AGREEMENT AND PLAN
OF REORGANIZATION
AMONG
JRECK SUBS GROUP, INC.
LI'L DINO MANAGEMENT CORPORATION AND
LI'L DINO CORPORATION
December 18, 1997
AGREEMENT AND PLAN
OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as
of December 18, 1997 among Jreck Subs Group, Inc., a Colorado corporation
("Jreck"), Li'l Dino Management Corporation, a North Carolina corporation
("LDM"), and Li'l Dino Corporation, a North Carolina corporation ("Target"), a
wholly owned subsidiary of LDM.
RECITALS
A.The parties hereto desire that LDM shall transfer and convey to Jreck
substantially all of its assets including all the issued and outstanding common
stock, $1.00 par value, of Target in exchange for Jreck common stock as set
forth in this Agreement.
B.The parties hereto intend that, to the maximum extent possible, the
reorganization constitute a "tax free reorganization" under Section
368(a)(1)(C), of the Internal Revenue Code of 1986, as amended.
THE PARTIES AGREE AS FOLLOWS:
1. DEFINITIONS. For purposes of this Agreement, the following terms shall
have the meanings specified in this Article 1 unless the context expressly or by
necessary implication otherwise requires:
1.1. Balance Sheet and Balance Sheet Data. shall have the meaning set
forth in Section 4.4 of this Agreement.
1.2. Closing shall mean the delivery by Jreck and Target of the various
documents contemplated by this Agreement or otherwise required in order to
consummate the Reorganization.
1.3. Closing Date shall mean the delivery by Jreck and Target of the
various documents contemplated by this Agreement or otherwise required in order
to consummate the Reorganization.
1.4. Dissenting Shares shall mean all shares, if any, of the
outstanding capital stock of LDM for which dissenter's rights shall be perfected
under Article 13 of the North Carolina Business Corporation Act.
1.5. Target Shareholder shall mean the record owner of Target Common
immediately prior to the Reorganization.
1.6. Code shall mean the Internal Revenue Code of 1986, as amended.
1.7. Corporations Code shall collectively mean the Colorado General
Corporations Law (the "Colorado Corporations Code"), and the North Carolina
Business Corporation Act (the "North Carolina Business Corporation Act").
1.8. Exchange Act shall mean the Securities and Exchange Act of 1934,
as amended, and the rules and regulations thereunder.
1.9. Knowledge. Wherever in this Agreement a statement, warranty or
representation is to a party's "knowledge," knowledge shall mean all facts
actually known by such party's CEO, President, CFO (or equivalent) and all
executive or senior vice presidents.
1.10. Reorganization shall mean the reorganization of LDM pursuant to
this Agreement.
1.11. Jreck Common shall mean the unregistered voting common stock, no
par value, of Jreck issued subject to the restrictions of Rule 144 of the
Securities Act and any other restrictions specified in this Agreement.
1.12. Securities Act shall mean the Securities Act of 1933, as amended,
and the rules and regulations thereunder.
1.13. Target Common shall mean the voting common stock, $1.00 par
value, of Target.
2. CONVEYANCE OF ASSETS, EXCHANGE OF SHARES AND CLOSING.
2.1. Exchange. At the Closing, Jreck will acquire substantially all the
assets of LDM by exchanging and delivering to LDM the Jreck Common in accordance
with this Section 2 of this Agreement in consideration of the transfer,
conveyance and delivery to Jreck by LDM of all the issued and outstanding shares
of Target Common together with the assets of LDM listed on attached Exhibit A.
In addition, at Closing, Jreck will assume those LDM liabilities listed on
attached Exhibit B, and no others.
2.2. Closing. The Closing shall, in Jreck's discretion, take place
either at the offices of Xxxxx Early Xxxxxx & Xxxxxxx, L.L.P., 0000 Xxxxxxxxxxx
Xxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxx Xxxxxxxx 00000, or by mail and facsimile, on
the date which is no more than fifteen (15) days following the date of approval
of this Agreement by LDM's shareholders at 10:00 a.m., or at such other day and
time as Jreck and Target shall agree (the "Closing Date") after all of the
conditions to the parties' obligations to consummate the Reorganization set
forth in Articles 6 and 7 of this Agreement have been satisfied or waived.
2.3. Exchange of Shares. In accordance with this Plan of
Reorganization, Jreck shall convey, transfer and deliver to LDM _____ shares of
Jreck Common in exchange for LDM's conveyance, transfer and delivery of all of
the Target Common and LDM assets listed on Exhibit A.
2.4. Exchange of Certificate. Promptly after the Closing, Jreck shall
transfer and convey to LDM good and marketable title to the shares of Jreck
Common issuable pursuant to Section 2.3.
2.5. Dissenting Shares. Holders of Dissenting Shares shall have those
rights, but only those rights, of holders of "dissenting shares" under Articles
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13 of the North Carolina Business Corporation Act, if applicable. LDM shall give
Jreck prompt notice of any demand, purported demand or other communication
received by LDM with respect to any Dissenting Shares or shares claimed to be
Dissenting Shares. Any payments to Dissenting Shareholders prior to the Closing
shall be the responsibility of LDM.
2.6. Unregistered Shares. The Jreck Common to be issued in the
Reorganization to LDM shall not be registered under the Securities Act and shall
be subject to all relevant resale restrictions under the Securities Act and
State law. Target and LDM understand that the Jreck Common 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 3(a)(10) and/or 4(2) thereof, and that it
must be held by LDM indefinitely and LDM 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. LDM, shall
in writing notify its shareholders 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 Jreck, 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.
2.6.1. Other Resale Restrictions. With respect to any shares
of Jreck Common issued pursuant to this Agreement to any Target or LDM officer,
or five percent (5%) or more Target Shareholder, such shares and each such
Target Shareholder shall be subject to a further restriction providing that no
one such Target Shareholder, or its successor, shall sell more than 5,000 shares
of Jreck Common in any one business day, proportionately adjusted for any
increase or decrease in the number of issued shares of Jreck common voting stock
resulting from any stock issuance, stock split or other subdivision or
consolidation of shares after the date hereof. The foregoing restrictions set
forth in this Section 2.6.1 shall not prevent or limit the distribution of the
Jreck Common by LDM to its shareholders in liquidation and dissolution as
contemplated in Section 8.7.2 hereof, and thereafter the restrictions contained
in this Section 2.6.1 shall apply only to LDM officers and former LDM
shareholders who owned five percent (5%) or more of the outstanding common stock
of LDM at any time during the period commencing on the date hereof and ending
upon the completion of such liquidation and dissolution.
2.7. Piggyback/Demand Registration Rights. Subject to the terms of this
Agreement, in the event Jreck decides to Register (defined below) any of its
stock (either for its own account or the account of a security holder or holders
exercising their respective demand registration rights) on a form that would be
suitable for a registration involving solely Registerable Securities (defined
below), Jreck at its sole cost and expense will: (i) promptly give LDM and any
other holders of Jreck Common received in the Reorganization (including any
stockholders of LDM who receive Jreck Common by distribution from LDM) (the
"Holders") written notice thereof (which notice shall include a list of the
jurisdictions in which Jreck intends to attempt to qualify such securities under
the applicable Blue Sky or other state securities laws) and (ii) include in such
Registration (and any related qualification under Blue Sky laws or other
compliance), and in any underwriting involved therein pursuant to Section 2.7.1,
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all the Registerable Securities which were issued under this Agreement and are
specified in a written request delivered to Jreck by said Holders within fifteen
(15) days after delivery of such written notice from Jreck.
2.7.1. Piggyback Registration Involving an Underwriting. If
the Registration of which Jreck gives notice is for a Registered public offering
involving an underwriting, Jreck shall so advise the Holders as a part of the
written notice given pursuant to this Section 2.7. In such event, the right of
the Holders to Registration of the Jreck Common received pursuant to the
Reorganization shall be conditioned upon such underwriting. If the Holders
desire to distribute their securities through such underwriting, they shall
(together with Jreck and the other holders distributing their securities through
such underwriting) enter into an underwriting agreement with the underwriter's
representative for such offering. The Holders shall have no right to participate
in the selection of the underwriters for an offering pursuant to this Section
2.7.1 and the Holders shall pay any incremental costs and fees related to the
piggyback Registration of their shares of Jreck Common. In the event the
underwriter places a limit on the number of outstanding shares of Jreck Common
to be included in the underwriting, the Holders shall participate in the
underwriting on a pro rata basis with Jreck insiders and other Jreck
stockholders having registration rights, but in no event may the Holders
participate in any over allotment, if any, afforded to Jreck in connection with
such underwriting.
2.7.2. Demand/Registration Rights. If Jreck does not give to
the Holders the opportunity to Register all the Registerable Securities which
were issued under this Agreement on or before nine (9) months after the Closing,
LDM and any other holders of Jreck Common received in the Reorganization
(including any stockholders of LDM who receive Jreck Common by distribution from
LDM) (the "Holders") will have the right to make one written demand upon Jreck
to cause Jreck at its sole cost and expense to Register such Jreck Common on a
form that would be suitable for a registration involving solely Registerable
Securities. Promptly following such demand, Jreck shall file a registration
statement with the Securities and Exchange Commission (the "SEC"), pursuant to
the Securities Act of 1933 (the "1933 Act"), and thereafter use its best efforts
to cause the registration statement to become effective within one (1) year
after the Closing. Jreck shall use its best efforts to cause the registration
statement to remain effective, and to supplement and amend the registration
statement in accordance with the 1933 Act and applicable rules thereunder, for a
period of at least 90 days following the effective date of registration.
