Document:

PURCHASE AGREEMENT

 

FOR

 

GARAGE UNIT

 

MCP SO STRATEGIC, 56, L.P., Seller

 

With

 

AMERICAN REALTY CAPITAL III, LLC, Purchaser

 

Centurion Condominium

33 West 56th Street

New York, New York 10019

 

  

  

  

	
TABLE OF CONTENTS

	 	 
	
TO

	 	 
	
PURCHASE AGREEMENT

	 	 
	
1.

	
AGREEMENT TO PURCHASE

	 	4
	
2.

	
PAYMENT FOR UNIT

	 	5
	
3.

	
INSPECTION PERIOD; RECEIPT OF DOCUMENTS AND INCORPORATION OF PLAN

	 	5
	
4.

	
NO MORTGAGE CONTINGENCY

	 	7
	
5.

	
MONIES TO BE HELD IN TRUST

	 	7
	
6.

	
CONDOMINIUM DOCUMENTS

	 	9
	
7.

	
CLOSING OF TITLE

	 	9
	
8.

	
TITLE INSURANCE

	 	11
	
9.

	
SELLER‘S RIGHT TO MAKE CHANGES

	 	12
	
10.

	
INTENTIONALLY OMITTED

	 	12
	
11.

	
EXPENSES OF CLOSING AND CLOSING ADJUSTMENTS

	 	12
	
12.

	
PURCHASER‘S LIEN

	 	13
	
13.

	
PURCHASER‘S DEFAULT

	 	13
	
14.

	
INTENTIONALLY DELETED

	 	14
	
15.

	
NO SURVIVAL

	 	14
	
16.

	
RETURN OF DOWN PAYMENTS

	 	14
	
17.

	
ASSIGNMENT AND ASSUMPTION OF SPACE LEASE

	 	14
	
18.

	
THE UNIT

	 	15
	
19.

	
AGREEMENT SHALL NOT BE RECORDED

	 	15
	
20.

	
PRIORITY OF MORTGAGE LIEN

	 	15
	
21.

	
RISK OF LOSS

	 	16
	
22.

	
BROKER

	 	16
	
23.

	
AGREEMENT SUBJECT TO PLAN BECOMING EFFECTIVE

	 	16
	
24.

	
INTENTIONALLY DELETED

	 	16
	
25.

	
POWER OF ATTORNEY TO BOARD OF MANAGERS

	 	16
	
26.

	
FURTHER ACTS

	 	17
	
27.

	
NO ASSIGNMENT OF AGREEMENT

	 	17
	
28.

	
SUCCESSORS AND ASSIGNS

	 	17
	
29.

	
NO REPRESENTATIONS

	 	17
	
30.

	
COSTS OF ENFORCING AND DEFENDING AGREEMENT

	 	18
	
31.

	
NOTICES

	 	18
	
32.

	
WARRANTIES

	 	18
	
33.

	
EQUIPMENT AND FURNISHINGS

	 	18
	
34.

	
ACCEPTANCE OF CONDITION OF THE UNIT

	 	19
	
35.

	
ATTORNEYS

	 	19
	
36.

	
DEFINITIONS

	 	19
	
37.

	
CERTAIN REFERENCES

	 	19

  

2

  

 

	
38.

	
AMENDMENT OF PURCHASE AGREEMENT

	 	20
	
39.

	
GOVERNING LAW AND WAIVER

	 	20
	
40.

	
PLAN GOVERNS

	 	20
	
41.

	
SEVERABILITY

	 	20
	
42.

	
STRICT COMPLIANCE

	 	21
	
43.

	
WAIVER OF JURY TRIAL

	 	21
	
44.

	
ENTIRE AGREEMENT

	 	21
	
45.

	
CAPTIONS A RULES OF CONSTRUCTION

	 	21
	
46.

	
COUNTERPARTS

	 	21
	
47.

	
BINDING EFFECT

	 	21

  

3

  

PURCHASE AGREEMENT

 

THE CENTURION

 

	

Date ;

Purchaser(s) Name:

Address:

City/State/Zip Code:

Garage Unit

	

June 8, 2011

American Realty Capital III,

LLC

405 Park Ave., 15th Floor

New York, NY 10022

	

Total Common Interest: 1,488%

 

	

A.

	

Purchase Price

	 	$	5,400,000.00	 
	

B.

	

Down Payment (5%)

	 	$	270,000.00	 
	

C.

	

Balance Due at Closing

	 	$	5,130,000.00	 
	

D.

	

Working Capital Deposit

	 	$	4,991.64	 
	

E.

	

Additional Work

	 	 	N/A	 

 

	

Brokers:

	

Titan Realty Group LLC

	

New York Residence Inc.

	

______________________

	

1501 Broadway

	

New York, NY ___________

	

New York, New York 10036

	

June 30, 2011, TIME BEING OF THE

	

Closing Date (see Paragraph 7):

	

ESSENCE

   

WHEREAS, MCP SO Strategic 56, L.P., a Delaware limited partnership, having an address at c/o Bayrock Group, LLC, 160 Varick Street, 2nd Floor, New York, New York 10013, (the “Seller“ or “Sponsor“) has prepared and filed a Condominium Plan and desires to offer for sale, pursuant to Article 9-B of the Real Property Law of the State of New York, the aforementioned Units) to be situated on the Land owned by the Seller at 33 West 56th Street, New York, New York 10019 (the “Property“), and Purchaser desires to purchase the Unit(s) therein; and

 

NOW, THEREFORE, the Seller and Purchaser mutually agree as follows:

 

	
1. 

	
AGREEMENT TO PURCHASE.

 

Purchaser agrees to purchase and Seller agrees to sell the Garage Unit (the “Unit“) in The Centurion Condominium, together with the undivided interest in the Common Elements appurtenant thereto. The Unit is depicted in the Offering Plan (the “Plan“) which Purchaser has reviewed. The Purchase Price and the percentage of undivided interest in the Common Elements appurtenant thereto are shown on the first page of this Agreement and the Plan.

 

  

4

  

 

	
2. 

	
PAYMENT FOR UNIT.

 

a.            Purchaser shall make the down payment (“Down Payment“) shown on the first page of this Agreement in immediately available funds by wire transfer to the “Escrow Agent“, as that term is hereinafter defined as part payment of the Purchase Price at the time the sale is closed, or disbursed as agreed upon in accordance with the terms of this Agreement.

 

In the event that Purchaser fails to pay the Down Payment on or before the date that is not more than three (3) business days after the date of this Purchase Agreement, TIME BEING OF THE ESSENCE THEREFORE, then this Purchase Agreement shall automatically be deemed void and of no further force and effect as if the same had never been executed.

 

b. The Balance Due at Closing shall be shall be paid by wire transfer of immediately available funds to Escrow Agent, at the time of Closing, or as otherwise agreed to between Purchaser and Seller, Purchaser‘s payment of the Balance Due and acceptance of a deed to the Unit shall constitute Purchaser‘s acknowledgment that Seller has satisfactorily performed those obligations stated in the Plan and in this Agreement to be performed by Sponsor at or prior to Closing.

 

c.           In addition to the Balance Due at Closing and any other requirements contained herein, including adjustments, Purchaser shall pay to Seller, as agent of the Board of Managers of the Condominium, at or before the Closing, the sum set forth on the first page of this Agreement, representing Purchaser‘s proportionate share of the Condominium‘s working capital.

 

d.           Purchaser shall also submit an executed “Request for Taxpayer Identification Number and Certification“ known as the “W-9 Form“ (or, if applicable, “Certificate of Foreign Status“, known as the “W-8 Form“) (see Rider 2), along with the Down Payment. If the W-9 (or W-8) Form is not submitted with the Purchase Agreement, the Sponsor or Escrow Agent may return the Down Payment.

 

	
3.

	
INSPECTION PERIOD; RECEIPT OF DOCUMENTS AND INCORPORATION OF PLAN.

 

3.1             Inspection Period, Purchaser will have a period beginning on the day this Agreement is fully executed and ending on the date that is twenty one (21) days following the date hereof (the “Inspection Period“) to perform physical and title inspections and other due diligence and to decide, in Purchaser‘s sole discretion, whether the Unit is satisfactory. Purchaser‘s due diligence may include without limitation (a) all investigations relating to the physical characteristics of the Unit and Property including, without limitation, all engineering, structural and environmental inspections and assessments, (b) interview with the Space Tenant provided a principal of Seller is present at such interview, and (c) reviews of all of the files relating to the Unit All due diligence costs including, without limitation, all costs of building and site inspections, engineering, environmental and/or other reports or inspections undertaken by Purchaser shall be paid by Purchaser, which payment obligation shall survive the Closing or sooner termination of this Agreement, During the Inspection Period, Seller shall reasonably cooperate (at no cost to Seller) with Purchaser in its inspection of the Unit and Property by making the Condominium‘s managing agent, and employees of Seller responsible for managing Seller‘s units at the Condominium, reasonably available to Purchaser,

  

5

  

 

3.2           During the Inspection Period, Seller, upon written notice, will provide Purchaser or its designated representatives» at reasonable times and subject to the rights of the Space Tenant, access to the Property to conduct, at Purchaser‘s sole cost and expense, its due diligence with respect to the Unit and the Property; provided, however, that Purchaser (i) shall indemnify, defend and hold Seller harmless from and against all costs, expenses, losses, claims, damages and/or liabilities arising from Purchaser‘s inspection; (ii) shall promptly repair any damage resulting from any such inspections; (iii) shall fully comply with all laws, ordinances, rules and regulations in connection with such inspections; (iv) shall permit a representative of Seller to accompany Purchaser on any interviews with the Space Tenant and shall not interfere with the Space Tenant‘s right to the use, occupancy and operation of its premises; (v) shall not permit any inspections, investigations or other due diligence activities to result in any liens, judgments or other encumbrances being filed against the Unit and shall, at its sole cost and expense, promptly discharge of record any such liens or encumbrances that are so filed or recorded; (vi) shall not permit any borings, drillings, samplings or invasive testing to be done on or at the Unit without the prior written consent of Seller; (vii) shall, promptly following receipt thereof, provide Seller with copies of inspection reports and studies prepared by third parties in connection with Purchaser‘s inspection and due diligence; (viii) shall, and shall require all consultants and third-party designated representatives to, obtain and maintain, with an insurance company or insurance companies reasonably satisfactory to Seller, a policy of commercial general public liability insurance, with a broad form contractual liability endorsement covering Purchaser‘s indemnification obligations hereunder, and with a combined single limit of not less than $1,000,000 per occurrence for bodily injury and property damage, insuring Seller and its affiliates as additional insureds (certificates of which shall be given to Seller prior to the first entry by Purchaser on the Unit and the Property), all of which insurance shall be written on an “occurrence form“. The obligations and liabilities of Purchaser under this paragraph shall survive the Closing or sooner termination of this Agreement.

 

3.3         On or before the expiration of the Inspection Period, Purchaser, in its sole and absolute discretion, will have the right to terminate this Agreement by giving written notice of termination to Seller and Escrow Agent. In the event Purchaser timely exercises its right to terminate this Agreement pursuant to this Section 3,3 or pursuant to any other Section of this Agreement that refers to this Section 3.3: (a) Purchaser shall receive an immediate full refund of the Down Payment and all accrued interest, without the necessity of Seller‘s approval or consent and (b) except for obligations in this Agreement that expressly survive termination, neither party shall have any further rights against the other.

 

3.4          Purchaser acknowledges that prior to the expiration of the Inspection Period it will have had a full opportunity to examine all documents and investigate all statements contained herein and in the Plan and all amendments thereto for at least three (3) full business days prior to the execution of this Agreement. The Purchaser agrees to be bound by the Plan (including, without limitation, the Declaration, By-Laws, Rules and Regulations and other documents made part of Part II of the Offering Plan and the Schedules, Plans and Exhibits attached thereto) and any additions and amendments thereto, all of which are incorporated by reference and made a part of this Agreement with the same force and effect as if set forth in full in this Agreement.

  

6

  

 

	
4. 

	
NO MORTGAGE CONTINGENCY.

 

The terms and conditions of this Agreement and Purchaser‘s obligations hereunder shall not be conditioned upon the issuance to Purchaser of a commitment for mortgage financing. In the event that Seller is ready, willing and able to close in accordance with the terms and provisions hereof, and if Purchaser is unable to pay the Balance due at Closing or the Adjourned Time of the Essence Closing Date as defined herein, then Seller shall be entitled to, as its sole and exclusive remedy to declare this Agreement to be terminated, and Seller shall be entitled to immediately receive all of the Down Payment as liquidated damages and this Agreement will be deemed terminated.

 

	
5. 

	
MONIES TO BE HELD IN TRUST.

 

“THE PURCHASER OF THIS UNIT MAY REQUIRE SELLER TO DEPOSIT THE INITIAL ADVANCE MADE BY THE PURCHASER IN AN ESCROW ACCOUNT.

 

a.          The above statement is made in accordance with the provisions of Section 71- a(3)(e) of the Lien Law of the State of New York, which applies to a contract of sale of a Garage Unit.

 

b.          All deposits, downpayments, or advances made by Purchaser prior to Closing, whether received before or after the date of consummation of the Plan, will be placed, within three (3) business days after the agreement is signed by all necessary parties, in a segregated special escrow account of Chicago Title Insurance Company (the “Escrow Agent“), whose address is Suite 1325, 1515 Market Street, Philadelphia, PA 19102-1930, Attention: Edwin G, Ditlow, Telephone: 215-875-4184; Telecopy: 215-732-1203; E-Mail: ditlowE@ctt.com.

 

c.          The parties agree that the Escrow Agent shall be responsible for (x) organizing the issuance of the Commitment and Title Policy, (y) preparation of the closing statement, and (z) collections and disbursement of the funds.

 

d.          The account will be interest-bearing and, unless the Purchaser defaults, interest will be credited to the Purchaser at Closing.

 

e.          All escrow deposit funds will be held or secured, as the case may be, in accordance with Section 71-a(3) of the Lien Law and with the escrow and trust fund requirements of Sections 352-e(2-b) and 352-h of the General Business Law and the Attorney General‘s regulations promulgated pursuant thereto (see Exhibit 8(b) of the Plan). Purchaser shall not be obligated to pay any legal or other expense of the Seller in connection with the establishment, maintenance or defense of obligations arising from the handling or disposition of trust funds.

  

7

  

f.             Subject to the foregoing, all sums paid on account of this Agreement, and the reasonable expense of examination of title to the Unit are hereby made liens on the Unit, but such liens shall not continue after default by Purchaser under this Agreement.

