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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment Number One
to Report on Form 8-K Dated July 23, 1998
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report October 6, 1998 Commission file number 0-3833
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MORGAN'S FOODS,INC.
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(Exact name of registrant as specified in its charter)
Ohio 34-0562210
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(State or other jurisdiction of (I.R.S. Employer incorporation
or organization) Identification Number)
24200 Chagrin Boulevard, Suite 126, Beachwood, OH 44122
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(Address of principal executive officers) (Zip Code)
Registrant's telephone number, including area code: (216) 360-7500
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MORGAN'S FOODS, INC.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 23, 1998 Morgan's Restaurants of Pennsylvania, Inc. and
Morgan's Restaurants of Ohio, Inc., both wholly owned subsidiaries of Morgan's
Foods, Inc. completed the acquisition of the assets of four (4) existing KFC
restaurants from GRNN, Inc. and Gary Cocolin for cash in the amount of
$2,435,000. The assets involved include land and building in Ashtabula, Ohio,
land and building in Conneaut Lake, Pennsylvania, land and building in Erie,
Pennsylvania, a building on leased land in Erie, Pennsylvania and all of the
related restaurant equipment, franchise agreements, inventory and leasehold
improvements used in the operation of the four (4) KFC restaurants. The Company
intends to continue to operate the four (4) properties as KFC restaurants under
the franchise agreements which were assigned to the Company as part of the asset
purchase and sale transaction. Revenues for the four restaurants for the 12
months ended November 30, 1997 were $3,085,000. Funds for the acquisition were
provided via several loan transactions with Captec Financial Group Inc., all of
which involve mortgages or security interests in the assets which were acquired.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
The following Exhibit is filed herewith and incorporated herein by this
reference:
Exhibit
Number Exhibit Description
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1 Asset Purchase and Sale Agreement dated April 9, 1998
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
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(Registrant)
Dated: October 6, 1998 By: /s/ Kenneth L. Hignett
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Kenneth L. Hignett
Senior Vice President,
Chief Financial Officer & Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.
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Exhibit 1
RESTAURANT ASSET SALE PURCHASE AGREEMENT
This Restaurant Asset Purchase Agreement, hereinafter "AGREEMENT" is
made and entered into this 1ST day of May, 1998, by and between MORGAN'S
RESTAURANTS OF OHIO, INC. ("MROI"), an Ohio corporation and MORGAN'S RESTAURANTS
OF PENNSYLVANIA, INC. a Pennsylvania corporation, both MROI and MRPI having an
address and principal place of business at 24200 Chagrin Blvd., Suite 126,
Beachwood, OH 44122 and MROI and MRPI being jointly and severally herein
identified as Buyer; and GRNN, Inc. ("GRNN"), a Pennsylvania corporation, and
GARY L. COCOLIN ("Cocolin"), hereinafter GRNN and Cocolin are jointly and
severally identified as the "Seller", whose collective address and principal
place of business is 4963 Sir Hue Drive, Erie, Pennsylvania 16506.
WITNESSETH:
WHEREAS, Seller owns four (4) KFC restaurant enterprises located in
Pennsylvania and Ohio on real estate interests more particularly described: (i)
In the Leasehold(s) list in attached EXHIBIT A hereinafter "Leasehold(s)," and;
(ii) In the list of Fee Real Estate in attached EXHIBIT B hereinafter "Fee Real
Estate." The attached EXHIBIT A contains a copy of each lease agreement and a
letter from each Leasehold's governing Building and Zoning authority certifying
that there are no code violations pending in connection with the applicable
Leasehold premises and that such premises are currently in full compliance with
all zoning requirements. The Fee Real Estate interests are described in attached
EXHIBIT B containing a copy of the warranty deed into Seller and a letter from
each governing Building and Zoning authority certifying that there are no code
violations
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pending in connection with each Fee Real Estate premises and that such premises
are currently in full compliance with all zoning requirements.
WHEREAS, Seller owns non-real estate, tangible and intangible assets
which as of January 1, 1998 were employed in the operation of the Seller's four
(4) KFC restaurants located on the Seller's Leaseholds and the Seller's Fee Real
Estate, which non-real estate, tangible and intangible assets are more
particularly described herein as Seller's "Personal Property." EXHIBIT C
attached hereto contains a detailed schedule of Seller's Personal Property by
restaurant location as of the date of this Agreement. The Seller's Personal
Property includes Seller's KFC franchise agreement for each of Seller's four (4)
KFC restaurant locations and all restaurant food, supplies and paper inventory
items at a wholesale book value of not less than Five Thousand Dollars
($5,000.00) for each of the four restaurant locations, and all restaurant
operating equipment (except as excluded below), including but not limited to
menu boards, cash registers, furniture, telephones, buffet equipment, computers,
security systems, cooking equipment, KFC Purchasing Cooperative stock, all
surveys of each Restaurant location in Seller's possession, if any, and
restaurant operating equipment. This sale excludes the following assets of
Seller: cash, checking accounts, savings accounts, investment accounts, all
prepaid items including prepaid insurance, rent, deposits, down payments, and
advances/loans/receivables from officers, capitalized interest, organizational
costs and capitalized fees; and, all office equipment located at Seller's
residential home office and West 12th Street, Erie, PA office, i.e., computer,
copier, fax machine, file cabinet, a complete inventory for which is attached at
EXHIBIT C-1. A copy of each of Seller's four (4) KFC franchise agreements and
Seller's HVAC engineer's written certification that the HVAC equipment in each
of Seller's four (4) KFC restaurants is in good working order as of the date of
the certification attached
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hereto in EXHIBIT D. "Good working order" is defined as the level of performance
necessary to function in a reasonably foreseeable manner and meeting reasonable
expectations.
WHEREAS, for purposes of this AGREEMENT the combination of the Personal
Property attributable to any one Leasehold on attached EXHIBIT C and the
applicable Leasehold comprise a "Restaurant."
WHEREAS, for purposes of this AGREEMENT, the combination of the
Personal Property attributable to any one Fee Real Estate parcel on attached
EXHIBIT C and the applicable Fee Real Estate parcel comprise a "Restaurant."
WHEREAS, except as specifically set forth to the contrary herein,
Seller's warranties and representations as to the physical attributes of the
real estate and working condition of the fixtures/personalty shall not survive
the closing since following closing Buyer takes title to the same and in "as is"
condition with all faults.
