Document:

tenx_ex1072.htm

Exhibit 10.72

 

TENAX THERAPEUTICS, INC.

 

$40,000,000

 

SALES AGREEMENT

 

February 23, 2015

 

Cowen and Company, LLC

599 Lexington Avenue

New York, NY 10022

Ladies and Gentlemen:

Tenax Therapeutics, Inc. (the “Company”), confirms its agreement (this “Agreement”) with Cowen and Company, LLC (“Cowen”), as follows:

 

1.   Issuance and Sale of Shares.  The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the conditions set forth herein, it may issue and sell through Cowen, acting as agent and/or principal, up to 40,000,000 shares (the “Placement Shares”) of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) having an aggregate offering price of up to $40,000,000.  Notwithstanding anything to the contrary contained herein, the parties hereto agree that compliance with the limitations set forth in this Section 1 on the number of shares of Common Stock issued and sold under this Agreement shall be the sole responsibility of the Company, and Cowen shall have no obligation in connection with such compliance.  The issuance and sale of Common Stock through Cowen will be effected pursuant to the Registration Statement (as defined below) to be filed by the Company and declared effective by the Securities and Exchange Commission (the “Commission”), although nothing in this Agreement shall be construed as requiring the Company to use the Registration Statement (as defined below) to issue the Common Stock.

 

The Company shall file, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder (collectively, the “Securities Act”), with the Commission a registration statement on Form S-3, including one or more base prospectuses, relating to certain securities, including the Placement Shares, to be issued from time to time by the Company, and which incorporates by reference documents that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (collectively, the “Exchange Act”). The Company may prepare a prospectus supplement specifically relating to the Placement Shares (the “Prospectus Supplement”) to the base prospectus included as part of such registration statement.  The Company shall furnish to Cowen, for use by Cowen, copies of the prospectus included as part of such registration statement, as supplemented, if at all, by the Prospectus Supplement, relating to the Placement Shares.  Except where the context otherwise requires, such registration statement, as amended when it becomes effective, including all documents filed as part thereof or incorporated by reference therein, and including any information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act or deemed to be a part of such registration statement pursuant to Rule 430B or 462(b) of the Securities Act, is herein called the “Registration Statement.”  The base prospectus relating to the Common Stock to be issued from time to time by the Company pursuant to this Agreement, including all documents incorporated therein by reference, included in the Registration Statement, as it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus Supplement have most recently been filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act, together with any “issuer free writing prospectus,” as defined in Rule 433 of the Securities Act regulations (“Rule 433”), relating to the Common Stock that (i) is required to be filed with the Commission by the Company or (ii) is exempt from filing pursuant to Rule 433(d)(5)(i), in each case in the form filed or required to be filed with the Commission or, if not required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g), is herein called the “Prospectus.” Any reference herein to the Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated by reference therein (the “Incorporated Documents”). For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement thereto shall be deemed to include any copy filed with the Commission pursuant to either the Electronic Data Gathering Analysis and Retrieval System or Interactive Data Electronic Applications (collectively “IDEA”).

 

2.   Placements.  Each time that the Company wishes to issue and sell Placement Shares hereunder (each, a “Placement”), it will notify Cowen by email notice (or other method mutually agreed to in writing by the parties) (a “Placement Notice”) containing the parameters in accordance with which it desires the Placement Shares to be sold, which shall at a minimum include the number of shares of Placement Shares to be issued, the time period during which sales are requested to be made, any limitation on the number of shares of Placement Shares that may be sold in any one Trading Day (as defined in Section 3) and any minimum price below which sales may not be made, a form of which containing such minimum sales parameters necessary is attached hereto as Schedule 1.  The Placement Notice shall originate from any of the individuals from the Company set forth on Schedule 2 (with a copy to each of the other individuals from the Company listed on such schedule), and shall be addressed to each of the individuals from Cowen set forth on Schedule 2, as such Schedule 2 may be amended from time to time. The Placement Notice shall be effective upon receipt by Cowen unless and until (i) in accordance with the notice requirements set forth in Section 4, Cowen declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount of the Placement Shares thereunder have been sold, (iii) in accordance with the notice requirements set forth in Section 4, the Company suspends or terminates the Placement Notice, (iv) the Company issues a subsequent Placement Notice with parameters superseding those on the earlier dated Placement Notice, or (v) this Agreement has been terminated under the provisions of Section 11.   The amount of any discount, commission or other compensation to be paid by the Company to Cowen in connection with the sale of the Placement Shares shall be calculated in accordance with the terms set forth in Schedule 3.  It is expressly acknowledged and agreed that neither the Company nor Cowen will have any obligation whatsoever with respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to Cowen and Cowen does not decline such Placement Notice pursuant to the terms set forth above, and then only upon the terms specified therein and herein.  In the event of a conflict between the terms of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control.

 

  

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3.   Sale of Placement Shares by Cowen.  Subject to the terms and conditions herein set forth, upon the Company’s issuance of a Placement Notice, and unless the sale of the Placement Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this Agreement, Cowen, for the period specified in the Placement Notice, will use its commercially reasonable efforts consistent with its normal trading and sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Stock Market, LLC (“Nasdaq”) to sell such Placement Shares up to the amount specified, and otherwise in accordance with the terms of such Placement Notice.  Cowen will provide written confirmation to the Company (including by email correspondence to each of the individuals of the Company set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) no later than the opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting forth the number of Placement Shares sold on such day, the compensation payable by the Company to Cowen pursuant to Section 2 with respect to such sales, and the Net Proceeds (as defined below) payable to the Company, with an itemization of the deductions made by Cowen (as set forth in Section 5(a)) from the gross proceeds that it receives from such sales.  Cowen may sell Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, including without limitation sales made through Nasdaq, on any other existing trading market for the Common Stock or to or through a market maker.  If expressly authorized by the Company in a Placement Notice, Cowen may also sell Placement Shares by any other method permitted by law, including but not limited to negotiated transactions.  Notwithstanding the provisions of Section 6(ff), Cowen shall not purchase Placement Shares for its own account as principal unless expressly authorized to do so by the Company in a Placement Notice.  The Company acknowledges and agrees that (i) there can be no assurance that Cowen will be successful in selling Placement Shares, and (ii) Cowen will incur no liability or obligation to the Company or any other person or entity if it does not sell Placement Shares for any reason other than a failure by Cowen to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell such Placement Shares as required under this Section 3.  For the purposes hereof, “Trading Day” means any day on which the Company’s Common Stock is purchased and sold on the principal market on which the Common Stock is listed or quoted.

 

4.   Suspension of Sales.

 

(a)           The Company or Cowen may, upon notice to the other party in writing (including by email correspondence to each of the individuals of the other party set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence to each of the individuals of the other party set forth on Schedule 2), suspend any sale of Placement Shares; provided, however, that such suspension shall not affect or impair either party’s obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice.  Each of the Parties agrees that no such notice under this Section 4 shall be effective against the other unless it is made to one of the individuals named on Schedule 2 hereto, as such schedule may be amended from time to time.

 

(b)           Notwithstanding any other provision of this Agreement, during any period in which the Company is in possession of material non-public information, the Company and Cowen agree that (i) no sale of Placement Shares will take place, (ii) the Company shall not request the sale of any Placement Shares, and (iii) Cowen shall not be obligated to sell or offer to sell any Placement Shares.

5.   Settlement.

 

(a)  Settlement of Placement Shares.  Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will occur on the third (3rd) Trading Day (or such earlier day as is industry practice for regular-way trading) following the date on which such sales are made (each, a “Settlement Date” and the first such settlement date, the “First Delivery Date”).  The amount of proceeds to be delivered to the Company on a Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the aggregate sales price received by Cowen at which such Placement Shares were sold, after deduction for (i) Cowen’s commission, discount or other compensation for such sales payable by the Company pursuant to Section 2 hereof, (ii) any other amounts due and payable by the Company to Cowen hereunder pursuant to Section 7(g) (Expenses) hereof, and (iii) any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales.

 

(b)  Delivery of Placement Shares.  On or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer the Placement Shares being sold by crediting Cowen’s or its designee’s account (provided Cowen shall have given the Company written notice of such designee at least one (1) Trading Day prior to the Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian System (“DWAC”) or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradeable, transferable, registered shares in good deliverable form.  On each Settlement Date, Cowen will deliver the related Net Proceeds in same day funds to an account designated by the Company on, or prior to, the Settlement Date.  Cowen will be responsible for providing DWAC instructions or instructions for delivery by other means with regard to the transfer of Placement Shares being sold.  The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to deliver duly authorized Placement Shares on a Settlement Date (other than as a result of a failure by Cowen to provide instructions for delivery), the Company agrees that in addition to and in no way limiting the rights and obligations set forth in Section 9(a) (Indemnification and Contribution) hereto, it will (i) hold Cowen harmless against any loss, claim, damage, or reasonable, documented expense (including reasonable and documented legal fees and expenses), as incurred, arising out of or in connection with such default by the Company and (ii) pay to Cowen (without duplication) any commission, discount, or other compensation to which it would otherwise have been entitled absent such default.

 

6.   Representations and Warranties of the Company.  Except as disclosed in the Registration Statement, the Prospectus or any prospectus supplement (including the Incorporated Documents), the Company represents and warrants to, and agrees with, Cowen that as of the effective date of the Registration Stratement, each Representation Date, the date on which a Placement Notice is given, and any date on which Placement Shares are sold hereunder:

 

(a)  Compliance with Registration Requirements.  The Registration Statement has been declared effective by the Commission under the Securities Act. The Company has complied to the Commission’s satisfaction with all requests of the Commission for additional or supplemental information. No stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company, contemplated or threatened by the Commission.  The Company meets the requirements for use of Form S-3 under the Securities Act.  The aggregate market value of the Company’s voting and non-voting common equity held by non-affiliates of the Company was at least $75 million within 60 days prior to the date of filing the Registration Statement or the most recent Annual Report on Form 10-K.

 

  

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(b)             No Misstatement or Omission.  Each of the Registration Statement, any Rule 462(b) Registration Statement, the Prospectus and any post-effective amendments or supplements thereto, at the time it became effective or its date, as applicable, and as of each of the Settlement Dates, if any, complied in all material respects with the Securities Act and did not and, as of each Settlement Date, if any, will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading. The Prospectus, as amended or supplemented, as of its date and as of each of the Settlement Dates, if any, will not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with information relating to Cowen furnished to the Company in writing by Cowen expressly for use therein.  There are no contracts or other documents required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been described or filed as required.

 

(c)  Offering Materials Furnished to Cowen. The Company has delivered to Cowen one complete copy of the Registration Statement and a copy of each consent and certificate of experts filed as a part thereof, and conformed copies of the Registration Statement (without exhibits) and the Prospectus, as amended or supplemented, in such quantities and at such places as Cowen has reasonably requested.

 

(d)  Distribution of Offering Material By the Company. The Company has not distributed and will not distribute, prior to the completion of Cowen’s distribution of the Placement Shares pursuant to this Agreement, any offering material in connection with the offering and sale of the Placement Shares other than the Prospectus or the Registration Statement.

 

(e)  The Sales Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the Company, enforceable against the Company in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

 

(f)  Authorization of the Common Stock. The Placement Shares have been duly authorized for issuance and sale pursuant to this Agreement and, when issued and delivered by the Company against payment therefor pursuant to this Agreement, will be validly issued, fully paid and nonassessable.

 

(g)  No Applicable Registration or Other Similar Rights. There are no persons with registration or other similar rights to have any equity or debt securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement, except for such rights as have been duly waived.

 

(h)  No Material Adverse Change.  Except as otherwise disclosed in the Prospectus, subsequent to the respective dates as of which information is given in the Prospectus: (i) there has been no material adverse change, or any development that would reasonably be expected to result in a material adverse change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the ordinary course of business, of the Company and Life Newco (as defined below), considered as one entity (any such change is called a “Material Adverse Change”); (ii) the Company and Life Newco, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business; and (iii) there has been no dividend or distribution of any kind declared, paid or made by the Company or by Life Newco on any class of capital stock or repurchase or redemption by the Company or Life Newco of any class of capital stock.

 

(i)  Independent Accountants.  Cherry Bekaert LLP, who have expressed their opinion with respect to the financial statements (which term as used in this Agreement includes the related notes thereto) and supporting schedules filed with the Commission or incorporated by reference as a part of the Registration Statement and included in the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Exchange Act.

 

(j)  Preparation of the Financial Statements. The financial statements filed with the Commission as a part of or incorporated by reference in the Registration Statement and included in the Prospectus present fairly, in all material respects, the consolidated financial position of the Company and Life Newco as of and at the dates indicated and the results of their operations and cash flows for the periods specified.  The supporting schedules included in or incorporated in the Registration Statement present fairly, in all material respects, the information required to be stated therein.  Such financial statements and supporting schedules have been prepared in accordance with generally accepted accounting principles as applied in the United States applied on a consistent basis throughout the periods involved, except as may be expressly stated in the related notes thereto.  No other financial statements or supporting schedules are required to be included in or incorporated in the Registration Statement.  The financial data set forth or incorporated in the Prospectus under the captions “Ratio of Earnings to Fixed Charges” and “Selected Financial Data” fairly present the information set forth therein on a basis consistent with that of the audited financial statements contained, incorporated or deemed to be incorporated in the Registration Statement.

 

(k)  XBRL. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the each Registration Statement fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines applicable thereto.

 

  

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(l)  Incorporation and Good Standing of the Company and its Subsidiaries. The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus and to enter into and perform its obligations under this Agreement. Life Newco, Inc. (“Life Newco”) is the Company’s only subsidiary.  Life Newco has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus.  Each of the Company and Life Newco  is duly qualified as a foreign corporation to transact business and is in good standing in the State of North Carolina and each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of property or the conduct of business, except for such jurisdictions where the failure to so qualify or to be in good standing would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.  Except as described in the Prospectus, all of the issued and outstanding capital stock of Life Newco have been duly authorized and validly issued, are fully paid and nonassessable and are owned by the Company free and clear of any security interest, mortgage, pledge, lien, encumbrance or adverse claim.’

 

(m)  Capital Stock Matters. The Common Stock conforms in all material respects to the description thereof contained in the Prospectus.  All of the issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and nonassessable and have been issued in compliance with federal and state securities laws.  None of the outstanding shares of Common Stock were issued in violation of any preemptive rights, rights of first refusal or other similar rights to subscribe for or purchase securities of the Company.  There are no authorized or outstanding options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of the Company or Life Newco other than those accurately described in all material respects in the Prospectus.  The description of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, arrangements, options and rights.

