UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
the
Securities Exchange Act of 1934
Date
of
Report: February 28, 2006
(Date
of
earliest event reported)
NATHAN'S
FAMOUS, INC.
(Exact
Name of Registrant as Specified in its Charter)
|
Delaware
|
1-3189
|
11-3166443
|
|
(State
of Incorporation)
|
(Commission
File Number)
|
(I.R.S.
Employer Identification No.)
|
|
1400
Old Country Road, Westbury, New York
|
11590
|
|
(Address
of Principal Executive Offices)
|
(Zip
Code)
|
|
Registrant's
telephone number including area code
|
(516)
338-8500
|
N/A
(Former
name or former address, if changed since last report.)
Item
8.01. Other
Events.
On
February 28, 2006, PAT Franchise Systems, Inc. (“PFSI”) and NF Treachers Corp.
(“NFTC”), a wholly-owned subsidiary of the Registrant, entered into an Asset
Purchase Agreement pursuant to which NFTC purchased and PFSI sold all of the
intellectual property that is associated with the “Arthur Treacher’s” brand,
concept and franchise system, worldwide, including but not limited to the
“Arthur Treacher’s” name, trademarks, service marks, copyrights, patents, trade
secrets and all other intellectual property whatsoever associated with the
“Arthur Treacher’s” fish and chips concept (the “Acquired Assets”).
Pursuant
to, and simultaneously with the closing of, the Asset Purchase Agreement, NFTC
entered into a license agreement pursuant to which NFTC licensed to PFSI the
right to use the Acquired Assets in certain limited geographic regions.
A
copy of
the Asset Purchase Agreement is attached as exhibit 99.1 hereto and a copy
of
the License Agreement is attached as exhibit 99.2 hereto.
Item
9.01. Financial
Statements and Exhibits.
|
Exhibit
|
Description
|
|
|
Asset
Purchase Agreement dated as of February 28, 2006 between PAT Franchise
Systems, Inc. and NF Treachers Corp.
|
||
|
License
Agreement dated as of February 28, 2006 between PAT Franchise Systems,
Inc. and NF Treachers Corp.
|
SIGNATURE
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
| NATHAN'S FAMOUS, INC. | ||
| |
|
|
| Date: March 2, 2006 | By: | /s/ RONALD DEVOS |
|
|
||
|
Name:
Ronald DeVos
Title:
Vice-President Finance and Chief Financial Officer
(Principal Financial and Accounting
Officer)
|
||
ASSET
PURCHASE AGREEMENT
THIS
ASSET PURCHASE AGREEMENT (the
“Agreement”) is made this 28th day of February 2006, by and among NF
Treachers Corp., a Delaware corporation (“NFTC”), and PAT Franchise Systems,
Inc., a Delaware corporation (“PFSI”). TruFoods Systems, Inc.,
the
100% stockholder of PFSI (“Parent”), is a an additional party hereto for the
purposes indicated herein.
R E C I T A L S:
WHEREAS,
PFSI owns all worldwide right, title and interest in and to the trademarks,
proprietary formulas, recipes, processes and other intellectual property related
to the “Arthur Treacher’s” brand, products and restaurant system;
and
WHEREAS,
NFTC wishes to acquire, and PFSI is prepared to sell, all right, title and
interest in the intellectual property related to the “Arthur Treacher’s” brand,
products and restaurant system as more fully described, and upon the terms
and
conditions set forth, in this Agreement.
NOW,
THEREFORE, in consideration of the Recitals and the mutual covenants, conditions
and agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, it is hereby
agreed as follows:
ARTICLE
I
PURCHASE
OF ASSETS
1.1 Purchase.
(a) At
the
Closing on the Closing Date, and upon all of the terms and subject to all of
the
conditions of this Agreement, PFSI shall sell, assign, convey, transfer and
deliver to NFTC, on an exclusive, perpetual and irrevocable basis, all worldwide
rights, titles and interests, legal and equitable, in and to:
(i) all
names, logos, trademarks and service marks relating to the “Arthur Treacher’s”
brand, products and/or restaurant system (the “AT Trademarks”);
(ii) all
proprietary formulas, recipes, systems, manufacturing and cooking procedures
and
processes, vendor agreements, equipment and fixture specifications, lists of
equipment and fixture suppliers, operating manuals, marketing manuals, prototype
plans and all other proprietary information relating to the “Arthur Treacher’s”
brand, products and/or restaurant system (the “Proprietary AT Information”);
and
(iii) any
and
all other intellectual property (including, without limitation, trade secrets,
domain names, websites, copyrights, etc.) relating to the “Arthur Treacher’s”
brand, products and/or restaurant system (the “Other AT Intellectual
Property”).
The
AT
Trademarks, the Proprietary AT Information and the Other AT Intellectual
Property are collectively referred to herein as the “Arthur
Treacher’s System”
and
shall comprise the “Purchased Assets.” The assignment of the Arthur Treacher’s
System to NFTC shall be made free and clear of any and all liabilities,
obligations, claims, liens, levies, security interests, pledges and/or other
encumbrances against and/or in any way relating to and/or otherwise affecting
the Arthur Treacher’s System and/or any element thereof (collectively, the
“Liabilities”), all of which Liabilities shall be satisfied by, retained by,
and/or shall remain the sole responsibility of, PFSI. The Purchased Assets
hereunder specifically exclude the Franchise Agreements in effect as of the
date
of the Closing and PFSI’s rights and obligations thereunder.
1.2 Consideration.
At the
Closing on the Closing Date, NFTC shall pay to PFSI, by wire transfer of
immediately available U.S. funds to such account as shall be designated by
PFSI
to NFTC in writing at least three (3) days prior to the Closing Date, an amount
equal to One Million Two Hundred Fifty Thousand Dollars ($1,250,000), which
amount shall be reduced by any amounts required to be paid by PFSI to satisfy
the Liabilities. Prior to the Closing Date, PFSI will provide NFTC with a
schedule outlining the uses of the proceeds to satisfy, and receive complete
releases of, the Liabilities.
1.3 Closing
Date Deliveries.
At the
Closing on the Closing Date:
(a) PFSI
shall deliver or cause to be delivered, to NFTC, properly executed and dated
as
of the Closing Date:
(i) the
Bill
of Sale and Assignment;
(ii) the
Trademark Assignment;
(iii) the
License Agreement
(iv) PFSI’s
Closing Certificate;
(v) PFSI’s
Performance Certificate;
(vi) PFSI’s
Fair Value Certificate
(vii) documentation,
in a form reasonably satisfactory to NFTC in its sole discretion, executed
by
the applicable third parties indicating either: (A) that each Liability has
been
completely and finally satisfied; or (B) with respect to any Liability that
has
not been completely and finally satisfied, the applicable third party’s
agreement to irrevocably release and forgo any claim against the Arthur
Treacher’s System (and/or any element thereof) and NFTC;
(viii) PFSI’s
Opinion of Counsel; and
(ix) such
other documents as provided in Article VI of this Agreement or as NFTC shall
reasonably request.
(b) In
addition to the payments described in Section 1.2, NFTC shall deliver, or cause
to be delivered, to PFSI, properly executed and dated as of the Closing Date:
(i) the
Bill
of Sale and Assignment;
(ii) the
Trademark Assignment;
(iii) the
License Agreement
(iv) NFTC
Closing Certificate;
(v) NFTC
Performance Certificate; and
(vi) such
other documents as provided in Article VII hereof or as PFSI shall reasonably
request.
1.4 Non-Assumption
of Liabilities.
NFTC
does not and shall not assume or become obligated to pay any of the Liabilities
or any other debt, obligation or liability of any kind or nature of PFSI or
the
Arthur Treacher’s System, whether or not incurred or accrued in connection with
the operation of the Arthur Treacher’s System.
1.5 Taxes.
(a) All
federal, state, and local transfer and sales and use taxes applicable to,
imposed upon or arising out of the transfer to NFTC of the Purchased Assets
as
contemplated by this Agreement shall be paid by PFSI.
(b) The
parties agree that in the event that the purchase of the Purchased Assets is
an
“applicable asset acquisition” governed by Section 1060 of the Code, NFTC and
PFSI agree to complete IRS Form 8594 consistently with this Agreement, and,
if
requested by the other, to furnish the other with a copy of such Form prepared
in draft form no less than 45 days prior to the filing due date of such
Form.
1.6 Risk
of Loss.
The
risk of all Events of Loss prior to the Closing shall be upon PFSI and the
risk
of all Events of Loss at or subsequent to the Closing shall be upon
NFTC.
1.7 Special
Provision Related to Vendors to Arthur Treacher’s System. As
a
condition to Closing: (a) NFTC shall have entered into agreements with
those vendors identified on Schedule 1.7 to purchase supplies for the Arthur
Treacher’s System on terms and conditions no less favorable to Purchaser than
the terms and conditions applicable to purchases from such vendors by PFSI
under
its current contracts with such vendors; and (b) NFTC shall be entitled to
receive under its agreements with vendors mutually-agreed upon rebates and/or
marketing payments in amounts as set forth in Section 4.3 of the License
Agreement.
1.8 Termination
or Assignment of Certain Existing Agreements.
Simultaneously with the Closing, the letter agreement dated January 1, 2003,
as
amended February 4, 2003, by and among PAT, Nathan’s Famous Systems, Inc., Miami
Subs USA, Inc., and NF Roasters Corp. (the “Co-Branding
Agreement”)
is and
shall be terminated, and the parties shall have no further rights and/or
obligations thereunder. It is acknowledged that during the term of the
Co-Branding Agreement, PAT and NFTC Franchisor Affiliates (defined below)
established certain co-branded “Arthur
Treacher’s”
concepts
within host “Nathan’s
Famous”
and
“Miami
Subs”
company-owned and franchised restaurants (those remaining in operation as of
the
Closing Date are referred to herein as “Existing
Co-Branded Units”
and
are
identified on Schedule 1.8). Accordingly, all existing co-branding participation
agreements by and among PFSI, the NFTC Franchisor Affiliates and franchisees
of
the NFTC Franchisor Affiliates (the “Participation
Agreements”)
shall
be revised as follows:
(a) From
and
after the Closing Date, PFSI shall have no further entitlement to receive any
fees, royalties, or other compensation under any of the Participation
Agreements;
(b) From
and
after the Closing Date, PFSI shall no longer have any rights whatsoever under
any Participation Agreement or any other agreement entered into with a
franchisee of NFTC’s affiliates (except with respect to a Franchise Agreement
with such Person for a stand-alone Arthur Treacher’s restaurant, without a
Nathan’s
Famous,
Kenny
Rogers Roasters,
or
Miami
Subs
operation);
(c) On
the
Closing Date, PFSI will assign all of its rights under the Participation
Agreements for the Existing Co-Branded Units to NFTC, and PFSI agrees that
it
shall sign such documents as NFTC may deem necessary to implement this
provision, including but not limited to any notices to franchisees party to
such
Participation Agreements.; and
1.9 Limited
License of Arthur Treacher’s System to PFSI.
Simultaneously with the Closing, NFTC will license the Arthur Treacher’s System
back to PFSI for the sole purpose of PFSI conducting business as the franchisor
of the Arthur Treacher’s System in the geographic region and on the terms and
conditions as set forth in the License Agreement attached hereto as Exhibit
A.
ARTICLE
II
REPRESENTATIONS
AND WARRANTIES OF PFSI
PFSI
and
Parent jointly and severally represent and warrant to NFTC the
following:
2.1 Organization.
PFSI is
a corporation duly organized and validly existing under the laws of the State
of
Delaware and is in good standing under such laws. PFSI has the power to own,
license and operate the Arthur Treacher’s System and to conduct the business
related thereto as it is now being conducted. PFSI is duly qualified and
licensed and in good standing as a foreign corporation in each jurisdiction
set
forth on Schedule
2.1,
constituting each jurisdiction in which such qualification is required, except
where the failure to be so qualified would not reasonably be expected to have
a
Material Adverse Effect on the Purchased Assets, Copies of the articles of
incorporation and bylaws of PFSI, as amended and currently in force, have been
delivered to NFTC, and are true, complete and correct as of the date
hereof.
2.2 Authorization;
Enforceability.
The
execution, delivery and performance of this Agreement and all of the documents
and instruments delivered in connection herewith by PFSI and the consummation
by
PFSI of the transactions contemplated hereby and thereby are within the
corporate power of PFSI and have been duly authorized by all necessary corporate
action by PFSI and Parent. This Agreement is, and the other documents and
instruments required hereby will be, when executed and delivered by PFSI, the
valid and binding obligations of PFSI, enforceable against PFSI in accordance
with their respective terms subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect affecting
the
enforceability or right of creditors generally and by general equitable
principles which may limit the right to obtain equitable remedies.
2.3 Absence
of Conflicting Agreements.
Except
as set forth on Schedule
2.3,
the
execution, delivery and performance of this Agreement in accordance with its
terms by PFSI, and the consummation of the sale of the Purchased Assets as
contemplated by this Agreement does not, and will not, after the giving of
notice, or the lapse of time or both, or otherwise:
(a) conflict
with, result in a breach of, or constitute a default under, the articles of
incorporation, bylaws or other organizational documents of PFSI, or any federal,
state or local law, statute, ordinance, rule or regulation, or any court or
administrative order or process or any Contract to which PFSI or Parent is
a
party or by which any of the Purchased Assets are bound or which relates to
the
ownership or operation of the Arthur Treacher’s System;
(b) result
in
the creation of any Lien upon any of the Purchased Assets;
(c) require
the consent, waiver, approval, permit, license, clearance or authorization
of,
or any declaration or filing with, any court or public agency or other
authority; or
(d) require
the consent of any Person under any agreement, arrangement or commitment of
any
nature to which PFSI or Parent is a party or the Purchased Assets are subject
or
by which PFSI, Parent or the Purchased Assets are bound.
2.4 Purchased
Assets. The
Purchased Assets include all of the assets, properties and rights of every
type
and description, tangible and intangible, that comprise the Arthur Treacher’s
System and will enable NFTC to operate the Arthur Treacher’s System in the
manner in which it has been and is now operated by PFSI.
2.5 Title
to Purchased Assets; Liens and Encumbrances.
Except
as set forth on Schedule
2.5,
PFSI
owns good and marketable title to, or has a valid and enforceable license or
leasehold interest in, all of the Purchased Assets free and clear of any and
all
Liabilities and Liens.
2.6 Contracts. Schedule
2.6
lists
all Contracts of PFSI that are part of, or related to, the Arthur Treacher’s
System. Except as set forth on Schedule
2.6:
(a) PFSI
has
performed in all material respects each term, covenant and condition of each
of
the Contracts to which it is a party required to be listed on Schedule
2.6,
and no
material default on the part of PFSI or, to the Knowledge of PFSI or Parent,
any
other party thereto, or any event which with the passing of time or giving
of
notice would constitute a default on the part of PFSI or, to the Knowledge
of
PFSI or Parent, any other party thereto, exists under any of the Contracts
required to be listed on Schedule
2.6;
(b) Schedule
2.6
lists
all Contracts (i) pursuant to which PFSI has licensed the Arthur Treacher’s
System to, or the use of the Arthur Treacher’s System is otherwise permitted
(through non-assertion, settlement or similar agreements or otherwise) with
respect to, any Person, and (ii) which are necessary to the operation of the
Arthur Treacher’s System;
(c) each
of
the Contracts required to be listed on Schedule
2.6
is in
full force and effect and constitutes the legal and binding obligation of PFSI
and, to the Knowledge of PFSI and Parent, the other parties thereto, in
accordance with its terms;
(d) PFSI
has
furnished true and complete copies of all Contracts listed on Schedule
2.6,
including all amendments, modifications and supplements thereto, and
Schedule 2.6
contains
accurate summaries of all oral contracts;
(e) except
as
set forth on Schedule
2.6,
the
transfer of the Arthur Treacher’s System pursuant to this Agreement may be
consummated without the consent, approval or waiver of any other Person, and
none of the Contracts will be breached by the consummation of the transactions
contemplated hereunder; and
(f) with
the
exception of the Contract identified in Section 1.7, none of the Contracts
is
necessary to the continued operation of the Arthur Treacher’s System as conveyed
to NFTC pursuant to this Agreement.
2.7 Intellectual
Property; Trade Secrets.
(a) Items
of Intellectual Property.
Schedule
2.7(a)
contains
an accurate and complete list of the items of Intellectual Property that
comprise the Arthur Treacher’s System (including individual lists of the AT
Trademarks, the Proprietary AT Information, and the Other AT Intellectual
Property). Schedule
2.7(a)
also
identifies any third-party intellectual property which is used as part of the
Arthur Treacher’s System, and the agreements pursuant to which such third party
intellectual property is used. If there is any omission from Schedule 2.7(a),
whether intentional or inadvertent, said omission shall neither limit nor amend
the transfer of the Arthur Treacher’s System to NFTC.
(b) Ownership
and Right to Use.
PFSI
either owns exclusively or has valid licenses to use all Intellectual Property
which comprises the Arthur Treacher’s System. There are no facts or
circumstances that would render the Intellectual Property which comprises the
Arthur Treacher’s System or rights in or to such Intellectual Property invalid
or unenforceable.
(c) Registered
Intellectual Property.
Except
as set forth on Schedule
2.7(c),
there
is no Registered Intellectual Property which is part of the Arthur Treacher’s
System.
(i) The
Registered Intellectual Property remains valid and subsisting, in good standing,
with all application fees, and other amounts due as of the Closing Date duly
paid, and, except as set forth on Schedule
2.7(c),
all
necessary documents in connection with the Registered Intellectual Property
have
been filed, in a timely manner. Except as set forth on Schedule
2.7(c),
all of
PFSI’s rights in and to the Registered Intellectual Property are enforceable.
PFSI has made available to Purchaser
correct
and complete copies of written documentation evidencing ownership and
prosecution (if applicable) of each item of Registered Intellectual Property.
(ii) All
registrations, applications and related documents with respect to Registered
Intellectual Property are in good standing, and no actions for reissuance,
reexamination or opposition are pending or, to PFSI’s of Parent’s Knowledge,
threatened with respect to any issued registrations or pending applications.
Neither PFSI nor Parent has received any notice of any pending actions or
opposition with respect to the Registered Intellectual Property. Schedule
2.7(c)
contains
a complete and accurate list of all actions that must be taken within 90 days
following the Closing Date relating to the payment of any Taxes, fees or other
amounts, or the filing of any documents necessary or appropriate to maintain,
perfect or renew any Registered Intellectual Property with the appropriate
official office (e.g., patent or trademark office, or the appropriate
governmental or regulatory agency).
(d) No
Violations of Rights.
