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Exhibit 10.16
AGREEMENT AND CONSENT
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This AGREEMENT AND CONSENT (hereinafter the "CONSENT") is made in
Dublin, Ohio, as of the date set forth below, by and among WENDY'S
INTERNATIONAL, INC., an Ohio corporation (hereinafter "WENDY'S"); MCC FOOD
SERVICE INC. ("MCCFS"); MHG FOOD SERVICE INC. ("FOOD SERVICE"); MERITAGE
HOSPITALITY GROUP INC. ("MERITAGE"); MERITAGE CAPITAL CORP. ("MCC"); ROBERT E.
SCHERMER, JR., and CHRISTOPHER B. HEWETT (together referred to herein as the
"PRINCIPALS"); WENDY'S OF WEST MICHIGAN LIMITED PARTNERSHIP (hereinafter
referred to as the "PARTNERSHIP"); and WM LIMITED PARTNERSHIP-1998 (hereinafter
referred to as the "NEW PARTNERSHIP"). The Principals, Food Service, MCC, MCCFS
and Meritage are collectively referred to herein from time to time as the
"GUARANTORS".
WHEREAS, Wendy's, the Partnership and the Guarantors entered into a
Consent Agreement dated May 16, 1997 (the "Original Consent") related to the
operation of the Wendy's Old Fashioned Hamburgers Restaurants referenced on
Exhibit A (the "Restaurants"), which Restaurants are operated pursuant to the
various franchise agreements as listed on Exhibit A (the "Franchise
Agreements"); and
WHEREAS, the Original Consent also referenced the two (2) Wendy's Old
Fashioned Hamburgers Restaurants referenced on Exhibit B (the "Co-Franchised
Restaurants") which are operated pursuant to the various franchise agreements as
listed on Exhibit B (the "Co-Franchised Franchise Agreements"); and
WHEREAS, the Original Consent also referenced a Wendy's Old Fashioned
Hamburgers Restaurant located at 115 Monroe Avenue, Grand Rapids, Michigan (the
"MONROE MALL RESTAURANT") which was operated pursuant to a Restaurant Franchise
Agreement dated June 30, 1994 (the "MONROE MALL FRANCHISE AGREEMENT"), however,
the Monroe Mall Restaurant has closed and the parties desire to terminate the
Monroe Mall Franchise Agreement by mutual agreement; and
WHEREAS, Wendy's West Michigan, Inc., John G. Dodgson, Raymond A.
Weigle, III, and Gregory E. Dodgson (the "Michigan Parties") and the Guarantors
were adversaries in a civil lawsuit in Kent County, Michigan Circuit Court, Case
No. 9705360-CB (the "Lawsuit") which Lawsuit related, in part, to the ownership
of the Partnership; and
WHEREAS, documents were filed with the State of Michigan indicating
that the Partnership had been dissolved and that the successor in interest was
the New Partnership, although those facts were also disputed in the Lawsuit; and
WHEREAS, the Michigan Parties and the Guarantors reached a settlement
in the Lawsuit as set forth in the Settlement Agreement and Mutual Release dated
May 11, 1998 and the Written Acknowledgment dated May 27, 1998, which are
attached hereto as Exhibit C (together referred to as the "Settlement
Agreement") and pursuant to the Settlement Agreement the Michigan Parties have
released Wendy's of any liability, have transferred to the New Partnership any
and all right, title and interest they may have in the Co-Franchised Franchise
Agreements and have acknowledged that they have no further interest in the
Franchise Agreements. The Michigan
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Parties and the Guarantors have also resolved the status of the Partnership and
the New Partnership as part of the Settlement Agreement.
WHEREAS, the parties now desire to confirm Wendy's consent to certain
transfers and to clarify the ownership of all of the Franchise Agreements and
the Co-Franchised Franchise Agreements by the New Partnership, subject to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the mutual
promises contained herein, the parties, intending to be legally bound, mutually
agree as follows:
1. Pursuant to Paragraph 3 of the Original Consent, all parties hereto
acknowledge and agree that the Partnership has been duly dissolved and
the new franchisee under the Franchise Agreements and under the
Co-Franchised Franchise Agreements is and shall remain the New
Partnership for the duration of those agreements. The New Partnership
and the Guarantors represent and agree as follows:
A. Food Service currently owns 90% or more of the limited
partnership units in the New Partnership.
