ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (the “Agreement”) is entered into as of December 9,
2010 (the “Effective Date”) by and between New Horizon, Inc., a Texas
corporation (“Seller”), and I-Web Media Inc., a Delaware corporation doing
business as Heartland Bridge Capital (“Purchaser”). The Seller and the
Purchaser shall each be referred to individually as a “Party” and collectively
as the “Parties.”
RECITALS
WHEREAS,
the Seller is the owner, operator and administrator of the assets described on
Exhibit A (the
“Assets”);
WHEREAS,
the Seller is seeking to sell its interest in the Assets to a third party that
may provide the Seller with liquidity for its interest in the Assets in advance
of when payments pursuant to those Assets would otherwise be received by
Seller;
WHEREAS,
the Seller believes that it may obtain such liquidity by selling the Assets to
Purchaser;
WHEREAS,
the Purchaser believes that the acquisition of the Assets will further its
business interests; and
WHEREAS,
the Seller desires to sell to Purchaser, and the Purchaser desires to purchase
and acquire from the Seller, Seller’s interest in the Assets according to the
terms set forth herein.
NOW,
THEREFORE, in consideration of the mutual promises herein contained, the Parties
hereby agree as follows:
I. Purchase and Sale of the
Assets
1.1 Purchase and Sale of
Assets. The Seller hereby sells, transfers, assigns, and
delivers to the Purchaser, free and clear of any liens or encumbrances of any
kind, all of the Seller’s right, title, and interest in the
Assets.
1.2 Assumption of
Liabilities. The Purchaser will not assume any liabilities or
obligations related to the Assets, and Seller represents that there are no
liabilities or obligations related to the Assets.
1.3 Assignment of Rights
Agreement. At Closing, the Seller
shall deliver to Purchaser an Assignment of Rights Agreement assigning to
Purchaser any and all rights, interest and title in and to its interest in the
escrow established under the Stock Purchase Agreement in the form set forth in
Exhibit B (the
“Assignment of Rights Agreement”).
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1.4 Closing. The
closing shall be deemed to have taken place on the Closing Date, which shall be
December 10, 2010.
1.5 Post-Closing
Activities. At any time after the Closing Date, upon
any Party’s written request and without further consideration, the other
Party shall take such other actions as the requesting Party may reasonably deem
necessary or desirable in order to consummate the terms, and recognize the
benefits, of obligations under and transactions contemplated by this
Agreement.
II. Purchase Price
In consideration of the Seller’s
sale, transfer, and assignment of the Assets, the Purchaser shall issue the
Seller the following:
2.1 Common
Stock. Four Million (4,000,000) shares of the Purchaser’s
common stock, restricted in accordance with Rule 144 (the “Common Stock”), with
up to an additional Two Million (2,000,000) shares of the Purchaser’s common
stock, restricted in accordance with Rule 144, to be issued to the Seller by
August 31, 2012, with the exact number of shares to be issued proportional to
the difference between (i) the higher of the average closing stock price on any
applicable stock exchange during the month of July 2012 (“CP”) or $1.33 per
share; and (ii) $2.00 per share, and determined in accordance with the formula
(1-((CP-$1.33)/($2.00-$1.33)))*2,000,000. For the avoidance of doubt
and by way of example, if the Purchaser’s average closing stock price during
July 2012, on either a national exchange or an over-the-counter market, is
$1.85, the number of additional shares to be issued, calculated according to the
formula (1-(($1.85-$1.33)/($2.00-$1.33)))*2,000,000, shall be 447,761 shares of
Purchaser’s common stock;
2.2 Preferred
Stock. Three Million (3,000,000) shares of a newly created
series of preferred stock (“Series B Convertible Preferred Stock”) with the
following rights and preferences: (i) dividend rights equal to the
dividend rights of the Purchaser’s common stock; (ii) liquidation preference
over the Purchaser’s common stock and equal to that of the Purchaser’s Series A
Convertible Preferred Stock; (iii) each share of Series B Convertible Preferred
Stock will be convertible into five (5) shares of the Purchaser’s common stock;
(iv) no redemption rights; (v) no call rights by the Purchaser; and (vi) each
share of Series B Convertible Preferred Stock will have one (1) vote on all
matters validly brought to the Purchaser’s common stockholders (the “Preferred
Stock” and together with the Common Stock, the “Shares”), with the other rights
and preferences to be determined by the Purchaser’s Board of
Directors. The Purchaser will issue to the Seller by August 31, 2012,
up to an additional 1,500,000 shares of Series B Convertible Preferred Stock,
with the exact number of shares to be calculated in accordance with the formula
set forth in Section 2.1, above, except that 1,500,000 is to be used where
2,000,000 is used in Section 2.1, above; and
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2.3 Convertible Promissory
Note. A promissory note in the form attached hereto as Exhibit D, in the principal
amount of Two Million Dollars ($2,000,000), which may be repaid by the Purchaser
in cash or in common stock at the value of One Dollar ($1) per share, or
convertible at the Seller’s discretion into the Purchaser’s common stock at the
conversion ratio based on a value of One Dollar Fifty Cents ($1.50) per share
(the “Note”). This Agreement, the Assignment of Rights Agreement, and
the Note collectively are the “Transaction Documents.”
