Document:

Exhibit
10.44

ALLOS THERAPEUTICS, INC.

CORPORATE BONUS PLAN

Adopted April 25,
2007
 Effective January 1, 2007

PLAN OBJECTIVES

The objectives of the
Corporate Bonus Plan (the “Plan”) are to:

·                  provide certain employees of Allos
Therapeutics, Inc. (the “Company”) with
incentives to achieve the highest level of individual and team performance and
to meet or exceed specified objectives, which contribute to the overall success
of the Company;

·                  motivate participants to achieve both
corporate and individual objectives; and

·                  enable the Company to attract and retain
high-quality employees.

ADMINISTRATION

The Plan will be
administered by the Compensation Committee of the Company’s Board of Directors
(the “Compensation Committee”) and the Chief
Executive Officer; provided that any action permitted to be taken by the
Committee may be taken by the Board, in its discretion.  The Compensation Committee may correct any
defect or omission or reconcile any inconsistency in the Plan in the manner and
to the extent the Compensation Committee deems necessary or desirable.  Any decision of the Compensation Committee in
the interpretation and administration of the Plan, as described herein, shall
lie within its sole and absolute discretion and shall be final, conclusive and
binding on all parties concerned.  The
Compensation Committee generally sets a one-year performance period under the
Plan to run from January 1 through December 31 (the “Performance
Period”).  The Compensation
Committee is responsible for approving any incentive compensation for executive
officers, as that term is defined in Section 16 of the Securities Exchange Act
of 1934, as amended (the “Executive Officers”),
and for recommending to the Company’s Board of Directors (the “Board”) the incentive compensation for the Chief Executive
Officer.  The Chief Executive Officer is
responsible for any incentive compensation for employees who are not Executive
Officers (the “Non-Executive Officer Employees”).

ELIGIBILITY

All Company employees
holding a position with the Company that is covered by the Plan as determined
by the Compensation Committee from time to time in its discretion are eligible
to participate in the Plan for each Performance Period; provided, however, that
in order to receive an award for a Performance Period, if awards are available,
eligible employees (“Participants”)
must: (i) be employed by the Company both on the last day of the applicable
Performance Period (which will generally be December 31 of each year) and at
the time awards are paid out under the Plan; (ii) have completed at least six
months of full-time, active service with the Company during the applicable
Performance Period (which shall include all family and medical leaves of
absence) or have been deemed by the Compensation Committee to be eligible to
participate fully in the Plan; (iii) receive at least a “Meets Expectations”
rating on the employee’s performance review for the applicable Performance
Period; and (iv) not be subject to a written performance improvement plan at
the time awards are paid out under the Plan.

Participants with at least
six, but less than 12, months of active service during a Performance Period may
be eligible for a prorated bonus for such Performance Period, depending on
their length of service for that period. 
A Participant who changes job grades during a Performance Period may be
eligible for a bonus 

 1
 

based on the length of time
in each grade and the respective bonus targets that would apply for such grades
during such Performance Period.

Unless the terms of an applicable
severance plan or employment agreement provide otherwise, a Participant who
terminates employment (or gives notice of his or her intent to terminate) for
reasons other than death or disability prior to a payout date of an award under
the Plan will not be eligible for a bonus award.  If an employee dies prior to a payout date of
an award under this Plan, then the award that the employee otherwise would have
been eligible to receive under the Plan, if any, may be paid to his/her estate
at the discretion of the Company.

TARGET BONUS AWARDS

Target bonus awards will be
determined and communicated to eligible employees annually.  For Non-Executive Officer Employees, the
target bonus awards for such Participants will be determined by the Chief
Executive Officer.  For Executive
Officers (other than the Chief Executive Officer), the target bonus awards for
such Participants will be determined by the Compensation Committee, in
consultation with the Chief Executive Officer. 
For the Chief Executive Officer, the target bonus award for such
Participant will be determined by the Compensation Committee and the
Board.  Target bonus awards may be
modified from time to time.

AWARD DETERMINATION

Actual bonus payouts can
range from 0 to 1.5 times the target bonus awards, based on corporate and
individual performance.

Following are the weightings
of the corporate and individual performance components used for Participants in
determining the actual bonus award amounts:

	
  Title

  	
   

  	
  Weighting of 

  Corporate 

  Performance 

  Against

  Corporate 

  Objectives

  	
   

  	
  Weighting of 

  Individual 

  Performance

  Against

  Individual

  Objectives

  	
   

  
	
  President and
  CEO

  	
   

  	
  100

  	
  %

  	
  0

  	
  %

  
	
  Executive or
  Senior Vice President

  	
   

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Vice President

  	
   

  	
  60

  	
  %

  	
  40

  	
  %

  
	
  Below Vice President

  	
   

  	
  50

  	
  %

  	
  50

  	
  %

  

 

At the beginning of each
Performance Period under the Plan, the criteria for assessing the Company’s
corporate performance will be (i) developed by the Chief Executive Officer of
the Company in consultation with management, (ii) reviewed and approved by the
Compensation Committee, and (iii) approved by the Board.

At the beginning of each
Performance Period under the Plan, the criteria for assessing an individual’s
performance will be developed by the Company in consultation with the
Participant (the “Individual Bonus Criteria”).  For Non-Executive Officer Employees, the
Individual Bonus Criteria for such Participants must be approved by the Chief
Executive Officer.  For Executive
Officers with an individual performance component, the Individual Bonus
Criteria for such Participants must be approved by the Compensation Committee,
in consultation with the Chief Executive Officer.

 2
 

After the end of each
Performance Period, the Compensation Committee will assess the extent to which
corporate goals and objectives have been met, identify any unplanned
achievements or adverse events that have occurred and recommend to the Board
for approval an overall percentage of weighted goals achieved with respect to
the corporate component of the Plan. 
This percentage of corporate goal achievement, together with the
percentage of achievement for the individual component, will be used to
calculate bonus payouts, if any, for each eligible Participant in the Plan.

After the end of each
Performance Period, individual performance will be evaluated based on
achievement of weighted goals and objectives as reflected in the employee’s
written performance objectives for the Performance Period.  For Non-Executive Officer Employees, the
Chief Executive Officer will assess the extent to which Individual Bonus
Criteria have been met, identify any unplanned achievements or adverse events that
have occurred and approve an overall percentage of weighted goals achieved with
respect to the individual component of the Plan.  For Executive Officers with an individual
performance component, the Compensation Committee will assess, in consultation
with the Chief Executive Officer, the extent to which Individual Bonus Criteria
have been met, identify any unplanned achievements or adverse events that have
occurred and approve an overall percentage of weighted goals achieved with
respect to the individual component of the Plan.

The Company generally must
achieve at least 75% of the Company’s weighted corporate objectives (the “Bonus Trigger”) for the relevant Performance Period in order
for any bonus award payouts to occur; provided, however, that
the Compensation Committee, in its discretion, may determine to grant an award
under the Plan even though certain corporate objectives or Individual Bonus
Criteria are not met.  The Compensation
Committee and the Board shall have the authority, in their discretion, to
determine whether the Bonus Trigger has been achieved for a particular
Performance Period.

Awards under the Plan are
subject to applicable withholdings.  Participants
who have elected to participate in the Company’s 401(k) Plan will have the
applicable funds withheld from their bonus payment.

PAYMENT OF AWARDS

Payment of an award under the Plan to a Participant shall be made as
soon as practicable after determination of the amount of the award, and will generally
occur within 75 days after the end of the year during which the applicable
Performance Period ends.  Notwithstanding
the foregoing, if the payment of any award at the time specified herein would
be result in the adverse tax consequences described in Section 409A(a)(1) of
the Internal Revenue Code (the “Code”) as a result of the recipient’s status as
a “specified employee” (within the meaning of Section 409A of the Code), the
time of such payment shall be automatically delayed to the minimum extent
necessary so that Section 409A(a)(1) of the Code will not apply.

OTHER PROVISIONS

The Company reserves the
right to interpret, modify, suspend or terminate this Plan at any time.

No Participant will have the
right to alienate, assign, encumber, hypothecate or pledge his or her interest
in any award under the Plan, voluntarily or involuntarily, and any attempt to
so dispose of any such interest will be void.

Participants who engage in
an activity that violates applicable local, state or federal laws, or who
violate Company policies, may be subject to having their awards reduced or
eliminated in the sole discretion of 

 3
 

the Compensation Committee,
except in the case of the Chief Executive Officer where the Board shall make
the final determination after considering the Compensation Committee’s
recommendation.

Neither
this Plan nor any action taken hereunder shall be construed as giving any
employee or Participant the right to be retained in the employ of the Company.  Employees of the Company are employed “at
will” unless they have an agreement signed by the Chief Executive Officer or a
member of the Board providing for other than at-will employment.

The Company shall not be
required to fund or otherwise segregate any cash or any other assets which may
at any time be paid to Participants under the Plan.  The Plan shall constitute an “unfunded” plan
of the Company.

In the event of any conflict
between a Participant’s employment agreement with the Company and this Plan, the
terms of the Participant’s employment agreement will control.

The provisions contained in
this Plan set forth the entire understanding of the Company with respect to the
Plan and supercede any and all prior communications between the Company and any
employee with respect to the Plan.  This
Plan supercedes and replaces the Company’s previous Annual Incentive Plan.

 4
 

ATTACHMENT I

CALCULATION
WORKSHEET

EXAMPLE 1:

A Senior Director, assuming:
(i) 50% Corporate + 50% Individual weighting; (ii) $160,000 base salary; (iii)
a target bonus award set at 25% of base salary ($40,000) at the beginning of
the Performance Period; (iv) a 75% corporate threshold for any bonus payout;
and (v) an individual achievement score of 110% (exceeded goals).

A bonus award under the Plan
will be based partially on corporate performance against goals and a
Participant’s individual performance against goals.  Each of these measures will account for 50%
of the total bonus goal, and will be measured over the same period.  The achievement of corporate goals also
determines the payout for individual goals, and thus, the corporate weighted
score must be at least 75% for any bonuses to be paid.

Example of Corporate Goals, Weighting and Calculation of Corporate
Score (as % achievement):

	
  Goal

  	
   

  	
  Corporate 

  Bonus Criteria

  	
   

  	
  Weighting

  	
   

  	
  Score

  	
   

  	
  Total

  	
   

  
	
  1

  	
   

  	
  Goal
  1

  	
   

  	
  30

  	
  %

  	
  100

  	
   

  	
  30

  	
  %

  
	
  2

  	
   

  	
  Goal
  2

  	
   

  	
  25

  	
  %

  	
  80

  	
   

  	
  20

  	
  %

  
	
  3

  	
   

  	
  Goal
  3

  	
   

  	
  20

  	
  %

  	
  95

  	
   

  	
  19

  	
  %

  
	
  4

  	
   

  	
  Goal
  4

  	
   

  	
  10

  	
  %

  	
  120

  	
   

  	
  12

  	
  %

  
	
  5

  	
   

  	
  Goal
  5

  	
   

  	
  5

  	
  %

  	
  75

  	
   

  	
  3.75

  	
  %

  
	
  6

  	
   

  	
  Goal
  6

  	
   

  	
  5

  	
  %

  	
  100

  	
   

  	
  5

  	
  %

  
	
  7

  	
   

  	
  Goal
  7

  	
   

  	
  5

  	
  %

  	
  115

  	
   

  	
  5.75

  	
  %

  
	
  Total

  	
   

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  95.5

  	
  %

  

Corporate Total = 95.5% (so
it clears the 75% threshold to trigger bonus payouts)  

Example of Calculation of Bonus Payouts:

	
   

  	
   

  	
  Base Salary

  	
   

  	
  Target %

  	
   

  	
  Weighting

  	
   

  	
  Score

  	
   

  	
  Bonus Amount

  	
   

  
	
  Corporate

  	
   

  	
  $

  	
  160,000

  	
   

  	
  25

  	
  %

  	
  50

  	
  %

  	
  95.5

  	
  %

  	
  $

  	
  19,100

  	
   

  
	
  Individual

  	
   

  	
  $

  	
  160,000

  	
   

  	
  25

  	
  %

  	
  50

  	
  %

  	
  110

  	
  %

  	
  $

  	
  22,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Total

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  100

  	
  %

  	
   

  	
   

  	
  $

  	
  41,100

  	
   

  

160,000 x .25 x .5 x .955 = $19,100.00

160,000 x .25 x .5 x 1.10 =
$22,000.00

 5
 

EXAMPLE 2: 

Vice President, assuming:
(i) 60% Corporate + 40% Individual weighting; (ii) $260,000 base salary; (iii)
a target bonus award set at 25% of base salary ($65,000) at the beginning of
the Performance Period; (iv) a 75% corporate threshold for any bonus payout;
and (v) multiple corporate and individual achievement scenarios.

A.            If Corporate Perf =
100% and Individual Perf = 100%:

	
  Annual Target Incentive
  Opportunity:

  	
   

  	
  $260,000 x 25% = $65,000

  
	
   

  	
   

  	
   

  
	
  Corporate
  Weighting

  	
   

  	
  60%

  
	
  Annual Tgt Based
  on 100% Corp Perf

  	
   

  	
  $65,000 x 60% x 100% = $39,000

  
	
   

  	
   

  	
   

  
	
  Individual
  Weighting

  	
   

  	
  40%

  
	
  Annual Tgt Based
  on 100% Ind Perf

  	
   

  	
  $65,000 x 40% x 100% = $26,000

  
	
   

  	
   

  	
   

  
	
  Total
  Bonus Award = $39,000 + $26,000 = $65,000

  	
   

  	
   

  

 

B.            If Corporate Perf =
95% and Individual Perf = 110% (exceeds):  

	
  Annual Target Incentive:

  	
   

  	
  $260,000 x 25% = $65,000

  
	
   

  	
   

  	
   

  
	
  Corporate
  Weighting

  	
   

  	
  60%

  
	
  Annual Tgt Based
  on 95% Corp Perf

  	
   

  	
  $65,000 x 60% x 95% = $37,500

  
	
   

  	
   

  	
   

  
	
  Individual
  Weighting

  	
   

  	
  40%

  
	
  Annual Tgt Based
  on 110% Ind Perf

  	
   

  	
  $65,000 x 40% x 110% = $28,600

  
	
   

  	
   

  	
   

  
	
  Total
  Bonus Award = $37,500 + $28,600 = $66,100

  	
   

  	
   

  

 

C.            If Corporate Perf
=110% (exceeds) and Individual Perf = 90%:

	
  Annual Target Incentive:

  	
   

  	
  $260,000 x 25%  = $65,000

  
	
   

  	
   

  	
   

  
	
  Corporate
  Weighting

  	
   

  	
  60%

  
	
  Annual Tgt Based
  on 110% Corp Perf

  	
   

  	
  $65,000 x 60% x
  110%  = $42,900

  
	
   

  	
   

  	
   

  
	
  Individual
  Weighting

  	
   

  	
  40%

  
	
  Annual Tgt Based
  on 90% Ind Perf

  	
   

  	
  $65,000 x 40% x
  90%  = $23,400

  
	
   

  	
   

  	
   

  
	
  Total
  Bonus Award = $42,900 + $23,400 = $66,300

  	
   

  	
   

  

 

 6
 

D.                                    If Corporate Perf = 60% and
Individual Perf = 110% (exceeds): Corporate threshold cancels out all payouts

	
  Annual Target Incentive:

  	
   

  	
  $260,000 x 25% = $65,000

  
	
   

  	
   

  	
   

  
	
  Corporate
  Weighted Score 60% is < 75% threshold

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Total
  Bonus Award = $0

  	
   

  	
   

  

 

 7Exhibit 10.1

STOCK PURCHASE AGREEMENT,

dated as of April 27, 2007,

among

the Stockholders of Coffee
Bean Holding Co., Inc.,

Coffee Bean Holding Co.,
Inc.

and

Farmer Bros. Co.

TABLE OF CONTENTS

	
  RECITALS

  	
   

  	
   

  	
   

  	
  1

  	
   

  
	
  AGREEMENTS

  	
   

  	
   

  	
   

  	
  1

  	
   

  
	
  ARTICLE I   DEFINITIONS

  	
   

  	
  1

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
   

  	
  1

  	
   

  
	
  1.2

  	
   

  	
  Construction

  	
   

  	
  10

  	
   

  
	
  ARTICLE II   PURCHASE
  AND SALE

  	
   

  	
  10

  	
   

  
	
  2.1

  	
   

  	
  Purchase and Sale

  	
   

  	
  10

  	
   

  
	
  2.2

  	
   

  	
  Purchase Price

  	
   

  	
  10

  	
   

  
	
  2.3

  	
   

  	
  Closing Date

  	
   

  	
  11

  	
   

  
	
  2.4

  	
   

  	
  Closing Deliveries

  	
   

  	
  11

  	
   

  
	
  2.5

  	
   

  	
  Net Working Capital
  Adjustment

  	
   

  	
  14

  	
   

  
	
  2.6

  	
   

  	
  Escrow

  	
   

  	
  16

  	
   

  
	
  ARTICLE III   REPRESENTATIONS
  AND WARRANTIES AS TO THE COMPANY

  	
   

  	
  17

  	
   

  
	
  3.1

  	
   

  	
  Organization and
  Qualification

  	
   

  	
  17

  	
   

  
	
  3.2

  	
   

  	
  Authorization

  	
   

  	
  18

  	
   

  
	
  3.3

  	
   

  	
  No Violation

  	
   

  	
  18

  	
   

  
	
  3.4

  	
   

  	
  Capitalization

  	
   

  	
  18

  	
   

  
	
  3.5

  	
   

  	
  Subsidiaries and Equity
  Investments

  	
   

  	
  19

  	
   

  
	
  3.6

  	
   

  	
  Consents and Approvals

  	
   

  	
  19

  	
   

  
	
  3.7

  	
   

  	
  Financial Statements

  	
   

  	
  19

  	
   

  
	
  3.8

  	
   

  	
  Absence of Undisclosed
  Liabilities

  	
   

  	
  20

  	
   

  
	
  3.9

  	
   

  	
  Absence of Certain
  Changes

  	
   

  	
  20

  	
   

  
	
  3.10

  	
   

  	
  Employee Benefit Plans

  	
   

  	
  22

  	
   

  
	
  3.11

  	
   

  	
  Brokers’ Fees and
  Commissions; Sellers’ Transaction Costs

  	
   

  	
  23

  	
   

  
	
  3.12

  	
   

  	
  Contracts

  	
   

  	
  24

  	
   

  
	
  3.13

  	
   

  	
  Taxes

  	
   

  	
  25

  	
   

  
	
  3.14

  	
   

  	
  Title to Assets

  	
   

  	
  25

  	
   

  
	
  3.15

  	
   

  	
  No Violation,
  Litigation or Regulatory Action

  	
   

  	
  26

  	
   

  
	
  3.16

  	
   

  	
  Licenses

  	
   

  	
  26

  	
   

  
	
  3.17

  	
   

  	
  Environmental Matters

  	
   

  	
  26

  	
   

  
	
  3.18

  	
   

  	
  Other Activities

  	
   

  	
  27

  	
   

  
	
  3.19

  	
   

  	
  Availability of Assets

  	
   

  	
  27

  	
   

  
	
  3.20

  	
   

  	
  Real Property

  	
   

  	
  28

  	
   

  
	
  3.21

  	
   

  	
  Personal Property

  	
   

  	
  28

  	
   

  
	
  3.22

  	
   

  	
  Intellectual Property:
  Software

  	
   

  	
  28

  	
   

  
	
  3.23

  	
   

  	
  Accounts Receivable
  Inventories; Products

  	
   

  	
  30

  	
   

  
	
  3.24

  	
   

  	
  Employee Relations

  	
   

  	
  31

  	
   

  
	
  3.25

  	
   

  	
  Insurance

  	
   

  	
  33

  	
   

  
	
  3.26

  	
   

  	
  Customers and Suppliers

  	
   

  	
  33

  	
   

  

 

 i
 

 

	
  ARTICLE IV   INDIVIDUAL
  REPRESENTATIONS AND WARRANTIES OF THE SELLERS

  	
   

  	
  33

  	
   

  
	
  4.1

  	
   

  	
  Organization and
  Qualification

  	
   

  	
  33

  	
   

  
	
  4.2

  	
   

  	
  Authorization

  	
   

  	
  34

  	
   

  
	
  4.3

  	
   

  	
  No Violation

  	
   

  	
  34

  	
   

  
	
  4.4

  	
   

  	
  Title to Shares

  	
   

  	
  34

  	
   

  
	
  4.5

  	
   

  	
  Consents and Approvals

  	
   

