Document:

opmg_ex1022.htm

EXHIBIT 10.22

 

SECURITY AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”), is entered into and made as of February 25, 2011, by and between  Options Media Group Holdings, Inc., a Nevada corporation (the “Company”) to RVH Inc. (together with its permitted successors and assigns, the “Secured Party”).

 

WHEREAS, to induce the Secured Party to lend the Company monies pursuant to the Secured Promissory Note (the "Note") and all other documents and agreements entered into in connection with this loan transaction (collectively referred to as the “Transaction Documents”), the Company hereby grants to the Secured Party a first priority security interest in and to the pledged property identified on Exhibit “A” hereto (collectively referred to as the “Pledged Property”) until the satisfaction of the Obligations, as defined herein below; and

 

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

 

ARTICLE 1.

 

DEFINITIONS AND INTERPRETATIONS

 

Section 1.1.  Recitals.

 

The above recitals are true and correct and are incorporated herein, in their entirety, by this reference.

 

Section 1.2.  Interpretations.

 

Nothing herein expressed or implied is intended or shall be construed to confer upon any person other than the Secured Party any right, remedy or claim under or by reason hereof.

 

Section 1.3. Obligations Secured.

 

The obligations secured hereby are any and all obligations of the Company now existing or hereinafter incurred to the Secured Party, whether oral or written and whether arising before, on or after the date hereof including, without limitation, those obligations of the Company to the Secured Party under this Agreement and the Note and any other amounts now or hereafter owed to the Secured Party by the Company hereunder or thereunder, in each case, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others and whether or not from time to time decreased or extinguished and later deceased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from the Secured Party as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time (collectively, the “Obligations”).

 

  

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ARTICLE 2.

 

PLEDGED COLLATERAL, ADMINISTRATION OF COLLATERAL AND TERMINATION OF SECURITY INTEREST

 

Section 2.1.   Pledged Property.

 

(a)  Company hereby pledges to the Secured Party, and creates in the Secured Party for its benefit, a first priority security interest for such time until the Obligations are paid in full, in and to all of the property and assets of the Company as set forth in Exhibit “A” attached hereto, whether presently owned or existing or hereafter acquired or coming into existence, and all additions and accessions thereto and all substitutions and replacements thereof (collectively, the “Pledged Property”).

 

The Pledged Property, as set forth in Exhibit “A” attached hereto, and the products thereof and the proceeds of all such items are hereinafter collectively referred to as the “Pledged Collateral.”

 

(b)  Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute, acknowledge, file, record and deliver to the Secured Party any documents reasonably requested by the Secured Party to perfect its first priority security interest in the Pledged Property.  Simultaneously with the execution and delivery of this Agreement, the Company shall make, execute, acknowledge and deliver to the Secured Party such documents and instruments, including, without limitation, financing statements, certificates, affidavits and forms as may, in the Secured Party’s reasonable judgment, be necessary to effectuate, complete or perfect, or to continue and preserve, the security interest of the Secured Party in the Pledged Property, and the Secured Party shall hold such documents and instruments as secured party, subject to the terms and conditions contained herein. The Company shall permit the Secured Party and its representatives and agents the right to inspect the Pledged Collateral at any time and to make copies of records pertaining to the Pledged Collateral as may be requested by the Secured Party from time to time.

 

Section 2.2.   Rights; Interests; Etc.

 

(a)  So long as no Event of Default (as hereinafter defined) shall have occurred and be continuing:

 

(i)  the Company shall be entitled to exercise any and all rights pertaining to the Pledged Property or any part thereof for any purpose not inconsistent with the terms hereof; and

 

(ii)  the Company shall be entitled to receive and retain any and all payments paid or made in respect of the Pledged Property.

 

(b) Upon the occurrence and during the continuance of an Event of Default:

 

  

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(i)  All rights of the Company to exercise the rights which it would otherwise be entitled to exercise pursuant to Section 2.2(a)(i) hereof and to receive payments which it would otherwise be authorized to receive and retain pursuant to Section 2.2(a)(ii) hereof shall be suspended, and all such rights shall thereupon become vested in the Secured Party who shall thereupon have the sole right to exercise such rights and to receive and hold as Pledged Collateral such payments; provided, however, that if the Secured Party shall become entitled and shall elect to exercise its right to realize on the Pledged Collateral pursuant to Article 5 hereof, then all cash sums received by the Secured Party, or held by Company for the benefit of the Secured Party and paid over pursuant to Section 2.2(b)(ii) hereof, shall be applied against any outstanding Obligations; and

 

(ii)  All interest, dividends, income and other payments and distributions which are received by the Company contrary to the provisions of Section 2.2(b)(i) hereof shall be received in trust for the benefit of the Secured Party, shall be segregated from other property of the Company and shall be forthwith paid over to the Secured Party; or

 

(iii)  The Secured Party in its sole discretion shall be authorized to sell any or all of the Pledged Property at public or private sale in order to recoup all of the outstanding principal plus accrued interest owed pursuant to the Note as described herein.

 

For purposes of clarification, the Company agrees and acknowledges that if the Secured Party uses any of the Pledged Collateral for the purpose of maintaining the existence of the Company (such as accountants and attorneys fees and expenses to maintain the Company's filings with the Securities and Exchange Commission and taxing authorities), such sums shall not be applied against any outstanding Obligations.

 

The Company shall, upon receipt by it of any revenue, income or other sums, whether payable pursuant to the Note or otherwise, or of any check, draft, note, trade acceptance or other instrument evidencing an obligation to pay such sum, hold the same in trust for the Secured Party and shall forthwith endorse and transfer any such sums or instrument, or both, to the Secured Party for application to the satisfaction of the Obligations.

 

(c)  Each of the following events shall constitute a default under this Agreement (each an “Event of Default”):

 

(i)  any default, whether in whole or in part, shall occur in the payment to the Secured Party of principal, interest or other item comprising the Obligations as and when due or with respect to any other debt or obligation of the Company to a party other than the Secured Party;

 

(ii)  any default, whether in whole or in part, shall occur in the due observance or performance of any obligations or other covenants, terms or provisions to be performed under this Agreement or any other Transaction Document;

 

  

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(iii)  (y) the Company shall:  (1) make a general assignment for the benefit of its creditors; (2) apply for or consent to the appointment of a receiver, trustee, assignee, custodian, sequestrator, liquidator or similar official for itself or any of its assets and properties; (3) commence a voluntary case for relief as a debtor under the United States Bankruptcy Code; (4) file with or otherwise submit to any governmental authority any petition, answer or other document seeking:  (A) reorganization, (B) an arrangement with creditors or (C) to take advantage of any other present or future applicable law respecting bankruptcy, reorganization, insolvency, readjustment of debts, relief of debtors, dissolution or liquidation; (5) file or otherwise submit any answer or other document admitting or failing to contest the material allegations of a petition or other document filed or otherwise submitted against it in any proceeding under any such applicable law, or (6) be adjudicated a bankrupt or insolvent by a court of competent jurisdiction; or (z) any receiver, trustee, assignee, custodian, sequestrator, liquidator or other official shall be appointed with respect to the Company, or shall be appointed to take or shall otherwise acquire possession or control of all or a substantial part of the assets and properties of the Company; or

 

(iv)  any case, proceeding or other action shall be commenced against the Company and has not been resolved in a period of thirty (30) days after such commencement;

 

ARTICLE 3.

 

ATTORNEY-IN-FACT; PERFORMANCE

 

Section 3.1.  Secured Party Appointed Attorney-In-Fact.

 

Upon the occurrence of an Event of Default, the Company hereby appoints the Secured Party as its attorney-in-fact, with full authority in the place and stead of the Company and in the name of the Company or otherwise, from time to time in the Secured Party’s discretion to take any action and to execute any instrument which the Secured Party may reasonably deem necessary to accomplish the purposes of this Agreement, including, without limitation, to receive and collect all instruments made payable to the Company representing any payments in respect of the Pledged Collateral or any part thereof and to give full discharge for the same.  The Secured Party may demand, collect, receipt for, settle, compromise, adjust, sue for, foreclose, or realize on the Pledged Property as and when the Secured Party may determine.  To facilitate collection, the Secured Party may notify account debtors and obligors on any Pledged Property or Pledged Collateral to make payments directly to the Secured Party.

