ASSET PURCHASE AGREEMENT
PEABODYS COFFEE, INC., a Nevada corporation ("Peabodys"), and ARROSTO
COFFEE COMPANY, LLC, a California limited liability Company ("Arrosto"),
effective as of June 19, 2000, agree as follows:
1. BACKGROUND AND PURPOSE. Peabodys desires to purchase from Arrosto, and
Arrosto desires to sell to Peabodys, on the terms and subject to the conditions
of this Agreement, certain assets of Arrosto described in Section 2, in exchange
for the consideration described in Section 3, all in consideration of the mutual
covenants, agreements, representations, and warranties set forth in this
Agreement.
2. SALE AND TRANSFER OF ASSETS. Subject to the terms and conditions set
forth in this Agreement, Arrosto will sell, convey, transfer, assign, and
deliver to Peabodys, and Peabodys will purchase from Arrosto, the assets of
Arrosto which are described on Schedule 1 attached hereto and incorporated
herein ("Assets").
3. CONSIDERATION FOR THE ASSETS. As consideration for the Assets, subject
to the terms and conditions set forth in Section 4, Peabodys shall issue to
Arrosto Three Hundred and Twenty Thousand (320,000) shares of Peabodys' common
stock ("Shares"), which will be issued to Arrosto by Peabodys, as set forth
below, and will be "restricted securities" as that term is defined in Rule 144
promulgated under the Securities Act of 1933, as amended ("Securities Act").
3.1. ALLOCATION OF PURCHASE PRICE. The parties acknowledge that the
valuation of the Shares, as restricted securities serving as consideration for
the Assets, has been arbitrarily determined by the parties. In valuing the
Shares the parties have considered the value of the Assets set forth on Schedule
1, less the valuation of the assumed obligations set forth on Schedule 2. The
Shares are valued by the parties at Fifty Cents ($0.50) per share, for an
aggregate valuation of One Hundred and Sixty Thousand Dollars ($160,000.00)
("Purchase Price"). The Purchase Price shall be allocated among the Assets as
set forth on Schedule 1. Each of the parties shall report this transaction for
federal tax purposes in accordance with this allocation of the Purchase Price.
3.2. PURCHASE OF UNITS. As further inducement for Peabodys to enter
into this Agreement, Arrosto, or other parties as designated by Arrosto, and
Peabodys shall enter into a subscription agreement, substantially in the form
attached hereto as Exhibit A ("Subscription Agreement"), pursuant to which
Arrosto (or its assignees) shall purchase from Peabodys, and Peabodys shall
issue to Arrosto (or its assignees), Two Hundred and Twenty Thousand (220,000)
units ("Units"), with each Unit consisting of: (i) one (1) share of Peabodys'
common stock; and (ii) one (1) warrant for the purchase of a share of common
stock at an exercise price of One Dollar ($1.00) for a term of three (3) years.
The Units shall be purchased for Fifty Cents ($0.50) per Unit, for a total
purchase price of One Hundred and Ten Thousand Dollars ($110,000.00).
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4. PAYMENT OF PURCHASE PRICE. As payment of the Purchase Price, Peabodys
shall issue the Three Hundred and Twenty Thousand (320,000) Shares and deliver
to Arrosto a share certificate representing such issuance ("Share Certificate")
under the following terms, and subject to the following conditions:
(a) The parties acknowledge that, as of the Closing date all of the
Assets are encumbered by a security interest in favor of G. E. Capital Small
Business Finance Corporation ("Security Interest"). A condition precedent to the
obligation of Peabodys to issue the Shares and deliver the Share Certificate to
Arrosto is the removal from the Assets of the Security Interest. Upon
presentation of evidence to Peabodys which establishes, to Peabodys' reasonable
satisfaction, that the Security Interest has been removed from the Assets,
subject to other conditions set forth in this Section 4, Peabodys will issue the
Shares, evidencing such issuance by delivery of the Share Certificate to
Arrosto. If the Security Interest is not removed before October 15, 2000, then
the number of Shares serving as consideration for the Assets shall be reduced by
Five Thousand (5,000) Shares. Thereafter, on the fifteenth (15th) day of each
following calendar month, until and including March 15, 2001, if the Security
Interest has not been removed from the Assets, the number of Shares will be
reduced by an additional Five Thousand (5,000) Shares. Beginning on April 15,
2001, and continuing on the fifteenth (15th) day of each following calendar
month, if the Security Interest has not been removed from the Assets, the number
of Shares will be reduced by an additional Twenty Five Thousand (25,000) Shares.
(b) If, prior to removal of the Security Interest from the Assets as
described in subpart (a), Peabodys is required to forfeit any of the Assets to
G. E. Capital, then the number of Shares serving as consideration for the Assets
shall be reduced in a proportionate amount based on the value of the Asset(s)
forfeited relative the value of all the Assets.
(c) As a further condition to Peabodys' obligations to issue the
Shares and deliver the Share Certificate, all representations and warranties by
Arrosto contained in this Agreement, or in any written statement that will be
delivered to Peabodys under this Agreement, must be true in all material
respects.
5. ASSUMPTION OF OBLIGATIONS. Peabodys will assume only those obligations
and liabilities set forth in Schedule 2. It is expressly understood and agreed
that Peabodys will not be liable for any of the obligations or liabilities of
Arrosto of any kind other than those expressly set forth on Schedule 2. The
parties understand and acknowledge that in no event will the "trade payables
obligation," assumed by Peabodys as described in Schedule 2, exceed a total
amount of Thirty Six Thousand, Five Hundred Dollars ($37,570.00).
6. PAYMENT OF TAXES. Peabodys will pay all sales and use taxes arising from
the transfer of the Assets. Arrosto will pay its portion, prorated as of the
Closing date, of state and local real and personal property taxes of the
business. Peabodys will not be responsible
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for any business, occupation, withholding, or similar tax, or any taxes of any
kind related to any period before the Closing date.
7. REPRESENTATIONS AND WARRANTIES OF ARROSTO. Arrosto represents and
warrants as follows:
7.1. ORGANIZATION, EXISTENCE AND STANDING. Arrosto is a limited
liability company, duly organized, validly existing, and in good standing under
the laws of California and has all necessary corporate powers to own the Assets
and to transfer good and marketable title to the Assets to Peabodys.
7.2. TITLE TO ASSETS. Arrosto has good and marketable title to all of
the Assets. All of the Assets are free and clear of restrictions on, or
conditions to, transfer or assignment, and free and clear of all mortgages,
liens, pledges, charges, encumbrances, equities, claims, easements, rights of
way, covenants, conditions, or restrictions, except for: (i) the Security
Interest described in Section 4(a); (ii) the lien of current taxes not yet due
and payable; and (iii) possible minor matters that, in the aggregate, are not
substantial in amount and do not materially detract from or interfere with the
present or intended use of any of these assets or materially impair business
operations. Arrosto is not in default or in arrears in any material respect
under any lease. All real property and tangible personal property of Arrosto are
in good operating condition and repair, ordinary wear and tear excepted.
7.3. INVENTORIES. The inventories of raw materials, work in process,
and finished goods (collectively called inventories) described in Schedule 1
consist of items that are usable and salable in the ordinary course of business
by Arrosto. Except for sales made in the ordinary course of business since that
date, all such inventories are the property of Arrosto. No items are subject to
any security interest, except the Security Interest described in Section 4(a).
7.4. COMPLIANCE WITH LAWS. Arrosto has not received notice of any
violation of any applicable federal, state, or local statute, law, or regulation
(including any applicable building, zoning, environmental protection, or other
law, ordinance, or regulation) relating to the ownership or use of any of the
Assets; and to the best of the knowledge of Arrosto, there are no such
violations.
7.5. LITIGATION. There is no pending, or, to the best knowledge of
Arrosto, threatened, suit, action, arbitration, or legal, administrative, or
other proceeding, or governmental investigation against or affecting Arrosto
relating to the ownership or use of any of the Assets. Arrosto is not in default
with respect to any order, writ, injunction, or decree of any federal, state,
local, or foreign court, department, agency, or instrumentality.
7.6. NO BREACH OR LITIGATION. The consummation of the transactions
contemplated by this Agreement will not result in or constitute any of the
following: (1) a breach of any term or provision of this Agreement; (2) a
default or an event that, with notice, lapse of time, or both, would be a
default, breach, or violation of the articles of incorporation
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or bylaws of Arrosto or any lease, license, promissory note, conditional sales
contract, commitment, indenture, mortgage, deed of trust, or other agreement,
instrument, or arrangement to which Arrosto is a party or by which any of them
or the property of any of them is bound; (3) an event that would permit any
party to terminate any agreement or to accelerate the maturity of any
indebtedness or other obligation of Arrosto; or (4) the creation or imposition
of any lien, charge, or encumbrance on any of the properties of Arrosto.
