ASSET SALE AGREEMENT
Date: March 3, 1997
Parties: "Sellers" - Pizza Hut of America, Inc.
Pizza Huts of BrazosValley, Inc.
Pizza Management, Inc.
A&M Food Services, Inc.
Pizza Hut of San Diego, Inc.
Hoosier Pizza Hut Co.
North Gate Pizza Hut, Inc.
"PHI"- Pizza Hut, Inc.
0000 Xxxx Xxxxxxx
X.X. Xxx 000
Xxxxxxx, Xxxxxx 00000
"Buyers" - NPC International, Inc. ("NPC"), NPC
Restaurants LP ("Partnership") and NPC
Management, Inc. ("Management")
Recital: The Sellers own or lease a variety of real and personal
property that they use in the operations of 126 Pizza Hut
restaurants (the "Restaurants") as such Restaurants are
described on Schedule 1.1. The Sellers are willing to sell,
lease, assign or sublease the assets relating to those
restaurants to the Buyers as provided in this Asset Sale
Agreement (the "Agreement"). PHI is willing to grant to
Management a franchise agreement allowing the Buyers to continue
to operate those restaurants as "Pizza Hut" restaurants. The
Buyers have inspected each of the operating restaurants and
desire to acquire them "AS IS", on the terms and conditions set
forth in this Agreement.
AGREEMENT: In consideration of the mutual promises set forth in
this Agreement, the Sellers, PHI and the Buyers agree as
follows:
1. Transfer of Business. Subject to the terms and
conditions of this Agreement, the following sale will take
place:
1.1 Conveyance. The appropriate Sellers will each
convey to the NPC and Partnership all of their respective
interest in the following types of personal property (the
"Assets") relating to the Pizza Hut restaurant business being
conducted at the Restaurants (the "Restaurants") listed on
Schedule 1.1:
(a) All furniture, fixtures and equipment (including
computer hardware owned by the Sellers) located in the
Restaurants, except as provided in Section 1.2, below;
(b) Any prepaid rents, utility deposits and
miscellaneous deposits with respect to the Assumed
Liabilities (as defined) relating to the Restaurants;
(c) All uniforms, menus, dishes, glassware, utensils
and other smallwares located in the Restaurants;
(d) All useable inventories of food ingredients,
supplies, paper products and other consumables in the
Restaurants, as well as a change fund for each of the
Restaurants in an amount and in denominations adequate to do
business at the Restaurant on the morning of the Closing
Date (as defined in Section 7); and
(e) All liquor and other licenses relating to the
Restaurants, to the extent those licenses are transferable.
1.2 Excluded Equipment. The Assets do not include the
following:
(a) Leased Equipment. The equipment listed in
Schedule 1.2, is leased by the Sellers (the "Leased
Equipment"). Sellers will assign to the Buyers, and the
Buyers will assume, the leases (the "Equipment Leases") on
the Leased Equipment, to the extent such Equipment Leases
are not "Excluded Liabilities" as provided in Section 1.8.
(b) FMS/SUS System. If any of the Restaurants
contain PHI's proprietary SUS software and the related FMS
software (the "SUS/FMS Software"), then the SUS/FMS
Software will remain the property of the Sellers. The
Buyers will replace the SUS/FMS Software with its own
software during a one-year period (the "Roll Out Period")
from the applicable Closing. The relevant Buyer shall have
a non-exclusive license to use the SUS/FMS Software free of
charge during the Roll Out Period pending the installation
in the applicable Restaurant of Buyers' software, and the
Sellers agree to provide maintenance and support for the
SUS/FMS Software used by the Buyers during the Roll Out
Period. The parties will coordinate and use their
reasonable best efforts to assist each other in removing
the Sellers' SUS/FMS Software and installing the Buyers'
software during the Roll Out Period. The Buyers may not
disconnect, deinstall, move or tamper with the SUS/FMS
Software before the removal of the SUS/FMS Software from
the Restaurants.
