Exhibit 10.9


 


AGREEMENT 

DAVCO RESTAURANTS, INC.


 


December 18, 1997


 


This Agreement
(the “Agreement”) between DavCo Restaurants, Inc. (“DRI”) and Coca-Cola USA
Fountain (“CCF”), an operating unit of The Coca-Cola Company, sets forth the
terms and conditions of certain programs related to the availability and
marketing of CCF’s Fountain Beverages in restaurants and other outlets owned or
operated by DRI or its subsidiaries.


 


SCOPE OF AGREEMENT


 


This Agreement
will apply to all outlets where Fountain Beverages are served that are owned or
operated by:


 


•                                          DRI,


 


•                                          its
current subsidiaries (namely, Midwest DavCo Food, Inc. (“MDF”), Southern
Hospitality Corporation (“SHC”), and FriendCo Restaurants, Inc. (“FriendCo”)),
and


 


•                                          subsidiaries
formed or acquired by DRI after this Agreement is signed,


 


including any
such outlets that are opened or acquired by DRI or any of its current or future
subsidiaries (collectively, the “Subsidiaries”) after this Agreement is signed.
All outlets to which this Agreement applies are referred to as “Covered
Outlets.” This Agreement will not apply to any outlets outside the fifty United
States and may not be assigned to a third party without CCF’s approval.


 


Unless
specifically stated otherwise in the program descriptions, the programs described
in this Agreement are in addition to those made available (i) to DRI, MDF and
SHC pursuant to their respective Wendy’s Franchisee Marketing Agreements with
CCF, (the “Wendy’s Franchisee Agreement”) and (ii) to FriendCo pursuant to its
Marketing Agreement with CCF, all of which have the same date as this
Agreement.


 


TERM


 


The term of
this Agreement began January 1, 1997 and will continue through December 31,
2004 or until DRI and the Subsidiaries have purchased the Volume Commitment of
CCF’s Fountain Syrups, whichever occurs last. When used in this Agreement, the
term “Year” means each calendar year during the Term.


 


DEFINITIONS


 


“Beverages”
means all soft drinks and other non-alcoholic flavored waters, punches and
ades, whether carbonated or non-carbonated, but does not include tea, brewed
coffee, juices, juice


 

















 


containing
drinks, sports drinks, frozen beverages, unflavored carbonated and
non-carbonated water and dairy beverages (the “Excluded Beverages”).


 


“Fountain
Beverages” are those Beverages that are dispensed from post-mix or pre-mix
Beverage dispensers, bubblers, or similar equipment.


 


“Competitive
Beverages” and “Competitive Fountain Beverages” mean, respectively, any
Beverage or Fountain Beverage that is not marketed under a brand name or
trademark owned by or licensed for use to The Coca-Cola Company.


 


“Fountain
Syrup” means the post-mix syrup used to prepare Fountain Beverages, but does
not include other forms of concentrate or syrup for frozen Beverages that is
purchased from a full service supplier of frozen Beverages to which CCF
provides marketing funds.


 


BEVERAGE AVAILABILITY


 


DRI will serve
in its Covered Outlets and will cause the Subsidiaries to serve in their
Covered Outlets a core brand set of Fountain Beverages that consists of
Coca-Cola® classic, diet Coke® and Sprite®, and the remaining products will be
jointly selected by DRI and CCF.  CCF’s
Fountain Beverages will be the only Fountain Beverages served in the Covered
Outlets.


 


DRI agrees
that if it should, during the Term, consider the possibility of selling
Beverages packaged in bottles or cans or any Excluded Beverage in Fountain or
frozen form or in bottles or cans, it will allow The Coca-Cola Company the
opportunity to present to it a program regarding the sale and marketing of such
beverages prior to any similar presentation by any other potential supplier.
Further, DRI agrees that, during the Term, it will not enter into a contract
regarding the sale and/or marketing of such beverages with a third party upon
terms and conditions more favorable to such third party than those offered to
The Coca-Cola Company.


 


DRI currently
anticipates the acquisition of Exxon convenience/petroleum outlets and/or “dual
concept” Exxon/Wendy’s outlets located in the mid-Atlantic region of the U.S.
DRI agrees that any such outlets will be considered Covered Outlets for
purposes of this Agreement and agrees further that CCF’s Fountain Beverages
will be the only Fountain Beverages served in such outlets.


 


VOLUME COMMITMENT


 


DRI agrees
that the Covered Outlets will purchase [ * ] gallons of CCF’s Fountain Syrup
during the Term (the “Volume Commitment”). This Term Volume Commitment will be
increased by CCF if DRI or any Subsidiary acquires, after the execution of this
Agreement, additional Covered Outlets to which this Agreement will apply.


 


MARKETING PROGRAM


 


The following
marketing programs will be provided to assist DRI and the Subsidiaries in
promoting the sale of CCF’s Fountain Beverages in the Covered Outlets:


 


2

















 


Research and Testing
Fund.


