Document:

f8k072011ex10xxi_medicalcare.htm

Exhibit 10.21

 

SECURITIES PURCHASE AGREEMENT

 

This SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of July 20, 2011, by and between MEDICAL CARE TECHNOLOGIES INC., a Nevada corporation, with headquarters located at Room 815, No. 2 Building Beixiaojie, Dongzhimen Nei, Beijing, People's Republic of China 10009 (the “Company”), and ASHER ENTERPRISES, INC., a Delaware corporation, with its address at 1 Linden Place, Suite 207, Great Neck, NY 11021 (the “Buyer”).

 

WHEREAS:

 

A.           The Company and the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “1933 Act”);

 

B.           Buyer desires to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $32,500.00 (together with any note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof, the “Note”), convertible into shares of common stock, $0.00001 par value per share, of the Company (the “Common Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.

 

C.           The Buyer wishes to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth immediately below its name on the signature pages hereto; and

 

NOW THEREFORE, the Company and the Buyer severally (and not jointly) hereby agree as follows:

 

       1.           Purchase and Sale of Note.

 

a.           Purchase of Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages hereto.

 

b.           Form of Payment. On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company, in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.

  

  

  

            c.           Closing Date. Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon, Eastern Standard Time on July 22, 2011, or such other mutually agreed upon time. The closing of the transactions contemplated by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.

 

       2.           Buyer’s Representations and Warranties.     The  Buyer represents and

warrants to the Company that:

 

a.           Investment Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable (i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement, such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however, that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the 1933 Act.

 

b.           Accredited Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an “Accredited Investor”).

 

c.           Reliance on Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions from the registration requirements of United States federal and state securities laws and that the Company is relying upon the truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the Buyer to acquire the Securities.

 

d.           Information. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer understands that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute a breach of any of the Company's representations and warranties made herein.

  

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e.           Governmental Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency has passed upon or made any recommendation or endorsement of the Securities.

 

f.           Transfer or Re-sale. The Buyer understands that (i) the sale or re­ sale of the Securities has not been and is not being registered under the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate” (as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona fide margin account or other lending arrangement.

 

g.           Legends. The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer order may be placed against transfer of the certificates for such Securities):

  

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“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A    UNDER    SAID ACT.NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

 

The legend set forth above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements, if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

 

h.           Authorization; Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.

 

 i.           Residency.   The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.

 

       3.           Representations   and   Warranties   of   the   Company.      The   Company represents and warrants to the Buyer that:

  

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a.           Organization and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect. “Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership interest.

 

b.           Authorization; Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required, (iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized representative is the true and official representative with authority to sign this Agreement and the other documents executed in connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms.

 

  

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c.           Capitalization. As of the date hereof, the authorized capital stock of the Company consists of: (i) 500,000,000 shares of Common Stock, $0.00001 per share, of which 209,268,992 shares are issued and outstanding; and (ii) 100,000,000 shares of Preferred Stock, $0.00001 per share, of which no shares are issued and outstanding; no shares are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities (other than the Note and four (4) prior convertible promissory notes in favor of the Buyer: (a) prior convertible promissory note dated February 1, 2011 in the amount of $50,000.00 for which 38,162,695 shares of Common Stock are presently reserved; (b) prior convertible promissory note dated March 11, 2011 in the amount of $32,500.00 for which 9,832,098 shares of Common Stock are presently reserved and (c) prior convertible promissory note dated April 12, 2011 in the amount of $32,500.00 for which 21,922,921 shares of Common Stock are presently reserved and (d) prior convertible promissory note dated June 1, 2011 in the amount of $32,500.00 for which 20,077,923 shares of Common Stock are presently reserved) exercisable for, or convertible into or exchangeable for shares of Common Stock and 19,545,737 shares are reserved for issuance upon conversion of the Note (subject to adjustment pursuant to the Company’s covenant set forth in Section 4(g) below). All of such outstanding shares of capital stock are, or upon issuance will be, duly authorized, validly issued, fully paid and non­assessable. No shares of capital stock of the Company are subject to preemptive rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions or failure to act of the Company. As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip, rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the 1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares. The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect on the date hereof (“Certificate of Incorporation”), the Company’s By­laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.

 

d.           Issuance of Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Company and will not impose personal liability upon the holder thereof.

 

e.           Acknowledgment of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.

  

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 f.           No Conflicts. The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares) will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect. The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency, regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is not in violation of the listing requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate that the Common Stock will be delisted by the OTCBB in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

            

  

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              g.           SEC Documents; Financial Statements.  The Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934 Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred to herein as the “SEC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents, the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business subsequent to March 31, 2011, and (ii) obligations under contracts and commitments incurred in the ordinary course of business and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to the reporting requirements of the 1934 Act.

 

             h.           Absence of Certain Changes.   Since March 31, 2011, there has been no material adverse change and no material adverse development in the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting status of the Company or any of its Subsidiaries.

 

             i.           Absence of Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give rise to any of the foregoing.

 

             j.           Patents,   Copyrights,   etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names, trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person; and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual Property.

  

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             k.           No Materially Adverse Contracts, Etc.   Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.

 

             l.           Tax Status. The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s tax returns is presently being audited by any taxing authority.

 

   m.          Certain Transactions. Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner.

 

             n.           Disclosure. All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct in all material respects and the Company has not omitted to state any material fact necessary in order  to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).

  

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             o.           Acknowledgment Regarding Buyer’ Purchase of Securities.   The Company acknowledges and agrees that the Buyer is acting solely in the capacity of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely incidental to the Buyer’ purchase of the Securities. The Company further represents to the Buyer that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.

 

             p.           No Integrated Offering.    Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions applicable to the Company or its securities.

 

             q.           No Brokers. The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or similar payments relating to this Agreement or the transactions contemplated hereby.

 

             r.           Permits; Compliance. The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements, variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a Material Adverse Effect. Since March 31, 2011, neither the Company nor any of its Subsidiaries has received any notification with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts, defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.

  

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             s.           Environmental Matters.

 

                (i)              There are, to the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities, circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state, local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing, nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.

 

                (ii)              Other than those that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s or any of its Subsidiaries’ business.

 

                (iii)              There are no underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are not in compliance with applicable law.

 

             t.           Title to Property.   The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would not have a Material Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.

 

             u.           Insurance.  The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability coverage, errors and omissions coverage, and commercial general liability coverage.

  

11

  

 

             v.           Internal Accounting Controls.    The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

w.           Foreign Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment to any foreign or domestic government official or employee.

 

             x.           Solvency.   The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not, after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue a qualified opinion in respect of its current fiscal year.

 

             y.           No Investment Company.    The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”). The Company is not controlled by an Investment Company.

  

12

  

 

z.           Breach of Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an Event of default under Section 3.4 of the Note.

 

       4.           COVENANTS.

 

a.           Best Efforts. The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.

 

b.           Form D; Blue Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing Date.

 

c.           Use of Proceeds. The Company shall use the proceeds for general working capital purposes.

 

d.           Right of First Refusal. Unless it shall have first delivered to the Buyer, at least seventy two (72) hours prior to the closing of such Future Offering (as defined herein), written notice describing the proposed Future Offering, including the terms and conditions thereof and proposed definitive documentation to be entered into in connection therewith, and providing the Buyer an option during the seventy two (72) hour period following delivery of such notice to purchase the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations referred to in this sentence and the preceding sentence are collectively referred to as the “Right of First Refusal”) (and subject to the exceptions described below), the Company will not conduct any equity financing (including debt with an equity component) (“Future Offerings”) during the period beginning on the Closing Date and ending twelve (12) months following the Closing Date. In the event the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of the proposed Future Offering and the Buyer thereafter shall have an option during the seventy two (72) hour period following delivery of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed Future Offering, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed Future Offering. The Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a firm commitment underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition of a business, product or license by the Company. The Right of First Refusal also shall not apply to the issuance of securities upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option or restricted stock plan approved by the shareholders of the Company.

  

13

  

 

e.           Expenses. At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation, preparation, execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”), including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated by the Documents. When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice by the Buyer. The Company’s obligation with respect to this transaction is to reimburse Buyer’ expenses shall be $2,500.

 

f.           Financial Information. Upon written request the Company agrees to send or make available the following reports to the Buyer until the Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1) day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company makes available or gives to such shareholders.

 

g.           [INTENTIONALLY DELETED]

 

h.           Listing.   The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB or any equivalent replacement exchange, the Nasdaq National Market (“Nasdaq”), the Nasdaq SmallCap Market (“Nasdaq SmallCap”), the New York Stock Exchange (“NYSE”), or the American Stock Exchange (“AMEX”) and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any notices it receives from the OTCBB and any other exchanges or quotation systems on which the Common Stock is then listed regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.

  

14

  

 

             i.           Corporate Existence.  So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded corporation whose Common Stock is listed for trading on the OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.

 

             j.           No Integration.  The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would require registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable to the Company or its securities.

 

             k.           Breach of Covenants.     If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4 of the Note.