WHEREAS, the Seller wishes to sell to the Buyer, and the Buyer wishes
to purchase from the Seller, the four (4) Restaurants on the following terms and
conditions:
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the parties
hereby agree as follows:
1. AGREEMENT TO BUY AND SELL RESTAURANT ASSETS.
Subject to the terms, representations, warranties, covenants and
conditions set forth in this Agreement, Seller shall, at the Closing (as
hereinafter defined), convey, sell, transfer and assign all of Seller's rights,
title and interest in and to all the assets comprising the four (4) Restaurants
located on both the Leaseholds and the Fee Real Estate itemized in attached
EXHIBIT A and EXHIBIT B. It is understood that such transfer of the four (4)
Restaurants shall be by
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recordable and insurable instruments and shall deliver good and marketable (as
defined below) title to each and every asset comprising any one of the four (4)
Restaurants unencumbered by: (i) any third party claims against any of the
assets of the four (4) Restaurants; (ii) any third party rights or powers to
restrict Buyer's unilateral right and power to mortgage, or offer other security
interests in, each and every asset composing the four (4) Restaurants. The Buyer
and Seller mutually agree that this is an asset sale only and the Buyer is not
liable as a successor enterprise for any enterprise obligation, or business
entity obligation, of the Seller arising from the Seller's operation or
ownership of the KFC restaurant businesses located on the premises of the
Leaseholds or the premises of the Fee Real Estate.
2. PURCHASE PRICE.
2.1 Upon and subject to the conditions set forth in this Agreement;
Buyer agrees to pay Seller at the Closing the sum of Two Million Four Hundred
Thirty Five Thousand Dollars ($2,435,000.00) (the "Purchase Price"), payable as
follows:
(a) Ten Thousand Dollars ($10,000.00) as a deposit ("Deposit") to be
held in escrow with the Title Company that will control the Closing on the date
that all parties sign this Agreement. That Deposit shall accumulate interest for
the benefit of the ultimate recipient of the deposit or credited toward Buyer's
financial obligations at the Closing.
(b) The remainder of the Purchase Price on the Closing Date.
2.2 The Purchase Price shall be allocated to specific assets and the
amount to be placed in escrow for the Sellers "like-kind exchange" shall be
mutually agreed upon between the accountants of the Buyer and Seller, which
election is memorialized in the letter contained in attached EXHIBIT E, and
which letter shall reflect that eighty five percent (85%) of the Purchase
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Price shall be allocated to land and buildings to Cocolin and fifteen percent
(15%) of the Purchase Price shall be allocated to equipment and franchise
agreements owned by GRNN.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
3.1 Seller unconditionally Represents and Warrants to Buyer that as of
the date of this agreement, and at no additional cost to the Buyer:
(a) (i) all corporate or third party approvals necessary to permit
Seller to consummate this transaction will have been secured; (ii) Seller has
all necessary capacity to enter into and consummate this transaction, and is
under no legal restraint to prevent Seller from entering into and performing
Seller's obligations under this Agreement; (iii) this Agreement constitutes the
valid and binding obligation of Seller in accordance with this Agreement's
terms; (iv) Cocolin owns ninety-five percent (95%) and controls one hundred
percent (100%) of the voting shares of GRNN; and (v) on or before the Closing
Seller shall be the sole and exclusive owner of all assets comprising all four
(4) Restaurants.
(b) Seller (including Seller's agents and employees) received, (i) no
notices or citations for the violation of any zoning, building, or other law,
ordinance, regulation, or directive from any governmental authority or
authorities having jurisdiction relating to any part of any Restaurant, or if
such notice or citation were received by Seller, or by any agent or employee of
Seller, the same has been fully and timely corrected, and Seller has not been
notified by any agent or employee of Seller that Seller or any Restaurant, or
any part of any Restaurant, is or may be in violation of any such law,
ordinance, regulation, or directive; (ii) Seller has received no notice or
communication from any insurance carrier regarding any dangerous, illegal, or
other condition requiring any corrective action not previously corrected; and
(iii) Seller has no reason to believe that
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any such notice, communication, or citation for such a violation or condition is
in process for issuance;
(c) Seller (including Seller's agents and employees) knows of no
litigation, state or federal governmental proceeding, or action pending or
threatened against or relating to Seller or any part of the four (4) Restaurants
which might adversely affect any one of the four (4) Restaurants or which
questions the validity of this Agreement or any of the actions taken or to be
taken by Seller or Buyer pursuant to this Agreement;
(d) Neither the execution of this Agreement nor the consummation of the
transactions contemplated hereby will constitute a violation of, be in conflict
with, or constitute a default under any lease (except for a pending lease with
Pepsi), commitment, agreement, or contract to which Seller is a party;
(e) Except for disposing of used shortening, to the best of Seller's
knowledge and belief, neither the Seller, nor any third party (including
Seller's predecessors in title under any Leasehold or in connection with any Fee
Real Estate), used, generated, manufactured, refined, produced, processed,
treated, stored in subterranean tanks or otherwise, spilled or released, or
disposed on, under, or about any one of the four (4) Restaurants, or transported
to or from any one of the four (4) Restaurants any product or material regulated
by or considered environmentally hazardous under any local, state, or federal
statute, regulation, or code. Seller has not received any notice from any
federal, state, regional, municipal or other governmental agency, or private or
public entity or person, advising Seller that Seller or any third party is
responsible for, or potentially responsible for, response costs with respect to
a release, a threatened release or clean up of chemicals produced by, or
resulting from, any business, commercial, charitable, or industrial activities,
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operations, or processes, including Hazardous Materials. All such warranties
shall survive the Closing and transfer of title.
(f) Except for the Pepsi contract referred to above, there are no
service or management contracts or agreements affecting any one of the four (4)
Restaurants which will or might survive Closing except such contracts which are
approved in writing prior to Closing by Buyer; and all such unapproved contracts
shall be canceled in writing by Seller, and at Seller's sole cost, prior to
Closing. Buyer shall assume the Pepsi contract currently in place with Seller
and release and indemnify Seller from any liability for the same following the
date of Closing.
