Document:

formofregrightsagree.htm

EXHIBIT 10.2

 

 

REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (the “Agreement”) is made and entered into as of this 1st day of December, 2011 by and among Celsion Corporation, a Delaware corporation (the “Company”), and the Investors named in that certain Purchase Agreement by and among the Company and the Investors dated as of December 1, 2011 (the “Purchase Agreement”).

 

For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

 

1.      Certain Definitions.

 

Capitalized terms used herein have the respective meanings ascribed thereto in the Purchase Agreement unless otherwise defined herein.  As used in this Agreement, the following terms shall have the following meanings:

 

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

 

“Investors” means the Investors identified in the Purchase Agreement and any Affiliate or permitted transferee of any Investor who is a subsequent holder of any Warrants or Registrable Securities.

 

“Prospectus” means (i) the prospectus included in any Registration Statement, as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by such Registration Statement and by all other amendments and supplements to the prospectus, including post-effective amendments and all material incorporated by reference in such prospectus, and (ii) any “free writing prospectus” as defined in Rule 405 under the Securities Act.

 

“Register,” “registered” and “registration” refer to a registration made by preparing and filing a Registration Statement or similar document in compliance with the Securities Act (as defined below), and the declaration or ordering of effectiveness of such Registration Statement or document.

 

“Registrable Securities” means (i) the Shares, (ii) the Warrant Shares and (iii) any other securities issued or issuable with respect to or in exchange for Registrable Securities, whether by merger, charter amendment or otherwise; provided, that, a security shall cease to be a Registrable Security upon (A) sale pursuant to a Registration Statement or Rule 144 under the Securities Act, or (B) such security becoming eligible for sale without restriction by the Investors pursuant to Rule 144.

 

“Registration Statement” means any registration statement of the Company filed under the Securities Act that covers the resale of any of the Registrable Securities pursuant to the provisions of this Agreement, amendments and supplements to such Registration Statement, including post-effective amendments, all exhibits and all material incorporated by reference in such Registration Statement.

 

“Required Investors” means the Investors holding a majority of the Registrable Securities.

 

“SEC” means the U.S. Securities and Exchange Commission.

 

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

 

 

2.      Registration.

 

 

(a)           Registration Statement.  Promptly following the Closing Date but no later than thirty (30) days after the Closing Date (the “Filing Deadline”), the Company shall prepare and file with the SEC one Registration Statement on Form S-3 (or, if Form S-3 is not then available to the Company, on such form of registration statement as is then available to effect a registration for resale of the Registrable Securities), covering the resale of the Registrable Securities.  Subject to any SEC comments, such Registration Statement shall include the plan of distribution attached hereto as Exhibit A; provided, however, that no Investor shall be named as an “underwriter” in the Registration Statement without the Investor’s prior written consent.  Such Registration Statement also shall cover, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416), such indeterminate number of additional shares of Common Stock resulting from stock splits, stock dividends or similar transactions with respect to the Registrable Securities.  Such Registration Statement shall not include any shares of Common Stock or other securities for the account of any other holder without the prior written consent of the Required Investors.  The Registration Statement (and each amendment or supplement thereto, and each request for acceleration of effectiveness thereof) shall be provided in accordance with Section 3(c) to the Investors and their counsel prior to its filing or other submission.  If a Registration Statement covering the Registrable Securities is not filed with the SEC on or prior to the Filing Deadline, then, in addition to any other rights that the Holders may have hereunder or under applicable law, the Company will make pro rata payments to each Investor, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the Filing Deadline and on each monthly anniversary of such Filing Deadline (until such Registration Statement is filed with respect to the Registrable Securities), but not greater than 10.0% of the amount invested by such Investor in the aggregate.  Such payments shall constitute the Investors’ exclusive monetary remedy for such events, but shall not affect the right of the Investors to seek injunctive relief.  Such payments shall be made to each Investor in cash no later than three (3) Business Days after the end of each 30-day period.

 

 

(b)           Expenses.  The Company will pay all expenses associated with each registration, including filing and printing fees, the Company’s counsel and accounting fees and expenses, costs associated with clearing the Registrable Securities for sale under applicable state securities laws, listing fees, fees and expenses of one counsel to the Investors (not to exceed $25,000) and the Investors’ reasonable expenses in connection with the registration, but excluding discounts, commissions, fees of underwriters, selling brokers, dealer managers or similar securities industry professionals with respect to the Registrable Securities being sold.

 

 

(c)           Effectiveness.

 

 

(i)           The Company shall use commercially reasonable efforts to have the Registration Statements declared effective as soon as practicable.  The Company shall notify the Investors by facsimile or e-mail as promptly as practicable, and in any event, within twenty-four (24) hours, after any Registration Statement is declared effective and shall simultaneously provide the Investors with copies of any related Prospectus to be used in connection with the sale or other disposition of the securities covered thereby.  If (A) a Registration Statement covering the Registrable Securities is not declared effective by the SEC prior to the earlier of (i) five (5) Business Days after the SEC shall have informed the Company that no review of the Registration Statement will be made or that the SEC has no further comments on the Registration Statement or (ii) the 90th day after the Closing Date (or, in the event of a “full review” by the SEC, the 120th day after the Closing Date), or (B) after a Registration Statement has been declared effective by the SEC, sales cannot be made pursuant to such Registration Statement for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), but excluding any Allowed Delay (as defined below) or the inability of any Investor to sell the Registrable Securities covered thereby due to market conditions, then, in addition to any other rights that the Holders may have hereunder or under applicable law, the Company will make pro rata payments to each Investor, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount invested by such Investor for each 30-day period or pro rata for any portion thereof following the date by which such Registration Statement should have been effective (the “Blackout Period”), but not greater than 10.0% of the amount invested by such Investor in the aggregate.  Such payments shall constitute the Investors’ exclusive monetary remedy for such events, but shall not affect the right of the Investors to seek relief.  The amounts payable as liquidated damages pursuant to this paragraph shall be paid monthly within three (3) Business Days of the last day of each month following the commencement of the Blackout Period until the termination of the Blackout Period.  Such payments shall be made to each Investor in cash.

 

 

(ii)           For not more than fifteen (15) consecutive days or for a total of not more than twenty-five (25) days in any twelve (12) month period, the Company may suspend the use of any Prospectus included in any Registration Statement contemplated by this Section in the event that the Company determines in good faith that such suspension is necessary to (A) delay the disclosure of material non-public information concerning the Company, the disclosure of which at the time is not, in the good faith opinion of the Company, in the best interests of the Company or (B) amend or supplement the affected Registration Statement or the related Prospectus so that such Registration Statement or Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in the case of the Prospectus in light of the circumstances under which they were made, not misleading (an “Allowed Delay”); provided, that the Company shall promptly (a) notify each Investor in writing of the commencement of an Allowed Delay, but shall not (without the prior written consent of an Investor) disclose to such Investor any material non-public information giving rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales under the Registration Statement until the end of the Allowed Delay and (c) use commercially reasonable efforts to terminate an Allowed Delay as promptly as practicable.

 

 

(d)           Rule 415; Cutback  If at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement is not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires any Investor to be named as an “underwriter”, the Company shall use its best efforts to persuade the SEC that the offering contemplated by the Registration Statement is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none of the Investors is an “underwriter”.  The Investors shall have the right to participate or have their counsel participate in any meetings or discussions with the SEC regarding the SEC’s position and to comment or have their counsel comment on any written submission made to the SEC with respect thereto.  No such written submission shall be made to the SEC to which the Investors’ counsel reasonably objects.  In the event that, despite the Company’s best efforts and compliance with the terms of this Section 2(d), the SEC refuses to alter its position, the Company shall (i) remove from the Registration Statement such portion of the Registrable Securities (the “Cut Back Shares”) and/or (ii) agree to such restrictions and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance with the requirements of Rule 415 (collectively, the “SEC Restrictions”); provided, however, that the Company shall not agree to name any Investor as an “underwriter” in such Registration Statement without the prior written consent of such Investor.  If the SEC refuses to alter its position despite the removal of the Cut Back Shares from the Registration Statement and an Investor does not consent to being named as an “underwriter” in the Registration Statement, then such Investor (a “Non-Electing Investor”) shall be deemed to have elected to have its Registrable Shares (the “Non-Electing Registrable Shares”) withheld from the Registration Statement and no liquidated damages shall accrue as to any such Registrable Shares of such Investor.  Any cut-back imposed on the Investors pursuant to this Section 2(d) shall be allocated among the Investors on a pro rata basis and shall be applied first to any Warrant Shares, unless the SEC Restrictions otherwise require or provide or the Investors otherwise agree.  No liquidated damages shall accrue as to any Cut Back Shares until such date as the Company is able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions (such date, the “Restriction Termination Date” of such Cut Back Shares).  From and after the Restriction Termination Date applicable to any Cut Back Shares, all of the provisions of this Section 2 (including the liquidated damages provisions) shall again be applicable to such Cut Back Shares; provided, however, that (i) the Filing Deadline for the Registration Statement including such Cut Back Shares shall be twenty (20) Business Days after such Restriction Termination Date, and (ii) the date by which the Company is required to obtain effectiveness with respect to such Cut Back Shares under Section 2(c) shall be the 120th day immediately after the Restriction Termination Date.