  	
  34

  	
   

  
	
  ARTICLE V   REPRESENTATIONS
  AND WARRANTIES OF THE BUYER

  	
   

  	
  34

  	
   

  
	
  5.1

  	
   

  	
  Organization and
  Qualification

  	
   

  	
  34

  	
   

  
	
  5.2

  	
   

  	
  Authorization

  	
   

  	
  35

  	
   

  
	
  5.3

  	
   

  	
  No Violation

  	
   

  	
  35

  	
   

  
	
  5.4

  	
   

  	
  Consents and Approvals

  	
   

  	
  35

  	
   

  
	
  5.5

  	
   

  	
  Brokers’ Fees and
  Commissions

  	
   

  	
  35

  	
   

  
	
  5.6

  	
   

  	
  Purchase for Investment

  	
   

  	
  35

  	
   

  
	
  ARTICLE VI   COVENANTS
  OF THE BUYER

  	
   

  	
  36

  	
   

  
	
  6.1

  	
   

  	
  Access to Books and
  Records

  	
   

  	
  36

  	
   

  
	
  ARTICLE VII   COVENANTS
  OF THE BUYER AND THE SELLERS

  	
   

  	
  36

  	
   

  
	
  7.1

  	
   

  	
  Public Announcements

  	
   

  	
  36

  	
   

  
	
  7.2

  	
   

  	
  Further Assurances

  	
   

  	
  36

  	
   

  
	
  7.3

  	
   

  	
  Tax Matters

  	
   

  	
  36

  	
   

  
	
  ARTICLE VIII   CONDITIONS
  TO CLOSING

  	
   

  	
  40

  	
   

  
	
  8.1

  	
   

  	
  Conditions to
  Obligation of the Buyer

  	
   

  	
  40

  	
   

  
	
  8.2

  	
   

  	
  Conditions to
  Obligation of the Sellers

  	
   

  	
  41

  	
   

  
	
  ARTICLE IX   INDEMNIFICATION

  	
   

  	
  42

  	
   

  
	
  9.1

  	
   

  	
  Survival of
  Representations, Warranties and Covenants

  	
   

  	
  42

  	
   

  
	
  9.2

  	
   

  	
  Indemnification

  	
   

  	
  43

  	
   

  
	
  9.3

  	
   

  	
  Limitations on
  Liability

  	
   

  	
  44

  	
   

  
	
  9.4

  	
   

  	
  Notice of Claims

  	
   

  	
  45

  	
   

  
	
  9.5

  	
   

  	
  Third Party Claims

  	
   

  	
  45

  	
   

  
	
  9.6

  	
   

  	
  Scope of Liability

  	
   

  	
  47

  	
   

  
	
  9.7

  	
   

  	
  Characterization of
  Indemnity Payments

  	
   

  	
  47

  	
   

  
	
  ARTICLE X   MISCELLANEOUS

  	
   

  	
  47

  	
   

  
	
  10.1

  	
   

  	
  Notices

  	
   

  	
  47

  	
   

  
	
  10.2

  	
   

  	
  Seller Representative

  	
   

  	
  49

  	
   

  
	
  10.3

  	
   

  	
  Amendments and Waivers

  	
   

  	
  52

  	
   

  
	
  10.4

  	
   

  	
  Expenses

  	
   

  	
  52

  	
   

  
	
  10.5

  	
   

  	
  Successors and Assigns

  	
   

  	
  52

  	
   

  
	
  10.6

  	
   

  	
  Governing Law

  	
   

  	
  52

  	
   

  
	
  10.7

  	
   

  	
  Waiver of Jury Trial

  	
   

  	
  52

  	
   

  
	
  10.8

  	
   

  	
  Counterparts

  	
   

  	
  52

  	
   

  
	
  10.9

  	
   

  	
  No Third Party
  Beneficiaries

  	
   

  	
  53

  	
   

  

 

 ii
 

 

	
  10.10

  	
   

  	
  Entire Agreement

  	
   

  	
  53

  	
   

  
	
  10.11

  	
   

  	
  Captions

  	
   

  	
  53

  	
   

  
	
  10.12

  	
   

  	
  Severability

  	
   

  	
  53

  	
   

  
	
  10.13

  	
   

  	
  Interpretation

  	
   

  	
  53

  	
   

  

 

LIST OF SCHEDULES

Schedule 1             Sellers

Schedule 2             Closing
Date Bonuses

Schedule 3             Sellers’
Transaction Costs

Schedule 4             Employment
Agreements

Schedule 5             Closing
Payment

LIST OF EXHIBITS

Exhibit A                Form of
Escrow Agreement

Exhibit B                Form
of Facility Lease

Exhibit C                Form
of Nondisclosure, Non-Competition and Non-Solicitation Agreement (SvoCo,
Prairie)

Exhibit D                Form
of Nondisclosure, Non-Competition and Non-Solicitation Agreement (Crow,
Criteser)

 

 iii

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (this “Agreement”), dated as of April 27, 2007, is
by and between the Persons set forth on Schedule 1 hereto (individually,
a “Seller” and, collectively, the “Sellers”), Coffee Bean Holding Co., Inc., a Delaware
corporation (the “Company”), and
Farmer Bros. Co., a Delaware corporation (the “Buyer”).

RECITALS

1.             The
Sellers are the owners of all of the issued and outstanding shares of capital
stock of the Company.

2.             The
Sellers desire to sell, and the Buyer desires to purchase, all of such shares
on the terms and subject to the conditions set forth in this Agreement.

AGREEMENTS

In consideration of the foregoing premises and the
respective representations, warranties, covenants and agreements contained herein,
and for other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:

ARTICLE I

DEFINITIONS

1.1                     Definitions.  When used in this Agreement, the following
terms shall have the meanings assigned to them in this Section 1.1.

“2006 Audited Financial
Statements” has the meaning ascribed thereto in Section 3.7.

“2007 Audited Financial
Statements” has the meaning ascribed thereto in Section 2.5.

“Advisory Services
Agreement” means that certain Advisory Services Agreement, dated as
of April 9, 2004, between Coffee Bean, Svoboda, Collins L.L.C., Daniels &
King Capital III, LLC, and WSG/CBI, L.L.C.

“Accountants”
has the meaning ascribed thereto in Section  2.5.

“Affiliate”
means, with respect to any specified Person, any other Person directly or
indirectly controlling, controlled by or under common control with such
specified Person.

“Ancillary Agreements”
means the Escrow Agreement, Employment Agreements, Facility Lease,
Non-Competition Agreements, and the other agreements, instruments and documents
delivered at the Closing pursuant to this Agreement.

“Associate” has
the meaning ascribed thereto in Section 3.24.

“Authorization”
means any authorization, approval, consent, certificate, waiver, clearance,
license, permit or franchise of or from any Person or Governmental Body.

 1
 

“Authorized Action”
has the meaning ascribed thereto in Section 10.2.

“Balance Sheet Date”
has the meaning ascribed thereto in Section 3.7.

“Books and Records”
means books of account, general, financial, warranty and shipping records,
invoices, customer lists, advertiser lists, exhibitor lists, subscriber lists,
circulation lists, sponsorship information, conference attendee information,
correspondence, engineering, maintenance, operating and production records,
advertising and promotional materials, credit records of customers and other
documents, records and files of the Company and each of its Subsidiaries.

“Business Day”
means a day other than a Saturday, Sunday or other day on which commercial
banks located in Los Angeles, California are authorized or required by Law to
close.

“Buyer” has the
meaning ascribed thereto in the preamble.

“Buyer Indemnitee”
means the Buyer and its Affiliates, including, without limitation, the Company
and its Subsidiaries from and after the Closing Date, and their respective
successors and assigns.

“Buyer
Material Adverse Effect” means any
circumstance, change or effect that is, or is reasonably likely to be, Material
in amount or otherwise materially adverse to the business, operations,
properties or condition (financial or
otherwise) of the Buyer and its Subsidiaries, taken as a whole.

“Cap” has the
meaning ascribed thereto in Section 9.3.

“CBI Common Stock” has the
meaning ascribed thereto in Section 3.4.

“CBI Shares” has
the meaning ascribed thereto in Section 3.4.

“CERCLA” has the
meaning ascribed thereto in Section 3.17.

“Certificate of
Incorporation” means the Second Amended and Restated Certificate of
Incorporation of the Company, as amended or amended and restated from time to
time.

“Claim Notice” has the meaning
ascribed thereto in Section 9.4.

“Closing” has
the meaning ascribed thereto in Section 2.3.

“Closing Date”
means the date on which the Closing occurs.

“Closing Date Balance Sheet”
has the meaning ascribed thereto in Section 2.5.

“Closing Date Bonuses”
means that portion of the Sale Bonuses payable at the Closing pursuant to the
Sale Bonus Letters to the Persons and in the amounts listed on Schedule 2.

“Closing Net Purchase Price”
has the meaning ascribed thereto in Section 2.4.

 2
 

“Closing Payment”
has the meaning ascribed thereto in Section 2.4.

“Code”
means the Internal Revenue Code of 1986, as amended through the Closing Date,
and the rules and regulations promulgated thereunder.

“Coffee Bean”
means Coffee Bean International, Inc., an Oregon corporation.

“Company” has
the meaning ascribed thereto in the preamble.

“Common Stock”
means the Common Stock, par value $.01 per share, of the Company.

“Company Agreements”
has the meaning ascribed thereto in Section 3.12.

“Company Group”
means any “affiliated group” (as defined in Section 1504(a) of the Code without
regard to the limitations contained in Section 1504(b) of the Code) that, at
any time on or before the Closing Date, includes or has included the Company or
any Subsidiary or any predecessor of or successor to the Company or any
Subsidiary (or another such predecessor or successor), or any other group of
corporations that, at any time on or before the Closing Date, files or has filed
Tax Returns on a combined, consolidated or unitary basis with the Company or
any Subsidiary or any predecessor of or successor to the Company or any
Subsidiary (or another such predecessor or successor).

“Confidentiality
Agreement” means, collectively, that certain Confidentiality
Agreement dated December 11, 2006, and paragraph 9 of that certain Letter of
Intent dated March 7, 2007.

“Contract”
means any contract, agreement, indenture, note, bond, loan, instrument, lease,
conditional sales contract, mortgage, license, franchise, insurance policy,
binding commitment or other binding arrangement or agreement.

“Copyrights”
means United States and foreign copyrights, copyrightable works, and mask
works, whether registered or unregistered, and pending applications to register
the same.

“Current Assets”
means any and all current assets that should be reflected on the balance sheet
of the Company and its Subsidiaries on a consolidated basis, prepared in
accordance with GAAP using the same accounting methods, policies, practices and
procedures, with consistent classifications, judgments and estimation
methodology, as were used in the determination of the current assets in the
preparation of the 2006 Audited Financial Statements.

“Current Liabilities”
means any and all current liabilities that should be reflected on the balance
sheet of the Company and its Subsidiaries on a consolidated basis, prepared in
accordance with GAAP using the same accounting methods, policies, practices and
procedures, with consistent classifications, judgments and estimation
methodology, as were used in the determination of the current liabilities in
the preparation of the 2006 Audited Financial Statements.

“Employee Benefit
Plans” has the meaning ascribed thereto in Section 3.10.

 3
 

“Employment Agreement”
has the meaning ascribed thereto in Section 2.4.

“Encumbrance”
means any lien (statutory or other), claim, charge, security interest,
mortgage, deed of trust, pledge, hypothecation, assignment, conditional sale or
other title retention agreement, or other security agreement of any kind or
nature, and any easement, encroachment, covenant, restriction, right of way,
defect in title or other encumbrance of any kind.

“ERISA” has the
meaning ascribed thereto in Section 3.10.

“Escrow Account”
has the meaning ascribed thereto in Section 2.6.

“Escrow Agent”
has the meaning ascribed thereto in Section 2.6.

“Escrow Agreement”
has the meaning ascribed thereto in Section 2.4.

“Escrow Deposit”
has the meaning ascribed thereto in Section 2.6.

“Escrow Fund”
means (A) the Escrow Deposit, in whatever form from time to time held or
invested as provided in the Escrow Agreement, and (B) all amounts received by
the Escrow Agent (and not otherwise distributed under the Escrow Agreement) on
or in respect of the aforesaid funds in whatever form from time to time held or
invested as provided in the Escrow Agreement.

“Estimated Closing Date
Balance Sheet” has the meaning ascribed thereto in Section 2.5.

“Estimated Closing Net
Working Capital” has the meaning ascribed thereto in Section 2.5.  For the
purposes of determining Estimated Closing Net Working Capital, estimated
Current Liabilities shall not include (i) any liability for Indebtedness
incurred or assumed by the Company or any of its Subsidiaries after the
Closing; (ii) any liability for Taxes resulting from the Section 338(g)
Election; (iii) any liability for Excluded Taxes; (iv) any liability for Sale
Bonuses and any related payroll and withholding Taxes; and (v) any liability
associated with the Transfer and Redemption including, without limitation, the
alternative minimum Tax associated therewith which shall be paid by the Sellers
in accordance with Section 7.3.

“Estimated Net Working
Capital Statement” has the meaning ascribed thereto in Section 2.5.

“Excluded Taxes”
means any sales or use taxes, or personal property taxes on coffee brewing
equipment outside the State of Oregon, and all interest, penalties, additions
to tax or additional amounts imposed by any Governmental Body with respect to
such taxes.

“Facility” means
the facility located at 2181 N.W. Nicolai Street, Portland, Oregon.

“Facility Lease”
has the meaning ascribed thereto in Section 2.4.

 4
 

“Facility LLC”
means Nicolai Street Investment, LLC, a Delaware limited liability company.

“Final Net Working Capital
Statement” has the meaning ascribed thereto in Section 2.5.

“Financial Statements”
has the meaning ascribed thereto in Section 3.7.

“First Release Amount”
has the meaning ascribed thereto in Section 2.6.

“First Release Date”
has the meaning ascribed thereto in Section 2.6.

“GAAP”
has the meaning ascribed thereto in Section 3.7.

“Governmental Body”
means any foreign, federal, state, local or other governmental authority or
regulatory body.

“Hazardous Materials”
has the meaning ascribed thereto in Section 3.17.

“Hazardous Waste”
has the meaning ascribed thereto in Section 3.17.

“Indebtedness”
means the sum of (i) all obligations of the Company and its Subsidiaries for
borrowed money (including the current portion thereof), including principal,
accrued interest, deferred financing costs, fees, charges, prepayment premiums
or penalties, and any other fees, expenses, indemnities or other amounts
payable as a result of the prepayment or discharge of any such indebtedness;
(ii) all obligations of the Company and its Subsidiaries under leases which, in
accordance with GAAP, are required to be classified as “capital leases”; and
(iii) all accrued and unpaid fees and expenses under the Advisory Services
Agreement; provided that, notwithstanding anything to the contrary contained
herein, in calculating the foregoing, no account shall be taken of, and there
shall be excluded from Indebtedness, the total amount of all of the respective
indebtedness of the Company and its Subsidiaries then outstanding or arising
under, or otherwise related to, trade payables, operating lease obligations and
other operating liabilities incurred by the Company or any of its Subsidiaries
which are included in Current Liabilities.

“Indebtedness Holders”
has the meaning ascribed thereto in Section 2.4.

“Indemnified Party”
has the meaning ascribed thereto in Section 9.4.

“Indemnitor” has
the meaning ascribed thereto in Section 9.4.

“Intellectual
Property” means Copyrights, Patent Rights, Trademarks and Trade
Secrets and all copies and tangible embodiments thereof (in whatever form or
medium).

“knowledge”
means:  (i) in the case of the Company,
the actual knowledge of Margaret Crow, Patrick Criteser, Aaron Loreth or Andrew
Kunkler without duty of inquiry; (ii) in the case of each individual Seller,
the actual knowledge of such individual Seller without duty of inquiry; and
(iii) in the case of each Seller which is not an individual, the actual
knowledge of the

 5
 

representative, agent or employee of such Seller
having primary responsibility for such Seller’s relationship with the Company
without duty of inquiry.

“Laws”
means any foreign, federal, state and local laws, statutes, regulations, rules,
codes or ordinances enacted, adopted, issued or promulgated by any Governmental
Body (including those pertaining to electrical, building, zoning, subdivision,
land use, environmental and occupational safety and health requirements) or
common law.

“Leased Real Property”
has the meaning ascribed thereto in Section 3.20.

“Licenses” has
the meaning ascribed thereto in Section 3.16.

“Losses” has the
meaning ascribed thereto in Section 9.2.

“Material” means
an amount, individually or in the aggregate, whether arising in a single
transaction or series of related transactions, or requiring a single payment or
series of related payments, involving more than $15,000.

“Material Adverse Effect” means any circumstance, change or
effect that is, or is reasonably likely to be, Material in amount or otherwise
materially adverse to the business, operations, properties or condition (financial or otherwise) of the Company
and its Subsidiaries, taken as a whole.

“Net Purchase Price”
has the meaning ascribed thereto in Section 2.2.

“Net Working Capital”
means the difference between the book value prepared in accordance with GAAP of
the Current Assets and the book value prepared in accordance with GAAP of the
Current Liabilities, in each case, as of the close of business on the Closing
Date. For the purposes of determining Net Working Capital, Current Liabilities
shall not include (i) any liability for Taxes resulting from the Section 338(g)
Election; (ii) any liability for Excluded Taxes; (iii) any liability associated
with the Transfer and Redemption including, without limitation, the alternative
minimum Tax associated therewith which shall be paid by the Sellers in
accordance with Section 7.3; (iv) any liability
for Indebtedness incurred or assumed by the Company or any of its Subsidiaries
after the Closing; and (v) any liability for Sale Bonuses and any related
payroll and withholding Taxes.

“Net Working Capital
Statement” has the meaning ascribed thereto in Section 2.5.

“Non-Competition Agreements”
has the meaning ascribed thereto in Section 2.4.

“Non-ERISA Plans”
has the meaning ascribed thereto in Section 3.10.

“Order”
means any award, injunction, judgment, decree, order, ruling, subpoena or
verdict or other decision issued, promulgated or entered by any Governmental
Body of competent jurisdiction.

“Organizational
Documents” means, with respect to any entity, the certificate of incorporation,
articles of incorporation, by-laws, articles of organization, partnership
agreement,

 6
 

limited liability company agreement, formation
agreement, joint venture agreement, voting agreement and other similar
organizational documents of such entity (in each case, as amended through the
date of this Agreement).

“Outstanding Sellers’
Transaction Costs” has the meaning ascribed thereto in Section 2.4.

“Patent Rights”
means United States and foreign patents, patent applications, continuations,
continuations-in-part, divisions, reissues, patent disclosures, inventions
(whether or not patentable or reduced to practice) and improvements thereto.

“Pay-Off Letters”
has the meaning ascribed thereto in Section 2.4.

“Permitted Encumbrances”
means: (i) liens for Taxes and other governmental charges and assessments
arising in the ordinary course of business which are not yet due and payable;
(ii) liens of landlords and liens of carriers, warehousemen, mechanics and
materialmen and other like liens arising in the ordinary course of business for
sums not yet due and payable; and (iii) other liens or imperfections on
property which are not Material in amount, do not interfere with, and are not
violated by, the consummation of the transactions contemplated by this Agreement,
and do not impair the marketability of, or materially detract from the value of
or materially impair the existing use of, the property affected by such lien or
imperfection.

“Person”
means an individual, a corporation, a partnership, a limited liability company,
a trust, an unincorporated association, a Governmental Body or any agency,
instrumentality or political subdivision of a Governmental Body, or any other
entity or body.

“Prairie Capital”
means, collectively, Prairie Capital III, L.P., a Delaware limited partnership,
and Prairie Capital III QP, L.P., a Delaware limited partnership.

“Pre-Closing Income Tax
Returns” has the meaning ascribed thereto in Section 7.3.

“Preferred Stock”
means the Series A Preferred Stock and the Series B Preferred Stock.

“Protest Notice”
has the meaning ascribed thereto in Section 2.5.

“Purchase Price”
has the meaning ascribed thereto in Section 2.2.

“Sale Bonus Letters”
means those certain Amendment and Restatement of Sale Bonus Letters, each dated
as of the date hereof, among Coffee Bean, Facility LLC, the Seller
Representative and each employee named therein.

“Sale Bonuses”
means the aggregate sale bonuses payable pursuant to the Sale Bonus Letters.

“Second Release Amount”
has the meaning ascribed thereto in Section 2.6.

“Second Release Date”
has the meaning ascribed thereto in Section 2.6.

 7
 

“Section 338(g) Election”
has the meaning ascribed thereto in Section 7.3.

