_________________________________________________________
______________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: May 24, 1996
NPC INTERNATIONAL, INC.
(Exact name of registrant as specified in its
charter)
Kansas
(State of incorporation)
0-13007
48-0817298
(Commission
(IRS Employer
File Number)
Identification No.)
720 W. 20th Street, Pittsburg, Kansas 66762
(Address of principal executive office)
(Zip Code)<PAGE>
Registrant's telephone number: (316-231-3390)
_________________________________________________________
Page 1 of 2
Item 2. Acquisition or Disposition of Assets
NPC International, Inc. completed the sale of it's
Northwest-based Skipper's chain to a Seattle investment
group on May 14, 1996. The transaction is effective as
of March 25, 1996. The company has recorded an
impairment and loss provision of approximately
$20,000,000 related to the sale in their fiscal year-
ended March 26, 1996.
The transaction includes the sale of all of the
outstanding stock of Skipper's Inc. with NPC retaining
certain assets, principally comprised of real-estate, and
liabilities associated with the February 1995 closure of
approximately 77 Skipper's units. Additionally, NPC will
retain certain liabilities established as of March 25,
1996.
For the fiscal year ended March 26, 1996, Skipper's
aggregated revenues of $44,910,000, losses from
restaurant operations of $194,000 and operating losses
exclusive of the impairment and loss provision of
$4,008,000.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits.
(a) Pro forma financial information. Attached
hereto as Exhibit 1
Exhibit Description<PAGE>
A Acquisition Agreement by and among NPC
International, Inc., Seattle Crab Co. and
Skipper's, Inc.
B Lease Indemnification Agreement
C Liability Assumption Agreement
D Environment Compliance Agreement
E Administrative Services Agreement
F Non-Competition Agreement
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
thereunto duly authorized.
NPC INTERNATIONAL, INC.
Date: May 24, 1996 By:
Troy D. Cook
Vice President and
Chief Financial
Officer
Page 2 of 2<PAGE>
NPC INTERNATIONAL, INC.
Pro-Forma Financial Statements
As of and for the year ended March 26, 1996
Transaction Summary
As described in response to Item 2 of Form 8K, NPC
International, Inc. sold the stock of it's subsidiary Skipper's,
Inc. as of March 25, 1996. A pre-tax loss of $20,000,000 has
been recorded in the financial statements for the year ended
March 26, 1996. As part of the transaction, Skippers made a
dividend to NPC that reflected the transfer of certain assets and
liabilities which consisted principally of real estate, insurance
reserves, and reserves for future costs of liquidating previously
closed properties. All the accounts of Skipper's have been
removed from the balance sheet at March 26, 1996. Therefore,
pro-forma adjustments to the condensed balance sheet are not
necessary to reflect the transaction.
CONDENSED CONSOLIDATED BALANCE SHEET
Current Assets $ 30,245,000
Facilities and equipment 92,677,000
Assets held for sale 5,904,000
Intangibles, net 62,583,000
Other 6,479,000
Total Assets $197,888,000
Current Liabilities 33,405,000 (b)
Long-Term Debt 72,852,000
Closure reserve 4,000,000
Other 10,311,000
Equity 77,320,000
Total Liabilities
and Equity $197,888,000
PRO-FORMA CONDENSED
CONSOLIDATED STATEMENT OF OPERATIONS
NPC International, Inc. and Subsidiaries
As Reported Pro-Forma
NPC International,Inc. Pro-forma NPC International,
Fiscal Year Ended Adjustments Inc.
March 26, March 26, March 26,
1996 1996 1996
Total revenue 323,261,000 44,910,000 (a) 278,351,000
Restaurant operating
expenses 265,276,000 45,106,000 (a) 220,170,000
General and
administrative expenses 24,452,000 3,812,000 (a) 20,640,000
Impairment and loss
provision for
underperforming assets 23,500,000 23,500,000
Operating income (loss) 10,033,000 (4,008,000)(a) 14,041,000
Interest and other expense (6,487,000) (144,000)(a) (6,343,000)
Income (loss) before
income taxes 3,546,000 (4,152,000) 7,698,000
Provision (benefit)
for income taxes 1,403,000 (1,662,000) 3,065,000
Net income (loss) $2,143,000 $(2,490,000) $4,633,000
Earnings (loss) per share $0.09 $(0.10) $0.19
Weighted average
shares outstanding 24,663,971 24,663,971 24,663,971
Condensed Consolidated
Notes to Pro-Forma Financial Statements
(a) These items reflect the results of Skipper's operations -
for the year ended March 26, 1996. The sale of Skipper's is not
anticipated to have any further effect on salaries and corporate
expenses other than noted here.<PAGE>
(b) In addition to the $4,000,000 long-term closure reserve,
$3,500,000 is included in current liabilities related to
estimated closure expenses.<PAGE>
ACQUISITION AGREEMENT
BY AND AMONG
SEATTLE CRAB CO.,
NPC INTERNATIONAL, INC.
and
SKIPPER'S, INC.
Dated as of
MARCH 25, 1996<PAGE>
TABLE OF CONTENTS
Page
1. PURCHASE AND SALE OF STOCK............................... 1
A. Basic Transaction................................... 1
B. Initial Purchase Price.............................. 2
C. Contingent Purchase Price........................... 2
D. Closing............................................. 2
1. The Closing Date............................. 2
2. Actions and Deliveries by the Seller......... 2
3. Actions and Deliveries by the
Buyer at the Closing......................... 3
4. Actions and Deliveries by SKIPPER'S
at the Closing............................... 4
5. Further Action and Deliveries
at the Closing............................... 4
E. Post Closing Cash Reconciliation.................... 4
F. Treatment of Certain Assets and Liabilities......... 5
G. Leased Non-Operating Properties..................... 5
H. Rebates............................................. 5
2. REPRESENTATIONS AND WARRANTIES OF BUYER.................. 5
A. Organization, Standing and Corporate Power.......... 5
B. Authority and Capacity.............................. 6
C. Authorization of Agreements......................... 6
D. Execution, Delivery and Performance................. 6
E. Finder's Fee........................................ 6
F. Insurance............................................ 6
3. REPRESENTATIONS AND WARRANTIES OF SKIPPER'S AND SELLER.... 6
A. Organization, Standing and Power..................... 7
B. Authority and Capacity............................... 7
C. Compliance with Laws and Other Instruments............8
D. Subsidiaries..........................................8
E. Assets of SKIPPER'S................................ 8
F. The Stock............................................ 9
G. Inventory............................................ 9
H. Accounts Receivable................................ 9
I. Financial Statements................................ 9
J. Liabilities......................................... 10
K. Absence of Certain Changes or Events................ 10
L. Tax Matters......................................... 12
1. Definitions..................................... 12
2. Representations and Warranties of Seller........ 12
M. Litigation.......................................... 14
N. Agreements, Arrangements, Etc....................... 14
O. Government Permits.................................. 15
P. Trade Rights........................................ 15
Q. Insurance Policies.................................. 15
R. Employees........................................... 16
S. Employee Benefit Plans, Etc......................... 16
T. Suppliers........................................... 17
U. Purchase and Sale Obligations....................... 17
V. Powers of Attorney.................................. 17
W. No Change of Control Provisions..................... 17
2<PAGE>
X. No Finder's Fee..................................... 17
Y. Environmental Compliance Matters.................... 18
Z. Letters of Credit................................... 18
AA. Labor Relations..................................... 18
BB. Accuracy of Other Information....................... 18
CC. Franchise Matters................................... 18
4. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING................ 19
A. Investigation....................................... 19
B. Operation of SKIPPER'S Business Pending Closing..... 20
C. Conduct............................................. 22
D. Non-Disclosure or Use of Information................ 22
E. Governmental and Third Party Consents and Approvals 22
5. POST-CLOSING COVENANTS................................... 23
A. General............................................. 23
B. Transition.......................................... 23
C. Confidentiality..................................... 24
D. Noncompetition...................................... 24
E. Franchising......................................... 24
F. Administrative Services............................. 24
6. CONDITIONS OF PURCHASE AND SALE.......................... 24
A. Conditions to Obligations of the Buyer.............. 24
1. Representations and Warranties of the
Seller and SKIPPER'S To Be True................ 24
2. Statutory Requirements......................... 25
3<PAGE>
3. No Proceedings................................ 25
4. Certificates................................... 25
5. Form of Schedules.............................. 25
6. Delivery of Ancillary Agreements and Other
Instruments.................................... 26
7. Dividends...................................... 26
8. Due Diligence................................ 26
9. Financing...................................... 26
10. Insurance...................................... 26
B. Conditions to Obligations of the Seller............. 26
1. Representations and Warranties of the
Buyer To Be True............................... 26
2. Statutory Requirements......................... 27
3. No Proceedings................................ 27
4. Certificates................................... 27
5. Delivery of Ancillary Agreements and
Other Instruments.............................. 27
6. Boards of Directors' Approval.................. 27
7. Lender Consents................................ 27
7. FURTHER AGREEMENTS OF THE PARTIES....................... 27
A. Additional Agreements............................... 27
B. Further Agreements of the Seller.................... 28
C. Confidentiality..................................... 28
D. Section 338(h)(10) Election......................... 29
4<PAGE>
8. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY................................................ 29
A. Nature and Survival of Representations and
Warranties...........................................29
B. Indemnification by the Seller....................... 30
C. Indemnification by the Buyer........................ 31
D. Right to Defend, Etc................................ 32
E. Subrogation......................................... 33
9. TERMINATION.............................................. 33
A. Termination of Agreement............................ 33
B. Effect of Termination............................... 34
10. TAXES.................................................... 35
Payment of Taxes, Filing of Returns...................... 35
11. DEFINITIONS.............................................. 35
A. Definitions......................................... 35
12. GENERAL PROVISIONS....................................... 37
A. Survival............................................ 37
B. Expenses............................................ 37
C. Modification; Waiver................................ 37
D. Counterparts........................................ 37
E. No Third-Party Beneficiaries........................ 37
F. Assignment.......................................... 37
G. Attorneys' Fees..................................... 38
H. Notices............................................. 38
I. Entire Agreement.................................... 39
5<PAGE>
J. Headings............................................ 39
K. Singular and Plural; Gender......................... 39
L. Governing Law....................................... 39
M. Arbitration......................................... 39
N. Severability........................................ 39
O. Confidential Information............................ 40
P. Specific Performance................................ 40
Q. Publicity........................................... 40
R. Rights Cumulative................................... 40
S. Time of the Essence................................ 40
6<PAGE>
ACQUISITION AGREEMENT
This Acquisition Agreement (the "Agreement") is made and
entered into as of 12:01 a.m. March 25, 1996, (the "Effective
Date") by and among Seattle Crab Co., a Washington corporation
("Buyer"), NPC International, Inc., a Kansas corporation
("Seller") and Skipper's, Inc., a Washington corporation
("SKIPPER'S").
R E C I T A L S
WHEREAS, Seller owns all of the issued and outstanding
shares of capital stock of SKIPPER'S, consisting of 1 share of
common stock, $1.00 par value; and
WHEREAS, SKIPPER'S is engaged in the business of operating
and franchising quick service seafood restaurants (the "SKIPPER'S
Business"), and in connection with the conduct of the SKIPPER'S
Business, SKIPPER'S owns and leases interests in real property,
contract rights, franchise rights, proprietary rights, accounts
receivable and other tangible, intangible and fixed assets used
in the ordinary course of the conduct of the SKIPPER'S Business;
and
WHEREAS, the Seller agrees that it is in the best interests
of Seller that this Agreement be consummated, and to that end has
authorized and directed the full cooperation of SKIPPER'S and its
7<PAGE>
directors, officers, employees, agents and representatives in
carrying out the terms and provisions of this Agreement; and
WHEREAS, the Buyer agrees to purchase and acquire the Stock
from the Seller and the Seller agrees to sell, convey, assign,
transfer and deliver to the Buyer the Stock, all according to the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and of the
mutual covenants and provisions herein contained, and subject to
the terms and conditions set forth herein, the parties agree as
follows:
PURCHASE AND SALE OF STOCK
A. Basic Transaction. On and subject to the terms and
conditions of this Agreement, the Buyer shall acquire from the
Seller, and the Seller shall sell, convey, assign, transfer and
deliver to the Buyer the Stock for the consideration specified in
Section 1.B below.
B. Initial Purchase Price. The Buyer agrees to purchase
the Stock for the sum of SEVEN MILLION SIX HUNDRED THOUSAND
DOLLARS ($7,600,000) (the "Initial Purchase Price"). At the
Closing, as defined herein, the Buyer shall pay to the Seller an
amount equal to the Initial Purchase Price in cash.
C. Contingent Purchase Price. In addition, Buyer agrees
to pay to Seller an amount (the "Contingent Purchase Price") on
the sale of (a) a controlling interest in SKIPPER'S or (b) all or
substantially all the assets of SKIPPER'S (the "Sale") equal to
8<PAGE>
the lessor of (i) Nine Hundred Thousand Dollars ($900,000) or
twenty percent (20%) of the Profit (as defined below) if the Sale
occurs within the first twelve months following the Closing; (ii)
Nine Hundred Thousand Dollars ($900,000) or fifteen percent (15%)
of the Profit if the Sale occurs after month twelve but before
the date which is 24 months following the Closing, or (iii) Nine
Hundred Thousand Dollars ($900,000) or five percent (5%) of the
Profit if the Sale occurs after the twenty-fourth month but
before the date which is thirty-six months following the Closing.
Profit for the purpose of this calculation shall be the
difference between the consideration paid in the Sale and the
Initial Purchase Price.
D. Closing.
1. The Closing Date. The Closing (the "Closing") of
the purchase and sale of the Stock shall take place on May 6,
1996 at 10:00 a.m. in the offices of Graham & Dunn, 1420 5th
Avenue, 33rd Floor, Seattle, Washington unless another date or
place is agreed to in writing by the parties. The date of the
Closing is herein referred to as the "Closing Date."
2. Actions and Deliveries by the Seller. At the
Closing, the Seller shall deliver to the Buyer and SKIPPER'S the
following instruments in form and substance reasonably
satisfactory to the Buyer:
9<PAGE>
(a) any governmental and third party consents,
approvals, assurances or UCC termination statements necessary for
the consummation by the Seller of the transactions contemplated
by this Agreement or as may be required to permit the Seller to
transfer the Stock to Buyer, provided, however, Buyer, Seller and
SKIPPER'S shall fully cooperate and be jointly responsible for
obtaining any and all approvals from the various state,
provincial and local authorities required for the transfer of the
beer and wine licenses used in the SKIPPER'S Business with such
costs to be assumed by Buyer;
(b) the opinions of Preston Gates & Ellis,
special counsel for SKIPPER'S, and Shook Hardy & Bacon, L.L.P.,
special counsel for the Seller, dated as of the Closing Date;
(c) a certificate of the Seller meeting the
requirements of Section 6.A.4 hereof;
(d) Estoppel Certificates (the "Estoppel
Certificates") and such further certificates, consents and other
documents as may be reasonably required for the Seller to carry
out the terms of this Agreement including, without limitation,
evidence of the satisfaction of all of the conditions precedent
set forth in Section 6.A hereto.
(e) a certificate representing the Stock with an
assignment separate from certificate executed in blank with
respect thereto, or other satisfactory instruments to evidence
the transfer to the Buyer of its beneficial interest in the
Stock;
10<PAGE>
(f) a non-competition agreement (the
"Noncompetition Agreement");
(g) an administrative services agreement (the
"Administrative Services Agreement");
(h) a lease indemnification agreement (the "Lease
Indemnification Agreement");
(i) a liability assumption agreement (the
"Liability Assumption Agreement");
(j) the Schedules; and
(k) the Environmental Compliance Agreement
referred to in Section 3.2.
