INDEMNITY AGREEMENT
INDEMNITY
AGREEMENT
This
Indemnity Agreement (the
“Agreement”)
is
entered into and dated effective as of this 22nd day of February, 2007 (the
“Effective
Date”)
by and
among Frezer, Inc., a Nevada corporation (the “Company"),
Xxxxx
X. Xxxx, an adult resident of the State of California (“Koos”),
Xxxxx
X. Xxxxxxx, an adult resident of the State of California (“Pockett”),
Xxxxxxxx X’Xxxxx, an adult resident of the State of California (“X’Xxxxx”),
and
Bombardier Pacific Ventures, Inc., a Nevada corporation (“Bombardier”).
Koos,
Pockett, X’Xxxxx and Bombardier are referred to herein individually as the
“Principal”
and
collectively as the “Principals.”
RECITALS
X.
Xxxx,
Pockett and X’Xxxxx have been the executive officers and directors of the
Company since the Company’s inception and have been directly involved and
participated in the Company’s business, operations and finances since the
Company’s inception.
X.
Xxxx
controls and has sole dispositive power over the shares of the Company’s common
stock owned by Bombardier.
C.
The
Company and KI Equity Partners VI, LLC, a Delaware limited liability company
(“KI
Equity”)
have
entered into a certain securities purchase agreement dated February 1, 2007
(“Purchase
Agreement”)
under
which, among other things, the Company will sell 63,900,000 shares of the
Company’s common stock to KI Equity for a purchase price of $639,000, or $0.01
per share, and KI Equity will purchase the such shares from the Company.
D.
All
capitalized terms set forth in this Agreement (unless otherwise defined herein)
shall have the meaning ascribed to them in the Purchase Agreement.
E.
As
a
condition to the Closing of the transactions contemplated under the Purchase
Agreement (“Closing”),
the
Buyer has required that an indemnification be provided by the Principals under
which the Company will be held harmless from any liabilities or obligations
of
the Company arising out of or related to the period prior to the Closing.
F.
As
a
further condition to the Closing of the transactions contemplated under the
Purchase Agreement, Pockett, X’Xxxxx and Bombardier shall have completed the
sale of 6,100,000 shares of the Company’s common stock, in the aggregate, to the
Buyer for a for an aggregate purchase price of $61,000, or $0.01 per share
(the
“Stock
Transfer”).
G.
The
Company is willing to provide good and valuable consideration to the Principals
for providing such indemnification to the Company.
H.
The
Principals are willing to provide such indemnification pursuant to the terms
and
conditions hereof.
1
AGREEMENTS
Now,
Therefore,
in
consideration of the above recitals, the following representations, warranties,
covenants and conditions, and other good and valuable consideration, the receipt
of which is acknowledged, the parties agree as follows:
1. Indemnification.
(a)
The
Principals hereby jointly and severally indemnify and hold harmless, and agree
to indemnify and hold harmless, the Company (from and after the Closing) against
(i) any and all liabilities, obligations, losses, damages, claims, actions,
Liens and deficiencies which exist, or which may be imposed on, incurred by
or
asserted against the Company (“Asserted
Claims”)
based
upon, resulting from or arising out of the following: (a) the Liabilities (as
defined herein) of the Company related to the period prior to the Closing,
(b)
any material breach or inaccuracy of any representation or warranty by the
Company under the Purchase Agreement, (c) any material breach of any agreement
or covenant made by the Company in or pursuant to the Purchase Agreement
requiring performance by the Company prior to Closing, (d) any material breach
of any agreement or covenant made by the Principals in or pursuant to this
Agreement, and (e) any Company Closing Obligations (as defined in the Purchase
Agreement) which are not paid from the $564,000 of Purchase Price deposited
in
the Escrow Account for the disbursement and payment of the Company Closing
Obligations, and (ii) any reasonable cost or expense (including reasonable
attorneys' fees and court costs) incurred by the Company in connection with
the
foregoing (including, without limitation, any cost or expense incurred by the
Company in enforcing its rights pursuant to this Agreement)(collectively, the
“Damages”).
(b)
Each
of
the Principals acknowledges and agrees that it has received a copy of the
Purchase Agreement, has carefully reviewed and fully understands the terms
and
conditions of the Purchase Agreement and fully understands that each of the
Principals may be held liable for breaches of representations, warranties and
agreements of the Company contained in the Purchase Agreement.
