Exhibit 10.4
SERVICING AGREEMENT
Dated as of November 21, 2000
among
ARBY'S FRANCHISE TRUST,
as Issuer
ARBY'S, INC.,
as the Servicer
and
BNY MIDWEST TRUST COMPANY, A BANK OF NEW YORK COMPANY,
as Indenture Trustee
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS.............................................
SECTION 1.1 Certain Definitions........................
SECTION 1.2 Other Defined Terms........................
SECTION 1.3 Other Terms................................
SECTION 1.4 Computation of Time Periods................
ARTICLE 2 ADMINISTRATION AND SERVICING OF FRANCHISE ASSETS.
SECTION 2.1 The Servicer to Act as the Servicer........
SECTION 2.2 Collection of Franchisee Payments and
Remittances; Lock-Box Accounts; Collection
Account....................................
SECTION 2.3 Records....................................
SECTION 2.4 Administrative Duties of Servicer..........
SECTION 2.5 No Offset..................................
SECTION 2.6 Servicing Compensation.....................
SECTION 2.7 Indemnification............................
SECTION 2.8 Nonpetition Covenant.......................
SECTION 2.9 Consent of Franchisor and Consent to
Assignment.................................
ARTICLE 3 STATEMENTS AND REPORTS..................................
SECTION 3.1 Reporting by the Servicer..................
SECTION 3.2 Appointment of Independent Accountant......
SECTION 3.3 Annual Accountants' Reports................
SECTION 3.4 Available Information......................
ARTICLE 4 THE SERVICER............................................
SECTION 4.1 Representations and Warranties Concerning
the Servicer...............................
SECTION 4.2 Existence; Status as the Servicer..........
SECTION 4.3 Performance of Obligations.................
SECTION 4.4 Merger; Resignation and Assignment.........
SECTION 4.5 Certain Covenants of the Servicer..........
ARTICLE 5 DEFAULT.................................................
SECTION 5.1 Servicer Termination Events.................
SECTION 5.2 No Effect on Other Parties..................
SECTION 5.3 Rights Cumulative...........................
ARTICLE 6 MISCELLANEOUS PROVISIONS.................................
SECTION 6.1 Termination of Agreement....................
SECTION 6.2 Amendment...................................
SECTION 6.3 Governing Law...............................
SECTION 6.4 Notices.....................................
SECTION 6.5 Severability of Provisions..................
SECTION 6.6 Delivery Dates..............................
SECTION 6.7 Binding Effect; Limited Rights of Others....
SECTION 6.8 Limitation of Liability of Wilmington Trust
Company and the Certificateholder...........
SECTION 6.9 Article and Section Headings.................
SECTION 6.10 Concerning the Indenture Trustee.............
SECTION 6.11 Counterparts.................................
EXHIBIT A - Duties of the Servicer
EXHIBIT B - Monthly Servicer's Certificate
EXHIBIT C - Quarterly Servicer's Certificate
SERVICING AGREEMENT, dated as of November 21, 2000 (the
"Agreement"), by and among ARBY'S FRANCHISE TRUST, a Delaware statutory business
trust (herein, together with its successors and assigns, called the "Issuer"),
ARBY'S, INC., a Delaware corporation (herein, together with its successors and
assigns, collectively called "Arby's" or the "Servicer"), and BNY Midwest Trust
Company, a Bank of New York Company, an Illinois banking corporation, as
indenture trustee (the "Indenture Trustee").
PRELIMINARY STATEMENT
WHEREAS, the Issuer has entered into an Indenture (the
"Indenture"), dated as of the date of this Agreement, with the Indenture Trustee
and Ambac Assurance Corporation, a Wisconsin stock insurance corporation (the
"Insurer"), pursuant to which the Issuer has issued its Notes (the "Notes"), on
the terms and in the amounts described therein. Pursuant to the Indenture, as
security for the indebtedness represented by the Notes, the Issuer is and will
be Granting to the Indenture Trustee on behalf of the Noteholders, a security
interest in the Collateral, which includes, among other things, the Franchise
Assets, the Issuer's rights under this Agreement, the Collection Account and all
proceeds of the foregoing.
WHEREAS, pursuant to the Amended and Restated Trust Agreement,
dated as of November 21, 2000 (the "Trust Agreement"), between Wilmington Trust
Company, a Delaware banking corporation (the "Issuer Trustee"), and Arby's
Finance, LLC, a special purpose Delaware limited liability company (the
"Certificateholder"), the Issuer has issued a Certificate (the "Certificate") to
the Certificateholder evidencing the beneficial interests in the Issuer.
WHEREAS, the parties desire to enter into this Agreement to
provide, among other things, for the servicing of the Franchise Assets by the
Servicer.
NOW THEREFORE, in consideration of the premises and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.1 Certain Definitions. For all purposes of this
Agreement, capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed thereto in the Indenture. In addition, the following
terms shall have the following meanings:
"Account Control Agreement" means the account control
agreement among the Servicer, the Indenture Trustee, the Insurer, the Issuer and
the Lock Box Bank.
"Agreement" has the meaning set forth in the preamble.
"American Lock-Box Accounts" means Xxxxxxx # 00000 (Xxxxxxxxx)
and # 840074 (Dallas) at the Lock-Box Bank held in the name of the Issuer, and
pledged to the Indenture Trustee.
"American Lock-Box Bank" means Bank of America, N.A. or such
other bank designated by the Issuer and consented to by the Controlling Party.
"American Servicer" means Arby's.
"Arby's" has the meaning set forth in the preamble.
"Canadian Lock-Box Account" means Account # 00000-0000000 at
the Canadian Lock-Box Bank held in the name of Arby's of Canada, Inc. which has
been assigned to the Issuer, and pledged to the Indenture Trustee.
"Canadian Lock-Box Bank" means Royal Bank of Canada or such
other bank designated by the Issuer and consented to by the Controlling Party.
"Canadian Servicer" means Arby's of Canada, Inc., an Ontario
corporation.
"Capital Stock" means, with respect to any Person, (i) any and
all shares, interests, participations or other equivalents of or interests in
(however designated) corporate or capital stock, including, without limitation,
shares of preferred or preference stock of such Person, (ii) all partnership
interests (whether general or limited) in such Person, (iii) all membership
interests or limited liability company or partnership interests in such Person,
and (iv) all other equity ownership interests in such Person of any other type.
"Closing Date" means November 21, 2000.
"Code" means the Internal Revenue Code of 1986, as amended,
reformed or otherwise modified from time to time.
"Controlled Group" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with the
Servicer, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"Delinquent Franchisee" means a Franchisee who has not made
its Franchisee Payments by the end of the Collection Period in which such
Franchisee Payments were due.
"Environmental Laws" has the meaning set forth in Section
4.1(k) hereof.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Franchise Agreement" means a franchise agreement with the
Franchisor pursuant to which a Franchisee is licensed to operate an Arby's(R)
branded restaurant in the United States subject to the terms and conditions
contained therein.
"Franchise Assets" has the meaning specified in the Indenture,
provided, however, as used herein (other than in Section 4.5(b) hereof or where
the term "Franchise Assets" is preceded by the word "Canadian"), "Franchise
Asset" shall only refer to "Franchise Assets" located in the United States.
"Franchise Document" means each Franchise Agreement, LOA and
MDA.
"Franchisee" means the Person identified as franchisee
pursuant to a Franchise Agreement.
"Franchisor" means, prior to the date hereof, Arby's, Inc., a
Delaware corporation, and subsequent to the date hereof, the Issuer.
"Independent Accountants" has the meaning set forth in
Section 3.2 hereof.
"Insurance Policy" means any insurance policy or policies
maintained by a Franchisee in accordance with the requirements of its Franchise
Agreement.
"Insurance Proceeds" means any amounts received upon
settlement of a claim field under an Insurance Policy, net of direct fees, costs
(exclusive of overhead) and disbursements incurred in connection with the
collection thereof.
"LOA" means a License Option Agreement between the Franchisor
and an optionee which gives the optionee the right to become a Franchisee with
respect to an Arby's(R) branded restaurant located on a specified site within
the United States in accordance with the terms and conditions contained therein.
"Material Adverse Effect" shall mean, (i) with respect to the
Servicer, a material adverse effect on (x) its condition, financial or
otherwise, (y) its earnings or business affairs, or (z) its ability to own its
properties or to conduct its business or to enter into or perform its
obligations under the Servicing Agreement, and (ii) with respect to the Trust
Estate, a material adverse effect with respect to (A) any material Arby's IP
individually or with respect to the Arby's IP taken as a whole, the
enforceability of the terms thereof, the likelihood of the payment of the
amounts required with respect thereto in accordance with the terms thereof, the
value thereof, the transferability or the transfer thereof to the Issuer or the
ownership thereof and the security interest in the rights thereto Granted under
the License Agreement by the IP Holder or Granted under the terms of the
Indenture by the Issuer and (B) the existing and reasonably anticipated future
Franchise Assets taken as a whole, the enforceability of the terms thereof, the
likelihood of the payment of the amounts required with respect thereto in
accordance with the terms thereof, the value thereof, the transferability or the
transfer thereof to the Issuer or the ownership thereof and the security
interest in the rights thereto Granted under the Indenture by the Issuer. For
avoidance of doubt, the fact that the Debt Service Coverage Ratio is then, or
would remain, at 1.2x or greater shall not, solely in and of itself, preclude or
negate the determination of a Material Adverse Effect in any instance.