 

g.           If Escrow Agent receives a written request signed by Purchaser or Seller (the “Noticing Party“), other than a request by Purchaser pursuant to Section 3.3 above, stating that this Agreement has been canceled or terminated and that the Noticing Party is entitled to the Down Payment, or that the other party hereto (the “Non-Noticing Party“) has defaulted in the performance of its obligations hereunder, Escrow Agent shall send a copy of such request to the Non-Noticing Party. The Non-Noticing Party shall have the right to object to such request for the Down Payment by written notice of objection delivered to and received by Escrow Agent ten (10) days (excluding Saturdays, Sundays and State of New York and Federal holidays) after the date of Escrow Agent‘s sending of such copy to the Non-Noticing Party, but not thereafter. If Escrow Agent shall not have so received a written notice of objection from the Non-Noticing Party, Escrow Agent shall deliver the Down Payment, together with the interest earned thereon, to the Noticing Party, If Escrow Agent shall have received a written notice of objection within the time herein prescribed, Escrow Agent shall refuse to comply with any requests or demands on it and shall continue to hold the Down Payment, together with any interest earned thereon, until Escrow Agent receives either (a) a written notice signed by both Seller and Purchaser stating who is entitled to the Down Payment (and interest) or (b) a final order of a court of competent jurisdiction directing disbursement of the Down Payment (and interest) in a specific manner, in either of which events Escrow Agent shall then disburse the Down Payment, together with the interest earned thereon, in accordance with such notice or order. Escrow Agent shall not be or become liable in any way or to any person for its refusal to comply with any such requests or demands.

 

h.            Any notice to Escrow Agent shall be sufficient only if received by Escrow Agent within the applicable time period set forth herein. All mailings and notices from Escrow Agent to Seller and/or Purchaser, or from Seller and/or Purchaser to Escrow Agent, provided for in this Section shall be sent in the manner and addressed to the party to receive such notice at its notice addresses set forth in Section 31 herein (with copies to be similarly sent to the additional persons therein indicated).

 

i.            Notwithstanding the foregoing, if Escrow Agent shall have received a written notice of objection within the time therein prescribed, or shall have received at any time before actual disbursement of the Down Payment a written notice signed by either Seller or Purchaser disputing entitlement to the Down Payment or shall otherwise believe in good faith at any time that a disagreement or dispute has arisen between the parties hereto over entitlement to the Down Payment (whether or not litigation has been instituted), Escrow Agent shall have the right, upon written notice to both Seller and Purchaser, (a) to deposit the Down Payment, together with the interest earned thereon with the Clerk of the Court in which any litigation is pending and/or (b) to take such reasonable affirmative steps as it may, at its option, elect in order to terminate its duties as Escrow Agent, including, without limitation, the depositing of the Down Payment, together with the interest earned thereon, with a court of competent jurisdiction and the commencement of an action for interpleader, the costs thereof to be borne by whichever of Seller or Purchaser is the losing party, and thereupon Escrow Agent shall be released of and from all liability hereunder except for any previous gross negligence or willful misconduct.

  

8

  

 

j.            Escrow Agent is acting hereunder without charge in its capacity as Escrow Agent, as an accommodation to Purchaser and Seller, it being understood and agreed that Escrow Agent shall not be liable for any error in judgment or any act done or omitted by it in good faith or pursuant to court order, or for any mistake of fact or law. Escrow Agent shall not incur any liability in acting upon any document or instrument believed thereby to be genuine. Escrow Agent is hereby released and exculpated from all liability hereunder, except only for willful misconduct or gross negligence. Escrow Agent may assume that any person purporting to give it any notice on behalf of any party has been authorized to do so. Escrow Agent shall not be liable for, and Purchaser and Seller hereby jointly and severally agree to indemnify Escrow Agent against, any loss, liability or expense, including reasonable attorney‘s fees (either paid to retained attorneys or, representing the fair value of legal services rendered by Escrow Agent to itself), arising out of any dispute under this Agreement, including the cost and expense of defending itself against any claim arising hereunder.

 

	
6. 

	
CONDOMINIUM DOCUMENTS.

 

Purchaser hereby acknowledges that the Plan has been declared effective and that the First Unit Closing has occurred. The Declaration and By-Laws, as amended, have been recorded by Seller in the Office of the City Register, New York County, together with the plans theretofore filed or being filed simultaneously with which fully and fairly depict the layout, location, Unit designation and approximate dimensions of the Units as built. Purchaser hereby accepts and approves the Condominium Documents and agrees to abide and be bound by the terms and conditions thereof.

 

	
7. 

	
CLOSING OF TITLE.

 

a.          The Escrow Agent shall act as closing or settlement agent and the Closing of title shall be held at the Escrow Agents Manhattan offices upon notice delivered to Seller no later than June 28, 2011, Purchaser shall be entitled to a one time five (5) day adjournment of the Time of the Essence Closing Date to July 5, 2011. TIME BEING OF THE ESSENCE THEREFORE (the “Adjourned Time of the Essence Closing Date“) provided Purchaser increases the Down Payment held by the Escrow Agent by an additional $125,000.00 (the “Additional Deposit“). Collectively, the Down Payment and the Additional Deposit shall be refereed to as the Down Payment on June 30, 2011 (the “Closing Date“), TIME BEING OF THE ESSENCE WITH REGARD TO PURCHASER‘S OBLIGATION TO CLOSE BY SAID DATE (the “Time of the Essence Closing Date“).

 

b.          At the Closing, Seller shall deliver to Purchaser or Escrow Agent a bargain and sale deed with covenants against grantor‘s acts, transferring ownership of the Unit and the undivided interest in the Common Elements appurtenant thereto to Purchaser. This deed, which is to be in the form contained in the Plan, will be executed and acknowledged by Seller and Purchaser in form for recording. It will provide Purchaser with good and marketable, fee simple title to the Unit, free and clear of all liens and encumbrances other than the Permitted Exception as set forth in Section 16 of the Plan, entitled “Terms of Sale“, as amended, and/or in the Declaration of Condominium.

 

  

9

  

c.            Seller shall also deliver to Purchaser or Escrow Agent an affidavit that it is not a “foreign person“ as required under the Internal Revenue Code of 1986, as amended (the “Code“), and Seller and Purchaser shall each execute, acknowledge and deliver to the other party such instruments as may be reasonably required to comply with Section 1445 of the Code, or any successor provision or any regulations promulgated thereunder, insofar as the same requires reporting of information in respect of real estate transactions.

 

d.            At the closing of title, Seller shall deliver to Purchaser or Escrow Agent an original copy of the agreement of lease dated as of ____, 2008 between Seller as Landlord, and Regal Car Park, LLC, as Tenant (the “Space Lease“), including any amendments, guaranties, and any other documents which pertain to the Space Lease, to the extent same are in Seller‘s possession, as well as a signed notice to Regal Car Park, LLC (the “Space Tenant“) advising it of the sale of the Unit and directing Space Tenant where to send all future rent and notices

 

Purchaser shall pay twenty (20%) percent of all New York State and New York City transfer taxes due in connection with this transaction and Seller shall pay eighty (80%) percent of all such transfer taxes due, In addition, Purchaser shall pay any financing costs incurred or charged by Purchaser‘s lender, title charges and insurance premiums, and closing costs, escrows and expenses set forth in Section 18 of the Plan except as otherwise provided herein. At the Closing, Purchaser and Seller shall execute and deliver a New York City Real Property Transfer Tax Return, New York State Form TP-584, (Combined Real Estate Transfer ‘fax Return and Credit Line Mortgage Certificate), the New York State Real Property Transfer Report, affidavit of non-multiple dwelling, and any other documents required by the government and prepared by the Seller. Real estate taxes and assessments, Common Charges and accrued rent and other charges paid pursuant to the Space Lease for the period past Closing will be adjusted as of the Closing. Any errors or omissions in computing adjustments at the Closing shall be corrected post closing. This provision shall survive delivery of the deed. To the extent that Seller receives any rents under the Space Lease after the Closing, the same shall be applied in the following order of priority:(i) First, to the calendar month in which the Closing occurred;(ii) Second, to any calendar month or months following the calendar month in which the Closing occurred until the Space Tenant, under the Space Lease, is current on rents and charges; and

 

(iii)           Third, to any calendar month or months preceding the calendar month in which the Closing occurred.

 

e.          At the Closing, Seller shall deliver to Purchaser or the Escrow Agent, an original estoppel certificate signed by the Space Tenant substantially in the form annexed hereto as Exhibit A.

 

f.          At the Closing, Seller shall deliver to Purchaser or the Escrow Agent, a statement from the Board of Managers that there are no unpaid common charges.

 

g.          At the same time the deed is delivered to the Purchaser, the Purchaser will sign and deliver any other documents required by the Seller in order to comply with the conditions set forth in the Plan. (See also Paragraph 25).

  

10

  

h. An assignment and assumption of the Space Lease as provided in Paragraph 17 herein,

 

	
8. 

	
TITLE INSURANCE.

 

a.           Purchaser shall order, at Purchaser‘s expense, a commitment for title insurance from Escrow Agent. All matters shown in the Title Commitment and all permitted exceptions as defined in the Plan and Declaration, as amended, with respect to which Purchaser fails to object prior to the expiration of the Inspection Period shall be deemed “Permitted Exceptions“. However, Permitted Exceptions shall not include any mechanic‘s lien or any monetary lien, or any deeds of trust, mortgage, or other loan documents secured by the Property, (collectively, “Liens“). Seller shall be required to cure or remove all Liens (by payment, bond deposit or indemnity acceptable to Escrow Agent). Seller shall have no obligation to cure any Permitted Exception or any other title matter objected to by Purchaser in accordance with the terms of this Agreement provided Seller notifies Purchaser of any objections which Seller elects not to remove or cure within five (5) business days following receipt of Purchaser‘s objections. In the event that Seller refuses to remove or cure any such objections, Purchaser shall have the right to terminate this Agreement upon written notice to Seller given within five (5) business days after receipt of Seller‘s notice, upon which termination the Down Payment shall be returned to Purchaser and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein. The title insurance procured by Purchaser is to be effective as of the Closing Date, insuring (subject to the standard general exceptions typically set forth in such title insurance company‘s standard form of title policy), that the Condominium has been validly created and agreeing to insure Purchaser‘s good and insurable fee title in and to the Unit, free and clear of all liens and encumbrances, except the liens of the first mortgage, if any, applied for by Purchaser herein and except tor the Permitted Exceptions. The delivery of a title insurance binder, redated to the Closing Date, and the subsequent delivery of the title insurance policy to Purchaser as soon after the Closing as the same is issued by the title insurance company, shall be conclusive evidence of Seller‘s full compliance with its obligations to convey good and insurable title, subject to the terms and conditions in the Plan and this Agreement.

 

b.          The existence of unpaid taxes or liens of any kind at the time of Closing shall not constitute an objection to title, provided Seller shall deposit a sufficient amount with Purchaser‘s title insurance company, so that it shall be willing to insure against collection of same from the property herein described. I he parties agree that the Seller may pay and discharge any liens and encumbrances upon the property, not provided for in this Agreement, out of the monies to be paid by Purchaser at the time of the Closing.

 

c.          If any matter not revealed in the Title Commitment is discovered by Purchaser or by the Escrow Agent and is added to the Title Commitment by the Escrow Agent at or prior to Closing, Purchaser shall have until the earlier of (i) ten (10) days after the Purchaser‘s receipt of the updated, revised Title Commitment showing the new title exception, together with a legible copy of any such new matter, or (ii) the date of Closing, to provide Seller with written notice of its objection to any such new title exception far. “Objection“), If Seller does not remove or cure such Objection prior to the date of Closing, Purchaser may terminate this Agreement, in which case the Earnest Money shall be returned to Purchaser, Seller shall reimburse Purchaser for all out of pocket costs and expenses incurred hereunder and neither party shall have any further obligation hereunder, except as otherwise expressly set forth herein.

 

  

11

  

 

	
9. 

	
SELLER‘S RIGHT TO MAKE CHANGES.

 

Intentionally omitted

 

	
10. 

	
SPACE LEASE.

 

Sponsor represents and warrants to the best of its knowledge as follows;

 

(i)             Sponsor has received no written notice of any litigation, proceeding or claim pending against or relating to the Unit or the Space Lease.

 

(ii)             There are no leases with Sponsor affecting the Unit other than the Space Lease, which lease is in full force and effect. With respect to the Lease: (A) Sponsor has delivered a true and complete copy of the Space Lease and Guaranty to Purchaser; (B) the Space Lease is in full force and effect and to Seller‘s knowledge there is no default (hereunder; (C) no brokerage or leasing commissions or other compensation is or will be due or payable to any person, firm, corporation or other entity with respect to or on account of the current term of the Space Lease or any extension or renewal thereof; (D) Seller has no outstanding obligation to provide Tenant with an allowance to construct, or to construct at its own expense, any tenant improvements; and (E) the total scheduled annual fixed rent (the “Annual Net Rent“) for the term of the Space Lease commencing on July 17, 2011 will be $345,050.00 per annum with three percent (3,0%) increases every two (2) years as per the rent schedule annexed hereto as Exhibit C.

 

(iii)             Space Tenant is not entitled to any rebate, concession, offset, reduction, purchase option or free rents except as stated in its Space Lease.

 

(iv)              Space Tenant shall be in possession of the premises demised under the Space Lease, open for business to the public and paying full and unabated rent under the Space Lease and, unless otherwise permitted pursuant to the terms of the Space Lease, Space Tenant shall not have assigned or sublet the Property.

 

The foregoing representations shall not survive the Closing.

 

	
11. 

	
MORTGAGE RECORDING TAX CREDIT.

 

The Plan provides that, in the event a mortgage recording tax credit becomes available pursuant to Section 339-ee(2) of the Condominium Act, and if Purchaser obtains mortgage financing in connection with the transaction, Seller shall waive the right to reimbursement by-Purchaser to the extent of any mortgage recording tax credit that is allowed. Seller hereby agrees to waive the right to reimbursement that applies hereto.

 

  

12

  

 

12.            PURCHASER‘S LIEN.

 

Subject to the provisions of Paragraph 5, all sums paid on account of this Agreement, and the reasonable expense of examination of the title are hereby made liens on the Unit, but such liens shall not continue after default by the Purchaser under this Agreement,

 

13.            DEFAULT

 

A.           PURCHASER‘S DEFAULT.

 

Seller may cancel this Agreement if Purchaser fails to pay any portion of the Purchase Price or the Working Capital deposit when due, fails to close title on the Closing Date specified by Seller pursuant to Paragraph 7 or willfully or intentionally fails to perform any of Purchaser‘s other obligations under this Agreement.

 

Seller shall send notice to Purchaser of Sellers intention to cancel this Agreement if such default is not cured within 10 days. Time is of the essence to cure such default within said ten (10) day period. If Purchaser shall fail to cure such default during the 10 day period, Seller may, at its option, cancel this Agreement by sending notice of cancellation to Purchaser. In this event, Seller shall notify Escrow Agent that title has not closed because of Purchasers default and that Seller has elected to cancel this Agreement, The Escrow Agent will then pay over to Seller as liquidated damages an amount equal to the sum of the Down Payment made by Purchaser plus interest earned on the Down Payment as provided for hereinabove (the “Liquidated Sum“). The Liquidated Sum will be paid out of the escrow account, and once paid, Purchaser and Seller will be relieved of any further liabilities or obligations under this Agreement. Notwithstanding anything to the contrary herein, no such notice of default nor opportunity to cure shall be afforded Purchaser if Purchaser shall fail to close title on the Time of the Essence Closing Date.