2.7.3. General Registration Covenants. With respect to any
piggyback or demand registration statement filed by Jreck pursuant to Paragraphs
2.7, 2.7.1 or 2.7.2 above, Jreck agrees as follows:
(i) The registration statement shall cover all shares of Jreck common
issued under this Agreement, including any additional shares of Jreck
common issued on such shares in stock dividends or stock split, at any time
prior to the expiration of 90 days following the registration date;
(ii) From time-to-time, Jreck will deliver copies of each preliminary
prospectus, prospectus and supplement filed with the SEC to LDM and any
former LDM shareholder, and to any broker, dealer or underwriters acting
for LDM or any LDM shareholder in such quantities as they may reasonably
request;
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(iii) Jreck shall bear all expenses in connection with the
registration, including, without limitation, legal and accounting fees,
registration and filing fees, printing costs, blue sky expenses, costs of
delivering preliminary prospectuses and prospectuses and supplements
thereto to LDM and LDM's former shareholders, and other customary expenses.
LDM (and/or LDM's selling shareholders) shall bear any brokerage
commissions and underwriting discounts applicable to the Registerable
Securities sold by them, any transfer fees or taxes applicable thereto and
the expenses of counsel, accountants and other advisers, if any, retained
by LDM or LDM's shareholders in connection with such registration and sale;
(iv) If Jreck has reason to believe that the registration statement or
any prospectus, as in effect at any time, requires amendment or
supplementation or otherwise includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances then existing, then Jreck will immediately use its best
efforts to take all action necessary to make the registration statement
and/or prospectus not misleading and to permit the sale of shares of
Registerable Securities by LDM and/or former LDM shareholders in accordance
with the requirements of applicable federal and state securities laws
common laws and regulations thereunder;
(v) Jreck shall file a registration of the Jreck common stock on Form
10SB under the Securities Exchange Act of 1934 (the "1934 Act"), including
the Jreck common to be issued in the Reorganization, and will use its best
efforts to cause such registration to be approved, as promptly as
practicable after the Closing and in any event on or before the effective
date of the registration statement filed under the 1933 Act;
(vi) Jreck shall indemnify and hold harmless LDM and LDM's shareholders
(the "LDM Indemnified Persons") from and against any and all losses,
claims, demands, damages, liabilities and expenses, joint or several, to
which they or any of them may become subject under the 1933 Act, the 1934
Act, the rules and regulations of the SEC under such Acts, the common law
or otherwise and will reimburse each LDM Indemnified Persons for any legal
or other expenses incurred by it in connection with investigating or
defending any actions relating thereto, insofar as such losses, claims,
demands, damages, liabilities or expenses arise out of or are based on any
actual or alleged untrue statement of a material fact contained in the
Jreck registration statement, any prospectus thereunder or any amendment or
supplement thereto, including material incorporated by reference therein,
or arise out of or are based on any actual or alleged omission therein of a
material fact required to be stated therein or necessary to make the
statements therein not misleading; but there shall be excluded from the
foregoing indemnification any loss, claim, demand, damage, liability, or
expense arising out of or based on any actual or alleged untrue statement
or omission made in reliance upon and in conformity with information
furnished in writing to Jreck by or on behalf of any LDM Indemnified Person
expressly for use in the Jreck registration statement, such prospectus or
such amendment or supplement thereto. LDM Indemnified Persons shall
indemnify and hold harmless Jreck from and against any and all losses,
claims, demands, damages, liabilities and expenses, joint or several, to
which they or any of them may become subject under the 1933 Act, the 1934
Act, the rules and regulations of the SEC under such Acts, the common law
or otherwise and will reimburse Jreck for any legal or other expenses
incurred by it in connection with investigating or defending any actions
relating thereto, insofar as such losses, claims, demands, damages,
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liabilities or expenses arise out of or based on any actual or alleged
untrue statement or omission made in reliance upon and in conformity with
information furnished in writing to Jreck by or on behalf of any LDM
Indemnified Persons expressly for use in any such Jreck registration
statement, prospectus or amendment or supplement thereto, including
material incorporated by reference therein.
2.7.4. Co-Sale Rights. For purposes of this Agreement, "Block
Seller" shall mean Xxxxxxxxxxx Xxxxxx, President of Jreck. Notwithstanding
anything contained in this Agreement to the contrary, if Block Seller at any
time, acting alone or in concert with other Jreck shareholders, propose to
transfer an aggregate number of shares of Jreck common stock (or common stock
equivalents) equal to or exceeding twenty-five percent (25.0%) of the
then-outstanding shares of Jreck common stock to a purchaser or related group of
purchasers in a single transaction or related series of transactions, then the
Block Seller shall provide at least fifteen (15) days' prior written notice of
the proposed sale (or series of sales) to LDM. If LDM has previously distributed
the Jreck shares to its shareholders, then Jreck shall provide such notice to
Xxxxx X. Xxxxxxx, as LDM shareholder representative, who shall in turn forward
such notice to each former LDM shareholder. LDM or each former LDM shareholder,
as the case may be, shall have the right to require, as a condition to such
transfer, that the purchaser or purchasers purchase, on the same terms and
conditions and at the same price as offered to the Block Seller, that percentage
of the Jreck common stock held by LDM (or the former LDM shareholder) as equals
the percentage of all Jreck common stock (or common stock equivalents) owned by
the Block Seller in the aggregate which is included in the transaction. In that
event, the number of shares of Jreck stock to be sold by the Block Seller shall
be reduced accordingly. Notice of the exercise of the co-sale right provided by
this Paragraph 2.7.4 must be given to Jreck within the 15-day notice period in
order to be effective. Notwithstanding the foregoing, Block Seller may pledge,
hypothecate or gift any of his Jreck common stock and neither LDM nor any former
LDM shareholder, as the case may be, shall have any rights under this Section in
such event. Any recipient of a gift of Block Seller's Jreck common stock will be
bound by the terms of this Section 2.7.4 and Block Seller agrees to make any
such gift expressly subject to the terms of the co-sale rights set forth in this
Section 2.7.4.
2.7.5. Blue Sky in Piggyback Registration. In the event of any
Registration of Registerable Securities pursuant to this Section 2.7, Jreck will
exercise its best efforts to Register and qualify the securities covered by the
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions (not exceeding twenty (20) unless otherwise agreed to by Jreck,
provided such Registration will be made in those states in which LDM
shareholders reside) as shall be reasonably appropriate for the distribution of
such securities.
2.7.6. Definitions. For purposes of this Agreement, the
following definitions shall apply:
(a) The terms "Register", "Registered", and
"Registration" refer to a registration effected by preparing and filing a
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registration statement in compliance with the Securities Act ("Registration
Statement"), and the declaration or ordering of the effectiveness of such
Registration Statement.
(b) "Registerable Securities" shall mean all Jreck
common stock not previously sold to the public, including stock issued or
issuable pursuant to stock splits, stock dividends and stock options.
2.8 Tax Free Reorganization. The parties intend to adopt this Agreement
as a tax free plan of reorganization and to consummate the Reorganization in
accordance with the provisions of Section 368(a)(1)(C) of the Code.
0.XXXXXX REPRESENTATIONS AND WARRANTIES. Each of Jreck, LDM and Target is a
"Company" for the purposes of this Article 3. Except as set forth in any
exhibits to this Agreement, each Company represents and warrants to the other
party hereto that:
3.1. Organization and Authority. The Company: (i) is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation; (ii) has all necessary corporate power to own
and lease its properties, to carry on its business as now being conducted and to
enter into and perform this Agreement and all agreements to which the Company is
or will be a party that are exhibits to this Agreement; and (iii) is qualified
to do business in all jurisdictions in which the failure to so qualify would
have a material adverse effect on its business or financial condition. The
Company has made available to the other party for inspection complete and
correct copies of its Articles of Incorporation, as amended, and Bylaws as in
effect on the date hereof and a record of any and all proceedings and actions at
all meetings of, or taken by written consent by, its Board of Directors and
shareholders, from and after January 1, 1994, in each case, certified as true,
complete and correct copies by Company's Secretary.
3.2. Authority Relating to this Agreement; No Violation of Other
Instruments.
3.2.1. The execution and delivery of this Agreement and all
agreements to which the Company is or will be a party that are exhibits to this
Agreement and the performance hereunder and thereunder by the Company have been
duly authorized by all necessary corporate action on the part of the Company
and, assuming execution of this Agreement and such other agreements by each of
the other parties thereto, this Agreement and such other agreements will
constitute legal, valid and binding obligations of the Company, enforceable
against the Company in accordance with their terms, subject as to enforcement:
(i) to bankruptcy, insolvency, reorganization, arrangement, moratorium and other
laws of general applicability relating to or affecting creditors' rights; and
(ii) to general principles of equity, whether such enforcement is considered in
a proceeding in equity or at law.
3.2.2. To the Company's knowledge, neither the execution of
this Agreement or any other agreement to which the Company is or will be a party
that is an exhibit to this Agreement nor the performance of any of them by the
Company will: (i) conflict with or result in any breach or violation of the
terms of any decree, judgment, order, law or regulation of any court or other
governmental body now in effect applicable to the Company; (ii) conflict with,
or result in, with or without the passage of time or the giving of notice, any
breach of any of the terms, conditions and provisions of, or constitute a
default under or otherwise give another party the right to terminate, or result
in the creation of any lien, charge, or encumbrance upon any of the assets or
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properties of the Company pursuant to, any indenture, mortgage, lease, agreement
or other instrument to which the Company is a party or by which it or any of its
assets or properties are bound, including all Contracts (as defined in Section
4.13); (iii) permit the acceleration of the maturity of any material
indebtedness of the Company or of any other person secured by the assets or
properties of the Company; or (iv) violate or conflict with any provision of the
Company's Articles of Incorporation, Bylaws, or similar organizational
instruments.