(g) Except for the terms of the applicable mortgages, financing
statements and Buffalo Road Lease, which will remain in effect up to the date of
closing, neither the four (4) Restaurants nor any part or combination thereof,
are the subject of any outstanding agreement with any third party pursuant to
which any such third party may acquire any interest in the four (4) Restaurants,
or any portion thereof;
(h) No notice has been received by Seller from any insurance company
which has issued a policy with respect to any one of, or all of, the four (4)
Restaurants or by any board of fire underwriters (or other body exercising
similar functions) claiming any defects or deficiencies or requesting the
performance of any repairs, alterations, or other work to or on any one of the
four (4) Restaurants or under any rule, regulation, or law of any regulatory
body having jurisdiction over any one of the four (4) Restaurants which has or
might have an adverse effect on any of the assets comprising the four (4)
Restaurants;
(i) There are no brokerage commissions, finder's fees, or similar
payments due and owing on account of any act or omission of Seller with respect
to this transaction or any part of the
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four (4) Restaurants;
(j) No condemnation or taking of any Leasehold or Fee Real Estate, or
any portion thereof, is pending or, to the best of Seller's (including Seller's
agents and employees) knowledge, threatened;
(k) Except as set forth in Paragraph 3.1(1), below, each of the
Leaseholds is fully assignable and delegatable by the Seller to the Buyer
without prior permission of any kind by any third party, including but not
limited to, the Seller's lessor under any Leasehold, and each Leasehold entitles
Seller (and after the Closing shall entitle Buyer) to rent each leased premises
at least through August 31, 2009. Seller will exercise good faith and its best
efforts to cooperate with Buyer in obtaining leasehold extensions through July
1, 2017 plus provisions allowing the tenant two successive renewal rental
periods of five (5) years and four (4) years all at the present Leasehold rental
rates or possibly subject to increases tied to a Consumer Price Index. This
obligation continues for the period between contract signing and closing;
(1) Each of the Leaseholds is freely assignable and delegatable by the
Buyer as the new Tenant thereunder without restriction of any kind except that
the prior written consent is required by the Leasehold lessor of the Buffalo
Road location. Said lessor has indicated a willingness to accept Buyer as
Seller's assignee of the current lease so long as Seller remains secondarily
liable on the lease up to its natural termination, August 31,2009. Seller agrees
to remain secondarily liable on the condition that Buyer is primarily liable for
payments under the terms of the lease and Buyer indemnifies and holds Seller
harmless for any liability under the terms of the assigned lease up to and
including its natural termination, August 31, 2009. This indemnity shall survive
the closing. Seller shall not be secondarily liable for any lease extensions
beyond August
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31, 2009.
(m) By Seller's agreement with KFC Corporation the termination date of
each of Seller's four (4) KFC franchise agreements shall be a date not earlier
than July 1, 2017, and KFC Corporation shall have approved the transfer of each
of the Seller's four (4) franchise agreements to the Buyer as the successor
franchisee under all four (4) franchise agreements all at no cost or expense to
Buyer. If Seller needs to procure KFC franchise agreement extensions to comply
with this Agreement's requirements, Seller shall do so at no cost or expense to
Buyer;
(n) Except as noted in Paragraph 3.1(g), above, (all of which
obligations are current as of the date of this Agreement), all Seller's Personal
Property is free of all liens or claims of any kind by any third party including
but not limited to Seller's creditors claims, claims of Seller's predecessors in
real estate title, and Seller's lessors' claims;
(o) The financial data including current income statements through
March, 1998 for each of the four (4) Restaurants which appear in attached
EXHIBIT F accurately reflect the income and expenses of each restaurant for the
disclosed time frame;
(p) The Fee Real Estate is owned or controlled exclusively by the
Seller and no natural person or entity other than the Seller owns or controls
any interest in any parcel of Fee Real Estate;
(q) Except as set forth in Paragraph 3.1(1), above, all Leaseholds and
Fee Real Estate are freely assignable and delegatable and freely mortgageable by
the Buyer after the Closing Date without restrictions of any kind imposed by the
Seller, or by any third party claiming through Seller. As of the Closing Date
Buyer shall be free to mortgage all Leaseholds (subject to terms of the
respective Lease) and Fee Real Estate without the approval of any Seller or any
third party claiming
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through Seller.
(r) There is no judicial or administrative litigation, pending or
threatened, against Seller, which arises under, or in any way relates to, any
contract rights, tort rights, state law or state administrative regulation, or
federal law or federal administrative regulation, except as such matters are
fully disclosed in attached EXHIBIT G. This Seller's Representation and Warranty
to Buyer includes but is not limited to full disclosure of: (1) tort or contract
claims by employees, vendors, or business invitees; (2) federal or state
Department of Labor investigations or claims; (3) state or federal OSHA
investigations or claims; (4) state, federal, or private civil rights
investigations or claims; (5) KFC Corporation investigations or claims in
connection with Seller's full compliance with each of the four (4) KFC franchise
agreements or any other matters examined by KFC Corporation.
(s) Attached EXHIBIT H includes copies of business licenses, vendor
licenses, certificates of occupancy, health licenses and all other licenses or
permits required to operate a KFC restaurant on the premises of each of the
Sellers four (4) KFC Restaurants. All documents identified in EXHIBIT H shall be
currently valid and in full force and effect.
(t) The Sellers have no knowledge of any armed robbery, food
poisonings, or embezzlement of funds (except as disclosed in attached EXHIBIT I)
at any of the Seller's four (4) KFC Restaurant locations during the three year
period prior to the Closing Date.
(u) To the best of Seller's personal knowledge and belief, (even after
inquiring of its restaurant general managers) as of the date of this Agreement,
Seller has no notice of any of the following being present with respect to any
Leasehold, Fee Real Estate, or Personal Property asset, or portion thereof,
which comprise the four (4) Restaurants:
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(i) Any latent defects or malfunctions which are not
visible upon a walk through or normal use, of the
four (4) Restaurants 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 Fee Real Estate or Leasehold shared
in common with adjoining landowners, such as walks,
fences and driveways and the like;
(iii) Except as filed of record or contained in any Lease,
any encroachments, easements or similar matters of
title that may affect any Fee Real Estate or
Leasehold;
(iv) Room additions, structural modifications or other
alterations or repairs made without necessary
permits;
(v) Landfill, compacted or otherwise, prior to the date
of this Agreement;
(vi) Any settling from any cause, or slippage, sliding, or
other soil problems;
(vii) Except as to a potential future problem with the
rear, unused portion of the West 12th Street property
which may also have some wetlands issues, flooding,
drainage or grading problems;
(viii) Damage to the property or any of the structures from
fire, earthquake, floods, landslides, or other cause
of nature;
(ix) Any zoning violations, nonconforming uses, or
violations of "setback" requirements;
(x) Neighborhood noise problems constituting a nuisance
or other conditions constituting a nuisance;
(xi) Except as to the Buffalo Road property's access to
Nagle Road from the Mellon Bank property, any "common
area" in undivided interest with others;
(xii) Any defect in any HVAC system, or component thereof;
(xiii) Any notices of abatement or similar citations;
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(xiv) Any dispute with any landlord, or other natural
person or entity, pertaining to Seller's right to
continued quiet enjoyment of any of the Leaseholds,
or the Fee Real Estate.
(xv) Except as specifically set forth to the contrary,
none of the foregoing representations in Paragraph
3.1(u) as to the physical attributes of the real
estate and working condition of the
buildings/fixtures/personalty shall constitute a
warranty surviving the closing since following
Closing buyer shall take title to same in "as is"
condition, with all faults. All of the warranties and
representations contained in this Agreement are
subject to the time limitations set forth in
Paragraph 11, below.
(v) Seller agrees to notify Buyer of any changes to the status of the
above representations and warranties which may occur from the date of this
Agreement up to the date of closing.
3.2 Material Misstatements or Omissions. To the best of Seller's
knowledge, information and belief, 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, intentionally or
knowingly contains or will contain any untrue statement or half truth, or will
omit to state any fact necessary to make the Seller's statements contained
therein materially misleading.
