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EXHIBIT 10.9
CONTRIBUTION AGREEMENT
This CONTRIBUTION AGREEMENT (this "Agreement") is entered into as of
September __, 1997 by and among CKE RESTAURANTS, INC., a Delaware corporation
("CKE"), SUMMIT FAMILY RESTAURANTS INC., a Delaware corporation and, as of the
date of this Agreement, a wholly-owned subsidiary of CKE ("Summit"), STAR
BUFFET, INC., a Delaware corporation and, as of the date of this Agreement, a
wholly-owned subsidiary of CKE ("Star"). CASA XXXXXX INCORPORATED, a Texas
corporation and indirect wholly-owned subsidiary of CKE ("Casa Xxxxxx"), and
JB's RESTAURANTS, INC., a Delaware corporation and wholly-owned subsidiary of
CKE ("JB's").
RECITALS:
A. CKE is engaged, through its subsidiaries listed in Schedule 1
attached hereto (the "CKE Subsidiaries"), in the primary business, among
others, of owning, operating, franchising and licensing quick-service
restaurants, primarily consisting of the Carl's Jr.(R), Hardee's(R) and Taco
Bueno(R) concepts (CKE and the CKE Subsidiaries other than members of the Star
Group (as such term is hereinafter defined) are collectively referred to as the
"CKE Group");
B. CKE has determined to reorganize and consolidate the assets and
operations of the buffet-style restaurant business of certain of its
subsidiaries (collectively, the "Buffet Restaurant Business"), which is
currently comprised of 16 HomeTown Buffet restaurants currently operated by HTB
Restaurants, Inc., a Delaware corporation and wholly-owned subsidiary of Summit
("HTB"), as a franchisee of HomeTown Buffet, Inc. (the "Franchisor"), two (2)
Casa Xxxxxx Mexican theme restaurants currently operated by Casa Xxxxxx, and
seven (7) XX Xxxxx'x Grand Buffet restaurants to be acquired pursuant to an
Asset Purchase Agreement, dated July 24, 1997 (the "North Purchase Agreement"),
between CKE and North's Restaurants, Inc., an Oregon corporation ("North's"),
into Star and Star's subsidiaries listed in Schedule 2 attached hereto (the
"Star Subsidiaries") (Star and the Star Subsidiaries, after giving effect to the
Asset Transfers (as such term is hereinafter defined) and the consummation of
the transactions contemplated by this Agreement, are collectively referred to
herein as the "Star Group"); and
C. Star has filed a registration statement on Form S-1 (the
"Registration Statement") with the Securities and Exchange Commission (the
"SEC") under the Securities Act of 1933, as amended (the "Securities Act"),
relating to an initial public offering of 2,500,000 shares of Star Common Stock,
of which 600,000 shares are to be offered and sold by CKE (the "Offering")
pursuant to an Underwriting Agreement to be entered into by and among Star, CKE
and Equitable Securities Corporation, EVEREN Securities, Inc. and Cruttenden
Xxxx Incorporated, as representatives of the Underwriters (the "Underwriting
Agreement"), on or promptly following the date on which the Registration
statement is declared effective by the SEC;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and in consideration
of the mutual covenants and conditions contained herein, the parties hereby
agree as follows:
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1. FORMATION TRANSACTIONS
1.1 Exchange of Summit Shares for Star Shares; Section 351.
Effective as of the Effective Time (as defined in Section 1.3 below), CKE agrees
to contribute and transfer to Star all of the issued and outstanding shares of
capital stock of Summit (the "Summit Shares"), free and clear of any and all
liens, claims, pledges, options, security interests, encumbrances and
restrictions on transfer (other than restrictions imposed pursuant to applicable
federal and state securities laws), in exchange for, and Star agrees to issue to
CKE, Two Million Six Hundred Thousand (2,600,000) newly issued shares of common
stock, par value $0.001 per share (the "Common Stock) of Star (the "Star
Shares"). This Agreement is being entered into by the parties as part of a
unified plan of contribution and exchange of stock (the "Plan") that is intended
by the parties to qualify for non-recognition treatment under Section 351 of the
Internal Revenue Code of 1986, as amended (the "Code"). Such Plan is comprised
of the transactions contemplated by this Agreement provided that none of the
parties to this Agreement or such other agreements have made or are making any
representations or warranties with respect to whether the transactions being
consummated pursuant to and as part of such Plan will comply with the
requirements of Code Section 351 or as to the consequences, under applicable
federal, state or other tax laws, of such transactions to the parties to this
Agreement or the parties to the other agreements and transactions that are part
of the Plan.