7.7. AUTHORITY AND CONSENTS. Arrosto has the right, power, legal
capacity, and authority to enter into and perform its obligations under this
Agreement, and no approvals or consents of any persons other than Arrosto are
necessary in connection with it. The execution and delivery of this Agreement by
Arrosto has been duly authorized by all necessary corporate action on the part
of Arrosto.
8. REPRESENTATIONS AND WARRANTIES OF PEABODYS. Peabodys represents and
warrants as follows:
8.1. ORGANIZATION, EXISTENCE AND GOOD STANDING. Peabodys is a
corporation duly organized, existing, and in good standing under the laws of
Nevada. The execution and delivery of this Agreement and the consummation of
this transaction by Peabodys have been duly authorized, and no further corporate
authorization is necessary on the part of Peabodys.
8.2. REQUIRED APPROVALS. No consent, approval, or authorization of any
third party, or declaration, filing, or registration with, any federal or state
governmental or regulatory authority, is required to be made or obtained by
Peabodys in connection with the execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated by this
Agreement.
9. CLOSING. The execution of this Agreement and the Subscription Agreement,
and the transfer of the Assets by Arrosto to Peabodys (the "Closing") will take
place on June 19, 2000, at a time and place agreed to by the parties.
9.1. ARROSTO'S OBLIGATIONS AT CLOSING. At the Closing, Arrosto shall
deliver or cause to be delivered to Peabodys:
(a) All instruments of assignment and transfer required to
transfer all right, title and interest in all of the Assets to Peabodys;
(b) Instruments of assignment of all contracts and agreements,
properly executed and acknowledged by Arrosto, and accompanied by all consents
of lessors required by this Agreement and the leases being assigned; and
(c) Arrosto or its assigns shall deliver One Hundred and Ten
Thousand Dollars ($110,000.00) as consideration for the Units described in
Section 3.2, to be wire transferred into an account designated by Peabodys, in
accordance with instructions to be
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supplied by Peabodys, all in accordance with the Subscription Agreement.
At the Closing, Arrosto shall take all actions
reasonably required to put Peabodys into full possession and enjoyment of all of
the Assets to be conveyed and transferred by this Agreement. At any time before
or after the Closing date, Arrosto shall execute, acknowledge, and deliver any
further deeds, assignments, conveyances, and other assurances, documents, and
instruments of transfer, reasonably requested by Peabodys, and will take any
other action consistent with the terms of this Agreement that may reasonably be
requested by Peabodys for the purpose of assigning, transferring, granting,
conveying, and confirming to Peabodys, or reducing to possession, any or all of
the Assets. If requested by Peabodys, Arrosto will prosecute or otherwise
enforce in its own name for the benefit of Peabodys any claims, rights, or
benefits that are transferred to Peabodys under this Agreement and that require
prosecution or enforcement in Arrosto's name. Any prosecution or enforcement of
claims, rights, or benefits under this section will be solely at Peabodys'
expense, unless the prosecution or enforcement is made necessary by a breach of
this Agreement by any of the Arrosto.
9.2. PEABODYS' OBLIGATIONS AT CLOSING. At the Closing or as soon as
practicable thereafter, Peabodys shall deliver the following:
(a) A share certificate(s) and a warrant(s), representing Two
Hundred and Twenty Thousand (220,000) shares, and Two Hundred and Twenty
Thousand (220,000) warrant shares, respectively, made in the name of Arrosto (or
its assignees), which shall be delivered to Arrosto (or its assignees) in
connection with the Subscription Agreement(s).
10. ARROSTO'S OBLIGATIONS AFTER CLOSING.
10.1. ARROSTO'S INDEMNITY. Arrosto shall indemnify, defend, and hold
harmless Peabodys against and with respect to all claims, demands, losses,
costs, expenses, obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and reasonable attorney fees, that
Peabodys may incur or suffer, that arise from any breach of, or failure by
Arrosto to perform, any of its representations, warranties, covenants, or
agreements in this Agreement or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Arrosto under this Agreement.
10.1.1. DEFENSE OF CLAIMS. Peabodys will promptly notify Arrosto
of the existence of any claim, demand, or other matter to which Arrosto's
indemnification obligations would apply, and will give it a reasonable
opportunity to defend the same at its own expense and with counsel of its own
selection; provided that Peabodys will at all times also have the right to
participate fully in the defense at its own expense. If, within a reasonable
time after this notice, Arrosto fails to defend, Peabodys will have the right,
but not the obligation, to undertake the defense of, and to compromise or settle
(exercising reasonable business judgment), the claim or other matter on behalf
and at the risk of Arrosto. If the claim is one
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that cannot by its nature be defended solely by Arrosto (including any federal
or state tax proceeding), Peabodys will make available all information and
assistance that Arrosto may reasonably request.
10.2. CONFIDENTIALITY. Arrosto will not divulge, communicate, use to
the detriment of Peabodys, or for the benefit of any other person or persons, or
misuse in any way, any confidential information or trade secrets (including,
without limitation, secret processes, know-how, customer lists, recipes,
formulas, or other technical data) related to the Assets.
10.3. NONCOMPETITION. In consideration for a portion of the Purchase
Price as set forth on Schedule 1, Arrosto and its principals will not, at any
time within a three (3) year period immediately following the Closing date,
directly or indirectly engage in or have any interest in any person, firm, or
business (whether as an employee, officer, director, agent, security holder,
creditor, consultant, or otherwise) that engages in any activity in each county
in the State of California, or in any county in which Peabodys conducts business
outside of the State of California, that is the same as, similar to, or
competitive with any activity now engaged in by Peabodys, or currently engaged
in by Arrosto in connection with the Assets, in any of the above-described
counties as long as Peabodys (or any successor) engages in the activity in such
county or other area.
The parties intend that the covenant contained in the preceding
portion of this section be construed as a series of separate covenants, one for
each county. Except for geographic coverage, each such separate covenant will be
considered identical in terms to the covenant contained in the preceding
paragraph. If, in any judicial proceeding, a court refuses to enforce any of the
separate covenants included in this paragraph, the unenforceable covenant will
be considered eliminated from these provisions for the purpose of those
proceedings to the extent necessary to permit the remaining separate covenants
to be enforced.
11. PEABODYS' OBLIGATION AFTER CLOSING.
11.1. PEABODYS' INDEMNIFICATION. Peabodys shall indemnify and hold
harmless against, and with respect to, claims, losses, expenses, costs,
obligations, and liabilities it may incur by reason of Peabodys' breach of or
failure to perform any of its warranties or commitments in this Agreement, or by
reason of any act or omission of Peabodys, or any of its successors or assigns,
after the Closing date, that constitutes a breach or default under, or a failure
to perform, any obligation or liability which Peabodys has expressly assumed
under this Agreement.
All notices to third parties and all other publicity concerning
the transactions contemplated in this Agreement will be jointly planned and
coordinated by and between Peabodys and Arrosto. No party will act unilaterally
in this regard without the prior written approval of the others; however, this
approval will not be unreasonably withheld.
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12. COSTS AND EXPENSES.
12.1. NO BROKERS OR FINDERS. Each party warrants that it has dealt
with no broker or finder in connection with any transaction contemplated by this
Agreement, and, as far as it knows, no broker or other person is entitled to any
commission or finder's fee in connection with any of these transactions.
12.2. EXPENSES. Each party will pay all costs and expenses incurred or
to be incurred by it in negotiating and preparing this Agreement and in closing
and carrying out the transactions contemplated in this Agreement.
13. SECURITIES REPRESENTATIONS BY ARROSTO. Arrosto, through its principals,
acknowledges, understands, represents, warrants and covenants the following with
respect to the Shares:
(a) No federal or state agency has made any finding or determination
as to the fairness of the offering of the Shares for investment, or any
recommendation or endorsement of the Shares;
(b) The Shares have not been registered under the Securities Act of
1933, as amended (the "Securities Act"), but are being offered pursuant to the
exemption from registration provided by Section 4(2) of the Act and Rule 506 of
Regulation D promulgated thereunder, and under the intrastate offering exemption
set forth at Section 3(a)(11) of the Securities Act and Rule 147 promulgated
thereunder. The offer and sale of the Shares has not been registered or
qualified with any state regulatory agencies. Peabodys is offering the Shares in
reliance on the exemption from state regulation provided by Section 18 of the
Securities Act for "covered securities," as that term is defined in Section
18(b)(4)(D) of the Securities Act. The Shares may not be resold or otherwise
transferred unless an exemption from registration is available.