 

             l.           Failure to Comply with the 1934 Act.    So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.

 

m.          Trading Activities. Neither the Buyer nor its affiliates has an open short position in the common stock of the Company and the Buyer agree that it shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions with respect to the common stock of the Company.

  

15

  

 

       5.           Transfer  Agent  Instructions.     The  Company  shall  issue  irrevocable instructions to its transfer agent to issue certificates, registered in the name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”). In the event that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect in any way the Buyer’s obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any, upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend, in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer, without the necessity of showing economic loss and without any bond or other security being required.

 

       6.           Conditions to the Company’s Obligation to Sell.   The obligation of the Company hereunder to issue and sell the Note to the Buyer at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:

 

a.           The Buyer shall have executed this Agreement and delivered the same to the Company.

 

b.           The Buyer shall have delivered the Purchase Price in accordance with Section 1(b) above.

 

c.           The representations and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.

  

16

  

 

           d.           No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

      7.           Conditions to The Buyer’s Obligation to Purchase.  The obligation of the Buyer hereunder to purchase the Note at the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:

 

a.           The Company shall have executed this Agreement and delivered the same to the Buyer.

 

b.           The Company shall have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance with Section 1(b) above.

 

c.           The Irrevocable Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyer, shall have been delivered to and acknowledged in writing by the Company’s Transfer Agent.

 

d.           The representations and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the transactions contemplated hereby.

 

e.           No litigation, statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

f.           No event shall have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.

  

17

  

 

g.           The Conversion Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not have been suspended by the SEC or the OTCBB.

 

h.           The Buyer shall have received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.

 

      8.           Governing Law; Miscellaneous.

 

a.           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 conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

 

b.           Counterparts; Signatures by Facsimile. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party. This Agreement, once executed by a party, may be delivered to the other party hereto by facsimile transmission of a copy of this Agreement bearing the signature of the party so delivering this Agreement.

 

c.           Headings. The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of, this Agreement.

 

d.           Severability. In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law.   Any provision hereof which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision hereof.

  

18

  

 

e.           Entire Agreement; Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.

 

f.           Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

	 	If to the Company, to:
	 	 	
MEDICAL CARE TECHNOLOGIES INC.

Room 815, No. 2 Building Beixiaojie, Dongzhimen Nei

Beijing, People's Republic of China 10009

Attn: NING C. WU, President

facsimile: [enter fax number]

	 	 	 
	 	With a copy by fax only to (which copy shall not constitute notice): 
	 	 	
[enter name of law firm] 

Attn: [attorney name] 

[enter address line 1] 

[enter city, state, zip] 

facsimile: [enter fax number]

	 	 	 
	 	 	
If to the Buyer:

ASHER ENTERPRISES, INC. 

1 Linden Pl., Suite 207 

Great Neck, NY. 11021 

Attn: Curt Kramer, President 

facsimile: 516-498-9894

  

19

  

 

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

	 	 	

Naidich Wurman Birnbaum & Maday LLP 

80 Cuttermill Road, Suite 410 

Great Neck, NY 11021 

Attn: Bernard S. Feldman, Esq. 

facsimile: 516-466-3555

 

    Each party shall provide notice to the other party of any change in address.

 

             g.          Successors and Assigns.   This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns. Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder to any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that term is defined under the 1934 Act, without the consent of the Company.

 

             h.          Third Party Beneficiaries.    This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

             i.           Survival. The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.

 

             j.           Publicity.   The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC, OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCBB (or other applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations (although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall be provided with a copy thereof and be given an opportunity to comment thereon).

             k.          Further Assurances.  Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.

  

20

  

 

             l.           No Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party.

 

        m.          Remedies. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing economic loss and without any bond or other security being required.

 

IN WITNESS WHEREOF, the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.

 

MEDICAL CARE TECHNOLOGIES INC.

 

	By: 	/s/ Ning C. Wu	 
	 	
NING C. WU 

President

	 
	 	 	 
	ASHER ENTERPRISES, INC.	 
	 	 	 
	By:	/s/ Curt Kramer	 
	Name: 	Curt Kramer 	 
	Title: 	President	 
	
      

	 

 

1 Linden Pl., Suite 207 

Great Neck, NY. 11021

 

	AGGREGATE SUBSCRIPTION AMOUNT: 	 
	 	 
	Aggregate Principal Amount of Note: 	$32,500.00 
	 	 
	Aggregate Purchase Price:	$32,500.00

 

 

 

 

 

 21f8k072211ex10i_atlanticgreen.htm

EXHIBIT 10.1

 

SALE AND PURCHASE AGREEMENT

 

This SALE AND PURCHASE AGREEMENT (this “Agreement”) dated as of this 20th day of July 2011, is made and entered into by and between Atlantic Green Power Corporation, a New Jersey corporation (“Seller”), and Invenergy Solar Development LLC, a Delaware limited liability company (“Purchaser”).

 

WHEREAS, Seller is the owner of one hundred percent (100%) of the membership interests (the “Membership Interests”) in the capital of [           ]*, a Delaware limited liability company (the “Company”);

 

WHEREAS, Seller desires to sell to Purchaser and Purchaser desires to purchase from Seller eighty percent (80%) of the Membership Interests of the Company owned by Seller on the terms and subject to the conditions set forth herein.

 

NOW THEREFORE, in consideration of the mutual representations, warranties, covenants and agreements set forth in this Agreement, upon the terms and subject to the conditions hereinafter set forth, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

 

ARTICLE I

DEFINITIONS

 

1.1   Definitions.  As used in this Agreement, the following terms have the meanings indicated below:

 

“Affiliate” means any Person that directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified.  For purposes of this definition, control of a Person means the power, direct or indirect, to direct or cause the direction of the management and policies of such Person whether by Contract or otherwise.

 

“Agreement” means this Sale and Purchase Agreement and all Schedules and Exhibits hereto, as the same shall be amended in writing from time to time.

 

“Assets and Properties” of any Person means all assets and properties of every kind, nature, character and description (whether real, personal or mixed, whether tangible or intangible and wherever situated), including the goodwill related thereto, operated, owned or leased by such Person.

 

* NOTE: Certain portions of this exhibit have been omitted based upon a request for confidential treatment. The non-public information has been filed separately with the Securities and Exchange Commission.

  

1

  

 

“[           ]*” means the 69 kV/12 kV electrical substation owned by Atlantic City Electric Company and located in [           ]*, New Jersey.

 

“Books and Records” of any Person means all files, documents, instruments, papers, books and records (including records and files stored on computer disks or tapes or any other storage medium), contracts, reports, surveys, notices, deeds, and any other document relating to the Assets and Properties of such Person, including without limitation deeds, title policies, minute books, share certificates or other evidence of equity or shareholdings and registration books, stock transfer ledgers, Contracts, Licenses, Environmental Permits, environmental studies, operating plans, copies of all Tax Returns and tax filings, assessments and reassessments.

 

“Business Day” means a day other than a Saturday or Sunday on which the principal commercial banks in the City of New York are open for business during normal banking hours.

 

“Claim Notice” means written notification pursuant to Section 10.2(a) of a Third Party Claim as to which indemnity under Section 10.1 is sought by an Indemnified Party, enclosing a copy of all papers served, if any, and specifying the nature of and basis for such Third Party Claim and for the Indemnified Party’s claim against the Indemnifying Party under Section 10.1, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such Third Party Claim.

 

“Closing” means the closing of the transactions, contemplated by Section 2.3.

 

“Closing Date” means five (5) days following the date of execution of this Agreement, or as otherwise agreed-to by the Parties.

 

“Company” means [           ]*, a Delaware limited liability company.

 

“Confidential Information” means information reasonably designated as confidential or proprietary by either Party; provided that Confidential Information shall not include information that: (i) at the time obtained by Party, was already in the public domain or was a matter of public knowledge; (ii) after being obtained by Party, becomes part of the public domain or public knowledge, by publication or otherwise, other than by breach of the confidentiality provisions in Section 12.4; (iii) the disclosing Party can establish by competent proof that such information already was in its possession, without any breach of any third-party’s obligations to a Party, at the time obtained by it; or (iv) the disclosing Party can establish by competent proof was independently developed by it.

 

“Contract” means any written agreement, lease, license, option, guaranty, warranty, right-of-way, evidence of indebtedness, mortgage, indenture, security agreement or other written contract, commitment or undertaking of any kind.

 

  

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“Development Costs” means all third party expenses (not including any expenses of any Affiliates of Seller or Purchaser) relating to the development of the Project, including, without limitation, environmental reports, geotechnical investigation, hydrological studies, title reports, land purchase costs, additional entitlements works, engineering studies, fees relating to all necessary licenses, permits and approvals, financing costs, survey costs, property preparation costs, legal costs, transmission studies, time studies and all other third party fees, costs and expenses (other than such fees, costs and expenses internally incurred by any Affiliate of Seller or Purchaser) relating in any way to the development or administration of the Project and the Project Financial Closing, and all other financial obligations relating to the development or administration of the Project, including all development activities (including without limitation those “Development Activities” listed in the Term Sheet), all third party contract security obligations of the Company, if any, required under (i) any of the Interconnection Agreements; (ii) any long-term energy/brown power off-take agreements with one or more load serving entities or other third parties; (iii) any long-term solar renewable energy certificate (“SREC”) off-take agreements with one or more load serving entities or other third parties; (iv) any site improvement bond required by [           ]*with respect to the Project, and (v) any and all other costs or obligations to PJM or Atlantic City Electric Company relating in any way to the Project (including without limitation all such costs and obligations under the Interconnection Agreements).