3.3. Brokers and Finders. Except for Jreck's obligation to Xxxxxx Xxxx,
neither the Company nor any shareholder, director, officer, employee or agent of
the Company has retained any broker, finder or investment banker in connection
with the transactions contemplated by this Agreement. Each Company will
indemnify and hold the other parties hereto harmless against all claims for
brokers', finders' or investment bankers' fees made or asserted by any party
claiming to have been employed by such Company or any shareholder, director,
officer, employee or agent of such Company and all costs and expenses (including
the reasonable fees of counsel) of investigating and defending such claims.
3.4. Division Approval. LDM and Jreck each acknowledge the need to seek
approval from the Division (as defined in Section 8.2 below) of the terms and
conditions of the transactions provided for under this Agreement and shall
cooperate with each other in order to procure such approval.
4. REPRESENATIONS AND WARRANTIES OF TARGET. LDM and Target hereby represent
and warrant to Jreck that except as set forth in any exhibits to this Agreement:
4.1. Compliance with Law. To LDM's and Target's knowledge, Target
holds, and has at all times held, all licenses, permits and authorizations
necessary for the lawful conduct of Target's business wherever conducted
pursuant to all applicable statutes, laws, ordinances, rules and regulations of
all governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over Target or over any part of Target's operations' and to LDM's
and Target's knowledge, there are no violations thereof which have not been
contains a true and complete list of all licenses, permits and authorizations
necessary for the lawful conduct of Target's business wherever conducted
pursuant to all applicable statutes, laws, ordinances, rules and regulations of
all governmental bodies, agencies and subdivisions having, asserting or claiming
jurisdiction over Target or over any part of Target's operations. Target is not
in violation of any decree, judgment, order, and to LDM's and Target's knowledge
any law or regulation of any court or other governmental body (including without
limitation, applicable franchise legislation and regulations, environmental
protection legislation and regulations, equal employment and civil rights
regulations, wages, hours and the payment of social security taxes and
occupational health and safety legislation), which violation could have a
material adverse effect on the condition, financial or otherwise, assets,
liabilities, business or results of operations of Target.
4.2. Investments in Others. Other than LDM's ownership of Target, LDM
and Target do not conduct any part of their business operations through any
subsidiaries or through any other entity. Other than LDM's ownership of Target,
LDM and Target do not, directly or indirectly, own an equity or participation
interest in any other corporation, association, partnership, joint venture,
limited liability company or any other entity or venture.
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4.3. Tax Returns and Payments. All tax returns and reports with respect
to LDM and Target required by law to be filed under the laws of any
jurisdiction, domestic or foreign, have been duly and timely filed (except as
set fort herein) and all taxes, fees or other governmental charges of any nature
which were required to have been paid, have been paid or funds have been set
aside to provide for the payment of all such taxes. Exhibit D contains a true
and complete list of all types of taxes paid or required to be paid by LDM
and/or Target and each state to which LDM and Target pay sales or use tax
related to the sale of their products. LDM and Target have no knowledge of any
actual or threatened assessment of deficiency or additional tax or other
governmental charge or a basis for such a claim against LDM and/or Target
(except as set forth herein). LDM and Target have no knowledge of any tax audit
of LDM and/or Target by any taxing or other authority in connection with any of
its fiscal years; LDM and Target have no knowledge of any such audit currently
pending or threatened, and there are no tax liens on any of LDM's and/or
Target's properties. Notwithstanding the foregoing, LDM's consolidated federal
and state income tax returns for fiscal years 1994-1995 and 1995-1996 were not
timely filed, but such returns indicate no taxes due. LDM's consolidated federal
and state income tax returns for fiscal year 1996-1997 are not yet due. LDM will
indemnify Jreck pursuant to Section 10 below for any Claims arising from any
such untimely tax filings.
4.4. Absence of Certain Changes or Events. Since the date (the "Balance
Sheet Date") of the most recent financial statement delivered by LDM and Target
pursuant to Section 4.16 (the "Balance Sheet"), there have been no, nor as of
the Closing Date shall there be, material changes in the condition, financial or
otherwise, assets, liabilities, business or the results of operations of LDM
and/or Target, other than changes in the ordinary course of business which in
the aggregate have not been materially adverse.
4.5. Inventories. The inventories, if any, shown on the Balance Sheet
are of a quantity and quality useable and saleable in accordance with good
business practices and represent a distribution of the types of inventories
utilized in the business of LDM and Target in accordance with good business
practices. Additions and deletions from the inventories since the Balance Sheet
Date have been in the ordinary course of business. The amounts shown for
inventories on the Balance Sheet have been determined in accordance with U.S.
GAAP on a first-in, first-out basis and are stated at the lower of cost or
market.
4.6. Accounts Receivable. The accounts receivable of Target and to the
extent listed on the Exhibit A asset list, the accounts receivable of LDM shown
on the Balance Sheet as of the Balance Sheet Date, or thereafter acquired by
Target prior to the date hereof and thereafter acquired by LDM prior to the date
hereof to the extent listed on the Exhibit A asset list as of Closing, have
been, are and shall be (as the case may be) valid and enforceable and generated
in the ordinary course of business.
4.7. Personal Property. LDM and Target have good title, free and clear
of all liens, encumbrances and security interests, to all of its machinery,
equipment, furniture, inventory, franchise agreements and other personal
property, except as set forth on Exhibit E. To LDM's and Target's knowledge, all
of the leases to personal property utilized in the business of Target are valid
and enforceable against Target and are not in default.
4.8. Real Property. LDM and Target do not own any real property.
Exhibit F contains a list of all leases for real property to which LDM and/or
Target are
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a party (as lessee, sublessor, sublessee or guarantor), the monthly rental with
respect to each lease and the expiration date of each lease. To LDM's and
Target's knowledge, all such leases are valid and enforceable and are not in
default. The real property leased or occupied by LDM and/or Target, the
improvements located thereon, and the furniture, fixtures and equipment relating
thereto, (including plumbing, heating, air conditioning and electrical systems),
to LDM's and Target's knowledge conform in all material respects to any and all
applicable health, fire, safety, zoning, land use and building laws, ordinances
and regulations. There are no outstanding contracts made by LDM and/or Target
for any material improvements made to the real property, leased or occupied by
LDM and/or Target that have not been paid for.
4.9. Patents, Trademarks, Trade Names and Copyrights. Exhibit G sets
forth all patents, trademarks, trade names, copyrights, and other intellectual
property owned or utilized by LDM and/or Target. All patents, trademarks, trade
names, copyrights, processes, designs, formulas, inventions, trade secrets,
know-how, technology or other proprietary rights which are necessary to the
conduct of LDM's and/or Target's business are owned or are useable by LDM and
Target. Upon the Reorganization all such items shall be owned or useable by
Jreck to the same extent as by LDM and/or Target immediately prior to the
Reorganization. To LDM's and Target's knowledge, the conduct of any business
conducted by LDM and Target does not infringe any patent, trademark, trade name,
copyright, trade secret, or other proprietary right of any other person. No
litigation is pending or, to the knowledge of LDM and Target, has been
threatened against LDM and/or Target or any officer, director, shareholder,
employee or agent of LDM and/or Target, for the infringement of any patents,
trademarks or trade names of any other party or for the misuse or
misappropriation of any trade secret, know-how or other proprietary right owned
by any other party nor, to the knowledge of LDM and Target, does any basis exist
for such litigation. To LDM's and Target's knowledge, there has been no
infringement or unauthorized use by any other party of any patent, trademark,
trade name, copyright, process, design, formula, invention, trade secret,
know-how, technology or other proprietary right belonging to LDM and/or Target.
4.10. Warranties. LDM and Target have made no warranties or guarantees
relating to their products other than as implied or required by law.
4.11. Litigations. Except as set forth on Exhibit H, neither LDM and/or
Target nor any officer, director, shareholder, employee or agent of LDM and/or
Target is a party to any pending or, to LDM's and Target's knowledge, threatened
action, suit, proceeding or investigation, at law or in equity or otherwise in,
for or by any court or other governmental body which could have a material
adverse effect on: (i) the condition, financial or otherwise, assets or
properties of LDM and/or Target, liabilities, business or results of operations
of LDM and/or Target; or (ii) the transactions contemplated by this Agreement,
nor, to LDM's and Target's knowledge, does any basis exist for any such action,
suit, proceeding or investigation. LDM and Target are not and have not been
subject to any pending, or to LDM's and Target's knowledge threatened, product
liability claim; nor to LDM's and Target's knowledge does any basis exist for
any such claim. LDM and Target are not subject to any decree, judgment, order,
law or regulation of any court or other governmental body which could have a
material adverse effect on the condition, financial or otherwise, assets,
liabilities, business or results of operations of LDM and/or Target or which
could prevent the transactions contemplated by this Agreement. Notwithstanding
the foregoing, the pending or threatened actions, suits, proceedings or
investigations set forth on Exhibit H could not in the aggregate have a material
adverse effect on: (i) the condition, financial or otherwise, assets or
10
properties of LDM and/or Target, liabilities, business or results of operations
of LDM and/or Target or (ii) the transactions contemplated by this Agreement.
