Document:

Blueprint

 

Exhibit 10.62

  

 

***Text Omitted and Filed Separately

with the Securities and Exchange Commission.

Confidential Treatment Requested

Under 17 C.F.R. Sections 200.80(c) and 240.24b-2

EXECUTION COPY

 

SUPPLY AGREEMENT

 

THIS SUPPLY AGREEMENT (the "Agreement") is made and entered into as
of the 19th of December, 2018
(the “Effective
Date”) by and between NESTEC Ltd., a Swiss private limited company, with
principal offices located at Avenue Nestle 55, 1800 Vevey,
Switzerland ("Buyer" or
“NHSc”) and
ChromaDex Inc., a California corporation with principal offices
located at 10005 Muirlands, Blvd, Suite G, Irvine, CA 92618, USA
(“Seller” or
“ChromaDex”).
Buyer and Seller are individually referred to herein as a
“Party” and
collectively as the “Parties.”

 

R E C I T A L S

 

WHEREAS, Seller is the owner or exclusive licensee of
certain intellectual property rights related to the composition and
use of the compound Nicotinamide Riboside (“NR”) and NR Product (defined
below) that is currently sold under the ChromaDex Trademarks
(defined below); and

 

WHEREAS, NR is supplied by Seller to third parties for the
commercialization of NR Product under the ChromaDex Trademarks (or
other tradenames) as dietary supplements on a global basis;
and

 

WHEREAS, NR and NR Product is marketed, commercialized and
sold by Seller to consumers in its pure form and in combination
with other active ingredients on a global basis under the ChromaDex
Trademarks (or other tradenames) subject to the terms and
conditions of this Agreement; and

 

WHEREAS, Buyer now desires to purchase the NR Product to
develop, market, promote, sell, and distribute the Approved
Products (defined below) subject to the terms and conditions
hereinafter described.

 

NOW, THEREFORE, in consideration of the mutual promises and
agreements contained herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties hereto agree as follows.

 

1.

Definitions.

 

The
following terms have the meanings specified below:

 

“Active
Nutrition” means product offerings that are formulated
and marketed to consumers of all ages for the purpose of living a
healthy lifestyle with integrated physical activity. Active
Nutrition does not include Sports Nutrition.

 

“Affiliate”
shall mean, with respect to a Party, any person or entity that
controls, is controlled by, or is under common control with such
Party. An entity or person shall be deemed to be in control of
another entity (“Controlled
Entity”) if the former owns directly or indirectly at
least fifty percent (50%) of the outstanding voting equity of the
Controlled Entity (or some other majority equity or ownership
interest exits, in the event that such Controlled Entity is other
than a corporation).

 

“Allowable
Deductions” shall mean,

 

(a)
sales returns and allowances actually paid, granted or accrued,
including trade, quantity and cash discounts and any other
adjustments, including those granted on account of price
adjustments or billing errors, rejected goods, damaged or defective
goods, recalls, returns;

 

(b)
rebates, chargeback rebates, compulsory rebates, reimbursements or
similar payments granted or given to wholesalers or other
distributors, buying groups, health care insurance carriers or
other institutions and compulsory payments to governmental
authorities and any other governmental charges imposed upon the
sale of such Approved Product to third parties;

 

(c) adjustments
arising from consumer discount programs or other similar
programs;

 

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(d)
customs or excise duties, sales tax, consumption tax, value added
tax, and other taxes (except income taxes); and

 

(e)
charges for packing, freight, shipping and insurance (to the extent
that Buyer or its Affiliates bear such cost).

 

Allowable
Deductions shall be calculated by Buyer consistent with its
ordinary practice and in accordance with International Financial
Reporting Standards, and Buyer shall not calculate Allowable
Deductions in any manner that has the primary purpose of avoiding
or reducing the Sales Fees payable hereunder.

 

“Approved
Products” shall mean any Medical Nutrition (as defined
herein) or Functional Food and Beverages (as defined herein)
product which contains a minimum of [...***...]mg of the NR
Product per serving unless Buyer and Seller agree otherwise in
advance in writing. Buyer does not require any consent from Seller
to launch new products in Medical Nutrition or Functional Food and
Beverages provided that they comply with the requirements set forth
in this Agreement. For the sake of clarity, the Approved Products
will include NR Product in combination with proteins or other
active ingredients as Functional Food and Beverages or as Medical
Nutrition products of NHSc.

 

“Approved
Product Category(ies)” shall mean Medical Nutrition
and/or Functional Food and Beverages.

 

“Buyer”
shall include NESTEC Ltd. and its U.S. Affiliate, Nestlé
HealthCare Nutrition, Inc. and their respective successors and
assigns; provided, however, that the Parties acknowledge and agree
that Buyer or any of its Affiliates may purchase the NR Product and
market, sell and distribute the Approved Products pursuant to the
terms and conditions of this Agreement.

 

“Buyer’s
Technical Feasibility” shall mean when Buyer, in its
reasonable judgment, determines that the NR Product would be stable
in a ready to drink format.

 

“Change
of Control” shall mean any person or entities having
acquired, in any single transaction or series of related
transactions, whether by way of merger, consolidation, purchase, or
in any other manner, (i) securities of Seller or its Controlling
Affiliate(s) representing [...***...] percent
([...***...]%) or more of either the combined voting power
or ownership interest thereof, (ii) [...***...] percent
([...***...]%) or more of the profit/loss participation in
Seller or its Controlling Affiliate(s), or (iii) Control in Seller
or its Controlling Affiliate(s).

 

“ChromaDex
Brand Usage Guidelines” are attached hereto as
Exhibit A –
ChromaDex Brand Usage Guidelines (Exhibit A is hereby
incorporated herein in full by this reference) and, subject to the
terms and conditions in Section 11, sets forth the rules and
guidelines pertaining to the proper use of the ChromaDex Trademarks
which rules and guidelines may be amended by ChromaDex, at any
time, in ChromaDex’s sole discretion. If the ChromaDex Brand
Usage Guidelines are supplemented or amended, a supplemented or
amended version shall be promptly provided to Buyer, and Buyer has
the obligation to ensure that Buyer is in compliance with
ChromaDex’s current ChromaDex Brand Usage Guidelines after a
reasonable transition period.

 

“ChromaDex
Trademarks” shall mean the trademarks and logos owned
by ChromaDex incorporating the name, mark, and/or brand of the NR
Product as shown in the ChromaDex Brand Usage
Guidelines.

 

“Control”
shall mean (including the term “Controlling”)
possession, directly or indirectly, through one (1) or more
intermediaries, of the power to direct or cause the direction of
management and policies of Seller, whether through ownership of
voting securities or otherwise.

 

“Dollerup”
shall mean the following study: Dollerup, O.L., et al., A
randomized placebo-controlled clinical trial of nicotinamide
riboside in obese men: safety, insulin-sensitivity, and
lipid-mobilizing effects. Am J Clin Nutr, 2018.

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“Field”
shall mean human use.

 

“Functional
Food and Beverages” shall mean a Protein Based
(defined below) functional food or beverage (meaning consumer
healthcare sold under “Nutrition Facts” labeling
regulations in the US or similar labeling or definitional
regulations globally; i.e. not sold under dietary supplement
regulations) product containing NR Product in ready to drink and
loose powder format currently sold under the NHSc Brands (defined
below), which may include Active Nutrition products. Functional
Food and Beverages do not include Sports Nutrition.
“NHSc Brands”
shall mean the existing brands of Buyer or its affiliates set forth
in Exhibit B – NHSc
Brands (Exhibit
B is hereby incorporated herein in full by this reference)
as well as (i) any other existing brands acquired by Buyer during
the Term within the Approved Product Categories and (ii) any new
brands created by Buyer within the Approved Product Categories,
subject to the approval of Seller, such approval not to be
unreasonably withheld or delayed.

 

Functional
Food and Beverages Extensions” shall mean a Protein
Based product containing NR Product sold under the NHSc Brands that
is in a format other than ready to drink or loose
powder.

 

“Good
Manufacturing Practices” shall mean current and any
future good manufacturing practices and quality system regulations
set forth by the United States Food and Drug Administration
(“USFDA”), and
if the Approved Product is manufactured or sold outside of the
Unites States, the current and any future good manufacturing
practices and quality system regulations set forth by the USFDA or
higher standards if and as applicable in the country in which the
Approved Product is manufactured or sold.

 

“Gross
Sales Price” shall mean all invoiced sales of Approved
Products without offset, deduction, or allowances.

 

“Licensed
Materials” shall mean any advertising, marketing,
promotional, and/or merchandising materials and artwork prepared by
ChromaDex and provided to Buyer. There is no obligation for
ChromaDex to create or provide Licensed Materials. Licensed
Materials may or may not display ChromaDex Trademarks and may or
may not be provided to Buyer by ChromaDex, in ChromaDex’s
sole discretion.

 

“Launch”
shall mean first bona fide commercial sale of an Approved Product
in a country in the respective Sub-Territory.

 

“Martens”
shall mean the following study: Martens, C.R., Denman, B.A., Mazzo,
M.r., Armstrong, M.L., Reisdorph, N., McQueen, M.B., Chonchol,
M.B., Seals, D.R., Chronic
nicotinamide riboside supplementation is well-tolerated and
effectively elevates NAD+ in healthy middle-aged and older
adults. 2018, University of Colorado Boulder.

 

“Medical
Nutrition” shall mean (a) a specialized nutrition
product that serves as a nutritional solution for the dietary
management of a specific health condition to be used under medical
supervision; (b) a “medical food,” as defined in
Section 5(b) of the Orphan Drug Act (21 U.S.C. 360ee(b)(3)) and 21
CFR 101.9(j)(8); or (c) a “dietary food for special medical
purposes” as defined in Directive 1999/21/EC of the European
Parliament and of the Council; or (d) any food product
substantially equivalent to the preceding clause (a), (b) or (c)
under any applicable laws and regulations in any other jurisdiction
to be used under medical supervision.

 

 

“Net
Sales” shall mean the Gross Sales Price invoiced by
Buyer or its Affiliates to third parties, less only (a) any taxes
included in the Gross Sales Price, if any, and (b) Allowable
Deductions.

 

 

“NR
Product” means NR and any future revisions in salts,
formulations, or other forms.

 

 

“Protein
Based” means any functional food or beverages (not a
supplement) that lists protein as a primary nutrient in the
ingredient list under labeling regulations in the US or similar
labeling or definitional

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regulations
globally and contains at least 5 grams of protein per serving for
ready to drink products and 2 grams of protein per serving in
sachets.

 

"Reporting
Period" shall begin on the first day of each calendar
quarter and end on the last day of such calendar
quarter.

 

“Seller”
shall include ChromaDex, Inc., its Affiliates and their respective
successors and assigns.

 

“Seller’s
Technical Feasibility” shall mean when Seller, in its
reasonable judgment, determines that the NR Product would be stable
in a ready to drink format. Buyer’s Technical Feasibility and
Seller’s Technical Feasibility may sometimes be referred to
collectively as “Technical
Feasibility”.

 

“Specification”
shall mean the description of the NR Product set forth on
Exhibit C – Product
Specifications (Exhibit C is hereby
incorporated herein in full by this reference). The Specifications
may be amended from time to time by ChromaDex upon
[...***...] prior written notice thereof to Buyer. Any
material modifications to the Specifications that may impact
commercialization, manufacturing, and indications for use or taste
of an Approved Product shall require the advance written approval
of Buyer, such approval not to be unreasonably withheld or
delayed.

 

“Sports
Nutrition” means product offerings formulated for and
marketed to athletes to support sports and athletic training to
optimize sports and athletic performance.

 

Sub-Territories” shall mean each of (i) North America;
(ii) Europe; (iii) Latin America (including Central America and
South America; and (iv) Asia Pacific Exceptions (as defined
below)).

 

“Sub-Territory
Reversion” is defined in Paragraph 3.6.2.

 

“Supplier
Code of Conduct” shall mean Buyer’s Responsible
Sourcing Standard as published on
https://www.nestle.com/aboutus/suppliers (or any successor URL of
which Seller is advised in advance in writing). Seller shall be
advised of and agree to any revisions to the version at such URL as
of the Effective Date hereof.

 

“Term”
shall mean the term of this Agreement, which shall commence on the
Effective Date and shall remain in effect until the expiration or
abandonment of all applicable issued patents and applicable filed
patent applications for the NR Product, unless earlier terminated
in accordance with the provisions of this Agreement.

 

“Territory”
shall mean the combination of North America, Europe, Latin America
(including Central America and South America), but excluding Asia
Pacific except for the following territories that shall be included
in the Territory: Australia, New Zealand, and Japan only
(collectively the “Asia
Pacific Exceptions”). The Territory shall be subject
to the Sub-Territory Reversion pursuant to the terms
hereof.

 

“Washington
Heart Study” shall mean ClinicalTrials.gov
Identifier: NCT03423342, which can be found at
https://www.clinicaltrials.gov/ct2/show/NCT03423342?term=nicotinamide+riboside&rank=3.

 

2.

Conditions Precedent to Grant of Rights and Execution of This
Agreement.

 

2.1
Execution of this Agreement is conditioned upon:

 

(i)

Completion
of due diligence satisfactory to both ChromaDex and Buyer;
and

 

(ii)

Receipt
of the internal approvals reasonably required by both ChromaDex and
Buyer.

 

2.2                  

By
execution of this Agreement by both Parties, both Seller and Buyer
are representing that the foregoing conditions have been
satisfied.

 

 
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3.

Supply and Exclusivity.

 

3.1

Supply.
Throughout the Term, Buyer shall exclusively purchase from Seller
and Seller shall supply to Buyer the NR Product in accordance with
the specific terms and conditions contained herein. In the event
Seller fails to timely fulfill a Purchase Order (defined below),
Buyer will provide Seller written notice thereof and Seller shall
have [...***...] to cure by fulfilling the Purchase Order.
If Seller repeatedly (at least [...***...] times in any
rolling [...***...] period) and materially fails to timely
fulfill Purchase Orders, Buyer shall not be obligated to purchase
NR Product solely from Seller.

 

3.2

Approved
Products. Seller hereby agrees
that Buyer shall be entitled to develop, manufacture, sell,
promote, import, and distribute the Approved Products using NR
Product in the Field in the Territory during the
Term.

 

3.3

Exclusivity.
Provided that Seller has not terminated exclusivity as permitted by
this Agreement (including Seller’s rights to Reversion),
Seller agrees that it shall not sell NR Product to any third party
for use in Medical Nutrition in the Field in the Territory during
the Term. In addition, Seller shall not sell Medical Nutrition
products containing NR Product in the Field in the Territory during
the Term.

 

3.4

Co-Exclusivity.
Provided that Seller has not terminated exclusivity as permitted by
this Agreement (including Seller’s rights to Reversion),
Seller agrees that it shall not sell NR Product to any third party
for use in the manufacture of any third party product sold under a
third party brand in Functional Food and Beverages in the Field in
the Territory during the Term (“Buyer’s
Co-Exclusivity”).

 

3.4.1

In
order to maintain Buyer’s Co-Exclusivity:

 

3.4.1.1

Buyer
and Seller shall meet at the beginning of each quarter during
calendar year 2019 to communicate regarding Buyer’s progress
towards commercialization.

 

3.4.1.2

Buyer shall conduct Technical Feasibility product
testing (including sensory panel testing) by [...***...] on
a Functional Food and Beverages Approved Product (the
“Consumer Product Test
Target”). If Buyer fails
to achieve Buyer’s Technical Feasibility by the Consumer
Product Test Target, Buyer shall notify Seller in writing no later
than [...***...]. If Seller provides Buyer written notice
no later than [...***...] that Seller has achieved
Seller’s Technical Feasibility after Buyer notifies Seller
that Buyer failed to achieve Buyer’s Technical Feasibility,
then Seller shall have the option to terminate Buyer’s
Co-Exclusivity upon [...***...] written notice
(“Seller’s Feasibility
Failure Option”).

 

3.4.1.3

Buyer
must Launch the Approved Products in accordance with Section 3.6.
If Buyer fails to comply with the Launch requirements and
deadlines, Seller shall have the option to exercise any of its
rights to reversion and terminate Buyer’s Co-Exclusivity in
accordance with the terms of this Agreement.

 

3.4.1.4

Buyer’s
Co-Exclusivity shall cease without notice when Buyer is no longer
required to remit Sales Fees pursuant to Section 4.3.3.2, at which
time (i) there shall be no limitation on Seller’s ability to
sell the NR Product and (ii) Buyer will no longer be subject to the
Annual Minimum Royalty requirements set forth in Section 4.3.3.4 of
this Agreement.

 

3.4.2

Buyer’s
Co-Exclusivity does not prohibit Seller from selling products
containing NR Product to consumers at any time and Buyer
acknowledges that Seller will maintain all rights to sell products
containing NR Product to consumers in Functional Food and Beverages
without limitation.

 
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3.4.3

Buyer’s
Co-Exclusivity shall not include Functional Food and Beverages
Extensions. As long as Buyer has the right to purchase NR Product
for use in Buyer’s development, manufacture, sale, promotion,
importation, and distribution of Functional Food and Beverages in a
Sub-Territory, Buyer shall have the right (although not
co-exclusive) to purchase NR Product for use in Buyer’s
development, manufacture, sale, promotion, importation, and
distribution of Functional Food and Beverages Extensions in the
same Sub-Territory. The Parties hereby acknowledge that Seller is
not prohibited from developing, manufacturing, or selling
Functional Food and Beverages Extensions equivalent products
containing NR Product.

 

3.5

Prior Existing
Obligations. Notwithstanding
Section 3.3 (Exclusivity)
and Section 3.4 (Co-Exclusivity),
prior to the Effective Date, Seller entered into certain agreements
to supply the NR Product or products containing NR Product to
certain third parties (“Prior Existing
Obligations”). A list of
such Prior Existing Obligations are attached hereto as Exhibit D -
Prior Existing Obligations (Exhibit D is hereby incorporated herein
in full by this reference). Buyer agrees that Seller’s
continued performance under the Prior Existing Obligations is not a
breach of this Agreement, provided however that Seller shall use
commercially reasonable efforts to terminate such Prior Existing
Obligations as soon as legally possible.

 

3.6

Regulatory Activities;
Sub-Territory Reversion.

 

3.6.1

Seller’s
Regulatory Activities. Buyer
and Seller acknowledge and agree that Seller is principally
responsible for performing certain regulatory activities relating
to the NR Product as set forth in this Section 3.6 and Seller
agrees to proceed diligently, in good faith, and without delay
(“Seller’s Regulatory
Activities”). To the
extent that any of Seller’s Regulatory Activities are
required by applicable governmental regulators
“Applicable
Regulators”) in order for
Buyer to launch an Approved Product in a specific Sub-Territory,
Seller’s Regulatory Activities shall be conditions to
Buyer’s launch (and any related payment) obligations for such
Approved Products (on a product by product basis in each Approved
Product Category). If Seller is unable to obtain regulatory
approval from the Applicable Regulators of any specific Approved
Product as directed and recommended by Buyer, including dosage and
regulatory categories set by Buyer, Buyer has the option to accept
the Applicable Regulators’ decision and/or guidance or,
within [...***...] of Buyer’s receipt of Applicable
Regulators’ final decision and/or guidance with respect to a
particular Approved Product in a Sub-Territory, reject it in
writing. If Buyer accepts such final decision or guidance,
Seller’s Regulatory Activities shall be deemed satisfied for
the applicable Approved Product in the applicable Sub-Territory. If
Buyer rejects Applicable Regulators’ final decision and/or
guidance with respect to a particular Approved Product in a
Sub-Territory, Seller has the right to terminate all of
Buyer’s rights to sell the applicable Approved Products in
the applicable Sub-Territory.

3.6.1.1

Functional Food and
Beverages in United States.
Buyer and Seller acknowledge that Seller has already obtained GRAS
certification self-determination with successful FDA notification
for certain Functional Food and Beverages, including vitamin
waters, protein shakes, nutrition bars, gum, chews, and powdered
beverages at a maximum level of 0.0057% by weight as consumed.
Seller has successfully completed a New Dietary Ingredient
Notification for nutritional drinks and meals to include NR use up
to 300mg/day. Within [...***...] of the execution of this
Agreement, Seller will endeavor to obtain a GRAS self-determination
without notice status for certain mutually agreed Functional Food
and Beverages to include NR use up to 500mg/day; provided however
that Buyer and Seller shall consider the daily allowable dosage in
light of intake products Buyer intends to Launch, it being
acknowledged by Buyer that the more opportunities to intake NR
Product, the lower the daily allowable usage may
result.

3.6.1.2

Medical Nutrition in
United States. Within
[...***...] after the execution of this Agreement, Seller
will use commercially reasonable efforts to obtain a GRAS
self-determination without notification status at 1,000mg/day based
on the Martens and

 

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Dollerup studies.
Within [...***...] after the publication of the Washington
Heart Study, anticipated to be completed by the end of
[...***...], Seller will use commercially reasonable
efforts to obtain a GRAS self-determination without notice status
at 2,000mg/day.

3.6.1.3

Outside United
States. Buyer and Seller shall
meet within [...***...] of the Effective Date and
periodically thereafter to arrive at a mutually agreed upon
schedule of Sub-Territories outside the United States for which
Seller will submit regulatory approval dossiers (the
“Schedule of International
Markets”). Buyer and
Seller acknowledge that Brazil, Canada, Europe and Australia are
the initial Sub-Territories on the Schedule of International
Markets. Buyer and Seller shall exchange information as appropriate
to facilitate the parties’ efforts to obtain regulatory
approvals, which might include scientific information to help
accelerate the process.

 

3.6.2

Sub-Territory
Reversion.

3.6.2.1

North America.

3.6.2.1.1

Functional Food and
Beverages. If Buyer fails to
Launch a Functional Food and Beverages Approved Product in North
America within [...***...] of the Effective Date (the
“NA
Functional Food and Beverages Reversion Period”), all co-exclusivity rights of Buyer with
respect to North America for such Approved Product Category shall
terminate and there shall be no limitation on Seller’s
ability to sell NR Product in North America in such Approved
Product Category after such termination (the
“NA
Functional Food and Beverages Reversion”).

3.6.2.1.1.1

Reversion;
Termination. Buyer can avoid
the NA Functional Food and Beverages Reversion and extend its
co-exclusivity rights for [...***...] (the
“NA
FF&B Co-Exclusivity Extension”) if Buyer pays to Seller the equivalent of
the Approved Product Launch Fee for Functional Food and Beverages
for North America for such [...***...] (the
“NA
FF&B Reversion Fee”).
The NA FF&B Reversion Fee must be received by Seller prior to
the expiration of the NA Functional Food and Beverages Reversion
Period in order for Buyer to exercise the NA FF&B
Co-Exclusivity Extension. The NA FF&B Exclusivity Extension may
be exercised only once. If Buyer elects not to remit such NA
FF&B Reversion Fee, Buyer’s co-exclusivity for Functional
Food and Beverages in North America shall terminate and Seller
shall have the option to terminate all of Buyer’s rights to
sell Functional Food and Beverages Approved Products containing the
NR Product within North America (the “NA FF&B
Termination”) as its sole
and exclusive remedy. Seller shall have [...***...] after
Buyer’s failure to pay the NA FF&B Reversion Fee to
determine whether Seller is exercising the NA FF&B Termination.
Seller shall provide the NA FF&B Termination notice in
writing.

 

3.6.2.1.2

Medical
Nutrition. If Buyer does not
Launch a Medical Nutrition Approved Product in North America within
[...***...] of the Effective Date (the
“NA
Medical Nutrition Reversion Period”), all exclusivity rights of Buyer with
respect to North America for such Approved Product shall terminate
and there shall be no limitation on Seller’s ability to sell
NR Product into Medical Nutrition in North America after such
termination (the “NA Medical Nutrition
Reversion”).

3.6.2.1.2.1

Reversion;
Termination. Buyer can avoid
the NA Medical Nutrition Reversion and extend its exclusivity
rights for [...***...] (the “NA MN Exclusivity
Extension”) if Buyer pays
to Seller the equivalent of the Approved Product Launch Fee for
Medical Nutrition for North America for such [...***...]
(the “NA MN Reversion
Fee”). The NA MN
Reversion Fee must be received by Seller prior to the expiration of
the NA Medical Nutrition Reversion Period in order for Buyer to
exercise the NA MN

 

 
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Exclusivity
Extension. The NA MN Exclusivity Extension may be exercised only
once. If Buyer elects not to remit such NA MN Reversion Fee,
Buyer’s exclusivity for Medical Nutrition in North America
shall terminate and Seller shall have the option to terminate all
of Buyer’s rights to sell Medical Nutrition Approved Products
containing the NR Product within North America (the
“NA MN
Termination”) as its sole and exclusive remedy. Seller
shall have [...***...] after Buyer’s failure to pay
the NA MN Reversion Fee to determine whether Seller is exercising
the NA MN Termination. Seller shall provide the NA MN Termination
notice in writing.

 

3.6.2.1.3

The NA Functional Food and Beverages Reversion
Period and the NA Medical Nutrition Reversion Period shall be
collectively referred to herein as the “NA Reversion
Period” and the NA
Functional Food and Beverages Reversion and the NA Medical
Nutrition Reversion shall be collectively referred to herein as the
“NA
Reversion”.

 

3.6.2.2

International.
If Buyer does not Launch an Approved Product in an Approved Product
Category in Europe, Latin America and/or Asia Pacific within
[...***...] of the Effective Date (the
“Sub-Territory Reversion
Period”), all
co-exclusivity rights in Functional Food and Beverages and all
exclusivity rights in Medical Nutrition with respect to the
relevant Sub-Territory shall terminate and there shall be no
limitation on Seller’s ability to sell NR Product in the
relevant Sub-Territory in such Approved Product Category after such
termination (the “Sub-Territory
Reversion”).

3.6.2.2.1.1

Reversion;
Termination. Buyer can avoid
the Sub-Territory Reversion and extend its co-exclusivity or
exclusivity rights, as applicable, for [...***...] (the
“Sub-Territory
Extension”) if Buyer pays
to Seller the equivalent of the Approved Product Launch Fee per
Approved Product Category for the relevant Sub-Territory for such
[...***...] (the “Sub-Territory Reversion
Fee”). The Sub-Territory
Reversion Fee must be received by Seller prior to the expiration of
the Sub-Territory Reversion Period in order for Buyer to exercise
the Sub-Territory Extension. The Sub-Territory Extension may be
exercised only once. If Buyer elects not to remit such
Sub-Territory Reversion Fee, Buyer’s co-exclusivity rights
for Functional Food and Beverages and its exclusivity rights for
Medical Nutrition shall terminate in the relevant Sub-Territory and
Seller shall have the option to terminate all of Buyer’s
rights to sell the Approved Products containing the NR Product
within the relevant Category and Sub-Territory (the
“Sub-Territory
Termination”) as its sole
and exclusive remedy. Seller shall have [...***...] after
Buyer’s failure to pay the Sub-Territory Reversion Fee to
determine whether Seller is exercising the Sub-Territory
Termination. Seller shall provide the Sub-Territory Termination
notice in writing.

3.6.2.3

The NA Reversion and Sub-Territory Reversion shall
collectively be referred to herein as the
“Reversions.”
The NA FF&B Reversion Fee, NA MN Reversion Fee and
Sub-Territory Reversion Fee shall collectively be referred to
herein as the “Reversion
Fees”.

3.7

Reservation of
Rights. Other than the
specifically enumerated, limited exclusivity and co-exclusivity
rights sets forth in this Agreement, Seller is entitled to develop,
manufacture, sell, promote, import, and distribute any items,
products, materials, and rights in its sole discretion. Any rights
not specifically granted to Buyer are hereby reserved to
Seller.

3.8

Recall and Termination
Under A Recall. If any Approved
Products are at any point during the Term subject to a Class I
product recall and are likely to cause serious health problems or
death requiring notification by the USFDA, ChromaDex has the right
to direct Buyer to refrain from selling or distributing the
affected Approved Products until the situation is resolved to
ChromaDex’s reasonable satisfaction, and without liability to
NHSc therefor.

 

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4.

Ordering, Purchase Price and Payment.

 

4.1

Forecasts.
Buyer shall provide to Seller a good faith projection or estimate
of the quantity of NR Products that Buyer may order each month for
a [...***...] period (the “Forecast”). The first
[...***...] of the Forecast shall be binding (the
“Binding
Forecast”) and reflected
in the Purchase Order (defined below) with the remaining
[...***...] constituting a rolling Forecast which shall be
an estimate only of Buyer’s production requirements and not a
firm order for the NR Products. Seller will maintain sufficient
inventory and manufacturing capacity to produce up to
[...***...] percent ([...***...]%) of Buyer’s
estimated purchases for the Forecast period.

 

4.2

Purchase
Orders. Buyer agrees to submit
to Seller a binding purchase order, which will specify, among other
things, (i) the quantity of NR Product ordered and (ii) the
delivery date (the “Purchase
Order”) at least
[...***...] in advance of any required NR Product delivery
date. All NR Product will be made available for pick up at
Seller’s designated facility (“Seller’s
Facility”). Each Purchase
Order will not vary by more than [...***...] percent
([...***...]%) from the applicable Binding Forecast. Any
terms contained in any Purchase Order which are inconsistent with
the terms of this Agreement, shall be excluded and are of no force
and effect. In the event of a conflict
between the terms of this Agreement and a Purchase Order, the terms
of this Agreement shall prevail. Seller shall confirm to Buyer the receipt of each
Purchase Order within [...***...] after receipt and provide
to Buyer the dates by which Seller will deliver the NR Products to
Seller’s Facility. Legally binding obligations for the
purchase of NR Products will be created when Buyer submits the
Binding Forecast. Seller will fulfill Purchase Orders within the
requested timeframe (barring any Force Majeure Events). The minimum
purchase order quantity shall be [...***...]kg and minimum
pack size shall be [...***...]kg. The NR Product shall have
a minimum remaining shelf life of [...***...] upon
availability at Seller’s Facility.

 

4.3

Purchase
Price. Buyer shall pay to
Seller the following Fees:

 

4.3.1

Exclusivity
Fee. In exchange for the
exclusivity and co-exclusivity set forth in this Agreement, Buyer
shall pay to Seller within [...***...] of the Effective
Date a one-time, non-refundable payment of Four Million United
States Dollars (US$4,000,000.00) (the “Exclusivity
Fee”).

 

4.3.2

Approved Product Launch
Fees. Following the Launch of
the first Approved Product in the respective Approved Product
Category in a country in the respective Sub-Territory, Buyer shall
pay to Seller within [...***...] following the relevant
Launch a one-time, non-refundable payment in the amounts set forth
below (“Approved Product Launch
Fees”):

 

 

	

Approved Product

	

North America

	

Europe

	

Latin America

	

Asia Pacific

 

	

Functional
Food and Beverages

	

US$[...***...]

	

US$[...***...]

	

US$[...***...]

	

US$[...***...]

	

Medical
Nutrition

	

US$[...***...]

	

US$[...***...]

	

US$[...***...]

	

US$[...***...]

 

For
the avoidance of doubt, Approved Product Launch Fees are only
payable once per Approved Product Category and Sub-Territory, i.e.
the maximum Approved Product Launch Fees under this Agreement in
the event the Buyer launches one or several Approved Medical
Nutrition product and one or several Approved Functional Foods and
Beverages product in each Sub-Territory is maximum
US$6,000,000.00.