3.3 Unless specifically stated otherwise herein, all Representations
and Warranties stated in this Agreement by either party shall survive the
Closing Date subject to the time limitations set forth in Paragraph 11, below.
4. THE CLOSING DATE.
The "Closing Date" shall be on or before July 15, 1998 with an
extension available to September 1, 1998, time being of the essence subject to
further extensions upon written agreement
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between the Parties. The Closing Date may be extended until September 1, 1998 by
the Buyer, if the Buyer reasonably believes in good faith that such extension is
necessary in order to satisfy any of the Contingencies or Conditions Precedent
which must be satisfied under this Agreement before the Closing can occur. Under
this Agreement the Closing shall constitute the point in time in which Buyer
shall take title to all the assets comprising the four (4) Restaurants in
exchange for the Buyer's payment, in conformity with the terms of this
Agreement, of the Purchase Price to the Seller.
5. CONDITIONS PRECEDENT TO BUYER'S OBLIGATION TO CLOSE
Buyer's obligation to purchase all or part of the assets comprising the
four (4) Restaurants and pay all or part of the Purchase Price shall be
expressly subject to the satisfaction or waiver (by the Buyer in writing in each
instance) of each of the following conditions precedent to Buyer's obligation to
Close (hereinafter individually a "Contingency" and collectively the
"Contingencies");
5.1 (a) Buyer shall secure from its agent, the Title Company, a
commitment (the "Commitment") for leasehold title insurance with respect to
each Leasehold, and owner's title insurance with respect to each item of Fee
Real Estate. The Title Company shall cause UCC searches to be performed with
respect to the Seller, and the assets comprising all four (4) Restaurants. Prior
to the Closing Date the Buyer shall be satisfied that as of the date of closing,
in Buyer's discretion, which exercise of discretion is not to be unreasonably
withheld, that (1) no interests, encumbrances, or restrictions exist in
connection with the Leaseholds (other than the amended original lease agreement
instruments and amendments thereto true copies of which are contained in
attached EXHIBIT A which render any one of the Leaseholds unmortgageable,
unmarketable or unassignable; (2) no interests, encumbrances or restrictions
exist in connection with
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the Fee Real Estate which render any parcel of Fee Real Estate unmarketable,
unassignable, or unmortgageable at Buyer's discretion, which exercise of
discretion is not to be unreasonably withheld; (3) no interests, encumbrances or
restrictions exist in connection with any item of Personal Property which render
title to any such tangible and intangible Personal Property unmarketable,
unassignable, or unmortgageable at Buyer's sole discretion. Consistent with the
foregoing, in the event that Buyer concludes that any assets described in
Section 5.1 (a) are unmarketable, unassignable, or unmortgageable at Buyer's
discretion, which exercise of discretion is not to be unreasonably withheld,
Buyer, at Buyer's sole election, may waive that Contingency in whole or in part,
or Buyer may choose not to waive that Contingency and then Buyer may be excused
from Closing, in which case Buyer shall be refunded in full the Deposit plus
interest, if any, and neither Seller nor Buyer shall have any further liability
to each other.
(b) Buyer shall be entitled to exercise Buyer's discretion's to
withdraw from the Closing in accordance with Section 5.1(a) above in the event
that the Title Company prior to the Closing informs Buyer that Title Company
will refuse to issue to Buyer a marketable ALTA leasehold policy of title
insurance in connection with any one of the Leaseholds or a marketable ALTA
owner's fee policy of title insurance in connection with the Fee Real Estate
based on the projected status of title in the Buyer post Closing. In the event
Buyer withdraws from the Closing under this Section 5.1(b), Buyer shall be
refunded Buyer's Deposit plus interest, if any, and neither Seller nor Buyer
shall have any further liability to each other.
5.2 Sellers shall deliver a duly executed Leasehold assignment
instrument for each Leasehold identified in attached EXHIBIT A and a General
Warranty Deed for each Fee Real Estate parcel identified in attached EXHIBIT B,
to Buyer at the Closing in forms satisfactory to the Buyer
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and the Title Company along with a resolution of the Board of Directors of GRNN,
evidencing that all the Seller's representations and warranties set forth in
this Agreement are each true and correct [including but not limited to the
Warranties and Representations specified in Sections 3.1(k) and 3.1(l)] as of
the Closing Date and authorizing the Seller to Close on this Agreement, and
authorizing officers of GRNN to execute the necessary and appropriate documents
to accomplish and perfect this transaction, and such individual additional
documents and instruments (including but not limited to affidavits, or bills of
sale with itemized lists of all tangible and intangible assets included in the
Personal Property) as Buyer's counsel may reasonably determine are necessary to
the consummation of this transaction, including documents reasonably required by
the Title Company or Buyer's lender. Buyer at its sole election may waive, in
whole or in part, any Contingency identified in this Section 5.2, or Buyer may
choose not to waive any such Contingency and then Buyer may be excused from
Closing, in which case Buyer shall be refunded in full the Deposit plus
interest and neither Seller nor Buyer shall have any further liability to each
other.
5.3 Buyer must be advised by Earth Sciences Consultants, Inc. (or other
firm satisfactory to Buyer) that all Leasehold locations and the Fee Real Estate
locations contain no significant environmental, soil, boundary and topographic
issues that may make it inadvisable for Buyer to consummate this transaction.
Therefore before Buyer shall be obligated to Close this transaction Seller (at
Seller's sole cost) must present to Buyer Phase I Environment Assessments and
reports prepared by Earth Science Consultants, Inc. a firm selected and retained
by Buyer (or other firm satisfactory to Buyer) certifying to Buyer that each of
the Leasehold locations and the Fee Real Estate locations are free of all
environmental, soil, boundary, and topographic issues that may make it
inadvisable for the Buyer to consummate this transaction. The cost of Buyer to
retain its
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environmental assessment firm shall be paid by the Seller regarding each such
Phase I Environment Assessment and shall not exceed $2,000.00 per report. Any
Phase 2 environmental testing to be performed shall be the responsibility of
Buyer unless otherwise agreed between Seller and Buyer. Seller may elect to not
be responsible to cure any environmental problems disclosed as a result of any
environmental testing. In the event an environmental problem arises in
connection with one Restaurant location which does not meet with the Buyer's
approval, said approval not to be unreasonably withheld, either the Seller shall
cure the problem (at Seller's sole cost) to the reasonable satisfaction of
Buyer, or Buyer may opt to "carve out" of the Closing the restaurant location to
which Buyer objects and then Buyer and Seller shall Close this transaction
excluding the "carved out" Restaurant location. In the event the Parties cannot
agree as to which option to select, or more than one property is objectionable
to Buyer, either Party may terminate the Agreement, in which event the deposit
plus interest shall be refunded in full to Buyer with no further liability to
either Party. In the event of such a "carve out", the Purchase Price shall be
reduced by the percentage of the annual cash flow of the "carved out"
Restaurants to the total annual cash flow of the four (4) Restaurants. In the
event Seller fails to procure the four (4) necessary Earth Science Consultants,
Inc.'s (or other firm satisfactory to Buyer) Phase I Environmental Assessments
with certifications satisfactory to Buyer before forty-five (45) days following
execution of this Agreement, Buyer shall be entitled to terminate this
Agreement pursuant to this Section 5.3 and neither Seller nor Buyer shall have
any further liability, or obligation, to each other and the Deposit plus
interest, if any, shall be returned immediately by the Title Company to Buyer.
