Purchase Agreement by and between JDCO, Inc. and Java Nevada, LLC July 1, 2008 AGREEMENT TO PURCHASE ALL LOCATIONS OF JAVA NEVADA, LLC IN NEVADA
JDCO,
Inc. and Java Nevada, LLC
July
1, 2008
This
ASSET PURCHASE AGREEMENT (“Agreement”) is made and entered into as of the
1st
day of
July, 2008, by and between JDCO, Inc. a California corporation, with a business
address at 0000 Xxxxxx Xxxxxx, Xxxxx X000, Xxxxx, XX 00000 (“Buyer”) and Java
Nevada, LLC a Nevada limited liability company, with a business address at
000
Xxxxx Xxxxx Xxx 000, Xxx Xxxxx, Xxxxxx 00000 (“Seller”).
RECITALS
A.
Seller
purchased all Assets of the Nevada Business (as defined below) from Buyer on
July 11, 2007 and wishes to re-sell all such Assets to Buyer.
B.
Seller
is engaged in the business of operating four (4) retail locations of Java
Detour® within Nevada at the following addresses: 0000 Xxxx Xxxxxxxxxx Xxxx.,
Xxx Xxxxx, XX 00000; 0000 X. Xxxxxxxxx Xxxxxx, Xxx Xxxxx, XX 00000; 0000 X.
Xxxxx Xxxx, Xxx Xxxxx, XX 00000; and 0000 X. Xxxx Xxxxxxx Xxxx, Xxxxxxxxx,
XX
00000 (each a “Location” and collectively, the “Nevada Business”).
C.
Seller
turned over to Buyer the Nevada Business on, effective at 11:59 pm Pacific
Time
on January 1, 2008 and Buyer has been operating the Nevada Business since 12:01
am Pacific Time on January 2, 2008 (the “Effective Time”).
D.
Subject
to the terms and conditions contained in this Agreement, Seller desires to
sell
to Buyer, and Buyer agrees to purchase from Seller, substantially all of the
Assets of Seller related to the Nevada Business.
E.
Buyer is
purchasing all Assets of Seller related to the Nevada Business.
In
consideration of the mutual covenants, representations, and warranties contained
in this Agreement, the parties agree as follows:
Page
1 of
17
ARTICLE 1.
1.1.
Purchase and Sale of Assets.
Seller
agrees to sell to Buyer, and Buyer agrees to purchase from Seller, at Closing
(as defined below), all of Seller’s right, title, and interest in and to all of
the assets used by Seller in connection with the operation of the Nevada
Business other than the Excluded Assets (the “Assets”). The Assets to be sold
and transferred include the following assets of Seller:
(a)
All
tangible personal property, furnishings, fixtures, equipment, machinery, parts,
accessories,
inventory, and any other property listed on Schedule 1 (the “Personal
Property”);
(b)
All
of Seller’s rights under the contracts, agreements, equipment leases,
warranties, and other rights or agreements, whether written or oral, listed
on
Schedule 2 (the “Contracts”);
(c)
All
real estate leases listed on Schedule 3, together with all of Seller’s interest
in any security deposits, prepaid rent, leasehold improvements, and
appurtenances to the leased property (the “Real Property Leases”); and
(d)
All
of Seller’s right, title, and interest in and to the goodwill associated with
the Nevada Business (the “Intangible Property”).
1.2.
Excluded Assets.
The
Assets shall not include, and Buyer shall not acquire any interest in, the
assets of Seller listed on Schedule 4 (the “Excluded Assets”).
1.3.
Permitted Liens.
Seller
shall convey title to the Assets to Buyer free and clear of all liens, security
interests, and encumbrances of any kind or nature, other than those items listed
on Schedule 5 (the “Permitted Liens”).
1.4.
Risk of Loss.
Seller
assumes all risk of loss or damage to the Assets prior to the Closing. In the
event there is any material loss or damage to all or any portion of the Assets
prior to the Closing, Buyer may either terminate this Agreement pursuant to
Article 11, or negotiate with Seller for a proportionate reduction in the
Purchase Price to reflect the loss or damage. For the purposes of this
provision, the term “material loss or damage” shall mean any loss or damage to
the Assets with an aggregate cost of $10,000.
ARTICLE 2.
ASSUMPTION OF LIABILITIES
Effective
as of the Effective Time, and in addition to any other liabilities expressly
assumed by Buyer under this Agreement, Buyer shall assume responsibility for
the
performance and satisfaction of all of the executory obligations and liabilities
of Seller listed on Schedule 6 (the “Assumed Liabilities”).
