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Exhibit 2-A
ASSET PURCHASE AGREEMENT
by and among
Xxxxxx'x Restaurants of
Pennsylvania, Inc.,
Xxxxxx'x Foods of Missouri, Inc.,
Xxxxxx'x Restaurants of Ohio, Inc.
and
Xxxxxx'x Weirton Foods, Inc.
(together, "Purchaser"),
Xxxxxx'x Foods, Inc.
("MFI")
and
KFC National Management Company
and
Kentucky Fried Chicken of California, Inc.
(together "Seller")
April 30,1999
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ASSET PURCHASE AGREEMENT
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This ASSET PURCHASE AGREEMENT (this "Agreement"), made and entered into
as of this 30th day of April, 1999 by and among Xxxxxx'x Restaurants of
Pennsylvania, Inc., a Pennsylvania corporation ("MRP"), Xxxxxx'x Foods of
Missouri, Inc., a Missouri corporation ("MFM"), Xxxxxx'x Restaurants of Ohio,
Inc., an Ohio corporation ("MRO"), Xxxxxx'x Weirton Foods, Inc., a West Virginia
corporation ("MWF"), (MRP, MFM, MRO and MWF shall be referred to jointly and
severally as "Purchaser"), Xxxxxx'x Foods, Inc., an Ohio corporation ("MFI"),
KFC National Management Company, a Delaware corporation ("NMC"), and Kentucky
Fried Chicken of California, Inc., a Delaware corporation ("KFCCAL") (NMC and
KFCCAL shall be referred to jointly and severally as "Seller");
WITNESSETH:
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WHEREAS, Seller presently owns and operates 42 KFC restaurants and owns
1 restaurant site in areas in and around Pittsburgh, Pennsylvania, St. Louis,
Missouri, Ohio and West Virginia as identified on Schedule 1 hereto (the
"Restaurants"); and
WHEREAS, Seller desires to sell and transfer to Purchaser and Purchaser
desires to purchase and acquire from Seller the Restaurants on the terms and
subject to the conditions set forth in this Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
I. PURCHASE AND SALE OF ASSETS
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1.1. PURCHASE AND SALE OF ASSETS. Subject to and upon the terms and
conditions hereof, Seller shall sell and assign to Purchaser, and Purchaser
shall purchase and acquire from Seller at the Closing (as defined in Section 7.1
hereof) the assets referred to or described in this Section 1.1 and/or the
Schedules contemplated hereby (the "Assets"):
1.1.1. OWNED REAL PROPERTY. All of Seller's rights and incidents of
interest in and to the real property owned, as of the Closing Date (as defined
in Section 7.1 hereof), by Seller constituting part of the Restaurants (the
"Owned Real Property"). The Owned Real Property is identified on Schedule 1.1.1
hereto.
1.1.2. LEASED REAL PROPERTY. All of Sellers rights and incidents of
interest, as of the Closing Date, in and to the leases of real property
constituting part of the Restaurants (the "Leased Real Property"). The Leased
Real Property is identified on Schedule 1.1.2 hereto. Seller shall provide
Purchaser with copies of the leases for such Leased Real Property.
1.1.3. TANGIBLE PERSONAL PROPERTY. All rights and incidents of interest
of Seller in and to all restaurant equipment, fixtures, furniture, signs, menus,
dishes, glassware, utensils and other smallwares, computers, telephones, and
other office or telecommunications equipment (but excluding the register systems
and Sellers proprietary software) in which Seller has any interest as of the
date of this Agreement and which are located at the Restaurants, as well as
spare equipment and parts of which Seller is aware that are readily available,
stored in the area of the Restaurants, and designated for use at the
Restaurants, all of the foregoing subject to use, wear and tear, disposition,
replacement or similar actions in the normal course between the date hereof and
the Closing (the "Tangible Personal Property").
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Purchaser may temporarily use the register systems until December 31,
1999 while Purchaser converts to a new POS system. Purchaser shall be entitled
to use said systems free of charge for the first 90 days following the Closing
Date. Thereafter, Purchaser agrees to pay Seller at the rate of $436 per month
per Restaurant for Purchaser's use of such systems up to December 31, 1999. At
the end of Purchaser's use of such systems, Purchaser shall, at its expense,
deliver such register systems to Seller at one or more locations designated by
Seller in the same condition as on the Closing Date, ordinary wear and tear for
the period of use excepted. Purchaser may, at its option, cease using such
register systems prior to December 31, 1999, at which time Purchaser's
obligation to pay the monthly fee shall also cease.
1.1.4. INVENTORIES. All rights and incidents of interest of Seller in
and to the food ingredients, packaging materials, paper products, miscellaneous
consumable inventories and stores and supplies located at the Restaurants, as of
the Closing Date ("xxx Xxxxxxxxxxx").
1.1.5. MISCELLANEOUS ASSETS. Other supplies (in addition to those
listed as part of the Inventories described in Section 1.1.4 hereof) and sundry
items, including telephone numbers, keys, lock combinations and similar items
relating to the operation of the Restaurants, security systems located at the
Restaurants and any purchasing cooperative stock interests of Seller pertaining
specifically to the Restaurants.
1.1.6. CASH. All cash in drawers and change funds of Seller in each
Restaurant as of the commencement of business on the Closing Date, not to exceed
$1,000 per Restaurant (the "Cash").
1.2. EXCLUDED ASSETS. Notwithstanding anything contained in this
Agreement to the contrary, the following rights, properties and assets (the
"Excluded Assets") shall not be included in the Assets:
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1.2.1. CASH AND CASH EQUIVALENTS. All cash or cash equivalents of
Seller, including bank accounts and deposits, in existence on the Closing Date,
other than the Cash.
1.2.2. EXCLUDED REAL PROPERTY. The owned and leased real property of
Seller other than the Owned Real Property and the Leased Real Property (the
"Excluded Real Property").
1.2.3. EXCLUDED IMPROVEMENTS. All buildings, fixtures and similar
improvements located on the Excluded Real Property.
1.2.4. EXCLUDED TANGIBLE PERSONAL PROPERTY. All office equipment,
furniture, fixtures, business machines and other tangible personal property of
Seller other than the Tangible Personal Property.
