|
RHINO
OUTDOOR INTERNATIONAL, INC.,
a
Nevada corporation
W.E.
ROCK EVENT, INC.
a
Nevada corporation
RICHARD
C. KLEIN, II, doing business as
W.E.
ROCK
a
California sole proprietorship
TABLE
OF CONTENTS
| 1. |
Definitions |
1
|
| 2. |
Basic
Transaction |
3
|
| |
(a)
Purchase and Sale of Assets |
3
|
| |
(b)
Assumption of Liabilities |
3
|
| |
(c)
Purchase Price |
3
|
| |
(d)
Security
Agreement |
3
|
| |
(e)
The Closing |
3
|
| |
(f)
Deliveries at the Closing |
3
|
| |
(g)
Allocation |
3
|
| 3. |
Representations
and Warranties of Klein |
|
| |
(a) Noncontravention |
4
|
| |
(b)
Brokers' Fees |
4
|
| |
(c)
Title to Acquired Assets |
4
|
| |
(d)
Rhino Shares/ Investment |
4
|
| |
(e)
Disclaimer of other Representations and Warranties
|
5
|
| 4. |
Representations
and Warranties of Buyers |
5
|
| |
(a)
Organization of Rhino and Buyers |
5
|
| |
(b)
Authorization of Transaction |
5
|
| |
(c)
Noncontravention |
5
|
| |
(d)
Brokers' Fees |
6
|
| |
(e)
Rhino
Shares |
6
|
| 5. |
Pre-Closing
Covenants |
6
|
| |
(a)
General |
6
|
| |
(b)
Ownership of Acquired Assets |
6
|
| |
(c)
Confidentiality |
6
|
| 6. |
Conditions
to Obligation to Close |
6
|
| |
(a)
Conditions to Obligation of Buyers |
6
|
| |
(b)
Conditions to Obligation of Klein |
7
|
| 7. |
Termination |
8
|
| |
(a)
Termination of Agreement |
8
|
| |
(b)
Effect of Termination |
8
|
| 8. |
Indemnification |
8
|
| |
(a)
Indemnification Provisions for Benefit of the Buyers
|
8
|
| |
(b)
Indemnification Provisions for Benefit of Klein
|
8
|
| |
(c)
Matters Involving Third Parties |
9
|
| |
(d)
Limitation
of Liability |
9
|
| 9. |
Miscellaneous |
10
|
| |
(a)
Survival of Representations and
Warranties |
10
|
| |
(b)
Press Releases and Public Announcements
|
10
|
| |
(c)
No Third-Party Beneficiaries |
10
|
| |
(d)
Entire Agreement |
10
|
| |
(e)
Succession and Assignment |
10
|
| |
(f)
Counterparts |
10
|
| |
(g)
Headings |
10
|
| |
(h)
Notices |
10
|
| |
(i)
Governing Law |
11
|
| |
(j)
Amendments and Waivers |
12
|
| |
(k)
Severability |
12
|
| |
(l)
Construction |
12
|
| |
(m)
Incorporation of Exhibits and Schedules
|
12
|
|
Exhibit
2(b)
|
Assumption
Agreement
|
|
Exhibit
2(c)
|
Secured
Convertible Promissory Note
|
|
Exhibit
2(d)
|
General
Security Agreement
|
|
Exhibit
2(f)(i)
|
Bill
of Sale
|
|
Schedule
A
|
Acquired
Assets
|
|
Schedule
B
|
Assumed
Liabilities
|
ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (“Agreement”) is
entered into this 28th day of September, 2007, by and among
Rhino Outdoor International, Inc., a Nevada corporation
(“Rhino”), W.E Rock Event, Inc., a Nevada
corporation (collectively referred to as "Buyer" or “
Buyers” ) and Richard C. Klein, II, doing
business as W.E. Rock, a California sole proprietorship
(“Klein”) . Buyers and Klein
are the only parties to this Agreement and are sometimes
referred to herein singularly as a “ Party
” and collectively herein as the " Parties
."
RECITALS
WHEREAS, Rhino Outdoor
International, Inc. and Klein entered into a Letter of Intent
for the acquisition of assets dated August 28,
2007.
WHEREAS, WE Rock Event,
Inc is the newly formed wholly-owned subsidiary of
Rhino referred to in the Letter of Intent as
Acquisition Subsidiary.
WHEREAS,
Buyers wish to purchase certain of the assets and to assume
certain of the liabilities of Klein, and Klein desires to sell
and assign such assets and liabilities to Buyers, pursuant to
the Letter of Intent and subject to the terms and conditions
of this Agreement.