4.12. Personnel. Exhibit I contains a true and complete list of: (i)
any and all employment, bonus, profit sharing, percentage compensation, employee
benefit, incentive, pension or retirement, stock purchase and stock option
plans, oral or written contracts or agreements with directors, officers,
employees or unions, or consulting agreements, to which LDM and/or Target are a
party or are subject as of the date of this Agreement; and (ii) all group
insurance programs in effect for employees of LDM and Target. LDM and Target are
not in default with respect to any of the obligations so listed. LDM and Target
have delivered complete and correct copies of all such obligations (to the
extent they are in writing or written descriptions to the extent they are oral)
to the other party hereto. LDM and Target have no union contracts or collective
bargaining agreements with, or any other obligations to, employee organizations
or groups relating to LDM's and Target's negotiations except in minor grievances
not involving any employee organization or group, nor, to the knowledge of LDM
and Target, is LDM and/or Target the subject of any union organization affecting
its business. There is no pending or, to LDM's and/or Target's knowledge,
threatened labor dispute, strike or work stoppage affecting LDM's and/or
Target's business. All plans described in Exhibit I are in full compliance with
applicable provisions of the Employees Retirement Income Security Act of 1974
("ERISA") and regulations issued under ERISA, and there is no unfunded liability
with respect to such plans. Exhibit I also lists the amounts currently payable
to employees of LDM and Target under any other fringe benefit plans.
4.13. Contracts. Exhibit J contains a true and complete list of all
oral or written agreements, notes, instruments, or contracts to which LDM and/or
Target are a party or by which its assets or properties may be bound which
involve the payment or receipt of more than $10,000 (on an annual basis), or
which have a term of more than one year, or which involve the licensing or use
of intellectual property, or which are franchise, employment or consulting
agreements (the "Contracts"). LDM and Target are not in default in performance
of their obligations under any material provisions of such Contracts. LDM and
Target have no knowledge of any violation of any Contract by any other party
thereto and have no knowledge of any intent by any other party to a Contract not
to perform its obligations under such Contract.
4.14. Absence of Environmental Liabilities. To LDM's and Target's
knowledge, neither they nor, the real property at any time owned, leased or
occupied by LDM and/or Target are in violation of any applicable federal, state
or local law, ordinance, regulation or order relating to industrial hygiene,
worker safety, public health and safety, environmental protection, or Hazardous
Materials (as defined below) on, under or about such real property, including
the soil and ground water underlying such real property. To LDM's and Target's
knowledge, any handling, transportation, storage, treatment or use of Hazardous
Material (as defined below) that has occurred on the real property owned, leased
or occupied by LDM and/or Target during LDM's and/or Target's ownership,
tenancy, or occupancy and prior to the Closing Date has been and will be as of
the Closing Date in compliance with all applicable laws, ordinances, regulations
and orders relating to Hazardous Material. As used herein, the term "Hazardous
Material" means any substance, material or waste which is or becomes regulated
as "hazardous," "toxic" or "dangerous" by any local government authority, or the
State of North Carolina or any other state where LDM and/or Target conduct
business, including without limitation, any material or substance which is: (1)
petroleum; (2) asbestos; (3) lead containing paint; or (4) defined as a
'hazardous substance' under Section 101 or Section 102 of the Comprehensive
11
Environmental Response Compensation and Liability Act, 42 U.S.C. Section 9601 et
sect, as amended ("CERCLA"), and any regulations applicable thereunder. To LDM
and Target's knowledge, the real property at any time owned, leased or occupied
by LDM and/or Target, including without limitation, the soil and groundwater on
or under such real property, is free of any significant release of any Hazardous
Material. No notification of release of Hazardous Material pursuant to CERCLA or
the Federal Clean Water Act, or any state or local environmental law or
regulatory requirement has been received by LDM and/or Target as to any of such
real property.
4.15. Capitalization. The authorized capital stock of Target is
1,000,000 shares of $1.00 par value common stock of which 50,000 shares are
outstanding. LDM owns all the issued and outstanding shares of Target. A list of
all of the shareholders of LDM and Target by name and address, with the number
of shares owned by each as of the date hereof, is contained in Exhibit K. All
such issued and outstanding shares have been duly authorized and validly issued,
are fully paid and non-assessable, and are free and clear of all liens,
encumbrances and security interests. Except as set forth in Exhibit K, there are
no outstanding warrants, options, agreements, convertible or exchangeable
securities or other commitments pursuant to which Target is or may become
obligated to issue, sell, purchase, retire or redeem any shares of capital stock
or other securities (collectively "Option Agreements"). Notwithstanding the
foregoing, LDM and Target represent and warrant that as of the Closing and
thereafter, no Option Agreements will survive the Reorganization.
4.16. Financial Statements. LDM has delivered the following financial
statements of LDM (the "LDM Financial Statements") to Jreck attached as Exhibit
L: unaudited balance sheet and income statement of LDM for the years ending
October 31, 1996 and October 31, 1997; audited balance sheet of Target for the
year ending October 31, 1996; and schedule of marketing fund income and expense
for the year ending October 31, 1997. LDM shall deliver an audited balance sheet
and income statement of Target on or before the Closing for the year ending
October 31, 1997. Each LDM Financial Statement together with the notes thereto
is in accordance with the books and records of LDM, fairly presents the
financial position of LDM and Target and the results of operations of LDM and
Target for the period indicated, and has been prepared in accordance with
generally accepted accounting principles consistently applied, except that any
unaudited statement or schedule does not contain all the notes required under
generally accepted accounting principles and any internally prepared schedules
have not been prepared in accordance with generally accepted accounting
principles.
4.17. Absence of Undisclosed Liabilites. Except as set forth in such
Balance Sheet and Exhibit M, neither LDM nor Target have outstanding on the date
hereof, nor will it have outstanding on the Closing Date, any indebtedness or
liability (absolute or contingent) other than those incurred since the date of
such Balance Sheet in the ordinary course of business, which in the aggregate
will not have a material adverse effect upon LDM's or Target's business, assets
or properties in an amount exceeding $5,000.00.
4.18. Employees. Exhibit N contains a true and complete list of the
names, current salary rates, bonuses paid during the last fiscal year, and
accrued vacation and sick leave for all Target employees.
4.19. Insurance. Copies of all Target insurance policies and bonds have
been furnished to Jreck. All such insurance policies and bonds are in full force
and effect.
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4.20. Bank Accounts. Exhibit O contains a true and complete list of all
Target bank accounts identifying the name of the bank, the account number, and
the authorized signatories to the account.
4.21. Power of Attorney: Suretyships. LDM and Target have no power of
attorney outstanding, nor have any obligation or liability, either actual,
accrued, accruing or contingent, as guarantor, surety, cosigner, endorser,
co-maker, indemnitor or otherwise in respect of the obligation of any other
person, corporation, partnership, joint venture, association, organization or
other entity.
4.22. Accuracy of UFOC. To LDM's and Target's knowledge, the "Li'l Dino
Management Corporation Franchise Offering Circular, effective date _________,
1997" ("LDM's UFOC"), attached as Exhibit P, complies with all legal
requirements of the State of North Carolina respecting franchise offering
circulars as well as all legal requirements of any other state where LDM and/or
Target are doing business or currently offering franchises. All of the
statements, financial data and other information contained in LDM's UFOC are
true and correct in all material respects as of the date hereof. LDM's UFOC, as
of the date hereof and Closing, does not contain any untrue statement of a
material fact nor does it omit to state a material fact necessary to make the
statements or facts contained therein not misleading.
4.23. List of Franchisees. Exhibit Q ontains a true and complete list
of all of LDM's and/or Traget's franchisess.
4.24. Accurancy of Documents and Information. As of the date of
Closing, the copies of all instruments, agreements, other documents and written
information set forth as, or referenced in, Schedules or Exhibits to this
Agreement or specifically required to be furnished pursuant to this Agreement by
LDM and Target to the other party hereto to the best of LDM's and Target's
knowledge, are and will be complete and correct in all material respects. No
representations or warranties made by LDM and Target in this Agreement, nor any
document, written information, statement, financial statement, certificate,
Schedule or Exhibit furnished directly to the other party hereto pursuant to
this Agreement contains any untrue statement of a material fact, or omits to
state a material fact necessary to make the statements or facts contained herein
not misleading.
4.25. Approvals. Except for LDM and Target shareholder and board
approvals of this Agreement, no consent from any third party, except as set
forth on Exhibit R, and no consent, approval or authorization of, or
declaration, filing or registration with, any government or regulatory
authority, excluding the Division, is required to be made or obtained by LDM
and/or Target in order to permit the execution, delivery or performance of this
Agreement or any other agreement to which LDM and/or Target is or will be a
party that is an exhibit to this Agreement, or the consummation of the
transactions contemplated by this Agreement and such other agreements.
5. REPRESENTATIONS AND WARRANTIES OF JRECK. Jreck hereby represents and
warrants to LDM and Target that:
13
5.1. Compliance with Law. To Jreck's knowledge, Jreck holds, and has at
all times held, all licenses, permits and authorizations necessary for the
lawful conduct of Jreck's business wherever conducted pursuant to all applicable
statutes, laws, ordinances, rules and regulations of all governmental bodies,
agencies and subdivisions having, asserting or claiming jurisdiction over Jreck
or over any part of Jreck's operations' and to Jreck's knowledge, there are no
violations thereof which have not been cured. Jreck is not in violation of any
decree, judgment, order, and to the Jreck's knowledge any law or regulation of
any court or other governmental body (including without limitation, applicable
environmental protection legislation and regulations, equal employment and civil
rights regulations, wages, hours and the payment of social security taxes and
occupational health and safety legislation), which violation could have a
material adverse effect on the condition, financial or otherwise, assets,
liabilities, business or results of operations of Jreck.