 

 

3.      Company Obligations.  The Company will use commercially reasonable efforts to effect the registration of the Registrable Securities in accordance with the terms hereof, and pursuant thereto the Company will, as expeditiously as possible:

 

 

(a)           use commercially reasonable efforts to cause such Registration Statement to become effective and to remain continuously effective for a period that will terminate upon the earliest of (i) the one year anniversary of the date hereof, (ii) the date on which all Registrable Securities covered by such Registration Statement as amended from time to time, have been sold, and (iii) the date on which all Registrable Securities covered by such Registration Statement may be sold without restriction pursuant to Rule 144 (the “Effectiveness Period”) and advise the Investors in writing when the Effectiveness Period has expired;

 

 

(b)           prepare and file with the SEC such amendments and post-effective amendments to the Registration Statement and the Prospectus as may be necessary to keep the Registration Statement effective for the Effectiveness Period and to comply with the provisions of the Securities Act and the Exchange Act with respect to the distribution of all of the Registrable Securities covered thereby;

 

 

(c)           provide copies to and permit counsel designated by the Investors to review each Registration Statement and all amendments and supplements thereto no fewer than five (5) days prior to their filing with the SEC and not file any document to which such counsel reasonably objects;

 

 

(d)           furnish to the Investors and their legal counsel (i) promptly after the same is prepared and publicly distributed, filed with the SEC, or received by the Company (but not later than two (2) Business Days after the filing date, receipt date or sending date, as the case may be) one (1) copy of any Registration Statement and any amendment thereto, each preliminary prospectus and Prospectus and each amendment or supplement thereto, and each letter written by or on behalf of the Company to the SEC or the staff of the SEC, and each item of correspondence from the SEC or the staff of the SEC, in each case relating to such Registration Statement (other than any portion of any thereof which contains information for which the Company has sought confidential treatment), and (ii) such number of copies of a Prospectus, including a preliminary prospectus, and all amendments and supplements thereto and such other documents as each Investor may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Investor that are covered by the related Registration Statement;

 

 

(e)           use commercially reasonable efforts to (i) prevent the issuance of any stop order or other suspension of effectiveness and, (ii) if such order is issued, obtain the withdrawal of any such order at the earliest possible moment;

 

 

(f)           prior to any public offering of Registrable Securities, use commercially reasonable efforts to register or qualify or cooperate with the Investors and their counsel in connection with the registration or qualification of such Registrable Securities for offer and sale under the securities or blue sky laws of such jurisdictions requested by the Investors and do any and all other commercially reasonable acts or things necessary or advisable to enable the distribution in such jurisdictions of the Registrable Securities covered by the Registration Statement; provided, however, that the Company shall not be required in connection therewith or as a condition thereto to (i) qualify to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 3(f), (ii) subject itself to general taxation in any jurisdiction where it would not otherwise be so subject but for this Section 3(f), or (iii) file a general consent to service of process in any such jurisdiction;

 

 

(g)           use commercially reasonable efforts to cause all Registrable Securities covered by a Registration Statement to be listed on each securities exchange, interdealer quotation system or other market on which similar securities issued by the Company are then listed;

 

 

(h)           immediately notify the Investors, at any time prior to the end of the Effectiveness Period, upon discovery that, or upon the happening of any event as a result of which, the Prospectus includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing, and promptly prepare, file with the SEC and furnish to such holder a supplement to or an amendment of such Prospectus as may be necessary so that such Prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing;

 

 

(i)           otherwise use commercially reasonable efforts to comply with all applicable rules and regulations of the SEC under the Securities Act and the Exchange Act, including, without limitation, Rule 172 under the Securities Act, file any final Prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under the Securities Act, promptly inform the Investors in writing if, at any time during the Effectiveness Period, the Company does not satisfy the conditions specified in Rule 172 and, as a result thereof, the Investors are required to deliver a Prospectus in connection with any disposition of Registrable Securities and take such other actions as may be reasonably necessary to facilitate the registration of the Registrable Securities hereunder; and make available to its security holders, as soon as reasonably practicable, but not later than the Availability Date (as defined below), an earnings statement covering a period of at least twelve (12) months, beginning after the effective date of each Registration Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act, including Rule 158 promulgated thereunder (for the purpose of this subsection 3(i), “Availability Date” means the 45th day following the end of the fourth fiscal quarter that includes the effective date of such Registration Statement, except that, if such fourth fiscal quarter is the last quarter of the Company’s fiscal year, “Availability Date” means the 90th day after the end of such fourth fiscal quarter); and

 

 

(j)           With a view to making available to the Investors the benefits of Rule 144 (or its successor rule) and any other rule or regulation of the SEC that may at any time permit the Investors to sell shares of Common Stock to the public without registration, the Company covenants and agrees to:  (i) make and keep public information available, as those terms are understood and defined in Rule 144, until the earlier of (A) six months after such date as all of the Registrable Securities may be sold without restriction by the holders thereof pursuant to Rule 144 or any other rule of similar effect or (B) such date as all of the Registrable Securities shall have been resold; (ii) file with the SEC in a timely manner all reports and other documents required of the Company under the Exchange Act; and (iii) furnish to each Investor upon request, as long as such Investor owns any Registrable Securities, (A) a written statement by the Company that it has complied with the reporting requirements of the Exchange Act, (B) a copy of the Company’s most recent Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other information as may be reasonably requested in order to avail such Investor of any rule or regulation of the SEC that permits the selling of any such Registrable Securities without registration.

 

 

4.      Due Diligence Review; Information.  The Company shall make available, during normal business hours, for inspection and review by the Investors, advisors to and representatives of the Investors (who may or may not be affiliated with the Investors and who are reasonably acceptable to the Company), all financial and other records, all SEC Filings (as defined in the Purchase Agreement) and other filings with the SEC, and all other corporate documents and properties of the Company as may be reasonably necessary for the purpose of such review, and cause the Company’s officers, directors and employees, within a reasonable time period, to supply all such information reasonably requested by the Investors or any such representative, advisor or underwriter in connection with such Registration Statement (including, without limitation, in response to all questions and other inquiries reasonably made or submitted by any of them), prior to and from time to time after the filing and effectiveness of the Registration Statement for the sole purpose of enabling the Investors and such representatives, advisors and underwriters and their respective accountants and attorneys to conduct initial and ongoing due diligence with respect to the Company and the accuracy of such Registration Statement.

 

The Company shall not disclose material nonpublic information to the Investors, or to advisors to or representatives of the Investors, unless prior to disclosure of such information the Company identifies such information as being material nonpublic information and provides the Investors, such advisors and representatives with the opportunity to accept or refuse to accept such material nonpublic information for review and any Investor wishing to obtain such information enters into an appropriate confidentiality agreement with the Company with respect thereto.

 

 

5.      Obligations of the Investors.

 

 

(a)           Each Investor shall furnish in writing to the Company such information regarding itself, the Registrable Securities held by it and the intended method of disposition of the Registrable Securities held by it, as is set forth on the questionnaire attached to this Agreement as Exhibit B ("Selling Stockholder Questionnaire").  At least five (5) Business Days prior to the first anticipated filing date of any Registration Statement, the Company shall provide notice to each Investor to deliver the Selling Stockholder Questionnaire if such Investor elects to have any of the Registrable Securities included in the Registration Statement.  An Investor shall provide the Selling Stockholder Questionnaire to the Company at least two (2) Business Days prior to the first anticipated filing date of such Registration Statement if such Investor elects to have any of the Registrable Securities included in the Registration Statement.

 

 

(b)           Each Investor, by its acceptance of the Registrable Securities agrees to cooperate with the Company as reasonably requested by the Company in connection with the preparation and filing of a Registration Statement hereunder and covenants that it will only effect sales of Registrable Securities in accordance with the plan of distribution attached hereto as Exhibit A, unless such Investor has notified the Company in writing of its election to exclude all of its Registrable Securities from such Registration Statement.

 

 

(c)           Each Investor agrees that, upon receipt of any notice from the Company of either (i) the commencement of an Allowed Delay pursuant to Section 2(c)(ii) or (ii) the happening of an event pursuant to Section 3(h) hereof, such Investor will immediately discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities, until the Investor is advised by the Company that such dispositions may again be made.

 

 

6.      Indemnification.

 

 

(a)           Indemnification by the Company.  The Company will indemnify and hold harmless each Investor and its officers, directors, members, employees and agents, successors and assigns, and each other person, if any, who controls such Investor within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which they may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon: (i) any untrue statement or alleged untrue statement or omission or alleged omission of any material fact contained in any Registration Statement, any preliminary Prospectus or final Prospectus, or any amendment or supplement thereof; (ii) any blue sky application or other document executed by the Company specifically for that purpose or based upon written information furnished by the Company filed in any state or other jurisdiction in order to qualify any or all of the Registrable Securities under the securities laws thereof (any such application, document or information herein called a “Blue Sky Application”); (iii) the omission or alleged omission to state in a Blue Sky Application a material fact required to be stated therein or necessary to make the statements therein not misleading; (iv) any violation by the Company or its agents of any rule or regulation promulgated under the Securities Act applicable to the Company or its agents and relating to action or inaction required of the Company in connection with such registration; or (v) any failure to register or qualify the Registrable Securities included in any such Registration Statement in any state where the Company or its agents has affirmatively undertaken or agreed in writing that the Company will undertake such registration or qualification on an Investor’s behalf and will reimburse such Investor, and each such officer, director or member and each such controlling person for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by such Investor or any such controlling person in writing specifically for use in such Registration Statement, preliminary Prospectus or final Prospectus, or any amendment or supplement thereof, or Blue Sky Application, as applicable.

 

 

(b)           Indemnification by the Investors.  Each Investor agrees, severally but not jointly, to indemnify and hold harmless, to the fullest extent permitted by law, the Company, its directors, officers, employees, stockholders and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expense (including reasonable attorney fees) resulting from any untrue statement of a material fact or any omission of a material fact required to be stated in the Registration Statement or Prospectus or preliminary Prospectus or amendment or supplement thereto or necessary to make the statements therein not misleading, to the extent, but only to the extent that such untrue statement or omission is contained in any information furnished in writing by such Investor to the Company specifically for inclusion in such Registration Statement or Prospectus or amendment or supplement thereto.  In no event shall the liability of an Investor be greater in amount than the dollar amount of the proceeds (net of all expense paid by such Investor in connection with any claim relating to this Section 6 and the amount of any damages such Investor has otherwise been required to pay by reason of such untrue statement or omission) received by such Investor upon the sale of the Registrable Securities included in the Registration Statement giving rise to such indemnification obligation. In no event shall the liability of any Investor under this Section 6(b) be greater in amount than the dollar amount of the net proceeds received by such Investor upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

 

(c)           Conduct of Indemnification Proceedings.  Any person entitled to indemnification hereunder shall (i) give prompt notice to the indemnifying party of any claim with respect to which it seeks indemnification and (ii) permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party; provided that any person entitled to indemnification hereunder shall have the right to employ separate counsel and to participate in the defense of such claim, but the fees and expenses of such counsel shall be at the expense of such person unless (a) the indemnifying party has agreed to pay such fees or expenses, or (b) the indemnifying party shall have failed to assume the defense of such claim and employ counsel reasonably satisfactory to such person or (c) in the reasonable judgment of any such person, based upon written advice of its counsel, a conflict of interest exists between such person and the indemnifying party with respect to such claims (in which case, if the person notifies the indemnifying party in writing that such person elects to employ separate counsel at the expense of the indemnifying party, the indemnifying party shall not have the right to assume the defense of such claim on behalf of such person); and provided, further, that the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations hereunder, except to the extent that such failure to give notice shall materially adversely affect the indemnifying party in the defense of any such claim or litigation.  It is understood that the indemnifying party shall not, in connection with any proceeding in the same jurisdiction, be liable for fees or expenses of more than one separate firm of attorneys at any time for all such indemnified parties.  No indemnifying party will, except with the consent of the indemnified party, consent to entry of any judgment or enter into any settlement that does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect of such claim or litigation.