2.2
Excluded Liabilities.
Except
as
expressly provided in this Agreement, Buyer shall not assume or become liable
for any obligations, commitments, or liabilities of Seller, whether known or
unknown, absolute, contingent, or otherwise, and whether or not related to
the
Assets, including, without limitation, any employment, business, sales,
royalties, vendor payments, all other expenses or use tax relating to Seller’s
operation of the Nevada Business and use and ownership of the Assets prior
to
the Effective Time.
Page
2 of
17
ARTICLE 3.
PURCHASE PRICE
3.1.
Purchase Price.
3.2.
Payment of Purchase Price.
At
the
Closing, Buyer shall pay the Purchase Price to Seller as follows:
(a) Cancellation
of that certain promissory note delivered on July 11, 2007 (the “Promissory
Note”) in the principal amount of Nine Hundred Thousand Dollars ($900,000), in
substantially the form attached as Exhibit 1.
(b) The
sum
of $70,000.00 shall be paid to Seller by Buyer, without interest, in 24 equal
monthly payments beginning 180 days from the Closing Date and continuing for
each month thereafter until paid in full in accordance with the terms of a
Promissory Note, attached hereto as Exhibit 6, evidencing such debt. The parties
agree that the Buyer’s obligation to pay this amount resolves all issues between
them with respect to gift cards or payments to vendors and any other payment
obligations to each other, except as provided in this Agreement. If
Buyer
completes a secondary offering of its securities for a minimum of $5 million
in
equity financing, or secondary and subsequent offerings which together exceed
$5
million in equity financing, or if more than 51% of Buyer is sold or
transferred, then Buyer’s obligation to pay the balance of the $70,000.00
referenced in this Paragraph 3.2(b) shall be accelerated and payable immediately
following the completion of such offering or sale.
(c)
Buyer
may
pay to Seller contingent payments (the “Contingent Payments”) as set forth
below. The amount of the Contingent Payments will be based on (i) of the
Multi-Unit Development Agreement dated July 2, 2007 between Seller and Noah’s
Creations, LLC from Seller to Buyer in which case the Seller shall retain
$70,000.00 paid to it by Noah’s Creations, LLC for the Multi-Unit Development
Agreement, and that $70,000.00 shall be paid to Seller in connection with the
partial refund of the $200,000.00 down payment made by Seller when Seller
acquired the Nevada Business; and (ii) the entering into unit franchise
agreements between Noah’s Creations, LLC and Buyer, and the payment of franchise
fees, up to a combined total of $35,000.00 in initial franchise fees paid by
Noah’s Creations, LLC which shall be paid to Seller in connection with the
partial refund of the $200,000.00 down payment made by Seller when Seller
acquired the Nevada Business.
(d)
In no
event shall the Seller be entitled to more than $200,000.00 under the provisions
of this Paragraph 3.2 (b) and (c)
Page
3 of
17
ARTICLE 4.
CLOSING
4.1.
Time and Place of Closing.
The
closing for the purchase and sale of the Assets (the “Closing”) shall be held at
Java Nevada LLC, 000 Xxxxx Xxxxx, Xxxxx 000, Xxx Xxxxx, Xxxxxx 00000, Xxxxx
County on or before May __, 2008 or at such other time and place as the parties
may mutually agree in writing (the “Closing Date”). At Closing, Seller shall
transfer and convey title to the Assets to Buyer as provided in this Agreement,
subject only to the Permitted Liens.
ARTICLE 5.
REPRESENTATIONS AND WARRANTIES OF SELLER
5.1.
Seller’s Representations and Warranties.
Seller
makes the following representations and warranties to Buyer, each of which
is
true and correct as of the date of this Agreement, and will be true and correct
as of the Closing Date:
(a)
Seller is a limited liability company, duly organized, validly existing, and
in
good standing under the laws
of
the state of its organization, and is qualified to transact business in the
State of Nevada.
(b)
Seller has full legal power and authority to enter into and perform this
Agreement, and this Agreement constitutes the valid and binding obligation
of
Seller, enforceable in accordance with its terms.
(c)
The
execution and delivery of this Agreement does not conflict with, violate, or
constitute a default under the terms, conditions, or provisions of any agreement
or instrument to which Seller is a party, or any law, judgment, or order of
which Seller is aware, and will not result in the creation of any lien, security
interest, or encumbrance on any of the Assets.