“Seller” or “Sellers” has the meaning ascribed thereto in the preamble.

“Seller Disclosure
Schedule” means the disclosure schedules called for by the
representations and warranties set forth in Article III.

“Seller Indemnitee”
means any Seller and its Affiliates, and their respective successors and
assigns.

“Seller Representative”
has the meaning ascribed thereto in Section 10.2.

“Sellers’ Transaction Costs”
means all expenses, costs and fees (excluding all expenses, costs and fees of
KPMG LLP associated with the audit of the Company’s consolidated financial
statements and preparation of the Company’s and its Subsidiaries’ income Tax
Returns for the fiscal year ended March 31, 2007) incurred by or on behalf of
any Seller at any time or the Company or any of its Subsidiaries at any time at
or prior to the Closing, in connection with the preparation, negotiation, execution
and delivery of this Agreement and the Ancillary Agreements and the
transactions contemplated hereby and thereby and are set forth in Schedule 3
hereto.

“Series A Preferred Stock”
means the Series A 12% Convertible Participating Preferred Stock, par value
$.01 per share, of the Company.

“Series B Preferred Stock”
means the Series B Convertible Participating Preferred Stock, par value $.01
per share, of the Company.

“Shares” has the
meaning ascribed thereto in Section 3.4 and
includes all rights to accrued and unpaid dividends and distributions thereon.

“Shortfall” has
the meaning ascribed thereto in Section 2.5.

“Software” means
computer software programs and software systems, including all databases,
compilations, tool sets, compilers, higher level or “proprietary” languages,
and related documentation and materials, whether in source code, object code or
human readable form.

“Straddle Period”
means any taxable year or period beginning before and ending after the Closing
Date.

“Subsidiary”
or “Subsidiaries” means, with
respect to any Person, any corporation, partnership, limited liability company,
joint venture or other legal entity of any kind of which such Person (either
alone or through or together with one or more of its other Subsidiaries) owns,
directly or indirectly, more than 50% of the capital stock or other equity
interests the holders of which are (a) generally entitled to vote for the
election of the board of directors or other governing body of such legal entity
or (b) generally entitled to share in the profits or capital of such legal
entity.

“SvoCo”
means SvoCo, L.P., a Delaware limited partnership.

 8
 

“SvoCo/Prairie
Non-Competition Agreements” has the meaning ascribed thereto in Section 2.4.

“Target Net Working Capital”
means Three Million One Hundred Thousand Dollars ($3,100,000).

“Tax” (and, with
correlative meaning, “Taxes”) means:
(i) any federal, state, local or foreign net income, gross income, gross
receipts, windfall profit, severance, property, production, sales, use,
license, excise, franchise, employment, payroll, withholding, alternative or
add-on minimum, ad valorem, value-added, transfer, stamp, or environmental tax
(including taxes under Code Section 59A), or any other tax, custom, duty,
governmental fee or other like assessment or charge of any kind whatsoever,
together with any interest or penalty, addition to tax or additional amount
imposed by any Governmental Body; and (ii) any liability of the Company or any
of its Subsidiaries for the payment of amounts with respect to payments of a
type described in clause (i) as a result of being a member of an affiliated,
consolidated, combined or unitary group, or as a result of any obligation of
the Company or any of its Subsidiaries under any Tax Sharing Agreement or Tax
indemnity arrangement; provided, however, for purposes of this Agreement, “Taxes”
shall not include any Excluded Taxes.

“Tax Return”
means any return, report or similar statement required to be filed with respect
to any Tax (including any attached schedules), including, without limitation,
any information return, claim for refund, amended return or declaration of
estimated Tax.

“Tax Sharing Agreement”
means any written agreement for the allocation or payment of Tax liabilities or
payment for Tax benefits with respect to a consolidated, combined or unitary
Tax Return which Tax Return includes or included the Company or any of its
Subsidiaries.

“Third Party Notice”
has the meaning ascribed thereto in Section 9.5.

“Third Release Amount”
has the meaning ascribed thereto in Section 2.6.

“Third Release Date”
has the meaning ascribed thereto in Section 2.6.

“Threshold” has
the meaning ascribed thereto in Section 9.3.

“Trademarks”
means United States, state and foreign trademarks, service marks, Internet
domain names, Internet and WorldWide Web URLs, logos, trade dress and trade
names (including all assumed or fictitious names under which the Company or any
of its Subsidiaries is conducting business or has within the previous five (5)
years conducted business), whether registered or unregistered, and pending
applications to register the foregoing.

“Trade
Secrets” means all trade secrets and confidential business
information (including confidential ideas, research and development, know-how,
methods, formulae, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and
supplier lists, pricing and cost information, and business and marketing plans
and proposals).

 9
 

“Transfer and Redemption”
mean the contribution of the Facility by Coffee Bean to Facility LLC, the
issuance of membership interests in Facility LLC to Coffee Bean, the assignment
of membership interests in Facility LLC by Coffee Bean to the Company, and the
transfer of membership interests in Facility LLC by the Company to the holders
of Series A Preferred Stock in partial redemption of their shares of Series A
Preferred Stock.

“Transfer Taxes”
means sales, use, transfer, real property transfer, recording, documentary,
stamp, registration and stock transfer Taxes and any similar Taxes.

“Treasury
Regulations” means the federal income Tax regulations promulgated
under the Code.

“Unaudited Balance Sheet”
has the meaning ascribed thereto in Section 3.7.

“Unaudited Financial
Statements” has the meaning ascribed thereto in Section 3.7.

“WARN” has the
meaning ascribed thereto in Section 3.24.

1.2                     Construction.  For the purposes of this Agreement, except as
otherwise expressly provided herein or unless the context otherwise
requires:  (a) the meaning assigned to
each term defined herein shall be equally applicable to both the singular and
the plural forms of such term and vice versa, and words denoting either gender
shall include both genders as the context requires; (b) where a word or phrase
is defined herein, each of its other grammatical forms shall have a
corresponding meaning; (c) the terms “hereof,” “herein,” “hereunder,” “hereby”
and “herewith” and words of similar import shall, unless otherwise stated, be
construed to refer to this Agreement as a whole and not to any particular
provision of this Agreement; (d) when a reference is made in this Agreement to
an Article, Section, paragraph, Exhibit or Schedule, such reference is to an
Article, Section, paragraph, Exhibit or Schedule to this Agreement unless otherwise
specified; (e) the word “include,” “includes,” and “including” when used in
this Agreement shall be deemed to be followed by the words “without limitation,”
unless otherwise specified; and (f) all accounting terms used and not defined
herein have the respective meanings given to them under GAAP.

ARTICLE
II

PURCHASE AND SALE

2.1                     Purchase
and Sale.  At the Closing, on the
terms and subject to the conditions set forth in this Agreement, and in
reliance on the respective representations and warranties of the parties
hereto, the Sellers shall sell, transfer, assign, convey and deliver to the
Buyer, and the Buyer shall purchase from the Sellers, all right, title and
interest in and to the Shares.

2.2                     Purchase
Price.  The consideration to be paid
by the Buyer to the Sellers for the Shares shall be an aggregate amount equal
to (x) Twenty Two Million Seventy-Five Thousand Dollars ($22,075,000) (the “Purchase Price”), minus (y) the aggregate
Indebtedness of the Company and its Subsidiaries outstanding as at the Closing
Date (such amount, the “Net  Purchase Price”), subject to adjustment as
provided in Section 2.5.

 

 10

2.3                     Closing
Date.  The consummation of the
transactions contemplated by this Agreement (the “Closing”) shall take place at the offices of Anglin,
Flewelling, Rasmussen, Campbell & Trytten LLP, 199 S. Los Robles Avenue,
Pasadena, California 91101, at 10:00 a.m. (Pacific Time) on the date hereof.

2.4                     Closing
Deliveries.

(a)           Deliveries
by the Sellers at the Closing.  At
the Closing, the Sellers shall deliver or cause to be delivered to the Buyer
the following:

(i)          certificates evidencing the Shares,
duly endorsed in blank or accompanied by duly executed stock powers;

(ii)         an escrow agreement, in the form of Exhibit
A hereto, dated the Closing Date (the “Escrow
Agreement”), duly executed by each of the parties thereto (other
than the Buyer);

(iii)        a payoff letter from each holder of
Indebtedness of the Company and each of its Subsidiaries (each, an “Indebtedness Holder”), (A) indicating that
upon payment of a specified amount, such Indebtedness shall be paid in full
and, if applicable, such holder shall release its security interest against the
assets of the Company or its Subsidiaries and/or against the Shares, and (B)
authorizing the Buyer to file Uniform Commercial Code termination statements,
or such other documents or endorsements necessary to release of record such
security interests of all such holders, and evidence the release or discharge
of such financing statements, judgments or other Encumbrances on or against the
Shares and/or the assets of the Company or any of its Subsidiaries (each, a “Pay-Off Letter”);

(iv)        an opinion of counsel to SvoCo and the
Company, in a form reasonably acceptable to Buyer, addressed to the Buyer and
dated as of the Closing Date;

(v)         copies of the certificate of
incorporation (or formation) of the Company and Coffee Bean certified as of a
recent date by the Secretary of State of the jurisdiction of each such Person’s
incorporation (or formation);

(vi)        copies of the certificate of good
standing of the Company and Coffee Been issued as of recent date by the
Secretary of State of the jurisdiction of each such Person’s organization and
of each jurisdiction in which such Person is qualified to do business;

(vii)       in the case of each Seller that is an
entity, a certificate of the secretary or an assistant secretary of such
Seller, dated the Closing Date, in form and substance reasonably satisfactory
to the Buyer, as to: (A) the resolutions of the board of directors or other
authorizing body (or a duly authorized committee thereof) of such Seller
authorizing the execution, delivery, and performance of this Agreement and the
transactions contemplated hereby; and (B) incumbency

 11
 

and signatures
of the officers of such Seller executing this Agreement or any other agreement
or document executed by such Seller contemplated by this Agreement;

(viii)      a certificate of the secretary or an
assistant secretary of each of the Company and Coffee Bean, dated the Closing
Date, in form and substance reasonably satisfactory to Buyer, as to: (A) the
certificate of incorporation of such Person; (B) the bylaws of such Person; (C)
any resolutions of the board of directors (or a duly authorized committee
thereof) of such Person authorizing the execution, delivery, and performance of
this Agreement and the transactions contemplated hereby; and (D) incumbency and
signatures of the officers of such Person executing this Agreement or any other
agreement or document executed by such Person contemplated by this Agreement;

(ix)         a facility lease, in the form of Exhibit
B hereto, dated the Closing Date, between Facility LLC, as lessor, and
Coffee Bean, as lessee (the “Facility Lease”),
duly executed by the parties thereto;

(x)          an employment agreement, dated the
Closing Date, between Coffee Bean and each of the Persons set forth in Schedule
4 hereto (each, an “Employment Agreement”),
duly executed by the parties thereto;

(xi)         a
nondisclosure/non-competition/non-solicitation agreement, in the form of Exhibit
C hereto, dated the Closing Date, between the Buyer and each of SvoCo and
Prairie Capital (the “SvoCo/Prairie
Non-Competition Agreements”), duly
executed by the parties thereto;

(xii)        a
nondisclosure/non-competition/non-solicitation agreement, in the form of Exhibit
D hereto, dated the Closing Date, between the Buyer and each of Margaret
Crow and Patrick Criteser (together with the SvoCo/Prairie Non-Competition
Agreements, the “Non-Competition Agreements”),
duly executed by the parties thereto;

(xiii)       the resignations, effective as of the
Closing Date of each director and officer of the Company and Coffee Bean other
than those whom the Buyer shall have specified in writing prior to the Closing;

(xiv)      all Authorizations obtained by any of the
Sellers, the Company or Coffee Bean with respect to the consummation of the
transactions contemplated by this Agreement; and

(xv)         evidence that all outstanding options
to purchase shares of Common Stock shall have been cancelled in accordance with
the terms of the Coffee Bean Holding Co., Inc. 2004 Stock Option Plan.

 12
 

(b)           Deliveries by the Buyer at the Closing.  At the Closing, the Buyer shall deliver to
the Sellers the following:

(i)          the Net Purchase Price, adjusted pursuant to Section 2.5(a) (the “Closing Net Purchase Price”), less (w) the
Escrow Deposit to be placed in escrow pursuant to Section 2.6, (x) the aggregate amount of the Sellers’
Transaction Costs which have not been paid prior to the Closing (the “Outstanding Sellers’ Transaction Costs”),
(y) the aggregate amount of the Closing Date Bonuses, and (z) the aggregate
amount of the employer’s portion of the Medicare tax with respect to the
Closing Date Bonuses (the resulting amount being referred to herein as the “Closing Payment”), by wire transfer of
immediately available funds to the accounts and in the amounts set forth in Schedule
5;

(ii)         a copy of the certificate of
incorporation of the Buyer certified as of a recent date by the Secretary of
State of the State of Delaware;

(iii)        a copy of the certificate of good
standing of the Buyer issued as of recent date by the Secretary of State of the
State of Delaware;

(iv)        a certificate of the secretary or an
assistant secretary of the Buyer, dated the Closing Date, in form and substance
reasonably satisfactory to the Sellers, as to: (A) the certificate of
incorporation of the Buyer; (B) the bylaws of the Buyer; (C) any resolutions of
the board of directors (or a duly authorized committee thereof) of the Buyer
authorizing the execution, delivery, and performance of this Agreement and the
transactions contemplated hereby; and (D) incumbency and signatures of the
officers of the Buyer executing this Agreement or any other agreement or
document executed by the Buyer contemplated by this Agreement;

(v)           the Escrow Agreement, duly executed
by the Buyer; and

(vi)          an opinion of counsel to the Buyer, in
a form reasonably acceptable to Sellers, addressed to the Sellers and dated as
of the Closing Date.

(c)           Pay-off
of Indebtedness.  At the Closing, the
Buyer will deliver to each Indebtedness Holder a dollar amount equal to the “pay-off”
amount set forth in the Pay-Off Letter delivered by such Indebtedness Holder,
and such payment will be by wire transfer of immediately available funds to the
accounts designated by such Indebtedness Holder in the Pay-Off Letter.

(d)           Outstanding
Sellers’ Transaction Costs and Closing Date Bonuses.  The Sellers hereby instruct and direct the
Buyer, on behalf of each of the Sellers, to pay at the Closing, by wire
transfer of immediately available funds, out of the Closing Net Purchase Price,
the following: (i) to the Seller Representative, an amount equal to the
aggregate Outstanding Sellers’ Transaction Costs; and (ii) to Coffee Bean, an
amount equal to (A) the aggregate Closing Date Bonuses; and (B) the aggregate
amount of the employer’s portion of the Medicare tax with respect to the
Closing Date Bonuses.  Upon receipt of the
foregoing, the Seller Representative

 13
 

shall disburse such funds in payment of the Outstanding Sellers’
Transaction Costs, and the Buyer shall cause Coffee Bean to pay the Closing
Date Bonuses, net of all applicable withholding and payroll Taxes.

2.5           Net
Working Capital Adjustment.

(a)           Closing
Adjustment.  At least three (3)
Business Days prior to the Closing Date, the Sellers shall prepare in good
faith and deliver to the Buyer an estimated consolidated balance sheet of the
Company as of the close of business on the Closing Date (the “Estimated Closing Date Balance Sheet”) and
a statement (the “Estimated Net Working
Capital Statement”) setting forth the estimated Net Working Capital
based on the Estimated Closing Date Balance Sheet (the “Estimated Closing Net Working Capital”).  The Estimated Net Working Capital Statement
and the calculation of Estimated Closing Net Working Capital shall be based on
the Books and Records, and shall be accompanied by (i) a certificate signed by
the Seller Representative on behalf of the Sellers certifying that the
Estimated Closing Net Working Capital and Closing Net Purchase Price adjustment
calculations were prepared in good faith based on the Books and Records and the
Financial Statements and in accordance with the definitions of Current Assets,
Current Liabilities and Estimated Closing Net Working Capital, and consistent
with past practice of the Company and its Subsidiaries, and (ii) detailed
supporting documents for the calculation of the Estimated Closing Net Working Capital.
The Closing Net Purchase Price shall be increased or decreased, respectively,
dollar-for-dollar by the amount that the Estimated Closing Net Working Capital
is more than or less than the Target Net Working Capital.

(b)           Net
Working Capital Statement.  As soon
as practicable, but not later than thirty (30) days following the Buyer’s
receipt of the Company’s audited consolidated financial statements for the
fiscal year ended March 31, 2007 (the “2007
Audited Financial Statements”), together with an unqualified opinion
thereon, from KPMG LLP, the Company’s independent accountants, the Buyer shall
prepare in good faith and deliver to the Seller Representative a consolidated
balance sheet of the Company as of the close of business on the Closing Date
(the “Closing Date Balance Sheet”)
and a statement (the “Net Working Capital
Statement”) setting forth the Net Working Capital.  The Net Working Capital Statement and the
calculation of Net Working Capital shall be based on the Books and Records, and
shall be accompanied by (i) a certificate signed by the Chief Financial Officer
of the Buyer certifying that the Net Working Capital was prepared in good faith
based on the Books and Records and the 2007 Audited Financial Statements and in
accordance with the definitions of Current Assets, Current Liabilities and Net
Working Capital, and consistent with past practice of the Company and its
Subsidiaries, and (ii) detailed supporting documents for the calculation of the
Net Working Capital.  All expenses, costs
and fees of KPMG LLP associated with the audit of the Company’s consolidated
financial statements and preparation of the Company’s and its Subsidiaries’
income Tax Returns for the fiscal year ended March 31, 2007 shall be borne by
the Company and shall be accrued as a Current Liability on the Estimated
Closing Date Balance Sheet and the Closing Date Balance Sheet; provided, that
if, after the Closing Date, the Buyer requests that the auditors perform any
additional services outside the scope of those generally performed in
connection with the Company’s annual audit and delivery of an unqualified
opinion, the Buyer shall be liable to the extent of any additional expenses,
costs and fees associated with such additional services.

 14
 

(c)           Protest
Notice. Within thirty (30) days following delivery of the Net Working
Capital Statement, the Seller Representative may deliver written notice (the “Protest Notice”) to the Buyer of any
disagreement that the Sellers may have as to the Net Working Capital
Statement.  Such Protest Notice shall set
forth in reasonable detail the amount(s) in dispute. The failure of the Seller
Representative to deliver such Protest Notice within the prescribed time period
shall constitute the Sellers’ acceptance of the Net Working Capital as set
forth in the Net Working Capital Statement delivered by the Buyer.  Upon receipt of the Net Working Capital
Statement, the Seller Representative and its representatives shall be given
reasonable on-site access to, and the Buyer shall make available, during reasonable
business hours, upon reasonable advance notice, for the purpose of verifying
the Net Working Capital Statement: (i) all of the Books and Records, work
papers, trial balances and similar materials relating to the Net Working
Capital Statement; and (ii) the Buyer’s personnel and accountants involved in
the calculation of the Net Working Capital. 
Any item included in the Net Working Capital Statement and the
calculation of the Net Working Capital that is not objected to by the Seller
Representative in the manner and within the time period set forth in this Section 2.5(c) shall be deemed to be
accepted and any amounts included within such item shall be deemed to be final,
binding and conclusive on all parties.

(d)           Resolution
of Protest. Upon receipt of the Protest Notice, the Buyer and the Seller
Representative shall use good faith efforts to resolve any dispute involving
the determination of the Net Working Capital. 
If the Buyer and the Seller Representative are unable to resolve any
disagreement as to the Net Working Capital Statement within thirty (30) days
following the Buyer’s receipt of the Protest Notice, then the dispute will be
promptly referred to an independent certified public accounting firm of
national standing which has not regularly provided services to the Buyer,
SvoCo, Prairie, the Company or any of its Subsidiaries in the last three (3)
years (the “Accountants”) for
final arbitration within forty-five (45) days after the matter is submitted to
the Accountants.  The Buyer and the
Sellers agree that arbitration shall take place in Portland, Oregon, unless
agreed otherwise at the time of arbitration by the Buyer and the Seller
Representative. The Accountants shall then diligently conduct the arbitration
proceeding in accordance with rules and procedures mutually agreed upon by the
Buyer and the Seller Representative and, if the Buyer and the Seller
Representative are unable to mutually agree upon such rules and procedures,
such rules and procedures as the Accountants may determine.  The decision of the Accountants shall be
final and conclusive upon the Buyer and the Sellers, and a judgment upon the
award may be entered in any court having jurisdiction.  The Accountants shall act as an arbitrator to
determine, based solely on presentations by the Buyer and the Seller
Representative, and not by independent review, only those amounts still in
dispute.  The Buyer and the Sellers agree
to execute, if requested by the Accountants, a reasonable engagement letter.  The fees and expenses of the Accountants
shall be divided equally between the Buyer, on the one hand, and the Sellers,
on the other hand.  The term “Final Net Working Capital Statement,” as
used in this Agreement, shall mean the definitive Net Working Capital Statement
accepted by the Seller Representative or agreed to by the Seller Representative
and the Buyer in accordance with Section
2.5(c) or the definitive Net Working Capital Statement resulting
from the determinations made by the Accountants in accordance with this Section 2.5(d).