 

 

(d)           Contribution.  If for any reason the indemnification provided for in the preceding paragraphs (a) and (b) is unavailable to an indemnified party or insufficient to hold it harmless, other than as expressly specified therein, then the indemnifying party shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations.  No person guilty of fraudulent misrepresentation within the meaning of Section 11(f) of the Securities Act shall be entitled to contribution from any person not guilty of such fraudulent misrepresentation.  In no event shall the contribution obligation of a holder of Registrable Securities be greater in amount than the dollar amount of the proceeds (net of all expenses paid by such holder in connection with any claim relating to this Section 6 and the amount of any damages such holder has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission) received by it upon the sale of the Registrable Securities giving rise to such contribution obligation.

 

 

7.      Piggyback Rights; Other Registration Statements.

 

 

(a)           No Piggyback on Registrations; Prohibition on Filing Other Registration Statements.  Except as set forth on Schedule 7(a) attached hereto, neither the Company nor any of its security holders (other than the Investors in such capacity pursuant hereto) may include securities of the Company in any Registration Statements other than the Registrable Securities.  The Company shall not file any other registration statements until all Registrable Securities (other than Non-Electing Registrable Shares) are registered pursuant to a Registration Statement that is declared effective by the SEC, provided that this Section 7(a) shall not prohibit (i) the Company from filing amendments to registration statements filed prior to the date of this Agreement and (ii) the Company from filing a shelf registration statement on Form S-3 for a primary offering by the Company, provided that the Company makes no offering of securities pursuant to such shelf registration statement prior to the effective date of the Registration Statement required hereunder that includes all of the Registrable Securities.

 

 

(b)           Piggy-Back Registrations. If, at any time during the Effectiveness Period, there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the SEC a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with the Company’s stock option or other employee benefit plans and other than (i) any registration statement with respect to any equity line of credit as permitted by Section 7.9(b) of the Purchase Agreement or (ii) any resale registration statement with respect to transactions similar to the one contemplated by the Purchase Agreement or those permitted by Section 7.9(a) of the Purchase Agreement, (iii) a new shelf registration statement on Form S-3 to allow a registered direct or underwritten public offering under Rule 415, or (iv) any registration statement on Form S-1 with respect to a registered direct offering or an underwritten public offering, then the Company shall deliver to each Investor (other than a Non-Electing Investor with respect to such Investor’s Non-Electing Registrable Shares) a written notice of such determination and, if within fifteen days after the date of the delivery of such notice, any such Holder shall so request in writing, the Company shall include in such registration statement all or any part of such Registrable Securities such Holder requests to be registered; provided, however, that the Company shall not be required to register any Registrable Securities pursuant to this Section 7(b) that are eligible for resale pursuant to Rule 144 (without volume restrictions or current public information requirements) promulgated by the SEC pursuant to the Securities Act or that are the subject of a then effective Registration Statement.

 

 

8.      Miscellaneous.

 

 

(a)           Amendments and Waivers.  This Agreement may be amended only by a writing signed by the Company and the Required Investors.  The Company may take any action herein prohibited, or omit to perform any act herein required to be performed by it, only if the Company shall have obtained the written consent to such amendment, action or omission to act, of the Required Investors.

 

 

(b)           Notices.  All notices and other communications provided for or permitted hereunder shall be made as set forth in Section 9.4 of the Purchase Agreement.

 

 

(c)           Assignments and Transfers by Investors.  The provisions of this Agreement shall be binding upon and inure to the benefit of the Investors and their respective successors and assigns.  An Investor may transfer or assign, in whole or from time to time in part, to one or more persons its rights hereunder in connection with the transfer of Registrable Securities by such Investor to such person, provided that such Investor complies with all laws applicable thereto and provides written notice of assignment to the Company promptly after such assignment is effected.

 

 

(d)           Assignments and Transfers by the Company.  This Agreement may not be assigned by the Company (whether by operation of law or otherwise) without the prior written consent of the Required Investors, provided, however, that in the event that the Company is a party to a merger, consolidation, share exchange or similar business combination transaction in which the Common Stock is converted into the equity securities of another Person, from and after the effective time of such transaction, such Person shall, by virtue of such transaction, be deemed to have assumed the obligations of the Company hereunder, the term “Company” shall be deemed to refer to such Person and the term “Registrable Securities” shall be deemed to include the securities received by the Investors in connection with such transaction unless such securities are otherwise freely tradable by the Investors after giving effect to such transaction.

 

 

(e)           Benefits of the Agreement.  The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective permitted successors and assigns of the parties.  Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

 

 

(f)           Counterparts; Faxes.  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.  This Agreement may also be executed via facsimile, which shall be deemed an original.

 

 

(g)           Titles and Subtitles.  The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

 

(h)           Severability.  Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof but shall be interpreted as if it were written so as to be enforceable to the maximum extent permitted by applicable law, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  To the extent permitted by applicable law, the parties hereby waive any provision of law which renders any provisions hereof prohibited or unenforceable in any respect.

 

 

(i)           Further Assurances.  The parties shall execute and deliver all such further instruments and documents and take all such other actions as may reasonably be required to carry out the transactions contemplated hereby and to evidence the fulfillment of the agreements herein contained.

 

 

(j)           Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto in respect of the subject matter contained herein.  This Agreement supersedes all prior agreements and understandings between the parties with respect to such subject matter.

 

 

(k)           Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.  This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York without regard to the choice of law principles thereof.  Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby.  Service of process in connection with any such suit, action or proceeding may be served on each party hereto anywhere in the world by the same methods as are specified for the giving of notices under this Agreement.  Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court.  Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.

 

  

  

  

IN WITNESS WHEREOF, the parties have executed this Agreement or caused their duly authorized officers to execute this Agreement as of the date first above written.

 

 

The Company:                                                                CELSION CORPORATION

 

 

 

By:_________________________

 

Name:

 

Title:

 

  

  

  

[SIGNATURE PAGE OF INVESTORS TO CLSN RRA]

Name of Holder: __________________________

Signature of Authorized Signatory of Holder: __________________________

Name of Authorized Signatory: _________________________

Title of Authorized Signatory: __________________________

[SIGNATURE PAGES CONTINUE]

 

 

 

  

  

  

Exhibit A

 

 

Plan of Distribution

The selling stockholders, which as used herein includes donees, pledgees, transferees or other successors-in-interest selling shares of common stock or interests in shares of common stock received after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from time to time, sell, transfer or otherwise dispose of any or all of their shares of common stock or interests in shares of common stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions.  These dispositions may be at fixed prices, at prevailing market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale, or at negotiated prices.

The selling stockholders may use any one or more of the following methods when disposing of shares or interests therein:

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

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

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

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

- privately negotiated transactions;

- short sales effected after the date the registration statement of which this Prospectus is a part is declared effective by the SEC;

- through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;

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

- a combination of any such methods of sale; and

-- any other method permitted by applicable law.

The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the shares of common stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock, from time to time, under this prospectus, or under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.  The selling stockholders also may transfer the shares of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

In connection with the sale of our common stock or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the common stock in the course of hedging the positions they assume.  The selling stockholders may also sell shares of our common stock short and deliver these securities to close out their short positions, or loan or pledge the common stock to broker-dealers that in turn may sell these securities.  The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

The aggregate proceeds to the selling stockholders from the sale of the common stock offered by them will be the purchase price of the common stock less discounts or commissions, if any.  Each of the selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part, any proposed purchase of common stock to be made directly or through agents.  We will not receive any of the proceeds from this offering. Upon any exercise of the warrants by payment of cash, however, we will receive the exercise price of the warrants.

The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act of 1933, provided that they meet the criteria and conform to the requirements of that rule.

The selling stockholders and any underwriters, broker-dealers or agents that participate in the sale of the common stock or interests therein may be "underwriters" within the meaning of Section 2(11) of the Securities Act.  Any discounts, commissions, concessions or profit they earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act.  Selling stockholders who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the prospectus delivery requirements of the Securities Act.

To the extent required, the shares of our common stock to be sold, the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agents, dealer or underwriter, any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.

In order to comply with the securities laws of some states, if applicable, the common stock may be sold in these jurisdictions only through registered or licensed brokers or dealers.  In addition, in some states the common stock may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification requirements is available and is complied with.

We have advised the selling stockholders that the anti-manipulation rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders and their affiliates.  In addition, to the extent applicable we will make copies of this prospectus (as it may be supplemented or amended from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities Act.  The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against certain liabilities, including liabilities arising under the Securities Act.

We have agreed to indemnify the selling stockholders against liabilities, including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this prospectus.

We have agreed with the selling stockholders to keep the registration statement of which this prospectus constitutes a part effective until the earlier of (1) such time as all of the shares covered by this prospectus have been disposed of pursuant to and in accordance with the registration statement or (2) the date on which all of the shares may be sold without restriction pursuant to Rule 144 of the Securities Act.

  

  

  

Exhibit B

 

CELSION CORPORATION

 

Selling Stockholder Notice and Questionnaire

 

The undersigned beneficial owner of common stock (the “Registrable Securities”) of Celsion Corporation, a Delaware corporation (the “Company”), understands that the Company has filed or intends to file with the Securities and Exchange Commission (the “Commission”) a registration statement (the “Registration Statement”) for the registration and resale under Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”), of the Registrable Securities, in accordance with the terms of the Registration Rights Agreement (the “Registration Rights Agreement”) to which this document is annexed.  A copy of the Registration Rights Agreement is available from the Company upon request at the address set forth below.  All capitalized terms not otherwise defined herein shall have the meanings ascribed thereto in the Registration Rights Agreement.