 

B.           SELLER‘S DEFAULT

 

In the event of a default in the obligations herein taken by Seller, or in the event of the failure of a condition precedent set forth in this Agreement, with respect to the Property, Purchaser may, as its sole and exclusive remedy, either: (i) waive any unsatisfied conditions and proceed to Closing in. accordance with the terms and provisions hereof without reduction or abatement of the Purchase Price; (ii) terminate this Agreement by delivering written notice thereof to Seller of not less than ten (10) days and an opportunity to cure such unsatisfied condition within such ten (10) day period no later than Time of the Essence Closing Date or the Adjourned Time of the Essence Closing Date, as the case may be, upon which termination the Down Payment shall be refunded to Purchaser and in the event of a willful and intentional default by Seller, then Seller shall pay to Purchaser all of the out-of-pocket costs and expenses incurred by Purchaser in connection with this Agreement, in an amount not to exceed $20,000.00 which return and payment shall operate to terminate this Agreement and release Seller and Purchaser from any and all liability hereunder, except those which are specifically stated herein to survive any termination hereof; (iii) enforce specific performance of Seller‘s obligations hereunder; or (iv) by notice to Seller given on or before the Closing Date, extend the Closing Date for a period of up to thirty (30) days (the “Closing Extension Period“), and the “Closing Date“ shall be moved to the last day of the Closing Extension Period. If Purchaser so extends the Closing Date, then Seller may, but shall not be obligated to, cause said conditions to be satisfied during the Closing Extension Period, If Seller does not cause said conditions to be satisfied during the Closing Extension Period, then Purchaser shall have the remedies set forth in Section 13(B)(i) through (iii) above except that the term “Closing“ shall read “Extended Closing“

 

  

13

  

 

C.           RIGHT TO SELL

 

If this Agreement shall be canceled by Seller pursuant to this Paragraph, Seller may sell the Unit to any third party and shall be under no obligation to account to Purchaser for any part of the proceeds of such sale. The attorneys for Seller may rely upon the truth and accuracy of the facts contained in Seller‘s notification and the authority of the person or persons executing the same. The provisions contained in this Agreement for the Liquidated Sum are bona fide provisions for such, and are not a penalty. The parties understand that Seller will sustain damages by reason of the withdrawal of the Unit from sale to the general public at a time other parties would be interested in purchasing the Unit, These damages will be substantial but will not be capable of determination with mathematical precision, and, therefore, the provisions for the Liquidated Sum have been incorporated into this Agreement as a provision beneficial to both parties, as a valid pre-estimate of the damages which will otherwise flow on account of any such default by Purchaser and termination of this Agreement on account thereof.

 

	
14. 

	
INTENTIONALLY DELETED.

 

	
15. 

	
NO SURVIVAL.

 

None of the terms of this Agreement, except as otherwise herein expressly provided, shall survive the delivery to and acceptance of the deed by Purchaser.

 

	
16. 

	
RETURN OF DOWN PAYMENT.

 

Seller‘s liability for failure to complete and/or to deliver title for reasons beyond the Seller‘s control will be limited to the return of the monies deposited under this Agreement, together with the interest earned thereon, if any. Upon the return of said monies, this Agreement shall be null and void and Seller and Purchaser released from any and all liability hereunder. Except as provided in the Plan, Seller shall not be required to bring any action or proceeding or otherwise incur any cost or expense of any nature in excess of its obligations set forth in the Plan to render the title to the Unit or Property marketable or to cure any objection to title, but Purchaser may, subject to Section 13B herein, accept such title as Seller is able to give without reduction or abatement of the Purchase Price or any claim or right against the Seller for damages or otherwise.

 

	
17. 

	
ASSIGNMENT AND ASSUMPTION OF SPACE LEASE.

 

A. Purchaser is acquiring the Unit subject to the Space Lease and Space Tenant‘s rights thereunder. At Closing, Purchaser shall execute and deliver to Sponsor an Assignment and Assumption of the Space Lease in form attached hereto as Exhibit B. Purchaser agrees to assume all of the obligations on the part of Sponsor under the Space Lease so assigned from and after the Closing Date and to indemnify and to hold Sponsor harmless from and against any and all claims, liabilities, damages, costs and expenses (including, without limitation, reasonable attorneys, fees) arising out of or in connection with such Space Lease on or after the Closing-Date. The provisions of this Paragraph 17A shall survive the Closing.

  

14

  

 

B.            Notwithstanding anything to the contrary contained herein, Purchaser agrees that the sale of the Garage Unit and the assignment of the Space Lease shall include an assignment of the parking passes held by Seller pursuant to Section 26.01 of the Space Lease except that Seller shall have the right to retain (2) two parking pass, at no additional charge, for as long as Seller still owns residential units at the Property at which time such parking passes shall be surrendered to the Purchaser and be of no further force and effect. The provisions of s Paragraph 17B shall survive the Closing.

 

	
18. 

	
THE UNIT.

 

Purchaser agrees to use the Unit, as provided in the Plan and the Declaration and By-Laws.

 

	
19. 

	
AGREEMENT SHALL NOT BE RECORDED.

 

Purchaser further agrees that this Agreement shall not be recorded, and any attempt to do so shall be a material default by Purchaser under this Agreement.

 

	
20. 

	
PRIORITY OF MORTGAGE LIEN

 

a.          Except for the lien described in Paragraphs 5 and 12, no encumbrance shall arise against the Unit as a result of this Agreement or any monies deposited hereunder. In addition, this Agreement is and will be subject and subordinate to the lien of any mortgage(s) (including, but not limited to, any acquisition or building loan mortgage) heretofore or hereafter made and to any payments or expenses already made or incurred or which may hereafter be made or incurred, pursuant to the terms thereof, or incidental thereto, or to protect the security thereof, to the full extent thereof, without the execution of any further legal documents by Purchaser. This subordination applies to voluntary or involuntary advances whether or not they are made in accordance with the building loan schedule of payments or accelerated thereunder by virtue of Lender‘s right to make advances before they become due in accordance with the schedule of payments.

 

b.          Seller will, at its option, either satisfy such mortgage or obtain a release of the Unit from the lien of such mortgage(s) on or prior to the Closing Date. The existence of any mortgage or mortgages encumbering the Condominium, or portions thereof, other than the Unit and its Common Interests, shall not constitute an objection to title or excuse Purchaser from completing payment of the Purchase Price or performing all his other obligations under the Agreement. It will also not be the basis of any claim against or liability of Seller, provided that any such mortgage is subordinate to the Declaration or the Unit is released from the lien of such mortgage.

  

15

  

	
21.

	
RISK OF LOSS.

 

a.           The risk of loss or damage to the Unit by fire or any other casualty is assumed by Seller until the Closing at which time Purchaser shall assume the risk of loss. If there is a casualty, Seller does not have any obligation or liability to repair or restore the Unit. If Seller elects to repair or restore the Unit, this Agreement shall continue in full force and effect and Purchaser shall not have the right to reject title or receive a credit against or abatement in the Purchase Price. In such event, Seller shall have a reasonable period of time within which to complete the repair or restoration. Any proceeds received from insurance or in satisfaction of any claim or action in connection with such loss shall, subject to the right of the Board of Managers and the owners of other Units, if the Declaration has theretofore been recorded, belong entirely to Seller, and if such proceeds are paid to Purchaser, Purchaser shall promptly turn over the full amount to Seller, The provisions of the preceding sentence shall survive the Closing.

 

b.           If Seller notifies Purchaser that it does not elect to repair or restore the Unit or, if the Declaration has been previously recorded, such repairs or restoration are not made pursuant to the By-Laws, this Agreement shall be deemed canceled and of no further force and effect. In such event, Seller shall return to Purchaser all sums deposited hereunder and under the Plan (plus accrued interest, if any), whereupon the parties shall be released and discharged from all obligations and liability hereunder and under the Plan, except that if Purchaser is then in default hereunder (beyond the applicable grace period, if any) Seller shall retain all such sums, together with any interest earned thereon, as and for liquidated damages.

 

	
22.

	
BROKER.

 

Purchaser represents to Seller that Purchaser has dealt with no broker in connection with this transaction, except for the Broker(s) named on the first page of this Agreement. Seller agrees to pay the commission earned by New York Residence Inc. and Purchaser agrees to pay the commission earned by Titan Realty Group LLC pursuant to separate agreements. Each party agrees to indemnify and hold the other harmless from all claims, liabilities, damage and costs (including attorney‘s fees) arising from any breach of either respective representations or obligations under this Section 22. The provisions of this Paragraph shall survive the Closing.

 

	
23.

	
PLAN DECLARED EFFECTIVE.

 

Purchaser hereby acknowledges that the Plan has been declared effective and that the First Unit Closing has occurred.

 

	
24.

	
INTENTIONALLY OMITTED.

 

	
25.

	
POWER OF ATTORNEY TO BOARD OF MANAGERS.

 

At Closing of title, and delivery of the deed to the Unit, or sooner upon request of Seller, Purchaser shall execute, acknowledge and deliver to Seller a Power of Attorney substantially the form set forth in the Plan as Exhibit 2.

  

16

  

	
26.

	
FURTHER ACTS.

 

Purchaser agrees to execute, acknowledge and deliver to Seller all documents and to perform all further acts and take such other actions, in addition to the documents and actions specifically provided for herein and in the Plan, as may be reasonably required by Seller to carry out the provisions of this Agreement and the Plan and, to establish the Condominium and to conform to the provisions of all applicable Laws and regulations. This Paragraph shall survive the Closing.

 

	
27.

	
NO ASSIGNMENT OF AGREEMENT.

 

Purchaser represents and warrants that Purchaser is a duly formed limited liability company organized under the laws of the State of Delaware, Purchaser will not assign this Agreement or any of Purchaser‘s rights hereunder, without the prior written consent of Seller except a transfer of the membership interest in Purchaser shall be deemed an assignment hereunder requiring Seller‘s consent. Notwithstanding the foregoing Seller agrees and accepts that Purchaser is entering into this Agreement for and on behalf of a related special purpose entity titled ARC NYCTGRG001, LLC (“Approved Assignee“) and intends to assign Approved Assignee its rights hereunder prior to Closing. Any other purported assignment of this Agreement shall be null and void at the option of the Seller.

 

	
28.

	
SUCCESSORS AND ASSIGNS.

 

Except as expressly provided herein to the contrary, the provisions of this Agreement shall bind and inure to the benefit of each party‘s successors and permitted assigns, except for any required reimbursement of a Down Payment. This Agreement shall, however, bind and inure to the benefit of Seller, its successors and assigns.

 

	
29.

	
NO REPRESENTATIONS.

 

Purchaser acknowledges that the information relied upon in signing this Agreement is solely that contained in this Agreement and the Plan. Purchaser has not relied upon any architect‘s plans, sales plans, selling brochures, advertisements, representations, warranties, statements or estimates of any nature whatsoever, whether written or oral, whether made by Seller, any real estate broker or any Selling Agent or otherwise, including, but not limited to, any relating to the description or physical condition of the Unit, the Building or Condominium; the size or the dimensions of the Unit or the rooms therein contained or any other physical characteristics thereof, the services to be provided Unit Owners, the estimated Common Charges, real estate taxes and expenses allocable to the Unit or the right to any income tax deduction on account of any real estate taxes and/or mortgage interest paid by Purchaser. Purchaser also acknowledges that the sales office and/or a model apartment may be designed or decorated with items that are not included in the sale of the Unit. No Person has been authorized to make any representations on behalf of Seller, except as herein or in the Plan specifically set forth, and no oral representations shall be considered a part of this Agreement. Purchaser expressly agrees that he will not be relieved from his obligations hereunder by reason of any minor inaccuracy or error. If the layout or dimensions of the Unit or any part thereof or Common Elements or any part thereof as shown on the Floor Plans or working drawings are not accurate or correct, as compared to the description in the Plan, Seller will not be liable or responsible to Purchaser if such layout conforms substantially to the plans for the Unit and the site plan, and the square foot area of any room in the Unit is reduced by only a minor amount.

  

17

  

 

	
30.

	
COSTS OF ENFORCING AND DEFENDING AGREEMENT.

 

In the event that either party commences an action or proceeding to enforce their rights under this Agreement, than the prevailing party shall be entitled to recover its reasonable legal fees from the other party which are incurred in such action or proceeding.

 

	
31.

	
NOTICES.

 

Any notice, letter, consent, request or other communication to be given pursuant to this Agreement shall be hand delivered or sent by overnight mail or by postage prepaid by registered or certified mail, return receipt requested, to Purchaser at the address given above to the attention of Adam Schorsch, with a copy at the same address to the attention of: Jesse Galloway, Esq.; and to Seller at c/o Bayrock Group, LLC, 160 Varick Street, 2nd Floor, New York, New York 10013 attention: Julius Schwarz, Esq., with a copy given simultaneously to Seller‘s attorneys, Kurzman Eisenberg Corbin & Lever, LLP, 1 North Broadway, White Plains, New York 10601, Attn: Steven M, Goldman, Esq. and to the Escrow Agent at the address set forth in Section 5(b) or at such other address as either party may hereafter designate to the other in writing. The date of mailing or hand delivery shall be deemed to be the date of the giving of notice, except that the date of actual receipt shall be deemed to be the date of the giving of any notice of change of address. Any Notice either party receives from the other party‘s attorneys shall be deemed to be notice from such party.

 

	
32.

	
WARRANTIES.

 

SELLER MAKES NO HOUSING MERCHANT IMPLIED WARRANTY OR ANY OTHER WARRANTIES, EXPRESS OR IMPLIED, IN CONNECTION WITH THIS AGREEMENT OR THE UNIT COVERED HEREBY AND ALL SUCH WARRANTIES ARE EXCLUDED.

 

Except as provided herein and in the Plan, the Seller shall not be liable to the Board of Managers or to the Purchaser for any matter as to which an assignable warranty, guaranty or bond has been assigned to such Board or to the Purchaser. The provisions of this Paragraph 32 shall survive the Closing,

 

	
33.

	
EQUIPMENT AND FURNISHINGS.

 

Seller will provide Purchaser only with the fixtures, equipment and hardware referred to in the Plan, which are included in the Purchase Price of the Unit.

  

18

  

 

	
34. 

	
ACCEPTANCE OF CONDITION OF THE UNIT.