The
creation, use, license, operation and/or other exploitation of the Arthur
Treacher’s System does not infringe upon or misappropriate the Intellectual
Property or other rights of any party, and, to PFSI’s or Parent’s Knowledge,
there is no basis for such a claim to be made. No party has, to PFSI’s or
Parent’s Knowledge, infringed, misappropriated or otherwise used without
authorization any parts of the Arthur Treacher’s System. Immediately after the
Closing, NFTC
shall have
the
sole right to bring actions for infringement or misappropriation regarding
the
Arthur Treacher’s System, and NFTC shall have the sole right to retain any
compensation or payment derived therefrom, no matter when the alleged
infringement or misappropriation occurred. Except as set forth in Schedule
2.7(d):
(1)
PFSI has not received any written claim or notice in which any party alleges
that PFSI, through the operation of the Arthur Treacher’s System, has infringed,
misappropriated or used without authorization any Intellectual Property rights
of another party, and (2) to PFSI’s or Parent’s Knowledge, no basis for any such
claim or allegation exists.
(e) Licenses
and Rights. PFSI
has
not breached or violated any of the agreements to which it is a party governing
use of any third party intellectual property that is part of the Arthur
Treacher’s System and, to the knowledge of PFSI, no other party to any such
agreements has breached any of those agreements. Schedule
2.7(e)
lists
all agreements pursuant to which PFSI
has
licensed or otherwise granted rights in or to the Arthur Treacher’s System to
any third party, including without limitation any rights to use, market,
distribute or otherwise exploit or commercialize any of the products or services
or any other element of the Arthur Treacher’s System, including franchised
operations. PFSI has not breached or violated any of those agreements and,
to
the knowledge of PFSI and Parent, no other party to those agreements has
breached any of those agreements. Except as set forth on Schedule
2.7(e),
PFSI is
not obligated to pay any royalties or other payments to third parties with
respect to the marketing, sale, distribution, license or use of the Arthur
Treacher’s System.
(h) Proprietary
Information and Confidentiality.
PFSI
has taken appropriate steps to protect and preserve trade secrets and the
confidentiality of other confidential information included in the Arthur
Treacher’s System. PFSI has taken the appropriate steps necessary to comply with
any duties of PFSI to protect the confidentiality of information provided to
PFSI by any other Person in connection with the Arthur Treacher’s System.
(i) Legal
Proceedings.
PFSI
has not
received
any notice or threat of, and there
is not, to the knowledge of PFSI and Parent, any legal proceeding, order,
agreement to which PFSI is a party, or similar arrangement that prohibits or
restricts (or would prohibit or restrict if adversely determined) PFSI from
exploiting the Arthur Treacher’s System in any manner whatsoever, throughout the
world.
(k) Effect
of Closing.
The
consummation of the transactions contemplated by this Agreement shall not cause
PFSI to
be in
violation of any license, sublicense, agreement or instrument relating to the
Arthur Treacher’s System to which PFSI is
a
party or otherwise bound, nor will the consummation of the transactions
contemplated by this Agreement cause: (1) the diminution, termination or
forfeiture of any rights of PFSI (or after Closing, NFTC) therein or thereto,
or the
increase of any financial or other burden with respect to the Arthur Treacher’s
System; (2) there to be a breach of any agreement to which PFSI is a party;
and/or (3) there to arise any impairment, claim or Lien on any component of
the
Arthur Treacher’s System or any rights of PFSI (or after Closing, NFTC) therein
or thereto. Immediately following consummation of the transactions contemplated
by this agreement, NFTC shall have the same rights in and to the Arthur
Treacher’s System as PFSI
had
immediately prior to Closing, including valid and marketable title thereto
(subject only to the limitations set forth in the License Agreement).
2.8 Real
Property.
The
Purchased Assets do not included any owned or leased real property or any leased
personal property.
2.9 Financial
Statements.
(a) Attached
as Schedule
2.9(a)
are true
and complete copies of the audited balance sheets of PFSI as at December 31,
2002 and December 31, 2003, and the related statements of operations and
statement of cash flows, for the fiscal years then ended, including any notes
and schedules thereto (the "Financial Statements"). The Financial Statements
have been prepared in accordance with GAAP throughout the periods covered
thereby and present fairly in all material respects the financial condition
of
PFSI as at the dates indicated and the results of their operations and changes
in cash flow for the periods then ended.
(b) Attached
as Schedule
2.9(b)
are true
and complete copies of the unaudited consolidated balance sheet of PFSI as
at
December 31, 2005, and the related operating statements and statements of cash
flow for the eleven-month period then ended (the "Interim Financial
Statements"). The Interim Financial Statements have been prepared in accordance
with GAAP applied on a basis consistent with the Financial Statements and
present fairly in all material respects the financial condition of PFSI as
at
the dates indicated and the results of its operations for the periods then
ended; subject,
however,
to
year-end adjustments which, in the aggregate, will not be materially adverse,
and provided,
that
the Interim Financial Statements do not contain footnotes.
2.10 Absence
of Undisclosed Liabilities.
(a) PFSI
has
no debt, liability or obligation of any kind, whether accrued, absolute,
contingent or otherwise, including, without limitation, any liability or
obligation on account of Taxes or any governmental charges or penalties,
interest or fines, except (i) the Liabilities, all of which are either reflected
in the Financial Statements and Interim Financial Statements, or to the extent
incurred since November 30, 2005, are identified on Schedule
2.10(a);
and
(ii) liabilities incurred in connection with the transactions provided for
in
this Agreement.
(b) Except
as
set forth on Schedule
2.10(b),
PFSI
has not, by written instrument or otherwise, guaranteed the payment or
collection or pledged any of its assets to secure payment of any unsatisfied
indebtedness or other obligation of any Person.
(c) Except
as
set forth on Schedule
2.10(c),
there
are no debts or liabilities of any kind owed by PFSI to
Parent
or any related Person or Affiliate thereof.
2.11 No
Material Adverse Change.
Except
as set forth on Schedule
2.11,
since
September 30, 2005, there has been no:
(a) Material
Adverse Effect with respect to the Purchased Assets or PFSI;
(b) default
under any indebtedness of PFSI or any event which with the lapse of time or
the
giving of notice, or both, would constitute such a default which default would,
or could reasonably be expected to have a Material Adverse Effect on the
Purchased Assets or PFSI;
(c) declaration,
setting aside or payment, directly or indirectly, of any cash or non-cash
dividend or other cash or noncash distribution in respect of any of the
securities of PFSI;
(d) damage,
destruction or loss, whether or not covered by insurance which has resulted
in a
Material Adverse Effect;
(e) Co-Branding
Agreement, Contract, Franchise Agreement, Lease, License, commitment or
transaction entered into or consummated by PFSI except in the ordinary course
of
business consistent with past practice;
(f) amendment
or termination of any Co-Branding Agreement, Contract, Franchise Agreement,
Lease or License, except in the ordinary course of business;
(g) extraordinary
losses (whether or not covered by insurance) or waiver by PFSI of any
extraordinary rights of value with respect to, or affecting the Purchased
Assets;
(h) sale,
assignment, license, lease or other transfer or disposition of any of the
Purchased Assets (including for the purpose of this Section 2.11(h), the
Co-Branding Agreements);
(i) amendment
to the articles of incorporation or bylaws of PFSI;
(j) notice
from any customer, supplier or Franchisee (including for the purpose of this
Section 2.11(j), a franchisee under a Co-Branding Agreement) as to the
customer's, supplier’s or Franchisee’s intention not to conduct business with
PFSI or, the result of which loss or losses of business, individually or in
the
aggregate, has had, or could reasonably be expected to have a Material Adverse
Effect on the Purchased Assets or PFSI;
(k) write-down
or write-off of the value of any of the Purchased Assets;
(l) change
in
the accounting methods or principles of PFSI;
(m) agreement
by PFSI to do any of the foregoing; or
(n) other
event or condition of any character, that has or might reasonably have a
Material Adverse Effect on the Purchased Assets or PFSI.
2.12 No
Litigation; Labor Disputes; Compliance with Law
Except
as set forth on Schedule
2.12:
(a) there
is
no decree, judgment, order, investigation or litigation at law or in equity,
no
arbitration proceeding, and no proceeding before or by any commission, agency
or
other administrative or regulatory body or authority, pending or, to the
Knowledge of PFSI or Parent, threatened, to which PFSI is a party or otherwise
relating to the Purchased Assets;
(b) PFSI
is
not subject to or bound by any labor agreement or collective bargaining
agreement and there is no labor dispute, grievance, controversy, strike or
request for union representation pending or, to the Knowledge of PFSI or Parent,
threatened against PFSI, and to the Knowledge of PFSI and Parent, there has
been
no occurrence of any events which would give rise to any such labor dispute,
controversy, strike or request for representation; and
(c) PFSI
owns
and operates, and has owned and operated, the Arthur Treacher’s System and the
business related thereto in material compliance with all federal, foreign,
state
and local laws, statutes, ordinances, rules and regulations, and all court
or
administrative orders or processes.
2.13 Taxes.
Except
as
set forth on Schedule
2.13:
(a) PFSI
has
duly and timely filed all required federal, state and local Tax returns, reports
and estimates for all years and periods (and portions thereof) for which any
such returns, reports and estimates were due, and any and all amounts shown
on
such returns and reports to be due and payable have been paid in full except
as
may be contested in good faith. All of such Tax returns, reports and estimates
are true and complete in all respects. All taxes due and owing by PFSI (whether
or not shown on any Tax Return) have been paid. PFSI has withheld all Tax
required to be withheld under applicable law and regulations (including but
not
limited to, Tax required to be withheld in connection with any amounts paid
or
owing to any employee, independent contractor, creditor, partner, stockholder
or
other third party), and such withholdings have either been paid to the proper
governmental agency or set aside in accounts for such purpose, or accrued,
reserved against and entered upon the books of PFSI, as the case may
be;
(b) There
are
no Tax deficiencies (including penalties and interest) or claims of any kind
assessed against or relating to PFSI or the Purchased Assets with respect to
any
taxable periods ending on or before, or including, the Closing Date of a
character or nature that would result in Liens or claims on any of the Purchased
Assets or on NFTC title or use of the Purchased Assets or that would result
in
any claim against, or liability or obligation of, NFTC;
(c) PFSI:
(i)
is not a party to or bound by, and has no obligation under, any Tax sharing
or
similar agreement; (ii) has no liability for the payment of Taxes of any Person
(other than PFSI ) under Treasury Regulation § 1.1502-6 (or any similar
provision of state, local or foreign law), as a transferee or successor, by
contract or otherwise; (iii) is not currently the beneficiary of any extension
of time within which to file any Tax return; and (iv) has not waived any statute
of limitations or otherwise agreed to any extension of the period for assessment
or collection with respect to Taxes, which waiver or agreement is currently
in
force;
(d) PFSI
is
not currently under audit with respect to Taxes by any government agency and
there have been no claims or issues (other than a claim or issue that has been
finally settled) concerning any liability for Taxes of PFSI asserted by any
government agencies;
(e) Schedule
2.13
lists:
(i) all income Tax returns that have been filed with respect to PFSI; and (ii)
each jurisdiction in which PFSI is required (or was required during any of
the
last three years) to file a Tax return or pay Taxes and each type of Tax giving
rise to such obligation.
(f) PFSI
has
not agreed to, or been requested to make, any adjustment by reason of a change
in accounting method or otherwise.
(g) PFSI
has
not made any payments, is not obligated to make any payments, and is not a
party
to any agreement that under certain circumstances could obligate it to make
any
payments that are not deductible under Section 280G of the Code. PFSI has
disclosed on its federal income Tax returns all positions taken therein that
could give rise to a substantial understatement of federal income Tax within
the
meaning of Section 6662 of the Code.
2.14 Inventory.
No
Inventory is included among the Purchased Assets.
2.15 Insurance. Schedule
2.15
is a
true and complete list of all liability and casualty insurance and errors and
omissions insurance policies insuring the Arthur Treacher’s System. All of such
policies are in full force and effect and are for such coverage and in such
amounts as is usual and customary for businesses similar to that Business.
PFSI
is not in default with respect to such insurance policies, nor has PFSI failed
to give any notice or present any claim under any policies in due and timely
fashion.
2.16 Brokers.
Neither
this Agreement nor the transaction contemplated by this Agreement was induced
or
procured through any Person acting on behalf of, working for or representing
PFSI as broker, finder, investment banker, financial advisor or in any similar
capacity.
2.17 Employee
Matters.
Except
as set forth on Schedule
2.17,
the
consummation of the transactions contemplated under this Agreement will not
cause NFTC or PFSI to incur or suffer: (i) any liability relating to, or
obligation to pay, severance, termination, or other payments to any Person
or
entity; or (ii) any liability or obligations with respect to any Employee
Benefit Plan maintained or offered by PFSI or Parent.
2.18 Affiliated
Transactions.
Except
as provided in Schedule
2.18
hereto,
no officer, director, partner or employee of PFSI or Parent, and no family
member of any of the foregoing, has any contractual relationship with PFSI
(other than as an employee) or any direct or indirect interest in any customer,
franchisee, supplier or competitor of PFSI, or in any other Person with whom
PFSI is doing business or otherwise has an agreement, arrangement or
understanding, written or oral with PFSI, whether in existence as of the date
hereof or proposed, other than the ownership of stock of publicly traded
corporations that does not exceed 1% of the issued and outstanding stock of
such
corporation.
2.19 Disputes
with Customers and Franchisees. Schedule
2.19
identifies with specificity all material unresolved disputes that PFSI has
with
any customers or Franchisees relating to the Arthur Treacher’s System and the
manner in which PFSI proposes to resolve such disputes.
2.20 Off
Balance Sheet Transactions. Except
for transactions, arrangements and other relationships otherwise specifically
identified on PFSI’s Financial Statements, including but not limited to
identification of the information set forth below, Schedule
2.20
sets
forth a true, complete and correct list of all transactions, arrangements and
other relationships between and/or among PFSI, Parent
any of
their Affiliates and any unconsolidated entity or other Person, including but
not limited to any structured finance, special purpose or limited purpose entity
or Person (each, an “Off-Balance Sheet Transaction”). Schedule
2.20
also
sets forth: (a) the business purpose and activities of each Off-Balance Sheet
Transaction; (b) the economic substance of each Off-Balance Sheet Transaction;
(c) the key terms and conditions of each Off-Balance Sheet Transaction; (d)
PFSI’s, Parent’s
and/or
its Affiliates’ potential risk associated with each such Off-Balance Sheet
Transaction; (e) the amounts of any guarantees, lines of credit, standby letters
of credit or commitments or take or pay contracts, throughput contracts or
other
similar types of arrangements, including tolling, capacity or leasing
arrangements, that could create a Lien on any of the Purchased Assets, including
but not limited to guarantees of repayments, make whole agreements or value
guarantees; and (f) any other information with respect to each such Off-Balance
Sheet Transaction that could have a material adverse effect on the financial
condition or results of operations of the Arthur Treacher’s System.
2.21 Disclosure.
No
statement by PFSI contained in this Agreement and no written statement furnished
or to be furnished by PFSI to NFTC pursuant to or in connection with this
Agreement contains or will contain any untrue statement of a material fact
or
omits or will omit to state a material fact necessary in order to make the
statements herein or therein contained not misleading.
ARTICLE
III
REPRESENTATIONS
AND WARRANTIES OF NFTC
NFTC
represents and warrants to PFSI as follows:
3.1 Organization.
NFTC is
a corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware and is duly qualified to do business as a foreign
limited liability company in all jurisdictions where the failure to so qualify
would have a Material Adverse Effect. NFTC has full power to purchase the
Purchased Assets pursuant to this Agreement..
3.2 Authorization;
Enforceability.
The
execution, delivery and performance of this Agreement and all of the documents
and instruments required hereby from NFTC have been duly authorized by all
necessary corporate action by NFTC. This Agreement is, and the other documents
and instruments required hereby will be, when executed and delivered by NFTC,
the valid and binding obligation of NFTC, enforceable against NFTC in accordance
with their respective terms, subject only to bankruptcy, insolvency,
reorganization, moratorium or similar laws at the time in effect affecting
the
enforceability or right of creditors generally and by general equitable
principles which may limit the right to obtain equitable remedies.
3.3 Absence
of Conflicting Laws and Agreements.
Except
as set forth on Schedule 3.3,
neither
the execution, delivery or performance of this Agreement by NFTC, nor the
consummation of the sale of the Purchased Assets or any other transaction
contemplated by this Agreement, does, or will after the giving of notice or
the
lapse of time or otherwise:
(a) conflict
with, result in a breach of, or constitute a default under, the certificate
of
incorporation or bylaws of NFTC, or any federal, state or local law, statute,
ordinance, rule or regulation, or any court or administrative order or process,
or any contract, agreement, arrangement, commitment or plan to which NFTC is
a
party or by which NFTC or its assets is bound;
(b) require
the consent, waiver, approval, permit, license, clearance or authorization
of,
or any declaration or filing with, any court or governmental or public agency;
or
(c) require
the consent of any Person under any contract, agreement, arrangement, commitment
or plan of any nature to which a NFTC is a party to or by which it is
bound.
3.4 Brokers.
Neither
this Agreement nor any other transaction contemplated by this Agreement was
induced or procured through any Person acting on behalf of, working for or
representing NFTC as broker, finder, investment banker, financial advisor or
in
any similar capacity.
3.5 Disclosure.
No
statement by NFTC contained in this Agreement and no written statement furnished
or to be furnished by NFTC to PFSI pursuant to or in connection with this
Agreement contains or will contain any untrue statement of a material fact
or
omits or will omit to state a material fact necessary in order to make the
statements herein or therein contained not misleading.
ARTICLE
IV
CERTAIN
MATTERS PENDING THE CLOSING
From
and
after the date of this Agreement and until the Closing (unless otherwise
provided herein) PFSI shall comply with each of the following
provisions:
4.1 Access. NFTC
and
its authorized agents, officers and representatives shall have reasonable access
to PFSI and the Purchased Assets to conduct such examination and investigation
of the Arthur Treacher’s System as they deem reasonably necessary, provided
that
such examinations shall be during the normal business hours and shall not
unreasonably interfere with the PFSI’s normal operations and
activities.
4.2 Notice
of Adverse Changes. Pending
the Closing, PFSI shall give NFTC prompt written notice of the occurrence of
any
of the following:
(a) an
Event
of Loss involving the Arthur Treacher’s System and which, individually or in the
aggregate, is more than Five Thousand Dollars ($5,000);
(b) the
commencement or filing of any decree, judgment, order, proceeding or litigation
at law or in equity, arbitration or other proceeding before any commission,
agency or administrative or regulatory body or authority which involves the
Arthur Treacher’s System or which could have a material adverse effect on the
Purchased Assets;
(c) any
violation by PFSI, or written notice of any alleged violation, of any federal,
state or local law, statute, ordinance, rule or regulation;
(d) any
notice of breach, default, claimed default or termination of any contracts,
agreement or rights related to the Arthur Treacher’s System; or
(e) any
other
material adverse developments with respect to the Arthur Treacher’s System .
