<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
For the fiscal year ended February 26, 1995 Commission file number 0-3833
----------------------- ----------
MORGAN'S FOODS, INC.
- - --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 34-0562210
- - ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
25201 Chagrin Boulevard, Suite 330, Beachwood, OH 44122
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (216) 360-7500
------------------------------
<PAGE> 2
MORGAN'S FOODS, INC.
PART I
ITEM 1. ACQUISITION OR DISPOSITION OF ASSETS.
On May 5, 1995 Morgan's Restaurants of Pennsylvania, Inc., ("Morgan's
PA") a Pennsylvania corporation, Morgan's Restaurants of New Jersey, Inc.,
("Morgan's NJ") a New Jersey corporation, both wholly owned subsidiaries of
Morgan's Foods, Inc., ("Morgan's") the registrant herein, completed the sale to
Kazi Foods of New Jersey, Inc., ("Kazi") a New Jersey corporation, all of
the assets of twenty-four KFC restaurants located in Central Pennsylvania and
New Jersey. This transaction was effected pursuant to an asset purchase and
sale agreement ("the Agreement") dated as of February 24, 1995 among Morgan's,
Morgan's PA, Inc., Morgan's NJ, Inc. and Kazi. Through the transaction Kazi
acquired all of the assets, properties and leases of the twenty-four KFC
restaurants for a cash purchase price of $10,625,000. Morgan's used the
proceeds primarily to pay down $9,750,000 of floating rate bank debt in advance
of scheduled maturities. Morgan's received net cash proceeds from the sale of
$294,000, after payment for various closing costs and buyouts of previously
leased equipment.
Under the Agreement, all obligations and liabilities which arose from
or in connection with the operation of the twenty-four KFC restaurants prior to
the closing of the sale transaction remain the obligation of Morgan's or its
subsidiaries. All leases related to the twenty-four KFC restaurants were
assigned to Kazi. Morgan's or one of its subsidiaries remains as the guarantor
on six of the restaurant leases for periods of time ranging from 1 to 15 years.
<PAGE> 3
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.
Morgan's Foods, Inc.
----------------------------
(Registrant)
Dated: May 22, 1995
------------------------ By: /s/ Kenneth L. Hignett
-------------------------
Kenneth L. Hignett
Senior Vice President,
Chief Financial Officer & Secretary
<PAGE> 4
MORGAN'S FOODS, INC.
FORM 8-K, ITEM 7(b)
PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
The following pro forma financial statements have been prepared to
reflect the sale of twenty-four KFC restaurants of Morgan's Foods, Inc.
("Morgan's") to Kazi Foods of New Jersey, Inc. ("Kazi") on May 5, 1995 for a
cash purchase price of $10,625,000.
The pro forma balance sheet has given effect to the transaction as if
it had occurred at the end of the prior fiscal year, February 26, 1995. The
pro forma statement of operations has given effect to the transaction as if it
had occurred at the beginning of the fiscal year ended February 26, 1995. In
connection with the sale, Morgan's expects to record an estimated gain, after
tax, of approximately $1.8 million, net of costs of the transaction. This
nonrecurring gain results directly from the transaction and will be included in
Morgan's results of operations within the next twelve months and accordingly
has not been considered in the pro forma statement of operations.
The following pro forma financial statements do not purport to be
indicative of the financial position or results of operations of Morgan's that
would have been reported had the transaction been effected on the dates
indicated, or which may be reported in the future.
<PAGE> 5
<TABLE>
<CAPTION>
MORGAN'S FOODS, INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
FEBRUARY 26, 1995
<S> <C> <C> <C> <C>
PRO FORMA
HISTORICAL ADJUSTMENTS NOTE PROFORMA
----------- ------------ ---- -----------
ASSETS
Current assets:
Cash................................. $ 1,993,000 $ 294,000 (1) $2,287,000
Marketable securities................ 359,000 359,000
Accounts receivable.................. 105,000 68,000 (2) 173,000
Inventories.......................... 298,000 298,000
Prepaid expenses..................... 299,000 299,000
Assets held for sale, net............ 8,354,000 (8,354,000) (3) 0
----------- ------------ -----------
11,408,000 (7,992,000) 3,416,000
----------- ------------ -----------
Property and Equipment:
Land.................................. 1,464,000 1,464,000
Buildings and improvements............ 5,224,000 5,224,000
Capitalized leases.................... 4,605,000 4,605,000
Machinery and equipment............... 7,433,000 327,000 (4) 7,760,000
Leasehold improvements................ 3,809,000 3,809,000
Construction in progress.............. 465,000 465,000
----------- ------------ -----------
23,000,000 327,000 23,327,000
Accumulated depreciation.............. 7,886,000 7,886,000
----------- ------------ -----------
15,114,000 327,000 15,441,000
Other assets........................... 990,000 990,000
Deferred taxes......................... 600,000 600,000
Excess of cost over amounts assigned
to net assets of acquired businesses.. 1,320,000 1,320,000
----------- ------------ -----------
$29,432,000 $(7,665,000) $21,767,000
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Current maturities of long-term debt.. $10,600,000 $(9,750,000) (5) $ 850,000
Current maturities of capital lease... 263,000 263,000
Accounts payable...................... 2,680,000 2,680,000
Accrued expenses...................... 1,593,000 278,000 (6) 1,871,000
----------- ------------ -----------
15,136,000 (9,472,000) 5,664,000
Long-term debt......................... 4,151,000 4,151,000
Long-term lease obligation............. 3,896,000 3,896,000
SHAREHOLDERS' EQUITY:
Common stock.......................... 17,817,000 17,817,000
Treasury shares....................... (3,000) (3,000)
Capital in excess of stated value..... 11,088,000 11,088,000
Accumulated deficit................... (22,653,000) 1,807,000 (7) (20,846,000)
----------- ------------ -----------
Total shareholders' equity............. 6,249,000 1,807,000 8,056,000
----------- ------------ -----------
$29,432,000 $(7,665,000) $21,767,000
========== ========== ===========
</TABLE>
See notes to pro forma financial statements
<PAGE> 6
<TABLE>
<CAPTION>
MORGAN'S FOODS, INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
YEAR ENDED FEBRUARY 26, 1995
PRO FORMA
HISTORICAL ADJUSTMENTS NOTE PRO FORMA
-------------- ------------ ---- -------------
<S> <C> <C> <C> <C>
Revenues............................. $53,295,000 $(17,964,000) (8) $35,331,000
Cost of sales:
Food, paper and beverage........... 17,282,000 (5,992,000) (9) 11,290,000
Labor and benefits................. 13,807,000 (4,374,000) (9) 9,433,000
Restaurant operating expenses........ 17,088,000 (5,886,000) (10) 11,202,000
General and administrative
expenses............................ 3,839,000 (642,000) (11) 3,197,000
------------ ----------- ----------
Operating income..................... 1,279,000 (1,070,000) 209,000
Interest Expense:
Bank debt and notes payable........ (1,430,000) 820,000 (12) (610,000)
Capital leases..................... (478,000) 117,000 (13) (361,000)
Other income......................... 208,000 208,000
------------ ---------- -----------
Net loss before taxes................ (421,000) (133,000) (554,000)
Provision for income taxes........... 4,000 0 4,000
------------ ------------ -----------
Net loss ............................ $ (425,000) $ (133,000) $ (558,000)
============ ============ ===========
Net loss per common share............ $ (.02) $ (.01) $ (.03)
============ ============ ===========
Weighted average common
shares outstanding.................. 17,806,837 - 17,806,837
============ ============ ===========
</TABLE>
See notes to pro forma financial statements.
<PAGE> 7
<TABLE>
<CAPTION>
MORGAN'S FOODS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS
The pro forma balance sheet and statement of operations have been prepared to
reflect the sale of twenty-four KFC restaurants.
<S> <C> <C>
(1) Reflects net cash received from sale.
Sales price $10,625,000
Expenses paid by seller prior to closing 67,000
Bank debt repayment (9,750,000)
Bank debt prepayment penalty and interest (119,000)
Purchase previously leased equipment (327,000)
Buyout of lease on sold equipment (100,000)
Closing costs (52,000)
Required improvements to sold restaurants (50,000)
---------------
$ 294,000
============
(2) Reflects amount due Morgan's from Kazi for certain inventory,
equipment and security deposits purchased as a separate agreement.
(3) Records the following assets sold and liabilities transferred:
Inventories $ 140,000
Property and equipment 13,303,000
Accumulated depreciation (6,462,000)
Excess of cost over amounts assigned
to net assets of acquired businesses 2,688,000
Other assets 98,000
Capital lease obligations (1,413,000)
----------
Assets held for sale $8,354,000
==========
(4) Represents purchase from proceeds of sale of previously leased
rotisserie equipment at certain retained restaurants.
(5) Bank debt repayment from proceeds of sale.
(6) Represents miscellaneous accrued expenses and state income taxes
related to the sale and reimbursement by buyer of expenses to be paid
by the seller prior to closing.
(7) Represents pro forma estimated gain on the sale of twenty-four KFC
restaurants.
(8) Reflects the elimination of revenue of the twenty-four KFC
restaurants.
(9) Reflects the elimination of cost of sales of the twenty-four KFC
restaurants.
</TABLE>
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<TABLE>
<CAPTION>
MORGAN'S FOODS, INC.
NOTES TO PRO FORMA FINANCIAL STATEMENTS CONT.
<S> <C>
(10) Reflects the elimination of the restaurant operating expenses of the
twenty-four KFC restaurants.
(11) Reflects the elimination of the general and administrative expenses
incurred in operating the twenty-four KFC restaurants.
(12) Reflects the elimination of interest expense at the interest rates
incurred during the year on the bank debt that was paid down with the
proceeds of the sale of the twenty-four KFC restaurants.
(13) Eliminates interest expense on previously capitalized leases that were
assumed by the buyer.
</TABLE>
<PAGE> 9
MORGAN'S FOODS, INC.
INDEX TO EXHIBITS
ITEM 14 (a) (3)
Exhibit
Number Exhibit Description
------- -------------------
2 Asset Purchase Agreement
<PAGE> 1
EXHIBIT 2
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
AND
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
AS SELLER
AND
KAZI FOODS OF NEW JERSEY, INC.
AS BUYER
<TABLE>
<CAPTION>
ARTICLE CONTENTS PAGE
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<S> <C> <C>
I Assets To be Purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
II Assumption of Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
III Purchase Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
IV Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . 7
V Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
VI Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
VII Conditions Precedent to Obligations . . . . . . . . . . . . . . . . . . . . . . 22
VIII Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
IX Eminent Domain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
X Miscellaneous Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
</TABLE>
<PAGE> 2
ASSET PURCHASE AND SALE AGREEMENT
THIS ASSET PURCHASE AND SALE AGREEMENT ("AGREEMENT") is
entered into on February 24, 1995. The parties to this Agreement are:
1. KAZI FOODS OF NEW JERSEY, INC. (hereinafter "BUYER"),
a New Jersey corporation, with a principal place of business located at 3671
Sunswept Drive, Studio City, California 91604.
2. MORGAN'S FOODS, INC. (hereinafter "MFI"), an Ohio
corporation, whose principal place of business is located at Signature Square,
Suite 330, 25201 Chagrin Boulevard, Beachwood, Ohio 44122.
3. MORGAN'S RESTAURANTS OF NEW JERSEY, INC. (hereinafter
"MRNJI"), a New Jersey corporation, whose principal place of business is
located at Signature Square, Suite 330, 25201 Chagrin Boulevard, Beachwood,
Ohio 44122.
4. MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
(hereinafter "MRPI"), a Pennsylvania corporation, whose principal place of
business is located at Signature Square, Suite 330, 25201 Chagrin Boulevard,
Beachwood, Ohio 44122.
MFI, MRNJI, and MRPI are collectively identified herein as "SELLER."
