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Unassociated Document

SECOND AMENDED AND RESTATED OWNERSHIP LIMIT WAIVER AGREEMENT (VORNADO)

 

THIS SECOND AMENDED AND RESTATED OWNERSHIP LIMIT WAIVER AGREEMENT (this “Agreement”), dated as of December 6, 2010, is between Lexington Realty Trust, a Maryland real estate investment trust (the “Company”), and Vornado Realty L.P. (“VRT”), a Delaware limited partnership (together with any entity at least 99% of the voting securities of which are owned by VRT, “Vornado”) and amends and restates, as set forth below, that certain Ownership Limit Waiver Agreement (Vornado), dated as of December 31, 2006, between the Company and VRT (the “Original Agreement”), as further amended and restated by the Amended and Restated Ownership Limit Waiver Agreement, dated as of October 27, 2008, between the Company and VRT (the “First Restatement”), and as further amended by Amendment No. 1 to the First Restatement, dated April 21, 2009 (the “Amendment”). Capitalized terms used, but not otherwise defined, in this Agreement shall have the meanings given to them in the hereinafter-mentioned Declaration.

 

R E C I T A L S

 

A.           Article IX of the Company’s Declaration of Trust (the “Declaration”) contains (1) a restriction prohibiting any Person from Beneficially Owning or Constructively Owning outstanding shares of beneficial interest in the Company which are classified as Common Stock or Preferred Stock (the “Equity Stock”) in excess of 9.8% of the value of the outstanding Equity Stock of the Company (the “Ownership Limit”) and (2) a restriction setting forth that any sale, transfer, gift, hypothecation, pledge, assignment, devise or other disposition of Equity Stock of the Company that, if effective, would result in any Person Beneficially Owning or Constructively Owning Equity Stock in excess of the Ownership Limit shall be void ab initio as to the Transfer of that number of shares of Equity Stock which would be otherwise Beneficially or Constructively Owned by such Person in excess of the Ownership Limit; and the intended transferee shall acquire no rights in such excess shares of Equity Stock.

 

B.           The Company and Vornado entered into the Original Agreement in connection with the merger of Newkirk Realty Trust, Inc. with and into the Company on December 31, 2006.

 

C.           On October 27, 2008, the Company and Vornado entered into the First Restatement under which Vornado received an increase in the number of shares of Equity Stock that are covered by the Original Agreement in connection with a purchase of an additional 8.0 million shares of Equity Stock of the Company which purchase was estimated to close on or around October 31, 2008 (the date of the actual closing, the “Settlement Date”).

 

D.           On April 21, 2009, the Company and Vornado entered into the Amendment under which the Company and Vornado made certain clarifications to the First Restatement with regard to stock ownership arising out of stock dividends.

 

E.           Vornado has requested an increase in the number of shares of Equity Stock that are covered by this Agreement, in connection with a purchase of additional shares of Equity Stock of the Company.

 

  

  

  

F.           Pursuant to subparagraph (a)(9) of Article IX of the Declaration, the Company’s Board of Trustees has adopted resolutions approving Vornado’s exemption from the Ownership Limit on the terms and conditions hereinafter set forth.

 

AGREEMENT

 

1. WAIVER OF OWNERSHIP LIMIT

 

1.1 The Company exempts Vornado, effective as of the date hereof and subject to the terms herein, from the Ownership Limit solely:

 

(A)           (i) to the extent of Vornado’s Beneficial Ownership or Constructive Ownership of the lesser of (1) 21,351,461 shares of Equity Stock; and (2) any lesser number of shares of Equity Stock of the Company owned by Vornado from time to time after the earlier of December 31, 2013 and the first date upon which Vornado Beneficially or Constructively Owns the maximum number of shares of Equity Stock of the Company permitted pursuant to the foregoing clause (A)(i)(1) (the “Maximum Waiver Date”) (but excluding for the avoidance of doubt any shares described in Section 1.1(A)(ii) hereof), plus

 

(ii) the number of shares of Equity Stock of the Company issued by the Company to Vornado by reason of or in connection with any stock dividend declared and paid pursuant to Revenue Procedure 2008-68 or any similar Revenue Procedure or private letter ruling with respect to shares of Equity Stock exempt under this Agreement where the value of Vornado’s Beneficial or Constructive Ownership expressed as a percentage of the value of all shares of Equity Stock of the Company does not exceed 23% following such stock dividend (a “Permitted Stock Dividend”), and

 

(B) upon and subject to Vornado’s compliance with Section 2 below and its continued compliance with the covenants referred to therein.