5.4 The Buyer, with Seller's full cooperation, shall have secured
written and binding evidence that each of Seller's KFC franchise expiration
dates is extended to at least July 1, 2017 by
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<PAGE> 17
the franchisor, KFC Corporation, and that all the Seller's representations and
warranties specified in this Agreement have in fact been put into place and are
true and accurate as of the Closing Date. If any of the conditions or
representation and warranties stated anywhere in this Agreement are not true and
accurate as of the Closing Date, the Buyer may elect to proceed with this
transaction or terminate this Agreement. In the event Buyer terminates this
Agreement pursuant to this Section 5.4, neither Seller nor Buyer shall have any
further liability to each other, and the Deposit plus interest, if any, shall be
returned immediately by the Title Company to the Buyer.
5.5 The Buyer's lending institution that Buyer selects to finance
Buyer's purchase of Seller's four (4) Restaurants approves the Closing of this
Agreement by the Buyer on the Closing Date and Seller shall have maintained all
assets associated with all four (4) Restaurants in good working order through
the Closing Date. "Good working order" is defined as the level of performance
necessary to function in a reasonably foreseeable manner and meeting reasonable
expectations. In the event that the Buyer terminates this Agreement pursuant to
this Section 5.5, neither Seller nor Buyer shall have any further liability to
each other, and the Deposit plus interest, if any, shall be returned immediately
by the Title Company to the Buyer.
5.6 As of the date of Closing, and as additional conditions to Closing,
all leaseholds will have been extended, in a form satisfactory to Buyer, through
September 1, 2017, and Buyer is reasonably satisfied that no wetlands or
flooding issues associated with the Restaurant located on West 12th Street in
Erie, Pennsylvania, and that no "common area" or access issues associated with
the Buffalo Road, Erie, Pennsylvania Restaurant exist, which make it inadvisable
for Buyer to consummate this transaction as to any particular location. In the
event Buyer decides it inadvisable to close on any one location for the above
reasons, that location will be "carved out" consistent with
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the formula set forth in Paragraph 5.3, above, and the closing shall proceed in
all other respects.
6. ELECTION TO PROCEED TO CLOSING.
6.1 In the event that all Seller's Representations and Warranties in
this Agreement are acceptable to Buyer, and all Contingencies to the Buyer's
obligation to Close are satisfied in accordance with Section 5 of this Agreement
then the Buyer and Seller shall proceed to Closing this transaction on the
Closing Date defined in Section 4. Except as it may be limited by the matter of
controls required by Buyer's lending institution as set forth in Paragraph 5.5,
above, Buyer shall notify Seller of its intent to proceed under this Paragraph
within sixty (60) days after execution of this Agreement, time not being of the
essence, or in the alternative, notice of any problems which might disrupt the
Closing.
6.2 On or before the Closing Date, Seller shall deposit in escrow with
the Title Company all the Leasehold assignment and delegation instruments, and
all of General Warranty Deeds, and all other instruments required of Seller
hereunder.
6.3 On or before the Closing Date, Seller and Buyer shall deliver to
the Title Company such other documents as may be reasonably required by the
Title Company in connection with consummation of the transaction contemplated
hereunder.
6.4 On or before the Closing Date, Buyer shall deposit the balance of
the Purchase Price in escrow with the Title Company.
6.5 On the Closing Date, the Title Company shall prorate between the
parties, as of the Closing Date, all relevant annual real estate taxes and
governmental assessments (both general and special) on the basis of the current
fiscal tax year, except that if the Closing Date shall occur before the tax rate
is fixed for the current fiscal year, the apportionment of annual real estate
taxes
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and assessments shall be based upon the latest available rate and valuation.
6.6 Following deposit of the Purchase Price, and other documents in
escrow, and when the Title Company can and will issue the Title Policy, the
Title Company shall immediately (a) file the assignment of each assigned
Leasehold, or Memorandum thereof, and the Warranty Deed for each Fee Real Estate
parcel in the appropriate public land records office and (b) disburse the
Purchase Price to or for the account of Seller after appropriate deductions by
reason of proration of taxes and assessments and charges for expenses payable by
Seller, in accordance with Cocolin's accountant's written disbursement
instructions addressed to the Title Company in order to facilitate Seller's
"like kind exchange" purposes.
6.7 Seller shall pay: fifty percent (50%) of the escrow fee; (b) fifty
percent (50%) of all State or County conveyance tax or transfer tax levied or
payable in connection with any title transfer or public records filings. Buyer
shall pay all of the cost of any public land records filings and fifty percent
(50%) of all State or County conveyance tax or transfer tax levied or payable in
connection with any title transfer or public records filing; (c) the amount due
Buyer, if any, by reason of the proration of annual real estate taxes and
assessments; (d) all of Seller's state or federal income taxes, only, levied in
connection with this Agreement.
6.8 Buyer shall pay all title examination, survey and title insurance
policy fees, fifty (50%) percent of the escrow fees, premium and charges
attributable to the Closing of this Agreement. To the extent referenced in
Paragraph 5.3, above, Seller shall pay all Phase 1 environmental fees and
charges owed to Earth Sciences Consultants, Inc. an entity retained by Buyer
(or other firm satisfactory to Buyer) and also to the extent set forth above,
all Seller's post Phase 1 Environmental Assessment report costs and
environmental remediation costs, if any and so agreed
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<PAGE> 20
upon, in connection with the Closing of this Agreement.
6.9 This Agreement shall constitute instructions to the Title Company
regarding the Closing of this transaction. The Title Company may attach hereto
its standard conditions of escrow acceptance without further signature of the
parties and the same shall supplement instructions to the Title Company to the
extent, and only to the extent, consistent with this Agreement. All the Buyer's
and Seller's respective monetary obligations at Closing Date (including
environmental report or remediation costs, title examination, survey and title
insurance fees and charges, State or County conveyance or title transfer taxes,
and annual real estate taxes and assessments) shall be adjusted at the Closing
on the Closing Statement. Buyer shall select the Title Company that will control
the escrow and the Closing. The Closing shall take place through the mail
without the need for the Parties to actually travel to a particular site.