(c) Norand System. If any of the Restaurants contain
PHI's proprietary software (the "Norand Software") used in
connection with the Norand cash registers and computer
equipment, then the Norand Software will remain the
property of the Sellers. The Buyers will replace the
Norand Software with its own software during the applicable
Roll Out Period. The relevant Buyer shall have an non-
exclusive license to use the Norand Software free of charge
during the Roll Out Period pending the installation in the
applicable Restaurant of Buyers' software, and the Sellers
agree to provide maintenance and support for the Norand
Software used by the Buyers during the Roll Out Period. The
parties will coordinate and use their reasonable best
efforts to assist each other in removing the Sellers'
Norand Software and installing the Buyers' software during
the Roll Out Period. The Buyers may not disconnect,
deinstall, move or tamper with the Norand Software before
the removal of the Norand Software from the Restaurants.
(d) Any personal property relating to any individual
Restaurant which has been disposed of prior to the Closing
in the ordinary course of business consistent with the past
operations of such Restaurant, subject to the provisions of
Section 4.1 regarding the replacement of such assets.
1.3 Real Property.
(a) Owned Real Properties. Sellers own the parcels of
real estate listed in Schedule 1.3(a) and the buildings and
premises located thereon (the "Owned Real Properties").
The appropriate Seller will lease to the
appropriate Buyer the Owned Real Properties on the terms
set forth in the lease (the "Lease") in substantially the
form of Exhibit "A" attached hereto.
(b) Leased Real Properties. Sellers lease from unrelated
third parties the parcels of real estate listed in Schedule
1.3(b) (the "Leased Real Properties"). Sellers will
use reasonable, good-faith efforts to obtain prior to the
Closing:
(i) from each landlord from whom consent to
an assignment to Buyer is required, a
consent to that assignment (it being
understood that Sellers will use
reasonable, good faith efforts, for a
60day period after the Closing, to
continue to obtain any such assignments
not obtained prior to the Closing); and
(ii) from each landlord an estoppel
certificate showing substantially the
information shown on Schedule
1.3(b)(ii).
With respect to the leases for the Leased Real Properties
(the "Real Property Leases") which have terms expiring
prior to December 31, 1998 and which have no renewal
options thereafter, PHI agrees to use all reasonable
efforts to obtain prior to the Closing two five year
renewal options for such leases at rates reasonably
acceptable to the Buyers. Sellers and PHI need not pay any
consideration to obtain such renewal options, the consent
to assignment or the estoppel certificate. If any required
consent to an assignment cannot be obtained, Sellers may,
at their option, either sublease the affected property to
the Buyers or assign the lease without consent; in either
event, Sellers will indemnify Buyers (using a mutually
agreeable form of indemnity) against claims by the
respective landlord arising out of the sublease/assignment
without consent.
1.4 Licenses. The Buyers understand they need 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
Buyers' 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 Buyers request the temporary use of any of the
nontransferable licenses until the Buyers obtain their 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 Buyers demonstrate to Sellers' continuing
satisfaction that the Buyers are diligently and in good
faith trying to obtain the appropriate licenses for each
Restaurant;
(c) The use of Sellers' licenses by the Buyers 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 Buyers agree 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 Buyers' use
of Sellers' licenses, beginning 90 days
after the Closing Date, and continuing
for each month or portion of a month that
the Buyers use 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 day immediately prior to the applicable
Closing Date, Sellers' representatives (who may, at Buyers'
election, be accompanied by 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 Buyers may, at their
option, send their 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 Buyers' 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 Buyers 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 and Other Payments. As consideration for
this Agreement, Buyers will pay Sellers and PHI the following
amounts at the times noted:
(a) The consideration to be received by the Sellers and
PHI hereunder shall be the sum $56,500,000. The foregoing
consideration shall be allocated among the two Closings (to
the extent applicable) and among the Assets, the initial
franchise fee and a buydown of the percentage of net sales
payable under the Franchise Agreement, as defined herein, as
set forth in Schedule 1.6 attached hereto.