III. Representations and Warranties of
the Seller
The
Seller represents and warrants to the Purchaser, as of the date of this
Agreement and again as of the Closing, as follows:
3.1 Organization. The Seller is a
corporation, duly organized, validly existing, and in good standing under the
laws of Texas, and has all requisite corporate power and authority to carry on
its business as now conducted by it and to own and operate its assets as now
owned and operated by it. The Seller has delivered to the Purchaser
true and correct copies of the Seller’s Articles of Incorporation (the
“Organizational Documents”) as currently in effect.
3.2 Authority;
Enforceability.
(a) The
Seller has the right, power, and authority to execute and deliver the
Transaction Documents executed or to be executed by the Seller pursuant to this
Agreement, and to perform its obligations thereunder. The Transaction
Documents, to which the Seller is a Party, constitute (or will, when executed
and delivered as contemplated herein, constitute) the legally binding
obligations of the Seller, enforceable in accordance with their respective
terms.
(b) The
execution, delivery, and performance of the Transaction Documents by the Seller,
and the consummation of the transactions contemplated thereby, do not and will
not: (i) require the consent, waiver, approval, license, or other authorization
of any Person, except as provided for herein; (ii) violate any of provision of
applicable law; (iii) contravene, conflict with, or result in a violation of any
provision of the Seller’s Organizational Documents; (iv) conflict with, require
a consent or waiver under, result in the termination of any provisions of,
constitute a default under, accelerate any obligations arising under, trigger
any payment under, result in the creation of any lien pursuant to, or otherwise
adversely affect, any contract to which the Seller is a party or by which any of
its assets are bound, in each such case whether with or without the giving of
notice, the passage of time, or both.
(c) All
requisite corporate action has been taken by the Seller to authorize and approve
the execution and delivery of the Transaction Documents, the performance by the
Seller of its obligations thereunder, and of all other acts necessary or
appropriate for the consummation of the transactions contemplated by the
Transaction Documents.
3.3 Legal Actions. There
is no demand, action, suit, claim, proceeding, complaint, grievance, charge,
inquiry, hearing, arbitration, or governmental investigation of any nature,
public or private, (each, a “Proceeding”) pending or, to the knowledge of the
Seller, threatened by or against the Seller (or any of its officers, directors,
partners, or employees) related to the Assets, or involving any of the Assets,
nor is there any basis for any such legal proceeding.
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3.4 Personal Property,
Inventory, and Title of Assets. The Assets were acquired by
the Seller in bona fide, arms-length transactions entered into in the ordinary
course of business. The Seller owns, and at the Closing, the
Purchaser shall be vested with, all right, title, and interest in and to all of
the Assets, as stated in the Assignment of Rights Agreement, free and clear of
any and all liens.
3.5 Tax
Matters.
(a) The
Seller has duly and timely filed all tax returns required to be filed by them
under applicable law. All such tax returns were correct and complete
in all material respects. All tax returns that have been made
available to the Purchaser for inspection prior to the date hereof were true and
complete copies of the tax returns actually filed by the Seller (or affiliates
thereof), and have not been subsequently amended. All taxes due and
payable by the Seller (whether or not shown on any tax return) relating to the
Assets or which could result in a lien on the Assets have been
paid. No claim has ever been made by an authority in a jurisdiction
where the Seller does not file tax returns that the Seller is or may be subject
to taxation by that jurisdiction in connection with or as a result of the
ownership of the Assets.
(b) All
taxes that the Seller is or was required by applicable law to withhold or
collect which could result in a lien on the Assets have been duly withheld or
collected and, to the extent required, have been paid to the proper governmental
authority or other person or, if not paid, have been appropriately
reserved.
(c) The
Seller has no reason to believe that any governmental authority will or intends
to assess any additional taxes which could result in a lien on the Assets for
any period for which tax returns have been filed. No dispute or claim
concerning any tax liability of the Seller which could result in a lien on the
Assets has been claimed or raised by any governmental authority in writing at
any time in the past six (6) years. There exists no proposed tax
assessment against the Seller which could result in a lien on the
Assets.
(d) The
Seller has not waived any statute of limitations in respect of Taxes which could
result in a lien on the Assets, or agreed to any extension of time with respect
to a Tax assessment or deficiency which could result in a lien on any
Assets.
(e) The
Seller has not entered into any agreements with federal, state, or local taxing
authorities, including any tax abatement or tax credit agreements, in connection
with the Assets.
