tm2311103-1_424b3 - none - 1.734369s
 Filed Pursuant to Rule 424(b)(3)
 Registration No. 333-267864
PROSPECTUS SUPPLEMENT NO. 2
(to prospectus dated December 23, 2022)
Up to 22,900,000 Ordinary Shares issuable upon the exercise
of warrants
Up to 62,151,365 Ordinary Shares and 5,650,000 Warrants to
purchase Ordinary Shares offered by Selling Securityholders
of
TH International Limited
This prospectus supplement updates, amends and supplements the prospectus dated December 23, 2022 (as supplemented or amended from time to time, the “Prospectus”), which forms a part of our Registration Statement on Form F-1 (Registration No. 333-267864), with the information contained in the Current Report on Form 6-K furnished to the U.S. Securities and Exchange Commission (“SEC”) on March 30, 2023, which is set forth below.
This prospectus supplement is not complete without the Prospectus. This prospectus supplement should be read in conjunction with the Prospectus, which is to be delivered with this prospectus supplement, and is qualified by reference thereto, except to the extent that the information in this prospectus supplement updates or supersedes the information contained in the Prospectus.
Our ordinary shares and warrants are listed on the Nasdaq Stock Market LLC (“Nasdaq”) under the trading symbols “THCH” and “THCHW,” respectively. On March 30, 2023, the closing price of our ordinary shares on Nasdaq was $3.93 per share, and the closing price of our warrants on Nasdaq was $0.488 per warrant.
Neither the SEC nor any state securities commission has approved or disapproved of the securities or passed upon the accuracy or adequacy of the Prospectus or this prospectus supplement. Any representation to the contrary is a criminal offense.
Investing in our securities involves a high degree of risk. Before buying any of our securities, you should carefully read the discussion of material risks of investing in such securities under “Risk Factors” beginning on page 39 of the Prospectus.
The date of this prospectus supplement is March 31, 2023.

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
under the Securities Exchange Act of 1934
For the month of March 2023
Commission File Number: 001-41516
TH International Limited
2501 Central Plaza
227 Huangpi North Road
Shanghai, People’s Republic of China, 200003
+86-021-6136-6616
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F. Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

 
EXPLANATORY NOTE
On March 30, 2023, TH International Limited (the “Company”) entered into a share purchase agreement (the “Share Purchase Agreement”) with Pangaea Three Acquisition Holdings IV, Limited, a Cayman Islands exempted company, PLKC International Limited, a Cayman Islands exempted company (“Popeyes China”), and PLK APAC Pte. Ltd., a company organized and existing under the laws of Singapore. The transaction values Popeyes China at an up-front equity value of $35.1 million. Up-front transaction consideration comprises newly-issued ordinary shares of the Company, priced at 85% of the trailing 40-trading-day VWAP (as defined in the Share Purchase Agreement) from the date of announcement of the transaction (February 8, 2023), resulting in the issuance of 12.1 million ordinary shares of the Company, of which 5% will be reserved for an employee stock option plan. In addition to the up-front transaction consideration, shareholders of Popeyes China will receive deferred contingent consideration (“DCC”) equal to 3% of the revenue of the Popeyes China business going forward, with a buy-out right exercisable at any time by the Company for $35 million. The DCC (including the buy-out payment, if any) will be paid in newly issued ordinary shares of the Company, priced at 85% of the trailing 40-trading-day VWAP from the end of the trailing fiscal year, or in case of a buy-out, from the date of the buy-out election by the Company. A copy of the Share Purchase Agreement is attached hereto as exhibit 10.1. The foregoing summary of the Share Purchase Agreement is subject to, and qualified in its entirety by reference to, such exhibit. The transaction was approved by the independent directors of the Company’s audit committee and a fairness opinion was obtained from Kroll, LLC, independent financial advisor to the audit committee, that the consideration paid by the Company in the transaction is fair from a financial point of view to the Company.
On March 30, 2023, the Company issued a press release announcing the closing of the transaction. A copy of the press release regarding the transaction is attached hereto as Exhibit 99.1.
 

 
INDEX TO EXHIBITS
Exhibit
Number
Exhibit Title
10.1
99.1
 

 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TH International Limited
Date: March 30, 2023
/s/ Yongchen Lu
Yongchen Lu
Chief Executive Officer
 

 

Exhibit 10.1

 

Confidential

 

 

SHARE PURCHASE AGREEMENT

 

dated March 30, 2023

 

by and among

 

EACH OF THE SELLERS LISTED ON SCHEDULE 1 ATTACHED HERETO

 

and

 

TH International Limited

 

and

 

PLKC INTERNATIONAL LIMITED

 

 

 

 

 

TABLE OF CONTENTS

 

Page

 

Article I Definitions 1

Section 1.1 Certain Definitions 1
Section 1.2 Interpretation and Rules of Construction 7

 

Article II Purchase and Sale of Target Shares; Closing 8

Section 2.1 Purchase and Sale. 8
Section 2.2 Closing 8
Section 2.3 Sellers Closing Deliverables 8
Section 2.4 Purchaser Closing Deliverables 9

 

Article III Representations and Warranties of the Sellers 9

Section 3.1 Organization and Standing of Seller 9
Section 3.2 Authority and Enforceability of Seller 9
Section 3.3 Organization, Standing and Qualification of the Company 10
Section 3.4 No Conflicts 10
Section 3.5 Target Shares 10
Section 3.6 Capitalization of the Company 10
Section 3.7 No Subsidiaries 11
Section 3.8 Undisclosed Liabilities 11
Section 3.9 Absence of Certain Changes, Events, and Conditions 11
Section 3.10 Compliance with Laws 11
Section 3.11 No Litigation 11
Section 3.12 Intellectual Property 11
Section 3.13 Properties 12
Section 3.14 Employees and Employee Benefit Plans 12
Section 3.15 Contracts 12
Section 3.16 Taxes 12
Section 3.17 Investment Purposes and Seller’s Status 13
Section 3.18 Broker’s Fees 13
Section 3.19 No Other Warranties 13

 

Article IV Representation and Warranties of Purchaser 13

Section 4.1 Organization and Standing 13
Section 4.2 Due Authorization and Enforceability 13
Section 4.3 Capitalization of the Purchaser 14
Section 4.4 No Conflicts 14
Section 4.5 Investment Purposes 14
Section 4.6 Broker’s Fees 14
Section 4.7 No Other Warranties 14

 

Article V Covenants and Agreements 15

Section 5.1 Commercially Reasonable Efforts; Further Assurances 15
Section 5.2 Unvested Shares 15
Section 5.3 Deferred Contingent Consideration 15
Section 5.4 ESOP 17
Section 5.5 Lock-up Arrangement 17
Section 5.6 Required Audit Committee Approval 19
Section 5.7 China Operation Company 19
Section 5.8 Absence of Certain Changes; Notification Obligations 19

 

1

 

 

Article VI Conditions 19

Section 6.1 Conditions to the Obligation of each Party 19
Section 6.2 Conditions to the Purchaser’s Obligations 20
Section 6.3 Conditions to the Sellers’ Obligations 20
Section 6.4 No other Conditions 20

 

Article VII Indemnification 20

Section 7.1 Indemnification by the Sellers 20
Section 7.2 Indemnification by the Purchaser 21
Section 7.3 Survival 21
Section 7.4 Right to Cure 21
Section 7.5 Limitation of Liability 21
Section 7.6 Exclusive Remedy 21

 

Article VIII Termination 21

Section 8.1 Grounds for Termination 21
Section 8.2 Effect of Termination 22

 

Article IX Miscellaneous 22

Section 9.1 Governing Law; Jurisdiction 22
Section 9.2 WAIVER OF JURY TRIAL 22
Section 9.3 Specific Performance 22
Section 9.4 Entire Agreement 23
Section 9.5 Successors and Assigns 23
Section 9.6 Notices 23
Section 9.7 Amendments and Waivers 23
Section 9.8 Delays or Omissions 23
Section 9.9 Interpretation; Titles and Subtitles 23
Section 9.10 Counterparts 24
Section 9.11 Severability 24
Section 9.12 Expenses 24

Section 9.13 Confidentiality; Publicity. 24

 

Schedule 1 List of the Sellers 1
Schedule 2 Deferred Contingent Consideration 2
Schedule 3 Address for Notices 3

 

Exhibit A Amended and Restated Master Development Agreement 1
Exhibit B Form of the Company Franchise Agreement 1
Exhibit C General Release of Actions 1
Exhibit D Termination Agreement of Joint Venture and Investment Agreement 1

 

2

 

 

SHARE PURCHASE AGREEMENT

 

THIS SHARE PURCHASE AGREEMENT (this “Agreement”) is dated as of March 30, 2023, by and among:

 

(1)            each of the Persons listed on column 1 of Part A of Schedule 1 attached hereto (each such Person, a “Seller” and collectively, the “Sellers”);

 

(2)            TH International Limited, a Cayman Islands exempted company (the “Purchaser”); and

 

(3)            PLKC International Limited, a Cayman Islands exempted company (the “Company”).

 

Each of the Sellers, the Purchaser and the Company is hereinafter referred to as a “Party” and collectively as the “Parties”.

 

RECITALS

 

WHEREAS, immediately prior to the consummation of the transaction contemplated by this Agreement, each Seller will hold such number of Ordinary Shares and/or Redeemable Shares (as applicable) as set forth opposite such Seller’s name in column 2 in Part A of Schedule 1 attached hereto (such Seller’s “Target Shares” and the aggregate Target Shares to be held by both of the Sellers, collectively, the “Aggregate Target Shares”);

 

WHEREAS, each Seller desires to sell to the Purchaser, and the Purchaser desires to purchase from such Seller all of its Target Shares, with the Aggregate Target Shares representing 100% of the issued share capital of the Company, pursuant to the terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, the Parties desire to enter into this Agreement on the terms and conditions set forth herein and to make the respective representations, warranties, covenants and agreements set forth herein on the terms and conditions set forth herein in connection with the transactions contemplated hereby.

 

NOW, THEREFORE, in consideration of the foregoing recitals, the mutual promises hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

Article I
Definitions

 

Section 1.1             Certain Definitions. For purposes of this Agreement, the following terms shall have the meanings specified in this Section 1.1:

 

Action” means claim, action, suit, proceeding, arbitration, complaint, charge or other investigation.

 

Affiliate” of a Person (the “Subject Person”) means (a) in the case of a Subject Person other than a natural Person, a Person who, directly or indirectly through one or more intermediaries, Controls, is Controlled by, or is under common Control with, such Subject Person and (b) in the case of a Subject Person who is a natural Person, a Person who is such Subject Person’s Relative, or is directly or indirectly Controlled by such Subject Person and/or such Relatives, or is a trust for the benefit of such Subject Person and/or such Relatives.

 

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Aggregate Consideration” has the meaning ascribed to it in Section 2.1.

 

Aggregate Target Shares” has the meaning ascribed to it in the Recitals.

 

Agreement” has the meaning ascribed to it in the Preamble.

 

Amended and Restated Master Development Agreement” means the Amended and Restated Master Development Agreement to be executed and delivered by and among PLK, the Purchaser and other parties named therein on the Closing Date substantially in the form set forth in Exhibit A hereto.

 

Annual Deferred Contingent Consideration has the meaning ascribed to it in Section 5.3(a).

 

Approvals” has the meaning ascribed to it in Section 3.4.

 

Audit Committee” means the audit committee established by the board of directors of the Purchaser.

 

Benefit Plans” of any Person means any deferred compensation, incentive compensation, equity purchase or other equity-based compensation plan, employment, severance or termination pay, holiday, vacation or other bonus plan or practice, hospitalization or other medical, life or other welfare benefit insurance, profit sharing, pension, or retirement plan and each other employee benefit plan, program, agreement or arrangement (whether written or unwritten), including each “employee benefit plan” as such term is defined under Section 3(3) of ERISA (whether or not subject to ERISA), maintained, sponsored or contributed to, or required to be contributed to, by a Person for the benefit of any current or former employee or individual service provider of such Person, or with respect to which such Person has any Liability.

 

Business Day” means any day other than a Saturday, Sunday or a legal holiday on which commercial banking institutions in New York City, New York; Hong Kong; or the Cayman Islands are authorized to close for business.

 

Cartesian” means Pangaea Three Acquisition Holdings IV, Limited, an exempted company incorporated under the Laws of the Cayman Islands.

 

Cayman Act” means the Cayman Islands Companies Act (2023 Revision), as amended.

 

Charter Documents” means, with respect to a particular legal entity, the articles of incorporation, certificate of incorporation, formation or registration (including, if applicable, certificates of change of name), shareholders’ agreement, memorandum of association, articles of association, bylaws, articles of organization, limited liability company agreement, trust deed, trust instrument, operating agreement, joint venture agreement, business license, or similar or other constitutive, governing, or charter documents, or equivalent documents, as applicable, of such legal entity.

 

China Opco” has the meaning ascribed to it in Section 5.7.

 

Closing” has the meaning ascribed to it in Section 2.2.

 

Closing Date” has the meaning ascribed to it in Section 2.2.

 

2

 

 

Companyhas the meaning ascribed to it in the Preamble.

 

Company Franchise Agreement” means the Company Franchise Agreement to be executed and delivered by PLK, the Purchaser and the other parties named therein pursuant to Section 5.7 substantially in the form set forth in Exhibit B hereto.

 

Company Intellectual Property” has the meaning ascribed to it in Section 3.12(a).

 

Company Shares” means, collectively, the Ordinary Shares and the Redeemable Shares.

 

Confidential Information” means, the terms and conditions of the Transaction Documents, including their existence, and with respect to any Person, any information, knowledge or data of such Person, including any data, information, ideas, knowledge and materials concerning the organization, business, technology, safety records, investment, finance, transactions, customers, products or affairs of such Person, but excluding any information that is or becomes available in the public domain other than by reason of the breach of the confidentiality obligations hereunder.

 

Contract” means a contract, agreement, understanding, indenture, note, bond, loan, instrument, lease, mortgage, franchise, license, commitment, purchase order, and other legally binding arrangement, whether written or oral.

 

Controlmeans, as used with respect to any Person, the possession, directly or indirectly, of the power or authority to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by Contract or otherwise; for the avoidance of doubt, such power or authority shall conclusively be presumed to exist by possession of (a) the beneficial ownership or power to direct the vote of more than fifty percent (50%) of the votes entitled to be casted at a meeting of the members or shareholders of such Person, or (b) the power to appoint or elect a majority of the members of the board of directors or equivalent governing body of such Person. The terms “Controlled by” and “under common Control with” shall have correlative meanings.

 

CST” means Continental Stock Transfer & Trust Company, a New York corporation, as transfer agent of the Purchaser.

 

Deferred Contingent Consideration” means the newly issued Purchaser Shares that are payable to each Seller pursuant to Section 5.3(a) and Section 5.3(b).

 

Equity Securities” means (a) with respect to the Company, the equity securities in the Company, including the Ordinary Shares, the Redeemable Shares and other equity securities (including any securities convertible into, exchangeable for or exercisable for any equity securities or any equity-linked securities), and (b) with respect to any other Person, the equity securities (including any securities convertible into, exchangeable for or exercisable for any equity securities or any equity-linked securities) of such Person.

 

ESOP” has the meaning ascribed to it in Section 5.4(a).

 

ESOP Shares” has the meaning ascribed to it in Section 5.4(b).

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Exercise Date” has the meaning ascribed to it in Section 5.3(b).

 

3

 

 

Existing Contractshas the meaning ascribed to it in Section 3.15.

 

Forfeiture Event has the meaning ascribed to it in Section 5.3(c).

 

General Waiver and Release Letter” means the General Release of Actions against PLK to be issued by the Company and the Purchaser on the Closing Date substantially in the form set forth in Exhibit C hereto.

 

Governmental Authority” means any nation or government or any province or state or any other political subdivision thereof, or any entity, authority or body exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any government authority, agency, department, board, commission or instrumentality or any political subdivision thereof, any court, tribunal or arbitrator, and any self-regulatory organization or national or international stock exchange on which the securities of the applicable Party or its Affiliates are listed.

 

Hong Kong” means the Hong Kong Special Administrative Region of the People’s Republic of China.

 

Indemnifiable Loss” means, with respect to any Person, any damage, expense, liability, loss or penalty (and in any event excluding any loss of profits or other consequential, indirect, exemplary, speculative or punitive damages), together with all reasonable and documented legal fees and expenses incurred in the prosecution and defense of claims therefor and amounts paid in settlement thereof, that are actually imposed on or otherwise actually incurred or suffered by such Person.

 

Injunction” has the meaning ascribed to it in Section 6.1(a).

 

Intellectual Property” means any and all of the following in any jurisdiction throughout the world: (i) issued patents and patent applications; (ii) trademarks, service marks, trade names, and other similar indicia of source or origin, whether registered or unregistered, together with the goodwill connected with the use thereof and symbolized thereby, including all registrations, applications for registration, and renewals of, any of the foregoing; (iii) copyrights, copyrightable materials and works of authorship, whether registered or unregistered, including all applications and registrations of any of the foregoing; (iv) trade secrets, know-how, inventions (whether or not patentable), technology and proprietary or confidential information and all rights therein; (v) rights in software, data, databases and documents relating to any of the foregoing; (vi) internet domain names and social media accounts and pages; and (vii) other intellectual or industrial property and related proprietary rights, interests, and protections.

 

JVIA” means the Joint Venture and Investment Agreement, dated as of March 30, 2023, entered into by and among Cartesian, PLK, the Company and Pangaea Three-B, LP, a legal entity organized and existing under the laws of the Cayman Islands with file registration number of MC-96696.

 

JVIA Termination Agreement” means the termination agreement of the JVIA to be executed and delivered by the parties named therein on the Closing Date substantially in the form set forth in Exhibit D hereto.

 

Laws” means any federal, state, territorial, foreign or local law, common law, statute, ordinance, rule, regulation, code, measure, notice, circular, opinion or order of any Governmental Authority, including any rules promulgated by a stock exchange or regulatory body.

 

Liabilitieshas the meaning ascribed to it in Section 3.8.

 

4

 

 

Lien” means any encumbrance, right, interest or restriction, including any mortgage, judgment lien, materialman’s lien, mechanic’s lien, other lien (statutory or otherwise), charge, security interest, pledge, hypothecation, encroachment, easement, title defect, title retention agreement, voting trust agreement, right of pre-emption, right of first refusal, claim, option, limitation, forfeiture, penalty, equity, adverse interest or other third party right or security interest of any kind or an agreement, arrangement or obligation to create any of the foregoing.

 

Locked-Up Periodhas the meaning ascribed to it in Section 5.5(a).

 

Locked-Up Restrictionshas the meaning ascribed to it in Section 5.5(b).

 

Locked-Up Shareshas the meaning ascribed to it in Section 5.5(a).

 

Long Stop Date” has the meaning ascribed to it in Section 8.1(b).

 

Master Franchisee” means PLKC HK International Limited, a limited liability company organized and existing under the laws of Hong Kong and having a principal place of business at 5/F Manulife Place 348 Kwun Tong Road, Kowloon, Hong Kong.

 

Minimum Subsequent Contributionhas the meaning ascribed to it in Section 5.2(b).

 

Non-Contingent Consideration” has the meaning ascribed to it in Section 2.1.

 

Ordinary Shares” means the ordinary shares with a par value of US$0.0001 per share in the share capital of the Company.

 

Partyhas the meaning ascribed to it in the Preamble.

 

Person” means any individual or any partnership, firm, corporation, limited liability company, association, trust, unincorporated organization or other entity.

 

PLK” means PLK APAC Pte. Ltd., a company organized and existing under the laws of Singapore and having a principal place of business at 8 Cross St, Manulife Tower, #28-01/07, Singapore 048424.

 

PRC” means the People’s Republic of China, and solely for the purpose of this Agreement, excludes Hong Kong, Macau, and Taiwan.

 

Purchaserhas the meaning set forth in the Preamble.

 

Purchaser Indemnified Party” has the meaning ascribed to it in Section 7.1.

 

Purchaser Shareshas the meaning ascribed to it in Section 2.1.

 

Purchaser’s Fundamental Representations” means the representations and warranties set forth in Section 4.1, Section 4.2, Section 4.3, Section 4.4 and Section 4.6.

 

Redeemable Shares” means the class of redeemable shares with a par value of $0.0001 in the share capital of the Company having voting rights and other rights set out in the Charter Documents of the Company, which by their terms of issue are redeemable by the Company in accordance with the terms of the Charter Documents of the Company.

 

Relative” of a natural Person means the spouse of such Person and any parent, step-parent, grandparent, child, step-child, grandchild, sibling, step-sibling, cousin, in-law, uncle, aunt, nephew, niece or great-grandparent of such Person or such Person’s spouse.

 

5

 

 

Representative” means, with respect to a Party, its Affiliates, its or its Affiliates’ respective directors, officers, members, employees, current or bona fide prospective investors, limited or general partners, lenders, accountants, auditors, business or financial advisors, and attorneys.

 

Required Audit Committee Approvalhas the meaning ascribed to it in Section 5.6.

 

Securities Act” means the United States Securities Act of 1933, as amended, or any successor federal statute, and the rules and regulations thereunder.

 

Seller” or “Sellers” has the meaning ascribed to it in the Preamble.

 

Seller Disclosure Schedulehas the meaning ascribed to it in Article III.

 

Seller Indemnified Partyhas the meaning ascribed to it in Section 7.2.

 

Seller’s Fundamental Representations” means the representations and warranties set forth in Section 3.1, Section 3.2, Section 3.4, Section 3.5, Section 3.17, Section 3.18 and Section 3.19.

 

Sellers’ Knowledge” means, with respect to matters pertaining to the Company, the actual knowledge of (a) Peter Yu and Gregory Armstrong (in respect of Cartesian as a Seller) and (b) Rafael Odorizzi and Gordon Tam (in respect of PLK as a Seller).

 

Subsidiary” means, with respect to any Person, each other Person in which the first Person (a) owns, directly or indirectly, share capital or other equity interests representing more than fifty percent (50%) of the outstanding voting stock or other equity interests; (b) holds, directly or indirectly, the rights to more than fifty percent (50%) of the economic interest of such other Person, including interests held through a nominee holding structure; (c) has a relationship such that the financial statements of the other Person may be consolidated into the financial statements of the first Person under applicable accounting conventions; or (d) otherwise Controls such other Person.

 

Target Shares” has the meaning ascribed to it in the Recitals.

 

Tax” or “Taxes” means any national, provincial, municipal, or local taxes, charges, fees, levies, or other assessments, including all net income (including enterprise income tax and individual income withholding tax), turnover (including value-added tax, business tax, and consumption tax), resource (including urban and township land use tax), special purpose (including land value-added tax, urban maintenance and construction tax, and additional education tax), property (including urban real estate tax and land use taxes), documentation (including stamp duty and deed tax), filing, recording, social insurance (including pension, medical, unemployment, housing, and other social insurance withholding), tariffs (including import duty and import value-added tax), and estimated and provisional taxes of any kind whatsoever, and all interest, penalties (administrative, civil or criminal), or additional amounts imposed by any Governmental Authority in connection with any of the foregoing tax items.

 

Tax Return” means any return, report or statement showing Taxes, used to pay Taxes, or required to be filed with respect to any Tax (including any elections, declarations, schedules or attachments thereto, and any amendment thereof), including any information return, claim for refund, amended return or declaration of estimated or provisional Tax.

 

Trading Planhas the meaning ascribed to it in Section 5.5(b).

 

Transaction Documents” means this Agreement, Amended and Restated Master Development Agreement, General Waiver and Release Letter, JVIA Termination Agreement and any other agreement, document or instrument expressly required to be executed and delivered in connection with the transactions contemplated by this Agreement, Amended and Restated Master Development Agreement, General Waiver and Release Letter or JVIA Termination Agreement.

 

6

 

 

Transferhas the meaning ascribed to it in Section 5.5(a).

 

Unvested Shareshas the meaning ascribed to it in Section 5.2(a).

 

US$” or “U.S. dollars” means the lawful currency of the United States of America.

 

Section 1.2             Interpretation and Rules of Construction.

 

(a)            Unless otherwise expressly provided, for purposes of this Agreement, the following rules of interpretation shall apply:

 

(i)            the provision of a Table of Contents, the division of this Agreement into Articles, Sections and other subdivisions and the insertion of headings are for convenience of reference only and shall not affect or be utilized in construing or interpreting this Agreement;

 

(ii)           any reference in this Agreement to an Article, Section, Exhibit or Schedule is to an Article or Section of, or a Schedule or Exhibit to, this Agreement, unless otherwise indicated. All Exhibits and Schedules hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth in full herein;

 

(iii)          any reference in this Agreement to gender shall include all genders, and words imparting the singular number only shall include the plural and vice versa;

 

(iv)          the word “including” or any variation thereof means (unless the context of its usage otherwise requires) “including, without limitation” and shall not be construed to limit any general statement that it follows to the specific or similar items or matters immediately following it;

 

(v)           the term “or” is not exclusive;

 

(vi)          words such as “herein,” “hereinafter,” “hereof” and “hereunder” refer to this Agreement as a whole and not merely to a subdivision in which such words appear unless the context otherwise requires;

 

(vii)         when calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded;

 

(viii)        references to “writing,” “written” and comparable expressions include any mode of reproducing words in a legible and non-transitory form including emails and faxes, provided the sender complies with the provisions of Section 9.6;

 

(ix)          the word “extent” in the phrase “to the extent” means the degree to which a subject or other thing extends and such phrase shall not mean simply “if”;

 

(x)           references to “day” mean a calendar day unless otherwise indicated as a “Business Day”;

 

7

 

 

(xi)          if any payment hereunder would have been, but for this Section 1.2(a)(xi), due and payable on a date that is not a Business Day, then such payment shall instead be due and payable on the first Business Day after such date;

 

(xii)         the term “non-assessable,” when used with respect to any shares, means that no further sums are required to be paid by the holders thereof in connection with the issue thereof;

 

(xiii)        any share number or share price calculation shall be appropriately adjusted to take into account any share split, share dividends, share consolidation, share combination, recapitalization, bonus issue or similar event; and

 

(xiv)        references to any agreement, Contract or document are references to that agreement, Contract or document as may be amended, restated, consolidated, supplemented, novated, replaced or otherwise modified from time to time.

 

(b)            In the event an ambiguity or question of intent or interpretation arises, no presumption or burden of proof shall arise favoring or disfavoring any Party by virtue of the authorship of any provision of this Agreement.

 

Article II
Purchase and Sale of Target Shares; Closing

 

Section 2.1             Purchase and Sale. Subject to the terms and conditions hereof, at the Closing, each Seller hereby agrees to sell to the Purchaser, and the Purchaser hereby agrees to purchase from such Seller, such Seller’s Target Shares in exchange for (i) the number of ordinary shares, par value of $0.00000939586994067732 per share, of the Purchaser (the “Purchaser Shares”) as set forth opposite such Seller’s name under column 3 titled “Non-Contingent Consideration” of Part A of Schedule 1 attached hereto (the newly issued Purchaser Shares that are payable to each Seller, its “Non-Contingent Consideration”); and (ii) the Deferred Contingent Consideration, if any, that may become due and payable in accordance with the terms and conditions set forth in Section 5.3 (the aggregate of consideration payable to such Seller pursuant to (i) and (ii), the “Aggregate Consideration”).

 

Section 2.2             Closing. Subject to the terms and conditions of this Agreement, the sale and purchase of the Target Shares (the “Closing”) shall take place via the remote exchange of electronic documents and signatures on the date that is the next Business Day after the satisfaction or valid waiver of each of the conditions set forth in Section 6.1, Section 6.2 and Section 6.3 (other than those conditions to be satisfied at the Closing, but subject to the satisfaction or waiver thereof at the Closing) or such other time as the Sellers and the Purchaser shall mutually agree (the date on which the Closing occurs shall be referred to as the “Closing Date”).

 

Section 2.3             Sellers Closing Deliverables. At the Closing, each Seller shall and shall direct the Company to deliver or cause to be delivered to the Purchaser:

 

(a)            copies of the duly adopted board resolutions of the Company approving the transactions contemplated hereby and any other relevant documents required or necessary for the consummation of the transactions contemplated hereby in accordance with the existing Charter Documents of the Company, instructing the registered office provider of the Company to update the register of members of the Company to reflect the transfer of the Aggregate Target Shares to the Purchaser;

 

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(b)            a copy of the register of members of the Company, dated as of the Closing Date and duly certified by a director of the Company or the registered office provider of the Company, evidencing that the Purchaser is the record owner of the Aggregate Target Shares as of the Closing Date; and

 

(c)            a copy of the General Waiver and Release Letter, the JVIA Termination Agreement and the Amended and Restated Master Development Agreement, each being executed by the Sellers and/or the Company to which it is a party.

 

Section 2.4             Purchaser Closing Deliverables. At the Closing, the Purchaser shall deliver or cause to be delivered, with respect to each Seller:

 

(a)            copies of (i) the Required Audit Committee Approval and (ii) the duly adopted resolutions of the board of directors of the Purchaser approving the transactions contemplated hereby and any other relevant documents required or necessary for the consummation of the transactions contemplated hereby in accordance with the existing Charter Documents of the Purchaser, instructing CST to update the share register of the Purchaser to reflect the issuance of corresponding Non-Contingent Consideration to such Seller;

 

(b)            reasonably satisfactory evidence from CST, dated as of the Closing Date, reflecting the corresponding Non-Contingent Consideration registered in the name of such Seller (or its nominee in accordance with its delivery instructions) in book entry form as of the Closing Date; and

 

(c)            a copy of the General Waiver and Release Letter, the JVIA Termination Agreement and the Amended and Restated Master Development Agreement, each being executed by the Purchaser.

 

Article III
Representations and Warranties of the Sellers

 

Except as set forth in the disclosure schedules delivered by the Sellers to the Purchaser on the date of this Agreement (the “Seller Disclosure Schedule”), each section of which qualifies the correspondingly numbered representation or warranty specified therein and such other representation or warranty where its relevance as an exception to (or disclosure for purposes of) such other representation or warranty is reasonably apparent on the face of such disclosure, (i) each Seller, severally but not jointly (and for the avoidance of doubt, not “jointly and severally”), represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date (except for such warranties that speak as of a specified date, in which case, such warranties shall be made as of such specified date) the Seller’s Fundamental Representations; and (ii) Cartesian hereby further represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date (except for such warranties that speak as of a specified date, in which case, such warranties shall be made as of such specified date), the representations set forth in Section 3.3 and Section 3.6 through Section 3.16:

 

Section 3.1             Organization and Standing of Seller. Such Seller is duly incorporated, validly existing and in good standing (or equivalent status in the relevant jurisdiction) under the Laws of the jurisdiction of its incorporation or establishment, and has all requisite corporate power and authority to own its properties and assets and to carry on its business as now conducted, and to perform each of its obligations hereunder and under any other Transaction Document to which it is a party.

 

Section 3.2             Authority and Enforceability of Seller. Such Seller has all requisite power and authority to execute and deliver the Transaction Documents to which it is a party and to carry out and perform its obligations thereunder. All corporate action on the part of such Seller necessary to authorize the execution and delivery by such Seller of the Transaction Documents to which it is a party, the performance of all obligations of such Seller thereunder, and the sale of the Target Shares from such Seller to the Purchaser has been taken or will be taken prior to the Closing. All corporate actions on the part of the Company necessary for such Seller to execute and deliver the Transaction Documents to which it is a party, the performance of all obligations of such Seller thereunder, and the sale of such Seller’s Target Shares to the Purchaser has been taken or will be taken prior to the Closing. This Agreement has been duly executed and delivered by such Seller, and each of the other Transaction Documents to which such Seller is a party will be duly executed and delivered by such Seller. This Agreement and each of the other Transaction Documents are, or when executed and delivered by such Seller shall be (assuming due execution and delivery by each of the other parties thereto), valid and legally binding obligations of such Seller enforceable against such Seller in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors’ rights generally, and (b) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and to general equity principles.

 

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Section 3.3             Organization, Standing and Qualification of the Company. The Company is duly incorporated, validly existing and in good standing (or equivalent status in the relevant jurisdiction) under the Laws of the jurisdiction of its incorporation or establishment, and has all requisite corporate power and authority to own its properties and assets and to carry on its business as now conducted, and to perform each of its obligations hereunder and under any other Transaction Document to which it is a party. Except as in Section 3.3 of the Seller Disclosure Schedule or as would not reasonably be expected to have a material adverse effect on the Company or materially impair or delay the ability of the Sellers to consummate the Transactions contemplated by this Agreement and the other Transaction Documents, the Company is duly qualified or licensed and in good standing to do business in each jurisdiction in which the character of the property to be owned, leased or operated by it or the nature of the business to be conducted by it makes such qualification or licensing necessary.

 

Section 3.4             No Conflicts. Neither the execution, delivery or performance of and compliance with this Agreement and other Transaction Documents to which such Seller is a party, nor the consummation of the transactions contemplated hereby or thereby by such Seller, will (a) result in any violation or breach of the Company’s Charter Documents, (b) result in any violation, breach or default under any material Contract to which such Seller or the Company is a party, (c) violate any applicable Law in any material respect on the part of such Seller or the Company, or (d) require any consents, waivers, permits, approvals, orders, licenses, authorizations, registrations, qualifications, designations, declarations or filings (collectively, “Approvals”) by or with any Governmental Authority or any third party on the part of such Seller or the Company, except in each of the foregoing cases under (b), (c) and (d), as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Company or materially impair or delay the ability of the Seller to consummate the Transactions contemplated by this Agreement and the other Transaction Documents.

 

Section 3.5             Target Shares. Immediately prior to the Closing, such Seller will be the sole and beneficial owner of such Seller’s Target Shares, and has valid and marketable title to such Target Shares, free and clear of any Liens other than those specified or contemplated under the existing Charter Documents of the Company or under applicable Laws. Upon the transfer, assignment, and delivery of the Target Shares and payment therefor in accordance with the terms of this Agreement, the Purchaser shall own all of the Target Shares, free and clear of all Liens other than those specified or contemplated under the existing Charter documents of the Company or under applicable Laws.

 

Section 3.6             Capitalization of the Company.

 

(a)            The authorized share capital of the Company consists of (i) 200,000,000 Ordinary Shares, of which 40,000 Ordinary Shares are issued and outstanding; and (ii) 300,000,000 Redeemable Shares, of which 60,000 Redeemable Shares are issued and outstanding and together constitute the Aggregate Target Shares. Immediately prior to the Closing, all of the Target Shares will be duly authorized, are validly issued, fully paid and nonassessable, and will be owned of record and beneficially by Sellers as set forth on Part A of Schedule 1, free and clear of all Liens and the Aggregate Target Shares will represent 100% of the issued share capital of the Company. All of the Target Shares will be issued in compliance with applicable Laws. None of the Target Shares will be issued in violation of any agreement or commitment to which such Seller or the Company is a party or is subject to or in violation of any preemptive or similar rights of any Governmental Authority or any other Person.

 

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(b)            Other than set forth in Section 3.6(a), there are no outstanding or authorized Equity Securities, or other rights, agreements, or commitments relating to Equity Securities of the Company or obligating any Seller or the Company to issue or sell any Equity Securities of, or any other interest in, the Company. Except as set forth in Section 3.6(b) of the Seller Disclosure Schedule, there are no voting trusts, shareholder agreements, proxies, or other agreements in effect with respect to the voting or transfer of any of the Target Shares.

 

Section 3.7             No Subsidiaries. As of the date of this Agreement, except as set forth in Section 3.7 of the Seller Disclosure Schedule, the Company does not have, or have the right to acquire, an ownership interest in any other Person.

 

Section 3.8             Undisclosed Liabilities. The Company has no material liabilities, obligations, or commitments of any nature whatsoever, whether asserted or unasserted, known or unknown, absolute or contingent, accrued or unaccrued, matured or unmatured, liquidated or unliquidated or otherwise (collectively, “Liabilities”), except for (a) Liabilities under the executory portion of any Existing Contract and (b) Liabilities under any of the Transaction Documents.

 

Section 3.9             Absence of Certain Changes, Events, and Conditions. As of the date of this Agreement, the Company has (a) except as set forth on Section 3.9 of the Seller Disclosure Schedule, since its formation, conducted no business other than its formation, and (b) since its formation, not been subject to any change, event, condition, or development that is, or could reasonably be expected to be, individually or in the aggregate, adverse in any material respect to the business, results of operations, condition (financial or otherwise), or assets of the Company.

 

Section 3.10           Compliance with Laws. The Company is, and has since its formation been, in compliance in all material respects with all Laws applicable to it and the conduct of its business, and the Company has not received written notice or involved in any Action alleging any violation of applicable Laws in any respect by the Company.

 

Section 3.11           No Litigation. There is no Action pending or, to the Sellers’ Knowledge, threatened against the Company or any of its Affiliates (i) relating to or affecting the Company or any of the Company’s properties or assets or (ii) that challenges or seeks to prevent, enjoin or otherwise delay the transactions contemplated by this Agreement and the other Transaction Documents.

 

Section 3.12           Intellectual Property.

 

(a)            Except as set forth in Section 3.12 of the Seller Disclosure Schedule, the Company does not own, license or otherwise have any right, title or interest in any Intellectual Property used or held for use in or necessary for the conduct of the Company’s business as currently conducted or as proposed to be conducted (the “Company Intellectual Property”). The Company’s Subsidiary has the valid and enforceable right to use the Company Intellectual Property in accordance with the terms and conditions of the Amended and Restated Master Development Agreement.

 

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(b)            The Company has not received any written or, to the Sellers’ Knowledge, oral notice from any third Person alleging that the conduct of the Company’s business as currently or formerly conducted or as proposed to be conducted has infringed, misappropriated, or otherwise violated, infringes, misappropriates or otherwise violates, or will infringe, misappropriate, or otherwise violate, the Intellectual Property or other rights of such third Person. The business to be conducted by the Company does not infringe, misappropriate or otherwise violate, any Intellectual Property or other rights of any Person. To the Sellers’ Knowledge, no third Person has infringed, misappropriated, or otherwise violated, or infringes, misappropriates or violates, any Company Intellectual Property.

 

Section 3.13           Properties. The Company does not own or lease any real property or any machinery, equipment, tools, vehicles, furniture, leasehold improvements, office equipment, plant, parts or other tangible personal property.

 

Section 3.14           Employees and Employee Benefit Plans. The Company does not (a) have any employees or (b) maintain, sponsor, contribute to or otherwise have any Liability under, any Benefit Plans. Neither the execution and delivery of this Agreement or the Transaction Documents nor the consummation of the transactions contemplated by this Agreement and the other Transaction Documents will (i) result in any payment or benefit (including severance, unemployment compensation, golden parachute, bonus or otherwise) becoming due to any director, officer, employee or other service provider of the Company, (ii) result in the acceleration of the time of payment or vesting of any such payment or benefit, or (iii) result in any “parachute payment” under Section 280G of the United States Code.

 

Section 3.15           Contracts. Except for this Agreement and the other Transaction Documents and the agreements set forth in Section 3.15 of the Seller Disclosure Schedule (the “Existing Contracts”), there is no Contract to which the Company is a party or by which any of its properties or assets may be bound, subject or affected. Each Existing Contract is legal, valid and binding on the Company in accordance with its terms and is in full force and effect. None of the Company or, to the Sellers’ Knowledge, any other party thereto is in breach of or default under (or is alleged to be in breach of or default under), or has provided or received any written notice of any intention to terminate, any Existing Contract. Complete and correct copies of each Existing Contract (including all modifications, amendments, and supplements thereto and waivers thereunder) have been made available to the Purchaser.

 

Section 3.16           Taxes

 

(a)            There is no Tax Return required to be filed by the Company on or before the Closing Date. There is no Tax due and owing by the Company (whether or not shown on any Tax Return). No extensions or waivers of statutes of limitations have been given or requested with respect to any Taxes of the Company.

 

(b)            The Company has not been a member of an affiliated, combined, consolidated, or unitary Tax group for Tax purposes. The Company has no Liability for Taxes of any Person (other than the Company), as transferee or successor, by contract, or otherwise.

 

(c)            The Company has complied in all material respects with all applicable Laws relating to the withholding of Taxes and there is no Tax is required to be withheld and paid over to the proper Taxing Authority under all applicable Laws.

