Document:

exhibit10-1.htm

PURCHASE AGREEMENT AND DEPOSIT RECEIPT

This Agreement (the “Agreement”) is made and entered into to be effective as of March 16, 2016 (“Effective Date”) by and among Interwest Capital Corporation or its assignee, hereinafter designated as "Buyer," and TOTB Miami, LLC., as to that portion of the Property (as herein defined) owned by it, and TOTB North, LLC, as to that portion of the Property (as defined herein) owned by it, hereinafter each designated as a "Seller" and collectively as the “Sellers”. Collectively the Sellers own the Property.

1.  PROPERTY.  Subject to and upon the terms and conditions set forth in this Agreement, Buyer hereby agrees to purchase from Sellers, and Sellers, as to the respective units owned by each, agree to sell to Buyer approximately 329 residential units, consisting of 169 condominium units and 160 apartment units. The entire property is commonly known as Treasures on the Bay and is located at 1900 S. Treasure Drive, North Bay Village, FL, 33141 (“Land”), and is legally described as set forth on Exhibit “A” attached hereto and made a part hereof (the “Property”).  In addition to the Land, the definition of Property includes and Sellers, as to the respective portions of the Property owned by each Seller, will, subject to and upon the terms conditions of this Agreement, also convey the following: (a) all right, title and interest of Sellers in any buildings, structures and other improvements on the Land (the “Improvements”); (b) all right, title and interest of Sellers in any existing leases or other agreements demising space in or providing for the use or occupancy of the Improvements and/or Land (the “Leases”), and any prepaid rents and deposits, security or otherwise (“Security Deposits”), paid to Sellers by tenants (“Tenants”) holding under the Leases; (c) all right, title and interest of Sellers, if any, in (i) any items of tangible personal property on the Land or the Improvements; (ii) any plans and specifications actually in the possession or control of a Seller pertaining to the Improvements, (iii) any licenses, permits, entitlements, guaranties and warranties (construction and building related or otherwise), architectural or engineering plans and specifications, development rights and utility capacity regarding the Land or the Improvements, and (iv) all intangible property, any trademarks and trade names used with the Land and/or the Improvements (collectively, the “Personal Property”); (d) all right, title and interest of Sellers, if any, in maintenance, parking, service, supply and other service contracts, including, without limitation, equipment leases and other capital leases affecting the Land, Improvements and/or Personal Property (the “Service Contracts”), excluding Seller’s existing property management agreement for the Property and the Rejected Contracts (as hereinafter defined).  Buyer agrees to assume all of the Service Contracts at the Closing, other than the Rejected Contracts.  Buyer shall notify Seller in writing prior to the expiration of the Feasibility Period in the event Buyer desires to have any of the Service Contracts canceled at the Closing (the “Rejected Contracts”). Seller hereby agrees to send cancellation notices with respect to the Rejected Contracts upon consummation of the Closing and agrees to pay any fee or penalty required as a result of the termination of any Rejected Contract; and (e) all right, title and interest of Sellers, if any, in (i) any adjacent and/or contiguous streets, roads, avenues, alleys, and rights of way; (ii) any rivers, streams, and strips and gores of land adjoining, adjacent and contiguous to the Land; (iii) any easements, rights of ingress and egress, rights of way, and rights under any covenants, conditions and/or restrictions appurtenant to the Land; (iv) any water rights pertaining to the Land; and (v) any rights, titles and interests appurtenant to the Land and the foregoing items.

  

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The above-listed items in this Agreement are collectively considered the “Property”. The “Property” does not include any rights of Seller in (i) rents or other amounts received or due prior to the Closing, (ii) any other claims or rights with respect to the Land and/or Improvements for the period prior to the Closing, or (iv) any rights, titles or interests in or pertaining to any real property other than the Land.

2.  PURCHASE PRICE.  The purchase price to be paid by Buyer to Sellers for the property to be sold, transferred and conveyed herein shall be in the amount of Eighty-Two Million Dollars ($82,000,000) (the “Purchase Price”).  An earnest money deposit in the sum of Five Hundred Thousand Dollars ($500,000) (“Initial Deposit”) shall be deposited with the Escrow Agent (as herein defined) within Three (3) days after Escrow (as hereinafter defined) is opened. Upon expiration of the Feasibility Period (as such term is defined in Section 10(a) hereof) and provided that Buyer has not elected to terminate this Agreement prior to end of the Feasibility Period as provided in Section 10(b) hereof, Buyer shall deposit with Escrow the sum of Five Hundred Thousand Dollars ($500,000) as an additional deposit (“Additional Deposit”, together with the Initial Deposit shall be referred to herein as the “Deposit”).  The balance of the purchase price in the sum of Eighty-One Million Dollars ($81,000,000), subject to prorations and adjustments as herein provided, shall be deposited into Escrow on or before the date of Closing (as herein defined).

3. ESCROW AGENT. Upon execution of this Agreement, Sellers and Buyer shall open escrow (“Escrow”) with First American Title Insurance Company 13450 West Sunrise Boulevard, Suite 300, Sunrise Florida 33323; Attn: Erika L. Cleaves, Escrow Coordinator; Tel: (954) 839-2928; Email ecleaves@firstam.com (“Escrow Agent”).  Shumaker, Loop & Kendrick, LLP (“Title Agent”), 101 East Kennedy Boulevard, Suite 2800, Tampa, Florida 33602, Attention: W. Kent Ihrig, Esq, Telephone Number: (813) 229-7600, Facsimile Number: (813) 229-1660, Electronic Mail: kihrig@slk-law.com, an authorized agent of First American Title Insurance Company (“Title Company”), shall act as Title Agent for this transaction.

 

 

4.  PURCHASE OF PROPERTY IN AS-IS WHERE-IS CONDITION.  The parties agree that Buyer is to purchase the Property "as is, where is, and with all faults" that is, in its present condition, and that Seller makes no warranties or representations regarding the Property or its use or condition, whether express or implied, and SELLERS DO HEREBY DISCLAIM ANY AND ALL SUCH WARRANTIES OR REPRESENTATIONS EXPRESS OR IMPLIED, REGARDING THE CONDITION, VALUE, USE, HABITABILITY, MERCHANTABILITY OR FITNESS, SUITABILITY OR ADEQUACY FOR ANY PARTICULAR PURPOSE.  EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT, BUYER ACKNOWLEDGES THAT BUYER HAS NOT RELIED, AND IS NOT RELYING, UPON ANY INFORMATION, DOCUMENT OR OTHER LITERATURE, MAPS, PLANS, PROJECTION, PROFORMA, STATEMENT, REPRESENTATION, GUARANTEE OR WARRANTY (WHETHER EXPRESS OR IMPLIED, ORAL OR WRITTEN, MATERIAL OR IMMATERIAL) THAT MAY HAVE BEEN GIVEN BY OR MADE BY OR ON BEHALF OF SELLERS.  Buyer shall have the right, during the Feasibility Period, at Buyer's expense, to have one or more professionals of its choice inspect the Property.  Buyer shall indemnify and hold Sellers harmless from all liability, claims, liability for strict liability, losses, damages, costs and expenses, including attorneys’ fees arising out of or resulting from the performance of any such inspection; provided, however, the indemnity which is the subject of this Section 4 shall not cover liability arising from pre-existing conditions of the Property unless such pre-existing conditions are exacerbated by Buyer or its consultants, agents, contractors, employees, representatives or invitees, in which case Buyer shall be liable for and to the extent of the exacerbated condition of the Property and not the pre-existing condition.  The provisions of this Section shall survive the Closing or termination of this Agreement.

  

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Within Five (5) business days of execution of this agreement Sellers shall provide Buyer the following information:

	
a)  

	
All relevant documentation in Sellers’ possession regarding the Property, including but not limited to, surveys, inspection reports, plat maps, and studies; and

	
b)  

	
The items set forth in Exhibit “C”

5.   CLOSING.  The closing of the Property (the “Closing”) shall occur on that date which is fifteen (15) days following (but in no event sooner than thirty (30) days following the end of the Feasibility Period)  the issuance by the Miami-Dade County Department of Regulatory and Economic Resources-Division of Environmental Resources Management's ("DERM") of a No Further Action Letter (“NFA”) to Seller with respect to the Environmental Matters (as such term is defined in Section 13(a)(vii)) and DERM shall have approved, as a condition of the issuance of such NFA, restrictive covenants with respect to the Property consisting only of the following (1) that X-Groundwater from the Property shall not be used for drinking water purposes and (2) that X-Groundwater from the Property shall only be withdrawn for the purposes of monitoring of pollution (the “DERM Restrictive Covenants”), but not later than one hundred eighty (180) days after the expiration of the Feasibility Period.  In the event that that DERM has not issued the NFA (and as conditioned upon DERM’s approval of the DERM Restrictive Covenants) within one hundred eighty (180) days following the expiration of the Feasibility Period, Buyer shall have the option, exercised in the manner hereinafter provided, of (i) terminating this Agreement, (ii) extending the period for obtaining the NFA, and, thus, the Closing, by an additional thirty (30) days from the expiration of the original one hundred eighty (180) day period (the “First DERM Extension Election”), or (iii) waiving receipt of the NFA and proceeding with the acquisition of the Property, in which latter case the Closing shall occur on that date which is fifteen (15) days after that date which is one hundred eighty (180) days following expiration of the Feasibility Period. Buyer’s election as provided in the immediately preceding sentence shall be made by giving written notice to Seller and Escrow Agent within five (5) days after said one hundred (180) day period.  In the event that Buyer shall fail to give such notice, it shall be deemed to have waived receipt of the NFA as a condition of Closing and Closing shall occur on the date set forth in clause (iii) of the penultimate sentence to this sentence.

  

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In the event that that Buyer has timely made the First DERM Extension Election and thereafter DERM has not issued the NFA (and as conditioned upon DERM’s approval of the DERM Restrictive Covenants) within two hundred ten (210) days following the expiration of the Feasibility Period, Buyer shall have the option, exercised in the manner hereinafter provided, of (i) terminating this Agreement, (ii) extending the period for obtaining the NFA, and, thus, the Closing, by an additional thirty (30) days from the expiration of the extended thirty (30) day period as a result of Borrower’s exercise of First DERM Extension Election (the “Second DERM Extension Election”), or (iii) waiving receipt of the NFA and proceeding with the acquisition of the Property, in which latter case the Closing shall occur on that date which is fifteen (15) days after that date which is two hundred ten (210) days following expiration of the Feasibility Period. Buyer’s election shall be made by giving written notice to Seller and Escrow Agent within five (5) days after the thirty (30) day extended period as a result of Borrower’s exercise of the First DERM Extension Election.  In the event that Buyer shall fail to give such notice, it shall be deemed to have waived receipt of the NFA as a condition of Closing and Closing shall occur on the date set forth in clause (iii) of the penultimate sentence to this sentence.

In the event that that Buyer has timely made both the First DERM Extension Election and the Second DERM Extension Election and thereafter DERM has not issued the NFA (and as conditioned upon DERM’s approval of the DERM Restrictive Covenants) within two hundred forty (240) days following the expiration of the Feasibility Period, Buyer shall have the option, exercised in the manner hereinafter provided, of (i) terminating this Agreement, or (ii) waiving receipt of the NFA and proceeding with the acquisition of the Property, in which latter case the Closing shall occur on that date which is fifteen (15) days after that date which is two hundred forty (240) days following expiration of the Feasibility Period. Buyer’s election shall be made by giving written notice to Seller and Escrow Agent within five (5) days after the thirty (30) day extended period as a result of Borrower’s exercise of the Second DERM Extension Election.  In the event that Buyer shall fail to give such notice, it shall be deemed to have waived receipt of the NFA as a condition of Closing and Closing shall occur on the date set forth in clause (ii) of the penultimate sentence to this sentence.

If Buyer terminates the Agreement under the terms of this Section 5, the Deposit shall be fully refunded and returned to Buyer and this Agreement shall be of no further force and effect, except for the obligations which survive Closing.

	
(a)  

	
Delivery of Documents by Sellers.

 

At the Closing, in addition to any other documents specifically required to be delivered or acts required to be done pursuant to this Agreement, Sellers will deliver, or cause to be delivered, to Buyer the following:

 

  

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(i)           Deed.  Executed Special warranty deeds in the form attached to this Agreement as Exhibit “B” to the respective units comprising the Property owned by each Seller, duly executed and acknowledged by each Seller in form as is acceptable to the Title Company for the purposes of insuring title to the Property and in proper form for recording;

 

(ii)            Assignment and Assumption of Leases and Contracts.  An executed counterpart of the assignment and assumption of leases and contracts in the form attached to this Agreement as Exhibit “D,” of each Seller’s respective rights under all Leases, intangible property and contracts (other than the Rejected Contracts) relating to the Property;

 

(iii)           Bill of Sale and General Assignment. An executed Bill of Sale and General Assignment in the form attached to this Agreement as Exhibit “E”.

(iv)           FIRPTA Certificate.  An executed Foreign Investors Real Property Tax Act Certificate in the form attached to this Agreement as Exhibit “F”;

(v)           Tenant Notice Letter. An executed letter addressed to Tenants notifying them of the change in ownership, in the form attached to this Agreement as Exhibit “G”;

(vi)           Certificate of Seller. An executed Certificate of Seller that all of Seller's warranties and representations remain true as of the Closing in the form attached to this Agreement as of Exhibit “H”;

(vii)          Notice Letter. An executed letter to the taxing authorities, utility companies, and such other entities as may be appropriate advising such entities of the sale, which letters shall be in form reasonably acceptable to Buyer;

(viii)         Condominium Association Estoppel.  An estoppel from each condominium association related to the Property that Seller is not in default under the each condominium declaration;

 

(ix)           All final (i) certificates of occupancy, (ii) construction and/or contractor affidavits (iii) lien waivers and (iv) termination of all notices of commencement, if any, related to the Property;

 

(x)            Settlement Statement.  A duly executed settlement statement;

 

(xi)           Manager’s Certificate. An incumbency certificate and resolution of the governing body of each Seller evidencing the authority of the person executing this Agreement and the Deed or Deeds to the Property;

 

  

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(xii)           Title Company Requirements.  Evidence satisfactory to the Title Company of each Seller’s authority to execute and deliver the documents necessary to consummate the transaction contemplated hereby as well as any and all affidavits and other instruments and documents which the Title Company shall reasonably require in order to insure title to the Property to Buyer; and

 

(xiii)          Additional Documents.  Such other documents as may be reasonably required to consummate the transactions herein contemplated and reasonably requested by Buyer or its representatives; provided that Sellers shall not be obligated to cause the delivery of any such instrument or document that would increase or expand Sellers’ obligations or liability under this Agreement.

 

(b)           Deliveries by Buyer. At the Closing, in addition to any other documents specifically required to be delivered or required to be done pursuant to this Agreement, Buyer will deliver, or cause to be delivered, to Sellers:

 

(i)             Balance of Purchase Price.  By bank wire transfer of immediately available funds (directly or by payment to the Escrow Agent for each Seller’s account) the balance of the Purchase Price;

 

(ii)           Assignment and Assumption of Leases, Intangible Property and Contracts.  An executed counterpart of the assignment and assumption of all Leases, intangible property and contracts in the form attached to this Agreement as Exhibit “D”

 

(iii)          Settlement Statement.  A duly executed settlement statement;

 

(iv)          Title Company Requirements.  Evidence satisfactory to the Title Company of Buyer’s authority to execute and deliver the documents necessary to consummate the transaction contemplated hereby as well as any and all affidavits and other instruments and documents which the Title Company shall reasonably require in order to insure title to the Property to Buyer; and

 

(v)           Additional Documents.  Any other documents, instruments or agreements reasonably necessary to effectuate the transactions contemplated by this Agreement and reasonably requested by Sellers or their representatives; provided that Buyer shall not be obligated to cause the delivery of any such instrument or document that would increase or expand Buyer’s obligations or liability under this Agreement.

 

6.  TITLE AND CLOSING FEES AND COSTS. Sellers shall pay the following: (i) the premium for an owner’s policy of title insurance policy, which shall be in the amount of the Purchase Price, (ii) the title search fees therefor, if applicable, for any corrective instrument in order to cure any title defect, (ii) all the State of Florida and Miami-Dade County Documentary Stamp Taxes or any other applicable transfer taxes, (iii) recording fees, including, but not limited to, the Special Warranty Deeds conveying title to the Property and (iv) one-half of escrow charges or closing fees charged by the Escrow Agent. Buyer shall the following: (i) pay one-half of the escrow charges or closing fees charged by the Escrow Agent, (ii) the premium and cost of issuance of any mortgagee’s policy of title insurance (provided, however that this Agreement is not contingent on mortgagee financing), (iii) any endorsements to the owner’s (or any mortgagee’s) policy of title insurance requested by Buyer (or its mortgagee, if any), (iv) the cost of any new survey obtained by Buyer, (v) all costs related to its inspection of the Property, and (vi) costs relating to any financing obtained by Buyer. The foregoing notwithstanding, if either party defaults under this Agreement after the lapsing of the Feasibility Period then the party in default shall pay all escrow charges charged by the Escrow Agent.