3.6 Material
Contracts.
(a) The
Seller has previously delivered to the Purchaser true and correct copies of all
such material contracts (or accurate written summaries of any oral material
contract) related to the Assets, each as currently in effect.
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(b) The
Seller has not breached, violated, or defaulted under (or taken or failed to
take any action that, with the giving of notice, the passage of time, or both
would constitute a breach, violation, or default under), or received notice
alleging that the Seller has breached, violated, or defaulted under (or taken or
failed to take any action that, with the giving of notice, the passage of time,
or both would constitute a breach, violation, or default under) any contract
included in the Assets. No other party obligated to the Seller
pursuant to any such contract has breached, violated, or defaulted under (or
taken or failed to take any action that, with the giving of notice, the passage
of time, or both would constitute a breach, violation, or default under) any
such contract.
(c) All
of the contracts included in the Assets: (i) were entered into in the ordinary
course of business on commercially reasonable terms, with bona fide third
parties in arms-length transactions; (ii) are valid and enforceable in
accordance with their terms; (iii) are in full force and effect; and (iv) will
continue to be valid and enforceable and in full force and effect on identical
terms following the Closing. All such contracts can be fulfilled or
performed in accordance with their respective terms in the ordinary course of
business without undue or unusual expenditures of money or effort.
3.7 Certain
Changes. Since November 23, 2010, the Seller has owned the
rights to the Assets, solely in the ordinary course of business consistent with
past practices, and the Seller has used its reasonable best efforts to preserve
the Assets. Without limiting the foregoing, since November 23, 2010,
there has not been any:
(a) event
or circumstance that has had or could reasonably be expected to have,
individually or in the aggregate, a material adverse effect on, or a material
adverse change in, the operations, affairs, prospects, condition (financial or
otherwise), results of operations, or assets associated with the Assets, taken
as a whole (“Material Adverse Change”);
(b) damage,
destruction, or loss (whether or not covered by insurance) that resulted in, or
could reasonably be expected to result in, losses or diminution of value with
respect to the Assets;
(c) revaluation
or write-down of any of the Assets;
(d) amendment
or termination of any material contract other than in the ordinary course of
business;
(e) change
in accounting principles, methods, or practices of the Seller relating to the
Assets, or in the manner the Seller keeps its books and records relating to the
Assets;
(f) any
settlement or compromise in any claim, suit, or cause of action relating to the
Assets; or
(g) agreement
by Seller to do, either directly or indirectly, any of the things described in
the preceding clauses (a) through (f).
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3.8 Brokers. Neither
the Seller nor any other person acting on its behalf has incurred any obligation
or liability to any person for any brokerage fees, agent’s commissions, or
finder’s fees in connection with the execution or delivery of the Transaction
Documents or the consummation of the transactions contemplated
hereby.
3.9 Certain
Payments. Neither the Seller nor any director, officer, or
employee thereof, nor any other person associated with or acting for or on
behalf of any of them, has, in connection with the Assets, directly or
indirectly: (a) made any contribution, gift, bribe, rebate, payoff,
influence payment, kickback, or other payment to any Person, private or public,
regardless of form, whether in money, property, or services (i) to obtain
favorable treatment in securing business, (ii) to pay for favorable treatment
for business secured, (iii) to obtain special concessions or for special
concessions already obtained, or (iv) in violation of any applicable law; or (b)
established or maintained any fund or asset that has not been recorded in the
books and records of Seller maintained in the ordinary course in connection with
the Assets.
3.10 Purchase for Own
Account. The Seller represents that it is acquiring the Shares
solely for its own account and beneficial interest for investment and not for
sale or with a view to distribution of the Shares or any part thereof, has no
present intention of selling (in connection with a distribution or otherwise),
granting any participation in, or otherwise distributing the same, and does not
presently have reason to anticipate a change in such intention.
3.11 Ability to Bear Economic
Risk. The Seller acknowledges that investment in the Shares
involves a high degree of risk, and represents that it is able, without
materially impairing its financial condition, to hold the Shares for an
indefinite period of time and to suffer a complete loss of its
investment.
3.12 Further Limitations on
Disposition. The Seller further acknowledges that the Shares
are restricted securities under Rule 144 of the Act (as defined below), and,
therefore, when issued by the Purchaser to the Seller will contain a restrictive
legend substantially similar to the following:
THESE
SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “ACT”). THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER THE ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
THAT SUCH REGISTRATION IS NOT REQUIRED.
Without
in any way limiting the representations set forth above, the Seller further
agrees not to make any disposition of all or any portion of the Shares unless
and until:
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(i) There
is then in effect a Registration Statement under the Act covering such proposed
disposition and such disposition is made in accordance with such Registration
Statement; or
(ii) The
Seller shall have notified the Purchaser of the proposed disposition and shall
have furnished the Purchaser with a detailed statement of the circumstances
surrounding the proposed disposition, and if reasonably requested by the
Purchaser, the Seller shall have furnished the Purchaser with an opinion of
counsel, reasonably satisfactory to the Purchaser, that such disposition will
not require registration under the Act or any applicable state securities
laws.
