Asset Purchase Agreement

ASSET PURCHASE AGREEMENT


DATED JUNE 21, 2005


BETWEEN


VIANSA WINERY, A CALIFORNIA LIMITED PARTNERSHIP

LA FONTANA DI VIANSA, LLC, A CALIFORNIA LIMITED LIABILITY COMPANY

COLLECTIVELY, THE SELLER


AND


360 VIANSA LLC, A NEVADA LIMITED LIABILITY COMPANY

THE BUYER


13680618161.3


TABLE OF CONTENTS


1.

Assets Transferred

2

2.

Excluded Assets

4

3.

Liabilities Assumed

4

4.

Purchase Price

5

5.

Net Asset Adjustment

5

6.

Representations and Warranties of Seller

6

7.

Representations and Warranties of Buyer

17

8.

Access

18

9.

Due Diligence Period

18

10.

Bulk sales

18

11.

Buyer' s Conditions to Closing

18

12.

Seller' s Conditions to Closing

21

13.

Closing

21

14.

Material Changes; Survival

25

15.

Indemnification

25

16.

Sellers' Covenants During Contract period

26

17.

Exclusivity

27

18.

Confidentiality and Publicity

27

19.

Nondisparagement

27

20.

Damage or Destruction; Eminent Domain

27

21.

Arbitration of Disputes

28

22.

Termination

28

24.

Miscellaneous

29


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SCHEDULES AND EXHIBITS

Exhibit A:

Wedding Contracts

Exhibit B:

Excluded Assets

Exhibit C:

Accounts Payable

Exhibit D:

2005 Audited Financial Statements

Schedule 5:

Net Asset Adjustment Example

Schedule 6:

Disclosure Schedules

Schedule 6.2:

This Section Intentionally Left Blank

Schedule 6.4(a):

LP Financial Statements

Schedule 6.4(b):

This Section Intentionally Left Blank

Schedule 6.6:

Personal Property

Schedule 6.7:

Inventory

Schedule 6.8:

Accounts Receivable

Schedule 6.9:

Real Property

Schedule 6.9(d)

Condition of Assets

Schedule 6.11:

Permits

Schedule 6.12:

Contracts

Schedule 6.13:

Insurance

Schedule 6.14(a):

Personnel

Schedule 6.14(b):

Benefit Plans

Schedule 6.18(j)

Termination Bonus

Schedule 6.20:

Intellectual Property

Schedule 6.21:

Customers & Suppliers

Schedule 6.22:

Bank Accounts

Schedule 15

Holdback Security

Exhibit E:

Opinions Required

Exhibit F:

SGV Agreement

Exhibit G:

Bill of Sale

Exhibit H:

Seller' s Closing Certificate

Exhibit I:

Indemnification Agreement


2


ASSET PURCHASE AGREEMENT

This Asset Purchase Agreement (the " Agreement" ) is made and entered into as of June 21, 2005 (the " Contract Date" ), by and among Viansa Winery, a California Limited Partnership (the " Partnership" ) and La Fontana di Viansa, LLC, a California limited liability company (the " LLC" ) (the Partnership and the LLC are collectively referred to as the " Seller" ) and 360 Viansa LLC, a Nevada limited liability company (" Buyer" ).

R E C I T A L S

A.

The Partnership is the owner and operator of Viansa Winery & Italian Marketplace, an Italian style wine hospitality center and vineyard located at 25200 Arnold Drive in Sonoma, California which includes a 10,694 square foot wine tasting, deli, retail sales and production building, a 3,870 square foot events center, various other structures, a use permit authorizing the production of 150,000 cases of wine, 600 gallons of olive oil, additional building and cave construction, up to 150 special events, public tours and tastings, and the preparation and sale of foods, wines and support items, 23.18 net acres planted with modern vines, 8 acres of plantable land, the Tuscan Club, the trademark " Viansa" , a parking lot, a well producing approximately 300 gallons per minute, fire pond and pumping station, engineered leach field wastewater system, and all other improvements, fixtu res, equipment, cooperage, wine and retail inventory, furnishings and other tangible personal property used in connection therewith (the " Winery" ).