(c) The tax consequences to Arrosto of investing in Peabodys will
depend on Arrosto's particular circumstances and neither Peabodys nor its
officers, directors, agents, employees, affiliates or consultants will be
responsible to Arrosto for the tax consequences of an investment in Peabodys.
Arrosto will look solely to, and rely upon, its own advisors with respect to the
tax consequences of this investment;
(d) At no time have any of the following been guaranteed or warranted
to Arrosto by Peabodys, or any of its officers, directors, agents or employees,
or any other person, expressly or by implication:
(i) the approximate or exact length of time that Arrosto will be
required, by market conditions or otherwise, to remain the owner of the Shares;
(ii) the amount of profit and/or amount of any type of
consideration, profit or loss, if any, to be realized as a result of this
investment; or
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(iii) the future successful operation of Peabodys.
(e) No representations or warranties of any kind are intended to be
made in this Agreement nor should any be inferred from the information and
statements contained herein with respect to the economic return or benefits
which may accrue to investors. No assurance is given that existing tax,
securities, or other laws will not be changed or interpreted adversely. Arrosto
is not to construe the contents of this Agreement or any prior, concurrent or
subsequent communication from Peabodys, its officers, directors, agents or
employees, or any professionals associated with this offering as legal, tax or
investment advice. ARROSTO SHALL CONSULT WITH HIS OWN COUNSEL, ACCOUNTANT AND
OTHER ADVISORS AS TO THE LEGAL, TAX AND RELATED MATTERS CONCERNING THE
INVESTMENT IN THE SHARES.
(f) Arrosto is acquiring the Shares for Arrosto's own account, solely
for investment and not with a view to resale or distribution;
(g) Arrosto either:
(i) has a preexisting personal or business relationship with Peabodys
or any of its officers, directors, controlling persons or agents; or
(ii) by reason of Arrosto's business or financial experience, or
the business or financial experience of Arrosto's professional advisor who is
not affiliated with or compensated by Peabodys, has the capacity to evaluate
adequately the merits and risks of, and protect his or her own interests in
connection with, this investment;
(h) Arrosto can afford to bear the economic risks of this investment
for an indefinite period and has no need for liquidity in this investment.
Arrosto has adequate means of providing for Arrosto's current needs and
contingencies if this investment results in a total loss;
(i) Arrosto is acquiring the Shares without having been furnished any
offering literature or prospectus other than Peabodys' Form 10-SB Registration
Statement, as amended, and related financial statements ("Form 10-SB"), and
other documents specifically authorized by Peabodys. Arrosto has not seen,
received or been presented with any advertising or general solicitation in any
form with respect to the sale of the Shares;
(j) Arrosto has received and carefully read the Form 10-SB, and
Peabodys has made available to the Arrosto all documents that have been
requested relating to an investment in the Shares. Peabodys has provided an
opportunity for Arrosto to ask questions, and has provided answers to all of
Arrosto's questions concerning the terms of the offering. In evaluating the
suitability of an investment in the Shares, Arrosto has not relied upon any
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representations or other information (whether oral or written) other than as set
forth in the Form 10-SB, or as contained in any documents or answers to
questions furnished by Peabodys;
(k) Arrosto recognizes that the investment in Peabodys involves
substantial risks, including a risk of total loss of Arrosto's investment.
Arrosto is aware of and understands all of the risk factors related to Arrosto's
purchase of the Shares, including but not limited to those contained in the Form
10-SB;
(l) Within five (5) days after receipt of a written request from
Peabodys, Arrosto shall provide such information and shall execute and deliver
such documents as reasonably may be necessary to comply with any and all laws,
regulations and ordinances to which Peabodys is subject;
(m) All of the information provided to Peabodys or its agents and all
representations made herein are complete, true and correct as of the date
hereof. Arrosto understands that Arrosto's answers will be confidential but
authorizes Peabodys or its agents to disclose the information contained herein
to appropriate regulatory agencies if called upon to establish the availability
of an exemption from registration under the act or qualification under state
securities laws or for other purposes; and
(n) The undersigned who is signing on behalf of Arrosto is duly
authorized and empowered to legally represent such entity and each of its owners
and to execute this Agreement and all other instruments in connection with the
purchase of the Shares on behalf of such entity and each owner thereof.
14. MISCELLANEOUS.
14.1. HEADINGS. The subject headings of the paragraphs and
subparagraphs of this Agreement are included for convenience only and will not
affect the construction or interpretation of any of its provisions.
14.2. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties pertaining to the subject matter contained in it
and supersedes all prior and contemporaneous agreements, representations, and
understandings of the parties. No supplement, modification, or amendment of this
Agreement will be binding unless executed in writing by all the parties. No
waiver of any of the provisions of this Agreement will be considered, or will
constitute, a waiver of any other provision, and no waiver will constitute a
continuing waiver. No waiver will be binding unless executed in writing by the
party making the waiver.
14.3. COUNTERPARTS. This Agreement may be executed simultaneously in
one or more counterparts, each of which will be considered an original, but all
of which together will constitute one and the same instrument.
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14.4. PARTIES IN INTEREST. Nothing in this Agreement, whether express
or implied, is intended to confer any rights or remedies under or by reason of
this Agreement on any persons other than the parties to it and their respective
successors and assigns; nothing in this Agreement is intended to relieve or
discharge the obligation or liability of any third persons to any party to this
Agreement; and no provision will give any third persons any right of subrogation
or action against any party to this Agreement.
14.5. SUCCESSORS AND ASSIGNS. This Agreement will be binding on, and
will inure to the benefit of, the parties to it and their respective heirs,
legal representatives, successors, and assigns, provided that Peabodys may not
assign any of its rights under this Agreement except to a wholly owned
subsidiary of Peabodys. No such assignment by Peabodys to its wholly owned
subsidiary will relieve Peabodys of any of its obligations or duties under this
Agreement.
14.6. SPECIFIC PERFORMANCE. Each party's obligation under this
Agreement is unique. If any party should default in its obligations under this
Agreement, the parties each acknowledge that it would be extremely impracticable
to measure the resulting damages; accordingly, the nondefaulting party or
parties, in addition to any other available rights or remedies, may sue in
equity for specific performance, and the parties each expressly waive the
defense that a remedy in damages will be adequate. Despite any breach or default
by any of the parties of any of their respective representations, warranties,
covenants, or agreements under this Agreement, if the purchase and sale
contemplated by it will be consummated at the Closing, each of the parties
waives any rights that they may have to rescind this Agreement or the
transaction consummated by it provided that this waiver will not affect any
other rights or remedies available to the parties under this Agreement or under
the law.
14.7. ATTORNEY'S FEES. If any legal action, arbitration, or other
proceeding is brought for the enforcement of this Agreement, or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this Agreement, the successful or prevailing party or parties
will be entitled to recover reasonable attorney fees and other costs incurred in
that action or proceeding, in addition to any other relief to which they may be
entitled.
14.8. SURVIVAL. All representations, warranties, covenants, and
agreements of the parties contained in this Agreement, or in any instrument,
certificate, opinion, or other writing provided for in it, will survive the
Closing.
14.9. NOTICES. All notices, requests, demands, and other
communications under this Agreement must be in writing and will be considered to
have been duly given on the date of service if served personally on the party to
whom notice is to be given, or on the second day after mailing if mailed to the
party to whom notice is to be given, by first class mail, registered or
certified, postage prepaid, and properly addressed as follows:
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To Arrosto: Mr. Joe Konis
Arrosto Coffee Company, LLC
15019 Califa Street
Van Nuys, CA 91411
To Peabodys: Mr. Todd Tkachuk
Peabodys Coffee, Inc.
3845 Atherton Road, Suite 9
Rocklin, CA 95765
Any party may change its address for purposes of this paragraph
by giving the other parties written notice of the new address in the manner set
forth above.
14.10. GOVERNING LAW. This Agreement will be construed in accordance
with, and governed by, the laws of the State of California as applied to
contracts that are executed and performed entirely in California.
14.11. SEVERABILITY. If any provision of this Agreement is held
invalid or unenforceable by any court of final jurisdiction, it is the intent of
the parties that all other provisions of this Agreement be construed to remain
fully valid, enforceable, and binding on the parties.