 

 
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4.3.2.1

The
Reversion Fees are separate and apart from the Approved Product
Launch Fees and payment of a Reversion Fee, if any, shall not be
applicable against the Approved Product Launch Fees. The Approved
Product Launch Fees shall not be applicable against the Exclusivity
Fee, any Sales Fees (defined below), or any Annual Minimum
Royalty.

 

4.3.3

NR Product
Fees.  The purchase price of the NR Product
purchased by Buyer from Seller pursuant to the Purchase Orders
shall be calculated as follows:

 

4.3.3.1

[...***...] United States Dollars per
kilogram (US$[...***...]/kg) for purchase orders placed in
2018 and 2019 (the “KG Price”). The KG Price for future years will be
mutually determined by the Parties and agreed to in advance in
writing by both parties; plus

 

4.3.3.2

A percent of the Net Sales of Approved Products
sold by Buyer as set forth below (the “Sales Fees”) (for purposes of clarification, this
is for all Approved Products and not per Approved
Product Category) :

 

 

	

 

Cumulative worldwide Annual Net Sales:

	

 

Sales Fee:

	

 

[...***...]

	

 

[...***...] Percent ([...***...]%)

	

 

[...***...]

	

 

[...***...] Percent ([...***...]%)

	

 

[...***...]

	

 

[...***...] Percent ([...***...]%)

	

 

[...***...]

	

 

[...***...] Percent ([...***...]%)

	

 

[...***...]

	

 

[...***...] Percent ([...***...]%)

	

 

[...***...]

	

 

[...***...] Percent ([...***...]%)

 

4.3.3.3

The Sales Fees will be calculated based on
cumulative worldwide gross Net Sales per each calendar year. The
first calendar year of the Agreement shall be deemed to be the
Effective Date through December 31, 2019. Thereafter, each calendar
year shall commence on January 1st
and end on December
31st.

   

4.3.3.4

Commencing twenty four (24) months after Buyer has
Launched an Approved Product in the relevant category
(“Royalty Year
1”), Buyer will pay
Seller the following minimum royalties on an annual basis for such
Approved Product Category as indicated below (the "Annual Minimum
Royalty"):

 

	

 

Royalty Year*

	

 

Functional Food and Beverages Category: Annual Minimum
Royalty

 

	

 

Medical Nutrition Category: Annual Minimum

Royalty

	

 

[...***...]

	

 

[...***...]

	

 

[...***...]

 

   
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[...***... ]

	

 

[...***...]

	

 

[...***...]

 

* The
Annual Minimum Royalty shall be prorated for any partial calendar
year.

   

4.3.3.5

Sales
Fees shall be due quarterly and shall be payable within
[...***...] of Buyer’s receipt of an invoice from
Seller reflecting the Sales Fee amount set forth in the sales
report for such period submitted by Buyer pursuant to Section 5.2
of this Agreement.

4.3.3.6

Sales
Fees payable on Net Sales of Approved Products will be applicable
against and offset only against the Annual Minimum Royalty. If the
total Sales Fees for any calendar year exceed the combined Annual
Minimum Royalty due for all Approved Product Categories in which an
Approved Product has been launched, no additional Annual Minimum
Royalty shall be due for that calendar year.

4.3.3.7

In the event that the Sales Fees are less than the
Annual Minimum Royalties, Buyer shall pay the difference between
the total Annual Minimum Royalty in all Approved Product Categories
in which an Approved Product has been launched combined less the
amount of Sales Fees received by Seller for the relevant calendar
year (the “Sales Fee True
Up”). The Sales Fee True
Up shall be paid within [...***...] of the end of relevant
calendar year. In the event that Buyer does not pay Seller the
Annual Minimum Royalty in a particular calendar year, Buyer will
lose all exclusivity and co-exclusivity rights with respect to NR
Product, products containing NR Product, and uses thereof and
Seller shall have the option to terminate all of Buyer’s
rights to sell the Approved Products in the Sub-Territory for which
the Annual Minimum Royalty was not paid (“Annual Minimum Royalty
Termination”).

4.3.3.8

The Sales Fees set forth in clause 4.3.3.2 above
will be reduced by an amount equal to [...***...] percent
([...***...]%) of such Sales Fees with respect to an
Approved Product in each country in the Territory if for the
applicable calendar quarter there is a product that (a) contains NR
and (b) is either (i) a Functional Food or (ii) a Medical Nutrition
product, has been approved by the applicable regulatory authority
and is being sold in such country by a Third Party (a
“Competing
Product”).
Notwithstanding the foregoing, such [...***...] percent
([...***...]%) reduction to the Sales Fees will not apply
if and for so long as unit sales of Competing Products in such
country are lower than (i) [...***...] percent
([...***...]%) of the units of Buyer’s sales in the
corresponding period in such country or (ii) [...***...]
percent ([...***...]%) of the units of Buyer’s sales
in the corresponding period in such country if Seller has brought
an action in a court of competent jurisdiction challenging such
Competing Product. No Annual Minimum Royalties or Sales Fees on the
Net Sales of Approved Products sold by Seller to Buyer are due with
respect to any given Sub-Territory after the expiration, final invalidation or abandonment
of all of Seller’s applicable issued patents and
applicable filed patent applications for the NR Product in such
Sub-Territory, or when Seller no longer has the right to sell the
NR Product in such Sub-Territory.

 

4.3.3.9

The
KG Price shall be due [...***...] after the date of
shipment of NR Product based on each Purchase Order (and
corresponding with Seller’s invoice date). The Sales Fees
shall be due within [...***...] after the last day of each
calendar quarter. In the event that, after first sale of an
Approved Product, there are no sales made during a given calendar
quarter, Buyer shall provide ChromaDex with a statement within
[...***...] after the last day of such quarter reporting
that no sales were made during such quarter.

 

4.3.3.10

  In
the event Buyer, via benchmarking, can demonstrate a gap between
the price being

charged
by Seller and the competition or market price, or the price
movement and the market price movement, for NR Products in
comparable quality and quantity, Buyer and Seller will meet to
discuss ways to remedy the situation. Further the Seller agrees not
to sell or supply NR Products to any third party at a price lower
than the applicable price charged to Buyer for the same volume of
NR Products.

 

 
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4.4

Payments.

4.4.1

Late Payments.
Failure to make prompt and full
payment of undisputed amounts hereunder constitutes a material
breach of this Agreement and to take the measures as set forth in
Section 15.2 of this Agreement. Buyer has no right of setoff. If
full payment is not made when due, Seller shall be entitled to
interest on any amount unpaid at the rate of [...***...]
percent ([...***...]%) per [...***...] or the
maximum rate permissible by applicable law until Seller receives
payment in full. In addition, if any amount payable to Seller is
not received by Seller within [...***...] of the due date,
Buyer agrees to reimburse Seller for any and all commercially
reasonable out-of-pocket expenses Seller may incur, including
reasonable attorneys' fees, in taking any action to obtain such
overdue payments contemplated by this Section.

 

4.4.2

Method of
Payment. All payments under
this Agreement should be made payable to "ChromaDex, Inc." and sent
via wire transfer as indicated below. Each payment should reference
this Agreement and identify the obligation under this Agreement
that the payment satisfies. Buyer shall remit payment to the
following account (or such other accounts(s) as ChromaDex may
specify in writing):

	

 

ChromaDex,
Inc.

Attention:
[...***...]

Account
# [...***...]

ABA#:
[...***...]

Bank:
[...***...]

Address:
[...***...]

Address:
[...***...]

 

Remittance detail
for wire

transfers must also
be sent either

by fax
or e-mail to:

Fax:
[...***...], Attention:

[...***...]

E-mail:
[...***...]

	
 

	
 

	
 

4.4.3

Payments in U.S.
Dollars.    All payments due under
this Agreement shall be drawn on a United States bank and shall be
payable in United States dollars. Conversion of foreign currency to
U.S. dollars shall be made at the conversion rate existing in the
United States (as reported in the Wall Street Journal) on the last
working day of the calendar quarter of the applicable Reporting
Period. Such payments shall be without deduction of exchange,
collection, or other charges, and, specifically, without deduction
of withholding or similar taxes or other government imposed fees or
taxes, except as permitted in the definition of Net Selling
Price.

 

5.

REPORTS AND RECORDS.

 

        5.1    Progress
Reports.   

 

5.1.1

Within
[...***...] after the Effective Date (and an updated
version [...***...] thereafter), Buyer shall furnish
ChromaDex with a high level research and development plan
describing the major tasks to be achieved in order to bring to
market an Approved Product (including updates and progress and
regulatory milestones achieved for the prior report). Such plans
can be written or consist of conversations between NHSc and
ChromaDex’s scientific and project management
representatives.

      

5.1.2

Before First
Commercial Sale.  Prior to the first Launch of the
first Approved Product, Buyer shall deliver reports to ChromaDex
[...***...], within [...***...] of the end of each
[...***...], containing reasonably detailed high level
information concerning

 

 

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the immediately preceding [...***...],
regarding Buyer’s progress towards commercialization
including, but not limited to, progress towards regulatory
approvals. In addition, Seller will provide Buyer with
[...***...] updates on status and progress of the Seller
Regulatory Obligations and any related regulatory approvals that
Seller is undertaking that may impact Buyer’s launch plans
for each territory.  

 

5.1.3

 Upon First Commercial
Sale of an Approved Product. Buyer shall report to ChromaDex the date of
first commercial sale of each Approved Product in each
Sub-Territory within [...***...] of
occurrence.

5.2

Sales
Reports.   

5.2.1

After
the first commercial sale of each Approved Product, Buyer shall
deliver reports to ChromaDex within [...***...] of the end
of each Reporting Period, containing information concerning the
immediately preceding Reporting Period.

5.2.2

Each
report delivered by Buyer to ChromaDex shall contain sufficient
detail to permit confirmation of the accuracy of the Sales Fee for
such period, including the following information for the
immediately preceding Reporting Period only to the extent that such
information may be applicable to such Reporting Period and shall be
in a form as mutually agreed by the parties:

(i)

the
number of Approved Products sold by Buyer and its Affiliates to
independent third parties in each Sub-Territory of the
Territory;

(ii)

the
Gross Sales Price charged by Buyer and its Affiliates for each
Approved Product in each Sub-Territory of the Territory (for the
total Gross Sales Price of each Approved Product sold by
Buyer);

(iii)

calculation
of Net Sales for each Approved Product for the applicable Reporting
Period in each Sub-Territory of the Territory, including a listing
of Allowable Deductions and allowed taxes; and

(iv)

total
Sales Fee due in U.S. dollars, together with the exchange rates
used for conversion.

5.3

Records, Audit, and
Payment.   Buyer
shall maintain, and shall cause its Affiliates if and as
applicable, to maintain, complete and accurate records relating to
the rights and obligations under this Agreement and any amounts
payable to ChromaDex in relation to this Agreement, which records
shall contain sufficiently clear and detailed information to permit
ChromaDex to confirm the accuracy of any reports delivered to
ChromaDex and compliance in all other respects with this Agreement.
The relevant party shall retain such records for at least
[...***...] following the end of the calendar year to which
they pertain, during which time ChromaDex, or ChromaDex's appointed
agents, shall have the right, at ChromaDex's expense, to inspect
such records during normal business hours to verify any reports and
payments made or compliance in all other respects under this
Agreement. Requests for an audit shall be made in writing. The
audit shall occur within [...***...] after receipt of such
written request. In the event that any audit performed under this
Section reveals an underpayment in excess of [...***...]
Dollars ($[...***...]), Buyer shall bear the full
reasonable cost of such audit and shall correct any errors and
omissions disclosed by such audit and remit any amounts due to
ChromaDex within [...***...] of receiving notice thereof
from ChromaDex.

 

6.

Taxes
and Import Duties. The KG Price
does not include federal taxes, state or local sales taxes, use
taxes, occupational taxes or import duties, all of which are the
obligation of Buyer. Unless prohibited by law, Buyer is responsible
for and shall pay all applicable sales, use, occupational, excise,
value added or other similar taxes or import duties applicable to
the manufacture, sale, price, delivery or use of the NR Product
provided by Seller, or in lieu thereof, Buyer shall provide Seller
with a tax-exemption certificate acceptable to and considered valid
by the applicable taxing authorities.

 

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7.

Delivery
and Risk of Loss. Shipping
terms for the Products are FOB Seller’s Facility. Seller
shall bear all risk of loss or damage to NR Products until the NR
Products are tendered to Buyer or its carrier for shipment at
Seller’s Facility. Seller shall also assume full
responsibility for any loss or damage to NR Products in the care,
custody, or control of Seller until such time as title to the NR
Product passes. Title shall pass at the time the NR Products are
tendered to Buyer or its carrier for shipment at Seller’s
Facility. At such time as title passes Buyer shall be fully
responsible and shall hold Seller harmless for and assume all risk
for any loss, destruction, or damage to the NR Product. Seller
reserves the right to pack orders in the most economical manner,
provided that this does not result in increased risk of loss of the
NR Product. However, where Buyer requests special packaging or
shipping, any additional cost will be billed to and be the
responsibility of Buyer. Buyer acknowledges that, subject to
Section 9 of this Agreement, Seller cannot accept returns, unless
they do not meet the applicable Specifications or are otherwise
defective and Seller is notified in writing within
[...***...] of the delivery date of such defect or failure
to meet applicable Specifications.

 

8.

Delivery
Delays. Seller shall use
commercially reasonable efforts to make the NR Products available
to Buyer on or before the delivery date set forth in the relevant
Purchase Order. Delivery dates and estimates are, however, subject
to Force Majeure Events. Once the NR Products are available for
Buyer’s pick up, Buyer shall pick up and remove the NR
Products promptly from Seller’s Facility, however in no event
shall Buyer delay or defer pick up for more than
[...***...].

 

9.

Rejection
and Revocation of Acceptance.
Any rejection or revocation of acceptance of NR Product by Buyer
that is based on initial inspection of the NR Product must be made
within [...***...] of delivery of NR Product to Buyer. All
shipments of NR Product shall be tested and inspected by Buyer
during such [...***...] period. Rejection or revocation of
acceptance of NR Product by Buyer shall be based the failure of NR
Product to conform to the Specifications or any other
representation, warranty or obligation set forth in this Agreement
(including the exhibits hereto) in any material respect. Any
attempted rejection or revocation of acceptance of such NR Product
made thereafter shall be null and void except for any latent
defects that Buyer did not detect after a reasonable initial
inspection and acceptance. Each shipment hereunder is to be
regarded as a separate and independent sale.

 

10.

Obligations.

 

10.1

The
identities of Seller’s suppliers are a proprietary trade
secret of Seller. All information regarding Seller’s
suppliers and their quality standards released to Buyer shall be
kept strictly confidential in accordance with the requirements
herein. Buyer acknowledges and agrees that Buyer will not contact
ChromaDex's supplier(s) in connection with the manufacture,
distribution, purchase, pricing, or sale of NR, NR Product, or any
other NR or NR Product precursor or otherwise as indicated in
further detail in the Non-Solicitation, Non-Competition, and
Non-Circumvention provision herein.

10.2

Buyer
shall not sell Approved Product other than in the Field in the
Territory

10.3

Approved
Product must contain a minimum of [...***...]mg of NR
Product per serving (unless Buyer and Seller agree otherwise in
advance in writing) and comply with the New Dietary Ingredient
(NDI) Notifications submitted by Seller to the FDA on August 20,
2015 and filed by the FDA on November 3, 2015 and submitted by
Seller to the FDA on December 27, 2017 and filed by the FDA on
March 7, 2018.

10.4

Buyer
may not re-sell or re-ship the NR Product to a third party (other
than an Affiliate or a co-manufacturer appointed by Buyer) in bulk
raw material form, unless expressly authorized to do so in advance
in writing by Seller.

10.5

For
U.S. distribution, on or in labels, packaging, advertising,
promotional materials or Internet communications for Buyer’s
Approved Product, Buyer will only make claims that in Buyer’s
commercially reasonable assessment are substantiated by competent
and reliable scientific evidence, and are in compliance with all
applicable laws, rules, statutes, and regulations. Buyer will not
misrepresent on product labels the amount, quantity or level of the
NR Product contained in the Approved Product. Buyer hereby
guarantees compliance with the requirements of this Section 10,
specifically including compliance with current Good

 

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Manufacturing
Practices as set forth in 21 CFR Section 111 and other relevant
rules, regulations, statutes, and laws. In the event that current
labeling, packaging or formulations of the Approved Product do not
comply with the requirements of this Section 10, Buyer will
promptly rectify all nonconforming Approved Product in a manner
reasonably acceptable to Seller and at Buyer’s sole cost and
expense.

10.6

Patent
Marking. During the Term, Buyer will ensure proper patent marking
on all Approved Product. All Approved Product shall be marked as
negotiated and agreed upon by the parties in good
faith.

10.7

Trademark
Marking. During the Term, Buyer
will ensure proper trademark marking on all Approved Product that
includes a ChromaDex Trademark as set forth in this
Agreement.

 

11.

ChromaDex
Trademarks. Provided that Buyer is not in material breach of
this Agreement, ChromaDex hereby grants Buyer a fully paid-up,
royalty-free, non-exclusive, non-sublicensable (other than to its
Affiliates) right and license to use the ChromaDex Trademarks only
as provided below:

11.1

Buyer agrees to use the ChromaDex Trademarks in
accordance with this Section, and in accordance with
ChromaDex’s Brand Usage Guidelines. The parties shall negotiate and agree upon in good
faith the display (prominence and location) of the ChromaDex
Trademarks on Approved Product labels and marketing
materials.

11.2

For the avoidance of doubt, ChromaDex rights in
accordance with this Section are limited to solely
the right to review if the ChromaDex Trademarks are being used by
Buyer in accordance with this Agreement. ChromaDex has no right to
control the content of any promotional
material.

11.3

Buyer agrees to include the ChromaDex Trademark
“TRU NIAGEN®
on the product packaging (with the
exception of small product formats like sachets). Any use of the
ChromaDex Trademarks and other proprietary markings and notices of
ChromaDex by Buyer shall be consistent with ChromaDex’s Brand
Usage Guidelines.

11.4

All
use of ChromaDex Trademarks and any related goodwill will all inure
to ChromaDex’s benefit.

11.5

Any
use of the ChromaDex Trademarks by Buyer outside the scope of
ChromaDex’s Brand Usage Guidelines or any use of the
ChromaDex Trademarks that are not used for labeling, packaging,
marketing and advertising of the Approved Products in the ordinary
course (e.g. press releases) require the prior written approval of
Seller.

11.6

Subject
to the limitations set forth above, Buyer agrees to abide by
ChromaDex’s reasonable written ChromaDex Brand Usage
Guidelines as issued and provided to Buyer from time to time. In
any case where the ChromaDex Trademarks are not used in compliance
with ChromaDex’s trademark policies, Buyer will as soon as
reasonably commercially practical correct the non-compliance and
submit samples of compliant use to ChromaDex for prior written
approval.

11.7

The
Approved Products will be marketed by Buyer under a trade name or
trademark to be determined by Buyer in its sole discretion, subject
to the obligation that Buyer will not use confusingly similar marks
or trade dress as compared to the ChromaDex Trademarks (and
ChromaDex also agrees not to use confusingly similar marks or trade
dress as compared to Buyer trademarks or trade dress).

11.8

ChromaDex has the right to supervise the
Buyer’s use of the ChromaDex Trademarks with respect to the
nature and quality of the Approved Products to ensure that any such
trademarks are used by Buyer pursuant to this Agreement. During the
Term, without limitation, Buyer agrees to use the ChromaDex Trademarks on and only in
connection with the Approved Products in strict accordance with
this Agreement.

11.9

Buyer
agrees to always use a ChromaDex Trademark accompanied by an
appropriate noun as shown in ChromaDex’s Brand Usage
Guidelines. Buyer further agrees that Buyer shall not use any
ChromaDex Trademarks as a noun and that Buyer shall not pluralize,
make possessive, abbreviate, or join any ChromaDex Trademark to
other words, symbols, or numbers, either as one word or with a
hyphen.

11.10

Buyer
shall always use the proper spelling and the proper trademark
symbol for the ChromaDex Trademarks in accordance with
ChromaDex’s Brand Usage Guidelines.

 

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11.11

Buyer
shall attribute ownership of all ChromaDex Trademarks to ChromaDex
by using the TM, SM, or ® symbol (as indicated in
ChromaDex’s Brand Usage Guidelines) and by using the
trademark attribution on all marketing and collateral materials for
the Approved Product as indicated in ChromaDex’s Brand Usage
Guidelines or as otherwise mutually agreed in writing by the
Parties. For the trademark symbol, the superscript or subscript
mode is preferred, but if it is not available, use parentheses:
(TM), (SM) or (R).

11.12

Buyer
may not incorporate Buyer’s and/or any other third party mark
into any ChromaDex Trademark nor may Buyer integrate any ChromaDex
Trademark into any of Buyer’s own trademarks, logos, or
designs. Buyer shall not alter, make puns on, or modify the
ChromaDex Trademarks in any way, nor may Buyer use and/or adopt any
marks or logos that are confusingly similar to or that dilute any
ChromaDex Trademarks.

11.13

Buyer
shall not use any ChromaDex Trademark in any manner that creates
confusion as to the source, sponsorship, or association of
Buyer’s products and/or site or facility with ChromaDex or,
that in any way indicates to the public that Buyer is a division or
Affiliate, or franchisee of ChromaDex or otherwise related to
ChromaDex. Buyer may not use or display any ChromaDex Trademarks on
Buyer’s invoices, bills, shipping memos, and/or letterhead,
and Buyer may not incorporate any ChromaDex Trademarks into any
company name or product name.

11.14

Buyer
shall not re-use, copy, modify, and/or counterfeit packaging
associated with any ChromaDex product. To do so will constitute a
material breach of this Agreement and ChromaDex shall have the
right to terminate this Agreement. ChromaDex further reserves all
rights to pursue any and all remedies available to it as a result
of Buyer’s selling and/or manufacturing any remarked,
counterfeited, copied, re-used, modified ChromaDex Trademark,
ChromaDex product, and/or ChromaDex product packaging.

11.15

Buyer
shall not use any ChromaDex Trademarks on any promotional material
created by Buyer in close proximity to non- Approved Products
unless it is completely clear that the ChromaDex Trademark is being
used and associated solely with the appropriate Approved Product.
Buyer agrees to take all steps necessary to avoid creating the
false impression that ChromaDex is in any way the source, sponsor,
or licensor of any product that is not an Approved
Product.

11.16

Buyer
shall not use or display any ChromaDex Trademarks in any manner
that may disparage ChromaDex, its products or services, or for
promotional goods or for products which, in ChromaDex’s sole
discretion may diminish or otherwise damage ChromaDex’s
goodwill in any ChromaDex Trademarks, including but not limited to,
uses which could be deemed to be obscene, pornographic, excessively
violent, or otherwise in poor taste or unlawful, or which purpose
is to encourage unlawful activities.

11.17

Notwithstanding
any of the foregoing, Buyer is not prohibited from making textual,
non-logo use in advertising, promotional materials, and invoices of
ChromaDex product names to refer to ChromaDex products that Buyer
is selling, so long as such product names are used properly as
trademarks with the appropriate trademark symbol and attribution
legend as required by ChromaDex’s Brand Usage
Guidelines.

11.18

All
Approved Product shall conform with the requirements herein,
including, but not limited to, ChromaDex’s Brand Usage
Guidelines. Approved Product labels must be submitted to Seller
prior to launch and approved by Seller in advance in writing as to
the use of ChromaDex’s Trademarks. Seller will not
unreasonably withhold approval. If Seller does not reject a
submitted label within [...***...], such label is deemed
accepted. Seller shall indicate to Buyer Seller’s reasons for
withholding approval which must be consistent with the requirements
set forth in this Agreement. Buyer at Buyer’s sole cost and
expense shall ensure all Approved Product labels meet all
applicable laws, rules, statutes, and regulations and all of
Seller’s requirements for approval set forth in this
Agreement.

 

12.

Buyer
Diligence Obligations. Buyer
shall use commercially reasonable diligent efforts, or shall cause
its Affiliates to use commercially reasonable diligent efforts, to
develop Approved Products and to introduce Approved Products into
the commercial market; thereafter, Buyer or its Affiliates shall
make Approved Products reasonably available to the public.
   

 

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13.

NR
Trade Secret Use. In
connection with the rights granted herein, Buyer needs access to
certain clinical and non-clinical data, agreements, and know-how
with respect to NR, NR Product, and uses thereof (collectively the
“NR
Trade Secrets”). Buyer
acknowledges that as between Buyer and Seller, Seller owns all
right, title and interest in and to the NR Trade Secrets. Neither
Buyer nor any of its Affiliates will contest Seller’s sole
ownership and control over the NR Trade Secrets. Seller hereby
agrees to make certain current and future NR Trade Secrets, in
Seller’s sole discretion, available to Buyer solely for
Buyer’s use to develop, manufacture and sell the Approved
Products (the “Disclosure
Purpose”). Except for the
Disclosure Purpose, Buyer hereby agrees that Buyer shall not use or
disclose the NR Trade Secrets. Buyer shall be entitled to share
portions of the NR Trade Secrets with its Affiliates on a need to
know basis provided that such Affiliates sign a confidentiality and
non-disclosure agreement at least as restrictive as this Agreement.
Upon expiration or earlier termination of this Agreement for any
reason, Buyer and its Affiliates shall immediately cease use of all
NR Trade Secrets and shall return all copies in any form (digital
or otherwise) of the NR Trade Secrets to Seller within
[...***...] of Seller’s request, and neither Buyer
nor its Affiliates shall maintain any copies of any NR Trade
Secrets.

 

14.

Right
of First Negotiation. In the
event that ChromaDex, in its sole discretion, decides to
exclusively license or sell substantially all assets related to the
NR Product in the dietary supplement category (the
“Divesting
Assets”), ChromaDex shall
advise Buyer and Buyer shall have a right of first negotiation for
a period of [...***...] to acquire the Divesting Assets
under terms and conditions to be negotiated in good faith by the
Parties. If after [...***...] the Parties are unable to
reach mutually agreeable terms and conditions, ChromaDex shall have
the ability to sell or license the Divesting Assets in its sole
discretion to a third party.

 

15.

Term
and Termination.

 

15.1

Term.
This Agreement shall commence on the Effective Date and, unless
earlier terminated in accordance herewith, shall remain in full
force and effect (the “Term”). For purposes of clarification, the Sales
Fee and exclusivity and Buyer’s Co-Exclusivity (unless such
exclusivity and/or Buyer’s Co-Exclusivity have been
previously terminated pursuant to the terms hereof) shall terminate
upon the expiration of the last relevant claim of ChromaDex’s
applicable issued patents and applicable filed patents for the NR
Product. Such applicable issued patents and applicable filed
patents for the NR Product are as indicated on Exhibit F –
Applicable Issued Patents and Applicable Filed Patents for the NR
Product (as may be amended by
ChromaDex from time to time) (Exhibit F
is hereby incorporated herein in full
by this reference)

15.2

Termination.
This Agreement may be terminated by: (i) a Party for cause if the
other Party commits a material breach of this Agreement and does
not cure such breach within thirty (30) days following such
Party’s receipt of written notice reasonably detailing such
breach from the non-breaching Party; (ii) a Party immediately upon
the giving of written notice if the other Party files a petition
for bankruptcy, is adjudicated bankrupt, takes advantage of the
insolvency laws of any state, territory or country, or has a
receiver, trustee, or other court officer appointed for its
property; or, (iii) a Party if a Force Majeure Event (as described
in Section 20 of this Agreement) with respect to the other Party
shall have continued for ninety (90) days or is reasonably expected
to continue for more than one hundred eighty (180)
days.

15.3

Buyer’s Further
Termination Rights. Buyer shall
have the right to terminate this Agreement under the following
circumstance:

15.3.1

Buyer
may terminate this Agreement if Buyer’s Technical Feasibility
in desired food forms is not achieved by December 31, 2019 by
providing Seller sixty (60) days advanced written
notice;

15.3.2

After the first anniversary of this Agreement
until the twenty-fourth (24th)
month after the Launch of the first Approved Product in each
Product Category, Buyer may terminate this Agreement as to one or
both Product Categories upon the payment of the Termination Fee for
the terminated Product Category, which shall be paid promptly
following Seller’s receipt of the termination
notice;

 

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15.3.3

After the twenty-fifth (25th)
month of the Launch of the first Approved Product, Buyer may
terminate this Agreement with twelve (12) months advance written
notice. No Termination Fee shall be due.

15.3.4

The “Termination
Fee” shall be Five
Hundred Thousand Dollars (US$500,000) for each Product Category
terminated, with a cap of One Million Dollars
(US$1,000,000).

15.3.5

ChromaDex
will receive monthly updates on Buyer’s Technical Feasibility
progress and other technical data from Buyer as further detailed in
the Reports and Records Section herein and will offer reasonable
assistance to Buyer in solving technical development issues as they
arise. Seller shall have no obligation to reimburse Buyer any
amounts already due and owing and/or paid under this Agreement in
the event of a termination by Buyer pursuant to Section 15.3 of
this Agreement.

 

15.4

Effect of
Termination.    

15.4.1

Survival.    Any
payment obligation of Buyer, Buyer’s obligations under
Sections 13, 16.2, 17, 18, 21, and 22-37, and any other term of
this Agreement that by their nature are meant to survive the
termination of this Agreement, including all provisions that
contemplate continuing effectiveness, including, without
limitation, any term regarding warranty disclaimer, limitations of
liability, indemnification, intellectual property rights, governing
law/venue/prevailing party and general terms, shall so survive any
termination of this Agreement.

15.4.2

Inventory.    Upon
the early termination of this Agreement, Buyer and its Affiliates
may complete and sell any work-in-progress and inventory of
Approved Products that exist as of the effective date of
termination (unless termination is based on cause or a breach by
Buyer of ChromaDex’s intellectual property rights or
Buyer’s confidentiality rights herein), provided that
(i) Buyer pays Seller the applicable royalty on the Net Sales
or other amounts due on such sales of Approved Products in
accordance with the terms and conditions of this Agreement, and
(ii) Buyer and its Affiliates shall complete and sell all
work-in-progress and inventory of Approved Products within
[...***...] after the effective date of
termination.

15.4.3

Pre-termination
Obligations.    In no event shall
termination of this Agreement release Buyer or its Affiliates from
the obligation to pay any amounts that became due on or before the
effective date of termination.

15.4.4

Buyer’s
Post-Termination Obligations.
After the termination hereof and Buyer’s exercise of the
rights granted herein in the Inventory Section above, Buyer shall
have no further rights to use the NR Product, sell Approved
Product, or use any of the other rights granted to Buyer herein
(including, but not limited to rights to the ChromaDex Trademarks
and ChromaDex Trade Secrets). Buyer shall further return to
ChromaDex all of ChromaDex’s Confidential Information (as
defined herein).

 

16.

Representations And Warranties.

 

16.1

Seller’s Representations and Warranties.

 

Seller expressly represents and warrants that:

(a)  It
has all necessary legal capacity, right, power, and authority to
enter into, execute, deliver, and be bound by this Agreement and
that the execution and delivery of this Agreement and the
performance by Seller of Seller’s obligations under this
Agreement, do not breach, and shall not result in a breach or
violation of, any agreement to which Seller is a party or by which
Seller is bound.

