EXHIBIT 10.1
DEBENTURE PURCHASE AGREEMENT
DEBENTURE PURCHASE AGREEMENT (this "Agreement"), dated as of September 9,
2005, by and among EUROFORTUNE HOLDING, S.A., a Luxembourg company, ("Buyer"),
HEM MUTUAL ASSURANCE LLC, a Colorado limited liability company ("Seller"), and
HERITAGE WORLDWIDE, INC., a Delaware corporation (the "Company").
R E C I T A L S :
Seller desires to sell to Buyer, and Buyer desires to purchase from Seller,
all right, title and interest in and to (a) the 1% Convertible Debenture Due
October 9, 2008, dated October 9, 2003, with a stated principal amount of
$498,750, issued by the Company's wholly-owned subsidiary and predecessor in
interest, OS MXM, Inc. ("OS"), to Seller, and titled 'First Debenture A' ("First
Debenture A"), (b) the 1% Convertible Debenture Due October 9, 2008, dated
October 9, 2003, with a stated principal amount of $500,000, issued by the
Company's wholly-owned subsidiary and predecessor in interest, OS, to Seller,
and titled 'First Debenture B' ("First Debenture B"), and (c) the 1% Convertible
Debenture Due October 9, 2008, dated October 9, 2003, with a stated principal
amount of $1,250, issued by the Company's wholly-owned subsidiary and
predecessor in interest, OS, and titled 'Second Debenture' ("Second Debenture"
and together with First Debenture A and First Debenture B, the
"Debentures"),owned by Seller, all upon the terms and subject to conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements set
forth herein, the parties hereto hereby agree as follows:
1. PURCHASE AND SALE.
1.1 Purchase and Sale. In consideration of the payment by Buyer of
the Purchase Price (as defined in Section 1.2 below), and subject to the
satisfaction of the conditions set forth in Section 4 herein, Seller hereby
sells, assigns, transfers, conveys and delivers to Buyer, and Buyer hereby
purchases, acquires and takes assignment and delivery of, all the right, title
and interest of Seller in and to the Debentures as of the date hereof (the
"Closing Date").
1.2 Purchase Price. The aggregate purchase price for the Debentures
(the "Purchase Price") shall be $1,048,897 (which amount includes a premium
payment of $80,000). Subject to the last paragraph of Section 4, the Purchase
Price is payable on the Closing Date in cash, by certified or bank check or by
wire transfer of immediately available funds to such accounts as Seller may
designate in writing.
1.3. Delivery of the Debentures and Escrow Shares. On the Closing
Date, Seller shall (a) deliver to Buyer the Debentures together with any
instruments reasonably requested by Buyer to properly transfer ownership to
Buyer, and (b) subject to Section 5.3, deliver to the Company stock certificates
issued in the name of and registered to Seller representing 10,000,000 shares of
the Company's common stock owned by Seller together with any stock powers
(including stock powers with a medallion guaranty) that the Company's transfer
agent requires to effect the transfer to the Company.
2. REPRESENTATIONS AND WARRANTIES OF SELLER.
Seller hereby represents and warrants to Buyer and the Company as follows:
2.1. Organization of Seller. Seller is a limited liability company
duly organized, validly existing and in good standing under the laws of its
jurisdiction of organization.
2.2. Authority. Seller has all requisite power and authority to
execute and deliver this Agreement and to carry out its obligations hereunder.
Seller has obtained all necessary organizational approvals for the execution and
delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered by Seller and (assuming due
authorization, execution and delivery by the other parties hereto) constitutes
Seller's legal, valid and binding obligation, enforceable against it in
accordance with its terms.
2.3 Ownership. Seller owns the Debentures, free and clear of all
liens, pledges, security interests, claims, options, restrictions, proxies or
other encumbrances ("Liens"). Upon consummation of the transactions contemplated
hereby, Buyer will acquire good and marketable title to the Debentures, free and
clear of any Liens. Seller has not transferred all or any portion of any
Debenture (or any right thereunder) or granted any person or entity the right to
acquire any of the preceding since the original issuance of such Debenture.
Except as set forth on Schedule 2.3, Seller has not converted all or any portion
of any Debenture into capital stock of the Company since the original issuance
of such Debenture. Except as set forth on Schedule 2.3, Seller does not own and
has never owned (a) any equity interest in the Company, (b) any instrument,
security or other right that is convertible or exercisable into any equity
interest of the Company or (c) any other right to acquire any equity interest in
the Company, in each case other than the Debentures to be transferred to Buyer
hereunder. Upon the closing of this Agreement, Seller and Gottbetter (as defined
below) will have transferred to the Company (in the aggregate) 10,000,000 shares
of the Company's common stock free and clear of any Liens.