1.2.5. RECEIVABLES. All accounts and notes receivable of Seller.
II. PURCHASE PRICE
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2.1. PURCHASE PRICE. (a) In consideration of the transfer of the Assets
and the other undertakings of Seller hereunder, Purchaser shall pay to Seller
the sum of Thirty Million Five Hundred Thousand Dollars ($30,500,000) (the
"Purchase Price"), plus the Cash and the value of the Inventories as of the
Closing Date determined in accordance with Section 2.1(b) hereof. The Purchase
Price shall be payable in cash to Seller by cashier's check or bank wire
transfer to an account or accounts designated in writing by Seller as follows:
$150,000 upon the execution of this Agreement, and the remaining $30,350,000 on
the Closing Date. The $150,000 shall be refundable to Purchaser only in the
event this Agreement terminates pursuant to Section 10.1 hereof due to Seller's
failure to fulfill any of
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its obligations hereunder that constitutes a condition precedent to the
performance of Purchaser's obligations hereunder.
b) On the business day immediately preceding the Closing Date,
as of the close of business of the Restaurants, Seller shall take a physical
count and review of the Cash and Inventories, and Purchaser shall have the right
to have its representatives observe such physical count and review. No later
than 15 business days thereafter, Seller shall prepare and deliver to Purchaser
a statement of all of the Cash and Inventories as of the Closing Date (the
"Closing Inventory Statement"). Within ten business days after receipt by
Purchaser of the Closing Inventory Statement, Purchaser shall remit to Seller,
by cashiers check or bank wire transfer to an account designated in writing by
Seller, the amount stated in the Closing Inventory Statement. All items of
Inventory shall be valued at Seller's actual cost. Any amounts not paid by
Purchaser within ten business days as provided herein shall bear interest at the
lesser of (i) the rate of 1.5% per month or (ii) the highest rate permissible
under applicable law.
(c) On the Closing Date, Purchaser shall remit to Seller in
immediately available funds the amount of any prepaid deposits or other items
that will benefit Purchaser's operation of the Restaurants and which are
identified in Schedule 2.1(c) hereto as of the date hereof, or added to such
schedule on or before the Closing Date.
III. ASSUMPTION OF LIABILITIES
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3.1. ASSUMED LIABILITIES. It is expressly understood and agreed that
Purchaser shall assume, and shall be responsible for, those liabilities and
obligations as are described in this Section 3.1. Purchaser shall assume on the
Closing Date, and thereafter in due course shall pay and fully satisfy, the
liabilities and obligations relating to the Restaurants and set forth
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below in subparagraphs (i) and (ii) of this Section 3.1 (such liabilities and
obligations being referred to herein as the "Assumed Liabilities"):
(i) All liabilities and obligations arising or accruing, or pertaining
to the period, on or after the Closing Date (A) relating to the Restaurants or
the Assets, or their ownership or operation, and (B) under all contracts, leases
and other agreements pertaining to the Restaurants in the normal course (i) as
identified on Schedule 3.1, (ii) copies of which have been provided to
Purchaser, or (iii) (and where monetary obligations are included) for amounts
consistent with market pricing (the "Assumed Contracts"); and
(ii) Without limiting anything in subparagraph (i) above, all
liabilities and obligations arising or accruing, or pertaining to the period, on
or after the Closing Date for death, personal injury (including workers'
compensation), property damage or other injury, damage or loss to, by or of any
person or entity, any property or any right, relating to the Restaurants or the
Assets, or their operation, including, without limitation, any tort, breach of
contract or violation of any statute, regulation or other law or requirement of
any governmental agency.
Purchaser understands and agrees that the liabilities and obligations
it is assuming under the Assumed Contracts may include, without limitation, the
chicken purchases Seller or its affiliates plan, or may be obligated, to make
for the Restaurants under Seller's or its affiliates' chicken supply agreements
as listed on Schedule 3.1. Seller will use reasonable efforts to identify the
Assumed Contracts, provide copies thereof to Purchaser, and list the Assumed
Contracts it has knowledge of on Schedule 3.1.
IV. REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS
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4.1. REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF SELLER.
Seller represents and warrants to and covenants with Purchaser as follows:
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4.1.1. ORGANIZATION. Each of NMC and KFCCAL is a corporation duly
organized, validly existing and in good standing under the laws of Delaware.
4.1.2. AUTHORIZATION AND EFFECT OF AGREEMENT. Seller has all requisite
corporate power and authority to enter into and to perform its obligations under
this Agreement. This Agreement constitutes a valid and binding obligation of
Seller.
4.1.3. NO RESTRICTIONS AGAINST SALE OF THE ASSETS. The execution and
delivery of this Agreement by Seller, and the performance by it of the
transactions contemplated hereby will not violate, conflict with, or result in a
breach of the Certificate of Incorporation or By-Laws of Seller, or any Law
applicable to it.
4.1.4. INVENTORIES. As of the Closing Date, Inventories shall not be
excessive in light of the present operation of the Restaurants. The Inventories
consist of items usable in the normal course of the operation of the
Restaurants.
4.1.5. COMPLIANCE WITH LAWS. The Restaurants have been, are and will
be, from the date hereof through the Closing Date, conducted in substantial
compliance with applicable laws ("Laws"), and in a fashion reasonable consistent
with Seller's business practices prior to Seller's execution of this Agreement.
4.1.6. TITLE TO AND CONDITION OF TANGIBLE PERSONAL PROPERTY. Except as
provided in Schedule 4.1.6 thereto, Seller has marketable title to all of the
Tangible Personal Property free and clear of all liens, except for liens for
taxes not due and payable, or that otherwise arise by operation of law. All
items of the Tangible Personal Property are being sold in "as is" condition.
Except with respect to the Restaurant located at 000 X. Xxxxx Xx. 0, Xxx
Xxxxxxxxxxxx, Xxxx Xxxxxxxx, there is no significant asset necessary for
operating the Restaurants as KFC outlets that is not included in the Assets.
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4.1.7. OWNED REAL PROPERTY AND LEASED REAL PROPERTY. With respect to
the Owned Real Property and the Leased Real Property (the "Real Property"),
except as provided in Schedule 4.1.7 hereto:
(i) To Seller's knowledge, there are no pending actions against
or affecting the Real Property;
(ii) The Real Property (including all improvements, parking
areas, utilities and HVAC systems) is being sold in "as is" condition; provided,
however, that all major equipment systems included herein shall be in working
condition on the Closing Date;
(iii) The Real Property currently has unrestricted vehicular
and pedestrian ingress and egress access to publicly dedicated and publicly
maintained roads or streets, the failure of which would not result in more than
an insignificant adverse impact on the operation of the Restaurants;
(iv) Seller has not released or discharged nor, to Seller's
knowledge (for purposes of this Agreement, to Seller's knowledge shall be deemed
to be knowledge at the Louisville headquarters level, without any special
investigation, of factors that would have more than an insignificant adverse
impact on the operation of the Restaurants), has any third party released or
discharged, any hazardous substance on the Real Property. Seller agrees to
provide Purchaser with copies of any environmental surveys, audits or other
reports relating to the Restaurants of which it is aware in its possession;
v) The Real Property leases are in effect, and all amounts
due and owing by Seller pursuant to the leases prior to the Closing will be paid
by Seller; and
(vi) Seller has marketable title in fee simple to the Owned
Real Property, and marketable title to a leasehold estate in the Leased Real
Property.