(b)  Seller
is the owner of all or has the right to (i) license Buyer the
rights to use the ChromaDex Trademarks and NR Trade Secrets as
specifically set forth in this Agreement, and (ii) grant Buyer the
rights to develop, manufacture, and sell the Approved Products
using the patents listed in Exhibit F on the terms set forth in
this Agreement;

 

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(c)
All
patents that are necessary for Buyer to use the NR Product to be
supplied to Buyer in the development, manufacture, promotion,
importation, marketing, distribution and sale of Approved Products
are set forth in Exhibit F;

(d) Seller has not received any notice regarding the NR
Product, including written notice, alleging any infringement by
Seller of any intellectual property rights of a third
party;

(e)
To the best of Seller’s knowledge after due diligence and
reasonable investigation, neither Seller, its Affiliates or any
person employed thereby directly in the performance of
Seller’s obligations under this Agreement has been debarred
under Section 306(a) or (b) of the Federal Food, Drug and Cosmetic
Act, and no debarred person will in the future by employed by
Seller. If, at any time after execution of this Agreement, Seller
becomes aware that Seller, any of its Affiliates or any person
employed thereby is, or is in the process of being, debarred,
Seller will so notify NHSc immediately.

(f) No NR Product at the time of shipment by Seller will be
adulterated or misbranded within the meaning of the Federal Food,
Drug and Cosmetic Act, as amended from time to time, or regulations
promulgated thereunder, as such law or regulation is constituted
and in effect at the time of any such shipment and no NR Product at
the time of shipment will be considered to be an article that may
not, under the provisions of §§ 404, 505 or 512 of the
Federal Food, Drug and Cosmetic Act, be introduced into interstate
commerce.

(g) All NR
Product at the time furnished to Buyer and for the full period of
the expected shelf life of such products will be in full compliance
with the Specifications, the quality standards set forth in
Exhibit G
– Quality Standards (the
“Quality
Standards”)
(Exhibit G
is hereby incorporated herein in full
by this reference), applicable Law and other requirements of this
Agreement as long as Buyer’s errors, acts, omissions, or
other conduct do not cause directly or indirectly the NR Product to
become out of compliance with the Specifications, fail to meet the
Quality Standards or violate applicable law and other requirements
of this Agreement.

(h) Seller’s manufacturing, laboratory, and packaging
facilities are and will at all times remain in material compliance
with Good Manufacturing Practices, including but not limited to
those set forth in 21 C.F.R. § 110 et seq., to the extent
applicable to the manufacture and packaging of the NR Product, and
all NR Product furnished to Buyer will be manufactured in
accordance with Good Manufacturing Practices.

(i) All NR Product at the time furnished to Buyer will not
have been damaged during storage and handling and will otherwise be
wholesome, fit for human consumption, and in first-class
merchantable condition.

(j) Seller has and will maintain during the Term the
necessary expertise, equipment, personnel, facilities, equipment
and inventory of raw materials and finished product to supply the
NR Products as agreed upon in all Purchase Orders accepted by
Seller (unless Seller is unable to due to a Force Majeure
Event).

(k)
Except as otherwise advised by Seller in writing to Buyer on or
prior to the Effective Date, there is no demand, claim, suit,
action, arbitration, and/or other proceeding, whether pending or
threatened (and for which any basis exists), that jeopardizes (or
could jeopardize) Seller’s ability to enter into this
Agreement or perform any of its obligations hereunder.

(l)
It will at all times during the Term comply with all applicable
laws, rules, orders, guidelines and regulations, including the ones
regarding the following matters: anticorruption, immigration,
antidiscrimination, tax, environment, data protection, food safety
and quality, and export control, import, customs and economic
sanctions.

(m)
Have a quality management system in accordance with
Nestlé’s reasonable requirements of which Seller is
advised of and agrees to in advance in writing.

 

16.2

LIMITED WARRANTY AND DISCLAIMER OF ALL OTHER
WARRANTIES.

 

(i)

SELLER
WARRANTS THAT THE NR PRODUCT SOLD HEREUNDER, AS DELIVERED TO BUYER,
CONFORMS, TO ITS SPECIFICATIONS; (a) EXCEPT FOR THE SPECIFIC
WARRANTIES CONTAINED IN THIS PARAGRAPH AND ELSEWHERE IN THE
AGREEMENT, SELLER HEREBY EXPRESSLY DISCLAIMS ANY AND ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED OR STATUTORY, WITH RESPECT TO THE NR
PRODUCT OR OTHERWISE UNDER THIS AGREEMENT, INCLUDING BUT
NOT

 

 
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LIMITED
TO, THE WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE. SELLER HAS NOT MADE ANY RECOMMENDATION TO BUYER REGARDING
THE USE OR SUBSEQUENT SALE OF THE NR PRODUCT. EXCEPT FOR ANY
LIABILITIES RELATING TO NEGLIGENCE, RECKLESSNESS, WILLFUL
MISCONDUCT, OR BREACH OF THIS AGREEMENT BY SELLER (OR ITS
AFFILIATES OR CONTRACTORS) BUYER ASSUMES ALL OTHER RISKS AND
LIABILITIES FOR ANY LOSS, DAMAGE OR INJURY TO PERSONS OR PROPERTY
RESULTING FROM THE USE OR SUBSEQUENT SALE OF THE NR PRODUCT, EITHER
ALONE OR IN COMBINATION WITH OTHER INGREDIENTS; AND (b) BUYER
WARRANTS TO SELLER THAT BUYER HAS SATISFIED ITSELF THAT THE NR
PRODUCT AND THE PURPOSE FOR WHICH IT WILL BE USED AND/OR SOLD IS IN
COMPLIANCE WITH THE APPLICABLE LAWS AND REGULATORY REQUIREMENTS OF
THE RELEVANT COUNTRIES.

 

(ii)

ALL
CLAIMS MADE WITH RESPECT TO THE NR PRODUCT SHALL BE DEEMED WAIVED
BY BUYER UNLESS MADE IN WRITING.

 

16.3

Buyer’s
Representations and Warranties.
Buyer expressly warrants that it has all necessary legal capacity,
right, power, and authority to enter into, execute, deliver, and be
bound by this Agreement and that the execution and delivery of this
Agreement and the performance by Buyer of Buyer’s obligations
under this Agreement, do not breach, and shall not result in a
breach or violation of, any agreement to which Buyer is a party or
by which Buyer is bound. Except as otherwise advised by Buyer in
writing to ChromaDex on or prior to the Effective Date, there is no
demand, claim, suit, action, arbitration, and/or other proceeding,
whether pending or threatened (and for which any basis exists),
that jeopardizes (or could jeopardize) Buyer’s ability to
enter into this Agreement or perform any of its obligations
hereunder. Buyer further represents and warrants that Buyer and its
Affiliates, shall assume full responsibility for all acts, errors,
omissions, misrepresentations, and negligence by Buyer arising out
of or relating to: (i) any and all uses of the rights granted
herein, (subject to any ChromaDex liability specifically set forth
in this Agreement or subject to Seller’s breach of this
Agreement, gross negligence or willful misconduct); and (ii) the
development, manufacture, distribution, sale and advertisement of
the Approved Products. Without in any way limiting the foregoing,
Buyer represents and warrants that: (i) Buyer will obtain all
regulatory compliance required by its actions under this Agreement;
(ii) Buyer will conduct all actions under this Agreement in
compliance with all applicable laws, rules, statutes, and
regulations; and (iii) Buyer will ensure that none of the Approved
Products violate any intellectual property or any other right of a
third party.

 

17.

LIMITATION OF LIABILITY.

 

EXCEPT
FOR LIABILITY RESULTING FROM A PARTY’S INDEMNIFICATION OR
CONFIDENTIALITY OBLIGATIONS OR MISAPPROPRIATION OF THE OTHER
PARTY’S TRADE SECRETS AS SET FORTH

IN
SECTIONS 13 AND 26 OR INFRINGEMENT OF A PARTY’S INTELLECTUAL
PROPERTY, IN

NO
EVENT WILL EITHER PARTY BE LIABLE FOR ANY LOST REVENUE OR LOST
PROFITS OR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR
CONSEQUENTIAL DAMAGES ARISING UNDER

THIS
AGREEMENT OR OTHERWISE INCLUDING, WITHOUT LIMITATION, ANY BUSINESS
INTERRUPTION OR DAMAGE TO BUSINESS REPUTATION, REGARDLESS OF THE
THEORY UPON

WHICH
ANY CLAIM MAY BE BASED, INCLUDING ANY TORT OR STATUTORY CAUSES OF
ACTION. EXCEPT FOR LIABILITY RESULTING FROM INDEMNIFICATION OR
CONFIDENTIALITY OBLIGATIONS OR WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE, IN NO EVENT, SHALL SELLER’S AGGREGATE LIABILITY
UNDER THIS AGREEMENT EXCEED THE AMOUNT OF TWO (2) TIMES THE SALES
FEES PAYABLE TO SELLER BY BUYER HEREUNDER IN THE TWELVE
(12)

MONTH
PERIOD IMMEDIATELY PRECEDING THE EVENT GIVING RISE TO
SELLER’S LIABILITY.

THE
FOREGOING LIMITATIONS OF LIABILITY SHALL BE ENFORCED TO THE MAXIMUM
EXTENT PERMITTED UNDER APPLICABLE LAW. BOTH PARTIES UNDERSTAND AND
AGREE THAT THIS LIMITATION OF LIABILITY ALLOCATES RISK OF
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PARTIES
AS AUTHORIZED BY THE UNIFORM COMMERCIAL CODE AND OTHER APPLICABLE
LAW. THE PRICES SET FORTH HEREIN REFLECT THIS ALLOCATION OF RISK
AND THE LIMITATIONS OF LIABILITY, INCLUDING THE EXCLUSION OF
SPECIAL, INDIRECT, CONSEQUENTIAL AND INCIDENTAL DAMAGES, IN THIS
AGREEMENT.

 

18.

Intellectual Property Rights.

18.1

Rights Retained by
Seller. Except as otherwise
explicitly set forth in this Agreement, the sale of NR Product
covered by this Agreement shall not confer upon Buyer any license
or right under any patents, copyrights, trade secrets or other
proprietary information owned or controlled by Seller, or the right
to otherwise utilize such proprietary information unless in strict
accordance with all of the terms hereof, it being specifically
understood and agreed that all such rights, including, without
limitation, all intellectual property rights contained therein and
pertaining thereto, are reserved exclusively to Seller. Seller
hereby grants Buyer a fully paid-up, royalty-free, exclusive or
co-exclusive (in accordance with Sections 3.3 and 3.4 of this
Agreement), non-sublicensable (other than to its Affiliates) right
and license to use all current and future intellectual property
rights, clinical and non-clinical data, records, formulations, data
on new therapeutic uses and know-how, in respect of NR Product (the
“NR
Product IP Rights”).

 

(i)

Patent Filing and
Prosecution. From time to time
throughout the Term, the Parties will regularly confer and review
their solely and jointly owned and licensed existing, now pending,
and being developed during the Term intellectual property rights
that claim NR Product, products containing NR Product, or any uses
thereof and together consider strategies that would enhance the
value of those rights in the context of NR Product, products
containing NR Product, or uses thereof.

 

(ii)

Seller’s New
Intellectual Property Rights.
Any new intellectual property rights created solely by ChromaDex
during the Term hereof, will as between the Parties be owned solely
and exclusively by ChromaDex. Any such new intellectual property
rights and any new intellectual property rights licensed to
ChromaDex during the Term, to the extent that they are directed to
Medical Nutrition or Functional Food and Beverages products
containing NR Product or uses thereof shall not, however, be used
adversely against Buyer by ChromaDex in contradiction to the terms
and conditions detailed herein.

 

(iii)

Ownership of New
Jointly Created Intellectual Property Rights. Any new intellectual property rights jointly
created by ChromaDex and Buyer during the Term shall be jointly and
equally owned by ChromaDex and Buyer (subject to the clarification
in Section 18.1 (iv) below).

 

(iv)

Buyer’s New
Intellectual Property Rights.
Any new intellectual property rights created during the Term solely
by Buyer shall be owned solely and exclusively by Buyer, including,
for purposes of clarification, any new intellectual property rights
in respect of NR Product in combination with other active
ingredients or uses thereof and improved NR formulations (the
“New
IP”). Buyer agrees that
it will not enforce its intellectual property rights in a legal
proceeding against Seller for New IP pertaining or relating to the
use or inclusion of NR in Functional Food and Beverages or Medical
Nutrition that is necessary by Seller in order for Seller to
achieve Technical Feasibility for a commercial launch of a
Functional Food and Beverage or Medical Nutrition product, subject
to Seller’s compliance with the exclusivity and
co-exclusivity rights granted to Buyer under this
Agreement.

 

(v)

No Right By Buyer to
Challenge ChromaDex’s Intellectual Property
Rights. Buyer hereby
acknowledges and agrees that Buyer will not subvert, diminish, in
any way challenge in any forum, including, but not limited
to, administrative proceedings, or assert any rights in the
ChromaDex Trademarks, ChromaDex Trade Secrets, NR, NR Product,
products containing NR Product, or uses thereof, or any other NR
intellectual property, including ChromaDex owned or licensed
patents or patent applications. If Buyer violates or otherwise
breaches this non-challenge clause, Seller shall have the
right to terminate Buyer’s rights under this
Agreement,

 

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provided however,
in no event shall such termination diminish Seller’s rights
under this Section 18.1.

 

19.

Waiver
and Severability. No claim or right arising out of a breach of this
Agreement can be discharged in whole or in part by a waiver or
renunciation of the claim or right unless the waiver or
renunciation is in writing signed by the aggrieved Party. If any
term, covenant, warranty, remedy or condition of this Agreement, or
the application thereof to any person or circumstance shall, to any
extent, be held or deemed invalid, illegal or unenforceable, such
term, covenant, warranty, remedy, or condition shall be conformed
to a valid, legal, and enforceable provision that best accomplishes
the original intent of the Parties, and the remainder of this
Agreement or the application of such term, covenant or provision,
to persons or circumstances other than those to which it is held
invalid, illegal or unenforceable, shall not be affected thereby,
and each remaining term, covenant or provision of this Agreement
shall be deemed valid, legal and shall be enforced to the fullest
extent permitted by law.

 

20.

Force
Majeure. A Party shall have no
liability or obligation to the other party of any kind, including,
but not limited to, any obligation to deliver NR Product or to make
payment or accept delivery of NR Product, arising from any delay or
failure to perform all or any part of this Agreement as a result of
causes, conduct or occurrences beyond such Party’s reasonable
control, including, but not limited to, fire, flood, earthquake,
lightning, storm, accidents, act of war, terrorism, civil disorder
or disobedience, act of public enemies, , acts or failure to act of
any state, federal or foreign governmental or regulatory
authorities, labor disputes or strikes, (each a “Force
Majeure Event”). During a Force Majeure Event Seller may
allocate its available supply among its customers in a manner
determined by Seller to be fair and reasonable.

 

21.

Indemnification and Insurance.

 

21.1

To the fullest extent permitted by law, Buyer
shall defend, indemnify and hold Seller and its affiliates,
successors, heirs, and assigns and its and their respective
officers, directors, employees, and agents (the
"Seller
Indemnitees"), harmless from
any and all claims, damages, demands, suits, causes of action,
controversy, judgements, liabilities, fines, regulatory actions,
seizures of NR Product, losses, costs and expenses (including, but
not limited to attorneys’ fees, expert witness expenses and
litigation expenses) (hereinafter “Claim”), arising from or in connection with any
Claim asserted by a third party against Seller (i) for any damage,
environmental liability, patent or intellectual property
infringement caused by Buyer’s use, modification or
alteration of the NR Product, or any combination of the NR Product
in connection with Buyer’s product or any third party’s
product, or (ii) any injury, death, loss, property damage, delay or
failure in delivery of Seller’s NR Product or any other Claim
for injuries or damage to the general public who consumed the
Approved Product (unless due solely and exclusively to a Claim
arising from the NR Product), or (iii) any alleged or actual act,
error, omission, or negligence by Buyer or Buyer’s
Affiliates’ agents, employees, or representatives in
connection with the NR Product, Approved Products, or this
Agreement, whether in tort, contract, breach of warranty or
otherwise, relating to this Agreement, the business relationship
between the Parties, Buyer’s development, manufacture,
distribution, promotion, and sale of the Approved Products, or
Buyer’s breach of this Agreement (including breach of
Buyer’s representations and warranties). Notwithstanding the
foregoing, Buyer has no indemnity obligation to Seller to the
extent that any Claims result directly from the negligence or
willful misconduct of Seller or a material breach of this Agreement
by Seller.

 

21.2

To the fullest extent permitted by law, Seller
shall defend, indemnify and hold Buyer and its affiliates,
successors, heirs, and assigns and its and their respective
officers, directors, employees, and agents (the
"Buyer
Indemnitees") harmless from any
and all Claims, arising from or in connection with any Claim
asserted by a third party against Buyer for (i) any patent or other
intellectual property right infringement in connection with the NR
Product (provided that such alleged infringement does not arise
from (A) the combination of the NR Product with other ingredients
or (B) Buyer’s intellectual property, including New IP), or
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actual
act, error, omission, or negligence by Seller or Seller’s
Affiliates’ agents, employees, or representatives in
connection with this Agreement whether in tort, contract, breach of
warranty or otherwise, relating to this Agreement, the business
relationship between the Parties, the NR Product provided
hereunder, or Seller’s breach of this Agreement, or (iii) any
use of the ChromaDex Trademarks. Notwithstanding the foregoing,
Seller has no indemnity obligation to Buyer to the extent that any
Claims result directly from the negligence or willful misconduct of
Buyer or if such claims stem from Buyer’s acts or use which
is not in accordance with the rights and requirements of Buyer
herein.

 

21.3

Indemnification
Procedures.    Each Party agrees to
provide the other Party with prompt written notice of any claim,
suit, action, demand, or judgment for which indemnification is
sought under this Agreement. The indemnifying Party agrees, at its
own expense, to provide attorneys reasonably acceptable to the
indemnified Party to defend against any such claim. The indemnified
Party shall cooperate fully with the indemnifying Party in such
defense and will permit the indemnifying Party to conduct and
control such defense and the disposition of such claim, suit, or
action (including all decisions relative to litigation, appeal, and
settlement); provided, however, that the indemnified Party shall
have the right to retain its own counsel, at the expense of such
indemnifying Party, if representation of such the indemnified Party
by the counsel retained by the indemnifying Party would be
inappropriate because of actual or potential differences in the
interests of such indemnified Party and any other party represented
by such counsel. The indemnifying Party agrees to keep the
indemnified Party informed of the progress in the defense and
disposition of such claim and to consult with the indemnified Party
with regard to any proposed settlement.

 

21.4

Insurance.
The Parties agree, for the Term of this Agreement, to maintain a
program of insurance or self-insurance at levels sufficient to
satisfy its obligations as set forth in this Agreement, which shall
include commercial general liability insurance with limits
of at least $[...***...] per occurrence
and product liability insurance
with an aggregate limit of at
least $[...***...], and that such insurance coverage lists
the other party hereto as additional insureds. Each party shall
continue to maintain such insurance or self-insurance after the
expiration or termination of this Agreement during any period in
which Buyer or any Affiliate continues (i) to make, use, or
sell an Approved Product under the terms of this Agreement and
thereafter for a period of [...***...].

 

22.

Relationship
of the Parties. The relationship between Seller and Buyer shall be
solely that of independent contractors and neither Party, its
agents and employees, shall under no circumstances be deemed the
employees, partners, joint venturers, franchisees, agents or
representatives of the other Party. Neither Party shall represent
itself as the agent or legal representative of the other Party for
any purpose whatsoever or hold itself out contrary to the terms of
this Section, and neither Party shall have the right to create or
assume any obligation of any kind, express or implied, for or on
behalf of the other Party in any way
whatsoever.

 

23.

Assignment
and Modification. The rights and obligations of Buyer under this
Agreement shall not be assignable or
delegable without the prior written consent of Seller except in the
event of assignment to an
Affiliate of Buyer (which does not require consent of the Seller,
but does require reasonable advance written notification). Any
attempted assignment or delegation in violation of the foregoing
shall be void. Seller may assign this Agreement, or delegate its
duties hereunder, in whole or in part, without
the written consent of the Buyer (but with advance written
notification) (a “Transfer”) to an Affiliate
(other than in connection with a Change of Control). In addition,
Seller may also Transfer this
Agreement to an Affiliate or a third party in connection with a
Change of Control (a “Transfer
Event”), subject to the requirements set forth herein. If
Seller is contemplating entering into a Transfer Event with a company that sells
products to consumers directly
competitive with the Approved Products
in the then existing exclusive and co-exclusive Territories or any
other then existing NHSc brands (a “Restricted
Transferee”), Seller shall notify Buyer in advance in writing
and Buyer shall have a [...***...] right of first
negotiation from the date of such notification to negotiate in good
faith terms by which Seller would complete a Transfer Event with
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such
[...***...] of good faith negotiations, no agreement is
reached, Seller shall be entitled to Transfer this Agreement to a
Restricted Transferee upon at least [...***...] written
notice thereof to Buyer; provided that in such event Buyer shall
have the right in its sole discretion to terminate this Agreement
without penalty or liability. All
other assignments or delegations by Seller require the advance
written consent of Buyer, such consent not to be unreasonably
withheld, conditioned, or delayed. This Agreement shall not be
modified, altered or amended in any respect except by a writing
signed by the Parties. Any variation, modification or addition to
the terms set forth in this Agreement shall be considered a
material modification and shall not be considered part of this
Agreement unless it is amended in accordance with the
foregoing.

 

24.

Governing
Law; Venue; Attorneys’ Fees. This Agreement and all claims and causes of action
shall be governed by and subject to the internal laws (exclusive of
the conflicts of law provisions) and decisions of the courts of the
State of Delaware. The sole and exclusive venue for all claims and
causes of action between the Parties shall be the state or federal
court located in the State of Delaware, provided that either Party
may, at any time, seek injunctive or other equitable relief from
any court of competent jurisdiction. The prevailing Party in any
legal action shall be entitled to recover its reasonable
attorneys’ fees, in addition to any other remedies available
to such Party at law or in equity.

 

25.

Foreign
Corrupt Practices Act. Each of the Parties (including its officers,
directors, employees and agents) shall not pay, offer, promise or
authorize the payment, directly or indirectly, of any monies or
anything of value to any official or employee of any foreign
government, including, without limitation, any government-owned or
controlled entity, or of a public international organization, or
any political party, party official, or candidate for political
office, for the purpose of improperly inducing or rewarding
favorable treatment or advantage in connection with this
Agreement.

 

26.

Confidentiality
and Publicity. This Confidentiality and Publicity provision shall
supersede in its entirety the Mutual Non-Disclosure Agreement
between the Parties dated April 7, 2017. The Parties will be making
certain general business information and know-how that is not
generally known by the public available to the other Party, or a
Party may have access to Confidential Information of the other
Party orally and/or in writing. “Confidential
Information” shall
include, without limitation, any intellectual property, trade
secrets, technical information, training materials, control
documents, workflows and relevant documentation, materials, data,
any other secret, sensitive or confidential material related to the
business generally, business technology, business strategies,
accounting, financial information, contracts, agreements, files,
records, documents, techniques, expertise, marketing concepts,
diagrams or concepts relating to product plans or designs,
products, product specifications, systems, software code, formulae,
practices, processes, customers, projects or information of any
type whatsoever, in whatever form or media, whether or not marked
as “confidential” or “proprietary,” of a
Party that is disclosed to or becomes known by the other Party,
including all the records of the disclosing Party created,
accessed, viewed, learned or obtained by the receiving Party
pursuant to this Agreement and the transactions contemplated hereby
and which is not generally known to the public or throughout the
trade, or which could reasonably be expected to be valuable to the
disclosing Party or its Affiliates or a competitor of any of the
disclosing Party or its Affiliates. Confidential Information shall
also include the terms of this Agreement. For purposes of
clarification only and in no way intending to limit or otherwise
revise the obligations in this Section, these obligations apply to
Confidential Information disclosed to the other Party pursuant to
this Agreement and the transactions contemplated hereby prior to
the Effective Date. The Parties agree to refrain at all times from
disclosing the other Party’s Confidential Information to
others or from using any such Confidential Information except for
the benefit of the disclosing Party. The Parties further agree to
refrain from any other acts that could tend to destroy the value of
the Confidential Information to the disclosing
Party.

 

Without
in any way intending to limit the forgoing the Parties
shall:

(a)

not
access or use Confidential Information other than as necessary to
exercise its rights or perform its obligations under and in
accordance with this Agreement;

(b)

not
disclose or permit access to Confidential Information;

 

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(c)

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

(d)

promptly
notify the other Party in writing of any unauthorized use or
disclosure of Confidential Information and use its best efforts and
cooperate with such disclosing Party to prevent further
unauthorized use or disclosure; and

(e)

ensure
its representatives’ compliance with, and be responsible and
liable for any of its representatives’ non-compliance with,
the terms of this Section.

 

Neither
NHSc nor ChromaDex will, without the prior written consent of the
other Party, issue any statement or communication to the public, to
the press or any third party regarding the transactions detailed
herein, or otherwise disclose to any third party the existence of
this Agreement or any other communication between the parties with
respect to the transactions detailed herein.

 

This
Section shall survive expiration or termination of this
Agreement.

 

27.

Dispute Resolution.

27.1

Mandatory
Procedures.    The Parties agree that
any dispute arising out of or relating to this Agreement shall be
resolved solely by means of the procedures set forth in this
Section, and that such procedures constitute legally binding
obligations that are an essential provision of this Agreement. If
either Party fails to observe the procedures of this Section, as
may be modified by their prior written agreement, the other Party
may bring an action for specific performance of these procedures in
any court of competent jurisdiction.

27.2

Equitable
Remedies.    Although the procedures
specified in this Section are the sole and exclusive procedures for
the resolution of disputes arising out of or relating to this
Agreement, either Party may seek a preliminary injunction or other
provisional equitable relief pursuant to Section 30 if, in its
reasonable judgment, such action is necessary to avoid irreparable
harm to itself or to preserve its rights under this
Agreement.

27.3

Dispute Resolution
Procedures.    

27.3.1

Exclusive
Procedures. Any controversy,
claim, or dispute arising out of or relating to this Agreement
including, without limitation, the interpretation, performance,
formation, validity, breach (including, without limitation, alleged
violations of state or federal statutory or common law rights or
duties) or enforcement of this Agreement, and further including any
such controversy, claim, or dispute against or involving any
officer, director, agent, employee, affiliate, successor,
predecessor or assign of a party to this Agreement (collectively, a
“Dispute”)
shall be resolved according to the procedures set forth in this
Section which shall constitute the sole and exclusive Dispute
resolution mechanism to resolve all Disputes and no other procedure
may be used with the sole exception that a party need not comply
with the terms herein before filing a claim for equitable relief.
Each Party's promise to resolve all Disputes as set forth herein is
given in consideration for the other Party's like
promise.

27.3.2

Confidentiality.
Without limiting the confidentiality
obligations referred to elsewhere in this Agreement, the details
and/or existence of any Dispute, any informal meetings, and any
proceedings conducted hereunder, including without limitation any
discovery taken in connection therewith, shall be kept strictly
confidential and shall not be disclosed or discussed with any third
party (excluding a party's attorneys, accountants, and other agents
and representatives, as reasonably required in connection with any
Dispute resolution procedure hereunder and provided that they sign
a confidentiality agreement at least as restrictive as this Section
if they are not attorneys), except as otherwise required by laws or
rule of any securities exchange on which such party's securities
are traded. All offers, promises, conduct, and statements, whether
oral or written, made in the course of the resolution of any
Dispute by the parties, their agents, employees, experts, and
attorneys, shall be confidential, privileged, and inadmissible for
any purpose, including impeachment, in any litigation, arbitration,
or other proceeding, except that evidence that is otherwise
admissible or discoverable shall not be rendered inadmissible or
non-discoverable as a result of its use by either
Party.

 

 

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27.3.3

Good Faith.
With regard to any Disputes between
ChromaDex and Buyer, the Parties agree to work together in good
faith to resolve all disputes promptly.

27.3.4

Informal Dispute
Resolution. Either Party may
demand, in writing, that each Party’s management
representatives meet within [...***...] at such place as
ChromaDex may reasonably designate to resolve the Dispute. No third
party shall have authority to consider or resolve any Dispute that
is not first the subject of informal Dispute resolution pursuant to
this Section. The Parties or their representatives with full
authority to settle the Disputes at issue shall attend all
meetings.

27.3.5

Mediation.
If the Parties do not resolve the Dispute within
[...***...] of the date of the first meeting between
management representatives (the “Informal Dispute
Resolution Deadline”),
ChromaDex and NHSc agree to mediate the Dispute within
[...***...] of the Informal Dispute Resolution Deadline and
at such place in the State of Delaware as ChromaDex may designate
with a mutually agreed upon mediator. If the Parties cannot agree
upon the selection of a mediator, the mediator will be chosen from
the list of certified mediators maintained by a court having
jurisdiction over this Agreement within [...***...] of
receiving such list. The Parties agree to continue to work in good
faith to resolve the Dispute prior to the date upon which the
mediation is scheduled to take place. If the Parties agree on a
resolution for the Dispute prior to the scheduled mediation date,
the mediation shall be cancelled. The Parties agree to share the
cost of any independent mediator engaged to assist the Parties in
resolving their differences. The mediator shall be a person
familiar with complex business transactions and litigation in the
nutraceutical industry, unless the Parties agree otherwise in
writing. If either Party fails to mediate the Dispute within
[...***...] of the Informal Dispute Resolution Deadline,
such Party shall be deemed to have waived its right to demand
mediation and the other Party may, in its sole discretion, proceed
directly to arbitration.

27.3.6

Arbitration.
In the event the Dispute is not
resolved through mediation, then the Dispute shall be fully and
finally adjudicated by binding arbitration to the fullest extent
allowed by law, but only if the arbitration is properly commenced
within the time allowed for similar legal action to be commenced in
accordance with the applicable statute of limitations; otherwise,
the Dispute is waived. Except as provided herein or by agreement of
all parties, the arbitration shall be administered by JAMS or its
successors (“JAMS”) and shall be conducted according to
the JAMS Comprehensive Arbitration Rules and Procedures in effect
at the time the arbitration is initiated or, if JAMS is no longer
in existence, then the arbitration shall be administered by the
American Arbitration Association or its successor (the
“AAA”) and conducted in accordance with the AAA
Commercial Arbitration Rules in effect at that time (the
“Rules”). The arbitration shall be conducted as
expeditiously and economically as reasonably
practicable.