NOW,
THEREFORE, in consideration of the premises and the mutual
promises herein made, and in consideration of the
representations, warranties, and covenants herein contained,
the Parties agree as follows.
1.
Definitions . When used in this Agreement, the terms
set forth below and those defined throughout the Agreement
when initially capitalized shall have the meanings ascribed to
them.
"
Adverse Consequences " means all legal actions, suits,
proceedings, hearings, governmental investigations,
complaints, claims, demands, injunctions, judgments, orders,
decrees, rulings, damages, penalties, fines, costs,
liabilities, obligations, taxes, liens, losses, expenses, and
fees outside the ordinary course of business, including
litigation costs and reasonable attorneys' fees and
expenses.
" Acquired Assets "
means all of the right, title, and interest that Klein
possesses and has the right to transfer in and to the assets
set forth in Schedule A attached hereto and incorporated by
this reference.
" Assumed
Liabilities " means the liabilities and obligations of
Klein set forth in Schedule B attached hereto and
incorporated by this reference.
"
Closing " has the meaning set forth in Section 2(d)
below.
"
Closing Date " has the meaning set forth in Section
2(d) below.
" Code " means the
Internal Revenue Code of 1986, as amended.
"
Confidential Information " means any confidential,
trade secret or other proprietary information (in whatever
form or media, and whether or not marked as confidential)
pertaining to Klein, including without limitation any and all
information, documents and other materials concerning the
business and affairs of Klein that is not already generally
available to the public at the time of disclosure to Buyers
hereunder.
"
GAAP " means United States generally accepted
accounting principles as in effect from time to
time.
"
Income Tax " means any federal, state, local, or
foreign income tax, including any interest, penalty, or
addition thereto, whether disputed or not.
"
Income Tax Return " means any return, declaration,
report, claim for refund, or information return or statement
relating to Income Taxes, including any schedule or attachment
thereto.
"
Knowledge " means actual knowledge without independent
investigation.
"
Ordinary Course of Business " means the ordinary course
of business consistent with past custom and practice,
including with respect to quantity and frequency.
"
Party " has the meaning set forth in the preface
above.
"
Person " means an individual, a partnership, a
corporation, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization, or a
governmental entity (or any department, agency, or political
subdivision thereof).
"
Purchase Price " has the meaning set forth in Section
2(c) below.
"
Securities Act " means the Securities Act of 1933, as
amended.
"
Securities Exchange Act " means the Securities Exchange
Act of 1934, as amended.
"
Security Interest " means any mortgage, pledge, lien,
encumbrance, charge, or other security interest, other
than (a) mechanic's, materialmen's, and similar liens, (b)
liens for taxes not yet due and payable or for taxes that the
taxpayer is contesting in good faith through appropriate
proceedings, (c) purchase money liens and liens securing
rental payments under capital lease arrangements, and (d)
other liens arising in the Ordinary Course of Business and not
incurred in connection with the borrowing of
money.
"
Subsidiary " means any corporation with respect to
which a specified Person (or a Subsidiary thereof) owns a
majority of the common stock or has the power to vote or
direct the voting of sufficient securities to elect a majority
of the directors.
2. Basic
Transaction .
(a)
Purchase and Sale of Assets . On and subject
to the terms and conditions of this Agreement, Buyers agrees
to purchase from Klein, and Klein agrees to sell, transfer,
convey, and deliver to Buyers, all of the Acquired Assets at
the Closing for the consideration specified below in this
Section 2.
(b)
Assumption of Liabilities . On and subject
to the terms and conditions of this Agreement, Buyer agrees to
assume and become responsible for all of the Assumed
Liabilities at the Closing pursuant to the Assumption
Agreement in the form attached hereto as Exhibit
2(b).
(c)
Purchase Price . The purchase price to be
paid by Buyers for the Acquired Assets will be $179,500.00
payable as follows:
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(i)
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The
assumption of the Assumed Liabilities
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(ii)
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The
delivery by Buyers of its non-negotiable secured convertible demand
promissory note (“Buyers Note”) in the
principal amount of $100,000.00. The Note shall be in the form as
described in the attached Exhibit 2(c).
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(d)
Security Agreement . Klein will hold a
security interest in the Acquired Assets pursuant to the
General Security Agreement (“Security
Agreement”) in the form attached hereto as Exhibit
2(d).
