Document:

Exhibit 4.2

 

Execution Copy

 

REGISTRATION RIGHTS AGREEMENT

 

by and among

 

Harvest Operations Corp.

 

and

 

the Guarantors listed on Schedule A hereto

 

and

 

Banc of America Securities LLC
 HSBC Securities (USA) Inc.
 CIBC World Markets Corp.
 Mitsubishi UFJ Securities (USA), Inc.
 NBF Securities (USA) Corp.
 Scotia Capital (USA) Inc.
 TD Securities (USA) LLC

 

Dated as of October 4, 2010

 

 

REGISTRATION RIGHTS AGREEMENT

 

This Registration Rights Agreement (this “Agreement”) is made and entered into as of October 4, 2010, by and among Harvest Operations Corp., an Alberta corporation (the “Company”), the Guarantors named on Schedule A hereto (the “Guarantors”), and Banc of America Securities LLC, HSBC Securities (USA) Inc., CIBC World Markets Corp., Mitsubishi UFJ Securities (USA), Inc., NBF Securities (USA) Corp., Scotia Capital (USA) Inc. and TD Securities (USA) LLC (collectively, the “Initial Purchasers”), each of whom has agreed to purchase the Company’s 6 7/8% Senior Notes due 2017 (the “Initial Notes”) fully and unconditionally guaranteed by the Guarantors (the “Guarantees”) pursuant to the Purchase Agreement (as defined below). The Initial Notes and the Guarantees are herein collectively referred to as the “Initial Securities.”

 

This Agreement is made pursuant to the Purchase Agreement, dated as of September 24, 2010 (the “Purchase Agreement”), among the Company, the Guarantors and the Initial Purchasers (i) for the benefit of the Initial Purchasers and (ii) for the benefit of the holders from time to time of the Initial Securities, including the Initial Purchasers. In order to induce the Initial Purchasers to purchase the Initial Securities, the Company has agreed to provide the registration rights set forth in this Agreement. The execution and delivery of this Agreement is a condition to the obligations of the Initial Purchasers set forth in Section 5(h) of the Purchase Agreement.

 

The parties hereby agree as follows:

 

SECTION 1.           Definitions. As used in this Agreement, the following capitalized terms shall have the following meanings:

 

Additional Interest: As defined in Section 4 hereof.

 

Broker-Dealer: Any broker or dealer registered under the Exchange Act.

 

Business Day: Any day other than a Saturday, Sunday or U.S. federal holiday or a day on which banking institutions or trust companies located in New York, New York are authorized or obligated to be closed.

 

Commission: The Securities and Exchange Commission.

 

Consummate: A registered Exchange Offer shall be deemed “Consummated” for purposes of this Agreement upon the occurrence of (i) the filing and effectiveness under the Securities Act of the Exchange Offer Registration Statement relating to the Exchange Securities to be issued in the Exchange Offer, (ii) the maintenance of such Registration Statement continuously effective and the keeping of the Exchange Offer open for a period not less than the minimum period required pursuant to Section 2(b) hereof, and (iii) the delivery by the Company to the Registrar under the Indenture of Exchange Securities in the same aggregate principal amount as the aggregate principal amount of Initial Securities that were tendered by Holders thereof pursuant to the Exchange Offer.

 

Effectiveness Target Date: As defined in Section 4 hereof.

 

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Exchange Act: The Securities Exchange Act of 1934, as amended.

 

Exchange Offer: The registration by the Company under the Securities Act of the Exchange Securities pursuant to a Registration Statement pursuant to which the Company offers the Holders of all outstanding Initial Securities permitted to be included therein the opportunity to exchange all such outstanding Initial Securities held by such Holders for Exchange Securities in an aggregate principal amount equal to the aggregate principal amount of the Initial Securities tendered in such exchange offer by such Holders.

 

Exchange Offer Registration Statement: The Registration Statement relating to the Exchange Offer, including the related Prospectus.

 

Exchange Securities: The 6 7/8% Senior Notes due 2017, of the same series under the Indenture as the Initial Securities, to be issued to Holders in exchange for Initial Securities pursuant to this Agreement.

 

Filing Date: As defined in Section 2(a) hereof.

 

FINRA: Financial Industry Regulatory Authority, Inc.

 

Free Writing Prospectus: Each free writing prospectus (as defined in Rule 405 under the Securities Act) prepared by or on behalf of the Company or used or referred to by the Company in connection with the sale of the Securities or the Exchange Securities.

 

Holder: means a Person in whose name a Note is registered.

 

Indemnified Holder: As defined in Section 7(a) hereof.

 

Indenture: The Indenture, dated as of October 4, 2010, by and among the Company, the Guarantors and U.S. Bank National Association, as trustee (the “Trustee”), pursuant to which the Securities are to be issued, as such Indenture is amended or supplemented from time to time in accordance with the terms thereof.

 

Initial Purchasers: As defined in the preamble hereto.

 

Initial Notes: As defined in the preamble hereto.

 

Initial Placement: The issuance and sale by the Company of the Initial Securities to the Initial Purchasers pursuant to the Purchase Agreement.

 

Initial Securities: As defined in the preamble hereto.

 

Interest Payment Date: As defined in the Indenture and the Securities.

 

Person: An individual, partnership, corporation, trust or unincorporated organization, or a government or agency or political subdivision thereof.

 

Prospectus: The prospectus included in a Registration Statement, as amended or supplemented by any prospectus supplement and by all other amendments thereto, including post-effective amendments, and all material incorporated by reference into such Prospectus.

 

Registration Default: As defined in Section 4 hereof.

 

Registration Statement: The Exchange Offer Registration Statement and Shelf Registration Statement, which is filed pursuant to the provisions of this Agreement, in each case,

 

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including the Prospectus included therein, all amendments and supplements thereto (including post-effective amendments) and all exhibits and material incorporated by reference therein.

 

Securities Act: The Securities Act of 1933, as amended.

 

Shelf Registration Statement: As defined in Section 3(a) hereof. 

 

Trust Indenture Act: The Trust Indenture Act of 1939, as amended.

 

Underwritten Registration or Underwritten Offering: A registration in which securities of the Company are sold to an underwriter for reoffering to the public.

 

SECTION 2.           Registered Exchange Offer.

 

(a)             Unless the Exchange Offer shall not be permissible under applicable law or Commission policy (after the procedures set forth in Section 5(a) hereof have been complied with), each of the Company and the Guarantors shall (i) cause to be filed with the Commission on or prior to 45 days after the filing deadline (such date, the “Filing Date”), as specified in the Commission’s rules and regulations, for the Company’s Form 20-F for the fiscal year ended December 31, 2011, an Exchange Offer Registration Statement under the Securities Act relating to the Exchange Securities and the Exchange Offer, (ii) use their commercially reasonable efforts to have the Exchange Offer Registration Statement declared effective by the Commission on or prior to 105 days after the Filing Date (or if such 105th day is not a Business Day, the next succeeding Business Day) and (iii) upon the effectiveness of such Exchange Offer Registration Statement, (a) commence the Exchange Offer and (b) issue Exchange Notes in exchange for all Notes tendered prior thereto by Holders that are not prohibited by any law or policy of the Commission form participating in the Exchange Offer. The Exchange Offer shall be on the appropriate from permitting registration of the Exchange Securities to be offered in exchange for the Initial Securities and to permit resales of Initial Securities held by Broker-Dealers as contemplated by Section 2(c) hereof.

 

(b)             The Company and the Guarantors shall cause the Exchange Offer Registration Statement to be effective continuously and shall keep the Exchange Offer open for a period of not less than the minimum period required under applicable federal and state securities laws to Consummate the Exchange Offer; provided, however, that in no event shall such period be less than 30 days after the date notice of the Exchange Offer is first furnished to the Holders. The Company and the Guarantors shall cause the Exchange Offer to comply with all applicable federal and state securities laws in all material respects. No securities other than the Exchange Securities shall be included in the Exchange Offer Registration Statement. The Company and the Guarantors shall use their commercially reasonable efforts to cause the Exchange Offer to be Consummated on the earliest practicable date after the Exchange Offer Registration Statement has become effective, but in no event later than 30 Business Days of the Effectiveness Target Date (or if such 30th day is not a Business Day, the next succeeding Business Day).

 

(c)             The Company shall indicate in a “Plan of Distribution” section contained in the Prospectus forming a part of the Exchange Offer Registration Statement that any Broker-Dealer who holds Initial Securities that are Initial Securities and that were acquired for its own account as a result of market-making activities or other trading activities (other than Initial Securities acquired directly from the Company), may exchange such Initial Securities pursuant to the

 

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Exchange Offer; however, such Broker-Dealer may be deemed to be an “underwriter” within the meaning of the Securities Act and must, therefore, deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the Exchange Securities received by such Broker-Dealer in the Exchange Offer, which prospectus delivery requirement may be satisfied by the delivery by such Broker-Dealer of the Prospectus contained in the Exchange Offer Registration Statement. Such “Plan of Distribution” section shall also contain all other information with respect to such resales by Broker-Dealers that the Commission may require in order to permit such resales pursuant thereto, but such “Plan of Distribution” shall not name any such Broker-Dealer or disclose the amount of Initial Securities held by any such Broker-Dealer except to the extent required by the Commission as a result of a change in policy after the date of this Agreement.

 

Each of the Company and the Guarantors shall use its commercially reasonable efforts to keep the Exchange Offer Registration Statement continuously effective, supplemented and amended as required by the provisions of Section 5(c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities acquired by Broker-Dealers for their own accounts as a result of market-making activities or other trading activities, and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, for a period ending on the earlier of (i) 180 days from the date on which the Exchange Offer Registration Statement is declared effective, (ii) the date on which all Broker-Dealers have sold all Exchange Securities held by them that require the delivery of a Prospectus in connection with the resale thereof, and (iii) the date on which a Broker-Dealer is no longer required to deliver a prospectus in connection with market-making or other trading activities.

 

The Company shall provide sufficient copies of the latest version of such Prospectus to Broker-Dealers promptly upon request at any time during such 180-day (or shorter as provided in the foregoing sentence) period in order to facilitate such resales.

 

SECTION 3.           Shelf Registration.

 

(a)             Shelf Registration. If (i) the Company is not required to file an Exchange Offer Registration Statement or to consummate the Exchange Offer because the Exchange Offer is not permitted by applicable law or Commission policy (after the procedures set forth in Section 5(a) hereof have been complied with), (ii) for any reason the Exchange Offer is not Consummated within 30 Business Days of the Effectiveness Target Date (or if such 30th day is not a Business Day, the next succeeding Business Day), or (iii) with respect to any Holder of Initial Securities (A) such Holder notifies the Company in writing within 10 Business Days of the effectiveness of the Exchange Offer Registration Statement that it is prohibited by applicable law or Commission policy from participating in the Exchange Offer, (B) such Holder notifies the Company in writing within 10 Business Days of the effectiveness of the Exchange Offer Registration Statement that it may not resell the Exchange Securities acquired by it in the Exchange Offer to the public without delivering a prospectus and that the Prospectus contained in the Exchange Offer Registration Statement is not appropriate or available for such resales by such Holder, or (C) such Holder notifies the Company in writing within 10 Business Days of the effectiveness of the Exchange Offer Registration Statement that it is a Broker-Dealer and holds Initial Securities

 

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acquired directly from the Company or one of its affiliates, upon such Holder’s request, then the Company and the Guarantors shall cause to be filed and use their commercially reasonable efforts to cause to be declared effective a shelf registration statement pursuant to Rule 415 under the Securities Act, which may be an amendment to the Exchange Offer Registration Statement (in either event, the “Shelf Registration Statement”) on or prior to the later of (1) the 105th day after the Filing Date and (2) the 90th day after such obligation arises , which Shelf Registration Statement shall provide for resales of all Initial Securities the Holders of which shall have provided the information required pursuant to Section 3(b) hereof.

 

Each of the Company and the Guarantors shall use their commercially reasonable efforts to keep such Shelf Registration Statement continuously effective, supplemented and amended as required by the provisions of Sections 5(b) and (c) hereof to the extent necessary to ensure that it is available for resales of Initial Securities by the Holders of Initial Securities entitled to the benefit of this Section 3(a), and to ensure that it conforms with the requirements of this Agreement, the Securities Act and the policies, rules and regulations of the Commission as announced from time to time, until the earlier of (a) one year after the date the Shelf Registration Statement is declared effective and (b) the date on which all Initial Securities registered thereunder are disposed of in accordance therewith.

 

(b)             Provision by Holders of Certain Information in Connection with the Shelf  Registration Statement. No Holder of Initial Securities may include any of its Initial Securities in any Shelf Registration Statement pursuant to this Agreement unless and until (i) such Holder furnishes to the Company in writing, within 10 Business Days after receipt of a request therefor, such information as the Company may reasonably request for use in connection with any Shelf Registration Statement or Prospectus or preliminary Prospectus included therein and (ii) such Holder agrees to be bound by all provisions of this Agreement applicable to such Holder. Each Holder as to which any Shelf Registration Statement is being effected agrees to furnish promptly to the Company all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading.

 

SECTION 4.         Additional Interest.

