Unassociated Document


    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

    


    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 2121 Second Street, Suite C105, Davis, CA 95618 (“Buyer”) and Java
      Nevada, LLC a Nevada limited liability company, with a business address at
      985
      White Drive Ste 100, Las Vegas, Nevada 89119 (“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: 1501 West Charleston Blvd.,
      Las Vegas, NV 89102; 2840 E. Tropicana Avenue, Las Vegas, NV 89121; 6087 S.
      Pecos Road, Las Vegas, NV 89120; and 1659 W. Warm Springs Road, Henderson,
      NV
      89014 (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: 

    
      
        
        

      

      
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    ARTICLE 1. 

    PURCHASE AND
      SALE OF ASSETS 

     

    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 

    


    2.1.
      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. 

    
      
        
        

      

      
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    ARTICLE 3. 

    PURCHASE PRICE 

    


    3.1.
      Purchase Price. 

     

    On
      the
      Closing Date, subject to the terms and conditions set forth in this Agreement,
      Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase, the
      Assets, for an amount (the “Purchase Price”) equal to (i) the cancellation of
      the $900,000 Promissory Note delivered by Buyer on July 11, 2007, (ii) payment
      of $70,000, plus (iii) the Contingent Payment as provided below and (iv) the
      assumption of the Assumed Liabilities. 

     

    


    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)

    
      
        
        

      

      
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    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, 985 White Drive, Suite 100, Las Vegas, Nevada 89119, Clark
      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. 


    
      
        
        

      

      
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    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.

    REPRESENTATIONS AND WARRANTIES OF BUYER 

    


    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. 

     

    (e)
      No
      consent, approval, or authorization of or declaration, filing, or registration
      with any governmental or regulatory authority is required in connection with
      the
      execution, delivery, and performance by Buyer of this Agreement or the
      consummation of the transactions contemplated by the 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. 


    
      
        
        

      

      
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    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.



    
      
        
        

      

      
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    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. 

     

    The
      obligation of Buyer 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)
      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.

    
      
        
        

      

      
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    (g)
      Seller shall have executed and delivered or cause to be delivered to Buyer:
      (1)
      a duly executed bill of sale (the “Bill 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. 

    
      
        
        

      

      
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    (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.

    
      
        
        

      

      
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    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. 


    
      
        
        

      

      
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    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.


    
      
        
        

      

      
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    (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.


    
      
        
        

      

      
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    ARTICLE 13. 

    GENERAL PROVISIONS 

    


    13.1.
      Assignment. 

     

    The
      respective rights and obligations of the parties to this Agreement may not
      be
      assigned by any party without the prior written consent of the other, which
      consent may not be unreasonably withheld or delayed. 

    


    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: 2121 Second Street, Suite C105, Davis, CA 95618; facsimile no.
_____________;
      attention:_____________

     

    (ii)
      If
      to Seller: Java Nevada, LLC, 985 White Drive, Ste 100, Las Vegas, Nevada 89119;
      facsimile no. (702) 733-8859; attention: Steve Burford.

    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. 


    
      
        
        

      

      
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    13.8.
      Headings. 

     

    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. 

    
      
        
        

      

      
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      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/
        Joe Plante    

      By:
        Joe
        Plante

      Its:
        Member

      


      /s/
        J
        Dapper    

      By:
        Don
        Forman

      Its:
        Member

      


      


      


      BUYER

      JDCO,
        Inc.

      /s/
        Michael Binninger

      By:
        Michael Binninger

      Its:
        Chief Executive Officer

      


    

    
      
        
        

      

      
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    LIST
      OF
      SCHEDULES

     

    Schedule
      1 -- List of Personal Property

    


    All
      personal property, furnishings, fixtures, equipment, machinery, parts,
      accessories, inventory in the following locations: 1.) Patrick and Pecos 2.)
      Charleston and Martin Luther King Boulevard 3.) Tropicana and Harrison and
      4.)
      Warmsprings & Arroyo Grande.

    


    See
      attached list


    Schedule
      2 - List of Contracts 

    


    See
      attached list



    Schedule
      3 -- List of Real Property Leases 

    


    1.)
      Patrick and Pecos

    2.)
      Charleston and Martin Luther King Boulevard

    3.)
      Tropicana and Harrison and

    4.)
      Warmsprings & Arroyo Grande.




    Schedule
      4 -- List of Excluded Assets

    


    None

    

 

    Schedule
      5 -- List of Permitted Liens 

    


    None


    Schedule
      6 -- List of Assumed Liabilities:

    


    Leases
      -


    1.)
      Patrick and Pecos

    2.)
      Charleston and Martin Luther King Boulevard

    3.)
      Tropicana and Harrison and

    4.)
      Warmsprings & Arroyo Grande.


    
      
        
        

      

      
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    LIST
      OF
      EXHIBITS 

     

    Exhibit
      1
      - Cancellation of Promissory Note

    


    Exhibit
      2
      - Bill of Sale

    


    Exhibit
      3
      -- Assignment of Contracts 


    Exhibit
      4
      -- Assignment of Real Property Leases 

    


    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)


    
      
        
        

      

      
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