 

(n)  Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required.   Neither the Company nor Life Newco is in violation of its charter or by-laws or is in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which the Company or Life Newco is a party or by which it may be bound, or to which any of the property or assets of the Company or Life Newco is subject (each, an “Existing Instrument”), except for such Defaults as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.  The Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Prospectus (i) have been duly authorized by all necessary corporate action and will not result in any violation of the provisions of the charter or by-laws of the Company or Life Newco, (ii) will not conflict with or constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or Life Newco pursuant to, or require the consent of any other party to, any Existing Instrument, except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company or Life Newco.  No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or agency, is required for the Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Prospectus, except such as have been obtained or made by the Company under the Securities Act and are in full force and effect or that may be required under applicable state securities or blue sky laws and from the Financial Industry Regulatory Authority (“FINRA”) or Nasdaq.

 

(o)  No Material Actions or Proceedings.  Except as disclosed in the Prospectus, there are no legal or governmental actions, suits or proceedings pending or, to the best of the Company’s knowledge, threatened (i) against or affecting the Company or Life Newco, (ii) which has as the subject thereof any officer or director of, or property owned or leased by, the Company or Life Newco or (iii) relating to environmental or discrimination matters, where in any such case (A) there is a reasonable possibility that such action, suit or proceeding might be determined adversely to the Company or Life Newco and (B) any such action, suit or proceeding, if so determined adversely, would reasonably be expected to result in a Material Adverse Change or adversely affect the consummation of the transactions contemplated by this Agreement.  No material labor dispute with the employees of the Company or Life Newco exists or, to the best of the Company’s knowledge, is threatened or imminent.

 

(p)  All Necessary Permits, etc.  Each of the Company and Life Newco possess such valid and current certificates, authorizations or permits issued by the appropriate state, federal or foreign regulatory agencies or bodies necessary to conduct their respective businesses as currently conducted by it and described in the Registration Statement and Prospectus, other than those the failure to possess or own would not reasonably be expected to result in a Material Adverse Change, and neither the Company nor Life Newco has received any notice of proceedings relating to the revocation or modification of, or non-compliance with, any such certificate, authorization or permit which, singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would reasonably be expected to result in a Material Adverse Change.

 

(q)  Tax Law Compliance.  The Company and Life Newco have filed all necessary federal, state and foreign income, property and franchise tax returns (or have properly requested extensions thereof) and have paid all taxes required to be paid by any of them and, if due and payable, any related or similar assessment, fine or penalty levied against any of them except as may be being contested in good faith and by appropriate proceedings.  The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 6(i) above in respect of all federal, state and foreign income, property and franchise taxes for all periods as to which the tax liability of the Company or Life Newco has not been finally determined.

 

(r)  Company Not an “Investment Company”. The Company has been advised of the rules and requirements under the Investment Company Act of 1940, as amended (the “Investment Company Act”).  The Company is not, and after receipt of payment for the Common Stock will not be, an “investment company” within the meaning of Investment Company Act.

 

(s)  Insurance.  Except as otherwise described in the Prospectus, the Company and Life Newco are insured by insurers of recognized financial responsibility with policies in such amounts and with such deductibles and covering such risks as are generally deemed prudent and customary for their businesses as currently conducted and described in the Registration Statement and Prospectus including, but not limited to, policies covering real and personal property owned or leased by the Company and Life Newco against theft, damage, destruction, acts of vandalism and earthquakes.  The Company has no reason to believe that it or Life Newco will not be able (i) to renew its existing insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its business as now conducted and at a cost that would not reasonably be expected to result in a Material Adverse Change.

 

  

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(t)  No Price Stabilization or Manipulation.  The Company has not taken and will not take, directly or indirectly, any action designed to or that might be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Placement Shares.

 

(u)  Related Party Transactions.  There are no business relationships or related-party transactions involving the Company or Life Newco or any other person required to be described in the Prospectus which have not been described as required.

 

(v)  Exchange Act Compliance.  The documents incorporated or deemed to be incorporated by reference in the Prospectus (other than exhibits to such documents), at the time they were or hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act, and, when read together with the other information in the Prospectus, at the Settlement Dates, will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(w)  No Unlawful Contributions or Other Payments.  Neither the Company nor Life Newco nor, to the Company’s knowledge, any employee or agent of the Company or Life Newco, has made any contribution or other payment to any official of, or candidate for, any federal, state or foreign office in violation of any law or of the character required to be disclosed in the Prospectus.

 

(x)  Company’s Accounting System.  The Company maintains a system of accounting controls sufficient to provide reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorization; (ii) transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles in the United States and to maintain accountability for assets; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing assets at reasonable intervals and appropriate action is taken with respect to any differences.

 

(y)  Compliance with Environmental Laws. Except as otherwise described in the Prospectus, and except as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change (i) neither the Company nor Life Newco is in violation of any federal, state, local or foreign law or regulation relating to pollution or protection of human health, the environment (including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata) or wildlife, including without limitation, laws and regulations relating to emissions, discharges, releases or threatened releases of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum and petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Materials of Environmental Concern (collectively, “Environmental Laws”), which violation includes, but is not limited to, noncompliance with any permits or other governmental authorizations required for the operation of the business of the Company or Life Newco under applicable Environmental Laws, or noncompliance with the terms and conditions thereof, nor has the Company or Life Newco received any written communication, whether from a governmental authority, citizens group, employee or otherwise, that alleges that the Company or Life Newco is in violation of any Environmental Law; (ii) there is no claim, action or cause of action filed with a court or governmental authority, no investigation with respect to which the Company has received written notice, and no written notice by any person or entity alleging potential liability for investigatory costs, cleanup costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release into the environment, of any Material of Environmental Concern at any location owned, leased or operated by the Company or Life Newco, now or in the past (collectively, “Environmental Claims”), pending or, to the best of the Company’s knowledge, threatened against the Company or Life Newco or any person or entity whose liability for any Environmental Claim the Company or Life Newco has retained or assumed either contractually or by operation of law; and (iii) to the best of the Company’s knowledge, there are no past or present actions, activities, circumstances, conditions, events or incidents, including, without limitation, the release, emission, discharge, presence or disposal of any Material of Environmental Concern, that reasonably could result in a violation of any Environmental Law or form the basis of a potential Environmental Claim against the Company or Life Newco or against any person or entity whose liability for any Environmental Claim the Company or Life Newco has retained or assumed either contractually or by operation of law.

 

(z)  Intellectual Property.  The Company and Life Newco own or possess the valid right to use all (i) valid and enforceable patents, patent applications, trademarks, trademark registrations, service marks, service mark registrations, Internet domain name registrations, copyrights, copyright registrations, licenses, trade secret rights (“Intellectual Property Rights”) and (ii) inventions, software, works of authorships, trade names, databases, formulae, know how, Internet domain names and other intellectual property (including trade secrets and other unpatented and/or unpatentable proprietary confidential information, systems, or procedures) (collectively, “Intellectual Property Assets”) necessary to conduct their respective businesses as currently conducted, and as proposed to be conducted and described in the Prospectus.  The Company and Life Newco have not received any opinion from their legal counsel concluding that any activities of their respective businesses infringe, misappropriate, or otherwise violate, valid and enforceable Intellectual Property Rights of any other person, and have not received written notice of any challenge, which is to their knowledge still pending, by any other person to the rights of the Company and Life Newco with respect to any Intellectual Property Rights or Intellectual Property Assets owned or used by the Company or Life Newco.  To the knowledge of the Company, the Company and Life Newco’s respective businesses as now conducted do not give rise to any infringement of, any misappropriation of, or other violation of, any valid and enforceable Intellectual Property Rights of any other person.  All licenses for the use of the Intellectual Property Rights described in the Prospectus are valid, binding upon, and enforceable by or against the parties thereto in accordance to its terms.  The Company has complied in all material respects with, and is not in breach nor has received any asserted or threatened claim of breach of any Intellectual Property license, and the Company has no knowledge of any breach or anticipated breach by any other person to any Intellectual Property license.  Except as described in the Prospectus, no claim has been made against the Company alleging the infringement by the Company of any patent, trademark, service mark, trade name, copyright, trade secret, license in or other intellectual property right or franchise right of any person.  The Company has taken all reasonable steps to protect, maintain and safeguard its Intellectual Property Rights, including the execution of appropriate nondisclosure and confidentiality agreements.  The consummation of the transactions contemplated by this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other person in respect of, the Company’s right to own, use, or hold for use any of the Intellectual Property Rights as owned, used or held for use in the conduct of the business as currently conducted.

 

(aa)  Regulatory Authorizations.  Except as disclosed in the Prospectus, each of the Company and Life Newco possesses all certificates, authorizations and permits issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct its business as currently conducted (including without limitation, those required for the manufacture and distribution of its product candidates for clinical and nonclinical testing, and the clinical and nonclinical testing of any product candidates) as disclosed in the Prospectus, except where the failure to possess such certificates, authorizations and permits would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change.

 

  

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(bb)  Compliance with Certain Laws, Rules, Procedures, Etc.  Except as disclosed in the Prospectus, to the Company’s knowledge, the conduct of the preclinical and clinical testing,  and manufacture of the products of the Company or Life Newco is in compliance, in all material respects, with all laws, rules and regulations applicable to such activities, including without limitation applicable good laboratory practices, good clinical practices and good manufacturing practices, except for such non-compliance as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. The descriptions of the results of such tests and trials contained in the Prospectus are accurate in all material respects. Except as otherwise disclosed in the Prospectus, the Company has not received notice of adverse finding, warning letter or clinical hold notice from the U.S. Food and Drug Administration (the “FDA”) or any non-U.S. counterpart of any of the foregoing, or any untitled letter or other correspondence or notice from the FDA or any other governmental authority or agency or any institutional or ethical review board alleging or asserting noncompliance with any law, rule or regulation applicable in any jurisdiction, except notices, letters, and correspondences and non-U.S. counterparts thereof alleging or asserting such noncompliance as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. Except as disclosed in the Prospectus, neither the Company nor Life Newco has, either voluntarily or involuntarily, initiated, conducted or issued, or caused to be initiated, conducted or issued, any recall, field correction, market withdrawal or replacement, safety alert, warning, “dear doctor” letter, investigator notice, or other notice or action relating to an alleged or potential lack of safety or efficacy of any product of the Company or Life Newco, any alleged product defect of any product of the Company or Life Newco, or any violation of any material applicable law, rule, regulation or any clinical trial or marketing license, approval, permit or authorization for any product of the Company or Life Newco, and the Company is not aware of any facts or information that would cause it to initiate any such notice or action and has no knowledge or reason to believe that the FDA, the European Medicines Evaluation Agency or any other governmental agency or authority or any institutional or ethical review board or other non-governmental authority intends to impose, require, request or suggest such notice or action, except in each case as would not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Change. The Company has not received and is otherwise not aware of any notices, correspondence or other communication from the FDA or other governmental regulatory agency or subdivision thereof, or any institutional or ethical review boards, asserting non-compliance with any applicable statutes, rules, regulations, orders, or other laws, or requiring or requesting the termination, suspension or modification of any preclinical or clinical studies, tests, investigations, or trials conducted by, or on behalf of, the Company or Life Newco or in which the Company or Life Newco has participated.

 

(cc)  Brokers.  Except as contemplated by this Agreement, there is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder’s fee or other fee or commission as a result of any transactions contemplated by this Agreement.

 

(dd)  No Outstanding Loans or Other Indebtedness.  Except as described in the Prospectus, there are no outstanding loans, advances (except normal advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company to or for the benefit of any of the officers or directors of the Company or any of the immediate family members of any of them.

 

(ee)  No Reliance.  The Company has not relied upon Cowen or legal counsel for Cowen for any legal, tax or accounting advice in connection with the offering and sale of the Placement Shares.

 

(ff)  Cowen Purchases.  The Company acknowledges and agrees that Cowen has informed the Company that Cowen may, to the extent permitted under the Securities Act, the Exchange Act and this Agreement, purchase and sell shares of Common Stock for its own account while this Agreement is in effect.

 

(gg)  Compliance with Laws.  The Company has not been advised, and has no reason to believe, that it and Life Newco are not conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, except where failure to be so in compliance would not reasonably be expected to result in a Material Adverse Change.

 

Any certificate signed by an officer of the Company and delivered to Cowen or to counsel for Cowen in connection with this Agreement shall be deemed to be a representation and warranty by the Company to Cowen as to the matters set forth therein.

 

The Company acknowledges that Cowen and, for purposes of the opinions to be delivered pursuant to Section 7 hereof, counsel to the Company and counsel to Cowen, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance.

 

7.   Covenants of the Company.  The Company covenants and agrees with Cowen that, during the term of this Agreement, unless otherwise specified:

 

(a)  Registration Statement Amendments.  After the date of this Agreement and during any period in which a Prospectus relating to any Placement Shares is required to be delivered by Cowen under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), (i) the Company will notify Cowen promptly of the time when any subsequent amendment to the Registration Statement, other than documents incorporated by reference or amendments not related to any Placement, has been filed with the Commission and/or has become effective or any subsequent supplement to the Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus related to any Placement or for additional information related to any Placement; (ii) the Company will prepare and file with the Commission, promptly upon Cowen’s request, any amendments or supplements to the Registration Statement or Prospectus that, in Cowen’s reasonable opinion, may be necessary or advisable in connection with the distribution of the Placement Shares by Cowen (provided, however, that the failure of Cowen to make such request shall not relieve the Company of any obligation or liability hereunder, or affect Cowen’s right to rely on the representations and warranties made by the Company in this Agreement); (iii) the Company will not file any amendment or supplement to the Registration Statement or Prospectus, other than documents incorporated by reference, relating to the Placement Shares or a security convertible into the Placement Shares unless a copy thereof has been submitted to Cowen within a reasonable period of time before the filing and Cowen has not reasonably objected thereto (provided, however, that (A) the failure of Cowen to make such objection shall not relieve the Company of any obligation or liability hereunder, or affect Cowen’s right to rely on the representations and warranties made by the Company in this Agreement, (B) the Company has no obligation to provide Cowen any advance copy of such filing or to provide Cowen an opportunity to object to such filing if the filing does not name Cowen or does not relate to the transaction herein provided, and (C) the only remedy Cowen shall have with respect to the failure by the Company to provide Cowen with such copy or the filing of such amendment or supplement despite Cowen’s objection shall be to cease making sales under this Agreement) and the Company will furnish to Cowen at the time of filing thereof a copy of any document that upon filing is deemed to be incorporated by reference into the Registration Statement or Prospectus, except for those documents available via IDEA; and (iv) the Company will cause each amendment or supplement to the Prospectus, other than documents incorporated by reference, to be filed with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act.

 

(b)  Notice of Commission Stop Orders.  The Company will advise Cowen, promptly after it receives notice or obtains knowledge thereof, of the issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the qualification of the Placement Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be issued.

