FILED: NEW YORK COUNTY CLERK 06/07/ :37 PM INDEX NO /2016 NYSCEF DOC. NO. 9 RECEIVED NYSCEF: 06/07/2016

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1 FILED: NEW YORK COUNTY CLERK 06/07/ :37 PM INDEX NO /2016 NYSCEF DOC. NO. 9 RECEIVED NYSCEF: 06/07/2016 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK >e Gruppo Industriale Filicori-Zecchini Index No. bssoi ~ /16 S.p.A., and Filicori Zecchini USA Corp. -against- Petitioners, Espresso Management Holding, Inc., Espresso Dream MNGT, LLC, 601 Le>e Filicori, LLC, F-6 Chelsea, Inc., Espresso Stores, Inc., AF-1, LLC, and AF-22, LLC, Respondents >e AFFIRMATION OF LUCA FILICORI IN SUPPORT OF PETITION TO CONFIRM AWARD AND FOR INJUNCTIVE RELIEF IN AID OF ARBITRATION I, Luca Filicori, hereby affirm this 6 day of June 2016, under the penalties ofperjury under the laws ofnew York, which may include a fine or imprisonment, that I am physically located outside the geographic boundaries ofthe United States, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction ofthe United States, that the following is true and correct to the best ofmy knowledge and information, and that I understand that this document may be filed in an action or proceeding in a court of law: 1. I am the ChiefE>eecutive OffIcer for Gruppo Industriale Filicori-Zecchini S.p.A. ("G.LFI.ZE."), and I am also acting President, ChiefE>eecutive OffIcer, Chief Financial OffIcer, and Secretary offilicori Zecchini USA Corp., ("Filicori USA"), the Petitioners in the above-referenced action. 2. I have personal knowledge ofall facts contained herein, and ifcalled to testify to these facts, I could and would competently do so. 1 of 8

2 3. Summary. As detailed below, Petitioners are an Italian company and its U.S. subsidiary in the business of sourcing, roasting, and seiling coffee and coffee~related products at both wholesale and retail worldwide. a. In about 2012, Petitioners entered the New York direct retail coffee market by licensing and franchising Respondents to open what came to be six company-branded cafes in Manhattan. b. At great expense, Petitioners opened the six cafes outfitted with trademarking, equipment, furniture, decor and products, all ofwhich were to be managed as franchises by Respondents pursuant to written franchise and other agreements. c. After proceeding as agreed for several years, very recently, Respondents have embarked on a scheme to seize these cafes for themselves and eliminate Petitioners from their business. d. Ignoring their obligations under the franchise agreements, Respondents' principals met last month with Petitioners' and stated that they would "divorce" from Petitioners, seize and run the cafes for themselves alone, and buy coffee and products from Petitioners' competitors. e. Petitioners immediately commenced a AAA arbitration, pursuant to the tenns of parties' agreements, and sought injunctive relief to enforce the franchise agreements' noncompetition provisions under the AAA's rules authorizing injunctive relief enacted in 2013 ("AAA Injunction Rules"). f. On May 25, the Arbitrator enjoined four of the Respondents-those that signed franchise agreements after the enactment of the AAA Injunction Rules, but held that those signing agreements prior thereto could not be subjected to the AAA Injunction Rules. I am advised that the sole reason was that the Arbitrator found that Respondents, Espresso Dream MGMT, LLC, AF -1, LLC, AF -22, LLC entered into arbitration agreements with Claimants prior to October 1, 2013 and the AAA Commercial Arbitration Rules authorizing injunctive relief can apply only to arbitration agreements entered into after October 1, Accordingly, the Arbitrator concluded that he could not issue injunctions against these parties. 2 of 8

