Document:

Exhibit
10.12

 

 

 

 

NPC INTERNATIONAL, INC.

(a Kansas corporation)

91⁄2% Senior Subordinated Notes due 2014

PURCHASE AGREEMENT

Dated:  April 25, 2006

 

 

NPC INTERNATIONAL, INC.

(a Kansas corporation)

$175,000,000

91⁄2% Senior Subordinated Notes due 2014

PURCHASE AGREEMENT

April 25, 2006

MERRILL
LYNCH & CO. 

J.P. MORGAN SECURITIES INC.

c/o Merrill Lynch, Pierce, Fenner & Smith
                        Incorporated
               as Representatives of the
several Initial Purchasers

4 World Financial Center

New York, New York  10080

Ladies
and Gentlemen:

NPC International, Inc., a
Kansas corporation (the “Company”), and the guarantor listed on Schedule C
attached hereto (the “Guarantor”; and together with the Company, the
“Issuers”), confirm their respective agreements with Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and
each of the other Initial Purchasers named in Schedule A hereto (collectively,
the “Initial Purchasers” which term shall also include any initial purchaser
substituted as hereinafter provided in Section 11 hereof), for whom Merrill
Lynch and J.P. Morgan Securities Inc. are acting as representatives (in such
capacity, the “Representatives”), with respect to the issue and sale by the
Company and the purchase by the Initial Purchasers, acting severally and not
jointly, of the respective principal amounts set forth in said Schedule A of
$175,000,000 aggregate principal amount of the Company’s 91⁄2% Senior
Subordinated Notes due 2014 (the “Notes”), which are to be unconditionally
guaranteed on a senior subordinated basis (the “Guarantee”; and together with
the Notes, the “Securities”) by the Guarantor. 
The Securities are to be issued pursuant to an indenture dated as of May
3, 2006 (the “Indenture”) between the Company, the Guarantor and Wells Fargo
Bank, National Association, as trustee (the “Trustee”).  Securities issued in book-entry form will be
issued to Cede & Co. as nominee of The Depository Trust Company (“DTC”)
pursuant to a letter agreement (the “DTC Agreement”) between the Company and
DTC.

The Company understands that
the Initial Purchasers propose to make an offering of the Securities on the
terms and in the manner set forth herein and agrees that the Initial Purchasers
may resell, subject to the conditions set forth herein, all or a portion of the
Securities to purchasers (“Subsequent Purchasers”) at any time after this
Agreement has been executed and delivered. 
The Securities are to be offered and sold through the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
“1933 Act”), in reliance upon exemptions therefrom.  Pursuant to the terms of the Securities and
the Indenture, investors that acquire Securities may only resell or otherwise
transfer such Securities if such Securities are hereafter registered under the
1933 Act or if an exemption from the registration requirements of the 1933 Act
is available (including the exemption afforded by Rule 144A (“Rule 144A”) of
the rules and regulations promulgated under the 1933 Act by the Securities and Exchange
Commission (the “Commission”)) or if such sale is not subject to such
registration requirements in accordance with Regulation S (“Regulation S”)
under the 1933 Act.

 

The holders of the
Securities will be entitled to the benefit of a registration rights agreement
(the “Registration Rights Agreement”), to be dated as of the Closing Date (as
defined below), among the Issuers and the Initial Purchasers, pursuant to which
the Issuers will agree to register under the 1933 Act another series of debt
securities of the Company with terms identical to the Securities (the “Exchange
Securities”) to be offered in exchange for the Securities, subject to the terms
and conditions therein specified.

The Company has (i) prepared
and delivered to each Initial Purchaser copies of a preliminary offering
memorandum dated April 11, 2006 (the “Preliminary Offering Memorandum”) and the
final pricing term sheet, in the form attached hereto as Exhibit A (the “Pricing
Supplement”) and (ii) has prepared and will deliver to each Initial Purchaser,
as soon as practicable but in no event later than two business days prior to
the Closing Date, copies of a final offering memorandum dated April 25, 2006
(the “Final Offering Memorandum”), each for use by such Initial Purchaser in
connection with its solicitation of purchases of, or offering of, the
Securities.  “Offering Memorandum” means,
with respect to any date or time referred to in this Agreement, the most recent
offering memorandum (whether the Preliminary Offering Memorandum or the Final
Offering Memorandum, or any amendment or supplement to either such document),
which has been prepared and delivered by the Company to the Initial Purchasers
in connection with their solicitation of purchases of, or offering of, the
Securities.

SECTION 1.           Representations and Warranties by
the Company.

(a)           Representations and
Warranties.  Each Issuer
jointly and severally represents and warrants to each Initial Purchaser as of
the date hereof and as of Closing Time, and agrees with each Initial Purchaser,
as follows:

(i)      Disclosure Package and Final Offering
Memorandum.  As of the Applicable
Time (as defined below), neither (x) the Preliminary Offering Memorandum as of
the Applicable Time as supplemented by the Pricing Supplement, that has been
prepared and delivered by the Company to the Initial Purchasers in connection
with their solicitation of offers to purchase Securities, all considered
together (collectively, the “Disclosure Package”), nor (y) any individual
Supplemental Offering Materials (as defined below), when considered together
with the Disclosure Package, included any untrue statement of a material fact
or omitted to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.  “Applicable Time” means 5:00
p.m. (New York City time) on April 25, 2006 or such other time as agreed by the
Company and Merrill Lynch.

“Supplemental Offering
Materials” means any “written communication” (within the meaning of the 1933
Act Regulations (as defined below)) prepared by or on behalf of the Company, or
used or referred to by the Company, that constitutes an offer to sell or a
solicitation of an offer to buy the Securities other than the Offering
Memorandum or amendments or supplements thereto, including, without limitation,
any road show relating to the Securities that constitutes such a written
communication.

As of its issue date and as
of the Closing Time, the Final Offering Memorandum will not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

 

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The representation and
warranties in this subsection shall not apply to statements in or omissions
from the Disclosure Package or the Final Offering Memorandum made in reliance
upon and in conformity with written information furnished to the Company by any
Initial Purchaser through Merrill Lynch expressly for use therein.

(ii)     Independent Accountants.  KPMG, LLP, the accountants who reported on
the financial statements included in the Disclosure Package and the Final
Offering Memorandum are independent public accountants with respect to the
Company and its subsidiaries within the meaning of the 1933 Act and the rules
and regulations thereunder (the “1933 Act Regulations”).

(iii)    Financial Statements.  The financial statements, together with the
related notes, included in the Disclosure Package and the Final Offering
Memorandum present fairly the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders’ equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial statements
have been prepared in conformity with generally accepted accounting principles
(“GAAP”) applied on a consistent basis throughout the periods involved.  The selected financial data and the summary
financial information included in the Disclosure Package and the Final Offering
Memorandum present fairly, in all material respects, the information shown
therein and have been compiled on a basis consistent with that of the audited financial
statements included in the Disclosure Package and Final Offering Memorandum
(except as otherwise noted therein).  
The pro forma financial statements of the Company and its subsidiaries
and the related notes thereto included in the Disclosure Package and the Final
Offering Memorandum present fairly, in all material respects, the information
shown therein, have been prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein.

(iv)    No Material Adverse Change in Business.  Since the respective dates as of which
information is given in the Disclosure Package and the Final Offering
Memorandum, except as otherwise stated therein, (A) there has been no material
adverse change, or any development involving a prospective material
adverse change, in the
condition, financial or otherwise, or in the earnings or business affairs of
the Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business (a “Material Adverse Effect”) and
(B) there have been no transactions entered into by the Company or any of its
subsidiaries, other than those in the ordinary course of business, which are
material with respect to the Company and its subsidiaries considered as one enterprise.

(v)     Good Standing of the Company.  The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Kansas and has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Disclosure Package
and the Final Offering Memorandum and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.

 

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(vi)    Good Standing of Guarantor.  Except for any subsidiaries for which the
Company has executed all corporate procedures to institute a dissolution, the
Company has no subsidiaries other than the Guarantor and NPC Bar Management,
Inc., a Texas corporation.  The Guarantor
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to conduct its
business as described in the Disclosure Package and the Final Offering
Memorandum and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; except as otherwise
disclosed in the Disclosure Package and the Final Offering Memorandum, all of
the issued and outstanding capital stock of the Guarantor has been duly
authorized and validly issued, is fully paid and non-assessable and is owned by
the Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity; none of the
outstanding shares of capital stock of the Guarantor was issued in violation of
any preemptive or similar rights of any securityholder of the Guarantor.

(vii)   Capitalization.  The authorized, issued and outstanding
capital stock of the Company is as set forth in the financial statements,
including the schedules and notes, included in the Disclosure Package and the Final
Offering Memorandum under the heading “Capitalization” (except for subsequent
issuances, if any, pursuant to this Agreement, pursuant to reservations,
agreements, employee benefit plans referred to in the Disclosure Package and
the Final Offering Memorandum or pursuant to the exercise of convertible
securities or options referred to in the Disclosure Package and the Final
Offering Memorandum).  The shares of
issued and outstanding capital stock of the Company have been duly authorized
and validly issued and are fully paid and non-assessable; none of the
outstanding shares of capital stock of the Company was issued in violation of
the preemptive or other similar rights of any securityholder of the Company.

(viii)  Authorization of Agreement.  This Agreement has been duly authorized,
executed and delivered by the Company.

(ix)    Authorization of the Indenture.  At the Closing Time, the Indenture will be
duly authorized by each Issuer and, when executed and delivered by each Issuer
and the Trustee, will constitute a valid and binding agreement of each Issuer,
enforceable against each Issuer in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency (including,
without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors’ rights generally
and except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity or
at law).

(x)     Authorization of the Securities.  At the Closing Time, the Securities will be
duly authorized and, at Closing Time, will have been duly executed by the
Issuers and, when authenticated, issued and delivered in the manner provided
for in the Indenture and delivered against payment of the purchase price
therefor as provided in this Agreement, will constitute valid and binding
obligations of each Issuer, enforceable against each Issuer in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency (including, without limitation, all laws relating to fraudulent
transfers) reorganization, moratorium or similar laws affecting enforcement of
creditors’ rights generally and except as 

 

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enforcement thereof is
subject to general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law), and will be in the form
contemplated by, and entitled to the benefits of, the Indenture.

(xi)    Description of the Securities and the
Indenture.  The Securities and the
Indenture will conform in all material respects to descriptions thereof
contained in the Disclosure Package and in the Final Offering Memorandum.

(xii)   Absence of Defaults and Conflicts.  Neither the Company nor any of its
subsidiaries is in violation of its charter or by-laws or in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which or any of them may be bound, or
to which any of the property or assets of the Company or any of its
subsidiaries is subject (collectively, “Agreements and Instruments”) except for
such defaults that would not, individually or in the aggregate, result in a
Material Adverse Effect; and the execution, delivery and performance of this
Agreement, the Indenture, the Securities and any other agreement or instrument
entered into or issued or to be entered into or issued by any of the Issuers in
connection with the transactions contemplated hereby or thereby or in the
Disclosure Package or the Final Offering Memorandum and the consummation of the
transactions contemplated herein and in the Disclosure Package and the Final
Offering Memorandum (including the issuance and sale of the Securities and the
use of the proceeds from the sale of the Securities as described in the
Disclosure Package and the Final Offering Memorandum under the caption “Use of
Proceeds”) and compliance by the Issuers with their obligations hereunder have
been duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, the Agreements and Instruments except for such
conflicts, breaches or defaults or Repayment Events or liens, charges or
encumbrances as are disclosed in both the Disclosure Package and the Final
Offering Memorandum or that would not, individually or in the aggregate, result
in a Material Adverse Effect, nor will such action result in any violation of
the provisions of the charter or by-laws of the Company or any of its
subsidiaries or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its subsidiaries or
any of their assets, properties or operations. 
As used herein, a “Repayment Event” means any event or condition which
gives the holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the Company
or any of its subsidiaries.

(xiii)  Absence of Labor Dispute.  No labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the knowledge of the Company,
is imminent, and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any of its subsidiaries’
principal suppliers, manufacturers, customers or contractors, which, in either
case, would, individually or in the aggregate, result in a Material Adverse
Effect.

 

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(xiv)  Absence of Proceedings.  Except as otherwise disclosed in the
Disclosure Package and the Final Offering Memorandum, there is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, now pending, or, to the
knowledge of the Company, threatened, against or affecting the Company or any
of its subsidiaries which might result in a Material Adverse Effect, or which
might materially and adversely affect the properties or assets of the Company
or any of its subsidiaries or the consummation of the transactions contemplated
by this Agreement or the performance by the Company of its obligations
hereunder.  The aggregate of all pending
legal or governmental proceedings to which the Company or any of its
subsidiaries is a party or of which any of their respective property or assets
is the subject which are not described in the Disclosure Package and the Final
Offering Memorandum, including ordinary routine litigation incidental to the
business, would not reasonably be expected to result in a Material Adverse
Effect.

(xv)   Absence of Manipulation.  Except for any Initial Purchaser, no Issuer
nor any affiliate of any Issuer has taken, nor will any Issuer or any such
affiliate take, directly or indirectly, any action which is designed to or
which has constituted or which would be expected to cause or result in
stabilization or manipulation of the price of any security of any Issuer to
facilitate the sale or resale of the Securities.

(xvi)  Possession of Intellectual Property.  Except as otherwise disclosed in both the
Disclosure Package and the Final Offering Memorandum, the Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know-how (including
trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively, “Intellectual
Property”) necessary to carry on the business now operated by them, and neither
the Company nor any of its subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others with
respect to any Intellectual Property or of any facts or circumstances which
would render any Intellectual Property invalid or inadequate to protect the
interest of the Company or any of its subsidiaries therein, and which
infringement or conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy would, individually or in the aggregate,
result in a Material Adverse Effect.

(xvii)  Absence
of Further Requirements.  Assuming
compliance by the purchasers of the Securities with the representations,
warranties, covenants and agreements set forth in Section 6 hereof and the
transfer restrictions set forth in the Offering Memorandum by parties other
than the Issuers, no filing with, or authorization, approval, consent, license,
order, registration, qualification or decree of, any court or governmental
authority or agency is necessary or required for the performance by the Issuers
of their respective obligations hereunder, in connection with the offering,
issuance or sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement or for the due execution, delivery
or performance of the Indenture by the Issuers, except such as have been
already obtained or are disclosed in the Disclosure Package and the Final
Offering Memorandum and except for the registration of the Exchange Securities
under the 1933 Act.

(xviii)  Possession
of Licenses and Permits.  The Company
and its subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, “Governmental Licenses”) issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies 

 

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necessary to conduct the
business now operated by them, except where the failure to do so would not,
individually or in the aggregate, result in a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and conditions of
all such Governmental Licenses, except where the failure so to comply would
not, individually or in the aggregate, result in a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect, except
where the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, individually or
in the aggregate, result in a Material Adverse Effect; and neither the Company
nor any of its subsidiaries has received any notice of proceedings relating to
the revocation or modification of any such Governmental Licenses which,
individually or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a Material Adverse Effect.

(xix)   Title to Property.  The Company and its subsidiaries have good
and marketable title to all real property and good title to all personal
property described in the Disclosure Package and the Final Offering Memorandum
as owned by the Company and its subsidiaries and hold valid leases on all real
property and buildings held under lease by the Company and its subsidiaries as
described in the Disclosure Package and the Final Offering Memorandum, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind except such as (a) are
described in both the Disclosure Package and the Final Offering Memorandum or
(b) do not, individually or in the aggregate result in a Material Adverse
Effect; and except as would not result in a Material Adverse Effect all of the
leases and subleases material to the business of the Company and its
subsidiaries, considered as one enterprise, and under which the Company or any
of its subsidiaries holds properties described in the Disclosure Package and
the Final Offering Memorandum, are in full force and effect, and neither the
Company nor any of its subsidiaries has any notice of any material claim of any
sort that has been asserted by anyone adverse to the rights of the Company or
any of its subsidiaries under any of the leases or subleases mentioned above,
or affecting or questioning the rights of the Company or any subsidiary thereof
to the continued possession of the leased or subleased premises under any such
lease or sublease.

(xx)    Environmental Laws.  Except as described in both the Disclosure
Package and the Final Offering Memorandum and except such matters as would not,
individually or in the aggregate, result in a Material Adverse Effect, (A)
neither the Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign statute, law, rule, regulation, ordinance, code, policy
or rule of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products, asbestos-containing materials or mold (collectively,
“Hazardous Materials”) or to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Hazardous Materials
(collectively, “Environmental Laws”), (B) the Company and its subsidiaries have
all permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or threatened administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of its subsidiaries and (D) there
are no events or circumstances 

 

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that would reasonably be
expected to form the basis of an order for clean-up or remediation, or an
action, suit or proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its subsidiaries relating to Hazardous
Materials or Environmental Laws.

(xxi)   Accounting Controls.  The Company (on a consolidated basis)
maintains a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance with management’s
general or specific authorization; (B) transactions are recorded as necessary
to permit preparation of financial statements in conformity with GAAP and to
maintain accountability for assets; (C) access to assets is permitted only in
accordance with management’s general or specific authorization; and (D) the
recorded accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.

(xxii)  Payment of Taxes.  All United States federal income tax returns
of the Company and its subsidiaries required by law to be filed have been filed
or extensions relating to such returns have been timely filed and all taxes
shown by such returns or otherwise assessed, which are due and payable, have
been paid, except assessments against which appeals have been or will be
promptly taken and as to which adequate reserves have been provided. The
Company and its subsidiaries have filed all tax returns or extensions relating
to such returns that are required to have been filed by them pursuant to
applicable foreign, state, local or other law except insofar as the failure to
file such returns would not result in a Material Adverse Effect, and has paid
all taxes due pursuant to such returns or pursuant to any assessment received
by the Company and its subsidiaries, except for such taxes, if any, as are
being contested in good faith and as to which adequate reserves have been
provided. The charges, accruals and reserves on the books of the Company in
respect of any income and corporation tax liability for any years not finally
determined are adequate to meet any assessments or re-assessments for
additional income tax for any years not finally determined, except to the
extent of any inadequacy that would not result in a Material Adverse Effect.