"MDA" means a Market Development Agreement between the
Franchisor and a prospective Franchisee pursuant to which the prospective
Franchisee commits to build two or more Arby's(R) branded restaurants within a
specified territory in the United States.
"Monthly Servicer's Certificate" means the certificate
prepared by the Servicer in the form of Exhibit B hereto.
"Pension Plan" means a "pension plan," as such term is defined
in section 3(2) of ERISA, which is subject to Title IV of ERISA (other than a
multi- employer plan as defined in section 4001(a)(3) of ERISA), and to which
the Servicer or any of its subsidiaries or any corporation, trade or business
that is, along with the Servicer or any of its subsidiaries, a member of a trade
or business that is, along with the Servicer or any of its subsidiaries, a
member of a Controlled Group, may have liability, including any liability by
reason of having been a substantial employer within the meaning of section 4063
of ERISA at any time during the preceding five years, or by reason of being
deemed to be a contributing sponsor under section 4069 of ERISA.
"Permitted Encumbrances" has the meaning specified in the
Indenture.
"Principal Reinsurer" has the meaning specified in the
Indenture.
"Quarterly Servicer's Certificate" means the certificate
prepared by the Servicer in the form of Exhibit C hereto.
"Servicing Fee" has the meaning specified in the Indenture.
"Servicing Standard" shall mean standards maintained by the
Servicer that are at least equal to the standards in place on the Closing Date
("Current Practices") and are conducted in a manner which shall be normal and
usual in its Current Practices and to the extent of changed circumstances,
practices and technologies, the procedures which the Servicer would use if the
Franchise Assets were owned by the Servicer.
"Stock Option Plan" means a stock option plan that may be
adopted by the Servicer providing for the granting of options to acquire the
voting Capital Stock of the Servicer, as amended, supplemented, amended and
restated or otherwise modified from time to time.
"Subsidiary" means, with respect to the Servicer, a direct or
indirect subsidiary of the Servicer, including any corporation, limited
liability company or business trust.
"System" means the system of restaurants located in the United
States and Canada operated under the Arby's(R) brand concept franchised by
Arby's, prior to the Closing Date, and by the Issuer, subsequent to the Closing
Date.
"Welfare Plan" means a "welfare plan," as such term is defined
in section 3(1) of ERISA (other than a multi-employer plan as defined in Section
4001(a)(3) of ERISA).
SECTION 1.2 Other Defined Terms.
(a) Each term defined in the singular form in Section 1.1 or
elsewhere in this Agreement shall mean the plural thereof when the plural form
of such term is used in this Agreement and each term defined in the plural form
in Section 1.1 shall mean the singular thereof when the singular form of such
term is used herein.
(b) The words "hereof," "herein," "hereunder" and similar
terms when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and article, section,
subsection, schedule and exhibit references herein are references to articles,
sections, subsections, schedules and exhibits to this Agreement unless otherwise
specified.
SECTION 1.3 Other Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP. All terms used in
Article 9 of the UCC in the State of New York, and not specifically defined
herein, are used herein as defined in such Article 9.
SECTION 1.4 Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding."
ARTICLE 2
ADMINISTRATION AND SERVICING OF FRANCHISE ASSETS
SECTION 2.1 The Servicer to Act as the Servicer.
(a) Engagement of the Servicer. The Servicer is hereby
authorized to and shall service and administer the Franchise Assets in
accordance with the terms of this Agreement (including Exhibit A hereto) and
each related Franchise Document. The Servicer shall have full power and
authority, acting alone and subject only to the specific requirements and
prohibitions of this Agreement and the Indenture, to do and take any and all
actions, or to refrain from taking any such actions, and to do any and all
things in connection with such servicing and administration which it may deem
necessary or desirable, including, without limitation, calculating and compiling
information required in connection with any report to be delivered pursuant to
this Agreement, and the performance of certain duties related to the Franchise
Assets, as contemplated by Exhibit A hereto. Without limiting the generality of
the foregoing, but subject to the provisions of the Indenture and this
Agreement, including, without limitation, Section 2.9 hereof, the Servicer is
hereby authorized and empowered to execute and deliver, in the Servicer's own
name or in the name of the Issuer, on behalf of the Issuer and Indenture
Trustee, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments, with respect
to the Franchise Assets, including, without limitation, consents to sales,
transfers or encumbrances of the Franchise Documents by a Franchisee or
assignments and assumptions of the Franchise Assets in accordance with the terms
thereof. The Servicer agrees that its servicing of the Franchise Assets shall be
carried out as provided in accordance with the Servicing Standard. Additionally,
the Servicer agrees to perform its duties and obligations under the Indenture,
if any.
(b) Actions to Perfect Security Interests. The Servicer shall
take all actions that are necessary or desirable to maintain continuous
perfection and priority (subject to Permitted Encumbrances) of the Issuer's
interest in the Franchise Assets. Without limiting the foregoing, the Servicer
shall file or cause to be filed the financing statements on Form UCC-1 and
assignments of financing statements on Form UCC-3 required to be filed in
connection with each Contribution Agreement relating to the Franchise Assets,
the Indenture and the transactions contemplated thereby.
(c) Franchisee Insurance. The Servicer acknowledges that to
the extent that it is named as a "loss payee" or "additional insured" under any
Insurance Policies, it is so named in its capacity as the Servicer, and the
Servicer, in accordance with procedures contemplated by Exhibit A, shall
promptly remit to the Indenture Trustee for deposit in the Collection Account
any Insurance Proceeds received by the Servicer under the Insurance Policies.
The Servicer shall use its commercially reasonable efforts to cause the Issuer
to be named as "loss payee" under all Insurance Policies at the time of renewal
or replacement.
(d) Servicer's Insurance. The Servicer agrees to use
commercially reasonable efforts to maintain adequate insurance with reputable
insurers, to the extent available, including casualty, public liability,
fiduciary liability, workers compensation and employment practices liability
policies, in at least such forms and amounts and against such risks as were
maintained by the Servicer on the Closing Date. Such insurance will cover the
Issuer as an additional insured.
SECTION 2.2 Collection of Franchisee Payments and Remittances;
Lock-Box Accounts; Collection Account.
(a) Collection of Payments. The Servicer shall cause the
collection of all payments called for under the terms and provisions of each
Franchise Document with parties in both the United States and Canada in
accordance with the Servicing Standard. The Servicer shall cause all collections
to be deposited in the American Lock-Box Accounts or the Canadian Lock-Box
Account, as applicable, which, pursuant to the Account Control Agreements or
other direction to the American Lock-Box Bank and/or Canadian Lock-Box Bank,
shall be swept daily to the Collection Account. In addition to any other
customary services which the Servicer may perform, including those set forth in
Exhibit A hereto, the Servicer shall perform the following servicing and
collection supervision activities:
(1) perform, or cause to be performed, standard
accounting services, and perform general
recordkeeping services, with respect to the
Franchise Agreements;
(2) respond to any telephone or written inquiries of
Franchisees concerning the Franchise Agreements;
(3) keep Franchisees informed of the proper place and
method for making payments with respect to the
Franchise Agreements;
(4) contact Franchisees to effect collection and to
discourage delinquencies in the payment of monies
due under the Franchise Agreements, doing so by
any lawful means, including, but not limited to,
the following:
(i) transmittal of routine past due notices;
(ii) preparing and mailing collection letters;
(iii) contacting delinquent Franchisees by
telephone to encourage payment;
(iv) transmittal of reminder notices to
delinquent Franchisees; and
(v) initiating and pursuing termination or
enforcement actions deemed necessary by
the Servicer;
(5) report to Franchisees such tax information, if
any, as may be required by law;
(6) provide written notice to the Indenture Trustee
and Controlling Party with respect to any
increase in the percentage limit for Advertising
Fees and Canadian Advertising Fees as specified
in the definitions thereof, and, if requested by
either the Controlling Party or the Indenture
Trustee, documentation evidencing such increase
as may be reasonably requested by the Indenture
Trustee or the Controlling Party; and
(7) take such other action as may, in the reasonable
discretion of the Servicer, be necessary or
appropriate to carry out the duties and
obligations imposed upon the Servicer pursuant to
the terms of this Section 2.2.
(b) Deposit of Misdirected Funds; No commingling;
Excluded Fees. The Servicer shall promptly remit to the Indenture Trustee for
deposit in the Lock-Box Account by the third Business Day immediately following
receipt thereof by the Servicer and in the form received, all payments received
by the Servicer in respect of the Franchise Assets incorrectly sent to the
Servicer by, or on behalf of, a Franchisee. The Servicer shall not commingle
with its own assets and shall keep separate, segregated and appropriately
marked and identified all Franchise Assets or any property comprising any
part of the Trust Estate, and for such time, if any, as such Franchise
Assets or property are in the possession or control of the Servicer, the
Servicer shall hold the same in trust for the benefit of the Indenture Trustee,
the Noteholders (or, following termination of the Indenture, the Issuer and
the Certificateholder) and the Insurer. Additionally, the Servicer shall
notify the Indenture Trustee in writing of any Misdirected Payments or Excluded
Fees deposited into the Collection Account, and arrange for the prompt
remittance by the Indenture Trustee of such funds from the Collection Account
to the Servicer.