 

Section 3.2. Secured Party May Perform.

 

If the Company fails to perform any agreement contained herein, the Secured Party, at its option, may itself perform, or cause performance of, such agreement, and the expenses of the Secured Party incurred in connection therewith shall be included in the Obligations secured hereby and payable by the Company under Section 8.3.

 

  

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ARTICLE 4.

 

REPRESENTATIONS AND WARRANTIES

 

Section 4.1.  Authorization; Enforceability.

 

Each of the parties hereto represents and warrants that it has taken all action necessary to authorize the execution, delivery and performance of this Agreement and the transactions contemplated hereby; and upon execution and delivery, this Agreement shall constitute a valid and binding obligation of the respective party, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights or by the principles governing the availability of equitable remedies.

 

Section 4.2.  Ownership of Pledged Property.

 

The Company warrants and represents that it is the legal and beneficial owner of the Pledged Property free and clear of any lien, security interest, option or other charge or encumbrance except for the security interest created by this Agreement. The execution, delivery and performance of this Agreement does not conflict with or cause a breach or default, or an event that with or without the passage of time or notice, shall constitute a breach or default, under any agreement to which the Company is a party or by which the Company is bound. No consent is required for the Company to enter into and perform its obligations hereunder.

 

ARTICLE 5.

 

DEFAULT; REMEDIES; SUBSTITUTE COLLATERAL

 

Section 5.1. Default and Remedies.

 

(a)  If an Event of Default described in Section 2.2(c)(i)or (ii) occurs, then in each such case the Secured Party may declare the Obligations to be due and payable immediately, by a notice in writing to the Company, and upon any such declaration, the Obligations shall become immediately due and payable.  If an Event of Default described in Sections 2.2(c)(iii) or (iv) occurs and is continuing for the period set forth therein, then the Obligations shall automatically become immediately due and payable without declaration or other act on the part of the Secured Party.

 

(b) Upon the occurrence of an Event of Default, the Secured Party shall:  (i) be entitled to receive all distributions with respect to the Pledged Collateral, (ii) to cause the Pledged Property to be transferred into the name of the Secured Party or its nominee, (iii) to dispose of the Pledged Property, and (iv) to realize upon any and all rights in the Pledged Property then held by the Secured Party.

 

Section 5.2. Method of Realizing Upon the Pledged Property:  Other Remedies.

 

Upon the occurrence of an Event of Default, in addition to any rights and remedies available at law or in equity, the following provisions shall govern the Secured Party’s right to realize upon the Pledged Property:

 

  

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(a) Any item of the Pledged Property may be sold for cash or other value in any number of lots at brokers board, public auction or private sale and may be sold without demand, advertisement or notice (except that the Secured Party shall give the Company ten (10) days’ prior written notice of the time and place or of the time after which a private sale may be made (the “Sale Notice”)), which notice period shall in any event is hereby agreed to be commercially reasonable, all of which are expressly waived.  At any sale or sales of the Pledged Property, the Company may bid for and purchase the whole or any part of the Pledged Property and, upon compliance with the terms of such sale, may hold, exploit and dispose of the same without further accountability to the Secured Party.  The Company will execute and deliver, or cause to be executed and delivered, such instruments, documents, assignments, waivers, certificates, and affidavits and supply or cause to be supplied such further information and take such further action as the Secured Party reasonably shall require in connection with any such sale.

 

(b) Any cash being held by the Secured Party as Pledged Collateral and all cash proceeds received by the Secured Party in respect of, sale of, collection from, or other realization upon all or any part of the Pledged Collateral shall be applied as follows:

 

(i) to the payment of all amounts due the Secured Party for the expenses reimbursable to it hereunder or owed to it pursuant to Section 8.3 hereof;

 

(ii) to the payment of the Obligations then due and unpaid.

 

(iii) the balance, if any, to the person or persons entitled thereto, including, without limitation, the Company.

 

(c) In addition to all of the rights and remedies which the Secured Party may have pursuant to this Agreement, the Secured Party shall have all of the rights and remedies provided by law, including, without limitation, those under the Uniform Commercial Code. The Secured Party shall have the right, in its sole and absolute discretion, to utilize only a portion of the Obligations owed to it to realize its rights with respect to the Pledged Property.

 

(i) If the Company fails to pay such amounts due upon the occurrence of an Event of Default which is continuing, then the Secured Party may institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against the Company and collect the monies adjudged or decreed to be payable in the manner provided by law out of the property of Company, wherever situated.

 

(ii) The Company agrees that it shall be liable for any reasonable fees, expenses and costs incurred by the Secured Party in connection with enforcement, collection and preservation of this Agreement and the Transaction Documents, including, without limitation, reasonable legal fees and expenses, and such amounts shall be deemed included as Obligations secured hereby and payable as set forth in Section 8.3 hereof.

 

  

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Section 5.3.  Proofs of Claim.

 

In case of the pendency of any receivership, insolvency, liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding relating to the Company or the property of the Company or of such other obligor or its creditors, the Secured Party (irrespective of whether the Obligations shall then be due and payable as therein expressed or by declaration or otherwise and irrespective of whether the Secured Party shall have made any demand on the Company for the payment of the Obligations), , shall be entitled and empowered, by intervention in such proceeding or otherwise:

 

(i)  to file and prove a claim for the whole amount of the Obligations and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Secured Party (including any claim for the reasonable legal fees and expenses and other expenses paid or incurred by the Secured Party permitted hereunder and of the Secured Party allowed in such judicial proceeding), and

 

(ii)  to collect and receive any monies or other property payable or deliverable on any such claims and to distribute the same; and any custodian, receiver, assignee, trustee, liquidator, sequestrator or other similar official in any such judicial proceeding is hereby authorized by the Secured Party to make such payments to the Secured Party and, in the event that the Secured Party shall consent to the making of such payments directed to the Secured Party, to pay to the Secured Party any amounts for expenses due it hereunder.

 

Section 5.4. Duties Regarding Pledged Collateral.

 

The Secured Party shall have no duty as to the collection or protection of the Pledged Property or any income thereon or as to the preservation of any rights pertaining thereto, beyond the safe custody and reasonable care of any of the Pledged Property actually in the Secured Party’s possession.

 

ARTICLE 6.

 

AFFIRMATIVE COVENANTS

 

The Company covenants and agrees that, from the date hereof and until the Obligations have been fully paid and satisfied, unless the Secured Party shall consent otherwise in writing (as provided in Section 8.4 hereof):

 

  

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Section 6.1. Existence, Properties, Etc.

 

(a)  The Company shall do, or cause to be done, all things, or proceed with due diligence with any actions or courses of action, that may be reasonably necessary (i) to maintain Company’s due organization, valid existence and good standing under the laws of its state of incorporation, and (ii) to preserve and keep in full force and effect all qualifications, licenses and registrations in those jurisdictions in which the failure to do so could have a Material Adverse Effect (as defined below); and (b) the Company shall not do, or cause to be done, any act impairing the Company’s corporate power or authority (i) to carry on the Company’s business as now conducted, and (ii) to execute or deliver this Agreement or any other document delivered in connection herewith, including, without limitation, any UCC-1 Financing Statements required by the Secured Party (which other loan instruments collectively shall be referred to as the “Loan Instruments”) to which it is or will be a party, or perform any of its obligations hereunder or thereunder.  For purpose of this Agreement, the term “Material Adverse Effect” shall mean any material and adverse affect as determined by Secured Party in its reasonable discretion, whether individually or in the aggregate, upon (a) the Company’s assets, business, operations, properties or condition, financial or otherwise; (b) the Company’s to make payment as and when due of all or any part of the Obligations; or (c) the Pledged Property.