(xxiii)  Insurance.  Except as described in the Disclosure Package
and the Final Offering Memorandum, the Company and its subsidiaries carry or
are entitled to the benefits of insurance, with financially sound and reputable
insurers (other than with respect to insurers providing insurance the loss of
which would not result in a Material Adverse Effect), in such amounts and
covering such risks as is generally maintained by companies of established
repute engaged in the same or similar business, and all such insurance is in
full force and effect.  The Company has
no reason to believe that it or any subsidiary will not be able (A) to renew
its existing insurance coverage as and when such policies expire or (B) to
obtain comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Change. 
Neither of the Company nor any subsidiary has been denied any insurance
coverage which it has sought or for which it has applied.

(xxiv)  Statistical
and Market-Related Data.  Any
statistical and market-related data included in the Disclosure Package and the
Final Offering Memorandum are based on or derived from sources that the Company
believes to be reliable and accurate.

 

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(xxv) Investment Company Act.  Each Issuer is not required, and upon the
issuance and sale of the offered Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Disclosure
Package and the Final Offering Memorandum will not be required, to register as
an “investment company” under the Investment Company Act of 1940, as amended
(the “1940 Act”).

(xxvi)  Similar
Offerings.  No Issuer nor any of
their respective affiliates, as such term is defined in Rule 501(b) under the
1933 Act (each, an “Affiliate”), has, directly or indirectly, solicited any
offer to buy, sold or offered to sell or otherwise negotiated in respect of, or
will solicit any offer to buy, sell or offer to sell or otherwise negotiate in
respect of, in the United States or to any United States citizen or resident,
any security which is or would be integrated with the sale of the Securities in
a manner that would require the offered Securities to be registered under the
1933 Act.

(xxvii)  Rule
144A Eligibility.  The Securities are
eligible for resale pursuant to Rule 144A and will not be, at Closing Time, of
the same class as securities listed on a national securities exchange
registered under Section 6 of the Securities Exchange Act of 1934 (the “1934
Act”), or quoted in a U.S. automated interdealer quotation system.

(xxviii) No
General Solicitation or Directed Selling Efforts.  No Issuer nor any of their respective
Affiliates or any person acting on its or any of their behalf (other than the
Initial Purchasers, as to whom the Company makes no representation) has engaged
or will engage, in connection with the offering of the offered Securities, in
any form of general solicitation or general advertising within the meaning of
Rule 502(c) under the 1933 Act or by means of any directed selling efforts
within the meaning of Rule 902 under the 1933 Act and the Issuers, any
affiliate of the Issuers and any person acting on their behalf have complied
with and will implement the “offering restrictions” requirements of Regulation
S.

(xxix) No Registration Required.  Subject to compliance by the Initial
Purchasers with the representations and warranties of the Initial Purchasers
and the procedures set forth in Section 6 hereof, and the compliance by the
purchasers of the Securities with the offering and transfer procedures and
restrictions described in the Offering Memorandum, it is not necessary in connection
with the offer, sale and delivery of the offered Securities to the Initial
Purchasers and to each Subsequent Purchaser in the manner contemplated by this
Agreement, the Disclosure Package and the Final Offering Memorandum to register
the Securities under the 1933 Act or to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the “1939 Act”), except any registration or
qualification in connection with the Exchange Securities.

(xxx)  Money Laundering Laws.  The operations of the Company are and have
been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign
Transactions Reporting Act of 1970, as amended, the money laundering statutes
of all jurisdictions, the rules and regulations thereunder and any related or
similar rules, regulations or guidelines, issued, administered or enforced by
any governmental agency (collectively, the “Money Laundering Laws”) and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending or, to the best knowledge of the Company,
threatened.

 

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(xxxi) Related Party Transactions.  No relationship, direct or indirect, exists
between or among any of the Issuers or any affiliate of such Issuer, on the one
hand, and any former or current director, officer, stockholder, customer or
supplier of any of them (including any member of their immediate family), on
the other hand, which is required by the 1933 Act or by the 1933 Regulations to
be described in a registration statement on Form S-1 which is not so described
or is not described as required in the Offering Memorandum.

(xxxii)   Suppliers.  No supplier of merchandise to the Company or
any of its subsidiaries has ceased shipments to the Company or any of its
subsidiaries, other than in the normal and ordinary course of business
consistent with past practices, which cessation would not reasonably be
expected to result in a Material Adverse Effect.

(xxxiii)    Senior Indebtedness.  No event of default exists under any
contract, indenture, mortgage, loan agreement, note, lease or other agreement
or instrument constituting Senior Indebtedness (as defined in the Indenture).

(b)           Officer’s Certificates.  Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Initial Purchasers shall be deemed a representation and
warranty by the Company to each Initial Purchaser as to the matters covered
thereby.

SECTION 2.           Sale and
Delivery to Initial Purchasers; Closing.

(a)           Securities.  On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Initial Purchaser, severally and not
jointly, and each Initial Purchaser, severally and not jointly, agrees to
purchase from the Company, at the price set forth in Schedule B, the aggregate
principal amount of Securities set forth in Schedule A opposite the name of
such Initial Purchaser, plus any additional principal amount of Securities
which such Initial Purchaser may become obligated to purchase pursuant to the
provisions of Section 11 hereof.

(b)           Payment.  Payment of the purchase price for, and
delivery of certificates for, the Securities shall be made at the office of
Shearman & Sterling LLP, or at
such other place as shall be agreed upon by the Representatives and the Company,
at 9:00 A.M. (New York City time) on the 6th business day after the date hereof
(unless postponed in accordance with the provisions of Section 11), or such
other time not later than ten business days after such date as shall be agreed
upon by the Representatives and the Company (such time and date of payment and
delivery being herein called “Closing Time”).

Payment shall be made to the
Company by wire transfer of immediately available funds to a bank account
designated by the Company, against delivery to the Representatives for the
respective accounts of the Initial Purchasers of certificates for the
Securities to be purchased by them.  It
is understood that each Initial Purchaser has authorized the Representatives,
for its account, to accept delivery of, receipt for, and make payment of the
purchase price for, the Securities which it has agreed to purchase.  Merrill Lynch, individually and not as
Representatives of the Initial Purchasers, may (but shall not be obligated to)
make payment of the purchase price for the Securities to be purchased by any
Initial Purchaser whose funds have not been received by Closing Time, but such
payment shall not relieve such Initial Purchaser from its obligations
hereunder.

 

10

 

(c)           Denominations;
Registration.  Certificates
for the Securities shall be in such denominations ($2,000 or integral multiples
of $1,000 in excess thereof) and registered in such names as the
Representatives may request in writing at least one full business day before
Closing Time.  The certificates
representing the Securities shall be made available for examination by the
Initial Purchasers in The City of New York not later than 10:00 A.M. on the
last business day prior to Closing Time.

SECTION 3.           Covenants
of the Issuers.  Each Issuer jointly
and severally covenants with each Initial Purchaser as follows:

(a)           Offering Memorandum and
Pricing Supplement.  The
Company, as promptly as possible, shall furnish to each Initial Purchaser,
without charge, such number of copies of the Preliminary Offering Memorandum,
the Final Offering Memorandum, any Supplemental Offering Materials, the Pricing
Supplement and any amendments and supplements thereto and documents
incorporated by reference therein as such Initial Purchaser may reasonably
request.

(b)           Notice and Effect of
Material Events.  Prior to the
completion of the placement of the offered Securities by the Initial Purchasers
as evidenced by a notice in writing from the Initial Purchasers to the Company,
the Company shall immediately notify each Initial Purchaser, and confirm such
notice in writing, of any material changes, or any development involving
a prospective material adverse change, in or affecting the
condition, financial or otherwise, or the earnings or business affairs of the
Company and its subsidiaries considered as one enterprise which (i) makes any
statement in the Disclosure Package, the Final Offering Memorandum or any
Supplemental Offering Material false or misleading or (ii) is not disclosed in
both the Disclosure Package and the Final Offering Memorandum.  In such event or if during such time any
event shall occur as a result of which it is necessary, in the reasonable
opinion of any of the Company, its counsel, the Initial Purchasers or counsel
for the Initial Purchasers, to amend or supplement the Offering Memorandum in
order that the Offering Memorandum not include any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein not misleading in the light of the circumstances then
existing, the Company will forthwith amend or supplement the Offering
Memorandum by preparing and furnishing to each Initial Purchaser an amendment
or amendments of, or a supplement or supplements to, the Offering Memorandum
(in form and substance satisfactory in the reasonable opinion of counsel for
the Initial Purchasers) so that, as so amended or supplemented, the Offering
Memorandum will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a Subsequent
Purchaser, not misleading.

(c)           Amendment and
Supplements to the Offering Memorandum; Preparation of Pricing Supplement;
Supplemental Offering Materials. 
The Company will advise each Initial Purchaser promptly of any proposal
to amend or supplement the Offering Memorandum and will not effect such
amendment or supplement without the consent of the Representatives, which
consent shall not be unreasonably withheld. 
Neither the consent of the Representatives nor the Initial Purchasers’
delivery of any such amendment or supplement shall constitute a waiver of any
of the conditions set forth in Section 5 hereof.  The Company will prepare the Pricing
Supplement, in form and substance satisfactory to the Representatives, and
shall furnish as soon as practicable after the execution of this Agreement and
prior to the Applicable Time to each Initial Purchaser, without charge, as many
copies of the Pricing Supplement as such Initial Purchaser may reasonably
request.  Each Issuer represents and
agrees that, unless it obtains the prior consent of the Representatives, it has
not made and will not make any offer relating to the Securities by means of any
Supplemental Offering Materials.

 

11

 

(d)           Qualification of
Securities for Offer and Sale. 
The Company will use its best efforts, in cooperation with the Initial
Purchasers, to qualify the offered Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions as the
Initial Purchasers  may designate and to
maintain such qualifications in effect as long as required for the sale of the
Securities; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it is not
so qualified or to subject itself to taxation in respect of doing business in
any jurisdiction in which it is not otherwise so subject.

(e)           Rating of Securities.  The Company shall take all reasonable action
necessary to enable Standard & Poor’s Ratings Services, a division of McGraw
Hill, Inc. (“S&P”), and Moody’s Investors Service Inc. (“Moody’s”) to
provide their respective credit ratings of the Securities.

(f)            DTC.  The Company will cooperate with the Initial
Purchasers and use its best efforts to permit the offered Securities to be
eligible for clearance and settlement through the facilities of DTC.

(g)           Use of Proceeds.  The Company will use the net proceeds
received by it from the sale of the Securities in the manner specified in the
Disclosure Package and the Final Offering Memorandum under “Use of Proceeds”.

(h)           Restriction on Sale of
Securities.  During a period
of 90 days from the date of the Final Offering Memorandum, the Company will
not, without the prior written consent of Merrill Lynch, directly or
indirectly, issue, sell, offer or agree to sell, grant any option for the sale
of, or otherwise dispose of, any other debt securities of the Company or
securities of the Company that are convertible into, or exchangeable for, the
offered Securities or such other debt securities (other than the Exchange
Securities).

(i)            PORTAL Designation.  The Company will use its best efforts to
permit the Securities to be designated PORTAL securities in accordance with the
rules and regulations adopted by the National Association of Securities
Dealers, Inc. (“NASD”) relating to trading in the PORTAL Market.

(j)            Market-Maker
Registration Statement.  The
Issuers will make all necessary filings with the Commission and state
regulatory authorities as may be necessary in order to enable Merrill Lynch to
make a market in the Securities for so long as Merrill Lynch is advised by its
counsel that such filings are required to be delivered in connection with a
sale of the Securities by Merrill Lynch in connection with market-making
activities.

SECTION 4.           Payment
of Expenses.

                                Expenses.  The Company will pay all expenses incident to
the performance of its obligations under this Agreement and the Indenture,
including, without limitation (i) the preparation, printing, delivery to the
Initial Purchasers and any filing of the Disclosure Package or any Offering
Memorandum (including financial statements and any schedules or exhibits) and
of each amendment or supplement thereto or of any Supplemental Offering
Material, (ii) the preparation, issuance and delivery of the certificates for
the Securities to the Initial Purchasers, including any transfer taxes, any
stamp or other duties payable upon the sale, issuance and delivery of the
Securities to the Initial Purchasers, (iii) the fees and disbursements of the Company’s
counsel, accountants and other advisors, (iv) the qualification of the
Securities under securities laws in accordance with the provisions of Section
3(d) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Initial 

 

12

 

Purchasers in connection therewith and in connection
with the preparation of the a “Blue Sky” survey, any supplement thereto, up to
$5,000 (v) the fees and expenses of the Trustee, including the fees and
disbursements of counsel for the Trustee in connection with the Indenture and
the Securities, (vi) the costs and expenses of the Issuers relating to investor
presentations on any “road show” undertaken in connection with the marketing of
the Securities including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations, travel and
lodging expenses of the representatives and officers of the Issuers and any
such consultants and the cost of aircraft and other transportation chartered in
connection with the road show; provided, however, that the
Initial Purchasers will pay one-half the cost of any chartered aircraft, (vii)
any fees payable in connection with the rating of the Securities, and (viii)
any fees and expenses payable in connection with the initial and continued
designation of the Securities as PORTAL securities under the PORTAL Market
Rules pursuant to NASD Rule 5322.  It is
understood, however, that except as provided in this Section 4 or Sections 7, 8
or 10 hereof, the Initial Purchasers shall pay their own costs and expenses,
including the fees and disbursements of their counsel.

SECTION 5.           Conditions
of Initial Purchasers’ Obligations. 
The obligations of the several Initial Purchasers hereunder are subject
to the accuracy of the representations and warranties of the Issuers contained
in Section 1 hereof and in certificates of any officer of any Issuer delivered
pursuant to the provisions hereof, to the performance by the Issuers of their
covenants and other obligations hereunder, and to the following further
conditions:

(a)           Opinion of Counsel for
Company and the Guarantor.  At
Closing Time, the Representatives shall have received the favorable opinion,
dated as of Closing Time, of Shearman & Sterling LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Initial Purchasers, to the effect set forth in
Exhibit B.  At the Closing Time, the Representatives
shall have received favorable opinion of Stinson Morrison Heckler LLP, Kansas
counsel to the Company, to the effect set forth in Exhibit C, and Richards,
Layton & Finger P.A., Delaware counsel to the Guarantor, to the effect set
forth in Exhibit D.

(b)           Opinion of Counsel for
Initial Purchasers.  At
Closing Time, the Representatives shall have received the favorable opinion,
dated as of Closing Time, of Cahill Gordon & Reindel LLP, counsel for the Initial Purchasers,
in form and substance reasonably satisfactory to the Representatives.  In giving such opinion such counsel may rely,
as to all matters governed by the laws of jurisdictions other than the law of
the State of New York, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Representatives. 
Such counsel may also state that, insofar as such opinion involves
factual matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Issuers and certificates of public officials.

(c)           Officers’ Certificate.  At Closing Time, there shall not have been,
since the date hereof or since the date as of which information is given in the
Disclosure Package and the Final Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this Agreement),
any material adverse change, or any development involving a prospective
material adverse change, in the condition, financial or otherwise, or in the
earnings or business affairs of the Company and its subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, and
the Representatives shall have received a certificate of the President or a
Vice President of the Company and of the chief financial or chief accounting
officer of the Company, dated as of Closing Time, to the effect that (i) there
has been no such material adverse change, or any development involving
a prospective material adverse change, in the condition, financial
or otherwise, or in the 

 

13

 

earnings or business affairs
of the Company and its subsidiaries considered as one enterprise, whether or
not arising in the ordinary course of business, (ii) the representations and
warranties in Section 1 hereof are true and correct with the same force and
effect as though expressly made at and as of Closing Time,  (iii) each Issuer is solvent and (iv)
the Issuers have complied with all agreements and satisfied all conditions on
their part to be performed or satisfied at or prior to Closing Time.

(d)           Accountants’ Comfort
Letter.  At the time of the
execution of this Agreement, the Representatives shall have received from KPMG
LLP a letter dated such date, in form and substance satisfactory to the
Representatives containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to Initial Purchasers with respect
to the financial statements and certain financial information contained in the
Disclosure Package and the Final Offering Memorandum.

(e)           Bring-down Comfort
Letter.  At Closing Time, the
Representatives shall have received from KPMG LLP a letter, dated as of Closing
Time, to the effect that they reaffirm the statements made in the letter
furnished pursuant to subsection (d) of this Section, except that the specified
date referred to shall be a date not more than three business days prior to
Closing Time.

(f)            Maintenance of Rating.  Since the date of this Agreement, there shall
not have occurred a downgrading in the rating assigned to the Securities or any
of the Company’s other debt securities by any “nationally recognized
statistical rating agency”, as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the 1933 Act, and no such securities rating
agency shall have publicly announced that it has under surveillance or review,
with possible negative implications, its rating of the Securities or any of the
Company’s other debt securities.

(g)           PORTAL.  At Closing Time, the Securities shall have
been designated for trading on PORTAL.

(h)           Indenture.  At Closing Time, the Representatives shall
have received a copy of the Indenture, in form and substance reasonably
satisfactory to the Representatives, executed by the Issuers and the Trustee,
and such agreement shall be in full force and effect.

(i)            Registration Rights
Agreement.  At Closing Time,
the Representatives shall have received a copy of the Registration Rights
Agreement, in form and substance reasonably satisfactory to the
Representatives, executed by the Issuers and each Initial Purchaser.

