Document:

duane_ex105.htm

EXHIBIT 10.5

 

SECURITIES PURCHASE AGREEMENT

 

THIS SECURITIES PURCHASE AGREEMENT (this “Agreement”), is made effective as of _________________ ___, 2014, and is entered into by and among Duane Street Corp. (to be renamed CÜR Media, Inc.), a Nevada corporation (the “Company”), and the Buyer(s) set forth on the signature pages affixed hereto (individually, a “Buyer” or collectively, the “Buyers”).

 

WITNESSETH:

 

WHEREAS, the Company and the Buyer(s) are executing and delivering this Agreement in reliance upon an exemption from securities registration pursuant to Section 4(2) and/or Rule 506 of Regulation D (“Regulation D”) and/or Regulation S (“Regulation S”) as promulgated by the U.S. Securities and Exchange Commission (the “SEC”) under the Securities Act of 1933, as amended (the “Securities Act”); and

 

WHEREAS, the parties desire that, upon the terms and subject to the conditions contained herein, the Company shall sell to the Buyers, as provided herein, and the Buyers shall purchase in a private placement offering (the “PPO”), a minimum of 242,367 (4,000,000 post-split) units (the “Minimum PPO”) and a maximum of 424,143 (7,000,000 post-split) units (the “Maximum PPO”) with an additional 60,592 (1,000,000 post-split) units subject to offer and sale at the discretion of the Company and Raditaz, LLC, a Connecticut limited liability corporation (“Raditaz”), pursuant to an over-allotment option (the “Over-Allotment Option”), at a price of $16.503906 ($1.00 post-split) per unit, with each PPO unit (the “Units”) consisting of one share of the Company’s common stock, $0.0001 par value per share (the “Common Stock”) and one five year common stock purchase warrant of the Company (the “PPO Warrant”) to purchase one share of Common Stock at a price of $33.007812 ($2.00 post-split) per share (the “PPO Warrant Shares”); and

 

WHEREAS, the Company may offer the Units at any time through and including January 31, 2014, which date may be extended to April 14, 2014 (as such may be extended, the “Offering Period”) at the sole discretion of the Company and the Placement Agent (as defined below); and

 

WHEREAS, the Company is currently negotiating a membership interests contribution (the “Contribution”) with Raditaz and the members of Raditaz, pursuant to which Raditaz will become a wholly owned subsidiary of the Company and the members of Raditaz will receive 605,918 (10,000,000 post-split) shares of Common Stock and have their outstanding Raditaz options converted into an aggregate of 109,066 (1,800,000 post-split) Company stock options; and

 

WHEREAS, the PPO, in at least the Minimum PPO amount, shall close simultaneously with the closing of the Contribution; and

 

WHEREAS, the Company stockholders prior to the Contribution and the PPO will retain such numbers of shares of Common Stock following the initial closing of the PPO that is equal to 19.9% of the total number of shares of Company Common Stock after taking into account the PPO, Contribution, Forward Split (as defined below), Split-Off (as defined below) and Split-Off Share Cancellation (as defined below); and

 

  

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WHEREAS, prior to or upon the closing of the Contribution and at least the Minimum PPO amount, the Company shall have adopted a 242,367 (4,000,000 post-split) share Equity Incentive Plan (the “2014 EIP”) for the future issuance of awards to officers, directors, key employees and consultants of the Company; and

 

WHEREAS, the PPO Warrants and the Broker Warrants (as defined below) will have weighted average anti-dilution price protection, for a period of two years, from the final PPO closing date, subject to customary exceptions, if prior to the earlier of the end of such two year period or their exercise or termination, the Company issues additional shares of Common Stock or Common Stock equivalents for a consideration per share less than the PPO Units offering price of $16.503906 ($1.00 post-split) per Unit, as such price may be adjusted, subject to customary exceptions, including but not limited to issuances under the 2014 EIP; and

 

WHEREAS, the PPO Units will also have weighted average anti-dilution protection for a period of two years from the final PPO closing date such that if the Company issues additional shares of Common Stock or Common Stock equivalents for a consideration per share less than the PPO offering price of $16.503906 ($1.00 post-split) per Unit, as such PPO offering price may be adjusted, subject to customary exceptions, including but not limited to issuances under the 2014 EIP, the holder of the Units will be entitled to receive from the Company additional Units.

 

WHEREAS, as soon as practicable following the Contribution and the PPO, the Company will (i) change its name to CÜR Media, Inc., and (ii) conduct a forward stock split in the form of a stock dividend in the ratio of 16.503906:1 (the “Forward Split”); and

 

WHEREAS, in conjunction with the closing of the Contribution and the initial closing under the PPO, the Company will transfer all of its pre-Contribution operating assets and liabilities to a newly formed wholly owned subsidiary (“Split-Off Subsidiary”), and thereafter, the Company shall transfer all of the outstanding shares of capital stock of Split-Off Subsidiary to the Company’s pre-Contribution insiders in exchange for the surrender and cancellation of shares (the “Split-Off Share Cancellation”) of Common Stock held by such insiders (the “Split-Off”) (the Contribution, the PPO, the Forward Split, the Split-Off, and the transactions contemplated thereby are sometimes hereinafter referred to as the “Transactions”); and

 

WHEREAS, all of the Transactions give retroactive effect to the Forward Split such that the number of Company securities to be issued in connection with the PPO and all other issuances of Company securities contemplated by this Agreement, will not be effected by the effectuation of the Forward Split; and

 

WHEREAS, Gottbetter Capital Markets, LLC (the “Placement Agent”), a FINRA registered broker-dealer, will act as the Company’s exclusive Placement Agent on a reasonable best efforts basis in the PPO and in connection therewith will engage EDI Financial, Inc., and other Financial Industry Regulatory Authority (“FINRA”) registered broker-dealers as sub-agents; and

 

  

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WHEREAS, the Placement Agent will be paid a cash commission of 10% of funds raised from the Buyers introduced to the PPO by it plus a warrant commission in the form of a warrant (the “Broker Warrants”) to purchase such number of shares of the Company’s Common Stock as is equal to 10% of the number of shares of Common Stock sold to Buyers introduced to the PPO by it having a term of 5 years and an exercise price of $16.503906 ($1.00 post-split) per share (the “Broker Warrant Shares”); and

 

WHEREAS, the Placement Agent will not be paid a cash commission or warrant commission on sales of Units to Buyers introduced to the PPO by Raditaz or to Buyers that are pre-PPO members of Raditaz; and

 

WHEREAS, the Placement Agent will also act as the Company’s Warrant Solicitation Agent in connection with the exercise of the PPO Warrants and will be paid a cash commission of 5% of funds raised upon exercise of PPO Warrants by Buyers introduced to the PPO by it and solicited by the Placement Agent for such purpose; and

 

WHEREAS, the aggregate proceeds from the sale of the Units shall be held in escrow pursuant to the terms of an escrow agreement substantially in the form of Exhibit A to this Agreement among the Company and the Escrow Agent (as defined below) (the “Escrow Agreement”).

 

WHEREAS, promptly, but no later than ninety calendar days from the closing date of the PPO, the Company shall file a registration statement on Form S-1, or similar form with the SEC covering (i) the shares of Common Stock comprising part of the PPO Units; (ii) the shares of Common Stock underlying the PPO Warrants; and (iii) the shares of Common Stock underlying the Broker Warrants.

 

NOW, THEREFORE, in consideration of the mutual covenants and other agreements contained in this Agreement the Company and the Buyer(s) hereby agree as follows:

 

1. PURCHASE AND SALE OF UNITS.

 

(a) Purchase of Units. Subject to the satisfaction (or waiver) of the terms and conditions of this Agreement, each Buyer agrees, severally and not jointly, to purchase at Closing (as defined below), and the Company agrees to sell and issue to each Buyer, severally and not jointly, at Closing, Units in the amounts set forth on the Buyer Omnibus Signature Page, attached hereto as Annex A, for each Buyer affixed hereto. The PPO Warrants comprising part of the Units shall be substantially in the form attached as Exhibit B to this Agreement. The Broker Warrants comprising part of the Placement Agent compensation shall be identical to the PPO Warrants in all material respects except exercise price. Upon execution of this Agreement on the Buyer Omnibus Signature Page and completion of the Investor Certification, the Investor Profile, the Anti-Money Laundering Information Form and if applicable, the Wire Transfer Authorization (each attached hereto) by a Buyer, the Buyer shall wire transfer the Subscription Amount set forth on its Buyer Omnibus Signature Page, in same-day funds in accordance with the instructions set forth immediately below, which Subscription Amount shall be held in escrow pursuant to the terms of the Escrow Agreement and disbursed in accordance therewith.

 

  

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Wire Instructions

 

	
Bank Name:

	
PNC Bank

	 	300 Delaware Avenue
	
 

	Wilmington, DE 19801
	
ABA Routing Number:

	
031100089

	
SWIFT Code:

	
PNCCUS33

	
Account Name:

	
CSC Trust Company of Delaware

	
Account Number:

	
5605012373

	
Reference:

	
Duane Street Corp.; 79-2052; [insert Buyer’s name]

	
Escrow Agent Contact:

	
Alan R. Halpern

 

(b) Closing Date. The initial closing of the purchase and sale of at least the Minimum Amount of Units (the “Closing”) shall take place at 10:00 a.m. New York time on or before the 3rd business day following the satisfaction of the conditions to the Closing set forth herein and in Sections 7 and 8 below (or such later date as is mutually agreed to by the Company and the Buyer(s)). There may be multiple Closings, subject to prior termination, until such time as subscriptions for the Maximum Amount are accepted (the date of any such Closing is hereinafter referred to as a “Closing Date”). The Closing shall occur on the Closing Date at the offices of Gottbetter & Partners, LLP, 488 Madison Avenue, New York, New York 10022 (or such other place as is mutually agreed to by the Company and the Buyer(s)). The Units may be offered and sold through the end of the Offering Period.

 

(c) Escrow Arrangements; Form of Payment. Upon execution hereof by the Buyer and pending the Closing, the Purchase Price shall be deposited in a non-interest bearing escrow account with CSC Trust Company of Delaware, as escrow agent (the “Escrow Agent”), pursuant to the terms of the Escrow Agreement. Subject to the satisfaction of the terms and conditions of this Agreement, on the Closing Date or as soon as practicable thereafter, (i) the Escrow Agent shall deliver to the Company in accordance with the terms of the Escrow Agreement the Purchase Price for the Units to be issued and sold to the Buyer(s) on such Closing Date, and (ii) the Company shall deliver to the Buyer(s), the certificates for the Common Stock and the PPO Warrants, duly executed on behalf of the Company.

 

(d) Brokers or their sub-agents who introduce Buyers to the Company will be paid a commission in amounts and on terms as indicated in the placement agency agreement to be entered into between the Company and such brokers (collectively, the “Brokers’ Fees”).

 

2. BUYER’S REPRESENTATIONS AND WARRANTIES.

 

Each Buyer represents and warrants, severally and not jointly, as to such Buyer, that:

 

(a) Investment Purpose. Each Buyer is acquiring the Units, including the Common Stock, PPO Warrants and PPO Warrant Shares, for its own account for investment only and not with a view towards, or for resale in connection with, the public sale or distribution thereof, except pursuant to sales registered or exempted under the Securities Act; provided, however, that by making the representations herein, such Buyer reserves the right to dispose of the Common Stock comprising part of the Units and the Common Stock underlying the PPO Warrants at any time in accordance with or pursuant to an effective registration statement covering such Common Stock, or an available exemption under the Securities Act. The Buyer agrees not to sell, hypothecate or otherwise transfer the Buyer’s securities unless such securities are registered under the federal and applicable state securities laws or unless, in the opinion of counsel satisfactory to the Company, an exemption from such law is available. Each Buyer understands and agrees that the Company, in its sole discretion, reserves the right to accept or reject subscriptions for Units in whole or in part.

