MERGER OF DEVELOPMENT AGREEMENTS
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THIS MERGER OF DEVELOPMENT AGREEMENTS ("Agreement") is entered into as of
the 1st day of February, 2001, by and among: (i) PJ AMERICA, INC., a Delaware
corporation ("PJAM"), PJ CHEESE, INC., an Alabama corporation ("PJC"), OHIO
PIZZA DELIVERY CO., an Ohio corporation ("OPD"), PJ LOUISIANA, INC., a Louisiana
corporation ("PJLA"), and PJ UTAH, L.L.C., a Utah limited liability company
(PJAM, PJC, OPD, PJLA and PJUT are affiliated entities and are hereinafter
collectively referred to as "Developer"), and (ii) PAPA JOHN'S INTERNATIONAL,
INC., a Delaware corporation ("Franchisor").
RECITALS:
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A. Developer and Franchisor were formerly parties to 11 Development
Agreements pursuant to which Developer developed 92 Papa John's Pizza outlets
and which Development Agreements have expired pursuant to their terms (the
"Completed Development Agreements"), which Completed Development Agreements were
identified by Franchisor as Dev Agmt 79-1, Dev Agmt 79-2, Dev Agmt 193-1, Dev
Agmt 261-0, Dev Agmt 261-1, Dev Agmt 261-2, Dev Agmt 261-3, Dev Agmt 261-4, Dev
Agmt 261-6, Dev Agmt 261-7 and Dev Agmt 261-10.
B. Developer and Franchisor are parties to seven Development Agreements,
dated July 10, 2000 ("Dev Agmt 79-3"), March 26, 1998 ("Dev Agmt 193-2"),
October 4, 1996 ("Dev Agmt 245-1"), April 20, 1998 ("Dev Agmt 261-5"), December
19, 1997 (" Dev Agmt 261-8"), November 13, 1998 ("Dev Agmt 261-9"), and May 28,
2000 ("Dev Agmt 261-11"), under which Developer has the right to develop a total
of 143 Papa John's Pizza outlets in parts of Ohio, Louisiana, Utah, California,
Alabama and Oregon (collectively, the "Active Development Agreements").
C. The Completed Development Agreements and the Active Development
Agreements are sometimes hereinafter referred to collectively as the
"Development Agreements."
D. As of December 31, 2000, Developer had opened a total of 167 Papa John's
Pizza outlets under the Development Agreements, which are open and operating
pursuant to Franchise Agreements with Franchisor.
E. Developer and Franchisor desire to reduce the area included in the
development area under Dev Agmt 261-5.
F. Developer and Franchisor desire to merge all the remaining development
rights held by Developer under the Development Agreements into a new Development
Agreement for 46 Papa John's Pizza outlets in the combined development areas
under the Development Agreements, except as reduced with respect to the
development area under Dev Agmt 261-5, a net reduction in remaining development
rights for 22 Papa John's Pizza outlets.
G. Developer and Franchisor have agreed to the foregoing transactions upon
the terms and conditions hereinafter set forth
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual promises contained herein,
the parties to this Agreement hereby agree as follows:
1. Disposition of Development Fees. Developer paid Franchisor Development
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Fees totalling $715,000 under the terms of the Active Development Agreements for
143 outlets. Development Fees of $375,000 have been credited against the 75 Papa
John's Pizza outlets already open and operating under the Active Development
Agreements. Subject to the provisions of Section 3, Franchisor shall retain one-
half of the Development Fees paid by
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Developer with respect to the terminated development rights for 22 outlets under
the Active Development Agreements that will not be included in the New
Development Agreement (as defined in Section 2), totalling $55,000 (the
"Retained Fees"), to offset a portion of the administrative costs and expenses
incurred by Franchisor prior to and after the execution of the Active
Development Agreements. Concurrently with the execution of this Agreement,
Franchisor shall refund to Developer $55,000 in Development Fees, representing
one-half of the Development Fees paid by Developer with respect to the
terminated development rights for 22 outlets that will not be included in the
New Development Agreement. The remaining $230,000 in Development Fees shall be
applied to the initial franchise fees for the remaining 46 Papa John's Pizza
outlets to be developed pursuant to the New Development Agreement, at the rate
of $5,000 per outlet. By executing this document, Developer acknowledges: (a)
the receipt and sufficiency of said application previously paid Development
Fees; and (b) that, except as provided in Section 3, Franchisor has no
obligation or duty to make any refund of the Retained Fees or the remaining
Development Fees. Developer hereby waives and releases Franchisor from any claim
or demand to seek reimbursement or payment of any additional sums or amounts.