 

  

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(c)  Delivery of Prospectus; Subsequent Changes.  During any period in which a Prospectus relating to the Placement Shares is required to be delivered by Cowen under the Securities Act with respect to a pending sale of the Placement Shares, (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will comply in all material respects with all requirements imposed upon it by the Securities Act, as from time to time in force, and to file on or before their respective due dates all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14, 15(d) or any other provision of or under the Exchange Act.  If during such period any event occurs as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to comply with the Securities Act, the Company will promptly notify Cowen to suspend the offering of Placement Shares during such period and the Company will promptly amend or supplement the Registration Statement or Prospectus (at the expense of the Company) so as to correct such statement or omission or effect such compliance.

 

(d)  Listing of Placement Shares.  During any period in which the Prospectus relating to the Placement Shares is required to be delivered by Cowen under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied pursuant to Rule 172 under the Securities Act), the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed on Nasdaq and to qualify the Placement Shares for sale under the securities laws of such jurisdictions as Cowen reasonably designates and to continue such qualifications in effect so long as required for the distribution of the Placement Shares; provided, however, that the Company shall not be required in connection therewith to qualify as a foreign corporation or dealer in securities or file a general consent to service of process in any jurisdiction.

 

(e)  Delivery of Registration Statement and Prospectus.  The Company will furnish to Cowen and its counsel (at the expense of the Company) copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and supplements to the Registration Statement or Prospectus that are filed with the Commission during any period in which a Prospectus relating to the Placement Shares is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as Cowen may from time to time reasonably request and, at Cowen’s request, will also furnish copies of the Prospectus to each exchange or market on which sales of the Placement Shares may be made; provided, however, that the Company shall not be required to furnish any document (other than the Prospectus) to Cowen to the extent such document is available on IDEA.

 

(f)  Earnings Statement.  The Company will make generally available to its security holders as soon as practicable, but in any event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies the provisions of Section 11(a) and Rule 158 of the Securities Act.

 

(g)  Expenses.  The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, in accordance with the provisions of Section 11 hereunder, will pay the following expenses all incident to the performance of its obligations hereunder, including, but not limited to, expenses relating to (i) the preparation, printing and filing of the Registration Statement and each amendment and supplement thereto, of each Prospectus and of each amendment and supplement thereto, (ii) the preparation, issuance and delivery of the Placement Shares, (iii) the qualification of the Placement Shares under securities laws in accordance with the provisions of Section 7(d) of this Agreement, including filing fees (provided, however, that any fees or disbursements of counsel for Cowen in connection therewith shall be paid by Cowen except as set forth in (vii) below), (iv) the printing and delivery to Cowen of copies of the Prospectus and any amendments or supplements thereto, and of this Agreement, (v) the fees and expenses incurred in connection with the listing or qualification of the Placement Shares for trading on Nasdaq, (vi) filing fees and expenses, if any, of the Commission and the FINRA Corporate Financing Department and (vii) the reasonable fees and disbursements of Cowen’s counsel in an aggregate amount not to exceed $50,000.

 

(h)  Use of Proceeds.  The Company will use the Net Proceeds as described in the Prospectus in the section entitled “Use of Proceeds.”

 

(i)  Notice of Other Sales.  During the pendency of any Placement Notice given hereunder, and for 5 trading days following the termination of any Placement Notice given hereunder, the Company shall provide Cowen notice as promptly as reasonably possible before it offers to sell, contracts to sell, sells, grants any option to sell or otherwise disposes of any shares of Common Stock (other than Placement Shares offered pursuant to the provisions of this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or acquire Common Stock; provided, that such notice shall not be required in connection with the (i) issuance, grant or sale of Common Stock, options to purchase shares of Common Stock or Common Stock issuable upon the exercise of options or other equity awards pursuant to the any stock option, stock bonus or other stock plan or arrangement described in the Prospectus, (ii) the issuance of securities in connection with an acquisition, merger or sale or purchase of assets or (iii) the issuance or sale of Common Stock pursuant to any dividend reinvestment plan that the Company may adopt from time to time provided the implementation of such is disclosed to Cowen in advance or (iv) any shares of common stock issuable upon the exchange, conversion or redemption of securities or the exercise of warrants, options or other rights in effect or outstanding.

 

(j)  Change of Circumstances.  The Company will, at any time during a fiscal quarter in which the Company intends to tender a Placement Notice or sell Placement Shares, advise Cowen promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter or affect in any material respect any opinion, certificate, letter or other document provided to Cowen pursuant to this Agreement.

 

(k)  Due Diligence Cooperation.  During the term of the Agreement, the Company will cooperate with any reasonable due diligence review conducted by Cowen or its agents in connection with the transactions contemplated hereby, including, without limitation, providing information and making available documents and senior corporate officers, during regular business hours and at the Company’s principal offices, as Cowen may reasonably request.

 

(l)  Required Filings Relating to Placement of Placement Shares.  To the extent that the filing of a prospectus supplement with the Commission with respect to a placement of Placement Shares becomes required under Rule 424(b) under the Securities Act, the Company agrees that on or before such dates as the Securities Act shall require, the Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act (each and every filing under Rule 424(b), a “Filing Date”), which prospectus supplement will set forth, within the relevant period, the amount of Placement Shares sold through Cowen, the Net Proceeds to the Company and the compensation payable by the Company to Cowen with respect to such Placement Shares (provided that the Company may satisfy its obligations under this Section 7(l)(i) by effecting a filing in accordance with the Exchange Act with respect to such information), and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be required by the rules or regulations of such exchange or market.

 

  

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(m)  Representation Dates; Certificate.  On or prior to the First Delivery Date and, thereafter, each time the Company (i) files the Prospectus relating to the Placement Shares or amends or supplements the Registration Statement or the Prospectus relating to the Placement Shares (other than a prospectus supplement filed in accordance with Section 7(l) of this Agreement) by means of a post-effective amendment, sticker, or supplement but not by means of incorporation of document(s) by reference to the Registration Statement or the Prospectus relating to the Placement Shares; (ii) files an annual report on Form 10-K under the Exchange Act; (iii) files its quarterly reports on Form 10-Q under the Exchange Act; or (iv) files a current report on Form 8-K containing amended financial information (other than an earnings release) under the Exchange Act (each date of filing of one or more of the documents referred to in clauses (i) through (iv) shall be a “Representation Date”); the Company shall furnish Cowen with a certificate, in the form attached hereto as Exhibit 7(m) within three (3) Trading Days of any Representation Date.  The requirement to provide a certificate under this Section 7(m) shall be automatically waived for any Representation Date occurring at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date; provided, however, that such waiver shall not apply for any Representation Date on which the Company files its annual report on Form 10-K.  Notwithstanding the foregoing, if the Company subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and did not provide Cowen with a certificate under this Section 7(m), then before the Company delivers the Placement Notice or Cowen sells any Placement Shares, the Company shall provide Cowen with a certificate, in the form attached hereto as Exhibit 7(m), dated the date of the Placement Notice.

 

(n)  Legal Opinion.  On or prior to the First Delivery Date and within three (3) Trading Days of each Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause to be furnished to Cowen a written opinion and negative assurance statement of Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P. (“Company Counsel”), or other counsel reasonably satisfactory to Cowen, in form and substance reasonably satisfactory to Cowen and its counsel, dated the date that the opinion is required to be delivered; provided, however, the Company shall not be required to furnish any such opinion if the Company does not intend to deliver a Placement Notice in such calendar quarter until such time as the Company delivers its next Placement Notice; provided, further, that in lieu of such opinions for subsequent Representation Dates, counsel may furnish Cowen with a letter (a “Reliance Letter”) to the effect that Cowen may rely on a prior opinion delivered under this Section 7(n) to the same extent as if it were dated the date of such letter (except that statements in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented at such Representation Date).

 

(o)  Comfort Letter.  On or prior to the First Delivery Date and within three (3) Trading Days of each Representation Date with respect to which the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause its independent accountants to furnish Cowen letters (the “Comfort Letters”), dated the date the Comfort Letter is delivered, in form and substance satisfactory to Cowen, (i) confirming that they are an independent registered public accounting firm within the meaning of the Securities Act and the PCAOB, (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily covered by accountants’ “comfort letters” to Cowen in connection with registered public offerings (the first such letter, the “Initial Comfort Letter”) and (iii) updating the Initial Comfort Letter with any information that would have been included in the Initial Comfort Letter had it been given on such date and modified as necessary to relate to the Registration Statement and the Prospectus, as amended and supplemented to the date of such letter.

 

(p)  Market Activities.  The Company will not, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the Placement Shares or (ii) sell, bid for, or purchase the Placement Shares to be issued and sold pursuant to this Agreement, or pay anyone any compensation for soliciting purchases of the Placement Shares other than Cowen; provided, however, that the Company may bid for and purchase shares of its common stock in accordance with Rule 10b-18 under the Exchange Act.

 

(q)  Insurance.  The Company and Life Newco shall maintain, or caused to be maintained, insurance in such amounts and covering such risks as is reasonable and customary for the business for which it is engaged.

 

(r)  Compliance with Laws.  The Company and Life Newco shall maintain, or cause to be maintained, all material environmental permits, licenses and other authorizations required by federal, state and local law in order to conduct their businesses as described in the Prospectus, and the Company and Life Newco shall conduct their businesses, or cause their businesses to be conducted, in substantial compliance with such permits, licenses and authorizations and with applicable environmental laws, except where the failure to maintain or be in compliance with such permits, licenses and authorizations would not reasonably be expected to result in a Material Adverse Change.

 

(s)  Investment Company Act.  The Company will conduct its affairs in such a manner so as to reasonably ensure that neither it nor Life Newco will be or become, at any time prior to the termination of this Agreement, an “investment company,” as such term is defined in the Investment Company Act, assuming no change in the Commission’s current interpretation as to entities that are not considered an investment company.

 

(t)  Securities Act and Exchange Act.  The Company will use its best efforts to comply with all requirements imposed upon it by the Securities Act and the Exchange Act as from time to time in force, so far as necessary to permit the continuance of sales of, or dealings in, the Placement Shares as contemplated by the provisions hereof and the Prospectus.

 

(u)  No Offer to Sell.  Other than a free writing prospectus (as defined in Rule 405 under the Act) approved in advance by the Company and Cowen in its capacity as principal or agent hereunder, neither Cowen nor the Company (including its agents and representatives, other than Cowen in its capacity as such) will make, use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405 under the Act), required to be filed with the Commission, that constitutes an offer to sell or solicitation of an offer to buy Placement Shares hereunder.

 

(v)  Sarbanes-Oxley Act.  The Company and Life Newco will use their best efforts to comply with all effective applicable provisions of the Sarbanes-Oxley Act.

 

8.   Conditions to Cowen’s Obligations. The obligations of Cowen hereunder with respect to a Placement will be subject to the continuing accuracy and completeness of the representations and warranties made by the Company herein, to the due performance by the Company of its obligations hereunder, to the completion by Cowen of a due diligence review satisfactory to Cowen in its reasonable judgment, and to the continuing satisfaction (or waiver by Cowen in its sole discretion) of the following additional conditions:

 

(a)  Registration Statement Effective.  The Registration Statement shall be effective and shall be available for (i) all sales of Placement Shares issued pursuant to all prior Placement Notices and (ii) the sale of all Placement Shares contemplated to be issued by any Placement Notice.

 

  

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(b)  No Material Notices.  None of the following events shall have occurred and be continuing:  (i) receipt by the Company or Life Newco of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the Prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification from the Commission or any other federal or state governmental authority with respect to the suspension of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or any material document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any changes in the Registration Statement, the related Prospectus or such documents so that, in the case of the Registration Statement, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading and, that in the case of the Prospectus, it will not contain any materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.

 

(c)  No Misstatement or Material Omission.  Cowen shall not have advised the Company that the Registration Statement or Prospectus, or any amendment or supplement thereto, contains an untrue statement of fact that in Cowen’s reasonable opinion is material, or omits to state a fact that in Cowen’s opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading.

 

(d)  Material Changes.  Except as contemplated in the Prospectus, or disclosed in the Company’s reports filed with the Commission, there shall not have been any material adverse change, on a consolidated basis, in the authorized capital stock of the Company or any Material Adverse Change or any development that would reasonably be expected to result in a Material Adverse Change, or any downgrading in or withdrawal of the rating assigned to any of the Company’s securities (other than asset backed securities) by any rating organization or a public announcement by any rating organization that it has under surveillance or review its rating of any of the Company’s securities (other than asset backed securities), the effect of which, in the case of any such action by a rating organization described above, in the reasonable judgment of Cowen (without relieving the Company of any obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement Shares on the terms and in the manner contemplated in the Prospectus.

 

(e)  Company Counsel Legal Opinion.  Cowen shall have received the opinions of Company Counsel required to be delivered pursuant Section 7(n) on or before the date on which such delivery of such opinion is required pursuant to Section 7(n).

 

(f)  Cowen Counsel Legal Opinion.  Cowen shall have received from LeClairRyan, A Professional Corporation, counsel for Cowen, such opinion or opinions, on or before the date on which the delivery of the Company Counsel legal opinion is required pursuant to Section 7(n), with respect to such matters as Cowen may reasonably require, and the Company shall have furnished to such counsel such documents as they request for enabling them to pass upon such matters.

 

(g)  Comfort Letter.  Cowen shall have received the Comfort Letter required to be delivered pursuant Section 7(o) on or before the date on which such delivery of such opinion is required pursuant to Section 7(o).

 

(h)  Representation Certificate.  Cowen shall have received the certificate required to be delivered pursuant to Section 7(m) on or before the date on which delivery of such certificate is required pursuant to Section 7(m).

 

(i)  No Suspension.  Trading in the Common Stock shall not have been suspended on Nasdaq at the time of such Placement.

 

(j)  Other Materials.  On each date on which the Company is required to deliver a certificate pursuant to Section 7(m), the Company shall have furnished to Cowen such appropriate further information, certificates and documents as Cowen may have reasonably requested. All such opinions, certificates, letters and other documents shall have been in compliance with the provisions hereof. The Company will furnish Cowen with such conformed copies of such opinions, certificates, letters and other documents as Cowen shall have reasonably requested.

 

(k)  Securities Act Filings Made.  All filings with the Commission required by Rule 424 under the Securities Act to have been filed prior to the issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424.

 

(l)  Approval for Listing.  The Placement Shares shall either have been (i) approved for listing on Nasdaq, subject only to notice of issuance, or (ii) the Company shall have filed an application for listing of the Placement Shares on Nasdaq at, or prior to, the issuance of any Placement Notice.

 

(m)  No Termination Event.  There shall not have occurred any event that would permit Cowen to terminate this Agreement pursuant to Section 11(a).