B.

The Partnership leases property at 334 Grant Street, in San Francisco, California, pursuant to the terms of that certain Lease for 334 Grant Avenue dated as of July 1, 2003 between the Partnership and Erwin Roy Chen, Grant & Bush LLC, and 334 Grant Avenue, LLC, tenants-in-common dba Waverly-Grant Properties (as amended and assigned the " Wine Bar Lease" ) and thereon owns and operates Enoteca Viansa, a tasting room and wine bar including all improvements, fixtures, equipment, inventory, furnishings and other tangible personal property used in connection therewith (the " Wine Bar" ).

C.

The Partnership leases property at 400 First Street East in Sonoma, California pursuant to the terms of that certain Lease Agreement Between Old Creamery Partners and Viansa Winery and Old Creamery Partners and the property adjacent thereto known as Il Centro located at 408 First Street East pursuant to that Commercial Lease and Deposit Receipt (as amended and assigned, collectively, the " Restaurant Lease" ) and thereon owns and operated Cucina Viansa, a restaurant and wine bar including all improvements, fixtures, equipment, inventory, furnishings and other tangible personal property used in connection therewith (the " Restaurant" ).

D.

This Section Intentionally Left Blank.

E.

Seller wishes to sell and Buyer wishes to purchase the Winery, the Wine Bar, and the Restaurant (collectively, the " Business" ), subject to the terms and conditions of this Agreement.


NOW, THEREFORE, incorporating the foregoing and in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

1.

Assets Transferred . On the terms and subject to the conditions of this Agreement, Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase from Seller, all rights, property and assets of every kind, character and description, whether tangible or intangible, whether real, personal or mixed, whether accrued, contingent or otherwise, of Seller which are owned, held or used by Seller in connection with the Business, wherever located and whether or not reflected in its books and records, other than the Excluded Assets (as defined below) (collectively, the " Purchased Assets" ). The Purchased Assets shall include, without limitation, the following:

1.1

Real Property . That certain real property located at 25200 Arnold Drive in Sonoma California with Assessor' s Parcel Number 128-491-059 (the " Land" ), together with all buildings, structures, fixtures, parking areas, wells, ponds, fuel and water tanks, landscaping, vines, trellising, growing crops, stakes, fencing, posts, irrigation and frost control facilities and all other improvements and fixtures placed, constructed or installed on or affixed to the Land; all easements, rights of way, privileges, licenses, appurtenances and other rights and benefits of Seller belonging to or in any way related to the Land. All of the foregoing shall be referred to collectively as the " Real Property" .

1.2

Personal Property . All farming, office, restaurant, and winemaking equipment, inventory, motor vehicles, trailers, pumps, supplies, tasting room supplies, bottling supplies, restaurant supplies, bottling line equipment, bottled and bulk wines (including library wines), marketing materials and supplies, furnishings and other tangible personal property owned by Seller and used in connection with the Business (the " Personal Property" ).

1.3

Permits and Licenses . All transferable or assignable certificate(s) of occupancy, use permits, use permit applications, building or equipment permits, consents, authorizations, variances, waivers, licenses, permits, certificates and approvals from any governmental or quasi-governmental authority with respect to the Business, including Seller' s California Department of Alcoholic Beverage Control Licenses and its Federal Tax and Trade Bureau Permits (collectively, the " Permits" ).

1.4

Plans . All architectural, mechanical, engineering, as-built and other plans, specifications and drawings in Seller' s possession or control (the " Plans" ),

1.5

Reports . All surveys and all soil, viticultural, environmental, land use, water, engineering, or other reports or studies in Seller' s possession or control (the " Reports" )

1.6

Warranties . All transferable or assignable warranties, representations, guaranties, and miscellaneous rights (the " Warranties" ) relating to the ownership, development, use and operation of the Business.