(b) Reimbursement for useable inventory and change
funds and for prepaid rental expense to third parties
pursuant to the Leased Real Property and other prepaid
expenses; and reimbursement for any other items payment for
which is due to Sellers under this Agreement.
(c) One-half of the transfer, documentary, recording or
other fees as contemplated by Section 7.6 hereof.
The purchase price and any other amounts due at Closing
will be paid by wire transfer, in immediately available
funds, to an account or accounts designated by Sellers
and PHI.
1.7 Closing Documents. At the Closing of the sale, Sellers,
PHI, the Buyers will exchange the following fully executed
documents:
(a) the Franchise Agreement (including the Amendment to
Franchise Agreement);
(b) Assignment and assumption agreement for the Real
Property Leases, in the form of Exhibit "C", 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 "D";
(d) Assignment and assumption agreements for the
Equipment Leases and contracts being assumed in the form of
Exhibit "E" hereto;
(e) the Leases for each of the Owned Real Properties;
and
(f) any other documents reasonably requested by any
party.
1.8 Non-Assumption. At the Closing, the Buyers 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"); provided, however, the Buyers
shall not be obligated to assume and perform the obligations
arising under the "Excluded Liabilities" after the expiration
of 90-day period following the applicable Closing Date. As
used herein, the "Excluded Liabilities" shall mean any
equipment leases or contracts which cannot be terminated
within 90 days from the date of the applicable Closing Date
and which Buyers identify in writing to the Sellers within 60
days after the applicable Closing Date. Except as
specifically contemplated by this Agreement, the Buyers are
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.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS.
The Sellers warrant to the Buyers that, as of the date of
this Agreement and as of the Closing:
2.1 Title to Assets. The relevant Seller has good and
marketable title to all of the Assets, free and clear of any
liens and encumbrances, except for liens for current taxes
not yet due and payable and liens securing the Equipment
Leases (other than the Excluded Liabilities). This warranty
does not constitute a warranty by Sellers of the title of the
owners of the Leased Real Estate and the Leased Equipment.
2.2 Adequacy of Assets. The Assets and the Leased Equipment
constitute all of the items of personal property necessary to
operate the Restaurants as PIZZA HUT restaurants, except for
the SUS/FMS Software and the Norand Software as contemplated
in Subsections 1.2(b) and (c) above. These representations
do not constitute a warranty of the condition of
the Assets, which are sold "AS IS", with all faults.
2.3 Leases. Each of the Real Property Leases and each of the
Equipment Leases is in full force and effect, and no Seller
has been given notice of default under any of them. Subject
to obtaining required consents, the relevant Seller has the
right to assign each such material Equipment Lease and Real
Property Lease to the relevant Buyer, providing the relevant
Buyers with the right to occupy the premises or to use the
Leased Equipment on the same terms and conditions as such
Sellers had prior to any assignment. This warranty does not
constitute a warranty as to the adequacy of the lessor's
title to any of these items.
2.4 Corporate Power and Authority. Each Seller is duly
organized and in good standing under the laws of its state of
incorporation or organization and has full power and
authority to execute, deliver and perform its obligations
under this Agreement.
2.5 Insurance. The Sellers carry adequate insurance (both in
form and amount) with respect to their properties, assets and
business. That insurance is in effect and will be kept in
effect through the Closing.
2.6 Taxes. The Sellers have filed all requisite federal,
state and local tax returns relating to the ownership and
operation of the Restaurants and paid all taxes required
thereby, to the extent they have become due and payable,
other than those presently payable without penalty or
interest, and except any that are being contested in good
faith by appropriate proceedings. The Sellers will indemnify
Buyers for any damages suffered by the Buyers 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.
2.7 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, pollutant*, 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 as the result of any
activities of the Sellers, nor has any such act or
occurrence taken place under the ownership of a prior owner
which has not been cured.
*The term "pollutant" means any substance subject to control under
the Federal Water Pollution Act, 33 U.S.C. ss1251, et seq., or the
Clean Air Act, 42 U.S.C. ss7401, 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. ss9601, et seq., or regulations promulgated
thereunder, or under the Resource Conservation and Recovery Act of
1976, 42 U.S.C. ss6901, 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.