 

This exemption shall not apply to any other shares of Equity Stock of the Company Beneficially Owned or Constructively Owned by Vornado.

 

1.2 For avoidance of doubt, (A) following any sale, assignment, transfer or other disposition by Vornado of shares of Equity Stock of the Company, the exemption granted by the Company hereunder shall exempt Vornado from the Ownership Limit only with respect to the maximum aggregate number of shares of Equity Stock of the Company, as the case may be, owned by Vornado immediately after such sale, assignment, transfer or disposition and after each such sale, assignment, transfer or disposition by Vornado anytime thereafter, (B) under no circumstances shall this exemption apply to any Equity Stock of the Company acquired by Vornado at any time after the Maximum Waiver Date, with the exception of shares of Equity Stock of the Company that are issued by the Company to Vornado by reason of or in connection with a Permitted Stock Dividend, and (C) Permitted Stock Dividends shall not include any shares of Equity Stock issued pursuant to a direct share purchase or dividend reinvestment plan.

 

  

  

  

1.3 No later than three (3) business days after the occurrence of the Maximum Waiver Date, Vornado shall provide written notification to the Company of (A) the occurrence of such Maximum Waiver Date and (B) the number of shares and applicable holder of Equity Stock of the Company Beneficially and Constructively Owned by Vornado on such date.

 

2. LIMITATIONS AND OTHER MATTERS

 

2.1 The exemption set forth in Section 1 above (the “Ownership Limit Waiver”) shall not be effective if and to the extent that, as a result of Vornado’s ownership of Equity Stock of the Company permitted by reason of the Ownership Limit Waiver:

 

(A) the Company would be considered to own (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code) an interest described in Section 856(d)(2)(B) of the Code in a “Vornado Related Tenant” (as defined in Section 2.4 herein), or

 

(B) any “individual” (within the meaning of Section 542(a)(2) of the Code) would be considered to  “own”  (within the meaning of Section 856(h) of the Code) any of the shares of Equity Stock of the Company covered by the Ownership Limit Waiver, of more than 9.8% (by number of shares or value, whichever is more restrictive) of the total outstanding shares of Equity Stock of the Company (whether or not such ownership causes the Company to be “closely held” under the REIT rules).

 

In addition, if the Ownership Limit Waiver is not effective as a result of the operation of any clause(s) of the preceding sentence, the Equity Stock of the Company that otherwise would be Excess Stock shall be deemed to have been transferred to the Company in accordance with subparagraph (b)(1) of Article IX of the Declaration.

 

2.2 For the Ownership Limit Waiver to be effective, Vornado Realty L.P. must execute a counterpart signature page to this Agreement and complete and make the representations and covenants set forth in the Certificate of Representations and Covenants, the form of which is attached hereto as Exhibit A (the “Certificate”), and must deliver such Certificate to the Company.  Except as otherwise determined by the Board of Trustees of the Company, the Ownership Limit Waiver shall cease to be effective upon any breach of the representations or covenants set forth herein or in the Certificate.  In addition, if the Ownership Limit Waiver ceases to be effective as a result of the operation of the preceding sentence, the shares of Equity Stock of the Company that would otherwise be Excess Stock shall be deemed to have been transferred to the Company in accordance with subparagraph (b)(1) of Article IX of the Declaration.