1


1.7

Claims . All claims, prepayments, other than prepaid taxes, causes of action, rights of recovery, rights of set off, and rights of recoupment (other than refunds of Taxes).

1.8

Intellectual Property . To the extent transferable, all domestic and foreign patents, licenses, registered and unregistered trademarks, trade names, service marks, copyrights, domain names, websites, proprietary computer software, industrial designs, government approvals, permits and authorizations (and applications for any of the foregoing), fictitious business name statements, and all designs, patterns, drawings, technology, technical know-how, trade secrets, inventions, processes, specifications, formulas, ideas, work product, work-in-process, confidential information and other similar intangible assets, owned, held, or used by S eller in connection with the Business, including, without limitation, all rights of Seller in respect of the name " Viansa" (collectively, the " Intellectual Property" ).

1.9

Goodwill . All of the goodwill associated with the Business and the Purchased Assets (including the exclusive right of Buyer to represent itself as carrying on the Business as the successor of Seller).

1.10

Contracts . All grape, custom bottling, distributor, broker, supplier, service, maintenance, management and other contracts, leases and agreements related to the operation and management of the Business, as well as any rights arising under or related to those contracts (collectively, the " Contracts" ). Buyer will have until the expiration of the Due Diligence Period (as defined in Section 9 Due Diligence Period ) to notify Seller whether Buyer will assume such Contracts as of the Closing. All Contracts so assumed hereinafter are referred to as the " Assumed Contracts" ). Notwithstanding the foregoing, Buyer expressly agrees to assume all Wedding (&Party) Reservation Contracts and Wine Future Contracts identified on Exhibit A (" Wedding Contracts" ).

1.11

Leases and Improvements . The Wine Bar Lease, the Restaurant Lease and all other leases, subleases and rights thereunder, including the lease for warehousing space at 21481 Eighth Street East in Sonoma (the " Warehouse Lease" ), together with all buildings, structures, fixtures, landscaping, vines, trellising, growing crops, stakes, fencing, posts, irrigation and frost control facilities and all other improvements and fixtures placed, constructed or installed on or affixed to the leased property or used in connection with the leased property that is owned by Seller.

1.12

This Section Intentionally Left Blank.

1.13

Records . All copies of financial and accounting records relating to the Purchased Assets, computer software and documents, books, supplier, customer and mailing lists, copies of customer and client records, work orders, equipment logs, operating guides and manuals, drawings, electronic art, database information, program and process documentation owned by Seller and related to the Business.


2


1.14

Accounts Receivable . All trade and other accounts and notes receivable and all notes, bonds, employee travel advances and other evidences of indebtedness and rights to receive payment from any person held by Seller relating to the Business including any accounts receivable from Lo Spuntino Taste of Sonoma, LLC (" Lo Spuntino" ), a California limited liability company with its principal place of business in Sonoma, California but excluding any related party accounts receivable. The Purchase Price will be reduced by the value of any related party accounts receivable identified on the 2005 Audited Financial Statements (as defined below).

1 .15

Cash . All cash in any of the bank accounts listed in Schedule 6.22, to the extent that there is a negative cash balance in any of these accounts, the Buyer will receive a credit against the Purchase Price.

2.

Excluded Assets . Notwithstanding anything to the contrary contained herein, the Purchased Assets shall not include, and the Seller shall retain full ownership and control over (a) Seller' s qualifications to conduct business, taxpayer and other identification numbers, seals, minute books, and other documents relating to the organization, maintenance, and existence of Seller, (b) any of the rights of Seller under this Agreement, and (c) certain personal property set forth on Exhibit B to this Agreement which shall be removed from the Real Property prior to the Closing (as defined in Section 13.1 Closing Date ) (the " Excluded Assets" ).

3.