 

 

  

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7.  EXAMINATION OF TITLE.  In addition to any encumbrances referred to herein, Buyer shall take title to the Property subject to: (1) real estate taxes for the year of closing and thereafter, (2) assessments not yet due, (3) Leases and Service Contracts currently in place, (4) covenants, conditions, restrictions, rights of way and easements of record, if any, as of the date of this Agreement, and (5) the DERM Restrictive Covenants.  With respect to (1) (2) and (3) above, Buyer shall only be financially liable for Buyer’s prorata share, as further set forth in Section 8.  Within five (5) days from the Effective Date of this Agreement, Sellers shall provide Buyer with the existing survey (“Survey”) and order a title commitment (“Title Commitment”) for the issuance of an owner’s policy of title insurance from the Title Company.  Buyer may, at its expense, obtain an updated survey (the “New Survey”) of the Property.  Seller shall cause an independent municipal lien search company to perform a municipal lien search of the Property and Seller shall have all municipals liens removed from title prior to Closing at Seller’s expense.  On or prior to the expiration of the Feasibility Period, as hereinafter defined, Buyer shall notify Seller in writing of any items in the Title Commitment, the Survey, and/or the New Survey, which Buyer finds objectionable (the “Title and Survey Objections”).  If Buyer does not timely deliver such written notice to Seller, then Buyer will be deemed to have approved all items reflected in the Title Commitment, and the Survey or the New Survey.  On or prior to Closing, Seller shall be obligated to remove or cause to be removed any monetary liens consented to or caused by Seller prior to or after the Effective Date.  All exceptions to title contained in the Title Commitment other than monetary liens shall be deemed approved unless written objection is delivered to Sellers on or prior to the expiration of the Feasibility Period.  Upon receipt of the Title and Survey Objections, Sellers shall notify Buyer in writing within ten (10) days of their receipt thereof whether or not the Sellers elect to cure the Title and Survey Objections prior to Closing.  If, however, Sellers elect not to cure all or any Title and Survey Objections, Buyer may either (1) terminate the Agreement, in which case the Deposit shall be returned to Buyer, or (2) proceed with the purchase of the Property subject to such exceptions.  If one of the Title and Survey Objections Seller’s elects not to cure is a monetary lien, with respect to (1) set forth above, Buyer shall also be entitled to Transaction Costs, as hereinafter defined.  If Buyer elects to proceed with this transaction under the terms of this Agreement, then within five (5) days of receipt of Sellers’ written notification not to cure, Buyer shall notify Sellers in writing of its election to proceed with the transaction and Buyer shall be deemed to have waived the Title and Survey Objections and elected the purchase the Property.

  

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8.  PRORATIONS.   The following items will be prorated between Sellers and Buyer at the Closing:

(a)   Rent, association fees, assessments from the operation of the Property received by Seller for the calendar month in which the Closing occurs will be prorated.

(b)           Rent, assessments and/or association fees which are unpaid or delinquent as of the Closing will not be prorated, but such unpaid or delinquent rent collected after the Closing will be delivered: (i) first, all rent, assessments and/or association fees received by Buyer after the Closing will be applied first to current rents, assessments and/or association fees and then to delinquent rents, assessments and/or association fees in inverse order of maturity; (ii) second, Buyer will deliver to Sellers any such rents, assessments and/or association fees relating to the period prior to the Closing within fifteen (15) days after the receipt of such rent; (iii) Buyer agrees that after the Closing it will use commercially reasonable efforts to collect such amounts, provided, however, that Buyer will have no obligation to institute legal proceedings, including an action for unlawful detainer, against a Tenant owing any such amounts); (iv) if after the expiration of sixty (60) days from the Closing, Buyer has been unsuccessful in collecting delinquent rents and or association fees to which Sellers are entitled from Tenants, then Seller may sue such Tenants to collect the delinquent rent to which Sellers are entitled, but Seller may not as a part of such lawsuit seek to terminate such Tenant’s lease of the Property or affect such Tenant’s occupancy of the Property; and (v) Sellers retain all rights regarding any former Tenant who is not occupying space at the Property as of the Closing.

(c)           All ordinary operating expenses of the Property including, without limitation, utility charges, maintenance, management and other service charges, expenses and charges under the Service Contracts, licenses, permits and all other normal operating charges regarding the Property, will be prorated.

(d)           All personal property taxes and other assessments against the Property or any portion of the Property for the tax year during which the Closing occurs will be prorated between Buyer and Sellers, as of the Closing.

(e)           All ad valorem taxes levied or assessed against the Property or any portion of the Property for the tax year during which the Closing occurs will be prorated between Buyer and Sellers as of the Closing based on the assessment of such taxes for the year of the Closing, with Sellers being charged for all of same from the beginning of the year through the day immediately preceding the Closing and Buyer being charged for all of same thereafter, including the Closing, through the end of the year. If at the time of Closing, (i) the assessed valuation for the current year has not yet been fixed, taxes will be prorated based upon the assessed valuation for the previous tax year and the current year’s tax rate; (ii) the tax rate for the current year has not yet been fixed, taxes will be prorated based upon the tax rate for the previous tax year and the current year’s assessed valuation; or (iii) the tax rate and the assessed valuation for the current year have not yet been fixed, ad valorem taxes will be prorated based upon the most current tax rate and/or assessed valuation of the Property.  Due to the fact that the 2016 ad valorem taxes will not be known at the time of Closing, Sellers agree that in addition to the proration amount to be credited to Buyer at Closing for ad valorem taxes under this subsection, Buyer shall receive an additional credit of Ten Thousand Dollars ($10,000) at Closing.  If any portion of the Property has been assessed for ad valorem real estate tax purposes at such rates (by exemption or otherwise) as would cause additional taxes being due with the change in ownership of the Property or a subsequent change in the use of the Property, Buyer agrees to pay all such taxes and to indemnify, defend and hold Sellers harmless against all claims and liability for such taxes.  All ad valorem tax prorations made at Closing shall be deemed final and no amount prorated under this subsection (e) shall thereafter be re-prorated or subject to adjustment.

  

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If the exact amount of any item to be prorated is not known as of the Closing, the proration will be based upon a reasonable estimate made by Seller.  Except for the items set forth in subsection (e) above, as soon after Closing as the exact amount of the item is known, but in no event later than sixty (60) days following Closing, the proration shall be adjusted and cash adjustments shall be made by Buyer and Sellers.  Sellers and Buyer agree to cooperate and use their best efforts to make such adjustments and to pay to each other any amounts owed.

For purposes of calculating prorations under this Agreement, Buyer will be deemed to be in ownership of the Property, and, therefore entitled to the income therefrom and responsible for the expenses thereof, for the entire day upon which the Closing occurs. All prorations will be made on the basis of the actual number of days of the month which will have elapsed as of the day of the Closing and based upon the actual number of days in the month and a three hundred sixty-six (366) day calendar year.  In the event the ad valorem taxes and other assessments with respect to the Property for the year of Closing based on the purchase of the Property by Buyer, Seller shall not be liable for any resulting increase in the ad valorem taxes or assessments.

9.  EVIDENCE OF TITLE.  Title as to the units comprising the Property owned by each Seller shall be conveyed from each Seller to Buyer by a Special Warranty Deed in the form attached hereto as Exhibit “B”.

10.  FEASIBILITY PERIOD.

(a) Buyer shall have forty-five (45) days from the Effective Date (the “Feasibility Period”) to conduct, at its sole cost and expense, such independent investigations, studies and tests as Buyer deems to be necessary or appropriate concerning Buyer’s proposed ownership, operation, use, development and/or suitability of the Property for Buyer’s intended purposes; provided, however, that in the event of any damage to the Property or any adjoining property as a result of the conduct such inspections, Buyer shall, at its sole cost and expense, immediately restore the Property or any such adjoining property to its condition as existed immediately prior to such damage or destruction, failing which Sellers shall be entitled to undertake and complete such restoration and charge Buyer for the cost thereof.  Such investigation may include, without limitation, appraisals, soils and engineering tests, intrusive testing, environmental studies, hazardous substance studies, biological surveys, property surveys, investigation concerning the availability of development approvals required from any governmental agencies for Buyer’s proposed operation, use, or development of the Property, the imposition or increase of any fees, change, or exceptions by any governmental agencies and such economic feasibility and marketing studies deemed appropriate.  Buyer may freely consult with any governmental agency concerning the condition of the Property, the project, its entitlements or regulatory terms and conditions of approval.

  

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(b) Buyer shall be entitled to terminate this Agreement in the event that any such inspection is unacceptable to Buyer, in Buyer’s sole discretion, by delivering to Sellers, with a copy to the Escrow Agent, of a written notice of termination on or before 5:00 p.m. (Pacific Time) on or prior to the expiration of the Feasibility Period.  In the event of such timely termination, the Deposit to the extent then paid shall be returned to Buyer.  In the event that Buyer does not timely terminate this Agreement as herein provided, then, it shall be conclusively presumed that Buyer has approved and accepted the Property and Buyer shall be obligated to immediately pay to escrow agent the Additional Deposit as provided in clause (b) of Section 2 hereof, and all Deposits shall thereupon be non-refundable to Buyer, except as otherwise provided in this Agreement and in the event of Sellers’ default as herein provided.

11.  NOTICES.  Any notices and demands as required by this Agreement and escrow shall be given in writing by registered mail or certified mail, overnight courier service, postage prepaid, return receipt requested, or email and shall be effective upon receipt.  Notice shall be addressed as follows:

Sellers:                                                                                                     Buyer:

Owens Financial Group, Inc.                                                                Interwest Capital Corporation

Attn: William Owens                                                                             Attn: Elliot Burrell

                  Attn: Alex Roudi

2221 Olympic Blvd.                                                                                7724 Girard Avenue Suite 300

	
                Walnut Creek, CA 94595                                                                       La Jolla, CA 92037

                                  Tel: (858) 777-0100

                  Email: Alex@interwestcapital.com

  Elliott@interwestcapital.com

With Copy to:

A.Nick Shamiyeh, Esq.                                                                         Monique Talamantez, Esq.

ATTORNEYS AT LAW                                                                       Interwest Capital Corporation

2221 Olympic Blvd.                                                                                7724 Girard Avenue Suite 300

Walnut Creek, CA 94595                                                                       La Jolla, CA 92037

Tel:                                                                                                           Tel: (858) 777-0100

Email:                                                                                                        Email: Monique@interwestcapital.com

  

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And to :

W. Kent Ihrig, Esq.                                                              Robert Brown, Esq.

	
  

	
Shumaker, Loop & Kendrick, LLP

	
Procopio, Cory, Hargreaves & Savitch

	
  

	
101 East Kennedy Boulevard

	
LLP

Suite 2800                                                                              525 B Street, Suite 2200

Tampa, Florida 33602                                                           San Diego, California 92101

Tel: (813) 229-7600                                                               Tel: (619) 515-3268

Email: kihrig@slk-law.com                                                  Email: robert.brown@procopio.com

12.  EXECUTION OF DOCUMENTS.  Each of the parties hereto shall execute any and all papers and documents reasonably necessary to effectuate the purpose of this Agreement and do all acts necessary to carry out the terms of this Agreement.

13.   REPRESENTATIONS AND WARRANTIES AND COVENANTS.

(a) Representations and Warranties of Sellers: Subject to and except as may be otherwise forth in the Due Diligence Documents in Exhibit “C”, Sellers represent and warrant to Buyer:

	
i.  

	
Each Seller is a Florida limited liability company. The execution and delivery of this Agreement by the signatories to this Agreement on behalf of each Seller and performing this Agreement by each Seller have been duly authorized by each Seller.

	
ii.  

	
There is no action, suit or proceeding pending or, to the best of Sellers’ knowledge, threatened against or affecting Sellers which could adversely affect Sellers’ ability to consummate this transaction contemplated by this Agreement or perform any of its obligations under this Agreement, in any court or municipal department, commission, board, bureau, agency or other governmental instrumentality.

	
iii.  

	
Neither the entering into of this Agreement nor consummating the transaction contemplated will constitute a violation or breach by Sellers of any agreement or other instrument to which Sellers is a party, or to which it is subject or by which any of its assets or properties may be affected, or of any judgment, order, writ, injunction or decree issued against or imposed upon it.

	
iv.  

	
No consent or approval of any person or entity or governmental authority is required regarding the execution and delivery of this Agreement by Sellers or the consummation by Sellers of the transactions contemplated or the performance by Sellers of its obligations under this Agreement.

 

  

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v.  

	
There are no attachments, executions, assignments for the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy or under other debtor relief laws contemplated by, pending, or threatened against Sellers.

	
vi.  

	
Sellers are not, and will not become, a person or entity with whom United States persons or entities are restricted from doing business under regulations of the Office of Foreign Asset Control (“OFAC”) of the Department of the Treasury (including those named on OFAC’s Specially Designated and Blocked Persons list), or under any statute, executive order (including the September 24, 2002, Executive Order blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism) or other governmental action and is not and will not engage in any dealing or transaction or be otherwise associated with such persons or entities.

	
vii.  

	
Except for certain existing arsenic contamination on certain portions of the Land and prior petroleum leakage which has been closed, both of which are disclosed in the Due Diligence Documents (the “Environmental Matters”), Sellers have received no notice concerning the Property from any governmental authority about a violation of any federal, state, county, or city statute, ordinance, code, rule, or regulation or stating that any investigation has commenced or is contemplated regarding any violation.

	
viii.  

	
There is no pending or threatened litigation or administrative proceeding affecting the Property.

	
ix.  

	
To the best of Seller’s knowledge, all financial information provided by Sellers to Buyer is accurate in all material respects.

	
x.  

	
No condemnation or taking of all or any portion of any of the Property by any governmental authority is pending or threatened against the Property in writing by any authority with the power of eminent domain.

	
xi.  

	
Seller has not received any notices from any insurance company of any defects or inadequacies in the Property or any part thereof which would materially and adversely affect the insurability of the Property or the premiums for the insurance thereof.

	
xii.  

	
Other than the Environmental Matters, to Sellers’ knowledge, no hazardous substances, solid wastes, or other substances known or suspected to pose a threat to health or the environment have been disposed of or otherwise released on or to the Property or exist on or within any portion of the Property.

 

  

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xiii.  

	
Other than the Environmental Matters, Sellers have not received written notice from any governmental authority of any material violation at the Property of laws relating to Hazardous Substances (as hereinafter defined) which violation occurred during Sellers’ ownership of the Property and remains uncured in any material respect.

	
xiv.  

	
Except pursuant to this Agreement, Sellers have not granted any person or entity any options or rights of first refusal or similar rights to purchase or otherwise acquire the Property or any portion thereof which have not expired or been otherwise terminated or waived.

	
xv.  

	
Sellers have not received any notices from the condominium associations related to the Property indicating that Seller is in violation or default of all or any of the condominium declarations and Seller is not aware of any violation or default by Seller under any of the condominium declarations.

	
xvi.  

	
 To the best of Seller’s knowledge, there are no pending or threatened construction liens against the Property.  If after the Effective Date a construction lien arises, Seller has until Closing to have the construction lien removed or sufficiently bonded.

	
xvii.  

	
The copies of the Service Contracts and Leases are true, correct, and to the extent available, complete copies of such Service Contracts and Leases, which, to Sellers’ knowledge, have not been modified except as set forth in the copies thereof or otherwise disclosed by Seller to Buyer.

If prior to the Closing, Sellers notify Buyer of, or Buyer discovers, any material breach of any of Sellers’ representations or warranties set forth above (other than those set forth in clause x, which shall be subject to Section 21, and clause xvi which shall be subject to the provisions of said clause xvi), in which case, Buyer shall give written notice to Seller specifically detailing the alleged breach, and thereupon Seller shall have such time as is necessary to cure such breach, not to exceed thirty (30) days after the date of Seller’s notification to Buyer of such material breach or the date of Seller’s receipt of Buyer’s written notice to Seller, as aforesaid, in which to cure such breach, and if such cure period extends beyond the date of Closing established pursuant to Section 5 hereof, the date of Closing shall be extended by a like number of days.  In the event that Seller is unable to cure such material breach (other than any breach related to clause x and clause xvi above) then Buyer may, as Buyer’s sole remedy, either (i) terminate this Agreement and receive a refund of the Deposit plus Transaction Costs from Sellers, or (ii) waive any such breach and proceed with the Closing with no reduction of the Purchase Price. Buyer’s failure to terminate this Agreement after Buyer learns of any material breach of any of Sellers’ representations or warranties set forth above prior to the Closing will constitute Buyer’s waiver of any claim based on such breach.

(b) Representations and Warranties of Buyer: Buyer represents and warrants to Seller:

 

  

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i.  

	
Buyer is a California corporation. The execution and delivery of this Agreement by the signatories to this Agreement on behalf of Buyer and performing this Agreement by Buyer have been duly authorized by Buyer.

	
ii.  

	
There is no action, suit or proceeding pending or, to the best of Buyer’s knowledge, threatened against or affecting Buyer which could adversely affect Buyer’s ability to consummate this transaction contemplated by this Agreement or perform any of its obligations under this Agreement, in any court or municipal department, commission, board, bureau, agency or other governmental instrumentality.

	
iii.  

	
Neither the entering into of this Agreement nor consummating the transaction contemplated will constitute a violation or breach by Buyer of any agreement or other instrument to which Buyer is a party, or to which it is subject or by which any of its assets or properties may be affected, or of any judgment, order, writ, injunction or decree issued against or imposed upon it.

	
iv.  

	
No consent or approval of any person or entity or governmental authority is required regarding the execution and delivery of this Agreement by Buyer or the consummation by Buyer of the transactions contemplated or the performance by Buyer of its obligations under this Agreement.

	
v.  

