Document:

ex10_1.htm

    AGREEMENT OF CONVEYANCE,
TRANSFER

     

    AND ASSIGNMENT OF ASSETS AND
ASSUMPTION OF OBLIGATIONS

     

    This
Agreement of Conveyance, Transfer and Assignment of Assets and Assumption of
Obligations (“Transfer
and Assumption Agreement”) is made as of September 11, 2008, by Hammer
Handle Enterprises Inc., a Nevada corporation (“Assignor”), and Cove
Park Enterprises Ltd, an Alberta Corpration, (“Assignee”).

     

    WHEREAS,
Assignor is engaged in the business of mining exploration in British Columbia,
and has acquired a 100% interest in the “Pinto” mineral claims, which is
comprised of three contiguous British Columbia mineral tenures occupying an
aggregate of 230 hectares or 569 acres of land located near Grand Forks, British
Columbia (the “Business”);
and

     

    WHEREAS,
Assignor desires to divest, convey, transfer and assign to Assignee, and
Assignee desires to acquire from Assignor, all of the assets of Assignor
relating to the operation of the Business, and in connection therewith, Assignee
has agreed to assume all of the liabilities of Assignor relating to the
Business, and to indemnify Assignor on the terms and conditions set forth
herein.

     

    NOW
THEREFORE, in consideration of the mutual promises and agreements contained
herein, the parties hereto, intending to be legally bound hereby, agree as
follows:

     

    Section
1.                                Assignment.

     

    1.1.           Assignment
of Assets.  For $2,000, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged by
Assignor, Assignor does hereby assign, grant, bargain, sell, convey, transfer
and deliver to Assignee, and its successors and assigns, all of Assignor’s
right, title and interest in, to and under the assets, properties and business,
of every kind and description, wherever located, real, personal or mixed,
tangible or intangible, owned, held or used in the conduct of the Business (the
“Assets”),
including, but not limited to, the Assets listed on Exhibit A
hereto.

     

    1.2           Further
Assurances.  Assignor shall from time to time after the date
hereof at the request of Assignee and without further consideration execute and
deliver to Assignee such additional instruments of transfer and assignment,
including without limitation any bills of sale, assignments of leases, deeds,
and other recordable instruments of assignment, transfer and conveyance, in
addition to this Transfer and Assumption Agreement, as Assignee shall reasonably
request to evidence more fully the assignment by Assignor to Assignee of the
Assets.

     

    Section
2.                                Assumption.

     

    2.1           Assumed
Liabilities.  As of the date hereof, Assignee hereby assumes
and agrees to pay, perform and discharge, fully and completely, (i) all
liabilities, commitments, contracts, agreements, obligations or other claims
against Assignor, whether known or unknown, asserted or unasserted, accrued or
unaccrued, absolute or contingent, liquidated or unliquidated, due or to become
due, and whether contractual, statutory, or otherwise associated with the
Business or operations of Assignor prior to the date hereof (the “Liabilities”),
including, but not limited to, the Liabilities listed on Exhibit
B.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.2           Further
Assurances.  Assignee shall from time to time after the date
hereof at the request of Assignor and without further consideration execute and
deliver to Assignor such additional instruments of assumption in addition to
this Transfer and Assumption Agreement as Assignor shall reasonably request to
evidence more fully the assumption by Assignee of the Liabilities.

     

    Section
3.                                Indemnification.

     

    3.1           Indemnification.  Assignee
covenants and agrees to indemnify, defend, protect and hold harmless Assignor,
and its officers, directors, employees, stockholders, agents, representatives
and affiliates (collectively, together with Assignor, the “Assignor Indemnified
Parties”) at all times from and after the date of this Transfer and
Assumption Agreement from and against all losses, liabilities, damages, claims,
actions, suits, proceedings, demands, assessments, adjustments, costs and
expenses (including specifically, but without limitation, reasonable attorneys’
fees and expenses of investigation), whether or not involving a third party
claim and regardless of any negligence of any Assignor Indemnified Party
(collectively, “Losses”), incurred by
any Assignor Indemnified Party as a result of or arising from (i) any breach or
nonfulfillment of any covenant or agreement on the part of Assignee under this
Transfer and Assumption Agreement, or (iii) the Assets, the Liabilities or the
Business.