(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.
2.8 ADA Compliance. Each of the facilities of the
Restaurants meet or exceed that standard which is the average
PHI owned Pizza Hut restaurant level of compliance with the
provisions of the Americans With Disabilities Act.
2.9 Brokerage and Finder's Fees. None of the Sellers
nor any stockholder, director, officer, partner, or employee
of any Seller has incurred or will incur on behalf of the
Sellers, any brokerage, finder's or similar fee in connection
with the transfers contemplated by this Agreement.
2.10 Absence of Certain Changes. To the knowledge of
each Seller, each of the unaudited profit and loss summaries
(the "Profit and Loss Summaries") that relate to the
Restaurants for the 52-week period ended December 25, 1996
previously delivered to the Buyers are true and correct in
all material respects. Since December 25, 1996, 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. The Sellers agree to inform the Buyers
of any material adverse changes to the financial condition or
results of operations of the Restaurants prior to the
Closing.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYERS. The
Buyers, jointly and severally, hereby represent and warrant
to the Sellers that, as of the date of this Agreement and as
of the Closing:
3.1 Organization, Standing and Power of the Buyers.
Each of the Buyers is duly organized and in good standing
under the laws of the state in which it is incorporated or
organized and in which it is doing business, and has full
power to enter into this Agreement.
3.2 Obligations Under Franchise Agreement. NPC is now
current in payment, and at Closing will be current in
payment, due and payable under all other franchise agreements
that NPC has with PHI, and on all indebtedness to and
accounts with PHI, PFS, I.P.H.F.H.A., Inc., and all local
Pizza Hut advertising cooperatives. NPC (and each of its
affiliates) is, to the best of its knowledge, in good
standing (as such term is defined in the existing franchise
agreements) in the existing franchise agreements it has with
PHI.
3.3 Brokerage and Finder's Fees. Neither of the Buyers
nor any stockholder, director, officer, partner, or employee
of any Buyer has incurred or will incur on behalf of the
Buyers, any brokerage, finder's or similar fee in connection
with the transfers contemplated by this Agreement.
4. COVENANTS.
4.1 Operation Until Closing. Since January 23, 1997,
the Sellers have operated, and through the Closing Date the
Sellers 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 it was in on January 23, 1997, except (I) Assets
disposed of in the ordinary course of business consistent
with the past operations of such Restaurant; provided,
however, any such Assets must be replaced by similar Assets
of equal or greater value in like or better condition than
those Assets transferred or removed or (ii) Assets
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
Buyers' 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 Buyers at the Closing an
amount equal to the sum of the reasonable cost (as agreed by
the Buyers 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. The Buyers may inspect each
Restaurant (under the conditions set forth below) to assess
the condition of the business and the Assets being conveyed
pursuant to this Agreement. As to each inspection, the Buyers
must schedule the inspection with PHI, the Buyers must be
accompanied by an agent or employee of PHI and the Buyers
must conduct the inspection in a manner that minimizes
disruption to the Restaurant's operations.
4.3 Xxxx-Xxxxx-Xxxxxx Act. The Buyers and the Sellers
shall, in cooperation with each other, file (or cause to be
filed) with each of the Department of Justice ("DOJ") and the
Federal Trade Commission ("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. The Buyers 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 1996 Franchise Agreement and Amendment to Certain
Existing Franchise Agreements.
(a) Subject to the terms and conditions of this
Agreement, PHI will grant to Management the franchise rights
and obligations contained in the form of 1996 Pizza Hut
Location Franchise Agreement as amended in the Amendment to
Franchise Agreement, each in the form attached hereto as
Exhibits "F" and "G", respectively (such Franchise
Agreement, as amended by the Amendment to Franchise
Agreement is referred to as the "Franchise Agreement"). A
copy of the form of the Franchise Agreement has been
provided to Management with PHI's Uniform Franchise Offering
Circular.
