ASSET PURCHASE AGREEMENT Dated as of April 7, 2008 by and among
Execution
Version
Dated
as of April 7, 2008
by
and among
JDCO,
Inc.,
Java
Detour, Inc.,
Java
Universe, LLC,
▇▇▇▇
▇▇▇▇▇▇
and
▇▇▇▇▇▇
▇▇▇▇▇
- -
Execution
Version
This
ASSET PURCHASE AGREEMENT (this “Agreement”), dated as of
April 7, 2008, is by and among JDCO, Inc., a California corporation (“Buyer”), solely for the
purposes of Article Six, Java Detour, Inc., a Delaware corporation and parent of
Buyer (“Java Detour”),
Java Universe, LLC, a California limited liability company (“Seller”), and solely for
purposes of Article Three, ▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇, each individuals
residing in California (each, a “Member” and collectively, the
“Member”).
WITNESSETH:
WHEREAS,
Seller is engaged in the business of selling coffees, whole leaf teas, other
beverages and select baked goods (the “Business”) in a store located
at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (the “Business
Facility”);
WHEREAS,
Seller desires to sell all of the Assets (as defined herein) to Buyer, and Buyer
desires to purchase such Assets from Seller;
WHEREAS,
Seller desires to appoint Buyer as its agent for purposes of occupying and
operating the Business at the Business Facility, and Buyer desire to act as
Seller’s agent in such capacity; and
NOW THEREFORE, in consideration of the
foregoing and of the mutual covenants set forth below, the parties hereby agree
as follows:
Article
1.
Asset
Sale and Purchase Transaction
1.1
Sale and Purchase of Assets. Subject
to the terms and conditions of this Agreement, Seller shall grant, convey, sell,
assign, transfer, and deliver to Buyer on the Closing Date (as such term is
defined herein), and Buyer shall purchase on the Closing Date, free and clear of
all covenants, restrictions, liens, security interests, claims, pledges,
assignments, subleases, options, rights of refusal, charges, leases, licenses,
encumbrances and any other restriction of any kind or nature (collectively,
“Liens”), all
properties, assets, privileges, rights, interests and claims, real and personal,
tangible and intangible, of every type and description, wherever located,
including the Business as a going concern and goodwill, that are owned, used, or
held for use by Seller and related to the Business, except for those assets
which are expressly excluded pursuant to Section 1.2 hereof (collectively, the
“Assets”) Without
limiting the generality of the foregoing, the Assets shall include, without
limitation, items in the following categories that conform to the definition of
the term “Assets”:
(a) Inventories. All
inventories (including raw materials, work-in-progress, and finished good) and
supplies of Seller (collectively, the “Inventory”), including,
without limitation, Inventory held at the Business Facility;
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(b)
Prepaid
Items. All prepaid items and expenses;
(c) Machinery, Equipment, and Other
Personal Property. All physical assets, machinery, equipment,
furniture, fixtures, office materials and supplies, computer hardware and
software, spare parts, and other tangible personal property of every kind and
description owned, leased, or licensed by each Seller and used or held for use
in connection with the Business, including those set forth on Schedule
1.1(c);
(d)
Real
Property. Seller’s interest in all of the leaseholds, and
other estates in real property and appurtenances thereto, leased or owned by
Seller and used or held for use in connection with the Business (collectively,
the “Business Real
Properties”);
(e) Contracts. Seller’s
rights under all contracts, leases, licenses, indenture, agreements, whether
oral or written, express or implied (collectively, the “Assumed Contracts”);
(f) Intellectual
Property. Seller’s rights and goodwill in and to all
trademarks, service marks, franchises, patents, trade names, jingles, slogans,
and logotypes, copyrights and other intangible rights (registered or
unregistered), including, without limitation, any and all such rights of Seller
with respect to trademarks and registrations applied for and/or granted in
Lebanon, and including any applications therefor and all drawings and designs,
know-how, show-how trade secrets and secret processes and formulas and licenses
with respect to intangible property rights, computer programs and program
rights, and other intangible property and proprietary rights, whether or not
subject to statutory registration or protection solely in connection with the
Business and excluding any and all motion picture and related rights of any kind
whatsoever (the “Retained IP
Rights”);
(g) Files and
Records. All files, records, books of account, general,
financial, and accounting records, invoices, computer programs, tapes,
electronic data processing software, customer and supplier lists,
correspondence, and other records of Seller to the extent necessary for transfer
and operation of the Business Facility;
(h) Permits, Licenses and
Authorizations. All governmental permits, licenses and
authorizations held by Seller related to the Business, including, without
limitation, those listed on Schedule 1.1(h) to
the extent the same may be transferred to Buyer;
(i) Guaranties. All
guaranties, warranties, indemnities, and similar rights in favor of Seller with
respect to the Business or any of the Assets;
(j) Asset List. Those
items listed on the asset list attached as Schedule 1.1(j)
hereto; and
(k) Goodwill. Seller’s
goodwill in, and the going concern value of, the Business.
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1.2 Excluded
Assets. Notwithstanding
the foregoing, the Assets shall not include the following Assets (collectively,
the “Excluded
Assets”):
(a) Claims for
Taxes. Any and all claims of Seller for refunds, carrybacks,
carryforwards, and credits relative to Taxes paid or attributable to a taxable
period (or portion thereof) ending on or prior to the Closing Date;
(b) Retained
Rights. Any property, right, or asset, arising from or
directly related to the defense, release, compromise, discharge, or satisfaction
of any of the Retained Liabilities (as such term is defined
herein);
(c) Personnel
Records. The personnel records of Seller with respect to the
employees of the Business; and
(d) Retained IP
Rights. Any rights and goodwill in and to any of the Retained
IP Rights.
1.3 Liabilities.
All
debts, liabilities, taxes, claims, costs and expenses of or against Seller,
including but not limited to all accounts payable balances and any accrued
payroll incurred or arising prior to the Closing Date shall be the
responsibility of Seller; provided, that any
accrued payroll or operating expenses shall only be the responsibility of Seller
to the extent incurred or arising prior to the Closing Date. Buyer
does not hereby and shall not assume or in any way undertake to pay, perform,
satisfy or discharge any obligation or liability of any nature or kind
whatsoever of Seller, whether arising before, on or after the Closing Date (the
“Retained Liabilities”),
and Seller shall pay and satisfy when due all Retained Liabilities.
1.4 Purchase
Price; Payment of Purchase Price.
(a) Purchase
Price. Buyer shall purchase the Assets for an aggregate
purchase price of One Million Four Hundred Fifty Thousand Dollars ($1,450,000)
(the “Purchase Price”).
(b) Payment of Purchase
Price. The Purchase Price shall be paid at Closing by the
issuance of One Million Four Hundred Fifty Thousand Dollars ($1,450,000) in
Common Stock (as defined herein), valued at One Dollar ($1.00) per share, or One
Million Four Hundred Fifty Thousand (1,450,000) shares of Common
Stock.
1.5 Allocation
of Consideration. The
Purchase Price shall be allocated among the Assets in accordance with the
allocations set forth in Schedule
1.5. To the extent consistent with law, Buyer and Seller shall
report the federal, state and local income and other tax consequences of the
purchase and sale contemplated hereby in a manner consistent with such
allocation and none of them shall take any position inconsistent therewith upon
examination of any tax return, in any refund claim, in any litigation, or
otherwise. Seller acknowledges and agrees that it shall cooperate
with and assist Buyer and its authorized representatives in providing Buyer with
the necessary documentation supporting the Purchase Price allocation as set
forth in Schedule
1.5.