 

Certain legal consequences arise from being named as a selling stockholder in the Registration Statement and the related prospectus.  Accordingly, holders and beneficial owners of Registrable Securities are advised to consult their own securities law counsel regarding the consequences of being named or not being named as a selling stockholder in the Registration Statement and the related prospectus.

 

NOTICE

 

The undersigned beneficial owner (the “Selling Stockholder”) of Registrable Securities hereby elects to include the Registrable Securities owned by it in the Registration Statement.

 

  

  

  

The undersigned hereby provides the following information to the Company and represents and warrants that such information is accurate:

 

QUESTIONNAIRE

 

	
  

	
1.

	
Name.

 

	
  

	
(a)

	
Full Legal Name of Selling Stockholder

 

	  
	  

	
  

	
(b)

	
Full Legal Name of Registered Holder (if not the same as (a) above) through which Registrable Securities are held:

 

	  
	  

	
  

	
(c)

	
Full Legal Name of Natural Control Person (which means a natural person who directly or indirectly alone or with others has power to vote or dispose of the securities covered by this Questionnaire):

 

	  
	  

 

	
  

	
2.  Address for Notices to Selling Stockholder:

 

	  
	  
	  
	
Telephone:

	
Fax:

	
Contact Person:

	
  

	
3.  Broker-Dealer Status:

 

	
  

	
(a)

	
Are you a broker-dealer?

 

Yes                         No   

 

	
  

	
(b)

	
If “yes” to Section 3(a), did you receive your Registrable Securities as compensation for investment banking services to the Company?

 

Yes                         No   

 

	
  

	
Note:

	
If “no” to Section 3(b), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

	
  

	
(c)

	
Are you an affiliate of a broker-dealer?

 

Yes                         No   

 

	
  

	
(d)

	
If you are an affiliate of a broker-dealer, do you certify that you purchased the Registrable Securities in the ordinary course of business, and at the time of the purchase of the Registrable Securities to be resold, you had no agreements or understandings, directly or indirectly, with any person to distribute the Registrable Securities?

 

Yes                         No   

 

	
  

	
Note:

	
If “no” to Section 3(d), the Commission’s staff has indicated that you should be identified as an underwriter in the Registration Statement.

 

	
  

	
4.  Beneficial Ownership of Securities of the Company Owned by the Selling Stockholder.

 

Except as set forth below in this Item 4, the undersigned is not the beneficial or registered owner of any securities of the Company other than the securities issuable pursuant to the Purchase Agreement.

 

	
  

	
(a)

	
Type and Amount of other securities beneficially owned by the Selling Stockholder:

 

	  
	  
	  

 

  

  

  

	
  

	
5.  Relationships with the Company:

 

Except as set forth below, neither the undersigned nor any of its affiliates, officers, directors or principal equity holders (owners of 5% of more of the equity securities of the undersigned) has held any position or office or has had any other material relationship with the Company (or its predecessors or affiliates) during the past three years.

 

	
  

	
State any exceptions here:

 

	  
	  
	  

 

The undersigned agrees to promptly notify the Company of any inaccuracies or changes in the information provided herein that may occur subsequent to the date hereof at any time while the Registration Statement remains effective.

 

By signing below, the undersigned consents to the disclosure of the information contained herein in its answers to Items 1 through 5 and the inclusion of such information in the Registration Statement and the related prospectus and any amendments or supplements thereto.  The undersigned understands that such information will be relied upon by the Company in connection with the preparation or amendment of the Registration Statement and the related prospectus and any amendments or supplements thereto.

 

IN WITNESS WHEREOF the undersigned, by authority duly given, has caused this Notice and Questionnaire to be executed and delivered either in person or by its duly authorized agent.

 

Date:                                                      Beneficial Owner:                                                                         

By:                                                                         

Name:

Title:

PLEASE FAX A COPY (OR EMAIL A .PDF COPY) OF THE COMPLETED AND EXECUTED NOTICE AND QUESTIONNAIRE, AND RETURN THE ORIGINAL BY OVERNIGHT MAIL, TO:ex_10-1.htm

LOT PURCHASE AND DEVELOPMENT AGREEMENT

BY AND BETWEEN

NTS / VIRGINIA DEVELOPMENT COMPANY

(“SELLER”)

AND

M/I HOMES OF DC, LLC

(“PURCHASER”)

November 30, 2011

  

  

  

 

TABLE OF CONTENTS

 

 

	Section 1.                         Lots. 

Section 2.                         Purchase Price.           

Section 3.                         Study Period - Entry and Indemnity.

Section 4.                         Conditions Precedent and Development Obligations.

Section 5.                         Costs of Developing Lots.

Section 6.                         Purchaser’s Warranties and Representations.

Section 7.                         Seller’s Representations and Warranties.

Section 8.                         Brokerage Commission.

Section 9.                         Governmental Compliance.

Section 10.                       Confidentiality.

Section 11.                       Notices.

Section 12.                       Facsimile.

Section 13.                       Interpretation.

Section 14.                       Binding Effect.

Section 15.                       Miscellaneous.

Section 16.                       Sales Center Use.

Section 17.                       Exclusive Dealings.

Section 18.                       Marketing.

Section 19.                       Competitive Lot Development.

	
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LOT PURCHASE AND DEVELOPMENT AGREEMENT

THIS LOT PURCHASE AND DEVELOPMENT AGREEMENT (the “Agreement”) is made  by and between NTS / VIRGINIA DEVELOPMENT COMPANY, a Virginia corporation, (“Seller”), and M/I HOMES OF DC, LLC, a Delaware limited liability company (“Purchaser”).

W I T N E S S E T H:

WHEREAS, Seller is the owner of certain property located in Spotsylvania County (the “County”), Virginia (the “State”), designated as Section 15 of the subdivision known as Fawn Lake (the “Subdivision”), as more fully shown and designated on the attached Exhibit A (the “Property”);

WHEREAS, Seller wishes to sell and Purchaser wishes to buy one hundred sixty (160), more or less, duly and properly subdivided single family detached residential lots (individually, a “Lot,” and, collectively, the “Lots”) to be located on the Property;

WHEREAS, the Property is presently not developed and not ready for the construction of residences thereon;

NOW, THEREFORE, in consideration of the premises and of the mutual promises hereinafter set forth the parties agree as follows:

Section 1.     Lots.

Seller shall convey and Purchaser shall buy the Lots in accordance with the terms of this Agreement.

Section 2.     Purchase Price.

The “Purchase Price” of the Lots shall be paid by Purchaser to Seller as follows:

a)     Escrow Deposit.  Within five (5) days after the expiration of the Study Period (as such term is defined in Section 3 below), Purchaser shall deposit with Curran and Whittington, PLLC, 15100 Washington Street, Suite 201, Haymarket, Virginia 20169 (the “Escrow Agent”) a sum in the amount of Two Hundred Forty Thousand Dollars ($240,000.00) (the “Deposit”), to be held by the Escrow Agent in an interest-bearing account.  The Deposit shall be in good and collected funds, or in the form of a letter of credit (issued by Wells Fargo Bank, N.A., Regions Bank or U.S. Bank, N.A. or other federally insured bank acceptable to Seller in its reasonable discretion, to be substantially in the same form as the specimen letter of credit attached as Exhibit C hereto).  The Deposit shall be disbursed by the Escrow Agent to Seller, applied against the Purchase Price of each Lot prorata at each Lot Settlement, or reduced if in the form of a Letter of Credit, as more fully set forth herein.  The Deposit shall be non-refundable to Purchaser upon the expiration of the Study Period, unless this Agreement is terminated prior to the expiration of the Study Period in accordance with the terms set forth in Section 3 or as otherwise provided for herein.  All interest earned on the Deposit shall accrue to the benefit of the Purchaser, except in the event of a default by Purchaser, in which event the interest shall follow

  

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the Deposit.   Seller shall execute and deliver to Purchaser any documents reasonably required to reduce/cancel any letter of credit and as applicable authorize return thereof to the Purchaser.  Purchaser reserves the right to replace any letter of credit with cash or any cash with a letter of credit, so long as the letter of credit is issued by Wells Fargo Bank, N.A., Regions Bank or U.S. Bank, N.A. or other federally insured bank acceptable to Seller in its reasonable discretion, to be substantially in the same form as the specimen letter of credit attached hereto as Exhibit C.

b)     Purchase Price.  The purchase price for the Lots shall be Sixty One Thousand Dollars ($61,000.00) per Lot for any Lots closed within the first twelve (12) months after the Initial Closing, increasing at an annual rate of three percent (3%) commencing on the date which is twelve (12) months after the Initial Lot Closing.  Notwithstanding the foregoing, the purchase price shall not increase, on a per diem basis, for that number of days in any twelve (12) month period after the Initial Closing where the Purchaser is ready, willing and able to go to Closing on Lot(s) but the Seller is unable to deliver the minimum number of Lots in accordance with the Agreement.  At such time thereafter as the Seller can deliver said Lot(s) the escalator shall recommence.

c)     Payment of Purchase Price.  The purchase price for each Lot shall be paid in cash, by wire transfer, title company check, or immediately available federal funds at the Closing of such Lot.

d)     Closing.  The Initial Closing shall be for one (1) lot upon which a model home is to be built by Purchaser, and shall be held within thirty (30) days after the satisfaction of the Conditions Precedent (as such term is defined in Section 4 hereof) for the first phase of Section 15 of Fawn Lake (estimated to be in June 2012) (the “Initial Closing”).  Thereafter, Purchaser shall close on the Lots at the rate of six (6) single family detached Lots per calendar quarter, the first such take-down and Closing to occur within one hundred fifty (150) days after the Initial Closing (collectively, the “Closings”, provided the Conditions Precedent (as such term is defined in Section 4 hereof) for such Lots have been satisfied or waived in writing by Purchaser.  Purchaser shall be allowed to “pass” on Closing Lots only one (1) time during the twelve (12) month period commencing after the Initial Closing, and during each successive twelve (12) month period, but in no event shall the number of Lots closed during any such twelve (12) month period following the Initial Closing be fewer than twenty-four (24). Purchaser shall have the right at any time to close on more Lots than the number of Lots required to be purchased in accordance herewith, upon reasonable prior written notice to Seller, in which event Purchaser shall receive cumulative credits toward the minimum number of Lots required to be purchased in succeeding quarters.

e)     Seller’s Closing Costs.  Seller shall pay for the preparation of the special warranty deeds conveying to Purchaser the Lots, any lien waivers, grantor’s tax and the State excise tax stamps to be affixed thereto, if any. Seller shall be responsible for its own attorneys’ fees and any recording fees for the release of any monetary liens or encumbrances affecting the Property, but for no other costs associated with the transfer of the Lots.

f)     Purchaser’s Closing Costs.  Purchaser shall be solely responsible for its Closing costs, which shall include, but not be limited to, cost of examination of title, title insurance premiums and fees, Purchaser’s closing fees, Purchaser’s attorneys’ fees, any grantee’s tax or other applicable transfer tax other than the grantor’s tax and document preparation fees for the

  

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Closing documents and any loan or other documents, if any, and any and all inspections, surveys, and tests performed by or for the Purchaser or its lenders.  Purchaser shall pay for recordation of the special warranty deeds.