5.2. Capitalization. The authorized capital stock of Jreck is
50,000,000 shares of common, no par, voting stock of which 13,877,444 shares
were issued and outstanding as of November 6, 1997, and 5,000,000 shares of
authorized preferred of which 700,000 shares of Series A voting nonredeemable
convertible preferred, 350,000 shares of Series B voting nonredeemable
convertible preferred, and 120 shares of Series C non-voting nonredeemable
convertible preferred are outstanding. All such issued and outstanding shares
have been duly authorized and validly issued, and are fully paid and
non-assessable. Jreck has outstanding options to purchase 100,000 shares of
common stock of Jreck pursuant to a written agreement. Except as set forth in
the preceding sentence, there are no outstanding warrants, options, agreements,
convertible or exchangeable securities pursuant to which Jreck is or may become
obligated to issue, sell, purchase, retire or redeem any shares of capital stock
or other securities.
5.3 Financial Statements. Jreck has delivered the following financial
statements of Jreck (the "Jreck Financial Statements") to LDM and Target, or
will promptly furnish to LDM and Target after the date hereof, true and complete
copies of: (i) the Form 10-SB Registration of Jreck dated December, 1997 (the
"Jreck Form 10-SB") proposed to be filed with the SEC; (ii) the consolidated
balance sheet of Jreck Subs Group, Inc. as of December 31, 1996 and 1995 and the
related consolidated statements of income, cash flows and stockholders' equity
for the years then ended (all or part of which may be included in Jreck Form
10-SB); (iii) the unaudited consolidated balance sheet of Jreck Subs Group, Inc.
as of September 30, 1997 and 1996, and the related statements of income, cash
flows and stockholders' equity for the nine-month periods then ended; (iv) each
report, if any (including, without limitation, reports in the form of a 00-X,
00-X, 0-X, Xxxxxxxx 13-D, etc.) prepared by Jreck, although not filed with the
SEC since Jreck is not a reporting company, and (v) each final prospectus and
definitive proxy statement furnished by Jreck to its stockholders since January
1, 1996. Each Jreck Financial Statement together with the notes thereto is in
accordance with the books and records of Jreck, fairly presents the financial
position of Jreck the results of operations of Jreck for the period indicated,
and has been prepared in accordance with generally accepted accounting
principles consistently applied, except that any unaudited statement does not
contain all the notes required under generally accepted accounting principles.
5.4 Absence of Certain Changes or Events. Since the date (the "Balance
Sheet Date") of the most recent financial statement delivered by Jreck pursuant
to Section 5.3 (the "Balance Sheet"), there have been no, nor as of the Closing
Date shall there, be material changes in the condition, financial or otherwise,
assets, liabilities, business or the results of operations of Jreck, other than
14
changes in the ordinary course of business which in the aggregate have not been
materially adverse.
5.5. Litigation/Correspondence/Proceedings. Except as set forth on
Exhibit S, neither Jreck nor any officer, director, shareholder, employee or
agent of Jreck is a party to any pending or, to Jreck's knowledge, threatened
action, suit, proceeding or investigation, at law or in equity or otherwise in,
for or by any court or other governmental body which could have a material
adverse effect on: (i) the condition, financial or otherwise, assets or
properties of Jreck, liabilities, business or results of operations of Jreck; or
(ii) the transactions contemplated by this Agreement; nor, to Jreck's knowledge,
does any basis exist for any such action, suit, proceeding or investigation.
Jreck is not and has not been subject to any pending, or to Jreck's knowledge
threatened product liability claim; nor does any basis exist for any such claim.
Jreck is not subject to any decree, judgment, order, law or regulation of any
court or other governmental body which could have a material adverse effect on
the condition, financial or otherwise, assets, liabilities, business or results
of operations of Jreck or which could prevent the transaction contemplated by
this Agreement. Exhibit S accurately lists all written notices, correspondence
and written inquiries which Jreck has received on or after January 1, 1996, from
the Securities and Exchange Commission ("SEC"), the National Association of
Securities Dealers, Inc. ("NASD"), the Federal Trade Commission and the
securities or franchise commission of any state or from any other regulatory
agency with authority over the sale of securities or the offer and sale of
franchises in any jurisdiction (exclusive of routine notices, correspondence and
inquiries from such agencies concerning the registration or availability of an
exemption from registration for the offering of shares or franchises for sale in
such jurisdiction). Except as described in Exhibit S, neither Jreck nor any of
its officers or directors has ever been the subject of any SEC, Federal Trade
Commission or state regulatory agency stop order or censure or NASD disciplinary
proceeding or, to the knowledge of Jreck, the subject of any investigation with
respect to such proceeding.
5.6. Accuracy of UFOC. To Jreck's knowledge, the Jreck Uniform
Franchise Offering Circular not yet effective ("Jreck's UFOC"), the Mountain
Mike's Uniform Franchise Offering Circular ("Mountain Mike's UFOC") and the
Little Kings, Inc. Uniform Offering Circular not yet effective ("Little Kings
UFOC") comply or will comply with all legal requirements of the state of New
York with respect to the Jreck UFOC, the state of California with respect to the
Mountain Mike's UFOC and the state of Nebraska with respect to the Little Kings
UFOC, respecting franchise offering circulars as well as all legal requirements
of any other state where Jreck, Mountain Mike's or Little King are offering
franchises. All of the statements, financial data and other information
contained in Jreck's UFOC, and to Jreck's knowledge the Mountain Mike's UFOC and
Little Kings UFOC, were true and correct as of the date thereof, and continues
to be true and correct in all material respects as of the date hereof and the
date of Closing, except, since the date of the Little Kings UFOC, Jreck has
acquired all outstanding common voting shares of Little Kings and has made
certain management and operational changes since the date of the acquisition
which changes continue to evolve. Jreck's UFOC, and to Jreck's knowledge the
Mountain Mike's UFOC and Little Kings UFOC, as of the date hereof and Closing,
do not contain any untrue statement of a material fact nor do they omit to state
a material fact necessary to make the statements or facts contained therein not
misleading. Jreck intends to cause its affiliate, Admiral Subs Group, Inc. to
prepare and file a UFOC with respect to the sale of SeaWest Sub Shops franchises
in the State of Washington. At this time, Admiral Subs Group needs to complete
an audit and the UFOC must be prepared by legal counsel. Jreck anticipates that
15
the UFOC will be filed with the State of Washington by December 31, 1997. Once
the UFOC is effective Jreck expects Admiral Subs Group to begin selling SeaWest
Sub Shop franchises.
5.7. Tax Treatment of Reorganization. Jreck makes no representation or
warranty as to whether this Agreement and the consummation of the Reorganization
will be treated as a tax free plan of reorganization in accordance with the
provisions of Section 368(a)(1)(C) of the Code and is relying on LDM and Target
to consult with their tax advisors regarding the tax treatment of this
Agreement.
5.8. Tax Returns and Payments. All tax returns and reports with respect
to Jreck required by law to be filed under the laws of any jurisdiction,
domestic or foreign, have been duly and timely filed and all taxes, fees or
other governmental charges of any nature which were required to have been paid,
have been paid or funds have been set aside to provide for the payment of all
such taxes. Jreck has no knowledge of any actual or threatened assessment of
deficiency or additional tax or other governmental charge or a basis for such a
claim against Jreck. Jreck has no knowledge of any tax audit of Jreck by any
taxing or other authority in connection with any of its fiscal years; Jreck has
no knowledge of any such audit currently pending or threatened, and there are no
tax liens on any of Jreck's properties.
5.9. Patents. Trademarks Trade Names and Copyrights. Exhibit T sets
forth all patents, trademarks, trade names, copyrights, and other intellectual
property owned or utilized by Jreck. All patents, trademarks, trade names,
copyrights, processes, designs, formulas, inventions, trade secrets, know-how,
technology or other proprietary rights which are necessary to the conduct of
Jreck's business are owned or are useable by Jreck. To Jreck's knowledge, the
conduct of any business conducted by Jreck does not infringe any patent,
trademark, trade name, copyright, trade secret, or other proprietary right of
any other person. No litigation is pending or, to the knowledge of Jreck, has
been threatened against Jreck or any officer, director, shareholder, employee or
agent of Jreck, for the infringement of any patents, trademarks or trade names
of any other party or for the misuse or misappropriation of any trade secret,
know-how or other proprietary right owned by any other party nor, to the best
knowledge of Jreck, does any basis exist for such litigation. To Jreck's
knowledge, there has been no infringement or unauthorized use by any other party
of any patent, trademark, trade name, copyright, process, design, formula,
invention, trade secret, know-how, technology or other proprietary right
belonging to Jreck.
5.10. Absence of Environmental Liabilities. Neither Jreck nor, to
Jreck's knowledge, neither it nor the real property at any time owned, leased or
occupied by Jreck is in violation of any applicable federal, state or local law,
ordinance, regulation or order relating to industrial hygiene, worker safety,
public health and safety, environmental protection, or Hazardous Materials (as
defined below) on, under or about such real property, including the soil and
ground water underlying such real property. To Jreck's knowledge, any handling,
transportation, storage, treatment or use of Hazardous Material (as defined
below) that has occurred on the real property owned, leased or occupied by Jreck
during Jreck's ownership, tenancy, or occupancy and prior to the Closing Date
has been and will be as of the Closing Date in compliance with all applicable
laws, ordinances, regulations and orders relating to Hazardous Material. As used
herein, the term "Hazardous Material" means any substance, material or waste
which is or becomes regulated as "hazardous," "toxic" or "dangerous" by any
local government authority, including without limitation, any material or
substance which is: (1) petroleum; (2) asbestos; (3) lead containing paint; or
(4) defined as a 'hazardous substance' under Section 101 or Section 102 of the
16
Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et sect, as amended ("CERCLA"), and any regulations applicable
thereunder. To Jreck's knowledge, the real property at any time owned, leased or
occupied by Jreck, including without limitation, the soil and groundwater on or
under such real property, is free of any significant release of any Hazardous
Material. No notification of release of Hazardous Material pursuant to CERCLA or
the Federal Clean Water Act, or any state or local environmental law or
regulatory requirement has been received by Jreck as to any of such real
property.