 15
 

(e)           Payment. Within five (5) Business Days of the
determination of the Final Net Working Capital Statement:

(i)          if the Estimated Closing Net Working Capital is greater
than the Net Working Capital set forth on the Final Net Working Capital
Statement (such difference being a “Shortfall”),
then (A) the amount of such Shortfall up to and including $500,000 shall be
released from the Escrow Account and paid to the Buyer, by wire transfer of
immediately available funds to an account designated by the Buyer (and the Seller
Representative agrees to execute joint instructions, and take all other
actions, necessary to cause such release), and (B) the amount of such Shortfall
in excess of $500,000, if any, shall be paid immediately by the Sellers to the
Buyer by wire transfer of immediately available funds to an account designated
by the Buyer; or

(ii)         if the Net Working Capital set forth on
the Final Net Working Capital Statement is greater than the Estimated Closing
Net Working Capital, then the Buyer shall pay to the Seller Representative such
excess, by wire transfer of immediately available funds to the account
designated by the Seller Representative.

2.6           Escrow.

(a)           There
shall be deposited in escrow with Union Bank of California, N.A. (the “Escrow Agent”) an amount equal to Two
Million One Hundred Thousand Dollars ($2,100,000) (the “Escrow Deposit”) as part of the
consideration for the Shares.  The Escrow
Deposit shall be delivered by the Buyer to the Escrow Agent at the Closing and
shall be held and delivered by the Escrow Agent in an account (the “Escrow Account”) in accordance with the
terms and provisions of the Escrow Agreement. 
Any fees and expenses payable to the Escrow Agent pursuant to the Escrow
Agreement shall be divided equally between the Buyer, on the one hand, and the
Sellers, on the other hand.

(b)           The
Escrow Fund shall be released to the Seller Representative, and Buyer agrees to
execute joint instructions, and take all other actions, necessary to cause any
such release, as follows:

(i)          first, upon determination of the Net
Working Capital pursuant to Section 2.5
and payment of any Shortfall or excess amounts payable thereunder (the date of
such payment being referred to herein as the “First
Release Date”), an amount (the “First
Release Amount”) equal to (x) $500,000 less (y) the sum of (A) the
amount of any Shortfall paid to the Buyer pursuant to Section 2.5(e)(i)(A); (B) the aggregate
dollar amount of any indemnification claims paid out of the Escrow Fund on or
prior to the First Release Date; and (C) the aggregate dollar amount of any
indemnification claims (as shown in the notices of such claims provided under
the Escrow Agreement) pending as of the First Release Date, by wire transfer of
immediately available funds to an account designated by the Seller
Representative; provided, however, there shall be no release from the Escrow
Fund to the Seller Representative on the First Release

 16
 

Date if (1)
the First Release Amount is a negative number, or (2) any Buyer Indemnitee has
given notice of a claim under the Escrow Agreement with respect to which it is
not reasonably able to specify the amount of Losses and such claim is then
pending;

(ii)         second, on the first anniversary of the
Closing Date (the “Second Release Date”),
an amount (the “Second Release Amount”)
equal to (x) $1,125,000 less (y) the sum of (A) the First Release Amount; (B)
the aggregate dollar amount of any indemnification claims paid out of the
Escrow Fund on or prior to the Second Release Date; and (C) the aggregate
dollar amount of any indemnification claims (as shown in the notices of such
claims provided under the Escrow Agreement) pending as of the Second Release
Date, by wire transfer of immediately available funds to an account designated
by the Seller Representative; provided, however, there shall be no release from
the Escrow Fund to the Seller Representative on the Second Release Date if (1)
the Second Release Amount is a negative number, or (2) any Buyer Indemnitee has
given notice of a claim under the Escrow Agreement with respect to which it is
not reasonably able to specify the amount of Losses and such claim is then
pending; and

(iii)        third, on the date which is eighteen
(18) months after the Closing Date (the “Third
Release Date”), an amount (the “Third
Release Amount”) equal to (x) the remaining Escrow Fund, if any,
less (y) the aggregate dollar amount of any indemnification claims (as shown in
the notices of such claims provided under the Escrow Agreement) pending as of
the Third Release Date, by wire transfer of immediately available funds to an
account designated by the Seller Representative; provided, however, if any
Buyer Indemnitee has given notice of a claim under the Escrow Agreement with
respect to which it is not reasonably able to specify the amount of Losses and
such claim is then pending, the Escrow Agent shall retain the remaining Escrow
Fund until it receives joint written instructions of the Buyer and the Seller
Representative or a final non-appealable order of a court of competent
jurisdiction as provided in the Escrow Agreement, upon which the Escrow Agent
shall pay the remaining Escrow Fund, if any, to the Seller Representative in
accordance with this paragraph.

Article
III

REPRESENTATIONS AND WARRANTIES

AS TO THE COMPANY

Each of the Sellers and the Company hereby represent
and warrant to the Buyer as follows:

3.1                     Organization
and Qualification.

(a)           The
Company is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, with all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as it is now being

 17
 

conducted.  The
Company is qualified or licensed to do business and is in good standing in
every jurisdiction where the nature of the business conducted by it or the
properties owned or leased by it requires qualification except where such
failure to be so qualified or licensed or in good standing would not have a
Material Adverse Effect.  The Sellers
have made available to the Buyer complete and correct copies of the
Organizational Documents of the Company.

(b)           Coffee
Bean is a corporation duly organized, validly existing and in good standing
under the laws of the State of Oregon, with all requisite corporate power and
authority to own, operate and lease its properties and to carry on its business
as it is now being conducted.  Coffee
Bean is qualified or licensed to do business and is in good standing in every
jurisdiction where the nature of the business conducted by it or the properties
owned or leased by it requires qualification except where such failure to be so
qualified or licensed or in good standing would not have a Material Adverse
Effect.  The Sellers have made available
to the Buyer complete and correct copies of the Organizational Documents of
Coffee Bean.

3.2           Authorization.  The Company has the requisite legal capacity,
power and authority (including full corporate power and authority) to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement by the Company, the
performance by the Company of its obligations hereunder, and the consummation
by the Company of the transactions contemplated hereby, have been duly
authorized by the Company.  No other
action (corporate or otherwise) on the part of the Company or Coffee Bean is
necessary to authorize the execution and delivery of this Agreement or the
consummation of the transactions contemplated hereby.  This Agreement has been duly and validly
executed and delivered by the Company and constitutes a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except to the extent that such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights generally, and
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

3.3                     No
Violation.  Except as set forth in Schedule
3.3, neither the execution and delivery of this Agreement by the Company,
the performance by the Company of its obligations hereunder, nor the
consummation by the Company of the transactions contemplated hereby will: (a)
violate, conflict with or result in any breach of any provision of the
Organizational Documents of the Company or Coffee Bean; (b) violate, conflict
with or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under the terms, conditions or
provisions of any note, bond, mortgage, indenture or deed of trust, or any
material license, lease or agreement to which any Seller, the Company or Coffee
Bean are a party; or (c) violate any order, writ, judgment, injunction, decree,
statute, rule or regulation of any court or Governmental Body applicable to the
Company or Coffee Bean, except, in the case of clause (b), as would not,
individually or in the aggregate, have a Material Adverse Effect.

3.4           Capitalization.

(a)           The
authorized capital stock of the Company consists of 101,250 shares of Series A
Preferred Stock, 240,000 shares of Series B Preferred Stock, and 528,750 shares
of

 18
 

Common Stock. 
As of the date hereof (after giving effect to the Transfer and
Redemption), the Company has 56,250 shares of Series A Preferred Stock, 80,000
shares of Series B Preferred Stock, and 111,000 shares of Common Stock issued
and outstanding (the “Shares”), all
of which have been validly issued, are fully paid and non-assessable and were
not issued in violation of any preemptive rights.  Except as set forth in Schedule 3.4(a),
there are no options, warrants, calls, subscriptions, conversion or other
rights, agreements or commitments obligating the Company to issue any
additional shares of capital stock or any other securities convertible into,
exchangeable for or evidencing the right to subscribe for any shares of capital
stock of the Company.  No accrued and
unpaid dividends on the Shares have been stripped from the Shares and assigned
or transferred to any Person.

(b)           The authorized capital stock of Coffee Bean consists of
1,000 shares, all of which are designated common stock, no par value per share
(“CBI Common Stock”).  As of the date hereof, Coffee Bean has 100
shares of CBI Common Stock issued and outstanding (the “CBI Shares”), all of which have been
validly issued, are fully paid and non-assessable and were not issued in
violation of any preemptive rights.  There
are no options, warrants, calls, subscriptions, conversion or other rights,
agreements or commitments obligating Coffee Bean to issue any additional shares
of capital stock or any other securities convertible into, exchangeable for or
evidencing the right to subscribe for any shares of capital stock of Coffee
Bean.  The Company is the sole record and
beneficial owner of, and has good and valid title to, the CBI Shares, free and
clear of all Encumbrances except as set forth in Schedule 3.4(b).

3.5                     Subsidiaries and Equity Investments.  Except for the CBI Shares and the Facility
LLC (the membership interests of which shall be transferred to the holders of
Series A Preferred Stock pursuant to the Transfer and Redemption), neither the
Company nor Coffee Bean has any Subsidiaries or any direct or indirect equity
ownership in any Person.

3.6                     Consents and Approvals.  Except as set forth in Schedule 3.6,
no filing or registration with, no notice to and no permit, authorization,
consent or approval of any third party or any Governmental Body is necessary
for the consummation by the Company and Coffee Bean of the transactions
contemplated by this Agreement.

3.7           Financial Statements.

(a)           Schedule 3.7(a) contains copies of the following
financial statements (collectively, the “Financial
Statements”):

(i)          The audited
consolidated balance sheet of the Company as of March 25, 2006, and the related
statements of income, changes in stockholders’ equity and cash flows for the
periods then ended (the “2006 Audited
Financial Statements”); and

(ii)         The unaudited
consolidated balance sheet (the “Unaudited
Balance Sheet”) of the Company as
of March 31, 2007 (the “Balance Sheet Date”)
and the related statements of income, changes in stockholders’ equity and cash
flows for the periods then ended (the “Unaudited
Financial Statements”).

 19
 

(b)           The Financial Statements: (i) were prepared in accordance
with generally accepted accounting principles applied on a consistent basis (“GAAP”) throughout the periods covered
thereby, except as otherwise noted thereon or disclosed in Schedule 3.7(b);
and (ii) present fairly in all material respects the consolidated financial
position and results of operations of the Company as of such dates and for the
periods then ended.

3.8           Absence of Undisclosed Liabilities.  Except for matters relating to the
transactions contemplated by this Agreement, there are no liabilities or
financial obligations of the Company or any of its Subsidiaries other than
liabilities and obligations: (a) provided for or reserved against in the
Financial Statements; (b) arising after the Balance Sheet Date in the ordinary
course of business; (c) which are not Material to the consolidated financial
position of the Company; or (d) which are disclosed in Schedule 3.8.

3.9           Absence of Certain Changes.

(a)           Except as disclosed in Schedule 3.9(a), and except
for matters relating to the transactions contemplated by this Agreement, since
the Balance Sheet Date:

(i)          there has been no
Material Adverse Effect; and

(ii)         no Material damage,
destruction, loss or claim, whether or not covered by insurance, or
condemnation or other taking adversely affecting any of the assets, business,
operations or condition of the Company or any of its Subsidiaries has occurred.

(b)           Except as set forth in Schedule 3.9(b), since the
Balance Sheet Date, each of the Company and its Subsidiaries has conducted its
business only in the ordinary course and in conformity with past practice and,
without limiting the generality of the foregoing, has not:

(i)          sold, leased (as
lessor), transferred or otherwise disposed of, or mortgaged or pledged, or
imposed or suffered to be imposed any Encumbrance (other than a Permitted
Encumbrance) on, any of the assets reflected on the Unaudited Balance Sheet or
any assets acquired by the Company or any of its Subsidiaries after the Balance
Sheet Date, except for inventory and non-Material amounts of personal property
sold or otherwise disposed of in the ordinary course of business consistent
with past practice;

(ii)         canceled any Material
debts owed to or claims held by the Company or any of its Subsidiaries
(including the settlement of any claims or litigation) or waived any other
rights held by the Company or any of its Subsidiaries other than in the
ordinary course of business consistent with past practice;

(iii)        paid any claims
against the Company or any of its Subsidiaries (including the settlement of any
claims and litigation against the Company or any of its Subsidiaries or the
payment or settlement of any obligations or liabilities of the Company or any
of its Subsidiaries) other than in the ordinary course of business consistent
with past practice;

 

 20

(iv)        created, incurred or
assumed, or agreed to create, incur or assume, any indebtedness for borrowed
money or entered into, as lessee, any capitalized lease obligations (as defined
in Statement of Financial Accounting Standards No. 13);

(v)         accelerated or delayed
collection of notes or accounts receivable in advance of or beyond their
regular due dates or the dates when the same would have been collected in the
ordinary course of business consistent with past practice;

(vi)        delayed or accelerated
payment of any account payable or other liability of the Company or any of its
Subsidiaries beyond or in advance of its due date or the date when such
liability would have been paid in the ordinary course of business consistent
with past practice;

(vii)       allowed the levels of
raw materials, supplies, work-in-process or other materials included in the
inventory of the Company or any of its Subsidiaries to vary in any material
respect from the levels customarily maintained;

(viii)      acquired any real
property or undertaken or committed to undertake capital expenditures exceeding
$50,000 in the aggregate;

(ix)         made, or agreed to
make, any payment of cash or distribution of assets to the Company (in the case
of payments or distributions by CBI), any Seller or any Seller’s Affiliates;

(x)          instituted any
increase in (A) any annual compensation payable to any officer or employee of
the Company or any of its Subsidiaries in excess of $15,000 (whether payable in
a single payment or series of related payments), or (B) any profit-sharing,
bonus, incentive, deferred compensation, insurance, pension, retirement,
medical, hospital, disability, welfare or other benefits made available to
officers or employees of the Company or any of its Subsidiaries;

(xi)         made any change in
the accounting principles and practices used by the Company or any of its
Subsidiaries from those applied in the preparation of the Financial Statements;

(xii)        entered into or
become committed to enter into any other Material transaction except in the
ordinary course of business; or

(xiii)       prepared or filed any
Tax Return inconsistent with past practice or, on any such Tax Return, taken
any position, made any election, or adopted any method that is inconsistent
with positions taken, elections made or methods used in preparing or filing
similar Tax Returns in prior periods (including, without limitation,
inconsistent positions, elections or methods which would have the effect of
deferring income to periods for which the Buyer is liable pursuant to

 21
 

Section 7.3 or accelerating
deductions to periods for which the Sellers are liable pursuant to Section 7.3).

3.10                   Employee Benefit Plans.

(a)           Schedule 3.10(a) sets forth a true and complete
list of each “employee benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), applied without regard to the
exceptions from coverage contained in Sections 4(b)(4) or 4(b)(5) of ERISA),
and any related trust, as to which the Company or any of its Subsidiaries has
any obligation or liability, contingent or otherwise (collectively, “Employee Benefit Plans”).  Except as disclosed on Schedule 3.10(a),
none of the Employee Benefit Plans listed on Schedule 3.10(a) is a “multiemployer
plan” as defined in Section 3(37) of ERISA. 
True, correct and complete copies of the following documents, to the
extent applicable, with respect to each of the Employee Benefit Plans have been
made available to the Buyer by the Sellers: (i) the Employee Benefit Plan and
related trust documents, and all amendments thereto; (ii) the most recent Form
5500 and accompanying schedules; (iii) the last Internal Revenue Service
determination letter; and (iv) the current summary plan descriptions and
modifications thereto.

(b)           Each Employee Benefit Plan listed on Schedule 3.10(a)
which is intended to qualify under Section 401(a) of the Code has received a
favorable determination or opinion letter from the Internal Revenue Service (or
a request for a determination letter has been submitted within the applicable
remedial amendment period under Section 410(b) of the Code and is pending) that
such Employee Benefit Plan is so qualified under the Code, and, to the
knowledge of the Sellers and the Company, no circumstance exists which might
reasonably be expected to cause such Employee Benefit Plan to cease being so
qualified.  Each Employee Benefit Plan
listed on Schedule 3.10(a) complies and has been maintained, in all
material respects, with its terms and all requirements of law and regulations
applicable thereto, and there has been no notice issued by any Governmental
Body questioning or challenging such compliance.  There are no actions, suits or claims (other
than routine claims for benefits) pending or, to the knowledge of the Sellers
and the Company, threatened involving such Employee Benefit Plans or the assets
of such Employee Benefit Plans.  Neither
the Company nor any of its Subsidiaries has any obligations under any welfare
plan or otherwise to provide health or death benefits to or in respect of
former employees of the Company or any of its Subsidiaries, except as
specifically required by the health care continuation requirements of Part 6 of
Subtitle B of Title I of ERISA or comparable applicable state law.  Neither the Company nor any of its
Subsidiaries maintains any pension plan which is subject to Title IV of ERISA
and which, if terminated on the Closing Date, would impose any liability on the
Company or any of its Subsidiaries. 
Neither the Company nor any of its Subsidiaries has any Material
liability, whether direct, indirect, contingent or otherwise: (i) on account of
any violation of the health care requirements of Part 6 of Subtitle B of Title
I of ERISA or Section 4980B of the Code; (ii) under Section 502(1) of ERISA or
Section 4975 of the Code; (iii) under Section 302 of ERISA or Section 412 of
the Code; or (iv) under Title IV of ERISA.

(c)           Schedule 3.10(c) sets forth a
true and complete list of each of the following pursuant to which the Company
or any of its Subsidiaries may be required to make payments to or for the
benefit of employees or former employees of the Company or any of its

 22
 

Subsidiaries that, singly or in the aggregate for each
arrangement, are reasonably expected to exceed $15,000, other than the Employee
Benefit Plans listed in Schedule 3.10(a): all employee benefit programs,
arrangements, or payroll practices, including those involving: retirement or
savings; bonus, incentive, equity or equity-based compensation; consulting,
deferred compensation or other compensation agreements; sick leave, vacation
pay, or salary continuation arrangements; hospitalization or other medical,
disability, life or other insurance; stock ownership, stock purchase, or stock
option programs; scholarships; severance pay; tuition reimbursement; each employee
collective bargaining agreement and each other agreement, commitment, policy or
arrangement, whether written or oral, with or for the benefit of any current or
former officer, director, employee or consultant, including, without
limitation, each employment, supplemental pension, termination or consulting
agreement or arrangement and any agreements or arrangements associated with a
change in control (“Non-ERISA Plans”).
True and complete copies of all written Non-ERISA Plans and of all related
insurance and annuity policies and contracts and other documents with respect
to each Non-ERISA Plan have been made available to the Buyer by the Sellers. Schedule
3.10(c) contains a true and complete description of all oral Non-ERISA
Plans. No amounts will become payable under any Non-ERISA Plan as a result of
the Closing for which the Buyer will bear any liability.

(d)           Schedule 3.10(d) sets forth a true and complete
list of all compensation, whether in cash, equity (including the acceleration
of any equity instruments subject to vesting restrictions) or otherwise, that
is paid or will become payable to any employee of the Company or any of its
Subsidiaries (whether such amounts are payable by the Company or such
Subsidiaries) as a result of, or in connection with, the transactions
contemplated hereby.  In addition, Schedule
3.10(d) sets forth a true and complete list of all equity (including any
equity-related instruments such as options, warrants or stock appreciation
rights) of the Company and its Subsidiaries beneficially owned by any employee
of the Company or any of its Subsidiaries.

3.11                   Brokers’ Fees and Commissions; Sellers’
Transaction Costs.

(a)           Except for Lincoln International, whose fees will be paid
by the Sellers, none of the Sellers, the Company or any of its Subsidiaries, or
any of their respective directors, officers, partners, member, employees or
agents has employed any investment banker, broker or finder in connection with
the transactions contemplated hereby.