(e)
The Closing . The closing of the
transactions contemplated by this Agreement
("Closing" ) shall take place at Townsend and
Townsend and Crew LLP, 379 Lytton Avenue, Palo Alto, CA 94301
on the day this Agreement is signed and
executed or such other date as the Parties may
mutually determine ( Closing Date");
(f)
Deliveries at the Closing . In addition to
any other documents to be delivered under other provisions of
this Agreement, at the Closing:
|
(i)
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Klein
will execute and deliver to Buyers:
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(A)
|
a
bill of sale for the Acquired Assets in the form attached hereto as
Exhibit 2(f)(i);
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(B)
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such
other deeds, bills of sale, assignments, certificates of title,
documents and other instruments as may reasonably be requested by
Rhino or Buyers, each in a form and substance satisfactory to Rhino
and /or Buyers, as the case may be, and their legal
counsel;
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(ii)
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Buyers
will execute and deliver to Klein:
|
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(A)
|
the
Buyers Note and the Security Agreement to Klein;
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(B)
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the
Assumption Agreement;
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(g)
Allocation . The Parties agree to cooperate
with each other in connection with the preparation, execution
and filing of IRS Form 8594 related to allocation of the
Purchase Price; and (iii) they shall promptly advise each
other regarding the existence of any tax audit controversy or
litigation related to such allocation. The parties
acknowledge and agree that, for tax purposes, Buyers are
acquiring all substantial rights to the Acquired
Assets.
3.
Representations and Warranties of Klein
. Klein represents and warrants to Buyers that the
statements contained in this Section 3 are correct and
complete as of the date of this Agreement and will be correct
and complete as of the Closing Date, as though made then and
as though the Closing Date were substituted for the date of
this Agreement throughout this Section
(a)
Noncontravention . Neither the execution and
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, including the assignments
and assumptions referred to in Section 2 above, will (i)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court
to which Klein is subject, or (ii) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which Klein is a party or by which he is bound
or to which any of his assets is subject, or result in the
imposition of any Security Interest upon any of his assets,
except where the violation, conflict, breach, default,
acceleration, termination, modification, cancellation, failure
to give notice, or Security Interest would not have a material
adverse effect or on the ability of the Parties to consummate
the transactions contemplated by this
Agreement. Klein shall not be required to give any
notice to, make any filing with, or obtain any authorization,
consent, or approval of any government or governmental agency
in order for the Parties to consummate the transactions
contemplated by this Agreement, including the assignments and
assumptions referred to in Section 2 above, except where the
failure to give notice, to file, or to obtain any
authorization, consent, or approval would not have a material
adverse effect on the ability of the Parties to consummate the
transactions contemplated by this Agreement.
(b)
Brokers' Fees . Klein has no liability or
obligation to pay any fees or commissions to any broker,
finder, or agent with respect to the transactions contemplated
by this Agreement for which Buyers could become liable or
obligated.
(c)
Title to Assets . Klein has
good and marketable title to the Acquired Assets
free of any liens and encumbrances.
(d)
Rhino Shares/Investment . Klein (i)
understands that the shares of Rhino Outdoor International,
Inc. Common Stock (“Rhino Shares”) which
may be issued to him upon the exercise of the conversion
privileges pursuant to the Buyers Note will not have been
registered under the Securities Act, or under any state
securities laws, and will be issued in reliance upon federal
and state exemptions for transactions not involving any public
offering, and (ii) Klein is acquiring the Rhino Shares solely
for his own account for investment purposes, and not with a
view to the distribution thereof.
Klein acknowledges and agrees that the certificate
evidencing the Rhino Shares will include a legend reading
substantially as follows:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THE SHARES
HAVE BEEN ACQUIRED WITHOUT A VIEW TO DISTRIBUTION AND MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT FOR THE SHARES UNDER THE ACT
AND UNDER ANY APPLICABLE SECURITIES LAWS, OR AN OPINION OF COUNSEL
ACCEPTABLE TO THE CORPORATION THAT SUCH REGISTRATION IS NOT
REQUIRED AS TO SUCH SALE OR OFFER.”
Rhino
Outdoor International, Inc. will provide any necessary opinion
of counsel in order to enable Klein to remove the
above-mentioned legend a the appropriate time. Such
opinion will not be unreasonably withheld or delayed by
Rhino.