 

  

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(b) Residence of Buyer. Each Buyer resides in the jurisdiction set forth on the Buyer Omnibus Signature Page affixed hereto.

 

(c) Investor Status. The Buyer meets the requirements of at least one of the suitability standards for an “Accredited Investor” as that term is defined in Rule 501(a)(3) of Regulation D or is not a “U.S. Person” as that term is defined in Rule 902(k) of Regulation S, and as set forth on the Investor Certification attached hereto.

 

(d) Non-US Person. If a Buyer is not a person in the United States or a U.S. Person (as defined in Rule 902(k) of Regulation S) or is not purchasing the Units on behalf of a person in the United States or a U.S. Person:

 

(i) neither the Buyer nor any disclosed principal is a U.S. Person nor are they subscribing for the Units for the account of a U.S. Person or for resale in the United States and the Buyer confirms that the Units have not been offered to the Buyer in the United States and that this Agreement has not been signed in the United States;

 

(ii) the Buyer acknowledges that the Units have not been registered under the Securities Act and may not be offered or sold in the United States or to a U.S. Person unless the securities are registered under the U.S. Securities Act and all applicable state securities laws or an exemption from such registration requirements is available, and further agrees that hedging transactions involving such securities may not be conducted unless in compliance with the U.S. Securities Act;

 

(iii) the Buyer and if applicable, the disclosed principal for whom the Buyer is acting, understands that the Company is the seller of the Units and underlying securities and that, for purposes of Regulation S, a “distributor” is any underwriter, dealer or other person who participates pursuant to a contractual arrangement in the distribution of securities sold in reliance on Regulation S and that an “affiliate” is any partner, officer, director or any person directly or indirectly controlling, controlled by or under common control with any person in question. Except as otherwise permitted by Regulation S, the Buyer and if applicable, the disclosed principal for whom the Buyer is acting, agrees that it will not, during a one year distribution compliance period, act as a distributor, either directly or through any affiliate, or sell, transfer, hypothecate or otherwise convey the Units or underlying securities other than to a non-U.S. Person;

 

(iv) the Buyer and if applicable, the disclosed principal for whom the Buyer is acting, acknowledges and understands that in the event the Units are offered, sold or otherwise transferred by the Buyer or if applicable, the disclosed principal for whom the Buyer is acting, to a non-U.S Person prior to the expiration of a one year distribution compliance period, the purchaser or transferee must agree not to resell such securities except in accordance with the provisions of Regulation S, pursuant to registration under the Securities Act, or pursuant to an available exemption from registration; and must further agree not to engage in hedging transactions with regard to such securities unless in compliance with the Securities Act; and

 

  

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(v) neither the Buyer nor any disclosed principal will offer, sell or otherwise dispose of the Units or the underlying securities in the United States or to a U.S. Person unless (A) the Company has consented to such offer, sale or disposition and such offer, sale or disposition is made in accordance with an exemption from the registration requirements under the Securities Act and the securities laws of all applicable states of the United States or, (B) the SEC has declared effective a registration statement in respect of such securities.

 

(e) Investor Qualifications. The Buyer (i) if a natural person, represents that the Buyer has reached the age of 21 and has full power and authority to execute and deliver this Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof; (ii) if a corporation, partnership, or limited liability company or partnership, or association, joint stock company, trust, unincorporated organization or other entity, represents that such entity was not formed for the specific purpose of acquiring the Units, such entity is duly organized, validly existing and in good standing under the laws of the state of its organization, the consummation of the transactions contemplated hereby is authorized by, and will not result in a violation of state law or its charter or other organizational documents, such entity has full power and authority to execute and deliver this Agreement and all other related agreements or certificates and to carry out the provisions hereof and thereof and to purchase and hold the Units, the execution and delivery of this Agreement has been duly authorized by all necessary action, this Agreement has been duly executed and delivered on behalf of such entity and is a legal, valid and binding obligation of such entity; or (iii) if executing this Agreement in a representative or fiduciary capacity, represents that it has full power and authority to execute and deliver this Agreement in such capacity and on behalf of the subscribing individual, ward, partnership, trust, estate, corporation, or limited liability company or partnership, or other entity for whom the Buyer is executing this Agreement, and such individual, partnership, ward, trust, estate, corporation, or limited liability company or partnership, or other entity has full right and power to perform pursuant to this Agreement and make an investment in the Company, and represents that this Agreement constitutes a legal, valid and binding obligation of such entity. The execution and delivery of this Agreement will not violate or be in conflict with any order, judgment, injunction, agreement or controlling document to which the Buyer is a party or by which it is bound.

 

(f) Buyer Relationship with Brokers The Buyer’s substantive relationship with any broker for the transactions contemplated hereby or subagent thereof (collectively, “Brokers”) through which the Buyer is subscribing for the Units predates such Broker’s contact with the Buyer regarding an investment in the Units.

 

(g) Solicitation. The Buyer is unaware of, is in no way relying on, and did not become aware of the offering of the Units through or as a result of, any form of general solicitation or general advertising including, without limitation, any article, notice, advertisement or other communication published in any newspaper, magazine or similar media or broadcast over television or radio, in connection with the offering and sale of the Units and is not subscribing for the Units and did not become aware of the offering of the Units through or as a result of any seminar or meeting to which the Buyer was invited by, or any solicitation of a subscription by, a person not previously known to the Buyer in connection with investments in securities generally.

 

  

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(h) Brokerage Fees. The Buyer has taken no action that would give rise to any claim by any person for brokerage commissions, finders’ fees or the like relating to this Agreement or the transaction contemplated hereby (other than commissions to be paid by the Company to the Brokers, as described above).

 

(i) Buyer’s Advisors. The Buyer and the Buyer’s attorney, accountant, purchaser representative and/or tax advisor, if any (collectively, the “Advisors”), as the case may be, has such knowledge and experience in financial, tax, and business matters, and, in particular, investments in securities, so as to enable it to utilize the information made available to it in connection with the Units to evaluate the merits and risks of an investment in the Units and the Company and to make an informed investment decision with respect thereto.

 

(j) Buyer Liquidity. Each Buyer has adequate means of providing for such Buyer’s current financial needs and foreseeable contingencies and has no need for liquidity of its investment in the Units for an indefinite period of time.

 

(k) High Risk Investment; Review of Risk Factors. The Buyer is aware that an investment in the Units involves a number of very significant risks, including those set forth in Exhibit D, hereto and has carefully reviewed and understands the risks of, and other considerations relating to, the purchase of the Unit, including the underlying securities.

 

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

 

(m) Information. Each Buyer and its Advisors have been furnished with all documents and materials relating to the business, finances and operations of the Company and information that Buyer requested and deemed material to making an informed investment decision regarding its purchase of the Units and the underlying securities. Each Buyer and its Advisors have been afforded the opportunity to review such documents and materials, as well as the Company’s SEC Filings, as such term is defined below (hard copies of which were made available to the Buyer upon request to the Company or were otherwise accessible to the Buyer via the SEC’s EDGAR system), and the information contained therein. Each Buyer and its Advisors have been afforded the opportunity to ask questions of the Company and its management. Each Buyer understands that such discussions, as well as any written information provided by the Company, were intended to describe the aspects of the Company’s business and prospects which the Company believes to be material, but were not necessarily a thorough or exhaustive description, and except as expressly set forth in this Agreement, the Company makes no representation or warranty with respect to the completeness of such information and makes no representation or warranty of any kind with respect to any information provided by any entity other than the Company. Some of such information may include projections as to the future performance of the Company, which projections may not be realized, may be based on assumptions which may not be correct and may be subject to numerous factors both beyond and within the Company’s control. Additionally, the Buyer understands and represents that he is purchasing the Units notwithstanding the fact that the Company may disclose in the future certain material information the Buyer has not received, including its financial results for its current fiscal quarter. Neither such inquiries nor any other due diligence investigations conducted by such Buyer or its Advisors shall modify, amend or affect such Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. Each Buyer has sought such accounting, legal and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the Units.

 

  

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(n) No Other Representations or Information. In evaluating the suitability of an investment in the Units, the Buyer has not relied upon any representation or information (oral or written) other than as stated in this Agreement. No oral or written representations have been made, or oral or written information furnished, to the Buyer or its Advisors, if any, in connection with the offering of the Units.

 

(o) No Governmental Review. Each Buyer 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 Units (or the underlying securities), or the fairness or suitability of the investment in the Units (and the underlying securities), nor have such authorities passed upon or endorsed the merits of the offering of the Units.

 

(p) Transfer or Resale. (A) Each Buyer understands that: (i) the Units, including the underlying securities, have not been and are not being registered under the Securities Act or any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder, or (B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration requirements; (ii) any sale of such securities made in reliance on Rule 144 under the Securities Act (or a successor rule thereto) (“Rule 144”) may be made only in accordance with the terms of Rule 144 and further, if Rule 144 is not applicable, any resale of such securities under circumstances in which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the Securities Act) may require compliance with some other exemption under the Securities Act or the rules and regulations of the SEC thereunder; and (iii) except as otherwise set forth in this Agreement and the Registration Rights Agreement (substantially in the form attached as Exhibit C), neither the Company nor any other person is under any obligation to register such securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder. The Company reserves the right to place stop transfer instructions against the shares and certificates for the Common Stock comprising part of the Units and the Warrant Shares underlying the PPO Warrant to the extent specifically set forth under this Agreement. There can be no assurance that there will be any market or resale for the Units (or the Common Stock, including the Common Stock underlying the Units and the PPO Warrants), nor can there be any assurance that the Units (or the Common Stock, including the Common Stock underlying the Units and PPO Warrants) will be freely transferable at any time in the foreseeable future.

 

  

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(B) Each Buyer understands that the Company is currently a “shell company” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Pursuant to Rule 144(i), securities issued by a current or former shell company (that is, the Units (and the underlying securities)) that otherwise meet the holding period and other requirements of Rule 144 nevertheless cannot be sold in reliance on Rule 144 until one year after the Company (a) is no longer a shell company; and (b) has filed current “Form 10 information” (as defined in Rule 144(i)) with the SEC reflecting that it is no longer a shell company, and provided that at the time of a proposed sale pursuant to Rule 144, the Company is subject to the reporting requirements of section 13 or 15(d) of the Exchange Act and has filed all reports and other materials required to be filed by section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports. As a result, the restrictive legends on certificates for the Securities cannot be removed except in connection with an actual sale meeting the foregoing requirements or pursuant to an effective registration statement.

 

(q) Legends. Each Buyer understands that the certificates or other instruments representing the Units and PPO Warrants (and the Common Stock underlying the Units and PPO Warrants) shall bear a restrictive legend in substantially the following form (and a stop transfer order may be placed against transfer of such stock certificates):

 

	
  

	
For U.S. Persons:

 

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”). THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (C) IN COMPLIANCE WITH RULE 144 OR 144A THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT, OR (E) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE STATE SECURITIES LAWS, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS INVOLVING THESE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

 

  

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For Non-U.S. Persons:

 

THESE SECURITIES WERE ISSUED IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED IN REGULATION S) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “1933 ACT”). ACCORDINGLY, NONE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN REGISTERED UNDER THE 1933 ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD IN THE UNITED STATES OR, DIRECTLY OR INDIRECTLY, TO U.S. PERSONS EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT, AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE 1933 ACT.

 

The legend set forth above shall be removed and the Company within three (3) business days shall issue a certificate without such legend to the holder of the Units and the PPO Warrants (and the Common Stock underlying the PPO Units and PPO Warrants,) upon which it is stamped, if, unless otherwise required by state securities laws, (i) the Buyer or its broker make the necessary representations and warranties to the transfer agent for the Common Stock that it has complied with the prospectus delivery requirements in connection with a sale transaction, provided the Units and PPO Warrants (and the Common Stock underlying the Units and PPO Warrants) are registered under the Securities Act or (ii) in connection with a sale transaction, after such holder provides the Company with an opinion of counsel satisfactory to the Company, which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale, assignment or transfer of the Units or PPO Warrants (or the Common Stock underlying the Units and PPO Warrants) may be made without registration under the Securities Act.