(d)
There
is no action, suit, proceeding, or claim pending, or, to the best of Seller’s
knowledge, threatened against Seller or the Assets that would affect Seller’s
ability to fulfill its obligations under this Agreement or that would impair
the
value of the Assets.
(e)
Seller has, and will have at Closing, good and marketable title to the Assets
free and clear of all liens, charges, and encumbrances other than the Permitted
Liens.
(f)
Seller has provided Buyer with true and correct copies of all Contracts. To
Seller’s knowledge, all of the Contracts are in full force and effect, have been
duly executed by the parties, and Seller is not in default under any Contract.
(g)
Seller has provided Buyer with true and correct copies of all Real Property
Leases. To Seller’s knowledge,
each Real Property Lease is in full force and effect, and Seller is not in
default under any Real Property Lease.
(h)
Seller has provided Buyer with true and correct copies of all documents
evidencing Seller’s rights in the Intangible Property. To Seller’s knowledge,
each agreement,
instrument, or license with respect to the Intangible Property is in full force
and effect, and Seller is not in default under any such agreements.
(i)
Seller is not a party to, or otherwise bound by, any collective bargaining
agreement, multi-employer pension fund, or other labor union agreement with
respect to any persons employed by Seller in connection with its operation
of
the Nevada Business.
Page
4 of
17
5.2.
Correctness of Representations.
No
representation or warranty of Seller in this Agreement or any other information
furnished by Seller pursuant to this Agreement contains any untrue statement
of
material fact or fails to state any fact necessary in order to make the
statements not misleading in any material respect. All statements,
representations, and other information provided by Seller to Buyer shall be
true
and correct on and as of the Closing Date as though made on that date.
ARTICLE 6.
6.1.
Buyer’s Representations and Warranties.
Buyer
makes the following representations and warranties to Seller, each of which
is
true and correct as of the date of this Agreement and shall be true and correct
as of the Closing Date:
(a)
Buyer
is a corporation, duly organized, validly existing, and in good standing under
the laws of the state of its organization, and is qualified to transact business
in the State of California and Nevada.
(b)
Buyer
has full legal power and authority to enter into and perform this Agreement,
and
this Agreement constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms.
(c)
The
execution and delivery of this Agreement does not conflict with, violate, or
constitute a default under the terms, conditions, or provisions of any agreement
or instrument to which Buyer is a party, or any law, judgment, or order of
which
Buyer is aware, and will not result in the creation of any lien, security
interest, or encumbrance on any of the Assets.
(d)
There
is no action, proceeding, or claim pending, or, to Buyer’s knowledge,
threatened, against Buyer that would affect Buyer’s ability to consummate the
transactions contemplated by this Agreement.
6.2.
Correctness of Representations.
No
representation or warranty of Buyer in this Agreement or any other information
furnished by Buyer pursuant to this Agreement contains any untrue statement
of
material fact or fails to state any fact necessary in order to make the
statements not misleading in any material respect. All statements,
representations, exhibits, and other information provided by Buyer to Seller
shall be true and correct on and as of the Closing Date as though made
on
that
date.
Page
5 of
17
ARTICLE 7.
COVENANTS
PRIOR TO CLOSING
7.1.
Access and Information.
Seller
shall promptly provide Buyer with all information concerning the Nevada Business
and the Assets that Buyer may reasonably request, and Buyer and its accountants
and other representatives shall have access during normal business hours to
all
of the Assets and to the books and records of the Nevada Business.
7.2.
Consents.
On
or
before the Closing Date, Seller, at its expense and with the assistance of
Buyer
as reasonably necessary, shall obtain all necessary consents required to assign
Seller’s interest in any of the Assets to Buyer as contemplated by this
Agreement. In the event Seller is unable to obtain any such consent on or before
the Closing Date, Buyer may terminate this Agreement as provided in Article
11.
7.3.
Discharge of Liens.
All
liens, claims, charges, security interests, pledges, assignments, or
encumbrances relating to the Assets that are not Permitted Liens shall be
satisfied, terminated, and discharged by Seller on or prior to the Closing
Date
and evidence reasonably satisfactory to Buyer and its counsel of the
satisfaction, termination, and discharge of such liens, claims, charges,
security interests, pledges, assignments or encumbrances shall be delivered
to
Buyer at or prior to the Closing.
7.4.
Further Assurances Prior to Closing.