1.2 Asset Transfers and Assumption of Liabilities. Prior to
the Effective Time, Star, Summit and CKE shall, and shall cause their respective
subsidiaries to, execute and deliver such agreements, instruments and other
documents as may be necessary or appropriate to evidence the transactions
contemplated by this Agreement. Notwithstanding the generality of the foregoing,
prior to the closing of the Offering, CKE, Star and Summit shall cause (i) the
entities, assets, operations and corresponding liabilities of the Buffet
Restaurant Business to be included as part of the Star Group, and (ii) the
entities, assets and operations and liabilities of the Star Group to be limited
to the Buffet Restaurant Business.
(a) Casa Xxxxxx. Prior to the Effective Time, Casa Xxxxxx
shall transfer to Summit, and Summit shall accept from Casa Xxxxxx,
substantially all of the assets of Casa Xxxxxx used in connection with the
operation of the two Casa Xxxxxx Restaurants described in Schedule 1.2(a)
attached hereto (the "Casa Xxxxxx Assets"), subject to the Casa Xxxxxx
Liabilities (as such term is defined in Section 1(d)(i) below, in consideration
for an amount (subject to adjustment as provided in Section 1.5 below) equal to
$495,000, representing the estimated net asset value of the Casa Xxxxxx
Restaurants (the "Casa Xxxxxx Asset Transfer") pursuant to a Xxxx of Sale and
Assumption of Liabilities in the form attached hereto as Exhibit A (the "Casa
Xxxxxx Xxxx of Sale"). The foregoing amount shall be paid by delivery of an
interest free promissory note to Casa Xxxxxx (the "Casa Xxxxxx Note"). Star
shall cause the Casa Xxxxxx Note to be repaid in full from the net proceeds of
the Offering.
(b) Summit. Prior to the Effective Time, Summit shall
transfer to JB's, and JB's shall accept from Summit, substantially all of
Summit's assets (other than the outstanding shares of HTB and the Casa Xxxxxx
Assets), including, without limitation, all assets used by Summit relating to
its JB's Restaurants and related franchise system and its Galaxy Diner
restaurants and all interests (including leasehold interests) of Summit in and
to any real property (collectively, the "JB's Assets"), subject to the JB's
Liabilities (as such term is defined in Section 1(e) in consideration for an
amount (subject to adjustment as provided in Section 1.5 below) equal to
$________, representing the estimated net asset value of the JB's Assets (the
"JB's Asset Transfer"), pursuant to a Xxxx of Sale and Assumption of Liabilities
in the form attached hereto as Exhibit B (the "JB's Xxxx of Sale"). The
foregoing amount shall be paid by delivery of a promissory note of JB's to
Summit (the "JB's Note").
(c) Transfer of JB's Note. After the effectiveness of the
JB's Asset Transfer, but prior to the Effective Time, Summit shall transfer to
CKE, as a dividend, all of Summit's right, title and interest in and to
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the JB's Note (the "Note Transfer" and, collectively with the Casa Xxxxxx Asset
Transfer and the JB's Asset Transfer, the "Asset Transfers").
(d) Assumption of Liabilities by Star and Summit.
(i) Casa Xxxxxx Liabilities. As of the Effective Time,
Summit agrees to assume and pay all contracts, obligations and liabilities of
Casa Xxxxxx or any other member of the CKE Group associated in any way with the
Casa Xxxxxx Assets or the operation of the Casa Xxxxxx restaurants, whether
accrued, absolute, contingent or otherwise, and whether due or to become due
(collectively, the "Casa Xxxxxx Liabilities"), except as provided herein as in
the Casa Xxxxxx Xxxx of Sale. The Casa Xxxxxx Liabilities shall include, without
limitation, all obligations of any member of the CKE Group acting as a guarantor
of obligations of Casa Xxxxxx which relate to the Casa Xxxxxx Assets and all
obligations of Casa Xxxxxx under leases for real or personal property and other
executory contracts and liabilities, whether arising as a result of the
transactions contemplated hereby, existing on the date hereof or based on facts
or actions arising on or prior to the Effective Date.