 

(r) Authorization, Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and is a valid and binding agreement of such Buyer enforceable in accordance with its terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.

 

(s) Receipt of Documents. Each Buyer and its counsel have received and read in their entirety: (i) this Agreement, the Risk Factors applicable to an investment in the Units as set forth in Exhibit D, and each representation, warranty and covenant set forth herein; and (ii) all due diligence and other information necessary to verify the accuracy and completeness of such representations, warranties and covenants; each Buyer has received answers to all questions such Buyer submitted to the Company regarding an investment in the Company; and each Buyer has relied on the information contained therein and has not been furnished any other documents, literature, memorandum or prospectus.

 

  

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(t) Trading Activities. The Buyer’s trading activities with respect to the Company’s Common Stock shall be in compliance with all applicable federal and state securities laws, rules and regulations and the rules and regulations of the principal market on which the Company’s Common Stock is listed or traded. Neither the Buyer nor its affiliates has an open short position in the Common Stock of the Company and, except as set forth below, the Buyer shall not, and shall not cause any of its affiliates under common control with the Buyer, to engage in any short sale as defined in any applicable SEC or FINRA rules on any hedging transactions with respect to the Common Stock until the earlier to occur of (i) the second anniversary of the Closing Date and (ii) the Buyer(s) no longer own Common Stock. Without limiting the foregoing, the Buyer agrees not to engage in any naked short transactions in excess of the amount of shares owned (or an offsetting long position) by the Buyer.

 

(u) Regulation FD. Each Buyer acknowledges and agrees that all of the information received by it in connection with the transactions contemplated by this Agreement and the other Transactions is of a confidential nature and may be regarded as material non-public information under Regulation FD promulgated by the SEC and that such information has been furnished to the Buyer for the sole purpose of enabling the Buyer to consider and evaluate an investment in the Units. The Buyer agrees that it will treat such information in a confidential manner, will not use such information for any purpose other than evaluating an investment in the Units, will not, directly or indirectly, trade or permit the Buyer’s agents, representatives or affiliates to trade in any securities of the Company while in possession of such information and will not, directly or indirectly, disclose or permit the Buyer’s agents, representatives or affiliates to disclose any of such information without the Company’s prior written consent. The Buyer shall make its agents, affiliates and representatives aware of the confidential nature of the information contained herein and the terms of this section including the Buyer’s agreement to not disclose such information, to not trade in the Company’s securities while in the possession of such information and to be responsible for any disclosure or other improper use of such information by such agents, affiliates or representatives. Likewise, without the Company’s prior written consent, the Buyer will not, directly or indirectly, make any statements, public announcements or other release or provision of information in any form to any trade publication, to the press or to any other person or entity whose primary business is or includes the publication or dissemination of information related to the transactions contemplated by this Agreement. In the event the Merger (or other business combination if such transaction assumes a different corporate form) is not entered into, the Company acknowledges that the information covered by this Section 2(u) will no longer be deemed material, non public information under Regulation FD.

 

(v) No Legal Advice from the Company. Each Buyer acknowledges that it had the opportunity to review this Agreement and the transactions contemplated by this Agreement with its own legal counsel and investment and tax advisors. Each Buyer is relying solely on such Advisors and not on any statements or representations of the Company or any of its representatives or agents for legal, tax or investment advice with respect to this investment, the transactions contemplated by this Agreement or the securities laws of any jurisdiction.

 

  

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(w) No Group Participation. Each Buyer and its affiliates is not a member of any group, nor is any Buyer acting in concert with any other person, including any other Buyer, with respect to its acquisition of the Units, including the PPO Warrants (and the Common Stock, including the Common Stock underlying the Units and PPO Warrants).

 

(x) Reliance. Any information which the Buyer has heretofore furnished or is furnishing herewith to the Company or any Broker is complete and accurate and may be relied upon by the Company and any Broker in determining the availability of an exemption from registration under federal and state securities laws in connection with the offering of securities as described in the Transmittal Letter. The Buyer further represents and warrants that it will notify and supply corrective information to the Company immediately upon the occurrence of any change therein occurring prior to the Company’s issuance of the securities comprising part of the Units. Within five (5) days after receipt of a request from the Company or any Broker, the Buyer will provide such information and deliver such documents as may reasonably be necessary to comply with any and all laws and ordinances to which the Company or any Broker is subject.

 

(y) (For ERISA plan Buyers only). The fiduciary of the ERISA plan represents that such fiduciary has been informed of and understands the Company’s investment objectives, policies and strategies, and that the decision to invest “plan assets” (as such term is defined in ERISA) in the Company is consistent with the provisions of ERISA that require diversification of plan assets and impose other fiduciary responsibilities. The Buyer fiduciary or Plan (a) is responsible for the decision to invest in the Company; (b) is independent of the Company or any of its affiliates; (c) is qualified to make such investment decision; and (d) in making such decision, the Buyer fiduciary or Plan has not relied primarily on any advice or recommendation of the Company or any of its affiliates;

 

(z) [The Buyer should check the Office of Foreign Assets Control (“OFAC”) website at http://www.treas.gov/ofac before making the following representations.] The Buyer represents that the amounts invested by it in the Company in the Units were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including anti-money laundering laws and regulations. Federal regulations and Executive Orders administered by OFAC prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website at http://www.treas.gov/ofac. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit dealing with individuals1 or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists;

 

(aa) To the best of the Buyer’s knowledge, none of: (1) the Buyer; (2) any person controlling or controlled by the Buyer; (3) if the Buyer is a privately-held entity, any person having a beneficial interest in the Buyer; or (4) any person for whom the Buyer is acting as agent or nominee in connection with this investment is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs. Please be advised that the Company may not accept any amounts from a prospective investor if such prospective investor cannot make the representation set forth in the preceding paragraph. The Buyer agrees to promptly notify the Company should the Buyer become aware of any change in the information set forth in these representations. The Buyer understands and acknowledges that, by law, the Company may be obligated to “freeze the account” of the Buyer, either by prohibiting additional subscriptions from the Buyer, declining any redemption requests and/or segregating the assets in the account in compliance with governmental regulations, and a Broker may also be required to report such action and to disclose the Buyer’s identity to OFAC. The Buyer further acknowledges that the Company may, by written notice to the Buyer, suspend the redemption rights, if any, of the Buyer if the Company reasonably deems it necessary to do so to comply with anti-money laundering regulations applicable to the Company or any Broker or any of the Company’s other service providers. These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs;

_____________________

1 These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.

 

  

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(bb) To the best of the Buyer’s knowledge, none of: (1) the Buyer; (2) any person controlling or controlled by the Buyer; (3) if the Buyer is a privately-held entity, any person having a beneficial interest in the Buyer; or (4) any person for whom the Buyer is acting as agent or nominee in connection with this investment is a senior foreign political figure2, or any immediate family3 member or close associate4 of a senior foreign political figure, as such terms are defined in the footnotes below; and

 

(cc) If the Buyer is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if the Buyer receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, the Buyer represents and warrants to the Company that: (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities; (2) the Foreign Bank maintains operating records related to its banking activities; (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities; and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.

 

 

______________________________________

2   A “senior foreign political figure” is defined as a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation. In addition, a “senior foreign political figure” includes any corporation, business or other entity that has been formed by, or for the benefit of, a senior foreign political figure.

 

3   “Immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws.

 

4   A “close associate” of a senior foreign political figure is a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.

  

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3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

 

The Company represents and warrants to each of the Buyers that:

 

(a) Organization and Qualification. The Company is a corporation duly organized and validly existing in good standing under the laws of the State of Delaware, and has the requisite corporate power to own its properties and to carry on its business as now being conducted. The Company is duly qualified as a foreign corporation to do business and is in good standing in every jurisdiction in which the nature of the business conducted by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would not have a Material Adverse Effect, as defined below. The Company presently has no subsidiaries although it will form the Split-Off Subsidiary in connection with the Split-Off.

 

(b) Authorization, Enforcement, Compliance with Other Instruments. (i) The Company has the requisite corporate power and authority to enter into and perform this Agreement, the Registration Rights Agreement, the Escrow Agreement and all other documents necessary or desirable to effect the transactions contemplated hereby (collectively the “Transaction Documents”) to which it is a party and to issue the Units, including the PPO Warrants and the Broker Warrants (and the Common Stock, including the Common Stock underlying the Units, the PPO Warrants and the Broker Warrants) in accordance with the terms hereof and thereof, (ii) the execution and delivery of the Transaction Documents by the Company and the consummation by it of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Units (and the Common Stock, including the Common Stock underlying the Units, PPO Warrants and Broker Warrants) and the reservation for issuance of the PPO Warrant Shares and Broker Warrant Shares have been duly authorized by the Company’s Board of Directors and no further consent or authorization is required by the Company, its Board of Directors or its stockholders, (iii) the Transaction Documents will be duly executed and delivered by the Company, (iv) the Transaction Documents when executed will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms, except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of creditors’ rights and remedies.

 

  

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(c) Capitalization. The authorized capital stock of the Company consists of 150,000,000 shares of Common Stock and no shares of blank check preferred stock (“Preferred Stock”). As soon as practicable following the closing under the Contribution and the Closing under the PPO, the authorized capital stock of the Company shall consist of 310,000,000 shares of common stock and 10,000,000 shares of Preferred Stock. As of the date hereof, the Company has 1,756,000 pre-split shares of Common Stock issued and outstanding (of which it is anticipated that 1,500,000 pre-split shares will be surrendered and retired in connection with the Split-Off) and no shares of Preferred Stock outstanding. All of such outstanding shares have been duly authorized, validly issued and are fully paid and nonassessable. No shares of Common Stock are subject to preemptive rights or any other similar rights or any liens or encumbrances suffered or permitted by the Company. Except as contemplated by the Contribution or PPO or as otherwise provided herein, (i) there are no outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of capital stock of the Company or options, warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible into, any shares of capital stock of the Company, (ii) there are no outstanding debt securities and (iii) there are no agreements or arrangements under which the Company is obligated to register the sale of any of their securities under the Securities Act (except in connection with the Contribution and the PPO), and (iv) there are no outstanding registration statements and there are no outstanding comment letters from the SEC or any other regulatory agency. There are no securities or instruments containing anti-dilution or similar provisions that will be triggered by the issuance of the Units as described in this Agreement. The Units, including the PPO Warrants (and the Common Stock underlying the Units and PPO Warrants) and the Broker Warrants when issued, will be free and clear of all pledges, liens, encumbrances and other restrictions (other than those arising under federal or state securities laws as a result of the issuance of the Unit and the underlying securities). No co-sale right, right of first refusal or other similar right exists with respect to the Units (or the Common Stock underlying the Units and PPO Warrants) or the issuance and sale thereof. The issue and sale of the Units (and the Common Stock underlying the Units and PPO Warrants) will not result in a right of any holder of Company securities to adjust the exercise, exchange or reset price under such securities. The Company has made available to the Buyer true and correct copies of the Company’s Articles of Incorporation, and as in effect on the date hereof (the “Articles of Incorporation”), and the Company’s By-laws, as in effect on the date hereof (the “By-laws”), and the terms of all securities exercisable for Common Stock and the material rights of the holders thereof in respect thereto other than stock options issued to employees and consultants.

 

(d) Issuance of Securities. The Units are duly authorized and, upon issuance in accordance with the terms hereof, shall be duly issued, fully paid and nonassessable, are free from all taxes, liens and charges with respect to the issue thereof. The Common Stock underlying the Units, the PPO Warrants and Broker Warrants has been duly authorized and reserved for issuance. Upon issuance, the Common Stock underlying the Units, the PPO Warrants and the Broker Warrants will be duly issued, fully paid and nonassessable.