Purchaser also agrees to pay to Seller, or to Seller’s designated affiliate, sales commissions/fees as a percentage of the total value of the home sales contract for each home built on a Lot, such fees to be paid at the time of the home closing, as more fully described on Exhibit B attached hereto and made a part hereof.

g)     Adjustments.  All property taxes, ad valorem taxes, and all other fees, if any, payable on an annual or periodic basis shall be adjusted to the date(s) of closing and thereafter assumed by Purchaser. Seller will be responsible for the payment of any presently enacted rezoning or development tax which may be imposed on the Lots or Property as a result of the conversion thereof to residential use, including but not limited to any “rollback taxes”.

h)     Possession and Risk of Loss.  Possession of the Lots shall be delivered at Closing on such Lots.  The risk of loss or damage to the Lots by fire or other casualty is assumed by Seller until the Closing, except for damage caused by Purchaser and/or its agents, contractors or representatives during the Study Period.

Section 3.     Study Period - Entry and Indemnity.

a)     Confirmation or Automatic Termination.  The Purchaser shall have the period of time commencing with the Effective Date and ending at 5:00 p.m. Eastern time on the date which is thirty (30) days after the Effective Date (the “Study Period”) to enter onto the Property and conduct such tests, studies and investigations as it may in its sole discretion deem appropriate, and at Purchaser’s sole discretion proceed with this Agreement by providing written notice (the “Confirmation Notice”) thereof to Seller.  The Confirmation Notice shall be delivered in accordance with the notice provisions of Section 11 hereof not later than 5:00 p.m. Eastern time on the date which is thirty (30) days after the Effective Date (the “Confirmation Notice Deadline”).  In the event Purchaser fails to deliver the Confirmation Notice by the Confirmation Notice Deadline, this Agreement shall automatically terminate and Seller and Purchaser shall have no further obligations hereunder except for those obligations of Purchaser which expressly survive termination of this Agreement.  If this Agreement is terminated in accordance with the terms hereof, then within five (5) business days  after expiration of the Study Period, Purchaser shall provide Seller with a copy of any third-party reports or studies that were conducted on Purchaser’s behalf during the Study Period, without cost or expense to Seller, exclusive of any proprietary information of Purchaser. Purchaser shall conduct its own review of zoning and other governmental regulations affecting the Property. Seller, its employees and representatives shall cooperate fully with Purchaser in connection with its review, including providing a right of entry on the Property to obtain an appraisal and survey, to perform engineering and Phase I environmental testing, and such other studies necessary or desired in connection with Purchaser’s evaluation of the Property. However, Purchaser shall not conduct any invasive or intrusive testing upon the Property without the prior written consent of Seller. Purchaser agrees to promptly restore the Property to its original condition and agrees to be responsible for any damage incurred while performing its investigations.  Purchaser agrees to hold harmless and indemnify Seller from any liability, lien, loss, cost or expense for the actions or negligence of Purchaser’s agents and representatives while conducting such inspection on the Property.  Prior

  

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to entry upon the Property, Purchaser shall provide Seller with copies of certificates of insurance evidencing comprehensive general liability insurance, naming Seller as an additional insured party, with a minimum coverage of One Million Dollars ($1,000,000.00) per occurrence. The provisions of this paragraph shall survive Closing or any earlier termination of this Contract and shall remain fully binding on the Purchaser.  The foregoing repair, indemnity and defense obligations do not apply to (a) any loss, liability, cost or expense to the extent arising from or related to negligent or willful acts or omissions of the Seller, or its agents or consultants, (b) any diminution of the Property arising from or related to matters merely discovered (but not caused or worsened) by Purchaser during its investigation of the Property, (c) latent defects in the Property merely discovered (but not caused or worsened) by Purchaser or (d) the release or spread of hazardous substances which were merely discovered (but not caused, worsened or deposited) on or under the Property by Purchaser.

b)     Condition of Property.  Notwithstanding the foregoing inspections, at the Initial Closing or at the subsequent Closings, except as otherwise expressly provided for herein, Purchaser is accepting the Property in its then “AS IS”, “WHERE IS” condition.  However, nothing in this paragraph shall operate to relieve or excuse Seller from its obligations under this Agreement not yet completed or to be performed at or after the time of such Closings.

c)     Construction Trailer.  At a mutually agreeable date, Purchaser may place a construction and/or sales trailer on the Property at mutually agreeable location.  The parties shall agree prior to the expiration of the Study Period as to the date and location of the construction and/or sales trailer on the Property.  Purchaser’s trailer(s) shall not impede development by Seller and shall conform to all State and County codes.  Any trailer shall be at the sole cost and expense of Purchaser.  Purchaser agrees that it shall promptly move said trailer to another location on the Property agreeable to Seller upon request by Seller in order to permit Seller to complete required development of the Property in accordance with the terms of this Agreement.  Seller shall attempt to verify that the trailer location selected by the Purchaser does not interfere with the utility design prior to its placement.  Purchaser shall indemnify and hold harmless Seller from and against any and all claims made against Seller as a result of Purchaser’s (or Purchaser’s agents, contractors, subcontractors or representatives) activities on the Property in connection with Purchaser’s trailer(s), construction activity or otherwise. The provisions of this paragraph shall survive Closing or any earlier termination of this Contract and shall remain fully binding on the Purchaser.

d)     Title Insurance and Survey.  As a condition to each closing, title to the Lots at Closing shall be good of record and fully merchantable, insurable and conveyed to Purchaser by special warranty deeds subject only to the Permitted Exceptions (as herein after defined).  During the first twenty (20) days of the Study Period, Purchaser shall obtain, at Purchaser’s sole cost and expense, an ALTA form title insurance commitment for the Property issued by Commonwealth Land Title Insurance Company, a national title insurance company (the “Title Company”). Purchaser may also obtain, during the first twenty (20) days of the Study Period, at Purchaser’s sole cost and expense, a current ALTA/ACSM survey of the Property.

In the event the title commitment discloses any exceptions to title or matters which are not acceptable to Purchaser (each, a “Title Defect”), or the survey discloses any encroachment or violation which is not acceptable to Purchaser (each, a “Survey Defect”), Purchaser shall notify Seller in writing of such Title Defect or Survey Defect, as the case may be, within five (5) days 

  

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of Purchaser’s receipt of such title commitment or survey. If Purchaser fails to timely notify Seller of a Title Defect or Survey Defect, Purchaser shall be deemed to have accepted title and/or survey matters reflected in the title commitment and/or survey.  Seller shall have thirty (30) days after receipt of such notice to remove the Title Defect or Survey Defect and provide Purchaser evidence of such removal. In the event that a Title Defect, other than one that may be cured solely by the payment of money (which monetary lien Seller shall be obligated to remedy), or a Survey Defect is not cured, Purchaser shall have the right to either: (i) accept such Title Defect or Survey Defect and proceed to Closing, or (ii) terminate this Contract, receive a return of the Deposit, including any interest thereon, and in which event neither party shall have any further liability to the other, except for those obligations which expressly survive the termination hereof.  Any item contained in the title commitment or any matter shown on the survey to which Purchaser does not timely object shall be considered a “Permitted Exception” and Seller shall have no further obligation with respect to such Permitted Exceptions.  Permitted Exceptions shall also include real estate taxes not yet due and payable, utility and access easements of record, and other title and survey matters which do not materially interfere with or materially increase the cost of Purchaser’s home construction, and the declarations, covenants, conditions and restrictions of record.

From and after the Effective Date, Seller shall not, except as otherwise provided for herein, encumber or change the state to title.  Notwithstanding the foregoing, Seller shall have the right to grant such easements as may be required by applicable governmental authorities and/or utility providers in connection with obtaining final site plan and/or subdivision plan for the Property in accordance with the terms hereof.  In the event any such easements materially interfere with or materially increase the cost of Purchaser’s home construction or marketing activities Purchaser shall have the right to decline to purchase any such Lot so affected.

e)     Default.  In the event Seller shall default under this Agreement, after five (5) days written notice with opportunity to cure from Purchaser, then the Purchaser may either terminate this Agreement, in which event the Deposit and interest thereon shall be returned to Purchaser and this Agreement shall become null and void, or Purchaser may enforce its right of specific performance, provided litigation to enforce such right is commenced within ninety (90) days after the date for Closing.  Purchaser shall have no other remedies at law or in equity.  Notwithstanding the foregoing, in the event the practical benefits of the equitable remedy of specific performance are unavailable to Purchaser due to an action or inaction of Seller, but only in such event, if Purchaser elects to terminate this Agreement, then in addition to the right obtain a refund of the Deposit, Purchaser shall have the right to recover from Seller Purchaser’s actual out of pocket expenses resulting from Seller’s default, not to exceed fifty thousand dollars ($50,000.00).  In the event Purchaser, having provided the Confirmation Notice, fails to Close any of the Lots as provided for in this Agreement, after five (5) days written notice and opportunity to cure from Seller, the Seller shall have the right to terminate this Agreement and the Deposit and all interest thereon shall be retained by Seller as liquidated damages, and this shall be the sole remedy at law and in equity of the Seller. Seller specifically waives all rights to damages (other than liquidated damages) and to specific performance of Purchaser’s obligation to close.  Upon the occurrence of such a breach, this Agreement shall terminate and Seller shall have no additional obligations to the Purchaser save and except those obligations that expressly survive Closings, in accordance with the terms hereof.