4.3 Operations
Pending Closing. Except
as
set forth in Schedule
4.3,
after
the
date hereof and prior to the Closing, PFSI shall:
(a) operate
the Arthur Treacher’s System in the ordinary course of business in accordance
with past practices;
(b) operate
the Arthur Treacher’s System in accordance with existing contracts and
agreements related thereto and applicable governmental requirements, rules
and
regulations;
(c) not
sell,
lease, license, mortgage, pledge or otherwise dispose of any of the Purchased
Assets,
except for franchising transactions in the ordinary and regular course of the
operations of PFSI;
(d) not
take
or agree to take any action inconsistent with the representations and warranties
of PFSI contained herein being true and correct as of the Closing Date in all
material respects, or the consummation of the Closing as contemplated by this
Agreement.
4.4 Consents.
PFSI
will
use its good faith best efforts to obtain all consents and approvals from third
Persons whose consent or approval is required pursuant to any Contract or
agreement prior to the Closing Date.
4.5 Exclusivity.
Neither
PFSI nor anyone acting on behalf of PFSI, shall, directly or indirectly, solicit
or initiate discussions concerning, or enter into negotiation with or furnish
information that is not publicly available to, any Person concerning any
proposal with respect to the Arthur Treacher’s System and will notify NFTC
immediately in writing if PFSI receives a written proposal with respect to
any
such transactions. This exclusivity provision shall expire if the Closing has
not occurred on or before March 24, 2006, unless such date is extended by mutual
agreement of the parties hereto
4.6 Release
of Liens. At
or
prior to the Closing, PFSI shall obtain the release of all Liens disclosed
in
the Schedules hereto and any other Liens on the Purchased Assets and
shall
duly file releases or terminations of all such Liens in each governmental agency
or office in which any such Lien or evidence thereof shall have been previously
filed.
4.7 Tax
Returns and Payments.
(a) All
tax
returns, estimates and reports required to be filed by PFSI prior to the Closing
Date will be timely filed when due with the appropriate governmental agencies
or
extensions will have been granted; and
(b) all
Taxes
pertaining to ownership of the Purchased
Assets
or operation of the Arthur Treacher’s System due prior to the Closing Date will
be paid when due and payable unless protested in good faith.
4.8 Public
Announcement. No
party
hereto shall issue any press release or public announcement or, except as
otherwise required in connection with obtaining any third party consent,
otherwise divulge the existence of this Agreement or the transactions
contemplated hereby without prior approval of the other parties hereto which
shall not be unreasonably withheld, except as and to the extent that such party
shall be obligated by law or regulation, in which case the other party shall
be
so advised and the parties shall use their best efforts to cause a mutually
agreeable release or announcement to be issued. Prior to any disclosure to
a
third party in connection with obtaining consent of such third party to the
transaction contemplated herein or obtaining the release of any Lien on the
Purchased Assets, the third party will be required to execute a non-disclosure
agreement in a form approved by NFTC.
4.9 Best
Efforts. Without
limiting the specific obligations of any party hereto under any agreement or
covenant hereunder, each party hereto shall use reasonable best efforts to
take
all action and do all things necessary in order to consummate the transactions
contemplated by this Agreement, including, without limitation, satisfaction,
but
not waiver, of the closing conditions set forth in Article V and Article
VI.
ARTICLE
VII
CONDITIONS
PRECEDENT TO OBLIGATIONS OF NFTC
Each
and
every obligation of NFTC to be performed on the Closing Date shall be subject
to
the satisfaction prior to or at the Closing of the following express conditions
precedent:
5.1 Compliance
with Agreement.
PFSI
shall have performed and complied in all material respects with each of their
obligations under this Agreement which are to be performed or complied with
by
them prior to or at the Closing.
5.2 Proceedings
and Instruments Satisfactory.
All
proceedings, corporate or other, required to be taken by PFSI in connection
with
the performance of this Agreement, and all documents incident thereto, shall
be
complete in all material respects to the reasonable satisfaction of NFTC and
NFTC counsel, and PFSI shall have made available to NFTC for examination the
originals or true and correct copies of all documents which NFTC may reasonably
request in connection with the transactions contemplated by this Agreement
and
in order to establish the existence and good standings of PFSI and the due
authorization of this Agreement and the transactions contemplated hereby by
PFSI.
5.3 Representations
and Warranties. The
representations and warranties made by PFSI and the PFSI Stockholders which
are
qualified in any respect as to materiality shall be true and correct as of
the
Closing Date with the same force and effect as though such representations
and
warranties had been made on the Closing Date, except for changes permitted
or
contemplated by this Agreement; all other representations and warranties made
by
PFSI in this Agreement shall be true and correct in all material respects as
of
the Closing Date with the same force and effect as though such representations
and warranties had been made on the Closing Date, except for changes permitted
or contemplated by this Agreement.
5.4 No
Material Adverse Change. Between
the date of this Agreement and the Closing, there shall have occurred no event,
occurrence, fact, condition, change, development or effect with respect to
or
affecting the Arthur Treacher’s System which would reasonably be expected to
result in a Material Adverse Effect.
5.5 Event
of Loss.
Between
the date of this Agreement and the Closing, PFSI shall not have sustained an
Event of Loss impacting the Arthur Treacher’s System which individually or in
the aggregate would cost in excess of Twenty Thousand Dollars ($20,000) to
resolve and which resolution shall not have been completed on or prior to the
Closing Date to NFTC reasonable satisfaction; provided,
however,
PFSI
may elect to extend the Closing for a reasonable period of time not to exceed
thirty (30) days necessary to complete such resolution.
5.6 Deliveries
at Closing.
PFSI
shall have delivered or caused to be delivered to NFTC the documents, each
properly executed and dated as of the Closing Date, as required pursuant to
this
Agreement and shall have satisfied each of the obligations as set forth in
Article I to be satisfied as of the Closing Date.
5.7 Possession;
Instruments of Conveyance and Transfer.
PFSI
shall have delivered to NFTC at the Closing such other documents as shall be
effective to vest in NFTC good title to the Purchased Assets as contemplated
by
this Agreement.
5.8 Approvals
and Consents.
There
shall have been secured such permissions, approvals, determinations, consents
and waivers as listed on Schedule
5.8.
5.9 Absence
of Investigations and Proceedings.
There
shall be no decree, judgment, order, or litigation at law or in equity, no
arbitration proceedings, and no proceeding before or by any commission, agency
or other administrative or regulatory body or authority pending to which PFSI
or
the Purchased Assets are subject which would materially adversely affect the
ability of NFTC to operate the Arthur Treacher’s System in the same manner as
operated and used by PFSI. Without limiting the generality of the foregoing,
no
action or proceeding or formal investigation by any Person or governmental
agency shall be pending with the object of challenging or preventing the Closing
and no other proceedings shall be pending with such object or to collect damages
from NFTC or PFSI on account thereof.
5.10 Governmental
Consents.
All
authorizations, consents or approvals of any and all governmental regulatory
authorities necessary in connection with the consummation of the transactions
contemplated by this Agreement shall have been obtained and be in full force
and
effect.
5.11 No
Liens.
On the
Closing Date and simultaneously with the Closing, there shall not be any Liens
on the Purchased Assets.
Notwithstanding
the above, if any of the conditions set forth in this Article V have not been
satisfied, NFTC may in their sole discretion elect to proceed with the
consummation of the transactions contemplated hereby.
ARTICLE
VI
CONDITIONS
PRECEDENT TO OBLIGATIONS OF PFSI
Each
and
every obligation of PFSI to be performed on the Closing Date shall be subject
to
the satisfaction prior to or at the Closing of the following express conditions
precedent:
6.1 Compliance
with Agreement.
NFTC
shall have performed and complied in all material respect with all of their
obligations under this Agreement which are to be performed or complied with
by
them prior to or at the Closing.
6.2 Proceedings
and Instruments Satisfactory.
All
proceedings to be taken by NFTC in connection with the transactions contemplated
by this Agreement, and all documents incident thereto, shall be complete to
the
reasonable satisfaction of PFSI and PFSI’s counsel, and NFTC shall have made
available to PFSI for examination the originals or true and correct copies
of
all documents which PFSI may reasonably request in connection with the
transactions contemplated by this Agreement and in order to establish the
existence and good standing of NFTC and the due authorization of this Agreement
and the transactions contemplated hereby by NFTC.
6.3 Representations
and Warranties.
The
representations and warranties made by NFTC shall be true and correct in all
material respects as of the Closing Date with the same force and effect as
though such representations and warranties had been made on the Closing Date,
except for changes permitted or contemplated by this Agreement.
6.4 Deliveries
at Closing.
NFTC
shall have delivered or caused to be delivered to PFSI the documents, each
properly executed and dated as of the Closing Date, required pursuant to this
Agreement and shall have satisfied each of the obligation as set forth in
Article I to be satisfied as of the Closing Date, including but not limited
to,
the execution of the License Agreement. NFTC shall also have paid the Purchase
Price.
6.5 Absence
of Investigations and Proceedings. No
action
or proceeding or formal investigation by any Person or governmental agency
shall
be pending with the object of challenging or preventing the Closing and no
other
proceeding shall be pending with such object or to collect damages from PFSI
on
account thereof.
6.6 Governmental
Consents.
All
other material authorizations, consents or approvals of any and all governmental
regulatory authorities shall have been obtained and be in full force and
effect.
Notwithstanding
the above, if any of the conditions set forth in this Article VI have not been
satisfied, PFSI may nevertheless elect to proceed with the consummation of
the
transactions contemplated hereby.
ARTICLE
VII
INDEMNIFICATION
From
and
after the Closing, the parties shall be indemnified as set forth
below
7.1 Indemnification
by PFSI and Parent.
PFSI and
Parent shall, jointly and severally, indemnify, exculpate and hold NFTC and
NFTC
stockholders, officers, employees and agents (collectively the "NFTC Indemnified
Parties") harmless from and against, and agree promptly to defend NFTC
Indemnified Parties from and reimburse NFTC Indemnified Parties for, any and
all
losses, damages, costs, expenses, liabilities, obligations and claims of any
kind (including, without limitation, reasonable attorneys' fees and other costs
and expenses incurred in connection herewith or in the investigation of any
claims made hereunder) (“Claims”) incurred by any of the NFTC Indemnified
Parties that result from:
(a) any
inaccuracy in or breach of any of the representations and warranties made by
PFSI and Parent in or pursuant to this Agreement or in any instrument,
certificate or affidavit delivered by PFSI at the Closing in accordance with
the
provisions of any Section hereof; provided
that,
NFTC
makes a claim for indemnification within the applicable survival period set
forth in Section 7.5 hereof;
(b) any
failure by PFSI or the PFSI Stockholders to carry out, perform, satisfy and
discharge any covenants, agreements, undertakings, liabilities or obligations
under this Agreement or under any of the documents delivered by PFSI pursuant
to
this Agreement;
(c) any
claims or litigation matters which relate to liabilities or Liens related to
the
operations of PFSI, either prior to or after the Closing Date (excluding
liabilities or Liens related to or arising from the operations of the Arthur
Treacher’s System by NFTC from and after the Closing);
(d) any
claims or litigation matters which relate to liabilities or Liens related to
the
operations of the Arthur Treacher’s System prior to the Closing Date, including,
without limitation, the claims described in Schedule
___
hereto;
(e) any
claims or litigation matters which relate to liabilities or obligations of
PAT
arising under or in connection with the Co-Branding Agreements with respect
to
facts that occurred prior to the Closing Date;
(f) any
fees,
expenses or other payments incurred or owed by PFSI to any brokers or comparable
third parties retained or employed by them or their affiliates in connection
with the transactions contemplated by this Agreement;
(g) any
loss,
claim, liability, expense, or other damage attributable to: (x) all Taxes (or
the non-payment thereof) of PFSI and for time periods (or portions thereof)
ending on or before the Closing Date; (y) any and all Taxes of any Person
imposed on NFTC as a transferee or successor, by contract or pursuant to any
law, rule, or regulation, which Taxes related to an event or transaction
occurring before the Closing Date; and (z) any and all Taxes of PFSI, Parent
or
their affiliates which relate to the operations of PFSI’s business from and
after the Closing Date; and
(h) any
suit,
action or other proceeding brought by any governmental authority or Person
arising out of, or in anyway related to, any of the matters referred to in
Sections 7.1(a) through 7.1(g).
7.2 Indemnification
by NFTC. NFTC
shall indemnify, exculpate and hold PFSI and Parent, and their respective
stockholders, officers, directors, employees and agents (collectively the "PFSI
Indemnified Parties") harmless from and against, and agree promptly to defend
PFSI Indemnified Parties from and reimburse PFSI Indemnified Parties for, any
and all Claims incurred by PFSI Indemnified Parties that result
from:
(a) any
breach or inaccuracy of any representations and warranties made by NFTC in
or
pursuant to this Agreement, or in any instrument, certificate or affidavit
delivered by NFTC at the Closing in accordance with the provisions of any
Section hereof; provided
that,
PFSI
makes a claim for indemnification within the applicable survival period set
forth in Section 7.5 hereof;
(b) any
failure by NFTC to carry out, perform, satisfy and discharge any of its
covenants, agreements, undertakings, liabilities or obligations under this
Agreement or under any of the documents and materials delivered by NFTC pursuant
to this Agreement;
(c) any
claim
or litigation matters that relate to or are due to the operation or ownership
of
the Arthur Treacher’s System after the Closing, excluding any claims or
litigation matters related to PFSI’s operations pursuant to the
License;
(d) any
fees,
expenses or other payments incurred or owed by NFTC to any brokers or comparable
third parties retained or employed by them or their affiliates in connection
with the transactions contemplated by this Agreement; or
(e) any
suit,
action or other proceeding brought by any governmental authority or person
arising out of, or in any way related to, any of the matters referred to in
Sections 7.2(a) through 7.2(d).
7.3 Method
of Asserting Claims.
(a) The
party
seeking indemnification (the “Indemnitee”) will give prompt written notice to
the other party or parties (the “Indemnitor”) of any Claim which it discovers or
of which it receives notice after the Closing and which might give rise to
a
claim by it against Indemnitor under Section 7 hereof, stating the nature,
basis
and (to the extent known) amount thereof; provided that failure to give prompt
notice shall not jeopardize the right of any Indemnitee to indemnification
except to the extent such failure shall have materially prejudiced the ability
of the Indemnitor to defend such Claim. Subject to the Indemnitor’s right to
defend in good faith third party claims as hereinafter provided, the Indemnitor
shall satisfy its obligations and this Section 9 within thirty (30) days after
receipt of written notice thereof from the Indemnitee.
(b) In
case
of any Claim or suit by a third party or by any governmental body, or any legal,
administrative or arbitration proceeding with respect to which Indemnitor may
have liability under the indemnity agreement contained in this Section 7, which
the Indemnitor acknowledges is a Claim or demand for which it must indemnify
or
hold harmless the Indemnitee under Section 7.1 or 7.2 above, Indemnitor shall
be
entitled to participate therein, and, to the extent desired by it, to assume
the
defense thereof and to employ counsel reasonably acceptable to the Indemnitee
to
defend any such Claim or demand asserted against the Indemnitee. After notice
from Indemnitor to Indemnitee of the election so to assume the defense thereof,
Indemnitor will not be liable to Indemnitee for any legal or other expenses
subsequently incurred by Indemnitee in connection with the defense thereof,
other than reasonable costs of investigation, unless Indemnitor does not
actually assume the defense thereof following notice of such election.
Indemnitee and Indemnitor will render to each other such assistance as may
reasonably be required of each other in order to insure proper and adequate
defense of any such suit, Claim or proceeding. If the Indemnitor actually
assumes the defense of the Indemnitee, the Indemnitee will not make any
settlement of any Claim which might give rise to liability of Indemnitor under
the indemnity agreements contained in this Section without the written consent
of Indemnitor, which consent shall not be unreasonably withheld if such
settlement includes the unconditional release of Indemnitor, and the Indemnitor
shall not agree to make any settlement of any Claim that does not include the
unconditional release of the Indemnitee without the written consent of
Indemnitee.
7.4 Payment
of Claims.
An
Indemnitor which is liable for any Claim shall pay such Claim promptly to the
Indemnitee within 10 business days of the final determination of the liability
of the Indemnitor and the amount of the Claim.
7.5 Nature
and Survival of Representations.
All
statements made by or on behalf of PFSI or Parent herein or in the Schedules,
shall be deemed representations and warranties of PFSI and Parent regardless
of
any investigation made by or on behalf of NFTC. The representations and
warranties made by PFSI and Parent, on the one hand, and by NFTC, on the other
hand, under this Agreement shall survive for eighteen (18) months following
the
Closing Date, except that (i) the representations and warranties set forth
in Section 2.5 (Title to Purchased Assets; Liens and Encumbrances), 2.7
(Intellectual Property; Trade Secrets), and 2.13 (Taxes) shall survive the
Closing until the expiration of the applicable statute of limitations, and
(ii)
there shall be no limitation on any claim involving fraud or intentional
misconduct.
7.6 Limitation
on Claims.
No
Claims may be asserted by a party pursuant to Sections 7.1(a) or 7.1(h) (as
it
relates to Sections 7.1(a)) or 7.2(a) or 7.2(e)) (as it relates to 7.2(a))
of
this Agreement until the aggregate amount of all such Claims of such party
shall
exceed Fifteen Thousand Dollars ($15,000) (the “Threshold Amount”), at which
time the party seeking indemnification shall be entitled to recover only to
the
extent that the cumulative aggregate amount of such Claims, finally determined,
exceeds the Threshold Amount. Notwithstanding anything in this Agreement to
the
contrary, the maximum aggregate amount for which PFSI and/or Parent shall be
liable for Claims asserted by the NFTC Indemnified Parties under this Agreement
shall be $1,250,000.
7.7 Remedies.
Except
as otherwise specifically provided in this Agreement, the foregoing
indemnification provisions, absent fraud or intentional misconduct, are the
sole
and exclusive remedy any party may have for a breach of any representation
or
warranty hereunder.
ARTICLE
VIII
TERMINATION;
MISCELLANEOUS
8.1 Termination. This
Agreement may be terminated and the transactions contemplated hereby may be
abandoned at any time prior to the Closing Date, as follows:
(a) by
mutual
written agreement of PFSI, Parent and NFTC; or
(b) by
NFTC
or PFSI and Parent if the Closing has not occurred on or before March 24, 2006,
or such later date as mutually agreed; or
(c) by
NFTC
if NFTC is not then in material breach of this Agreement and PFSI or Parent
are
then in material breach of this Agreement, and such breach remains uncured
for
ten (10) days after receipt of written notice thereof from NFTC; or
(d) by
PFSI
and Parent, if PFSI and Parent are not then in material breach of this Agreement
and NFTC is then in material breach of this Agreement, and such breach remains
uncured for ten (10) days after receipt of written notice thereof from
PFSI.