 

  

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(e) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the Company of the transactions contemplated hereby will not (i) result in a violation of the Articles of Incorporation or the By-laws or (ii) violate or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of time or both 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 Company is a party, or result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws and regulations and the rules and regulations of the OTC Bulletin Board (the “OTCBB”) on which the Common Stock is quoted) applicable to the Company or by which any property or asset of the Company is bound or affected except for those which could not reasonably be expected to have a material adverse effect on the assets, business, condition (financial or otherwise), results of operations or future prospects of the Company (a “Material Adverse Effect”). Except those which could not reasonably be expected to have a Material Adverse Effect, the Company is not in violation of any term of or in default under its Articles of Incorporation or By-laws. Except as set forth on Schedule 3(c) and except for those which could not reasonably be expected to have a Material Adverse Effect, the Company is not in violation of any term of or in default under any material contract, agreement, mortgage, indebtedness, indenture, instrument, judgment, decree or order or any statute, rule or regulation applicable to the Company. The business of the Company is not being conducted, and shall not be conducted in violation of any material law, ordinance, or regulation of any governmental entity. Except as specifically contemplated by this Agreement and as required under the Securities Act and any applicable state securities laws, the Company is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court or governmental agency in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement or the Escrow Agreement in accordance with the terms hereof or thereof. All consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained or effected on or prior to the date hereof. The Company is unaware of any facts or circumstance, which might give rise to any of the foregoing.

 

(f) SEC Filings; Financial Statements. The Company has filed (and, except for certain Current Reports on Form 8-K, has, within the past two years, timely filed (subject to 12b-25 filings with respect to certain periodic filings)) all reports, schedules, forms, statements and other documents required to be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (all of the foregoing and all other documents filed with the SEC prior to the date hereof and all exhibits included therein and financial statements and schedules thereto and documents incorporated by reference therein, being hereinafter referred to herein as the “SEC Filings”). The SEC Filings are available to the Buyers via the SEC’s EDGAR system. As of their respective dates, the SEC Filings complied in all material respects with the requirements of the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Filings, at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. As of their respective dates, the audited financial statements of the Company included in the Company’s SEC Filings for the period from inception on November 17, 2011 to December 31, 2012, and the subsequent unaudited interim financial statements included in the Company’s SEC Filings (collectively, the “Financial Statements”) complied as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto. Such financial statements were prepared in accordance with generally accepted accounting principles, consistently applied, during the periods involved (except (i) as may be otherwise indicated in such Financial Statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may exclude footnotes or may be condensed or summary statements), and fairly present in all material respects the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). As of the date hereof, there are no outstanding or unresolved comments in comment letters received from the staff of the SEC with respect to any of the SEC Filings. No other information provided by or on behalf of the Company to the Buyer including, without limitation, information referred to in this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

  

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(g) Absence of Litigation. Except as set forth in the Company’s SEC filings, there is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending against or affecting the Company or the Common Stock, wherein an unfavorable decision, ruling or finding would (i) adversely affect the validity or enforceability of, or the authority or ability of the Company to perform its obligations under, this Agreement or any of the documents contemplated herein, or (ii) have a Material Adverse Effect.

 

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

 

(i) No General Solicitation. 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 Units and the underlying securities.

 

(j) No Integrated Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances that would require registration of the Units, including the underlying securities, under the Securities Act or cause this offering of the Units to be integrated with prior offerings by the Company for purposes of the Securities Act.

 

(k) Employee Relations. The Company is not involved in any labor dispute nor, to the knowledge of the Company, is any such dispute threatened. The Company has no employees.

 

(l) Intellectual Property Rights. The Company has no proprietary intellectual property. The Company has not received any notice of infringement of, or conflict with, the asserted rights of others with respect to any intellectual property that it utilizes.

 

  

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(m) Environmental Laws.

 

(i) The Company has complied with all applicable Environmental Laws (as defined below), except for violations of Environmental Laws that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. There is no pending or, to the knowledge of the Company, threatened civil or criminal litigation, written notice of violation, formal administrative proceeding, or investigation, inquiry or information request, relating to any Environmental Law involving the Company, except for litigation, notices of violations, formal administrative proceedings or investigations, inquiries or information requests that, individually or in the aggregate, have not had and would not reasonably be expected to have a Material Adverse Effect. For purposes of this Agreement, “Environmental Law” means any federal, state or local law, statute, rule or regulation or the common law relating to the environment or occupational health and safety, including without limitation any statute, regulation, administrative decision or order pertaining to (i) treatment, storage, disposal, generation and transportation of industrial, toxic or hazardous materials or substances or solid or hazardous waste; (ii) air, water and noise pollution; (iii) groundwater and soil contamination; (iv) the release or threatened release into the environment of industrial, toxic or hazardous materials or substances, or solid or hazardous waste, including without limitation emissions, discharges, injections, spills, escapes or dumping of pollutants, contaminants or chemicals; (v) the protection of wild life, marine life and wetlands, including without limitation all endangered and threatened species; (vi) storage tanks, vessels, containers, abandoned or discarded barrels, and other closed receptacles; (vii) health and safety of employees and other persons; and (viii) manufacturing, processing, using, distributing, treating, storing, disposing, transporting or handling of materials regulated under any law as pollutants, contaminants, toxic or hazardous materials or substances or oil or petroleum products or solid or hazardous waste. As used above, the terms “release” and “environment” shall have the meaning set forth in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (“CERCLA”).

 

(ii) To the knowledge of the Company there is no material environmental liability with respect to any solid or hazardous waste transporter or treatment, storage or disposal facility that has been used by the Company.

 

(iii) The Company (i) has received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct its business and (ii) is in compliance with all terms and conditions of any such permit, license or approval.

 

(n) Title. Except as set forth on Schedule 3(n), the Company does not own or lease any real or personal property.

 

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

 

(p) No Material Adverse Breaches, etc. Except as set forth in the SEC Filings, the Company is not subject to any charter, corporate or other legal restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is expected in the future to have a Material Adverse Effect. Except as set forth in the SEC Filings, the Company is not in breach of any contract or agreement which breach, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect.

 

  

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(q) Tax Status. The Company has made and filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject and (unless and only to the extent that the Company has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any such claim.

 

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

 

(s) Rights of First Refusal. The Company is not obligated to offer the securities offered hereunder on a right of first refusal basis or otherwise to any third parties including, but not limited to, current or former stockholders of the Company, underwriters, brokers, agents or other third parties.

 

(t) Reliance. The Company acknowledges that the Buyers are relying on the representations and warranties made by the Company hereunder and that such representations and warranties are a material inducement to the Buyer purchasing the Units. The Company further acknowledges that without such representations and warranties of the Company made hereunder, the Buyers would not enter into this Agreement.

 

(u) Brokers’ Fees. The Company does not have any liability or obligation to pay any fees or commissions to any broker, finder or agent with respect to the transactions contemplated by this Agreement, except for the payment of the Brokers’ Fees to the Brokers, as described above.

 

4. COVENANTS.

 

(a) Best Efforts. Each party shall use its best efforts timely to satisfy each of the conditions to be satisfied by it as provided in Sections 5 and 6 of this Agreement.

 

(b) Form D. The Company agrees to file a Form D with respect to the offer and sale of the Units as required under Regulation D. The Company shall, on or before the Closing Date, take such action as the Company shall reasonably determine is necessary to qualify the Units, including the PPO Warrants (and the Common Stock underlying the Units and PPO Warrants), or obtain an exemption for the Units, including the PPO Warrants (and the Common Stock underlying the Units and the PPO Warrants) for sale to the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of the United States, and shall provide evidence of any such action so taken to the Buyers on or prior to the Closing Date.

 

  

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(c) Reporting Status. Until the date on which the Buyer(s) shall have sold all the Common Stock, including the Common Stock underlying the Units and PPO Warrants, the Company shall file in a timely manner (or, with respect to Form 8-K reports, shall use its reasonable commercial efforts to file in a timely manner) all reports required to be filed with the SEC pursuant to the Exchange Act, and the regulations of the SEC thereunder, and the Company shall not terminate its status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the rules and regulations thereunder would otherwise permit such termination.

 

(d) Use of Proceeds. The Company shall use 100% of the net proceeds from the sale of the Units (after deducting Brokers’ Fees, legal and accounting fees and expenses and fees payable to the Escrow Agent) to complete the development of the CÜR product, negotiate with music labels, and for working capital purposes.

 

(e) Listings or Quotation. The Company shall use its best efforts to maintain the listing or quotation of its Common Stock on the OTC Markets.

 

(f) Corporate Existence. For a period of one (1) year from the date of the Contribution, the Company shall not directly or indirectly consummate any merger, reorganization, restructuring, reverse stock split, consolidation, sale of all or substantially all of the Company’s assets, enter into a change of control transaction, or any similar transaction or related transactions (each such transaction, an “Organizational Change”), unless, prior to the consummation of an Organizational Change, the Company obtains the written consent of the Buyers then owning a majority of the Units sold in the PPO. In any such case, the Company will make appropriate provision with respect to such holders’ rights and interests to insure that the provisions of this Section 4(f) will thereafter be applicable to the Units (including the underlying securities). The provisions of this Section 4(f) shall be inapplicable with respect to any Organizational Change, including the Name Change, Forward Split, the Split-Off, and the PPO, if any, effected in connection with the Contribution.

 

(g) Resales Absent Effective Registration Statement. Each of the Buyers understands and acknowledges that (i) this Agreement and the agreements contemplated hereby may require the Company to issue and deliver the Common Stock, including the Common Stock underlying the Units and the PPO Warrants to the Buyers with legends restricting their transferability under the Securities Act, and (ii) it is aware that resales of such Common Stock, including the Common Stock underlying the Units and PPO Warrants may not be made unless, at the time of resale, there is an effective registration statement under the Securities Act covering such Buyer’s resale(s) or an applicable exemption from registration.

 

  

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(h) Cancellation of Common Stock Owned by Pre-Transaction Company Stockholders. At the Closing, the pre-Transaction stockholders of the Company will own such number of shares of Common Stock as is equal to 19.9% of the Company’s issued and outstanding shares of Common Stock after taking into account the Forward Split, Split-Off, Split-Off Share Cancellation, PPO and Contribution. The-pre-Transaction stockholders of the Company, excluding the shareholders that will be parties to the Split-Off Agreement, including the Split-Off Share Cancellation, will own an aggregate of 4,225,000 shares of Common Stock after the Forward Split. If the Closing is on the Maximum PPO amount of $7,000,000, such pre-Transaction stockholders of the Company will retain all 4,225,000 of such shares as this amount will constitute 19.9% of the Company’s issued and outstanding shares of Common Stock after taking all of the Transactions into account. If however, the Closing will be on less than the Maximum PPO amount, such pre-Transaction stockholders of the Company will cancel, prior to Closing, such number of shares of Common Stock as is necessary to insure that their aggregate holdings at the Closing will represent 19.9% of the Company’s issued and outstanding shares of Common Stock at the Closing. In the event that there are additional closings under the PPO following the Closing, the pre-Transaction stockholders of the Company will receive additional shares of Common Stock in an amount necessary to maintain their aggregate 19.9% ownership. If, however, the Company issues additional shares of Common Stock subsequent to the Closing and prior to, or in conjunction with, the final closing under the PPO, outside of the PPO issuances, such non-PPO share issuances shall not serve to increase the number of shares of Common Stock issuable by reason of the 19.9% maintenance provision.

 

(i) Disclosure of Information in Form 8-K. The Company will disclose in a Form 8-K filed with the SEC within 4 business days of closing the Contribution (or business combination if such transaction assumes a different corporate form) all of the confidential information provided to Buyers as described in Section 2(u) of this Agreement so that Buyers will not be privy to any confidential information not made generally available to the public (it being understood that information not disclosed in the Form 8-K filing will no longer be deemed material non-public information under Regulation FD).