 

(d)            The Company has not received any notice of deficiency or proposed adjustment in writing for any material Tax owed by the Company that has not been paid in full or otherwise resolved.

 

(e)            The Company has not requested or received a ruling, technical advice memorandum or similar document in writing from any Taxing Authority, or has signed a closing agreement with any Taxing Authority, in each case, that would have an adverse effect after the Closing.

 

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(f)            No jurisdiction in which the Company does not file a Tax Return has made a material claim or assertion in writing on or after the date of its formation that the Company is required to file a Tax Return in such jurisdiction.

 

(g)            There are no Liens for Taxes upon the assets of the Company.

 

Section 3.17           Investment Purposes and Seller’s Status. Such Seller is receiving its corresponding Aggregate Consideration solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof or any other security related thereto within the meaning of the Securities Act. Such Seller acknowledges that none of the Aggregate Consideration will be registered for offer and sale under the Securities Act or any state securities Laws at the time of its issuance, and that such Aggregate Consideration may not be pledged, transferred, sold, offered for sale, hypothecated, or otherwise disposed of except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable. Such Seller is an “accredited investor” as defined in Regulation D promulgated under the Securities Act.

 

Section 3.18           Broker’s Fees. No Seller has any Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement or other Transaction Documents for which the Purchaser could become liable or obligated.

 

Section 3.19           No Other Warranties. Except for the warranties contained in this Article III, neither Seller makes any express or implied representation or warranty, and each Seller hereby disclaims any such representation and warranty. In furtherance of the foregoing, no material or information provided by or communications made by such Seller or any of its Affiliates, or by any advisor thereof, whether by use of a “data room,” or in any information memorandum, disclosure document or otherwise, will cause or create any warranty, express or implied, as to or in respect of the Company, or the title, condition, value or quality of the Company and its assets.

 

Article IV
Representation and Warranties of Purchaser

 

The Purchaser hereby warrants to each Seller as of the date hereof and as of the Closing Date (except for such warranties that speak as of a specified date, in which case, such representations and warranties shall be made as of such specified date) as follows:

 

Section 4.1             Organization and Standing. The Purchaser is duly organized, validly existing and in good standing (or equivalent status in the relevant jurisdiction) under, and by virtue of, the Laws of the place of its incorporation or establishment, and has all requisite corporate power and authority to own its properties and assets and to carry on its business as now conducted and as proposed to be conducted, and to perform each of its obligations hereunder and under any agreement contemplated hereunder to which it is a party.

 

Section 4.2             Due Authorization and Enforceability. The Purchaser has all requisite corporate power and authority to execute and deliver the Transaction Documents to which the Purchaser is a party and to carry out and perform its obligations hereunder and thereunder, subject to obtaining the Required Audit Committee Approval. All action on the part of the Purchaser (and, as applicable, its officers, directors and/or shareholders) necessary to authorize the execution and delivery of the Transaction Documents to which it is a party and the performance of all obligations of the Purchaser thereunder, has been taken or will be taken prior to the Closing. This Agreement has been, and each of the other Transaction Documents to which the Purchaser is a party will be, duly executed and delivered by the Purchaser. This Agreement and each of the other Transaction Documents to which the Purchaser is a party are, or when executed and delivered by it, will be (assuming due execution and delivery by each of the other parties thereto) valid and legally binding obligations of the Purchaser and enforceable against it in accordance with its terms, except (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium and other Laws of general application affecting creditors’ rights generally, and (b) as limited by Laws relating to the availability of specific performance, injunctive relief or other equitable remedies and to general equitable principles.

 

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Section 4.3             Capitalization of the Purchaser. As of the Closing Date, all of the Purchaser Shares will be duly authorized. Upon consummation of the transactions contemplated by this Agreement, each of the Sellers shall own all of the Purchaser Shares as set forth opposite such Seller’s name under column 3 titled “Non-Contingent Consideration” of Part A of Schedule 1 attached hereto, free and clear of all Encumbrances, other than restrictions on transfer under this Agreement or the other Transaction Documents, any of the applicable Charter Documents of the Purchaser, any of the existing restrictions set forth in the Purchaser Shares as of the Closing Date or any state and federal securities Laws and all of the Purchaser Shares shall be validly issued, fully paid and non-assessable. The Purchaser has, and will continue to have through the Closing, sufficient authorized but unissued Equity Securities of the Purchaser to meet its obligation to deliver the Purchaser Shares under this Agreement.

 

Section 4.4             No Conflicts. Neither the execution, delivery or performance by the Purchaser of, or compliance by the Purchaser with, this Agreement and the other Transaction Documents to which it is a party, nor the consummation of the transactions contemplated hereby or thereby, will (a) result in any violation or breach by the Purchaser of any of its Charter Documents, (b) result in any violation, breach of default under any material Contract to which the Purchaser is party, (c) result in any violation of any applicable Law on the part of the Purchaser, or (d) require any Approvals by or with any Governmental Authority or any third party, except in each of the foregoing cases under (b), (c) and (d), as would not, individually or in the aggregate, reasonably be expected to materially impair or delay the ability of the Purchaser to consummate the Transactions contemplated by this Agreement and the other Transaction Documents.

 

Section 4.5             Investment Purposes. The Purchaser is acquiring the Aggregate Target Shares solely for its own account for investment purposes and not with a view to, or for offer or sale in connection with, any distribution thereof or any other security related thereto within the meaning of the Securities Act. The Purchaser acknowledges that the Aggregate Target Shares have not been registered for offer and sale under the Securities Act or any state securities laws, and that the Aggregate Target Shares may not be pledged, transferred, sold, offered for sale, hypothecated, or otherwise disposed of except pursuant to the registration provisions of the Securities Act or pursuant to an applicable exemption therefrom and subject to state securities laws and regulations, as applicable.

 

Section 4.6             Broker’s Fees. The Purchaser has no Liability or obligation to pay any fees or commissions to any broker, finder, or agent with respect to the transactions contemplated by this Agreement or other Transaction Documents for which any Seller could become liable or obligated.

 

Section 4.7             No Other Warranties. Except for the warranties contained in this Article IV, the Purchaser does not make any express or implied representation or warranty pursuant to this Agreement, and the Purchaser hereby disclaims any such representation and warranty.

 

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Article V
Covenants and Agreements

 

Section 5.1             Commercially Reasonable Efforts; Further Assurances. Each Party hereto shall from time to time and at all times hereafter, use its commercially reasonable efforts to make, do or execute, or cause or procure to be made, done or executed, such further acts, deeds, conveyances, consents and assurances without further consideration, which may reasonably be required to effect the transactions contemplated by this Agreement and other Transaction Documents, and to comply as promptly as practicable with any requirement of a Governmental Authority applicable to the transactions contemplated by this Agreement and the other Transaction Documents.

 

Section 5.2             Unvested Shares.

 

(a)            At Closing, 1,547,988 Purchaser Shares, representing fifteen percent (15%) of the Non-Contingent Consideration (rounded down to the nearest whole Purchaser Share), received by Cartesian pursuant to this Agreement shall be unvested shares (the “Unvested Shares”) and shall be subject to the vesting and forfeiture terms set forth in this Section 5.2. Each Unvested Share shall not be transferable until such Unvested Share vests pursuant to this Section 5.2. Until such Unvested Share vests pursuant to this Agreement, (i) the book entry position representing the Unvested Shares will bear or reflect, as applicable, a legend that such Unvested Share is subject to forfeiture pursuant to the provisions of this Agreement, and (ii) CST, or any other transfer agent for the Purchaser, will be given appropriate stop transfer orders that will be applicable until such Unvested Share vests pursuant to this Agreement.

 

(b)            Subject to Section 5.2(c), by the first (1st) anniversary of the Closing, if neither Cartesian nor the Purchaser has contributed, or provided reasonable evidence to PLK (in its reasonable discretion) verifying that it has contributed, to the Company at least US$20,000,000 for the sole purpose of developing and operating the Popeyes® business in the PRC (the “Minimum Subsequent Contribution”), (i) Cartesian shall surrender all the Unvested Shares to the Purchaser for no consideration upon which such Unvested Shares will immediately get forfeited; and (ii) upon the consummation of the surrender and forfeiture by Cartesian set forth in (i) above, the Purchaser shall issue Purchaser Shares in the same number equal to the Unvested Shares to PLK for no consideration. For the avoidance of doubt, any forfeiture of Purchaser Shares and all references to the forfeiture of Purchaser Shares shall take effect as a surrender of such shares for no consideration under the Cayman Act.

 

(c)            The Unvested Shares shall become fully vested (and shall not be subject to the restrictions and forfeiture provisions set forth in this Section 5.2, including, for the avoidance of doubt, Section 5.2(b)) upon consummation of the Minimum Subsequent Contribution to the Company by Cartesian or the Purchaser (or any other Person designated by Cartesian or the Purchaser) on or prior to the first (1st) anniversary of the Closing.

 

(d)            Notwithstanding anything to the contrary set forth herein, Cartesian shall be entitled to enjoy all of the rights (save for the right of transfer set forth in Section 5.2(a)) attached to the Unvested Shares, including to (i) exercise voting rights carried by such Unvested Shares and (ii) receive any dividends or other distributions in respect of such Unvested Shares.

 

Section 5.3             Deferred Contingent Consideration.

 

(a)            Unless a written notice has been delivered to the Sellers pursuant to Section 5.3(b), then within twenty (20) Business Days or as soon as reasonably practicable after each fiscal year, the Purchaser shall issue to each Seller the number of the Purchaser Shares set forth opposite such Seller’s name under column 2 titled “Annual Deferred Contingent Consideration” of Schedule 2 attached hereto for the entirety of the immediately preceding fiscal year (the “Annual Deferred Contingent Consideration”).

 

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(b)            At any time, subject to the prior written consent of the disinterested directors of the Audit Committee, the Purchaser may elect in its sole discretion to issue a written notice to each Seller (the issuance date of such notice, the “Exercise Date”), exercising the option to pay all remaining deferred consideration owed to the Sellers through an issuance, within twenty (20) Business Days or as soon as reasonably practicable after the Exercise Date, to each Seller of the number of the Purchaser Shares set forth opposite such Seller’s name under column 3 titled “Lumpsum Deferred Contingent Consideration” of Schedule 2 attached hereto, plus any unpaid Annual Deferred Contingent Consideration that has accrued for the current fiscal year up to the Exercise Date.

 

(c)            In the event that after the Closing and prior to the Exercise Date, (i) any liquidation, dissolution or winding up of the Company (whether voluntary or involuntary) is initiated; (ii) any bankruptcy, reorganization, debt arrangement or similar proceeding under any bankruptcy, insolvency or similar law, or any dissolution or liquidation proceeding, is initiated by or against the Company, or a receiver is appointed for the Company or a substantial part of its assets or properties; or (iii) the Company makes an assignment for the benefit of creditors, or petitions or applies to any Governmental Authority for, or consents or acquiesces to, the appointment of a custodian, receiver or trustee for all or substantially all of its assets or properties (each of clauses (i) through (iii), a “Forfeiture Event”), then the rights of each Seller to receive any Deferred Contingent Consideration pursuant to Section 5.3(a) and Section 5.3(b) shall be immediately forfeited without any further action by any Party hereto; and the obligation of the Company to issue any further Deferred Contingent Consideration shall terminate upon the date of such Forfeiture Event and, for the avoidance of doubt, any unpaid Annual Deferred Contingent Consideration that has accrued for the current fiscal year up to the date of the Forfeiture Event shall be forfeit.

 

(d)            With respect to any issuance of Purchaser Shares pursuant to either Section 5.3(a) or Section 5.3(b), no fraction of a Purchaser Share will be issued, and each Seller who would otherwise be entitled to a fraction of a Purchaser Share (after aggregating all fractional shares of the Purchaser Shares that otherwise would be received by such Seller) shall instead have the number of Purchaser Shares issued to such Seller rounded down in the aggregate to the nearest whole Purchaser Share.

 

(e)            At all times following the Closing, the Purchaser shall reserve and keep available for issuance its reasonable estimate of the sufficient number of authorized and unissued Purchaser Shares to permit the Purchaser to satisfy its issuance obligations set forth in this Section 5.3 and shall take all actions required to increase the authorized number of Purchaser Shares if at any time there shall be insufficient authorized and unissued Purchaser Shares to permit such reservation.

 

(f)            The Purchaser shall take such actions as are reasonably requested by the Sellers to evidence the issuances pursuant to this Section 5.3, including (if requested) providing reasonably satisfactory evidence from CST reflecting the corresponding Deferred Contingent Consideration registered in the name of such Seller (or its nominee in accordance with its delivery instructions) in book entry form following any such issuance.

 

(g)            The right of the Sellers to receive the Deferred Contingent Consideration shall not entitle the holder thereof to any voting or dividend rights otherwise granted to holders of Deferred Contingent Consideration (if any) prior to the issuance of such shares. For the avoidance of doubt, the Purchaser shall not be required to issue the Deferred Contingent Consideration to the extent not permitted to do so by applicable Law, including by way of an exemption from registration under applicable securities Laws; provided that, in such case, the Purchaser and the Sellers shall reasonably cooperate to establish an alternative arrangement which would enable the Sellers to enjoy the same economic benefit as they would have received had the Purchaser been permitted to issue the Deferred Contingent Consideration.

 

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Section 5.4             ESOP.

 

(a)            As soon as practicable following the Closing Date, in lieu of providing Purchaser Shares as Non-Contingent Consideration to the Sellers that the Sellers would otherwise have been entitled to based upon their ownership percentages of the Company prior to the Closing, the Purchaser shall establish a separate employee stock option plan (the “ESOP”), which is to be provided as an incentive and benefit for the employees, officers, consultants, and/or directors of the Company and its Subsidiaries from time to time.

 

(b)            In connection with the implementation of the ESOP following the Closing, the Purchaser shall reserve for issuance pursuant to the ESOP the number of the Purchaser Shares set forth opposite name of the ESOP under column 2 titled “Reserved Purchaser Shares” of Part B of Schedule 1 attached hereto (the “ESOP Shares”).

 

(c)            The Purchaser hereby undertakes that the ESOP Shares that are issued pursuant to the ESOP from time to time will be subject to the Locked-Up Restrictions in accordance with Section 5.5 for eighteen (18) months from and after the date of issuance of such ESOP Shares.

 

Section 5.5             Lock-up Arrangement.

 

(a)            Subject to the exceptions set forth in Section 5.5(b), during the applicable Locked-Up Period, each Seller agrees not to, without the prior written consent of the disinterested directors of the Audit Committee: (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option, right or warrant to purchase or otherwise transfer or dispose of, or agree to transfer or dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, any of the Aggregate Consideration (the “Locked-Up Shares”); (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of such Locked-Up Shares, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise; or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii) (the actions specified in clauses (i)-(iii), collectively, “Transfer”). With respect to each Seller, the foregoing limitations shall remain in full force and effect for a period of: (x) with respect to the Non-Contingent Consideration, eighteen (18) months from and after the Closing Date; and (y) with respect to each Purchaser Share issued as part of the Deferred Contingent Consideration, eighteen (18) months from and after the date of issuance of such Purchaser Share (such periods set forth in the foregoing clauses (x) through (y), as applicable, the “Locked-Up Period”).

 

(b)            With respect to each Seller, the restrictions set forth in Section 5.5(a) (the “Locked-Up Restrictions”) shall not apply to:

 

(i)             in the case of an entity, Transfers to (A) such entity’s officers or directors or any affiliate (as defined below) or immediate family (as defined below) of any of such entity’s officers or directors, (B) any shareholder, partner or member of such entity or their affiliates, (C) any affiliate of such entity, or (D) any employees of such entity or of its affiliates;

 

(ii)            in the case of an individual, Transfers by gift to members of the individual’s immediate family or to a trust, the beneficiary of which is a member of the individual’s immediate family or to an affiliate of such person;

 

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(iii)           in the case of an individual, Transfers by virtue of laws of descent and distribution upon death of the individual;

 

(iv)           in the case of an individual, Transfers by operation of law or pursuant to a court order, such as a qualified domestic relations order, divorce decree or separation agreement;

 

(v)            in the case of an individual, Transfers to a partnership, limited liability company or other entity of which the undersigned and/or the immediate family of the undersigned are the legal and beneficial owner of all of the outstanding equity securities or similar interests;

 

(vi)           in the case of an entity that is a trust, to a trustor or beneficiary of the trust or to the estate of a beneficiary of such trust;

 

(vii)          in the case of an entity, Transfers by virtue of the laws of the state of the entity’s organization and the entity’s organizational documents upon dissolution of the entity;

 

(viii)         pledges of any Locked-Up Shares to a financial institution that create a mere security interest in such Locked-Up Shares pursuant to a bona fide loan or indebtedness transaction so long as such Seller continues to control the exercise of the voting rights of such pledged Locked-Up Shares as well as any foreclosures on such pledged Locked-Up Shares;

 

(ix)           Transfers to the Purchaser to satisfy tax withholding obligations;

 

(x)            the establishment of a trading plan that meets the requirements of Rule 10b5-1(c) under the Exchange Act (a “Trading Plan”); provided, however, that no sales of Locked-Up Shares, shall be made by such Seller pursuant to such Trading Plan during the applicable Locked-Up Period and no public announcement or filing is voluntarily made regarding such plan during the applicable Locked-Up Period; and

 

(xi)           Transfers made in connection with a liquidation, merger, share exchange or other similar transaction that results in all of the Purchaser’s shareholders having the right to exchange their Purchaser Shares for cash, securities or other property subsequent to the Closing Date;

 

provided, however, that in the case of clauses (i) through (viii), these permitted transferees must enter into a written agreement, in substantially the form of this Agreement, agreeing to be bound by the Locked-Up Restrictions and shall have the same rights and benefits under this Agreement. For purposes of this paragraph, “immediate family” shall mean a spouse, domestic partner, child, grandchild or other lineal descendant (including by adoption), father, mother, brother or sister of an individual; and “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act of 1933, as amended.

 

(c)            Notwithstanding anything to the contrary set forth herein, each Seller shall be entitled to enjoy all of the rights (save for the Locked-Up Restrictions set forth in Section 5.5(a)) attached to any Locked-Up Shares that have been issued by the Purchaser to such Seller, including to (i) exercise voting rights carried by such issued Locked-Up Shares and (ii) receive any dividends or other distributions in respect of such issued Locked-Up Shares.

 

(d)            In furtherance of the foregoing, the Purchaser, and any duly appointed transfer agent for the registration or transfer of the Locked-Up Shares, are hereby authorized to decline to make any transfer of securities if such Transfer would constitute a violation or breach of the Locked-Up Restrictions.

 

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Section 5.6             Required Audit Committee Approval. The Parties acknowledge and agree that the transactions contemplated by the Transaction Documents constitute transactions with related person (as defined in Item 404 of Regulation S-K) and remain subject to review and approval by the Audit Committee pursuant to the Charter Documents of the Purchaser (the “Required Audit Committee Approval”) as of the date of this Agreement. The Parties agree to use its reasonable best efforts to cooperate with the Audit Committee (including providing all materials reasonably requested by the Audit Committee) to facilitate its review and evaluate the transactions contemplated by the Transaction Documents, together with Kroll LLC, as its independent financial advisor.

 

Section 5.7             China Operation Company. Promptly after the Closing, the Purchaser shall cause the Company to: (i) form and incorporate a limited liability company under the Laws of the PRC (the “China Opco”) directly and wholly owned by the Master Franchisee in a form reasonably satisfactory to each of Cartesian and PLK; and (ii) provide Cartesian and PLK with written materials evidencing the formation of the China Opco in forms reasonably satisfactory to each of Cartesian and PLK. Upon formation of the China Opco, the Parties shall cause PLK and/or its Affiliates, the Master Franchisee (acting as the “Parent” under the Company Franchise Agreement) and the China Opco (acting as the “Franchisee” under the Company Franchise Agreement) to execute and deliver to each of the other Parties the Company Franchise Agreement.

 

Section 5.8             Absence of Certain Changes; Notification Obligations. From the date of this Agreement until the Closing, except (a) as specifically required by this Agreement or any of the Transaction Documents, or (b) with the prior written consent of the Purchaser, each of the Sellers shall use its reasonable best efforts to refrain the Company from any change, event, condition, or development that is, or could reasonably be expected to be, individually or in the aggregate, adverse in any material respect to the business, results of operations, condition (financial or otherwise), or assets (if any) of the Company. The Sellers shall give prompt notice to the Purchaser of (a) the occurrence or non-occurrence of any event, the occurrence or non-occurrence of which is likely to cause any representation or warranty of any of the Sellers contained in this Agreement to be untrue or inaccurate at or prior to the Closing Date and (b) any failure of any of the Sellers to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by it hereunder; provided, however, that the delivery of any notice pursuant to this Section 5.8 shall not limit or otherwise affect any remedies available to the Purchaser receiving such notice.

 

Article VI
Conditions

 

Section 6.1             Conditions to the Obligation of each Party. The obligations of each Party to proceed to the Closing is subject to the satisfaction or waiver (where legally permissible) of the following conditions on or prior to the Closing:

 

(a)            no applicable Laws shall have been adopted or promulgated after the date of this Agreement by any Governmental Authority, and no temporary restraining order, preliminary or permanent injunction or other order issued by any Governmental Authority of competent jurisdiction (an “Injunction”) shall be in effect, in any case having the effect of making the transactions contemplated hereby illegal or otherwise prohibiting the consummation of the transactions contemplated hereby;

 

(b)            no Action shall have been initiated or threatened by any Governmental Authority seeking an Injunction having the effect of making the transactions contemplated hereby illegal or otherwise prohibiting the consummation of the transactions contemplated hereby;

 

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(c)            the Closing (as defined in the JVIA) shall have been consummated pursuant to the JVIA; and

 

(d)            the Purchaser shall have obtained the Required Audit Committee Approval.

 

Section 6.2             Conditions to the Purchaser’s Obligations. The obligation of the Purchaser to proceed to the Closing is subject to the satisfaction or waiver of the following conditions on or prior to the Closing:

 

(a)            each of the warranties of each Seller contained in Article III shall be true and correct in all material respects when made and at the Closing as if made anew as of such time (except to the extent any such warranty expressly relates to an earlier date, as of such earlier date);

 

(b)           each Seller shall have performed in all material respects all of the covenants and agreements under this Agreement that are required to be performed by it at or prior to the Closing; and

 

(c)            each Seller shall have delivered to the Purchaser a certificate signed by an authorized director or officer of such Seller, dated the Closing Date, certifying that, to the knowledge and belief of such director or officer, the conditions specified in Section 6.2(a) and Section 6.2(b) have been fulfilled.

 

Section 6.3             Conditions to the Sellers’ Obligations. The obligation of the Sellers to proceed to the Closing is subject to the satisfaction or waiver of the following conditions on or prior to the Closing:

 

(a)            each of the warranties of the Purchaser contained in Article IV shall be true and correct in all material respects when made and at the Closing as if made anew as of such time (except to the extent any such warranty expressly relates to an earlier date, as of such earlier date);

 

(b)            the Purchaser shall have performed in all material respects all of the covenants and agreements under this Agreement that are required to be performed by it at or prior to the Closing; and

 

(c)            the Purchaser shall have delivered to the Sellers a certificate signed by an authorized director or officer of the Purchaser, dated the Closing Date, certifying that, to the knowledge and belief of such director or officer, the conditions specified in Section 6.3(a) and Section 6.3(b) have been fulfilled.

 

Section 6.4             No other Conditions. Each Party agrees that, except as may be otherwise agreed in writing between the Sellers and the Purchaser, the Closing is not subject to any conditions (including any condition as to availability of financing to the Purchaser) other than those conditions expressly set forth in this Article VI.

 

Article VII
Indemnification

 

Section 7.1             Indemnification by the Sellers. Each Seller hereby agrees to, from and after the Closing, severally but not jointly (and for the avoidance of doubt, not “jointly and severally”), indemnify and hold harmless the Purchaser and its successors and permitted assigns and any of its Affiliates, and their respective officers, directors, and employees (each, a “Purchaser Indemnified Party”) from and against any and all Indemnifiable Losses that were actually suffered by such Purchaser Indemnified Party as a result of, or arising from any breach of or inaccuracy in any Seller’s Fundamental Representation made by such Seller in this Agreement.

 

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Section 7.2             Indemnification by the Purchaser. The Purchaser hereby agrees to, from and after the Closing, indemnify and hold harmless the Sellers and their respective successors and permitted assigns and any of its Affiliates, and their respective officers, directors, and employees (each, a “Seller Indemnified Party”) from and against any and all Indemnifiable Losses that were actually suffered by such Seller Indemnified Party as a result of, or arising from any breach of or inaccuracy in any Purchaser Fundamental Representation made by the Purchaser in this Agreement.

 

Section 7.3             Survival. Each of the representations and warranties of each Seller set forth in Article III and the Purchaser set forth in Article IV shall survive the Closing until the third (3rd) anniversary of the Closing Date and those covenants and agreements contained in Article V that by their terms expressly apply in whole or in part at or after the Closing shall survive the Closing in accordance with their respective terms.

 

Section 7.4             Right to Cure. None of the Sellers and the Purchaser shall be liable for any claim made by a Purchaser Indemnified Party or a Seller Indemnified Party (as applicable) pursuant to this Article VII to the extent any breach or circumstances underlying such claim has been remedied or otherwise cured by such Seller or the Purchaser (as applicable) after such claim is made (to the extent that, as a result of such cure, such Purchaser Indemnified Party or Seller Indemnified Party (as applicable) has not actually suffered Indemnifiable Losses in connection with or attributable to the matters giving rise to such claim).

 

Section 7.5             Limitation of Liability; Exclusive Remedy. Each Seller’s aggregate liability in respect of all claims against it under or in connection with the terms of this Agreement shall not exceed the value of the Aggregate Consideration (received by such Seller) at the time of issuance pursuant to the terms and conditions hereof. With respect to each Seller, the Purchaser’s aggregate liability for the benefit of such Seller in respect of all claims against the Purchaser under or in connection with the terms of this Agreement shall not exceed the Aggregate Consideration (received by such Seller) at the time of issuance pursuant to the terms and conditions hereof. The Parties agree that, in the event the Closing occurs, with respect to PLK only, the remedies provided for in this Article VII shall be the Purchaser’s sole and exclusive remedies for any breach of the representations and warranties provided by PLK under this Agreement or any claims against PLK relating to this Agreement, other documents, certificates, agreements delivered in connection with this Agreement, the Company, or any Law or otherwise.

 

Article VIII
Termination

 

Section 8.1             Grounds for Termination. This Agreement may be terminated as between the Parties:

 

(a)            at any time prior to the occurrence of the Closing by the mutual written consent of the Sellers, on one hand, and the Purchaser, on the other hand;

 

(b)            by the Sellers (acting collectively) or the Purchaser if the Closing shall not have been consummated on or before June 30, 2024 or such other date as may be agreed by the Sellers and the Purchaser in writing (the “Long Stop Date”), provided, however, that the Sellers or the Purchaser, as applicable, shall not be entitled to terminate this Agreement pursuant to this Section 8.1(b) if, (i) with respect to the termination right of the Sellers, any Seller, or (ii) with respect to the termination right of the Purchaser, the Purchaser, has breached this Agreement and such breach has resulted in the Closing not having been consummated on or before the Long Stop Date; and

 

(c)            by any Seller or the Purchaser if there has been a material misrepresentation or material breach of a representation, warranty, covenant or agreement contained in this Agreement on the part of the Purchaser (in case of termination by a Seller) or a Seller (in case of termination by the Purchaser), and such breach is not curable or, if curable, has not been cured within thirty (30) days after the delivery of notice of breach by the non-breaching Party, provided however that the right to terminate this Agreement pursuant to this Section 8.1(c) shall not be available to a Seller or the Purchaser (as the case may be), if such Party is then in material breach of this Agreement.

 

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Section 8.2             Effect of Termination. Upon any termination of this Agreement pursuant to Section 8.1, this Agreement shall forthwith become wholly void and of no effect with respect to the applicable Parties and such Parties shall be released from all future obligations hereunder, provided that (i) nothing herein shall relieve any such Party from liability for any breach of this Agreement occurring prior to such termination, and (ii) the provisions of Article I, Article VII, this Article VIII and Article IX shall remain in full force and effect pursuant to their terms and survive any termination of this Agreement.

 

Article IX
Miscellaneous

 

Section 9.1             Governing Law; Jurisdiction. This Agreement and all Actions (whether in contract, tort or otherwise) that may be based upon, arise out of or relate to this Agreement or the negotiation, execution or performance hereof shall be governed by, construed and enforced in accordance with the Laws of the State of New York, without regard to the conflict of laws principles thereof, except that the internal affairs of the Purchaser and any provisions of this Agreement that are expressly or otherwise required to be governed by the Cayman Act, shall be governed by the Laws of the Cayman Islands (without giving effect to choice of law principles thereof) in respect of which the Parties irrevocably submit to the non-exclusive jurisdiction of the Courts of the Cayman Islands. Subject to the immediately preceding sentence, all Actions arising out of or relating to this Agreement, the other Transaction Documents, or the transactions contemplated hereby or thereby shall be heard and determined exclusively in the Court of Chancery of the State of New York, or to the extent such Court does not have subject matter jurisdiction, any federal court within the State of New York (and any courts having jurisdiction over appeals therefrom), and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Action.

 

Section 9.2             WAIVER OF JURY TRIAL . EACH OF THE PARTIES HERETO HEREBY WAIVES TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY ACTION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, the other Transaction Documents OR THE TRANSACTIONS CONTEMPLATED HEREBY and thereby, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY, OR OTHERWISE. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF ANY ACTION, SEEK TO ENFORCE THAT FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS Section 9.2.

 

Section 9.3             Specific Performance. Each Party hereto acknowledges that money damages would not be an adequate remedy in the event that any of the covenants or agreements in this Agreement are not performed in accordance with its terms, and it is therefore agreed that in addition to and without limitation to any other remedy or right it may have, the non-breaching Party will have the right to seek an injunction, temporary restraining order or other equitable relief in any court of competent jurisdiction enjoining any such breach and enforcing specifically the terms and provisions hereof.

 

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Section 9.4             Entire Agreement. This Agreement, the other Transaction Documents and the schedules and exhibits hereto and thereto, which are hereby expressly incorporated herein by this reference, and any other written agreements entered into concurrently with this Agreement in connection with the transactions contemplated hereby or thereby, constitute the entire understanding and agreement between the Parties with respect to the subject matter hereof and thereof and supersede all prior agreements, understandings, and warranties, whether written or oral, among the Parties hereto with respect to the subject matter hereof; provided, however, that nothing in this Agreement or the other Transaction Documents shall be deemed to terminate or supersede the provisions of any confidentiality and nondisclosure agreements executed by the Purchaser or any of its Affiliates thereof prior to the date of this Agreement.

 

Section 9.5             Successors and Assigns. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the Parties hereto whose rights or obligations hereunder are affected by such amendments. This Agreement and the rights and obligations hereunder may not be assigned by any Party without the prior written consent of the other Parties. Notwithstanding the foregoing, this Agreement and the rights and obligations herein may be assigned by the Purchaser or any Seller to any of their respective Affiliates, provided that such Affiliate agrees in writing to be bound by and subject to all the terms and conditions of this Agreement, and that no such assignment shall relieve the Purchaser or such Seller, as applicable, of its obligations hereunder.

 

Section 9.6             Notices. Except as may be otherwise provided herein, all notices, requests, waivers and other communications made pursuant to this Agreement shall be in writing to the number or address set forth in Schedule 3 hereto, and shall be conclusively deemed to have been duly given (a) when hand-delivered to the other Parties, upon delivery; (b) when sent by electronic mail, upon receipt of confirmation of error-free transmission or, in the case of electronic mail, upon such mail being sent unless the sending Party subsequently learns that such electronic mail was not successfully delivered; or (c) three (3) Business Days after deposit with an overnight delivery service, postage prepaid with next-business-day delivery guaranteed, provided that the sending Party receives a confirmation of delivery from the delivery service provider. A Party may change or supplement the addresses given above, or designate additional addresses, for purposes of this Section 9.6, by giving the other Parties written notice of the new address in the manner set forth above.

 

Section 9.7             Amendments and Waivers. Any term of this Agreement may be amended only with the written consent of each Seller and the Purchaser. Any term of this Agreement may be waived only with the written consent of the Party against whom such waiver is effective.

 

Section 9.8             Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Party hereto upon any breach or default of any other Party hereto under this Agreement shall impair any such right, power or remedy of such Party, nor shall it be construed to be a waiver of any such breach or default, or of an acquiescence therein, or of any similar breach or default thereafter occurring; nor shall it be construed to be any waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of any Party hereto of any breach or default under this Agreement or any waiver on the part of any Party hereto of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to any Party hereto, shall be cumulative and not alternative.

 

Section 9.9             Interpretation; Titles and Subtitles. This Agreement shall be construed according to its fair language. The rule of construction to the effect that ambiguities are to be resolved against the drafting Party shall not be employed in interpreting this Agreement. The titles of the sections and subsections of this Agreement are for convenience of reference only and are not to be considered in construing this Agreement. Unless otherwise expressly provided herein, all references to Sections, Schedules and Exhibits herein are to Sections, Schedules and Exhibits of this Agreement.

 

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Section 9.10           Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument. Facsimile and e-mailed copies of signatures in portable document format (PDF) shall be deemed to be originals for purposes of the effectiveness of this Agreement.

 

Section 9.11           Severability. If any provision of this Agreement is found to be invalid or unenforceable, then such provision shall be construed, to the extent feasible, so as to render the provision enforceable and to provide for the consummation of the transactions contemplated hereby on substantially the same terms as originally set forth herein, and if no feasible interpretation would save such provision, it shall be severed from the remainder of this Agreement, which shall remain in full force and effect unless the severed provision is essential to the rights or benefits intended by the Parties. In such event, the Parties shall use their best efforts to negotiate, in good faith, a substitute, valid and enforceable provision or agreement which most nearly reflects the Parties’ intent in entering into this Agreement.

 

Section 9.12           Expenses. Except as set forth in the JVIA Termination Agreement, each Party hereto will bear its own legal, accounting and other costs and expenses incurred by such Party in connection with the negotiation, execution and delivery of this Agreement and the other Transactionl Documents and the consummation of the transactions contemplated hereby and thereby.

 

Section 9.13           Confidentiality; Publicity.

 

(a)            Each Party hereto undertakes to each other Party that, it shall not disclose (including through its Representatives) to any third party any Confidential Information concerning such other Party or the transactions contemplated hereby except that (i) each Party, as appropriate, may disclose any of the Confidential Information to its Representatives on an as-needed basis in connection with the negotiation and consummation of the transactions contemplated hereby, in each case only where such Representatives are under appropriate nondisclosure obligations; and (ii) if any Party is requested or becomes legally compelled (including without limitation, pursuant to securities Laws) to disclose the existence or content of any of the Confidential Information in contravention of the provisions of this section, such Party shall promptly provide such other Party with written notice of that fact so that such other Party may seek a protective order, confidential treatment or other appropriate remedy and in any event shall furnish only that portion of the information that is legally required and shall exercise reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information.

 

(b)            No Party shall make, or cause to be made, any press release or public announcement in respect of this Agreement, the other Transaction Documents or the transactions contemplated hereby and thereby or otherwise communicate with any news media in respect of the same without the prior written consent of the other Parties (which consent shall not be unreasonably withheld, conditioned or delayed), unless otherwise required by Law, in which case each Party shall have the right to review and comment on such press release or announcement prior to publication (to the extent permissible by Law).

 

(c)            The confidentiality provisions contained in this Section 9.13 shall not abridge or modify the obligations of any of the parties to the Amended and Restated Master Development Agreement, and the Parties hereto agree that to the extent a conflict arises between this Agreement and the Amended and Restated Master Development Agreement, the provisions of the Amended and Restated Master Development Agreement shall control.

 

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25

 

 

IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.

   
  Seller:
   
  Pangaea Three Acquisition Holdings IV, Limited
   
   
   

 

[Signature Page to Share Purchase Agreement]

 

 

 

IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.

   
  Seller:
   
  PLK APAC Pte. Ltd.
   
   
   

 

[Signature Page to Share Purchase Agreement]

 

 

 

IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.

 

  PURCHASER:
   
  TH International Limited
   
   
  By:                   
  Name:
  Title: Authorized Signatory

 

[Signature Page to Share Purchase Agreement]

 

 

 

IN WITNESS WHEREOF, the Parties hereto have caused their respective duly authorized representatives to execute this Agreement as of the date first above written.

 

  COMPANY:
   
  PLKC International Limited
   
   
  By:                         
  Name:
  Title: Authorized Signatory

 

[Signature Page to Share Purchase Agreement]

 

 

 

Schedule 1

Part A - List of the Sellers

 

Name Number of Target Shares Non-Contingent Consideration*
Cartesian 30,000 Ordinary Shares and 60,000 Redeemable Shares 10,319,917 Purchaser Shares
PLK 10,000 Ordinary Shares 1,146,657 Purchaser Shares
Total 40,000 Ordinary Shares and 60,000 Redeemable Shares 11,466,574 Purchaser Shares

 

 

Part B - ESOP Arrangement

 

Name Reserved Purchaser Shares*
ESOP 603,503 Purchaser Shares

 

*Drafting Notes:

 

The Non-Contingent Consideration to be received by each of Cartesian and PLK and the number of reserved Purchaser Shares to be issuable pursuant to the ESOP has been calculated pursuant to the following formula:

 

1.US$35.087719 million, divided by

2.US$2.9070, which represents 85% of the volume-weighted average price (VWAP) of Purchaser Shares during the forty (40) trading days ended as of February 8, 2023, and multiplied by

3.for Cartesian, 85.5%; for PLK, 9.5%; and for the ESOP, 5%; with

4.each fractional share being rounded down to the nearest whole Purchaser Share.

 

Schedule 1

 

 

 

Schedule 2

Deferred Contingent Consideration

 

Type of Deferred
Contingent Consideration
Annual Deferred Contingent
Consideration
Lumpsum Deferred Contingent
Consideration
Cartesian

A number of Purchaser Shares calculated pursuant to the following formula:

 

1.       3% of the gross revenue attributable to the Company for each day in the applicable fiscal year, divided by

2.       85% of the volume-weighted average price (VWAP) of Purchaser Shares during the forty (40) trading days ended (i) in case of issuance pursuant to Section 5.3(a), as of the last trading day of the immediate preceding fiscal year or; (ii) in case of issuance pursuant to Section 5.3(b), as of the Exercise Date (or to the extent the Exercise Date is not a trading day, the last trading day immediately prior to the Exercise Date), and multiplied by

3.       90%.

A number of Purchaser Shares calculated pursuant to the following formula:

 

1.       US$35,000,0000, divided by

2.       85% of the volume-weighted average price (VWAP) of Purchaser Shares during the forty (40) trading days ended as of the Exercise Date (or to the extent the Exercise Date is not a trading day, the last trading day immediately prior to the Exercise Date), and multiplied by

3.       90%.

PLK

A number of Purchaser Shares calculated pursuant to the following formula:

 

1.     3% of the gross revenue attributable to the Company for each day in the applicable fiscal year, divided by

2.     85% of the volume-weighted average price (VWAP) of Purchaser Shares during the forty (40) trading days ended (i) in case of issuance pursuant to Section 5.3(a), as of the last trading day of the immediate preceding fiscal year or; (ii) in case of issuance pursuant to Section 5.3(b), as of the Exercise Date (or to the extent the Exercise Date is not a trading day, the last trading day immediately prior to the Exercise Date), and multiplied by

3.     10%.

A number of Purchaser Shares calculated pursuant to the following formula:

 

1.       US$35,000,0000, divided by

2.       85% of the volume-weighted average price (VWAP) of Purchaser Shares during the forty (40) trading days ended as of the Exercise Date (or to the extent the Exercise Date is not a trading day, the last trading day immediately prior to the Exercise Date), and multiplied by

3.       10%.

