ASSET SALE AGREEMENT
ASSET SALE AGREEMENT, dated as of February _____, 1999
(this "Agreement"), is by and among Pizza Hut of America, Inc.,
Pizza Hut of Florida, Inc., D & E Foodservice, Inc., Red Raider
Pizza Company and Romet Corp. (the "Sellers") and NPC
International, Inc. and NPC Management, Inc. (the "Buyer") and
Pizza Hut, Inc. ("PHI").
W I T N E S S E T H :
WHEREAS, the Sellers operate the 99 Pizza Hut restaurants
listed on Schedule 1.1 hereto and own or lease certain real and
personal property that they use in connection with such
restaurants; and
WHEREAS, the Sellers desire (i) to sell, convey, assign,
transfer or lease (as provided below) to the Buyer the operations
of and substantially all of the real and personal property (the
"Assets") owned by the Sellers (or any of them) and used in
connection with such restaurants and (ii) to assign or sublease
to the Buyer substantially all of the real property leased from
third parties and used in connection with such restaurants, and
the Buyer desires to acquire such restaurants and property "AS
IS, WHERE IS", with all faults (collectively, the "Acquisition"),
on the terms and subject to the conditions set forth in this
Agreement;
NOW THEREFORE, in consideration of the premises and of
the mutual covenants of the parties set forth in this Agreement,
the Sellers and the Buyer hereby agree as follows:
1. Transfer of Business and Property.
1.1 Tangible Personal Property.
Subject to the satisfaction or waiver of the conditions
set forth in this Agreement, at the Closing (as such term
is defined in Section 7), each Seller shall sell, convey,
assign, transfer and deliver to the Buyer, and the Buyer
shall purchase and acquire from such Seller, all of such
Seller's right, title and interest in and to the
following types of tangible personal property
(collectively, the "Personal Property") relating to the
Pizza Hut restaurant business (the "Business") being
conducted at the restaurants listed on Schedule 1.1
hereto (collectively, the "Restaurants") that are
operated by such Seller:
(a) all furniture, signs, fixtures and equipment located
in the Restaurants;
(b) all prepaid rents, advertising and other amounts and
all utility and miscellaneous deposits relating to the
Restaurants (subject, however, to reimbursement in
accordance with Section 7.1);
(c) all uniforms, menus, dishes, glassware, utensils and
other small wares located in the Restaurants;
(d) all inventories of usable food ingredients, packaging
materials, supplies, paper products and other consumables
and stores in the Restaurants, as well as a change fund
for each Restaurant consisting of cash in drawers and in
safes located in such Restaurant (but excluding any
deposits in safes located in such Restaurant and any
amounts in local bank accounts) in an amount and in
denominations adequate to do business at such Restaurant
on the morning after the Closing Date (as such term is
defined in Section 7) (subject, however, to reimbursement
in accordance with Section 7.1);
(e) copies of real property records relating solely to
the operations of the Restaurants, and copies of certain
personnel and payroll records relating solely to the
Hired Employees (as such term is defined in Section 5)
who worked in the Restaurants immediately prior to the
Closing; and
(f) buildings and improvements, if any, owned by any of
the Sellers located on the Leased Real Property (as such
term is defined in Section 1.3(b)).
(g) One (1) 1986 Ford F600 Truck and Hot
trailer and three (3) Hot trailers collectively
("H.O.T."), identified as follows:
(1) Vehicle identification number
0XXXX00X0XXX00000, Georgia license plate #6969JT
(Truck) and Georgia license plate #7168DD
(trailer);
(2) Title number 82714089, Florida license
plate #FIO71A;
(3) Title number 82080388, Florida license
plate #TKQ52K; and
(4) Title number 82127816,
Florida license plate #TKQ53K.
1.2 Excluded Property.
It is expressly understood and agreed that:
(a) Leased Equipment.
The Personal Property shall not include the equipment
listed or described on Schedule 1.2, which is leased by
the Sellers pursuant to lease agreements with third
parties. Subject to the relevant Seller obtaining the
necessary consents and approvals (which such Seller
agrees to use reasonable, good faith efforts to obtain,
and provided that such Seller need not pay any
consideration or incur any incremental liability to
obtain any such consent or approval), the relevant Seller
will assign and transfer to the Buyer all of such
Seller's right, title and interest in and to, and the
Buyer will assume and will agree to faithfully perform,
pay and discharge when due all of the terms, covenants,
liabilities and obligations of such Seller under, each
equipment lease (collectively, the "Equipment Leases")
with respect to leased equipment located in the
Restaurants (collectively, the "Leased Equipment"). The
Buyer will have 90 days after the Closing Date to review
any non-readily terminable Equipment Leases which the
Sellers may assign and transfer, and the Sellers agree to
assume and may terminate those Equipment Leases rejected
by the Buyer in writing within such 90 day period.
Notwithstanding the foregoing, the Buyer agrees to
perform the obligations arising under the Equipment
Leases for at least 90 days following the Closing Date,
if not terminable sooner, and for the entire term of the
Equipment Leases if such Equipment Leases are not
terminated or put back to the Sellers within the allotted
90 days.
(b) POS and Computer Systems.
The Restaurants will contain the software, and necessary
hardware, for the proprietary SUS/FMS Systems (the
SUS/FMS Systems") owned by PHI. The Buyer is acquiring as
part of the Purchase Price, the rights to use the
SUS/FMS Systems. At the Closing, the Buyer will execute a
separate license and support agreement with PHI (in form
and substance satisfactory in all respects to PHI) (a
"SUS/FMS License and Support Agreement"). The Purchase
Price (as defined in Section 1.6) includes 12 months free
maintenance on the SUS/FMS System hardware and support on
software. Such maintenance is limited to normal routine
service and excludes repairs necessitated by customer
abuse or acts of God. Sellers agree to provide Buyer with
the file formats and phone consulting to assist Buyer
with the interface of existing systems with Buyer's
existing system, if necessary, to allow Buyer to poll and
self-support the existing systems. Buyer will be
responsible for supporting the interface between Buyer's
Back-Office System and the SUS/FMS Systems. In the event
Buyer's interface between the systems causes the SUS/FMS
System to malfunction, Sellers will notify Buyer and
Buyer can either cure the malfunction or obtain
assistance from Sellers at Sellers standard charge for
non-routine service. In the event that Buyer elects not
to retain the SUS/FMS Systems for the entire first twelve
months following Closing, Sellers will refund to Buyer
the sum of $16,667.00 for each full month then remaining
under this pre-paid service agreement. In such event,
the Buyer will not, without the prior approval of
Sellers, disconnect or deinstall the Sellers' SUS/FMS
Systems before the removal of the Sellers' SUS/FMS
Systems by the Sellers or the Sellers' agents. If Buyer
elects to continue its use of the SUS/FMS Systems longer
than 12 months after Closing, Buyer will pay PHI's
standard support and maintenance fees beginning in the
thirteenth month after Closing unless otherwise agreed in
writing by Buyer and PHI.
(c) Contracts.
The Personal Property shall not include any right, title
or interest of any Seller in or to any contracts or
agreements. Subject to the relevant Seller obtaining the
necessary consents and approvals (which such Seller
agrees to use reasonable, good faith efforts to obtain,
provided that such Seller need not pay any consideration
or incur any incremental liability to obtain any such
consent or approval), the relevant Seller will assign and
transfer to the Buyer all of such Seller's right, title
and interest in and to, and the Buyer will assume and
will agree to faithfully perform, pay and discharge when
due all of the terms, covenants, liabilities and
obligations of such Seller under, each contract and
agreement (including, without limitation, each service,
security, maintenance, print advertising and supply
contract) used on the Closing Date in the normal and
customary operations of, and that relates specifically
to, one or more of the Restaurants (collectively, the
"Contracts"). During the first 90 days after the Closing
Date, the Buyer may reject any non-readily terminable
contracts (other than print advertising contracts) which
the Sellers have assigned and transferred and the
Sellers agree to assume and may terminate those Contracts
rejected by the Buyer in writing within such 90 day
period. Notwithstanding the foregoing, the Buyer agrees
to perform the obligations arising under all of the
Contracts for at least 90 days following the Closing
Date, if not terminable sooner, and for the entire term
of the Contracts if such Contracts are not terminated or
put back to the Sellers within the allotted 90 days.
