AGENCY, CO-OCCUPANCY AND OPERATING AGREEMENT
This Agency, Co-Occupancy and Operating
Agreement (this “Agreement”) is executed effective as
of April 7, 2008 (the “Effective
Date”), by and
between Xxxxxxx
Xxxxxx, an individual (“Xxxxxx”), Xxxxxx
Foods, Inc., a California corporation (“Xxxxxx
Foods”), Java
Universe, LLC, a California limited liability company (“Java
Universe”), and
JDCO,
Inc., a California corporation (“JDCO”).
Recitals:
X. Xxxxxx is
currently the tenant under that certain Lease with Xxxxx Fargo Bank, N.A., as
Trustee for Xxxxxxx Family Memorial Trust (“Landlord”), dated as of May 1, 2002,
as amended by that certain First Amendment to Lease dated as of January 9, 2007
(as amended, the “Lease”), with respect to that
certain premises commonly known as 0000 Xxxx Xxxxx Xxxxxx Xxxx., Xxxx Xxxxxxxxx,
Xxxxxxxxxx 00000 (the “Premises”);
B.
The
California Alcohol Beverage Control Board liquor license for use in the Premises
(the “Liquor
License”) is
held by Xxxxxx Foods;
C.
Pursuant
to that certain Asset Purchase Agreement of even date herewith (the “APA”) by and among JDCO, Java
Universe, Java Detour, Inc., a Delaware corporation and parent of JDCO (“Java
Detour”), and
Xxxx Xxxxxx and Xxxxxx Xxxxx, Java Detour is issuing certain shares of its
common stock to Java Universe in exchange for, among other consideration, the
right to assume from Java Universe occupancy and operations of the existing Java
Detour® store in the Premises, as the agent and on behalf of Java
Universe.
D. As a condition of JDCO entering into
the APA, JDCO has requested that the parties hereto execute and deliver this
Agreement.
NOW, THEREFORE, in consideration of the
sum of Ten and 00/100 Dollars ($10.00) paid by JDCO to Java Universe, the
receipt of which is hereby acknowledged, and other good and valuable
consideration, intending to be legally bound hereby, it is hereby covenanted,
stipulated and agreed as follows:
1. The
foregoing recitals are incorporated herein and are made a part of the covenants
and conditions of this Agreement.
2. Each of
Java Universe and Xxxxxx hereby designates JDCO as its agent for all purposes
hereunder, and hereby grants unto JDCO the exclusive right to co-occupy and
operate the Premises on behalf of each of Java Universe and Xxxxxx for so long
as the Lease is in effect, or until such time as JDCO’s occupancy rights are
terminated as provided herein, whichever comes first. JDCO’s rights
as agent granted under this Section 2 shall not be assigned or transferred
without the written consent of Java Universe, which consent shall not be
unreasonably withheld or delayed.
3. Java
Universe and Xxxxxx shall provide JDCO with immediate and exclusive access to
the Premises following the Effective Date. JDCO shall have the sole
right to make all decisions with respect to the Java Detour® store in the
Premises, including without limitation with respect to all operational,
personnel, and management matters. JDCO shall operate the Premises in
a manner consistent with other similar stores operated by JDCO, and in a manner
so as to not cause any defaults by Xxxxxx under the Lease.
4. JDCO
shall directly reimburse Xxxxxx for the amounts paid by Xxxxxx to Landlord as
Minimum Rent and Additional Rent (as such terms are defined in the Lease) on a
monthly basis, upon receipt from Xxxxxx of evidence of payment of such rent to
the Landlord, such reimbursement to be paid by JDCO immediately on the same
business day of receipt of evidence of payment. Xxxxxx shall continue
to make such payments of Minimum Rent and Additional Rent directly to Landlord
as required by the Lease in a timely manner so as to avoid any delinquencies due
to late payments.
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5. In the
event that JDCO creates a situation on the Premises that causes a default to
occur under the provisions of the Lease, and Xxxxxx receives written notice of
same from Landlord, Xxxxxx shall immediately deliver such notice to JDCO and
JDCO shall promptly cure such default on behalf of Xxxxxx. If JDCO
fails to cure such default within the amount of time given Xxxxxx under the
Lease to cure same minus one (1) business day, then Xxxxxx may take such actions
as are necessary and appropriate under the situation to cure such default, and
JDCO shall reimburse Xxxxxx for the amounts reasonably incurred in doing so
within thirty (30) days after receipt of a written and reasonably detailed
invoice therefor. If any such default (written notice of which has
been received by JDCO in a timely manner) is not cured by JDCO and Landlord
commences eviction efforts or pursues other remedies available to it under the
Lease, Xxxxxx and/or Java Universe shall have the right to terminate this
Agreement by delivering a written termination notice thereof to JDCO; provided, that
exercise of such termination right shall not require Java Universe to return,
forfeit or transfer any shares of Common Stock of Java Detour issued to Java
Universe or its designees and affiliates pursuant to the APA and the Termination
Agreement (as defined in the APA).