 

Section 6.2. Maintenance of Books and Records; Inspection.

 

The Company shall maintain its books, accounts and records in accordance with generally accepted accounting principles consistently applied, and permit the Secured Party, its officers and employees and any professionals designated by the Secured Party in writing, at any time to visit and inspect any of its properties (including but not limited to the collateral security described in the Transaction documents and or the Loan Instruments), corporate books and financial records, and to discuss its accounts, affairs and finances with any employee, officer or director thereof.

 

Section 6.3.  Maintenance and Insurance.

 

(a) The Company shall maintain or cause to be maintained, at its own expense, all of its assets and properties in good working order and condition, subject to ordinary wear and tear, making all necessary repairs thereto and renewals and replacements thereof.

 

(b) The Company shall maintain or cause to be maintained, at its own expense, insurance in form, substance and amounts (including deductibles), which the Company deems reasonably necessary to the Company’s business, (i) adequate to insure all assets and properties of the Company, which assets and properties are of a character usually insured by persons engaged in the same or similar business against loss or damage resulting from fire or other risks included in an extended coverage policy; (ii) against public liability and other tort claims that may be incurred by the Company; (iii) as may be required by this Agreement or applicable law and (iv) as may be reasonably requested by Secured Party, all with adequate, financially sound and reputable insurers.

 

Section 6.4.  Contracts and Other Collateral.

 

The Company shall perform all of its obligations under or with respect to each instrument, receivable, contract and other intangible included in the Pledged Property to which the Company is now or hereafter will be party on a timely basis and in the manner therein required, including, without limitation, this Agreement.

 

  

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Section 6.5.  Defense of Collateral, Etc.

 

The Company shall defend and enforce its right, title and interest in and to any part of:  (a) the Pledged Property; and (b) if not included within the Pledged Property, those assets and properties whose loss could have a Material Adverse Effect, the Company shall defend the Secured Party’s right, title and interest in and to each and every part of the Pledged Property, each against all manner of claims and demands on a timely basis to the full extent permitted by applicable law.

 

Section 6.6.  Payment of Debts, Taxes, Etc.

 

The Company shall pay, or cause to be paid, all of its indebtedness and other liabilities and perform, or cause to be performed, all of its obligations in accordance with the respective terms thereof, and pay and discharge, or cause to be paid or discharged, all taxes, assessments and other governmental charges and levies imposed upon it, upon any of its assets and properties on or before the last day on which the same may be paid without penalty, as well as pay all other lawful claims (whether for services, labor, materials, supplies or otherwise) as and when due.

 

Section 6.7.  Taxes and Assessments; Tax Indemnity.

 

The Company shall (a) file all tax returns and appropriate schedules thereto that are required to be filed under applicable law, prior to the date of delinquency, (b) pay and discharge all taxes, assessments and governmental charges or levies imposed upon the Company, upon its income and profits or upon any properties belonging to it, prior to the date on which penalties attach thereto, and (c) pay all taxes, assessments and governmental charges or levies that, if unpaid, might become a lien or charge upon any of its properties; provided, however, that the Company in good faith may contest any such tax, assessment, governmental charge or levy described in the foregoing clauses (b) and (c) so long as appropriate reserves are maintained with respect thereto.

 

Section 6.8.  Compliance with Law and Other Agreements.

 

The Company shall maintain its business operations and property owned or used in connection therewith in compliance with (a) all applicable federal, state and local laws, regulations and ordinances governing such business operations and the use and ownership of such property, and (b) all agreements, licenses, franchises, indentures and mortgages to which the Company is a party or by which the Company or any of its properties is bound.  Without limiting the foregoing, the Company shall pay all of its indebtedness promptly in accordance with the terms thereof.

 

Section 6.9.  Notice of Default.

 

The Company shall give written notice to the Secured Party of the occurrence of any default or Event of Default under this Agreement, the Note or any other agreement of Company for the payment of money, promptly upon the occurrence thereof.

 

  

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ARTICLE 7.

 

NEGATIVE COVENANTS

 

The Company covenants and agrees that, from the date hereof until the Obligations have been fully paid and satisfied, the Company shall not, unless the Secured Party shall consent otherwise in writing:

 

Section 7.1.  Liens and Encumbrances.

 

Except as permitted by the Note, the Company shall not directly or indirectly make, create, incur, assume or permit to exist any assignment, transfer, pledge, mortgage, security interest or other lien or encumbrance of any nature in, to or against any part of the Pledged Property or of the Company’s capital stock, or offer or agree to do so, or own or acquire or agree to acquire any asset or property of any character subject to any of the foregoing encumbrances (including any conditional sale contract or other title retention agreement), or assign, pledge or in any way transfer or encumber its right to receive any income or other distribution or proceeds from any part of the Pledged Property or the Company’s capital stock; or enter into any sale-leaseback financing respecting any part of the Pledged Property as lessee, or cause or assist the inception or continuation of any of the foregoing.

 

Section 7.1.  Conduct of Business.

 

The Company will continue to engage, in an efficient and economical manner, in a business of the same general type as conducted by it on the date of this Agreement.

 

Section 7.2.  Places of Business.

 

The location of the Company’s chief place of business is 123 NW 13th Street, Suite 300, Boca Raton, Florida 33432.  The Company shall not change the location of its chief place of business, chief executive office or any place of business disclosed to the Secured Party or move any of the Pledged Property from its current location without fifteen (15) days prior written notice to the Secured Party in each instance.

 

Section 7.3.  Subsidiaries.

 

The Company will not directly or indirectly create any subsidiary or enter into any partnership, limited liability Company or joint venture agreement unless the subsidiary becomes a party to this Agreement.

 

ARTICLE 8.

 

MISCELLANEOUS

 

Section 8.1.  Notices.

 

All notices, requests, claims, demands and other communications given or made pursuant hereto shall be in writing and shall be deemed to have been duly given if delivered in person against written receipt, by facsimile transmission, overnight courier prepaid, or mailed by prepaid first class registered or certified mail, postage prepaid, return receipt requested to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section):

 

  

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(i)  If to the Company:

Options Media Group Holdings, Inc.

123 NW 13th Street, Suite 300

Boca Raton FL 33432

Phone: (561) 368-5067

Telecopy: (561)

Email: scott@optionsmedia.com

(ii)  If to the Holder:

 

RVH Inc.

PO Box 403303

Miami Beach, FL 33140

Telecopy: 212-787-9268

Email: robbie490@aol.com

with a copy (which shall not constitute notice) to:

David Lubin & Associates, PLLC

10 Union Avenue

Suite 5

Lynbrook, NY 11563

Telecopy: 516-887-8250

Attn: David Lubin, Esq.

david@dlubinassociates.com

 

All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, (iii) if delivered by overnight courier to the address as provided in this Section, be deemed given on the earlier of the first business day following the date sent by such overnight courier or upon receipt, or (iv) if delivered by mail in the manner described above to the address provided in this Section, be deemed given on the earlier of the third business day following mailing or upon receipt. . In order for any such notice to be deemed given as provided above, any such notice must also be accompanied by an email to the recipient.

 

Section 8.2.  Severability.

 

If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall attach only to such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein.

 

  

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Section 8.3. Expenses.

 

In the event of an Event of Default, the Company will pay to the Secured Party the amount of any and all reasonable expenses, including the fees and expenses of its counsel, which the Secured Party may incur in connection with:  (i) the custody or preservation of, or the sale, collection from, or other realization upon, any of the Pledged Property; (ii) the exercise or enforcement of any of the rights of the Secured Party hereunder or (iii) the failure by the Company to perform or observe any of the provisions hereof.

 

Section 8.4. Waivers, Amendments, Etc.