 

9.   Indemnification and Contribution.

 

(a)  Company Indemnification.  The Company agrees to indemnify and hold harmless Cowen, the directors, officers, partners, employees and agents of Cowen and each person, if any, who (i) controls Cowen within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or (ii) is controlled by or is under common control with Cowen (a “Cowen Affiliate”) from and against any and all losses, claims, liabilities, expenses and damages (including, but not limited to, any and all reasonable investigative, legal and other expenses  incurred in connection with, and any and all amounts paid in settlement (in accordance with Section 9(c)) of, any action, suit or proceeding between any of the indemnified parties and any third party, or any claim asserted), as and when incurred, to which Cowen, or any such person, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based, directly or indirectly, on (x) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or supplement to the Registration Statement or the Prospectus or in any free writing prospectus or in any application or other document executed by or on behalf of the Company or based on written information furnished by or on behalf of the Company filed in any jurisdiction in order to qualify the Common Stock under the securities laws thereof or filed with the Commission, (y) the omission or alleged omission to state in any such document a material fact required to be stated in it or necessary to make the statements in it not misleading or (z) any breach by any of the indemnifying parties of any of their respective representations, warranties and agreements contained in this Agreement; provided, however, that this indemnity agreement shall not apply to the extent that such loss, claim, liability, expense or damage arises from the sale of the Placement Shares pursuant to this Agreement and is caused directly or indirectly by an untrue statement or omission made in reliance upon and in conformity with written information relating to Cowen and furnished to the Company by Cowen expressly for inclusion in any document described in clause (x) of this Section 9(a). This indemnity agreement will be in addition to any liability that the Company might otherwise have.

 

  

9

  

(b)  Cowen Indemnification. Cowen agrees to indemnify and hold harmless the Company and its directors and each officer of the Company that signed the Registration Statement, and each person, if any, who (i) controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act or (ii) is controlled by or is under common control with the Company against any and all loss, liability, claim, damage and expense described in the indemnity contained in Section 9(a), as incurred, but only with respect to untrue statements or omissions, or alleged untrue statements or omissions, made in the Registration Statement (or any amendments thereto) or the Prospectus (or any amendment or supplement thereto) in reliance upon and in conformity with written information relating to Cowen and furnished to the Company by Cowen expressly for inclusion in any document described in clause (x) of Section 9(a).

 

(c)  Procedure.  Any party that proposes to assert the right to be indemnified under this Section 9 will, promptly after receipt of notice of commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 9, notify each such indemnifying party of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify such indemnifying party will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under this Section 9 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section 9 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly with any other indemnifying party similarly notified, to assume the defense of the action, with counsel reasonably satisfactory to the indemnified party, and after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the indemnified party for any legal or other expenses except as provided below and except for the reasonable costs of investigation subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or (4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees, disbursements and other charges of more than one separate firm admitted to practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by the indemnifying party promptly as they are incurred. An indemnifying party will not, in any event, be liable for any settlement of any action or claim effected without its written consent.  No indemnifying party shall, without the prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or proceeding relating to the matters contemplated by this Section 9 (whether or not any indemnified party is a party thereto), unless such settlement, compromise or consent (1) includes an unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or proceeding; and (2) does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.

 

(d)  Contribution.  In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing paragraphs of this Section 9 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or Cowen, the Company and Cowen will contribute to the total losses, claims, liabilities, expenses and damages (including any investigative, legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted, but after deducting any contribution received by the Company from persons other than Cowen, such as persons who control the Company within the meaning of the Securities Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for contribution) to which the Company and Cowen may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the Company on the one hand and Cowen on the other. The relative benefits received by the Company on the one hand and Cowen on the other hand shall be deemed to be in the same proportion as the total Net Proceeds from the sale of the Placement Shares (before deducting expenses) received by the Company bear to the total compensation received by Cowen from the sale of Placement Shares on behalf of the Company.  If, but only if, the allocation provided by the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and Cowen, on the other, with respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant equitable considerations with respect to such offering. Such relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or Cowen, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and Cowen agree that it would not be just and equitable if contributions pursuant to this Section 9(d) were to be determined by pro rata allocation or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an indemnified party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 9(d) shall be deemed to include, for the purpose of this Section 9(d), any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim to the extent consistent with Section 9(c) hereof.  Notwithstanding the foregoing provisions of this Section 9(d), Cowen shall not be required to contribute any amount in excess of the commissions received by it under this Agreement and no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), any person who controls a party to this Agreement within the meaning of the Securities Act, and any officers, directors, partners, employees or agents of Cowen, will have the same rights to contribution as that party, and each officer and director of the Company who signed the Registration Statement will have the same rights to contribution as the Company, subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against such party in respect of which a claim for contribution may be made under this Section 9(d), will notify any such party or parties from whom contribution may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or they may have under this Section 9(d) except to the extent that the failure to so notify such other party materially prejudiced the substantive rights or defenses of the party from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 9(c) hereof, no party will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required pursuant to Section 9(c) hereof.

 

10.   Representations and Agreements to Survive Delivery.  The indemnity and contribution agreements contained in Section 9 of this Agreement and all representations and warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as of their respective dates, regardless of (i) any investigation made by or on behalf of Cowen, any controlling persons, or the Company (or any of their respective officers, directors or controlling persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or (iii) any termination of this Agreement.

 

  

10

  

11.   Termination.

 

(a)  Cowen shall have the right by giving notice as hereinafter specified at any time to terminate this Agreement if (i) any Material Adverse Change, or any development that would reasonably be expected to result in a Material Adverse Change has occurred that, in the reasonable judgment of Cowen, may materially impair the ability of Cowen to sell the Placement Shares hereunder, (ii) the Company shall have failed, refused or been unable to perform any agreement on its part to be performed hereunder; provided, however, in the case of any failure of the Company to deliver (or cause another person to deliver) any certification, opinion, or letter required under Sections 7(m), 7(n), or 7(o), Cowen’s right to terminate shall not arise unless such failure to deliver (or cause to be delivered) continues for more than thirty (30) days from the date such delivery was required, (iii) any other condition of Cowen’s obligations hereunder is not fulfilled, or (iv), any suspension or limitation of trading in the Placement Shares or in securities generally on Nasdaq shall have occurred.  Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g) (Expenses), Section 9 (Indemnification and Contribution), Section 10 (Representations and Agreements to Survive Delivery), Section 16 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination. If Cowen elects to terminate this Agreement as provided in this Section 11(a), Cowen shall provide the required notice as specified in Section 12 (Notices).

 

(b)  The Company shall have the right, by giving ten (10) days notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement.  Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g) (Expenses), Section 9 (Indemnification and Contribution), Section 10 (Representations and Agreements to Survive Delivery), Section 16 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination.

 

(c)  Cowen shall have the right, by giving ten (10) days notice as hereinafter specified to terminate this Agreement in its sole discretion at any time after the date of this Agreement.  Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g) (Expenses), Section 9 (Indemnification and Contribution), Section 10 (Representations and Agreements to Survive Delivery), Section 16 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination.

 

(d)  Unless earlier terminated pursuant to this Section 11, this Agreement shall automatically terminate upon the issuance and sale of all of the Placement Shares through Cowen on the terms and subject to the conditions set forth herein; provided that the provisions of Section 7(g) (Expenses), Section 9 (Indemnification and Contribution), Section 10 (Representations and Agreements to Survive Delivery), Section 16 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination.

 

(e)  This Agreement shall remain in full force and effect unless terminated pursuant to Sections 11(a), (b), (c), or (d) above or otherwise by mutual agreement of the parties; provided, however, that any such termination by mutual agreement shall in all cases be deemed to provide that Section 7(g) (Expenses), Section 9 (Indemnification and Contribution), Section 10 (Representations and Agreements to Survive Delivery), Section 16 (Applicable Law; Consent to Jurisdiction) and Section 17 (Waiver of Jury Trial) shall remain in full force and effect.

 

(f)  Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided, however, that such termination shall not be effective until the close of business on the date of receipt of such notice by Cowen or the Company, as the case may be. If such termination shall occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions of this Agreement.

 

12.   Notices.  All notices or other communications required or permitted to be given by any party to any other party pursuant to the terms of this Agreement shall be in writing, unless otherwise specified in this Agreement, and if sent to Cowen, shall be delivered to:

 

Cowen at Cowen and Company, LLC

599 Lexington Avenue

New York, NY 10022

Attention:  General Counsel

Telephone:  212- 201-4841

e-mail:  owen.littman@cowen.com

Fax:  646-562-1124

with a copy to:

LeClairRyan

885 Third Avenue, Sixteenth Floor

New York, NY 10022

Attention: James T. Seery

Telephone:  973- 491-3315

e-mail: james.seery@leclairryan.com

Fax:  973- 491-3415

  

11

  

and if sent to the Company, shall be delivered to:

Tenax Therapeutics, Inc.

One Copley Parkway, Suite 490

Morrisville, NC 27560

Attention:  Michael Jebsen

Telephone:  919-855-2123

e-mail:  m.jebsen@tenaxthera.com

Fax:  919-855-2133

with a copy to:

Smith, Anderson, Blount, Dorsett, Mitchell & Jernigan, L.L.P.

150 Fayetteville Street, Suite 2300

Raleigh, NC 27601

Attention: Margaret Rosenfeld

Telephone:  919-821-6714

e-mail:  mrosenfeld@smithlaw.com

Fax:  919-821-6800

Each party to this Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose.  Each such notice or other communication shall be deemed given (i) when delivered personally, by e-mail or by verifiable facsimile transmission (with an original to follow) on or before 4:30 p.m., New York City time, on a Business Day (as defined below), or, if such day is not a Business Day on the next succeeding Business Day, (ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier and (iii) on the Business Day actually received if deposited in the U.S. mail (certified or registered mail, return receipt requested, postage prepaid). For purposes of this Agreement, “Business Day” shall mean any day on which Nasdaq and commercial banks in the City of New York are open for business.

 

13.   Successors and Assigns.  This Agreement shall inure to the benefit of and be binding upon the Company and Cowen and their respective successors and the affiliates, controlling persons, officers and directors referred to in Section 9 hereof. References to any of the parties contained in this Agreement shall be deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or obligations under this Agreement without the prior written consent of the other party; provided, however, that Cowen may assign its rights and obligations hereunder to an affiliate of Cowen without obtaining the Company’s consent.

 

14.   Adjustments for Share Splits.  The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted to take into account any share split, share dividend or similar event effected with respect to the Common Stock.

 

15.   Entire Agreement; Amendment; Severability.  This Agreement (including all schedules and exhibits attached hereto and Placement Notices issued pursuant hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and oral, among the parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a written instrument executed by the Company and Cowen.  In the event that any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement.

 

16.   Applicable Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the principles of conflicts of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection with any transaction contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is improper.  Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law.

 

17.   Waiver of Jury Trial.  The Company and Cowen each hereby irrevocably waives any right it may have to a trial by jury in respect of any claim based upon or arising out of this Agreement or any transaction contemplated hereby.

 

  

12

  

18.   Effect of Headings.  The section and Exhibit headings herein are for convenience only and shall not affect the construction hereof.

 

19.   Absence of Fiduciary Relationship.  The Company acknowledges and agrees that:

 

(a)  Cowen has been retained solely to act as sales agent in connection with the sale of the Common Stock and that no fiduciary, advisory or agency relationship between the Company and Cowen has been created in respect of any of the transactions contemplated by this Agreement, irrespective of whether Cowen has advised or is advising the Company on other matters;

 

(b)  the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions contemplated by this Agreement;

 

(c)  the Company has been advised that Cowen and its affiliates are engaged in a broad range of transactions which may involve interests that differ from those of the Company and that Cowen has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary, advisory or agency relationship; and

 

(d)  the Company waives, to the fullest extent permitted by law, any claims it may have against Cowen, for breach of fiduciary duty or alleged breach of fiduciary duty and agrees that Cowen shall have no liability (whether direct or indirect) to the Company in respect of such a fiduciary claim or to any person asserting a fiduciary duty claim on behalf of or in right of the Company, including stockholders, partners, employees or creditors of the Company.

 

20.   Counterparts.  This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile or electronic transmission.

 

[Remainder of Page Intentionally Blank]

 

  

13

  

 

If the foregoing correctly sets forth the understanding between the Company and Cowen, please so indicate in the space provided below for that purpose, whereupon this letter shall constitute a binding agreement between the Company and Cowen.

 

	 	Very truly yours,	 
	 	 	 
	 	COWEN AND COMPANY, LLC	 
	 	 	 	 
	 	
By: 

	/s/ Kevin Raidy	 
	 	 	Name: Kevin Raidy	 
	 	 	Title: Managing Director	 
	 	 	 	 
	 	 
ACCEPTED as of the date

	 
	 	first-above written:	 
	 	 	 
	 	TENAX THERAPEUTICS, INC.	 
	 	 	 	 
	 	 
By: 

	/s/ Michael Jebsen	 
	 	 	Name: Michael Jebsen	 
	 	 	Title: President and Chief Financial Officer	 
	 	 	 	 

 

  

14

  

SCHEDULE 1

 

FORM OF PLACEMENT NOTICE

 

	 
From:

	[	 
]

	 
Cc:

	[	 
]

	 
To:

	[	 
]

	Subject: 	Cowen at the Market Offering—Placement Notice

 

Ladies and Gentlemen:

 

Pursuant to the terms and subject to the conditions contained in the Sales Agreement between Tenax Therapeutics, Inc. (the “Company”), and Cowen and Company, LLC (“Cowen”) dated February 23, 2015 (the “Agreement”), I hereby request on behalf of the Company that Cowen sell up to [ ] shares of the Company’s common stock, par value $0.0001 per share, at a minimum market price of $_______ per share.  Sales should begin on the date of this Notice and shall continue until [DATE] [all shares are sold] [the aggregate sales price of the shares reaches $[___]].

 

  

15

  

 

SCHEDULE 2

 

 

	The Company	 
	 	 
	John P. Kelley	Chief Executive Officer
	Michael B. Jebsen	Chief Financial Officer
	 	 
	Cowen	 
	 	 
	Rob Sine	Director
	William Follis 	Director

 

 

  

  

16

  

SCHEDULE 3

 

 

Compensation

 

Cowen shall be paid compensation equal to 3.0% of the gross proceeds from the sales of Common Stock pursuant to the terms of this Agreement.

 

  

17

  

 

Exhibit 7(m)

OFFICER CERTIFICATE

The undersigned, the duly qualified and elected _______________________, of Tenax Therapeutics, Inc. (“Company”), a Delaware corporation, does hereby certify in such capacity and on behalf of the Company, pursuant to Section 7(m) of the Sales Agreement dated February 23, 2015 (the “Sales Agreement”) between the Company and Cowen and Company, LLC, that to the best of the knowledge of the undersigned.