7. INDEMNITY.
(a) Seller agrees to defend, indemnify, and hold Buyer harmless
against and in respect of any and all liabilities of Seller related to the four
(4) Restaurants and incurred or arising prior to the Closing Date.
(b) Each party agrees to defend, indemnify and hold the other harmless
against and in respect to any and all loss, liability, claim, damage, and
expense whatsoever arising out of a breach by either party any representations,
warranties, or covenants contained in this Agreement or in any instrument
executed or delivered in connection with this Agreement.
(c) Unless specifically stated to the contrary in the Agreement, all
indemnities pursuant to this Paragraph shall survive the Closing and the
Closing Date.
8. UTILITIES. The Parties agree to cooperate with each other to
effectuate a change
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<PAGE> 21
in utility services from Seller's to Buyer's name and responsibility as of the
Closing date. Seller shall cause all utility meters and services to be read and
measured as of the Closing Date, and Seller shall pay all charges for telephone,
electricity, gas, water, oil, and any other utilities which have accrued to that
date, all such charges to be adjusted between the Buyer and the Seller at the
Closing based on which party owned the Restaurant incurring the utility charges,
or portion thereof, at the time such utility charges were actually incurred.
9. CASUALTY. Seller assumes all risks and liability for loss, damage,
or injury by fire, windstorm, accident, or cause of damage to, or legal
liability to any governmental regulatory body or third party in connection with,
any one of the four (4) Restaurants until the Closing Date. In the event the
Personal Property or the real estate improvements on any one of the four (4)
Restaurant sites suffers any casualty damage, Seller shall apply the insurance
proceeds payable on account of such casualty to the replacement or repair of the
improvements on that site, and the Buyer shall have thirty (30) days after the
completion of the replacement or repair in which to decide whether to accept the
insurance restored assets or terminate this Agreement. If Buyer elects to
terminate this Agreement pursuant to this Section 9, neither Seller nor Buyer
shall have any further liability to each other and Buyer's Deposit plus interest
(if any) shall be refunded to Buyer. The Closing Date shall be extended as
necessary to protect Buyer's rights under this Section 9.
10. CONDEMNATION. If, prior to the Closing Date, all or any portion of
one of the four (4) Restaurants is taken by eminent domain, then Buyer shall
have the option, exercisable by written notice given to Seller within thirty
(30) days after written notice of the occurrence of the eminent domain taking is
received by Buyer, to either: (a) proceed with the Closing, without a reduction
of the Purchase Price and otherwise pursuant to the terms hereof; or (b)
terminate this
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<PAGE> 22
Agreement. If Buyer shall elect to terminate this Agreement, pursuant to this
Section 10, no party shall have any rights, obligations, or liabilities against
the other, and the Deposit plus interest (if any) shall be returned immediately
to Buyer. If Buyer shall elect to Close on the condemnation real estate "as
is", without reduction of the Purchase Price, and otherwise pursuant to the
terms hereof, then on the Closing Date, Seller shall deliver to Buyer, and
assign to Buyer, all condemnation or eminent domain awards, rights, judgments,
or amounts related thereto, if any, payable by virtue of such eminent domain
taking. The Closing Date shall be extended as necessary to protect the Buyer's
rights under this Section 10.
11. SURVIVAL. Unless otherwise specifically set forth herein, Seller's
and Buyer's indemnities, Representations and Warranties contained herein shall
survive the Closing Date, the delivery of other documents by Seller to Buyer
hereunder, and the Closing of this transaction, PROVIDED HOWEVER, that except
for indemnities, representations or warranties as to environmental matters, in
no event shall any of the indemnities, representations or warranties contained
herein survive for more than one (1) year after the Closing date.
12. NOTICES. Notice required or permitted to be given hereunder by the
parties shall be delivered personally or served by regular mail or by telefax to
the parties at the addresses and fax numbers set forth below, unless different
addresses or fax numbers are given by one party to the other:
AS TO BUYER:
Morgan's Restaurants of Ohio, Inc. and/or
Morgan's Restaurants of Pennsylvania, Inc.
24200 Chagrin Blvd., Suite 126
Beachwood, OH 44122
Attn: James J. Liguori, President
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Fax Number: 216-360-0299
AS TO SELLER:
Gary L. Cocolin
4963 Sir Hue Drive
Erie, Pennsylvania 16506
Attn: Gary L. Cocolin
Fax Number: 814-835-3436
With a copy to SELLER'S ATTORNEY at:
Thomas P. Agresti, Esq.
319 West 10th Street
Erie, Pennsylvania 16502
Fax Number: 814-454-2520
13. MECHANIC'S LIENS. Seller Represents and Warrants that no unpaid
construction work has been performed on any of the Leaseholds, or on any Fee
Real Estate, or unpaid materials supplied for any of the Leaseholds or for any
Fee Real Estate in connection with the improvement thereof within one year prior
to the Closing Date for which a legally or equitably enforceable mechanic's lien
presently could be filed. Seller agrees to indemnify and hold Buyer or Title
Company harmless against any costs, damages, and expenses incurred by Buyer and
Title Company, including reasonable attorney's fees and all other legal expenses
listed in Section 22 of this Agreement, as a result of the filing against any
Leasehold or any Fee Real Estate parcel of a mechanic's lien by natural persons,
firms, entities, or corporations claiming to have performed work on such
Leaseholds or on such Fee Real Estate or supplied materials for such Leaseholds
or for such Fee Real Estate prior to the Closing Date. Buyer agrees to give
Seller notice of any such liens promptly after Buyer obtains knowledge thereof.
If any such liens are not discharged of record or fully bonded by Seller within
thirty (30) days after the receipt by Seller of such notice, Buyer shall
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<PAGE> 24
have the right to pay the full amount of any such liens to the lien claimants,
and Buyer shall deduct such amounts and all directly associated expenses from
the Purchase Price or any other amounts which Buyer may at any time owe Seller.
If Buyer first learns of such liens after the Closing Date, Buyer shall sue
Seller, and Seller shall immediately consent to judgment in Buyer's favor, for
full indemnification payment under the terms of this Agreement. Seller shall
execute all mechanic's lien affidavits required by Title Company, on or before
the Closing Date.
14. POSSESSION AND RIGHT TO GRANT POSSESSION.
14.1 Possession of each of the four (4) Restaurants shall be delivered
by Seller to Buyer on the Closing Date.
14.2 Seller Represents and Warrants to Buyer that on the Closing Date
there are, and will be, no outstanding written or oral leases or other
agreements (except as previously set forth herein) covering or in any way
affecting the four (4) Restaurants and that no person or entity shall have any
right with respect to any of the four (4) Restaurants (whether by option to
purchase, contract, credit or security instrument, management agreement,
consulting agreement, or otherwise) which would prevent or interfere with
Buyer's acquiring and taking full and unencumbered legal and physical possession
of all four (4) Restaurants.