 

The Secured Party’s delay or failure at any time or times hereafter to require strict performance by Company of any undertakings, agreements or covenants shall not waiver, affect, or diminish any right of the Secured Party under this Agreement to demand strict compliance and performance herewith.  Any waiver by the Secured Party of any Event of Default shall not waive or affect any other Event of Default, whether such Event of Default is prior or subsequent thereto and whether of the same or a different type.  None of the undertakings, agreements and covenants of the Company contained in this Agreement, and no Event of Default, shall be deemed to have been waived by the Secured Party, nor may this Agreement be amended, changed or modified, unless such waiver, amendment, change or modification is evidenced by an instrument in writing specifying such waiver, amendment, change or modification and signed by the Secured Party. No course of dealing between the Company and the Secured Party, nor any failure to exercise nor any delay in exercising on the party of the Secured Party, any right, power or privilege hereunder or under the Note shall operate as a waiver; nor shall any single or partial exercise of any right, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, power or privilege.

 

Section 8.5. Continuing Security Interest.

 

This Agreement shall create a continuing first priority lien and security interest in the Pledged Property and shall: (i) remain in full force and effect until payment in full of the Obligations; and (ii) be binding upon the Company and its successors and assigns and (iii) inure to the benefit of the Secured Party and its successors and assigns.  Upon the payment or satisfaction in full of the Obligations, the Company shall be entitled to the return, at its expense, of such of the Pledged Property as shall not have been sold in accordance with Section 5.2 hereof or otherwise applied pursuant to the terms hereof. All of the rights and remedies of the Secured Party with respect to the Collateral, whether established hereby or by the Note or any other agreements, instruments or documents or by law shall be cumulative and may be exercised singly or concurrently.

 

  

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Section 8.6. Independent Representation.

 

Each party hereto acknowledges and agrees that it has received or has had the opportunity to receive independent legal counsel of its own choice and that it has been sufficiently apprised of its rights and responsibilities with regard to the substance of this Agreement. This Agreement shall be construed to effectuate the mutual intent of the parties. The parties and their counsel have cooperated in the drafting and preparation of this Agreement and the Transaction Documents, and this Agreement therefore shall not be construed against any party by virtue of its role as the drafter thereof. No drafts of this Agreement shall be offered by any party, nor shall any draft be admissible in any proceeding, to explain or construe this Agreement.

 

Section 8.7.  Applicable Law:  Jurisdiction.

 

This Agreement shall be deemed to be made under and shall be construed in accordance with the laws of the State of New York without giving effect to the principals of conflict of laws thereof. Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the jurisdiction of the courts sitting in the Southern District of New York, and any appellate court from any thereof, in respect of any action, suit or proceeding arising out of or relating to this Agreement, or for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably and unconditionally agrees that all claims in respect of any such action, suit or proceeding may be heard and determined in such courts.  Each of the parties hereto agrees that a final judgment in any such action, suit or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each of the parties hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any action, suit or proceeding arising out of or relating to this Agreement, or in any court referred to above.  Each of the parties further hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action, suit proceeding in any such court and waives any other right to which it may be entitled on account of its place of residence or domicile. THE COMPANY IRREVOCABLY WAIVES ANY AND ALL RIGHT THE COMPANY MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR CLAIM OF ANY NATURE RELATING TO THIS AGREEMENT, ANY DOCUMENTS EXECUTED IN CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED IN ANY OF SUCH DOCUMENTS.  THE COMPANY ACKNOWLEDGES THAT THE FOREGOING WAIVER IS KNOWING AND VOLUNTARY.

Section 8.8.  Entire Agreement.

 

This Agreement constitutes the entire agreement among the parties and supersedes any prior agreement or understanding among them with respect to the subject matter hereof.

 

[Remainder of Page Intentionally Omitted; Signature Pages to Follow]

  

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IN WITNESS WHEREOF, with the intent to be legally bound hereby, the parties have executed this Security Agreement as of the date first written above.

 

 

	 	Options Media Group Holdings, Inc.	 
	 	 	 	 
	
 

	
By: 

	/s/ Scott Frohman	 
	 	 	Name: Scott Frohman	 
	 	 	Title:   CEO	 

 

	 	 RVH Inc.	 
	 	 	 	 
	 	
By: 

	/s/ Robert Herskowitz	 
	 	 	Name: Robert Herskowitz	 
	 	 	Title:   President	 

 

  

14

  

 

EXHIBIT A

 

DEFINITION OF PLEDGED PROPERTY

 

For the purpose of securing prompt and complete payment and performance by the Company of all of the Obligations, the Company unconditionally and irrevocably hereby grants to the Secured Party a continuing first priority security interest in and to, and lien upon, all of its assets and property (collectively, the Pledged Property), including without limitation the following:

 

(a)  all cash, negotiable instruments, escrow funds, bank accounts, contract rights,  prepaid expenses and claims;

 

(b)  all goods of the Company, including, without limitation, machinery, equipment, computer, furniture, furnishings, fixtures, signs, lights, tools, parts, supplies and motor vehicles of every kind and description, now or hereafter owned by the Company or in which the Company may have or may hereafter acquire any interest, and all replacements, additions, accessions, substitutions and proceeds thereof, arising from the sale or disposition thereof, and where applicable, the proceeds of insurance and of any tort claims involving any of the foregoing;

 

(c)  all inventory of the Company, including, but not limited to, all goods, wares, merchandise, parts, supplies, finished products, other tangible personal property, including such inventory as is temporarily out of Company’s custody or possession and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or disposition of any of the foregoing;

 

(d)  all contract and license rights and general intangibles of the Company, including, without limitation, goodwill, trademarks, trade styles, trade names, leasehold interests, partnership or joint venture interests, patents and patent applications, copyrights, deposit accounts whether now owned or hereafter created;

 

(e)  all documents, warehouse receipts, instruments and chattel paper of the Company whether now owned or hereafter created, including without limitation all files, records, books of account, business papers and computer programs;

 

(f)  all accounts and other receivables, instruments or other forms of obligations and rights to payment of the Company (herein collectively referred to as “Accounts”), together with the proceeds thereof, all goods represented by such Accounts and all such goods that may be returned by the Company’s customers, and all proceeds of any insurance thereon, and all guarantees, securities and liens which the Company may hold for the payment of any such Accounts including, without limitation, all rights of stoppage in transit, replevin and reclamation and as an unpaid vendor and/or lien or, all of which the Company represents and warrants will be bona fide and existing obligations of its respective customers, arising out of the sale of goods by the Company in the ordinary course of business;

 

(g)  to the extent assignable, all of the Company’s rights under all present and future authorizations, permits, licenses and franchises issued or granted in connection with the operations of any of its facilities; and

 

(h)  all products and proceeds (including, without limitation, insurance proceeds) from the above-described Pledged Property.

 

 

15opmg_ex1023.htm

EXHIBIT 10.23

 

 

 

DATABASE PURCHASE AGREEMENT

BY AND AMONG

MEDIA DIRECT, INC.,

OPTIONS ACQUISITION SUB, INC.

AND

1 TOUCH MARKETING, LLC

DATED AS OF FEBRUARY 4, 2011

 

 

 

 

 

  

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DATABASE PURCHASE AGREEMENT

      This DATABASE PURCHASE AGREEMENT (“Agreement”), is entered into on this 4th day of February, 2011 by and among Options Acquisition Sub, Inc., a Delaware corporation and 1 Touch Marketing, LLC, a Florida limited liability company (collectively, the "Seller"), and Media Direct, Inc., a Florida corporation ("Buyer").

WITNESSETH:

      WHEREAS, among other activities, the Seller is engaged in the business of email marketing and lead generation and is located at 123 NW 13th Street, Suite 300, Boca Raton, Florida 33432 (the "Business"); and

      WHEREAS, the Seller owns an email database consisting of a minimum of sixty million (60,000,000) unique, active and verifiable opt-in records including name, address, email, phone when available, site source time, date and IP of acquisition (the "Database"); and

      WHEREAS, the Seller wishes to transfer, and the Buyer wishes to purchase the Database in exchange for the Purchase Price (as hereafter defined).