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Article
2.
Closing;
Proceedings
2.1 Closing.
The
closing of the sale and transfer of the Assets (the “Closing”) and the
consummation of the other transactions contemplated by this Agreement shall take
place on or before April 7, 2008 (the “Closing Date”).
2.2 Proceedings.
(a) Deliveries by Seller. At Closing,
Seller shall deliver to Buyer:
(i) The
Assets.
(ii) Evidence
that all third party debt and obligations of Seller related to, or that is
secured by, the Assets has been paid in full.
(iii) Evidence
that any and all obligations of Seller related to, or that is secured by, any
equipment being acquired by Buyer pursuant to Section 1.1(c) has been paid in
full.
(iv) Evidence
that any and all liens on the Assets have been released and all financing
statements terminated.
(v) Evidence
that Seller has paid Buyer a one-time fee in the amount of Fifteen Thousand
Dollars ($15,000).
(vi) An
executed ▇▇▇▇ of Sale (the “▇▇▇▇ of Sale”) in
substantially the form of Exhibit A attached
hereto.
(vii) An
executed Assignment and Assumption Agreement (the “Assignment Agreement”) in
substantially the form of Exhibit B attached
hereto.
(viii) An
executed Agency, Co-Occupancy and Operating Agreement (the “Operating Agreement”) in
substantially the form of Exhibit C attached
hereto.
(ix) An
executed Termination, Waiver and Mutual Release (the “Termination Agreement”) in
substantially the form of Exhibit D attached
hereto.
(x) An
executed Finder’s Fee Agreement (the “Foxwoods Finder’s Agreement”)
in substantially the form of Exhibit E attached
hereto.
(xi) An
executed Finder’s Fee Agreement (the “▇▇▇▇▇ Finder’s Agreement”) in
substantially the form of Exhibit F attached
hereto.
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(b) Deliveries by Buyer. At Closing, Buyer shall
deliver to Seller:
(i) An
executed Assignment Agreement;
(ii) An
executed Operating Agreement;
(iii)
An executed Termination Agreement;
(iv) An
executed Foxwoods Finder’s Agreement;
(v) An
executed ▇▇▇▇▇ Finder’s Agreement; and
(vi) A
copy of the irrevocable instructions to Java Detour’s transfer agent instructing
the transfer agent to deliver certificates evidencing an aggregate of 1,450,000
shares of Common Stock pursuant to this Agreement, such shares to be registered
in the name of Seller or its designees.
Article
3.
Non-competition
3.1 Defined
Terms. For
purposes of this Agreement:
(a)
“Competitive
Business” means any business engaged or preparing to engage in (i) any
business competitive with any of the types of business activities solely with
respect to the Business that the Seller conducted or materially prepared to
conduct prior to the Closing Date; (ii) the business of owning, operating,
licensing and/or selling a coffee franchise, coffee café or coffeehouse; (iii)
roasting, manufacturing, selling or distributing coffee beans and related coffee
products; and (iv) manufacturing, licensing, selling, producing, or distributing
coffee, tea or related beverages and related products, including without
limitation, the development, design, manufacture, sales, distribution and
marketing of coffee or tea related beverages, products, equipment, supplies,
accessories and apparel. Notwithstanding anything to the contrary,
“Competitive Business” shall not include: (1) any and all restaurants, bars,
night clubs and similar establishments where the sale of non-alcoholic coffee
beverages amount to 7% or less of the gross sales of such business
(collectively, the “Excluded
Businesses”); (2) any and all manufacturing, licensing, sales, production
or distribution activities and products to the extent not related to activities
and products competitive with any business that is or may be deemed to be
competitive with the Business, including without limitation, the development,
design, manufacture, sales, distribution and marketing of products, equipment,
supplies, accessories and apparel with respect to any Excluded Business; (3) any
and all activities with respect to the motion picture and television industries
including, without limitation, with respect to the Retained IP Rights; and (4)
any and all other businesses or activities not expressly defined in clauses (i)
through (iv) above.
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(b) “Specified Geographic Area”
means each and every city, county, parish or other political subdivision within
a fifty (50) mile radius of the Business Facility.
(c)
“Confidential
Information” means any and all information in whatever form, tangible or
intangible, that is not generally known to the public and that relates in any
material way to the Business conducted by the Seller, including concepts,
techniques, processes, methods, systems, designs, programs, code, formulas,
research, technologies, strategies, plans, and trade secrets, as well as
customer lists, customer preferences, costs, profits, sources of supply,
financial data, budgets, marketing data, business plans and production methods
relating to any aspect of the present or actual anticipated business of the
Seller; information regarding the skills and compensation of employees,
consultants, contractors and/or agents of the Seller; and customer, client or
investor names and contact information and other confidential information
relating to all such customers, clients and investors of
Seller. “Confidential Information” also includes information in
whatever form, tangible or intangible, that is not generally known to the public
and that was provided to Buyer by Seller in connection with negotiations and
other discussions leading up to this Agreement and/or that Buyer designates as
being confidential. “Confidential Information” does not include any
information that the receiving party can prove becomes publicly known through no
wrongful act of the receiving party.
(d) “Affiliate” means, with respect
to any specified Person, any other Person directly or indirectly controlling or
controlled by or under the direct or indirect common control with such specified
Person.
(e)
“Person”
means an individual, a corporation, a limited liability company, a partnership,
a joint venture, a business association, a trust or any other entity or
organization, including a governmental entity.
3.2 Non-competition.
In
light of each respective Member’s ownership interest in the Business, his key
position with the Seller, his contributions in the past to the growth and
development of the Business, his confidential and proprietary information
relating to the business and operations of the Seller, and the significant
financial benefit that each will derive from the sale of the Business, including
the sale of substantially all of the Seller’s assets and the goodwill value of
the Business to Buyer, and in order to preserve for Buyer the goodwill,
proprietary rights and value of the Business, and to protect Buyer’s investment
in the Assets, including preserving the goodwill of the Business as obtained
pursuant to this Agreement and the Confidential Information of the Seller, each
Member hereby covenants and agrees that during and for the period commencing on
the Closing Date and ending on the date that is one (1) year after the Closing
Date (hereinafter, the “Restricted Period”), the
Members (including any Affiliate) shall not, directly or indirectly, except for
on behalf of Buyer or with the prior written approval of Buyer:
(a) engage
in, operate, control, carry on, manage, direct or otherwise conduct a
Competitive Business within the Specified Geographic Area during the Restricted
Period; or
(b) work
for, be employed by, accept employment with, serve as an agent for, agree to
provide advisory services to, consult with or otherwise assist any Person,
entity or organization that engages in a Competitive Business within the
Specified Geographic Area during the Restricted Period; or
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(c) own,
finance, lend to, have an economic interest in, or become associated as a
partner, owner, stockholder, member, or joint venturer with any Person, entity
or organization (other than Buyer) engaged in, or about to become engaged in, a
Competitive Business within the Specified Geographic Area during the Restricted
Period, provided, however, that nothing
in this Section 3.2(c) shall prohibit any Member from holding, directly or
indirectly, up to two percent (2%) of any securities of an entity that is quoted
on a national securities exchange or inter-dealer quotation system;
(d) have
a business relationship with any Person, entity or organization (other than
Buyer) resulting in products of a Competitive Business being featured in a film
where any of the Members or its Affiliates had either exclusive or joint control
with respect to the choice of product placement, provided, however, that to the
extent such Member or Affiliate only had joint control over product placement,
Buyer understands and acknowledges that while such Member or Affiliate shall be
responsible for promoting the placement of Java Detour® products in place of the
products of a Competitive Business in such instances, Buyer shall not be deemed
to have violated this Section 3.2(d) in the event that products of a Competitive
Business are featured in a film as referenced above; or
(e) plan,
develop, market, or make any preparations to provide assistance to any
Competitive Business or to form a Competitive Business, including but not
limited to any research or development efforts aimed at ultimately benefiting a
Competitive Business, within the Specified Geographic Area during the Restricted
Period.