(b)           Except for fees and expenses payable pursuant to that
certain Exclusive Listing Agreement, dated June 22, 2006, between Cushman &
Wakefield of Oregon, Inc. and Coffee Bean, as amended, which agreement shall be
assigned to and all liabilities and obligations thereunder assumed by the LLC
pursuant to the Transfer and Redemption and for which neither the Company nor
any of its Subsidiaries shall have any liability or obligation upon such
assignment, none of the Sellers, the Company or any of its Subsidiaries, or any
other Person on behalf of any of the Sellers, the Company or any of its
Subsidiaries, has any liability or obligation to pay any fees or commissions to
any broker, finder, or agent, or any liability or other obligation to any other
Person, with respect to the sale, transfer, or listing for sale or transfer, of
the Facility.

(c)           Except for the Outstanding Sellers’ Transaction Costs
which will be paid at Closing in accordance with Section 2.4(d), none of
the Sellers, the Company or any of its

 23
 

Subsidiaries, or any other Person on behalf of any of
the Sellers, the Company or any of its Subsidiaries has incurred any expenses,
costs of fees in connection with the preparation, negotiation, execution and
delivery of this Agreement and the Ancillary Agreements and the transactions
contemplated hereby and thereby.

3.12                   Contracts.

(a)           Schedule 3.12(a) hereto sets forth a list of all
Contracts to which the Company or any of its Subsidiaries is a party or by
which it is bound, except: (a) any contract that does not require payment by
any party thereto of more than $15,000 in any single payment or series of
related payments; (b) any contract that is terminable by the Company or such
Subsidiary upon thirty (30) days’ notice or less without the payment of any
Material penalty or Material termination fee; (c) any contract entered into
prior to Closing with the Buyer or with any other Person in connection with any
transaction contemplated by this Agreement; (d) purchase and sales orders for
goods and services entered into in the ordinary course of business (other than
contracts or other arrangements associated with limiting commodity price risk
which shall be set forth in Schedule 3.12(a)); and (e) any contract
specifically listed in any other Schedule to this Agreement.

(b)           Schedule 3.12(b) sets forth a list of all Contracts
between the Company or any of its Subsidiaries and any Seller or any Seller’s
Affiliates.

(c)           Except as set forth in Schedule 3.12(c) or in any
other schedule hereto, each of the leases, contracts and other agreements
listed in Schedules 3.10(a), 3.10(c), 3.12(a), 3.12(b),
3.20(b), 3.21(b), 3.22(a), 3.22(b) and 3.22(c)
(collectively, the “Company Agreements”)
constitutes a valid and binding obligation of the Company or its Subsidiary
that is a party thereto and is in full force and effect and (except for those
Company Agreements which shall be terminated on the Closing Date in accordance
with the provisions hereof) will continue in full force and effect after the
Closing, in each case without breaching the terms thereof or resulting in the
forfeiture or impairment of any rights thereunder and without the consent,
approval or act of, or the making of any filing with, any other party.  Each of the Company and its Subsidiaries has
fulfilled and performed its material obligations under each of the Company
Agreements, and neither the Company nor any of its Subsidiaries is in, or to
the Sellers’ and the Company’s knowledge alleged to be in, breach or default
under, nor is there or to the Sellers’ and the Company’s knowledge is there
alleged to be any basis for termination of, any of the Company Agreements and
to the Sellers’ and the Company’s knowledge no other party to any of the
Company Agreements has breached or defaulted thereunder, and no event has
occurred and no condition or state of facts exists which, with the passage of
time or the giving of notice or both, would constitute such a default or breach
by the Company, any of its Subsidiaries or, to the Sellers’ and the Company’s
knowledge, by any such other party. 
Neither the Company nor any of its Subsidiaries is currently
renegotiating any of the Company Agreements or paying liquidated damages in
lieu of performance thereunder.  Complete
and correct copies of each of the Company Agreements have heretofore been made
available to the Buyer by the Sellers.

 24
 

3.13         Taxes.  

(a) (i)
Each of the Company and its Subsidiaries has filed all Tax Returns required to
be filed; (ii) all such Tax Returns are complete and accurate and disclose all
Taxes required to be paid by the Company and its Subsidiaries for the periods
covered thereby and all Taxes shown to be due on such Tax Returns have been
timely paid; (iii) none of the Company or any of its Subsidiaries is currently
the beneficiary of any extension of time within which to file any Tax Return;
(iv) all Taxes (whether or not shown on any Tax Return) owed by the Company or
any of its Subsidiaries have been timely paid; (v) none of the Company or any
of its Subsidiaries has waived or been requested to waive any statute of
limitations in respect of Taxes which waiver currently is in effect; (vi) there
is no action, suit, investigation, audit, claim or assessment pending or, to
the Sellers’ and the Company’s knowledge, proposed or threatened with respect
to Taxes of the Company or any of its Subsidiaries, and no basis exists
therefor; (vii) all deficiencies asserted or assessments made as a result of
any examination of the Tax Returns referred to in clause (i) have been paid in
full; (viii) all Tax indemnity arrangements relating to the Company or any of
its Subsidiaries (other than this Agreement) will terminate prior to the
Closing Date, and neither the Company nor any of its Subsidiaries will have any
liability thereunder on or after the Closing Date; and (ix) there are no liens
for Taxes upon the assets of the Company or any of its Subsidiaries except
liens relating to current Taxes not yet due.

(b)           As
a direct or indirect result of the transactions contemplated by this Agreement,
no payment or other benefit including any payment under a Non-ERISA Plan, and no
acceleration of the vesting of any options, payments or other benefits, will
be, an “excess parachute payment” to a “disqualified individual” as those terms
are defined in Section 280G of the Code and the Treasury Regulations
thereunder. Except as set forth on Schedule 3.13(b), as a direct or
indirect result of the transactions contemplated by this Agreement, no payment
or other benefit, and no acceleration of the vesting of any options, payments
or other benefits will be (or under Section 280G of the Code and the Treasury
Regulations thereunder be presumed to be) a “parachute payment” to a “disqualified
individual” as those terms are defined in Section 280G of the Code and the
Treasury Regulations thereunder, without regard to whether such payment or acceleration
is reasonable compensation for personal services performed or to be performed
in the future.

(c) Neither
the Company nor any of its Subsidiaries is a member of a Company Group other
than a Company Group of which the Company or any of its Subsidiaries is the
common parent.

(d)           Schedule
3.13(d) accurately reflects the following: (i) the federal and state net
operating losses as defined in Section 172(c) of the Code (or any comparable
provision of state law) of the Company and its Subsidiaries for the tax years
ended March 26, 2005 and March 25, 2006; and (ii) the net loss for book
purposes of the Company and its Subsidiaries for the twelve months ended March
31, 2007.

3.14                   Title to Assets.  Except as set forth in Schedule 3.14
hereto, each of the Company and its Subsidiaries has good and marketable title
to all of its assets and properties free and clear of all Encumbrances, other
than Permitted Encumbrances.

 25
 

3.15                   No Violation, Litigation or Regulatory Action.  Except as set forth in Schedule 3.15
and except as to those Laws which are the subject of specific representations
elsewhere in this Article III:

(a)           the assets of each of the Company and its Subsidiaries and
their uses comply in all material respects with all applicable Laws and Orders;

(b)           each of the Company and its Subsidiaries has complied in
all material respects with all Laws and Orders which are applicable to its
assets or business;

(c)           there are no lawsuits, suits, proceedings or
investigations pending or, to the knowledge of the Sellers and the Company,
threatened against the Company or any of its Subsidiaries, and there are no
lawsuits, suits or proceedings pending in which the Company or any of its
Subsidiaries is the plaintiff or claimant; and

(d)           there is no action, suit or proceeding pending or, to the
knowledge of the Sellers and the Company, threatened against any Seller, the
Company or any of its Subsidiaries which questions the legality or propriety of
the transactions contemplated by this Agreement.

3.16                   Licenses. Except as set forth in Schedule
3.16, each of the Company and its Subsidiaries holds each material license,
permit or other governmental authorization (hereinafter referred to as “Licenses”) which is required for the
operation of its business, and all such Licenses are in full force and effect
and will remain in full force and effect notwithstanding the closing of the
transactions contemplated hereby.

3.17         Environmental Matters.

(a) Except
as set forth in Schedule 3.17(a), there are not now pending, nor have
there been, any private or governmental claims, citations, complaints, notices
of violation or letters made, issued to or, to the knowledge of the Sellers and
the Company, threatened against the Company or any of its Subsidiaries by any
Governmental Body or private or other party related to any release of Hazardous
Waste or Hazardous Materials, any noncompliance with environmental laws and
regulations, or for the impairment or diminution of, or damage, personal
injury, property damages or other adverse effects to third parties, the
environment or public health resulting from the Company’s or any of its
Subsidiaries’ ownership, use or operation of its facilities or the conduct of
its business.  With respect to the
Facility, the Company has: (i) provided all legally required notices under
applicable environmental Laws; (ii) materially complied with all such Laws with
respect to any Hazardous Waste or Hazardous Materials; (iii) provided any
legally required access to the Facility for any response actions by government
agencies; (iv) complied with any applicable land use restrictions and
institutional controls; and (v) complied with any information request or
administrative subpoena under CERCLA or comparable state law.

(b)           Neither the Company nor any of its Subsidiaries has used
any of its properties for the disposal of “Hazardous Waste” or “Hazardous
Materials” as those terms are defined below, and there have been no material
spills or releases of Hazardous Wastes or Hazardous Materials by the Company or
any of its Subsidiaries, or to the knowledge of the Sellers and the Company,
any other Person, on any property currently or formerly owned, leased

 26
 

or operated by the Company or any of its
Subsidiaries.  As used in this Agreement,
the term “Hazardous Materials” or “Hazardous Waste” means any hazardous or toxic substances,
materials, and wastes listed in the United States Department of Transportation
Hazardous Materials Table (49 CFR 172.101) or by the Environmental Protection
Agency as a hazardous substance (40 CFR Part 302), or such substances,
materials and wastes which are regulated or for which liability or standards of
care are imposed under any applicable local, state or federal law, including,
without limitation, any material, waste or substance which is (i) petroleum, (ii)
asbestos, (iii) polychlorinated biphenyls, (iv) defined as a “hazardous waste,”
“extremely hazardous waste” or “restricted hazardous waste” or “hazardous
material” under applicable state laws and regulations, (v) designated as a “hazardous
substance” pursuant to Section 311 of the Clean Water Act, 33 U.S.C. § 1251, et
seq. (33 U.S.C. § 1321) or U.S.C. § 1317, (vi) defined as a “hazardous waste”
pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42
U.S.C. § 6901, et seq. (42 U.S.C. §6903) or (vii) defined as a “hazardous
substance” pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. § 9601, et seq. (42 U.S.C. § 9601) (“CERCLA”).

(c)           Each of the Company and its Subsidiaries possesses all
required federal, state and local permits, licenses, certificates and approvals
with respect to its properties relating to (i) air emissions, (ii) discharges
to surface water or groundwater, (iii) noise emissions, (iv) solid or liquid
waste disposal, (v) the use, generation, storage, transportation or disposal of
hazardous materials or hazardous wastes, or (vi) other environmental, health or
safety matters, such permits are in good standing, and each of the Company and
its Subsidiaries is operating in material compliance with such permits and all
applicable environmental laws and regulations.

3.18                   Other Activities.  Except as set forth in Schedule 3.18,
none of the Sellers, the Company, any of its Subsidiaries, or any officer,
director, partner or member of any of the foregoing owns, directly or
indirectly, any interest or has any investment or profit participation in any
Person which, as of the Closing Date, is a competitor or, to the knowledge of
the Sellers and the Company, is considering becoming a potential competitor, of
or which otherwise, directly or indirectly, does business with the Company or
any of its Subsidiaries.

3.19                   Availability of Assets.

(a)           Except as set forth in Schedule 3.19: the assets
owned or leased by each of the Company and its Subsidiaries constitute all the
assets and properties used in, or necessary for, the operation of the business
of the Company and its Subsidiaries (including all books, records, computers
and computer programs and data processing systems) as presently conducted and
are in reasonably good and serviceable condition (subject to normal wear and
tear) for their age and past usage and are suitable for the uses for which
intended.

(b)           Schedule 3.19 sets forth a description of all
material services provided by any Seller or any Seller’s Affiliates to the
Company or Coffee Bean utilizing either (i) assets not owned or leased by the
Company or any of its Subsidiaries or (ii) employees not listed in Schedule
3.24(a) (other than those employees not listed by reason of clause (i) of Section 3.24(a)) and the manner in which
the costs of providing such services have been allocated to the Company and its
Subsidiaries.

 27
 

3.20                   Real Property.

(a) Except
as set forth on Schedule 3.20(a), neither the Company nor any of its
Subsidiaries own any real property.

(b)           Schedule
3.20(b) sets forth a list and brief description of each lease or similar
agreement (showing the parties thereto, annual rental, expiration date, renewal
and purchase options, if any, and the location of the real property covered by
such lease or other agreement) under which (i) the Company or any of its
Subsidiaries is lessee of, or holds, uses or operates, any real property owned
by any third Person (the “Leased Real Property”).
Except as set forth in such Schedule, each of the Company and its Subsidiaries
has the right to quiet enjoyment of all the Leased Real Property described in
such Schedule for the full term of each such lease or similar agreement (and
any renewal option) relating thereto, and the leasehold or other interest of
the Company and its Subsidiaries in such Leased Real Property is not subject or
subordinate to any Encumbrance except for Permitted Encumbrances. Except for
Permitted Encumbrances and the leases pertaining to the Leased Real Property,
there are no agreements or other documents governing or affecting the occupancy
or tenancy of any of the Leased Real Property by the Company or any of its
Subsidiaries.

(c) Neither
the whole nor any part of any real property leased, used or occupied by the
Company or any of its Subsidiaries is subject to any pending suit for
condemnation or other taking by any public authority, and, to the knowledge of
the Sellers and the Company, no such condemnation or other taking is threatened
or contemplated.

3.21                   Personal Property.

(a) Schedule
3.21(a) contains a list of all machinery, equipment, vehicles, furniture
and other personal property owned by each of the Company and its Subsidiaries
having an original cost of $10,000 or more.

(b)           Schedule 3.21(b) contains a brief description of
each lease or other agreement or right, whether written or oral (including in
each case the annual rental, the expiration date thereof and a brief
description of the property covered), under which the Company or any of its
Subsidiaries is lessee of, or holds or operates, any machinery, equipment,
vehicle or other tangible personal property owned by a third Person, except for
any such lease, agreement or right that is terminable by the Company or such
Subsidiary without penalty or payment on notice of thirty (30) days or less, or
which involves the payment by the Company or any of its Subsidiaries of rentals
of less than $15,000 per year.

3.22                   Intellectual Property: Software.

(a)           Schedule 3.22(a) contains a list and description
(showing, where applicable, the registered or other owner, expiration date and
number, if any) of all of the following Intellectual Property owned by,
licensed to or used by the Company and/or any of its Subsidiaries:  (i) active copyright registrations and pending
copyright registration applications; (ii) active patents and pending patent
applications; (iii) trademark and service mark registrations and pending
trademark and service mark registration applications; (iv) material
unregistered trademarks and service marks; (v) trade names; and (vi) domain
names and pending domain

 28
 

name applications. 
Schedule 3.22(a) additionally contains a list of (A) all Internet
and World Wide Web URLs of websites owned or operated by or on behalf of the
Company or any of its Subsidiaries; and (B) all 800- or 888- prefix phone
numbers (or similar toll-free phone numbers) assigned to the Company or any of
its Subsidiaries and used in connection with the conduct of its business.

(b)           Schedule 3.22(b) contains a list (showing in each case
any owner, licensor or licensee) of all Software owned by, licensed to or used
by the Company and/or any of its Subsidiaries, except Software licensed to the
Company or any of its Subsidiaries that is available in consumer retail stores
and subject to “shrink-wrap” license agreements.

(c) Schedule
3.22(c) contains a list (showing in each case the parties thereto) of all
Contracts which license, sublicense or assign, or otherwise grant permission to
use, to or by the Company or any of its Subsidiaries (i) any Intellectual
Property listed in Schedule 3.22(a), (ii) any trade secrets (as defined
under applicable Law) owned by, licensed to or used by the Company or any of
its Subsidiaries or (iii) any Software listed in Schedule 3.22(b).

(d)           Except as disclosed in Schedule 3.22(d), each of
the Company and its Subsidiaries either: (i) owns the entire right, title and
interest in and to the Intellectual Property and Software necessary for the
conduct of its business as conducted as of the Closing, free and clear of any
Encumbrance other than Permitted Encumbrances; or (ii) has the perpetual,
royalty-free right to use the same.

(e)           Except as disclosed in Schedule 3.22(e): (i) all
registrations for Copyrights, Patent Rights and Trademarks identified in Schedule
3.22(a) as being owned by the Company or its Subsidiaries are valid and in
force, and all applications to register any unregistered Copyrights, Patent
Rights and Trademarks so identified are pending and in good standing, all
without challenge of any kind; (ii) the Intellectual Property owned by each of
the Company and its Subsidiaries is valid and enforceable; (iii) each of the
Company and its Subsidiaries has the sole and exclusive right to bring actions
for infringement or unauthorized use of the Intellectual Property and Software
owned by the Company and its Subsidiaries, and, to the knowledge of the Sellers
and the Company, there is no basis for any such action; (iv) each of the
Company and its Subsidiaries has taken all actions reasonably necessary to protect,
and where necessary register, the Copyrights, Trademarks, Software, Patent
Rights or Trade Secrets; and (v) neither the Company nor any of its
Subsidiaries is in breach of any agreement affecting the Intellectual Property,
and has not taken any action which would impair or otherwise adversely affect
its rights in the Intellectual Property. Correct and complete copies of: (x)
registrations for all registered Copyrights, Patent Rights and Trademarks
identified in Schedule 3.22 as being owned by the Company or any of its
Subsidiaries; and (y) all pending applications to register unregistered
Copyrights, Patent Rights and Trademarks identified in Schedule 3.22(a)
as being owned by the Company or any of its Subsidiaries (together with any
subsequent correspondence, notices or filings relating to the foregoing) have
heretofore been made available by the Sellers to the Buyer.

(f)            Except as set forth in Schedule 3.22(f): (i) to
the knowledge of the Sellers and the Company, no infringement of any
Intellectual Property of any other Person has occurred or resulted in any way
from the operations, activities, products, Software, equipment, machinery

 29
 

or processes used in the Company’s and its
Subsidiaries’ business; (ii) to the knowledge of the Sellers and the Company,
no claim of any infringement of any Intellectual Property of any other Person
has been made or asserted in respect of the operations of the Company’s and its
Subsidiaries’ business; (iii) to the knowledge of the Sellers and the Company,
no claim of invalidity of any Copyright, Trademark or Patent Right, Software or
Trade Secret owned by or licensed to  the Company or
any Subsidiary has been made; (iv) no proceedings are pending or, to the
knowledge of the Sellers and the Company, threatened which challenge the
validity, ownership or use by the Company or any Subsidiary of any Intellectual
Property; and (v) none of the Sellers, the Company or any of its Subsidiaries
has had notice of a claim against the Company or any of its Subsidiaries that
the operations, activities, products, software, equipment, machinery or
processes of the Company or any of its Subsidiaries infringe any Intellectual
Property of any other Person.

3.23                   Accounts Receivable Inventories; Products.

(a)           All accounts receivable of the Company and its
Subsidiaries have arisen from bona fide transactions by the Company and its
Subsidiaries in the ordinary course of business.  All accounts receivable reflected in the
Unaudited Balance Sheet are good and collectible in the ordinary course of
business at the aggregate recorded amounts thereof, net of any allowance for
doubtful accounts shown on the face of the Estimated Closing Date Balance Sheet
and the Closing Date Balance Sheet, and such allowance was established in the
ordinary course of business consistent with past practice.