15. SERVICE CONTRACTS. Seller shall perform its obligations, up to the
Closing Date, under all service contracts that Seller has entered into in
connection with each and every Restaurant. Except for the Pepsi Lease, all such
contracts, unless approved and assumed by Buyer, shall be terminated in writing
by Seller, at Seller's sole cost, on or before the Closing Date.
16. ENTIRE AGREEMENT. This Agreement, together with the Exhibits
attached hereto, and any addendums, embodies and constitutes the entire
understanding between the parties
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<PAGE> 25
with respect to the transactions contemplated herein, and all prior or
contemporaneous agreements, understandings, representations, and statements,
oral or written (including the parties' Letter of Intent signed on or about
January 13, 1998), are merged into, and superseded by this Agreement. Neither
this Agreement, nor any provision hereof, may be waived, modified, amended,
discharged, or terminated except by an instrument in writing signed by the party
against which the enforcement of such waiver, modification, amendment,
discharge or termination is sought, and then only to the extent set forth in
such instrument.
17. SUCCESSORS AND ASSIGNS. Seller shall not assign this Agreement (or
delegate Seller's duties under this Agreement) without the prior written consent
of Buyer. Buyer shall not be entitled to assign this Agreement (or delegate
Buyer's duties under this Agreement) without the prior written consent of
Seller, which consent will not be unreasonably withheld, except that Buyer may
without Seller's prior written approval, assign Buyer's rights and delegate
Buyer's duties under this Agreement to a corporation, partnership, or limited
liability company under common control with Buyer. This Agreement shall be
binding upon and inure to the benefit of the Seller, the Buyer and their
respective successors and permitted assigns.
18. SECTION HEADINGS. All section headings and other titles and
captions herein are for convenience only, do not form a substantive part of this
Agreement, and shall not restrict or enlarge any substantive provisions of this
Agreement.
19. PRONOUNS. All references to "Seller" or pronouns and any variations
thereof shall be deemed to refer to the masculine, feminine, neuter, singular or
plural, as the identity of the person or persons may require.
20. LAW. This Agreement shall be construed under and governed by the
laws of the
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State of Ohio, and all litigation arising under or in connection with, this
Agreement shall be conducted exclusively in either the Ohio state courts located
within the geographic region known as Cuyahoga County, Ohio, or the Federal
courts located within the geographic region known as Cuyahoga County, Ohio. The
parties mutually waive the defenses of lack of personal jurisdiction, improper
venue, inconvenient forum, or inconvenient venue with respect to all
litigation between them which is filed in a forum which complies with this
Section 20, except that either Buyer or Seller retains the right to remove any
litigation between them from any state court to a federal court pursuant to 28
U.S.C. Sections 1441 through 1446. This Agreement shall be deemed executed in
Ohio when signed by Buyer's authorized officers at the Buyer's above named
principal place of business.
21. REMEDIES.
21.1 If either party learns prior to the Closing Date that the other
party breached any of its covenants, agreements, indemnities, Representations,
or Warranties in this Agreement, and provided such breach has not been cured
within (30) days after written notice thereof, either party may:
(a) declare this Agreement terminated, in which event the Deposit (plus
interest), if any, shall be refunded in full to Buyer, with no further liability
to either Party, each Party responsible for its own costs at which time the
Parties shall be released of all further liability hereunder; or
(b) enforce all of the said Party's rights under this Agreement by an
action for damages, or injunction, or specific performance against the offending
Party, plus reimbursement to the prevailing party for all its litigation and
pre-litigation costs including reasonable attorney fees (which includes Buyer's
in-house employee staff counsel's salary and expenses) and all other
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recoverable fees and expenses listed in Section 22 of this Agreement.
21.2 Buyer and Seller mutually waive all rights that either of them may
have to litigate any issue before a jury, it being their express intent that all
litigation between them shall proceed exclusively before a judge.
22. LEGAL EXPENSES.
To the maximum extent permitted by law, in the event of any litigation
between the Seller and the Buyer arising from this transaction or in connection
with or involving any Seller's Representation, Warranty, or any Seller's
Indemnity to Buyer under this Agreement, the prevailing party shall be entitled
to recover from the adverse party all costs and expenses of such litigation
including, without limitations, reasonable attorneys fees including Buyer's
in-house employee staff counsel's salary and expenses, court reporter fees,
deposition expenses, expert and non-expert witness fees, court filing fees,
sheriff's fees, and all other litigation costs in addition to any legal or
equitable judgment awarded to the substantially prevailing party.
23. AUTHORIZATION.
Each party Represents and Warrants to the other that it has taken all
necessary corporate and partnership action to obtain the signatures affixed
hereto in preparing this Agreement, and each party shall deliver evidence
thereof at the time of executing the within Agreement in form and substance
satisfactory to each of the parties' respective counsel, to such effect.
24. EMPLOYEES AND VENDORS.
Seller warrants, represents and covenants to Buyer that all Seller's
employee compensation and Seller's vendor obligations (invoiced or uninvoiced)
shall be paid up to and through the Closing Date to the extent the claims arose
during the employees employment
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<PAGE> 28
relationship with Seller. Seller indemnifies Buyer from any such Seller's
employee's claims or Seller's vendor's claims asserted against Buyer after the
Closing Date. Buyer is not obligated to retain or hire any of Seller's
employees, PROVIDED HOWEVER, forty-eight (48) hours prior to the closing date
Buyer shall notify Seller of all those employees it intends to rehire, if any,
time being of the essence. Seller shall be unilaterally obligated for all
employee notices, expenses (including but not limited to workers compensation,
health insurance, accrued vacation, or unemployment costs, fees, bonus payments,
salaries or expenses) associated with the Seller's termination of employment of
any of Seller's employees. Similarly, Seller shall be unilaterally responsible
for all United States Department of Labor claims, OSHA claims, claims of
employment discrimination, or any other employee related tort or contract claims
arising under State law or Federal law which any of Seller's employees may
assert against Buyer after the Closing Date to the extent the claims arose
during the employees employment relationship with Seller. Seller indemnifies
Buyer against all claims, judicial or administrative, which any of Seller's
employees or Seller's vendors may assert against Buyer to the extent the claims
arose during the employees employment relationship with Seller. The name,
address and telephone number of all Seller's vendors (by Restaurant which each
vendor services) is listed on attached EXHIBIT J. The name, job title, date of
employment and compensation (including employees insurance coverage) accrued
vacation, and bonus plans of all of Seller's employees (by the Restaurant at
which each employee is employed) is listed on attached EXHIBIT K. A copy of any
insurance policy, which Seller maintains for Seller's employees, is included in
EXHIBIT K. After the Closing Date Buyer, under Buyer's sole discretion, shall be
free to hire or not hire any of Seller's employees. Seller warrants and
represents to Buyer that Seller shall terminate the employment of all Seller's
employees effective at the Closing.