 

(a)             If (i) any of the Registration Statements required by this Agreement is not filed with the Commission on or prior to the date specified for such filing in this Agreement, (ii) any of such Registration Statements has not been declared effective by the Commission on or prior to the date specified for such effectiveness in this Agreement (the “Effectiveness Target Date”), (iii) the Exchange Offer has not been Consummated within 30 Business Days of the Effectiveness Target Date with respect to the Exchange Offer Registration Statement or (iv) any Registration Statement required by this Agreement is filed and declared effective but (A) such Registration Statement ceases to be effective, except, in the case of the Exchange Offer Registration Statement, following the consummation of the Exchange Offer with respect to all Initial Securities tendered in connection therewith prior to the expiration of the Exchange Offer or (B) such Registration Statement or the related Prospectus ceases to be usable in connection with resales of Initial Securities during the periods specified herein because either (1) any event occurs as a result of which the related prospectus forming part of such Registration Statement would include any untrue statement of a material fact or omit to state any material fact necessary to make the

 

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statements therein in the light of the circumstances under which they were made not misleading or (2) it shall be necessary to amend such Registration Statement or supplement the related prospectus to comply with the Securities Act or the Exchange Act or the respective rules thereunder, (each such event referred to in clauses (i) through (iv), a “Registration Default”), the Company hereby agrees that the interest rate borne by the Initial Securities shall be increased by 0.25% per annum during the 90-day period immediately following the occurrence of any Registration Default and shall increase by 0.25% per annum at the end of each subsequent 90-day period until all Registration Defaults have been cured, up to a maximum amount of 1.00% for all Registration Defaults (“Additional Interest”). All accrued Additional Interest will be paid by the Company and the Guarantors on each Interest Payment Date to the Global Note Holder of a global note by wire transfer of immediately available funds or by federal funds check and to Holders of Certificated Notes by wire transfer to the accounts specified by them or by mailing checks to their registered addresses if no such accounts have been specified. Following the cure of all Registration Defaults relating to the Securities, the interest rate borne by the Securities will be reduced to the original interest rate borne by such Securities; provided, however, that, if after any such reduction in interest rate, a different Registration Default occurs, the interest rate borne by the Securities shall again be increased pursuant to the foregoing provisions.

 

SECTION 5.           Registration Procedures.

 

(a)             Exchange Offer Registration Statement. In connection with the Exchange Offer, the Company and the Guarantors shall comply with all of the provisions of Section 5(c) hereof, shall use their commercially reasonable efforts to effect such exchange to permit the sale of Initial Securities, by any such Broker-Dealer, being sold in accordance with the intended method or methods of distribution thereof, and shall comply with all of the following provisions:

 

(i)           If in the reasonable opinion of counsel to the Company there is a question as to whether the Exchange Offer is permitted by applicable law, each of the Company and the Guarantors hereby agrees to seek a no-action letter or other favorable decision from the Commission allowing the Company and the Guarantors to Consummate an Exchange Offer for such Initial Securities. Each of the Company and the Guarantors hereby agrees to pursue the issuance of such a decision to the Commission staff level but shall not be required to take commercially unreasonable action to effect a change of Commission policy. Each of the Company and the Guarantors hereby agrees, however, to (A) participate in telephonic conferences with the Commission, (B) deliver to the Commission staff an analysis prepared by counsel to the Company setting forth the legal bases, if any, upon which such counsel has concluded that such an Exchange Offer should be permitted and (C) diligently pursue a favorable resolution by the Commission staff of such submission.

 

(ii)          As a condition to its participation in the Exchange Offer pursuant to the terms of this Agreement, each Holder of Initial Securities shall furnish, upon the request of the Company, prior to the Consummation thereof, a written representation to the Company (which may be contained in the letter of transmittal contemplated by the Exchange Offer Registration Statement) to the effect that (A) it is not an affiliate of the Company, (B) it is not engaged in, and does not intend to engage in, and has no

 

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arrangement or understanding with any Person to participate in, a distribution of the Exchange Securities to be issued in the Exchange Offer and (C) it is acquiring the Exchange Securities in its ordinary course of business. In addition, all such Holders of Initial Securities shall otherwise cooperate in the Company’s preparations for the Exchange Offer. Each Holder hereby acknowledges and agrees that any Broker-Dealer and any such Holder using the Exchange Offer to participate in a distribution of the securities to be acquired in the Exchange Offer (1) could not under Commission policy as in effect on the date of this Agreement rely on the position of the Commission enunciated in Morgan Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in the Commission’s letter to Shearman & Sterling dated July 2, 1993, and similar no-action letters (which may include any no-action letter obtained pursuant to clause (i) above), and (2) must comply with the registration and prospectus delivery requirements of the Securities Act in connection with a secondary resale transaction and that such a secondary resale transaction should be covered by an effective registration statement containing the selling security holder information required by Item 507 or 508, as applicable, of Regulation S-K if the resales are of Exchange Securities obtained by such Holder in exchange for Initial Securities acquired by such Holder directly from the Company.

 

(b)             Shelf Registration Statement. In connection with the Shelf Registration Statement, each of the Company and the Guarantors, to the extent applicable, shall comply with all the provisions of Section 5(c) hereof and shall use its commercially reasonable efforts to effect such registration to permit the sale of the Initial Securities being sold in accordance with the intended method or methods of distribution thereof, and pursuant thereto each of the Company and the Guarantors will as expeditiously as possible prepare and file with the Commission a Registration Statement relating to the registration on any appropriate form under the Securities Act, which form shall be available for the sale of the Initial Securities in accordance with the intended method or methods of distribution thereof.

 

(c)             General Provisions. In connection with any Registration Statement and any Prospectus required by this Agreement to permit the sale or resale of Initial Securities (including, without limitation, any Registration Statement and the related Prospectus required to permit resales of Initial Securities by Broker-Dealers), each of the Company and the Guarantors shall:

 

(i)           use its commercially reasonable efforts to keep such Registration Statement continuously effective and provide all requisite financial statements (including, if required by the Securities Act or any regulation thereunder, financial statements of the Guarantors) for the period specified in Section 2 or 3 hereof, as applicable; upon the occurrence of any event that would cause any such Registration Statement or the Prospectus contained therein (A) to contain a material misstatement or omission or (B) not to be effective and usable for resale of Initial Securities during the period required by this Agreement, the Company shall file promptly an appropriate amendment to such Registration Statement, in the case of clause (A), correcting any such misstatement or omission, and, in the case of either clause (A) or (B), use its commercially reasonable efforts to cause such amendment to be declared effective and such Registration Statement

 

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and the related Prospectus to become usable for their intended purpose(s) as soon as practicable thereafter;

 

(ii)          prepare and file with the Commission such amendments and post-effective amendments to the applicable Registration Statement as may be necessary to keep the Registration Statement effective for the applicable period set forth in Section 2 or 3 hereof, as applicable, or such shorter period as will terminate when all Initial Securities covered by such Registration Statement have been sold; cause the Prospectus to be supplemented by any required Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424 under the Securities Act if such a filing is required, and to comply fully with the applicable provisions of Rules 424 and 430A under the Securities Act in a timely manner.

 

(iii)         advise the underwriter(s), if any, and selling Holders promptly and, if requested by such Persons, to confirm such advice in writing, (A) when the Prospectus or any Prospectus supplement or post-effective amendment has been filed, and, with respect to any Registration Statement or any post-effective amendment thereto, when the same has become effective, (B) of any request by the Commission for amendments to the Registration Statement or amendments or supplements to the Prospectus or for additional information relating thereto, (C) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement under the Securities Act or of the suspension by any state securities commission of the qualification of the Initial Securities for offering or sale in any jurisdiction, or the initiation of any proceeding for any of the preceding purposes or (D) of the existence of any fact or the happening of any event that makes any statement of a material fact made in the Registration Statement, the Prospectus, any amendment or supplement thereto, or any document incorporated by reference therein untrue, or that requires the making of any additions to or changes in the Registration Statement or the Prospectus in order to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made), not misleading. If at any time the Commission shall issue any stop order suspending the effectiveness of the Registration Statement, or any state securities commission or other regulatory authority shall issue an order suspending the qualification or exemption from qualification of the Initial Securities under state securities or blue sky laws, each of the Company and the Guarantors shall use its commercially reasonable efforts to obtain the withdrawal or lifting of such order at the earliest possible time;

 

(iv)        furnish without charge to each of the Initial Purchasers, each selling Holder named in any Shelf Registration Statement, and each of the underwriter(s), if any, before filing with the Commission, copies of any Shelf Registration Statement or any Prospectus included therein or any amendments or supplements to any such Registration Statement or Prospectus (including all documents incorporated by reference after the initial filing of such Shelf Registration Statement), which documents will be subject to the review and comment of such Holders and underwriter(s) in connection with such sale, if any, for a period of at least five Business Days, and the Company will not file any such Shelf Registration Statement or Prospectus or any amendment or supplement to any such Shelf Registration Statement or Prospectus (including all such documents incorporated by

 

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reference) to which an Initial Purchaser of Initial Securities covered by such Shelf Registration Statement or the underwriter(s), if any, shall make a reasonable objection in writing within five Business Days after the receipt thereof (such objection to be deemed timely made upon confirmation of telecopy transmission within such period). The objection of an Initial Purchaser or underwriter, if any, shall be deemed to be reasonable only if such Shelf Registration Statement, amendment, Prospectus or supplement, as applicable, as proposed to be filed, contains a material misstatement or omission. If such material misstatement or omission is corrected, such objection will cease to be considered reasonable for purposes of this clause (iv);

 

(v)         [Reserved]

 

(vi)        in the case of a Shelf Registration Statement, make available at reasonable times for inspection by the Initial Purchasers, the managing underwriter(s), if any, participating in any disposition pursuant to such Registration Statement and any attorney or accountant retained by such Initial Purchasers or any of the underwriter(s), all relevant financial and other records, pertinent corporate documents and properties of each of the Company and the Guarantors and cause the Company’s and the Guarantors’ officers, directors and employees to supply all relevant information reasonably requested by any such Holder, underwriter, attorney or accountant in connection with such Registration Statement or any post-effective amendment thereto subsequent to the filing thereof and prior to its effectiveness and to participate in meetings with investors to the extent requested by the managing underwriter(s), if any, in each case, to enable such persons to conduct a reasonable investigation within the meaning of Section 11 of the Securities Act; provided, however, that the foregoing inspection and information gathering shall be coordinated on behalf of the Initial Purchasers by one Initial Purchaser and on behalf of the other parties, by one counsel designated by and on behalf of such other parties; provided further, however, that the conduct of the foregoing inspection and information gathering shall be subject to the execution by all persons party to such inspection and information gathering of a reasonable confidentiality undertaking in customary form with respect to confidential and proprietary information of the Company;

 

(vii)       in the case of a Shelf Registration Statement, if requested by any selling Holders or the underwriter(s), if any, promptly incorporate in any Shelf Registration Statement or Prospectus, before it is filed, such information as such selling Holders and underwriter(s), if any, may reasonably request to have included therein, including, without limitation, information relating to the “Plan of Distribution” of the Initial Securities, information with respect to the principal amount of Initial Securities being sold to such underwriter(s), the purchase price being paid therefor and any other terms of the offering of the Initial Securities to be sold in such offering; and make all required filings of such Prospectus supplement or post-effective amendment as soon as practicable after the Company is notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment;

 

(viii)      use its commercially reasonable efforts to cause the Initial Securities covered by the Shelf Registration Statement to be rated with the appropriate rating

 

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agencies, if so requested by the Holders of a majority in aggregate principal amount of Securities covered thereby or the underwriter(s), if any;

 

(ix)        if not otherwise available on EDGAR, furnish to each Initial Purchaser, each selling Holder and each of the underwriter(s), if any, without charge, at least one copy of the Registration Statement, as first filed with the Commission, and of each amendment thereto, including financial statements and schedules, all documents incorporated by reference therein and all exhibits (including exhibits incorporated therein by reference);

 

(x)         deliver to each selling Holder and each of the underwriter(s), if any, without charge, as many copies of the Prospectus (including each preliminary prospectus) and any amendment or supplement thereto as such Persons reasonably may request; each of the Company and the Guarantors hereby consents, subject to the provisions of this Agreement, to the use of the Prospectus and any amendment or supplement thereto by each of the selling Holders and each of the underwriter(s), if any, in connection with the offering and the sale of the Initial Securities covered by the Prospectus or any amendment or supplement thereto;

 

(xi)        enter into such customary agreements (including an underwriting agreement), and make such customary representations and warranties, and take all such other actions in connection therewith in order to expedite or facilitate the disposition of the Initial Securities pursuant to any Shelf Registration Statement contemplated by this Agreement, all to such extent as may be reasonably requested by any Initial Purchaser or by any Holder of Initial Securities or underwriter in connection with any sale or resale pursuant to any Shelf Registration Statement contemplated by this Agreement; and whether or not an underwriting agreement is entered into and whether or not the registration is an Underwritten Registration, each of the Company and the Guarantors shall:

 

(A)              furnish to each Initial Purchaser, each selling Holder and each underwriter, if any, in such substance and scope as they may request and as are customarily made by issuers to underwriters in primary underwritten offerings, upon the effectiveness of the Shelf Registration Statement:

 

(1)        a certificate, dated the date of effectiveness of the Shelf Registration Statement signed by an officer of the Company and an officer or director of each of the Guarantors or its managing partner or trustee, as applicable, concerning such matters as such parties may reasonably request;

 

(2)        a customary opinion, dated the date of effectiveness of the Shelf Registration Statement of counsel for the Company and the Guarantors, concerning such matters as such parties may reasonably request, and in any event including a statement to the effect that such counsel has participated in conferences with officers and other representatives of the Company and the Guarantors, representatives of the

 

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independent public accountants for the Company and the Guarantors, representatives of the underwriter(s), if any, and counsel to the underwriter(s), if any, in connection with the preparation of such Registration Statement and the related Prospectus and have considered the matters required to be stated therein and the statements contained therein, although such counsel has not independently verified the accuracy, completeness or fairness of such statements; and that such counsel advises that, on the basis of the foregoing, no facts came to such counsel’s attention that caused such counsel to believe that the applicable Registration Statement, at the time such Registration Statement or any post-effective amendment thereto became effective contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading, or that the Prospectus contained in such Registration Statement as of its date contained an untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Such counsel may state further that such counsel assumes no responsibility for, and has not independently verified, the accuracy, completeness or fairness of the financial statements, notes and schedules and other financial data included in any Registration Statement contemplated by this Agreement or the related Prospectus;

 

(3)        a customary comfort letter, dated as of the date of effectiveness of the Shelf Registration Statement, and a “bring down comfort letter” from the Company’s independent public accountants, in the customary form and covering matters of the type customarily requested to be covered in comfort letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in the comfort letters delivered pursuant to Section 5(a) of the Purchase Agreement, without exception; and

 

(4)        letters, dated as of the date of effectiveness of the Shelf Registration Statement, and a “bring down letter,” from each of the Company’s independent reserves engineering evaluators, in the customary form and covering matters of the type customarily requested to be covered in such letters by underwriters in connection with primary underwritten offerings, and covering or affirming the matters set forth in the letters delivered pursuant to Section 5(h) of the Purchase Agreement, without exception; and

 

(B)            [Reserved];

 

(C)            deliver such other documents and certificates as may be reasonably requested by such parties to evidence compliance with Section 5(c)(xi)(A) hereof and with any customary conditions contained in the underwriting agreement or

 

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other agreement entered into by the Company or any of the Guarantors pursuant to this Section 5(c)(xi), if any.