3 3 of 8 3 g. As of last week, Respondents have changed the signage at several ofthe cafes to eliminate Petitioners' brand and trademarks and ceased making payments due under the franchise agreements. h. In summary, Respondents, their principals, and entities controlled by them have now stolen the parties' franchised cafes and entered into direct competition with Petitioners in willful violation of the parties' non-competition agreements. 4. I met Shlomi Levi, one of Respondents' principals, at a fair at the end of2010, beginning of Given Mr. Levi's availability and expertise in the coffee business, and our desire to expand the Filicori Zecchini franchise concept in the U.S., Mr. Levi and I entered into discussions about opening Filicori Zecchini franchises in Manhattan. 6. The franchise documents for the first two locations were sent to the Attorney General ofnew York in June 2011 for approval 7. The New York Attorney General's Office approved and registered these first two locations (file number for location 1 and file number for location 2), effective January 20, Attached hereto as Exhibit A are true and correct copies ofthe approval letters for the first two franchise locations from the New York Attorney General's Office. 8. Following the registration ofthe first two franchises, Mr. Levi personally engaged in detailed negotiations for the Area Development Agreement and the first two franchise agreements, which were signed in November 2012 and December 2012, respectively. 9. On November 20,2012, G.I.FLZE. entered into an Area Development Agreement with Espresso Dream Management, LLC, a Delaware limited liability company. Attached hereto as Exhibit B is a true and correct copy of the executed Area Development Agreement.

4 10. On December 14, 2012, G.I.FI.ZE. entered into a Franchise Agreement with AF-l LLC, a New York limited liability company, for the first franchise location, located at 42 E. 46 th Street, New York, NY Attached hereto as Exhibit C is a true and correct copy of the executed Franchise Agreement. 11. On December 14, 2012, G.I.FI.ZE. entered into a Franchise Agreement with AF-22 LLC, a New York limited liability company, for the second franchise location, located at 8 W. 46 th Street, New York, NY Attached hereto as Exhibit D is a true and correct copy ofthe executed Franchise Agreement. 12. In November 2013, G.I.FI.ZE. entered into a Franchise Agreement with 601 Lex Filicori LLC for the third franchise location, located at 601 Lexington Avenue, New York, NY Attached hereto as Exhibit E is a true and correct copy ofthe executed Franchise Agreement. 13. On March 23,2015, Filicori USA entered into a Franchise Agreement with Espresso Management Holding, Inc., a New York corporation, for the fourth location, located at 2541 Broadway, New York, NY Attached hereto as Exhibit F is a true and correct copy of the executed Franchise Agreement. 14. In September 2015, Filicori USA entered into a Franchise Agreement with Espresso Stores, Inc., a New York corporation, for the fifth location, located at 1 Broadway, New York, NY Attached hereto as Exhibit G is a true and correct copy of the executed Franchise Agreement. 15. On December 8, 2015, Filicori USA entered into a Franchise Agreement with F-6 Chelsea Inc., a New York corporation, for the sixth location, located at 201 W. 21 st Street, New York, NY Attached hereto as Exhibit H is a true and correct copy of the executed Franchise Agreement. 4 of 8

5 16. In 2014, we amended the franchise documents to correct an error made by the New York Attorney General's Office to change the franchisor to be Filicori Zecchini USA, Corp. The franchise agreements for the first three locations were not re-signed to reflect the new franchisor. 17. In May 2016, we learned that Shlomi Levi had filed for bankruptcy in April As detailed in the accompanying Affidavit of Olga Evglevska, a Manager ofthe Petitioners, on May 10, 2016, she met with Mr. Moshe Maman, a principal of Respondents', at Mr. Maman's request. 19. Mr. Maman initiated the conversation by stating that Mr. Levi has filed for bankruptcy and, therefore, is no longer involved with the operations ofthe locations. Mr. Maman said he would be in charge of running the locations from that moment on. 20. Mr. Maman also stated that, in the following weeks, the locations will change name and signage. 21. Mr. Maman also stated that, in the following weeks, the locations would start serving Cafe La Colombe drip coffee pursuant to a contract that was signed with La Colombe for the leasing ofthe drip equipment. 22. Mr. Maman said that he likes Filicori Zecchini espresso coffee, and, in consideration of all the years of business, would like to collaborate with Filicori Zecchini in Respondents' "new format." 23. Mr. Maman said it is his intention to create a "new format," which will be independent of Filicori Zecchini, will price everything at $2.00, and will open over 20 more locations in the next few years. 24. Mr. Maman said he is giving Petitioners two options to collaborate with Respondents and their principals: 1) Respondents, their principals and their related entities run the cafes under another name, but leave Petitioners' furniture and coffee equipment in place and 5 of 8 5