(i)           The representations and warranties of the Company in Section 6 of the Sales Agreement (A) to the extent such representations and warranties are subject to qualifications and exceptions contained therein relating to materiality or Material Adverse Change, are true and correct on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date, and (B) to the extent such representations and warranties are not subject to any qualifications or exceptions, are true and correct in all material respects as of the date hereof as if made on and as of the date hereof with the same force and effect as if expressly made on and as of the date hereof except for those representations and warranties that speak solely as of a specific date and which were true and correct as of such date; and

 

(ii)           The Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied pursuant to the Sales Agreement at or prior to the date hereof.

 

Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Sales Agreement.

 

	 	TENAX THERAPEUTICS, INC.	 
	 	 	 	 
	
Date:

	
By: 

	/s/ 	 
	 	 	Name 	 
	 	 	Title 	 
	 	 	 	 

 

 

18HGR II Exhibit 10.1 Domain Apartments PSA

Exhibit 10.1

REAL ESTATE PURCHASE AGREEMENT

THIS REAL ESTATE PURCHASE AGREEMENT ("Agreement") is made as of July 8, 2015 by and between Hines Global REIT II 891 Coronado LLC, a Delaware limited liability company or its permitted assigns ("Buyer"), on the one hand, and LV Eastern, LLC, a Nevada limited liability company (“Seller”), on the other hand, for the purchase by Buyer and the sale by Seller, on the terms and conditions stated herein, of the real property located at 891 Coronado Center Drive, Henderson, State of Nevada 89052, as more particularly identified as The Domain Apartments and described on Exhibit A attached hereto, including the 308 residential apartment units identified on said Exhibit A (“Property”).  The Property shall include the improvements and personal property described in Exhibit C, Exhibit D and Exhibit E.  For purposes hereof, the term “Effective Date” shall mean the date of the mutual execution and delivery of this Agreement by Seller and Buyer, but in no case shall the Effective Date be later than July 8, 2015.

1. PURCHASE PRICE AND DEPOSIT: The purchase price to be paid by Buyer to Seller for the Property is the sum of Fifty Nine Million Four Hundred Fifty Thousand  Dollars ($59,450,000.00.00) (the "Purchase Price") through new financing obtained by Buyer.  A deposit in immediately available funds of One Million Five Hundred Dollars ($1,500,000.00) (together with interest earned thereon, the "Deposit") shall be placed in escrow within three (3) business days after the opening of escrow as described in Paragraph 2 below with First American Title Insurance Company at its office located at 2500 Paseo Verde Parkway, Suite 120, Henderson, Nevada 89074, (“Title Company” or “Escrow Agent”) Attn: Julie Skinner. The Deposit shall, promptly upon receipt by Escrow Agent, be placed into an interest-bearing escrow account, with interest accruing for the benefit of the Buyer.  Upon Buyer’s written approval pursuant to Paragraph 2B hereof, the Deposit shall, subject to the provisions of this Agreement, become subject to the liquidated damages provisions of Paragraph 5 hereof, and in addition to accrued interest thereon shall be credited to the Purchase Price should the Closing (as defined below) occur.  The Purchase Price, as adjusted by the application of the Deposit and by the prorations and credits specified herein, shall be deposited by Buyer with Escrow Agent in immediately available federal funds on or prior to the Closing Date (as defined below).  Prior to the Approval Date, Seller and Buyer shall agree upon and attach as Schedule 1 hereto, a schedule reflecting the allocation of the Purchase Price among (i) the real property and improvements located thereon; and (ii) the remainder of the Property (the “Purchase Price Allocation”).

2. ESCROW: Escrow shall be opened within three (3) business days after the Effective Date. For purposes of this Agreement, the "Close of Escrow" or the “Closing" shall mean the date on which the Deed (as defined in Paragraph 2A. below) is recorded in the Official Records of Clark County. The Close of Escrow shall occur on or before the date which is thirty (30) days after the Approval Date  (the “Closing Date”); provided, however, Buyer shall have the right, by delivery of written notice to Seller no less than three (3) business days prior to the Closing Date, to extend the Closing Date for up to  thirty (30) days if needed to finalize Buyer’s acquisition financing for the Property; provided further that Buyer otherwise approves the Property, at which time the Deposit shall be deemed non-refundable to Buyer except in the event of default by Seller or as otherwise provided herein.  At the time of the extension notice, Buyer will deposit an additional One Million Five Hundred Thousand Dollars ($1,500,000.00) (“Additional Deposit”) which Additional Deposit shall be added to Deposit.  The Additional Deposit shall not be required if Buyer does not extend the Closing.  The Deposit and Additional Deposit (and all interest thereon) shall be credited toward the Purchase Price as Closing.  The provisions hereof shall constitute joint instructions to Escrow Agent to consummate the purchase in accordance with the terms and provisions hereof; provided, however, that the parties shall execute such additional escrow instructions, not inconsistent with the provisions hereof, as may 

1
 

be deemed reasonably necessary to carry out the intentions of the parties as expressed herein. If there is a conflict between the provisions of the additional escrow instructions and the provisions of this Agreement, the provisions of this Agreement shall control.  The cost of escrow shall be paid 1⁄2 by Buyer and 1⁄2 by Seller. Buyer shall pay the cost of its third party reports and any updates to the survey delivered to Buyer that may be required by Buyer or its lender.  Each party shall pay its own legal fees. Any county and/or city documentary, deed, stamp, transfer taxes or other fees or charges associated with the recording of the Deed shall be paid by Seller.  Seller shall pay the cost of the standard ALTA coverage premium for the Title Policy (as defined below). Buyer shall pay the ALTA extended coverage portion of the premium for the Title Policy and the premium for any endorsements to the Title Policy requested by Buyer (provided, however, Seller shall be responsible for the cost of any endorsements that Seller elects to procure to address any title matters disapproved by Buyer). All other closing costs shall be apportioned between Seller and Buyer in the manner customary in Clark County, Nevada.

2A. Deliveries:  

		
	i.
	Initial Deliveries: Within 5 business days of the Effective Date (the "Delivery Date"), Seller shall deliver to Buyer the following items if within Seller’s possession or control (i) current rent rolls and delinquency reports, tenant files, including a copy of all leases, security deposit schedule, vacancy list, delinquency report, side agreements and letters of understanding with tenants or subtenants, and the standard form lease; (ii) all operating statements and records, and tax bills and other financial data related to the Property for the current year-to-date from and after completion of construction but not including any construction costs or construction budgets, if available and utility bills for the past twelve (12) months; (iii) maintenance,  advertising, management, leasing, employment, laundry, cable, service and all other contracts affecting the Property; (iv) copies of all environmental, structural, mechanical and engineering plans and appraisal, marketing, rental and other reports and studies relating to the Property which are within the possession or control of Seller, its employees or agents, if any; (v) a list and summary of pending and threatened litigation, if any; (vi) information regarding rights of tenants or subtenants, including, without limitation, purchase options, rights of first refusal, lease extensions and termination options, if any; (vii) a copy of Seller's title insurance policy and the latest version of any survey for the Property, if any; (viii) all governmental correspondence, notices and documentation relating to use, zoning, building codes or other regulatory matters applicable to Property, if any; (ix) all licenses and permits, including, without limitation, certificates of occupancy, use permits and operating licenses; (x) list of personal property; (xi) a list of pending or threatened litigation; (xii) property budgets for all periods after commencement of occupancy; (xii) list of employees, salaries and benefits; (xiv) schedule of unit mix and unit square footage by residential unit number; (xv) copy of all insurance policies (declaration pages) and insurance loss runs; (xv) marketing brochures, materials and market studies; (xvi) all documents relating to the HOA, if any; (xxi) copies of all guarantees and warranties; and (xxii) within 5 business days, any other information reasonably requested by Buyer.  Seller may redact any construction cost, construction expense or contractor payment information from any disclosures provided under this section 2A.  The Delivery Date shall be deemed to be the date of delivery of the documents set forth above but shall not exceed 10 days beyond the Effective Date, unless otherwise agreed by the parties in writing. 

		
	ii.
	Closing Deliveries.  Seller shall execute and deliver into escrow at least one (1) day prior to Closing with respect to the Property: (i) a Grant, Bargain and Sale Deed in the form set forth on Exhibit "B" hereto (“Deed”) which shall include a specific deed restriction on 

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condominium conversion for eight (8) years from the date the last certificate of occupancy was issued for the Property and as more fully set forth therein, (ii) a Bill of Sale in the form set forth on Exhibit "C" hereto (“Bill of Sale”), (iii) an Assignment of Service Contracts (for any service contracts which may be assumed by Buyer and which Buyer elects to assume prior to the Approval Date) in the form set forth on Exhibit "D" hereto (“Assignment of Service Contracts”), (iv) an Assignment of Leases in the form set forth on Exhibit "E" hereto (“Assignment of Leases”), (v) a FIRPTA Affidavit, (vi) an updated rent roll certified as true, correct, and complete as of Closing by Seller, (vii) affidavits in customary form reasonably acceptable to Title Company (as defined below) to enable Title Company to delete the standard exceptions relating to mechanics' liens, parties in possession and the creditor's right exclusion and other exceptions and exclusions from the title insurance policy to be issued at Closing and to issue endorsements as requested by Buyer, (viii) a Tenant’s Notice in the form set forth on Exhibit "F" hereto, (ix) tax certificates and/or other reasonable assurances of payment under Nevada Revised Statutes (“NRS”) 360.525, and if Seller fails to do so, Buyer will withhold such amounts from the Purchase price until such certificates and/or assurances are provided to Buyer’s satisfaction, and (x) any other documents or instruments reasonably requested by Buyer, Title Company and/or Escrow Agent or as otherwise necessary to close the escrow and consummate the purchase of the Property, all in form and substance reasonably satisfactory to Buyer, Title Company and Escrow Agent. At Closing Seller will also deliver to Buyer all original lease and rental agreements, files and records relating to the Property and all other elements of the Property.  Buyer shall execute and deliver into escrow at least one (1) day prior to Closing: (a) a counterpart of the assignment of Service Contracts; (b) a counterpart of the Assignment of Leases; and (c) any other documents or instruments reasonably requested by Seller or Escrow Agent, all in form and substance reasonably satisfactory to Buyer and Escrow Agent. Additionally, Seller and Buyer shall execute and deliver a State of Nevada Declaration of Value listing the Purchase Price Allocation attributable to the real property and improvements located thereon as the purchase price and submit the same for recording with the Deed.  Seller, at its cost and expense, shall terminate prior to Closing all management and leasing agreements and all Service Contracts Buyer does not elect to assume.

2B. Approval Date.  Seller agrees that Buyer shall have until 5:30 p.m. Pacific time on the date that is thirty (30) days from latter of the Effective Date or Delivery Date but in no case later than August 14, 2015, in order to conduct its due diligence, including but not limited to obtaining and performing any and all reviews, investigations, surveys, soil testing, engineering studies, environmental studies and to otherwise determine the suitability of the Property for Buyer’s purposes (“Approval Date”).  If, prior to the expiration of the Approval Date, Buyer determines, in its sole and absolute discretion, for any reason or no reason, that the Property or any matter affecting the Property renders the Property unsuitable for any reason, Buyer may terminate this Agreement by notifying Seller in writing that the Property is unacceptable.  Upon such termination, the Parties shall have no continuing obligations under this Agreement and the Deposit, plus interest actually earned thereon, if any, shall be returned to Buyer.  If Buyer does not give Seller written notice of its intent to terminate this Agreement prior to the end of the Approval Date, this Agreement shall continue and the Deposit shall be nonrefundable except as otherwise provided in this Agreement.  

     
3. TITLE:  Upon execution of this Agreement, Seller shall order a commitment for title insurance for the Property (the “Title Commitment”) issued by Title Company, and all documents referred to in the Title Commitment. Seller has delivered to Buyer its existing survey.  Buyer may, at its cost and expense, promptly cause updates to be made to such survey (“Survey”).  On or before fifteen (15) calendar days 

3
 

following the Effective Date, the Buyer shall either approve in writing the exceptions contained in the Title Commitment and said survey or specify in writing any exceptions to which Buyer objects. If Buyer objects to any exceptions, Seller shall within five (5) calendar days after receipt of Buyer's objections, deliver to Buyer written notice that either (i) Seller has removed, or will remove prior to the Closing, the exceptions to which Buyer has objected, or (ii) Seller is unwilling or unable to eliminate such exceptions provided Seller shall in all events be obligated, at its cost and expense, to remove all liens, including all mortgage, deed of trust, and/or mechanics’ liens, whether or not Buyer makes objection thereto (“Required Cure Items”).  If Seller notifies Buyer that Seller will remove exceptions to which Buyer has objected, then such removal shall be a condition precedent to Buyer's obligations under this Agreement. If Seller fails to so notify Buyer or is unwilling or unable to remove such exceptions by the Closing Date, Buyer, within three (3) business days after said five (5) day period, may elect to terminate this Agreement and receive back the entire Deposit and Additional Deposit, in which event Buyer and Seller shall have no further obligations under this Agreement; or, alternatively, within said three (3) business day period, Buyer may elect to purchase the Property subject to such exceptions. Seller, at Seller's expense, may but shall not be required to remove any exception to which Buyer objects; provided Seller shall, at its cost and expense, remove all Required Cure Items.  If, following the expiration of the Approval Date, such title report is amended and shows additional exceptions which reflect a material change in the condition of title to the Property (as determined by Buyer in its sole but good faith discretion), Buyer may terminate this Agreement, in which event, the Deposit and Additional Deposit shall be immediately payable to Buyer and Seller shall pay all escrow fees. Seller shall convey to Buyer (or to such other person or entity as may be specified in Buyer's escrow instructions) marketable fee title, free and clear of deeds of trust and liens affecting the Property and subject only to those exceptions approved by Buyer in accordance with this Agreement. It is a condition to Buyer's obligations under this Agreement that, at the Closing, Buyer's title to the Property is insured by an ALTA extended owner's policy of title insurance with such endorsements as Buyer shall reasonably require issued by Title Company in an amount equal to the Purchase Price, free and clear of deeds of trust and liens affecting the Property (including all Required Cure Items) and subject only to those exceptions approved in writing by Buyer (the "Title Policy").  Additional endorsements which are not necessary for an ALTA extended owner’s policy shall be paid for by Buyer.  