SECTION 2.3 Records. The Servicer shall retain all data
(including, without limitation, computerized records) relating directly to, or
maintained in connection with, the servicing of the Franchise Assets at the
address of the Servicer set forth in Section 6.4 or, upon 30 days' notice to the
Issuer, the Indenture Trustee and the Insurer, at such other place where the
servicing offices of the Servicer are located, and shall give the Indenture
Trustee and the Insurer access to all such data at all reasonable times upon
reasonable notice, and, while a Servicer Termination Event shall be continuing,
the Servicer shall, on demand of the Indenture Trustee, deliver to the Indenture
Trustee all data in its possession or under its control (including, without
limitation, computerized records) necessary for the servicing of the Franchise
Assets. If the rights of the Servicer shall have been terminated in accordance
with Section 5.1 or if this Agreement shall have been terminated pursuant to
clause (ii) of Section 6.1, the Servicer shall, upon demand of the Indenture
Trustee or the Insurer, in the case of a termination pursuant to Section 5.1, or
of the Issuer pursuant to clause (ii) of Section 6.1, deliver to the demanding
party all data in its possession or under its control (including, without
limitation, computerized records) necessary for the servicing of the Franchise
Assets. In addition to delivering such data, the Servicer shall, at its expense
(or at the expense of the Issuer in the event of termination under clause (ii)
of Section 6.1), use its commercially reasonable efforts to effect the orderly
and efficient transfer of the servicing of the Franchise Assets to the party
that will be assuming responsibility for such servicing, including, without
limitation, directing Franchisees to remit Franchisee Payments and all other
payments in respect of the Franchise Assets to an account or address designated
by such new servicer. The provisions of this Section 2.3 shall not require the
Servicer to transfer any proprietary material or computer programs unrelated to
the servicing of the Franchise Assets.
SECTION 2.4 Administrative Duties of Servicer.
(a) Duties with Respect to the Transaction Documents. The
Servicer shall perform the duties of the Issuer and the Issuer Trustee under the
Transaction Documents except for those duties that are (i) to be explicitly
performed by the Issuer Trustee under the Trust Agreement and (ii) those duties
that are required to be performed by a Delaware trustee pursuant to Chapter 38
of Title 12 of the Delaware Code, 12 Del. C. ss. 3801 et seq. In furtherance of
the foregoing, the Servicer shall consult with the Issuer Trustee as the
Servicer deems appropriate regarding the duties of the Issuer and the Issuer
Trustee under the Transaction Documents. The Servicer shall monitor the
performance of the Issuer and the Issuer Trustee and shall advise the Issuer
Trustee when action is necessary to comply with the Issuer's or the Issuer
Trustee's duties under the Transaction Documents. The Servicer shall prepare
for execution by the Issuer Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Issuer
Trustee to prepare, file or deliver pursuant to the Transaction Documents.
(b) Duties with Respect to the Issuer.
(i) In addition to the duties of the Servicer set forth
in this Agreement or any of the Transaction Documents, the Servicer shall
perform such calculations and shall prepare for execution by the Issuer or the
Issuer Trustee or shall cause the preparation by other appropriate Persons of
all such documents, reports, filings, instruments, certificates and opinions as
it shall be the duty of the Issuer to prepare, file or deliver pursuant to
state and federal securities laws. In accordance with the directions of the
Issuer or the Issuer Trustee, the Servicer shall administer, perform or
supervise the performance of such other activities in connection with the
Issuer as are not covered by any of the foregoing provisions and as are
expressly requested by the Issuer or the Issuer Trustee and are reasonably
within the capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any
of the Transaction Documents to the contrary, the Servicer shall be responsible
for promptly notifying the Issuer Trustee and the Indenture Trustee in the event
that the Servicer has knowledge that any withholding tax is imposed on the
Issuer's payments (or allocations of income) to a Certificateholder. Any such
notice shall be in writing and specify the amount of any withholding tax
required to be withheld by the Issuer Trustee or the Indenture Trustee pursuant
to such provision.
(c) Tax Matters. The Servicer shall prepare and file, on
behalf of the Issuer, all tax returns, tax elections, financial statements and
such annual or other reports of the Issuer as are necessary for the preparation
of tax reports as required by the Indenture. All tax returns will be signed by
the Servicer on behalf of the Issuer.
(d) Records. The Servicer shall maintain appropriate books
of account and records relating to services performed under this Agreement,
which books of account and records shall be accessible for inspection by the
Issuer Trustee during normal business hours and upon reasonable Notice.
(e) Additional Information to be Furnished to the Issuer.
The Servicer shall furnish to the Issuer Trustee from time to time such
additional information regarding the Issuer or the Transaction Documents
as the Issuer Trustee shall reasonably request.
SECTION 2.5 No Offset. The obligations of the Servicer under
this Agreement shall not be subject to, and the Servicer hereby waives, any
defense, counterclaim or right of offset which the Servicer has or may have
against the Issuer, the Indenture Trustee or the Insurer, whether in respect of
this Agreement, any Franchise Asset or otherwise.
SECTION 2.6 Servicing Compensation. As compensation for the
performance of its obligations under this Agreement, the Servicer shall be
entitled to receive the Servicing Fee from the Issuer on each Payment Date out
of amounts released by the Indenture Trustee from the Collection Account on such
Payment Date pursuant to Section 10.03 of the Indenture.
SECTION 2.7 Indemnification.
(a) The Servicer agrees to indemnify and hold the Issuer, the
Insurer, the Principal Reinsurer and the Indenture Trustee (and their respective
officers, directors, employees and agents) (each an "Indemnitee") harmless
against all claims, losses, penalties, fines, forfeitures, legal fees, and
related costs and judgments and other costs, fees and reasonable expenses
(collectively, "Liabilities") that any of them may incur because of the failure
of the Servicer to perform its duties to service and administer the Franchise
Assets in compliance with this Agreement as a result of the Servicer's
negligence or willful misconduct. Any Indemnitee which proposes to assert the
right to be indemnified under this Section 2.7 will promptly, after receipt of
notice of the commencement of any action, suit or proceeding against such party
in respect of which a claim is to be made against the Servicer under this
Section 2.7, notify the Servicer of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. In the event that any action,
suit or proceeding shall be brought against any Indemnitee and it shall notify
the Servicer of the commencement thereof, the Servicer shall be entitled to
participate in, and to the extent that it shall wish, to assume the defense
thereof, with counsel reasonably satisfactory to such Indemnitee, and after
notice from the Servicer to such Indemnitee of its election to assume the
defense thereof, the Servicer shall not be liable to such Indemnitee for any
legal expenses subsequently incurred by such Indemnitee in connection with the
defense thereof except as set forth in the next sentence. The Indemnitee shall
have the right to employ its own counsel in any such action the defense of which
is assumed by the Servicer in accordance with this subsection (a), but the fees
and expenses of such counsel shall be at the expense of such Indemnitee unless
the employment of counsel by such Indemnitee has been specifically authorized by
the Servicer, or unless there is a conflict of interest with other counsel;
provided, that the Insurer and the Principal Reinsurer shall utilize one joint
counsel to represent them both in the event that such counsel fees are, pursuant
to this sentence, to be paid by the Servicer; provided, further, that in the
event that either the Insurer or the Principal Reinsurer determines that the
utilization of joint counsel is unacceptable, the Insurer and the Principal
Reinsurer may utilize separate counsel and the Principal Reinsurer shall bear
the expense of separate counsel that it may choose to retain in connection with
such action.
An Indemnitee shall not settle or compromise any claim covered pursuant to this
Section 2.7 without the prior written consent of the Servicer. The payment
obligations of the Servicer under this Section shall survive the termination of
this Agreement or the earlier resignation or removal of any party hereto.
(b) Notwithstanding the foregoing Section 2.7(a), the Servicer
shall not be obligated to make any payments to the Principal Reinsurer (or any
of its officers, directors, employees or agents) pursuant to Section 2.7(a) if
and to the extent such payments (i) would be in respect of Liabilities incurred
by the Insurer and/or the Principal Reinsurer as a result of a payment made
under or in respect of the Policy and the reimbursement or recovery thereof to
or by the Insurer and/or the Principal Reinsurer, or (ii) would be in respect of
Liabilities incurred by the Insurer and the Principal Reinsurer on either a
joint or joint and several basis, and such indemnification payments would
exceed, by reason of duplication, the amount which the Servicer would be
obligated to pay to the Insurer or its officers, directors, employees and
agents, without giving effect to any indemnification obligation otherwise owed
to the Principal Reinsurer (or any of its officers, directors, employees or
agents) pursuant to Section 2.7(a).