 

Schedule 2

 

 

 

Schedule 3

Address for Notices

 

If to Cartesian to:

c/o Cartesian Capital Group, LLC

505 Fifth Avenue, 15th Floor

New York, NY 10017

   

If to PLK to:

8 Cross Street, Manulife Tower, #28-021, Singapore 048424

Attention: [***]
Email: [***]

 

with a copy (which will not constitute notice) to:

Legal Department

Email: [***]

If to the Purchaser to:

2501 Central Plaza, 227 Huangpi North Road, Shanghai, People’s Republic of China

with a copy (which will not constitute notice) to:

Kirkland & Ellis

Attention: Armand A. Della Monica / Jesse Sheley / Joseph Raymond Casey / Min Lu

Address: 26th Floor, Gloucester Tower, The Landmark, 15 Queen's Road, Central, Hong Kong

Email: armand.dellamonica@kirkland.com; JSheley@kirkland.com; joseph.casey@kirkland.com; min.lu@kirkland.com

   

If to the Company to:

Mourant Governance Services (Cayman) Limited, 94 Solaris Avenue, Camana Bay, P.O. Box 1348, Grand Cayman KY1-1108, Cayman Islands

with a copy (which will not constitute notice) to:

c/o Cartesian Capital Group, LLC

505 Fifth Avenue, 15th Floor

New York, NY 10017

  

Schedule 3

 

 

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Exhibit A
Amended and Restated Master Development Agreement

 

Exhibit A

 

EXECUTION VERSION

 

AMENDED AND RESTATED MASTER DEVELOPMENT AGREEMENT

 

THIS AGREEMENT dated March 30, 2023 (the “Original Commencement Date”) has been amended and restated on March 30, 2023 (the “A&R Effective Date”) by and among:

 

(1)PLK APAC PTE. LTD., a company organized and existing under the laws of Singapore and having a principal place of business at 8 Cross St, Manulife Tower, #28-01/07, Singapore 048424 (“PLK”);

 

(2)PLKC HK INTERNATIONAL LIMITED, a limited liability company organized under the laws of Hong Kong (the “Master Franchisee”);

 

(3)PLKC INTERNATIONAL LIMITED, a company organized under the laws of Cayman Islands (the “JVC”); and

 

(4)TH INTERNATIONAL LIMITED, a limited company organized under the laws of Cayman Islands having a principal place of business at PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands (the “Shareholder”).

 

For the purposes of this Agreement, the above parties shall be individually referred to as a "Party" and collectively referred to as the "Parties".

 

INTRODUCTION

 

A.PLK has the exclusive right to use, and possesses the right to license and/or permit third parties to use, the unique Popeyes System and the Popeyes Marks for the development and operation of Quick Service Restaurants known as Popeyes Restaurants throughout the Region.

 

B.PLK is engaged in the business of developing, operating and granting franchises to operate Popeyes Restaurants throughout the Region using the Popeyes System and the Popeyes Marks and such other marks as PLK or its Affiliates may authorize from time to time for use in connection with Popeyes Restaurants.

 

C.PLK and its Affiliates have established a reputation and image with the public as to the quality of products and services available at Popeyes Restaurants, which reputation and image have been, and continue to be, a unique benefit to PLK, its Affiliates and its franchisees.

 

D.On the Original Commencement Date, PLK, Pangaea Three Acquisition Holdings IV, Limited (“Investor”), and Cartesian agreed to develop Popeyes Restaurants in the Territory, and for this purpose the JVC was established as a joint venture company (the “Transaction”). Upon consummation of the Transaction, PLK owned 10% of the Equity Securities of the JVC and the Investor owned 90% of the Equity Securities of the JVC. Master Franchisee is a wholly-owned subsidiary of the JVC.

 

E.On the Original Commencement Date, PLK and Master Franchisee entered into the Original Agreement, pursuant to which PLK granted to Master Franchisee and Master Franchisee obtained the exclusive right to develop, open and operate (through itself and the Approved Subsidiaries), and to license Franchisees to develop, open and operate, Popeyes Restaurants in the Territory.

 

F.On the A&R Effective Date, as a result of the Combination, the Shareholder owns one hundred percent (100%) of the Equity Securities of the JVC, and the JVC owns one hundred percent (100%) of the Equity Securities of Master Franchisee.

 

 

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

G.Master Franchisee recognizes, acknowledges, declares and confirms that (i) the benefits to be derived from being identified with and licensed by PLK and being able to utilize the Popeyes System including the Popeyes Marks which PLK makes available to its franchisees are substantial, and (ii) without such benefits being granted by PLK, Master Franchisee would not be in a position to establish and operate a food chain business in the Territory of the nature, reputation and quality of the Popeyes Restaurants and, as such, Master Franchisee has been provided a business opportunity that would not otherwise be available to Master Franchisee.

 

H.In connection with the granting of the Development Rights to Master Franchisee to ensure that the Standards shall be complied with and maintained, Master Franchisee has agreed to provide services and operational support to all Popeyes Restaurants operating within the Territory.

 

I.Master Franchisee acknowledges that it entered into the Original Agreement and is entering into this Agreement after having made an independent investigation of PLK's operations, and not upon any representation as to the profits and/or sales volumes which it might be expected to realize, nor upon any representations or promises made by PLK or any Person on its behalf which are not contained in this Agreement, except for such representations, warranties, covenants and agreements contained in the Transaction Agreements.

 

J.It is the intent of PLK and Master Franchisee to preserve continuing customer confidence in the reliability and quality of all products sold at Popeyes Restaurants.

 

K.The Parties now desire to enter into this Agreement, which Agreement will amend, restate, supersede and replace the Original Agreement with effect from the A&R Effective Date.

 

L.PLK has delivered to Master Franchisee a pre-contractual disclosure document as required under the applicable Law of the Territory, and Master Franchisee acknowledges that it has received such pre-contractual disclosure document in fulfilment of the requirements of applicable Law of the Territory.

 

NOW THEREFORE, in consideration of the mutual promises, agreements, obligations and covenants contained in this Agreement and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

1    INTERPRETATION

 

1.1Definitions

 

In this Agreement, the terms below have the following meanings. Any of such terms, unless the context otherwise requires, may be used in the singular or plural, depending upon the context.

 

A&R Effective Date” has the meaning set out in the preamble.

 

Accounting Principles” means the accounting principles of the Shareholder consistent with US GAAP.

 

Acquired Restaurant” has the meaning set out in clause 6.2.

 

Ad Fund Account” has the meaning set out in clause 11.1(a).

 

Ad Fund Breach” has the meaning set out in clause 11.7.

 

Administrative Expenses” means all general and administrative expenses and overhead associated with managing, administering and maintaining the Advertising Fund, including, without limitation, salaries of relevant employees of Master Franchisee and/or its Affiliates, and the salaries of relevant employees of PLK and its Affiliates if PLK terminates Master Franchisee’s right to manage the Advertising Fund and provide the Marketing Services and Advertising Services pursuant to clause 11.7.

 

2

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Advertising Contributions” has the meaning set out in clause 11.1(a).

 

Advertising Fund” means the advertising fund formed by Master Franchisee by combining the Advertising Contributions paid by Master Franchisee and Franchisees under the Company Franchise Agreement and the Franchise Agreements, as applicable, in respect of all Popeyes Restaurants in the Territory, which advertising fund shall be used for the purposes and in the manner stipulated in this Agreement, the Company Franchise Agreement and the Franchise Agreements.

 

Advertising Fund Audit” has the meaning set out in clause 11.9.

 

Advertising Services” has the meaning set out in clause 11.5.2.

 

Affected Area” has the meaning set out in clause 10.2.1.

 

"Affiliate" means any Person that directly or indirectly Controls, is Controlled by, or is under common Control with another Person.

 

Agreement” means this Amended and Restated Master Development Agreement.

 

Annual Cap” has the meaning set out in clause 10.2.4.

 

Annual Opening Target” has the meaning set out in the Development Schedule.

 

Anti-Corruption Laws” means the FCPA, the CFPOA, the Corruption and Disobedience sections of the Canadian Criminal Code, RSC 1985, c C-46, and all other anti-corruption, fraud, kickback, anti-money laundering, anti-boycott laws, regulations or orders, and all similar laws, or regulations or orders applicable to the Parties of this Agreement in the Territory and any other relevant jurisdictions.

 

Anti-Terrorism Laws” means Executive Order 13224 issued by the President of the United States, the Terrorism Sanctions Regulations (Title 31, Part 595 of the U.S. Code of Federal Regulations), the Foreign Terrorist Organizations Sanctions Regulations (Title 31, Part 597 of the U.S. Code of Federal Regulations), the Cuban Assets Control Regulations (Title 31, Part 515 of the U.S. Code of Federal Regulations), the USA PATRIOT Act, and all other present and future federal, state, provincial and local laws, ordinances, regulations, policies, lists and any other requirements of any governmental authority (including, without limitation, the United States Department of Treasury Office of Foreign Assets Control and any government agency outside the U.S.) addressing or in any way relating to terrorist acts and/or acts of war, including without limitation any applicable Canadian and UK anti-terrorism legislation.

 

Applicable Royalty” has the meaning set out in clause 9.5.1.

 

Approvals” has the meaning set out in clause 35.1.1.

 

Approved Facility” means the specific facility of an Approved Supplier that is approved by PLK in writing to manufacture and/or distribute the Approved Products in the Territory.

 

Approved Plans and Specifications” means the general plans and specifications for the construction and fit-out of a new or remodelled Restaurant in the Territory (including requirements as to signage and equipment) which may be approved from time to time by PLK in its sole discretion, which, for the avoidance of doubt are not specific to an individual site or Restaurant location.

 

3

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Approved Products” has the meaning set out in the Company Franchise Agreement.

 

Approved Subsidiary” means any entity (a) which will be and remain at all times wholly-owned by Master Franchisee, (b) which will be established in the Territory while the Development Rights are in effect, (c) the business of which will be limited to the operation of Popeyes Restaurants in the Territory, (d) which PLK will license the right to operate Direct-Owned Restaurants in the Territory pursuant to the Company Franchise Agreement, and (e) which will deliver to PLK a Joinder Agreement. An Approved Subsidiary may operate Direct-Owned Restaurants pursuant to the Company Franchise Agreement, subject to compliance with this Agreement and the Company Franchise Agreement.

 

Approved Suppliers” has the meaning set out in the Company Franchise Agreement.

 

Audit Report” has the meaning set out in clause 10.3.1.

 

Authority” means any federal, state, municipal, local or other governmental department, regulatory body, commission, board, bureau, agency or instrumentality, or any administrative, judicial or arbitral court or panel, with jurisdiction over the applicable matter.

 

Background Check Provider” means Guidehouse, Inc. or any similar service provider with reputable standing and relevant experience acceptable to PLK.

 

Basic Training Program” has the meaning set out in clause 15.1.1.

 

Board Meetings” has the meaning set out in clause 2.15.

 

Business Day” means a day, other than a Saturday, Sunday or public holiday in the Territory and Singapore on which banks are open in the Territory and Singapore for general commercial business.

 

Cartesian” means, collectively, PANGAEA THREE-B, LP, a legal entity organized and existing under the laws of the Cayman Islands with file registration number of MC-96696, and its Affiliates.

 

Cash and Cash Equivalents” means, as of any date of determination, the aggregate amount of cash, cash equivalents and marketable securities (including deposits) of the China Group as of such date, determined on a consolidated basis in accordance with the Accounting Principles.

 

CFPOA” means the Canadian Corruption of Foreign Public Officials Act, S.C. 1998, c. 34, as amended or superseded.

 

Chicken Competitive Business” means a Quick Service Restaurant business (a) based in and/or operating within the Region, where the combined sales of Chicken Products constitute twenty percent (20%) or more of its overall food and beverage sales and/or total menu items, or (b) based outside and/or operating solely outside the Region, where the combined sales of Chicken Products constitute thirty percent (30%) or more of its overall food and beverage sales and/or total menu items. A Chicken Competitive Business includes businesses that grant franchises or licenses to others to operate any of the types of businesses described in the preceding sentence. Without limiting the generality of the foregoing, the restaurant chains listed on Schedule 1 shall each be considered a Chicken Competitive Business for purposes of this Agreement and the Company Franchise Agreement.

 

Chicken Products” means any food products intended for human consumption that are (a) made with poultry or poultry parts or cuts, whether fresh or frozen, skinned or unskinned, boned or boneless, including domesticated chickens, turkeys and quails, or (b) intended to be sold as poultry substitutes, including plant-based poultry substitutes.

 

4

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

China Group” means the Shareholder, together with all subsidiaries of the Shareholder and all entities Controlled by the Shareholder. A “China Group Company” shall mean any of them.

 

China Group Debt” has the meaning set out in clause 2.14.

 

Claim” means any lawsuit, litigation, dispute, claim, arbitration, mediation, action, hearing, proceeding, investigation, charge, complaint, demand, injunction, judgment, order, decree, ruling or any other proceeding before a judicial, administrative or arbitral court or panel, whether known or unknown, liquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal or equitable.

 

Co-Branded Location” means a location where a Popeyes Restaurant and another restaurant business under another brand (the “Other Restaurant Business”) co-exist and any one of the following characteristics is present: (i) the Popeyes Restaurant and the Other Restaurant Business are staffed with the same employees, or (ii) the Popeyes Restaurant and the Other Restaurant Business share any one of the following: (a) the POS Systems, (b) kitchen or kitchen equipment, (c) seating areas (except that if the Popeyes Restaurant and the Other Restaurant Business are located in a food court, both businesses may share a common seating area), or (d) décor packages.

 

Combination” means the sale of one hundred percent (100%) of the Equity Securities of the JVC to the Shareholder on the date hereof.

 

Company Franchise Agreement” means the PRC Company Franchise Agreement. The form of Company Franchise Agreement is attached as Exhibit A.

 

Competitor” means any Person who (or which), whether directly or indirectly, owns or operates, or licenses to any other Person the right to own and/or operate, (a) any Chicken Competitive Business, and/or (b) any Seafood Competitive Business. For purposes of this definition, the term “Competitor” shall also include (i) any Affiliate of such Person, (ii) any director or officer of such Person or Affiliate, (iii) any entity Controlled by such Person or Affiliate, either through the direct or indirect ownership of Equity Securities, a contractual arrangement with one or more holders of Equity Securities or otherwise, and (iv) any immediate family member of such Person (or any Affiliate of any of the foregoing). Notwithstanding the foregoing, the Existing Businesses are excluded from the definition of “Competitor” for the purposes of this Agreement and the other Transaction Agreements.

 

Compliance Plan” is the compliance program and code of business ethics maintained by the JVC (with such modifications and updates as may be agreed to with PLK from time to time) to establish internal controls and reporting mechanisms to prevent, detect, identify, investigate and correct unethical, illegal or improper business practices, including violations of applicable Anti-Corruption Laws.

 

Concept Approval” has the meaning described in clause 10.2.1.

 

Concept Approval Notice” has the meaning described in clause 10.2.1.

 

Confidential Information” has the meaning set out in clause 19.1.

 

Confidential Operating Manual” means such sets of manuals, guides and video training materials, memoranda, bulletins, directives, computer programs, and other materials whether stored in a retrieval system or in paper format and whether documented or communicated in writing or electronically, as may exist or be changed by PLK and/or its Affiliates from time to time, in their sole discretion, which together create and maintain uniform standards and specifications of use of the Popeyes Marks and the operation of Restaurants and the Popeyes System.

 

5

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Control” or “Controlled” means the direct or indirect ownership, whether by ownership of Equity Securities, contract, proxy or otherwise, of shareholding or contractual rights of a Person that assures (a) the majority of the votes in the resolutions of such Person, or (b) the power to appoint the majority of the managers or directors of such Person, or (c) the power to direct or cause the direction of the management or policies of such Person, and the related terms “Controlled by” “Controlling” or “under common Control with” shall be read accordingly.

 

“Conversion Rate” means the official exchange rate published by Bloomberg L.P. (or if this rate is unavailable or is no longer published, the rate published by The Wall Street Journal or such other internationally recognized third party financial information publisher designated by PLK from time to time) for the exchange of the currency in question on the date applicable to any currency conversion.

 

Core Menu Items” means the items set out in Schedule 5, and such other essential menu items as may be determined by PLK and/or its Affiliates acting in good faith, in their sole discretion, for the Popeyes System globally and not solely with respect to the Territory, from time to time and communicated in writing to Master Franchisee. The publication of any changes to the Core Menu Items in the Confidential Operating Manual shall be considered a “writing” for purposes hereof. PLK shall provide Master Franchisee with reasonable time to implement any new Core Menu Item.

 

Core Menu Item Removal Notice” has the meaning set out in clause 10.4.1.

 

Cumulative Opening Targets” has the meaning set forth in the Development Schedule.

 

Current Image” means the internal and external physical appearance of new or remodeled Popeyes Restaurants including, without limitation, as it relates to signage, fascia, color schemes, menu boards, lighting, furniture, finishes, décor, materials, equipment and other matters generally applicable to PLK’s operations in the Territory as may be changed from time to time by PLK and/or its Affiliates in their sole discretion.

 

Days” or “Day” means calendar day or days, unless otherwise expressly provided.

 

Debt” means, with respect to China Group, on a consolidated basis, and without duplication, the outstanding principal amount of, together with accrued and unpaid interest on, any (a) indebtedness for borrowed money; (b) other obligations evidenced by any note, bond, debenture or other debt security; and (c) guarantees of any indebtedness of a third party of the type described in the foregoing (a) and (b). “Debt” shall not include (x) any obligations under operating leases or real property leases, (y) any obligations with respect to surety bonds or undrawn letters of credit, or (z) any intercompany obligations.

 

Definitive Agreements” has the meaning set out in clause 4.10.5.

 

Delivery Aggregator” means a business that (a) permits a customer to place an order for products provided by a Popeyes Restaurant through an online portal, Mobile Application, call center or other electronic means, (b) transmits such order to the Restaurant for fulfillment, and (c) provides additional services in connection therewith (including delivery and pickup services). The terms of any arrangements between Master Franchisee and a Delivery Aggregator (and any amendments thereto) are subject to approval by PLK (not to be unreasonably withheld or delayed).

 

Delivery Aggregator Information” means the data and information arising out of the utilization of a Delivery Aggregator by Master Franchisee and/or Franchisees or otherwise provided to Master Franchisee by the Delivery Aggregator. Delivery Aggregator Information includes sales data, aggregated, per order and per SKU sales and order accuracy data (food subtotal, tax amounts, etc.), Delivery Fees, customer ratings and feedback, metrics relevant to improve in-store performance, including online time, wait time at pickup, total delivery time, unaccepted or canceled orders, time to accept orders, preparation time and completed and failed orders, and such other information that PLK may from time to time request.

 

6

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Delivery Fee” means the full amount of the commission, service fee or other charge paid to Delivery Aggregators and other third parties in connection with the Delivery Program.

 

Delivery Program” means a PLK-approved program pursuant to which customers can order Approved Products (as defined in the Company Franchise Agreement) to be delivered to their home or office through any means, including an online portal which is accessible via a computer or a Mobile Application, call center or other electronic means. Each participating Popeyes Restaurant will (a) manage the Delivery Program in the manner prescribed by PLK from time to time (which is currently through a web-based delivery manager portal), including the management of delivery zones, orders, drivers, product availability and pricing, (b) purchase special equipment approved by PLK from time to time (to the extent applicable to all franchisees in the Region) in order to maintain temperature of the Approved Products and to connect the POS System to the then approved delivery system (currently, the delivery manager portal), and (c) pay all applicable fees to the third party vendor, if any, which is approved by PLK from time to time to administer all or any portion of the Delivery Program, including the online portal, call center and delivery manager portal.

 

Delivery Requirements” means the rules, policies, guidelines and Standards established by PLK, in its sole discretion, from time to time in connection with a Delivery Program, taking into consideration local norms, customs and practices, and recommendations from Master Franchisee.

 

Development Cure Period” means for any Shortfall Year, a six (6) month period commencing on January 1st of the Development Year immediately following such Shortfall Year.

 

Development Default” has the meaning set out in clause 6.8.

 

Development Rights” has the meaning set out in clause 4.1.

 

Development Schedule” means the schedule attached to this Agreement as Schedule 2.

 

Development Services has the meaning set out in clause 9.13.

 

"Development Year" or “Year” means each calendar year during the Term, except for the first Development Year, which began on the Original Commencement Date and shall end on December 31, 2023.

 

Direct-Owned Restaurants” means the Popeyes Restaurants owned, established and operated by Master Franchisee and/or Approved Subsidiaries in the Territory pursuant to this Agreement and the Company Franchise Agreement. Direct-Owned Restaurants include any Acquired Restaurants.

 

Direct-Owned Restaurant Fee Credit” has the meaning set out in clause 8.6.

 

Direct-Owned Restaurant Limitation” has the meaning set out in clause 6.1.

 

Direct-Owned Restaurant Unit Fee” has the meaning set out in clause 8.5.

 

Dispute” has the meaning set out in clause 29.2.

 

DTT” has the meaning set out in clause 22.6.

 

Early Closure Request” has the meaning set out in clause 6.6.

 

7

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Equity Securities” means, with respect to a Person that is a legal entity, any and all shares of the capital stock or other equity interests of such Person, securities of such Person convertible into, or exchangeable or exercisable for, such shares or other equity interests, and options, warrants or other rights, including, but not limited to, subscription rights, to acquire such shares or other equity interests.

 

Events of Default” means those events set out in clause 18.1.

 

Exclusivity Exclusions” has the meaning set out in clause 4.5.

 

Existing Businesses” has the meaning set out in clause 14.3.

 

Export Control Laws” means the various export control statutes, regulations, decrees, orders, guidelines and policies of the United States Government and the Government of Canada, collectively referred to as “Export Control Laws,” including, but not limited, to the International Traffic in Arms Regulations (22 C.F.R. Parts 120-130 (2016)) of the U.S. Department of State, the Export Administration Regulations ("EAR") (15 C.F.R. Parts 730-774 (2016)) of the U.S. Department of Commerce; the U.S. anti-boycott regulations and guidelines, including those under the EAR and U.S. Department of the Treasury regulations; the various economic sanctions regulations and guidelines of the U.S. Department of the Treasury, Office of Foreign Assets Control, as amended, the equivalent laws and regulations of Canada; and restrictions against dealings with certain prohibited, debarred, denied or specially designated entities or individuals under statutes, regulations, orders, and decrees of various agencies of the United States Government or Government of Canada.

 

Extension Notice” has the meaning set forth in clause 5.1.1.

 

Extension Period” has the meaning set forth in clause 5.1.

 

Extension Period Targets” has the meaning set out in the Development Schedule.

 

FCPA” means the U.S. Foreign Corrupt Practices Act of 1977, as amended or superseded.

 

Final Judgment” has the meaning set out in clause 20.5.

 

Final Proposal” has the meaning set out in clause 4.10.5.

 

Financial Year” means the fiscal year of the Shareholder and its subsidiaries, including Master Franchisee and the Approved Subsidiaries.

 

First Deadline” has the meaning set out in clause 4.10.3.

 

Force Majeure Event” has the meaning set out in clause 6.9.

 

Franchise Agreement” means a franchise agreement authorized by PLK to be used in the Territory and entered into between Master Franchisee, as franchisor, and a Franchisee, as franchisee, during the Term which grants Franchisee the right to operate a Franchised Restaurant at a specific location in the Territory. Prior to entering into the Franchise Agreement with respect to the first Franchised Restaurant in the Territory, the final form of Franchise Agreement shall be approved in writing by PLK. In addition, PLK shall approve any changes to the form of Franchise Agreement from time to time and may require Master Franchisee to implement changes to the form in the event that PLK’s requirements change from time to time.

 

Franchised Restaurants” means, collectively, the Popeyes Restaurants operated by Franchisees pursuant to Franchise Agreements.

 

8

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Franchised Restaurant Unit Fee” has the meaning set out in clause 9.4.1.

 

Franchisee” means a Person that is not an Affiliate of Master Franchisee who is licensed by Master Franchisee to open and operate a Popeyes Restaurant in the Territory pursuant to a Franchise Agreement.

 

Funding Breachhas the meaning set forth in clause 2.17.

 

FSC” has the meaning set out in clause 20.9.6.

 

FSR” has the meaning set out in clause 20.9.6.

 

Global Marketing Policy” means the Global Marketing Policy, as such policy may be amended or supplemented by PLK and/or its Affiliates from time to time in their sole discretion. The current version of the Global Marketing Policy is attached as Exhibit F.

 

Goods and Services” means the goods and services in respect of which the Popeyes Marks are registered.

 

Gross Salesincludes all sums charged or received in cash or by credit (and regardless of collection in the case of credit) for all goods and merchandise sold or otherwise disposed of, or services provided or performed at or from a Restaurant, including all premiums unless exempted by PLK, and all other revenue and income of every kind and nature related to the Restaurant. The sale of Popeyes products away from a Restaurant is not authorized; however, should any such sales, including off-premises services such as catering and delivery, occur or be approved in the future, they will be included within the definition of Gross Sales. For the avoidance of doubt, Gross Sales includes all sums charged or received in cash or by credit by Master Franchisee or a Franchisee for goods or merchandise sold through the provision of delivery or catering services, whether such delivery or catering services are provided by Master Franchisee, a Franchisee or another third party. For further clarity, if the delivery or catering services are provided by a Delivery Aggregator or other third party and a portion of the sum charged to or received in cash or by credit from customers must be paid by Master Franchisee or the Franchisee to the Delivery Aggregator or other third party as a Delivery Fee, such Delivery Fee shall not be deducted from the calculation of Gross Sales. Finally, any fees or costs relating to loyalty programs of Master Franchisee or a third party, including, without limitation, fees paid on the issuance of loyalty points or similar award units, whether or not such fees or costs are paid directly to any loyalty program administrator or service provider or are deducted from amounts otherwise due to Master Franchisee by such loyalty program administrator or service provider for the sale of Popeyes products at a Restaurant, shall not be deducted from the calculation of Gross Sales. Gross Sales excludes taxes that are required by applicable Law: (a) to be levied on the customer at the time of each sales transaction; (b) to be collected by Master Franchisee or a Franchisee and remitted to the Tax Authority by such Persons; and (c) to be based upon the amount of the sale. Gross Sales also excludes cash received as payment in credit transactions where the extension of credit itself has already been included in the figure upon which the Royalty and Advertising Contribution is calculated. In addition, and for certainty only, taxes based on gross income or gross revenue of Master Franchisee or a Franchisee shall not be deducted from the calculation of Gross Sales.

 

HK$” means Hong Kong Dollars.

 

HK Development Rights” has the meaning set out in clause 4.10.

 

ICC Rules” has the meaning set out in clause 29.3.

 

9

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Indirect Tax” or “Indirect Taxes” means sales and use tax, goods and services tax, value added tax, ad valorem tax, excise tax, duty, levy or other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing (together with any penalties, interest, or other similar amounts thereon) levied by a Tax Authority.

 

Initial Term” has the meaning set out in clause 5.1.

 

Intellectual Property Claims” has the meaning set out in clause 20.2.4.

 

Interest Notice” has the meaning set out in clause 4.10.3.

 

Interim FA” means that certain franchise agreement to be entered into by and between PLK and Mr. Peng Zhang with respect to the Popeyes Marks and/or the Popeyes Restaurants in the Territory.

 

Investor” has the meaning set out in Recital D.

 

IP Transferee” has the meaning set out in clause 21.2.

 

IT Systemsmeans POS Systems, Order Systems or any other technology for the purpose of (a) communicating with customers of Popeyes Restaurants in the Territory, or (b) collecting, managing, processing, storing and using Popeyes Restaurant data, as well as any other data and information collected from or relating to customers of Popeyes Restaurants in the Territory, which may be mandated or approved by PLK or any of its Affiliates from time to time during the Term, and including any system, equipment, network, wiring, hardware and software in connection with any of the foregoing.

 

Joinder Agreement” means the Joinder Agreement executed by Master Franchisee and an Approved Subsidiary and delivered to PLK, pursuant to which the Approved Subsidiary agrees to be bound by the Company Franchise Agreement and jointly and severally liable with Master Franchisee and all other Approved Subsidiaries for all of the liabilities and obligations of Franchisee (as defined in the Company Franchise Agreement) pursuant to the Company Franchise Agreement and each Unit Addendum issued thereunder. The form of Joinder Agreement is attached as Schedule E to the Company Franchise Agreement.

 

JVC” has the meaning set out in the preamble.

 

Law” or “law” means, collectively, any laws, rules, statutes, decrees, regulations, circulars, writs, injunctions, ordinances or orders, including all applicable public, environmental, and competition laws, and regulations; and any administrative decisions, judgments and other pronouncements enacted, issued, promulgated, enforced or entered by any Authority.

 

Level 2 Background Check” means the final report issued by the Background Check Provider based on the level 2 background check to be conducted by the Background Check Provider, which will be limited to:

 

(a)the standard scope of work of Guidehouse, Inc. for a Level 2 Background Check, a copy of which is in the agreed form attached as Exhibit B hereto, as such scope may be modified by applicable Law (the “Level 2 Agreed Scope”); or

 

(b)to the extent that Guidehouse, Inc. from time to time amends its standard scope for work for completing a background check of an equivalent level to that contemplated by the Level 2 Agreed Scope, such amended scope; or

 

10

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

(c)to the extent that a provider other than Guidehouse, Inc. is used, its standard scope of work at the relevant time for completing a background check of an equivalent level to that contemplated by the Level 2 Agreed Scope.

 

Local Currency” has the meaning set out in clause 22.1.

 

Losses” means any losses, amounts paid in settlement, penalties, fines, damages (including special, indirect and consequential damages), lost profits, liabilities, costs and expenses (including reasonable attorneys’ fees and expenses incurred in investigating, preparing or defending any Claims covered hereby).

 

LTM EBITDA” means, as of any date of determination, the consolidated earnings before interest, taxes, depreciation and amortization of China Group for the 12-month period ending as of the last day of the month ended immediately prior to such date, determined in accordance with the Accounting Principles.

 

“Mainland China” means the PRC, excluding Taiwan and the Special Administrative Regions of Hong Kong and Macau.

 

Marketing Agencies” means all service providers or agencies retained directly or indirectly by Master Franchisee to provide Marketing Services during the Term.

 

Marketing Calendar” means the annual marketing calendar for the Territory, to be delivered to PLK and/or its Affiliates under clause 11.4.

 

Marketing Serviceshas the meaning set out in clause 11.5.1.

 

Master Franchisee” means the Party designated in the preamble above as Master Franchisee, its successors and permitted assigns.

 

Material Change in Ownership” has the meaning set out in clause 18.9.

 

MDA Termination Event” means the (a) expiration of this Agreement, or (b) termination of this Agreement or the termination of the Development Rights, whichever occurs first.

 

Mobile Application” means any application software, platform, application or functionality embedded within social media applications or platforms or any other software configurations or systems designed to run on smartphones, tablets, computers and other mobile devices.

 

MOFCOM” means the Ministry of Commerce of the PRC.

 

Monitoring Services” has the meaning set out in clause 16.1.

 

MOP” means Macanese pataca, the currency of the Macau Special Administrative Region of the PRC.

 

Net Debt” means, as of any date of determination, the aggregate amount of Debt of China Group outstanding as of such date, minus the aggregate amount of Cash and Cash Equivalents of China Group as of such date, in each case determined on a consolidated basis in accordance with the Accounting Principles.

 

Notice of Completion” means a written notice from Master Franchisee to PLK, advising PLK that Master Franchisee or an Approved Subsidiary will open a Direct-Owned Restaurant and providing the scheduled opening date and location of the Direct-Owned Restaurant.

 

11

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Notice of Dispute” has the meaning set out in clause 29.2.

 

Offer Date” has the meaning set out in clause 4.10.2.

 

Offer Notice” has the meaning set out in clause 4.10.2.

 

Opening Supervision Services” has the meaning set out in clause 15.4.

 

Optional Training Programs” has the meaning set out in clause 15.1.3.

 

Original Agreement” means the Master Development Agreement dated March 30, 2023 by and between PLK and Master Franchisee.

 

Original Commencement Date” has the meaning set out in the preamble.

 

Order Systems” means any technology-based methods of taking, processing, routing and delivering orders or receiving payment for such orders as mandated or approved by PLK or any of its Affiliates from time to time during the Term, including restaurant kiosks, websites, and Mobile Applications.

 

Other Brands” has the meaning set out in clause 4.4.

 

Other Distribution Channels” means distribution channels other than Popeyes Restaurants, such as retail channels, including supermarkets, grocery and convenience stores, catering and unmanned machines and petrol filling stations.

 

Other Marks” means worldwide trademarks, service marks, trade names, trade dress, logos, slogans, designs, copyrights, other intellectual property and other commercial symbols and source-identifying indicia (and the goodwill associated therewith) that are similar, either in whole or in part, to those of any PLK Affiliate.

 

P&L Information” means the following information, by hard copy or electronic format prescribed by or otherwise acceptable to PLK: (a) monthly, quarterly and fiscal year-to-date profit and loss statements prepared as management accounts in accordance with generally accepted accounting principles in the Territory for each Direct-Owned Restaurant or Franchised Restaurant and the total operations of Master Franchisee and the applicable Franchisees, as the case may be, including, without limitation, all Popeyes Restaurants operated by Franchisee which for the avoidance of doubt includes the main office function and any distribution function and (b) such other information and records of any kind as PLK may reasonably require from time to time, including, without limitation, quarterly balance sheets and income statements and copies of any other documentation provided to the Tax Authorities relating to the Direct-Owned Restaurants or Franchised Restaurants, as the case may be.

 

Parent” has the meaning set out in clause 18.2(d).

 

Party” and “Parties” has the meaning set out in the preamble above.

 

Payment Restriction” has the meaning set out in clause 22.4.

 

Permitted Closure Restaurant” has the meaning set out in clause 6.7.

 

Person” means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Authority, statutory organization or other entity.

 

PLK” means the Party designated in the preamble above as PLK, its successors and assigns.

 

12

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

PLK Designee” has the meaning set out in clause 2.15.

 

PLK Indemnified Parties” means PLK, its Affiliates and their respective directors, officers, employees, shareholders, advisors and agents.

 

Polling Information” means information or data about Popeyes Restaurants and customers of Popeyes Restaurants that is transmitted to or from an IT System operated by Master Franchisee, a Franchisee or their respective agents into a computer or system operated by PLK or its agents in the manner and format prescribed by or on behalf of PLK from time to time. For the avoidance of doubt, Polling Information includes, without limitation, daily sales, daily transaction level data, number of items sold and their respective prices, coupon data, sales per visit, digital sales and products and combinations of products sold, otherwise known as product mix data or “PMIX” and inventory data, as well as any other data and information collected from or relating to customers of Popeyes Restaurants in the Territory.

 

Popeyes Advertising Materials” means all advertising, marketing, promotional, and public relations materials used to advertise or promote Popeyes Restaurants, including video, audio, print, mobile, digital, and electronic advertisements, pamphlets, brochures, collateral materials, merchandising and in-restaurant point of purchase materials, and internet materials (including websites), created, developed or obtained by Master Franchisee in connection with the provision of the Services during the Term.

 

Popeyes Core Marks” means the marks set forth on Schedule 4A.

 

Popeyes Curriculum” means those training manuals, lesson plans and other guidelines, in hard copy or electronic format, including online training materials, in relation to the provision of Training Services which have been developed or approved by PLK and/or its Affiliates and made available in writing to Master Franchisee from time to time.

 

Popeyes Domain Names” means all internet or global computing network addresses or locations, including all top-level domains (and the goodwill associated therewith) used to advertise or promote Popeyes Restaurants, including domain names developed, acquired or used by Master Franchisee in connection with the operation of the Restaurants and the provision of the Services during the Term.

 

Popeyes Global Initiatives” means global, regional and other advertising, promotional, marketing and research initiatives intended for the benefit of the Popeyes System, as determined by PLK and its Affiliates, from time to time in their sole discretion.

 

Popeyes Intellectual Property Rights” means all industrial and intellectual property rights subsisting (but excluding any industrial and intellectual property rights that may be owned by third parties) in the Popeyes System, Popeyes Curriculum, Popeyes Advertising Materials, Popeyes Packaging Materials, and any other material or information provided to Master Franchisee or any Franchisee under this Agreement, the Company Franchise Agreement, any Franchise Agreement or any other agreement (excluding the Popeyes Marks and Popeyes Domain Names). For purposes of this Agreement, the Popeyes Intellectual Property Rights shall also include social media accounts (including Facebook, Twitter, Google, Pinterest, Instagram and YouTube) and other digital assets currently administered by Master Franchisee as of the Original Commencement Date and those which may be administered by Master Franchisee on and after the Original Commencement Date and (to the extent permitted by applicable Law), all User Data.

 

Popeyes Logo” means the principal logo used by PLK and/or its Affiliates from time to time in respect of the Popeyes System.

 

13

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

"Popeyes Marks" means the worldwide trademarks, service marks, trade names, trade dress, logos (including, but not limited to, the Popeyes Logo), slogans, designs and other commercial symbols and source-identifying indicia (and the goodwill associated therewith) used in the operation of the Restaurants and the Popeyes System, whether registered, applied for or unregistered. 

 

Popeyes Master GTCs” means the Master General Terms and Conditions of Supply for PLK governing the supply of Approved Products to the Popeyes System in the Territory as determined by PLK and/or its Affiliates from time to time in their sole discretion. All Approved Suppliers shall accept the Popeyes Master GTCs.

 

Popeyes Packaging Materials” means and includes all tags, labels, cartons, bags, containers, wrapping, and other materials used in the Restaurants, including, but not limited to packaging materials developed, acquired or used by Master Franchisee in connection with the operation of the Restaurants and the provision of the Services during the Term.

 

Popeyes QA Program” means all written quality assurance processes, testing procedures and other requirements of PLK and/or its Affiliates relating to the design, manufacture and/or distribution of Approved Products in the Popeyes System, including, but not limited to, the Product Specifications and all documents and procedures referenced or incorporated therein, as any and/all of the same shall be amended from time to time by PLK and/or its Affiliates in its and/or their sole discretion.

 

Popeyes Restaurants” and “Restaurants” means restaurants operating under the Popeyes System and utilizing the Popeyes Marks in a format approved by PLK and/or its Affiliates, in their sole discretion. A “Popeyes Restaurant” or “Restaurant” means any of them. Popeyes Restaurants include Direct-Owned Restaurants and Franchised Restaurants.

 

Popeyes System” means the unique restaurant format and operating system developed or owned by PLK and/or its Affiliates for the development and operation of Quick Service Restaurants, and to which PLK has the right to license in the Territory, including proprietary designs and colour schemes for restaurant buildings, equipment, layout and décor, proprietary menu and food preparation and service formats, uniform product and quality specifications, training programs, restaurant operations manuals, bookkeeping and report formats, marketing and advertising formats, promotional marketing items and procedures for inventory and management control, and also includes the Current Image and Popeyes Marks, Popeyes Domain Names, Popeyes Intellectual Property Rights, Popeyes Logo and all Confidential Information, other proprietary information, copyrights and other intellectual property rights relating to the system, and any modifications, amendments, improvements and/or other changes PLK and/or any of its Affiliates may make to the system from time to time, in their sole discretion.

 

POS System” means a point of sale system approved by PLK and/or an Affiliate of PLK in its sole discretion, after consultation with Master Franchisee, for use in the Territory consisting of electronic hardware and software technology (including hardware and software updates approved and prescribed by PLK and/or its Affiliates after consultation with Master Franchisee), which captures, records and transmits sales, taxes on sales, type and price of each item sold, coupon redemptions, number, date and time of transactions, products and combinations of products sold and employees using the system and such other related information as may be required by PLK from time to time, in its sole discretion.

 

PRC” means the People’s Republic of China.

 

PRC Company Franchise Agreement” means the Company Franchise Agreement, of even date herewith, by and among PLK, as franchisor, Master Franchisee, as parent, and an Approved Subsidiary, as franchisee, pursuant to which, among other things, PLK will grant the franchisee a license to use the Popeyes Marks in connection with the operation of Direct-Owned Restaurants in Mainland China and Macau.

 

14

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Pre-Opening Services” has the meaning set out in clause 15.4.

 

Prior Agreements” has the meaning set out in clause 18.6.

 

Product Approval Notice” has the meaning set out in clause 10.3.1.

 

Product Specifications” means (i) all written processes, procedures and requirements of PLK and/or its Affiliates as they relate to the design, development and manufacture of Approved Products, as they may be amended by PLK and/or its Affiliates from time to time in their sole discretion; and (ii) all product descriptions, as may be amended by PLK and/or its Affiliates from time to time in their sole discretion (e.g., commodity type, raw materials and ingredient listing, finished product standards, product formulation, processing control points, packaging, labelling and nutritional information, if applicable).

