Exhibit 10.1

RIGHT OF FIRST REFUSAL AGREEMENT

 

This RIGHT OF FIRST REFUSAL AGREEMENT made and entered into this 9th day of
October, 2019 (the "Effective Date"), by and between CMC DEVELOPMENT LLC, a New
York limited liability company with a principal place of business located at
4419 Third Avenue Bronx, New York, 10457 ("CMC") and SG Blocks, Inc., a publicly
traded Delaware corporation with a principal place of business located at 195
Montague Street, Brooklyn, NY 11201 ("SGBX").

 

WITNESSETH:

 

WHEREAS, CMC is in the business of identifying, acquiring, developing and
managing affordable residential and commercial properties in the United States,
with a focus on emerging urban markets (hereafter the "CMC Real Estate
Projects"); and

 

WHEREAS, SGBX is a designer, innovator and fabricator of container-based
structures

("SGBX Container Structures"); and

 

WHEREAS, CMC is desirous of utilizing and employing SGBX' s Container Structures
in connection with current and future CMC Real Estate Projects;

 

WHEREAS, SGBX is desirous of offering and building Container Structures for the
CMC Real Estate Projects;

 

NOW, THEREFORE, in consideration of the mutual covenants, terms and conditions
set forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.            Definitions. For purposes of this Agreement, the following terms
have the following meanings:

 

"Affiliate" means, with respect to any Person, any other Person who, directly or
indirectly (including through one or more intermediaries), controls, is
controlled by, or is under common control with, such Person. For purposes of
this definition, "control," when used with respect to any specified Person,
shall mean the power, direct or indirect, to direct or cause the direction of
the management and policies of such Person, whether through ownership of voting
securities or partnership or other ownership interests, by contract or
otherwise; and the terms "controlling" and "controlled" shall have correlative
meanings.

 

"Business Day" means a day other than a Saturday, Sunday or other day on which
commercial banks in the City of New York are authorized or required to close.

 

"Design and Build Agreement" means the agreement(s) executed by and between CMC

and SGBX wherein SGBX will be engaged by CMC to build and design specified CMC
Real Estate Projects utilizing the SGBX Container Structures.

 

1 

 

2.                 Right of First Refusal.

 

      (a)               Offered CMC Real Estate Project. SGBX shall have a right
of first refusal with respect to any and all CMC Real Estate Projects that CMC
has secured rights to develop in which CMC has greater than a 50% interest in
the owner or developer entity and has the right to select the builder (each a
"Prospective CMC Project"), to build and design the Prospective CMC Project the
utilizing the SGBX Container Structures (the "Offered CMC Project") during the
Term.

     (b)              Offering. Each time CMC secures rights to develop a
Prospective CMC Project, CMC shall, prior to offering to or agreeing to develop
the Prospective CMC Project with another builder, real estate developer or
construction company, offer to SGBX the exclusive right to build and design the
Prospective CMC Project utilizing the SGBX Container Structures.

 

       (c)               Offer Notice. CMC shall, within Ninety (90) Days of its
securing of the right to build or develop a Prospective CMC Project, give
written notice (the "ROFR Notice") to SGBX stating that it has been offered the
right to acquire, develop, construct, and/or manage a CMC Real Estate Project
and specifying and/or including:

  

       (d)               Exercise of Right of First Refusal.

 

            (i)   Upon receipt of the ROFR Notice and SGBX' s delivery of the
ROFR Exercise Notice, SGBX shall have the exclusive right, for a period of sixty
(60) Business Days, to negotiate and enter into a Design Build Agreement with
CMC whereby SGBX will be engaged to be the

designer and builder of the Prospective CMC Project utilizing SGBX Container
Structures. CMC

agrees to cooperate with SGBX's due diligence requests, time being of the
essence, and shall promptly inform SGBX of any material developments or changes
in the Prospective CMC Project.

 

           (ii)  The right of SGBX to be exclusive designer and builder of the
Prospective CMC Project utilizing SGBX Container Structures shall be exercisable
with the delivery of a written notice (the "ROFR Exercise Notice") by SGBX to
CMC within ten (10) Business Days of receipt of the ROFR Notice (the "ROFR
Option Period"). The ROFR Exercise Notice shall be binding upon delivery and
irrevocable by CMC.