B. MCCFS is and shall remain the sole general partner of the New
Partnership.
C. All of the Guarantors shall be guarantors of all obligations
under the Franchise Agreements, the Co-Franchised Franchise
Agreements (as modified in Paragraph 2 below), the Original
Consent, and this Consent in accordance with the terms of
Exhibit E and Exhibit F of the Original Consent. The terms of
said Exhibit E and F shall also be applicable to any other
franchise agreement executed by Wendy's and the New
Partnership, although Wendy's may require the execution of
separate guaranties for any additional franchise agreements
for its records. The Guarantors shall individually comply with
the noncompetition and confidentiality provisions of the New
Co-Franchised Franchised Agreements (as defined in Paragraph 2
below) and their failure to do so shall constitute a default
under the New Co-Franchised Franchise Agreements.
D. The New Partnership hereby assumes all rights, restrictions
and obligations of the Partnership under the Franchise
Agreements, the Co-Franchised Franchise Agreements, the
Original Consent and this Consent. All references in the
Original Consent to the Partnership shall henceforth reference
the New Partnership.
2. The Guarantors, the Partnership and the New Partnership acknowledge,
represent and agree that the Michigan Parties have transferred any and
all interest they may have in the Franchise Agreements and in the
Co-Franchised Franchise Agreements to the New Partnership and that the
New Partnership is and shall remain the sole franchisee under the
Franchise Agreements and under the Co-Franchised Franchise Agreements
(as modified in Paragraph 2 below). Wendy's confirms its consent to
such transfers as necessary to effectuate such ownership by the New
Partnership subject to the following:
A. The New Partnership and the Guarantors agree to execute New
Franchise Agreements in the form which is attached to Wendy's
current Offering
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Circular and which is incorporated herein by reference (the
"NEW CO-FRANCHISED FRANCHISE AGREEMENTS") to replace the
Co-Franchised Franchise Agreements. The Guarantors and the New
Partnership agree to execute contemporaneously herewith two
(2) copies of the New Co-Franchised Franchise Agreements for
each of the two(2) Co-Franchised Restaurants described herein.
The Guarantors and the New Partnership further agree that
except as otherwise specifically provided herein, the
Co-Franchised Franchise Agreements are hereby superseded and
replaced in their entirety with the New Co-Franchised
Franchise Agreements which are incorporated herein by
reference. The New Co-Franchised Franchise Agreements shall
govern the parties' relationship with respect to the
Co-Franchised Restaurants commencing as of the effective date
of this Consent with a new term of twenty (20) years. Except
as specifically set forth herein, upon Wendy's execution of
this Consent and the New Co-Franchised Franchise Agreements,
the Co-Franchised Franchise Agreements shall be of no further
force or effect. The Guarantors and the New Partnership
warrant, represent and agree that they have reviewed the New
Co-Franchised Franchise Agreements, acknowledge that they
differ from the Co-Franchised Franchise Agreements, and except
as may be set forth herein, warrant and represent that as of
the effective date of this Consent, they are in compliance
with all provisions of the New Co-Franchised Franchise
Agreements (including, without limitation, the provisions
contained in Section 16 therein) and this Consent.
B. The New Partnership and the Guarantors hereby jointly and
severally agree to indemnify, defend and hold Wendy's, its
successors, assigns, subsidiaries, officers, directors,
employees and agents, harmless from any and all claims,
judgments, actions or expenses (including reasonable attorney
fees), arising out of or otherwise connected with any known or
unknown claims hereafter asserted by any of the Michigan
Parties for matters accruing or arising up to the date hereof,
the past operation of the Restaurants or the Co-Franchised
Restaurants, the Franchise Agreements , the Co-Franchised
Franchise Agreements, the New Co-Franchised Franchise
Agreements, the Lawsuit, the Partnership, the New Partnership,
the Settlement Agreement, or the transfers of interest
referenced herein, to which Wendy's consents but assumes no
responsibility for effectuating. This indemnity shall be
binding upon the heirs of the Principals and the successors of
the entities comprising Guarantors as a contingent claim and
shall survive any termination of the Franchise Agreements and
the New Co-Franchised Franchise Agreements.