 

Product Supplier Documents” has the meaning set out in clause 10.3.1.

 

Prohibited Person” means a Person (a) for whom evidence exists that such Person has been blacklisted or identified as a defaulting entity or its equivalent by any Authority, (b) that has engaged in prior or current criminal activity which would (or would reasonably be expected to) rise to the level of an offense punishable by imprisonment, (c) for whom evidence exists of moral turpitude or reputational issues, or (d) that has been accused by a competent regulator, voluntarily disclosed or admitted to, or has otherwise been found by a court of competent jurisdiction to have violated, attempted to violate, aided or abetted another party to violate, or conspired to violate, any of the Anti-Corruption Laws.

 

Proposal” has the meaning set out in clause 4.10.3.

 

Public Company” means a Person that has listed its Equity Securities on a recognized stock exchange and complies with the applicable reporting requirements of such stock exchange and any applicable Authority.

 

Qualified Expenditures” means those expenditures that may be paid out of the Advertising Fund, as more particularly described in the Global Marketing Policy.

 

Quick Service Restaurant” means any restaurant that does not offer table service as its principal method of ordering or food delivery.

 

RBI” means Restaurant Brands International Inc., a public company incorporated under the laws of Canada, and the indirect parent company of PLK.

 

RBI Brands” means the restaurant brands and franchise systems or trademarks owned, operated, licensed or acquired at any time by RBI or an Affiliate of RBI. The current RBI Brands are BURGER KING®, TIM HORTONS®, POPEYES®, and FIREHOUSE SUBS®.

 

RBI Franchisee” means (a) a Person that holds (or formerly held) one or more licenses (whether exclusive or non-exclusive) to own, operate or subfranchise any of the RBI Brands, and (b) an Affiliate of such Person.

 

Region” means the Asia and the Pacific region (as defined by PLK from time to time, in its sole discretion), which includes the Territory.

 

Relevant Persons” has the meaning set out in clause 4.10.1.

 

15

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

Renewal Fee” means the sum of [****] to be paid by Master Franchisee to PLK upon renewal of a Unit Addendum or a Franchise Agreement for a twenty (20) year term (which amount will be prorated if the term of the applicable Renewal Unit Addendum or Franchise Agreement renewal is less than twenty (20) years).

 

Replacement Restaurant” has the meaning set out in clause 8.6.

 

Required Country” has the meaning set out in clause 22.1.

 

Required Currency” has the meaning set out in clause 22.1.

 

Reserve Account” has the meaning set out in clause 22.4.

 

Restaurant Management” means restaurant managers, assistant managers and shift supervisors in respect of a Popeyes Restaurant.

 

Retail Opportunity” has the meaning set out in clause 4.6.

 

Retail Opportunity Notice” has the meaning set out in clause 4.6.

 

Right of First Offer” has the meaning set out in clause 4.10.1.

 

RMB” means the lawful currency of the PRC.

 

Royalty” or “Royalty Fee” means the non-refundable amounts payable by Master Franchisee to PLK or its designee pursuant to clauses 8.7 and 9.5.

 

Sales Report” means the monthly overview of sales provided by Franchisees with respect to each of their Franchised Restaurants pursuant to their respective Franchise Agreements.

 

Seafood Competitive Business” means any Quick Service Restaurant business where the combined sales of Seafood Products constitute twenty percent (20%) or more of its overall food and beverage sales and/or total menu items. A Seafood Competitive Business includes businesses that grant franchises or licenses to others to operate any of the types of businesses described in the preceding sentence.

 

Seafood Products” means any food products intended for human consumption that are (i) made with fish or shellfish, or fish or shellfish parts or cuts, whether fresh or frozen, skinned or unskinned, boned or boneless, including marine or freshwater fish, shrimp or crawfish, or (ii) intended to be sold as seafood substitutes, including plant-based seafood substitutes.

 

Second Deadline” has the meaning set out in clause 4.10.3.

 

Services” means the services to be provided by Master Franchisee to Direct-Owned Restaurants and Franchised Restaurants in accordance with this Agreement, in each case including Advertising Services, Marketing Services, Training Services, Monitoring Services, Development Services, Opening Supervision Services and Pre-Opening Services.

 

Shareholder” has the meaning set out in the preamble.

 

Shareholder Board” has the meaning set out in clause 2.15.

 

Shortfall Year” has the meaning set out in clause 6.8.

 

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Site Approval” has the meaning set out in clause 7.2.

 

Site Information” has the meaning set out in clause 7.3.1.

 

Standards” means the standards, including the operating standards established from time to time by PLK and/or its Affiliates as to quality of service, cleanliness, health and sanitation, requirements, specifications and procedures for Popeyes Restaurants issued, directed and amended by PLK and/or its Affiliates from time to time, in their sole discretion, including those contained from time to time in the Confidential Operating Manual (and such superseding or additional documents as may be issued by PLK and/or its Affiliates from time to time).

 

Subsidiary” means a wholly owned direct subsidiary of Master Franchisee.

 

Substitute Master Franchisee” has the meaning set out in clause 22.4.

 

Survey Program” has the meaning set out in clause 11.2.4.

 

Surviving Provisions” means the provisions of this Agreement that shall survive an MDA Termination Event. The Surviving Provisions are the following: clause 1.1 (Definitions); clause 1.2 (Construction); clause 2 (Master Franchisee), except for clause 2.2; clause 4.1.2, but only with respect to the Prior Agreements, it being understood that the reference to “Franchise Agreements” in such clause shall refer to “Prior Agreements" and that no right to license Franchisees to develop, establish, own and operate any Franchised Restaurants after the Termination Date shall be conferred on Master Franchisee pursuant hereto; clause 9.2.5 through clause 9.3.3 (inclusive), clause 9.5 through clause 9.10 (inclusive) and clause 9.12, it being understood that all references in such clauses to “Franchise Agreements” shall refer to “Prior Agreements”; clause 12 (Popeyes Marks and Popeyes Domain Names); clause 13 (Popeyes Intellectual Property Rights); clause 14 (Competition); clause 18.4, 18.6, 18.7 and 18.8; clause 19 (Confidentiality); clause 20 (Indemnification and Insurance); clause 22 (Currency, Exchange Control and Taxation); clause 23 (Audit Rights); clause 24 (Severability); clause 26 (Notices); clause 27 (Non-Waiver); clause 28 (Relationship of Parties); clause 29 (Governing Law & Jurisdiction; Language); clause 30 (No Third Party Enforcement Rights); clause 31 (Survival); clause 32 (Parties to This Agreement All Legally Advised); and clause 33 (Interest).

 

Targets” means, collectively, the Cumulative Opening Targets, Annual Opening Targets and Extension Period Targets (if applicable).

 

tax” or “taxes” means all taxes, however denominated, including any interest, penalties, or other additions that may become payable in respect thereof, imposed by any Tax Authority, which taxes shall include all income or profits taxes (including federal income taxes and provincial or state income taxes), capital taxes, withholding taxes, payroll and employee withholding taxes, employment insurance (including provincial health insurance, old age benefits, welfare funds, pensions and annuities and disability insurance), social insurance taxes, Indirect Taxes, customs duties, tariffs, franchise taxes, gross receipts taxes, business license taxes, occupation taxes, real and personal property taxes, stamp taxes, environmental taxes, transfer taxes, workers' compensation, other governmental charges, and other obligations of the same or of a similar nature to any of the foregoing (together with any penalties, interest, or other similar amounts thereon).

 

Tax Authority” means any Authority having or purporting to have power to impose, administer or collect any tax.

 

Term” has the meaning set out in clause 5.1.

 

Termination Date” has the meaning set out in clause 18.4.

 

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Termination Notice” has the meaning set out in clause 18.3.1.

 

Termination Period” has the meaning set out in clause 18.3.

 

Territory” means the de jure boundaries of the PRC (as depicted in the map attached as Schedule 3), which for the purposes of this Agreement excludes Taiwan and the Special Administrative Region of Hong Kong, but includes the Special Administrative Region of Macau.

 

Territory Development Agreements” has the meaning set out in clause 4.1.4.

 

Third Deadline” has the meaning set out in clause 4.10.5.

 

Total Equity Contributionhas the meaning set forth in clause 2.17.

 

Training Services” has the meaning set out in clause 15.1.

 

Transaction” has the meaning set out in the Recitals.

 

Transaction Agreements” means this Agreement, the Company Franchise Agreement, each Unit Addendum and any other written agreement between the Parties entered into in connection with the Transaction.

 

Transfer” and “Transferred” have the meaning set out in clause 21.1.

 

Transition Period” has the meaning set out in clause 18.7.

 

Unit Addendum” means Schedule B to the Company Franchise Agreement, which will identify the location of a Direct-Owned Restaurant and any Renewal Unit Addendum (as defined in the Company Franchise Agreement) with respect thereto.

 

Unit Addendum Term” has the meaning set out in clause 8.4.

 

[****]

 

Unregistered Marks” has the meaning set out in clause 12.1.4.

 

US$” means United States Dollars.

 

US GAAP” means generally accepted accounting principles in the United States of America.

 

User Data” means all log-in information and personal data of all users/fans/followers of the Popeyes Intellectual Property Rights.

 

VAT” means the value added tax payable under applicable Law of the Territory.

 

[****]

 

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Withholding Income Taxmeans a retention tax on income, to be paid to a Tax Authority by the payor of the income rather than the recipient of the income. Withholding Income Tax is withheld or deducted by the payor from the income due to the recipient.

 

1.2Construction

 

(a)Capitalized terms used herein, which are not defined in this Agreement but are defined in the Company Franchise Agreement shall have the same meaning as in the Company Franchise Agreement unless the context otherwise requires.

 

(b)In this Agreement, unless otherwise specified (i) singular words include the plural and plural words include the singular; (ii) words importing any gender include the other gender; (iii) references to any Law include all applicable rules, regulations and orders adopted or made thereunder and all statutes or other laws amending, consolidating or replacing the statute or law referred to; (iv) references to any agreement or other document, including this Agreement, include all subsequent amendments, modifications or supplements to such agreement or document made in accordance with the terms hereof and thereof; (v) references to clauses, Exhibits and Schedules are to the clauses, Exhibits and Schedules of this Agreement, unless the context otherwise requires; (vi) numberings and headings of clauses, Exhibits and Schedules are inserted as a matter of convenience and shall not affect the construction of this Agreement; (vii) the term “including” as used herein means “including but not limited to”; and (viii) all Exhibits and Schedules to this Agreement are incorporated herein by this reference thereto as if fully set forth herein, and all references herein to this Agreement shall be deemed to include all such incorporated Exhibits and Schedules.

 

(c)In all cases where Master Franchisee is required to obtain PLK’s prior consent, authorization or approval, such consent, authorization or approval shall be granted or withheld in the sole and absolute discretion of PLK, unless otherwise indicated, and any such consent, authorization or approval must be in a writing signed by a duly authorized officer of PLK.

 

(d)References to a Party shall include such Party’s permitted successors and assigns.

 

(e)Reference to any specific standard, policy, procedure, form, agreement or process of PLK and/or any of its Affiliates includes a reference to any policy, procedure, form, agreement or process described by any other name which has been issued by PLK and/or any of its Affiliates in substitution thereof or with substantially similar effect.

 

(f)The headings as to contents of particular clauses are inserted only for convenience and reference and are in no way to be construed as part of this Agreement or as a limitation on the scope of any of the terms or provisions of this Agreement.

 

(g)A writing includes any mode of representing or reproducing words in tangible and permanently visible forms, and includes electronic mail and, with respect to PLK, the posting on PLK’s intranet.

 

(h)In the event that any Day on which a payment is due from Master Franchisee under this Agreement falls on a day other than a Business Day, then Master Franchisee shall make such payment on the prior Business Day.

 

(i)References to Master Franchisee, including the references in clause 8 and clause 22, shall be deemed, where appropriate, to include the Approved Subsidiaries, and references to the development, establishment, ownership, operation and/or closure of Direct-Owned Restaurants by Master Franchisee shall be deemed, where appropriate, to include the development, establishment, ownership, operation and/or closure of such Restaurants by Approved Subsidiaries; provided, however, that Master Franchisee and any such Approved Subsidiary shall have executed a Joinder Agreement and delivered such executed Joinder Agreement to PLK in accordance with the terms of this Agreement and the Company Franchise Agreement.

 

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2          MASTER FRANCHISEE

 

2.1Upon PLK’s request, Master Franchisee shall, at Master Franchisee’s expense, within ten (10) Business Days following receipt of the request, furnish PLK with certified copies of any amendments to, or restatements of, articles of incorporation, bylaws and other governing documents of Master Franchisee and the Approved Subsidiaries.

 

2.2Master Franchisee shall at all times during the Term, at its sole cost and expense, maintain a business office and premises within the Territory. The business office and premises will be located so as to permit Master Franchisee to adequately (a) sell franchises for Popeyes Restaurants within the Territory, (b) supervise and promote Popeyes Restaurants within the Territory, and (c) provide the Services to Direct-Owned Restaurants and Franchised Restaurants in accordance with this Agreement. For the avoidance of doubt, Master Franchisee may not solicit Franchisees for business of any kind except as approved by PLK in writing in its sole discretion.

 

2.3PLK hereby engages Master Franchisee to provide the Services in the Territory in accordance with this Agreement, and Master Franchisee hereby accepts such engagement. Master Franchisee will at all times provide the Services in compliance with this Agreement and the Franchise Agreements to ensure that the Standards shall be complied with and maintained, and Master Franchisee understands and acknowledges that the foundation of the Popeyes System is the adherence to the Standards by Franchisees, including Master Franchisee, and provides the basis for the valuable good will and wide acceptance of the Popeyes System.

 

2.4Master Franchisee shall secure and maintain in force in all material respects all licenses, permits and certificates relating to the operation of the Direct-Owned Restaurants, pay promptly or ensure payment of all material taxes and assessments when due and operate or ensure operation of the Direct-Owned Restaurants in compliance with all applicable Laws in all material respects, including those relating to occupational hazards, health, workers’ compensation insurance, unemployment insurance, payment of taxes owed to any Authority, and the Anti-Corruption Laws. If applicable, Master Franchisee agrees that it shall register for VAT with the applicable Authority and stay registered for VAT and require that Franchisees register for VAT with the applicable Authority and stay registered for VAT. Master Franchisee shall provide PLK with evidence of such tax registrations upon PLK’s request.

 

2.5Master Franchisee shall use commercially reasonable efforts to procure that all Franchisees shall secure and maintain in force all required licenses, registrations, approvals, permits and certificates relating to the operation of the Franchised Restaurants. Further, Master Franchisee shall use commercially reasonable efforts to procure that all Franchisees, (a) pay promptly or ensure payment of all taxes and assessments when due, retain proof of such payment for review by PLK, and (b) ensure operation of the Franchised Restaurants in full compliance with all applicable Law, including those relating to occupational hazards, health, workers’ compensation insurance, payment of taxes owed to any Authority, and/or Anti-Corruption Laws. Master Franchisee shall require Franchisees to register for all applicable taxes with the applicable Authority and stay registered for such taxes. Master Franchisee shall provide PLK with evidence of such tax registrations upon PLK’s request.

 

2.6Master Franchisee shall notify PLK in writing as soon as Master Franchisee learns of the commencement of any action, proceeding or suit, or the issuance of any order, writ, injunction, award or decree of any court, agency or other Authority, that might have a material adverse effect on the operation or financial condition of the Popeyes System in the Territory.

 

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2.7Prior to entering into the first Franchise Agreement with a Franchisee in the Territory, Master Franchisee shall complete the commercial franchise filing with MOFCOM required for Master Franchisee to be a duly qualified and filed franchisor in the PRC and shall submit such first Franchise Agreement to MOFCOM within the time period specified by applicable Law. Thereafter, Master Franchisee shall comply with all applicable Laws necessary for the maintenance of its status as a duly qualified and filed franchisor in the PRC, including the timely submission of the annual reporting form through the Filing System of Commercial Franchises of MOFCOM. In addition, Master Franchisee shall comply with all franchising codes and any other Law applicable to the offering and sale of franchises in effect in the Territory as well as any and all other applicable Law (including personal data legislation). Master Franchisee shall ensure that all necessary consents are obtained to process personal data as contemplated under this Agreement in connection with the operations of Master Franchisee and its Affiliates. Under no circumstances will PLK or any of its Affiliates be liable for any act, omission, debt or other obligation of Master Franchisee or Affiliates thereof or any Franchisee or any Affiliates thereof.

 

2.8Master Franchisee (a) has conducted such due diligence and investigation as it desires; (b) recognizes that the business venture described in this Agreement involves business and commercial risks; and (c) acknowledges that the success of such business venture is dependent upon Master Franchisee’s performance of its obligations hereunder. PLK EXPRESSLY DISCLAIMS THE MAKING OF, AND MASTER FRANCHISEE ACKNOWLEDGES THAT IT HAS NOT RECEIVED OR RELIED UPON, ANY REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE POTENTIAL PERFORMANCE OR VIABILITY OF THE BUSINESS VENTURE CONTEMPLATED BY THIS AGREEMENT.

 

2.9Master Franchisee acknowledges that it has received, read and understands this Agreement and the documents referred to herein and the Schedules and Exhibits to this Agreement. All such Schedules and Exhibits are deemed part of this Agreement. Master Franchisee also acknowledges that it has had ample time and opportunity to consult with its advisors concerning the potential benefits and risks of entering into this Agreement.

 

2.10Master Franchisee may not, and will procure that its Affiliates will not, include any of the following words/expressions in its name without the prior written consent of PLK or its Affiliates: the initials “RBI”, the words “Restaurant Brands”, “Restaurant Brands International”, “Popeyes”, “Popeyes Louisiana Kitchen”, the initials “PLK” or anything similar to or resembling the same in appearance, sound, or in any other way.

 

2.11Master Franchisee hereby represents and warrants to PLK that this Agreement constitutes a valid and binding obligation of Master Franchisee, enforceable against it in accordance with the terms hereof. Master Franchisee further represents and warrants that neither the execution of this Agreement nor the performance by it of its obligations hereunder violate any provision of any applicable Law or results in a material breach or material default under any indenture, contract, commitment or restriction to which Master Franchisee or any of its Affiliates is a party or by which Master Franchisee or any of its Affiliates is bound. Master Franchisee further represents and warrants that no consent, approval, filing or authorization from any Authority is necessary or shall be obtained for the signature and performance by Master Franchisee of this Agreement, except as would not, or would not reasonably be expected to, individually or in the aggregate, materially impair or delay Master Franchisee’s ability to perform its obligations hereunder. Master Franchisee further represents and warrants that it complies with the Anti-Corruption Laws as well as any other Law binding upon it intended to control, prohibit and/or penalize bribery, kickbacks, the giving of unlawful gratuities and benefits and other similar unlaws practices, no notice has been received by nor has any investigation commenced against it or any of its Affiliates related to breach of the Anti-Corruption Laws as in effect in the Territory and/or any other Law applicable to it intended to control, prohibit and/or penalize bribery, kickbacks, the giving of unlawful gratuities and benefits, and other similar unlawful practices under such Laws, and it is not currently subject to or in violation of any Export Control Laws or owned or Controlled in any manner by any Person that is subject to, or in violation of, any Export Control Laws.

 

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2.12During the Term, PLK may request P&L Information, and Master Franchisee shall provide the requested information, in a format acceptable to PLK, within thirty (30) Days from receipt of such request.

 

2.13Master Franchisee shall promptly notify PLK of any potential improvements or new features which it intends to use or identifies as capable of benefiting the Popeyes System. Master Franchisee agrees that all right, title and interest in and to such potential improvements or new features are hereby transferred to, vest in and remain the exclusive property of PLK on and from their creation, without payment by PLK, and PLK and/or its Affiliates may evaluate, modify and introduce any such potential improvements or new features into the Popeyes System for the benefit of PLK and other franchisees. Master Franchisee shall do all things and sign all documents necessary to give effect to this clause 2.13. PLK shall have no obligation to use the improvements or new features. Master Franchisee shall not use potential improvements or new features at any of the Direct-Owned Restaurants unless and until first approved by PLK.

 

2.14After the third (3rd) anniversary of the A&R Effective Date, the members of the China Group shall be entitled to incur Debt (such borrowing, the “China Group Debt”) provided that (a) immediately after the incurrence of such Debt, the ratio of Net Debt to LTM EBITDA does not exceed 3.0 to 1.0 except and solely to the extent approved in writing by PLK, (b) the terms of such Debt are non-recourse to PLK or THRI (or any of their permitted successors and assigns), and (c) such Debt is not secured by a pledge, hypothecation, mortgage or other lien on the Equity Securities of any member of the China Group. The China Group shall use the proceeds of the China Group Debt to expand the business of the China Group, to finance the working capital needs of the China Group and for other corporate purposes consistent with such activities.

 

2.15The Shareholder agrees that all shares of the Shareholder received by PLK in connection with the Combination and pursuant to that certain Share Purchase Agreement, dated as of March 30, 2023 (the “SPA”), by and among PLK, Investor and the Shareholder (including shares received as Aggregate Consideration (as defined in the SPA) and any additional shares of the Shareholder issued to PLK pursuant to Section 5.2 (Unvested Shares) of the SPA) shall be considered together with the shares of the Shareholder held by any of PLK’s Affiliates (including Tim Hortons Restaurants International GmbH (“THRI”)) for purposes of satisfying the threshold for THRI to remain entitled to nominate one director of the board of the Shareholder (the “Shareholder Board”) pursuant to that certain Amended and Restated Master Development Agreement, by and among THRI, the Shareholder and the other parties signatory thereto, dated as of August 13, 2021, as amended from time to time.

 

2.16Without prejudice to PLK’s right in clause 2.15, the Shareholder will permit a person designated by PLK to attend all meetings of the Shareholder Board or any committee of the Shareholder Board as an observer, and the Shareholder Board (or the applicable committee) shall furnish to such observer, at the same time and in the same manner as furnished to the directors of the Shareholder Board or members of any applicable committee, notice of each such meeting, including such meeting’s time and place and any materials relevant to such meeting.

 

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2.17The Shareholder undertakes and agrees to contribute an aggregate amount of sixty million United States Dollars (US$60,000,000) (the “Shareholder Equity Contribution”), and the JVC acknowledges and agrees that on or prior to the A&R Effective Date it has already contributed an aggregate amount of thirty million United States Dollars (US$30,000,000) (such US$30,000,000 together with the Shareholder Equity Contribution, the “Total Equity Contribution”) into Master Franchisee to be used to fund the growth of the Popeyes business in the Territory and for no other purpose. The Shareholder Equity Contribution will be made in two (2) installments as follows: (a) thirty million United States Dollars (US$30,000,000) on or before the first anniversary of the A&R Effective Date; and (b) an additional thirty million United States Dollars (US$30,000,000) on or before the second anniversary of the A&R Effective Date. On or prior to the applicable payment date of each installment of the Shareholder Equity Contribution, the Shareholder shall provide evidence proving that such installment of the Shareholder Equity Contribution has been made in accordance with this clause 2.17. Failure to make any installment of the Shareholder Equity Contribution within thirty (30) days after such payment becomes due, or to provide evidence of payment of each installment of the Shareholder Equity Contribution within thirty (30) days after such payment becomes due (in each case, a “Funding Breach”) will be an Event of Default under this Agreement and cause for termination of this Agreement with immediate effect, and none of Master Franchisee, the JVC or the Shareholder will have any ability to cure. In the event of a Funding Breach, Master Franchisee, JVC and the Shareholder, on behalf of themselves and their respective Affiliates, successors and permitted assigns, (a) agree not to dispute the termination of this Agreement or the Development Rights due to a Funding Breach, (b) knowingly and voluntarily waive and relinquish all Claims against PLK and its Affiliates purportedly arising from or in connection with PLK’s termination of this Agreement or the Development Rights as a result of the Funding Breach, and (c) release and fully discharge PLK and its Affiliates from any liability of any kind arising out of or related to the termination of this Agreement or the Development Rights as a result of the Funding Breach.

 

3     PLK

 

3.1PLK hereby represents and warrants that this Agreement constitutes a valid and binding obligation of PLK, enforceable against it in accordance with the terms hereof. Except for MOFCOM Approval, no consent, approval, filing or authorization from any Authority is necessary or shall be obtained for the signature and performance by PLK of this Agreement, except as would not, or would not reasonably be expected to, individually or in the aggregate, materially impair or delay the ability of it to perform its obligations hereunder.

 

3.2PLK represents and warrants as of the date hereof that (a) to PLK’s actual knowledge, there are no pending or threatened Claims against PLK relating to the grant of rights to develop Popeyes brand restaurants in the Territory; and (b) except for the Interim FA, no other Person has the right to develop and operate, or license to another Person the right to develop and operate, Popeyes brand restaurants in the Territory.

 

3.3PLK shall comply in all material respects with all material applicable Laws necessary for the maintenance of its status as a duly qualified and filed franchisor in the PRC, including the timely submission of the annual reporting form through the Filing System of Commercial Franchises of MOFCOM.

 

       4    GRANT

 

4.1PLK hereby grants to Master Franchisee the exclusive right, except for the Interim FA, subject to the limitations set out in this Agreement, and Master Franchisee hereby accepts the obligation, pursuant to the terms and conditions of this Agreement, to (together, the “Development Rights”):

 

4.1.1Develop, establish, own and operate Direct-Owned Restaurants in the Territory, subject to the terms of this Agreement and the Company Franchise Agreement;

 

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4.1.2License to Franchisees the right to develop, establish, own and operate Franchised Restaurants in the Territory (which license does not include the right to license Franchisees to grant sublicenses for Restaurants in the Territory), subject to the terms of this Agreement and the Franchise Agreements;

 

4.1.3Use and permit Franchisees to use (subject to the terms of this Agreement, the Company Franchise Agreement and the Franchise Agreements) the Popeyes Marks and the Popeyes System in its capacity as Master Franchisee or Franchisee in the Territory, as the case may be, in order to engage in the activities described above; and

 

4.1.4Enter into exclusive or non-exclusive development agreements with Franchisees in the Territory (the “Territory Development Agreements”), provided that such Territory Development Agreements provide for their termination in accordance with clause 18.4.4 upon the occurrence of an MDA Termination Event and provided further that no Territory Development Agreement shall provide for the grant of any rights that are inconsistent with the terms and conditions of this Agreement.

 

4.2For purposes of this Agreement and the grant of the Development Rights, operations at a Popeyes Restaurant include dine-in, take-out, delivery and catering from a Popeyes Restaurant, provided that, in the case of delivery and catering, PLK has approved the Delivery Requirements in its sole discretion. Accordingly, subject to the provisions of clause 4.8, Master Franchisee and its Franchisees will have the right to conduct delivery and catering operations and services at or from each Popeyes Restaurants during the Term of this Agreement, the Company Franchise Agreement, or any Franchise Agreement, as applicable.

 

4.3By no later than nine (9) months after the A&R Effective Date, and in any event prior to the opening of the first Direct-Owned Restaurant pursuant to this Agreement, PLK, Master Franchisee and an Approved Subsidiary will enter into the PRC Company Franchise Agreement, which agreement shall further define the rights and obligations of Master Franchisee and the Approved Subsidiaries, in establishing, owning and operating Direct-Owned Restaurants. Upon formation of a new Approved Subsidiary, Master Franchisee and the Approved Subsidiary will execute the Joinder Agreement and deliver a copy of such agreement to PLK. Prior to the opening of the first Direct-Owned Restaurant, Master Franchisee and an Approved Subsidiary will execute and deliver to PLK the PRC Company Franchise Agreement, and prior to the opening of each Direct-Owned Restaurant, Master Franchisee or the applicable Approved Subsidiary will execute and deliver to PLK a Unit Addendum for such Direct-Owned Restaurant.

 

4.4PLK, on behalf of itself, its Affiliates and its designees, reserves all rights not expressly granted to Master Franchisee under this Agreement, and Master Franchisee hereby accepts and acknowledges such reserved rights of PLK, its Affiliates and designees. Accordingly, except as described below, nothing in this Agreement or at Law shall prevent PLK, its Affiliates, designees and licensees or any other Person from one or all of the following: (a) operating or granting to any Person a franchise or license to operate Popeyes Restaurants outside the Territory, (b) operating or granting to any Person a franchise or license to operate, in or outside the Territory, a restaurant business using one or more of the other brands and franchise systems or trademarks now or hereafter owned or licensed by PLK or any Affiliate of PLK (the “Other Brands”), regardless of whether such business is in competition with the Popeyes System or its menu items or located in close proximity to any Restaurant; or (c) subject to clause 4.6, distributing, selling or offering or granting to any Person the right to distribute, sell or offer, in the Territory, menu or other items or services which are the same as or similar to Popeyes menu items, using the Popeyes System and the Popeyes Marks through Other Distribution Channels, whether located in close proximity to any Restaurant or otherwise, of a temporary or permanent nature; provided, however, that such distribution, sale or offering through Other Distribution Channels shall not include the distribution, sale or offering of such item by means of sales or distribution at a Popeyes Restaurant or by catering or delivery from a Popeyes Restaurant anywhere in the Territory, which the Parties acknowledge and agree are reserved to Master Franchisee and its Franchisees, subject to clause 4.7.

 

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4.5The Development Rights will not apply with respect to PLK’s global and regional operation and promotion of the Popeyes System, including (a) any global and/or regional activities of PLK and/or its Affiliates such as global and/or regional marketing and promotional campaigns, public relations or other activities of PLK and/or its Affiliates relating to the Popeyes System globally and/or regionally (including any programs pursuant to which any gift cards are provided to guests in the Territory); or (b) any global and/or regional Internet-related activity of PLK and/or its Affiliates or global and/or regional internet activities of a third party authorized by PLK (collectively, the “Exclusivity Exclusions”). Master Franchisee acknowledges and agrees that in connection with the Exclusivity Exclusions set forth above, PLK may authorize third party vendors, contractors, suppliers and promotional parties to use elements of the Popeyes System, including the Popeyes Marks, Popeyes Domain Names and Popeyes Intellectual Property Rights, in connection with the global and/or regional activities of PLK and/or its Affiliates and that such use may include the Territory. Nothing herein shall prevent PLK from appropriately responding to any consumer, governmental body, regulatory body and/or other matters relating to the Popeyes System in the Territory where PLK is required to do so by Law and/or to otherwise appropriately manage PLK’s brand reputation. For the avoidance of doubt, use of the term regional or regionally in this clause 4.4 shall refer to the Region of which the Territory is a part but shall not refer exclusively to the Territory.

 

4.6During the Term, if PLK, in its sole discretion, elects to distribute or sell Approved Products using the Popeyes System and the Popeyes Marks in the Territory through any designated Retail Distribution Channel (a “Retail Opportunity”), PLK will first approach Master Franchisee by providing Master Franchisee with a written notice containing the proposed terms of the Retail Opportunity (the “Retail Opportunity Notice”). For a period of up to ninety (90) Days after the date that Master Franchisee receives the Retail Opportunity Notice, Master Franchisee and PLK shall enter into discussions regarding the Retail Opportunity, it being understood that PLK shall not be obligated to enter into the Retail Opportunity with Master Franchisee. If the Parties fail to enter into a written agreement with respect to the terms of the Retail Opportunity within the ninety (90) Day period, (a) PLK may cease all discussions with Master Franchisee regarding the Retail Opportunity, and (b) PLK or an Affiliate of PLK may immediately enter into the Retail Opportunity either on its own or with any other party or parties.

 

4.7Master Franchisee may at any time request to exercise its right to distribute, sell or offer Approved Products in the Territory through a Delivery Program. PLK agrees to work with Master Franchisee to develop the Delivery Requirements for implementing a Delivery Program in the Territory and, once such Delivery Requirements are approved by PLK, in its sole discretion, Master Franchisee may sell Approved Products in the Territory through such Delivery Program in compliance with such Delivery Requirements. Master Franchisee agrees not to implement a Delivery Program until PLK has approved, in its sole discretion, the Delivery Requirements applicable to such Delivery Program.

 

4.8While the Development Rights are in effect, PLK will not itself operate, or franchise, license or authorize any Person other than Master Franchisee to operate, Restaurants in the Territory.

 

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4.9The Parties agree that in the event of conflict or confusion as to the exact boundaries of the Territory, the description of the boundaries in, and the map attached to, Schedule 3 will prevail.

 

4.10PLK may, in its sole discretion, grant a license to develop, establish, own, open and operate Popeyes Restaurants in the Special Administrative Region of Hong Kong (the “HK Development Rights”), subject to the following right of first offer which shall be available to Master Franchisee on the terms and conditions contained in this clause 4.10.

 

4.10.1PLK shall not grant the HK Development Rights to any Person unless and until PLK shall have first offered the HK Development Rights to Master Franchisee in accordance with this clause 4.10 (the “Right of First Offer”); provided, that (a) the Development Rights remain in effect from the date hereof through the Offer Date (as defined below), (b) Master Franchisee is in compliance with the Cumulative Opening Targets as set forth in the Development Schedule as of the Offer Date, (c) there has not been an uncured Event of Default at any time during the one (1) year period prior to the Offer Date, and (d) the results of updated background checks conducted at PLK’s request and at Master Franchisee’s sole expense by a service provider acceptable to PLK on Master Franchisee, Principal and their respective shareholders (collectively, the “Relevant Persons” and, individually, a “Relevant Person”) must be satisfactory to PLK, in its sole discretion.

 

4.10.2If PLK desires to grant the HK Development Rights to any Person, PLK will deliver written notice thereof to Master Franchisee (the “Offer Notice”). The date of the Offer Notice is referred to as the “Offer Date”.

 

4.10.3Master Franchisee shall have a period of ten (10) days following the Offer Date (the “First Deadline”) to inform PLK in writing of its interest in the HK Development Rights (the “Interest Notice”). PLK and Master Franchisee shall then negotiate, on an exclusive basis, for a period of up to thirty (30) days from the date of the Interest Notice (the “Second Deadline”), the financial and other material terms upon which Master Franchisee would offer PLK to acquire the HK Development Rights. On or prior to the Second Deadline, Master Franchisee will present a binding written offer to PLK (the “Proposal”) for the acquisition of the HK Development Rights. The Proposal shall set forth the financial and other material terms and conditions for the HK Development Rights, including the proposal development plan.

 

4.10.4The failure by Master Franchisee (a) to provide an Interest Notice by the First Deadline or (b) submit a Proposal by the Second Deadline shall each be deemed an irrevocable waiver by Master Franchisee of the Right of First Offer, and PLK and/or any of its Affiliates may grant all or any portion of the HK Development Rights to any Person on any terms and conditions whatsoever.

 

4.10.5PLK shall have the unrestricted right to reject any Proposal, in its sole discretion. If PLK elects, in its sole discretion, to grant the HK Development Rights (or any portion thereof) to Master Franchisee following receipt of the Proposal, the Proposal, as may be modified by Master Franchisee and PLK through their negotiations will become binding and enforceable on Master Franchisee (the “Final Proposal”), and the relevant parties will use commercially reasonable efforts to enter into final and binding agreements incorporating the commercial terms set forth in the Final Proposal (the “Definitive Agreements”) within forty-five (45) Days of the date of the Final Proposal (the “Third Deadline”).

 

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4.10.6If (a) PLK elects, in its sole discretion, not to grant the HK Development Rights following receipt of the Proposal, or (b) the relevant parties fail to enter into Definitive Agreements by the Third Deadline, PLK and/or its Affiliates may grant all or any portion of the HK Development Rights (on either an exclusive or non-exclusive basis) to any Person on terms no less favorable to PLK than the commercial terms set forth in the Proposal or the Final Proposal, as applicable.

 

4.10.7For the avoidance of doubt, if Master Franchisee has not been in compliance with the Development Schedule at all times prior to the signing of the Definitive Agreements, PLK shall have no obligation to comply with the foregoing Right of First Offer.

 

4.10.8Master Franchisee acknowledges and agrees that PLK is under no obligation to grant to Master Franchisee or any Affiliate thereof the HK Development Rights and such decision will be made by PLK in its sole discretion.

 

      5    DURATION

 

5.1The initial term of this Agreement shall be for a period of twenty (20) years commencing on the Original Commencement Date, subject to earlier termination in accordance with the terms of this Agreement (the “Initial Term”). Master Franchisee shall have the option to extend the Initial Term for ten (10) years, subject to earlier termination in accordance with the terms of this Agreement (the “Extension Period”, and together with the Initial Term, the “Term”), provided that:

 

5.1.1Master Franchisee has given PLK and/or its Affiliates written notice of its intention to exercise its option to extend this Agreement no later than the first Day of Development Year 19 (the “Extension Notice”);

 

5.1.2Master Franchisee has, as determined on the date of the Extension Notice and the last Day of the Initial Term, fully complied with the applicable Targets set forth in the Development Schedule;

 

5.1.3there has been no uncured Event of Default during the one (1) year period prior to the date of the Extension Notice or during the period commencing on the date of the Extension Notice and ending on the last Day of the Initial Term;

 

5.1.4there has been no uncured default (for which Master Franchisee received a formal notice of default) under the Company Franchise Agreement or any Unit Addendum during the one (1) year period prior to the date of the Extension Notice and during the period commencing on the date of the Extension Notice and ending on the last Day of the Initial Term;

 

5.1.5Master Franchisee, on behalf of itself and its Affiliates, executes a general release in favor of PLK and its Affiliates, in form and substance acceptable to PLK.

 

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If all of the foregoing conditions are not satisfied, this Agreement shall expire at the end of the Initial Term.

 

                                             6     DEVELOPMENT OBLIGATIONS

 

6.1Master Franchisee shall (a) develop and open for business (and keep open to the extent required hereby), and (b) license Franchisees to develop and open for business (and keep open to the extent required hereby) a minimum number of new Popeyes Restaurants within the Territory in strict compliance with the Development Schedule, and such new Restaurants may be either Direct-Owned Restaurants or Franchised Restaurants; provided, however, that for each Development Year, the aggregate number of Direct-Owned Restaurants shall be at least sixty percent (60%) of the total number of Popeyes Restaurants open and operating in the Territory on a cumulative basis (rounded up to the nearest whole number), as determined on the last Day of such Development Year (the “Direct-Owned Restaurant Limitation”).

 

6.2For the avoidance of doubt, any Franchised Restaurants purchased or otherwise acquired by Master Franchisee or any of its Affiliates (the “Acquired Restaurants”) shall not be included for purposes of determining Master Franchisee’s compliance with the Targets set forth in the Development Schedule; provided, however, that such Acquired Restaurants shall be counted as Direct-Owned Restaurants for purposes of satisfying the Direct-Owned Restaurant Limitation.

 

6.3All of the Targets set forth in the Development Schedule are net of closures, without distinction as to the reason for such closure (expiration, early termination, [****] or otherwise), and without distinction between closures of Direct-Owned Restaurants or Franchised Restaurants.

 

6.4Master Franchisee may develop Restaurants at a faster rate than as set out in the Development Schedule. Any Restaurants developed faster than as provided for in the Development Schedule shall be included in determining Master Franchisee’s compliance with the Development Schedule and shall carry forward to be used in calculating the satisfaction of the next Development Year’s Target.

 

6.5Master Franchisee will not develop any Restaurant in a Co-Branded Location without the prior written consent of PLK.

 

6.6Except as set forth in clause 6.7, if Master Franchisee desires to close a Direct-Owned Restaurant prior to the expiration of the term of the applicable Unit Addendum, Master Franchisee will provide written notice to PLK at least ninety (90) Days prior to the proposed closure date setting out the reasons for the closure of the Direct-Owned Restaurant and documentary evidence supporting any reasons cited in support of closure (the “Early Closure Request”). PLK may either approve or disapprove an Early Closure Request in its reasonable discretion. PLK will respond in writing within thirty (30) Days as to whether it approves or disapproves the Early Closure Request and, if PLK decides, in its reasonable discretion, to disapprove the Early Closure Request, PLK will specify a reason therefor. If PLK requests further information or documents in relation to the Early Closure Request, Master Franchisee will provide such further information or documents to PLK within a reasonable period, and PLK will render its decision within thirty (30) Days of receipt from Master Franchisee of such further information or documents. If PLK does not respond to an Early Closure Request within the thirty (30) Day period, the Early Closure Request shall be deemed to be denied.