(ii) Buffet Restaurant Liabilities. As of the
Effective Time, Star agrees to assume and pay, or to cause a subsidiary entity
included within the Star Group to assume and pay, all contracts, obligations and
liabilities of each member of the CKE Group associated in any way with the
Buffet Restaurant Business, whether accrued, absolute, contingent or otherwise,
and whether due or to become due, including, without limitation, all obligations
of any member of the CKE Group acting as a guarantor of obligations of the
Buffet Restaurant Business, all obligations under leases and other executory
contracts and liabilities, whether arising as a result of the transactions
contemplated hereby, existing on the date hereof or based on facts or actions
arising on or prior to the Effective Date, and all Retained Summit Liabilities
(as defined below) (collectively, the "Assumed Liabilities").
(e) Assumption of Liabilities by JB's. As of the
Effective Time, JB's agrees to assume and pay all contracts, obligations and
liabilities of Summit and each member of the CKE Group associated in any way
with the JB's Assets, whether accrued, absolute, contingent or otherwise, and
whether due or to become due, including, without limitation, all obligations of
Summit under any lease agreement for real or personal property and other
executory contracts and liabilities, whether arising as a result of the
transactions contemplated hereby, existing on the date hereof or based on facts
or actions arising on or prior to the Effective Date (collectively, the "JB's
Liabilities"); provided, however, that Summit shall retain full responsibility
for the payment or performance and satisfaction of, and none of the CKE Group
shall be deemed to have assumed, any obligation of Summit which, by the terms
and provisions thereof, relates specifically to the Buffet Restaurant Business
(the "Retained Summit Liabilities"). By way of example, the Retained Summit
Liabilities include, without limitation, certain agreements executed by Summit
in favor of the Franchisor with respect to the operations of the HomeTown Buffet
restaurants operated by HTB, guarantees executed by Summit of any obligation of
HTB, and Casa Xxxxxx Liabilities.
(f) Casa Xxxxxx Name Change. Casa Xxxxxx shall take all
corporate actions necessary to amend its charter documents to change its name to
"Taco Bueno Restaurants, Inc."
(g) Special Dividend. Star agrees to declare prior to
the issuance of shares of Common Stock of Star to the Underwriters pursuant to
the Underwriting Agreement (subject to the completion of the Offering), and to
pay to CKE, as sole stockholder of Star, a dividend in cash in an amount equal
to $7,885,000. Such dividend shall be paid by Star upon completion of the
Offering.
1.3 Effective Time. The "Effective Time" shall mean 6:00 a.m.
Pacific Time on Tuesday, September 23, 1997, or such later time and date as CKE
and Star may mutually agree.
1.4 Delayed Transfers. To the extent that any required consent
with respect to the assignment, transfer or bifurcation of a contract,
agreement, lease or other instrument included in the Casa Xxxxxx Assets or the
JB's Assets has not been obtained on or prior to the Effective Time and the
transferor is unable (by sublease or otherwise) to transfer the legal benefit
thereof to the transferee, such contract, agreement, lease or instrument (a
"Delayed Asset") shall not be transferred and any related liability (a "Delayed
Liability") shall not be assumed by the transferee as an Assumed Liability
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hereunder, unless and until such required consent has been obtained or the
transferor is otherwise able to transfer the legal benefit thereof.
Notwithstanding the foregoing, if such required consent to transfer is not
obtained, CKE shall cause Casa Xxxxxx to use its best efforts to attempt to
provide to Summit the benefits of any such Delayed Assets which are Casa Xxxxxx
Assets and Star shall cause Summit to use its best efforts to attempt to provide
to JB's the benefits of any such Delayed Assets which are JB's Assets. At such
time and on each occasion after the Effective Time that a required consent shall
be obtained with respect to a Delayed Asset, such Delayed Asset shall forthwith
be deemed transferred and assigned as contemplated hereunder, and all related
Delayed Liabilities shall be simultaneously assumed by the transferee hereunder,
whereupon (i) such delayed asset shall constitute a JB's Asset or a Casa Xxxxxx
Asset, as the case may be, for all purposes hereunder and (ii) such delayed
liability shall constitute an Assumed Liability for all purposes hereunder.