(e)
Disclaimer of other Representations and Warranties
. Except as expressly set forth in this Section 3,
Klein makes no representation or warranty, express or implied,
at law or in equity, in respect of the Acquired Assets and the
Assumed Liabilities with respect to merchantability or fitness
for any particular purpose, and any such other representations
or warranties are hereby expressly
disclaimed. Buyers hereby acknowledge and agree
that, except to the extent specifically set forth in this
Section 3, it is purchasing the Acquired Assets on an "as-is,
where-is" basis. Without limiting the generality of
the foregoing, Klein makes no representation or warranty
regarding any assets other than the Acquired Assets or any
liabilities other than the Assumed Liabilities, and none shall
be implied at law or in equity.
4.
Representations and Warranties of Buyers . Buyers
represent and warrant to Klein that the statements contained
in this Section 4 are correct and complete as of the date of
this Agreement and will be correct and complete as of the
Closing Date, as though made then and as though the Closing
Date were substituted for the date of this Agreement
throughout this Section 4.
(a)
Organization of Buyers . Buyers are
corporations duly organized, validly existing, and in good
standing under the laws of the jurisdiction of their
incorporation.
(b)
Authorization of Transaction . Buyers have
full power and authority, including full corporate power and
authority, to execute and deliver this Agreement
and to perform its obligations hereunder. Without
limiting the generality of the foregoing, the board of
directors of Buyers, respectively, have duly authorized the
execution, delivery, and performance of this Agreement by
Buyers, respectively. This Agreement constitutes
the valid and legally binding obligation of Buyers,
enforceable in accordance with its terms and
conditions.
(c)
Noncontravention . Neither the execution and
the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby (including the assignments
and assumptions referred to in Section 2 above), will (i)
violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court
to which Buyers are subject or any provision of their
respective charter or bylaws or (ii) conflict with, result in
a breach of, constitute a default under, result in the
acceleration of, create in any party the right to accelerate,
terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other
arrangement to which Buyers are a party or by which they are
each bound or to which any of their respective assets is
subject.
Neither
Buyer needs to give any notice to, make any filing with, or
obtain any authorization, consent, or approval of any
government or governmental agency in order for the Parties to
consummate the transactions contemplated by this Agreement,
including the assignments and assumptions referred to in
Section 2 above.
(d)
Brokers' Fees . Buyers have no
liability or obligation to pay any fees or commissions to any
broker, finder, or agent with respect to the transactions
contemplated by this Agreement for which
Klein could become liable or
obligated.
(e)
Rhino Shares . Subject to Rule 144
promulgated under the Securities Act and other applicable
state securities laws, when issued pursuant to the conversion
of the Buyers Note the Rhino Shares will be duly issued and
outstanding Common Stock and will not be subject to any
Security Interest or other transfer restrictions other than
under the Securities Act or applicable state securities
laws.
5.
Pre-Closing Covenants . The Parties agree as
follows with respect to the period between the execution of
this Agreement and the Closing.
(a)
General . Each of the Parties will use its
reasonable best efforts to take all action and to do all
things necessary in order to consummate and make effective the
transactions contemplated by this Agreement, including
satisfaction, but not waiver, of the closing conditions set
forth in Section 6 below.
(b)
Ownership of Acquired Assets . Klein will
not engage in any practice, take any action, or enter into any
transaction which will have the affect of causing an Adverse
Consequence to the Acquired Assets.
(c)
Confidentiality . Each of the Parties will
treat and hold in the strictest confidence any Confidential
Information it receives from the other in the course of the
negotiation and preparation of this Agreement and will not
use any of the Confidential Information except in connection
with this Agreement, and in addition shall not directly or
indirectly disclose, copy, distribute, republish or allow any
third party to have access to any Confidential Information
except to the extent necessary to effect the transactions
contemplated under this Agreement, and in such cases solely
to their respective officers, counsel, accountants and
similar agents , and, if this
Agreement is terminated for any reason whatsoever, will
return to Klein all tangible embodiments, and all copies of
the Confidential Information which are in their respective
possession, custody or control.
6.
Conditions to Obligation to Close .
(a)
Conditions to Obligation of Buyers . The
obligation of Buyers to consummate the transactions to be
performed by them in connection with the Closing is subject to
satisfaction of the following conditions:
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(i)
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the
representations and warranties set forth in Section 3 above shall
be true and correct in all material respects at and as of the
Closing Date;
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(ii)
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Klein
shall have performed and complied with all of its covenants
hereunder in all material respects through the
Closing;
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(iii)
|
there
shall not be any injunction, judgment, order, decree, ruling, or
charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
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(iv)
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all
actions to be taken by Klein in connection with consummation of the
transactions contemplated hereby and all certificates, instruments,
and other documents required to effect the transactions
contemplated hereby will be reasonably satisfactory in form and
substance to Buyers. Delivery of past financial
statements or records by Klein, however will not be condition to
the Closing.