      NOW, THEREFORE, in consideration of the mutual terms, conditions and other agreements set forth herein, the Seller and Buyer hereby agree as follows:

ARTICLE I

DEFINITIONS; PURCHASE OF THE ASSETS;

PURCHASE PRICE; CLOSING

      1.1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms have the following meanings unless the context otherwise requires:

      "AFFILIATE" means, with respect to any Person, any other Person controlling, controlled by or under common control with such Person.

      "BUSINESS" has the meaning specified in the Recitals.

      "BUSINESS DAY" means any day other than a Saturday, Sunday or other day on which commercial banks are authorized or required by law to close in New York City.

      "BUYER" has the meaning specified in the introductory paragraph of this Agreement.

      "CLOSING" has the meaning specified in Section 2.1 (a).

  

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      "GOVERNMENTAL OR REGULATORY BODY" means any government or political subdivision thereof, whether federal, state, county, local or foreign, or any agency, authority or instrumentality of any such government or political subdivision.

      "INDEMNIFIED PARTY" has the meaning specified in Section 5.2.

      "INDEMNIFYING PARTY" has the meaning specified in Section 5.2.

      "LIEN" means any lien, pledge, hypothecation, mortgage, security interest,  claim, lease, charge, option, right of first refusal, easement, servitude,  transfer restriction under any stockholder or similar agreement, encumbrance or any other restriction or limitation whatsoever.

      "MATERIAL ADVERSE EFFECT" means any change or changes or effect or effects that individually or in the aggregate are or is reasonably expected to be materially adverse to (a) the Purchased Assets, operations, income or conditions (financial or otherwise) of the Business or the transactions contemplated by this Agreement, (b) the ability of the Seller to perform its obligations under this Agreement or (c) the business of Buyer following the Closing.

      "PERSON" means any individual, corporation, partnership, firm, joint venture, association, joint-stock company, trust, unincorporated organization, Governmental or Regulatory Body or other entity.

      "PURCHASE PRICE" has the meaning specified in Section 1.5.

“REVENUE” means proceeds which have been collected less commissions paid.

      "SELLER" has the meaning specified in the introductory paragraph of this Agreement.

      1.2 PURCHASED ASSETS:  Subject to the terms and conditions set forth in this Agreement, the Seller agrees that, on the date hereof (the "Closing Date"), the Seller shall sell, transfer, assign, convey and deliver to the Buyer, and Buyer shall purchase from the Seller, free and clear of all Liens, all of the right, title and interest in and to the following assets (the “Purchased Assets”):  (a) the Database and (b) a customer list of all current and past customers of the Business, accounts as shall be made available in written or electronic form.

 

  

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      1.3 LIABILITIES. The parties expressly agree that Buyer will not assume nor otherwise be liable for any liabilities or obligations of Seller and Buyer is not assuming, and shall not be deemed to have assumed, any liabilities, obligations for accounts payable or obligations of Seller of any kind or nature whatsoever. Without limiting the generality of the foregoing, it is hereby agreed that Buyer is not assuming, and shall not be deemed to have assumed, any liability and shall not have any obligation for or with respect to any liability or obligation of Seller (i) under any employee benefit or profit sharing plan of Seller, (ii) in respect of (x) any sales, use or excise taxes, (to the extent not otherwise credited against the Purchase Price or adjusted pursuant to Article 2), income or withholding taxes, or taxes based on or measured by income or franchise taxes attributable to periods or events prior to or ending on the Closing Date, federal, state or local payroll taxes or (y) any legal, accounting, brokerage, finder's fees, or other expenses of whatsoever kind or nature incurred by Seller or any affiliate, stockholder, director, employee or officer of Seller as a result of the consummation of the transactions contemplated by this Agreement, or (iii) arising out of any action, suit or proceeding based upon an event occurring or a claim arising (x) prior to the Closing Date or (y) after the Closing Date in the case of claims in respect of products sold by Seller prior to the Closing Date and attributable to acts performed or omitted by Seller prior to the Closing Date; or (iv) any liability or obligation under contracts to which Seller is a party or by which Seller is bound; or (v) any contingent liabilities of Seller, including, but not limited to, any liability resulting from any litigation pending, threatened or commenced before or after the Closing Date (civil or criminal), based on any act or course of conduct on the part of Seller occurring prior to the Closing Date; or (vi) any contingent liabilities of Seller in respect of products sold or otherwise disposed of (including claims for refunds or replacements) prior to the Closing Date. The provisions of this Section 1.3 shall survive Closing.

      1.4 PURCHASE PRICE FOR THE ASSETS. The aggregate purchase price (collectively, the "Purchase Price") to be paid to Seller for the Purchased Assets shall be One Hundred Seventy Five Thousand Dollars ($175,000), plus a percentage of future Revenue as provided in Section 7.2.

ARTICLE II

CLOSING

      2.1 THE CLOSING. (a) The consummation of the transactions contemplated by this Agreement (the "Closing") shall be held on the date hereof. Such date is referred to as the "Closing Date" at the offices of legal counsel to Buyer.

      (b) At the Closing, the Seller shall execute and deliver or cause to be executed and delivered to the Buyer, all documents and instruments necessary to transfer to the Buyer, all of the right, title and interest of the Seller in and to the Purchased Assets.

      (c) At the Closing, the Buyer shall deliver the Purchase Price to Seller by wire transfer of immediately available funds.

 

  

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      2.2 ADDITIONAL ACTIONS TO BE TAKEN ON THE CLOSING DATE.

      (a) LIENS/CONSENTS. The Seller shall have satisfied and discharged all Liens on the Purchased Assets and provided the Buyer with evidence of such satisfaction and discharge as well as all necessary consents to transfer or assign the Purchased Assets to Buyer, in form and substance satisfactory to the Buyer.

      (b) CONSENTS. The Buyer shall have received written consents to the transactions contemplated by this Agreement signed by the shareholder of Seller and all of the directors of Seller in form and substance satisfactory to the Buyer. The Seller shall have received the written consent to the transactions contemplated by this Agreement signed by Michael Richmond, CEO and President of Buyer.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SELLER

      The Seller represents and warrants to the Buyer as follows:

      3.1 ORGANIZATION AND QUALIFICATION. Seller is a corporation validly existing and in good standing under the laws of the State of Delaware, and has all requisite corporate power and authority to (a) own, lease and operate its properties and assets as they are now owned, leased and operated and (b) carry on its business as now presently conducted and as proposed to be conducted.  Seller is duly qualified to do business in each jurisdiction in which the nature of its business or properties makes such qualification necessary, except where the failure to do so would not have a Material Adverse Effect.

      3.2 SUBSIDIARIES. Seller has no subsidiaries.

      3.3. VALIDITY AND EXECUTION OF AGREEMENT. Seller has the full legal right, capacity and power and all requisite corporate power, authority and approval required to enter into, execute and deliver this Agreement and the other agreements or instruments contemplated hereby, and to perform fully its obligations hereunder and thereunder. The shareholder and the board of directors of Seller have each approved the transactions contemplated pursuant to this Agreement and each of the other agreements to which Seller is a party. This Agreement and such other agreements and instruments have been duly executed and delivered by Seller and each constitutes the legal, valid and binding obligation of Seller enforceable against it in accordance with its terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws (whether statutory, regulatory or decisional), now or hereafter in effect, relating to or affecting the rights of creditors generally or by equitable principles (regardless of whether considered in a proceeding at law or in equity).