SECTION 2.8 Nonpetition Covenant. The Servicer shall not,
prior to the date that is one year and one day after the payment in full of the
Outstanding Principal Amount of the Notes, petition or otherwise invoke the
process of any court or governmental authority for the purpose of commencing or
sustaining a case against the Issuer under any Insolvency Law or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 2.9 Consent of Franchisor and Consent to Assignment.
Subject to the Servicing Standard, the Servicer shall have the authority to
grant consents of the Franchisor required under the Franchise Assets; provided
that the Servicer may only consent to the assignment, renewal, modification or
termination of any Franchise Asset and the release of the existing Franchisee if
such consent and release is not in conflict with the Servicing Standard.
ARTICLE 3
STATEMENTS AND REPORTS
SECTION 3.1 Reporting by the Servicer.
(a) Monthly Servicer's Certificate. Not later than 3:00 p.m.
on each Accounting Date, the Servicer shall transmit the Monthly Servicer's
Certificate to the Issuer, the Certificateholder, the Indenture Trustee and the
Insurer.
(b) Quarterly Servicer's Certificate. Not later than 3:00 p.m.
on the fiftieth (50th) day after the end of each of the Servicer's fiscal
quarters, the Servicer shall transmit the Quarterly Servicer's Certificate to
the Issuer, the Certificateholder, the Indenture Trustee and the Insurer.
(c) Termination Notices. The Servicer shall send the
Indenture Trustee a copy of any notices of termination sent by the Servicer to
any Franchisee.
(d) Additional Information. The Servicer shall send to the
Indenture Trustee and the Insurer such other information concerning the
Franchise Assets as the Indenture Trustee or the Insurer shall reasonably
request from time to time as necessary to perform the Indenture Trustee's
obligations under the Indenture or the Insurer's obligations under the Insurance
Policy.
SECTION 3.2 Appointment of Independent Accountant. Within
sixty (60) days of the Closing Date, the Issuer shall appoint a firm of
independent accountants of recognized national reputation and reasonably
acceptable to the Indenture Trustee and the Insurer to serve as the independent
accountants ("Independent Accountants") for purposes of preparing and delivering
the reports required by Section 3.3. It is hereby acknowledged that the
accounting firm of Deloitte & Touche LLP is acceptable for purposes of serving
as Independent Accountants. The Issuer may not remove the Independent
Accountants without first giving 90 days prior written notice to the Independent
Accountants, with a copy of such notice also given concurrently to the Indenture
Trustee, the Insurer and the Servicer. Upon any resignation by such firm or
removal of such firm, the Issuer shall promptly appoint, by Issuer order
delivered to the Indenture Trustee, a successor thereto that shall also be a
firm of independent accountants of recognized national reputation to serve as
the Independent Accountants hereunder. If the Issuer shall fail to appoint a
successor to a firm of Independent Accountants which has resigned or been
removed within 30 days after the effective date of such resignation or removal,
the Controlling Party shall promptly appoint a successor firm of independent
accountants of recognized national reputation reasonably satisfactory to the
Indenture Trustee to serve as the Independent Accountants hereunder. The fees of
such Independent Accountants and its successor shall be payable by the Servicer,
and any fees not so paid by the Servicer shall be paid by the Indenture Trustee
on behalf of the Servicer, subject to the Indenture Trustee's right of
reimbursement therefor pursuant to the Indenture.
SECTION 3.3 Annual Accountants' Reports. On or before 120 days
after (A) for each fiscal year from the Closing Date through and including
fiscal year 2003, each of (i) the end of each fiscal June and (ii) the end of
each fiscal year, and (B) for each fiscal year thereafter, the end of each
fiscal year, the Servicer shall deliver to the Issuer, the Indenture Trustee,
the Insurer and the Rating Agencies a separate report, prepared by the
Independent Accountants, to the effect that their examination (i) was made in
accordance with generally accepted auditing standards and accordingly included
such tests of the accounting records and such other auditing procedures as they
considered necessary in the circumstances and (ii) included, if applicable,
certain agreed-upon procedures in accordance with standards established by the
American Institute of Certified Public Accountants, relating to the servicing of
the Franchise Assets based on procedures determined by the Insurer, and if the
Insurer is no longer the Controlling Party, the Indenture Trustee, to assist the
Controlling Party in determining that such servicing has been conducted in
compliance with this Agreement. The nature, scope and design of the procedures,
will not constitute an audit made in accordance with generally accepted auditing
standards, the objective of which is the issuance of an opinion.
SECTION 3.4 Available Information. The Servicer shall make
available on behalf of the Issuer the information requested by prospective
purchasers necessary to satisfy the requirements of Rule 144A under the 1933 Act
and the Investment Company Act of 1940, as amended. For as long as the Notes are
outstanding, copies of the following items shall be available to holders and
prospective purchasers of Notes upon request to the Servicer:
(a) all Monthly Servicer's Certificates and Quarterly
Servicer's Certificates delivered to the Indenture Trustee since the initial
issuance of the Notes; and
(b) All accountants' reports delivered or caused to be
delivered by the Servicer to the Indenture Trustee pursuant to this Agreement
since the initial issuance of the Notes.
Upon request, the Servicer shall make available, upon
reasonable advance notice and at the expense of the requesting party, copies of
the above items to any direct or beneficial holder of Notes and to prospective
transferees of Notes; provided that the Servicer shall require (a) in the case
of a direct or beneficial holder of Notes, a confirmation executed by the
requesting party generally to the effect that such party is a direct or
beneficial holder of Notes, as applicable, is requesting the information solely
for use in evaluating such party's investment in the Notes and will otherwise
keep such information confidential and (b) in the case of a prospective
transferee, the designation of the requesting party as a prospective transferee
by a Noteholder and a confirmation executed by the requesting party generally to
the effect that such party is a prospective transferee of Notes, is requesting
the information solely for use in evaluating a possible investment in Notes,
will otherwise keep such information confidential and that such party is
eligible to purchase the Notes based on the transfer restrictions set forth in
Section 2.05 of the Indenture.
ARTICLE 4
THE SERVICER
SECTION 4.1 Representations and Warranties Concerning the
Servicer. The Servicer represents and warrants to the Issuer and the Indenture
Trustee, effective as of the Closing Date, as follows:
(a) Organization and Good Standing. The Servicer has been
duly organized and is validly existing and in good standing under the laws of
the state of its formation and organization, has qualified to do business and is
in good standing in each jurisdiction where the character of its properties or
the nature of its activities makes such qualification necessary and where
failure to so qualify would have a material and adverse effect on its ability to
perform its obligations hereunder, and has full power, authority and legal right
to own its property, to carry on its business as presently conducted, and to
enter into and perform its obligations under this Agreement.
(b) Power and Authority; No Conflicts. The execution and
delivery by the Servicer of this Agreement and its performance of, and
compliance with, the terms hereof are within the power of the Servicer and have
been duly authorized by all necessary corporate action on the part of the
Servicer. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated to be consummated by the
Servicer, nor compliance with the provisions hereof, will conflict with or
result in a material breach of, or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, any of the
provisions of any law, governmental rule, regulation, judgment, decree or order
binding on the Servicer or its properties or the charter or bylaws or other
organizational documents and agreements of the Servicer, or any of the
provisions of any indenture, mortgage, leases, contract or other instrument to
which the Servicer is a party or by which it or its property is bound or result
in the creation or imposition of any material lien, charge or encumbrance upon
any of its property pursuant to the terms of any such indenture, mortgage,
leases, contract or other instrument.
(c) Consents. Except for registrations as a franchise broker
or franchise sales agent as may be required under state franchise statutes and
regulations, the Servicer is not required to obtain the consent of any other
party or the consent, license, approval or authorization, or registration or
declaration with, any governmental authority, bureau or agency in connection
with the execution, delivery or performance by the Servicer of this Agreement,
or the validity or enforceability of this Agreement against the Servicer.
(d) Due Execution and Delivery. This Agreement has been
duly executed and delivered by the Servicer and constitutes a legal, valid and
binding instrument enforceable against the Servicer in accordance with its terms
(subject to applicable Insolvency Laws and to general principles of equity).
(e) No Litigation. There are no actions, suits,
investigations or proceedings pending or, to the knowledge of the Servicer,
threatened against or affecting the Servicer, before or by any court,
administrative agency, arbitrator or governmental body with respect to the
Servicer or any of the transactions contemplated by this Agreement or the
Indenture (i) asserting the illegality, invalidity or unenforceability, or
seeking any determination or ruling that would affect the legality,
binding effect, validity or enforceability of this Agreement or (ii) which
could reasonably be expected to materially and adversely affect it or its
business, assets, operations or condition, financial or otherwise, or the
Servicer's ability to perform its obligations under this Agreement. The
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially and
adversely affect the consummation of the transactions or performance by the
Servicer contemplated by this Agreement or the Indenture.
(f) Due Qualification. Except for registrations as a
franchise broker or franchise sales agent as may be required under state
franchise statutes and regulations, the Servicer has obtained or made all
material licenses, registrations, consents, approvals, waivers and
notifications of creditors, lessors and other persons, in each case, in
connection with the execution and delivery of this Agreement by the Servicer,
and the consummation by the Servicer of all the transactions herein
contemplated to be consummated by the Servicer and the performance of its
obligations hereunder.