27.3.7

The
arbitration shall be conducted by one arbitrator (the
“Arbitrator”). Unless all parties to the arbitration
agree, the Arbitrator shall be a lawyer admitted to practice in at
least one (1) State of the United States and need not be on the
roster of JAMS or the AAA. The Arbitrator shall be selected as
follows: If all parties to the Dispute do not agree upon the
Arbitrator within [...***...] after commencement of the
arbitration, then any party may initiate the following selection
process by written notice to each other party. Within
[...***...] after such written notice, each side to the
Dispute shall simultaneously transmit to each other side a list of
four (4) persons qualified to serve as the Arbitrator (the
“Candidates”). No party shall nominate a Candidate whom
that party knows or reasonably believes to have a conflict of
interest rendering the Candidate unable to serve as the Arbitrator.
If any single Candidate appears on the list of each side then that
person shall be appointed as the Arbitrator. If more than one
Candidate appears on the list of each side, then one of those
Candidates shall be selected randomly and that person shall be
appointed as the Arbitrator. If no Candidate appears on the list of
each side then, within [...***...] after the initial
exchange of lists, each side may strike one Candidate from the list
of each other side and rank all remaining Candidates in order of
preference (with “1” being the most preferable
Candidate), and the ranked lists shall be simultaneously exchanged.
The Candidate with the lowest total number of points shall be
appointed as the Arbitrator. In the event of a tie, one of the
Candidates with the

 

 

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 lowest
total number of points shall be selected randomly and that person
shall be appointed as the Arbitrator. If the person selected as the
Arbitrator declines to serve or becomes unwilling or unable to
serve after selection or appointment, or the administrator declines
to appoint that person as the Arbitrator, then the Candidate with
the next lowest total of points shall be appointed as the
Arbitrator. If any party to the arbitration fails to timely
participate in the foregoing selection process then the
administrator shall select and appoint the Arbitrator pursuant to
the Rules, except that each recalcitrant party shall be excluded
from that selection process.

27.3.8

The
Arbitrator shall entertain any demurrer, motion to strike, motion
for judgment on the pleadings, motion for complete or partial
summary judgment, motion for summary adjudication, or any other
dispositive motion consistent with Delaware or United States
federal rules of procedure, as applicable

27.3.9

 The
exchange of information in the arbitration shall be governed by the
Rules except as follows: (a) no side shall take the deposition of
more than [...***...] individuals (including the use of
corporate, “persons most knowledgeable,” F.R.C.P.
30(b)(6), or similar deposition notices or devices) unless, upon a
showing of extraordinary cause, the Arbitrator permits that side to
take a limited number of additional depositions; (b) each side
shall be entitled to the limited discovery of documents (including
electronically stored information) which are directly relevant and
material to the Dispute and are produced in response to a request
that is narrowly tailored to minimize both the burden and expense
of the responding person and the disclosure of confidential,
sensitive or financial information; (c) no party shall propound
interrogatories or requests for admission unless permitted by the
Arbitrator upon a showing of extraordinary cause; and (d) upon the
request of any party, the Arbitrator shall weigh the anticipated
burden or expense of any requested discovery against its likely
benefit, and shall impose any reasonable conditions on that
discovery, including, without limitation, allocation of the expense
of the discovery to the party seeking it.

27.3.10

The
Arbitrator shall issue a written award supported by a statement of
decision setting forth the Arbitrator’s complete
determination of the Dispute and the factual findings and legal
conclusions relevant to it (the “Award”). The Award
shall be final and binding on the Parties and, if the Award is not
fully satisfied within [...***...] after its issuance, then
judgment upon the Award may be entered by any court having
jurisdiction thereof or having jurisdiction over the relevant Party
or its assets. Each Party to this Agreement irrevocably submits to
the personal jurisdiction and venue of a state or federal court of
competent jurisdiction in Delaware for any purpose permitted
herein.

27.3.11

The
administrative costs of the arbitration, including fees of the
Arbitrator, initially shall be split equally between the sides;
provided, however, that the Arbitrator may, in his or her
discretion, allocate such costs in favor of any prevailing
party.

27.3.12

If
all or any portion of a Dispute is held to be non-arbitrable then
that Dispute (or portion thereof) shall be adjudicated by a single
referee appointed by a state or federal court of competent
jurisdiction in Delaware.

27.3.13

Notwithstanding
any other provision of this Agreement including, without
limitation, any other provision of this Section 27, the Parties may
bring suit in any court of competent jurisdiction to enjoin any
actual or threatened infringement of any intellectual property
rights or any actual or threatened violation of any confidentiality
or non-compete, non-solicitation, non-circumvention provisions of
this Agreement.

27.4

Performance to
Continue.    Each Party shall continue
to perform its undisputed obligations under this Agreement pending
final resolution of any dispute arising out of or relating to this
Agreement; provided, however, that a Party may suspend performance
of its undisputed obligations during any period in which the other
Party fails or refuses to perform its undisputed obligations.
Nothing in this Section is intended to relieve Buyer from its
obligation to make undisputed payments pursuant to the requirements
of this Agreement.

27.5

Statute of
Limitations.    The Parties agree that
all applicable statutes of limitation and time-based defenses (such
as estoppel and laches) shall be tolled while the procedures set
forth in Sections are pending. The Parties shall cooperate in
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achieve this result.

 

28.

Non-Solicitation,
Non-Competition, and Non-Circumvention.

 

28.1 Upon a Triggering Event (defined below),
during the Term and for a period of [...***...] after the
Triggering Event, neither Buyer nor any of Buyer’s
subsidiaries, Affiliates, principals, agents, representatives, or
employees (the “Buyer
Parties”) shall without
the prior express written consent of ChromaDex directly or
indirectly develop, manufacture, market, promote, sell or
distribute Functional Food and Beverages or Medical Nutrition
product using any NR, or NR Product. For purposes of this
Agreement, a “Triggering
Event” shall have
occurred if (a) Seller terminates this Agreement for any reason
permitted under this Agreement; (b) Buyer terminates this Agreement
pursuant to Section 15.3.1 or 15.3.2; or (c) Seller terminates any
of Buyer’s rights pursuant to the NA FF&B Termination, NA
MN Termination, Annual Minimum Royalty Termination, or a
Sub-Territory Termination, provided however in such event,
Buyer’s obligations contained in this paragraph shall only
apply to the terminated Sub-Territory or Approved Product
Category.

 

28.2
During the Term and for a period of [...***...] after the
termination of this Agreement, neither Buyer nor any of the Buyer
Parties shall, without the prior express written consent of the
ChromaDex, directly or indirectly:

 

(a)                  

Solicit
or induce or attempt to solicit or induce any vendor, employee,
sales representative, agent, or consultant of ChromaDex to
terminate or adversely alter their relationship, engagement,
employment, representation, or other association with ChromaDex;
or

(b)                  

Contract
with, or otherwise become involved in any transaction with
ChromaDex’s manufacturers, without ChromaDex’s explicit
advance written permission (unless Buyer has a pre-existing
relationship with such manufacturer prior to the Effective Date or
wishes to enter into a relationship with such manufacturer for
other products unrelated to the Approved Products, in which case
the restrictions set forth herein shall not be
applicable).

These
obligations in this Section are in no way intended to revise or
otherwise limit the other restrictions and obligations of Buyer
herein, including, but not limited to, those regarding
termination.

 

28.3                  

During
the Term and for a period of [...***...] after the
termination of this Agreement, ChromaDex shall not, without the
prior express written consent of the Buyer, directly or indirectly
solicit or induce or attempt to solicit (other than general
solicitations for hire) or induce any vendor, employee, sales
representative, agent, or consultant of Buyer to terminate or
adversely alter their relationship, engagement, employment,
representation, or other association with Buyer.

 

29.

Notices.
Any demand upon or notice to a Party
hereunder shall be effective when delivered by hand or when
properly deposited in the mails postage prepaid, or sent by
electronic facsimile or electronic mail transmission with receipt
acknowledged, or delivered to an overnight courier, in each case
addressed to the Party at the address shown below or such other
address as the Parties may advise in advance in
writing.

	

 

If to Seller:

ChromaDex,
Inc.

10005
Muirlands Blvd., Suite G

Irvine,
CA 92618

Attention: Legal
Department

Fax:
949-419-0294

 

With
a Copy to:

ChromaDex
Corporation

10900
Wilshire Blvd.,

Suite
650

Los
Angeles, CA 90024

Fax:
949-600-8923

	
 

 

 

 
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Attn:
General Counsel

 

With
Another Copy to:

Nolan
Heimann

16133
Ventura Blvd.,

Suite
820

Encino,
California 91436

Fax:
818-574-5689

Attn:
ChromaDex

 

If to Buyer:

Avenue
Nestle 55

1800
Vevey

Switzerland

Email:
[...***...]

Attn:
General Counsel, Nestlé Health Science

 

	
 

30.

Injunctive
Relief. In addition to all
other remedies that ChromaDex may have hereunder, including,
without limitation, a claim of money damages, Buyer acknowledges
that (a) its failure (except as otherwise provided herein) to cease
the manufacture, sale, distribution, advertising, or promotion of
the Approved Products covered by this Agreement or any class or
category thereof at the termination or expiration of this
Agreement; (b) its threatened or actual unauthorized use of the
rights granted hereunder, whether in whole or in part; (c) its
threatened or actual breach of the confidentiality provisions in
the ChromaDex and NHSc NDA referred to herein; or (d) its
threatened or actual breach of any other material term of this
Agreement may result in immediate and irreparable damage to
ChromaDex and to the rights of any subsequent licensee. Buyer
acknowledges and admits that there is no adequate remedy at law for
such failures listed in this Section and that in the event of such
threatened or actual failure, ChromaDex shall be entitled to
equitable relief by way of temporary and permanent injunctions and
such other and further relief as any court of competent
jurisdiction may deem just and proper.

 

In
addition to all other remedies that Buyer may have hereunder,
including, without limitation, a claim of money damages, Seller
acknowledges that; (a) its threatened or actual breach of the
confidentiality provisions contained in Section 26 herein; or (b)
its violation of Buyer’s exclusivity or Buyer’s
Co-Exclusivity (as set forth in Sections 3.3 and 3.4, respectively)
still in effect, may result in immediate and irreparable damage to
Buyer. Seller acknowledges and admits that there is no adequate
remedy at law for the violations set forth in the preceding
sentence and that in the event of such violation, Buyer shall be
entitled to seek equitable relief by way of temporary and permanent
injunctions and such other and further relief as any court of
competent jurisdiction may deem just and proper.

 

31.

Binding
Effect.    This Agreement shall be
binding upon and inure to the benefit of the Parties and their
respective permitted successors and assigns.

 

32.

Section
and Other Headings; Number; Construction of
Language. The section and other
headings contained in this Agreement are for reference purposes
only and shall not affect in any way the meaning or interpretation
of this Agreement. Words used in this Agreement in the singular
number shall be held to include the plural, and vice versa, unless
the context requires otherwise. The language in all parts of this
Agreement is intended by the parties to be interpreted simply,
according to its fair meaning, and not strictly for or against
ChromaDex or Buyer regardless of which party drafted this
Agreement. The parties hereby agree and acknowledge that this
Agreement is a document negotiated by the parties, which are
sophisticated entities and fully understand the meaning of the
terms and conditions of this Agreement.

 

33.

Attorney
Representation. In the
negotiation, preparation and execution of this Agreement, each
Party has been represented by, or has been afforded the opportunity
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such
Party’s own choosing prior to the execution of this Agreement
and has been advised that it is in such Party’s best interest
to do so. The Parties have read this Agreement in its entirety and
fully understand its terms and provisions. The Parties have
executed this Agreement freely, voluntarily and without any
coercion whatsoever, they accept all terms, conditions and
provisions hereof. The Parties further agree that any rule or
construction to the effect that ambiguities are to be resolved
against the drafting Party shall not apply in the interpretation of
this Agreement or any amendments.

 

34.

Entire
Agreement. This Agreement and
any documents referred to herein and any exhibits attached hereto
contain and constitute the complete agreement between the Parties
with respect to the subject matter hereof. All previous or
contemporaneous agreements, representations, warranties, promises
and conditions relating to the subject matter of this Agreement are
superseded by this Agreement.

 

35.

Expenses.
Except as otherwise expressly provided in this Agreement, whether
or not the transactions contemplated hereby are consummated, each
Party shall pay its own costs and expenses incurred in connection
with the negotiation, execution and closing of this Agreement and
the transactions contemplated herein.

 

36.

Survival.
All obligations that by their nature should survive the termination
of this Agreement shall so survive.

 

37.

Counterparts.
This Agreement may be executed in counterparts, each of shall
constitute an original, whether actual original or a copy, and all
of which shall constitute one and the same
instrument.

 

 

 

[THE REMAINDER OF THIS PAGE HAS BEEN

LEFT BLANK INTENTIONALLY –

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Buyer's and
Seller's Initials  /s/ CK   /s/
RF 

 

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EXECUTION COPY

 

 

IN WITNESS WHEREOF, the Parties have caused this Supply
Agreement to be executed by their duly authorized
representatives.

 

 

	

Buyer

 

NESTEC Ltd.

 

	

Seller

 

ChromaDex, Inc.

	

 

Signature:
/s/ Claudio
Kuoni          
      

 

 

Name:
Claudio
Kuoni                  
         

 

 

Title
General
Counsel                         
 

 

 

Date:
19 December
2018                      

 

 

	

 

Signature:
/s/ Robert Fried 
        
                                                                   

 

 

Name:
Robert Fried  
                 
   
                                                                  

 

 

Title:
President &
CEO             
     
                                                               

 

 

Date:
December 19, 2018  
            
                                                                    

 

 

 
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RF

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Exhibit A – ChromaDex Brand Usage Guidelines

 

[...***...]

 

 
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RF

 

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***Confidential Treatment Requested

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***Confidential Treatment Requested

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Exhibit B - NHSc Brands

 

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Exhibit C – NR Product Specification

 

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Exhibit D – Prior Existing Obligations

 

 

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Exhibit E – Intentionally Left Blank

 

 

 

 

 

 

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Exhibit F – Applicable Issued Patents and Applicable
Filed Patents for the NR Product

 

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Exhibit
G - Quality Standards 

 

 

 

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-50-Exhibit 10.1

 

AMENDED AND RESTATED PURCHASE AND SALE AGREEMENT

AND JOINT ESCROW INSTRUCTIONS

 

Buyer and Seller described below have previously executed a Purchase and Sale Agreement and Joint Escrow Instructions dated as of January 17, 2019 (the “Original PSA”) with an original Effective Date of January 17, 2019 (the “Original Effective Date”). Buyer and Seller hereby amend and restate the Original PSA in its entirety, as set forth below. The Original PSA as hereby amended and restated shall be referred to as this “Restated Agreement.”

 

Basic Provisions

 

The following Basic Provisions form a part of this Amended and Restated Purchase and Sale Agreement and Joint Escrow Instructions (this “Restated Agreement”).

 

A.            Effective Date of this Restated Agreement:   February 27, 2019

 

B.            Seller: Collectively, the following entities (and, where the context warrants, each a “Seller”):

 

CIM/Oakland 1901 Harrison, LP, a Delaware limited partnership (“1901 Owner”), which owns 1901 Harrison (as defined below)

CIM/Oakland 2353 Webster, LP, a Delaware limited partnership (“2353 Owner”), which owns 2353 Webster (as defined below)

CIM/Oakland Center 21, LP, a Delaware limited partnership (“Center 21 Owner”), which owns 2101 Webster (as defined below)

 

Seller’s Knowledge Party (Section 8.1): Karin Schrader as to 1901 Harrison and Paul Mahoney as to 2101 Webster and 2353 Webster.

 

C.            Buyer:  SOF-XI U.S. MAR Acquisitions, L.L.C., a Delaware limited liability company

 

Buyer’s Knowledge Party (Section 14.2.2): Sam Caven

 

D.            Escrow Holder: First American Title Insurance Company

 

E.            Escrow Number: NCS-925114

 

F.             Title Company: First American Title Insurance Company

 

G.           Land: Collectively, the fee simple parcels of improved land (collectively, the “Land” and each a “Land Parcel”) legally described on Exhibits A-1 through A-3 attached hereto, located in Alameda County, California (the “County”):

 

1901 Harrison Street, Oakland, CA (“1901 Harrison”), legally described on Exhibit A-1

2353 Webster Street, Oakland, CA (“2353 Webster”), legally described on Exhibit A-2

2101 Webster Street , 2150 Franklin Street & 2100 Franklin Street, Oakland, CA  (“2101 Webster”), legally described on Exhibit A-3

 

H.           Purchase Price: Five Hundred Twelve Million Sixteen Thousand Four Hundred Eighty-Three and 22/100ths Dollars ($512,016,483.22). The Purchase Price shall be allocated among the Properties as set forth on Schedule H attached hereto (the “Allocation Schedule”).

 

I.                Deposit:                                                  Initial Deposit: $4,000,000

 

Portion of Initial Deposit constituting Independent Consideration:  $100

 

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Additional Deposit: $20,000,000

 

J.              Investigation Period Expiration Date: January 17, 2019.

 

K.           Closing Date:  March 1, 2019, subject to any extensions of such date as are specifically provided in this Restated Agreement.

 

L.            Seller’s Broker: HFF (Michael Leggett)

 

M.         Pages to Initial: 22, 23, 34, and 39

 

	
N.            Seller’s Notice Address:
    	
 
    	
c/o 4700 Wilshire Blvd.
    
	
 
    	
 
    	
Los   Angeles, CA 90010
    
	
 
    	
 
    	
E-Mail:   kschrader@cimgroup.com
    
	
 
    	
 
    	
Telephone Number:    323 860 4900
    
	
 
    	
 
    	
Facsimile transmission number:
    
	
 
    	
 
    	
 
    
	
With a copy to:
    	
 
    	
c/o 4700 Wilshire Blvd.
    
	
 
    	
 
    	
Los Angeles, CA 90010
    
	
 
    	
 
    	
E-Mail: generalcounsel@cimgroup.com
    
	
 
    	
 
    	
Telephone Number:    323 860 9542
    
	
 
    	
 
    	
Facsimile transmission number:  323 297 2586
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
Fragner Seifert Pace & Winograd, LLP
    
	
 
    	
 
    	
601 S. Figueroa Street, Suite 2320
    
	
 
    	
 
    	
Los Angeles, CA 90017
    
	
 
    	
 
    	
Attn:  Matthew   C. Fragner, Esq.
    
	
 
    	
 
    	
E- Mail: mfragner@fspwlaw.com
    
	
 
    	
 
    	
Telephone number: (310) 779-7284
    
	
 
    	
 
    	
Facsimile transmission number:  (310) 496-2887
    
	
 
    	
 
    	
 
    
	
O.           Buyer’s Notice Address:
    	
 
    	
Mayer Brown LLP
    
	
 
    	
 
    	
1999 K Street NW
    
	
 
    	
 
    	
Washington, DC 20006
    
	
 
    	
 
    	
Attn:  Nathan   McMichael
    
	
 
    	
 
    	
E-mail:  nmcmichael@mayerbrown.com
    
	
 
    	
 
    	
Telephone number:    (202) 263-3376
    

 

P.             Escrow Holder Notice Address:  First American Title Insurance Company

 666 Third Avenue, 5th Floor

 New York, New York 10017

 Attn: Brett Habermann

 Email: bhabermann@firstam.com

 

Q.           Local Time: Standard time in the County.

 

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This Restated Agreement is entered into as of the Effective Date by and between Seller and Buyer and constitutes an agreement to purchase and sell real property, and escrow instructions directed to Escrow Holder to establish an escrow (the “Escrow”) to accommodate the transactions contemplated by this Restated Agreement.

 

RECITALS

 

A.                                    Each Seller is the owner of its respective Land Parcel, as indicated in Basic Provision “B” above, together with certain personal property located upon or used in connection with such improved Land and certain other assets relating thereto, all as more particularly described in Section 1 below. The Seller are all affiliated and under common control with each other.

 

B.                                    Buyer desires to purchase from Sellers, and Sellers desire to sell to Buyer, the Properties (as defined below), subject to the terms and conditions set forth herein. Now therefore, Buyer and Sellers have agreed as follows:

 

TERMS AND CONDITIONS

 

1.                                      The Property.

 

Each Seller shall sell to Buyer, and Buyer shall purchase from such Seller, on all of the terms and conditions set forth in this Restated Agreement, all of Seller’s right, title and interest in and to the Property, which Property as used herein shall mean the following (each, a “Property” and, collectively, with respect to all Sellers, the “Properties”):

 

1.1                         Land. The Land Parcel indicated in Basic Provision “B” above as being owned by such Seller;

 

1.2                         Appurtenances. All rights, privileges and easements appurtenant to such Land Parcel, including, without limitation, all minerals, oil, gas and other hydrocarbon substances on and under such Land Parcel, as well as all development rights and air rights relating to the Land, and all water, water rights and water stock relating to such Land Parcel, and any and all easements, rights-of-way or appurtenances used in connection with the beneficial use and enjoyment of such Land Parcel and, solely with respect to 2353 Webster, an undivided interest in the Common Area and the Restricted Common Area (as each is defined in the 2353 Declaration (as defined below)), any exclusive or nonexclusive easement or easements appurtenant to 2353 Webster over such Common Area or over Unit 1 (as defined in the 2353 Declaration) and all rights of the Declarant (as defined in the 2353 Declaration), in each case, as described in that certain Declaration of Covenants, Conditions and Restrictions Oakland YMCA/2353 Webster Street Condominium Oakland, California recorded May 1, 1985, as Instrument Number 85-084703 of the Official Records of Alameda County, California (including all amendments, letter agreements, modifications, supplements, renewals, extensions, addenda and/or assignments thereof, the “2353 Declaration”) (all of which are sometimes collectively referred to for each Seller and, where the context warrants, for all Sellers as the “Appurtenances”);

 

1.3                         Improvements. All improvements and fixtures located upon such Land Parcel, including, without limitation, all structures presently located on such Land Parcel, and all fixtures, apparatus, equipment, and appliances used in connection with the operation or occupancy thereof (all of which are collectively referred to for each Seller and, where the context warrants, for all Sellers as the “Improvements” and together with the Land and the Appurtenances, as the “Real Property”);

 

1.4                         Leases. All interest of each Seller, as landlord, in and to the leases of space in the Improvements, including but not limited to, all unexpired leases, subleases, office or retail rental agreements, license agreements, parking agreements, other occupancy agreements, and any other agreements for the use, possession, or occupancy of any portions of the Property (including, without limitation, signage rights) as of the Close of Escrow, including, without limitation, any security deposits and guaranties delivered in connection with any of the foregoing, together with any and all amendments, modifications and/or  supplements thereto (collectively, the “Leases”), a schedule of which as of the date hereof is attached hereto as Schedule 1.4 (the “Lease Schedule”);

 

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1.5                         Personal Property. All tangible personal property owned by each Seller, if any, located on or in or used in connection with the operation, maintenance or management of the Property (collectively, the “Personal Property”), but excluding (i) any personal property of tenants and employees, (ii) computers and associated equipment (e.g., cables, monitors, docking stations, keyboards, and printers) and leased copiers and postage machine.

 

1.6                         Service Contracts. All service contracts and other agreements, utility contracts and other rights relating to the ownership, use and operation of all or any part of the Property, if any, to the extent assigned to Buyer at Closing pursuant to this Restated Agreement (collectively, the “Service Contracts”);

 

1.7                         Permits and Licenses. All transferable permits, licenses, certificates and other governmental approvals related to the Property; and

 

1.8                         Intangible Property. All right, title and interest of Seller in and to the following (collectively, the “Intangible Property”) (i) any and all intangible property owned by Seller and used in the ownership, use and/or operation of the Property, including, without limitation, the right to use any trade name now used in connection with the Property, including, without limitation, the name “Center 21” in connection with 2101 Webster, website name for the exclusive use of the Property, claims against third parties, including claims against tenants for tenant improvement reimbursements, insurance proceeds and condemnation awards or claims assigned to Buyer hereunder, copies of all books and records relating to the Properties for the last three (3) years, marketing materials, and (ii) all warranties, guaranties and indemnities relating to the Improvements or Service Contracts. Notwithstanding the foregoing, “Intangible Property” shall not include (i) any rights to property tax refunds for property taxes relating to time periods prior to Close of Escrow.

 

2.                                      Purchase Price.   Buyer shall pay the Purchase Price at the Close of Escrow (as defined in Section 4.2 below), adjusted as set forth in this Restated Agreement.  The Purchase Price shall be allocated among the Properties in accordance with the Allocation Schedule.  Buyer may modify the Allocation Schedule from time to time so long as the amount allocated to any single Property is not modified by more than ten percent (10%) greater or less than the amount allocated to such Property as of the Effective Date, without Seller’s prior written consent. Upon Buyer’s delivery of any such notice to Seller, the Allocation Schedule shall be deemed modified in accordance with such notice.

 

3.                                      Payment of Purchase Price.

 

3.1                         Deposit.  Buyer has delivered to Escrow Holder the Deposit in accordance with the Original PSA and elected to proceed with the transaction in accordance with the Original PSA, which Deposit is non-refundable except as expressly provided in this Restated Agreement.  Escrow Holder is holding the Deposit in an interest-bearing account in accordance with the terms and conditions of this Restated Agreement.  All interest accruing on such sums shall become a part of the Deposit and shall be distributed as Deposit in accordance with the terms of this Restated Agreement.  Notwithstanding any provision of this Restated Agreement to the contrary, in no event shall Seller have any responsibility or liability to Buyer in connection with the accrual or payment of interest on any portion of the Deposit. Upon receipt of the Initial Deposit, Escrow Holder disbursed to Seller from the Initial Deposit the sum of $100.00 (the “Independent Consideration”), which Independent Consideration was fully earned by Seller and is non-refundable to Buyer, but shall be applicable to the Purchase Price at Closing.

 

3.2                               Nature of Deposit.  The Deposit is entirely non-refundable to Buyer, except as otherwise provided in this Restated Agreement.  The Deposit (together with any interest earned thereon while, but only while, held by Escrow Holder) shall be applied and credited to the Purchase Price at the Close of Escrow and allocated among the Properties in the same proportion that the allocated prices bear to the Purchase Price in accordance with Schedule H.

 

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3.3                               Balance of Purchase Price.  Buyer shall deposit into Escrow the balance of the Purchase Price, as adjusted for costs and pro-rations to be made pursuant to Sections 12 and 13 of this Restated Agreement, in cash or other immediately available federal funds, no later than 11:00 AM, Local Time, on the scheduled Closing Date for the Close of Escrow.  If such funds are not timely delivered by Buyer (but Seller has otherwise complied with all Closing conditions and Closing deliverables) and as a result thereof the transaction is not deemed closed by the Escrow Holder by 1:00 PM, Local Time on the scheduled Closing Date, it shall not be a default by Buyer, so long as the Close of Escrow occurs on the Closing Date, but there shall be no modifications to the prorations or adjustments. Escrow Holder is hereby instructed by Buyer and Seller to deliver to Seller the Purchase Price at Close of Escrow, adjusted as set forth in this Restated Agreement. Buyer and Seller each agree to file all local transfer tax forms in accordance with the Allocation Schedule.

 

4.                                      Opening and Close of Escrow.

 

4.1                               Opening of Escrow.  For the purposes of this Restated Agreement, the “Opening of Escrow” shall be the date that Escrow Holder receives a fully executed original or executed counterpart copies of this Restated Agreement signed by Buyer and Seller.  Escrow Holder is instructed to notify Buyer and Seller, in writing (which may be by email transmission), of the date of Opening of Escrow.

 

4.2                               Escrow Instructions. The terms and conditions set forth in this Restated Agreement shall constitute both an agreement between Seller and Buyer and escrow instructions for Escrow Holder. Seller and Buyer shall promptly execute and deliver to Escrow Holder any separate or additional escrow instructions requested by Escrow Holder that are consistent with the terms of this Restated Agreement. Any separate or additional instructions shall not modify or amend this Restated Agreement unless expressly set forth by the mutual consent of Seller and Buyer and to the extent of any conflict between this Restated Agreement and any such separate/additional instructions, the provisions of this Restated Agreement shall control.

 

4.3                               Close of Escrow.  For purposes of this Restated Agreement, “Close of Escrow” or “Closing” shall mean the date that a grant deed conveying the title to each Property (each a  “Deed” and collectively the “Deeds”) is recorded in the County; provided, however, that at Buyer’s option, the Closing shall occur by a “gap” style closing, with recording of the Deeds to occur on the morning immediately following the date of the Closing, in which event the parties shall execute such additional reasonable escrow instructions and indemnity agreements as are customary and requested by the Escrow Holder to allow the “gap” style Closing. The Deeds shall be executed by Seller in the form attached as Exhibit B, with the execution properly notarized in form for recordation in the public records of the County.  The Closing shall take place on or before the Closing Date, subject to the terms and conditions of this Restated Agreement.

 

5.                                      Investigation Period and Right of Entry.

 

5.1                               Investigation Period.  From and after the Original Effective Date through the Investigation Period Expiration Date (such period is referred to as the “Investigation Period”) and, thereafter, through the Close of Escrow, Buyer shall have the right to examine and investigate all aspects of each Property, including without limitation grading, settling, soil composition and condition, drainage, hydrology, existence of mold and/or Hazardous Materials (as defined below), structural aspects, easements, rights of way, feasibility, building and other permits, approvals, laws and restrictions, land use and other governmental conditions and restrictions, likelihood of condemnation, zoning matters, traffic and flight patterns, demographics, title matters, all declarations of covenants, conditions & restrictions and other documents of record affecting each Property, matters disclosed by a survey of each Property if Buyer should obtain such a survey and/or desire an ALTA extended coverage owner’s policy of title insurance, the Leases (if any), tenant quality and credit (if any), contracts that will survive Close of Escrow (if any), income and expenses of each Property and each portion thereof (if any), matters that would be disclosed by investigations of the types contemplated by Section 5.2, and all other matters related to the suitability of each Property for Buyer’s intended purposes, use and investment.  All square footages, dimensions and sizes (if any) in any materials furnished or made available by Seller are approximate.  Buyer is urged to independently verify all of such information.  Buyer also is urged to conduct its own 

 

5

 

investigations with the City and/or County in which each Property is located regarding any impact the zoning of each Property may  have on Buyer’s intended use of each Property.  Seller has made available to Buyer prior to the Effective Date, copies of documents regarding each Property on the following data website: https://my.hfflp.com/doccenters?id=16160, which documents are described on the attached Exhibit D, and a preliminary title report (the “PTR”) for each Property issued by the Title Company and a copy of, or hyperlinks to, all recorded underlying documents (all of such materials so delivered or made available to Buyer are referred to collectively as the “Seller Information”).  Without limitation of any covenant, representation or warranty in this Restated Agreement, Buyer acknowledges that the Seller Information does not include and that Seller shall not be obligated to disclose to Buyer any of the following (the “Protected Information”) in Seller’s possession or available to Seller: (a) information contained in Seller’s credit reports (other than credit reports for Seller’s tenants), Seller’s credit authorizations, Seller’s credit or financial analyses or projections, steering committee sheets, account summaries or other internal documents relating to the value of any Property, including any valuation documents and the book value of any Property; (b) material which is subject to any attorney client privilege or which is attorney work product excluding (1) any items which Seller would be obligated to disclose under law, and (2) any items relating to the environmental condition of any Property; (c) appraisal reports or letters;  (d) financials of Seller or any affiliate of Seller; or (e) material which Seller is legally required not to disclose.

 

5.2                         Right of Entry.  Buyer and Seller acknowledge that notwithstanding execution of this Restated Agreement, that certain Access Agreement dated as of December 17, 2018, by and among Seller and SCG Global Holdings, L.L.C., remains in full force and effect and shall continue in full force and effect during the Investigation Period and, thereafter, through the Close of Escrow, and shall be co-terminous with this Restated Agreement (and Seller as Licensor shall not have the right to terminate such Access Agreement and Section 17 and Section 20 of the Access Agreement shall no longer apply), providing for Buyer’s rights and obligations with respect to entry upon each Property. In the event Closing occurs, Buyer and any parties taking title to any Property shall be jointly and severally liable for any obligations of the Licensee under the Access Agreement.  Notwithstanding the foregoing, Buyer and Seller acknowledge that the Access Agreement has terminated as of the Original Effective Date with respect to 1333 Broadway (as defined in the Access Agreement).