	
There are no attachments, executions, assignments for the benefit of creditors, or voluntary or involuntary proceedings in bankruptcy or under other debtor relief laws contemplated by, pending, or threatened against Buyer.

	
vi.  

	
Buyer is not, and will not become, a person or entity with whom United States persons or entities are restricted from doing business under regulations of OFAC (including those named on OFAC’s Specially Designated and Blocked Persons list), or under any statute, executive order (including the September 24, 2002, Executive Order blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit or Support Terrorism) or other governmental action and is not and will not engage in any dealing or transaction or be otherwise associated with such persons or entities.

(c)           Covenants.  Until the Closing or the sooner termination of this Agreement in accordance with the terms and conditions of this Agreement:

i. Sellers shall operate and maintain the Property in substantially the same manner as prior hereto pursuant to Seller’s normal course of business (such maintenance obligations not including capital expenditures or expenditures not incurred in such normal course of business), subject to reasonable wear and tear and further subject to destruction by casualty or other events beyond the control of Sellers.

  

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ii. Except with respect to Rejected Contracts, Sellers may not cancel, modify, extend, renew or permit the expiration of any Service Contracts relating the Property, except for the expiration or termination of any such Service Contract pursuant to its terms, or enter into any new service or leasing contract, except to the extent that the same is terminable at Closing without Buyer’s consent without the prior consent of Buyer, which consent shall not be unreasonably withheld, conditioned, or delayed; provided, however, Buyer’s consent shall not be required if such contract is cancelable upon not more than thirty (30) days’ notice.  Buyer’s failure to disapprove any request for consent by Sellers under this paragraph within five (5) days following Sellers’ request therefor shall be deemed to constitute Buyer’s consent thereto.

iii. Seller shall have the right to continue to offer the Property for lease in the same manner as prior hereto pursuant to its normal course of business and, upon request, shall keep Buyer reasonably informed as to the status of leasing prior to the Closing.

iv. Sellers shall keep in force and effect with respect to the Property insurance policies with amounts no less than those currently being carried by Sellers through the Closing.

14.  POSSESSION.  Buyer shall take possession of the Property at Closing.

15.  INUREMENT.  This Agreement and its terms shall inure to the benefit of and be binding upon the parties, their respective heirs, personal representatives, permitted assigns, and other successors in interest.

16.  REAL ESTATE COMMISSION.   Buyer and Sellers each represent and warrant to the other that neither of them has had any dealings with any person, firm, broker or finder in connection with the negotiation of this Agreement and/or the consummation of the purchase and sale contemplated herein, other than the Broker named herein and other than legal counsel of their own choosing. No broker or other person, firm or entity, other than said Broker is entitled to any commission or finder's fee in connection with this transaction as the result of any dealings or acts of such party, other than Hampton Beebe with ARA a Newmark Company (“Broker”) to whom a commission, per separate agreement, will be payable solely by Sellers, if and only upon occurrence of the Closing.  Sellers hereby indemnifies, protects, defends and agrees to hold Buyer harmless from any loss, liability, damage, cost, or expense (including, but not limited to, reasonable attorneys' fees) resulting to Buyer from a breach of the representation and warranty made by Sellers in this Section 16. Buyer hereby indemnifies, protects, defends and agrees to hold Sellers harmless from any loss, liability, damage, cost, or expense (including, but not limited to, reasonable attorneys' fees) resulting to Sellers from a breach of the representation and warranty made by Buyer in this Section 16. Seller shall be responsible for payment of any commission due and owing to the Broker pursuant to the terms of a separate written agreement by and between Seller and the Broker.

  

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17.  ASSIGNMENT.  Buyer may assign any of its rights and obligations under this Agreement with the prior written consent of Sellers, which shall not be unreasonably withheld.  Notwithstanding the foregoing, on or prior to the Closing, Buyer shall have the right, without Seller’s prior written consent but with prior written notice to Seller, to assign its rights and obligations under this Agreement to an entity controlled directly or indirectly by Shahyar Zayanderoudi (a/k/a Alex Roudi).  Any such assignment shall not release Buyer from his obligations under this Agreement.

18.  ATTACHMENTS.  Any attachments hereto, and the terms and conditions set forth herein shall be deemed incorporated into this Agreement by reference.

19.  DISCLOSURE OF HAZARDOUS SUBSTANCES

       A.  Definitions

1.  Hazardous Substances

“Hazardous Substances” shall mean any chemical, compound, material, mixture, or substance that is now or may in the future be defined or listed in, or otherwise classified pursuant to any Environmental Laws (defined below) as a “hazardous substance”, “hazardous material”, “hazardous waste”,  “extremely hazardous waste”, “infectious waste”, “toxic substance”, “toxic pollutant” or any other formulation intended to define, list or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, or toxicity.  The term “hazardous substances” shall also include asbestos or asbestos-containing materials, radon, polychlorinated biphenyls, petroleum, petroleum products or by-products, petroleum components, oil, mineral spirits, natural gas, natural gas liquids, liquefied natural gas, and synthetic gas usable as fuel, whether or not defined as a hazardous waste or hazardous substance in any “Environmental Laws.”

2.  Environmental Laws

“Environmental Laws” shall mean all present and future federal, state and local laws (whether under common law, statutes, ordinances, regulations, rules, administrative rules and policies, judicial and administrative orders and decrees, or otherwise), and all other requirements of governmental authorities relating to the protection of human health or the environment.

3.  Intentionally Omitted.

     B.  Sellers’ Disclosure of Hazardous Substances and other Environmental Conditions at the Property

  

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Sellers shall deliver all information in its possession as to whether or not there are any hazardous substances or other environmental conditions on the Subject Property.  Buyer is purchasing the same based on its own investigation and evaluation. Buyer may, at Buyer’s expense, obtain, within the Feasibility Period set forth in Section 10 above, a Phase One Environmental Audit Report on the Property.

  C.  Release

Buyer hereby releases and forever discharges Sellers, their respective members, managers, partners, officers, directors, shareholders, employees, agents, representatives, affiliates, insurers, and their respective predecessors, successors and assigns (collectively  “Seller Representatives” for purposes of this Paragraph C.) from any and all claims, liability for strict liability and causes of action of any kind, arising out of or relating in any way to any Hazardous Substances that were first released following Closing, on, under, or around the Property, or of the air, soil, groundwater or surface water at or beneath the Property, and which are not caused by Sellers and/or Seller Representatives, Sellers’ and/or Seller Representative’s passive or active negligence, or predecessor in interest of Sellers, or any other person or entity (“Buyer’s Substances”).  Sellers hereby releases and forever discharges Buyer, its respective members, managers, partners, officers, directors, shareholders, employees, agents, representatives, affiliates, insurers, and its respective successors and assigns (collectively “Buyer Representatives” for purposes of this Paragraph C.) from any and all claims, liability for strict liability and causes of action of any kind, arising out of or relating in any way to any Hazardous Substances that were first released prior to the Closing, on, under, or around the Property, or of the air, soil, groundwater or surface water at or beneath the Property, and which are deemed not to be caused by Buyer and/or Buyer Representatives, Buyer’s and/or Buyer Representative’s passive or active negligence (“Seller’s Substances”).

Without limiting the foregoing, Buyer agrees to defend and hold Sellers and Seller Representatives free and harmless from any claims, liability for strict liability, damages, attorney’s fees, costs, etc. as a result of any claims or causes of action threatened or made by anyone not otherwise a party hereto, including, without limitation, adjoining property owners and governmental agencies arising from incidents that occurred following the Closing.  Without limiting the foregoing, Sellers agrees to defend and hold Buyer and Buyer Representatives free and harmless from any claims, liability for strict liability, damages, attorney’s fees, costs, etc. as a result of any claims or causes of action threatened or made by anyone not otherwise a party hereto, including, without limitation, adjoining property owners and governmental agencies arising from incidents that occurred prior to the Closing.

  

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  D. INDEMNIFICATION

Buyer absolutely and unconditionally agrees to indemnify and to hold the Sellers and its directors, officers, employees, agents, stockholders and affiliates (collectively the “Sellers Indemnified Parties”) harmless from and against any and all loss, liability, claim, liability for strict liability, cost or expense of any nature whatsoever, contingent or otherwise, foreseen or unforeseen, including, without limitation, attorneys’ fees, court costs and litigation expenses related to any Buyer’s Substances.  Sellers absolutely and unconditionally agrees to indemnify and to hold the Buyer and its directors, officers, employees, agents, stockholders and affiliates (collectively the “Buyer Indemnified Parties”) harmless from and against any and all loss, liability, claim, liability for strict liability, cost or expense of any nature whatsoever, contingent or otherwise, foreseen or unforeseen, including, without limitation, attorneys’ fees, court costs and litigation expenses related to Seller’s Substances.

Buyer and Seller hereby specifically acknowledges that he has carefully reviewed this provision and discussed its significance with legal counsel and acknowledges that this provision is a material part of this Agreement.

This release shall inure to the benefit of and be binding upon Sellers’ and Buyer’s respective successors, assigns and transferees.

20.  CONDOMINIUM DISCLOSURE.  Certain of the individual units to be purchased hereunder and comprising a portion of the Property are subject to the Condominium form of ownership as provided in Chapter 718, Florida Statutes (each, a “Condominium Unit” and collectively, the “Condominium Units”), in separate Condominiums.  Pursuant to the provisions of Florida Statutes §718.706(5), Sellers are not required to comply with the filing and disclosure requirements of Florida Statutes §§718.706(1) and (2), in that Sellers are selling all of the Condominium Units included within the Property in a single transaction to a single purchaser.   As to each of the separate Condominiums in which Condominium Units are located,

THE BUYER HEREBY ACKNOWLEDGES THAT BUYER HAS BEEN PROVIDED WITH A CURRENT COPY OF THE DECLARATION OF CONDOMINIUM, ARTICLES OF INCORPORATION OF THE ASSOCIATION, BYLAWS AND RULES OF THE ASSOCIATION, AND A COPY OF THE MOST RECENT YEAR-END FINANCIAL INFORMATION AND FREQUENTLY ASKED QUESTIONS AND ANSWERS DOCUMENT MORE THAN 3 DAYS, EXCLUDING SATURDAYS, SUNDAYS, AND LEGAL HOLIDAYS, PRIOR TO THE EXECUTION OF THIS CONTRACT.

 

 

  

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21.  CONDEMNATION; CASUALTY.

(a) If a material portion of the Property is condemned or taken by eminent domain prior to the Closing, Buyer will, at its option, either (i) terminate this Agreement by written notice of such termination to Sellers within ten (10) days after Seller notifies Buyer of the condemnation and receive an immediate refund of the Deposit, or (ii) close the transaction contemplated in this Agreement, in which event Buyer will receive a credit against the Purchase Price equal to the proceeds previously received by Sellers and attributable to the Property from such condemnation or eminent domain proceeding (less any amounts expended by Sellers to repair or restore the Property or in connection with such condemnation or eminent domain proceeding ), and Sellers will assign to Buyer all claims for such proceeds attributable to the Property from such condemnation or eminent domain proceeding accruing thereafter. If Buyer fails to timely deliver written notice of termination as described in (i) above, Buyer will be deemed to have elected to terminate the Agreement. If less than a material portion of the Property is condemned or taken by eminent domain prior to the Closing, Buyer will close the transaction contemplated in this Agreement, Buyer will receive a credit against the Purchase Price equal to the proceeds previously received by Sellers and attributable to the Property from such condemnation or eminent domain proceeding (less any amounts expended by Sellers to repair or restore the Property or in connection with such condemnation or eminent domain proceeding), and Sellers will assign to Buyer all claims for such proceeds attributable to the Property from such condemnation or eminent domain proceeding accruing thereafter.

(b) If a material portion of the Property is damaged or destroyed by fire or other casualty prior to the Closing, Buyer may, at its option, either (i) terminate this Agreement by written notice of such termination to Sellers within ten (10) days after Sellers notifies Buyer of the casualty and receive an immediate refund of the Deposit, or (ii) close the transaction contemplated in this Agreement, in which event Buyer will receive a credit against the Purchase Price equal to the proceeds received by Sellers and attributable to the Property from such casualty (less any amounts expended by Sellers to repair or restore the Property or to recover the insurance proceeds), and Buyer will also receive a credit against the Purchase Price equal to the deductible under Sellers’ insurance policy regarding such casualty, and Sellers will assign to Buyer all claims for such insurance proceeds attributable to the Property. If Buyer fails to timely deliver written notice of termination as described in (i) above, Buyer will be deemed to have elected to terminate the Agreement. If less than a material portion of the Property is damaged or destroyed by fire or other casualty prior to the Closing, Buyer will close the transaction contemplated in this Agreement, Buyer will receive a credit against the Purchase Price equal to the proceeds received by Sellers and attributable to the Property from such casualty (less any amounts expended by Sellers to repair or restore the Property or to recover the insurance proceeds), and Buyer will also receive a credit against the Purchase Price equal to the deductible under Sellers’ insurance policy regarding such casualty, and Sellers will assign to Buyer all claims for such insurance proceeds attributable to the Property.

(c) With respect to a condemnation or eminent domain proceeding, a “material portion” of the Property means any taking of property having a reasonably estimated value or having a cost of repair or replacement of One Million and No/100 Dollars ($1,000,000.00) or more, in the reasonable opinion of Buyer’s and Sellers’ respective engineering consultants. With respect to a casualty, a “material portion” of the Property means any casualty such that the cost of repairs are reasonably expected to be One Million and No/100 Dollars ($1,000,000.00) or more, in the reasonable opinion of Buyer’s and Sellers’ respective engineering consultants.

  

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22. GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of Florida.

23. MUTUAL DRAFTING. In construing or interpreting the Agreement, the word “or” shall not be construed as exclusive, and the word “including” shall not be limiting.  The headings are for reference purposes only and are not to be considered in construing the Agreement.  This Agreement shall be fairly interpreted in accordance with its terms without any strict construction in favor or against either party and ambiguities shall not be interpreted against the drafting party.

24. SURVIVAL. If any provision or condition of the Agreement shall be held to be invalid or unenforceable by any court of competent jurisdiction, such invalidity or unenforceability shall attach only to such provision or condition.  The validity of the remaining provisions and conditions shall not be affected thereby and the Agreement shall be carried out as if any such invalid or unenforceable provision or condition were not contained therein.

 

 

25. ENTIRE AGREEMENT; AMENDMENT. The Agreement constitutes the entire agreement of the Parties with respect to the matters covered herein and supersedes any written or oral understandings or agreements between the Parties respecting the subject matter hereof.  The Agreement may not be amended except in writing by the Parties.

26. ATTORNEY’S FEES. If any party hereto shall bring suit in connection with this Agreement, the prevailing party in said suit shall be paid by the other party reasonable attorney’s fees, costs and expenses as determined by the Court.

27. RADON GAS.  RADON IS A NATURALLY OCCURRING RADIOACTIVE GAS THAT, WHEN IT HAS ACCUMULATED IN A BUILDING IN SUFFICIENT QUANTITIES, MAY PRESENT HEALTH RISKS TO PERSONS WHO ARE EXPOSED TO IT OVER A PERIOD OF TIME.  LEVELS OF RADON THAT HAVE EXCEEDED FEDERAL AND STATE GUIDELINES HAVE BEEN FOUND IN BUILDINGS IN FLORIDA.  ADDITIONAL INFORMATION REGARDING RADON AND RADON TESTING MAY BE OBTAINED THROUGH YOUR COUNTY HEALTH UNIT.

28.  TIME IS OF THE ESSENCE. Time is of the essence in this contract.  Extensions, if any, must be agreed upon in writing by the parties.

  

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30. INSPECTION. Buyer will have, as per Section 10. “FEASIBILITY PERIOD ” above, the full opportunity to inspect the Property and will be relying solely on its own investigations of the title to and physical condition of the Property and its operational history and the future potential of the Property as it deems appropriate and, to the maximum extent permitted by law will be buying the Property without recourse on an “as-is,” “where-is” and “with all faults” condition and basis, and has not relied, and is not relying and will not rely on any statements, representations, projections, whether oral or written, with respect to the past, present or future physical condition or operation of, or income from the Property, whether heretofore or hereafter made by (a) Sellers or any of their respective managers, members, officers, agents, attorneys, employees or representatives;  (b) other documents executed by a manger or officer of each Seller and delivered by each such Seller to Buyer at the closing, and  (c) any other instrument or document dated or delivered to Buyer after the date hereof and  executed by any manager or officer of either Seller.

31. INTENTIONALLY DELETED.

32.  DEFAULT.

 

(a)           Buyer’s Default.  If, after satisfaction or waiver of all contingencies of Buyer’s obligation to close as provided herein, the Closing fails to occur due to Buyer’s default of any of its obligations pursuant to this Agreement, Sellers, as Sellers’ sole and exclusive remedy may elect to terminate this Agreement, and in the event Sellers elect to terminate this Agreement, Escrow Agent will deliver the amount of the Deposit held in Escrow at the time of the default as liquidated damages in full settlement of all claims of Sellers against Buyer related to the transaction which is the subject of this Agreement, it being specifically understood and agreed that in such event Sellers will suffer material damages otherwise incapable of precise ascertainment; and thereafter this Agreement will be terminated and the parties hereto will have no further rights or obligations hereunder except as to any provision hereof which by its terms expressly survives termination of this Agreement.