3.3 Confidentiality.
Members
acknowledge that due to the nature of their association with the Business, each
has Confidential Information that is of importance to the Business of Seller,
affects the value of the Business being acquired by Buyer, and will continue to
be confidential subsequent to the Closing Date, such that disclosure of such
Confidential Information to others or the unauthorized use of such Confidential
Information would cause substantial loss and harm to Buyer as purchaser of the
Assets. Accordingly, Members agree that at all times hereafter,
Members shall not, directly or indirectly, except for on behalf of Buyer or with
the prior written approval of Buyer: (a) reveal, disclose, publish, communicate
or divulge to any person or entity, in any manner whatsoever, any Confidential
Information that has come into any Members’ knowledge or has been designed by,
developed, or otherwise learned or received by any Member; (b) authorize, permit
or allow the publication, communication, or disclosure of any Confidential
Information; and (c) either on each Member’s own behalf or on behalf of any
other Person, use any Confidential Information for any purpose other than for
the benefit of Buyer.
The terms of this confidentiality
covenant supplement and do not replace any other agreements to which any Member
may be a party or any other obligations that any Member may have under laws
regarding confidentiality, non-disclosure, assignment of inventions, or the
protection of intellectual property, including any employment agreement or other
agreement between Members and Buyer or between Members and Seller.
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3.4 Non-solicitation.
During the Restricted
Period, the Members (including Affiliates) shall not, directly or indirectly,
solicit, encourage, assist, facilitate or induce any customer, client or
supplier of Seller as of the Closing Date (or who were such at any time during
the six (6) month period immediately preceding the Closing Date), to breach any
agreement or contract with, or to discontinue or reduce his, her, or its
business relationships with, the Business being acquired by Buyer within the
Specified Geographic Area. Each Member further covenants and agrees
that during the Restricted Period, it shall not, and shall cause its Affiliates
not to, directly or indirectly, except for on behalf of Buyer or with the prior
written approval of Buyer, solicit, recruit, hire, employ or engage any current
or former employee of Seller, or assist or facilitate any Person or entity other
than Buyer in the hiring or recruitment (including assessment) of any current or
former employee of Seller, or otherwise encourage, assist, or invite any current
or former employee of Seller to enter into an employment relationship or a
service arrangement of any kind with any Person or entity other than
Buyer. Notwithstanding anything to the contrary, Buyer, Seller and
each Member acknowledges and agrees that ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall not be deemed to be
subject to the restrictions set forth in this Section 3.4 insofar as ▇▇▇▇▇▇▇
▇▇▇▇▇ has an ongoing business relationship with each of Buyer, Seller and the
Members.
3.5 Reasonableness of Restrictions.
Members
acknowledge that Buyer considers the restrictive covenants of this Article 3 to
be essential and integral to this Agreement, and Buyer would not purchase the
Assets without the Members’ execution of this Agreement containing these
restrictive covenants. Members will derive significant financial
benefit from the Closing of this transaction, and the execution of this
Agreement by Members is a condition to the Closing. Members further
acknowledge and agree that the scope of Seller’s Business is as defined in this
Agreement and that the duration of the Restricted Period as well as the
geographic scope of the Specified Geographic Area, and the related prohibitions
in this Article 3, are reasonable and necessary in order to protect the value
and legitimate interests of Buyer and Buyer’s investment in the Assets,
including the Confidential Information of the Business. Members
represent that each will otherwise be able to obtain gainful employment during
the Restricted Period notwithstanding the provisions of this Article
3.
3.6 Remedy
for Breach and Right to Injunction. Notwithstanding
other provisions of this Agreement, Members agree
that damages in the event of a breach by a Member of Article 3 of this Agreement
would be difficult to ascertain and may be an inadequate remedy. The
parties agree that Buyer will have the right to an immediate injunction or other
equitable relief in a state or federal court with appropriate jurisdiction to
enjoin any such threatened or actual breach, without any requirement to post
bond or provide similar security. The existence of this right will
not preclude Buyer from pursuing any other rights and remedies at law or in
equity that Buyer may have, including recovery of damages for any breach by
Members of this Article 3.
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3.7 Severability
and Enforceability. The
provisions contained in the above Sections 3.1, 3.2, and 3.4 as to the time
periods, geographic area, and scope of restricted activities shall be deemed
severable, so that if any provision contained in any such Section of this
Agreement is held to be invalid or unenforceable due to the asserted
unreasonableness of time, scope or geographical restrictions, such covenants and
restrictions will be deemed modified so as to be valid and effective for such
period of time, scope and/or for such area as may be determined to be reasonable
by a court of competent jurisdiction and will be enforced accordingly to the
fullest extent lawfully permitted. If any portion of this Article 3
is held to be invalid or unenforceable for any reason such that it cannot be
modified with respect to the reasonableness of time, scope or geographical
restrictions, such provisions will be severed from this Agreement and the
remaining covenants and restrictions or portions thereof will remain in full
force and effect.
Article
4.
Certain
Covenants
4.1 Conduct
of Business Pending Closing. From and
after the date hereof and until the Closing Date, unless the Buyer shall
otherwise consent in writing, Seller shall conduct the affairs of the Business
in the ordinary course and consistent with past practice. Seller
shall take reasonable actions to maintain the Business’ property, equipment and
other assets in substantially the same condition as such assets existed on the
date of this Agreement and consistent with past practice and shall, subject to
available resources, comply in a timely fashion with the provisions of all the
Assumed Contracts and its other agreements and commitments. Further,
Seller shall not incur additional debt (including, without limitation, any
capital lease obligations) through the Closing Date without the prior written
consent of Buyer.
4.2 Certain
Transitional Matters.
(a) Remit Funds. After
the Closing, (i) Seller shall promptly transfer and deliver to Buyer any cash or
other property, if any, that Seller may receive related to the Business or the
Assets which was earned by the Business after the Closing Date; and (ii) Buyer
shall promptly transfer and deliver to Seller any cash or other property, if
any, that Buyer may receive related to the Business or the Assets which was
earned by the Business prior to the Closing Date.
(b) Assistance. Seller
shall cooperate with and assist Buyer and its authorized representatives in
order to provide, to the extent reasonably requested by Buyer, an efficient
transfer of control of the Assets, and to avoid any material undue interruption
in the activities and operations of the Business following the Closing
Date. Such assistance shall be provided on a reasonable basis during
normal business hours and shall include, among other reasonable requests,
assistance in retaining the customers of the Business for the benefit of Buyer
after the Closing Date. Buyer shall reimburse the party providing
assistance for direct out-of-pocket expenses incurred in providing such
assistance.
