PURCHASE AGREEMENT

 

                                                                  EXHIBIT 10.18

                                 PURCHASE AGREEMENT

     This Agreement is made and entered into by and between PARADISE BAKERY, 
INC.,  a Delaware corporation ("Paradise Bakery" or "Seller"), and 
SKYLINE BAKERY, INC. a Texas Corporation ("Skyline" or "Buyer").

                                 RECITAL

     Effective as of May 20, 1996, Paradise Bakery wishes to sell, and 
Skyline wishes to purchase, all of the assets owned by Paradise Bakery which 
are used in the operation of Paradise Bakery's stores (collectively the 
"Stores") located at 777 Walker, Suite M-130, Houston, Texas ("Store 
#1"), and 800 W. Belt (Town & Country), Houston, Texas ("Store #2"), which 
are more particularly described in this Agreement, in accordance with the 
terms of this Agreement.

     THEREFORE, in consideration of the mutual covenants and conditions set 
forth herein, the parties to this Agreement hereby agree as follows:

                                 AGREEMENTS

ARTICLE 1.    GENERAL

     1.01. ASSETS; LEASES; ACCOUNTS RECEIVABLE/WORK IN PROCESS; AND INVENTORY.

          A. Paradise Bakery is the owner of certain equipment, 
     materials, machinery, supplies, furniture, furnishings, tools and other 
     tangible personal property and tenant improvements (the "Assets") 
     which are currently located at 777 Walker, Suite M-130, Houston, Texas 
     (the "Store #1 Premises"), and 800 W. Belt (Town & Country), Houston, 
     Texas (the "Store #2. Premises"). Subject to the terms and conditions 
     of this Agreement, at the Closing (as hereinafter defined) Seller shall 
     sell and Buyer shall buy the Assets. (The Store #1 Premises and the 
     Store #2 Premises are sometimes collectively referred to herein as the 
     "Store Premises"). The Assets are more particularly described in 
     Exhibit 1.01A attached hereto.

          B. Paradise Bakery has previously entered into that certain 
    real property lease (the "Store #1 Lease") covering the Store #1 
    Premises, The Store #1 Lease is attached hereto as Exhibit 1.01B and 
    is incorporated herein by this reference. The Store #1 Lease was 
    originally entered into by and between SWH Management, Inc. (the 
    "Store #1 Landlord"), and Paradise Bakery, Inc. on or about October 
    1, 1990. Upon the close of the purchase of the Assets by Skyline, as 
    described in this Agreement, Paradise Bakery shall, with the consent 
    of the Store #1 Landlord, assign the Store #1 Lease to Skyline and 
    Skyline shall assume all of Paradise Bakery's obligations under the 
    Store #1 Lease. Skyline agrees to execute such assignment and 
    assumption documents and to pay such assignment charges as the Store 
    #1 Landlord may require. Skyline agrees to indemnify, defend and hold 
    harmless Paradise Bakery with respect to all liabilities, obligations,

    claims and expenses in connection with the Store #1 Lease after it is 
    assumed by Skyline.

        C. Paradise Bakery has previously entered into that certain real 
    property lease (the "Store #2 Lease") covering the Store #2 Premises. 
    The Store #2 Lease is attached hereto as Exhibit 1.0IC and is 
    incorporated herein by this reference. The Store #2 Lease was 
    originally entered into by and between HEM Associates Ltd.-Houston 
    (the "Store #2 Landlord"), and Paradise Bakery, a California 
    corporation, on or about November 10, 1983. Upon the close of the 
    purchase of the Assets by Skyline as described in this Agreement, 
    Paradise Bakery shall, with the consent of the Store #2 Landlord, 
    assign the Store #2 Lease to Skyline and Skyline shall assume all of 
    Paradise Bakery's obligations under the Store #2 Lease. Skyline agrees 
    to execute such assignment and assumption documents and to pay such 
    assignment charges as the Store #2 Landlord may require. Skyline 
    agrees to indemnify, defend and hold harmless Paradise Bakery with 
    respect to all liabilities, obligations, claims and expenses in 
    connection with the store #2 Lease after it is assumed by Skyline. The 
    Store #1 lease and the Store #2 Lease are sometimes collectively 
    referred to herein as the "Store Leases." The Store #1 Landlord and 
    the Store #2 Landlord are sometimes collectively referred to herein as 
    the "Store Landlords."

        D.  Seller shall sell and Buyer shall buy, at Closing, all of the 
    Seller's rights, title and interest in and to the accounts receivable 
    related to the two Store Premises, with separate consideration for the 
    accounts receivable provided in Article 2.05.

        E.  Seller shall sell and Buyer shall buy, at Closing, all of the 
    Seller's right, title and interest in and to the inventory related to 
    the two Store Premises, with the separate consideration for the 
    inventory provided in Article 2.06 herein.

    1.02.  PURPOSE.  The purpose of this Agreement is to set forth the 
terms under which Paradise Bakery shall sell the Assets to Skyline.