 

  

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      3.4. NO CONFLICT. Neither the execution and delivery of this Agreement nor the performance by the Seller of the transactions contemplated hereby will violate or conflict with (a) any of the provisions of its Certificate of Incorporation, the Bylaws or other organizational documents of the Seller; (b) or result in the acceleration of, or entitle any party to accelerate the maturity or the cancellation of the performance of any obligation under, or result in the creation or imposition of any Lien in or upon the Purchased Assets or constitute a default (or an event which might, with the passage of time or the giving of notice, or both, constitute a default) under any material contract to which Seller is a party; or (c) any order, judgment, regulation or ruling of any Governmental or Regulatory Body to which the Seller is a party or by which any of its property or assets may be bound or affected or with any provision of any law, rule, regulation, order, judgment, or ruling of any Governmental or Regulatory Body applicable to the Seller other than such violations or conflicts as do not or will not individually or in the aggregate have a Material Adverse Effect.

      3.5 LITIGATION. There are no outstanding orders, judgments, injunctions, investigations, awards or decrees of any court, Governmental or Regulatory Body or arbitration tribunal by which the Seller, or any of its securities, assets, properties or business is bound. There are no actions, suits, claims, investigations, legal, administrative or arbitral proceedings pending or, to the best knowledge of the Seller, threatened (whether or not the defense thereof or liabilities in respect thereof are covered by insurance) against or affecting the Seller, or any of its assets or properties, that, individually or in the aggregate, are reasonably expected to have a Material Adverse Effect.

      3.6 THE PURCHASED ASSETS. Seller owns outright and has good title to the Purchased Assets free and clear of any Lien. This Agreement and such other conveyancing documents as shall have been executed and delivered to the Buyer will convey good title to the Purchased Assets, free and clear of any Liens.

      3.7 NO MATERIAL ADVERSE CHANGE. Since December 31, 2010 there has been no material adverse change in the Business, operations or financial condition of the Seller, or in the assets, liabilities, net worth or properties of the Seller, and the Seller knows of no such change that is threatened, nor has there been any damage, destruction or loss which could have a Material Adverse Effect, whether or not covered by insurance.

      3.8 COMPLIANCE WITH LAWS.

      (a) Seller is in material compliance with, and Seller has not violated any applicable law, rule or regulation of any federal, state, local or foreign government or agency thereof. No notice, claim, charge, complaint, action, suit, proceeding, investigation or hearing has been received by Seller or filed, commenced or threatened against Seller, alleging a violation of or liability or potential responsibility under any such law, rule or regulation which has not heretofore been duly cured and for which there is no remaining liability.

 

  

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      (b) Seller is not in receipt of notice of, or subject to, any adverse inspection, finding of deficiency, finding of non-compliance, investigation, penalty, fine, sanction, assessment, request for corrective or remedial action or other compliance or enforcement action.

      3.9 SOLVENCY. As of the Closing Date and after giving effect to the sale of the Purchased Assets and to the transactions contemplated under this Agreement:

      (a) The aggregate value of the Seller, as a going concern, exceeds the amount of all the debts and liabilities (including contingent, subordinated, unmatured and unliquidated liabilities) of the Seller;

      (b) The aggregate value of all liabilities of the Seller is less than the aggregate value of all assets (including goodwill and other intangible assets) at a fair valuation of the Seller;

      (c) The Seller does not have an unreasonably small capital with which to conduct their business operations as heretofore conducted;

      (d) No final judgments against the Seller, in actions for money damages with respect to pending or threatened litigation could reasonably be expected to be rendered at a time when, and in an amount such that, the Seller will be unable to satisfy any such judgments promptly in accordance with their terms (taking into account the maximum reasonable amount of such judgments in any such actions and the earliest reasonable time at which such judgments might be rendered) and the cash available to the Seller, after taking into account all other anticipated uses of the cash of the Seller (including the payments on or in respect of debt), is anticipated to be sufficient to pay all such judgments promptly in accordance with their terms.

      (e) The Seller has not incurred, do not intend to incur, and believe that it will not incur, liabilities beyond its ability to pay such liabilities as such liabilities become absolute and mature.

      3.10 DISCLOSURE. The representations and warranties contained in this Section 3 along with any Disclosure Schedule and any other written information, statement or certificate provided by the Seller, does not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained in this Section 3 and any Disclosure Schedule not misleading.

 

  

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ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

      The Buyer represents and warrants to the Seller as follows:

      4.1 ORGANIZATION AND QUALIFICATION. The Buyer is a corporation validly existing and in good standing under the laws of its state of incorporation and has all requisite corporate power and authority to (a) own, lease and operate its properties and assets as they are now owned, leased and operated and (b) carry on its business as now presently conducted and is duly qualified to do business in each jurisdiction in which the nature of its business or properties makes such qualification necessary.

      4.2 VALIDITY AND EXECUTION OF AGREEMENT. The Buyer has the full legal right, capacity and power and all requisite corporate authority and approval required to enter into, execute and deliver this Agreement and any other agreement or instrument contemplated hereby, and to perform fully its obligations hereunder and thereunder. The board of directors of the Buyer has approved to the extent required by law the transactions contemplated by this Agreement and each of the other agreements required to be entered into pursuant hereto by the Buyer and no other corporate or shareholder approvals are required. This Agreement and such other agreements and instruments have been duly executed and delivered by the Buyer and each constitutes

the valid and binding obligation of the Buyer enforceable against it in accordance with its terms, except as may be limited by any bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or other laws (whether statutory, regulatory or decisional), now or hereafter in effect, relating to or affecting the rights of creditors generally or by equitable principles (regardless of whether considered in a proceeding at law or in equity).

      4.3 NO CONFLICT. Neither the execution and delivery of this Agreement nor

the performance by the Buyer of the transactions contemplated herein will violate or conflict with (a) any of the provisions of its Articles of Incorporation or By-Laws or other organizational documents of Buyer; or (b) result in the acceleration of, or entitle any party to accelerate the maturity or the cancellation of the performance of any obligation under, or result in the creation or imposition of any Lien or constitute a default (or an event which might, with the passage of time or the giving of notice, or both, constitute a default) under any material contract to which Buyer is a party, other than (1) such contract violations, accelerations, cancellations, defaults or Liens as do not individually or in the aggregate have a material adverse effect on Buyer (2) any order, judgment, regulation or ruling of any Governmental or Regulatory Body to which the Buyer is a party or by which any of its property or assets may be bound or affected or with any

provision of any law, rule, regulation, order, judgment, or ruling of any Governmental or Regulatory Body applicable to the Buyer other than such violations or conflicts as do not individually or in the aggregate have a material adverse effect on Buyer.

  

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ARTICLE V

INDEMNIFICATION AND OTHER COVENANTS

      5.1 SURVIVAL. Subject to this Section 5.1, all representations, warranties, covenants and agreements contained in this Agreement, or in any Section, exhibit, certificate, agreement, document or statement delivered pursuant hereto shall survive (and not be affected in any respect by) the Closing and any investigation conducted by any party hereto for a period of two (2) years.

      5.2 INDEMNIFICATION. (a) The Seller agrees to indemnify, defend and hold harmless the Buyer and its directors, officers, employees, shareholders and counsel and any Affiliates of the foregoing, and their successors and assigns (collectively, the "Buyer Group") from and against any and all losses, liabilities (including punitive or exemplary damages and fines or penalties and any interest thereon), expenses (including reasonable fees and disbursements of counsel and expenses of investigation and defense), claims, Liens or other obligations of any nature whatsoever (hereinafter individually, a "Loss" and collectively, "Losses") suffered or incurred by the Buyer Group which, directly or indirectly, arise out of, result from or relate to, (i) any inaccuracy in or any breach of any representation or warranty of the Seller contained in Article III, (ii) any breach of any covenant or agreement of the Seller, in each case contained in this Agreement or in any other document contemplated by this Agreement, or (iii) any liability of Seller.

      (b) The Buyer agrees to indemnify, defend and hold harmless the Seller and its respective directors, officers, employees, shareholders, and counsel and any Affiliates of the foregoing, and their successors and assigns from and against any and all Losses suffered or incurred by them which, directly or indirectly, arise out of, result from or relate to (i) any inaccuracy in or any breach of any representation or warranty of the Buyer contained in Article IV, or (ii) any breach of any covenant or agreement of the Buyer contained in this Agreement or in any other document contemplated by this Agreement.

