Exhibit 10.9
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 , 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 of F.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)0000000
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
______________________ By:_______________________ (Seal)
Name: Name:
Title: Title:
FRIENDCO RESTAURANTS, INC.
______________________ By:_______________________ (Seal)
Name: Name:
Title: Title:
E X H I B I T 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:
S C H E D U L E B
Management Agreement Properties (14 Total)
No. Rest. No. City Address State
---- --------- ---- ------- -----
1 0384 Baltimore 6901 Security Boulevard MD
2 0780 Cockeysville 000 Xxxx Xxxxxx XX
0 0000 Xxxxxxxxxxxx 9428 - 00 Xxxxxxx Xxxx XX
0 0000 Xxxxxx 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