Notwithstanding
the provisions of subparagraphs (i) and (ii) above, no such registration
statement or opinion of counsel shall be necessary for a transfer by the Seller
to a partner (or retired partner) of the Seller, or transfers by gift, will or
intestate succession to any spouse or lineal descendants or ancestors, if all
transferees agree in writing to be subject to the terms hereof (including the
Registration Rights Agreement) to the same extent as if they were the Seller
hereunder.
3.13 Certificate of
Designation. The Seller will be provided with a copy of the
Certificate of Designation for the Preferred Stock (the “Certificate of
Designation”), which will set forth all of the rights, privileges, and
preferences with respect to the Preferred Stock.
IV. Representations and Warranties of
the Purchaser
4.1 Organization. The
Purchaser is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware.
4.2 Authority;
Enforceability. The Purchaser has full corporate power and
authority to execute and deliver the Transaction Documents to which it is, or
will be, a party, and to perform its obligations thereunder. The
Transaction Documents to which the Purchaser is a party constitute (or will,
when executed and delivered at the Closing, constitute) the legally binding
obligations of the Purchaser, enforceable in accordance with their respective
terms. The execution, delivery, and performance of the Transaction
Documents by the Purchaser, and the consummation of the transactions
contemplated thereby, do not and will not: (a) require the consent, waiver,
approval, license or other authorization of any Person; (b) violate any
provision of Applicable Law applicable to the Purchaser; (c) contravene,
conflict with, or result in a violation of: (i) any provision of the
Purchaser’s Articles of Incorporation, Regulations, or any other governing or
constitutive documents of the Purchaser; or (ii) any resolution adopted by the
manager, member, or other governing bodies of the Purchaser; or (d) conflict
with, result in the termination of any provisions of, constitute a default
under, accelerate any obligations arising under, trigger any payment under, or
otherwise adversely affect, any material contract to which the Purchaser is a
party, which, as to each of (a) through (d), would materially and adversely
affect the Purchaser’s ability to consummate the transactions contemplated
herein or to perform its obligations under the Transaction Documents to which
the Purchaser is a party. All requisite corporate action has been
taken by the Purchaser authorizing and approving the execution and delivery by
the Purchaser of the Transaction Documents to which the Purchaser is or will be
a party, the performance by the Purchaser of its duties and obligations
thereunder, and the taking of all other acts necessary and appropriate for the
consummation of the transactions contemplated thereby.
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4.3 Brokers. The
Purchaser has not incurred any obligation or liability to any Person for any
brokerage fees, agent’s commissions, or finder’s fees in connection with the
execution or delivery of the Transaction Documents or the transactions
contemplated hereby.
V. Consents
The
Seller will use its reasonable best efforts to obtain or cause to be obtained
any consents required in connection with the transactions contemplated by any of
the Transaction Documents that are requested by the Purchaser and that have not
been previously obtained prior to or at the Closing. Notwithstanding
anything to the contrary set forth herein, this Agreement shall not constitute
an assignment or attempt to assign or transfer any interest in any contract or
permit otherwise included in the Assets, or any claim, right or benefit arising
thereunder or resulting therefrom, if such assignment or transfer is without the
consent of a third party and would constitute a breach or violation thereof or
adversely affect the rights of the Purchaser or the Assets. Until all
such consents are obtained, the Seller shall cooperate in any arrangement
reasonably satisfactory to the Purchaser designed to fulfill the Seller’s
obligations thereunder and to afford the Purchaser the continued full benefits
thereof.
VI. Covenants
6.1 Further
Assurances. From time to time (including after the Closing),
the Parties will execute and deliver such other documents, certificates,
agreements, and other writings and take such other actions as may reasonably be
necessary or requested by another Party in order to consummate, evidence or
implement expeditiously the transactions contemplated by this
Agreement.
6.2 Fulfillment of
Conditions. The Parties hereto agree to take and to cause to
be taken in good faith commercially reasonable efforts to fulfill, as soon as
reasonably practicable, the conditions to Closing.
6.3 Certain
Filings. The Parties hereto shall cooperate with one another
in determining whether any action by or in respect of, or filing with, any
governmental authority is required, or any action, consent, approval, or waiver
from any party to any contract is required, in connection with the consummation
of the transactions contemplated by this Agreement. Subject to the
terms and conditions of this Agreement, in taking such actions or making any
such filings, the Parties hereto shall furnish information reasonably required
in connection therewith and timely seek to obtain any such actions, consents,
approvals, or waivers.