ARTICLE 2.  PURCHASE TERMS.

    2.01.  PURCHASE PRICE. The purchase price for the Assets shall be 
equal to the sum of (i) THREE HUNDRED SIXTY THOUSAND AND NO/100THS 
DOLLARS ($360,000.00) (ii) the "Unamortized Cost" of any new assets or 
tenant improvements in connection with the Stores, which are not part 
of the Assets, but which are paid by Paradise Bakery, with the consent 
of Skyline, on or before the Closing Date; (iii) the value of the 
accounts receivable as of the Closing Date as described in Section 
2.05; (iv) the value of the inventory as of the Closing Date, as 
described in Section 2.06; and, (v) the amount of cash on hand at the 
Stores as of the Closing which is transferred from Seller to Buyer. 
The "Unamortized Cost" shall be equal to the original cost of such new 
assets or tenant improvements, less depreciation calculated in 
accordance with federal income tax principles. The purchase price 
shall be decreased by the Unamortized Cost of any of the Assets sold 
by Paradise Bakery, with the consent of Skyline, after the date of 
this Agreement, but before the Closing Date. The total purchase price 
shall be paid by Skyline to Paradise Bakery as described in Section 
3.04. Skyline shall execute and

deliver assumption documents, as described in Sections 1.01 and 3.05.

     2.02. REIMBURSEMENT OF PARADISE BAKERY. At the Closing, Skyline shall 
reimburse Paradise Bakery for the sum of (i) the deposits held by the Store 
Landlords in favor of Paradise Bakery under the terms of the Store Leases, in 
the approximate amount of ___(None)___ DOLLARS ($___-0-___), and (ii) all 
deposits which Paradise Bakery has made with utilities or other third parties 
in connection with the Stores in the approximate amount of ___(None)___ DOLLARS 
($___-0-___).

     2.03. PURCHASE PRICE ALLOCATION. The purchase price for the Assets shall 
be allocated among the Assets in the manner specified on Exhibit 2.03 
attached hereto (the "Allocation Schedule"). Each of the parties shall report 
this transaction for federal and state tax purposes in accordance with the 
allocation of the purchase price set forth in the Allocation Schedule. 

     2.04. BULK SALES LAW: INDEMNIFICATION. In view of the repeal of the bulk 
transfer law in Texas, Skyline waives compliance with the provisions of the 
laws relating to bulk transfers in connection with the sale of the Assets. As 
a further condition to Paradise Bakery's obligation to close, Skyline and 
Skyline's shareholders shall execute and deliver that certain Indemnification 
and Guaranty Agreement ("Indemnification and Guaranty Agreement") 
indemnifying, defending and holding harmless Paradise Bakery with respect to 
any third party claims against Skyline arising after the Closing (e.g., 
claims of Skyline's trade creditors, sales or payroll taxes owed by Skyline 
which relate to either of the Stores at such times as Skyline owns, operates 
or subleases either of the Stores). The Indemnification and Guaranty 
Agreement shall be in the form attached hereto as Exhibit 2.04.

     2.05. ACCOUNTS RECEIVABLE. Buyer shall purchase the accounts receivable 
relating to the Stores as of the Closing from Seller. As of the close of 
business on the day prior to the Closing, representatives of Seller and Buyer 
shall make a list of the accounts receivable (the "Accounts Receivable"). The 
value of the Accounts Receivable shall be added to the purchase price, as 
described in Section 2.01. The value of the Accounts Receivable shall be the 
total of unpaid invoices per the books and records of Seller or as mutually 
agreed by the parties.

     2.06. INVENTORY. Buyer shall purchase the inventory located at the Stores 
as of the Closing from Seller. As of the close of business on the day prior 
to the Closing, representatives of Seller and Buyer shall take a physical 
inventory at the Stores (the "Inventory"). The value of the Inventory shall be 
added to the purchase price, as described in Section 2.01. The value of the 
Inventory shall be as agreed by the parties. If the parties are unable to 
agree, the value of the Inventory shall be calculated at Seller's cost, 
using the LIFO method of inventory valuation.

     2.07. DISCLAIMER OF ANY ASSUMPTION OF LIABILITIES. Other than the 
liabilities specifically assumed by Buyer herein, the Buyer does not agree 
to pay, assume or discharge any liabilities or obligations of the Seller.

ARTICLE 3.      ESCROW.

     3.01. CLOSING. The closing of the purchase of the Assets, as described 
in this Agreement (the "Closing"), shall take place at 455 Capitol Mall, 
Suite 300, Sacramento, California 95814 or, at Paradise Bakery's option, at 
the then corporate offices of Paradise Bakery, or in such other manner as 
Paradise Bakery reasonably determines. The Closing shall occur on or before 
May 17, 1996.

     3.02. TRANSFER COSTS. Skyline agrees to pay all costs of transferring 
the Assets to Skyline, including, but not limited to, all sales and use taxes 
and all transfer taxes. However, Buyer shall not be responsible for any state 
or federal income taxes imposed on Seller relating to the purchase and sale 
of these Assets. Skyline shall pay all taxes, expenses or costs associated 
with the assignment and assumption of the Store Leases. However, these 
provisions do not obligate Buyer to pay any legal cost incurred by Seller.