(c) Assignment of Assumed Contracts;
Consents. Seller shall use commercially reasonable efforts
prior to, and if necessary after, the Closing Date, to obtain at the earliest
practicable date but no later than thirty (30) days after the Closing Date, the
consent to the assignment to Buyer of the Assumed Contracts which require
consent to assignment, without any conditions adverse to Buyer. To
the extent that such consents are obtained after the Closing Date, Seller shall
keep the applicable contracts in effect and shall give Buyer the benefit of such
contracts to the same extent as if they had been assigned and Buyer shall
perform the obligations under such contracts relating to the benefit obtained by
Buyer. Notwithstanding anything to the contrary, it is understood by
the parties that the Original Lease is not being assigned and is not part of the
Assumed Contracts.
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(d)
Publicity. Buyer
shall consult with Seller before issuing any press release or otherwise making
any public announcements, including any announcement to employees, with respect
to this Agreement or the transactions contemplated hereby (except to the
respective directors and officers of Seller and Buyer), and shall not issue any
such press release or make any such public announcement prior to such
consultation and written consent of Seller, except as required by
law. Seller shall not make any press release or external public
announcement regarding this Agreement or the transactions contemplated hereby
without prior approval of the Buyer.
4.3 Foxwood
Stores. From and
after the date hereof, Seller shall use commercially reasonable efforts to
assist Buyer in its efforts to complete a transaction with Foxwoods Development
Co. (“Foxwoods”) wherein
the coffee shops currently owned by Foxwoods and located on the premises of the
Foxwoods Resort Casino located in Mashantucket, Connecticut would become Java
Detour® stores.
4.4 Lease
Extension. Seller
shall use commercially reasonable efforts to obtain an extension or option to
extend (an “Extension”)
for that certain Lease (the “Original Lease”) dated as of
May 1, 2002 by and between ▇▇▇▇▇ Fargo Bank, N.A. as Trustee for ▇▇▇▇▇▇▇ Family
Memorial Trust and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, an affiliate of Seller (“Tenant”), such Extension to be
in the name of Tenant for a period of at least five (5) years with the same
terms and conditions as the Original Lease except that the Minimum Rent and
Additional Rent (as such terms are defined in the Original Lease) due and
payable pursuant to the Extension may reflect an increase of up to fifteen
percent (15%) from the rent payable in the last year of the Original Lease to
the rent payable in the first (1st) year
of the Extension. To the extent that Seller obtains an Extension in
accordance with the terms and conditions set forth herein and in form and
substance reasonably satisfactory to Buyer, Buyer hereby agrees and acknowledges
that it shall cause Java Detour to issue Seller Five Hundred Thousand (500,000)
Shares of Common Stock to Seller upon execution of the Extension; provided, that
Seller’s failure to obtain an Extension shall not be deemed to be a breach of
this Agreement so long as Seller has used commercially reasonable efforts to
obtain such Extension.
4.5 Strategic
Opportunities. From and
after the date hereof, Seller shall use commercially reasonable efforts to seek
out and facilitate certain strategic opportunities for Buyer including, without
limitation, the potential deal with certain stadium venues (each a “Strategic
Opportunity”). Buyer and Seller each acknowledge and agree
that in exchange for presenting such Strategic Opportunities to Buyer, Seller
may seek additional compensation for presenting such opportunities to
Buyer. Buyer and Seller further acknowledge and agree that each
Strategic Opportunity shall be reasonably evaluated on a case-by-case basis;
provided, that
Buyer shall not be obligated to pursue any of the Strategic Opportunities
presented by Seller and any such decision shall be made in Buyer’s sole
discretion.
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4.6 Board
of Directors. After
the Closing Date, at Seller’s request, Buyer shall cause Java Detour to
designate ▇▇▇▇▇▇▇ ▇▇▇▇▇ as a nominee for appointment to Java Detour’s board of
directors at the first (1st) annual
shareholder’s meeting following the Closing. In the event that
▇▇▇▇▇▇▇ ▇▇▇▇▇ is elected to Java Detour’s board of directors, he shall receive
the same compensation package and access to operating and financial information
of Java Detour as the other members of the board. Notwithstanding
anything to the contrary, in the event that ▇▇▇▇▇▇▇ ▇▇▇▇▇ is not elected to Java
Detour’s board of directors after being nominated by Buyer at Seller’s request,
Buyer shall not be deemed to have breached this Section 4.6.
4.7 Product
Placement. After
the Closing, the Seller shall use commercially reasonable efforts to cause seven
(7) promotional feature film contracts to be executed within thirty-six (36)
months from the Closing wherein Java Detour® products and/or store would be
featured for a minimum of fifteen (15) seconds per film, such feature film to
include “A-rated” actors (as such term is commonly defined and understood within
the film industry) (the “Product
Placement”). Notwithstanding the foregoing, Buyer and Seller
acknowledge and agree that Seller shall not be obligated to complete the Product
Placement pursuant to the terms and conditions set forth in this Section 4.7 and
failure to complete such Product Placement shall not be deemed to be a breach of
this Agreement so long as Seller has used commercially reasonable efforts with
respect to completing the Product Placement. Buyer and Seller further
acknowledge and agree that to the extent that Buyer is unsatisfied with any of
Seller’s or its affiliates’ efforts under this Agreement or any agreement
contemplated hereby, Buyer may, in its reasonable discretion, cease paying any
Management Fee (as such term is defined in the Foxwoods Finder’s Agreement) due
and payable under the Foxwoods Finder’s Agreement without any further obligation
on the part of Buyer or Seller thereunder, except that Buyer shall not in any
event cease paying any Management Fee otherwise due and payable under the
Foxwoods Finder’s Agreement solely as a result of Seller’s failure to complete
the Product Placement pursuant to the terms and conditions set forth in this
Section 4.7.
4.8 ▇▇▇▇▇▇▇
Store. After
the Closing, without further consideration, in the event that Seller or its
affiliates shall assume operating control of all or a portion of that certain
building located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the “▇▇▇▇▇▇▇ Building”), Buyer and
Seller acknowledge and agree that the space currently occupied by the existing
café at such building will be allocated to Buyer to be converted into a Java
Detour® store or office location (the “▇▇▇▇▇▇▇ Store”), such
conversion to be undertaken by Buyer at Buyer’s sole expense and cost; provided, that in no
event shall Seller or its affiliates, as the case may be, require Buyer to pay
any rent with respect to Buyer’s use of the ▇▇▇▇▇▇▇ Store so long as Seller or
its affiliates shall retain its operating control of the ▇▇▇▇▇▇▇
Building. Buyer and Seller further acknowledge and agree that to the
extent Buyer hosts any special events at the ▇▇▇▇▇▇▇ Store, Buyer shall allocate
fifty percent (50%) of the proceeds received from any such events to the
restaurant located in the ▇▇▇▇▇▇▇ Building as designated by Seller.
11
4.9 Lebanon. Buyer
shall grant an option to Seller or any of its affiliates or partners to open and
operate a Java Detour® franchise store (“Lebanon Store”) in the
territory of Lebanon, such option to be available to Seller for a period of one
(1) year following the Closing Date. Buyer and Seller acknowledge and
agree that in the event that Seller or any of its affiliates or partners shall
exercise its option to open up the Lebanon Store within the one (1)-year period,
Buyer shall (X) waive its standard franchise fee for such store and (Y) cap
ongoing royalty fees due and payable in connection with the Lebanon Store at
three percent (3%) of such store’s gross revenues; provided, that the
owner and operator of the Lebanon Store agrees to pay for all travel costs plus
fifteen percent (15%) incurred by Buyer’s personnel in connection with the
set-up, building, training and operational support of the Lebanon Store; provided, further, that the
waiver of the standard franchise fee and cap on ongoing royalty fees shall be
limited to the Lebanon Store only and shall not be applicable to any subsequent
Java Detour® stores opened by Seller or any of its affiliates or
partners.
