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: June 20, 1997
NPC INTERNATIONAL, INC.
(Exact name of registrant is specified in its charter)
Kansas
(State of incorporation)
0-13007 48-0817298
(Commission Identification No.) (IRS Employer
Identification No.)
720 West 20th Street, Pittsburg, Kansas 66762
(Address of principal executive office Zip Code)
Registrant's telephone number: (316/231-3390)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Pursuant to an Asset Purchase Agreement, dated May 29, 1997, by and
among NPC International, Inc. and certain of its subsidiaries and
affiliates (collectively, the "Company") and Pizza Hut, Inc. and
certain of its affiliates (collectively, "PHI"), on June 5, 1997 the
Company completed the acquisition of certain of the Pizza Hut
restaurants announced April 15, 1997.
The consideration for the purchase of 51 units was $29.9 million. The
Company expects to acquire one additional flood-damaged unit in
Minnesota for $1.1 million after Pizza Hut repairs the unit to the
Company's satisfaction. The purchase price was negotiated between the
Company and PHI, based primarily on the Company's internal review of
the value of cash flow generated by operations of the restaurants and
future development opportunities perceived to be available to the
Company.
The Company financed the acquisition of the units through it's
revolving credit facility, for which the agent bank is Texas Commerce
Bank.
A press release of Registrant issued on June 5, 1997, announcing the
completion of the above described acquisition, is attached as an
exhibit to this report and incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a.) Financial statements of business acquired
Financial statements are not available at this time. However, in
accordance with Rule 3-05(b) of Regulation S-X the applicable statements
are expected to be filed prior to August 19, 1997.
(b.) Pro forma financial information
Pro forma financial information will be filed in conjunction with the
filing of the financial statements referred to in Item 7. (a) above.
(c.) Exhibits
The exhibits set forth on the Index to Exhibits on page 4 are
incorporated herein by reference.
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.
DATED: June 20, 1997
Troy D. Cook
Vice President Finance
Chief Financial Officer
Principal Financial Officer
INDEX TO EXHIBITS
PAGE NO.
IN THIS
EXHIBIT DESCRIPTION FILING
2-A Asset Sale Agreement 5
99-A Press Release of Registrant dated May 15, 1997 28
EXHIBIT 2-A
ASSET SALE AGREEMENT
Date: May 29, 1997
Parties: "Sellers" - Pizza Hut of America, Inc.
El Kram, Inc.
"PHI"- Pizza Hut, Inc.
9111 East Douglas
P.O. Box 428
Wichita, Kansas 67201
"Buyers" - NPC International, Inc. ("NPC") and NPC
Management, Inc. ("Management")
Recital: The Sellers own or lease a variety of real and personal property
that they use in the operations of 52 Pizza Hut restaurants (the
"Restaurants") as such Restaurants are described on Schedule 1.1. The
Sellers are willing to sell, lease, assign or sublease the assets relating
to those restaurants to the Buyers as provided in this Asset Sale Agreement
(the "Agreement"). PHI is willing to grant to Management a franchise
agreement allowing the Buyers to continue to operate those restaurants as
"Pizza Hut" restaurants. The Buyers have inspected each of the operating
restaurants and desire to acquire them "AS IS", except as otherwise
provided herein, on the terms and conditions set forth in this Agreement.
AGREEMENT: In consideration of the mutual promises set forth in this
Agreement, the Sellers, PHI and the Buyers agree as follows:
1. Transfer of Business. Subject to the terms and conditions of this
Agreement, the following sale will take place:
1.1 Conveyance. The appropriate Sellers will each convey to NPC
all of their respective interest in the following types of personal
property (the "Assets") relating to the Pizza Hut restaurant business being
conducted at the Restaurants (the "Restaurants") listed on Schedule 1.1,
subject to the provisions of Section 4.7 hereof:
(1) All furniture, fixtures and equipment (including
computer hardware owned by the Sellers) located in the Restaurants,
except as provided in Section 1.2, below;
(2) Any prepaid rents, utility deposits and miscellaneous
deposits with respect to the Assumed Liabilities (as defined) relating
to the Restaurants;
(3) All uniforms, menus, dishes, glassware, utensils and
other smallwares located in the Restaurants;
(4) All useable inventories of food ingredients, supplies,
paper products and other consumables in the Restaurants, as well as a
change fund for each of the Restaurants in an amount and in
denominations adequate to do business at the Restaurant on the morning
of the Closing Date (as defined in Section 7); and
(5) All liquor and other licenses relating to the
Restaurants, to the extent those licenses are transferable.
1.2 Excluded Equipment. The Assets do not include the
following:
(1) Leased Equipment. The equipment listed in Schedule 1.2
is leased by the Sellers (the "Leased Equipment"). Sellers will
assign to the Buyers, and the Buyers will assume, the leases (the
"Equipment Leases") on the Leased Equipment, to the extent such
Equipment Leases are not "Excluded Liabilities" as provided in Section
1.8.
(2) FMS/SUS System. (i) If any of the Restaurants contain
PHI's proprietary SUS software and the related FMS software (the
"SUS/FMS Software"), then the SUS/FMS Software will remain the
property of the Sellers. The Buyers will replace the SUS/FMS Software
with its own software during a one-year period (the "Roll Out Period")
from the Closing. The relevant Buyer shall have a non-exclusive
license to use the SUS/FMS Software free of charge during the Roll Out
Period pending the installation in the applicable Restaurant of
Buyers' software, and the Sellers agree to provide maintenance and
support for the SUS/FMS Software used by the Buyers during the Roll
Out Period. The parties will coordinate and use their reasonable best
efforts to assist each other in removing the Sellers' SUS/FMS Software
and installing the Buyers' software during the Roll Out Period. The
Buyers may not disconnect, deinstall, move or tamper with the SUS/FMS
Software before the removal of the SUS/FMS Software from the
Restaurants.