Signatures on Following Page
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ARROSTO COFFEE COMPANY, LLC,
A California Limited Liability Company
By:_____________________________________
(Joe Konis, Member/Manager)
PEABODYS COFFEE, INC.
a Nevada Corporation
By:_____________________________________
(Todd N.Tkachuk, President)
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SCHEDULE 1
ASSETS TO BE ACQUIRED
DESCRIPTION QUANTITY VALUE
----------- -------- -----
Fixed Assets
Probat Roaster 1 $60,000
Chaffer 1 3,000
After Burner 1 14,000
Grinders and Brewers
Ditting Grinder 1 1,000
Espresso Grinders Used 2 500
Curtis Twin Air Pot Brewer 1 1,100
Curtis Pour Over Air Pot Brewer 2 760
America Metal Ware 6 Gallon Brewer 1 1,100
Espresso Machines
SoTech Two Group 3 6,000
Faema (E91) Two Group 1 2,500
Pavoni Two Group 1 500
Pavoni Two Group 2 500
Unic Two Group 1 2,000
Office Equipment
HP Fax/Printer 1 600
HP Copier 2500C 1 1,500
Brothers Fax/Printer 1 200
File Cabinets/Desks 1 3,000
Field Assets
American MetalWare Grinder/Brewer 8 6,400
Tea Urns 6 6,000
Espresso Machines 3 7,500
Miscellaneous
Shelving 1 3,000
3ft Arnag Cold Case 1 7,500
Arrosto Electric Neon Signs 3 7,500
Bean Displays 13 2,000
Hopper Dosers 6 300
Ross Temp Ice Maker 1 800
Two Compartment Prep Sink 1 1,000
Three Compartment Wash Sink 1 250
50 Gallon Commercial Water Heater 1 500
Heat Sealer 1 1,500
Compressor 1 500
Mill Work for Retail Espresso Bar 1 3,000
One Door Freezer 1 200
Auto Sham 1000-TH-1 Double Oven 1 1,500
Bev Air Under Counter Refrigerator 1 200
Subtotal $ 147,910
INVENTORY (see attached list) $ 11,662
NONCOMPETITION AGREEMENT $ 37,995
TOTAL $ 197,567.00
<PAGE>
ARROSTO INVENTORY
ITEM CONTENT PRICE PER VALUE
---- ------- --------- -----
--------------------------------------------------------------------------------
Roasted Beans 446 Pounds $3.00 per/lb. $ 1,338.00
Non-Kona Beans 14 Bags/150lbs. $1.50 per/lb. $ 3,150.00
Kona Beans 2 Bags/130lbs. $10.00 per/lb. $ 2,600.00
Bristot `IL Caffe' Classico 72 Bags $11.00 per/bag $ 792.00
Bristot Bar Micela Tiziano 12 Bags $11.00 per/bag $ 132.00
Affe' Decaffeinato 246 Cans $4.00 per/can $ 984.00
Tazo Iced Tea 77-boxes/24 ct. $2.25 per/box $ 173.25
Stash Iced Tea 96/ 1oz. Packs $0.50 per/packet $ 48.00
Syrup 778 bottles $2.85 per/bottle $ 2,217.30
Designer Protein 7 Jugs $32.50 per/jug $ 227.50
--------------------------------------------------------------------------------
TOTAL VALUE: $11,662.05
------------
<PAGE>
SCHEDULE 2
OBLIGATIONS TO BE ASSUMED
1. Dodge Pick-up Auto Lease, at $160.00 per month--PEABODY'S ASSUMES NO
OBLIGATIONS UNDER THIS LEASE OTHER THAN THE MONTHLY PAYMENT OBLIGATION, WHICH
PEABODY'S WILL FULFILL BY MAKING MONTHLY PAYMENTS TO ARROSTO.
2. Dell Computer Lease, at $157.33 per month, ONLY THROUGH SEPTEMBER OF 2000.
3. Month to Month sublease of facility located on Califa Street in Van Nuys
($1,950.00 per month)--PEABODYS WILL SUBLEASE THIS FACILITY FROM ARROSTO, WHO
WILL REMAIN LIABLE ON THE PRIMARY LEASE
4. Accounts Payable:
6/19/2000 - Accounts Payable
<TABLE>
<CAPTION>
DATE INVOICE # VENDOR AMOUNT DESCRIPTION
------------ ----------- ------------------ -------------- ---------------
<S> <C> <C> <C> <C>
06/06/00 AICCO 19.26 INSURANCE
06/22/00 348782 CLASSIC PLAN 446.26
06/10/00 3534674 DUN & BRADSTREET 29.95
05/22/00 DWP 300.85 ELECTRIC BILL
03/15/00 3413 EXPRESSO PRIMO 86.60 PARTS
02/21/00 3422 EXPRESSO PRIMO 194.85 PARTS
FARMERS INS. 173.80 DAKOTA INS
03/15/00 GLOBAL COM 139.77
03/23/00 30048425 GRINDMASTER 32.10
02/23/00 30043693 GRINDMASTER 110.78
02/08/00 30040928 GRINDMASTER 1,348.74
01/19/00 30037839 GRINDMASTER 563.27
01/18/00 30037690 GRINDMASTER 1,192.74
10/15/99 30025260 GRINDMASTER 29.67
10/07/99 30023927 GRINDMASTER 1,220.37
09/29/99 30022638 GRINDMASTER 31.93
09/24/99 30021966 GRINDMASTER 63.25
09/23/99 30021753 GRINDMASTER 168.87
06/30/99 30009797 GRINDMASTER 1,943.09
05/11/00 K-TECK 1,530.00
04/30/00 LA PRINT 896.16 CARD DRINKS
05/22/00 MOBIL OIL 1,129.00
05/11/00 9910986038 NEBS 130.29 COMPUTER CHECK
<PAGE>
02/22/00 55163 NEXT PROTEINS 705.32
01/04/00 52770 NEXT PROTEINS 362.74
02/02/00 54082 NEXT PROTEINS 453.42
06/08/00 8590428 PACIFIC BELL 249.87 PHONE BILL
06/08/00 5966 PACIFIC EXPRESSO 83.70 PUROCAFFE
04/05/00 1704 PACK PLUS 471.00 SEAL BAGS
Balance n/a ROYAL COFFEE 19,564.98
05/31/00 84145 SUPERIOR PAPER 188.89
05/15/00 82980 SUPERIOR PAPER 311.28
03/17/00 78908 SUPERIOR PAPER 549.14
03/23/00 78353 SUPERIOR PAPER 64.38
04/21/00 81453 SUPERIOR PAPER 278.48
04/27/00 81775 SUPERIOR PAPER 219.36
05/02/00 82000 SUPERIOR PAPER 1,152.98
03/31/00 420033 TECKNOWAVE 450.00
06/05/00 THE GAS CO 194.06 GAS BILL
06/02/00 13517 TOM HULL 25.00 PAYROLL ASST.
04/27/00 2975657 ULINE 133.24 PACKING BOXES
04/20/00 98852 VIKING 127.92 OFFICE SUPPLIES
04/11/00 77502 VIKING 145.26 OFFICE SUPPLIES
1101 WINDWARD 55.04
----------------
TOTAL: 37,567.66
================
</TABLE>
<PAGE>
EXHIBIT A
SUBSCRIPTION AGREEMENT
PEABODYS COFFEE, INC., a Nevada corporation (the "Company"), and ARROSTO
COFFEE COMPANY LLC, a California limited liability company ("Subscriber"),
effective as of June _____, 2000, agree as follows:
1. BACKGROUND. The Company has entered into an Asset Purchase Agreement with
Subscriber of even date herewith. Pursuant to the terms of that agreement, the
Company is selling Two Hundred and Twenty Thousand (220,000) units ("Units"),
with each Unit consisting of: (i) one (1) share of Peabodys' common stock
("Share"); and (ii) one (1) warrant for the purchase of a share of common stock
at an exercise price of One Dollar ($1.00) for a term of three (3) years in a
private offering ("Warrant"). The Company has furnished Subscriber with a copy
of the Company's Form 10-SB Registration Statement, as amended, and related
financial statements (collectively, "Form 10-SB"), which Subscriber, through its
principals, has thoroughly reviewed. The Company desires to sell the Units to
Subscriber, and Subscriber desires to purchase the Units, on the terms and
conditions set forth below.
2. PURCHASE AGREEMENT. Subscriber hereby offers to purchase the Units, at a
purchase price of Fifty Cents ($0.50) per Unit, for a total purchase price of
One Hundred and Ten Thousand Dollars ($110,000.00) ("Purchase Price").
3. PAYMENT FOR THE UNITS. As payment of the Purchase Price, Subscriber shall
deliver, on or before the Closing as that term is defined in Section 11 of the
Asset Agreement, One Hundred and Ten Thousand Dollars ($110,000.00) by wire
transfer to an account, and in accordance with instructions, supplied by the
Company. At such Closing or as soon as practicable thereafter, the Company shall
deliver to Subscriber: (i) a share certificate evidencing the issuance of Two
Hundred and Twenty Thousand (220,000) Shares, and (ii) a warrant agreement for
the purchase of Two Hundred and Twenty Thousand (220,000) shares in the form
attached hereto.