1.5 Post-Closing Adjustments. As soon as practicable, but in
no event later than 45 days following the Effective Time, CKE shall prepare and
deliver to Star statements of the net assets setting forth (a) with respect to
the Casa Xxxxxx Asset Transfer, the book values of the Casa Xxxxxx Assets and
the Casa Xxxxxx Liabilities as of the Effective Time, and (b) with respect to
the JB's Asset Transfer, the book values of the JB's Assets and the Assumed
Liabilities as of the Effective Time (which shall be subject to adjustment
pursuant to Section 1.7 below) Star shall provide CKE and its representatives
with full access to the books, records, facilities and employees of the Star
Group and corporate fully with CKE and CKE's representatives, including the
provision on a timely basis of all necessary as useful information, in
connection with the preparation of the foregoing statements of net assets. Upon
receipt of such statements, Star shall have 30 days to review the statements
and related work papers, and shall be deemed to have accepted and agreed to the
statements and the adjustments resulting therefrom. Otherwise, CKE and Star
shall use reasonable commercial efforts to resolve any differences, and any
resolution by them as to any disputed amounts shall be final, binding and
conclusive. Within ten Business Days following agreement by CKE and Star to the
statements of net assets, (a) Summit shall pay to Casa Xxxxxx the amount, if
any, by which the net asset value of the Casa Xxxxxx Assets and Casa Xxxxxx
Liabilities exceeds $495,000, or Casa Xxxxxx shall pay to Summit the amount, if
any, by which $495,000 exceeds such net asset value, and (b) JB's shall pay to
Summit the amount, if any, by which the net asset value of the JB's Assets and
Assumed Liabilities exceeds $_______, or Summit shall pay to JB's the amount,
if any, by which $________ exceeds such net asset value. Any such payments made
pursuant to this Section 1.5 shall be accompanied by interest, accrued from the
Effective Time up to and including the date of payment, at the Base Rate of
interest provided under CKE's primary secured credit facility.
1.6 Adjustments and Prorations. The parties agree to prorate
as of the Effective Time, as appropriate, rents, taxes, insurance, utilities
and similar items and to make such adjustments to the statements of net assets
to be prepared pursuant to Section 1.5 above or to provide for direct
reimbursement, as the case may be, in order to reasonably allocate to the party
for whose benefit payments or accruals are made all such payments or accruals
made prior to the Effective Time but which relate to periods from and after the
Effective Time and for which no assumption of liabilities is provided in the
Casa Xxxxxx Xxxx of Sale or the JB's Xxxx of Sale, as the case may be.
1.7 Special Summit Adjustment. The net asset value of the
JB's Assets to be determined pursuant to Section 1.5 above shall be adjusted,
as appropriate, to the extent that the balance as of the Effective Time of the
intercompany account balance between Summit and HTB is different than
$7,885,000 million. Such difference, if a positive number, shall result in an
increase to the net asset value of the JB's Assets and, if a negative number,
shall result in a decrease to the net asset value of the JB's Assets.
2. OTHER AGREEMENTS
2.1 Letters of Credit. Star shall use its best efforts to
cause the beneficiaries of all letters of credit, guarantees and other
contingent liabilities relating to the Buffet Restaurant Business (including,
without limitation, commercial letters of credit, financing guarantees,
performance guarantees, and insurance and workers' compensation liabilities)
which will not have expired on or prior to the Effective Date to release and
terminate all such letters of credit, guarantees and contingent liabilities on
or prior to the Effective Date and, where necessary or appropriate, to accept
substitute letters of credit, guarantees or contingent liabilities issued for
the account of Star or to post sufficient cash collateral on behalf of Star.