(ii) Norand System. If any of the Restaurants contain
PHI's proprietary software (the "Norand Software") used in
connection with the Norand cash registers and computer equipment,
then the Norand Software will remain the property of the Sellers.
The Buyers will replace the Norand Software with its own software
during the applicable Roll Out Period. The relevant Buyer shall
have an non-exclusive license to use the Norand Software free of
charge during the Roll Out Period pending the installation in the
applicable Restaurant of Buyers' software, and the Sellers agree
to provide maintenance and support for the Norand Software used
by the Buyers during the Roll Out Period. The parties will
coordinate and use their reasonable best efforts to assist each
other in removing the Sellers' Norand Software and installing the
Buyers' software during the Roll Out Period. The Buyers may not
disconnect, deinstall, move or tamper with the Norand Software
before the removal of the Norand Software from the Restaurants.
(iii) Exclusion of Touch-Screen Computers. The
parties acknowledge that the Assets being sold will not include
the 13 touch-screen Point-of-Sale systems (the "Touch-Screens")
located in 13 of the Restaurants. The Sellers agree to replace
the Touch Screens in the applicable Restaurants with SUS 486
computers installed with the SUS/FMS Software within 30 days of
the Closing.
(c) Ordinary Course of Business Sales. Any personal
property relating to any individual Restaurant which has been disposed
of prior to the Closing in the ordinary course of business consistent
with the past operations of such Restaurant, subject to the provisions
of Section 4.1 regarding the replacement of such assets, will not be
included in the Assets.
1.3 Real Property.
(1) Owned Real Properties. Sellers own the parcels of real
estate listed in Schedule 1.3(a) and the buildings and premises
located thereon (the "Owned Real Properties"). The appropriate Seller
will lease to the appropriate Buyer the Owned Real Properties on the
terms set forth in the lease (the "Lease") in substantially the form
of Exhibit "A" attached hereto.
(2) Leased Real Properties. Sellers lease from unrelated
third parties the parcels of real estate listed in Schedule 1.3(b)
(the "Leased Real Properties"). Sellers will use reasonable, good-
faith efforts to obtain prior to the Closing:
(1) from each landlord from whom consent to an
assignment to Buyer is required, a consent to that assignment (it
being understood that Sellers will use reasonable, good faith
efforts, for a 60-day period after the Closing, to continue to
obtain any such assignments not obtained prior to the Closing);
and
(2) from each landlord an estoppel certificate showing
substantially the information shown on Schedule 1.3(b)(ii).
With respect to the leases for the Leased Real Properties (the "Real
Property Leases") which have terms expiring prior to June 30, 1999 and
which have no renewal options thereafter, PHI agrees to use all reasonable
efforts to obtain prior to the Closing two five year renewal options for
such leases at rates reasonably acceptable to the Buyers. Sellers and PHI
need not pay any consideration to obtain such renewal options, the consent
to assignment or the estoppel certificate. If any required consent to an
assignment cannot be obtained, Sellers may, at their option, either
sublease the affected property to the Buyers or assign the lease without
consent; in either event, Sellers will indemnify Buyers (using a mutually
agreeable form of indemnity) against claims by the respective landlord
arising out of the sublease/assignment without consent.
1.4 Licenses. The Buyers understand they need various licenses
and permits (including alcoholic beverage licenses) to conduct the business
following Closing, and that some or all of the licenses are
nontransferable. Neither this Agreement nor the Closing will in any way be
conditioned upon or subject to the Buyers' ability to obtain any required
license or permit, including alcoholic beverage licenses, except as
provided in Section 4.7. Except as provided below, Sellers will remove all
of Sellers' licenses from the Restaurants on the Closing Date, except those
licenses or permits which Buyer has prior to the Closing Date requested (i)
be left in the Restaurant for transfer or (ii) be left in the Restaurant
subject to temporary use pursuant to Section 1.4(c) hereof.
If, prior to the Closing Date, the Buyers request the temporary use of
any of the nontransferable alcoholic beverage licenses until the Buyers
obtain their own licenses, the Sellers will allow that use, but only if
each of the following conditions is (in Sellers' opinion) satisfied:
(1) Sellers have no other use for the licenses;
(2) The Buyers demonstrate to Sellers' continuing
satisfaction that the Buyers are diligently and in good faith trying
to obtain the appropriate licenses for each Restaurant;
(3) The use of Sellers' licenses by the Buyers on an
interim basis is legally permissible and poses no liability or other
risk to Sellers that Sellers (in their sole discretion) consider
unacceptable; and
(4) The Buyers agree in writing, in form acceptable to
Sellers:
(1) to indemnify Sellers against all claims, losses,
liability (including fines), expenses (including reasonable
attorneys' fees), or damages that Sellers suffer as a result of
Buyer's use of the licenses;
(2) to pay a fee of $100.00 per license per month in
exchange for Sellers' management services in connection with
Buyers' use of Sellers' licenses, beginning 90 days after the
Closing Date, and continuing for each month or portion of a month
that the Buyers' use any of Sellers' licenses; and
(3) to reimburse Sellers promptly for any out-of-
pocket expenses (including outside counsel fees) incurred in
connection with this Section.
1.5 Restaurant Inventories and Change Funds. At the close of
business on the day immediately prior to the Closing Date, Sellers'
representatives (who may, at Buyers' election, be accompanied by Buyer's
representatives) will take inventory, utilizing an Inventory Form in the
form of Exhibit "B", of the food ingredients, supplies, paper products, and
other consumables in each Restaurant and count each Restaurant's change
fund. The Buyers may, at their option, send their representatives to the
Restaurants to accompany Sellers' representatives during these
inventory/cash counts, and may then verify the accuracy of those
inventory/cash counts. Unless Buyers' representatives accompany Sellers'
representatives during these inventory/cash counts and point out any
discrepancies during the inventory/cash counts, the inventory/cash counts
prepared by Sellers' representatives will be final. The Buyers will
reimburse Sellers for Sellers' actual costs of the useable inventories and
change funds, net of any offsets, as provided in Section 7.1.
