EXHIBIT 10.19
INDEMNIFICATION AGREEMENT
This Agreement is made on the 18th day of February, 2002, by and
between Meritage Hospitality Group Inc., a Michigan corporation ("MERITAGE"),
MHG Food Service Inc., a Michigan corporation ("MHGFS"), WM Limited
Partnership-1998, a Michigan limited partnership ("WENDY'S OF MICHIGAN"), RES
Management, LLC, a Michigan limited liability company ("RES"), and Xxxxxx X.
Xxxxxxxx, Xx. ("XXXXXXXX").
RECITALS
A. Wendy's of Michigan is the owner and/or operator of Wendy's "Old
Fashioned Hamburgers" restaurants in Southern and Western Michigan.
B. MHGFS is a wholly-owned subsidiary of Meritage and the 99.9% owner
of Wendy's of Michigan.
C. RES was appointed the sole general partner of Wendy's of Michigan
effective June 19, 2001. RES and Xxxxxxxx have jointly and severally guaranteed
the obligations of Wendy's of Michigan under the consent and franchise
agreements with the franchisor, Wendy's International, Inc. Schemer also
personally guaranteed certain indebtedness incurred by Wendy's of Michigan in
connection with its efforts to obtain financing to construct new restaurants.
D. In return for agreeing to act as general partner and for agreeing to
guarantee certain obligations of the franchisee, Meritage, MHGFS and Wendy's of
Michigan agree to indemnify RES and Xxxxxxxx on the terms and conditions set
forth below.
E. Meritage, MHGFS and Wendy's of Michigan have each determined that
the Agreement is fair and beneficial to them.
Therefore, Meritage, MHGFS, Wendy's of Michigan, RES and Xxxxxxxx agree
as follows:
1. DEFINITIONS. The following terms as used in this Agreement shall
have the following respective meanings:
"EXPENSES" means all expenses, liabilities and losses, including
attorneys' fees, judgments, and amounts paid or to be paid in settlement of a
Proceeding.
"PROCEEDING" means any threatened, pending or completed action, suit or
proceeding (or part thereof) arising out of or relating in whole or in part to
the guarantees referenced above.
2. INDEMNIFICATION BY MERITAGE, MHGFS AND WENDY'S OF MICHIGAN. Subject
to the terms and conditions of this Agreement, Meritage, MHGFS and Wendy's of
Michigan shall indemnify and hold harmless RES and Xxxxxxxx from and against all
Expenses reasonably incurred or suffered in connection with any Proceeding in
which RES and Xxxxxxxx is or was a party, or is threatened to be made a party,
to the extent such Expenses arise out of or relate, in whole or in part, to (i)
RES's actions or inaction as the general partner of Wendy's of Michigan (unless
such action or inaction constitutes gross negligence, reckless conduct or a
default under this Agreement by RES), or (ii) the guarantees referenced above.
3. INDEMNIFICATION ONLY TO EXTENT PERMITTED BY LAW. In no event shall
this Agreement be construed to obligate Meritage, MHGFS and Wendy's of Michigan
to do any act or thing not permitted by applicable law.
4. EXPENSES. The right to indemnification conferred under paragraph 2
above includes the right to be paid by Meritage, MHGFS or Wendy's of Michigan
the Expenses incurred by RES and/or Xxxxxxxx in defending any Proceeding in
advance of its final disposition. Meritage, MHGFS or Wendy's of Michigan shall
also timely reimburse RES for any reasonable out-of-pocket expenses incurred by
RES while performing its duties as the general partner of Wendy's of Michigan.
However, it is not intended that RES shall receive any regular fee or
compensation from Meritage, MHGFS or Wendy's of Michigan in RES's capacity as
general partner of Wendy's of Michigan.
5. NON-EXCLUSIVITY OF RIGHTS. The indemnification rights provided for
herein are in addition to all such other indemnification rights which RES and
Xxxxxxxx now or hereafter holds from Meritage, MHGFS or Wendy's of Michigan (as
a director, officer or otherwise).
6. SETTLEMENT. Meritage, MHGFS and Wendy's of Michigan shall have no
obligation under this Agreement with respect to any settlement or compromise of
a Proceeding entered into by RES and Xxxxxxxx without Meritage's, MHGFS's and
Wendy's of Michigan's prior written approval, which shall not be unreasonably
withheld.
7. SEVERABILITY. If any provision of this Agreement is determined by a
court of competent jurisdiction to be in violation of applicable law, such
provision shall be limited or modified in its application to the minimum extent
necessary to avoid a violation of law and, as so limited or modified, such
provision and the balance of this Agreement shall be enforceable in accordance
with their terms.
8. SUCCESSORS AND ASSIGNS. This Agreement shall be (a) binding upon all
successors and assigns of Meritage, MHGFS and Wendy's of Michigan, including any
transferee of all or substantially all of its assets and any successor by merger
or otherwise by operation of law, and (b) binding upon and inure to the benefit
of the respective officers, directors, shareholders, subsidiaries, successors,
assigns, agents, insurers, affiliated entities, employees, heirs, personal
representatives, executors, and administrators of RES and Xxxxxxxx.
9. CHOICE OF LAW. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Michigan.
10. AMENDMENT. No amendment, modification, termination or cancellation
of this Agreement shall be effective unless made in writing and signed by each
of the parties hereto.
11. EFFECTIVE DATE. This Agreement shall be effective as of June 19,
2001 (the date RES became the general partner).
[SIGNATURES FOLLOW ON NEXT PAGE]
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IN WITNESS WHEREOF, Meritage, MHGFS, Wendy's of Michigan, RES and
Xxxxxxxx have executed this Agreement as of the date first written above.
MERITAGE HOSPITALITY GROUP INC.
/s/ Xxxxxx X. Xxxxxx Xxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ ----------------------------------
President
/s/ Xxxxx X. Xxxxxxxx
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MHG FOOD SERVICE INC.
/s/ Xxxxxx X. Xxxxxx Xxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ ----------------------------------
President
/s/ Xxxxx X. Xxxxxxxx
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WM LIMITED PARTNERSHIP-1998
/s/ Xxxxxx X. Xxxxxx Xxxx By: /s/ Xxxxxx X. Xxxxx
------------------------------ ----------------------------------
Vice President
/s/ Xxxxx X. Xxxxxxxx
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RES MANAGEMENT, LLC
/s/ Xxxxxx X. Xxxxxx Xxxx By: /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------------ ----------------------------------
President
/s/ Xxxxx X. Xxxxxxxx
------------------------------
/s/ Xxxxxx X. Xxxxxx Xxxx /s/ Xxxxxx X. Xxxxxxxx, Xx.
------------------------------ ---------------------------------------
/s/ Xxxxx X. Xxxxxxxx
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