 

Purchaser acknowledges that Purchaser is purchasing the Unit in its “as is“ condition with all faults and has not relied upon any architect‘s plans, sales plans, selling brochures, advertisements, representations, warranties, statements or estimates of any nature whatsoever, whether written or oral, made by Sponsor, the Broker, any Selling Agent or otherwise, including, but not limited to, any relating to the description or physical condition of the Property, the Building or the Unit, or the size or the dimensions of the Unit or any other physical characteristics thereof, the services to be provided to Unit Owners, the estimated Common Charges allocable to the Unit, the estimated real estate taxes on the Unit, the right to any income tax deduction for any real estate taxes or mortgage interest paid by Purchaser, the right to any income lax credit with respect to the purchase of the Unit, or any other data, except as herein or in the Plan specifically represented. Purchaser has relied solely on his own judgment and investigation in deciding to enter into this Agreement and purchase the Unit. No person has been authorized to make any representations on behalf of Sponsor except as herein or in the Plan specifically set forth. No oral representations or statements shall be considered a part of this Agreement. Sponsor mates no representation or warranty as to the work, materials, appliances, equipment or fixtures in the Unit, the Common Elements or any other part of the Property other than as set forth herein or in the Plan. Except as otherwise set forth in the Plan, Purchaser agrees (a) to purchase the Unit, without offset or any claim against, or liability of, Sponsor, whether or not any layout or dimension of the Unit or any part thereof, or of the Common Elements, as shown on the Floor Plans is accurate or correct, and (b) that Purchaser shall not be relieved of any Purchaser‘s obligations hereunder by reason of any immaterial or insubstantial inaccuracy or error. The provisions of this Article 34 shall survive the closing of title.

 

	
35. 

	
ATTORNEYS.

 

Purchaser understands that the attorney representing Seller or any Lender represents such parties only and not Purchaser. Purchaser acknowledges that he or she has been advised by Seller that it should retain independent counsel of Purchaser‘s selection.

 

	
36. 

	
DEFINITIONS.

 

The term “Purchaser“ shall be read as “Purchasers“ if more than one person are purchasers, in which case their obligations shall be deemed joint and several. The terms used herein shall have the same meanings as ascribed thereto in the Plan. If two or more persons are named as Purchaser therein, any one of them is hereby made agent for the other in all matters of any and every kind or nature affecting the Unit or this Agreement.

 

A “business day“ is a day which is not a Saturday, Sunday or legal holiday recognized by the Federal Government. Furthermore, if any date upon which or by which action is required under this Agreement is not a business day, then the date for such action shall be extended to the first day that is after such date and is a business day.

 

	
37. 

	
CERTAIN REFERENCES.

 

The use of the masculine gender in this Agreement shall be deemed to refer to the feminine (or neuter) gender whenever the context so requires. The terms “herein“, “hereof or “hereunder“ or similar terms used in this Agreement refer to this entire Agreement and not to the particular provision in which the term is used, unless the context otherwise requires.

 

  

19

  

	
38. 

	
AMENDMENT OF PURCHASE AGREEMENT.

 

This Agreement may not be amended, altered or discharged, except by an agreement in writing signed by the party sought to be charged therewith or by his, her or its duly authorized agent.

 

	
39. 

	
GOVERNING LAW; WAIVER AND JURISDICTION.

 

(A)        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 law. This Agreement does not and may not contain, or be modified to contain, a provision waiving Purchaser‘s rights or abrogating Seller‘s obligations under the Offering Plan or under Article 23-A of the General Business Law. Any provision of any agreement, whether oral or in writing, by which Purchaser purports to waive or indemnify any obligation of the Escrow Agent holding trust funds is absolutely void. The provisions of the Attorney General‘s regulations concerning escrow/trust funds shall prevail over any conflicting or inconsistent provision in the Plan or in this Purchase Agreement.

 

(B)           Any legal suit, action or proceeding arising out of or relating to this Agreement shall be instituted in any Federal or State Court in the City of New York, County of New York, and each party hereto waives any objections which it may now or hereafter have based on venue and/or forum non conveniens of any suit, action or proceeding, and each party hereby irrevocably submits to the jurisdiction of any such Court in nay suit, action or proceeding.

 

(C)           Each party agrees that process may be served in any such suit, action or proceeding in any Federal or State Court in New York, New York, by mailing process to each party in the manner provided in Section 31 herein and service in such manner shall be deemed in every respect effective service of process in any such suit, action or proceeding in the State of New York. Nothing contained herein shall affect the right of any party to serve process in any other manner otherwise proceed against borrower in any other jurisdictions.

 

	
40. 

	
PLAN GOVERNS.

 

In the event of any inconsistency or conflict between the provisions of this Agreement and those of the Plan, other than the provisions relating to closing costs, the provisions of the Plan will govern and be binding, except as to inconsistencies arising from changes to the Purchase Agreement negotiated between Sponsor and Purchaser. Purchaser hereby adopts, accepts and approves the Plan (including, without limitation, the Declaration, By-Laws and Rules and Regulations contained therein) and agrees to abide and be bound by the terms and conditions thereof, as well as all amendments to the Plan duly filed by Sponsor.

 

	
41. 

	
SEVERABILITY.

 

If any provision of this Agreement or the Plan is invalid or unenforceable as against any Person or under certain circumstances, the remainder of this Agreement or the Plan and the applicability of such provisions to other Persons or circumstances shall not be affected thereby. Each provision of this Agreement or the Plan, except as otherwise provided, shall be valid and enforced to the fullest extent permitted by Law.

  

20

  

	
42. 

	
STRICT COMPLIANCE.

 

Any failure by Seller to insist upon the strict performance by Purchaser of any of the provisions of this Agreement shall not be deemed a waiver of any of the provisions hereof, and Seller, notwithstanding any such failure shall have the right to insist upon the strict performance by Purchaser of any and all of the provisions of this Agreement to be performed by Purchaser.

 

	
43. 

	
WAIVER OF JURY TRIAL.

 

Except as prohibited by Law, the parties expressly waive trial by jury in any action, proceeding or counterclaim arising out of or relating to this Agreement or the relationship created thereby. With respect to any matter for which a jury trial cannot be waived, the parties agree not to assert any such claim as a counterclaim in, or move to consolidate such claim with, any action or proceeding in which a jury trial is waived. This provision shall survive the Closing or termination of this Agreement.

 

	
44. 

	
ENTIRE AGREEMENT.

 

All prior understandings and agreements between or among the parties are merged in this Agreement. It completely expresses their full agreement. It has been entered into after full investigation, neither party relying upon any statement made by anyone that is not set forth in this Agreement.

 

	
45. 

	
CAPTIONS & RULES OF CONSTRUCTION.

 

The captions in this Agreement are for convenience and reference only, and in no way define, limit or describe the scope or intent of this Agreement or the intent of any provision hereof. There shall be no presumption against the draftsman of this Agreement.

 

	
46. 

	
COUNTERPARTS

 

This Agreement may be executed in any number of counterparts, each of which shall constitute an original but all of which, taken together, shall constitute but one and the same instrument. Photocopies or electronic copies of such signed counterparts shall be deemed to be originals and may be used in lieu of the original for any purpose.

 

	
47. 

	
BINDING EFFECT.

 

This Agreement will not be binding on Seller until a fully executed counterpart hereof, executed by the Seller has been furnished to Purchaser or Purchaser‘s attorney, If this Agreement is not accepted within 30 days by Seller‘s returning a fully executed counterpart, then this Agreement will be deemed rejected and canceled. The Down Payment paid pursuant to the terms hereof will be promptly returned to Purchaser without interest thereon.

 

[Signatures on Following Page]

  

21

  

The Seller and Purchaser have signed this Agreement on the day and year first above written.

 

SELLER:

	
MCP SO STRATEGIC 56, L.P.

	 
	
By: MCP 56 LLC, General Partner

	 
	
By: Bayrock Group, LLC, Manager

	 
	 	 
	
By:

	
[Illegible]

	 
	  	
Name:

	  	 
	  	
Title:

	
Principal

	 

 

PURCHASER:

 

AMERICAN REALTY CAPITAL III, LLC

 

	

By:

	

/s/ William M. Kahane

	 	

EID/SS Number:

	 
	  	

Name: William M. Kahane

	 	  	 
	  	

Title: President

	 	  	 

 

Chicago Title Insurance Company, as Escrow Agent

 

	
By:

	  	  
	  	
Name:

	  
	  	
Title:

	  

 

  

22

  

EXHIBIT A

 

TENANT ESTOPPEL CERTIFICATE

The undersigned, being the tenant under a certain Lease dated as of __________, 2008 (the “Lease“), between MCP SO Strategic 56, L.P. (“Landlord“) and Regal Car Park, LLC (the “Tenant“) demising the premises located at property known as the Garage Unit in The Centurion Condominium located at 33 West 56th Street, New York, New York (the “Premises“) does hereby certify that;

 

	 	
1.

	
The Lease is in full force and effect and is the valid and binding obligation of Tenant. The Lease constitutes the entire agreement between Tenant and the Landlord concerning the Premises and has not been assigned, amended, extended or modified in any manner nor have the Premises been sublet in whole or in part

 

	 	
2.

	
The term of the Lease commenced on ____________ and will expire on ________________.

 

	 	
3.

	
To the best of Tenant‘s knowledge, no uncured default, event of default, or breach by Landlord or Tenant currently exists under the Lease, nor does any state of facts exist which with the passage of time or giving of notice, or both, could constitute a default by Landlord under the Lease. Tenant has made no claim against Landlord alleging Landlord‘s default under the Lease. Tenant has no setoffs, credits, claims or defenses to Tenant‘s obligation to pay rent or other charges to be paid under the Lease or to enforcement of the Lease. Tenant has not given Landlord any notice of termination of the Lease.

 

	 	
4.

	
The current Fixed Rent under the Lease is $__________ annually. Fixed Rent has been paid through ___________, 2011 and no rents have been paid more than 30 days in advance.

 

	 	
5.

	
Tenant has paid all Real Estate taxes and water and sewer charges assessed against the Premises through the period ending

 

	 	
6.

	
Tenant has paid all Operating Expenses assessed against the Premises through the period ending ____________.

 

	 	
7.

	
Tenant has no outstanding options or rights of refusal to purchase the Premises or any part of the real property of which the Premises are a part and Tenant has no options to lease additional space, no rights of refusal with respect to leasing additional space, and no renewal options.

 

	 	
8.

	
Tenant makes this certificate with the understanding that Landlord is contemplating a sale of the Premises and that if such sale is effectuated, the purchaser of the Premises will materially rely upon this certificate. This estoppel certificate shall be binding upon Tenant and its successors and assigns and shall inure to the benefit of and be enforceable by (i) Landlord and its successors, assigns and designees, (ii) American Realty Capital II, LLC and its successors, assigns and designees, (iii) Citigroup Global Markets Realty Corp. and its successors, assigns and designees, (iv) and any other purchaser of the Premises,

  

23

  

This certificate is dated as of ________________, 2011.

 

	 	Tenant:	 
	 	 	 
	 	Regal Car Park, LLC	 
	 	 	 	 
	 	
By:

	  	 
	 	  	
Name:

	 
	 	  	
Title:

	 

 

  

24

  

EXHIBIT B

  

FORM OF ASSIGNMENT AND ASSUMPTION OF SPACE LEASE

 

THIS ASSIGNMENT dated this ____ day of ____, 2011 between MCP SO Strategic 56, L.P., as Assignor, (“Assignor“), having an address at c/o Bayrock Group, LLC, 160 Varick Street, 2nd Floor, New York, New York 10013 and ________________________, as Assignee, (“Assignee“), having an address at c/o ___________________________.

 

WHEREAS, Assignor, as Seller and Assignee as Purchaser, entered into a Purchase and Sale Agreement dated as of June , 2011, (the “Agreement“) for the sale and purchase of Garage Unit in the Condominium known as The Centurion Condominium (the “Unit“) in the building commonly known as and located at 633 West 56th Street, New York, NY (“Premises“) which is occupied, pursuant to a lease agreement (“Space Lease“), by certain tenants as set forth in Exhibit A annexed hereto; and

 

WHEREAS, as part of the Agreement, Assignor and Assignee have agreed that, except as specifically set forth herein, Assignor will assign all of its right, title and interest in and to and Assignee will assume all of the obligations in, to and under the Space Lease (and guarantees thereof, if any); and

 

WHEREAS, Assignor and Assignee have also agreed that Assignor will assign all of its right, title and interest in and to Letter of Credit in the amount of $167,500 being held by Seller, under the Space Lease;

 

NOW THEREFORE, in consideration of $10.00 and other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.           Assignment. Assignor hereby assigns to Assignee all of Assignor‘s right, title and interest in and to the Space Lease. The assignment shall include an assignment of the Letter of Credit by endorcement on the face thereof where indicated. Notwithstanding the foregoing, the assignment of the Space Lease shall include an assignment of the parking passes held by Assignor pursuant to Section 26.01 of the Space Lease except that Assignor shall retain two parking pass, at no additional charge, for so long as assignor owns a condominium unit in the Condominium. The provisions of this Paragraph shall survive the Assignment.

  

25

  

2.           Assumption. Assignee hereby accepts the assignment of said Space Lease and, as of this date, hereby assumes and agrees to perform and comply with all of the terms, covenants and conditions on the landlord‘s part to be performed under the Space Lease, which first arise on and after the date hereof,

 

3.           Indemnification. (a) Assignee hereby defends, indemnifies and holds harmless Assignor from and against any and all loss, liability, damage, cost or expense (including, without limitation, reasonable attorneys‘ fees and disbursements) incurred or sustained by or asserted against Assignor solely as a result of Assignee‘s failure to perform any obligations of the landlord under the Space Lease accruing on or after the date hereof so assigned to Assignee on this date, 

 

(b) Assignor hereby defends, indemnifies and holds harmless Assignee from and against any and all loss, liability, damage, cost or expense (including, without limitation, reasonable attorneys‘ fees and disbursements) incurred or sustained by or asserted against Assignee solely as a result of Assignor‘s failure to perform any obligations of the landlord under the Space Lease accruing before the date hereof.

 

4.           Non-Recourse.                Except to the extent provided herein and in the Agreement, this Assignment is entirely without recourse, representation or warranty to or by Assignor, except that Assignor represents that Assignor has the present right, power and authority to deliver this Assignment.

 

IN WITNESS WHEREOF, Assignee and Assignor have signed this Assignment as of the date first set forth above.

 

	  	
ASSIGNOR:

	 
	 	 	 
	  	
MCP SO Strategic 56, L.P.