Additionally, the Buyer agrees that it will pay for or
reimburse the Sellers for any non-terminable benefits
flowing from the Contracts (including print advertising)
that are received by the Restaurants or the Business
after the Closing Date for which PHI and/or the Sellers
have previously paid or will pay, regardless of the date
of assignment or termination of such Contracts The
Contracts shall not include, and Sellers will not assign,
any contracts with hotels or motels for in-room delivery
service of Pizza Hut products, any contracts for phone or
computer maintenance with respect to the SUS/FMS Systems,
any contracts with respect to participation in the
National School Lunch Program or any school food service
program, automobile leases, and any other contracts
(other than print advertising contracts) that are covered
by a master agreement which includes any Pizza Hut
restaurant other than the Restaurants listed on Schedule
1.1. Notwithstanding the foregoing, the Buyer may seek
to contract with hotels, motels and school food service
programs within the delivery areas, if any, designated in
the Franchise Agreement (as defined at Section 4.4).
(d) Ordinary Course Dispositions.
Subject to Section 4.1, the Personal Property relating to
any individual Restaurant shall not include any property
or assets which have been disposed of prior to the
Closing in the ordinary course of business consistent
with the past operations of such Restaurant.
(e) Intellectual Property.
The Personal Property shall not include any patents,
trademarks, copyrights, any applications or registrations
for any thereof, or any other intellectual property or
similar rights or assets.
(f) Cash, Etc.
The Personal Property shall not include any cash (other
than the change funds specifically referred to in
Sections 1.1(d)), bank accounts, cash equivalents or
other similar types of investments or marketable
securities.
1.3 Real Property.
(a) Owned Real Property.
The Sellers collectively own the parcels of real estate
listed or described on Schedule 1.3(a) hereto, together
with all buildings and improvements located thereon
(collectively, the "Owned Real Property"). Subject to
Subsection 1.3(c), below, at Closing, the relevant Seller
will lease to the Buyer, and the Buyer will lease from
such Seller, the Owned Real Property under leases in the
form attached hereto as Exhibit H (the "Seller Leases").
As more specifically described in Exhibit H, the Seller
Leases will provide for base rent equal to 5% of sales,
plus percentage rent. Sellers will also sublease to
Buyer any additional parking lot leases that support the
Restaurants located on Owned Real Property
(b) Leased Real Property.
The Sellers collectively lease from third parties the
parcels of real estate listed or described on Schedule
1.3(b) (collectively, the "Leased Real Property")
pursuant to existing real property leases (the "Real
Property Leases"). Subject to Subsection 1.3(c), below,
the Buyer hereby agrees to execute an Assignment and
Assumption of Lease Agreement, substantially in the form
attached as Exhibit "A" hereto, with respect to each
parcel of Leased Real Property, pursuant to which the
Buyer will assume all of the relevant Seller's right,
title and interest in and to, and will agree to
faithfully perform, pay and discharge when due all of the
terms, covenants, liabilities and obligations of the
relevant Seller under, the Real Property Lease related to
such parcel of the Leased Real Property. The Buyer also
agrees to name the Seller as an additional insured as
their interests may appear with respect to its insurance
coverage required to be carried under the terms of the
Real Property Leases related to each Leased Real
Property, to the extent that the Seller retains any
contingent liability with respect to the Leased Real
Property. The relevant Seller agrees to use reasonable,
good-faith efforts to obtain:
(i) from each landlord from whom consent to an
assignment of a Real Property Lease to the Buyer is
required, a consent to such assignment; and
(ii) from each landlord, an estoppel certificate with
respect to each Real Property Lease.
The Sellers need not pay any consideration or incur any
incremental liability to obtain either a consent or an
estoppel certificate from any landlord. If any required
consent to an assignment cannot be obtained prior to
Closing, the relevant Seller may, at its option (and if
permitted by the relevant Real Property Lease), either
(i) proceed with the assignment and agree to indemnify
the Buyer for any losses suffered by Buyer as a
consequence of the lack of consent, or (ii) sublease the
affected Leased Real Property to the Buyer, or (iii)
enter into a management agreement or other similar
arrangement with the Buyer on terms that are no less
favorable to the Buyer than those contained in the Real
Property Lease covering the affected Leased Real
Property.
(c) Closure Units.
Buyer has the option to close and de-image the 18 System
Restaurants listed on the attached Schedule 1.1,
("Closure Units") on the terms provided below. Sellers
will indemnify Buyer against the costs associated with
closing any of the Closure Units, except for de-
identification costs which will be paid by the Buyer.
(i) Owned Closure Units.
The relevant Seller will lease to the Buyer, and the
Buyer will lease from such Seller, the Owned Real
Property Closure Units under leases in the form
attached hereto as Exhibit H-1. Buyer has the
option to close any of the 8 Owned Real Property
Closure Units set forth on Schedule 1.1, during the
first four years following the Closing Date. In the
event Buyer closes any of these units, the
respective Seller Lease will terminate as of the
date of the closure.
(ii) Leased Closure Units.
Seller will sublease the 10 Leased Real Property
Closure Units and 1 parking lot set forth on
Schedule 1.1 on the same terms as the primary leases
in the sublease form attached hereto as Exhibit H-2.
Buyer has the option to close these 11 units before
the expiration of the existing primary lease term.
Buyer will give Sellers 60 days advance notice of
any unit closing. Buyer will be responsible for
complying with all the terms of the third party
leases until their closure by Buyer as contemplated
herein. In the event any of these 11 Leased Real
Property Closure Units contains a "continuous
operations" clause, and Buyer elects to close the
unit, Buyer agrees to continue to operate the unit
until: (a) the unit has been successfully
subleased by Seller, (b) the lease has been
liquidated by Seller, or (c) the prime lease
terminates. Once Buyer has notified Seller of its
intent to close one of the 11 Leased Real Property
Closure Units, Seller will, within 10 days of
receiving such notice, commence efforts to liquidate
the lease or identify a subtenant for the balance of
the term. If the lease cannot be liquidated or
subleased, the Buyer and Seller will enter into a
management agreement for the balance of the term and
the Seller will indemnify Buyer against any lost
profits from the operation of the unit, the terms
and conditions for which will be agreed upon in such
management agreement. Seller will use its best
efforts to sublease the unit or terminate the lease
through a buy-out once it has received notice from
the Purchaser of its intent to close the location.
(iii) Closure Unit Initial Fees.
Buyer will be credited with an initial franchise fee
of $25,000 for any approved relocation of any
Closure Unit. Upon the closure of any Closure Unit,
the associated initial franchise fee, net of any
ratable amortization using a 20-year period, will be
applied as a credit against any initial fees
required for relocation.
1.4 Licenses.
The Buyer understands it needs various licenses and
permits (including alcoholic beverage licenses) to
conduct the business following Closing, and that some or
all of the licenses are nontransferable. Neither this
Agreement nor the Closing will in any way be conditioned
upon or subject to the Buyer's ability to obtain any
required license or permit, including alcoholic beverage
licenses. Except as provided below, Sellers will remove
all nontransferable licenses from the Restaurants on the
Closing Date.
If the Buyer requests the temporary use of any of the
nontransferable licenses until the Buyer obtains its own
licenses, the Sellers will allow that use, but only if
each of the following conditions is (in Sellers' opinion)
satisfied:
(a) Sellers have no other use for the licenses;
(b) The Buyer demonstrates to Sellers' continuing
satisfaction that the Buyer is diligently and in good
faith trying to obtain the appropriate licenses for each
Restaurant;
(c) The use of Sellers' licenses by the Buyer on an
interim basis is legally permissible and poses no
liability or other risk to Sellers that Sellers (in their
sole discretion) consider unacceptable; and
(d) The Buyer agrees in writing, in form acceptable to
Sellers:
(i) to indemnify Sellers against all claims, losses,
liability (including fines), expenses (including
reasonable attorneys' fees), or damages that Sellers
suffer as a result of Buyer's use of the licenses;
(ii) to pay a fee of $100.00 per license per month in
exchange for Sellers' management services in
connection with Buyer's use of Sellers' licenses,
beginning 90 days after the Closing Date, and
continuing for each month or portion of a month that
the Buyer uses any of Sellers' licenses; and
(iii) to reimburse Sellers promptly for any out-of-
pocket expenses (including outside counsel fees)
incurred in connection with this Section.