 

“Dispute Period” means the period ending forty-five (45) days following receipt by an Indemnifying Party of either a Claim Notice or an Indemnity Notice.

 

“Distributable Cash” means as of any date, all cash, cash equivalents and liquid investments received from any source (excluding capital contributions) held by the Company as of such date after (i) payment of all reasonable expenses, debts and obligations of the Company then due and payable, and (ii) the establishment of any reasonable reserves by, or increase or decrease of any reasonable reserves established by the Manager (as defined in the Operating Agreement), including reasonable reserves for anticipated operating expenses or capital requirements.

 

“Dollars” and “$” refers to lawful money of the United States.

 

“Environmental Law” means any Law or Order relating to the regulation or protection of human health and safety or to the regulation, protection and preservation of the environment or to emissions, discharges, releases or threatened releases of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes into the environment (including, without limitation, ambient air, soil, surface water, ground water, wetlands, land or subsurface strata), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes.

 

 “GAAP” means generally accepted accounting principles which are in effect from time to time in the United States.

 

“Governmental or Regulatory Authority” means any federal, municipal, local or foreign government, any court, tribunal, arbitrator, authority, agency, commission, official or other instrumentality of the United States, county, city, municipality or other political subdivision or similar governing entity.

 

“Indemnified Party” means any Person claiming indemnification under any provision of Article 10.

 

  

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“Indemnifying Party” means any Person against whom a claim for indemnification is being asserted under any provision of Article 10.

 

“Indemnity Notice” means written notification pursuant to Section 10.2(b) of a claim for indemnity under Article 10 by an Indemnified Party, specifying the nature of and basis for such claim, together with the amount or, if not then reasonably ascertainable, the estimated amount, determined in good faith, of such claim.

 

“Interconnection Studies” means (a) any studies issued by PJM relating solely to the point of interconnection at the [           ]*for queue position V4-025 (for 20 AC MW with 10 MW to interconnect at the [           ]*, and 10 AC MW to the [           ]*as requested by Seller under the Reconfiguration Request Letter for the reconfigured queue position V4-025 with 10 AC MW at the [           ]*.

 

“Interconnection Study Agreements” means any fully executed agreements for studies to be performed by PJM relating solely to the point of interconnection at the [           ]*for queue position V4-025 .

 

“Interconnection Dynamic Study” means the required “time-based” dynamic study to be conducted by PJM during the Facilities Study Agreement phase of the Interconnection Agreements.

 

“Land Agreement” means:  the Land Option to Purchase Agreement for a parcel located at [           ]*, New Jersey made and entered into as of May 10, 2011 between Purchaser and [           ]*.

 

“Laws” means all constitutions, treaties, laws, statutes, rules, regulations, ordinances and other pronouncements having the effect of law of the United States or any county, city or other political subdivision or of any Governmental or Regulatory Authority.

 

“Liens” means any charge, claim, community property interest, condition, equitable interest, easement, encumbrance, option, warrants, conversion rights, lien, pledge, hypothecation, assignment, deposit arrangement (including, without limitation, any deposit arrangements with a broker or other financial institution), security interest (preference, priority or other security agreement or preferential arrangement of any kind), mortgage, deed of trust, retention of title agreement, right of first refusal, right of first offer, preemptive right, or other restriction or granting of any rights with respect to, the use, voting, transfer, receipt of income or exercise of any other attribute of ownership or similar matters.  With respect to the Membership Interests, “Liens” includes without limitation, any claim by a third party of an interest in or right to acquire any of the Membership Interests.

 

“Loss” means any and all direct and actual damages, assessments, fines, penalties, deficiencies, losses, judgments, amounts paid in settlement or diminution in value, costs and expenses (excluding incidental and consequential damages, but including, without limitation, interest, court costs, reasonable fees and expenses of attorneys, accountants and other experts or other reasonable expenses incurred in investigating, preparing, defending against or prosecuting any litigation or claim, action, suit, proceeding or demand).

 

  

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“Membership Interests” has the meaning given to it in the recitals to this Agreement.

 

“Operating Agreement” means that certain Operating Agreement dated July 20, 2011 establishing the terms and condition of formation and operation of the Company, and attached hereto as Exhibit A.

 

“Order” means any award, writ, judgment, decision, decree, stipulation, injunction, ruling or similar order of any Governmental or Regulatory Authority (in each such case whether preliminary or final).

 

“Party” means either Seller or Purchaser; and “Parties” means both Seller and Purchaser.

 

“Person” means any natural person, corporation, general partnership, limited partnership, limited liability company, proprietorship, other business organization, trust, union, association or Governmental or Regulatory Authority.

 

“PJM” means the PJM Interconnection LLC, a Regional Transmission Organization.

 

“Pre-Closing Period” means the period or periods ending on or prior to the Closing Date.

 

“Pre-Closing Taxes” means any and all Taxes relating to any taxable period ending on or prior to the Closing Date.

 

“Project” means a solar photovoltaic energy facility having a total installed solar energy capacity of 10 AC MW (on a net alternating current basis) to be located on the Property that has a point of interconnection solely at the [           ]*.

 

“Project Financial Closing” means the date when construction debt financing for the Project is fully committed and the first advance is made thereunder.

 

“Property” means, the property referenced in the Land Agreement.

 

“Purchase Price” means Ninety Thousand Dollars ($90,000.00).

 

“Purchaser” has the meaning given to it in the recitals to this Agreement.

 

“Purchaser Indemnified Parties” has the meaning given to it in Section 10.1(a).

 

“Representatives” means, for any Person, any director, officer, manager, employee, counsel, accountant, financial advisor or consultant of such Person.

 

“Resolution Period” means the period ending thirty (30) days following receipt by an Indemnified Party of a written notice from an Indemnifying Party stating that it disputes all or any portion of a claim set forth in a Claim Notice or an Indemnity Notice.

 

“Seller” has the meaning given to it in the recitals to this Agreement.

 

“Seller Indemnified Parties” has the meaning given to it in Section 10.1(b).

 

  

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“Success Fee” means the amount of [           ]* Dollars per megawatt ([           ]*/AC MW) of installed solar energy capacity (on a net alternating current basis) paid to Seller by Purchaser upon Project Financial Closing.

 

“Tax Returns” means with respect to the Company, any return, report, information return or other document required to be supplied to any taxing authority with respect to Taxes, including any claims for refunds of Taxes and any amendments or supplements to any of the foregoing.

 

“Taxes” means all taxes, charges, duties, fees, levies or other assessments imposed on the Company by any federal, municipal, local or foreign taxing authority, including but not limited to, income, profits, excise, property, sales, use, goods and services, transfer, franchise, payroll, withholding, social security (or similar), employment, unemployment, business license, occupation, stamp, environmental, workers compensation, severance, ad valorem, customs duties, registration, gross receipts, premium, windfall profits, capital stock, disability, personal property, alternative or add-on minimum, estimated, or other taxes of any kind whatsoever, imposed by any Governmental or Regulatory Authority, and including any interest, penalty, or addition thereto, whether disputed or not.

 

“Term Sheet” means that certain Term Sheet for Acquisition of Ownership Interest in the [           ]* Project dated May 13, 2011.

 

“Third Party Claim” has the meaning given to it in Section 10.2(a).

 

“Transfer Taxes” has the meaning given to it in Section 8.1(b).

 

“[           ]*” means the 69 kV/12 kV electrical substation owned by Atlantic City Electric Company and located in [           ]*, New Jersey.

 

1.2           Construction of Certain Terms and Phrases.  Unless the context of this Agreement otherwise requires, (i) words of any gender include each other gender; (ii) words using the singular or plural number also include the plural or singular number, respectively; (iii) the terms “hereof,” “herein,” “hereby” and derivative or similar words refer to this entire Agreement; (iv) the terms “Article” or “Section” refer to the specified Article or Section of this Agreement; and (v) “include” or “including” means including without limiting the generality of any description preceding such term.  Whenever this Agreement refers to a number of days, such number shall refer to calendar days unless Business Days are specified.  All accounting terms used herein and not expressly defined herein shall have the meanings given to them under GAAP. Any representation or warranty contained herein as to the enforceability of a Contract shall be subject to the effect of any bankruptcy, insolvency, reorganization, moratorium or other similar Law affecting the enforcement of creditors’ rights generally and to general equitable principles (regardless of whether such enforceability is considered in a proceeding in equity or at Law).