(b) Subject to the terms and conditions of this
Agreement, at the Closing, PHI and Management will execute
amendments to the existing Pizza Hut Franchise Agreement
issued to NPC in connection with NPC's acquisition of 23
Pizza Hut restaurants as of April 18, 1995 to provide for
the automatic renewal of the term of such agreement for an
additional 15 years under the then current terms and fees.
4.5 Maintenance on Computer Hardware. The Sellers agree to
pay the maintenance fees on the computer hardware owned by
the Sellers and included in the Assets for one year following
the applicable Closing. The Buyers acknowledge that such
maintenance will be performed by a third party.
4.6 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 Buyers.
5. Sellers' Employees. Sellers' policy on
refranchising (a copy of which is attached as Schedule 5)
obligates Sellers to offer transfer opportunities to all its
employees who will be affected by sale of the Restaurants.
Unless otherwise agreed before Closing, with respect to any
of Sellers' restaurant-level employees (i.e., all employees
at the level of "Restaurant General Manager" or below) who do
not elect to transfer, Sellers will terminate the employment
of those employees at the close of business on the day
immediately prior to the Closing Date. The terminated
employees may become employees of Buyers as of the Closing
Date. 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 Buyers
from all claims of that nature. Sellers will directly pay all
terminated employees, including any of the employees hired by
Buyers (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).
As between Sellers and Buyers, Buyers assume all claims of
the Hired Employees relating to employment by Buyers arising
after the Closing Date, and Buyers will indemnify Sellers
from all such claims by them. For the purpose of determining
benefits for Hired Employees, Buyers agree to honor the Hired
Employees' length of service and anniversary dates with
Sellers. Sellers will furnish Buyers a list of the Hired
Employees stating length of service and anniversary dates.
Buyers understand that the active participation of the Hired
Employees in all benefit plans maintained by 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.
If any of Sellers' employees elect to transfer to other
operations of Sellers ("Electing Employees"), in accordance
with Sellers' policy on refranchising, the Sellers will
(upon request by Buyers) use their reasonable best efforts to
provide to Buyers the services of some or all of the Electing
Employees (as chosen by Buyers) for a minimum of 90 days
after the Closing. Buyers will reimburse Sellers for all
payroll and benefit costs associated with any such loaned
Electing Employees.
6. Conditions to Closing.
(a) The obligations of the Sellers, on the one hand,
and the Buyers, on the other hand, to consummate the
transactions contemplated by this Agreement are subject tothe
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 each 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) each 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 Buyers to
perform their obligations under this Agreement
or any other agreement or document
contemplated hereby;
(iii) The Capital Expenditures Committee of
PepsiCo, Inc. will have approved the
transactions contemplated by this Agreement;
(iv) The Sellers will have received a copy of an
action by Buyers' Board of Directors approving
the purchase of the Assets under this
Agreement certified by an authorized officer
of the applicable Buyer; and
(v) The Buyers will deliver to Sellers a statement,
signed by the Buyers' Chief Financial Officer,
certifying that at least 20% of the combined total of
the payments being made to Sellers and PHI at Closing
will be represented by "at risk capital" as defined
by applicable accounting rules.
(c) Each Buyer'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 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;
(iii) Buyers 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;
(iv) Buyers shall have obtained financing for the
acquisition of the Restaurants on terms
acceptable to the Buyers; and
(v) Buyers shall have completed the inspection of
the Assets and facilities of the Restaurants.
