PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT ("Agreement") is entered as of August ___,
1997, by and between Admiral's Fleet Inc. ("Purchaser") a Washington
corporation, Jreck Subs Group, Inc. ("JSUB"), a Colorado corporation, ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ (together the "Sellers"), and ▇▇▇▇▇▇ ENTERPRISES, INC.
("Target"), a Washington corporation.
1. Purchaser desires to purchase from Sellers and Sellers desire to sell to
Purchaser all of the issued and outstanding stock of Target.
2. The PURCHASE PRICE shall be Three Hundred & Forty Thousand and no/100s
($340,000), to be paid as follows:
a. The PURCHASE PRICE shall be deposited with escrow holder at
the settlement and shall be in the form of validly issued,
fully paid, and nonassessable voting common stock of JSUB to
be valued at the lowest of the closing prices for the Ten (10)
business days immediately prior to the day of Close of Escrow.
The JSUB stock shall be subject to a restriction against
transfer for Twelve (12) months following the date of the
Close of Escrow, except for the transfer of stock to the
Broker to pay the Broker's Commission in which case the Broker
shall also be so limited as to the transfer of its JSUB stock.
b. For purposes of this definition, the PURCHASE PRICE does not
include assumed liabilities, agreements for consulting,
employment or management, security deposits and any other
service or expense for which additional money is promised or
otherwise agreed upon. The PURCHASE PRICE does include
inventory of saleable goods.
3. Additional conditions, covenants, warranties and representations are listed
in the attached ADDENDUM, which by this reference is made an integral part of
this Agreement.
4. For the purpose of completing this transaction, escrow shall be opened at the
office of ▇▇▇▇▇ ▇. ▇▇▇▇▇, Attorney, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, LLP, located in
Seattle, Washington and closing shall take place on or before 5:00 PM on August
___, 1997, unless the parties hereto consent to the extension of this date to
accommodate reasonable delays in the transfer of license(s) and assignment of
leases.
5. The opening of escrow and closing costs shall be paid by Purchaser.
6. Any sales tax or use tax resulting from the transfers of Target stock shall
be paid by the Purchaser at the Close of Escrow and all other taxes and similar
expenses (such as lease deposits, license fees, etc.) shall be paid by
Purchaser.
7. Sellers and Target warrant that at the time physical possession of Target's
business is delivered to Purchaser, its equipment will be in working order, and
the premises will pass all inspections necessary to conduct such business.
Possession date shall be the date of the Close of Escrow. Seller will provide a
list of creditors and liabilities assumed, including vendors, lien holder, etc.
(attached hereto as Paragraph 6 of the Disclosure Schedule) to Purchasers prior
to the Close of Escrow.
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8. Escrow holder is authorized to draw the necessary escrow instructions for
consummation of this transaction. Sellers shall provide Purchaser a list of
Target's assets (attached hereto as Exhibit A). Purchaser and Sellers agree to
provide values to the assets of the business, including the furniture, fixture
and equipment, within Fourteen (14) days of mutual acceptance or the current
county assessed value of the equipment will be utilized.
9. This Agreement contains the entire understanding of the parties and there are
no oral agreements, understandings or representations relied upon by the
parties. Any modifications must be in writing and signed by all parties.
10. Sellers warrants that it has a good and clear title to the stock being sold
except as mentioned in the attached ADDENDUM. Target warrants that it has a good
and clear title to the business being sold except as mentioned in the attached
ADDENDUM. Sellers warrant and represent that as of date of closing, there will
be no liens, encumbrances or security interests against or upon the business to
be sold to the Purchaser except as noted in the attached ADDENDUM and warrant
the titles conveyed to the Purchaser will be free and clear. Seller shall
indemnify and hold Purchaser harmless from liabilities from Seller's operation
to the extent provided in the attached ADDENDUM.
11. Purchaser, Seller and Broker agree that in the event of any breach of this
Agreement or in the event litigation is instituted to collect any sum due Broker
to enforce or interpret any of the provisions of this Agreement, the prevailing
party or parties shall be entitled to recover from the other(s) their reasonable
attorney's fees and court costs, including appeals, as determined by the Court
in such action or suit. This Agreement shall be governed by, and constructed in
accordance with the laws of the State of Washington. The parties agree that
proper venue for any court proceeding related to this Agreement and the subject
matter hereof shall be in King County, State of Washington.