     3.03. PRORATIONS. Personal property taxes, utility charges and all other 
expenses involving the operation of the Stores, including the Store Leases, 
shall be prorated as of the Close of Escrow. Seller shall pay when due all 
property, sales and use taxes and all federal and state payroll taxes related 
to the Stores to the extent such sales and use taxes and payroll taxes relate 
to the operation of the Stores prior to Buyer taking possession of the 
Stores. Skyline shall pay when due all property, sales and use taxes and all 
federal and state payroll taxes related to the Stores to the extent such 
sales and use taxes and payroll taxes related to the operation of the Stores 
after Skyline takes possession of the Stores.

     3.04. PAYMENT OF PURCHASE PRICE AND INITIAL FRANCHISE FEE; FINANCING. 
The purchase price and the initial franchise fee shall be paid by Skyline, at 
the Closing, as follows:

          A. CASH PAYMENT. Skyline shall deliver a cashier's check in the 
     amount of THREE HUNDRED TWENTY THOUSAND AND 00/100THS DOLLARS ($320,000.00)
     payable to Paradise Bakery at the Closing. Forty Thousand Dollars of such 
     payment shall be applied to and shall satisfy Buyer's obligation to pay an 
     initial franchise fee of $40,000.00 to Paradise Bakery.

          B. DEFERRED PORTION OF PURCHASE PRICE. The balance of the purchase 
     price for the Assets (e.g., the total purchase as calculated in Section 
     2.01 less the cash down payment of $280,000.00 described in Section 3.04A) 
     shall be evidenced by a promissory note (the "Purchase Note"), to be 
     delivered to Paradise Bakery at the Closing. The principal amount of the 
     Purchase Note shall bear interest at a rate equal to "prime" plus one 
     percent. The "prime" rate shall be the prime commercial lending rate of 
     interest from time to time announced by Chase Manhattan Bank for short term
     unsecured loans to corporate borrowers of the highest credit rating. Any 
     change in the rate at which the Purchase Note bears interest resulting from
     a change in the prime rate shall become effective on the same date on which
     such change in the prime rate becomes effective, If Chase Manhattan Bank 
     shall cease to announce a prime rate, then for the purposes of the Purchase
     Note, the prime rate shall be deemed to be the average prime interest rate 
     determined as set forth above by the three (3) largest (measured by total
     assets) banking

institutions in the State of California then announcing a prime interest 
rate, but not to exceed the maximum rate then permitted by law. Commencing 
one month from the earlier of (1) the payment of that certain promissory 
note, dated on or about the date of the Purchase Note, to Bank of America, or 
(2) five (5) years after Closing, an amount equal to the then unpaid 
principal balance of the Purchase Note plus accrued interest from the date of 
the Purchase Note shall be paid in thirty-six (36) equal monthly installments 
of principal and interest. The Purchase Note shall be in the form attached 
hereto as Exhibit 3.04B, which Purchase Note shall contain the terms of 
payment contained in this Agreement and the Purchase Note shall provide for 
prepayment of any amount or amounts without penalty and shall provide for 
written notice and opportunity to cure before default. Seller is leasing 
certain equipment from AT&T Capital Leasing Services, Inc. ("AT&T") as 
reflected in the lease attached hereto as Exhibit 3.04B-2. Buyer agrees to 
assume Seller's obligations under such lease. All remaining scheduled 
payments under such lease which are paid by Buyer shall be deemed to 
constitute payments under the terms of the Purchase Note when delivered to 
AT&T.

    C.  GUARANTY. Payment of the Purchase Note shall be personally guaranteed 
by Roy R. Frederick in the form attached hereto as Exhibit 3.04C.

    D.  SECURITY AGREEMENT.  The Purchase Note shall be secured by 
subordinated security agreements ("Security Agreements") covering all of the 
assets and rights being sold by Seller to Buyer under the terms of this 
Agreement. Seller's security interests shall be junior and subordinate to the 
trust deed(s) and/or security agreement(s) to be provided to Buyer's purchase 
money lender(s).

    E.  ACCELERATION.  After the Closing , Skyline shall not, without the 
prior written consent of Paradise Bakery, sell, convey, alienate or otherwise 
transfer, or permit the transfer of (i) any interest in the Assets, (ii) any 
direct or indirect interest in the business conducted by Skyline at either of 
the Stores, or (iii) agree to do any of the foregoing without the prior 
written consent of Paradise Bakery so long as the Purchase Note has not yet 
been paid in full. Without the prior written consent of Paradise Bakery, upon 
(i) the sale, conveyance, alienation or transfer, whether voluntary, 
involuntary or by operation of law, of all or any part of the Assets, or any 
interest therein, (ii) the sale, conveyance, alienation or transfer, of 
substantially all of the assets and/or business of Skyline conducted at 
either of the Stores outside of the ordinary course of business, (iii) the 
dissolution and/or liquidation of Skyline, or (iv) entering into an agreement 
to do anything described in clauses (i), (ii) or (iii) (each of such acts or 
events being hereinafter referred to as a "Transfer"), then at the Paradise 
Bakery's sole option, Paradise Bakery may declare, by written notice to 
Skyline, all obligations under the Purchase Note immediately due and payable. 
Skyline shall notify Paradise Bakery promptly in writing of any transaction 
or event which may give rise to a right of acceleration.