1.5 Restaurant Inventories and Change Funds.
At the close of business on the Closing Date, Sellers'
representatives (who may, at the Buyer's election, be
accompanied by the Buyer's representatives) will take
inventory, utilizing an Inventory Form in the form of
Exhibit "B", of the food ingredients, supplies, paper
products, and other consumables in each Restaurant and
count each Restaurant's change fund. The Buyer may, at
its option, send its representatives to the Restaurants
to accompany Sellers' representatives during these
inventory/cash counts, and may then verify the accuracy
of those inventory/cash counts. Unless the Buyer's
representatives accompany Sellers' representatives during
these inventory/cash counts and point out any
discrepancies during the inventory/cash counts, the
inventory/cash counts prepared by Sellers'
representatives will be final. The Buyer will reimburse
Sellers for Sellers' actual costs of the useable
inventories and change funds, net of any offsets, as
provided in Section 7.1.
1.6 Purchase Price, Exclusivity Fee and Other Payments.
As consideration for the transfer of the Assets and the
other undertakings of Sellers in this Agreement, (other
than the transfer of the Personal Property described in
subsections 1.1(b) and 1.1(d) for which the Buyer must
separately reimburse the Sellers pursuant to Section
7.1), the Buyer will pay the sum of $31,000,000 (the
"Purchase Price") to Sellers and PHI by paying the
following amounts at the times noted:
(a) [Intentionally Deleted]
(b) At Closing, the Buyer shall pay to the Sellers the
sum of $31,000,000 representing the Purchase Price.
These funds must be transferred to the Seller by no later
than 10:30 a.m. on the day following the Closing Date.
(c) Reimbursement for inventories and change funds, for
rents and other prepaid expenses and amounts, and for any
other items for which payment is required pursuant to
Section 7.1 at the times called for in such Section.
(d) At the Closing, if then due, or otherwise pursuant to
Section 7.1 when due, (i) its prorata share of any and
all applicable sales, use, excise, transfer, documentary,
recording fees and other taxes and fees (except for the
Sellers' income taxes) arising out of the transactions
contemplated by this Agreement that any party hereto may
be required to pay by any applicable law or regulation;
and (ii) any other amount due under this Agreement or any
other agreement contemplated hereby.
The Purchase Price and any other amounts due at the
Closing or pursuant to this Section 1.6 shall be paid by
wire transfer of immediately available funds to an
account or accounts designated by the Sellers. The
Purchase Price includes the initial franchise fees
required by the Franchise Agreement (as such term is
defined in Section 4.4), which initial franchise fees
will be collected by the Sellers on behalf of PHI and
forwarded on to PHI by the Sellers. The Purchase Price
does not include any other fees or obligations under the
Franchise Agreement.
1.7 Closing Documents.
Prior to or at the Closing of the Acquisition, the
Sellers, PHI, and the Buyer will exchange the following
fully executed documents:
(a) the Franchise Agreement in the form attached as
Exhibit "E";
(b) Assignment and Assumption Agreement for the Real
Property Leases in the form of Exhibit "A" hereto,
accompanied by any required consents and estoppel
certificates (or indemnities) as contemplated by Section
1.3(b);
(c)a Xxxx of Sale for the Assets, in the form attached
as Exhibit "C";
(d) Assignment and Assumption Agreement for the Equipment
Leases and Contracts being assumed in the form of Exhibit
"D" hereto;
(e) The SUS/FMS License and Support Agreement;
(f) the Access and Confidentiality Agreement in the form
attached as Exhibit "F";
(g) A waiver letter from AmeriServe Food Distribution,
Inc., or the Sales and Distribution Agreement in the form
attached as Exhibit "G"; and
(h) Seller Leases of the Owned Real Properties in the
form of Exhibit H;
(i) Lessor Agreements covering the Owned Real Property in
the form attached as Exhibit I; and
(j) any other documents reasonably requested by any
party.
1.8 Non-Assumption.
At the Closing, the Buyer shall assume the liabilities of
PHI and the Sellers that relate to the operation of the
Restaurants from and after the Closing Date (the "Assumed
Liabilities"). Except as specifically contemplated by
this Agreement, the Buyer is not assuming any liabilities
or obligations that arise from the operation of the
Restaurants on or before the Closing Date, and the
Sellers agree to timely perform all obligations relating
to the Restaurants that arise out of operations of the
Restaurants for the period prior to the Closing Date.
1.9 Title Insurance, Surveys and Environmental Reports.
Due to the critical timeline requirements to close the
transaction, PHI may order title searches on all Owned
Real Property and Leased Real Property to be transferred
to the Buyer pursuant to this Agreement. These title
searches will be performed by either Lawyer's Title,
Xxxxxxx Title or another title company approved by PHI.
PHI has established relations with such companies and the
Buyer will be entitled to the benefit of PHI's preferred
rates. If permissible under applicable law and the terms
of any agreement with such companies, the fees paid for
the searches may be applied toward the title policy costs
for title policies desired by the Buyer based upon these
title searches. In any event, the Buyer shall reimburse
the Sellers at Closing for one half of the costs of title
search fees incurred by Sellers on behalf of the Buyer
related to these items or, if not at Closing, then
pursuant to Sections 7.1 and 7.8 of this Agreement.
2. Representations of Sellers.
Each Seller represents to the Buyer that as of the date of
this Agreement:
2.1 Corporate Power and Authority.
Such Seller is a corporation duly organized and in good
standing under the laws of the jurisdiction of its
incorporation, and has full corporate power and authority
to execute, deliver and perform its obligations under
this Agreement and each other agreement or document
executed or to be executed by such Seller in connection
herewith, and to consummate the transactions contemplated
hereby and thereby. Such Seller is authorized to do
business and is in good standing in the states in which
the Restaurants operated by such Seller are located.
This Agreement has been, and each other agreement or
document to be executed by such Seller in connection
herewith will be, duly executed and delivered by such
Seller and constitutes, or will constitute, a legal,
valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms, except
as affected by bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights
generally, general equitable principles (whether
considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.
2.2 No Conflict or Breach.
The execution, delivery and performance of this Agreement
and any other agreements or documents contemplated hereby
and the consummation by such Seller of the transactions
contemplated hereby or thereby do not and will not:
(a) conflict with or constitute a violation of the
certificate of incorporation or by-laws of such Seller;
(b) to the knowledge of such Seller, conflict with or
constitute a violation of (with or without the giving of
notice or the lapse of time or both) any provision of any
law, judgment, order, decree, rule or regulation of any
legislative body, court, governmental or regulatory
authority or arbitrator which is applicable to or relates
to such Seller; or
(c) to the knowledge of such Seller, with or without the
giving of notice or the lapse of time or both, violate or
conflict with, constitute a default under, result in a
breach, acceleration or termination of any provision of,
or require notice to or the consent of any third party
under, any contract, agreement, commitment, indenture,
mortgage, deed of trust, lease, licensing agreement, note
or other instrument or obligation to which such Seller is
a party or by which such Seller is bound, which could,
individually or in the aggregate, reasonably be expected
to have a material adverse effect upon such Seller or the
ability of such Seller to perform its obligations under
this Agreement or any other agreement or document
contemplated hereby.
2.3 Consents.
To the knowledge of such Seller, except the filings with
the Federal Trade Commission (the "FTC") and the
Department of Justice (the "DOJ") referred to in Section
4.3, no material consent, approval, or authorization of,
or designation, declaration or filing with, or notice to,
any legislative body, court, governmental or regulatory
authority or arbitrator under any provision of any law,
judgment, order, decree, rule or regulation is required
on the part of such Seller in connection with the
execution, delivery and performance of this Agreement or
any other agreement or document contemplated hereby or
with the consummation of the transactions contemplated
hereby and thereby.