2.4 Escrow Account. Schedule 2.4 sets forth the number of shares of
the Company's common stock held in escrow pursuant to that certain Escrow
Agreement (the "Escrow Agreement") dated as of October 9, 2003 by and among the
Company, Gottbetter & Partners, LLP ("Gottbetter"), as escrow agent, and Seller.
Except as set forth on Schedule 2.4, since the original issuance of the
Debentures, none of the shares of the Company's common stock deposited or
required to be deposited in escrow under the Escrow Agreement has been released
to Seller or any other person or entity. The Escrow Agreement replaced and
superseded in all respects the Escrow Agreement dated October 2003, by and among
OS, Gottbetter, as escrow agent and Seller and included as Exhibit F to the
Convertible Debenture Purchase Agreement (the "Original Debenture Purchase
Agreement") dated as of October 9, 2003 between OS and Seller.
2.5 Non-Contravention. None of the execution and delivery by Seller
of this Agreement or the performance of its obligations hereunder or the
consummation of the transactions contemplated hereby (a) will conflict with
Seller's organizational documents or will, with or without notice, the passage
of time or both, constitute a breach or violation of, be in conflict with, or
constitute or create a default under, (i) any contract or instrument to which
Seller is a party or by which it is bound or (ii) any applicable law or (b)
require the consent or approval of any third party or governmental authority
relating to Seller.
2.6. Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the participation of any person or entity acting on behalf of Seller in such
manner as to give rise to any valid claim against Buyer or the Company for any
brokerage or finder's fee, commission or similar compensation.
3. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller as follows:
3.1. Organization of Buyer. Buyer is duly organized or incorporated,
validly existing and in good standing (to the extent such concept is applicable)
under the laws of its jurisdiction of formation.
3.2 Authority. Buyer has all requisite power and authority to execute
and deliver this Agreement and to carry out its obligations hereunder. Buyer has
obtained all necessary corporate or organizational approvals for the execution
and delivery of this Agreement and the performance of its obligations hereunder.
This Agreement has been duly executed and delivered by Buyer and (assuming due
authorization, execution and delivery by the other parties hereto) constitutes
Buyer's legal, valid and binding obligation, enforceable against it in
accordance with its terms.
3.3 Non-Contravention. None of the execution and delivery by Buyer of
this Agreement or the performance of its obligations hereunder or the
consummation by Buyer of the transactions contemplated hereby will conflict with
Buyer's organizational documents or will, with or without notice, the passage of
time or both, constitute a breach or violation of, be in conflict with, or
constitute or create a default under, (a) any material contract to which Buyer
is a party or by which it is bound or (b) any applicable law relating to Buyer.
3.4. Brokers, Finders, etc. All negotiations relating to this
Agreement and the transactions contemplated hereby have been carried on without
the participation of any person or entity acting on behalf of Buyer in such
manner as to give rise to any valid claim against Seller for any brokerage or
finder's fee, commission or similar compensation.
4. CONDITIONS TO THE CLOSING.
Buyer's obligation to purchase the Debentures are expressly conditioned
upon the occurrence of the following conditions:
(a) the payment by Gottbetter to the Company of the following amounts:
(i) $2,690.30, representing the amount remaining in the Company's
retainer account with Gottbetter;
(ii) $6,931.09, representing amounts applied by Gottbetter from
the Company's retainer account for legal fees during November and December 2004;
and
(iii) $1,940.64, representing the amount paid by the Company to
Gottbetter in an attempt to partially redeem a Debenture that was never
redeemed;
(b) the delivery by Seller to Buyer of the Debentures, together with
any instruments reasonably requested by Buyer to properly transfer ownership to
Buyer;
(c) the delivery by Gottbetter to the Company of a certificate
certifying the funds and securities held in escrow under the Escrow Agreement
and the retainer amounts specified in clauses (a)(i)-(iii) above;
(d) the delivery of all certificates of the Company's stock held or
required to be held in escrow pursuant to the Escrow Agreement and any stock
certificates which were released from escrow prior to the Closing Date to the
Company's transfer agent (or to the Company for delivery to the Company's
transfer agent), which certificates should represent no less than 10,000,000
shares of the Company's common stock, together (i) with a letter instructing the
transfer agent to reissue such shares at the direction of the Company to such
persons and with such legends as the Company may so direct, if required to
transfer such shares and (ii) with any stock powers (including stock powers with
a medallion guaranty) that the Company's transfer agent requires to effect such
transfer; and
(e) the resignation of Gottbetter as escrow agent under the Escrow
Agreement, the delivery by Gottbetter to its replacement escrow agent of all
securities and funds held or required to be held in the escrow account under the
Escrow Agreement and the termination of any powers of attorney granted to
Gottbetter by the Company and its predecessors (including, without limitation,
OS).