3.05.  DELIVERY OF DOCUMENTS AND CASH IN CONNECTION WITH CLOSING.

    A.  PARADISE BAKERY'S CLOSING OBLIGATIONS.  In order to close the 
transactions described herein, Paradise Bakery is obligated to deliver the 
following:

         (1)  An assignment and assumption of each of the Store 
    Leases, properly executed by Paradise Bakery, and accompanied by the 
    consent of each of the Store Landlords, in such form as the Store 
    Landlords may reasonably require, as more fully described in Article I 
    (collectively, the "Lease Assignments");
         (2)  A Bill of Sale and Assignment of the Assets, executed by 
    Paradise Bakery, substantially in the form attached hereto as Exhibit 
    3.05A-(2); and
         (3)  Such other documents and items that Paradise Bakery is 
    obligated to deliver under the terms of this Agreement.

    B.  SKYLINE'S CLOSING OBLIGATIONS.  In order to close the transactions 
described herein, Skyline is obligated to deliver the following:

         (1)  Original copies of the Lease Assignments, properly 
    executed by Skyline, in such forms as the Store Landlords may 
    reasonably require;
         (2)  such additional documents as Paradise Bakery may require 
    to evidence the assumption by Skyline of all of the Obligations of 
    Paradise Bakery under the terms of the Store Leases;
         (3)  The cash or cashier's check described in Section 3.04;
         (4)  Reimbursement by cashier's check of the amounts 
    described in Section 2.02;
         (5)  The Purchase Note, duly executed by Skyline;
         (6)  The Guaranty described in Section 3.04C, duly executed; 
    and,
         (7)  such other documents and items that Skyline is obligated 
    to deliver under the terms of this Agreement.

3.06.  CONDITIONS PRECEDENT TO PARADISE BAKERY'S OBLIGATION TO CLOSE.  
The obligation of Paradise Bakery to close the sale of the Assets, as 
described in this Agreement, is subject to the satisfaction, at or 
before the Closing, of all of the conditions set forth below in this 
Section 3.06. Paradise Bakery may waive any or all of these 
conditions, in whole or in part, without prior notice; provided, 
however, that no such waiver of a condition shall constitute a waiver 
by Paradise Bakery of any of its other rights or remedies, at law or 
in equity, if Skyline shall be in default of any of its 
representations, warranties or covenants under this Agreement.

    A.  OPINION LETTER.  Paradise Bakery must receive from Counsel for 
Skyline an opinion dated on or about the Closing Date, in form and 
substance satisfactory to Paradise Bakery and its Counsel, that:
         (1) Skyline is a corporation duly organized and validly 
    existing and in good standing under the laws of the State of Texas, 
    and has all necessary power to own its properties as now owned and 
    operate its business as now operated.

          (2) This Agreement has been duly and validly authorized and, when 
executed and delivered by Skyline, will be valid and 
binding on Skyline and enforceable in accordance with its terms, except as 
limited by bankruptcy and insolvency laws and by others laws affecting the 
rights of creditors generally.

     B. CLOSING OBLIGATIONS. Skyline shall have satisfied or be ready, 
willing and able to satisfy all of Skyline's obligations on or before the 
Closing Date, including the obligations described in Section 3.05.

     C. EXECUTION OF FRANCHISE AGREEMENTS. Skyline shall have entered into 
Franchise Agreements with Paradise Bakery on or before the Closing Date 
covering both Stores and shall, at the Closing, pay the initial franchise fee 
described in Section 3.04.  Paradise Bakery may terminate this Agreement if 
it has rightfully terminated any Franchise Agreement with Skyline.

     D. CONSENTS. The necessary consents to consummate the sale, as described 
herein, have been obtained.

     3.07 CONDITION PRECEDENT TO SKYLINE'S OBLIGATION TO CLOSE. The 
obligations of Skyline to close the purchase of Assets, as described in this 
Agreement, is subject to the satisfaction, at or before the Closing, of all 
of the conditions set forth below in this Section 3.07A.  Skyline may waive 
any or all of these conditions, in whole or in part, without prior notice, 
provided, however, that no such waiver of a condition shall constitute a 
waiver by Skyline of any of its other rights or remedies, at law or in 
equity, if Paradise Bakery be in default of any of its representations, 
warranties or covenants under this Agreement.

     A. SECRETARY'S CERTIFICATE. Skyline must receive a Secretary's 
Certificate from Paradise regarding the Paradise directors' resolution 
approving this Purchase Agreement and the transaction set forth herein.