 

           (iii)   The failure of SGBX to deliver a ROFR Exercise Notice by the
end of the ROFR Option Period shall constitute a waiver of its right of first
refusal with respect to the subject Prospective CMC Project, but shall not
affect its respective rights with respect to any future Prospective CMC
Projects.

3.                 Ridge Avenue, Atlanta Project. The Parties acknowledge and
agree that CMC has engaged SGBX to build and design, in the aggregate,
approximately one hundred (100) residential and commercial units utilizing the
SGBX Container Structures at 1100 Ridge Avenue, Atlanta, Georgia (the "Ridge
Avenue, Atlanta Project"), at a total project cost of $15,000,000, the terms and
conditions for which are set forth in a separate Design and Build Agreement.

2 

 

4.                   Consideration. In exchange for the rights of first refusal
granted to SGBX hereunder during the Term, SGBX has agreed to issue to CMC fifty
thousand (50,000) restricted stock units (each a "RSU") of SGBX's common stock.
The RSUs will vest in two tranches; 25,000 on September 30, 2020, and 25,000 on
September 30, 2021, unless this Agreement is sooner terminated pursuant to
Section 5 hereof. For avoidance of doubt, in the event that this Agreement is
terminated prior to the Term set forth in Section 5, then CMC shall be entitled
to the amount of RSUs that have vested as of the termination date, but in no
event less than 25,000 RSUs.

 

5.                   Term. The term of this Agreement commences as of the
Effective Date and, unless this Agreement is terminated earlier pursuant to any
of its express provisions, will continue in effect for two (2) years (the
"Term").

 

                      5.1      Termination.

 

    (a)            Either party may terminate this effective upon written notice
to the other party, if the other party materially breaches this Agreement and
such breach:

 

     (i)is incapable of cure; or

 

     (ii)being capable of cure, remains uncured fifteen (15) days after the
breaching party receives written notice thereof.

 

6.                   Indemnification.

 

         6.1                  CMC Indemnification. CMC shall defend, indemnify
and hold harmless SGBX and its Affiliates, and each of their respective
officers, directors, employees, agents, successors and assigns (each, a "SGBX
lndemnitee") from and against all any and all losses, damages, liabilities,
deficiencies, claims, actions, judgments, settlements, interest, awards,
penalties, fines, costs, or expenses of whatever kind, including reasonable
attorneys' fees, fees and the cost of enforcing any right to indemnification
hereunder and the cost of pursuing any insurance providers that are incurred by
a SGBX Indemnitee ("Losses") arising out of or resulting from any third party
claim, demand, suit, action or proceeding, whether civil, criminal,
administrative or investigatory in nature (each, an "Action") that arises out of
or results from CMC's breach of any representation, warranty, covenant or
obligation of CMC under this Agreement.

 

         6.2                    SGBX Indemnification. SGBX shall defend,
indemnify and hold harmless CMC and CMC 1s Affiliates, and each of their
respective officers, directors, employees, agents, successors and assigns (each,
a "CMC lndemnitee") from and against all any and all Losses arising out of or
resulting from any Action that arises out of or results from SGBX's breach of
any representation, warranty, covenant or obligation of SGBX under this
Agreement.

 

3 

 

7.                  Representations and Warranties. Each party represents and
warrants to the other party that: (i) it is duly organized, validly existing and
in good standing as a corporation or other entity as represented herein under
the laws and regulations of its jurisdiction of incorporation, organization or
chartering; (ii) it has the full right, power and authority to enter into this
Agreement, to grant the rights granted hereunder and to perform its obligations
hereunder; (iii) the execution of this Agreement by its representative whose
signature is set forth at the end hereof has been duly authorized by all
necessary corporate action of the party; and (iv) when executed and delivered by
both parties, this Agreement will constitute the legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms.