 

(xii)       use its commercially reasonable efforts to prior to any public offering of Initial Securities, cooperate with the selling Holders, the underwriter(s), if any, and their respective counsel in connection with the registration and qualification of the Initial Securities under the state securities or blue sky laws of such jurisdictions as the selling Holders or underwriter(s), if any, may reasonably request and do any and all other acts or things necessary or advisable to enable the disposition in such jurisdictions of the Initial Securities covered by the Shelf Registration Statement; provided, however, that none of the Company nor the Guarantors shall be required to register or qualify as a foreign corporation where it is not then so qualified or to take any action that would subject it to the service of process in suits or to taxation in any jurisdiction where it is not then so subject;

 

(xiii)      shall issue, upon the request of any Holder of Initial Securities covered by the Shelf Registration Statement, Exchange Securities having an aggregate principal amount equal to the aggregate principal amount of Initial Securities surrendered to the Company by such Holder in exchange therefor or being sold by such Holder; such Exchange Securities to be registered in the name of such Holder or in the name of the purchaser(s) of such Securities, as the case may be; in return, the Initial Securities held by such Holder shall be surrendered to the Company for cancellation;

 

(xiv)      cooperate with the selling Holders and the underwriter(s), if any, to facilitate the timely preparation and delivery of certificates representing Initial Securities to be sold pursuant to any Registration Statement and not bearing any restrictive legends; and enable such Initial Securities to be in such denominations and registered in such names as the Holders or the underwriter(s), if any, may request at least two Business Days prior to any sale of Initial Securities made by such Holders or underwriter(s);

 

(xv)       [Reserved]

 

(xvi)      if any fact or event contemplated by Sections 5(c)(iii)(B) through (D) hereof shall exist or have occurred, prepare a supplement or post-effective amendment to the Registration Statement or related Prospectus or any document incorporated therein by reference or file any other required document so that, as thereafter delivered to the purchasers of Initial Securities, the Prospectus will not contain an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading;

 

(xvii)     provide a CUSIP number for all Securities not later than the effective date of the Registration Statement covering such Securities and provide the Trustee under the Indenture with printed certificates for such Securities which are in a form eligible for deposit with the Depository Trust Company and take all other reasonable action necessary to ensure that all such Securities are eligible for deposit with the Depository Trust Company;

 

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(xviii)    cooperate and assist in any filings required to be made with FINRA and in the performance of any due diligence investigation by any underwriter (including any “qualified independent underwriter”) that is required to be retained in accordance with the rules and regulations of the FINRA, subject to the provisions in Section 5(c)(iv);

 

(xix)      otherwise use its commercially reasonable efforts to comply in all material respects with all rules and regulations of the Commission to the extent and so long as they are applicable to the Exchange Offer or the Shelf Registration Statement and will make generally available to Holders (or otherwise provide in accordance with Section 11(a) of the Securities Act) an earnings statement satisfying the provisions of Section 11(a) of the Securities Act, no later than 45 days after the end of a 12-month period (or 90 days, if such period is a fiscal year) beginning with the first month of the Company’s first fiscal quarter commencing after the effective date of the Registration Statement, which statement shall cover such 12-month period;

 

(xx)       use its commercially reasonable efforts to cause the Indenture to be qualified under the Trust Indenture Act not later than the effective date of the first Registration Statement required by this Agreement, and, in connection therewith, cooperate with the Trustee and the Holders of Securities to effect such changes to the Indenture as may be required for such Indenture to be so qualified in accordance with the terms of the Trust Indenture Act; and to execute and use its commercially reasonable efforts to cause the Trustee to execute, all documents that may be required to effect such changes and all other forms and documents required to be filed with the Commission to enable such Indenture to be so qualified in a timely manner;

 

(xxi)      use its commercially reasonable efforts to cause all Securities covered by the Registration Statement to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed if requested by the Holders of a majority in aggregate principal amount of Initial Securities or the managing underwriter(s), if any; and

 

(xxii)     [Reserved]

 

Each Holder agrees by acquisition of an Initial Security that, upon receipt of any notice from the Company of the existence of any fact of the kind described in Sections 5(c)(iii)(B) through (D) hereof, such Holder will forthwith discontinue disposition of Initial Securities pursuant to the applicable Registration Statement (and keep confidential the cause of such notice) until such Holder’s receipt of the copies of the supplemented or amended Prospectus contemplated by Section 5(c)(xvi) hereof, or until it is advised in writing (the “Advice”) by the Company that the use of the Prospectus may be resumed, and has received copies of any additional or supplemental filings that are incorporated by reference in the Prospectus. If so directed by the Company, each Holder will deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the Prospectus covering such Initial Securities that was current at the time of receipt of such notice. In the event the Company shall give any such notice, the time period regarding the effectiveness of such Registration Statement set forth in Section 2 or 3 hereof, as applicable, shall be extended by the number of days during the period from and including the date of the giving of such notice

 

14

 

pursuant to Sections 5(c)(iii)(B) through (D) hereof to and including the date when each selling Holder covered by such Registration Statement shall have received the copies of the supplemented or amended Prospectus contemplated by Section 5(c)(xvi) hereof or shall have received the Advice; provided, however, except as provided in Section 4 that no such extension shall be taken into account in determining whether Additional Interest is due pursuant to Section 4 hereof or the amount of such Additional Interest, it being agreed that the Company’s option to suspend use of a Registration Statement pursuant to this paragraph shall be treated as a Registration Default for purposes of Section 4 hereot.

 

SECTION 6.           Registration Expenses.

 

(a)             All expenses incident to the Company’s and the Guarantors’ performance of or compliance with this Agreement will be borne by the Company and the Guarantors, jointly and severally, regardless of whether a Registration Statement becomes effective, including, without limitation: (i) all registration and filing fees and expenses (including filings made by any Initial Purchaser or Holder with FINRA (and, if applicable, the fees and expenses of any “qualified independent underwriter” and their counsel that may be required by the rules and regulations of FINRA)); (ii) all fees and expenses of compliance with federal securities and state securities or blue sky laws; (iii) all expenses of printing (including printing certificates for the Exchange Securities to be issued in the Exchange Offer and printing of Prospectuses), messenger and delivery services and telephone; (iv) all fees and disbursements relating to the qualification of the Indenture under applicable securities laws; (v) the fees and disbursements of the Trustee and its counsel; (vi) all application and filing fees in connection with listing the Exchange Securities on a securities exchange or automated quotation system pursuant to the requirements thereof; and (vii) all fees and disbursements of independent certified public accountants of the Company and the Guarantors (including the expenses of any special audit and comfort letters required by or incident to such performance).

 

Each of the Company and the Guarantors will, in any event, bear their internal expenses (including, without limitation, all salaries and expenses of their officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any Person, including special experts, retained by the Company or the Guarantors.

 

(b)             In connection with any Shelf Registration Statement required by this Agreement, the Company and the Guarantors, jointly and severally, will reimburse the Initial Purchasers and the Holders of Initial Securities registered pursuant to the Shelf Registration Statement for the reasonable and documented fees and disbursements of not more than one counsel, who shall be Shearman & Sterling LLP or such other counsel as may be chosen by the Holders of a majority in principal amount of the Initial Securities for whose benefit such Registration Statement is being prepared.

 

SECTION 7.           Indemnification.

 

(a)             The Company and the Guarantors, jointly and severally, agree to indemnify and hold harmless (i) each Holder and (ii) each Person, if any, who controls (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) any Holder (any of the Persons referred to in this clause (ii) being hereinafter referred to as a “controlling person”) and

 

15

 

(iii) the respective officers, directors, partners, employees, representatives and agents of any Holder or any controlling person (any Person referred to in clause (i), (ii) or (iii) may hereinafter be referred to as an “Indemnified Holder”), to the fullest extent lawful, from and against any and all losses, claims, damages, liabilities, judgments, actions and expenses (including, without limitation, and as incurred, reimbursement of all reasonable costs of investigating, preparing, pursuing, settling, compromising, paying or defending any claim or action, or any investigation or proceeding by any governmental agency or body, commenced or threatened, including (subject to the provisions of this Section 7) the reasonable fees and expenses of counsel to any Indemnified Holder), joint or several, directly or indirectly caused by, related to, based upon, arising out of or in connection with (x) any untrue statement or alleged untrue statement of a material fact contained in any Registration Statement covered by Clause 4 (or any amendment or supplement thereto), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and (y) any untrue statement or alleged untrue statement of a material fact contained in any Prospectus (or any amendment or supplement thereto), any Free Writing Prospectus used in violation of this Agreement or any “issuer information” filed, or required to be filed pursuant to Rule 433(d) under the Securities Act (each, an “Issuer FWP”), or any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, except insofar as such losses, claims, damages, liabilities or expenses are caused by an untrue statement or omission or alleged untrue statement or omission that is made in reliance upon and in conformity with information relating to any of the Holders furnished in writing to the Company by any of the Holders expressly for use therein. The indemnity agreement contained in this subsection (a) shall not inure to the benefit of any Holder or Broker-Dealer from whom the person asserting any such losses, claims, damages or liabilities purchased the Securities concerned, to the extent that a prospectus or amendment or supplement thereto relating to such Securities was required to be delivered (including through satisfaction of the conditions of Commission Rule 172) by such Holder or Broker-Dealer under the Securities Act in connection with such purchase and any such loss, claim, damage or liability of such Holder or Broker-Dealer results from the fact that there was not sent or given to such person, at or prior to the time of the sale of such Securities to such person, an amended or supplemented prospectus or, an Issuer FWP correcting the applicable untrue statement or omission or alleged untrue statement or omission if the Company had previously furnished copies thereof to such Holder or Broker-Dealer. This indemnity agreement shall be in addition to any liability which the Company or any of the Guarantors may otherwise have.

 

In case any action or proceeding (including any governmental or regulatory investigation or proceeding) shall be brought or asserted against any of the Indemnified Holders with respect to which indemnity may be sought against the Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder controlled by such controlling person) shall promptly notify the Company and the Guarantors in writing; provided, however, that the failure to give such notice shall not relieve any of the Company or the Guarantors of their obligations pursuant to this Agreement unless such failure results in the forfeiture of substantial rights. Such Indemnified Holder shall have the right to employ their own counsel in any such action and the fees and expenses of such counsel shall be paid, as incurred, by the Company and the Guarantors only if (i) the Indemnified Holder and the Company and the Guarantors shall have mutually agreed;

 

16

 

(ii) the Indemnified Holder shall have reasonably concluded that there may be legal defenses available to it that are different from or in addition to those available to the Company and the Guarantors; or (iii) the named parties in any such proceeding (including any impleaded parties) include both the Company and Guarantors and the Indemnified Holder and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. The Company and the Guarantors shall not, in connection with any one such action or proceeding or separate but substantially similar or related actions or proceedings in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) at any time for such Indemnified Holders, which firm shall be designated by the Holders. The Company and the Guarantors shall be liable for any settlement of any such action or proceeding effected with the Company’s and the Guarantors’ prior written consent, which consent shall not be withheld unreasonably, and each of the Company and the Guarantors agrees to indemnify and hold harmless any Indemnified Holder from and against any loss, claim, damage, liability or expense by reason of any settlement of any action effected with the written consent of the Company and the Guarantors. The Company and the Guarantors shall not, without the prior written consent of each Indemnified Holder, settle or compromise or consent to the entry of judgment in or otherwise seek to terminate any pending or threatened action, claim, litigation or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not any Indemnified Holder is a party thereto), unless such settlement, compromise, consent or termination includes an unconditional release of each Indemnified Holder from all liability arising out of such action, claim, litigation or proceeding. No indemnifying party shall be liable for any settlement or compromise of, or consent to the entry of judgment with respect to, any such action or claim effected without its consent.