1.6 Purchase Price and Other Payments. As consideration for this
Agreement, Buyers will pay Sellers and PHI the following amounts at the
times noted:
(1) The consideration to be received by the Sellers and PHI
hereunder shall be the sum $31,000,000 (the "Purchase Price");
provided, however, $29,900,000 of the Purchase Price will be paid at
the Closing with the remaining $1,100,000 to be paid upon the re-
opening of the Restaurant located in Breckenridge, Minnesota in
accordance with the provisions of Section 4.7(c)(iii). The Purchase
Price shall be allocated among the Assets, the initial franchise fee
and a buydown of the percentage of net sales payable under the
Franchise Agreement, as defined herein, as set forth in Schedule 1.6
attached hereto.
(2) Reimbursement for useable inventory and change funds
and for prepaid rental expense to third parties pursuant to the Leased
Real Property and other prepaid expenses and reimbursement for any
other items payment for which is due to Sellers under this Agreement.
(3) One-half of the transfer, documentary, recording or
other fees as contemplated by Section 7.6 hereof.
The Purchase Price and any other amounts due at Closing will be paid by
wire transfer, in immediately available funds, to an account or accounts
designated by Sellers and PHI.
1.7 Closing Documents. At the Closing of the sale, Sellers, PHI
and the Buyers will exchange the following fully executed documents:
(1) the Franchise Agreement (including the Amendment to
Franchise Agreement);
(2) Assignment and assumption agreement for the Real
Property Leases, in the form of Exhibit "C", accompanied by any
required consents and estoppel certificates (or indemnities) as
contemplated by Section 1.3(b);
(3) a Bill of Sale for the Assets, in the form attached as
Exhibit "D";
(4) Assignment and assumption agreements for the Equipment
Leases and contracts being assumed in the form of Exhibit "E" hereto;
(5) the Leases for each of the Owned Real Properties; and
(6) any other documents reasonably requested by any party.
1.8 Non-Assumption. At the Closing, the Buyers shall assume the
liabilities of PHI and the Sellers that relate to the operation of the
Restaurants from and after the Closing Date (the "Assumed Liabilities");
provided, however, the Buyers shall not be obligated to assume and perform
the obligations arising under the "Excluded Liabilities" after the
expiration of 90-day period following the applicable Closing Date. As used
herein, the "Excluded Liabilities" shall mean any equipment leases or
contracts which cannot be terminated within 90 days from the date of the
Closing Date and which Buyers identify in writing to the Sellers within 60
days after the Closing Date. Except as specifically contemplated by this
Agreement, the Buyers are not assuming any liabilities or obligations that
arise from the operation of the Restaurants on or before the Closing Date,
and the Sellers agree to timely perform all obligations relating to the
Restaurants that arise out of operations of the Restaurants for the period
prior to the Closing Date.
2. REPRESENTATIONS AND WARRANTIES OF THE SELLERS. The Sellers
warrant to the Buyers that, as of the date of this Agreement and as of the
Closing:
2.1 Title to Assets. The relevant Seller has good and marketable
title to all of the Assets, free and clear of any liens and encumbrances,
except for liens for current taxes not yet due and payable and liens
securing the Equipment Leases (other than the Excluded Liabilities). This
warranty does not constitute a warranty by Sellers of the title of the
owners of the Leased Real Estate and the Leased Equipment.
2.2 Adequacy of Assets. The Assets and the Leased Equipment
constitute all of the items of personal property necessary to operate the
Restaurants as PIZZA HUT restaurants, except for the SUS/FMS Software, the
Norand Software and Touch Screens as contemplated in Subsection 1.2(b)
above. These representations do not constitute a warranty of the condition
of the Assets, which are sold "AS IS", with all faults, except as otherwise
provided herein.
2.3 Leases. Each of the Real Property Leases and each of the
Equipment Leases is in full force and effect, and no Seller has been given
notice of default under any of them. Subject to obtaining required
consents, the relevant Seller has the right to assign each such material
Equipment Lease and Real Property Lease to the relevant Buyer, providing
the relevant Buyers with the right to occupy the premises or to use the
Leased Equipment on the same terms and conditions as such Sellers had prior
to any assignment. This warranty does not constitute a warranty as to the
adequacy of the lessor's title to any of these items.
2.4 Corporate Power and Authority. Each Seller is duly
organized and in good standing under the laws of its state of incorporation
or organization and has full power and authority to execute, deliver and
perform its obligations under this Agreement.
2.5 Insurance. The Sellers carry adequate insurance (both in
form and amount) with respect to their properties, assets and business.
That insurance is in effect and will be kept in effect through the Closing.
2.6 Taxes. The Sellers have filed all requisite federal, state
and local tax returns relating to the ownership and operation of the
Restaurants and paid all taxes required thereby, to the extent they have
become due and payable, other than those presently payable without penalty
or interest, and except any that are being contested in good faith by
appropriate proceedings. The Sellers will indemnify Buyers for any damages
suffered by the Buyers as a result of the Sellers' failure to pay any such
taxes to the extent such taxes related to the ownership or operation of the
Restaurants prior to the applicable Closing.
2.7 Environmental Matters. To the best of the Sellers'
knowledge, without independent investigation:
(1) The Restaurants contain no asbestos in friable form;
(2) No underground petroleum or chemical storage tanks or
underground storage facilities are located under or adjacent to the
Restaurants.
(3) No contaminant, industrial waste, pollutant*, toxic or
hazardous waste, or any similar substance of any kind or
character has been stored, processed, or disposed of in or around the
Restaurants by the Sellers in conducting their business, or discharged
at any time by the Sellers directly or indirectly into the environment
in violation of any law or governmental regulation applicable to the
Sellers, or into any sanitary sewer connection or treatment system
except in conformity with requirements of all applicable laws,
regulations and valid permits as the result of any activities of the
Sellers, nor has any such act or occurrence taken place under the
ownership of a prior owner which has not been cured.