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VII. Indemnification
7.1 Agreement to
Indemnify.
(a) The
Seller shall indemnify, defend, and hold harmless the Purchaser and its
respective officers, directors, employees, representatives, agents, successors,
and assigns (collectively, the “Indemnitees”) from, against, and in respect of
any and all damages incurred by any Indemnitee arising out of or as a result
of: (i) any inaccuracy or misrepresentation in or breach of any
representation or warranty made by the Seller in this Agreement; (ii) any breach
of any covenant or agreement made by the Seller in this Agreement; and/or (iii)
any and all proceedings, judgments, decrees, awards, assessments, fees, and
expenses incident to any of the foregoing or incurred in investigating or
attempting to avoid the same or to oppose the imposition thereof, or in
enforcing this indemnification.
(b) The
Seller shall not be required to provide indemnification to any Indemnitee
pursuant to Section 7.1(a) unless and until the
aggregate amount of all damages incurred by all Indemnitees responsive to such
Section exceeds Five Thousand Dollars ($5,000) (the “Deductible”), whereupon the
Indemnitees shall be entitled to indemnification under such Section only with
respect to damages in excess of such Deductible. The maximum
aggregate monetary liability of the Seller to indemnify the Indemnitees under
Section 7.1(a) shall not exceed the
Purchase Price (the “Cap”) in the aggregate. Notwithstanding the
foregoing, neither the Deductible nor the Cap shall apply to claims arising out
of fraud, intentional misrepresentation, or gross negligence.
(c) If
any third party notifies any Indemnitee with respect to any matter which may
give rise to a claim for indemnification against the Seller under this Article
VII, then the Indemnitee will notify the Seller thereof within thirty (30) days
thereafter, such notice to state the nature and basis of any claim made by the
third party; provided that, no delay on the part of the Indemnitee in notifying
the Seller will relieve the Seller from any obligation hereunder unless, and
then solely to the extent that, the Seller is demonstrably prejudiced
thereby. In the event the Seller notify the Indemnitee within thirty
(30) days after the date the Indemnitee has given notice of the matter that the
Seller will indemnify the Indemnitee in respect of such matter, then the Seller
may, by notice to the Indemnitee within such 30-day period, assume the defense
of such matter. If the Seller assume the defense of such matter, (i)
the Seller will defend the Indemnitee against the matter with counsel of
Seller’s choice reasonably satisfactory to the Indemnitee, (ii) the Indemnitee
may retain separate counsel at its sole cost and expense, and (iii) the Seller
will not consent to the entry of a judgment or consent order with respect to the
matter, or enter into any settlement, in each case which either (A) grants the
plaintiff or claimant any form of relief other than monetary damages which will
be satisfied by the Seller or (B) fails to include a provision whereby the
plaintiff or claimant in the matter releases the Indemnitees from all liability
with respect thereto, in either such case without the written consent of the
Indemnitee (which consent shall not be unreasonably withheld or
delayed). If the Seller has not assumed the defense of such matter,
(i) the Indemnitee may defend against the matter in any manner it reasonably may
deem appropriate and with counsel of its choice, and (ii) the Seller may retain
separate counsel at its sole cost and expense. Notwithstanding
anything to the contrary in the foregoing, if defendants in any action include
any Indemnitee and Seller, and such Indemnitee shall have been advised by its
counsel that there may be material legal defenses available to such Indemnitee
inconsistent with those available to Seller, or if a conflict of interest exists
between an Indemnitee and Seller with respect to such claim or the defense
thereof, or if an Indemnitee reasonably determines that Seller’s control of such
defense would reasonably be expected to have an adverse effect on the Assets or
the outcome of the matter, then in any such case, the Indemnitee shall have the
right to reassert such defense through its own counsel, and in such event (or in
the event that the Seller does not timely assume or diligently pursue the
defense of such matter as provided above) the reasonable fees and expenses of
the Indemnitee’s counsel shall be borne by the Seller and shall be paid by them
from time to time within twenty (20) days of receipt of appropriate invoices
therefore.
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(d) In
the event that an Indemnitee notifies the Seller of any claim for
indemnification hereunder that does not involve a third party claim, the Seller
shall, within thirty (30) days after the date of such notice, pay to the
Indemnitee the amount of damages payable pursuant to this Section 7.1 and shall
thereafter pay any other damages payable pursuant to this Section 7.1 and
arising out of the same matter on demand, unless the Seller dispute in writing
its liability for, or the amount of, any such damages within such 30-day period,
in which case such payment shall be made as provided above in respect of any
matters or amounts not so disputed and any damages in respect of the matters so
disputed shall be paid within five (5) business days after any determination (by
agreement of Purchaser and Seller, or pursuant to arbitration in accordance with
Section 8.3) that the Seller are liable therefore pursuant to this Section
7.1.