 

(j) Forward Stock Split. As soon as practicable after the closing of the Contribution, the Company will effect a 16.503906-for-1 forward split of its Common Stock in the form of a dividend, with the result that each share of the Company’s Common Stock outstanding immediately prior to the stock split will become 16.503906 shares of its Common Stock immediately thereafter.

 

(k) Increase of Authorized Shares. As soon as practicable following the closing of the Contribution, the Company will increase its number of authorized shares from 150,000,000 shares consisting of (i) 150,000,000 shares of Common Stock, and (ii) no shares of Preferred Stock, to 310,000,000 shares, consisting of (i) 300,000,000 shares of Common Stock, and (ii) 10,000,000 shares of Preferred Stock.

 

(l) Name Change. As soon as practicable following the closing of the Contribution, the Company will change its name to “CUR Media, Inc.”

 

  

21

  

 

5. CONDITIONS TO THE COMPANY’S OBLIGATION TO SELL.

 

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

 

(a) Each Buyer shall have executed this Agreement and completed and executed the Investor Certification and the Investor Profile and delivered them to the Company.

 

(b) The Buyer(s) shall have delivered to the Escrow Agent the Purchase Price for Units in respective amounts as set forth on the signature page(s) affixed hereto and the Escrow Agent shall have delivered the net proceeds to the Company by wire transfer of immediately available U.S. funds pursuant to the wire instructions provided by the Company.

 

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

 

6. CONDITIONS TO THE BUYER’S OBLIGATION TO PURCHASE.

 

(a) The obligation of the Buyer(s) hereunder to purchase the Units at the Closing is subject to the satisfaction, at or before the Closing Date, of each of the following conditions:

 

(i) The representations and warranties of the Company contained in this Agreement shall be true and correct in all material respects (except to the extent that any of such representations and warranties is already qualified as to materiality in Section 3 above, in which case, such representations and warranties shall be true and correct without further qualification) as of the date when made and as of the Closing Date as though made at that time (except for representations and warranties that speak as of a specific date) and the Company shall have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Company shall have obtained any and all consents, permits, approvals, registrations and waivers necessary or appropriate for consummation of the purchase and sale of the Units, all of which shall be in full force and effect.

 

(ii) The Company shall have delivered to the Buyers a certificate, executed on behalf of the Company by its Secretary, dated as of the Closing Date, certifying the resolutions adopted by the Board of Directors of the Company approving the transactions contemplated by this Agreement and the issuance of the Units, including the PPO Warrants and the Common Stock underlying the Units and PPO Warrants, certifying the current versions of the Articles of Incorporation and By-laws of the Company and certifying as to the signatures and authority of persons signing this Agreement on behalf of the Company. The foregoing certificate shall only be required to be delivered on the first Closing Date, unless any information contained in the certificate has changed.

 

  

22

  

 

(iii) The Buyer(s) shall have received opinions from the Company’s and Raditaz’s legal counsels, dated as of the Closing Date.

 

(b) Indemnification of Buyers. In consideration of the Buyer’s execution and delivery of this Agreement and acquiring the Units, including the PPO Warrants (and the Common Stock underlying the Units and PPO Warrants) hereunder, and in addition to all of the Company’s other obligations under this Agreement, the Company shall defend, protect, indemnify and hold harmless the Buyer(s) and each other holder of the Units (and the Common Stock, including the Common Stock underlying the Units and PPO Warrants), and all of their officers, directors, employees and agents (including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively, the “Buyer Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Buyer Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “Indemnified Liabilities”), incurred by the Buyer Indemnitees or any of them as a result of, or arising out of, or relating to (a) any material breach of any covenant, agreement or obligation of the Company contained in this Agreement, or (b) any cause of action, suit or claim brought or made against such Buyer Indemnitee and arising out of or resulting from the execution, delivery, performance or enforcement of this Agreement by any of the Buyer Indemnitees. To the extent that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution to the payment and satisfaction of each of the Indemnified Liabilities, which is permissible under applicable law.

 

7. [RESERVED]

 

8. CONFLICT WAIVER.

 

The Buyers acknowledge that Adam S. Gottbetter is the owner of Gottbetter & Partners, LLP, counsel to the Company, and Gottbetter Capital Markets, LLC (the “Placement Agent”) and that Adam S. Gottbetter beneficially owns or may in the future beneficially own shares in the Company. The Buyers agree that in the event of any dispute arising in connection with this Agreement, or otherwise in connection with any transaction or agreement contemplated and referred herein, Gottbetter & Partners, LLP shall be permitted to continue to represent the Company, and the Buyers will not seek to disqualify such counsel and waive any objection the Buyers might have with respect to the acting as the counsel to the Company pursuant to this Agreement.

 

9. GOVERNING LAW: MISCELLANEOUS.

 

(a) Governing Law. This Agreement shall be governed by and interpreted in accordance with the laws of the State of New York without regard to the principles of conflict of laws.

 

(b) The parties agree to submit all controversies to arbitration in accordance with the provisions set forth below and understand that:

 

  

23

  

 

(i) Arbitration shall be final and binding on the parties.

 

(ii) The parties are waiving their right to seek remedies in court, including the right to a jury trial.

 

(iii) Pre-arbitration discovery is generally more limited and different from court proceedings.

 

(iv) The arbitrator’s award is not required to include factual findings or legal reasoning and any party’s right to appeal or to seek modification of rulings by arbitrators is strictly limited.

 

(v) The panel of arbitrators will typically include a minority of arbitrators who were or are affiliated with the securities industry.

 

(vi) All controversies which may arise between the parties concerning this Agreement shall be determined by arbitration pursuant to the rules then pertaining to the Financial Industry Regulatory Authority in New York, New York. Judgment on any award of any such arbitration may be entered in the Supreme Court of the State of New York or in any other court having jurisdiction of the person or persons against whom such award is rendered. Any notice of such arbitration or for the confirmation of any award in any arbitration shall be sufficient if given in accordance with the provisions of this Agreement. The parties agree that the determination of the arbitrators shall be binding and conclusive upon them. The prevailing party, as determined by such arbitrators, in a legal proceeding shall be entitled to collect any costs, disbursements and reasonable attorney’s fees from the other party. Prior to filing an arbitration, the parties hereby agree that they will attempt to resolve their differences first by submitting the matter for resolution to a mediator, acceptable to all parties, and whose expenses will be borne equally by all parties. The mediation will be held in the County of New York, State of New York, on an expedited basis. If the parties cannot successfully resolve their differences through mediation, the matter will be resolved by arbitration. The arbitration shall take place in the County of New York, State of New York, on an expedited basis.

 

(c) Counterparts. This Agreement may be executed in two or more identical counterparts, all of which 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. In the event any signature page is delivered by facsimile transmission, the party using such means of delivery shall cause four (4) additional original executed signature pages to be physically delivered to the other party within five (5) days of the execution and delivery hereof.

 

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

 

(e) Severability. If any provision of this Agreement shall be invalid or unenforceable in any jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

 

  

24

  

 

(f) Entire Agreement, Amendments. This Agreement supersedes all other prior oral or written agreements between the Buyer(s), the Company, their affiliates and persons acting on their behalf with respect to the matters discussed herein (including any term sheet), and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be waived or amended other than by an instrument in writing signed by the party to be charged with enforcement.

 

(g) Notices. Any notices, consents, waivers, or other communications required or permitted to be given under the terms of this Agreement must be in writing and will be deemed to have been delivered (i) upon receipt, when delivered personally; (ii) upon confirmation of receipt, when sent by facsimile; (iii) upon receipt when sent by U.S. certified mail, return receipt requested, or (iv) one (1) day after deposit with a nationally recognized overnight delivery service, in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall be:

 

	
If to the Company, to:

	
Duane Street Corp.

	 	
616 Corporate Way, Suite 2-4059

	 	
Valley Cottage, NY 10989

	 	
Attention: Peretz Yehuda Aisenstark, CEO

	 	
Telephone: (855) 360-3330

	 	
Facsimile: _______________

	 	 
	
With a copy to:

	
Gottbetter & Partners, LLP

	 	
488 Madison Avenue, 12th Floor

	 	
New York, New York 10022

	 	
Attention: Adam S. Gottbetter, Esq.

	 	
Telephone: (212) 400-6900

	 	
Facsimile: (212) 400-6901

 

If to the Buyer(s), to its address and facsimile number set forth on the Buyer Omnibus Signature Page affixed hereto. Each party shall provide five (5) days’ prior written notice to the other party of any change in address or facsimile number.

 

(h) Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. No party shall assign this Agreement or any rights or obligations hereunder without the prior written consent of the other party hereto.

 

(i) No Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.

 

  

25

  

 

(j) Survival. Unless this Agreement is terminated under Section 9(l), the representations and warranties of the Company and the Buyer(s) contained in Sections 2 and 3, the agreements and covenants set forth in Sections 4, 5 and 9, and the indemnification provisions set forth in Section 6, shall survive the Closing for a period of two (2) years. The Buyer(s) shall be responsible only for its own representations, warranties, agreements and covenants hereunder.

 

(k) Publicity. The Company shall have the right to approve, before issuance any press release or any other public statement with respect to the transactions contemplated hereby made by any other party; and the Company shall be entitled, without the prior approval of any Buyer, to issue any press release or other public disclosure with respect to such transactions required under applicable securities or other laws or regulations or as it otherwise deems appropriate.

 

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

 

(m) Termination. Subject to the prior termination at the discretion of the Company and the Placement Agent, in the event the Closing shall not have occurred on or before five (5) business days from the end of the Offering Period, the Offering shall not be completed and the Company shall arrange for the prompt return of all subscription proceeds without interest or deduction.

 

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

 

(o) Remedies. In addition to being entitled to exercise all rights provided herein or granted by law, including recovery of damages, the Buyer and the Company will be entitled to specific performance under this Agreement. 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 agree to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.

 

  

26

  

 

(p) ANTI MONEY LAUNDERING REQUIREMENTS

 

	
The USA PATRIOT Act

	
What is money laundering?

	
How big is the problem and why is it important?

	
The USA PATRIOT Act is designed to detect, deter, and punish terrorists in the United States and abroad. The Act imposes new anti-money laundering requirements on brokerage firms and financial institutions. Since April 24, 2002, all brokerage firms have been required to have new, comprehensive anti-money laundering programs.

 

To help you understand these efforts, we want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.

	
Money laundering is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities. Money laundering occurs in connection with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.

	
The use of the U.S. financial system by criminals to facilitate terrorism or other crimes could well taint our financial markets. According to the U.S. State Department, one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.

 

	
What are we required to do to eliminate money laundering?

	
Under new rules required by the USA PATRIOT Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with the new laws.

	
As part of our required program, we may ask you to provide various identification documents or other information. Until you provide the information or documents we need, we may not be able to effect any transactions for you.

 

(p) Omnibus Signature Page. This Agreement is intended to be read and construed in conjunction with the Registration Rights Agreement. Accordingly, pursuant to the terms and conditions of this Agreement and such related agreements, it is hereby agreed that the execution by the Buyer of this Agreement, in the place set forth on the Buyer Omnibus Signature Page below, shall constitute agreement to be bound by the terms and conditions hereof and the terms and conditions of the Registration Rights Agreement, with the same effect as if each of such separate but related agreement were separately signed.

 

[REMAINDER PAGE INTENTIONALLY LEFT BLANK]

 

  

27

  

 

To subscribe for Units in the private offering of Duane Street Corp. (to be renamed CUR Media, Inc.):

 

	
1.  

	
Date and Fill in the amount of Units being purchased and Complete and Sign (i) the Buyer Omnibus Signature Page of the Securities Purchase Agreement, attached as Annex A.

 

	
2.  

	
Initial the Investor Certification, attached as Annex B.

 

	
3.  

	
Complete and Sign the Investor Profile, attached as Annex C.

 

	
4.  

	
Complete and Sign the Anti-Money Laundering Information Form, attached as Annex D.

 

	
5.  