     

    3.2           Third
Party Claims.  If any claim or liability (a “Third-Party Claim”)
should be asserted against any of the Assignor Indemnified Parties (the “Indemnitee”) by a
third party for which Assignee has an indemnification obligation under the terms
of Section 3.1 above, then the Indemnitee shall notify Assignee (the “Indemnitor”) within
20 days after the Third-Party Claim is asserted by a third party (said
notification being referred to as a “Claim Notice”) and
give the Indemnitor a reasonable opportunity to take part in any examination of
the books and records of the Indemnitee relating to such Third-Party Claim and
to assume the defense of such Third-Party Claim and in connection therewith and
to conduct any proceedings or negotiations relating thereto and necessary or
appropriate to defend the Indemnitee and/or settle the Third-Party Claim. The
expenses (including reasonable attorneys’ fees) of all negotiations,
proceedings, contests, lawsuits or settlements with respect to any Third-Party
Claim shall be borne by the Indemnitor. If the Indemnitor agrees to assume the
defense of any Third-Party Claim in writing within 20 days after the Claim
Notice of such Third-Party Claim has been delivered, through counsel reasonably
satisfactory to Indemnitee, then the Indemnitor shall be entitled to control the
conduct of such defense, and shall be responsible for any expenses of the
Indemnitee in connection with the defense of such Third-Party Claim so long as
the Indemnitor continues such defense until the final resolution of such
Third-Party Claim. The Indemnitor shall be responsible for paying all
settlements made or judgments entered with respect to any Third-Party Claim the
defense of which has been assumed by the Indemnitor. Except as provided in
Section 3.3 below, both the Indemnitor and the Indemnitee must approve any
settlement of a Third-Party Claim. A failure by the Indemnitee to timely give
the Claim Notice shall not excuse Indemnitor from any indemnification liability
except only to the extent that the Indemnitor is materially and adversely
prejudiced by such failure.

     

    3.3           Failure
to Assume.  If the Indemnitor shall not agree to assume the
defense of any Third-Party Claim in writing within 20 days after the Claim
Notice of such Third-Party Claim has been delivered, or shall fail to continue
such defense until the final resolution of such 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Third-Party
Claim, then the Indemnitee may defend against such Third-Party Claim in such
manner as it may deem appropriate and the Indemnitee may settle such Third-Party
Claim, in its sole discretion, on such terms as it may deem appropriate. The
Indemnitor shall promptly reimburse the Indemnitee for the amount of all
settlement payments and expenses, legal and otherwise, incurred by the
Indemnitee in connection with the defense or settlement of such Third-Party
Claim. If no settlement of such Third-Party Claim is made, then the Indemnitor
shall satisfy any judgment rendered with respect to such Third-Party Claim
before the Indemnitee is required to do so, and pay all expenses, legal or
otherwise, incurred by the Indemnitee in the defense against such Third-Party
Claim.

     

    3.4           Non-Third-Party
Claims. Upon
discovery of any claim for which Assignee has an indemnification obligation
under the terms of this Section 3 which does not involve a claim by a third
party against the Indemnitee, the Indemnitee shall give prompt notice to
Assignee of such claim and, in any case, shall give Assignee such notice within
30 days of such discovery. A failure by Indemnitee to timely give the foregoing
notice to Assignee shall not excuse Assignee from any indemnification liability
except to the extent that Assignee is materially and adversely prejudiced by
such failure.

     

    Section
4.                                Headings.  The
descriptive headings contained in this Transfer and Assumption Agreement are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Transfer and Assumption Agreement.

     

    Section
5.                                Governing
Law.  This Transfer and Assumption Agreement shall be governed
by and construed in accordance with the laws of the State of Nevada applicable
to contracts made and to be performed entirely within that state, except that
any conveyances of leaseholds and real property made herein shall be governed by
the laws of the respective jurisdictions in which such property is
located.