 

f)     Refund of Deposits.  In the event Purchaser fails to provide the “Confirmation 

  

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Notice” under this paragraph, the Agreement shall be deemed null and void.

Section 4.     Conditions Precedent and Development Obligations.

a)     Conditions Precedent.  The obligation of the Purchaser to purchase any Lot is and shall be contingent upon each and all of the following (the “Conditions Precedent”) having been satisfied or waived in writing by Purchaser prior to the Closing for each Lot (or Lots) being conveyed to Purchaser at such Closing, including the Initial Closing:

 

       (i)     Seller to Complete Obligations.  The Seller shall have completed all of its Development Obligations which are applicable to the Lots scheduled for purchase at that time except for those obligations which are specifically designated as not being required prior to Closing.

 

       (ii)    No Pending Governmental Action.  On the date of each Closing no condition, limitation or action by any applicable governmental authority, including but not limited to the imposition of a sewer or water moratorium, phasing plan or unresolved public facilities issue (e.g., roads, storm sewers, water, schools) shall exist or have been taken or publicly announced to have been taken, which: (A) materially and adversely affects the availability of building permits or installation of sanitary sewer or water facilities, electric, telephone, cable or other utilities to serve a residential dwelling to be constructed on each Lot; or (B) in any other manner unreasonably prevents or delays such residential dwellings to be constructed on the Lots from being connected to the public sewer and water systems and to other utilities.

 

       (iii)   Building Pad.  Each Lot shall have a building pad consistent with PDH Zoning, with a minimum width of approximately one hundred feet (100’) and a building envelope of approximately sixty feet (60’), except on cul-de-sac Lots.

 

       (iv)    Easements and Dedications.  On the date of each Closing, all off-site easements and dedications necessary for the Purchaser’s development and construction of houses shall have been obtained by Seller at its cost.

 

       (v)     Plan Approvals.  Prior to the expiration of the Study Period, the Purchaser may submit house plans for preliminary approval to Seller as agent for the Architectural Review Committee (“ARC”).  Prior to construction, Purchaser will submit for final approval plans and specifications and documentation as required by the Declaration of Restrictive Covenants, Fawn Lake Community Builders Guidelines and the Fawn Lake Signature Builder Program.  The final house plan approval shall be a condition precedent to Closing.

 

       (vi)    Title.    Title to the Property is as required by Paragraph 3d. hereof.

 

       (vii)   Seller’s Representations and Warranties. The representations, warranties and covenants of Seller contained within this Agreement shall be true and correct at the time of each Closing.

 

       (viii)  Utilities. All utilities, including but not limited to water and sewer service, shall be located at and available to the Property;

  

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       (ix)  Easements. All offsite easements, if any, necessary for complete access and utility availability, including but not limited to water and sewer service, as well as any and all other easements needed to perform the site development work shall be in place and of record.

 

       (x)       Base Paving and Approvals. Base paving of the streets providing access to the Lots (“Base Paving”) shall have been completed and all necessary approvals shall be in place so as to allow Purchaser to obtain building permits and occupancy permits, or their equivalent, upon the posting of customary bonds and/or payment of customary fees.

b)     Development Obligations of Seller.

 

       (i)        Finished Lot Improvements. Seller shall provide Purchaser the Lots fully engineered, subdivided, recorded and approved by all government authorities and agencies having jurisdiction in the matter substantially in conformance with the plat attached hereto as Exhibit A, provided Seller may make such changes to the plat as required by any governmental authority having approval rights over such plat and as may be reasonably acceptable to Buyer.  Lots shall be engineered in accordance with all applicable laws and codes and in accordance with sound engineering practices and suitable for construction of single family detached residences.  Lots shall be subdivided for sale in which the following improvements shall have been accomplished by Seller, as will be shown on the Final Site Subdivision Plan as approved by all applicable County and State authorities.  Development obligations of the Seller shall survive Closings.

 

          (A)     Public or community sewer shall have been installed, approved and functioning without the need or expense of grinder pumps or ejector pumps from the first floor elevations (with all offsite fees and charges paid by Seller) with a lateral provided for connection, within eight feet (8’-0”) of the surface.  Sewer tap fees for all Lots purchased will be paid by Purchaser.

 

          (B)  Public or community water shall have been installed, approved and functioning, without the need for a booster pump from the first floor elevations unless Seller provides such booster pump (with all offsite fees and charges paid by Seller) with a lateral provided for connection to within one foot (1’-0”) inside the property line.  Water tap fees for all Lots purchased by Purchaser will be paid by Purchaser.  If Seller shall have paid water tap fees in advance, then Purchaser may, at its option, reimburse Seller for the actual amount of said water tap fees at the time of each Closing and Seller shall assign the applicable water tap to the Purchaser.

 

          (C)  All storm drainage and storm drainage retention systems required by appropriate County or other public authorities shall have been installed with all offsite fees and charges paid by Seller.  Seller shall be responsible for the installation and maintenance of sediment and erosion controls as shown on Seller’s approved subdivision plans.  After said controls have been installed the Purchaser shall have the right, to the extent possible, to utilize the said controls in  connection with its on-lot development and construction; provided, however, that to the extent that Purchaser damages said controls it shall be responsible for the repair thereof.  Purchaser shall be responsible for all on-lot sediment and erosion controls required in 

 

  

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connection with Purchaser’s construction on the Lots.  Seller shall be responsible for the removal and compaction of any sediment ponds on Lots.

 

          (D)     Streets, curbs, gutters, sidewalks across common areas and along street right-of-ways adjacent to common areas and/or culverts and ditches as applicable shall have been installed by Seller with dedicated and base asphalt paved access to an existing public street which access may be across a private street in accordance with the approved plans.  Final paving and sidewalks across common areas and along street right-of-ways may be completed after Lot Closings, provided such work is completed in a timely manner so as not to delay the issuance of building permits or residential use or occupancy permits for the Lots.  All driveways and on-Lot lead sidewalks and sidewalks adjacent to the frontage of each Lot shall be Purchaser’s responsibility. Entry aprons and curbs damaged during construction must be replaced per approved design plans and standards and shall be Purchaser’s responsibility.

 

          (E)  All electric, gas and telephone main lines shall be available to the Lots, but are not required to be extended to each Lot prior to Closing.  The extension of such lines to the property line of each Lot shall be designed and installed by the utilities associated therewith. Such utilities (except for cable) shall be furnished in a timely manner so as not to delay the issuance of building permits or residential use or occupancy permits for the Lots.  Installation of such lines from the property line of each Lot to the dwelling, and the connection fees associated therewith, shall be Purchaser’s responsibility.

 

          (F)      Purchaser, at its sole cost and expense, shall be responsible for the installation and maintenance of on-Lot dust and siltation controls as required by applicable governmental authorities and for the restoration of all areas of the Project or public roads disturbed by its construction activities.

 

          (G)     Common area trails and walks, culverts, common area amenities and landscaping, street lights and signs shall be completed as required by applicable County, State and any other governmental authority.  The items set forth in this subparagraph (G) may be completed after Lot Closings, provided such work is completed in a timely manner so as not to delay the issuance of building permits or residential use or occupancy permits for the houses to be constructed on the Lots.

 

          (H)     All common area retaining and screening walls and entry features and signage shall be completed in accordance with the approved Final Site Subdivision Plan.

 

          (I)  All required off-site easements, dedications or permissions necessary for Purchaser’s development and construction of houses on the Lots shall have been obtained and all off-site improvements as required by the applicable governmental authorities and necessary for Purchaser’s development and construction of houses on the Lots shall have been completed, and all related off-site fees for the water tower shall be paid by Seller.

 

          (J)      All recreation facilities and amenities as shown on the approved site/plans for the Project.

 

          (K)     All bonded improvements, preliminary plan conditions, and all proffered development conditions and contributions, whether they are to be made or performed

  

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before or after Closing, shall be completed and satisfied.

 

          (L)  All other site improvements or actions whether on or off the Property required by any governmental authority having jurisdiction, exclusive of house construction, as a condition for the occupancy of residential dwellings constructed by Purchaser.

 

          (M)  Preparation and approval of all homeowners’ association documents, including approval to the extent required by applicable County authorities.

 

          (N)  Seller shall perform over Lot clearing and rough grading of the Property, Seller shall cut, fill and grade each Lot as necessary to the proper and lawful drainage of such Lot before the erection of a building thereon in accordance with the approved site plan.  Each Lot will be graded in accordance with the Lot grade specified grades shown on the approved site plan.  Seller shall install verification stakes to facilitate the determination of elevations. Seller will notify Purchaser of such time as grading is complete on a Lot(s).  A walk-thru inspection will be made by a representative of both Purchaser and Seller, and a list of discrepancies, if any, will be prepared.  Seller will promptly correct said deficiencies. If all or part of the foundation cannot be placed at natural grade capable of supporting such foundation, Seller will supply control house pads with dimensions to be provided by Purchaser. Each such fill pad must be certified to Purchaser by a registered engineer who is approved by Purchaser to support a footing/foundation (“Lot Certification”) A copy of the Lot Certification shall be provided by Seller to Purchaser no less than ten (10) days prior to the date of Closing for such Lot. In the event that rock is encountered on any Lot by Seller during its grading operation, Seller will blast and/or excavate rock twenty-four (24) inches below the Lot slab or as otherwise reasonably requested by Purchaser as well as blasting and/or excavating rock if necessary in order to facilitate utility laterals to Purchaser’s house location(s).

 

       (ii)  Workmanship.  All engineering plans, work, materials and improvements done or to be installed or furnished by Seller under this Agreement have been or shall be done and completed by Seller in a good and workmanlike manner in accordance with the rules, regulations, laws and ordinances of the applicable governmental authorities, shall be for the construction of the planned residences and shall be approved by all applicable governmental authorities, in a timely manner so as not to delay the issuance of building permits or residential use or occupancy permits for the Lots.