 

5.3                         Title and Survey Examination.

 

5.3.1                           For each Property, Buyer shall have until the Inspection Period Expiration Date (the “Title Exam Deadline”), to notify Seller, in writing, of such objections as Buyer may have to anything contained in the applicable PTR, Title Update obtained by Buyer prior to the Title Exam Deadline or the Seller’s Survey. Except as expressly set forth below in connection with any updated Survey obtained by Buyer or any Title Update, any item contained in the PTRs, any Title Update obtained by Buyer prior to the Title Exam Deadline or any matter shown on the Seller’s Surveys to which Buyer does not object in writing prior to the applicable Title Exam Deadline shall automatically and irrevocably be deemed a Permitted Exception. In the event Buyer shall notify Seller, in writing, of any such objections to title or to matters shown on the Seller’s Surveys prior to the Title Exam Deadline, Seller shall have the right, but not the obligation, to cure such objections. Within five (5) days after receipt of Buyer’s notice of objections, Seller shall notify Buyer in writing whether Seller elects to attempt to cure any or all of such objections. If Seller elects to attempt to cure, and provided that Buyer shall not have terminated this Restated Agreement in accordance with Section 5.7 hereof, Seller shall be obligated to “cure” (which, for purposes of this Section 5.3 shall mean to remove the same from title) prior to the Close of Escrow (provided, however, that insuring over any objection shall not be permissible without Buyer’s consent, in its sole discretion).  If Seller elects not to cure any objections specified in Buyer’s notice, , or if Seller fails to respond to Buyer’s notice, in each case, within said five (5) day period, Buyer shall have the following options: (i) to accept a conveyance of the applicable Property subject to the Permitted Exceptions and any matter objected to by Buyer which Seller so notifies (or is deemed to have notified) Buyer that it is unwilling or unable to cure (each of which shall also be deemed to be Permitted Exceptions), and without reduction of the Purchase Price; or (ii) to terminate this Restated Agreement by sending written notice thereof to Seller, and upon delivery of such notice of termination, this Restated Agreement shall terminate and the Deposit (excluding the Independent 

 

6

 

Consideration) shall be returned to Buyer, and thereafter neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Restated Agreement. If Seller notifies Buyer that Seller does not intend to attempt to cure any title objection or fails to respond to Buyer’s  notice within said five (5) day period; or if, having properly elected to cure any objection, Seller later notifies Buyer in writing that Seller will be unable to effect a cure thereof; Buyer shall, within five (5) business days after such notice has been given notify Seller in writing whether Buyer shall elect to accept the conveyance under clause (i) or to terminate this Restated Agreement under clause (ii). Buyer’s failure to notify Seller of termination of this Restated Agreement within such five (5) business day period shall be deemed to be an irrevocable election under clause (ii) to terminate this Restated Agreement.

 

5.3.2                           Seller shall be obligated to pay at or before Close of Escrow and eliminate and remove from title prior to Close of Escrow (a) any and all mortgages, deeds of trust, judgments and any other monetary liens for liquidated amounts, including mechanics’ and materialmen’s liens and tax liens encumbering any Property or that are an exception, and any mezzanine loans related to any Property secured by interests in any Seller, other than liens for property taxes which are not yet delinquent, and (b) exceptions or encumbrances against and which affect title to any Property which are voluntarily created by, under or through Seller after the Original Effective Date without Buyer’s consent (collectively, “Seller Mandatory Cure Items”), and all such Seller Mandatory Cure Items shall be deemed disapproved by Buyer regardless of whether they are objected to by Buyer in any written title objection notice. Seller shall provide such indemnities, bonds, guaranties or holdback amounts required by the Title Company in connection with the Seller Mandatory Cure Items (provided, however, that insuring over any objection shall not be permissible without Buyer’s consent, in its sole discretion).If Seller declines or otherwise fails to cure any Seller Mandatory Cure Item or does not use commercially reasonable efforts to attempt to cure any objection that Seller elected to attempt to cure in accordance with Sections 5.3.1 and 5.3.3 by Closing and Buyer elects to terminate this Restated Agreement, the same shall be a material default hereunder and Buyer will be entitled to recover its costs and expenses as if it were terminating due to a Seller material default pursuant to Section 14.1.  If on the Closing Date, the Property is subject to any Seller Mandatory Cure Item or any objection that Seller has elected to attempt to cure in accordance with Sections 5.3.1 and 5.3.3, Buyer may, at Closing, withhold and apply such portion of Purchase Price as is necessary to remove or satisfy any such item (together with  costs for preparing and recording and filing the instruments necessary in connection therewith), such withholding not to exceed the sum of (a) the amount necessary to payoff and discharge any mortgage or deed of trust voluntarily incurred by any Seller on any Property, plus $6,100,000.

 

5.3.3                     If any further updated Survey or Title Update for any Property received after the Title Exam Deadline shall disclose any additional matter not disclosed on the applicable PTR or Seller’s Survey, then within three (3) business days after Buyer’s receipt of such Title Update or updated Survey, Buyer shall notify Seller in writing of Buyer’s approval or disapproval of each additional matter not created by, through or under Buyer and, except as specified in Section 5.3.2, failure of Buyer to deliver such notice shall be deemed approval. Upon notice of such disapproval, Seller shall have a period of five (5) business days to cure such matter, provided, however, that if Buyer has not terminated this Restated Agreement in accordance with Section 5.7 hereof, if additional time is required to cure such matter, Seller, shall, at Seller’s election by written notice to Buyer, be entitled to reasonable additional time so long as Seller continues to diligently pursue such cure, including, a reasonable adjournment of the Closing (should the expiration of the initial five (5) business day cure period occur within five (5) business days of the Closing Date and only to the extent of the additional time specified herein), but in no event shall such additional time exceed ten (10) business days. If the Seller is unable or unwilling to cure such matter within such time, Buyer shall have the option of either: (i) accepting title to the applicable Property subject to such additional matters as if Buyer had not objected thereto and without reduction of the Purchase Price and such exceptions shall be deemed Permitted Exceptions hereunder or (ii) to terminate this Restated Agreement by delivering written notice to Seller within three (3) business days of such election or determination by Seller, whereupon the Deposit (excluding the Independent Consideration) shall be returned to Buyer and neither party hereto shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Restated Agreement. If, for any reason whatsoever, Buyer fails to give timely notice of its approval or disapproval or its election to terminate, Buyer shall be deemed to have elected to terminate this Restated Agreement.

 

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5.4                               Conveyance of Title. At Closing, Seller shall convey and transfer to Buyer fee simple title to the Real Property subject only to those matters expressly deemed to be Permitted  Exceptions elsewhere in this Restated Agreement and the following (collectively, the “Permitted Exceptions”):

 

5.4.1                     except for items that Seller has elected to cure pursuant to Sections 5.3.1 or 5.3.3, the exceptions (including exceptions that are part of the promulgated title insurance form) in the applicable PTR or a Title Update that the Title Company has not agreed to remove from the PTR as of the end of the Investigation Period;

 

5.4.2                     matters created by, through or under Buyer;

 

5.4.3                     except for items that Seller has elected to cure pursuant to Sections 5.3.1 or 5.3.3, items shown on the Seller’s Survey which have not been removed as of the end of the Investigation Period;

 

5.4.4                     the lien of all ad valorem real estate taxes and assessments not yet due and payable as of the Closing Date, subject to adjustment as herein provided;

 

5.4.5                     local, state and federal laws, ordinances or governmental regulations, including but not limited to, building and zoning laws, ordinances and regulations, now or hereafter in effect relating to the Real Property; and

 

5.4.6                     items appearing of record shown in the PTR or shown on the Survey and, in either case, not objected to by Buyer or waived or deemed waived by Buyer in accordance with Section 5.3.1 hereof.

 

5.5                         Title Policy. At Closing, Buyer shall request that Title Company issue a CLTA owner’s extended coverage title insurance policy for each Property in the amount of the applicable allocated Purchase Price shown on the Allocation Schedule (“Title Policy”) to Buyer in accordance with the PTR or other Title Update acceptable to Buyer, insuring Buyer’s title to the applicable Real Property as of the Closing Date, subject only to the Permitted Exceptions, provided that Buyer may request an ALTA owner’s extended coverage title insurance policy and endorsements so long as Buyer pays for the increased cost of such policy and endorsements. If Buyer’s requests an ALTA owner’s extended coverage title insurance policy, Seller shall execute and deliver such affidavits, indemnities or other documentation to the Title Company reasonably necessary to cause the Title Company to issue as of the Closing Date an ALTA owner’s form of title insurance policy and endorsements in the form of the title commitment as approved by Buyer (subject only to the Permitted Exceptions).

 

5.6                         Intentionally Omitted.

 

5.7                         Right to Terminate.  Seller agrees that in the event Buyer determines (such determination to be made in Buyer’s sole discretion) that all or any Property is not suitable for its purposes, or for any other or no reason, Buyer shall have the right to terminate this Restated Agreement by giving written notice thereof to Seller prior to the expiration of the Inspection Period. If Buyer does not give notice of Buyer’s election to proceed to the Closing prior to expiration of the Inspection Period, this Restated Agreement shall automatically terminate, the Deposit (excluding the Independent Consideration) shall be returned to Buyer and neither party shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Restated Agreement. Time is of the essence with respect to the provisions of this Section 5.7. If Buyer gives Seller a notice of its election to proceed to the Closing prior to the expiration of the Inspection Period, Buyer shall no longer have any right to terminate this Restated Agreement under this Section 5.7 and shall be bound to proceed to Closing and consummate the transaction contemplated hereby pursuant to the terms of this Restated Agreement, and the Deposit shall 

 

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be non-refundable to Buyer, except that Buyer shall be entitled to a return of the Deposit (excluding the Independent Consideration) if Buyer or Seller terminates this Restated Agreement in accordance with a specific right contained in this Restated Agreement (except that the Deposit shall be paid to Seller if, and only if, Seller terminates this Restated Agreement as expressly provided in Section 14.1).

 

5.8                         Disclosure Statement; Hazardous Substances/Conditions and Disclosures; Section 25359.7 of Health and Safety Code.  Section 25359.7 of the California Health and Safety Code requires owners of non-residential real property who know, or have reasonable cause to believe, that any release of hazardous substance has come to be located on or beneath the real property to provide written notice of such to a buyer of the real property.  Buyer agrees that the sole inquiry and investigation Seller has conducted in connection with the environmental and seismic condition of the Property is to review those certain environmental reports and related materials (if any) delivered by Seller to Buyer (collectively, the “Existing Environmental and Seismic Reports”). In furtherance of the foregoing, (i) Buyer acknowledges Buyer’s receipt of the foregoing notice given pursuant to Section 25359.7 of the California Health and Safety Code; (ii) Buyer is fully aware of the matters described in the Existing Environmental and Seismic Reports and the Exhibits to this Restated Agreement; and (iii) Buyer, after receiving advice of Buyer’s legal counsel, waives any and all rights Buyer may have to assert that Seller has not complied with the requirements of Section 25359.7 of the California Health and Safety Code.  By executing this Restated Agreement, Buyer has approved the Existing Environmental and Seismic Reports.

 

5.9                         Natural Hazard Disclosure.  Buyer and Seller acknowledge that Seller may be required under California law to disclose if the Property lies within the following natural hazard areas or zones:  (a) a special flood hazard area designated by the Federal Emergency Management Agency (California Civil Code Section 1102.17); (b) an area of potential flooding (California Government Code Section 8589.4); (c) a very high fire hazard severity zone (California Government Code Section 51183.5); (d) a wild land area that may contain substantial forest fire risks and hazards (Public Resources Code Section 4136); (e) an earthquake fault zone (Public Resources Code Section 2621.9); or (f) a seismic hazard zone (Public Resources Code Section 2694).  Title Company shall engage at Seller’s cost the services of Disclosure Source, an affiliate of Title Company (which, in such capacity, is referred to herein as the “Natural Hazard Expert”), to examine the maps and other information specifically made available to the public by government agencies for the purposes of enabling Seller to fulfill Seller’s disclosure obligations, if and to the extent such obligations exist, with respect to the natural hazards referred to in California Civil Code Section 1102.6c(a) and to report the result of the Natural Hazard Expert’s examination to Buyer and Seller in writing no later than the Investigation Period Expiration Date.  The written reports prepared by the National Hazard Expert regarding the results of the Natural Hazard Expert’s full examination fully and completely discharges Seller from Seller’s disclosure obligations referred to herein, if and to the extent any such obligations exist, and, for the purpose of this Restated Agreement, the provisions of Civil Code Section 1102.4 regarding non-liability of Seller for errors or omissions not within Seller’s personal knowledge shall be deemed to apply and the Natural Hazard Expert shall be deemed to be an expert, dealing with matters within the scope of the Natural Hazard Expert’s expertise with respect to the examination and written report regarding the natural hazards referred to above.

 

6.                                      Buyer’s Covenants.  Buyer hereby covenants to do the following:

 

6.1                         Entitlements.  Prior to the Close of Escrow, Buyer shall not make any submittals for a zoning change, variance, subdivision map, lot line adjustment or other governmental act, approval or permit with respect to the Property or submit any reports, studies or other documents, including, without limitation, plans and specifications, impact statements for water, sewage, drainage or traffic, environmental review forms, or energy conservation checklists to any governmental agency without Seller’s prior written approval, which approval shall not be unreasonably withheld, conditioned or delayed.

 

6.2                         Payment of Invoices.  Buyer shall pay all bills and invoices for labor, goods, materials, services and utilities of any kind relating to any Property which were contracted for by or on behalf of Buyer.

 

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6.3                               No Contact.  Neither Buyer nor Buyer’s agents, employees, representatives, contractors and subcontractors (collectively, “Buyer’s Representatives”) shall contact any governmental agencies, tenants, or any of Seller’s vendors, consultants or contractors concerning the Property prior to the Close of Escrow without obtaining Seller’s prior written consent in each instance, which consent shall not be unreasonably withheld, conditioned or delayed) and without first giving Seller the opportunity to be present at any meeting or on any telephone call; except that Buyer shall not be required to obtain any additional Seller’s consent (beyond that required pursuant to Section 5.2) for tenant interviews scheduled in accordance with Section 5.2 or prior to conducting generic due diligence (e.g., accessing public records held at a government office or governmental agency or making customary inquiries regarding the zoning status of any Property from municipal authorities or procuring a Phase I environmental site assessment), so long as Licensee is not engaging in discussions or conducting interviews regarding any Property with such governmental agency or other third party, or prior to contacting Seller’s property manager.

 

7.                                      Seller’s Covenants and Obligations.  Seller covenants with Buyer that, so long as this Restated Agreement remains in effect:

 

7.1                         No Conveyances. Through the originally scheduled Closing Date and, thereafter so long as Buyer is not in material breach of this Restated Agreement, Seller shall not make, solicit negotiate, or accept or otherwise pursue any offers to purchase or sell all or any part of the Property from any other party, whether or not binding. Seller shall cause Seller’s Broker to discontinue actively marketing the Properties for sale as of the Original Effective Date and neither Seller nor Seller’s Broker shall actively market all or any of the Properties for sale during the pendency of this Restated Agreement.

 

7.2                         Payment of Invoices.  Seller shall pay in full all bills and invoices for labor, goods, materials, services and utilities of any kind relating to any Property which were contracted for by or on behalf of Seller.

 

7.3                         Leases. During the pendency of this Restated Agreement, Seller agrees to consult with Buyer and to keep Buyer apprised on a regular basis regarding the leasing activity at such Seller’s Property (and to cause its property manager and leasing agent to do the same) so that Buyer can provide input on a real-time basis as such leasing activity occurs. The foregoing undertaking will include, without limitation, providing Buyer with advance drafts of term sheets and other agreements relating to any leasing activity (including, without limitation, a summary of all proposed tenant inducement costs and leasing commissions being requested or proposed in connection with any such leasing activity) before sharing the same with any tenant or prospective tenant so that Buyer can be actively apprised of leasing activity at each Property as it unfolds, and taking Buyer’s input into account in good faith in carrying out that leasing activity.  Seller shall not enter into or consent to any Lease or Lease termination, amendment, modification, expansion, renewal, or lease assignment or sublease for any part of any Property or premises therein, without the prior written approval of Buyer, which approval (i) shall not be unreasonably withheld or delayed prior to the Investigation Period Expiration Date, and (ii) thereafter may be granted or withheld in Buyer’s sole discretion and shall extend to applying any tenant security deposits to tenant obligations under any Lease, accepting any tendered termination of any Lease, or removing any tenant, or waiving any tenant default under any Lease or enforcing any other material rights and remedies as landlord under any Lease, provided that Buyer consent is not required for Seller to enforce such other material rights and remedies as landlord under any Lease that are necessary on an emergency basis to protect the Property from imminent physical damage or any natural person from imminent injury, as long as Seller promptly notifies Buyer of the emergency situation and the enforcement actions taken by Seller.  Buyer shall either approve or disapprove any proposed Lease termination, amendment, modification, expansion, renewal, or lease assignment or sublease for any part of any Property or premises therein submitted to Buyer for approval within five (5) business days of receipt of the same, together with tenant financial information and detail on any tenant improvement, leasing commission or other leasing costs to be incurred in connection therewith. Buyer’s failure to expressly approve or disapprove of any such proposed Lease termination, amendment, modification, expansion, renewal, or lease assignment or sublease for any part of any Property or premises therein within said five (5) business day period shall conclusively constitute Buyer’s approval of same prior to the Investigation Period Expiration Date and thereafter shall constitute rejection of the proposed action.  Seller shall deliver to Buyer, promptly after receipt by Seller, a copy of all current written default and other material notices to and from tenants during 

 

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the term of this Restated Agreement.  Buyer shall, at Close of Escrow assume the obligation to pay and shall pay all Lease commissions, tenant improvement costs and other costs and expenses arising, or that shall have arisen, from or in connection with any Lease modification, amendment or lease assignment entered into with Buyer’s consent between the Original Effective Date and the Close of Escrow in accordance with this Section 7.3 and which first become due following the Close of Escrow, such obligation to survive the Close of Escrow.  Notwithstanding the foregoing, Buyer’s prior written approval shall not be required for (i) Seller’s application of tenant security deposits to the extent permitted under the applicable Lease in connection with (x) a tenant default in its  obligation to pay rent first occurring after the Original Effective Date and prior to Closing and (y) the expiration of the term of the applicable lease in accordance with the terms thereof, provided tenant is not in default under such lease and (ii) the exercise by tenant of any extension, renewal, expansion or contraction right in accordance with the applicable lease to the extent Seller does not have an approval or consent right with respect to the same.

 

7.4                         Operation and Maintenance.  Subject to the terms and conditions of this Restated Agreement, Seller shall cause the Properties to be insured, operated, repaired and maintained in the ordinary and usual course of business and consistent with past practice, throughout the entire period from the date hereof until the Close of Escrow.  Prior to the Close of Escrow, Seller will perform its obligations under the Leases, Service Contracts, and all other agreements and contractual arrangements affecting a Property by which any Seller is bound.  In addition, Seller shall maintain in existence the licenses, permits and approvals set forth on Schedule 7.4 that are now in existence with respect to the ownership, operation or use of the Properties.  Unless expressly approved by Buyer in writing, no Seller shall perform any capital improvements at any Property other than a capital improvement project expressly required under a Lease entered into as of the Original Effective Date or as identified on Schedule 7.4 or repairs and maintenance in the ordinary and usual course of business, consistent with past practice and not exceeding $50,000 in any single instance, other than as needed on an emergency basis to protect the Property from imminent physical damage, to protect natural persons from imminent injury or to avoid Seller being in default under any Lease such that tenant has a right to terminate such Lease due to such default or if Seller could reasonably have any liability to such tenant for such failure. In the event Buyer delivers the Buyer’s Notice to Proceed, then following the Investigation Period Expiration Date and prior to the Closing (and as of the Original Effective Date and prior to Closing for the projects as noted on Schedule 7.4), Seller shall not enter into any contract or agreement respecting the Property which shall continue in effect following the Close of Escrow without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed.  Seller shall also terminate at Closing, and Buyer shall not assume, any property management or leasing agreement affecting any Property.

 

Notwithstanding the foregoing, the repairs and capital improvement projects set forth on Schedule 7.4 (the “Ongoing Repairs and CI Work”) (which shall exclude tenant improvement work) shall be commenced by Seller prior to the Close of Escrow pursuant to agreements satisfactory to Buyer (“Ongoing Repairs and CI Contracts”), which Ongoing Repairs and CI Contracts (together with all applicable historical statements, bills and invoices) will be assigned to Buyer at the Closing with Buyer receiving credits for amounts remaining outstanding as of the Closing and the cost to complete such Ongoing Repairs and CI Work (the “Ongoing Work Credit”).  No later than the Final Adjustment Date, Seller and Buyer shall make a final adjustment crediting Buyer for the amount by which the cost of the Ongoing Repairs and CI Work exceeded the Ongoing Work Credit, if any, such amounts to be substantiated by applicable statements, bills and invoices for the applicable Ongoing Repairs and CI Work.  Any such net adjustment in favor of one party is to be paid in cash by the other no later than thirty (30) days after such final adjustment has been made.

 

With respect to 2353 Webster, the Unit 1 Owner under the 2353 Declaration has informed Seller that the Unit 1 Owner intends to perform certain repairs, retrofitting and other work to the elevator that provides access from 2353 Webster to the entrance of the Unit 1 Owner’s building on Broadway (the “Elevator Work”).  Pursuant to the 2353 Declaration, the owner of 2353 Webster is responsible for twenty-five percent (25%) of the cost of the Elevator Work (“2353 Webster’s Share”).  In the event the Elevator Work has not been completed and fully paid for by the Closing Date (including, without limitation, Seller’s payment to the Unit 1 Owner of the 2353 Webster’s Share of the Elevator Work), Seller shall credit to Buyer at the Closing, an amount equal to 2353 Webster’s Share of the remaining cost to complete the Elevator Work, as reasonably determined by Buyer and Seller, after crediting any payments previously 

 

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made by Seller.  Prior to Closing, Seller shall deliver to Buyer all contracts relating to the Elevator Work, and evidence of any amounts paid by Seller to the Unit 1 Owner on account of the Elevator Work. No later than the Final Adjustment Date, Seller and Buyer shall make a final adjustment crediting Buyer for the amount by which the 2353 Webster’s Share of the Elevator Work exceeded the credit received by Buyer at Closing, if any, and crediting Seller for the amount by which the cost of the 2353 Webster’s Share of the Elevator Work was less than the credit, if any, such amounts to be substantiated by applicable statements, bills and invoices for the Elevator Work.  Any such net adjustment in favor of one party is to be paid in cash by the other party no later than thirty (30) days after such final adjustment has been made.

 

7.5                         Service Contracts. Seller shall not alter, amend or become a party to any new Service Contract unless the new Service Contract is entered into in the ordinary course, terminable on no more than thirty (30) days’ notice and such termination can occur without cause, penalty or other cost to Buyer.  Seller shall deliver to Buyer, promptly after receipt by Seller, a copy of all current written default and other material notices from the service providers under any Service Contracts.  Buyer will assume the obligations arising from and after the Closing Date under all the Service Contracts At Closing, Seller and Buyer shall split 50-50 any transfer or assignment fees or charges due in connection with Seller’s assignment to Buyer of any Service Contracts that Buyer has elected to assume under this Restated Agreement.

 

7.6                   Estoppel Certificates.

 

7.6.1                           Seller shall use its commercially reasonable efforts to deliver to Buyer an Acceptable Estoppel Certificate (as defined below) from all of the tenants of each Property.

 

7.6.2                           In the case of the estoppel certificates to be obtained from the tenants, an “Acceptable Estoppel Certificate” shall mean an estoppel certificate that: (i) is consistent with the terms and provisions of the copy of the applicable tenant’s Lease provided by Seller to Buyer as part of the Seller Information and the representations of Seller contained in this Restated Agreement, (ii) is substantially in the form of the estoppel attached hereto as Exhibit H-1, or in the form of estoppel attached to the applicable tenant’s Lease, if a form is so attached, or if a tenant refuses to execute an estoppel in the form attached hereto as Exhibit H-1 and such tenant’s Lease permits a different form, then in the form permitted by such tenant’s Lease, or if the tenant under the Lease is the United States of America (“Government”), either acting through the General Services Administration (“GSA”) or another agency of the Government, in the form attached hereto as Exhibit H-2 or other form promulgated by Government, (iii) except with respect to Leases with the Government (“Government Leases”), is certified to Buyer, its mortgage lender and the successors and assigns of each of them, (iv) is dated within sixty (60) days of the Close of Escrow, (v) does not claim that Seller is in material default, (vi) does not claim an offset or deduction to a tenant’s payment obligations under its Lease or obligation for payment to or from Seller, as applicable, (vii) does not make an affirmative, material claim against Seller, (viii) has all blanks completed or marked as not applicable, as appropriate, (ix) certifies that that the lease is in full force and effect and, except with respect to Government Leases, that tenant has not initiated or had initiated against it any insolvency, bankruptcy, receivership or other similar proceeding, and (x) has all exhibits completed and attached, as applicable.  For clarification purposes, an estoppel certificate that meets the foregoing criteria shall nonetheless be an Acceptable Estoppel Certificate even though (A) a tenant modifies any statement in the estoppel certificate that it has no offset rights and/or claims and/or that Seller is not in default under the applicable lease by including a best or actual knowledge limitation, (B) if any or all guarantors of the applicable lease do not execute such estoppel, (C)  if the tenant submits an estoppel certificate without certifying the same to Buyer’s mezzanine lender, or (D) Kaiser or Pandora do not include the extra provisions set forth at the end of the form of estoppel attached as Exhibit H-1.

 

7.6.3                     Promptly following the Original Effective Date, Seller prepared the tenant estoppel certificates in the form attached hereto as Exhibit H for each tenant at each Property (other than for the Government Leases or tenants having a Lease that contains a form estoppel certificate, for which Seller shall complete an estoppel on the applicable form).  Prior to distributing the applicable form of tenant estoppel certificate to the tenants, Seller delivered copies of each proposed form to Buyer with all blanks completed, and Buyer had and has the right to modify it to correct Lease descriptions and any other apparent errors as necessary to be consistent with the underlying Lease.  

 

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Buyer reviewed and is reviewing such drafts and delivered and is delivering to such Seller any such modifications thereto.  Seller has delivered and is delivering the completed tenant estoppel certificates to the applicable tenants and shall deliver copies of fully executed, completed tenant estoppel certificates to Buyer as Sellers receive them.

 

7.6.4                     It will be a condition to Buyer’s obligation to close the transaction contemplated under this Restated Agreement that, on or before five (5) days before the Closing Date, Seller shall have delivered to Buyer Acceptable Estoppel Certificates from (i) tenants under the Leases representing at least seventy percent (70%) of the leased space at each Property (inclusive of Major Tenants), according to leased space shown in the Rent Roll attached hereto as Schedule 8.1.19 (the “Estoppel Threshold”), and (ii) from each tenant leasing 50,000 rentable square feet of space or more at any Property (each, a “Major Tenant”).

 

7.7                         SNDAs.  If Buyer provides Seller with appropriate documents for distribution, Seller agrees to distribute to the Tenants Subordination, Non-Disturbance and Attornment Agreements in the form requested by Buyer’s lender (the “SNDAs”).  Seller agrees to deliver SNDAs to each tenant Buyer instructs Seller to deliver an SNDA to and request that each such tenant execute and deliver the SNDA so distributed.  Seller further agrees to send follow-up requests for execution and delivery of such SNDAs to any such tenant up to two (2) times per tenant, as requested by Buyer prior to Closing, at no material cost or expense to Seller.

 

7.8                         GSA Leases.

 

7.8.1                     At Closing, Buyer and Seller shall execute and deliver a novation agreement for each Government Lease by and among the Government, Seller and Buyer regarding the applicable Lease in the form attached hereto as Exhibit I or such other then-current form promulgated by the Government (a “Novation Agreement”).  Promptly after the Closing, Buyer and Seller will cooperate with the Government to obtain the execution by Government of a Novation Agreement with respect to each Government Lease.  If prior to its execution Government requires changes to the Novation Agreements signed at Closing, then such changes shall be reasonably accommodated by Buyer and Seller.  Buyer agrees to promptly submit all information and deliveries required or requested by the Government to obtain the Novation Agreements.  Seller and Buyer agree to (i) cooperate in connection with obtaining the Novation Agreements (at each party’s own expense) and (ii) promptly perform such further acts and promptly execute and deliver such further instruments as may be reasonably required by the Government to obtain the Novation Agreements following Closing. Buyer acknowledges that as a condition to its execution of the Novation Agreements, the Government will require Buyer to have a Dun & Bradstreet D-U-N-S Number and that the Buyer be registered  in the U.S. Government’s System for Award Administration (“SAMS”).  The Buyer covenants that it shall procure such number and complete such registration

 

7.8.2                     The parties acknowledge that rent and other amounts payable by the Government under the Government Leases after the Closing may be paid to Seller until the Novation Agreements are finalized and executed, and, therefore, any such amounts that Seller or its agents receives that relates to a period from and after the Closing, shall be remitted promptly (but in no event longer than 5 business days after receipt by Seller or its agent) to Buyer by Seller.  In view of the foregoing, Seller shall (a) maintain its existence, D-U-N-S number, SAMS registration, and otherwise be in good standing as a Government contractor, and (b) after Closing until the Novation Agreement is signed with respect to each Government Lease, cooperate with Buyer in communication and activities required of the landlord under Government Leases, but shall not take any action or have any communications with tenants under Government Leases with respect to the Property or the applicable Lease, without Buyer’s consent, provided, however, no consent shall be required in connection with Seller’s efforts to finalize and execute the Novation Agreements.

 

7.9                         Personal Property.  From the Original Effective Date until Close of Escrow, Seller shall not transfer or remove any Personal Property or fixtures from the Improvements except for the purpose of repair or replacement thereof.  Any items of Personal Property or fixtures replaced after the Original Effective Date will be installed prior to Closing and will be of at least substantially similar quality and value of the item being replaced.

 

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7.10                  No New Encumbrances; Estoppels for Existing Encumbrances.  Seller will not grant or authorize any other person or entity to grant any lien or encumbrance against any Property or enter into any agreement that creates any exception to marketable title to any Property, in each case, unless the action is the grant of a Lease in accordance with Section 7.3 or otherwise has been approved by Buyer in writing.  Seller shall deliver the estoppel certificates in the form attached hereto as Schedule 7.10 in connection with the agreements of record for the Property identified on Schedule 7.10 and shall send follow up requests up to two times at Buyer’s request.Seller shall use commercially reasonable efforts to deliver to Buyer an estoppel certificate pertaining to the 2353 Declaration, signed by the Unit 1 Owner (as defined in the 2353 Declaration), dated not more than thirty (30) days prior to the Closing and in substantially the  form attached hereto as Exhibit J-1 (the “YMCA 2353 Condominium Estoppel”), provided, however, that if Seller shall fail to deliver such estoppel to Buyer prior to Closing, then Seller shall execute and deliver to Buyer at the Closing an estoppel certificate pertaining to the 2353 Declaration substantially the form attached hereto as Exhibit J-2. Notwithstanding the foregoing, if the YMCA 2353 Condominium Estoppel is delivered at Closing but without all of the provisions included, Seller shall execute and deliver to Buyer at Closing the estoppel certificate in the form of Exhibit J-2, modified by deleting the provisions that are contained in the YMCA 2353 Condominium Estoppel as delivered.