C. The New Partnership and the Guarantors agree to execute the
Release of All Claims attached hereto as Exhibit D
contemporaneously with the execution of this Consent.
D. The New Partnership and the Guarantors warrant, represent and
agree that except as otherwise provided herein or in the
Original Consent, the
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Restaurants and the Co-Franchised Restaurants shall be
operated only by the New Partnership, and that the New
Partnership has the legal right to possession of the premises
associated with the Restaurants and the Co-Franchised
Restaurants.
E. The New Partnership and the Guarantors warrant and represent
that as of the effective date of this Consent, the New
Partnership shall have in full force and effect and will have
delivered to Wendy's a certificate of insurance specifically
covering each of the Co-Franchised Restaurants under the New
Co-Franchised Franchise Agreements (as defined herein) and
which complies with the insurance provisions of the New
Co-Franchised Franchise Agreements, and includes the street
locations on the front or back of the certificate or attached
to it as an exhibit, naming the New Partnership as the insured
and naming Wendy's as additional insured.
F. The New Partnership and the Guarantors acknowledge and agree
that the Partnership has voted in favor of the 1998/'99 WNAP
increase and that they have reviewed the memorandum and ballot
related to such increase. The New Partnership and Guarantors
hereby agree to comply with the terms of the memorandum and
ballot executed by the Partnership for the Franchise
Agreements and the New Co-Franchised Franchise Agreements.
G. The New Partnership and the Guarantors acknowledge and agree
that they have received and reviewed a copy of Wendy's
transaction policy dated April 1, 1994, as amended November 4,
1994, as amended from time to time for the Wendy's System and
agree to comply with the provisions therein.
3. The New Partnership and the Guarantors acknowledge and agree that the
terms and conditions of the Original Consent, except as specifically
set forth herein, are and shall remain binding upon the New
Partnership, including, without limitation, the ownership restrictions
contained in Paragraphs 1 and 2 of the Original Consent and the
development restrictions contained in Paragraph 5 thereof. For further
clarification and without limitation, it is acknowledged that any
subsequent offering by the New Partnership shall be subject to its
compliance with Paragraph 2(E) of the Original Consent and Paragraph
13.6 of the Franchise Agreements and the New Co-Franchised Franchise
Agreements (entitled "OFFERING MATERIALS").
4. Wendy's, the New Partnership, Guarantors and the Partnership agree that
the Monroe Mall Franchise Agreement shall be deemed terminated in its
entirety effective August 3, 1997 (the "TERMINATION DATE") and shall be
of no further force or effect as of said date, subject to the
following:
A. The New Partnership, Guarantors and the Partnership warrant
that the Monroe Mall Restaurant closed on the Termination Date
and as of the date of this Consent has been de-identified so
as to remove all signage and indicia of Wendy's.
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B. The New Partnership and Guarantors agree that to the extent
there remain outstanding obligations accruing through the
Termination Date under the Monroe Mall Franchise Agreement,
they shall be promptly paid by the New Partnership.
C. Except as specifically set forth herein, Wendy's agrees that
the aforementioned parties shall no longer be liable under the
Monroe Mall Franchise Agreement for any obligations which
arise after the Termination Date, including any obligations to
pay a minimum royalty of Two Hundred Fifty Dollars ($250.00)
per month throughout the remaining term of the Monroe Mall
Franchise Agreement.
5. The New Partnership and the Guarantors warrant, represent and agree
that the terms and conditions of the Original Consent and this Consent
shall modify and be equally applicable to both the Franchise Agreements
and the New Co-Franchised Franchise Agreements and are hereby
incorporated therein, notwithstanding Paragraph 1(J) of the Original
Consent. Any breach of the terms or conditions of the Original Consent
or this Consent by the New Partnership (as the successor in interest to
the Partnership) or the Guarantors shall constitute a material default
under the Franchise Agreements and the New Co-Franchised Franchise
Agreements, subject to such notice and cure periods as are provided for
therein or by law.
6. Nothing herein shall in any way limit or restrict the obligations of
the Guarantors under the Guaranty, which obligations are acknowledged
by Guarantors to include all of the Franchise Agreements, the New
Co-Franchised Franchise Agreements, the Original Consent and this
Consent.