Notwithstanding the foregoing, the payments required to be made by
Gottbetter under Section 6(a)(i-iii) above may be reduced by $1,200,
representing legal fees charged by Gottbetter for 3.5 hours of time spent on the
potential conversion of a Debenture and other related matters.
The parties agree that the net payment from Buyer to Seller at the closing
shall be $1,038,534.97 (representing the Purchase Price, minus the amounts in
Section 6(a)(i)-(iii), plus the $1,200 discussed in the preceding sentence).
Upon payment of $1,038,534.97 from Buyer to Seller, the closing conditions set
forth in Section 6(a)(i-iii) and the second preceding sentence shall be deemed
satisfied and the Purchase Price shall be deemed paid to Seller; provided,
however, Buyer agrees to reimburse the Company $10,362.03 (representing the
amounts owed to the Company under Section 6(a)(i-iii) minus the amount owed by
the Company in the second preceding sentence).
5. PURCHASE AGREEMENT RIGHTS; CONVERSION NOTICES VOID; ALTERNATIVE
TRANSFEROR OF CERTAIN SHARES UNDERLYING DEBENTURES.
5.1 Purchase Agreement Rights. All rights of Seller under the Original
Debenture Purchase Agreement, the Escrow Agreement and the other agreements and
instruments executed in connection with the Original Debenture Purchase
Agreement shall be automatically transferred to Buyer upon the Closing Date,
without any further action required on the part of any party.
5.2 Prior Conversions Rescinded and Unwound. Seller agrees that any
conversions of, and pending notices to convert, any portion of a Debenture into
the Company's capital stock is rescinded and of no effect (including, without
limitation, the attempt to convert under the conversion notice dated June 2,
2005). Seller hereby revokes any such conversion notices, unwinds all prior
conversions and has returned to the escrow agent an equal number of shares of
the Company's common stock (100,000 shares) that it had received in connection
with such prior conversions. Such shares of common stock are included in the
shares transferred in Section 1.3 above.
5.3 Alternative Transferor for Certain Shares Underlying Debentures.
Notwithstanding anything in this Agreement to the contrary, Buyer and the
Company acknowledge and agree that stock certificates in the name of and
registered to Gottbetter representing 50,000 shares of the Common Stock are
being transferred to the Company under Section 1.3. Such 50,000 shares of the
Common Stock shall count towards the 10,000,000 shares of the Common Stock
required to be transferred from Seller to the Company hereunder, and all
applicable provisions of this Agreement shall be deemed revised to reflect that
9,950,000 shares of the Common Stock are being transferred hereunder from Seller
to the Company and 50,000 shares of the Common Stock are being transferred
hereunder from Gottbetter to the Company; provided, however, Seller shall still
(a) have the obligation to ensure that the Company receives 10,000,000 shares of
the Common Stock hereunder pursuant to Section 1.3 and (b) make the
representations and warranties described in Section 2.3 with respect to all
10,000,000 shares of the Common Stock.
6. INDEMNIFICATION.
6.1. Indemnification by Seller. Seller agrees to defend, indemnify,
hold harmless, pay or reimburse each of Buyer and the Company, any subsidiary or
affiliate thereof and its officers, directors, shareholders and controlling
persons, employees, agents, successors and assigns from and against any and all
liabilities, losses, damages, claims, costs, expenses, judgments, interest and
penalties (including, without limitation, attorneys', accountants' and outside
advisors' fees and disbursements) (collectively, "Losses") incurred as a result
of, arising out of or resulting from (i) the breach of any representation or
warranty made by Seller and contained in this Agreement or (ii) the breach of
any covenant or agreement made by Seller and contained in this Agreement or
(iii) any Losses incurred by the Company under the medallion guaranty indemnity
letter provided by the Company to Contintenal Stock Transfer and Trust Company
dated on or around the Closing Date pursuant to which the Company waived the
medallion guaranty signature requirement for Seller's transfer to the Company of
9,950,000 shares of the Company's common stock.