(b)           The inventories net of related reserves of the Company and
its Subsidiaries (including raw materials, supplies, work-in process, finished
goods and other materials) (i) are in good, merchantable and useable condition,
(ii) are reflected in the Unaudited Balance Sheet and will be reflected in the
Estimated Closing Date Balance Sheet and Closing Date Balance Sheet at the
lower of cost or market in accordance with GAAP, (iii) are, in the case of
finished goods, of a quality and quantity saleable in the ordinary course of
business and, in the case of all other inventories are of a quality and
quantity useable in the ordinary course of business and (iv) are neither
adulterated nor misbranded within the meaning of, and in compliance with, the
Federal Food Drug and Cosmetic Act of 1938, as amended, the Federal Fair
Packaging and Labeling Act of 1966, as amended, the Nutrition Labeling and
Education Act of 1990, the Public Health Security and Bioterrorism Preparedness
and Response Act of 2002, and any other state or federal legal requirements
applicable thereto.  The inventory obsolescence policies of the
Company and its Subsidiaries are appropriate for the nature of the products
sold and the marketing methods used by the Company and its Subsidiaries, the
reserve for inventory obsolescence contained in the Unaudited Balance Sheet
fairly reflects the amount of obsolete inventory as of the Balance Sheet Date,
and the reserve for inventory obsolescence to be contained in the Estimated Closing
Date Balance Sheet and Closing Date Balance Sheet will fairly reflect the
amount of obsolete inventory as of the Closing Date. The Sellers have
heretofore made available to the Buyer a list of places where Material
inventories of each of the Company and its Subsidiaries were located as of the
date hereof.  Neither the Company nor any
of its Subsidiaries has made any sales on consignment or granted return
privileges to any purchaser of its finished goods other than normal spoilage,
defect or damage allowances.

 

 30

(c)           The products previously sold or delivered by the Company
and its Subsidiaries were in compliance with any specifications therefor
established by the customers of the Company and its Subsidiaries and are fit
for their intended purpose and neither adulterated nor misbranded within the
meaning of, and in compliance with, the Federal Food Drug and Cosmetic Act of
1938, as amended, the Federal Fair Packaging and Labeling Act of 1966, as
amended, the Nutrition Labeling and Education Act of 1990, the Public Health
Security and Bioterrorism Preparedness and Response Act of 2002, and any other
state or federal legal requirements applicable thereto.

(d)           The manufacturing practices, ingredients, composition and
labeling for each of the products of the Company and its Subsidiaries are in
compliance with, and each of the Company and its Subsidiaries may produce,
distribute and sell each of its products on and after the Closing Date without
violating any federal, state or local food and drug, consumer safety, consumer protection
or hazardous and toxic substance laws or regulations (including, without
limitation, the Federal Food Drug and Cosmetic Act of 1938, as amended, the
Federal Fair Packaging and Labeling Act of 1966, as amended, the Nutrition
Labeling and Education Act of 1990, and the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002).

3.24                   Employee Relations.

(a)           Schedule 3.24(a) contains: (i) a list of all
employees or commission salespersons of each of the Company and its Subsidiaries
as of March 31, 2007; (ii) the then current annual compensation of, and a
description of the fringe benefits (other than those generally available to
employees of the Company and its Subsidiaries) provided by the Company and its
Subsidiaries to any such employees or commission salespersons; (iii) a list of
all present or former employees or commission salespersons of each of the
Company and its Subsidiaries paid (on an annualized basis) in excess of $75,000
in calendar year 2006 who have terminated or given notice of their intention to
terminate their relationship with the Company or any of its Subsidiaries since
the Balance Sheet Date; (iv) a list of any increase, effective after the
Balance Sheet Date, in the rate of compensation of any employees or commission
salespersons; and (v) a list of all substantial changes after the Balance Sheet
Date in job assignments of, or arrangements with, or promotions or appointments
of, any employees or commission salespersons whose compensation as of the
Balance Sheet Date was in excess of $50,000 per annum.

(b)           Except as set forth in Schedule 3.24(b), (i) to the
knowledge of the Sellers and the Company, none of the Sellers, the Company or
any of its Subsidiaries is a party to any transaction with any Seller, any
employee, officer, director, partner, member or Affiliate of any Seller, or any
officer or director of the Company or any of its Subsidiaries, which may be
generally characterized as a “conflict of interest,” including, but not limited
to, direct or indirect interests in the business of competitors, suppliers or
customers of the Company or any of its Subsidiaries, and (ii) neither the
Company nor any of its Subsidiaries has engaged in any of the following: (A)
the use of any corporate funds for unlawful contributions, gifts, entertainment
or other unlawful expenses related to political activity, (B) the making of any
direct or indirect unlawful payments to government officials or others from
corporate funds or the establishment or maintenance of any unlawful or unrecorded
funds, (C) the violation of any of the provisions of The Foreign Corrupt
Practices Act of 1977, or any rules or regulations promulgated thereunder or
(D) the receipt of any illegal discounts or rebates or any other violation of
the antitrust laws.

 31
 

(c)           Except as set forth in Schedule 3.24(c), since
March 26, 2006, neither the Company nor any of its Subsidiaries has, directly
or indirectly, purchased, leased from others or otherwise acquired any material
property or obtained any material services from, or sold, leased to others or
otherwise disposed of any material property or furnished any material services
to (except with respect to remuneration for services rendered as a director,
officer or employee of the Company or any of its Subsidiaries), in the ordinary
course of business or otherwise, (i) any Seller, (ii) any Affiliate of any
Seller, (iii) any Person who is an officer or director of the Company or any of
its Subsidiaries or (iv) any Associate of any Person referred to in clause (i),
(ii) or (iii) above.  Except as set forth
in Schedule 3.24(c), neither the Company nor any of its Subsidiaries
owes any amount in excess of $15,000 to, or has any contract with or commitment
to, any director, officer or employee of the Company or any of its Subsidiaries
(other than for compensation for current services not yet due and payable and
reimbursement of expenses arising in the ordinary course of business) and none
of such Persons owes any amount in excess of $15,000 to the Company or any of
its Subsidiaries. An “Associate”
of any Person means (i) a corporation or organization of which such Person is
an officer, partner or member or is, directly or indirectly, the beneficial
owner of ten percent (10%) or more of any class of equity securities, (ii) any
trust or other estate in which such Person has a substantial beneficial
interest or as to which such Person serves as trustee or in a similar fiduciary
capacity and (iii) any relative or spouse of such Person, or any relative of
such spouse, who has the same home as such Person or who is a director or
officer of the Person or any of its parents or subsidiaries.

(d)           None
of the Company, any of its Subsidiaries or any officer, employee or agent or
other Person acting on its behalf has, directly or indirectly, given or agreed
to give any gift or similar benefit (other than with respect to bona fide
payments for which adequate consideration has been given) to any customer,
supplier, governmental employee or other Person who is or may be in a position
to help or hinder the business of the Company or any of its Subsidiaries (or
assist the Company or any of its Subsidiaries in connection with any actual or
proposed transaction) (i) which could reasonably be expected to subject the
Company or any of its Subsidiaries to any damage or penalty in any civil,
criminal or governmental litigation or proceeding, (ii) which, if not continued
in the future, would subject the Company or any of its Subsidiaries to suit or
penalty in any private or governmental litigation or proceeding, (iii) for any
of the purposes described in Section 162(c) of the Code, or (iv) for
establishment or maintenance of any concealed fund or concealed bank account.

(e)           Except as set forth in Schedule 3.24(e), each of
the Company and its Subsidiaries has complied with all applicable laws, rules
and regulations which relate to prices, wages, hours, discrimination in
employment and collective bargaining and is not liable for any arrears of wages
or any Taxes or penalties for failure to comply with any of the foregoing.  Each of the Company and its Subsidiaries is
in compliance with the requirements of the Workers Adjustment and Retraining
Notification Act (“WARN”) and has
no liabilities pursuant to WARN.  Each of
the Sellers and the Company believes that each of the Company’s and its
Subsidiaries’ relations with their respective employees are satisfactory.
Neither the Company nor any of its Subsidiaries is a party to, and neither the
Company nor any of its Subsidiaries is affected by or to the Sellers’ and the
Company’s knowledge threatened with, any dispute or controversy with a union or
with respect to unionization or collective bargaining involving the employees
of the Company or any of its Subsidiaries. 
To the Sellers’ and the Company’s knowledge, neither the Company nor any
of its Subsidiaries is materially affected by any dispute

 32
 

or controversy with a union or with respect to
unionization or collective bargaining involving any supplier or customer of the
Company or any of its Subsidiaries.  Schedule
3.24(e) sets forth a description of any union organizing or election
activities involving any non-union employees of the Company and its
Subsidiaries which have occurred since January 1, 2004 or, to the knowledge of
the Sellers and the Company, are threatened as of the date hereof.

3.25                   Insurance. 
Schedule 3.25 sets forth a list and brief description (including
nature of coverage, limits, deductibles and premiums with respect to each type
of coverage) of all policies of insurance maintained, owned or held by or for
the benefit of the Company and its Subsidiaries on the date hereof.  The Company shall (and shall cause its
Subsidiaries to) keep or cause such insurance or comparable insurance to be
kept in full force and effect through the Closing Date. The Company and its
Subsidiaries have complied with each of such insurance policies in all material
respects and neither the Company nor any of its Subsidiaries has failed to give
any notice or present any claim thereunder in a due and timely manner. The
Company has made available to the Buyer correct and complete copies of the most
recent inspection reports, if any, received from insurance underwriters as to
the condition of the assets and properties of the Company and its Subsidiaries.

3.26                   Customers and Suppliers.  Schedule 3.26 sets forth (i) a list of
names and addresses of the ten largest customers and the ten largest suppliers
(measured in each case by dollar volume of purchases or sales during the fiscal
year ended March 31, 2007) of the Company and its Subsidiaries and the dollar
amount of purchase or sales which each such customer or supplier represented
during each of the fiscal years ended March 31, 2006 and 2005; and (ii) copies
of the forms of purchase order for inventory and other supplies and sales contracts
for finished goods used by the Company and its Subsidiaries.  Except as set forth in Schedule 3.26,
there exists no actual or, to the knowledge of the Sellers and the Company,
threatened termination, cancellation or limitation of, or any modification or
change in, the business relationship of the Company or any of its Subsidiaries
with any customer or group of customers listed in Schedule 3.26, or
whose purchases individually or in the aggregate are material to the Company
and its Subsidiaries, taken as a whole, or the operation of their business, or
with any supplier or group of suppliers listed in Schedule 3.26, or
whose sales individually or in the aggregate are material to the Company and
its Subsidiaries, taken as a whole, or the operation of their business.  Except as set forth in Schedule 3.26,
all foreign suppliers are registered facilities as required under the Public
Health Security and Bioterrorism Preparedness and Response Act of 2002.

ARTICLE
IV

INDIVIDUAL REPRESENTATIONS AND WARRANTIES OF THE
SELLERS

Each of the Sellers, severally and not jointly, and
solely with respect to itself, hereby represents and warrants to the Buyer as
follows:

4.1                     Organization and Qualification.  Such Seller (if a corporation or other
entity) is duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation (or other formation).

 33
 

4.2           Authorization.  Such Seller has the requisite legal capacity,
power and authority (including full corporate power and authority) to execute and
deliver this Agreement and to consummate the transactions contemplated
hereby.  The execution and delivery of
this Agreement by such Seller, the performance by such Seller of its
obligations hereunder, and the consummation by such Seller of the transactions
contemplated hereby, have been duly authorized by such Seller.  No other action (corporate or otherwise) on
the part of such Seller is necessary to authorize the execution and delivery of
this Agreement or the consummation of the transactions contemplated
hereby.  This Agreement has been duly and
validly executed and delivered by such Seller and constitutes a valid and
binding obligation of such Seller, enforceable against such Seller in
accordance with its terms, except to the extent that such enforcement may be
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors’ rights
generally, and the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought.

4.3                     No Violation.  Neither the execution and delivery of this
Agreement by such Seller, the performance by such Seller of its obligations
hereunder, nor the consummation by such Seller of the transactions contemplated
hereby will: (a) violate, conflict with or result in any breach of any
provision of the Organizational Documents of such Seller; (b) violate, conflict
with or result in a violation or breach of, or constitute a default (with or
without due notice or lapse of time or both) under the terms, conditions or
provisions of any note, bond, mortgage, indenture or deed of trust, or any
material license, lease or agreement to which such Seller is a party; or (c)
violate any order, writ, judgment, injunction, decree, statute, rule or
regulation of any court or Governmental Body applicable to such Seller.

4.4                     Title to Shares.  Such Seller is the sole record and beneficial
owner of, and has good and valid title to, the Shares set forth opposite such
Seller’s name in Schedule 3.4(a) hereto, free and clear of all
Encumbrances, such Seller has full right, power and authority to transfer such
Shares to Buyer, free and clear of any Encumbrances, and such Seller is not a
party to any voting trust, proxy or other agreement with respect to the voting
of such Shares.

4.5                     Consents and Approvals.  No filing or registration with, no notice to
and no permit, authorization, consent or approval of any third party or any
Governmental Body is necessary for the consummation by such Seller of the
transactions contemplated by this Agreement.

ARTICLE V

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer hereby represents and warrants to the
Sellers as follows:

5.1                     Organization and Qualification. The Buyer
is a corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, with all requisite corporate
power and authority to own, lease and operate its properties and to carry on
its businesses as now being conducted.

 34
 

5.2                     Authorization. The Buyer has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby.  The execution and delivery of this Agreement
by the Buyer, the performance by the Buyer of its obligations hereunder, and
the consummation by the Buyer of the transactions contemplated hereby, have
been duly authorized by the Buyer.  No
other corporate proceeding on the part of the Buyer is necessary to authorize
the execution and delivery of this Agreement or to consummate the transactions
contemplated hereby.  This Agreement has
been duly and validly executed and delivered by the Buyer and constitutes a
valid and binding obligation of the Buyer, enforceable against it in accordance
with its terms, except to the extent that such enforcement may be subject to
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors’ rights generally, and
the remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought.

5.3                     No Violation. Neither the execution and
delivery of this Agreement by the Buyer, the performance by the Buyer of its
obligations hereunder nor the consummation by the Buyer of the transactions
contemplated hereby will: (a) violate, conflict with or result in any breach of
any provision of the Organizational Documents of the Buyer; (b) violate,
conflict with or result in a violation or breach of, or constitute a default
(with or without due notice or lapse of time or both) under the terms,
conditions or provisions of any note, bond, mortgage, indenture or deed of
trust, or any material license, lease or agreement to which the Buyer or any of
the Buyer’s Subsidiaries is a party; or (c) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation of any court or Governmental
Body applicable to the Buyer or any of the Buyer’s Subsidiaries, except, in the
case of clause (b), as would not, individually or in the aggregate, have a
Buyer Material Adverse Effect.

5.4                     Consents and Approvals. No filing or
registration with, no notice to and no permit, authorization, consent or
approval of any third party or any Governmental Body is necessary for the
consummation by the Buyer of the transactions contemplated by this Agreement.

5.5                     Brokers’ Fees and Commissions. Except for
Kerlin Capital Group, whose fees will be paid by the Buyer, neither the Buyer
nor any of its Subsidiaries, directors, officers, employees or agents has
employed any investment banker, broker or finder in connection with the
transactions contemplated hereby.

5.6                     Purchase for Investment. The Buyer is
acquiring the Shares for its own account for investment purposes and not with a
view of the distribution of the Shares. 
The Buyer has such knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its
investment in the Shares.  The Buyer is
an “accredited investor” as defined in Rule 501 of the Shares Act of 1933, as
amended.  The Buyer will not, directly or
indirectly, dispose of the Shares except in compliance with applicable federal
and state securities laws.

 35
 

ARTICLE
VI

COVENANTS OF THE BUYER

6.1                     Access to Books and Records.  After the Closing Date, upon reasonable
notice and at reasonable times without significant disruption to the business
of the Company and its Subsidiaries, the Buyer will cause the Company and its
Subsidiaries to give the Seller Representative upon the Seller Representative’s
reasonable request and its authorized representatives reasonable access to all
Books and Records of the Company and will cause its officers to furnish the
Seller Representative upon the Seller Representative’s reasonable request such
financial and operating data and other information with respect to the
businesses and properties of the Company and its Subsidiaries as may be
necessary for (i) the Sellers to prepare their respective tax returns for any
period ending before or including the Closing Date or (ii) the defense of any
matter contemplated under Article IX. 
The Buyer shall make available, on a mutually convenient basis, its
employees and agents for the purpose of explaining any information provided
under this Section 6.1.

ARTICLE
VII

COVENANTS OF THE BUYER AND THE SELLERS

7.1                     Public Announcements.  The parties shall cooperate with each other
in connection with the issuance of any press release or otherwise making any
public statement with respect to the contents of this document or the
transactions contemplated hereby, and none of the parties hereto shall issue
any such press release or make any such public statement prior to such
consultation, except as my be required by law or applicable stock exchange or
NASDAQ regulations.  The foregoing shall
not restrict the dissemination of information following the Closing by any
Seller to its Affiliates, limited partners, lenders, investors, or prospective
lenders or investors, which dissemination shall be governed by the terms of the
Confidentiality Agreement.

7.2                     Further Assurances.  The parties hereto shall execute such
documents and other instruments and take such further actions as may reasonably
be required by the other party and at such other party’s expense to carry out
the provisions hereof and consummate the transactions contemplated by this
Agreement.

7.3                     Tax Matters.

(a)           Liability for Taxes.

(i)          Except to the extent
reflected as a Current Liability in the Final Net Working Capital Statement,
the Sellers shall be liable for and pay, and pursuant to Article IX
shall indemnify and hold harmless the Buyer from and against any and all Losses
incurred by any Buyer Indemnitee in connection with or arising from (A) all
Taxes imposed on the Company or any of its Subsidiaries, or for which the
Company or any of its Subsidiaries may otherwise be liable, as a result of
having been a member of a Company Group of which the Company or any of its
Subsidiaries is no longer a member (including, without limitation, Taxes for
which the Company or any of its Subsidiaries may be liable pursuant to Treas.

 36
 

Reg. § 1.1502-6 or similar provisions of state, local or foreign law as
a result of having been a member of a Company Group and any Taxes resulting
from the Company or any of its Subsidiaries ceasing to be a member of any
Company Group) for periods ending on or before the Closing Date, and (B) all
Taxes (other than any Taxes imposed on the Company or any of its Subsidiaries
resulting from the Section 338(g) Election) imposed on the Company or any of
its Subsidiaries, or for which the Company or any of its Subsidiaries may
otherwise be liable, for any taxable year or period that ends on or before the
Closing Date, including, without limitation, all Taxes in connection with,
arising out of or resulting from the Transfer and Redemption, including any
alternative minimum Tax, and, with respect to any Straddle Period, the portion
of such Straddle Period ending on and including the Closing Date (including,
without limitation, any obligations to contribute to the payment of a Tax
determined on a consolidated, combined or unitary basis with respect to any
Company Group). Final payment required by this indemnification shall be treated
as a Purchase Price adjustment.

(ii)         For purposes of Section 7.3(a)(i), whenever it is necessary
to determine the liability for Taxes of the Company or any of its Subsidiaries
for a Straddle Period, the determination of the Taxes of the Company or such
Subsidiary for the portion of the Straddle Period ending on and including the
Closing Date shall be determined by assuming that the Straddle Period consisted
of two taxable years or periods, one which ended at the close of the Closing
Date and the other which began at the beginning of the day following the
Closing Date and items of income, gain, deduction, loss or credit of the
Company and its Subsidiaries for the Straddle Period shall be allocated between
such two taxable years or periods on a “closing of the books basis” by assuming
that the books of the Company and its Subsidiaries were closed at the close of
the Closing Date; provided, however, that exemptions, allowances, deductions or
Taxes that are calculated on an annual basis, such as the deduction for
depreciation, shall be apportioned between such two taxable years or periods on
a daily basis.  Estimated Tax payments
made by the Sellers, the Company or its Subsidiaries prior to the Closing Date
reflected in the Final Net Working Capital Statement attributable to Straddle
Periods shall reduce any liability for Taxes owed by the Sellers to the Buyer
under this Section 7.3. If such
estimated Tax payments exceed the Taxes owed by the Sellers to the Buyer under
this Section 7.3, the Buyer shall
promptly refund such excess to the Seller Representative on behalf of the
Sellers.

(iii)        All Transfer Taxes,
sales Taxes, use Taxes, real estate transfer or gains Taxes, or other similar
Taxes imposed on, arising out of or otherwise relating to (i) the sale of the
Shares by the Sellers to the Buyer and (ii) the Transfer and Redemption, shall
be borne and paid by the Sellers.

 37
 

(b)                           Tax Returns.