8.2 Rights
on Termination. If
this
Agreement is terminated pursuant to Section
8.1
above,
then except as otherwise provided herein, all further obligations of the parties
under or pursuant to this Agreement shall immediately terminate without further
liability of any party to the other, provided, however, that nothing in this
Section
8.2
shall
relieve liability or obligations hereunder of any party (the “Defaulting Party”)
to the other party or parties on account of a breach of a covenant or agreement
contained herein, or any misrepresentation or warranty contained herein by
the
Defaulting Party. In the case of such a breach or misrepresentation, in addition
to any damages for which the Defaulting Party may be liable, the Defaulting
Party shall reimburse the other party or parties for any expenses incurred
by
such party or parties in order to enforce its or their rights under this
Agreement (including reasonable attorney’s fees and expenses). In addition, NFTC
shall be entitled to pursue specific performance against PFSI (PFSI hereby
acknowledging that the Purchased Assets are unique and that NFTC has no adequate
remedy at law if PFSI breaches this Agreement).
8.3 Further
Assurances. From
time
to time after the Closing Date, upon the reasonable request of any party hereto,
the other party or parties hereto shall execute and deliver or cause to be
executed and delivered such further instruments of conveyance, assignment and
transfer and take such further action as the requesting party may reasonably
request in order to effectuate fully the purposes, terms and conditions of
this
Agreement.
8.4 Entire
Agreement; Amendment; and Waivers. This
Agreement and the agreements required to be delivered pursuant hereto constitute
the entire agreement between the parties pertaining to the subject matter
hereof, and supersede all prior and contemporaneous agreements, understandings,
negotiations and discussions of the parties, whether oral or written, and there
are no warranties, representations or other agreements between the parties
in
connection with the subject matter hereof, except as specifically set forth
herein. No amendment, supplement, modification, waiver or termination of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed
or
shall constitute a waiver of any other provision of this Agreement, whether
or
not similar, unless otherwise expressly provided.
8.5 Expenses. Except
as
otherwise specifically provided herein, whether or not the transactions
contemplated by this Agreement are consummated, each of the parties shall pay
the fees and expenses of its respective counsel, accountants and other experts
incident to the negotiation, drafting and execution of this Agreement and
consummation of the transactions contemplated hereby.
8.6 Benefit;
Assignment. This
Agreement shall be binding upon and shall inure to the benefit of and shall
be
enforceable by NFTC, PFSI, Parent and their respective permitted successors
and
assigns. This Agreement (and any rights, obligation or liabilities hereunder)
may not be assigned or delegated in whole or in part by any party without the
prior written consent of each other party hereto.
8.7 Notices. All
communications or notices required or permitted by this Agreement shall be
in
writing and shall be deemed to have been given (i) on the date of personal
delivery to an officer of the other party, or (ii) when sent by telecopy or
facsimile machine to the number shown below on the date of such confirmed
facsimile or telecopy transmission, or (iii) when properly deposited for
delivery by a nationally-recognized commercial overnight delivery service,
prepaid, or by deposit in the United States mail, certified or registered mail,
postage prepaid, return receipt requested on the date that is two (2) days
after
the date set forth in the records of such delivery service or on the return
receipt, and addressed as follows, unless and until either of such parties
notifies the other in accordance with this Section of a change of address or
change of telecopy number:
If
to
NFTC:
NF
Treachers Corp.
1400
Old
Country Road, Suite 400
Westbury,
New York 11590
Attention:
President
Telephone
No. (516) 338-8500, Fax No.: (516) 338-7220
With
a
copy to:
DLA
Piper
Rudnick Gray Cary US LLP
1775
Wiehle Avenue, Suite 400
Reston,
Virginia 20190
Attention:
Jay Gary Finkelstein, Esq.
Telephone
No: (703) 773-4211, Fax No.: (202) 689-7479
|
If
to PFSI or Parent:
|
PAT
Franchise Systems, Inc.
14
Penn
Plaza, Suite 1305
New
York,
New York 10122
Attention:
Jeffrey Bernstein
Fax
No.
516-918-3301
Telephone
No: 516-918-3300
With
a
copy to:
Olsham
Grundman Frome Rosenzweig & Wolosky LLP
Park
Avenue Tower
65
East
55th Street
New
York,
New York 10022
Attention:
Randy M. Friedberg, Esq.
Telephone
No: (212)
451-2300, Fax No: (212) 451-2222
8.8 Counterparts;
Headings. This
Agreement may be executed in several counterparts, each of which shall be deemed
an original, but such counterparts shall together constitute but one and the
same Agreement. This Agreement may be executed and delivered in counterpart
signature pages executed and delivered via facsimile transmission, and any
such
counterpart executed and delivered via facsimile transmission shall be deemed
an
original for all intents and purposes. The Article and Section headings in
this
Agreement are inserted for convenience of reference only and shall not
constitute a part hereof.
8.9 Severability. If
any
provision, clause or part of this Agreement or the application thereof under
certain circumstances is held invalid or unenforceable, the remainder of this
Agreement, or the application of such provision, clause or part under other
circumstances, shall not be affected thereby.
8.10 No
Reliance. Except
for: (i) any assignees permitted by Section 8.6 of this Agreement; and (ii)
investors providing financing for the consummation of the transactions
contemplated by this Agreement:
(a) no
third
party is entitled to rely on any of the representations, warranties and
agreements of NFTC, PFSI or Parent contained in this Agreement; and
(b) NFTC.,
PFSI and Parent assume no liability to any third party because of any reliance
on the representations, warranties and agreements of NFTC, PFSI or Parent
contained in this Agreement.
8.11 Judicial
Interpretation. Should
any provision of this Agreement require judicial interpretation, the parties
hereto agree that the court interpreting or construing the same shall not apply
a presumption that the terms hereof shall be more strictly construed against
one
party by reason of the rule of construction that a document is to be construed
more strictly against the party which itself or through its agent prepared
the
same, it being agreed that the agents of each party have participated in the
preparation hereof.
8.12 Saturdays,
Sundays and Legal Holidays.
If
the
time period by which any acts or payments required hereunder must be performed
or paid expires on a Saturday, Sunday or federal or California State legal
holiday, then such time period shall be automatically extended to the close
of
business on the next regularly scheduled business day.
8.13 Governing
Law.
This
Agreement shall be construed and interpreted exclusively according to the laws
of the State of New York, without regard to the conflict of law principles
thereof.
8.14 Consent
to Jurisdiction. The
parties hereby consent to the jurisdiction of the State and Federal courts
sitting in the County of New York, State of New York in any action arising
out
of or connected in any way with this Agreement. The parties hereto further
agree
that the service of process or of any other papers upon them or any of them
by
registered mail in the manner provided in Section 8.7 shall be deemed good,
proper and effective service upon them, and each of them hereby waives any
claim
or objection it or he ay have to such jurisdiction and forum based on the
principle of forum non conveniens, and acknowledges that such forum is and
would
be a convenient forum. Nothing in this Section shall affect the right of any
party to serve process in any other manner permitted by law or limit the right
of any party to bring any suit, action or proceeding against any other party
in
the courts of any other jurisdiction.
8.15 Singular/Plural;
Gender.
Where
the context so requires or permits, the use of the singular form includes the
plural, and the use of the plural form includes the singular, and the use of
any
gender includes any and all genders.
[SIGNATURES
APPEAR ON FOLLOWING PAGE]
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year
first above written.
|
NF
TREACHERS CORP.
By:
s/Eric
Gatoff
Name: Eric
Gatoff
Title: VP-
Corporate Counsel
|
|
|
PAT
FRANCHISE SYSTEMS, INC.
By:
s/Jeffrey
Bernstein
Name: Jeffrey
Bernstein
Title: President
|
|
|
TRUFOODS
SYSTEMS, INC.
By:
s/Jeffrey
Bernstein
Name: Jeffrey
Bernstein
Title: President
|
|
APPENDIX
I
DEFINITIONS
Except
as
specified otherwise, when used in this Agreement and any Exhibits or Schedules,
the following terms shall have the meanings specified:
“Affiliate”
shall
mean with respect to any Person, any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by or is under
common control with such Person;
"Agreement"
shall
mean this Asset Purchase Agreement, together with the Schedules and Exhibits,
as
the same shall be amended from time to time in accordance with the terms hereof;
“Arthur
Treacher’s System”
shall
have the meaning set forth in Section 1.1;
"Bill
of Sale and Assignment"
shall
mean the instrument in the form of EXHIBIT
B attached
hereto;
"Closing"
shall
mean the closing to be held at such time and place as the parties may mutually
agree to in writing, at which the transactions contemplated by this Agreement
shall be consummated;
"Closing
Date"
shall
mean February 28, 2006, or such date as the parties may mutually agree upon
in
writing, after all of the conditions set forth in Articles V and VI hereof
have
been satisfied or waived, other than those conditions which by their terms
are
intended to be satisfied at Closing. The Closing shall be deemed effective
as of
12:01 A.M. (Pacific Daylight Time) on the Closing Date;
"Code"
shall
mean the Internal Revenue Code of 1986, as amended;
"Contracts"
shall
mean those agreements to which PFSI or Parent is a party, whether written,
oral,
or implied, including without limitation those agreements listed on Schedule
2.6 which
relate to the Arthur Treacher’s System;
"Copyrights"
shall
mean all copyrights (including computer software, data and documentation) and
any registrations and applications to register or renew the registration thereof
owned, leased, licensed or used by PFSI, including without limitation those
Copyrights described on Schedule
2.7;
“Customer”
shall
mean, individually or collectively and Person who is currently a customer or
franchisee of PFSI or its Affiliates or who has been a customer or franchisee
of
PFSI or its Affiliates during the two (2) year period prior to the Closing
Date;
"Customer
Lists"
shall
mean all lists, documents, information in whatever form or media, including
without limitation computer tapes and programs and other computer readable
media
used by, prepared for the benefit of or in the possession of PFSI concerning
past, present and potential customers of the Business including without
limitation, web site visitors to PFSI’s website(s);
"Event
of Loss"
shall
mean any loss, taking, condemnation, damage or destruction of or to any of
the
Purchased Assets ;
"Financial
Statements"
shall
mean the financial statements of PFSI described in Section 2.9(a);
“Franchise
Agreements” shall
mean any and all contracts between PFSI and any other Person for the
establishment and operation of an “Arthur Treacher’s” restaurant (excluding
Co-Branding Agreements);
“Franchisees”
shall
mean those Persons who have entered into a Franchise Agreement with
PFSI;
“GAAP”
shall
mean United States generally accepted accounting principles, consistently
applied;
"Intellectual
Property"
shall
mean United States and foreign trademarks, service marks, trade names, trade
dress, domain names, copyrights, and similar rights, including registrations
and
applications to register or renew the registrations of any of the foregoing,
United States and foreign patents and patent applications, and trade secrets,
ideas, author’s rights and photographic releases, whether published or
unpublished (including any rights to prepare, display, perform reproduce or
distribute copies, compilations and derivative works), confidential business
and
technical information, inventions, designs, know-how, proprietary information,
internet websites and domain names, computer software, data and documentation,
processes, and rights of privacy and publicity and all similar intellectual
property rights and licenses of any of the foregoing, including but not limited
to, any and all other such or similar assets used in the Business but owned
individually by the PFSI Stockholders or any other Person;
"Interim
Financial Statements"
shall
mean the financial statements of PFSI described in Section 2.9(b);
“Inventory"
shall
mean all inventories held by PFSI, including but not limited to raw materials,
work-in-process, finished goods, spare parts and supplies; and including all
Inventory in transit or on order and not yet delivered, and all rights with
respect to the processing and completion of any works-in-process;
"IRS"
shall
mean the Internal Revenue Service;
"Knowledge”
shall
mean the actual knowledge of Jeff Bernstein and each officer and director of
PFSI or Parent, including such knowledge which any of such Persons should have
possessed upon a reasonable investigation;
"Lien"
shall
mean any mortgage, deed of trust, pledge, hypothecation, security interest,
encumbrance, claim, lien, lease (including any capitalized lease) or charge
of
any kind, whether voluntarily incurred or arising by operation of law or
otherwise, including without limitation any agreement to give or grant any
of
the foregoing, any conditional sale or other title retention agreement and
the
filing of or agreement to give any financing statement with respect to any
of
the Purchased Assets under the applicable Uniform Commercial Code or comparable
law of any jurisdiction;
“Material
Adverse Effect” shall
mean a material adverse effect on the financial condition, assets, liabilities
or results of operations of PFSI taken as a whole, excluding any such effect
resulting from or arising in connection with: (i) the entering into or
performance of this Agreement, the transactions contemplated by this Agreement
or the announcement thereof; (ii) changes or conditions generally affecting
the
sale of franchises and operations of franchises and franchisors involving fast
food or related industries in which PFSI operates; or (iii) changes in general
economic, regulatory or political conditions.
"NFTC"
shall
mean NF Treachers Corp., a Delaware corporation;
"NFTC
Closing Certificate"
shall
mean the certificate of the Secretary of NFTC in the form of EXHIBIT
C attached
hereto;
“NFTC
Franchisor Affiliates”
means
Nathan’s Famous Systems, Inc., NF Roasters Corp., and Miami Subs USA,
Inc.;
"NFTC's
Performance Certificate"
shall
mean the certificate of an officer of NFTC in the form of EXHIBIT
D
hereto;
"Patents"
shall
mean all of those United States and foreign patents and patent applications
owned or filed by PFSI, including without limitation those patents listed on
Schedule
2.7;
"Person"
shall
mean any natural person, general or limited partnership, corporation,
association, limited liability company or other entity;
"PFSI"
shall
mean PAT Franchise Systems, Inc., a Delaware corporation;
“PFSI’s
Closing Certificate” shall
mean a Closing Certificate of the Secretary of PFSI in the form of EXHIBIT
E
attached
hereto;
“PFSI’s
Fair Value Certificate” means
the
certificate in the form of EXHIBIT
F
attached
hereto;
“PFSI’s
Opinion of Counsel” means
the
legal opinion of counsel to PFSI addressed to NFTC in the form of EXHIBIT
G
attached
hereto;
“PFSI’s
Performance Certificate” shall
mean the certificate of an officer of PFSI in the form of EXHIBIT
H attached
hereto;
“Purchased
Assets” shall
have the meaning set forth in Section 1.1;
"Schedules"
shall
mean those schedules referred to in this Agreement;
"Tax"
shall
mean any federal, state, local, or foreign income, gross receipts, license,
payroll, employment, excise, severance, stamp, occupation, premium, windfall
profits, environmental (including taxes under Code Section 59A), customs duties,
capital stock, franchise, profits, withholding, social security (or similar),
unemployment, disability, real property, personal property, sales, use,
transfer, registration, value added, alternative or add-on minimum, estimated,
or other tax of any kind whatsoever, including any interest, penalty, or
addition thereto, whether disputed or not;
"Trade
Secrets"
shall
mean all proprietary information owned, leased, licensed or used by PFSI
relating to the Arthur Treacher’s System in any form or media, including without
limitation trade secrets, ideas, confidential business and technical
information, inventions, designs, know-how, processes and Customer
Lists;
“Trademark
Assignment” shall
mean an instrument in the form of EXHIBIT
I
attached
hereto; and
"Trademarks"
shall
mean all foreign and United States trade names, trademarks, service marks,
trade
dress and domain names (including without limitation registrations and
applications to register or renew the registrations of any of the foregoing),
trademark and service mark registrations, and trademark and service mark
applications that are owned, licensed, leased or used by PFSI, including without
limitation, those Trademarks described on Schedule 2.7 (excluding only the
trade
names, trademarks, service marks, trade dress and domain names used by PFSI
exclusively in conjunction with its “Pudgie's Famous Chicken”
business).
EXHIBIT
99.2
LICENSE
AGREEMENT
THIS
LICENSE AGREEMENT (the “Agreement”)
is
made as of February 28, 2006 (the “Effective
Date”)
by and
between:
|
·
|
NF
Treachers Corp., a Delaware corporation having its principal place
of
business at 1400 Old Country Road, Westbury, New York 11590 (“Licensor”);
and
|
|
·
|
PAT
Franchise Systems, Inc., a Delaware corporation having its principal
place
of business at 14 Penn Plaza, Suite 1305, New York, New York 10122
(“Licensee”).
|
RECITALS:
WHEREAS,
on the same date as this Agreement is signed, Licensor and Licensee have entered
into an agreement captioned the “Asset Purchase Agreement” (the “APA”)
under
which Licensee has sold, and Licensor has purchased, the IP Assets (defined
below), on the terms and conditions set forth in the APA;
WHEREAS,
the “IP
Assets”
that
were sold to Licensor under the APA consist of, among other things, all of
the
intellectual property that is in any way associated with the “Arthur Treacher’s”
brand, concept and franchise system, worldwide, which includes but is not
limited to the “Arthur Treacher’s” name, trademarks, service marks, copyrights,
patents, trade secrets, the rights under the Treacher Letter Agreement (defined
below), and all other intellectual property whatsoever associated with the
“Arthur Treacher’s” fish and chips concept, whether or not exploited in the past
by Licensee or its predecessors, all as set forth in the APA;
WHEREAS,
before the parties’ entry into the APA, Licensee operated, and licensed, the
Arthur
Treacher’s
restaurant system to those System franchisees specified in Attachment A to
this Agreement (the “PAT
Direct Unit Franchisees”);
WHEREAS,
before the parties’ entry into the APA, Licensee, on the one hand, and Nathan’s
Famous Systems, Inc. (“NFSI”),
NF
Roasters Corp. (“NFR”),
and
Miami Subs USA, Inc. (“MSUSA”)
(all
affiliates of Licensor), on the other hand, were parties to a co-branding
development agreement dated The letter agreement dated January 1, 2003, as
amended February 4, 2003 (the “Co-Branding
Agreement”)
pursuant to which Licensee and one of NFSI, NFR, and/or MSUSA entered into
separate participation agreements (the “Participation
Agreements”)
to
permit certain franchisees of NFSI, NFR, and MSUSA (as well as those entities’
company-owned restaurants) operating NF Concept Restaurants the right to also
operate under the Arthur
Treacher’s
name and
to also sell Arthur
Treacher’s products
in their franchised NF Concept Restaurants (such NF Concept Restaurants in
existence as of the date hereof being referred to herein as the “Co-Branded
Units”);
WHEREAS,
Licensor and Licensee have agreed that as part of the overall arrangement
involving the transaction in which the parties agreed to the terms of the APA,
Licensor would license back to Licensee the rights granted under this Agreement,
which include, among other things, the right to sublicense and use certain
of
the IP Assets in connection with Licensee’s continued and uninterrupted
management and operation of the PAT Direct Franchises and Licensee's maintenance
and expansion of that system within the PFSI Market, all on the terms set forth
herein; and
Page
1
WHEREAS,
Licensee and Licensor wish to enter into this Agreement, which will confer
upon
Licensee the rights set forth herein;
NOW,
THEREFORE, in consideration of the mutual undertakings and commitments set
forth
herein, and other good and valuable consideration, the sufficiency and receipt
of which are hereby acknowledged, the parties agree as follows:
1. GRANT
1.1. Grant
and Acceptance.