(c)
For
purposes of this Agreement, the term “Liabilities”
shall
mean the following: all debts, liabilities and obligations, direct, indirect,
absolute or contingent of the Company, whether accrued, vested or otherwise,
whether known or unknown and whether or not reflected, or required in accordance
with U.S. GAAP to be reflected, in the Company’s balance sheet including,
without limitation, accounts and trade payables, accrued expenses, payroll
liabilities, vacation and sick pay obligations, deferred revenue, customer
deposits, loans and promissory notes, vendor and customer claims, obligations
under any contracts, agreement, instruments, licenses and leases (including,
without limitation, the lease of office and other facilities wherever located,
contracts, letters of intent, memorandum of understandings, employment
agreements, protocols, broker-dealer agreements, financial advisory agreements,
customer or client agreements, bank notes, bank guaranties, consulting
agreements, business contracts, distribution, license, joint venture agreement,
and other agreements to which the Company is or was a party), compensation
claims and employee benefits, taxes of any kind or nature, filings made with
any
regulatory agencies including the SEC and the NASD, fines and penalties,
obligations, damages or expenses (including fines and penalties) arising as
a
result of the Company’s failure to comply with any laws, rules or regulations
applicable to the Company or its respective businesses (including, without
limitation, any and all laws, rules and regulations under and with respect
to
Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the NASD governing broker-dealers),
any claims by past or present stockholders, debt holders, warrant holders,
or
option holders on account of actions or events occurring prior to the Closing,
employment matters and benefits (including any and all liabilities arising
out
of or with respect to the termination of the Company’s employees whether for
severance, health care insurance continuation or any other matter), any and
all
obligations with respect to any stock option or incentive plans of the Company,
any and all options and shares issued under such plans, and any registration
statements filed on Form S-8 with respect to such plans, any and all Taxes
(as
defined in the Purchase Agreement) arising out of or related to the period
prior
to Closing, any and all liabilities and obligations with respect to the
Technology related to the period prior to the Closing, debt obligations of
any
kind, claims made by any past or current holders of the Company’s securities,
customer and product warranty claims, actions and proceedings, pending or
threatened, and any liabilities, obligations or claims, whether or not presently
asserted, arising out of, relating to or in connection with the assets or the
businesses heretofore conducted by the Company or any of its respective
affiliates and subsidiaries at any time prior to the Closing, provided that
in
every case said Liabilities arise out of or are proximately related to the
period prior to Closing. Notwithstanding any other provision of this Agreement,
the Liabilities shall not include any of the obligations of the Company under
this Agreement or the Registration Obligations (as defined in the Purchase
Agreement).
2
(d)
If
at any
time the Company determines to assert a right to indemnification under this
Section, the Company shall give to the Principals and whoever indemnification
is
being asserted against, prompt and detailed written notice describing the matter
for which indemnification is sought in reasonable detail so (together with
photocopies of all letters, e-mails, memoranda, demands letters, inquiries,
and
similar correspondence) as to allow the party receiving said notice full
understanding of the Asserted Claims received by the Company and the extent
of
the Company’s access to books and records that may be reasonably necessary or
useful in the defense against any Asserted Claims. In the event that a demand
or
claim for indemnification is made hereunder with respect to a matter the amount
or extent of which is not yet known or certain, the notice of demand for
indemnification shall so state, and, where practicable, shall include an
estimate of the amount of the matter. The failure of the Company to give notice
of any matter to the Principals shall not relieve the Principals of any
liability which the Principals may have to the Company, except to the extent
such failure to notify shall have resulted or caused prejudice to the Principals
or results in a material adverse impact on the ability of the Principals to
respond to any Asserted Claims, conduct discovery, assert any affirmative
defenses against said Claims, or prevent the Principals from obtaining a
convenient and commercially reasonable forum and venue to adjudicate, mediate,
or arbitrate any said Asserted Claims. Within ten business (10) days after
receipt of the notice referred to above, the Principals shall (i) acknowledge
in
writing its responsibility for all or part of such matter, and shall pay or
otherwise satisfy the portion of such matter as to which responsibility is
acknowledged or take such other action as is reasonably satisfactory to the
Company to resolve any such matter that involves anyone not a party hereto,
or
(ii) give written notice to the Company of its intention to dispute or contest
all or part of such responsibility. Upon delivery of such notice of intention
to
contest, the parties shall negotiate in good faith to resolve as promptly as
possible any dispute as to responsibility for, or the amount of, any such
matter. If such dispute is not resolved within ten business (10) days, such
dispute shall be submitted to arbitration as provided under Section 7.h. hereof.
(e)
The
Principals shall have the authority and the sole and exclusive right to select
legal counsel and to satisfy and/or settle any indemnity claims, without notice
or cost to the Company, and the Company shall cooperate with the Principals
as
reasonably requested to dispute and defend against any indemnification claim
as
determined by the Principals, at the Principals’ expense, and the Company shall
promptly, after written request of the Principals, supply any necessary
confirmation or available documentation as related to the defense of any
indemnification claim involving a third party; provided, however, that any
settlement or satisfaction of any indemnity claim by the Principals shall
include a release of the Company, which shall be reasonably acceptable to the
Company.