 

(b)           Sellers’ Default. If Closing fails to occur due to Sellers’ default of any of their obligations pursuant to the Agreement, Buyer, as Buyer’s sole remedies may elect to either: (i) seek specific performance of this Agreement and reimbursement of all reasonable costs and fees, including reasonable attorneys’ fees, it incurs in pursuing the same; or (ii) terminate this Agreement and, in such event, Buyer shall be entitled to receive a full refund of the Deposit and Transaction Costs, and thereafter this Agreement shall be of no further force and effect and the parties hereto will have no further rights or obligation hereunder, except as to any provision hereof which by its terms expressly survives termination of this Agreement.  “Transaction Costs” shall mean all documented out of pocket costs actually incurred by Buyer in connection with the transaction contemplated by this Agreement, up to but not in excess of Two Hundred Thousand Dollars ($200,000.00).

 

33.   VENUE; JURISDICTION.  The parties hereto each hereby submit to the jurisdiction of State and Federal Courts located within the State of Florida.  Venue for all proceedings brought pursuant to, or in connection with, this Agreement shall be Miami-Dade County, Florida.

  

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34.  JURY TRIAL WAIVER.  BUYER AND SELLER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT EITHER MAY HAVE TO A TRIAL BY JURY IN RESPECT TO ANY LITIGATION ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, THE CLOSING HEREUNDER AND ANY OTHER DOCUMENTS, MATTERS OR TRANSACTIONS CONTEMPLATED, EXECUTED OR UNDERTAKEN IN CONNECTION HEREWITH, OR ARISING OUT OF, UNDER, OR IN CONNECTION HEREWITH, WHETHER BEFORE, IN CONNECTION WITH OR AFTER CLOSING. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE PARTIES TO ENTER INTO THIS AGREEMENT.  THE PROVISIONS OF THIS PARAGRAPH SURVIVE TERMINATION AND/OR CLOSING HEREUNDER.

35. COUNTERPARTS.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute one and the same instrument.  Any party may execute this Agreement by signing any one counterpart. Receipt of a facsimile telecopy (followed promptly by an original executed counterpart) shall be deemed receipt of an original.

36.  RISK OF LOSS.  Any risk of loss prior to the Closing shall be borne by the Sellers.  Thereafter, it shall be borne by the Buyer.

37. SELLERS’ DISCLOSURE. Sellers hereby disclose to Buyer, and/or its assignees, that Owens Financial Group, Inc., a California corporation, an affiliate / manager of Sellers, is licensed by the California Bureau of Real Estate as a Real Estate Broker, license #00188862.

38. AGREEMENT NOT RECORDABLE.  Neither this Agreement nor any part hereof shall be recorded in the Public Records of any County in the State of Florida; provided, however, that the foregoing shall not prohibit the filing or introduction into evidence of this Agreement in any court proceeding related to this Agreement.

 

39. ESCROW AGENT.  The Escrow Agent for the purposes of this Section 39) shall hold and disburse the Deposit in accordance with this Agreement.  If Escrow Agent desires, Buyer and Seller to execute Escrow Agent’s form of Escrow Agreement, Buyer and Seller shall cooperate in an effort to agree upon and promptly execute such reasonable and customary form of Escrow Agreement as Escrow Agent may provide.  Upon execution of such separate Escrow Agreement, the provisions of this Paragraph 39 shall be superseded and shall be of no further effect, and the terms of the executed Escrow Agreement shall control.  In receiving and maintaining the Deposit, Escrow Agent shall be deemed to be acting only as a stake holder and shall have no liability for any loss or damage or for the improper delivery of such funds, except where such loss or damage is the result of Escrow Agent’s misconduct or negligence.  Escrow Agent shall not be responsible for any defaults hereunder by any of the parties.  In the event of an actual or potential dispute as to the rights of the parties hereto under this Agreement, the Escrow Agent may in its sole discretion, continue to hold the Deposit until the parties mutually agree to the release thereof, or until a judgment of a court of competent jurisdiction shall determine the rights of the parties thereto, or it may deposit any monies and all instruments held pursuant to this Agreement in the court registry and the parties agree to indemnify Escrow Agent from any costs and fees associated therewith, and upon notifying all parties concerned of such action, all liability on the part of the Escrow Agent shall fully terminate, except to the extent of an account of any monies theretofore delivered out of escrow.  All parties agree that Escrow Agent shall not be liable to any party or person whomsoever for any action taken or omitted by Escrow Agent unless due to misconduct or negligence on the part of the Escrow Agent.  All of the terms and conditions in connection with Escrow Agent’s duties and responsibilities and the  

 

  

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rights of Seller, Buyer and any lender or anyone else, are contained in this instrument, and the Escrow Agent is not required to be familiar with the provisions of any other instrument or agreement, and shall not be charged with any responsibility or liability in connection with the observance or non-observance by anyone of the provisions of any other such instrument or agreement.  Escrow Agent may rely and shall be protected in acting upon any paper or other document which may be submitted to Escrow Agent in connection with its duties hereunder and which is believed by Escrow Agent, in its exercise of reasonable discretion to be genuine and to have been signed or presented by the proper party or parties and shall have no liability or responsibility with respect to the form, execution or validity thereof.  Escrow Agent shall not be required to institute or defend any action or legal process involving any matter referred to herein which in any manner affects it or Escrow Agent’s duties or liabilities hereunder unless or until required to do so by the Buyer or Seller, and then only upon receiving full indemnity in an amount and of such character as Escrow Agent shall require, against any and all claims, liabilities, judgments, attorneys’ fees and other expenses of every kind in relation thereto, except in the case of Escrow Agent’s own willful misconduct or gross negligence.  Escrow Agent shall not be bound in any way or affected by any notice of any modification, cancellation, abrogation or rescission of this Agreement, or any fact or circumstance affecting or alleged to affect the rights or liabilities of any other persons, unless Escrow Agent has received written notice satisfactory to Escrow Agent signed by all parties to this Agreement.

 

 

 

The undersigned parties hereby acknowledge receipt of a copy hereof and acknowledge further that they have not received nor relied upon any statements or representations made by any other party.

 

 

[Remainder of Page Intentionally Blank]

 

  

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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the date shown below.

	
  

	
SELLERS:

	
  

	
TOTB Miami, LLC.

	
  

	
By:  Owens Financial Group, Inc., its Manager

 

BY:________________________________

 

ITS:_______________________________ 

 

DATE _____________________________

 

	
  

	
TOTB North, LLC.

	
  

	
By:  Owens Financial Group, Inc., its Manager

 

BY:________________________________

 

ITS:_______________________________ 

 

DATE _____________________________

 

 

	
  

	
BUYER:

	
  

	
Interwest Capital Corporation or Assignee

	
  

	
 

BY:________________________________

 

ITS:_______________________________ 

 

DATE _____________________________

  

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ESCROW AGENT’S ACCEPTANCE

The undersigned agrees to act as Escrow Agent pursuant to the foregoing Agreement and acknowledges receipt of the Deposit.

ESCROW AGENT

FIRST AMERICAN TITLE INSURANCE COMPANY

By: ____________________________

Name: _________________________

Title: ___________________________

  

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EXHIBIT A

LEGAL DESCRIPTION

[COMMENT: PLEASE PROVIDE LEGAL DESCRIPTION]

  

26

  

 

EXHIBIT B

SPECIAL WARRANTY DEED

 

Prepared by

and when recorded return to:

W. Kent Ihrig, Esq.

101 East Kennedy Boulevard

Suite 2800

Tampa, Florida 33602

Phone: (813) 229-7600

Consideration Paid: $[______________]

Documentary Stamp Tax Paid: $[_________]

Miami-Dade County Sur-tax Paid: $[_________] (if applicable)

SPECIAL WARRANTY DEED

 

THIS SPECIAL WARRANTY DEED is made this ___ day of ___________, 201__, by _________________________________________, a Florida limited liability company, whose address is 2221 Olympic Boulevard, Walnut Creek, California 94595 (hereinafter referred to as “Grantor”) to ________________________________________, a ______________________________, whose address is 7724 Girard Avenue, Suite 300, La Jolla, California 92037 (hereinafter referred to as “Grantee”).

 

(Whenever used herein, the terms “Grantor” and “Grantee” shall be deemed to include all of the parties to this instrument and the successors and assigns of each party.)

WITNESSETH:

 

THAT, the Grantor, for Ten and No/100 Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby grants, bargains, sells, conveys, confirms, remises, releases and transfers unto the Grantee all that certain land situate in Pinellas County, Florida, legally described on Exhibit A hereto;

TOGETHER WITH all tenements, hereditaments and appurtenances, and every privilege, right, title, interest and estate, reversion, remainder and easement thereto belonging or in anywise appertaining (collectively, the “Property”).

 

TO HAVE AND TO HOLD, the same in fee simple forever.

 

        SUBJECT ONLY TO taxes and assessments accruing subsequent to December 31, 2015, and the matters set forth in Exhibit B, attached hereto and incorporated herein by this reference; provide the foregoing shall not serve to reimpose the same as encumbrances on the Property.

AND the Grantor does hereby covenant with the Grantee that the Grantor is lawfully seized of the Property in fee simple; that it has good, right and lawful authority to sell and convey the Property; that it warrants the title to the Property and will defend the same against the lawful claims of all persons claiming by, through or under the Grantor, but against none other.

  

27

  

IN WITNESS WHEREOF, the Grantor has caused this Special Warranty Deed to be executed and delivered as of the day and year first above written.

 

Signed, sealed and delivered

in the presence of:

 

	
WITNESS:

	
__________________________________________

___________________________________                      By:                                                                           

	
Printed Name:________________________

	
                    Name: ______________________________

	
  

	
Title: ________________________________

__________________________________

Printed Name:________________________                                                        

 

STATE OF CALIFORNIA                                  )

)

COUNTY OF CONTRA COSTA                       )

The foregoing instrument was acknowledged before me this ___ day of _____________, 20__, by ______________________________, as ___________________________ of Owens Financial Group, Inc., as the Manager of ______________________, a Florida limited liability company, on behalf of the company.  He o is personally known to me or o has produced ________________________ as identification.

 

                                                                                                                 _____________________________________

	
(NOTARIAL SEAL)

	
Notary Public

                                                                                                                 _____________________________________

               (Type, Print or Stamp Name)

  

28

  

                                                                                                   

 

EXHIBIT A

 

LEGAL DESCRIPTION

 

  

29

  

 

EXHIBIT C

DUE DILIGENCE CHECKLIST

  

30

  

 

EXHIBIT D

ASSIGNMENT AND ASSUMPTION OF LEASES, INTANGIBLE PROPERTY AND CONTRACTS

THIS ASSIGNMENT AND ASSUMPTION OF LEASES AND CONTRACTS (this “Assignment”) is executed as of the ____ day of __________, 201_ by and between _______________________LLC, a _________________ limited liability company (“Assignor”), having an address __________________________________ and [__________________], a [__________________________________________] (“Assignee”), having an address c/o [______________________________].

WHEREAS, Assignee is this day purchasing from Assignor and Assignor is conveying to Assignee the Property (as such term is described in that certain Purchase Agreement and Deposit Receipt dated as of __________________________ between Assignor and Assignee).

WHEREAS, the Property is occupied by those certain tenants (the “Tenants”) under the leases listed and described on Exhibit A annexed hereto (collectively, the “Tenant Leases”).

WHEREAS, in connection with its ownership and management of the Property, Assignor has certain rights, title and interest in licenses, permits, entitlements, guaranties and warranties, architectural or engineering plans and specifications, development rights related to the Property (collectively, the “Intangible Property”).

WHEREAS, in connection with its ownership and management of the Property, Assignor has entered into those certain maintenance, service and supply contracts and equipment leases, in effect on the date hereof, listed and described on Exhibit B annexed hereto (collectively, the “Contracts”).

WHEREAS, Assignor desires to transfer and assign to Assignee, and Assignee desires to assume as provided herein, all of Assignor’s right, title and interest in and to the Tenant Leases, Intangible Property and the Contracts.

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

	
1.  

	
Assignor hereby transfers and assigns to Assignee all right, title and interest of Assignor in and to the Tenant Leases, Intangible Property and the Contracts, without representation, warranty or recourse, except as otherwise provided in the Purchase Agreement and Deposit Receipt effective February 5, 2016 by and between Assignor and Interwest Capital Corporation.

 

  

31

  

 

	
2.  

	
Assignee hereby affirmatively and unconditionally assumes all of Assignor’s obligations and liabilities under the Tenant Leases and the Contracts arising from and after the date hereof.

	
3.  

	
This Assignment shall constitute a direction and full authority to any person or entity that is a party to any of the Contracts to perform its obligation under the Contracts for the benefit of Assignee without further proof to any such party of the assignment to Assignee of the Contracts.

	
4.  

	
Assignee indemnifies and agrees to defend and hold Assignor harmless against all loss, liability, claims or causes of action arising out of or relating to Assignee’s failure to perform any of the obligations of the owner/lessor under the Leases and Contracts from and after the date of this Assignment.  Assignor agrees to indemnify, defend and hold Assignee harmless against all loss, liability, claims or causes of action arising out of or relating to Assignor’s failure to perform any of the obligations of the owner/lessor under the Leases and Contracts but only for the period of time commencing on the date Assignor acquired the Property through and including the date of this Assignment.

	
5.  

	
This Assignment may be executed in any number of counterparts, each of which may be executed by any one or more of the parties hereto, but all of which shall constitute one and the same instrument, and shall be binding and effective when all parties hereto have executed and delivered at least one counterpart.

	
6.  

	
The terms and provisions of this Assignment shall be binding upon and inure to the benefit of the respective parties hereto, and their respective successors and assigns.

  

32

  

 

IN WITNESS WHEREOF, the parties hereto have caused this Assignment to be duly executed as of the day and year first written above.

	
ASSIGNOR:

	  
	
[___________________________________]

 

	
 

By:           _______________________

Name:

Title:

	
ASSIGNEE:

	  
	
[___________________________________]

	  
	  
	
By:

	  
	  	
Name:

	  
	  	
Title:

	  

  

33

  

 

EXHIBIT A

(List of Tenant Leases)

  

34

  

EXHIBIT B

(List of Contracts)

  

35

  

 

EXHIBIT E

BILL OF SALE AND GENERAL ASSIGNMENT

THIS BILL OF SALE AND GENERAL ASSIGNMENT (this “Assignment”) is executed as of the ____ day of _____________, 201__ by ______________________, a ________ limited liability company (“Assignor”), having an address _____________________________________________ in favor of [______________________________], a [______________________] (“Assignee”), having an address c/o [______________________________].

WHEREAS, Assignee is this day purchasing from Assignor and Assignor is conveying to Assignee the Property (as such term is described in that certain Purchase Agreement and Deposit Receipt dated as of ____________________ between Assignor and Assignee (the “Agreement”)).

WHEREAS, Assignor desires to assign, transfer, set over and deliver to Assignee all of Assignor’s rights, if any, in and to the Personal (as such term is defined in the Agreement) (collectively, the “Assigned Properties”) to the extent assignable.

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

	
1.  

	
Assignor hereby assigns, transfers, sets over and delivers to Assignee, its successors and assigns, all of Assignor’s right, title and interest, if any, in and to the Assigned Properties, without representation, warranty or recourse, except as otherwise provided in the Purchase Agreement and Deposit Receipt effective February 5, 2016 by and between Assignor and Interwest Capital Corporation.

	
2.  

	
This Assignment is made without warranty, representation, or guaranty by, or recourse against Assignor of any kind whatsoever.

	
3.  

	
This Assignment may be executed in any number of counterparts, each of which may be executed by any one or more of the parties hereto, but all of which shall constitute one and the same instrument, and shall be binding and effective when all parties hereto have executed and delivered at least one counterpart.

	
4.  

	
The terms and provisions of this Assignment shall be binding upon and inure to the benefit of the respective parties hereto, and their respective successors and assigns.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

  

36

  

IN WITNESS WHEREOF, Assignor has caused this Assignment to be duly executed as of the day and year first written above.

	
ASSIGNOR:

	  
	  
	
 

By:           _______________________

Name:

Title:

  

37

  

 

EXHIBIT F

FIRTPA

Section 1445 of the Internal Revenue Code provides that a transferee of a U.S. real property interest must withhold tax if the transferor is a foreign person. For U.S. tax purposes (including section 1445), the owner of a disregarded entity (which has legal title to a U.S. real property interest under local law) will be the transferor of the property and not the disregarded entity. To inform the transferee that withholding of tax is not required upon the disposition of a U.S. real property interest by ________________ (“Transferor”), the undersigned hereby certifies the following:

	
1.  

	
Transferor is not a foreign corporation, foreign partnership, foreign trust, or foreign estate (as those terms are defined in the Internal Revenue Code and Income Tax Regulations);

	
2.  

	
Transferor is not a disregarded entity as defined in Treasury Regulations § 1.1445-2(b)(2)(iii);

	
3.  

	
Transferor 's U.S. employer identification number is ________________; and

	
4.  

	
Transferor 's office address is ________________________________.

Transferor understands that this certification may be disclosed to the Internal Revenue Service by transferee and that any false statement contained herein could be punished by fine, imprisonment, or both.

Under penalties of perjury I declare that I have examined this certification and to the best of my knowledge and belief it is true, correct, and complete, and I further declare that I have authority to sign this document on behalf of Transferor.