 

(b)         Each Holder of Initial Securities agrees, severally and not jointly, to indemnify and hold harmless the Company, the Guarantors and their respective directors, officers, employees and agents and any Person controlling (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) the Company or any of the Guarantors, and the respective officers, directors, partners, employees, representatives and agents of each such Person, to the same extent as the foregoing indemnity from the Company and the Guarantors to each of the Indemnified Holders, but only with respect to claims and actions based on information relating to such Holder furnished in writing by such Holder expressly for use in any Registration Statement. In case any action or proceeding shall be brought against the Company, the Guarantors or their respective directors or officers or any such controlling person in respect of which indemnity may be sought against a Holder of Initial Securities, such Holder shall have the rights and duties given the Company and the Guarantors, and the Company, the Guarantors, their respective directors and officers and such controlling person shall have the rights and duties given to each Holder by the preceding paragraph.

 

(c)          If the indemnification provided for in this Section 7 is unavailable to an indemnified party under Section 7(a) or (b) hereof (other than by reason of exceptions provided in those Sections) in respect of any losses, claims, damages, liabilities, judgments, actions or expenses referred to therein, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities or expenses in such proportion as is

 

17

 

appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one hand, and the Holders, on the other hand, from the Initial Placement (which in the case of the Company and the Guarantors shall be deemed to be equal to the total net proceeds (after excluding any discounts received by the Initial Purchasers) to the Company and the Guarantors from the Initial Placement), or if such allocation is not permitted by applicable law, the relative fault of the Company and the Guarantors, on the one hand, and the Holders, on the other hand, in connection with the statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as well as any other relevant equitable considerations. The relative fault of the Company on the one hand and of the Indemnified Holder on the other shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or any of the Guarantors, on the one hand, or the Indemnified Holders, on the other hand, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The amount paid or payable by a party as a result of the losses, claims, damages, liabilities and expenses referred to above shall be deemed to include, subject to the limitations set forth in the second paragraph of Section 7(a) hereof, any legal or other fees or expenses reasonably incurred by such party in connection with investigating or defending any action or claim.

 

The Company, the Guarantors and each Holder of Initial Securities agree that it would not be just and equitable if contribution pursuant to this Section 7(c) were determined by pro rata allocation (even if the Holders were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, none of the Holders (and its related Indemnified Holders) shall be required to contribute, in the aggregate, any amount in excess of the amount by which the total discount received by such Holder from the sale of the Initial Securities exceeds the amount of any damages which such Holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to indemnification contribution from any Person who was not guilty of such fraudulent misrepresentation. The Holders’ obligations to contribute pursuant to this Section 7(c) are several in proportion to the respective principal amount of Initial Securities held by each of the Holders hereunder and not joint.

 

SECTION 8.         Rule 144A. Each of the Company and the Guarantors hereby agrees with each Holder, for so long as any Initial Securities remain outstanding, to make available to any Holder or beneficial owner of Initial Securities in connection with any sale thereof and any prospective purchaser of such Initial Securities from such Holder or beneficial owner, the information required by Rule 144A(d)(4) under the Securities Act in order to permit resales of such Initial Securities pursuant to Rule 144A under the Securities Act.

 

18

 

SECTION 9.         Participation in Underwritten Registrations. No Holder may participate in any Underwritten Registration hereunder unless such Holder (a) agrees to sell such Holder’s Initial Securities on the basis provided in any underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements and (b) completes and executes all reasonable questionnaires, powers of attorney, indemnities, underwriting agreements, lock-up letters and other documents required under the terms of such underwriting arrangements.

 

SECTION 10.       Selection of Underwriters. The Holders of Initial Securities covered by the Shelf Registration Statement who desire to do so may sell such Initial Securities in an Underwritten Offering. In any such Underwritten Offering, the investment banker(s) and managing underwriter(s) that will administer such offering will be selected by the Holders of a majority in aggregate principal amount of the Initial Securities included in such offering; provided, however, that such investment banker(s) and managing underwriter(s) must be reasonably satisfactory to the Company.

 

SECTION 11.       Miscellaneous.

 

(a)           Remedies. Each of the Company and the Guarantors hereby agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agree to waive the defense in any action for specific performance that a remedy at law would be adequate. The Initial Purchasers and the Holders acknowledge and agree that the Additional Interest provided by Section 3 of this Agreement shall be the exclusive monetary remedy available to Holders for any Registration Default.

 

(b)           No Inconsistent Agreements. Each of the Company and the Guarantors will not on or after the date of this Agreement enter into any agreement with respect to their securities that is inconsistent with the rights granted to the Holders in this Agreement or otherwise conflicts with the provisions hereof. The rights granted to the Holders hereunder do not in any way conflict with and are not inconsistent with the rights granted to the holders of the Company’s or any of the Guarantors’ securities under any agreement in effect on the date hereof.

 

(c)           [Reserved]

 

(d)           Amendments and Waivers. The provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to or departures from the provisions hereof may not be given unless the Company has (i) in the case of Section 4 hereof and this Section 11(d)(i), obtained the written consent of Holders of all outstanding Initial Securities and (ii) in the case of all other provisions hereof, obtained the written consent of Holders of a majority of the outstanding principal amount of Initial Securities (excluding any Initial Securities held by the Company or its Affiliates). Notwithstanding the foregoing, a waiver or consent to departure from the provisions hereof that relates exclusively to the rights of Holders whose securities are being tendered pursuant to the Exchange Offer and that does not affect directly or indirectly the rights of other Holders whose securities are not being tendered pursuant to such Exchange Offer may be given by the Holders of a majority of the outstanding principal amount of Initial Securities being tendered or registered; provided, however, that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser

 

19

 

hereunder, the Company shall obtain the written consent of each such Initial Purchaser with respect to which such amendment, qualification, supplement, waiver, consent or departure is to be effective.

 

(e)           Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail (registered or certified, return receipt requested), telex, telecopier, or air courier guaranteeing overnight delivery:

 

(i)            if to a Holder, at the address set forth on the records of the Registrar under the Indenture, with a copy to the Registrar under the Indenture; and

 

(ii)           if to the Company:

 

Harvest Operations Corp.

Suite 1900, 330 5th Avenue S.W.

Calgary, Alberta

Canada T2P OL4

Fax: 403-265-3490

Attention: Dean Beacon

 

with a copy to:

 

Paul, Weiss, Rifkind, Wharton & Garrison LLP

1285 Avenue of the Americas

New York, NY 10019

Facsimile: (212) 492-0078

Attention: Andrew Foley

 

All such notices and communications shall be deemed to have been duly given: at the time delivered by hand, if personally delivered; five Business Days after being deposited in the mail, postage prepaid, if mailed; when answered back, if telexed; when receipt acknowledged, if telecopied; and on the next Business Day, if timely delivered to an air courier guaranteeing overnight delivery.

 

Copies of all such notices, demands or other communications shall be concurrently delivered by the Person giving the same to the Trustee at the address specified in the Indenture.

 

(f)            Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without limitation, and without the need for an express assignment, subsequent Holders of Initial Securities; provided, however, that this Agreement shall not inure to the benefit of or be binding upon a successor or assign of a Holder unless and to the extent such successor or assign acquired Initial Securities from such Holder.

 

20

 

(g)           Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.

 

(h)           Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

(i)            Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.

 

(j)            Submission to Jurisdiction; Agent for Service; Waiver of Immunities. Each of the Company and the Guarantors irrevocably (i) agrees that any legal suit, action or proceeding against the Company or any Guarantor brought by any Holder or by any person who controls any Holder arising out of or based upon this Agreement or the transactions contemplated thereby may be instituted in any federal or state court located in the City and County of New York (a “New York Court”), (ii) waives, to the fullest extent it may effectively do so, any objection which it may now or hereafter have to the laying of venue of any such proceeding and (iii) submits to the non-exclusive jurisdiction of such courts in any such suit, action or proceeding. Each of the Company and the Guarantors has appointed CT Corporation System, New York, New York, as its authorized agent (the “Authorized Agent”) upon whom process may be served in any such action arising out of or based on this Agreement or the transactions contemplated thereby which may be instituted in any New York Court by any Initial Purchaser or by any person who controls any Initial Purchaser, expressly consents to the jurisdiction of any such court in respect of any such action, and waives any other requirements of or objections to personal jurisdiction with respect thereto. Such appointment shall be irrevocable. Each of the Company and the Guarantors represents and warrants that the Authorized Agent has agreed to act as such agent for service of process and agrees to take any and all action, including the filing of any and all documents and instruments, that may be necessary to continue such appointment in full force and effect as aforesaid. Service of process upon the Authorized Agent and written notice of such service to each of the Company and the Guarantors shall be deemed, in every respect, effective service of process upon the Company or any Guarantor, as applicable. To the extent that the Company or any Guarantor has acquired or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service of notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or their property, it hereby irrevocably waives such immunity in respect of their obligations under the above-referenced documents, to the extent permitted by law. The provisions of this clause (i) shall survive any termination of this Agreement, in whole or in part.

 

(k)           Judgment Currency. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder into any currency other than U.S. dollars, the parties hereto agree, to the fullest extent that they may effectively do so, that the rate of exchange used shall be the rate at which in accordance with normal banking procedures the Initial Purchasers could purchase U.S. dollars with such other currency in The City of New York on the business day preceding that on which final judgment is given. The obligations of the Company and each

 

21

 

Guarantor in respect of any sum due from them to any Initial Purchaser shall, notwithstanding any judgment in any currency other than U.S. dollars, not be discharged until the first business day, following receipt by such Initial Purchaser of any sum adjudged to be so due in such other currency, on which (and only to the extent that) such Initial Purchaser may in accordance with normal banking procedures purchase U.S. dollars with such other currency; if the U.S. dollars so purchased are less than the sum originally due to such Initial Purchaser hereunder, the Company and each Guarantor agrees, as a separate obligation and notwithstanding any such judgment, to indemnify such Initial Purchaser against such loss. If the U.S. dollars so purchased are greater than the sum originally due to such Initial Purchaser hereunder, such Initial Purchaser agrees to pay to the Company and the Guarantors (but without duplication) an amount equal to the excess of the U.S. dollars so purchased over the sum originally due to such Initial Purchaser hereunder.

 

(l)            Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions contained herein shall not be affected or impaired thereby.

 

(m)          Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein. There are no restrictions, promises, warranties or undertakings, other than those set forth or referred to herein with respect to the registration rights granted by the Company with respect to the Initial Securities. This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

(n)           Additional Guarantors. In the event that any other entity becomes a Guarantor of the Initial Securities pursuant to the terms of the Indenture, the Company shall cause such additional Guarantor to become a party to this Agreement.

 

(o)           The Company and the Guarantors shall not, without the prior consent of the Initial Purchasers, and each Initial Purchaser, Holder of the Securities and Broker-Dealer shall not, without the prior written consent of the Company, make any offer relating to the Securities that would constitute a “free writing prospectus”, as defined in Commission Rule 405.

 

22

 

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.

 

	
 
    	
Very truly yours,
    
	
 
    	
 
    
	
 
    	
HARVEST OPERATIONS CORP.
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Zahary
    
	
 
    	
 
    	
Name:
    	
John Zahary
    
	
 
    	
 
    	
Title:
    	
President and CEO
    
	
 
    	
 
    	
 
    
	
 
    	
1496965 Alberta Ltd.,
    
	
 
    	
 
    	
in its capacity as trustee of
    
	
 
    	
 
    	
HARVEST  BREEZE   TRUST NO. 1
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Zahary
    
	
 
    	
 
    	
Name:
    	
John Zahary
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
1496965 Alberta Ltd.,
    
	
 
    	
 
    	
in its capacity as trustee of
    
	
 
    	
 
    	
HARVEST BREEZE TRUST NO. 2
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Zahary
    
	
 
    	
 
    	
Name:
    	
John Zahary
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
1496965 Alberta Ltd.,
    
	
 
    	
 
    	
in its capacity as trustee of
    
	
 
    	
 
    	
Harvest Breeze Trust No. 2,
    
	
 
    	
 
    	
as managing partner of
    
	
 
    	
 
    	
BREEZE RESOURCES PARTNERSHIP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Zahary
    
	
 
    	
 
    	
Name:
    	
John Zahary
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
1496965 Alberta Ltd.,
    
	
 
    	
 
    	
in its capacity as trustee of 
    
	
 
    	
 
    	
Harvest Breeze Trust No. 2, 
    
	
 
    	
 
    	
as managing partner of
    
	
 
    	
 
    	
HAY RIVER PARTNERSHIP
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Zahary
    
	
 
    	
 
    	
Name:
    	
John Zahary
    
	
 
    	
 
    	
Title:
    	
Director
    
	
 
    	
 
    
	
 
    	
NORTH ATLANTIC REFINING LIMITED,
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Zahary
    
	
 
    	
 
    	
Name:
    	
John Zahary
    
	
 
    	
 
    	
Title:
    	
Chairman of the Board and Director
    

 

[Registration Rights Agreement]

 

 

	
 
    	
1496965 ALBERTA LTD. 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/ John Zahary
    
	
 
    	
 
    	
Name:
    	
John Zahary
    
	
 
    	
 
    	
Title:
    	
Director
    

 

[Registration Rights Agreement]

 

 

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:

 

	
BANC OF AMERICA SECURITIES LLC 
    	
 
    
	
HSBC SECURITIES (USA) INC. 
    	