(f)
The
Principals hereby agree that $25,000 of the Consideration, in the aggregate,
to
be paid to them under this Agreement, shall be held in escrow by Escrow Agent
to
satisfy any indemnification claims asserted against the Principals under this
Agreement (“Indemnity
Escrow”).
Notwithstanding anything contained in this Agreement to the contrary, the
establishment of the Indemnity Escrow, and the use of it to satisfy
indemnification claims under this Agreement, shall not in any way limit or
restrict the indemnification rights or other rights or remedies of the Company
under this Agreement or otherwise. On the 90th
day
following the Closing, the Indemnity Escrow (less any claims that have been
previously paid out of the Indemnity Escrow) shall be promptly disbursed by
the
Escrow Agent to the Principals pro rata based on their respective share of
the
Indemnity Escrow as set forth in Section 2 hereof), provided, however, in no
case shall monies be disbursed to the Principals unless and until all
indemnification claims for which notice had previously been provided in
accordance with this Agreement are resolved. Any disbursement of funds from
the
Indemnity Escrow shall be made to the Principals pro rata based on their
respective percentage share of the Indemnity Escrow as set forth in the Schedule
to Section 2 hereof.
3
(g)
The
Company shall not be entitled to indemnification under this Agreement unless
and
until the amount of the Damages to the Company for an individual Asserted Claim
exceeds $2,500 or the amount of the Damages for all Asserted Claims in the
aggregate exceed $5,000 (the “Baskets”),
at
which time, subject to the Cap on the maximum Damages, the Company shall be
entitled to indemnification for the total amount of such Damages in excess
of
the Baskets. The Company shall not be entitled to indemnification for any
Damages in excess of $499,700 (“Cap”).
No
demand or claim for indemnification under this Agreement may be made after
11:59
p.m., Denver time, on the date two (2) years following the Closing Date (the
“Claim
Period”).
The
parties hereto acknowledge and agree that the limitations on amount and duration
of the indemnification set forth in the preceding sentence shall not apply
to
any claim for indemnification of Taxes. Materiality qualifications to the breach
or inaccuracy of the representations and warranties and the breach of any
agreements or covenants for which a claim for indemnity may be asserted
hereunder shall not be taken into account in determining the amount of Damages
occasioned by a breach or inaccuracy for purposes of determining whether the
Baskets have been met. Further, the Baskets shall not be applicable to any
Asserted Claim based on or arising out of (i) intentional misrepresentation
or
fraud, or (ii) a breach of the Principals’ covenants under Section 3 hereof.
2.
Consideration.
In
consideration of the indemnification provided by the Principals under this
Agreement, the Company shall pay the Principals, in the aggregate, Three Hundred
Seventy-Six Thousand Seven Hundred Fifty Dollars ($376,750) (“Consideration”).
Subject to the funding of the Indemnity Escrow and the Additional Closing Escrow
described in Section 3, the Consideration shall be paid to the Principals at
the
Closing. The Consideration shall be allocated among the Principals as set forth
in the Schedule attached hereto. Each Principal acknowledges and agrees that
the
portion of the Consideration payable to him pursuant to the attached Schedule
is
fair and reasonable and fairly compensates the Principal for the indemnification
obligation each is taking under this Agreement.
3. Covenants
by the Principals.
(a) In
the
event the Company Closing Obligations exceed $564,000, the Principals shall
be
responsible for paying any Company Closing Obligations in excess of $564,000
(“Excess
Obligations”)
at
Closing in accordance with this Section 3. The Excess Obligations (if any)
and
the Compliance Costs (as defined below) (collectively, the “Principals’
Closing Obligations”)
shall
be paid by the Principals from the Consideration
(pro
rata based on their respective percentage share of the Consideration as set
forth in the Schedule to Section 2 hereof) at
Closing. To the extent the Principals’ Closing Obligations are not fully paid at
Closing or are not known at the time of Closing, the Buyer and the Principals
shall in good
faith
determine the portion of the Consideration that shall be held in the Escrow
Account for the payment and satisfaction of such Principals’ Closing Obligations
after Closing (“Additional
Closing Escrow”).