 

2.3 Vornado Realty L.P. shall deliver to the Company, at such times as may reasonably be requested by the Company (it being acknowledged that the Company may reasonably make such request on at least a calendar quarterly basis), a certificate signed by an authorized officer of Vornado Realty L.P. to the effect that Vornado Realty L.P. has complied and expects to continue to comply with its representations and covenants set forth in this Agreement and the Certificate.  If so requested by the Company, Vornado will cooperate with the Company in investigating any direct or indirect relationship that Vornado and any Person whose ownership of shares of Equity Stock of the Company would be attributed to Vornado under Section 318(a) of the Code (as modified by Section 856(d)(5) of the Code), may have with the Company’s tenants or “independent contractors” (within the meaning of Section 856(d)(3) of the Code) for purposes of determining compliance with the provisions of this Ownership Limit Waiver and in updating the Certificate accordingly.  However, the Company’s remedies under this Agreement with respect to Vornado Realty L.P.’s representations and covenants set forth in this Agreement and the Certificate shall become effective only if and for the taxable years of the Company during which Vornado requires the exemptions afforded to Vornado under this Agreement (the “Waiver Period”).

 

  

  

  

2.4 For purposes of this Agreement, “Vornado Related Tenant” means any entity:

 

(A) in which Vornado owns during the Waiver Period (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code), in the case of a corporation, shares equal to or greater than the “Threshold Percentage” (as defined in Section 2.5 herein) of either the total combined voting power of all classes of stock of such entity entitled to vote or the total value of shares of all classes of stock of such entity or, in the case of an entity that is not a corporation, an interest equal to or greater than the Threshold Percentage in the assets or net profits of such entity (such actual or Constructive ownership equal to or greater than the Threshold Percentage being hereinafter called a “Related Interest”),

 

(B) from which the Company is or will be deriving rental income (other than a taxable REIT subsidiary, if the requirements of Section 856(d)(8) of the Code are satisfied) and

 

(C) included in the tenant list (the “Tenant List”) attached hereto as Exhibit B (or added to such Tenant List pursuant to the next sentence), unless the Board of Trustees of the Company has determined that the Company derives (and is expected to continue to derive) an amount of gross rental income that is sufficiently small so as not to adversely affect the Company’s ability to qualify as a REIT.

 

The Company may add an entity to the Tenant List from time to time by written notice (which may be made by email with a written confirmation copy to follow within one business day by hand, facsimile or overnight delivery) to Vornado and Vornado shall promptly review any such revisions to the Tenant List (reflecting substitute or additional tenants) at the request of the Company and recertify its acknowledgment and agreement under this Agreement to such Tenant List within 10 (ten) business days of the date of such written notice, which response may initially be made by email, but shall be followed within 10 (ten) business days thereafter with a hard copy of recertification of the Certificate in Exhibit A with the updated Tenant List attached (the “Response Period”), provided, however, that if such notice is delivered at a time when Vornado owns a Related Interest in such entity that would result in the Company’s owning (actually or Constructively) an interest in such entity described in Section 856(d)(2)(B) of the Code, then, subject to the following proviso, such entity shall not be added to the Tenant List so long as Vornado so notifies the Company within the Response Period, which response shall include Vornado’s percentage owned in such entity; provided, further, that if such notice is given at a time when either Vornado’s interest in such entity has a fair market value of less than $1,000,000 or Vornado is engaged in active discussions regarding a potential acquisition of a Related Interest in such entity that would result in the Company’s owning (actually or Constructively) an interest in such entity described in Section 856(d)(2)(B) of the Code, then Vornado shall so notify the Company within the Response Period, and the parties shall jointly determine in good faith, based on the parties’ relative economic interests and REIT qualification interests with respect to such entity, whether such entity shall be added to the Tenant List.  Vornado shall advise the Company of the percentage ownership that its Related Interest represents in each Vornado Related Tenant not later than five days following the date of the Company’s request for such information.