 
    
	
 
    	
Acting on behalf of itself
    	
 
    
	
 
    	
and as the Representatives of
    	
 
    
	
 
    	
the several Initial Purchasers
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
Banc of America Securities LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/ J. Lex Maultsby 
    	
 
    
	
 
    	
 
    	
Name: 
    	
J. Lex Maultsby 
    	
 
    
	
 
    	
 
    	
Title:
    	
Managing Director
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    
	
HSBC Securities (USA) Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    

 

[Signature Page to Registration Rights Agreement]

 

 

The foregoing Registration Rights Agreement is hereby confirmed and accepted as of the date first above written:

 

	
BANC OF AMERICA SECURITIES LLC
    	
 
    
	
HSBC SECURITIES (USA) INC.
    	
 
    
	
 
    	
Acting on behalf of itself
    	
 
    
	
 
    	
and as the Representatives of
    	
 
    
	
 
    	
the several Initial Purchasers
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Banc of America Securities LLC
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    	
 
    
	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
HSBC Securities (USA) Inc.
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By
    	
/s/ Diane M. Kenna
    	
 
    
	
 
    	
 
    	
Name:
    	
Diane M. Kenna
    	
 
    
	
 
    	
 
    	
Title:
    	
Senior Vice President
    	
 
    

 

[Signature Page to Registration Rights Agreement]

 

 

Schedule A

 

HARVEST BREEZE TRUST NO. 1

HARVEST BREEZE TRUST NO. 2

BREEZE RESOURCES PARTNERSHIP

HAY RIVER PARTNERSHIP

NORTH ATLANTIC REFINING LIMITED 

1496965 ALBERTA LTD.Exhibit 10.1 Asset Acquisition Agreement

ASSET ACQUISITION AGREEMENT

by and between

DEAL A DAY GROUP CORP.

&

RICH MEDIA CORP.

Dated as of November 4, 2011

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TABLE OF CONTENTS

			
	 
	 
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	ARTICLE I ACQUISITION OF ASSETS AND ACQUISITION CONSIDERATION

	 

	1.1

	Acquisition of Assets

	3

	1.2

	Assumption of Liabilities.

	4

	1.3

	Acquisition Consideration

	4

	1.4

	Restriction on the Shares

	4

	ARTICLE II CLOSING; DELIVERY

	 

	2.1

	Closing

	5

	2.2

	Delivery

	5

	ARTICLE III REPRESENTATIONS AND WARRANTIES OF RMC

	 

	3.1

	Organization, Power, Authority, and Good Standing.

	5

	3.2

	Authorization, Execution, Enforceability and No Conflicts.

	5

	3.3

	Good Title, Sufficiency and Condition of Assets

	6

	3.4

	Compliance with Laws

	6

	3.5

	Intellectual Property.

	6

	3.6

	Litigation and Other Proceedings

	6

	3.7

	Brokers’ Fees

	6

	3.8

	Foreign Corrupt Practices Act

	7

	3.9

	Disclosure

	7

	3.10

	Investment Intention; No Resales

	7

	3.11

	Investment Experience

	7

	ARTICLE IV REPRESENTATIONS AND WARRANTIES OF DAD GROUP

	 

	4.1

	Organization; Good Standing

	7

	4.2

	Valid Issuance of the Shares

	7

	4.3

	Authorization, Execution, Enforceability and No Conflicts.

	7

	4.4

	Compliance with Other Instruments, Laws and Orders

	8

	4.5

	Litigation and Other Proceedings

	8

	4.6

	Permits

	8

	4.7

	Offering

	8

	ARTICLE V COVENANTS OF RMC PRIOR TO CLOSING 

	 

	5.1

	Access and Investigation

	8

	5.2

	Operation of the Business of RMC

	8

	5.3

	Required Approvals

	8

	5.4

	Notification

	8

	5.5

	No Negotiation

	9

	5.6

	Public Announcements

	9

	ARTICLE VI COVENANTS OF DAD GROUP PRIOR TO CLOSING

	 

	6.1

	Required Approvals

	9

	6.2

	Public Announcements

	9

	6.3

	No Solicitation

	9

	ARTICLE VII CONDITIONS PRECEDENT TO DAD GROUP’S OBLIGATION TO CLOSE

	 

	7.1

	Accuracy of Representations

	9

	7.2

	RMC’s Performance

	9

	7.3

	Consents

	9

	7.4

	No Proceedings

	9

	7.5

	No Conflict

	9

	ARTICLE VIII CONDITIONS PRECEDENT TO RMC PARTIES’ OBLIGATION TO CLOSE

	 

	8.1

	Accuracy of Representations

	10

	8.2

	DAD Group’s Performance

	10

	8.3

	No Conflict

	10

	ARTICLE IX TERMINATION

	 

	9.1

	Termination Events

	10

	9.2

	Effect of Termination

	10

	ARTICLE X POST-CLOSING COVENANTS

	 

	10.1

	Mail Received After Closing; Websites and Domain Names

	10

	10.2

	Assistance in Proceedings

	10

	10.3

	Missing Consents.

	10

	10.4

	Further Assurances

	11

	ARTICLE XII MISCELLANEOUS

	 

	11.1

	Expenses

	11

	11.2

	Successors and Assigns

	11

	11.3

	Entire Agreement

	11

	11.4

	Notices

	11

	11.5

	Amendments, Modifications and Waivers

	12

	11.6

	Governing Law; Disputes; Required Consent to Jurisdiction

	12

	11.7

	Extension; Waiver

	12

	11.8

	Severability

	12

	11.9

	Independence of Agreements, Covenants, Representations and Warranties

	12

	11.10

	Counterparts; Facsimile Signatures

	12

	11.11

	No Strict Construction

	12

	ARTICLE XIII DEFINED TERMS

	 

	12.1

	Defined Terms

	13

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This ASSET ACQUISITION AGREEMENT (“Agreement”) is dated as of November 4, 2011, by and between Deal A Day Group Corp., (f.k.a. Avisio, Inc.) a Nevada corporation (“DAD Group”) and Rich Media Corp., of Daechi 4 Dong 919-33, Gangnam Gu, Seoul, Korea (“RMC”). DAD Group and RMC shall hereinafter be referred to individually as a “Party” and collectively as the “Parties.”

RECITALS

WHEREAS, RMC owns various online marketing and media websites, including social media accounts operating in the online group buying and marketing sector (the “Business”); and

WHEREAS, RMC wishes sell to DAD Group, and DAD Group wishes to acquire and purchase, all of the RMC’s assets related to the Business of on the terms and subject to the conditions hereinafter set forth; and 

WHEREAS, this Agreement contemplates a transaction in which DAD Group will acquire substantially all of the assets owned by RMC used in the operation of the Business, in return for consideration consisting of cash payments and the issuance of restricted shares of DAD Group’s common stock as set forth in Section 1.3(a) below; and, 

WHEREAS, RMC represents that its current officers, managers and employees shall use reasonable efforts to continue the ongoing operations and maintenance of the Assets following the Closing of this Agreement. 

AGREEMENT

NOW, THEREFORE, in consideration of the mutual covenants and promises contained herein and for other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the Parties hereto agree as follows (certain defined terms are set forth in ARTICLE XII):

ARTICLE I

ACQUISITION OF ASSETS AND ACQUISITION CONSIDERATION

1.1

Acquisition of Assets.  Upon the terms and subject to the conditions of this Agreement, on the Closing Date (as defined below), RMC shall contribute, sell, assign, transfer and deliver (or cause to be sold, assigned, transferred and delivered), and DAD Group shall purchase and acquire, free and clear of all Encumbrances, all of RMC’s rights, titles and interests in and to RMC’s assets described below (collectively, the “Assets”):

(a)

Web Presence. Those URLs, domains, websites and social media outlets used in the connection with the Business and any and all email addresses based on such URLs, which are specifically described and set forth on Schedule 1.1(a); 

(b)

Marketing/Branding Materials & Coding.  (i) All interests of RMC’s assets, consisting of Intellectual Property, Artwork, Logos, Graphics, (ii) all coding and associated rights used, employed or otherwise related to the operations and functionality of those domains, URLs and websites used in connection with the Business, all of which items in clauses (i) and (ii) are specifically set forth on Schedule 1.1(b);

(c)

 Marks. Those Marks of RMC used in the operation of the Business, which are specifically described and set forth on Schedule 1.1(c); 

(d)

Contracts.  All rights under any Contracts listed or described on Schedule 1.1(d) and all amendments, supplements or modifications thereto (collectively, the “Assumed Contracts”);

(e)

Books and Records.  The Books and Records; provided, however, that RMC may retain one archival copy of the Books and Records; 

(f)

Goodwill. The goodwill related to the ownership, use, discharge, exploitation or disposition of the Assets described in the other subclauses of this Section 1.1; and, 

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(g)

Trade Secret & Know-How. The description of the Assets, in this Section 1.1 shall include, without limitation, any and all trade secrets, and "know-how" relating to the Business known to RMC, and all other intangible assets, in RMC’s possession or that may be reasonably acquired by RMC relating to all customer lists, vendor and supplier lists and any other proprietary information relating to the Business;

1.2

Assumption of Liabilities.  Notwithstanding Section 1.1 above, DAD Group shall have no responsibility for any of the RMC’s obligations (including any leases, product warranties, purchase orders and liabilities of any type, kind or nature), whether fixed, accrued, contingent or otherwise, and whether arising in contract, in tort, by violation of law, by operation of law, or otherwise, and all such obligations shall remain with the RMC and are herein referred to as the “Excluded Liabilities.”

1.3

Acquisition Consideration. The total acquisition consideration to RMC in exchange for the Assets (the “Acquisition Consideration”) shall be an amount equal to US $400,000 consisting of the following:

(a)

DAD Group shall pay an amount equal to US $250,000 (the “Closing Cash Amount”) to RMC at the Closing by wire transfer of immediately available United States funds, payable as follows:

(i)

$25,000 immediately upon the Closing; 

(ii)

$25,000 upon the 6 month anniversary of the Closing Date; and, 

(iii)

$200,000 upon the one year anniversary of the Closing Date. 

(b)

DAD Group shall issue to RMC on the Closing Date 1,500,000 post-consolidated shares of DAD Group’s restricted common stock, (the “Shares”). The Parties acknowledge and agree that for purposes of the Acquisition Consideration, the Shares shall have a value of US $0.10 per share.

1.4

Restrictions on the Shares. RMC hereby agrees and acknowledges that:

(a)

The certificates evidencing the Shares issued to RMC shall bear the following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (2) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED.”

 

(b)

The certificates representing such Shares, issued in transfer thereof, will also bear any other legend required under any applicable law, including, without limitation, any U.S. state corporate and state securities law, or contract.

(c)

RMC shall not transfer any or all of the Shares pursuant to Rule 144, under the Securities Act, Regulation S or absent an effective registration statement under the Securities Act and applicable state securities law covering the disposition of the Shares, without first providing DAD Group with an opinion of counsel (which counsel and opinion are reasonably satisfactory to DAD Group) to the effect that such transfer will be made in compliance with Rule 144, under the Securities Act, Regulation S or will be exempt from the registration and the prospectus delivery requirements of the Securities Act and the registration or qualification requirements of any applicable U.S. state securities laws.

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ARTICLE II

CLOSING; DELIVERY

2.1

Closing    The closing of the Transactions (the “Closing”) shall be consummated on November 4, 2011 (the “Closing Date”) at the offices of Carrillo Huettel, LLP, 3033 Fifth Ave. Suite 400, San Diego, CA 92103, or at such other date, time and place as shall be mutually agreed upon by DAD Group and RMC (which may include virtual closing through the electronic or facsimile exchange of documents); provided, that the conditions set forth in ARTICLE VII and ARTICLE VIII have been satisfied or waived (other than conditions that by their terms are to be satisfied at the Closing).  The effective time of the Closing shall be 11:59 PM Pacific time on the Closing Date (the “Effective Time”).

2.2

Delivery   At the Closing or as soon as practical following the Closing:

(a)

RMC will deliver to DAD Group (in each case, if applicable, duly executed by RMC):

(i)

title to and possession of the Assets, free and clear of all Encumbrances and evidence to the effect of the foregoing that is reasonably satisfactory to DAD Group;

(ii)

the Required Consents; 

(iii)

assignment documents in form reasonably acceptable to DAD Group for the transfer of the Marks and registrations of the URLs described in Section 1.1(a); and,

(iv)

a certificate of an officer of RMC that all representations and warranties made by RMC in the Documents are true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, which shall be true and correct in all respects) on and as of the Closing Date (except those representations and warranties which are made expressly only as of another date, which are true and correct as of such date).

(b)

DAD Group will deliver to RMC (in each case, if applicable, duly executed by DAD Group):

(i)

the Closing Cash Amount;

(ii)

a Certificate representing Shares shall be delivered a soon as practical following the execution of this Agreement; and,

(iii)

a certificate of an officer of DAD Group that all representations and warranties made by DAD Group in the Documents are true and correct in all material respects (except for those representations and warranties which are qualified as to materiality, which shall be true and correct in all respects) on and as of the Closing Date (except those representations and warranties which are made expressly only as of another date, which are true and correct as of such date).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF RMC

As a material inducement to DAD Group to enter into and perform its obligations under this Agreement, RMC represents and warrants to DAD Group that the statements contained in this Section III are correct and complete as of the date hereof and will be correct and complete as of the Closing Date, as if made on the Closing Date.

3.1

Organization, Power, Authority, and Good Standing. RMC is duly organized, validly existing and in good standing under the Laws of the jurisdiction of its organization.  RMC has all requisite power and authority to own, lease and operate the Assets and to carry on the Business as presently conducted.  