Dated:  __________________

	  
	
 

 

By:_____________________________

Name:

Title:

  

38

  

 

EXHIBIT G

TENANT NOTICE LETTER

 

________________________________.

 

[Address]

 

 

______________ _, 201_

 

By Certified Mail -

 

Return Receipt Requested

 

_______________________

_______________________

_______________________

_______________________

 

	
Re:

	
Lease (the “Lease”) dated __________ between _______________________________ (“Landlord”) and ______________________ encumbering certain real property located at ________________________________, __________, __________ (the “Property”)

 

Ladies and Gentlemen:

 

Please be advised that (1) Landlord has conveyed all of its right, title and interest in and to the Property, including its interest as landlord under the Lease, to _____________________________  (“Purchaser”), and (2) Purchaser has assumed Landlord’s obligations under the Lease.

Accordingly, effective as of the date hereof, you are hereby notified and directed to deliver all future rent and additional rent payments due under the Lease, and any notices, inquiries or requests relating thereto, to Purchaser at:

_____________________________

                    

                                                                                _____________________________

 

 

  

39

  

In addition, all security deposits held by Landlord, if any, together with any interest earned thereon, have been transferred to Purchaser.

	
Very truly yours,

 

	  
	
 

 

By:           _______________________

Name:

Title:

  

40

  

 

EXHIBIT H

CERTIFICATE OF SELLER

_____________________, as ____________________ as ______________________ of _______________________________________, a __________________ limited liability company, as Seller, under that certain Purchase Agreement and Deposit Receipt dated _____________, 2016, by and between ___________________________, a _______________ limited liability company, as Buyer and, as Seller (the "Agreement") does hereby certify that all representations and warranties of Seller set forth in the Agreement remain true as of __________, 2016.

[NAME]

By:  ________________________                                                     

Name: ______________________                     

Title: _______________________

STATE OF CALIFORNIA                                  )

)  SS.

COUNTY OF CONTRA COSTA                       )

The foregoing instrument was acknowledged before me this ____ day of _________, 2016 by __________________, as ______________________ of ______________________________, a __________________ limited liability company.  He is personally known to me or has produced a driver's license as identification.

                                                                                                                __________________________________

Notary Public

Print Name:_________________________                                                                

Serial No. (if any): ____________________                                                               

  

41Exhibit 10.1

 

EXECUTION VERSION

SECURITIES PURCHASE AGREEMENT

THIS SECURITIES PURCHASE AGREEMENT (the “Agreement”), dated as of March 21, 2016, by and among GigOptix, Inc., a Delaware corporation (the “Company”), and Pudong Science and Technology Investment (Cayman) Co., Ltd., an exempted company incorporated and existing under the laws of the Cayman Islands, or any affiliate designated thereby (collectively, the “Investor”).

RECITALS

A.           Investor wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) 1,754,385 shares (the “Common Shares” or the “Securities”) of the common stock, par value $0.001 per share, of the Company (the “Common Stock”). Immediately after the Closing, the Common Shares will represent 3.77% of the Company’s aggregate Common Stock issued and outstanding (the “Investment Percentage”).

B.           The Company and the Investor are executing and delivering this Agreement in reliance upon the exemption from registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506(b) of Regulation D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the Securities Act.

NOW, THEREFORE, IN CONSIDERATION of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and adequacy of which are hereby acknowledged, the Company and the Investor agree as follows:

ARTICLE I

DEFINITIONS

1.1          Definitions. In addition to the terms defined elsewhere in this Agreement, the following terms have the meanings indicated:

“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.

“Agent” has the meaning set forth in Section 3.1(h).

“Agreement” has the meaning set forth in the Preamble.

“Business Day” means any day other than Saturday, Sunday or other day on which commercial banks in the City of New York or Shanghai are authorized or required by law to remain closed.

“Closing” means the closing of the purchase and sale of the Securities pursuant to Section 2.1.

 

“Closing Date” means the date and time of the Closing and shall be 11:00 a.m., San Francisco, California time, on March 24, 2016 or such later date and time as is mutually agreed to by the Company and the Investor.

“Common Shares” has the meaning set forth in the Recitals.

“Common Stock” has the meaning set forth in the Recitals.

“Company” has the meaning set forth in the Preamble.

“Delay Cure” has the meaning set forth in Section 6.1(d).

“Delay Payment” has the meaning set forth in Section 6.1(d).

“Disclosure Materials” has the meaning set forth in Section 3.1(g).

“Effective Date” means the date that the Investor Registration Statement is first declared effective by the SEC.

“Effectiveness Period” has the meaning set forth in Section 6.1(b).

“8-K Filing” has the meaning set forth in Section 4.3.

“Eligible Market” means any of the New York Stock Exchange, Inc., the NYSE MKT, the NASDAQ Global Select Market, the NASDAQ Global Market or the NASDAQ Capital Market.

“End Date” has the meaning set forth in Section 7.1.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Excluded Event” has the meaning set forth in Section 6.1(e).

“GAAP” has the meaning set forth in Section 3.1(g).

“Indemnified Party” has the meaning set forth in Section 6.4(c).

“Indemnifying Party” has the meaning set forth in Section 6.4(c).

“Initial Filing Date” means May 23, 2016, the date that is thirty-five (35) days after April 18, 2016, the anticipated release date of the Company’s earnings release in respect of the first quarter of 2016.

“Investment Percentage” has the meaning set forth in the Recitals.

“Investor Registration Statement” means the Registration Statement in respect of the Registrable Securities held by the Investor, as described in Section 6.1(a).

 

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“Lien” means any lien, charge, claim, security interest, encumbrance, right of first refusal or other restriction.

“Losses” means any and all losses, claims, damages, liabilities, settlement costs and expenses, including, without limitation reasonable attorneys’ fees.

“Material Adverse Effect” means (i) a material adverse effect on the condition (financial or otherwise), results of operations, assets, business or prospects of the Company and the Subsidiaries, taken as a whole, or (ii) a material and adverse impairment of the Company’s ability to perform its obligations under any of the Transaction Documents.

“Options” means any outstanding rights, warrants or options to subscribe for or purchase Common Stock.

“Participation Deadline” has the meaning set forth in Section 4.6(c).

“Participation Maximum” has the meaning set forth in Section 4.6(a).

“Participation Notice” has the meaning set forth in Section 4.6(c).

“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.

“Pre-Notice” has the meaning set forth in Section 4.6(b).

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

“Prospectus” means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus.

“Purchase Price” has the meaning set forth in Section 2.1.

“Registrable Securities” means the Securities issued or issuable pursuant to the Transaction Documents, together with any securities issued or issuable upon any stock split, dividend or other distribution, recapitalization or similar event with respect to the foregoing.

“Registration Statement” means each registration statement required to be filed under Article VI, and, in each case, the Prospectus, amendments and supplements to such registration statement or Prospectus, including pre- and post-effective amendments, all exhibits thereto, and all material incorporated by reference or deemed to be incorporated by reference in such registration statement.

 

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“Regulation D” has the meaning set forth in the Recitals.

“Repurchase Trigger Event” has the meaning set forth in Section 4.7.

“Required Effectiveness Date” means July 7, 2016, the date which is 80 days after April 18, 2016, the anticipated release date of the Company’s earnings release in respect of the first quarter of 2016.

“Rule 144,” “Rule 415,” “Rule 424,” means Rule 144, Rule 415 and Rule 424, respectively, promulgated by the SEC pursuant to the Securities Act, as such Rules may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.

“Rule 506” has the meaning set forth in Section 3.1(i).

“SEC” has the meaning set forth in the Recitals.

“Securities” has the meaning set forth in the Recitals.

“Securities Act” has the meaning set forth in the Recitals.

“SEC Reports” has the meaning set forth in Section 3.1(g).

“Short Sales” has the meaning set forth in Section 3.2(i).

“Subsequent Financing” has the meaning set forth in Section 4.6(a).

“Subsequent Financing Notice” has the meaning set forth in Section 4.6(b).

“Subsidiary” means any Significant Subsidiary (which for purposes of this Agreement has the meaning ascribed to such term in Regulation S-X under the Exchange Act) of the Company.

“Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded on its primary Trading Market, or (b) if the Common Stock is not then listed or quoted and traded on its primary Trading Market, then a day on which trading of the Common Stock occurs on an Eligible Market, or (c) if the Common Stock is not listed or quoted as set forth in clauses (a) or (b) hereof, any Business Day.

“Trading Market” means any Eligible Market, or any national securities exchange, market or trading or quotation facility on which the Common Stock is then listed or quoted.

“Transaction” has the meaning set forth in Section 3.2(i).

“Transaction Documents” means this Agreement and the exhibits attached hereto, and the Transfer Agent Instructions.

 

-4-

“Transfer Agent” means American Stock Transfer & Trust Company, or any successor transfer agent for the Company.

“Transfer Agent Instructions” means, with respect to the Company, the Irrevocable Transfer Agent Instructions, in the form of Exhibit A, executed by the Company and delivered to and acknowledged in writing by the Transfer Agent.

ARTICLE II

PURCHASE AND SALE

2.1          Closing. Subject to the terms and conditions set forth in this Agreement, at the Closing the Company shall issue and sell to the Investor, and the Investor shall purchase from the Company, 1,754,385 Common Shares at a price of $2.85 per Common Share, for an aggregate purchase price of $4,999,997.25 (the “Purchase Price”). The date and time of the Closing and shall be 11:00 a.m., San Francisco, California time, on the Closing Date. The Closing shall take place at the San Francisco, California offices of Crowell & Moring, LLP, counsel to the Company. Settlement for the sale of the Common Shares will occur on March 24, 2016.

2.2          Closing Deliveries.

(a) At the Closing, the Company shall deliver or cause to be delivered to the Investor the following:

(i) one or more stock certificates (or copies thereof provided by the Transfer Agent), bearing the legends provided in Section 4.1(b) hereof, evidencing 1,754,385 Common Shares registered in the name of the Investor (or its designee); and

(ii) duly executed Transfer Agent Instructions acknowledged by the Company’s transfer agent.

(b) At the Closing, the Investor shall deliver or cause to be delivered to the Company the Purchase Price in United States dollars and in immediately available funds, by wire transfer to an account designated in writing to the Investor by the Company for such purpose at least two (2) Business Days prior to the Closing Date.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1          Representations and Warranties of the Company. The Company hereby represents and warrants to the Investor and the Agent as follows (which representations and warranties shall be deemed to apply, where appropriate, to each Subsidiary of the Company):

(a) Organization and Qualification. Each of the Company and the Subsidiaries is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite legal 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 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 do 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, would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.

 

-5-

(b) Authorization; Enforcement. The Company has the requisite corporate authority to enter into and to consummate the transactions contemplated by each of the Transaction Documents to which it is a party and otherwise to carry out its obligations hereunder and thereunder. The execution and delivery of each of the Transaction Documents to which it is a party by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all necessary corporate action on the part of the Company and no further consent or action is required by the Company, its Board of Directors or its stockholders. Each of the Transaction Documents to which it is a party has been (or upon delivery will be) duly executed by the Company and is, or when delivered in accordance with the terms hereof, will constitute, the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, and (ii) the effect of rules of law governing the availability of specific performance and other equitable remedies.

(c) No Conflicts. The execution, delivery and performance of the Transaction Documents to which it is a party by the Company and the consummation by the Company of the 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, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, 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, except to the extent that such conflict, default, termination, amendment, acceleration or cancellation right would not reasonably be expected to have a Material Adverse Effect, or (iii) 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 any Subsidiary is subject (including, assuming the accuracy of the representations and warranties of the Investor set forth in Section 3.2 hereof, federal and state securities laws and regulations and the rules and regulations of any self-regulatory organization to which the Company or its securities are subject, including all applicable Trading Markets), or by which any property or asset of the Company or any Subsidiary is bound or affected, except to the extent that such violation would not reasonably be expected to have a Material Adverse Effect.

(d) 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 this Agreement, other than: (i) the filings required by the rules and regulations of the SEC and the filing of Form D with the SEC, (ii) the notice and/or application(s) to each applicable Trading Market for the issuance and sale of the Securities and the listing of the Securities for trading thereon in the time and manner required thereby, and (iii) such filings as are required to be made under applicable state securities laws.

 

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(e) The Securities. The Securities are duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all Liens and will not be subject to preemptive or similar rights of stockholders (other than those imposed by the Investor). The Company has a sufficient number of authorized shares of Common Stock for the issuance of the Securities. The offer, issuance and sale of the Securities to the Investor pursuant to the Agreement, are exempt from the registration requirements of the Securities Act.

(f) Capitalization of the Company. The authorized capital stock of the Company is as described in the Company’s Annual Report on Form 10-K filed with the SEC on March 14, 2016. As stated therein, the number of shares of Common Stock outstanding as of February 26, 2016 was 44,811,907 shares, and the Company held 701,754 shares as of December 31, 2015 as treasury stock. All issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable, were not issued in violation of and are not subject to any right of rescission, right of first refusal or preemptive right, and have been offered, issued, sold and delivered by the Company in compliance with all requirements of applicable law.

(g) SEC Reports; Financial Statements; Internal Control. 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 twenty-four (24) months preceding the date hereof 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. Such reports, schedules, forms, statements and other documents required to be filed by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, together with any materials filed or furnished by the Company under the Exchange Act, whether or not any such reports were required being collectively referred to herein as the “SEC Reports” and, together with this Agreement, the “Disclosure Materials”. As of their respective dates, the SEC Reports filed by the Company complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed by the Company, 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 comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC 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, the notes thereto and except that unaudited financial statements may not contain all footnotes required by GAAP or may be condensed or summary statements, and fairly present in all material respects the consolidated 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, year-end audit adjustments. All material agreements to which the Company or any Subsidiary is a party or to which the property or assets of the Company or any Subsidiary are subject are included as part of or identified in the SEC Reports, to the extent such agreements are required to be included or identified pursuant to the rules and regulations of the SEC. The Company maintains a system of internal accounting control to provide reasonable assurance that transactions are executed in accordance with management’s general or specific authorizations.

 

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(h) No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Affiliates, nor any Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any placement agent’s fees, financial advisory fees, or brokers’ commission (other than for persons engaged by the Investor or its investment advisor) relating to or arising out of the issuance of the Securities pursuant to this Agreement. The Company shall pay, and hold the Investor harmless against, any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising in connection with any such claim for fees arising out of the issuance of the Securities pursuant to this Agreement. The Company acknowledges that it has engaged Cowen and Company, LLC as its exclusive placement agent (the “Agent”) in connection with the sale of the Securities. Other than the Agent, the Company has not engaged any placement agent or other agent in connection with the sale of the Securities.

(i) Rule 506 Compliance. The Company is not disqualified from relying on Rule 506 of Regulation D under the Securities Act (“Rule 506”) for any of the reasons stated in Rule 506(d) in connection with the issuance and sale of the Common Shares to the Investor pursuant to this Agreement. The Company has exercised reasonable care, including without limitation, conducting a factual inquiry that is appropriate in light of the circumstances, into whether any such disqualification under Rule 506(d) exists. The Company has furnished to the Investor, a reasonable time prior to the date hereof, a description in writing of any matters that would have triggered disqualification under Rule 506(d) but which occurred before September 23, 2013, in each case, in compliance with the disclosure requirements of Rule 506(e). The Company has exercised reasonable care, including without limitation, conducting a factual inquiry that is appropriate in light of the circumstances, into whether any such disqualification under Rule 506(d) would have existed and whether any disclosure is required to be made to Investor under Rule 506(e). Any outstanding securities of the Company (of any kind or nature) that were issued in reliance on Rule 506 at any time on or after September 23, 2013 have been issued in compliance with Rule 506(d) and (e) and no party has any reasonable basis for challenging any such reliance on Rule 506 in connection therewith.

(j) Private Placement.  Neither the Company nor any of its Affiliates nor, any Person acting on the Company’s behalf has, directly or indirectly, at any time within the past six months, made any offer or sale of any security or solicitation of any offer to buy any security under circumstances that would (i) eliminate the availability of the exemption from registration under Regulation D under the Securities Act in connection with the offer and sale by the Company of the Securities as contemplated hereby or (ii) cause the offering of the Securities pursuant to the Transaction Documents to be integrated with prior offerings by the Company for purposes of any applicable law, regulation or stockholder approval provisions, including, without limitation, under the rules and regulations of any Trading Market. The sale and issuance of the Securities hereunder does not contravene the rules and regulation of any applicable Trading Market on which the Common Stock is listed or quoted.

 

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(k) Investment Act. The Company is not required to be registered as, and is not an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.

(l) Form S-3 Eligibility. The Company is eligible to register the Securities for resale by the Investor using Form S-3 promulgated under the Securities Act.

(m) 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 SEC is contemplating terminating such registration. The Company has not, in the twenty-four (24) months preceding the date hereof, received notice (written or oral) 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 in compliance with all such listing and maintenance requirements.

(n) Acknowledgment Regarding Investors’ Purchase of Securities. The Company acknowledges and agrees that the Investor does not make and has not made any representations or warranties with respect to the transactions contemplated hereby other than those set forth in the Transaction Documents. Based upon the assumption that the transactions contemplated by this Agreement are consummated in all material respects in conformity with the Transaction Documents, the Company acknowledges and agrees that the Investor is acting solely in the capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby and thereby. The Company further acknowledges that the Investor is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this Agreement and the transactions contemplated hereby and any advice given by the Investor or any of its representatives or agents in connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to the Investor’s purchase of the Securities. The Company further represents to the Investor that the Company’s decision to enter into this Agreement has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.