Seller
and Buyer shall, prior to Closing, execute any and all documents and perform
any
and all acts reasonably necessary, incidental, or appropriate to effect the
transactions contemplated by this Agreement.
7.5.
Notification of Changed Circumstances.
At
any
time after the date hereof and prior to the Closing, if either party becomes
aware of any fact or circumstance that would materially change a representation
or warranty made under this Agreement, the party with
knowledge of those facts shall notify the other in writing as soon as possible
after the discovery of the changed circumstances.
7.6.
Broker’s Fees.
Each
party represents and warrants that no broker, finder, or any other person or
entity has any claim for any brokerage commissions or fees in connection with
any of the transactions contemplated by this Agreement. Each
party shall indemnify the other against any claim or loss suffered as a result
of any claim for brokerage commissions or fees payable, or claimed to be
payable, on the basis of any actions in connection with this Agreement.
Page
6 of
17
7.7.
Expenses of Closing.
The
expenses of Closing shall be paid as follows:
(a)
Buyer
shall pay all sales and use taxes arising out of the transfer of the Assets,
if
any.
(b)
Except as otherwise expressly provided in this Agreement, all other Closing
fees
and costs, including, but not limited to, legal fees, accounting fees,
consulting fees, and other incidental expenses in connection with the
transactions contemplated by this Agreement shall be borne by the party that
incurs such expenses.
7.8.
Proration of Expenses.
Except
as
otherwise expressly provided in this Agreement, all expenses associated with
the
Assets being conveyed to Buyer, including, but not limited to, taxes, rent,
insurance premiums, and utility charges, shall be apportioned ratably between
the parties as of the Effective Time. This obligation to make apportionments
shall survive the Closing.
ARTICLE 8.
CONDITIONS PRECEDENT TO OBLIGATIONS OF
BUYER
8.1.
Buyer’s Conditions.
(a)
The
representations and warranties of Seller set forth in Article 5 shall be true
and correct as of the date of the Agreement and shall be true and correct in
all
material respects at and as of the Closing Date.
(b)
Seller shall have performed and complied in all material respects with all
of
the agreements, covenants, and conditions required of Seller by this Agreement
on or before the Closing Date.
(c)
No
action, suit, or proceeding before any court or any governmental body or
authority that would in any way affect the Assets or the ability of the parties
to consummate the transactions contemplated by this Agreement shall have been
instituted or, to Seller’s knowledge, threatened on or before the Closing Date.
(d)
The
Assets shall be in substantially the same condition on the Closing Date as
they
were at the Effective Time, and there shall be no material loss or damage to
the
Assets prior to the Closing.
(e)
Seller shall have obtained all necessary agreements and consents of any parties
required to consummate the transactions contemplated by this Agreement.
(f)
Buyer
shall have received copies of such releases and documents, and reviewed
such
other evidence as Buyer reasonably deems necessary to assure the Buyer that
the
Assets are being delivered to Buyer free and clear of all liens, claims,
charges, security interests, pledges, assignments or encumbrances other than
Permitted Liens.
Page
7 of
17
(g)
Seller shall have executed and delivered or cause to be delivered to Buyer:
(1)
a duly executed xxxx of sale (the “Xxxx of Sale”), in substantially the form
attached as Exhibit 2, (2) a duly executed assignment of contracts (the
“Assignment of Contracts”) in substantially the form attached as Exhibit 3, (3)
a duly executed assignment of leases (the “Assignment of Leases”) in
substantially the form attached as Exhibit 4, (4) a duly executed assignment
of
intangible property (the “Assignment of Intangible Property”) in substantially
the form attached as Exhibit 5, (5) a duly executed Mutual Release as attached
hereto as Exhibit 7, (6) duly executed assignments of the Master Franchise
Agreement and related agreements, as well as the Master Franchise Agreement
(the
“Assignment and Assumption Agreements “) in substantially the form attached as
Exhibit 8 and (7) all other documents, files, records, certificates and
agreements required to be executed and/or delivered at Closing to transfer,
convey and assign to Buyer all of Seller’s right, title and interest in and to
the Assets, free and clear of any liens or encumbrances other than the Permitted
Liens.
8.2.
Failure to Satisfy Buyer’s Conditions.
Any
of
Buyer’s conditions precedent may be waived in whole or in part by Buyer in
writing at any time on or before the Closing Date. In the event all Buyer’s
conditions precedent have not been waived by Buyer or satisfied in full on
or
before the Closing Date, Buyer may elect to terminate this Agreement as provided
in Article 11.