4.10 Operating
Agreement. Buyer
shall use commercially reasonable efforts to take or cause to be taken such
actions (including the execution, acknowledgment and deliver of instruments,
documents, transfers, assignments and assurances) as may be necessary to ensure
that the Operating Agreement remains in full force and effect. Seller
acknowledges and agrees that in the event that Seller shall be deemed to be in
breach of any provision of the Operating Agreement, such breach shall also be
deemed to constitute a breach under this Agreement.
Article
5.
Representations
and Warranties of Seller
Seller
hereby represents and warrants to Buyer that all statements set forth in this
Article 5 are true and correct.
5.1 Organization. Seller
is a limited liability company duly organized, validly existing and in good
standing under the laws of the State of California. Seller has the
limited liability company power and authority to operate, own and lease its
properties and carry on its business as now conducted. Seller has the
absolute and unrestricted power, authority and capacity to enter into this
Agreement and any agreements related hereto to which it is or is to become a
party and perform its obligations under this Agreement and such related
agreements. Copies of the certificate of organization and operating
agreement of Seller, which have been delivered to Buyer, are complete and
correct.
5.2 Authorization;
Enforceability. This
Agreement and all agreements contemplated hereby to which Seller is a party have
been duly executed and delivered by it and constitute the legal, valid and
binding obligations of Seller, enforceable against it in accordance with their
respective terms. Seller has duly and validly authorized this
Agreement and all agreements contemplated hereby to which it is or is to become
a party and all of the transactions contemplated thereby.
12
5.3 No
Violation of Laws or Agreements. Neither
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof by Seller will: (i) result in a breach
of, constitute a default or an event of default under any of the terms of, or
give to any other person the right to cause a termination of, any of the Assumed
Contracts or any other contract to which Seller is a party or by which its
Assets may be bound, (ii) result in the creation, maturation or acceleration of
any liability of Seller, (iii) violate any law or violate any judgment or order
of any governmental body to which Seller is subject or by which any of the
Assets may be bound or affected, or (iv) result in the creation or imposition of
any Lien or encumbrance upon any of the Assets or give to any other person any
interest or right therein.
5.4 Condition
of Assets; Title. Seller
has and is conveying good, marketable and exclusive title to all of the
Assets. None of the Assets is subject to any Lien, encumbrance,
impairment, burden or charge of any kind or nature whatsoever, legal or
equitable, or any item similar or related to the foregoing. Schedule 5.4
identifies any outstanding liability in connection with the Business and the
Assets.
5.5 Legal
Proceedings. No
action, suit, investigation, claim or proceeding of nay nature or kind
whatsoever, whether civil, criminal or administrative, by or before any
governmental body or arbitrator is pending or, to the knowledge of Seller,
threatened against or affecting Seller, any of the Assets or any of the
transactions contemplated by this Agreement. Seller does not have
pending any litigation against any third party related to the
Assets.
5.6 Consents;
No Assumed Contracts. No
consent of any third party is required for the transfer to Buyer of any of the
Assets. There are no Assumed Contracts.
5.7 Undisclosed
Liabilities; Creditors. Seller
has no debts, obligations or liabilities, absolute, fixed, contingent or
otherwise, of any nature whatsoever, whether due or to become due (including
unasserted claims), whether incurred directly or by any predecessor thereto, and
whether arising out of any condition that occurred or existed on or before the
Closing Date, whether or not then known, due or payable which such debt would
adversely affect the Business or the Assets or the sale thereof to
Buyer. Schedule 5.7
identifies all of Seller’s creditors and Seller represent and warrant that it
has no debts, obligations or liabilities, absolute, fixed, contingent or
otherwise, of any nature whatsoever, whether due or to become due to such
creditors or otherwise, which such debt or obligation would adversely affect the
Business or the Assets or the sale thereof to Buyer.
5.8 Compliance
with Laws. The
operation of the Business is not now being conducted and has not been conducted
in violation of any applicable law (including any environmental law), ordinance,
statute, rule, regulation permit or license, and no event has occurred or
condition or state of facts exist which could give rise to any such
violation.
13
5.9 Customer
Relations. To
Seller’s knowledge, there exists no condition or state of facts or circumstances
involving Seller’s customers, suppliers, distributors or sales representatives
that Seller can reasonably foresee that could adversely affect the Business or
the Assets after the Closing Date.
5.10 Finders’
Fees; No Existing Discussions. Except
for the fee being paid to ▇▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to the ▇▇▇▇▇ Finder’s
Agreement, neither Seller nor any of its respective officers, members or
employees has employed any broker or finder or incurred any liability for any
brokerage fee, commission or finders’ fee in connection with any of the
transactions contemplated by this Agreement. As of the date of this
Agreement, Seller is not engaged, directly or indirectly, in any discussions or
negotiations with any other party with respect to a proposal to acquire, in any
manner, the Assets, the Business or the membership interests of
Seller.
5.11 Investment
Representations.
(a) Seller
has received the Agreement and carefully read such Agreement; the decision to
acquire Common Stock has been taken solely in reliance upon the information
contained in the Agreement, and such other written information supplied by an
authorized representative of Java Detour as Seller may have
requested. Seller acknowledges that all documents, records and books
pertaining to this investment have been made available for inspection by Seller,
its attorneys, accountants and purchaser representatives upon request prior to
tendering this Agreement, and that Seller has been informed by Java Detour that
its books and records will be available for inspection by Seller or its agents
and representatives at any time, and from time to time, during reasonable
business hours and upon reasonable notice. Seller further
acknowledges that it (or its advisors, agents and/or representatives) have had a
reasonable and adequate opportunity to ask questions of and receive answers from
Java Detour concerning the terms and conditions of the acquisition of Common
Stock, the nature of Common Stock and the business and operations of Java
Detour, and to obtain from Java Detour such additional information, to the
extent possessed or obtainable without unreasonable effort or expense, as is
necessary to verify the accuracy of the information contained in the Agreement
or otherwise provided by Java Detour; all such questions have been answered by
Java Detour to the full satisfaction of Seller. Seller is not relying
upon any oral information furnished by Java Detour or any other person in
connection with his/her investment decision, and in any event, no such oral
information has been furnished to Seller which is in any way inconsistent with
or contradictory to any information contained in the Agreement, or otherwise
provided to Seller by Java Detour in writing as described above.
(b) Seller
is an “accredited investor” as such term is defined in Rule 501 of Regulation
D.
(c) Seller:
(1) has adequate net worth and means of providing for current financial needs
and possible personal contingencies, (2) has no need for liquidity in this
investment; and (3) is able to bear the economic risks of an investment in
Common Stock for an indefinite period of time, and of losing the entire amount
of such investment.