Liabilities Assumed . Buyer hereby assumes and agrees to pay, perform and discharge, to the extent not theretofore performed, paid or discharged, all liabilities and/or obligations of Seller related to the Assumed Contracts and the Leases arising after the Closing Date (as defined in Section 13.1 Closing Date ), provided that Buyer will not be obligated to assume such Assumed Contracts if the assignment of the Assumed Cont ract requires the consent of a third party and such consent has not been obtained prior to the Closing Date and all liabilities of Seller associated with all accounts payable and all accrued expenses incurred by Seller in the ordinary course of Seller' s business prior to the Closing Date (the " Assumed Liabilities" ). Attached as Exhibit C is a list of all of the accounts payable and accrued expenses as of May 30, 2005 and the value of each that Buyer will assume after the Closing Date (the " Accounts Payable" ). Buyer will receive a credit against the Purchase Price (as defined in Section 4 Purchase Price ) for the total amount of Accounts Payable that the Buyer will assume. The Buyer will not assume or have any responsibility with respect to any other obligation or liability of Seller not included within the definition of Assumed Liabilities, including, without limitation, any liability, obligation, claim against or contract of the Bu siness or Seller of any kind or nature, whether known or unknown, arising out of this or any other transaction or event occurring prior or subsequent to the Closing, and Seller expressly agrees it will remain liable for, it will indemnify Buyer, and its affiliates, members, officers, employees, agents, consultants, contractors and representatives from all such obligations or liabilities. Buyer will be provided with a credit against the Purchase Price for all deposits paid to Seller under the Wedding Contracts and any and all customer deposit receipts including but not limited to the foregoing. Notwithstanding any other provision of this Agreement, in no event whatsoever, except to the extent agreed upon pursuant to the terms set forth in Section 11.9, in either law or


3


in equity, will Samuel J. Sebastiani and or Victoria K. Sebastiani be held personally liable for any claim whatsoever of any kind or nature, whenever it may occur, which arises out of the Agreement or as a result of the closing of the transactions covered by the Agreement.

4.

Purchase Price . The purchase price for the Purchased Assets (" Purchase Price" ) will be $30,000,000 in cash paid at the Closing, subject to reduction as provided in Section 1.14 Accounts Receivable and Section 3 Liabilities Assumed . Prior to Closing, the parties agree to approve a reasonable allocation of the Purchase Price. Seller and Buyer agree to prepare and file all federal, state, local and foreign tax returns and other filings reflecting this transaction on a basis consistent with such allocation, and to cooperate with each other in good faith in preparing any and all statements required to be included in their respective tax returns reflecting such allocation.

5.

Net Asset Adjustment . Buyer will cause its accountants to prepare a balance sheet of the Partnership as of the Closing Date (the " Closing Balance Sheet" ) using the same accounting methods, principles and practices that were used by such accountants to prepare the Partnership' s audited financial statements for the year ended February 28, 2005 (" 2005 Audited Financial Statements" ). A copy of the 2005 Audited Financial Statements are attached hereto as Exhibit D . The Closing Balance Sheet will be delivered to Seller within 60 days after the Closing (as defined in Section 13.1 Closing Date ). If the Closing Balance Sheet shows that the " Net Asset Value" of the Purchased Assets as of the Closing Date is less than the Net Asset Value of the Purchased Assets as sho wn in the 2005 Audited Financial Statements, Seller shall pay to Buyer within 10 days such shortfall amount. If the Closing Balance Sheet indicates that the Net Asset Value of the Purchased Assets as of the Closing Date is greater than the Net Asset Value of the Purchased Assets as shown in the 2005 Audited Financial Statements, no adjustment will be made. " Net Asset Value" shall mean the " Book Value" of the Purchased Assets less any liabilities, debts, or deferred revenue assumed by the Buyer. " Book Value" shall mean the cost or value of the Purchased Assets as recorded on the 2005 Audited Financial Statements net of deletions and accumulated depreciation in accordance with generally accepted accounting principles. For illustrative purposes only, attached as Schedule 5 is an example of a calculation that would be made under this Section 5 if the factual circumstances as set forth in Schedule 5 occur. If within 30 days of re ceipt of the Closing Balance Sheet, the Seller disputes, for any commercially reasonable reason, any amount shown on the Closing Balance Sheet, or the accuracy of the Closing Balance Sheet, then the Seller may request reasonable substantiation from the Buyer' s accountants. If such substantiation does not reasonably satisfy Seller, Buyer will engage another accountant to compile a Closing Balance Sheet with respect to the disputed issue, using the same accounting methods, principles and practices that were used to prepare the 2005 Financial Statements and the revised Closing Balance Sheet with respect to the disputed issue will be deemed conclusive. The fees charged by the second accountant will be paid by the Seller unless the revised Closing Balance Sheet reveals a discrepancy of more than 10% in Buyer' s favor, in which case the cost will be paid by the Buyer. If the Seller does not dispute the Closing Balance Sheet within 30 days of receipt thereof, the Closing Balance Sheet wil l be deemed approved by the Seller. Notwithstanding the preceding provision of this Section 5, the