8.                  Confidentiality. 

        (b)               In connection with this Agreement, each party (the
"Disclosing Party") may disclose or make available Confidential Information to
the other party (the "Receiving Party"). As a condition to being provided with
any disclosure of or access to the Disclosing Party's Confidential Information,
the Receiving Party shall:

 

             (i)                 not access or use the Disclosing Party's
Confidential Information other than as necessary to exercise its rights or
perform its obligations under this Agreement;

 

             (ii)                not use the Disclosing Party's Confidential
Information, directly or indirectly, in any manner to the detriment of the
Disclosing Party or to obtain any competitive benefit with respect to the
Disclosing Party;

 

             (iii)               not disclose or permit access to Confidential
Information other than to its representatives who: (A) need to know such
Confidential Information for purposes of the Receiving Party's exercise of its
rights or performance of its obligations under and in accordance with this
Agreement; (B) have been informed of the confidential nature of the Confidential
Information and the Receiving Party's obligations under this Section; and (C)
are bound by confidentiality and restricted use obligations at least as
protective of the Confidential Information as the terms set forth in this
Section; and

 

             (iv)               safeguard the Confidential Information from
unauthorized use, access or disclosure using at least the degree of care it uses
to protect its similarly sensitive information and in no event less than a
reasonable degree of care;

 

The Disclosing Party is responsible for ensuring its Representatives' compliance
with, and shall be liable for any breach by its Representatives of, this
Section.

 

        (c)                "Confidential Information" shall mean information in
any form or medium (whether oral, written, electronic or other) that a party (as
a Disclosing Party) considers confidential or proprietary, including trade
secrets, technology, information pertaining to business operations and
strategies, marketing and advertising, and information pertaining to
participants in the Accelerator, including but not limited to other cohort
companies, mentors, sponsors or investors, in each case to the extent it is: (a)
if disclosed in writing or other tangible form or medium, marked "confidential"
or "proprietary;" (b) is of the nature that the Receiving Party should
reasonably have understood it to be confidential, proprietary or sensitive at
the time of disclosure or at any time thereafter. With respect to each party,
the terms of this Agreement are Confidential Information of the other party

 

4 

 

 

      (d)               Confidential Information does not include information
that the Receiving Party can demonstrate by written or other documentary
records: (i) was already known to the Receiving Party without restriction on use
or disclosure prior to its receipt of or access to such information in
connection with this Agreement; (ii) was or becomes generally known by the
public other than by breach of this Agreement by, or other wrongful act of, the
Receiving Party or any of its Representatives; (iii) was or is received by the
Receiving Party from a third party who was not or is not, at the time of such
receipt, under any obligation to the Disclosing Party or any other Person to
maintain the confidentiality of such information; or (iv) was or is
independently developed by

the Receiving Party without reference to or use of any of the Disclosing Party's
Confidential Information.

9.                  General.

 

        (a)                Upon a party's reasonable request, the other party
shall, at the requesting/such other party's sole cost and expense, execute and
deliver all such documents and instruments, and take all such further actions,
necessary to give full effect to this Agreement.

 

        (b)               The relationship between the parties is that of
independent contractors. Nothing contained in this Agreement shall be construed
as creating any agency, partnership, joint venture or other form of joint
enterprise, employment or fiduciary relationship between the parties, and
neither party shall have authority to contract for or bind the other party in
any manner whatsoever.

        (c)                The parties agree to maintain the terms of this
Agreement in confidence. Neither party shall issue or release any announcement,
statement, press release or other publicity or marketing materials relating to
this Agreement except as expressly permitted under this Agreement or with the
prior written consent of the other party, which shall not be unreasonably
withheld or delayed. For the avoidance of doubt, the Parties have agreed to
issue a press release substantially in the form of Exhibit A hereto.

 

        (d)                During the Term of this Agreement and for a period of
twenty-four (24) months thereafter, each party agrees that it will not at any
time make, publish, or communicate to any person or entity or in any public
forum any defamatory or disparaging remarks, comments, or statements concerning
the other party, or the other party's business, or any of its employees,
officers, and existing and prospective customers, shareholders, suppliers,
investors, and other associated third parties.