4. RISK OF LOSS: Any risk of loss to the Property shall be borne by Seller until title has been conveyed to Buyer. In the event that the improvements on the Property are destroyed or materially damaged or condemned between the Effective Date and the date title is conveyed to Buyer, Buyer shall have the option of demanding and receiving back the Deposit and the Additional Deposit and being released from all obligations hereunder, in which case Seller shall pay all escrow fees, or alternatively, taking such improvements as Seller can deliver.  Material damage or condemnation shall mean damage or condemnation costing more than $500,000 or causing a loss of value of more than $500,000, the permanent taking of any access, or permanent taking of more than 5% of the parking.  If Buyer elects to accept the Property in its then condition, all insurance proceeds or condemnation awards payable to Seller by reason of the damage to or condemnation of the Property shall be paid and/or assigned, as the case may be, to Buyer and Buyer shall receive a credit, at Closing, for the amount of any deductible or uninsured loss.  If the Property is destroyed or materially damaged and the damage or destruction is not covered by Seller's insurance, then Buyer may terminate this Agreement, in which event Buyer shall receive the Deposit and the Additional Deposit back, Seller shall pay all escrow fees, and both parties will be released from all obligations each to the other, hereunder. This Section 4 is intended as an express provision with respect to casualty and condemnation of the Property, which supersedes the provisions of the Nevada Uniform Vendor and Purchaser Risk Act, NRS 113.030, et. seq.  The provisions of this Section 4 shall survive Closing and the recording of the Deed.

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5.A BUYER DEFAULT/ LIQUIDATED DAMAGES: BY PLACING THEIR INITIALS IMMEDIATELY BELOW, BUYER AND SELLER AGREE THAT IF BUYER FAILS TO COMPLETE THE PURCHASE OF THE PROPERTY BY REASON OF ANY DEFAULT OF BUYER, IT WOULD BE IMPRACTICAL AND EXTREMELY DIFFICULT TO FIX SELLER’S ACTUAL DAMAGES, THAT THE AMOUNT OF BUYER’S DEPOSIT IS A REASONABLE ESTIMATE OF SUCH DAMAGES, AND THAT SELLER SHALL RETAIN THE DEPOSIT AS LIQUIDATED DAMAGES AS SELLER’S SOLE AND EXCLUSIVE REMEDY. SELLER AGREES TO WAIVE ALL OTHER REMEDIES IT OTHERWISE MAY HAVE AGAINST BUYER IN LAW OR EQUITY BY REASON OF ANY DEFAULT OF BUYER.

Buyer Initials ___DS____    Seller Initials __ME___     

5.B SELLER DEFAULT:  If Seller defaults or breaches any of its material obligations under this Agreement and does not cure such default or breach within ten (10) days after written notice thereof (but in no case later than the Closing Date), Buyer shall have the right, as its sole remedy, to elect either to: (a) terminate this Agreement, in which case the Deposit and any Additional Deposit shall be returned to Buyer and the Parties shall have no further rights or obligations under this Agreement except those which expressly survive termination; or (b) pursue an action for specific performance, provided that if the remedy of specific performance is not available to Buyer due to Seller’s actions (e.g. a cloud on title), then Seller shall reimburse Buyer for all costs incurred in connection with this Agreement.  If Buyer does not notify Seller of such election within thirty (30) days after notice of Seller’s default, then Buyer shall be deemed to have elected to terminate under (a) above.   

NEITHER PARTY SHALL BE LIABLE TO THE OTHER, AND EACH PARTY HEREBY WAIVES ANY CLAIM, FOR ANY INCIDENTAL, CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES, INCLUDING LOSS OF PROFIT OR LOSS OF VALUE.                       

6. PRORATIONS: Real estate taxes for the fiscal year in which the Closing occurs, expenses of the Property, and rents (to the extent rents have been paid) shall be prorated as of the Closing. Any consideration involving future lease credits, all advance rentals and all deposits and refundable fees of any type paid by tenant(s) to Seller, including without limitation security and cleaning deposits and fees, and all accrued interest on such deposits and fees which is required to be paid by the leases or applicable law shall be credited to Buyer. Seller shall within five (5) days prior to the Closing Date provide Buyer and Escrow Agent with a schedule of such amounts and a complete and current rent roll, including without limitation, a schedule of all tenant deposits, fees, date of last rent received and description of any defaults. The amount of any bond or assessment, which is a lien, shall be paid by Seller. Buyer shall be credited with the amount of any advance or bonus payment made under any laundry leases, cable television agreements or similar service contracts which are either allocable to the period from and after the Closing, or paid in consideration for the portion of the term of any such contract which remains unexpired at the Closing. Any supplementary tax bills received by Buyer or Seller following the Closing shall be prorated by the parties following the Closing as if said tax bills had been available at the Closing Date.  Seller shall pay to Buyer any rents received by Seller after Closing.  If at any time following the Closing Date the amount of an item listed above shall prove to be incorrect, the party in whose favor the error was made shall pay the sum necessary to correct such error to the other party promptly following receipt of proof of such error from such other party, provided that such proof is delivered to the party from whom payment is requested within one (1) year after the Closing Date as to real estate taxes and ninety (90) days after the Closing Date as to all other items.  If the amount of real estate taxes for the current year is not known on the Closing Date, then the taxes shall be apportioned on the basis of the taxes assessed for the preceding year, with a reconciliation as soon as the new tax rate and valuation can be ascertained, provided that if the parties can agree upon a reasonable estimate of an 

5
 

amount which is likely to be more accurate than the preceding year’s taxes, then such estimated amount shall be used as the basis for the tentative apportionment (subject to reconciliation as aforesaid).  Notwithstanding anything herein to the contrary, Seller shall be responsible for all supplemental and/or recapture taxes incurred due to Seller’s use or change in use of the Property prior to the Closing Date.

Delinquent rent shall not be prorated at Closing.  As to any tenants who are delinquent in the payment of rent at the Closing Date (as set forth on an updated rent roll certified by Seller), Seller shall assign to Buyer, effective as of the Closing, all such delinquent rents (and the right to collect such delinquent rents).  Upon collection of any delinquent rents after Closing, such rents shall first be credited to Buyer for those periods on and after Closing (plus Buyer’s expenses in collecting such rent) and thereafter Seller shall receive 100% of the delinquent rents less than 30 days in arrears, 50% for those delinquent rents 30 to 90 days in arrears, and Seller shall receive no delinquent rents more than 90 days in arrears, with the understanding that there shall be a true up of such delinquent rents for a period of 90 days post Closing and thereafter there shall be no further obligation of Buyer to Seller for delinquent rents. Seller shall provide a summary of any collection or pending eviction matters within five (5) days of the Effective Date.  All prorations shall be calculated on a calendar day basis for the month and year during which the Closing occurs and shall be credited against the Purchase Price. Seller shall not have any right to seek to collect from, or to institute litigation against, tenants at the Property after Closing.  The provisions of this Paragraph 6 shall survive the Closing and the recording of the Deed.

7. PERSONAL PROPERTY: Furniture, furnishings, tradenames, trademarks, service marks, tradestyle, logos, rights to any internet web names, web sites, and URLs and other images, photographs of the Property, and other personal property owned by the Seller located on the Property and/or used in connection therewith are included in the Purchase Price and shall be conveyed by the Bill of Sale to Buyer free and clear of all encumbrances. 

8. POSSESSION AND INTERIM OPERATING COVENANTS: Possession of the Property is to be delivered to Buyer as of the Closing Date.  Until possession is delivered to Buyer, Seller agrees, at its sole cost and expense, to manage, maintain and keep the Property and all the improvements thereon in compliance with all laws and in not less than the same manner and in the same order and condition as they are managed and maintained and kept on the Effective Date, including maintaining insurance similar to the insurance maintained as of the Effective Date. Seller shall refurbish all vacant units to “rent ready” condition and continue to lease the units prior to the Closing Date at rents consistent with the current rent rolls for the Property and on terms of no less than six (6) months or no longer than one (1) year according to current marketing and rental agreements in the ordinary course of business.  In the event that any units are not “rent ready” no later than three (3) business days prior to Closing, then Seller shall credit Buyer at Closing an amount equal to $1,000 for non “rent ready” unit.  Seller shall not remove any personal property from the Property unless it is replaced with comparable property.  Seller shall notify Buyer of any notice of violation of laws or of any litigation affecting the Property.  Any material deviation from existing tenant leases (such as rent credits free rent or other monetary incentives) not currently part of Seller’s marketing program (a summary of the marketing program will be provided with the Deliveries under Paragraph 2A above) will be subject to prior approval of Buyer which shall not be unreasonably withheld, conditioned or delayed prior to the Approval Date. After the Approval Date, Seller shall not enter into any contract or agreement which cannot be terminated (with no fee, charge, payment, or penalty) at Closing without the prior approval of Buyer in its sole discretion.  The provisions of this Paragraph 8 shall survive the Closing and the recording of the Deed.

		
	A.
	Escrow for Modifications.   Seller is currently making modifications to certain Units at the Property, 30 of which have not been completed as of the Effective Date of this Agreement.  Seller 

6

agrees to credit $3,500 per Unit for any unfinished modifications as of Closing in order to permit Buyer to complete the modifications to the remaining Units after Closing.  Buyer will be responsible for any modifications after the Closing Date if Buyer elects to complete the modifications,   

9. CONDITIONS: In addition to any and all other conditions precedent set forth in this Agreement, Buyer's obligations under this Agreement are subject to Buyer's written approval of the following conditions, but Buyer shall have the right to waive any such condition(s). In the event Buyer determines that any such condition is not satisfied on or before the dates set forth below, Buyer may, in its sole and absolute discretion, disapprove said condition. Buyer's failure to deliver written notice of  approval of any of the following conditions shall be conclusively deemed Buyer's disapproval thereof, and this Agreement shall, at Buyer’s option, terminate, in which event Escrow Agent shall immediately return the Deposit and the Additional Deposit to Buyer, Seller shall pay all escrow fees, and Seller shall have no further obligations under this Agreement.
 
A.  On or before the Approval Date, Buyer's review and approval of such documents as Buyer may request reasonable from Seller, if in Seller’s possession.

B. On or before the Approval Date, Buyer's approval of its inspection of the Property (including but not limited to the physical condition thereof). Seller shall make the Property available at reasonable times for inspection(s) by Buyer and its employees and agents in accordance with the provisions of Paragraph 22 hereof, which shall be completed at Buyer's sole expense.   All inspections shall require insurance certificates naming Seller as an “also insured” party.  

C.   Upon the Closing, the Title Company shall be unconditionally committed to issue to Buyer the Title Policy as approved pursuant to Paragraph 3 hereof.

D.  Upon the Closing, Seller shall not be in default under this Agreement and shall have performed its obligations hereunder, and all representations and warranties of Seller shall be true and correct when made and as of the Closing.

E.    On or before the Approval Date, Buyer has obtained the approval of the board of directors of its parent entity.

10. SELLER'S REPRESENTATIONS AND WARRANTIES: Seller hereby warrants and represents, for the benefit of Buyer and its assigns, the following both as of the date hereof and as of the date of the Closing:

A. To the best of Seller’s actual knowledge, (i) the Property has no material physical or mechanical defects; and neither the Property nor the operation thereof violate in any way any health and safety or building codes or other laws pertaining to the Property; (ii) Seller has delivered to Buyer all material information concerning the physical condition of the Property which may have a material adverse effect on the Property; and (iii) Seller has not received any actual notice of any design or construction defect claims from any tenants or government officials regarding the Property.

B.  All documents delivered to Buyer are true, complete and correct in all material respects, and are originals or true, complete and correct copies thereof.

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C. Seller has provided to Buyer a true, accurate, and complete rent roll.  The current tenant lease(s) are in full force and effect and subject to no offsets except as set forth on the rent roll delivered by Seller to Buyer pursuant to Paragraph 2A above. Seller shall disclose any and all rental and lease agreements, implicit or explicit. The Property is subject to no leases or rights of any occupants, oral or written, other than those Leases set forth on the rent roll.  No rent payable under each Tenant’s Lease has been paid more than thirty (30) days in advance of its due date.  Except as reflected in the Tenant Rent Roll, no Tenant is entitled to any concession, rebate, allowance, or period of occupancy free of rent under its lease or under any other agreement and there are no agreements with any of the tenants except as set forth in their leases.  Seller shall deliver to Buyer not later than the Closing Date, an assignment of all Seller's rights and interests in and to said rental agreements.

D. To the best of Seller’s actual knowledge, there are not presently pending any special assessments or condemnation actions against the Property or any part thereof.  Seller has not received any notice of any special assessments or condemnation actions being contemplated except as shown on the Title Commitment, if any. There is no litigation or other proceeding pending or, to the best of Seller’s actual knowledge, threatened, which would affect Seller or the Property or its operation, except as set forth on Exhibit G.

E. To the best of Seller’s actual knowledge, the Property does not contain any hazardous or toxic materials, including, but not limited to, any chemicals or materials regulated as hazardous or toxic under any federal, state or local law, including, without limitation, petroleum, asbestos or PCB's, and does not have located under it any underground storage tanks. In addition, to the best of Seller’s actual knowledge, no such hazardous or toxic materials have ever migrated from the Property to any other property. Seller agrees to provide Buyer promptly in writing any information, which Seller has or may acquire regarding the presence and location of any hazardous materials or underground storage tanks on or about the Property.

F. This Agreement and all documents delivered by Seller to Buyer, now or at the Closing, have been duly authorized and executed and delivered by Seller, and are legal, valid and binding obligations of Seller, sufficient to convey title, and enforceable. Seller knows of no facts to prevent Buyer from operating the Property in the normal manner in which similar properties in the area are operated and in which the Property has been operated in the past. As of the Closing, there will be no outstanding contracts made by Seller for any improvements to the Property which have not been fully paid for, and Seller shall cause to be discharged all mechanics' and materialmen's liens arising from any labor and material furnished prior to Closing to the Property. Upon request of Buyer, Seller shall have terminated all contracts for goods and services requested by Buyer at the Property, including without limitation, any employment agreements and arrangements for employee occupancy of rental units as instructed by Buyer.  Buyer will have no responsibility for any of Seller’s employees after Closing.

G.  Seller has not received notice or complaints from occupants of the Property, governmental authorities or others of mold or fungi, including, without limitation, penicillium/aspergillus and stachybotrys chartarum located within or on the Property.

H.  The Seller warrants that it has full authority to sell the Property under the terms and conditions outlined herein without any additional approval(s) and that such a sale is not prohibited or otherwise constrained by any agreements to which the Seller or the Property is subject.

I.    Neither Seller nor, any of its beneficial owners, nor any of its officers, managers, or directors appear on the Specially Designated Nationals and Blocked Persons List of OFAC, nor are they otherwise a party with which UST is prohibited to deal under the laws of the United States. 

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J.    As of the date hereof and as of the Closing: (a) Seller is not and will not be (i) an “employee benefit plan,” as defined in Section 3(3) of ERISA, (ii) a “governmental plan” within the meaning of Section 3(32) of ERISA, or (iii) a “plan” within the meaning of Section 4975(e) of the Code; (b) the assets of Seller do not and will not constitute “plan assets” within the meaning of the United States Department of Labor Regulations set forth in Section 2510.3-101 of Title 29 of the Code of Federal Regulations; and (c) transactions by or with Seller are not and will not be subject to state statutes applicable to Seller regulating investments of fiduciaries with respect to governmental plans.
 