5.11. Jreck Information in LDM Shareholder Meeting Notice. All
information relating to and concerning Jreck contained in LDM's shareholder
meeting notice referred to in Section 8.2 including, without limitation, the
Jreck From 10-SB, will be true in all material respects and will not, as of the
date of mailing of LDM's shareholder meeting notice or as of the date of the LDM
shareholder's meeting, contain any untrue statement of material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements there, in light of the circumstances under which they are made, not
misleading. Jreck makes no representation or warranty as to any other statement,
information or omission in the LDM shareholder meeting notice. Jreck will
promptly inform LDM of any material changes in its business affairs, operations
or financial condition which would require any change in the LDM shareholder
meeting notice or the Jreck Form 10-SB contained therein.
5.12. Accuracy of Documents and Information. As of the date of Closing,
the copies of all instruments, agreements, other documents and written
information set forth as, or referenced in, Schedules or Exhibits to this
Agreement or specifically required to be furnished pursuant to this Agreement by
Jreck to the other parties hereto to the best of Jreck's knowledge, are and will
be complete and correct in all material respects. No representations or
warranties made by Jreck in this Agreement, nor any document, written
information, statement, financial statement, certificate, Schedule or Exhibit
furnished directly to the other parties hereto pursuant to this Agreement
contains any untrue statement of a material fact, or omits to state a material
fact necessary to make the statements or facts contained herein not misleading.
5.13. Non-Disposition of LDM. From and after the Closing Date, it is
Jreck's intention not to dispose of the assets of LDM acquired hereunder,
including the Target Common, except in the ordinary course of business provided,
however, Jreck shall be free to merge the operations of Target into Jreck in
continuance of Target's business enterprise.
5.14. Approvals. Except for Jreck board approval of this Agreement, no
consent from any third party and no consent, approval or authorization of, or
declaration, filing or registration with, any government or regulatory
authority, excluding the Securities Exchange Commission and any state securities
regulatory body, is required to be made or obtained by Jreck in order to permit
the execution, delivery or performance of this Agreement or any other agreement
to which Jreck is or will be a party that is an exhibit to this Agreement, or
the consummation of the transactions contemplated by this Agreement and such
other agreements.
6. CONDITOINS OT THE OBLIGATION OF JRECK. The obligation of Jreck to
consummate the Reorganization is subject to the fulfillment, at or before the
Closing of all the following conditions, any one or more of which may be waived
by Jreck.
17
6.1. Representations and Warranties True at Closing. The
representations and warranties of LDM and Target contained in this Agreement
shall be deemed to have been made again at and as of the Closing with respect to
the stated facts then existing and shall be true in all material respects.
6.2. Covenants Performed. All of the obligations of LDM and Target to
be performed at or before the Closing pursuant to the terms of this Agreement
shall have been duly performed.
6.3. Certificate. At the Closing, Jreck shall have received a
certificate signed by the President and Chief Executive Officer of LDM and
Target to the effect that the conditions set forth in Sections 6.1 and 6.2 have
been satisfied.
6.4. Shareholder/Board of Director Approval. This Agreement and the
Plan of Reorganization, to the extent required by law, shall have been duly
approved by the Board of Directors of LDM and Target as of the date hereof. Both
LDM and Target shall certify to Jreck at Closing that all shareholder and board
of director approvals continue to be effective as of the date of Closing.
6.5. Dissenting Shares. The aggregate number of Dissenting Shares shall
not exceed seven and one-half percent (7.5%) of the aggregate of the outstanding
shares of LDM common stock outstanding immediately before the Reorganization.
6.6. Material Changes in the Business of LDM and/or Target. There shall
have been no material adverse change in the financial position, results of
operations, assets, liabilities or business of LDM and/or Target since the date
of this Agreement.
6.7. Consents. Jreck shall have received in writing any consents,
approvals, renewal of all bank loans, and waivers required in connection with
the Reorganization (a) from parties to LDM's and/or Target's agreements,
indentures, mortgages, franchises, licenses, permits, leases, and other
instruments set forth in exhibits to this Agreement, including without
limitation the Contracts and (b) from all governmental authorities.
6.8. Documenations. All actions, proceedings, instruments, resolutions,
certificates, and documents reasonably requested by Jreck to be executed and
delivered to Jreck in order to carry out this Agreement and to consummate the
Reorganization, and all of the relevant legal matters, shall be reasonably
satisfactory to Jreck and its counsel including, without limitation compliance
with any applicable state or federal securities law or regulation.
6.9. Outstanding Securities. At the Closing, the only issued and
outstanding securities of Target shall be the Target Common, and there shall be
no other outstanding securities, options, warrants, stock option plans, or
securities entitlements of any kind.
6.10. Financial Condition. At the Closing, the LDM Financial Statements
shall reflect that Target's current liquid (cash or cash equivalent) assets are
equal to or greater than Target's current liabilities.
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7. CONDITIONS TO THE OBLIGATION OF TARGET. The obligation of LDM and Target
to consummate the Reorganization is subject to the fulfillment, at or before the
closing, of all of the following conditions, any one or more of which may be
waived by Target and LDM:
7.1. Representations and Warranties True at Closing. The
representations and warranties of Jreck contained in this Agreement shall be
deemed to have been made again at and as of the Closing with respect to the
stated facts then existing and shall be true in all material respects.
7.2. Covenants Performed. All of the obligations of Jreck to be
performed at or before the Closing pursuant to the terms of this Agreement shall
have been duly performed.
7.3. Shareholder Approval. This Agreement and the Reorganization, to
the extent required by law, shall have been duly approved by the shareholders of
LDM as of the date of Closing.
7.4. Consents. LDM and Target shall have received in writing any
consents, approvals, and waivers required in connection with the Reorganization
(a) from parties to Jreck's agreements, indentures, mortgages, franchises,
licenses, permits, leases, and other instruments set forth in exhibits to this
Agreement, and (b) from all governmental authorities.
7.5. Documentation. All actions, proceedings, instruments, resolutions,
certificates, and documents reasonably requested by LDM and Target to be
executed and delivered to LDM and Target in order to carry out this Agreement
and to consummate the Reorganization, and all of the relevant legal matters,
shall be reasonably satisfactory to LDM, Target and their counsel.
7.6. Certificate. At Closing, LDM and Target shall have received a
certificate signed by the President and Chief Executive Officer of Jreck to the
effect that the conditions set forth in Sections 7.1 and 7.2 have been
satisfied.
7.7. Material Changes in Business of Jreck. There shall have been no
material adverse change in the financial position, results of operations,
assets, liabilities or business of Jreck since the date of this Agreement.
8. PRE-CLOSING COVENANTS
8.1. Pre-Closing Documents. During the period from the date of this
Agreement until the Closing, LDM, Target and Jreck covenant and agree as
follows:
8.1.1.Advice of Changes. Each of LDM, Target and Jreck will
promptly advise the other in writing (i) of any event occurring subsequent to
the date of this Agreement that would render any representation or warranty of
such party contained in this Agreement, if made on or as of the date of such
event or the Closing Date, untrue or inaccurate in any material respect and (ii)
of any material adverse change in such party's business.
8.1.2. Maintenance of Business. MLDM and Target will use their
reasonable best efforts to carry on and preserve their business and their
relationships with customers, suppliers, employees and others in substantially
the same manner as it has prior to the date hereof. If LDM or Target becomes
aware of a deterioration in the relationship with any customer, supplier or key
19
employee, they will promptly bring such information to the attention of Jreck in
writing and, if requested by Jreck, will exert their reasonable best efforts to
restore the relationship.