4. ACKNOWLEDGMENTS. Subscriber, through its principals, acknowledges and
understands the following (all references to "Shares" also include the Warrant
and the shares underlying the Warrant):
(a) GENERAL SECURITIES RISK. The Shares are "securities" under federal and
state securities laws, and these securities involve a high degree of risk and
should not be purchased by anyone who cannot afford the risk of loss of his or
her entire investment.
(b) REVIEW BY FEDERAL OR STATE AGENCY. No federal or state agency has made
any finding or determination as to the fairness of the offering of the Shares
for investment, or any recommendation or endorsement of the Shares.
Specifically, these securities have not been approved or disapproved by the
Securities & Exchange Commission ("SEC"), the California Department of
Corporations ("DOC"), or any other state or federal agency.
<PAGE>
(c) NO FEDERAL REGISTRATION. The offer and sale of the Shares have not been
registered under the Securities Act of 1933, as amended (the "Securities Act").
The Company is offering the Shares in reliance upon the exemption from
registration provided by Rule 506 of Regulation D promulgated under Section 4(2)
of the Securities Act (17 CFR ss. 230.506).
(d) NO STATE QUALIFICATION OR REGISTRATION. The offer and sale of the
Shares has not been qualified with the Commissioner of Corporations of the State
of California. The Company is offering the Shares in reliance on the exemption
from state regulation provided by California Corporations Code Section 25102.1
for "covered securities," as that term is defined in Section 18 of the Act.
(e) FOREIGN SECURITIES LAWS. The Company makes no representation with
regard to the securities laws and other laws of any country other than the
United States. SUBSCRIBER WILL LOOK SOLELY TO, AND RELY UPON, HIS OR HER OWN
ADVISOR WITH RESPECT TO THE EFFECT OF SUCH SECURITIES LAWS AND OTHER LAWS ON
THIS INVESTMENT.
(f) TAX CONSEQUENCES. The tax consequences to Subscriber of investing in
the Shares will depend on Subscriber's particular circumstances and neither
Peabodys nor its officers, directors, agents, employees, affiliates or
consultants will be responsible to Subscriber for the tax consequences of such
an investment. SUBSCRIBER WILL LOOK SOLELY TO, AND RELY UPON, SUBSCRIBER'S OWN
ADVISOR WITH RESPECT TO THE TAX CONSEQUENCES OF THIS INVESTMENT.
(g) NO WARRANTIES REGARDING PERFORMANCE. At no time have any of the
following been guaranteed or warranted to Subscriber by the Company, or any of
its officers, directors, agents or employees, or any other person, expressly or
by implication:
(i) the approximate or exact length of time that Subscriber will be
required, by market conditions or otherwise, to remain the owner of the Shares;
(ii) the amount of profit and/or amount of any type of consideration,
profit or loss, if any, to be realized as a result of this investment; or
(iii) the future successful operation of the Company.
(h) NO WARRANTIES REGARDING BENEFIT TO INVESTORS. No representations or
warranties of any kind are intended to be made in this Agreement nor should any
be inferred from the information and statements contained herein with respect to
the economic return or benefits which may accrue to investors. No assurance is
given that existing tax, securities, or other laws will not be changed or
interpreted adversely. Subscriber is not to construe the contents of this
Agreement or any prior, concurrent or subsequent communication from the Company,
its officers, directors, agents or employees, or any professional associated
with this offering as
<PAGE>
legal, tax or investment advice. SUBSCRIBER SHALL CONSULT WITH HIS OWN COUNSEL,
ACCOUNTANT AND OTHER ADVISORS AS TO THE LEGAL, TAX AND RELATED MATTERS
CONCERNING THE INVESTMENTS DESCRIBED HEREIN.
(j) ARBITRARY OFFERING PRICE. The offering price of the Shares has been
determined arbitrarily by the Company and does not necessarily bear any
relationship to the assets, book value or any other recognized criteria of value
or the prospective value of the Company's assets. No assurance is or can be
given that any Shares could be sold for the offering price or for any amount.
(k) ADDITIONAL INFORMATION. If Subscriber has any questions regarding this
offering, or desires any additional information or documents to verify or
supplement the information contained in this Agreement or any prior, concurrent
or subsequent communication from the Company, Subscriber may write or call Todd
Tkachuk, Peabodys Coffee, Inc., 3845 Atherton Road, Suite 9, Rocklin,
California, 95765, phone: (916) 632-6090 ext. 19.
(l) OTHER RISK FACTORS. Subscriber has read, acknowledges and understands
the risk factors, with respect to an investment in the Common Stock, which are
set forth in the Company's Form 10-SB Registration Statement, as amended, and
related financial statements (collectively, "Form 10-SB"), in the section
entitled "Risk Factors Affecting the Company," beginning on page 13 thereof.
5. REPRESENTATIONS WARRANTIES AND COVENANTS. Subscriber, through its principals,
represents, warrants and covenants as follows (all references to "Shares" also
include the Warrant and the shares underlying the Warrant):
(a) Subscriber is acquiring the Shares for Subscriber's own account, solely
for investment and not with a view to resale or distribution;
(b) Subscriber either:
(i) has a preexisting personal or business relationship with the
Company or any of its officers, directors, controlling persons or agents; or
(ii) by reason of Subscriber's business or financial experience, or
the business or financial experience of Subscriber's professional advisor who is
not affiliated with or compensated by the Company, has the capacity to evaluate
adequately the merits and risks of, and protect his or her own interests in
connection with, this investment;
(c) Subscriber can afford to bear the economic risks of this investment for
an indefinite period and has no need for liquidity in this investment.
Subscriber has adequate means of providing for Subscriber's current needs and
contingencies if this investment results in a total loss;
<PAGE>
(d) Subscriber is acquiring the Shares without having been furnished any
offering literature or prospectus other than the Form 10-SB, and other documents
specifically authorized by the Company. Subscriber has not seen, received or
been presented with any advertising or general solicitation in any form with
respect to the sale of Shares;
(e) Subscriber has received and has carefully read the Form 10-SB, and the
Company has made available to the Subscriber all documents that have been
requested relating to an investment in the Shares. The Company has provided an
opportunity for Subscriber to ask questions, and has provided answers to all of
Subscriber's questions concerning the terms of the offering. In evaluating the
suitability of an investment in the Shares, Subscriber has not relied upon any
representations or other information (whether oral or written) other than as set
forth in the Form 10-SB, or as contained in any documents or answers to
questions furnished by the Company;
(f) Subscriber recognizes that the investment in the Company involves
substantial risks, including a risk of total loss of Subscriber's investment.
Subscriber is aware of and understands all of the risk factors related to
Subscriber's purchase of the Shares, including but not limited to those
contained in the Form 10-SB;
(g) Within five (5) days after receipt of a written request from the
Company, Subscriber shall provide such information and shall execute and deliver
such documents as reasonably may be necessary to comply with any and all laws,
regulations and ordinances to which the Company is subject;
(h) All of the information provided to the Company or its agents and all
representations made herein are complete, true and correct as of the date
hereof. Subscriber understands that Subscriber's answers will be confidential
but authorizes the Company or its agents to disclose the information contained
herein to appropriate regulatory agencies if called upon to establish the
availability of an exemption from registration under the act or qualification
under state securities laws or for other purposes; and
(i) The undersigned who is signing on behalf of Subscriber is duly
authorized and empowered to legally represent such entity and each of its owners
and to execute this Agreement and all other instruments in connection with the
purchase of Shares on behalf of such entity and each owner thereof.
6. SUBSCRIBER INFORMATION. The Company will accept subscriptions only from
persons who meet certain suitability standards. Therefore, certain information
is requested below:
6.1. IDENTIFYING INFORMATION
Name of entity:
----------------------------------------------------------------
Address:
-----------------------------------------------------------------------
City: State: Zip Code:
-------------------------------------- ---------- ------
Phone:
-----------------------------
Form of Organization (corporation, partnership, etc.):
--------------------------
State of Organization: Date of Formation:
---------------------- --------------
<PAGE>
Was the partnership, corporation or other organization formed specifically
for the purpose of participating in this placement?
Yes No
------- -------
6.2 QUALIFIED INVESTOR STATUS
Is the Entity:
A self-directed employee benefit plan, with investment decisions made solely by
persons that are accredited investors?
Yes No
------- -------
If yes, please describe:
A trust, with total assets in excess of $5,000,000, whose purchase of securities
is directed by a sophisticated person has with such knowledge and experience in
financial and business matters that such person is capable of evaluating the
merits and risks of any prospective investment?
Yes No
------- -------
If yes, please describe:
An corporation, a partnership, a limited liability company, a Massachusetts or
similar business trust, or an organization described in Section 501(c)(3) of the
Internal Revenue Code, with total assets in excess of $5,000,000?
Yes No
------- -------
If yes, please describe:
An "insurance company" as defined in Section 2(13) of the Securities Act of
1933?