6.1 Conditions to Closing on the Lake Xxxxxxx Stores. Buyers and
Sellers are aware of a lawsuit on file in the United States District
Court, Western District of Louisiana, Lake Xxxxxxx Division, styled
Xxxxxxx Xxxxx, et al., Plaintiffs vs. Pizza Hut of America, Inc.,
Defendant, Civil Action No. 97-C200 (the "Xxxxx Case"). The Xxxxx
Case involves a claim that the Sellers' operating affiliate in Lake
Charles, Louisiana, has engaged in unlawful discrimination in the
way in which it has defined its delivery areas in the North Lake
Xxxxxxx area. Sellers deny the claim and intend to vigorously
defend the Xxxxx Case. Seven of the Restaurants are located in the
Lake Charles, Louisiana, DMA (the "Lake Xxxxxxx Stores"). The
Buyers' obligation to close on the Lake Xxxxxxx Stores is
conditioned upon a final resolution of the Xxxxx Case acceptable to
Buyers. Sellers agree to obtain Buyers' prior approval for any
settlement of the Xxxxx Case that involves any commitment regarding
redefinition of the delivery areas for the Lake Xxxxxxx Stores. If
the Xxxxx Case is not finally resolved prior to the second Closing
(as described in Section 7), Buyers' obligation to close on the Lake
Xxxxxxx Stores will be deferred and the purchase price will be
reduced by $2.5 million. In that event, Buyers will have the option
to assume operation of the Lake Xxxxxxx Stores on the date of the
second Closing pursuant to a management agreement between Buyers and
Sellers on mutually agreeable terms. Thereafter, upon a final
resolution of the Xxxxx Case acceptable to Buyers, Buyers may
acquire the Lake Xxxxxxx Stores (paying the $2.5 million to Sellers
at such time), and the management agreement will terminate.
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 Sellers, at 10:00
a.m. (local time) on or before, at Sellers' discretion, March 27,
1997. In addition, the parties may mutually agree that the Closing
be completed in two stages, with the Restaurants listed on the
subheadings "Tulsa DMA," "Topeka DMA," "Ft. Xxxxx DMA" and "Xxxxxxx
DMA" on Schedule 1.1 being sold by the Sellers and purchased by the
Buyers on March 6, 1997 (or such other date as the parties may
agree) and with the purchase and sale of the remaining restaurants
on Schedule 1.1 occurring on March 27, 1997 (or such other date as
the parties hereto may agree). (As used herein, "Closing" shall mean
each and any of the Closing or Closings of the purchase or sale of
all or a portion of the Restaurants, and the date any Closing or
Closings actually occur is referred to in this Agreement as the
"Closing Date"). At the Closing, the Sellers shall deliver to the
Buyers such bills of sale, instruments of assignment, transfer and
conveyance and the other documents contemplated by this Agreement.
Against such delivery, the Buyers shall deliver to the Sellers 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 12:01 am on the Closing Date. Sellers will cooperate
with Buyers to see that the transfer of the Assets proceeds
smoothly.
7.1 Post-Closing Adjustments. From time to time after the Closing
Date, Buyer or 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; and real or personal property
taxes. In addition, the post-closing adjustments shall include an
obligation of the Sellers to pay $100,000 to the Buyers to reimburse
them for the expected costs of relocating Restaurant #717103, 0000
Xxxxxxxxx Xxxxxxx Xxxxx, Xxxxxx, Xxxxxx which has a lease expiring
in July 1997 to a like site in the same Development Area (as
defined in the Franchise
Agreement).
7.2 Post-Closing Indemnification. Buyers (jointly and
severally) will indemnify 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. Sellers
(jointly and severally) will indemnify Buyers, their 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 Additional Documents. 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. Sellers will use their best
efforts 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.
7.4 Buyer's Acknowledgment. Buyer acknowledges that:
(a) Except as set forth in Section 7.4 (b), below, Sellers
(and their agents and employees) have made no statements or
warranties to Buyers as an inducement for Buyers' decision to
purchase, except as contained in this Agreement or in the PHI
Franchise Offering Circular for Prospective Franchisees, and Buyers'
decision to purchase was made independently by them with the aid of
professional counselors, including legal, accounting, and financial
advisors.
(b) Sellers have made available to Buyers, before Buyers'
execution of this Agreement, the Profit and Loss Summaries. Buyers'
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 Buyers or their agents or
representatives (and on other information available to the Buyers
because of Buyers' experience in the Pizza Hut System), without
reliance on the book ledgers or on any oral statements of any kind
or character by Sellers or their representatives.