 

  

  

  

2.5 For purposes of Section 2.4 above, the “Threshold Percentage” shall mean the percentage which, taking into account the shares or other ownership interests in the applicable tenant held by each other holder of shares of Equity Stock of the Company (as of the date of determination) who (as of the date of determination)has been granted an exemption from the Ownership Limit (an “Exempt Holder”), would cause the Company to own (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code) stock or other ownership interests in such applicable tenant equal to or greater than 7.8%.  If more than one Exempt Holder owns shares or other ownership interests with respect to the applicable tenant that, in the aggregate, amount to 7.8% or greater , then each such Exempt Holder’s Threshold Percentage in such applicable tenant shall mean the percentage determined by dividing 7.8% by the number of such Exempt Holders as of the date of determination; provided that Vornado’s Threshold Percentage in an applicable tenant shall not be shared with (1) the Exempt Holders on Exhibit C hereto or (2) any additional Exempt Holder to the extent of Vornado’s ownership in such tenant on the date the Company grants a waiver of Article IX to such Exempt Holder.  The Company hereby (1) represents and warrants that as of the date hereof, the Company has granted waivers of Article IX of the Declaration to those Exempt Holders (other than Vornado) as set forth on Exhibit C hereto and (2) agrees to give written notice to Vornado thirty (30) days prior to granting a waiver of Article IX of the Declaration to any additional Exempted Holder.

 

3. MISCELLANEOUS

 

3.1 All questions concerning the construction, validity and interpretation of this Agreement shall be governed by and construed in accordance with the domestic laws of the State of Maryland, without giving effect to any choice of law or conflict of law provision (whether of the State of Maryland or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Maryland.

 

3.2 This Agreement may be signed by the parties in separate counterparts, each of which when so signed and delivered shall be an original, but all such counterparts shall together constitute one and the same instrument.

 

3.3 All references to any Code provision shall be deemed to include any successor provisions of the Code and any regulatory, judicial or administrative amendment or interpretation of such statutory provisions.

 

3.4 To the extent shares of Equity Stock subject to the Ownership Limitation Waiver provided for in this Agreement are treated as Excess Shares pursuant to Article IX of the Declaration, if permitted under applicable law and regulation, the treatment of shares of Equity Stock as Excess Shares shall be done in a way that first treats shares of Equity Stock other than shares of Equity Stock acquired prior to the applicable Maximum Waiver Date as Excess Shares and then any other shares of Equity Stock, including the shares of Equity Stock acquired on the applicable Maximum Waiver Date. For the avoidance of doubt, nothing in this Agreement shall be interpreted, construed or deemed to grant a waiver of the Ownership Limit to anyone other than Vornado.

 

 

[Signature Page Follows]

 

  

  

  

Each of the parties has caused this Agreement to be signed by its duly authorized officers as of the date set forth in the introductory paragraph hereof.

 

	  	  
	  	
THE COMPANY

	
VORNADO

	  	  	  
	  	
Lexington Realty Trust

	
Vornado Realty L.P.

	  	  	
 

By: Vornado Realty Trust

General Partner

	  	  	  
	  	
By: /s/ T. Wilson Eglin                                                              

	
By: /s/ Alan J. Rice                                                      

	  	
Name: T. Wilson Eglin

	
Name: Alan J. Rice

	  	
Title: Chief Executive Officer

	
Title: SVP

	  	  	  

LEGAL_US_E # 89882819.7

  

  

  

EXHIBIT A TO THE WAIVER AGREEMENT

 

CERTIFICATE OF REPRESENTATIONS AND COVENANTS

 

FOR

 

OWNERSHIP LIMIT WAIVER

 

The undersigned desires that the Second Amended and Restated Ownership Limit Waiver Agreement (the “Waiver Agreement”) dated as of December 6, 2010, between the undersigned and Lexington Realty Trust, a Maryland real estate investment trust (the “Company”), be applicable to the shares of Equity Stock of the Company Beneficially Owned or Constructively Owned or to be received by the undersigned to the extent provided in the Waiver Agreement.  Capitalized terms used, but not otherwise defined, in this Certificate shall have the meanings given to them in the Waiver Agreement.

 

In connection with the Waiver Agreement, the undersigned makes the following representations effective as of the date of execution hereof:

 

	
(a)  

	
For U.S. federal income tax purposes, Vornado is a United States person within the meaning of Section 7701(a)(30) of the Code.

 

	
(b)  

	
The Equity Stock of the Company covered by the Waiver Agreement will be acquired by Vornado for its own account.