7. The New Partnership and the Guarantors acknowledge and understand that
to the extent the growth and expansion of the New Partnership, any of
the Guarantors, or any entity controlled by the New Partnership or any
of the Guarantors involves other quick-service restaurant concepts that
sell products that Wendy's views as competitive, even if such interest
may not constitute a default under the Franchise Agreements or the New
Co-Franchised Franchise Agreements, such may affect Wendy's willingness
to grant new franchises to the Partnership or any of the Guarantors
under Paragraph 5 of the Original Consent or otherwise.
8. Wendy's and the New Partnership agree that the official mailing address
of the New Partnership for the Franchise Agreements and the New
Co-Franchised Franchise Agreements shall be as follows:
WM Limited Partnership-1998
c/o MCC Food Service Inc.
40 Pearl Street, N.W., Suite 900
Grand Rapids, MI 49503
Attn: President
All parties agree that notice to the New Partnership shall constitute
notice to each of the Guarantors.
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9. All parties understand that Wendy's may in the future approve offerings
and transfers under different terms, conditions and policies existing
at that time. Wendy's consent and waiver here shall not be relied upon
in future transactions as limiting Wendy's position or the conditions
associated with Wendy's consent and/or waiver of its right of first
refusal.
10. The New Partnership and the Guarantors acknowledge and agree that
Wendy's has no knowledge of, and makes no warranties with respect to,
the accuracy of any representations or warranties made by the Michigan
Parties, the New Partnership or the Guarantors to each other in
connection with this transfer, and Wendy's assumes no obligation in
this regard.
11. The parties understand and acknowledge that Wendy's consent and/or
waiver in no way constitutes an acknowledgment, undertaking or
representation by Wendy's as to the financial viability of this
transaction, any approval of any monetary terms or the earnings
potential of the Restaurants or the Co-Franchised Restaurants. The
parties acknowledge that they have separately reviewed and evaluated
this transaction and the Settlement Agreement and obtained independent
professional assistance and have in no way relied upon Wendy's consent
as an appraisal of any kind.
12. The New Partnership and the Guarantors hereby acknowledge the receipt
of Wendy's Uniform Franchise Offering Circular at the earlier of the
first personal meeting with Wendy's regarding this Consent or ten (10)
business days prior to the execution of this Agreement. The New
Partnership and Guarantors further acknowledge the receipt of a final
copy of this Consent at least five (5) business days prior to the
execution hereof.
13. The parties agree that if they fail to execute and return this Consent
to Wendy's within twenty-one (21) days of the receipt hereof, this
Consent may not be executed by Wendy's and the terms and conditions
contained herein shall not otherwise be binding upon Wendy's without
such execution.
14. Nothing contained in the Settlement Agreement or any collateral
documentation between the Michigan Parties, the New Partnership and the
Guarantors and affiliated parties, is intended to conflict with the
terms and conditions of this Consent, the Franchise Agreements or the
New Co-Franchised Franchise Agreements as defined herein as to the
rights of Wendy's and the obligations of the parties to Wendy's, or to
impose additional requirements or restrictions on Wendy's except as may
be specifically set forth herein. Except as otherwise provided for
herein, all terms and conditions of the Original Consent, the Franchise
Agreements and the New Co-Franchised Franchise Agreements shall remain
in full force and effect and the terms and conditions of this Consent
are intended to supplement those provisions contained in the
aforementioned documents. In the event of a conflict between the
Original Consent, the Franchise Agreements, the New Co-Franchised
Franchise Agreements on the one hand and this Consent, the terms and
conditions of this Consent will control.
A. ALL PARTIES ACKNOWLEDGE AND AGREE THAT AS TO WENDY'S AND THE
RIGHTS OF WENDY'S, THE FRANCHISE AGREEMENTS, THE NEW
CO-FRANCHISED FRANCHISE
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AGREEMENTS AND THIS CONSENT SHALL BE GOVERNED AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO.
15. If any material provision or restriction contained herein is void under
federal, state or local law, or held unenforceable and against public
policy, the parties shall negotiate in good faith to give each party
the benefit of its bargain consistent with the intent and rights of the
parties.