 

       (iii)     Dedication of Public Improvements.  Seller shall cause all public improvements to be dedicated to public or private use and shall be responsible for causing all such public improvements to be accepted for maintenance by the applicable governmental authorities or by the HOA at such time as required by the Declaration of Restrictive Covenants, at no expense to Purchaser.

 

       (iv)  Bond and Escrows.  Seller agrees at its own expense to post and keep in effect street, storm drain, maintenance and other forms of surety bonds and escrows as may be required by the applicable County authorities for the Seller’s development of the Property.  Seller shall furnish Purchaser copies of such bond and escrow documents upon request and shall be solely responsible for the timely release of said bonds and escrows.  Seller shall be entitled to receive the return of any deposits paid or refunds for fees paid by Seller in connection with its 

  

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development obligations free from all claims of Purchaser or any of its assignees.  Purchaser shall be responsible for any bonds or escrows related to on-lot erosion and siltation control required in connection with Purchaser’s construction of houses.

 

       (v)       Timely Performance by Seller.  Seller represents and warrants that it will use due diligence to perform all tasks required by this Paragraph in a timely manner so as not to delay; (A) any Closing hereunder; (B) Purchaser’s construction work; or (C) the issuance of building or occupancy permits for any houses constructed or to be constructed by Purchaser.

 

       (vi)  Indemnification by Seller.  Seller shall defend, indemnify and hold Purchaser harmless from and against any and all claims and suits of any kind, all costs and expenses including attorney’s fees and other defense costs resulting from or arising out of the work done or required to be done hereunder by Seller, as well as attorney’s fees incurred in enforcing this indemnity, and warrants that all work is and shall be free of mechanics’ and materialmen’s liens.

Section 5.     Costs of Developing Lots.

Seller shall be responsible, at its cost and expense, for the development obligations as set forth in Section 4. Conditions Precedent and Development Obligations including but not limited to: preparation of sketch plans, preliminary and final subdivision plans/plats; jurisdiction fees associated with obtaining approvals, and a wetland permit, if required; completion of public water and sewer main lines and laterals to within one foot two inches (1’-2”) of the Lot boundary (electric, telephone and cable to be installed per such utility company’s standards);  all rough Lot grading completed in accordance with Buyer’s house products, including any controlled fills and blasting and removal of rock necessary to provide a certified building pad, as well as utility laterals; installation and completion of all roads, utilities, storm water drainage systems, off-site improvements and utilities, street trees, street signs, street lights and common area amenities, entrance features, proffers if any.

Section 6.     Purchaser’s Warranties and Representations.

Purchaser hereby represents and warrants to Seller as of the Effective Date and as of the date of each Closing, including the Initial Closing, as follows:

a)     Authority.  The execution and delivery of this Agreement by Purchaser and the consummation by Purchaser of the transactions contemplated by this Agreement are within its legal capacity and authority and all requisite action has been taken to make this Agreement valid and binding on Purchaser in accordance with its terms.

 

b)     No Legal Bar.  The execution by Purchaser of this Agreement and the consummation by Purchaser of the transactions hereby contemplated does not, and on the Closing Date(s) will not (i) result in a breach of or default under any indenture, agreement, instrument or obligation to which Purchaser is a party and which affects all or any portion of the Property, or (ii) to Purchaser’s knowledge, constitute a violation of any governmental requirement.

 

c)     No Default.  Purchaser is not in default under any indenture, mortgage, deed of

  

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trust, loan agreement, or other agreement to which Purchaser is a party and which affects any portion of the Property.

d)     Signature Builder Program.  Purchaser has read the Declaration of Fawn Lake and is familiar with the development plans for the Subdivision and the Property, including the importance the Seller attaches to the Signature Builder Program. Seller and Purchaser shall, during the Study Period, negotiate and enter into a modified Signature Builder Agreement (“Signature Builder Agreement”) which shall set forth the terms and conditions of the Signature Builder Program applicable to Purchaser’s construction and sale of homes on the Lots. In the event the parties do not agree on the terms and conditions of the Signature Builder Agreement, prior to the expiration of the Study Period, then either party may, at its option, terminate this Agreement and have no further obligations to the other hereunder. Purchaser has applied or will apply for acceptance into the Signature Builder Program and will, at all times relevant to this Agreement after the expiration of the Study Period, remain in good standing as a Signature Builder under the Signature Builder Agreement. Purchaser’s failure to remain in good standing under the Signature Builder Agreement shall constitute a breach of this Agreement at the option of Seller. Commissions associated with the Signature Builder Program shall be modified in accordance with Exhibit B.  The Initial Closing is conditioned upon Purchaser’s acceptance into the Signature Builder Program.

e)     Architectural Requirements.  Purchaser agrees to maintain the existing architectural and design requirements for the homes to be constructed at the Property.  Prior to the end of the Study Period, Seller shall provide Purchaser any printed and/or formalized architectural and design guidelines with respect to the Property.  If Purchaser does not terminate this Agreement and proceeds to Closing, Purchaser will comply with such architectural and design guidelines. Purchaser shall delver to Seller architectural sketches and renderings of the homes to be constructed at least five (5) business days prior to the end of the Study Period, and Seller shall provide Purchaser with preliminary approval of such sketches prior to the end of the Study Period. Purchaser shall provide full architectural and design plans to Seller for approval of the Architectural Review Committee (“ARC”)  pursuant to the ARC rules and regulations prior to commencing construction of any home on the Lots.

f)     Seller’s Preconditions to Closing.  The Purchaser’s obligation to proceed to Closing under this Contract shall be contingent upon (i) the approval of the transactions referred to herein by the Board of Directors of NTS Mortgage Income Fund on or before the end of the Study Period, and (ii) such other terms and conditions specifically set forth in this Agreement.

g)     Indemnification by Purchaser.  Purchaser shall indemnify, defend and hold Seller harmless from and against any and all claims or suits resulting from or arising out of the construction by Purchaser, its employees, agents, subcontractors, materialmen or invitees, of its houses upon the Property and Seller agrees to give Purchaser prompt notice of any such claim or suit.

 

Section 7.     Seller’s Representations and Warranties.

 

    In addition to any other warranty made in connection with this Agreement, the Seller warrants and agrees (a) that the Seller is the fee simple owner of all of the Property which shall 

  

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be sold to and acquired by Purchaser under this Agreement and at Closing will be the fee simple owner of the Property, and has no knowledge of off-record or undisclosed interest in the Property, and, to Seller’s knowledge and belief, the Property is free and clear of all liens and encumbrances other than those of record; (b) that the Property is not subject to any unrecorded restrictive covenant or equitable servitude of any kind which would in any way limit the free choice of the Purchaser with respect to the nature or location of homes to be constructed on the Property, except as provided herein and in recorded instruments and documents; (c)  that to the  best of Seller’s knowledge:  The Property does not contain any hazardous substance, the Seller has not conducted or authorized the generation, transportation, storage, treatment or disposal at the Property of any hazardous substance other than is customary resulting from construction on surrounding properties; that the Seller has not received any notice of, and has no knowledge that, any government authority or any employee or agent thereof, or any private citizen, has determined, or threatens to determine, or has made any claim in any form, that there is a presence, release, threat of release, placement on or in the Property, or the generation, transportation, storage, treatment or disposal at the Property, of any hazardous substance; nor has any “clean-up” of the Property occurred pursuant to the Environmental Laws (as hereinafter defined) which could give rise to liability on the part of Purchaser to reimburse any governmental authority for the costs of such clean-up or a lien or encumbrance on the Property.  For purposes of this paragraph, “hazardous substance” means any materials in violation of any applicable environmental laws or regulations including, but not limited to, Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act, 42 U.S.C., 9601 et seq., any “superlien” laws, any “superfund” laws, or similar federal, state or local laws, or any successor statutes thereto (the Environmental Laws”); (d) that to the best of Seller’s knowledge the Property does not contain levels of natural asbestos unacceptable to any local, state or federal authority; (e) that to the best of Seller’s knowledge the Property has not been used as a grave site or fill or borrow area; (f) no suit, actions, arbitration or legal, administrative or other proceeding is pending or has been threatened against the Property, or against Seller with respect to the Property, which, if adversely determined, could prevent or impair the ability of Seller to perform this Agreement or restrict Purchaser’s use or development of the Property, or any part thereof; (g) no bankruptcy, insolvency, rearrangement, or similar action or proceeding, whether voluntary or involuntary, is pending or threatened against Seller, and Seller has no intention of filing or commencing any such action or proceeding; (h) that the Property, is in compliance with all applicable zoning and subdivision ordinances; (i) that Seller has granted no person any contract right or other legal right to the use of any portion of the Property or to the furnishing or use of any facility or amenity on or relating solely to the Property; (j) that no part of the Property is subject to a right of first refusal which has not been waived or other right which Seller, or any predecessor in title, may have granted to other persons or parties as to the Property, or any part thereof, whether written or verbal; (k) that no notice, either oral or written, has been received by Seller that any governmental or quasi-governmental agency or authority intends to commence construction of any special or off-site improvements or impose any special or other assessment against the Property, or any part thereof; (l) that the Property is not located within a flood hazard area or wetland; (m) that Seller has not received any notice alleging that it or the Property to be, or that with due notice or lapse of time or both it or the Property will be, in breach of default of any lawful statute, ordinance or regulation of the United States, State, County or City applicable to the Lots (“Legal Requirement”) which could materially adversely affect the ability of Seller to perform this Agreement or restrict Purchaser’s use or construction of residential homes on the Lots; and (n) that the executing of this Agreement will not conflict with or result in a breach of any of the terms or provisions of, constitute a default under, or cause or allow an acceleration of

  

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any note, mortgage, deed of trust, loan agreement or other document, instrument or agreement to which Seller is a party or by which the Property is encumbered or affected.

“Seller’s knowledge” or terms to such effect shall mean the actual knowledge of Ralph DeRosa without any inquiry.  Such warranties shall survive for a period of one year following each Lot Closing as to the effected Lots.

Section 8.     Brokerage Commission.

Seller and Purchaser each represent and warrant to the other that no real estate brokers have been involved in this transaction and each indemnifies the other from any brokers or finders claiming any real estate commissions or marketing fees related to this transaction by or through such party.

Section 9.     Governmental Compliance.