3.2

Authorization, Execution, Enforceability and No Conflicts.

(a)

RMC has all requisite power and authority to execute and deliver each Document to which it is a party and any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of each such Document and to perform and consummate the Transactions.  This Agreement and each other Document to which RMC is a party, and the performance of its respective obligations hereunder and thereunder, have been duly and validly authorized by all requisite action on the part of RMC, and each Document to which RMC is a party has been duly and validly executed and delivered by RMC, and is, or upon its execution and delivery will be (assuming the valid authorization, execution and delivery of such Document by the other counterparties thereto), Enforceable against RMC.

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(B)

The execution, delivery and performance by RMC of this Agreement and all other Documents to which it is a party, and the consummation of the Transactions, will not (i) except as would not have a Material Adverse Effect, violate any Law applicable to RMC or any of the Assets or (ii) conflict with, or result in any breach of, any of the terms, conditions or provisions of, or constitute (with or without due notice or lapse of time, or both) a default or give rise to any right of termination, cancellation or acceleration, or result in the creation of any Encumbrance (1) upon any of the Assets or (2) under any provision of (A) the Fundamental Documents of RMC, (B) any Permit of RMC relating to the ownership, use, discharge, exploitation or disposition of the Assets or (C) any other Contracts relating to the ownership, use, discharge, exploitation or disposition of the Assets or Assumed Liabilities to which RMC is a party or by which the Assets may be bound.  RMC has neither been nor is required to give any notice to, or make any filing with, any Governmental Authority or any other Person, or obtain any Permit, in each case, for the valid execution, delivery and performance by RMC of the Documents.

3.3

Good Title, Sufficiency and Condition of Assets.  RMC has good and marketable title to the Assets, free and clear of all Encumbrances, and upon delivery of the Assets against payment of the Acquisition Consideration, DAD Group will receive good and marketable title thereto, free and clear of all Encumbrances.  RMC has full legal right and power to transfer and deliver the Assets to DAD Group in the manner contemplated by this Agreement.

3.4

Compliance with Laws. Except as would not have a Material Adverse Effect, RMC (a) has complied in all respects with, is in compliance in all respects with and has operated the Business and maintained the Assets in compliance in all respects with, all Laws applicable to RMC’s ownership, use, discharge, exploitation or disposition of the Assets and (b) has all Permits used or necessary for RMC’s ownership, use, discharge, exploitation or disposition of the Assets.  

3.5

Intellectual Property.

(a)

There are no Patents (i) owned by RMC, or (ii) owned by an Affiliate of RMC that areeither licensed to RMC or used by RMC in the operation of the Business.  

(b)

Schedule 1.1(c) lists each trademark or service mark (i) that is registered to RMC; (ii) for which RMC has applied to register; (iii) that is used or currently intended to be used by RMC in connection with the Business; (iii) that is registered to an Affiliate of RMC and used or currently intended to be used by RMC in connection with the Business, or (iv) that an Affiliate of RMC has applied to register and is currently intended to be used by RMC in connection with the Business.

(c)

There are no copyright registrations (i) owned by RMC, or (ii) owned by an Affiliate of RMC that are either licensed to RMC or used by RMC in the operation of the Business.  

(d)

Schedule 1.1(a) lists each of the domain names

 used in the operation of the Business

 that are registered in the name of RMC, its Affiliates or a Person on behalf of RMC (including RMC’s employees) as of the Closing Date and indicates which domain names are used in connection with websites operated in relation to Business.  

(e)

RMC owns or has the right to use pursuant to an Enforceable Contract, in each case, free and clear of all Encumbrances, all Intellectual Property that constitutes part of the Assets and each item of Intellectual Property included in the Assets that RMC owned prior to the Closing shall be owned by DAD Group on identical terms and conditions immediately subsequent to the Closing. 

(f)

to RMC’s Knowledge no Proceeding is pending or threatened that challenges the enforceability, validity, use or ownership of any of the Assets; and

(g)

to RMC’s Knowledge, the Business or the operation thereof has not infringed upon, misappropriated, or otherwise violated or come into conflict with any other Person’s Intellectual Property, and no Person has ever alleged or threatened action alleging any such infringement, misappropriation, violation, or conflict and to RMC’s Knowledge, no other Person has infringed upon, misappropriated, or otherwise come into conflict with the Business’s Intellectual Property.

3.6

Litigation and Other Proceedings.  There are no (a) Proceedings or Claims pending or, to the Knowledge of RMC, threatened, against or involving RMC, whether at law or in equity, whether civil or criminal in nature or by or before any Governmental Authority or (b) Orders of any Governmental Authority with respect to or involving RMC, in each case relating to the Assets.

3.7

Brokers’ Fees.  RMC has no Liability to pay any fees or commissions to any broker, finder or agent with respect to the Transactions, for which DAD Group could become liable or obligated.

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3.8

Foreign Corrupt Practices Act.  RMC has not, directly or indirectly, in connection with its ownership, use, discharge, exploitation or disposition of the Assets, made or agreed to make any payment to any Person connected with or related to any Governmental Authority, except payments or contributions required or allowed by Law.  The internal accounting controls and procedures of RMC are sufficient to cause RMC to comply with the Foreign Corrupt Practices Act.

3.9

Disclosure.  RMC has provided DAD Group with true, correct and complete copies of all documents listed or described in the Schedules and true, correct and complete descriptions of any oral Contract or any matter included on the Schedules that is not documented.

3.10

Investment Intention; No Resales.  RMC is acquiring the Shares for investment, solely for its own account and not with a view to, or for resale in connection with, the distribution thereof; provided, however, that RMC shall have the right at all times to sell or otherwise dispose of all or any part of the Shares so acquired in compliance with applicable Law.

3.11

Investment Experience.  RMC has such knowledge, experience and skill in financial and business matters in general and with respect to investments of a nature similar to the Shares so as to be capable of evaluating the merits and risks of, and making an informed business decision with regard to, its investment in DAD Group.  RMC acknowledges and understands that the acquisition of the Shares involves an investment in a business that has a history of operating losses and will require future financing without any guarantee of obtaining such financing, and, therefore, such investment is a speculative investment with no assurance of success.  RMC has (i) received all information that RMC deems necessary to make an informed investment decision with respect to an investment in DAD Group; (ii) had the unrestricted opportunity to make such investigation as RMC desires pertaining to DAD Group and an investment therein, and to verify any information furnished to RMC; and (iii) had the opportunity to ask questions concerning DAD Group and RMC’s investment.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF DAD GROUP

DAD Group represents and warrants to RMC that the statements contained in this ARTICLE IV are correct and complete as of the date hereof and will be correct and complete as of the Closing Date, as if made on the Closing Date.  

4.1

Organization; Good Standing.  DAD Group is duly formed, validly existing and in good standing under the Laws of the jurisdiction of its organization.   DAD Group has all requisite power and authority to own, lease and operate its business as presently conducted.  

4.2 

Valid Issuance of the Shares.  The Shares have been duly authorized and, when issued and delivered to RMC against payment therefor as provided by this Agreement, will be validly issued, fully paid and non-assessable.

4.3

Authorization, Execution, Enforceability and No Conflicts.

1.

DAD Group has all requisite power and authority to execute and deliver each Document to which it is a party and any and all instruments necessary or appropriate in order to effectuate fully the terms and conditions of each such Document and to perform and consummate its obligations under each such Document.  Each Document to which DAD Group is a party, and the performance of its obligations under such Document, have been duly and validly authorized by all requisite action on the part of DAD Group, and each such Document to which such DAD Group is a party has been duly and validly executed and delivered by DAD Group and is, or upon its execution and delivery will be (assuming the valid authorization, execution and delivery of such Document by the counterparties thereto), Enforceable against DAD Group.

2.

The execution, delivery and performance by DAD Group of the Documents to which it is a party, and the consummation of the Transactions, will not (i) violate any Law applicable to DAD Group or (ii) conflict with or result in any violation or breach of, any of the terms, conditions or provisions of, or constitute (with due notice or lapse of time, or both) a default under, or give rise to any right of termination, cancellation or acceleration or result in the creation of any Encumbrance upon DAD Group or under any provisions of DAD Group’s Fundamental Documents, any Permit or any other Contracts to which it is a party or by which it or any of its assets is or may be bound, in each case, which would prohibit DAD Group from consummating the Transactions.  DAD Group has not been or is not required to give any notice to, or make any filing with, any Governmental Authority or any other Person, or obtain any Permit, in each case, for the valid execution, delivery and performance by DAD Group of the Documents to which it is a party.

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4.4

Compliance with Other Instruments, Laws and Orders.  Except as would not have an DAD Group Material Adverse Effect, DAD Group is not in violation of (a) any term of its Fundamental Documents or (b) any Contract, Law or Order by which DAD Group is a party or bound or to which its properties and assets are subject.

4.5

Litigation and Other Proceedings.  Except as set forth on Schedule 4.5, there are no (a) Proceedings or Claims pending or, to the Knowledge of DAD Group, threatened in writing, against or involving DAD Group, whether at law or in equity, whether civil or criminal in nature or by or before any Governmental Authority or (b) Orders of any Governmental Authority with respect to or involving DAD Group.

4.6

Permits.  Except as would not have a DAD Group Material Adverse Effect, (a) DAD Group has all Permits necessary for the conduct of its business as now being conducted by it, and (b) DAD Group is not in default in any material respect under any of such Permits.

4.7

Offering. Subject in part to the truth and accuracy of RMC’s representations set forth in ARTICLE III of this Agreement, the offer, sale and issuance of the Shares as contemplated by this Agreement are exempt from the registration requirements of any applicable state and federal securities Laws, other than the filing of notices under state and federal securities Laws.

ARTICLE V

PRE-CLOSING COVENANTS OF RMC

5.1

Access and Investigation.  Between the date of this Agreement and the Closing Date, and upon reasonable advance notice provided by DAD Group to RMC, RMC shall (a) afford DAD Group and its Representatives (collectively, the “DAD Group Parties”) full and free access, during regular business hours, to RMC’s Assumed Contracts, Books and Records, authorized personnel designated by senior officers of RMC and other documents and data as may be reasonably requested by DAD Group; provided, that such rights of access shall be exercised in a manner that does not unreasonably interfere with the operations of RMC; (b) furnish DAD Group with copies of all Assumed Contracts, Books and Records and other existing documents and data as DAD Group may reasonably request; (c) furnish DAD Group with such additional financial, operating and other relevant data and information related to the ownership, use, discharge, exploitation or disposition of the Assets as DAD Group may reasonably request; and (d) otherwise cooperate and assist, to the extent reasonably requested by DAD Group, with DAD Group’s investigation of the Assets and financial condition constituting or related to the Assets.

5.2

Operation of the Business of RMC.  Between the date of this Agreement and the Closing, RMC shall (i) conduct its business only in the ordinary course of business; (ii) use commercially reasonable efforts to preserve intact its current business organization, keep available the services of its officers, key employees and key agents and maintain its relations and goodwill with material suppliers, material customers, landlords, creditors, key employees, key agents and others having material business relationships with it or who are counterparties to the Assumed Contracts.

5.3

Required Approvals.  As promptly as practicable after the date of this Agreement, RMC shall, at its sole expense, use commercially reasonable efforts to make all filings required by Law to be made by it in order to consummate the Transactions.  RMC shall cooperate with the DAD Group Parties with respect to all filings that DAD Group elects to make or, pursuant to Laws, is required to make in connection with the Transactions.  RMC also shall cooperate with the DAD Group Parties in obtaining all Required Consents.

5.4

Notification.  Between the date of this Agreement and the Closing, RMC shall promptly notify DAD Group in writing if it becomes aware of (a) any fact or condition that causes or constitutes a material breach of any of its representations and warranties made as of the date of this Agreement or (b) the occurrence after the date of this Agreement of any fact or condition that would, or be reasonably likely to (except as expressly contemplated by this Agreement), cause or constitute a material breach of any such representation or warranty had that representation or warranty been made as of the time of the occurrence of, or RMC’s discovery of, such fact or condition.  Should any such fact or condition require any material change to the Schedules, RMC shall promptly deliver to DAD Group a supplement to the Schedules specifying such change. During the same period, RMC also shall promptly notify DAD Group of the occurrence of any material breach of any covenant of RMC or of the occurrence of any event that may make the satisfaction of the conditions in ARTICLE VII impossible or unlikely.  

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5.5

No Negotiation.  Until such time as this Agreement is terminated pursuant to the terms hereof, neither RMC nor any of its Representatives shall directly or indirectly solicit, initiate, encourage or entertain any inquiries or proposals from, discuss or negotiate with, provide any nonpublic information to or consider the merits of any inquiries or proposals from any Person (other than DAD Group) relating to any business combination transaction involving RMC, including the sale of RMC’s equity, the merger or consolidation of RMC or the sale of the Business or any of the Assets (other than in the ordinary course of business).  RMC shall notify DAD Group of any bona fide proposal within twenty-four (24) hours of receipt of the same.

5.6

Public Announcements.  RMC agrees that, except as required by any Law or Order, it will at no time prior to the Closing issue any reports, statements or releases, in each case pertaining to any Document to which it is a party or the Transactions, without the prior written consent of DAD Group, which consent shall not be unreasonably withheld.