Buyer agrees to purchase from Seller, and Seller agrees to
sell to Buyer all of Seller's right, title and interest in and to the assets
and real property owned by Seller and used in connection with the operation of
nine (9) KFC restaurants located in New Jersey (hereinafter "NEW JERSEY
RESTAURANTS") and fifteen (15) KFC restaurants located in Pennsylvania
(hereinafter "PENNSYLVANIA RESTAURANTS") (the New Jersey Restaurants and the
Pennsylvania Restaurants are hereinafter collectively referred to as the
"RESTAURANTS"). The New Jersey Restaurants are more particularly described in
attached Exhibit A and the Pennsylvania Restaurants are more particularly
described in attached Exhibit B.
NOW, THEREFORE, in consideration of the mutual promises
contained herein the parties agree as follows:
ARTICLE I
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ASSETS TO BE PURCHASED
----------------------
Section 1.1 Description of Assets. Upon the terms and
subject to the conditions set forth in this Agreement, at the Time of Closing
(as hereinafter defined), Seller shall convey, sell, transfer, assign and
deliver to Buyer, and Buyer shall purchase and accept assignment from Seller,
free and clear of all security interests, liens, restrictions, claims,
encumbrances or charges of
<PAGE> 3
any kind (other than the Leaseholds and the Enduring Indemnities as hereinafter
defined and described), all respective right, title and interest of Seller, in
and to the assets, properties, real estate leaseholds, and rights of Seller of
every kind, nature and description, real, personal and mixed, tangible and
intangible, known or unknown, wherever located, used in connection with the
operation of the Restaurants, including, without limitation:
(a) The real property listed on Schedule 1.1(a), along
with all associated rights, alleys, ways, easements, appurtenances and
privileges and all buildings, fixtures and improvements located thereon
(hereinafter "REAL PROPERTY");
(b) All leases of real property and leasehold
improvements entered into by Seller (including all machinery, equipment,
furniture and fixtures leased by Seller in connection with the Shillington,
Pennsylvania Restaurant [the "SHILLINGTON LEASE"]) and listed on Schedule
1.1(b) (hereinafter "LEASEHOLDS");
(c) All machinery, equipment, furniture, fixtures, parts
and accessory equipment, signs, small tools, special tools, office supplies,
restaurant uniforms, promotional and advertising materials, and all other
tangible personal property (other than the Inventory and the Shillington Lease)
(but including the rotisserie equipment used at the Restaurants and now subject
to a rotisserie equipment lease ["REL"] with GECC described in Section 5.4
hereof) used in connection with the operation of, and in the ordinary course of
business located on the premises of, the Restaurants, including the items
described on Schedule 1.1(c) (hereinafter "PERSONAL PROPERTY");
(d) All inventory, including beverages, food, restaurant
supplies, cleaning supplies, and paper goods of, and in the ordinary course of
business located on the premises of the Restaurants in a minimum amount of
$121,000 by value at Seller's actual cost (hereinafter "INVENTORY");
(e) All licenses, permits, consents and certificates of
any government agency or body issued to or held by Seller necessary or
incidental to the operation of the Restaurants (to the extent the same are
transferable), including the items listed on Schedule 1.1(e);
(f) All warranties associated with the Real Property and
the Personal Property, together with all of Seller's rights in the twenty four
(24) franchise agreements with KFC Corporation (hereinafter "KFC")
(collectively, the "KFC FRANCHISES"), all of which are listed on Schedule
1.1(f) (these contracts, warranties, and the KFC Franchises are hereinafter
referred to collectively as the "ASSUMED CONTRACTS");
(g) All goodwill, if any, of the New Jersey Restaurants
and Pennsylvania Restaurants;
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<PAGE> 4
(h) Seller's right, if any, to use the telephone numbers
used by Seller at the Restaurants; and
(i) Seller's right to use the names now currently being
used under the KFC Franchises at the Restaurants, including, but not limited to
any "doing business as Kentucky Fried Chicken" (but specifically excluding (a)
the use of the legal name of each Seller and (b) the names "Morgan's" and
"Morgan's Foods").
All of the assets, properties and rights to be conveyed, sold, transferred,
assigned and delivered to Buyer by Seller pursuant to this Section 1.1 are
hereinafter collectively referred to as the "ASSETS."
Section 1.2. Excluded Assets. The Assets shall not
include Seller's accounts receivable and the vans and other equipment of Seller
listed on Schedule 1.2 which is not in the normal course of business located on
the premises of the Restaurants.
Section 1.3. Non-Assignment of Certain Assumed Contracts
and Leaseholds.
(a) Notwithstanding anything to the contrary in this
Agreement, to the extent that the assignment hereunder of any of the Assumed
Contracts or the Leaseholds (the Assumed Contracts and the Leaseholds being
referred to hereinafter collectively as the "DOCUMENTS") shall require the
consent of other parties (hereinafter "OTHER PARTIES") (or in the event that
any of the Documents shall be non-assignable), neither this Agreement nor any
action taken pursuant to its provisions shall constitute an assignment or an
agreement to assign any of the Documents if such assignment, or attempted
assignment, would constitute a breach thereof or result in the loss or
diminution thereof. Notwithstanding the foregoing, Seller shall be responsible
for obtaining the necessary consents to assignments from all Other Parties
(collectively, the "REQUIRED CONSENTS"); provided, however, that: (1) in each
such case, Buyer and Seller shall both use their best efforts to obtain the
consent of the reticent Other Party to an assignment and delegation of all
Seller's obligations to Buyer; (2) Buyer and Seller shall make all reasonable
concessions necessary to induce those reticent Other Parties to consent to the
assignment of all benefits and delegation of all duties in connection with all
Documents whereby Buyer is substituted for Seller, and Seller is completely
released from all Documents; and (3) Seller shall, at no cost to Seller, assist
Buyer in obtaining subordination and nondisturbance agreements and estoppel
certificates from the landlords of the Leaseholds which Buyer's source of
financing ("BUYER'S LENDER") may reasonably require.
(b) In the event a reticent Other Party consents to the
assignment of all benefits and delegation of all duties to Buyer in connection
with a Document but such Other Party insists on retaining any claim whatsoever
against Seller in connection with
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<PAGE> 5
that Document, then Buyer shall indemnify Seller against any liability
whatsoever in connection with that Document, all in accordance with
the requirements of Sections 8.2(e) and 8.3 of this Agreement.
(c) In the event a reticent Other Party withholds its
consent to the assignment of all benefits and delegation of all duties to Buyer
in connection with a Document which on its face is freely assignable and
delegable, then Buyer and Seller shall assign the benefits and delegate the
duties in connection with that Document from Seller to Buyer, and Buyer shall
indemnify Seller against any liability whatsoever in connection with that
Document, all in accordance with the requirements of Sections 8.2(e) and 8.3 of
this Agreement.
(d) In the event a reticent Other Party withholds its
consent to the assignment of all benefits and delegation of all duties to Buyer
in connection with a Document which by its express terms and applicable law is
non-assignable and non-delegable, Buyer and Seller must agree upon a management
agreement (hereinafter "MANAGEMENT AGREEMENT") for the post closing operation
of the Restaurant Assets affected by that Document. Any such Management
Agreement must: (1) not violate the terms of the reticent Other Party's
Document; and (2) provide that all Seller's obligations under that Document
shall be timely satisfied through the Document's termination date; and (3)
provide that all profits, if any, after timely satisfaction of Seller's
Document obligations, shall accrue to Buyer; and (4) express Buyer's
indemnification of Seller against any liability whatsoever in connection with
that Document, all in accordance with the requirements of Sections 8.2(e) and
8.3 of this Agreement. In the event that any necessary Management Agreement
cannot be fashioned with respect to that portion of the Assets associated with
any Restaurant location for which a Management Agreement is required, those
Assets shall be deleted from this Agreement and the aggregate dollar
consideration paid by the Buyer for the remaining Assets shall be reduced in
accordance with Section 3.7 hereof. Seller shall have no obligation to transfer
any interest in any Asset to Buyer associated with Leaseholds which can not be
assigned to Buyer.
(e) Buyer agrees that it shall affirm Buyer's "NET
TANGIBLE ASSETS" (which shall not be less than One Million Dollars ($1.0
million) and defined and computed under generally accepted accounting
principles) in a written balance sheet verified by Buyer's controlling
stockholder and addressed to Seller every six months after the Closing Date for
so long as Seller continues to be obligated to Other Parties on any assigned
Leaseholds or Management Agreements in accordance with the requirements of this
Section 1.3. Buyer also agrees that it shall timely satisfy all Seller
obligations to Other Parties in connection with Leasehold assignments or
Management Agreementsin accordance with the requirements of Section 1.3.
Buyer's agreement expressed in this Section 1.3(e) shall survive for as long
as any Seller obligations
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<PAGE> 6
to Other Parties survive on Leasehold assignments or Management
Agreements executed pursuant to this Section 1.3.
(f) The indemnities which Buyer extends to Seller
pertaining to Seller's assigned Leaseholds and Management Agreements in this
Section 1.3, which indemnities are more particularly described in Sections
8.2(e) and 8.3 hereinbelow are herein collectively referred to as Buyer's
"ENDURING INDEMNITIES." The Enduring Indemnities shall include (a) Seller's
assigned Leaseholds under which Seller remains liable; (b) any Buyer/Seller
Management Agreements; and (c) new leases between Buyer and Other Parties for
which Seller is in any way a guarantor or surety of Buyer's performance.
ARTICLE II
----------
ASSUMPTION OF LIABILITIES
-------------------------
Section 2.1 No Assumption of Liabilities. Except for the
Documents, all liabilities and obligations incurred by Seller or either of
them, or arising out of the operation of the Restaurants before the Time of
Closing, or otherwise accruing before the Time of Closing, and relating to the
Restaurants or the Assets, shall be the sole responsibility of Seller and not
Buyer and shall be promptly discharged when due by Seller. Notwithstanding the
foregoing, nothing contained in this Section 2.1 shall diminish Buyer's
obligation to Seller for Buyer's representations, warranties, covenants and
agreements set forth in this Agreement.
Section 2.2. Subject to Section 2.1 hereof, the Closing of
this transaction shall eliminate all of Seller's obligations associated with
the Assets sold or transferred to Buyer pursuant to this Agreement.
Notwithstanding the foregoing, nothing contained in this Section 2.2 shall
diminish Seller's obligation to Buyer for Seller's representations, warranties,
covenants and agreements set forth in this Agreement.
Section 2.3. Buyer and Seller each mutually agree that this
Agreement involves the purchase and sale solely of the Assets.
ARTICLE III
-----------
PURCHASE PRICE
--------------
Section 3.1. Consideration. The aggregate dollar
consideration ("PURCHASE PRICE") paid for all of the Assets (except those for
which provision is made in Section 3.3, Section 3.7 and Section 5.4 hereof)
shall consist of TEN MILLION SIX HUNDRED TWENTY FIVE THOUSAND DOLLARS
($10,625,000.00) in wired federal funds in full to Seller at the Time of
Closing and Buyer's assumption of the KFC Franchise obligations and Buyer's
assumption of the Seller's Leaseholds and Buyer's indemnities relating to the
Documents.
- 5 -
<PAGE> 7
Section 3.2. Post-Closing Inventory and Consideration.
Buyer and Seller shall count the Inventory associated with the Assets referred
to in Section l.l(d) hereof immediately after the close of business at the New
Jersey Restaurants and the Pennsylvania Restaurants on the day prior to
Closing. On the 5th day after Closing, Buyer shall pay to Seller an amount
equal to (a) the agreed-upon Inventory (as of the close of business on the day
prior to Closing) of a quality usable or salable in the ordinary course of
business of the New Jersey Restaurants and the Pennsylvania Restaurants, plus
(b) the amount of change funds on hand at the New Jersey Restaurants and the
Pennsylvania Restaurants (as of such close of business), plus (c) the amount of
all the New Jersey Restaurants and the Pennsylvania Restaurants utility and
Leasehold deposits (as of such close of business), except that such payment
shall not include any payment amount attributable to the initial $121,000.00
worth of agreed-upon Inventory. Five days after counting the Inventory, Seller
shall refund to Buyer an amount equal to any cost of Inventory which is less
than $121,000 existing as of the close of business on the day before Closing.