 

7.11                  Notices.  Seller will deliver to Buyer, promptly after receipt, any notice of violation of any laws applicable (or alleged to be applicable) to any Real Property, or any part thereof, including, without limitation, any noncompliance with Environmental Laws.

 

8.                                      Representations and Warranties; Releases; “As Is” Sale.

 

8.1                         Seller’s Representations.  Each Seller hereby represents and warrants to Buyer on the Effective Date and again on and as of the Closing Date, as follows:

 

8.1.1                     Organization and Authority. Seller has been duly organized and is validly existing and in good standing under the laws of Delaware and is qualified to do business in the state in which the Property is located. Seller has the full right and authority to enter into this Restated Agreement and to transfer all of the Property to be conveyed by Seller pursuant hereto and to consummate or cause to be consummated the transactions contemplated herein to be made by Seller. This Restated Agreement constitutes a valid and binding obligation of Seller, enforceable against Seller in accordance with its terms. The execution, delivery and performance of this Restated Agreement and the other documents to be executed and delivered by Seller hereunder have been duly authorized by all necessary action on the part of Seller and do not and will not (a) require any consent or approval that has not been obtained under Seller’s organizational documents, or (b) violate any provision of Seller’s organizational documents. No consent or approval of any person, entity or governmental authority is required for the execution, delivery or performance by Seller of this Restated Agreement, and this Restated Agreement is hereby binding and enforceable against Seller.

 

8.1.2                     No Breach. Seller is not in violation or default under any agreement with any third party, or under any judgment, order, decree, rule or regulation of any applicable governmental authority to which it may be subject, which violation or default will materially and adversely affect Seller’s ability to consummate the transaction contemplated by this Restated Agreement. The execution, delivery and performance of this Restated Agreement by Seller and the consummation of the transaction contemplated herein will not: (i) result in a breach or acceleration of or constitute a default or event of termination under the provisions of any agreement or instrument by which the Property is bound or affected which would have an adverse impact on the ownership and operation of the Property by Buyer; (ii) result in the creation or imposition of any lien, charge or encumbrance, against the Property or any portion thereof; or (iii) constitute or result in the violation or breach by Seller of any judgment, order, writ, injunction or decree issued against or imposed upon Seller or result in the violation of any applicable law, rule or regulation of any governmental authority which, with respect to any of the foregoing, would have a material adverse impact on the ownership or operation of the Property by Buyer.

 

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8.1.3                           Leases. The copies of Leases (including all guarantees, amendments, letter agreements, modifications, supplements, confirmation of renewals or extensions, addenda and/or assignments thereof) and brokerage/leasing commission agreements made available to Buyer with the Seller Information are true and correct copies of all such Leases and brokerage agreements and are listed on the Lease Schedule.  Such Leases and brokerage/leasing commission agreements are in full force and effect, and binding on the tenant (and the guarantor in respect thereof, if applicable) thereunder.  There are no agreements or licenses, written or oral, with respect to any possessory rights, use or occupancy of the Property or tenancies of the Property, except as described on the Lease Schedule (as defined above) and any Lease entered into after the Original Effective Date in accordance with Section 7.3.   Except as set forth in the Lease Schedule, no tenant under any existing Lease has delivered written notice of its termination of its Lease (or the surrender of any space demised thereunder) or surrender any space currently demised under its Lease.  To Seller’s knowledge, Seller is not in material default under any Lease.  Except for collateral assignments of leases and rents in connection with Seller’s existing mortgage loan, which will be released prior to or concurrently with Closing, Seller has not assigned, or granted any pledge or encumbrance in respect of, its interest in any Lease or rents payable thereunder.  Except as set forth on Schedule 8.1.3, Seller has not sent any written notice to any tenant claiming that such tenant is in material default of any of its obligations under any Lease, which default remains uncured.  To Seller’s knowledge, no rents have been paid more than one (1) month in advance by any tenant under any Lease.  All tenant improvement work that Seller is required to construct as of the Effective Date under the Leases has been substantially completed, other than work for which Buyer receives a credit at Closing as set forth on Schedule 8.1.22.  Seller has not received written notice from any party that any existing tenant is subject to any pending actions, voluntary or otherwise, under the bankruptcy law of the United States.

 

8.1.4                           Service Contracts.  A complete schedule of service contracts relating to each Property is attached hereto as Schedule 8.1.4 (the “Service Contracts Schedule”). The copies of the service contracts made available to Buyer with the Seller Information are true and correct copies of all such service contracts and are in full force and effect.  Except as set forth on the Service Contract Schedule, to Seller’s knowledge, there are no defaults by Seller nor any party under the service contracts.  Except as set forth on the Service Contract Schedule, the Permitted Exceptions and the Leases, to Seller’s knowledge, there are no contracts or agreements to which Seller is a party that relate to any Property and would be binding on Buyer or any Property after the Close of Escrow.  The Service Contracts Schedule shall be updated by Seller at Closing to reflect any new Service Contracts, renewals or amendments entered into in accordance with this Restated Agreement.

 

8.1.5                           Pending Actions. Except as set forth on Schedule 8.1.5, Seller has  not received (i) any written notice of any claims, demands, litigation, proceedings or governmental investigations pending (A) against Seller that would prevent Seller from consummating the Closing of the sale of any Property contemplated under this Restated Agreement, or (B) directly related to any Property that will survive Closing, (ii) any written notice of any special assessments, taxes, charges, road club fees, or the imposition of any costs, charges, obligations or requirements arising out of or pertaining to roads, highways or thoroughfares and (iii) any written notice of any pending assessment, condemnation, eminent domain or similar proceeding which would affect any Property or any part thereof and to Seller’s knowledge, no such proceedings identified above are threatened in writing or pending.

 

8.1.6                           Notices from Governmental Authorities. Except as set forth on Schedule 8.1.6, as of the Effective Date, Seller has not received from any governmental authority written notice of any violation of any laws applicable (or alleged to be applicable) to any Real Property, or any part thereof, that has not been corrected.

 

8.1.7                           Patriot Act Compliance. Neither Seller nor, to Seller’s knowledge,  any person, group, entity or nation that Seller is acting, directly or indirectly for, or on behalf of, is named by any Executive Order (including the September 24, 2001, Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism) or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or is otherwise a banned or blocked person, group, entity, or nation pursuant to any law that is enforced or administered by the Office of Foreign Assets Control, and to Seller’s knowledge, Seller is not 

 

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engaging in the transaction contemplated herein, directly or indirectly, on behalf of, or instigating or facilitating the transaction contemplated herein, directly or indirectly, on behalf of, any such person, group, entity or nation. Seller is not engaging in the transaction contemplated herein, directly or indirectly, in violation of any laws relating to drug trafficking, money laundering or predicate crimes to money laundering. To Seller’s knowledge, none of the funds of Seller have been or will be derived from any unlawful activity with the result that the investment of direct or indirect equity owners in Seller is prohibited by law or that the transaction contemplated herein or this Restated Agreement is or will be in violation of law. Seller has and will continue to implement procedures, and has consistently and will continue to consistently apply those procedures, to ensure the foregoing representations and warranties remain true and correct at all times prior to Closing.

 

8.1.8                           FIRPTA.  Seller is not a “foreign person” as that term is defined in the Code.

 

8.1.9                           ERISA. Seller is not an employee benefit plan subject to Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), a plan subject to Section 4975 of the Internal Revenue Code of 1986, as amended, or an entity or account deemed to hold  “plan assets” of either of the foregoing (within the meaning of the Department of Labor regulations located at 29 C.F.R. Section 2510.3-101, as modified by Section 3(42) of ERISA (“Plan Assets”). Seller is not subject to any state or local laws that are substantially similar to Title I of ERISA or Section 4975 of the Code and that would be violated by the transactions contemplated by this Restated Agreement.

 

8.1.10                    Insurance. Seller has not received written notice from any insurance company of any defects or inadequacies in the Property which remain uncured that would affect adversely its insurability or materially increase the cost of insurance. All such policies will terminate as of the Closing.

 

8.1.11                    Bankruptcy. Seller has not (i) commenced a voluntary case with respect to it or its assets, or to Seller’s knowledge had entered against it a petition, for relief under any federal bankruptcy act or any similar petition, order or decree under any federal or state law or statute relative to bankruptcy, insolvency or other relief for debtors, (ii) caused, suffered or consented to the appointment of a receiver, trustee, administrator, conservator, liquidator, or similar official in any federal, state, or foreign judicial or non-judicial proceeding, to hold, administer and/or liquidate all or substantially all of its assets, or (iii) made a general assignment for the benefit of creditors.

 

8.1.12                    Title. To Seller’s knowledge, except with respect to the equipment leases listed on Schedule 8.1.12, Seller (i) has title to the Personal Property to be transferred to Buyer, free and clear of all liens, encumbrances or other rights whatsoever (other than liens which will be released by Seller on the Closing Date), and (ii) owns or has the right to assign its interest in the Service Contracts and Intangibles and other property as set forth herein. Except with respect to the equipment leases listed on Schedule 8.1.12, Seller has not given to any other party any option, contract right or right of first refusal or right of first offer to acquire any interest in any portion of the Property or in the Seller.

 

8.1.13                    Licenses and Permits. Seller has received no written notice of any violations which remain uncured of any licenses and permits affecting any Property.

 

8.1.14                    Environmental. Except as set forth on Schedule 8.1.14, Seller has not received from any governmental authority having jurisdiction over the Property written notice of any material violation of any Environmental Laws (as defined below) that has not been corrected.

 

8.1.15                    Management Agreements. There will be no property management or asset management contract or agreement relating to the Property as of the Closing Date.

 

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8.1.16                    Taxes. Except as set forth on Schedule 8.1.16, Seller is not actively engaged in any audit, dispute or claim now pending or threatened in writing by any governmental authority with respect to any Tax related to the Property (other than tax appeals or disputes which Seller elects to file after the Original Effective Date relating to tax periods before the Closing tax period). Except as set forth on Schedule 8.1.16, Seller has not filed notices of protest or appeal against, or commenced proceedings to recover, property tax assessments against any of the Property, tax appeals or disputes which Seller elects to file after the Original Effective Date relating to tax periods before the Closing tax period).

 

8.1.17                    Property Information. To Seller’s knowledge, copies of the Seller Information that have been delivered or made available to Buyer are true, correct and complete copies of all such Seller Information in Seller’s possession or control.

 

8.1.18                    Lease Audits.  No tenants have previously audited Seller’s books and records, which audit has not been fully and finally finalized, are currently auditing Seller’s books and records or have notified Seller that they intend to audit Seller’s books and records.  Seller has reconciled and refunded all outstanding tax amounts to and owing to existing tenants related to all tax challenges relating to each Property.

 

8.1.19                    Rent Roll.  The rent roll attached hereto as Schedule 8.1.19 for Seller’s Property was prepared by or for Seller in the ordinary course of its business and from the system used and relied upon by Seller in connection with the operation of its Property for the period indicated.  The Rent Rolls shall be updated by Seller at Closing to reflect any new Leases or lease expansions, renewals or amendments entered into in accordance with this Restated Agreement.

 

8.1.20                    Operating Statements.  The operating statements delivered or made available to Buyer in respect of its Property as part of the Seller Information were prepared by or for Seller in the ordinary course of its business and are used and relied upon by Seller in connection with its operation of its Property for the period indicated.

 

8.1.21                    Arrearage Schedule.  To the best of Seller’s knowledge, the information in the arrearage schedule attached hereto as Schedule 8.1.21 is true, correct and complete as of the date thereof, as prepared by or for Seller in the ordinary course of its business.The arrearage shall be updated by Seller at Closing.

 

8.1.22                    Leasing Commissions and Tenant Inducement Costs.  Attached hereto as Schedule 8.1.22 is (i) a true, correct and complete list as of the date shown of all unpaid leasing commissions payable by Seller as of the Effective Date with respect to the existing Leases at its Property and (ii) a true, correct and complete list as of the Effective Date of all unpaid Tenant Inducement Costs under the existing Leases at its Property.  At Closing, Seller shall update Schedule 8.1.22 to reflect all unpaid leasing commissions and Tenant Inducement Costs as of the Closing Date.  Items identified on Schedule 8.1.22 with the notation “Buyer” shall be Buyer’s responsibility and not credited against the Purchase Price.

 

8.1.23                    Security Deposits.  The security deposits, including letters of credit, under the Leases that are listed on Schedule 8.1.23 are all of the security deposits being held by Seller, together with any interest thereon, under the Leases (which list shall be updated by Seller at Closing to reflect the application of any security deposit by Seller after the Original Effective Date in accordance with Section 7.3).

 

8.1.24                    Employees.  Seller has no employees.

 

8.1.25                    No Unions.Neither Seller nor its manager are party to any collective bargaining agreements, union contracts or other labor agreements applicable to employees of Seller or its manager providing services at any Property.  To Seller’s knowledge, as of the date of this Restated Agreement, no representation election petition is pending with the National Labor Relations Board and no union organizing campaign involving any employee of Seller’s manager has occurred or is in progress against such manager with respect to any Property.

 

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8.1.26                    2353 Webster Declaration.  Seller has delivered to Buyer with the Seller Information the only copy of the 2353 Declaration in Seller’s possession.  To Seller’s knowledge, the 2353 Declaration is in full force and effect, binding on Declarant, Unit 1 and Unit 2 (each used in this Section 8.1.26, as defined in the 2353 Declaration).To Seller’s knowledge, Seller is not in default under the 2353 Declaration and no event or circumstance exists that (with the passage of time and/or giving of notice) could constitute a default by Seller under the 2353 Declaration.  Except in connection with Seller’s existing mortgage loan, which will be released prior to or concurrently with Closing, Seller has not assigned, or granted any pledge or encumbrance in respect of, its interest in the 2353 Declaration.  To Seller’s knowledge, no material amounts are due and owing to Seller or by Seller under the 2353 Declaration.  To Seller’s knowledge, no condominium association or similar organization has been formed with respect to the 2353 Declaration.  To Seller’s knowledge, 2353 Webster and the improvements thereon currently comply with all material obligations, prohibitions and restrictions under the 2353 Declaration.

 

8.1.27                    Kaiser Lease Waiver of Signage Right; Reassessment.  Kaiser Foundation Health Plan, Inc., a California nonprofit public benefit corporation, has permanently and unconditionally waived its right to install Building Top Sign(s) (as defined in such tenant’s Lease) at 2101 Webster.  Since January 1, 2015, no transfer or assignment of 2101 Webster or any ownership interest therein has occurred that would trigger a reassessment of real property taxes for 2101 Webster under California Proposition 13.

 

8.1.28                    Agreements Permitting Encroachments.  With respect to that certain Resolution Granting Conditional Revocable Permit to Encroach recorded on June 13, 1986, as Instrument Number 1986-140753 in the Official Records of Alameda County, California, that certain Revocable and Conditional Permit recorded on January 25, 2006, as Instrument Number 2006-026896 in the Official Records of Alameda County, California, that certain Resolution No. 79829 C.M.S. recorded on August 9, 2006, as Instrument Number 2006-304958 in the Official Records of Alameda County, California, that certain Agreement Permitting a Conditional and Revocable Encroachment in the Public Right-of-Way recorded on November 30, 2006, as Instrument Number 2006-441248 in the Official Records of Alameda County, California, and that certain Indenture Agreement recorded on December 17, 2014, as Instrument Number 2014-308068 in the Official Records of Alameda County, California (as amended, collectively, the “Encroachment Agreements”), (i) the City has not delivered to Seller written notice of a default under, its revocation of or its termination of any of the Encroachment Agreements, and, (ii) to Seller’s knowledge,  neither Seller nor any applicable Property is in material default under any of the Encroachment Agreements.

 

8.1.29                    Renewal Plan.  To Seller’s knowledge,  neither Seller nor any Property is in material default under that certain The Central District Urban Renewal Plan dated as of May 27, 1969 and recorded on December 10, 1969, in Book 2529, Image 910 in the Official Records of Alameda County, California (as amended, the “Renewal Plan”).  The City has not delivered to Seller or any Property written notice of a default under the Renewal Plan.

 

8.1.30                    No Ground Lease.  To Seller’s knowledge, no unrecorded ground lease exists or was ever created pursuant to that certain Disposition and Development Agreement recorded on August 30, 2001, as Instrument Number 2001326786 in the Official Records of Alameda County, California, and Seller is not aware of any outstanding obligations with respect thereto.

 

8.1.31                    Definitive Information Statement.  CMCT (as defined herein) mailed the Schedule 14C Statement (as defined herein) to all of its shareholders on January 11, 2019.  To the extent CIM Commercial Trust Corporation (“CMCT”) or Seller, receives comments from the SEC with respect to the definitive information statement that CMCT filed on January 9, 2019 (the “Schedule 14C Statement”), Seller shall promptly deliver a copy of any such comments to Buyer and Seller shall cause CMCT to use commercially reasonable efforts to respond and resolve all such comments as promptly as practicable after such receipt and, if necessary, to make any further distributions to shareholders within five (5) days after resolving all such comments.

 

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At the Closing, Seller shall reaffirm and restate the above representations and warranties, subject to disclosure of any changes in facts or circumstances that may have occurred since the date hereof.  As reaffirmed and restated at Closing, the aforesaid representations and warranties shall survive the Closing for a period of twelve (12) months (the “Survival Period”), after which time Seller shall have no liability with respect thereto unless Buyer shall have asserted a breach thereof in a written notice delivered to Seller prior to the expiration of the Survival Period and initiated litigation to enforce such claim within forty-five days after the expiration of the Survival Period (as such period may be extended with Seller’s written consent).

 

If Seller learns of any matters that make any of Seller’s representations or warranties untrue (including, when remade as of the Closing), Seller shall promptly (i.e., within two business days) disclose such matters to Buyer in writing.  Notwithstanding anything to the contrary provided hereinabove, if prior to Closing, Seller notifies Buyer, or if Buyer has actual knowledge, that there is an inaccuracy or change in any one or more of the representations and warranties made by Seller above and such inaccuracy or change, together with all other inaccuracies or changes to Seller’s representations and warranties, in the aggregate, causes, or could reasonably be expected to cause if Buyer were to Close on the acquisition of the Properties, damages or loss to Buyer of any nature in excess of $500,000 (the “Basket”), then Buyer may, at its option, either (i) terminate this Restated Agreement and, if any inaccuracy or change is the result of any Seller’s breach of a representation or warranty set forth in this Restated Agreement that is within Seller’s reasonable control, Seller shall reimburse Buyer for its out-of-pocket costs for this transaction in an amount not to exceed $500,000 or (ii) waive such breach and proceed to Closing with no adjustment in the Purchase Price and Seller shall have no further liability as to such matter thereafter; provided, however, Buyer shall not be entitled to terminate this Restated Agreement pursuant to the foregoing sentence after the Investigation Period to the extent that Buyer had actual knowledge of the material inaccuracy of any such representation or warranty prior to the expiration of the Investigation Period.  In the event Buyer terminates this Restated Agreement pursuant to this paragraph, the Deposit, along with any interest earned thereon (less the Independent Consideration) shall be promptly refunded to Buyer and, except as provided in Section 14.2, neither Buyer nor Seller shall thereafter have any other rights or remedies hereunder other than obligations expressly surviving termination of this Restated Agreement.

 

8.2                         Limitation on Seller’s Representations and Warranties. For the avoidance of doubt, as of the Investigation Period Expiration Date, all of the representations and warranties of Seller contained herein are qualified by the Seller Information delivered by Seller to Buyer, the PTR, and any reports, investigations, surveys, tests and/or analyses or other information regarding the Properties that Seller makes available to Buyer on the data website https://my.hfflp.com/doccenters?id=16160 as of 12:00 p.m. Local Time, on January 8, 2019, all of which the parties have instructed Seller’s Broker to copy onto a [USB drive/CD-rom] and titled “Oakland Portfolio Seller Information” and deliver to Purchaser and Seller (collectively, the “Data Site Information”).  After the Investigation Period Expiration Date, in no event shall Seller be deemed to have breached any of the representations and warranties contained in this Restated Agreement to the extent the facts or conditions alleged to constitute such breach were actually known by Buyer prior to the Investigation Period Expiration Date or otherwise disclosed to Buyer in the Data Site Information.

 

8.3                         Knowledge of Seller.  Whenever a representation, warranty or covenant is made in this Restated Agreement on the basis of the “knowledge”  or “best knowledge” of Seller, such representation, warranty or covenant is made: (i) solely on the basis of the actual, as distinguished from implied, imputed, or constructive knowledge of the Seller’s Knowledge Party (as defined in Basic Provision “B” above) on the date that such representation or warranty is made, after inquiry of Seller’s affiliated property manager CIM Group, L.P., but without any other independent inquiry or investigation; and (ii) solely on the basis of the knowledge of Seller’s Knowledge Party, without attribution to such specific individual of facts and matters otherwise within the personal knowledge of any other former or existing affiliates, agents or employees of Seller or any third parties, except as provided above.  In no event shall Seller’s Knowledge Party have any liability under this Restated Agreement for any reason. Seller hereby represents that Seller’s Knowledge Party is the person within Seller’s organization having the most comprehensive knowledge of the matters set forth in Section 8.1 above.

 

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8.4                         NO OTHER REPRESENTATIONS OR WARRANTIES.  EXCEPT FOR SELLER’S COVENANTS, REPRESENTATIONS AND WARRANTIES AS EXPRESSLY SET FORTH IN THIS RESTATED AGREEMENT AND/OR IN ANY OF THE DOCUMENTS TO BE EXECUTED AND DELIVERED BY SELLER AS OF THE CLOSE OF ESCROW (COLLECTIVELY, “SELLER’S CLOSING DOCUMENTS”), BUYER ACKNOWLEDGES, UNDERSTANDS AND AGREES THAT SELLER HAS NOT MADE AND IS NOT NOW MAKING, AND SELLER SPECIFICALLY DISCLAIMS, ANY AND ALL, REPRESENTATIONS, WARRANTIES OR GUARANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED, ORAL OR WRITTEN, PAST, PRESENT OR FUTURE, WITH RESPECT TO THE PROPERTY, INCLUDING, BUT NOT LIMITED TO, WARRANTIES, REPRESENTATIONS OR GUARANTIES AS TO (I) MATTERS OF TITLE, (II) ENVIRONMENTAL MATTERS RELATING TO THE PROPERTY OR ANY PORTION THEREOF (INCLUDING, WITHOUT LIMITATION, THE EXISTENCE OF MOLD, WATER DAMAGE, FUNGI, BACTERIA AND/OR OTHER BIOLOGICAL GROWTH OR BIOLOGICAL GROWTH FACTORS), (III) GEOLOGICAL CONDITIONS, INCLUDING, WITHOUT LIMITATION, SUBSIDENCE, SUBSURFACE CONDITIONS, WATER TABLE, UNDERGROUND WATER RESERVOIRS, LIMITATIONS REGARDING THE WITHDRAWAL OF WATER AND EARTHQUAKE FAULTS AND THE RESULTING DAMAGE OF PAST AND/OR FUTURE EARTHQUAKES, (IV) WHETHER, AND TO THE EXTENT TO WHICH, THE PROPERTY OR ANY PORTION THEREOF IS AFFECTED BY ANY STREAM (SURFACE OR UNDERGROUND), BODY OF WATER, FLOOD PRONE AREA, FLOOD PLAIN, FLOODWAY OR SPECIAL FLOOD HAZARD, (V) DRAINAGE, (VI) SOIL CONDITIONS, INCLUDING THE EXISTENCE OF INSTABILITY, PAST SOIL REPAIRS, SOIL ADDITIONS OR CONDITIONS OF SOIL FILL, OR SUSCEPTIBILITY TO LANDSLIDES, OR THE SUFFICIENCY OF ANY UNDERSHORING, (VII) ZONING TO WHICH THE PROPERTY OR ANY PORTION THEREOF MAY BE SUBJECT, (VIII) THE AVAILABILITY OF UTILITIES TO THE PROPERTY OR ANY PORTION THEREOF INCLUDING, WITHOUT LIMITATION, WATER, SEWER, GAS, TELEPHONE AND ELECTRICITY, (IX) USAGES OF ADJOINING PROPERTY, (X) ACCESS TO THE PROPERTY OR ANY PORTION THEREOF, (XI) THE VALUE, COMPLIANCE WITH THE PLANS AND SPECIFICATIONS, SIZE, LOCATION, AGE, USE, DESIGN, QUALITY, DESCRIPTIONS, SUITABILITY, STRUCTURAL INTEGRITY, OPERATION, TITLE TO, OR PHYSICAL OR FINANCIAL CONDITION OF THE PROPERTY OR ANY PORTION THEREOF, (XII) INCOME, EXPENSES, CHARGES, LIENS, ENCUMBRANCES, RESTRICTIONS, RIGHTS OR CLAIMS ON OR AFFECTING OR PERTAINING TO THE PROPERTY OR ANY PART THEREOF, (XIII) THE PRESENCE OF HAZARDOUS MATERIALS (AS DEFINED BELOW) IN OR ON, UNDER OR IN THE VICINITY OF THE PROPERTY, (XIV) THE CONDITION OR USE OF THE PROPERTY OR COMPLIANCE OF THE PROPERTY WITH ANY OR ALL PAST, PRESENT OR FUTURE FEDERAL, STATE OR LOCAL ORDINANCES, RULES, REGULATIONS OR LAWS, BUILDING, FIRE OR ZONING ORDINANCES, CODES OR OTHER SIMILAR LAWS OR COVENANTS, INCLUDING WITHOUT LIMITATION RENT CONTROL AND AFFORDABLE HOUSING PROVISIONS, (XV) THE EXISTENCE OR NON-EXISTENCE OF UNDERGROUND STORAGE TANKS, (XVI) ANY OTHER MATTER AFFECTING THE STABILITY OR INTEGRITY OF THE PROPERTY OR ANY PORTION THEREOF, (XVII) THE POTENTIAL FOR FURTHER DEVELOPMENT OF THE PROPERTY, (XVIII) THE STATUS OF THE CONVERSION OF THE PROPERTY TO CONDOMINIUM FORM OF OWNERSHIP, (XIX) THE EXISTENCE OR NONEXISTENCE OF VESTED LAND USE, ZONING OR BUILDING ENTITLEMENTS AFFECTING THE PROPERTY, (XX) THE MERCHANTABILITY OF THE PROPERTY OR FITNESS OF THE PROPERTY FOR ANY PARTICULAR PURPOSE (BUYER HEREBY AFFIRMING THAT BUYER HAS NOT RELIED ON SELLER’S SKILL OR JUDGMENT TO SELECT OR FURNISH THE PROPERTY FOR ANY PARTICULAR PURPOSE, AND THAT SELLER MAKES NO WARRANTY THAT THE PROPERTY IS FIT FOR ANY PARTICULAR PURPOSE, INCLUDING CONDOMINIUM OWNERSHIP), (XXI) TAX CONSEQUENCES (INCLUDING, BUT NOT LIMITED TO, THE AMOUNT, USE OR PROVISIONS RELATING TO ANY TAX CREDITS), OR (XXII) ANY OF THE OTHER MATTERS CONTEMPLATED TO BE INSPECTED OR INVESTIGATED BY IT, INCLUDING WITHOUT LIMITATION THOSE MATTERS THAT ARE DESCRIBED IN SECTION 8.5, BELOW.

 

8.5                         Condition of Property.  Buyer represents and warrants, which representations and warranties shall survive the Close of Escrow and not be merged with the Deed, that Buyer is a knowledgeable, sophisticated and experienced purchaser and owner of properties such as the Property or has retained or shall retain such advisors and consultants as are necessary to fully and adequately investigate all aspects of the Property, that, subject to the express covenants, representations and 

 

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warranties of Seller set forth in this Restated Agreement and/or in the Seller’s Closing Documents, Buyer will have an opportunity to fully investigate the Property and all relevant aspects of it, and to conduct tests, investigations and studies as necessary to fully evaluate the Property and all aspects thereof prior to the Investigation Period Expiration Date, that Buyer has received or will have an opportunity to obtain such additional professional analyses and studies concerning the Property, on its own and through the use of consultants, as Buyer and its advisors and consultants deem prudent in reaching prior to the Investigation Period Expiration Date the decision to purchase the Property (if Buyer should elect to proceed with its purchase of the Property pursuant to Section 5.6, above).  Buyer understands and acknowledges that the Property may be subject to earthquake, fire, floods, erosion, high water table, dangerous underground soil conditions, hazardous materials and similar occurrences that may alter its condition or affect its suitability for any proposed use.  Seller shall have no responsibility or liability under this Restated Agreement with respect to any such occurrence or condition, subject to the express covenants, representations and warranties of Seller set forth in this Restated Agreement and/or in the Seller’s Closing Documents.

 

8.6                         No Side Agreements or Representations.   No person acting on behalf of Seller is authorized to make, and by execution hereof, Buyer acknowledges that Buyer has not relied on any representation, agreement, statement, warranty, guarantee or promise made by any other person or entity purporting to represent any Seller regarding any one or more Properties or the transaction contemplated herein or the zoning, construction, physical condition or other status or attribute of the Property, except as may be expressly set forth in this Restated Agreement and/or in the Seller’s Closing Documents.  No representation, warranty, agreement, statement, guarantee or promise, if any, made by any person acting  on behalf of Seller which is not contained in this Restated Agreement and/or in the Seller’s Closing Documents will be valid or binding on Seller.

 

8.7                         Limited Liability.  Buyer on its own behalf and on behalf of its agents, members, partners, shareholders, employees, representatives, related and affiliated entities, successors and assigns (collectively, the “Buyer Parties”) hereby agrees that in no event or circumstance shall any of the shareholders, members, partners, employees, representatives, officers, directors, agents, property management company, or affiliated or related entities of Seller or of Seller’s property management company, namely CIM Group, L.P. and its affiliated entities, exclusive of Seller and CIM Commercial Trust Corporation, have any personal liability under this Restated Agreement or to any of Buyer’s lenders in connection with the Property.  Seller on its own behalf and on behalf of its agents, members, partners, shareholders, employees, representatives, related and affiliated entities, successors and assigns hereby agrees that in no event or circumstance shall any of the shareholders, members, partners, employees, representatives, officers, directors, agents, or affiliated or related entities of Buyer have any personal liability under this Restated Agreement.