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4.1.8. NO DEFAULT OR LITIGATION. To its knowledge, Seller is not, and
on the Closing Date shall not be, in default under any of the material terms or
provisions of any Assumed Contract. Except as provided in Schedule 4.1.8 hereto,
to Seller's knowledge no action has occurred, or on the Closing Date shall have
occurred, relating to the conduct of the Restaurants that would have a material
adverse impact upon the post Closing operation of the Restaurants. Except as
provided in Schedule 4.1.8 hereto, to Seller's knowledge there is no action
pending against Seller relating to the conduct of the Restaurants that could
have a material adverse effect upon the operation of the Restaurants.
4.1.9. GENERAL. Seller shall not be deemed to have made any
representation or warranty to Purchaser other than as expressly made by Seller
in Sections 4.1.1 through 4.1.8 hereof. Without limiting the generality of the
foregoing, Seller makes no representations with respect to any projections,
estimates, budgets, future revenues or future operations of the Restaurants.
4.2. REPRESENTATIONS, WARRANTIES AND CERTAIN COVENANTS OF PURCHASER.
Purchaser represents and warrants to and covenants with Seller as follows:
4.2.1. ORGANIZATION AND POWER. MRP is a corporation duly organized,
validly existing and in good standing under the laws of Pennsylvania; MFM is a
corporation duly organized, validly existing and in good standing under the laws
of Missouri, MWF is a corporation duly organized, validly existing and in good
standing under the laws of West Virginia, and each of MRO and MFI is a
corporation duly organized, validly existing and in good standing under the laws
of Ohio. Purchaser has all requisite corporate power and authority to own its
properties and to conduct its business as presently conducted.
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4.2.2. AUTHORIZATION AND EFFECT OF AGREEMENT. Purchaser has all
requisite power and authority to enter into and to perform its obligations under
this Agreement. This Agreement constitutes a valid and binding obligation of
Purchaser.
4.2.3. NO RESTRICTIONS AGAINST PURCHASE OF THE ASSETS; NO DEFAULT. The
execution and delivery of this Agreement by Purchaser, and the performance by it
of the transactions contemplated hereby will not violate, conflict with or
result in a breach of the Certificate of Incorporation or By-Laws of Purchaser,
or any Law applicable to it. Purchaser is not in default under any of the terms
or provisions of any debt instrument, supply agreement or other agreement or
instrument relating in any way to its existing business or assets.
4.2.4. GENERAL. Except as may otherwise be expressly included
elsewhere in this Agreement, Purchaser shall not be deemed to have made any
representation or warranty to Seller other than as expressly made by Purchaser
in Sections 4.2.1 through 4.2.3 hereof.
V. CERTAIN COVENANTS OF PURCHASER AND SELLER
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Purchaser and Seller covenant and agree as follows:
5.1. PRESS RELEASES. Purchaser and Seller shall not issue or cause
publication of any press release or other public communication with respect to
this Agreement or the transactions contemplated hereby without the consent of
the other. Without the express prior written consent of the other, Purchaser and
Seller shall not, and Purchaser and Seller shall cause their affiliates not to,
disclose to any other person or entity any information with respect to the terms
and conditions of this Agreement; provided however that each of Purchaser and
Seller may make such disclosures to (i) its independent accountants, legal
counsel and employees, and (ii) as required by law, including without limitation
by the
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Securities and Exchange Commission ("SEC") and any other national stock
exchange, provided such party gives written notice to the other and discusses
the matter with the other prior to any such disclosure.
5.2. INVESTIGATION BY PURCHASER. Seller shall afford to the authorized
representatives of Purchaser access to the Restaurants so that Purchaser may
interview the Restaurant employees and assess the condition of the Assets.
Purchaser shall schedule the interviews and inspections with Seller's Director
of Operations and Recognition ("DOR") for the region(s) in which the Restaurants
are located, and Purchaser's representative shall be accompanied by Seller's DOR
or his designee. Purchaser shall conduct the interviews and inspections so as to
minimize any disruption to the operation of the Restaurants.
5.3. CONFIDENTIAL NATURE OF INFORMATION. Whether or not the Closing
shall occur, each of the parties hereto shall treat in confidence all documents,
materials and other information which it shall have obtained regarding the other
relating to this Agreement or the transactions contemplated hereby.
5.4. MAKE NO MATERIAL CHANGE IN THE RESTAURANTS. Seller shall operate
the Restaurants until the Closing Date in the ordinary course, which shall
include maintaining, repairing and/or replacing equipment at the Restaurants in
the normal course.
5.5. SATISFACTION OF CONDITIONS. Each of the parties hereto agrees to
use its best efforts with due diligence and in good faith to satisfy promptly
all conditions to the obligations of the parties hereto in order to expedite the
consummation of the transactions contemplated hereby. In connection herewith,
both parties agree to work together to agree to reasonable terms and conditions
with the landlords of each parcel of Leased Real Property in order to obtain,
where necessary, landlord consents to the assignment of the leaseholds from
Seller to
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Purchaser, including as an example but not limited to Seller reasonably agreeing
to remain contingently obligated to the landlord on a particular assigned
leasehold and Purchaser reasonably agreeing to indemnify Seller against any
Seller's loss associated with Seller's remaining so obligated.
5.6. PURCHASE PRICE ALLOCATION. For federal, state, local and other tax
purposes, including without limitation income tax, ad valorem, transfer and
recording tax and similar purposes, Purchaser and Seller agree that the Purchase
Price will be allocated (the "Allocation") among the Assets as set forth on
Schedule 5.6. None of the parties hereto will take any position that is
substantively inconsistent with the Allocation in preparing any income or other
tax return or report and will each use reasonable efforts to maintain the
positions reflected in such returns or reports in determining any tax
liabilities. The parties acknowledge that the Allocation shall be based on, and
reflect, the relative fair market value of the Assets and Assumed Liabilities as
of the date hereof.
5.7. TITLE AND SURVEY MATTERS. Purchaser shall have the right, at its
option and sole cost and expense, to cause a current Commitment for Title
Insurance for the Restaurants to be issued for the benefit of Purchaser, to
cause a title search to be performed for the Restaurants and to cause surveys
and/or environmental Vista reports to be prepared or performed. In the event any
of the foregoing require access to the Restaurants, Purchaser shall follow the
procedures set forth in Section 5.2 hereof. Title and/or environmental reports,
searches, investigations, work or the like other than as specifically described
in this Section 5.7 shall not be performed or caused to be performed by
Purchaser in connection with the Restaurants without Seller's prior written
consent, which shall not be unreasonably withheld. Seller agrees to provide
Purchaser with copies of any surveys, title reports, title insurance policies or
environmental assessments relating to the Restaurants of which it is aware in
its possession.