     

    Section
6.                                Counterparts. This Transfer and Assumption
Agreement may be signed in any number of counterparts, each of which will be
deemed an original but all of which together shall constitute one and the same
instrument.

     

    Section
7.                                Amendments
and Waivers. Any
provision of this Transfer and Assumption Agreement may be amended or waived if,
but only if, such amendment or waiver is in writing and is signed, in the case
of an amendment, by each party to this Transfer and Assumption Agreement, or in
the case of a waiver, by the party against whom the waiver is to be effective.
No failure or delay by any party in exercising any right, power or privilege
hereunder will operate as a waiver thereof nor will any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
will be cumulative and not exclusive of any rights or remedies provided by
Law.

     

    Section
8.                                Successors
and Assigns. The
provisions of this Transfer and Assumption Agreement will be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided that no party may assign, delegate or otherwise transfer
(including by operation of Law) any of its rights or obligations under this
Transfer and Assumption Agreement without the consent of each other party
hereto.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Section
9.                                No Third
Party Beneficiaries. This Transfer and Assumption Agreement is for the
sole benefit of the parties hereto and their permitted successors and assigns
and nothing herein expressed or implied will give or be construed to give to any
Person, other than the parties hereto, those referenced in Section 3 above, and
such permitted successors and assigns, any legal or equitable rights
hereunder.

     

    Section
10.                                Entire
Agreement. This Transfer and Assumption Agreement constitutes the entire
agreement among the parties with respect to the subject matter of this Transfer
and Assumption Agreement. This Transfer and Assumption Agreement supersedes all
prior agreements and understandings, both oral and written, between the parties
with respect to the subject matter hereof of this Transfer and Assumption
Agreement.

     

    Section
11.                                Severability.
If any provision of this Transfer and Assumption Agreement or the application of
any such provision to any person or circumstance is held invalid, illegal or
unenforceable in any respect by a court of competent jurisdiction, the remainder
of the provisions of this Transfer and Assumption Agreement (or the application
of such provision in other jurisdictions or to persons or circumstances other
than those to which it was held invalid, illegal or unenforceable) will in no
way be affected, impaired or invalidated, and to the extent permitted by
applicable law, any such provision will be restricted in applicability or
reformed to the minimum extent required for such provision to be enforceable.
This provision will be interpreted and enforced to give effect to the original
written intent of the parties prior to the determination of such invalidity or
unenforceability.

     

    Section
12.                                Notices. Any notice, request or other
communication hereunder shall be given in writing and shall be served either
personally, by overnight delivery or delivered by mail, certified return receipt
and addressed to the following addresses:

    
    

     

    
      	      
              If to
      Assignee:

              Cove
      Park Enterprises Ltd.

              Suite
      T167

              4825
      Mount Royal Gate

              Calgary,
      Alberta, T3E 6K6

              Canada

            	      
              If to
      Assignor:

              Hammer
      Handle Enterprises Inc.

              c/o
      Cane Clark LLP

              3273
      East Warm Springs

              Las
      Vegas, NV 89120

            

    

    
    

     

    [The remainder of this page is blank
intentionally.]

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
WITNESS WHEREOF, this Transfer and Assumption Agreement has been duly executed
and delivered by the parties hereto as of the date first above
written.

    
       

      
        	
                 

              	HAMMER HANDLE
      ENTERPRISES, INC.
	 	 
	 	By:       
      /s/David
Price
	 	Name:   David
      Price
	 	Title:    
      President 
	 	 
	 	 
	 	

                COVE
      PARK ENTERPRISES LTD.