ARTICLE 9.
CONDITIONS PRECEDENT TO OBLIGATIONS OF
SELLER
9.1.
Seller’s Conditions.
The
obligation of Seller to consummate the transactions contemplated by this
Agreement shall be subject to the satisfaction, on or before the Closing Date,
of each of the following conditions:
(a)
Seller shall have received the Cash
Purchase Price on or before the Closing Date.
(b)
Buyer
shall have executed and delivered or cause to be delivered to Seller: (1) a
duly
executed Assignment of Contracts, (2) a duly executed Assignment of Leases,
(3)
a duly executed Assignment of Intangible Property, (4) a duly executed
Cancellation of Promissory Note, (5) a duly executed Promissory Note in the
form
attached hereto as Exhibit 6, (6) a duly executed Mutual Release as attached
hereto as Exhibit 7; (7) a duly executed release in favor of Seller, Buyer
and
their principals, executed by and on behalf of Noah’s Creations, LLC, its
principals and affiliates, and (8) all other documents, files, records,
certificates and agreements required to be executed and/or delivered at Closing
to transfer, convey and assign to Buyer all of Seller’s right, title and
interest in and to the Assets, free and clear of any liens or encumbrances
other
than the Permitted Liens.
(c)
The
representations and warranties of Buyer set forth in Article 6 shall be true
and
correct as of the date of the Agreement and shall be true and correct in all
material respects at and as of the Closing Date.
Page
8 of
17
(d)
Buyer
shall have performed and complied in all material respects with all of the
agreements, covenants, and conditions required of Buyer by this Agreement on
or
before the Closing Date.
(e)
No
action, suit, or proceeding before any court or any governmental body or
authority that would in any way affect the ability of the parties to consummate
the transactions contemplated by this Agreement shall have been instituted
or,
to Buyer’s knowledge, threatened on or before the Closing Date.
(f)
Buyer
shall have furnished to Seller a certificate of its manager, dated on the
Closing Date, certifying to the fulfillment of the conditions set forth in
subparagraphs (c)-(e) of this Section 9.1.
9.2.
Failure to Satisfy Seller’s Conditions.
Any
of
Seller’s conditions precedent may be waived in whole or in part by Seller in
writing at any time on or before the Closing Date. In the event all Seller’s
conditions precedent have not been waived by Seller or satisfied in full on
or
before the Closing Date, Seller may elect to terminate this Agreement as
provided in Article 11.
ARTICLE 10.
POST-CLOSING OBLIGATIONS
10.1.
Additional Assurances.
Each
party agrees to do all acts and things and to make, execute, and deliver such
written instruments as shall be reasonably necessary to carry out the terms
and
provisions of this Agreement. This covenant of further assurances
shall survive the Closing.
10.2
Master Franchise Agreement
Seller
shall assign the Master Franchise Agreement for the State of Nevada (the
“Territory”) to Buyer as of the Effective Date. Buyer may pay Seller a refund of
up to $275,000.00 of the Master Franchise Fee to the following
extent:
If
Buyer
sells a Master Franchise or its equivalent, for all or any part of the
Territory, or Area Development or Unit Franchise Agreements and receives payment
for such sales prior to May 15, 2012, Seller shall receive a refund, up to
a
total of $275,000 consisting of the amount of fees paid for any Master Franchise
and fifty percent (50%) of the amount of fees paid for any Area Development
Agreement or Unit Franchise Agreement.
This
paragraph 10.2 shall not apply to any fees paid by the existing sub-franchisee,
Noah’s Creations, LLC or its principals or affiliates. Any Initial Franchise
Fees or Area Development Fees received by Seller from Noah’s Creations, LLC will
be applied as set forth in Paragraph 3.2(c) of this Agreement.
In
no
event shall the total payments by Buyer to Seller under Paragraph 10.2 of this
Agreement exceed a combined maximum total of $275,000.00.
To
the
extent Buyer has not paid Seller a complete refund of $275,000 pursuant to
the
foregoing provisions, Buyer may pay any remaining portion of the $275,000 as
follows: (a) one-half of the then-remaining balance between any amounts already
paid and $275,000 shall be
paid
on or before May 15, 2011; and (b) the then-remaining balance shall be paid
in
twelve (12) equal monthly installments on the last day of each month, over
the
ensuing twelve months, concluding on May 15, 2012, to the extent such balance
is
not otherwise satisfied by payments under paragraph 10.2.