 

ARTICLE II

SALE AND PURCHASE OF SHARES AND CLOSING

 

2.1           The Sale.  On the basis of the representations, warranties and undertakings set forth in this Agreement, and on the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller shall sell, transfer, convey, assign and deliver to Purchaser, or one or more nominees of Purchaser designated prior to the Closing Date, free and clear of all Liens, and Purchaser will pay the Purchase Price for eighty percent (80%) of the Membership Interests.

 

  

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2.2            Payment.  Purchaser shall pay to Seller, on the terms and subject to the conditions set forth in this Agreement, the Purchase Price and Success Fee, if any, as follows:

 

                (a)           The Purchase Price of Ninety Thousand Dollars ($90,000.00) shall be paid by Purchaser to Seller on the Closing Date, in exchange for eighty percent (80%) of the Membership Interests as set forth in Section 2.1 above;

 

                 (b)          The Success Fee in the amount of [           ]* Dollars per AC megawatt ([           ]*/AC MW) of installed solar energy capacity (on a net alternating current basis) shall be paid by Purchaser to Seller upon Project Financial Closing.  Notwithstanding anything to the contrary herein, no Success Fee shall be due to Seller if the Project Financial Closing does not occur.

 

2.3           Closing.  Closing will take place by an exchange of documents on or before 5:00 p.m. prevailing Eastern Time, on the Closing Date at the offices of Seller or in such other manner or at such other time as Purchaser and Seller mutually agree.  At the Closing, Purchaser will pay the Purchase Price by wire transfer of immediately available funds to the following account:

 

Receiving Bank:  Atlantic Central Bankers Bank (ACBB)

                               Camp Hill, PA

Receiving Bank ABA #:  031301752

Beneficiary Financial Institution:  The Bank of Princeton – Acct# 220547

183 Bayard Lane

Princeton, NJ 08540

(609) 921-6800

Beneficiary:  Atlantic Green Power Corp

                       Account # 1200004800

Simultaneously, Seller will assign and transfer to Purchaser the Membership Interests free and clear of all Liens, by execution and delivery of a Membership Interest Transfer instrument in the form attached as Exhibit B.  At the Closing, there shall also be delivered to Seller and Purchaser certificates and other contracts, documents and instruments required to be delivered under Articles 6 and 7 hereof.

 

2.4            Purchaser Project Return Requirement.

 

                (a)            Any equity capital that Purchaser or an affiliate thereof invests in the Project at Project Financial Closing (such capital shall exclude Development Costs and any cost of internal labor in connection with the development of the Project as described in Section 5.2(b)) shall be fully returned to the Purchaser from the Company’s after-tax Distributable Cash from the Project as priority distributions ahead of any Company distributions to the Seller.  Any such return of capital to Purchaser under this Section 2.4(a) shall not affect the payment of the Success Fee, which will be paid directly by Purchaser to Seller under Section 2.2(b).

 

  

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                (b)            Once all of Purchaser's equity capital is fully returned pursuant to Section 2.4(a), the Purchaser shall then receive preferred Company after-tax Distributable Cash from the Project ahead of Company distributions to the Seller until such priority distributions equal two (2) times the amount of the Success Fee paid to Seller at Project Financial Closing.

 

                (c)            Once the Purchaser’s Project return requirement is paid in full pursuant to Sections 2.4(a) and (b), all remaining Project Distributable Cash distributions shall be made in accordance with each Party’s Membership Interest. 

 

2.5            Further Assurances.  At any time and from time to time after the Closing Date, (a) at the request of Purchaser, Seller will execute and deliver such other instruments of sale, transfer, conveyance, assignment, amendment and confirmation as may be reasonably requested by Purchaser and at Purchaser’s expense, in order to more effectively transfer, convey and assign to Purchaser and to confirm Purchaser’s ownership of the Membership Interests in accordance with the terms herein, and (b) at the request of Seller, Purchaser will execute and deliver and cause the Company to execute and deliver such other instruments as may be reasonably requested by Seller and at Seller’s expense, in order to more effectively carry out the provisions hereof and the transactions contemplated hereby.

 

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF SELLER

 

As an inducement to Purchaser to enter into this Agreement and to consummate the transactions contemplated hereby, Seller represents and warrants with respect to itself and the Company, as applicable, that as of the date of this Agreement and as of the Closing Date:

 

3.1           Power and Authority.  Seller and the Company have all requisite power and authority to enter into, execute and deliver this Agreement, to perform their respective obligations hereunder and to consummate the transactions contemplated hereby, including without limitation to sell and transfer the Membership Interests.  Seller is in good standing under the laws of the State of New Jersey and the Company is in good standing under the laws of the State of Delaware.

 

3.2           Execution, Legality and Validity.  The execution and delivery by Seller of this Agreement, and the performance by Seller of its obligations hereunder, have been duly and validly authorized by all necessary action on its behalf.  This Agreement has been duly and validly executed and delivered by Seller and constitutes its legal, valid and binding obligation, enforceable against Seller in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.

 

  

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3.3           The Membership Interests.

 

                (a)           The Membership Interests constitute all of the issued and outstanding Membership Interests of the Company representing all of the capital of the Company.

 

                (b)           The Membership Interests are owned by Seller, free and clear of all Liens and Seller has the full capacity, authority and power to sell and transfer ownership in and to the Membership Interests to Purchaser.

 

                (c)           The sale and delivery of eighty percent (80%) of the Membership Interests to Purchaser pursuant to Article 2 hereof will fully effect the transfer to Purchaser of such Membership Interests free and clear of all Liens.

 

                (d)           There are no options, warrants or other rights which are in any way capable of being converted into securities in the capital of the Company.

 

3.4           Brokers.  All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Seller or an Affiliate of Seller, directly with Purchaser without the intervention of any Person on behalf of Seller in such manner as to give rise to any valid claim by any Person (including, for the avoidance of doubt, any Affiliate of Seller) against Purchaser for a finder’s fee, brokerage commission or similar payment.

 

3.5            No Conflicts.  The execution, delivery and performance by Seller of this Agreement does not conflict with:

 

                (a)            the Certificate of Incorporation, by-laws or other corporate organizational documents or any resolutions of Seller or the Company;

 

                (b)           any Order or applicable Law; or

 

                (c)           any agreement to which the Company or Seller is a party.

 

3.6           Litigation.  There is no action, claim or litigation of any kind pending or threatened against Seller or the Company that threaten Seller or the Company’s right to transfer the Membership Interests to Purchaser pursuant to this Agreement.

 

3.7           Employees.  The Company does not currently have nor has it in the past had any employees.

 

3.8           Absence of Bankruptcies.  Neither the Company nor Seller has filed any voluntary petition in bankruptcy, or filed or published any proposal or notice of intent to file a proposal pursuant to any legislation relating to bankruptcy, insolvency, restructuring or reorganization, or has been adjudicated as bankrupt or insolvent, or filed any petition or answer seeking any reorganization, liquidation, dissolution or similar relief under any Federal bankruptcy, insolvency, or other debtor relief law, or sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of all or any substantial part of its properties.  No involuntary petition in bankruptcy has been filed against the Company or Seller and no court of competent jurisdiction has entered an order, judgment or decree approving a petition filed against the Company or Seller or seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any bankruptcy act, or other debtor relief law, and no other liquidator has been appointed for the Company of all or any substantial part of its or their respective properties.

 

  

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3.9           Seller Contracts.  Schedule 3.9 attached hereto lists all Contracts for transfer to the Company on or before the Closing, together with all written amendments, modifications and supplements thereto executed or obtained by Seller (collectively, the “Seller Contracts” and individually, a “Seller Contract”).  Neither the Company nor Seller is in default in connection with any Seller Contract, and there are no claims made or pending for which Seller or the Company is responsible to provide indemnification pursuant to any Contract.  Furthermore, there are no shareholder’s agreements (unanimous or otherwise), Seller voting trust agreements, unanimous shareholder declarations or other similar arrangements in place with respect to Seller as same may relate to the Membership Interests or any interest in the Company or any agreement or instrument which may in any way derogate from or limit the powers of the members of the Company to manage the business and affairs of the Company other than the Operating Agreement of the Company attached hereto as Exhibit A.

 

3.10         Company Assets.  Schedule 3.10 attached hereto lists all of the Company’s Assets and Properties of whatever nature or kind, wherever situated, are free and clear of any Liens, and any adverse claim of any form, including, without limitation all Contracts, together with all written amendments, modifications and supplements thereto executed or obtained by Company on or before the Closing (collectively, the “Company Contracts” and individually, a “Company Contract”).  Neither the Company nor Seller is in default in connection with any Company Contract, and there are no claims made or pending for which Seller or the Company is responsible to provide indemnification pursuant to any Contract.

 

3.11          Liabilities.  The Company has paid all amounts due and owing for work or services performed for or on behalf of the Company on or prior to the Closing Date.

 

3.12          Company Business.  The Company owns no Assets and Properties not directly related to the Project.  The Company has engaged in no other business not reasonably related to the development of the Project.