(o) Manipulation of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any action designed to cause or to result, or that could reasonably be expected to cause or 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) other than the Agent, sold, bid for, purchased, or paid any compensation for soliciting purchases of, any of the Securities, or (iii) other than the Agent, paid or agreed to pay to any person any compensation for soliciting another to purchase any other securities of the Company.

 

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3.2          Representations, Warranties and Covenants of the Investor. The Investor hereby represents, warrants and covenants to the Company and the Agent as follows:

(a) Organization; Authority. The Investor is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate, partnership or other 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 purchase by the Investor of the Securities hereunder has been duly authorized by all necessary corporate, partnership or other action on the part of the Investor. This Agreement has been duly executed and delivered by the Investor and constitutes the valid and binding obligation of the Investor, enforceable against it in accordance with its terms, except as may be limited by (i) applicable bankruptcy, insolvency, reorganization or other laws of general application relating to or affecting the enforcement of creditors rights generally, and (ii) the effect of rules of law governing the availability of specific performance and other equitable remedies.

(b) No Public Sale or Distribution. The Investor is (i) acquiring the Securities in the ordinary course of business for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered under the Securities Act or under an exemption from such registration and in compliance with applicable federal and state securities laws, and the Investor does not have a present arrangement to effect any distribution of the Securities to or through any person or entity; provided, however, that by making the representations herein, the Investor does not agree to hold any of the Securities for any minimum or other specific term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement or an exemption under the Securities Act and pursuant to the applicable terms of the Transaction Documents.

(c) Investor Status. At the time the Investor was offered the Securities, it was, and at the date hereof it is, (i) an “accredited investor” as defined in Rule 501(a) under the Securities Act and (ii) an “institutional investor” as defined in Financial Industry Regulatory Authority Rule 5110(d)(4)(B). The Investor is not a registered broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. or an entity engaged in the business of being a broker dealer. The Investor is not affiliated with any broker dealer registered under Section 15(a) of the Exchange Act, or a member of the Financial Industry Regulatory Authority, Inc. or an entity engaged in the business of being a broker dealer.

(d) Experience of the Investor. The Investor, 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. The Investor understands that it must bear the economic risk of this investment in the Securities indefinitely, and is able to bear such risk and is able to afford a complete loss of such investment.

 

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(e) Access to Information. The Investor acknowledges that it has reviewed the Disclosure Materials and has been afforded: (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, the Company and its representatives concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities; (ii) access to information about the Company and the Subsidiaries and their respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Neither such inquiries nor any other investigation conducted by or on behalf of the Investor or its representatives or counsel shall modify, amend or affect the Investor’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction Documents. The Investor acknowledges that either it has access to the SEC Reports or has received copies of the SEC Reports.

(f) General Solicitation. The Investor 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, broadcast over television or radio, disseminated over the Internet or presented at any seminar or, to its knowledge, any other general solicitation or general advertisement.

 

(g) No Governmental Review. The Investor understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

(h) No Conflicts. The execution, delivery and performance by the Investor of this Agreement and the consummation by the Investor of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of the Investor or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which the Investor is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to the Investor, except in the case of clauses (ii) and (iii) above, for such that are not material and do not otherwise affect the ability of the Investor to consummate the transactions contemplated hereby.

(i) Prohibited Transactions. No Investor, directly or indirectly, and no Person acting on behalf of or pursuant to any understanding with the Investor, has engaged in any purchases or sales of any securities, including any derivatives, of the Company (including, without limitation, any Short Sales involving any of the Company’s securities) (a “Transaction”) since the time that the Investor was first contacted by the Company, the Agent or any other Person regarding an investment in the Company. The Investor covenants that neither it nor any Person acting on its behalf or pursuant to any understanding with the Investor will engage, directly or indirectly, in any Transactions prior to the time the transactions contemplated by this Agreement are publicly disclosed. “Short Sales” include, without limitation, all “short sales” as defined in Rule 200 promulgated under Regulation SHO under the Exchange Act and all types of direct and indirect stock pledges, forward sale contracts, options, puts, calls, short sales, swaps, derivatives and similar arrangements (including on a total return basis), and sales and other transactions through non-U.S. broker-dealers or foreign regulated brokers.

 

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(j) Restricted Securities. The Investor understands that the Securities are characterized as “restricted securities” under the U.S. federal securities laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act only in certain limited circumstances.

(k) Legends. The Investor understands that, except as otherwise provided in Section 4.1(b), certificates evidencing such Securities shall bear the legends set forth in Section 4.1(b).

(l) No Legal, Tax or Investment Advice. The Investor understands that nothing in this Agreement or any other materials presented by or on behalf of the Company to the Investor in connection with the purchase of the Securities constitutes legal, tax or investment advice. The Investor has consulted such legal, tax and investment advisors as it, in its sole discretion, has deemed necessary or appropriate in connection with its purchase of the Securities. The Investor understands that the Agent has acted solely as the agent of the Company in this placement of the Securities and not to the Investor, and that the Agent makes no representation or warranty with regard to the merits of this transaction or as to the accuracy of any information the Investor may have received in connection therewith. The Investor acknowledges that he has not relied on any information or advice furnished by or on behalf of the Agent.

ARTICLE IV

OTHER AGREEMENTS OF THE PARTIES

4.1          Transfer Restrictions.

(a) The Investor covenants that it will not transfer any Securities (i) until the earlier of (x) the effectiveness of the Investor Registration Statement or (y) the date that is six months after the Closing Date that the Securities may be transferred pursuant to Rule 144 promulgated under the Securities Act or (ii) at any time that the Investor is in possession of material nonpublic information regarding the Company. The Investor further covenants that it will dispose of Securities only pursuant to an effective Registration Statement under, and in compliance with the requirements of, the Securities Act or pursuant to exemption from the registration requirements of the Securities Act under Rule 144, and in compliance with any applicable state securities laws. In connection with any transfer of pursuant to Rule 144, among any other requirement of this Agreement, the Company may require the transferor to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration under the Securities Act. Notwithstanding the foregoing, the Company hereby consents to and agrees to register on the books of the Company and with its Transfer Agent, without any such legal opinion, except to the extent that the Transfer Agent requests such legal opinion, any transfer of Securities by the Investor to an Affiliate thereof, provided that the transferee certifies to the Company that it is an “accredited investor” as defined in Rule 501(a) under the Securities Act and provided that such Affiliate does not request any removal of any existing legends on any certificate evidencing the Securities.

 

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(b) The Investor agrees to the imprinting, until no longer required by this Section 4.1(b), of the following legend on any certificate evidencing any of the Securities:

THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF A SECURITIES PURCHASE AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, DATED MARCH 21, 2016, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY.

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”), OR ANY APPLICABLE STATE SECURITIES LAWS 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 COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS OR BLUE SKY LAWS.

Upon the written request of the Investor and subject to the provisions of this Section 4.1, the legend set forth above shall be removed and the Company shall as promptly as reasonably practicable issue a certificate without such legend to the holder of the Securities upon which it is stamped or issue to such holder by electronic delivery at the applicable balance account of The Depository Trust Company (DTC), if, unless otherwise required by state securities laws, (i) such Securities are registered for resale under the Securities Act, (ii) in connection with a sale, assignment or other transfer, such holder provides the Company with an opinion of counsel, the form and substance of which opinion shall be reasonably acceptable to the Company, that the sale, assignment or transfer of the Securities may be made without registration under the applicable requirements of the Securities Act or (iii) such holder provides the Company with reasonable assurance that the Securities can be sold, assigned or transferred pursuant to Rule 144 or have been sold under Rule 144.

4.2          Furnishing of Information. Until the date that the Investor may sell all of the Common Shares issued to it without restriction or limitation under Rule 144 of the Securities Act (or any successor provision) (including, without limitation, the requirement to be in compliance with Rule 144(c)(1)), the Company covenants to use its commercially reasonable efforts 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.

 

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4.3          Securities Laws Disclosure; Publicity. The Company shall within four business days of the date of this Agreement file a Current Report on Form 8-K with the SEC (the “8-K Filing”) and press release describing all material terms of the transaction contemplated by the Transaction Documents and shall include this Agreement, and such exhibits as the Company in its sole discretion deems necessary or appropriate, as an exhibit such Current Report on Form 8-K. Thereafter, the Company shall timely file any filings and notices required by the SEC or applicable law with respect to the transactions contemplated hereby and provide notice of the filing thereof to the Investor promptly after such filing. The Company shall not, and shall cause each of its Subsidiaries and its Affiliates and each of their respective officers, directors, employees and agents not to, provide the Investor with any material nonpublic information regarding the Company or any of its Subsidiaries from and after the issuance of the above referenced press release without the express consent of the Investor.

4.4          Use of Proceeds. The Company intends to use the net proceeds from the sale of the Securities for working capital and general corporate purposes. The Company also may use a portion of the net proceeds, currently intended for general corporate purposes, to acquire or invest in entities, technologies, products or services that complement its business.

4.5          Form D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation D. 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 Investor at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States (or to obtain an exemption from such qualification). The Company shall make all filings and reports relating to the offer and sale of the Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the Closing Date.

4.6          Participation in Future Financing.

(a) From the date of the filing of the Investor Registration Statement until the second anniversary of the Closing Date, prior to any issuance by the Company of Common Stock in any (x) offering pursuant to an effective registration statement or (y) private placement (each, a “Subsequent Financing”) occurring during such period of time, the Investor shall have the right to purchase its pro rata percentage, based on the Investor’s then current ownership of the outstanding Common Stock (whether acquired as the Common Shares or otherwise), of the equity securities offered in the Subsequent Financing (the “Participation Maximum”), on the same terms, conditions and price provided for in the Subsequent Financing; provided, that, unless otherwise agreed in writing by the Company, the Participation Maximum (i) shall in no event exceed the Investment Percentage of the outstanding shares of the Common Stock on a post-offering closing basis, and (ii) shall be reduced to the extent required, if any, (1) by the principal Trading Market in order for the Company to comply with the listing agreement for such Trading Market and (2) to ensure that the Investor’s beneficial ownership (as defined under Section 13(d) of the Exchange Act) of the Common Stock, together with the beneficial ownership of its Affiliates and any Person acting in concert with the Investor, does not equal or exceed ten percent (10%) of the shares of Common Stock then outstanding (that is, the Investor would not constitute an “Acquiring Person” under the Company’s Amended and Restated Rights Agreement, dated December 16, 2014).

 

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(b) As soon as practicable prior to the Subsequent Financing, the Company shall deliver to the Investor a written notice of its intention to effect a Subsequent Financing (“Pre-Notice”), which Pre-Notice shall ask the Investor if it wants to review the details of such financing (such additional notice, a “Subsequent Financing Notice”). Upon the request of the Investor, and only upon the request by the Investor, for a Subsequent Financing Notice, the Company shall promptly, but no later than one (1) Trading Day after such request, deliver a Subsequent Financing Notice to the Investor. The Subsequent Financing Notice shall describe in reasonable detail the proposed terms of such Subsequent Financing that are available at such time that the Subsequent Financing Notice is delivered (which shall include pricing of the securities only if known at such time), recognizing that if the Subsequent Financing is an offering pursuant to an effective registration statement, that there may be minimal details available at the time such Subsequent Financing Notice is delivered as terms will not be set until final pricing negotiations are conducted with the underwriter(s) or placement agent(s).

(c) (i) If the Subsequent Financing is a private placement and the Investor desires to participate in such Subsequent Financing, it must provide written notice to the Company by not later than 5:30 p.m. (San Francisco, California time) on the third Business Day following the date of its receipt of the Subsequent Financing Notice (the “Participation Deadline”), stating the amount of the Investor’s participation, and that the Investor has such funds ready, willing, and available for investment on the terms set forth in the Subsequent Financing Notice (such information, the “Participation Notice”). If the Company receives no Participation Notice from the Investor as of the Participation Deadline, the Investor shall be deemed to have notified the Company that it does not elect to participate, and the Company may effect the Subsequent Financing on the terms and with the Persons set forth in the Subsequent Financing Notice without inclusion of the Investor.

(ii) If the Subsequent Financing is an offering pursuant to an effective registration statement and the Investor desires to participate in such Subsequent Financing, it must provide a written notice to the Company and underwriter(s)/placement agent(s) by the Participation Deadline of its desire to participate in the Subsequent Financing and stating that it will be available to the underwriter(s)/placement agent(s) immediately after (and the same day as) the pricing of the Subsequent Financing (and the underwriter(s)/placement agent(s) shall provide at such time to the Investor the price terms of the Subsequent Financing) to provide the Participation Notice to the Company and underwriter(s)/placement agent(s) by not later than 5:30 p.m. (San Francisco, California time) on the day of the pricing of the Subsequent Financing. If the Company and underwriter(s)/placement agent(s) receive no Participation Notice from the Investor by such time on the day of the pricing of the Subsequent Financing, the Investor shall be deemed to have notified the Company that it does not elect to participate, and the Company may effect the Subsequent Financing on the terms negotiated with the underwriter(s)/placement agent(s) without inclusion of the Investor.

(d) If the Investor provides a valid Participation Notice to the Company prior to the time specified in Section 4.6(c), the Company shall include the Investor as a participant in the Subsequent Financing, up to the lesser of (i) the amount that the Investor has specified in the Participation Notice and (ii) Participation Maximum, as may be limited under Section 4.6(a), on the same terms and conditions applicable to the Person or Persons through or with whom such Subsequent Financing is proposed to be effected.

 

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(e) For the avoidance of doubt, this Section 4.6 shall not apply in respect of the offer, sale or issuance of any Common Stock: (i) in connection with any stock option or employee benefit plan that is outstanding as of the Closing Date or subsequently approved by the Board of Directors of the Company; (ii) upon the conversion, exercise or exchange of any Options; (iii) in connection with bona fide strategic transactions, stock acquisitions, mergers, asset acquisitions, joint ventures or similar transactions approved by the Board of Directors of the Company occurring after the Closing Date in each case with non-affiliated third parties and otherwise on an arm’s-length basis; provided, that, the purpose of such issuance is not to raise capital; or (iv) in connection with any stock split, stock dividend, recapitalization or similar transaction by the Company. Without the Investor’s written consent, the Company shall not prior to the second anniversary of the Closing Date issue any Options to any other investor that is not otherwise carved out by this Section 4.6(e) without concurrently issuing shares of the Common Stock to the same investor.

4.7          Repurchase. In the event that on or before the date that is six months after the Closing Date, any federal agency or other governmental body of the United States takes any action or issues any order or ruling with the effect of preventing or invalidating the Investor’s purchase or holding of the Common Shares under this Agreement or requiring any mitigation measures to address the concerns of the governmental body that may affect the Investor’s interests or rights with respect to the Securities (the “Repurchase Trigger Event”), the Company shall, within two (2) Business Days after the occurrence of the Repurchase Trigger Event, (i) repurchase the Securities from the Investor at a repurchase price equal to the Purchase Price by wire transfer of United States dollars in immediately available funds to an account designated by the Investor, and (ii) pay the Investor (x) a fee which shall accrue, from the Closing Date and until the payment date of such fee, at a rate of four-tenths of one percent (0.4%) per month based on the Purchase Price (pro-rated for any partial month), and (y) an amount, up to a limit of US$15,000, to reimburse the Investor for its expenses and costs actually incurred, including fees and expenses for lawyers, accountants, auditors, financial advisors, technical consultants and other professions, associated with its purchase of the Common Shares.

4.8          Listing of Common Stock. The Company hereby agrees to use commercially reasonable efforts to maintain the listing or quotation of the Common Stock on the Trading

Market on which it is currently listed or another Eligible Market for a minimum of three (3) years following the date of the Closing.

ARTICLE V

CONDITIONS

5.1          Conditions Precedent to the Obligations of the Investor. The obligation of the Investor to acquire the Common Shares at the Closing is subject to the satisfaction or waiver by the Investor, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects (except for those representations and warranties which are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing as though made on and as of such date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date);

 

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(b) No Order. No governmental authority shall have enacted, issued, promulgated, enforced or entered any law or governmental order (whether temporary, preliminary or permanent) that has the effect of making the transactions contemplated by this Agreement illegal or otherwise restraining or prohibiting the consummation of such transactions;

(c) No Material Adverse Effect.  There shall have been no Material Adverse

Effect;

(d) Transaction Documents. The Company shall have delivered to the Investor duly executed counterparts to the Transaction Documents; and

(e) Performance. The Company shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing.

5.2          Conditions Precedent to the Obligations of the Company. The obligation of the Company to sell the Common Shares at the Closing is subject to the satisfaction or waiver by the Company, at or before the Closing, of each of the following conditions:

(a) Representations and Warranties. The representations and warranties of the Investor contained herein shall be true and correct in all material respects (except for those representations and warranties which are qualified by materiality or Material Adverse Effect, which shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made on and as of such date (except for representations and warranties that speak as of a specific date, which shall be true and correct as of such specified date); and

(b) Performance. The Investor shall have performed, satisfied and complied in all material respects with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Investor at or prior to the Closing.

ARTICLE VI

REGISTRATION RIGHTS

6.1          Registration Statement.

(a) The Company shall prepare and file with the SEC the Investor Registration Statement covering the resale of all Registrable Securities of the Investor for an offering to be made on a continuous basis pursuant to Rule 415. The Investor Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance with the Securities Act and the Exchange Act) and shall contain (except if otherwise directed by the Investor or requested by the SEC) the “Plan of Distribution” in substantially the form attached hereto as Exhibit B, as may be amended by the Investor from time to time prior to the filing of the Investor Registration Statement. The Company shall use its commercially reasonable best efforts to cause the Investor Registration Statement to be filed with the SEC on or before the Initial Filing Date.