(g) No Default. The Servicer is not in default under any
agreement, contract, instrument or indenture to which the Servicer is a party or
by which it or its properties is or are bound, or with respect to any order of
any court, administrative agency, arbitrator or governmental body, which would
have a material adverse effect on the transactions contemplated hereunder; and
no event has occurred which with notice or lapse of time or both would
constitute such a material default with respect to any such agreement, contract,
instrument or indenture, or with respect to any such order of any court,
administrative agency, arbitrator or governmental body.
(h) Taxes. The Servicer has filed or caused to be filed all
material tax returns which, to its knowledge, are required to be filed. The
Servicer has paid or made adequate provisions for the payment of all taxes
shown as due on such returns, and all assessments made against it or any of
its property (other than any amount of tax the validity of which is currently
being contested in good faith by appropriate proceedings and with
respect to which reserves in accordance with GAAP have been provided on
the books of the Servicer). The charges, accruals and reserves on the
Servicer's books in respect of taxes are, in the Servicer's opinion, adequate.
(i) Accuracy of Information. The information contained in
the Offering Circular regarding (i) the American Servicer, (ii) the servicing of
the Franchise Assets by the American Servicer and (iii) the description of this
Agreement therein does not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(j) Pension and Welfare Plans. During the twelve-
consecutive-month period prior to the date of the execution and delivery of this
Agreement, no steps have been taken by the Servicer to terminate any Pension
Plan of the Servicer, and no contribution failure has occurred with respect to
any such Pension Plan sufficient to give rise to a lien under section 302(f) of
ERISA. No condition exists or event or transaction has occurred with respect to
any Pension Plan which might result in the incurrence by the Servicer or any
member of the Controlled Group of any liability, fine or penalty which could
reasonably be expected to have a material adverse effect on the Servicer's
ability to perform its obligations hereunder. Neither the Servicer nor any
member of the Controlled Group has any contingent liability with respect to any
post-retirement medical benefits under a Welfare Plan, other than (i) liability
for continuation coverage described in Part 6 of Subtitle B of Title I of ERISA
or other applicable continuation of coverage laws or (ii) liabilities for
unfunded medical and death benefits for a limited number of retired employees
which could not reasonably be expected to have a material adverse effect on the
Servicer's ability to perform its obligations under this Agreement.
(k) Environmental Matters.
(i) As of the date hereof, the Servicer (A) is in
compliance with any and all applicable foreign, federal, state and local laws
and regulations, and directives of any Governmental Authority relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws"), (B) has
received and will have in full force and effect all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct its
businesses and (C) is in compliance with all terms and conditions of any such
permit, license or approval, except where such noncompliance with Environmental
Laws, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or
approvals would not, singly or in the aggregate, have a Material Adverse Effect
on the Servicer.
(ii) As of the date hereof there are no costs or
liabilities associated with Environmental Laws (including, without limitation,
any capital or operating expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or any permit, license or
approval, any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate, have a
Material Adverse Effect on the Servicer.
SECTION 4.2 Existence; Status as the Servicer. The Servicer
shall keep in full effect its existence, rights and franchises under the laws of
the state of its formation and organization, and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability by the Servicer
of the Franchise Assets and this Agreement or to perform its obligations
hereunder.
SECTION 4.3 Performance of Obligations.
(a) Performance of Obligations. The Servicer shall
punctually perform and observe all of its obligations and agreements contained
in this Agreement in accordance with the terms hereof and as contemplated by the
Servicing Standard.
(b) Limitations of Responsibility of the Servicer. The
Servicer will have no responsibility under this Agreement other than to render
the services called for hereunder in good faith and consistent with the
Servicing Standard. The Servicer, its affiliates, its directors, officers,
shareholders and employees will not be liable to the Issuer, the Insurer, the
Issuer Trustee, the Indenture Trustee, the Noteholders or others, except by
reason of acts constituting willful misconduct or negligence in the performance
of its duties hereunder.
(c) Right to Receive Instructions. In the event that the
Servicer is unable to decide between alternative courses of action, or is unsure
as to the application of any provision of this Agreement or any Transaction
Document, or any such provision is, in the good faith judgment of the Servicer,
ambiguous as to its application, or is, or appears to be, in conflict with any
other applicable provision, or in the event that this Agreement or any
Transaction Document permits any determination by the Servicer or is silent or
is incomplete as to the course of action which the Servicer is required to take
with respect to a particular set of facts, the Servicer may give notice (in such
form as shall be appropriate under the circumstances) to the Indenture Trustee
and the Issuer Trustee requesting instructions in accordance with the Indenture
and Trust Agreement and, to the extent that the Servicer shall have acted or
refrained from acting in good faith in accordance with any such instructions
received from the Indenture Trustee and the Issuer Trustee (except where the
Servicer is acting for the Issuer Trustee pursuant to Section 2.4 or the Issuer
Trustee is acting at the direction of an Affiliate of the Servicer), the
Servicer shall not be liable on account of such action or inaction to any
Person. Subject to the Servicing Standard, if the Servicer shall not have
received appropriate instructions from both the Indenture Trustee and
the Issuer Trustee within ten days of such notice (or within such shorter
period of time as may be specified in such notice) the Servicer may, but
shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Transaction Documents, as the Servicer
shall deem to be in the best interests of the Indenture Trustee and the Issuer,
and the Servicer shall have no liability to any Person for such action or
inaction except for the Servicer's own willful misconduct or negligence.
(d) No Duties Except as Specified in this Agreement or in
Instructions. The Servicer shall not have any duty or obligation to manage, make
any payment in respect of, register, record, sell, reinvest, dispose of, create,
perfect or maintain title to or any security interest in, or otherwise deal with
the Trust Estate, to prepare or file any report or other document, or to
otherwise take or refrain from taking any action under, or in connection with,
any document contemplated hereby to which the Servicer is a party, except as
expressly provided by the terms of this Agreement and consistent with the
Servicing Standard, and no implied duties or obligations shall be read into this
Agreement against the Servicer. The Servicer nevertheless agrees that it will,
at its own cost and expense, promptly take all action as may be necessary to
discharge any valid liens on any part of the Trust Estate which result from
valid claims against the Servicer personally that are not related to the
ownership or the administration of the Trust Estate (as defined in the Trust
Agreement) or the transactions contemplated by the Transaction Documents.
(e) No Action Except Under Specified Documents or
Instructions. The Servicer shall not manage, control, use, sell, reinvest,
dispose of or otherwise deal with any part of the Trust Estate except (1) in
accordance with the powers granted to, and the authority conferred upon, the
Servicer pursuant to this Agreement, or (2) in accordance with instructions
delivered to the Servicer pursuant hereto.
(f) Limitations on the Servicer Liability. Subject to the
Servicing Standard, and except for the Servicer's own willful misconduct or
negligence, the Servicer shall not be personally liable under any circumstances,
including, without limitation:
(1) for any error of judgment made in the absence of
negligence;
(2) for any action taken or omitted to be taken by the
Servicer in good faith in accordance with the
instructions of the Indenture Trustee and Issuer
Trustee (except where the Servicer is acting for the
Issuer Trustee pursuant to Section 2.4 or the Issuer
Trustee is acting at the direction of an Affiliate
of the Servicer) made in accordance herewith;
(3) for any representation, warranty, covenant,
agreement or indebtedness of the Issuer under the
Notes or any Transaction Document (other than for
the performance by the Servicer of the Issuer's
duties pursuant to Section 2.4 of this Agreement),
or for any other liability or obligation of the
Issuer;
(4) for or in respect of the validity or sufficiency of
this Agreement or for the due execution hereof by any
party hereto other than the Servicer, or for the
form, character, genuineness, sufficiency, value or
validity of any part of the Trust Estate, or for or
in respect of the validity or sufficiency of the
Transaction Documents; and
(5) for any action or inaction of the Indenture Trustee
or the performance of, or the supervision of the
performance of, any obligation under this Agreement
or any Transaction Document that is required to be
performed by the Indenture Trustee or the Issuer
Trustee (except as performed by the Servicer
pursuant to Section 2.4 hereof) under any
Transaction Document.
(g) No provision of this Agreement (other than the last
sentence of paragraph (d) above) shall require the Servicer to expend or risk
its personal funds or otherwise incur any financial liability in the performance
of any of its rights or powers hereunder, if the Servicer shall have reasonable
grounds for believing that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it.
Notwithstanding the foregoing, the Servicer shall be obligated to perform its
obligations hereunder, consistent with the Servicing Standard, notwithstanding
the fact that the Servicer may not be entitled to be reimbursed for all of its
expenses incurred in connection with its obligations hereunder as a result of
the application of any limit on amounts payable pursuant to the definition of
Servicing Fee.