 

3.13          Consents.  No third party consents are necessary for Seller to sell and transfer the Membership Interests.

 

3.14          Compliance with Laws.  The Company has complied with all federal, municipal and local laws and regulations with respect to its activities and has obtained and maintained in effect all approvals that have been necessary for its business as presently conducted.

 

3.15          Single Member Limited Liability Company.  The Company has been since the date of its formation, disregarded as an entity separate from Seller, within the meaning of Treasury Regulation Section 301.7701-3(b)(1)(ii), for federal income tax purposes and, where permitted, state and local income tax purposes.  The Company has never elected to be treated as an association taxable as a corporation pursuant to Treasury Regulation Section 301.7701-3(c).  The Company is not a successor by merger, operation of law or otherwise, of any entity that was ever treated as a corporation for U.S. federal income tax purposes.

 

  

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3.16        Interconnection Agreements.  To Seller’s actual knowledge, there are no conditions having a material adverse effect on the development of the Project arising from the Interconnection Studies and the Interconnection Study Agreements in connection with a 10 AC MW interconnection at the [           ]* under queue position V4-025.

 

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF PURCHASER

 

As an inducement for Seller to enter into this Agreement and to consummate the transactions contemplated hereby, Purchaser represents and warrants to Seller that, as of the date of this Agreement and, except as otherwise expressly provided, as of the Closing Date:

 

4.1            Power and Authority.  Purchaser has all requisite power and authority to enter into, execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby, including without limitation, to purchase the Membership Interests.  Purchaser is in good standing under the laws of the state of Delaware.

 

4.2           Execution, Legality and Validity.  The execution and delivery by Purchaser of this Agreement, and the performance by Purchaser of its obligations hereunder, have been duly and validly authorized by all necessary action on its behalf.  This Agreement has been duly and validly executed and delivered by Purchaser and constitutes its legal, valid and binding obligation enforceable against Purchaser in accordance with its terms, except as the same may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium or other similar Laws relating to or affecting the rights of creditors generally, or by general equitable principles.

 

4.3            Brokers.  All negotiations relative to this Agreement and the transactions contemplated hereby have been carried out by Purchaser, or an Affiliate thereof, directly with Seller without the intervention of any other Person on behalf of Purchaser in such manner as to give rise to any valid claim by any Person (including, for the avoidance of doubt, any Affiliate of Purchaser) against Seller for a finder’s fee, brokerage commission or similar payment.

 

4.4            No Conflicts.  The execution, delivery and performance by Purchaser of this Agreement does not conflict with:

 

                (a)            the certificate of formation, operating agreement or other corporate organizational documents or any resolutions or agreements of Purchaser;

 

                (b)           any Order or applicable Law; or

 

                (c)            any agreement to which Purchaser is a party.

 

4.5            Litigation.  There is no action or claim of any kind pending or threatened against Purchaser that threatens Purchaser’s right or ability to purchase the Membership Interests from Seller pursuant to this Agreement.

 

  

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4.6           Absence of Bankruptcies.  Purchaser has not filed any voluntary petition in bankruptcy, or filed or published any proposal or notice of intent to file a proposal pursuant to any legislation relating to bankruptcy, insolvency, restructuring or reorganization, nor has Purchaser been adjudged as bankrupt or insolvent, or filed any petition or answer seeking any reorganization, liquidation, dissolution or similar relief under any Federal bankruptcy, insolvency or other debtor relief law, or sought or consented to or acquiesced in the appointment of any trustee, receiver, conservator or liquidator of all or any substantial part of its properties.  No involuntary petition in bankruptcy has been filed against Purchaser nor has any court of competent jurisdiction entered an order, judgment or decree proving a petition filed against Purchaser or seeking any reorganization, arrangement, composition, readjustment, liquidation, dissolution or similar relief under any bankruptcy act, or other debtor relief law against Purchaser, and no other liquidator has been appointed for Purchaser or of all or any substantial part of their respective properties.

 

4.7           Consents.  No third party consents are necessary for Purchaser to purchase the Membership Interests.

 

4.8            Purchaser Contracts.  Schedule 4.8 lists all Contracts, together with all written amendments, modifications and supplements thereto executed or obtained by Purchaser for transfer to the Company on or before the Closing (collectively, the “Purchaser Contracts” and individually, a “Purchaser Contract”).  Purchaser is not in default in connection with any Purchaser Contract, and there are no claims made or pending for which Purchaser is responsible to provide indemnification pursuant to any Purchaser Contract.  Furthermore, there are no operating agreements (unanimous or otherwise), voting trust agreements, unanimous member declarations or other similar arrangements with respect to Purchaser in place as same may relate to the Membership Interests being purchased by Purchaser or any interests in the Company or any agreement or instrument which may in anyway derogate from or limit the powers of the members of the Company to manage the business and affairs of the Company.

 

ARTICLE V

CERTAIN COVENANTS OF THE PARTIES

 

5.1            Covenants of Seller.

 

                (a)            Seller hereby covenants and agrees, upon the request of Purchaser, to take all further actions in connection with this Agreement (and any Contracts contemplated herein), which are reasonably necessary or advisable to accomplish the required transfers of the Seller Contracts to the Company, including any acknowledgement and delivery of such assignments, transfers, consents and other documents and instruments as Purchaser or its counsel may reasonably request.  Seller shall not be compensated for any such work.

 

                 (b)           Seller acknowledges and agrees that Seller shall be responsible for all internal (non-third party) fees, costs and expenses incurred by it or any of its Affiliates in connection with the advancement of the Project, and that no such internal fees, costs or expenses shall be charged to the Company.

 

  

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5.2           Covenants of Purchaser.

 

                (a)            Purchaser hereby covenants and agrees, upon the request of Seller, to take all further actions in connection with this Agreement (and any Contracts contemplated herein), which are reasonably necessary or advisable to accomplish the required transfers of the Purchaser Contracts to the Company, including any acknowledgement and delivery of such assignments, transfers, consents and other documents and instruments that Seller or its counsel may reasonably request.  Purchaser shall not be compensated for any such work.

 

                 (b)           Subsequent to the Closing, the development of the Project shall be advanced exclusively by the Company under the sole direction of Purchaser with assistance from Seller, as reasonably requested by Purchaser or the Company. The Company shall provide Seller with an update on the status of the development of the Project and the Development Costs on no less than a quarterly basis.  All Development Costs and obligations relating in any way to the development of the Project shall be the responsibility of Purchaser. All Development Costs shall be loaned by Purchaser to the Company, without interest, and repaid to Purchaser in according with the remaining provisions of this Section 5.2(b).  All Development Costs actually loaned by Purchaser to the Company shall be reimbursed to Purchaser by the Company upon the Project Financial Closing, without interest.  Purchaser acknowledges and agrees that Seller shall not be responsible for, or have any obligations with respect to, any out-of-pocket costs or any other obligations associated with the Project, including without limitation any of the Development Costs.  Purchaser further agrees that all documented third party development costs incurred by Seller subsequent to the Closing and constituting Development Costs or otherwise relating to the Project, if any, shall be reimbursed by Purchaser to Seller within thirty (30) days of Purchaser’s receipt of written invoice and supporting documents from Seller evidencing such costs if such costs were pre-approved in writing by Purchaser.  Purchaser acknowledges and agrees that Purchaser shall be responsible for all internal (non-third party) labor required in connection with the development of the Project (other than third party labor costs included in the Development Costs) and all internal fees, costs and expenses incurred by it or any of its Affiliates in connection with the advancement or development of the Project, and that no such internal fees, costs or expenses shall be charged to the Company or otherwise deemed to be part of any loan made by Purchaser to the Company with respect to any Development Costs.

 

                (c)            Subsequent to the Closing, Purchaser shall use commercially reasonable efforts to cause the Company to advance the development of the Project if Purchaser, in its sole discretion, deems it in the best interest of Purchaser or the Company to cause the Company to advance the development of the Project.  Notwithstanding the aforementioned, nothing in this Agreement or otherwise shall obligate Purchaser in any way to cause the Company to develop and construct the Project if Purchaser, in its sole discretion, deems that it is not in the best interest of Purchaser or the Company to do so.

 

  

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ARTICLE VI

CONDITIONS TO OBLIGATIONS OF PURCHASER

 

The obligations of Purchaser hereunder to purchase the Membership Interests are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Purchaser in its sole discretion):

 

6.1           Representations and Warranties.  The representations and warranties made by Seller in this Agreement shall be true and correct in all material respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of each such date.

 

6.2           Officers’ Certificates.  Seller shall have delivered to Purchaser a certificate in the form attached hereto as Exhibit C, dated the Closing Date and executed by a duly authorized officer of Seller as to corporate matters.

 

6.3           Orders and Laws.  There shall not be in effect, pending or threatened on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of the transaction contemplated by this Agreement.

 

6.4            Deliveries.  Seller shall have:

 

(a)            Evidence from PJM that it has granted to the Company a 10 AC MW interconnection at the [           ]* under queue position V4-025.