(j)            Additional Documents.  At Closing Time, counsel for the Initial
Purchasers shall have been furnished with such documents and opinions as they
may reasonably require for the purpose of enabling them to pass upon the
issuance and sale of the Securities as herein contemplated, or in order to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained; and all proceedings
taken by the Issuers in connection with the issuance and sale of the Securities
as herein contemplated shall be satisfactory in form and substance to the
Representatives and counsel for the Initial Purchasers.

(k)           Termination of
Agreement.  If any condition
specified in this Section shall not have been fulfilled when and as required to
be fulfilled, this Agreement may be terminated by the Representatives by notice
to the Company at any time at or prior to Closing Time, and such  termination shall be without liability of any
party to any other party except as provided in Section 4 and except that
Sections 1, 7, 8 and 9 shall survive any such termination and remain in full
force and effect.

 

14

 

(l)            Concurrent
Transactions.  At the Closing
Time, the new senior secured credit agreement (as described in the Offering
Memorandum) shall have been executed on the terms as set forth in the Offering
Memorandum.  At the Closing Time, the
Acquisition (as defined in the Offering Memorandum) (expect for the
compensation portion thereof), shall have been consummated on the terms as set
forth in the Offering Memorandum.

SECTION 6.           Subsequent
Offers and Resales of the Securities.

(a)           Offer and Sale
Procedures.  Each of the
Initial Purchasers and the Company hereby establish and agree to observe the
following procedures in connection with the offer and sale of the Securities:

(i)      Offers and Sales.  Offers and sales of the Securities shall be
made to such persons and in such manner as is contemplated by the Offering
Memorandum.  Each Initial Purchaser
severally agrees that it will not offer, sell or deliver any of the Securities
in any jurisdiction outside the United States except under circumstances that
will result in compliance with the applicable laws thereof, and that it will
take at its own expense whatever action is required to permit its purchase and
resale of the Securities in such jurisdictions.

(ii)     No General Solicitation.  No general solicitation or general
advertising (within the meaning of Rule 502(c) under the 1933 Act) will be used
in the United States in connection with the offering or sale of the Securities.

(iii)    Purchases by Non-Bank Fiduciaries.  In the case of a non-bank Subsequent
Purchaser of a Security acting as a fiduciary for one or more third parties,
each third party shall, in the judgment of the applicable Initial Purchaser, be
a “qualified institutional buyer” within the meaning of Rule 144A under the
1933 Act (a “Qualified Institutional Buyer”) or a non-U.S. person outside the
United States.

(iv)    Subsequent Purchaser Notification.  Each Initial Purchaser will take reasonable
steps to inform, and cause each of its U.S. Affiliates to take reasonable steps
to inform, persons acquiring Securities from such Initial Purchaser or
Affiliate, as the case may be, that the Securities (A) have not been and will
not be registered under the 1933 Act, (B) are being sold to them without
registration under the 1933 Act in reliance on Rule 144A or in accordance with
another exemption from registration under the 1933 Act, as the case may be, and
(C) may not be offered, sold or otherwise transferred except (1) to the
Company, (2) outside the United States in accordance with Regulation S, or (3)
inside the United States in accordance with (x) Rule 144A to a person whom the
seller reasonably believes is a Qualified Institutional Buyer that is
purchasing such Securities for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the offer, sale or
transfer is being made in reliance on Rule 144A or (y) pursuant to another
available exemption from registration under the 1933 Act.

(v)     Minimum Principal Amount.  No sale of the Securities to any one
Subsequent Purchaser will be for less than U.S. $2,000 principal amount and no
Security will be issued in a smaller principal amount.  If the Subsequent Purchaser is a non-bank
fiduciary acting on behalf of others, each person for whom it is acting must
purchase at least U.S. $2,000 principal amount of the Securities.

 

15

 

(b)           Covenants of the
Issuers.  Each of the Issuers,
jointly and severally covenants with each Initial Purchaser as follows:

(i)      Integration.  The Company agrees that it will not and will
cause its Affiliates not to, directly or indirectly, solicit any offer to buy,
sell or make any offer or sale of, or otherwise negotiate in respect of,
securities of the Company of any class if, as a result of the doctrine of “integration”
referred to in Rule 502 under the 1933 Act, such offer or sale would render
invalid (for the purpose of (i) the sale of the offered Securities by the
Company to the Initial Purchasers, (ii) the resale of the offered Securities by
the Initial Purchasers to Subsequent Purchasers or (iii) the resale of the
offered Securities by such Subsequent Purchasers to others) the exemption from
the registration requirements of the 1933 Act provided by Section 4(2) thereof
or by Rule 144A or by Regulation S thereunder or otherwise.

(ii)     Rule 144A Information.  The Company agrees that, in order to render
the offered Securities eligible for resale pursuant to Rule 144A under the 1933
Act, while any of the offered Securities remain outstanding, it will make
available, upon request, to any holder of offered Securities or prospective
purchasers of Securities the information specified in Rule 144A(d)(4), unless
the Company furnishes information to the Commission pursuant to Section 13 or
15(d) of the 1934 Act.

(iii)    Restriction on Repurchases.  Until the expiration of two years after the
original issuance of the offered Securities, the Company will not, and will
cause its Affiliates not to, resell any offered Securities which are “restricted
securities” (as such term is defined under Rule 144(a)(3) under the 1933 Act),
whether as beneficial owner or otherwise (except as agent acting as a
securities broker on behalf of and for the account of customers in the ordinary
course of business in unsolicited broker’s transactions).

(c)           Qualified Institutional
Buyer.  Each Initial Purchaser
severally and not jointly represents and warrants to, and agrees with, the
Issuers that it is a Qualified Institutional Buyer and an “accredited investor”
within the meaning of Rule 501(a) under the 1933 Act (an “Accredited Investor”).

(d)           Resale Pursuant to Rule
903 of Regulation S or Rule 144A. 
Each Initial Purchaser understands that the offered Securities have not
been registered under the 1933 Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except in
accordance with Regulation S under the 1933 Act or pursuant to an exemption
from the registration requirements of the 1933 Act.  Each Initial Purchaser severally represents
and agrees, that, except as permitted by Section 6(a) above, it has offered and
sold Securities and will offer and sell Securities (i) as part of their
distribution at any time and (ii) otherwise until forty days after the later of
the date upon which the offering of the Securities commences and Closing Time,
only in accordance with Rule 903 of Regulation S, Rule 144A under the 1933 Act
or another applicable exemption from the registration requirements of the 1933
Act.  Accordingly, neither the Initial
Purchasers, their affiliates nor any persons acting on their behalf have
engaged or will engage in any directed selling efforts with respect to
Securities sold hereunder pursuant to Regulation S, and the Initial Purchasers,
their affiliates and any person acting on their behalf have complied and will
comply with the offering restriction requirements of Regulation S.  Each Initial Purchaser severally agrees that,
at or prior to confirmation of a sale of offered Securities pursuant to Regulation
S it will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases offered Securities from it
or through it during the restricted period a confirmation or notice to
substantially the following effect:

 

16

 

“The Securities covered hereby have not been
registered under the United States Securities Act of 1933 (the “Securities Act”)
and may not be offered or sold within the United States or to or for the
account or benefit of U.S. persons (i) as part of their distribution at any
time and (ii) otherwise until forty days after the later of the date upon which
the offering of the Securities commenced and the date of closing, except in
either case in accordance with Regulation S or Rule 144A under the Securities
Act.  Terms used above have the meaning
given to them by Regulation S.”

Terms used in the above
paragraph have the meanings given to them by Regulation S.

SECTION 7.           Indemnification.

(a)           Indemnification of
Initial Purchasers.  The
Issuers agree jointly and severally to indemnify and hold harmless each Initial
Purchaser, its affiliates, as such term is defined in Rule 501(b) under the
1933 Act (each, an “Affiliate”), its selling agents and each person, if any,
who controls any Initial Purchaser within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:

(i)      against any and all loss, liability,
claim, damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in the
Disclosure Package, the Final Offering Memorandum or any Supplemental Offering
Materials (or any amendment or supplement to the foregoing), or the omission or
alleged omission therefrom of a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading;

(ii)     against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section 7(d)
below) any such settlement is effected with the written consent of the Company;
and

(iii)    against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by Merrill
Lynch), reasonably incurred in investigating, preparing or defending against
any litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission,
to the extent that any such expense is not paid under (i) or (ii) above;

provided, however,
that this indemnity agreement shall not apply to any loss, liability, claim,
damage or expense to the extent arising out of any untrue statement or omission
or alleged untrue statement or omission made in reliance upon and in conformity
with written information furnished to the Company by any Initial Purchaser
through Merrill Lynch expressly for use in the Disclosure Package, the Final
Offering Memorandum or in any Supplemental Offering Materials.

(b)           Indemnification of the
Issuers.  Each Initial
Purchaser severally agrees to indemnify and hold harmless the Company and each
person, if any, who controls the Company within the meaning of Section 15 of
the 1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection
(a) of this Section, as incurred, but only 

 

17

 

with respect to untrue
statements or omissions, or alleged untrue statements or omissions, made in the
Disclosure Package, the Final Offering Memorandum or any Supplemental Offering
Materials in reliance upon and in conformity with written information furnished
to the Company by such Initial Purchaser through Merrill Lynch expressly for
use therein.

(c)           Actions Against
Parties; Notification.  Each
indemnified party shall give notice as promptly as reasonably practicable to
each indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an indemnifying
party shall not relieve such indemnifying party from any liability hereunder to
the extent it is not materially prejudiced as a result thereof and in any event
shall not relieve it from any liability which it may have otherwise than on
account of this indemnity agreement.  In
the case of parties indemnified pursuant to Section 7(a) above, counsel to the
indemnified parties shall be selected by Merrill Lynch, and, in the case of
parties indemnified pursuant to Section 7(b) above, counsel to the indemnified
parties shall be selected by the Company. 
An indemnifying party may participate at its own expense in the defense
of any such action; provided, however, that counsel to the
indemnifying party shall not (except with the consent of the indemnified party)
also be counsel to the indemnified party. 
In no event shall the indemnifying parties be liable for fees and expenses
of more than one counsel (in addition to any local counsel) separate from their
own counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. 
No indemnifying party shall, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section or Section 8 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from
all liability arising out of such litigation, investigation, proceeding or
claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act by or on behalf of any indemnified party.

(d)           Settlement Without
Consent if Failure to Reimburse. 
If at any time an indemnified party shall have requested an indemnifying
party to reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 7(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement.

SECTION 8.           Contribution.  If the indemnification provided for in
Section 7 hereof is for any reason unavailable to or insufficient to hold
harmless an indemnified party in respect of any losses, liabilities, claims,
damages or expenses referred to therein, then each indemnifying party shall
contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Issuers on the one hand and the Initial Purchasers on the other hand from the
offering of the Securities pursuant to this Agreement or (ii) if the allocation
provided by clause (i) is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Issuers on the one hand and
of the Initial Purchasers on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations.

 

18

 

The relative benefits
received by the Issuers on the one hand and the Initial Purchasers on the other
hand in connection with the offering of the Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the total discount
received by the Initial Purchasers, bear to the aggregate initial offering price
of the Securities.

The relative fault of the
Issuers on the one hand and the Initial Purchasers on the other hand shall be
determined by reference to, among other things, whether any such untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact relates to information supplied by the Issuers or by the
Initial Purchasers and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.

The Issuers and the Initial
Purchasers agree that it would not be just and equitable if contribution
pursuant to this Section were determined by pro rata allocation (even if the
Initial Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this Section.  The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission.

Notwithstanding the
provisions of this Section, no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total discount and
commissions applicable to the Securities purchased and sold by it hereunder
exceeds the amount of any damages which such Initial Purchaser has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission.

No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.

For purposes of this Section
8, each person, if any, who controls an Initial Purchaser within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act and each Initial
Purchaser’s Affiliates and selling agents shall have the same rights to contribution
as such Initial Purchaser, and each person, if any, who controls the Company
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act
shall have the same rights to contribution as the Company.  The Initial Purchasers’ respective
obligations to contribute pursuant to this Section are several in proportion to
the principal amount of Securities set forth opposite their respective names in
Schedule A hereto and not joint.

SECTION 9.           Representations,
Warranties and Agreements to Survive. 
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
subsidiaries submitted pursuant hereto shall remain operative and in full force
and effect, regardless of (i) any investigation made by or on behalf of any
Initial Purchaser or its Affiliates or selling agents, any person controlling
any Initial Purchaser, its officers or directors or any person controlling the
Company and (ii) delivery of and payment for the Securities.

 

19

 

SECTION 10.         Termination
of Agreement.

(a)           Termination; General.  The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time
(i) if there has been, since the time of execution of this Agreement or since
the date as of which information is given in the Disclosure Package or the
Final Offering Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement), any material adverse change in the
condition, financial or otherwise, or in the earnings, business affairs or
business prospects of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred any material adverse change in the financial markets in
the United States or the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which
is such as to make it, in the judgment of the Representatives, impracticable or
inadvisable to proceed with the offering, sale or delivery of the Securities or
to enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission, or if trading generally on the New York Stock Exchange or in the
NASDAQ System has been suspended or materially limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) a material disruption has occurred in
commercial banking or securities settlement or clearance services in the United
States, or (v) if a banking moratorium has been declared by either Federal or
New York authorities.

(b)           Liabilities.  If this Agreement is terminated pursuant to
this Section, such termination shall be without liability of any party to any
other party except as provided in Section 4 hereof, and provided further that
Sections 1, 7, 8 and 9 shall survive such termination and remain in full force
and effect.

SECTION 11.         Default
by One or More of the Initial Purchasers. 
If one or more of the Initial Purchasers shall fail at Closing Time to
purchase the Securities which it or they are obligated to purchase under this
Agreement (the “Defaulted Securities”), the Representatives shall have the
right, within 24 hours thereafter, to make arrangements for one or more of the
non-defaulting Initial Purchasers, or any other initial purchasers, to purchase
all, but not less than all, of the Defaulted Securities in such amounts as may
be agreed upon and upon the terms herein set forth; if, however, the
Representatives shall not have completed such arrangements within such 24-hour
period, then:

(a)           if the number of Defaulted Securities does not exceed 10%
of the aggregate principal amount of the Securities to be purchased hereunder,
each of the non-defaulting Initial Purchasers shall be obligated, severally and
not jointly, to purchase the full amount thereof in the proportions that their
respective underwriting obligations hereunder bear to the underwriting
obligations of all non-defaulting Initial Purchasers, or

(b)           if the number of Defaulted Securities exceeds 10% of the
aggregate principal amount of the Securities to be purchased hereunder, this
Agreement shall terminate without liability on the part of any non-defaulting
Initial Purchaser.

No action taken pursuant to
this Section shall relieve any defaulting Initial Purchaser from liability in
respect of its default.

 

20

 

In the event of any such
default which does not result in a termination of this Agreement, either the
Representatives or the Company shall have the right to postpone Closing Time
for a period not exceeding seven days in order to effect any required changes
in the Offering Memorandum or in any other documents or arrangements.  As used herein, the term “Initial Purchaser”
includes any person substituted for an Initial Purchaser under this Section.

SECTION 12.                          Conditions to the Issuers’ Obligations.  The obligations of the Issuers’ set forth in
this Agreement are subject to the following condition:

                At
the Closing Time, the new senior secured credit agreement (as described in the
Offering Memorandum) shall have been executed on the terms as set forth in the
Offering Memorandum.  At the Closing
Time, the Acquisition (as defined in the Offering Memorandum) (expect for the
compensation portion thereof), shall have been consummated on the terms as set
forth in the Offering Memorandum.

SECTION 13.         Notices.  All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
mailed or transmitted by any standard form of telecommunication.  Notices to the Initial Purchasers shall be
directed to the Representatives, c/o Merrill Lynch, Pierce, Fenner & Smith
at 4 World Financial Center, New York, New York 10080, attention of Michael Barrish,
Robert Innocentin and David Kocon, notices to the Company shall be directed to
it at 14400 College Blvd., Ste. 201, Lenexa, KS 66215, attention of Troy Cook.

SECTION 14.         No
Advisory or Fiduciary Relationship. 
Each Issuer acknowledges and agrees that (a) the purchase and sale of
the Securities pursuant to this Agreement, including the determination of the
offering price of the Securities and any related discounts and commissions, is
an arm’s-length commercial transaction between the Issuers, on the one hand,
and the several Initial Purchasers, on the other hand, (b) in connection with
the offering contemplated hereby and the process leading to such transaction
each Initial Purchaser is and has been acting solely as a principal and is not
the agent or fiduciary of any Issuer, or its stockholders, creditors, employees
or any other party, (c) no Initial Purchaser has assumed or will assume an
advisory or fiduciary responsibility in favor of any Issuer with respect to the
offering contemplated hereby or the process leading thereto (irrespective of whether
such Initial Purchaser has advised or is currently advising any Issuer on other
matters) and no Initial Purchaser has any obligation to any Issuer with respect
to the offering contemplated hereby except the obligations expressly set forth
in this Agreement, (d) the Initial Purchasers and their respective affiliates
may be engaged in a broad range of transactions that involve interests that
differ from those of each of the Issuers, and (e) the Initial Purchasers have
not provided any legal, accounting, regulatory or tax advice with respect to
the offering contemplated hereby and the Issuers have consulted its own legal,
accounting, regulatory and tax advisors to the extent it deemed appropriate.

SECTION 15.         Integration.  This Agreement supersedes all prior
agreements and understandings (whether written or oral) between the Issuers (or
any of them) and the Initial Purchasers, or any of them, with respect to the
subject matter hereof.

SECTION 16.         Parties.  This Agreement shall inure to the benefit of
and be binding upon the Initial Purchasers and the Company and their respective
successors.  Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Initial Purchasers and the Company
and their respective successors and the controlling persons and officers and
directors referred to in Sections 7 and 8 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained.  This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive 

 

21

 

benefit
of the Initial Purchasers and the Company and their respective successors, and
said controlling persons and officers and directors and their heirs and legal
representative, and for the benefit of no other person, firm or
corporation.  No purchaser of Securities
from any Initial Purchaser shall be deemed to be a successor by reason merely
of such purchase.