(i)          The Sellers shall
prepare or cause to be prepared at the Sellers’ expense (which shall be accrued
as a Current Liability) all Tax Returns relating to, or required to be filed in
connection with, any and all Taxes based upon or measured in whole or in part
by net income (regardless of whether denominated as an “income tax,” “franchise
tax” or otherwise and including any Tax imposed on alternative bases, one of
which is net income), that are required to be filed after the Closing Date by
or with respect to the Company and its Subsidiaries for taxable years or periods
ending on or before the Closing Date that are not due on or before the Closing
Date (“Pre-Closing Income Tax Returns”),
and deliver them to the Buyer for filing in accordance with Section 7.3(c)(i).
The Buyer shall pay, or reimburse the Sellers for, the cost of the preparation
of Pre-Closing Income Tax Returns to the extent such cost is reflected as a
Current Liability in the Final Net Working Capital Statement.  The Buyer shall remit (or cause to be
remitted) any Taxes due in respect of Pre-Closing Income Tax Returns; and the
Sellers shall reimburse the Buyer the Taxes for which the Sellers are liable
pursuant to paragraph (a)(i) of this Section
7.3 but which are either remitted by the Buyer in respect of any
Pre-Closing Income Tax Return pursuant to this paragraph (b)(i) or otherwise
with respect to any Tax Return relating to any taxable period ending on or
before the Closing Date, upon the written request of the Buyer setting forth in
detail the computation of the amount owed by the Sellers, but in no event
earlier than ten (10) days prior to the due date for paying such Taxes.

(ii)         The Buyer shall file
or cause to be filed when due (taking into account all extensions properly
obtained) all Tax Returns that are required to be filed by or with respect to the
Company and its Subsidiaries for taxable years or periods ending after the
Closing Date.  The Buyer shall remit (or
cause to be remitted) any Taxes due in respect of such Tax Returns; and the
Sellers shall reimburse the Buyer the Taxes for which the Sellers are liable
pursuant to paragraph (a)(i) of this Section
7.3 but which are remitted in respect of any Tax Return to be filed
by the Buyer pursuant to this paragraph (b) upon the written request of the
Buyer setting forth in detail the computation of the amount owed by the
Sellers, but in no event earlier than ten (10) days prior to the due date for
paying such Taxes.

(iii)        All Tax Returns which
the Sellers are required to prepare or cause to be prepared and the Buyer is
required to file or cause to be filed in accordance with paragraph (b)(i) of
this Section 7.3 shall be prepared
and filed in a manner consistent with past practice of the Company and its
Subsidiaries in preparing and filing their Tax Returns and, on such Tax
Returns, no position shall be taken, election made or method adopted that is
inconsistent with positions taken, elections made or methods used in preparing
and filing similar Tax Returns in prior periods (including, but not limited to,
positions, elections or methods which would have the effect of deferring income
to periods for which the Buyer is

 38
 

liable under this Section 7.3
or accelerating deductions to periods for which the Sellers are liable under
this Section 7.3).

(c)           Assistance and Cooperation.  After the Closing Date, each of the Sellers
and the Buyer shall (and shall cause their respective Affiliates to):

(i)          assist the other
party in preparing and filing as necessary (including, by having the Buyer
cause the Company and its Subsidiaries to sign and file or cause to be filed when
due any Pre-Closing Income Tax Return prepared by the Sellers pursuant to Section 7.3(b)(i), which Pre-Closing Income
Tax Return shall be made available to the Buyer at least thirty (30) days prior
to the applicable filing due date, and any unresolved dispute regarding such
Pre-Closing Income Tax Return shall be resolved using the same procedures and
same allocation of expenses as the resolution of a Protest Notice under Section 2.5(d); provided if the Buyer and
the Seller Representative are unable to resolve such dispute prior to the
applicable filing due date (including any properly obtained extensions
thereof), the Buyer shall timely file or cause to be filed such Pre-Closing
Income Tax Return and, upon final resolution of such dispute in accordance with
Section 2.5(d), shall file or
cause to be filed any amendment to such Pre-Closing Income Tax Return required
to reflect such resolution) any Tax Returns which such other party is
responsible for preparing and filing in accordance with paragraph (b) of this Section 7.3, and in connection therewith
provide the other party necessary powers of attorney;

(ii)         cooperate fully in
preparing for and conducting any audits of, or disputes with taxing authorities
regarding, any Tax Returns of the Company and any of its Subsidiaries;

(iii)        make available to the
other and to any taxing authority as reasonably requested all information,
records, and documents relating to Taxes of the Company and its Subsidiaries;

(iv)        furnish the other with
copies of all correspondence received from any taxing authority in connection
with any Tax audit or information request with respect to any such taxable
period;

(v)         The Buyer and the
Sellers agree to retain all Books and Records with respect to tax matters
pertaining to the Company and its Subsidiaries relating to periods prior to the
Closing for six (6) years;

(vi)        To the extent the
Sellers will be required to reimburse the Buyer pursuant to paragraph (b)(ii)
of this Section 7.3, the Buyer
agrees to allow the Seller Representative to review all Straddle Period Tax
Returns prior to their filing, which Straddle Period Tax Returns shall be made
available to the Seller Representative at least thirty (30) days prior to the
applicable filing due date, and any unresolved dispute regarding any such
Straddle Tax Return shall be resolved using the same procedures and same
allocation of expenses as the resolution of a

 39
 

Protest Notice under Section 2.5(d);
provided if the Buyer and the Seller Representative are unable to resolve such
dispute prior to the applicable filing due date (including any properly
obtained extensions thereof), the Buyer shall timely file or cause to be filed
such Straddle Tax Return and, upon final resolution of the dispute in
accordance with Section 2.5(d),
shall file or cause to be filed any amendment to such Straddle Period Tax
Return required to reflect such resolution;

(vii)       The Buyer agrees to
allow the Sellers to control any Tax audit or proceeding relating to any
taxable periods ending on or before the Closing Date and the Sellers agree to
allow the Buyer to control any Tax audit or proceeding relating to any period
ending after the Closing Date; provided, however, that in the case of a
Straddle Period, the Sellers shall be entitled to participate at their expense
in any Tax audit or proceeding relating (in whole or in part) to Taxes  attributable to the portion of such Straddle
Period ending on and including the Closing Date; and

(viii)      Neither the Buyer or
the Sellers, nor any of their respective Affiliates, shall file (other than
Pre-Closing Income Tax Returns or any other Tax Returns not due before the
Closing Date filed in accordance with this Section
7.3) re-file or amend any Tax Return of the Company or its
Subsidiaries that includes any period ending on or before the Closing Date
except as a result of any audit by any Governmental Body, in which case the
filing, re-filing or amendment of any such Tax Return shall be subject to the
review and dispute resolution provisions of this Section 7.3.

(d)           Section 338(g) Election.  The Buyer may, at its election, make an
election under Section 338(g) of the Code (or any comparable provision of
state, local or foreign law) (together, the “Section
338(g) Election”) with respect to the purchase of the Company’s
stock as provided herein. The Sellers shall make such filings, cooperate with
the Buyer and take any such other actions as are reasonably necessary or
appropriate to accomplish such election. 
In the event the Buyer makes such election, the Buyer shall be
responsible for and shall pay all additional Taxes, if any, imposed on the
Company and its Subsidiaries resulting from the Section 338(g) Election,
assuming that any items of income or gain resulting from the Section 338(g)
Election are the last items of income or gain recognized by the Company or its
Subsidiaries in the relevant Tax period, it being understood that the foregoing
shall in no event relieve the Sellers of liability for Losses resulting from
the breach of any representation or warranty contained herein.

ARTICLE
VIII

CONDITIONS TO CLOSING

8.1                     Conditions to Obligation of the Buyer.  The obligation of the Buyer to consummate the
transactions contemplated by this Agreement is subject to the satisfaction (or
waiver by the Buyer in its sole discretion) of the following further
conditions:

 40
 

(a)           All Authorizations and Orders of, declarations and filings
with, and notices to, any Governmental Body or other Person required to be
obtained or made by any Seller, the Company or any of its Subsidiaries to
permit the consummation of the transactions contemplated by this Agreement
shall have been obtained or made and shall be in full force and effect.

(b)           No temporary restraining order, preliminary or permanent
injunction or other Order preventing the consummation of the transactions
contemplated by this Agreement shall be in effect against any Seller, the
Company or any of its Subsidiaries.  No
Law shall have been enacted or shall be deemed applicable to the transactions
contemplated by this Agreement which makes the consummation of such
transactions by any Seller, the Company or any of its Subsidiaries illegal.

(c)           Each of the representations and warranties of the Sellers
and the Company set forth in this Agreement that is qualified by materiality or
Materiality shall be true and correct at and as of the Closing Date and each of
such representations and warranties that is not so qualified shall be true and
correct in all material respects at and as of the Closing Date, except in each
case (i) to the extent that such representations and warranties refer
specifically to an earlier date, in which case such representations and
warranties shall have been true and correct as of such earlier date or (ii) for
changes contemplated by this Agreement.

(d)           The Company and each Seller shall have performed or
complied in all material respects with all obligations and covenants required
by this Agreement to be performed or complied with by the Company or such
Seller at or prior to the Closing Date.

(e)           The Sellers and the other relevant parties thereto shall
have delivered to the Buyer all agreements and other documents required to be
delivered by the Seller and such other relevant parties to the Buyer pursuant
to Section 2.4(a) and the same
shall be in full force and effect.

(f)            All outstanding options to purchase shares of Common
Stock shall have been cancelled in accordance with the terms of the Coffee Bean
Holding Co., Inc. 2004 Stock Option Plan, and as of the Closing no such options
shall be outstanding.

(g)           Prior to Closing, the Sellers shall cause all Contracts
between the Company or any of its Subsidiaries and any Seller or any Seller’s
Affiliates to be terminated and be of no further force or effect,
notwithstanding any terms thereof to the contrary.

(h)           The Transfer and Redemption shall have been completed.

8.2                     Conditions to Obligation of the Sellers.  The obligation of the Sellers to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
(or waiver by the Sellers in their sole discretion) of the following further
conditions:

(a)           All Authorizations and Orders of, declarations and filings
with, and notices to, any Governmental Body or other Person required to be
obtained or made by the Buyer to permit the consummation of the transactions
contemplated by this Agreement shall have been obtained or made and shall be in
full force and effect.

 

 41

(b)           No temporary restraining order, preliminary or permanent
injunction or other Order preventing the consummation of the transactions
contemplated by this Agreement shall be in effect against the Buyer.  No Law shall have been enacted or shall be
deemed applicable to the transactions contemplated by this Agreement which
makes the consummation of such transactions by the Buyer illegal.

(c)           Each of the representations and warranties of the Buyer
set forth in this Agreement that is qualified by materiality shall be true and
correct at and as of the Closing Date and each of such representations and
warranties that is not so qualified shall be true and correct in all material
respects at and as of the Closing Date, except in each case (i) to the extent
that such representations and warranties refer specifically to an earlier date,
in which case such representations and warranties shall have been true and
correct as of such earlier date, or (ii) for changes contemplated by this
Agreement.

(d)           The Buyer shall have performed or complied in all material
respects with all obligations and covenants required by this Agreement to be
performed or complied with by the Buyer at or prior to the Closing Date.

(e)           The Sellers shall have been released from any and all
guarantees under, and similar obligations with respect to, any Indebtedness of
the Company and each of its Subsidiaries.

(f)            The Buyer shall have delivered to the Sellers all
agreements and other documents required to be delivered by the Buyer to the
Sellers pursuant to Section 2.4(b).

(g)           The Transfer and Redemption shall have been completed.

ARTICLE
IX

INDEMNIFICATION

9.1                     Survival  of
Representations, Warranties and Covenants. 
The representations and warranties made in this Agreement shall survive
for a period of eighteen (18) months after the Closing Date; provided, however,
that: (i) the representations and warranties set forth in Section 3.13 shall survive until the
expiration of the applicable statute of limitations; (ii) the representations
and warranties set forth in Sections 3.1,
3.2, 3.4, 3.5, 4.1, 4.2
and 4.4 shall survive
indefinitely; and (iii) the representations and warranties set forth in Section 3.17 shall survive for a period of
thirty-six (36) months after the Closing Date. 
The covenants and agreements contained herein shall survive the Closing
without limitation as to time unless the covenant or agreement specifies a
term, in which case such covenant or agreement shall survive for such specified
term.  Any claims under this Agreement
with respect to any inaccuracy of any representation or warranty or the breach
of any covenant, undertaking or other agreement contained in this Agreement
must be asserted by written notice delivered prior to 5:00 P.M., Pacific time,
on the last Business Day of the applicable survival period set forth above, and
if such a Claim Notice is given in compliance with Section 9.4(a) or a Third Party Notice is given in
compliance with Section 9.5(a), as
applicable, prior to such time, the survival period for such claim shall continue
until such claim is fully resolved. 
Notwithstanding anything in this Article IX to the contrary, if
any representation made by the Sellers or the Company based on facts in

 42
 

existence as of the Closing Date is rendered incorrect
solely because of a change in Law or regulation subsequent to the Closing Date,
such representation shall not be deemed to have been incorrect as of the
Closing Date.

9.2                     Indemnification.

(a)           Subject to the limitations set forth in this Article IX,
subsequent to the Closing, the Sellers shall indemnify, defend and hold
harmless each Buyer Indemnitee from and against, any and all claims, demands,
obligations, deficiencies, assessments, judgments, losses, damages,
liabilities, penalties, interest, costs and expenses, including reasonable
attorneys’ fees and disbursements (“Losses”),
incurred by such Buyer Indemnitee in connection with, arising out of or
resulting from:

(i)          any breach or
inaccuracy of any representation or warranty made by the Sellers and the
Company contained in Article III of this Agreement;

(ii)         any breach or
non-performance by the Company of any of its covenants or agreements contained
in this Agreement; or

(iii)        the sale or transfer
of the Facility to, or the listing of the Facility for sale with, any Person, including,
without limitation, the Transfer and Redemption.

(b)           Subject to the limitations set forth in this Article IX,
subsequent to the Closing, each Seller shall, severally and not jointly,
indemnify, defend and hold harmless each Buyer Indemnitee from and against, any
and all Losses incurred by such Buyer Indemnitee in connection with, arising
out of or resulting from:

(i)          any breach or
inaccuracy of any representation or warranty made by such Seller contained in Article
IV of this Agreement; or

(ii)         any breach or
non-performance by such Seller of any of its covenants or agreements contained
in this Agreement.

(c)           Subsequent to the Closing, subject to the limitations set
forth in this Article IX, the Buyer shall indemnify, defend and hold
harmless each Seller Indemnitee from and against any and all Losses incurred by
such Seller Indemnitee in connection with, arising out of or resulting from:

(i)          any breach or
inaccuracy of any representation or warranty made by the Buyer contained in
this Agreement;

(ii)         any breach or
non-performance by the Buyer of any of its covenants or agreements contained in
this Agreement; or

(iii)        any Excluded Taxes
imposed on the Company or its Subsidiaries.

 43
 

9.3                     Limitations on Liability.

(a)           Notwithstanding anything to the contrary in Section 9.2, (i) no Indemnitor shall have
any obligation to indemnify a Buyer Indemnitee or Seller Indemnitee, as the
case may be, hereunder for any Losses unless and until the aggregate of all
Losses suffered by all Buyer Indemnitees or Seller Indemnitees, as the case may
be, hereunder exceeds $112,500 (the “Threshold”),
whereupon, provided the other requirements of this Article IX have been
complied with and subject to the other limitations of this Article IX,
the Indemnitor shall be liable to indemnify the Buyer Indemnitee or Seller
Indemnitee, as the case may be, for only the excess of Losses over the amount
of the Threshold; (ii) in no event shall the aggregate of all indemnification
paid by the Sellers, on the one hand, or the Buyer, on the other hand, exceed
$4,000,000 (the “Cap”); and (iii)
no Indemnitor shall have any obligation to indemnify a Buyer Indemnitee for any
Losses under any provision of this Agreement relating to or arising out of the
failure by the Company or any of its Subsidiaries to pay Excluded Taxes or to
file any tax returns relating to Excluded Taxes.

(b)           Notwithstanding Section
9.3(a), neither the Threshold nor the Cap shall apply to (i) any
breach of the representations and warranties set forth in Sections 3.2, 3.4, 3.11, 3.13, 4.2,
4.4 or 5.2, (ii) the breach of (or a failure to comply with) any
covenant or obligation that by its terms requires any action or contains any
obligation to be performed after the Closing, or (iii) any Losses indemnifiable
under Section 9.2(a)(iii).

(c)           If any Losses sustained by an Indemnified Party are
covered by an insurance policy, such Indemnified Party shall use reasonable
efforts to collect such insurance proceeds. 
If the Indemnified Party receives such insurance proceeds prior to being
indemnified with respect to such Losses under Section
9.2, the payment under this Article IX with respect to such
Losses shall be reduced by the amount of such insurance proceeds to the extent
related to such Losses, less reasonable attorney’s fees and other expenses
incurred in connection with such recovery. 
If the Indemnified Party receives such insurance proceeds after being
indemnified and held harmless with respect to such Losses, then such
Indemnified Party shall pay to the Indemnitor the amount of such insurance
proceeds to the extent related to such Losses, less reasonable attorney’s fees
and other expenses incurred in connection with such recovery.

(d)           The parties agree that the Escrow Fund shall serve as the
initial and primary source of funding for any payment obligations of each of
the Sellers under Section 2.5
(subject to the $500,000 cap set forth therein) and the indemnification
obligations of each of the Sellers under this Article IX, and any
amounts up to $500,000 payable under Section
2.5 and any indemnity payment due to the Buyer under this Article
IX shall be made first from the Escrow Fund in accordance with the terms of
the Escrow Agreement.  Buyer agrees and
acknowledges that it shall not make any claim for, or seek to recover, any
amounts payable under Section 2.5
(except in excess of the $500,000 cap) and any indemnity payment due to the
Buyer under this Article IX from any Seller until and unless either no
funds remain in the Escrow Fund or the amount of the proposed claim exceeds the
remaining Escrow Fund.

(e)           For the avoidance of doubt, any payment of a Net Working
Capital Adjustment pursuant to Section 2.5
shall not count towards the Threshold or the Cap.

 44
 

(f)            The amount of Losses recoverable by any Indemnified Party
pursuant to Section 9.2 shall be
reduced by an amount equal to any Tax benefits attributable to such Losses.

(g)           In no event shall any party be entitled to recover or make
a claim for any amounts in respect of, and in no event shall “Losses” be deemed
to include indirect, incidental or consequential damages, lost profits,
business interruption, special or punitive damages and, in particular, no “multiple
of profits” or “multiple of cash flow” or similar valuation methodology shall
be used in calculating the amount of any Losses.

9.4                     Notice of Claims.

(a)           Any Buyer Indemnitee or Seller Indemnitee seeking
indemnification hereunder (the “Indemnified
Party”) shall, within the relevant limitation period provided for in
Section 9.1, give to the
party from whom identification is sought (the “Indemnitor”) a notice in writing (a “Claim Notice”) describing in reasonable
detail any claim for indemnification hereunder and the facts giving rise to
such claim for indemnification.  The
Indemnified Party shall include in such Claim Notice the amount or the method
of computation of the amount of such claim, and a reference to the provision(s)
of this Agreement pursuant to which such claim for indemnification is made
including, if applicable, the representation or warranty with respect to which
such claim is being made.

(b)           An Indemnitor shall have thirty (30) calendar days after
the receipt of any Claim Notice pursuant hereto to either (i) agree that it has
an indemnification obligation under Article IX, agree to the amount or
method of determination set forth in the Claim Notice and to pay such amount to
such Indemnified Party in immediately available funds or (ii) provide such
Indemnified Party with notice that it disagrees with the assertion that it has
an indemnification obligation under Article IX or the amount or method
of determination set forth in the Claim Notice. 
If the Indemnitor sends such a notice, then the Indemnified Party and
the Indemnitor shall attempt in good faith to resolve any disputed claim within
thirty (30) calendar days thereafter.

(c)           Notwithstanding anything contained in this Agreement to
the contrary, the provisions of this Section
9.4 shall not apply (i) in the case of Claims made by any Buyer
Indemnitee prior to termination of the Escrow Agreement, which Claims shall be
governed by the notice and resolution provisions set forth in the Escrow
Agreement; and (ii) in the case of a Claim Notice provided in connection with a
claim by a third Person made against an Indemnified Party, which Claims shall
be governed by Section 9.5.