6. Xxxxxx
and/or Java Universe shall have the right, at any time during the period
commencing eighteen (18) months after the Effective Date and ending upon
termination of this Agreement, to engage an independent commercially qualified
business appraiser (the “Appraiser”)
to determine whether Java Detour has a negative net worth, such Appraiser to be
selected by Java Universe with JDCO’s prior written consent, such consent not to
be unreasonably withheld or delayed. In the event that the Appraiser
determines that Java Detour has a negative net worth and such negative net worth
continues for at least 150 consecutive days from the date of such Appraiser’s
initial report, Xxxxxx and/or Java Universe shall have the right to terminate
this Agreement upon delivery of a written termination notice (“Termination
Notice”) to JDCO along with a copy of the Appraiser’s initial and final
report confirming Java Detour’s negative net worth during the 150-day period in
question. Java Universe, Xxxxxx and JDCO acknowledge and agree that
any and all costs associated with engaging an Appraiser shall be borne by Java
Universe. For purposes of this Agreement, “negative net worth” shall
mean that total liabilities exceed the greater of the fair market value of total
assets or the book value of total assets. Upon delivery of a
Termination Notice hereunder: (i) JDCO’s right to occupy and operate the
Premises shall cease immediately, (ii) JDCO shall promptly return full and
exclusive occupancy of the Premises to Xxxxxx, and (iii) Java Universe shall
immediately forfeit, return, and transfer to Java Detour any and all shares of
Common Stock of Java Detour issued to Java Universe or its designees and
affiliates pursuant to the APA and the Termination Agreement (as defined in the
APA). Notwithstanding anything to the contrary, in the event that the
average trading price of the Java Detour Common Stock as quoted on Pink Sheets
(or such other stock exchange as Java Detour may be trading on at such time)
shall be equal to or greater than Five Dollars ($5.00) per share for at least a
ninety (90)-day period, any and all Appraiser and termination rights granted to
Xxxxxx and/or Java Universe pursuant to this Section 6 shall terminate and be of
no further force and effect; provided, that in
connection with the termination of such rights hereunder, the Lock-up
Restrictions (as such term is defined in applicable agreement referenced below)
shall be removed from the shares of Common Stock issued to Java Universe and/or
Xxxxxxx Xxxxx under the APA, Termination Agreement and Xxxxx Finder’s Agreement
(all as defined in the APA), as applicable.
7. Nothing
contained herein shall be deemed to constitute a transfer of the Liquor License
by Xxxxxx Foods. Xxxxxx Foods agrees that it will not voluntarily
transfer the Liquor License to any party during the term of this Agreement, and
that the Liquor License shall be used by JDCO, in its capacity as agent for Java
Universe and Xxxxxx, in its operation of the Premises. In the event
that the Liquor License is revoked by the California Alcohol Beverage Control
Board or Xxxxxx Foods otherwise relinquishes or loses control of, or authority
to use, the Liquor License for the sale of alcoholic beverages on the Premises
(“License
Triggering Event”), and such revocation, relinquishment or loss of
control or use is caused by any reason other than JDCO’s actions on the
Premises, then Java Universe shall immediately forfeit, return, and transfer to
Java Detour One Hundred Thousand Dollars ($100,000) in shares of Common Stock
(as defined in the APA) of Java Detour issued to Java Universe pursuant to the
APA, such shares valued at the average trading price of the Java Detour Common
Stock as quoted on Pink Sheets (or such other stock exchange as Java Detour may
be trading on at such time) for the thirty (30)-day period immediately preceding
the date of the License Triggering Event. In the event that Xxxxxx
Foods loses the Liquor License during the term of this Agreement because of acts
for which JDCO is solely responsible, then Java Detour shall issue to Java
Universe One Hundred Thousand Dollars ($100,000) in shares of Common Stock, such
shares valued at the average trading price of the Java Detour Common Stock as
quoted on Pink Sheets (or such other stock exchange as Java Detour may be
trading on at such time) for the thirty (30)-day period immediately preceding
the License Triggering Event.
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8. All
notices, demands and requests required or permitted to be given under this
Agreement must be in writing and must be delivered personally, or by prepaid
nationally recognized overnight courier, or by deposit in the United States
mail, prepaid and certified or registered mail, return receipt requested,
addressed in each instance to JDCO, Java Universe or Xxxxxx, as the case may be,
at the following addresses:
To
JDCO: JDCO,
Inc.