3. Actions and Deliveries by the Buyer
At the Closing. At the closing, the Buyer shall deliver to Seller
following instruments in form and substance reasonably
satisfactory to Seller:
(a) the consideration specified in Section 1.B
above, by means of a bank cashiers check, or by wire transfer to
an account designated by the Seller;
(b) a certificate of the Buyer meeting the
requirements of Section 6.B.4 hereof;
(c) such further certificates, consents and other
documents as may be reasonably required for the Buyer to carry
out the terms of this Agreement, including, without limitation,
evidence of the satisfaction of all conditions precedent set
forth in Section 6.B hereof;
11<PAGE>
(d) any governmental and third party consents,
approvals or assurances necessary for the consummation by the
Buyer of the transactions contemplated by this Agreement;
(e) an opinion of Graham & Dunn, counsel for the
Buyer, dated as of the Closing Date; and
(f) the Environmental Compliance Agreement.
4. Actions and Deliveries by SKIPPER'S at the
Closing. At the Closing, SKIPPER'S shall deliver to Buyer or
Seller, as the case may be, the following instruments in form
reasonably satisfactory to Buyer or Seller as the case may be:
(a) an Employment Agreement executed by Paul A.
Baird, President of SKIPPERS;
(b) the Non-Competition Agreement;
(c) the Administrative Services Agreement;
(d) the Lease Indemnification Agreement;
(e) the Liability Assumption Agreement;
(f) the Schedules;
(g) the Environmental Compliance Agreement; and
(h) a certificate of SKIPPER'S meeting the
requirements of Section 6.A.4 hereof.
5. Further Action and Deliveries at the Closing. In
addition to the foregoing, each of the parties shall execute and
deliver such consents, certificates and other documents as may be
required pursuant to, or for it to carry out the terms of, this
Agreement.
12<PAGE>
E. Post Closing Cash Reconciliation. Between the
Effective Date and the Closing, Seller will continue to sweep
cash from the cash depository accounts of SKIPPER'S into Seller's
bank accounts and disburse cash from Seller's bank accounts to
fund all checks written by SKIPPER'S that clear the bank account
of SKIPPER'S through the date of Closing. Within 15 days
following the Closing, Seller shall prepare detailed reports
showing all such cash transactions between Seller and SKIPPER'S
(the "reports").
The reports will provide detail of each item of cash that
has been transferred between Seller and SKIPPER'S from the
Effective Date through the Closing Date. Each item will be
assigned to either SKIPPER'S or Seller pursuant to the terms of
this Agreement and the Ancillary Agreements. All deposits will be
assigned to SKIPPER'S except those specifically relating to the
Non-Operating Properties referred to in Section 1.G. Any cash
advanced by Seller that is used to pay for items that remain the
obligation of Seller will be charged to Seller. These
obligations include but are not limited to those outlined in
Sections 1.F relating to liabilities assumed by Seller and 1.G.
relating to Non-Operating Properties retained by Seller.
The net cash deposited in Seller's bank accounts that is
attributable to SKIPPER'S less cash advances that are
attributable to SKIPPER'S will be remitted by Seller to SKIPPER'S
within 15 days of delivery of such detailed reports.
13<PAGE>
F. Treatment of Certain Assets and Liabilities. Those
assets of SKIPPER'S listed on Exhibit A , attached hereto and
incorporated herein by reference (the "Seller Assets"), shall be
transferred, assigned and conveyed to Seller prior to Closing by
SKIPPER'S by way of a dividend all costs and expenses incurred by
SKIPPER'S before the Effective Date relating to the Seller Assets
shall be the responsibility of Seller. Seller agrees to assume
at Closing and be responsible for certain liabilities of
SKIPPER'S as of the Effective Date pursuant to the Liability
Assumption Agreement. Those liabilities of SKIPPER'S not assumed
by Seller under the Liability Assumption Agreement or the Lease
Indemnification Agreement shall remain the responsibility of
SKIPPER'S.
G. Leased Non-Operating Properties. Seller shall be fully
responsible for any and all payments and obligations relating to
the properties listed on Exhibit B, attached hereto and
incorporated herein by reference (the "Non-Operating
Properties")pursuant to the Lease Indemnification Agreement. All
rents from tenants of the Non-Operating Properties shall be paid
to Seller and Seller shall make any and all payments to lessors
or other parties required under the leases for the Non-Operating
Properties under the Lease Indemnification Agreement.
H. Rebates. Seller shall pay to SKIPPER'S by the tenth
(10th) day of the following month the amount of any rebates or
14<PAGE>
other payments received by Seller from vendors relating to the
SKIPPER'S Business other than rebates or payments which relate to
Seller Assets.
2. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer represents and warrants to Seller that each and all of
the statements in this Section 2 are true, correct and complete
as of the date of this Agreement, and will be true, correct and
complete as of the Closing Date:
A. Organization, Standing and Corporate Power. The Buyer
is a corporation duly organized, validly existing and in good
standing under the laws of the State of Washington, with
requisite corporate power and authority to own its properties and
assets and carry on its business as proposed to be conducted
immediately following the Closing Date. The copies of the
Articles of Incorporation and Bylaws of the Buyer which will be
delivered to the Seller prior to Closing are true and complete
and will not be amended or repealed prior to Closing.
B. Authority and Capacity. The Buyer has requisite
corporate power and authority to enter into, execute and deliver
this Agreement and each of the Ancillary Agreements to which it
is a party and to perform its obligations hereunder and
thereunder. Buyer need not give any notice to, make any filing
with, or obtain any authorization, consent or approval of any
government or governmental agency in order to consummate the
transactions contemplated by this Agreement and the Ancillary
15<PAGE>
Agreements other than as may be required for state or local beer
and wine licenses.
C. Authorization of Agreements. The execution and
delivery of this Agreement and the Ancillary Agreements and the
performance by the Buyer of its obligations and agreements
hereunder and thereunder have been duly authorized by all
necessary corporate action. The Buyer has taken, and shall use
all reasonable efforts to take prior to the Closing Date, all
other actions and will obtain all consents required on its part
by law and its Articles of Incorporation and Bylaws in order to
consummate the transactions contemplated hereby and thereby.
D. Execution, Delivery and Performance. This Agreement
constitutes the valid and binding obligations of the Buyer and is
enforceable in accordance with its terms. The Ancillary
Agreements, to the extent applicable, will at Closing, constitute
the valid and binding obligations of Buyer and will be
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratoriums and similar laws affecting creditors rights generally
and general equity principles.
E. Finder's Fee. Buyer shall be fully responsible for any
and all finder, broker, agent or other party due any brokerage
fee, commission, finder's fees or investment banking fees in
connection with this Agreement or the transactions contemplated
16<PAGE>
hereby other than any such broker or agent known to Seller and
not disclosed to Buyer.
F. Insurance. Buyer shall have all necessary and
customary liability, fire and other insurance policies necessary
for operation of the SKIPPER'S Business in place, all such
policies to be effective as of the Effective Date.
3. REPRESENTATIONS AND WARRANTIES OF SKIPPER'S AND SELLER
SKIPPER'S and the Seller represent and warrant to the Buyer
that the statements contained in this Section 3 are true, correct
and complete as of the Effective Date and will be true, correct
and complete as of the Closing Date as though made on and through
the Closing Date except as set forth in the Schedules. The
Schedules shall be delivered to Buyer prior to the Closing and
shall be true, correct and complete as of the Closing Date. The
Schedules (if any) correspond to the numbered paragraphs below
set forth in this Section 3. Nothing in a Schedule shall be
deemed adequate to disclose an exception to a representation or
warranty made herein, however, unless the Schedule identifies the
exception with reasonable particularity and describes the
relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a
copy) of a document or other item shall not be deemed adequate to
disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the
existence of a document or other item itself).
17<PAGE>
A. Organization, Standing and Power. Seller and SKIPPER'S
are corporations duly organized, validly existing and in good
standing under the laws of the State of Kansas and Washington,
respectively, have requisite corporate power and authority to own
their properties and assets and carry on their business as
presently conducted, are duly qualified to transact intrastate
business and are qualified as foreign corporations and are in
good standing in each jurisdiction where their business so
requires. The jurisdictions listed on Schedule 3.A are the only
jurisdictions in which the nature of the SKIPPER'S Business or
its properties make such qualification necessary. The copies of
the Articles of Incorporation and Bylaws of Seller and SKIPPER'S
which will be delivered to the Buyer prior to Closing are true
and complete and will not be amended or repealed prior to
Closing.
B. Authority and Capacity. Seller and SKIPPER'S have the
requisite corporate power and authority to enter into, execute
and deliver this Agreement and each of the Ancillary Agreements
to which they are a party and to perform their obligations
hereunder and thereunder. The execution and delivery of this
Agreement has been and each of the Ancillary Agreements will be,
and the consummation of the transactions contemplated hereby and
thereby by Seller and SKIPPER'S, will have been duly authorized
by all necessary corporate action. Seller and SKIPPER'S have
taken, and shall use all reasonable efforts to take prior to the
18<PAGE>
Closing Date, all other actions and have obtained all consents
required on their part by law and their Articles of Incorporation
and Bylaws in order to consummate the transactions contemplated
hereby and by the Ancillary Agreements. This Agreement
constitutes the valid and binding obligation of SKIPPER'S and
Seller and is enforceable in accordance with its terms. The
Ancillary Agreements will, at Closing, constitute the valid and
binding obligations of Seller and SKIPPER'S and will be
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws affecting creditors rights generally
and general equity principles. Seller and SKIPPER'S need not
give any notice to, make any filing with, or obtain any
authorization, consent or approval of any government or
governmental agency in order to consummate the transactions
contemplated by this Agreement and the Ancillary Agreements other
than as may be required for state or local beer and wine
licenses.
C. Compliance with Laws and Other Instruments. The
business and operations of the SKIPPER'S Business have been and
are being conducted substantially in accordance with all
applicable federal, state and local laws, rules and regulations.
D. Subsidiaries. SKIPPER'S does not own nor is it
obligated to acquire an ownership interest in, directly or
indirectly, any shares of stock or any other security or
19<PAGE>
financial interest in any other Person, other than as set forth
on Schedule 3.D.
E. Assets of SKIPPER'S. SKIPPER'S has and will have
immediately prior to the Closing, good and marketable title to
all of the properties and assets, including leasehold interests,
used in the conduct of the SKIPPER'S Business, wherever located,
free and clear of all Liens, encumbrances and restrictions, other
than as set forth on Schedule 3.E.
1. Schedule 3.E.1 is a complete itemization and
description of all Trade Rights which are used in the SKIPPER'S
Business. To the best knowledge of Seller, no third party has
interfered with, infringed upon, misappropriated or otherwise
come into conflict with the Trade Rights, except as set forth on
Schedule 3.E.1.
2. Schedule 3.E.2 to this Agreement sets forth a
complete and accurate list of all real property leased and
currently operated by SKIPPER'S (the "Leased Real Property").
The leases with respect to the Leased Real Properties (the "Real
Property Leases") are valid, enforceable and effective in
accordance with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium, and similar laws
affecting creditors rights generally and general equity
principles, and all amounts due and payable thereunder have been
fully paid and no default exists under any of the Real Property
Leases. The lease abstracts previously delivered to Buyer
20<PAGE>
relating to the Real Property Leases are true, complete and
accurate other than as set forth on Schedule 3.E.2.
3. Schedule 3.E.3 sets forth a complete and accurate
list of all personal property leased by SKIPPER'S (the "Leased
Personal Property"). The leases with respect to the Leased
Personal Property (the "Personal Property Leases") are valid,
enforceable and effective in accordance with their terms and all
amounts due and payable thereunder have been fully paid and no
default exists under any of the Personal Property Leases.
4. The assets and properties of SKIPPER'S, including
without limitation the Trade Rights, the Leased Real Property,
and the Leased Personal Property, constitute all of the material
properties and assets, tangible and intangible, applicable to,
used or usable in connection with, and are generally suitable
for, the operation of the SKIPPER'S Business as it is being
conducted on the Effective Date.
F. The Stock. Seller holds of record and owns
beneficially the Stock, free and clear of any restrictions on
transfer, liens, encumbrances, taxes, security interests,
options, warrants, purchase rights, contracts, commitments,
equities, claims or demands. Seller is not a party to any
option, warrant, purchase right, or other contract or commitment
that could require the Seller to sell, transfer or otherwise
dispose of the Stock or any other capital stock of SKIPPER'S
(other that by this Agreement). Seller is not at party to any
voting trust, proxy or other agreement or understanding with
21<PAGE>
respect to the voting of the Sock or any other capital stock of
SKIPPER'S.
G. Inventory. The inventory shown on the Effective Date
Balance Sheet consisted of items generally of a quality and
quantity usable and salable in the ordinary course of business
and no such items have been pledged as collateral or are held on
consignment from others.
H. Accounts Receivable. All accounts receivable shown on
the Effective Date Balance Sheet have arisen in the ordinary
course of the SKIPPER'S Business, represent valid obligations due
SKIPPER'S, and have been collected or are collectible in the
normal course of the SKIPPER'S Business in the aggregate recorded
amounts thereof in accordance with their terms (net of
appropriate reserves for doubtful accounts as shown on the
Effective Date Balance Sheet and certain receivables which have
been either transferred to Seller or written off with the
approval of Buyer set forth on Schedule 3.H.).
I. Financial Statements Schedule 3.I. to this Agreement
contains:
1. The unaudited balance sheet of Skippers, Inc. as
of March 27, 1994, March 26, 1995 and March 24, 1996 (the
"Balance Sheets"), and the unaudited statement of operations for
each year (52 weeks) in the two year period ended March 24, 1996
(the "Statements of Operations") (together the "Financial
22<PAGE>
Statements") have been prepared on a consistent basis for
inclusion in the consolidated financial statements of Seller.
The financial statements of Seller are audited and are prepared
in accordance with Generally Accepted Accounting Principles
(GAAP). The Financial Statements do not include a statement of
stockholder's equity, a statement of cash flows, or accompanying
notes that are required for presentation in accordance with GAAP.
Certain items presented in the Financial Statements, including
but not limited to property, general liability and health
insurance, represent an allocation of expenses/liabilities
incurred by Seller on a consolidated basis which may not be
precisely reflective of such items if incurred by SKIPPER'S on a
stand-alone basis. Furthermore, these Financial Statements do
not include charges for all expenses incurred by Seller on behalf
of SKIPPER'S (including, but not limited to, accounting, data
processing, and office supplies).
J. Liabilities. SKIPPER'S has no liabilities or other
obligations, either accrued or unaccrued, absolute or contingent,
direct or indirect, or otherwise, whether as principal, agent,
partner, co-venturer, guarantor or in any other capacity
whatsoever, other than liabilities that are reflected on the
Effective Date Balance Sheet or as shown on Schedule 3.J.
K. Absence of Certain Changes or Events. Since the
Effective Date, SKIPPER'S will not have:
23<PAGE>
1. suffered any adverse change in, and no events have
occurred which, individually or in the aggregate, have had, or
may have, any material adverse effect on, the financial
condition, results of operations, business or prospects of
SKIPPER'S;
2. incurred damage to or destruction of any of its
assets that materially adversely affects its financial condition,
business or prospects;
3. incurred any obligation or liability except
obligations incurred in the ordinary course of business, none of
which were entered into for consideration which was not of
reasonably equivalent value (within the meaning of Section 548 of
the Bankruptcy Code);
4. made or granted any wage or salary increases or
bonus to any employee of SKIPPER'S or paid or promised to pay any
bonus or severance payment to such employee other than salary
increases and bonuses granted in the ordinary course of business
to employees; entered into any employment agreement with any
officer or employee which is not terminable at will; or entered
into or instituted any new employee benefit plan which has not
been previously approved in writing by Buyer;
5. made any loans, which have not been repaid, to any
employee of SKIPPER'S other than travel advances made in the
ordinary course of business and consistent with past practice;
24<PAGE>
6. changed any of its accounting methods or practices
or made any changes in depreciation or amortization policies or
rates;
7. committed or agreed to merge or consolidate with
or otherwise acquire any firm, association, corporation or other
business organization or division thereof;
8. experienced any labor trouble or controversy of
any type or character which would have a material adverse effect
on SKIPPER'S business;
9. mortgaged, pledged or subjected to Lien or any
other encumbrance any of its properties (other than purchase
money security interests);
10. sold, transferred or leased any of its properties
other than Non-Operating Properties or canceled or compromised
any debt or claim other than in the ordinary course of its
business activities;
11. sold, or assigned, transferred or granted any
rights, which have not been approved in writing by Buyer, under
or with respect to, any licenses, agreements, franchise
agreements, Trade Rights, or with respect to know-how or any
other intangible asset;
12. amended or terminated any of its contracts,
agreements, franchise agreements, leases or arrangements other
than as disclosed to Buyer;
13. entered into any transaction not in the ordinary
course of business;
25<PAGE>
14. made any payment of any dividend, distribution or
other payment in respect of its outstanding stock other than as
disclosed to Buyer;
15. agreed to do any of the actions described in the
preceding subsections (1) through (14).