 

5 

 

 

      (e)                All notices, requests, consents, claims, demands,
waivers and other communications hereunder must be in writing and addressed to
the parties as follows:

 

 

  If to CMC: CMC Development LLC     4419 Third Avenue     Bronx, New York,
10457     E-mail: [sbelle@cmcdevelopmentnyc.com]     Attention: Shaun Belle,
Member

  If to SGBX: SG Blocks Inc.           Attention: Paul Galvin, CEO          
Facsimile:     E-mail: pgalvin@sgblocks.com     With a courtesy copy to:    
Steven Soulios, Esq.

                          Notices sent in accordance with this Section will be
deemed effectively given: (a) when received, if delivered by hand, with signed
confirmation of receipt; (b) when received, if sent by a nationally recognized
overnight courier, signature required; (c) when sent, if by facsimile or e-mail,
in each case, with confirmation of transmission, if sent during the addressee's
normal business hours, and on the next business day, if sent after the
addressee's normal business hours;

and (d) on the 3rd day after the date mailed by certified or registered mail,
return receipt requested, postage prepaid.

 

       (f)                This Agreement constitutes the entire agreement of the
parties with respect to the Services , and supersedes all prior and
contemporaneous understandings, agreements, representations and warranties, both
written and oral, with respect to such subject matter.

 

       (g)                Upon the written consent of CMC, which shall not be
unreasonably withheld, conditioned or delayed, SGBX may assign or otherwise
transfer any of its rights, or delegate or otherwise transfer any of its
obligations or performance, under this Agreement. This Agreement is binding upon
and inures to the benefit of the parties hereto and their respective permitted
successors and assigns.

 

       (h)                This Agreement is for the sole benefit of the parties
hereto and their respective permitted successors and permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other person any legal or equitable right, benefit or remedy of any nature
whatsoever, under or by reason of this Agreement.

 

6 

 

 

      (i)                 No amendment to or modification of this Agreement is
effective unless it is in writing and signed by an authorized representative of
each party. No waiver by any party of any of the provisions hereof shall be
effective unless explicitly set forth in writing and signed by the party so
waiving. Except as otherwise set forth in this Agreement, no failure to
exercise, or delay in exercising, any rights, remedy, power or privilege arising
from this Agreement shall operate or be construed as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege.

 

      G)                If any provision of this Agreement is invalid, illegal
or unenforceable in any jurisdiction, such invalidity, illegality or
unenforceability shall not affect any other term or provision of this Agreement
or invalidate or render unenforceable such term or provision in any other
jurisdiction. Upon such determination that any term or other provision is
invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.

 

      (k)               This Agreement is governed by and construed in
accordance with the internal laws of the State of New York without giving effect
to any choice or conflict of law provision or rule that would require or permit
the application of the laws of any jurisdiction other than those of the State of
New York.

 

      (1)                Any dispute, claim or controversy arising out of or
relating to this Agreement or the breach, termination, enforcement,
interpretation or validity thereof, including the determination of the scope or
applicability of this agreement to arbitrate, shall be determined by arbitration
in New York City, before one arbitrator. The arbitration shall be administered
by JAMS pursuant to its 4 JAMS STREAMLINED ARBITRATION RULES I JULY 1, 2014
Streamlined Arbitration Rules & Procedures (Comprehensive Arbitration Rules &
Procedures). Judgment on the Award may be entered in any court having
jurisdiction. This clause shall not preclude parties from seeking provisional
remedies in aid of arbitration from a court of appropriate jurisdiction. The
arbitrator shall, in the Award, allocate all or part of the costs of the
arbitration, including the fees of the arbitrator and the reasonable attorneys'
fees of the prevailing party.

 

      (m)               This Agreement may be executed in counterparts, each of
which is deemed an original, but all of which together are deemed to be one and
the same agreement. A signed copy of this Agreement delivered by facsimile,
e-mail or other means of electronic transmission is deemed to have the same
legal effect as delivery of an original signed copy of this Agreement.

 

7 

 

 

IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized representatives as of the date first written above.

 

SG BLOCKS, INC.

 

CMC Development LLC

          By: /s/ Paul Galvin   By: /s/ Shaun Belle   Name: Paul Galvin   Name:
Shaun Belle   Title: CEO   Title: Member  

 

 

8