Page
9 of
17
If
Buyer
completes a secondary offering of its securities for a minimum of $5 million
in
equity financing, or secondary and subsequent offerings which together exceed
$5
million in equity financing, or if more than 51% of Buyer is sold or
transferred, then Buyer’s obligation to pay the balance of up to $275,000 shall
be accelerated and payable immediately following the completion of such offering
or sale.
ARTICLE 11.
TERMINATION
11.
Termination.
This
Agreement may be terminated as follows:
(a)
By
the mutual consent of Buyer and Seller at any time prior to the Closing.
(b)
By
Buyer at any time prior to the Closing as expressly provided in this Agreement,
or if any condition precedent to Buyer’s obligations set forth in Article 9 has
not been satisfied in full or previously waived by Buyer in writing, at or
prior
to the Closing.
(c)
By
Buyer pursuant to Section 7.11.
(d)
By
Seller at any time prior to the Closing as expressly provided in this Agreement,
or if any condition precedent to Seller’s obligations set forth in Article 10
has not been satisfied in full or previously waived
by
Buyer in writing, at or prior to the Closing.
(e)
By
either party if the Closing has not occurred on or before May 31, 2008.
11.2.
Effect of Termination.
In
the
event of the termination of this Agreement pursuant to the provisions of this
Article 11, this Agreement shall become void and have no effect, without any
liability on the part of any of the parties.
11.3.
Remedies Cumulative.
The
remedies set forth in this Agreement are cumulative and not exclusive of any
other legal or equitable remedy otherwise available to any party.
ARTICLE 12.
INDEMNIFICATION
12.1.
Seller’s Indemnification.
In
addition to any other agreement on the part of Seller to indemnify Buyer set
forth in this Agreement, Seller shall indemnify and hold Buyer and it’s
officers, directors, employees, agents and affiliates harmless from and against
any and all loss, cost, damage, claim, liability, or expense, including
reasonable attorney fees and costs, in any way arising from or related to (a)
Seller’s ownership
or use of the Assets, or Seller’s operation of the Nevada Business,
prior to the Effective Time, (b) the breach of any representation or warranty
of
Seller contained in this Agreement, or (c) the failure by Seller to observe
or
perform any other covenant or agreement to be observed or performed by Seller
under this Agreement.
Page
10 of
17
12.2.
Buyer’s Indemnification.
In
addition to any other agreement on the part of Buyer to indemnify Seller set
forth in this Agreement, Buyer shall indemnify and hold Seller and its officers,
directors, employees, agents and affiliates harmless from and against any and
all loss, cost, damage, claim, liability, or expense, including reasonable
attorney fees and costs, in any way arising from or related to (a) Buyer’s
ownership or use of the Assets from and after the Effective Time, (b) the breach
of any representation or warranty of Buyer contained in this Agreement, or
(c)
the failure by Buyer to observe or perform any other covenant or agreement
to be
observed or performed by Buyer under this Agreement.
12.3.
Survival of Indemnities.
All
representations and warranties contained in this Agreement and the mutual
agreements to indemnify set forth in this Article 12 shall survive the Closing
for a period of two (2) years.
12.4
Limitation on Liability.
Seller
shall not have any obligation to indemnify Buyer or any of its affiliates for
losses, and Buyer shall not have any obligation to indemnify Seller or any
of
its affiliates for losses, in each case, until the aggregate amount of all
losses, incurred by Buyer or any of its affiliates, on the one hand, or Seller
or any of its affiliates, on the other hand, exceeds Fifty Thousand Dollars
($50,000) (the “Basket”) and then, subject to the other limitations set forth in
this Section
12.4,
Seller’s indemnification obligations or Buyer’s indemnification obligations, as
the case may be from the first dollar of the loss in excess of the Basket.
In no
event shall the aggregate liability of Seller be, and in no event shall claims
be made against Seller by Buyer for losses, in excess of $550,000. The
indemnification remedies contained in this Agreement shall be
exclusive.
12.5
Procedure.
(a)
The
party seeking indemnification under Section 12.1
or
Section
12.2
as the
case may be (the “Indemnified Person”), shall provide written notice (a “Notice
of Claim”) to the party against whom indemnity is sought (the “Indemnifying
Person”) of the assertion of any claim, or the commencement of any suit, action
or proceeding in respect of which the Indemnified Person has determined has
given or could give rise to a right of indemnification under this Agreement.