SECTION 17.         GOVERNING
LAW.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

SECTION 18.         TIME.  TIME SHALL BE OF THE ESSENCE OF THIS
AGREEMENT.  EXCEPT AS OTHERWISE SET FORTH
HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.

SECTION 19.         Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.

SECTION 20.         Effect
of Headings.  The Section headings
herein are for convenience only and shall not affect the construction hereof.

 

22

 

If the foregoing is in
accordance with your understanding of our agreement, please sign and return to
the Company a counterpart hereof, whereupon this instrument, along with all
counterparts, will become a binding agreement between the Initial Purchasers
and the Company in accordance with its terms.

 

	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  NPC
  INTERNATIONAL, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Troy D. Cook

  
	
   

  	
   

  	
  Name:
  Troy D. Cook

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  NPC
  MANAGEMENT, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Troy D. Cook

  
	
   

  	
   

  	
  Name:
  Troy D. Cook

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  

 

 

23

 

CONFIRMED
AND ACCEPTED,
  as of the date first above written:

MERRILL LYNCH & CO.

MERRILL
LYNCH, PIERCE, FENNER & SMITH

INCORPORATED

J.P.
MORGAN SECURITIES INC.

By:  MERRILL LYNCH, PIERCE, FENNER &
SMITH

                               
INCORPORATED

 

	
  By:

  	
  /s/ Michael Barrish

  	
   

  
	
   

  	
  Name: Michael Barrish

  	
   

  
	
   

  	
  Title: Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:  J.P. MORGAN SECURITIES INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Stathis Karanikolaidis

  	
   

  
	
   

  	
  Name: Stathis
  Karanikolaidis

  	
   

  
	
   

  	
  Title: Vice President

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

For themselves and as
Representatives of the other Initial Purchasers named in Schedule A hereto.

 

24

 

SCHEDULE A

	
  Name of Initial Purchaser

  	
   

  	
  Principal 

  Amount of

  Securities

  	
   

  
	
  Merrill Lynch Pierce,
  Fenner & Smith Incorporated

  	
   

  	
  $

  	
  78,759,000.00

  	
   

  
	
  J.P. Morgan Securities
  Inc.

  	
   

  	
  78,750,000.00

  	
   

  
	
  Banc of America Securities
  LLC

  	
   

  	
  17,500,000.00

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
  $

  	
  175,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
						

 

Sch.
A-1

 

SCHEDULE B

NPC INTERNATIONAL, INC.

$175,000,000 91⁄2% Senior Subordinated Notes

1.             The initial public offering price of the Securities
shall be 100.0% of the principal amount thereof, plus accrued interest, if any,
from the date of issuance.

2.             The purchase price to be paid by the Initial Purchasers
for the Securities shall be 97.5% of the principal amount thereof.

3.             The interest rate on the Securities shall be 91⁄2% per annum.

4.             Optional Redemption:  The Securities are redeemable, in whole or in
part from time to time, on or after May 1, 2010 at the Company’s option at
certain redemption prices as set forth in the Indenture plus accrued and unpaid
interest to the date of redemption.

                On or before May 1, 2010, the Company may redeem the
Securities, in whole or in part, at a price equal to the principal amount
thereof plus a make-whole amount as set forth in the Indenture, plus accrued
and unpaid interest to the date of redemption.

                Until May 1, 2009, the Company may redeem up to 35%
of the aggregate principal amount of the Securities with the net proceeds of
certain equity offerings at 109.500% of the principal amount thereof, plus
accrued and unpaid interest to the date of redemption if at least 65% of the
originally issued principal amount of the Securities remains outstanding.

                Mandatory Redemption:  Upon the occurrence of a Change of Control
(as defined in the Indenture), the Company will be required to offer to
repurchase the Securities at a price equal to 101% of the principal amount,
plus accrued and unpaid interest to the date of repurchase.

 

Sch. B-1

 

SCHEDULE C

NPC Management, Inc.

 

Sch.
C-1

 

Exhibit A

PRICING SUPPLEMENT

PRICING SUPPLEMENT                                                                                                           STRICTLY
CONFIDENTIAL

$175,000,000

INTERNATIONAL

NPC International, Inc.

9.5%
Senior Subordinated Notes due 2014

April 25, 2006

Pricing
Supplement dated April 25, 2006 to the Preliminary Offering Memorandum dated
April 11, 2006, as supplemented by the Supplemental Information dated April 21,
2006.

This Pricing Supplement is qualified in its entirety by reference to
the Preliminary Offering Memorandum, as supplemented by the Supplemental
Information. Terms used but not defined in this Pricing Supplement have the
meanings ascribed to them in the Preliminary Offering Memorandum.

The information in this Pricing Supplement supplements the Preliminary
Offering Memorandum and supersedes the information in the Preliminary Offering
Memorandum to the extent inconsistent with the information in the Preliminary
Offering Memorandum.

The notes have not been registered under the Securities Act of 1933 and
are being offered only to (1) “qualified institutional buyers” as defined in
Rule 144A under the Securities Act and (2) outside the United States to
non-U.S. persons in compliance with Regulation S under the Securities Act.

 

	
  Issuer:

  	
   

  	
  NPC International, Inc.

  
	
  Principal
  Amount:

  	
   

  	
  $175,000,000

  
	
  Title
  of Securities:

  	
   

  	
  9.5% Senior
  Subordinated Notes due 2014

  
	
  Final
  Maturity Date:

  	
   

  	
  May 1, 2014

  
	
  Issue
  Price:

  	
   

  	
  100.000%, plus
  accrued interest, from May 3, 2006

  
	
  Coupon:

  	
   

  	
  9.5%

  
	
  Interest
  Payment Dates:

  	
   

  	
  May 1 and
  November 1

  
	
  Record
  Dates:

  	
   

  	
  April 15 and
  October 15

  
	
  First
  Interest Payment Date:

  	
   

  	
  November 1, 2006

  
	
  Optional
  Redemption:

  	
   

  	
  On and after May
  1, 2010, the Issuer may redeem the Notes, in whole or in part, upon not less
  than 30 nor more than 60 days’ prior notice mailed by first-class mail to
  each Holder’s registered address or otherwise delivered in accordance with
  the procedures of DTC, at the redemption prices (expressed as percentages of
  principal amount of the Notes to be redeemed) set forth

  

 

 

	
   

  	
   

  	
  below, plus accrued and
  unpaid interest thereon to the applicable date of redemption (the “Redemption
  Date”), subject to the right of Holders of record on the relevant record date
  to receive interest due on the relevant interest payment date, if redeemed
  during the twelve-month period beginning on May 1 of each of the years
  indicated below:

  

 

	
  Year

  	
   

  	
  Percentage

  	
   

  
	
  2010

  	
   

  	
  104.750

  	
  %

  
	
  2011

  	
   

  	
  102.375

  	
  %

  
	
  2012 and thereafter

  	
   

  	
  100.000

  	
  %

  

 

	
   

  	
   

  	
  At any time
  prior to May 1, 2010, the Issuer may redeem all or a part of the Notes, upon
  not less than 30 nor more than 60 days’ prior notice mailed by first-class
  mail to each Holder’s registered address or otherwise delivered in accordance
  with the procedures of DTC, at a redemption price equal to 100% of the
  principal amount of Notes redeemed plus the Applicable Premium as of, and
  accrued and unpaid interest, if any, to the Redemption Date, subject to the
  rights of Holders of record on the relevant record date to receive interest
  due on the relevant interest payment date.

  
	
   

  	
   

  	
  “Applicable
  Premium” means, with respect to any Note on any applicable Redemption Date,
  the greater of:

  
	
   

  	
   

  	
  (1) 1.0% of the
  principal amount of such Note; and

  
	
   

  	
   

  	
  (2) the excess, if any, of (a) the present value at
  such Redemption Date of (i) the redemption price of such Note at May 1, 2010
  (such redemption price being set forth in the table appearing above under the
  caption “Optional Redemption”), plus (ii) all required interest payments due
  on such Note through May 1, 2010 (excluding accrued but unpaid interest to
  the Redemption Date), computed using a discount rate equal to the Treasury
  Rate as of such Redemption Date plus 50 basis points; over (b) the principal
  amount of such Note.

  
	
   

  	
   

  	
  “Treasury Rate”
  means, as of any Redemption Date, the yield to maturity as of such Redemption
  Date of United States Treasury securities with a constant maturity (as
  compiled and published in the most recent Federal Reserve Statistical Release
  H.15 (519) that has become publicly available at least two Business Days
  prior to the Redemption Date (or, if such Statistical Release is no longer
  published, any publicly available source of similar market data)) most nearly
  equal to the period from the Redemption Date to May 1, 2010; provided,
  however, that if the period from the Redemption Date to May 1, 2010 is less
  than one year, the weekly average yield on actually traded United States
  Treasury securities adjusted to a constant maturity of one year will be used.

  
	
   

  	
   

  	
  Until May 1,
  2009, the Issuer may, at its option, redeem up to 35% of the aggregate
  principal amount of Notes issued by it at a redemption price equal to
  109.500% of the aggregate principal amount thereof, plus accrued and unpaid
  interest thereon to the applicable Redemption Date, subject to the right of
  Holders of Notes of record on the relevant record date to receive interest
  due on the relevant interest payment date, with the net cash proceeds

  

 

2

 

	
   

  	
   

  	
  of one or more Equity
  Offerings; provided that at
  least 65% of the aggregate principal amount of Notes originally issued under
  the Indenture remain outstanding immediately after the occurrence of each
  such redemption; and provided, further, that
  each such redemption occurs within 90 days of the date of closing of each
  such Equity Offering.

  
	
  Trade
  Date:

  	
   

  	
  April 25, 2006

  
	
  

  Settlement Date:

  	
   

  	
  May 3, 2006
  (T+6)

  
	
   

  	
   

  	
   

  
	
  Use
  of Proceeds:

  	
   

  	
  We will use the
  proceeds of this offering to partially fund the Transactions and to pay
  related fees and expenses. The net proceeds from this offering and borrowings
  under our new senior secured credit facility will be advanced to a subsidiary
  of NPC Holdings to partially pay the purchase price of the Acquisition,
  subsequent to which such subsidiary will be merged with and into us.

  
	
   

  	
   

  	
   

  
	
  Guarantor:

  	
   

  	
  The Preliminary
  Offering Memorandum stated that the new senior secured credit facility and
  the Notes will be guaranteed by each of our subsidiaries. One of our
  subsidiaries, NPC Bar Management Corporation, will not be a guarantor of
  either the new senior secured credit facility or of the Notes. The only
  guarantor of the Notes will be NPC Management, Inc.

  
	
   

  	
   

  	
   

  
	
  New
  Senior Secured Credit Facility:

  	
   

  	
  The Preliminary
  Offering Memorandum disclosed that the term loan under the new senior secured
  credit facility would be $275,000,000. Such term loan is now expected to be
  $300,000,000. The aggregate principal amount of Notes that is being offered
  has been reduced to $175,000,000. Consequently, the total indebtedness to be
  incurred in connection with the Transactions has not changed, but the
  aggregate principal amount of senior secured indebtedness, to which the Notes
  will be subordinated, has increased by $25,000,000.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  In addition, the
  pricing on the term loan will be decreased 50 bps from LIBOR, plus an
  applicable margin of 2.25%, to LIBOR, plus an applicable margin of 1.75%.

  
	
   

  	
   

  	
   

  
	
  Description
  of the Notes— Certain
  Covenants:

  	
   

  	
  In clause (1) of
  the second paragraph under the heading “Description of the Notes—Certain
  Covenants—Limitation on Incurrence of Indebtedness and Issuance of
  Disqualified Stock and Preferred Stock” (on page 100 of the Preliminary
  Offering Memorandum), the $450.0 million amount set forth in the Preliminary
  Offering Memorandum is increased to $475.0 million.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  The last
  paragraph under the heading “Description of the Notes—Certain
  Covenants—Merger, Consolidation or Sale of All or Substantially All Assets”
  (on page 106 of the Preliminary Offering Memorandum) is amended to read as
  follows (insertions are underlined):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Subject to
  certain limitations described in the Indenture, the Successor Person will
  succeed to, and be substituted for, such Guarantor under the Indenture and
  such Guarantor’s Guarantee. Notwithstanding the foregoing, any Guarantor may
  merge into or transfer all or part of its properties and assets to another
  Guarantor or the Issuer. This covenant will not apply to any merger
  effected in connection with the Acquisition Transactions.

  

 

3

 

	
   

  	
   

  	
  The definition of “Acquisition Transactions” under the heading “Description
  of the Notes—Certain Definitions” (on page 117 of the Preliminary Offering
  Memorandum) is amended to read as follows (insertions are underlined):

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Acquisition Transactions” means the transactions
  contemplated by the Transaction Agreement or to effect the transactions
  contemplated thereby, the issuance of the Notes, borrowings under the
  Senior Credit Facilities as in effect on the Issue Date and equity
  investments by members of the Issuer’s management in NPC Acquisition
  Holdings, LLC.

  
	
   

  	
   

  	
   

  
	
  Recent
  Developments:

  	
   

  	
  The following
  information represents our preliminary operating results for the thirteen
  weeks ended March 28, 2006. For the thirteen weeks ended March 28, 2006, we
  had net sales of $158.5 million compared to net sales of $156.0 for the
  thirteen weeks ended March 29, 2005. For the thirteen weeks ended 

  March 28, 2006, we had EBITDA of $26.9 million (which excludes $0.6 million
  in professional fees associated with the Acquisition) compared to EBITDA of
  $24.3 million for the thirteen weeks ended March 29, 2005. We also had
  Adjusted EBITDA (as defined below) of $27.5 million for the thirteen weeks
  ended March 28, 2006. Our same store sales growth for thirteen weeks ended
  March 28, 2006 was 2.1% compared to same store sales growth of 5.8% for the
  thirteen weeks ended March 29, 2005.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Adjusted EBITDA
  is defined as EBITDA for the thirteen weeks ended 

  March 28, 2006, on a pro forma basis after giving effect to the Transactions,
  further adjusted to exclude former stockholder expenses and the recognition
  of net executive deferred compensation expense with respect to a plan that
  will be terminated in connection with the Transactions.

  

 

ANY DISCLAIMERS OR OTHER NOTICES THAT MAY APPEAR BELOW ARE NOT
APPLICABLE TO THIS COMMUNICATION AND SHOULD BE DISREGARDED. SUCH DISCLAIMERS OR
OTHER NOTICES WERE AUTOMATICALLY GENERATED AS A RESULT OF THIS COMMUNICATION
BEING SENT VIA BLOOMBERG OR ANOTHER EMAIL SYSTEM.

 

4

 

Exhibit B

FORM
OF OPINION OF SHERMAN & STERLING LLP

(a)                The execution and delivery by each Issuer of each
Opinion Document to which it is a party do not, and the performance by each
Issuer of its obligations thereunder will not, (a) result in a violation of
Generally Applicable Law or (b) result in a breach of, a default under or the
acceleration of (or entitle any party to accelerate) the maturity of any
obligation of any Issuer under, or result in or require the creation of any
lien upon or security interest in any property of any Issuer pursuant to the
terms of, any agreement or document listed in the Schedule B.

(b)               No authorization, approval or other action by, and no
notice to or filing with, any United States federal or New York governmental
authority or regulatory body, is required for the due execution, delivery or
performance by each Issuer of any Opinion Document to which it is a party,
except as may be required under the Securities Act of 1933, as amended (the “Securities
Act”), and the Trust Indenture Act of 1939, as amended (the “Trust
Indenture Act”), in connection with the registration statement described in
the Disclosure Package and the Final Offering Memorandum and contemplated by
the Registration Rights Agreement and as may be required under the securities
or blue sky laws of any jurisdiction in the United States in connection with
the offer and sale of the Notes.

(c)                The Purchase Agreement has been duly executed and
delivered by the Company.

(d)               The Registration Rights Agreement has been duly
executed and delivered and is the legal, valid and binding obligation of each
Issuer, enforceable against each Issuer in accordance with its terms.

(e)                The Indenture has been duly executed and delivered
and is the legal, valid and binding obligation of each Issuer, enforceable
against each Issuer in accordance with its terms.

(f)                The Notes have
been duly executed by the Company and, when authenticated by the Trustee in
accordance with the Indenture and delivered and paid for as provided in the
Purchase Agreement, the Notes will be the legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their terms
and entitled to the benefits of the Indenture.

(g)               The Company is not required to register as an
investment company under the Investment Company Act of 1940, as amended (the “Investment
Company Act”).

(h)               Based upon the representations, warranties and
agreements of the Issuers and you in the Purchase Agreement and assuming
compliance with the offering and transfer procedures and restrictions described
in the Disclosure Package and the Final Offering Memorandum, it is not
necessary in connection with the offer and sale of the Notes to you under the
Purchase Agreement or in connection with the initial resale of such Notes by
you in the manner contemplated by the Purchase Agreement to register the Notes
under the Securities Act or to qualify the Indenture under the Trust Indenture
Act, it being understood that no opinion is expressed as to any subsequent
resale of any Notes.

 

 

(i)                 The statements in the Disclosure Package and the
Final Offering Memorandum under the caption “The Transactions—The Acquisition”,
“The Transactions—New Senior Secured Credit Agreement”, “Description of the New
Senior Secured Credit Agreement”, “Description of the Notes” and “Exchange
Offer; Registration Rights”, in each case, insofar as such statements
constitute summaries of documents referred to therein, fairly summarize in all
material respects the documents referred to therein. The statements in the
Disclosure Package and the Final Offering Memorandum under the caption “Certain
Material U.S. Federal Income Tax Considerations for Non-U.S. Holders” insofar
as such statements constitute summaries of legal matters referred to therein,
fairly summarize in all material respects the legal matters referred to
therein.

