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Exhibit 10.1
INDEMNIFICATION AGREEMENT
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This Agreement is made on the 16th day of February, 1999, 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"), S & Q
Management, LLC, a Michigan limited liability company ("S & Q"), Robert E.
Schermer, Jr. ("SCHERMER"), and Ray E. Quada ("QUADA").
RECITALS
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A. Wendy's of Michigan is the owner and/or operator of 25 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. S & Q was appointed the sole general partner of Wendy's of Michigan
effective December 16, 1998. S & Q, Schermer and Quada 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.
D. In return for agreeing to act as general partner and for agreeing to
guarantee the obligations of the franchisee, Meritage, MHGFS and Wendy's of
Michigan have agreed to indemnify S & Q, Schermer and Quada 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, S & Q, Schermer and
Quada 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 S & Q, Schermer and Quada from and
against all Expenses reasonably incurred or suffered in connection with any
Proceeding in which S & Q, Schermer and Quada 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) S & Q 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 S & Q), or
(ii) the guarantees referenced above.
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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 S & Q, Schermer and Quada in defending any Proceeding
in advance of its final disposition.
5. NON-EXCLUSIVITY OF RIGHTS. The indemnification rights provided for
herein are in addition to all such other indemnification rights which S & Q,
Schermer and Quada 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 S & Q, Schermer and Quada, 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 S & Q, Schermer and Quada.
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 December
16, 1998 (the date S & Q became the general partner and the guarantees were
accepted by Wendy's International).
IN WITNESS WHEREOF, Meritage, MHGFS, Wendy's of Michigan, S & Q,
Schermer and Quada have executed this Agreement as of the date first written
above.
MERITAGE HOSPITALITY GROUP INC.
/s/ Jenica L. Vander Mark By: /s/ James R. Saalfeld
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James R. Saalfeld
Vice President
/s/ Kimberly A. VandeVooren
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MHG FOOD SERVICE INC.
/s/ Jenica L. Vander Mark By: /s/ James R. Saalfeld
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James R. Saalfeld
Vice President
/s/ Kimberly A. VandeVooren
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WM LIMITED PARTNERSHIP-1998
/s/ Jenica L. Vander Mark By: /s/ James R. Saalfeld
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James R. Saalfeld
General Counsel
/s/ Kimberly A. VandeVooren
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S & Q MANAGEMENT, LLC
/s/ Jenica L. Vander Mark By: /s/ Robert E. Schermer, Jr.
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Robert E. Schermer, Jr.
Member
/s/ Kimberly A. VandeVooren
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/s/ Jenica L. Vander Mark /s/ Robert E. Schermer, Jr.
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Robert E. Schermer, Jr.
/s/ Kimberly A. VandeVooren
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/s/ Jenica L. Vander Mark /s/ Ray E. Quada
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Ray E. Quada
/s/ Kimberly A. VandeVooren
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