(4) With respect to the Restaurants, the Sellers have not
at any time been the subject of any governmental investigation or
proceeding pertaining to the use, storage, processing, transportation
or disposition of toxic or hazardous waste or any other subject or
material that has been determined to be hazardous to human health
under applicable law or government regulation, nor have they been the
subject of any governmental investigation or proceeding pertaining to
violation of any waste water or sewage disposal statutes or
regulations applicable to the business and operations of the Sellers.
2.8 Regulatory Compliance. Subject to the provisions of Section
4.7 hereof, each of the facilities of the Restaurants meet or exceed that
standard which is the average PHI owned Pizza Hut restaurant level of
compliance with the provisions of the Americans With Disabilities Act (the
"ADA") as well as other governmental standards in effect as of the Closing
Date with which the Restaurants need to comply in order for the Buyers to
operate the Restaurants as Pizza Hut restaurants.
2.9 Brokerage and Finder's Fees. None of the Sellers nor any
stockholder, director, officer, partner, or employee of any Seller has
incurred or will incur on behalf of the Sellers, any brokerage, finder's or
similar fee in connection with the transfers contemplated by this
Agreement.
2.10 Absence of Certain Changes. To the knowledge of each Seller,
each of the unaudited profit and loss summaries (the "Profit and Loss
Summaries") that relate to the Restaurants for the 52-week period ended
April 16, 1997 previously delivered to the Buyers are true and correct in
all material respects. Since April 16, 1997, none of the Restaurants have
suffered any material adverse change in its financial condition or results
of operations other than changes in the ordinary course of business that,
individually or in the aggregate, have not had a material adverse effect on
such Restaurants, other than the flooding described in Section 4.7 hereof.
The Sellers agree to inform the Buyers of any material adverse changes to
the financial condition or results of operations of the Restaurants prior
to the Closing.
3. REPRESENTATIONS AND WARRANTIES OF THE BUYERS. The Buyers, jointly
and severally, hereby represent and warrant to the Sellers that, as of the
date of this Agreement and as of the Closing:
3.1 Organization, Standing and Power of the Buyers. Each of the
Buyers is duly organized and in good standing under the laws of the state
in which it is incorporated and in which it is doing business, and has full
power to enter into this Agreement.
3.2 Obligations Under Franchise Agreement. NPC is now current in
payment, and at Closing will be current in payment, due and payable under
all other franchise agreements that NPC has with PHI, and on all
indebtedness to and accounts with PHI, PFS, I.P.H.F.H.A., Inc., and all
local Pizza Hut advertising cooperatives. NPC (and each of its affiliates)
is, to the best of its knowledge, in good standing (as such term is defined
in the existing franchise agreements) in the existing franchise agreements
it has with PHI.
3.3 Brokerage and Finder's Fees. Neither of the Buyers nor any
stockholder, director, officer, partner, or employee of any Buyer has
incurred or will incur on behalf of the Buyers, any brokerage, finder's or
similar fee in connection with the transfers contemplated by this
Agreement.
4. COVENANTS.
4.1 Operation Until Closing. Since April 14, 1997, the Sellers
have operated, and through the Closing Date the Sellers will operate, the
Restaurants in the ordinary course of business, other than changes
attributable to the flooding described in Section 4.7 hereof. Each Seller
will maintain all of the Assets with respect to the Restaurants operated by
such Seller in substantially the same condition (ordinary wear and tear
excepted) as it was in on April 14, 1997, except (i) Assets disposed of in
the ordinary course of business consistent with the past operations of such
Restaurant; provided, however, any such Assets must be replaced by similar
Assets of equal or greater value in like or better condition than those
Assets transferred or removed, (ii) Assets transferred among Restaurants
that are subject to this Agreement; or (iii) changes attributable to the
flooding described in Section 4.7 hereof. The damage or destruction of any
Restaurant operated by any Seller before the Closing will not affect the
Buyers' obligation to close the transactions contemplated by this
Agreement, except as provided in Section 4.7 hereof. Subject to the
requirements of any applicable Real Property Lease, such Seller shall
proceed to repair the damage or, if such repair is not reasonably
practicable in the reasonable opinion of such Seller, then such Seller
shall credit to the Buyers at the Closing an amount equal to the sum of the
reasonable cost (as agreed by the Buyers and the Sellers) of repairing or
restoring the damaged or destroyed restaurant to substantially the same
condition as immediately before the damage or destruction.
4.2 Access to Restaurants. The Buyers may inspect each
Restaurant (under the conditions set forth below) to assess the condition
of the business and the Assets being conveyed pursuant to this Agreement.
As to each inspection, the Buyers must schedule the inspection with PHI,
the Buyers must be accompanied by an agent or employee of PHI and the
Buyers must conduct the inspection in a manner that minimizes disruption to
the Restaurant's operations.
4.3 Hart-Scott-Rodino Act. The Buyers and the Sellers shall, in
cooperation with each other, file (or cause to be filed) with each of the
Department of Justice ("DOJ") and the Federal Trade Commission ("FTC") any
reports or notifications that may be required to be filed by them under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the "HSR Act") in
connection with the transactions contemplated by this Agreement. The
Buyers and the Sellers shall promptly comply with all requests for further
documents and information made by the DOJ or the FTC, shall use their best
efforts to obtain early termination of all waiting periods under the HSR
Act, and shall furnish to the others all such information in its possession
as may be necessary for the completion of the reports or notifications to
be filed by the others. All fees due from any party to the FTC or the DOJ
under the HSR Act in connection with the filing of any of those reports or
notifications shall be borne by the party making such filing.
4.4 1996 Franchise Agreement and Amendment Thereto. Subject to
the terms and conditions of this Agreement, PHI will grant to Management
the franchise rights and obligations contained in the form of 1996 Pizza
Hut Location Franchise Agreement as amended in the Amendment to Franchise
Agreement, each in the form attached hereto as Exhibits "F" and "G",
respectively (such Franchise Agreement, as amended by the Amendment to
Franchise Agreement is referred to as the "Franchise Agreement"). A copy of
the form of the Franchise Agreement has been provided to Management with
PHI's Uniform Franchise Offering Circular.