L. Tax Matters.
1. Definitions. For purposes of this Section L, the
following terms shall have the respective meanings set forth
below:
(a) "Tax" - including with correlative meaning,
the terms "Taxes" and "Taxable" - means any sales, use, payroll,
or property taxes, together with any interest and any penalty,
addition to Tax or additional amount imposed by any Taxing
Authority due from, or allocable under any applicable law or
agreement to, SKIPPER'S or Seller.
(b) "Taxable Year" - means, with respect to any
Tax, the calendar or fiscal year, for which the Tax is computed
and the Return (as defined below) for such Tax is made.
(c) "Taxing Authority" - means any governmental
authority (domestic or foreign) responsible for the imposition of
any Tax.
26<PAGE>
2. Representations and Warranties of Seller.
(a) all Tax returns, reports, statements, or
other material forms (collectively, "Returns") required to be
filed with any Taxing Authority for Taxable Years ending on or
before the Effective Date by SKIPPER'S have been or will be
timely filed in accordance with all applicable laws;
(b) as of the time of filing, the Returns were
prepared in accordance with the appropriate books of account and
correctly and completely reflect the facts and any other
information required to be shown therein;
(c) all Taxes due and owing by or with respect to
the SKIPPER'S Business through the Effective Date (whether or not
shown on any Return) have been or will be paid in a timely
manner;
(d) the charges, accruals and reserves for Taxes
reflected on the book of SKIPPER'S and the Financial Statements,
are adequate to cover the tax liabilities accruing or payable in
respect of Taxable Years ending on or before the Effective Date;
(e) all Returns due by, on behalf of, or with
respect to SKIPPER'S through the Taxable Years ended on or before
the Effective Date have been filed and SKIPPER'S has not received
any notice of audit with respect thereto;
(f) SKIPPER'S is not delinquent in the payment of
any Tax nor has it requested any extension of time within which
to file any Return which Return has not since been filed;
27<PAGE>
(g) no deficiency for any Tax or claim for
additional Taxes by any Taxing Authority has been proposed,
asserted or assessed against SKIPPER'S;
(h) SKIPPER'S has not been granted any extension
or waiver of the limitation period applicable to any Returns,
which extension or waiver is currently in effect;
(i) SKIPPER'S has not entered into nor will it
enter into any agreement or consent under Section 341(f) of the
Internal Revenue Code of 1986 as amended (the "Code");
(j) there is no audit, action, suit, proceeding
or investigation now pending against or with respect to SKIPPER'S
in respect of any Tax or assessment;
(k) none of the property owned or used by
SKIPPER'S is subject to a tax benefit transfer lease executed in
accordance with Section 168(f)(8) of the Code;
(l) there are no liens for Taxes upon the assets
used or usable in the SKIPPER'S Business except liens for current
taxes not yet due;
(m) no claim has ever been made by a Taxing
Authority in a jurisdiction where SKIPPER'S does not file Returns
that it is or may be subject to taxation by that jurisdiction;
(n) there are no security interests on any of the
assets of SKIPPER'S that arose in connection with any failure (or
alleged failure) to pay any Tax;
(o) SKIPPER'S has withheld and paid all Taxes of
a material nature required to have been withheld and paid in
28<PAGE>
connection with amounts paid or owing to any employee, creditor,
independent contractor, customer or other third party;
(p) neither Seller nor SKIPPER'S nor any director
or officer (or employee responsible for Tax Matters) of SKIPPER'S
or Seller has any knowledge that any Taxing Authority may assess
any additional Taxes for any period for which Returns have been
filed;
(q) SKIPPER'S has not made any payments, is not
obligated to make any payments, or is not a party to any
agreement that could obligate it to make any payments that will
not be deductible under S 280(G) of the Code;
(r) SKIPPER'S has not been a United States real
property holding corporation within the meaning of S 897(c)(2) of
the Code during the applicable period specified in
897(c)(1)(A)(ii) of the Code; S
(s) SKIPPER'S is not a party to any Tax
allocation or sharing agreement, except as otherwise expressly
contemplated herein; and
M. Litigation. There is no claim, legal action, suit,
arbitration, investigation or hearing, notice of claim or other
legal, administrative or governmental proceedings pending against
Seller or SKIPPER'S (or in which the Seller or SKIPPER'S is
plaintiff or otherwise a party thereto) relating to the SKIPPER'S
Business, other than as listed on Schedule 3.M., (ii) to the best
knowledge of Seller and SKIPPER'S, there are no facts existing
and not disclosed to Buyer which create a material probability of
29<PAGE>
the occurrence of any such claim, action, suit, arbitration,
investigation, hearing, notice of claim or other legal,
administrative or governmental proceeding or material liability
therefore, (iii) neither the Seller nor SKIPPER'S has waived any
statute of limitations or other affirmative defense with respect
to any liabilities other than waivers made prior to the assertion
of a claim such as a waiver contained in loan documents and
similar instruments, (iv) there is no continuing order,
injunction or decree of any court, arbitrator or governmental or
administrative authority to which Seller or SKIPPER'S is a party
relating to the SKIPPER'S Business or to which they or the
SKIPPER'S Business or Stock is subject and (v) neither the Seller
nor SKIPPER'S has been permanently, or temporarily enjoined or
barred by order, judgment or decree of any court or other
tribunal or any agency or self-regulatory body from engaging in
or continuing any conduct or practice related to the SKIPPER'S
Business.
N. Agreements, Arrangements, Etc. SKIPPER'S is not a
party to, nor is SKIPPER'S bound by, any written or oral
agreement, or instrument not made in the ordinary course of
business that is material to the SKIPPER'S Business that has not
been disclosed to Buyer. Correct and complete copies of all
material agreements, indentures, mortgages, employee benefit
plans, operating policies, and other instruments and written
amendments thereto of SKIPPER'S have been separately delivered to
the Buyer prior to the date hereof.
30<PAGE>
O. Government Permits. To the best knowledge of Seller
and SKIPPER'S, all Permits required for the operation of the
SKIPPER'S Business have been obtained by SKIPPER'S, each of which
is now and will immediately after the Closing Date be in full
force and effect. As of the date hereof, to the best knowledge
of Seller and SKIPPER'S, no violation of any Permit has occurred
and no proceeding is pending or threatened to revoke or limit any
such Permit.
P. Trade Rights. Each trade right which grants to
SKIPPER'S the right or permission to operate the SKIPPER'S
Business is in full force and effect and is valid and binding in
accordance with its terms, and SKIPPER'S is not in default under
any of the material terms thereof, nor has SKIPPER'S received
notice of any such default, or relinquished, forfeited or waived
any of its rights or privileges thereunder which are material to
the ongoing business operations of SKIPPER'S and, to the best
knowledge of Seller and SKIPPER'S, there exists no event which
with or without the giving of notice or the lapse of time or both
would constitute such a default or grant to any other party
thereto the right to cancel or terminate the same or withhold or
suspend its performance thereunder. SKIPPER'S has not, except as
disclosed on Schedule 3.P., during the 60 months prior to the
execution of this Agreement, infringed or received notice of any
claimed infringement of any Person's copyright in the conduct of
its business, and, to the best knowledge of Seller and SKIPPER'S
31<PAGE>
is not infringing upon or otherwise acting adversely to the
rights of any Person under or in respect to any Trade Rights
owned or claimed by any Person or Persons, and there is no claim
or action pending or threatened with respect thereto or to any
SKIPPER'S Business Trade Right. SKIPPER'S has not, except as
disclosed on Schedule 3.P., agreed to indemnify or hold any
Person or entity harmless from or against any losses or claims
resulting from any infringement of any trademark or copyright.
Q. Insurance Policies. All policies and binders of fire,
liability, workers' compensation, errors and omissions, vehicular
and other forms of insurance and performance bonds which are
owned by SKIPPER'S and the Seller (with respect to the SKIPPER'S
Business), were in full force and effect at the Effective Date
(copies of which have been delivered to Buyer). Such policies
were in such amounts and insured the owner thereof against such
losses and risks as are generally maintained by comparable
businesses, and were in all respects adequate to protect the
SKIPPER'S Business. SKIPPER'S and Seller have not failed to give
any notice or present any claim with respect to the SKIPPER'S
Business under any insurance policy or surety bond in due and
timely fashion which would result in the loss of any material
rights of SKIPPER'S. There are no disputes with underwriters of
any such policies or bonds, and all premiums due and payable have
been paid. To the best knowledge of Seller and SKIPPER'S, Seller
and SKIPPER'S were in compliance with all material conditions
contained in such policies or bonds. To the best knowledge of
32<PAGE>
Seller and SKIPPER'S, there exist no material facts or
circumstances which would relieve any insurer under any such
policy of its obligation to satisfy in full any valid claim of
the Seller or SKIPPER'S under such policy, Seller and SKIPPER'S
have not received any notice of cancellation or termination of
any such policies.
R. Employees. Schedule 3.R is a true and complete list of
all current exempt employees (the "Employees") of SKIPPER'S,
together with the current rates of compensation and all accrued
but unpaid vacation and sick pay earned by all Employees, and all
material written or oral employment contracts and collective
bargaining agreements and all other agreements or arrangements
providing for employee compensation, to which SKIPPER'S is a
party. SKIPPER'S has delivered to the Buyer accurate and
complete copies of all such contracts, agreements and
arrangements and all handbooks, manuals and other writings
describing the employment policies utilized with the Employees
and other employees of the SKIPPER'S Business. There are no
commissions due and owing to any Employee which are currently due
and payable and which have not been paid in full. SKIPPER'S is
not a party to, or subject to any obligation, liability or
commitment with respect to, any written or oral employment,
compensation, consulting, severance pay or similar agreement or
arrangement which cannot be terminated by SKIPPER'S upon 30 days
notice or is disclosed on Schedule 3.R.
33<PAGE>
S. Employee Benefit Plans, Etc. Schedule 3.S contains a
true and complete list and description of each written and
unwritten employee benefit plan (as that term is defined by the
Employee Retirement Income Security Act of 1947, as amended
("ERISA")), vacation plan, sick leave plan, retiree health plan,
bonus plan, severance plan, deferred compensation plan and any
other compensation agreements or plan or funding arrangement
("Benefit Plans") sponsored, maintained or contributed to by
SKIPPER'S. SKIPPER'S has delivered to the Buyer accurate and
complete copies of all documents embodying or relating to the
Benefit Plans, including a list of the employees eligible for
coverage and the benefits available under each such plan. All
Benefit Plans have in the past been, and are now, in all respects
maintained, fully funded and administered in compliance with
ERISA and other applicable law and no Benefit Plan subject to
Title IV of ERISA has been terminated which would result in
liability to SKIPPER'S after the Effective Date. To the best
knowledge of Seller and SKIPPER'S, no reportable event within the
meaning of Section 4043 of Subtitle C of ERISA has occurred for
any Benefit Plan. SKIPPER'S has not incurred any liability to
the Pension Benefit Guaranty Corporation with respect to any
Benefit Plan.
T. Suppliers. Schedule 3.T contains a correct and
complete list of each of the 10 largest suppliers of SKIPPER'S by
dollar amount who have supplied goods and/or services to
34<PAGE>
SKIPPER'S during the 12 months ended March 25, 1996. Except as
disclosed to Buyer, no such supplier, or any other Person or
entity having material business dealings with SKIPPER'S, has
indicated that they will cease to continue such relationship with
the Buyer or SKIPPER'S, or has indicated that they will
substantially reduce the extent of such relationship, at any time
from or after the Closing Date. Except as set forth on
Schedule 3.T., the Seller and SKIPPER'S have no knowledge of facts
which would indicate any supplier intends to decrease the amount of
business conducted with SKIPPER'S or other condition which would
materially adversely affect the relationship of the Buyer or
SKIPPER'S with the suppliers of SKIPPER'S, and which has
prevented or will prevent such business from being carried on by
the Buyer, and SKIPPER'S after the Closing Date in essentially
the same manner as it is currently carried on.
U. Purchase and Sale Obligations. Since the Effective
Date, all purchase orders and all other commitments for purchases
made by or on behalf of SKIPPER'S have been made in the usual and
ordinary course of its business in accordance with SKIPPER'S'
normal practices.
V. Powers of Attorney. No Person has been granted and
currently holds any power of attorney to act on behalf of
SKIPPER'S.
W. No Change of Control Provisions. SKIPPER'S is not a
party or subject to any agreement, contract or other obligation
35<PAGE>
which would require the making of any payment to an Employee or
to any other Person as a result of the consummation of the
transactions contemplated hereby, except as disclosed on
Schedule 3.W.
X. No Finder's Fee. Neither SKIPPER'S nor Seller has
retained any finder, broker, agent or other party or incurred any
liability or is otherwise obligated for any brokerage fees,
commissions, finder's fee or investment banking fees in
connection with this Agreement or the transactions contemplated
hereby.
Y. Environmental Compliance Matters. Seller and SKIPPER'S
representations and warranties on environmental matters and the
assumption of liability for such matters shall be dealt with in
an Environmental Compliance Agreement between the parties to be
delivered at Closing.
Z. Letters of Credit. Schedule 3.Z attached hereto
contains a true and complete list of all letters of credit issued
for or on behalf of SKIPPER'S, including the date of the letter
of credit, the amount of the letter of credit, the payee of the
letter of credit and the termination date of the letter of
credit.
AA. Labor Relations. SKIPPER'S, except as disclosed on
Schedule 3.AA. (a) is not a party to any labor or collective
bargaining agreement, (b) has not received any notice from a
36<PAGE>
labor union or group of employees that represents or believes or
claims it represents or intends to represent any of the employees
of SKIPPER'S, or (c) to the best knowledge of Seller and
SKIPPER'S, is not subject to any material liability or obligation
related to the commission of acts of employment or hiring
discriminations in matters including, but not limited to, age,
sex, race, religion, national origin or creed, or relating to any
violation of any federal, state, or local discrimination, civil
rights employment law, regulation or rule (including, without
limitation to, laws, regulations or rules regulating hours,
discrimination in employment, hiring, or condition of the
workplace). There are no material labor or employee disputes of
any type or character between SKIPPER'S and any of the employees
of SKIPPER'S. There have not occurred, during the past two
years, any activities to organize any employees of SKIPPER'S and
no strike or work interruption or slow down by any employees of
SKIPPER'S is threatened. SKIPPER'S has not received any notice
of any liability or obligation relating to any violation of, or
that it is in violation of, the Immigration Reform Act of 1986,
as amended, or any other federal law, rule or regulation
regarding immigration.
BB. Accuracy of Other Information. None of the information
contained in any certificate to be delivered by SKIPPER'S or
Seller to the Buyer at the Closing or delivered or to be
delivered by the Seller and SKIPPER'S to the Buyer in connection
with the Buyer's due diligence investigation in connection with
37<PAGE>
the transactions contemplated hereby contains, when considered
with all other information disclosed to the Buyer, any untrue
statement of a material fact or omits to state any material fact
necessary in order to make the statements therein, in light of
the circumstances under which they were or will be made, not
materially misleading.
CC. Franchise Matters.
1. SKIPPER'S owns the Skipper's system (including the
trade secret recipes, operations manuals, and other confidential
information) and the franchisor's interest in the agreements with
existing SKIPPER'S franchisees (the "Franchise Agreements").
2. To the best knowledge of SKIPPER'S, the Franchise
Agreements are valid and enforceable, subject to bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium, and
similar laws affecting creditors rights generally and general
equity principles, and, other than as previously disclosed to
Buyer, there are no claims challenging the legality or
enforceability of the Franchise Agreements or that SKIPPER'S is
in default thereunder on its material obligations to franchisees.