	
Fax or email all forms and then send all signed original documents to:

 

	 	

Gottbetter & Partners, LLP 

488 Madison Avenue, 12th Floor

New York, NY 10022

Facsimile Number: 212.400.6901

Telephone Number: 212.400.6900

Attention: Kathleen L. Rush

Email: klr@gottbetter.com

 

	
6.  

	
If you are paying the Purchase Price by check, a check for the exact dollar amount of the Purchase Price for the amount of Units you are offering to purchase, rounded up to the nearest whole cent, should be made payable to the order of “CSC Trust Company of Delaware, as Escrow Agent for Duane Street Corp.” and should be sent to CSC Trust Company of Delaware, 2711 Centerville Road, One Little Falls Centre, Wilmington, DE 19808, Attention: Alan R. Halpern. By way of example, if a prospective investor was to purchase 6,060 Units in the PPO, the aggregate purchase price would be $100,013.67036. The prospective investor should round up to the nearest whole cent, which, in the preceding hypothetical, would result in an aggregate purchase price of $100,013.68.

 

	
7.  

	
If you are paying the Purchase Price by wire transfer, you should send a wire transfer for the exact dollar amount of the Purchase Price of the Units you are offering to purchase, rounded up to the nearest whole cent, according to the following instructions:

 

 

	Bank Name: 	PNC Bank 

300 Delaware Avenue

Wilmington, DE 19801

	ABA Routing Number: 	031100089
	SWIFT Code:	PNCCUS33
	Account Name: 	CSC Trust Company of Delaware
	Account Number:	5605012373
	Reference: 	Duane Street Corp.; 79-2052; [insert Purchaser’s name]
	Escrow Agent Contact: 	Alan R. Halpern

 

  

28

  

                                                                                                                                                                         

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

 

	 	COMPANY:
	 	 
	 	DUANE STREET CORP.
	 	 	 
	 	
By: 

	_______________________________________________________
	 	
Name: 

	_______________________________________________________
	 	
Title: 

	_______________________________________________________
	 	 	 
	 	
BUYERS: 

 

The Buyers executing the Buyer Omnibus Signature Page in the form attached hereto as Annex A and delivering the same to the Company or its agents shall be deemed to have executed this Agreement and agreed to the terms hereof.

 

  

29

  

 

ANNEX A

 

BUYER OMNIBUS SIGNATURE PAGE

to

Securities Purchase Agreement and

Registration Rights Agreement

 

The undersigned, desiring to: (i) enter into the Securities Purchase Agreement, dated as of _______________5, 201_ (the “Securities Purchase Agreement”), between the undersigned, DUANE STREET CORP., a Delaware corporation (the “Company”), and the other parties thereto, in or substantially in the form furnished to the undersigned, (ii) enter into the Registration Rights Agreement (the “Registration Rights Agreement”), between the undersigned, the Company, and the other parties thereto, in or substantially in the form furnished to the undersigned and (iii) purchase the Units of the Company as set forth below, hereby agrees to purchase such Units from the Company and further agrees to join the Securities Purchase Agreement and the Registration Rights Agreement as a party thereto, with all the rights and privileges appertaining thereto, and to be bound in all respects by the terms and conditions thereof. The undersigned specifically acknowledges having read the representations section in the Securities Purchase Agreement entitled “Buyer’s Representations and Warranties,” and hereby represents that the statements contained therein are complete and accurate with respect to the undersigned as a Buyer.

 

The Buyer hereby elects to purchase_________________________Units ($_______________) (to be completed by the Buyer) under the Securities Purchase Agreement.

 

	BUYER (individual)	 	BUYER (entity)
	 	 	 
	_______________________________________________________	 	_______________________________________________________
	 	 	 
	Signature	 	Name of Entity
	_______________________________________________________	 	_______________________________________________________
	 	 	 
	Print Name  	 	Signature
	_______________________________________________________	 	_______________________________________________________
	 	 	Print Name:
	Signature (if Joint Tenants or Tenants in Common)	 	_______________________________________________________
	 	 	Title: 
	 	 	 
	Address of Principal Residence:	 	Address of Executive Offices:
	_______________________________________________________	 	_______________________________________________________
	_______________________________________________________	 	_______________________________________________________
	 _______________________________________________________	 	_______________________________________________________
	 	 	 
	Social Security Number(s): 	 	IRS Tax Identification Number:
	_______________________________________________________	 	_______________________________________________________
	 	 	 
	Telephone Number:	 	Telephone Number:
	_______________________________________________________	 	_______________________________________________________
	 	 	 
	Facsimile Number:	 	Facsimile Number:
	_______________________________________________________	 	_______________________________________________________
	_______________________________________________________	 	_______________________________________________________

 

_______________________________

5 Will reflect the Closing Date. Not to be completed by Buyer.

 

  

30

  

 

ANNEX B

 

DUANE STREET CORP.

ACCREDITED INVESTOR CERTIFICATION

 

For Individual Investors Only

(all Individual Investors must INITIAL where appropriate):

 

	
Initial _______

	
I have a net worth of at least US$1 million either individually or through aggregating my individual holdings and those in which I have a joint, community property or other similar shared ownership interest with my spouse. (For purposes of calculating your net worth under this paragraph, (a) your primary residence shall not be included as an asset; (b) indebtedness secured by your primary residence, up to the estimated fair market value of your primary residence at the time of your purchase of the securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of your purchase of the securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of your primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by your primary residence in excess of the estimated fair market value of your primary residence at the time of your purchase of the securities shall be included as a liability.)

 

	
Initial _______

	
I have had an annual gross income for the past two years of at least US$200,000 (or US$300,000 jointly with my spouse) and expect my income (or joint income, as appropriate) to reach the same level in the current year.

 

	
Initial _______

	
I am a director or executive officer of [__________].

 

For Non-Individual Investors

(all Non-Individual Investors must INITIAL where appropriate):

 

	
Initial _______

	
The investor certifies that it is a partnership, corporation, limited liability company or business trust that is 100% owned by persons who meet at least one of the criteria for Individual Investors set forth above.

 

	
Initial _______

	
The investor certifies that it is a partnership, corporation, limited liability company or business trust that has total assets of at least US$5 million and was not formed for the purpose of investing the Company.

 

	
Initial _______

	
The investor certifies that it is an employee benefit plan whose investment decision is made by a plan fiduciary (as defined in ERISA §3(21)) that is a bank, savings and loan association, insurance company or registered investment advisor.

 

	
Initial _______

	
The investor certifies that it is an employee benefit plan whose total assets exceed US$5,000,000 as of the date of this Agreement.

 

	
Initial _______

	
The undersigned certifies that it is a self-directed employee benefit plan whose investment decisions are made solely by persons who meet at least one of the criteria for Individual Investors.

 

  

31

  

 

	
Initial _______

	
The investor certifies that it is a U.S. bank, U.S. savings and loan association or other similar U.S. institution acting in its individual or fiduciary capacity.

 

	
Initial _______

	
The undersigned certifies that it is a broker-dealer registered pursuant to §15 of the Securities Exchange Act of 1934.

 

	
Initial _______

	
The investor certifies that it is an organization described in §501(c)(3) of the Internal Revenue Code with total assets exceeding US$5,000,000 and not formed for the specific purpose of investing in the Company.

 

	
Initial _______

	
The investor certifies that it is a trust with total assets of at least US$5,000,000, not formed for the specific purpose of investing in the Company, and whose purchase is directed by a person with such knowledge and experience in financial and business matters that such person is capable of evaluating the merits and risks of the prospective investment.

 

	
Initial _______

	
The investor certifies that it is a plan established and maintained by a state or its political subdivisions, or any agency or instrumentality thereof, for the benefit of its employees, and which has total assets in excess of US$5,000,000.

 

	
Initial _______

	
The investor certifies that it is an insurance company as defined in §2(13) of the Securities Act of 1933, or a registered investment company.

 

For Non-U.S. Person Investors

(all Investors who are not a U.S. Person must INITIAL this section):

 

	
Initial _______

	
The investor is not a “U.S. Person” as defined in Regulation S; and specifically the investor is not:

 

	
  

	
A.

	
a natural person resident in the United States of America, including its territories and possessions (“United States”);

 

	
  

	
B.

	
a partnership or corporation organized or incorporated under the laws of the United States;

 

	
  

	
C.

	
an estate of which any executor or administrator is a U.S. Person;

 

	
  

	
D.

	
a trust of which any trustee is a U.S. Person;

 

	
  

	
E.

	
an agency or branch of a foreign entity located in the United States;

 

	
  

	
F.

	
a non-discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary for the benefit or account of a U.S. Person;

 

  

32

  

 

	
  

	
G.

	
a discretionary account or similar account (other than an estate or trust) held by a dealer or other fiduciary organized, incorporated, or (if an individual) resident in the United States; or

 

	
  

	
H.

	
a partnership or corporation: (i) organized or incorporated under the laws of any foreign jurisdiction; and (ii) formed by a U.S. Person principally for the purpose of investing in securities not registered under the Securities Act, unless it is organized or incorporated, and owned, by accredited investors (as defined in Rule 501(a) under the Securities Act) who are not natural persons, estates or trusts.

 

And, in addition:

 

	
  

	
I.

	
the investor was not offered the securities in the United States;

 

	
  

	
J.

	
at the time the buy-order for the securities was originated, the investor was outside the United States; and

 

	
  

	
K.

	
the investor is purchasing the securities for its own account and not on behalf of any U.S. Person (as defined in Regulation S) and a sale of the securities has not been pre-arranged with a purchaser in the United States.

 

  

33

  

 

ANNEX C

 

DUANE STREET CORP.

 

Investor Profile

(Must be completed by Investor)

 

Section A - Personal Investor Information

 

	
Investor Name(s):

	  
	
Individual executing Profile or Trustee:

	  
	
Social Security Numbers / Federal I.D. Number:

	  
	
Date of Birth:

	  	  	  	
Marital Status:

	  	  
	
Joint Party Date of Birth:

	  	  	  	
Investment Experience (Years):

	  	  
	
Annual Income:

	  	  	  	
Liquid Net Worth:

	  	  
	
Net Worth (excluding value of primary residence):

	  
	
Tax Bracket:

	  	  	
15% or below

	  	  	
25% - 27.5%

	  	  	
Over 27.5%

	  	  
	
Home Street Address:

	  
	
Home City, State & Zip Code:

	  
	
Home Phone:

	  	
Home Fax:

	  	
Home Email:

	  
	
Employer:

	  
	
Employer Street Address:

	  
	
Employer City, State & Zip Code:

	  
	
Bus. Phone:

	  	
Bus. Fax:

	  	
Bus. Email:

	  
	
Type of Business:

	  
	
(PLACEMENT AGENT) Account Executive / Outside Broker/Dealer:

	  
	
If you are a United States citizen, please list the number and jurisdiction of issuance of any other government-issued document evidencing residence and bearing a photograph or similar safeguard (such as a driver’s license or passport), and provide a photocopy of each of the documents you have listed.

	  
	
If you are NOT a United States citizen, for each jurisdiction of which you are a citizen or in which you work or reside, please list (i) your passport number and country of issuance or (ii) alien identification card number AND (iii) number and country of issuance of any other government-issued document evidencing nationality or residence and bearing a photograph or similar safeguard, and provide a photocopy of each of these documents you have listed. These photocopies must be certified by a lawyer as to authenticity.

	  
	  
	
Section B – Certificate Delivery Instructions

	  
	  	  	
Please deliver certificate to the Employer Address listed in Section A.

	  	  	
Please deliver certificate to the Home Address listed in Section A.

	  	  	
Please deliver certificate to the following address:

	  
	  
	
Section C – Form of Payment – Check or Wire Transfer

	  
	  	  	
Check payable to CSC Trust Company of Delaware , as Escrow Agent for Duane Street Corp.

	  	  	
Wire funds from my outside account according to Section 1(a) of the Securities Purchase Agreement.