4.5 Maintenance on Computer Hardware. The Sellers agree to pay
the maintenance fees on the computer hardware owned by the Sellers and
included in the Assets for one year following the applicable Closing. The
Buyers acknowledge that such maintenance will be performed by a third
party.
4.6 Post-Closing Audit. PHI will produce audited financial
statements, in accordance with the requirements of Rule 3-05 of Regulation
S-X promulgated under the Securities Act of 1933, as amended, reasonably in
advance of the date required for Buyers' filing of a report on Form 8-K
under the Securities Exchange Act of 1934, as amended. The audit fees
associated with preparation of these audited financial statements will be
borne by Buyers.
4.7 Certain Covenants Regarding the Condition of the Assets.
(a) If any of the facilities for the Restaurants do not
meet the level of compliance with the ADA and other applicable
governmental regulations (collectively, the "Governmental Standards")
to the extent and as set forth in Section 2.8 hereof, then, subject to
the terms and condition contained herein, the Sellers agree to
reimburse the Buyers for reasonable and documented costs and expenses
(the "Documented Expenses") incurred by the Buyers to cause such
Restaurant facility to meet the Governmental Standards.
Notwithstanding the foregoing, the Sellers' reimbursement obligation
is limited to building design and structural issues and to those
Restaurants where (i) the Documented Expenses exceed $25,000 and (ii)
the Buyers have received notification (and a copy of such notification
is sent to the Sellers within 75 days from the Closing Date) by the
applicable governmental agency that such Restaurant facility fails to
meet such Governmental Standards within 60 days of the Closing Date.
If a Restaurant must be closed for modification to satisfy such
Governmental Standards, then the Sellers agree to reimburse the Buyers
within 20 days after receiving a reimbursement request for the
Documented Expenses and any lost cash flows attributable to the
closing of the Restaurant. The lost cash flows will be calculated on a
per day amount based on the average daily cash flows for the rolling
13 periods ending on the accounting period immediately prior to the
Closing Date. The Buyers agree that the Sellers' obligation to
reimburse the Buyers' Documented Expenses is limited to modifications
to the Restaurant facility relating to building design or structural
issues.
(b) Prior to the Closing, the Sellers will cause the ovens
in each Restaurant to be upgraded to the new standard for preparation
of the Lightning Bolt product.
(c) (i) The parties acknowledge that some of the
Restaurants listed on Schedule 4.7 have been damaged by the
flooding occurring in Fargo, Grand Forks and East Grand Forks,
North Dakota and Moorehead and Breckenridge, Minnesota (the
"Flooded Area"). The Sellers and the Buyers agree that any
Restaurant premises, whether leased from third parties or
Sellers, and any equipment, furniture, fixtures, smallwares or
other item related to the operation of such Restaurant damaged
from the flooding in the Flooded Areas will be repaired or
replaced, regardless of book value, at the sole cost and expense
of Sellers and to the satisfaction of Buyers prior to Closing or,
with respect to the Restaurant located in Breckenridge,
Minnesota, prior to such Restaurant's reopening. All repairs/
replacements shall be in conformity with local codes and with the
system-wide standards of Pizza Hut restaurants. The Buyers shall
have 90 days after delivery of possession of any Restaurant in
the Flooded Area sustaining flood-related damage to identify to
the Sellers any such damage not apparent as of the Closing Date,
and the Sellers shall pay up to $25,000 per damaged Restaurant to
repair any such flood-related damages. Further, if any
Restaurant in a Flooded Area has been identified by a health
organization as a source of any food-borne illness and such
illness in the Buyers' judgment has caused a negative impact on
the net sales of such identified Restaurant, then the Buyers have
the option to refuse to purchase any or all of the Restaurants
located in the same city in the Flooded Area where the identified
Restaurant is located and the parties will negotiate a reduction
in the Purchase Price.
(ii) If any local infrastructure supporting the
Business in the Flooded Area (e.g., water treatment facilities,
sewer systems, etc.) is damaged to a point which will cause
extraordinary cost of operation of a Restaurant and Buyers
temporarily discontinue operations of such Restaurant on or
immediately after the Closing Date, then Sellers agree to pay the
applicable deductible in an amount not to exceed $25,000 under
Buyers' business interruption insurance.
(iii) The parties acknowledge that (A) the
Restaurant located in Breckenridge, Minnesota has been damaged by
the flooding and will not be able to reopen to the public until
on or about July 2, 1997 (the date such Restaurant reopens to the
public is referred to herein as the "Reopening Date") and (B)
$1,100,000 of the Purchase Price is attributable to the purchase
of this Restaurant. The Reopening Date will be a date determined
by the Buyers which in no event will be later than 30 days from
the occurrence of the following two events: (x) the repairs or
replacement of the Assets used in the operation of the Restaurant
in accordance with standards set forth in subsection (i) hereof
will be completed by the Sellers to Buyers' satisfaction and (y)
the Sellers will have obtained the necessary approvals of the
applicable local authorities to reopen the Restaurant. The
closing for the purchase of the Restaurant will be delayed until
the Reopening Date at which time Buyers agree to pay to the
Sellers by wire transfer the remaining $1,100,000 of the Purchase
Price, and the parties will execute such bills of sale,
assignment and assumption agreements, an assignment of lease and
other documents as is necessary to convey the Assets used in the
operation of such Restaurants to the Buyers. In addition, at such
closing, the parties agree to execute an amendment to the
Franchise Agreement to add the Restaurant, Breckenridge,
Minnesota and the county where such Restaurant is located to the
Franchise Agreement and related documents. References in this
Agreement to the "Closing Date" or the "Closing" with respect to
the Restaurant located in Breckenridge, Minnesota shall mean the
date the closing with respect to the sale of such Restaurant
actually occurs.