 

(b)           Executed and delivered to Purchaser a Membership Interest Transfer document evidencing the assignment and transfer of eighty percent (80%) of the Membership Interests, in the form attached hereto as Exhibit B and all other documents contemplated hereby to be executed and delivered by Seller on or before Closing;

 

(c)            Executed and delivered to Purchaser two (2) executed counterparts of the Operating Agreement, together with all documents contemplated hereby to be executed and delivered by Seller on or before Closing; and

 

(d)           Caused the Company’s Books and Records, in whatever form presently in the possession or control of Seller, to be in the possession or control of the Company at Closing.

 

6.5           Good Standing.  Seller shall have delivered to Purchaser certificates, dated as of a date no more than five (5) days prior to the Closing Date, duly issued by the appropriate authorities, showing that Seller and the Company are in good standing.

 

6.6            Resignation.  Seller shall have delivered to Purchaser a signed and duly executed letter of resignation of each officer and director of the Company, dated the Closing Date, in the form attached hereto as Exhibit D.

 

  

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ARTICLE VII

CONDITIONS TO OBLIGATIONS OF SELLER

 

The obligations of Seller hereunder to sell the Membership Interests are subject to the fulfillment, at or before the Closing, of each of the following conditions (all or any of which may be waived in whole or in part by Seller in its sole discretion):

 

7.1           Representations and Warranties.  The representations and warranties made by Purchaser in this Agreement shall be true and correct in all material respects on and as of the date of this Agreement and on and as of the Closing Date as though made on and as of each such date.

 

7.2           Officers’ Certificates.  Purchaser shall have delivered to Seller certificates in the forms attached hereto as Exhibit E respectively dated the Closing Date and executed by the Secretary of Purchaser as to corporate matters.

 

7.3           Orders and Laws.  There shall not be in effect on the Closing Date any Order or Law restraining, enjoining or otherwise prohibiting or making illegal the consummation of any of the transactions contemplated by this Agreement.

 

7.4           Deliveries.  Purchaser shall have:

 

                (a)            paid the Purchase Price to Seller; and,

 

                (b)           executed and delivered to Seller two (2) executed counterparts of the Operating Agreement, together with all documents contemplated hereby to be executed and delivered by Purchaser and the Company on or before Closing.

 

7.5           Good Standing.  Purchaser shall have delivered to Seller certificates, dated as of a date no more than five (5) days prior to the Closing Date, duly issued by the appropriate authorities, showing that Purchaser is in good standing.

 

ARTICLE VIII

TAX MATTERS

 

8.1           Tax Matters.

 

                (a)           Seller represents, warrants and covenants that as of the Closing Date, the Company has filed all Tax Returns required to be filed under applicable Laws and such Tax Returns were correct and complete in all material respects.  All Taxes due and owing by the Company (whether or not shown on any Tax Return), if any, have been paid.  There are no Liens for Taxes upon any of the Assets and Properties of the Company.  The Company has not received any written proposed adjustment to the Tax liability of the Company from any Tax authority in connection with any Tax Return of the Company.

 

                 (b)          Transfer Taxes.  Purchaser agrees that to the extent that any transfer taxes are assessed relating to the transactions contemplated under this Agreement (“Transfer Taxes”), Purchaser shall be solely responsible for all such Transfer Taxes.

 

  

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                (c)            Taxes.  Seller is liable for the payment of all liabilities of the Company for Taxes related or allocable to a period ending on or before the Closing Date.  The Company shall be liable for the payment of all liabilities of the Company for Taxes relating to all periods after the Closing Date.  Seller shall prepare and deliver to Purchaser all Tax Returns relating to periods ending on or before the Closing Date, if any, and Seller shall pay all income Taxes and pay or remit all other Taxes owed by the Company relating to periods ending on or before the Closing Date.  The Parties agree to cooperate with one another with respect to preparing and filing Tax Returns.

 

                (d)           Refunds.  Any refund or credit of Pre-Closing Taxes paid by Seller or the Company shall be for the benefit of Seller.  The Company shall pay any such refund to Seller within thirty (30) days after the Company receives such refund or actually realizes the benefit of such credit.

 

                (e)            Information.  In connection with preparing any Tax Return relating to any Pre-Closing Period or preparing for any audit or other examination relating to such a period by any taxing authority or any judicial or administrative proceedings relating to liability for Taxes for such a period, Seller, Purchaser and the Company will provide information, records or documents relating to Taxes as may be in such Party’s possession or control, and as may be reasonably requested by another Party.  Neither Purchaser nor Seller will destroy any records related to the Company for tax periods commencing after formation of the Company and through the Closing Date for a period of seven (7) years following such periods without first giving notice to and obtaining the written consent of Purchaser (whose consent shall not be unreasonably withheld).

 

                (f)            Seller shall provide Purchaser with copies of all Tax Returns filed with, and all written communications to or from, any Governmental Authority relating to the Taxes of the Company, to the extent relating to periods or events prior to the Closing Date in respect of which any Governmental Authority may by Law access or otherwise impose any such Tax on the Company relating to periods ending on or prior to the Closing Date.

 

ARTICLE IX

SURVIVAL

 

9.1           Survival of Representations, Warranties, Covenants and Agreements.  The representations and warranties of Seller and Purchaser contained in this Agreement shall survive until eighteen (18) months following the Closing Date, provided however, that the representations and warranties contained in Article 8 (Tax Matters) shall survive until the date that is one (1) month after the expiration date of the applicable statute of limitations for the Tax at issue or the period for which liability for Taxes may be assessed taking into account, without limitation, any waivers given by the Company in respect of any taxation year.  Seller and Purchaser agree that (a) all covenants contained in this Agreement, including without limitation the provisions of Sections 5.1 and 5.2, Article 10 (Indemnification), Article 11 (Termination) and Section 12.4 (Confidentiality) shall survive the termination of this Agreement and (b) all claims for indemnification under Article 10 hereof first asserted in writing within the applicable period (whether or not the amount of any such claims has become ascertainable within such period) shall not thereafter be time barred.

 

  

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ARTICLE X

INDEMNIFICATION

 

10.1         Indemnification.

 

                (a)           Seller shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless Purchaser and its Affiliates and the respective officers, directors, managers, employees, shareholders, members and equity owners of the foregoing, and their successors and assigns (“Purchaser Indemnified Parties”) from and against any claim, liability, obligation, judgment or Loss, of any kind or character, suffered, incurred or sustained by any of the Purchaser Indemnified Parties or to which it or they may become subject, arising out of or in any manner incident, relating or attributable to:

 

	
(i)  

	
any inaccuracy in any representation or breach of warranty of Seller contained in this Agreement or in any certificate, instrument of transfer or other document or Contract executed by Seller in connection with the Closing of this Agreement (other than the Operating Agreement); and

 

	
(ii)  

	
any failure by Seller to perform or observe, or to have performed or observed, in full, any covenant, agreement, condition or obligation to be performed or observed by it under this Agreement or under any certificates or other documents or Contract executed by Seller in connection with the Closing of this Agreement (other than the Operating Agreement).

 

                (b)            Purchaser shall, to the fullest extent permitted by Law, indemnify, defend and hold harmless Seller and its Affiliates and the respective officers, directors, managers, employees, shareholders, members and equity owners of the foregoing, and their successors and assigns (“Seller Indemnified Parties”) from and against any claim, liability, obligation, judgment or Loss, of any kind or character, suffered, incurred or sustained by any of the Seller Indemnified Parties or to which it or they become subject, arising out of or in any manner incident, relating or attributable to:

 

	
(i)  

	
any inaccuracy in any representation or breach of warranty of Purchaser contained in this Agreement or in any certificate, instrument of transfer or other document or Contract executed by Purchaser in connection with the Closing of this Agreement (other than the Operating Agreement); and

 

  

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(ii)  

	
any failure by Purchaser to perform or observe, or to have performed or observed, in full, any covenant, agreement, condition or obligation to be performed or observed by Purchaser under this Agreement or under any certificates or other documents or Contract executed by Purchaser in connection with the Closing of this Agreement (other than the Operating Agreement).

 

10.2          Method of Asserting Claims.  All claims for indemnification by any Indemnified Party under this Section 10.2 will be asserted and resolved as follows:

 

                (a)            In the event any claim or demand in respect of which an Indemnified Party might seek indemnity under Section 10.1 hereof is asserted against or sought to be collected from such Indemnified Party by a Person other than Seller, Purchaser or any Affiliate of Seller or Purchaser (a “Third Party Claim”), the Indemnified Party shall deliver a Claim Notice with reasonable promptness to the Indemnifying Party.