4


adjustment provided for hereunder in this Section 5, shall take into consideration the adjustment to the Purchase Price pursuant to Section 3 hereof. .

6.

Representations and Warranties of Seller . Except as set forth in the disclosure schedule attached hereto as Schedule 6 (" Disclosure Schedule" ), Seller hereby makes the following representations and warranties to Buyer, which representations and warranties, except as expressly provided, shall be true and correct as of the date hereof and as of the Closing Date. All references herein " to Seller' s knowledge" or " to the knowledge of Seller" will mean the knowledge of Jonathan Sebastiani and Russell Joy who are the representatives, employees or former employees of Seller most knowledgeable about the Business, after making such reasonable investigations as Seller deems necessary (which will include, among other things, discussing the representations and warranties with James Maselan, the voting trustee of the LLC to determine whether James Maselan obtained any knowledge concerning the representations and warranties while acting in his capacity as voting trustee) in order to make the representations and warranties below on a reasonably informed basis.

6.1

Seller Organization; Authority; Enforceability .

(a)

The LP is a limited partnership duly organized, validly existing and in good standing under the laws of the State of California. The LLC is a limited liability company, duly organized, validly existing and in good standing under the laws of the State of California. Seller has the full corporate power and authority, and all authorizations and permits required by governmental or other authorities, to own, lease and operate its properties and to carry on its business as now conducted, to execute, deliver and perform this Agreement and the other agreements contemplated herein, and to consummate the transactions contemplated hereby and thereby. This Agreement has been duly and validly executed and delivered by Seller and, subject to the due authorization, execution and delivery by Buyer, constitutes the legal, valid and binding obligation of Seller enforceable against Seller in accordance with its terms. No consent, approval or authorization of any third party or of any governmental authority or entity is required in connection with the execution, delivery or performance of this Agreement by Seller.

(b)

This Section Intentionally Left Blank.

6.2

This Section Intentionally Left Blank.

6.3

No Breach or Default . The execution, delivery and performance by Seller of this Agreement, and the consummation of the transactions contemplated hereby, do not and will not (i) violate the partnership agreement of the LP; (ii) violate the Operating Agreement of the LLC; or (iii) violate any law or any order, writ, injunction or decree of any court, administrative agency or governmental authority, or require the approval, consent or permission of any governmental or regulatory authority.

6.4

Financial Statements .


5


(a)

Attached as Schedule 6.4(a) are true and complete copies of the reviewed financial statements of the LP (" LP Financial Statements" ) for the fiscal years ended December 31, 1998 - 2002 and for the fiscal years ended February 28, 2003 and 2004 (the " LP Balance Sheet Date" ). The LP Financial Statements are true, complete and correct and fairly present (i) the financial position of the LP as of the respective dates of the balance sheets included in said statements, and (ii) the results of operations for the respective periods indicated. The LP Financial Statements have been prepared in accordance with generally accepted accounting principles, applied consistently with prior periods. LP' s revenue recognition policy with respect to its LP Financial Statements has been made in accordance with generally accepted accounting principles. All of the accounts receivable owing to Seller constitute valid and enforceable claims arising from bona fide transactions in the ordinary course of business, and except as set forth in the notes to the LP Financial Statements there are no known contingent or asserted claims, refusals to pay or other rights of set-off against any thereof.