The
Additional Closing Escrow shall be in addition to the Indemnity Escrow set
forth
in Section 1 hereof. For purposes of this Agreement, the term “Compliance
Costs”
shall
mean all
costs
associated with the preparation and/or filing of the 2006 Annual Report (as
defined in the Purchase Agreement), the preparation and audit of the Company’s
financial statements for the year ended December 31, 2006, and preparation
and
filing of the Returns; provided, however, upon the Closing, that the Buyer
shall
credit the Principals for fifty percent (50%) of the cost of said audit so
long
as the same shall not exceed $2,000.
(b)
On
or
before March 15, 2007, the Principals shall, at their sole cost and expense
and
on behalf of the Company, and subject to the prior review and approval of the
Company or its respective
counsel or other advisors,
which
approvals shall not be unreasonably withheld, (i) prepare
or cause to be prepared and file or cause to be filed the Company’s
federal
and state income, franchise and other tax returns for the year ended December
31, 2006 (“Returns”),
which
Returns will be, when filed, true, correct and complete in all material
respects, and (ii) pay any and all Taxes shown to be due on such Returns, if
any, and (iii) upon such filing and payment (if any), deliver a certificate
of a
duly authorized officer of the Company certifying as to the completion of the
foregoing. The Returns will be provided to the Company for review and approval
at least five (5) business days prior to the intended date of filing by the
Principals.
4
(c) Within
two (2) business days after the Closing, each Principal shall file all reports
and statements with the SEC as required under Section 16(a) of the Exchange
Act
including, without limitation, Form 4.
(d) The
Principals agree to pay all Taxes imposed on the Company by the State of
California through and including Closing to permit the prompt surrender of
the
Company’s certificate of authority to do business in California following the
Closing.
(e) Following
the Closing, the Principals agree to cooperate with the Company as commercially
reasonable under the then existing circumstances, and provide any information
and documentation reasonably requested by the Company or its advisors, to allow
the Company to continue to file its periodic reports with the SEC (or any
amendments thereto) in a timely manner, to allow the Company to comply with
the
reporting requirements of the Exchange Act of 1934, as amended, to allow the
Company to provide market makers with the information to obtain or maintain
a
quotation on the Over-the-Counter Bulletin Board, and to allow the Company
to
prepare and file any tax returns
4. Representations
and Warranties of the Company.
The
Company represents and warrants to the Company that: (i) on the date of this
Agreement, the Company has all necessary authority to execute this Agreement;
(ii) there is no claim, action, suit or other proceeding pending, threatened
or
known, which, if decided adversely, would interfere with the consummation of
the
transaction contemplated hereby; (iii) no approval or consent of any
governmental authority or third party is required for the Company to enter
into
or perform this Agreement; (iv) this Agreement is enforceable in accordance
with
its terms, subject to the laws of insolvency and general principles of equity;
and (v) this Agreement has been duly authorized and adopted by the
Company.
5. Representations
and Warranties of the Principals.
The
Principals represent and warrant to Company that: (i) on the date of this
Agreement, each of them has all necessary authority to execute this Agreement;
(ii) there is no known claim, action, suit or other proceeding pending,
threatened or known against them, which, if decided adversely, would interfere
with the consummation of the transaction contemplated hereby; (iii) no approval
or consent of any governmental authority or third party is required for the
Principals to enter into or perform this Agreement; and (iv) this Agreement
is
enforceable against the Principals in accordance with its terms, subject to
the
laws of insolvency and general principles of equity.
6. Delivery
and Cooperation.
If
either party requires any further documentation, the other party will promptly
respond to any reasonable requests for additional documentation.
7. Miscellaneous.
(a) Successors
and Assigns.
This
Agreement shall be binding upon the parties hereto and their respective
successors and assigns.
5
(b)
Survival
of Covenants and Representations.
All
agreements, covenants, representations and warranties made by the parties herein
shall survive the delivery of this Agreement, subject to the limitations set
forth in this Agreement.
(c) Severability.
Should
any part of this Agreement for any reason be declared invalid or unenforceable,
such decision will not affect the validity or enforceability of any remaining
portion, which remaining portion will remain in force and effect as if this
Agreement had been executed with the invalid portion thereof eliminated, and
it
is hereby declared as the intention of the parties hereto that the parties
would
have executed the remaining portion of this Agreement without including therein
any such part or portion that may, for any reason, be hereafter declared invalid
or unenforceable.
(d) Governing
Law and Venue.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of Nevada, without reference to choice of law principles.
(e) Captions.
The
descriptive headings of the various Sections or parts of this Agreement are
for
convenience only and shall not affect the meaning or construction of any of
the
provisions hereof.
(f) Entire
Agreement.
This
Agreement constitutes the entire agreement among the parties hereto concerning
the subject matter contained herein, and supersedes all prior agreements or
understanding of the parties. No provision of this Agreement may be waived
or
amended except in a writing signed by both parties. A waiver or amendment of
any
term or provision of this Agreement shall not be construed as a waiver or
amendment of any other term or provision.