 


Research and Testing Funds in the maximum amount of $ [ * ] will be
provided to support mutually agreed upon research and testing programs that
relate to the sale of Fountain Beverages in the Covered Outlets. Funding will
be paid to DRI as approved expenses are incurred. CCF currently anticipates
that funds will be used according to the following schedule:


 


	
  Year

  	
   

  	
  Amount

  	
   

  
	
  1997

  	
   

  	
  [ * ]

  	
   

  
	
  1998

  	
   

  	
   

  	
   

  
	
  1999

  	
   

  	
   

  	
   

  
	
  2000

  	
   

  	
   

  	
   

  
	
  2001

  	
   

  	
   

  	
   

  
	
  2002

  	
   

  	
   

  	
   

  
	
  2003

  	
   

  	
   

  	
   

  
	
  2004

  	
   

  	
   

  	
   

  



 


Mr. PiBB® Incentive
Program.


 


Beginning in Year Two, the Covered Outlets. will be eligible to
participate in CCF’s Mr. PiBB® “Buy 10, Get One Free” Incentive Program.
For every ten (10) Bag-in-Box containers of Mr. PiBB® Fountain Syrup purchased,
CCF will reimburse DRI or the applicable Subsidiary for its cost of purchasing
the eleventh Bag-in-Box container of Mr. PiBB®. Such payments will be made
semiannually and will be based on CCF’s then-current published chain account
price list, which is subject to change from time to time, less a discount of
two percent (2%) and less the amount of Marketing Allowances (as defined in the
Wendy’s Franchisee Agreements and FriendCo’s Marketing Agreement) paid by CCF
in connection with DRI’s or a Subsidiary’s purchase of such eleventh Bag-in-Box
container.


 


Mr. PiBB® Brand
Development Fund.


 


In Year Two only, CCF will provide funding of up to $ [ * ] for each
Covered Outlet operated under the Wendy’s or Friendly’s tradestyles which, as
of April 1, 1998, serves Mr. PiBB®. This fund is provided to offset the cost of
developing and implementing promotional programs featuring Mr. PiBB®.  To qualify for funding, DRI and the
applicable Subsidiaries must perform certain mutually agreed upon brand
development activities which may include, without limitation, crew incentive
programs and the development and continuous utilization of customized
merchandising for Mr. PiBB®. Funding will be paid to DRI or its designee as
expenses for agreed upon activities are incurred.


 


Lemonade Brand Development
Fund.


 


In Year Two only, CCF will provide to DRI funds in the maximum amount
of $ [ * ] to support the introduction of Original Style Lemonade from the
Makers of Minute Maid® (“MMOSL”) throughout the Covered Outlets. To qualify for
funding, DRI and the Subsidiaries must introduce MMOSL in all Covered Outlets
and perform certain


 


3

















 


mutually agreed upon brand development activities which may include,
without limitation, crew incentive programs and other promotional activities
designed to increase consumer awareness of MMOSL and the development and
continuous utilization of customized merchandising for MMOSL. Funding will be
paid to DRI or its designee as expenses for agreed upon activities are incurred.


 


Supplemental Funding.


 


[ * ]


 


Merchandising Fund.


 


CCF will provide $ [ * ] to support DRI’s and SHC’s development and
purchase of mutually agreed upon merchandising materials featuring CCF’s
trademarks and logos during 1997 and 1998. These materials may include, without
limitation, illuminated pick-up window banner stands and illuminated Fountain
Beverage merchandisers. Funding will be used by CCF to pay suppliers for goods
and services utilized in connection with the development and purchase of approved
materials.


 


EQUIPMENT


 


Equipment Purchase
Options.


 


In the event DRI, SHC and MDF elect to purchase the CCF-owned Fountain
Beverage dispensing equipment which will be loaned to them for their “Wendy’s
Outlets” (i.e., any Covered Outlet operated under the Wendy’s tradestyle,
including dual concept Exxon/Wendy’s outlets) pursuant to their respective
Wendy’s Franchisee Agreements, they may purchase such equipment directly from
CCF or finance the purchase of such equipment through Coca-Cola Financial Corporation
(“CCFC”). If equipment is purchased directly through CCF, CCF will, at DRI’s or
the applicable Subsidiaries’ direction, issue an invoice for payment or deduct
the purchase price of the equipment from the first two (2) payments of
Marketing Allowances due, pursuant to the Wendy’s Franchisee Agreements, to DRI
or the applicable Subsidiary subsequent to the equipment sale.


 


Any obligation to extend credit to DRI, SHC or MDF is subject to
approval of the applicable entity’s credit and such entity’s acceptance of
CCF’s or CCFC’s then-current terms and conditions of lending.


 


CCF agrees to pass along to DRI or the applicable Subsidiary any
warranties offered by the equipment manufacturer that may be transferred to a
subsequent purchaser. However, any used equipment sold by CCF pursuant to this
Agreement will be sold subject to the provisions of the Equipment Sales
Agreement attached as Exhibit “A” hereto, ON AN “AS IS,” “WHERE IS”
BASIS, AND CCF MAKES NO GUARANTEE OR WARRANTY WHATSOEVER, INCLUDING ANY WARRANTIES
OF QUANTITY, QUALITY, CONDITION, SALABILITY, MERCHANTABILITY, OR FITNESS FOR


 


4

















 


A PARTICULAR PURPOSE. DRI acknowledges that CCF has patent or other
proprietary rights in certain dispensers, valves and/or components that may be
part of the equipment to be sold to DRI, SHC and/or MDF. Accordingly, DRI
agrees that all proprietary equipment shall be sold subject to the Proprietary
Equipment Repurchase provisions of the Equipment Sales Agreement.