3. There is no known Internal Revenue Service notice
or claim regarding the SKIPPER'S advertising fund.
4. There are no undisclosed other, ongoing, legal
relationships between SKIPPER'S or its Affiliates and any
franchisees.
38<PAGE>
5. Except as previously disclosed to Buyer, no
franchisee is in default under any Franchise Agreement.
6. Each occupant of a franchised restaurant is a duly
licensed franchisee of record for that restaurant.
7. To SKIPPER'S best knowledge, it has complied with
all applicable franchise registration and disclosure laws.
8. There are no undisclosed outstanding offers by
SKIPPER'S to sell a franchise.
9. To the best knowledge of SKIPPER'S, if purchasing
from the same supplier, franchised and company-owned restaurants
in the same market area purchase goods and services at the same
base price.
4. CONDUCT AND TRANSACTIONS PRIOR TO CLOSING.
A. Investigation. Between the Effective Date and the
Closing Date, the Seller and SKIPPER'S shall each give to the
Buyer and its representatives full access to all of SKIPPER'S
premises, its books, records, employees, bankers, independent
public accountants and other agents, and Seller and SKIPPER'S
agree to furnish the Buyer with such financial and operating data
and other information with respect to the business and properties
of SKIPPER'S as the Buyer shall from time to time reasonably
request; provided, however, that any such investigation shall not
affect any of the representations and warranties of the Seller or
SKIPPER'S hereunder other than to the extent of actual knowledge
of Buyer of any set of facts which would constitute a potential
39<PAGE>
breach of any representations or warranties by Seller or
SKIPPER'S; and provided, further, that any such investigation
shall be conducted in such manner as not to interfere
unreasonably with the operation of the SKIPPER'S Business.
B. Operation of SKIPPER'S Business Pending Closing.
Between the Effective Date and the Closing Date, except with the
consent of the Buyer and except as otherwise expressly provided
herein, the Seller and SKIPPER'S shall:
1. conduct and operate the SKIPPER'S Business only in
the ordinary course in accordance with prior practice including
payment of trade payables and other liabilities;
2. make, amend and terminate contracts only in the
ordinary course of business;
3. not create or incur Indebtedness except current
liabilities in the ordinary course of business;
4. not suffer, create or incur any mortgage, security
interest, Lien, lease, encumbrance or restriction on any of
SKIPPER'S' assets except liens to be incurred as provided by this
Agreement;
5. duly comply with all laws, ordinances, rules and
regulations applicable to Seller or SKIPPER'S;
6. not make or agree to make any capital expenditures
in excess of $25,000;
7. not sell, lease, dispose of, convey or transfer,
or agree to sell, lease, dispose of, convey or transfer, any
40<PAGE>
asset, except sales from inventory in the ordinary course of
business;
8. not incur any fixed or contingent obligation, or
enter into any agreement, commitment or other transaction or
arrangement, which is not in the ordinary course of the SKIPPER'S
Business;
9. preserve SKIPPER'S' business organization, and use
SKIPPER'S' best efforts to retain SKIPPER'S employees generally
and to preserve good relationships with SKIPPER'S suppliers,
customers and other Persons having significant business
relationships with SKIPPER'S;
10. not enter into any agreement, arrangement or
undertaking with respect to any Employee relating to the payment
of, or otherwise pay, any bonus, severance payment, profit-
sharing or special compensation or any increase in the
compensation payable to such Employee, other than with respect to
non-executive employees made in the ordinary course of business
without prior notice to and approval of Buyer;
11. except as disclosed to Buyer without the
requirement of consent, maintain in full force and effect all
existing insurance policies and keep SKIPPER'S insurable
properties insured in accordance with present practice;
12. maintain SKIPPER'S properties and assets in their
customary condition and state of repair;
41<PAGE>
13. not sell, assign, license or transfer or agree to
sell, assign, license or transfer (with or without consideration)
any of SKIPPER'S Trade Rights or any interest therein;
14. not commit any act or omit to do any act which
would be or result in a breach of any of Seller's or SKIPPER'S
obligation, duties, agreements or representations under any
agreement, contract or commitment to which Seller or SKIPPER'S is
a party, or to which Seller or SKIPPER'S enters into subsequent
to the date of this Agreement, which would have a material
adverse effect on the SKIPPER'S business, its prospects,
condition (financial or otherwise) or earnings;
15. bear the risk of loss or damage to SKIPPER'S
properties and assets on and prior to the Effective Date;
provided, however, if any of SKIPPER'S properties or assets are
damaged on or prior to the Effective Date by any casualty, Seller
or SKIPPER'S shall give the Buyer immediate written notice of
such damage, which notice shall include Seller's or SKIPPER'S
estimate of the net financial impact of such damage to SKIPPER'S,
and, if materially adverse, such damage or destruction shall
afford the Buyer, in its sole and absolute discretion, the right
to (i) cancel or terminate this Agreement within 30 days after
receipt of the notice; or (ii) close the transactions
contemplated by this Agreement and collect any applicable
insurance proceeds on behalf of the Buyer;
42<PAGE>
16. maintain all of SKIPPER'S' books, records and
accounts in the usual, regular and ordinary manner, on a basis
consistent with prior period;
17. not enter into any agreement of any kind or nature
with any Affiliate not in the ordinary course of SKIPPER'S
business;
18. not enter into any transaction or perform any act
which would make any of the representations, warranties or
agreements contained in this Agreement, or the Ancillary
Agreements, false or misleading in any material respect if made
again immediately after such transaction or act;
19. not redeem, purchase or otherwise acquire, or
offer to redeem, purchase or otherwise acquire, or issue, sell or
offer to issue or sell, or otherwise distribute, any Equity
Securities of SKIPPER'S, other than as provided for herein; and
20. not declare, set aside or pay any dividend or
distribution, payable in cash, stock or property, with respect to
any Equity Securities of SKIPPER'S.
C. Conduct. Except as permitted or required hereby or as
the Buyer may otherwise consent in writing, the Seller and/or
SKIPPER'S shall not enter, and shall cause SKIPPER'S to refrain
from entering, into any transaction or take any action which
would result in any of the representations and warranties of the
Seller and SKIPPER'S contained in this Agreement or in any
Ancillary Agreements not being true and correct at and as of both
43<PAGE>
the time immediately after such transaction has been entered into
or such event has occurred and on the Closing Date.
D. Non-Disclosure or Use of Information. The Seller and
SKIPPER'S agree that from and after the date hereof they shall
not, and that they shall use their best efforts to cause
SKIPPER'S' officers, agents and employees not to, use or disclose
to any third party, other than in the required course of this
acquisition, any information proprietary to the SKIPPER'S
Business and held by SKIPPER'S in the SKIPPER'S Business.
E. Governmental and Third Party Consents and Approvals.
Prior to the Closing Date, the Seller and SKIPPER'S shall take
all such actions as may be reasonably necessary to:
1. prepare and file applications with any appropriate
governmental agency, or any other necessary third party, for
consummation of the transactions contemplated by this Agreement
or as may be required to deliver the Stock free and clear of any
liens and encumbrances other than those disclosed and
contemplated by this Agreement;
2. prosecute such applications with diligence;
3. diligently oppose any objections to, appeals from
or petition to reconsider, such governmental or third party
approvals or consents; and
4. take all such further action as reasonably may be
necessary to obtain and maintain such consents.
5. POST-CLOSING COVENANTS.
44<PAGE>
The parties agree as follows with respect to the period
following the Closing:
A. General. In case at any time after the Closing any
further action is necessary or desirable to carry out the
purposes of this Agreement, each of the parties will take such
further action (including the execution and delivery of such
further instruments and documents) as the other party may
reasonably request. The Seller acknowledges and agrees that from
and after the Closing the Buyer will be entitled to possession of
all documents, books, records (including tax records), agreements
and financial data which would constitute the business records of
SKIPPER'S, including Seller's internally developed and owned
general ledger accounting software and related operating codes
used in the SKIPPER'S business ("Seller Software"). Buyer agrees
that Seller Software shall be solely for use of SKIPPER'S in the
conduct of the SKIPPERS'S Business and that neither Buyer nor
SKIPPER'S will (i) license, sell, give or otherwise transfer the
Seller Software or any right to use thereof to any Person or (ii)
copy the Seller Software other than for the use of SKIPPER'S as
provided for herein. Buyer understands that Seller will provide
no support for SKIPPER'S use of the Seller Software following
termination of the Administrative Services Agreement, and that
such a use shall be solely at the risk of Buyer and SKIPPER'S.
Accordingly, Buyer and SKIPPER'S shall indemnify Seller from any
and all liabilities and claims by any Person which may arise from
SKIPPER'S use and possession of the Seller Software. In the
45<PAGE>
event of any breach of the Administrative Service Agreement by
Buyer or SKIPPER'S, Seller may, at Seller's option, require that
SKIPPER'S and Buyer cease use of the Seller Software and return
all copies to Seller. Seller shall retain such records or copies
thereof as are necessary for filing of any Tax Returns as
provided herein. Buyer, Seller and SKIPPER'S shall fully
cooperate with each other in the preparation of any Tax Return
and subsequent audit, if any, or carrying out any of Seller's
obligations hereunder.
B. Transition. The Seller will not take any action that
is designed or intended to have the effect of discouraging any
lessor, lessee, franchisee, licensor, licensee, supplier or other
business associate of SKIPPER'S from maintaining the same
business relationship with SKIPPER'S after the Closing as it
maintains with SKIPPER'S prior to the Closing.
C. Confidentiality. The Seller will treat any information
concerning the business and affairs of SKIPPER'S that is not
already generally available to the public as confidential and
privileged information, refrain from using any such confidential
information except in connection with this Agreement, and deliver
promptly to the Buyer or destroy, at the request and option of
the Buyer, all tangible embodiments (and all copies) of the
confidential information which are in possession of the Seller
and not needed by Seller to satisfy its on-going obligations
under this Agreement.
46<PAGE>
D. Noncompetition. For a period of three years from and
after the Closing, pursuant to the Non-Competition Agreement, the
Seller will not engage directly or indirectly in the quick
service seafood restaurant business that SKIPPER'S, or any
successor of SKIPPER'S, is involved in.
E. Franchising. From and after the date hereof, the
parties hereto shall fully cooperate in jointly seeking releases
and amendments to franchise agreements from all existing
SKIPPER'S franchisees. Buyer agrees to notify Seller of any
action SKIPPER'S or Buyer may take with regard to any SKIPPER'S
franchisees after Closing. Buyer agrees to indemnify Seller as
to any such actions and claims, resulting therefrom, taken
without the prior written consent of Seller.
F. Administrative Services. For a period of up to
eighteen months from and after the Closing, pursuant to the
Administrative Services Agreement, Seller shall continue to
provide the accounting and information services it is currently
providing for SKIPPER'S.
6. CONDITIONS OF PURCHASE AND SALE.
A. Conditions to Obligations of the Buyer. Unless waived
in whole or in part in writing by the Buyer, the obligation of
the Buyer to effect the transactions contemplated hereby and by
the Ancillary Agreements shall be subject to the satisfaction at
the Closing Date of each of the following conditions:
47<PAGE>
1. Representations and Warranties of the Seller and
SKIPPER'S To Be True. The representations and warranties of the
Seller and SKIPPER'S (contained in this Agreement, any Exhibit or
Schedule hereto, any Ancillary Agreement or any certificate,
instrument or other writing delivered to the Buyer or any of its
representatives pursuant to this Agreement by the Seller, or any
of its authorized representatives or SKIPPER'S or any of its
authorized representatives and specifically excluding any and all
business plans or forward looking projections regarding the
SKIPPER'S Business made by any Employee) shall be true and
correct on the Closing Date with the same force and effect as
though made on and as of the Closing Date (i.e., with respect to
a representation that a state of facts exists on or as of the
date hereof, it is a condition that such state of facts exists on
or as of the Closing Date, and with respect to a representation
that a state of facts has or has not changed between a date prior
to the date hereof and the Closing Date, it is a condition that
such state of facts has or has not changed between such prior
date and the Closing Date), except as affected by transactions
contemplated hereby and thereby and except that any such
representation or warranty made as of a specified date (other
than the date of this Agreement) shall only need to have been
true on and as of such date. The Seller and SKIPPER'S shall have
performed in all material respects all obligations and complied
with all covenants required by this Agreement to be performed or
48<PAGE>
complied with by Seller and SKIPPER'S on or prior to the Closing
Date.
2. Statutory Requirements. All consents and
approvals of all federal, state, local and foreign governmental
agencies and authorities, and any other Person or entity,
required to be obtained to permit consummation by the Seller and
SKIPPER'S of the transactions contemplated by this Agreement and
the Ancillary Agreements shall have been obtained, and true and
correct copies of such consents and approvals shall have been
delivered to the Buyer or its counsel.
3. No Proceedings. No action, suit or proceeding
before any court or any governmental body or authority pertaining
to the material aspects of the transactions contemplated by this
Agreement or to their consummation shall have been instituted or
threatened on or prior to the Closing Date.
4. Certificates. The Seller and SKIPPER'S shall have
delivered to the Buyer certificates, executed by or on behalf of
the Seller and SKIPPER'S and dated the Closing Date, certifying
that the conditions specified in Sections 6.A.1, 2, and 3 of this
Agreement have been satisfied.
5. Form of Schedules. The form and substance of all
Schedules, certificates, instruments, opinions and other
documents delivered to the Buyer under this Agreement shall be
satisfactory in all respects to the Buyer and its counsel;
49<PAGE>
6. Delivery of Ancillary Agreements and Other
Instruments. All instruments required to be delivered to the
Buyer pursuant to Section 1.D.2 and Section 1.D.4 shall have been
received by, and shall be in form satisfactory to, the Buyer.
7. Dividends. Except as approved in writing by
Buyer, there shall have been no dividends declared or paid to the
Seller by SKIPPER'S.
8. Due Diligence. The Buyer shall have completed and
approved customary business and legal due diligence with respect
to SKIPPER'S prior to May 3, 1996 or three (3) days prior to the
Closing Date, if extended.
9. Financing. The Buyer shall have received at or
prior to the Closing Date a commitment from a financial
institution to provide to Buyer a loan or a line of credit on
terms and conditions satisfactory to the Buyer in an amount of
not less than $7,600,000 and such financial institution shall
have actually funded such credit facilities in accordance with
such commitment.
10. Insurance. SKIPPER'S shall have in place all
insurance policies and binders necessary in Buyer's opinion for
the operation of the SKIPPER'S Business, all effective as of the
Effective Date.
50<PAGE>
B. Conditions to Obligations of the Seller. Unless waived
in whole or in part in writing by the Seller, the obligations of
the Seller to effect the transactions contemplated hereby and by
the Ancillary Agreements shall be subject to the satisfaction at
the Closing Date of each of the following conditions:
1. Representations and Warranties of the Buyer To Be True.
The representations and warranties of the Buyer (contained in this
Agreement, any Exhibit or Schedule hereto, any Ancillary Agreement
or any certificate, instrument or other writing delivered to
the Seller, or any of its representatives, by the Buyer, or any
of its representatives) shall be true and correct on the Closing
Date with the same force and effect as though made on and as of
the Closing Date (i.e., with respect to a representation
that a state of facts exists on or as of the date hereof, it is a
condition that such state of facts exists on or as of the Closing
Date, and with respect to a representation that
a state of facts has or has not changed between a date prior to
the date hereof and the date hereof, it is a condition that such
state of facts has or has not changed between such prior date and
the Closing Date), except as affected by transactions
contemplated hereby and thereby and except that any such
representation or warranty made as of a specified date (other
than the date of this Agreement) shall only need to have been
true on and as of such date. The Buyer shall have performed in
51<PAGE>
all material respects all obligations and complied with all
covenants required by this Agreement to be performed or complied
with by the Buyer on or prior to the Closing Date.
2. Statutory Requirements. All consents and
approvals of all federal, state, local and foreign governmental
agencies and authorities, and any other Person or entity,
required to be obtained to permit consummation by the Buyer of
the transactions contemplated by this Agreement and the Ancillary
Agreements shall have been obtained, and true and correct copies
of such consents and approvals shall have been delivered to the
Seller or its counsel.