No
failure to give such Notice of Claim shall affect the indemnification
obligations of the Indemnifying Person hereunder, except to the extent such
Indemnifying Person can demonstrate such failure materially prejudiced such
Indemnified Person’s ability to successfully defend the matter giving rise to
the claim. The Notice of Claim shall state the nature of the claim, the amount
of the Losses, if known, and the method of computation thereof, all with
reasonably particularity and containing a reference to the provisions of this
Agreement in respect of which such right of
indemnification is claimed or arises.
Page
11 of
17
(b)
The
Indemnifying Party shall respond to each such claim within 20 Business Days
of
receipt of such notice. No action shall be taken pursuant to the provisions
of
this Agreement or otherwise by the Indemnified Party until the later of (i)
the
expiration of the 20 Business Day response period (unless reasonably necessary
to protect the rights of the party seeking indemnification), or (ii) 30
days following the termination of the 20 Business Day response period if a
response received within such 20 Business Day response period by the Indemnified
Party requested an opportunity to cure the matter giving rise to indemnification
(and, in such event, the amount of such claim for indemnification shall be
reduced to the extent so cured within such 30-day cure period).
(c)
Except as otherwise provided herein, if such demand is based on a claim by
a
third party or a governmental entity (each, a “Third
Party Claim”),
the
Indemnifying Party shall have the right to assume the entire control of the
defense thereof, including at its own expense, employment of counsel reasonably
satisfactory to the Indemnified Party, and, in connection therewith, the
Indemnified Party shall cooperate with and make available to the Indemnifying
Party all pertinent information as the Indemnifying Party may reasonably
request. In such event, the Indemnifying Party shall have the right to settle
or
resolve any such claim by a third party. Notwithstanding the foregoing, in
the
event that (i)
the
Indemnifying Party elects in writing not to assume or
does
not assume the defense of the Third Party Claim pursuant to this Section
12.5(c),
(ii)
the Indemnifying Party withdraws from the defense of a Third Party Claim, (iii)
counsel reasonably acceptable to the Indemnifying Party advises of any actual
conflict between the Indemnifying Party and the Indemnified Party, or (iv)
the
Third Party Claim seeks material, non-monetary relief from Seller or Parent,
Purchaser or any of their respective Affiliates or material monetary relief
from
Purchaser for which Purchaser is not indemnified,
the
Indemnified Party shall have the right to conduct such defense in good faith
with counsel reasonably acceptable to the Indemnifying Party, but the
Indemnified Party shall be prohibited from compromising or settling the claim
without the prior written consent of the Indemnifying Party, which consent
shall
not be unreasonably withheld,
delayed
or
conditioned.
(d)
Where
the
Indemnifying Party or the Indemnified Party is defending and controlling any
claim, they shall select counsel, contractors, experts and consultants of
recognized standing and competence to take all steps necessary in the
investigation, defense or settlement thereof and shall at all times diligently
and promptly pursue the resolution thereof. The Party conducting the defense
thereof shall at all times act as if all Losses relating to any such claim
are
for its own account and shall act in good faith and with reasonable prudence
to
minimize Losses therefrom. Regardless of which Party defends any such Third
Party Claim, the other Party shall have the right at its expense to participate
in the defense assisted by counsel of its own choosing.
(e)
Recovery from the Indemnifying Person by the Indemnified Person under this
Section
12.5
shall be
net of any insurance proceeds received by the Indemnified Person in relation
to claims for Losses brought under this Section
12.5.
Page
12 of
17
ARTICLE 13.
GENERAL PROVISIONS
13.1.
Assignment.
13.2.
Successors and Assigns.
The
terms
and provisions of this Agreement shall be binding on and inure to the benefit
of
the successors and assigns of the parties.
13.3.
Entire Agreement.
This
Agreement constitutes the entire agreement between the parties with respect
to
the subject matter of this Agreement and supersedes all prior agreements, oral
and written, between the parties hereto with respect to the subject matter
of
this Agreement.
13.4.
Modification and Waiver.
This
Agreement may not be amended, modified, or supplemented except by written
agreement signed by the party against which the enforcement of the amendment,
modification, or supplement is sought. No waiver of any of the provisions of
this Agreement shall be deemed, or shall constitute, a waiver of any other
provision. No waiver shall be binding unless executed in writing by the party
making the waiver.
13.5.
Attorney Fees.
If
any
legal action or other proceeding is brought to enforce the provisions of this
Agreement, the prevailing party shall be entitled to recover reasonable attorney
fees and other costs incurred in the action or proceeding,
in addition to any other relief to which the prevailing party may be entitled.