	  	  	
The funds for this investment are rolled over, tax deferred from __________ within the allowed 60 day window.

	  
	
Please check if you are a FINRA member or affiliate of a FINRA member firm: ________

	  
	 	  	 
	
Investor Signature

	  	
Date

 

  

34

  

 

ANTI MONEY LAUNDERING REQUIREMENTS

 

The USA PATRIOT Act

 

The USA PATRIOT Act is designed to detect, deter, and punish terrorists in the United States and abroad. The Act imposes new anti-money laundering requirements on brokerage firms and financial institutions. Since April 24, 2002 all brokerage firms have been required to have new, comprehensive anti-money laundering programs.

 

To help you understand these efforts, we want to provide you with some information about money laundering and our steps to implement the USA PATRIOT Act.

 

What is money laundering?

 

Money laundering is the process of disguising illegally obtained money so that the funds appear to come from legitimate sources or activities. Money laundering occurs in connection with a wide variety of crimes, including illegal arms sales, drug trafficking, robbery, fraud, racketeering, and terrorism.

 

How big is the problem and why is it important?

 

The use of the U.S. financial system by criminals to facilitate terrorism or other crimes could well taint our financial markets. According to the U.S. State Department, one recent estimate puts the amount of worldwide money laundering activity at $1 trillion a year.

 

What are we required to do to eliminate money laundering?

 

Under rules required by the USA PATRIOT Act, our anti-money laundering program must designate a special compliance officer, set up employee training, conduct independent audits, and establish policies and procedures to detect and report suspicious transaction and ensure compliance with such laws. As part of our required program, we may ask you to provide various identification documents or other information. Until you provide the information or documents we need, we may not be able to effect any transactions for you.

 

  

35

  

 

ANTI-MONEY LAUNDERING INFORMATION FORM

The following is required in accordance with the AML provision of the USA PATRIOT ACT.

(Please fill out and return with requested documentation.)

 

INVESTOR NAME: _____________________________________________________________________________________________________

 

LEGAL ADDRESS: _____________________________________________________________________________________________________

 

SSN# or TAX ID#

OF INVESTOR: __________________________________________________________________________________________

 

YEARLY INCOME: __________________________________________________________________________________________________

 

FOR INVESTORS WHO ARE INDIVIDUALS: AGE: __________________________________________________________________________

NET WORTH: _____________________________________________________________________________________________________*

 

	
*

	
For purposes of calculating your net worth in this form, (a) your primary residence shall not be included as an asset; (b) indebtedness secured by your primary residence, up to the estimated fair market value of your primary residence at the time of your purchase of the securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of your purchase of the securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of your primary residence, the amount of such excess shall be included as a liability); and (c) indebtedness that is secured by your primary residence in excess of the estimated fair market value of your primary residence at the time of your purchase of the securities shall be included as a liability.

 

FOR INVESTORS WHO ARE INDIVIDUALS: OCCUPATION: __________________________________________________

 

ADDRESS OF BUSINESS OR OF EMPLOYER: _______________________________________________________________

 

FOR INVESTORS WHO ARE ENTITIES:

 

YEARLY INCOME: _____________ NET WORTH:________________

 

TYPE OF BUSINESS: _______________________________________

 

INVESTMENT OBJECTIVE(S) (FOR ALL INVESTORS): _______________________________________________________

 

IDENTIFICATION & DOCUMENTATION AND SOURCE OF FUNDS:

 

	
1.

	
Please submit a copy of non-expired identification for the authorized signatory(ies) on the investment documents, showing name, date of birth, address and signature. The address shown on the identification document MUST match the Investor’s address shown on the Investor Signature Page.

 

	
Current Driver’s License

	
or

	
Valid Passport

(Circle one or more)

	
or

	
Identity Card

 

	
2.

	
If the Investor is a corporation, limited liability company, trust or other type of entity, please submit the following requisite documents: (i) Articles of Incorporation, By-Laws, Certificate of Formation, Operating Agreement, Trust or other similar documents for the type of entity; and (ii) Corporate Resolution or power of attorney or other similar document granting authority to signatory(ies) and designating that they are permitted to make the proposed investment.

 

	
3.

	
Please advise where the funds were derived from to make the proposed investment:

 

	
Investments

	

Savings

	

Proceeds of Sale

(Circle one or more)

	 	
Other ____________

 

Signature:  _______________________________________

Print Name:  ______________________________________

Title (if applicable):  ________________________________

Date: _______________________________________

 

 

36duane_ex106.htm

EXHIBIT 10.6

 

SUBSCRIPTION ESCROW AGREEMENT

 

Subscription Escrow Agreement (the “Escrow Agreement”) dated as of the effective date (the “Effective Date”) set forth on Schedule 1 attached hereto (“Schedule 1”) by and among the corporation identified on Schedule 1 (the “Issuer”), the limited liability company identified on Schedule 1 (the “Depositor”) and CSC Trust Company of Delaware, as escrow agent hereunder (the “Escrow Agent”).

 

WHEREAS, the Issuer intends to offer and sell to investors in a private placement offering (the “Offering”) its units (the “Units”) with each Unit consisting of (i) one share of the Issuer’s common stock (“Common Stock”), and (ii) one warrant representing the right to purchase one share of Common Stock, exercisable for a period of five years at an exercise price of $33.007812 ($2.00 post-split) per whole share.  The Offering will consist of a minimum of Four Million Dollars ($4,000,000) through the sale of 242,367 pre-split (4,000,000 post-split) Units (the “Minimum Amount”) and a maximum of Seven Million Dollars ($7,000,000) through the sale of 424,142 pre-split (7,000,000 post-split) Units (the “Maximum Amount”), at a purchase price of $16.503906 pre-split ($1.00 post-split) per Unit (the “Purchase Price”).  In the event the Offering is oversubscribed, the Issuer may, in its discretion, sell additional Units up to One Million Dollars ($1,000,000) through the sale of up to 60,592 pre-split (1,000,000 post-split) Units (the “Over-Allotment”) at the same purchase price per Unit;

 

WHEREAS, the Offering is being made on a reasonable best efforts basis until the Maximum Amount is reached, to “accredited investors” in accordance with Rule 506 of Regulation D under the Securities Act, as amended (the “Securities Act”), and/or to “non-U.S. Persons” in accordance with Rule 903 of Regulation S under the Securities Act;

 

WHEREAS, Units may be offered through January 31, 2014 (the “Initial Offering Period”), which period may be extended to April 14, 2014, at the mutual discretion of the Issuer and the Depositor (this additional period and the Initial Offering Period shall be referred to as the “Offering Period”);

 

WHEREAS, the initial closing of the Offering (the “Initial Closing”) is conditioned on the receipt of acceptable subscriptions by the Issuer and the satisfaction of other closing conditions (collectively, the “Initial Closing Conditions”);

 

WHEREAS, after the Initial Closing, the Issuer and the Depositor may mutually agree to continue the Offering until the Maximum Amount, including the Over-Allotment, has been reached or the end of the Offering Period, whichever is earlier, and subsequent closings (each, a “Subsequent Closing”) may take place on an intermittent basis, as deemed practical by the Issuer and the Depositor, conditioned on the receipt of acceptable subscriptions (this requirement for the receipt of acceptable subscriptions, together with certain other conditions to closing, are collectively referred to as the “Subsequent Closing Conditions”);

 

WHEREAS, the subscribers in the Offering (the “Subscribers”), in connection with their intent to purchase Units in the Offering, shall execute and deliver Subscription Agreements and certain related documents memorializing the Subscribers’ agreements to purchase and the Issuer’s agreement to sell the number of Units set forth therein at the Purchase Price;

 

  

1

  

 

WHEREAS, the parties hereto desire to provide for the safekeeping of the Escrow Deposit (as defined below) until such time as the Escrow Deposit is released by the Escrow Agent in accordance with the terms and conditions of this Agreement; and

 

WHEREAS, the Escrow Agent has agreed to accept, hold, and disburse the Escrow Deposit deposited with it and the earnings thereon in accordance with the terms of this Escrow Agreement.

 

NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth, the parties hereto agree as follows:

 

1. Appointment.  The Issuer and Depositor hereby appoint the Escrow Agent as their escrow agent for the purposes set forth herein, and the Escrow Agent hereby accepts such appointment under the terms and conditions set forth herein.

 

2. Escrow Fund.  On or before the Initial Closing, or on or before any Subsequent Closing with respect to Units sold after the Initial Closing, each Subscriber shall have delivered to the Escrow Agent the full Purchase Price for the number of Units subscribed for by such Subscriber by check sent to the Escrow Agent at its address set forth on Schedule 1 or by wire transfer of immediately available funds pursuant to the wire transfer instructions set forth on Schedule 2 hereto, to the account of the Escrow Agent referenced on Schedule 2 hereto.  All funds received from the Subscribers in connection with the sale of Units in the Offering shall be deposited with the Escrow Agent (the “Escrow Deposit”).  The Escrow Agent shall hold the Escrow Deposit and, subject to the terms and conditions hereof, shall invest and reinvest the Escrow Deposit and the proceeds thereof (the “Escrow Fund”) as directed in Section 3.

 

3. Investment of Escrow Fund.  During the term of this Escrow Agreement, the Escrow Fund shall be invested and reinvested by the Escrow Agent in the investment indicated on Schedule 1 or such other investments as shall be directed in writing by the Issuer and the Depositor and as shall be acceptable to the Escrow Agent.  All investment orders involving U.S. Treasury obligations, commercial paper and other direct investments may be executed through broker-dealers selected by the Escrow Agent. Periodic statements will be provided to the Issuer and the Depositor reflecting transactions executed on behalf of the Escrow Fund.  The Issuer and the Depositor, upon written request, will receive a statement of transaction details upon completion of any securities transaction in the Escrow Fund without any additional cost.  The Escrow Agent shall have the right to liquidate any investments held in order to provide funds necessary to make required payments under this Escrow Agreement.  The Escrow Agent shall have no liability for any loss sustained as a result of any investment in an investment indicated on Schedule 1 or any investment made pursuant to the instructions of the parties hereto or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Fund.  The Escrow Agent may earn compensation in the form of short-term interest (“float”) on items like uncashed distribution checks (from the date issued until the date cashed), funds that the Escrow Agent is directed not to invest, deposits awaiting investment direction or received too late to be invested overnight in previously directed investments.

 

  

2

  

 

4. Disposition and Termination.  The Depositor and the Issuer agree to notify the Escrow Agent in writing of any subscription revocations and the Initial Closing date of the Offering.  Additionally, subsequent to an Initial Closing, Depositor and the Issuer agree to notify the Escrow Agent in writing of Subsequent Closing dates, if any, and of the termination of the Offering.  Upon receipt of such written notification(s), the following procedures will take place:

 

	
(i)  

	
Release of Escrow Fund upon Initial Closing.  Prior to the Initial Closing, the Issuer and the Depositor shall deliver to the Escrow Agent joint written instructions executed by a duly authorized executive officer of each of the Issuer and the Depositor (“Instructions”), which Instructions shall provide the day designated as the Initial Closing date, and acknowledge and agree that as of the Initial Closing date the Initial Closing Conditions have been or will be fully satisfied and shall specify the time and payment instructions, including the address and tax identification number of each payee, of the Escrow Fund, including with respect to placement fees that may be disbursed to the Depositor or to any other placement agent or selected dealer with respect to the Offering.  The Escrow Agent shall, at the time and in accordance with the payment instructions specified in the Instructions, deliver the Escrow Fund (without interest).

 

	
(ii)  

	
Release of Escrow Fund upon a Subsequent Closing.  Prior to a Subsequent Closing, the Issuer and the Depositor shall deliver to the Escrow Agent Instructions, which Instructions shall provide the day designated as the Subsequent Closing date, and acknowledge and agree that as of the Subsequent Closing date the Subsequent Closing Conditions have been or will be fully satisfied and shall specify the time and payment instructions, including the address and tax identification number of each payee, of the Escrow Fund, including with respect to placement fees that may be disbursed to the Depositor or to any other placement agent or selected dealer.  The Escrow Agent shall, at the time and in accordance with the payment instructions specified in the Instructions, deliver the then Escrow Fund (without interest).