 


FriendCo Equipment
Survey.


 


CCF agrees to survey all Covered Outlets owned by FriendCo and to
provide FriendCo with an evaluation of the dispensing equipment currently
installed in such outlets.


 


SERVICE PROGRAM


 


[ * ]


 


TERMINATION


 


Once this
Agreement is signed by both parties, it may be terminated before the scheduled
expiration date only in the following circumstances:


 


(i)                                     Either
party may terminate the Agreement if the other party fails to comply with a
material term or condition of this Agreement and does not remedy the failure
within ninety (90) days after receiving written notice (the “Cure Period”).
Termination will be effective thirty (30) days after the end of the Cure
Period.


 


(ii)                                  Either
party may terminate this Agreement without cause after giving twelve months’
prior written notice.


 


(iii)                               CCF
will terminate this Agreement if a controlling interest in the stock or assets
of DRI is acquired by a third party, or if there is any other transfer of a
substantial portion of the stock or assets of DRI that is not in the ordinary
course of business. This provision shall not be construed to give CCF the right
to terminate this Agreement solely because DRI becomes a privately-held
corporation or is a party to a merger in which DRI is the surviving entity.


 


If this Agreement
is terminated before its expiration date for any reason, DRI must return any
dispensing equipment owned by CCF. Additionally, unless the agreement is
terminated by CCF without cause, DRI will pay the following damages at the time
of termination:


 


(i)                                     All
prepaid but unearned funding; plus


 


(ii)                                  Interest
on such amount at the rate of one percent per month, accrued from the date the
unearned funds were paid or costs were incurred.


 


5

















 


DISPUTE RESOLUTION


 


If a dispute
arises out of or relates to this Agreement or the breach hereof, and if said
dispute cannot be settled through direct discussions, the parties agree to
attempt to settle the dispute in an amicable manner by mediation administered
by the American Arbitration Association under its Commercial Mediation Rules.
Thereafter, any unresolved controversy or claim arising out of or relating to
this Agreement, or the breach thereof, shall be settled by arbitration
administered by the American Arbitration Association in accordance with its
Commercial Arbitration Rules, and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction thereof. Any
arbitration brought under the terms of this agreement shall be conducted in the
following manner: CCF shall appoint one person as an arbitrator and DRI shall
appoint one person as an arbitrator. The two arbitrators so chosen shall select
a third impartial arbitrator within ten (10) days of the date on which the
second arbitrator is selected. If the arbitrators selected by the parties are
unable or fail to agree upon the third arbitrator, such arbitrator shall be
selected by the American Arbitration Association. The three arbitrators shall
determine all questions presented to them by majority vote. The decision of a
majority of the arbitrators shall be final and conclusive on the parties
hereto.


 


AUTHORITY


 


DRI represents
and warrants that it has the unrestricted right and is authorized to enter into
this Agreement, to receive the funding described herein, and to cause the
Covered Outlets to perform the activities required to earn such funding.


 


ACQUISITION OF SUBSIDIARIES


 


In the event
DRI divests itself of any Subsidiary, the programs described herein will not be
assignable or transferable to the party acquiring the Subsidiary and may not be
disclosed to the acquiring parry.


 


WAIVER


 


The failure by
either party to seek redress for the breach of, or to insist upon the strict
performance of, any term, clause or provision of this Agreement, shall not
constitute a waiver of such breach or performance, unless such waiver shall be
in writing and signed by the party waiving performance. Any waiver so signed
shall not constitute a waiver of any other different or subsequent breach.


 


CONFIDENTIALITY


 


Neither party
shall disclose to any third party without the prior written consent of the
other party, any information concerning this Agreement or the transactions
contemplated hereby, except for disclosure to any employees, attorneys,
accountants and consultants involved in assisting with the negotiation and
closing of the contemplated transactions, or unless such disclosure is required
by law. A party that makes a permitted disclosure must obtain assurances from
the party to whom disclosure is made that such party will keep confidential the
information disclosed.


 


6

















 


TRADEMARKS


 


Neither DRI
nor CCF shall make use of any of the other party’s trademarks or logos without
the prior written consent of that party, and all use of the other party’s
trademarks shall inure to the benefit of that party.


 


Agreed to this
18th day of December, 1997.


 


	
  COCA-COLA
  FOUNTAIN

  	
   

  	
  DAVCO
  RESTAURANTS, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Thomas M. Ludwick

  	
   

  	
  By:

  	
  /s/
  Ronald D. Kirstien

  	
   

  
	
   

  	
  Thomas M.
  Ludwick

  Vice President

  Wendy’s International Account Team

  	
   

  	
   

  	
  Ronald D.
  Kirstien

  Chairman of the Board

  	
   

  



 


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