12. Purchaser will personally examine the Target's equipment, fixtures, stock on
hand, leasehold improvements and other assets of the business and will rely
solely on his/her personal evaluation and not upon any statements or
representations made by Broker, Seller or their agents, in deciding to purchase
or value the Target's stock.
13. AS TO PURCHASER: By signing this Agreement, Purchaser hereby acknowledges
that Purchaser is relying solely on Purchaser's own inspection of the business
and the representations of Seller, not of Broker, with regards to the prior
operating history of the business, the value of the assets being purchased and
all other material facts of Seller in making this offer. Purchaser acknowledges
that Broker has not verified, and will not verify, the representations of Seller
and should any such representations be untrue, Purchaser agrees to look solely
to Sellers for relief.
14. AS TO SELLERS: Sellers acknowledges that Broker has made no representations
concerning the credit-worthiness or ability of Purchaser to complete this
transaction, and relies solely on Purchaser's representations and not Broker
with respect thereto. Sellers acknowledge that Broker has not verified, and will
not verify the representations of the Purchaser and should any such
representations be untrue, Sellers agree to look solely to Purchaser for relief.
15. AGENCY DISCLOSURE: At the signing of this Agreement, ▇▇▇ ▇▇▇▇▇▇▇▇ of
EXECUTIVE REAL ESTATE, INC. ("Broker"), represented the Seller.
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a. Purchaser hereby agrees to buy on the terms set forth above and
acknowledges that a Broker's commission of Ten percent (10%) of
the Brokerage Amount shall be paid from the Seller's proceeds to
Broker.
▇. ▇▇▇▇▇▇▇ hereby agree to sell on the terms set forth above and to
pay a Broker's commission of Ten percent (10%) of the Brokerage
Amount to Broker, such commission to be paid solely in JSUB stock.
The Brokerage Amount shall be the sum of the Purchase Price, the
balance on the liabilities listed in Paragraph 6(a) and 6(b) of
the Disclosure Schedule as of the date of the Close of Escrow, and
any payments to Sellers under the Consulting Agreement.
c. Each party signing this document confirms that oral and written
disclosure of "The law of real estate agency" was provided to such
party prior to entering into this transaction.
16. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together will constitute one and
the same instrument.
ADMIRAL'S FLEET INC. ▇▇▇▇▇▇ ENTERPRISES, INC.
By: ______________________________ By:_____________________________
Its:______________________________ Its:____________________________
JRECK SUBS GROUP, INC. ▇▇▇ ▇▇▇▇▇▇▇▇
of EXECUTIVE REAL ESTATE, INC.
By:_______________________________
Its:______________________________ ________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------- --------------------------------
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ADDENDUM
This ADDENDUM is attached to and is an integral part of the PURCHASE AND SALE
AGREEMENT ("Agreement") dated August ___, 1997.
1. Definitions
"Addendum" means this Addendum to the Purchase and Sale Agreement.
"Agreement" means the Purchase and Sale Agreement. All references to
the Agreement shall include the
Addendum as an integral part of the Agreement.
"Broker" has the meaning set forth in Section 15 of the Agreement.
"Brokerage Amount" has the meaning set forth in Section 1 5(b) of the
Agreement.
"Close of Escrow" means the time at which the transactions contemplated
by this Agreement is closed.
"JSUB" has the meaning set forth in the introductory paragraph to the
Agreement.
"Purchaser" has the meaning set forth in the introductory paragraph to
the Agreement.
"Securities Act" means the Securities Act of 1933, as amended.
"Sellers" shall have the meaning set forth in the introductory
paragraph to the Agreement.
"Target" has the meaning set forth in the introductory paragraph to the
Agreement.
2. Representation and Warranties
a. Representations and Warranties of the Sellers. Each Seller
represents and warrants to the Purchaser that the statements
contained in this Section 2(a) are correct and complete as of
the date of this Agreement and will be correct and complete as
of the Close of Escrow, except as set forth in the Disclosure
Schedule
(1) Authorization of Transaction. Each Seller has full
power and authority to execute and deliver this
Agreement and to perform his or her obligations
hereunder. This Agreement constitutes the valid and
legally binding obligation of each Seller,
enforceable in accordance with its terms and
conditions.
(2) Target Shares. Each Seller holds of record and owns
beneficially the number of Target shares set forth
next to his or her name Section 2(c)(2) below, free
and clear of any restrictions on transfer (other than
restrictions under the Securities Act and state
securities laws).