Subject
to the other terms of this Agreement, Licensor grants to Licensee the right
to
use the Proprietary Marks and System (defined below) solely for the purpose
of operating and authorizing third parties to operate Restaurants which
are: (a) within the PFSI Market; and (b) in Non-Captive Market
Locations and Shopping Malls. Licensee accepts this grant of rights and agrees
that it shall use the Proprietary Marks and System only on the terms of this
Agreement. The grant of rights under this Section 1.1 shall also apply to the
PAT Direct Unit Franchisees under the terms specified below in Section
1.8.1.
1.2. Fees.
Licensee shall not be required to pay any fees, royalties, or make any other
payments to Licensor for the rights granted under this Agreement and/or the
exercise of those rights by Licensee’s Unit Franchisees.
1.3. Limited
Exclusivity.
The
grant of rights to use the Proprietary Marks and System, solely for the specific
purposes described in Section 1.1 above, shall be exclusive during the term
of
this Agreement subject to the other terms of this Agreement (including but
not
limited to Sections 1.4, 1.5 and 1.6 below).
1.4. Development
Schedule/Reversion of Sub-markets.
If
Licensee does not satisfy the Development Schedule for one or more of the
Sub-markets comprising the Secondary PFSI Market, then for any such Sub-market
as to which the Development Schedule has not been met, the rights granted to
Licensee for such Sub-market shall revert to Licensor, such Sub-market shall
no
longer form part of the PFSI Market, and thereafter, Licensor shall have the
sole right to operate and authorize other parties to operate Restaurants in
that
Sub-market. Nothing in this Section 1.4, however, shall negate, affect, or
otherwise impact upon any rights already granted to a Unit Franchisee operating
within the affected Sub-market by Licensee.
1.5. Shopping
Malls.
If
Licensor has the opportunity to operate or authorize a third party to operate
a
Restaurant in a Shopping Mall within the PFSI Market, Licensor shall notify
Licensee of the same. If, at the time of such notice, Licensee does not: (a)
actually have a Restaurant already operating within such Shopping Mall (either
as a company-owned or operated Restaurant or a Restaurant operated by a Unit
Franchisee); or (b) have definitive plans to develop a Restaurant within such
Shopping Mall; then Licensor shall be free to avail itself of such opportunity
without liability or obligation to Licensee or its Unit Franchisees. (For the
avoidance of any doubt, in no event will Licensee be considered to have
“definitive plans” to develop a Restaurant within a particular Shopping Mall
unless, at a minimum, Licensee has either: (a) begun and maintained ongoing
bona fide negotiations with the landlord of said Shopping Mall (or a Unit
Franchisee has done so); or (b) already submitted in writing to Licensor,
for Licensor’s approval pursuant to Section 3 below, a specific location within
such Shopping Mall and such information as Licensor may reasonably require
concerning the prospective Unit Franchisee for such Shopping Mall location.)
However, in exercising its rights under this Section 1.5, Licensor shall not
knowingly infringe upon any PAT Direct Unit Franchisee's Protected
Rights.
Page
2
1.6. Reservation
of Rights.
All
rights not expressly granted to Licensee under this Agreement are hereby
reserved to Licensor. For the avoidance of any doubt, Licensee acknowledges
that
such reserved rights include, without limitation, each of the following and
that
Licensor is free to exercise the same without liability or obligation to
Licensee and/or its Unit Franchisees;
however, in exercising its rights under this Section 1.6, Licensor shall not
knowingly infringe upon any PAT Direct Unit Franchisee's Protected
Rights:
1.6.1. Licensor
hereby reserves for itself and its designees the right to use the Proprietary
Marks and System to operate NF Concept Restaurants containing co-branded
Arthur
Treacher’s
operations anywhere within the PFSI Market (such co-branded operations to be
included in a manner and extent substantially similar to which NFSI and MSUSA
have, prior to the date hereof, included Arthur
Treacher’s menu-line
extensions in the Co-Branded Units);
1.6.2. Licensor
hereby reserves for itself and its designees the right to operate Restaurants
in
Shopping Malls located within the PFSI Market in accordance with the provisions
of Section 1.5 above;
1.6.3. Licensor
hereby reserves for itself and its designees the exclusive right to use the
Proprietary Marks and System for the purpose of operating Restaurants within
Captive Market Locations in the PFSI Market;
1.6.4. Licensor
hereby reserves for itself and its designees the exclusive right to use the
Proprietary Marks and System for the purpose of selling and distributing Retail
Products in the PFSI Market;
1.6.5. Licensor
hereby reserves for itself and its designees the exclusive right to use the
Proprietary Marks and System for the purpose of selling and distributing Branded
Food Service Products in the PFSI Market (provided that such sales shall be
made
to operators of Non-Traditional Restaurants);
1.6.6. Licensor
hereby reserves for itself and its designees the exclusive right to solicit
large institutional foodservice operators with operations that are national
in
scope, and whose operations encompass both the PFSI Market and other markets
(including but not limited to companies such as Aramark, HMS Host, Sodexho,
Compass Group, Delaware North, and BAA);
1.6.7. Licensor
hereby reserves for itself and its designees the exclusive right to use (or
to
decide not to use) the Proprietary Marks and/or System anywhere outside of
the
PFSI Market; and
1.6.8. In
no
event shall Licensor and/or its affiliates, nor shall any of their respective
designees, be prevented from operating and/or authorizing third parties to
operate restaurants under systems other than the System and/or using trademarks
other than the Proprietary Marks (including but not limited to the NF Concept
Restaurants), which restaurants may offer or sell products that are the same
as,
similar to, those offered from Restaurants operated under the System.
Conversely, nothing in this Agreement shall be construed to prevent Licensee
and/or its affiliates, nor shall any of their respective designees, from
operating and/or authorizing third parties to operate restaurants under systems
other than the System and/or using trademarks other than the Proprietary Marks
(including but not limited to Pudgie’s Chicken, Wall Street Deli, and
Burritoville), which restaurants may offer or sell products that are the same
as, similar to, those offered from Restaurants operated under the
System.
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1.7. Restrictions
on Licensee.
In
addition to any other provisions in this Agreement, Licensee agrees
that:
1.7.1. It
shall
neither solicit any party or transaction, nor exercise or attempt to exercise,
any right that is reserved to Licensor under this Agreement;
1.7.2. It
shall
not engage in the sale of Products other than through Restaurants;
1.7.3. It
shall
not use, nor shall it license to any other party the right to use, the
Proprietary Marks and/or System (except that Licensee may license the
Proprietary Marks to a Unit Franchisee that is operating a Restaurant solely
for
the purpose of operating the Restaurant, at the location set forth in the
Franchise Agreement, and under the terms and conditions of the Franchise
Agreement); and
1.7.4. It
shall
not use, nor license to any other party the right to use, the Proprietary Marks
and/or System for the purpose of operating a co-branded restaurant featuring
the
Proprietary Marks and/or System and another concept's trademarks and
system.
1.8. PAT
Direct Unit Franchisees and Co-Branded Units.
1.8.1. PAT
Direct Unit Franchisees.
During
the term of this Agreement, except as otherwise provided herein, Licensor shall
not preclude the continued operation of, and use of the Proprietary Marks and
System by, the PAT Direct Unit Franchisees that are still in operation as of
the
Effective Date (nor shall Licensor preclude Licensee from allowing Direct PAT
Unit Franchisees to renew their Franchise Agreements to the extent such
Franchise Agreements allow for such renewal rights). Notwithstanding the
foregoing or anything to the contrary contained herein, Licensee agrees that
it
will not, without first obtaining Licensor’s written consent, amend, extend or
otherwise alter any Franchise Agreement concerning any PAT Direct Unit
Franchisee which is located outside the PFSI Market or located in a Captive
Market Location within the PFSI Market (and Licensee will immediately notify
Licensor in the event that any such Franchise Agreement expires or is terminated
for any reason). Furthermore, Licensee represents and warrants to Licensor
that
Licensee has not granted any Protected Rights other than as expressly noted
and
described in the column marked “Radius Restriction” in Attachment A to this
Agreement.
1.8.2. Co-Branded
Units.
1.8.2.1. The
Co-Branding Agreement is terminated upon the Effective Date, and Licensee shall
have no further rights thereunder, nor any right or entitlement to (and neither
Licensor, NFSI, MSUSA or any of their respective franchisees shall have further
obligation to pay) any fees, royalties, rebates or other consideration in
connection with the Co-Branded Units (except as otherwise provided in Section
4.3 below).
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1.8.2.2. Licensee
hereby assigns to Licensor all of its future right, title, and interest in
and
to all of the Participation Agreements. In connection with such assignment,
Licensor assumes all of Licensee’s obligations arising under the Participation
Agreements from and after the Effective Date (it being expressly understood
that
Licensee shall remain solely responsible for all of such obligations arising
prior to the Effective Date and that it shall indemnify and hold Licensor
harmless in connection with same). The parties agree that they will sign, and
that Licensor will cause its affiliates to sign, the Letter Agreement in the
form specified in Attachment C to this Agreement to implement this
clause.
1.9. Definitions.
The
following terms shall have the following meanings as used in this
Agreement:
1.9.1. “Branded
Food Service Products”
means
products sold: (a) under and/or in conjunction with the Proprietary Marks;
(b)
at a food service location by a food service operator that is not a Unit
Franchisee or a franchisee or licensee of Licensor’s; (c) in a fully cooked or
prepared state for on-site or take-away consumption by the
customer.
1.9.2. “Captive
Market Locations”
means
locations, other than “Shopping Malls” (as defined below), where the primary
reason that patrons enter that environment is not to frequent food service
establishments, and includes, among other things: airports; book stores; bus
stations; department stores and big-box retain environments (such as Wal-Mart,
Target, and similar stores); factories; government facilities; hospitals and
other health-care facilities; military bases; recreational facilities and sports
arenas; schools, colleges and other academic facilities; seasonal facilities
(such as a state fair); supermarkets; theaters; train stations; and workplace
cafeterias.
1.9.3. “Development
Schedule”
shall
mean the schedule set out in Attachment B to this Agreement.
1.9.4. “Franchise
Agreement”
means
the form of franchise agreement that Licensee uses to grant rights to a Unit
Franchisee, subject to the provisions of Section 3 below.
1.9.5. “IP
Assets”
means
the assets that were sold to Licensor under the APA, which among other things
consist of the intellectual property that is in any way associated with the
“Arthur Treacher’s” brand, concept and franchise system, worldwide, which
includes but is not limited to the “Arthur Treacher’s” name, trademarks, service
marks, copyrights, patents, trade secrets, the rights under the Treacher Letter
Agreement (defined below), and all other intellectual property whatsoever
associated with the “Arthur Treacher’s” fish and chips concept, whether or not
exploited in the past by Licensee or its predecessors.
1.9.6. “Manuals”
means
the operating manuals for the System, which have been transferred to Licensor
pursuant to the APA, and which Licensor shall have the right to revise as it
deems fit from time to time.
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1.9.7. “NF
Concept Restaurant(s)”
means
a
restaurant concept owned, operated, and/or licensed by Licensor and/or its
affiliates, including but not limited to restaurants that are part of the
Nathan’s
Famous, Kenny Rogers Roasters,
and/or
Miami
Subs systems.
1.9.8. “Non-Captive
Market Locations”
means
traditional, street-level free-standing and in-line restaurant locations that:
(a) are not contained within larger retail or other foot traffic generating
environments; and (b) are not co-branded with other retail food service
concepts.
1.9.9. “Non-Traditional
Restaurants”
include, but are not limited to, those operating at military bases, hotels,
high
school and college campuses, airports, train stations, travel plazas, toll
roads, beaches, parks and other seasonal facilities, government buildings and
establishments, prisons, hospitals, convenience stores, cafeterias, snack bars,
trucks, casinos, sports or entertainment venues or stadiums, and retail
restaurant locations being sublet under a lease to a master concessionaire,
whether currently existing or constructed or established subsequent to the
date
hereof.
1.9.10. “Northern
New York State”
means
all of the counties in the State of New York except for the following counties:
Nassau, Suffolk, Queens, Kings, Richmond, New York, Bronx, Westchester,
Rockland, Orange, Putnam, Sullivan, Ulster, Dutchess, Delaware, Greene, and
Columbia.
1.9.11. “PFSI
Market”
means
the Principal PFSI Market and the Secondary PFSI Market, taken together (subject
to the provisions of Sections 1.4, 1.5, and 1.6 above).
1.9.12. “Principal
PFSI Market”
means
the States of Indiana, Michigan, and Ohio, and the Commonwealth of
Pennsylvania.
1.9.13. “Product(s)”
means
any proprietary item that is produced according to confidential methods,
recipes, and/or formulas, and/or using such ingredients as are either
confidential and/or trade secrets, that belong to (or are licensed by)
Licensor.
1.9.14. “Proprietary
Marks”
means
the trade names, service marks, trademarks, logos, emblems, and indicia of
origin, including but not limited to the mark Arthur
Treacher’s
and such
other trade names, service marks, and trademarks as are now designated (and
may
hereinafter be designated by Licensor in writing) for use in connection with
the
System.
1.9.15. “Protected
Rights”
means
a
protected area, restricted radius, or other form of “exclusivity” that Licensee
has granted to a PAT Direct Unit Franchisee under the terms of that PAT Direct
Unit Franchisee's Franchise Agreement that are in effect before the Effective
Date, as detailed in Attachment A to this Agreement.
1.9.16. “Restaurant”
means
a
business operating in a building that bears the interior and/or exterior trade
dress typical of an Arthur
Treacher's
restaurant, using the Proprietary Marks, and operated under the
System.
1.9.17. “Retail
Products”
means
products branded with the Proprietary Marks which are sold through a
non-Restaurant channel of distribution for off-site preparation and consumption
by the customer. (Solely by way of example, “Retail Products” shall include
products branded with the Proprietary Marks which are sold for off-site
preparation and consumption through grocery-type channels (e.g.,
supermarkets, club stores, groceries, etc.) and/or direct-to-consumer channels
(e.g., mail-order, the Internet, online, and television shopping channels,
etc.).)
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1.9.18. “Secondary
PFSI Market”
means
the area comprised of each of the Sub-markets, taken together.
1.9.19. “Shopping
Mall”
means
an enclosed shopping mall located inside the PFSI Market, which shopping mall
is
not otherwise connected to and/or part of a larger Captive Market Location.
(Solely by way of example, a shopping mall located within an airport shall
not
be considered a “Shopping Mall” for the purposes of this Agreement, but rather
such shopping mall shall be considered a “Captive Market Location” hereunder.)
1.9.20. “Sub-market(s)” means
each of the District of Columbia, the State of Maryland, Northern New York
State, and the Commonwealth of Virginia.
1.9.21. “System”
means
the format and the methods and techniques that relate to the establishment
and
operation of Restaurants and specializing in the sale of proprietary items,
which currently include fish sandwiches and meals, as well as non-proprietary
items such as beverages and related products that Licensor may periodically
designate.
1.9.22. “Transfer”
(as
applied to Licensee) shall mean any attempt to sell, assign, transfer, convey,
give away, subcontract, issue stock, sell securities, pledge, mortgage, or
otherwise encumber any direct or indirect interest in the rights granted under
this Agreement, in Licensee (including any direct or indirect interest in an
entity that is the Licensee), or in substantially all of the assets of the
Licensee (and, as applied to a Unit Franchisee, “Transfer” shall mean any
attempt to sell, assign, transfer, convey, give away, subcontract, issue stock,
sell securities, pledge, mortgage, or otherwise encumber any direct or indirect
interest in the franchise, in the Franchise Agreement, or in the Unit Franchisee
(including any direct or indirect interest in an entity that is the Unit
Franchisee), or in substantially all of the assets of the
Restaurant);
1.9.23. “Treacher
Letter Agreement”
means
the agreement dated March 14, 1972 between Mr. Arthur V. Treacher and Ms.
Virginia Josephine Treacher, and NFF Corp., as subsequently assigned by NFF
Corp., and, through various intermediate transfers, to Licensee, before
Licensee’s sale of the IP Assets to Licensor under the APA.
1.9.24. “Unit
Franchisee”
means
a
party to whom Licensee has licensed rights, pursuant to a Franchise Agreement,
to establish and operate a Restaurant. PAT Direct Unit Franchisees are included
within the definition of the term “Unit Franchisees.”
1.9.25. “Vittoria
Agreements”
means
a
Franchise Agreement entered into by and between Licensee and one of the Vittoria
Parties in the form appended to this Agreement as Attachment D for the
establishment and operation of a Restaurant in the PFSI Market.
1.9.26. “Vittoria
Party”
means
Mr. Greg Thomarios, Vittoria, Inc., and/or Garrett Vittoria, Inc.
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2. TERM.
The
term of this Agreement shall start on the Effective Date and shall expire,
unless sooner terminated, one hundred (100) years from the date
hereof.
3. LICENSEE’S
OFFER AND SALE OF FRANCHISES.
Licensee
understands and acknowledges that Licensor shall have the right to review and
approve all activities in conjunction with the offer and sale of franchises,
and
changes to the terms of existing Franchise Agreements with PAT Direct Unit
Franchisees, and that Licensor shall also have the right to determine the
details and characteristics of the System. Licensee also acknowledges and agrees
that the terms and conditions set forth below also apply with respect to any
“company-owned” or “company-operated” Restaurants established by Licensee and/or
its affiliates.
3.1. New
Unit Franchisees.
Licensee shall not enter into a Franchise Agreement with a prospective Unit
Franchisee unless and until Licensee has received Licensor’s written approval of
such prospective Unit Franchisee, which shall neither be unreasonably withheld
nor unduly delayed. Before entering into any agreement with a prospective Unit
Franchisee, Licensee shall submit to Licensor a copy of the UFOC receipt signed
on behalf of such prospective Unit Franchisee, along with a unit franchise
application in the form reasonably prescribed by Licensor, which form shall
disclose, without limitation, details concerning the prospective Unit Franchisee
and its principals and the prospective Unit Franchisee’s personal and corporate
financial statements. Nothing in this Section 3.1 shall prevent Licensee from
entering into one or more Vittoria Agreements.
3.2. Proposed
Sites.
Licensee shall not approve a proposed site for the establishment and operation
of a Restaurant without Licensor’s prior written approval of said site. Licensee
agrees to submit to Licensor such information as Licensor may reasonably request
concerning the proposed site of each prospective Restaurant. Furthermore, in
no
event shall Licensee grant any prospective Unit Franchisee any protected area,
restricted radius, or other form of “exclusivity” without first obtaining
Licensor’s prior written consent.