     B. CLOSING OBLIGATIONS. Paradise Bakery shall have satisfied or be 
ready, willing and able to satisfy all of Paradise Bakery's obligations on or 
before the Closing Date, including the obligations described in Section 3.05.

     C. EXECUTION OF FRANCHISE AGREEMENTS. Paradise Bakery shall have entered 
into Franchise Agreements with Skyline on or before the Closing Date covering 
both Stores and shall, at the Closing, pay the initial francise fee described 
in Section 3.04.  Skyline may terminate this Agreement if it has rightfully 
terminated any Franchise Agreement with Paradise Bakery.

     D. CONSENTS. The necessary consents to consummate the sale, as described 
herein, have been obtained. 

     3.08 CONDITIONS PRECEDENT TO EITHER PARTY'S OBLIGATIONS TO CLOSE. The 
obligations of either party to close the Purchase and Sale of Assets, as 
described in this Agreement is subject to the parties' mutual agreement with 
the terms and conditions of the following documents:

     (i)    the lease agreements and assumption agreements
     (ii)   the purchase price-allocation schedule
     (iii)  the Franchise Agreement
     (iv)   the Purchase Note
     (v)    the Guaranty Agreement
     (vi)   the Bill of Sale and Assignment for the Assets
     (vii)  the legal opinion letters
     (viii) the Indemnifiying and Guaranty Agreement

ARTICLE 4.  OTHER TERMS; REPRESENTATIONS AND WARRANTIES.

     4.01. ASSETS SOLD "AS IS". AS A RESULT OF THE ABILITY OF SKYLINE TO 
EXAMINE ALL OF THE ASSETS PRIOR TO THE CLOSING DESCRIBED ABOVE, THE PARTIES 
AGREE THAT THE ASSETS SHALL BE SOLD TO SKYLINE ON AN "AS IS" BASIS, WITH NO 
EXPRESS OR IMPLIED WARRANTIES INCLUDING THE IMPLIED WARRANTY OF 
MERCHANTABILITY AND THE IMPLIED WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, 
EXCEPT AS SET FORTH IN SECTION 4.02.

     4.02. REPRESENTATIONS AND WARRANTIES OF PARADISE BAKERY. Paradise Bakery 
hereby makes the following representations and warranties:

        A. GOOD STANDING, ETC. Paradise Bakery is a corporation duly 
     organized, validly existing and in good standing under the laws of 
     California and has all necessary powers to own its properties and to 
     operate its business as now owned and operated by it. 

        B. TAX RETURNS. Within the times and in the manner prescribed by law, 
     Paradise Bakery has filed all federal, state and local tax returns 
     required by law and has paid all taxes, assessments and penalties due 
     and payable which relate to the Stores.  There are no present disputes 
     as to taxes of any nature payable by Paradise Bakery which relate to the 
     Stores.

        C. EQUIPMENT AND OTHER TANGIBLE PERSONAL PROPERTY. The list of Assets 
     set forth on Exhibit 1.01A is a complete and accurate schedule 
     describing all machinery, equipment, furniture, supplies, tools and all 
     other tangible personal property owned by Paradise Bakery and used by 
     Paradise Bakery in connection with the operation of the Stores, as of 
     the execution of this Agreement.

        D. TITLE TO ASSETS. Paradise Bakery has good and marketable title to 
     all of the Assets, and as of the Closing, all of the Assets will be free 
     and clear of restrictions on or conditions to transfer or assignment, and 
     free and clear of mortgages, liens, pledges, charges, encumbrances, 
     equities claims, easements, rights of way, covenants, conditions or 
     restrictions, except for (i) the lien of current taxes not yet due and 
     payable, and (ii) possible minor matters that, in the aggregate, are not 
     substantial in amount and do not 

     materially detract from or interfere with the present or intended use of 
     any of the Assets. No one except Paradise Bakery owns, or has any 
     interest, directly or indirectly, in any of the Assets, except as 
     provided herein.

          E. AUTHORITY AND CONSENTS. Paradise Bakery has the right, power, 
     legal capacity and authority to enter into and perform its respective 
     obligations under this Agreement, and no approval, or consents of any 
     persons other than the persons signing this Agreement on behalf of Paradise
     Bakery are necessary in connection with it, other than the store Landlords 
     under the Store Leases.

          F. STORE LEASES. Paradise Bakery has fully complied with all 
     obligations of the tenant under the Stores Leases and shall have so 
     complied at the Closing, including the payment of all amounts and expenses 
     payable under the Store Leases. The parties shall equitably prorate all 
     rent and other payments owed under such agreements as of the Closing 
     (e.g., Cost pass-throughs, percentage rents (if any), etc.) so that 
     Paradise Bakery bears its share of all obligations under the Store Leases 
     reasonably allocable to the period prior to the Closing.