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(3) Securities. Sellers understand that the JSUB stock
has not been registered under the Securities Act by
reason of its issuance in a transaction exempt from
the registration and prospectus delivery requirements
of the Securities Act pursuant to section 4(2)
thereof, and that it must be held by Sellers
indefinitely and Sellers must therefore bear the
economic risk of such investment indefinitely, unless
a subsequent disposition thereof is registered under
the Securities Act or is exempt from registration.
Sellers are aware of the provisions of Rule 144
promulgated under the Securities Act which permit
limited resale of shares purchased in a private
placement subject to the satisfaction of certain
conditions, including, among other things the
existence of a public market for the shares, the
availability of certain current public information
about the Company, the resale occurring not less than
one year after a party has purchased and paid for the
security to be sold, the sale being through a
"broker's transaction" or in transactions directly
with a "market maker" (as provided by Rule 144(f))
and the number of shares being sold during any
three-month period not exceeding specified
limitations. Sellers are aware also that, while many
of the restrictions of Rule 144 do not apply to the
resale of shares by a person who owned those shares
for at least two years prior to their resale and who
is not an "affiliate" (within the meaning of Rule
144(a)) of the issuer and has not been an affiliate
of the issuer for at least three months prior to the
date of resale of the restricted securities,
Purchaser and JSUB do not warrant or represent that
Sellers are not an affiliate as of the date of this
Agreement or that Sellers will not be an affiliate at
any relevant times in the future.
b. Representations and Warranties of the Purchaser. The Purchaser
represents and warrants to the Sellers that the statements
contained in this Section 2(b) are correct and complete as of
the date of this Agreement and will be correct and complete as
of the Close of Escrow.
(1) Organization of the Purchaser. The Purchaser is a
corporation duly organized, validly existing, and in
good standing under the laws of the jurisdiction of
its incorporation.
(2) Authorization of Transaction. The Purchaser has full
power and authority to execute and deliver this
agreement and to perform its obligations hereunder.
This Agreement constitutes the valid and legally
binding obligation of the Purchaser, enforceable in
accordance with its terms and conditions. The
Purchaser need not give any notice to, make any
filing with, or obtain any authorization, consent, or
approval of any government or governmental agency in
order to consummate the transactions contemplated by
this agreement.
(3) Brokers' Fees. The Purchaser has no liability or
obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which
any Seller could become liable or obligated.
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c. Representations and Warranties Concerning the Target. The
Sellers represent and warrant to the Purchaser that the
statements contained in this Section 2(c) are correct and
complete as of the date of this Agreement and will be correct
and complete as of the Close of Escrow, except as set forth in
the Disclosure Schedule.
(1) Organization, Qualification, and Corporate Power. The
Target is a corporation duly organized, validly
existing, and in good standing under the laws of the
jurisdiction of its incorporation. The Target is duly
authorized to conduct business and is in good
standing under the laws of each jurisdiction where
such qualification is required, except where the lack
of such qualification would not have a material
adverse effect on the financial condition of the
Target. Target has full corporate power and authority
to carry on the businesses in which it is engaged and
to own and use the properties owned and used by it.
(2) Capitalization. The entire authorized capital stock
of the Target consists of Fifty Thousand (50,000)
shares of common stock, with a par value of $1.00 per
share, of which One Thousand (1,000) shares are
issued and outstanding. All issued and outstanding
Target shares have been duly authorized, are validly
issued, fully paid, and nonassessable, and are held
of record by the respective Sellers as follows:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ with 500 shares and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
with 500 shares. These shares are not represented by
stock certificates. There are no outstanding or
authorized options, warrants, subscription rights,
conversion rights or other commitments that could
require the Target to issue or sell any of its
capital stock.
(3) Tangible Assets. Exhibit A lists all of the tangible
assets used by Target in the conduct of its business.
(4) Real Property. Paragraph 2 of the Disclosure Schedule
lists all real property leased or subleased to the
Target. The Sellers have delivered to the Purchaser
correct and complete copies of the leases and
subleases listed in Paragraph 2 of the Disclosure
Schedule.
(5) Intellectual Property. Paragraph 3 of the Disclosure
Schedule identifies each intellectual property
registration which has been issued to the Target with
respect to any of its intellectual property, and
identifies each license, agreement, or other
permission which the Target has granted to any third
party with respect to its intellectual property.
(6) Contracts. Paragraph 4 of the Disclosure Schedule
lists all written contracts and to which Target is a
parry the performance of which will involve
consideration in excess of $1,000. The Sellers have
delivered to the Purchaser a correct and complete
copy of each such contract or other agreement.