              
	 	 
	 	By:      
      /s/K. William
      Sundberg
	 	

                Name: 
      K. William Sundberg

              
	 	

                Title:    Director

              

      

       

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      Exhibit
A

    

    
    

     

    (a) All of
the equipment, computers, servers, hardware, appliances, implements, and all
other tangible personal property that are owned by Assignor and have been used
in the conduct of the Business;

     

    (b) all
inventory associated with the Business;

     

    (c) all real
property and real property leases to which Assignor is a party, and which affect
the Business or the Assets;

     

    (d) all
contracts to which Assignor is a party, or which affect the Business or the
Assets, including leases of personal property;

     

    (e) all
rights, claims and causes of action against third parties resulting from or
relating to the operation of the Business or the Assets, including without
limitation, any rights, claims and causes of action arising under warranties
from vendors and other third parties;

     

    (f) all
governmental licenses, permits, authorizations, consents or approvals affecting
or relating to the Business or the Assets;

     

    (g) all
accounts receivable, notes receivable, prepaid expenses and insurance and
indemnity claims to the extent related to any of the Assets or the
Business;

     

    (h) all
goodwill associated with the Assets and the Business;

     

    (i) all
business records, regardless of the medium of storage, relating to the Assets
and/or the Business, including without limitation, all schematics, drawings,
customer data, subscriber lists, statistics, promotional graphics, original art
work, mats, plates, negatives, accounting and financial information concerning
the Assets or Business;

     

    (j) Assignor’s
right to use the name “Hammer Handle Enterprises, Inc.” and all other names used
in conducting the Business, and all derivations thereof, in connection with
Assignee’s future conduct of the Business;

     

    (k) all
internet domain names and URLs of the Business, software, inventions, art works,
patents, patent applications, processes, shop rights, formulas, brand names,
trade secrets, know-how, service marks, trade names, trademarks, trademark
applications, copyrights, source and object codes, customer lists, drawings,
ideas, algorithms, processes, computer software programs or applications (in
code and object code form), tangible or intangible proprietary information and
any other intellectual property and similar items and related rights owned by or
licensed to Assignor used in the Business, together with any goodwill associated
therewith and all rights of action on account of past, present and future
unauthorized use or infringement thereof; and

     

    (l) all other
privileges, rights, interests, properties and assets of whatever nature and
wherever located that are owned, used or intended for use in connection with, or
that are necessary to the continued conduct of, the Business as presently
conducted or planned to be conducted.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    Exhibit
B

     

    (a) All
liabilities in respect of indebtedness of Assignor related to the Business or
other operations of Assignor prior to the date hereof;

     

    (b) product
liability and warranty claims relating to any product or service of Assignor
associated with the Business;

     

    (c) taxes,
duties, levies, assessments and other such charges, including any penalties,
interests and fines with respect thereto, payable by Assignor to any federal,
provincial, municipal or other government, domestic or foreign, incurred in the
conduct of the Business;

     

    (d) liabilities
for salary, bonus, vacation pay, severance payments damages for wrongful
dismissal, or other compensation or benefits relating to Assignor’s employees
employed in the conduct of the Business; and

     

    (e) any
liability or claim for liability (whether in contract, in tort or otherwise, and
whether or not successful) related to any lawsuit or threatened lawsuit or claim
(including any claim for breach or non-performance of any contract) based upon
actions, omissions or events relating to the
Business.exhibit101_creditagrement.htm

    Exhibit
10.1

     

    SECOND
AMENDMENT TO CREDIT AGREEMENT

    

    THIS SECOND AMENDMENT TO CREDIT
AGREEMENT (“Second Amendment”), made and entered into as of the 9th day of
September, 2008, by and among PHYSICIANS FORMULA, INC., a New York corporation
(the “Borrower”), the several banks and other lenders from time to time parties
to such Credit Agreement (the “Lenders”), and UNION BANK OF CALIFORNIA, N.A.
(“UBOC”), as administrative agent for the Lenders (in such capacity, the
“Agent”),

    

    W I T N E S S E T H:

    

    WHEREAS, on November 14, 2006, the
Borrower, the Lenders and the Agent entered into a certain Credit Agreement (as
amended by that certain First Amendment to Credit Agreement, dated as of July 8,
2008, the “Credit Agreement”) pursuant to which the Lenders agreed to make
available to the Borrower certain credit facilities more particularly described
therein; and

    

    WHEREAS, the Borrower, the Lenders and
the Agent desire to modify one of the covenants set forth in the Credit
Agreement, subject, however, to the terms and conditions set forth in this
Second Amendment;

    

    NOW, THEREFORE, for and in
consideration of the premises hereof, and other good and valuable consideration
the receipt and adequacy of which are hereby acknowledged, the parties hereto
hereby agree as follows:

    

    1.           All
capitalized terms used in this Second Amendment shall, unless otherwise defined
herein or unless the context otherwise requires, have the meanings given thereto
in the Credit Agreement.