 

 

Exhibit C

FORM
OF OPINION OF STINSON MORRISON HECKLER LLP

(a)                The Company is a corporation duly incorporated,
validly existing and in good standing under the law of the State of Kansas with
corporate power and authority under such law to conduct its business as
described in the Disclosure Package and the Final Offering Memorandum.

(b)               The Company (i) has the corporate power to execute,
deliver and perform each of the Purchase Agreement, the Indenture, the
Registration Rights Agreement, and the Notes (collectively the “Opinion
Documents”) to which it is a party and (ii) has taken all corporate action
necessary to authorize the execution, delivery and performance of each Opinion
Document to which it is a party.

(c)                The execution and delivery by the Company of each of
the Opinion Documents to which it is a party and its agreement to perform its obligations
thereunder do not (i) result in a violation of the Company’s Articles or
By-Laws or (ii) result in a violation of the law of the State of Kansas.

(d)               The Purchase Agreement has been duly executed and
delivered by the Company.

(e)                The Registration Rights Agreement has been duly
executed and delivered by the Company.

(f)                The Indenture has been duly
executed and delivered by the Company.

(g)               The Notes have been duly executed and delivered by the
Company.

 

 

Exhibit D

FORM
OF OPINION OF RICHARDS, LAYTON & FINGER P.A.

(a)                The Guarantor has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware with the corporate power and authority under such law to conduct
its business as described in the Disclosure Package and the Final Offering
Memorandum.

(b)               The Guarantor (a) has the corporate power and
authority to execute and deliver and to perform it obligations under the
Opinion Documents and (b) has taken all action necessary to authorize the execution,
delivery and performance of each Opinion Document.

(c)                The execution and delivery of each Opinion Document
by the Guarantor do not, and the performance by the Guarantor of its
obligations thereunder will not, (a) result in a violation of the Certificate
of Incorporation or the Bylaws or (b) result in a violation of the laws of the
State of Delaware.

(d)               The Purchase Agreement has been duly executed and
delivered by the Guarantor.

(e)                The Rights Agreement has been duly executed and
delivered by the Guarantor.

(f)                The Indenture has been duly
executed and delivered by the Guarantor.Exhibit 10.13

STANDARD FORM

 

ASSET
SALE AGREEMENT 

WITH FEE INTEREST

By and
Between

NPC
MANAGEMENT, INC., AND 

NPC INTERNATIONAL, INC.

and

 PIZZA HUT OF AMERICA, INC.

and

PIZZA
HUT, INC.

Dated as
of August 24, 2006

 

 

 

TABLE OF
CONTENTS

 

	
  1. TRANSFER OF BUSINESS AND
  PROPERTY

  	
  1

  
	
  1.1

  	
  TANGIBLE PERSONAL PROPERTY

  	
  1

  
	
  1.2

  	
  EXCLUDED PROPERTY

  	
  2

  
	
  1.3

  	
  REAL PROPERTY

  	
  4

  
	
  1.4

  	
  LICENSES

  	
  5

  
	
  1.5

  	
  RESTAURANT INVENTORIES AND CHANGE FUNDS

  	
  6

  
	
  1.6

  	
  PURCHASE PRICE AND OTHER PAYMENTS

  	
  6

  
	
  1.7

  	
  CLOSING DOCUMENTS

  	
  7

  
	
  1.8

  	
  NON-ASSUMPTION

  	
  9

  
	
  1.9

  	
  TITLE INSURANCE AND SURVEYS

  	
  9

  
	
  1.10

  	
  REQUIRED CONTRACTS

  	
  9

  
	
  2. REPRESENTATIONS OF SELLER

  	
  11

  
	
  2.1

  	
  CORPORATE POWER AND AUTHORITY

  	
  11

  
	
  2.2

  	
  NO CONFLICT OR BREACH

  	
  11

  
	
  2.3

  	
  CONSENTS 

  	
  12

  
	
  2.4

  	
  TITLE TO OWNED PROPERTY

  	
  12

  
	
  2.5

  	
  ADEQUACY OF PERSONAL PROPERTY

  	
  13

  
	
  2.6

  	
  LEASES

  	
  13

  
	
  2.7

  	
  INSURANCE

  	
  13

  
	
  2.8

  	
  TAXES 

  	
  13

  
	
  2.9

  	
  BROKERAGE AND FINDER’S FEES

  	
  14

  
	
  2.10

  	
  ABSENCE OF CERTAIN CHANGES

  	
  14

  
	
  2.11

  	
  ENVIRONMENTAL MATTERS

  	
  14

  
	
  3. REPRESENTATIONS OF THE BUYER

  	
  15

  
	
  3.1

  	
  ORGANIZATION, STANDING, POWER AND AUTHORITY

  	
  15

  
	
  3.2

  	
  NO CONFLICT OR BREACH

  	
  15

  
	
  3.3

  	
  CONSENTS

  	
  16

  
	
  3.4

  	
  BROKERAGE AND FINDER’S FEES

  	
  16

  
	
  3.5

  	
  OBLIGATIONS UNDER OTHER FRANCHISE AGREEMENTS

  	
  17

  
	
  3.6

  	
  SUPPLEMENTAL OPERATIONAL AND FINANCIAL CONDITIONS

  	
  17

  
	
  4. COVENANTS

  	
  17

  
	
  4.1

  	
  OPERATION UNTIL CLOSING

  	
  17

  
	
  4.2

  	
  ACCESS TO RESTAURANTS AND EMPLOYEES

  	
  18

  
	
  4.3

  	
  HART-SCOTT-RODINO ACT 

  	
  18

  
	
  4.4

  	
  FINANCING OF PURCHASE PRICE 

  	
  19

  
	
  4.5

  	
  RECORDATION

  	
  20

  
	
  4.6

  	
  CAPITAL EXPENDITURES

  	
  20

  
	
  5. SELLER’ EMPLOYEES

  	
  20

  
	
  6. CONDITIONS TO CLOSING

  	
  21

  
	
  7. CLOSING

  	
  23

  
	
  7.1

  	
  POST-CLOSING ADJUSTMENTS 

  	
  23

  
	
  7.2

  	
  POST-CLOSING INDEMNIFICATION

  	
  24

  
	
  7.3

  	
  CRITICAL DEFICIENCIES

  	
  24

  
	
  7.4

  	
  ADDITIONAL DOCUMENTS

  	
  25

  
	
  7.5

  	
  THE BUYER’S ACKNOWLEDGMENT

  	
  25

  
	
  7.6

  	
  INFORMATION STATEMENT

  	
  25

  
				

 

 

	
  7.7

  	
  CLOSING COSTS,TRANSFER FEES AND EXPENSES

  	
  25

  
	
  8. MISCELLANEOUS

  	
  26

  
	
  8.1

  	
  NOTICES

  	
  26

  
	
  8.2

  	
  SURVIVAL

  	
  27

  
	
  8.3

  	
  TERMINATION OF AGREEMENT

  	
  27

  
	
  8.4

  	
  MODIFICATION AND WAIVER

  	
  27

  
	
  8.5

  	
  ASSIGNMENT: BINDING EFFECT

  	
  27

  
	
  8.6

  	
  SEVERABILITY

  	
  28

  
	
  8.7

  	
  ENTIRE AGREEMENT

  	
  28

  
	
  8.8

  	
  CONFIDENTIAL INFORMATION

  	
  28

  
	
  8.9

  	
  GOVERNING LAW

  	
  28

  
	
  8.10

  	
  BULK SALES WAIVER

  	
  29

  
	
  8.11

  	
  EXPENSES

  	
  29

  
	
  8.12

  	
  HEADINGS; INTERPRETATION

  	
  29

  
	
  8.13

  	
  TIME IS OF THE ESSENCE

  	
  30

  
	
  8.14

  	
  ANNOUNCEMENTS

  	
  30

  
	
  8.15

  	
  COUNTERPARTS

  	
  30

  
	
  8.16

  	
  NO SPECIFIC ENFORCEMENT

  	
  31

  
	
  8.17

  	
  SUBMISSION TO JURISDICTION

  	
  31

  
	
  8.18

  	
  ARMS LENGTH CONTRACT

  	
  31

  
	
  8.19

  	
  NO FUTURE ACQUISITION RIGHTS

  	
  31

  

 

 

ASSET SALE AGREEMENT

WITH FEE INTEREST

ASSET SALE AGREEMENT, dated as of August 24, 2006
(this “Agreement”), is by and among Pizza Hut of America, Inc. (the “Seller”), and NPC Management, Inc.
and NPC International, Inc., (collectively, the “Buyer”), and Pizza Hut, Inc. (“PHI”).

WITNESSETH:

WHEREAS, the Seller operates
the 39 Pizza Hut and/or Pizza Hut/WingStreet co-branded restaurants listed on Schedule
1.1 hereto and owns or leases certain real and personal property that it
uses in connection with such restaurants; and

WHEREAS, the Seller desires
(i) to sell, convey, assign, transfer or lease (as provided below) to the Buyer
the operations of and substantially all of the real and personal property (the “Assets”)
owned by the Seller and used in connection with such restaurants and (ii) to
assign or sublease to the Buyer substantially all of the real property leased
from third parties and used in connection with such restaurants, and the Buyer
desires to acquire such restaurants and property “AS IS, WHERE IS”, with all
faults (collectively, the “Acquisition”), on the terms and subject to the
conditions set forth in this Agreement;

NOW THEREFORE, in
consideration of the premises and of the mutual covenants of the parties set
forth in this Agreement, the Seller and the Buyer hereby agree as follows:

1.        Transfer of
Business and Property.

1.1      Tangible
Personal Property.

Subject to the terms of this
Agreement, at the Closing (as such term is defined in Section 7), Seller shall
sell, convey, assign, transfer and deliver to the Buyer, and the Buyer shall
purchase and acquire from Seller, all of Seller’s right, title and interest in
and to the following types of tangible personal property (collectively, the “Personal
Property”) relating to the Pizza Hut and/or Pizza Hut/WingStreet co-branded
restaurant business (the “Business”) being conducted at the restaurants listed
on Schedule 1.1 hereto (collectively, the “Restaurants”) that are
operated by Seller:

(a) all furniture, signs,
fixtures and equipment located in the Restaurants;

(b) all prepaid rents,
advertising and other amounts and all utility and miscellaneous deposits
relating to the Restaurants (subject to Sections 1.6 and 7.1);

(c) all uniforms, menus,
dishes, glassware, utensils and other small wares located in the Restaurants;

 

1

 

(d)       all inventories of usable food ingredients, packaging
materials, supplies, paper products and other consumables and stores in the
Restaurants, as well as a change fund for each Restaurant consisting of cash in
drawers and in safes located in such Restaurant (but excluding any deposits in
safes located in such Restaurant and any amounts in local bank accounts) in an
amount and in denominations adequate to do business at such Restaurant on the
morning after the Closing Date (as such term is defined in Section 7) (subject
to Sections 1.6 and 7.1);

(e)       copies of real property records relating solely to the
operations of the Restaurants, and copies of certain personnel and payroll
records relating solely to the Hired Employees (as such term is defined in
Section 5) who worked in the Restaurants immediately prior to the Closing; and

(f)        buildings and improvements, if any, owned by the Seller.

1.2      Excluded Property.

It is expressly understood
and agreed that:

(a)       Leased
Equipment.

The Personal Property shall
not include the equipment listed or described on Schedule 1.2, which is
leased by the Seller pursuant to lease agreements with third parties.
Notwithstanding the foregoing, the Seller will assign and transfer to the Buyer
all of Seller’s right, title and interest in and to, and the Buyer will assume
and will agree to faithfully perform, pay and discharge when due all of the
terms, covenants, liabilities and obligations of Seller under, each equipment
lease (collectively, the “Equipment Leases”) with respect to leased equipment
located in the Restaurants (collectively, the “Leased Equipment”). The Buyer
will have 90 days after the Closing Date to review any non-readily terminable
Equipment Leases which the Seller may assign and transfer, and the Seller
agrees to assume and may terminate those Equipment Leases rejected by the Buyer
in writing within such 90 day period. Notwithstanding the foregoing, the Buyer agrees
to perform the obligations arising under the Equipment Leases for at least 90
days following the Closing Date, if not terminable sooner, and for the entire
term of the Equipment Leases if such Equipment Leases are not terminated or put
back to the Seller within the allotted 90 days.

(b)       Contracts.

The Seller will assign and
transfer to the Buyer all of Seller’s right, title and interest in and to, and
the Buyer will assume and will agree to faithfully perform, pay and discharge
when due all of the terms, covenants, liabilities and obligations of Seller
under, each contract and agreement (including, without limitation, each
service, security, maintenance, print advertising and supply contract) used on
the Closing Date in the normal and customary operations of, and that relates
specifically to, one or more of the Restaurants (collectively, the “Contracts”).
Except as provided in

 

2

 

Section 1.10, below, during
the first 90 days after the Closing Date, the Buyer may reject any non-readily
terminable contracts (other than print advertising contracts) which the Seller
has assigned and transferred and the Seller agrees to assume and may terminate
those Contracts rejected by the Buyer in writing within such 90 day period.
Notwithstanding the foregoing, the Buyer agrees to perform the obligations
arising under all of the Contracts for at least 90 days following the Closing
Date, if not terminable sooner, and for the entire term of the Contracts if
such Contracts are not terminated or put back to the Seller within the allotted
90 days. Additionally, the Buyer agrees that it will pay for or reimburse the
Seller for any non-terminable benefits flowing from the Contracts (including
print advertising) that are received by the Restaurants or the Business after
the Closing Date for which PHI and/or the Seller have previously paid or will
pay, regardless of the date of assignment or termination of such Contracts. The
Contracts shall not include, and Seller will not assign, any contracts with
hotels or motels for in-room delivery service of Pizza Hut or WingStreet
products, any contracts for credit card services involving one or more of the
Restaurants, any contracts with respect to participation in the National School
Lunch Program, automobile leases, and any other contracts (other than print
advertising contracts and computer hardware maintenance contracts) that are
covered by a master agreement which includes any Pizza Hut and/or Pizza
Hut/WingStreet co-branded restaurant other than the Restaurants listed on Schedule
1.1. All such contracts as related to the Restaurants will be terminated at
Closing by Seller. Notwithstanding the foregoing, the Buyer may seek to
contract with hotels, motels and school food service programs within the
delivery areas, if any, designated in the Franchise Agreement (as defined at
Section 1.10 (a)).

(c)       Ordinary
Course Dispositions.

The Personal Property
relating to any individual Restaurant shall not include any property or assets
which have been disposed of prior to the Closing in the ordinary course of
business consistent with the past operations of such Restaurant and subject to
the provisions of Section 4.1.

(d)       Intellectual
Property.

The Personal Property shall
not include any patents, trademarks, copyrights, any applications or
registrations for any thereof, or any other intellectual property or similar
rights or assets.

(e)       Cash, Etc.

The Personal Property shall
not include any cash (other than the change funds specifically referred to in
Sections l.l(d)), bank accounts, cash equivalents or other similar types of
investments or marketable securities.

 

3

 

1.3      Real
Property.

(a)       Owned Real
Property.

The Seller owns the parcels
of real estate listed or described on Schedule 1.3(a) hereto, together with all buildings and
improvements located thereon (collectively, the “Owned Real Property”). At
Closing, the Seller will convey the Owned Real Property to the Buyer by special
warranty deed in the form attached hereto as Exhibit “L” (the “Special
Warranty Deed”). The Buyer will acquire the Owned Real Property “AS IS, WHERE
IS”. If a separate entity is formed to acquire the Owned Real Property, such
entity will not charge the Buyer lease amounts in excess of market rates and,
in any event, lease amounts will not exceed 6% of Gross Sales, as defined in
the Franchise Agreement. The Buyer’s right to acquire the Owned Real Property
is subject to and conditioned upon the Buyer’s consummation of the Acquisition.

(b)       Leased Real
Property.

The Seller leases from third
parties the parcels of real estate listed or described on Schedule 1.3(b)
(collectively, the “Leased Real Property”) pursuant to existing real property
leases (the “Real Property Leases”). The Buyer hereby agrees to execute an
Assignment and Assumption of Lease Agreement and Blanket Guaranty,
substantially in the form attached as Exhibit “I” hereto, with respect
to each parcel of Leased Real Property, pursuant to which the Buyer will assume
all of Seller’s right, title and interest in and to, and will agree to
faithfully perform, pay and discharge when due all of the terms, covenants,
liabilities and obligations of the Seller under, the Real Property Lease
related to such parcel of the Leased Real Property. The Buyer also agrees to
name the Seller as an additional insured with respect to its insurance coverage
required to be carried under the terms of the Real Property Leases related to
each Leased Real Property to indemnify the Seller from any losses resulting
from any contingent liability that Seller may have with respect to the Leased
Real Property. The Seller agrees to use reasonable, good-faith efforts to
obtain:

(i)        from each landlord from whom consent to an assignment of a
Real Property Lease to the Buyer is required, a consent to such assignment; and

(ii)       from each landlord, an estoppel certificate with respect to
each Real Property Lease.

The Seller need not pay any
consideration or incur any incremental liability to obtain either a consent or
an estoppel certificate from any landlord. If any required consent to an
assignment cannot be obtained prior to Closing, the Seller  may, at its option, either (i) proceed with
the assignment and agree to indemnify the Buyer for any losses suffered by
Buyer as a consequence of the lack of consent, or (ii) sublease the affected
Leased Real Property to the Buyer, or (iii) enter into a management agreement
or other similar arrangement with the Buyer on terms that are no less

 

4

 

favorable to the Buyer than
those contained in the Real Property Lease covering the affected Leased Real
Property.