8.1.3. Conduct of Business. Unless Jreck shall otherwise agree
in writing (which agreement shall be in Jreck's sole discretion) or as otherwise
expressly permitted or specifically contemplated by this Agreement, LDM and
Target covenant and agree that prior to the Closing:
(a)The business of LDM and Target shall be conducted
only in, and LDM and Target shall not take any action except in, the ordinary
course of business, and LDM and Target shall use their best efforts to maintain
and preserve their business organization, assets, employees and business
relationships, except that Target and LDM may pay the expenses set forth in
Section 12.1;
(b) Target shall not directly or indirectly do any of
the following: (i) amend its Articles of Incorporation or By-laws; (ii) declare,
set aside or pay any dividend or other distribution or payment (whether in cash,
stock or property) in respect of shares of its capital stock owned by any
person, (iii) issue, grant, sell or pledge or agree to issue, grant, sell or
pledge any shares of capital stock of Target, or securities convertible into or
exchangeable or exercisable for, or otherwise evidencing a right to acquire,
shares of capital stock of Target; (iv) redeem, purchase or otherwise acquire
any outstanding shares of its capital stock or other securities; (v) split,
combine or reclassify any shares of its capital stock; (vi) except as
contemplated herein, adopt a plan of liquidation or resolutions providing for
the capitalization, liquidation, dissolution, merger, consolidation or
reorganization of Target; or (vii) enter into or modify any contract, agreement,
commitment or arrangement with respect to any of the foregoing, except as
contemplated herein;
(c) Target shall directly or indirectly do any of the
following: (i) sell, lease, pledge, dispose of or encumber (except for such
encumbrances as will not interfere with the ability of LDM and/or Target to
obtain secured indebtedness for borrowed money on customary terms) any assets or
rights of LDM and/or Target except in the ordinary course of business; (ii)
acquire any corporation, partnership or other business organization or division
thereof, or make any investment either by purchase of stock or securities (other
than acquisitions of fixed-income securities with maturities of less than one
year), contributions of capital or property transfer; (iii) waive, release,
grant or transfer any rights of value or modify or change in any material
respect any existing license or contract, other than in the ordinary course of
business or breach in any material respect any of the terms of any existing
license or contract; (iv) enter into any agreement which cannot be performed
within one year or canceled within 30 days without penalty and which involves
the expending, together with all related expenditures, of more than $10,000; (v)
incur or guarantee any indebtedness for borrowed money other than unsecured
indebtedness for borrowed money incurred in the ordinary course of business
which indebtedness is prepayable without premium or penalty at anytime; or (vi)
authorize or propose any of the foregoing, or enter into or modify any contract,
agreement, commitment or arrangement to do any of the foregoing;
(d) Target shall take any action (i) with respect to
the grant of any severance or termination pay to, or the entering into of any
employment agreement with, any employee, or with any executive officer or
director of LDM and/or Target, or (ii) with respect to any increase of benefits
payable under its current severance or termination pay policies other than any
20
increase resulting from an increase in salaries granted in the ordinary course
and in accordance with past practices;
(e) Target shall adopt or amend any bonus, profit
sharing, stock option, pension, retirement, deferred compensation or other
similar plan, agreement, trust, fund or arrangement for the benefit of
employees, except as is necessary to comply with the law or existing contractual
or collective bargaining obligations or other than discretionary stay-put or
similar payments (which discretionary stay-put or similar payments shall be made
prior to the date of the Effective Date);
(f) Target shall (i) maintain their books of account
and record and billing practices consistently with past practices; (ii) maintain
and keep their properties and assets in as good repair, working order and
condition as at present, except for ordinary wear and tear; (iii) promptly
notify Jreck of any change which would have a material adverse effect on LDM or
Target, or their business, assets or properties;
(g) Target shall take any action or fail to take any
action that could reasonably be expected to result in the expiration,
revocation, suspension or modification of any of its licenses or fail to
prosecute with due diligence any applications to any governmental authority if
such action or the failure to take such action would have, individually or in
the aggregate, a material adverse effect;
(h) Target shall comply with all laws, rules and
regulations to which LDM and Target and their business, assets and properties
are subject, except where the failure to comply would not have, individually or
in the aggregate, a material adverse effect on LDM or Target, or their
respective businesses, assets or properties; and
(i) Target will continue to pay when due all income,
sales, payroll and other taxes which may be shown to be due on tax returns
required to be filed prior to the Closing Date.
8.2. Shareholder Meeting. As promptly as practicable after the date
hereof, LDM shall file an application with the North Carolina Secretary of
State, Securities Division (the "Division"), to seek approval of the terms and
conditions of the transactions provided for under this Agreement pursuant to
N.C.G.S. ss. 78A-30. If the Division approves the transaction, then LDM shall,
as promptly as practicable after receipt of such approval, mail an appropriate
notice to LDM's shareholders seeking their approval of the terms of the
transaction provided for under this Agreement. If the Division denies approval
of the transaction, or if the application for approval is rejected or withdrawn
by LDM for any reason, then LDM shall nonetheless proceed promptly with the
mailing of notice to LDM's shareholders to seek approval of the transaction. In
either event, the shareholder meeting shall be held as promptly as practicable
after the date of mailing, subject to applicable statutory and LDM bylaw
requirements and the Closing shall be held no more than fifteen (15) days
following the date of approval by LDM's shareholders.
LDM and Jreck acknowledge that if approval of the transaction from the Division
is obtained, the issuance of Jreck shares to LDM will be effected under the
federal exemption from registration provided by ss. 3(a)(10) of the Securities
Act. The subsequent distribution by LDM of the Jreck shares to LDM's
21
shareholders will require either an effective Jreck registration statement under
the Securities Act, or the availability of a federal and state exemption from
registration. In that event, LDM would proceed with its plan of liquidation and
dissolution and distribute the Jreck shares to LDM's shareholders as soon as the
distribution can be effected pursuant to a Jreck registration statement in
accordance with Section 2.7, or at such time as an exemption from federal and
state registration is available.
LDM and Jreck acknowledge that if approval of the transaction from the Division
is not obtained for any reason, then the ss. 3(a)(10) exemption will not be
available and issuance of Jreck shares to LDM will be effected under federal
exemption ss. 4(2). That exemption would require LDM to hold the Jreck stock for
a certain period of time to comply with the requirements of that exemption or
Rule 144 thereunder. LDM acknowledges that the sale transaction under that
scenario may not constitute a tax-free reorganization under applicable Code
rules and regulations.
8.3. Necessary Consents. Prior to the Closing, LDM and Target shall use
their reasonable best efforts to obtain such written consents and take such
other actions as may be necessary or appropriate to allow the consummation of
the transactions contemplated hereby and to allow LDM and Target to carry on
their respective businesses after the Closing.
8.4. Exclusivity. From the date hereof until the earlier of termination
of this Agreement or consummation of the Reorganization, neither LDM, Target nor
any of their officers, directors, employees, representatives, agents or
affiliates shall directly or indirectly encourage, solicit, initiate or conduct
discussions or negotiations with, provide any information to, or enter into any
agreement with, any corporation, partnership, person or other entity or group
concerning any merger, consolidation, sale of assets, sale of majority control,
or other similar transaction involving LDM and/or Target.
8.5. Due Diligence. Until the Closing, each party shall provide the
other (including accounting, legal, and investment banking representatives) with
access to its offices and its senior employees for the purpose of due diligence,
in accordance with procedures established by the parties to minimize disruptions
of their businesses.
8.6. Amendments to Disclosures. If after execution of this Agreement
either party learns of a breach or violation of any representation, warranty,
covenant or agreement made by it herein, which it had no knowledge of prior to
its execution of this Agreement, such party (the "initiating party") shall
promptly notify the other party (the "receiving party") in writing of such
breach or violation. The other party shall then have ten (10) days after receipt
of such notice of a breach or violation to terminate this Agreement by written
notice to the initiating party, if such breach or violation, individually, or
together with other breaches or violations by the initiating party of this
Agreement, has or would have a material adverse effect on the initiating party.
If the receiving party does not send written notice within such ten (10) days,
the receiving party shall be deemed to have waived such breach of violation;
Provided, however, in the event that the initiating party notifies the receiving
party in writing of a breach or violation subsequent to any breach or violation
which was so waived in accordance with this Section 8.6, the receiving party may
consider each breach or violation so waived together with other breaches or
violations by the initiating party in determining whether a material adverse
effect on the initiating party shall have occurred with respect to such
subsequent breach or violation.
8.7. Post-Closing Covenants.
22
8.7.1. Board Position. As soon after the Closing as
practicable, Jreck, its officers and directors, shall cause Xxxxx X. Xxxxxxx to
be elected or appointed as a member of the Jreck Advisory Board of Directors.
8.7.2. Liquidation and Dissolution. LDM shall liquidate and
dissolve in accordance with North Carolina law as required in Section
368(a)(2)(G) of the Code.
9. CONFIDENTIALITY COVENANT AND ANNOUNCEMENTS.
9.1. Confidentiality. No party to this Agreement shall use or disclose
any non-public information obtained from another party for any purpose unrelated
to the Reorganization, and, if this Agreement is terminated for any reason
whatsoever, each party shall return to the other all originals and copies of all
documents and papers containing technical, financial, and other information
furnished to such party pursuant to this Agreement or during the negotiations
which preceded this Agreement, and shall neither use nor disclose any such
information except to the extent that such information is available to the
public, is rightfully obtained from third parties or is independently developed.
9.2. Announcements. No party to this Agreement shall issue a press
release or other public communication relating to this Agreement or the Plan of
Reorganization without the prior approval of the other party. Notwithstanding
the foregoing, and after reasonable consultation with LDM and Target, Jreck may
make such announcements regarding the Reorganization as, in the judgment of its
management after consultation with legal counsel, are necessary to comply with
any securities laws or regulations.
10. Indemnifications. LDM ("Indemnitor") hereby indemnifies Jreck
("Indemnitee") for ten (10) months after the Closing against all Claims (as
defined below) and all costs, expenses, and attorneys' fees incurred in the
defense of any of such Claims or any action or proceeding brought on any of such
Claims. For purposes of this Section, "Claims" shall mean all liabilities,
damages, losses, costs, expenses, attorneys' fees, and claims, arising from (a)
any breach or default in the performance of any obligation to be performed by
Target or LDM under this Agreement or (b) any breach of any representation,
warranty or covenant of Target or LDM set forth in this Agreement. If any action
or proceeding is brought against Indemnitee by reason of any such Claims,
Indemnitor upon notice from Indemnitee shall defend such action or proceeding at
Indemnitor's sole cost by legal counsel reasonably satisfactory to Indemnitee.
In addition to any other remedies available to Indemnitee in law or in equity,
Indemnitor's obligations under this Section 10 shall be secured by a pledge of
ten percent (10%) of the Jreck Common received by Indemnitor pursuant to the
terms of this Agreement, as set forth in the Pledge Agreement attached as
Exhibit U.
11. Termination.
11.1. Mutual Agreement. This Agreement may be terminated at any time
prior to the Closing by the unanimous mutual consent of Jreck, LDM and Target,
even if and after the shareholders of LDM have approved this Agreement and the
Reorganization.