2.4 Title to Owned Property.
Such Seller has good and marketable title to all of the
Personal Property and the Owned Real Property with
respect to the Restaurants operated by such Seller, free
and clear of any liens and encumbrances, except for (i)
Personal Property, with respect to any Restaurant
operated by such Seller, disposed of prior to the Closing
in the ordinary course of business of such Restaurant
consistent with the past operations of such Seller, (ii)
certain fixtures, buildings and improvements located on
the Leased Real Property which such Seller has the right
to use pursuant to the Real Property Leases (or any of
them), (iii) easements or other encumbrances which do not
materially adversely affect the full use and enjoyment of
the Owned Real Property, the Leased Real Property, or the
purposes for which it is currently used, and (iv) liens
for taxes and assessments not yet due and payable. This
representation does not constitute a representation by
such Seller as to the title of such Seller's lessors of
any Leased Real Property or Leased Equipment, nor does
this representation constitute a representation of the
condition of any of the Personal Property or the Owned
Real Property or the Leased Real Property, which is sold
or leased, as applicable, "AS IS, WHERE IS", with all
faults. Additionally, the Seller shall not be required
to execute an "Owner's Affidavit" to delete standard
exceptions to an owner's or mortgagee's title policy.
2.5 Adequacy of Personal Property.
The Personal Property and the Leased Equipment with
respect to the Restaurants operated by such Seller
constitute all of the items of tangible personal property
required to operate such Restaurants as Pizza Hut
restaurants, except for computer hardware and software as
contemplated by Section 1.2(b) above. This
representation does not constitute a representation of
the condition of the Personal Property or Leased
Equipment, each of which are sold or assigned, as
applicable, "AS IS, WHERE IS", with all faults. Schedule
2.5 lists the items of Personal Property and Leased
Equipment (other than computer hardware and software)
required to operate the respective type of Restaurant
listed thereon.
2.6 Leases.
Each of the material Equipment Leases and Real Property
Leases with respect to the Restaurants operated by such
Seller is in full force and effect, and to the knowledge
of such Seller, such Seller has not received notice of a
material default under any of them. Subject to obtaining
any necessary consents and approvals, such Seller has the
right to assign each such material Equipment Lease and
Real Property Lease to the Buyer, providing the Buyer
with the right to use such Leased Equipment or to occupy
such Leased Real Property, as the case may be, on terms
and conditions that are materially the same as such
Seller had prior to any such assignment. This
representation does not constitute a representation as to
the adequacy of any lessor's title to any of the Leased
Equipment or the Leased Real Property, as the case may
be.
2.7 Insurance.
Such Seller carries adequate insurance (both in form and
amount), subject to deductibles, with respect to the
Business and real and personal property of the
Restaurants operated by such Seller. Such insurance is
in effect and will remain in effect through the Closing
Date.
2.8 Taxes.
Such Seller or its consolidated parent has filed all
requisite federal, state and local tax returns and has
paid all taxes required thereby, to the extent they have
become due and payable, other than (i) those presently
payable without penalty or interest, and (ii) any that
are being contested in good faith by appropriate
proceedings. The Sellers will indemnify the Buyer for
any damages suffered by the Buyer as a result of the
Sellers' failure to pay any such taxes to the extent such
taxes related to the ownership or operation of the
Restaurants prior to the applicable Closing Date.
2.9 Brokerage and Finder's Fees.
None of the Sellers, any of their respective Affiliates
or any of their respective stockholders, directors,
officers, partners or employees, on behalf of any Seller,
has retained or dealt with any broker or finder, or has
incurred or will incur any liability for brokerage fees,
commissions or finder's or similar fees in connection
with the transactions contemplated by this Agreement or
the other documents contemplated hereby.
2.10 Absence of Certain Changes.
Each of the unaudited profit and loss summaries (the
"Profit and Loss Summaries") that relate to the
Restaurants for the periods ended July 8, 1998 previously
delivered to the Buyer are true and correct in all
material respects. Since July 8, 1998, none of the
Restaurants have suffered any material adverse change in
its financial condition or results of operations other
than changes in the ordinary course of business that,
individually or in the aggregate, have not had a material
adverse effect on such Restaurants. Such Seller agrees
to inform the Buyer of any material adverse changes to
the financial condition or results of operations of the
Restaurants prior to the Closing.
2.11 Environmental Matters.
To the best of the Sellers' knowledge, without
independent investigation:
(a) The Restaurants contain no asbestos in friable form;
(b) No underground petroleum or chemical storage tanks or
underground storage facilities are located under or
adjacent to the Restaurants;
(c) No contaminant, industrial waste, pollutant1, toxic
or hazardous waste, or any similar substance of any kind
or character has been stored, processed, or disposed of
in or around the Restaurants by the Sellers in conducting
their business, or discharged at any time by the Sellers
directly or indirectly into the environment in violation
of any law or governmental regulation applicable to the
Sellers, or into any sanitary sewer connection or
treatment system except in conformity with requirements
of all applicable laws, regulations and valid permits nor
has any such act or occurrence taken place under the
ownership of a prior owner which has not been cured,
except in such instances which would not have a material
adverse effect on the operations and financial condition
of the Restaurants taken as a whole; and
(d) With respect to the Restaurants, the Sellers have not
at any time been the subject of any governmental
investigation or proceeding pertaining to the use,
storage, processing, transportation or disposition of
toxic or hazardous waste or any other subject or material
that has been determined to be hazardous to human health
under applicable law or government regulation, nor have
they been the subject of any governmental investigation
or proceeding pertaining to violation of any waste water
or sewage disposal statutes or regulations applicable to
the business and operations of the Sellers.
3. Representations of the Buyer.
The Buyer represents to the Sellers that as of the date of
this Agreement:
3.1 Organization, Standing, Power and Authority.
The Buyer is a duly organized corporation and in good
standing under the laws of the jurisdiction in which it
is incorporated and in which it is doing business, and
has full power and authority to execute, deliver and
perform its obligations under this Agreement and each
other agreement or document executed or to be executed by
it in connection herewith, and to consummate the
transactions contemplated hereby and thereby. The Buyer
and each of its Affiliates that sign this Agreement
and/or the Franchise Agreement meet all of the standards
for, and requirements of, franchisees of PHI, including
without limitation the standards set forth in the Manual
(as defined in the Franchise Agreement) and the
requirements set forth on Schedule 3.1 hereto. This
Agreement has been, and each other agreement or document
to be executed by the Buyer in connection herewith will
be, duly executed and delivered by the Buyer and
constitutes, or will constitute, a legal, valid and
binding obligation of the Buyer, enforceable against the
Buyer in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally,
general equitable principles (whether considered in a
proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.
3.2 No Conflict or Breach.
The execution, delivery and performance of this Agreement
and any other agreements or documents contemplated hereby
and the consummation by the Buyer of the transactions
contemplated hereby or thereby do not and will not:
(a) conflict with or constitute a violation of the
articles of incorporation or by-laws or other
organizational documents, as applicable, of the Buyer or
any of its Affiliates that sign this Agreement and/or the
Franchise Agreement;
(b) conflict with or constitute a violation of (with or
without the giving of notice or the lapse of time or
both) any provision of any law, judgment, order, decree,
rule or regulation of any legislative body, court,
governmental or regulatory authority or arbitrator which
is applicable to or relates to the Buyer or any of its
Affiliates that sign this Agreement and/or the Franchise
Agreement; or
(c) with or without the giving of notice or the lapse of
time or both, violate or conflict with, constitute a
default under, result in a breach, acceleration or
termination of any provision of, or require notice to or
the consent of any third party under, any contract,
agreement, commitment, indenture, mortgage, deed of
trust, lease, licensing agreement, note or other
instrument or obligation to which either of the Buyer (or
any of its Affiliates that sign this Agreement and/or the
Franchise Agreement) are a party or by which the Buyer
(or any such Affiliate) is bound, which could,
individually or in the aggregate, reasonably be expected
to have a material adverse effect upon the Buyer (or any
such Affiliate) or the ability of the Buyer (or any such
Affiliate) to perform its obligations under this
Agreement or any other agreement or document contemplated
hereby.
3.3 Consents.
No consent, approval, or authorization of, or
designation, declaration or filing with, or notice to,
any legislative body, court, governmental or regulatory
authority or arbitrator under any provision of any law,
judgment, order, decree, rule or regulation is required
on the part of the Buyer (or any of its Affiliates that
sign this Agreement and/or the Franchise Agreement) in
connection with the execution, delivery and performance
of this Agreement or any other agreement or document
contemplated hereby or with the consummation of the
transactions contemplated hereby and thereby, except for
the filings with the FTC and the DOJ referred to in
Section 4.3.
3.4 Brokerage and Finder's Fees Brokerage and Finder's
Fees.