(e) In
connection with any payment of damages pursuant to this Section 7.1, the Seller
shall pay to the Indemnitee(s) an amount calculated like interest on the amount
of such damages at the applicable interest rate from the date of Closing until
the Indemnitee(s) shall have been indemnified in respect thereof.
Section
7.2 Survival of Representations,
Warranties, and Covenants.
(a) Except
as otherwise provided in this Section 7.2, all representations and warranties
contained herein, and the right to assert claims in respect of any breach
thereof, shall survive the Closing and any investigation heretofore or hereafter
conducted by or on behalf of the Party entitled to benefit thereof, and shall
expire on the third (3rd) anniversary of the Closing Date.
(b) Notwithstanding
anything to the contrary herein, the survival period in respect of any
representation or warranty in this Agreement, or any related claim, shall be
extended automatically to include any time period necessary to resolve a claim
which was asserted but not resolved before expiration of such survival
period. Liability for any such item shall continue until such claim
shall have been finally settled, decided, or adjudicated.
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(c) Notwithstanding
anything herein to the contrary, all covenants, agreements and obligations
contained herein shall survive the Closing and not expire unless otherwise
specifically provided in this Agreement.
Section
7.3 No Other Representations;
Express Negligence.
(a) THE
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND PURCHASER CONTAINED IN THIS
AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS CONSTITUTE THE SOLE AND EXCLUSIVE
REPRESENTATIONS AND WARRANTIES OF SUCH PARTIES, RESPECTIVELY, IN CONNECTION WITH
THE TRANSACTIONS CONTEMPLATED HEREBY. EXCEPT FOR SUCH REPRESENTATIONS
AND WARRANTIES (IN EACH CASE, AS MODIFIED BY THE SCHEDULES), NONE OF SELLER,
PURCHASER OR ANY OTHER PERSON MAKES ANY OTHER EXPRESS OR IMPLIED REPRESENTATION
OR WARRANTY WITH RESPECT TO SUCH PARTIES OR THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, AND EACH PARTY DISCLAIMS ANY OTHER REPRESENTATIONS OR
WARRANTIES, WHETHER MADE BY SUCH PARTIES OR ANY OF THEIR OFFICERS, DIRECTORS,
EMPLOYEES, AGENTS, OR REPRESENTATIVES. PURCHASER ACKNOWLEDGES AND
AGREES THAT IT HAS NOT RELIED ON ANY REPRESENTATIONS AND WARRANTIES OTHER THAN
THE EXPRESS REPRESENTATIONS AND WARRANTIES SET FORTH IN THIS AGREEMENT OR THE
OTHER TRANSACTION DOCUMENTS IN MAKING ITS INVESTMENT DECISION WITH RESPECT TO
THE ASSETS.
(b) THE
INDEMNITIES SET FORTH IN THIS ARTICLE VII ARE INTENDED TO BE ENFORCEABLE AGAINST
THE PARTIES IN ACCORDANCE WITH THE EXPRESS TERMS AND SCOPE THEREOF
NOTWITHSTANDING ANY EXPRESS NEGLIGENCE RULE OR ANY SIMILAR DIRECTIVE THAT WOULD
PROHIBIT OR OTHERWISE LIMIT INDEMNITIES BECAUSE OF THE SIMPLE OR GROSS
NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE, OR PASSIVE) OR OTHER FAULT OR
STRICT LIABILITY OF ANY INDEMNITEE. THE PARTIES HERETO ACKNOWLEDGE
THAT THE INDEMNITIES SET FORTH HEREIN MAY RESULT IN THE INDEMNIFICATION OF A
PARTY FOR ITS SIMPLE OR GROSS NEGLIGENCE (WHETHER SOLE, CONCURRENT, ACTIVE, OR
PASSIVE) OR OTHER FAULT OR STRICT LIABILITY OF THE INDEMNIFIED
PARTY. NOTWITHSTANDING THE FOREGOING, NO INDEMNIFYING PARTY SHALL BE
OBLIGATED TO INDEMNIFY ANY OTHER PARTY FOR ANY LOSSES OR EXPENSES PURSUANT TO
THIS ARTICLE VII TO THE EXTENT THAT THE AMOUNT OF THE LOSSES OR EXPENSES
INCURRED BY THE INDEMNIFIED PARTY WERE GREATER THAN THEY OTHERWISE WOULD HAVE
BEEN AS A DIRECT RESULT OF THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
INDEMNIFIED PARTY.
11 of
15
VIII. Miscellaneous
8.1 Assignment.
Neither this Agreement nor any interest hereunder will be assignable in
part or in whole by either Party without the prior written consent of the
non-assigning Party, which consent will not be unreasonably withheld,
conditioned, or delayed.