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In the event the results of any environmental audit of any of the Owned
Real Property performed with Seller's prior consent as provided above indicates
that remedial action to alleviate currently existing contamination problems at
any such site is required by applicable federal or state law, Seller may, at its
option, (i) conduct, at its expense, the remedial action as required at such
site, (ii) work with Purchaser to reach a resolution that is mutually acceptable
to both Seller and Purchaser, or (iii) remove such Restaurant from this
Agreement, in which event the Purchase Price shall be reduced as provided in
Schedule 5.7 hereto.
5.8. CASUALTY AND CONDEMNATION. In the event that any Restaurant is
materially damaged by casualty or a material portion of any Restaurant is taken
or subject to pending or threatened condemnation prior to Closing, Purchaser
shall purchase the Restaurant and Seller shall transfer at Closing all insurance
or condemnation proceeds received (together with an assignment of the right to
receive any proceeds not yet paid) to Purchaser.
5.9. EQUITY PORTION OF PURCHASE PRICE. Commencing as of the Closing
Date, Purchaser shall maintain an equity position in the Restaurants equal to,
at a minimum, the aggregate of (i) 15% of the Purchase Price, Cash, value of the
Inventories and all transaction costs (with transaction costs, to the extent
they do not exceed 5% of the Purchase Price, Cash and value of the Inventories),
and (ii) all transaction costs incurred by Purchaser in connection with the
transactions contemplated hereby in excess of 5% of the Purchase Price, Cash and
value of the Inventories. Equity may include stock/partnership capital and
market value of existing assets, net of debt. Equity investments of
stock/partnership capital and/or a contribution of assets will be valued on an
"all-in" basis. The equity of the combined entity (acquired Assets and existing
operations) must be at least 15%. Equity shall be calculated in accordance with
the formula set forth in Schedule 5.9. In order to cause Purchaser to satisfy
its equity obligations under this Agreement, MFI hereby
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unconditionally guarantees to Seller and its affiliates, successors and assigns,
the full and complete timely performance of Purchaser's obligations under this
Agreement, the Real Property leases and the KFC Franchise Agreements for the
Restaurants. MFI hereby waives presentment, demand, protest and notice in
connection with this guaranty obligation. Purchaser's failure to maintain such
equity position in the Restaurants as provided in this Section 5.9 at any time
during the first two years following the Closing shall constitute a breach by
Purchaser of the KFC Franchise Agreements for all of the Restaurants; provided,
however, that Purchaser shall have 60 days following notice from Seller to cure
any failure by Purchaser, by a less than a material amount, to maintain such
equity position. The parties acknowledge that the remedy provided in the
foregoing sentence shall not limit any other remedy available to Seller relating
to a breach by Purchaser of Section 5.9, either during or after such two-year
period. Purchaser further agrees that it will not, during the first two years
following Closing, without the prior written consent of Seller, which shall not
be unreasonably withheld, refinance or restructure any portion of Purchaser's
debt or equity assumed or contributed in connection with the transactions
contemplated hereby. The parties agree that it shall not be unreasonable for
Seller to withhold its consent if such refinancing or restructuring would result
in a reduction of equity below the minimum level required by this Section 5.9.
Purchaser agrees, at Seller's request, to provide Seller at Closing with an
officers certificate in form satisfactory to Seller that the equity contributed
by Purchaser as required by this Section 5.9 is not encumbered in any way.
5.10. FINANCING. In the event Purchaser is planning to finance a
portion of the Purchase Price, Purchaser shall file within 10 business days of
the execution of this Agreement a completed application for such financing with
a reputable financing company and provide Seller with a copy of such completed
application. Purchaser shall regularly inform Seller of the
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status of its endeavors to obtain financing. In the event Purchaser does not,
despite its best efforts, obtain a commitment for such financing with 60 days of
the execution of this Agreement, then within 75 days of the execution of this
Agreement either party may terminate this Agreement. Purchaser agrees that it
will provide Seller with a copy of the lender commitment letter promptly
following its receipt of such letter, or at least 10 days before Closing,
whichever is earlier. Purchaser also agrees, at Seller's reasonable request, to
provide Seller with copies of any other documentation relating to such
financing.
5.11. FINANCIAL STATEMENTS AND RELATED DOCUMENTS. At the time of
execution of this Agreement, Purchaser shall deliver to Seller a copy of MFI's
certified audited current financial statements, as well as Purchaser's current
financial statements certified by the president and chief financial officer of
Purchaser. MFI's financial statements shall be in the form, with the content
and for the period required by the SEC. All financial statements of Purchaser
shall be in the form, with the content, and for the period reasonably required
by Seller.
If these financial statements do not show that Purchaser has available
cash or other liquid assets equaling at least 15% (as calculated in accordance
with Schedule 5.9) of the Purchase Price, Cash and value of the Inventories (and
transaction costs as provided in Section 5.9 hereof), Purchaser shall also
deliver proof that Purchaser has available 15% of the Purchase Price, Cash and
value of the Inventories (and transaction costs as provided in Section 5.9
hereof) that will not be secured by the Assets or by stock in the Purchaser.
For the two year period following the Closing, Purchaser shall provide
Seller with MFI's then current quarterly financial statements in the form
prescribed by the SEC, and Purchaser's then current certified quarterly
financial statements in the form reasonably satisfactory to Seller.
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Purchaser has provided Seller with copies of Purchaser's business plan
for the Restaurants, and shall provide Seller with Purchaser's ownership
structure, certified as true and correct by Purchaser or a duly authorized
officer of Purchaser.
5.12. EMPLOYEES. Except as provided in Schedule 5.12 hereto, Purchaser
shall extend offers of employment to all of Seller's employees up to and
including the level of Restaurant General Manager working in the Restaurants,
such employment to commence effective the Closing Date. Seller shall offer
Purchaser the opportunity to interview Seller's area coaches for the
Restaurants. Except as otherwise expressly provided by applicable law, on and
after the Closing Date Purchaser shall be responsible for all matters of
employment occurring on or after the Closing Date concerning such employees who
accept Purchaser's offer of employment, including without limitation workers'
compensation claims, unemployment benefit claims, wage and hour claims,
employment discrimination claims, child labor claims and OSHA claims, and
Purchaser shall indemnify Seller for any and all such matters and claims, and
Seller shall be responsible for such matters of employment and claims occurring
up to the Closing Date and shall indemnify Purchaser therefor. The employment by
Seller of the Restaurant employees who accept Purchaser's offer of employment
shall cease effective the close of business on the day preceding the Closing
Date. The timing of such offers of employment, and any related meetings between
Purchaser and the Restaurant employees, shall be as agreed between Purchaser and
Seller. Seller makes no representations regarding the qualifications or
abilities of the Restaurant employees. For a period of two years following the
Closing Date, Seller and its affiliates shall not knowingly, without the consent
of Purchaser, recruit with an intent to employ any Restaurant employee employed
by Seller on the day preceding the Closing Date who accepts Purchaser's offer of
employment, so long as such Restaurant employee remains an employee of
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XX. CONDITIONS PRECEDENT TO THE CLOSING
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6.1. CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER. The obligations
of Purchaser under this Agreement shall be subject to the satisfaction, on or
prior to the Closing Date, of all of the following conditions, any one or more
of which may be waived at the option of Purchaser:
6.1.1. MISREPRESENTATION OR BREACH OF COVENANTS, REPRESENTATIONS AND
WARRANTIES. There shall have been no material breach by Seller in the
performance of Seller's covenants herein, the representations and warranties of
Seller contained or referred to in this Agreement shall be true and correct on
the Closing Date and there shall have been delivered to Purchaser a certificate
to that effect, dated the Closing Date, and signed by a duly authorized officer
of Seller.