          G. COMPLIANCE WITH APPLICABLE LAWS. The Seller has not received any 
     notice of any violation of any law (including environmental laws), 
     regulation, ordinance, decree, judgment, order or requirement relating to 
     the Assets or operation of its business at these two Stores, and to the 
     extent of Seller's knowledge, the Seller has not committed a violation. For
     purposes of this Agreement, "Seller's knowledge" shall mean the current 
     actual knowledge without any investigation or inquiry having been 
     conducted, of the current officers of Seller. Buyer acknowledges that 
     Buyer's shareholder is currently an employee of Paradise Bakery, Inc. and 
     manages the Stores.

          H. LITIGATION. There is no litigation, suit, claim, or governmental 
     investigations pending or threatened against Seller, which could result in 
     a material adverse effect on these Assets at these Stores, or which would 
     prevent the consummation of the transactions contemplated hereby.

          I. PERMITS & LICENSES. To the extent of Seller's knowledge, the 
     Seller holds all material licenses and permits which are required to allow 
     it to operate at these Stores and has not received any notice of 
     termination of any permit or license.

     4.03. REPRESENTATIONS AND WARRANTIES OF SKYLINE. Skyline hereby makes the 
following representations and warranties:

          A. GOOD STANDING. Skyline is a corporation duly organized, validly 
     existing and in good standing under the laws of Texas and has all 
     necessary powers to own its properties and to operate its business as 
     now owned and operated by it.

          B. AUTHORITY AND CONSENTS. Skyline has the right, power, legal
     capacity and authority to enter into and perform its respective 
     obligations under this Agreement, and no approvals or consents of any
     persons other than the persons signing this Agreement on behalf of
     Skyline are necessary in connection with it.

          C. GOVERNMENT CONSENT. No consent, approval or authorization of, or
     declaration, filing, or registration with, any United States federal or
     state governmental or regulatory authority is required to be made or
     obtained by Skyline in connection with the execution, delivery and
     performance of this Agreement and the consummation of the transactions
     contemplated by this Agreement.

ARTICLE 5. OBLIGATIONS AFTER CLOSING.

     5.01 PARADISE BAKERY'S INDEMNIFICATION OBLIGATION. Paradise Bakery shall 
indemnify, defend and hold harmless Skyline against and in respect of any and 
all claims, demands, losses, costs, expenses, obligations, liabilities, 
damages, recoveries and deficiencies, including interest, penalties and 
reasonable attorneys' fees, that Skyline shall incur or suffer, that arise, 
result from or relate to (i) any breach of, or failure by Paradise Bakery to 
perform, any of its representations, warranties, covenants or agreements in 
this Agreement or in any schedule, certificate, exhibit or other instrument 
furnished or to be furnished by Paradise Bakery under this Agreement and (ii) 
operations of the Stores before Closing.

     5.02 CONFIDENTIAL INFORMATION. Skyline agrees that, unless and until the 
Closing has been consummated, Skyline and its officers, directors and other 
representatives will hold in strict confidence, and will not use to the 
detriment of Paradise Bakery, any data and information with respect to the 
Assets, the Stores or otherwise in connection with Paradise Bakery obtained 
in connection with the transaction described in this Agreement. It is agreed 
that upon termination of this Agreement or any other agreements for any 
reason, Skyline shall not, on and after the day of such termination, use to 
Skyline's own advantage, or to the advantage of any other person, party or 
corporation, any information gained for, or from the association and business 
of Paradise Bakery. Any written, printed, graphic or electronically or 
magnetically recorded information furnished by Paradise Bakery for Skyline's 
use in connection with the Stores are the sole property of Paradise Bakery. 
This proprietary information includes, but is not limited to, operation 
methods, manuals, marketing information and information concerning Paradise 
Bakery's employees, products, services, prices and operations. Skyline will 
keep this confidential information in the strictest confidence, and will not 
disclose it by any means to any person, except with Paradise Bakery's 
approval, and only to the extent necessary to perform the services under this 
Agreement. This prohibition also applies to Skyline's employees, agents and 
subcontractors. Skyline will return any confidential information in Skyline's 
possession to  Paradise Bakery.

     5.03 SKYLINE'S INDEMNIFICATION OBLIGATION. Skyline shall indemnify, 
defend and hold harmless Paradise Bakery against, and in respect of, any and 
all claims, demands, losses, costs, expenses, obligations, liabilities, 
damages, recoveries and deficiencies, including interest,

penalties and reasonable attorneys' fees, that Paradise Bakery shall incur or 
suffer, that arise from, result from or relate to (i) any breach of or 
failure by Skyline to perform any of its representations, warranties, 
covenants or agreements in this Agreement or in any schedule, certificate, 
exhibit or other instrument furnished or to be furnished by Skyline under 
this Agreement and (ii) operations of the Stores after Closing.