(h) Reliance. The Servicer may conclusively rely on, and
shall be protected in acting or refraining from acting when doing so, in each
case in accordance with any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper
party or parties. The Servicer may accept a certified copy of a resolution
of the board of directors or other governing body of any corporate party
as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter
the manner or ascertainment of which is not specifically prescribed herein, the
Servicer may for all purposes hereof rely on a certificate, signed by the
president or any vice president or by the treasurer or any assistant treasurer
or the secretary or any assistant secretary of the relevant party, as to such
fact or matter, and such certificate shall constitute full protection to the
Servicer for any action taken or omitted to be taken by it in good faith in
reliance thereon.
(i) Consultations with Third Parties; Advice of Counsel. In
the exercise and performance of its duties and obligations hereunder or under
any of the Transaction Documents, the Servicer (i) may act directly or through
agents (in compliance with Section 4.4(b) and any other requirement hereunder)
or attorneys pursuant to agreements entered into with any of them and (ii) may,
at the expense of the Servicer, consult with counsel, accountants and other
professionals or experts selected and monitored by the Servicer in the absence
of negligence, and the Servicer shall not be liable for anything done, suffered
or omitted in good faith by it in accordance with the advice or opinion of any
such counsel, accountants or other professionals or experts.
(j) Independent Contractor. In performing its obligations as
servicer hereunder the Servicer acts solely as an independent contractor of the
Issuer. Nothing in this Agreement shall, or shall be deemed to, create or
constitute any joint venture, partnership, employment, or any other relationship
between the Issuer on the one hand, and the Servicer on the other hand, other
than the independent contractor contractual relationship established hereby. The
Servicer shall not be and shall not be deemed to be liable for any acts or
obligations of the Issuer (except as performed or required to be performed by
the Servicer pursuant to Section 2.4 hereof), the Insurer or the Indenture
Trustee and, without limiting the foregoing, the Servicer shall not be liable
under or in connection with the Notes. The Servicer shall not be responsible for
any amounts required to be paid by the Indenture Trustee under or pursuant to
the Indenture.
SECTION 4.4 Merger; Resignation and Assignment.
(a) Preservation of Existence. The Servicer may not merge
into any corporation or convey, transfer or lease substantially all of its
assets, unless and until (i) the Servicer's successor or a new servicer is
willing to service the Franchise Assets and enter into a servicing agreement
with the Issuer and Indenture Trustee in form and substance substantially
similar to this Agreement; (ii) the Controlling Party has consented to such
successor in its reasonable discretion and (iii) the Rating Agencies confirm
that the selection of such successor or new servicer, in and of itself, will not
result in the downgrading of any rating assigned to the Notes by the Rating
Agencies. Notwithstanding anything to the contrary contained in this Section
4.4(a), the Servicer shall be permitted to reorganize its corporate form
from a corporation to a limited liability company without having to satisfy any
of the requirements of the preceding sentence.
(b) Resignation; Subservicing. The Servicer may resign or
engage any other Person as subservicer to perform the Servicer 's duties
hereunder, or assign this Agreement to any other Person; provided that no
subservicing arrangement, assignment or resignation shall be effective unless
and until (i) it receives the consent of the Controlling Party in its reasonable
discretion; (ii) a subservicer or successor servicer selected by the Controlling
Party executes and delivers an agreement to perform and observe, or in the case
of an assignment, an assumption by such successor entity of the due and punctual
performance and observance of, each covenant and condition to be performed or
observed by the Servicer under this Agreement; and (iii) the Rating Agencies
confirm that such servicing or subservicing agreement, or assignment and
assumption by such new servicer, in and of itself, will not result in the
downgrading of any rating assigned to the Notes. From and after such
effectiveness, the subservicer or successor servicer shall be, to the extent of
the subservicing arrangement or assignment, "the Servicer" hereunder. Except as
provided in the first sentence of this Section 4.4(b), the Servicer may not
assign this Agreement or any of its rights, powers, duties or obligations
hereunder.
(c) Term of Agreement. Except as provided in
Sections 4.4(a) and (b), the duties and obligations of the Servicer under this
Agreement shall continue until this Agreement shall have been terminated as
provided in Section 6.1, and shall survive the exercise by the Issuer or the
Indenture Trustee of any right or remedy under this Agreement, or the
enforcement by the Issuer, the Indenture Trustee, or any Noteholder of any
provision of the Indenture, the Notes or this Agreement.
SECTION 4.5 Certain Covenants of the Servicer.
(a) Indebtedness. The Servicer shall not incur Indebtedness
(including guaranties or pledges of its property) other than (i) trade debt
incurred in the ordinary course of business, (ii) debt and contingent
liabilities, in existence on the date hereof, (iii) additional debt for working
capital or capital improvements and debt incurred in connection with amounts
owed to holders of stock options issued pursuant to the Stock Option Plan, in
all cases not in excess of $10,000,000 in the aggregate outstanding at any time,
(iv) debt incurred by the Servicer from an Affiliate or a third party in
connection with any loans or capital contributions made directly or indirectly
to the Issuer to refinance or discharge the Notes in whole or, with respect to
any discharge or refinancing of the Notes in part, on a subordinated basis to
any debt outstanding to third parties having an enforceable claim against the
Servicer (the terms of which subordination shall include an express
acknowledgment and agreement that (A) such debt shall not constitute a claim
against the Servicer while the assets of the Servicer, available for application
to the satisfaction thereof after satisfaction of such other debt to third
parties, are insufficient, (B) to the extent such debt does not
constitute such a claim, such Affiliate or third party, as the case may be,
shall not exercise any legal right or remedy against the Servicer in seeking
repayment or recovery of any such amount, and (C) such Affiliate or third party,
as the case may be, for so long as the Indenture shall not have been satisfied
and discharged, shall not commence, or join any other Person in commencing, any
bankruptcy or other insolvency-related proceeding against the Servicer, and (v)
debt incurred in connection with any indemnification obligations of the
Servicer.
(b) Business Operations. The Servicer shall not to engage in
any business other than (i) the performance of its obligations under this
Agreement, (ii) the ownership and/or licensing of Arby's non-United States and
non-Canadian intellectual property to existing and future Affiliates and
franchisees, (iii) the ownership of existing non-United States and non-Canadian
Franchise Assets for a period not exceeding 60 days after the date hereof or the
assignment thereof to Arby's Brands, LLC, (iv) the ownership of Arby's Holdings,
LLC, (v) the performance of services for future and existing Affiliates (each a
"Serviced Affiliate"), pursuant to a written servicing or management services
agreement, on an arms-length basis reasonably customary in the restaurant
industry; provided that the costs to the Servicer in providing such services,
including without limitation, overhead, administrative and employee-related
expenses, shall be fairly and reasonably allocated among all such Serviced
Affiliates, (vi) the ownership of certain parcels of real property and acting as
a landlord in connection therewith as of the date hereof, (vii) the performance
of certain back-office support services to the Canadian Servicer in connection
with the Canadian Servicer's servicing of the Issuer's Franchise Assets located
in Canada and (viii) acting as "subfranchisor" of the Issuer in the State of
California.
(c) Maintenance of Separateness. Arby's covenants that:
(i) the books and records of each Subsidiary and
Serviced Affiliate will be maintained separately from those of Arby's and its
Subsidiaries;
(ii) all financial statements of Arby's and its other
Affiliates that are consolidated to include any Subsidiary or Arby's and any
Serviced Affiliate will contain detailed notes clearly stating that (A) all of
such Subsidiary's or Serviced Affiliate's respective assets are owned by such
Subsidiary or Serviced Affiliate, as the case may be, and (B) such Subsidiary
and any Serviced Affiliate is a separate entity and, if applicable, that the
respective assets of such Subsidiary or Serviced Affiliate is subject to the
claims of its respective creditors;
(iii) Arby's will observe (and shall cause each of its
Subsidiaries to observe) corporate formalities in dealing with each Subsidiary
and Serviced Affiliate;
(iv) Arby's shall not (and shall not permit any of its
Subsidiaries to) commingle its funds with any funds of any Subsidiary or
Serviced Affiliate; provided, that the foregoing shall not prohibit Arby's or
the Canadian Servicer from holding funds of a Subsidiary or Serviced Affiliate
in their respective capacity as Servicer or Canadian Servicer for such entity in
a segregated account identified for such purpose;
(v) Arby's will (and shall cause each of its
Subsidiaries to) maintain arm's length relationships with each Subsidiary and
Serviced Affiliate, and Arby's and each of its Subsidiaries will be compensated
at market rates for any services it renders or otherwise furnishes to any
Subsidiary or Serviced Affiliate, provided that the foregoing shall not apply to
dealings solely as among any Subsidiaries other than Holdings, the
Certificateholder, the Issuer and IP Holder and any Serviced Affiliates which do
not involve any of Arby's, Holdings, the Certificateholder, the Issuer or IP
Holder;
(vi) Arby's will not be, and will not hold itself out to
be, responsible for the debts of any Subsidiary or Serviced Affiliate or the
decisions or actions in respect of the daily business and affairs of any
Subsidiary or Serviced Affiliate (other than (i) in its capacity as Servicer,
licensor or servicer to a Serviced Affiliate, including, in each case, without
limitation, any indemnification obligation in connection therewith and (ii) any
indemnification obligation related to or in connection with the Transaction
Documents); and Arby's will not knowingly permit any Subsidiary or Serviced
Affiliate to hold Arby's out as responsible for the debts of any Subsidiary or
Serviced Affiliate or the decisions or actions in respect of the daily business
and affairs of any Subsidiary or Serviced Affiliate (other than, in its capacity
as Servicer, licensor or servicer to a Serviced Affiliate, including, in each
case, without limitation, any indemnification obligation in connection therewith
and (ii) any indemnification obligation related to or in connection with the
Transaction Documents); and
(vii) Upon an Authorized Officer obtaining actual
knowledge that any of the foregoing provisions in this Section 4.5(c) have been
breached or violated in any material respect, Arby's will take such actions as
may be reasonable and appropriate under the circumstances to correct and remedy
such breach or violation as soon as reasonably practicable under such
circumstances.