 

	
(i)  

	
If the Indemnifying Party notifies the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Indemnified Party with respect to the Third Party Claim pursuant to this Section 10.2(a), and confirms its liability with respect thereto, then the Indemnifying Party will have the right to defend, at the sole cost and expense of the Indemnifying Party, such Third Party Claim by all appropriate proceedings, which proceedings will be vigorously and diligently prosecuted by the Indemnifying Party, with counsel reasonably acceptable to the Indemnified Party, to a final conclusion or will be settled at the discretion of the Indemnifying Party (subject to the limitations set forth below).  From and after the Indemnifying Party’s delivery of the notice referred to in the first sentence of this Section 10.2(a)(i), the Indemnifying Party will have full control of such defense and proceedings, including any settlement thereof; provided, that the Indemnifying Party may not settle or compromise any Third Party Claim in any manner that results in any continuing liability or obligation for the Indemnified Party or any admission of liability or wrongdoing by the Indemnified Party, without, in any such case, the prior written consent of the Indemnified Party, which will not be unreasonably withheld.  If requested by the Indemnifying Party, the Indemnified Party will, at the sole cost and expense of the Indemnifying Party, cooperate with the Indemnifying Party and its counsel in contesting any Third Party Claim that the Indemnifying Party elects to contest, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint against any Person (other than the Indemnified Party or any of its Affiliates).  Notwithstanding the foregoing, the Indemnified Party may take over the control of the defense or settlement of a Third Party Claim at any time if it irrevocably waives its right to indemnity under Section 10.1 hereof with respect to such Third Party Claim. Should the Indemnifying Party have interests that diverge materially from those of the Indemnified Party, the Indemnified Party shall have the right to request separate counsel from that representing the Indemnifying Party, the expenses of such separate representation to be paid by the Indemnifying Party.

 

  

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(ii)  

	
If the Indemnifying Party fails to notify the Indemnified Party within the Dispute Period that the Indemnifying Party desires to defend the Third Party Claim pursuant to Section 10.2(a)(i) hereof, and confirm its liability with respect thereto, or if the Indemnifying Party gives such notice but fails to vigorously and diligently defend the Third Party Claim, then the Indemnified Party will have the right to defend, at the sole cost and expense of the Indemnifying Party, the Third Party Claim by all appropriate proceedings, which proceedings will be defended by the Indemnified Party to a final conclusion or will be settled at the discretion of the Indemnified Party (without the consent of the Indemnifying Party).  The Indemnified Party will have full control of such defense and proceedings, including any settlement thereof; provided, that if requested by the Indemnified Party, the Indemnifying Party will, at the sole cost and expense of the Indemnifying Party, cooperate with the Indemnified Party and its counsel in contesting any Third Party Claim which the Indemnified Party is contesting, or, if appropriate and related to the Third Party Claim in question, in making any counterclaim against the Person asserting the Third Party Claim, or any cross-complaint against any Person (other than the Indemnified Party or any of its Affiliates).

 

	
(iii)  

	
If the Indemnifying Party notifies the Indemnified Party that it does not dispute its liability to the Indemnified Party with respect to the Third Party Claim under Section 10.1 hereof or fails to notify the Indemnified Party within the Dispute Period whether the Indemnifying Party disputes its liability to the Indemnified Party with respect to such Third Party Claim, the Losses arising from such Third Party Claim will be conclusively deemed a liability of the Indemnifying Party under Section 10.1 hereof and the Indemnifying Party shall pay the amount of such Losses to the Indemnified Party on demand following the final determination thereof.  If the Indemnifying Party has timely disputed its liability with respect to such claim, the Indemnifying Party and the Indemnified Party will proceed in good faith to negotiate a resolution of such dispute, and if not resolved through negotiations within the Resolution Period, the Indemnified Party shall he entitled to seek such remedies against the Indemnifying Party as may then be available to it under this Agreement and applicable Laws.

 

                 (b)          In the event any Indemnified Party should have a claim under Section 10.1 hereof against any Indemnifying Party that does not involve a Third Party Claim, the Indemnified Party shall deliver an “Indemnity Notice” with reasonable promptness to the Indemnifying Party.  If the Indemnifying Party notifies the Indemnified Party that it does not dispute the claim or the amount of Loss therefrom described in such Indemnity Notice or fails to notify the Indemnified Party within the Dispute Period that it disputes the claim described in the Indemnity Notice, the Loss in the amount specified in the Indemnity Notice will be conclusively deemed a liability of the Indemnifying Party under Section 10.1 hereof and the Indemnifying Party shall pay the amount of such Loss to the Indemnified Party on demand.

 

  

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10.3          Exclusive Remedy.  After the Closing, to the extent permitted by applicable Laws, and except in the case of fraud or willful misconduct, the indemnities set forth in this Article 10 shall be the exclusive remedies of Purchaser and Seller and its or their respective officers, directors, employees, agents and Affiliates with respect to any claim for misrepresentation, breach of warranty, non-fulfillment or failure to be performed of any covenant or agreement contained in this Agreement, and the Parties shall not be entitled to a rescission of this Agreement or to any further indemnification rights or claims of any nature whatsoever in respect thereof, all of which the Parties hereby waive; provided, however, that the foregoing provision shall not limit or restrict the availability of specific performance or other injunctive or equitable relief (other than rescission) to the extent that specific performance or such other relief would otherwise be available to a Party under this Agreement.

 

10.4          Waiver of Consequential Damages.  Notwithstanding anything to the contrary contained in this Agreement, Seller and Buyer agree that the recovery by either Party of any damages suffered or incurred by such Party as a result of any breach by the other Party of any of its obligations under this Agreement shall be limited to the actual damages suffered or incurred by the non-breaching Party as a result of the breach of the breaching Party of its obligations hereunder and in no event shall the breaching Party be liable to the non-breaching Party as a result of the breach by the breaching Party of its obligations hereunder for any indirect, consequential, special, exemplary, or punitive damages (including any damages on account of lost profits or opportunities or lost or delayed generation) suffered or incurred by the non-breaching Party as a result of the breach by the breaching Party of any of its obligations hereunder.

 

ARTICLE XI

TERMINATION

 

11.1         Termination.  This Agreement may be terminated at any time prior to Closing as follows:

 

                (a)            By mutual written consent of Seller and Purchaser;

 

                (b)           By Purchaser at any time prior to the Closing if the Conditions contained in Article 6 are not fulfilled by Seller or waived by Purchaser prior to Closing;

 

                (c)            By Seller at any time prior to the Closing if the Conditions contained in Article 7 are not fulfilled by Purchaser or waived by Seller prior to Closing;

 

                (d)           By Seller at any time prior to the Closing, if there has been a material violation or breach by Purchaser of any Purchaser covenant, representation or warranty prior to the Closing which would prevent the satisfaction of any condition by the Closing and such violation or breach has not been waived by Seller or cured within fifteen (15) days after written notice thereof from Seller, unless Seller is in material breach of their obligations under this Agreement;

 

  

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                (e)           By Purchaser at any time prior to the Closing, if there has been a material violation or breach by Seller of any Seller covenant, representation or warranty prior to the Closing which would prevent the satisfaction of any condition by the Closing and such violation or breach has not been waived by Purchaser or cured within fifteen (15) days after written notice thereof from Purchaser, unless Purchaser is in material breach of their obligations under this Agreement; or

 

                (f)             By Purchaser if any evidence is received by Seller or Purchaser at any time prior to the Closing that indicates that any of the Land Agreements are not in full force and effect.

 

11.2         Sunset Date.   This Agreement shall be automatically terminated if the Project Financial Closing is not achieved by May 15, 2014, in which case this Agreement shall cease to be of any further force or effect.

 

11.3          Effect of Termination.

 

In the event of termination of this Agreement prior to the Closing, this Agreement shall become void and of no further force and effect and (i) the exchange between Seller and Purchaser of the consideration and other events contemplated under Sections 2.1 and 2.2 hereof shall not occur, (ii) all Seller Contracts, Interconnection Studies and Interconnection Agreements and Purchaser Contracts transferred to the Company prior to the Closing shall be unconditionally assigned and transferred back to Seller and Purchaser, respectively, without payment of any consideration for such assignment and transfer and (iii) the Success Fee, if any, shall cease to be payable by the Purchaser to the Seller.  Nothing in this Section 11.3 shall be deemed to relieve any Party from liability for any breach of this Agreement, or to impair the right of any Party under this Agreement.

 

ARTICLE XII

MISCELLANEOUS

 

12.1         Notices.  Unless this Agreement specifically requires otherwise, any notice, demand or request provided for in this Agreement, or served, given or made in connection with it, shall be in writing and shall be deemed properly served, given or made if delivered in person or sent by fax or sent by registered or certified mail, postage prepaid, or by an internationally recognized overnight courier service that provides a receipt of delivery, in each case, to the Parties at the addresses specified below:

 

a.  If to Seller:

Atlantic Green Power Corporation

Bayport One

Suite 455

8025 Black Horse Pike

West Atlantic City, New Jersey 08232

Fax: (609) 241-0952

Attention: Robert Demos, President and CEO

  

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and

Giordano, Halleran & Ciesla, P.C.

125 Half Mile Road, Suite 300

Red Bank, New Jersey 07701

Fax Number:  (732) 224-6599

Attention:  Paul T. Colella, Esq.