5. Sellers' Employees. Sellers' policy on refranchising (a copy of
which is attached as Schedule 5) does not obligate Sellers to offer
transfer opportunities to any of its employees who will be affected by sale
of the Restaurants. Sellers will seek to provide opportunities for
employees to remain with Sellers but such employment is not guaranteed and
will depend on Sellers' assessment of its business needs as well as the
employee's performance. Unless otherwise agreed before Closing, with
respect to any of Sellers' restaurant-level employees (i.e., all employees
at the level of "Restaurant General Manager" or below), Sellers will
terminate the employment of those employees at the close of business on the
day immediately prior to the Closing Date. These terminated employees may
become employees of Buyers as of the Closing Date. All claims of the
employees arising out of their employment with Sellers before the Closing
Date will be the sole liability of Sellers, and Sellers will indemnify
Buyers from all claims of that nature. Sellers will directly pay all
terminated employees, including any of the employees hired by Buyers (the
"Hired Employees"), for earned and unused vacation, in accordance with
Sellers' normal policies (which do not call for Sellers to pay for accrued
but unearned vacation) or as required by law.
As between Sellers and Buyers, Buyers assume all claims of the Hired
Employees relating to employment by Buyers arising after the Closing Date,
and Buyers will indemnify Sellers from all such claims by them. For the
purpose of determining benefits for Hired Employees, Buyers agree to honor
the Hired Employees' length of service and anniversary dates with Sellers.
Sellers will furnish Buyers a list of the Hired Employees stating length of
service and anniversary dates. Buyers understand that the active
participation of the Hired Employees in all benefit plans maintained by
Sellers will end on the Closing Date. Sellers will continue any employee
benefit payment obligations for Hired Employees who are on leave of absence
or disabled on the Closing Date.
If any of Sellers' employees elect to transfer to other operations of
Sellers ("Electing Employees"), in accordance with Sellers' policy on
refranchising, the Sellers will (upon request by Buyers) use their
reasonable best efforts to provide to Buyers the services of some or all of
the Electing Employees (as chosen by Buyers) for a minimum of 60 days after
the Closing. Buyers will reimburse Sellers for all payroll and benefit
costs associated with any such loaned Electing Employees.
6. Conditions to Closing.
(1) The obligations of the Sellers, on the one hand, and
the Buyers, on the other hand, to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or
prior to the Closing, of each of the following conditions:
(1) there shall not be in effect any preliminary or
permanent injunction or other order issued by any Federal or
state court of competent jurisdiction in the United States or by
any United States Federal or state governmental or regulatory
body nor any statute, rule, regulation or executive order
promulgated or enacted by any United States Federal or state
governmental authority which restrains, enjoins or otherwise
prohibits the consummation of the transactions contemplated by
this Agreement or any other agreement or document contemplated
hereby; and
(2) any filings required to be made under the HSR Act
shall have been made, and all applicable waiting periods
thereunder with respect to the transactions contemplated by this
Agreement shall have expired or been terminated.
(2) Each Seller's obligations to consummate the
transactions contemplated by this Agreement are subject to the
fulfillment, at or prior to the Closing, of each of the following
conditions (any of which may be waived in writing by such Seller):
(1) each of the representations of each Buyer under
this Agreement and each of the other agreements and documents
contemplated hereby shall be true and correct in all material
respects at and as of the time of the Closing with the same
effect as though such representations had been made again at and
as of that time, except to the extent that any such
representations expressly relate to an earlier date in which case
any such representations shall be true and correct in all
material respects at and as of such earlier date;
(2) each Buyer shall have performed and complied with
each obligation, covenant and condition required by this
Agreement and the other documents contemplated hereby to be
performed or complied with by it prior to or at the Closing, with
such exceptions as could not reasonably be expected to result in
a material adverse effect on the ability of the Buyers to perform
their obligations under this Agreement or any other agreement or
document contemplated hereby;
(3) The Capital Expenditures Committee of PepsiCo,
Inc. will have approved the transactions contemplated by this
Agreement;
(4) The Sellers will have received a copy of an action
by Buyers' Board of Directors approving the purchase of the
Assets under this Agreement certified by an authorized officer of
the applicable Buyer; and
(5) The Buyers will deliver to Sellers a statement,
signed by the Buyers' Chief Financial Officer, certifying that at
least 20% of the combined total of the payments being made to
Sellers and PHI at Closing will be represented by "at risk
capital" as defined by applicable accounting rules.
(3) Each Buyer's obligations to consummate the transactions
contemplated by this Agreement are subject to the fulfillment, at or
prior to the Closing, of each of the following conditions (any of
which may be waived in writing by such Buyer):
(1) each of the representations of each Seller
under this Agreement and each of the other agreements and
documents contemplated hereby shall be true and correct in all
material respects at and as of the time of the Closing with the
same effect as though such representations had been made again at
and as of that time, except to the extent that any such
representations expressly relate to an earlier date in which case
any such representations shall be true and correct in all
material respects at and as of such earlier date;
(2) each Seller shall have performed and complied
with each obligation, covenant and condition required by this
Agreement and the other documents contemplated hereby to be
performed or complied with by it prior to or at the Closing, with
such exceptions as could not reasonably be expected to result in
a material adverse effect on the ability of the Sellers to
perform their obligations under this Agreement or any other
agreement or document contemplated hereby;
(3) Buyers will have received a copy of a resolution
of Sellers' Board of Directors approving the sale of the Assets
certified by an authorized officer of the applicable Seller; and
(4) Buyers shall have completed the inspection of the
Assets and facilities of the Restaurants.