ARTICLE VI

PRE-CLOSING COVENANTS OF DAD GROUP

6.1

Required Approvals.  As promptly as practicable after the date of this Agreement, DAD Group shall make, or cause to be made, all filings required by Law to be made by it to consummate the Transactions.  DAD Group also shall cooperate, and cause its Affiliates to cooperate, with RMC (a) with respect to all filings that RMC is required by Law to make and (b) in obtaining the Required Consents. Notwithstanding anything herein to the contrary, neither DAD Group nor any Affiliate thereof shall be required by this Section 6.1 or otherwise to take or agree to undertake any action, including entering into any consent decree or agreeing to any Order or other arrangement with a Governmental Authority, that would require the divestiture of any assets of such Person, or limit such Person’s freedom of action with respect to, or limit its ability to consolidate and control, the Assets or the Business.

6.2

Public Announcements.  DAD Group agrees that, except as required by any Law or Order,

DAD Group

 will at no time prior to the Closing issue any reports, statements or releases, in each case pertaining to any Document to which it is a party or the Transactions, without the prior written consent of

RMC

, which consent shall not be unreasonably withheld.

6.3

No Solicitation.  DAD Group shall not solicit, directly or indirectly, for employment any employees or independent contractors of RMC prior to Closing.

ARTICLE VII

CONDITIONS PRECEDENT TO DAD GROUP’S OBLIGATION TO CLOSE

DAD Group’s obligation to consummate the Transactions is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by DAD Group, in its sole discretion, in whole or in part):

7.1

Accuracy of Representations.  RMC’s representations and warranties in this Agreement shall have been accurate in all material respects as of the date of this Agreement and shall be accurate in all material respects as of the time of the Closing as if then made (provided, that as to representations qualified by materiality, such representations and warranties shall be accurate in all respects) without giving effect to any supplement to the Schedules.

7.2

RMC’s Performance.  All of the covenants and obligations that RMC is required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been duly performed and complied with in all material respects, including the delivery of the items set forth in Section 2.2(a).

7.3

Consents.  The Required Consents shall have been obtained and shall be in full force and effect.  

7.4

No Proceedings.  Since the date of this Agreement, there shall not have been commenced or threatened against DAD Group, or against any Affiliate of DAD Group, any Proceeding (a) involving any challenge to, or seeking damages or other relief in connection with, any of the Transactions or (b) that may have the effect of preventing, delaying, making illegal, imposing limitations or conditions on or otherwise interfering with any of the Transactions.

7.5

No Conflict.  Neither the consummation nor the performance of any of the Transactions will, directly or indirectly (with or without notice or lapse of time), contravene or conflict with or result in a violation of or cause DAD Group or any Affiliate of DAD Group to suffer any adverse consequence under (a) any Law or Order or (b) any Law or Order that has been published, introduced or otherwise proposed by or before any Governmental Authority.

Page | 9

ARTICLE VIII

CONDITIONS PRECEDENT TO RMC’S OBLIGATION TO CLOSE

RMC’s obligation to consummate the Transactions is subject to the satisfaction, at or prior to the Closing, of each of the following conditions (any of which may be waived by RMC, in its sole discretion, in whole or in part):

8.1

Accuracy of Representations.  DAD Group’s representations and warranties in this Agreement shall have been accurate in all material respects as of the date of this Agreement and shall be accurate in all material respects as of the time of the Closing as if then made (provided, that as to representations qualified by materiality, such representations and warranties shall be accurate in all respects) without giving effect to any supplement to the Schedules.

8.2

DAD Group’s Performance.  All of the covenants and obligations that DAD Group is required to perform or to comply with pursuant to this Agreement at or prior to the Closing shall have been duly performed and complied with in all material respects, including the delivery of the items set forth in Section 2.2(b).

8.3

No Conflict.  Neither the consummation nor the performance of any of the Transactions will, directly or indirectly (with or without notice or lapse of time), contravene or conflict with or result in a violation of or cause RMC or any Affiliate thereof to suffer any adverse consequence under (a) any Law or Order or (b) any Law or Order that has been published, introduced or otherwise proposed by or before any Governmental Authority.

ARTICLE IX

TERMINATION

9.1

Termination Events.  By notice given prior to or at the Closing, subject to Section 9.2, this Agreement may be terminated as follows:

(a)

by DAD Group if a material breach of any provision of this Agreement has been committed by RMC and such breach has not been cured by the breaching Party or waived by DAD Group;

(b)

by RMC if a material breach of any provision of this Agreement has been committed by DAD Group and such breach has not been cured by the breaching Party or waived by RMC; or

(c)

by written notice by DAD Group to RMC.

9.2

Effect of Termination.  Each Party’s right of termination under Section 9.1 is in addition to any other rights it may have under this Agreement or otherwise, and the exercise of such right of termination will not be an election of remedies.  If this Agreement is terminated pursuant to Section 9.1, all obligations of the Parties under this Agreement will terminate, except that the obligations of the Parties in this Section 9.2 and ARTICLE XI will survive; provided, however, that if this Agreement is terminated because of a breach of this Agreement by the non-terminating Party or because one or more of the conditions to the terminating Party’s obligations under this Agreement is not satisfied as a result of the non-terminating Party’s failure to comply with its obligations under this Agreement, then the terminating Party’s right to pursue all legal remedies will survive such termination unimpaired.  

ARTICLE X

POST-CLOSING COVENANTS

10.1

Mail Received After Closing; Websites and Domain Names.  Following the Closing, DAD Group may receive and open all mail addressed to RMC and deal with the contents thereof in its discretion to the extent that such mail and the contents thereof relate to the ownership, use, discharge, exploitation or disposition of the Assets pursuant to this Agreement.  RMC shall deliver or cause to be delivered to DAD Group all mail received by RMC after the Closing that relates to the ownership, use, discharge, exploitation or disposition of the Assets.  RMC will cooperate with DAD Group in the redirection, registration and transfer of all websites and domain names included in the Assets.

10.2

Assistance in Proceedings.  RMC will provide reasonable cooperation to DAD Group and its counsel in the contest or defense of, and make available its personnel and provide any testimony and access to its books and records in connection with, any Proceeding involving or relating to the ownership, use, discharge, exploitation or disposition of the Assets following the Closing Date, insofar as it relates to RMC’s ownership, use, discharge, exploitation or disposition of the Assets before or on the Closing Date.  

10.3

Missing Consents. If there are any Required Consents that have not been obtained (or otherwise are not in full force and effect) as of the Closing (“Missing Consent(s)”), DAD Group may waive the closing conditions as to any Missing Consent.

Page | 10

10.4

Further Assurances.  The Parties shall cooperate reasonably with each other and with their respective representatives in connection with any steps required to be taken as part of their respective obligations under the Documents, and shall (a) furnish upon request to each other such further information; (b) execute and deliver to each other such other documents; and (c) do such other acts and things, all as the other Party may reasonably request for the purpose of carrying out the intent of the Documents and the Transactions.  Without limiting the foregoing, RMC shall cause its employees to transfer to DAD Group the registrations of the URLs described in Section 1.1 that are registered in the names of such employees. 

ARTICLE XI

MISCELLANEOUS

11.1

Expenses.  Each party to the Documents will pay all costs and expenses incident to such party’s negotiation and preparation of the Documents and to such party’s performance and compliance with all Agreements and conditions contained therein on such party’s part to be performed or complied with, including the fees, expenses and disbursements of such party’s counsel and accountants.  All costs and expenses, if any, incurred by RMC prior to the Closing in connection with the Documents and the Transactions, including the fees, expenses and disbursements of RMC’s counsel and accountants, shall be paid by RMC. 

11.2

Successors and Assigns.  This Agreement shall bind and inure to the benefit of each Party and their respective successors, assigns, heirs and personal representatives.  Notwithstanding the preceding sentence, none of the rights or obligations of RMC may be assigned or delegated without the prior written consent of DAD Group, which consent may be withheld for any reason or no reason.

11.3

Entire Agreement.  This Agreement and the other Documents constitute the entire agreement among the Parties hereto and thereto with respect to the subject matters addressed herein and therein and supersede any prior understandings, agreements or representations, by or among such Parties, written or oral, that may have related in any way to the subject matter of any Document.

11.4

Notices.  All notices, requests, demands, Claims, consents and other communications which are required or otherwise delivered hereunder shall be in writing and shall be deemed to have been duly given if (a) personally delivered, (b) sent by nationally recognized overnight courier, (c) mailed by registered or certified mail with postage prepaid, return receipt requested, or (d) transmitted by facsimile (with a copy of such transmission concurrently transmitted by registered or certified mail with postage prepaid, return receipt requested), to the Parties hereto at the following addresses (or at such other address for a Party as shall be specified by like notice):

if to DAD Group, to:

DAD Group, Inc. 

Mr. Amro Albanna

1650 Spruce Street

Suite 500

Riverside, CA 92507

Facsimile No.:  (951) 846-1755 

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

Carrillo Huettel, LLP

3033 Fifth Ave. Suite 400

San Diego, CA 92103

Attention:  Wade D. Huettel, Esq.

Facsimile No.:  (619) 546-6060

if to RMC, to:

Rich Media Corp., 

Daechi 4 Dong 919-33, 

Gangnam Gu, 

Seoul, Korea 

Attention:  Richard Pak

email: richardpak2@gmail.com

Page | 11

or to such other address as the Party to whom such notice or other communication is to be given may have furnished to the other Party in writing in accordance herewith.  Any such notice or communication shall be deemed to have been received (i) when delivered, if personally delivered, (ii) when sent, if sent by facsimile during normal business hours on a Business Day (or, if not sent by 5:00 p.m. recipient’s time on a Business Day, then the notice will be deemed to have been sent at 9:00 a.m. recipient’s time on the next Business Day after the date sent by facsimile), (iii) on the next Business Day after dispatch, if sent by nationally recognized, overnight courier guaranteeing next Business Day delivery, and (iv) on the fifth (5th) Business Day following the date on which the piece of mail containing such communication is posted, if sent by regular mail.

11.5

Amendments, Modifications and Waivers.  The terms and provisions of this Agreement may not be modified or amended, nor may any of the provisions hereof be waived, temporarily or permanently, except pursuant to a written instrument executed by the Parties hereto.

11.6

Governing Law; Disputes; Required Consent to Jurisdiction.  This Agreement shall be governed by and construed in accordance with the domestic Laws of the State of California without giving effect to any choice of law or conflict of law provision or rule (whether of the State of California or any other jurisdiction) that would cause the application of the Laws of any jurisdiction other than the State of California.  Each of the Parties hereby irrevocably and unconditionally agrees to submit to the exclusive jurisdiction of the appropriate state and federal courts situated in Riverside, California for any dispute, controversy, suit or action arising out of or in connection with any Document and hereby waives in advance any objection or defense to such jurisdiction, including any defense based on lack of personal jurisdiction or forum non conveniens.  Each of the Parties hereby acknowledges that it is the intent of all Parties hereto that any judgment, order or decree of any such court may be enforced in any court or other tribunal of competent jurisdiction in the United States of America or any other jurisdiction throughout the world and hereby waives and agrees not to assert any defense to the enforcement of any such judgment, order or decree in any such court or tribunal.

11.7

Extension; Waiver.  At any time prior to the Closing, the Parties may (a) extend the time for the performance of any of the obligations or other acts of the other Party, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement, and (c) waive compliance with any of the agreements or conditions contained in this Agreement.  Any agreement on the part of a Party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such Party, and any such waiver shall not operate or be construed as a waiver of any subsequent breach by another Party.

11.8

Severability.  It is the desire and intent of the Parties that the provisions of this Agreement be enforced to the fullest extent permissible under the Law and public policies applied in each jurisdiction in which enforcement is sought.  Accordingly, in the event that any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any jurisdiction.  Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

11.9

Independence of Agreements, Covenants, Representations and Warranties.  All agreements and covenants hereunder shall be given independent effect so that if a certain action or condition constitutes a default under a certain agreement or covenant, the fact that such action or condition is permitted by another agreement or covenant shall not affect the occurrence of such default, unless expressly permitted under an exception to such initial covenant.  In addition, all representations and warranties hereunder shall be given independent effect so that if a particular representation or warranty proves to be incorrect or is breached, the fact that another representation or warranty concerning the same or similar subject matter is correct or is not breached will not affect the incorrectness of or a breach of a representation and warranty hereunder. 

11.10

Counterparts; Facsimile Signatures.  This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement.  Facsimile or electronic scan (via email) counterpart signatures to this Agreement shall be acceptable and binding.

11.11

No Strict Construction.  The Parties hereto agree that they have been represented by counsel during the negotiation and execution of this Agreement and, therefore, waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the Party drafting such agreement or document.  

Page | 12

ARTICLE XII

DEFINED TERMS

12.1

Defined Terms.  The following terms used in the Agreement shall have the following meanings:

“Acquisition Consideration” has the meaning given to it in Section 1.3.

“Affiliate” of a Person means:  (i) any Person who directly or indirectly through one or more intermediaries Controls or is Controlled by or is under common Control with the specified Person; (ii) any Person who is an officer, director, employee, agent or trustee of, or who serves in a similar capacity with respect to, the specified Person or of which the specified Person is an officer, director, employee, agent or trustee, or with respect to which the specified Person serves in a similar capacity; or (iii) any Person who, directly or indirectly, is the beneficial owner of, or Controls, five percent (5%) or more of the equity Securities of, or otherwise has a beneficial interest in, the specified Person or of which the specified Person is directly or indirectly the owner of five percent (5%) or more of the equity Securities (or in which the specified Person has a beneficial interest.

“Agreement” has the meaning given to it in the preamble.

“Assets” has the meaning given to it in Section 1.1.