 

8.8                         Release.   Buyer on its own behalf and on behalf of each of the Buyer Parties hereby agrees that, except as to the “Excepted Matters” (as hereinafter defined), each of Seller, Seller’s shareholders, partners or members, as the case may be, and each of their respective partners, members, trustees, directors, officers, employees, representatives, property managers, asset managers, agents, attorneys, affiliated and related entities, heirs, successors and assigns (collectively, the “Releasees”) shall be, and are hereby, fully and forever released and discharged by Buyer from any and all liabilities, losses, claims, demands, damages (of any nature whatsoever), causes of action, costs, penalties, fines, judgments, attorneys’ fees, consultants’ fees and costs and experts’ fees (collectively, the “Claims”) with respect to any and all Claims that Buyer or any Buyer Party has, whether direct or indirect, known or unknown, foreseen or unforeseen, that may arise on account of or in any way be connected with the Property as of the Close of Escrow, including, without limitation, the physical, environmental and structural condition of the Property or any law or regulation applicable thereto, including, without limitation, any Claim or matter (regardless of when it first appeared) relating to or arising from (i) the presence of any environmental problems, or the use, presence, storage, release, discharge, or migration of Hazardous Materials (as hereinafter defined) on, in, under or around the Property regardless of when such Hazardous Materials were first introduced in, on or about the Property, in each case latent or otherwise, (ii) any patent or latent defects or deficiencies with respect to the Property, (iii) any and all matters related to the Property or any portion thereof, including without limitation, the condition and/or operation of the Property and each part thereof, (iv) the presence, release and/or remediation of asbestos 

 

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and asbestos containing materials in, on or about the Property regardless of when such asbestos and asbestos containing materials were first introduced in, on or about the Property, and (v) any construction defects, errors, omissions or other conditions, latent or otherwise, affecting the Property, or any portion thereof.  This release includes claims of which Buyer is presently unaware or which Buyer does not presently suspect to exist which, if known by Buyer, would materially affect Buyer’s release to Seller.  Buyer hereby waives and agrees not to commence any action, legal proceeding, cause of action or suits in law or equity, of whatever kind or nature, including, but not limited to, a private right of action under the federal superfund laws, 42 U.S.C. Sections 9601 et seq. or any applicable state or local law, statute, regulation or ordinance (as such may be amended, supplemented or replaced from time to time), directly or indirectly, against the Releasees or their agents in connection with Claims released as described above.  As to the release provided for above, Buyer expressly waives the benefit of any statute that provides that a general release does not release claims not known to the releasing party at the time of the release and all similar provisions or rules of law, including without limitation California Civil Code Section 1542:

 

“A general release does not extend to claims that the creditor or releasing party does not know or suspect to exist in his or her favor at the time of executing the release, and that if known by him or her would have materially affected his or her settlement with the debtor or released party.”

 

Buyer elects to and does assume all risk for such Claims so released heretofore and hereafter arising, whether now known or unknown by Buyer. In this connection and to the extent permitted by law, Buyer hereby agrees, which agreement shall survive the Close of Escrow and not be merged with the Deed, that  (i) Buyer realizes and acknowledges that factual matters now unknown to it may have given or may hereafter give rise to Claims which are presently unknown, unanticipated and unsuspected, and (ii) the waivers and releases herein have been negotiated and agreed upon in light of that realization and that Buyer nevertheless hereby intends to release, discharge and acquit Seller from any such unknown causes of action, claims, demands, debts, controversies, damages, costs, losses and expenses, other than the Excepted Matters.  Without limiting the foregoing, if Buyer has actual knowledge (such knowledge shall include all Data Site Information disclosed to Buyer) of (a) a default in any of the covenants, agreements or obligations to be performed by Seller under this Restated Agreement and/or (b) any breach or inaccuracy in any representation of Seller made in this Restated Agreement, and Buyer nonetheless elects to proceed to close Escrow, then, upon the consummation of the Close of Escrow, Buyer shall be conclusively deemed to have waived any such default and/or breach or inaccuracy and shall have no Claim against Seller or hereunder with respect thereto.

 

As used herein, the “Excepted Matters” shall mean Claims resulting from a breach or default by or indemnity obligation of Seller under this Restated Agreement and/or any of the Seller’s Closing Documents.

 

Seller has given Buyer material concessions regarding this transaction in exchange for agreeing to the provisions of this Section 8.8.  Seller and Buyer have each initialed this Section 8.8 to further indicate their awareness and acceptance of each and every provision hereof.  The provisions of this Section 8.8 shall survive the Close of Escrow and shall not be deemed merged into any instrument or conveyance delivered at the Close of Escrow.

 

	
 
    	
 
    	
 
    
	
Buyer’s Initials
    	
 
    	
Seller’s Initials
    

 

As used herein, “Hazardous Materials” means any pollutants, hazardous or toxic substances or wastes, or contaminated materials including oil and oil products, asbestos, urea formaldehyde and all other materials and substances designated or regulated as hazardous or toxic substances or wastes, pollutants or contaminated materials under any Environmental Law (as hereinafter defined).  As used herein, “Environmental Laws” means the Clean Water Act, Clean Air Act, Resource Conservation and Recovery Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendment and Reauthorization Act, the Toxic Substances Control Act, the Occupational Safety and Health Act, and all other Federal, State or local environmental statutes, rules and regulations as enacted or amended from time to time and all licenses, permits, certificates or like authorizations promulgated under any of the foregoing.

 

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8.9                         AS-IS Condition of Property.  Buyer specifically acknowledges that prior to the Close of Escrow, it and its agents and representatives will have had an opportunity to thoroughly inspect the Properties and observe the physical characteristics and condition of the Properties.  Notwithstanding anything to the contrary contained in this Restated Agreement, Buyer further acknowledges and agrees that Buyer is purchasing the Property subject to all applicable laws, rules, regulations, codes, ordinances and orders.  By Buyer purchasing the Property, and upon the occurrence of the Close of Escrow, except for the Excepted Matters, Buyer waives any and all right or ability to make a claim of any kind or nature against any of the Releasees for any and all deficiencies or defects in the physical characteristics and condition of the Property and expressly agrees to acquire the Property with any and all of such deficiencies and defects and subject to all matters disclosed by Seller herein or in any separate writing with respect to the Property.  Buyer further acknowledges and agrees that except for any covenants, representations and warranties of Seller expressly made by Seller in this Restated Agreement and/or in any of the Seller’s Closing Documents neither Seller nor any of Seller’s employees, agents, representatives or other Releasees have made any representations, warranties or agreements by or on behalf of Seller of any kind whatsoever, whether oral or written, express or implied, statutory or otherwise, as to any matters concerning the Property, the condition of the Property, the size of the Property, the size of the improvements thereon (including without limitation, any discrepancies in the actual rentable square footage of any leased premises within the improvements), the present use of the Property or the suitability of the Property for Buyer’s intended purposes, use or investment, in each case, on which Buyer shall rely.  Subject to the express covenants, representations and warranties of Seller set forth in this Restated Agreement and/or in the  Seller’s Closing Documents, Buyer hereby acknowledges, agrees and represents that the Property is to be purchased, conveyed and accepted by Buyer in its present condition, “AS IS”, “WHERE IS” AND WITH ALL FAULTS, and that no patent or latent defect or deficiency in the condition of the Property whether or not known or discovered, shall affect the rights of either Seller or Buyer hereunder, nor shall the Purchase Price be reduced as a consequence thereof.  Subject to the express covenants, representations and warranties of Seller set forth in this Restated Agreement and/or in the Seller’s Closing Documents, the Seller Information shall be deemed furnished as a courtesy to Buyer but without any warranty of any kind from or on behalf of Seller.  Buyer hereby represents and warrants to Seller that Buyer prior to the Close of Escrow will have had an opportunity to perform, an independent inspection and investigation of the Property and operative or proposed governmental laws and regulations including without limitation, land use laws and regulations to which the Property may be subject.  Buyer further represents that, except for any covenants, representations and warranties expressly made by Seller in this Restated Agreement and/or in any of the Seller’s Closing Documents, it shall acquire the Property solely upon the basis of its independent inspection and investigation of the Property, including without limitation, its independent investigation and inspection as to (i) the quality, nature, habitability, merchantability, use, operation, value, marketability, adequacy or physical condition of the Property or any aspect or portion thereof, including, without limitation, structural elements, foundation, roof, appurtenances, access, landscaping, parking facilities, electrical, mechanical, HVAC, plumbing, sewage, and utility systems, facilities and appliances, soils, geology and groundwater, or whether the Property lies within a special flood hazard area, an area of potential flooding, a very high fire hazard severity zone, a wildland fire area, an earthquake fault zone or a seismic hazard zone, (ii) the dimensions or lot size of the Property or the square footage of the improvements thereon or of any tenant space therein, (iii) the development or income potential, or rights of or relating to, the Property or its use, habitability, merchantability, or fitness, or the suitability, value or adequacy of the Property for any particular purpose, (iv) the zoning or other legal status of the Property or any other public or private restrictions on the use of the Property, (v) the compliance of the Property or its operation with any applicable codes, laws, regulations, statutes, ordinances, covenants, conditions and restrictions of any governmental or regulatory agency or authority or of any other person or entity (including, without limitation, Environmental Laws and the American with Disabilities Act), (vi) the ability of Buyer to obtain any necessary governmental approvals, licenses or permits for Buyer’s intended use or further development of or improvements on the Property, (vii) the presence or absence of Hazardous Materials on, in, under, above or about the Property or any adjoining or neighboring property, (viii) the quality of any labor and materials used in any improvements, (ix) the condition of title to the Property, (x) the leases, contracts or any other agreements affecting the Property or the intentions of any party with respect to the 

 

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negotiation and/or execution of any lease or contract with respect to the Property, (xi) Seller’s ownership of the Property or any portion thereof, (xii) the economics of, or the income and expenses, revenue or expense projections or other financial matters, relating to the operation of the property, (xiii) the manner or quality of the construction or materials, if any, incorporated into the Property, (xiv) the content, completeness or accuracy of the due diligence materials or the PTR, (xv) the conformity of the improvements to any plans or specifications for the Property, including any plans and specifications that may have been or may be provided to Buyer, (xvi) the conformity of the Property to past, current or future applicable zoning or building requirements, (xvii) deficiency of any undershoring or drainage with respect to the Property, and (xviii) any of the other matters described in Section 8.1.  Without limiting the generality of the foregoing, Buyer expressly acknowledges and agrees that Buyer is not relying on any representation or warranty of Seller, nor any other Seller Releasee, whether implied, presumed or expressly provided at law or otherwise, arising by virtue of any statute, common law or other legally binding right or remedy in favor of Buyer except as expressly provided in this Restated Agreement and/or in the Seller’s Closing Documents.  Buyer further acknowledges and agrees that Seller is not under any duty to make any inquiry regarding any matter that may or may not be known to the Seller or any member, partner, officer, employee, attorney, property manager, agent or broker of Seller, except as expressly provided herein.  Buyer acknowledges that the Purchase Price has been fully negotiated by the parties hereto so as to reflect the “AS IS,” “WHERE IS” and WITH ALL FAULTS nature of the purchase and sale transaction described herein, and any faults, liabilities, defects or other adverse matters that may be associated with the Property.  All of Buyer’s representations, warranties, acknowledgements, agreements, understandings and other statements contained in this Section 8.9 shall survive the Close of Escrow in perpetuity, shall not merge with the Deed or any other closing documents and shall be deemed incorporated into the Deed.

 

By initialing below, Buyer acknowledges that (a) this Section 8.9 has been read and fully understood, (b) Buyer has had the chance to ask questions of its counsel about its meaning and significance, and (c) Buyer has accepted and agreed to the terms set forth in this Section 8.9.

 

	
 
    	
 
    	
 
    
	
Buyer’s Initials
    	
 
    	
Seller’s Initials
    

 

Except as otherwise provided in this Restated Agreement, any reports, repairs or work required by Buyer are the sole responsibility of Buyer, and Buyer agrees that there is no obligation on the part of Seller to make any changes, alterations or repairs to the Property or to cure any violations of law or to comply with the requirements of any insurer.  The provisions of this Section 8.9 shall survive the Close of Escrow and shall not be deemed merged into any instrument or conveyance delivered at the Close of Escrow.

 

8.10                  Buyer’s Representations, Warranties and Covenants.  In addition to Buyer’s other representations, warranties and covenants set forth elsewhere in this Restated Agreement, Buyer hereby represents, warrants and covenants that:

 

8.10.1                    Formation; Authority.  Buyer is duly formed, validly existing and in good standing under the laws of the jurisdiction of its formation.  Buyer has full power and authority to enter into this Restated Agreement and the instruments herein, and to consummate the transactions contemplated hereby.  All requisite action has been taken by Buyer in connection with the entering into of this Restated Agreement and the instruments referenced herein, and the consummation of the transactions contemplated hereby.  The individuals executing this Restated Agreement and the instruments referenced herein on behalf of Buyer have the legal power, right and actual authority to bind Buyer to the terms and conditions hereof and thereof.

 

8.10.2                    Due Execution.  This Restated Agreement and all other documents executed and delivered by Buyer pursuant to this Restated Agreement shall constitute the legal, valid and binding obligations of Seller in accordance with the terms of each instrument.  To the best of Buyer’s knowledge, this Restated Agreement and all other instruments delivered by Buyer pursuant to this Restated Agreement (a) do not conflict with or constitute a default under any indenture, agreement or other instrument to which Buyer is a party or by which Buyer, or any officers or directors of Buyer may be bound, and (b) are not threatened with invalidity or enforceability by any action, proceeding or investigation pending or threatened by or against Buyer, or any officer or director of Buyer.

 

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8.10.3                    ERISA. Buyer does not hold Plan Assets and shall not hold Plan Assets as of the Close of Escrow.

 

8.10.4                    OFAC.  Buyer is not now, and shall not at any time until the Close of Escrow be a Person with whom a U.S. Person is prohibited from transacting business of the type contemplated by this Restated Agreement, whether such prohibition arises under United States law, regulation, executive orders and lists published by OFAC (including those executive orders and lists published by OFAC with respect to Specially Designated Nationals and Blocked Persons) or otherwise.  Neither Buyer nor, to Buyer’s Knowledge, any Person who owns a greater than 25% interest in Buyer (collectively, a “Buyer Party”) does business with, sponsors, or provides assistance or support to, the government of, or any person located in, any country, or with any other person, targeted by any of the economic sanctions of the United States administered by OFAC; Buyer is not directly owned or controlled (within the meaning of the regulations promulgating such sanctions or the laws authorizing such promulgation) by any such government or person; and any payments and/or proceeds received by Buyer under the terms of this Restated Agreement will not be used to fund any operations in, finance any investments or activities in or make any payments to, any country, or to make any payments to any person, targeted by any of such sanctions.

 

8.10.5                    Buyer’s Funds.  Buyer has taken, and shall continue to take until the Close of Escrow, such measures as are required by law to assure that all funds tendered by or on behalf of Buyer to the Seller pursuant to or in connection with this Restated Agreement, whether on account of the Purchase Price or otherwise, are derived (i) from transactions that do not violate or contravene United States law in any way nor, to the extent such funds originate outside the United States, do not violate or contravene the laws of the jurisdiction in which they originated in any way, including without limitation anti-money laundering laws; and (ii) from permissible sources under United States law and to the extent such funds originate outside the United States, under the laws of the jurisdiction in which they originated, in each case, such that the transactions contemplated in this Restated Agreement is not or will not be in violation of law.

 

8.10.6                    Patriot Act.  Neither Buyer nor, to Buyer’s knowledge, any Buyer Party, (i) is under investigation by any governmental authority for, or has been charged with, or convicted of, money laundering, drug trafficking, terrorist related activities, any crimes which in the United States would be predicate crimes to money laundering, or any violation of any laws, regulations and sanctions, state and federal, criminal and civil, that (1) limit the use of and/or seek the forfeiture of proceeds from illegal transactions; (2) limit commercial transactions with designated countries or individuals believed to be terrorists, narcotics dealers or otherwise engaged in activities contrary to the interests of the United States; (3) require identification and documentation of the parties with whom a Financial Institution conducts business; or (4) are designed to disrupt the flow of funds to terrorist organizations, including without limitation the Patriot Act or Anti-Money Laundering Laws; (ii) has been assessed civil or criminal penalties under any Anti-Money Laundering Laws; (iii) has had any of its funds seized or forfeited in any action under any Anti-Money Laundering Laws; (iv) is a person or entity that resides or has a place of business in a country or territory which is designated as a Non-Cooperative Country or Territory by the Financial Action Task Force on Money Laundering, or whose subscription funds are transferred from or through such a jurisdiction; (v) is a “Foreign Shell Bank” within the meaning of the Patriot Act (i.e., a foreign bank that does not have a physical presence in any country and that is not affiliated with a bank that has a physical presence and an acceptable level of regulation and supervision); (vi) is a person or entity that resides in, or is organized under the laws of, a jurisdiction designated by the Secretary of the Treasury under Section 311 or 312 of the Patriot Act as warranting special measures due to money laundering concerns; (vii) is an entity that is designated by the Secretary of the Treasury as warranting such special measures due to money laundering concerns; or (viii) is a person or entity that otherwise appears on any United States government-provided list of known or suspected terrorists or terrorist organizations.

 

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Buyer’s representations, warranties and covenants set forth above shall survive the Close of Escrow for the Survival Period.

 

8.11                  Governmental Approvals.  Except as may be expressly set forth in this Restated Agreement, Buyer’s obligation to purchase the Property shall not be subject to or conditioned upon Buyer’s obtaining any variances, zoning amendments, subdivision maps, lot line adjustment, or other discretionary governmental act, approval or permit.

 

9.                                      Conditions to Close of Escrow.

 

9.1                         Buyer’s Conditions.  Buyer’s obligation to purchase the Properties and to close Escrow is subject to and conditioned upon the satisfaction or Buyer’s written waiver of each of the following conditions at or before the Close of Escrow:

 

9.1.1                           For each Property, the Title Company shall have unconditionally and irrevocably committed to issue an ALTA extended coverage owner’s policy of title insurance (each, an “Owner Policy”) with a liability amount not less than the applicable allocated Purchase Price shown on the Allocation Schedule, naming Buyer, as the insured, showing fee simple title to such Property to be vested in Buyer, subject only to the Permitted Exceptions.

 

9.1.2                           Each Seller’s timely delivery to Escrow Holder of the items described in Section 10.1 below.

 

9.1.3                           Each Seller not being in default in the performance of any of its obligations in any material respect under this Restated Agreement as of the Close of Escrow.

 

9.1.4                           All representations and warranties of each Seller set forth in this Restated Agreement, as they may be amended or deemed amended or modified with Buyer’s acceptance pursuant to the terms of the last paragraph of Section 8.1 of this Restated Agreement, shall be true and correct in all material respects when made and shall be true and correct in all material respects when remade as of the Close of Escrow.

 

9.1.5                           Seller shall have delivered to Buyer (i) a sufficient number of Acceptable Estoppel Certificates to satisfy the Estoppel Threshold requirement in Section 7.6.4, and (ii) an Acceptable Estoppel Certificates from each Major Tenant.

 

9.1.6                           There shall be no pending legal action against any Seller that seeks to prevent, make illegal, enjoin or prohibit the sale of the Properties to Buyer.

 

9.1.7                           If the SEC notifies Seller or CMCT of its intent to review or comment on or otherwise provides comments to the Schedule 14C Statement prior to Closing, CMCT shall have determined in good faith that it has resolved all such comments and, if CMCT determines that a supplemental mailing to the Schedule 14C Statement is necessary in connection with the resolution of such comments, twenty (20) days shall have elapsed since such mailing by CMCT to the stockholders of CMCT.  If the foregoing condition is not fulfilled on or before the scheduled Close of Escrow contemplated in Section 4.2, Buyer, at its option, may either (i) adjourn Closing and extend the Closing Date for thirty (30) days to allow the satisfaction of such condition, and if the foregoing condition is not fulfilled on or before the expiration of such thirty (30) days, Buyer may adjourn Closing and extend the Closing Date for an additional thirty (30) days to allow the satisfaction of such condition, or (ii) terminate this Restated Agreement, whereupon Escrow Holder shall promptly return to Buyer the Deposit, along with any interest earned thereon, less the Independent Consideration, and neither party shall have any further rights or obligations under this Restated Agreement, except those that expressly survive the termination of this Restated Agreement, except that if the failure of any such condition specified in this Section 9.1.7 is a breach or default by Seller, then Buyer shall have such rights and remedies as are provided in this Restated Agreement upon the occurrence of such breach or default by Seller.  Notwithstanding the foregoing, if Buyer elects to adjourn Closing and extend the Closing Date pursuant to option (i) in the immediately preceding sentence, Buyer, at its option, may terminate this Restated Agreement pursuant to 

 

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option (ii) in the immediately preceding sentence at the expiration of the first thirty (30) day extension only.  At the expiration of the second thirty (30) day extension, if the foregoing condition is not fulfilled, this Restated Agreement shall automatically terminate, the Deposit (excluding the Independent Consideration) shall be returned to Buyer, Seller shall reimburse Buyer for its out-of-pocket costs incurred in connection with this Restated Agreement and the transactions contemplated by this Restated Agreement up to and not exceeding One Million and 00/100ths Dollars ($1,000,000.00) and neither party shall have any further rights, obligations or liabilities hereunder except to the extent that any right, obligation or liability set forth herein expressly survives termination of this Restated Agreement.

 

9.1.8                           The Closing of the sale of all of the Properties must occur simultaneously, and Seller shall not have the right to sell any Property without the sale of each of the other Properties.

 

The terms of this Section 9.1 are solely for the benefit of Buyer, and Seller shall have no additional right or remedy hereunder as a result of the exercise by Buyer of any of its rights under this Section 9.1.  Other than as set forth in Section 9.1.7, if any of the foregoing conditions is not fulfilled on or before the scheduled Close of Escrow contemplated in Section 4.2, Buyer, at its option, may either (i) elect to complete the transactions contemplated by this Restated Agreement, (ii) delay the Close of Escrow for up to thirty (30) days to allow the satisfaction of any unsatisfied condition, or (iii) terminate this Restated Agreement, whereupon Escrow Holder shall promptly return to Buyer the Deposit, along with any interest earned thereon, less the Independent Consideration, and neither party shall have any further rights or obligations under this Restated Agreement, except those that expressly survive the termination of this Restated Agreement, except that if the failure of any such condition specified in this Section 9.1 is a breach or default by Seller, then Buyer shall have such rights and remedies as are provided in this Restated Agreement upon the occurrence of such breach or default by Seller.

 

9.2                         Seller’s Conditions.  Seller’s obligation to sell the Properties and to close the Escrow is subject to and conditioned upon the satisfaction or Seller’s written waiver of each of the following conditions at or before the Close of Escrow:

 

9.2.1                           Buyer’s timely delivery into Escrow of all sums and documents required from Buyer to close Escrow, as set forth in Sections 2 and 3 above and Section 10 below.

 

9.2.2                           Buyer’s timely delivery to Escrow Holder of the items described in Section 10.2 below.

 

9.2.3                           Buyer not being in default in the performance of any of its material obligations under Section 6 above.

 

9.2.4                           All representations and warranties of Buyer set forth in this Restated Agreement, as they may be amended or deemed amended or modified with Seller’s acceptance pursuant to the terms of this Restated Agreement, shall be true and correct in all material respects as of the Close of Escrow.

 

9.2.5                           The Closing of the sale of all of the Properties must occur simultaneously, and Buyer shall not have the right to acquire any Property without the acquisition of each of the other Properties.

 

9.2.6                           If the SEC notifies Seller or CMCT of its intent to review or comment on or otherwise provides comments to the Schedule 14C Statement prior to Closing,  CMCT shall have determined in good faith that it has resolved all such comments and, if CMCT determines that a supplemental mailing to the Schedule 14C Statement is necessary in connection with the resolution of such comments, twenty (20) days shall have elapsed since such mailing by CMCT to the stockholders of CMCT; provided, however, that nothing contained in this Section 9.2.6 shall affect Buyer’s right to delay the Close of Escrow or terminate this Restated Agreement contained in Section 9.1.7.

 

Seller shall have the right to adjourn Closing and extend the Closing Date for up to ten (10) 

 

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business days to allow the fulfillment of any condition precedent in this Section 9.2 to occur.  If the conditions precedent have not occurred within such ten (10) business day period, Seller shall have the right to terminate this Restated Agreement, in which case Buyer shall be entitled to the return of the Deposit.  The terms of this Section 9.2 are solely for the benefit of Seller, and Buyer shall have no additional right or remedy hereunder as a result of the exercise by Seller of any of its rights under this Section 9.2.

 

10.                               Deliveries to Escrow Holder.

 

10.1                  Seller’s Deliveries.  Seller shall deliver or cause to be delivered to Escrow Holder by 11:00 AM, Local Time, on or prior to the scheduled date of the Close of Escrow the following documents:

 

10.1.1                    A Deed for each Property, duly executed and acknowledged by the applicable Seller, in the form of Exhibit B;

 

10.1.2                    A counterpart assignment and assumption of leases and contracts in the form of Exhibit E for each Property pursuant to which the applicable Seller shall assign to Buyer such Seller’s right, title and interest in the Leases and Service Contracts for such Property as of the Close of Escrow (“Assignment and Assumption of Leases and Contracts”);

 

10.1.3                    A bill of sale for each Property, duly executed by the applicable Seller, in the form of Exhibit F (the “Bill of Sale”);

 

10.1.4                    A counterpart general assignment for each Property, duly executed by the applicable Seller, in the form of Exhibit G (the “General Assignment”);

 

10.1.5                    A certification duly executed by each Seller under penalty of perjury in the form of Exhibit C stating that Seller is not a foreign corporation, a foreign partnership, a foreign trust, or a foreign estate, as those terms are defined in the Internal Revenue Code and the income tax regulations promulgated under the Internal Revenue Code, together with any required state form removing the obligation to withhold any portion of the proceeds;

 

10.1.6                    A certificate signed by Seller indicating that the representations and warranties set forth in Section 8.1 are true and correct as of the Close of Escrow, or, if there have been changes, describing such changes;

 

10.1.7                    Written notice executed by each Property’s property manager and addressed to the tenants stating that Buyer has acquired the Property and instructing the tenants to pay all future amounts owed under the Leases to Buyer, in a form mutually acceptable to Seller and Buyer;

 

10.1.8                    Customary owner’s affidavits for the Title Company as reasonably required for issuance of each Owner Policy, and such proof of Seller’s authority and authorization to enter into this Restated Agreement and the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of each Seller to act for and bind such Seller, as may be reasonably required by Title Company;

 

10.1.9                    Documentary evidence of the termination or notice of termination, as applicable, of (i) all existing property management agreements and leasing agreements relating to all Properties, and (ii) all Service Contracts required to be terminated pursuant to Section 5.11;

 

10.1.10             Such disclosures and reports as are required from each Seller by applicable state and local law in connection with the conveyance of the Real Property and Personal Property being conveyed by such Seller hereunder;

 

10.1.11             An executed closing statement consistent with this Restated Agreement in the form required by Escrow Agent;

 

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10.1.12    A Novation Agreement for each Government Lease signed by Seller in the form attached hereto as Exhibit I;

 

10.1.13    Seller’s written resignation of the 2353 Owner’s representative, as owner of Unit 2 (as defined in the 2353 Declaration), to the Committee established under the 2353 Declaration, and appointment of a replacement representative designated by Buyer; and

 

10.1.14    Such additional documents as Escrow Holder or the Title Company may reasonably require for the proper consummation of the transaction contemplated by this Restated Agreement.

 

10.2      Buyer’s Deliveries. At or before 11:00 AM, Local Time on the scheduled date of the Close of Escrow, Buyer shall deliver or cause to be delivered to Escrow Holder:

 

10.2.1       A counterpart of each Assignment and Assumption of Leases and Contracts;

 

10.2.2       A counterpart of each General Assignment;

 

10.2.3       Such proof of Buyer’s authority and authorization to enter into this Restated Agreement and the transactions contemplated hereby, and such proof of the power and authority of the individual(s) executing and/or delivering any instruments, documents or certificates on behalf of Buyer to act for and bind Buyer, as may be reasonably required by Title Company; and

 

10.2.4       A Novation Agreement for each Government Lease signed by Buyer in the form attached hereto as Exhibit I.

 

The parties hereto shall jointly deposit any required transfer declarations or declarations of value and appropriate closing statements, and Seller shall deliver State form 593-C, all in form and to the extent reasonably requested by Escrow Holder.  Seller shall also deliver to Buyer at Closing originals of the Leases, Service Contracts, warranties, guaranties, licenses and permits (and copies if originals are not in the possession of Seller or Seller’s agents), including, without limitation, any warranties covering the roof or any other part of the Improvements, and any correspondence with respect thereto, together with such non-proprietary leasing and property manuals, files and records which are material in connection with the continued operation, leasing and maintenance of the Property; all keys, combinations and codes to all locks on each Property; the books and records for each Property; originals (or copies if the original is not available) of all warranties and guaranties relating to such Property; and copies of all plans drawings, specifications, surveys and other technical descriptions for each Property.

 

Buyer shall deliver all sums that Buyer is required to deliver to Escrow Holder pursuant to Sections 2, 3, 11 and 12 in order to close Escrow to Escrow Holder by 1:00 PM Pacific Time on the date of the Close of Escrow, so long as no Seller default shall exist.

 

Possession of the Properties shall be delivered to Buyer upon Close of Escrow, subject to all tenants in possession under the Leases.

 

11.          Costs and Expenses.  At the Close of Escrow, Seller shall pay one-half of the applicable City documentary transfer taxes payable upon recording the Deed, all of the applicable State and County documentary transfer taxes payable upon recording the Deed, one-half (1⁄2) of the fee charged by Escrow Holder and one-half (1/2) of the recording fees for the Deed. Buyer shall pay one-half (1/2) of the fees charged by Escrow Holder, one-half of the applicable City documentary transfer taxes payable upon recording the Deed, all premiums for the Owner’s title insurance coverage, the cost of any endorsements to the Owner’s title insurance policy and one-half (1/2) of the recording fees for the Deed. Buyer hereby acknowledges that its ability to obtain title insurance in excess of an ALTA extended coverage owner’s policy without endorsements is not a contingency of this Restated Agreement or a condition to the enforceability against Buyer of its purchase obligations and other covenants set forth herein). Buyer and Seller shall each pay all fees incurred in connection with this transaction for their respective counsel retained by each.

 

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12.          Post Closing Adjustments.

 

12.1      Adjustments.  In executing this Restated Agreement, the parties have made appropriate adjustments regarding obligations with respect to tenant improvements, rents, taxes and other matters.  The parties agree that the adjustments they have made shall not be revisited, except that if any errors or omissions were made regarding the adjustments set forth below, the parties shall make the appropriate corrections promptly upon discovery, provided that the error or omission is discovered on or before April 30 in the calendar year following the year in which Close of Escrow occurs (the “Final Adjustment Date”).  Any error or omission not discovered within that period shall not be subject to adjustment.  The amount necessary to correct any adjustment that is to be corrected under the foregoing shall be paid in cash to the party entitled to the amount in question.  The parties’ obligations under this Section 12.1 shall survive the Close of Escrow.