From and after the Effective Date, Star will pay to CKE a fee based upon the
maximum exposure related to any such letters of credit, guarantees and
contingent liabilities which were not released, terminated or replaced prior to
the Effective Date. Such fee will be structured consistent with the pricing for
letter of credit fees under CKE's senior credit facility from time to time in
effect, and shall at all times indemnify and hold each member of the CKE Group
harmless from and against all losses, liabilities and obligations incurred with
respect to such letters of credit, guarantees or contingent liabilities and
shall pay or reimburse CKE, upon demand, within ten days for any amounts
actually paid by any member of the CKE Group with respect thereto.
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2.2 Insurance. All policies of liability, fire, workers'
compensation and other forms of insurance maintained by the CKE Group insuring
the properties, assets and/or operations of the Buffet Restaurant Business or
the Star Group shall continue in full force and effect up to and through the
Effective Date and, shall be terminated effective 11:59 p.m. Pacific Time on the
Effective Date. Any refunds of prepaid premiums with respect to such terminated
insurance shall be for CKE's account. Star shall be liable for payment of all
claims arising out of incidents, known or unknown, reported or unreported, which
occur prior to, on or after the Effective Date with respect to any insurance
programs relating to the Star Group.
2.3 Further Assurances. Each party shall execute and deliver
such further instruments and take such further actions as the other party may
reasonably request in order to carry out the intent of this Agreement and to
consummate the transactions contemplated hereby.
2.4 Cooperation. Each of CKE, Star and Summit acknowledge and
agree that because of the relationship between the parties prior to the
Effective Time, a very high degree of cooperation between the parties will be
necessary subsequent to the Effective Time in order to ensure a smooth and
efficient transition. Each party therefore agrees to cooperate in good faith
with the other party for the purpose of ensuring a smooth transition. Such
cooperation shall be without charge (other than reimbursement of expenses) and
shall include, but shall not be limited to, cooperating by each party in
preparing, reviewing, analyzing and responding to inquiries, claims, requests,
threats of litigation or actual litigation involving the business or the
assets of the other party.
3. TAX MATTERS
3.1 Liability for Taxes and Related Matters.
(a) CKE's Indemnification of Star. CKE shall be liable for
and indemnify Star for all Taxes (as hereinafter defined) (including, without
limitation, any obligation to contribute to the payment of a tax determined on a
consolidated, combined or unitary basis with respect to a group of corporations
that includes or included the Star Group and Taxes resulting from the members of
the Star Group ceasing to be members of the CKE Group) (i) imposed on the CKE
Group (other than the members of the Star Group) for any taxable year and (ii)
imposed on the Star Group or for which the Star Group may otherwise be liable
for any taxable year or period that ends on or before the Effective Date and,
with respect to any taxable year or period beginning before and ending after the
Effective Date, the portion of such taxable year ending on and including the
Effective Date. CKE shall also indemnify, defend and hold harmless Star from all
costs and expenses incurred by Star (including reasonable attorneys' fees and
expenses) in connection with any liability to, or claim by, any taxing
authority, for Taxes for which CKE is required to indemnify Star under this
Section 3.1(a). Except as set forth in Section 3.1(d), CKE shall be entitled to
any refund of Taxes of the Star Group received for such periods.
(b) Star's Indemnification of CKE. Star shall be liable
for and indemnify CKE for the Taxes of the Star Group for any taxable year or
period that begins after the Effective Date and, with respect to any taxable
year or period beginning before and ending after the Effective Date, the portion
of such taxable year beginning after the Effective Date. Star shall also
indemnify, defend and hold harmless CKE from all costs and expenses incurred by
CKE (including reasonable attorneys' fees and expenses) in connection with any
liability to, or claim by, any taxing authority, for Taxes for which Star is
required to indemnify CKE under this Section 3.1(b). Star shall be entitled to
any refund of Taxes of the Star Group received for such periods.
(c) Taxes for Short Taxable Year. For purposes of
paragraphs (a) and (b), whenever it is necessary to determine the liability for
Taxes of the Star Group for a portion of a taxable year or period that begins
before and ends after the Effective Date, the determination of the Taxes of the
Star Group for the portion of the year or period ending on, and the portion of
the year or period beginning after, the Effective Date shall be determined by
assuming that the Star Group had a taxable year or period which ended at the
close of the Effective Date, except that exemptions, allowances or deductions
that are calculated on an annual basis, such as the deduction for depreciation,
shall be apportioned on a time basis.