	 
	 	 	 	 
	  	
By:

	    	 
	  	  	
Name:

	 
	  	  	
Title:

	 
	 	 	 
	  	
ASSIGNEE:

	 
	  	[                                                   ]	 
	 	 	 	 
	  	
By:

	  	 
	  	  	
Name:

	 
	  	  	
Title:

	 

 

  

26

  

EXHIBIT C

 

ANNUAL FIXED RENT

 

	

Year numbers

	 	

Year Beginning

	 	

Year Ending

	 	

Annual Rent

	 	 	

Monthly Rent

	 
	

1-2

	 	

7/17/2009

	 	

7/16/2011

	 	 	335,000	 	 	 	27,916,67	 
	

3-4

	 	

7/17/2011

	 	

7/16/2013

	 	 	345,050	 	 	 	28,754.17	 
	

5-6

	 	

7/17/2013

	 	

7/16/2015

	 	 	355,402	 	 	 	29,616.79	 
	

7-8

	 	

7/17/2015

	 	

7/16/2017

	 	 	366,064	 	 	 	30,505.30	 
	

9-10

	 	

7/17/2017

	 	

7/16/2019

	 	 	377,044	 	 	 	31,420.37	 
	

11-12

	 	

7/17/2019

	 	

7/16/2021

	 	 	388,356	 	 	 	32,362.98	 
	

13-14

	 	

7/17/2021

	 	

7/16/2023

	 	 	400,006	 	 	 	33,333.87	 
	

15-16

	 	

7/17/2023

	 	

7/16/2025

	 	 	412,007	 	 	 	34,333.89	 
	

17-18

	 	

7/17/2025

	 	

7/16/2027

	 	 	424,367	 	 	 	35,363.90	 
	

19-20

	 	

7/17/2027

	 	

7/16/2029

	 	 	437,098	 	 	 	36,424.82	 
	

21-22

	 	

7/17/2029

	 	

7/16/2031

	 	 	450,211	 	 	 	37,517.56	 
	

23-24

	 	

7/17/2031

	 	

7/16/2033

	 	 	463,717	 	 	 	38,643.09	 
	

25

	 	

7/17/2033

	 	

7/17/2034

	 	 	477,629	 	 	 	39,802.38	 

 

  

27Exhibit 10.20

SECURITIES PURCHASE AGREEMENT

 

This Securities Purchase Agreement (this “Agreement”) is dated as of July 14, 2011 by and between Vicor Technologies, Inc., a Delaware corporation (the “Company”), and Centaurian Fund (the “Purchaser”). Capitalized terms used in this Agreement and not otherwise defined shall have the meanings ascribed to them in Article I.

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall have the right to issue and sell to Purchaser from time to time as provided herein, and Purchaser shall be obligated to purchase from the Company, up to $10,000,000 worth of shares of Common Stock on a private placement basis pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933; and

 

WHEREAS, the Purchaser shall be entitled to resell shares of Common Stock acquired hereunder pursuant to a resale registration statement established by the Company pursuant to the terms of the Registration Rights Agreement between the Company and the Purchaser which shall be declared effective by the Commission prior to the delivery of the first Draw Down Notice.

 

NOW, THEREFORE, in consideration of the foregoing premises, and the promises and covenants herein contained, the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties, intending to be legally bound, hereby agree as follows:

 

ARTICLE I.

DEFINITIONS

 

1.1          Definitions.  In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms have the meanings indicated in this Section 1.1:

 

“Action” shall have the meaning ascribed to such term in Section 3.1(j).

 

“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person as such terms are used in and construed under Rule 144 under the Securities Act.  With respect to the Purchaser, any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Purchaser will be deemed to be an Affiliate of the Purchaser.

 

“Agreement” shall have the meaning ascribed to such term in the preamble.

  

 

  

“Bankruptcy Event” means any of the following events: (a) the Company or any Significant Subsidiary (as such term is defined in Rule 1-02(w) of Regulation S-X) thereof commences a case or other proceeding under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction relating to the Company or any Significant Subsidiary thereof, (b) there is commenced against the Company or any Significant Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company or any Significant Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or proceeding is entered, (d) the Company or any Significant Subsidiary thereof suffers any appointment of any custodian or the like for it or any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company or any Significant Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Significant Subsidiary thereof calls a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company or any Significant Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

“Business Day” means any day except Saturday, Sunday, any day which shall be a federal legal holiday in the United States or any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.

 

“Closing Issuance” shall have the meaning ascribed to such term in Section 4.16.

 

“Closing Price” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the closing bid price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time) and (b) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchaser and reasonably acceptable to the Company.

 

“Commission” means the Securities and Exchange Commission.

 

“Commitment Amount” means an aggregate of up to $10,000,000 worth of Draw Down Shares.

 

“Commitment Period” shall mean the period of 36 consecutive months commencing ten (10) Trading Days immediately after the Effective Date.

 

“Commitment Shares” shall mean the shares of Common Stock issued to the Purchaser at the Closing pursuant to Section 2.2(a)(iii).

 

“Common Stock” means the common stock of the Company, par value $0.0001 per share, and any other class of securities into which such securities may hereafter be reclassified or changed into.

 

“Common Stock Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire at any time Common Stock, including, without limitation, any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common Stock.

  

2

  

“Company Counsel” means Akerman Senterfitt, One Southeast Third Avenue, 25th Floor, Miami, Florida 33131, Attn: Leonard H. Bloom and Laura M. Holm.

 

“Disclosure Schedules” means the Disclosure Schedules of the Company delivered concurrently herewith.

 

“Draw Down” shall have the meaning assigned to such term in Section 6.1(a) hereof.

 

“Draw Down Notice” shall have the meaning assigned to such term in Section 6.1(e) hereof.

 

“Draw Down Pricing Period” shall mean a period of 5 consecutive Trading Days immediately following the Trading Day on which receipt of a Draw Down is duly delivered to Purchaser pursuant to Section 8.3 herein.

 

“Draw Down Shares” shall mean the shares of Common Stock issued and issuable pursuant to a Draw Down.

 

“DTC” shall have the meaning assigned to such term in Section 6.1(f).

 

“DWAC” shall have the meaning assigned to such term in Section 6.1(f).

 

“EGS” means Ellenoff Grossman & Schole LLP, with offices located at 150 East 42nd Street, New York, New York 10017.

 

“Effective Date” means the date that the Registration Statement filed by the Company pursuant to the Registration Rights Agreement is first declared effective by the Commission.

 

 “Equity Conditions” shall mean, during the period in question, (i) all liquidated damages and other amounts owing to the Purchaser pursuant to the Transaction Documents have been paid, (ii) there is an effective Registration Statement pursuant to which the Purchaser is permitted to utilize the prospectus thereunder to resell all of the Draw Down Shares (issued and to be issued pursuant to the applicable Draw Down) (and the Company believes, in good faith, that such effectiveness will continue uninterrupted for the foreseeable future), (iii) the Common Stock is trading on the Trading Market and all of the shares issuable pursuant to the Transaction Documents are listed or quoted (if applicable) for trading on a Trading Market (and the Company believes, in good faith, that trading of the Common Stock on a Trading Market will continue uninterrupted for the foreseeable future), (iv) there is a sufficient number of authorized but unissued and otherwise unreserved shares of Common Stock for the issuance of all of the Draw Down Shares (issued and to be issued pursuant to the applicable Draw Down), (v) the issuance of the Draw Down Shares subject to the applicable Draw Down would not violate the limitations set forth in Section 4.12 and (vi) the Company, directly or indirectly, has not provided the Purchaser with any material, non-public information that has not been made publicly available in a widely disseminated release.

  

3

  

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

“Execution Date” Shall have the meaning assigned to such term in Section 2.

 

“Fundamental Transaction” means any one of the following: (i) the Company, directly or indirectly, in one or more related transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or other business combination).

 

“GAAP” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Intellectual Property Rights” shall have the meaning ascribed to such term in Section 3.1(o).

 

“Investment Amount” shall have the meaning assigned to such term in Section 6.1(e) hereof.

 

“Legend Removal Date” shall have the meaning ascribed to such term in Section 4.1(c).

 

 “Liens” means a lien, charge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.

 

“Material Adverse Effect” shall have the meaning assigned to such term in Section 3.1(b).

 

“Material Permits” shall have the meaning ascribed to such term in Section 3.1(m).

  

4

  

“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.

 

“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.

 

“Purchase Price” shall mean, with respect to Draw Down Shares purchased on a Trading Day in question, 93% of the lower of (i) the VWAP on such Trading Day in question and (ii) the Closing Price on the Trading Day immediately prior to such Trading Day in question.

 

“Purchaser Party” shall have the meaning ascribed to such term in Section 4.7.

 

“Registration Rights Agreement” means the Registration Rights Agreement, dated the date hereof, between the Company and the Purchaser, in the form of Exhibit A attached hereto.

 

“Registration Statement” means a registration statement meeting the requirements set forth in the Registration Rights Agreement and covering the resale by the Purchaser of the Draw Down Shares and Shares.

 

“Required Approvals” shall have the meaning ascribed to such term in Section 3.1(e).

 

“Rule 144” means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“Rule 424” means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.

 

“SEC Reports” shall have the meaning ascribed to such term in Section 3.1(h).

 

“Securities” means the Draw Down Shares and Commitment Shares.

 

“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

 

“Settlement” shall mean the delivery of the Draw Down Shares into the Purchaser’s DTC account via DTC’s DWAC system and the Purchaser’s delivery of payment therefor.

 

“Settlement Date” shall have the meaning assigned to such term in Section 6.1(b).

  

5

  

“Short Sales” shall include all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act.

 

“Subsidiary” shall have the meaning ascribed to such term in Section 3.1(a).

 

“Threshold Price” shall mean 95% of the average of the 10 VWAPs immediately prior to the date the Draw Down Notice is delivered to the Purchasers.

 

“Trading Cushion” shall mean the mandatory 2 Trading Days between Draw Down Pricing Periods.

 

 “Trading Day” means a day on which the Common Stock is traded on a Trading Market.

 

“Trading Market” means the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question: the Nasdaq Capital Market, the NYSE Amex, the New York Stock Exchange, the Nasdaq National Market, the OTC Bulletin Board.

 

“Transaction Documents” means this Agreement and the Registration Rights Agreement and any other documents or agreements executed in connection with the transactions contemplated hereunder.

 

“VWAP” means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed or quoted for trading as reported by Bloomberg Financial L.P. (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time) and (b) in all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith by the Purchaser and reasonably acceptable to the Company.

 

ARTICLE II.

PURCHASE AND SALE

 

2.1          Purchase and Sale of Draw Down Shares.  Upon the terms and subject to the conditions of this Agreement, the Company may sell and issue to the Purchaser and the Purchaser shall be obligated to purchase from the Company, up to the Commitment Amount.

 

2.2          Execution Date. The execution and delivery of this Agreement and the other agreements referred to herein shall take place at the offices of EGS, 150 East 42nd Street, New York, New York 10017 (i) at 10:00 a.m. local time within 5 Trading Days of the date hereof, or (ii) at such other time and place or on such date as the Purchaser and the Company may agree upon (the “Execution Date”).  Each party shall deliver the following documents, instruments and writings at or prior to the Execution Date:

  

6

  

(a)          the Company shall deliver or cause to be delivered to the Purchaser the following:

 

(i)           this Agreement duly executed by the Company;

 

(ii)          a legal opinion of Company Counsel, in the form of Exhibit B attached hereto;

 

(iii)         a certificate evidencing 140,000 shares of Common Stock to be registered in the name of the Purchaser; and

 

(iv)         the Registration Rights Agreement duly executed by the Company.

 

(b)         the Purchaser shall deliver or cause to be delivered to the Company the following:

 

(i)           this Agreement duly executed by the Purchaser; and

 

(ii)          the Registration Rights Agreement duly executed by the Purchaser.

 

ARTICLE III.

REPRESENTATIONS AND WARRANTIES

 

3.1          Representations and Warranties of the Company.  Except as set forth under the corresponding section of the Disclosure Schedules which Disclosure Schedules shall be deemed a part hereof and to qualify any representation or warranty otherwise made herein to the extent of such disclosure, the Company hereby makes the representations and warranties set forth below to the Purchaser:

 

(a)           Subsidiaries.  All of the direct and indirect subsidiaries of the Company are set forth on Schedule 3.1(a) (each a “Subsidiary” and collectively the “Subsidiaries”).  The Company owns, directly or indirectly, all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all the issued and outstanding shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar rights to subscribe for or purchase securities.  If the Company has no subsidiaries, then all other references in the Transaction Documents to the Subsidiaries or any of them will be disregarded.

 

(b)           Organization and Qualification.  The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted.  Neither the Company nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents.  Each of the Company and the Subsidiaries is duly qualified to conduct business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not have or reasonably be expected to result in (i) a material adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material adverse effect on the results of operations, assets, business, or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse effect on the Company’s ability to perform in any material respect on a timely basis its obligations under any Transaction Document (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.

  

7

  

(c)           Authorization; Enforcement.  The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder.  The execution and delivery of each of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company, its board of directors or its stockholders in connection therewith other than in connection with the Required Approvals.  Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof and thereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(d)           No Conflicts.  The execution, delivery and performance of the Transaction Documents by the Company, the issuance and sale of the Securities and the consummation by the Company of the other transactions contemplated hereby and thereby do not and will not (i) conflict with or violate any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational or charter documents, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or a Subsidiary is bound or affected; except in the case of clause (ii), such as could not have or reasonably be expected to result in a Material Adverse Effect.

  

8

  

(e)           Filings, Consents and Approvals.  The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents, other than (i) filings required pursuant to Section 4.4 of this Agreement, (ii) the filing with the Commission of the Registration Statement, (iii) application(s) to each applicable Trading Market for the listing of the Securities for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the Commission and such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).

 

(f)           Issuance of the Securities.  The Securities are duly authorized and, when issued and paid for in accordance with the applicable Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer provided for in the Transaction Documents.  The Company has reserved from its duly authorized capital stock the maximum number of shares of Common Stock issuable pursuant to this Agreement.

 

(g)           Capitalization.  The capitalization of the Company is as set forth on Schedule 3.1(g).  The Company has not issued any capital stock since its most recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee stock purchase plan and pursuant to the conversion or exercise of Common Stock Equivalents outstanding as of the date of the most recently filed periodic report under the Exchange Act.  No Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in the transactions contemplated by the Transaction Documents.  Except as set forth in the SEC Reports and except as a result of the purchase and sale of the Securities, there are no outstanding options, warrants, script rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common Stock Equivalents.  The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other securities to any Person (other than the Purchaser) and will not result in a right of any holder of Company securities to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital stock of the Company are validly issued, fully paid and nonassessable, have been issued in compliance with all federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar rights to subscribe for or purchase securities.  No further approval or authorization of any stockholder, the Board of Directors of the Company or others is required for the issuance and sale of the Securities.  There are no stockholders agreements, voting agreements or other similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the Company, between or among any of the Company’s stockholders.

  

9

  

(h)           SEC Reports; Financial Statements.  Except as set forth on Schedule 3.1(h), the Company has filed all reports, schedules, forms, statements, and other documents required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material) (the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing and has filed any such SEC Reports prior to the expiration of any such extension.  Except as set forth on Schedule 3.1(h), as of their respective dates, or as subsequently amended, the SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of the SEC Reports, when filed, 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 the light of the circumstances under which they were made, not misleading.  The financial statements of the Company included in the SEC Reports, or subsequent amendments thereto, comply in all material respects with applicable accounting requirements and the rules and regulations of the Commission with respect thereto as in effect at the time of filing.  Such financial statements have been prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material respects the financial position of the Company and its consolidated subsidiaries as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments.