Parties agree to comply with the applicable reporting requirements of the Internal Revenue Code and the Real Estate Closing Procedures Act of 1974, as amended.

Section 10.   Confidentiality.

Prior to the Initial Closing, and/or after any earlier termination of this Agreement, and except to the extent required to be disclosed by Purchaser to its employees, directors, officers, agents, representatives, attorneys, lenders, accountants and/or advisors (“Purchaser Representatives”), and/or to the extent required by law or order of a court of competent jurisdiction, Purchaser shall not disclose or use and Purchaser shall cause the Purchaser Representatives not to disclose or use any “Confidential Information” (as such term is defined below) with respect to the Property furnished or to be furnished by Seller or its representatives to Purchaser or Purchaser Representatives in connection herewith at any time or in any manner other than to Purchaser or Purchaser’s Representatives in connection with its investigations of the Property, provided that each of Purchaser’s Representatives shall be informed of this confidentiality requirement and shall agree in writing to abide by the terms of this Section 10, prior to receipt of any such “Confidential Information.” For purposes of this paragraph, “Confidential Information” means the fact of the proposed sale and any information about the Property identified in writing, including any third-party reports identified or obtained by Purchaser during its Study Period, except for information which Purchaser can reasonably demonstrate is generally available to or known by the public other than as a result of improper disclosure by Purchaser.  The provisions of this Section 10 shall survive any termination of this Agreement and shall remain fully binding on the Purchaser for twenty four (24) months after any such termination of this Agreement.

 

Section 11.   Notices. 

Any and all notices required to be delivered hereunder shall be deemed properly delivered when and if personally delivered, or the second day after being mailed by registered or certified mail, return receipt requested, postage prepaid (or the day after being sent by a recognized overnight courier service with instructions and payment for delivery on the next business day), electronic mail, or delivered by facsimile with confirmation of receipt to the Parties as set forth below:

  

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And if to Purchaser to:

 

 

 

 

 

 

 

and a copy to:

 

 

 

 

 

 

And to Escrow Agent:

 

 

 

 

 

 

And if to Seller:

 

 

 

 

With a copy to:                  

	
M/I Homes of DC, LLC

c/o M/I Homes, Inc.

3 Easton Oval, Suite 500

Columbus, OH 43219

Attn: Thomas Mason, Esquire

Telecopier #(614) 418-8030

EMAIL:  tmason@mihomes.com

 

M/I Homes of DC, LLC

21355 Ridgetop Circle, Suite 220

Sterling, Virginia 20166-6503

Attn: Dennis Kelleher

Telecopier #(703) 404-3040

EMAIL:  dkelleher@mihomes.com

 

Curran & Whittington, PLLC

15100 Washington Street, Suite 201

Haymarket, Va  20169

Attn:  Joseph F. Curran, Esq.

Telecopier #(571) 248-4436

EMAIL:  jcurran@curranwhittington.com

NTS/Virginia Development Company

10172 Linn Station Road

Louisville, Kentucky  40223

Attn:  Brian F. Lavin

NTS Development Company

10172 Linn Station Road

Louisville, Kentucky 40223

Attn: Rosann D. Tafel, Esq.

 

Either party hereto may change the names and addresses of the designee to whom notice shall be sent by giving written notice of such change to the other party hereto in the same manner as all other notices are required to be delivered hereunder.

Section 12.   Facsimile.

Facsimile and/or electronically transmitted signatures shall be sufficient for purposes of executing, negotiating, and finalizing this Agreement.  In the event notice is transmitted by facsimile or electronic mail after 5:00 p.m. Eastern Time, the effective date and time of such notice is the first hour of the next business day after transmission. 

Section 13.   Interpretation.

If there is more than one Purchaser, Seller or entity other than a natural person, the pronouns and grammatical structure shall be understood to conform.  Section headings shall not be used in construing this Agreement.  Each party acknowledges that such party and its counsel, after 

  

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negotiation and consultation, have reviewed and revised this Agreement.  As such, the terms of this Agreement shall be fairly construed and the usual rule of construction, to the effect that any ambiguities herein should be resolved against the drafting party, shall not be employed in the interpretation of this Agreement or any amendments, modifications or exhibits hereto.

Section 14.   Binding Effect.

This Agreement shall inure to the benefit of, and shall be binding upon, the successors and permitted assigns of the Parties hereto.

Section 15.   Miscellaneous.

a)     Business Days.  Business days are defined as Monday through Friday, excluding Federal holidays.  Any date specified in this Agreement which is a Saturday, Sunday or legal holiday, shall be extended to the first regular business after such date which is not a Saturday, Sunday or legal holiday.

b)     Time of Essence. Time is of the essence to the terms of this Agreement.

c)     Survival.  None of the representations, warranties, covenants, agreements, indemnifications or other undertakings hereunder shall survive the Closings on the Lots except as specifically noted herein.  Nothing herein shall relieve Seller of its development responsibilities as set for in Section 4 for any Lots closed.

d)     Entire Agreement.  This Agreement and the Exhibits thereto contain the entire understanding between the Seller and Purchaser and are intended to be an integration of all prior agreements, conditions or undertakings between them.  Except as expressly set forth herein, there are no promises, agreements, conditions, undertakings, warranties, or representations, oral or written, expressed or implied, between Purchaser and Seller.

e)     Relationship of the Parties.  Notwithstanding any other provision of this Agreement, or any agreements, contracts or obligations which may derive herefrom, nothing herein shall be construed to make the parties hereto partners or joint venturers, or to render either party liable for any of the debts or obligations of the other party, it being the intention of this Agreement to merely create the relationship of Seller and Purchaser with regard to the Property and the Lots to be conveyed hereby.

f)     Amendments; Waivers.  No change or modification of this Agreement shall be valid unless the same is in writing and signed by Purchaser and Seller. No purported or alleged waiver of any of the provisions of this Agreement shall be binding or effective unless in writing and signed by the party against whom it is sought to be enforced.

 

g)    Assignment of Agreement.  Neither party shall have the right to assign this Agreement without the prior written consent of the other and any such assignment will be void and of not effect; provided, however, Seller may assign this Agreement without such consent to any entity owned or controlled by any persons or entities that own or control NTS Development Company, a Kentucky corporation.

  

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h)    Applicable Law.  This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia.

i)     Recovery.  In the event of litigation the prevailing party shall have the right to recover its reasonable attorney’s fees.

j)     Counterparts.  This Agreement may be executed in several counterparts, each of which shall be deemed an original, all of which shall constitute one in the same instrument.  Any signature delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature to this Agreement.  In such event, the parties hereto shall promptly thereafter deliver to each other executed counterpart originals.

Section 16.   Sales Center Use.

Seller shall, or shall cause its affiliate, Fawn Lake Sales Center, LLC, to grant to Buyer a non-exclusive license or right to use, during the regular office hours of Fawn Lake Realty, one standard-sized salesperson’s office on the first floor of the sales center building, plus use of such common areas as may be necessary such as restrooms, kitchen, etc., as an office for the sole purpose of marketing Purchaser’s homes in Fawn Lake to third party purchasers.  The sales center shall not be used by Purchaser for any construction meetings, activities or materials selections.  The term of the license or use shall begin after the Initial Closing and continue  annually for so long as Purchaser is actively building and selling homes at the Property.

Section 17.   Exclusive Dealings.

Seller agrees that upon the Effective Date of this Agreement it shall not sell, contract to sell or enter into any discussions regarding selling the Property or any part thereof to any other person.

Section 18.   Marketing.

A joint marketing agreement for the Lots shall be negotiated in good faith between the parties during the Study Period and an agreement reasonably acceptable to the parties shall be executed upon the expiration of the Study Period if Buyer has not terminated the Agreement.

Section 19.   Competitive Lot Development.

Seller agrees to use reasonable efforts to delay development of additional competitive lot inventory (defined as any lot in Fawn Lake intended to be priced for sale at purchase price less than or equal to the Purchase Price for the Initial Lot Closing plus one hundred and twenty-five percent (125%) for a period not to exceed twelve (12) months from the date of the Initial Lot Closing to focus marketing and sales efforts on Purchaser’s Section 15 inventory and listing obligations.

 

Section 20.   Purchaser Execution.

 

This Agreement and any amendments hereto, shall not be effective against Purchaser unless executed and delivered by at least one of the following officers on behalf of the Purchaser 

  

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(each, an “Authorized Officer”): Robert H. Schottenstein, Chief Executive Officer and President; Phillip G. Creek, its Executive Vice President and Chief Financial Officer; or J. Thomas Mason, its Executive Vice President and General Counsel.  Execution and delivery by anyone in addition to an Authorized Officer may be for the Purchaser’s convenience but is not effective as against Purchaser unless, as noted above, at least one Authorized Officer also executes and delivers this Agreement and any amendment hereto.  Once this Agreement has been executed by an Authorized Officer, Dennis Kelleher, an Area President is authorized and empowered to execute and deliver in the name and on behalf of Purchaser any and all documents that may be required to effectuate the closing of the purchase of the Property in accordance with this Agreement.  The foregoing shall not limit Purchaser’s right through a duly adopted resolution of Purchaser, to add to, reduce or substitute any Authorized Officer, or any Area President, for any purpose.

 

Section 21.   Effective Date.

 

The date on which this Agreement is accepted by the last party to accept and sign the Agreement shall be the effective date of this Agreement. If this Agreement is not signed by a party, in order to become effective within five (5) days of the date it is signed by the other party, this Agreement shall be void and of no effect.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the dates shown below.

-SIGNATURE PAGES TO FOLLOW-

  

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Date: November 30, 2011

	
SELLER:

 

NTS/Virginia Development Company,

a Virginia corporation

 

 

 

By: /s/ Brian F. Lavin        

Name: Brian F. Lavin           

Its: President              

 

 

  

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Date: November 30, 2011

	

PURCHASER:

 

M/I Homes LLC,

a Delaware limited liability company

 

 

 

By:  /s/ D K            

Name: D. Kelleher         

Its: Area President         

 

 

 

	
 

 

 

 

 

 

 

Date: November 30, 2011

	

PURCHASER:

 

M/I Homes LLC,

a Delaware limited liability company

 

 

 

By: /s/ J. Thomas Mason       

Name: J. Thomas Mason         

Its: Executive Vice President       

 

 

 

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