Inventory which Buyer shall purchase per the above shall consist only of: (a)
food in good condition; (b) food which is unexpired; (c) food which is moving
in the last 30 days; (d) food which is undamaged; (e) food which is
non-obsolete; (f) food which is able to be sold to Seller's customers; and (g)
restaurant and cleaning supplies (including paper goods) which are useable in
the ordinary course of business.
Section 3.3. Prorating of Leasehold Rent Utilities and Real
Property Taxes. All utility bills of the New Jersey Restaurants and the
Pennsylvania Restaurants shall be prorated between Buyer and Seller, as of the
Time of Closing. Monies due hereunder shall be paid by certified check no later
than six (6) weeks after the Time of Closing. All Real Property taxes and
Leasehold rents shall be pro rated between Buyer and Seller, as of the Time of
Closing and itemized and reconciled at the Closing.
Section 3.4. Real Property Conveyance Taxes and Personal
Property Sales Taxes. The Seller shall pay Seller's equal portion, and Buyer
shall pay Buyer's equal portion, of the Real Property conveyance taxes imposed
on the sale of the nine parcels of Real Property by the states of New Jersey
and Pennsylvania. On the date this Agreement is signed, both Buyer and Seller
have been advised by outside counsel to Seller that no Personal Property sales
or transfer taxes will be incurred by the Closing of this Agreement, and
neither Buyer nor Seller has agreed to pay any such taxes. All taxes required
to be paid pursuant to this Section 3.4 shall be paid in full at the Closing.
Section 3.5. KFC Transfer Fees and KFC Real Property and
Leasehold Construction Improvement Costs. Seller shall pay all KFC transfer
fees imposed as a condition precedent to KFC's approval of the transfer of the
KFC Franchises from Seller to Buyer. Seller shall irrevocably indemnify Buyer
from any obligation to pay such KFC imposed franchise transfer fees. In the
event KFC
- 6 -
<PAGE> 8
also imposes requirements for improvements, image enhancements, or otherwise
(hereinafter "EXHIBIT A IMPROVEMENTS") as a condition precedent to KFC's
approval of the transfer of the KFC Franchises from Seller to Buyer, Seller
shall pay for such improvements in an aggregate total maximum amount of Fifty
Thousand Dollars ($50,000.00) and Buyer shall pay for all such "Exhibit A"
Improvements in excess of Fifty Thousand Dollars ($50,000.00). Seller shall pay
the KFC Franchise transfer fees, if any, at Closing, from the proceeds Buyer
tenders at the Closing. All Exhibit A Improvements shall be itemized in writing
from KFC to Seller and reconciled as a credit, if any, to Buyer at Closing not
to exceed $50,000. Buyer agrees to execute all documents reasonably required
by KFC in connection with any Exhibit A Improvements associated in any way with
this Agreement.
Section 3.6. Allocation of Cash Consideration to Assets
Buyer Acquires. Prior to Closing, Buyer and Seller shall mutually agree on the
allocation of the cash consideration to the Assets sold and transferred
pursuant to this Agreement and which shall be consistent with the following
mandatory cash consideration allocation standards:
(a) Buyer and Seller shall not allocate more than Five
Million Dollars ($5,000,000.00) in the aggregate to the Pennsylvania
Restaurants; and
(b) Buyer and Seller shall not allocate more than Three
Hundred Thousand Dollars ($300,000.00) to each one of the nine Real Properties
contained among the combined New Jersey Restaurants and Pennsylvania
Restaurants.
Section 3.7. Purchase Price Adjustment. Buyer and Seller
recognize that some portion of the Assets may not be sold by Seller to Buyer
pursuant to the terms of Sections 1.3(d) and 9.1 hereof. In such event, the
Purchase Price shall be reduced by a formula to be agreed upon by Buyer and
Seller on or before the time of Closing. If Buyer and Seller do not agree on
such a formula before the Time of Closing, the Closing shall not occur.
ARTICLE IV
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REPRESENTATIONS AND WARRANTIES
------------------------------
Section 4.1. Buyer's Representation and Warranties. Buyer
hereby represents and warrants (which representations and
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warranties in this Section 4.1 shall survive for one (1) year following the
closing of this Agreement) to Seller that:
(a) Organization. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation, and has at least One Million Dollars ($1,000,000.00) in Net
Tangible Assets, defined and computed under generally accepted accounting
principles.
(b) Authorization. Buyer has all requisite corporate
power, capacity and authority to enter into this Agreement and perform its
obligations hereunder,including, without limitation, the execution and delivery
of this Agreement, the Enduring Indemnities and the other documents and
instruments to be executed in connection with Section 6.3 hereof. All
necessary and appropriate corporate action has been taken by Buyer with respect
to the execution and delivery of this Agreement, and this Agreement constitutes
a valid and binding obligation of Buyer enforceable in accordance with the
terms thereof. At Closing, Buyer shall be authorized to do business in the
states of Pennsylvania and New Jersey.
(c) No Conflicts. Neither the execution and delivery nor
the performance by Buyer of this Agreement will (i) conflict with or result in
a breach of any provision of the articles or certificate of incorporation or
code of regulations or by-laws of Buyer, or violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under
any note, bond, mortgage, indenture, deed of trust, license, franchise, permit,
lease, contract, or other agreements to which Buyer, or any of its properties
may be bound; (ii) to the best of Buyer's knowledge, violate any statute,
ordinance or regulation of any governmental authority applicable to Buyer or
any of its properties; or (iii) require any consent, approval or authorization
of, or notice to, or declaration, filing or registration with, any governmental
or regulatory authority, except filings in connection with the maintenance of
qualification to do business in jurisdictions. No consent, approval or
authorization of, or notice to, or declaration, filing or registration with,
any governmental or regulatory authority is necessary in connection with the
execution, delivery and performance of this Agreement by Buyer.
(d) Litigation. There is no claim, litigation, action,
suit, proceeding, investigation or inquiry, administrative or judicial, pending
or, to the knowledge of Buyer, threatened against Buyer, at law or in equity,
before any federal, state or local court or regulatory agency, or other
governmental authority, which might have an adverse effect on Buyer's ability
to perform any of the Buyer's obligations under this Agreement.
(e) Brokers and Finders. Neither Buyer nor its
stockholders, officers, directors or employees has employed any broker or
finder or incurred any liability for any brokerage fees,
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commissions, finders' fees or similar fees or expenses, and no broker or finder
has acted directly or indirectly for Buyer in connection with this Agreement or
the transactions contemplated hereby. No investment banking, financial advisory
or similar fees have been incurred or are or will be payable by it in
connection with this Agreement.
(f) Material Misstatements and Omissions. No
representation or warranty by Buyer in this Agreement, or in any document,
schedule, certificate, exhibit or other instruments furnished or to be
furnished by Buyer to Seller pursuant hereto, or at Closing pursuant to the
requirements of this Agreement, contains, or will contain, any materially
untrue statement, or, to the Buyer's best knowledge will, omit to state a
material fact necessary to make the statements contained therein not
misleading.
Section 4.2. Seller's Representation and Warranties. MFI,
MRNJI and MRPI hereby jointly and severally represent and warrant (which
representations and warranties shall survive for one (1) year following the
closing of this Agreement, unless specifically provided otherwise in the
subparagraphs of this Section 4.2) to Buyer that:
(a) Corporate Organization. Each of MFI, MRNJI and MRPI
is a corporation duly organized, validly existing and in good standing under
the laws of the State(s) of their incorporation, and each has all requisite
power and authority to own, lease and operate its properties and conduct its
business as now being conducted.
(b) Authorization. MFI, MRNJI and MRPI have all requisite
corporate power, authority and capacity to enter into this Agreement and
perform their respective obligations hereunder, including, without limitation,
the execution and delivery of this Agreement and the general warranty deed,
general conveyance, assignment and bill of sale, assignments of the Documents ,
and other documents and instruments to be delivered in accordance with Section
6.2 (collectively, the "CLOSING DOCUMENTS"). All necessary and appropriate
action has been taken by each of them with respect to the execution and
delivery of this Agreement and the Closing Documents and this Agreement
constitutes a valid and binding obligation of each of them enforceable in
accordance with its terms.
(c) Absence of Certain Changes and Events. The financial
statements and 52-week sales histories of the Seller and Restaurants for the
periods ending November 6, 1994 and attached as Schedule 4.2(c) are true,
accurate and complete in all material respects. Seller makes no
representations or warranties concerning the sales volume or profitability of
the Restaurants after Closing. The pre-Closing financial performance of the
Assets when they were under Seller's exclusive control is not a reliable
predictor of the future financial performance of the Assets. Since November 6,
1994 there has not been:
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(i) Any transaction entered into or carried out by
Seller in connection with the Assets sold or transferred
herein other than in the ordinary and usual course of Seller's
business;
(ii) Any borrowing or agreement to borrow funds;
any incurring of any other obligation or liability, contingent
or otherwise, except current liabilities incurred in the usual
and ordinary course of business; or any endorsement,
assumption or guarantee of payment or performance of any loan
or obligation of any individual or entity in connection with
the Assets sold or transferred herein;
(iii) Any material change made by Seller in the
methods of doing business or any change in the accounting
principles or practices of Seller or the method of application
of such principles or practices in connection with the Assets
sold or transferred herein;
(iv) Any mortgage, pledge, lien, security
interest, hypothecation, charge or other encumbrance imposed
or agreed to be imposed in connection with the Assets sold or
transferred herein;
(v) Any sale, lease or other disposition of, or
any agreement to sell, lease or otherwise dispose of, any of
the Assets, or any other properties or assets, which are sold
or transferred in connection with this Agreement, except
pursuant to this Agreement; and
(vi) Any labor disputes or disturbances materially
adversely affecting the business associated with the financial
condition of the Assets sold or transferred herein.
(d) Taxes. Seller has duly filed all federal, state and
local tax returns and reports required to be filed by it in connection with the
ownership and use of the Assets in the Restaurants, all such returns and
reports are true and correct, none of them has been amended, and all taxes,
assessments, fees and other governmental charges arising under them have been
fully paid or will be timely paid by Seller.
(e) Compliance With Law. Seller has complied, and is in
material compliance, with all applicable laws and statutes and with all rules,
regulations, policies or guidelines promulgated, or judgments, decisions or
orders entered, by any federal, state or local judicial authority relating to
Seller or its business or properties (collectively, the "APPLICABLE LAWS") in
connection with the ownership and use of the Assets in the Restaurants; Seller
has all licenses, permits, authorizations and approvals necessary to carry on
its business in connection with the ownership and use of the Assets in the
Restaurants; Seller has not been charged with, or
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given notice of any violation of, any of the Applicable Laws. All licenses,
permits, authorizations and approvals which Seller has in connection with the
use and ownership of the Assets in the Restaurants are currently valid and in
full force and effect.
(f) Franchise Rights. Seller is the sole owner of all
right, title and interest in and to the KFC Franchises transferred under this
Agreement, free and clear of all liens, claims, charges, equities, rights of
use, encumbrances and restrictions whatsoever. To the best knowledge of Seller,
the business of the New Jersey Restaurants and the Pennsylvania Restaurants as
conducted prior to the Time of Closing, and the ownership by Buyer of any of
the Restaurants and Assets, is not, or will not, be in contravention of any
trademark, copyright or other proprietary right of any third party except to
the extent that consent of KFC Corporation to the transactions contemplated
hereby is required under the KFC Franchises.