7. Closing. Unless otherwise agreed, the consummation of the
transactions contemplated by this Agreement will occur at the "Closing",
which will be held at the offices of Sellers, at 10:00 a.m. (local time) on
or before, at Sellers' discretion, June 4, 1997 (As used herein, the date
any Closing or Closings actually occur is referred to in this Agreement as
the "Closing Date"). At the Closing, the Sellers shall deliver to the
Buyers such bills of sale, instruments of assignment, transfer and
conveyance and the other documents contemplated by this Agreement. Against
such delivery, the Buyers shall deliver to the Sellers the Purchase Price
to be paid at the Closing in accordance with Section 1.6 above and the
other documents contemplated by this Agreement. All actions taken at the
Closing shall be deemed to have been taken simultaneously at the time the
last of any such actions is taken or completed. Upon the completion of the
Closing, title to the Assets and the assumption of the Assumed Liabilities
will be deemed to be effective as of 12:01 am on the Closing Date. Sellers
will cooperate with Buyers to see that the transfer of the Assets proceeds
smoothly.
7.1 Post-Closing Adjustments. From time to time after the
Closing Date, Buyer or Sellers may prepare and submit to the other party
one or more post-closing statements concerning any obligations that become
due under this Agreement that were not paid at Closing, offsetting any
amounts owed by the other party. The net amount owed will be paid within 30
days after receipt of the post-closing statement. Any amount not paid
within 30 days after receipt of a post-closing statement will bear interest
at the rate of 18% per annum, or the maximum legal rate. Without limiting
the generality of this provision, the following is a non-exclusive list of
some of the types of items that may be reimbursed through use of post-
closing statements: rent; equipment lease payments; utilities; inventories
and change funds; sales taxes and any applicable interest and penalties;
real or personal property taxes; and any amounts due pursuant to Section
4.7 hereof.
7.2 Post-Closing Indemnification. Buyers (jointly and severally)
will indemnify Sellers, their affiliates, subsidiaries, employees,
officers, directors, and agents, on an after-tax basis, against any loss,
cost, damage, or other expense (including attorney's fees) (collectively,
"Losses") that arise from operation of the Restaurants or related
properties after Closing. Sellers (jointly and severally) will indemnify
Buyers, their affiliates, subsidiaries, employees, officers, directors, and
agents, on an after-tax basis, against any Losses that arise from operation
of the Restaurants or related properties on or before the Closing.
7.3 Additional Documents. Following the Closing, each of the
parties covenants to provide such additional documents or instruments as
the other party may reasonably request for the purpose of carrying out this
Agreement. Sellers will use their best efforts to have their present
officers, directors, and employees cooperate after the Closing in
furnishing information, evidence, testimony and other assistance concerning
matters that occurred prior to the Closing.
7.4 Buyer's Acknowledgment. Buyer acknowledges that:
(1) Except as set forth in Section 7.4 (b), below, Sellers
(and their agents and employees) have made no statements or warranties
to Buyers as an inducement for Buyers' decision to purchase, except as
contained in this Agreement or in the PHI Franchise Offering Circular
for Prospective Franchisees, and Buyers' decision to purchase was made
independently by them with the aid of professional counselors,
including legal, accounting, and financial advisors.
(2) Sellers have made available to Buyers, before Buyers'
execution of this Agreement, the Profit and Loss Summaries. Buyers'
decision to purchase the Assets for the consideration set forth in
this Agreement was made independently, based on inspection of the
Profit and Loss Summaries by Buyers or their agents or representatives
(and on other information available to the Buyers because of Buyers'
experience in the Pizza Hut System), without reliance on the book
ledgers or on any oral statements of any kind or character by Sellers
or their representatives.
7.5 Information Statement. Buyers and Sellers will timely file
any information statement required by regulations issued pursuant to
Section 1060(b) of the Internal Revenue Code of 1986, as amended.
7.6 Transfer Fees and Expenses. Buyers and Sellers will share
equally all sales taxes due and payable, and any penalties and interest
associated therewith as a result of the sale of the Assets. At Buyers'
discretion, Buyers may record any assignments and subleases. Buyers (on the
one hand) and Sellers (on the other hand) will share equally all transfer,
documentary, recording or other fees and/or taxes attributable to such
transfers and recording. Buyers may collect Sellers' half of those fees,
and Sellers may collect from Buyers half of any sales taxes and penalties
and interest associated therewith, through post-closing statements
generated in accordance with Section 7.1.
8. Miscellaneous.
8.1 Notices. Notices may be given to each party at the
respective addresses set forth on the first page of this Agreement.
8.2 Termination of Agreement. This Agreement will terminate and
be of no further force and effect if the transfer has not been consummated
by the close of business on June 11, 1997.
8.3 Modification and Waiver. No modification or waiver of any of
the provisions of this Agreement, and no consent by any of the parties to
any departure from the provisions of this Agreement by the other party,
will be effective unless the modification or waiver is in writing and
signed by the party or parties to be bound. Each modification or waiver
will be effective only for the period, on the conditions, and for the
specific instances and purposes specified in the writing. No notice to or
demand on any of the parties in any case will entitle it, them, or any of
them to any other or further notice or demand in similar or other
circumstances.
8.4 Assignment: Binding Effect. This Agreement is intended to
inure to the benefit of, and is binding upon, the parties and all of their
respective successors and permitted assigns. This Agreement is not,
however, assignable or transferable, in whole or in part, by any of the
parties except upon the express prior written consent of all of the other
parties, and nothing contained in this Agreement is intended to confer upon
any person, other than the parties and their respective heirs, successors,
and permitted assigns, any rights, remedies, or obligations under, or by
reason of, this Agreement. Any request by the Buyers for Sellers' consent
to the assignment of this Agreement will be subject to the conditions on
assignment contained in the Franchise Agreement.
8.5 Severability. If any provision or provisions of this
Agreement or of any of the documents or instruments delivered pursuant
hereto, or any portion of any provision hereof or thereof, is invalid or
unenforceable pursuant to a final determination of any court of competent
jurisdiction or a result of future legislative action, that determination
or action will be construed (whenever possible) so as not to affect the
validity or enforceability hereof or thereof and will not affect the
validity or effect of any other portion hereof or thereof which shall
remain in full force and effect.