11.2. Termination by Jreck. This Agreement may be terminated by Jreck
alone, by means of written notice to LDM and Target if (a) LDM and/or Target
fail to perform any material covenant of LDM and/or Target contained in this
23
Agreement, or (b) on or before March 31, 1998, any of the conditions set forth
in Article 6 of this Agreement shall not have been satisfied by LDM and Target
or waived by Jreck.
11.3. Termination by LDM/Target. This Agreement may be terminated by
LDM and Target alone, by means of written notice to Jreck if (a) Jreck fails to
perform any material covenant of Jreck contained in this Agreement, (b) LDM's
Board of Directors fail to approve this Agreement on or before December 19,
1997, (c) LDM's shareholders fail to approve this Agreement on or before March
31, 1998, or (d) on or before March 31, 1998, any of the conditions set forth in
Article 7 of this Agreement shall not have been satisfied by Jreck or waived by
LDM and Target.
11.4. Break Up Fee. If this Agreement or the transactions contemplated
under this Agreement are terminated or abandoned by LDM or Target because LDM's
shareholders fail to approve this Agreement pursuant to Section 8.2 on or before
March 31, 1998, then LDM and Target shall promptly pay Jreck a fee equal to
$250,000.00.
12. Miscellaneous.
12.1. Expenses. Jreck shall pay its own costs and expenses, including
legal, accounting and investment banking fees and expenses, relating to this
Agreement, the negotiations leading up to this Agreement and the transactions
contemplated by this Agreement. LDM and Target shall pay their own costs and
expenses, including legal, accounting and investment banking fees and expenses,
relating to this Agreement, the negotiations leading up to this Agreement and
the transactions contemplated by this Agreement.
12.2. Time. Time and strict and punctual performance are of the essence
with respect to each provision of this Agreement.
12.3. Governing Law. This Agreement is governed by and construed in
accordance with the laws of the State of North Carolina.
12.4. Headings. The paragraph headings in this Agreement: (a) are
included only for convenience, (b) do not in any manner modify or limit any of
the provisions of this Agreement, and (c) may not be used in the interpretation
of this Agreement.
12.5. Notices. Each notice and other communication required or
permitted to be given under this Agreement ("Notice") must be in writing. Notice
is duly given to another party upon: (a) hand delivery to the other party, (b)
receipt by the other party when sent by facsimile to the address and number for
such party set forth below (provided, however, that the Notice is not effective
unless a duplicate copy of the facsimile Notice is promptly given by one of the
other methods permitted under this paragraph), (c) three business days after the
Notice has been deposited with the United States postal service as first class
certified mail, return receipt requested, postage prepaid, and addressed to the
party as set forth below, or (d) the next business day after the Notice has been
deposited with a reputable overnight delivery service, postage prepaid,
addressed to the party as set forth below with next-business-day delivery
guaranteed, provided that the sending party receives a confirmation of delivery
from the delivery-service-provider.
24
If to Jreck:
Jreck Subs Group, Inc.
X.X. Xxx 0
Xxxxxxxxx, XX 00000
Attention: Xxxxxxxxxxx Xxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxxx Xxxxxxxxxx, Esq.
Solomon, Ward, Seidenwurm & Xxxxx, LLP
000 X Xxxxxx Xxxxx 0000
Xxx Xxxxx, XX 00000
Facsimile: (000) 000-0000
If to LDM/Target:
Li'l Dino Management Corporation
0000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxx Early Xxxxxx & Xxxxxxx, L.L.P.
0000 Xxxxxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxxx, XX 00000
Attention: Xxxxxxx X. Alt, Esq.
Facsimile: (000) 000-0000
Each party shall make a reasonable, good faith effort to ensure that it will
accept or receive Notices to it that are given in accordance with this
paragraph. A party may change its address for purposes of this paragraph by
giving the other party(ies) written notice of a new address in the manner set
forth above.
12.6. Partial Invalidity. Each provision of this Agreement is valid and
enforceable to the fullest extent permitted by law. If any provision of this
Agreement (or the application of such provision to any person or circumstance)
is or becomes invalid or unenforceable, the remainder of this Agreement, and the
application of such provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, are not affected by such invalidity
or unenforceability unless such provision or the application of such provision
is essential to this Agreement.
25
12.7. Survival of Representation, Warranties and Covenants. All
representations and warranties contained in this Agreement, including the
Exhibits, Schedules and other documents delivered pursuant to this Agreement
shall survive the Closing and shall expire one year thereafter. All covenants
contained in this Agreement which by their nature survive the Closing shall
survive the Closing unless otherwise limited in accordance with their terms
under this Agreement.
12.8. Waiver. Any waiver of a default or provision under this Agreement
must be in writing. No such waiver constitutes a waiver of any other default or
provision concerning the same or any other provision of this Agreement. No delay
or omission by a party in the exercise of any of its rights or remedies
constitutes a waiver of (or otherwise impairs) such right or remedy. A consent
to or approval of an act does not waive or render unnecessary the consent to or
approval of any other or subsequent act.
12.9. Successors in Interest and Assigns. Neither Target or LDM, on the
one hand, nor Jreck, on the other hand, may voluntarily or by operation of law
assign, hypothecate, delegate or otherwise transfer or encumber all or any part
of its rights, duties or other interests in this Agreement without the prior
written consent of the other party, which consent may be withheld in such
party's sole and absolute discretion. Any such transfer in violation of this
paragraph is void. Subject to the foregoing and any other restrictions on
transferability contained in this Agreement, this Agreement is binding upon and
inures to the benefit of the successors-in-interest and assigns of each party to
this Agreement.
12.10. Counterparts and Exhibits. This Agreement may be executed in
counterparts, each of which is deemed an original and all of which together
constitute one document. All exhibits attached to and referenced in this
Agreement are incorporated into this Agreement.
12.11. Other Remedies. Unless expressly provided otherwise, no remedies
contained in this Agreement or in any of the Exhibits or Schedules hereto shall
be in lieu of, or constitute a waiver of, any remedies at law or in equity (not
based upon negligent misrepresentations) that one party may otherwise have
against the other party hereto or against any present or former officer,
director or controlling shareholder of such party.
12.12. Arbitration. The parties hereto agree that any disputes between
the parties relating to or arising from this Agreement shall be submitted to
binding arbitration in accordance with the rules of the American Arbitration
Association. If any such dispute is initiated by LDM or Target, such arbitration
shall be held in San Diego, California; however, if any such dispute is
initiated by Jreck, such arbitration shall be held in Greensboro, North
Carolina. The results, determination, finding, judgment or award rendered
through such arbitration(s), shall be final and binding on each of the parties
hereto and not subject to appeal.
12.13. Attorney Fees. The prevailing party(ies) in any litigation,
arbitration, mediation, bankruptcy, insolvency or other proceeding
("Proceeding") relating to the enforcement or interpretation of this Agreement
may recover from the unsuccessful party(ies) all costs, expenses, and actual
attorney's fees (including expert witness and other consultants' fees and costs)
relating to or arising out of (a) the Proceeding (whether or not the Proceeding
proceeds to judgment), and (b) any post-judgment or post-award proceeding
including, without limitation, one to enforce or collect any judgment or award
resulting from the Proceeding. All such judgments and awards shall contain a
26
specific provision for the recovery of all such subsequently incurred costs,
expenses, and actual attorney's fees.
12.14. Prior Understandings. This Agreement and all documents
specifically referred to and executed in connection with this Agreement: (a)
contain the entire and final agreement of the parties to this Agreement with
respect to the subject matter of this Agreement, and (b) supersede all
negotiations, stipulations, understandings, agreements, letters of intent,
representations and warranties, if any, with respect to such subject matter,
which precede or accompany the execution of this Agreement.
27
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
JRECK SUBS GROUP, INC.
By: ______________________________
Xxxxxxxxxxx X. Xxxxxx,
Chairman of the Board and
Chief Executive Officer
LI'L DINO CORPORATION
By: ______________________________
Xxxxx X. Xxxxxxx,
Chairman of the Board and
Chief Executive Officer
LI'L DINO MANAGEMENT
CORPORATION
By: ______________________________
Xxxxx X. Xxxxxxx,
Chairman of the Board and
Chief Executive Officer
28
EXHIBIT A
ASSETS OF LDM
EXHIBIT B
LDM LIABILITIES
EXHIBIT C
PERMITS, LICENSES, AUTHORIZATIONS
EXHIBIT D
TAXES
EXHIBIT E
PERSONAL PROPERTY
EXHIBIT F
LIST OF LEASES
EXHIBIT G
LIST OF PATENTS, TRADEMARKS, TRADE NAMES AND COPYRIGHTS
EXHIBIT H
TARGET LITIGATION
EXHIBIT I
PERSONNEL
EXHIBIT J
CONTRACTS
EXHIBIT K
LDM/TARGET SHAREHOLDER LIST/OPTION AGREEMENTS
EXHIBIT L
FINANCIAL STATEMENTS
29
EXHIBIT M
NON BALANCE SHEET LIABILITIES
EXHIBIT N
EMPLOYEES
EXHIBIT O
BANK ACCOUNTS
EXHIBIT P
TARGET UFOC
EXHIBIT Q
FRANCHISEES
EXHIBIT R
THIRD PARTY APPROVALS
EXHIBIT S
JRECK LITIGATION
EXHIBIT T
PATENTS, TRADEMARKS, TRADE NAMES AND COPYRIGHTS
EXHIBIT U
PLEDGE AGREEMENT
30