(g) Assumed Contracts and Commitments. There are no
contracts, leases, permits, franchise agreements or other agreements
(collectively, "CONTRACTS" for purposes of this subsection) binding upon Seller
with respect to the Assets sold or transferred herein or the business or
operations of the New Jersey Restaurants or the Pennsylvania Restaurants except
as set forth in Schedules 1.1(b), (e), (f) and (i). Prior to the Time of
Closing, Seller shall have delivered to Buyer true and complete original
executed copies of all contracts listed on the aforesaid Schedules and any
amendments thereof. All of such contracts are in full force and effect and are
valid, binding and enforceable in accordance with their respective provisions.
To the best of Seller's knowledge, Seller is not in material default nor has
there occurred an event or condition which, with the passage of time or giving
of notice (or both), would constitute a material default with respect to the
payment or performance of any obligation under such contracts, and Seller
possesses no knowledge of any basis upon which a claim of Seller's default
validly could be made. However, all Assets sold or transferred pursuant to this
Agreement are currently encumbered by a blanket lien held by Seller's bank,
Citicorp of North America (hereinafter "CITICORP") in the principal amount of
$21.9 million (the "EXISTING CITICORP LIEN"), which lien, as it relates to the
Assets, shall be released at the Time of Closing.
(h) Title to the Assets. Seller enjoys good and
marketable title to the Assets sold or transferred herein, in fee simple
absolute in the case of the Real Property, all of the Assets being free and
clear of all mortgages, pledges, liens, security interests, equities, and
restrictions of any nature whatsoever, except the Existing Citicorp Lien. By
virtue of the deliveries made at the Time of Closing, Buyer will obtain good
and marketable title to the Assets, in fee simple absolute in the case of the
Real Property, free and clear of all mortgages, pledges, liens, security
interests, equities, and restrictions of any nature whatsoever except Buyer's
Enduring Indemnities to Seller. The Assets sold or transferred herein are in
suitable condition and repair to permit
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the continued operation of the New Jersey Restaurants and the Pennsylvania
Restaurants consistent with past practices and operations. Seller shall
provide Buyer with UCC and judgment searches on the Assets within thirty (30)
days of the date hereof verifying the representation contained in this Section
4.2(h).
(i) Litigation. There is no material judicial claim,
litigation, action or lawsuit pending or, to the best knowledge of Seller,
threatened against MFI, MRNJI or MRPI or involving the Assets sold or
transferred herein, at law or in equity, before any federal, state or local
court, or judicial authority, which could have an adverse effect on: (1) the
ability of MFI, MRNJI or MRPI to perform their obligations under this
Agreement; or (2) on the consummation of the transactions contemplated by this
Agreement or (3) the ownership and use of the Assets after Closing. To the best
knowledge of Seller, there is no basis upon which such material judicial claim,
litigation, action, or lawsuit could be brought or initiated.
(j) No Conflict or Default. Neither the execution and
delivery of this Agreement or performance of this Agreement, by Seller will (i)
to the best of Seller's knowledge, violate any statute, regulation or ordinance
of any governmental authority, or (ii) conflict with or result in the breach of
any term, condition or provision of the articles of incorporation or by-laws of
MFI, MRNJI or MRPI or of any agreement, deed, contract, mortgage, indenture,
writ, order, decree, legal obligation or instrument to which Seller is a party
or by which any Seller, or any of the Assets sold or transferred herein, are or
may be bound, or constitute a default (or an event which, with the lapse of
time or the giving of notice, or both, would constitute a default) thereunder,
except for such conflicts, breaches, and defaults thereunder which in the
aggregate will not have a material adverse effect on Seller's ability to
perform under this Agreement, or (iii) result in the creation or imposition of
any lien, charge or pledge of any nature whatsoever with respect to the Assets
sold or transferred herein, or give to others any interest or rights, including
rights of termination, acceleration or cancellation, in or with respect to the
Assets sold or transferred herein, except Buyer's Enduring Indemnities to
Seller.
(k) Brokers; Finders. The transactions contemplated
herein were not submitted to MFI, MRNJI or MRPI by any broker or other person
entitled to a commission or finder's fee thereon and were not, with the consent
of any of them, submitted to Buyer by any broker or person, and none of the
actions of MFI, MRNJI, or MRPI have given rise to any valid claim by any person
for a brokerage commission, finder's fee or like payment against any of the
parties hereto or any of the Assets sold or transferred herein.
(l) Inventory. All Inventory associated with the
Restaurants is owned by Seller and currently usable or salable in the ordinary
course of the business of the Restaurants.
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(m) Real Property, Leasehold Improvements, Personal
Property Quality Warranties. The Seller warrants that all HVAC equipment in all
of the New Jersey Restaurants and Pennsylvania Restaurants is in good working
order and shall remain so for a period ending thirty (30) days after the
Closing except for damage caused by abuse, acts of God or occurrence covered by
Buyer's insurance. Except for the thirty (30) day HVAC warranty, Seller
explicitly disclaims all warranties pertaining to the operation of all Personal
Property sold or transferred pursuant to this Agreement, including but not
limited to, the Warranty of Merchantability of any item of Personal Property or
the Warranty of Fitness For A Particular Use of any item of Personal Property.
Except for the thirty (30) day HVAC Warranty, all Personal Property, buildings
or improvements on Real Property, and Leasehold improvements are sold as is,
and WITHOUT WARRANTY of quality. Seller does warrant that as of the date this
Agreement is signed, all Personal Property meets or exceeds KFC's standards and
that all Personal Property located in each Restaurant is in good working order
and sufficient to operate such Restaurant in accordance with past practice.
(n) Environmental Matters. Except as disclosed in
Schedule 4.2(n):
(i) To the best of Seller's knowledge, there are
no outstanding violations of any federal, state, or local
environmental law, rule, order, decree, regulation, ordinance
or rule of common law, arising out of the use by Seller of the
Assets or the operation of the Restaurants by Seller thereat.
(ii) None of the Restaurants has ever been used by
Seller or, to the best of Seller's knowledge, by any other
person to treat, store, refine, process or dispose of any
material quantity of hazardous waste, hazardous substance, or
toxic substance (as those terms are defined under CERCLA, 42
U.S.C. 9601 et seq., RCRA, 42 U.S.C. 6901 et seq., or TSCA, 15
U.S.C. 2401 et seq.), petroleum or its products or
derivatives (including but not limited to gasoline and waste
oil), hydraulic fluid, or any other substance, material or
waste which poses or may pose if improperly handled, stored,
treated or disposed of a present or potential harm threat to
human health or the environment (collectively, "HAZARDOUS
SUBSTANCES"); and there has been no material release or
threatened release of any Hazardous Substance at, on or under
any of the Restaurants.
(iii) To the best of Seller's knowledge, there are no
underground storage tanks currently at or under any of the
Restaurants, and to the best of Seller's knowledge there has
never been any underground storage tanks at or under any of
the Restaurants.
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(iv) To the best of Seller's knowledge, none of
the Restaurants contain friable asbestos or include any
transformers, capacitators or other equipment containing PCBs.
(v) To the best of Seller's knowledge, there is
no substance currently present at the Restaurants or in the
soil thereunder which poses a material present or potential
environmental or human health hazard, including without
limitation any formaldehyde, radon gas, lead-based paint,
solvents or hazardous chemicals.
(vi) The representation contained in this Section
4.2(n) shall survive Closing for a period of the three (3)
years.
(o) Condition of Restaurants. To the best of Seller's
knowledge and except as disclosed in Schedule 4.2(o), none of the following are
present with respect to any of the Assets or any portion thereof:
(i) any defects or malfunctions in any of the
following: interior walls, ceilings, floors, exterior walls,
insulation, roof, windows, doors, foundation, slabs,
driveways, sidewalks, walks, electrical systems, plumbing,
sewers, septic tanks, structural components.
(ii) Features of the property shared in common
with adjoining landowners, such as walks, fences and driveways.
(iii) Any encroachments, easements, or similar
matters of title that may affect any of the Leaseholds.
(iv) Room additions, structural modifications or
other alterations or repairs made without necessary permits.
(v) Landfill (compacted or otherwise).
(vi) Any settling from any cause or slippage,
sliding, or other soil problems.
(vii) Flooding, drainage or grading problems.
(viii) Damage to the property or any of the
structures from fire, earthquake, floods or landslides.
(ix) Any zoning violations, nonconforming uses,
or violations of "setback" requirements.
(x) Neighborhood noise problems or other
nuisances.
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(xi) Any "common area" in undivided interest with
others.
(xii) Any notices of abatement or similar citations.
(xiii) Any dispute with any landlord of the
Leaseholds pertaining to Seller's right to
continued quiet enjoyment of the
Leaseholds.
(p) INSURANCE. Seller has maintained and now maintains
(i) insurance on all of the Assets used in the operation of the Restaurants of
a type customarily insured against loss or damage by fire or other casualty
(including extended coverage) and (ii) insurance protection against all
liabilities, claims, and risks arising out of or relating to the ownership and
use of the Assets in connection with the operation of the Restaurants against
which it is customary to insure. All such policies are valid, in good
standing, and in accordance with all applicable provisions and requirements of
the Documents.
(q) NO EMPLOYMENT CONTRACTS. There are no written
contracts of employment between MRNJI or MRPI and any of their employees,
officers or agents. All employees of MRNJI and MRPI are employed under oral
contracts of employment at will.
(r) CONDEMNATION OR OTHER LITIGATION. Seller has no
knowledge of any threatened or pending condemnation proceeding or other legal
proceeding, action or litigation relating to or otherwise affecting Seller
which has a material adverse effect on the Assets and/or any or all of the
Assets, nor has Seller any knowledge that any such action is presently
contemplated.
(s) SUBDIVISION. Each parcel of the Real Property has
been subdivided from all adjoining lands.
(t) TAX PARCEL. Each parcel of the Real Property
constitutes, and is listed on the tax records of its county as a separate and
distinct legal and tax parcel.
(u) MATERIAL MISSTATEMENTS OR OMISSIONS. No
representation or warranty by Seller in this Agreement, or in any document,
schedule, certificate, exhibit, or other instrument furnished or to be
furnished by Seller to Buyer pursuant hereto, or at Closing pursuant to the
requirements of this Agreement, contains or will contain any materially untrue
statement or, to the Seller's best knowledge will omit to state a material fact
necessary to make the statements contained therein not misleading.
ARTICLE V
---------
CONVENANTS
----------
SECTION 5.1. CONDUCT OF BUSINESS OF SELLER IN CONNECTION WITH
THE ASSETS SOLD OR TRANSFERRED HEREIN PRIOR TO THE TIME OF
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CLOSING. Seller agrees that on and after the date hereof and prior to the Time
of Closing, and except as otherwise consented to or approved by an authorized
officer of Buyer in writing, or required by this Agreement:
(a) The business of Seller in connection with the
ownership and use of the Assets in the Restaurants shall be conducted in the
ordinary course consistent with past practice;
(b) Seller will manage the ownership and use of the
Assets in the Restaurants using Seller's best efforts to preserve intact the
business organization associated with the Restaurants and Assets sold or
transferred, to retain the present service of the employees associated with the
Restaurants and Assets sold or transferred and to preserve intact the goodwill
of the suppliers, customers and others whose business relationships are
associated with the Restaurants and Assets sold or transferred herein; and
(c) Seller will not take, agree to take, or knowingly
permit to be taken, any action or do or knowingly permit to be done anything in
the conduct of the business associated with the ownership and use of the Assets
in the Restaurants, herein, which would be contrary to, or in breach of, any of
the terms or provisions of this Agreement or which would cause any of the
representations contained herein to be or become untrue in any material
respect.