13.6.
Fees and Expenses.
Except
as
otherwise specifically provided in this Agreement, Seller and Buyer shall pay
their own fees and expenses in connection with the negotiation and consummation
of the transactions contemplated by this Agreement.
13.7.
Notices.
All
notices, requests, demands, and other communications required by this Agreement
shall be in writing and shall be (a) delivered in person or by courier, (b)
mailed by first class registered or certified mail, or (c) delivered by
facsimile transmission, as follows, or to such other address as a party may
designate to the other in writing:
(i)
If to
Buyer: 0000 Xxxxxx Xxxxxx, Xxxxx X000, Xxxxx, XX 00000; facsimile no.
_____________;
attention:_____________
(ii)
If
to Seller: Java Nevada, LLC, 000 Xxxxx Xxxxx, Xxx 000, Xxx Xxxxx, Xxxxxx 00000;
facsimile no. (000) 000-0000; attention: Xxxxx Xxxxxxx.
If
delivered personally or by courier, the date on which the notice, request,
instruction, or document is delivered shall be the date on which the delivery
is
made, and if delivered by facsimile transmission or mail as aforesaid, the
date
on which the notice, request, instruction, or document is received shall be
the
date of delivery.
Page
13 of
17
All
section headings contained in this Agreement are for convenience of reference
only, do not form a part of this Agreement, and shall not affect in any way
the
meaning or interpretation of this Agreement.
13.9.
Counterparts.
This
Agreement may be executed in two (2) or more counterparts, all of which shall
be
considered one and the same agreement, and shall become effective when one
counterpart has been signed by each party and delivered to the other party
hereto.
13.10.
Time of Essence.
Time
shall be of the essence with respect to the obligations of the parties to this
Agreement.
13.11.
Governing Law.
This
Agreement shall be governed by and construed under the laws of the State of
Nevada without regard to its conflict of law doctrines.
13.12.
Severability.
In
the
event any provision of this Agreement is deemed to be invalid, illegal, or
unenforceable, all other provisions of the Agreement that are not affected
by
the invalidity, illegality, or unenforceability shall remain in full force
and
effect.
Page
14 of
17
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date
of this
Agreement.
SELLER
Java
Nevada LLC
/s/
J
Dapper
By:
J
Dapper
Its:
Manager
/s/
Xxx Xxxxxx
By:
Xxx
Xxxxxx
Its:
Member
/s/
J
Dapper
By:
Xxx
Xxxxxx
Its:
Member
BUYER
JDCO,
Inc.
/s/
Xxxxxxx Xxxxxxxxx
By:
Xxxxxxx Xxxxxxxxx
Its:
Chief Executive Officer
Page
15 of
17
LIST
OF
SCHEDULES
Schedule
1 -- List of Personal Property
All
personal property, furnishings, fixtures, equipment, machinery, parts,
accessories, inventory in the following locations: 1.) Xxxxxxx and Pecos 2.)
Charleston and Xxxxxx Xxxxxx Xxxx Boulevard 3.) Tropicana and Xxxxxxxx and
4.)
Warmsprings & Xxxxxx Grande.
See
attached list
Schedule
2 - List of Contracts
See
attached list
Schedule
3 -- List of Real Property Leases
1.)
Xxxxxxx and Pecos
2.)
Charleston and Xxxxxx Xxxxxx Xxxx Boulevard
3.)
Tropicana and Xxxxxxxx and
4.)
Warmsprings & Xxxxxx Grande.
Schedule
4 -- List of Excluded Assets
None
Schedule
5 -- List of Permitted Liens
None
Schedule
6 -- List of Assumed Liabilities:
Leases
-
1.)
Xxxxxxx and Pecos
2.)
Charleston and Xxxxxx Xxxxxx Xxxx Boulevard
3.)
Tropicana and Xxxxxxxx and
4.)
Warmsprings & Xxxxxx Grande.
Page
16 of
17
LIST
OF
EXHIBITS
Exhibit
1
- Cancellation of Promissory Note
Exhibit
2
- Xxxx of Sale
Exhibit
3
-- Assignment of Contracts
Exhibit
5-- Assignment of Intangible Property [None/Intentionally Omitted]
Exhibit
6—Promissory Note
Exhibit
7—Mutual Release
Exhibit
8—Assignment and Assumption Agreements (Master Franchise Agreement and
related
agreements; Multi-Unit Development Agreement)
Page
17 of
17