Yes No
------- -------
If yes, please describe:
An investment company registered under the Investment Company Act of 1940, or a
"business development company" as defined in Section 2(a)(48) of that Act?
Yes No
------- -------
<PAGE>
If yes, please describe:
A Small Business Investment Company licensed by the U.S. Small Business
Administration under section 301(c) or (d) of the Small Business Investment Act
of 1958?
Yes No
------- -------
If yes, please describe:
A plan established and maintained by a state, its political subdivisions, or an
agency or instrumentality of a state or its political subdivisions for the
benefit of its employees, if such plan has total assets in excess of $5,000,000.
Yes No
------- -------
If yes, please describe:
An employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974 if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of that Act, which is either a bank, savings and loan
association, insurance company, or registered investment adviser, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors?
Yes No
------- -------
If yes, please describe:
7. RELIANCE ON INFORMATION. Subscriber should not construe any information
provided to Subscriber by Peabodys or its agents as legal, business, investment,
accounting or tax advice. Subscriber will look solely to, and rely upon, its own
advisors with respect to such advice.
8. REGISTRATION RIGHTS.
8.1. DEFINITIONS. As used in this Section, the following terms shall have
the following meanings:
(a) "Subscriber" means the Subscriber and any transferee or assignee
thereof to whom the Subscriber assigns its rights under this Agreement and who
agrees to become bound by the provisions of this Agreement in accordance with
Section 8.8.
(b) "Person" means a corporation, a limited liability company, an
association, a partnership, an organization, a business, an individual, a
governmental or political subdivision thereof or a governmental agency.
<PAGE>
(c) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing one or more Registration
Statements in compliance with the 1933 Act and pursuant to Rule 415 under the
1933 Act or any successor rule providing for offering securities on a continuous
basis ("Rule 415"), and the declaration or ordering of effectiveness of such
Registration Statement(s) by the United States Securities and Exchange
Commission (the "SEC").
(d) "Registrable Securities" means the Shares, and the shares
underlying the Warrants, and any shares of capital stock issued or issuable with
respect to such shares as a result of any stock split, stock dividend,
recapitalization, exchange or similar event.
(e) "Registration Statement" means a registration statement of the
Company filed under the 1933 Act.
8.2. REGISTRATION.
8.2.1. PIGGY-BACK REGISTRATION RIGHTS. If at any time prior to the
expiration of the Registration Period (as hereinafter defined) the Company
proposes to file with the SEC a Registration Statement relating to an offering
for its own account or the account of others under the 1933 Act of any of its
securities (other than on Form S-4 or Form S-8 or their then equivalents
relating to securities to be issued solely in connection with any acquisition of
any entity or business or equity securities issuable in connection with stock
option or other employee benefit plans) the Company shall promptly send to
Subscriber written notice of the Company's intention to file a Registration
Statement and of such Subscriber's rights under this Section, and, if within
twenty (20) days after receipt of such notice, Subscriber shall so request in
writing, the Company shall include in such Registration Statement all or any
part of the Registrable Securities Subscriber requests to be registered, subject
to the priorities set forth in Section 8.2.2 below, and to applicable securities
laws. The obligations of the Company under this Section 8.2.1 may be waived by
Subscriber. If an offering in connection with which an Subscriber is entitled to
registration under this Section 8.2.1 is an underwritten offering, then
Subscriber shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering.
8.2.2. PRIORITY IN PIGGYBACK REGISTRATION RIGHTS IN CONNECTION WITH
REGISTRATIONS OR COMPANY ACCOUNT. If the registration referred to in Section
8.2.1 is to be an underwritten public offering for the account of the Company
and the managing underwriter(s) advise the Company in writing, that in their
reasonable good faith opinion, marketing or other factors dictate that a
limitation on the number of shares of Common Stock which may be included in the
Registration Statement is necessary to facilitate and not adversely affect the
proposed offering, then the Company shall include in such registration: (1)
first, all securities the Company proposes to sell for its own account, (2)
second, up to the full number of securities proposed to be registered for the
account of the holders of securities entitled to inclusion of their securities
in the Registration Statement by reason of demand registration
<PAGE>
rights, and (3) third, the securities requested to be registered by Subscriber
hereunder.
8.2.3. NON-ELIGIBILITY FOR FORM S-3. The Company is not eligible for
the use of Form S-3. Therefore: (i) the Company, in complying with its
obligations contained in Section 8.2.1, shall utilize other appropriate forms,
such as Form S-1 or Form SB-2, and (ii) the Company shall undertake to register
the Registrable Securities on Form S-3 as soon as practicable after such form
becomes available to the Company.
8.2.4. RELATED OBLIGATIONS. Whenever Subscriber has requested that any
Registrable Securities be registered pursuant to Section 8.2.1, the Company will
use its reasonable best efforts to effect the registration of the Registrable
Securities in accordance with the intended method of disposition thereof and,
pursuant thereto, the Company shall have the following obligations:
(a) The Company shall prepare and file with the SEC a
Registration Statement with respect to the Registrable Securities and use its
reasonable best efforts to cause such Registration Statement(s) relating to
Registrable Securities to become effective as soon as possible after such
filing, and shall use reasonable efforts keep the Registration Statement(s)
effective pursuant to Rule 415 at all times until the earlier of: (i) the date
as of which the Subscribers may sell all of the Registrable Securities without
restriction pursuant to Rule 144(k) promulgated under the 1933 Act (or successor
thereto); or (ii) the date on which the Subscribers shall have sold all the
Registrable Securities (the "Registration Period"), which Registration
Statement(s) (including any amendments or supplements thereto and prospectuses
contained therein) shall not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein, or necessary to
make the statements therein, in light of the circumstances in which they were
made, not misleading.
(b) The Company shall use its reasonable best efforts to prepare
and file with the SEC such amendments (including post-effective amendments) and
supplements to the Registration Statement(s) and the prospectus(es) used in
connection with tile Registration Statement(s), which prospectus(es) are to be
filed pursuant to Rule 424 promulgated under the 1933 Act, as may be necessary
to keep the Registration Statement(s) effective at all times during the
Registration Period, and, during such period, comply with the provisions of the
1933 Act with respect to the disposition of all Registrable Securities of the
Company covered by the Registration Statement(s) until such time as all of such
Registrable Securities shall have been disposed of in accordance wish the
intended methods of disposition by the seller or sellers thereof as set forth in
the Registration Statement(s). In the event the number of shares available under
a Registration Statement filed pursuant to this Agreement is insufficient to
cover all of the Registrable Securities, the Company shall amend the
Registration Statement, or file a new Registration Statement (on the short form
available therefore, if applicable), or both, so as to cover all of the
Registrable Securities, in each case, as soon as practicable. The Company shall
use its reasonable best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof.
<PAGE>
(c) The Company shall furnish to Subscriber without charge: (i)
promptly after the same is prepared and filed with the SEC at least one copy of
the Registration Statement and any amendment thereto, including financial
statements and schedules, all documents incorporated therein by reference and
all exhibits, the prospectus(es) included it such Registration Statement(s)
(including each preliminary prospectus); (ii) upon the effectiveness of any
Registration Statement, a copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto (or such other number of
copies as such Subscriber may reasonably request); and (iii) such other
documents, including any preliminary prospectus, as such Subscriber may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by Subscriber.
(d) The Company shall use reasonable efforts: (i) to register and
qualify the Registrable Securities covered by the Registration Statement(s)
under such other securities or "blue sky" laws of such jurisdictions in the
United States as Subscriber reasonably requests in writing, (ii) to prepare and
file in those jurisdictions, such amendments (including post-effective
amendments) and supplements to such registrations and qualifications as may be
necessary to maintain the effectiveness thereof during the Registration Period,
(iii) to take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the Registration
Period, and (iv) to take any other actions reasonably necessary or advisable to
quality the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto: (a) to qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 8.2.4(d), (b) to
subject itself to general taxation in any such jurisdiction, or (c) to file a
general consent to service of process in any such jurisdiction. The Company
shall promptly notify Subscriber of the receipt by the Company of any
notification with respect to the suspension of the registration or qualification
of any of the Registrable Securities for sale under the securities or "blue sky"
laws of any jurisdiction in the United States or its receipt of actual notice of
the initiation or threatening of any proceeding for such purpose.
(e) As promptly as practicable after becoming aware of such
event, the Company shall notify Subscriber of the happening of any event, of
which the Company has knowledge, as a result of which the prospectus included in
a Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading, and promptly prepare a supplement or
amendment to the Registration Statement to correct such untrue statement or
omission, and deliver a copy of such supplement or amendment to Subscriber (or
such other number of copies as such Subscriber may reasonably request). The
Company shall also promptly notify Subscriber: (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to each Subscriber by
facsimile on the same day of such effectiveness and by overnight mail); (ii) of
any request by the SEC for amendments or supplements to a Registration Statement
or related
<PAGE>
prospectus or related information, and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate.