6.1.2 CONVEYANCING DOCUMENTS. With respect to the Assets there shall
have been delivered to Purchaser by Seller bills of sale, assignments, general
warranty deeds, landlord consents, lease assignments, KFCC Form 76(5p) Franchise
Agreements in conformity with Section 6.2.4 of this Agreement, and KFCC and Taco
Xxxx Corporation authorizations, as appropriate, for Taco Xxxx/KFC. 2n1
facilities (conversions or ground-ups) and single brand facilities for the
locations specified in Schedule 10.12 hereto for the effective dates stated
therein. All of the transfer documents delivered pursuant to this Section shall
be reasonably satisfactory to Purchaser's attorneys and Purchaser's lender as of
the Closing Date.
6.1.3. CONSENTS AND APPROVALS. The consents, waivers and approvals
necessary for the effective transfer, assignment and conveyance of the Assets
shall have been given or obtained.
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6.1.4 APPROVAL BY MFI. This Agreement and the transactions contemplated
hereby shall have been approved by the Board of Directors of MFI.
6.1.5. NO LEGAL OBSTRUCTION. Any and all required waiting periods or
approvals under the Xxxx-Xxxxx-Xxxxxx Act or with or from other federal agencies
shall have expired or been terminated or received without the institution of a
proceeding challenging the transactions contemplated hereby. Any required filing
fees in connection with the approvals contemplated by this Section shall be
shared equally by Purchaser and Seller.
6.1.6 RELATED CLOSING. Simultaneously with the Closing hereunder, the
sale of 12 Taco Xxxx restaurants in the Pittsburgh, Pennsylvania area to
Purchaser or its affiliates contemplated under the Asset Purchase Agreement
executed on or about the date hereof among Purchaser, MFI, Taco Xxxx Corp. and
Taco Xxxx of California, Inc. shall also close.
6.2. CONDITIONS PRECEDENT TO OBLIGATIONS OF SELLER. The obligations of
Seller under this Agreement shall be subject to the satisfaction, on or prior to
the Closing Date, of all of the following conditions, any one or more of which
may be waived at the option of Seller.
6.2.1. NO MISREPRESENTATION OR BREACH OF COVENANTS, REPRESENTATIONS AND
WARRANTIES. There shall have been no material breach by Purchaser in the
performance of its covenants herein, the representations and warranties of
Purchaser contained or referred to in this Agreement shall be true and correct
on the Closing Date and there shall have been delivered to Seller a certificate
to that effect, dated the Closing Date, and signed by a duly authorized officer
of Purchaser.
6.2.2 CONSIDERATION. Purchaser shall have delivered to Seller the
Purchase Price in accordance with the terms of Section 2.1 (a) hereof.
6.2.3. RESOLUTIONS; OTHER DOCUMENTS. There shall have been delivered
to Seller by
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Purchaser copies, certified by the Secretary of Purchaser, of resolutions duly
adopted by the Board of Directors and shareholders of Purchaser authorizing,
ratifying and approving the terms, execution and delivery by Purchaser of this
Agreement and the performance thereof by Purchaser. Purchaser shall have also
delivered to Seller a good standing certificate dated within 15 days of the
Closing Date, as well as the documents referred to in Sections 5.10 and 5.11
hereof and any other documents that Seller may reasonably request.
6.2.4. FRANCHISE DOCUMENTS. Purchaser and KFCC shall have executed and
delivered to each other a 20-year KFC Franchise Agreement Form 76(5p) for each
of the Restaurants, together with such other documents as may then be
customarily required by KFCC in connection with the issuance of franchises,
including without limitation the Franchisee Use of Safety, Security and Employee
Relations Materials Release and Disclaimer, and the KFCC and Taco Xxxx Corp.
authorizations, as appropriate, for the Taco Xxxx/KFC 2nl and other facilities
for the locations specified in Schedule 10.12 hereto. For any of the Restaurants
that are Taco Xxxx/KFC 2nl's on the Closing Date, with the exception of the 2n1
Restaurant located at 0000 Xxxxxxxxxxxx Xxxx, XxXxxx Xxxxx, XX, Purchaser and
Taco Xxxx Corp. shall have executed and delivered to each other a current form
5-year Taco Xxxx Franchise Agreement, together with such other documents as may
then be customarily required by Taco Xxxx Corp. in connection with the issuance
of franchises, and Purchaser shall have been granted at Closing the option to
convert such 5-year franchises to (in the aggregate) 20-year franchises
following the upgrade by Purchaser of each such 2n1 facility to then current
Taco Xxxx/KFC ground-up image and standards within 5 years of the Closing and
the payment by Purchaser to Taco Xxxx Corp. of an initial fee of $45,000 for
each such 2n1 facility. For such McKees Rocks Restaurant, Purchaser shall have
the right to operate the Taco Xxxx Express facility for the remaining portion of
the current 5-year term only.
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6.2.5. APPROVAL BY TRICON. This Agreement and the transactions
contemplated hereby shall have been approved by the senior management of Tricon
Global Restaurants, Inc. ("Tricon").
6.2.6. NO LEGAL OBSTRUCTION. Any and all required waiting periods or
approvals under the Xxxx-Xxxxx-Xxxxxx Act or with or from other federal agencies
shall have expired or been terminated or received without the institution of a
proceeding challenging the transactions contemplated hereby. Any required filing
fees in connection with the approvals contemplated by this Section shall be
shared equally by Purchaser and Seller.
6.2.7. RELATED CLOSING. Simultaneously with the Closing hereunder, the
sale of 12 Taco Xxxx restaurants in the Pittsburgh, Pennsylvania area to
Purchaser or its affiliates contemplated under the Asset Purchase Agreement
executed on or about the date hereof among Purchaser, MFI, Taco Xxxx Corp. and
Taco Xxxx of California, Inc. shall also close.
