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").
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:
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
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
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
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
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
(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) 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
(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;
(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
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
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
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
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
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
PARADISE BAKERY, INC., a Delaware
By /s/ Steven Orlando
/s/ Steven Orlando
Its CHIEF FINANCIAL OFFICER
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