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(7) Litigation. Paragraph 5 of the Disclosure Schedule
sets forth any instance in which the Target is
subject to any outstanding injunction, judgment,
order, decree, ruling, or charge, or is a party to
any action, suit or proceeding, or before any court,
quasi-judicial or administrative agency of any
federal, state, local, or foreign jurisdiction,
except where the injunction, judgment, order, decree,
ruling, or charge would not have a material adverse
effect on the financial condition of the Target.
(8) Liabilities. Except as listed in Paragraph 6 of the
Disclosure Schedule, Target has no material liability
outstanding and to the knowledge of either Seller,
Target has no material contingent liability
outstanding. For purposes of this paragraph,
"material" means any item of liability for an amount
in excess of $1,000.
(9) Franchises. No authorization, consent, or approval of
any franchisees or governmental agency will be
required with respect to either of Target's franchise
agreements to consummate the transactions
contemplated by this agreement.
d. Representations and Warranties of JSUB. JSUB represents and
warrants to the Sellers that the statements contained in this
Section 2(d) are correct and complete as of the date of this
Agreement and will be correct and complete as of the Close of
Escrow.
(1) Organization. Qualification and Corporate Power. JSUB
is a corporation duly organized, validly existing,
and in good standing under the laws of the
jurisdiction of its incorporation. JSUB is duly
authorized to conduct business and is in good
standing under the laws of each jurisdiction where
such qualification is required, except where the lack
of such qualification would not have a material
adverse effect on the financial condition of JSUB.
JSUB has full corporate power and authority to carry
on the businesses in which it is engaged and to own
and use the properties owned and used by it.
(2) Capitalization. The entire authorized capital stock
of JSUB consists of 50,000,000 shares of common
stock, with no par value, and 5,000,000 shares of
non-voting preferred stock, with no par value, of
which 10,364,863 shares of common stock are issued
and outstanding immediately prior to this Agreement.
All of the issued and outstanding shares of JSUB
stock have been duly authorized, are validly issued,
fully paid, and nonassessable. JSUB has granted
options to purchase 100,000 shares of common stock,
other than which there are no outstanding or
authorized options, warrants, subscription rights,
conversion rights or other commitments that could
require JSUB to issue or sell any of its capital
stock.
(3) Preclosing Covenants. The parties agree as follows
with respect to the period between the execution of
this Agreement and the Close of Escrow.
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a. General. Each of the parties will use his, her or its
reasonable best efforts to take all action and to do all
things necessary, proper, or advisable to consummate and make
effective the transactions contemplated by this agreement
(including satisfaction, but not waiver, of the closing
conditions set forth in Section 5, below).
b. Operation of Business. The Sellers will not cause or permit
the Target to engage in any practice, take any action, or
enter into any transaction outside the ordinary course of
business.
c. Access and Confidentiality. The Sellers will permit, and
will cause the Target to permit, representatives of the
Purchaser to have access at all reasonable times, and in a
manner so as not to interfere with the normal business
operations of the Target, to all premises, properties,
personnel, books, records (including tax records), contracts,
and documents of or pertaining to the Target. The Purchaser
will treat and hold as such any confidential information it
receives from the Sellers and the Target in connection with
this Agreement, will not use any of the confidential
information except in connection with this Agreement, and, if
this Agreement is terminated for any reason whatsoever, will
return to the Sellers and the Target all tangible embodiments
(and all copies) of the confidential information which are in
its possession.
4. Postclosing Covenants. The parties agree as follows with respect to the
period following the Close of Escrow.
a. General. In case at any time after the Close of Escrow any
further action is necessary to carry out the purposes of this
agreement, each of the parties will take such further action
(including the execution and delivery of such further
instruments and documents) as any other party reasonably may
request, at the sole cost and expense of the requesting party
(unless the requesting party is entitled to indemnification
therefor under Section 6, below).
b. Change of Corporate Name. Within Two (2) months after the date
of the Close of Escrow, Purchaser shall cause Target to change
its corporate name to eliminate the word "▇▇▇▇▇▇."
c. Covenant Not to Compete. Neither Seller will engage, either
directly or indirectly, in Target's type of business within a
radius of Five (5) miles from any JSUB affiliate premises for
a term of Five (5) years from the date of the Close of Escrow.