 

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6.7Notwithstanding the foregoing (but subject to clause 6.3), Master Franchisee may close (a) up to ten (10) Direct-Owned Restaurants during each Development Year of the Term (each, a “Permitted Closure Restaurant”), [****] without PLK’s consent and without penalty or other payment to PLK, except for amounts due and payable to PLK prior to the closing date of the Permitted Closure Restaurant [****]. Upon the occurrence of an MDA Termination Event, Master Franchisee’s right to close Direct-Owned Restaurants in the Territory pursuant to this clause 6.7 will automatically terminate. Master Franchisee has the sole discretion to determine which Direct-Owned Restaurants are designated as Permitted Closure Restaurants [****]. For the avoidance of doubt, if PLK approves the closure of a Direct-Owned Restaurant pursuant to clause 6.6, such Direct-Owned Restaurant shall not be counted as a Permitted Closure Restaurant for purposes of this clause 6.7; provided, however, that the closure of such Direct-Owned Restaurant will not modify or extend any of the Targets, and Master Franchisee will replace any such Direct-Owned Restaurant by the end of the Development Year in which such Direct-Owned Restaurant was closed.

 

6.8If Master Franchisee fails to achieve the Target specified in the Development Schedule for any Development Year commencing with Development Year 3 (a “Development Default”) on or before the last Day of such Development Year (a “Shortfall Year”), Master Franchisee will have until the expiration of the Development Cure Period to achieve the Target for the Shortfall Year. If Master Franchisee fails to achieve the Target for the Shortfall Year by the expiration of the Development Cure Period, then, in addition to any other legal rights and remedies available to PLK set out in this Agreement or at Law, PLK may, in its sole discretion, terminate the Development Rights or terminate this Agreement in its entirety. PLK will not be required to provide any notice (whether oral or written) to Master Franchisee of a Development Default or the commencement of the Development Cure Period. For the avoidance of doubt, if a Restaurant is counted for purposes of determining Master Franchisee’s compliance with the applicable Annual Opening Target or Extension Period Target, if applicable, for a Shortfall Year, it will not be counted for purposes of determining compliance with the applicable Annual Opening Target or Extension Period Target for the Development Year in which the Restaurant actually opened.

 

6.9Notwithstanding the foregoing, provided that it has complied with all of the provisions of this clause 6, Master Franchisee shall not be deemed to be in breach of the Development Schedule if its failure to perform its obligations as set out in the Development Schedule results from any of the following events, which must have a continuous impact on any of the major metropolitan areas centered on or around Shanghai, Beijing or Shenzhen for a period of two (2) months or more, and make it impossible or commercially impracticable to achieve any of the Targets by the applicable deadlines set forth in the Development Schedule (a “Force Majeure Event”):

 

6.9.1compliance with any Law, ruling, order, regulation, requirement, instruction of any Authority or governmentally imposed moratorium that prohibits such performance;

 

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6.9.2acts of God, earthquake, blizzard or flood; or

 

6.9.3fires, strikes, actions of labor unions, embargoes, technological disaster, war, riot or terrorist acts, release of nuclear radiation or bio-toxic or bio-chemical agents.

 

Any delay in Master Franchisee’s performance of its obligations set out in the Development Schedule resulting from any of these Force Majeure Events will extend performance or excuse performance, in whole or in part, as reasonably determined by PLK according to the circumstances, but shall not in any event extend performance by more than one (1) Development Year. Notwithstanding the foregoing, no Force Majeure Event will relieve or suspend any payment obligation of Master Franchisee, and currency restrictions, fluctuations or devaluations will not be deemed to be Force Majeure Events.

 

6.10Upon the occurrence of a Force Majeure Event, Master Franchisee shall comply with the following:

 

6.10.1it shall promptly notify PLK in writing of the nature and extent of the Force Majeure Event causing its failure or delay in performance; and

 

6.10.2it shall use all commercially reasonable efforts to mitigate the effect of the Force Majeure Event to carry out its obligations under the Development Schedule in any way that is reasonably practicable and to resume the performance of its obligations as soon as reasonably possible.

 

7    DEVELOPMENT PROCEDURES FOR DIRECT-OWNED RESTAURANTS

 

7.1This Agreement is not a franchise for the operation of Popeyes Restaurants. The terms and conditions applicable to Master Franchisee for the operation of each Direct-Owned Restaurant are set forth in the Company Franchise Agreement and Unit Addendum for such Direct-Owned Restaurant, and the terms and conditions applicable to Franchisees for the operation of each Franchised Restaurant are set forth in the Franchise Agreement for such Franchised Restaurant.

 

7.2Until the occurrence of an MDA Termination Event, Master Franchisee will not be required to obtain PLK’s prior written approval for the development of any potential site in the Territory (“Site Approval”). After the occurrence of an MDA Termination Event, Master Franchisee shall have no further right or entitlement to develop and establish Direct-Owned Restaurants in the Territory, or to license to Franchisees the right to establish and operate Franchised Restaurants in the Territory, without first receiving Site Approval from PLK, which PLK may withhold in its sole discretion. If, after the occurrence of an MDA Termination Event, Master Franchisee enters into any legally binding commitment with vendors or lessors of a potential site before PLK has granted Site Approval, then Master Franchisee shall bear the entire risk of loss or damage resulting from a subsequent decision of PLK not to give Site Approval.

 

7.3The following requirements relating to site acquisition and construction of Direct-Owned Restaurants shall apply throughout the Term:

 

7.3.1For each Direct-Owned Restaurant, Master Franchisee shall provide PLK, prior to filing for permit applications with the relevant Authorities to construct the Direct-Owned Restaurant, with the following detailed information regarding the proposed site and the market around the site in a format prescribed by PLK: (i) profit and loss projections for five (5) years, (ii) capital expense breakdown, (iii) trade area information, including information regarding customers, (iv) interior and exterior renderings of the proposed site, complete with signage, (v) aerial maps of the proposed site and pictures of the main access point for the direction of the traffic flow, if applicable, and (vi) to the extent available, such other information as PLK may from time to time reasonably request in electronic format or any other formats prescribed by PLK from time to time (the “Site Information”).

 

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7.3.2Master Franchisee shall notify PLK when a Direct-Owned Restaurant is under construction so that PLK can issue the unique identifier for the Direct-Owned Restaurant.

 

7.3.3Master Franchisee assumes all cost, liability, expense and responsibility in procuring the location, acquisition and development of sites and the construction of Direct-Owned Restaurants. Master Franchisee shall provide copies of all documents related to title and possession of each site at PLK’s request.

 

7.3.4All Direct-Owned Restaurants shall be constructed, equipped and furnished in accordance with plans and specifications in compliance with Approved Plans and Specifications. These plans and specifications shall include the architectural design of the building, style, size and interior décor and colour schemes, internal and external signage as well as the proposed kitchen layout, service format and equipment. If, and to the extent that, Master Franchisee requires architectural and engineering services, it will contract for those services independently at its own expense and obtain all necessary approvals and permissions from the relevant Authority for such purposes.

 

7.4Master Franchisee agrees that PLK is not and shall not be deemed to be making, and no Affiliate of PLK or any Person on behalf of PLK is or shall be deemed to be making, any representation or warranty relating directly or indirectly to the success or viability of, or any other matter relating to, a Direct-Owned Restaurant, and any such representation or warranty is hereby expressly excluded, including in the event that PLK has granted Site Approval or provided Approved Plans and Specifications or of any other matter relating to the development of the Direct-Owned Restaurant. No reliance shall be placed by Master Franchisee or any of its Affiliates on any warranty, representation or advice that may be given by any Person by or on behalf of PLK and/or its Affiliates unless such representation, warranty or advice is expressly given in writing by PLK.

 

7.5PLK shall have the right to require Master Franchisee to use commercially reasonable efforts to have the landlord of any Direct-Owned Restaurant include any or all of the following provisions in the lease or purchase agreement, which will:

 

7.5.1Allow Master Franchisee and PLK the right to elect to assign the leasehold interest and the lease contract to PLK or an Affiliate or a franchisee of PLK and/or Master Franchisee, in each case, without landlord consent or any increase in rent or change in any other material term; and

 

7.5.2in case of lease of the site, require the lessor to provide PLK with a copy of any notice of deficiency under the lease sent to Master Franchisee, at the same time as such notice is sent to Master Franchisee (as the lessee under the lease), and which grants PLK the right (but not the obligation) to cure any of Master Franchisee’s deficiencies under the lease within fifteen (15) business Days after the expiration of the period in which Master Franchisee has to cure any such default, should Master Franchisee fail to do so.

 

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8    GRANT OF FRANCHISE FOR DIRECT-OWNED RESTAURANTS

 

8.1Direct-Owned Restaurants. Upon fulfilment of the following conditions precedent in relation to each proposed Direct-Owned Restaurant, PLK shall grant Master Franchisee or the relevant Approved Subsidiary, as applicable, a license to operate the relevant Direct-Owned Restaurant on the terms set out in the Company Franchise Agreement and Unit Addendum for the relevant Direct-Owned Restaurant:

 

8.1.1completion of the construction and fitting out of the Direct-Owned Restaurant in accordance with PLK’s then current Approved Plans and Specifications;

 

8.1.2delivery to PLK of a Notice of Completion at least ten (10) Days prior to the scheduled opening date of the Direct-Owned Restaurant, which Notice of Completion will identify the operator of the Direct-Owned Restaurant;

 

8.1.3payment to PLK or its designee of the applicable Direct-Owned Restaurant Unit Fee required in respect of the Direct-Owned Restaurant to be opened as specified in clause 8.5 below;

 

8.1.4Master Franchisee having provided PLK with a fully executed Joinder Agreement (if the operator of the Direct-Owned Restaurant is a new Approved Subsidiary) at least thirty (30) Days prior to the scheduled opening date of the Direct-Owned Restaurant;

 

8.1.5Master Franchisee having provided PLK with at least two (2) original counterparts of the Unit Addendum for the Direct-Owned Restaurant executed by Master Franchisee or the Approved Subsidiary, such counterparts to be delivered to PLK at least thirty (30) Days prior to the scheduled opening date of the Direct-Owned Restaurant;

 

8.1.6evidence, satisfactory to PLK in its sole discretion of compliance in all material respects by Master Franchisee with the requirements of this Agreement and the Company Franchise Agreement;

 

8.1.7evidence of property control, reasonably satisfactory to PLK, for the Unit Addendum Term (defined below); and

 

8.1.8Master Franchisee or the Approved Subsidiary having obtained and continuing to hold all relevant approvals, permits and licenses required by applicable Law to operate the Direct-Owned Restaurant.

 

In addition, by not later than the later to occur of (i) the first (1st) Business Day of the month following the month in which a Direct-Owned Restaurant was opened or (ii) five (5) Business Days following the date on which a Direct-Owned Restaurant was opened, Master Franchisee will provide PLK with a written communication advising of the date that the Direct-Owned Restaurant opened for business, together with digital photographs (geotagged with the location of the Direct-Owned Restaurant) of the interior and exterior of the Direct-Owned Restaurant, showing that such Direct-Owned Restaurant is open and serving guests and that the kitchen is stocked with food and supplies adequate to serve such guests. Additionally Master Franchisee will comply with all requirements established by PLK from time to time to evidence the opening of new Direct-Owned Restaurants in the Territory.

 

8.2Acquired Restaurants. Upon the purchase of an Acquired Restaurant by Master Franchisee or an Approved Subsidiary, PLK, Master Franchisee or the Approved Subsidiary and the applicable Franchisee will enter into an agreement to terminate the Franchise Agreement for such Acquired Restaurants in a form to be provided by PLK, and Master Franchisee will provide to PLK at least two (2) original counterparts of the Unit Addendum for the Acquired Restaurant executed by Master Franchisee or the Approved Subsidiary, such counterparts to be delivered to PLK on the acquisition date of the Acquired Restaurant.

 

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8.3Unit Addendum. Until the Unit Addendum has been executed and delivered to PLK pursuant to clause 8.1.5 for a particular Direct-Owned Restaurant and the applicable Direct-Owned Restaurant Unit Fee has been paid, the proposed Direct-Owned Restaurant shall not open for business.

 

8.4Unit Addendum Term. The term of each Unit Addendum will be up to twenty (20) years from the commencement date of the Unit Addendum (the “Unit Addendum Term”), with a minimum term of five (5) years (subject to renewal in accordance with clause 2.5 of the Company Franchise Agreement). The Unit Addendum Term for an Acquired Restaurant will be the remaining term of the relevant Franchise Agreement for such Acquired Restaurant.

 

8.5Direct-Owned Restaurant Unit Fee. During the Term, Master Franchisee will pay the following fee to PLK or its designee for the opening of each Direct-Owned Restaurant: (a) [****] for each Direct-Owned Restaurant opened during Development Year 1, Development Year 2 and Development Year 3, and (b) [****] for each Direct-Owned Restaurant opened during Development Year 4 and at any time thereafter (the “Direct-Owned Restaurant Unit Fee”), each for a twenty (20) year term (which amount will be prorated if the term of the applicable Unit Addendum is less than twenty (20) years). The Direct-Owned Restaurant Unit Fee will be due and payable no later than five (5) Days after receipt of an invoice from PLK and/or an Affiliate or five (5) Days after the opening of the Direct-Owned Restaurant, whichever is earlier. Upon the renewal of any Unit Addendum of a Direct-Owned Restaurant in accordance with the terms of the Company Franchise Agreement, Master Franchisee will pay the Renewal Fee to PLK or its designee prior to the expiration of the Unit Addendum for the applicable Direct-Owned Restaurant.

 

8.6Direct-Owned Restaurant Fee Credit. While the Development Rights are in effect, Master Franchisee will be entitled to receive a credit in the amount of the unused portion of the Direct-Owned Restaurant Unit Fee paid for a Permitted Closure Restaurant previously operated by Master Franchisee (the “Direct-Owned Restaurant Fee Credit”). The Direct-Owned Restaurant Fee Credit will be applied to the applicable Direct-Owned Restaurant Unit Fee charged in connection with the next Direct-Owned Restaurant opened by Master Franchisee located in the province, autonomous region or direct-controlled municipality in which the Permitted Closure Restaurant was located (the “Replacement Restaurant”); provided, however, that if Master Franchisee fails to open a Direct-Owned Restaurant located in such province, autonomous region or direct-controlled municipality within a period of eighteen (18) months after the closure of the Permitted Closure Restaurant, Master Franchisee will have no right to receive the Direct-Owned Restaurant Fee Credit and, in the event Master Franchisee opens a Direct-Owned Restaurant located in such province, autonomous region or direct-controlled municipality after the expiration of the 18-month period, Master Franchisee will pay the full amount of the applicable Direct-Owned Restaurant Unit Fee in connection therewith. The Direct-Owned Restaurant Fee Credit will be calculated on a pro rata basis as follows: the Direct-Owned Restaurant Unit Fee originally paid by Master Franchisee for the Permitted Closure Restaurant divided by the number of years of the Unit Addendum Term for the Permitted Closure Restaurant, multiplied by the full period remaining in the term of the Permitted Closure Restaurant. The result is subtracted from the Direct-Owned Restaurant Unit Fee (as set forth above) to arrive at the Direct-Owned Restaurant Unit Fee for the Replacement Restaurant. For the avoidance of doubt, the Direct-Owned Restaurant Fee Credit will not be available to Master Franchisee after the occurrence of an MDA Termination Event. By way of illustration only, if the Direct-Owned Restaurant Unit Fee was [***], the initial term was 20 years, and the Permitted Closure Restaurant closed at the end of the second year of the term, the Direct-Owned Restaurant Fee Credit would be [***] ÷ 20, and that amount ([***]) would be multiplied by 18 (the unused portion of the term), to obtain a Direct-Owned Restaurant Fee Credit of [***]. If the next Direct-Owned Restaurant required a Direct-Owned Restaurant Unit Fee of [***], Master Franchisee would receive a credit of [***] and would be obligated to pay [***].

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

8.7Royalty.

 

8.7.1During the Term, Master Franchisee will pay a monthly fee (the “Royalty Fee”) for each Direct-Owned Restaurant to PLK or its designee as follows: [****]

 

8.7.2During the Unit Addendum Term for each Acquired Restaurant, the Royalty Fee due in respect of such Acquired Restaurant will be the Royalty Fee set forth in the relevant Franchise Agreement for such Acquired Restaurant.

 

8.7.3Master Franchisee will pay the Royalty Fee due in respect of each Direct-Owned Restaurant to PLK or its designee by no later than the tenth (10th) day of each month for the entire Unit Addendum Term (and any renewal term, if applicable) based on Gross Sales for the preceding month in accordance with the Company Franchise Agreement.

 

8.7.4In the event that applicable Law requires the calculation of the Royalty Fee payable pursuant to this clause 8.7 to be based on any figure other than monthly Gross Sales, which calculation results in a sum payable to PLK which is less than what would have been payable had the Royalty Fee been calculated based on monthly Gross Sales, then Master Franchisee undertakes and agrees to pay such difference from its global assets and bank accounts so that the final amount paid to PLK amounts to the Royalty Fee calculated based on monthly Gross Sales.

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

8.8Advertising Contribution.

 

8.8.1During the Term, Master Franchisee will pay an Advertising Contribution in respect of each Direct-Owned Restaurant calculated by multiplying the monthly Gross Sales at the Direct-Owned Restaurant by five percent (5.0%) for the entire Unit Addendum Term (and any renewal term, if applicable), subject to clause 11.

 

8.8.2During the Term, the Advertising Contribution for Direct-Owned Restaurants will be contributed by no later than the tenth (10th) day of each month to the Advertising Fund to be managed by Master Franchisee, subject to clause 11 of this Agreement.

 

9    GRANT OF FRANCHISE FOR FRANCHISED RESTAURANTS

 

9.1General. The Development Rights include the right during the Term for Master Franchisee to enter into Franchise Agreements with Franchisees for the operation of Franchised Restaurants in the Territory. Master Franchisee will provide the Services to Franchisees and Franchised Restaurants in the Territory in strict compliance with the terms of this Agreement. Master Franchisee shall use commercially reasonable efforts to ensure compliance by Franchisees with the Popeyes System in the Territory and enforce all of the obligations of Franchisees as set forth in the Franchise Agreements. Except as set forth in this Agreement, Master Franchisee shall not charge any fees or other amounts to Franchisees without the prior written consent of PLK.

 

9.2Approval of Franchisees and Franchise Agreements. Master Franchisee will utilize PLK’s guidelines for approving Franchisees. In addition, Master Franchisee will, at its sole cost and expense procure mandatory Level 2 Background Checks conducted by the Background Check Provider on each proposed Franchisee and all principals and shareholders thereof, and provide copies of the background checks to PLK for review. Master Franchisee will not enter into a Franchise Agreement with any proposed Franchisee if the results of the background check reveal, in PLK’s sole judgment, that the proposed Franchisee or any of the principals or shareholders thereof is (i) a Competitor, (ii) a Person that directly or indirectly provides marketing, advertising, training, monitoring, development, reporting and/or collection or similar services to a Competitor; (iii) a Person which acts as a franchisee or master franchisee for any Competitor, or (iv) a Prohibited Person, as determined in PLK’s sole judgment based on the background check and any follow-up or additional diligence, if any, required by PLK based on the background check. In addition, Master Franchisee will not enter into a Franchise Agreement with any current or former RBI Franchisee without the prior written consent of PLK. The failure to comply with this provision is a material default under this Agreement.

 

9.2.1Franchisees who desire to open Franchised Restaurants will enter into a Franchise Agreement with Master Franchisee for each Franchised Restaurant opened in the Territory during the Term. If Master Franchisee desires to sell, transfer or otherwise dispose of a Direct-Owned Restaurant to a Franchisee, then PLK and Master Franchisee will terminate the Unit Addendum with respect to such Direct-Owned Restaurant prior to Master Franchisee entering into a Franchise Agreement with respect to such Restaurant.

 

9.2.2The term of each Franchise Agreement will be up to twenty (20) years from the date on which such Franchise Agreement is signed, as determined by Master Franchisee, in its sole discretion, with a minimum term of five (5) years and with one (1) option to renew for ten (10) years on the condition that Master Franchisee will consult with PLK before such renewal.

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

9.2.3Master Franchisee will provide PLK with the Site Information for each proposed Franchised Restaurant within ten (10) Days after receipt of same from the relevant Franchisee.

 

9.2.4Master Franchisee will provide PLK with written notice of the opening of a Franchised Restaurant within five (5) Days of the opening date. Master Franchisee will provide PLK with one (1) copy of each Franchise Agreement on or prior to the opening of the Franchised Restaurant, together with a signed acknowledgment from each Franchisee certifying in the manner set out in the Franchise Agreement that all applicable franchise disclosures, if any were required under applicable Law, were made by Master Franchisee to each Franchisee on a timely basis. Additionally, by not later than the later to occur of (i) the first (1st) Business Day of the month following the month in which a Franchised Restaurant was opened or (ii) five (5) Business Days following the date on which a Franchised Restaurant was opened, Master Franchisee will provide PLK with digital photographs (geotagged with the location of the Franchised Restaurant) of the interior and exterior of the Franchised Restaurant, showing that such Franchised Restaurant is open and operating and is serving guests and that the kitchen is stocked with food and supplies adequate to serve such guests. Additionally, Master Franchisee will comply with, and will cause all Franchisees to comply with, all requirements established by PLK from time to time to evidence the opening of new Franchised Restaurants in the Territory.

 

9.2.5Master Franchisee will not amend a Franchise Agreement in any material respect, nor waive a Franchisee’s obligation to comply with a material condition under a Franchise Agreement, without PLK’s prior written consent. Master Franchisee will provide to PLK in advance a copy of any such amendment or statement describing a waiver to be granted. In addition, at PLK’s request, Master Franchisee will provide to PLK a signed copy of each such amendment within ten (10) Days after such amendment is signed. Without limiting the generality of the foregoing, Master Franchisee will not amend a Franchise Agreement to delete PLK and its Affiliates as “FRANCHISOR INDEMNIFIED PARTIES” thereunder.

 

9.2.6Master Franchisee will ensure that PLK or any employee, agent or designee of PLK, shall have the unrestricted right to enter the Franchised Restaurants to conduct such inspections and other activities as PLK deems necessary to ascertain or ensure compliance with the Standards, including without limitation, to conduct interviews with Franchisee’s employees. The inspections and other activities may be conducted without prior notice at any time determined by PLK, subject to the requirement that PLK will use commercially reasonable efforts to ensure that the inspections and other activities will not disrupt the normal business operations of the Franchised Restaurants.

 

9.2.7Master Franchisee will fulfil all of the duties of the “Franchisor” under each Franchise Agreement executed pursuant to this Agreement and will use best efforts to maintain compliance by each Franchisee under, and enforce, each Franchise Agreement. However, Master Franchisee will not without PLK’s prior written consent;

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

9.2.7.1Approve any changes to the Approved Plans and Specifications;

 

9.2.7.2Authorize any alteration, addition or improvement to the interior or exterior of a Franchised Restaurant not in compliance with the Standards;

 

9.2.7.3Make any material changes to the form of the Franchise Agreement;

 

9.2.7.4Approve the use of any products, fixtures, furnishings, signs, equipment, interior or exterior design, or methods of operation not specified in the Confidential Operating Manual or otherwise approved in writing by PLK;

 

9.2.7.5Approve or disapprove suppliers or distributors to the Franchised Restaurant;

 

9.2.7.6Approve the sale or use in a Franchised Restaurant of any product that has not previously been approved in writing by PLK or that has been disapproved by PLK for sale or use in the Franchised Restaurant; or

 

9.2.7.7Except as otherwise permitted or authorized by PLK in writing, knowingly permit any material deviation by a Franchisee from the Standards.

 

9.2.8Master Franchisee will ensure that all Franchisees install equipment in their Franchised Restaurants as required by PLK.

 

9.2.9Master Franchisee will use commercially reasonable efforts to obtain P&L Information from each Franchisee. Master Franchisee will provide PLK with P&L Information provided to Master Franchisee by each Franchisee pursuant to its Franchise Agreements at such times as PLK designates and in an electronic format prescribed by or otherwise acceptable to PLK. The Franchise Agreement shall require each Franchisee to provide Master Franchisee with P&L Information and authorize Master Franchisee to provide such P&L Information to PLK.

 

9.2.10Master Franchisee’s failure to perform in a diligent and timely manner any material obligation owed to any Franchisee will constitute a breach of this Agreement, such breach to be cured within sixty (60) Days after written notification from PLK to Master Franchisee. Failure to cure following notification will constitute a material breach of this Agreement, and PLK may after giving reasonable consideration to the nature of the relevant default, either terminate the Development Rights or terminate this Agreement in its entirety.

 

9.2.11If Master Franchisee fails to carry out its material obligations under a Franchise Agreement within the time provided in the Franchise Agreement and in a manner consistent with the terms of the Franchise Agreement, PLK may, with the written approval of Master Franchisee (which shall not be unreasonably withheld) itself take such steps necessary to enforce the terms and conditions of the Franchise Agreement. Master Franchisee will cooperate with PLK to give effect to this clause, including, by providing and executing such documents deemed necessary by PLK.

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

9.2.12Each Franchised Restaurant shall be operated according to the Franchise Agreement and the Standards. Master Franchisee will immediately report to PLK any termination or renewal of, or refusal to renew, any Franchise Agreement, including any notice of intent not to renew by any Franchisee, and all information PLK may reasonably request concerning any termination, renewal or refusal to renew.

 

9.2.13If Master Franchisee fails to operate any Franchised Restaurant in compliance with the terms of the Franchise Agreement, PLK may direct, as it deems best, Master Franchisee to terminate the Franchise Agreement for that Franchised Restaurant and/or require the closure (either temporary or permanent) of the Franchised Restaurant.

 

9.2.14If Master Franchisee fails to pay PLK (or its designee) (other than a failure to pay due to a Payment Restriction which shall be governed by the terms of clause 22.4) when due any amounts payable under clause 9.4 or clause 9.5 at any time with respect to any Franchised Restaurant, either during the Term or, if applicable, thereafter, and does not cure such failure within twenty (20) Days of written notice from PLK, then PLK may notify, or may direct Master Franchisee to notify, Franchisees in writing to pay the Franchised Restaurant Unit Fee and/or Royalty Fee and submit Sales Reports directly to PLK or its designee with respect to all periods after the date of such notice. The Franchise Agreements shall provide for payment of such amounts and the submission of Sales Reports directly to PLK upon receipt of written notice from PLK or Master Franchisee. For purposes of enforcing this provision, PLK will be named as a third party beneficiary under the Franchise Agreements. Master Franchisee shall be liable and shall pay or reimburse PLK on demand for all reasonable costs, including legal costs, incurred by PLK in connection with the enforcement of PLK’s third party beneficiary rights under the Franchise Agreements.

 

9.2.15If at any time, Master Franchisee receives a termination payment or other amount from a Franchisee or any other Person for future royalties as a result of the closure of a Franchised Restaurant or termination of the Franchise Agreement, Master Franchisee and PLK will share such payment (reduced by the amount of any documented out of pocket collection costs incurred by Master Franchisee) pro rata in accordance with their respective Royalty Fee percentages. Master Franchisee will promptly notify PLK and remit payment to PLK within thirty (30) Days after receipt thereof. For the avoidance of doubt, Master Franchisee will have no obligation to pursue collection of a termination payment or other amount as a result of the closure of a Franchised Restaurant or termination of a Franchise Agreement and may determine in its sole discretion whether or not to initiate such collection activities.

 

9.3IT Systems.

 

9.3.1Master Franchisee will, at its sole cost and expense, provide PLK with Polling Information and Delivery Aggregator Information (to the extent received from Delivery Aggregators) at such time or times as may be reasonably required by PLK and ensure that Master Franchisee and all Franchisees install POS Systems and adopt polling and data collection systems prescribed by PLK. Master Franchisee will only use the information received from the Franchisees’ POS Systems and Franchisees’ Polling Information in order to provide the Services.

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

9.3.2PLK may at any time prescribe a POS System for use in the Territory so long as (i) such POS System is at least equivalent in functionality to the POS System currently in use in the Territory and (ii) the cost of such POS System is equivalent to or less than comparable POS Systems available in the Territory from third parties.

 

9.3.3PLK shall have the right to approve the vendor that Master Franchisee engages to develop any website, applications, including Mobile Applications, or other digital assets for use in the Territory. Such approval shall not be unreasonably withheld. In addition, upon written notice to Master Franchisee, PLK may require Master Franchisee to purchase websites, applications or other digital assets from PLK, an Affiliate of PLK or a vendor approved by PLK.

 

9.4Franchised Restaurant Unit Fee.

 

9.4.1During the Term, Master Franchisee will pay to PLK or its designee (a) US$[****] for each Franchised Restaurant opened during Development Year 1, Development Year 2 and Development Year 3, and (b) US$[****] for each Franchised Restaurant opened during Development Year 4 and at any time thereafter (the “Franchised Restaurant Unit Fee”), each for a twenty (20) year term (which amount will be prorated if the term of the applicable Franchise Agreement is less than twenty (20) years), whether or not Master Franchisee actually charges or collects a franchise fee for such Franchised Restaurant.

 

9.4.2The Franchised Restaurant Unit Fee will be due and payable no later than five (5) Days after the receipt of an invoice from PLK and/or an Affiliate of PLK or five (5) Days after the scheduled opening date of the Franchised Restaurant, whichever occurs first.

 

9.4.3Upon renewal of the Franchise Agreement for any Franchised Restaurant Master Franchisee will pay the Renewal Fee to PLK prior to the expiration of the term of the Franchise Agreement, whether or not Master Franchisee actually charges or collects a renewal fee for such Franchised Restaurant.

 

9.4.4For the avoidance of doubt, Master Franchisee may not charge a Franchised Restaurant Unit Fee or Renewal Fee in an amount in excess of the amount set forth in clause 9.4.1 or as set forth in the definition of “Renewal Fee”, respectively, it being understood that PLK will receive the entire amount of the fee paid by the Franchisee in connection with the opening of a Franchised Restaurant or the renewal of a Franchise Agreement.

 

9.5Royalty Fee.

 

9.5.1In consideration of the license and other rights granted under this Agreement during the Term, Master Franchisee will pay a Royalty Fee for each new Franchised Restaurant to PLK or its designee [****].

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

9.5.2The maximum royalty Master Franchisee may charge a Franchisee under a Franchise Agreement is [****]. Notwithstanding the foregoing, the Parties agree to discuss and consider in good faith any future proposals by Master Franchisee for an increase to the maximum royalty that Master Franchisee may charge Franchisees. Unless otherwise authorized by PLK in writing, the portion of the royalty fee collected and retained by Master Franchisee will be Master Franchisee’s sole compensation related to the Franchise Agreements and the Services to be provided to Franchisees. For the avoidance of doubt, regardless of the royalty Master Franchisee charges for a Franchised Restaurant, Master Franchisee will pay PLK (or its designee) the full amount of the Royalty Fee required under clause 9.5.1, even if the royalty Master Franchisee actually charges Franchisee is less and regardless of whether or not Master Franchisee charges and/or collects a fee for such Franchised Restaurant.

 

9.5.3In the event that applicable Law requires the calculation of the Royalty Fee payable pursuant to this clause 9.5 to be based on any figure other than monthly Gross Sales, which calculation results in a sum payable to PLK which is less than what would have been payable had the Royalty Fee been calculated based on monthly Gross Sales, then Master Franchisee undertakes and agrees to pay such difference from its global assets and bank accounts so that the final amount paid to PLK amounts to the Royalty Fee calculated based on monthly Gross Sales.

 

9.6Advertising Contribution. Master Franchisee will require each Franchisee to contribute no less than five percent (5.0%) of Gross Sales on a monthly basis, beginning the first month after each Franchised Restaurant has commenced operations, to an Advertising Fund to be managed by Master Franchisee during the Term pursuant to clause 11 of this Agreement. Master Franchisee will deposit all Advertising Contributions received pursuant to the Franchise Agreements into the Ad Fund Account. To the extent that the amount remitted by a Franchisee or Affiliate in connection with a Franchised Restaurant is insufficient to pay the Royalty Fee required under clause 9.5.1 and Advertising Contribution, the payment will be applied first to the Royalty Fee and the balance, if any, will be applied to the Advertising Contribution.

 

9.7Invoices; Taxes. On a monthly basis, Master Franchisee will calculate the royalties for all Franchised Restaurants based on the Sales Reports provide by Franchisees. Master Franchisee will provide PLK with a copy of the Sales Reports within five (5) Business Days from receipt thereof. Master Franchisee will invoice Franchisees for royalties, together with any taxes (including applicable VAT) which Master Franchisee is required by applicable Law to collect and remit to the Tax Authority in the Territory. Master Franchisee agrees to indemnify the PLK Indemnified Parties for any Claims or Losses, including penalties and interest, resulting from Master Franchisee’s failure to properly remit any such tax payment (including applicable VAT) collected from Franchisees. Notwithstanding the foregoing, Master Franchisee shall procure that Franchisees provide the Sales Report for each month utilizing such sales reporting and invoicing process as may be implemented by PLK for franchisees in the Territory from time to time. The failure of any Franchisee to submit a Sales Report on three (3) or more occasions during any twelve (12) month period shall be an event of default under the Franchise Agreement.

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

9.8Method of Payment. PLK may, at its option, and provided the same is permissible under the applicable Law of the Territory, require payment of the Royalty and/or Advertising Contribution and any other amount payable under this Agreement (including pursuant to clause 8 and 9 hereof) by such method or methods as may best align or accord with PLK’s global payment policy standards in effect from time to time, including, without limitation, by international wire transfer, electronic funds transfer, ACH credit transfer, international drawdown and/or by direct weekly or monthly withdrawals in the form of an electronic, wire, automated transfer or other similar electronic funds transfer in the appropriate amount(s) from Master Franchisee’s bank or other financial institution account. If PLK exercises the latter option to automatically pull funds from Master Franchisee’s bank account, Master Franchisee will: (a) execute and deliver to its financial institution and to PLK those documents necessary to authorize such withdrawals and to make payment or deposit as directed by PLK; (b) not thereafter terminate such authorization so long as any payments are owed to PLK hereunder or any other agreement with PLK, whether this Agreement is in effect or this Agreement has expired or been terminated or any other such agreement is in effect or has expired or been terminated, without the prior approval of PLK; (c) not close such account without prior notice to PLK and the establishment of a substitute account permitting such withdrawals; and (d) take all reasonable and necessary steps to establish an account at a financial institution which has a direct electronic funds transfer or other withdrawal program if such a program is not available at Master Franchisee’s financial institution.

 

9.9Master Franchisee Must Not Withhold Payment. Master Franchisee shall not, unless required by Law, for any reason withhold or offset payment of any amount due to PLK under this Agreement (including pursuant to clause 8 and 9 hereof). This applies even if Master Franchisee alleges that PLK has not performed or is not performing an obligation imposed upon it under this Agreement or any other agreement with PLK. PLK may accept any partial payment without prejudice to its right to recover the balance due or pursue any other remedy.

 

9.10Application of Payments. PLK, in its sole discretion, may apply any payment received from Master Franchisee or from any other Person on behalf of Master Franchisee against any past due indebtedness of Master Franchisee as PLK may see fit, notwithstanding any contrary instruction or designation given by Master Franchisee or any other Person as to the application or imputation of any such payment.

 

9.11Marketing Plan. Master Franchisee will develop a marketing plan to attract qualified Franchisee candidates within the Territory. Master Franchisee will consult with PLK about the plan and provide a copy of the plan to PLK.

 

9.12Mobile Applications. If PLK approves the use of any Mobile Applications in the Territory, Master Franchisee shall comply with, and shall cause Franchisees to comply with, such standards PLK may require for the use of Mobile Applications.

 

9.13Development Services. Master Franchisee will provide, at Master Franchisee’s sole cost and expense, the following development services (the “Development Services”) to Franchisees:

 

9.13.1Administer PLK’s development processes and procedures as described in Exhibit C attached hereto;

 

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CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

9.13.2Provide the Approved Plans and Specifications for all types of Restaurants;

 

9.13.3Provide architectural advice and consultation as necessary on plan revisions, layout and signs;

 

9.13.4Provide assistance, advice and consultation on zoning and other matters conducive to the development of a Restaurant for the approved location; provided, however, that none of these responsibilities should be construed to suggest that it is Master Franchisee’s responsibility to perform the tasks of, or undertake tasks normally undertaken by, any kind of engineer, architect, surveyor or other professional Person or to otherwise provide any engineering, architectural, quantity surveying or other professional services;

 

9.13.5analyze site packages prepared by Franchisees, administer PLK’s site selection policies in relation to proposed sites of Franchisees and grant Site Approval (subject to compliance with Exhibit C) for a proposed location of a Popeyes Restaurant; provided, however, that upon the occurrence of an MDA Termination Event, at PLK’s option and upon notice to Master Franchisee, PLK may terminate Master Franchisee’s right to grant Site Approval pursuant hereto;

 

9.13.6Conduct all necessary site-related studies (or procure that Franchisees conduct such studies), as may be called for by the Popeyes System or are otherwise appropriate, such as demographics and traffic studies;

 

9.13.7Inspect such site during construction and provide advice to Franchisees as necessary in relation to the franchise requirements; and

 

9.13.8Verify that each Franchised Restaurant has been constructed in accordance with the Approved Plans and Specifications.

 

10  RIGHTS AND OBLIGATIONS OF MASTER FRANCHISEE IN RELATION TO MENU AND SUPPLIERS

 

10.1Approved Suppliers and Approved Products.

 

10.1.1To ensure goods and services meet PLK’s Standards, Master Franchisee shall only procure such goods and services from Approved Suppliers in connection with the development, improvement or operation of the Restaurants. Such goods include the Approved Products, including, without limitation, food and supplies, packaging and paper products, furnishings, fixtures, signage, equipment, uniforms and premiums. The decision to approve or disapprove proposed suppliers and/or distributors shall be made by PLK in its sole discretion. PLK may consider any factors it deems relevant in establishing specifications and standards and in approving suppliers and/or distributors, and is not obligated to approve multiple suppliers and/or distributors of any good or service. To the extent that PLK or any of its Affiliates negotiates any cost recovery fees with Approved Suppliers after the Original Commencement Date, PLK may use these funds in its sole discretion.

 

10.1.2Additionally, Master Franchisee agrees to implement, at its sole cost and expense, the complaint reporting system approved by PLK and/or its Affiliates for use in the Popeyes System, for all Popeyes Restaurants in the Territory, prior to the shipment of any products from an Approved Facility to a Popeyes Restaurant in the Territory. Such complaint reporting system must be operated at Master Franchisee’s sole cost and expense, by such Approved Facility, the Master Franchisee or a third party approved by PLK. Master Franchisee must also implement, at its sole cost and expense, a customer complaint system, approved by PLK, for the purposes of receiving and addressing customer complaints and ensuring compliance with the Standards. Master Franchisee shall provide PLK with PLK-required customer complaint reports, monthly, or more frequently upon PLK’s request in a format approved by PLK.

 

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10.1.3Master Franchisee may negotiate pricing and other terms and conditions with Approved Suppliers in the Territory regarding Approved Products. Notwithstanding the foregoing, Master Franchisee may not negotiate terms and conditions with any Approved Supplier in the Territory which would negate or conflict with any agreements that PLK has with such Approved Supplier without PLK’s prior written consent. Master Franchisee may negotiate with Approved Suppliers for rebates and/or supply chain and/or marketing allowances to be paid directly to the Advertising Fund for the benefit of all of the PLK Restaurants in the Territory; provided, however, that Master Franchisee will promptly disclose to PLK the terms of any such rebates and/or supply chain and/or marketing allowances. For the avoidance of doubt, the rights granted to Master Franchisee pursuant to this clause 10.1.3 will automatically terminate upon the occurrence of an MDA Termination Event.

 

10.2Local Menu Customization. During the Term and without prejudice to the rights reserved to PLK in this Agreement and the Company Franchise Agreement, Master Franchisee may seek to establish local menu items for Restaurants operating within the Territory; provided that (i) all of the Core Menu Items are required to be offered for sale at all Restaurants in the Territory, (ii) all suppliers and product ingredients are approved by PLK in writing in accordance with PLK’s standard processes and procedures for such approval, as supplemented below, and (iii) all local menu items are approved by PLK in accordance with the procedures set forth below.