      5.3 METHOD OF ASSERTING CLAIMS. The party making a claim under this Article V is referred to as the "Indemnified Party" and the party against whom such claims are asserted under this Article V is referred to as the "Indemnifying Party". All claims by any Indemnified Party under this Article V shall be asserted and resolved as follows:

 

  

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      (a) In the event that any claim or demand for which an Indemnifying Party would be liable to an Indemnified Party hereunder is asserted against or sought to be collected from such Indemnified Party by a third party, said Indemnified Party shall with reasonable promptness notify in writing the Indemnifying Party of such claim or demand, specifying the nature of the specific basis for such claim or demand, and the amount or the estimated amount thereof to the extent then feasible (which estimate shall not be conclusive of the final amount of such claim and demand; any such notice, together with any notice given pursuant to Section 5.3(b) hereof, collectively being the "Claim Notice"); provided, however, that any failure to give such Claim Notice will not be deemed a waiver of any rights of the Indemnified Party except to the extent the rights of the Indemnifying Party are actually prejudiced or harmed. The Indemnifying Party, upon request of the Indemnified Party, shall retain counsel (who shall be reasonably acceptable to the Indemnified Party) to represent the Indemnified Party, and shall pay the fees and disbursements of such counsel with regard thereto, provided, further, that any Indemnified Party is hereby authorized prior to the date on which it receives written notice from the Indemnifying Party designating such counsel, to retain counsel, whose reasonable fees and expenses shall be at the expense of the Indemnifying Party, to file any motion, answer or other pleading and take such other action which it reasonably shall deem necessary to protect its interests or those of the Indemnifying Party until the date on which the Indemnified Party receives such notice from the Indemnifying Party. After the Indemnifying Party shall retain such counsel, the Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) the named parties of any such proceeding (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and counsel to the Indemnified Party has advised it that representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Indemnifying Party shall not, in connection with any proceedings or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one such firm for the Indemnified Party (except to the extent the Indemnified Party retained counsel to protect its (or the Indemnifying Party's) rights prior to the selection of counsel by the Indemnifying Party). The Indemnified Party agrees to cooperate with the Indemnifying Party and its counsel in contesting any claim or demand which the Indemnifying Party defends. No claim or demand may be settled by an Indemnifying Party or, where permitted pursuant to this Agreement, by an Indemnified Party without the consent of the Indemnified Party in the first case or the consent of the Indemnifying Party in the second case, which consent shall not be unreasonably withheld, unless such settlement shall be accompanied by a complete release of the Indemnified Party in the first case or the Indemnifying Party in the second case.

      (b) In the event any Indemnified Party shall have a claim against any Indemnifying Party hereunder which does not involve a claim or demand being asserted against or sought to be collected from it by a third party, the Indemnified Party shall send a Claim Notice with respect to such claim to the Indemnifying Party. If the Indemnifying Party does not dispute such claim, the amount of such claim shall be paid to the Indemnified Party within thirty (30) days of receipt of the Claim Notice.

 

  

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      (c) So long as any right to indemnification exists pursuant to this Article V, the affected parties each agree to retain all books, records, accounts, instruments and documents reasonably related to the Claim Notice. In each instance, the Indemnified Party shall have the right to be kept informed by the Indemnifying Party and its legal counsel with respect to all significant matters relating to any legal proceedings. Any information or documents made available to any party hereunder, which information is designated as confidential by the party providing such information and which is not otherwise generally available to the public, or which information is not otherwise lawfully obtained from third parties or not already within the knowledge of the party to whom the information is provided (unless otherwise covered by the confidentiality provisions of any other agreement among the parties hereto, or any of them), and except as may be required by applicable law or requested by third party lenders to such party, shall not be disclosed to any third Person (except for the representatives of the party being provided with the information, in which event the party being provided with the information shall request its representatives not to disclose any such information which it otherwise required hereunder to be kept confidential).

      5.4 SELLER NON-COMPETE. Seller agrees that after the Closing Date it will not conduct any operations that are competitive to the Business, including specifically not engaging in the email marketing business.  Additionally, Seller also agrees that Seller hereby accepts responsibility for Dan Lansman’s (“Lansman”) actions and to indemnify Buyer as set forth in 5.2 above if Lansman takes any actions that would breach the restrictions set forth in the Non- Compete Agreement attached hereto as Exhibit __ if Lansman executed such agreement as a Key Executive (as defined therein).

      5.5 MINIMUM NUMBER OF ACCOUNTS IN DATABASE. Seller covenants that the Database contains a minimum of sixty million (60,000,000) active and unique opt-in email addresses.  Seller acknowledges that the number of such accounts has been a material inducement to Buyer wishing to enter into this Agreement and consummate this transaction.

 

      5.6  SELLER’S AUDIT RIGHTS. For three years and three months following the Closing, the Seller or its duly authorized representatives shall have the right to examine the Buyer’s books of account and other business records relating to Revenue received by the Buyer as specified under Section 7.2. These inspections shall occur once each calendar quarter during normal business hours and upon reasonable prior notice and shall, except as otherwise specified in this Section 5.6, be at the expense of the Seller. The Buyer will pay to the Seller all amounts discovered to be due to the Seller as a result of such inspection within ten (10) days of receipt of written demand therefor. In addition, in the event that the inspection reveals a discrepancy of five percent (5%) or more for the relevant audit period, the Buyer will pay all reasonable costs of the inspection, and such costs shall be paid promptly upon the rendering of the invoice by the Seller unless Buyer disputes such discrepancy in which case such dispute shall be resolved as set forth in the final sentence of this Section 5.6. Except as provided for in the penultimate sentence of this Section 5.6, in order to preserve the Seller’s audit rights and its rights under Section 7.2 to receive additional Purchase Price, the Buyer may not, directly or indirectly, sell or otherwise dispose of the Purchased Assets whether voluntarily or by operation of law without the prior consent of the Seller, which consent can be withheld for any reason necessary to protect the Seller’s right to receive additional Purchase Price.  Notwithstanding anything to the contrary herein, the Buyer may sell, assign transfer or otherwise convey or dispose of the Purchased Assets provided that the party to whom Buyer sells, assigns, transfers or otherwise conveys or disposes the Purchased Assets executes an agreement to be bound by all terms of this Agreement as if such party were the Buyer.  The parties specifically acknowledge that any dispute hereunder shall be resolved as set forth in Section 8.7 of this Agreement and that the prevailing party shall pay all reasonable costs of the inspection.

 

  

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ARTICLE VI

CONDITIONS TO THE OBLIGATIONS OF THE BUYER

      The obligation of Buyer to effect the transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing Date of the following conditions, any or all of which may be waived in whole or in part in writing by the Buyer:

 

      6.1 NONCOMPETE AGREEMENTS. Scott Frohman, CEO of the Seller and all other key personnel of Seller, as determined solely by the Buyer, and Dan Lansman shall have signed non-compete agreements in the form attached hereto as Exhibit A, prohibiting them from participating in an entity that competes with the Buyer including but not limited to by offering email marketing, postal list marketing, or email appending.

 

ARTICLE VII

CONDITIONS TO THE OBLIGATIONS OF THE SELLER

      The obligation of Seller to effect the transactions contemplated hereby shall be subject to the fulfillment at or prior to the Closing Date of the following conditions, any or all of which may be waived in whole or in part in writing by the Seller:

 

      7.1 Employment of Sales Force.  Buyer shall offer contracts to and employ Seller’s sales force of ten (10) sales representatives paying them at their current commission levels.