d. Agreement to Pay Guaranteed Debts. For as long as either of
the Sellers or the Broker is a co-signer or a guarantor on any
liabilities of Target, Purchaser and JSUB agree to cause
Target to pay on a timely basis all such liabilities.
e. Operation of Business. For the period beginning on the date of
the Close of Escrow and ending on such date that (i) the
liabilities listed in Paragraph 6 of the Disclosure Schedule
are repaid in full or (ii) Sellers' and Broker's direct and
indirect obligations on all such liabilities are removed,
Purchaser and JSUB shall notify the Sellers before entering
into any transaction outside the ordinary course of business,
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including without limitation the sale of either the Pine Lake
or North Bend stores.
f. Subsequent Sale Proceeds. Purchaser and JSUB agree that in
the event Target sells or transfers any of its assets outside
the ordinary course of business, any proceeds from such sale
or transfer will be used (i) first, to pay down, to the extent
required by then-existing security interests in such assets,
the liabilities listed in Paragraph 6(b) of the Disclosure
Schedule, and (ii) second, to pay down the Washington Mutual
line of credit listed in Paragraph 6(a) of the Disclosure
Schedule, as follows: if the assets relate to the Pine Lake
store, then the proceeds shall be used to pay down the balance
allocated to the Pine Lake store, and if the assets relate to
the North Bend store, then the proceeds shall be used to pay
down the balance allocated to the North Bend store.
g. Stock Price Guarantee. JSUB agrees that to the extent the
Sellers sell any or all of their JSUB stock on any of the
first Thirty (30) business days in which the Sellers shall
have the right to transfer their stock (i.e., the first 30
business days starting on or after the anniversary of the date
of the Close of Escrow), and to the extent the Sellers sell
such stock during such period at a price that is less than 80%
of the price of the stock at the Close of Escrow, as defined
below, JSUB shall pay to Sellers the difference between the
sales price of the stock (before commission) and 80% of the
stock price at the Close of Escrow, within Five (5) business
days of the notice to JSUB of the sale of such stock. The
price of the stock at the Close of Escrow shall be the lowest
closing price of the JSUB stock during the Ten (10) business
days immediately prior to the date of Close of Escrow
h. Stock Sales. The Sellers agree to limit any sales of the JSUB
stock acquired under this Agreement to (i) 5,000 shares of
JSUB stock per business day (proportionately adjusted for any
increase or decrease in the number of issued shares of Common
Stock resulting from any stock split or other subdivision
consolidation of shares) or (ii) such amount as the market
will reasonably bear.
i. Tax Compliance. Each of the parties shall comply with rules
under the Internal Revenue Code of 1986, as amended ("Code")
consistent with the treatment of this transaction as a
tax-free reorganization within the meaning of Section 368(a)
of the Code.
j. Securities. JSUB shall exercise its best efforts to keep
its public information current pursuant to Rule 144(c) under
the Securities Act.
5. Conditions to Obligation to Close.
a. Conditions to Obligation of the Purchaser and JSUB. The
obligation of the Purchaser and JSUB to consummate the
transactions in connection with the Close of Escrow is subject
to satisfaction of the following conditions.
(1) The representations and warranties of the Sellers and
Target under this Agreement shall be true and correct
in all material respects as of date of the Close of
Escrow.
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(2) The Sellers and Target shall have performed and
complied with all of their covenants hereunder in all
material respects through the Close of Escrow.
(3) The Sellers shall have executed a Consulting
Agreement substantially in the form attached as
Exhibit B.
(4) All actions to be taken by the Sellers and Target in
connection with consummation of the transactions
contemplated hereby and all instruments and other
documents required to effect the transactions will be
reasonably satisfactory in form and substance to the
Purchaser. The Purchaser may waive any condition
specified in this Section 5(a) if it executes a
writing so stating at or prior to the Close of
Escrow.
b. Conditions to Obligation of the Sellers. The obligation of the
Sellers to consummate the transactions to be performed by them
in connection with the Close of Escrow is subject to
satisfaction of the following conditions:
(1) The representations and warranties of Purchaser and
JSUB under this Agreement shall be true and correct
in all material respects at and as of the date of the
Close of Escrow.
(2) The Purchaser shall have performed and complied with
all of its covenants hereunder in all material
respects through the Close of Escrow.
(3) The Boards of Directors of Purchaser and JSUB shall
have approved the Plan of Reorganization
substantially in the form attached as Exhibit C.