 

(i)            Material Changes; Undisclosed Events, Liabilities or Developments.  Since the date of the latest audited financial statements included within the SEC Reports, except as specifically disclosed in a subsequent SEC Report, (i) there has been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v) the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock option plans.  The Company does not have pending before the Commission any request for confidential treatment of information.  Except for the issuance of the Securities contemplated by this Agreement or as set forth on Schedule 3.1(i), no event, liability or development has occurred or exists with respect to the Company or its Subsidiaries or their respective business, properties, operations or financial condition, that would be required to be disclosed by the Company under applicable securities laws at the time this representation is made that has not been publicly disclosed at least 1 Trading Day prior to the date that this representation is made.

  

10

  

(j)            Litigation.  There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator, governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”) which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the Securities or (ii) could, if there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty.  There has not been, and to the knowledge of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current or former director or officer of the Company.  The Commission has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.

 

(k)           Labor Relations.  No material labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of the Company, which could reasonably be expected to result in a Material Adverse Effect.  None of the Company’s or its Subsidiaries’ employees is a member of a union that relates to such employee’s relationship with the Company, and neither the Company or any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries believe that their relationships with their employees are good.  No executive officer, to the knowledge of the Company, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality, disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to any liability with respect to any of the foregoing matters.  The Company and its Subsidiaries are in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices, terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

  

11

  

(l)            Compliance.  Neither the Company nor any Subsidiary (i) is in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture, loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is bound (whether or not such default or violation has been waived), (ii) is in violation of any order of any court, arbitrator or governmental body, or (iii) is or has been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws applicable to its business and all such laws that affect the environment, except in each case as could not have or reasonably be expected to result in a Material Adverse Effect.

 

(m)          Regulatory Permits.  The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal, state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports, except where the failure to possess such permits could not have or reasonably be expected to result in a Material Adverse Effect (“Material Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation or modification of any Material Permit.

 

(n)           Title to Assets.  The Company and the Subsidiaries have good and marketable title in fee simple to all real property owned by them that is material to the business of the Company and the Subsidiaries and good and marketable title in all personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear of all Liens, except for Liens as do not materially affect the value of such property and do not materially interfere with the use made and proposed to be made of such property by the Company and the Subsidiaries and Liens for the payment of federal, state or other taxes, the payment of which is neither delinquent nor subject to penalties.  Any real property and facilities held under lease by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.

 

(o)           Patents and Trademarks.  The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights and similar rights necessary or material for use in connection with their respective businesses as described in the SEC Reports and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).  Neither the Company nor any Subsidiary has received a notice (written or otherwise) that the Intellectual Property Rights used by the Company or any Subsidiary violates or infringes upon the rights of any Person.  To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is no existing infringement by another Person of any of the Intellectual Property Rights.  The Company and its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

  

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(p)           Insurance.  The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including, but not limited to, directors and officers insurance coverage at least equal to the aggregate Commitment Amount.  Neither the Company nor any 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 without a significant increase in cost.

 

(q)           Transactions With Affiliates and Employees.  Except as set forth in the SEC Reports, none of the officers or directors of the Company and, to the knowledge of the Company, none of the employees of the Company is presently a party to any transaction with the Company or any Subsidiary (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 entity in which any officer, director, or any such employee has a substantial interest or is an officer, director, trustee or partner, in each case in excess of $120,000 other than (i) for payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses incurred on behalf of the Company and (iii) for other employee benefits, including stock option agreements under any stock option plan of the Company.

 

(r)           Sarbanes-Oxley; Internal Accounting Controls.  The Company is in material compliance with all required provisions of the Sarbanes-Oxley Act of 2002 which are applicable to it as of the Closing Date.  The Company and the Subsidiaries maintain a system of internal accounting controls sufficient 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 GAAP 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. The Company has established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and designed such disclosure controls and procedures to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.  The Company’s certifying officers have evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).  The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date.  Since the Evaluation Date, there have been no changes in the Company’s internal control over financial reporting (as such term is defined in the Exchange Act) that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

  

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(s)           Certain Fees.  No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by the Transaction Documents.  The Purchaser shall have no obligation with respect to any fees or with respect to any claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with the transactions contemplated by the Transaction Documents.

 

(t)           Private Placement. Assuming the accuracy of the Purchaser representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Purchaser as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the Trading Market.

 

(u)           Investment Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.  The Company shall conduct its business in a manner so that it will not become subject to the Investment Company Act.

 

(v)           Registration Rights.  Other than the Purchaser, no Person has any right to cause the Company to effect the registration under the Securities Act of any securities of the Company.

 

(w)          Listing and Maintenance Requirements.  The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating such registration.  The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with all such listing and maintenance requirements.

 

(x)           Application of Takeover Protections.  The Company and its Board of Directors have taken all necessary action, if any, in order to render inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or other similar anti-takeover provision under the Company’s Certificate of Incorporation (or similar charter documents) or the laws of its state of incorporation that is or could become applicable to the Purchaser as a result of the Purchaser and the Company fulfilling their obligations or exercising their rights under the Transaction Documents, including without limitation as a result of the Company’s issuance of the Securities and the Purchaser’s ownership of the Securities.

  

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(y)           Disclosure.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company confirms that, neither it nor any other Person acting on its behalf has provided any of the Purchaser or their agents or counsel with any information that it believes constitutes or might constitute material, non-public information.   The Company understands and confirms that the Purchaser will rely on the foregoing representation in effecting transactions in securities of the Company.  All disclosure furnished by or on behalf of the Company to the Purchaser regarding the Company, its business and the transactions contemplated hereby, including the Disclosure Schedules to this Agreement, with respect to the representations and warranties made herein are true and correct with respect to such representations and warranties and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements, in light of the circumstances under which they were made and when made, not misleading.  The Company acknowledges and agrees that no Purchaser makes or has made any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth in Section 3.2 hereof.

 

(z)           No Integrated Offering. Assuming the accuracy of the Purchaser’s representations and warranties set forth in Section 3.2, 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 of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the Securities to be integrated with prior offerings by the Company for purposes of the Securities Act or any applicable shareholder approval provisions of any Trading Market on which any of the securities of the Company are listed or designated.

 

(aa)         Solvency.  The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date.  The SEC Reports set forth as of the dates thereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company or any Subsidiary has commitments.  For the purposes of this Agreement, “Indebtedness” shall mean (a) any liabilities for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business), (b) all guaranties, endorsements and other contingent obligations in respect of Indebtedness of others, whether or not the same are or should be reflected in the Company’s balance sheet (or the notes thereto), except guaranties by endorsement of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (c) the present value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP.  Neither the Company nor any Subsidiary is in default with respect to any Indebtedness.

  

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(bb)        Tax Status.  Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect, the Company and each Subsidiary has filed all necessary federal, state and foreign income and franchise tax returns and has paid or accrued all taxes shown as due thereon, and the Company has no knowledge of a tax deficiency which has been asserted or threatened against the Company or any Subsidiary.

 

(cc)         No General Solicitation.  Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities by any form of general solicitation or general advertising.  The Company has offered the Securities for sale only to the Purchaser and certain other “accredited investors” within the meaning of Rule 501 under the Securities Act.

 

(dd)        Foreign Corrupt Practices.  Neither the Company, nor to the knowledge of the Company, any agent or other person acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any person acting on its behalf of which the Company is aware) which is in violation of law, or (iv) violated in any material respect any provision of the Foreign Corrupt Practices Act of 1977, as amended.

 

(ee)         Accountants.  The Company’s accountants are set forth on Schedule 3.1(ee) of the Disclosure Schedule.  To the knowledge of the Company, such accountants, who the Company expects will express their opinion with respect to the financial statements to be included in the Company’s Annual Report on Form 10-K for the year ending December 30, 2011, are a registered public accounting firm as required by the Exchange Act.

 

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

  

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(gg)        Regulation M Compliance.  The Company has not, and will not during the term of this Agreement, and to its knowledge no one acting on its behalf has, or will during the term of this Agreement, (i) taken, directly or indirectly, any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or, paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.

 

3.2          Representations and Warranties of the Purchaser.  Purchaser hereby represents and warrants as of the date hereof and as of each Closing Date to the Company as follows:

 

(a)           Organization; Authority.  Purchaser is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with full right, corporate or partnership power and authority to enter into and to consummate the transactions contemplated by the Transaction Documents and otherwise to carry out its obligations hereunder and thereunder. The execution, delivery and performance by the Purchaser of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate or similar action on the part of the Purchaser.  Each Transaction Document to which it is a party has been duly executed by the Purchaser, and when delivered by the Purchaser in accordance with the terms hereof, will constitute the valid and legally binding obligation of the Purchaser, enforceable against it in accordance with its terms, except (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution provisions may be limited by applicable law.

 

(b)           Own Account.  Purchaser understands that the Securities are “restricted securities” and have not been registered under the Securities Act or any applicable state securities law and is acquiring the Securities at the Execution Date as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities (this representation and warranty not limiting the Purchaser’s right to sell the Securities pursuant to the Registration Statement or otherwise in compliance with applicable federal and state securities laws) in violation of the Securities Act or any applicable state securities law.  Purchaser is acquiring the Securities hereunder in the ordinary course of its business.

 

(c)           Purchaser Status.  At the time the Purchaser was offered the Securities, it was, and at the date hereof it is an “accredited investor” as defined in Rule 501 under the Securities Act.

 

(d)           Experience of Purchaser.  Purchaser, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment.  Purchaser is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.

  

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(e)           General Solicitation.  Purchaser is not purchasing the Securities as a result of any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or any other general solicitation or general advertisement.

 

ARTICLE IV.

OTHER AGREEMENTS OF THE PARTIES

 

4.1          Transfer Restrictions.

 

(a)           The Securities may only be disposed of in compliance with state and federal securities laws.  In connection with any transfer of Securities other than pursuant to an effective registration statement or Rule 144, to the Company or to an affiliate of the Purchaser or in connection with a pledge as contemplated in Section 4.1(b), the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor and reasonably acceptable to the Company, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.  As a condition of transfer, any such transferee shall agree in writing to be bound by the terms of this Agreement and shall have the rights of the Purchaser under this Agreement and the Registration Rights Agreement, as to issued Securities only.

 

(b)           The Purchaser agrees to the imprinting, so long as is required by this Section 4.1, of a legend on any of the Securities in substantially the following form:

 

THESE SECURITIES HAVE NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE COMPANY.  THESE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT WITH A REGISTERED BROKER-DEALER OR OTHER LOAN WITH A FINANCIAL INSTITUTION THAT IS AN “ACCREDITED INVESTOR” AS DEFINED IN RULE 501(a) UNDER THE SECURITIES ACT OR OTHER LOAN SECURED BY SUCH SECURITIES.

  

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The Company acknowledges and agrees that the Purchaser may from time to time pledge pursuant to a bona fide margin agreement with a registered broker-dealer or grant a security interest in some or all of the Securities to a financial institution that is an “accredited investor” as defined in Rule 501(a) under the Securities Act and who agrees to be bound by the provisions of this Agreement and the Registration Rights Agreement and, if required under the terms of such arrangement, the Purchaser may transfer pledged or secured Securities to the pledgees or secured parties.  Such a pledge or transfer would not be subject to approval of the Company and no legal opinion of legal counsel of the pledgee, secured party or pledgor shall be required in connection therewith.  Further, no notice shall be required of such pledge.  At the Purchaser’s expense, the Company will execute and deliver such reasonable documentation as a pledgee or secured party of Securities may reasonably request in connection with a pledge or transfer of the Securities, including, if the Securities are subject to registration pursuant to the Registration Rights Agreement, the preparation and filing of any required prospectus supplement under Rule 424(b)(3) under the Securities Act or other applicable provision of the Securities Act to appropriately amend the list of Selling Stockholders thereunder.

 

(c)           Certificates evidencing the Draw Down Shares and Commitment Shares shall not contain any legend (including the legend set forth in Section 4.1(b)), (i) while a registration statement (including the Registration Statement) covering the resale of such security is effective under the Securities Act, or (ii) following any sale of such Draw Down Shares or Commitment Shares pursuant to Rule 144, or (iii) if such Draw Down Shares or Commitment Shares are eligible for sale under Rule 144 and the current information requirements required pursuant to Rule 144 are then met, or (iv) if such legend is not required under applicable requirements of the Securities Act (including judicial interpretations and pronouncements issued by the staff of the Commission or in reliance upon Section 4(1) under the Securities Act based on an opinion of Purchaser counsel).  The Company shall cause its counsel to issue a legal opinion to the Company’s transfer agent promptly after the Effective Date if required by the Company’s transfer agent to effect the removal of the legend hereunder.   The Company agrees that following the Effective Date or at such time as such legend is no longer required under this Section 4.1(c), it will, no later than three Trading Days following the delivery by the Purchaser to the Company or the Company’s transfer agent of a certificate representing Draw Down Shares (assuming the Purchaser consented to delivery of physical certificates as to a Draw Down) or Commitment Shares, as the case may be, issued with a restrictive legend (such third Trading Day, the “Legend Removal Date”), transmitted by the transfer agent of the Company to the Purchaser by crediting the account of the Purchaser’s prime broker via DTC’s DWAC system.  Unless the Purchaser otherwise consents, all Draw Down Shares shall be issued without any restrictive legends. The Company may not make any notation on its records or give instructions to any transfer agent of the Company that enlarge the restrictions on transfer set forth in this Section.

  

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(d)           In addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $2,000 of Draw Down Shares or Commitment Shares (based on the VWAP of the Common Stock on the date such Securities are submitted to the Company’s transfer agent with restrictive legend) delivered for removal of the restrictive legend and subject to Section 4.1(c), $10 per Trading Day for each Trading Day after the 3rd Trading Day following the Legend Removal Date until such certificate is delivered without a legend provided that such delay in the legend removal is the direct result of the actions of the Company.  Furthermore, until such certificate is delivered without a legend, the Company will not be permitted to request a Draw Down. Nothing herein shall limit the Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

(e)           Purchaser agrees that the removal of the restrictive legend from certificates representing Securities as set forth in this Section 4.1 is predicated upon the Company’s reliance that the Purchaser will sell any Securities pursuant to either the registration requirements of the Securities Act, including any applicable prospectus delivery requirements, or an exemption therefrom, and that if Securities are sold pursuant to a Registration Statement, they will be sold in compliance with the plan of distribution set forth therein.

 

4.2          Furnishing of Information.  As long as Purchaser owns any Securities, the Company covenants to timely file (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to the Exchange Act.  As long as the Purchaser owns any Securities, if the Company is not required to file reports pursuant to the Exchange Act, it will prepare and furnish to the Purchaser and make publicly available in accordance with Rule 144(c) such information as is required for the Purchaser to sell the Securities under Rule 144. The Company further covenants that it will take such further action as any holder of Securities may reasonably request, to the extent required from time to time to enable such Person to sell such Securities without registration under the Securities Act within the requirements of the exemption provided by Rule 144.