3.3. Design.
Licensor will, from time to time, establish design, appearance and trade dress
standards for the System and Licensee will (and will cause its Unit Franchisees
to) comply with such standards in connection with their development and
operation of Restaurants hereunder; provided, however, that Licensee understands
and agrees that: (a) any such standards shall not take into account design,
architectural, zoning, and/or other legal requirements; and (b) as between
Licensor and Licensee, Licensee shall be solely responsible for compliance
with
any such design, architectural, zoning, and/or other legal requirements
pertaining to the standards. Nothing in this Section 3.3 shall require a PAT
Direct Unit Franchisee to renovate its Restaurant if Licensee does not have
the
right to require that PAT Direct Unit Franchisee to do so under the terms of
that PAT Direct Unit Franchisee's Franchise Agreement in force as of the date
of
this Agreement; however, Licensee agrees to make commercially reasonable efforts
to convince any such PAT Direct Unit Franchisees without a renovation
obligations to renovate their Restaurants at reasonable intervals in order
to
meet the then-current System standards.
3.4. Transfers.
Licensee shall not approve any proposed Transfer without Licensor’s prior
written approval therefor, which shall neither be unreasonably withheld nor
unduly delayed. Licensor’s approval may be conditioned on the receipt of such
information concerning the transaction and the proposed transferee as Licensor
may reasonably request, including, but not limited to, information that would
be
required in connection with a prospective Unit Franchisee under Section 3.1
above.
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3.5. Inspections.
Licensor shall have the right, but not the obligation, to conduct on-site visits
or inspections in carrying out it rights and obligations under this Agreement.
If Licensor exercises its rights under this Section 3.5 without providing prior
notice to Licensee and the Unit Franchisee, then Licensor agrees to advise
Licensee contemporaneously with conducting such inspections.
3.6. No
Changes to the Franchise Agreement.
Licensee shall not make any changes, amendments, or other revisions to the
form
of Franchise Agreement appended to the then-current form of UFOC prepared by
Licensee without Licensor’s prior written approval of said changes. Nothing in
this Section 3.6 shall prevent Licensee from entering into one or more Vittoria
Agreements.
3.7. The
Restaurants and the Unit Franchisees.
3.7.1. Licensee
acknowledges and agrees that every detail of the appearance and operation of
the
Restaurants is important to Licensor, Licensee, and Unit Franchisees in order
to
develop and maintain superior operating standards, to increase the demand for
services and products sold by the Restaurants, and to protect Licensor’s
reputation and goodwill.
3.7.2. In
addition to and not in place of other provisions of this Agreement, Licensee
agrees that Licensee shall fulfill all of the duties of the “Franchisor” under
each Franchise Agreement executed pursuant to this Agreement and shall use
commercially reasonable efforts to maintain compliance by each Unit Franchisee
under, and enforce, each Franchise Agreement according to the terms and
conditions thereof; and Licensee further agrees that it shall comply with the
terms of each Franchise Agreement; however, Licensee agrees that it shall not,
without Licensor’s prior written consent:
3.7.2.1. Approve
a
proposed site for any Restaurant;
3.7.2.2. Approve
the use of any supplies, fixtures, furnishings, signs, equipment, interior
or
exterior design, or methods of operation not specified in the Manuals or
otherwise approved in writing by Licensor;
3.7.2.3. Approve
or disapprove suppliers to the Restaurant;
3.7.2.4. Approve
the sale in a Restaurant of any product or service that has not previously
been
approved in writing by Licensor, or which has been disapproved by Licensor
for
sale in the Restaurants;
3.7.2.5. Permit
any Unit Franchisee to engage in any action or make any use of the Proprietary
Marks other than in compliance with the terms of Section 5.1 below (as if terms
applied to the Unit Franchisee);
3.7.2.6. Approve
any advertising or promotional materials proposed to be used, or marketing
plans
proposed to be implemented, by a Unit Franchisee; or
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3.7.2.7. Permit
(with knowledge thereof) any deviation by a Unit Franchisee from Licensor’s
standards, specifications, or procedures as set forth in the Manuals or
otherwise in writing by Licensor.
3.8. Unit
Franchise Fees.
Licensee shall be responsible for the collection of all royalties and initial
franchise fees due pursuant to each Franchise Agreement. Licensee shall not
be
obligated to pay any portion of those fees to Licensor.
3.9. Dealing
with Unit Franchisees and Prospective Unit Franchisees.
In all
dealings and contacts with Unit Franchisees and prospective Unit Franchisees,
Licensee shall do each of the following:
3.9.1. Make
no
representations that conflict with the terms and conditions of this Agreement,
the Franchise Agreement, the Manual, or other related documents. Any document
prepared by Licensee for the purpose of complying with any federal or state
law
or otherwise concerning the offer and sale of franchises, and any advertisement
proposed to be used for the purpose of promoting the sale of franchises, shall
be submitted to Licensor before such document is filed with a government
authority and/or used by Licensee.
3.9.2. Not
use
any document or material in connection with the offer or solicitation of Unit
Franchisees unless and until such proposed promotional material has been
submitted to Licensor and Licensor has given its prior written approval
thereof.
3.9.3. Carefully
screen and evaluate prospective Unit Franchisees pursuant to the standards
prescribed by Licensor, and prepare and submit to Licensor a written report
in
the form prescribed by Licensor for each prospective Unit Franchisee deemed
qualified by Licensee, including any materials which may be required under
Section 3.1 above and a site analysis prepared by Licensee concerning the
location proposed by such prospective Unit Franchisee for the establishment
of a
Restaurant.
3.10. Obligations
as to Unit Franchisees.
For
each Unit Franchisee, Licensee shall:
3.10.1. Provide
an initial training program to a principal of each Unit Franchisee and any
person hired by each Unit Franchisee for the position of Restaurant manager,
and
such other courses, seminars, and training programs for Unit Franchisees and
their employees as may be prescribed by Licensor from time to time.
3.10.2. Provide
plans and specifications for each Restaurant for the construction of the
Restaurant and for the exterior and interior design and layout, fixtures,
furnishings, equipment, and signs.
3.10.3. Review
the proposed location of each Restaurant to be established by a Unit Franchisee
(as provided in the Franchise Agreement) and provide to Licensor a written
report concerning each such proposed location.
3.10.4. Provide
advice and consultation with regard to equipping the Restaurant, grand-opening
assistance, and such periodic and continuing assistance as Unit Franchisee
may
reasonably request and as may be prescribed by Licensor.
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3.10.5. Monitor
(and submit to Licensor, at Licensor’s request, written reports on such form as
Licensor shall provide and at such time as Licensor may request) and, upon
Licensor’s request, promptly take all steps necessary to remedy the
following:
3.10.5.1. Any
apparent deficiencies and problems concerning the uniformity and quality of
service provided by the Unit Franchisee;
3.10.5.2. Any
apparent opportunities for the Unit Franchisee to improve its
performance;
3.10.5.3. Any
apparent deviations from Licensor’s operating procedures, standards, and
specifications or from proper usage of the Proprietary Marks;
3.10.5.4. Any
apparent violations of the Franchise Agreement; and
3.10.5.5. Any
apparent violations of applicable laws, rules, or regulations.
3.10.6. Supply
menu items, products, and services to Unit Franchisees as have been prescribed
by Licensor in the Manuals or otherwise.
3.11. Laws
Pertaining to Franchising and Licensing.
Licensee shall comply with any and all federal and state laws and regulations
that apply to the offer and sale of franchises as well as the relationship
between a Licensor and its franchisees, and Licensee shall timely obtain any
and
all government approvals and/or registrations necessary for the full and proper
conduct of the business contemplated hereunder.
3.11.1. Any
documents necessary to be prepared to comply with said laws (whether or not
filed with government authorities), including but not limited to the UFOC,
shall
be submitted to Licensor for Licensor’s prior written approval before Licensee
may use such documents and/or submit them to a government authority for approval
or otherwise. Licensee shall forward to Licensor copies of all such government
approvals, receipts, exemptions, and/or registrations obtained pursuant to
this
Section within ten (10) days of receipt thereof.
3.11.2. Licensee
shall have the right to require Licensee to include such information and/or
disclaimers with respect to the relationship between Licensee and Licensee
as
Licensee may reasonably require.
3.11.3. As
used
in this Agreement, the term “UFOC”
means
the Uniform Franchise Offering Circular prepared in the then-current form and
format required under the Federal Trade Commission Franchise Rule and any
applicable state franchise laws.
3.12. Sublicensing.
In its
agreements and relationship with Unit Franchisees, including but not limited
to
its licensing of the Proprietary Marks to Unit Franchisees, Licensee shall
not
take any action, tolerate or permit any action or use of Proprietary Marks,
or
otherwise include in its agreements any provision that is inconsistent with
the
provisions of this Agreement.
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4. VENDOR
RELATIONSHIPS AND REBATES.
4.1. Existing
Relationships.
Licensee and Licensor shall have separate and independent relationships with
suppliers to the System, including but not limited to any financial terms,
Rebates, and related matters; provided, that:
4.1.1. If
it
should be necessary to license the supplier’s use of the Proprietary Marks, only
Licensor shall have the right to do so;
4.1.2. Licensor
and Licensee shall cooperate with one another so that, to the extent possible,
they will seek to aggregate their respective purchases (and those of their
respective franchisees) in order to maximize volume discounts, vendor rebates,
and other beneficial treatment; and
4.1.3. Licensor
shall have the sole right to designate and/or approve the identity of all
suppliers to the System.
4.1.3.1. Licensor
may approve suppliers and producers of Products, food items, ingredients,
supplies, materials, and other products that meet its standards and requirements
including, but not limited to, standards and requirements relating to product
quality, prices, consistency, reliability, financial capability, labor and
customer relations. Licensee shall purchase (and designate for purchase in
the
portion of the System that Licensee operates and licenses to Unit Franchisees)
all Products, food items, ingredients, supplies, materials, and other products
used or offered for sale at the Restaurant solely from suppliers (including
manufacturers, producers, and other sources) who demonstrate, to the continuing
reasonable satisfaction of Licensor, the ability to meet Licensor’s then-current
standards and specifications for such items; who possess adequate quality
controls and capacity to supply Licensee’s needs promptly and reliably; whose
approval would enable the System, in Licensor’s sole opinion, to take advantage
of marketplace efficiencies; and who have been approved in writing by Licensor
prior to any purchases by Licensee from any such supplier, and have not
thereafter been disapproved (collectively, “Approved
Suppliers”).
Approval of a supplier may be conditioned on requirements relating to the
frequency of delivery, standards of service, including prompt attention to
complaints, or other criteria, and concentration of purchases, as set forth
above, and may be temporary pending a further evaluation of such supplier by
Licensor.
4.1.3.2. Licensor
shall have the right to approve a single supplier as an Approved Supplier for
any product or special equipment and may designate an Approved Supplier as
to
certain products. Licensor shall have the right to concentrate purchases with
one or more suppliers to obtain lower prices and/or the best advertising support
and/or services for any group of Restaurants franchised or operated by Licensor.
Licensor may from time to time modify the list of Approved Suppliers, and
Licensee shall not, after receipt of written notice of such modification, order
any Products or other items from any supplier which is no longer an Approved
Supplier.
4.1.3.3. If
Licensee desires to purchase any products from an unapproved supplier, Licensee
shall submit to Licensor a written request for such approval. Licensee shall
not
purchase from any supplier until, and unless, such supplier has been approved
in
writing by Licensor. Licensor shall have the right to require that its
representatives be permitted to inspect the supplier’s facilities, and that
samples from the supplier be delivered, either to Licensor or to an independent
laboratory designated by Licensor for testing. A charge not to exceed Licensor’s
actual reasonable cost of the inspection and the actual cost of the test shall
be paid by Licensee or the supplier. Licensor shall also have the right to
require that the supplier comply with such other requirements as Licensor may
deem appropriate, including payment of reasonable continuing inspection fees
and
administrative costs, or other payment to Licensor by the supplier on account
of
their dealings with Licensee and other Licensees, for use, without restriction
(unless instructed otherwise by the supplier) and for services that Licensor
may
render to such suppliers. Licensor reserves the right, at its option, to
reinspect from time to time the facilities and products of any such approved
supplier and to revoke its approval upon the supplier’s failure to continue to
meet any of Licensor’s then-current quality-control and quality-related
criteria. Nothing in the foregoing shall be construed to require Licensor to
approve any particular supplier, nor to require Licensor to make available
to
prospective suppliers, standards and specifications for formulas that Licensor
deems confidential. Licensor’s approval of any Approved Supplier is not and
shall not be a warranty on the part of Licensor as to the safety, fitness,
or
merchantability of any of the Products or other materials supplied by any
Approved Supplier.
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4.1.3.4. Licensor
may establish Licensor or affiliate owned and operated food commissaries, which
Licensor may designate as one of (or the only) Approved Supplier.
4.1.3.5. It
shall
be Licensee’s sole responsibility to arrange for distribution of Products to its
Unit Franchisees.
4.2. Relationships
with Suppliers.
Licensor shall not control the terms of Licensee’s relationships with its
vendors, and neither shall Licensee control the terms of Licensor’s
relationships with its vendors. Without limiting the foregoing, both Licensor
and Licensee agree to timely disclose to each other the terms of their
relationships with their respective vendors (including, without limitation,
product pricing and rebates or other allowances).
4.3. Rebates.
Notwithstanding Section 4.1 above, the parties agree that Licensor shall pay
Licensee fifty percent (50%) of any Rebates that Licensor receives from Vendors
for sales of the Selected Items by Vendors to Co-Branded Units during the
Initial Period. As used in this Section 4, the following terms have the
following meanings:
4.3.1. “Initial
Period”
means
the one (1) year period following the Effective Date hereof.
4.3.2. “Rebate”
means
any payment to Licensor (or a related advertising/marketing fund) from the
Vendor on account of the sale of Selected Items to a Co-Branded
Restaurant.
4.3.3. “Vendor”
means
the food item manufacturers that are manufacturing and selling the Selected
Items to the Co-Branded Units during the Initial Period.
4.3.4. “Selected
Items”
means
only the following Arthur
Treacher’s
products: (a) hush puppy mix (currently supplied by Griffith Laboratories);
(b)
fish batter mix (currently supplied by Griffith Laboratories); (c) frozen fish
wedges (currently supplied by Odyssey Enterprises); (d) clam strips (currently
supplied by SeaWatch International); and (e) shrimp (currently supplied by
King
& Prince Seafood Corporation).
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5. THE
PROPRIETARY MARKS.
5.1. Use
and Licensing of the Marks.
With
respect to Licensee’s use and licensing of the Proprietary Marks, in addition to
the other provisions of this Agreement, Licensee agrees that:
5.1.1. Licensee
shall use only the Proprietary Marks designated by Licensor, and shall use
them
only in the manner authorized and permitted by Licensor.
5.1.2. Licensee
shall use the Proprietary Marks only for the operation of the Restaurants and
only at the locations authorized under the Franchise Agreements, or in
Licensor-approved advertising for the businesses conducted at or from those
locations.
5.1.3. Unless
otherwise authorized or required by Licensor, Licensee shall operate and
advertise the Restaurant only under the names “ARTHUR TREACHER’S”, or “ARTHUR
TREACHER’S FISH AND CHIPS”, without prefix or suffix.
5.1.4. During
the term of this Agreement, Licensee and its Unit Franchisees shall identify
themselves (in a manner reasonably acceptable to Licensor) as the owner of
the
Restaurants in conjunction with any use of the Proprietary Marks, including,
but
not limited to, uses on invoices, order forms, receipts, and contracts, as
well
as the display of a notice in such content and form and at such conspicuous
locations on the premises of the Restaurants as Licensor may designate in
writing.
5.1.5. Licensee’s
right to use the Proprietary Marks is limited to such uses as are authorized
under this Agreement, and any unauthorized use thereof shall constitute an
infringement of Licensor’s rights.
5.1.6. Licensee
shall not use the Proprietary Marks to incur any obligation or indebtedness
on
behalf of Licensor.
5.1.7. Licensee
shall not use any of the Proprietary Marks as part of its corporate or other
legal name, or as part of any e-mail address, domain name, or other
identification of Licensee in any electronic medium.
5.1.8. Licensee
shall execute any documents deemed necessary by Licensor or its counsel to
obtain protection for the Proprietary Marks or to maintain their continued
validity and enforceability.
5.1.8.1. Licensee
shall promptly notify Licensor of any suspected infringement of the Proprietary
Marks, any challenge to the validity of the Proprietary Marks, or any challenge
to Licensor’s ownership of, or Licensee’s right to use, the Proprietary Marks
licensed hereunder. Licensee acknowledges that Licensor shall have the sole
right to initiate, direct, and control any administrative proceeding or
litigation involving the Proprietary Marks, including any settlement thereof.
Licensor shall also have the sole right, but not the obligation, to take action
against uses by others that may constitute infringement of the Proprietary
Marks.
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5.1.8.2. Provided
that Licensee has used the Proprietary Marks in accordance with this Agreement,
Licensor shall defend Licensee at Licensor’s expense against any third party
claim, suit, or demand involving the Proprietary Marks arising out of Licensee’s
use thereof. Licensor shall have the sole right to determine whether Licensee
has or has not used the Proprietary Marks in accordance with this Agreement,
and
if Licensor determines that Licensee’s use of the Proprietary Marks is not in
accordance with this Agreement, then Licensor shall defend Licensee, at
Licensee’s expense (which Licensee agrees to pay promptly upon demand from
Licensor), against such third party claims, suits, or demands.
5.1.8.3. If
Licensor undertakes the defense or prosecution of any litigation relating to
the
Proprietary Marks, Licensee shall execute any and all documents and do such
acts
and things as may, in the opinion of counsel for Licensor, be necessary to
carry
out such defense or prosecution, including, but not limited to, becoming a
nominal party to any legal action. Except to the extent that such litigation
is
the result of Licensee’s use of the Proprietary Marks in a manner inconsistent
with the terms of this Agreement, Licensor agrees to reimburse Licensee for
its
out of pocket costs in doing such acts and things, except that Licensee shall
bear the salary costs of its employees, and Licensor shall bear the costs of
any
judgment or settlement.
5.2. Acknowledgements.
Licensee expressly understands and acknowledges that:
5.2.1. Licensor
is the owner of all right, title and interest in and to the Proprietary Marks
and the goodwill associated with and symbolized by them.
5.2.2. The
Proprietary Marks are valid and serve to identify the System and those who
are
authorized to operate under the System.
5.2.3. Licensee
shall not directly or indirectly contest the validity or Licensor’s ownership of
the Proprietary Marks, nor shall Licensee, directly or indirectly, seek to
or
assist any person in registering the Proprietary Marks with any government
agency except with Licensor’s express prior written consent.
5.2.4. Licensee’s
use and sublicensing of the Proprietary Marks does not give Licensee or any
other party any ownership interest or other interest in or to the Proprietary
Marks, except the license granted by this Agreement.