(4) Purchaser shall have executed a Consulting Agreement
substantially in the form attached as Exhibit B.
(5) All actions to be taken by the Purchaser in
connection with consummation of the transactions
contemplated hereby and all instruments and other
documents required to effect the transactions will be
reasonably satisfactory in form and substance to the
requisite Sellers. The requisite Sellers may waive
any condition specified in this Section 5(b) if they
execute a writing so stating at or prior to the Close
of Escrow.
6. Remedies for Breaches of this Agreement.
a. Survival of Representations and Warranties. All of the
representations and warranties of the parties contained in
this Agreement shall survive the Close of Escrow (unless the
damaged party knew or had, reason to know of any
misrepresentation or breach of warranty at the time of the
Close of Escrow).
b. Indemnification for Benefit of the Purchaser. In the event
either Seller breaches any of his or her representations,
warranties, and covenants contained herein, and provided that
the Purchaser makes a written claim for indemnification
against the Seller pursuant to Section 8(d) below, then such
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Seller agrees to indemnify the Purchaser from and against his
or her allocable portion of any adverse consequences the
Purchaser shall suffer through and after the date of the claim
for indemnification (but excluding any adverse consequences
the Purchaser shall suffer after the end of any applicable
survival period) caused by the breach; provided, however, that
the Sellers shall not have any obligation to indemnify the
Purchaser from and against any adverse consequences caused by
the breach until the Purchaser has suffered adverse
consequences by reason of all such breaches in excess of a
$2,000 aggregate deductible (after which point the Sellers
will be obligated only to indemnify the Purchaser from and
against such adverse consequences in excess of $2,000).
c. Indemnification for Benefit of the Sellers. In the event the
Purchaser or JSUB breaches any of its representations,
warranties, and covenants contained herein, and provided that
either of the Sellers makes a written claim for
indemnification against the Purchaser or JSUB pursuant to
Section 8(d) below, then the Purchaser and JSUB agree to
indemnify each Seller from and against the entirety of any
adverse consequences the Seller shall suffer through and after
the date of the claim for indemnification (excluding any
adverse consequences the Seller shall suffer after the end of
any applicable survival period) caused by the breach;
provided, however, that the Purchaser and JSUB shall not have
any obligation to indemnify the Sellers from and against any
adverse consequences caused by the breach until the Sellers
have suffered adverse consequences by reason of all such
breaches in excess of a $2,000 aggregate deductible (after
which point the Purchaser and JSUB will be obligated only to
indemnify the Sellers from and against such adverse
consequences in excess of $2,000).
d. Other Indemnification Provisions. The indemnification
provisions in this Section 6 are in addition to, and not in
derogation of, any statutory, equitable, or common law remedy
any party may have for breach of representation, warranty, or
covenant.
7. Termination.
a. Termination of Agreement. The parties may terminate this
Agreement as provided below.
(1) The parties may terminate this Agreement by mutual
written consent at any time prior to the Close of
Escrow.
(2) The Purchaser or JSUB may terminate this Agreement by
giving written notice to the Sellers at any time
prior to the Close of Escrow in the event:
(a) either Seller has breached any material
representation, warranty, or covenant
contained in this Agreement in any material
respect, the Purchaser has notified the
requisite Seller of the breach, and the
breach has continued without cure for a
period of 10 days after the notice of
breach; or
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(b) the Close of Escrow has not occurred on or
before September 30, 1997, by reason of the
failure of any condition precedent under
Section 5(a) hereof (unless the failure
results primarily from the Purchaser or JSUB
itself breaching any representation,
warranty, or covenant contained in this
Agreement).
(3) Either Seller may terminate this Agreement by giving
written notice to the Purchaser at any time prior to
the Close of Escrow in the event:
(a) the Purchaser or JSUB has breached any
material representation, warranty, or
covenant contained in this Agreement in any
material respect, a Seller has notified the
Purchaser or JSUB of the breach, and the
breach has continued without cure for a
period of 10 days after the notice of
breach; or
(b) the Close of Escrow has not occurred on or
before September 30, 1997, by reason of the
failure of any condition precedent under
Section 3(b) hereof (unless the failure
results primarily from a Seller himself or
herself breaching any representation,
warranty, or covenant contained in this
Agreement).
b. Effect of Termination. If any party terminates this Agreement
pursuant to Section 7(a) above, all rights and obligations of
the parties hereunder shall terminate without any liability of
any party to any other party (except for any liability of any
party then in breach); provided, however, that the
confidentiality provisions contained in Section 3(c) above
shall survive termination.