K.    There are no contracts or agreements, written or oral, which would bind Buyer, affecting the ownership or operation of the Property (including, without limitation, any service contracts, maintenance contracts, management contracts or leasing commission agreements) except for the leases and service contracts Buyer has agreed to assume.

L.    Seller has no, and has never had any, employees at the Property.  Buyer is not assuming responsibility for any employees of Seller and/or at the Property after Closing.

M.    Seller has not ever filed any bankruptcy action or petition and no such action or petition has ever been filed against Seller. 

The representations and warranties set forth herein shall survive Closing for a period of twelve (12) months.

Except as expressly set forth herein in Section 10 A-M above, in the Deed or other documents delivered at Closing, Buyer agrees that the Property is to be sold to and accepted by Buyer at the Closing in its then condition "AS IS" and with all faults, including but not limited to ADA, Fair Housing and zoning compliance.  No person acting on behalf of Seller is authorized to make, and by execution hereof, Buyer acknowledges that no person has made any representation, agreement, statement, warranty, guarantee or promise regarding the Property or the transaction contemplated herein or the zoning, construction, physical condition or other status of the Property except as may be expressly set forth in this Agreement.  Buyer understands and acknowledges that Seller will not be responsible for any work related to the Property.

Except as set forth herein, in the Deed or other documents delivered at Closing, Seller makes no representation or warranty, express or implied, with respect to the Property or the surrounding properties owned by Seller. No representation, warranty, agreement, statement, guaranty or promise, if any, made by any person acting on behalf of Seller which is not contained in this Agreement will be valid or binding on Seller. 

10.1 BUYER'S WARRANTIES. Buyer hereby warrants, represents, covenants and certifies to Seller that:

A.    Due Authority.  Except for obtaining board approval of Buyer’s parent as described in Paragraph 9E above, all documents, certificates and instruments to be executed by Buyer in connection with the transfer of the Property will be duly authorized, executed and delivered, and each shall constitute a legal, valid and binding agreement enforceable against Buyer in accordance with its terms.  The foregoing is subject, as to the enforcement of remedies, to applicable bankruptcy, insolvency, moratorium or similar laws or equitable principles from time to time in effect.

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B.    Bankruptcy.  Buyer has not filed or been subject of any filing of a petition under the Federal Bankruptcy Law or any insolvency laws, or any laws for disposition of indebtedness or for the reorganization of debtors.

11. BROKERS: No broker or other party has a claim for brokerage commission, finder's fee, or like payment arising out of or in connection with Buyer's purchase of the Property, other than as follows: at the Closing, Seller shall pay a commission to Newmark Grubb Knight Frank (“Broker”), who has represented Seller in connection with the transaction contemplated by this Agreement, pursuant to a separate agreement between Seller and Broker.  Each party hereby agrees to indemnify, defend, protect and hold the other harmless from and against any liability, cause of action, claim, loss, cost, damage and/or expense, including, without limitation, attorneys' fees and costs and court costs arising out of or incurred in connection with any claim by any other broker or finder for any such commission, fee or like payment provided the person or entity making any such claim alleges that such claim arose out of acts or dealings of the indemnifying party.
12. FOREIGN INVESTOR DISCLOSURE: Seller represents and warrants to Buyer that Seller is not a foreign person within the meaning of Section 1445 of the Internal Revenue Code of 1986 ("IRC"), or under any similar sections of any similar laws of the State of Nevada, i.e., Seller is not a nonresident alien, foreign corporation, foreign partnership, foreign trust or foreign estate as those terms are defined in the IRC and Income Tax Regulations or similar Nevada laws or regulations. Seller shall sign under penalty of perjury and deliver to Buyer at Closing a certification thereof indicating thereon Seller's U.S. taxpayer identification number and address.

13. FUTURE LEASES AND COMMITMENTS: Subject to Section 8 above, from and after the Effective Date, Seller shall not execute, modify, approve and/or cancel any leases, contracts or commitments without Buyer’s prior written approval, which shall not be unreasonably withheld.  After the Approval Date, Seller shall not execute, modify, approve and/or cancel any leases, contracts or commitments of any kind affecting the Property or any interest therein without Buyer's prior written approval in its sole discretion. 

14. EXCHANGE: Seller and Buyer each agree to cooperate should either elect to purchase the Property to complete a like-kind exchange under IRC Section 1031 via a qualified intermediary. Such cooperation may include the assignment of all or a portion of this Agreement to a third party, the substitution of such third party as the Buyer or Seller and the execution of all documents reasonably necessary to complete the exchange in accordance with applicable laws and regulations except that the Property shall be conveyed by Deed directly from Seller to Buyer. Buyer and Seller agree that the consummation of this Agreement is not predicated or conditioned upon the completion of any such exchange. Buyer or Seller shall not incur any additional liability or financial obligation as a consequence of either’s contemplated exchange nor shall any time periods set forth herein be modified to accommodate such exchange without the mutual written consent of both Buyer and Seller.

15. NOTICES: Any Notice or other communication required or permitted under this Agreement shall be in writing and either: (A) personally delivered, (B) sent via U.S. Mail, registered or certified, or express mail, postage prepaid, return receipt requested, (C) sent via Federal Express or other nationally recognized overnight courier service that provides receipted delivery service, delivery charges prepaid, return receipt requested, (D) sent via telecopy facsimile with confirmation of delivery, or (E) sent via electronic mail with confirmation of delivery (such as return receipt function); and each such notice or communication shall be deemed to have been given on the date of its delivery (or the date of refusal to accept delivery, as the case may be) as indicated on the return receipt, at the addresses specified below:

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	If to Seller:

	LV Eastern, LLC 
6655 S. Eastern Ave #200
Las Vegas, Nevada 89119
Telephone:  (702) 307-2881
Email: megbert@nvwest.com 

With a copy to: 

Bradley R. Helsten, Esq.
ZUMPANO PATRICIOS & WINKER, P.A.
2022 S. 2100 E., Suite 202 
Salt Lake City, Utah 84108
Telephone: (801) 839-5538
Facsimile: (801) 401-7228
Email: brad@helstenlaw.com

	If to Buyer:
	Ken Jett
c/o Hines Advisors Limited Partnership
2800 Post Oak Blvd., Suite 4100
Houston, Texas 77056
Telephone:  (713) 966-2091
Facsimile:  
Email:  ken.jett@hines.com

	Copy to:
	Jason Maxwell
c/o Hines Advisors Limited Partnership
2800 Post Oak Blvd, Suite 4100
Houston, Texas 77056
Telephone:  (713) 966-7638
Facsimile:  
Email:  jason.maxwell@hines.com

	Copy to:
	Doug Metzler and
Brett Norton
c/o Hines Interests Limited Partnership
444 S. Flower, Suite 2100
Los Angeles, California 90071
Facsimile:  (215) 629-5200
Email:  brett.norton@hines.com
   doug.metzler@hines.com

	Copy to:
	Jonathan W. Dunlay
Baker Botts L.L.P.
2001 Ross Avenue, 6th Floor
Dallas, Texas 75201
Telephone:  (214) 953-6711
Facsimile:  (214) 661-4711
Email:  jon.dunlay@bakerbotts.com

or such other address as either party may from time to time specify in writing to the other party in the manner set forth above for notices.

    

                 16. ONGOING INFORMATION AND COOPERATION: 

11
 

A.    Seller agrees to promptly provide Buyer with any and all new documents or other items affecting or regarding the Property and make the Property available to Buyer on an ongoing basis until Closing.  Seller acknowledges that Buyer, as a public REIT, the Buyer’s parent’s board of directors may need to make standard public disclosures as required by law and SEC regulations.  
 
B.    Seller shall provide to Buyer (at Buyer’s expense) copies of, or shall provide Buyer access to, such factual information as may be reasonably requested by Buyer, and in the possession or control of Seller, or its property manager or accountants, to enable Buyer’s auditor (Deloitte & Touche LLP or any successor auditor selected by Buyer) to conduct an audit of the income statements of the Property for the year to date of the year in which the Closing occurs plus up to the three prior calendar years.  Buyer shall be responsible for all out-of-pocket costs associated with this audit.  Seller shall cooperate (at no cost to Seller) with Buyer’s auditor in the conduct of such audit.  In addition, Seller agrees to provide to Buyer’s auditor, if requested by such auditor, historical financial statements for the Property, including income and balance sheet data for the Property, whether required before or after Closing.  Without limiting the foregoing, (i) Buyer or its designated independent or other auditor may audit Seller’s operating statements of the Property, at Buyer’s expense, and Seller shall provide such documentation as Buyer or its auditor may reasonably request in order to complete such audit, and (ii) Seller shall furnish to Buyer such financial and other information as may be reasonably required by Buyer or any Affiliate of Buyer to make any required filings with the Securities and Exchange Commission or other governmental authority; provided, however, that the foregoing obligations of Seller shall be limited to providing such information or documentation as may be in the possession of, or reasonably obtainable by, Seller, its property manager or accountants, at no material cost to Seller, and in the format that Seller (or its property manager or accountants) have maintained such information.  This provision shall survive Closing.   

17. PROJECT REPORTS AND DRAWINGS: Within five (5) days after the Effective Date, Seller shall provide Buyer with copies of all soil and hydrology reports, environmental or toxic material reports, engineering reports, flood reports, traffic studies, environmental impact studies, civil, architectural, structural, electrical, mechanical-plumbing, fire sprinkler and landscape working drawings, specifications, as-built construction plans, architectural renderings or models or any other plans developed or prepared for the Property in Seller's possession or control, if any. Seller shall also provide to Buyer, within two (2) business days after Buyer’s request therefor, the names of any engineers, architects, draftsmen and/or consultants known to Seller who have information concerning the Property.  Buyer agrees that it will not use the construction plans or architectural drawings to develop, construct or design a multi-family housing project in Clark County Nevada for a period of 8 years following the Closing.  This covenant shall survive Closing. and enure to the benefit of Seller and its affiliated entities.  Buyer may disclose information provided by Seller to its agents, contractors or lenders in connection with the Approval Period.      

18. ASSIGNMENT: Buyer's rights hereunder may be assigned to a partnership, corporation, limited liability company, or other party controlling, controlled by, or under common control with Buyer, and any such transferee shall have all the benefits, including rights to specific performance, damages, and enforcement of Seller's representations and warranties, that Buyer has under this Agreement. Upon any such assignment, Buyer's liabilities and obligations hereunder or under any instruments, documents or agreements made pursuant thereto shall be binding upon the Buyer and such assignee jointly and severally. 

19. ADDENDA: Any exhibit or addendum attached hereto shall be deemed a part hereof. This writing, including exhibits and addenda if any, expresses the entire agreement of the parties. There are no other understandings, oral or written, which in any manner alter or enlarge its terms. This Agreement supersedes any and all prior agreements between the parties hereto regarding the Property. Seller and Buyer 

12

agree to execute such additional documents as may be reasonable and necessary to carry out the provisions of this Agreement.

20. ATTORNEY FEES: If this Agreement or the transactions contemplated herein gives rise to a lawsuit, arbitration or other legal proceeding between the parties hereto, the prevailing party shall be entitled to recover its costs and reasonable attorney fees in addition to any other judgment of the court or arbitrator(s).

21. MISCELLANEOUS:

A. All periods of time referred to in this Agreement shall include all Saturdays, Sundays and State or National holidays, unless the period of time specifies business days; provided that if the date or last date to perform any act or give any notice with respect to this Agreement shall fall on a Saturday, Sunday or State or National holiday, such act or notice may be timely performed or given on the next succeeding day which is not a Saturday, Sunday or State or National holiday.

B. This Agreement shall be governed by the laws of the State of Nevada. 

C. Paragraph headings contained herein are included solely for convenience of reference and shall in no way affect the construction of this Agreement.

D. The provisions of this Agreement are to be construed in accordance with the normal interpretation thereof, and, since both parties are sophisticated real estate investors and have employed counsel to review this Agreement, the party who has actually drafted this Agreement shall be deemed to be irrelevant in determining the meaning of any such provision.

E.  Seller agrees not to negotiate with other parties, nor enter into any back-up or other contracts, regarding the purchase of the Property during the time this Agreement is in effect.

F. This Agreement shall be binding upon and inure to the benefit of Buyer and Seller and their respective successors and assigns.  

G.  This Agreement and any modifications, amendments or supplements thereto may be executed in several counterparts, and all so executed shall constitute one agreement binding on all parties hereto, notwithstanding that all parties are not signatories to the original or the same counterpart.  The parties may also deliver executed copies of this Agreement (and any modifications, amendments or supplements thereto) to each other by facsimile or by electronic delivery (e.g., pdf), which facsimile or electronic signatures shall be binding upon the parties as if they were originals.

H.  It is expressly agreed by the parties hereto that time is of the essence with respect to this Agreement.
22. ACCESS TO THE PROPERTY: Seller shall grant Buyer and its employees and agents the right to enter the Property for, among other things, the purpose of physical investigation/inspection (engineering and maintenance); provided, however, Buyer shall not do any invasive testing without Seller’s written consent which shall not be unreasonably withheld. This shall include, without limitation, inspection of the architectural, mechanical, electrical, structural, civil, and any other physical conditions of the Property, including without limitation, inspection of the soils, and roofs. Buyer agrees to reasonably cooperate with Seller in minimizing potential disruption to tenants. This right shall terminate upon the earlier of (i) 

13
 

termination of escrow for any reason, or (ii) the Closing Date. Buyer shall cause Seller to be a named insured on all insurance for Buyer or any agent entering the property and agrees to indemnify and hold Seller harmless from any loss, liability or claim arising out of such investigation/inspection, except if any of same results from the mere discovery of any pre-existing condition at or in connection with the Property or the acts of Seller and its agents. The cost of all tests, inspections, surveys, applications and/or studies/surveys related to said physical inspection/investigation shall be paid for by Buyer.
23. INDEMNITY: Subject to the limitations set forth in Section 10, Seller hereby agrees to indemnify, defend and hold Buyer and its officers, directors, managers, members, shareholders, employees, agents, attorneys, representatives, and every other person acting on behalf of Buyer and its successors and assigns, harmless from and against any and all damages, losses, costs, claims, causes of action, liabilities, expenses, demands, warranties or obligations of any kind or nature whatsoever arising from third party claims relating or attributable to the Property arising or accruing prior to the Closing Date. 
Buyer hereby agrees to indemnify, defend and hold Seller and its officers, directors, managers, members, shareholders, employees, agents, attorneys, representatives, and every other person acting on behalf of Seller and its successors and assigns, harmless from and against any and all damages, losses, costs, claims, causes of action, liabilities, expenses, demands, warranties or obligations of any kind or nature whatsoever arising from third party claims relating or attributable to the Property arising or accruing from and after the Closing Date.
The provisions of this Paragraph 23 shall survive Closing and the delivery of the Deed. 
Notwithstanding the foregoing indemnities, neither party shall be liable to the other, and each party hereby waives any claim, for any incidental, consequential, punitive, or special damages, including loss of profit or loss of value.