16. This Consent sets forth the entire understanding between the parties
concerning the subject matter of this Consent and incorporates all
prior negotiations and understandings. There are no covenants,
promises, agreements, conditions or understandings, either oral or
written, between the parties relating to the subject matter of this
Consent other than those set forth herein. No representation or
warranty has been made by or on behalf of any party to this Consent (or
any officer, director, employee or agent thereof) to induce the other
party to enter into this Consent or to abide by or consummate any
transactions contemplated by any terms of this Consent, except
representations and warranties, if any, expressly set forth herein. No
alteration, amendment, change or addition to this Consent shall be
binding upon either party unless in writing and signed by the party to
be charged. The submission of any unexecuted copy of this Consent shall
not constitute an offer to be legally bound by any provision of the
document submitted, either currently or in the future; and no party
shall be bound by this Consent until it is fully executed and delivered
by all parties.
IN WITNESS WHEREOF, this Agreement and Consent is effective as of the
date it is executed by Wendy's International, Inc.
WENDY'S INTERNATIONAL, INC.
By: /s/ W. Stephen Wirt
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Title: Vice President
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Date: 8/7/98
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MCC FOOD SERVICE INC.
By: /s/ Christopher B. Hewett
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Title: Chairman & CEO
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MHG FOOD SERVICE INC.
By: /s/ Christopher B. Hewett
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Title: President
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(SIGNATURE LINES CONTINUED ON NEXT PAGE)
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MERITAGE HOSPITALITY GROUP INC.
By: /s/ Christopher B. Hewett
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Title: President & CEO
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MERITAGE CAPITAL CORP.
By: /s/ Christopher B. Hewett
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Title: President
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/s/ Robert E. Schermer, Jr.
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ROBERT E. SCHERMER, JR., Individually
/s/ Christopher B. Hewett
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CHRISTOPHER B. HEWETT, Individually
WENDY'S OF WEST MICHIGAN LIMITED PARTNERSHIP
By: /s/ Christopher B. Hewett
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Title: Chairman & CEO of MCC
Food Service Inc. - General Partner
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WM LIMITED PARTNERSHIP-1998
By: /s/ Christopher B. Hewett
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Title: Chairman & CEO of MCC
Food Service Inc. - General Partner
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Franchise:__________
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EXHIBIT A
DODGSON/WEIGEL
WENDY'S OLD FASHIONED HAMBURGERS RESTAURANTS
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STORE NO. RESTAURANT LOCATION
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#19-001 305 East Michigan, Kalamazoo, MI
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#19-002 2814 Portage, Kalamazoo, MI
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#19-003 5830 Westnedge Avenue South, Kalamazoo, MI
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#19-004 1280 28th Streeet, S.E., Grand Rapids, MI
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#19-005 929 W. Columbia Avenue, Battle Creek, MI
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#19-006 1061 Michigan Street, N.E. Grand Rapids, MI
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#19-007 2200 28th Street, S.W., Wyoming, MI
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#19-008 5455 West Main Street, Kalamazoo, MI
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#19-009 3045 Henry Street, Muskegon, MI
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#19-010 2315 Alpine Avenue, N.W., Walker, MI
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#19-011 3921 28th Street, S.E., Grand Rapids, MI
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#19-012 3850 S. Division Avenue, Wyoming, MI
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#19-013 2730 W. Michigan, Kalamazoo, MI
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#19-014 2071 E. Apple, Muskegon, MI
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#19-015 3301 Plainfield, N.E., Grand Rapids, MI
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#19-016 4343 Chicago Drive, Grandville, MI
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#232-001 320 North Beacon, Grand Haven, MI
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#232-002 261 E. 8th Street, Holland, MI
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#232-003 12393 James Street, Holland, MI
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#746-001 1185 M 89, Plainwell, MI
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#747-001 828 S. Kalamazoo, Paw Paw, MI
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#983-001 530 68th Street, S.W., Cutlerville, MI
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#1011-001 5335 Beckley Road, Battle Creek, MI
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EXHIBIT B
CO-FRANCHISED RESTAURANTS
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STORE NO. RESTAURANT LOCATION
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#1844-001 4694 W. River Road, Grand Rapids, MI
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#2020-001 3922 Lake Michigan Drive, N.W., Walker, MI
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