6.2.8. EAST SIDE MARIO'S LITIGATION. As of the Closing, MFI, Purchaser
and their affiliates shall execute and deliver to Seller a general release and
related documents in the form reasonably satisfactory to Purchaser, Seller and
their respective counsel. The release and related documents shall provide, in
substantial part, that MFI, Purchaser and their affiliates release with
prejudice any and all claims whatsoever that any of them have, may have or may
have had, or which were, could have been, or may have been asserted by them in
the litigation entitled XXXXXX'X CREATIVE RESTAURANT CONCEPTS, INC. AND XXXXXX'X
FOODS, INC. v. EAST SIDE MARIO'S RESTAURANTS, INC., XXXXX XXXXXXXXX'X PIE SHOPS,
INC. AND XXXX XXXXXXXX, filed in the United States District Court, Northern
District of Ohio, Eastern Division, Case No. 1:98CV1559, or XXXXXX'X CREATIVE
RESTAURANT CONCEPTS, INC. AND XXXXXX'X FOODS, INC. v. EAST SIDE MARIO'S, INC.,
XXXXX XXXXXXXXX'X PIE SHOPS,
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INC. AND XXXX XXXXXXXX, filed in the United States District Court, Northern
District of Ohio, Eastern Division, Case No.1:98CV920 (the "Litigation") against
Tricon or any of its affiliates, or for which Tricon or any of its affiliates
may have an obligation to indemnify any or all of East Side Mario's Restaurants,
Inc., Xxxxx Xxxxxxxxx'x Pie Shops, Inc., or any of their respective current or
former affiliates, employees, officers or directors, or PepsiCo, Inc., or any of
its current or former affiliates, employees, officers or directors (together
"Indemnified Parties") in connection therewith (provided, however, that this
shall not preclude MFI, Purchaser and their affiliates from asserting claims
against any such Indemnified Party, for which claims Tricon and its affiliates
have no obligation to indemnify such Indemnified Party), and that MFI, Purchaser
and their affiliates jointly and severally agree to indemnify Tricon and its
affiliates for, from and against any other claims which were, are or may be
asserted against Tricon or any of its affiliates in the Litigation or any
related litigation involving the same parties, or for which Tricon or any of its
affiliates are found to be liable in the Litigation or any related litigation
involving the same parties. Except as provided herein, Tricon and its affiliates
shall release MFI and its affiliates from any claims Tricon or its affiliates
may have against MFI or it affiliates relating to the East Side Mario's
restaurant concept.
In connection with such release, Seller shall cause Pizza Hut, Inc.
to pay MFI $60,000.
VII. CLOSING
------------
7.1 THE CLOSING. Subject to the fulfillment of the conditions
precedent specified in Article VI hereof, the consummation of the transactions
of purchase and sale contemplated hereby (the "Closing") shall take place at
10:00 a.m. on June 15, 1999 or on such other date
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as mutually agreed by Seller and Purchaser (the "Closing Date"). The Closing
shall take place at a location as mutually agreed by Purchaser and Seller.
VIII. INDEMNIFICATION
---------------
8.1. INDEMNIFICATION. (a) Purchaser and Seller (i) represent that they
have not incurred any brokerage or finder's fees or agent's commissions or other
similar charges to any person or entity which would result in liability, cost or
obligation to the other or any affiliate of the other and (ii) agree to
indemnify and save harmless the other from and against any loss, cost, damage or
expense (including court costs and reasonable attorneys' fees and expenses)
resulting from any breach of such representation.
(b) From and after the Closing, Seller shall indemnify and save
harmless Purchaser and its affiliates from and against any and all loss, cost,
damage or expense of or to Purchaser or its affiliates (including court costs
and reasonable attorneys' fees and expenses) resulting from or arising out of:
(i) Any breach of any representation, warranty, covenant or
obligation of Seller contained in this Agreement; or
(ii) Any liability or obligation in respect of the operation
of the Restaurants by Seller prior to the Closing Date (including but not
limited to employment or termination claims by Seller's Restaurant employees
arising from events occurring at the Restaurants prior to the Closing Date).
(c) From and after the Closing, Purchaser shall indemnify and save
harmless Seller and its affiliates from and against any and all loss, cost,
damage or expense of or to Seller or its affiliates (including court costs and
reasonable attorneys' fees and expenses) resulting from or arising out of:
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(i) Any breach of any representation, warranty, covenant or
obligation of Purchaser contained in this Agreement; or
(ii) The Assumed Liabilities.
IX. PRORATIONS AND EXPENSES
-----------------------
9.1. EXCLUSIVITY. Utility charges, rental charges, Real Property taxes,
and personal property taxes, including without limitation, accruals or
prepayments thereof (collectively called the "Proration Accounts"), shall be
apportioned between Seller and Purchaser as of the Closing. To the extent the
Proration Accounts cannot be fully apportioned, or other amounts payable by
Purchaser or Seller hereunder, as the case may be, cannot be fully determined as
of the Closing, either party may from time to time after the Closing Date
prepare and submit to the other one or more post-closing statements, and
Purchaser or Seller, as the case may be, shall pay the amounts due to the other
within 30 days of receipt of any such post-closing statement.
9.2. OTHER TAXES AND EXPENSES. (a) All federal, state and municipal
income, federal and state withholding, Federal Insurance Contributions Act,
federal employment and state unemployment taxes and other charges levied or
imposed upon Seller will be borne and paid by Seller and all such taxes and
charges so levied or imposed upon Purchaser will be borne and paid by
Purchaser.
(b) Except as otherwise provided by the Proration Accounts or
this Agreement, each party will bear and pay its own expenses and taxes incurred
in connection with the transactions referred to in this Agreement.
Notwithstanding the foregoing, Purchaser shall bear and pay in their entirety
all registration, sales, transfer, excise, real estate, escrow, recordation and
any similar taxes and fees, as well as all closing fees, whether charged by
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the lender, the title company or otherwise, payable by reason of the sale and
conveyance of any of the Assets; provided, however, that Seller shall pay 1/2 of
the 2% Pennsylvania real estate transfer tax only; and provided further,
however, that, to the extent Seller is required under applicable state law to
remit any sales taxes in connection with the transactions contemplated by this
Agreement, Purchaser shall pay such taxes to Seller at Closing so they can be
duly and timely paid in accordance with such state law.
X. MISCELLANEOUS
----------------
10.1. TERMINATION. Notwithstanding anything contained in this Agreement
to the contrary, this Agreement may be terminated at any time prior to the
Closing:
a) by the mutual written consent of Purchaser and Seller;
b) by Seller or Purchaser if the Closing shall not have
occurred on or before September 30, 1999, unless extended by written agreement
of the parties; or
c) by either Purchaser or Seller if the other shall fail to
fulfill any of its obligations hereunder that constitutes a condition precedent
to the performance of the first party's obligations in accordance with the terms
hereof.