24.  SIGNATURE OF SELLER:  As of the date of this Agreement and as of the Closing Date, Seller and the person executing this Agreement on behalf of Seller represents and warrants to Buyer that Seller has full power and authority to enter into this Agreement and no other signature, authority or action is necessary on the part of Seller to make this Agreement binding upon Seller in accordance with its terms.

25.  NON-DISCLOSURE AGREEMENT:  Seller acknowledges and agrees that Buyer, Hines Advisors Limited Partnership and its employees, Hines Global REIT II, Inc., and potential lenders are parties who may receive Confidential Information under the Non-Disclosure Agreement between Seller and Hines regarding the Property.

[Signature Page Follows]

14

IN WITNESS WHEREOF, Seller and Buyer have executed this Agreement as of the date indicated below.

	
		
	SELLER:

	LV EASTERN, LLC, 
a Nevada limited liability company 

By: /s/ Martin Egbert
Name: Martin Egbert 
Its: Manager

	

BUYER:

	

HINES GLOBAL REIT II 891 CORONADO LLC,
a Delaware limited liability company

   By: /s/ David Steinbach
   Name: David Steinbach
   Its: Manager

	 
	 

15
 

JOINDER BY GUARANTOR

The undersigned (“Guarantor”) agrees to and does guaranty Seller’s post-Closing obligations under this Agreement, including without limitation any liability relating to Seller’s breach of representation or warranty.

Guarantor does hereby waive each of the following: (a) any and all notices and demands of every kind which may be required to be given by any statute, rule or law, (b) any and all subrogation, contribution, indemnity and reimbursement rights against Seller until the obligations have been paid, performed and fully satisfied in full, (c) any assignment, conveyance, extinguishment, merger or other transfer, voluntary or involuntary (whether by operation of law or otherwise) of all or any part of the interest of Seller in this Agreement, (d) notice of any amendment of this Agreement, or (e) any other defense available to a surety under applicable law. 

This Guaranty shall continue to be effective, and Guarantor’s obligations under this Guaranty shall continue to be effective notwithstanding any amendment or modification of this Agreement with or without Guarantor’s consent. 

This Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time any payment of all or any part of the guaranteed obligations is rescinded or must otherwise be returned by Purchaser upon the insolvency, bankruptcy or reorganization of Seller or Guarantor, or otherwise, all as though such payment had not been made.  

Guarantor’s obligations hereunder shall apply only to claims made by Buyer within twelve (12) months after Closing and Guarantor’s liability hereunder shall not exceed $1,000,000.

/s/ Kenneth M. Woolley                
Kenneth M. Woolley

16

EXHIBIT "A"

DESCRIPTION OF THE LAND
	
	
	THAT PORTION OF THE SOUTH HALF (S 1/2) OF SECTION 25, TOWNSHIP 22 SOUTH, RANGE 61 EAST, M.D.M., CLARK COUNTY, NEVADA, DESCRIBED AS FOLLOWS:

PARCEL ONE (1) AS SHOWN BY MAP THEREOF ON FILE IN FILE 119 OF PARCEL MAPS, PAGE 28, RECORDED JUNE 27, 2013 IN BOOK 20130627 AS INSTRUMENT NO. 02509 AND CERTIFICATE OF AMENDMENT RECORDED JULY 25, 2014 IN BOOK 20140725 AS INSTRUMENT NO. 02215, OFFICIAL RECORDS, CLARK COUNTY, NEVADA.

17
 

EXHIBIT "B"
APN:     
 
WHEN RECORDED MAIL TAX
STATEMENTS AND RETURN TO:                    

____________________
____________________

GRANT, BARGAIN, SALE DEED and DEED RESTRICTION

This GRANT, BARGAIN, SALE DEED is made the ___ day of ___________, 2015 by ________________, a _________________, as GRANTOR to ________________, a ____________, whose address is c/o ____________________, as GRANTEE.

Witness that Grantor, for good and valuable consideration, receipt of which is hereby acknowledged, grants, bargains and sells to Grantee all that real property and improvements therein contained (“Property”) situated in the County of Clark, State of Nevada, more particularly described as follows:

See EXHIBIT “A” ATTACHED HERETO AND MADE PART HEREOF.

Together with all tenements, hereditaments and appurtenances thereto; subject to (i) taxes for the current fiscal year, not due or delinquent; and (ii) restrictions, conditions, reservations, rights of way and easements affecting the use and occupancy of this property as the same may now appear of record.

To have and to hold, all and singular, the premises aforementioned unto said Grantee, its successors and assigns forever subject to the following: 

Grantor and Grantee each acknowledge that upon recording of this Deed, Grantor and Grantee acknowledge and agree that (i) the improvements located on the Property were constructed as a residential apartment complex, (ii) Grantor has a substantial interest in avoiding the marketing and selling of condominium units on the Property within a certain time period after such improvements were completed; and (iii) Grantor is conveying the Property subject to the following restriction on Grantee's ability to market and sell the Property, which restriction was negotiated between Grantor and Grantee as a material inducement to Grantor to sell the Property to Grantee, and shall run with the Property and be binding on all parties having any right, title, or interest in the described Property or any part thereof, their heirs, successors, and assigns:
NO PORTION OF THE PROPERTY MAY BE SOLD OR OTHERWISE TRANSFERRED AS A UNIT OF A CONDOMINIUM COMMON INTEREST COMMUNITY PRIOR TO August 12022 (the “Termination Date”).  
As used herein, the term "transferred" shall include the following: (i) with respect to the Property or any portion thereof or interest therein, the transfer, conveyance, sale, granting of option to purchase, or 

18

execution of a purchase agreement relating thereto, including any transfer, conveyance, sale, granting of option to purchase, or execution of a purchase agreement relating thereto by a successor, assignee or transferee of Grantee's interest in the Property (a "Subsequent Owner"), and (ii) if Grantee or Subsequent Owner is not a natural person, the direct or indirect transfer, conveyance, sale, assignment or other disposition of twenty-five percent (25%) or more of the voting, equity or beneficial interest in such Grantee or Subsequent Owner, whether in one transaction or a series of transactions.
Upon the Termination Date the foregoing restriction shall automatically terminate and be of no further force and effect and no further recording shall be required to termination such restriction.
GRANTEE HAS READ AND UNDERSTANDS THE FOREGOING AND AGREES THAT THE FOREGOING LIMITATIONS ON GRANTEE'S ABILITY TO MARKET AND SELL THE LAND DO NOT CONSTITUTE AN UNREASONABLE RESTRAINT UPON THE ALIENABILITY OF THE LAND AND FURTHER AGREES TO ACCEPT THIS DEED FOR THE LAND SUBJECT TO THE FOREGOING LIMITATIONS.

IN WITNESS WHEREOF, Grantor has set its hand the day and year first above written.

GRANTOR: 

LV Eastern, LLC 

By: _________________________
Its: Manager
STATE OF NEVADA  )
COUNTY OF CLARK  )
On the _____ day of ____________, 2015, personally appeared _________________, the manager of LV Eastern, LLC, a Nevada limited liability company, and voluntarily acknowledged that he executed the foregoing document in his authorized and stated capacity. 

_______________________________________
Notary Public
My Commission Expires: __________________

19
 

EXHIBIT "C"

BILL OF SALE

FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, the undersigned ("Seller"), hereby conveys to _____________________________ ("Buyer"), free and clear of any and all liens, claims, and encumbrances, all of the tangible and intangible personal property (collectively the "Personal Property") owned by Seller and located on or utilized in connection with ownership, maintenance, and operation of the certain improved real property located at__________________________ (the "Property"), to have and to hold unto  the Buyer and its successors and assigns forever.  Seller warrants and covenants to Buyer that Seller owns good and marketable title to the Personal Property and that it will defend title to the Personal Property conveyed hereby against the claims of any and all parties claiming by or through the Seller, but not otherwise.

The Personal Property conveyed hereby includes, but is not limited to the following:

		
	1.
	The tangible personal property described on Exhibit A, attached hereto and incorporated herein by reference, located on and utilized in connection with the ownership maintenance, and operation of the Property.

		
	2.
	To the extent assignable, all warranties and guaranties, whether or not written, for all or any portion of the Property, including without limitation, all improvements thereon and the tangible personal property, including without limitation, construction warranties from contractors and subcontractors.

		
	3.
	To the extent assignable, all patents, licenses, tradenames, trademarks, service marks, trade style, rights to any internet web names, web sites, and URLs, photographs and other images of the Property, and names used in connection with the operation of the Property, and all symbols, emblems, and logos used in connection with the ownership or operation of the Property, whether in black and white or in color, and irrespective of size and all of Seller's right, title, and interest in and to all goodwill associated therewith, including without limitation, any name(s) used by Seller for the Property, including the name “The Domain Apartments”. 

		
	4.
	To the extent assignable, all intangible personal property relating to or used in connection with the ownership and use of the Property, including without limitation the right to telephone numbers; 

		
	5.
	To the extent assignable, all governmental permits and approvals, utility commitments, utility rights, development rights or other similar rights relating to the construction, operation, use, and/or occupancy of the Property, including without limitation pool permits and elevator permits; 

		
	6.
	To the extent assignable and to the extent in Seller’s possession or otherwise available, any and all right, title, and interest of Seller in and to all plans, models, drawings, specifications, 

20

surveys, architectural, engineering, soils, seismic, geological, environmental, marketing and demographic reports, studies and certificates, and other technical descriptions; and

		
	7.
	All other property, real, personal or mixed, owned or held by Seller which relates, in any way, to the design, construction, ownership, use, leasing, advertising, maintenance or operation of the Land and Improvements.

This conveyance is made concurrently with and as an incident to the conveyance of the Property by Seller to Buyer, and is effective for all purposes as of the date of such conveyance.

“SELLER”

        _______________________            DATE:  _______________________

21
 

EXHIBIT "D"

ASSIGNMENT AND ASSUMPTION OF
 SERVICE AGREEMENTS

FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, the undersigned ("Assignor"), hereby assigns and delegates to ___________________________ ("Assignee"), all of Assignor's rights, interests, and obligations of in and under those service and similar agreements with respect to the property located at _____________________ (the "Property"), described on Exhibit A hereto and listed on Exhibit B hereto (the "Service Agreements"), and is effective for all purposes as of the date of the conveyance of the Property by Assignor to Assignee ("the Closing Date").

		
	1.
	Assignor covenants and agrees to indemnify, defend, protect, and hold harmless Assignee from and against any and all costs, liabilities, claims, losses, proceedings, damages, causes of action and expenses, including without limitation attorneys' fees and expenses (collectively "Losses and Liabilities"), resulting from any breach by Assignor of any obligations under the Service Agreements accruing before the Closing Date or any action or omission to act of Assignor occurring under the Service Agreements prior to the Closing Date.

		
	2. 
	Assignee hereby accepts the foregoing assignment of the Service Agreements, assumes all of Assignor's obligations under the Service Agreements accruing on or after the Closing Date, and agrees to indemnify, defend, protect, and hold harmless Assignor from and against any and all Losses and Liabilities resulting from any breach by Assignee of any obligations under the Service Agreements occurring on or after the Closing Date or any action or omission to act of Assignee occurring under the Service Agreements on or after the Closing Date.

		
	3.
	This Assignment and Assumption of Service Agreements shall be binding on and inure to the benefit of the Assignee and Assignor and their respective successors and assigns.

		
	4.
	This Assignment and Assumption of Service Agreements may be executed in one or more counterparts, each of which shall be deemed to be an original, but any number of which, taken together, shall be deemed to constitute one and the same instrument.

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Service Agreements on the date indicated below,
 
Dated: _______________, 2015.    

“ASSIGNOR”                    "ASSIGNEE"

By:    ______________________________        By:    _______________________

22

EXHIBIT "E"

ASSIGNMENT AND ASSUMPTION OF 
LEASES AND RENTAL AGREEMENTS

FOR GOOD AND VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged, the undersigned ("Assignor"),  hereby assigns and delegates to _______________________ ("Assignee"), all of the rights, interests, and obligations of landlord/lessor in and under those certain leases and rental agreements of portions of the property located at ____________________________ (the "Property"), described on Exhibit A hereto and listed on Exhibit B hereto (the "Leases"), including but not limited to all security deposits and rents thereunder accruing from and after the date of the conveyance of the Property by Assignor to Assignee (the "Closing Date"), and is effective for all purposes as of the date of the Effective Date.

		
	1.
	Assignor covenants and agrees to indemnify, defend, protect, and hold harmless Assignee from and against any and all costs, liabilities, claims, losses, proceedings, damages, causes of action and expenses, including without limitation attorneys' fees and expenses (collectively "Losses and Liabilities"), resulting from any breach by Assignor of any obligations under the Leases accruing before the Closing Date or any action or omission to act of Assignor occurring under the Leases prior to the Closing Date.

		
	2.
	Assignee hereby accepts the foregoing assignment of the Leases, assumes all of Assignor's obligations under the Leases accruing on or after the Closing Date, and agrees to indemnify, defend, protect, and hold harmless Assignor from and against any and all Losses and Liabilities resulting from any breach by Assignee of any obligations under the Leases occurring on or after the Closing Date or any action or omission to act of Assignee occurring under the Leases on or after the Closing Date. 

		
	3.
	This Assignment and Assumption of Leases and Rental Agreements shall be binding on and inure to the benefit of the Assignee and Assignor and their respective successors and assigns.

This Assignment and Assumption of Leases and Rental Agreements may be executed in one or more counterparts, each of which shall be deemed to be an original, but any number of which, taken together, shall be deemed to constitute one and the same instrument.

IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment and Assumption of Leases and Rental Agreements on the date indicated below.

Dated:_______________, 2015.

    
“ASSIGNOR”                     "ASSIGNEE"

By:    _________________________                  By:            _________________________

23
 

EXHIBIT "F"

NOTICE TO TENANT
_______________, 2015
Certified Mail
Return Receipt Requested
____________________________
____________________________
____________________________
____________________________
Re:  Sale of Property
This is to notify you that the property located at  ______________(the “Property”) has been sold to _______________________ (“Buyer”), and in connection therewith your Lease has been assigned to Buyer.
Your security deposit in the amount of _____________ has also been delivered to Buyer.  Buyer’s address and phone number are ___________________.  Please direct all future rental and other payments and communications under your Lease to the Buyer at that address.
                        
By:    _______________________________
_______________________________

24

EXHIBIT “G”

LITIGATION

NONE

25

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