Neither the Buyer nor any of its Affiliates or any of its
respective stockholders, directors, officers, partners or
employees, on behalf of the Buyer, has retained or dealt
with any broker or finder, or has incurred or will incur
any liability for brokerage fees, commissions or finder's
or similar fees in connection with the transactions
contemplated by this Agreement or the other documents
contemplated hereby.
3.5 Obligations Under Other Franchise Agreements.
Neither the Buyer nor any Affiliate of it is in default
of any material provision under any existing franchise
agreement with PHI or with Tricon Global Restaurants,
Inc. or any division or subsidiary thereof, nor does
there exist any condition or conditions that, with the
giving of notice, the passage of time, or both, would
ripen into a default thereunder.
4. Covenants.
4.1 Operation Until Closing.
From and after January 7, 1999, the Sellers have operated
and will operate the Restaurants in the ordinary course
of business. Each Seller will maintain all of the Assets
with respect to the Restaurants operated by such Seller
in substantially the same condition (ordinary wear and
tear excepted) as they were in on January 7, 1999,
except for (i) Personal Property disposed of in the
ordinary course of business consistent with the past
operations of such Restaurant; provided, however, any
such Personal Property must be replaced by similar assets
of equal or greater value in like or better condition
than those assets transferred or removed or (ii) Personal
Property transferred among Restaurants that are subject
to this Agreement. The damage or destruction of any
Restaurant operated by any Seller before the Closing will
not affect the Buyer's obligation to close the
transactions contemplated by this Agreement. Subject to
the requirements of any applicable Real Property Lease,
such Seller shall proceed to repair the damage or, if
such repair is not reasonably practicable in the
reasonable opinion of such Seller, then such Seller shall
credit to the Buyer at the Closing an amount equal to the
sum of the reasonable cost (as agreed by the Buyer and
the Sellers) of repairing or restoring the damaged or
destroyed restaurant to substantially the same condition
as immediately before the damage or destruction.
4.2 Access to Restaurants and Employees.
The Buyer (and/or its consultants, attorneys, lenders or
advisers) may not inspect any Restaurant or contact any
Pizza Hut employees working in such Restaurant or market
until (i) Employee Announcements have been made to the
employees of the Restaurants, and (ii) the Buyer's (and
when applicable in Pizza Hut's sole discretion, the
Buyer's consultants (including attorneys, lenders or
other advisors)) have executed the Access and
Confidentiality Agreement in the form attached hereto as
Exhibit "F". Once these conditions have been met, if the
Buyer chooses to inspect the Restaurants (under the
conditions set forth herein and in the Access and
Confidentiality Agreement), the Buyer must schedule such
inspections with PHI, the Buyer must be accompanied by an
agent or employee of PHI and the Buyer must conduct the
inspections in a manner that minimizes disruption to the
Restaurant's operations. Any such inspections are for the
Buyer's information only; the Restaurants are being sold
"AS IS, WHERE IS." Buyer does not have the right to
perform environmental audits of the Leased Real Property.
Buyer acknowledges and agrees that a violation of this
Section 4.2 shall constitute a default under this
Agreement by Buyer and Sellers shall have, in addition to
any other rights or remedies hereunder, at law or in
equity, the right to terminate this Agreement.
4.3 Xxxx-Xxxxx-Xxxxxx Act.
The Buyer and the Sellers shall, in cooperation with each
other, file (or cause to be filed) with each of the DOJ
and the FTC any reports or notifications that may be
required to be filed by them under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 0000 (xxx "XXX Xxx") in
connection with the transactions contemplated by this
Agreement. If the Sellers, based upon the advice of
counsel, determine that any filings with the DOJ and the
FTC are necessary, the Buyer and any necessary Affiliates
of the Buyer agree to make any such filings in connection
with the transactions contemplated by this Agreement upon
request from PHI. The Buyer and the Sellers shall
promptly comply with all requests for further documents
and information made by the DOJ or the FTC, shall use
their best efforts to obtain early termination of all
waiting periods under the HSR Act, and shall furnish to
the others all such information in its possession as may
be necessary for the completion of the reports or
notifications to be filed by the others. All fees due
from any party to the FTC or the DOJ under the HSR Act in
connection with the filing of any of those reports or
notifications shall be borne by the party making such
filing.
4.4 Franchise Agreement.
(a) Subject to the terms and conditions of this
Agreement, PHI will grant to the Buyer the franchise
rights and obligations contained in the Pizza Hut
Location Franchise Agreement in the form attached hereto
as Exhibit "E" (the "Franchise Agreement"). A copy of
the form of the Franchise Agreement has been provided to
the Buyer with PHI's Uniform Franchise Offering Circular.
(b) Subject to the terms and conditions of this
Agreement, at the Closing, PHI and Buyer will execute
Amendments to the Franchise Agreement and to one or more
of Buyer's other existing Pizza Hut franchise agreements
to include the agreements set forth in paragraph 7 of the
Letter of Intent dated January 7, 1999.
4.5 Sales and Distribution Agreement
The Buyer acknowledges that the Restaurants are subject
to a Sales and Distribution Agreement (the "S&D
Agreement") with AmeriServe Food Distribution, Inc.
("AmeriServe"). Pursuant to the S&D Agreement, the Buyer
agrees, prior to or at Closing, to enter into a Sales and
Distribution Agreement in the form of Exhibit "G" (which
is substantially on the same terms as the S&D Agreement),
pursuant to which AmeriServe will continue to be the
exclusive distributor of Exclusive Restaurant Products
(as defined in the S&D Agreement) for the Restaurants
listed on Schedule 1.1 for a term equal to the remainder
of the original term of the S&D Agreement. In the
alternative, Buyer will deliver to Sellers a letter from
AmeriServe waiving NPC's execution of the S&D Agreement
and acknowledging PHI's compliance with the terms of the
S&D Agreement. The Buyer acknowledges that the Buyer's
terms of credit with AmeriServe are subject to
AmeriServe's credit approval process and AmeriServe may
require certain guarantees from the Buyer and/or its
Affiliates. PHI shall not guarantee in any way the
payments or other obligations of the Buyer to AmeriServe.
4.6 Covenant Regarding Sale of Non-Alcoholic Beverage
Products
The Buyer agrees that it shall not at any time during the
term of the Franchise Agreement change the non-alcoholic
beverage products sold in any of the Restaurants from
those sold in the Restaurants on the Closing Date without
the express prior written consent of PHI, in PHI's sole
discretion. The Buyer acknowledges that this covenant
relates to PHI's ability to obtain favorable terms from
certain vendors for the sale of non-alcoholic beverage
products in Pizza Hut restaurants. PHI acknowledges and
agrees that Buyer is free to negotiate its own contract
with the current non-alcoholic beverage suppliers for the
Restaurants, and will not assume Sellers' contract with
such suppliers. The Buyer also acknowledges and agrees
that, pursuant to Section 8.17, it submits to
jurisdiction of the courts described therein. The Buyer
further agrees not to oppose injunctive relief sought by
PHI or its Affiliates to enforce this covenant.
4.7 Post-Closing Audit
PHI will produce audited financial statements, in
accordance with the requirements of Rule 3-05 of
Regulation S-X promulgated under the Securities Act of
1933, as amended, reasonably in advance of the date
required for Buyers' filing of a report on Form 8-K under
the Securities Exchange Act of 1934, as amended. The
audit fees associated with preparation of these audited
financial statements will be borne by Buyer.
5. Sellers' Employees.
Sellers' policy on refranchising (a copy of which is attached
as Schedule 5) does not obligate the Sellers to offer transfer
opportunities to any of its restaurant-level employees, i.e.,
all employees at the level of "Restaurant General Manager" or
below, who will be affected by sale of the Restaurants.
Sellers will seek to provide opportunities for employees to
remain with Sellers but such employment is not guaranteed and
will depend on Sellers' assessment of its business needs as
well as the employee's performance. Unless otherwise agreed
before Closing, with respect to any of Sellers' restaurant-
level employees, Sellers will terminate the employment of
those employees at the close of business on the day
immediately prior to the Closing Date. Sellers will directly
pay all terminated employees, including any of the employees
hired by the Buyer (the "Hired Employees") for earned and
unused vacation, in accordance with Sellers' normal policies
(which do not call for Sellers to pay for accrued but unearned
vacation).The terminated employees may become employees of the
Buyer as of the Closing Date and PHI hereby waives any
violation of Section 13.2 of the Franchise Agreement with
respect to the Hired Employees. All claims of the employees
arising out of their employment with Sellers before the
Closing Date will be the sole liability of Sellers, and
Sellers will indemnify the Buyer from all claims of that
nature.