 

	
(c)  

	
Except as disclosed to the Company in writing, Vornado does not own (actually or Constructively, applying the provisions of Section 856(d)(5) of the Code) a Related Interest in any of the entities included in the Tenant List attached hereto as Schedule A, as the same may be supplemented from time to time in accordance with the Waiver Agreement.

 

	
(d)  

	
Vornado agrees that, during the Waiver Period, it will give ten (10) days’ written notice to the Company following an increase in its ownership in any of the entities included in the Tenant List attached hereto (1) in excess of the lesser of (1) 5% and (2) Vornado’s Threshold Percentage less .5%.  Vornado shall also give ten (10) days’ written notice to the Company during the Waiver Period following each time its ownership in any of the entities included in the Tenant List increases more than .5% above the applicable amount in the immediately preceding sentence.

 

	
(e)  

	
Vornado shall not take any affirmative action in the future that could reasonably be expected to cause the Company to be treated as deriving “impermissible tenant service income” (within the meaning of Section 856(d)(7) of the Code), provided that any “independent contractor” for purposes of Section 856 of the Code is identified in Schedule B attached hereto.

 

	
(f)  

	
Vornado further represents and warrants to the Company that:

 

	
(i)  

	
as of the date of execution and delivery hereof; it Beneficially Owns or Constructively Owns 18,468,969 shares of Equity Stock of the Company; and

 

	
(ii)  

	
no “individual” (as defined in Section 542(a)(2) of the Code) who “owns” (within the meaning of Section 856(h)(1) of the Code) any of the shares of Equity Stock of the Company covered by the Ownership Limit Waiver, shall own shares of Equity Stock of the Company in an amount greater than 9.8% (by number of shares or value, whichever is more restrictive) of the total outstanding shares of Equity Stock of the Company.

 

	
(g)  

	
The undersigned covenants to notify the Company promptly after the undersigned obtains knowledge that any of the foregoing representations (including any disclosures provided in connection with its representation in (c) above) is or may no longer continue to be accurate.

 

 

	
  

	
Vornado Realty L.P.

	 

	
  Dated:_________________     

	
 

	
  

	
By: Vornado Realty Trust

General Partner

                               

 

	
  

	
By:

	 

	
  

	
Name: Alan J. Rice

	
  

	
Title: Senior Vice President

 

 

-  -

  

  

  

SCHEDULE A TO THE CERTIFICATE

 

TENANT LIST

Omitted from filing.

 

 

 

-  -

  

  

  

SCHEDULE B TO THE CERTIFICATE

 

INDEPENDENT CONTRACTOR LIST

 

Omitted from filing.

 

 

-  -

  

  

  

EXHIBIT B TO THE WAIVER AGREEMENT

 

	
TENANT LIST

Omitted from filing.

-  -

  

  

  

	
  

	
EXHIBIT C TO THE WAIVER AGREEMENT

	
  

	
EXEMPT WAIVER HOLDERS

	
1.

	
BlackRock, Inc. up to 15,850,951 shares of Common Stock

	
2.

	
Cohen & Steers Capital Management, Inc. up to 15,850,951 shares of Common Stock, 372,880 shares of Series B Preferred Stock, 336,439 shares of Series C Preferred Stock, and 1,001,443 shares of Series D Preferred Stockinfospi_ex101.htm

Exhibit 10.1

 

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT, (the “Agreement”) made this 24th day of November 2010, (the “Effective Date”), by and among on the one hand, (i) Eilay Maman, an individual, and (ii) Oyster Shell Investment, LLLP, their successors and assigns (collectively, the “Sellers”), shareholders of InfoSpi,, Inc., a Nevada corporation, (hereinafter “Company”), and on the other hand, Dror Svorai, an individual, with an address of 1065 Lyontree Street, Hollywood, Florida 33019 (“Buyer”). (Sellers and Buyer may be referred to herein collectively as the “parties”, or individually, as a “party”.)