“Books and Records” means all books and records of RMC directly related to, and the portions of books and records of RMC reasonably related to, the ownership, use, discharge, exploitation or disposition of Assets including all applicable customer lists, supplier lists, vendor lists, manuals, books, files, procedures, systems, business records, production and purchase records and advertising materials.

“Business” has the meaning given to it in the Recitals.

“Business Day” means any day that is not a Saturday, Sunday, legal holiday or other day on which banks are required to be closed in the State of California.

“Claim” means any claim, demand, Order or Proceeding.

“Closing” has the meaning given to it in Section 2.1.

“Closing Cash Amount” has the meaning given to it in Section 1.3(a).

“Closing Date” has the meaning given to it in Section 2.1.

“Confidential and Proprietary Information” means information that is not generally known to the public and that is used, developed or obtained by RMC, or by its clients or customers and disclosed to RMC relating to the ownership, use, discharge, exploitation or disposition of the Assets, including (i) information, observations, procedures and data obtained by RMC or any of its clients or customers, (ii) products or services, (iii) costs and pricing structures, (iv) analyses, (v) drawings, photographs and reports, (vi) computer software, including operating systems, applications and program listings, (vii) flow charts, manuals and documentation, (viii) data bases, (ix) accounting and business methods, (x) inventions, devices, new developments, methods and processes, whether patentable or unpatentable and whether or not reduced to practice, (xi) customers and customer lists, (xii) other copyrightable works, (xiii) all production methods, processes, technology and trade secrets, and (xiv) all similar and related information in whatever form.

“Contract(s)” means any loan or credit agreement, note, indenture, purchase order or other agreement, commitment, understanding or instrument, in each case, whether written or oral.

“Control,” including the terms “Controlling,” “Controlled by,” and “under common Control with,” means the power to direct the management and policies of a Person, directly or indirectly, whether through the ownership of voting Securities, by contract or credit agreement, as trustee, partner, or executor, or otherwise.

“Copyrights” means copyrights, whether registered or unregistered, in published works and unpublished works, pending applications to register the same and moral rights.

“DAD Group” has the meaning given to it in the preamble of this Agreement.

“Document(s)” means this Agreement, and any other agreements, certificates, instruments and documents to be delivered pursuant to this Agreement.

Page | 13

“Effective Time” has the meaning given to it in Section 2.1.

“Encumbrance” means and includes any security interest, mortgage, lien, pledge, claim, charge, escrow, encumbrance, cloud, option, security agreement or other similar agreement, arrangement, Contract, understanding or obligation, whether written or oral and whether or not relating in any way to credit or the borrowing of money.

“Enforceable”, a Contract is “Enforceable” if it is the legal, valid, and binding obligation of the applicable Person enforceable against such Person in accordance with its terms, except as such enforceability may be subject to the effects of bankruptcy, insolvency, reorganization, moratorium, or other Laws relating to or affecting the rights of creditors, and general principles of equity.

“Excluded Liabilities” has the meaning given to it in Section 1.2.

“Fundamental Documents” means the documents by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs.  For example, the “Fundamental Documents” of a corporation would be its charter and by-laws, the “Fundamental Documents” of a limited liability company would be its certificate of formation or organization and operating agreement and the “Fundamental Documents” of a limited partnership would be its limited partnership certificate and its limited partnership agreement.  

“Governmental Authority” means any national, federal, state, local or regional (whether domestic or foreign) government, authority, instrumentality, department, commission, board, bureau, agency or court.

 “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such Person evidenced by (or which customarily would be evidenced by) bonds, debentures, notes or similar instruments, (c) all reimbursement obligations of such Person with respect to letters of credit and similar instruments, (d) all obligations of such Person under conditional sale or other title retention agreements relating to property or assets purchased by such Person, (e) all obligations of such Person incurred, issued or assumed as the deferred purchase price of property other than accounts payable incurred and paid on terms customary in the business of such Person (it being understood that the “deferred purchase price” in connection with any purchase of property or assets shall include only that portion of the Acquisition Consideration that is deferred beyond the date on which the purchase is actually consummated), (f) all obligations secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any lien on property owned or acquired by such Person, whether or not the obligations secured thereby have been assumed, (g) all obligations of such Person under forward sales, futures, options and other similar hedging arrangements (including interest rate hedging or protection agreements), (h) all obligations of such Person to purchase or otherwise pay for merchandise, materials, supplies, services or other property under an arrangement which provides that payment for such merchandise, materials, supplies, services or other property shall be made regardless of whether delivery of such merchandise, materials, supplies, services or other property is ever made or tendered, (i) all guaranties by such Person of the foregoing obligations of others, (j) all capitalized lease obligations of such Person, and (k) all past due accounts payable unless being contested in good faith by appropriate proceedings.

“Intellectual Property” means (a) all Marks, Patents, Copyrights and Trade Secrets; (b) the goodwill of the business of the holder of any of the items in clause (a) associated with or embodied by such item; and (c) all rights of the holder of any of the items in clause (a).  

“Knowledge” of any Person means (a) the actual knowledge of such Person and (b) that knowledge which could have been acquired by such Person after making reasonable investigation in consultation with key personnel of the Company.  

“Law(s)” means, as to any Person, all federal, state, local or foreign laws, statutes, rules, regulations, ordinances, Permits, Orders, certificates, requirements, regulations and restrictions of any Governmental Authority, in each case, applicable to such Person or any of its assets.

“Liability” means any liability or obligation, whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated and whether due or to become due, regardless of when asserted.

“Loss” means any loss (including diminution in value of Securities), Liability, Claim, action, cause of action, cost, damage, deficiency, Tax (including any Taxes imposed with respect to any indemnity payments for any such Loss), penalty, fine or expense, whether or not arising out of any Claims by or on behalf of any Party to this Agreement or any third party, including interest, penalties, reasonable attorneys’ fees and expenses and all amounts paid in investigation, defense or settlement of any of the foregoing which any such party may suffer, sustain or become subject to, as a result of, in connection with, relating or incidental to or by virtue of any indemnifiable event or condition; provided, however, that for any indemnification payment hereunder that is treated as an adjustment to the Acquisition Consideration, the term “Loss” shall not include any Tax (including any Taxes imposed with respect to any indemnity payments for any such Loss).

Page | 14

“Marks” means all fictitious business names, trade names, corporate names, and registered and unregistered trademarks, service marks and trade dress rights including applications for and registrations of any of the foregoing.

“Material Adverse Change or Material Adverse Effect” means, with respect to RMC, any circumstance, change in, or effect on RMC that is, or could reasonably be expected to be, materially adverse to the Assets or the ability of RMC to enter into or perform its obligations under the Agreement; provided, however, that the following events shall not constitute a Material Adverse Change or Material Adverse Effect:  any change in, or effect on RMC that results from (i) the announcement of the Transactions in accordance with this Agreement or the announcement by DAD Group in breach of this Agreement; (ii) changes in conditions generally affecting the industry in which RMC competes or the U.S. economy as a whole; (iii) compliance with the terms of, or the taking of any action required by, this Agreement; (iv) actions required to be taken under applicable Laws; or (vi) acts of terrorism or military action or the threat thereof; provided further, that the changes described in clauses (ii) and (iv) shall not constitute a Material Adverse Change or Material Adverse Effect solely to the extent that such changes do not have a disproportionate impact on RMC as compared to others in RMC’s industry.

“Material Adverse Change or Material Adverse Effect” means, with respect to DAD Group, any circumstance, change in, or effect on DAD Group that is, or could reasonably be expected to be, materially adverse to the business, properties or financial condition of DAD Group, taken as a whole or the ability of DAD Group to enter into or perform its obligations under the Agreement; provided, however, that the following events shall not constitute a Material Adverse Change or Material Adverse Effect: any change in, or effect on DAD Group that results from (i) the announcement of the Transactions in accordance with this Agreement or the announcement by RMC in breach of this Agreement; (ii) changes in conditions generally affecting the industry in which DAD Group competes or the U.S. economy as a whole; (iii) compliance with the terms of, or the taking of any action required by, this Agreement; (iv) any change in accounting requirements or principles or any change in applicable Laws; (v) actions required to be taken under applicable Laws; (vi) the discharge of Assumed Liabilities or transaction expenses incurred in connection with the Transactions;  or (vi) acts of terrorism or military action or the threat thereof; provided further, that the changes described in clauses (ii) and (iv) shall not constitute a Material Adverse Change or Material Adverse Effect solely to the extent that such changes do not have a disproportionate impact on DAD Group as compared to others in DAD Group’s industry.

“Missing Consents” has the meaning given to it in Section 10.3.

 “Order(s)” means any judgments, writs, decrees, injunctions, orders, compliance agreements or settlement agreements of or with any Governmental Authorities or arbitrator.

“Patents” means all (a) patents and patent applications, including divisions, continuations, continuations-in-part, extensions and reissues of the foregoing, and (b) business methods, inventions, and discoveries that may be patentable.

“Permits” means all permits, licenses, authorizations, registrations, franchises, approvals, consents, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

 “Person” means any individual, corporation, limited liability company, partnership, trust or unincorporated organization, Governmental Authority or other entity.

“Proceeding” means any action, suit, proceeding, complaint, charge, hearing, inquiry or investigation before or by a Governmental Authority.

“Representatives” means, with respect to a Person, such Person’s Affiliates and their respective partners, equity holders, officers, directors, managers, employees, agents, counsel and other representatives.

“Required Consents” means with respect to either Party of this Agreement, and all consents, approvals, and or authorizations required by such Party to consummate any of the Transactions or to execute any Documents hereunder.

“RMC” has the meaning given to it in the preamble of this Agreement.

“Schedules” means Schedules 1.1(a) – 1.1(d), which are attached hereto and are a part of this Agreement.

“Securities” means, with respect to any Person, such Person’s “Securities” as defined in Section 2(1) of the Securities Act and includes such Person’s capital stock, membership interests, partnership interests or other equity interests or any options, warrants or other Securities or rights that are directly or indirectly convertible into, or exercisable or exchangeable for, such Person’s capital stock, membership interests, partnership interests or other equity interests.

Page | 15

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, as the same may be amended from time to time.

“Shares” has the meaning given to it in Section 1.3(b).

“Subsidiary” means, with respect to any Person, any corporation, association, partnership, limited liability company or other business entity of which fifty (50%) or more of the total voting power of equity interests (including partnership interests) entitled (without regard to the occurrence of any contingency) to vote in the election of representatives, managers or trustees thereof is at the time owned or Controlled, directly or indirectly, by:  (a) such Person, (b) such Person and one or more Subsidiaries of such Person, or (c) one or more Subsidiaries of such Person.

“Trade Secrets” means all know-how, trade secrets, Confidential and Proprietary Information (with respect to RMC), customer lists, software (source code and object code), technical information, data, process technology, plans, discoveries, designs, drawings, and blue prints, excluding any of the foregoing to the extent that the foregoing are protected as Copyrights, Patents or Marks.

“Transactions” means:  (a) the sale of the Assets by RMC to DAD Group and DAD Group’s delivery of the Acquisition Consideration therefor, and, (b) the execution, delivery, and performance (including pre- and post-Closing obligations) of all of the Documents.

[REMAINDER OF PAGE DELIBERATELY LEFT BLANK]

Page | 16

IN WITNESS WHEREOF, the Parties hereto have executed this Asset Acquisition Agreement as of the date first above written.

	
	DAD GROUP:

	DAD Group, Inc. 

	 

	By:

/s/ Amro Albanna

Name:

Amro Albanna

Title: 

CEO

	 

	RMC:

	Rich Media Corp.

	 

	By:

/s/ Richard Pak

Name:

Richard Pak

Title: 

President

	 

	 

	 

[Signature Page to Asset Acquisition Agreement]

SCHEDULES

Schedule 1.1(a)

Web Presence 

Schedule 1.1(b)

Marketing/Branding Materials & Coding

Schedule 1.1(c)

Marks

Schedule 1.1(d)

Assumed Contracts

Schedule 4.5

Litigation and Other Proceedings

 

SCHEDULE 1.1(a)

WEB PRESENCE

·

www.ridethedeal.com

·

All Social Media accounts, including but not limited to Twitter and Facebook. 

·

All email addresses associated with and URL used in connection with the operation of the Business, including but not limited to those email addresses hosted on mailchimp.com.

Schedule A

LIST OF ASSETS

		
	 
	Domain names: 

	 
	ridethedeal.com 

	 
	ridethedeal.co 

	 
	ridethedeal.ca 

	 
	ridethedeal.info 

	 
	ridethedeal.net 

	 
	ridethedeal.org 

	 
	ridethedeals.com 

	 

	 

	 
	All coding and associated rights for the daily deal website presently located at ridethedeal.com 

	 
	All email addresses collected by the Company, presently hosted on mailchimp.com 

	 
	All artwork, logos, graphics created for ridethedeal.com 

	 
	All contracts/legal drafted for ridethedeal.com including sales material and other sales assets. 

	 
	Any trademarks and/or pending trademarks associated with Ride the Deal. 

	 
	Twitter account. 

	 
	Facebook account. 

SCHEDULE 1.1(b)

Marketing/Branding Materials & Coding

·

All coding and associated rights used and employed in the operations and functionality of the website located at www.ridethedeal.com.

·

All artwork, logos, graphics and any other such marketing or branding materials used in connection with the Business.

SCHEDULE 1.1(c) 

MARKS

·

None

SCHEDULE 1.1(d)

ASSUMED CONTRACTS

·

None

SCHEDULE 4.5

LITIGATION AND OTHER PROCEEDINGS

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