8.6 Entire Agreement. This Agreement (including Exhibits "A"
through "G" and the Schedules, which are incorporated into this Agreement
by reference) contains the entire understanding of the parties with respect
to the transactions contemplated by this Agreement and may be amended,
modified, supplemented, or altered only by a writing duly executed by all
of the parties. Any prior agreements or understandings relating to the same
subject matter, whether oral or written, are entirely superseded by this
Agreement.
8.7 Confidential Information. This Agreement, the terms of the
transactions contemplated by this Agreement, and any other information
heretofore or hereafter disclosed or obtained in connection with this
Agreement concerning the business, operations, affairs, or financial
condition of any party hereto (collectively, the "confidential
information"), will be kept confidential, except as otherwise required by
law or legal process and except to the extent (i) the confidential
information is or has been disclosed to any lender, to PepsiCo, Inc. or to
the respective attorneys, accountants, and financial advisors of any party
hereto, (ii) the confidential information is or hereafter becomes lawfully
obtainable from other sources, or (iii) this duty of confidentiality is
waived in writing by the party to whom the confidential information
relates. These obligations of confidentiality will permanently survive
termination or abandonment of this Agreement.
8.8 Governing Law. This Agreement, and all instruments delivered
in connection with this Agreement, unless otherwise expressly provided in
those other instruments, shall in all respects be construed in accordance
with and governed by the substantive laws of the State of Kansas without
regard to principles of conflicts of laws.
8.9 Bulk Sales Waiver. The Sellers and the Buyers each waive
compliance by the other with any bulk sales or similar laws that may be
applicable to the transactions contemplated by this Agreement.
8.10 Expenses. Except as otherwise expressly provided in this
Agreement, each of the parties will bear its own expenses incident to this
Agreement and the transactions contemplated by this Agreement, including
without limitation all fees and disbursements of counsel and accountants
retained by the party, whether or not the transactions contemplated by this
Agreement are consummated.
8.11 Construction. The captions of the various articles and
sections of this Agreement have been inserted for the purpose of
convenience of reference only. The captions are not a part of this
Agreement and will not be deemed in any manner to modify, explain, enlarge
or restrict any of the provisions of this Agreement.
The word "include", in all its tenses and variations, is always
used in a non-exclusive sense, as if followed by the phrase "without
limitation".
The auxiliary verb "will" is mandatory. The auxiliary verb "may"
is permissive (and, by extension, is prohibitive when used negatively, as a
denial of permission).
8.11 Time is of the Essence. Time is of the essence in the
performance of this Agreement.
[Signature page to follow]
IN WITNESS WHEREOF, the
parties have hereunto set their PIZZA HUT OF AMERICA, INC.
hands and seals on the date and EL KRAM, INC.
year first above written.
By:
Robert C. Kreidler
Attorney-in-Fact
PIZZA HUT, INC.
By:
Robert C. Kreidler
Vice President
NPC INTERNATIONAL, INC.
By:
Troy D. Cook
Vice President
NPC MANAGEMENT, INC.
By:
Troy D. Cook
Vice President
108450.9/SAH
INDEX TO EXHIBITS AND SCHEDULES
EXHIBITS
Exhibit "A" Lease
Exhibit "B" Inventory Form
Exhibit "C" Assignment and Assumption Agreement (Real Property
Leases)
Exhibit "D" Bill of Sale
Exhibit "E" Assignment and Assumption Agreement (Equipment Leases
and Contracts)
Exhibit "F" Franchise Agreement
Exhibit "G" Amendment to Franchise Agreement
SCHEDULES
Schedule 1.1 List of Restaurants
Schedule 1.2 Leased Equipment
Schedule 1.3(a) Owned Real Property
Schedule 1.3(b) Leased Real Estate
Schedule 1.3(b)(ii) Information for Estoppel Certificate
Schedule 1.6 Allocation of Consideration
Schedule 4.7 Restaurants in the Flooded Area
Schedule 5 Policies on Refranchising
EXHIBIT 99-A
Contact: Troy D. Cook
Vice President Finance and
Chief Financial Officer
(316) 231-3390
FOR IMMEDIATE RELEASE
NPC INTERNATIONAL, INC. ANNOUNCES CLOSING
OF 52 UNIT PIZZA HUT ACQUISITION
Pittsburg, Kansas (June 5, 1997) - NPC International, Inc.
(NASDAQ:NPCI) today announced that it had completed the acquisition of 51
units in North Dakota, South Dakota and Minnesota from Pizza Hut, Inc. for
$29.9 million. The Company expects to acquire one additional flood-damaged
unit in Minnesota after Pizza Hut repairs the unit to the Company's
satisfaction. The acquisition was funded through the Company's recently
increased $200 million Revolving Credit Facility.
NPC International, Inc. is the world's largest Pizza Hut franchisee
and now operates 680 Pizza Hut restaurants and delivery kitchens in twenty-
four states. Through Romacorp, Inc. a wholly-owned subsidiary, NPC also
operates and franchises 185 Tony Roma's restaurants, the casual theme
restaurant Famous For Ribs.
For more information contact Troy D. Cook, Vice President Finance and
Chief Financial Officer, NPC International, Inc., 720 West 20th Street,
Pittsburg, Kansas 66762. Telephone number: (316) 231-3390.
**********************************
97-10
_______________________________
*The term "pollutant" means any substance subject to control under the
Federal Water Pollution Act, 33 U.S.C. 1251, et seq., or the Clean Air
Act, 42 U.S.C. 7401, et seq., or regulations promulgated thereunder. The
term "toxic or hazardous waste" means any chemical, substance, or material
that is classified by the Environmental Protection Agency as a hazardous
substance under the Comprehensive Environmental Response, Compensation' and
Liability Act of 1980, 42 U.S.C. 9601, et seq., or regulations promulgated
thereunder, or under the Resource Conservation and Recovery Act of 1976, 42
U.S.C. 6901, et seq., or regulations promulgated thereunder, or which is a
petroleum product, or which is classified by any applicable state or local
regulation or statute as a hazardous waste.