8.2 Governing Law and
Venue. This Agreement is executed pursuant to and shall be
interpreted and governed for all purposes under the laws of the State of
Texas. Any cause of action brought to enforce any provision of this
Agreement shall be brought in the appropriate court in Fort Bend County,
Texas. If any provision of this Agreement is declared void, such
provision shall be deemed severed from this Agreement, which shall otherwise
remain in full force and effect. This Agreement shall supersede any
previous agreements, written or oral, expressed or implied, between the parties
relating to the subject matter hereof.
8.3 Dispute Resolution.
In the event of any controversy, dispute, or claim arising out of or
related to this Agreement or the breach thereof, the Purchaser and the Seller
agree to meet and confer in good faith to attempt to resolve the controversy,
dispute, or claim without an adversary proceeding. If the controversy,
dispute, or claim is not resolved to the mutual satisfaction of the Purchaser
and the Seller within ten (10) business days of notice of the controversy,
dispute, or claim, the Purchaser and the Seller agree to waive their rights, if
any, to a jury trial, and to submit the controversy, dispute, or claim to a
retired judge or justice for binding arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration
Association. The Purchaser and the Seller agree that the only proper
venue for the submission of claims shall be the Fort Bend County, Texas.
Judgment on the award rendered by the arbitrator(s) may be entered in any
court having jurisdiction thereof. Any dispute resolution proceedings
contemplated by this provision shall be as confidential and private as permitted
by law.
8.4 Notices. Any
notice, request, demand, or other communication given pursuant to the terms of
this Agreement shall be deemed given upon delivery, and may only be delivered or
sent via hand delivery, facsimile, or by overnight courier, correctly addressed
to the addresses of the parties indicated below or at such other address as such
Party shall in writing have advised the other Party.
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If
to the Purchaser:
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Xxxxx
X. Xxxxxxxxxx
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Chief
Executive Officer
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||
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0
Xxxxxxxxxxxxx Xxxxxxxxx, Xxxxx 000
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||
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Xxxxxx,
XX 00000
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||
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E-mail:
xxxxxxxxxxx@xxxxxxxxx.xxx
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||
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Fax: (000)
000-0000
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12 of
15
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With
a copy to:
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Xxxxx
X. Xxxxxx, Esq.
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The
Lebrecht Group, APLC
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0000
Xxxxxxxx Xxxxx
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Xxxxxx,
XX 00000
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Facsimile:
(000)
000-0000
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If
to the Seller:
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New
Horizon, Inc.
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||
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||
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Attn.:
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Fax:
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8.5 Amendment. No
amendment, modification, or supplement of any provision of this Agreement will
be valid or effective unless made in writing and signed by a duly authorized
officer of each Party.
8.6 Waiver. No
provision of this Agreement will be waived by any act, omission, or knowledge of
a Party or its agents or employees except by an instrument in writing expressly
waiving such provision and signed by a duly authorized officer of the waiving
Party.
8.7 Severability.
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under the applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under
applicable law, such provision will be in effective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this
Agreement.
8.8 Attorneys’ Fees.
In the event that any suit, arbitration, legal action, proceeding, or
dispute between the Parties arises in connection with this Agreement, the
prevailing Party shall be entitled to recover all expenses, costs, and fees,
including reasonable attorney’s fees, actually incurred in association with such
action.
8.9 Entire Agreement.
This Agreement, including all exhibits, is the complete, final, and
exclusive understanding and agreement of the Parties and cancels and supersedes
any and all prior negotiations, correspondence, and agreements, whether oral or
written, between the Parties respecting the subject matter of this
Agreement.
[remainder
of page intentionally left blank; signature page to follow]
13 of
15
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the date
first written hereinabove.
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“Seller”
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“Purchaser”
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|||
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New
Horizon, Inc.
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||||
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a
Texas corporation
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a
Delaware corporation
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|||
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/s/ M. Xxxxx Xxxxxxx
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/s/ Xxxxx X. Xxxxxxxxxx
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|||
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By:
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M.
Xxxxx Xxxxxxx
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By:
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Xxxxx
X. Xxxxxxxxxx
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Its:
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President
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Its:
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Chief
Executive
Officer
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14 of
15
Exhibit
A
Assets
As
confirmed by the Sellers Representative on Exhibit D, the Seller
owns the rights to receive certain cash distributions arising from the sale of
certain Business Products as defined in that certain Stock Purchase Agreement by
and between Sunbeam Products, Inc., a Delaware corporation (dba Jarden Consumers
Solutions), Desmond Oregon, LLC, an Oregon limited liability company, and the
selling shareholders (the “Sunbeam Agreement”).
Under the
Sunbeam Agreement, the Sellers Representative (as defined in the Sunbeam
Agreement) will distribute certain amounts received as the result of sales of
the Business Products. The funds to be distributed to the sellers by
the Sellers Representative are calculated using the following
formulas:
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•
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Profit Sharing A – The
Profit Sharing A pays 20% of EBITDA for the 3 subsequent years following
the Product Launch Date (1/01/11), paid at end of each EBITDA year.