(d) Refunds from Carrybacks. If CKE becomes entitled to a
refund or credit of Taxes for any period for which it is liable under Section
3.1(a) to indemnify Star and such Taxes are attributable solely to the carryback
of losses, credits or similar items attributable to the Star Group and from a
taxable year or period that begins after the Effective Date, CKE shall promptly
pay to Star the amount of such refund or credit together with any interest
thereon. In the event that any refund or credit of Taxes for which a payment has
been made is subsequently reduced or disallowed, Star shall indemnify and hold
harmless CKE for any tax liability, including interest and penalties, assessed
against CKE by reason of the reduction or disallowance.
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(e) Tax Returns. CKE shall file or cause to be filed when
due all Tax Returns (as hereinafter defined) that are required to be filed by or
with respect to the Star Group for taxable years or periods ending on or before
the Effective Date and shall pay any Taxes due in respect of such Tax Returns,
and Star shall file or cause to be filed when due all Tax Returns that are
required to be filed by or with respect to the Star Group for taxable years or
periods ending after the Effective Date and shall pay any Taxes due in respect
of such Tax Returns. CKE shall pay Star the Taxes for which CKE is liable
pursuant to Section 3.1(a) but which are payable with Tax Returns to be filed by
Star pursuant to the previous sentence within ten days prior to the due date for
the filing of such Tax Returns.
(f) Contest Provisions. Star shall promptly notify CKE in
writing upon receipt by Star, any of its affiliates or the Star Group of notice
of any pending or threatened federal, state, local or foreign income or
franchise tax audits or assessments which may materially affect the tax
liabilities of the Star Group for which CKE would be required to indemnify Star
pursuant to Section 3.1(a), provided that failure to comply with this provision
shall not affect Star's right to indemnification hereunder. CKE shall have the
sole right to represent the Star Group's interests in any tax audit or
administrative or court proceeding relating to taxable periods ending on or
before the Effective Date, and to employ counsel of its choice at its expense.
Notwithstanding the foregoing, CKE shall not be entitled to settle, either
administratively or after the commencement of litigation, any claim for Taxes
which would adversely affect the liability for Taxes of Star or the Star Group
for any period after the Effective Date to any extent (including, but not
limited to, the imposition of income tax deficiencies, the reduction of asset
basis or cost adjustments, the lengthening of any amortization or depreciation
periods, the denial of amortization or depreciation deductions, or the reduction
of loss or credit carry forwards) without the prior written consent of CKE. Such
consent shall not be unreasonably withheld.
CKE shall be entitled to participate at its expense in the
defense of any claim for Taxes for a year or period ending after the Effective
Date which may be the subject of indemnification by CKE pursuant to Section
3.1(a) and, with the written consent of Star, and at its sole expense, may
assume the entire defense of such tax claim. Neither Star nor Summit nor any of
the Star Group may agree to settle any tax claim for the portion of the year or
period ending on the Effective Date which may be the subject of indemnification
by CKE under Section 3.1(a) without the prior written consent of CKE, which
consent shall not be unreasonably withheld.
(g) Certain Definitions. For purposes of this Section 3,
(i) the term "Tax" shall mean all federal, state, local or foreign income, gross
receipts, windfall or excess profits, severance, property, production, sales,
use, license, excise, franchise, employment, withholding or similar taxes,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties, and (ii) the term "Tax
Return" shall mean all federal, state, local or foreign tax returns, tax
reports, and declarations of estimated tax, including without limitation
consolidated federal income tax returns of the Star Group.