14
(d) Seller
understands and acknowledges that an acquirer of Common Stock must be prepared
to bear the economic risk of such investment for an indefinite period because
of: (A) the heightened nature of the risks associated with an investment in Java
Detour due to its status as a development stage company; (B) illiquidity of
Common Stock due to the fact that the Common Stock has not been registered under
the 1933 Act or any state securities act (nor passed upon by the Securities
& Exchange Commission or any state securities commission), and Common Stock
has not been registered or qualified by Seller under federal or state securities
laws solely in reliance upon an available exemption from such registration or
qualification, and hence such Common Stock cannot be sold unless it is
subsequently so registered or qualified (which is not likely), or are otherwise
subject to any applicable exemption from such registration requirements; and (C)
substantial restrictions on the transfer of Common Stock, as set forth in, among
other documents, this Agreement and by legend on the face or reverse side of any
certificate evidencing an ownership interest in Java Detour.
(e) Seller
has such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in Common
Stock.
(f) Seller
understands and acknowledges that an investment in Common Stock is speculative
in nature, and involves certain risks.
(g) Seller
is not a member of the National Association of Securities Dealers, or of any
other self-regulatory agency which would require approval prior to any
acquisition of Common Stock.
(h) Seller
is acquiring Common Stock for its own investment, and not with a view toward the
subdivision, resale, distribution, or fractionalization
thereof. Seller does not have any contract, undertaking, arrangement
or obligation with or to any person to sell, transfer, or otherwise dispose of
Common Stock (or any portion thereof hereby acquired), and has no present
intention to enter into any such contract, undertaking, agreement or
arrangement.
(i) The
offering of Common Stock was made only through direct, personal communication
between Seller (or representatives thereof) and Java Detour; the acquisition of
Common Stock by Seller is not the result of any form of general solicitation or
general advertising including, but not limited to, the following: (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine, or other written communication, or broadcast over
television, radio or any other medium; or (ii) any seminar or meeting
to which the attendees had been invited by any general solicitation or general
advertising.
(j) Seller
has been advised to consult with an attorney regarding legal matters concerning
the acquisition and ownership of Common Stock, and with a tax advisor regarding
the tax consequences of acquiring such stock.
(k) Seller
has not distributed the Agreement, or any other information pertaining to the
acquisition of Common Stock hereunder, to anyone other than its representative
and/or its investment, legal or accounting advisors in connection with its
consideration of an acquisition of Common Stock.
15
5.12 Lock-Up
Restrictions.
(a) Java
Universe agrees that other than as set forth below, it shall not: (i) sell,
assign, exchange, transfer, pledge, distribute or otherwise dispose of (X) any
of the Common Stock received by Java Universe pursuant to this Agreement, or (Y)
any interest (including, without limitation, an option to buy or sell) in any
such Common Stock, in whole or in part, and no such attempted transfer shall be
treated as effective for any purpose; or (ii) engage in any transaction in
respect of any Common Stock received by Java Universe pursuant to this Agreement
or any interest therein, the intent or effect of which is the effective economic
disposition of such shares (including, but not limited to, engaging in put,
call, short-sale, straddle or similar market transactions) (the foregoing
restrictions are referred to herein as “Lock-Up
Restrictions”).
(b) Java
Universe’s Common Stock (including any Common Stock issued pursuant to Section
4.4 hereof) acquired pursuant to this Agreement shall be released from the
Lock-Up Restrictions on the date eighteen (18) months after the Closing
Date.
(c) The
certificates evidencing the Common Stock received by Java Universe pursuant to
this Agreement shall bear a legend as set forth below and such legend shall
remain during the term of the Lock-Up Restrictions as set forth
above:
“THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS SET
FORTH IN THAT CERTAIN ASSET PURCHASE AGREEMENT BY AND AMONG JDCO, INC., A
CALIFORNIA CORPORATION, SOLELY FOR PURPOSES OF ARTICLE SIX, JAVA DETOUR, INC., A
DELAWARE CORPORATION, SOLEY FOR PURPOSES OF ARTICLE THREE, ▇▇▇▇ ▇▇▇▇▇▇ AND
▇▇▇▇▇▇ ▇▇▇▇▇, AND THE HOLDER HEREOF (THE “PURCHASE AGREEMENT”), AND MAY NOT BE
SOLD, ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED OR
OTHERWISE DISPOSED OF PRIOR TO THAT CERTAIN TIME PERIOD DETAILED IN SECTION 5.12
OF THE PURCHASE AGREEMENT. THE ISSUER AGREES TO REMOVE THIS
RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE TRANSFER AGENT) UPON THE
EXPIRATION OF THE TIME PERIOD SPECIFIED IN SECTION 5.12 OF THE PURCHASE
AGREEMENT. A COPY OF THE PURCHASE AGREEMENT IS AVAILABLE FOR YOUR
REVIEW AT THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER.”
5.13 Disclosure. None
of the representations or warranties of Seller contained in this Article 5 and
none of the information contained in the Schedules referred to in this Article 5
is false or misleading in any material respect or omits to state a fact
necessary to make the statements in this Article 5 or in the Schedules to
Article 5 not misleading in any material respect.
16
Article
6.
Representations
and Warranties of Java Detour
6.1 Organization. Java
Detour is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware. Java Detour has the
corporate power and authority to operate, own and lease its properties and carry
on its business as now conducted. Java Detour has the absolute and
unrestricted power, authority and capacity to enter into this Agreement and any
agreements related hereto to which it is or is to become a party and perform its
obligations under this Agreement and such agreements contemplated
hereby. Java Detour is not in violation or default of any of the
provisions of its Articles of Incorporation or Bylaws.
6.2 Authorization;
Enforceability. This
Agreement and all agreements contemplated hereby to which Java Detour becomes a
party, has been duly executed and delivered by Java Detour, and constitutes the
legal, valid and binding obligations of Java Detour enforceable against it in
accordance with their respective terms. Each agreement contemplated
hereby to which Java Detour is to become a party, when executed and delivered by
Java Detour, will constitute the legal, valid and binding obligation of Java
Detour, enforceable against it in accordance with the terms of such legal
agreement. All agreements contemplated hereby to which Java Detour is
or is to become a party have been duly and validly authorized by all necessary
limited liability company proceedings by Java Detour.
6.3 Capitalization.
(a) As
of the date hereof, the authorized capital stock of Java Detour consists of (A)
75,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”), of which
28,743,823 common shares are issued and outstanding and (B) 5,000,000 shares of
preferred stock, $0.001 par value (the “Preferred Stock” and together
with the Common Stock, the “Java Detour Shares”), of which
no shares are issued and outstanding. All of the outstanding Java
Detour Shares have been duly authorized and are validly issued, fully paid and
non-assessable, and were not issued in violation of the preemptive rights of any
person. All Common Stock to be issued hereunder will be issued in
compliance in all material respects with all applicable federal and state
securities laws. As of the date of this Agreement, except as
disclosed in Java Detour’s most recently filed periodic report with the
Securities and Exchange Commission (the “Periodic Report”) and except
for Common Stock issuable pursuant to this Agreement, Java Detour has no other
commitment or obligation to issue, deliver or sell, or cause to be issued,
delivered or sold, any Common Stock. Except as set forth in the
Periodic Report, there are no bonds, debentures, notes or other indebtedness of
Java Detour, and no securities or other instruments or obligations of Java
Detour the value of which is in any way based upon or derived from any capital
or voting stock of Java Detour, having the right to vote (or convertible into,
or exchangeable for, securities having the right to vote) on any matters on
which stockholders of Java Detour may vote.