As between Sellers and the Buyer, the Buyer assumes all claims
of the Hired Employees relating to employment by the Buyer
arising after the Closing Date, and the Buyer will indemnify
Sellers from all such claims by them. For the purpose of
determining benefits for Hired Employees, the Buyer agrees to
honor the Hired Employees' length of service and anniversary
dates with the Sellers. The Sellers will furnish the Buyer a
list of the Hired Employees that defines their length of
service and anniversary dates. The Buyer understands that the
active participation of the Hired Employees in all benefit
plans maintained by the Sellers will end on the Closing Date.
Sellers will continue any employee benefit payment obligations
for Hired Employees who are on leave of absence or disabled on
the Closing Date in accordance with the Sellers' or PHI's
policies. No compensation increases shall be granted by
Sellers to the Hired Employees unless expressly approved by
Buyer. Buyer will not deny any increases which are reasonable
and justifiable.
If any of the Sellers' employees are transferred to other
operations of the Sellers ("Transferred Employees"), in
accordance with the Sellers' policy on refranchising, the
Sellers will (upon request by the Buyer) use their reasonable
best efforts to provide to the Buyer the services of some or
all of the Transferred Employees (as chosen by the Buyer) for
up to 90 days after the Closing. The Buyer will reimburse the
Sellers for all payroll and benefit costs associated with any
such loaned Transferred Employees.
6. Conditions to Closing.
(a) The obligations of the Sellers, on the one hand, and
the Buyer, on the other hand, to consummate the
transactions contemplated by this Agreement are subject
to the fulfillment, at or prior to the Closing, of each
of the following conditions:
(i) there shall not be in effect any preliminary or
permanent injunction or other order issued by any
federal or state court of competent jurisdiction in the
United States or by any United States federal or state
governmental or regulatory body nor any statute, rule,
regulation or executive order promulgated or enacted by
any United States federal or state governmental
authority which restrains, enjoins or otherwise
prohibits the consummation of the transactions
contemplated by this Agreement or any other agreement
or document contemplated hereby; and
(ii) any filings required to be made under the HSR
Act shall have been made, and all applicable waiting
periods thereunder with respect to the transactions
contemplated by this Agreement shall have expired or
been terminated.
(b) Each Seller's obligations to consummate the
transactions contemplated by this Agreement are subject
to the fulfillment, at or prior to the Closing, of each
of the following conditions (any of which may be waived
in writing by such Seller):
(i) each of the representations of the Buyer under
this Agreement and each of the other agreements and
documents contemplated hereby shall be true and correct
in all material respects at and as of the time of the
Closing with the same effect as though such
representations had been made again at and as of that
time, except to the extent that any such
representations expressly relate to an earlier date in
which case any such representations shall be true and
correct in all material respects at and as of such
earlier date;
(ii) the Buyer shall have performed and complied with
each obligation, covenant and condition required by
this Agreement and the other documents contemplated
hereby to be performed or complied with by it prior to
or at the Closing, with such exceptions as could not
reasonably be expected to result in a material adverse
effect on the ability of the Buyer to perform its
obligations under this Agreement or any other agreement
or document contemplated hereby provided, however, that
nothing in this subparagraph shall affect Sellers'
rights under Section 4.2 in the event of a default
thereunder;
(iii) the Capital Expenditures Committees of Tricon
Global Restaurants, Inc., and PHI will have approved
the transactions contemplated by this Agreement;
(iv) the Sellers will have received a copy of a
resolution or unanimous written consent evidencing the
action by the Buyer's Board of Directors or the Buyer's
general partner or such other similar authorizing body
approving the purchase of the Assets under this
Agreement certified by an authorized officer, partner
or member; and
(v) the Buyer will deliver to Sellers a statement,
signed by the Buyer's Chief Financial Officer,
certifying that at least 20% of the Purchase Price paid
to Sellers and PHI at Closing will be represented by
"at risk capital" as defined by applicable accounting
rules.
(vi) the Sellers shall have received evidence
satisfactory in all respects to them that the Buyer
shall have hired an operator to manage the Restaurants
to be purchased by the Buyer, which operator has
substantial experience in the operation of Pizza Hut
restaurants and has been approved by PHI, in its sole
discretion.
(vii) the Buyer shall deliver to Sellers and PHI, and
the Sellers and PHI shall have received from the Buyer
and its Affiliates, as the Sellers and PHI deem
necessary, in their sole discretion, all Uniform
Franchise Offering Circular receipts, including those
relating to any Addenda or Amendments.
(c) The Buyer's obligation to consummate the transactions
contemplated by this Agreement are subject to the
fulfillment, at or prior to the Closing, of each of the
following conditions (any of which may be waived in
writing by the Buyer):
(i) each of the representations of each Seller under
this Agreement and each of the other agreements and
documents contemplated hereby shall be true and correct
in all material respects at and as of the time of the
Closing with the same effect as though such
representations had been made again at and as of that
time, except to the extent that any such
representations expressly relate to an earlier date in
which case any such representations shall be true and
correct in all material respects at and as of such
earlier date;
(ii) each Seller shall have performed and complied
with each obligation, covenant and condition required
by this Agreement and the other documents contemplated
hereby to be performed or complied with by it prior to
or at the Closing, with such exceptions as could not
reasonably be expected to result in a material adverse
effect on the ability of the Sellers to perform their
obligations under this Agreement or any other agreement
or document contemplated hereby; and
(iii) the Buyer will have received a copy of a
resolution of Sellers' Board of Directors approving the
sale of the Assets certified by an authorized officer
of the applicable Seller.
7. Closing.
Unless otherwise agreed, the consummation of the transactions
contemplated by this Agreement will occur at the "Closing",
which will be held at the offices of the Sellers, at 10:00
a.m. (local time) on February 3, 1999, at Sellers'
discretion, at the offices of PHI in Dallas, Texas, or such
other location as may be designated by the Sellers in their
sole discretion. (As used herein, the date the Closing
actually occurs is referred to in this Agreement as the
"Closing Date"). At the Closing, the Sellers shall deliver to
the Buyer such bills of sale, instruments of assignment,
transfer and conveyance and the other documents contemplated
by this Agreement. Against such delivery, the Buyer shall
deliver to the Sellers that portion of the Purchase Price to
be paid at the Closing in accordance with Section 1.6 above
and the other documents contemplated by this Agreement. All
actions taken at the Closing shall be deemed to have been
taken simultaneously at the time the last of any such actions
is taken or completed. Upon the completion of the Closing,
title to the Assets and the assumption of the Assumed
Liabilities will be deemed to be effective as of 11:59 p.m. on
the Closing Date. The Sellers will cooperate with the Buyer
to see that the transfer of the Assets proceeds smoothly.
7.1 Post-Closing Adjustments.
From time to time after the Closing Date, the Buyer or
the Sellers may prepare and submit to the other party one
or more post-closing statements concerning any
obligations that become due under this Agreement that
were not paid at Closing, offsetting any amounts owed by
the other party. The net amount owed will be paid within
30 days after receipt of the post-closing statement. Any
amount not paid within 30 days after receipt of a post-
closing statement will bear interest at the rate of 18%
per annum, or the maximum legal rate. Without limiting
the generality of this provision, the following is a non-
exclusive list of some of the types of items that may be
reimbursed through use of post-closing statements: rent;
equipment lease payments; utilities; inventories and
change funds; sales taxes and any applicable interest and
penalties; real or personal property taxes; and
advertising and other prepaid expenses.
7.2 Post-Closing Indemnification.
The Buyer will indemnify the Sellers, their affiliates,
subsidiaries, employees, officers, directors, and agents,
on an after-tax basis, against any loss, cost, damage, or
other expense (including attorney's fees) (collectively,
"Losses") that arise from operation of the Restaurants or
related properties after Closing. The Sellers (jointly
and severally) will indemnify the Buyer, its affiliates,
subsidiaries, employees, officers, directors, and agents,
on an after-tax basis, against any Losses that arise from
operation of the Restaurants or related properties on or
before the Closing.