6 6 of 8 6 continue purchasing Petitioners' coffee while stating on the door "proudly serving Filicori Zecchini" or, 2) Petitioners can choose not to sell them coffee, and he would change the furniture and buy espresso from a different company. 25. Mr. Maman stated that he had contacted and inquired about doing business with the following companies, all competitors ofpetitioner: Coperaco, Brooklyn Roasting Company; Pascucci Roasters and La Colombe. 26. Ms. Evglevska explained to Mr. Maman that the two options he was suggesting to Filicori Zecchini are legally impossible with the existence of franchise and non-compete agreements; he responded that Mr. Levi is no longer part of operations due to his bankruptcy, and that while the court case is ongoing, Mr. Maman will be stepping in and would carry out the transformation ofthe Filicori Zecchini franchise cafes into a new $2 format. 27. Mr. Maman concluded the meeting by telling Ms. Evglevska to think about the two options he had presented, and to have me make a decision soon as the locations will be changing names during the corning weeks. 28. Following the meeting with Mr. Maman, Ms. Evglevska called Mr. Nicolas O'Connell, the sales director of La Colombe, and he confirmed that he, Mr. Levi and Mr. Maman met two weeks prior to discuss Mr. Levi's and Mr. Maman' s wish to use La Colombe for their drip coffee program. Mr. O'Connell further stated that La Colombe did not sign a contract during this meeting because Mr. O'Connell wished to communicate with Mr. Filicori first because he knew that the locations are Filicori Zecchini franchise cafes. 29. On May 17, 2016, Ms. Evglevska and I met with Shlomi Levi without attorneys or Mr. Maman present, per Mr. Levi's request. 30. Mr. Levi initiated the meeting by explaining that he was interested in talking about the future rather than talking about the past or the issues that the lawyers are handling.

7 7 of Mr. Levi said, and I quote "we are divorcing as a business and we need to decide how we are going to do that." 32. Mr. Levi then provided us with an offer of possibly entering into another agreement for Filicori Zecchini to sell him espresso, not drip coffee, to be sold in his locations. 33. Mr. Levi also said that the locations will be changing names soon, and the Filicori Zecchini name will be nowhere to be found. 34. Mr. Levi explained that ifwe are not willing to work with him and his future venture, then he will give us back the furniture, and will, instead, work with another coffee company. 35. As detailed in Ms. Evglevska's accompanying Affidavit, on June 1,2016, she observed that the signage for the Filicori Zechini franchise cafes had been removed from the first two franchise locations at 42 E. 46 th Street and 8 W. 46 th Street, evidence that Respondents are carrying out their scheme to steal the franchise cafes for themselves, tum to Petitioners' competitors for equipment and supplies and eliminate Petitioners from the franchise, all in violation ofthe parties' numerous agreement and their non-compete obligations therein. 36. Respondents' wrongful conduct will cause irreparable harm to Petitioners. Petitioners' goodwill in its name, logos, branding and other intellectual property will be damaged by Respondents' removal thereoffrom the franchise cafes with which it has been associated by Petitioners' customers for years and leave Petitioners without a brand presence in New York. 37. In addition, customers will be confused by the name and brand change being perpetrated by Respondents, will be likely to associate Respondents' planned lower-end, inferior "$2.00 format" coffee program with Petitioners' brand causing damage to its reputation for quality.

8 8 of Finally, Petitioners will be irreparably harmed by the perception that its brand has gone out of business or failed by reason of Respondents' unlawful removal of its branding and products from the franchise cafes. 39. For all ofthese types of harm, it is impossible to quantify a monetary value for the damage caused to Petitioners' goodwill, reputation, intellectual property and customer relationships. 40. For these reasons, Petitioners respectfully request a temporary, preliminary and permanent injunction against Respondents' wrongful conduct in violation oftheir obligation under the parties' agreements and the non-competition obligations therein. Executed and affirmed this 6 day ofjune, 2016 in Bologna, Italy.