 

10.2.1If Master Franchisee wishes to establish a local menu item, it must undertake (i) an analysis to assess the financial feasibility to Restaurants and (ii) consumer research in the part of the Territory in which Master Franchisee wishes to introduce the local menu item (the “Affected Area”) to assess whether that menu item has “concept appeal” and “taste ratings” in the Territory which are reasonably equivalent to the level of concept appeal and taste ratings of the Core Menu Items and local menu items already implemented in accordance with these procedures. Master Franchisee will permit PLK to review the financial analysis and consumer research conducted by Master Franchisee pursuant to this clause 10.2.1. Master Franchisee will submit its request for concept approval of the local menu item in the Affected Area (“Concept Approval”) to PLK in writing (the “Concept Approval Notice”), which PLK may approve or disapprove in its sole discretion. PLK will review the Concept Approval Notice and use commercially reasonable efforts to notify Master Franchisee within thirty (30) Days of its decision or that it requires additional time in order to review the Concept Approval Notice. Unless PLK approves any request for Concept Approval in writing, such request shall be deemed disapproved. Failure to notify Master Franchisee of its decision within thirty (30) Days shall not operate as a deemed consent by PLK in respect of the local menu item. If PLK decides to disapprove the local menu item, PLK will provide Master Franchisee with written notice of such disapproval, specifying the reasons for such determination, which reasons may not be challenged or appealed by Master Franchisee.

 

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10.2.2For the avoidance of doubt, the rights granted to Master Franchisee pursuant to this clause 10.2 shall terminate in the event that the Development Rights are terminated for any reason or this Agreement expires or terminates. Termination shall not affect rights granted to Master Franchisee pursuant to this clause 10.2 prior to such termination, subject always to PLK’s discretion to revoke or terminate any such prior approval given to Master Franchisee in the event that the required Standards in respect of such local menu items are not maintained by Master Franchisee and/or any suppliers as determined by the Popeyes QA Program.

 

10.2.3Master Franchisee shall require that, upon PLK’s request, Approved Suppliers of the ingredients for such local menu item shall promptly submit samples of the Approved Products or samples of any components of the Approved Products to a third party laboratory facility identified by PLK for analytical testing and/or specifications technical review according to the Popeyes QA Program. PLK may also authorize the laboratory facility to obtain such samples directly from Approved Suppliers or Popeyes Restaurants pursuant to a testing schedule established by PLK. Master Franchisee shall pay, or ensure that Approved Suppliers pay, all costs and expenses in connection with such analytical testing and/or specifications technical review according to the Popeyes QA Program.

 

10.2.4Any trademarks or other intellectual property rights created or subsisting in connection with the establishment of any local menu item, including any pre-existing marks or intellectual property rights of Master Franchisee, will become Popeyes Marks and Popeyes Intellectual Property Rights hereunder. Master Franchisee hereby disclaims any right or interest in or to such Popeyes Marks and/or Popeyes Intellectual Property Rights, and Master Franchisee hereby assigns to PLK such rights (if any) which Master Franchisee has or may acquire in such Popeyes Marks and/or Popeyes Intellectual Property Rights. If PLK elects to register the assignment or such trademarks or other intellectual property rights under applicable Law, PLK will be responsible for any costs associated with any such recordal or registration. Notwithstanding the foregoing, Master Franchisee will bear the cost of screening the potential new trademarks for use in the Territory in an amount not to exceed US$30,000 annually (the “Annual Cap”), which amount may be paid out of the Advertising Fund at Master Franchisee’s sole discretion. For the avoidance of doubt, if the Annual Cap is exhausted, PLK may deny approval of any further proposed marks, slogans or product names for that year, it being understood that PLK will not be responsible for the cost of any trademark screenings for the Territory.

 

10.2.5Master Franchisee agrees that it shall not enter into a supply or distribution agreement or any other commercial agreement with a supplier and/or distributor until such supplier and/or distributor is an Approved Supplier. If Master Franchisee enters into any legally binding commitment with a supplier and/or distributor before such supplier and/or distributor is an Approved Supplier, then Master Franchisee shall bear the entire risk of loss or damage resulting from a subsequent decision of PLK not to approve such supplier and/or distributor. Additionally, Master Franchisee may not enter into any supply or distribution agreement or any other commercial agreement with an Approved Supplier with terms inconsistent with or contradictory to the Popeyes Master GTCs.

 

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10.3Approval of Local Menu Ingredients and Suppliers.

 

10.3.1If PLK has granted Concept Approval for a local menu item, Master Franchisee will identify proposed suppliers of the ingredients for such local menu item and provide PLK with the written report of an independent audit company approved by PLK, confirming that, with respect to each such supplier, the supplier’s products and the facilities where such products will be manufactured comply with the Popeyes QA Program (the “Audit Report”). Additionally, if Master Franchisee proposes that PLK approve a new supplier of Approved Products, Master Franchisee will identify the proposed suppliers and provide PLK with the Audit Report. Master Franchisee will be responsible for the fees of the independent audit company if the supplier does not agree to pay such fees. Alternatively, PLK may, in its sole discretion, perform the audit itself, in which case Master Franchisee will be responsible for PLK’s costs incurred in conducting the audit and all incidental out-of-pocket expenses. Master Franchisee will submit this information to PLK, together with the notice in the form attached as Exhibit D hereto (the “Product Approval Notice”), and provide any additional information reasonably requested by PLK. For purposes of this Agreement, the Product Approval Notice, Audit Report, Popeyes Master GTCs executed by the proposed supplier, together with all other information reasonably requested by PLK, are collectively referred to as the “Product Supplier Documents”.

 

10.3.2PLK will use commercially reasonable efforts to notify Master Franchisee of its decision regarding a new supplier within sixty (60) Days following the receipt of the Product Supplier Documents. Failure by PLK to notify Master Franchisee of its decision during such sixty (60) Day period shall not operate as a deemed consent of the proposed supplier(s). If PLK disapproves of the proposed supplier(s), PLK will provide Master Franchisee with written notice of such disapproval, specifying the reasons for such disapproval, which reasons may not be challenged or appealed by Master Franchisee. Unless PLK approves any request for a proposed supplier in writing, such request shall be deemed disapproved. For the avoidance of doubt, the rights granted to Master Franchisee pursuant to this clause 10.3 shall terminate in the event that the Development Rights are terminated for any reason or this Agreement expires or terminates. Termination shall not affect rights granted to Master Franchisee pursuant to this clause 10.3 prior to such termination, subject always to PLK’s discretion to revoke or terminate any such prior approval given to Master Franchisee in the event that the required Standards are not maintained by any such Approved Suppliers as determined by the Popeyes QA Program.

 

10.3.3Any trademarks or other intellectual property rights created in connection with the establishment of proposed suppliers shall become Popeyes Marks and Popeyes Intellectual Property Rights hereunder unless Master Franchisee and PLK agree otherwise. Master Franchisee hereby disclaims any right or interest in or to such Popeyes Marks and/or Popeyes Intellectual Property Rights, and Master Franchisee hereby assigns to PLK or its designee such rights (if any) which Master Franchisee has or may acquire in such Popeyes Marks and/or Popeyes Intellectual Property Rights. Master Franchisee shall assist in the recordal or registration of such assignment(s) as required under applicable Law.

 

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10.4Removal of Core Menu Items. During the Term, all of the Core Menu Items are required to be offered for sale at all Restaurants in the Territory. Notwithstanding the foregoing Master Franchisee may request the removal of a Core Menu Item in the Territory pursuant to this clause 10.4.

 

10.4.1If Master Franchisee wishes to discontinue selling a Core Menu Item, Master Franchisee will submit its request for removal of the Core Menu Item to PLK in writing (the “Core Menu Item Removal Notice”), which PLK may approve or disapprove in its sole discretion based on the following factors: (i) Master Franchisee and Franchisee profitability in the Territory, (ii) appeal of the Core Menu Item in the Territory, (iii) historical sales data for the applicable Core Menu Item, (iv) advertising and promotional efforts in the Territory related to such Core Menu Item, (v) Popeyes global brand identity and essence, and/or (vi) such other factors as PLK deems relevant, in its sole discretion. PLK will review the Core Menu Item Removal Notice and use commercially reasonable efforts to notify Master Franchisee within thirty (30) Days of its decision or that it requires additional time in order to review the Core Menu Item Removal Notice. Failure to notify Master Franchisee of its decision within thirty (30) Days shall not operate as a deemed consent by PLK in respect of the removal of such Core Menu Item. If PLK decides to disapprove the removal of the Core Menu Item, PLK will provide Master Franchisee with written notice of such disapproval, specifying the reasons for such determination, which reasons may not be challenged or appealed by Master Franchisee. Otherwise, PLK will give approval to Master Franchise to remove the Core Menu Item in the Territory.

 

10.4.2For the avoidance of doubt, the rights granted to Master Franchisee pursuant to this clause 10.4 shall terminate upon the occurrence of an MDA Termination Event. Termination shall not affect rights granted to Master Franchisee pursuant to this clause 10.4 prior to such termination, subject always to PLK’s discretion to revoke or terminate any such prior approval.

 

10.5Prices. To the extent permitted under applicable Law, and provided that the Development Rights are in effect, Master Franchisee shall have the right to determine and adjust at its sole discretion the prices of all products and services offered in any of the Restaurants in the Territory. However, once the Development Rights expire or are terminated, Master Franchisee will participate in national promotions sponsored by PLK in the Territory at the recommended price point.

 

11  MARKETING AND ADVERTISING SERVICES

 

11.1Advertising Fund.

 

(a)Master Franchisee will pay, and will ensure that each Franchisee in the Territory will pay, a monthly advertising contribution (the “Advertising Contributions”) into an account to be owned and maintained (until, if ever, such rights are terminated pursuant to clause 11.7 or upon the occurrence of an MDA Termination Event) by Master Franchisee (the “Ad Fund Account”). The Advertising Fund is made up of the Advertising Contributions deposited by Master Franchisee pursuant to the Company Franchise Agreement, and Franchisees pursuant to their respective Franchise Agreements, plus any interest earned on such amounts. Master Franchisee will at all times keep the Ad Fund Account separate from and not commingle the Ad Fund Account with any other bank accounts. Master Franchisee will not utilize such Ad Fund Account for any other purpose or in any other manner other than the purposes and manner stipulated in this Agreement and in the Company Franchise Agreement. Master Franchisee acknowledges that PLK has no obligation to contribute to the Advertising Fund or to make any payment if there are insufficient funds in the Ad Fund Account to satisfy Advertising Fund expenditures, and Master Franchisee will be responsible for managing the Advertising Fund to ensure that it is able to discharge all of its liabilities, obligations and commitments.

 

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(b)Notwithstanding the foregoing, Master Franchisee may delegate to an Approved Subsidiary the rights and obligations under this clause 11 with respect to the management of the Advertising Fund to be established in Mainland China; provided, however, that (a) Master Franchisee will provide prior written notice to PLK of any such delegation to an Approved Subsidiary; (b) such arrangement complies with the relevant Franchise Agreements and the applicable Law in Mainland China; (c) Master Franchisee will provide PLK with an undertaking signed by such Approved Subsidiary in favour of PLK, pursuant to which such Approved Subsidiary agrees to comply with the terms and conditions of this clause 11 in all respects; and (d) no such delegation will relieve Master Franchisee from liability for its obligations hereunder.

 

11.2Management of Advertising Fund; Withdrawals from Ad Fund Account. Master Franchisee agrees to manage the Advertising Fund on the following terms and conditions:

 

11.2.1Other than as described in clause 11.2.5 below, Master Franchisee may withdraw sums from the Ad Fund Account only in connection with Marketing Services and for payment or reimbursement of Qualified Expenditures pursuant to the Company Franchise Agreement, the Global Marketing Policy and the applicable provisions of the Franchise Agreements;

 

11.2.2Franchisees shall never be required to contribute more to the Advertising Fund in respect of any Franchised Restaurant than the advertising contribution as set forth in the Franchise Agreement for such Franchised Restaurant;

 

11.2.3Master Franchisee may pay Administrative Expenses from the Advertising Fund, subject to the limitations set forth in the Global Marketing Policy. The Parties agree that: (i) for each of Development Year 1 through and including Development Year 3, the Administrative Expenses must not exceed in the aggregate fifty percent (50%) of the aggregate Advertising Contributions during such Development Year and (ii) for Development Year 4 and each Development Year thereafter, the Administrative Expenses must not exceed in the aggregate fifteen percent (15%) of the aggregate Advertising Contributions during such Development Year, without the written consent of PLK.

 

11.2.4At PLK’s request, Master Franchisee shall implement a guest experience survey program (the “Survey Program”) approved by PLK for the Territory and the costs associated with the implementation and management of the Survey Program shall be paid out of the Ad Fund Account;

 

11.2.5Master Franchisee shall remit to PLK or its designee from the Advertising Fund on a monthly basis, two percent (2%) of the total amount of Advertising Contributions for all of the Restaurants in the Territory to fund the Popeyes Global Initiatives, such payment to be made by the fifteenth (15th) day of each month based on Gross Sales for the previous month;

 

11.2.6Master Franchisee shall comply in all respects with the Global Marketing Policy; and

 

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11.2.7Master Franchisee and the Direct-Owned Restaurants will not receive any direct or indirect benefit in respect of the management of the Advertising Fund which is not afforded to the Franchisees.

 

11.3Invoices; Taxes. On a monthly basis, Master Franchisee will calculate the Advertising Contributions for all of the Franchised Restaurants owned by a Franchisee based on the Sales Report provided by Franchisee. Master Franchisee will invoice each Franchisee for Advertising Contributions, together with any taxes (including applicable VAT) which Master Franchisee is required by applicable Laws to collect and remit to the Tax Authorities in the Territory. Master Franchisee agrees to indemnify the PLK Indemnified Parties for any Claims or Losses, including penalties and interest, resulting from Master Franchisee’s failure to properly remit any such tax payment collected from Franchisees.

 

11.4Marketing Calendar. Master Franchisee will establish the Marketing Calendar for all Restaurants in the Territory prior to the beginning of each calendar year and submit a copy to PLK for review. If Master Franchisee makes any material changes to the Marketing Calendar, it will promptly provide a copy of the revised Marketing Calendar to PLK.

 

11.5Provision of Marketing Services and Advertising Services. Master Franchisee must provide Marketing Services and Advertising Services with respect to Direct-Owned Restaurants and Franchised Restaurants as follows:

 

11.5.1Marketing Services. Except as otherwise provided herein, Master Franchisee shall provide the following marketing services in respect of all Restaurants in the Territory (collectively, the “Marketing Services”): (i) advertising, sales promotion, media buying, design, development, and public relations for the benefit of Franchisees and the Restaurants located in the Territory; (ii) administering the Advertising Fund; and (iii) any other related services required to be performed by Master Franchisee pursuant to the Company Franchise Agreement and the Franchise Agreements with Franchisees.

 

11.5.2Advertising Services. Master Franchisee shall provide the following services in connection with the administration of the Advertising Fund (collectively, the “Advertising Services”):

 

11.5.2.1Seek to spend the Advertising Fund on a fair and reasonable basis for suitable advertising, sales promotions and public relations in or affecting the market area in which a particular contributing Restaurant is located and on a local, state or national basis;

 

11.5.2.2Seek to allocate expenditures on a fair and reasonable basis for advertising of the Direct-Owned Restaurants and advertising of Franchised Restaurants;

 

11.5.2.3Comply with and perform all obligations of applicable Laws in the Territory which relate to a marketing, advertising or other cooperative fund;

 

11.5.2.4Comply with the Advertising Fund financial reporting requirements set forth in the Global Marketing Policy;

 

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11.5.2.5Keep track of the Advertising Fund's receipts and expenses as required by any applicable Laws;

 

11.5.2.6Keep records of and in relation to the Advertising Fund expenses during each year, including details of the percentage spent on production, advertising, administration and other stated expenses;

 

11.5.2.7Prepare and deliver to PLK an annual financial statement of the Advertising Fund expenses for each Development Year and all other financial information required under the Global Marketing Policy or as otherwise reasonably requested by PLK;

 

11.5.2.8Provide to Franchisees such statements and information in relation to the Advertising Fund, which Master Franchisee is obligated to provide under any Franchise Agreement;

 

11.5.2.9Consider any submissions by Franchisees on planning of advertising, sales promotions and public relations;

 

11.5.2.10Comply with any reasonable directions of PLK in relation to the financial administration of the Advertising Fund;

 

11.5.2.11Use its commercially reasonable efforts to cause Franchisees to deposit their Advertising Contributions into the Advertising Fund;

 

11.5.2.12Use its commercially reasonable efforts to ensure that no marketing, promotion or advertising material is objectionable, obscene, offensive or otherwise likely, in the reasonable opinion of PLK, to bring the Popeyes Marks or Popeyes System (or any part thereof) into disrepute;

 

11.5.2.13Provide Franchisees with reasonable assistance in the development of local marketing calendars and budget planning process;

 

11.5.2.14Seek to identify, develop and implement new product and/or promotional opportunities that will build the Popeyes brand while increasing sales and traffic;

 

11.5.2.15Track and report country pre/post promotion analysis; and

 

11.5.2.16Assist in the identification and execution of local sales building and public relations opportunities.

 

11.6Advertising Standards.

 

11.6.1Master Franchisee must comply with all applicable Laws and industry codes of practice in relation to advertising, marketing, sales promotion and public relations in all material respects and to the advertising, marketing, sales promotion and public relations standards of PLK described herein in all material respects.

 

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11.6.2Master Franchisee must request PLK’s prior approval of all Popeyes Advertising Materials and Popeyes Packaging Materials which contain one or more of the Popeyes Marks and/or Popeyes Domain Names. Requests for the approval of Popeyes Advertising Materials and Popeyes Packaging Materials shall be simultaneously sent to the marketing and legal representative designated by PLK, for approval on behalf of PLK in accordance with the procedures set forth in clause 11.6.3. Approval of the materials shall be evidenced by the signature of a representative of each respective functional director designated by PLK. PLK’s review and approval of any materials prepared under this Agreement shall not constitute a waiver by PLK of Master Franchisee’s other obligations hereunder. Master Franchisee agrees that any or all of its rights and interests in relation to the Popeyes Advertising Materials and Popeyes Packaging Materials are hereby transferred to, vest in and remain the exclusive property of PLK on and from their creation, as part of the consideration from PLK for this Agreement and without any further payment by PLK. Master Franchisee will do all things and sign all documents necessary to give effect to this clause.

 

11.6.3Without limiting clause 11.6.1 and PLK's rights under clause 11.6.2 Master Franchisee must comply with the review mechanism for adherence to PLK’s advertising, marketing and sales promotion standards set forth below:

 

11.6.3.1Prior to the first use of any Popeyes Advertising Materials, Popeyes Packaging Materials or any other advertising or sales promotional material in respect of the Restaurants or the Popeyes System or which includes one or more of the Popeyes Marks, Master Franchisee must provide to PLK a copy of all such material, and:

 

(A)in the case of television or radio material, a recording of the relevant material together with a transcript of its content translated into English, if applicable; and

 

(B)in the case of material made available on the Internet, a print out of all material made available in this manner translated into English, if applicable.

 

11.6.3.2PLK shall have five (5) Business Days in which to approve or disapprove the Popeyes Marketing Materials or Popeyes Packaging Materials. If PLK withholds approval of the Popeyes Advertising Materials or Popeyes Packaging Materials, Master Franchisee must promptly arrange for the removal and discontinuation of the use of any advertising, marketing, sales promotional or public relations material where PLK has given notice to Master Franchisee that such material does not comply with its Standards.

 

11.6.3.3Master Franchisee shall at all times adhere to PLK's generally applicable policies and procedures relating to advertising, marketing and/or promotional matters, as may be modified by PLK, from time to time, and communicated to Master Franchisee. Master Franchisee shall use reasonable efforts to ensure that each Marketing Agency does not commence work unless and until the Marketing Agency has signed PLK’s Terms & Conditions of Supply of Marketing Services attached as Exhibit E to this Agreement.

 

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11.6.3.4Master Franchisee acknowledges that all advertising and promotional materials developed by Master Franchisee, its employees, Affiliates, vendors and subcontractors shall belong to PLK. Master Franchisee hereby irrevocably agrees that it shall, at PLK’s written request, assign to PLK any interest, property and rights it may have to any advertising and promotional materials developed by Master Franchisee, whether or not such materials are specifically approved for use by PLK in the Territory, and Master Franchisee further agrees that PLK may in its sole discretion, use or approve other franchisees in other territories to use such advertising and promotional materials developed by Master Franchisee in any such territories.

 

11.7Termination of Rights. If Master Franchisee commits a material breach of its material obligations in relation to any one or more of the following: the Advertising Fund, the provision of Marketing Services, the provision of Advertising Services, or the advertising standards set out above (an “Ad Fund Breach”), and such breach is not cured within sixty (60) Days after PLK’s written notice, PLK shall be entitled to terminate Master Franchisee’s right to manage the Advertising Fund and provide the Marketing Services and Advertising Services and, in such event, the provisions of clause 11.8 shall apply. The Parties agree that the remedy set forth in this clause 11.7 shall be PLK’s exclusive remedy for an Ad Fund Breach unless the Ad Fund Breach relates to (i) the failure of Master Franchisee to contribute the Advertising Contributions to the Ad Fund Account, (ii) the failure of Master Franchisee to maintain the Ad Fund in a separate account, or (iii) the misappropriation of the Advertising Contributions and/or Ad Fund Account.

 

11.8Administration of Advertising Fund upon Certain Events. Following the termination of rights pursuant to clause 11.7 or upon the occurrence of an MDA Termination Event, Master Franchisee shall, at PLK’s request, immediately and irrevocably designate PLK or its designee to administer the Advertising Fund and to provide the Marketing Services and Advertising Services for Master Franchisee and Franchisees, in place of Master Franchisee, with all of the rights and privileges of Master Franchisee in relation thereto under the Company Franchise Agreement and the Franchise Agreements. In such event, at PLK’s option and as directed by PLK, (a) Master Franchisee shall notify Franchisees in writing of PLK’s assumption of responsibility for the administration of the Advertising Fund and direct Franchisees to pay their Advertising Contributions to PLK or its designee with respect to all periods thereafter, and (b) Master Franchisee shall immediately cease to withdraw funds from the Ad Fund Account, notwithstanding any provision to the contrary set forth in any Franchise Agreements, it being the intention of the Parties that the administration of the Advertising Fund shall revert to PLK or its designee. Master Franchisee hereby provides an irrevocable power of attorney to PLK (and hereby commits to renew and separately document such power of attorney at any time upon PLK’s request) to grant PLK or its designee access to the Advertising Fund Account under the circumstances set forth in the previous sentence, and will, at PLK’s request, execute any and all documents and take any and all necessary action to transfer the Ad Fund Account to PLK or its designee. PLK shall as far as practicable take over and assume all future rights, obligations and liabilities under any agreement, arrangement or contract entered into by Master Franchisee for marketing and advertising consistent with approvals given by PLK up to a level of commitment consistent with the annual Marketing Calendar. In such event, Master Franchisee shall, upon demand, assign to PLK or its designee all right, title and interest of Master Franchisee in any agreement, arrangement or contract entered into by Master Franchisee for marketing or advertising for the benefit of Master Franchisee or Franchisees in the Territory except that any non-transferable contract or commitment will be carried to completion by Master Franchisee and paid for by PLK. This clause 11.8 shall survive the termination or expiration of this Agreement.

 

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11.9Audits. PLK may audit the Advertising Fund at any time in order to verify the appropriate application of the funds in connection with marketing and advertising activities (the “Advertising Fund Audit”). The results of such an audit shall be disclosed to Master Franchisee and Franchisees upon request, provided that no more than one (1) Advertising Fund Audit shall be performed during any calendar year. Where the Advertising Fund Audit reveals that Master Franchisee has not maintained or administered the Advertising Fund in material compliance with this Agreement and the Global Marketing Policy, Master Franchisee shall reimburse PLK for all costs incurred by PLK in conducting such audit. Otherwise, PLK will be responsible for all such audit costs.

 

12  POPEYES MARKS AND POPEYES DOMAIN NAMES

 

12.1Ownership/Validity

 

12.1.1Master Franchisee acknowledges that it has had no part in the creation or development of the Popeyes Marks and disclaims any right or interest in the Popeyes Marks and Popeyes Domain Names, and to the goodwill in and to the Popeyes Marks and Popeyes Domain Names. Master Franchisee hereby confirms that during the Term, all such Popeyes Marks and Popeyes Domain Names, are and shall have at all times been the sole and exclusive property of PLK and/or its Affiliates, and shall so remain after the termination of this Agreement.

 

12.1.2Master Franchisee shall not obtain or attempt to obtain, or allow any Marketing Agency or Franchisee to obtain or attempt to obtain during the Term, or at any time thereafter, any right, title or interest in or to any Popeyes Domain Names. In addition, Master Franchisee shall not obtain or attempt to obtain or allow any Marketing Agency or Franchisee to obtain or attempt to obtain during the Term, or at any time thereafter, any right, title or interest in or to any Popeyes Marks. Master Franchisee must not at any time during the Term or thereafter question, oppose, dispute or attack the validity, right, title or interest of PLK and/or its Affiliates as to the Popeyes Marks and Popeyes Domain Names.

 

12.1.3Master Franchisee acknowledges and agrees that: (i) it shall in no way contest or deny the validity of, or the right or title of PLK and/or its Affiliates in or to the Popeyes Marks and Popeyes Domain Names and shall not encourage or assist others directly or indirectly to do so, during the Term and thereafter; (ii) any unauthorized use of the Popeyes Marks and Popeyes Domain Names by it shall constitute a breach of this Agreement and an infringement of the rights of PLK and/or its Affiliates in and to the Popeyes Marks and Popeyes Domain Names, as the case may be; (iii) it shall at all times use its commercially reasonable efforts to promote the value and validity of the Popeyes Marks and Popeyes Domain Names, and to protect the rights and reputation of PLK and its Affiliates in the Popeyes Marks and Popeyes Domain Names in the Territory; (iv) all use of the Popeyes Marks and Popeyes Domain Names by Master Franchisee and any Franchisee inures to the benefit of PLK exclusively; (v) any and all goodwill connected with the Popeyes Marks and Popeyes Domain Names as a result of Master Franchisee’s use or any Franchisee’s use, excluding the accounting goodwill value associated with Master Franchisee and its assets, inures to the exclusive benefit of PLK and its applicable Affiliates; (vi) upon termination of this Agreement, PLK is not required to make any payment to Master Franchisee for any goodwill associated with Master Franchisee’s use or any Franchisee’s use of the Popeyes Marks and Popeyes Domain Names; and (vii) Master Franchisee shall include in its contracts with third-party suppliers, including any Marketing Agency, a provision prohibiting the unauthorized use of the Popeyes Marks and Popeyes Domain Names. Upon termination of this Agreement in accordance with its terms, Master Franchisee shall immediately terminate all use of the Popeyes Marks and Popeyes Domain Names in connection with the Development Rights and the Services. Upon termination of this Agreement in accordance with its terms, Master Franchisee shall immediately terminate all use of the Popeyes Marks and Popeyes Domain Names in connection with the Development Rights and the Services; provided, that Master Franchisee shall be authorized to use the Popeyes Marks and the Popeyes Domain Names solely for the purpose of operating Direct-Owned Restaurants, subject to the terms and conditions of the Company Franchise Agreement.

 

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12.1.4Without derogating from clause 12.1.1, Master Franchisee hereby absolutely assigns to PLK and/or its applicable Affiliates such rights (if any) which Master Franchisee has or may acquire in the Popeyes Marks and Popeyes Domain Names. PLK makes no express or implied warranty with respect to the validity, subsistence or otherwise of any of the Popeyes Marks and Popeyes Domain Names. Master Franchisee acknowledges that it may (but shall have no obligation to) conduct business utilizing some Popeyes Marks which have not been registered (“Unregistered Marks”) and that registration may not be granted for the Unregistered Marks.

 

12.1.5PLK represents that the Popeyes Marks set out in Schedule 4 are registered as stated in Schedule 4 as of the Original Commencement Date, but makes no express or implied warranty with respect to the validity of any of the Popeyes Marks, except as specifically disclosed in Schedule 4. As of the Commencement Date, the Popeyes Marks disclosed in Schedule 4 are subsisting and in full force and effect and have not been cancelled, expired or abandoned. Except as would not be reasonably expected to adversely affect the business to be conducted by Master Franchisee, and except as specifically disclosed in Schedule 4, the Popeyes Marks specified in Schedule 4 do not infringe upon any intellectual property rights of third parties. In the event any Popeyes Marks infringe, or PLK or Master Franchisee has received notice that the Popeyes Marks are likely to infringe, upon the intellectual property rights of third parties, Master Franchisee will not be required to use such marks. Master Franchisee acknowledges that it may be conducting business utilizing Popeyes Marks which have not been registered and that registration may not be granted for Unregistered Marks, and that some of the Popeyes Marks may be subject to use by third parties unauthorized by PLK.

 

12.1.6PLK grants to Master Franchisee a royalty-free license to use the User Data throughout the Term in the Territory solely in connection with its performance under this Agreement provided such use is in compliance with applicable Law and this Agreement. PLK will make the User Data available at no additional charge to the permitted Person or Persons who (or which) acquire Master Franchisee or the business of Master Franchisee in the Territory in accordance with the terms of the Transaction Agreements, provided that such Person or Persons uses the User Data solely in connection with its performance under the Transaction Agreements provided such use is in compliance with applicable Law and the terms of the Transaction Agreements. PLK agrees and acknowledges that Master Franchisee may, or may cause any of its Approved Subsidiaries to, seek to enter into contractual agreements with one or more third parties, with respect to the ownership, assignment, use, processing or storage of User Data with PLK’s prior written consent (such consent not to be unreasonably withheld if such contractual agreements are on substantially similar terms as those entered into in connection with the transfer of user data of TH International Limited, as described in its filings with the US Securities and Exchange Commission on or prior to the date hereof).

 

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12.2Use.

 

Master Franchisee must not use the Popeyes Marks and the Popeyes Domain Names which are registered in relation to any goods or services other than the Goods and Services. Master Franchisee must use the Popeyes Marks and the Popeyes Domain Names which are applied for or registered continuously throughout the Term in respect of the Goods and Services and notify PLK in writing promptly if it intends to cease using or ceases using any of the Popeyes Marks and/or Popeyes Domain Names for any period of time. It is acknowledged and agreed as follows:

 

12.2.1Master Franchisee may use the Popeyes Marks and Popeyes Domain Names only in such manner as PLK in its absolute discretion approves and must comply with any directions of PLK concerning the use of the Popeyes Marks and Popeyes Domain Names.

 

12.2.2Master Franchisee must ensure that the Popeyes Logo appears in all advertisements in the form approved by PLK and/or its Affiliates. Master Franchisee must ensure that, in all television advertisements, the Popeyes Logo appears in the tag line or final frames of the commercials in a manner acceptable to PLK and/or its Affiliates.

 

12.2.3Master Franchisee shall not use or display the Popeyes Marks and/or Popeyes Domain Names in a manner that is detrimental to the interests of PLK and/or its Affiliates.

 

12.2.4Master Franchisee shall place PLK’s copyright and PLK’s trademark notices on all materials prepared by Master Franchisee hereunder which utilize such rights. Placement of the relevant copyright and trademark notices shall be in such locations and styles as PLK may direct. Master Franchisee must not alter or deface the Popeyes Marks or Popeyes Domain Names in any manner.

 

12.2.5Master Franchisee may not use the Popeyes Marks and/or the Popeyes Domain Names pursuant to this Agreement in any manner likely to deceive or cause confusion, or use the Popeyes Marks and/or Popeyes Domain Names together with any other logos, names or trading styles, without PLK’s prior written consent, or use any other trademark or domain name which is identical or confusingly similar to the Popeyes Marks or Popeyes Domain Names.

 

12.3Control.

 

Master Franchisee shall ensure that the character and quality of the Goods and Services sold or provided by Franchisees using the Popeyes Marks and/or Popeyes Domain Names satisfy the Standards as modified by PLK from time to time. PLK has the right to require Master Franchisee to submit to PLK for approval samples of the goods and of all documents, labels, packaging and other matter on which any Popeyes Mark and/or Popeyes Domain Name will appear before use of such goods and as and when requested by PLK while such use continues. At all reasonable times and with reasonable prior notice, PLK may inspect the premises and operations of Master Franchisee to assess whether the Popeyes Marks and Popeyes Domain Names are being used in accordance with the terms and conditions of this Agreement, including, but not limited to the Standards.

 

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12.4Infringement.

 

12.4.1If Master Franchisee becomes aware of any infringement or threatened infringement of any of the Popeyes Marks and/or Popeyes Domain Names, or of any conduct in relation to any of the Popeyes Marks and/or Popeyes Domain Names that might constitute passing off or misleading and deceptive conduct pursuant to applicable Law, or any Claim by a third party that use of any of the Popeyes Marks and/or Popeyes Domain Names is likely to deceive or cause confusion, infringes a third party’s rights, or constitutes passing off or misleading and deceptive conduct, Master Franchisee shall promptly notify PLK in writing giving PLK all the information concerning the Claim and shall not take any other steps in relation to the matters referred to in this clause 12.4.1 without the prior written consent of PLK.

 

12.4.2PLK and/or its Affiliates may, in its absolute discretion, commence proceedings in respect of any infringement of any Popeyes Mark and/or Popeyes Domain Name, or any other cause of action connected with a Popeyes Mark and/or Popeyes Domain Name, and, subject to clause 12.4.3, will have the full conduct of such proceedings.

 

12.4.3Master Franchisee shall join and assist in any action relating to the right to use or the validity of the Popeyes Marks and Popeyes Domain Names where requested by PLK and at PLK’s sole cost and expense. Master Franchisee may not institute any legal action or other proceeding based upon the Popeyes Marks and/or the Popeyes Domain Names without the prior written approval of PLK and except on the terms permitted by PLK.

 

12.5Remedies.

 

Should Master Franchisee, having been notified by PLK that it is in default under this clause 12, fail to remedy the default as instructed by PLK, PLK may, without limiting any other right or remedy PLK may have under or in connection with this Agreement, by its authorized representative take such steps as it considers necessary to remedy the default, including the affixing of appropriate decals and the giving of instructions to the Marketing Agency involved in an improper use of the Popeyes Marks and/or Popeyes Domain Names.

 

13  POPEYES INTELLECTUAL PROPERTY RIGHTS

 

13.1Ownership/Validity.

 

Master Franchisee disclaims any right or interest in and to the Popeyes Intellectual Property Rights. Master Franchisee hereby confirms that during the Term, all Popeyes Intellectual Property Rights are and have at all times been the sole and exclusive property of PLK and/or its Affiliates, and shall remain so after the termination of this Agreement. Master Franchisee may not at any time during the Term or thereafter, (a) question, oppose, dispute or attack the validity, right, title or interest of PLK and/or any of its Affiliates in the Popeyes Intellectual Property Rights, (b) create and develop any trademarks and/or other intellectual property rights which are identical or similar to the Popeyes Intellectual Property Rights, nor (c) file any application or register any trademarks and/or other intellectual property rights which are identical or similar to the Popeyes Intellectual Property Rights. Master Franchisee acknowledges and agrees that it shall at all times use its commercially reasonable efforts to promote the value and validity of the Popeyes Intellectual Property Rights and protect the rights and reputation of PLK in the Popeyes Intellectual Property Rights. Without derogating from this clause 13.1, Master Franchisee agrees to assign and does hereby assign to PLK and/or its Affiliates such rights (if any) which Master Franchisee has or may acquire in the Popeyes Intellectual Property Rights. PLK and/or its Affiliates make no express or implied warranty with respect to the validity, subsistence or otherwise of any of the Popeyes Intellectual Property Rights. Any unauthorized use of the Popeyes Intellectual Property Rights by Master Franchisee shall constitute a material breach of this Agreement and an infringement of the rights of PLK and/or its Affiliates in and to PLK’s Intellectual Property Rights. Master Franchisee shall include in its contracts with third-party suppliers, including any Marketing Agency, a provision prohibiting the unauthorized use of the Popeyes Intellectual Property Rights. Upon termination of this Agreement, Master Franchisee shall immediately terminate all use of the Popeyes Intellectual Property Rights, in connection with rendering the Services. If Master Franchisee or its Affiliates, or their respective employees, develop any potential new trademark related to the Popeyes System for use in any Popeyes Restaurant operated by Master Franchisee or a Franchisee, prior to using such trademark, Master Franchisee shall seek the prior written permission of PLK and/or its Affiliates. Master Franchisee shall bear the cost of screening the potential new trademarks for use in the Territory. PLK and/or its Affiliates shall determine in their sole discretion whether to register such trademark, and if so, PLK shall be responsible for the costs of such registration. PLK and/or its Affiliates shall own any such trademarks and shall take all steps reasonably necessary, at PLK’s sole cost and expense, to register and thereafter maintain such trademarks for use in the Territory and such trademarks shall thereby be deemed to be on Schedule 4. Master Franchisee will cooperate with the Company in such trademark registration.

 

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13.2Use/Control.

 

Master Franchisee agrees not to use the Popeyes Intellectual Property Rights other than for the purposes set out in this Agreement. Master Franchisee shall at all times, both during the Term and following its termination, maintain in strict confidence the Standards and the operational manuals, marketing information and methods, policies, procedures of PLK and/or its Affiliates and all information and knowledge relating to the methods of operating and the functional know-how applicable to Popeyes Restaurants and the Popeyes System revealed to Master Franchisee by PLK or any of its Affiliates, representatives or agents. Master Franchisee may not disclose the information of PLK and/or its Affiliates referred to in this clause 13.2 to any third party, nor shall Master Franchisee use or permit any third party to use this information or any part thereof for any purpose whatsoever, except that during the Term, Master Franchisee may disclose to its employees, Franchisees and Marketing Agencies such of this information as may be necessary for carrying out its obligations under this Agreement, subject to the terms and conditions of this Agreement. Master Franchisee shall ensure that each of its employees to whom it discloses such information is aware of the confidential nature of such information and does not disclose such information to any third parties, except as permitted by this clause 13.2. Master Franchisee shall also ensure that it will not disclose any information to any Marketing Agencies without a signed written agreement from such Marketing Agencies to protect the confidentiality of such information.

 

13.3Infringement.

 

13.3.1If Master Franchisee becomes aware of any infringement or threatened infringement of any of the Popeyes Intellectual Property Rights, Master Franchisee must promptly notify PLK in writing giving PLK all the information concerning the claim and must not take any other steps in relation to that infringement without the prior written consent of PLK.

 

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13.3.2PLK and/or its Affiliates may, in their absolute discretion, commence proceedings in respect of any infringement of any of the Popeyes Intellectual Property Rights, or any other cause of action connected with Popeyes Intellectual Property Rights and will have the full conduct of such proceedings.

 

13.3.3Master Franchisee must join and assist in any action relating to the right to use or the validity of the Popeyes Intellectual Property Rights where requested by PLK and at PLK’s sole cost and expense. Master Franchisee may not institute any legal action or other proceeding based upon the Popeyes Intellectual Property Rights without the prior written approval of PLK and except on the terms permitted by PLK.

 

14  COMPETITION

 

14.1Master Franchisee acknowledges and agrees that the Popeyes System is unique, especially in the areas of building design, food preparation format, service format, menu, training program, audit routines, restaurant operations and related manuals, bookkeeping, marketing and advertising formats and in other areas not listed above, and PLK has valuable goodwill which it develops and maintains relating to these matters. Master Franchisee has no and shall have no proprietary interest whatsoever in the Popeyes System or any element thereof. Master Franchisee acknowledges further that no license has been or will be granted to them to use any part of the Popeyes System for any purpose other than the purposes contemplated by this Agreement and by the Company Franchise Agreement.

 

14.2Except as described below in clause 14.3, Master Franchisee agrees, on behalf of itself and its Affiliates, that it shall not at any time acquire or own any ownership interest in, consult, open, operate or act as a franchisee for any Competitor, whether directly or indirectly, within the Territory or elsewhere, with the exception of purely financial investments where Master Franchisee or its Affiliates hold a passive stake of less than three percent (3%) in any publicly listed company without the ability to control the strategy and business of such company.