The Profit Sharing is net of any investments, or negative EBITDA, made
following the Closing date. No cap.
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|
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•
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Profit Sharing B –
Profit Sharing B pays 20% of EBITDA for the 2 subsequent years following
Year 3 (Year 4 and 5) paid at end of each EBITDA year. The Profit
Sharing B payments shall NOT be offset against any negative Business
EBITDA from any prior periods.
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•
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Earn Out A – An amount
six times the average Business EBITDA Year 1, Year 2, and Year 3 less the
aggregate amount of the Profit Sharing A Payments, due at the end of Year
3. The Earn Out is net of any negative EBITDA associated with Year
3. A cap of $42.5M exists with this
payout.
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|
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•
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Earn Out B – A flat
amount of $25.0M is paid if the cumulative EBITDA is greater than or equal
to $250.0M for Years 1 through 5. The Earn Out B Payment shall not be
offset against any negative Business EBITDA from any prior
periods.
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Of the
total sums determined using the above formulas, the Assets consist of the
following:
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|
o
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98.18% (Preferred B
distribution) of the first $6,021,921 distributed by the Sellers
Representative (as defined in the Sunbeam
Agreement).
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|
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o
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0% (Preferred A
distribution) of the next $1,522,000 distributed by the Sellers
Representative.
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o
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60.07% (Common
distribution) of all funds thereafter distributed by the Sellers
Representative.
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A-1
Exhibit
B
Assignment
of Rights Agreement
A-2
Exhibit
C
Convertible
Promissory Note
A-3
Exhibit
D
Sellers
Representative Certificate
A-4
CONFIRMATION
OF OWNERSHIP
The undersigned, Xxxxxxx Wax, Sellers’
Representative hereby confirms that:
1. He
is the Sellers ‘ Representative as defined in and under that certain Stock
Purchase Agreement by and between Sunbeam Products, Inc., a Delaware corporation
(dba Jarden Consumers Solutions), Desmed Oregon, LLC, an Oregon limited
liability company, and the DesChutes Medical Products, Inc. shareholders (the
“Sunbeam Agreement”) dated January 6, 2009. The Sunbeam Agreement, in
combination with The First Amendment to the Sunbeam Agreement dated September
30, 2010, provides for all payments for the Selling Shareholders to be made into
an escrow under an Escrow Agreement among the Selling Shareholders and the
Sellers’ Representative.
2. Under
the Sunbeam Agreement, the Sellers’ Representative will receive certain amounts
of money as a result of sales of the Business Products (as defined in the
Sunbeam Agreement). The funds received by the Sellers Representative
for subsequent distribution to the Selling Shareholders by the Sellers’
Representative under the Sunbeam Agreement are described in the Sunbeam
Agreement (the “Distribution Payments”).
3. As
of the date hereof, in my capacity as the Sellers’ Representative, I hereby
confirm that New Horizon, Inc., a Texas corporation, is the owner of
approximately 60% of the Distribution Payments.
4. In
the event that New Horizon provides me with a binding and irrevocable notice
that it has transferred its ownership interest in the Distribution Payments to
another party, I will confirm to that party that henceforth they will be the
owner of that portion of the Distribution Payments that now belong to New
Horizon and that funds will be distributed to that party in accordance with the
terms of the Sunbeam Agreement and in the same manner as they would have been
distributed to New Horizon.
The
undersigned in his capacity as Sellers’ Representative further declares under
the laws of the State of Oregon that the matters set forth in this Confirmation
of Ownership are true and correct to be best of his own knowledge.
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Dated: December
8, 2010
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/s/ Xxxxxxx Wax
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Xxxxxxx
Wax, Sellers’
Representative
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New
Horizon, Inc., a Texas corporation, hereby agrees to indemnify, reimburse, and
hold harmless Xxxxxxx Wax (the “Indemnitee”) from and against any and all
losses, claims, liabilities, damages, penalties, suits, costs, and expenses, of
any kind or nature, (including fees relating to the cost of investigating and
defending any of the foregoing) imposed on, incurred by, or asserted against
such Indemnitee in any way related to or arising from or alleged to arise from
any transaction related to the purchase by, or sale by, New Horizon, Inc., or
its assignees, of the interest in the Sunbeam Agreement described herein, except
any such losses, claims, liabilities, damages, penalties, suits, costs, and
expenses which result from the gross negligence or willful misconduct of the
Indemnitee regarding the representations set forth in this Confirmation of
Ownership as determined by a final, nonappealable decision of a court of
competent jurisdiction.
A-5
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New
Horizon, Inc.
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|
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a
Texas corporation
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/s/ M. Xxxxx Xxxxxxx
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By: M.
Xxxxx Xxxxxxx
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|
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Its: President
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A-6