6.2. Indemnification by Buyer. Buyer agrees to defend, indemnify, hold
harmless, pay or reimburse Seller, any subsidiary or affiliate thereof and its
officers, directors, shareholders and controlling persons, employees, agents,
successors and assigns from and against any and all Losses incurred as a result
of, arising out of or resulting from (i) the breach of any representation or
warranty made by Buyer and contained in this Agreement or (ii) the breach of any
covenant or agreement made by Buyer and contained in this Agreement.
6.3. Survival of Representations and Warranties. The representations,
warranties, covenants and agreements made by Buyer and Seller shall survive the
signing and consummation of this Agreement. All representations, covenants and
warranties made by Seller in this Agreement will be deemed to have been relied
upon by Buyer (notwithstanding any investigation by Buyer). All representations,
covenants and warranties made by Buyer in this Agreement will be deemed to have
been relied upon by Seller (notwithstanding any investigation by Seller).
6.4. Notice of Claims. An indemnified party shall give prompt written
notice to the indemnifying party of any claim against the indemnified party
which might give rise to a claim by the indemnified party against the
indemnifying party under the indemnification provisions contained herein,
stating the nature and basis of the claim and the actual or estimated amount
thereof, provided, however, that failure to give such notice will not affect the
obligation of the indemnifying party to provide indemnification in accordance
with the terms of Section 6.1 or 6.2 unless, and only to the extent that, the
indemnifying party is actually prejudiced thereby. In the event that any action,
suit or proceeding is brought against any indemnified party with respect to
which the indemnifying party may have liability under the indemnification
provisions contained herein, the indemnifying party shall, upon written
acknowledgement by the indemnifying party that such action, suit or proceeding
is an indemnifiable Loss pursuant to Section 6.1 or 6.2, have the right, at the
cost and expense of the indemnifying party, to defend such action in the name
and on behalf of the indemnified party (using counsel satisfactory to the
indemnified party), and, in connection with any such action, the indemnified
party and the indemnifying party agree to render to each other such assistance
as may reasonably be required in order to ensure proper and adequate defense of
such action, provided, however, that an indemnified party shall have the right
to retain its own counsel, with fees and expenses paid by the indemnifying
party, if representation of such indemnified party by counsel retained by the
indemnifying party would be inappropriate because of actual or potential
differing interests between such indemnified party and the indemnifying party.
If the indemnifying party shall fail to defend such action, suit or proceeding,
then the indemnified party shall have the right to defend such action without
prejudice to its rights to indemnification under Section 6.1 or 6.2 and, in
connection therewith, the indemnified party and the indemnifying party agree to
render to each other such assistance as may reasonably be required in order to
ensure proper and adequate defense of such action. Neither the indemnified party
nor the indemnifying party shall make any settlement of any claim which might
give rise to liability of the indemnifying party under the indemnification
provisions contained herein without the written consent of each party, which
consent shall not be unreasonably withheld, delayed or conditioned.
7. GENERAL.
7.1. Expenses. All expenses of the preparation, execution and
consummation of this Agreement and of the transactions contemplated hereby
including, without limitation, attorneys', accountants' and outside advisors'
fees and disbursements, shall be borne by the party incurring such expense.
7.2. Entire Agreement. This Agreement contains the entire
understanding of the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof and this Agreement shall
not be amended or waived (in full or in part) except by a written instrument
hereafter signed by all of the parties hereto.
7.3. Assignment. None of the parties hereto may assign its rights or
delegate its obligations under this Agreement without the written consent of the
other parties hereto. This Agreement and all of the provisions hereof shall be
binding upon and inure only to the benefit of the parties hereto and their
respective heirs, executors, personal representatives and successors.
7.4. Further Action. Each of the parties hereto shall use all
reasonable efforts to do, or cause to be done, all things necessary, proper or
advisable under applicable law to carry out the provisions of this Agreement and
shall execute and deliver such documents and other papers as may be required to
carry out the provisions of this Agreement.
7.5. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed given if
delivered personally or by fax or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):
if to Buyer:
Eurofortune Holding, S.A.
00 Xxx Xxxxx xx Xxxxxxxxxx
X 0000 Xxxxxxxxxx
Xxxxxxxxxx
Attention: Me. Alain Sereyjol-Garros
if to the Company:
Heritage Worldwide, Inc.