 

b. If to Purchaser:

Invenergy Solar Development LLC

One South Wacker Drive, Suite 1900

Chicago, Illinois 60606

Fax: (312) 224-1444

Attention: Joe Condo, General Counsel

 

and

Invenergy Solar Development LLC

51 Monroe Street, Suite 1604

Rockville, Maryland 20850

Fax: (301) 610-6418

Attention: Vice President, Solar Development

Notice given by personal delivery, mail or overnight courier pursuant to this Section 12.1 shall be effective upon physical receipt.  Notice given by fax pursuant to this Section 12.1 shall be effective as of (i) the date of confirmed delivery if delivered before 5:00 p.m. prevailing Eastern Time, on any Business Day, or (ii) the next succeeding Business Day if confirmed delivery is after 5:00 p.m. prevailing Eastern Time, on any Business Day or during any non-Business Day.  In the event of any merger, dissolution or other event pursuant to which the corporate existence of any Party terminates, any notice provided for in this Agreement may be given or delivered to any survivor or successor to such Party or to any successor to all or any part of its assets.

 

12.2          Entire Agreement.  This Agreement supersedes all prior discussions and agreements between the Parties with respect to the subject matter hereof and contains the sole and entire agreement between the Parties with respect to the subject matter hereof.

 

12.3          Expenses.  Except as otherwise expressly provided in this Agreement, whether or not the transactions contemplated hereby are consummated, each Party will pay its own costs and expenses incurred in connection with the negotiation, execution and closing of this Agreement and the transactions contemplated hereby.

 

  

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12.4          Confidentiality; Public Announcements.

 

                (a)            Each Party will hold, and will use commercially reasonable efforts to cause its Affiliates and their respective Representatives to hold, all Confidential Information in strict confidence from any Person (other than any such Affiliate or Representative), unless (i) compelled to disclose by judicial or administrative process (including in connection with obtaining the necessary approvals of this Agreement and the transactions contemplated hereby of Governmental or Regulatory Authorities) or by other requirements of Law (including exchange rules), (ii) disclosed in an action or proceeding brought by a Party in pursuit of its rights or in the exercise of its remedies hereunder; provided, that in each such case, the Party from whom disclosure is sought shall notify the other Party of the proposed release of Confidential Information and shall cooperate with such Party in limiting or preventing the release of such Confidential Information (for example, by obtaining a protective order), prior to the release thereof, or (iii) on a confidential basis to its employees, officers and directors and agents who have a need to know the same for the purpose of consummating the transactions contemplated by this Agreement, who have been informed that the Confidential Information is subject to this Section 12.4, and who have agreed or are otherwise obligated to comply with this Section 12.4.

 

                (b)           In the event the transactions contemplated hereby are not consummated, upon the request of the other Party, each Party will, and will cause its Affiliates and their respective Representatives to, promptly (and in no event later than five (5) Business Days after such request) redeliver or cause to be redelivered all copies of Confidential Information furnished by the other Party in connection with this Agreement or the transactions contemplated hereby and destroy or cause to be destroyed all notes, memoranda, summaries, analyses, compilations and other writings related thereto or based thereon prepared by the Party furnished such documents and information or its Representatives.  Any destruction of Confidential Information in accordance with this Section 12.4 will be certified in writing by an officer of the Party destroying the Confidential Information.  The obligations contained in this Section 12.4 shall survive for three (3) years following the termination or abandonment of this Agreement or the Closing, as the case may be.  The provisions of this Section 12.4 supersede any conflicting provisions in any other Confidentiality Agreements executed by the Parties.

 

                (c)            Neither Party will make any public disclosure concerning the matters set forth in this Agreement or the negotiation of the Agreement without the prior written consent of the other Party.  If and when a Party desires to make a public disclosure, after receiving the prior written consent of the other Party, the disclosing Party will give the other Party an opportunity to review and comment on any such disclosure in advance of public release.  Notwithstanding the above, to the extent that either Party is advised by counsel that disclosure of the matters set forth in this Agreement is required by applicable securities laws or to the extent that such disclosure is ordered by a court of competent jurisdiction or is otherwise required by law, then such disclosing Party will provide the other Party, if reasonably possible under the circumstances, prior notice of such disclosure as well as an opportunity to review and comment on such disclosure in advance of the public release.

 

  

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12.5         Waiver; Remedies.  Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition.  No waiver by any Party of any term or condition of this Agreement, in any one or more instances, shall be deemed to be or construed as a waiver of the same or any other term or condition of this Agreement on any future occasion.  Except as otherwise provided in Section 10.3 hereof, all remedies, either under this Agreement or by Law or otherwise afforded, will be cumulative and not alternative.

 

12.6         Amendment.  This Agreement may be amended, supplemented or modified only by a written instrument duly executed by or on behalf of each Party.

 

12.7         No Third Party Beneficiary.  The terms and provisions of this Agreement are intended solely for the benefit of the Company, each Party and their respective successors or permitted assigns, and it is not the intention of the Parties to confer third-party beneficiary rights upon any other Person except for such shareholders, officers, directors, employees and Affiliates referenced in Section 10.1 hereof.

 

12.8          No Assignment; Binding Effect.  Neither this Agreement nor any right, interest or obligation hereunder may be assigned by any Party without the prior written consent of the other Party and any attempt to do so will be void, except for (a) assignments and transfers by operation of Law, or (b) assignments and transfers by Purchaser or Seller of its rights, interests or obligations hereunder, in whole or in part, to an Affiliate, provided that no such assignments referred to in clauses (a) or (b) shall relieve the assigning Party of its obligations hereunder. Subject to the preceding sentence, this Agreement is binding upon, inures to the benefit of and is enforceable by the Parties and their respective successors and assigns.

 

12.9          Headings.  The headings used in this Agreement have been inserted for convenience of reference only and do not define or limit the provisions hereof.

 

12.10        Invalid Provisions.  If any provision of this Agreement is held to be illegal, invalid or unenforceable under any present or future Law, and if the rights or obligations of any Party under this Agreement will not be materially and adversely affected thereby, (a) such provision will be fully severable, (b) this Agreement will be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part hereof, (c) the remaining provisions of this Agreement will remain in full force and effect and will not be affected by the illegal, invalid or unenforceable provision or by its severance herefrom, and (d) in lieu of such illegal, invalid or unenforceable provision, there will be added automatically as a part of this Agreement a legal, valid and enforceable provision as similar in terms to such illegal, invalid or unenforceable provision as may be possible.

 

  

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12.11        Governing Law.  This Agreement shall be governed by and construed in accordance with the Laws of the state of New Jersey applicable to a contract executed and performed in New Jersey, without giving effect to the conflicts of laws principles thereof.

 

12.12        Jurisdiction and Venue.  Each of the Parties hereby irrevocably and unconditionally consents and agrees that any actions, suits or proceedings arising out of or relating to this Agreement and the transactions contemplated hereby may be brought in any court of the state of New Jersey having subject matter jurisdiction, and, by execution and delivery of this Agreement and any other documents executed in connection herewith, each such Party hereby (i) accepts the non-exclusive jurisdiction of the aforesaid courts, (ii) irrevocably agrees to be bound by any final judgment (after any and all appeals) of any such court with respect to such documents, (iii) agrees that service of any process, summons, notice or document in any such action may be effected by mailing a copy thereof by registered or certified mail, postage prepaid, to such Party at its address set forth in Section 12.1 hereof, or at such other address of which the other Parties shall have been notified will be effective service for any action, suit or proceeding brought against it in any such court, and (v) agrees that nothing herein shall affect the right to effect service of process in any other manner permitted by law.

 

12.13       Attorneys’ Fees.  In the event of any suit or other proceeding between the Parties with respect to any of the transactions contemplated hereby or the subject matter hereof, the prevailing Party shall, in addition to such other relief as the court or arbitrator may award, be entitled to recover reasonable attorneys’ fees and costs (including at the trial and appellate levels) and expenses of investigation.

 

12.14       Time is of the Essence.  With regard to all dates and time periods set forth or referred to in this Agreement, time is of the essence.

 

12.15       Counterparts.  This Agreement may be executed in any number of counterparts, including facsimile, each of which will be deemed an original, but all of which together will constitute one and the same instrument.

 

[SIGNATURES APPEAR ON NEXT PAGE]

 

  

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the duly authorized officer of each of Seller and Purchaser as of the date first above written.

 

ATLANTIC GREEN POWER CORPORATION

 

            By:/s/ Robert Demos, Jr.                                                        

Name:   Robert Demos

Title:     President and CEO

INVENERGY SOLAR DEVELOPMENT LLC

 

            By:/s/ Enio Ricci                                                        

Name: Enio Ricci

Title:  Vice President

 

  

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LIST OF EXHIBITS AND SCHEDULES

 

 

	Exhibit A 	Operating Agreement  
	Exhibit B	Membership Interest Transfer Instrument  
	Exhibit C	
Seller Officer’s Certificate

	Exhibit D	Letter of Resignation
	Exhibit E  	Purchaser Officer’s Certificate
	Schedule 3.09 	Seller Contracts
	Schedule 3.10   	Company Assets
	Schedule 4.8  	Purchaser Contracts

 

All exhibits and schedules have been omitted.  Upon the request of the Securities and Exchange Commission, Atlantic Green Power Holding Company agrees to furnish copies of the exhibits and schedules listed above.

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