2. New Development Agreement. Concurrently with the execution of this
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Agreement, Franchisor and Developer shall enter into the a new Development
Agreement for the development of 46 outlets, in the form attached hereto as
Exhibit A (the "New Development Agreement"). The New Development Agreement is
incorporated herein by reference. All remaining rights and obligations of
Developer currently contained in the Development Agreements, including the
remaining Development credits totalling $230,000, are hereby merged into the New
Development Agreement, and upon execution thereof, all such rights and
obligations shall be contained solely in the New Development Agreement.
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3. Credit of Unused Development Fees. If at any time Developer desires to
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reacquire any of the development rights for Papa John's Pizza outlets for any
territory or outlet development rights reduced or terminated pursuant to this
Agreement, Franchisor shall credit a portion of the Retained Fees towards the
Development Fees due for reacquisition of such rights at the rate of $2,500 per
outlet, up to a maximum total credit of $55,000. Developer acknowledges and
agrees that Franchisor has no obligation to reserve any such rights or territory
for Developer's benefit and Franchisor may re-sell such rights or territory, or
any part(s) thereof, to one or more third party(ies) at any time without
restriction.
4. New Owner Agreement. Concurrently with the execution and delivery of
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this Agreement, each member of Developer's executive management team shall
execute and deliver a new Owner Agreement in the form attached hereto and
incorporated herein by reference ( the "New Owner Agreement"). The New Owner
Agreement shall supersede and replace the Owner Agreements executed for each of
the old Development Agreements.
5. Entire Agreement. This Agreement, including the Exhibits and the New
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Owner Agreement, constitutes and contains the entire agreement and understanding
of the parties on the matters covered by this Agreement and agreed to herein and
supersedes and replaces all prior negotiations, proposed agreements or
agreements, whether written or oral. Each of the parties to this Agreement
acknowledges that no party or any agent or attorney of any party has made any
promise, representation or warranty whatsoever, express or implied, whether
written or oral, not contained herein to induce any other party to this
Agreement to execute this Agreement or other document referred to herein, and
each of the parties acknowledges that it has not executed this Agreement or the
other documents referenced herein
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in reliance upon any promise, representation or warranty no contained herein.
IN WITNESS WHEREOF, the parties hereto have executed this Merger of
Development Agreements as of the day, month and year first above written.
PJ AMERICA, INC.
By: ______________________________
Xxxxxxx X. Xxxxxxxx, President
PJ XXXXXX.XXX.
By: ______________________________
Xxxxxxx X. Xxxxxxxx, President
OHIO PIZZA DELIVERY CO.
By: ______________________________
Xxxxxxx X. Xxxxxxxx, President
PJ LOUISIANA, INC.
By: ______________________________
Xxxxxxx X. Xxxxxxxx, President
PJ UTAH, L.L.C.
By: ______________________________
Xxxxxxx X. Xxxxxxxx, President
(collectively, "Developer")
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PAPA JOHN'S INTERNATIONAL, INC.
BY: ___________________________
Xxxxxxx X. Xxxxxx
Senior Vice President
("Franchisor")
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EXHIBIT A
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DEVELOPMENT SCHEDULE
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Dates on Which Each Cumulative Number of Restaurants
Restaurant Shall be Open to be Open and Operating*
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February 15, 2001 1
April 15, 2001 2
May 15, 2001 3
August 15, 2001 4
November 15, 2001 5
December 1 2001 6
January 31, 2002 7
February 28, 2002 8
April 30, 2002 9
June 30, 2002 10
July 31, 2002 11
September 30, 2002 12
October 31, 2002 13
December 15, 2002 14
January 31, 2003 15
February 28, 2003 16
April 30, 2003 17
June 30, 2003 19
July 31, 2003 19
September 30, 2003 20
October 31, 2003 21
December 15, 2003 22
January 31, 2004 23
February 28, 2004 24
April 30, 2004 25
May 30, 2004 26
July 31, 2004 27
August 31, 2004 28
October 31, 2004 29
November 30, 2004 30
January 31, 2005 31
February 28, 2005 32
April 30, 2005 33
May 31, 2005 34
July 31, 2005 35
August 31, 2005 36
October 31, 2005 37
November 30, 2005 38
DEVELOPMENT SCHEDULE (cont.)
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Dates on Which Each Cumulative Number of Restaurants
Restaurant Shall be Open to be Open and Operating*
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January 31, 2006 39
February 28, 2006 40
April 30, 2006 41
May 31, 2006 42
July 31, 2006 43
August 31, 2006 44
October 31, 2006 45
November 30, 2006 46
[* - Includes only those Restaurants to be developed pursuant to this
Development Agreement.]