    

    2.           Section
3.14(a) of the Credit Agreement is amended (x) by deleting the word "and" where
it appears at the end of Section 3.14(a) (iv) and by substituting in lieu
thereof a comma; (y) by deleting the period at the end of Section 3.14(v) and by
substituting in lieu thereof the phrase ", and"; and (z) by adding a new Section
3.14(a)(vi) to read as follows:

    

    (vi)  to
repurchase shares of the Pledgor’s publicly traded common stock as and to the
extent permitted by Section 6.6(iv).

    

    3.           Section
6.6 of the Credit Agreement is amended (x) by deleting the word "and" where it
appears at the end of the last line of Section 6.6(ii); (y) by deleting the
period at the end of Section 6.6(iii) and by substituting in lieu thereof the
phrase "; and"; and (z) by adding a new Section 6.6(iv) to read as
follows:

     

    (iv)   
the Borrower may directly purchase or make Restricted Payments to Pledgor
to permit Pledgor to repurchase shares of the Pledgor’s publicly traded
common stock from time to time so long as (1) no Default or Event of Default has
occurred and is continuing at the time of such Restricted Payment or would occur as a
consequence of such Restricted Payment; and (2) the aggregate amount of
Restricted Payments made to repurchase shares of the Pledgor's publicly
traded common stock over the period since November 14, 2006 shall not
exceed $12,000,000.

     

    4.           This
Second Amendment shall become effective on the date on which the Agent receives
this Second Amendment, duly executed by the Borrower and acknowledged and agreed
to by each of the Pledgor and Physicians Formula Cosmetics, Inc.

     

    
      
        
        

      

      
        Page 1 of
2

        
          

        

      

      
        
        

      

    

    
5.           Except
as expressly provided herein, the Credit Agreement is unchanged and remains in
full force and effect.

    

    6.           This
Second Amendment shall be governed by and construed in accordance with the laws
of the State of California.

    

    7.           This
Second Amendment may be executed in any number of identical counterparts, any
set of which signed by all parties hereto shall be deemed to constitute a
complete, executed original for all purposes.

    

    IN WITNESS WHEREOF, the Borrower, the
Lenders and the Agent have caused this Second Amendment to be executed as of the
day and year first above written.

    

    
      
        	UNION
      BANK OF CALIFORNIA, N.A.,	 	PHYSICIANS
      FORMULA, INC.	 
	   
      as  Agent and as sole Lender	 	 	 	 
	 	 	 	 	 	 	 
	
                By:

              	
                
                  /s/
      Steve Dunne

                

              	 	 	By:	
                /s/
      Joseph J. Jaeger

              	 
	Title:	
                Vice
      President

              	 	 	Title:	
                Chief
      Financial Officer

              	 
	 	
                 

              	 	 	 	
                 

              	 

      

    

     

    ACKNOWLEDGED
AND AGREED TO

    this 9th
day of September, 2008:

    

      	PHYSICIANS
      FORMULA HOLDING, INC.	 	PHYSICIANS
      FORMULA COSMETICS, INC.	 
	 	 	 	 	 
	 	 	 	 	 	 	 
	
              By:

            	
              
                
                  /s/
      Joseph J. Jaeger

                

              

            	 	 	By:	
              /s/
      Joseph J. Jaeger

            	 
	Title:	
              
                Chief
      Financial Officer

              

            	 	 	Title:	
              Chief
      Financial Officer

            	 
	 	
               

            	 	 	 	
               

            	 

    

     

     

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