 

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(b) The Company shall use its commercially reasonable efforts to cause the Investor Registration Statement to be declared effective by the SEC as promptly as possible after the filing thereof, but in any event prior to the Required Effectiveness Date, and shall use its commercially reasonable efforts to keep the Investor Registration Statement continuously effective under the Securities Act until the earlier of the date that all Registrable Securities covered by the Investor Registration Statement have been sold or can be sold publicly without restriction or limitation under Rule 144 (including, without limitation, the requirement to be in compliance with Rule 144(c)(1)) (the “Effectiveness Period”).

(c) The Company shall notify the Investor in writing promptly (and in any event within two Trading Days) after receiving notification from the SEC that the Investor Registration Statement has been declared effective.

(d) Should the Investor Registration Statement not be declared effective by the SEC on or prior to its Required Effectiveness Date, then on the following Trading Day, and on every monthly anniversary of such day thereafter thereof until the earlier of (i) the Investor Registration Statement has been declared effective or (ii) such time as all of the Registrable Securities may be transferred by the Investor pursuant to Rule 144 (the occurrence of clause (i) or (ii) being referred to as the “Delay Cure”), the Company shall pay to the Investor, on a monthly basis (and pro-rated for any partial month), an amount in cash, as liquidated damages and not as a penalty, equal to four-tenths of one percent (0.4%) of the Purchase Price of the Registrable Securities then held by the Investor. The payment to which the Investor shall be entitled pursuant to this Section 6.1(d) is referred to herein as the “Delay Payment.” In the event the Company fails to make a Delay Payment in a timely manner, such Delay Payment shall bear interest at the rate of one percent (1.0%) per month (pro-rated for partial months) until paid in full. All pro-rated calculations made pursuant to this paragraph shall be based upon the actual number of days in such pro-rated month.

(e) Notwithstanding anything in this Agreement to the contrary, after 60 consecutive Trading Days of continuous effectiveness of the Investor Registration Statement, the Company may, by written notice to the Investor, suspend sales under the Investor Registration Statement (such suspension, the “Excluded Event”), after the Effective Date thereof and/or require that the Investor immediately cease the sale of shares of Common Stock pursuant thereto and/or defer the filing of any subsequent Registration Statement if the Company is engaged in a material merger, acquisition or sale and the Board of Directors determines in good faith, by appropriate resolutions, that, as a result of such activity, (A) it would be materially detrimental to the Company (other than as relating solely to the price of the Common Stock) to maintain a Registration Statement at such time or (B) it is in the best interests of the Company to suspend sales under such registration at such time. Upon receipt of such notice, the Investor shall immediately discontinue any sales of Registrable Securities pursuant to such registration until the Investor is advised in writing by the Company that the current Prospectus or amended Prospectus, as applicable, may be used. In no event, however, shall this right be exercised to suspend sales beyond the period during which (in the good faith determination of the Company’s Board of Directors) the failure to require such suspension would be materially detrimental to the Company. The Company’s rights under this Section 6(e) may be exercised for a period of no more than 20 Trading Days at a time and not more than three times in any twelve-month period. Immediately after the end of any suspension period under this Section 6(e), the Company shall take all necessary actions (including filing any required supplemental prospectus) to restore the effectiveness of the Investor Registration Statement and the ability of the Investor to publicly resell their Registrable Securities pursuant to such effective Investor Registration Statement. For the avoidance of any doubt, the restrictions under this Section 6(e) shall not be applicable to the sale of shares of Common Stock by the Investor pursuant to Rule 144.

 

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6.2          Registration Procedures. In connection with the Company’s registration obligations hereunder, the Company shall:

(a) Not less than ten (10) Business Days prior to the filing of the Investor Registration Statement or any related Prospectus or any amendment or supplement thereto, furnish via email to the Investor copies of all such documents proposed to be filed, which documents (other than any document that is incorporated or deemed to be incorporated by reference therein) will be subject to the reasonable and timely review of the Investor. The Company shall reflect in each such document when so filed with the SEC such comments regarding the Investor and the plan of distribution as the Investor may reasonably and promptly propose no later than two Trading Days after the Investor has been so furnished with copies of such documents as aforesaid.

(b) (i) Subject to Section 6.1(e), prepare and file with the SEC such amendments, including post-effective amendments, to the Investor Registration Statement and the Prospectus used in connection therewith as may be necessary to keep the Investor Registration Statement continuously effective, as to the applicable Registrable Securities for the Effectiveness Period and prepare and file with the SEC such additional Registration Statements in order to register for resale under the Securities Act all of the Registrable Securities; (ii) cause the related Prospectus to be amended or supplemented by any required Prospectus supplement, and as so supplemented or amended to be filed pursuant to Rule 424; and (iii) comply in all material respects with the provisions of the Securities Act and the Exchange Act with respect to the disposition of all Registrable Securities covered by the Investor Registration Statement during the applicable period in accordance with the intended methods of disposition by the Investor set forth in the Investor Registration Statement as so amended or in such Prospectus as so supplemented.

 (c) Notify the Investor as promptly as reasonably possible, and if requested by the Investor, confirm such notice in writing no later than two Trading Days thereafter, of any of the following events: (i) the SEC notifies the Company whether there will be a “review” of the Investor Registration Statement; (ii) the Investor Registration Statement or any post-effective amendment is declared effective; (iii) the SEC issues any stop order suspending the effectiveness of the Investor Registration Statement or initiates any Proceedings for that purpose; (iv) the Company receives notice of any suspension of the qualification or exemption from qualification of any Registrable Securities for sale in any jurisdiction, or the initiation or threat of any Proceeding for such purpose; or (v) the financial statements included in the Investor Registration Statement become ineligible for inclusion therein or the Investor Registration Statement or Prospectus or other document contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

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(d) Use its commercially reasonable efforts to avoid the issuance of or, if issued, obtain the withdrawal of (i) any order suspending the effectiveness of the Investor Registration Statement, or (ii) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction, as soon as possible.

(e) If requested by the Investor, provide the Investor and its legal counsel, without charge, at least one conformed copy of the Investor Registration Statement and each amendment thereto, including financial statements and schedules, and all exhibits to the extent requested (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the SEC.

(f) Promptly deliver to the Investor, without charge, as many copies of the Prospectus or Prospectuses (including each form of prospectus) and each amendment or supplement thereto as the Investor may reasonably request. The Company hereby consents to the use of such Prospectus and each amendment or supplement thereto by the Investor in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto to the extent permitted by federal and state securities laws and regulations.

(g) (i) In the time and manner required by each Trading Market on which the Common Stock is listed, prepare and file with such Trading Market an additional shares listing application covering all of the Registrable Securities; (ii) take all steps necessary to cause such Registrable Securities to be approved for listing on each such Trading Market as soon as possible thereafter; (iii) provide to the Investor evidence of such approval; and (iv) except as a result of the Excluded Events, during the Effectiveness Period, maintain the listing of such Registrable Securities on each such Trading Market or another Eligible Market.

(h) Prior to any public offering of Registrable Securities, use its commercially reasonable efforts to register or qualify or cooperate with the Investor in connection with the registration or qualification (or exemption from such registration or qualification) of such Registrable Securities for offer and sale under the securities or Blue Sky laws of such jurisdictions within the United States as the Investor requests in writing, to keep each such registration or qualification (or exemption therefrom) effective for so long as required, but not to exceed the duration of the Effectiveness Period, and to do any and all other acts or things reasonably necessary or advisable to enable the disposition in such jurisdictions of the Registrable Securities covered by the Investor Registration Statement; provided, however, that the Company shall not be obligated to file any general consent to service of process or to qualify as a foreign corporation or as a dealer in securities in any jurisdiction in which it is not so qualified or to subject itself to taxation in respect of doing business in any jurisdiction in which it is not otherwise so subject.

(i) Cooperate with the Investor to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to the Investor Registration Statement, which certificates shall be free, to the extent permitted by this Agreement and under law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as the Investor may reasonably request.

 

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(j) Upon the occurrence of any event described in Section 6.2(c)(v), as promptly as reasonably possible, prepare a supplement or amendment, including a post-effective amendment, to the Investor Registration Statement or a supplement to the related Prospectus or any document incorporated or deemed to be incorporated therein by reference, and file any other required document so that, as thereafter delivered, neither the Investor Registration Statement nor such Prospectus will contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

(k) Cooperate with any reasonable due diligence investigation undertaken by the Investor in connection with the sale of Registrable Securities, including, without limitation, by making available documents and information; provided that the Company will not deliver or make available to any person, including the Investor, material, nonpublic information unless such recipient requests in advance in writing to receive material, nonpublic information and agrees to keep such information confidential.

(l) Comply with all rules and regulations of the SEC applicable to the registration of the Securities.

(m) It shall be a condition precedent to the obligations of the Company to complete the registration pursuant to this Agreement with respect to the Registrable Securities of the Investor or to make any Delay Payments set forth in Section 6.1(d) to the Investor that the Investor furnish to the Company the information specified to be provided pursuant to Section 7.2 and such other information regarding itself, the Registrable Securities and other shares of Common Stock held by it and the intended method of disposition of the Registrable Securities held by it (if different from the Plan of Distribution set forth on Exhibit B hereto) as shall be reasonably required to effect the registration of such Registrable Securities and shall complete and execute such documents in connection with such registration as the Company may reasonably request.

(n) The Company shall comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Investor in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investor is required to make available a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder.

 

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(o) Not identify the Investor as an underwriter without its prior written consent in any public disclosure or filing with the SEC, the Trading Market or any Eligible Market, and in the event that the Investor is deemed an underwriter by the SEC, such fact shall not relieve the Company of any obligations it has under this Agreement; provided, however, that the foregoing shall not prohibit the Company from including the disclosure found in the “Plan of Distribution” section attached hereto as Exhibit B, as may be amended by the Investor from time to time prior to filing of the Investor Registration Statement, in the Investor Registration Statement. In addition, and notwithstanding anything to the contrary contained herein, if the Company has received a comment by the SEC requiring the Investor to be named as an underwriter in the Investor Registration Statement (which notwithstanding the reasonable best efforts of the Company is not withdrawn by the SEC) and the Investor elects in writing not to be named as a selling stockholder in the Investor Registration Statement, the Investor shall not be entitled to any Delay Payments with respect to such Investor Registration Statement.

6.3          Registration Expenses. The Company shall pay all fees and expenses incident to the performance of or compliance with Article VI of this Agreement by the Company, including without limitation (a) all registration and filing fees and expenses, including without limitation those related to filings with the SEC, any Trading Market, any required filing with the Financial Industry Regulatory Authority by the Agent, and in connection with applicable state securities or Blue Sky laws, (b) printing expenses (including without limitation expenses of printing certificates for Registrable Securities), (c) messenger, telephone and delivery expenses, (d) fees and disbursements of counsel for the Company, (e) fees and expenses of all other Persons retained by the Company in connection with the consummation of the transactions contemplated by this Agreement, and (f) all listing fees to be paid by the Company to the Trading Market.

6.4          Indemnification.

 

(a) Indemnification by the Company. The Company shall, notwithstanding any termination of this Agreement, indemnify and hold harmless the Investor and its officers, directors, partners, members, agents and employees, each Person who controls the Investor (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all Losses, as incurred, arising out of or relating to (i) any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii) any breach of any covenant, agreement or obligation of the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (iii) any cause of action, suit or claim brought or made against such Indemnified Party (as defined in Section 6.4(c) below) by a third party (including for these purposes a derivative action brought on behalf of the Company), arising out of or resulting from (x) execution, delivery, performance or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (y) any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the Securities, or (z) the status of Indemnified Party as holder of the Securities or (iv) any untrue or alleged untrue statement of a material fact contained in the Investor Registration Statement or any Prospectus or form of Company prospectus, preliminary prospectus or amendment or supplement relating thereto, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding the Investor furnished to the Company by the Investor for use therein, or to the extent that such information relates to the Investor or the Investor’s proposed method of distribution of Registrable Securities and was reviewed and approved by the Investor expressly for use in the Registration Statement, or (B) with respect to any prospectus, if the untrue statement or omission of material fact contained in such prospectus was corrected on a timely basis in the prospectus, as then amended or supplemented, if such corrected prospectus was timely made available by the Company to the holder thereof, and the holder thereof seeking indemnity hereunder was advised in writing not to use the incorrect prospectus prior to the use giving rise to Losses.

 

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(b) Indemnification by Investor. The Investor shall indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses (as determined by a court of competent jurisdiction in a final judgment not subject to appeal or review) arising solely out of any untrue statement of a material fact contained in the Investor Registration Statement, any Prospectus, or any form of prospectus, or in any amendment or supplement thereto, or arising out of or relating to any omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any Prospectus or form of prospectus or supplement thereto, in the light of the circumstances under which they were made) not misleading, but only to the extent that such untrue statement or omission is contained in any information so furnished by Investor or its Affiliates, agents or representatives to the Company specifically for inclusion in the Investor Registration Statement or such Prospectus or to the extent that (i) such untrue statements or omissions are based solely upon information regarding the Investor furnished to the Company by the Investor or its Affiliates, agents or representatives expressly for use therein, or to the extent that such information relates to the Investor or its Affiliates or the Investor’s proposed method of distribution of Registrable Securities and was reviewed and expressly approved by the Investor or its Affiliates, agents or representatives expressly for use in the Registration Statement, such Prospectus or such form of Prospectus or in any amendment or supplement thereto. In no event shall the liability of the Investor hereunder be greater in amount than the dollar amount of the net proceeds received by the Investor upon the sale of the Registrable Securities giving rise to such indemnification obligation.

(c) Conduct of Indemnification Proceedings. If any Proceeding shall be brought or asserted against any Person entitled to indemnity hereunder (an “Indemnified Party”), such Indemnified Party shall promptly notify the Person from whom indemnity is sought (the “Indemnifying Party”) in writing, and the Indemnifying Party shall assume the defense thereof, including the employment of counsel reasonably satisfactory to the Indemnified Party and the payment of all fees and expenses incurred in connection with defense thereof; provided, that the failure of any Indemnified Party to give such notice shall not relieve the Indemnifying Party of its obligations or liabilities pursuant to this Agreement, except (and only) to the extent that it shall be finally determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that such failure shall have proximately and materially adversely prejudiced the Indemnifying Party.

 

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An Indemnified Party shall have the right to employ separate counsel in any such Proceeding and to participate in the defense thereof, but the fees and expenses of such counsel shall be at the expense of such Indemnified Party or Parties unless: (i) the Indemnifying Party has agreed in writing to pay such fees and expenses; or (ii) the Indemnifying Party shall have failed within 45 days of receiving notification of a Proceeding from an Indemnified Party to assume the defense of such Proceeding and to employ counsel reasonably satisfactory to such Indemnified Party in any such Proceeding; or (iii) the named parties to any such Proceeding (including any impleaded parties) include both such Indemnified Party and the Indemnifying Party, and such Indemnified Party shall have been advised by counsel that a conflict of interest is likely to exist if the same counsel were to represent such Indemnified Party and the Indemnifying Party (in which case, if such Indemnified Party notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense thereof and the reasonable fees and expenses of separate counsel shall be at the expense of the Indemnifying Party). It being understood, however, that the Indemnifying Party shall not, in connection with any one such Proceeding (including separate Proceedings that have been or will be consolidated before a single judge) be liable for the fees and expenses of more than one separate firm of attorneys at any time for all Indemnified Parties, which firm shall be appointed by a majority of the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any such Proceeding effected without its written consent, which consent shall not be unreasonably withheld. No Indemnifying Party shall, without the prior written consent of the Indemnified Party, effect any settlement of any pending Proceeding in respect of which any Indemnified Party is a party, unless such settlement includes an unconditional release of such Indemnified Party from all liability on claims that are the subject matter of such Proceeding.

All reasonable fees and expenses of the Indemnified Party (including reasonable fees and expenses to the extent incurred in connection with investigating or preparing to defend such Proceeding in a manner not inconsistent with this Section) shall be paid to the Indemnified Party, as incurred, within twenty (20) Trading Days of written notice thereof to the Indemnifying Party (regardless of whether it is ultimately determined that an Indemnified Party is not entitled to indemnification hereunder; provided, that the Indemnifying Party may require such Indemnified Party to undertake to reimburse all such fees and expenses to the extent it is finally judicially determined that such Indemnified Party is not entitled to indemnification hereunder).

(d) Contribution. If a claim for indemnification under Section 6.4(a) or (b) is unavailable to an Indemnified Party (by reason of public policy or otherwise), then each Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses, in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions, statements or omissions that resulted in such Losses as well as any other relevant equitable considerations. The relative fault of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission of a material fact, has been taken or made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action, statement or omission. The amount paid or payable by a party as a result of any Losses shall be deemed to include, subject to the limitations set forth in Section 6.4(c), any reasonable attorneys’ or other reasonable fees or expenses incurred by such party in connection with any Proceeding to the extent such party would have been indemnified for such fees or expenses if the indemnification provided for in this Section was available to such party in accordance with its terms.

 

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The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 6.4(d) were determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to in the immediately preceding paragraph. Notwithstanding the provisions of this Section 6.4(d), the Investor shall not be required to contribute, in the aggregate, any amount in excess of the amount by which the proceeds actually received by the Investor from the sale of the Registrable Securities subject to the Proceeding exceeds the amount of any damages that the Investor has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.