 

14.3Notwithstanding the foregoing or anything in this Agreement to the contrary, PLK acknowledges that Cartesian and/or its Affiliates, as of the date of this Agreement, operate the restaurant businesses set forth in Schedule 5 and shall be permitted to continue to operate such restaurant businesses in the Territory (the “Existing Businesses”). In respect of the Existing Businesses operated by Master Franchisee, and in the event that PLK permits Master Franchisee or an Affiliate of Master Franchisee to build, own or operate other businesses (which decision PLK may make in its absolute discretion), and whether or not such Existing Businesses or businesses constitute a Competitor, Master Franchisee represents and warrants that it shall have obtained all necessary consents and approvals from the owners of such other Existing Businesses, businesses or contracting parties related to those businesses (e.g., landlords, licensors, suppliers, service providers, etc.) to enter into this Agreement and own and operate the Restaurants as contemplated in this Agreement. Master Franchisee shall fully defend, indemnify and hold harmless the PLK Indemnified Parties against all Losses sustained or incurred by any PLK Indemnified Party arising directly or indirectly from any failure by Master Franchisee to obtain such consents and approvals.

 

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14.4Master Franchisee agrees that the restrictions in this clause 14 are reasonable and necessary to avoid any real or potential conflict of interest and to protect the Popeyes System and the Confidential Information and other proprietary information of PLK and the legitimate business interests of PLK, as Master Franchisee has been specifically granted the right by PLK to establish and operate the food chain business using the Popeyes System, the Popeyes Marks and the Popeyes Intellectual Property Rights in the Territory, which incorporates all requisite information, technical know-how, expertise and guidance which Master Franchisee could not have otherwise acquired except through the rights and obligations set forth in this Agreement.

 

14.5This clause 14 shall remain in effect during the Term and the term of the Company Franchise Agreement and the Unit Addenda and shall continue for a period of one (1) year following the expiration or termination of this Agreement, the Company Franchise Agreement or any Unit Addenda, whichever is the last to expire or terminate.

 

15  TRAINING AND OTHER SERVICES

 

15.1Training Services.

 

Master Franchisee shall provide at its sole cost and expense, the following training services and courses (the “Training Services”) in respect of all Direct-Owned Restaurants and Franchised Restaurants to ensure compliance with the Standards:

 

15.1.1An initial training program to be completed by operations directors and other above-restaurant and multi-unit managers, Restaurant Management teams and crew employed by Master Franchisee and Franchisees (the “Basic Training Program”);

 

15.1.2Continuing training programs to be completed by operations directors and other above-restaurant and multi-unit managers, Restaurant Management teams and crew at Direct-Owned Restaurants and Franchised Restaurants, including product and equipment training, in accordance with the Popeyes Curriculum or as may otherwise be required by PLK to ensure compliance with the Standards, such training to be in the form that PLK, in its sole discretion, deems to be most appropriate in the circumstances, including on-line training and other forms of electronic training;

 

15.1.3At Master Franchisee’s option, leadership training, soft skills, multi-unit management training, problem-solving methodology and other training programs, as determined by Master Franchisee (collectively, “Optional Training Programs”); provided, however, that if Master Franchisee offers any Optional Training Programs, such programs must be aligned with the Basic Training Program and Master Franchisee must use PLK’s modules and content, if available;

 

15.1.4Training and monitoring of trainers engaged by Master Franchisee and Franchisees who own multiple Franchised Restaurants;

 

15.1.5Seek to ensure that any certified training restaurants comply with the Standards; and

 

15.1.6Follow up on the training recommendations made by PLK on the training needs of Master Franchisee’s and any Franchisee’s employees and/or management.

 

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15.2Basic Training Program.

 

15.2.1The Basic Training Program shall be in the form that PLK, in its sole discretion, deems to be most appropriate in the circumstances to enable the Direct-Owned Restaurants and Franchised Restaurants to comply with the Standards and may be accomplished through, among other means, in-restaurant training, on-line and other electronic training, visits made by operations consultants, through printed and filmed reports, seminars and/or newsletter mailings or through electronic communications, including email.

 

15.2.2The Basic Training Program shall be conducted at training facilities and/or certified Restaurants approved by PLK and operated by Master Franchisee in the Territory, or, if no such certified training restaurants exist, at certified training restaurants owned by third parties at such location(s) determined by PLK. PLK reserves the right to modify the Basic Training Program, in its sole and complete discretion.

 

15.2.3For the avoidance of doubt, Master Franchisee shall be responsible for the cost of all Training Services, including all training materials, such as workbooks, online and/or electronic content (whether such amounts are due and payable to PLK or its Affiliates or a third party designated by PLK), all travel and living expenses relating to personnel of Master Franchisee to attend the Basic Training Program, other personal expenses incurred and materials provided to such personnel, and all fees and expenses charged by the operators of Popeyes Restaurants where the Basic Training Program is conducted. In particular, Master Franchisee shall be responsible for the costs of all training materials provided by PLK or third parties designated by PLK in connection with Popeyes Academy, PLK’s current online training platform. Master Franchisee shall remit payment of all amounts invoiced to Master Franchisee for Popeyes Academy by PLK or a third party designated by PLK within ten (10) Days of receipt of such invoice.

 

15.2.4A Restaurant must not open unless the operations director, Restaurant Management team and such other members of Master Franchisee’s or Franchisee's staff (as the case may be) charged with the responsibility for the day-to-day operation of such Restaurant have successfully completed the Basic Training Program.

 

15.3Popeyes Curriculum.

 

Master Franchisee must use reasonable efforts to ensure that the Training Services referred to in this clause 15 are provided in strict compliance with the Popeyes Curriculum. Once it is made available, PLK will provide Master Franchisee with the Confidential Operating Manual, Popeyes Curriculum and other training aids to assist Master Franchisee in carrying out the Training Services referred to in this clause 15. PLK will provide Master Franchisee with any necessary translations that PLK has prepared with respect to the Confidential Operating Manual, Popeyes Curriculum and other training aids. If no such translations of the Confidential Operating Manual, Popeyes Curriculum and other training aids are available on the Commencement Date, PLK, or with PLK’s approval, Master Franchisee, will translate the Confidential Operating Manual, Popeyes Curriculum and other training aids into the applicable language of the Territory at Master Franchisee’s sole cost and expense for the use of Master Franchisee and the Franchisees in the Territory (and provided that Master Franchisee will not use such translations until reviewed and approved by PLK or its designee, and the cost of such translation review shall be at Master Franchisee’s sole cost and expense). Any copyright or other proprietary rights in and to any translated version of the Confidential Operating Manual, Popeyes Curriculum and other training aids shall be the exclusive property of PLK. PLK authorizes Master Franchisee to reproduce the training manuals and other training aids for the purposes of carrying out its obligations under this clause 15 at Master Franchisee’s cost and expense.

 

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15.4Pre-Opening and Opening Services.

 

Master Franchisee must provide Pre-Opening Services and Opening Supervision Services as required under the Franchise Agreement in respect of all Franchisees. “Pre-Opening Services” and “Opening Supervision Services” consist of such pre-opening and opening supervision and assistance required by the Standards, including the standards, requirements and procedures from time to time in the PLK Confidential Operating Manual applicable to the Territory, as modified by PLK from time to time.

 

15.5Anti-Corruption Training; Audit.

 

Master Franchisee shall, at its sole cost and expense, attend and participate in any training required by PLK regarding compliance with Anti-Corruption Laws, and Master Franchisee shall, and shall cause each Franchisee to, allow PLK and/or its representatives and consultants to audit the books and records of Master Franchisee and each Franchisee to confirm compliance with any such Anti-Corruption Laws and/or other laws. Master Franchisee agrees to cooperate, and to ensure that Franchisees cooperate, with PLK and/or its representatives and consultants in the performance of any such audit.

 

16  MONITORING SERVICES

 

16.1Master Franchisee shall provide, at its sole cost and expense and at PLK’s request, the following day-to-day monitoring services (collectively, the “Monitoring Services”) in respect of the Direct-Owned Restaurants and Franchised Restaurants to ensure compliance with the Standards:

 

16.1.1Subject, to clause 17.2, conduct, at a minimum, three visits per year of each Direct-Owned Restaurant and Franchised Restaurant and otherwise administer the process required by PLK to evaluate compliance by Master Franchisee and Franchisees with the Standards in the operation of their Popeyes Restaurants. PLK may require the use of third party vendors approved by PLK to perform such visits and Master Franchisee will engage such vendors to perform the services at Master Franchisee’s sole expense, provided that Master Franchisee may require Franchisees to reimburse Master Franchisee for the costs of such third party vendor with respect to their Franchised Restaurants (without any mark-up or other charges);

 

16.1.2Perform a periodic review of the operational and financial performance of each such Restaurant (which, in the case of multi-unit Franchisees, must be at least semi-annual);

 

16.1.3Provide ongoing advice about Restaurant operations, accounting cost control and inventory control systems;

 

16.1.4Communicate new developments, techniques and improvements of PLK in food preparation, equipment, products, packaging and restaurant management;

 

16.1.5Monitor sales performance and evaluate success of sales building activities;

 

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16.1.6Develop monthly forecasts for sales and ticket count for each market within the Territory;

 

16.1.7Ensure customer complaints are dealt with appropriately;

 

16.1.8Develop yearly business plans with Master Franchisee and Franchisees and formally review such plans on a quarterly basis;

 

16.1.9Integrate plans proposed by Master Franchisee and Franchisees into overall plan for the market, with a focus on sales and financial performance;

 

16.1.10Identify opportunities and priorities to ensure proper allocation of existing resources to achieve goals;

 

16.1.11Provide general consulting advice in order to maintain safe, clean, and high quality Restaurant operations in the Territory;

 

16.1.12Provide consulting services regarding payroll processing, information technology support and business advice in finance, accounting and treasury activities;

 

16.1.13Provide advice regarding market planning and targeting; and

 

16.1.14Evaluate local suppliers to improve terms of supply.

 

17  SERVICES BY PLK

 

17.1PLK shall make the following available for use by Master Franchisee:

 

17.1.1the benefit of such new products and cooking techniques as PLK may approve from time to time;

 

17.1.2the benefit of PLK’s marketing ideas and concepts developed by or for PLK for use by the Popeyes System, provided that all of PLK’s obligations to make these elements available shall be limited to the extent that PLK, in its sole discretion, deems them appropriate for use in the Territory, and, where intellectual property rights of third parties are involved, to the extent that such third parties have consented to the use of such rights in the Territory;

 

17.1.3advice regarding the choice of Marketing Agency;

 

17.1.4the provision of supply quality assurance standards to evaluate and approve the suppliers and distributors proposed by Master Franchisee in the Territory;

 

17.1.5collaboration and advice in the preparation of an annual Marketing Calendar in accordance with the Global Marketing Policy;

 

17.1.6advice regarding the parameters within which Master Franchisee may from time to time authorize marketing and promotional concepts and materials; and

 

17.1.7technical support and advice to enable local suppliers to become Approved Suppliers.

 

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17.2Notwithstanding anything to the contrary set forth in this Agreement, for a period of six (6) years after the opening of the first Direct-Owned Restaurant in the Territory, PLK will, (a) engage a vendor, at PLK’s sole cost and expense, to conduct visits of each Direct-Owned Restaurant three times per year to evaluate Master Franchisee’s compliance with the Standards in the operation of such Direct-Owned Restaurant, and (b) use commercially reasonable efforts to cause such vendor to charge the same fee per visit to conduct inspections of Franchised Restaurants as PLK pays for the Direct-Owned Restaurants, which fee, as between PLK and Master Franchisee, shall be the sole responsibility of Master Franchisee at all times; provided that Franchisees may reimburse Master Franchisee for the costs of such third party vendor with respect to their Franchised Restaurants (without any mark-up or other charges).

 

17.3The contemplated services will be rendered by PLK outside of the Territory. PLK shall make available all of the foregoing to Master Franchisee which shall in turn have sole responsibility for passing on to all Franchisees in the Territory the benefit of the information and guidance provided by PLK.

 

18  DEFAULT AND TERMINATION

 

18.1Without prejudice to any other rights or remedies of PLK under this Agreement or at Law, upon the occurrence of any of the following events (each, an “Event of Default”), Master Franchisee shall be in default of this Agreement and PLK may, at its election, by written notice to Master Franchisee, terminate the Development Rights or this Agreement in its entirety with immediate effect (but with due regard for the cure periods set forth below, if any):

 

18.1.1if Master Franchisee (or any Approved Subsidiary) fails to pay to PLK (or its designee) when due any amounts payable under this Agreement in excess of US$25,000 and does not cure such failure within thirty (30) Days of written notice from PLK;

 

18.1.2if Master Franchisee does not receive any portion or all of the Total Equity Contribution on or prior to the applicable payment date set forth in clause 2.17 , or if Master Franchisee fails to provide evidence to PLK that each instalment of the Total Equity Contribution has been made on or prior to the applicable payment date set forth in clause 2.17;

 

18.1.3if Master Franchisee fails to achieve the applicable Target for any Development Year, subject to the provisions of this Agreement and the Development Schedule;

 

18.1.4if Master Franchisee fails to comply with any of the other obligations in clause 6 (Development Obligations);

 

18.1.5if (i) Master Franchisee assigns, transfers, charges, encumbers, sublicenses or otherwise disposes of this Agreement or the Development Rights granted to Master Franchisee hereunder in violation of clause 21 (Assignment and Transfer), (ii) Master Franchisee or any Affiliate thereof duplicates or attempts to duplicate the Popeyes System or any Other Brands owned by PLK or any Affiliate of PLK, (iii) Master Franchisee or any Affiliate thereof violates any of the provisions set forth in clause 19 (Confidentiality), or (iv) Master Franchisee acquires an interest in a Competitor or otherwise violates any of the provisions set forth in clause 14 (Competition);

 

18.1.6if Master Franchisee (including, for certainty, an Approved Subsidiary) fails (i) to pay to PLK (or its designee) when due any amounts payable under the Company Franchise Agreement or any Unit Addendum and does not cure such failure within sixty (60) Days from written notice by PLK, or (ii) to comply in any material respect with the other terms of the Company Franchise Agreement (which failure to comply is not cured within the applicable cure period set forth in the Company Franchise Agreement);

 

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18.1.7if a Franchisee is in breach of any material term of any Franchise Agreement (excluding any breach cured within the applicable cure period set out in the respective Franchise Agreement) and where such breach is not cured during the applicable cure period, PLK then directs Master Franchisee to terminate the relevant Franchise Agreement and Master Franchisee fails to issue a notice of termination to the Franchisee within thirty (30) Days after PLK notifies Master Franchisee in writing thereof;

 

18.1.8if Master Franchisee fails to provide in a material respect any of the Services in compliance with the terms and conditions of this Agreement;

 

18.1.9if Master Franchisee or any Approved Subsidiary seeks any type of relief under the provisions of a bankruptcy or insolvency law; or if Master Franchisee or any Approved Subsidiary becomes insolvent or makes a general assignment for the benefit of creditors or there is a similar arrangement among Master Franchisee’s or any Approved Subsidiary’s creditors; or any Person files a petition or application seeking to have Master Franchisee or any Approved Subsidiary adjudicated bankrupt or insolvent or if proceedings for a composition with creditors under the applicable Law is instituted by or against Master Franchisee or any Approved Subsidiary, and the action is not dismissed within ninety (90) Days after it is filed; or Master Franchisee or any Approved Subsidiary admits in writing the inability to pay any debts as they fall due; or a receiver or other administrator (permanent or temporary) is appointed over all or any of the assets of Master Franchisee or any Approved Subsidiary; or any administrator or liquidator is appointed over Master Franchisee or any Approved Subsidiary by any competent court or under any Law including under an order for a suspension of proceedings or Master Franchisee or any Approved Subsidiary takes any action to liquidate or wind up;

 

18.1.10if Master Franchisee (directly or through any Affiliate), challenges the validity of any of the Popeyes Marks or copyright or other Popeyes Intellectual Property Rights or Other Marks;

 

18.1.11if any information, representation or warranty provided by Master Franchisee or its shareholders to PLK or its Affiliates is materially false or misleading when provided;

 

18.1.12any wilful and material misappropriation or misuse of the Advertising Fund, Ad Fund Account, Advertising Contributions or any part thereof by Master Franchisee or its designee (including an Approved Subsidiary);

 

18.1.13if Master Franchisee, or any board member or senior officer of Master Franchisee or any Affiliate thereof engages in any conduct which is materially deleterious to, or could reasonably be expected to have a material adverse effect on the reputation of Master Franchisee, such Affiliate, PLK or the Popeyes brand, and the senior officer or board member is not removed from his or her position within thirty (30) Days after PLK notifies Master Franchisee in writing thereof (it being understood that such person may not be reinstated without PLK’s prior written approval);

 

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18.1.14if Master Franchisee fails to comply in any material respect with any of the other terms, provisions or conditions of this Agreement and fails to rectify the same within sixty (60) Days after PLK notifies Master Franchisee in writing thereof, subject to clause 11.7;

 

18.1.15if Master Franchisee fails to comply with clause 2.14 and such failure is not remedied within twenty (20) Days following written notice thereof by PLK to Master Franchisee;

 

18.1.16if Master Franchisee (a) fails to form an Approved Subsidiary prior to the date that is nine (9) months after the A&R Effective Date, and/or such Approved Subsidiary fails to execute and deliver to PLK the Company Franchise Agreement prior to the date that is nine (9) months after the A&R Effective Date, or (b) any of THIL, Master Franchisee and/or an Approved Subsidiary opens a Popeyes Restaurant in the Territory prior to the execution of the Company Franchise Agreement;

 

18.1.17if the Shareholder or any member of the China Group breaches the Compliance Plan;

 

18.1.18if Master Franchisee or an Affiliate thereof directly or indirectly acquires any ownership interest in another RBI Franchisee (whether through the acquisition of assets or Equity Securities of, or by consolidation, merger, reorganization, amalgamation or similar combination with, such RBI Franchisee or any parent holding company thereof), without the prior written consent of PLK; or

 

18.1.19if another RBI Franchisee thereof directly or indirectly acquires any ownership interest in Master Franchisee, an Approved Subsidiary or any parent holding company of Master Franchisee (whether through the acquisition of assets or Equity Securities of, or by consolidation, merger, reorganization, amalgamation or similar combination with, Master Franchisee, the Approved Subsidiary or any such parent holding company), without the prior written consent of PLK.

 

18.2Upon the occurrence of any of the events set out below in this clause 18.2, Master Franchisee may by giving written notice to PLK by registered letter, return receipt required, terminate this Agreement in its entirety before the expiry of the Term:

 

(a)if PLK assigns, transfers, charges, encumbers, sublicenses or otherwise disposes of this Agreement in violation of clause 21;

 

(b)if a court or tribunal of competent jurisdiction issues a final and non-appealable judgment determining that the Popeyes Core Mark materially infringes the Intellectual Property Rights of any third party in the Territory and PLK is unable to procure for Master Franchisee the continued right to use the relevant Popeyes Core Mark or a valid substitute thereof in the Territory on substantially the same terms and for the purposes envisaged in this Agreement;

 

(c)if PLK terminates the Company Franchise Agreement in its entirety; or

 

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(d)if any circumstance, event or fact leads to (i) a material deterioration in the reputation of the Popeyes brand (other than a deterioration which arises from any act or omission by Master Franchisee or any of its Affiliates); and (ii) as a result thereof, the ultimate parent of PLK (the “Parent”) seeks any type of relief under the provisions of a bankruptcy or insolvency law; or if there is an arrangement among the Parent’s creditors; or any Person files a petition or application seeking to have the Parent adjudicated bankrupt and the action is not dismissed within sixty (60) Days after it is filed; or the Parent admits in writing or upon sworn oath the inability to pay any debts as they fall due; or a receiver or other administrator (permanent or temporary) is appointed over all or any of the assets of the Parent; or any administrator or liquidator is appointed over the Parent by any competent bankruptcy court or under any other law including under an order for a suspension of proceedings or the Parent takes any action to liquidate or wind up.

 

18.3Master Franchisee, may, pursuant to Article 12 of the Commercial Franchise Administration Regulation promulgated by the State Council of China and effective as of May 1, 2007, terminate this Agreement within seven (7) days after the signing date of this Agreement (“Termination Period”). Master Franchisee further acknowledges that the foregoing seven-day Termination Period has been agreed to by PLK and Master Franchisee based on their negotiations and reflects a truthful allocation of risks and liabilities after taking into account all of the relevant factors in entering into this Agreement. In the event that Master Franchisee elects to terminate this Agreement pursuant to this clause 18.3:

 

18.3.1Master Franchisee shall, within the foregoing Termination Period, send the original copy of a written notice to terminate this Agreement (“Termination Notice”) to PLK by hand-delivery or registered air mail, postage fully prepaid. Master Franchisee shall clearly state its decision to terminate this Agreement in such Termination Notice, which shall be signed by the legal representative of Master Franchisee and affixed with the corporate seal of Master Franchisee. This Agreement may be terminated pursuant to this clause 18.3 only after PLK actually receives the original copy of the Termination Notice that meets the foregoing requirements. For the avoidance of doubt, if PLK does not receive the Termination Notice that meets all of the foregoing requirements, this Agreement shall not be terminated and shall continue in full force and effect and be binding upon PLK and Master Franchisee.

 

18.3.2If this Agreement is terminated pursuant to this clause 18.3, Master Franchisee shall comply with all relevant responsibilities herein upon termination of this Agreement (including, without limitation, the obligations provided in clause 18.4 below).

 

18.4Upon the occurrence of an MDA Termination Event, all rights granted to Master Franchisee under this Agreement shall terminate, subject to the Surviving Provisions. From and after the date of the MDA Termination Event (the “Termination Date”) and without prejudice to all other rights and remedies available to PLK under applicable Law or in equity:

 

18.4.1Master Franchisee shall have no further right or entitlement to develop, establish and operate new Direct-Owned Restaurants in the Territory without PLK’s prior written approval, which PLK may withhold in its sole discretion.

 

18.4.2Master Franchisee shall have no further right or entitlement to license to Franchisees the right to develop, establish and operate new Franchised Restaurants in the Territory, without PLK’s prior written approval, which PLK may withhold in its sole discretion.

 

18.4.3PLK and/or its designee may develop, open, operate or approve third parties to develop, open and operate new Popeyes Restaurants in the Territory, and Master Franchisee shall not oppose or otherwise interfere with such business by PLK and/or its designee in any manner whatsoever.

 

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18.4.4For the avoidance of doubt, if Master Franchisee has entered into any Territory Development Agreements prior to the occurrence of an MDA Termination Event, the Territory Development Agreements shall automatically terminate effective as of the Termination Date. Master Franchisee shall ensure that all Territory Development Agreements shall provide for termination upon the occurrence of an MDA Termination Event.

 

18.5In the event that PLK, in its sole discretion, determines that Export Control Laws restrict specific activities contemplated pursuant to this Agreement, PLK may suspend performance of this Agreement as may be required to comply with Export Control Laws. Master Franchisee will cooperate with PLK and provide any information or documentation reasonably requested to assist in such determinations. Any act or refusal to act by either Party that is required for compliance with Export Control Laws shall not be considered a breach of this Agreement.

 

18.6Notwithstanding the occurrence of an MDA Termination Event, (a) the rights and obligations of Master Franchisee under the Company Franchise Agreement shall remain unaffected solely by reason of such termination, and (b) any Franchise Agreements in effect as of the Termination Date (such agreements, the “Prior Agreements”) shall remain in full force and effect, and Master Franchisee shall be entitled to continue to receive payments thereunder; provided, however, that (i) the Surviving Provisions shall survive the expiration or termination of this Agreement and remain in full force and effect until the expiration or termination of the last remaining Prior Agreement, and (ii) Master Franchisee shall have no right to renew or extend the term of any Prior Agreement after the expiration date of such Prior Agreement.

 

18.7After the Termination Date, at PLK’s request, the Parties will work together and use commercially reasonable efforts to establish and agree on a transition plan for the orderly transition of the Services from Master Franchisee to PLK or its designee. The transition period shall commence as soon as practicable following the Termination Date and continue until PLK notifies Master Franchisee that it no longer desires Master Franchisee to provide the Services (such period, the “Transition Period”). During the Transition Period, Master Franchisee shall continue to provide the Services to all of the Restaurants in the Territory in accordance with the terms of this Agreement at its sole expense. Should PLK elect or deem it necessary to provide any of the Services during the Transition Period, Master Franchisee shall as far as possible make available to PLK or its designee, at PLK’s cost, those of its staff as are directly suited to be engaged by PLK or its designee in the service roles which it is taking over from Master Franchisee.

 

18.8Except as otherwise expressly permitted under the Company Franchise Agreement and each Unit Addendum or as otherwise set forth herein, upon termination of this Agreement:

 

18.8.1All rights of Master Franchisee under this Agreement shall terminate, and Master Franchisee must promptly cease all use of the Popeyes Marks, the Popeyes Domain Names, the Popeyes Intellectual Property Rights and the Popeyes System; promptly cease any sales or distribution of Goods and Services bearing any of the Popeyes Marks or Popeyes Domain Names; promptly discontinue use of letterhead, advertising, invoices, labels or packaging on which any of the Popeyes Marks or Popeyes Domain Names appear or which embody any of the Popeyes Intellectual Property Rights.

 

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18.8.2Regardless of any dispute among the Parties hereto, including disputes concerning the payment of money, Master Franchisee shall transfer and assign, together with any copyrights thereon, and shall ship or deliver to PLK (or if PLK prefers, to any other entity) all property and materials belonging to or purchased for PLK that are in the possession or control of Master Franchisee, including all materials (whether in paper and/or electronic format) containing the Popeyes Marks, Popeyes Domain Names and the Popeyes Intellectual Property Rights, all manuals, artwork, colour separations, research, Popeyes Advertising Materials and all other materials, layouts, scripts, websites, commercials and computerized data files, Confidential Information and all other information regarding PLK’s advertising, sales, market surveys and all rights and claims thereto within thirty (30) Days after the Termination Date, or shall destroy under PLK’s supervision all copies thereof, at PLK’s option, and allow PLK access to same, it being understood that no extra compensation is to be paid to Master Franchisee for its services in connection with this transfer or access.

 

18.8.3Master Franchisee must, within thirty (30) Days of the Termination Date, do all things necessary to de-register or transfer to PLK, at PLK’s sole discretion and Master Franchisee’s sole cost and expense, any domain names registered to or held or used by Master Franchisee which include or incorporate any Popeyes Marks or words substantially identical with or deceptively similar to any Popeyes Marks and any Popeyes Domain Names.

 

18.8.4If Master Franchisee is unable or fails to execute any document, which is necessary to carry out Master Franchisee’s obligations under this clause 18.8 following termination of this Agreement, Master Franchisee hereby irrevocably appoints PLK as its attorney to execute such document on its behalf, with the right to do any and all acts and things reasonably necessary to give effect to such document.

 

18.8.5All obligations of Master Franchisee under this clause 18.8 must be performed by Master Franchisee at its sole cost.

 

18.8.6The failure of PLK to terminate this Agreement or the Development Rights upon the occurrence of one or more Events of Default shall not constitute a waiver or otherwise affect the right of PLK to terminate this Agreement or the Development Rights because of a continuing or subsequent failure to cure one or more Events of Default or otherwise limit PLK’s right to pursue any and all other remedies available at Law or in equity.

 

18.9Notwithstanding anything contained in this Agreement to the contrary, so long as the Master Franchisee, or any of its direct and/or indirect holding companies, is a Public Company, Master Franchisee shall not issue and no Person shall Transfer, any of Equity Securities of Master Franchisee, whether directly or indirectly, and whether in one or more transactions, to any Person that is (i) a Competitor; or (ii) a Prohibited Person or any Affiliate thereof who, as a result of such issuance or Transfer, (a) will have the right to nominate and/or appoint a member of the Shareholder Board or any committee thereof, or (b) will obtain the ability to direct or cause the direction of the strategy, management or policies of Master Franchisee (in each case of (a) and (b) a “Material Change in Ownership”), and the Parties agree that a Material Change in Ownership shall constitute a material default hereunder and good cause for termination of the Transaction Agreements by PLK. To the extent that Master Franchisee or any of its Affiliates (including the Shareholder) becomes aware of any potential Material Change in Ownership, then Master Franchisee shall promptly inform and consult with PLK and arrange for such Level 2 Background Checks (or other related follow-up on additional due diligence) as may be reasonably required related to the potential transferee and its principals and shareholders to confirm whether such issuance or Transfer would constitute a Material Change in Ownership, and Master Franchisee will be solely responsible for all reasonable costs with respect to Level 2 Background Checks and additional due diligence, if applicable, in connection with the proposed Transfer or issuance of Equity Securities contemplated in this clause 18.9, including attorneys’ fees and the costs to engage the Background Check Provider. To the extent Master Franchisee or any of its Affiliates (including the Shareholder) becomes aware of any potential Material Change in Ownership before the proposed Material Change in Ownership is consummated, Master Franchisee will notify PLK in writing of such proposed Material Change in Ownership, and shall provide all information and documentation relating to the proposed Transfer or issuance. Master Franchisee shall use its commercially reasonable efforts to restrict the transfer of Confidential Information relating to operational matters and/or brand know-how to any such potential transferee until the Level 2 Background Checks and additional diligence are completed in accordance with this clause 18.9. If the Shareholder ceases to be a Public Company (or if Master Franchisee ceases to be held directly or indirectly by a Public Company), including in the case of a take-private transaction, the Transfer or issuance of any Equity Securities of the Master Franchisee, directly or indirectly, to any Person that is a Competitor, a Prohibited Person and/or an RBI Franchisee, in either case without obtaining the prior written approval of PLK shall be prohibited. Any transaction attempted without compliance with the terms hereof shall be void and of no effect and shall constitute a material default hereunder and good cause for termination of the Transaction Agreements by PLK.

 

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19  CONFIDENTIALITY

 

19.1The term “Confidential Information” as used in this Agreement means all confidential and proprietary information of PLK or any of its Affiliates, including without limitation, PLK’s or any of its Affiliates’ trade dress, restaurant and packaging design specifications and strategies, brand standards, any information relating to business plans, branding and design, equipment, operations manuals, including the Confidential Operating Manual, and other Standards, specifications and operating procedures, training material, marketing and business information, marketing strategy and marketing programs, plans and methods, food specifications (including recipes, prepared mixtures or blends of spices and other food products), details of suppliers and distributors, and sources of supply and distribution, sales, contractual and financial arrangements of PLK and its Affiliates and service providers, User Data and all other information and knowledge relating to the methods of operating and the functional know-how applicable to Popeyes Restaurants and the Popeyes System and any other system or brand operated by PLK or any of its Affiliates revealed by or at the direction of PLK or any of its Affiliates to Master Franchisee or any of its Affiliates.

 

19.2Master Franchisee acknowledges the uniqueness of the Popeyes System and that PLK and/or its Affiliates are making the Confidential Information available to Master Franchisee for the purpose of operating the Restaurants. Master Franchisee agrees that it would be an unfair method of competition for Master Franchisee to use or duplicate or to allow others to use or duplicate any of the Confidential Information. Master Franchisee, therefore, must:

 

19.2.1at all times, both during the Term and following its termination or expiration, maintain the Confidential Information in strict confidence;

 

19.2.2use the Confidential Information only in the operation, franchising and development of the Restaurants;

 

19.2.3not disclose the Confidential Information to any Person except those officers, employees and professional advisers of Master Franchisee who have a specific need to have access to it for the operation of the Restaurants or provision of the Services, who have been made aware of the terms on which it has been disclosed to Master Franchisee, and who agree to maintain its confidentiality. Master Franchisee is responsible for any unauthorized disclosure of the Confidential Information by Persons to whom Master Franchisee has disclosed it;

 

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19.2.4approve internal documents required for all employees of Master Franchisee containing the rules pertaining to the use of Confidential Information and impose an obligation not to disclose the Confidential Information in the employment agreements signed with its employees;

 

19.2.5not permit anyone to reproduce, copy or exhibit any portion of the Confidential Operating Manual or any other Confidential Information received from PLK;

 

19.2.6if none of this Agreement, the Company Franchise Agreement, any Unit Addenda, or any Franchise Agreement is in effect, return, delete or destroy the Confidential Information received from PLK immediately upon receipt of a request from PLK to do so;

 

19.2.7at PLK’s request, execute an agreement similar in substance to this clause in a form acceptable to PLK and naming PLK as a third party beneficiary with the independent right to enforce such agreement; and

 

19.2.8fulfil all other formalities required under applicable Law in order to ensure the trade secret regime in respect of any information and documents related to the Popeyes System.

 

19.3Master Franchisee will not disclose the terms and conditions of this Agreement or any other Transaction Agreement to any Person whatsoever, other than Master Franchisee’s professional advisors with a need to know such information, without the prior written consent of PLK, which consent may be withheld in PLK’s sole discretion.

 

19.4Master Franchisee agrees that it shall not, at any time, issue any press release or any other statement, broadcast, podcast, advertisement, circular, newsletter or other forms of information in relation to this Agreement, any other Transaction Agreement, including the Company Franchise Agreement or any Unit Addendum or the Popeyes business in the Territory to the public unless the contents of such information release have been approved in writing by PLK prior to dissemination. Master Franchisee must submit a request in writing for approval of PLK for all public relations material (for example, press releases or information statements) relating to any aspect of the Popeyes System, ingredients in menu items, public health issues, nutritional issues, or any other matter which may reasonably be expected to have an adverse impact on the public perception of the brand or reputation of PLK before using any such material, and PLK shall use commercially reasonable efforts to respond to such request for approval within two (2) Business Days.

 

19.5Notwithstanding the foregoing, “Confidential Information” shall not include the following (and, for greater certainty only, in such circumstances the obligations of confidentiality stipulated under this clause 19, as well as the penalties or remedies related to a breach thereof, shall not apply):

 

19.5.1Information existing in the public domain by or through public use, publication, general knowledge or the like;

 

19.5.2Information properly obtained by the receiving party from a third party having no obligation of confidentiality to the disclosing party;

 

19.5.3Information legally required to be disclosed pursuant to a subpoena, or order of a court or administrative agency, provided the receiving party immediately notifies the disclosing party of such subpoena or order so that the disclosing party can seek a protective order or take other appropriate action;

 

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19.5.4Information which can be shown to be properly in the receiving party’s possession before receipt from the disclosing party;

 

19.5.5Information which is disclosed by the disclosing party to a third party without a duty of confidentiality on the third party;

 

19.5.6User Data shared with or transferred to a third party pursuant to a contractual arrangement contemplated in clause 12.1.6; or

 

19.5.7Information which is disclosed by the receiving party with the disclosing party’s prior written consent.

 

20  INDEMNIFICATION AND INSURANCE

 

20.1Master Franchisee shall, at its own expense, defend, indemnify and hold harmless the PLK Indemnified Parties, with counsel reasonably acceptable to PLK, from and against any and all Losses sustained or incurred by the PLK Indemnified Parties, or any one or more of them, based upon or arising directly or indirectly out of any breach of this Agreement or negligent act, error or omission in connection with this Agreement by Master Franchisee or its employees or agents; and any Claim by or liability to any Franchisee in the Territory by reason of any material failure by Master Franchisee to provide Services in accordance with this Agreement.

 

20.2Without limiting the generality of the foregoing, Master Franchisee shall defend, indemnify and hold harmless the PLK Indemnified Parties from and against Losses arising out of or in connection with one or more of the following:

 

20.2.1Master Franchisee’s offering or sale of franchises for Franchised Restaurants;

 

20.2.2the performance of Master Franchisee under the Company Franchise Agreement, under any of the Territory Development Agreements and the Franchise Agreements, the operation of Direct-Owned Restaurants and Franchised Restaurants, including any action taken by Master Franchisee to enforce compliance by Franchisees with the obligations under the Franchise Agreements, and any product liability Claims;

 

20.2.3the quality or quantity of advertising or promotional materials produced and paid for from the Advertising Fund, to the extent not substantially compliant with this Agreement;

 

20.2.4any material prepared or supplied by Master Franchisee or any Affiliate thereof under this Agreement or any material prepared or supplied by PLK for a market other than the Territory that PLK has made available to Master Franchisee for use in the Territory, including, but not limited to, Claims, causes of action and suits alleging libel, slander, defamation, invasion of privacy, plagiarism, piracy, idea or trade secret misappropriation, trademark or copyright infringement, other violations of intellectual property rights or any other failure of Master Franchisee or any Affiliate thereof to comply with any applicable Laws, notwithstanding the fact that the material may have been approved by PLK (hereinafter, “Intellectual Property Claims”), but excluding any Intellectual Property Claims relating to ownership and validity of the Popeyes Marks or the Popeyes Domain Names;

 

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20.2.5any failure of Master Franchisee or its designee (including an Approved Subsidiary) to properly manage the Advertising Fund in accordance with this Agreement, the Company Franchise Agreement and the Franchise Agreements, including any misappropriation or misuse of the Advertising Fund, Advertising Contributions or any part thereof by Master Franchisee or its designee;

 

20.2.6deceptive or fraudulent activities, corporate malfeasance, negligence or misconduct in connection with Master Franchisee’s performance under this Agreement, which is determined by a final court judgment or arbitral award;

 

20.2.7any material Claim, action or demand of any kind or nature whatsoever brought by any employee, agent, subcontractor or independent contractor of Master Franchisee, any employee of any agent, subcontractor or independent contract of Master Franchisee, or an Affiliate thereof;

 

20.2.8any Claims by a Franchisee that the development of a new Restaurant has encroached upon any of its Restaurants, resulted in reduced sales and/or profitability or otherwise caused damage or harm to any such Restaurant or the Franchisee;

 

20.2.9any injury or death to natural persons, or injury or damage to property, during the rendering of Services required of Master Franchisee hereunder, if it is ruled by a final court judgment or arbitral award that such injury occurred in whole or in part as a result of acts of Master Franchisee or its employees or agents, whether said loss is sustained by PLK or any other Person(s) or third parties;

 

20.2.10any failure of Master Franchisee or any of its Affiliates to properly remit any tax payments required hereunder.

 

20.3Master Franchisee’s indemnification obligations hereunder shall be in effect from the A&R Effective Date and shall survive the termination of this Agreement and continue for one (1) year after the expiry of the statute of limitations applicable to any such Claim on the condition that a matter covered by this indemnity has arisen before the termination of this Agreement.

 

20.4The right to indemnity hereunder shall exist notwithstanding that joint or several liability may be imposed upon the PLK Indemnified Parties by statute, ordinance, regulation or judicial decision. Master Franchisee’s obligation to defend and indemnify the PLK Indemnified Parties is separate and distinct from its obligation to maintain insurance under this Agreement and the Company Franchise Agreement, and is not limited by the amount of insurance required by PLK under this Agreement and the Company Franchise Agreement.

 

20.5Notwithstanding the foregoing, no PLK Indemnified Party shall be indemnified or held harmless from any Losses to the extent that such Losses result from the negligence or willful misconduct of any such PLK Indemnified Party, as determined by a court of competent jurisdiction pursuant to a final and unappealable judgment (a “Final Judgment”), provided that (i) if Master Franchisee has assumed the defense of the Claim, Master Franchisee will advance all costs and expenses in connection with the defense of the Claim as such costs and expenses are incurred until such time as there is a Final Judgment, (ii) if the PLK Indemnified Party assumes the defense of the Claim, Master Franchisee will pay all costs and expenses in connection with the defense of the Claim as such costs and expenses are incurred until such time as there is a Final Judgment; and (iii) if the Final Judgment determines that any PLK Indemnified Party has contributed to the Losses through its own contributory negligence or willful misconduct, PLK shall repay to Master Franchisee a portion of the amount advanced by Master Franchisee or paid to the PLK Indemnified Party in proportion to the degree of contributory negligence of such PLK Indemnified Party, as determined in such Final Judgment.

 

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20.6Notwithstanding anything to the contrary in this clause 20, any sum recovered by the relevant PLK Indemnified Party through insurance or otherwise (less any reasonable out-of-pocket expenses incurred by such PLK Indemnified Party in recovering the sum and any tax attributable to or suffered in respect of the sum recovered) will reduce the amount of the Losses in respect of which a Claim can be made under clause 20.1 or clause 20.2 by an equivalent amount.