3.2 Assistance and Cooperation. After the Effective Date, each
of CKE and Star shall: (i) assist (and cause their respective affiliates to
assist) the other party in preparing any Tax Returns or reports which such other
party is responsible for preparing and filing in accordance with this Agreement;
(ii) cooperate fully in preparing for any audits of, or disputes with taxing
authorities regarding, any Tax Returns of the Star Group; (iii) make available
to the other and to any taxing authority as reasonably requested all
information, records, and documents relating to Taxes of the Star Group; (iv)
provide timely notice to the other in writing of any pending or threatened tax
audits or
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assessments of the Star Group for taxable periods for which the other may have a
liability under this Agreement, provided, that failure to comply with this
provision shall not affect the other party's rights to indemnification
hereunder; and (v) furnish the other with copies of all correspondence received
from any taxing authority in connection with any tax audit or information
request with respect to any such taxable period.
3.3 Tax Sharing Agreements. Any and all tax sharing, tax
indemnity, or tax allocation agreements with respect to which Summit or any of
its subsidiaries was a party at any time prior to the Effective Date shall
terminate upon the Closing Date. No further amounts shall be payable by Star or
any of its subsidiaries under such agreements following the Closing.
3.4 Survival of Obligations. The obligations of the parties
set forth in this Section shall be unconditional and absolute and shall remain
in effect without limitation as to time.
4. CONDITIONS PRECEDENT
4.1 Conditions Precedent to the Obligations of the Parties.
The obligations of each of the parties to effect the transactions contemplated
hereby are subject to the condition that, at the Effective Time, no (i)
threatened, instituted or pending action, proceeding, application, claim or
counterclaim by or before any court or governmental authority or agency seeking
to restrain or prohibit the consummation of the transactions contemplated hereby
or described in the Registration Statement or (ii) statute, rule, regulation,
decree, order of injunction promulgated, enacted, entered or enforced by any
court or governmental agency or authority restraining or prohibiting the
consummation of such transactions.
5. INDEMNIFICATION
5.1 Indemnification.
(a) CKE shall indemnify and hold harmless the Star Group
and their respective officers, directors, employees, representatives, agents,
successors and assigns (collectively, the "Star Group Indemnitees") against and
in respect of any and all damages, claims, liabilities, expenses as incurred
(including reasonable attorneys' fees) and losses (collectively "Damages")
incurred by the Star Group Indemnitees that arise out of or relate to (i) any
breach or violation of this Agreement by CKE; (ii) the conduct of CKE's business
(excluding the Buffet Restaurant Business) prior to the Effective Time, or (iii)
the conduct of CKE's business after the Effective Time; excluding therefrom any
Damages relating to any Assumed Liabilities.
(b) Star and Summit shall indemnify and hold harmless the
CKE Group their respective officers, directors, employees, representatives,
agents, successors and assigns (collectively, the "CKE Group Indemnitees")
against and in respect of any and all Damages incurred by the CKE Group
Indemnitees that arise out of or relate to (i) any breach or violation of this
Agreement
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by Star or Summit or their respective subsidiaries, (ii) the conduct of the
Buffet Restaurant Business after the Effective Time , and (iii) the Assumed
Liabilities.
5.2 Indemnification Procedure.
(a) Claims for Indemnification. Whenever any claim shall
arise for indemnification hereunder, the party entitled to indemnification (the
"indemnified party") shall promptly notify the other party or parties (the
"indemnifying party") of the claim and, when known, the facts constituting the
basis for such claim; provided that the indemnified party's failure to give such
notice shall not affect any rights or remedies of an indemnified party hereunder
with respect to indemnification for damages except to the extent that the
indemnifying party is materially prejudiced thereby. In the event of any claim
for indemnification hereunder resulting from or in connection with any claim or
legal proceedings by a third party, the notice to the indemnifying party shall
specify, if known, the amount or an estimate of the amount of the liability
arising therefrom. The indemnified party shall not settle or compromise any
claim by a third party for which it is entitled to indemnification hereunder
without the prior written consent of the indemnifying party (which shall not be
unreasonably withheld) unless suit shall have been instituted against it and the
indemnifying party shall not have taken control of such suit after notification
thereof as provided in Section 5.2(b) of this Agreement.