The indemnity and contribution agreements contained in this Section are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties.

6.5          Dispositions. The Investor agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement and shall sell its Registrable Securities in accordance with the Plan of Distribution set forth in the Prospectus. The Investor further agrees that, upon receipt of a notice from the Company of the occurrence of any event of the kind described in Sections 6.2(c)(v), the Investor will discontinue disposition of such Registrable Securities under the Investor Registration Statement (or any amendment or supplement thereto) until the Investor is advised in writing by the Company that the use of the Prospectus, or amended Prospectus, as applicable, may be used. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. The Investor 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 Investor will comply with the provisions of this subsection.

6.6          No Piggyback on Registrations. Neither the Company nor any of its security holders, other than the Investor in such capacity pursuant hereto with respect to the Registrable Securities, may include securities of the Company in the Investor Registration Statement.

ARTICLE VII

MISCELLANEOUS

7.1           Termination. This Agreement may be terminated by the Company or the Investor, by written notice to the other party, if the Closing has not been consummated by the seventh Business Day following the Closing Date (the “End Date”); provided that the right to terminate this Agreement pursuant to this Section shall not be available to a party whose failure to perform any material obligation required to be performed by such party under this Agreement has been a cause of, or results in, the failure of the transactions contemplated hereby to be consummated by the End Date. No such termination pursuant to this Section will affect the right of any party to sue for any breach by the other party (or parties).

 

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7.2          Information of Investor. The Investor agrees to provide the Company with information regarding itself, the Registrable Securities and other shares of Common Stock held by it and the intended method of disposition of the Registrable Securities held by it as shall be reasonably required to effect the registration of such Registrable Securities and complete and execute such documents in connection with such registration as the Company may reasonably request.

7.3          Fees and Expenses. 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 sale and issuance of the Securities.

7.4          Entire Agreement. The Transaction Documents, together with the Exhibits thereto, and the Mutual Nondisclosure Agreement, by and between the Company and the Investor (or its Affiliate), dated March 4, 2016, contain the entire understanding of the Company and the Investor 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. At or after the Closing, and without further consideration, the Company will execute and deliver to the Investor such further documents as may be reasonably requested in order to give practical effect to the intention of the parties under the Transaction Documents.

7.5          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 specified in this Section 7.5 prior to 6:30 p.m. (San Francisco, California 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 specified in this Section on a day that is not a Trading Day or later than 6:30 p.m. (San Francisco, California time) on any Trading Day, (c) the Trading Day following the date of deposit with a nationally recognized overnight courier service, or (d) upon actual receipt by the party to whom such notice is required to be given. The addresses, facsimile numbers and email addresses for such notices and communications are those set forth on the signature pages hereof, or such other address or facsimile number as may be designated in writing hereafter, in the same manner, by any such Person.

7.6           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 Investor or, in the case of a waiver, by the party against whom enforcement of any such waiver 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 either party to exercise any right hereunder in any manner impair the exercise of any such right.

 

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

7.8          Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and permitted assigns. The Company may not assign this Agreement or any rights or obligations hereunder without the prior written consent of the Investor. The Investor may assign its rights under this Agreement to any Person to whom the Investor assigns or transfers any Securities in accordance with this Agreement, provided (i) such transferor agrees in writing with the transferee or assignee to assign such rights, and a copy of such agreement is furnished to the Company after such assignment, (ii) the Company is furnished with written notice of (x) the name and address of such transferee or assignee and (y) the Registrable Securities with respect to which such registration rights are being transferred or assigned, (iii) following such transfer or assignment, the further disposition of such securities by the transferee or assignee is restricted under the Securities Act and applicable state securities laws, (iv) such transferee agrees in writing to be bound, with respect to the transferred Securities, by the provisions hereof that apply to the “Investor” and (v) such transfer shall have been made in accordance with the applicable requirements of this Agreement and with all laws applicable thereto.

7.9          Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of and be binding upon the Company and the Investor and their respective successors and permitted assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person, other than those persons mentioned in the preceding sentence or otherwise explicitly mentioned in this Agreement (including the Agent, which shall be a third party beneficiary with respect to Article III and Section 7.17), any legal or equitable right, remedy or claim under or in respect of this Agreement, or any provisions herein contained, this Agreement and all conditions and provisions hereof being intended to be and being for the sole and exclusive benefit of such persons and for the benefit of no other person; except that each Indemnified Party is an intended third party beneficiary of Section 6.4 and (in each case) may enforce the provisions of such Section directly against the parties with obligations thereunder.

7.10        Governing Law; Venue; Waiver of Jury Trial. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY, ENFORCEMENT AND INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF. THE COMPANY AND INVESTORS HEREBY IRREVOCABLY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF THE STATE AND FEDERAL COURTS SITTING IN THE CITY OF NEW YORK, BOROUGH OF MANHATTAN FOR THE ADJUDICATION OF ANY DISPUTE BROUGHT BY THE COMPANY OR THE INVESTOR HEREUNDER, 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 WAIVE, AND AGREE NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING BROUGHT BY THE COMPANY OR THE INVESTOR, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, OR THAT SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. 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 MANNER PERMITTED BY LAW. THE COMPANY AND INVESTORS HEREBY WAIVE ALL RIGHTS TO A TRIAL BY JURY.

 

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7.11        Survival. The representations and warranties contained herein shall survive the Closing and the delivery of the Securities for the applicable statute of limitations.

7.12        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 email attachment, 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 email-attached signature page were an original thereof.

7.13        Severability. If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

7.14        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, 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 and the execution by the holder thereof of a customary lost certificate affidavit of that fact and an agreement to indemnify and hold harmless the Company for any losses in connection therewith. The applicants for a new certificate or instrument under such circumstances shall also pay any reasonable third-party costs associated with the issuance of such replacement Securities.

 

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7.15        Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Investor and the Company will be entitled to seek 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 described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation (other than in connection with any action for temporary restraining order) the defense that a remedy at law would be adequate.

7.16        Adjustments in Share Numbers and Prices. In the event of any stock split, subdivision, dividend or distribution payable in shares of Common Stock (or other securities or rights convertible into, or entitling the holder thereof to receive directly or indirectly shares of Common Stock), combination or other similar recapitalization or event occurring after the date hereof and prior to the Closing, each reference in any Transaction Document to a number of shares or a price per share shall be amended to appropriately account for such event.

7.17        Independent Nature of Investors’ Investment Decision. The decision of the Investor to purchase Securities pursuant to this Agreement has been made by the Investor independently of any information, materials, statements or opinions as to the business, affairs, operations, assets, properties, liabilities, results of operations, condition (financial or otherwise) or prospects of the Company which may have been made or given by any Person other than the Company or the Agent or their representatives. The Investor acknowledges that no other Person has acted as agent for the Investor in connection with making its investment hereunder and that no other Person will be acting as agent of the Investor in connection with monitoring its investment hereunder.

7.18        Indemnity of Agent. The Investor agrees for the express benefit of the Agent, its Affiliates and representatives, that neither the Agent nor any of its Affiliates or representatives shall (i) have any duties or obligations to the Investor, or (ii) be liable (x) for any action taken, suffered or omitted by the Agent in good faith and reasonably believed to be authorized or within the discretion or rights or powers conferred upon it by this Agreement, the engagement letter, dated March 18, 2016, between the Agent and the Company or any Transaction Document or (y) for  anything  which  the  Agent  may  do  or  refrain  from  doing  in  connection  with  this Agreement or any Transaction Document, except for the Agent’s own willful misconduct, gross negligence or bad faith or that of its Affiliates or representatives.

7.19        Currency. Unless otherwise indicated, all dollar amounts referred to in this Agreement are in United States Dollars. All amounts owing under this Agreement or any Transaction Document shall be paid in US dollars. All amounts denominated in other currencies shall be converted in the US dollar equivalent amount in accordance with the Exchange Rate on the date of calculation. “Exchange Rate” means, in relation to any amount of currency to be converted into US dollars pursuant to this Agreement, the US dollar exchange rate as published in The Wall Street Journal on the relevant date of calculation.

 

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[SIGNATURE PAGES TO 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.

	 	 	
GIGOPTIX, INC.

	 	
 

	 	 
	 	 	 	 
	 	 	
By:

	
/s/ Dr. Avi Katz

	 	 	Name: Dr. Avi Katz
	 	 	Title: Chairman of the Board and
	 	 	Chief Executive Officer
	 	 	 	 
	 	 	Address for Notice:
	 	 	GigOptix, Inc.
	 	 	130 Baytech Drive
	 	 	San Jose, California 95134
	 	 	 	 
	 	 	Email:   akatz@gigoptix.com
	 	 	Telephone No.: 408-522-3178
	 	 	 	 
	 	 	 	 
	 	
With a copy to:

	Jeffrey Selman, Crowell & Moring, LLP
	 	
Email:

	jselman@crowell.com
	 	
Telephone:

	
415-365-7442

 

COMPANY SIGNATURE PAGE

 

Investor Signature Page

 

By its execution and delivery of this signature page, the undersigned Investor hereby joins in and agrees to be bound by the terms and conditions of the Securities Purchase Agreement dated as of March____ , 2016 (the "Purchase Agreement") by and among GigOptix, Inc. and the undersigned Investor and authorizes this signature page to be attached to the Purchase Agreement or counterparts thereof.

 

	 	
PUDONG SCIENCE AND TECHNOLOGY INVESTMENT (CAYMAN) CO., LTD.

	 		
	 	 	 
	 	
By:

	 /s/ Xudong Zhu
	 		Name: Xudong Zhu
	 		Title: Sole Executive Director
	 	 
	 	
Address: 13 Building, No. 439, Chunxiao Rd. Zhangjiang High-tech Park, Pudong, Shanghai 201203, PRC

	 	 
	 	
Telephone No.: 021 5027 6378

	 	 
	 	With a copy to:
	 	 
	 	 Mr. Deqing Meng
	 	Email Address: zhuxudong.pd@me.com
	 	 
	 	
Address: 13 Building, No. 439, Chunxiao Rd. Zhangjiang High-tech Park, Pudong, Shanghai 201203, PRC

	 	 
	 	Telephone No.: 021 5027 6378
	 	 
	 	
 Email Address: mengdq@pdsti.com

 

INVESTOR SIGNATURE PAGE

 

Exhibits:

	A	Company Transfer Agent Instructions

	B	Plan of Distribution

 

Exhibit A

COMPANY TRANSFER AGENT INSTRUCTIONS

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Attention:  [NAME]

		Re:	GigOptix, Inc.

Ladies and Gentlemen:

Reference is made to that certain Securities Purchase Agreement, dated as of March 21, 2016 (the “Agreement”), by and among GigOptix, Inc., a Delaware corporation (the “Company”), and Pudong Science and Technology Investment (Cayman) Co., Ltd., a Cayman Islands investment company, or any affiliates as designated thereby (collectively, the “Investor”), pursuant to which the Company is issuing to the Investor shares (the “Common Shares”) of Common Stock of the Company, par value $0.001 per share (the “Common Stock”).

This letter shall serve as our irrevocable authorization and direction to you (provided that you are the transfer agent of the Company at such time) to issue shares of Common Stock upon transfer or resale thereof.

You acknowledge and agree that so long as you have previously received (a) written confirmation from the Company’s legal counsel that either (i) a registration statement covering resales of the Common Shares has been declared effective by the Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”) and that resales of the Common Shares may be made thereunder, or (ii) sales of the Common Shares may be made in conformity with Rule 144 under the Securities Act (“Rule 144”), (b) if applicable, a copy of such registration statement, and (c) notice from legal counsel to the Company or the Investor that a transfer of Common Shares has been effected either pursuant to the registration statement (and a prospectus delivered to the transferee) or pursuant to Rule 144, then, unless otherwise required by law, within three (3) business days of your receipt of the notice referred to in (c), you shall issue the certificates representing the Common Shares so sold to the transferees registered in the names of such transferees, and such certificates shall not bear any legend restricting transfer of the Common Shares thereby and should not be subject to any stop-transfer restriction.

A form of written confirmation (to be used in connection with any sale) from the Company’s outside legal counsel that a registration statement covering resales of the Common Shares has been declared effective by the SEC under the Securities Act is attached hereto as Exhibit I.

Please be advised that the Investor is relying upon this letter as an inducement to enter into the Agreement and, accordingly, the Investor is a third party beneficiary to these instructions.

 

Please execute this letter in the space indicated to acknowledge your agreement to act in accordance with these instructions. Should you have any questions concerning this matter, please contact me at [_______________].

	 	
Very truly yours,

	 	  
	 	
GIGOPTIX, INC.

	 	 	 
	 	
By:

	 
	 	 	
Name:

	 	 	
Title:

THE FOREGOING INSTRUCTIONS 

ARE ACKNOWLEDGED AND AGREED 

TO this day of ___________, 2016

AMERICAN STOCK TRANSFER & TRUST COMPANY

	
By:

	 	 
	 	
Name:

	 	 
	 	
Title:

	 	 
	 	 	 

Enclosures

 

EXHIBIT I

FORM OF NOTICE OF EFFECTIVENESS

OF REGISTRATION STATEMENT

American Stock Transfer & Trust Company

59 Maiden Lane

New York, NY 10038

Attention:  [NAME]

		Re:	GigOptix, Inc.

Ladies and Gentlemen:

[We are][I am] counsel to GigOptix, Inc., a Delaware corporation (the “Company”), and have represented the Company in connection with that certain Securities Purchase Agreement, dated as of March 21, 2016 (the “Securities Purchase Agreement”), entered into by and among the Company and Pudong Science and Technology Investment (Cayman) Co., Ltd., an exempted company incorporated and existing under the laws of the Cayman Islands, or any affiliates designated thereby (collectively, the “Investor”) pursuant to which the Company issued to the Investor shares (the “Common Shares”) of the Company’s common stock, par value $0.001 per share (the “Common Stock”). Pursuant to the Securities Purchase Agreement, the Company agreed, among other things, to register the resale of the Registrable Securities (as defined in the Securities Purchase Agreement), including the Common Shares under the Securities Act of 1933, as amended (the “1933 Act”). In connection with the Company’s obligations under the Securities Purchase Agreement, on ________ ___, 2016, the Company filed a Registration Statement on Form S-3 (File No. 333-________) (the “Registration Statement”) with the Securities and Exchange Commission (the “SEC”) relating to the Registrable Securities which names Investor as a selling shareholder thereunder.

In connection with the foregoing, [we][I] advise you that a member of the SEC’s staff has advised [us][me] by telephone that the SEC has entered an order declaring the Registration Statement effective under the 1933 Act at [TIME OF EFFECTIVENESS] on [DATE OF EFFECTIVENESS] and [we][I] have no knowledge, after telephonic inquiry of a member of the SEC’s staff, that any stop order suspending its effectiveness has been issued or that any proceedings for that purpose are pending before, or threatened by, the SEC and the Registrable Securities are available for resale under the 1933 Act pursuant to the Registration Statement.

This letter shall serve as our standing instruction to you that the Common Shares are freely transferable by the Investor pursuant to the Registration Statement. You need not require further letters from us to effect any future legend-free issuance or reissuance of Common Shares to the Investor as contemplated by the Company’s Irrevocable Transfer Agent Instructions dated [________ __], 2016.

	 	
Very truly yours,

	 	 
	 	
[COMPANY COUNSEL]

	 	 
	 	
By:

	 	 

 

CC: [LIST NAMES OF HOLDERS]

 

Exhibit B

PLAN OF DISTRIBUTION

The selling stockholders may, from time to time, sell any or all of their shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

	·	ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

	·	block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

	·	purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

	·	an exchange distribution in accordance with the rules of the applicable exchange;

	·	privately negotiated transactions;

	·	short sales;

	·	broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

	·	a combination of any such methods of sale; and

	·	any other method permitted pursuant to applicable law.

The selling stockholders may also sell shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

Broker-dealers engaged by the selling stockholders may arrange for other brokers-dealers to participate in sales. Broker-dealers may receive commissions or discounts from the selling stockholders (or, if any broker-dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated. The selling stockholders do not expect these commissions and discounts to exceed what is customary in the types of transactions involved. Any profits on the resale of shares of common stock by a broker-dealer acting as principal might be deemed to be underwriting discounts or commissions under the Securities Act. Discounts, concessions, commissions and similar selling expenses, if any, attributable to the sale of shares will be borne by a selling stockholder. The selling stockholders may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities are imposed on that person under the Securities Act.

 

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus after we have filed a supplement to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933 supplementing or amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

The selling stockholders and any broker-dealers or agents that are involved in selling the shares of common stock may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares of common stock purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act.

We are required to pay all fees and expenses incident to the registration of the shares of common stock. We have agreed to indemnify the selling stockholders against certain losses, claims, damages and liabilities, including liabilities under the Securities Act.

The selling stockholders have advised us that they have not entered into any agreements, understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any selling stockholder. If we are notified by any selling stockholder that any material arrangement has been entered into with a broker-dealer for the sale of shares of common stock, if required, we will file a supplement to this prospectus. If the selling stockholders use this prospectus for any sale of the shares of common stock, they will be subject to the prospectus delivery requirements of the Securities Act.

The anti-manipulation rules of Regulation M under the Securities Exchange Act of 1934 may apply to sales of our common stock and activities of the selling stockholders.

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