8. Miscellaneous.
a. Succession and Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties named herein and
their respective successors and permitted assigns. No party
may assign either this Agreement or any of his, her or its
rights, interests, or obligations hereunder without the prior
written approval of the Purchaser and the Sellers.
b. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
c. Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way
the meaning or interpretation of this Agreement.
d. Notices. All notices, requests, demands, claims, and other
communications hereunder will be in writing. any notice,
request, demand, claim, or other communication hereunder shall
be deemed duly given if it is sent by registered or certified
mail, return receipt requested, postage prepaid, and addressed
to the intended recipient as set forth below:
If to Sellers: Copy to:
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Yuko Aimi
▇▇▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to Purchaser: Copy to:
Admiral's Fleet Inc. ▇▇▇▇▇ ▇▇▇▇▇
One Lake Bellevue Drive, Suite 201 ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
Attn: Brick Brunton Seattle, WA 98111-3926
If to JSUB: Copy to:
Jreck Subs Group, Inc. ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Any party may send any notice, request, demand, claim, or
other communication her eunder to the intended recipient at
the address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party may
change the address to which notices, requests, demands,
claims, and other communications hereunder are to be delivered
by giving the other parties notice in the manner herein set
forth.
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e. Amendments and Waivers. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing
and signed by each party hereto. No waiver by any party of any
default, misrepresentation, or breach of warranty or covenant
hereunder, whether intentional or not, shall be deemed to
extend to any prior or subsequent default, misrepresentation,
or breach of warranty or covenant hereunder or affect in any
way any rights arising by virtue of any prior or subsequent
such occurrence.
f. Severability. Any term or provision of this Agreement that is
invalid or unenforceable in any situation in any jurisdiction
shall not affect the validity or enforceability of the
remaining terms and provisions hereof or the validity or
enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
g. Expenses. Each of Purchaser, JSUB, the Sellers and Target will
bear his, her or its own costs and expenses (including legal
fees and expenses) incurred in connection with this Agreement
and the transactions contemplated hereby.
h. Incorporation of Exhibits, Annexes, and Schedules. The
exhibits, annexes, and schedules identified in this Agreement
are incorporated herein by reference and made an integral part
hereof.
In witness whereof, the parties hereto have executed this Agreement and
Addendum as of the date first above written.
ADMIRAL'S FLEET INC. ▇▇▇▇▇▇ ENTERPRISES, INC.
By: ______________________________ By:______________________________
Its:______________________________ Its:_____________________________
JRECK SUBS GROUP, INC. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
By:_______________________________
Its:______________________________ _________________________________
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
of EXECUTIVE REAL ESTATE, INC.
----------------------------------- ---------------------------------
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DISCLOSURE SCHEDULE
1. Tangible Assets -- Addendum ss. 2(c)(3).
See Exhibit A.
2. Real property -- Addendum ss. 2(c)(4).
See Leases, Paragraph 6(c).
3. Intellectual Property -- Addendum ss. 2(c)(5).
Trade name: Georgio's Subs (not federally registered).
4. Contracts -- Addendum ss. 2(c)(6).
Unit Franchise Agreement dated April 3, 1996 between Target
and JRNL Investments, Inc.
Unit Franchise Agreement dated November 13, 1996 between
Target and ▇. ▇▇▇▇▇ Co.
License Agreement dated August, 1994.
License Agreement dated September, 1995.
Agreement with Northwest Neon for lease of neon sign.
See also, Liabilities, Paragraph 6.
5. Litigation -- Addendum ss. 2(c)(7).
None.
6. Liabilities -- Addendum ss. 2(c)(8).
a. Liabilities: Balance as of 7/30/97
Line of Credit 5,949.86
Note Payable -- Wash Mutl LOC 11,679.89*
Note Payable -- NW Neon NB 2,302.14
* The balance on the Washington Mutual line of credit is
allocated between the Pine Lake and North Bend stores as
follows: 75% to Pine Lake, and 25% to North Bend.