5.2.5. Any
and
all goodwill arising from Licensee’s use (and/or that of its Unit Franchisees)
of the Proprietary Marks shall inure solely and exclusively to Licensor’s
benefit, and upon expiration or termination of this Agreement and the license
herein granted, no monetary amount shall be assigned as attributable to any
goodwill associated with Licensee’s use and sublicensing (and/or Unit
Franchisees’ use) of the System or the Proprietary Marks.
5.2.6. The
right
and license of the Proprietary Marks granted to Licensee under this Agreement
is
non-exclusive, and Licensor thus has and retains the rights, among
others:
5.2.6.1. To
use
the Proprietary Marks itself in connection with selling products and
services;
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15
5.2.6.2. To
grant
other licenses for the Proprietary Marks, in addition to those licenses that
have already been granted;
5.2.6.3. To
develop and establish other systems using the same or similar Proprietary Marks,
or any other proprietary marks, and to grant licenses or franchises thereto
without providing any rights therein to Licensee.
5.2.7. The
provisions of Section 5.2.6 above are not meant to, and shall neither be
interpreted nor construed to, diminish any of Licensee’s rights under Section
1.1 or 1.3 above.
5.3. Substitution.
Licensor reserves the right to substitute different Proprietary Marks for use
in
identifying the System and the businesses operating thereunder if Licensor’s
currently owned Proprietary Marks no longer can be used, or if Licensor
determines that substitution of different Proprietary Marks will be beneficial
to the System. Nothing in this Section 5.3 shall require a PAT Direct Unit
Franchisee to change its Proprietary Marks if Licensee does not have such right
under the terms of that PAT Direct Unit Franchisee's Franchise Agreement in
force as of the date of this Agreement; however, Licensee agrees to make
commercially reasonable efforts to convince any such PAT Direct Unit Franchisees
to update, refresh, or otherwise change its Proprietary Marks at reasonable
intervals in order to meet the then-current System standards.
6. ADVERTISING.
6.1. General.
All
advertising and promotion by Licensee (and/or any Unit Franchisees) shall be
in
such media, and of such type and format as Licensor may approve; shall be
conducted in a dignified manner; and, shall conform to such standards and
requirements as Licensor may specify. Licensee shall not use, permit, or fail
to
disapprove any of its Unit Franchisees’ use of any advertising or promotional
plans or materials unless and until Licensee has received written approval
from
Licensor as provided in Section 6.2 below. Without limiting the generality
of
the foregoing, Licensee specifically agrees it shall not engage in (nor shall
Licensee permit any other party and/or fail to disapprove any of its Unit
Franchisees’) advertising, marketing and/or other promotional activity that is
not: (a) in accordance with the terms of this Agreement; (b) inside
the PFSI Market; and/or (c) relating specifically to a PAT Direct
Franchisee.
6.2. Approval.
For all
proposed advertising and promotional plans intended to be used by Licensee
and/or by a Unit Franchisee, Licensee shall submit samples of such materials
and
details of such plans to Licensor’s Advertising Designee for Licensor’s prior
written approval. If written approval is not received by Licensee from Licensor
within seven (7) days of the date of receipt by Licensor of such samples or
materials, Licensor shall be deemed to have approved them.
6.2.1. For
the
purpose of this Section 6.2, the term “Advertising Designee” shall mean: (a) Ms.
Terry Kalish at Licensor’s offices; or (b) such other individual that
Licensor may designate in writing to Licensee with at least ten (10) days prior
written notice.
6.2.2. If
Licensor has not disapproved of proposed advertising samples or materials within
the seven-day period noted above, and such proposed advertising samples or
materials are therefore deemed “approved” under the terms set forth above,
Licensor shall nonetheless have the right thereafter to notify Licensee that
the
proposed advertising samples or materials are disapproved; and if Licensor
does
so, Licensor shall compensate Licensee and/or the Unit Franchisees for the
cost
of replacing advertising samples or materials in reasonable quantities that
were
produced in reliance on any such implied approval.
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6.2.3. Once
proposed advertising samples or materials have been submitted to Licensor for
review and either expressly approved or impliedly approved, said advertising
samples or materials need not be resubmitted to Licensor.
6.2.4. Upon
submission to Licensor, the proposed advertising and any copyrights in the
proposed advertising shall become the property of Licensor, and Licensee agrees
to sign and, where so requested, cause to be signed, such documents as may
be
necessary in order to implement this provision.
6.3. Materials.
Licensor shall make available to Licensee from time to time, at Licensee’s
expense, advertising plans and promotional materials, including newspaper mats,
coupons, merchandising materials, sales aids, point-of-purchase materials,
special promotions, direct mail materials, community relations programs, and
similar advertising and promotional materials. To the extent that these items
are sold by Licensor, Licensor shall make them available to Licensee and the
Unit Franchisees on the same terms as are generally available to Licensor’s
franchisees (however, this clause shall not be deemed to constitute a most
favored nations clause).
6.4. Websites.
6.4.1. Licensee
specifically acknowledges and agrees not to operate a Consumer Website (as
defined below).
6.4.2. Licensee
shall have the right to operate a Franchise Website (as defined below); provided
that Licensee has obtained Licensor’s prior written approval of the content of
said Franchise Website and the domain name or other electronic address at which
said Franchise Website is operated. Licensor hereby grants its approval to
Licensee’s use of the domain name <www.trufoods.com> for a Franchise
Website.
6.4.3. Definitions.
6.4.3.1. “Consumer
Website”
shall
mean a Website at which consumers can obtain information about Licensee, the
Unit Franchisees, and the Restaurants operated by Unit Franchisees.
6.4.3.2. “Franchise
Website”
shall
mean a Website at which a person seeking information about entering into a
Franchise Agreement with Licensee for operation of a Restaurant in the PFSI
Market is able to seek information and make an application to become a
franchisee.
6.4.3.3. “Website”
means
an interactive electronic document, contained in a network of computers or
other
electronic devices, linked by communications software or other technology.
The
term Website includes, but is not limited to, Internet, intranet, extranet,
e-mail, and World Wide Web home pages.)
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17
7. CONFIDENTIAL
INFORMATION
7.1. Each
party understands and agrees that during the term of this Agreement it may
be
furnished with or otherwise have access to non-public information that the
other
party considers to be of a confidential, proprietary, or trade secret nature,
including but not limited to business and marketing plans, as well as other
know-how of the Licensor, whether in tangible or intangible form, and whether
or
not stored, compiled or memorialized physically, electronically, graphically,
photographically, or in writing (collectively, the “Confidential
Information”).
The
receiving party agrees to secure and protect the other party’s Confidential
Information in a manner consistent with the maintenance of the other party’s
rights therein, using at least as great a degree of care as the receiving party
uses to maintain the confidentiality of its own confidential information of
a
similar nature or importance, but in no event using less than reasonable
efforts. Neither party will sell, transfer, publish, disclose, or otherwise
use
or make available any portion of the Confidential Information of the other
party
to third parties, except to those of its directors, officers, employees or
attorneys who clearly have a need-to-know the same, in furtherance of the
specific purposes of this Agreement and as expressly authorized in this
Agreement. All such disclosures shall be subject to all of the terms and
conditions of this Agreement, and the party making such disclosures to such
directors, officers, employees and/or attorneys shall be fully responsible
for
ensuring the compliance of all such parties with the terms and conditions of
this Agreement. Nothing in this Agreement shall be deemed to obligate either
party to disclose any Confidential Information to the other, or to accept any
Confidential Information from the other.
7.2. The
parties acknowledge that any failure to comply with the requirements of this
Section 7 will cause the non-defaulting party irreparable injury, and the
each party agrees to pay all court costs and reasonable attorneys’ fees incurred
by the prevailing party in obtaining specific performance of, or an injunction
against violation of, the requirements of this Section 7.
8. INSURANCE
AND INDEMNIFICATION.
8.1. Licensee’s
Indemnity.
Licensee agrees that it shall defend, indemnify, hold harmless the Nathan’s
Parties against any and all Claims, as well as all of the costs, including
but
not limited to attorneys’ fees, of defending against them.
8.1.1. “Claims”
means
all claims, lawsuits, actions, losses, obligations and damages directly or
indirectly arising out of the operation of Licensee’s business conducted
pursuant to this Agreement, whether or not caused by Licensee’s negligent or
willful action or failure to act. Claims includes, but are not limited to,
matters that arise directly or indirectly from, as a result of, or otherwise
in
connection with Licensee’s failure to comply with the terms of this Agreement,
Licensee’s offer and sale of franchises, Licensee’s contact with and
relationship to prospective Unit Franchisees, Unit Franchisees, prospective
transferees, and suppliers to the System, Licensee’s conduct under the Franchise
Agreements, Licensee’s ownership and/or operation of any Restaurants, Licensee’s
contact with and relationship to franchisees operating Co-Branded Units (with
respect to events that took place on or before the Effective Date), and
Licensee’s compliance with applicable laws.
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8.1.2. “Nathan’s
Parties”
means
Licensor, its corporate parents and affiliates, and their respective past,
present, and future officers, directors, employees, franchisees, and
agents.
8.2. Licensor’s
Indemnity.
Licensor agrees that it shall defend, indemnify, hold harmless the Licensee
Parties against any and all Assertions as well as all of the costs, including
but not limited to attorneys’ fees, of defending against them.
8.2.1. “Assertions”
means
all claims, lawsuits, actions, losses, obligations and damages directly or
indirectly arising out of the operation of Licensor’s business conducted
pursuant to this Agreement, whether or not caused by Licensor’s negligent or
willful action or failure to act. Assertions include, but are not limited to,
matters that arise directly or indirectly from, as a result of, or otherwise
in
connection with Licensor’s failure to comply with the terms of this Agreement,
Licensor’s offer and sale of franchises, Licensor’s contact with and
relationship to its own prospective franchisees (not Unit Franchisees or
prospective Unit Franchisees), and suppliers to the System, Licensor’s conduct
under the franchise agreements with its own franchisees, Licensor’s ownership
and/or operation of any Restaurants, Licensor’s contact with and relationship to
franchisees operating Co-Branded Units (with respect to events that took place
after the Effective Date), and Licensor’s compliance with applicable
laws.
8.2.2. “Licensee
Parties”
means
Licensee, its corporate parents and affiliates, and their respective past,
present, and future officers, directors, employees, franchisees, and
agents.
8.3. Insurance.
Licensee shall maintain such insurance policies (containing such limits and
other terms) as is customary and prudent for a restaurant system franchisor
to
maintain in the marketplace. Additionally, Licensee shall maintain such other
insurance policies (containing such limits and other terms) as Licensor may
deem
advisable. If requested by Licensor, all such policies shall name Licensor
and
its affiliates as additional insureds.
9. TRANSFER
OF INTEREST.
9.1. Transfer
by Licensor:
Licensor shall have the right to Transfer all or any part of its rights or
obligations herein to any person or legal entity.
9.2. Transfer
by Licensee.
Licensee understands and acknowledges that the rights and duties set forth
in
this Agreement are personal to Licensee, and that Licensor has granted the
rights hereunder in reliance on the business skill, financial capacity, and
personal character of Licensee or the owners of Licensee. Accordingly, neither
Licensee nor any immediate or remote successor to any part of Licensee’s
interest in this franchise, nor any individual, partnership, corporation, or
other legal entity which directly or indirectly owns any interest in this
franchise shall make a Transfer without Licensor’s prior written consent (which
consent shall not be unreasonably withheld). Any purported assignment or
Transfer, by operation of law or otherwise, not having the written consent
of
Licensor shall be null and void and shall constitute a material breach of this
Agreement, for which Licensor may terminate this Agreement and all rights
hereunder without opportunity to cure pursuant to Section 10
below.
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9.3. Offer
of Securities by Licensee:
All
materials required for any offer or sale of securities of Licensee (or any
entity that owns or is affiliated with Licensee) by federal or state law shall
be submitted to Licensor for review, reasonable approval, and consent, prior
to
their being filed with any government agency; and any materials to be used
in
any exempt offering shall be submitted to Licensor for review, approval, and
consent prior to their use. No such offering shall imply (by use of the
Proprietary Marks or otherwise) that Licensor is participating as an
underwriter, issuer, or offeror of Licensee’s or Licensor’s securities; and
Licensor’s review of any offering shall be limited solely to the subject of the
relationship between Licensee and Licensor. Licensee and the other participants
in the offering shall fully indemnify Licensor in connection with the offering.
For each proposed offering, Licensee shall reimburse Licensor for Licensor’s
costs (including, but not limited to, legal and accounting fees) in an amount
of
at least Seven Thousand Five Hundred Dollars ($7,500) associated with reviewing
the proposed documents and offering. In addition, Licensee shall submit to
Licensor an opinion of Licensee’s legal counsel (which shall be addressed to
Licensor and in a form acceptable to Licensor) that the offering documents
properly use the Proprietary Marks and accurately describe Licensee’s
relationship with Licensor. Licensee shall give Licensor written notice at
least
thirty (30) days prior to the date of commencement of any offering or other
transaction covered by this Section 9.3.
9.4. Special
Provisions Relating to Existing Pledges.
Licensee has advised Licensor that as of the date of this Agreement, Licensee
already has in place arrangements with lenders as detailed below in Section
9.4.2 (the “Pledges”).
9.4.1. Licensor
agrees not to object to said Pledges on the following terms and with the
following understandings, which Licensee acknowledges and to which Licensee
agrees: (a) Licensor’s agreement not to object to the Pledges is on the
basis of Licensor’s understanding that all aspects of the Pledge that apply to
the IP Assets, the Proprietary Marks, and the System have been released and
that
neither Pledge shall hereafter apply to said assets transferred to Licensor
under the APA; and (b) Licensor’s agreement not to object to the Pledges
shall in no way prevent or in any way restrict Licensor from exercising any
of
its rights under this Agreement (including but not limited to its rights under
Sections 9.1-9.3 above) if a party holding a Pledge should foreclose upon and
assume the position of Licensee under this Agreement.
9.4.2. The
Pledges are:
9.4.2.1. A
first
position security interest granted to Porter Bridge Loan Co., Inc. for a term
loan agreement; and
9.4.2.2. A
second
position security interest granted to David Alcalay for a term loan
agreement.
10. DEFAULT
AND TERMINATION.
10.1. Automatic.
Licensee shall be deemed to be in default under this Agreement, and all rights
granted herein shall automatically terminate without notice to Licensee, if
Licensee enters into liquidation (whether compulsory or voluntarily), or makes
any arrangement or composition with its creditors or has a receiver appointed
in
respect of all or any part of its assets, or takes any similar action in
consequence of debt.
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10.2. With
Notice.
Licensee shall be deemed to be in default and Licensor may, at its option,
terminate this Agreement and all rights granted hereunder, without affording
Licensee any opportunity to cure the default, effective immediately upon receipt
of notice by Licensee, upon the occurrence of any of the following
events:
10.2.1. If
Licensee at any time violates the territorial restrictions contained herein
by
operating or authorizing any third party to operate a Restaurant outside of
the
PFSI Market or in a Captive Market Location within the PFSI Market;
10.2.2. If
any
transfer is made without Licensor’s prior written consent, contrary to the terms
of Section 9 above;
10.2.3. If
Licensee, after curing a material default pursuant to Section 10.3 below,
commits the same material default again within twelve (12) months, whether
or
not cured after notice; and
10.2.4. If,
under
Section 10.3 hereof, Licensee is repeatedly in default for failure to comply
substantially with any of the material requirements imposed by this Agreement,
whether or not cured after notice. For the purpose of this Section 10.2.4,
“repeatedly” shall mean three or more times in one year.
10.3. With
Notice and Opportunity to Cure.
Except
as provided in Sections 10.1 and 10.2 above, Licensor may terminate this
Agreement only by giving written notice of termination stating the nature of
such default to Licensee at least thirty (30) days prior to the effective date
of termination. Licensee may avoid termination by immediately initiating a
remedy to cure such default and curing it to Licensor’s reasonable satisfaction
within the thirty-day period and by promptly providing proof thereof to
Licensor. If any such default is not cured within the specified time, this
Agreement shall terminate without further notice to Licensee, effective
immediately upon the expiration of the specified time period. Licensee shall
be
in default hereunder for any failure to comply with any of the requirements
imposed by this Agreement, or any failure to carry out the terms of this
Agreement in good faith.
10.4. -No
Rights or Remedies are Exclusive.
No
right or remedy herein conferred upon or reserved to Licensor is exclusive
of
any other right or remedy provided or permitted by law.
11. OBLIGATIONS
UPON TERMINATION OR EXPIRATION
Upon
termination or expiration of this Agreement, all of the rights granted to
Licensee under this Agreement shall immediately terminate and:
11.1. The
Franchise Agreements.
Licensor shall have the right, but not the obligation, to either assume
Licensee’s rights under some or all of the Franchise Agreements then in effect
with regard to the Restaurants operated pursuant to such Franchise Agreements,
or terminate such Franchise Agreements, pursuant to the terms thereof. If
Licensor chooses, in its sole discretion, to exercise its right to assume
Licensee’s rights under any Franchise Agreement pursuant to this Section 11.1,
Licensee shall: (a) in no way be relieved of its obligations under such
Franchise Agreements, including, without limitation, amounts owed to or
obligations assumed on behalf of the Unit Franchisees; and (b) execute and
deliver to Licensor such documents as Licensor may request in order to implement
this Section 11.1. Unless (and only to the extent that) Licensor assumes
Licensee’s obligations under one or more of the Franchise Agreements, Licensor
shall have no obligation or responsibility to any of the Unit
Franchisees.
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11.2. Cessation
of Operations.
Licensee shall immediately cease to operate any company-owned Restaurants,
and
shall immediately cease to solicit or provide service to Unit Franchisees,
and
shall not at any time thereafter, directly or indirectly, represent to the
public or hold itself out as a present or former franchisee, developer,
Licensee, or any other relation to Licensor, the Proprietary Marks, the System,
and/or the Products.
11.3. Activities
with Respect to Unit Franchisees.
Licensee: (a) shall immediately cease to solicit prospective Unit
Franchisees and have contact with existing Unit Franchisees; (b) shall not
enter into any Franchise Agreements with new Unit Franchisees nor any amendments
to Unit Franchisee Agreements with then-existing Unit Franchisees; and
(c) shall not exercise any right or perform any obligation under the
Franchise Agreements except with Licensor’s express prior written consent in
each such instance.
11.4. Cease
Use of Intellectual Property.
Licensee shall immediately and permanently cease to use, in any manner
whatsoever:
11.4.1. Any
trade
secrets, confidential methods, procedures, and techniques associated with the
System;
11.4.2. The
Proprietary Marks and all other proprietary marks and distinctive forms,
slogans, signs, symbols, and devices associated with the System, including,
without limitation:
11.4.2.1. All
signs, advertising materials, displays, stationery, forms, and any other
articles which display or make any reference to the Proprietary Marks;
and
11.4.2.2. Any
and
all references whatsoever to Licensor, the Proprietary Marks, any other mark
owned by Licensor, the System, and/or Licensee’s status as a former
Licensee.
