxxxxx, Summit,
Portage, Geauga and Lake)
TENNESSEE (except for the following counties: Anderson, Blount, Campbell,
Claiborne, Cocke, Cumberland, Fentress, Grainger, Hamblen, Hancock, Jefferson,
Knox, Louden, Monroe, Morgan, Xxxxx, Xxxxx, Xxxxxx and Union)
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EXHIBIT B
FLORIDA (subject to certain rights granted to Marriott in a certain Agreement
dated February, 1985, between Xxxxxx'x Restaurants, Inc., Kip's Big Boy, Inc.
and Marriott Corporation)
TEXAS (subject to certain rights granted to Marriott in a certain Agreement
dated February, 1985, between Xxxxxx'x Restaurants, Inc., Kip's Big Boy, Inc.
and Marriott Corporation)
OKLAHOMA
KANSAS (Sedgewick and Xxxxxx counties only)
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EXHIBIT C
Frisch's option for additional territory in NORTH CAROLINA, SOUTH CAROLINA,
ALABAMA, ARKANSAS, MISSISSIPPI, LOUISIANA and MISSOURI as set forth in section
21 of a certain Restated and Amended Area Franchise Agreement dated November 2,
1987, by and between Xxxxx Xxxxxxxx Restaurants, Inc., Xxxxxx'x Restaurants,
Inc. and Kip's Big Boy, Inc.
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EXHIBIT D
LIMITED CONCURRENT USE CONSENT AGREEMENT
This Agreement is made and entered into on January 12, 2001 between
Xxxxxxx Restaurant Enterprises LLC ("Xxxxxxx"), a Michigan limited liability
company, and Xxxxxx'x Restaurants, Inc. ("Frisch's), an Ohio corporation.
RECITALS
A. WHEREAS, Frisch's has been a franchisee of Xxxxx Xxxxxxxx
Restaurants, Inc. ("Xxxxx"), and as a franchisee, has, with the consent of
Xxxxx, used many of the trademarks and service marks identified in the attached
Schedule I since at least as early as 1946; and
B. WHEREAS, Xxxxx is currently a Chapter 11 Debtor in the United States
Bankruptcy Court for the Eastern District of Michigan, Southern Division (the
"Court") wherein the Court approved the sale of certain of Xxxxx' assets,
including the trademarks and service marks identified in the attached Schedule
I, to Xxxxxxx (the "Sale"); and
C. WHEREAS, in accordance with the Court's Order, Xxxxxxx and Xxxxx
closed the Sale on December 28, 2000, effective December 21, 2000; and
D. WHEREAS, the parties to this Agreement desire to ensure that,
subject to the terms of the Transfer Agreement and Intellectual Property Use and
Non-Compete Agreement dated the date hereof between, among others, Frisch's and
Xxxxxxx (collectively the "Agreements"), Frisch's obtains all right, title and
interest in and to the trademarks and service marks identified in the attached
Schedule I for use only in the "Territory" in which it has predominantly been
using the marks in the past, which Territory is defined in the attached Exhibit
A.
NOW, THEREFORE, in consideration of the respective promises contained
herein and other good and valuable consideration, Frisch's and Xxxxxxx agree as
follows:
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Xxxxxxx consents to and agrees to assist and cooperate with Frisch's in
enabling Frisch's to file in the U.S. Trademark Office and obtain Concurrent Use
Registrations strictly limited to use in connection in the Territory of all of
the trademarks and service marks identified in the attached Schedule I, which
Limited Concurrent Use Registrations shall be owned and used by Frisch's in
accordance with the terms of the Agreements and shall be assignable or
licensable to any successors, assigns or licensees of Frisch's subject to the
terms of said Agreements.
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Signatures on next page
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer on the date first above written.
XXXXXXX RESTAURANT ENTERPRISES LLC
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------
Title: Chairman
--------------------------
XXXXXX'X RESTAURANTS, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------
Title: President
--------------------------