SECTION 5.2. ACCESS TO RECORDS. From and after the date of
this Agreement and the Time of Closing, Seller shall make or cause to be made
available to Buyer for examination, all financial statements, books of account,
contracts, agreements, commitments, records, reports, correspondence and
documents of every character relating to the Restaurants, and shall permit
Buyer and its representatives, attorneys, accountants and agents to have access
to the same at all reasonable times, including, without limitation, access to
such books and records as are necessary or appropriate to the scrutiny of
relevant financial statements, reports regarding the condition of the Real
Property and Leaseholds, correspondence from any government agency relating to
the Restaurants, and access to review or photocopy, at Buyer's expense, all
employer or employee records documenting the hours of employment, taxes
withheld and employee compensation for the New Jersey Restaurants' or
Pennsylvania Restaurants' employees, which include, without limitation, all
payroll tax returns, payroll registers, employer copies of Form W-2, and time
cards. Seller agrees to maintain said original records and data, at its
expense, after the Closing for the period required by applicable laws. If
Buyer's examination of Seller's records prior to the Time of Closing reveals a
material item which should appear on a schedule or any other material
discrepancy relating to Seller's duties under this Agreement, Buyer shall
promptly disclose its discovery to Seller in order to provide Seller with a
fair opportunity to cure the Seller's omission or discrepancy.
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SECTION 5.3. TREATMENT OF EXISTING EMPLOYEES. Within a
reasonable time before the date set for Closing, Seller shall make available to
Buyer a list of all employees of Seller employed in connection with the
Restaurants, including with respect to each employee, his or her name, title,
date of hire, and current hourly wage or salary. Buyer shall not be obligated
to offer employment to any of Seller's employees, but Buyer shall be free to
offer employment to such of Seller's employees (if any) as Buyer may in its
sole discretion determine, upon such terms and conditions as Buyer deems
appropriate (any such employees who are offered and who accept employment with
Buyer being herein referred to as "HIRED EMPLOYEES"). Except as the parties
may otherwise agree, Seller shall terminate all of its employees effective as
of the Time of Closing (as hereinafter defined) and shall give such notices and
perform such obligations as may be required by law or by agreement in
connection therewith. Seller shall be solely responsible for and shall satisfy
all of Seller's obligations to their employees (including such of their
employees, if any, as become Hired Employees) on account of their employment by
Seller. Buyer shall have no liability for accrued wages (including salaries
and commissions), severance benefits, "COBRA" benefits, vacation pay, pension
and profit-sharing contributions, or other forms of compensation or welfare
benefits of any type or nature on account of the employment of any such
employees by Seller, and Seller shall indemnify and hold Buyer harmless from
and against any claim, demand, liability, cost, or expense (including
reasonable attorneys' fees) in any way arising out of any employment
relationship between Seller and any of their employees (including those of
their employees, if any, as become Hired Employees).
SECTION 5.4. ROTISSERIE EQUIPMENT LEASE. Prior to Closing,
Seller shall make timely payments on its REL to General Electric Credit Corp.
("GECC"). On or before Closing, Seller shall pay off the REL so that all of
the equipment associated with the REL applicable to the Restaurants shall be
conveyed to Buyer at Closing without any lien, lease or encumbrance. At
Closing, Buyer agrees that it shall reimburse Seller its costs to terminate the
REL, based on the percentage which the total REL buy-out cost bears to the
total REL original purchase cost, which percentage shall be applied to the
original cost of all the rotisserie equipment located on the premises of all of
the Restaurant locations; provided that Buyer's obligation to reimburse Seller
for the REL shall not exceed $192,000.
SECTION 5.5. KFC APPROVAL. Seller and Buyer mutually
recognize that on or prior to the Time of Closing KFC must elect to waive KFC's
right to acquire the KFC Franchises after KFC has been: (1) furnished a copy of
this Agreement; and (2) offered, in writing, a thirty (30) day period in which
to acquire the KFC Franchise upon the same or equivalent terms and conditions
specified in this Agreement for Buyer to acquire the KFC Franchises. Seller
and Buyer mutually recognize that on or prior to the Time of Closing Buyer, as
the proposed assignee or transferee of the KFC Franchises, must agree in a
writing satisfactory to KFC to assume all of the obligations of the Seller
under each of the KFC Franchises and to demonstrate to KFC's satisfaction that
Buyer meets in all respects KFC's standards
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applicable to new franchisees and the "Control Person" as that term is
described in Section 16 of the KFC Franchises. Buyer covenants to Seller that
Buyer is fully aware of all KFC contingencies which may prevent the Closing of
this Agreement and Buyer and Seller presently have no knowledge of any reason
which might cause KFC to reject Buyer as a satisfactory KFC Franchises assignee
or transferee. Seller covenants that Seller shall direct notice of the
existence of this binding Agreement to KFC. Seller shall keep Buyer advised of
KFC's reaction to that notice.
SECTION 5.6. BULK SALE. To the extent permitted by
Buyer's Lender, Buyer and Seller waive compliance with the Bulk Sale Notice
Laws and Seller hereby agrees to indemnify Buyer in relation thereto.
SECTION 5.7. RISK OF LOSS; INSURANCE. The risk of loss or
damage to the Assets shall remain with Seller until Closing. If there occurs
before Closing any loss, casualty, or other damage to or destruction of any
portion of the Assets or Restaurants, Buyer at its option may elect to: (i)
close the transactions contemplated by this Agreement, in which event (A)
Seller shall assign to Buyer at the Closing any and all proceeds and/or rights
to proceeds (including business interruption insurance) under available
insurance and (B) the Purchase Price shall be reduced by the aggregate
deductible thereunder; or (ii) if in Buyer's reasonable judgment, the insurance
proceeds available to Buyer are not adequate, require Seller promptly to cause
the Assets lost or damaged to be replaced or, as the case may be, repaired or
restored to their original condition, in which event the Closing applicable to
the damaged Asset shall be extended for such period as may be reasonably
necessary to enable Seller to fulfill their obligations hereunder.
SECTION 5.8. DOCUMENTS AND DATA. Within two (2) days after
the execution hereof, Seller shall deliver or make available to Buyer the
originals or copies of (a) all leases, subleases, contracts and agreements
relating to the Leaseholds, the Assumed Contracts and the KFC Franchises, and
(b) all correspondence and reports relating to environmental and health issues
relating to the Restaurants.
SECTION 5.9. PRESERVATION OF BUSINESS. At all times prior
to Closing, Seller shall use its best efforts to avoid depleting the usefulness
of the Assets in connection with the operation of the Restaurants. Thus Seller
shall use its best efforts, consistent with Seller's obligations in this
Agreement: (1) to avoid alienating Seller's employees who work with the
Assets; (2) to avoid alienating suppliers, other individuals, and Other Persons
who have significant business relations in connection with the Assets; (3) to
maintain Inventory levels consistent with prudent business practice; (4) to
maintain the Assets in good repair and condition, normal wear and tear
excepted; (5) to maintain the insurance policies and bonds currently associated
with the Assets in a fashion consistent with current practice, and to notify
Buyer of material pre-Closing cancellations or lapses, if any, in such bonds
and insurance. Through the Time of Closing
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Seller shall utilize the Assets only in the ordinary course, diligently and in
substantially the same manner in which Seller utilized the Assets prior to the
execution of this Agreement.
SECTION 5.10. INSPECTION OF RESTAURANTS. On or prior to
March 15, 1995, ("INITIAL INSPECTION PERIOD") Buyer and its agents,
contractors, architects, engineers and employees shall have the right to
examine and study the Assets located in the Restaurants and enter thereupon (at
their own risk and cost) for any lawful purpose including, but not limited to,
the conduct of tests, investigations, studies and the like (including, but not
limited to, an environmental analysis), so long as the same does not interfere
with the business of Seller. Buyer shall indemnify Seller from all claims,
damages or liability of any kind resulting from acts of Buyer in connection
with the inspections performed by Buyer and its agents of the Assets located in
the Restaurants. Buyer shall provide Seller with a report of its inspections
by March 22, 1995. Seller shall then have two (2) weeks to make any repairs or
corrections deemed necessary by Buyer; provided that Seller shall not be
obligated to make any Exhibit A Improvements or any image-enhancement
improvements. (Buyer and Seller may mutually agree to extend or alter the
aforesaid dates.) If Seller fails to make such repairs or corrections Buyer
and Seller shall agree upon an adjustment to the Purchase Price. Buyer shall
be entitled to a final walk through of the Restaurants within 48 hours of the
Time of Closing to make sure the condition of the Assets which were observed
during the Initial Inspection Period are substantially the same (subject to any
repairs agreed upon by Buyer and Seller).
ARTICLE VI
CLOSING
SECTION 6.1. TIME OF CLOSING. This transaction shall close
and all deliveries to be made at the Time of Closing shall take place at 11:00
a.m., Eastern Standard Time, on the fifth (5th) day after all conditions
precedent in Article VII are satisfied, at the principal place of business of
Buyer's counsel, or at such other place, date or time as may be agreed upon
from time to time in writing by the parties (the "TIME OF CLOSING"); provided
that if the Time of Closing has not occurred by the sixtieth (60th) day after
the execution hereof, this Agreement shall automatically terminate. The
"CLOSING" shall mean the deliveries to be made by the parties at the Time of
Closing in accordance with this Agreement. Buyer shall take possession of the
New Jersey Restaurants and Pennsylvania Restaurants and commence operation of
the New Jersey Restaurants and Pennsylvania Restaurants as soon as the Purchase
Price has been received by Seller.
SECTION 6.2. DELIVERIES BY SELLER. At or prior to the Time
of Closing, Seller shall deliver to Buyer, all duly and properly executed, the
following:
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(a) A General Warranty Deed for each parcel of Real
Property itemized on attached Schedule 1.1(a) conveying marketable, insurable,
fee simple title to the Real Property to Buyer free and clear of all liens and
encumbrances except: (i) zoning ordinances and regulations which do not
prohibit or restrict the present use of such property; (ii) easements,
covenants, conditions, reservations and restrictions of record, if any, which
do not interfere with the present use of such Real Property. Each General
Warranty Deed shall be accompanied by a title insurance commitment (which will
be followed after Closing by a title insurance policy) guarantying Buyer's fee
title to each of the nine parcels of Real Property in accordance with Section
7.1(d) hereof. All title policies shall be paid for by Seller.
(b) A General Conveyance, Assignment and Bill of Sale, in
a form attached hereto as Schedule 6.2(b), Seller, conveying, selling,
transferring and assigning to Buyer title to the Assets other than the Real
Property, free and clear of all security interests, liens, or equities
whatsoever except those securing liabilities assumed by Buyer pursuant to this
Agreement such as the Buyer's Enduring Indemnities to Seller.
(c) Duly executed written originals of each of the
Required Consents, including consents of Seller's Landlords for the assignment
of the Leaseholds identified in Section 1.1(b).
(d) Resolutions of the directors of MFI, MRNJI and MRPI
authorizing the execution and delivery of this Agreement by Seller and the
performance of the obligations hereunder, certified by each corporation's
respective Secretary.
(e) The written consent of KFC, obtained by Seller, to
the transfer of the KFC Franchises from Seller to Buyer including KFC's written
itemization of the transfer fees, if any, which KFC imposes as a condition
precedent to KFC's approval of the KFC Franchises transfer.
(f) Any existing third-party warranties and guaranties in
connection with the Real Property and the Personal Property;
(g) Copies of all maintenance and repair records in the
possession of Seller;
(h) A FIRPTA Non-Foreign Person Certification;
(i) All keys to the Restaurants in the possession of the
Seller and its agents and employees;
(j) A certificate that all representations and warranties
of Seller are true and correct in all material respects on and as of the Time
of Closing;
(k) A certificate or other statement from Seller and
Seller's insurance carrier or agent that Seller has, at all times
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prior to the Closing, owned and maintained an umbrella commercial comprehensive
general liability insurance policy, with coverage of at least $21.0 million,
that insured Seller for bodily injury and property damage associated with the
Restaurants on an occurrence basis for the three year period prior to Closing.