      7.2 Buyer shall pay Seller twenty percent (20%) of all Revenue generated from all (i) salesmen of the Seller who are hired by the Buyer and/or (ii) customers on the customer list acquired from Seller, except for those customers listed on Schedule 7.2, for a period of twelve (12) months from the Closing Date and ten percent (10%) of Revenue generated from such salesmen or customers for an additional twenty-four (24) months from March 1, 2011.  All payments shall be payable to the Seller by the 15th day of the calendar month subsequent to the calendar month in which such Revenue is Earned. Revenue shall be considered earned when only when funds have been collected and the corresponding order therefore is shipped  The parties acknowledge that total compensation to Seller shall not exceed: (a) one million five hundred thousand dollars ($1,500,000) during the first 12 months, (b) one million five hundred thousand dollars ($1,500,000) in the aggregate for the period from months thirteen through thirty-six and (c) three million dollars ($3,000,000) in the aggregate for the entire term which sum does not include the $175,000 initial payment.

 

  

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ARTICLE VIII

MISCELLANEOUS

      8.1 SALES AND TRANSFER TAXES. All required filings under any applicable Federal, state, foreign or local sales tax, stamp tax or similar laws or regulations shall be made in a timely manner by the party responsible therefore under such laws and regulations.

      8.2 POST-CLOSING FURTHER ASSURANCES. At any time and from time to time after the Closing Date at the request of either party, and without further consideration, the other party will execute and deliver, or cause the execution and delivery of, such other instruments of sale, transfer, conveyance, assignment and confirmation and take or cause to be taken such other action as the party requesting the same may reasonably deem necessary or desirable in order to transfer, convey and assign more effectively to the requesting party all of the property and rights intended to be conveyed to such party pursuant to the provisions of this Agreement.

      8.3 NOTICES. All notices, requests, demands and other communications required or permitted to be given hereunder shall be in writing and shall be given personally, sent by facsimile transmission or sent by prepaid air courier or certified, registered or express mail, postage prepaid. Any such notice shall be deemed to have been given when received, if delivered in person, sent by facsimile transmission and confirmed in writing within three (3) Business Days thereafter or sent by prepaid air courier (or to such other address or addresses as a party may have advised the other in the manner provided in this Section 6.3):

          If to Seller, to:

Options Media Group Holdings Inc.

123 NW 13th Street, Suite 300

Boca Raton, FL 33432

Attention: Scott Frohman CEO

Facsimile:----------------

          with a copy to:

Harris Cramer LLP

3507 Kyoto Gardens Dr.

Suite 320

Palm Beach Gardens, FL 33410

Facsimile: 561-899-0418

 

  

13

  

          If to Buyer to:

Media Direct, Inc.

260 SW Natura Avenue

Deerfield Beach, Florida 33441

Attention: Michael Richmond

Facsimile:  954-337-0251

          with a copy to:

The Law Office of James G. Dodrill II, PA

5800 Hamilton Way

Boca Raton, FL  33496

Attention:  James Dodrill, Esq.

Facsimile: (561) 892-7787

      8.4 PUBLICITY. No publicity release or announcement concerning this Agreement or the transactions contemplated hereby shall be made without advance approval thereof by the Buyer.

      8.5 ENTIRE AGREEMENT. This Agreement and the agreements, certificates and other documents delivered pursuant to this Agreement contain the entire agreement among the parties with respect to the transactions described herein, and supersede all prior agreements, written or oral, with respect thereto.

      8.6 WAIVERS AND AMENDMENTS. This Agreement may be amended, superseded, canceled, renewed or extended, and the terms hereof may be waived, only by a written instrument signed by the parties hereto or, in the case of a waiver, by the party waiving compliance. No delay on the part of any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof.

      8.7 MEDIATION AND ARBITRATION. All controversies, claims, disputes and matters in question arising out of or relating to this Agreement or the breach thereof, shall be decided by mediation and/or arbitration in accordance with this Section 8.7. The party who seeks resolution of a controversy, claim, dispute or other matter in question shall notify the other party in writing of the existence and subject matter hereof, and shall designate in such notices the names of three prospective mediators, each of whom shall be certified in the state of Florida. The recipient party shall select from such list one individual to act as a mediator in the dispute set forth by the notifying party. The parties agree to meet with said mediator within two weeks after the recipient party has received notice of the dispute and agree to utilize their best efforts and all expediency to resolve the matters in dispute. The mediation shall not continue longer than one (1) hearing day without the written approval of both parties. Neither party shall be bound by any recommendation of the mediator; however, any agreement reached during mediation shall be final and conclusive.

 

  

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      If the dispute is not resolved by such mediation, it shall be decided by mandatory arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association. Either party may apply to the American Arbitration Association for a determination of the dispute set forth in the notification thereof by the originating party. The parties agree that the arbitration shall take place in the State of Florida, and shall be governed by the laws of the State of Florida. The award entered or decision made by the arbitrator(s) shall be final and judgment may be entered upon it in accordance with applicable law in any court having jurisdiction thereof. Expense of mediation and/or arbitration shall be shared equally by both parties.

      8.8 BINDING EFFECT; NO ASSIGNMENT. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors, assigns and legal representatives. This Agreement is not assignable except by operation of law and any other purported assignment shall be null and void.

      8.9 VARIATIONS IN PRONOUNS. All pronouns and any variations thereof refer to the masculine, feminine or neuter, singular or plural, as the context may require.

      8.10 COUNTERPARTS. This Agreement may be executed by the parties hereto in separate counterparts, each of which when so executed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument. Each counterpart may consist of a number of copies hereof each signed by less than all, but together signed by all of the parties hereto.

      8.11 EXHIBITS AND SCHEDULES. The Exhibits and Schedules, if any, are a part of this Agreement as if fully set forth herein. All references herein to Sections, subsections, clauses, Exhibits and Schedules shall be deemed references to such parts of this Agreement, unless the context shall otherwise require.

      8.12 EFFECT OF DISCLOSURE ON SCHEDULES. Any item, if any, disclosed on any Schedule shall be deemed to be disclosed in connection with (a) the specific representation and warranty to which such Schedule is expressly referenced, (b) any specific representation and warranty which expressly cross-references such Schedule and (c) any specific representation and warranty to which any other Schedule to this Agreement is expressly referenced if such other Schedule expressly cross-references such Schedule.

      8.13 HEADINGS. The headings in this agreement are for reference only, and shall not affect the interpretation of this Agreement.

 

  

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      8.14 SEVERABILITY OF PROVISIONS. If any provision or any portion of any provision of this Agreement or the application of such provision or any portion thereof to any Person or circumstance, shall be held invalid or unenforceable, the remaining portion of such provision and the remaining provisions of this Agreement, or the application of such provision or portion of such provision as is held invalid or unenforceable to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby.

      8.15 BROKERS. Each party hereto represents and warrants that no broker or finder is entitled to any brokerage or finder's fee or other commission from such party, based on agreements, arrangements or undertakings made by such party, in connection with the transactions contemplated hereby.

      8.16 CONFIDENTIAL INFORMATION. Seller shall not at any time subsequent to the Closing, except as explicitly requested by Buyer, use for any purpose, disclose to any person, or keep or make copies of documents, tapes, discs, programs or other information storage media ("records") containing, any confidential information concerning the Business, the Purchased Assets, all such information being deemed to be transferred to Buyer hereunder, and if at any time after Closing Seller should discover that they are in possession of any records containing the confidential information of Buyer, then the party making such discovery shall immediately turn such records over to Buyer, which shall upon request make available to the surrendering party any information contained therein which is not confidential information.

      IN WITNESS WHEREOF, the parties have executed this Agreement as of the

date first above written.

	 MEDIA DIRECT, INC.  	 	 	 OPTIONS  ACQUISITION SUB, INC.	 
	 	 	 	 	 
	
/s/

	 	 	
/s/ Scott Frohman

	 
	
By:   

	 	 	
By:  Scott Frohman

	 
	
Title:  

	 	 	
Title     CEO

	 

 

	 	 	 	1 TOUCH MARKETING, LLC	 
	 	 	 	 	 
	 	 	 	
/s/ Scott Frohman

	 
	 	 	 	
By:  Scott Frohman

	 
	 	 	 	
Title     CEO

	 

 

 

16

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