1.4      Licenses.

(a)       The Buyer acknowledges that certain operational licenses  and permits, excluding alcoholic beverage
licenses, are required in the operation of the Restaurants and the Business
(collectively, “Licenses”) and that neither such Licenses nor any alcoholic
beverage licenses will be transferred or assigned by the Seller as part of the
Acquisition.  The Buyer further acknowledges,
that in the event FCC licenses are used in the operation of the Restaurants,
said licenses will not be transferred to the Buyer and the Buyer will be
responsible for obtaining its own FCC licenses. The Buyer recognizes that it
must make application to the appropriate regulatory agencies for all necessary
Licenses.   Application for all required
Licenses shall be in accordance with Section 1.4(b). Upon the execution of this
Agreement by all parties hereto, the Buyer agrees to promptly file all necessary
applications.  The Buyer acknowledges
that the Buyer is responsible for obtaining alcoholic beverage licenses in the
event Buyer desires to sell alcoholic beverages in the Restaurants. All costs,
fees and expenses associated with the Buyer obtaining new Licenses (including
alcoholic beverage licenses) shall be borne by the Buyer.

(b)       The Buyer hereby agrees that neither it nor any of its
Affiliates (as defined in Section 8.12(e)) will take any action, or fail to
take any action, which would result in any of the Seller’s Licenses (including
alcoholic beverage licenses) being revoked or otherwise terminated prior to
Closing.   The Buyer’s applications for
Licenses (including alcoholic beverage licenses) shall specify that such
Licenses are not to become effective until the day following the Closing Date
and that the approval of such applications by the applicable agency or
authority shall be conditioned upon the event of Closing. In the event that
this Agreement is terminated or abandoned prior to the Closing or the Closing
Date is rescheduled, the Buyer hereby agrees, at its cost, to immediately
withdraw or reschedule all pending applications with respect to all Licenses
(including alcoholic beverage licenses) and to otherwise take all action, in
cooperation with the Seller, as may be required to cause all rights in the
applicable Licenses (including alcoholic beverage licenses) to remain with or
return to the Seller. This Section 1.4(b) shall expressly and permanently
survive the termination or abandonment of this Agreement.

(c)       The Buyer and Seller acknowledge that neither this Agreement
nor the Closing will be conditioned upon or subject to the Buyer’s ability to
obtain the Licenses (including alcoholic beverage licenses).  The Seller will remove all of its Licenses
(including alcoholic beverage licenses) from the Restaurants on the Closing
Date.

(d)       The Seller agrees to provide the Buyer with license screen
summaries of the Licenses (to the knowledge of Seller) under which the Seller
currently operates the

 

5

 

Restaurants, excluding any
and all construction, building, zoning and occupancy permits.

1.5      Restaurant
Inventories and Change Funds.

At the close of business on
the Closing Date, Seller’s representatives (who may, at the Buyer’s election,
be accompanied by the Buyer’s representatives) will take inventory of the food
ingredients, supplies, paper products, and other consumables in each Restaurant
and count each Restaurant’s change fund. The Buyer may, at its option, send its
representatives to the Restaurants to accompany Seller’s representatives during
these inventory/cash counts, and may then verify the accuracy of those
inventory/cash counts. Unless the Buyer’s representatives accompany Seller’s
representatives during these inventory/cash counts and point out any
discrepancies during the inventory/cash counts, the inventory/cash counts
prepared by Seller’s representatives will be final. Any differences between the
actual inventories and change funds and the estimates described in Section 1.6
will be resolved pursuant to Section 7.1.

1.6      Purchase
Price and Other Payments.

As consideration for the
transfer of the Assets and the other undertakings of the Seller and PHI in this
Agreement, the Buyer shall pay the following amounts to the parties and at the
times noted:

(a)       Exclusivity
Fee.

Upon execution of this
Agreement, the Buyer shall pay to the Seller the sum of $577,000 (the “Exclusivity
Fee”). The Exclusivity Fee will be equal to at least 2% of the total agreed
price for the Assets (“Purchase Price”). If the Acquisition is not closed by
October 30, 2006, for any reason other than force majeure, failure of the
Seller to obtain CAPEX Committee approval or other circumstances solely within
Seller’s control, this Agreement will terminate as provided in Section 8.3 and
the Seller shall be entitled to keep the entire Exclusivity Fee as liquidated
damages.

(b)       Purchase Price Balance.

At Closing, the Buyer shall
pay to the Seller the sum of $28,470,000, representing the balance of the
Purchase Price.

(c)       Estimated Charges.

At Closing, the Buyer shall
pay to the Seller, as provided in Section 7.7, the sum of $915,477.05,
representing an estimate of the net amount due to Seller, after prorations, for
Development Fees, prepaid items (including rent and advertising), inventories,
utilities, change funds, property taxes, title, surveys and similar costs
chargeable to Buyer under this Agreement (“Estimated Charges”). An itemization
of

 

6

 

the Estimated Charges is
reflected in the form attached hereto as Exhibit “O” (“Pre-Close
Statement”). Any difference between the Estimated Charges paid at Closing and
the actual costs that should have been paid by Buyer will be resolved after the
Closing pursuant to section 7.1.

(d)       Other Taxes
and Fees.

At Closing, or when otherwise
due, as provided in Section 7.7, the Buyer shall pay to the Seller, or to the
appropriate governmental authority, any and all applicable sales, use, excise,
transfer, documentary, and recording fees and taxes, and all other fees and
taxes arising from the Acquisition (other than Seller’s income taxes) that any
party hereto may be required to pay by any applicable law, rule or regulation.
To the extent any such fees or taxes are payable by Seller, they will be
included in the Estimated Charges.

(e)       Development
Fees.

If, as a part of this
Acquisition, PHI is requiring development of new Pizza Hut/WingStreet
restaurants and/or the addition of WingStreet outlets at any of the
Restaurants, Buyer shall pay to Seller who will remit to PHI at Closing, the
Development Fees required by the Development Agreement(s) (as defined in the
Development Agreements attached as Exhibits “N” and “P”), in the
amounts set forth in Exhibits “N-l” and “P-l” attached hereto.

(f)        Other
Amounts.

At Closing, or when otherwise
due, the Buyer shall pay to the Seller, or to the appropriate payee, any other
amounts due under this Agreement or any other agreement contemplated hereby.

The Purchase Price balance
and all other amounts payable by the Buyer to Seller at Closing shall be paid
by wire transfer of immediately available funds to an account designated by
Seller. All such amounts must be wired to Seller by no later than 12:01 p.m. on
the Closing Date. The Purchase Price includes the initial franchise fees
required by the Franchise Agreement (as defined in Section 1.10(a)), which
initial fees will be collected by Seller and remitted to PHI. The Purchase
Price does not include any other fees due under the Franchise Agreement.

1.7      Closing
Documents.

Prior to or at the Closing of
the Acquisition, the Seller, PHI, and the Buyer will exchange the following
fully executed documents:

(a)       a Bill of Sale for the Assets in the form attached as Exhibit
“A”;

(b)       the Franchise Agreement in the form attached as Exhibit “B”;

 

7

 

(c)       the SUS/FMS License and Support Agreement attached as Exhibit
“C”;

(d)       the Pepsi-Cola Beverage Supply and Marketing Agreement in the
form attached as Exhibit “D”;

(e)       the Subscriber Agreement for 2-way Satellite Services and
Equipment Lease Agreement for Yum Franchisee attached as Exhibit “E”;

(f)        the Franchise Agreement and Mutual Indemnification for
Participation in Online Ordering attached as Exhibit “F”;

(g)       the Quik Order Agreement attached as Exhibit “G”;

(h)       the VIP Program Agreement attached as Exhibit “H”;

(i)        Assignment and Assumption Agreement for the Real Property
Leases and Blanket Guaranty in the form of Exhibit “I” hereto, accompanied
by any required consents and estoppel certificates (or indemnities) as
contemplated by Section 1.3(b);

(j)        Assignment and Assumption Agreement for the Equipment Leases
and Contracts being assumed in the form of Exhibit “J” hereto;

(k)       the Access and Confidentiality Agreement in the form attached
as Exhibit “K”;

(l)        Special Warranty Deeds covering the Owned Real Property in
the form of Exhibit “L”;

(m)      the Franchisee Agreement for Participation in Mapping of
Restaurant Delivery Areas in the form of Exhibit “M” hereto;

(n)       one or more Development Agreement(s) attached as Exhibit “N”
in the event PHI is requiring development of new Pizza Hut/WingStreet
restaurants and/or the Development Agreement attached as Exhibit “P” if
PHI is requiring the addition of WingStreet outlets in any of the Restaurants;

(o)       all documents necessary for Buyer to become a member of the
Pizza Hut National Purchasing Coop, Inc.;

(p)       the WingStreet Addendum to Pizza Hut, Inc. Franchise Agreement
attached as Exhibit “Q”; and

(q)       any other documents reasonably requested by any party.

 

8

 

1.8      Non-Assumption.

At the Closing, the Buyer
shall assume the liabilities of PHI and the Seller that relate to the operation
of the Restaurants from and after the Closing Date (the “Assumed Liabilities”).
Except as specifically contemplated by this Agreement, the Buyer will not
assume any liabilities or obligations that arise from the operations of the
Restaurants on or before the Closing Date, and the Seller agrees 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.

1.9      Title
Insurance and Surveys.

Due to the critical timeline
requirements to close the transaction, PHI may order title searches on all
Owned Real Property to be transferred to the Buyer pursuant to this Agreement.
These title searches will be performed by a national title company approved by
PHI. If PHI has established relations with such companies, the Buyer will be
entitled to the benefit of PHI’s preferred rates. If permissible under
applicable law and the terms of any agreement with such companies, the fees
paid for the searches may be applied toward the title policy costs for title
policies desired by the Buyer based upon these title searches. In the event the
Buyer or the Buyer’s lender requires environmental reports relating to the
Owned Real Property, the Buyer shall first obtain Seller’s prior written
consent and shall execute the Access and Confidentiality Agreement referenced
in Section 4.2 below, and shall retain a nationally recognized firm approved by
PHI to perform such work. Seller will not consent to any invasive environmental
audit or review and the results of any permitted environmental audit or review
will not affect Buyer’s obligations hereunder. To the extent that the Buyer or
the Buyer’s lender requires surveys of the Owned Real Property, the Buyer shall
retain a nationally recognized firm approved by PHI to perform such work. The
consultants referenced in this Section 1.9 will be retained solely by the
Buyer, but the Seller shall have the right to obtain copies of any documents or
reports that they prepare. As provided for in Sections 1.6 and 7.7, the Buyer
shall reimburse the Seller at Closing for all actual or estimated costs
incurred by Seller on behalf of the Buyer related to these items, subject to
any post-closing adjustments pursuant to Section 7.1 of this Agreement.

1.10    Required
Contracts.

Prior to or at Closing, Buyer
will execute any and all agreements that PHI customarily requires of
franchisees including, but not limited to those described in this Section 1.10.

(a)       Prior to or at Closing, PHI will grant and Buyer will enter
into a Pizza Hut, Inc. Location Franchise Agreement in the form attached hereto
as Exhibit “B” (the “Franchise Agreement”). A copy of the form of the
Franchise Agreement has previously been provided to Buyer with PHI’s Uniform
Franchise Offering Circular.

 

9

 

(b)       Prior to or at Closing, Buyer will execute a franchisee
version of the Pepsi-Cola Beverage Supply and Marketing Agreement (“Pepsi
Agreement”) in the form attached as Exhibit “D”, pursuant to which Buyer
will agree, subject to certain exceptions provided for in the Pepsi Agreement,
that Pepsi products will be the exclusive beverages sold, dispensed or
otherwise made available or advertised, displayed or promoted in the
Restaurants.

(c)       Prior to or at Closing, Buyer will execute a Subscriber
Agreement for 2-Way Satellite Services and Equipment Lease Agreement for Yum
Franchisee (the “Subscriber Agreement”) in the form attached as Exhibit “E”,
pursuant to which Buyer will contract to have Hughes Network Systems, Inc.,
provide communication services to the Restaurants as provided in the Subscriber
Agreement.

(d)       Prior to or at Closing, Buyer will execute the Franchisee
Agreement and Mutual Indemnification for Participation in Online Ordering (the “Online
Ordering Agreement”) in the form attached as Exhibit “F”, pursuant to
which Buyer will agree to adopt and enforce PHI’s Online Privacy Policy, and
any changes thereto, and will agree to indemnify PHI for certain damages
resulting from Buyer’s use of online ordering systems.

(e)       Prior to or at Closing, Buyer will execute a Quik Order
agreement (the “Quik Order Agreement”) in the form attached as Exhibit “G”,
pursuant to which Buyer will agree to pay Quik Order, Inc., for certain
services related to internet ordering from the Restaurants, all as more fully
described in the Quik Order Agreement.

(f)        Prior to or at Closing, Buyer will enter into an agreement to
participate in and continue the Very Into Pizza (or VIP) Program with Hawkeye
Communications, Inc. (the “VIP Agreement”) in the form attached as Exhibit “H”,
pursuant to which Buyer will continue participation in the VIP program.

(g)       Prior to or at Closing, Buyer will execute a Franchisee
Agreement for Participation in Mapping of Restaurant Delivery Areas in the form
attached as Exhibit “M”, pursuant to which Buyer agrees to participate
in the mapping program.

(h)       Prior to or at Closing, if PHI is requiring, as part of this
Acquisition, development of new Pizza Hut/WingStreet restaurants, Buyer will
execute one or more Development Agreements in the form attached as Exhibit “N”
for each such development obligation. If PHI is requiring as part of this
Acquisition, the addition of WingStreet to any of the Restaurants, Buyer will
execute a Development Agreement in the form attached as Exhibit “P.”

(i)        Prior to or at Closing, Buyer will execute a WingStreet
Addendum to Pizza Hut, Inc. Franchise Agreement in the form attached as Exhibit
“Q.”

 

10

 

(j)        Prior to or at Closing, Buyer will execute all documents necessary
to become and remain a member of the Pizza Hut National Purchasing Co-op, Inc.
(the “Purchasing Co-op”).

(k)       The Restaurants will contain the software and hardware for the
proprietary SUS/FMS Systems (the “SUS/EMS Systems”) of the Seller’s parent
company, PHI. Prior to or at Closing, Buyer will execute a separate license and
support agreement with PHI (a “SUS/FMS License and Support Agreement”), in the
form attached as Exhibit “C”, which will require the Buyer to pay the
standard software support, Help Desk and menu fees then being charged by PHI
with respect to the SUS/FMS Systems for each such Restaurant. Buyer will also
keep in force a hardware maintenance agreement with a vendor approved by PHI.
Neither the Seller nor PHI will have any liability to the Buyer for losses
suffered by the Buyer as a result of the Buyer’s failure to properly install,
update and use software updates or to implement necessary hardware changes
after Closing.

2.        Representations
of Seller.

Seller represents to the
Buyer that as of the date of this Agreement:

2.1      Corporate
Power and Authority.

Seller is a corporation duly
organized and in good standing under the laws of the jurisdiction of its
incorporation, and has full corporate power and authority to execute, deliver
and perform its obligations under this Agreement and each other agreement or
document executed or to be executed by Seller in connection herewith, and to
consummate the transactions contemplated hereby and thereby. Seller is
authorized to do business and is in good standing in the states in which the
Restaurants operated by Seller are located. This Agreement has been, and each
other agreement or document to be executed by Seller in connection herewith
will be, duly executed and delivered by Seller and constitutes, or will
constitute, a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other similar
laws relating to or affecting creditors’ rights generally, general equitable
principles (whether considered in a proceeding in equity or at law) and an
implied covenant of good faith and fair dealing.

2.2      No Conflict
or Breach.

The execution, delivery and
performance of this Agreement and any other agreements or documents
contemplated hereby and the consummation by Seller of the transactions
contemplated hereby or thereby do not and will not:

(a)       conflict with or constitute a violation of the certificate of
incorporation or by-laws of Seller;

 

11

 

(b)       to the knowledge of Seller, conflict with or constitute a
violation of (with or without the giving of notice or the lapse of time or
both) any provision of any law, judgment, order, decree, rule or regulation of
any legislative body, court, governmental or regulatory authority or arbitrator
which is applicable to or relates to Seller; or

(c)       to the knowledge of Seller, with or without the giving of
notice or the lapse of time or both, violate or conflict with, constitute a
default under, result in a breach, acceleration or termination of any provision
of, or require notice to or the consent of any third party under, any contract,
agreement, commitment, indenture, mortgage, deed of trust, lease, licensing
agreement, note or other instrument or obligation to which Seller is a party or
by which Seller is bound, which could, individually or in the aggregate,
reasonably be expected to have a material adverse effect upon Seller or the
ability of Seller to perform its obligations under this Agreement or any other
agreement or document contemplated hereby.

2.3      Consents.

To the knowledge of Seller,
except the filings with the Federal Trade Commission (the “FTC”) and the
Department of Justice (the “DOJ”) referred to in Section 4.3, no material
consent, approval, or authorization of, or designation, declaration or filing
with, or notice to, any legislative body, court, governmental or regulatory
authority or arbitrator under any provision of any law, judgment, order,
decree, rule or regulation is required on the part of Seller in connection with
the execution, delivery and performance of this Agreement or any other
agreement or document contemplated hereby or with the consummation of the transactions
contemplated hereby and thereby.

2.4      Title to
Owned Property.

Seller has good and
marketable title to all of the Personal Property and the Owned Real Property
with respect to the Restaurants operated by Seller, free and clear of any liens
and encumbrances, except for (i) Personal Property, with respect to any
Restaurant operated by Seller, disposed of prior to the Closing in the ordinary
course of business of such Restaurant consistent with the past operations of
Seller and Section 4.1, below, (ii) certain fixtures, buildings and
improvements located on the Leased Real Property which Seller has the right to
use pursuant to the Real Property Leases (or any of them), (iii) easements or
other encumbrances which do not materially adversely affect the full use and
enjoyment of the Owned Real Property, or the purposes for which it is currently
used, and (iv) liens for taxes and assessments not yet due and payable. This
representation does not constitute a representation by Seller as to the title
of Seller’s lessors of any Leased Real Property or Leased Equipment, nor does
this representation constitute a representation of the condition of any of the
Personal Property or the Owned Real Property or the Leased Real Property, which
is sold or leased, as applicable, “AS IS, WHERE IS”, with all faults.