W I T N E S S E T H:

WHEREAS, Sellers own 28,000,000 shares of common stock of the Company, (the “Stock”); and

WHEREAS, Buyer wishes to purchase the Stock from the Sellers;

NOW, THEREFORE, in consideration of the mutual promises, covenants, and representations contained herein, the parties hereto agree as follows:

ARTICLE 1

1.  Agreement to Purchase and Sell. Sellers will sell to Buyer and Buyer agrees to purchase the Stock for a total purchase price of Three Hundred and Twenty-Five Thousand Dollars ($325,000U.S.), (the “Purchase Price”), as follows:

a.  One Hundred and Fifty Thousand Dollars ($150,000 U.S.) to be paid by wire transfer to an account designated by the Sellers, or certified bank check (the “Deposit”) on the Effective Date.

b.  The balance of the Purchase Price, or One Hundred and Seventy-Five Thousand Dollars ($175,000 U.S.), interest free, shall be paid in installments (collectively, the “Installments”, or individually, the “Installment”) per the following schedule:

Installment Date                                           Installment Amount

January 15, 2011                                                        $50,000

February 15, 2011                                                      $50,000

March 15, 2011                                                          $75,000

c.  Until the Purchase Price is paid in full by the Buyer to the Sellers, the Stock shall be held in a escrow account by an escrow agent mutually selected by the Buyer and the Sellers, (the “Escrow”), to be released pro-rata to the Buyer as the Installments are paid to the Sellers by the Buyer.

 

  

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2.  Closing And Payment.  Subject to the terms and conditions hereof, and in reliance upon the written representations and warranties of Buyer, Sellers will sell and, subject to the terms and conditions hereof, and Purchaser will purchase, the Stock.  The Closing shall be held at Sellers’ Office on the Effective Date on such date as may be agreed upon by the Parties (the “Closing Date”).  At the Closing, Sellers shall deliver: the Stock to Buyer along with executed stock powers.  At the Closing, Buyer will deliver to Sellers the Purchase Price by wire transfer or such other means as the Parties may agree upon in writing.

3.  Representations and Warranties of Sellers.  Sellers hereby represents and warrants to Buyer that the statements in the following paragraphs of this Section 3 are all true and complete as of the date hereof:

a.  Authority; Due Authorization.  This Agreement has been duly and validly executed and delivered by Sellers, and upon the execution and delivery by Buyer of this Agreement and the performance by Buyer of Buyer’s obligations herein, will constitute, a legal, valid and binding obligation of Sellers enforceable against Sellers in accordance with its terms, except as such enforcement may be limited by bankruptcy or insolvency laws or other laws affecting enforcement of creditors’ rights or by general principles of equity.

b. Title to Stock.  Sellers is the sole record and beneficial owner of the Stock and has sole managerial and dispositive authority with respect to the Stock.  Sellers has not granted any person a proxy with respect to the Stock that has not expired or been validly withdrawn.  The sale and delivery of the Stock to Buyer pursuant to this Agreement will vest in Buyer legal and valid title to the Stock, free and clear of all liens, security interests, adverse claims or other encumbrances of any character whatsoever (“Encumbrances”) (other than Encumbrances created by Buyer and restrictions on resales of the Stock under applicable securities laws).

4.  Representations and Warranties of Buyer.  Buyer hereby represents and warrants to Sellers that the statements in the following paragraphs of this Section 4 are all true and complete as of the date hereof:

a.  Exempt Transaction. Buyer understands that the offering and sale of the Stock is intended to be exempt from registration under the Act and exempt from registration or qualification under any state law.

b.  Full Authority.  Buyer represents that he has full power and authority to enter into this Agreement. This Agreement has been duly and validly executed and delivered by Purchaser, and upon the execution and delivery by Sellers of this Agreement and the performance by Sellers of its obligations herein, will constitute, a legal, valid and binding obligation of Buyer enforceable against Buyer in accordance with its terms, except as such enforcement may be limited by bankruptcy or insolvency laws or other laws affecting enforcement of creditors’ rights or by general principles of equity.

c.  Investment Intent.  The Stock to be purchased by Buyer hereunder will be acquired for investment for Buyer’s own account, not as a nominee or agent, and not with a view to the public resale or distribution thereof, and Buyer has no present intention of selling, granting any participation in, or otherwise distributing the same.