(f) The Company shall use its reasonable best efforts to prevent
the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify Subscriber of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding for such purpose.
(g) At the request of the Subscriber, the Company shall furnish,
on the date that Registrable Securities are delivered to an underwriter, if any,
for sale in connection with the Registration Statement: (i) if required by an
underwriter, a letter, dated such date, from the Company's independent certified
public accountants in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten, public
offering, addressed to the underwriters, and (ii) if required by an underwriter,
an opinion, dated as of such date, of counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters.
(h) The Company shall make available for inspection by Subscriber
all pertinent financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the "Records"), as shall be reasonably
deemed necessary by Subscriber to enable Subscriber to exercise its due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information which Subscriber may reasonably request for
purposes of such due diligence provided, however, that Subscriber shall hold in
strict confidence and shall not make any disclosure or use of any Record or
other information which the Company determines in good faith to be confidential,
and of which determination Subscriber is so notified, unless (a) the disclosure
of such Records is necessary to avoid or correct a misstatement or omission in
any Registration Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final, non-appealable subpoena
or order from a court or government body of competent jurisdiction, or (c) the
information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. Subscriber
shall, upon learning that disclosure of such Records is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt notice to the Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a protective order
for, the Records deemed confidential.
(i) The Company shall hold in confidence and not make any
disclosure of information concerning Subscriber provided to the Company unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any Registration Statement, (iii) the
release of such information is ordered pursuant to a
<PAGE>
subpoena or other final, non-appealable order from a court or governmental body
of competent jurisdiction, or (iv) such information has been made generally
available to the public other than by disclosure in violation of this or any
other agreement. The Company agrees that it shall, upon learning that disclosure
of such information concerning Subscriber is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to Subscriber and allow Subscriber, at Subscriber's expense, to
undertake appropriate action to prevent disclosure of, or to obtain a protective
order for, such information.
(j) The Company shall use reasonable efforts to cooperate with
Subscriber and, to the extent applicable, any managing underwriter or
underwriters, to facilitate the timely preparation and delivery of certificates
(not bearing any restrictive legend) representing the Registrable Securities to
be offered pursuant to a Registration Statement and enable such certificates to
be in such denominations or amounts, as the case may be, as the managing
underwriter or underwriters, if any, or, if there is no managing underwriter or
underwriters, Subscriber may reasonably request and registered in such names as
the managing underwriter or underwriters, if any, or the Subscriber may request.
(k) The Company shall take all other reasonable actions necessary
to expedite and facilitate disposition by Subscriber of Registrable Securities
pursuant to a Registration Statement.
(l) The Company shall provide a transfer agent and registrar of
all such Registrable Securities not later than the effective date of such
Registration Statement.
(m) The Company shall use its reasonable best efforts to cause
the Registrable Securities covered by the applicable Registration Statement to
be registered with or approved by such other governmental agencies or
authorities as may be necessary to consummate the disposition of such
Registrable Securities.
(n) The Company shall otherwise use its reasonable best efforts
to comply with all applicable rules and regulations of the SEC in connection
with any registration hereunder.
8.3. OBLIGATIONS OF SUBSCRIBER.
(a) At least seven (7) days prior to the first anticipated filing date
of the Registration Statement, the Company shall notify Subscriber in writing of
the information the Company requires from Subscriber if Subscriber elects to
have any of Subscriber's Registrable Securities included in the Registration
Statement. It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of Subscriber that Subscriber shall furnish to the
Company such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of the Registrable Securities held by
it as shall be reasonably required to effect the registration of such
Registrable Securities, and shall execute such documents in
<PAGE>
connection with such registration as the Company may reasonably request.
(b) Subscriber by Subscriber's acceptance of the Registrable
Securities agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of the Registration
Statement(s) hereunder, unless Subscriber has notified the Company in writing of
Subscriber's election to exclude all of Subscriber's Registrable Securities from
the Registration Statement.
(c) In the event Subscriber determines to engage the services of an
underwriter, Subscriber agrees to enter into and perform such Subscriber's
obligations under an underwriting agreement, at Subscriber's sole expense, in
usual and customary, form, including, without limitation, customary
indemnification and contribution obligations, with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities, unless
Subscriber notifies the Company in writing of Subscriber's election to exclude
all of Subscriber's Registrable Securities from the Registration Statement(s).
(d) Upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 8.2.4(f) or the first sentence of
8.2.4(e), Subscriber will immediately discontinue disposition of Registrable
Securities pursuant to the Registration Statement(s) covering such Registrable
Securities until Subscriber's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 8.2.4(f) or the first sentence of
8.2.4(e) and, if so directed by the Company, Subscriber shall deliver to the
Company (at the expense of the Company) or destroy all copies in Subscriber's
possession, of the prospectus covering such Registrable Securities current at
the time of receipt of such notice.
(e) Subscriber shall not participate in any underwritten registration
hereunder unless Subscriber (i) agrees to sell Subscriber's Registrable
Securities on the basis provided in any underwriting arrangements approved by
Subscriber, (ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, and (iii) agrees to pay its
pro rata share of all underwriting discounts and commissions.
8.4. EXPENSES OF REGISTRATION. All reasonable expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Sections 8.2, including,
without limitation, all registration, listing and qualifications fees, printers
and accounting fees, and fees and disbursements of counsel for the Company shall
be borne by the Company. All reasonable expenses incurred in connection with
Subscriber's obligations set forth in Section 8.3 shall be borne by Subscriber.
8.5. INDEMNIFICATION. In the event any Registrable Securities are included
in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend Subscriber, the directors,
officers, partners,
<PAGE>
employees, agents and each Person, if any, who controls Subscriber within the
meaning of the 1933 Act or the Securities Exchange Act of 1934, as amended (the
"1934 Act"), (each, an "Indemnified Person"), against any losses, claims,
damages, liabilities, judgments, fines, penalties, charges, costs, attorneys'
fees, amounts paid in settlement or expenses, joint or several, (collectively,
"Claims") incurred in defending any action, claim, suit, inquiry, proceeding,
investigation or appeal taken from the foregoing by or before any court or
governmental, administrative or other regulatory agency, body or the SEC,
whether pending or threatened, whether or not an indemnified party is or may be
a party thereto "Indemnified Damages"), to which any of them may become subject
insofar as such Claims arise out of or are based upon: (i) any untrue statement
of a material fact in a Registration Statement or any post-effective amendment
thereto or in any filing made in connection with the qualification of the
offering under the securities or other "blue sky" laws of any jurisdiction in
which Registrable Securities are offered ("Blue Sky Filing"), or the omission to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which the statements
therein were made, not misleading; (ii) any untrue statement of a material fact
contained in any preliminary prospectus if lawfully used prior to the effective
date of such Registration Statement, or contained in the final prospectus (as
amended or supplemented, if the Company files any amendment thereof or
supplement thereto with the SEC) or the omission or alleged omission to state
therein any material fact necessary to make the statements made therein, in
light of the circumstances under which the statements therein were made, not
misleading; or (iii) any violation by the Company of the 1933 Act, the 1934 Act,
any other law, including, without limitation, any state securities law, or any
rule or regulation thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement (the matters in the foregoing
clauses (i) through (iii) being, collectively, "Violations"). Notwithstanding
anything to the contrary contained herein, the indemnification agreement
contained in this Section 8.5(a): (i) shall not apply to a Claim arising out of
or based upon a Violation which occurs in reliance upon and in conformity with
information furnished in writing to the Company by any Indemnified Person or
underwriter for such Indemnified Person expressly for use in connection with the
preparation of the Registration Statement or any such amendment thereof or
supplement thereto, if such prospectus was timely made available by the Company
pursuant to Section 8.2.4(c); (ii) with respect to any preliminary prospectus,
shall not inure to the benefit of any such person from whom the person asserting
any such Claim purchased the Registrable Securities that are the subject thereof
(or to the benefit of any person controlling such person) if the untrue
statement or omission of material fact contained in the preliminary prospectus
was corrected in the prospectus, as then amended or supplemented, if such
prospectus was timely made available by the Company pursuant to Section
8.2.4(c), and the Indemnified Person was promptly advised in writing not to use
the incorrect prospectus prior to the use giving rise to a violation and such
Indemnified Person, notwithstanding such advice, used it; (iii) shall not be
available to the extent such Claim is based on a failure of the Subscriber to
deliver or to cause to be delivered the prospectus made available by the Company
(i) and (iv) shall not apply to amounts paid in settlement of any Claim if such
settlement is effected without the prior written consent of the Company, which
consent shall not be unreasonably withheld. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Indemnified Person and shall survive the transfer of the Registrable Securities
by the Subscribers pursuant to Section 8.8.