 

12

 

Additionally, the Seller
shall not be required to execute an “Owner’s Affidavit” to delete standard
exceptions to an owner’s or mortgagee’s title policy.

2.5      Adequacy of
Personal Property.

The Personal Property and the
Leased Equipment with respect to the Restaurants operated by Seller constitute
all of the items of tangible personal property required to operate such
Restaurants as Pizza Hut and/or Pizza Hut/WingStreet co-branded restaurants.
This representation does not constitute a representation of the condition of
the Personal Property or Leased Equipment, each of which are sold or assigned,
as applicable, “AS IS, WHERE IS”, with all faults.

2.6      Leases.

Each of the material
Equipment Leases and Real Property Leases with respect to the Restaurants
operated by Seller is in full force and effect, and to the knowledge of Seller,
Seller has not received notice of a material default under any of them. Subject
to obtaining any necessary consents and approvals, Seller has the right to
assign each such material Equipment Lease and Real Property Lease to the Buyer,
providing the Buyer with the right to use such Leased Equipment or to occupy
such Leased Real Property, as the case may be, on terms and conditions that are
materially the same as Seller had prior to any such assignment. This
representation does not constitute a representation as to the adequacy of any
lessor’s title to any of the Leased Equipment or the Leased Real Property, as
the case may be.

2.7      Insurance.

Seller carries adequate
insurance (both in form and amount), subject to deductibles, with respect to
the Business and real and personal property of the Restaurants operated by
Seller. Such insurance is in effect and will remain in effect through the
Closing Date.

2.8      Taxes.

Seller or its consolidated
parent has filed all requisite federal, state and local tax returns and has
paid all taxes required thereby, to the extent they have become due and
payable, other than (i) those presently payable without penalty or interest,
and (ii) any that are being contested in good faith by appropriate proceedings.
The Seller will indemnify the Buyer for any damages suffered by the Buyer as a
result of the Seller’s 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 Date.

 

13

 

2.9      Brokerage
and Finder’s Fees.

The Seller, nor any of its respective
Affiliates or any of their respective stockholders, directors, officers,
partners or employees, on behalf of Seller, has retained or dealt with any
broker or finder, or has incurred or will incur any liability for brokerage
fees, commissions or finder’s or similar fees in connection with the
transactions contemplated by this Agreement or the other documents contemplated
hereby.

2.10    Absence of
Certain Changes.

Each of the unaudited profit
and loss summaries (the “Profit and Loss Summaries”) that relate to the
Restaurants for the periods ended March 20, 2006 previously delivered to the
Buyer are true and correct in all material respects. Since March 20, 2006, 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. Seller agrees to inform the Buyer of any
material adverse changes to the financial condition or results of operations of
the Restaurants prior to the Closing.

2.11    Environmental
Matters.

To the best of the Seller’s
knowledge, without independent investigation and except as otherwise reflected
in Seller’s files regarding the Restaurants which have been provided to Buyer:

(a)       The Restaurants contain no asbestos in friable form;

(b)       No underground petroleum or chemical storage tanks or
underground storage facilities are located under the Restaurants;

(c)       No contaminant, industrial waste, pollutant1, 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 Seller in
conducting its business, or discharged at any time by the Seller directly or
indirectly into the environment in violation of any law or governmental
regulation applicable to the Seller, or into any sanitary sewer connection or
treatment system except in conformity with requirements of all

1                               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.

 

14

 

applicable laws, regulations
and valid permits nor has any such act or occurrence taken place under the
ownership of a prior owner which has not been cured, except in such instances
which would not have a material adverse effect on the operations and financial
condition of the Restaurants taken as a whole; and

(d)       With respect to the Restaurants, the Seller has 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
Seller.

3.        Representations
of the Buyer.

The Buyer represents to the
Seller that as of the date of this Agreement:

3.1      Organization,
Standing, Power and Authority.

The Buyer is a corporation
duly organized and in good standing under the laws of the jurisdiction in which
it is incorporated and in which it is doing business, and has full power and authority
to execute, deliver and perform its obligations under this Agreement and each
other agreement or document executed or to be executed by it in connection
herewith, and to consummate the transactions contemplated hereby and thereby.
The Buyer and each of its Affiliates that sign this Agreement and/or the
Franchise Agreement meet all of the standards for, and requirements of,
franchisees of PHI, including without limitation the standards set forth in the
Manual (as defined in the Franchise Agreement) and the requirements set forth
on Schedule 3.1 hereto. This Agreement has been, and each other
agreement or document to be executed by the Buyer in connection herewith will
be, duly executed and delivered by the Buyer and constitutes, or will
constitute, a legal, valid and binding obligation of the Buyer, enforceable
against the Buyer in accordance with its terms, except as affected by
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and
other similar laws relating to or affecting creditors’ rights generally,
general equitable principles (whether considered in a proceeding in equity or
at law) and an implied covenant of good faith and fair dealing.

3.2      No Conflict
or Breach.

The execution, delivery and
performance of this Agreement and any other agreements or documents
contemplated hereby and the consummation by the Buyer of the transactions
contemplated hereby or thereby do not and will not:

 

15

 

(a)       conflict with or constitute a violation of the articles of
incorporation or by-laws or other organizational documents, as applicable, of
the Buyer or any of its Affiliates that sign this Agreement and/or the
Franchise Agreement;

(b)       to the knowledge of Buyer, conflict with or constitute a violation
of (with or without the giving of notice or the lapse of time or both) any
provision of any law, judgment, order, decree, rule or regulation of any
legislative body, court, governmental or regulatory authority or arbitrator
which is applicable to or relates to the Buyer or any of its Affiliates that
sign this Agreement and/or the Franchise Agreement; or

(c)       to the knowledge of Buyer, with or without the giving of
notice or the lapse of time or both, violate or conflict with, constitute a
default under, result in a breach, acceleration or termination of any provision
of, or require notice to or the consent of any third party under, any contract,
agreement, commitment, indenture, mortgage, deed of trust, lease, licensing
agreement, note or other instrument or obligation to which either of the Buyer
(or any of its Affiliates that sign this Agreement and/or the Franchise
Agreement) are a party or by which the Buyer (or any such Affiliate) is bound,
which could, individually or in the aggregate, reasonably be expected to have a
material adverse effect upon the Buyer (or any such Affiliate) or the ability
of the Buyer (or any such Affiliate) to perform its obligations under this
Agreement or any other agreement or document contemplated hereby.

3.3      Consents.

To the knowledge of Buyer, no
consent, approval, or authorization of, or designation, declaration or filing
with, or notice to, any legislative body, court, governmental or regulatory
authority or arbitrator under any provision of any law, judgment, order,
decree, rule or regulation is required on the part of the Buyer (or any of its
Affiliates that sign this Agreement and/or the Franchise Agreement) in
connection with the execution, delivery and performance of this Agreement or
any other agreement or document contemplated hereby or with the consummation of
the transactions contemplated hereby and thereby, except for the filings with
the FTC and the DOJ referred to in Section 4.3.

3.4      Brokerage
and Finder’s Fees.

Neither the Buyer nor any of
its Affiliates or any of its respective stockholders, directors, officers,
partners or employees, on behalf of the Buyer, has retained or dealt with any
broker or finder, or has incurred or will incur any liability for brokerage
fees, commissions or finder’s or similar fees in connection with the
transactions contemplated by this Agreement or the other documents contemplated
hereby.

 

16

 

3.5      Obligations Under Other Franchise
Agreements.

Neither the Buyer nor any Affiliate of it is in
default under any existing franchise agreement with PHI or with YUM! Brands,
Inc. or any division or subsidiary thereof, nor does there exist any condition
or conditions that, with the giving of notice, the passage of time, or both,
would ripen into a default thereunder.

3.6      Supplemental Operational and Financial
Conditions.

Buyer shall have satisfied, or agreed to satisfy, in a
manner satisfactory to Seller and PHI, the operational and financial conditions
set forth on Schedule 3.6 attached hereto, which include by way of example, the
conditions applicable to all current or future sale/leaseback transactions
involving any of the Restaurants. Any such failure by Buyer to satisfy the
conditions set forth on Schedule 3.6 shall constitute a breach by Buyer under
the PHI Franchise Agreement.

4.        Covenants.

4.1      Operation Until Closing.

Prior to and including the Closing Date, the Seller
will operate the Restaurants in the ordinary course of business. Seller will
maintain all of the Assets with respect to the Restaurants operated by Seller
in substantially the same condition (ordinary wear and tear excepted) as they
were in on the date of this Agreement, except for (i) Personal Property
disposed of in the ordinary course of business consistent with the past
operations of such Restaurant; provided, however, any such Personal
Property must be replaced by similar assets of equal or greater value in like
or better condition than those assets transferred or removed or (ii) Personal
Property transferred among Restaurants that are subject to this Agreement.
Seller will only make capital improvements to the Restaurants that have been
authorized as evidenced by a fully approved and executed CAPEX dated prior to
the date of this Agreement. Notwithstanding the foregoing, Seller will not
perform any CAPEX work that is otherwise scheduled to occur after the Closing
Date. The damage or destruction of any Restaurant operated by Seller before the
Closing will not affect the Buyer’s obligation to close the transactions
contemplated by this Agreement. Subject to the requirements of any applicable
Real Property Lease, Seller shall proceed to repair the damage or, if such
repair is not reasonably practicable in the opinion of Seller prior to the
closing date, then Seller shall credit to the Buyer at the Closing an amount
equal to the sum of the reasonable cost (as agreed by the Buyer and the Seller)
of repairing or restoring the damaged or destroyed restaurant to substantially
the same condition as immediately before the damage or destruction.

 

17

 

4.2      Access to
Restaurants and Employees.

The Buyer (and/or its
consultants, attorneys, lenders or advisers) may not inspect any Restaurant or
contact any Pizza Hut employees working in such Restaurant or market until (i)
Seller has made Employee Announcements to the employees of the Restaurants, and
(ii) the Buyer (and when applicable in Seller and PHI’s sole discretion, the
Buyer’s consultants, attorneys, lenders or other advisors) has executed the
Access and Confidentiality Agreement in the form attached hereto as Exhibit “K”.
Once these conditions have been met, if the Buyer chooses to inspect the
Restaurants (under the conditions set forth herein and in the Access and
Confidentiality Agreement), the Buyer must schedule such inspections with PHI,
the Buyer must be accompanied by an agent or employee of PHI and the Buyer must
conduct the inspections in a manner that minimizes disruption to the Restaurant’s
operations. Any such inspections are for the Buyer’s information only; the
Restaurants are being sold “AS IS, WHERE IS.” The Buyer’s (and its consultant’s,
attorney’s, lender’s or other advisor’s) right to perform environmental audits
on the Owned Real Property is subject to Seller’s prior written consent and the
conditions set forth in Section 1.9, as well as the execution and delivery of
the Access and Confidentiality Agreement, also described in Section 1.9 above,
and the terms and conditions contained therein. Buyer does not have the right
to perform environmental audits of the Leased Real Property. Buyer acknowledges
and agrees that a violation of this Section 4.2 shall constitute a default
under this Agreement by Buyer and Seller shall have, in addition to any other
rights or remedies hereunder, at law or in equity, the right to terminate this
Agreement and retain the Exclusivity Fee as provided in Section 1.6.

4.3      Hart-Scott-Rodino
Act.

The Buyer and the Seller
shall, in cooperation with each other, file (or cause to be filed) with each of
the DOJ and the 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. If the Seller, based upon the advice of counsel, determines that any
filings with the DOJ and the FTC are necessary, the Buyer and any necessary
Affiliates of the Buyer agree to make any such filings in connection with the
transactions contemplated by this Agreement upon request from PHI. The Buyer
and the Seller 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 Buyer.

 

18

 

4.4      Financing of
Purchase Price.

(a) Prior to execution of
this Agreement, the Buyer (i) shall notify the Seller of the source(s) of
financing that the Buyer proposes to use to consummate the transactions
contemplated by this Agreement, and (ii) shall provide the Seller with a copy
of the commitment(s) of the source(s) to provide such financing. The Buyer
hereby acknowledges and agrees that at least 20% of the total transaction costs
(which include the Purchase Price and all closing costs and other costs or
indebtedness to be incurred by the Buyer related to the Acquisition)
(collectively, the “Total Transaction Costs”), must be in the form of at-risk
equity, as determined by the Seller, and that no more than 80% of the Total
Transaction Costs may be secured by a lien on the real and personal property
(the “Property”) being sold by the Seller to the Buyer pursuant hereto. A
Sources and Uses of Funds Statement, detailing all amounts and sources of
equity, closing costs and any indebtedness to be incurred by Buyer related to
the Acquisition, has been provided by Buyer and is attached as Schedule 4.4
hereto. The Buyer acknowledges that PHI and the Seller’s approval of the Buyer’s
equity structure and financing was a condition to entry into this Agreement and
the Acquisition. The Buyer agrees to, and hereby does, authorize each proposed
source of third-party financing to provide to the Seller, from time to time,
information with respect to the likelihood and form in which financing will be
provided to the Buyer. At the time of applying for any third-party financing,
the Buyer shall notify the third party of the Seller’s right to the information
described in this Section and of the terms and requirements of this transaction
and of this Agreement and the agreements contemplated hereby.

(b) The Buyer hereby
acknowledges and agrees that the Buyer shall not pledge or grant a lien or
security interest or otherwise encumber any portion of its interest in or under
(i) any of the Real Property Leases or Equipment Leases without the prior
written consent of the lessor thereunder (which consent shall be in such lessor’s
sole discretion, with the Seller having no control over whether or not such
lessor will consent), including the filing of leasehold mortgages or financing
statements, (ii) any of the Contracts without the prior written consent of the
other party thereto (which consent shall be in such other party’s sole
discretion, with the Seller having no control over whether or not such other
party will consent), (iii) the Franchise Agreement and any other franchise
agreements between PHI and the Buyer or its Affiliates, (iv) any intellectual
property of PHI, any rights in any “Pizza Hut Marks” (as defined in the
Franchise Agreement), any proprietary PHI software or computer operating system
or any PHI trademarked property, or (v) any intellectual property of
WingStreet, LLC, any rights in any WingStreet “Marks” or any WingStreet
trademarked property. The Buyer further acknowledges and agrees that it will
not permit any of the equity interests in the Buyer to be pledged or otherwise
encumbered for any reason. The Buyer agrees that the Buyer will not take any
action which alters or affects any of the Seller’s rights under the Real
Property Leases or the Assignment and Assumption of Lease Agreements and that
the terms of any financing obtained by the Buyer shall not violate the terms of
the Franchise Agreement, this Agreement (including any

 

19

 

schedules and exhibits
thereto) or the Real Property Leases, including but not limited to terms
concerning payment of insurance proceeds.

(c) Without the prior written
consent of the PHI Law Department, attention John J. Murphy, none of the Buyer, its Affiliates or any of its
respective agents or representatives, including any parties who may be
providing financing to the Buyer, shall have any contact with any of the lessors
of the Leased Real Property or the Leased Equipment or any of the parties to
the Contracts (other than the Seller) prior to the Closing.

(d) The covenants contained
in this Section 4.4, or some of them, will also be contained in an amendment to
the Franchise Agreement and any breach of such covenants shall also constitute
a default under Section 18.2 of the Franchise Agreement.

4.5      Recordation.

The Buyer shall cause all
Special Warranty Deeds relating to the transfer of Owned Real Property pursuant
to this Agreement and all Assignment and Assumption of Lease Agreements
relating to the transfer of all Leased Real Property pursuant to this Agreement
to be recorded in the local county or applicable authority’s recording or real
estate recording office where each such property is located no later than five
(5) business days after the Closing Date.

4.6      Capital
Expenditures.

Current Image Requirements. All of the Restaurants must comply with PHI’s
published standards, as PHI may amend or modify from time to time. If any of
the Restaurants do not comply with PHI’s “Minimum Asset Standards and Re-Image
Specifications (5/2002)” (“Re-Image Standards”), Buyer will bring each such
Restaurant into compliance with PHI’s Re-Image Standards within six years after
the date of the Franchise Agreement, as set forth in Section 6.3 of the
Franchise Agreement. Buyer must also complete major asset actions, consisting
of relocations, rebuilds and/or major remodels (“Major Asset Actions”), on at
least 70% of its dine-in, or “Red Roof” System Restaurants (as defined in
Section 1.21 of the Franchise Agreement) as provided in the Franchise
Agreement, within ten years of the date of the Franchise Agreement.

5.        Seller’s
Employees.

Unless otherwise agreed
before Closing, with respect to any of Seller’s restaurant-level employees,
Seller will terminate the employment of those employees at the close of
business on the Closing Date. Seller will directly pay all terminated
employees, including any of the employees hired by the Buyer (the “Hired
Employees”) for earned and unused vacation, in accordance with Seller’s normal
policies (which do not call for Seller to pay for accrued but unearned
vacation). The terminated employees may become employees of the Buyer as of the

 

20

 

day following the Closing
Date and PHI hereby waives any violation of Section 13.2 of the Franchise
Agreement with respect to the Hired Employees. All claims of the employees
arising out of their employment with Seller before the Closing Date will be the
sole liability of Seller, and Seller will indemnify the Buyer from all claims
of that nature.

As between Seller and the
Buyer, the Buyer assumes all claims of the Hired Employees relating to
employment by the Buyer arising after the Closing Date, and the Buyer will
indemnify Seller from all such claims by them. For the purpose of determining
benefits for Hired Employees, the Buyer agrees to honor the Hired Employees’
length of service and anniversary dates with the Seller. The Seller will
furnish the Buyer a list of the Hired Employees that defines their length of
service and anniversary dates. The Buyer understands that the active
participation of the Hired Employees in all benefit plans maintained by the
Seller will end on the Closing Date. Seller will continue any employee benefit
payment obligations for Hired Employees who are on leave of absence or disabled
on the Closing Date in accordance with the Seller’s or PHI’s policies.