(b) The
Common Stock to be issued in exchange for the Assets as the Purchase Price, when
issued in accordance with the terms of this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable, and will not be subject to any
preemptive or other statutory right of Java Detour stockholders.
17
Article
7.
Representations
and Warranties of Buyer
Buyer represents and warrants to Seller
as follows:
7.1 Organization. Buyer
is a corporation duly organized, validly existing and in good standing under the
laws of the State of California. Buyer has the corporate power and
authority to operate, own and lease its properties and carry on its business as
now conducted. Seller has the absolute and unrestricted power,
authority and capacity to enter into this Agreement and any agreements related
hereto to which it is or is to become a party and perform its obligations under
this Agreement and such agreements contemplated hereby. Copies of the
articles of incorporation and bylaws of Buyer, which have been delivered to
Seller, are complete and correct.
7.2 Authorization;
Enforceability. This
Agreement and all agreements contemplated hereby to which Buyer becomes a party,
has been duly executed and delivered by Buyer, and constitutes the legal, valid
and binding obligations of Buyer enforceable against it in accordance with their
respective terms. Each agreement contemplated hereby to which Buyer
is to become a party, when executed and delivered by Buyer, will constitute the
legal, valid and binding obligation of Buyer, enforceable against it in
accordance with the terms of such legal agreement. All agreements
contemplated hereby to which Buyer is or is to become a party have been duly and
validly authorized by all necessary limited liability company proceedings by
Buyer.
7.3 No
Violation of Laws or Agreements. Neither
the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby nor the compliance with or fulfillment of the
terms, conditions or provisions hereof by Buyer will: (i) result in a breach of,
constitute a default or an event of default under any of the terms of, or give
to any other person the right to cause a termination of, any of the Assets or
any other contract to which Buyer is a party or by which its Assets may be
bound, (ii) result in the creation, maturation or acceleration of any liability
of Buyer, (iii) violate any law or violate any judgment or order of any
governmental body to which Seller is subject or by which any of the Assets may
be bound or affected, or (iv) result in the creation or imposition of any lien
or encumbrance upon any of the Assets or give to any other person any interest
or right therein.
7.4 Finders’
Fees. Except for the fee
being paid to ▇▇▇▇▇▇▇ ▇▇▇▇▇ pursuant to the ▇▇▇▇▇ Finder’s Agreement, neither
Buyer nor any of its officers, members or employees has employed any broker or
finder or incurred any liability for any brokerage fee, commission or finders’
fee in connection with any of the transactions contemplated hereby.
18
Article
8.
Survival
of Representations, Warranties and Covenants; Indemnification.
8.1 Survival
of Representations, Warranties and Covenants. Subject
to the limitations set forth in this Article 8, all representations, warranties,
covenants and obligations made by any party in this Agreement shall survive the
Closing. Any limitation or qualification set forth in any particular
representation or warranty in Article 5, 6 or 7 shall not limit or qualify any
other representation or warranty in Article 5, 6 or 7. The right to
indemnification under this Article 8 or any other remedy based on the breach or
inaccuracy of any representation or warranty in Articles 5, 6 or 7, or
breach of, or noncompliance with, any covenant or obligation in this Agreement
will not be affected by any investigation conducted with respect to, or any
knowledge acquired (or capable of being acquired) at any time, whether before or
after the Closing Date, with respect to any such representation, warranty
covenant or obligation. The waiver by any party of any condition at
Closing of the breach or inaccuracy of any representation or warranty, or breach
of, or noncompliance with, any covenant or obligation, will not affect the right
of such party to indemnification, payment of damages or other remedy based on
such breach, inaccuracy or noncompliance.
8.2 Indemnification
by Seller. Seller
shall indemnify, defend, save and hold harmless Buyer, its affiliates and their
respective officers, directors, employees, and agents (each, a “Buyer Indemnitee”) from and
against all Damages (collectively, “Buyer Damages”) directly or
indirectly asserted against, imposed upon, resulting to, or incurred or required
to be paid by any Buyer Indemnitee from or in connection with, (i) any breach or
inaccuracy of any representation or warranty made by Seller in this Agreement,
or in any certificate or document delivered by Seller in connection with this
Agreement or any other agreement to which Seller is or is to become a party; and
(ii) a breach or nonperformance of any covenant made or obligation undertaken by
Seller in or in connection with this Agreement or any other agreement to which
Seller is or is to become a party.
8.3 Indemnification
by Buyer. Buyer
shall indemnify, defend, save and hold harmless Seller and its officers,
directors, employees, affiliates and agents (each, a “Seller Indemnitee”) from and
against any and all Damages (collectively, “Seller Damages”) directly or
indirectly asserted against, imposed upon, resulting to, or incurred or required
to be paid by Seller Indemnitee from or in connection with, (i) any breach
or inaccuracy of any representation or warranty made by Buyer in this Agreement
or in any certificate or document delivered by Buyer in connection with this
Agreement or any other agreement to which Buyer is a party, and (ii) a
breach or nonperformance of any covenant made or obligation undertaken by Buyer
in or in connection with this Agreement or any other agreement to which Buyer is
or is to become a party.
19
Article
9.
Miscellaneous
9.1 Costs
and Expenses. Buyer
and Seller shall each pay its respective legal and other transactional fees and
expenses incurred by or on behalf of it in connection with this Agreement and
the transactions contemplated hereby. All brokerage fees, transfer
taxes (including real property transfer taxes), all applicable sales, income, or
use taxes in connection with the conveyance of the Assets, including the real
property, to Buyer and to effect the other transactions contemplated hereby
shall be borne equally by Buyer and Seller; provided, that accrued real property
taxes of the Business Facility shall be prorated in accordance with local custom
between Buyer and Seller as of the Closing Date. Buyer and Seller
shall settle such amounts within thirty (30) days following the Closing
Date.
9.2 Bulk
Sales and Asset Transfer Laws. Each
of Buyer and Seller waives compliance with the provisions of any applicable bulk
sales and asset transfer laws, and Seller agree to indemnify and hold Buyer
harmless from all claims made by creditors with respect to non-compliance with
any bulk sales and asset transfer laws, provided, however, that such
waiver does not, as between Buyer and Seller, relieve Seller of any debt,
liability or obligation to any other party.
9.3 Further
Assurances. After
the Closing, without further consideration, Seller shall take or cause to be
taken such actions (including the execution, acknowledgment and deliver of
instruments, documents, transfers and assurances) as Buyer may reasonably
request for the better conveying, transferring, assigning and delivering of the
Assets to Buyer.
9.4 Notices. All
notices given or made in connection with this Agreement shall be in
writing. Delivery of written notices shall be effective upon
receipt. All deliveries shall be made to the following
addresses:
(i) if
to Buyer or Java Detour, to:
|
|
JDCO,
Inc.
|
|
|
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
|
|
|
▇▇▇▇▇
▇▇▇
|
|
|
▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
|
Attn: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
|
|
|
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
|
|
|
with
a required copy to:
|
|
|
▇▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
LLP
|
|
|
▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇
▇▇▇▇▇
|
|
|
▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
|
|
|
Attn: ▇▇▇▇▇▇
▇▇▇▇▇▇▇, Esq.
|
|
|
Facsimile: (▇▇▇)
▇▇▇-▇▇▇▇
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20
(ii) if
to Seller or Members:
|
|
Java
Universe, LLC
|
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇
▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Attn: ▇▇▇▇▇
▇▇▇▇▇▇
with a required copy
to:
|
|
Costa
▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
|
|
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Attn: ▇▇▇▇
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Facsimile: 310.576.6160
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Any party
may change the address to which notice (or copies) to it shall be addressed by
giving notice of that change to the other parties in accordance with this
Section.