000 Xxxxxx xx Xxxxxxxxx - 00000
Xx Xxxxx-Xxx-Xxx, Xxxxxx
Attention: Xxxxxx Xxxxx
Telecopy: (00) 000-0000-00
in each case, with a copy to:
Xxxxxxx & Xxxxxx LLP
000 Xxxx Xxx Xxxx Xxxxxxxxx
Xxxxx 0000
Xxxx Xxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx, P.A.
Telecopy: (000) 000-0000
if to Seller:
HEM Mutual Assurance LLC
c/o HEM Mutual Assurance Limited
00 Xxxxxxxx Xxxxxx
Xxxxxx X0X 0XX
Xxxxxx Xxxxxxx
Attention: Fabrice Viguier or Xxxxx Xxxxxxxx
Telecopy: [011 020 7355 4975]
and
Global Emerging Markets
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxx
Telecopy: (000) 000-0000
with a copy to:
Xxxxxxxxx & Associates
000 Xxxx Xxxxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Attention: August X. Xxxxxxxxx, Esq.
Telecopy: (000) 000-0000
and
Gottbetter & Partners, LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxxxxxx, Esq.
Telecopy No.: (000) 000-0000
7.6. Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated thereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in a mutually acceptable manner in
order that the transactions contemplated by this Agreement be consummated as
originally contemplated to the fullest extent possible.
7.7. Headings. The headings of Sections and Subsections are for
reference only and shall not limit or control the meaning thereof.
7.8. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the different parties
to this Agreement need not execute the same counterpart.
7.9. Exhibits and Schedules. All exhibits and schedules to this
Agreement are hereby incorporated by reference and made a part of this
Agreement. Each such exhibit and schedule shall be read independent of any other
exhibit or schedule. The disclosure on the schedules shall be deemed
representations and warranties made by Seller under the section number to which
such disclosure schedule relates.
7.10. No Third Party Beneficiaries. Except as provided in Section 6,
nothing herein shall create or establish any third-party beneficiary hereto nor
confer upon any person not a party to this Agreement any rights or remedies of
any nature or kind whatsoever under or by reason of this Agreement.
7.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York applicable to a
contract executed and performed in such State without giving effect to the
conflicts of laws principles thereof.
7.12. Consent to Jurisdiction. The parties irrevocably agree that all
actions arising under or relating to this Agreement and the transactions
contemplated hereby shall be brought exclusively in any United States District
Court or New York State Court located in New York, New York having subject
matter jurisdiction over such matters, and each of the parties hereby consents
and agrees to such personal jurisdiction, and waives any objection as to the
venue, of such courts for purposes of such action.
7.13. Signatures. This Agreement shall be effective upon delivery of
original signature pages or facsimile copies thereof executed by each of the
parties.
7.14. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT
ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY
CONNECTED WITH THIS AGREEMENT.
IN WITNESS WHEREOF, and intending to be legally bound thereby, the parties
hereto have caused this Agreement to be duly executed and delivered by their
duly authorized officers as of the date and year first above written.
EUROFORTUNE HOLDING, S.A.
By: /s/ Alain Sereyjol-Garros
----------------------------------
Name: Alain Sereyjol-Garros
Title: Director
HEM MUTUAL ASSURANCE, LLC
By: /s/ Xxxxx Xxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxx
Title: Manager
HERITAGE WORLDWIDE, INC.
By: /s/ Xxxx Xxxxxx Mas
----------------------------------
Name: Xxxx Xxxxxx Mas
Title: Chairman of the Board
Schedule 2.3
On or around October 27, 2004, Seller converted $100 of principal of Second
Debenture into 100,000 shares of the Company's common stock. Seller has returned
100,000 shares of the Company's common stock to escrow (under the Escrow
Agreement) on or before the closing of this Agreement, and is rescinding and
unwinding such conversion pursuant to Section 5.2. Such 100,000 shares of the
Company's common stock are being transferred hereunder to the Company, free of
any Liens.
On June 2, 2005, Seller attempted to convert $100 of principal (with $1.65 of
interest) of Second Debenture into 101,650 shares of the Company's common stock.
Pursuant to Section 5.2, Seller rescinded such conversion notice, and it is of
no effect. The 101,650 shares of the Company's common stock described in such
notice never left escrow (under the Escrow Agreement) and are being transferred
hereunder to the Company, free of any Liens.
Schedule 2.4
As of the Closing Date, there are 10,000,000 shares of the Company's common
stock held in escrow under the Escrow Agreement.
See Schedule 2.3 for a description of prior conversions and the rescission and
unwinding of such conversions.