9.5                     Third Party Claims.

(a)           If a claim by a third Person is made against an
Indemnified Party, and if such Indemnified Party intends to seek indemnity with
respect thereto in accordance with this Article IX, such Indemnified
Party shall promptly notify the Indemnitor in writing of such claim, setting
forth in reasonable detail the claim, the facts giving rise to such claim and
references to the provisions of this Agreement pursuant to which such claim for
indemnification was made, including, if applicable, the representation or
warranty with respect to which such claim is made (the “Third Party Notice”); provided, however,
that the failure of the Indemnified Party to give

 45
 

such notice shall not excuse the Indemnitor’s
obligation to indemnify under this Article IX except to the extent that
the Indemnitor has suffered damage or prejudice by reason of the Indemnified
Party’s failure to give or delay in giving such notice.  After providing such written notice to the
Indemnitor, the Indemnified Party shall initially control the defense of such
claim through counsel of its choice at its own expense, subject to
reimbursement by the Indemnitor (i) upon receipt of an Acknowledgement (as
defined below) from the Indemnitor with respect to such claim or (ii) when it
is determined that the Indemnified Party is entitled to be indemnified with
respect to such claim, whether by agreement of the parties or otherwise.  The Indemnitor shall, at its expense, have
the right, but not the obligation, to participate in the Indemnified Party’s
defense of such claim and no such claim shall be settled by the Indemnified
Party without the written consent of the Indemnitor, which consent shall not be
unreasonably withheld, conditioned or delayed.

(b)           Except as provided in Section
9.5(c), in the event that at any time after receiving notice of a
claim under Section 9.5(a) above
the Indemnitor acknowledges in writing (the “Acknowledgement”)
its obligations to (i) indemnify the Indemnified Party against any Losses
(subject to the Threshold and Cap and other limitations set forth in this Article
IX, if applicable) that may result from such claim and (ii) reimburse the
Indemnified Party for the costs and expenses (including, without limitation,
reasonable attorneys’ fees) incurred by the Indemnified Party in defending such
claim prior to receiving such Acknowledgement (subject to the Threshold and Cap
and other limitations set forth in this Article IX, if applicable), the
Indemnitor shall have the right to control the defense of such claim through
counsel of its choice at any time after the receipt of the Acknowledgement by
the Indemnified Party.  In the event that
the Indemnitor delivers the Acknowledgement to the Indemnified Party, the
Indemnified Party shall, at its expense, have the right to participate in the
defense of such claim and, in any case, no such claim shall be settled by the
Indemnitor without the written consent of the Indemnified Party, which consent
shall not be unreasonably withheld, conditioned or delayed.  Should the Indemnitor elect to assume the
defense of a claim by delivering the Acknowledgement, the Indemnitor shall not
be liable to the Indemnified Party for legal expenses subsequently incurred by
the Indemnified Party in connection with the defense thereof.

(c)           Notwithstanding Section
9.5(b), if in the reasonable judgment of the Indemnified Party the
claim (if adversely determined) with respect to which an Acknowledgement has
been delivered (x) seeks an order, injunction or other equitable relief against
the business of the Indemnified Party which, if successful, could reasonably be
expected to materially interfere with the business of the Indemnified Party or
(y) claims for money damages that could reasonably be expected to exceed the
Cap (if applicable), then the Indemnified Party shall be entitled to control
the defense of such claim through counsel of its choice, with the reasonable
fees and expenses of any such counsel to be borne by the Indemnitor (subject to
the Threshold and Cap and other limitations set forth in this Article IX,
if applicable).  With respect to any such
claim that the Indemnified Party elects to control, the Indemnitor shall, at
its expense, have the right to participate in the defense of such claim and, in
any case, no such claim shall be settled by the Indemnified Party without the
written consent of the Indemnitor, which consent shall not be unreasonably
withheld, conditioned or delayed.

 46
 

9.6                     Scope of Liability.

(a)           The Buyer acknowledges and agrees that except in the case
of any Seller’s fraud or intentional misrepresentation, (i) the Buyer’s sole
remedy against the Sellers for any matter arising out of the transactions
contemplated by this Agreement is set forth in Article IX hereof, and
(ii) except to the extent Buyer has asserted a claim for indemnification prior
to the applicable survival periods set forth in Section 9.1, the Buyer shall have no remedy against the
Sellers for any breach of any provision of this Agreement.  In no event shall the Sellers have any
liability for Losses arising from the conduct of the Company’s and its
Subsidiaries’ business after the Closing.

(b)           Each Seller acknowledges and agrees that except in the
case of the Buyer’s fraud or intentional misrepresentation, such Seller’s sole
remedy against the Buyer for any matter arising out of the transactions
contemplated by this Agreement is set forth in Article IX hereof and
that, except to the extent such Seller has asserted a claim for indemnification
prior to the applicable survival periods set forth in Section 9.1, the Sellers shall have no
remedy against the Buyer for any breach of any provision of this Agreement.

9.7                     Characterization of Indemnity Payments.  Except as otherwise required by applicable
Law, any payment made pursuant to this Article IX shall be treated, for
Tax purposes, as an adjustment to the Purchase Price.

9.8                     Sellers’ Obligations.  Each Seller shall be liable only for such
Seller’s proportional share of any liability or obligation hereunder or under
any Ancillary Agreement, including, without limitation, the liabilities and
obligations of the Sellers under Sections 2.5,
2.6 and 7.3, and Article IX hereof,
and Section 5 of the Escrow
Agreement, except (i) with respect to the Escrow Fund, which shall be available
to satisfy indemnification claims made pursuant to this Article IX by any Buyer Indemnitee without
regard to which Seller is liable or such Seller’s proportional share thereof;
and (ii) with respect to indemnification claims by any Buyer Indemnitee under
Section 9.2(b) and which are not paid out of the Escrow Fund, for which such
breaching Seller shall be entirely liable. 
For purposes of this Agreement, the “proportional share” of any
liability or obligation of any Seller be determined based on such Seller’s
proportional share of the Closing Payment.

ARTICLE X

MISCELLANEOUS

10.1                   Notices. 
Any notice, request, demand, waiver, consent, approval or other
communication which is required or permitted hereunder shall be in writing and
shall be deemed given: (a) on the date established by the sender as having been
delivered personally, (b) on the date delivered by a private courier as
established by the sender by evidence obtained from the courier, (c) on the
date sent by facsimile, with confirmation of transmission, if sent during
normal business hours of the recipient, if not, then on the next business day,
or (d) on the fifth Business Day after the date mailed, by certified or
registered mail, return receipt requested, postage prepaid.  Such communications, to be valid, must be
addressed as follows:

 47
 

If to the Buyer, to:

Farmer Bros. Co.

20333 South Normandie Avenue

Torrance, California 90502

Attention:  Chief Executive Officer

Facsimile:  (310) 320-2436

with a copy (which shall not constitute
notice) to:

Anglin, Flewelling, Rasmussen, Campbell & Trytten LLP 

199 S. Los Robles Avenue, Suite 600

Pasadena, California 91101

Attention:  John M. Anglin, Esq.

Facsimile:  (626) 577-7764

If to the Seller Representative, to:

SvoCo. L.P.

One North Franklin Street, Suite 1500

Chicago, Illinois  60606

Attention:  Alex R. Miller

Facsimile:  (312) 267-6025

with a copy (which shall not constitute notice) to:

Katten Muchin Rosenman LLP

525 West Monroe Street

Chicago, Illinois 60661-3693

Attention:  Kenneth W. Miller, Esq.

Facsimile:  (312) 902-1061

If to any Seller, to the address set forth
with respect to such Seller on Schedule 1 hereto, with a copy (which
shall not constitute notice) to:

Katten Muchin Rosenman LLP

525 West Monroe Street

Chicago, Illinois 60661-3693

Attention:  Kenneth W. Miller, Esq.

Facsimile:  (312) 902-1061

 48
 

If to the Company, to:

Coffee Bean Holding Co., Inc.

2181 NW Nicolai Street

Portland, Oregon 97210

Attention:  President

Facsimile:  (503) 225-9604

with a copy (which shall not constitute notice) to:

Katten Muchin Rosenman LLP

525 West Monroe Street

Chicago, Illinois 60661-3693

Attention:  Kenneth W. Miller, Esq.

Facsimile:  (312) 902-1061

or to such other address or to
the attention of such Person or Persons as the recipient party has specified by
prior written notice to the sending party (or in the case of counsel, to such
other readily ascertainable business address as such counsel may hereafter
maintain).  If more than one method for
sending notice as set forth above is used, the earliest notice date established
as set forth above shall control.

10.2                   Seller Representative.

(a)           Except as otherwise provided herein, SvoCo is hereby
irrevocably constituted and appointed as the sole, exclusive, true and lawful
agent, representative and attorney-in-fact of all of the Sellers and each of
them (the “Seller Representative”),
with respect to any and all matters relating to, arising out of, or in
connection with this Agreement and the transactions contemplated hereby,
including for purposes of taking any action on behalf of any of the Sellers or
any of them under this Agreement and the Escrow Agreement, as fully to all
intents and purposes as such Person might or could do in person, including,
without limitation:

(i)          determining any
matters required to be determined pursuant to Section
2.5, and taking any and all action on behalf of the Sellers from
time to time as the Seller Representative may deem necessary or desirable to
defend, pursue, resolve and/or settle disputes pursuant to Section 2.5;

(ii)         determining the
presence (or absence) and directing payment of proceeds of claims for
indemnification against the Buyer pursuant to Article IX;

(iii)        delivering all
notices required to be delivered by the Sellers or any of them under this
Agreement, including, without limitation, any Protest Notice under Section 2.5 or a claim for which
indemnification is sought under Article IX;

 49
 

(iv)        receiving all notices
required to be delivered to the Sellers or any of them under this Agreement,
including, without limitation, any notice of a claim for which indemnification
is sought under Article IX;

(v)         receiving from the
Buyer and the Escrow Agent any payments and disbursements under this Agreement,
the Escrow Agreement or any Ancillary Agreement on behalf of the Sellers, and
making payments and disbursements of same, including, without limitation, any
payments and disbursements pursuant to the Sale Bonus Letters;

(vi)        incurring costs or
expenses, including, but not limited to, Tax obligations, on behalf of all
Sellers in connection with the transactions contemplated hereby and the
obligations of the Sellers hereunder;

(vii)       paying (or
establishing one or more reserves to pay), out of funds received on behalf of
the Sellers pursuant to this Agreement or the Escrow Agreement, obligations of
the Sellers under this Agreement and the Escrow Agreement, costs and expenses
incurred on behalf of the Sellers in connection with the transactions
contemplated hereby and the obligations of the Sellers hereunder, and the
payment of any additional amounts payable under the Sale Bonus Letters, as
determined by Seller Representative in its sole discretion;

(viii)      executing any
Ancillary Agreement on behalf of the Sellers or any Seller;

(ix)         taking any and all
action on behalf of the Sellers or any of them from time to time as the Seller
Representative may deem necessary or desirable to defend, pursue, resolve
and/or settle disputes or claims under this Agreement, including, without
limitation, claims for indemnification under Article IX;

(x)          consenting on behalf
of the Sellers or any of them with respect to matters under this Agreement or
the transactions contemplated hereby;

(xi)         engaging and
employing agents and representatives (including accountants, legal counsel and
other professionals) and incurring such other expenses as he deems necessary or
prudent in connection with the administration of the foregoing; and

(xii)        taking any and all
action on behalf of the Sellers or any of them to convey to the Buyer all of
the Shares and to evidence any such conveyance, including without limitation
execution and, if necessary, filing with the proper Governmental Bodies
documents evidencing such conveyance of the Shares.

All actions, notices,
communications and determinations by or on behalf of the Sellers or any of them
shall be given or made by the Seller Representative and all such actions,
notices, communications and determinations by the Seller Representative shall
conclusively be deemed

 50
 

to have been authorized by, and
shall be binding upon, the Sellers or any of them.  Execution of this Agreement by the Sellers
shall constitute ratification and approval of such appointment.

(b)           None of the Sellers may revoke the authority of the Seller
Representative.  Each Seller hereby
ratifies and confirms, and hereby agrees to ratify and confirm, any action taken
by the Seller Representative in the exercise of the power-of-attorney granted
to the Seller Representative pursuant to this Section
10.2, which power-of-attorney, being coupled with an interest, is
irrevocable and shall survive and not be affected by the subsequent
dissolution, termination, bankruptcy, death, disability, incapacity or
incompetence of such Seller.

(c)           The Seller Representative shall not have by reason of this
Agreement a fiduciary relationship in respect of any Seller, except in respect
of amounts received on behalf of such Seller. 
The Seller Representative shall not be liable to any Seller for any
action taken or omitted by him or any agent employed by him hereunder or under
any other Transaction Document, or in connection therewith, except that the
Seller Representative shall not be relieved of any liability imposed by law for
gross negligence or willful misconduct. 
The Seller Representative shall not be liable to any of the Sellers for
any apportionment or distribution of payments made by him in good faith, and if
any such apportionment or distribution is subsequently determined to have been
made in error the sole recourse of any Seller to whom payment was due, but not
made, shall be to recover from other Sellers any payment in excess of the
amount to which they are determined to have been entitled.  The Seller Representative shall not be
required to make any inquiry concerning either the performance or observance of
any of the terms, provisions or conditions of this Agreement.

(d)           In the event that the Seller Representative resigns for
any reason, the Seller Representative shall (in consultation with the Sellers)
select another representative to fill such vacancy.  Any substituted representative shall be
deemed the Seller Representative for all purposes of this Agreement and the
other Ancillary Agreements.  If at any
time there shall not be a Seller Representative, then Buyer may have a court of
competent jurisdiction appoint a Seller Representative hereunder.

(e)           Each Seller agrees that the Buyer shall be entitled to
rely on any action taken by the Seller Representative, on behalf of the
Sellers, pursuant to Section 9.2(a)
above (each, an “Authorized Action”),
and that each Authorized Action shall be binding on each Seller as fully as if
such Seller had taken such Authorized Action. 
The Buyer agrees that the Seller Representative shall have no liability
to the Buyer for any Authorized Action, except to the extent that such
Authorized Action is found by a final order of a court of competent
jurisdiction to have constituted fraud or willful misconduct.

(f)            The Buyer shall be entitled to rely on the full power and
authority of the Seller Representative to act hereunder and under any Exhibit
or Schedule hereto or any Ancillary Agreement on behalf of the Sellers, and
shall not be liable in any way whatsoever for any action the Buyer takes or
omits to take in reliance upon such power and authority.  No party hereunder shall have any cause of
action against the Buyer for any action taken by the Buyer in reliance upon the
instructions or decisions of the Seller Representative.

 51
 

10.3                   Amendments and Waivers.

(a)           Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and is signed, in the
case of an amendment, by each party to this Agreement, or in the case of a
waiver, by the party against whom the waiver is to be effective.

(b)           No failure or delay by any party in exercising any right
or privilege hereunder shall operate as a waiver thereof, nor shall any single
or partial exercise thereof preclude any other or further exercise thereof or
the exercise of any other right, power or privilege.

10.4                   Expenses. 
Except as otherwise provided in this Agreement, each party shall bear
its own costs and expenses in connection with this Agreement, the Ancillary
Agreements and the transactions contemplated hereby and thereby, including all
legal, accounting, financial advisory, consulting and all other fees and
expenses of third parties, whether or not the transaction contemplated hereby
is consummated.

10.5                   Successors and Assigns.  This Agreement may not be assigned by any
party hereto without the prior written consent of the other parties; provided
that, without such consent, the Buyer may transfer or assign, in whole or in
part or from time to time, to one or more of its Affiliates, the right to
purchase all or a portion of the Shares, but no such transfer or assignment
will relieve the Buyer of its obligations hereunder.  Subject to the foregoing, all of the terms
and provisions of this Agreement shall inure to the benefit of and be binding
upon the parties hereto and their respective executors, heirs, legal
representatives, successors and assigns.

10.6                   Governing Law.  This Agreement shall be governed by and interpreted
and enforced in accordance with the Laws of the State of California, without
giving effect to any choice of Law or conflict of Laws rules or provisions
(whether of the State of California or any other jurisdiction) that would cause
the application of the Laws of any jurisdiction other than the State of
California.

10.7                   Waiver of Jury Trial.  EACH PARTY HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED
ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SUCH PARTY IN THE
NEGOTIATION, ADMINISTRATION, PERFORM­ANCE AND ENFORCEMENT HEREOF.

10.8                   Counterparts.  This Agreement may be executed in
counterparts, and any party hereto may execute any such counterpart, each of
which when executed and delivered shall be deemed to be an original and all of
which counterparts taken together shall constitute but one and the same
instrument.  This Agreement shall become
effective when each party hereto shall have received a counterpart hereof
signed by the other party hereto.  In the
event that any signature to this Agreement or any amendment hereto is delivered
by facsimile transmission or by e-mail delivery of a “.pdf” format data file,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same

 52
 

force and effect as if such facsimile or “.pdf”
signature page were an original thereof. 
No party hereto shall raise the use of a facsimile machine or e-mail
delivery of a “.pdf” format data file to deliver a signature to this Agreement
or any amendment hereto or the fact that such signature was transmitted or
communicated through the use of a facsimile machine or e-mail delivery of a “.pdf”
format data file as a defense to the formation or enforceability of a contract
and each party hereto forever waives any such defense.

10.9                   No Third Party Beneficiaries.  No provision of this Agreement is intended to
confer upon any Person other than the parties hereto any rights or remedies
hereunder.

10.10                 Entire Agreement.  This Agreement, the Ancillary Agreements, the
Seller Disclosure Schedules, the Exhibits and Schedules, and the other
documents, instruments and agreements specifically referred to herein or
therein or delivered pursuant hereto or thereto set forth the entire
understanding of the parties hereto with respect to the transactions
contemplated by this Agreement.  All
schedules, including the Seller Disclosure Schedules, referred to herein are
intended to be and hereby are specifically made a part of this Agreement.  Any and all previous agreements and
understandings between or among the parties regarding the subject matter
hereof, whether written or oral, are superseded by this Agreement, except for
the Confidentiality Agreement which shall continue in full force and effect in
accordance with its terms.

10.11                 Captions. 
All captions 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.

10.12                 Severability. 
Any provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

10.13                 Interpretation.  The parties hereto have participated jointly
in the negotiation and drafting of this Agreement, and any rule of construction
or interpretation otherwise requiring this Agreement to be construed or
interpreted against any party by virtue of the authorship of this Agreement
shall not apply to the construction and interpretation hereof.

[SIGNATURE
PAGE FOLLOWS]

 

 53

IN WITNESS WHEREOF, the parties have executed and
delivered this Agreement as of the date first above written.

	
  Buyer:

  	
  FARMER BROS. CO.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ GUENTER W. BERGER

  
	
   

  	
  Name:

  	
  Guenter W. Berger

  
	
   

  	
  Title:

  	
  Chairman and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ ROGER M. LAVERTY III

  
	
   

  	
  Name:

  	
  Roger M. Laverty III

  
	
   

  	
  Title:

  	
  President and Chief Operating Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Company:

  	
  COFFEE BEAN HOLDING CO., INC.,

  
	
   

  	
  a Delaware corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ ALEX R. MILLER

  
	
   

  	
  Name:

  	
  Alex R. Miller

  
	
   

  	
  Title:

  	
  Chairman

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Sellers:

  	
  SVOCO, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SvoCo, G.P.

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  SvoCo, Inc.

  
	
   

  	
  Its:

  	
  Managing General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ JOHN SVOBODA

  
	
   

  	
  Name:

  	
  John Svoboda

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  	
   

  

 

[SIGNATURES OF SELLERS
CONTINUED ON THE FOLLOWING PAGE]

[SIGNATURE PAGE 1 OF 2 TO STOCK
PURCHASE AGREEMENT]

 

	
  Sellers (cont.):

  	
  PRAIRIE CAPITAL III, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Daniels & King Capital III, LLC

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ STEVE GROYA

  
	
   

  	
  Name:

  	
  Steve Groya

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  PRAIRIE CAPITAL III QP, L.P.,

  
	
   

  	
  a Delaware limited partnership

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Daniels & King Capital III, LLC

  
	
   

  	
  Its:

  	
  General Partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ STEVE GROYA

  
	
   

  	
  Name:

  	
  Steve Groya

  
	
   

  	
  Title:

  	
  Managing Director

  
	
   

  	
   

  	
   

  
	
   

  	
  WSG/CBI, L.L.C.,

  
	
   

  	
  a New Jersey limited liability company

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /S/ WILLIAM GREEN

  
	
   

  	
  Name:

  	
  William Green

  
	
   

  	
  Title:

  	
  Managing Member

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /S/ MARGARET R.
  CROW

  
	
   

  	
  Margaret R. Crow

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  /S/ PATRICK
  CRITESER

  
	
   

  	
  Patrick Criteser

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

[SIGNATURE PAGE 2 OF 2 TO STOCK PURCHASE AGREEMENT]

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00122-of-00352.parquet"}]]