3. No Proceedings. No action, suit or proceeding
before any court or any governmental body or authority pertaining
to the material aspects of the transactions contemplated by this
Agreement or to their consummation shall have been instituted or
threatened on or prior to the Closing Date.
4. Certificates. The Buyer shall have delivered to
the Seller a certificate, dated the Closing Date, certifying that
the conditions specified in Sections 6.B.1, 2 and 3 of this
Agreement have been satisfied.
5. Delivery of Ancillary Agreements and Other
Instruments. All instruments required to be delivered to the
Seller pursuant to Section 1.D.3 and Section 1.D.4 shall have
52<PAGE>
been received by, and shall be in form satisfactory to, the
Seller.
6. Boards of Directors' Approval. The transactions
contemplated by this Agreement and the Ancillary Agreements shall
have been approved by the respective Boards of Directors of
Seller and SKIPPER'S.
7. Lender Consents. Seller shall have received any
requisite consents or waivers of lenders under Seller's loan
agreements.
7. FURTHER AGREEMENTS OF THE PARTIES.
A. Additional Agreements. Subject to the terms and
conditions herein provided and in addition to the specific
agreements expressly set forth elsewhere in this Agreement, each
of the parties hereto agrees to use all reasonable efforts to
take, or cause to be taken, all actions and to do, or cause to be
done, all things necessary, proper or advisable under applicable
laws and regulations to consummate and make effective the
transactions contemplated by this Agreement, including using its
reasonable efforts to obtain all necessary waivers, consents and
approvals and effect all necessary registrations, filings and
applications including, without limitation, effecting all
required filings.
B. Further Agreements of the Seller. The Seller upon the
request of the Buyer from time to time, will execute and deliver
53<PAGE>
to the Buyer such further bills of sales, endorsements and other
good and sufficient instruments of title, conveyance, transfer
and assignment as may be necessary or desirable in order to vest
in the Buyer, free and clear of all liens and encumbrances other
than those expressly permitted by this Agreement, all rights,
title and interest in and to the Stock.
C. Confidentiality. The Buyer and the Seller and
SKIPPER'S hereby acknowledge to and agree with the other that any
and all information which has been disclosed by one to the other,
its employees, consultants, agents and, if applicable, partners
or stockholders, during the discussions and negotiations leading
to the execution of this Agreement, and all information to be
disclosed by one to the other, its employees, consultants and
agents and, if applicable partners, or stockholders, during the
period commencing on the Effective Date through the Closing Date
or termination of this Agreement, shall constitute confidential
information and trade secrets of the disclosing party, and as
such are secret, confidential and unique and constitute the
exclusive trade secrets and property of such party. Such
information has been made known and available to the other
parties and their respective employees, consultants and agents
strictly in connection with the negotiation and the execution of
this Agreement and the consummation of the transactions provided
for herein. Each party hereby acknowledges and agrees that any
use or disclosure of any such confidential information or trade
secrets, other than pursuant to this Agreement, would be wrongful
54<PAGE>
and could cause irreparable injury to the other. Accordingly,
each party hereby expressly agrees, for itself and on behalf of
its stockholders and directors, and its principal officers,
Employees, agents, consultants and representatives, that it will
not at any time prior to the Closing Date or at any time
thereafter, use or disclose, other than in accordance with the
terms and provisions of this Agreement any such confidential
information, provided, however, that the Buyer may disclose such
confidential information or secrets to any financial institution
from which the Buyer is seeking financing for the purchase of the
Stock; provided, further, that the Buyer on the one hand, or the
Seller and SKIPPER'S on the other hand, may use or disclose such
confidential information or secrets of the other without
restriction if such information or secrets (i) were or are
available to such party on a non-confidential basis from a source
other than the other party; or (ii) were to become generally
available to the public (other than as a result of an
impermissible disclosure by such party or its Affiliates); and
provided, further, that if either party is requested or required
(by oral questions, interrogatories, requests for information or
documents, subpoena or similar process or legal proceeding) to
disclose any of such information or secrets of the other, such
disclosure may be made without liability hereunder (although
notice of such requests or requirements shall be given to the
55<PAGE>
other party so that, if practicable, the other party may seek a
protective order against such disclosure). Notwithstanding the
foregoing, no provision of this Section 7.C shall in any manner
whatsoever prevent or inhibit the Buyer from using or disclosing
any such confidential information relating to SKIPPER'S
including, without limitation, Trade Rights in any manner the
Buyer shall deem fit from and after the Closing Date; further,
the Seller and SKIPPER'S agree, on behalf of each of the Seller
and SKIPPER'S, each of their Affiliates, officers, Employees,
agents, consultants and representatives, to use their reasonable
efforts not to at any time from and after the Closing Date to use
or disclose such confidential information which relates to the
SKIPPER'S Business. Each party acknowledges that, in the event
of a violation by the other of the terms and provisions of this
Section 7.C, the remedies at law would not be adequate; and,
accordingly, in such event such party may proceed to protect and
enforce its rights under this Section 7.C by a suit in equity for
specific performance hereof, or for an injunction against the
violation hereof.
D. Section 338(h)(10) Election. Seller and Buyer agree to
make (i) the elections provided for in Section 338(g) and Section
338(h)(10) of the Code and the Treasury regulations promulgated
under Section 338 of the Code and, (ii) at Seller's request, such
other similar elections as are available and as may be necessary
to achieve substantially the same results to the parties for
56<PAGE>
state and local income or franchise tax purposes as the elections
under Section 338 of the Code achieve for Federal income tax
purposes (the elections referred to in clauses (i) and (ii),
collectively referred to as the "338 Elections"). Seller and
Buyer shall comply fully with all filing and other requirements
necessary to effectuate the 338 Elections on a timely basis and
agree to cooperate in good faith with each other in the
preparation and timely filing of any Tax Returns required to be
filed in connection with making the 338 Elections, including the
exchange of information and the joint filing of Form 8023 and
related schedules. Within 30 days after the Closing Date, Buyer
and Seller jointly shall determine the allocation of the purchase
price among the assets of SKIPPER'S.
8. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
INDEMNITY.
A. Nature and Survival of Representations and Warranties.
All statements of fact contained in any certificate, Schedule,
Exhibit or Ancillary Agreement delivered by or on behalf of the
Seller and SKIPPER'S to the Buyer shall be deemed to be
representations and warranties of the Seller to the Buyer under
this Agreement, and all statements of fact contained in any
certificate, Schedule, Exhibit or Ancillary Agreement delivered
by or on behalf of the Buyer to the Seller shall be deemed to be
representations and warranties of the Buyer to the Seller under
this Agreement. All representations and warranties of SKIPPER'S,
the Seller and the Buyer shall survive the Closing and shall
57<PAGE>
terminate and expire on that date which is eighteen (18) months
following the Closing Date, except with the respect to any claim,
written notice of which shall have been delivered to the party
making the representation or warranty in question on or prior to
the earlier of the termination date described above; provided,
however, that the representations and warranties contained in
3.B, 3.L, 3.M, 3.S, and 3.CC hereof shall survive the Closing
until such time as the applicable statue of limitations expire
with respect to the matters set forth therein. All
representations and warranties hereunder shall survive any and
all inspections, examinations or audits on behalf of the
receiving party, and shall be binding upon the delivering parties
to this Agreement, their successors and assigns other than to the
extent of actual knowledge of Buyer of any set of facts which
would constitute a potential breach of any representation or
warranties by Seller or SKIPPER'S.
B. Indemnification by the Seller. The Seller hereby
covenants and agrees that, regardless of any investigation made
at any time by or on behalf of the Buyer other than to the extent
of actual knowledge of Buyer of any set of facts which would
constitute a potential breach of any representation or warranties
by Seller or SKIPPER'S and regardless of the Closing hereunder,
Seller shall indemnify and defend the Buyer (which term,
following the Closing, shall include SKIPPER'S) and its
stockholders, directors, officers and Affiliates, and each of
their successors and assigns (each, individually, a "Seller
58<PAGE>
Indemnified Party"), and hold them harmless from, against and in
respect of, any and all costs, losses, claims, liabilities,
fines, penalties (including interest which may be imposed in
connection therewith and court costs and fees and disbursements
of counsel) ("Claims") incurred by any of them, directly or
indirectly, in connection with:
1. all Claims of any nature, whether absolute,
contingent or otherwise, which occurred, accrued or arose out of,
or were related to, the SKIPPER'S Business on or prior to the
Effective Date, relating to all income and other taxes referred
to in Section 10; all Taxes; Claims of past or present
franchisees based upon operations of SKIPPER'S Franchise System
prior to the Effective Date except as provided for in Section
5.E; any and all employee Claims of any nature whatever; health
insurance; worker's compensation; Claims for infringement of
Trade Rights; general liability Claims not otherwise covered by
insurance policies; non-owned auto Claims; and liabilities and
obligations assumed by Seller pursuant to the Liability
Assumption Agreement, the Lease Indemnification Agreement and the
Environmental Compliance Agreement;
2. all Claims of any nature, whether absolute,
contingent or otherwise which occurred, accrued or arose out of
any liability of the Seller other than liabilities of SKIPPER'S
(excluding any liability the existence of which constitutes a
breach of the representations and warranties of the Seller or
SKIPPER'S contained in this Agreement);
59<PAGE>
3. any material breach of or any material inaccuracy
in any of the representations, warranties, covenants or
agreements made by the Seller and SKIPPER'S in this Agreement,
any Ancillary Agreement, any Exhibit or Schedule to this
Agreement or any certificate, instrument or writing delivered in
connection therewith. Seller shall not be required to indemnify
Buyer for the first Fifty Thousand Dollars ($50,000), net of any
related tax benefit, in aggregate amount of Claims incurred by
the Seller Indemnified Parties relating to the breach of any
representation or warranty by Seller or SKIPPER'S and which
Seller would be required to indemnify under this Agreement. To
the extent the Seller Indemnified Parties have been indemnified
by reason of all breaches by Seller or SKIPPER'S relating to the
breach of any representations or warranties by Seller or
SKIPPER'S to a maximum aggregate amount equal to the Initial
Purchase Price, Seller shall have no further obligation to
indemnify any Seller Indemnified Party from and against any
further Claims.
4. any attempt (whether or not successful) by any
Person to cause or require Buyer to pay or discharge any debt,
obligation, liability or commitment of SKIPPER'S assumed by
Seller pursuant to this Agreement, the Liability Assumption
Agreement and the Lease Indemnification Agreement or the
existence of which would constitute a breach by Seller or
SKIPPER'S of any representation, warranty, covenant or agreement
notwithstanding the Closing;
60<PAGE>
5. all Claims, including attorneys' fees, or Claims
against the Seller Indemnified Parties, arising out of litigation
listed on Schedule 3.M hereto;
6. any action, suit, proceeding and any compromise,
settlement, assessment approved by Seller or judgment arising out
of or incidental to any of the matters indemnified against in
this Section 8.B.
A. Indemnification by the Buyer. The Buyer hereby
covenants and agree that, regardless of any investigation made at
any time by or on behalf of the Seller, other than to the extent
of actual knowledge of Seller of any set of facts which would
constitute a potential breach of any representations or
warranties by Buyer and regardless of the Closing hereunder,
Buyer shall indemnify and defend the Seller, and hold it harmless
from, against and in respect of, any and all Claims incurred by
it, directly or indirectly, in connection with:
1. all Claims against Seller of any nature, whether
absolute, contingent or otherwise, (x) which occurred accrued or
arose out of, or were related to, the SKIPPER'S Business on or
after the Effective Date (other than liabilities the existence of
which constitutes a breach by Seller or SKIPPER'S of this
Agreement); (y) any event occurring on and after the Effective
Date attributable or relating to the operation by the Buyer of
the SKIPPER'S Business or the utilization or disposition by the
Buyer of all or any part of the Stock, from and after the
61<PAGE>
Effective Date; and (z) all liabilities of SKIPPER'S on the
Effective Date not assumed by Seller pursuant to the Liability
Assumption Agreement the Lease Indemnification Agreement, the
Environment Compliance Agreement or provided for in Section 8.B.1
hereof;
2. any material breach or any material inaccuracy in
any of the representations, warranties, covenants or agreements
made by the Buyer in this Agreement, any Ancillary Agreement,
Exhibit or any Schedule hereto or any certificate or instrument
or writing delivered in connection herewith or therewith. Buyer
shall not be required to indemnify Seller for the first Fifty
Thousand Dollars ($50,000), net of any related tax benefit, in
aggregate amount of Claims incurred by the Buyer Indemnified
Parties relating to the breach of any representation or warranty
by Buyer and which Buyer would be required to indemnify under
this Agreement. To the extent the Buyer Indemnified Parties have
been indemnified by reason of all breaches by Buyer to maximum
aggregate amount equal to the Initial Purchase Price, Buyer shall
have no further obligation to indemnify any Buyer Indemnified
Party from and against any further Claims.; or
3. any attempt (whether or not successful) by any
Person to cause or require Seller to pay or discharge any debt,
obligation, liability or commitment of SKIPPER'S not assumed by
Seller pursuant to this Agreement, the Liability Assumption
Agreement, the Lease Indemnification Agreement or the Environment
Compliance Agreement (other than any debt, obligation,
62<PAGE>
liabilities or commitment the existence of which constitutes a
breach of the representations and warranties of the Seller or
SKIPPER'S in this Agreement); or
4. any action, suit, proceeding and any compromise,
settlement, assessment approved by Buyer or judgment arising out
of or incidental to any of the matters indemnified against in
this Section 8.C.
A. Right to Defend, Etc. If the facts giving rise to any
indemnification claim hereunder shall involve any actual claim or
demand by any third Person against Seller or Buyer (referred to
hereinafter as an "Indemnified Party"), the indemnifying party
shall be entitled to notice of and entitled (without prejudice to
the right of any Indemnified Party to participate at its own
expense through counsel of its own choosing) to defend such
claim, at its expense and through counsel of its own choosing,
and to control such defense, if it gives written notice of its
intention to do so no later than the time by which the interests
of the Indemnified Party would not be materially prejudiced as a
result of its failure to give such notice; provided, however,
that if the defendants in any action shall include both the
indemnifying party and an Indemnified Party, and the Indemnified
Party shall have reasonably concluded that counsel selected by
the indemnifying party has a conflict of interest because of the
availability of different or additional defenses to the
Indemnified Party, each Indemnified Party shall have the right to
63<PAGE>
select separate counsel to participate in the defense of such
action on its behalf, at the expense of the indemnifying party.
The Indemnified Party shall cooperate fully in the defense of
such claim and shall make available to the indemnifying party
pertinent information under its control relating thereto, but
shall be entitled to be reimbursed, as provided in this Section
8, for all costs and expenses incurred by it in connection
therewith.
B. Subrogation. If the Indemnified Party receives payment
or other indemnification from the indemnifying party hereunder
with respect to any claim or demand by any third Person against
the Indemnified Party, the indemnifying party shall be subrogated
to the extent of such payment or indemnification to all rights in
respect of the subject matter of such claim to which the
Indemnified Party may be entitled, to institute appropriate
action for the recovery thereof, and the Indemnified Party agrees
to provide reasonable levels of assistance and cooperation to the
indemnifying party, (but only if such does not involve expense to
the Indemnified Party) in enforcing such rights.