 

4.3          Integration.  The Company shall not sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in Section 2 of the Securities Act) that would be integrated with the offer or sale of the Securities in a manner that would require the registration under the Securities Act of the sale of the Securities to the Purchaser or that would be integrated with the offer or sale of the Securities for purposes of the rules and regulations of any Trading Market such that it would require shareholder approval prior to the closing of such other transaction unless shareholder approval is obtained before the closing of such subsequent transaction.

 

4.4          Securities Laws Disclosure; Publicity.  The Company shall, by 9:30 a.m. Eastern time on Trading Day following the Execution Date issue a press release disclosing the material terms of this Agreement and within the time period required under the Securities Laws  issue a Current Report on Form 8-K disclosing the material terms of the transactions contemplated hereby.  The Company and the Purchaser shall consult with each other in issuing any other press releases with respect to the transactions contemplated hereby, and neither the Company nor the Purchaser shall issue any such press release or otherwise make any such public statement without the prior consent of the Company, with respect to any press release of the Purchaser, or without the prior consent of the Purchaser, with respect to any press release of the Company, which consent shall not unreasonably be withheld or delayed, except if such disclosure is required by law, in which case the disclosing party shall promptly provide the other party with prior notice of such public statement or communication.

  

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4.5          Shareholder Rights Plan.  No claim will be made or enforced by the Company or, with the consent of the Company, any other Person, that the Purchaser is an “Acquiring Person” under any control share acquisition, business combination, poison pill (including any distribution under a rights agreement) or similar anti-takeover plan or arrangement in effect or hereafter adopted by the Company, or that the Purchaser could be deemed to trigger the provisions of any such plan or arrangement, by virtue of receiving Securities under the Transaction Documents or under any other agreement between the Company and the Purchaser.

 

4.6          Non-Public Information.  Except with respect to the material terms and conditions of the transactions contemplated by the Transaction Documents, the Company covenants and agrees that neither it nor any other Person acting on its behalf will provide the Purchaser or its agents or counsel with any information that the Company believes constitutes material non-public information, unless prior thereto the Purchaser shall have executed a written agreement regarding the confidentiality and use of such information.  The Company understands and confirms that the Purchaser shall be relying on the foregoing representations in effecting transactions in securities of the Company.

 

4.7          Indemnification of Purchaser.   Subject to the provisions of this Section 4.7, the Company will indemnify and hold the Purchaser and its directors, officers, shareholders, members, partners, employees and agents (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title), each Person who controls the Purchaser (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, shareholders, agents, members, partners or employees (and any other Persons with a functionally equivalent role of a Person holding such titles notwithstanding a lack of such title or any other title) of such controlling persons (each, a “Purchaser Party”) harmless from any and all losses, liabilities, obligations, claims, contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements, court costs and reasonable attorneys’ fees and costs of investigation that any Purchaser Party may suffer or incur as a result of or relating to (a) any breach of any of the representations, warranties, covenants or agreements made by the Company in this Agreement or in the other Transaction Documents or (b) any action instituted against the Purchaser, or any of its Affiliates, by any stockholder of the Company who is not an Affiliate of the Purchaser, with respect to any of the transactions contemplated by the Transaction Documents (unless such action is based upon a breach of the Purchaser’s representations, warranties or covenants under the Transaction Documents or any agreements or understandings the Purchaser may have with any such stockholder or any violations by the Purchaser of state or federal securities laws or any conduct by the Purchaser which constitutes fraud, gross negligence, willful misconduct or malfeasance).  If any action shall be brought against any Purchaser Party in respect of which indemnity may be sought pursuant to this Agreement, the Purchaser Party shall promptly notify the Company in writing, and the Company shall have the right to assume the defense thereof with counsel of its own choosing reasonably acceptable to the Purchaser Party.  Any Purchaser Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of the Purchaser Party except to the extent that (i) the employment thereof has been specifically authorized by the Company in writing, (ii) the Company has failed after a reasonable period of time to assume such defense and to employ counsel or (iii) in such action there is, in the reasonable opinion of such separate counsel, a material conflict on any material issue between the position of the Company and the position of the Purchaser Party, in which case the Company shall be responsible for the reasonable fees and expenses of no more than one such separate counsel.  The Company will not be liable to any Purchaser Party under this Agreement (i) for any settlement by the Purchaser Party effected without the Company’s prior written consent, which shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a loss, claim, damage or liability is attributable to any Purchaser Party’s breach of any of the representations, warranties, covenants or agreements made by the Purchaser Party in this Agreement or in the other Transaction Documents.

  

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4.8          Reservation of Common Stock. As of the date hereof, the Company has reserved and the Company shall continue to reserve and keep available at all times, free of preemptive rights, a sufficient number of shares of Common Stock for the purpose of enabling the Company to issue Draw Down Shares and Commitment Shares pursuant to this Agreement.

 

4.9          Listing of Common Stock.  The Company hereby agrees to use best efforts to maintain the listing or quotation of the Common Stock on a Trading Market. The Company further agrees, if the Company applies to have the Common Stock traded on any other Trading Market, it will include in such application all of the Draw Down Shares and Commitment Shares, and will take such other action as is necessary to cause all of the Draw Down Shares and Commitment Shares to be listed or quoted on such other Trading Market as promptly as possible.  The Company will take all action reasonably necessary to continue the listing and trading of its Common Stock on a Trading Market and will comply in all respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Trading Market.

 

4.10        Confidentiality After the Date Hereof.  Purchaser covenants that until such time as the transactions contemplated by this Agreement are publicly disclosed by the Company as described in Section 4.4, the Purchaser will maintain the confidentiality of all disclosures made to it in connection with this transaction (including the existence and terms of this transaction.

 

4.11        Form D; Blue Sky Filings.  The Company agrees to timely file a Form D with respect to the Securities as required under Regulation D and to provide a copy thereof, promptly upon request of Purchaser. The Company shall take such action as the Company shall reasonably determine is necessary in order to obtain an exemption for, or to qualify the Securities for, sale to the Purchaser at the Closing under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of such actions promptly upon request of Purchaser.

  

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4.12        Beneficial Ownership Limitations.  The Company shall not effect any Draw Down to the extent that after giving effect to such issuance of Draw Down Shares, the Purchaser (together with the Purchaser’s Affiliates, and any other Persons acting as a group together with the Purchaser or any of the Purchaser’s Affiliates), would beneficially own in excess of the Beneficial Ownership Limitation (as defined below).  For purposes of the foregoing sentence, the number of shares of Common Stock beneficially owned by the Purchaser and its Affiliates shall include the number of shares of Common Stock issuable upon exercise of the applicable Draw Down with respect to which such determination is being made.  Except as set forth in the preceding sentence, for purposes of this Section 4.12, beneficial ownership shall be calculated in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.   In addition, a determination as to any group status as contemplated above shall be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.  For purposes of this Section 4.12, in determining the number of outstanding shares of Common Stock, a Purchaser may rely on the number of outstanding shares of Common Stock as reflected in (A) the Company’s most recent periodic or annual report filed with the Commission, as the case may be, (B) a more recent public announcement by the Company or (C) a more recent written notice by the Company or the Transfer Agent setting forth the number of shares of Common Stock outstanding.  The “Beneficial Ownership Limitation” shall be 4.99% of the number of shares of the Common Stock outstanding immediately after giving effect to the issuance of shares of Common Stock issuable upon issuance of the applicable Draw Down Shares.  The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity with the terms of this Section 4.12 to correct this paragraph (or any portion hereof) which may be defective or inconsistent with the intended Beneficial Ownership Limitation herein contained or to make changes or supplements necessary or desirable to properly give effect to such limitation.

 

4.13        Accuracy of Registration Statement. On each Settlement Date, the Registration Statement and the prospectus therein (including any prospectus supplement) shall not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances under which they were made; and on such Settlement Date the Registration Statement and the prospectus therein will not include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, the Company makes no representations or warranties as to the information contained in or omitted from the Registration Statement and the prospectus therein in reliance upon and in conformity with the information furnished in writing to the Company by the Purchaser specifically for inclusion in the Registration Statement and the prospectus therein.

 

4.14        Notice of Certain Events Affecting Registration; Suspension of Right to Request a Draw Down.  The Company will promptly notify the Purchaser in writing upon the occurrence of any of the events set forth in Section 3(d) of the Registration Rights Agreement. The Company shall not deliver to the Purchaser any Draw Down Notice during the continuation of any of the foregoing events.  The Company shall promptly make available to the Purchaser any such supplements or amendments to the related prospectus, at which time, provided that the registration statement and any supplements and amendments thereto are then effective, the Company may recommence the delivery of Draw Down Notices.

 

4.15        Short Sales.  After the date hereof and prior to the termination of this Agreement, the Purchaser hereby agrees not to execute any Short Sales of the Common Stock; provided, however, this restriction shall not apply to the sale by the Purchaser of any Draw Down Shares received or anticipated to be received in connection with a Draw Down Notice during the applicable Draw Down Pricing Period, notwithstanding that the exact number of Draw Down Shares cannot then be determined or that the Draw Down Shares have not yet been delivered to the Purchaser.

  

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4.16        Variable Rate Transactions.  During the Commitment Period, the Company shall be prohibited from effecting or entering into an agreement to effect any issuance by the Company or any of its Subsidiaries of Common Stock or Common Stock Equivalents for cash consideration (or a combination of units thereof) involving a Variable Rate Transaction.  “Variable Rate Transaction” means a transaction in which the Company (i) issues or sells any debt or equity securities that are convertible into, exchangeable or exercisable for, or include the right to receive, additional shares of Common Stock either (A) at a conversion price, exercise price or exchange rate or other price that is based upon, and/or varies with, the trading prices of or quotations for the shares of Common Stock at any time after the initial issuance of such debt or equity securities or (B) with a conversion, exercise or exchange price that is subject to being reset at some future date after the initial issuance of such debt or equity security or upon the occurrence of specified or contingent events directly or indirectly related to the business of the Company or the market for the Common Stock or (ii) enters into any agreement, including, but not limited to, an equity line of credit, whereby the Company may sell securities at a future determined price.

 

ARTICLE V.

CONDITIONS TO INITIAL CLOSING AND DRAW DOWNS

 

5.1          Conditions Precedent to the Obligation of the Company to Sell the Draw Down Shares.  The obligation hereunder of the Company to proceed to issue and sell the Draw Down Shares to the Purchaser is subject to the satisfaction, at or before the Execution Date, and as of each Settlement Date, of each of the conditions set forth below.

 

(a)           Accuracy of the Purchaser’s Representations and Warranties.  The representations and warranties of the Purchaser shall be true and correct in all material respects as of the date when made and as of the Execution Date and as of each Settlement Date as though made at that time (except for representations and warranties that speak as of a particular date, which shall be true and correct in all material respects as of such dates).

 

(b)           Performance by the Purchaser.  The Purchaser shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Purchaser at or prior to the Execution Date and as of each Settlement Date.

 

(c)           No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(d)           No Proceedings or Litigation.  No material Action shall have been commenced against the Purchaser or the Company or any Subsidiary, or any of the officers, directors or affiliates of the Company or any Subsidiary, seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

  

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(e)           Execution Date Deliveries.  The delivery by the Purchaser of the items set forth in Section 2.2(b) of this Agreement.

 

5.2          Conditions Precedent to the Obligation of the Purchaser to Accept a Draw Down and Purchase the Draw Down Shares.  The obligation hereunder of the Purchaser to accept a Draw Down request and to acquire and pay for the Draw Down Shares is subject to the satisfaction, at or before the Execution Date, and as of each Settlement Date, of each of the conditions set forth below.

 

(a)           Accuracy of the Company’s Representations and Warranties.  Each of 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 Execution Date as though made at that time (except for representations and warranties that speak as of a particular date, which shall be true and correct in all material respects as of such date).

 

(b)           Performance by the Company.  The Company shall have performed, satisfied and complied in all material respects with all material covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Execution Date and each Settlement Date.

 

(c)           No Injunction.  No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction which prohibits the consummation of any of the transactions contemplated by this Agreement.

 

(d)           No Proceedings or Litigation.  No material Action shall have been commenced, against the Purchaser or the Company or any subsidiary, or any of the officers, directors or affiliates of the Company or any subsidiary seeking to restrain, prevent or change the transactions contemplated by this Agreement, or seeking damages in connection with such transactions.

 

(e)           Execution Date Deliveries.  The delivery by the Company of the items set forth in Section 2.2(a) of this Agreement.

 

(f)           No Suspension.  Trading in the Common Stock shall not have been suspended by the Commission or the applicable Trading Market (except for any suspension of trading of limited duration agreed to by the Company, which suspension shall be terminated prior to the delivery of each Draw Down Notice), and, at any time prior to such Settlement Date, trading in securities generally as reported on the applicable Trading Market shall not have been suspended or limited, or minimum prices shall not have been established on securities whose trades are reported on the applicable Trading Market unless the general suspension or limitation shall have been terminated prior to the delivery of such Draw Down Notice.

 

(g)           Material Adverse Effect.  No Material Adverse Effect has occurred.

  

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(h)           Opinion of Counsel.  If requested by the Purchaser as to a Draw Down, the Purchaser shall have received a legal opinion from Company Counsel, in the form of Exhibit B hereto.

 

(i)            Equity Conditions.  On the Draw Down Notice Date, during the Draw Down Pricing Period through the Settlement Date, all of the Equity Conditions shall have been met.

 

ARTICLE VI.

DRAW DOWN TERMS

 

6.1          Draw Down Terms.  Subject to the satisfaction of the conditions set forth in this Agreement, the parties agree as follows:

 

(a)           The Company may, in its sole discretion, issue and exercise draw downs against the Commitment Amount (each a “Draw Down”) during the Commitment Period, which Draw Downs the Purchaser shall be obligated to accept, subject to the terms and conditions of this Agreement. Before the Company shall exercise a Draw Down, the Company shall have caused a sufficient number of shares of Common Stock to be registered to cover the resale of the Draw Down Shares to be issued in connection with such Draw Down.

 

(b)           Only one Draw Down shall be allowed in each Draw Down Pricing Period and any subsequent Draw Down Pricing Period shall not commence until the Trading Cushion has elapsed since the end of the previous Draw Down Pricing Period. The number of shares of Common Stock purchased by the Purchaser with respect to each Draw Down shall be determined as set forth in Section 6.1(d) herein and settled on the second Trading Day immediately following the end of the applicable Draw Down Pricing Period (each such settlement period and each such settlement date referred to as a “Settlement Period” and a “Settlement Date”, respectively).