In the event of termination of this Agreement under Section 10.1, each
party hereto shall pay all of its own fees and expenses. There shall be no
further liability hereunder on the part of any party hereto if this Agreement
shall be so terminated, except by reason of a breach of this Agreement or any
representation, warranty or covenant contained herein. Notwithstanding the
foregoing sentence, the $150,000 of the Purchase Price paid by Purchaser upon
the execution of this Agreement shall only be refundable as provided in Section
2.1(a) hereof. The termination of this Agreement as provided in this Section
shall
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have no impact on the defenses, rights and remedies, if any, available to
any party (currently or hereafter) in the Litigation, or with respect to any
claims which any party may make against Tricon or its affiliates in the
Litigation, or any claims that Tricon or its affiliates may make against any
such party or others in the Litigation or otherwise.
10.2. SPECIFIC PERFORMANCE. Seller and Purchaser acknowledge and agree
that monetary damages are not adequate to enforce the terms of this Agreement
or to address a breach or an alleged breach of this Agreement. Each of the
parties hereto will be entitled to obtain specific performance or other
equitable relief against the other in connection with any breach of any
provision hereof (in addition to any other remedies, including monetary
damages, otherwise available hereunder or at law).
10.3. NOTICES. All notices and other communications required or
permitted hereunder shall be in writing and, unless otherwise provided in this
Agreement, shall be deemed to have been duly given when delivered in person or
when dispatched by telegram or electronic facsimile transfer, or sent by
overnight mail to the addressees at the addresses specified below:
(a) If to Seller:
KFC National Management Company
Kentucky Fried Chicken of California, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: General Counsel
(b) If to Purchaser:
Xxxxxx'x Foods, Inc.
Xxxxxx'x Restaurants of Pennsylvania, Inc.
Xxxxxx'x Foods of Missouri, Inc.
Xxxxxx'x Restaurants of Ohio, Inc.
Xxxxxx'x Weirton Foods, Inc.
00000 Xxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxxx, Xxxx 00000
Attn: Xx. Xxxxx X. Xxxxxxx
President, Chief Operating Officer
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or to such other address or addresses as any such party may from time to time
designate as to itself by like notice.
10.4. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of Seller, Purchaser, and their respective successors and
assigns; provided however that Purchaser may not assign its rights or delegate
its obligations hereunder in whole or in part without the prior written consent
of Seller; provided further that, as between Seller and Purchaser, no such
assignment shall relieve Purchaser of its primary liability to Seller for any of
Purchaser's obligations hereunder.
10.5. MODIFICATION AND WAIVER. No modification or waiver of any of the
provisions of this Agreement shall be effective unless such modification or
waiver shall be in writing and signed by the party or parties to be bound.
10.6. ENTIRE AGREEMENT. This Agreement (together with any Schedules and
Exhibits hereto, the Asset Purchase Agreement referred to in Section 6.2.7 and
the settlement and release documents contemplated in Section 6.2.8) supersedes
any other agreement, whether written or oral, that may have been made or entered
into by Purchaser or Seller relating to the matters contemplated hereby. This
Agreement (together with any Schedules and Exhibits hereto) constitutes the
entire agreement by and between the parties and there are no agreements or
commitments except as expressly set forth herein. Notwithstanding the above,
this Section shall not apply to those agreements listed in Schedule 10.6 hereto.
10.7. LIMITATIONS ON RIGHTS OF THE PARTIES. Nothing expressed or
implied in this Agreement is intended or shall be construed to confer upon or
give any person, firm or
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corporation other than the parties hereto any rights or remedies under or by
reason of this Agreement or any transaction contemplated hereby.
10.8. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the substantive laws of the Commonwealth of Kentucky without
giving effect to the principles of conflict of laws thereof. If any party seeks
to enforce its rights under this Agreement by legal proceedings or otherwise,
the nonprevailing party shall pay the prevailing party's costs and expenses,
including, without limitation, reasonable attorney's fees.
10.9 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same agreement.
10.10. TITLES AND HEADINQS. Titles and headings to sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
10.11. SEVERABILITY. If any provision or provisions of this Agreement,
or any of the documents or instruments delivered pursuant hereto, or any portion
of any provision hereof or thereof, shall be deemed invalid or unenforceable
pursuant to a final determination of any court of competent jurisdiction or as a
result of future legislative action, such determination or action shall be
construed so as not to affect the validity or enforceability hereof or thereof
and shall not affect the validity or effect of any other portion hereof or
thereof.
10.12. FRANCHISE AGREEMENTS. (a) Purchaser acknowledges that, except as
may otherwise be provided in Schedule 10.12 hereto, Seller shall cause KFC
Corporation ("KFCC") to issue to Purchaser a KFC Franchise Agreement for each of
the Restaurants. Purchaser agrees to comply fully with the terms of such
Franchise Agreements and any supplements or
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attachments thereto, including without limitation any "Exhibit A's" containing
upgrading, relocation, rebuild and/or remodeling obligations for the
Restaurants. Purchaser further acknowledges that, due to concern for the
employees at the Restaurants, among other reasons, at the time of execution of
this Agreement, the Exhibit A's may only contain generally described upgrading,
relocation, rebuild and/or remodeling obligations, and that the specific
components of such obligations (which shall include current image signage for
all of the Restaurants) will be determined by Seller at a later date, consistent
with the I.E. Guidelines for Divestitures currently endorsed by the NCAC.
Purchaser agrees to comply with these specific obligations within the time
periods specified by Seller. Purchaser further agrees to comply fully with the
terms of each Real Property lease for the Leased Real Property, including
without limitation the obligations under each Real Property lease to pay rent
when due, so long as Seller or any of its affiliates remain obligated
(contingently or otherwise) under such Real Property lease. Purchaser agrees
that, notwithstanding anything to the contrary set forth in the KFC Franchise
Agreements for the Restaurants, a breach by Purchaser of any Real Property lease
under which Seller or any of its affiliates remain liable shall constitute a
breach by Purchaser of the KFC Franchise Agreement for that Restaurant, and a
breach by Purchaser of KFC Franchise Agreement for one of the Restaurants shall
constitute a breach by Purchaser under the KFC Franchise Agreements for all of
the Restaurants; provided, however, that this cross-default provision shall no
longer apply to a default under a Real Property lease where Seller and its
affiliates are no longer liable. The $25,000 initial franchise fee payable by
Purchaser to KFCC for the KFC franchise for each of the Restaurants is included
in the Purchase Price specified in Section 2.1 of this Agreement, and no
separate additional initial franchise fee shall be charged by Seller to
Purchaser for the KFC Franchise Agreements for any of the Restaurants. There
shall be no initial fees
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payable by Purchaser for the 5-year Taco Xxxx franchise agreements for the
Restaurants that are currently Taco Xxxx/KFC 2n1's.