     5.04. PUBLICITY. All notices to third parties and all other publicity 
concerning the transactions contemplated by this Agreement shall be jointly 
planned and coordinated by and between Paradise Bakery and Skyline; provided, 
however, that Paradise Bakery shall be entitled to make all filings and to 
take all appropriate actions to satisfy all federal and/or State securities 
laws and regulations, including Paradise Bakery's disclosure obligations. 
Except as provided in the preceding sentences no party shall act unilaterally 
in this regard without the prior written approval of the other; however, this 
approval shall not be unreasonably withheld.

     5.05. AT&T LEASE. Paradise Bakery covenants to make a good faith effort 
to get the AT&T Lease on the security equipment assigned to Skyline, to 
protect title for the benefit of Skyline, and at the end of the lease term to 
get whatever title Paradise has into Skyline.

ARTICLE 6.     MISCELLANEOUS.

     6.01. NO BROKER/FINDER. Each party represents and warrants that it has 
dealt with no broker or finder in connection with any transaction
contemplated by this Agreement, and, as far as it knows, no broker or other 
person is entitled to any commission or finder's fee in connection with any of 
these transactions. Each party shall indemnify and hold harmless the other 
against any loss, liability, damage, cost, claim or expense incurred by 
reason of any brokerage, commission or finder's fee alleged to be payable 
because of any act, omission or statement of the indemnifying party.

     6.02. EXPENSES. Each party shall pay all costs and expenses incurred or 
to be incurred by it in negotiating and preparing this Agreement and in 
closing and carrying out the transactions contemplated by this Agreement.

     6.03. FORM OF AGREEMENT. The subject headings of the paragraphs and 
subparagraphs of this Agreement are included for convenience only and shall 
not affect the construction or interpretation of any of its provisions.

     6.04. MODIFICATION: WAIVER. The Exhibits and Recitals are incorporated 
into this Agreement. No supplement, modification or amendment of this 
Agreement shall be binding unless executed in writing by all the parties. No 
waiver of any of the provisions of this Agreement shall be deemed, or shall 
constitute, a waiver of any other provision, whether or not similar, nor 
shall any waiver constitute a continuing waiver. No waiver shall be binding 
unless executed in writing by the party making the waiver.

     6.05. COUNTERPARTS. This Agreement may be executed simultaneously in one 
or more counterparts, each of which shall be deemed an original, but all of 
which together shall constitute one and the same fully executed instrument 
when each party has executed and delivered a counterpart to the other party.

     6.06. PARTIES IN INTEREST. Nothing in this Agreement, whether express or 
implied, is intended to confer any rights or remedies under or by reason of 
this Agreement on any persons other than the parties to it and their 
respective successors and assigns, nor is anything in this Agreement intended 
to relieve or discharge the obligation or liability of any third persons to 
any party to this Agreement, nor shall any provision give any third persons 
any right of subrogation or action over against any party to this Agreement.

     6.07. ASSIGNMENT. This Agreement shall be binding on, and shall inure to 
the benefit of, the parties to it and their respective heirs, legal 
representatives, successors and assigns; provided, however, that Skyline may 
not assign any of its rights or obligations under this Agreement.

     6.08. ARBITRATION PROCEDURE.

            A. ARBITRATION. In the event any dispute arising out of or in 
     connection with this Agreement or the transactions contemplated hereby
     cannot be settled by the parties or their representatives, such dispute, 
     at the option of any party, shall be finally, solely and exclusively
     settled by arbitration pursuant to the procedures described in this
     paragraph 6.08; provided, however, that any equitable remedy for which
     an arbitration award would be unenforceable may be sought in any court
     of competent jurisdiction, subject to Paragraph 6.12.

            B. ARBITRATION PROCEDURE.

            (1) Within fifteen (15) days after notice requesting arbitration 
by any party to the other parties to the dispute, the parties to the dispute 
shall attempt to mutually agree upon one person to act as the arbitrator. If 
no such agreement has occurred within such fifteen (15) day period, upon the
request of any party to the dispute, the presiding judge of the Sacramento
County Superior Court, acting in his or her individual capacity, shall select 
a panel of three (3) independent arbitrators who shall act as arbitrators of 
the dispute. If such judge refuses to select such arbitrators, each party 
shall select an arbitrator and the two arbitrators selected by the parties 
shall select a third arbitrator.

            (2) Except as provided herein to the contrary, the arbitration 
shall be in conformity with and subject to Sections 1280 through 1294.2 of 
the California Code of Civil Procedure. The discovery allowed under Section 
1283.05 thereof shall apply to any arbitration under this Agreement.

         (3)  The arbitrator(s) shall conduct hearings in Sacramento, 
    California. The arbitrator(s) shall proceed with due dispatch and 
    shall make a decision resolving the dispute as soon as reasonably 
    possible after appointment. In the case of a three (3)-person panel, 
    the decision of any two (2) of the three (3) arbitrators shall be 
    binding, final and conclusive on the parties to the dispute.

         (4)  The arbitrator(s)' decision may, in the absolute 
    discretion of the arbitrator(s), provide for recovery of all or any 
    portion of the costs, fees and expenses of the arbitration procedure 
    by any party(ies), consistent with Section 6.09.