7.5 Information Statement. Buyers and 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.
7.6 Transfer Fees and Expenses. Buyers and Sellers
will share equally all sales taxes due and payable, and any
penalties and interest associated therewith as a result of the sale
of the Assets. At Buyers' discretion, Buyers may record any
assignments and subleases. Buyers (on the one hand) and Sellers (on
the other hand) will share equally all transfer, documentary,
recording or other fees and/or taxes attributable to such transfers
and recording. Buyers may collect Sellers' half of those fees, and
Sellers may collect from Buyers half of any sales taxes and
penalties and interest associated therewith, through post-closing
statements generated in accordance with Section 7.1.
8.Miscellaneous.
8.1 Notices. Notices may be given to each party at
the respective addresses set forth on the first page of this
Agreement.
8.2 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 April 30, 1997.
8.3 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.
8.4 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 Buyers for Sellers' consent to the assignment of this
Agreement will be subject to the conditions on assignment contained
in the Franchise Agreement.
8.5 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.
8.6 Entire Agreement. This Agreement (including Exhibits "A"
through "G" 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.
8.7 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 PepsiCo, Inc. or to the respective attorneys,
accountants, and financial advisors of any party hereto, (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.
8.8 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
Kansas without regard to principles of conflicts of laws.
8.9 Bulk Sales Waiver. The Sellers and the Buyers each waive
compliance by the other with any bulk sales or similar laws that may
be applicable to the transactions contemplated by this Agreement.
8.10 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.
8.11 Construction. The captions of the various
articles and sections of this Agreement have been inserted for the
purpose of convenience of reference only. The captions are not a
part of this Agreement and will not be deemed in any manner to
modify, explain, enlarge or restrict any of the provisions of this
Agreement.
The word "include", in all its tenses and variations, is always used
in a non-exclusive sense, as if followed by the phrase "without
limitation".
The auxiliary verb "will" is mandatory. The auxiliary verb "may" is
permissive (and, by extension, is prohibitive when used negatively,
as a denial of permission).
8.12 Time is of the Essence. Time is of the essence in the
performance of this Agreement.
[Signature page to follow]
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:
Xxxxxx X. Xxxxxxxx Attorney-in Fact
PIZZA HUTS OF BRAZOS VALLEY, INC.
By:
Xxxxxx X. Xxxxxxxx Attorney-in-Fact
PIZZA MANAGEMENT, INC.
By:
Xxxxxx X. Xxxxxxxx Attorney-in-Fact
A&M FOOD SERVICES, INC.
By:
Xxxxxx X. Xxxxxxxx Attorney-in-Fact
PIZZA HUT OF SAN DIEGO, INC.
By:
Xxxxxx X. Xxxxxxxx Attorney-in-Fact
HOOSIER PIZZA HUT CO.
By:
Xxxxxx X. Xxxxxxxx Attorney-in-Fact
NORTH GATE PIZZA HUT, INC.
By:
Xxxxxx X. Xxxxxxxx Attorney-in-Fact
PIZZA HUT, INC.
By:
Xxxxxx X. Xxxxxxxx Vice President
NPC INTERNATIONAL, INC.
By:
Xxxxx X. Short
Vice President
NPC RESTAURANTS LP
By: NPC International, Inc.
(general partner)
By: ________________________
__ Xxxxx X. Short
Vice President
NPC MANAGEMENT, INC.
By:
Xxxxx X. Short Vice
President
INDEX TO EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit "A" Lease
Exhibit "B" Inventory Form
Exhibit "C" Assignment and Assumption Agreement
(Real Property Leases)
Exhibit "D" Xxxx of Sale
Exhibit "E" Assignment and Assumption Agreement
(Equipment Leases and Contracts)
Exhibit "F" Franchise Agreement
Exhibit "G" Amendment to Franchise Agreement
SCHEDULES
Schedule 1.1 List of Restaurants
Schedule 1.2 Leased Equipment
Schedule 1.3(a) Owned Real Property
Schedule 1.3(b) Leased Real Estate
Schedule 1.3(b)(ii) Information for Estoppel Certificate
Schedule 1.6 Allocation of Consideration
Schedule 5 Policy on Refranchising