If any of the Seller’s above
restaurant employees are transferred to other operations of the Seller (“Transferred
Employees”), the Seller will (upon request by the Buyer) use its reasonable
best efforts to provide to the Buyer the services of some or all of the
Transferred Employees (as chosen by the Buyer) for up to 60 days after the
Closing. The Buyer will reimburse the Seller for all payroll and benefit costs
associated with any such loaned Transferred Employees.

6.         Conditions
to Closing.

(a)       The obligations of the Seller, on the one hand, and the Buyer,
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:

(i)         there shall not be in effect any preliminary or permanent
injunction or other order issued by any federal or state court of competent
jurisdiction in the United States or by any United States federal or state
governmental or regulatory body nor any statute, rule, regulation or executive
order promulgated or enacted by any United States federal or state governmental
authority which restrains, enjoins or otherwise prohibits the consummation of
the transactions contemplated by this Agreement or any other agreement or
document contemplated hereby; and

(ii)        any filings required to be made under the HSR Act shall have
been made, and all applicable waiting periods thereunder with respect to the
transactions contemplated by this Agreement shall have expired or been
terminated.

(b)       The Seller’s obligation 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
Seller):

 

21

 

(i)        each of the representations of the Buyer under this Agreement
and each of the other agreements and documents contemplated hereby shall be
true and correct in all material respects at and as of the time of the Closing
with the same effect as though such representations had been made again at and
as of that time, except to the extent that any such representations expressly
relate to an earlier date in which case any such representations shall be true
and correct in all material respects at and as of such earlier date;

(ii)       the 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 Buyer to perform its
obligations under this Agreement or any other agreement or document
contemplated hereby provided, however, that nothing in this subparagraph shall
affect Seller’s rights under Section 4.2 in the event of a default thereunder;

(iii)      the Capital Expenditures Committees of YUM! Brands, Inc., and
PHI will have approved the transactions contemplated by this Agreement;

(iv)      the Seller will have received a copy of a resolution or
unanimous written consent evidencing the action by the Buyer’s Board of
Directors or the Buyer’s general partner or such other similar authorizing body
approving the purchase of the Assets under this Agreement certified by an
authorized officer, partner or member; and

(v)       the Buyer will deliver to Seller a statement, signed by the
Buyer’s Chief Financial Officer, certifying that at least 20% of the Total
Transaction Costs being paid will be represented by “at risk capital” as
defined by applicable accounting rules, which is in the form of equity and is
not (and will not be secured) by a lien on the Assets or on the equity
interests of the Buyer or any of its Affiliates, and the Seller shall otherwise
be satisfied in all respects with the capital structure of the Buyer; and

(vi)      the Seller shall have received evidence satisfactory in all
respects to them that the Buyer shall have hired an operator to manage the
Restaurants to be purchased by the Buyer, which operator has substantial
experience in the operation of Pizza Hut restaurants and has been approved by
PHI, in its sole discretion.

(vii)     the Buyer shall deliver to Seller and PHI, and the Seller and
PHI shall have received from the Buyer and its Affiliates, as the Seller and
PHI deem necessary, in their sole discretion, all Uniform Franchise Offering
Circular receipts, including those relating to any Addenda or Amendments.

 

22

 

(c)       The Buyer’s obligation 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
the Buyer):

(i)        each of the representations of Seller under this Agreement
and each of the other agreements and documents contemplated hereby shall be
true and correct in all material respects at and as of the time of the Closing
with the same effect as though such representations had been made again at and
as of that time, except to the extent that any such representations expressly
relate to an earlier date in which case any such representations shall be true
and correct in all material respects at and as of such earlier date;

(ii)       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 Seller to perform its
obligations under this Agreement or any other agreement or document
contemplated hereby; and

(iii)      the Buyer will have received a copy of a resolution of Seller’s
Board of Directors approving the sale of the Assets certified by an authorized
officer of the Seller.

7.        Closing.

Unless otherwise agreed, the
consummation of the transactions contemplated by this Agreement will occur at
the “Closing”, at 10:00 a.m. (local time) on September 18, 2006, at the offices
of PHI in Dallas, Texas, or such other location as may be designated by the
Seller in its sole discretion. (As used herein, the date the Closing actually
occurs is referred to in this Agreement as the “Closing Date”). At the Closing,
the Seller shall deliver to the Buyer such bills of sale, instruments of
assignment, transfer and conveyance and the other documents contemplated by
this Agreement. Against such delivery, the Buyer shall pay to the Seller the
balance of the Purchase Price and all other amounts required to be paid at the
Closing in accordance with Section 1.6 above and shall deliver 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 11:59 p.m. on the Closing Date. The Seller will cooperate
with the Buyer to see that the transfer of the Assets proceeds smoothly.

7.1      Post-Closing
Adjustments.

From time to time after the
Closing Date, the Buyer or the Seller 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, or

 

23

 

for which the actual costs
varied from any estimate. 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
advertising and other prepaid expenses.

7.2      Post-Closing
Indemnification.

The Buyer will indemnify the
Seller, its 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. The Seller will
indemnify the Buyer, its 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      Critical
Deficiencies.

Notwithstanding that the
Assets are being sold to Buyer “AS IS, WHERE IS”, with all faults, and subject
to the limitations set forth herein, Seller agrees to indemnify the Buyer for
the actual costs incurred by Buyer to cure any Critical Deficiency. For
purposes of this section, a “Critical Deficiency” is a deficiency in the
kitchen (or other area of the Restaurant that is not accessible to the general
public) that a local health department determines is of such a magnitude that
the Buyer would not be permitted to open the subject Restaurant for business
while such deficiency exists. Seller’s obligation to provide the Buyer such
indemnity is conditioned upon the Buyer notifying the Seller of the Critical
Deficiencies within seven (7) days after Closing and providing Seller with
copies of all relevant inspection reports citing the Critical Deficiencies
within thirty (30) days after Closing.

The maximum amount of the
indemnity for which Seller will be liable hereunder will not exceed the lesser
of $10,000 per Critical Deficiency or, in the aggregate for all Restaurants
listed on Schedule 1.1, $3,000 per Restaurant. Seller will have no
obligation to indemnify the Buyer for lost profits or other consequential
damages resulting from any business interruption while the Critical
Deficiencies are cured. Buyer specifically acknowledges that this provision
supersedes entirely all prior oral or written discussions, agreements or
understandings regarding the Seller’s responsibility for the costs to repair
Critical Deficiencies or other faults related to the Assets.

 

24

 

7.4      Additional
Documents.

For the period of two years
following the Closing, each of the parties covenants to cooperate and provide
such additional documents or instruments as the other party may reasonably
request for the purpose of carrying out this Agreement. Each of the parties
will use reasonable efforts, none of which shall require the payment of any
consideration, to have their present officers, directors, and employees
cooperate after the Closing in furnishing information, evidence, testimony and
other assistance concerning matters, including but not limited to litigation
and employment matters, that occurred prior to or after the Closing.

7.5      The Buyer’s
Acknowledgment.

The Buyer acknowledges that:

(a)       Except as set forth in Section 7.5(b), below, the Seller (and
its agents and employees) have made no statements or warranties to the Buyer as
an inducement for the Buyer’s decision to purchase, except as contained in this
Agreement or in the PHI and/or WingStreet Uniform Franchise Offering Circular
for Prospective Franchisees, and the Buyer’s decision to purchase was made
independently by it with the aid of professional counselors, including legal,
accounting, and financial advisors.

(b)       The Seller has made available to the Buyer, before the Buyer’s
execution of this Agreement, the Profit and Loss Summaries. The Buyer’s
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 the Buyer or its agents or representatives (and on other
information available to the Buyer), without reliance on the book ledgers or on
any oral statements of any kind or character by the Seller or its
representatives.

7.6      Information
Statement.

The Buyer and the Seller will
timely file any information statement required by regulations issued pursuant
to Section 1060(b) of the Internal Revenue Code of 1986, as amended.

7.7      Closing
Costs, Transfer Fees and Expenses.

The Buyer will pay, and
indemnify the Seller from, any and all closing costs including, but not limited
to, environmental reports, title search fees, title insurance premiums,
recording costs and survey costs, sales, use, excise, transfer, documentary,
recording, property and other taxes and fees (except the Seller’s income taxes)
and other costs for which Seller is to be reimbursed hereunder that arise out
of the transactions contemplated by this Agreement that the Seller or the Buyer
may be required to pay, which shall become due and payable prior to, on or
after the Closing Date. As provided in Section 1.6, at Closing the Buyer will
pay Seller an estimate of

 

25

 

these charges that are due to
Seller. Any differences between the estimated charges paid and the actual
charges incurred will be resolved pursuant to Section 7.1.

8.        Miscellaneous.

8.1      Notices.

Any notice or other
communication under this Agreement shall be in writing (including, without
limitation, by telecopy or like transmission) and shall be considered given (a)
when delivered personally (including, without limitation, by overnight
courier), (b) when telecopied (with confirmation of transmission having been
received), or (c) three days after being mailed by registered mail (postage
prepaid, return receipt requested), in each case to the respective parties at
the addresses set forth below (or at such other address as a party may specify
by notice to the other):

if to the Seller, to them
c/o:

Pizza Hut, Inc. 

14841 Dallas Parkway 

Dallas, Texas 75254 

Attention: John J. Murphy, Esq. 

Telecopy No.: (972) 338-6852

if to the Buyer, to:

NPC Management, Inc. 

7300 West 129th Street 

Overland Park, KS 66213 

Attn: Troy D. Cook 

Telecopy No: (913) 327-5849

with a copy to:

 

26

 

8.2      Survival.

The provisions set forth in
subsections 1.4(b), 4.4, 8.4, 8.8 and 8.14 of this Agreement shall expressly
and permanently survive the termination or abandonment of this Agreement. All
covenants and agreements contained in this Agreement shall expressly and permanently
survive the Closing Date and shall remain in full force and effect, except for
the representations set forth in Sections 2 and 3, which representations shall
expressly survive the Closing Date for a period of six months following the
Closing Date.

8.3      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 October 30, 2006.

8.4      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.

8.5      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 Buyer for the Seller’s consent to the assignment of this
Agreement will be subject to the conditions on assignment contained in the
Franchise Agreement. PHI and its respective successors and assigns are intended
third-party beneficiaries of this Agreement. Notwithstanding the foregoing,
however, PHI may assign all of its
rights and obligations hereunder to YUM! Brands,, Inc. (“YUM”) or to any
subsidiary of YUM that is the franchisor of the “Pizza Hut” and/or “WingStreet”
concept and, upon such assignment, PHI will have no further liability
hereunder.

 

27

 

8.6      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.

8.7      Entire
Agreement.

This Agreement (including the
Exhibits 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 (other than
the confidentiality letter between the parties dated September 8, 2005).

8.8      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 YUM! Brands,, Inc. or any of its Affiliates, or to the respective
attorneys, accountants, and financial advisors of any party hereto and its
Affiliates, (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.

8.9      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 TEXAS WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.

 

28

 

8.10    Bulk Sales
Waiver.

The Seller and the Buyer each
waive compliance by the other with any bulk sales or similar laws that may be
applicable to the transactions contemplated by this Agreement.

8.11    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.

8.12    Headings;
Interpretation.

(a)       The headings of the various articles, sections and subsections
of this Agreement have been inserted for the purpose of convenience of
reference only, are not a part of this Agreement and shall not be deemed in any
manner to modify, explain, enlarge or restrict any of the provisions of this
Agreement.

(b)       When reference is made in this Agreement to an Article,
Section, subsection, Schedule or Exhibit, such reference shall be to an
Article, Section, subsection, Schedule or Exhibit of this Agreement unless
otherwise indicated. Whenever the words “included”, “includes” or “including”
(or any other tense or variation of the word “include”) are used in this
Agreement, they shall be deemed to be followed by the words “without limitation”.
As used in this Agreement, the auxiliary verbs “will” and “shall” are
mandatory, and the auxiliary verb “may” is permissive (and, by extension, is
prohibitive when used negatively, as a denial of permission). All accounting
terms used but not defined in this Agreement shall have the meanings determined
by generally accepted accounting principles. The words “hereof”, “herein” and “hereunder”
and words of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this Agreement. The
definitions contained in this Agreement are applicable to the singular as well
as the plural forms of such terms and to the masculine as well as to the
feminine and neuter genders of such term, and references to a person include
any individual, corporation, partnership or other entity and its permitted
heirs, successors and assigns. Any agreement, instrument or statute defined or
referred to herein or in any agreement or instrument that is referred to herein
means such agreement, instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes.

(c)       Whenever any statement or representation is made to the
knowledge of the Seller, whether such statement or representation is contained
in this Agreement or in any other agreement or document contemplated hereby,
the “knowledge” referred to

 

29

 

shall be limited to the
actual knowledge (without independent investigation) of the employees and
officers of the Seller and/or its Affiliates who are involved in the
negotiation and documentation of the transactions contemplated by this
Agreement.

(d) When reference is made in
this Agreement to the “relevant” Seller, such reference shall be to the Seller
who is selling or assigning, the portion of the Business, Restaurants or real
or personal property being referred to in the context of such reference.
Similarly, if reference is made in this Agreement to the “relevant” Franchise
Agreement, such reference shall be to the Franchise Agreement to which the
Buyer being referred to in the context of such reference is a party.

(e) For purposes of this
Agreement, the term “Affiliate” shall mean, with respect to any person or
entity, any other person or entity that directly or indirectly controls, is
controlled by, or is under common control with, such first person or entity.

8.13    Time is of
the Essence.

Time is of the essence in the
performance of this Agreement. Facsimile signatures, including signatures
relating to the execution of this Agreement, shall be deemed legally binding.

8.14    Announcements.

(a)       None of the Buyer, its Affiliates or any of its respective
subsidiaries, employees, officers, directors, agents or representatives may,
without the prior written consent of the Seller (which consent shall not be
unreasonably withheld after the Closing Date but may be arbitrarily withheld
prior thereto), make any announcement to the public concerning the transactions
contemplated by this Agreement.

(b)       The Seller, its Affiliates or any of their respective
subsidiaries, employees, officers, directors, agents or representatives may
not, without the prior written consent of the Buyer (which consent shall not be
unreasonably withheld after the Closing Date but may be arbitrarily withheld prior
thereto), make any announcement to the public concerning the transactions
contemplated by this Agreement, except as required by law.

(c)       This subsection 8.14 shall expressly and permanently survive
the termination or abandonment of this Agreement.

8.15    Counterparts.

This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original and all of which together shall constitute one and the same
instrument.

 

30

 

8.16    No Specific
Enforcement.

Each of the parties to this
Agreement acknowledges that the Restaurants, the Assets, the Owned Real
Property and the Leased Real Property are not of a special, unique or
extraordinary character, and that any breach of this Agreement or any of the
agreements or documents contemplated hereby by any party hereto could be
compensated for by damages. Accordingly; if any party hereto breaches its
obligations under this Agreement or any of the agreements or documents
contemplated hereby, the other party hereto shall not be entitled to
enforcement of this Agreement or such other agreement or document by a decree
of specific performance requiring that the breaching party fulfill its
obligations hereunder or thereunder.

8.17    Submission to
Jurisdiction.

For purposes of any legal
action or proceeding relating to this Agreement or any other agreements or
documentation contemplated by the Acquisition, including recognition or
enforcement of any judgment, the Buyer and Seller hereby irrevocably and unconditionally
submit themselves and their property to the non-exclusive general jurisdiction
of the state and federal courts of the county in which PHI then has its
principal place of business, and any applicable appellate courts. The Buyer and
Seller waive any objection to venue or the inconvenience of such courts. The
Buyer and Seller waive, to the extent not prohibited by law, any right they may
have to claim any special, exemplary or consequential damages in such action or
proceeding.

8.18    Arms Length Contract.

This Agreement has been
negotiated “at arms length” by the parties hereto, each represented by counsel
of its choice and each having an equal opportunity to participate in the
drafting of the provisions hereof. Accordingly, in construing the provisions of
this Agreement no party shall be presumed or deemed to be the “drafter” or “preparer”
of the same.

8.19    No Future
Acquisition Rights.

The Buyer expressly
acknowledges and agrees that it has no rights to acquire any additional
restaurants or properties, other than those expressly provided in this
Agreement, from PHI or any of its Affiliates. Any future rights to acquire
restaurants or properties would only arise pursuant to a separate written
agreement between PHI or any of its Affiliates and Buyer.

 

31

 

IN WITNESS WHEREOF, the parties have hereunto set
their hands and seals on the date and year first above written.

 

	
   

  	
   

  	
  PIZZA HUT OF AMERICA, INC.

  
	
  

  	
   

  	
  By: 

  	
  

  /s/ John J. Murphy

  
	
   

  	
   

  	
   

  	
  John J. Murphy, President

  

 

 

	
   

  	
   

  	
  PIZZA HUT, INC.

  
	
  

  	
   

  	
  By: 

  	
  

  /s/ John J. Murphy

  
	
   

  	
   

  	
   

  	
  John J. Murphy, Vice
  President - Law

  

 

 

	
   

  	
   

  	
  NPC MANAGEMENT, INC.

  
	
  

  	
   

  	
  By: 

  	
  

  /s/ James K. Schwartz

  
	
   

  	
   

  	
   

  	
  James K. Schwartz,
  President

  

 

 

	
   

  	
   

  	
  NPC INTERNATIONAL, INC.

  
	
  

  	
   

  	
  By: 

  	
  

  /s/ James K. Schwartz

  
	
   

  	
   

  	
   

  	
  James K. Schwartz,
  President

  

 

 

32

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