         (5)  The decision of the arbitrator(s) shall be in writing 
    and delivered to the parties in such form that a judgment may be 
    entered in any Superior Court of the State of California having 
    jurisdiction.

    6.09  RECOVERY OF LITIGATION COSTS.  If any legal action or any 
arbitration or other proceeding is brought for the enforcement of this 
Agreement, or because of an alleged dispute, breach, default or 
misrepresentation in connection with any of the provisions of this 
Agreement, the successful or prevailing party or parties (including a 
successful defendant or defendants) shall be entitled to recover 
reasonable attorneys fees and other costs incurred in that action or 
proceeding, in addition to any other relief to which it or they may be 
entitled.

    6.10  SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  All 
representations, warranties, covenants and agreements of the parties 
contained in this Agreement, or in any instrument, certificate, 
opinion or other writing provided for in it, shall survive the Closing.

    6.11 NOTICES.  All notices, requests, demands and other 
communications under this Agreement shall be in writing and shall be 
deemed to have been duly given on the date of service if served 
personally on the party to whom notice is to be given, or on the 
second (2nd) day after mailing if mailed to the party to whom notice 
is to be given, by first class mail, registered or certified, postage 
prepaid, and properly addressed as follows:

To Skyline at:           Randy Frederick
                         777 Walker, Suite M-130
                         Houston, Texas 77002

with copy to:            Shelton Jones
                         JONES & GILLASPIA, L.L.P.
                         1100 Louisiana, Suite 650
                         Houston, Texas 77002

To Paradise Bakery at:   Paradise Bakery, Inc.
                         1610 Arden Way, Suite 144
                         Sacramento, California 95815

    Any party may change its address for purposes of this paragraph by 
giving the other parties written notice of the new address in the 
manner set forth above.

    6.12.  GOVERNING LAW.  This Agreement shall be construed in 
accordance with, and governed by, the laws of the State of California 
as applied to contracts that are executed and performed entirely in 
California, to the greatest extent possible (without regard to the 
conflicts of law rules of that state) except that this Agreement shall 
not be construed to make the California Franchise Investment Law or 
California Franchise Relations Act applicable. The parties agree that 
any action brought by either party in any court, whether federal or 
state, shall be brought in Sacramento, California and do hereby waive 
all questions of personal jurisdiction or venue for the purposes of 
carrying out this provision.

    6.13.  SEVERABILITY.  If any provision of this Agreement is held 
invalid Or unenforceable by any court of final jurisdiction, it is the 
intent of the parties that all other provisions of this Agreement be 
construed to remain fully valid, enforceable and binding on the 
parties.

    IN WITNESS WHEREOF, the parties to this Agreement have duly 
executed it on the day and year first above written.

                                    ---------------------------------------

                                    SKYLINE BAKERY, INC.

                                    By:  /s/ Randy R. Frederick
                                        -----------------------------------

                                    RANDY FREDERICK
                                    Its PRESIDENT

                                    Paradise Bakery:

                                    PARADISE BAKERY, INC., a Delaware 
                                    corporation

                                    By  /s/ Steven Orlando
                                       ------------------------------------

                                        /s/ Steven Orlando
                                    ---------------------------------------

                                    Its CHIEF FINANCIAL OFFICER

                                 EXHIBITS

1.01a      Assets

1.01B      Store #1 Lease

1.01C      Store #2 Lease

2.03       Allocation Schedule

2.04       Indemnification and Guaranty Agreement

3.04B      Purchase Note

3.04B-2    AT&T Lease

3.04C      Guaranty Agreement

3.05A-(2)  Bill of Sale and Assignment

 

Basic Info X:

Name: PURCHASE AGREEMENT
Type: Purchase Agreement
Date: Aug. 14, 1996
Company: JAVA CENTRALE INC /CA/
State: California

Other info:

Date:

  • May 20 , 1996
  • October 1 , 1990
  • November 10 , 1983
  • May 17 , 1996

Organization:

  • SWH Management , Inc.
  • Store # 1 Lease
  • Store # 2 Lease
  • Close of Escrow
  • Forty Thousand Dollars
  • Chase Manhattan Bank
  • Bank of America
  • AT & T Capital Leasing Services , Inc.
  • Seller to Buyer
  • Paradise Bakery for Skyline
  • Sacramento County Superior Court
  • California Code of Civil Procedure
  • Superior Court of the State of California
  • Shelton Jones JONES & GILLASPIA
  • Paradise Bakery , Inc.
  • Guaranty Agreement 3.04B Purchase Note 3.04B-2 AT & T Lease 3.04C Guaranty

Location:

  • State of Texas
  • United States
  • Skyline
  • Louisiana
  • Houston
  • State of California
  • Sacramento
  • Delaware

Money:

  • $ 360,000.00
  • $ 320,000.00
  • $ 40,000.00
  • $ 280,000.00

Person:

  • Roy R. Frederick
  • Randy Frederick 777 Walker
  • Randy R. Frederick
  • Steven Orlando