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<PAGE> 29
25. REPAIRS.
On or prior to forty-five (45) days following the signing of this
Agreement, Buyer and its agents, contractors, architects, engineers and
employees shall examine the premises of each of the four (4) Restaurants to
investigate and study the condition of the assets, both latent and patent,
located thereon. Buyer shall be entitled to a final walk through of all four (4)
Restaurant locations within 48 hours before the time at which the Closing
transpires to make sure the condition of all real estate and personal property
assets are substantially unchanged from the date of signing this Agreement. In
the event there is a substantial adverse change in the condition of any one
Restaurant (other than a casualty loss described in Section 9 of this Agreement)
the Buyer and Seller shall downwardly adjust the Purchase Price at the Closing
to reflect the diminished value of the assets sold according to a formula
mutually agreed upon by the Parties.
26. HVAC AND ROOF WARRANTY.
Seller represents and warrants to the Buyer that the HVAC Systems and
the roofs located on the premises of all four (4) Restaurants will be in good
working order up to the date of Closing. Good working order as used in this
Paragraph is defined in Paragraph 5.5, above. As with all real estate fixtures
and personalty transferred hereunder, Buyer certifies, acknowledges and
understands that it is purchasing the HVAC and buildings in "as is" condition
with all faults as of the date of closing.
27. COCOLIN'S NONCOMPETITION COVENANT.
Cocolin agrees that for a period of two (2) years after the date of the
Closing Cocolin shall not be associated in any fashion, whether as an owner,
shareholder, partner, member, or employee in connection with any for profit, or
non-profit, enterprise which engages in the Quick
29
<PAGE> 30
Service Restaurant ("QSR") business with chicken sales that exceed twenty
percent (20%) of its total food sales within a ten (10) mile radius of any one
of the four (4) Restaurants. The Parties understand and agree that Seller
currently intends to open a fine dining casual restaurant potentially with a
liquor license and situated within ten (10) miles of one of the four (4)
restaurants but in such case this covenant shall not apply. Cocolin warrants
that any violation of the Noncompetition Covenant articulated in Section 27 of
this Agreement shall result in great immediate and irreparable injury to Buyer
for which Buyer shall be entitled to injunctive relief in addition to any other
relief or judgment (including but not limited to a judgment for litigation costs
specified in Section 22 of this Agreement) which a court may award Buyer, or
Buyer's successors, assigns, or delegates. The provisions of this Section 27
shall survive the Closing of this Agreement.
28. EXCLUSIVE DEALINGS.
Between the date of this Agreement and the Closing, unless this
Agreement is terminated earlier by either Party either by breach or through
agreement, neither Party shall discuss the sale of any assets associated with
the four (4) Restaurants, or the sale of the stock of GRNN, with any natural
person or entity other than Buyer without the other Party's prior written
approval, and through the Closing Date the Parties shall avoid all conduct with
respect to third parties which, is inconsistent with Closing this Agreement.
Seller may casually and generally discuss the pending sale with third parties
and Buyer shall be free to publish any public announcement which Buyer
reasonably believes is necessary or appropriate in order to comply with federal
or state securities laws.
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This Agreement is entered into as of the date and year written above.
SELLER:
GRNN, INC.
Date: 4/9/98 By: /s/ GARY L. COCOLIN
-------------------------------
Gary L. Cocolin, President
SELLER:
GARY L. COCOLIN
Date: 4/9/98 /s/ GARY L. COCOLIN
-----------------------------------
Gary L. Cocolin, Personally
BUYER:
MORGAN'S RESTAURANTS OF OHIO, INC.
Date: 5/01/98 By: /s/ JAMES J. LIGUORI
-------------------------------
James J. Liguori, President
MORGAN'S RESTAURANTS OF
PENNSYLVANIA, INC.
Date: 5/01/98 By: /s/ JAMES J. LIGUORI
-------------------------------
James J. Liguori, President
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<PAGE> 32
STATE OF PENNSYLVANIA :
: SS.
COUNTY OF ERIE :
BEFORE ME, a Notary Public in and for said County and State, did
personally appear the above named GRNN, INC. by GARY L. COCOLIN, its President
who acknowledged to me that he did sign the foregoing instrument as such officer
of said corporation and that the same is his free act and deed and the duly
authorized free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at
this 9th day of April, 1998.
NOTARY PUBLIC
My Commission Expires: /s/ THOMAS S. KUBINSKI
----------------------------
STATE OF PENNSYLVANIA : [NOTARIAL SEAL
: SS THOMAS S. KUBINSKI, NOTARY PUBLIC
COUNTY OF ERIE : ERIE, ERIE COUNTY, PENNSYLVANIA
MY COMMISSION EXPIRES MAY 10, 1999]
BEFORE ME, a Notary Public in and for said County and State, did
personally appear the above named GARY L. COCOLIN personally acknowledged to me
that he did sign the foregoing instrument personally, and that the same is his
free act and deed.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at
this 9th day of April, 1998.
NOTARY PUBLIC
My Commission Expires: /s/ THOMAS S. KUBINSKI
----------------------------
[NOTARIAL SEAL
THOMAS S. KUBINSKI, NOTARY PUBLIC
ERIE, ERIE COUNTY, PENNSYLVANIA
MY COMMISSION EXPIRES MAY 10, 1999]
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<PAGE> 33
STATE OF OHIO :
: SS
COUNTY OF CUYAHOGA :
BEFORE ME, a Notary Public in and for said County and State, did
personally appear the above named MORGAN'S RESTAURANTS OF OHIO, INC. by JAMES
J. LIGUORI, its President, who acknowledged to me that he did sign the foregoing
instrument as such officer of said corporation and that the same is his free act
and deed and the duly authorized free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at
this 1st day of May, 1998.
NOTARY PUBLIC
My Commission Expires: /s/ KATHLEEN M. PHILBIN
----------------------------
[KATHLEEN M. PHILBIN
Notary Public
State of Ohio, Cuyahoga County
My Commission Expires 11/15/2000]
STATE OF OHIO :
: SS
COUNTY OF CUYAHOGA :
BEFORE ME, a Notary Public in and for said County and State, did
personally appear the above named MORGAN'S RESTAURANTS OF PENNSYLVANIA, INC. by
JAMES J. LIGUORI, its President, who acknowledged to me that he did sign the
foregoing instrument as such officer of said corporation and that the same is
his free act and deed and the duly authorized free act and deed of said
corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal at
this 1st day of May, 1998.
NOTARY PUBLIC
My Commission Expires: /s/ KATHLEEN M. PHILBIN
----------------------------
[KATHLEEN M. PHILBIN
Notary Public
State of Ohio, Cuyahoga County
My Commission Expires 11/15/2000]
33