 

  

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d.  Information Concerning the Company.  Buyer has conducted his own due diligence with respect to the Company and its liabilities and believes he has enough information upon which to base an investment decision in the Stock.  Buyer acknowledges that Sell has made no representations with respect to the existence or non-existence of liabilities in the Company.

e.  Investment Experience.  The Buyer understands that the purchase of the Stock involves substantial risk.  The Buyer (a) has experience as a purchaser in securities of companies in the development stage and acknowledges that he can bear the economic risk of Buyer’s investment in the Stock and (b) has such knowledge and experience in financial, tax, and business matters so as to enable Buyer to evaluate the merits and risks of an investment in the Stock, to protect Buyer’s own interests in connection with the investment, and to make an informed investment decision with respect thereto.

f.   No Oral Representations. No oral or written representations have been made other than as stated, or in addition to those stated, in this Agreement, and Buyer is not relying on any oral statements made by Sellers, or any of Sellers's representatives or affiliates, in purchasing the Stock.

5.  Indemnification.

a.  Basic Standard.  Buyer shall indemnify and hold harmless Sellers (the “Indemnified Person”) from and against any losses, damages, expenses and liabilities (collectively “Liabilities”) or actions, investigations, inquiries, arbitrations, claims or other proceedings in respect thereof, including enforcement of this Agreement (collectively “Actions”) (Liabilities and Actions are herein collectively referred to as “Losses”), as they may be incurred (including all reasonable legal fees and other expenses incurred in connection with investigating, preparing, defending, paying, settling or compromising any Losses, whether or not in connection with any pending or threatened Action, and notwithstanding the absence of a final determination as set forth below as to a party’s  obligation to reimburse an Indemnified Person for such Losses and the possibility that such payments might later be held to have been improper) to which any of them may become subject and which are related to or arise out of this Agreement or any breach of this Agreement.

b. No Settlement Without Consent of All Indemnified Persons.  Buyer agrees that without Indemnified Person’s prior written consent he shall not settle any pending or threatened claim, action, suit or proceeding related to this Agreement unless the settlement also includes an express unconditional release of all Indemnified Persons from all liability and obligations arising therefrom, or indemnifying party reaffirms their obligation to indemnify for or contribute to Losses incurred by any unreleased Indemnified Person as herein provided.

c.  Indemnification Procedure.  Promptly after receipt of notice of the commencement of any action, any Indemnified Person will, if a claim in respect thereof is to be made against any indemnitor hereunder, notify in writing the indemnitor of the commencement thereof; but omission so to notify an indemnitors will not relieve the indemnitors from any liability hereunder which they may have to any Indemnified Person.  If the indemnitor so elects, indemnitor may assume the defense of such Action in a timely manner, including the employment of counsel (reasonably satisfactory to the Indemnified Person) and payment of expenses, provided Indemnitors acknowledge in writing its unconditional obligation pursuant to this agreement to indemnify the Indemnified Person in respect of such Action and provides to the Indemnified Person evidence reasonably satisfactory to it that the indemnitor will have the financial resources to conduct such defense actively and diligently and permit Indemnitee and counsel retained by the Indemnified Person at its expense to participate in such defense.  Notwithstanding the foregoing, in the event the Indemnified Party determines in its sole discretion that it is advisable for the Indemnified Person to be represented by separate counsel, then the indemnitee may employ on behalf of the Indemnified Person a single separate counsel to represent or defend such Indemnified Persons in such action, claim, proceeding or investigation and the indemnitee will pay the reasonable fees and disbursements of such separate counsel as incurred.