(b) Defense by Indemnifying Party. In connection with any
claim giving rise to indemnity hereunder or resulting from or arising out of any
claim or legal proceeding by a person who is not a party to this Agreement, the
indemnifying party at its sole cost and expense may, upon written notice to the
indemnified party, assume the defense of any such claim or legal proceeding if
it acknowledges to the indemnified party in writing its obligations to indemnify
the indemnified party with respect to such claim, and thereafter diligently
conducts the defense thereof with counsel reasonably acceptable to the
indemnified party. The indemnified party shall be entitled to participate in
(but not control) the defense of any such action, with its counsel and at its
own expense. If the indemnifying party does not assume or fails to conduct in a
diligent manner the defense of any such claim or litigation resulting therefrom,
(a) the indemnified party may defend against such claim or litigation, in such
manner as it may deem appropriate, including, but not limited to, settling such
claim or litigation, after giving notice of the same to the indemnifying party,
on such terms as the indemnified party may deem appropriate, and (b) the
indemnifying party shall be entitled to participate in (but not control) the
defense of such action, with its counsel and at its own expense. If the
indemnifying party thereafter seeks to question the manner in which the
indemnified party defended such third party claim or the amount or nature of any
such settlement, the indemnifying party shall have the burden to prove by a
preponderance of the evidence that the indemnified party did not defend or
settle such third party claim in a reasonably prudent manner. Each party agrees
to cooperate fully with the other, such cooperation to include, without
limitation, attendance at depositions and the provision of relevant documents as
may be reasonably requested by the indemnifying party, provided that the
indemnifying party will hold the indemnified party harmless from all of its
expenses, including reasonable attorney's fees, incurred in connection with such
cooperation by the indemnified party.
6. MISCELLANEOUS
6.1 Notices. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
or facsimile communications)) and shall be mailed (return receipt requested),
telegraphed, sent by facsimile or hand delivered to each party at the address
set forth as follows, or at such other address as either party may designate by
notice to the others, and any such notice, request, demand or other
communications shall be effective upon receipt:
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If to CKE: CKE Restaurants, Inc.
0000 Xxxxx Xxxxxx Xxxxxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attn: Chief Financial Officer
If to Summit: Summit Family Restaurants Inc.
000 Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attn: Chief Financial Officer
If to Star: Star Buffet, Inc.
000 Xxxxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Attn: Chief Financial Officer
6.2 Amendments. This Agreement shall not be amended, changed,
modified, terminated or discharged in whole or in part except by an instrument
in writing signed by all parties, or their respective successors or assigns, or
otherwise as provided herein.
6.3 Attorneys' Fees. In the event of any dispute arising out
of or in connection with this Agreement, and any other documents executed
pursuant, the prevailing party, in addition to any other amounts which it may be
entitled to, shall be entitled to recover from the other party reasonable
attorneys' fees and court costs as shall be awarded in the resolution of such
dispute.
6.4 Entire Agreement. This Agreement contains the entire
agreement between the parties pertaining to the subject matter hereof. This
Agreement supersedes all prior written agreements and all prior or
contemporaneous verbal agreements with respect to the subject matter hereof.
6.5 Waiver. Any forbearance by a party to this Agreement in
exercising any right or remedy under this Agreement or otherwise afforded by
applicable law shall not be a waiver of or preclude the exercise of that or any
other right or remedy.
6.6 Headings. The section headings hereof have been inserted
for convenience of reference only and shall not be construed to affect the
meaning, construction or effect of this Agreement.
6.7 Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity of any other
provision, and all other provision, and all other provisions shall remain in
full force and effect.
6.8 Choice of Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and performed in such State, without regard to conflicts of laws
principles.
6.9 Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed an original, and
all of which taken together shall counterparts, each of which when so executed
shall be deemed an original, and all of which taken together shall constitute
one and the same instrument.
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IN WITNESS WHEREOF, this Agreement is executed on behalf of the parties
by duly authorized representatives as of the date first above written.
CKE RESTAURANTS, INC.
By:
--------------------------------
Name:
Title:
SUMMIT FAMILY RESTAURANTS INC.
By:
--------------------------------
Name:
Title
STAR BUFFET, INC.
By:
--------------------------------
Name:
Title:
CASA XXXXXX INCORPORATED
By:
--------------------------------
Name:
Title:
JB'S RESTAURANTS, INC.
By:
--------------------------------
Name:
Title:
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