 

(c)           The Investment Amount as to each Draw Down shall not exceed  the product of A multiplied by B, where A equals a number of shares of Common Stock equal to 300% of the average daily trading volume for the 10 consecutive Trading Days immediately prior to the delivery by the Company of a Draw Down Notice and B equals the average of the 3 VWAPs immediately prior to the delivery by the Company of the applicable Draw Down Notice; provided, however, no Draw Down shall exceed $250,000 or such amount that would otherwise cause the Purchaser to exceed the Beneficial Ownership Limitation set forth in Section 4.12.

 

(d)          The number of Draw Down Shares to be issued on the applicable Settlement Date shall equal to the sum of the following quotients:

 

	
  

	
(i)

	
1/5 of the applicable Investment Amount divided by (y) the Purchase Price on the first Trading Day of the applicable Draw Down Pricing Period;

 

  

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(ii)

	
1/5 of the applicable Investment Amount divided by (y) the Purchase Price on the second Trading Day of the applicable Draw Down Pricing Period;

 

	
  

	
(iii)

	
1/5 of the applicable Investment Amount divided by (y) the Purchase Price on the third Trading Day of the applicable Draw Down Pricing Period;

 

	
  

	
(iv)

	
1/5 of the applicable Investment Amount divided by (y) the Purchase Price on the fourth Trading Day of the applicable Draw Down Pricing Period; and

 

	
  

	
(v)

	
1/5 of the applicable Investment Amount divided by (y) the Purchase Price on the fifth Trading Day of the applicable Draw Down Pricing Period.

 

The number of Draw Down Shares to be issued on such Settlement Date shall be adjusted as follows:

 

(vi)         if the VWAP on a given Trading Day is less than the applicable Threshold Price, then such Trading Day shall be withdrawn from the Draw Down Pricing Period and such Draw Down shall be reduced by 1/5th for each such Trading Day withdrawn; and

 

(vii)        if during any Trading Day during the Draw Down Pricing Period trading of the Common Stock on the Trading Market is suspended for more than 3 hours, in the aggregate, or if any Trading Day during the Draw Down Pricing Period is shortened because of a public holiday, then such Trading Day shall be withdrawn from the Draw Down Pricing Period and such Draw Down shall be reduced by 1/5th for each such Trading Day withdrawn.

 

(e)          The Company must inform the Purchaser by delivering a draw down notice, in the form of Exhibit C hereto (the “Draw Down Notice”), via facsimile transmission in accordance with Section 8.3, as to the amount of the Draw Down (the “Investment Amount”) the Company wishes to exercise.  At no time shall the Purchaser be required to purchase more than the maximum Investment Amount for a given Draw Down Pricing Period.  The Company shall have the right to notify the Purchaser that Draw Downs shall be continuous pursuant to a Draw Down Notice until such time that the Company elects to suspend such Draw Down Notice.  In the event of a continuous Draw Down Notice, the Company must give at least 2 Trading Days’ written notice of suspension to the Purchaser and in no event shall a suspension of a Draw Down occur prior to the end of any pending Draw Down Pricing Periods.  On or before any Trading Day that a Draw Down Notice is delivered or notice of suspension of Draw Downs is delivered, the Company shall have filed with the Commission a prospectus supplement pursuant to Rule 424 under the Securities Act setting forth the terms of the Draw Down Notice or suspension notice.

  

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(f)            On the Trading Day immediately following the last day of the Draw Down Pricing Period, the Company shall deliver and the Purchaser shall acknowledge a settlement statement (the “Settlement Statement”) setting forth the number of Draw Down Shares issuable and the aggregate Purchase Price as to such Draw Down.  On the Settlement Date as to such Draw Down, the Draw Down Shares purchased pursuant to such Settlement Statement shall be delivered to the Depository Trust Company (“DTC”) account of the Purchaser, or its designees, as designated by the Purchaser in the Settlement Statement, via DTC’s Deposit Withdrawal Agent Commission system (“DWAC”).  Upon the Company electronically delivering such Draw Down Shares to the DTC account of the Purchaser, or its designees, via DWAC by 1:00 p.m. ET, the Purchaser shall, on the same day (or the next Business Day if such day is not a Business Day) wire transfer immediately available funds to the Company’s bank account, as designated by the Company in the Settlement Statement, for the amount of the aggregate Purchase Price of such Draw Down Shares. Upon the Company electronically delivering the Draw Down Shares to the Purchaser or its designee’s DTC account via DWAC after 1:00 p.m. ET, the Purchaser shall wire transfer next day available funds to the Company’s designated account on such day.  At the sole election of the Purchaser, the Purchaser may elect to pay any broker fees disclosed in the schedules attached to this Agreement directly to the brokers pursuant to written instructions from any such broker.

 

(g)           The Company understands that a delay in the delivery of the Draw Down Shares to the Purchaser beyond the Settlement Date could result in economic loss to the Purchaser.  In addition to the Purchaser’s other available remedies, the Company shall pay to the Purchaser, in cash, as partial liquidated damages and not as a penalty, for each $1,000 of Draw Down Shares (based on the Closing Price of the Common Stock on the applicable Settlement Date) required to be delivered on the Settlement Date, $10 per Trading Day (increasing to $20 per Trading Day five (5) Trading Days after such damages have begun to accrue) for each Trading Day after the Settlement Date until such Draw Down Shares are delivered pursuant to this Article VI.  Nothing herein shall limit the Purchaser’s right to pursue actual damages for the Company’s failure to deliver certificates representing any Securities as required by the Transaction Documents, including but not limited to the cost of any buy-in to the Purchaser, and the Purchaser shall have the right to pursue all remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief.

 

ARTICLE VII.

TERMINATION

 

7.1          Term.  The term of this Agreement shall begin on the date hereof and shall end 36 months from the Effective Date or as otherwise set forth in Section 7.2.

 

7.2          Other Termination.

 

(a)           This Agreement shall terminate if (i) the Common Stock is de-listed from the principal Trading Market unless such de-listing is in connection with a subsequent listing on another principal Trading Market, (ii) a Bankruptcy Event occurs or is publicly announced, (iii) a Fundamental Transaction occurs or is publicly announced or (iv) the Registration Statement is not declared effective by the Commission on the 9-month anniversary of the date hereof; provided, however, that upon such date, the Company shall be required to deliver the shares of Common Stock otherwise deliverable pursuant to Section 4.16 as if the Registration Statement had gone effective on such date.

  

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(b)          The Company may terminate this Agreement at any time at its sole discretion.

 

7.3          Effect of Termination.  In the event of termination of this Agreement pursuant to Section 7.2 herein, written notice thereof shall forthwith be given to the other party and the transactions contemplated by this Agreement shall be terminated without further action by either party.  If this Agreement is terminated as provided in Section 7.1 or 7.2 herein, this Agreement shall become void and of no further force and effect, except for Section 4.7 and Article 8 herein, which shall survive the termination of this Agreement.  Nothing in this Section 7.3 shall be deemed to release the Company or the Purchaser from any liability for any breach under this Agreement, or to impair the rights of the Company or the Purchaser to compel specific performance by the other party of its obligations under this Agreement.

 

ARTICLE VIII.

MISCELLANEOUS

 

8.1          Fees and Expenses.  The Company has agreed to reimburse the Purchaser $20,000 for its legal fees and expenses, $10,000 of which amount was paid prior to the date hereof and the balance to be paid on the first Settlement Date.  Except as expressly set forth in the Transaction Documents to the contrary, each party shall pay the fees and expenses of its advisers, counsel, accountants and other experts, if any, and all other expenses incurred by such party incident to the negotiation, preparation, execution, delivery and performance of this Agreement.  The Company shall pay all transfer agent fees, stamp taxes and other taxes and duties levied in connection with the delivery of any Securities to the Purchaser.

 

8.2          Entire Agreement.  The Transaction Documents, together with the exhibits and schedules thereto, contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.

 

8.3          Notices.  Any and all notices or other communications or deliveries required or permitted to be provided hereunder shall be in writing and shall be deemed given and effective on the earliest of (a) the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth on the signature pages attached hereto prior to 5:30 p.m. (New York City time) on a Trading Day, (b) the next Trading Day after the date of transmission, if such notice or communication is delivered via facsimile or email at the facsimile number or email address set forth on the signature pages attached hereto on a day that is not a Trading Day or later than 5:30 p.m. (New York City time) on any Trading Day, (c) the 2nd Trading Day following the date of transmission if sent by U.S. nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given.  The address for such notices and communications shall be as set forth on the signature pages attached hereto.

  

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8.4          Amendments; Waivers.  No provision of this Agreement may be waived or amended except in a written instrument signed, in the case of an amendment, by the Company and the Purchaser or, in the case of a waiver, by the party against whom enforcement of any such waived provision is sought.  No waiver of any default with respect to any provision, condition or requirement of this Agreement shall be deemed to be a continuing waiver in the future or a waiver of any subsequent default or a waiver of any other provision, condition or requirement hereof, nor shall any delay or omission of any party to exercise any right hereunder in any manner impair the exercise of any such right.

 

8.5          Headings.  The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof.

 

8.6          Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the parties and their successors.  Neither party may assign this Agreement or any rights or obligations hereunder (other than by merger).

 

8.7          No Third-Party Beneficiaries.  This Agreement is intended for the benefit of the parties hereto and their respective successors and permitted assigns and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except as otherwise set forth in Section 4.7.

 

8.8          Governing Law.  All questions concerning the construction, validity, enforcement and interpretation of the Transaction Documents shall be governed by and construed and enforced in accordance with the internal laws of the State of California, without regard to the principles of conflicts of law thereof.  Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the state and federal courts sitting in Orange County. Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal courts sitting in Orange County for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding 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.  The parties hereby waive all rights to a trial by jury.  If either party shall commence an action or proceeding to enforce any provisions of the Transaction Documents, then the prevailing party in such action or proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred with the investigation, preparation and prosecution of such action or proceeding.

  

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8.9          Survival.  The representations and warranties contained herein shall survive the Closing and the delivery of the Draw Down Shares.

 

8.10        Execution.  This Agreement may be executed in two or more counterparts, all of which when taken together shall be considered one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other party, it being understood that both parties need not sign the same counterpart.  In the event that any signature is delivered by facsimile transmission or by e-mail delivery of a “.pdf” format data file, such signature shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such facsimile or “.pdf” signature page were an original thereof.

 

8.11        Severability.  If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their commercially reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable.

 

8.12        Replacement of Securities.  If any certificate or instrument evidencing any Securities is mutilated, lost, stolen or destroyed, the Company shall issue or cause to be issued in exchange and substitution for and upon cancellation thereof (in the case of mutilation), or in lieu of and substitution therefor, a new certificate or instrument, but only upon receipt of evidence reasonably satisfactory to the Company of such loss, theft or destruction.  The applicant for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs (including customary indemnity) associated with the issuance of such replacement Securities.

 

8.13        Remedies.  In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, each of the Purchaser and the Company will be entitled to specific performance under the Transaction Documents.  The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations contained in the Transaction Documents and hereby agrees to waive and not to assert in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

8.14        Liquidated Damages.  The Company’s obligations to pay any partial liquidated damages or other amounts owing under the Transaction Documents is a continuing obligation of the Company and shall not terminate until all unpaid partial liquidated damages and other amounts have been paid notwithstanding the fact that the instrument or security pursuant to which such partial liquidated damages or other amounts are due and payable shall have been canceled.

  

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8.15        Construction. The parties agree that each of them and/or their respective counsel has reviewed and had an opportunity to revise the Transaction Documents and, therefore, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of the Transaction Documents or any amendments hereto.  In addition, each and every reference to share prices and shares of Common Stock in any Transaction Document shall be subject to adjustment for reverse and forward stock splits, stock dividends, stock combinations and other similar transactions of the Common Stock that occur after the date of this Agreement.

 

(Signature Pages Follow)

  

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IN WITNESS WHEREOF, the parties hereto have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

	VICOR TECHNOLOGIES, INC.	  	
Address for Notice:

	 
	  	  	  	 	 
	
By:

	/s/ David H. Fater	  	2300 NW CORPORATE BLVS	 
	  	
Name: DAVID H. FATER

	  	SUITE 123	 
	  	
Title:   CEO

	  	BOLA RATON, FL 33431	 
	  	  	  	  	 
	
With a copy to (which shall not constitute notice):

	  	  	 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK

SIGNATURE PAGE FOR PURCHASER FOLLOWS]

  

33

  

[PURCHASER SIGNATURE PAGES TO VCRT SECURITIES PURCHASE AGREEMENT]

IN WITNESS WHEREOF, the undersigned have caused this Securities Purchase Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.

 

Name of Purchaser: Centurion Fund                                                                                               

 

Signature of Authorized Signatory of Purchaser: /s/ Jody Eisennan                                           

 

Name of Authorized Signatory: Jody Eisennan                                                                                       

 

Title of Authorized Signatory: Managing Partner                                                                                   

 

Email Address of Purchaser: JEISENNAN@PHDC.COM                                                            

 

Fax Number of Purchaser: 212-202-3937                                                                                    

 

Address for Notice of Purchaser:

 

739 Palmer Ave

Teaneck, NJ 07666

Address for Delivery of Securities for Purchaser (if not same as above):

 

739 Palmer Ave

Teaneck, NJ 07666

Brokerage Identification Code (if delivered via DWAC)

 

PHDC

 

Commitment Amount: Up to $10,000,000

[SIGNATURE PAGES CONTINUE]

  

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EXHIBIT C

 

DRAW DOWN NOTICE/COMPLIANCE CERTIFICATE

 

VICOR TECHNOLOGIES, INC.

 

The undersigned hereby certifies, with respect to shares of Common Stock of Vicor Technologies, Inc. (the “Company”) issuable in connection with this Draw Down Notice and Compliance Certificate dated _____________ (the “Notice”), delivered pursuant to the Securities Purchase Agreement dated as of ______ __, 2011 (the “Agreement”), as follows:

1.            The undersigned is the duly appointed Chief Executive Officer or Chief Financial Officer of the Company.

 

 

2.            Except as set forth on the schedules attached hereto or in the SEC Reports (as defined in the Agreement), the representations and warranties of the Company set forth in the Agreement are true and correct in all material respects as though made on and as of the date hereof, except for representations and warranties that are expressly made as of a particular date.

 

3.            The Company has performed in all material respects all covenants and agreements and conditions required under the Agreement to be performed by the Company on or prior to the date of this Draw Down Notice.

 

4.            The Investment Amount is $___________.

 

5.            The Threshold Price is $____________ (must be greater than $0.01).

 

6.            Draw Downs shall commence on ____________ and end after [check one]:

 

a.           ______ the completion of ___ Draw Down Pricing Periods.

 

b.           ______ until written notice to you that Draw Downs have been suspended provided that no pending Draw Down may be suspended.

 

The undersigned has executed this Certificate this ____ day of ________, _____.

	  	
VICOR TECHNOLOGIES, INC.

	  	  	  
	  	
By: 

	  
	  	
Name:

	  	
Title

 

  

35

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