 

  

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d. Corporate Changes Will Not Affect Indemnification.  In the event of any fundamental change involving the corporate structure of either party, such as by merger, plan of exchange or sale of all or substantially all of its assets, any executory obligations of an indemnitor in this Agreement shall, if not assumed by operation of law, be assumed by contract by the acquiring entity or arrangements made to protect the interests of Indemnified Person reasonably satisfactory to it.

e.  Multiple Claims.  If multiple claims are brought against an Indemnified Person in any Action with respect to at least one of which indemnification is permitted under applicable law and provided for under this Agreement, the indemnitor agrees that any judgment, arbitration award or other monetary award shall be conclusively deemed to be based on claims as to which indemnification is permitted and provided for.

f.  Indemnification Contributions.  If the indemnity referred to in this Agreement should be, for any reason whatsoever, unenforceable, unavailable or otherwise insufficient to hold each Indemnified Person harmless, Indemnitors shall pay to or on behalf of each Indemnified Person contributions for Losses so that each Indemnified Person ultimately bears only a portion of such Losses as is appropriate (i) to reflect the relative benefits received by each such Indemnified Person, respectively, on the one hand and Indemnitors on the other hand in connection with the transaction or (ii) if the allocation on that basis is not permitted by applicable law, to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of each such Indemnified Person, respectively, and Indemnitors as well as any other relevant equitable considerations.

g. Not Exclusive Remedy.  The obligations of the indemnitor referred to above shall be in addition to any rights that any Indemnified Person may otherwise have.

6.  Arbitration.  Any controversy of claim arising out of, or relating to, this Agreement, or the making, performance, or interpretation thereof, shall be settled by arbitration in Florida, Broward County, in accordance with the Rules of the American Arbitration Association then existing, and judgment on the arbitration award may be entered in any court having jurisdiction over the subject matter of the controversy. In the event of disputes between the parties related to this transaction, the prevailing party will be entitled to recover reasonable attorney and legal fees and court costs from the non-prevailing party.

 

  

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7.  Termination. Buyer or Sellers may not, except for a material breach or failure of a condition or requirement, on or before the Closing Date.

8.  Successors and Assigns.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties, except that Buyer may not assign or transfer any of its rights or obligations under this Agreement.

9.  Governing Law.  Any dispute, disagreement, conflict of interpretation or claim arising out of or relating to this Agreement, or its enforcement, shall be governed by the laws of the State of Florida.

10.  Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same agreement.  A telefaxed copy of this Agreement shall be deemed an original.

11.  Headings.  The headings and captions used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.  All references in this Agreement to sections, paragraphs, exhibits and schedules shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits and schedules attached hereto, all of which exhibits and schedules are incorporated herein by this reference.

12.  Costs, Expenses.  Each party hereto shall bear its own costs in connection with the preparation, execution and delivery of this Agreement.

13.  Amendments and Waivers.  Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively), only with the written consent of Sellers and the Buyer.  No delay or omission to exercise any right, power, or remedy accruing to Buyer, upon any breach, default or noncompliance of Sellers under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring.  All remedies, either under this Agreement, by law, or otherwise afforded to Purchaser, shall be cumulative and not alternative.

14.  Severability.  If one or more provisions of this Agreement are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms.

15.  Entire Agreement.  This Agreement, together with all exhibits and schedules hereto, constitutes the entire agreement and understanding of the parties with respect to the subject matter hereof and supersedes any and all prior negotiations, correspondence, agreements, understandings duties or obligations between the parties with respect to the subject matter hereof.

 

  

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16.  Further Assurances.  From and after the date of this Agreement, upon the request of the Buyer or Sellers, Buyer and Sellers shall execute and deliver such instruments, documents or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.

17.  Brokers.  The parties represent and warrant they have entered into this Agreement without the advice of each parties own investment advisor or broker.  Further, each party shall be responsible for their own fees to its broker or investment advisor, and neither party shall be responsible for the fees of the other party.

In Witness Whereof, the parties hereto have executed this Agreement as of the Effective Date.

 

 

	SELLERS	 	BUYER
	 	 	 
	By: __________________________	 	By: ___________________________
	Eilay Mayan	 	Dror Svorai
	 	 	 
	 	 	 
	
Oyster Shell Investments, LLLP

	 	 
	 	 	 
	
By: __________________________

	 	 
	 	 	 
	
Name: ________________________

	 	 
	 	 	 
	Title: _________________________	 	 
	 	 	 

 

 

  

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