(b) In addition to its other agreements and obligations hereunder,
including without limitation its Exhibit A obligations, Purchaser agrees that,
subject to the then existing contractual rights of other KFC and Taco Xxxx
franchisees and the then current practices and policies of KFCC and Taco Xxxx
Corp. (e.g., any impact guidelines), it will construct and open for business a
total of 20 new KFC and/or Taco Xxxx single or multi-brand outlets (including 9
conversions of single brand outlets to ground-up image 2nl's) in the following
areas: 12 in the vicinity of the "Committed Locations" as identified in Schedule
10.12, and the remaining 8 in and/or around the areas where the Restaurants are
located or in the "Optional Locations" as identified in Schedule 10.12. Where
Schedule 10.12 specifies a certain facility type for a particular location (e.g.
Taco Xxxx/KFC 2n1), Purchaser agrees to construct such facility type at that
location. The new outlets shall be constructed and opened for business in
accordance with KFCC's and Taco Xxxx Corp.'s standards at specific locations
approved by KFCC and/or Taco Xxxx Corp., as the case may be. Five new outlets
shall be opened for business within each successive 12 month period following
the Closing.
At Closing, and in addition to the Purchase Price, Purchaser shall
pay Seller the nonrefundable amount of $170,000 toward the initial franchise
fees for the new outlets to be constructed at the Committed Locations
identified in Schedule 10.12: $10,000 for each of the new brand points of
distribution. As each of such 12 new outlets are opened for business as
provided in this subsection (b), the remaining $15,000 portion of the initial
franchise fee for each KFC and Pizza Hut outlet (distribution point) and
$35,000 for each
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Taco Xxxx outlet (distribution point) shall be payable by Purchaser to Seller or
its designee on such opening day. In the event any of such 12 new outlets are
not opened for business as provided herein (unless due to factors outside of
Purchaser's control), the portion of the initial franchise fee paid hereunder
for such outlet shall be retained by Seller.
(c) For the 24-month period following the Closing, Seller shall
not, and shall cause its affiliates not to, grant any other party the right to
construct and open for business a KFC and/or Taco Xxxx outlet at any of the
"Optional Locations designated for such brands; provided, however, that in order
to retain the right to construct a KFC and/or Taco Xxxx outlet of the type
identified in Schedule 10.12 at any of the Optional Locations after such
24-month period, Purchaser shall (I) pay to Seller or its designee before the
expiration of such 24-month period $10,000 toward the initial franchise fee for
each new brand distribution point at each such Optional Location, and (ii)
remain in full compliance with the development timetable specified in subsection
(b) above; otherwise, Purchaser shall have no further right to construct or open
for business any such outlet. The remainder of the initial franchise fee shall
be paid as provided in subsection (b) above.
(d) If any new outlet as referred to in (b) or (c) above is not
opened for business as provided herein within the time periods specified (unless
due to factors outside of Purchaser's control), the option for such outlet shall
automatically expire, and Purchaser shall have no further right to construct or
open for business such outlet. In addition, in the event any such new KFC outlet
as referred to in (b) or (c) above is not opened as provided herein, Purchaser
shall waive and release for a period of one year following the scheduled opening
day any and all rights it may have under any then existing KFC Franchise
Agreement to apply for any new KFC franchised outlet within such vicinity is
described in Schedule 10.12 or subsection (b) above, unless such failure to open
is due to factors outside of Purchaser's control. At the end
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of such one-year period, subject to the provisions of such KFC Franchise
Agreements, Purchaser shall regain such rights.
(e) Within 30 days following the beginning of each 12-month period
following the Closing, Purchaser shall notify Seller in writing of the outlets
(specifying locations) it will construct and open for business during that
12-month period.
(f) Purchaser further agrees, as part of its overall agreement
hereunder, that it will waive any Section 19 or other rights it may have under
any current or then existing KFC, Pizza Hut or Taco Xxxx Franchise Agreement
with respect to a total of 4 new franchised outlets to be constructed and opened
for business of the types and in the vicinities identified below:
Type of Outlet Vicinity
-------------- --------
1. XXX/Xxxx Xxxx 0x0 Xxxxxxxxx, XX
2. XXX/Xxxx Xxxx 0x0 Xxxxxxxxxx University Campus (Forbes Ave.)
3. KFC/Taco Xxxx/Pizza Hut 3n1 Pittsburgh, PA (Xxxxxx Street)
4. KFC/Taco Xxxx 2n1 Cadiz, PA (part of Wheeling)
Purchaser is waiving these rights on the condition that the KFC Franchise
Agreements issued to a third party for the KFC franchises identified above do
not contain Section 19.
(g) Purchaser and Seller further agree that Purchaser will
relocate its current KFC outlet at 000 X. 0xx Xxxxxx in Indiana, PA (L125087) to
another location acceptable to KFCC in Indiana, PA, in accordance with a
timetable to be reasonably agreed upon by Purchaser and Seller. There shall be
no initial franchise fee payable to KFCC with respect to this relocation, and
such relocation shall not be counted toward Purchaser's development obligations
under this Section 10.12.
10.13. ASSET SALE ONLY. Purchaser and Seller mutually agree that this
transaction constitutes an asset sale only.
10.14. SANDWICH EQUIPMENT. Purchaser acknowledges and agrees that an
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incremental investment in equipment for the Restaurants will be necessary for
Purchaser to participate in the national launch of sandwiches in the KFC System
scheduled for September, 1999. Purchaser further acknowledges and agrees that it
shall be responsible for purchasing such equipment and having it delivered to
the Restaurants prior to such sandwich launch.
IN WITNESS WHEREOF, the parties hereto have executed, or have caused
their duly authorized representatives to execute, this Agreement the day and
year first above written.
SELLER: PURCHASER:
KFC National Management Company Xxxxxx'x Foods, Inc.
By /s/ Xxxxx Xxxx By /s/ Xxxxxxx Xxxxx-Xxxxx
----------------------------- ---------------------------
Vice President Chairman
FEIN 00-0000000
----------
Kentucky Fried Chicken of Xxxxxx'x Restaurants of
California, Inc. Pennsylvania, Inc.
By /s/ Xxxxx Xxxx By /s/ Xxxxx X. Xxxxxxx
---------------------------- ----------------------------
Vice President President & COO
FEIN 00-0000000
----------
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Xxxxxx'x Foods of Missouri, Inc.
By /s/ Xxxxx X. Xxxxxxx
----------------------
President & COO
FEIN 00-0000000
-----------
Xxxxxx'x Restaurants of Ohio, Inc.
By /s/ Xxxxx X. Xxxxxxx
----------------------
President & COO
FEIN 00-0000000
------------
Xxxxxx'x Weirton Foods, Inc.
By /s/ Xxxxx X. Xxxxxxx
--------------------
President & COO
FEIN 00-0000000
----------
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