9.5 Assignment. This
Agreement and all the rights and powers granted by this Agreement shall bind and
inure to the benefit of the parties and their respective successors and
permitted assigns. This Agreement and the rights, interests and
obligations under this Agreement may not be assigned by operation of law or
otherwise by any party without the prior written consent of the other parties;
provided that
Buyer and Seller may assign this Agreement and its rights, interests or
obligations hereunder to any of its respective affiliates.
9.6 Consideration;
Recitals; Governing Law. The
parties acknowledge the mutual receipt and sufficiency of valuable consideration
for the formation of the legally binding contract represented by this
Agreement. The consideration includes all of the representations,
warranties, covenants and obligations contained in this
Agreement. The recitals set forth on page one of this Agreement are
incorporated into this Agreement and made a part of this
Agreement. This Agreement shall be governed by and construed in
accordance with the laws of the State of California without regard to its
conflict of law doctrines.
9.7 Arbitration. Except
with respect to injunctive relief, for any disputes, controversies or claims
between the parties arising out of or relating to this Agreement and the
transactions contemplated hereby (each, a “Dispute”), the parties shall
make a good faith effort to reach an amicable resolution for a period of thirty
(30) days. If the Dispute has not been resolved by the parties within
such thirty (30)-day time period, the parties shall attempt in good faith to
resolve such Dispute by mediation. Any party hereto may initiate a
mediation proceeding by a request in writing to the other party (the “Request”), and such parties
will then be obligated to engage in a mediation. Any such mediation
will be conducted in accordance with the American Arbitration Association
Commercial Arbitration Rules and Mediation Procedures (“AAA Rules”). The
mediation shall be held at such location within the State of California as
mutually determined by the parties hereto, or as selected by the mediator in the
event the parties are unable to determine such location. If the
Dispute has not been resolved pursuant to the aforesaid mediation procedure
within thirty (30) days of commencement of such mediation procedure, or if
either party will not participate in a mediation, the Dispute shall be settled
by arbitration in accordance with the AAA Rules. The place of
arbitration shall be mutually determined by both parties. The
arbitrator(s) shall apply California law in accordance with the regulations of
the AAA Rules. Judgment upon the award rendered by the arbitrator(s)
resulting from such arbitration shall be in writing, and shall be final and
binding upon all involved parties. Notwithstanding anything to the
contrary, the arbitrator(s) are not empowered to award damages in excess of
actual damages, including punitive or consequential damages. All
deadlines specified in this Section 9.7 may be extended by mutual written
agreement between the parties.
21
9.8 Schedules.
Any
item disclosed on any Schedule to this Agreement shall only be deemed to be
disclosed in connection with (i) the specific representation and warranty to
which such Schedule is expressly referenced, (ii) any specific representation
and warranty which expressly cross-references such Schedule and (iii) any
specific representation and warranty to which any other Schedule to this
Agreement is expressly referenced if such other Schedule expressly
cross-references such Schedule.
9.9 Amendment
and Waiver; Cumulative Effect. To
be effective, any amendment or waiver under this Agreement must be in writing
and signed by the parties hereto. Neither the failure of any party to
exercise any right, power or remedy provided under this Agreement or to insist
upon compliance by any other party with its obligations under this Agreement,
nor any custom or practice of the parties at variance with the terms of this
Agreement, shall constitute a waiver by such party of its right to exercise any
such right, power or remedy or to demand such compliance. The rights
and remedies of the parties are cumulative and not exclusive of the rights and
remedies that they otherwise might have now or hereafter at law, in equity, by
statute or otherwise.
9.10 Entire
Agreement; No Third-Party Beneficiaries. This
Agreement (including any agreements incorporated herein) and the Schedules and
Exhibits contain the entire agreement between the parties with respect to the
subject matter hereof, and there are no agreements, understandings,
representations and warranties regarding the subject matter hereof between the
parties other than those set forth or referred herein. This Agreement
supersedes all prior or contemporaneous agreements and understandings,
negotiations, inducements or conditions, express or implied, oral or written,
among the parties. Except for the provisions of Sections 8.2 and 8.4
relating to Buyer Indemnitees and Seller Indemnitees, this Agreement is not
intended to confer upon any person other than the parties any rights or remedies
under this Agreement.
9.11 Severability. If
any term or other provision of this Agreement is held by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced under any
applicable legal requirement in any particular respect or under any particular
circumstances, then, so long as the economic or legal substance of the
transactions contemplated hereby is not affected in any manner materially
adverse to any party, (a) such term or provision shall nevertheless remain in
full force and effect in all other respects and under all other circumstances,
and (b) all other terms, conditions and provisions of this Agreement shall
remain in full force and effect. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner so that the transactions contemplated hereby are fulfilled to the fullest
extent possible.
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9.12 Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original but all of which together shall be deemed to be one and
the same instrument.
[Remainder
of Page Intentionally Left Blank]
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The parties, each intending to be
legally bound by this Agreement, have executed this Agreement as of the first
date identified in the first sentence of this Agreement.
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JDCO,
INC.
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By:
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/s/ ▇▇▇▇▇▇▇
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Name:
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Title:
Chief Executive Officer
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JAVA
DETOUR, INC., solely for purposes of Article
Six
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By:
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/s/ ▇▇▇▇▇▇▇
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Name:
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Title:
Chief Executive Officer
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JAVA
UNIVERSE, LLC
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By:
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/s/ ▇▇▇▇
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Name:
▇▇▇▇ ▇▇▇▇▇▇
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Title:
Manager
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By:
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/s/ ▇▇▇▇▇▇
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Name:
▇▇▇▇▇▇ ▇▇▇▇▇
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Title:
Manager
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/s/ ▇▇▇▇ ▇▇▇▇▇▇ |
| ▇▇▇▇ ▇▇▇▇▇▇, solely for purposes of Article Three |
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/s/ ▇▇▇▇▇▇ ▇▇▇▇▇ |
| ▇▇▇▇▇▇ ▇▇▇▇▇, solely for purposes of Article Three |
Asset
Purchase Agreement Signature Page
Schedule
1.1(c)
Machinery,
Equipment and Other Personal Property
All
furniture, fixture and equipment and other physical assets purchased by Seller,
and delivered to the Business Facility on or prior to the Closing Date by
Hockenbergs or any similar and/or related vendors.
Schedule
1.1(h)
Permits,
Licenses and Authorizations
1. Health
permit
2. Occupancy
permit
3. Patio
permit
4. Signage
permit
5. Street
and sidewalk permit
6. Special Event permit
(four (4) allotted per calendar year) issued to Seller by the City of
West Hollywood
Schedule
1.1(j)
Asset
List
None.
Schedule
1.5
Purchase
Price Allocation
| Inventory | $3,000 |
| Supplies | $2,000 |
| Furniture, Fixtures and Equipment | $325,000 |
| Leasehold Improvements | $970,000 |
| Goodwill/Operating Agreement | $150,000 |
Schedule
5.4
Condition
of Assets; Title
None.
Schedule
5.7
Undisclosed
Liabilities; Creditors
None.