0000
Xxxxxx Xxxxxx
Xxxxx
000
Xxx
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxxxxxx
To Java
Universe: Java Universe,
LLC
0000 Xxxxxx Xxxx.,
Xxxxx 000
Xxxx Xxxxxxxxx, XX
00000
Attn: Xxxxx
Xxxxxx
To
Xxxxxx: Xxxxxxx
Xxxxxx
0000 Xxxxxx Xxxx.,
Xxxxx 000
Xxxx Xxxxxxxxx, XX
00000
To Xxxxxx
Foods: x/x Xxxxxxx Xxxxxx
0000 Xxxxxx Xxxx.,
Xxxxx 000
Xxxx Xxxxxxxxx, XX
00000
Each such notice, demand or request
shall be deemed to have been given as of the date the same is personally
delivered to the party to be notified or the date the same is delivered to the
address designated hereunder for the party to be notified, as the case may be;
provided, however, that rejection or refusal to accept or the inability to
deliver because of changed address of which no notice was given shall be deemed
to be receipt of the notice, demand or request. Each party shall have
the right from time to time and at any time upon at least ten (10) days’ written
notice thereof, to change its respective address, and each party shall have the
right to specify as its address any other address within the United States of
America.
9. If either
of the parties at any time fails to perform any of its obligations, covenants or
conditions stated in this Agreement in the manner and at the time required to be
performed hereunder, then the other party, their agents or representatives, may,
if such failure continues for a period in excess of ten (10) days after written
notice thereof to the other party perform any and all of such obligations for
and on behalf of the non-performing party; whereupon, such non-performing party
shall pay to the performing party all reasonable costs incurred by such party to
perform such obligations, together with a ten percent (10%) administrative
fee. The rights and remedies set forth above are cumulative and are
in addition to any other remedies available in law or in equity, including, if
applicable, the right to restrain by injunction any violation or threatened
violation of the terms and provisions hereof and by decree to compel performance
of any such terms and provisions, it being agreed that the remedy at law for
such breach is not adequate. Notwithstanding the foregoing, in the
event that any act or omission of Xxxxxx causes a default under the Lease beyond
any applicable notice and cure period, and Landlord terminates the Lease and/or
Xxxxxx’x right of possession thereunder, and such default is independent of
JDCO’s occupancy and operation of the Premises and not otherwise caused by the
default of JDCO under this Agreement, then Java Universe shall immediately
forfeit, return, and transfer to Java Detour the following shares of Common
Stock of Java Detour issued to Java Universe pursuant to the APA:
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3
|
If Lease is Terminated or Possession
Lost:
|
Java Universe Forfeits:
|
|
Effective
Date through day immediately preceding 1st
Anniversary of Effective Date
|
700,000
shares
|
|
1st
Anniversary of Effective Date through day immediately preceding 2nd
Anniversary of Effective Date
|
600,000
shares
|
|
2nd
Anniversary of Effective Date through day immediately preceding 3rd
Anniversary of Effective Date
|
500,000
shares
|
|
3rd
Anniversary of Effective Date through day immediately preceding 4th
Anniversary of Effective Date
|
400,000
shares
|
|
4th
Anniversary of Effective Date through day immediately preceding 5th
Anniversary of Effective Date
|
300,000
shares
|
|
5th
Anniversary of Effective Date through day immediately preceding 6th
Anniversary of Effective Date
|
200,000
shares
|
|
6th
Anniversary of Effective Date through day immediately preceding 7th
Anniversary of Effective Date
|
100,000
shares
|
10. This
Agreement shall be governed by the laws of the State of California.
11. This
Agreement sets forth all the covenants, promises, agreements, conditions and
understandings between the parties concerning the subject matter of this
Agreement and there are no covenants, promises, agreements, conditions or
understandings, either oral or written, between them other than as herein set
forth. Except as herein otherwise provided, no subsequent alteration,
amendment, change or addition to this Agreement shall be binding upon the
parties unless reduced to writing and signed by them.
12. 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,
which consent shall not be unreasonably withheld or delayed in any
event.
13. In the
event that any provision of this Agreement shall be construed as or declared to
be invalid, unenforceable, or unconstitutional then such invalidity,
unenforceability or unconstitutionality shall not affect the remaining
provisions of this Agreement and the remaining provisions shall be given full
force and effect as if the invalid, unenforceable or unconstitutional provision
did not exist.
14. The
failure of either party to enforce any provision of this Agreement at any time
shall in no way be construed to be a waiver of such provision nor in any way
affect the validity of this Agreement or any part thereof, nor the right of any
party thereafter to enforce each and every such provision.
15. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original and all of which when taken together shall constitute
one and the same Agreement.
[Remainder
of Page Intentionally Left Blank]
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EXECUTED as of the Effective Date first
written above.
JDCO:
JDCO, Inc.,
a California corporation
By: /s/ Xxxxxxx
Xxxxxxxxx
Name: Xxxxxxx
Xxxxxxxxx
Title: Chief Executive
Officer
Java
Universe:
Java Universe, LLC,
a California limited liability
company
By: /s/ Xxxxxx
Xxxxx
Name: Xxxxxx Xxxxx
Title: Manager
By: /s/ Xxxx
Xxxxxx
Name: Xxxx Xxxxxx
Title: Manager
Xxxxxx:
/s/ Xxxxxxx Xxxxxx
Name: Xxxxxxx Xxxxxx
Xxxxxx
Foods:
Xxxxxx Foods, Inc.,
a California corporation
By: /s/ Xxxx
Xxxxxx
Name: Xxxx Xxxxxx
Title: President