ARTICLE 5
DEFAULT
SECTION 5.1 Servicer Termination Events.
(a) Servicer Termination Events. Any of the following acts
or occurrences shall constitute a Servicer Termination Event by the Servicer
under this Agreement, the assertion as to the occurrence of which may be made,
and notice of which may be given, by any of the Issuer, the Indenture
Trustee or the Controlling Party (other than in the case of clause (xi) below,
the assertion of which may only be made by the Controlling Party), provided
that in the case of any such assertion made and/or notice given by either the
Indenture Trustee or the Controlling Party as to the existence of a Servicer
Termination Event (or the assertion and/or notice of an act or occurrence
which, with the lapse of any time period specified below would constitute a
Servicer Termination Event), any waiver or consent, or purported waiver or
consent, given by the Issuer to the Servicer (whether before or after any such
assertion made and/or notice given by either the Indenture Trustee or the
Controlling Party) with respect to such Servicer Termination Event (or with
respect to any provision of this Agreement or the underlying factual
circumstances relating thereto) shall be of no force or effect:
(i) any failure by the Servicer to remit to the
Lock-Box Accounts, within three Business Days of the receipt thereof,
any payments received by it in respect of the Franchise Assets;
(ii) any failure by the Servicer to provide to the
Indenture Trustee a Monthly Servicer's Certificate or a Quarterly
Servicer's Certificate within two Business Days of its due date, or
with respect to any other required report, within 30 days of its due
date;
(iii) a default by the Servicer in the due observance
of the provisions of the Servicing Agreement regarding preservation
of the Servicer's existence;
(iv) the default by the Servicer in the due
performance and observance of any other provision of the Servicing
Agreement and the continuation of such default uncured for a period of
30 days after it has been notified by the Indenture Trustee of, or
otherwise obtained knowledge of, such default, provided, however, as
long as the Servicer is diligently attempting to cure such default,
such cure period shall be extended by an additional period as may be
required to cure such default but in no event by more than an
additional 30 days;
(v) any representation, warranty or statement
of the Servicer made in the Servicing Agreement or by the Servicer in
its capacity as Servicer in any certificate, report or other writing
delivered pursuant thereto will prove to be incorrect in any material
respect as of the time when the same will have been made or deemed to
have been made or as of any other date specified in this Agreement
("breach"), provided, that if any such breach is capable of being
remedied within 30 days of the Servicer's knowledge of such breach or
receipt of notice thereof, then a Servicer Termination Event shall
occur under this clause (v) as a result of such breach if it is not
cured in all material respects by the end of such 30-day period;
(vi) the Servicer makes an assignment for the
benefit of creditors or generally fails to pay its debts as such debts
become due;
(vii) the Servicer's petition or application to any
tribunal for, or its consent to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of the Servicer, or of any substantial part of the assets of
the Servicer, or the Servicer's commencement of a voluntary case under
the Insolvency Law of the United States or any proceedings relating to
the Servicer under the Insolvency Law of any other jurisdiction;
(viii) any petition or application referred to in
clause (vi) is filed, or any proceedings referred to in clause (vi) are
commenced, against the Servicer and the Servicer by any act indicates
its approval thereof, consent thereto or acquiescence therein, or any
order, judgment or decree is entered appointing any such trustee,
receiver, custodian, liquidator or similar official, or approving the
petition in any such proceedings and such order, judgment or decree
remains unstayed and in effect for more than 60 days;
(ix) any final, non-appealable order, judgment
or decree is entered in any proceedings against the Servicer by a court
of competent jurisdiction decreeing the dissolution of the Servicer and
such order, judgment or decree remains unstayed and in effect for more
than ten days;
(x) a final non-appealable judgment for an
amount in excess of $10,000,000 (exclusive of any portion thereof which
is insured) is rendered against the Servicer by a court of competent
jurisdiction and is not paid or discharged within ten days;
(xi) (a) the Servicer shall fail to comply with the
Servicing Standard in the judgment of the Controlling Party, exercised
in a reasonable manner and (b) such failure could reasonably be
expected to have a Material Adverse Effect on the Trust Estate (not
taking into account the benefits of the Policy), as determined in good
faith by the Controlling Party;
(xii) the Debt Service Coverage Ratio is less
than or equal to 1.10x; and
(xiii) an Event of Default under the Indenture has
been declared and is continuing.
(b) Remedies. Upon the occurrence and continuance of any
Servicer Termination Event, the Controlling Party may, or the Issuer or the
Indenture Trustee may, with the consent, or at the direction, of the Controlling
Party, by notice given to the Servicer (with copies to whichever of the
Controlling Party, the Issuer or the Indenture Trustee has not given notice to
the Servicer), terminate all of the rights and powers of the Servicer under
this Agreement, including without limitation all rights of the Servicer
to receive the servicing compensation provided for in Section 2.5 or any
expense reimbursement hereunder, other than to the extent accrued prior to
such termination and not previously paid. Upon any termination or the
giving of the notice referred to in the preceding sentences, all rights,
powers, duties and responsibilities of the Servicer under this Agreement,
whether with respect to the related Franchise Documents, Collection
Account, any Servicing Fee or otherwise shall vest in and be assumed by a new
servicer as provided in Section 13.11 of the Indenture. From and during
the continuation of a Servicer Termination Event, the Controlling Party is
hereby irrevocably authorized and empowered to execute and deliver, on behalf of
the Servicer, as attorney-in-fact or otherwise, all documents and other
instruments (including any notices to Franchisees deemed necessary or advisable
by the Controlling Party), and to do or accomplish all other acts or things
necessary or appropriate, to effect such vesting and assumption.
(c) Notice of Servicer Termination Event. Promptly after the
Indenture Trustee shall have notice of the occurrence of any Servicer
Termination Event, the Indenture Trustee shall transmit by mail to all
Noteholders, the Certificateholder, the Insurer and the Rating Agencies notice
of such Servicer Termination Event.
SECTION 5.2 No Effect on Other Parties. Upon any termination
of the rights and powers of the Servicer from time to time pursuant to Section
5.1 or upon any appointment of a successor to the Servicer, all the rights,
powers, duties and obligations of the Issuer or the Indenture Trustee under this
Agreement or under the Indenture shall remain unaffected by such termination or
appointment and shall remain in full force and effect thereafter, except as
otherwise expressly provided in this Agreement or in the Indenture.
SECTION 5.3 Rights Cumulative. All rights and remedies from
time to time conferred upon or reserved to the Issuer, the Indenture Trustee,
the Insurer, Certificateholder or the Noteholders or to any or all of the
foregoing are cumulative, and none is intended to be exclusive of another or any
other right or remedy which they may have at law or in equity. Except as
otherwise expressly provided herein, no delay or omission in insisting upon the
strict observance or performance of any provision of this Agreement, or in
exercising any right or remedy, shall be construed as a waiver or relinquishment
of such provision, nor shall it impair such right or remedy. Every right and
remedy may be exercised from time to time and as often as deemed expedient.
ARTICLE 6
MISCELLANEOUS PROVISIONS
SECTION 6.1 Termination of Agreement. The respective duties
and obligations of the Servicer and the Issuer created by this Agreement shall
terminate upon the earliest to occur of (i) a Servicer Termination Event and
(ii) the latest to occur of (x) the final payment or other liquidation of the
last outstanding Franchise Asset included in the Trust Estate and (y) the
satisfaction and discharge of the Indenture pursuant to Article Four of the
Indenture. Upon termination of this Agreement pursuant to this Section 6.1, the
Servicer shall pay over to the Issuer or any other Person entitled thereto all
monies received from Franchisees and held by the Servicer. The provisions of
Section 2.7 shall survive the termination of this Agreement.
SECTION 6.2 Amendment.
(a) This Agreement may only be amended from time to time
in writing by the Issuer, the Servicer and the Indenture Trustee.
(b) Promptly after the execution of any amendment, the
Servicer shall send to the Indenture Trustee and the Insurer a conformed copy of
such amendment, but the failure to do so will not impair or affect its validity.
(c) Any amendment or modification effected contrary to the
provisions of this Section 6.2 shall be void.
SECTION 6.3 Governing Law. This Agreement shall be construed
in accordance with and governed by the laws of the State of New York, without
regard to the conflict of law provisions thereof.