2. TERMINATION.
A. Termination of Agreement. The parties may terminate
this Agreement as provided below:
1. The Buyer may terminate this Agreement by giving
written notice to the Seller on or before May 3, 1996, if the
Buyer is not satisfied with the results of its continuing due
64<PAGE>
diligence examinations of the SKIPPER'S Business including all
operations, legal and accounting matters;
2. The Buyer may terminate this Agreement by giving
written notice to the Seller at any time prior to the Closing (A)
in the event the Seller has breached any material representation,
warranty or covenant contained in this Agreement in any material
respect, the Buyer has notified the Seller of the breach, and the
breach has continued without cure for a period of 10 days after
the notice of breach; or (B) if the Closing shall not have
occurred on or before June 15, 1996, by reason of the failure of
any condition precedent under Section 6.A hereof (unless the
failure results primarily from the Buyer itself breaching any
representation, warranty or covenant contained in this
Agreement);
3. Buyer may terminate this Agreement by giving
written notice to the Seller on or before May 3, 1996 unless the
Closing Date is extended in which case Buyer must give such
notice at least three (3) days prior to such extended Closing
Date, if the Buyer is unable to obtain a financing commitment for
the transaction contemplated by this Agreement on terms and
conditions satisfactory to Buyer; and
4. The Seller may terminate this Agreement by giving
written notice to the Buyer at any time prior to the Closing (A)
in the event the Buyer has breached any representation, warranty
or covenant contained in this Agreement, in any material respect,
the Seller has notified the Buyer of the breach, and the breach
65<PAGE>
has continued without cure for a period of 10 days after the
notice of breach, (B) if the Closing shall not have occurred on
or before June 15, 1996, by reason of the failure of any
condition precedent under Section 6.B hereof (unless the failure
results primarily from the Seller or SKIPPER'S breaching any
representation, warranty or covenant contained in this
Agreement), or (C) Seller's Board of Directors has not approved
the transaction.
5. Seller may terminate this Agreement in the event
Buyer notifies Seller that Buyer has been advised by U.S. Bank of
Washington ("Bank") that Bank will not provide financing for the
transaction. Buyer agrees to immediately notify Seller of such
advice from the Bank.
6. This Agreement shall automatically terminate with
no further liability on the part of any party if the Closing has
not occurred on or before June 30, 1996.
7. The parties may terminate this Agreement by mutual
agreement with no further liability on the part of any party at
any time.
B. Effect of Termination. Subject to the other provisions
of this Agreement, in the event this Agreement is terminated
pursuant to this Section 9, this Agreement shall terminate
without any liability or further obligation of either party to
the other, except for Section 12.B, which shall survive
termination. However, a termination under this Section 9 shall
not relieve a party for any failure to perform or comply with any
66<PAGE>
agreement prior to the date of termination or any
misrepresentation or breach of warranty or constitute a waiver of
any claim with respect thereto. If within six (6) months after
the date of such termination, except with respect to termination
pursuant to Sections 9.A.1., 9.A.3., 9.A.4.(A) and (B), 9.A.5.,
9.A.6. (unless Buyer has fully performed its obligations
hereunder and Seller refuses to close) and 9.A.7., either Seller
or SKIPPER'S enters into any agreement relating to the
acquisition of the Stock or all or substantially all of the
assets or business of SKIPPER'S by a single purchaser, whether
directly or indirectly, through purchase, merger, consolidation
or otherwise (other than sales of inventory or immaterial
portions of SKIPPER'S assets in the ordinary course), and such
transaction is ultimately consummated, then immediately upon the
closing of such transaction, Seller will pay, or cause SKIPPER'S
to pay, to Buyer the sum of $200,000 which shall be Buyer's sole
remedy.
3. TAXES.
Payment of Taxes, Filing of Returns. The Seller shall
remain liable for the filing of all tax returns and reports
relating to and for the payment of any and all federal, state,
provincial, Canadian and local taxes, including but not limited
to income taxes, relating to the operation of SKIPPER'S and the
SKIPPER'S Business, for the period up to the Effective Date, and
shall indemnify and hold the Buyer harmless as provided for in
Section 8.B from and against all liabilities, taxes, fines and
67<PAGE>
penalties in connection therewith. Seller shall also be
responsible for all taxes (including sales, use or similar taxes)
attributable to or relating to the consummation of the
transactions contemplated herein, and shall indemnify and hold
Buyer harmless from and against all liabilities in connection
therewith.
4. DEFINITIONS.
A. Definitions. As used in this Agreement, the following
terms shall have the following meanings:
1. "SKIPPER'S Business" means SKIPPER'S and shall
include all of the business, assets and properties of SKIPPER'S,
real and personal, tangible and intangible, wherever located,
choate or inchoate, used in connection with or related to the
operation of the business of SKIPPER'S.
2. "Affiliate" of any Person means (i) any Person
that, directly or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with such
Person, or (ii) any executive officer, director or partner of
such Person, and the term "control" shall include the possession,
direct or indirect, of the power to direct or cause the direction
of the management or policies of a Person, whether through
ownership of voting securities, by conduct or otherwise.
3. "Ancillary Agreements" means the Non-Competition
Agreement, the Employment Agreement, the Administrative Services
68<PAGE>
Agreement, the Lease Indemnification Agreement, the Liability
Assumption Agreement and the Environment Compliance Agreement.
4. "Equity Security" shall mean: (i) any capital
stock or similar security of the issuer, or (ii) any security
(whether stock or Indebtedness for borrowed money) convertible,
with or without consideration, into any stock or similar
security, or (iii) and security (whether stock or Indebtedness
for borrowed money) carrying any warrant or right to subscribe to
or purchase any stock or similar security, or (iv) any warrant,
option or other right to subscribe to or purchase any stock or
similar security.
5. "Best Knowledge" shall mean facts and other
information which the President or any Vice President of any
party actually know as a result of the performance by them of
their duties as officers of that company and diligent inquiry by
such officers of those Persons in the employ of that company or
its subsidiaries having responsibility for the subject matter
referred to.
6. "GAAP" means generally accepted accounting
principles.
7. "Indebtedness" with respect to any Person shall
mean any obligation of such Person or any subsidiary of
subsidiaries of such Person which under generally accepted
accounting principles is required to be shown on the balance
sheet of such Person or such subsidiary as a liability. Any
obligation secured by a Lien on, or payable out of the proceeds
69<PAGE>
of production from, property of such Person or any subsidiary of
such Person shall be deemed to be Indebtedness even though such
obligation is not assumed by such Person or subsidiary.
8. "Lien" shall mean any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind, including,
without limitation, any conditional sale or other title retention
agreement, any lease in the nature thereof and the filing of or
agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction and including any lien or
charge arising by statute or other law.
9. "Permit" means any federal, state, local or other
governmental license permit, order or approval of any federal,
state, local or other regulatory body.
10. "Person" means any individual, corporation, trust,
estate, partnership, joint venture, company, association,
governmental bureau or other entity of whatsoever kind or nature.
11. "Trade Right" means all federal, state and foreign
trade names, trademarks, servicemarks, trademarks and servicemark
registrations and applications, copyrights, copyright
registrations and applications, patents, patent registrations and
applications, common law rights (including proprietary rights)
applicable to the SKIPPER'S Business.
5. GENERAL PROVISIONS.
A. Survival. All representations, warranties and
agreements contained in this Agreement or in any certificate
delivered pursuant to this Agreement shall survive the Closing
70<PAGE>
according to the terms hereof notwithstanding any investigation
conducted other than to the extent of actual knowledge of any
party of any set of facts which would constitute a potential
breach of any representations, warranties or agreements by
another party.
B. Expenses. Each of the parties shall pay its respective
costs and expenses incurred or to be incurred by it in
negotiating and preparing this Agreement, and in closing and
carrying out the transactions contemplated by this Agreement,
including, without limitation, fees and expenses for legal,
accounting and other professional and consulting services.
C. Modification; Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in
writing by the parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any single
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
D. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
71<PAGE>
E. No Third-Party Beneficiaries. This Agreement shall not
confer any rights or remedies upon any Person other than the
parties and their respective successors and permitted assigns.
F. Assignment. This Agreement may not be assigned by any
party, other than to an Affiliate, without the prior written
consent of the other parties hereto, and any such assignment
shall be binding upon and shall inure to the benefit of the
parties and their respective legal representatives, successors
and permitted assigns; provided, however, that no assignment of
this Agreement shall relieve the parties of their respective
indemnification obligations hereunder.
G. Attorneys' Fees. If any legal action is brought for
the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or
proceeding in addition to any other relief to which it may be
entitled.
H. Notices. All notices, consents and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given when (i) delivered in Person,
(ii) sent by fax, provided that a copy is mailed First Class
Mail, or (iii) when received by the addressee, if sent by Express
72<PAGE>
Mail, Federal Express or other express delivery service (receipt
requested), in each case to the appropriate addressee or fax
numbers set forth below (or to such other address or fax number
as a party may designate as to itself or himself by notice to the
other party):
(1) If to Buyer:
Seattle Crab Co.
1325 Fourth Avenue, Suite 1900
Seattle, Wash. 98101
Telephone Number: (206) 623-4000
Fax Number: (206) 623-8221
with a copy to:
James L. Vandeberg, Esq.
Graham & Dunn
1420 Fifth Ave. 33rd Floor
Seattle, Wash. 98101
Telephone Number: (206) 340-9615
Fax Number: (206) 340-9599
(2) If to the Seller:
Troy D. Cook
Vice President Finance
NPC International, Inc.
720 West 20th Street
Pittsburg, Kansas 66762
Telephone Number: (316) 231-3390
Fax Number: (316) 231-0288
with a copy to:
David G. Short, Esq.
NPC International, Inc.
9304 Forest Lane, Suite 200
Dallas, TX. 75243
Telephone Number: (214) 343-7886
Fax Number: (214) 343-2680
A. Entire Agreement. This Agreement, including the
Schedules and Exhibits hereto which are incorporated herein by
this reference, embodies the entire understanding of the parties
73<PAGE>
and supersedes the letter agreement dated April 3, 1996 by and
between Seller and Olympic Capital Partners, L.L.C., and other
than the agreements and other documents executed and delivered
upon the execution date of this Agreement and upon the Closing,
there are no further or other agreements or understandings,
representations, warranties, written or verbal, in effect between
the parties relating to the subject matter of this Agreement,
unless expressly referenced herein.
B. Headings. The captions and headings in this Agreement
are for convenience of reference only and shall not be given any
effect in the interpretation of this Agreement.
C. Singular and Plural; Gender. When required by the
context of this Agreement singular shall include the plural, and
the masculine shall include the feminine.
D. Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of
Washington without giving effect to conflicts of law principles.
E. Arbitration. Any controversy or claim arising out of,
or relating to, this Agreement, or the making, performance or
interpretation hereof, shall be resolved by arbitration in
Seattle, Washington in accordance with the Rules of the American
Arbitration Association then existing, and judgment of the
arbitration award may be entered in any court having competent
jurisdiction over the subject matter. The prevailing party shall
74<PAGE>
be entitled to recover reasonable attorneys' fees and other costs
incurred in that proceeding, in addition to any other relief to
which it or he is entitled.
F. Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such
provision shall be excluded from this Agreement and the balance
of this Agreement shall be interpreted as if such provision or
provisions were so excluded and shall be enforceable in
accordance with its terms.
G. Confidential Information. The Buyer and the Seller
expressly acknowledge that during the course of their respective
due diligence investigations prior to the Closing they have had
and will have access to certain confidential business information
and trade secrets of each other ("Information"). The parties
mutually agree that, in the event the Closing of the transactions
contemplated by this Agreement do not occur, the parties shall
not make use of any Information to solicit any of the other
party's or SKIPPER'S' employees or customers. The obligations of
the parties under this Section 12 shall be in effect for a period
of three years.
H. Specific Performance. Seller acknowledges that
SKIPPER'S and the Stock are unique and that Buyer will have no
adequate remedy at law if the Seller shall fail to perform any of
his obligations hereunder. In such event, the Buyer shall have
75<PAGE>
the right, in addition to any other rights it may have, to
specific performance of this Agreement.
I. Publicity. The Seller and Buyer shall each consult
with the other and mutually agree upon any proposed publicity or
release concerning the transactions referred to herein proposed
to be issued by any party at or prior to the Closing.
J. Rights Cumulative. Except as provided for in Sections
8.B.3 and 8.C.3 and 9.B hereof, no right granted to the parties
under this Agreement for default or breach is intended to be in
full or complete satisfaction of any damages arising out of such
default or breach, and each and every right under this Agreement,
or under any other document or instrument delivered hereunder, or
allowed by law or equity, shall be cumulative and may be
exercised from time to time.
K. Time of the Essence. Time is of the essence for each
provision of the Agreement in which time is an element.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement effective as of the date first above written.
76<PAGE>
BUYER:
SEATTLE CRAB CO.,
a Washington corporation
By:__________________________
Warren Van Genderen,
Chairman of the Board
ATTEST:
______________________________
Charles S. Wilke, Secretary
SELLER
NPC INTERNATIONAL, INC,.
a Kansas corporation
By:___________________________
James K. Schwartz,
President
ATTEST:
By:___________________________
David G. Short, Secretary
SKIPPERS, INC.
a Washington corporation
By:___________________________
Paul A. Baird, President
ATTEST:
By:___________________________
, Secretary
77<PAGE>
The schedules and exhibits listed below formed part of the
acquisition agreement.
Exhibits
A Seller Assets to be Retained Following Closing
B Non-Operating Properties
Schedules
3.A Jurisdictions Skippers Authorized to do Business
D Subsidiary
E Assets with Liens/Encumbrances
E-1 Description of Trade Rights and Infringements by
Third Parties
E-2 Owned and Leased Real Property
E-3 Leased Personal Property - Automobiles - Equipment
H Accounts Receivable Expected Restaurant Write-Off
I Financial Statements 1993, 1994, 1995, and 1996
J Other Liabilities and Obligations
L-2 Proposed Tax Allocation or Sharing Agreement
M Litigations
Q Trademark Infringement by Skippers
R List of Exempt Employees and Noncancellable Employee
Contracts
R-1 Ongoing Employment/Consulting Agreement
S Employee Benefit Plans
T Supplies
V Power of Attorney
W Change in Control
Z Letters of Credit
AA Labor Relations
DD Franchise Matters
i<PAGE>
LEASE INDEMNIFICATION AGREEMENT
THIS LEASE INDEMNIFICATION AGREEMENT, made as of this 24th
day of March, 1996, by and between NPC INTERNATIONAL, INC., a
Kansas corporation ("Seller"); and SKIPPER'S INC., a Washington
corporation ("SKIPPER'S").
This Agreement is made and delivered in order to effect and
document the indemnification by Seller of any and all obligations
and liabilities of SKIPPER'S under certain leases listed on
Exhibit A attached hereto and incorporated herein by reference
(the "Leases") pursuant to Section 1.G of the Acquisition
Agreement dated as of March 24, 1996 by and among Seller,
SKIPPER'S and Seattle Crab Co., a Washington corporation
("Buyer"), (the "Acquisition Agreement"). Pursuant to the
Acquisition Agreement, Buyer became the sole shareholder of
SKIPPER'S (the "Acquisition"). Any term not otherwise defined
herein shall have the meaning provided for in the Acquisition
Agreement.
Agreement
Indemnification of SKIPPER'S and Buyer. For value
received, the receipt and sufficiency of which are hereby
acknowledged, Seller hereby agrees to indemnify, hold harmless
and defend SKIPPER'S and Buyer for any and all costs, losses,
claims, liabilities, fines, penalties (including interest which
may be imposed in connection therewith, court costs, and fees and
disbursements of counsel) incurred by either of them, directly or
indirectly, in connection with any and all obligations and
liabilities of SKIPPER'S under the Leases.
Indemnification of Seller. For value received, the
receipt and sufficiency of which are hereby acknowledged, Buyer
and SKIPPER'S hereby agree to indemnify, hold harmless and defend
Seller for any and all costs, losses, claims, liabilities, fines
or penalties (including interest which may be imposed in
connection therewith, court costs, and fees and disbursements of
counsel) incurred, directly or indirectly, in connection with any
and all actions of Buyer and SKIPPER'S under the Leases
subsequent to the date hereof not authorized or approved in
writing by Seller.
2. Payment. Seller further agrees to pay, perform and
discharge any and all obligations of SKIPPER'S under the Leases
according to their respective terms. Seller shall collect all
ii<PAGE>
rents from any subtenants and pay directly to the respective
Landlords and other parties, including taxing authorities, all
amounts due under the Leases by SKIPPER'S.