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Disclosure Schedule. Continued
b. Additional Liabilities Balance as of 7/30/97
Note Payable -- Issaquah 52,124.87
Note Payable -- N. Bend 71,000.00
c. Leases:
Issaquah Pine Lake Site
North Bend Site
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SCHEDULE OF ASSETS
GEORGIO'S SUBS at Pine Lake Village
1) ALL PICTURES AND ARTWORK
2) ALL SMALLWARES AND COOKING ITEMS
3) 11 COUNTER STOOLS
4) FULL SIZE ▇▇▇▇▇ WARMING UNIT
5) 11 QUART SOUP WARMER
6) 60" SANDWICH PREP TABLE/REFRIGERATOR
7) MICROWAVE
8) AUTO MEAT SLICER
9) 3 COMPARTMENT SINK
10) VEGETABLE PREP SINK - 1 COMPARTMENT
11) HAND SINK
12) MOP SINK 13) CASH REGISTER 14) 6X6 WALK-IN COOLER
15) 6X6 WALK-IN FREEZER
16) OVEN
17) PROOFER
18) BREAD TRANSPORT RACK
19) 2 BREAD HOLDING RACKS
20) WORKTABLE ON CASTERS
21) DIGITAL WEIGHT SCALE
22) ALL LIGHTING FIXTURES
23) AL PLUMBING FIXTURES
24) NEON "GEORGIO'S SUBS" SIGNS ON STOREFRONT
25) STEREO
26) ALL CABINETS, EATING COUNTERS INSTALLED IN STORE
27) MENU BOARDS
SCHEDULE OF ASSETS
GEORGIO'S SUBS in North Bend
1) 2 EATING TABLES
2) 6 CHAIRS
3) 8 COUNTER STOOLS
4) FULL SIZE ▇▇▇▇▇ WARMING UNIT
5) 11 QUART SOUP WARMER
6) 60" SANDWICH PREP TABLE/REFRIGERATOR
7) MICROWAVE
8) AUTO MEAT SLICER
9) 3 COMPARTMENT SINK
10) VEGETABLE PREP SINK - 1 COMPARTMENT
11) HAND SINK
12) MOP SINK
13) ICE MAKER
14) 6X6 WALK-IN COOLER
15) 6X6 WALK-IN FREEZER
16) OVEN
17) PROOFER
18) BREAD TRANSPORT RACK
19) 2 BREAD HOLDING RACKS
20) WORKTABLE ON CASTERS
21) DIGITAL WEIGHT SCALE
22) ALL LIGHTING FIXTURES
23) AL PLUMBING FIXTURES (EXCEPT FOR BATHROOM)
24) NEON "GEORGIO'S SUBS" SIGN ON STOREFRONT
25) NEON "GEORGIO'S SUBS" SIGN IN STORE WINDOW
26) ALL CABINETS, EATING COUNTERS INSTALLED IN STORE
27) MENU BOARDS
28) STEREO
29) CASH REGISTER
30) ALL SMALL KITCHEN WARES AND COOKING ITEMS
31) ALL PICTURES AND ARTWORK
EXHIBIT C
PLAN OF REORGANIZATION
This PLAN OF REORGANIZATION ("Plan") describes the transaction to be
undertaken by Jreck Subs Group, Inc., a Colorado corporation ("Parent"),
Admiral's Fleet Inc., a Washington corporation ("Acquiror"), ▇▇▇▇▇▇ Enterprises,
Inc., a Washington corporation ("Target"), ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
husband and wife ("Sellers"), (all collectively, the "Parties"), pursuant to the
Purchase and Sale Agreement to be executed by and between the Parties.
1. For Federal income tax purposes, the Parties intend that the
transaction will qualify as a reorganization within the meaning of Section
368(a) of the Internal Revenue Code, as amended (the "Code").
2. Sellers are the holders of 100% of the issued and outstanding shares
of Target. Parent is a publicly traded corporation. Acquiror is a wholly owned
subsidiary of Parent.
3. At closing, Sellers will transfer all of their shares in Target
stock to Acquiror solely in exchange for shares of voting common stock in Parent
with approximately the same fair market value as the Target stock surrendered
4 After the transaction, Parent and Acquiror intend that Target will
continue its historic business or use a significant portion of its historic
business assets in a business. Target's name will be changed to eliminate the
word "▇▇▇▇▇▇," the specific name to be chosen at the discretion of Parent and
Acquiror.
5. To assist in the transition of Target's business, Sellers will enter
into a consulting agreement with Parent and Acquiror to provide temporary
management and bookkeeping services to Target.
6. The Parties will pay each their respective expenses, if any,
incurred in connection with the transaction
7. Each Party will comply with the rules under the Code consistent with
the treatment of the transaction as a tax-free triangular "B" reorganization,
within the meaning of Section 368(a)(1)(B) of the Code.