<PAGE>
(b) In connection with any Registration Statement in which Subscriber
is participating, Subscriber shall indemnify, hold harmless and defend, to the
same extent and in the same manner as is set forth in Section 8.5(a), the
Company, each of its directors, each of its officers who signs the Registration
Statement, each Person, if any, who controls the Company within the meaning of
the 1933 Act or the 1934 Act (collectively and together with an Indemnified
Person, an "Indemnified Party"), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934 Act or
otherwise, insofar as such Claim or Indemnified Damages arise out of or are
based upon any Violation, in each case to the extent, and only to the extent,
that such Violation occurs in reliance upon and in conformity with written
information furnished to the Company by Subscriber expressly for use in
connection with such Registration Statement; and, subject to Section 8.5(d),
Subscriber will reimburse any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such Claim; provided,
however, that Subscriber shall be liable under this Section 8.5(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net proceeds to
Subscriber as a result of the sale of Registrable Securities pursuant to such
Registration Statement. Such indemnity shall remain in full force and effect
regardless of any investigation made by or on behalf of such Indemnified Party
and shall survive the transfer of the Registrable Securities by Subscriber
pursuant to Section 8.8. Notwithstanding anything to the contrary contained
herein, the indemnification agreement contained in this Section 8.5(b) with
respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented.
(c) The Company shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in any distribution, to the same extent as provided
above, with respect to information such persons so furnished in writing
expressly for inclusion in the Registration Statement.
(d) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 8.5 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim
such indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Section 8.5,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the indemnified Person or
the indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses to be paid by the indemnifying party, if, in
the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person
<PAGE>
or Indemnified Party and any other party represented by such counsel in such
proceeding. The Company shall pay reasonable fees for only one legal counsel for
Subscriber. The Indemnified Party or Indemnified Person shall cooperate fully
with the indemnifying party in connection with any negotiation or defense of any
such action or claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the Indemnified Party
or Indemnified Person, which relates to such action or claim. The indemnifying
party shall keep the Indemnified Party or Indemnified Person fully apprised at
all times as to the status of the defense or any settlement negotiations with
respect thereto. No indemnifying party shall be liable for any settlement of any
action, claim or proceeding effected without its written consent, provided,
however, that the indemnifying party shall not unreasonably withhold, delay or
condition its consent. No indemnifying party shall, without the consent of the
Indemnified Party or Indemnified Person, consent to entry of any judgment or
enter into any settlement or other compromise which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party or Indemnified Person of a release from all liability in
respect to such claim or litigation. Following indemnification as provided for
hereunder, the indemnifying party shall be subrogated to all rights of the
Indemnified Party or Indemnified Person with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the indemnified Person or Indemnified
Party under this Section 8.5, except to the extent that the indemnifying party
is prejudiced in its ability to defend such action.
(e) The indemnification required by this Section 8.5 shall be made by
periodic payments of the amount thereof during the course of the investigation
or defense, as and when bills are received or Indemnified Damages are incurred.
(f) The indemnity agreements contained herein shall be in addition to
(i) any cause of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others; (ii) any liabilities the
indemnifying party may be subject to pursuant to the law; and (iii) any other
indemnification agreements contained in this Subscription Agreement.
8.6. CONTRIBUTION. To the extent any indemnification by an indemnifying
party is prohibited or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would otherwise be
liable under Section 8.5 to the fullest extent permitted by law; provided,
however, that: (i) no contribution shall be made under circumstances where the
maker would not have been liable for indemnification under the fault standards
set forth in Section 8.5; (ii) no seller of Registrable Securities guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the 1933
Act) shall be entitled to contribution from any seller of Registrable Securities
who was not guilty of fraudulent misrepresentation; (iii) contribution by any
seller of Registrable Securities shall be limited in amount to the net amount of
proceeds received by such seller from the sale of' such Registrable Securities;
and (iii) contribution by the Company shall be limited as to the placement of
the securities.
<PAGE>
8.7. REPORTS UNDER THE 1934 ACT. With a view to making available to
Subscriber the benefits of Rule 144 promulgated under the 1933 Act or any other
similar rule or regulation of the SEC that may at any time permit Subscriber to
sell securities of the Company to the public without registration ("Rule 144"),
the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and
(c) furnish to Subscriber so long as Subscriber owns Registrable
Securities, promptly upon reasonable request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Subscribers to sell such securities pursuant to Rule 144 without
registration.
8.8. ASSIGNMENT OF REGISTRATION RIGHTS. The rights to have the Company
register Registrable Securities pursuant to this Agreement shall be assignable
by Subscriber to any transferee of all or any portion of Registrable Securities
if: (i) Subscriber agrees in writing with the transferee or assignee to assign
such rights, and a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within a reasonable
time after such transfer or assignment, furnished with written notice of: (a)
the name and address of such transferee or assignee, and (b) the securities with
respect to which such registration rights are being transferred or assigned;
(iii) immediately following such transfer or assignment the further disposition
of such securities by the transferee or assignee is restricted under the 1933
Act and applicable state securities laws; (iv) at or before the time the Company
receives the written notice contemplated by clause (ii) of this sentence the
transferee or assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; (v) such transfer shall have been made in
accordance with the applicable requirements of this Subscription Agreements;
(vi) such transferee shall be an "accredited investor" as that term is defined
in Rule 501 of Regulation D promulgated under the 1933 Act; and (vii) the
transferee agrees to pay all reasonable expenses of amending or supplementing
such Registration Statement to reflect such assignment.
9. INDEMNIFICATION. Subscriber hereby agrees to defend, indemnify and hold
harmless the Company from all damages, losses, costs and expenses (including
reasonable attorneys' fees) which it may incur: (i) by reason of Subscriber's
failure to fulfill any of the terms and conditions of this Agreement, (ii) by
reason of Subscriber's breach of any of the representations, warranties or
agreements contained in this Agreement, or (iii) with respect to any and all
claims made by or involving any person, other than Subscriber personally,
<PAGE>
claiming any interest, right, title, power or authority regarding Subscriber's
purchase of the Shares. Subscriber further agrees and acknowledges that the
obligation to indemnify shall survive any sale or transfer, or attempted sale or
transfer, of any portion of Subscriber's Shares, or Subscriber's death or
default under this Agreement.
10. MISCELLANEOUS
10.1. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
between Subscriber and Peabodys with respect to the subject matter of this
Agreement and may be amended only by a writing signed by each of the parties.
10.2. SURVIVAL OF REPRESENTATIONS. All representations, warranties,
covenants, and agreements of the parties contained in this Agreement shall
survive the closing of the sale of the Shares.
10.3. ATTORNEYS' FEES; PREJUDGMENT INTEREST. If the services of an attorney
are required by any party to secure the performance of this Agreement or
otherwise upon the breach or default of another party to this Agreement, or if
any judicial remedy or arbitration is necessary to enforce or interpret any
provision of this Agreement or the rights and duties of any person in relation
thereto, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and other expenses, in addition to any other relief to which such party
may be entitled. Any award of damages following judicial remedy or arbitration
as a result of the breach of this Agreement or any of its provisions shall
include an award of prejudgment interest from the date of the breach at the
maximum amount of interest allowed by law.
10.4. SEVERABILITY. If any provision of this Agreement is held by a court
of competent jurisdiction to be invalid or unenforceable, the remainder of the
Agreement which can be given effect without the invalid provision shall continue
in full force and effect and shall in no way be impaired or invalidated.
10.5. GOVERNING LAW. The rights and obligations of the parties and the
interpretation and performance of this Agreement shall be governed by the law of
California, excluding its conflict of laws rules.
10.6. VENUE. Each party consents to the jurisdiction of, and any actions
arising under this Agreement shall be heard and resolved in, courts in the State
of California.
10.7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if the parties had all signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
10.8. WAIVER. Any of the terms or conditions of this Agreement may be
waived at any time by the party entitled to the benefit thereof, but no such
waiver shall affect or impair the right of the waiving party to require
observance, performance or satisfaction either of that term or condition as it
applies on a subsequent occasion or of any other term or condition.
<PAGE>
ARROSTO COFFEE COMPANY, LLC,
A _________________ Limited Liability Company
By:_____________________________________
(Joe Konis, Member/Manager)
Address: 15019 Califa Street
Van Nuys, CA 91411
PEABODYS COFFEE, INC.
a Nevada Corporation
By:_____________________________________
(Todd N. Tkachuk, President)
Address: 3845 Atherton Road, Suite 9
Rocklin, CA 95765