 

20.7PLK shall advise Master Franchisee if it receives notice that a Claim has been or will be filed with respect to a matter covered by this indemnity and provide Master Franchisee with such information as Master Franchisee may reasonably require to assume the defense of the Claim. In such event, Master Franchisee shall be given the opportunity to assume the defense thereof with counsel reasonably acceptable to PLK, and PLK shall have the right to participate in the defense of any Claim against PLK that is assumed by Master Franchisee at PLK’s own cost and expense. PLK and Master Franchisee shall consult with counsel in connection with any proposed settlement to assess and determine the viability of any Claim and the appropriate amount of the proposed settlement. Master Franchisee shall not, without the prior written consent of the applicable PLK Indemnified Parties, settle, compromise or offer to settle or compromise any such Claim unless the terms of such settlement provide for (a) a full and unqualified release of the PLK Indemnified Parties, (b) no admission of liability, fault or violation of Law or contract, and (c) no relief other than payments of monetary damages that are not to be paid by the PLK Indemnified Parties, subject to clause 20.5.

 

20.8Notwithstanding the foregoing, at PLK’s option, PLK may hire attorneys of its own choice, to manage and defend any Claim, at Master Franchisee’s cost, risk and expense; provided, however, that PLK will not consent to the entry of any judgment or enter into any settlement without Master Franchisee’s prior written consent, which consent will not be unreasonably withheld or delayed.

 

20.9For as long as this Agreement remains in effect and for three years thereafter (which may be satisfied by a prepaid tail policy), Master Franchisee shall maintain the following insurance:

 

20.9.1Commercial General Liability coverage on a per occurrence form, that includes broad form coverage for “contractual liability,“ “property damage,“ “products liability,“ “bodily injury,“ “advertising injury,“ and “personal injury“ liability as those terms are defined in Insurance Services Office (ISO) Form CG00-01 or its equivalent. The policies shall provide the minimum limits of no less than the amounts set forth below, contain a waiver subrogation in favour of the PLK Indemnified Parties, and name as additional insureds by policy endorsement the PLK Indemnified Parties. Advertising injury coverage provided under the Commercial General Liability insurance must include coverage for Claims arising out of or related to: (i) invasion or infringement or interference with the right of privacy or publicity, whether under common law or statutory law; (ii) infringement of copyright or trademark, whether under statutory or common law; (iii) libel, slander or other forms of defamation; and (iv) plagiarism, piracy or unfair competition resulting from the alleged unauthorized use of titles, formats, ideas, characters, plots, performers, or other material.

 

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20.9.2Workers’ Compensation coverage that includes all coverage required under the laws of each province or part of the Territory in which Master Franchisee conducts business operations in any way related to the PLK Indemnified Parties and should contain a waiver subrogation in favour of the PLK Indemnified Parties.

 

20.9.3Prior to the opening of the first Franchised Restaurant, Error and Omissions or Advertising Agency Professional Liability Insurance insuring the contractual liability assumed by Master Franchisee under this Agreement, with respect to Intellectual Property Claims. The policy shall provide the minimum limits of no less than the amounts set forth below, contain a waiver subrogation in favour of the PLK Indemnified Parties, and name the PLK Indemnified Parties as additional insureds by policy endorsement.

 

20.9.4All risks property insurance, providing coverage for fire, lightning, explosion, windstorm, typhoon, flood and earthquake or other natural or man-made disaster, shall be maintained for the full replacement value of a Direct-Owned Restaurant which is sufficient to satisfy any co-insurance clause contained in the policy, provided that where the Direct-Owned Restaurant is a leasehold, cover rental insurance shall not be required.

 

20.9.5Business interruption insurance to insure Master Franchisee for losses incurred as a result of business interruption, providing coverage for fire, lightning, explosion, windstorm, typhoon, flood, earthquake or other natural or man-made disaster, which causes the Direct-Owned Restaurant (or any part of them) to be closed for a period of time. Such business interruption insurance policy will, at a minimum, provide a level of coverage to Master Franchisee sufficient for Master Franchisee to be able to pay to PLK, on a monthly basis, the estimated Royalty Fees that Master Franchisee would have been obligated to pay had the business interruption not occurred. The foregoing amount is calculated by taking the average monthly Gross Sales of the Direct-Owned Restaurant(s) over the twelve (12) months immediately preceding the date of the business interruption (or in the case where the Direct-Owned Restaurant has not been open for twelve (12) months, Master Franchisee’s estimate of the average monthly Gross Sales) and multiplying such number by the Royalty Percentage.

 

20.9.6All insurance policies required pursuant to this Agreement shall provide the minimum limits of no less than the amounts set forth below and shall not be sub-limited with respect to PLK, Affiliates of PLK or this Agreement. Additionally, the policies shall contain a waiver of subrogation in favour of the PLK Indemnified Parties, and name as additional insureds by policy endorsement the PLK Indemnified Parties. Further, all insurance shall be provided on a primary basis and shall not seek contribution from any separate insurance maintained by PLK or any PLK Affiliates, regardless of the “other insurance” or similar provisions of the respective policies of insurance. All insurance coverage required herein shall be provided by an insurance company or companies with minimum AM Best ratings of "A(X)" or “A10”, where “A” is the Financial Strength Rating ("FSR") and (X) or (10) is the Financial Size Category ("FSC"). In the event that an AM Best rating is not available, a minimum Standard and Poor’s FSR of “A” and an FSC (surplus) at least equal to an AM Best rating of "X” is required, which may be supplied by a PLK approved credit rating agency. Each policy shall provide for thirty (30) Days’ notice to PLK from the insurer by registered mail, return receipt requested, in the event of any unrestricted prior written notice of cancellation, non-renewal or change in coverage.

 

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20.9.7Each and every policy required pursuant to this Agreement, except as noted, shall have maximum deductibles of Fifty Thousand Dollars US$50,000 subject to approval by PLK and shall have the coverage limits set out in Schedule 7.

 

20.9.8The addition of the PLK Indemnified Parties as additional insureds or its equivalents shall be effectuated through an endorsement to Master Franchisee’s insurance policies, without any language of limitation affecting coverage. All certificates of insurance and policy endorsements required herein shall be provided by Master Franchisee to PLK at 8 Cross St, Manulife Tower, #28-01/07, Singapore 048424, with a copy to General Counsel at 5707 Blue Lagoon Drive, Miami, FL, 33126 (or to the address of the third party designee of PLK) in the manner required for written notices hereunder, or to such other address as may be designated by PLK. All policies must be renewed, and a renewal certificate of insurance must be provided to PLK or its designated agent prior to the expiration date(s) of the policies.

 

20.9.9Master Franchisee must not do nor omit to do any act which is or may render any of the insurance policies void or voidable. If PLK determines that a particular insurer is unacceptable to PLK and so notifies Master Franchisee, Master Franchisee will use all reasonable efforts to obtain alternative or additional insurance from an insurer acceptable to PLK prior to the expiration of the relevant policy and furnish to PLK certificates of insurance evidencing that such alternative or additional insurance coverage is in effect. The insurance afforded by the policy or policies required under this Agreement shall be primary and not contributory with PLK’s insurance and shall not be limited in any way by reason of the insurance which may be maintained by PLK.

 

20.9.10Master Franchisee shall require its Affiliates to, and use best efforts to require all third party subcontractors and suppliers to, maintain insurance coverages consistent with the requirements and amounts set forth in this clause 20.

 

20.9.11Master Franchisee’s failure to secure and maintain proper insurance coverage for itself and its Affiliates as required in the preceding sub-clause, or failure to use reasonable efforts to ensure that all of Master Franchisee’s third party subcontractors and suppliers have the proper insurance coverage as required in the preceding sub-clause, will not relieve Master Franchisee of its responsibility to indemnify and defend a PLK Indemnified Party, and shall, of itself, constitute a material breach of this Agreement.

 

21  ASSIGNMENT AND TRANSFER

 

21.1Except with respect to assignment or transfer to a wholly-owned subsidiary or parent company that owns all of the interests in Master Franchisee (which subsidiary or parent company, as applicable, must be, and remain during the Term, a single-purpose entity, the business of which is limited to the development, operation and servicing of Popeyes Restaurants and any activities ancillary thereto), this Agreement and the Development Rights granted to Master Franchisee may not be sold, assigned, transferred, leased, licensed or sub-licensed, charged, mortgaged, pledged, hypothecated, encumbered or otherwise disposed of, whether directly or indirectly (“Transferred”) by Master Franchisee, in whole or in part, voluntarily or involuntarily by operation of law or otherwise, nor shall Master Franchisee have any right to sub-license any of the rights granted under this Agreement except as expressly provided herein, nor shall Master Franchisee be permitted to subcontract the whole or any substantial part of its obligations under this Agreement, or to transfer any material assets that are necessary for Master Franchisee or any Affiliate thereof to operate its Direct-Owned Restaurants or fulfil its other material obligations under any of the Transaction Agreements or Franchise Agreements, without the prior written consent of PLK, which consent may be withheld at PLK’s sole and complete discretion. Any Transfer described in this clause 21.1 without compliance with the terms hereof shall be void and of no effect.

 

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21.2In the event that PLK sells, transfers, assigns, licenses or otherwise conveys the rights to the Popeyes Marks, Popeyes Domain Names and/or Popeyes Intellectual Property Rights previously licensed by PLK for the operation of the Popeyes System in the Territory to any Person (an “IP Transferee”), PLK shall assign this Agreement, and all the rights and obligations of PLK hereunder, to such IP Transferee, in which case the IP Transferee shall license such intellectual property to Master Franchisee as contemplated in this Agreement, and Master Franchisee’s rights and obligations hereunder shall remain in full force and effect. Subject to the foregoing, PLK may transfer or assign this Agreement, and all of the rights and obligations of PLK hereunder to (a) an Affiliate of PLK or (b) an IP Transferee, and each of Master Franchisee, the JVC and the Shareholder hereby grants its prior and irrevocable consent to such assignment, and waives any requirement of prior notice. PLK will provide Master Franchisee, the JVC and the Shareholder with formal written notice of the assignment within fifteen (15) Days following its completion. Master Franchisee, the JVC and the Shareholder shall take all such actions as PLK shall reasonably require or as required by applicable Law to effect such transfer.

 

22  CURRENCY, EXCHANGE CONTROL AND TAXATION

 

22.1All payments to PLK required under this Agreement shall be made in US$ (the “Required Currency”) into such bank account in Singapore, or such other place as PLK shall designate (the “Required Country”). Master Franchisee shall, at its expense, make all necessary and appropriate applications to such Authorities as may be requested by PLK or as may be required by Law for transmittal and payment of the Required Currency to PLK. Such payment shall be made by such method as PLK may from time to time stipulate. Each conversion from the RMBand/or MOP (“Local Currency”) to the Required Currency shall be made at the Conversion Rate for the purchase of the Required Currency as of the last bank trading Day of the month on which the payment is based, or in the case of the Direct-Owned Restaurant Unit Fee and Franchised Restaurant Unit Fee, as of the close of business on the last bank trading Day preceding the invoice date for the respective Direct-Owned Restaurant Unit Fee and Franchised Restaurant Unit Fee. At Master Franchisee’s request, PLK will provide Master Franchisee with confirmation of the applicable Conversion Rate. To the extent such application to the Authorities is denied or the convertibility of each Local Currency to the Required Currency is insufficient to make any of the required payments to PLK pursuant to this Agreement, Master Franchisee undertakes and agrees to pay such monies in the Required Currency from Master Franchisee or its subsidiaries’ global assets.

 

22.2As and when any consent is required under any applicable Law for the remittance of royalties and other payments to PLK or to an Affiliate of PLK nominated by PLK, Master Franchisee will at its own expense make all necessary and appropriate applications to such Authorities as may be necessary or desirable to facilitate the transmittal and payment of sums due under this Agreement in accordance with the time frames set forth herein.

 

22.3In the event that Master Franchisee shall at any time be prohibited from making any payment in US$ outside of the Territory, Master Franchisee shall immediately notify PLK of this fact and such payment shall thereupon be made to such place and in such currency as may be selected by PLK and acceptable to the appropriate Authorities, all in accordance with remittance instructions furnished by PLK. The acceptance by PLK of any payment in a currency other than that of the Required Currency or in a territory other than the Required Country or a destination as specified by PLK does not release Master Franchisee from its obligation to make future payments in the Required Currency to the Required Country or a destination as specified by PLK.

 

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22.4If at any time there exists an exchange control, governmental regulation or any Law which prohibits the payment to PLK of the amounts due to PLK under this Agreement, the Company Franchise Agreement and/or any Unit Addendum in the Required Currency and the Required Country (“Payment Restriction”), Master Franchisee shall immediately reserve and keep in a separate account such amounts for the benefit of PLK (the “Reserve Account”) or, at the option of PLK, pay such amounts in the Local Currency to a Person designated by PLK. For a period of at least six (6) months, PLK and Master Franchisee shall use commercially reasonable efforts to reach an agreement regarding payment of the applicable amounts due to PLK in the Required Currency and the Required Country. If such efforts are not successful after such six (6) month period, PLK and Master Franchisee shall use commercially reasonable efforts over a three (3) month period to agree to form a new master franchisee with the same beneficial ownership as the Master Franchisee (the “Substitute Master Franchisee”) and transfer the rights and obligations of Master Franchisee to such Substitute Master Franchisee to permit such payments to resume. If such efforts are not successful after such three (3) month period, PLK and Master Franchisee shall use commercially reasonable efforts to agree to make the payments in an alternative form, including the use of alternative currencies, entrance into new service or delivery contracts, or payment of extraordinary dividends. As soon as the Payment Restriction is no longer in effect, Master Franchisee shall make payments from the Reserve Account to PLK or PLK’s designee in an aggregate amount equal to the amounts subject to the Payment Restriction, less any amounts paid by the Substitute Master Franchisee or in an alternative form, if applicable. Master Franchisee agrees not to make any dividend payments or similar payments to its shareholders until (or simultaneously with) the payment to PLK of all amounts subject to the Payment Restriction, less any amounts paid by the Substitute Master Franchisee or in an alternative form, if applicable. Master Franchisee shall bear all costs associated with the formation of a Substitute Master Franchisee or any alternate method of payment pursuant to this clause 22.4. Notwithstanding the foregoing, in the event that (i) PLK reasonably determines that any other Person similarly situated to Master Franchisee has been able to make payments in the Required Currency notwithstanding the Payment Restriction, has determined the means by which such other Person is making such payments, has given Master Franchisee ninety (90) days to implement the same or similar measures to make payments in the Required Currency, and Master Franchisee continues to be unable to make payments after receiving written notice from PLK, or (ii) the Payment Restriction is in effect for a period of more than three (3) years, PLK may terminate this Agreement immediately upon notice to Master Franchisee.

 

22.5It is understood and agreed by the Parties that Master Franchisee (including, for certainty, the Approved Subsidiaries) will be responsible for complying with any Indirect Tax obligation in respect of any payment made by Master Franchisee (including, for certainty, the Approved Subsidiaries) pursuant to this Agreement and any and all other tax liabilities except Indirect Taxes arising out of this Agreement will be the responsibility of the Party owing such Taxes. Notwithstanding the foregoing or anything else herein, the Parties have agreed that all amounts payable pursuant to this Agreement by Master Franchisee do not include Indirect Tax and, in the event Indirect Tax applies under either existing law or a future change in statute or interpretation that results in Indirect Tax on such amounts, Master Franchisee will bear the economic burden of such Indirect Tax either through payment of the Indirect Tax to PLK or, if Master Franchisee is required by Law to deduct and pay the applicable Indirect tax to the relevant Tax Authority, Master Franchisee will gross up all amounts payable pursuant to this Agreement by the applicable Indirect Tax and remit payment of the applicable Indirect Tax amount to the relevant Tax Authority, without any deduction from amounts payable under this Agreement. For greater clarity, all payments made under this Agreement shall be made in full, free of any deduction or set off whatsoever, except Withholding Income Tax as required by the applicable Law of the Territory.

 

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22.6In the event that Master Franchisee (including, for certainty, the Approved Subsidiaries) is required to withhold an amount in respect of Withholding Income Tax liability of a payee as a result of any of the payments set out in this Agreement made by or on behalf of Master Franchisee, Master Franchisee shall withhold from such payments such Withholding Income Taxes as are required by Law and remit payment of all amounts in respect of Withholding Income Tax liability, with all necessary forms, to the applicable Tax Authority in the Territory in accordance with applicable Law. To the extent that any Authority imposes a penalty and/or interest for failure to properly withhold and remit Withholding Income Tax in connection with any payment made by Master Franchisee to PLK, Master Franchisee will be solely responsible for the payment of such penalties and related interest and PLK shall have no responsibility or liability therefor. For the avoidance of doubt, the amount so withheld for Withholding Income Tax shall be deducted from the amount required to be paid by Master Franchisee to PLK hereunder. Master Franchisee shall provide PLK with corresponding receipts from the relevant Tax Authority in the Territory to evidence such payments or amounts withheld to support a Claim against PLK’s Singapore (or other country’s) income taxes with respect to the taxes withheld and paid by Master Franchisee.  In the event a Double Tax Treaty (“DTT”) exists between the payor and the payee jurisdiction, the payee will provide the necessary documentation to confirm eligibility to receive the benefits of the DTT by the required due date. Master Franchisee agrees to comply with the requirements of the DTT and file any required documentation with the applicable Tax Authority. Additionally, Master Franchisee agrees to cooperate with PLK by providing PLK with any information requested by PLK from Master Franchisee in order for PLK to comply with the requirements of the DTT.

 

22.7If there is an exemption in the Territory for the application of Withholding Income Taxes or Indirect Taxes to any payments made by Master Franchisee to PLK or its designee, Master Franchisee will cooperate in good faith with PLK and take all reasonable steps necessary to ensure that PLK or its designee will be eligible for such exemption, including by applying for the exemption with the applicable Tax Authority.

 

23  AUDIT RIGHTS

 

23.1During the Term and for one (1) year thereafter, PLK shall be entitled to inspect, and make copies, during normal business hours upon three (3) Business Days’ notice (and without giving notice in the case of emergency or suspecting malfeasance) any records and books of Master Franchisee and Master Franchisee must timely make all such books and records available to PLK at PLK’s request and deliver any copies of such books and records at PLK’s request. PLK shall not exercise this inspection right more frequently than three (3) times during any year. Master Franchisee must permit a representative of PLK to enter its offices and any training facility during normal business hours and without prior notice. PLK shall exercise commercially reasonable efforts to minimize disruption to the normal operation of Master Franchisee’s business.

 

23.2PLK may, on reasonable notice and with such professional assistance as PLK may require, conduct an annual audit at its expense during each calendar year to ensure that Master Franchisee is complying with the Global Marketing Policy and providing the Services in accordance with this Agreement. Master Franchisee must cooperate in the conduct of any such audit, including by complying with its obligations under clause 23.1 and promptly and fully answering any questions and providing any information reasonably required by PLK.

 

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23.3PLK may from time to time (but not more than once in any 12-month period unless it reasonably believes the circumstances warrant otherwise) require that an audit or review of the business affairs of any member of the China Group is carried out, and shall in such case, be entitled to designate an individual as PLK’s representative to carry out such audit or review on its behalf and at its sole cost and expense. PLK’s representative shall be entitled to: (a) visit and inspect any premises of the China Group and to discuss the affairs, finances and accounts of the China Group with its officers and directors; (b) access, examine and retain copies (at PLK’s sole cost and expense) of any books, records, accounts or other documents and information relating to the affairs of the China Group; provided that such examination shall be done during normal business hours without disruption to the business of the China Group and with reasonable prior notice; and (c) such access and cooperation from each member of the China Group as may be reasonable under the circumstances to facilitate the carrying out of such audit or review.

 

23.4The Shareholder shall, and shall procure that each other member of the China Group shall, reasonably cooperate with PLK and provide PLK and/or its representatives and consultants with all documents, information, assistance (including reasonable access to the officers and employees of the Shareholder and each other member of the China Group but subject to legal privilege protection) in connection with any ethics or compliance investigations or audits relating to compliance with the Anti-Corruption Laws and/or other laws.

 

23.5The Shareholder shall provide PLK with copies of the following information in accordance with the Accounting Principles: (a) monthly unaudited consolidated revenue and gross profit reports of the China Group within thirty (30) Business Days after the respective month end; (b) quarterly unaudited consolidated balance sheets and cash flow statements of the China Group within thirty (30) Business Days after the respective quarter end; (c) audited annual consolidated financial statements of the China Group (copying with all relevant legal requirements) which shall be prepared and reported on by the auditors of the Shareholder within a reasonable time and in any event within five (5) months after the end of the Financial Year in question; and (d) an itemized revenue and capital budget for each Financial Year covering each member of the China Group and showing proposed trading and cash flow figures, manning levels and all material proposed acquisitions, disposals and other commitments for that Financial Year.

 

23A   ANTI-CORRUPTION LAWS AND COMPLIANCE

 

23A.1The Shareholder shall maintain a Compliance Plan, and the Shareholder shall cause each other member of the China Group to adopt such Compliance Plan. By January 15 of each Development Year, the Shareholder shall, upon PLK’s request, deliver to PLK a certificate duly executed by the Chief Executive Officer of the Shareholder certifying that each member of the China Group is in compliance with the Compliance Plan and that there has been no breach thereof during the prior Development Year.

 

23A.2The Shareholder shall, and shall cause each other member of the China Group to, (a) provide anti-corruption training to its employees, officers and directors on a regular basis, and (b) comply with the accounting control provisions (if any) of the Anti-Corruption Laws.

 

23A.3The Shareholder shall, and shall cause each other member of the China Group to, undertake that neither it, nor any of its Subsidiaries, nor any of their respective directors, officers, agents or employees or any other Person affiliated with or acting for or on behalf of them shall, (a) directly or indirectly, use or offer to use any corporate funds for contributions, gifts, entertainment or other payments relating to political activity, in each case, which are not in compliance with applicable Anti-Corruption Laws; (b) make any unlawful payment to a foreign or domestic government official (including employees of wholly state-owned or partially state-owned entities) or to foreign or domestic political parties or campaigns in violation of any applicable Anti-Corruption Laws; (c) make any bribe, rebate, payoff, influence payment, kickback or other similar payments or establish or maintain any unrecorded funds, in each case, which are not in compliance with all applicable Anti-Corruption Laws; or (d) agree to give any fit or similar benefit to any customer, supplier or other Person in violation of any applicable Anti-Corruption Laws.

 

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23A.4The Shareholder shall devise and maintain a system of internal accounting controls for itself and other members of the China Group 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 (x) to permit preparation of financial statements in conformity with the Accounting Principles or any other criteria applicable to such statements, and (y) 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.

 

24  SEVERABILITY

 

Each of the Parties agrees that if any provisions of this Agreement may be construed in more than one way, one or more of which would render the provision illegal or otherwise voidable or unenforceable, and one of which would render the provision valid and enforceable, such provision shall have the meaning which renders it valid and enforceable. The language of all provisions of this Agreement shall be construed according to its fair meaning and not strictly against any Party. It is the intent of the Parties that the provisions of this Agreement be enforced to the fullest extent and should any court or other Authority determine that any provision herein is not enforceable as written in this Agreement, the Parties shall use their best endeavors to amend it consistent with the intent of the Parties so that it is enforceable to the fullest extent permissible under the laws and public policies of the jurisdiction in which the enforcement is sought. Subject to the preceding sentence, the provisions of this Agreement are severable and this Agreement shall be interpreted and enforced as if all completely invalid or unenforceable provisions were not contained in this Agreement, and partially valid and enforceable provisions shall be enforced to the extent that they are valid and enforceable.

 

25  ENTIRE AGREEMENT

 

This Agreement, together with the Company Franchise Agreement and each Unit Addendum entered into pursuant to this Agreement, and the other Transaction Agreements, constitute the entire agreement and understanding of the Parties with respect to the development and franchising of Popeyes Restaurants and related matters set out in the Transaction Agreements and supersedes all prior negotiations, commitments, representations, warranties and undertakings of the Parties (if any) with respect to the development and franchising of Popeyes Restaurants and related matters set out in the Transaction Agreements, whether written or oral, including the Original Agreement. The Parties acknowledge that they are not relying upon any representations, warranties, conditions, agreements or understandings, written or oral, made by the Parties as their agents or representatives, except as herein or therein specified. Neither this Agreement nor any term or provision of it may be changed, waived, discharged, or modified other than in writing and signed by the Parties. If there is a conflict between this Agreement and the Company Franchise Agreement, any Unit Addendum, any other Transaction Agreement, the Standards or any Exhibit or Schedule to this Agreement (other than the Development Schedule), the provisions contained in the body of this Agreement will control. If there is a conflict between the body of this Agreement and the Development Schedule, the Development Schedule will control.

 

26  NOTICES

 

Any notice, demand, request, consent, approval, authorization, designation, specification or other communication given or made, or required to be given or made hereunder, to or by a Party to this Agreement:

 

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26.1must be in writing and in English addressed:

 

 (a) if to PLK: PLK APAC PTE. LTD. 
   8 Cross St, Manulife Tower, #28-01/07, 
   Singapore 048424 
   Attention: Head of Popeyes International; and 
   Head of Legal, International 
   Email: sdean@rbi.com 
     
 With a copy to Popeyes Louisiana Kitchen, Inc 
   5707 Blue Lagoon Drive 
   Miami, FL 33126 
   Attention: General Counsel 

  Email:jgranat@rbi.com;

              gonzalez1@rbi.com  
       
  (b) if to Master Franchisee  PLKC HK International Limited  

c/o Cartesian Capital Group, LLC
 505 Fifth Avenue, 15th Floor
 New York, NY 10017

 

  or as specified to the sender by any Party by notice; and  

 

26.2is regarded as being given by the sender and received by the addressee: (i) if by delivery in person (including by overnight courier service), when delivered to the addressee; (ii) if by certified, return receipt mail, on the earlier of actual receipt or the tenth (10th) Day after being deposited in the mail; or (iii) if by email, along with a PDF copy of all relevant attachments, when the sender receives evidence of delivery.

 

27  NON-WAIVER

 

The failure or delay on the part of a Party to exercise any right or option given to it under this Agreement, or to insist on strict compliance by the other Party with the terms of this Agreement, shall not constitute a waiver of any terms or conditions of this Agreement with respect to any other or subsequent breach, nor a waiver by the first Party of its right at any time thereafter to require exact and strict compliance with all the terms of this Agreement, nor shall acceptance by PLK of any money paid on behalf of Master Franchisee under this Agreement, under the Company Franchise Agreement, under any Unit Addendum or any other Transaction Agreement following any breach or default by Master Franchisee of any one or more of the terms or provisions of this Agreement, the Company Franchise Agreement, any Unit Addendum or any other Transaction Agreement, whether before or after notice to or knowledge of the breach or default by PLK, constitute a waiver by PLK of such breach or default. The rights or remedies of the Parties set out in this Agreement are in addition to any other rights or remedies which may be granted by law.

 

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28  RELATIONSHIP OF PARTIES

 

For purposes of this Agreement, Master Franchisee is an independent contractor and is not an agent, partner, joint venturer or employee of PLK, and no express or implied fiduciary relationship exists between Master Franchisee and PLK by virtue of this Agreement. Master Franchisee shall not, nor shall it attempt to, bind or obligate PLK in any way nor represent that it has any right to do so.

 

29  GOVERNING LAW & JURISDICTION; LANGUAGE

 

29.1This Agreement and any non-contractual obligations, performance or liabilities arising out of or in connection with this Agreement is governed by and construed in accordance with the substantive Laws of New York without regard to conflicts of law principles. The United Nations Convention Contracts for the International Sale of Goods of 11 April 1980 is hereby waived and excluded from application to this Agreement.

 

29.2If any dispute, controversy or Claim, in law or equity, arises out of or in connection with this Agreement or the business relationship created thereby, including the breach, termination or invalidity of this Agreement or any non-contractual obligations or liabilities arising out of, or in connection with, this Agreement (“Dispute”), any Party shall serve formal written notice on the other Parties that a Dispute has arisen and describing the nature of such Dispute (“Notice of Dispute”).

 

29.3Any disputing Party may serve notice in writing on the other disputing Party that the Dispute shall be exclusively submitted to final and binding arbitration in accordance with the Rules of Arbitration of the International Chamber of Commerce in effect on the date of commencement of the arbitration (the “ICC Rules”), which rules are deemed to be incorporated by reference into this clause 29.4. The Parties undertake to each execute and perform, on a timely basis, all such agreements, documents, assurances, acts and things and to exercise all powers and rights available to them, including the giving of all information and documentation reasonably requested, the convening of all meetings, the giving of all waivers and the passing of all resolutions reasonably required to ensure the enforceability of any final award of the arbitrator in any jurisdiction where such enforceability is sought.

 

29.4Notwithstanding the foregoing, a disputing Party shall be entitled to interim or conservatory measures pursuant to the ICC Rules, including, but not limited to, temporary injunctive relief to preserve or restore the status quo between the parties, if such Party reasonably believes that the timeline set forth in this clause 29 shall materially prejudice such Party.

 

29.5The arbitral panel shall be composed of one (1) arbitrator to be appointed in accordance with the ICC Rules. Such arbitrator shall be a licensed lawyer or retired judge, in the latter case, who is affiliated with ADR Chambers, and has at least five (5) years of experience handling matters involving the Laws of the State of New York. The arbitrator shall: (i) have the exclusive authority to decide any issues regarding the applicability, interpretation, formation, or enforcement of this Agreement (including determining the arbitrability of any Dispute); (ii) be empowered to grant legal and equitable remedies (including injunctive relief) in connection with any Dispute submitted to arbitration; and (iii) issue a reasoned final award after making a determination on the merits of any such Dispute. The arbitrator shall award the prevailing party in the arbitration the reasonable attorneys’ fees and costs (including expert costs) incurred in connection with the arbitration and any related proceedings to enforce the arbitration award.

 

29.6The place of arbitration shall be Miami, Florida and the language to be used in the arbitral proceedings shall be English, save that all documents attached to filings submitted to the tribunal do not have to be translated from their original language unless expressly ordered by the arbitrator in consultation with the Parties. All submissions to the arbitrator, save any documents attached to such submissions as set forth in this clause 29.6, shall be submitted in English.

 

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29.7Any final award entered by the arbitrator shall be the final, binding and exclusive determination of any Dispute submitted to arbitration, and may be entered in any court having jurisdiction and any court where any party to the arbitration or its assets are located. Neither a party to an arbitration nor the arbitrator may disclose the existence, subject matter, content or results of any arbitration without the prior written consent of all parties, unless to protect or pursue a legal right or as may otherwise be required by applicable Law, Canadian or US franchise disclosure requirements, franchise disclosure requirements of the relevant jurisdiction in the Territory (or other foreign equivalent applicable in the circumstances) or disclosure requirements of the US Securities and Exchange Commission, the Ontario Securities Commission or any applicable foreign equivalent, or any stock exchange on which the Equity Securities of a Party or, its Affiliates may be listed or any other Authority.

 

29.8The ICC Court may, at the request of a party to the arbitration, consolidate two or more arbitrations pending under the ICC Rules into a single arbitration in accordance with the ICC Rules.

 

29.9The Parties agree that irreparable damage, for which there would be no adequate remedy at law, would occur if any provision of this Agreement were not performed in accordance with the terms hereof and each Party shall be entitled to seek injunctive relief to prevent breaches of this Agreement by the other Party, or to seek to enforce specifically the performance of the terms and provisions hereof, in addition to any other remedy to which a party is entitled at law or in equity. Each of the Parties hereby waives, in any action for specific performance or other equitable remedy (including for injunctive relief), the defence of adequacy of a remedy at law.

 

30  NO THIRD PARTY ENFORCEMENT RIGHTS

 

Except as expressly stipulated in this Agreement, this Agreement shall not grant any right to Persons who are not a Party to this Agreement. To the extent this Agreement expressly grants rights to third parties, the parties to this Agreement shall be permitted to change or exclude such rights at any time without the consent of the respective third party.

 

31  SURVIVAL

 

The expiry or termination of this Agreement shall be without prejudice to any rights which shall have accrued to a Party prior to the date of such termination or expiry, shall not affect or diminish the binding force or effect of any provisions of this Agreement which expressly or by their nature are intended to survive the expiration or termination of this Agreement and, without limitation shall not release Master Franchisee from the obligation to pay any sum outstanding under this Agreement.

 

32  PARTIES TO THIS AGREEMENT ALL LEGALLY ADVISED

 

Each of the Parties to this Agreement acknowledges that it has taken or has had the opportunity to take all such independent professional advice as it deems appropriate, including legal advice and declares that it understands and accepts all of the terms and conditions of this Agreement.

 

33  INTEREST

 

Master Franchisee shall pay to PLK interest on any sum overdue under this Agreement, in the currency in which the overdue sum is required to be paid, calculated on a daily basis from the due date until payment in full at the rate of ten percent (10%) per annum. Entitlement to such interest shall be in addition to any other remedies PLK may have. It is acknowledged that the late payment interest payable pursuant to this clause 33 is not a penalty but the Parties’ reasonable pre-estimate of the loss incurred by PLK as a result of late payments of amounts due to it under this Agreement.

 

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34  COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, and by each Party on separate counterparts. Each counterpart is an original, but all counterparts shall together constitute one and the same instrument. Delivery of a counterpart of this Agreement by e-mail attachment or by facsimile shall be an effective mode of delivery.

 

35  SPECIAL COVENANTS

 

35.1Regulatory Approval.

 

35.1.1This Agreement, the Company Franchise Agreement, and the Unit Addenda are subject to all governmental approvals, registrations or filings required by applicable Law within the Territory (“Approvals”). To the extent any Approvals must be obtained to operate the business contemplated in this Agreement, the Company Franchise Agreement, and the Unit Addenda within the Territory, Master Franchisee shall use best efforts to obtain any such Approval at Master Franchisee’s expense, including the modification, amendment or other alteration of this Agreement, the Company Franchise Agreement, or the Unit Addenda as may be required by the relevant Authority. Notwithstanding the preceding provisions of this clause 35.1.1, Master Franchisee agrees not to apply for Approval until after PLK has had an opportunity to review and comment on all materials to be filed with any Authority. PLK shall use commercially reasonable efforts to promptly review and comment on such materials.

 

35.1.2In the event that any Approval is required to enable Master Franchisee or any Affiliate thereof to enter any Unit Addendum for a Direct-Owned Restaurant, Master Franchisee shall obtain such Approval at its sole responsibility and cost. Master Franchisee shall provide PLK with copies of such Approvals. Without limitation of the foregoing, if any translations or certifications are required of this Agreement, the Company Franchise Agreement, any Unit Addendum or any license agreement, Master Franchisee shall pay for any costs of complying with such requirements. Master Franchisee hereby agrees to indemnify PLK in relation to all Losses or other amounts incurred by PLK arising from Master Franchisee’s failure to obtain the Approvals set out in this clause 35.1.2.

 

35.2Recordal or Registration.

 

In the event that this Agreement, the Company Franchise Agreement, and/or any Unit Addendum and/or Franchise Agreements shall be recorded or registered with any Authority in the Territory, whether or not such recordal or registration is required by PLK, Master Franchisee or both, Master Franchisee shall bear the costs related to the making of such recordal or registration, including all translation costs, filing fees and attorneys’ fees and expenses reasonably incurred by PLK. If Master Franchisee is directed by PLK to make the recordal or registration, Master Franchisee hereby agrees to indemnify PLK in relation to all costs, expenses, damages, loss or other amounts incurred by PLK arising from Master Franchisee’s failure to do so. Upon termination or expiration of this Agreement for any reason, Master Franchisee will cooperate with PLK as required in order to terminate the recordal of Master Franchisee as a registered user with the Intellectual Property Office (of the Territory).

 

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35.3Stamp Duty

 

In the event that this Agreement must be stamped in the Territory, Master Franchisee shall attend to the stamping and shall bear the cost of any stamp duty arising in relation to such stamping as and when due (including any fines or penalties) within thirty (30) Days of execution of this Agreement, or sooner if required under applicable Law. Master Franchisee shall provide evidence to PLK of its compliance with this clause 35.3, including obtaining, at its expense, certified copies for all other Parties to this Agreement.

 

35.4Anti-Terrorism

 

Master Franchisee agrees to comply with and to use commercially reasonable efforts to assist PLK in PLK’s efforts to comply with Anti-Terrorism Laws. In connection with such compliance, Master Franchisee certifies, represents, and warrants that none of its property or interests are subject to being “blocked” under any of the Anti-Terrorism Laws and that Master Franchisee is not otherwise in violation of any of the Anti-Terrorism Laws. Master Franchisee:

 

a)certifies that it and its owners, employees, or anyone associated with it are not listed in the Annex to Executive Order 13224. Master Franchisee agrees not to hire or to permit any Franchisees to hire (or, if already employed, retain the employment of) any individual who is listed in the Annex; and

 

b)is solely responsible for ascertaining what actions it shall take to comply with the Anti-Terrorism Laws, and Master Franchisee specifically acknowledges and agrees that its indemnification responsibilities set forth in this Agreement pertain to its obligations under this clause.

 

Any misrepresentation under this clause or any violation of the Anti-Terrorism Laws by Master Franchisee, its agents or employees constitutes grounds for immediate termination of this Agreement and any other agreement Master Franchisee has entered with PLK or any of PLK’s Affiliates.

 

35.5Language

 

The language of this Agreement is English. To the extent that any translation from English to any other official language in the Territory may be required of this Agreement or any document or information under it, it shall be at the cost of Master Franchisee, and Master Franchisee shall provide a copy of the translation to PLK on request. In such event, the English version of this Agreement or document or information shall alone govern all matters of interpretation of this Agreement.

 

[Signature Page Follows]

 

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This Agreement is executed by the Parties as of the day and year indicated on the first page of this Agreement.

  
  
SIGNED by  
Authorized Director  
For and on behalf of  
PLK APAC PTE. LTD.  
   
   
   
SIGNED by  
For and on behalf of  
PLKC HK INTERNATIONAL LIMITED  
   
   
   
SIGNED by  
For and on behalf of  
TH INTERNATIONAL LIMITED  
   
   
   
SIGNED by  
For and on behalf of  
PLKC INTERNATIONAL LIMITED  

 

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SCHEDULE 1 – List of Competitive Business

 

·  Chick-fil-A

·  Chicken Cottage

·  Dixie’s Fried Chicken

·  Kentucky Fried Chicken, KFC

·  Kennedy Fried Chicken

·  Buffalo Wings

·  Zaxby’s

·  Bojangles’

·  Wingstop

·  Church’s Chicken (or Texas Chicken)

·  El Pollo Loco

·  Chester’s International

·  Dicos

·  CNHLS

·  Pelicana

·  Nene Chicken

 

 

·  BHC

·  Cheogajip

·  Kyochon Chicken

·  Hosigi Two Chickens

·  Goopne Chicken

·  Chooks-to-go

·  California Fried Chicken

·  Oporto

·  Red Rooster

·  Bonchon Chicken

·  Nando’s

·  Chickeria

·  Chicken Treat

·  Papaye

·  Jollibee

·  Richeese Factory

·  Fried Chicken Master

·  Fat Daddy American Fried Chicken

·  Hot-Star Large Fried Chicken

·  Napoli Fried Chicken

 

 

 

 

CERTAIN PORTIONS OF THE EXHIBIT THAT ARE NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT TREATS AS PRIVATE OR CONFIDENTIAL HAVE BEEN REDACTED PURSUANT TO ITEM 601(b)(10)(iv) OF REGULATION S-K. [****] INDICATES THAT INFORMATION HAS BEEN REDACTED.

 

SCHEDULE 2 – Development Schedule

 

Subject to the terms of this Development Schedule and this Agreement:

 

(a)            Development Years 1-10. Master Franchisee agrees to develop, open, build, and operate, or license Franchisees to develop, open, build, and operate, on a cumulative basis, at least 1,700 Popeyes Restaurants in the Territory, by the end of Development Year 10, as follows (each a “Cumulative Opening Target”):

 

Development Year Cumulative Opening Targets
1 (from Original Commencement Date to December 31, 2023) [****]
2 (from January 1, 2023 to December 31, 2024) [****]
3 (from January 1, 2024 to December 31, 2025) [****]
4 (from January 1, 2025 to December 31, 2026) [****]
5 (from January 1, 2026 to December 31, 2027) [****]
6 (from January 1, 2027 to December 31, 2028) [****]
7 (from January 1, 2028 to December 31, 2029) [****]
8 (from January 1, 2029 to December 31, 2030) [****]
9 (from January 1, 2030 to December 31, 2031) [****]
10 (from January 1, 2031 to December 31, 2032) [****]