 

	
(iii)  

	
Return of Escrow Fund on Termination of Offering.  In the event that the Escrow Agent shall have received written notice executed by a duly authorized executive officer of each of the Issuer and the Depositor indicating that the Offering has been terminated prior to the Initial Closing and designating a termination date, the Escrow Agent shall return to each Subscriber, the Purchase Price (without interest and deduction) delivered by such Subscriber to the Escrow Agent.  The Issuer and the Depositor shall provide the Escrow Agent with time and payment instructions, including the address and tax identification number of each payee, for each Subscriber whose Purchase Price the Escrow Agent is to deliver pursuant to this Section (but in no case shall the Escrow Agent deliver such Purchase Price more than thirty (30) days following receipt by the Escrow Agent of such delivery instructions).

 

  

3

  

 

	
(iv)  

	
Return of Escrow Fund on Rejection of Subscription.  In the event the Issuer determines it is necessary or appropriate to reject the subscription of any Subscriber for whom the Escrow Agent has received an Escrow Deposit, the Issuer shall deliver written notice of such event to the Escrow Agent and the Depositor which notice shall include the reason for such rejection and the time and payment instructions, including the address and tax identification number of each payee, for the return to such Subscriber of the Purchase Price delivered by such Subscriber.  The Escrow Agent shall deliver such funds (without interest and deduction) pursuant to such written notice.

 

	
(v)  

	
Return of Escrow Fund on Revocation of Subscription.  In the event that the Escrow Agent shall have received written notice executed by a duly authorized executive officer of each of the Issuer and the Depositor indicating that any subscription has been revoked prior to the Initial Closing, pursuant to the subscription agreement between the Issuer and the relevant Subscriber, the Escrow Agent shall return to such revoking Subscriber, the Purchase Price (without interest and deduction) delivered by such Subscriber to the Escrow Agent.  The Issuer and the Depositor shall provide the Escrow Agent with time and payment instructions, including the address and tax identification number of each payee, for each Subscriber whose Purchase Price the Escrow Agent is to deliver pursuant to this Section (but in no case shall the Escrow Agent deliver such Purchase Price more than thirty (30) days following receipt by the Escrow Agent of such delivery instructions).

 

	
(vi)  

	
Delivery Pursuant to Court Order.  Notwithstanding any provision contained herein, upon receipt by the Escrow Agent of a final and non-appealable judgment, order, decree or award of a court of competent jurisdiction (a “Court Order”), the Escrow Agent shall deliver the Escrow Fund in accordance with the Court Order.  Any Court Order shall be accompanied by an opinion of counsel for the party presenting the Court Order to the Escrow Agent (which opinion shall be satisfactory to the Escrow Agent) to the effect that the court issuing the Court Order has competent jurisdiction and that the Court Order is final and non-appealable.

 

Upon delivery of the Escrow Fund by the Escrow Agent (i) to the Issuer following the Initial Closing, if there are to be no Subsequent Closings, (ii) following a final Subsequent Closing, or (iii) to the Subscribers upon termination of the Offering prior to the Initial Closing, as the case may be, and in each case notice of termination of the Offering having been delivered by the Issuer and the Depositor to the Escrow Agent, this Escrow Agreement shall terminate, subject to the provisions of Section 8.

 

  

4

  

 

5.           Escrow Agent.  The Escrow Agent undertakes to perform only such duties as are expressly set forth herein and no duties shall be implied.  The Escrow Agent shall have no liability under and no duty to inquire as to the provisions of any agreement other than this Escrow Agreement.  The Escrow Agent may rely upon and shall not be liable for acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed by it to be genuine and to have been signed or presented by the proper party or parties.  The Escrow Agent shall be under no duty to inquire into or investigate the validity, accuracy or content of any such document.  The Escrow Agent shall have no duty to solicit any payments which may be due it or the Escrow Fund.  The Escrow Agent shall not be liable for any action taken or omitted by it in good faith except to the extent that a court of competent jurisdiction determines that the Escrow Agent’s gross negligence or willful misconduct was the primary cause of any loss to the Issuer or Depositor.  The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and other skilled persons to be selected and retained by it.  The Escrow Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons.  In the event that the Escrow Agent shall be uncertain as to its duties or rights hereunder or shall receive instructions, claims or demands from any party hereto which, in its opinion, conflict with any of the provisions of this Escrow Agreement, it shall be entitled to refrain from taking any action and its sole obligation shall be to keep safely all property held in escrow until it shall be directed otherwise in writing by all of the other parties hereto or by a final order or judgment of a court of competent jurisdiction.  Anything in this Escrow Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action.

 

6.           Succession.  The Escrow Agent may resign and be discharged from its duties or obligations hereunder by giving 10 business days advance notice in writing of such resignation to the other parties hereto specifying a date when such resignation shall take effect.  The Escrow Agent shall have the right to withhold an amount equal to any amount due and owing to the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in connection with the termination of the Escrow Agreement.  Any corporation or association into which the Escrow Agent may be merged or converted or with which it may be consolidated shall be the Escrow Agent under this Escrow Agreement without further act.

 

7.           Fees.  The Issuer and the Depositor agree jointly and severally to (i) pay the Escrow Agent upon the Initial Closing and from time to time thereafter reasonable compensation for the services to be rendered hereunder, which unless otherwise agreed in writing shall be as described in Schedule 4 attached hereto, and (ii) pay or reimburse the Escrow Agent upon request for all expenses, disbursements and advances, including reasonable attorney’s fees and expenses, incurred or made by it in connection with the preparation, execution, performance, delivery, modification and termination of this Escrow Agreement.  The Escrow Agent is authorized to deduct such fees from the Escrow Fund at the time of the Initial Closing without prior authorization from the Issuer or the Depositor.  In the event that the Offering is terminated prior to an Initial Closing, the Issuer and the Depositor agree to pay the Escrow Agent the Review Fee and the Acceptance Fee as described in Schedule 4 hereto.

 

  

5

  

 

8.           Indemnity.  The Issuer and the Depositor shall jointly and severally indemnify, defend and save harmless the Escrow Agent and its directors, officers, agents and employees (the “indemnitees”) from all loss, liability or expense (including the reasonable fees and expenses of in house or outside counsel) arising out of or in connection with (i) the Escrow Agent’s execution and performance of this Escrow Agreement, except in the case of any indemnitee to the extent that such loss, liability or expense is due to the gross negligence or willful misconduct of such indemnitee, or (ii) its following any instructions or other directions from the Issuer or the Depositor, except to the extent that its following any such instruction or direction is expressly forbidden by the terms hereof.  The parties hereto acknowledge that the foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Escrow Agreement.

 

9.           TINs.  The Issuer and the Depositor each represent that its correct TIN assigned by the Internal Revenue Service or any other taxing authority is set forth in Schedule 1.  All interest or other income earned under the Escrow Agreement, if any, shall be allocated and/or paid as directed in a joint written direction of the Issuer and the Depositor and reported by the recipient to the Internal Revenue Service or any other taxing authority.  Notwithstanding such written directions, the Escrow Agent shall report and, if required, withhold any taxes as it determines may be required by any law or regulation in effect at the time of the distribution.  In the absence of timely direction, all proceeds of the Escrow Fund shall be retained in the Escrow Fund and reinvested from time to time by the Escrow Agent as provided in Section 3.  In the event that any earnings remain undistributed at the end of any calendar year, the Escrow Agent shall report to the Internal Revenue Service or such other authority such earnings as it deems appropriate or as required by any applicable law or regulation or, to the extent consistent therewith, as directed in writing by the Issuer and the Depositor.  In addition, the Escrow Agent shall withhold any taxes it deems appropriate and shall remit such taxes to the appropriate authorities.

 

10.           Notices.  All communications hereunder shall be in writing and shall be deemed to be duly given and received:

 

	
  

	
(i)

	
upon delivery if delivered personally or upon confirmed transmittal if by facsimile;

 

	
  

	
(ii)

	
on the next Business Day (as hereinafter defined) if sent by overnight courier; or

 

	
  

	
(iii)

	
four (4) Business Days after mailing if mailed by prepaid registered mail, return receipt requested, to the appropriate notice address set forth on Schedule 1 or at such other address as any party hereto may have furnished to the other parties in writing by registered mail, return receipt requested.

 

Notwithstanding the above, in the case of communications delivered to the Escrow Agent pursuant to (ii) and (iii) of this Section 10, such communications shall be deemed to have been given on the date received by the Escrow Agent.  In the event that the Escrow Agent, in its sole discretion, shall determine that an emergency exists, the Escrow Agent may use such other means of communication as the Escrow Agent deems appropriate.  “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth on Schedule 1 is authorized or required by law or executive order to remain closed.

 

  

6

  

 

11.           Security Procedures.  In the event funds transfer instructions are given (other than in writing at the time of execution of this Escrow Agreement), whether in writing, by telecopier or otherwise, the Escrow Agent is authorized to seek confirmation of such instructions by telephone call-back to the person or persons designated on Schedule 3 hereto, and the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated.  The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. The Escrow Agent and the beneficiary’s bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by the Issuer or the Depositor to identify (i) the beneficiary, (ii) the beneficiary’s bank, or (iii) an intermediary bank.  The Escrow Agent may apply any of the escrowed funds for any payment order it executes using any such identifying number, even where its use may result in a person other than the beneficiary being paid, or the transfer of funds to a bank other than the beneficiary’s bank or an intermediary bank designated.  The parties to this Escrow Agreement acknowledge that these security procedures are commercially reasonable.

 

12.           Miscellaneous.  The provisions of this Escrow Agreement may be waived, altered, amended or supplemented, in whole or in part, only by a writing signed by all of the parties hereto.  Neither this Escrow Agreement nor any right or interest hereunder may be assigned in whole or in part by any party, except as provided in Section 6, without the prior consent of the other parties, which consent shall not be unreasonably withheld.  This Escrow Agreement shall be governed by and construed under the laws of the State of Delaware.  Each party hereto irrevocably waives any objection on the grounds of venue, forum non-conveniens or any similar grounds and irrevocably consents to service of process by mail or in any other manner permitted by applicable law and consents to the jurisdiction of the courts located in the State of Delaware.  The parties further hereby waive any right to a trial by jury with respect to any lawsuit or judicial proceeding arising or relating to this Escrow Agreement.  No party to this Escrow Agreement is liable to any other party for losses due to, or if it is unable to perform its obligations under the terms of this Escrow Agreement because of, acts of God, fire, floods, strikes, equipment or transmission failure, or other causes reasonably beyond its control.  This Escrow Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

 

[Remainder of Page Intentionally Left Blank]

 

  

7

  

 

IN WITNESS WHEREOF, the parties hereto have executed this Subscription Escrow Agreement as of the date set forth in Schedule 1.

 

 

	 	CSC Trust Company of Delaware 

as Escrow Agent

	 
	 	 	 	 
	 	
By: 

	/s/ Alan R. Halpern 	 
	 	Name:	Alan R. Halpern	 
	 	Title:	Vice President	 
	 	 	 	 
	 	 	 	 
	 	ISSUER	 
	 	 	 	 
	 	DUANE STREET CORP.	 
	 	 	 	 
	 	By: 	/s/ Peretz Yehuda Aisenstark 	 
	 	Name:	Peretz Yehuda Aisenstark	 
	 	Title:	President	 
	 	 	 	 
	 	 	 	 
	 	DEPOSITOR:	 
	 	 	 	 
	 	Gottbetter Capital Markets, LLC	 
	 	 	 	 
	 	By: 	/s/ Julio A. Marquez 	 
	 	Name:	Julio A. Marquez	 
	 	Title:	President	 

 

 

8

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