Additional Instruments. Seller shall execute or obtain
at its sole expense upon Buyer's request any additional documents
or instruments reasonably necessary or prudent to effect the
intention of this Agreement. SKIPPER'S shall execute or obtain
at Seller's expense upon Seller's request any additional
documents or instruments reasonably necessary or prudent to
effect the intention of this Agreement. SKIPPER'S shall
cooperate fully with Seller in the performance of Seller's
obligations hereunder, including making the services of SKIPPER'S
employees reasonably available to Seller without cost.
Attorneys' Fees. If any legal action is brought for
the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or
proceeding in addition to any other relief to which it may be
entitled.
Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of
Washington without giving effect to conflicts of law principles.
Assignment. This Agreement may not be assigned by any
party, other than to an Affiliate, without the prior written
consent of the other parties hereto, and any such assignment
shall be binding upon and shall inure to the benefit of the
parties and their respective legal representatives, successors
and permitted assigns; provided, however, that no assignment of
this Agreement shall relieve the parties of their respective
indemnification obligations hereunder.
Entire Agreement. This Agreement embodies the entire
understanding of the parties and other than the agreements and
other documents executed and delivered upon the execution date of
the Acquisition Agreement and upon the Closing of the
Acquisition, there are no further or other agreements or
understandings written or verbal, in effect between the parties
relating to the subject matter of this Agreement, unless
expressly referenced herein.
iii<PAGE>
Arbitration. Any controversy or claim arising out of,
or relating to, this Agreement, or the making, performance or
interpretation hereof, shall be resolved by arbitration in
Seattle, Washington in accordance with the Rules of the American
Arbitration Association then existing, and judgment of the
arbitration award may be entered in any court having competent
jurisdiction over the subject matter. The prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs
incurred in that proceeding, in addition to any other relief to
which it or he is entitled.
Rights Cumulative. Except as provided for in Sections
8.B.3 and 8.C.3 and 9.B of the Acquisition Agreement, no right
granted to the parties under this Agreement for default or breach
is intended to be in full or complete satisfaction of any damages
arising out of such default or breach, and each and every right
under this Agreement, or under any other document or instrument
delivered hereunder, or allowed by law or equity, shall be
cumulative and may be exercised from time to time.
Time of the Essence. Time is of the essence for each
provision of the Agreement in which time is an element.
General Provisions.
B. Modification; Waiver. No supplement, modification
or amendment of this Agreement shall be binding unless executed
in writing by the parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any single
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
B. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
C. No Third-Party Beneficiaries. This Agreement
shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted
assigns.
iv<PAGE>
D. Notices. All notices, consents and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given when (i) delivered in Person,
(ii) sent by fax, provided that a copy is mailed First Class
Mail, or (iii) when received by the addressee, if sent by Express
Mail, Federal Express or other express delivery service (receipt
requested), in each case to the appropriate addressee or fax
numbers set forth below (or to such other address or fax number
as a party may designate as to itself or himself by notice to the
other party):
v<PAGE>
(1) If to SKIPPER'S:
Paul Baird
SKIPPER'S, Inc.
1500 114th Avenue S.E., Suite 150
Bellevue, Wash. 98004
Telephone Number: (206) 450-2233
Fax Number: (206) 462-7121
with a copy to:
James L. Vandeberg, Esq.
Graham & Dunn
1420 Fifth Ave. 33rd Floor
Seattle, Wash. 98101
Telephone Number: (206) 340-9615
Fax Number: (206) 340-9599
(2) If to the Seller:
Troy D. Cook
Vice President Finance
NPC International, Inc.
720 West 20th Street
Pittsburg, Kansas 66762
Telephone Number: (316) 231-3390
Fax Number: (316) 231-0288
with a copy to:
David G. Short, Esq.
NPC International, Inc.
9304 Forest Lane, Suite 200
Dallas, TX 75243
Telephone Number: (214) 343-7886
Fax Number: (214) 343-2680
IN WITNESS WHEREOF, the undersigned have affixed their
respective signatures.
NPC INTERNATIONAL, INC.
By ____________________________
President
SKIPPER'S INC.
By ____________________________
, President
vi<PAGE>
LIABILITY ASSUMPTION AGREEMENT
THIS LIABILITY ASSUMPTION AGREEMENT, made as of this 24th
day of March, 1996, by and between NPC INTERNATIONAL, INC., a
Kansas corporation ("Seller"); and SKIPPER'S INC., a Washington
corporation ("SKIPPER'S").
This Agreement is made and delivered in order to effect and
document the assumption by Seller of certain liabilities of
SKIPPER'S pursuant to Section 1.F of the Acquisition Agreement
dated as of March 24, 1996 by and among the parties hereto and
SEATTLE CRAB CO., a Washington corporation ("Buyer") (the
"Acquisition Agreement"). Pursuant to the Acquisition Agreement,
Buyer became the sole shareholder of SKIPPER'S (the
"Acquisition"). Any term not otherwise defined herein shall have
the meaning provided in the Acquisition Agreement.
Agreement
Assumption. For value received, the receipt and
sufficiency of which are hereby acknowledged, Seller hereby
assumes any and all obligations of SKIPPER'S for satisfaction in
full of the liabilities listed on Exhibit A attached hereto,
(collectively, the "Assumed Liabilities") and agrees to pay,
perform and fully discharge the Assumed Liabilities according to
their respective terms.
Indemnification of Buyer and SKIPPER'S. Seller further
agrees to indemnify, hold harmless and defend SKIPPER'S and Buyer
for any and all costs, losses, claims, liabilities, fines,
penalties, (including interest which may be imposed in connection
therewith, court costs and fees, and attorneys' fees and
disbursements of counsel) incurred by either of them, directly or
indirectly, in connection with any and all obligations of
SKIPPER'S relating to the Assumed Liabilities.
Indemnification of Seller. Buyer and SKIPPER'S further
agree to indemnify, hold harmless and defend Seller for any and
all costs, losses, claims, liabilities, fines, or penalties
(including interest which may be imposed in connection therewith,
court costs and fees, and attorneys' fees and disbursements of
counsel) incurred, directly or indirectly, in connection with any
and all actions of Buyer and SKIPPER'S taken after the date
hereof not authorized or approved in writing by Seller relating
to the Assumed Liabilities.
vii<PAGE>
Additional Instruments. Seller shall execute or obtain
at its sole expense upon SKIPPER'S or Buyer's request any
additional documents or instruments, including without limitation
releases, reasonably necessary or prudent to effect the intention
of this Agreement. SKIPPER'S shall execute or obtain at Seller's
expense upon Seller's request any additional documents or
instruments reasonably necessary or prudent to effect the
intention of this Agreement. SKIPPER'S shall cooperate fully
with Seller in the performance of Seller's obligations hereunder,
including making the services of SKIPPER'S employees reasonably
available to Seller without cost.
Attorneys' Fees. If any legal action is brought for
the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or
proceeding in addition to any other relief to which it may be
entitled.
Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of
Washington without giving effect to conflicts of law principles.
Assignment. This Agreement may not be assigned by any
party, other than to an Affiliate, without the prior written
consent of the other party hereto, and any such assignment shall
be binding upon and shall inure to the benefit of the parties and
their respective legal representatives, successors and permitted
assigns; provided, however, that no assignment of this Agreement
shall relieve Seller of its indemnification obligations
hereunder.
Entire Agreement. This Agreement, embodies the entire
understanding of the parties and other than the agreements and
other documents executed and delivered upon the execution date of
the Acquisition Agreement and upon the Closing of the
Acquisition, there are no further or other agreements or
understandings, representations, warranties, written or verbal,
in effect between the parties relating to the subject matter of
this Agreement, unless expressly referenced herein.
Arbitration. Any controversy or claim arising out of,
or relating to, this Agreement, or the making, performance or
interpretation hereof, shall be resolved by arbitration in
viii<PAGE>
Seattle, Washington in accordance with the Rules of the American
Arbitration Association then existing, and judgment of the
arbitration award may be entered in any court having competent
jurisdiction over the subject matter. The prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs
incurred in that proceeding, in addition to any other relief to
which it is entitled.
Rights Cumulative. Except as provided for in Sections
8.B.3 and 8.C.3 and 9.B of the Acquisition Agreement, no right
granted to the parties under this Agreement for default or breach
is intended to be in full or complete satisfaction of any damages
arising out of such default or breach, and each and every right
under this Agreement, or under any other document or instrument
delivered hereunder, or allowed by law or equity, shall be
cumulative and may be exercised from time to time.
Time of the Essence. Time is of the essence for each
provision of the Agreement in which time is an element.
General Provisions.
Modification; Waiver. No supplement, modification
or amendment of this Agreement shall be binding unless executed
in writing by the parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any single
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
No Third-Party Beneficiaries. This Agreement
shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted
assigns.
Notices. All notices, consents and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given when (i) delivered in Person,
(ii) sent by fax, provided that a copy is mailed First Class
ix<PAGE>
Mail, or (iii) when received by the addressee, if sent by Express
Mail, Federal Express or other express delivery service (receipt
requested), in each case to the appropriate addressee or fax
numbers set forth below (or to such other address or fax number
as a party may designate as to itself or himself by notice to the
other party):
(1) If to SKIPPER'S:
Paul Baird
1500 - 114th Avenue S.E., Suite 150
Bellevue, Washington 98004
Telephone Number: (206) 450-2233
Fax Number: (206) 462-7121
with a copy to:
James L. Vandeberg, Esq.
Graham & Dunn
1420 Fifth Ave. 33rd Floor
Seattle, Wash. 98101
Telephone Number: (206) 340-9615
Fax Number: (206) 340-9599
(2) If to the Seller:
Troy D. Cook
Vice President Finance
NPC International, Inc.
720 West 20th Street
Pittsburg, Kansas 66762
Telephone Number: (316) 231-3390
Fax Number: (316) 231-0288
with a copy to:
David G. Short, Esq.
NPC International, Inc.
9304 Forest Lane, Suite 200
Dallas, TX 75243
Telephone Number: (214) 343-7886
Fax Number: (214) 343-2680
x<PAGE>
IN WITNESS WHEREOF, the undersigned have affixed their
respective signatures.
NPC INTERNATIONAL, INC.
By ____________________________
President
SKIPPER'S INC.
By ____________________________
, President
xi<PAGE>
ENVIRONMENT COMPLIANCE AGREEMENT
THIS ENVIRONMENT COMPLIANCE AGREEMENT, made as of this 25th
day of March, 1996, by and between NPC INTERNATIONAL, INC., a
Kansas corporation ("Seller"); SKIPPER'S INC., a Washington
corporation ("SKIPPER'S"); and SEATTLE CRAB CO., a Washington
corporation ("Buyer").
This Agreement is made and delivered in order to effect and
document the representations and warranties by Seller and
SKIPPER'S pursuant to Section 3 of the Acquisition Agreement
dated as of March 24, 1996 by and among Seller, SKIPPER'S and
Buyer, (the "Acquisition Agreement"). Pursuant to the
Acquisition Agreement, Buyer became the sole shareholder of
SKIPPER'S (the "Acquisition"). Any term not otherwise defined
herein shall have the meaning provided for in the Acquisition
Agreement.
Agreement
Representations and Warranties of Seller and SKIPPER'S.
SKIPPER'S and Seller represent and warrant to Buyer that the
statements contained in this Agreement are true, correct and
complete as of the Effective Date and will be true, correct and
complete as though made on and through the Closing Date. Other
than as disclosed to Buyer with reference to grease trap
contingent liability in certain jurisdictions, neither the Seller
nor SKIPPER'S has received any notice of any claim, proceeding or
investigation under federal, state or local law relating to air,
soil, subsurface and water pollution, soil monitoring and the
storage, treatment, disposal, removal, remediation, release,
discharge or emission of any Hazardous Material (as defined
below). To the best knowledge of Seller, SKIPPER'S has not ever
owned, leased or operated or otherwise controlled any real
property with respect to which a claim or proceeding is presently
pending or threatened. There is no condition caused by SKIPPER'S
or to the best knowledge of the Seller and SKIPPER'S which would
give rise to any such claim or proceeding under federal, state or
local law relating to air, soil, subsurface, water pollution,
soil monitoring and the storage, treatment, disposal, removal,
remediation, release, discharge or emission of any Hazardous
Material other than as disclosed to Buyer with reference to
grease trap contingent liability in certain jurisdictions. For
the purposes of this Agreement, Hazardous Material shall mean any
flammables, asbestos, explosives, radioactive material, hazardous
wastes, toxic substances or related material, including without
limitation of any substances defined or included in the
definition of "hazardous substances," "hazardous wastes,"
"hazardous materials," "toxic substances" under any applicable
federal, state, or local law, rules, regulations or orders or
xii<PAGE>
which federal, state or local laws, rules, regulations or orders
designate as potentially dangerous to public health and/or safety
when present in the environment.
Indemnification. In the manner provided for in Section
8 of the Acquisition Agreement, Buyer and Seller agree to assume
responsibility for and indemnify each other as follows:
A. Buyer and SKIPPER'S shall be responsible for all owned
real estate of SKIPPER'S that was either owned or under
lease by SKIPPER'S on or prior to January 1, 1989 and
grease trap liabilities with respect to all properties.
B. Seller shall be responsible for all owned real estate
of SKIPPER'S that was acquired or on which a lease was
entered into by SKIPPER'S between January 1, 1989 and
the Effective Date. Seller shall also indemnify Buyer
and with regard to the representations and warranties
of Seller and SKIPPERS'S set forth in Section 1 hereof.
Additional Instruments. The parties shall execute or
obtain at the requesting party's sole expense any additional
documents or instruments reasonably necessary or prudent to
effect the intention of this Agreement. The parties shall
execute or obtain any additional documents or instruments
reasonably necessary or prudent to effect the intention of this
Agreement.
Attorneys' Fees. If any legal action is brought for
the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or
proceeding in addition to any other relief to which it may be
entitled.
Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of
Washington without giving effect to conflicts of law principles.
Assignment. This Agreement may not be assigned by any
party, other than to an Affiliate, without the prior written
consent of the other parties hereto, and any such assignment
shall be binding upon and shall inure to the benefit of the
parties and their respective legal representatives, successors
and permitted assigns; provided, however, that no assignment of
xiii<PAGE>
this Agreement shall relieve the parties of their respective
indemnification obligations hereunder.
Entire Agreement. This Agreement embodies the entire
understanding of the parties and other than the agreements and
other documents executed and delivered upon the execution date of
the Acquisition Agreement and upon the Closing of the
Acquisition, there are no further or other agreements or
understandings written or verbal, in effect between the parties
relating to the subject matter of this Agreement, unless
expressly referenced herein.
Arbitration. Any controversy or claim arising out of,
or relating to, this Agreement, or the making, performance or
interpretation hereof, shall be resolved by arbitration in
Seattle, Washington in accordance with the Rules of the American
Arbitration Association then existing, and judgment of the
arbitration award may be entered in any court having competent
jurisdiction over the subject matter. The prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs
incurred in that proceeding, in addition to any other relief to
which it or he is entitled.
Rights Cumulative. Except as provided for in Sections
8.B.3 and 8.C.3 and 9.B of the Acquisition Agreement, no right
granted to the parties under this Agreement for default or breach
is intended to be in full or complete satisfaction of any damages
arising out of such default or breach, and each and every right
under this Agreement, or under any other document or instrument
delivered hereunder, or allowed by law or equity, shall be
cumulative and may be exercised from time to time.
Time of the Essence. Time is of the essence for each
provision of the Agreement in which time is an element.
General Provisions.
A. Modification; Waiver. No supplement, modification
or amendment of this Agreement shall be binding unless executed
in writing by the parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any single
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
xiv<PAGE>
B. Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
C. No Third-Party Beneficiaries. This Agreement
shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted
assigns.
D. Notices. All notices, consents and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given when (i) delivered in Person,
(ii) sent by fax, provided that a copy is mailed First Class
Mail, or (iii) when received by the addressee, if sent by Express
Mail, Federal Express or other express delivery service (receipt
requested), in each case to the appropriate addressee or fax
numbers set forth below (or to such other address or fax number
as a party may designate as to itself or himself by notice to the
other party):
xv<PAGE>
(1) If to SKIPPER'S or Seller:
Paul Baird
SKIPPER'S, Inc.