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Buyers may waive any
condition specified in this Section 6(a) if they execute a
writing so stating at or prior to the Closing.
(b)
Conditions to Obligation of Klein . The
obligation of Klein to consummate the transactions to be
performed by him in connection with the Closing is subject to
satisfaction of the following conditions:
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(i)
|
the
representations and warranties set forth in Section 4 above shall
be true and correct in all material respects at and as of the
Closing Date;
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(ii)
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Buyers
shall have performed and complied with all of their covenants
hereunder in all material respects through the
Closing;
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(iii)
|
there
shall not be any injunction, judgment, order, decree, ruling, or
charge in effect preventing consummation of any of the transactions
contemplated by this Agreement;
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(iv)
|
Buyers
shall have delivered to Klein a certificate executed by their
respective Officers to the effect that each of the conditions
specified above in Section 6(b)(i)-(iii) is satisfied in all
respects, along with copies of resolutions of the Boards of
Directors of Buyers, respectively, authorizing this Agreement and
the transactions contemplated hereunder.
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(v)
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all
actions to be taken by Buyers in connection with consummation of
the transactions contemplated hereby and all certificates,
instruments, and other documents required to effect the
transactions contemplated hereby will be reasonably satisfactory in
form and substance to Klein.
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Klein may waive any
condition specified in this Section 6(b) if it executes a
writing so stating at or prior to the Closing.
7.
Termination .
(a)
Termination of Agreement . The Parties may
terminate this Agreement as provided below:
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(i)
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The
Parties may terminate this Agreement by written consent of all
Parties at any time prior to the Closing;
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(ii)
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Buyers
may terminate this Agreement by giving written notice to Klein at
any time prior to the Closing in the event Klein has
breached any representation, warranty, or covenant
contained in this Agreement in any material respect, Buyers have
notified Klein of the breach, and the breach has continued without
cure for a period of thirty (30) days after the notice of breach;
and
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(iii)
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Klein
may terminate this Agreement by giving written notice to Buyers at
any time prior to the Closing in the event Buyers have breached any
material representation, warranty, or covenant contained in this
Agreement in any material respect, Klein has notified Buyers of the
breach, and the breach has continued without cure for a period of
thirty (30) days after the notice of breach.
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(b)
Effect of Termination . If any Party
terminates this Agreement pursuant to Section 7(a) above, all
rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other
Party, except for any liability of any Party then in breach;
provided, however , that the confidentiality provisions
contained in Section 5(c) above shall survive
termination.
8.
Indemnification .
(a)
Indemnification Provisions for Benefit of Buyers
.
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(i)
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In
the event Klein breaches any of his representations, warranties,
and covenants contained in this Agreement, then Klein agrees to
indemnify each Buyer, their respective directors, officers,
shareholders, agents, attorneys and employees (each, a
“Buyer Indemnified Party”) from and against
any Adverse Consequences a Buyer Indemnified Party shall suffer
through and after the date of the claim for indemnification caused
by the breach; provided, however , that Klein shall not have
any obligation to indemnify a Buyer Indemnified Party from and
against any Adverse Consequences until the Buyer Indemnified Party
has suffered Adverse Consequences by reason of all such breach in
excess of Two Hundred Thousand Dollars
($200,000). If the Buyer Indemnified Party has suffered
Adverse Consequences greater than $200,000, Klein will indemnify
Buyer Indemnified Party for no more than $25,000.
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(b)
Indemnification Provisions for Benefit of Klein
.
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(i)
|
In
the event Buyers breaches any of their representations, warranties,
and covenants contained in this Agreement, including the Assumption
Agreement and other exhibits attached hereto, then Rhino and Buyers
agree to indemnify Klein, his agents, attorneys and employees
(each, a “ Klein Indemnified Party” ) from and
against the entirety of any Adverse Consequences a Klein
Indemnified Party shall suffer through and after the date of the
claim for indemnification caused by the breach.
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(ii)
|
Buyers
agrees to indemnify each Klein Indemnified Party from and against
the entirety of any Adverse Consequences such Klein Indemnified
Party shall suffer due to or arising from any liability of Klein
which is an Assumed Liability.
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(iii)
|
In
the event Rhino breaches any of its representations,
warrantie
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