(g) Counterparts.
This
Agreement may be executed by facsimile or electronic signatures and in multiple
counterparts, each of which shall be deemed an original. It shall not be
necessary that each party executes each counterpart, or that any one counterpart
be executed by more than one party so long as each party executes at least
one
counterpart.
(h) Arbitration.
All
disputes, controversies or claims (“Disputes”)
arising out of or relating to this Agreement shall in the first instance be
the
subject of a meeting between a representative of each party who has
decision-making authority with respect to the matter in question. Should the
meeting either not take place or not result in a resolution of the Dispute
within twenty (20) business days following notice of the Dispute to the other
party, then the Dispute shall be resolved in a binding arbitration proceeding
to
be held in San Diego, California in accordance with the international rules
of
the American Arbitration Association. The arbitrators may award reasonable
attorneys’ fees and other related arbitration expenses, as well as pre- and
post-judgment interest on any award of damages, to the prevailing party or
parties, in their sole discretion. The parties agree that a panel of three
arbitrators shall be required, all of whom shall be fluent in the English
language, and that the arbitration proceeding shall be conducted entirely in
the
English language. Any award of the arbitrators shall be deemed confidential
information for a minimum period of five (5) years.
(i) Notices.
All
notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or
sent
via telecopy (receipt confirmed) to the parties at the following addresses
or
telecopy numbers (or at such other address or telecopy numbers for a party
as
shall be specified by like notice):
6
| (1) |
if
to the Company (prior to Closing), to:
|
Attention:
Xxxxx X. Xxxx
0000
Xxxxxxxxxx Xxxxxx, Xxxxx 00
Xxx
Xxxxx, XX 9210
(000)
000-0000
fax
with
a
copy to:
Xxxxxxx
X. Xxx, Esq.
0000
Xxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxx
Xxxxx, XX 00000
(000)
000-0000 fax
| (2) |
if
to the Company (after Closing), to:
|
Attention:
Xxxxx Xxxxxxx, Director
000X
Xxxxxxxxx Xxxxxxxxx, Xxxxx 00
Xxxx
Xxxxx, Xxxxxxx 00000
(000)
000-0000 fax
|
(3)
|
if
to the Principals, to the address and fax number set forth next to
their
respective names on the signature
page
|
[Remainder
of this page intentionally left blank.]
7
IN
WITNESS WHEREOF, this Agreement has been executed as of the date first written
above.
| |
|
|
| By: | /s/ Xxxxx X. Xxxx | |
|
Xxxxx
X. Xxxx, CEO
|
||
|
PRINCIPALS:
|
||
| |
|
|
|
/s/
Xxxxx X. Xxxx
|
||
|
Xxxxx
X. Xxxx, Individually
|
||
|
Address:
0000 Xxxxxx Xxxxxx
Xx
Xxxx, XX 00000
SSN:
|
||
|
/s/
Xxxxx X. Xxxxxxx
|
||
|
Xxxxx
X. Xxxxxxx, Individually
|
||
|
Address:
0000 Xxxxxxxx Xxxx
Xxx
Xxxxx, XX 00000
SSN:
|
||
|
/s/
Xxxxxxxx X’Xxxxx
|
||
|
Xxxxxxxx
X’Xxxxx, Individually
|
||
|
Address:
0000 X. Xxxxx Xxxxxx Xx.
Xxxxxx
Xxxxxxx, XX 00000
SSN:
|
||
|
Bombardier
Pacific Ventures, Inc.
|
||
|
Address:
0000 Xxxxxx Xxxx., Xxxxx X
Xxx
Xxxxx, XX 00000
FEIN:
|
||
|
By:
/s/
Xxxxx X. Xxxx
|
||
|
Xxxxx
X. Xxxx, CEO
|
||
8
Schedule
to Section 2
Allocation
of Consideration and Indemnity Escrow
|
Principal
|
Dollar
Share of Consideration
|
Dollar
Share of Indemnity Escrow
|
|||||
|
Xxxxx
X. Xxxx
|
$
|
295,625
|
$
|
15,625
|
|||
|
Xxxxx
X. Xxxxxxx
|
$
|
24,000
|
$
|
3,125
|
|||
|
Xxxxxxxx
X’Xxxxx
|
$
|
24,000
|
$
|
3,125
|
|||
|
Bombardier
Pacific Ventures, Inc.
|
$
|
33,125
|
$
|
3,125
|
|||
|
Total
|
$
|
376,750
|
$
|
25,000
|
|||
9