In executing and delivering any amendment or modification to
this Servicing Agreement, the Indenture Trustee shall be entitled to an opinion
of counsel stating that: (i) such amendment is authorized pursuant to the
Servicing Agreement and complies therewith; (ii) such amendment shall not
adversely affect the interests of the Noteholders in any material respect; and
(iii) all conditions precedent to the execution, delivery and performance of
such amendment shall have been satisfied in full. The Indenture Trustee may, but
shall have no obligation to, execute and deliver any amendment or modification
which would affect its duties, powers, rights, immunities or indemnities
hereunder.
SECTION 6.4 Notices. All notices, requests or other
communications desired or required to be given under this Agreement shall be in
writing and shall be sent by (a) certified or registered mail, return receipt
requested, postage prepaid, (b) national prepaid overnight delivery service, (c)
telecopy or other facsimile transmission (following with hard copies to be sent
by national prepaid overnight delivery service) or (d) personal delivery
with receipt acknowledged in writing, as follows:
(1) if to the Servicer:
Arby's, Inc.
0000 Xxxxxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000;
copy to:
Triarc Companies, Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
(2) if to the Issuer:
Arby's Franchise Trust
0000 Xxxxxxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: General Counsel
Facsimile: (000) 000-0000;
(3) if to the Indenture Trustee;
BNY Midwest Trust Company,
a Bank of New York Company
0 Xxxxx XxXxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust
Administration; and
(4) if to the Insurer:
Ambac Assurance Corporation
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Risk Management
Structured Finance
and Credit Derivatives
Arby's Franchise Trust 7.44% Fixed
Rate Insured Notes due
December 20, 2020
Facsimile: (000) 000-0000
Any of the persons in subclauses (1) through (4) above may change its address
for notices hereunder by giving notice of such change to the other persons. Any
change of address of a Noteholder shown on a Note Register shall, after the date
of such change, be effective to change the address for such Noteholder
hereunder. All notices and demands shall be deemed to have been given either at
the time of the delivery thereof to any officer or manager of the Person
entitled to receive such notices and demands at the address of such person for
notices hereunder, or on the third day after the mailing thereof to such
address, as the case may be.
SECTION 6.5 Severability of Provisions. If one or more of the
provisions of this Agreement shall be for any reason whatever held invalid or
unenforceable, such provisions shall be deemed severable from the remaining
covenants, agreements and provisions of this Agreement and such invalidity or
unenforceability shall in no way affect the validity or enforceability of such
remaining provisions, the rights of any parties hereto. To the extent permitted
by law, the parties hereto waive any provision of law which renders any
provision of this Agreement invalid or unenforceable in any respect.
SECTION 6.6 Delivery Dates. If the due date of any notice,
certificate or report required to be delivered by the Servicer hereunder falls
on a day that is not a Business Day, the due date for such notice, certificate
or report shall be automatically extended to the next succeeding day that is a
Business Day.
SECTION 6.7 Binding Effect; Limited Rights of Others. The
provisions of this Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the parties hereto, provided, however,
the provisions of this Agreement that inure directly or indirectly to the
benefit of the Insurer and the Indenture Trustee shall be expressly limited to
Sections 2.5, 2.7, 5.1 and 5.3 hereof and the provision of this Agreement that
inures to the benefit of the Principal Reinsurer shall be expressly limited to
Section 2.7 hereof, and the right of the Indenture Trustee or the Insurer, as
the case may be, to receive any notice or provide or withhold any consent
specifically intended by this Agreement for the benefit of each such party.
Except as provided in the preceding sentence, nothing in this Agreement
expressed or implied, shall be construed to give any Person other than the
parties hereto any legal or equitable right, remedy or claim under or in
respect of this Agreement or any covenants, agreements, representations or
provisions contained herein.
SECTION 6.8 Limitation of Liability of Wilmington Trust
Company and the Certificateholder. It is expressly understood and agreed by the
parties hereto that (a) this Agreement is executed and delivered by the Issuer,
a special purpose Delaware business trust created under the Trust Agreement, in
the exercise of the powers and authority conferred on, and vested in, it (b) the
representations, undertakings and agreements herein made on the part of the
Issuer are made and intended not as personal representations, undertakings and
agreements by Wilmington Trust Company or the Certificateholder but are made and
intended for the purpose of binding only the Issuer, (c) nothing herein
contained shall be construed as creating any liability on Wilmington Trust
Company, or the Certificateholder, individually or personally, to perform any
covenant either expressed or implied contained herein, all such liability, if
any, being expressly waived by the parties hereto, and (d) under no
circumstances shall Wilmington Trust Company or the Certificateholder be
personally liable for the payment of any indebtedness or expenses of the Issuer
or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Issuer under this Agreement.
SECTION 6.9 Article and Section Headings. The Article and
Section headings herein are for convenience of reference only, and shall not
limit or otherwise affect the meaning hereof.
SECTION 6.10 Concerning the Indenture Trustee. In acting under
this Agreement, the Indenture Trustee shall be afforded the rights, privileges,
immunities and indemnities set forth in the Indenture as if fully set forth
herein.
SECTION 6.11 Counterparts. This Agreement may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Servicing Agreement to be duly executed by their respective officers thereunto
duly authorized as of the day and year first above written.
ARBY'S FRANCHISE TRUST
By: Wilmington Trust Company, not in its
individual capacity but solely as
Issuer Trustee
By: W. XXXXX XXXXXXXXXX
------------------------------------
Name: W. Xxxxx Xxxxxxxxxx
Title: Assistant Vice President
ARBY'S, INC.
By: XXXXXX X. XXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President
BNY MIDWEST TRUST COMPANY, A BANK OF
NEW YORK COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By: XXXXX XXXXXXX
---------------------------------
Name: Xxxxx Xxxxxxx
Title: Assistant Vice President
EXHIBIT A
DUTIES OF THE SERVICER
Pre-Opening Services.
Prior to the opening of an Arby's(R) branded Restaurant
located in the United States, the Servicer will:
(A) (i) Designate a geographical area in which the
prospective Franchisee may select a proposed
Restaurant location for approval;
(ii) Offer counseling and advice in Restaurant site
selection;
(iii) Review and accept or reject the proposed site;
(iv) Provide a brief overview of the System and the
administrative and corporate support provided by
the Servicer; and
(v) Provide an operational training program conducted
at a certified training location.
(B) with respect to Arby's(R) branded Restaurants located in
the United States and Canada:
(i) Provide generic plans for the approved
building, including specifications for
equipment, fixtures, furnishings and signs,
and review for approval or rejection the
proposed building and equipment plans;
(ii) On behalf of the Issuer, arrange for the
Issuer to execute and deliver a Franchise
Agreement to the proposed Franchisee upon
payment of all required fees and performance
of all required obligations by the proposed
Franchisee;
(iii) Provide specifications and names of approved
suppliers for opening inventory, supplies
and related materials;
Post-Opening Services.
Following the opening of an Arby's(R) branded Restaurant
located in the United States by a Franchisee, the Servicer will provide to such
Franchisee a copy of the Arby's Operating Standards Manual and supplementary
materials, as issued and revised from time to time by the Servicer. The Servicer
also will consider for approval new specifications and suppliers as requested by
Franchisees from time to time.
Other Functions To Be Performed by the Franchisor Under the Servicing Agreement.
The Servicer has agreed to perform the following services,
subject to the Servicing Standard, that are not required by the Franchise
Agreements, but that are essential functions for any company engaged in
operating a franchise business. These functions include:
(A) With respect to Franchise Agreements related to
Arby's(R) branded Restaurants located in the United
States and Canada:
(i) Fulfilling the obligations of the Issuer in
its capacity as Licensee under the License
Agreement.
(ii) Preparation and filing of Franchise Offering
Circulars to comply with applicable federal
and state laws;
(iii) Preparation of Franchise Agreements and
appropriate documentation of franchise
transfers, terminations, renewals, site
relocations and ownership changes;
(iv) Providing legal services with respect to the
enforcement of the Franchise Agreements,
MDAs and LOAs of the Issuer;
(v) Providing accounting and financial reporting
services;
(vi) Providing quality control services with
respect to the promulgation and maintenance
of standards for food, equipment, suppliers
and distributors;
(vii) Providing legal services with respect to
the protection of trademarks used by the
Issuer in its franchise business;
(viii) Assisting the Issuer in complying with
franchise industry-specific government
regulation and applicable laws; and
(ix) Providing notice as specified in Sections 7
and 12 of the License Agreement, on behalf
of the Issuer in its capacity as
Licensee under the License Agreement, to the
IP Holder, in its capacity as Licensor under
the License Agreement, upon obtaining actual
knowledge of a breach by the IP Holder of
its obligations under Sections 7 and 12 of
the License Agreement.
(B) With respect to Franchise Agreements related to
Arby's(R) branded Restaurants located in the United
States:
(i) Monitoring industry conditions;
(ii) Formulating a strategy for the System and
utilizing commercially reasonable efforts
to implement such strategy;
(iii) Supporting the development of new products
and increased brand awareness; and
(iv) Using commercially reasonable efforts to
expand the System on a profitable basis.