(b)

This Section Intentionally Left Blank.

6.5

Liabilities . To the Seller' s actual knowledge, there are no claims, suits, proceedings, audits, inspections or investigations which are pending, threatened or anticipated against Seller. To the Seller' s actual knowledge, there is no litigation or proceeding pending or threatened, involving Seller or the Purchased Assets, including claims of encroachment or prescriptive easement. To the Seller' s actual knowledge, there is no outstanding judgment, order, writ, injunction or decree against Seller, the result of which could adversely affect the Purchased Assets, nor has Seller been notified that any such judgment, order, writ, injunction or decree has been requested.

6.6

Personal Property .

(a)

Schedule 6.6 is a detailed list of the Personal Property. Seller owns all Personal Property necessary for the conduct of the Business as presently conducted. All of Seller' s vehicles, machinery and equipment necessary for the operation of the Business (i) have been maintained in the ordinary course of business, (ii) are in operable condition (normal wear and tear excepted), (iii) are in material compliance with all applicable Laws (as defined in Section 6.19), rules and regulations, (iv) are free of any encumbrance or charge of any kind and (v) are free of known defects that would cause them to fail.

(b)

This Section Intentionally Left Blank.

6.7

Inventory . Schedule 6.7 is a complete and accurate list of all inventory of the Partnership as of May 30, 2005. To the Seller' s actual knowledge, all inventory of the Partnership consists of items of a quality and quantity usable and saleable by Seller in the ordinary course of business. The values at which the inventory is shown on the LP Financial Statements have been determined in accordance with the normal valuation policy of Seller, consistently applied and in accordance with generally accepted accounting principles.


6


6.8

Accounts Receivable . Attached hereto as Schedule 6.8 is a list of all accounts receivable of the Partnership, including the Lo Spuntino account receivable (See Section 1.14), as of May 30, 2005 together with an accurate aging of these accounts. All unpaid accounts outstanding as of the date hereof constitute, and those outstanding at the Closing Date will constitute, valid and enforceable claims arising in bona fide transactions in the ordinary course of business. There is (i) no account who has refused or threatened to refuse to pay its obligations or who has threatened to set-off such obligations for any reason, (ii) no account who is insolvent or bankrupt and (iii) no account is pledged to any third party.

6.9

Real Property .

(a)

Each parcel of real property or facility leased, owned or being purchased by the Seller, including the Land (the " Partnership Property" ), including the street address and, in the case of Partnership Property owned or being purchased, the legal description thereof, is set forth on Schedule 6.9 . Schedule 6.9 identifies all (i) leases relating to real property leased from third-party landlords pursuant to which the Seller leases Partnership Property from such third-party landlord, including the Wine Bar Lease, the Restaurant Lease and the Warehouse Lease (collectively the " Leases" );(ii) deeds, outstanding mortgages and other encumbrances (including leases with third-parties) relating to real property owned or being purchased by the Partnership and (iii) all surveys or site plans with respect to each Partnership Property. & nbsp;A copy of each Lease, survey and site plan has been delivered to Buyer or will be delivered to Buyer within 5 days of the Contract Date and is a true and accurate copy.

(b)

Seller has provided or will provide within 5 days of the Contract Date with a current preliminary title report issued by First American Title Company of Napa (the " Title Company" ) of the Real Property (the " Preliminary Title Report" ), together with a copy of each document referred to in the Preliminary Title Report, and copies of any existing easements, covenants, restrictions, agreements, and other documents which affect title to the Land and are not disclosed by the Preliminary Title Report.

(c)

All Leases are in full force and effect and binding ...