11.5. Premises.
Licensee shall make such modifications or alterations to the premises of each
company-owned Restaurant (including, without limitation, the changing of the
telephone numbers) immediately upon the termination or expiration of this
Agreement as may be necessary to distinguish the appearance of the premises
from
that of restaurants under the System, and shall make such specific additional
changes thereto as Licensor may reasonably request for that
purpose.
11.6. No
Use
of Marks in Other Businesses.
Licensee agrees, if it continues to operate or subsequently begins to operate
any other business, not to use any reproduction, counterfeit, copy, or colorable
imitation of the Proprietary Marks (nor any reference to the System, the
Proprietary Marks, any other of Licensor’s marks, Licensor, or Licensee’s status
as a former Licensee) in connection with either such other business or the
promotion thereof, and further agrees not to use any designation of origin
or
description or representation that suggests, implies, or represents a past
or
present association or connection with Licensor, the System, the Proprietary
Marks, or the Restaurants.
Page
22
11.7. Damages.
Licensee shall pay Licensor all damages, costs, and expenses, including
reasonable legal fees, incurred by Licensor subsequent to the termination or
expiration of this Agreement in obtaining injunctive or other relief for the
enforcement of any provisions of this Section 11.
11.8. Return
Manuals and Other Data.
Licensee shall immediately deliver to Licensor all manuals, including the Manual
(and any copies of the Manual, even if made in violation of this Agreement),
in
all media where recorded whatsoever, and all other records and reports,
correspondence, and instructions containing trade secrets or confidential
information of Licensor.
11.9. Return
Documents.
Licensee shall, at its own expense: (a) immediately deliver to Licensor any
and all materials, agreements, amendments, correspondence, and records relating
to the Franchise Agreements, Unit Franchisees, and any prospective Unit
Franchisees with whom Licensee has had contact; (b) cooperate fully with
Licensor, at Licensee’s expense, in any subsequent interaction between Licensor
and the Unit Franchisees; and (c) cooperate fully with Licensor if Licensor
(or its designee) seeks to be substituted as the Licensor under the Franchise
Agreements. Licensee agrees to execute such documents as Licensor deems
necessary in order to implement this Section 11.9.
12. TAXES,
PERMITS, AND INDEBTEDNESS
12.1. Taxes
Imposed on Licensee.
Licensee shall promptly pay when due all taxes levied or assessed, including,
without limitation, sales taxes and payroll taxes, and all accounts and other
indebtedness of every kind incurred by Licensee in the operation of its business
(including but not limited to any company-owned Restaurants).
12.2. Tax
Disputes.
In the
event of any bona
fide
dispute
as to Licensee’s liability for taxes assessed or other indebtedness, Licensee
may contest the validity or the amount of the tax or indebtedness in accordance
with procedures of the taxing authority or applicable law, but in no event
shall
Licensee permit a tax sale or seizure by levy of execution or similar writ
or
warrant, or attachment by a creditor, to occur against Licensee and/or the
premises of any company-owned Restaurant or any improvements
thereon.
12.3. Permits.
Licensee shall timely obtain any and all permits, certificates, or licenses
necessary for the full and proper operation of each company-owned Restaurant,
including, without limitation, licenses to do business, tax permits, and fire
clearances.
12.4. Legal
Actions with Possible Adverse Consequences.
Licensee shall notify Licensor in writing within five (5) days after Licensee
becomes aware of the commencement of any action, suit, or proceeding, and of
the
issuance of any order, writ, injunction, award, or decree of any court, agency,
or other governmental instrumentality, which may adversely affect the operation
or financial condition of any Restaurant.
13. PARTIES
-INDEPENDENT RELATIONSHIP
13.1. No
Fiduciary Relationship.
It is
understood and agreed by the parties hereto that this Agreement does not create
a fiduciary relationship between them; that Licensee is an independent
contractor, and that nothing in this Agreement is intended to constitute either
party an agent, legal representative, subsidiary, joint venturer, partner,
employee, or servant of the other for any purpose whatsoever.
Page
23
13.2. No
Franchise Relationship.
It is
understood and agreed by the parties that while both Licensor and Licensee
will,
in turn, enter into franchise agreements with their respective franchisees,
the
relationship between Licensor and Licensee is not a franchise, as there are
no
payments or other fees due from Licensee to Licensor.
13.3. Independent
Contractor.
During
the term of this Agreement, the parties shall hold themselves out to the public
as independent parties operating pursuant to this Agreement. Licensee agrees
to
take such actions as shall be necessary to that end including, without
limitation, posting a conspicuous notice (in such form as may be reasonably
acceptable to Licensor) that Licensee operates under a license from Licensor,
on
the premises of any company-owned Restaurants as well as in all contracts,
checks, invoices, business stationery, etc., in which reference is made to
the
Proprietary Marks in any manner. Licensee further agrees to require its Unit
Franchisees to meet similar requirements in connection with their operations
and
uses of the Proprietary Marks.
13.4. No
Right to Bind Each Other.
Nothing
in this Agreement authorizes either party to make any contract, agreement,
warranty, or representation on the other party’s behalf, or to incur any debt or
other obligation in the other party’s name; and in no event shall one of the
parties to this Agreement assume liability for, or be deemed liable as a result
of, any such action, or by reason of any act or omission of the other party,
or
any claim or judgment arising therefrom.
14. APPROVALS
AND WAIVERS
14.1. Request
for Approval.
Whenever this Agreement requires Licensor’s prior approval or consent, Licensee
shall make a timely written request to Licensor therefor and such approval
or
consent shall be obtained in writing. Licensor shall neither unreasonably
withhold nor unduly delay its approval or consent.
14.2. No
Waivers.
No
delay, waiver, omission, or forbearance on the part of Licensor to exercise
any
right, option, duty, or power arising out of any breach or default by Licensee
under any of the terms, provisions, covenants, or conditions hereof shall
constitute a waiver by Licensor to exercise any such right, option, duty, or
power as against Licensee, or as to subsequent breach or default by Licensee.
Subsequent acceptance by either party of any performance due to it hereunder
shall not be deemed to be a waiver of any preceding breach of any terms,
provisions, covenants, or conditions of this Agreement.
15. NOTICES.
Any and
all notices required or permitted under this Agreement shall be in writing
and
shall be delivered by any means that affords the sender evidence of delivery
or
of attempted delivery, to the respective parties at the addresses designated
on
the signature page of this Agreement, unless and until a different address
has
been designated by written notice to the other party. Any notice by a means
which affords the sender evidence of delivery, or rejected delivery, shall
be
deemed to have been given at the date and time of receipt or rejected
delivery.
16. SEVERABILITY
AND CONSTRUCTION
16.1. Each
Clause Severable.
Except
as expressly provided to the contrary herein, each portion, section, part,
term,
and/or provision of this Agreement shall be considered severable; and if, for
any reason, any portion, section, part, term, and/or provision herein is
determined to be invalid and contrary to, or in conflict with, any existing
or
future law or regulation by a court or agency having valid jurisdiction, such
determination shall not impair the operation of, or have any other effect upon,
such other portions, sections, parts, terms, and/or provisions of this Agreement
as may remain otherwise intelligible. The latter shall continue to be given
full
force and effect and bind the parties hereto, and the invalid portions,
sections, parts, terms, and/or provisions shall be deemed not to be a part
of
this Agreement.
Page
24
16.2. Consents.
Provisions of this Agreement under which one party requires the consent of
the
other party before undertaking an action or doing a thing are not meant, and
shall not be construed, to impose any obligation on the part of the party whose
consent is sought except as otherwise stated in this Agreement.
16.3. No
Third-Party Beneficiary Rights; No Rights Conferred on Others.
This
parties agree that this Agreement is not intended to, and shall not be deemed
to, create, establish or in any way confer upon any person the right of a third
party beneficiary or any similar such right. Except as expressly provided to
the
contrary herein, nothing in this Agreement is intended or shall be deemed to
confer upon any person or legal entity other than Licensee, Licensor, Licensor’s
officers, directors, and employees, and such of Licensee’s and Licensor’s
respective successors and assigns as may be contemplated (and, as to Licensee,
permitted) by Section 9 above, any rights or remedies under or by reason of
this Agreement.
16.4. Provisions
Meant to Survive Agreement.
All
covenants, obligations, and agreements hereunder that by their terms or by
reasonable implication are to be performed, in whole or in part, after the
termination or expiration of this Agreement, shall survive such termination
or
expiration.
16.5. Costs.
Each
party shall bear its own costs in complying with its obligations under this
Agreement
16.6. Captions
and Headings.
The
captions and headings in this Agreement are merely for the sake of convenient
reference and shall not amend, modify, or have any effect whatsoever on the
terms of this Agreement.
17. ENTIRE
AGREEMENT AND AMENDMENTS
17.1. Complete
Agreement.
This
Agreement and the APA constitute the entire agreement between Licensor and
Licensee concerning the subject matter hereof and supersede any and all prior
agreements concerning the same subject matter. The parties agree that in
deciding whether to enter into this Agreement, they did not rely on anything
other than the words of this Agreement.
17.2. Amendment.
Except
for those permitted to be made unilaterally by Licensor hereunder, no amendment,
change, or variance from this Agreement shall be binding on either party unless
mutually agreed to by the parties and executed by their authorized officers
or
agents in writing.
18. APPLICABLE
LAW
18.1. Choice
of Law.
This
Agreement takes effect upon its acceptance and execution by Licensor, and shall
be interpreted and construed exclusively under the laws of the State of New
York
which laws shall prevail in the event of any conflict of law (without regard
to,
and without giving effect to, the application of New York choice-of-law
rules).
Page
25
18.2. Choice
of Venue.
Subject
to Sections 18.3 and 18.4 below, the parties agree that any action brought
by
either party in any court, whether federal or state, shall be brought only
within such state and in the judicial district in which Licensor has its
principal place of business. The parties agree that this Section shall not
be
construed as preventing either party from removing an action from state to
federal court; provided, however, that venue shall be as set forth above.
Licensee hereby waives all questions of personal jurisdiction or venue for
the
purpose of carrying out this provision. Any such action shall be conducted
on an
individual basis, and not as part of a consolidated, common, or class
action.
18.3. Injunctions.
Nothing
contained in this Agreement shall bar either party’s right to obtain injunctive
relief against threatened conduct that will cause it loss or damages, under
the
usual equity rules, including the applicable rules for obtaining restraining
orders and preliminary injunctions.
18.4. Parties
Rights Are Cumulative.
No
right or remedy conferred upon or reserved to Licensor or Unit Franchisee by
this Agreement is intended to be, nor shall be deemed, exclusive of any other
right or remedy herein or by law or equity provided or permitted, but each
shall
be cumulative of every other right or remedy.
18.5. Waiver
of Jury Trial.
Licensor and Licensee irrevocably waive trial by jury in any action, proceeding,
or counterclaim, whether at law or in equity, brought by either of them against
the other, whether or not there are other parties in such action or
proceeding.
18.6. Payment
of Legal Fees.
In any
litigation between the parties, the parties agree that the prevailing party
shall be entitled to recover its costs (including but not limited to lawyers’
fees) from the other party.
19. ACKNOWLEDGMENTS
19.1. No
Warranties or Guarantees.
Each
party expressly disclaims the making of any warranty or guarantee, express
or
implied, as to the potential volume, profits, or success of the business
ventures that are contemplated by this Agreement.
19.2. Cooperation.
Licensor and Licensee agree to cooperate reasonably and amicably with one
another in terms of exchange and transfer of know-how and information concerning
the System to Licensor, including for example meetings between the parties’
personnel, Licensor’s questions regarding the Manuals and the System, the and
such other matters as may be necessary in order to implement the APA and this
Agreement.
19.3. Representations
and Warranties.
Each
party to this Agreement hereby represents and warrants to the other that:
(a) the person signing this Agreement on such party’s behalf has been duly
authorized to do so; (b) any and all corporate actions necessary to be
taken in order to authorize entry into this Agreement have been duly taken;
and
(c) there are no other agreements, court orders, or other legal obligations
that limit or prevent such party from negotiating, entering into, exercising
its
rights, and/or carrying out its responsibilities under this
Agreement.
[Signature
Page to Follow]
Page
26
IN
WITNESS WHEREOF,
the
parties hereto have duly signed and delivered this Agreement in duplicate on
the
day and year first above written.
|
NF
Treachers Corp.
Licensor
By:
s/Eric
Gatoff
Name:
Eric
Gatoff
Title:
VP-Corporate
Counsel
|
PAT
Franchise Systems, Inc.
Licensee
By:
s/Jeffrey
Bernstein
Name:
Jeffrey
Bernstein
Title:
President
|
|
Address
for Notices:
1400
Old Country Road, Suite 400
Westbury,
New York 11590
Attn:
President
Fax:
516.338.7220
|
Address
for Notices:
1111
Marcus Avenue, Suite M27
Lake
Success, New York 11042
Attn:
President
Fax:
516.918.3301
|
Attachments:
A
- List
of PAT Direct Unit Franchises
B
-
Development Schedule
C
-
Participation Agreement Transfer Agreement
D
-
Vittoria Agreement
Page
27
Attachment
A
List
of PAT Direct Unit Franchises
[see
two
attached pages]
Page
28
Attachment
B
Development
Schedule
|
The
following number of Restaurants shall be open and in operation in
each
Sub-market - either by Licensee and/or one or more Unit Franchisees
|
||||
|
By
this Date
|
Washington,
D.C.
|
Maryland
|
Northern
New York
|
Virginia
|
|
September
30, 2007
|
Four
(4)
|
Four
(4)
|
Four
(4)
|
Four
(4)
|
|
March
31, 2009
|
Eight
(8)
|
Eight
(8)
|
Eight
(8)
|
Eight
(8)
|
|
March
31, 2010
|
Twelve
(12)
|
Twelve
(12)
|
Twelve
(12)
|
Twelve
(12)
|
|
March
31, 2011
|
Sixteen
(16)
|
Sixteen
(16)
|
Sixteen
(16)
|
Sixteen
(16)
|
|
March
31, 2012
|
Twenty
(20)
|
Twenty
(20)
|
Twenty
(20)
|
Twenty
(20)
|
|
March
31, 2013
|
Twenty-four
(24)
|
Twenty-four
(24)
|
Twenty-four
(24)
|
Twenty-four
(24)
|
|
March
31, 2014
|
Twenty-seven
(27)
|
Twenty-seven
(27)
|
Twenty-seven
(27)
|
Twenty-seven
(27)
|
|
March
31, 2015
|
Thirty
(30)
|
Thirty
(30)
|
Thirty
(30)
|
Thirty
(30)
|
|
March
31, 2016
|
Thirty-three
(33)
|
Thirty-three
(33)
|
Thirty-three
(33)
|
Thirty-three
(33)
|
|
March
31, 2017
|
Thirty-six
(36)
|
Thirty-six
(36)
|
Thirty-six
(36)
|
Thirty-six
(36)
|
|
March
31, 2018
|
Thirty-eight
(38)
|
Thirty-eight
(38)
|
Thirty-eight
(38)
|
Thirty-eight
(38)
|
|
March
31, 2019
|
Forty
(40)
|
Forty
(40)
|
Forty
(40)
|
Forty
(40)
|
|
March
31, 2020
|
Forty-two
(42)
|
Forty-two
(42)
|
Forty-two
(42)
|
Forty-two
(42)
|
|
March
31, 2021
|
Forty-four
(44)
|
Forty-four
(44)
|
Forty-four
(44)
|
Forty-four
(44)
|
|
Thereafter
|
Forty-four
(44)
|
Forty-four
(44)
|
Forty-four
(44)
|
Forty-four
(44)
|
Page
29
Attachment
C
Participation
Agreement Transfer Agreement
February
28, 2006
PAT
Franchise Systems, Inc.
1111
Marcus Avenue, Suite M27
Lake
Success, New York 11042
NF
Treachers Corp.
Nathan’s
Famous Systems, Inc.
NF
Roasters Corp.
Miami
Subs USA, Inc.
1400
Old
Country Road
Westbury,
New York 11590
Re: Transfer
to NF Treachers Corp. of all Participation Agreements
Dear
Sir
or Madam:
Effective
as of the date of this letter agreement, PAT Franchise Systems, Inc.
(“PFSI”)
hereby
transfers to NF Treachers Corp. (“NFTC”)
all of
PFSI’s rights and obligations under the Participation Agreements (defined
below), in conjunction with and in consideration for other agreements between
the parties as of this same date.
Effective
as of the date of this letter agreement:
(a) PFSI
shall have no further entitlement to receive any fees, royalties, or other
compensation under any of the Participation Agreements;
(b) PFSI
shall no longer have any rights whatsoever under any Participation Agreement
or
any other agreement entered into with Nathan’s Famous Systems, Inc.
(“NFSI”),
NF
Roasters Corp. (“NFR”),
and
Miami Subs USA, Inc. (“MSUSA”),
or
any of those companies’ respective franchisees (except with respect to a
Franchise Agreement with such a franchisee for a stand-alone Arthur Treacher’s
restaurant, without a Nathan’s
Famous,
Kenny
Rogers Roasters,
or
Miami
Subs
operation); and
(c) NFTC
shall assume PFSI’s obligations under the Participation Agreements, with PFSI’s
express understanding and agreement that: (i) PFSI is and shall remain
solely responsible for any and all obligations that arose prior to the date
of
this letter agreement; and (ii) PFSI shall indemnify and hold Licensor and
its affiliates harmless in connection with same, as specified in the License
Agreement between NFTC and PFSI of this same date.
The
term
“Participation
Agreement”
means
an agreement among: (i) PFSI; (ii) Nathan’s Famous Systems, Inc.
(“NFSI”),
NF
Roasters Corp. (“NFR”),
and/or Miami Subs USA, Inc. (“MSUSA”);
and
(iii) a franchisee of NFSI, NFR, and/or MSUSA (the “NF
Franchisee”);
pursuant to which agreement the NF Franchisee was granted the right to also
operate its franchised Nathan’s
Famous, Miami Subs,
and/or
Kenny
Rogers Roasters franchised
restaurant under the Arthur
Treacher’s
name and
to sell Arthur
Treacher’s products
in said franchised restaurant.
Page
30
Acknowledged
and agreed, as of this 28th day of February 2006.
|
PAT
Franchise Systems, Inc.
|
NF
Treachers Corp.
|
|
By:
Printed
Name:
Title:
|
By:
Printed
Name:
Title:
|
|
Nathan’s
Famous Systems, Inc.
|
NF
Roasters Corp.
|
|
By:
Printed
Name:
Title:
|
By:
Printed
Name:
Title:
|
|
Miami
Subs USA, Inc.
|
|
|
By:
Printed
Name:
Title:
|
Page
31
Attachment
D
Form
of Vittoria Agreement
[see
attached pages]
Page
32