7.3 Critical Deficiencies.
Notwithstanding that the Assets are being sold to Buyer
"AS IS, WHERE IS", with all faults, and subject to the
limitations set forth herein, Sellers agree that each of
the Restaurants listed on Schedule 1.1 attached hereto,
will meet or exceed that standard which is the average of
Sellers' restaurant level of compliance with the
provisions of the Americans With Disabilities Act as well
as other Governmental standards (including state and
local municipalities and agencies), in effect as of the
Closing, with which the Restaurant needs to comply in
order for Buyer to operate each Restaurant. Sellers
agree to reimburse Buyer for any costs, including lost
cash flows in the event a Restaurant is closed for
modification, incurred to satisfy the aforementioned
requirements if such modifications exceed $25,000 per
Restaurant and the Buyer is notified of the requirement
by local authorities within sixty (60) days after
Closing. Buyer must notify Sellers within seventy-five
(75) days after Closing and document any such
requirement. The required expenditures to be reimbursed
must be limited to building design or structural issues.
Sellers agree to reimburse Buyer within forty-five (45)
days after receiving a reimbursement request from Buyer.
Sellers further agree that each Restaurant will have
adequate equipment, smallwares, inventories, change funds
and supplies to function as a Pizza Hut Restaurant. Any
damage caused by the recent hurricane activity in the
region where the Restaurants are located, will be
repaired by Sellers at Sellers' cost prior to closing.
7.4 Additional Documents.
For the period of one year following the Closing, each of
the parties covenants to provide such additional
documents or instruments as the other party may
reasonably request for the purpose of carrying out this
Agreement. The Sellers will use reasonable efforts, none
of which shall require the payment of any consideration
by the Sellers, to have their present officers,
directors, and employees cooperate after the Closing in
furnishing information, evidence, testimony and other
assistance concerning matters that occurred prior to the
Closing.
7.5 [Intentionally Deleted]
7.6 The Buyer's Acknowledgment.
The Buyer acknowledges that:
(a) Except as set forth in Section 7.5(b), below, the
Sellers (and their agents and employees) have made no
statements or warranties to the Buyer as an inducement
for the Buyer's decision to purchase, except as contained
in this Agreement or in the PHI Franchise Offering
Circular for Prospective Franchisees, and the Buyer's
decision to purchase was made independently by it with
the aid of professional counselors, including legal,
accounting, and financial advisors.
(b) The Sellers have made available to the Buyer, before
the Buyer's execution of this Agreement, the Profit and
Loss Summaries. The Buyer's decision to purchase the
Assets for the consideration set forth in this Agreement
was made independently, based on inspection of the Profit
and Loss Summaries by the Buyer or its agents or
representatives (and on other information available to
the), without reliance on the book ledgers or on any oral
statements of any kind or character by the Sellers or
their representatives.
7.7 Information Statement.
The Buyer and the Sellers will timely file any
information statement required by regulations issued
pursuant to Section 1060(b) of the Internal Revenue Code
of 1986, as amended.
7.8 Closing Costs, Transfer Fees and Expenses.
Sellers and Buyer agree to share equally all transfer,
documentary stamp, title search fees, and recording and
fees/taxes related to the Acquisition, transfer of the
Closure Units and subsequent purchase of Owned Real
Property units by Buyer. The Buyer will assume the
obligations of, and indemnify the Sellers for, the
payment and remittance of (and any costs, expenses,
penalties and interest associated for the failure to so
pay and remit) its other closing costs, (including but
not limited to costs for all environmental reports sought
by the Buyer or required by Buyer's lender), all items
for which the Sellers are to be reimbursed at Closing or
pursuant to Section 7.1 of this Agreement.
8. Miscellaneous.
8.1 Notices.
Any notice or other communication under this Agreement
shall be in writing (including, without limitation, by
telecopy or like transmission) and shall be considered
given (a) when delivered personally (including, without
limitation, by overnight courier), (b) when telecopied
(with confirmation of transmission having been received),
or (c) three days after being mailed by registered mail
(postage prepaid, return receipt requested), in each case
to the respective parties at the addresses set forth
below (or at such other address as a party may specify by
notice to the other):
if to the Sellers, to them c/o:
Pizza Hut, Inc.
00000 Xxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy No.: (000) 000-0000
if to the Buyer, to:
NPC International, Inc.
NPC Management, Inc.
00000 Xxxxxxx Xxxx., Xxxxx 000
Xxxxxx, Xxxxxx 00000
Attention: Xxxxx X. Xxxxxxxx
Xxxx Xxxx
Telecopy No.: (000) 000-0000
Telephone No.: (000) 000-0000
with a copy to:
Xxxxx X. Short
Romacorp, Inc.
0000 Xxxxxx Xxxx #000
Xxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
8.2 Survival.
The provisions set forth in subsections 1.4(b), 4.5, 8.4,
8.8 and 8.14 of this Agreement shall expressly and
permanently survive the termination or abandonment of
this Agreement. All covenants and agreements contained
in this Agreement shall expressly and permanently survive
the Closing Date and shall remain in full force and
effect, except for the representations set forth in
Sections 2 and 3, which representations shall expressly
survive the Closing Date for a period of six months
following the Closing Date.
8.3 Termination of Agreement.
This Agreement will terminate and be of no further force
and effect if the transfer has not been consummated by
the close of business on February 17, 1999.
8.4 Modification and Waiver.
No modification or waiver of any of the provisions of
this Agreement, and no consent by any of the parties to
any departure from the provisions of this Agreement by
the other party, will be effective unless the
modification or waiver is in writing and signed by the
party or parties to be bound. Each modification or
waiver will be effective only for the period, on the
conditions, and for the specific instances and purposes
specified in the writing. No notice to or demand on any
of the parties in any case will entitle it, them, or any
of them to any other or further notice or demand in
similar or other circumstances.
8.5 Assignment: Binding Effect.
This Agreement is intended to inure to the benefit of,
and is binding upon, the parties and all of their
respective successors and permitted assigns. This
Agreement is not, however, assignable or transferable, in
whole or in part, by any of the parties except upon the
express prior written consent of all of the other
parties, and nothing contained in this Agreement is
intended to confer upon any person, other than the
parties and their respective heirs, successors, and
permitted assigns, any rights, remedies, or obligations
under, or by reason of, this Agreement. Any request by
the Buyer for the Sellers' consent to the assignment of
this Agreement will be subject to the conditions on
assignment contained in the Franchise Agreement. PHI and
its respective successors and assigns are intended third-
party beneficiaries of this Agreement. Notwithstanding
the foregoing, however, PHI may assign all of its rights
and obligations hereunder to Tricon Global Restaurants,
Inc. ("Tricon") or to any subsidiary of Tricon that is
the franchisor of the "Pizza Hut" concept and, upon such
assignment, PHI will have no further liability hereunder.
8.6 Severability.
If any provision or provisions of this Agreement or of
any of the documents or instruments delivered pursuant
hereto, or any portion of any provision hereof or
thereof, is invalid or unenforceable pursuant to a final
determination of any court of competent jurisdiction or a
result of future legislative action, that determination
or action will be construed (whenever possible) so as not
to affect the validity or enforceability hereof or
thereof and will not affect the validity or effect of any
other portion hereof or thereof which shall remain in
full force and effect.
8.7 Entire Agreement.
This Agreement (including the Exhibits and the Schedules,
which are incorporated into this Agreement by reference)
contains the entire understanding of the parties with
respect to the transactions contemplated by this
Agreement and may be amended, modified, supplemented, or
altered only by a writing duly executed by all of the
parties. Any prior agreements or understandings relating
to the same subject matter, whether oral or written, are
entirely superseded by this Agreement (other than the
confidentiality letter between the parties dated January
21, 1999).
8.8 Confidential Information.
This Agreement, the terms of the transactions
contemplated by this Agreement, and any other information
heretofore or hereafter disclosed or obtained in
connection with this Agreement concerning the business,
operations, affairs, or financial condition of any party
hereto (collectively, the "confidential information"),
will be kept confidential, except as otherwise required
by law or legal process and except to the extent (i) the
confidential information is or has been disclosed to any
lender, to Tricon Global Restaurants, Inc. or any of its
Affiliates, or to the respective attorneys, accountants,
and financial advisors of any party hereto and its
Affiliates, (ii) the confidential information is or
hereafter becomes lawfully obtainable from other sources,
or (iii) this duty of confidentiality is waived in
writing by the party to whom the confidential information
relates. These obligations of confidentiality will
permanently survive termination or abandonment of this
Agreement.