(l) An opinion of outside counsel to Seller as to due
authorization and approval and enforceability in form and content reasonably
satisfactory to Buyer and its counsel; and
(m) Such other documents and instruments as counsel for
Buyer and Seller agree (acting reasonably and in good faith) are necessary to
consummate the transactions contemplated hereby.
SECTION 6.3. DELIVERIES BY BUYER. At or prior to the Time
of Closing, Buyer shall deliver to Seller, all duly and properly executed, the
following:
(a) The purchase price consideration, and other
documentation satisfactory to Seller, identified in Section 3.1, supra.
(b) The documentation, satisfactory to Buyer and Seller,
for the termination of all Seller obligations under the REL, all in conformity
with Section 1.3 and 5.4, supra;
(c) All Other Party written consents to assignment of
benefits and delegation of duties, incorporating Buyer's Enduring Indemnities
to Seller;
(d) All assignments of benefits and delegation of duties
agreements between Buyer and Seller pertaining to assignable and delegable
Assets for which Other Parties withheld their consent, incorporating Buyer's
Enduring Indemnities;
(e) All Management Agreements, if any, executed between
Buyer and Seller, pertaining to non-assignable, non-delegable Assets identified
pursuant to Section 1.3, including Buyer's Enduring Indemnities to Seller;
(f) Buyer's financial statement, conclusively
establishing that Buyer possesses One Million Dollars ($1,000,000.00) in
Tangible Net Worth supported by affidavits in a form acceptable to Seller from
Buyer's majority shareholder, which shall confirm the accuracy of Buyer's
current financial statement and documents Buyer's future commitments to
maintain such Tangible Net Worth for so long as Buyer is obligated on any
Enduring Indemnities to Seller;
(g) A true copy of Buyer's applicable loan documentation
conclusively establishing the Buyer's Lender's willingness to allow Seller to
reenter and operate as a Restaurant any Asset which is encumbered by Buyer's
Enduring Indemnities to Seller in the event Buyer defaults on such Enduring
Indemnities;
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<PAGE> 23
(h) Resolutions of the directors of Buyer authorizing the
execution and delivery of this Agreement by Buyer and the performance of the
obligations hereunder, certified by Buyer's Secretary;
(i) Written notice from KFC that Buyer is an approved
assignee transferee of the KFC Franchise pursuant to Section 16 of the KFC
Franchise;
(j) Written confirmation that KFC's Exhibit A
Improvements have been itemized as required pursuant to Section 3.5 supra.
(k) Buyer's certificate that all Representations and
Warranties of Buyer are true and correct in all material respects on and as of
the Time of Closing;
(l) An opinion of counsel to Buyer as to the due
authorization and approval, and enforceability in form and content reasonably
satisfactory to Buyer and its counsel of this Agreement against Buyer including
Buyer's counsel's opinion that none of the Enduring Indemnities Buyer issues to
Seller in this Agreement conflict in any way with Buyer's obligations to
Buyer's Lender; and
(m) Such other documents and instruments as counsel for
Buyer and Seller agree (acting reasonably and in good faith) are reasonably
necessary to consummate the transactions, contemplated hereby.
SECTION 6.4. FURTHER ASSURANCES. On or after the Time of
Closing, Buyer and Seller (each acting with commercial reasonableness and in
good faith) each prepare, execute and deliver, such further instruments of
conveyance, sale, assignment or transfer, and shall take or cause to be taken
such other or further action as either Buyer or Seller shall reasonably request
at any time, or from time to time, in order to perfect, confirm or evidence in
Buyer title to all or any of the Assets sold or transferred pursuant to this
Agreement, or Seller's release from all obligations associated with any of the
Assets sold or transferred pursuant to this Agreement, or to consummate the
terms and conditions of this Agreement.
ARTICLE VII
CONDITIONS PRECEDENT TO OBLIGATIONS
SECTION 7.1. CONDITIONS TO OBLIGATIONS OF BUYER. Each and
every obligation of Buyer to be performed at the Closing shall be subject to
the satisfaction, on or before the Time of Closing, of the following conditions
(unless waived in writing by Buyer):
(A) REPRESENTATIONS AND WARRANTIES. The representations
and warranties of Seller set forth in Section 4.2 of this Agreement shall be
true and correct in all material respects when made and
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shall be true and correct in all material respects at and as of the Time of
Closing as if such representations and warranties were made as of such date and
time.
(B) CONSENTS. Seller shall have obtained and delivered to
Buyer the Required Consents of landlords or other acceptable agreements that
are reasonably requested by Buyer's Lender.
(C) PERFORMANCE OF AGREEMENT. All covenants, conditions
and other obligations under this Agreement which are to be performed or
complied with by Seller on or before the Time of Closing shall have been fully
performed and complied with in all respects on or prior to the Time of Closing,
including the delivery of the fully executed instruments and documents in
accordance with Section 6.2.
(D) TITLE INSURANCE. Fee simple title in and to the Real
Property shall be marketable, insurable at standard rates on an ALTA Form B
policy of owner's title insurance (current revision), and free and clear of all
liens, encumbrances, leases, easements, covenants, conditions, and
restrictions, except for those matters approved in writing by Buyer and Buyer's
Lender (the "PERMITTED EXCEPTIONS"). Within thirty (30) days of the date
hereof, Seller shall provide Buyer with a report of title for each Real
Property, together with copies of all items and instruments listed as
exceptions (objections) to the title (all of the foregoing being hereinafter
referred to collectively as the "TITLE DOCUMENTS"). Seller agrees that upon
Buyer's written request prior to Closing, Seller shall, at its sole expense,
take all necessary steps prior to Closing to promptly clear the title of the
Real Property of any exceptions, liens, encumbrances, leases, restrictions or
other matters that may affect either title to or Buyer's intended use of the
Real Property, other than the Permitted Exceptions.
(E) FINANCING CONTINGENCY. On or before the 30th day
after the execution hereof, Buyer shall obtain a commitment letter from Buyer's
Lender to provide financing for the purchase of the Assets and provide Seller
with a copy thereof. The purchase of the Assets is subject to obtaining a loan
by Buyer from Buyer's Lender on terms and conditions acceptable to Buyer.
(F) FRANCHISE AGREEMENTS. KFC shall have given Buyer
notice of its acceptance of the assignment of the KFC Franchises to Buyer, or
such other form of franchise documentation as KFC requires, so long as KFC
shall act within its rights under Section 16 of the KFC Franchises.
(G) SUBORDINATION AND NONDISTURBANCE. Each landlord
under the Leaseholds and each mortgagee or other holder (if any) of an
encumbrance otherwise superior to the purchase money lien of Buyer's Lender
securing the financing contemplated by section 7.1(e) hereof shall have
executed and delivered such subordination
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and nondisturbance agreements as may be required by and in form and substance
satisfactory to Buyer's Lender.
(H) ESTOPPEL CERTIFICATES. Each landlord under the
Leaseholds shall have executed and delivered such estoppel certificates as may
be required by and in form and substance satisfactory to Buyer's Lender.
(I) RELEASE OF LIENS. Citicorp shall have given Seller
written notice that it will release the Assets from the Existing Citicorp Lien
at the Time of Closing.
(J) CONDITION OF ASSETS. The Assets shall be in the same
condition and repair as on the date hereof, reasonable wear and tear excepted,
and in a condition necessary to operate the Restaurants.
(K) NO ADVERSE CHANGE. There will not have been any
material adverse change in the financial condition, business, prospects or
future business of Seller which would impact Seller's ability to transfer the
Assets to Buyer, or any event which may, in the future, cause such a change.
(L) NO ADVERSE PROCEEDINGS. There shall be no pending or
threatened claim, action, litigation or proceeding, judicial or administrative,
or governmental investigation against Seller involving any of the Assets.
SECTION 7.2. CONDITIONS TO OBLIGATIONS OF SELLER. Each and
every obligation of Seller to be performed at the Time of Closing shall be
subject to the satisfaction, on or before such time, of the following
conditions (unless waived in writing by Seller):
(A) REPRESENTATIONS AND WARRANTIES. Buyer's
representations and warranties set forth in Section 4.1 of this Agreement shall
have been true and correct in all material respects when made and shall be true
and correct in all material respects at and as of the Time of Closing as if
such representations and warranties were made as of such time and date.
(B) PERFORMANCE OF AGREEMENT. All covenants, conditions
and other obligations under this Agreement which are to be performed or
complied with by Buyer shall have been fully performed and complied with in all
respects on or prior to the Time of Closing, including the delivery of the
funds and the fully executed instruments, documents, and indemnities to Seller
in accordance with Sections 1.3, 3.1, 5.4, 8.2(e) and 8.3.
(C) FINANCING CONTINGENCY. Buyer shall have received and
delivered to Seller a commitment for financing as set forth in Section 7.1(e)
within thirty (30) days of the date of execution hereof.
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(D) APPROVALS AND WAIVERS. KFC shall have given Buyer
and/or Seller written approval of Buyer as the assignee transferee in
accordance with Section 16 of the KFC Franchisees, KFC's rights to acquire the
KFC Franchise are terminated, and Citicorp has approved the Closing in writing.
(E) NO MATERIAL ADVERSE PROCEEDING. At the Closing there
is no pending or threatened claim, action, litigation or proceeding, judicial
or administrative or governmental investigation against Buyer, or Buyer's
majority shareholder for the purpose of enjoining or preventing the
consummation of this Agreement, otherwise claiming that this Agreement or the
consummation hereof is illegal, or which tends to materially diminish the true
economic value of the Buyer's Enduring Indemnities to Seller pursuant to
Section 1.3 and Sections 8.2(e) and 8.3 of this Agreement.
ARTICLE VIII
INDEMNIFICATION
SECTION 8.1. INDEMNIFICATION BY SELLER.
(a) Each of Seller covenants and agrees jointly and
severally to indemnify and defend Buyer and hold Buyer harmless from and
against any and all losses, liabilities, damages, claims, costs (including
court costs) and expenses (including reasonable attorneys' fees) that Buyer
incurs as a result of or with respect to:
(i) any material inaccuracy in or material breach
of any representation or warranty of Seller contained in this
Agreement or in any document (including, without limitation,
any schedule, certificate, exhibit, or other instrument)
delivered or to be delivered by Seller pursuant to this
Agreement;
(ii) any failure by Seller to perform, carry out,
comply with, or abide by their obligations under this
Agreement;
(iii) any debt, claim, cause of action, liability,
or obligation other than the Documents (whether or not
disclosed herein) of any nature arising out of, or relating
to, the operation of the Assets and the Restaurants, or out of
any act or omission of Seller, or any of their agents,
employees, or officers occurring, on or before the Closing
Date; and
(iv) any and all debts, obligations or liabilities
of Seller, whether direct or indirect, fixed or contingent,
other than the Documents, whether existing at or as of the
Closing Date or which arise after the Closing Date but which
are based upon or arise from any
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act, transaction, circumstance, sale of goods or services,
state of facts, or other condition which occurred or existed
on or before the Closing Date, whether or not then known, due,
or payable.
(b) Notwithstanding anything in this Agreement to the
contrary, (i) the maximum liability of Seller for aggregate claims under
Section 8.1(a) shall be One Million Dollars ($1.0 million) and (ii) Seller's
indemnity to Buyer under Section 8.1(a) shall survive Closing for one (1) year,
except as provided in Section 4.2(n) and except for any claims of third parties
for bodily injury or personal property damage arising from occurrences during
the time that Seller owned the Assets, which shall survive Closing for a period
of three (3) years.