1500 114th Avenue S.E., Suite 150
Bellevue, Wash. 98004
Telephone Number: (206) 450-2233
Fax Number: (206) 462-7121
with a copy to:
James L. Vandeberg, Esq.
Graham & Dunn
1420 Fifth Ave. 33rd Floor
Seattle, Wash. 98101
Telephone Number: (206) 340-9615
Fax Number: (206) 340-9599
(2) If to the Seller:
Troy D. Cook
Vice President Finance
NPC International, Inc.
720 West 20th Street
Pittsburg, Kansas 66762
Telephone Number: (316) 231-3390
Fax Number: (316) 231-0288
with a copy to:
David G. Short, Esq.
NPC International, Inc.
9304 Forest Lane, Suite 200
Dallas, TX 75243
Telephone Number: (214) 343-7886
Fax Number: (214) 343-2680
IN WITNESS WHEREOF, the undersigned have affixed their
respective signatures.
NPC INTERNATIONAL, INC.
By ____________________________
President
SKIPPER'S INC.
By ____________________________
, President
SEATTLE CRAB CO.
By ____________________________
, Chairman
xvi<PAGE>
ADMINISTRATIVE SERVICES AGREEMENT
THIS ADMINISTRATIVE SERVICES AGREEMENT, made as of this 25th
day of March, 1996, by and between NPC INTERNATIONAL, INC., a
Kansas corporation ( "Seller"); and SKIPPER'S INC., a Washington
corporation ("SKIPPER'S").
This Agreement is made and delivered in order to effect and
document the agreement by Seller to provide accounting and
information services to SKIPPER'S as provided for in Section 5.F
of the Acquisition Agreement dated as of March 24, 1996 by and
among Seller, SKIPPER'S and Seattle Crab Co., a Washington
corporation ("Buyer"), (the "Acquisition Agreement"). Pursuant
to the Acquisition Agreement, Buyer became the sole shareholder
of SKIPPER'S (the "Acquisition"). Any term not otherwise defined
herein shall have the meaning provided for in the Acquisition
Agreement.
Agreement
Services. Seller hereby agrees to provide SKIPPER'S
with the services described in Exhibit A.
Term. The term of this Agreement shall be for a period
of up to 18 months from the date hereof unless earlier terminated
by SKIPPER'S upon sixty (60) days prior written notice to Seller
or by Seller fifteen (15) days after a failure of SKIPPER'S to
perform its obligations hereunder.
Payment. SKIPPER'S agrees to pay to Seller the
following fees for said administrative services monthly in
advance for the term of this Agreement unless terminated earlier
by SKIPPER'S pursuant to Section 2 hereof:
Months of Term Monthly Fee
1-4 $ -0-
5-8 $12,500.00
9-12 $25,000.00
13-18 $25,000.00
SKIPPER'S will reimburse Seller for all expenses incurred on
behalf of SKIPPER'S within 5 days of the date of the invoice from
Seller as outlined in Exhibit A.
xvii<PAGE>
Additional Instruments. SKIPPER'S shall execute and
obtain at Seller's expense upon Seller's request any additional
documents or instruments reasonably necessary or prudent to
effect the intent of this Agreement. SKIPPER'S shall cooperate
fully with Seller in the performance of Seller's obligations
hereunder, including making the services of SKIPPER'S employees
reasonably available to Seller without cost.
Attorneys' Fees. If any legal action is brought for
the enforcement of this Agreement, or because of an alleged
dispute, breach, default or misrepresentation in connection with
any of the provisions of this Agreement, the successful or
prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in such action or
proceeding in addition to any other relief to which it may be
entitled.
Governing Law. This Agreement shall be governed by and
construed and enforced in accordance with the law of the State of
Washington without giving effect to conflicts of law principles.
Assignment. This Agreement may not be assigned by any
party, other than to an Affiliate, without the prior written
consent of the other party hereto, and any such assignment shall
be binding upon and shall inure to the benefit of the parties and
their respective legal representatives, successors and permitted
assigns.
Entire Agreement. This Agreement, embodies the entire
understanding of the parties and other than the agreements and
other documents executed and delivered upon the execution date of
this Agreement and upon the Closing of the Acquisition, there are
no further or other agreements or understandings,
representations, warranties, written or verbal, in effect between
the parties relating to the subject matter of this Agreement,
unless expressly referenced herein.
Arbitration. Any controversy or claim arising out of,
or relating to, this Agreement, or the making, performance or
interpretation hereof, shall be resolved by arbitration in
Seattle, Washington in accordance with the Rules of the American
Arbitration Association then existing, and judgment of the
arbitration award may be entered in any court having competent
jurisdiction over the subject matter. The prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs
xviii<PAGE>
incurred in that proceeding, in addition to any other relief to
which it or he is entitled.
Rights Cumulative. Except as provided for in Sections
8.B.3 and 8.C.3 and 9.B of the Acquisition Agreement, no right
granted to the parties under this Agreement for default or breach
is intended to be in full or complete satisfaction of any damages
arising out of such default or breach, and each and every right
under this Agreement, or under any other document or instrument
delivered hereunder, or allowed by law or equity, shall be
cumulative and may be exercised from time to time.
Time of the Essence. Time is of the essence for each
provision of the Agreement in which time is an element.
General Provisions.
Modification; Waiver. No supplement, modification
or amendment of this Agreement shall be binding unless executed
in writing by the parties. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of
any other provision, whether or not similar, nor shall any single
waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the
waiver.
Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which shall
be deemed an original, but all of which together shall constitute
one and the same instrument.
No Third-Party Beneficiaries. This Agreement
shall not confer any rights or remedies upon any Person other
than the parties and their respective successors and permitted
assigns.
Notices. All notices, consents and other
communications under this Agreement shall be in writing and shall
be deemed to have been duly given when (i) delivered in Person,
(ii) sent by fax, provided that a copy is mailed First Class
Mail, or (iii) when received by the addressee, if sent by Express
Mail, Federal Express or other express delivery service (receipt
requested), in each case to the appropriate addressee or fax
numbers set forth below (or to such other address or fax number
xix<PAGE>
as a party may designate as to itself or himself by notice to the
other party):
xx<PAGE>
(1) If to SKIPPER'S:
Paul Baird
1500 - 114th Avenue S.E., Suite 150
Bellevue, Washington 98004
Telephone Number: (206) 450-2233
Fax Number: (206) 462-7121
with a copy to:
James L. Vandeberg, Esq.
Graham & Dunn
1420 Fifth Ave. 33rd Floor
Seattle, Wash. 98101
Telephone Number: (206) 340-9615
Fax Number: (206) 340-9599
(2) If to the Seller:
Troy D. Cook
Vice President Finance
NPC International, Inc.
720 West 20th Street
Pittsburg, Kansas 66762
Telephone Number: (316) 231-3390
Fax Number: (316) 231-0288
with a copy to:
David G. Short, Esq.
NPC International, Inc.
9304 Forest Lane, Suite 200
Dallas, TX 75243
Telephone Number: (214) 343-7886
Fax Number: (214) 343-2680
IN WITNESS WHEREOF, the undersigned have affixed their
respective signatures.
NPC INTERNATIONAL, INC.
By ____________________________
President
SKIPPER'S INC.
By ____________________________
, President
xxi<PAGE>
NON-COMPETITION AGREEMENT
This Non-Competition Agreement (this "Agreement"), dated as
of March 25, 1996, is between NPC INTERNATIONAL, INC., a Kansas
corporation ("Covenantor"), and SKIPPER'S, INC., a Washington
corporation ("SKIPPER'S").
WHEREAS Seattle Crab Co., a Washington corporation
("Parent"), is acquiring all the issued and outstanding stock of
SKIPPER'S from Covenantor pursuant to an Acquisition Agreement
among Parent, SKIPPER'S and Covenantor, dated as of March 25,
1996 (such agreement, with all exhibits, schedules and written
information delivered pursuant thereto, the "Acquisition
Agreement");
WHEREAS the parties to the Acquisition Agreement have agreed
that SKIPPER'S and the Covenantor shall execute a Non-Competition
Agreement as a condition to Closing under the Acquisition
Agreement;
NOW THEREFORE, in consideration of the foregoing and the
mutual agreements and covenants contained herein, Covenantor and
SKIPPER'S agree as follows:
1. Term. The terms of this agreement shall commence upon
the date hereof and shall terminate three (3) years thereafter,
unless earlier terminated or extended pursuant to this Agreement
(the "Term").
2. Confidential Information.
A. Proprietary Information. Covenantor agrees that
the relationships between Covenantor and SKIPPER'S were fiduciary
relationships which have given Covenantor access to certain
confidential information of SKIPPER'S (the "Proprietary
Information"). The parties agree that the Proprietary
Information shall include:
(i) Trade Rights; and
(ii) Inventions, secret processes, secret
formulas, customer and supplier lists, licensed know-how,
writings and works of authorship, drawings, designs,
specifications, mask works, related documentation and
technical data, all as used only in SKIPPER'S business,
including any existing improvements thereto, in which
Covenantor shall have any right, title or interest, whether
xxii<PAGE>
or not patented or patentable (all of which, as between the
parties, are "Trade Secrets").
B. Covenant of Confidentiality. During the Term of
this Agreement, Covenantor shall not:
(i) disclose or use in Competition (as defined in
paragraph 3 hereof) with SKIPPER'S in any Market Area (as
defined in paragraph 2.B(ii) below) any Proprietary
Information in (a) any business in which Covenantor shall be
an owner, partner, shareholder, member, or in which
Covenantor shall have any ownership interest; or (b) with
which Covenantor shall have any contractual relationship or
other understanding which results in, any pecuniary benefit
to Covenantor; or
(ii) disclose any Proprietary Information to any
individual, business or entity which shall be in Competition
with the business of SKIPPER'S in any market from which
SKIPPER'S shall have derived twenty percent (20%) of its
sales in the twelve (12) months prior to the date hereof
("Market Area").
3. Covenant of Non-Competition.
A. During the Term of this Agreement, Covenantor
agrees that it shall not knowingly, directly or indirectly, enter
into Competition with SKIPPER'S in the quick service seafood
restaurant business as such business is being operated on the
date hereof in terms of menu, facilities and price point
("Competition"), whether alone or in association with any other
individual or entity, whether as an owner, partner, shareholder,
lender or investor in any business in which Covenantor shall have
any ownership interest or which accords any pecuniary benefit to
Covenantor in any Market Area.
B. During the Term of this Agreement, Covenantor
agrees that it shall not induce or attempt to induce any
employee, supplier, customer, franchisee, lessee, lessor,
licensee or licensor of SKIPPER'S to (i) terminate his
relationship with SKIPPER'S; (ii) modify his relationship with
SKIPPER'S to SKIPPER'S detriment; (iii) disclose any Trade
Secrets; (iv) modify the terms of any Trade Rights to SKIPPER'S;
or (v) cause any holder or owner of any Trade Rights to grant any
interest therein to Covenantor.
C. Nothing herein shall prevent Covenantor from
investing in the securities of any entity in Competition with
SKIPPER'S by purchase of any security of such entity on any
national exchange, if the value of Covenantor's investment
xxiii<PAGE>
therein (i) does not exceed ten percent (10%) of Covenantor's net
worth at any time during the Term hereof; and (ii) does not
exceed three percent (3%) of the issued and outstanding shares or
the aggregate principal outstanding of such competing entity's
securities.
4. Consideration. In consideration for Covenantor's
execution hereof, SKIPPER'S and Parent shall execute the
Acquisition Agreement.
5. Indemnification.
A. Indemnification by Covenantor. Covenantor shall
indemnify SKIPPER'S against, and hold it harmless from and in
respect of, any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action,
encumbrances, and reasonable costs and expenses suffered,
sustained, incurred or required to be paid by the SKIPPER'S,
including reasonable attorney's fees, because of the breach of
any obligation of Covenantor contained in this Agreement.
B. Indemnification by SKIPPER'S. SKIPPER'S shall
indemnify the Covenantor against and hold it harmless from and in
respect of, any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action
encumbrances, and reasonable costs and expenses suffered,
sustained, incurred or required to be paid by the Covenantor,
including reasonable attorney's fees, because of the breach of
any obligation of SKIPPER'S contained in this Agreement.
7. Injunctive Relief. The parties hereto agree that any
breach of the covenant of confidentiality regarding the
Proprietary Information, or the covenant of non-competition by
Covenantor, would cause extreme hardship to SKIPPER'S, which
would be difficult to measure in damages, and that SKIPPER'S
would not have an adequate remedy at law for such breach.
Therefore, in addition to any other recovery in damages and
indemnification hereunder, SKIPPER'S shall be entitled to seek
and obtain specific performance of the covenants herein, and
temporary, preliminary and permanent injunctive relief from the
violation of this Agreement in any court of competent
jurisdiction, without the necessity of proof of actual damages
from breach.
8. Remedies Cumulative. Except as otherwise provided
herein, the remedies provided herein and in any exhibit hereto
xxiv<PAGE>
shall be cumulative and shall not preclude the assertion by any
party hereto of any other rights or the seeking of any other
remedies against the other party hereto.
9. Miscellaneous.
A. Amendment and Waiver. This Agreement may not be
amended and no provision hereof may be waived, except by an
instrument in writing signed by all the parties. Any waiver of
any matter in a particular instance shall not effect a general
waiver of that or any matter.
B. Parties in Interest. All the terms and provisions
of this Agreement shall be binding upon, shall insure to the
benefit of and shall be enforceable by and against, the
respective successors and assigns of the parties hereto.
C. Entire Agreement. This Agreement contains the
entire understanding of the parties with respect to the subject
matter hereof.
D. Headings. The section and paragraph headings
contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this
Agreement.
E. Survival. The covenants of confidentiality
regarding proprietary information and indemnification provisions
of the Agreement shall survive for a period of five (5) years
after the term of this Agreement.
F. Notices. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall
be deemed to have been duly given if personally delivered,
transmitted by facsimile or three days after being mailed by
registered or certified mail, postage prepaid, return receipt
requested, as follows:
(1) If to the Covenantor:
NPC INTERNATIONAL, INC.
720 West 20th Street
Pittsburg, KA. 66762
Attn: Troy Cook
xxv<PAGE>
Facsimile: (316) 231-0288
Copy to:
David Short, Esq.
Romacorp.
9304 Forrest Lane, Suite 200
Dallas, TX. 75243
Facsimile: (214) 343-2680
(2) If to SKIPPER'S
SKIPPER'S, Inc.
Attn: Paul Baird, President
1500 - 114th Avenue S. E.
Bellevue, Washington, 98004
Facsimile: (206) 462-7121
xxvi<PAGE>
Copy to:
James L. Vandeberg, Esq.
Graham & Dunn
1420 5th. Ave. 33rd. Floor
Seattle, Washington 98101
Facsimile: (206) 340-9599
or to such other address or
facsimile number or such additional
recipient as any party may have
furnished to the others in writing
in accordance herewith, except that
such notices of changes of address
shall only be effective upon
receipt.
G. Law Governing; Choice of Forum. This Agreement
has been made and executed under, and will be construed and
interpreted in accordance with, the laws of the State of
Washington. The parties consent to the jurisdiction of the
courts of the State of Washington in any action or proceeding
arising out of this Agreement, and agree that in those actions or
proceedings, venue will be proper in the Superior Court of the
County of King.
H. Arbitration. Any controversy of claim arising out
of, or relating to, this Agreement, or the making, performance or
interpretation hereof, shall be resolved by arbitration in
Seattle, Washington in accordance with the Rules of the American
Arbitration Association then existing, and judgment of the
arbitration award may be entered in any court having competent
jurisdiction over the subject matter. The prevailing party shall
be entitled to recover reasonable attorneys' fees and other costs
incurred in that proceeding, in addition to any of the relief to
which it is entitled.
IN WITNESS WHEREOF, this Agreement has been duly executed
and delivered by Covenantor and SKIPPER'S, as of the date first
above written.
"SKIPPER'S"
SKIPPER'S, INC., a Washington
corporation
By: __________________________________
Paul Baird, President
xxvii<PAGE>
"COVENANTOR"
NPC INTERNATIONAL, INC., a Kansas
corporation
By:____________________________________
xxviii<PAGE>