8.9 GOVERNING LAW.
THIS AGREEMENT, AND ALL INSTRUMENTS DELIVERED IN
CONNECTION WITH THIS AGREEMENT, UNLESS OTHERWISE
EXPRESSLY PROVIDED IN THOSE OTHER INSTRUMENTS, SHALL IN
ALL RESPECTS BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE SUBSTANTIVE LAWS OF THE STATE OF TEXAS WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
8.10 Bulk Sales Waiver.
The Sellers and the Buyer each waive compliance by the
other with any bulk sales or similar laws that may be
applicable to the transactions contemplated by this
Agreement.
8.11 Expenses.
Except as otherwise expressly provided in this Agreement,
each of the parties will bear its own expenses incident
to this Agreement and the transactions contemplated by
this Agreement, including without limitation all fees and
disbursements of counsel and accountants retained by the
party, whether or not the transactions contemplated by
this Agreement are consummated.
8.12 Headings; Interpretation.
(a) The headings of the various articles, sections and
subsections of this Agreement have been inserted for the
purpose of convenience of reference only, are not a part
of this Agreement and shall not be deemed in any manner
to modify, explain, enlarge or restrict any of the
provisions of this Agreement.
(b) When reference is made in this Agreement to an
Article, Section, subsection, Schedule or Exhibit, such
reference shall be to an Article, Section, subsection,
Schedule or Exhibit of this Agreement unless otherwise
indicated. Whenever the words "included", "includes" or
"including" (or any other tense or variation of the word
"include") are used in this Agreement, they shall be
deemed to be followed by the words "without limitation".
As used in this Agreement, the auxiliary verbs "will" and
"shall" are mandatory, and the auxiliary verb "may" is
permissive (and, by extension, is prohibitive when used
negatively, as a denial of permission). All accounting
terms used but not defined in this Agreement shall have
the meanings determined by generally accepted accounting
principles. The words "hereof", "herein" and "hereunder"
and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The definitions
contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to
the masculine as well as to the feminine and neuter
genders of such term, and references to a person include
any individual, corporation, partnership or other entity
and its permitted heirs, successors and assigns. Any
agreement, instrument or statute defined or referred to
herein or in any agreement or instrument that is referred
to herein means such agreement, instrument or statute as
from time to time amended, modified or supplemented,
including (in the case of agreements or instruments) by
waiver or consent and (in the case of statutes) by
succession of comparable successor statutes.
(c) Whenever any statement or representation is made to
the knowledge of the Sellers (or either of them), whether
such statement or representation is contained in this
Agreement or in any other agreement or document
contemplated hereby, the "knowledge" referred to shall be
limited to the actual knowledge (without independent
investigation) of the employees and officers of the
Sellers and/or their Affiliates who are involved in the
negotiation and documentation of the transactions
contemplated by this Agreement.
(d) When reference is made in this Agreement to the
"relevant" Seller, such reference shall be to the Seller
who is selling or assigning, the portion of the Business,
Restaurants or real or personal property being referred
to in the context of such reference. Similarly, if
reference is made in this Agreement to the "relevant"
Franchise Agreement, such reference shall be to the
Franchise Agreement to which the Buyer being referred to
in the context of such reference is a party.
(e) For purposes of this Agreement, the term "Affiliate"
shall mean, with respect to any person or entity, any
other person or entity that directly or indirectly
controls, is controlled by, or is under common control
with, such first person or entity; provided that, with
respect to the Buyer, the term Affiliate shall also
include all members of the Buyer's Control Group (as such
term is defined in Section 4.6).
8.13 Time is of the Essence.
Time is of the essence in the performance of this
Agreement.
8.14 Announcements.
(a) None of the Buyer, its Affiliates or any of its
respective subsidiaries, employees, officers, directors,
agents or representatives may, without the prior written
consent of the Sellers (which consent shall not be
unreasonably withheld after the Closing Date but may be
arbitrarily withheld prior thereto), make any
announcement to the public concerning the transactions
contemplated by this Agreement.
(b) None of the Sellers, their Affiliates or any of their
respective subsidiaries, employees, officers, directors,
agents or representatives may, without the prior written
consent of the Buyer (which consent shall not be
unreasonably withheld after the Closing Date but may be
arbitrarily withheld prior thereto), make any
announcement to the public concerning the transactions
contemplated by this Agreement, except as required by
law.
(c) This subsection 8.14 shall expressly and permanently
survive the termination or abandonment of this Agreement.
8.15 Counterparts.
This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one
and the same instrument.
8.16 No Specific Enforcement.
Each of the parties to this Agreement acknowledges that
the Restaurants, the Assets, the Owned Real Property and
the Leased Real Property are not of a special, unique or
extraordinary character, and that any breach of this
Agreement or any of the agreements or documents
contemplated hereby by any party hereto could be
compensated for by damages. Accordingly, if any party
hereto breaches its obligations under this Agreement or
any of the agreements or documents contemplated hereby,
the other party hereto shall not be entitled to
enforcement of this Agreement or such other agreement or
document by a decree of specific performance requiring
that the breaching party fulfill its obligations
hereunder or thereunder.
8.17 Submission to Jurisdiction.
For purposes of any legal action or proceeding relating
to this Agreement or any other agreements or
documentation contemplated by the Acquisition, including
recognition or enforcement of any judgment, the Buyer and
each Seller hereby irrevocably and unconditionally submit
themselves and their property to the non-exclusive
general jurisdiction of the state and federal courts of
the county in which PHI then has its principal place of
business, and any applicable appellate courts. The Buyer
and each Seller waive any objection to venue or the
inconvenience of such courts. The Buyer and each Seller
waive, to the extent not prohibited by law, any right
they may have to claim any special, exemplary or
consequential damages in such action or proceeding.
8.18 Arms Length Contract.
This Agreement has been negotiated "at arms length" by
the parties hereto, each represented by counsel of its
choice and each having an equal opportunity to
participate in the drafting of the provisions hereof.
Accordingly, in construing the provisions of this
Agreement no party shall be presumed or deemed to be the
"drafter" or "preparer" of the same.
8.19 No Future Acquisition Rights.
The Buyer expressly acknowledges and agrees that it has
no rights to acquire any additional restaurants or
properties, other than those expressly provided in this
Agreement, from PHI or any of its Affiliates. Any future
rights to acquire restaurants or properties would only
arise pursuant to a separate written agreement between
PHI or any of its Affiliates and Buyer.
IN WITNESS WHEREOF, the parties have hereunto set their hands
and seals on the date and year first above written.
PIZZA HUT OF AMERICA, INC.
By: ____________________________
Xxxx X. Xxxxxx
Attorney-in-Fact
PIZZA HUT OF FLORIDA, INC.
By: ____________________________
Xxxx X. Xxxxxx
Attorney-in-Fact
D & E FOODSERVICE, INC.
By: ____________________________
Xxxx X. Xxxxxx
Attorney-in-Fact
RED RAIDER PIZZA COMPANY
By: ____________________________
Xxxx X. Xxxxxx
Attorney-in-Fact
PIZZA HUT, INC.
By: ____________________________
Xxxx X. Xxxxxx
Vice President - Law
ROMET CORP.
By: ____________________________
Xxxx X. Xxxxxx
Attorney-in-Fact
NPC INTERNATIONAL, INC.
By: ____________________________
Xxxxx X. Xxxxxxxx
President & Chief
Operating Officer
NPC MANAGEMENT, INC.
By: ____________________________
Xxxxx X. Xxxxxxxx
President & Chief Operating
Officer
_______________________________
1 The term "pollutant" means any substance subject to control
under the Federal Water Pollution Act, 33 U.S.C. 1251, et
seq., or the Clean Air Act, 42 U.S.C. 7401, et seq., or
regulations promulgated thereunder. The term "toxic or
hazardous waste" means any chemical, substance, or material
that is classified by the Environmental Protection Agency as
a hazardous substance under the Comprehensive Environmental
Response, Compensation' and Liability Act of 1980, 42 U.S.C.
9601, et seq., or regulations promulgated thereunder, or
under the Resource Conservation and Recovery Act of 1976, 42
U.S.C. 6901, et seq., or regulations promulgated
thereunder, or which is a petroleum product, or which is
classified by any applicable state or local regulation or
statute as a hazardous waste.