SECTION 8.2. INDEMNIFICATION BY BUYER. Buyer shall indemnify
and defend Seller and hold Seller harmless from and against any and all losses,
liabilities, damages, claims, costs (including court costs) and expenses
(including reasonable attorneys' fees) that Seller incur as a result of or with
respect to:
(a) any material inaccuracy in or material breach of any
representation or warranty of Buyer contained in this Agreement or in any
document (including, without limitation, any schedule, certificate, exhibit, or
other instrument) delivered or to be delivered by Buyer pursuant to this
Agreement;
(b) any failure by Buyer to perform, carry out, comply
with, or abide by its obligations under this Agreement;
(c) any loss incurred by Seller arising out of Buyer's
failure to discharge any of the Assumed Contracts;
(d) any debt, claim, cause of action, liability, or
obligation of any nature arising out of, or relating to, the operation of the
Restaurants or the Assets by Buyer, or out of any act or omission of Buyer, its
agents, employees, or officers, occurring after the Closing Date; and
(e) Buyer shall also indemnify Seller for any breach, or
threatened breach of Buyer's Leasehold indemnities to Seller arising from
Buyer's commitments to Seller pursuant to the Enduring Indemnities described in
Sections 1.3, 8.2(e) and 8.3. All Enduring Indemnities shall survive for as
long as Seller has any potential liability to an Other Party in connection with
any Leasehold. The term Enduring Indemnities, as defined in Sections 1.3,
8.2(e) and 8.3 and used in this Agreement shall include:
(i) Buyer holding Seller harmless from any claim by
an Other Party against Seller in any way associated with
Seller's Leaseholds, a related Buyer/Seller Management
Agreement, or Other Party/Buyer new lease for which
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Seller is in any way a guarantor or surety of Buyer's
performance;
(ii) Time being of the essence, Buyer's obligation
to bring current within seven (7) days after Seller's written
demand, all Seller's obligations to Other Parties which
obligations are in any way associated with Seller's
Leaseholds, a related Buyer/Seller Management Agreement or
Other Party/Buyer new lease for which Seller is in any way a
guarantor or surety of Buyer's performance;
(iii) Buyer's obligation to continuously maintain a
minimum of One Million Dollars ($1,000,000.00) in Tangible Net
Assets, defined and computed under generally accepted
accounting principles, and Buyer's obligation to regularly
document the existence of Buyer's Tangible Net Asset position
in accordance with the procedures mandated in Section 1.3;
(iv) Time being of the essence, and irrespective of
the other reporting requirements delineated herein, Buyer's
obligation, within seven (7) days of Seller's written demand,
to affirm Buyer's compliance with the One Million Dollar
($1,000,000.00) Tangible Net Asset requirement in a written
balance sheet verified by an affidavit signed by Buyer's
controlling shareholder;
(v) Time being of the essence, Buyer's obligation to
immediately replenish Buyer's Tangible Net Assets position to
satisfy the One MillionDollar ($1,000,000.00) Tangible Net
Asset requirement in the event Buyer's balance sheet as
reported to Seller fails to indicate that such requirement has
been met;
(vi) Subject to approval of Buyer's Lender, Buyer's
obligation to convey to Seller a recordable lien (which shall
be subordinate to the lien of Buyer's Lender) on Buyer's
interest in any Asset located at the applicable Leasehold,
which lien shall be sufficient to secure Seller's claim of
indemnity from Buyer pertaining to that Leasehold;
(vii) Buyer's obligation not to dissolve as a
corporation without Seller's consent at any time Buyer remains
obligated to Seller for an Enduring Indemnity;
(viii) For each Leasehold location in which Buyer
has an Enduring Indemnity to Seller, Buyer's obligation to
maintain commercial comprehensive general liability insurance
coverage for bodily injury liability and property damage in
the amount of $1.0 million and which also names Seller as an
additional insured; and
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(ix) Buyer shall advise in writing all landlords for
which there is an Enduring Indemnity and Buyer's Lender that
Seller shall enjoy the right of full disclosure and the free
exchange of financial information regarding the status of
Buyer's rental obligation to such landlords and Buyer's debt
service obligation to Buyer's Lender for as long as Buyer is
obligated on any Enduring Indemnity to Seller.
SECTION 8.3. SELLER'S ENFORCEMENT OF ENDURING INDEMNITIES.
(a) Seller shall be entitled to collect all its damages
associated with Buyer's breach of any of the Enduring Indemnities specified in
Sections 1.3 or 8.2(e) or 8.3. Seller shall also be entitled to injunctive
relief from Buyer's breach of any Enduring Indemnities. Buyer covenants that
any lawsuit in which Seller seeks Buyer's compliance with any Enduring
Indemnities pursuant to Sections 1.3 or 8.2(e) or 8.3 of this Agreement shall
involve great immediate and irreparable injury to Seller by damaging Seller's
good credit standing, damaging Seller's valuable commercial and financial
contacts, as well as exposing Seller to an uncollectible claim because of
Buyer's failure to maintain $1.0 million in Tangible Net Assets. Thus, Buyer
hereby irrevocably acknowledges that such litigation will leave Seller with no
adequate remedy at law, because Seller's injury cannot be fully recompensed in
monetary damages. In such a lawsuit, Buyer acknowledges that subject to the
rights of Buyer's Lender, Seller shall be entitled to injunctive relief in the
form of an equity court's order: (1) compelling Buyer to immediately comply
with Buyer's Enduring Indemnities obligation; and (2) imposing a constructive
trust over the Assets located at any Leasehold (or subject to a Management
Agreement) associated with Buyer's default on any Enduring Indemnities
obligations, and authorizing the Seller, as trustee, to immediately re-enter
that location, take physical custody of the Assets located thereon, and operate
the Assets located on the premises in order to ensure that all Seller's
obligations to the germane Other Party are promptly brought current and kept
current, and that all Seller's legal and operating costs are reimbursed to
Seller. Seller may obtain such an injunction, as well as any necessary TRO or
preliminary injunction, without the requirement of obtaining a bond, because
Buyer hereby waives the bond requirement.
(b) In the event Buyer rejects or repudiates (pursuant to
Section 365 of the Bankruptcy Code) any Assets of any Leasehold covered by the
Enduring Indemnities articulated in Sections 1.3, 8.2(e), or 8.3, subject to
the rights of Buyer's Lender, Seller shall enjoy an immediate right, but not
the obligation, to reenter the Leasehold and operate all the Assets associated
with that Leasehold in order to ensure that all Seller's obligations to the
germane Other Party are promptly brought current and kept current, and that all
Seller's legal and operating costs are reimbursed to Seller.
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(c) Notwithstanding anything in this Agreement to the
contrary, (i) the maximum liability of Buyer for aggregate claims under Section
8.2 and Section 8.3 shall be One Million Dollars ($1.0 million) and (ii)
Buyer's indemnity to Seller under Section 8.2(a), (b), (c) and (d) shall
survive Closing for one (1) year. The Enduring Indemnities under Sections 1.3,
8.2(e) and 8.3 shall continue as long as Seller is obligated on any Leasehold.
SECTION 8.4. COSTS AND EXPENSES. In any action brought to
enforce the provisions of this Agreement or the rights of Buyer or Seller
hereunder, the prevailing party shall be entitled to recover from the other its
costs and expenses, including reasonable attorneys' fees.
ARTICLE IX
EMINENT DOMAIN
SECTION 9.1. In the event Seller receives any notice of any
condemnation proceedings involving the Assets, or other proceedings in the
nature of eminent domain, Seller will forthwith send a copy of such notice to
Buyer. If any portion of any Asset is taken by eminent domain, Buyer, upon
written notice to the Seller, may elect to: (a) exclude any such Asset from
this Agreement in which event an appropriate reduction in the Purchase Price
will be made in accordance with Section 3.7 hereof; or (b) assume an assignment
of the condemnation proceeds in connection therewith, and close this Agreement
without a downward adjustment in the Purchase Price hereunder.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. NOTICE. All notices and other communications
required or permitted under this Agreement shall be deemed to have been duly
given and made if in writing and if served either by personal delivery to the
party for whom intended or by being deposited, postage prepaid, certified or
registered mail, return receipt requested, in the United States mail bearing
the address shown below in this Agreement for, or such other address as may be
designated in writing hereafter by, such party:
If to MFI, MRNJI Morgan's Foods, Inc.
or MRPI Signature Square, Suite 330
25201 Chagrin Blvd.
Beachwood, Ohio 44122
Attn: James Liguori, President
If to Buyer: Mr. Zubair Kazi, President
Kazi Foods of New Jersey, Inc.
3671 Sunswept Drive
Studio City, CA 91604
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With a copy to: Robert M. Ercole, Esquire
Neuberger, Quinn, Gielen, Rubin &
Gibber, P.A.
One South Street
27th Floor
Baltimore, Maryland 21202
SECTION 10.2. ENTIRE AGREEMENT. This Agreement, the
exhibits and schedules hereto, and the documents referred to herein embody the
entire agreement and understanding of the Buyer and Seller with respect to the
subject matter hereof, and supersede all prior and contemporaneous agreements
and understandings, oral or written, relative to said subject matter.
SECTION 10.3. BINDING EFFECT; ASSIGNMENT. This Agreement
and the various rights and obligations arising hereunder shall inure to the
benefit of, and be binding upon, MFI, MRNJI and MRPI, their respective heirs,
representatives, successors and permitted assigns, on the one hand; and Buyer,
and their respective successors and permitted assigns, on the other hand.
Neither this Agreement nor any of the rights, interests or obligations
hereunder shall be transferred or assigned (by operation of law or otherwise)
by any of the parties hereto without the prior written consent of the other
party or parties; provided, however, Buyer may assign the right to purchase all
or any portion of the Real Property at Closing to one or more entities owned
and controlled by Zubair Kazi as long as (a) such entities shall assume the
obligations as the Buyer hereunder applicable to such Real Property and (b) the
Buyer shall purchase the remaining Assets and shall continue to have Tangible
Net Assets of One Million Dollars ($1.0 million).
SECTION 10.4. EXPENSES OF TRANSACTION. Buyer shall pay all
its own costs and expenses incurred by it in connection with this Agreement,
and the transactions contemplated hereby. Seller shall pay all its own costs,
and expenses incurred by it in connection with this Agreement, and the
transactions contemplated hereby.
SECTION 10.5. WAIVER; CONSENT. This Agreement may not be
changed, amended, terminated, augmented, rescinded or discharged (other than by
performance), in whole or in part, except by a writing executed by the Buyer
and Seller, and no waiver of any of the provisions or conditions of this
Agreement or any of the rights of Buyer or Seller shall be effective or binding
unless such waiver shall be in writing and signed by the party claimed to have
given or consented thereto. Except to the extent that Buyer or Seller may have
otherwise agreed in writing, no waiver by that party of any condition of this
Agreement or breach by the other party hereto of any of its obligations or
representations hereunder or thereunder shall be deemed to be a waiver of any
other condition, or subsequent or prior breach of the same, or any other
obligation or representation by the other party hereto, nor shall any
forbearance by Buyer or Seller to seek a remedy for any noncompliance or breach
- 32 -
<PAGE> 32
by another party hereto be deemed to be a waiver by the first party of its
rights and remedies with respect to such noncompliance or breach.
SECTION 10.6. NO THIRD-PARTY BENEFICIARIES. Subject to
Section 10.3 hereof, nothing herein, expressed or implied, is intended or shall
be construed to confer upon or give to any person, firm, corporation or legal
entity, other than the Buyer or Seller, any rights, remedies or other benefits
under or by reason of this Agreement.
SECTION 10.7. COUNTERPARTS. This Agreement may be executed
simultaneously in multiple counterparts, each of which shall be deemed an
original, but all of which taken together shall constitute one and the same
instrument.
SECTION 10.8. GOVERNING LAW. This Agreement shall in all
respects be construed in accordance with and governed by the laws of the State
of Pennsylvania.
SECTION 10.9 HEADINGS. The Section titles and headings in
this Agreement are for descriptive purposes only one shall not control or limit
the meaning of this Agreement as set forth in the text.
SECTION 10.10. REMEDIES. Except as otherwise specifically
provided herein, nothing contained in this Agreement shall be construed to
prohibit the parties from pursuing any remedies available to them at law or in
equity for a breach or threatened performance or the recovery of monetary
damages, and in the event it is necessary for either party to employ legal
counsel to enforce its rights under this Agreement or to protect its interests
herein, the party determined to be in breach shall reimburse the damaged party
for any and all legal fees, expenses or court costs arising from such legal
proceeding.
SECTION 10.11. BANKRUPTCY/PRIOR TO CLOSING.
(a) Seller acknowledges that if Seller files for bankruptcy or
if creditors of Seller put Seller in bankruptcy that Buyer will be adversely
affected and Buyer will suffer damages and attorneys' fees and costs. Seller
hereby indemnifies Buyer for any and all damages, expenses, and attorneys' fees
that Buyer incurs as a result of unknown or unpaid Seller debts or as a result
of the filing of a voluntary or involuntary bankruptcy involving Seller prior
to Closing. If Seller files for bankruptcy or an involuntary bankruptcy is
filed involving Seller prior to Closing, Buyer has the option of rescinding
this Agreement prior to Closing.
(b) Buyer acknowledges that if Buyer files for bankruptcy
or if creditors of Buyer put Buyer in bankruptcy that Seller will be adversely
affected and Seller will suffer damages and attorneys' fees and costs. Buyer
hereby indemnifies Seller for any and all damages, expenses, and attorneys'
fees that Seller incurs as a result of unknown or unpaid Buyer debts or as a
result of the filing of a voluntary or involuntary bankruptcy involving Buyer
prior to Closing. If Buyer files for bankruptcy or an involuntary bankruptcy
is filed involving Buyer prior to Closing, Seller has the option of rescinding
this Agreement prior to Closing.
SECTION 10.12. DISCLOSURE. Neither Buyer nor Seller shall
disclose the contents or terms of this Agreement except to (a) the officers,
agents and representatives of Buyer and Seller; (b) KFC; (c) Buyer's Lender;
and (d) any disclosure deemed necessary by Seller's counsel if required to be
made by Seller under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended, or any other governing corporate or
securities laws; provided that Seller agrees to advise and consult with Buyer
prior to the disclosure of any information regarding this Agreement pursuant to
such corporate or securities laws.
- 33 -
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed on the day and year first above written.
WITNESS OR ATTEST: SELLERS:
--------
MORGAN'S FOODS, INC.
____________________________ _______________________________
By:____________________________
Title:_________________________
MORGAN'S RESTAURANTS OF
NEW JERSEY, INC.
____________________________ _______________________________
By:____________________________
Title:_________________________
MORGAN'S RESTAURANTS OF
PENNSYLVANIA, INC.
____________________________ _______________________________
By:____________________________
Title:_________________________
BUYER:
------
KAZI FOODS OF NEW JERSEY, INC.
____________________________ _______________________________
By:____________________________
Title:_________________________
- 33 -
<PAGE> 34
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
<TABLE>
<CAPTION>
LIST OF
EXHIBITS AND SCHEDULES
----------------------
<S> <C>
Exhibit A - New Jersey Restaurants
Exhibit B - Pennsylvania Restaurants
</TABLE>
<TABLE>
<S> <C>
Schedule 1.1(a) - Real Property
Schedule 1.1(b) - Leaseholds
Schedule 1.1(c) - Personal Property
Schedule 1.1(e) - Licenses and Permits
Schedule 1.1(f) - Assumed Contracts
Schedule 1.2 - Excluded Assets
Schedule 4.2(c) - Financial Statements and 24-month Sales Histories
Schedule 4.2(n) - Environmental Matters
Schedule 4.2(o) - Condition of Restaurants
Schedule 6.2(b) - Form of General Conveyance, Assignment and Bill of Sale
</TABLE>
- 34 -
<PAGE> 35
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
<TABLE>
<CAPTION>
EXHIBIT A
---------
New Jersey Restaurants
<S> <C>
* #70 ROCKAWAY #81 PERTH AMBOY
Kentucky Fried Chicken Kentucky Fried Chicken
190 Route 46 576 New Brunswick Avenue
Rockaway, NJ 07866-4021 Perth Amboy, NJ 08861
#71 HACKETTSTOWN #82 ABERDEEN
Kentucky Fried Chicken Kentucky Fried Chicken
230 East Mountain Avenue Route 34 & Lloyd Road
Hackettstown, NJ 07840-2409 Aberdeen, NJ 07747
#72 FLORHAM PARK #83 HAZLET
Kentucky Fried Chicken Kentucky Fried Chicken
185 Ridgedale Avenue Route 36 & Middle Road
Florham Park, NJ 07932-1706 Hazlet, NJ 07730
* #73 LEDGEWOOD * #84 CLIFFWOOD
Kentucky Fried Chicken Kentucky Fried Chicken
1110 Route 46 Route 35 & Cliffwood Avenue
P.O. Box 192 Cliffwood Beach, NJ 07735
Ledgwood, NJ 07852
#74 JEFFERSON
Kentucky Fried Chicken
766 Route 15 South
Jefferson, NJ 07849
</TABLE>
____________________________________
* Denotes Fee Owned Property
A-1
<PAGE> 36
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
<TABLE>
<CAPTION>
EXHIBIT B
---------
Pennsylvania Restaurants
<S> <C>
#44 SHILLINGTON #60 ROUTE 30 EAST
Kentucky Fried Chicken Kentucky Fried Chicken
241 Lancaster Pike, West 35 S. Willowdale Drive
Shillington, PA 19807-2428 Lancaster, PA 17802
#45 RT. 79/MANHEIM #61 COLUMBIA AVENUE
Kentucky Fried Chicken Kentucky Fried Chicken
1695 Manheim Pike 1533 Columbia Avenue
Lancaster, PA 17901 Lancaster, PA 17803-4526
#52 LEMOYNE #62 WALNUT STREET
Kentucky Fried Chicken Kentucky Fried Chicken
813 Lowther Street 3819 Walnut Street
Lemoyne, PA 17043-2015 Harrisburg, PA 17109-2533
#53 MECHANICSBURG * #63 MARKET STREET
Kentucky Fried Chicken Kentucky Fried Chicken
6557 Carlisle Pike 1314 Market Street
Mechanisburg, PA 17055-1705 Harrisburg, PA 17109-2281
#54 CARLISLE * #64 LEBANON
Kentucky Fried Chicken Kentucky Fried Chicken
670 North Hanover Street 1505 Cumberland Street
Carlisle, PA 17013-1933 Lebanon, PA 17042-4533
* #56 CHAMBERSBURG * #65 SOUTH DUKE
Kentucky Fried Chicken Kentucky Fried Chicken
1226 Lincoln Way East 480 South Duke Street
Chambursburg, PA 17201-3347 Lancaster, PA 17502
</TABLE>
B-1
<PAGE> 37
* #66 NORTH SIXTH STREET
Kentucky Fried Chicken
2001 North Sixth Street
Harrisburg, PA 17102-1006
* #67 EPHRATA
Kentucky Fried Chicken
275 North Reading Street
Ephrata, PA 17522
#67 ENOLA
Kentucky Fried Chicken
331 North Enola Road
Enola, PA 17025
_____________________________________________
* Denotes Fee Owned Property
B-2
<PAGE> 38
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
<TABLE>
<CAPTION>
SCHEDULE 1.1(a)
---------------
<S> <C>
Real Property
#70 ROCKAWAY #64 LEBANON
Kentucky Fried Chicken Kentucky Fried Chicken
190 Route 46 1505 Cumberland Street
Rockaway, NJ 07866-4021 Lebanon, PA 17042-4533
#73 LEDGEWOOD #65 SOUTH DUKE
Kentucky Fried Chicken Kentucky Fried Chicken
1110 Route 46 480 South Duke Street
P.O. Box 192 Lancaster, PA 17502
Ledgwood, NJ 07852
#66 NORTH SIXTH STREET
#94 CLIFFWOOD Kentucky Fried Chicken
Kentucky Fried Chicken 2001 North Sixth Street
Route 35 & Cliffwood Avenue Harrisburg, PA 17102-1006
Cliffwood Beach, NJ 07735
#67 EPHRATA
#56 CHAMBERSBURG Kentucky Fried Chicken
Kentucky Fried Chicken 275 North Reading Street
1226 Lincoln Way East Ephrata, PA 17522
Chambursburg, PA 17201-3347
#63 MARKET STREET
Kentucky Fried Chicken
1314 Market Street
Harrisburg, PA 17109-2281
</TABLE>
S-1
<PAGE> 39
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
<TABLE>
<CAPTION>
SCHEDULE 1.1(b)
---------------
<S> <C>
Leaseholds
#44 SHILLINGTON #61 COLUMBIA AVENUE
Kentucky Fried Chicken Kentucky Fried Chicken
241 Lancaster Pike, West 1533 Columbia avenue
Shillington, PA 19807-2428 Lancaster, PA 17803-4526
#45 RT. 79/MANHEIM #62 WALNUT STREET
Kentucky Fried Chicken KENTUCKY FRIED CHICKEN
1695 Manheim Pike 3819 Walnut Street
Lancaster, PA 17901 Harrisburg, PA 17109-2533
#52 LEMOYNE #67 Enola
Kentucky Fried Chicken Kentucky Fried Chicken
813 Lowther Street 331 North Enola Road
Lemoyne, PA 17043-2015 Enola, PA 17025
#53 MECHANICSBURG #71 HACKETTSTOWN
Kentucky Fried Chicken Kentucky Fried Chicken
6557 Carlisle Pike 230 East Mountain Avenue
Mechanisburg, PA 17055-1705 Hackettsown, NJ 07840-2409
#54 CARLISLE #72 FLORHAM PARK
Kentucky Fried Chicken Kentucky Fried Chicken
670 North Hanover Street 185 Ridgedale Avenue
Carlisle, PA 17013-1933 Florham Park, NJ 07932-1706
#60 ROUTE 30 EAST #74 JEFFERSON
Kentucky Fried Chicken Kentucky Fried Chicken
35 S. Willowdale Drive 766 Route 15 South
Lancaster, PA 17802 Jefferson, NJ 07849
</TABLE>
S-2
<PAGE> 40
#81 PERTH AMBOY
Kentucky Fried Chicken
576 New Brunswick Avenue
Perth Amboy, NJ 08861
#82 ABERDEEN
Kentucky Fried Chicken
Route 34 & Lloyd Road
Aberdeen, NJ 07747
#83 HAZLET
Kentucky Fried Chicken
Route 36 & Middle Road
Hazlet, NJ 07730
S-3
<PAGE> 41
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 1.1(c)
---------------
Personal Property
S-4
<PAGE> 42
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 1.1(e)
---------------
Licenses and Permits
S-5
<PAGE> 43
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 1.1(f)
---------------
Assumed Contracts
S-6
<PAGE> 44
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 1.2
------------
Excluded Assets
S-7
<PAGE> 45
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 4.2(c)
---------------
Financial Statements and 52-week Sales Histories
S-8
<PAGE> 46
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 4.2(n)
---------------
Environmental Matters
S-9
<PAGE> 47
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 4.2(o)
---------------
Condition of Restaurants
S-10
<PAGE> 48
ASSET PURCHASE AND SALE AGREEMENT
BY AND AMONG
MORGAN'S FOODS, INC.,
MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC.
and
MORGAN'S RESTAURANTS OF NEW JERSEY, INC.
as Seller
and
KAZI FOODS OF NEW JERSEY, INC.
as Buyer
SCHEDULE 6.2(b)
---------------
Form of General Conveyance,
Assignment and Bill of Sale
S-11