 

12.1.1       Tenant Expense Charges.

 

(i)            Calendar Year 2019. All amounts received by Buyer from tenants as interim payments for maintenance and operating costs, real estate taxes, utilities, amortized capital, insurance and similar amounts (collectively, “Tenant Expense Charges”) on or after the Close of Escrow for the calendar year 2019 shall be retained by Buyer until the year-end adjustment and determination of Seller’s allocable share thereof as of the Final Adjustment Date.  No later than the Final Adjustment Date, Seller’s allocable share of actual Tenant Expense Charges for the calendar year 2019 for Leases in effect and pursuant to which tenants are required to pay Tenant Expense Charges as of the Close of Escrow shall be determined by multiplying the total payments due from each tenant for such fiscal year (the sum of estimated payments plus or minus year-end adjustments) by a fraction, the numerator of which is Seller’s actual cost of providing common area maintenance services and taxes (as the case may be) prior to the Close of Escrow (within that portion of the fiscal year prior to the Close of Escrow in which the applicable Lease is in effect and the tenant thereunder is required to pay Tenant Expense Charges), and the denominator of which is the cost of providing such services and paying such taxes for the entire fiscal year (or that portion of the fiscal year in which the applicable Lease is in effect and the tenant thereunder is required to pay Tenant Expense Charges).  Seller shall not be entitled to Tenant Expense Charges under Leases with respect to which tenants are not required to pay Tenant Expense Charges prior to the Close of Escrow; provided, however, that with respect to Government’s obligation to pay real estate taxes in excess of the base real estate tax amount under the Government Leases, Government pays such excess at year-end, and Buyer shall pay to Seller promptly upon receipt Seller’s portion of any such excess.  If, on the basis of amounts actually incurred and the estimated payments received by Seller for Tenant Expense Charges for the calendar year 2018, Seller has retained amounts in excess of its allocable share, it shall remit, within thirty (30) days after notice from Buyer of the excess owed Buyer, such excess to Buyer.  If, on the basis of the foregoing amounts, Seller has retained less than its allocable share of such amounts (the “Seller Shortfall”), Buyer shall attempt to collect the Seller Shortfall from the tenants of the Property and, to the extent collected by Buyer, Buyer shall promptly remit the Seller Shortfall, net of reasonable costs of collection, including without limitation, reasonable attorneys’ fees, to Seller.  Buyer shall not be obligated to expend any funds or commence legal proceedings to collect any Seller Shortfall.

 

(ii)           Calendar Year 2018.  Buyer and Seller acknowledge that Seller has delivered a preliminary reconciliation of the amounts of all Tenant Expense Charges for calendar year 2018.  After Closing, Seller shall cooperate with Buyer to determine the final amount of the Tenant Expense Charges for calendar year 2018 and the adjustments with the tenants under leases with respect thereto.  If, based on the final amount of the Tenant Expense Charges for calendar year 2018, Seller was paid amounts in excess of the agreed upon credit to Buyer at Closing, it shall remit such excess to Buyer, within ten (10) days after notice from Buyer.  If, on the basis of the foregoing amounts, there is a Seller Shortfall for calendar year 2018, Buyer shall attempt to collect the Seller Shortfall from the tenants of the Property and, to the extent collected by Buyer, Buyer shall promptly remit the Seller Shortfall, net of reasonable costs of collection, including without limitation, reasonable attorney’s fees, to Seller.  Buyer shall not be obligated to expend any funds or commence legal proceedings to collect any Seller Shortfall.

 

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Seller shall remain responsible for amounts owed to any tenants at each Property in respect of Tenant Expense Charges for time periods before the Close of Escrow, and Seller shall indemnify, defend and hold Buyer harmless from and against any claims, suits or demand brought against Buyer by any tenant in connection with any such amounts, and Buyer shall be responsible to tenants for any Tenant Expense Charges owed to any Tenant for time periods after the Close of Escrow.

 

12.1.2       Percentage Rent.  Any percentage rent received from a tenant after the Close of Escrow shall be applied as follows:  (a) Buyer shall be entitled to a pro-rata portion of such percentage rent payment based on the number of days within the applicable percentage rent fiscal year period that Buyer owned the Property and (b) Seller shall be entitled to a pro-rata portion of such percentage rent payment based on the number of days within the applicable percentage rent period that Seller owned the Property.

 

12.1.3       Leasing Costs.  Leasing commissions and Tenant Inducement Costs (as defined below) shall be allocated according to whether such obligations arise in connection with Leases, including amendments, confirmations of renewals, extensions or expansions, executed prior to the Original Effective Date (collectively, “Existing Leasing Costs”), or Leases and amendments, renewals, extensions or expansions entered into after the Original Effective Date, in each case, in accordance with the terms and provisions of Section 7.3 (“New Leasing Costs”).  In the event that, prior to Close of Escrow, Seller enter into any agreement(s) to perform tenant improvements constituting New Leasing Costs and the work under such contract(s) have not been completed and fully paid for by the Closing Date, Seller shall assign all such agreements for such uncompleted tenant improvements to the Buyer at the Close of Escrow together with written verification by the applicable contractor of the amounts remaining to be paid under such agreement(s).  No later than the Final Adjustment Date, Seller and Buyer shall make a final adjustment crediting Buyer for the amount by which the cost of such landlord work exceeded the credit previously extended to Buyer, if any, and crediting Seller for the amount by which the cost of such landlord work was less than the credit, all such amounts to be substantiated by applicable statements, bills and invoices. As used herein, “Tenant Inducement Costs,” shall mean payments required under a Lease to be paid by the landlord thereunder to or for the benefit of the tenant thereunder which is in the nature of a tenant inducement or concession, including, without limitation, tenant improvement costs, design, refurbishment and other work allowances, lease buyout costs, and moving allowances, but shall exclude free or abated rent that is in the nature of a tenant inducement or concession other than free or abated rent that is attributable to the Leases with the following tenants: the United States of America (Social Security Administration), and SMTD Law, LLP, a California limited liability partnership.

 

12.1.4     Utilities.  Seller and Buyer shall endeavor to have all meters for utilities servicing each Property and not billed directly to any tenant or other third party, including (without limitation) water, sewer, gas and electricity, read for the period to and including the day of the Close of Escrow.  To the extent this is unavailable, Seller shall credit Buyer based on the average utility expense of the previous three (3) months prior to closing, and no later than the Final Adjustment Date, Seller and Buyer shall make a final adjustment based on the actual utility bills for such services.

 

12.1.5     Contracts.  Fees and charges under such of the Service Contracts, licenses and permits being assigned to and assumed by Buyer at the Closing shall be adjusted no later than the Final Adjustment Date, based on the actual fees and charges paid.

 

12.1.6     Refunds.  All refunds of any amounts relating to the period of time prior to the Closing Date, including, without limitation, real property taxes, utility refunds and the like, shall be paid to Buyer to the extent required (whether the requirement arises before or after Close of Escrow) to be refunded to the tenants under Leases.  To the extent any excess amounts remain after refunding tenants, Buyer will pay such excess amount to Seller.

 

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12.2      Post-Closing Obligations.

 

12.2.1     As of the Close of Escrow, Seller shall have paid all real property taxes then due and payable.  Seller shall be responsible for all taxes and assessments levied against the Property and applicable to the period through and including the day prior to the Close of Escrow, and Buyer shall be responsible for all taxes and assessments levied against the Property and applicable to the period from and after the date of Close of Escrow.  Seller reserves the right to meet with governmental officials and to contest any assessment or reassessment concerning or affecting Seller’s obligations with respect to real property taxes and assessments on the Property for a tax period ending prior to the Closing Date, and Buyer promptly shall deliver to Seller any refund with respect to such real property taxes and assessments applicable to any such period ending prior to the Close of Escrow, subject to any reimbursement to tenants required under the Leases and less the costs incurred by Buyer in obtaining any such refund.  Buyer shall have the sole authority to prosecute tax protests, challenges and appeals for any tax period from and after the period in which the Closing occurs. Buyer shall cooperate with Seller after Close of Escrow to collect any rent under the Leases that has accrued as of the Close of Escrow by taking the following action:  For a period of three hundred sixty (360) days after the Closing, Buyer shall bill tenants for all amounts due under their Leases accruing prior to the Closing (including, without limitation, base rent, percentage rent, additional rent, or other tenant charges for the year in which the Closing occurs) (collectively, “Delinquent Rents”) and shall use commercially reasonable efforts (Buyer shall be deemed to have used commercially reasonable efforts, if Buyer shall indicate, on Buyer’s rent invoices to each tenant, all arrearages for rent applicable to periods prior to the Closing Date, shall not compromise or settle any such rental arrearages during such 360-day period without Seller’s prior written consent, and shall provide progress updates as to collections of Delinquent Rents to Seller upon Seller’s request but, in any event, no more frequent than two (2) times in any calendar month, provided that Buyer shall not be required to incur any material cost or commence any legal proceeding in connection therewith or put any tenant in default under its Lease) to collect from tenants any base rent, percentage rent, additional rent, or other tenant charges owing with respect to the period prior to the Closing; provided, however, Buyer shall not be obligated to sue any tenants or exercise any legal remedies under the Leases (including, but not limited to, the termination of Leases or the recovery of possession of the leased premises) or to incur any expense over and above its own regular collection expenses or any other liability (“Buyer’s Collection Process”).  Seller acknowledges and agrees that following the Close of Escrow, Seller shall not contact (by telephone, electronic mail, mail, or otherwise), pursue litigation against, or attempt to collect any rent from, any of the tenants at the Properties, it being agreed that Seller’s only mechanism for collecting delinquent rent from and after the Closing Date shall be as set forth in this Section. All Delinquent Rents collected from tenants after Close of Escrow shall first be applied to any rent due to Buyer for the period after the end of the month in which Close of Escrow occurs, then to any costs incurred by Buyer in collecting Delinquent Rents, then to rent due in the month in which the Close of Escrow occurs, and finally, to any rent due to Seller for the period prior to Close of Escrow, with the excess, if any, to be retained by Buyer.

 

12.2.2     Rents collected by a Seller relating to the period from and after the Close of Escrow and not previously credited or paid to Buyer shall be paid to Buyer within three (3) Business Days after receipt thereof by such Seller.

 

12.2.3     Notwithstanding the foregoing provisions of this Section 12, the parties acknowledge that rent and other amounts payable by the Government under the Government Leases are paid in arrears, and, therefore, certain payments to be made by the Government following Closing will relate to a period prior to the Closing, so any such amounts received subsequent to the Closing by Buyer or its agents or Seller or its agents on account of non-delinquent rent shall, to the extent applicable to a period which includes the Closing Date, be prorated between Seller and Buyer as of Close of Escrow and Seller’s portion thereof shall be remitted promptly (but in no event longer than 5 business days after Buyer’s receipt) to Seller by Buyer, if received by Buyer, or, if received by Seller, retained by Seller with Buyer’s portion thereof being promptly remitted (but in no event longer than 5 business days after Seller’s receipt) to Buyer by Seller.

 

12.2.4     Buyer shall indemnify, defend and hold harmless Seller and Seller’s agents and representatives with respect to and to the extent of any and all claims made with respect to tenant security deposits, which have been credited to Buyer by Seller.  Seller will indemnify, defend, and hold Buyer harmless from and against all claims made with respect to tenant security deposits placed by

 

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tenants under Leases as of the Closing Date, which are not credited to Buyer in accordance with this Section.  For any tenant security deposit that is in the form of a letter of credit, at the Close of Escrow the applicable Seller is delivering to Buyer the original versions of such letter of credit, completed requisite applications for the transfer of such letter of credit and shall pay all charges, if any, required to complete such transfer.  Following Closing, Seller shall reasonably cooperate with Buyer to effectuate the transfer of such letters of credit.

 

12.2.5     After the Close of Escrow, Seller shall provide to Buyer reasonable back-up data for the calendar year 2018 consistent with Seller’s typical record-keeping at the Properties, including copies of invoices and checks evidencing payment for purposes of calculating such reconciliation.

 

13.          Disbursements and Other Actions by Escrow Holder

 

Upon the Close of Escrow, Escrow Holder shall promptly undertake all of the following in the manner indicated:

 

13.1      Cause each Deed and any other documents that the parties to this Restated Agreement may mutually direct, to be recorded in the Official Records of the County.

 

13.2      Disburse all funds deposited with Escrow Holder by Buyer as follows:

 

13.2.1       Deduct all amounts, if any, chargeable to the account of Buyer under the terms of this Restated Agreement, and pay those amounts to the parties entitled to them.

 

13.2.2       Pay to the parties entitled to all amounts chargeable to the account of Seller under the terms of this Restated Agreement, including the commission described in Section 16 below.

 

13.2.3       Pay the remaining balance of the Purchase Price as directed by Seller.

 

13.2.4       When all of the foregoing disbursements have been made, refund any remaining balance to Buyer.

 

13.3      Direct the Title Company to issue the Title Policy and deliver an original to Buyer.

 

13.4      Deliver to both Buyer and Seller a closing statement showing the distribution, application, receipt and earnings of all funds of such party processed through Escrow.

 

13.5      Deliver to Buyer each Bill of Sale.

 

13.6      Deliver to both Buyer and Seller a counterpart of each Assignment and Assumption of Leases and Contracts and each General Assignment (in each case executed by the other party).

 

13.7      Deliver the Novation Agreements signed by Buyer and the applicable Seller to the applicable Seller.

 

14.          Default; Termination Absent Default.

 

14.1        Buyer’s Default.  If Buyer defaults in its obligation to purchase the Properties on the Closing Date under this Restated Agreement, Seller shall be entitled, as its sole remedy (without limiting any Seller’s rights with respect to any indemnification obligations of Buyer under this Restated Agreement), to terminate this Restated Agreement and receive the  Deposit as liquidated damages for such breach of this Restated Agreement, it being agreed between the parties hereto that the actual damages to Seller in the event of such breach are impractical to ascertain and the amount of the Deposit  is  a  reasonable  estimate thereof. THEREFORE, BY PLACING THEIR INITIALS BELOW, THE PARTIES ACKNOWLEDGE THAT THE DEPOSIT HAS BEEN AGREED UPON, AFTER NEGOTIATION,

 

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AS THE  PARTIES’ REASONABLE ESTIMATE OF SELLERS’ DAMAGES AND AS SELLERS’ EXCLUSIVE REMEDY AGAINST BUYER, AT LAW OR IN EQUITY, IN THE EVENT OF A DEFAULT UNDER THIS RESTATED AGREEMENT ON THE PART OF BUYER. THE PARTIES ACKNOWLEDGE THAT THE PAYMENT OF SUCH LIQUIDATED DAMAGES IS NOT INTENDED AS  A  FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLERS PURSUANT TO CALIFORNIA CIVIL CODE SECTIONS 1671, 1676 AND 1677.

 

	
 
    	
 
    	
 
    
	
Buyer’s Initials
    	
 
    	
Seller’s Initials
    

 

Nothing contained in this Section 14.1 shall limit or prevent Seller from (a) asserting any legal or equitable claims against Buyer for any breaches under this Restated Agreement other than the failure of Buyer to consummate the sale contemplated by this Restated Agreement, including Buyer’s obligations with respect to any indemnification of Seller under this Restated Agreement or obligation to pay attorneys’ fees and other amounts under Section 24, or (b) enforcing any indemnity obligation of Buyer under this Restated Agreement or preclude Seller from obtaining a damage award in connection therewith, or (c) enforcing Buyer’s other obligations and liabilities which survive a termination of this Restated Agreement provided that in no event shall Seller be entitled to or Buyer be liable for any incidental, consequential or punitive damages (except to the extent actually awarded in any third party claim for which Buyer has expressly indemnified Seller under this Restated Agreement).

 

14.2        Buyer’s Remedies For Seller’s Breach of Representations and Warranties.

 

14.2.1         Pre-Closing Remedies. In the event (i) any Seller defaults in a material obligation to be performed on the Closing Date, or (ii) any Seller defaults in a material obligation to be performed prior to the Closing Date (and, with respect to any default under this clause (ii) only, such default shall continue until the earlier of (x) three (3) business days after notice to Seller and (y) the Closing Date), Buyer shall be entitled, as its sole remedy, either (a) terminate this Restated Agreement and release Seller from any and all liability hereunder, in which case Buyer shall receive a return of the Deposit (excluding the Independent Consideration) and Seller shall reimburse Buyer for its out-of-pocket costs incurred in connection with the transactions contemplated by this Restated Agreement up to and not exceeding Five Hundred Thousand and No/100 Dollars ($500,000.00) or (b) to enforce specific performance of Seller’s obligation to execute and deliver the documents required in accordance with the terms of this Restated Agreement to allow Closing to occur, and to otherwise deliver possession of the Property to Buyer at Closing, it being understood and agreed that the remedy of specific performance shall not be available to enforce any other obligation of Seller hereunder or to enforce an obligation of Seller that requires consent from a third party that has not been received. Except as set forth below, Buyer expressly waives its rights to seek damages in the event of Seller’s default hereunder. Buyer shall be deemed to have elected to terminate this Restated Agreement and receive back the Deposit (excluding the Independent Consideration) if Buyer fails to file suit for specific performance against Seller in a court having jurisdiction in the county and state in which the Property is located, on or before sixty (60) days following the date upon which Closing was to have occurred. As material consideration to Seller’s entering into this Restated Agreement with Buyer, Buyer expressly waives any right under California Code of Civil Procedure, Part II, Title 4.5 (Sections 405 through 405.60) or at common law or otherwise to record or file a lis pendens or a notice of pendency of action or similar notice against all of any portion of the Property except in connection with an action for specific performance.  Nothing contained in this Section 14.2.1 shall limit or prevent Buyer from (a) if the Closing under this Restated Agreement occurs, asserting any legal or equitable claims against Seller for any breaches of Seller’s representations and warranties in Section 8.1 in strict accordance with Section 8.1, (b) enforcing any specific and express indemnity obligation of Seller under this Restated Agreement or preclude Buyer from obtaining a damage award in connection therewith, or (c) enforcing Seller’s other obligations and liabilities set forth in this Restated Agreement which expressly survive a termination of this Restated Agreement, provided, that, notwithstanding anything to the contrary set forth in this Restated Agreement, in no event shall Buyer be entitled to or Seller be liable for any damages other than the actual and reasonably foreseeable damages of Buyer, together with any damages, including, without limitation, incidental, consequential and punitive damages to the extent actually awarded in any third party claims for which Seller has expressly indemnified Buyer under this Restated Agreement.

 

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14.2.2       Post-Closing Remedies.  Notwithstanding anything contained in this Restated Agreement to the contrary, in the event the Close of Escrow occurs, Buyer hereby expressly waives, relinquishes and releases any right or remedy available to it at law, in equity or under this Restated Agreement to make a claim against Seller for damages that Buyer incurs or may incur, or to rescind this Restated Agreement and the transactions contemplated hereby, as the result of any of Seller’s representations or warranties being untrue, inaccurate or incorrect when made if (1) Buyer had knowledge or is “deemed to have known” at the time of the Close of Escrow that such representation or warranty was untrue, inaccurate or incorrect when made and Buyer nevertheless consummates the purchase of the Property hereunder, or (2) Buyer’s damages as a result of such representations or warranties being so untrue, inaccurate or incorrect are, in the aggregate, less than $500,000 (the “Basket”), provided that once the Basket has been exceeded, Seller shall be responsible on a joint and several basis for the entirety of all claims (not just the amount in excess of the Basket).  Buyer shall be “deemed to have known” at the time of the Close of Escrow that a representation or warranty was untrue, inaccurate or incorrect when made if any Data Site Information, any Acceptable Estoppel Certificate delivered to Buyer prior to Closing pursuant to Section 7.7 but only to the extent the estoppel certificate confirms, without qualification, a fact to which a Seller has represented in Section 8.1, or any other information or materials contained in the certificate delivered by Seller at Closing pursuant to Section 10.1.6, contains any information which contradicts such representation or warranty by Seller, or if prior to Closing Seller shall have notified Buyer in writing that such representation or warranty was untrue, inaccurate, or incorrect when made.  Seller’s representations and warranties contained in Section 8.1, as reaffirmed and restated by Seller at Closing, shall survive the Close of Escrow for the Survival Period, unless Buyer asserts a breach of any such representation or warranty in a written notice delivered to Seller prior to the expiration of the Survival Period, in which case such applicable representation or warranty shall survive until Buyer’s claims set forth in such written notice have been resolved.  For purposes of this Restated Agreement, references to “Buyer’s knowledge,” “the knowledge of Buyer,” or words of similar import shall be deemed to refer solely to the actual and not constructive knowledge of Buyer’s Knowledge Party.

 

14.2.3       Cap on Damages for Breach of Seller Representation or Warranty. Notwithstanding any other provision of this Restated Agreement, and without in any way diminishing any other provision of this Restated Agreement that would limit any Seller’s representations and warranties set forth herein or any Seller’s liability if one or more of any Seller’s representations set forth herein should be untrue and/or if one or more of Seller’s warranties should be breached, in no event shall Seller’s liability under Section 14.2.2 for such untrue representations or breached warranties exceed 1.5% of the Purchase Price in the aggregate (the “Maximum Recovery”); provided, however, that the Maximum Recovery shall not apply to actual fraud committed by any Seller, to Seller’s representation and warranty in Section 16.

 

14.2.4     Limits Supported by Separate Value.  Buyer and Seller hereby acknowledge and agree that the limitations on Buyer’s ability to recover, and of Seller’s liability for, damages under Section 14.2.2 arising out of breaches of Seller’s representations and warranties set forth in this Restated Agreement have been separately negotiated by the parties.  Accordingly, Buyer hereby covenants and agrees that Buyer shall be estopped from asserting any liability under Section 14.2.2 for untrue representations by Seller or breaches by Seller of warranties set forth in this Restated Agreement (1) if Buyer had knowledge or is “deemed to have known” that such representation or warranty was untrue, inaccurate or incorrect at the time of the Close of Escrow and Buyer nevertheless consummates the purchase of the Property hereunder, or (2) if Close of Escrow should occur and Buyer’s damages as a result of such representations or warranties being untrue, inaccurate or incorrect are, in the aggregate, less than the Basket.  Buyer’s acknowledgement, covenant and estoppel set forth in this Section 14.2.4 shall survive the Close of Escrow in perpetuity.

 

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14.3      Termination Without Default.  In the event any condition set forth in Section 9 is not waived and is not timely satisfied for a reason other than the default of Buyer or Seller under this Restated Agreement, or if this Restated Agreement is terminated by either party under any provision of this Restated Agreement giving that party the right to do so (other than as a result of the termination by Seller under Section 14.1), then upon written notice by the party benefited by the unsatisfied condition to the other party and to Escrow Holder:

 

14.3.1         This Restated Agreement, the Escrow and the rights and obligations of Buyer and Seller under this Restated Agreement shall terminate except as and to the extent otherwise expressly provided in this Restated Agreement;

 

14.3.2         Any and all Cancellation Charges shall be divided equally between Buyer and Seller;

 

14.3.3         Escrow Holder shall promptly return to Buyer the Deposit (along with any interest earned on those funds while held by Escrow Holder) less the Independent Consideration and any and all of Buyer’s share of the Cancellation Charges;

 

14.3.4         Buyer shall promptly deliver and assign over to Seller or destroy (subject to compliance with Buyer’s record retention policies) all Property Information provided to Buyer by Seller, with such delivery obligation to survive the termination of this Restated Agreement; and

 

14.3.5         Escrow Holder shall promptly return to Seller and Buyer, respectively, all documents deposited by each that are then held by Escrow Holder.

 

14.4        Other Remedies.  Nothing in this Section 14 shall limit Buyer’s and Seller’s respective rights and remedies against the other with respect to the parties’ respective obligations to indemnify and hold the other party harmless pursuant to any provisions contained in this Restated Agreement or to pay enforcement costs,  or with respect to any other obligations surviving the termination or the Close of Escrow under the express terms of this Restated Agreement.

 

15.          Damage or Condemnation Prior to Closing. Risk of loss resulting from any condemnation, fire, flood or any other casualty before the Closing, shall remain with Seller.  Seller shall promptly notify Buyer of the occurrence of any loss or damage to one or more of the Properties.

 

15.1      Minor Damage.  In the event of loss or damage to any one or more Properties or any portion thereof which is not “major” (as hereinafter defined), this Restated Agreement shall remain in full force and effect provided Seller, at Seller’s option, either (a) assigns to Buyer all of Seller’s right, title and  interest to any claims and proceeds Seller may have with respect to any casualty insurance policies relating to the premises in question, or (b) elects to, and Buyer mutually agrees that Seller shall, perform any necessary repairs. If Buyer does not mutually agree to clause (b) of the preceding sentence, the parties shall proceed under clause (a). In the event the parties mutually agree to proceed under clause (b), above, Seller shall use reasonable efforts to complete such repairs promptly and the Closing Date shall be extended a reasonable time in order to allow for the completion of such repairs. If the parties proceed under clause (a), above, the Purchase Price shall be reduced by an amount equal to the deductible amount under Seller’s insurance policy, and Seller shall assign all of its rights to proceeds under the applicable policy with respect to any claim for the applicable loss. Upon Closing, full risk of loss with respect to the Property shall pass to Buyer.

 

15.2      Major Damage. In the event of a “major” loss or damage to one or more Properties or any portion thereof, Buyer may terminate this Restated Agreement by written notice to Seller, in which event the Deposit (excluding the Independent Consideration) shall be returned to Buyer. If Buyer fails for any reason to deliver written notice of termination to Seller within fifteen (15) days after Seller sends Buyer written notice of the occurrence of major loss or damage, then Buyer shall be deemed to have elected to terminate this Restated Agreement.  If the Closing Date is within the aforesaid 15-day period, then the Closing Date shall be extended to the next business day following the end of said 15-day period. If Buyer elects not to terminate this Restated Agreement, this Restated Agreement shall remain in full force and effect provided Seller, at Seller’s option, either (a) assigns to Buyer all of Seller’s right, title and interest to any claims and proceeds Seller may have with respect to any casualty insurance policies relating to the premises in question, or (b) elects to, and Buyer mutually agrees that Seller shall, perform

 

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any necessary repairs. If Buyer does not mutually agree to clause (b) of the preceding sentence, the parties shall proceed under clause (a). In the event the parties mutually agree to proceed under clause (b), above, Seller shall use reasonable efforts to complete such repairs promptly and the Closing Date shall be extended a reasonable time in order to allow for the completion of such repairs. If the parties proceed under clause (a), above, the Purchase Price shall be reduced by an amount equal to the deductible amount under Seller’s insurance policy, and Seller shall assign all of its rights to proceeds under the applicable policy with respect to any claim for the applicable loss. Upon Closing, full risk of loss with respect to the Property shall pass to Buyer.

 

15.3      Definition of “Major”. For purposes of Sections 15.1, 15.2, and 15.4 “major” refers to the following: (i) loss or damage for which the cost of repairing or restoring the premises in question to a condition substantially identical to that of the premises in question prior to the event of loss or damage would be, in the opinion of an architect selected by Seller and reasonably approved by Buyer, equal to or greater than one and one-half percent (1.50%) of the Purchase Price allocated to the affected Property in the Allocation Schedule, (b) one or more takings or condemnations of all or any portion of the Properties having an aggregate value exceeding one and one-half percent (1.50%) of the Purchase Price allocated to the affected Property in the Allocation Schedule, (c) any loss, damage or taking that would permit any Major Tenant at a Property to terminate its Lease or would result in a one and one-half percent (1.50%) or greater reduction of in-place, annualized gross base rents from the Properties from that shown in the attached Rent Rolls (after giving effect to tenants’ rights to rent abatement subsequent to the Closing Date as a result of such damage or taking) if the tenant or tenants, in the aggregate, that are entitled to terminate their respective lease(s) as a result of such damage or taking did terminate their respective lease(s), (d) any taking that materially interferes with the existing access to or parking at the affected Property, or (e) the loss or damage exceeds $2,000,000 for any Property to repair and is not covered by insurance, unless Seller agree to credit the Purchase Price for the repair cost of such uninsured loss or damage (it being agreed that if the aggregate of such uninsured loss or damage is $2,000,000 or less for any Property, the Buyer will not have any right of election in respect thereof and the cost thereof automatically will be applied as a credit against the Purchase Price). If Buyer does not give notice to Seller of Buyer’s reasons for disapproving an architect within five (5) business days after receipt of notice of the proposed architect, Buyer shall be deemed to have approved the architect selected by Seller.

 

15.4        Condemnation. If proceedings in eminent domain are instituted or threatened with respect to any one or more of the Properties or any portion thereof that is “major”, Buyer may, at its option, by written notice to Seller given within ten (10) days after Seller notify Buyer of such proceedings or threat (and if necessary the Closing Date shall be automatically extended to give Buyer the full ten-day period to make such election), either: (a) terminate this Restated Agreement, in which case the Deposit (excluding the Independent Consideration) shall be immediately returned to Buyer and the parties hereto shall have no further rights or obligations, other than those that by their terms survive the termination of this Restated Agreement, or (b) proceed under this Restated Agreement, in which event Seller shall, at the Closing, assign to Buyer its entire right, title and interest in and to any insurance and condemnation awards, and Buyer shall have the sole right after the Closing to negotiate and otherwise deal with the condemning authority in respect of such matter. If Buyer does not give Seller written notice of its election within the time required above, then Buyer shall be deemed to have elected option (a) above.

 

16.        Brokers.  Seller is represented by Seller’s Broker in connection with the transaction contemplated in this Restated Agreement.  Except for commissions payable to Seller’s Broker to be paid by Seller pursuant to separate agreements, Buyer and Seller each warrant to the other that no fees or commissions are due or owing to any finders or brokers as a result of the respective activities of it in connection with this transaction.  In the event of any other claim for brokers’ or finders’ fees or commissions in connection with negotiations between the parties relating to the Property, the negotiation, execution or consummation of this Restated Agreement or the purchase and sale of the Property, then Buyer indemnifies Seller, and shall hold harmless and defend Seller, from and against any claim from any broker or finder representing or engaged by Buyer or any claim based upon the alleged statement, representation or agreement by Buyer relating to broker’s or finders’ fees or commissions.  Seller shall indemnify, hold harmless and defend Buyer from and against any claim from any broker or finder representing or engaged by Seller for this transaction or any claim based upon the alleged statement, representation or agreement by any Seller relating to broker’s or finders’ fees or commissions.  The foregoing indemnities shall survive the Close of Escrow or the termination of this Restated Agreement for any reason.

 

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17.        Notices.  All notices and demands given under the terms of Agreement shall be in writing and may be effected by personal delivery, including by any commercial courier or overnight delivery service, or by United States registered or certified mail, return receipt requested, with all postage and fees fully prepaid.  Notices shall be effective upon receipt by the party being given notice, as indicated by the return receipt if mailed; except that if a party has relocated without providing the other party with its new address for service of notices, or if a party refuses delivery of a notice upon its tender, the notice shall be effective upon the attempt to serve the notice at the last address given for service of notices upon that party.  Alternatively, notices may be sent by email, with written confirmation sent the same day by overnight delivery using a nationally recognized overnight courier, in which case notice shall be deemed delivered upon receipt of confirmation of transmission of such email.  Notices shall be addressed as provided in the Basic Provisions.  Any address for service of notice on either party may be changed by that party serving a notice upon the other of the new address, except that any change of address to a post office box shall not be effective unless a street address is also specified for use in effectuating personal service.

 

18.        Joint and Several. Except as otherwise specified herein, prior to Closing a default or breach by any Seller or with respect to any Property shall be a failure of a condition precedent for Buyer’s benefit for all Properties, and, after Closing, each Seller’s liability under this Restated Agreement shall be joint and several with each other Seller and CIM Commercial Trust Corporation.

 

19.        Partial Invalidity.  If any term or provision of this Restated Agreement, or its application to any person or circumstance, shall be invalid or unenforceable to any extent, the remainder of this Restated Agreement, and the application of the term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected, and each term and provision of this Restated Agreement shall be valid and be enforced to the fullest extent permitted by law.

 

20.        Waiver.  No waiver by Buyer or Seller of any of the terms or conditions of this Restated Agreement or any of their respective rights under this Restated Agreement shall be effective unless such waiver is in writing and signed by the party charged with the waiver.  No delay in enforcement of any provision or right contained in this Restated Agreement by either of Buyer or Seller shall constitute a waiver of such provision or right.  No waiver of any breach of any covenant or provision shall be deemed a waiver of any preceding or succeeding breach of that or any other covenant or provision.  No extension of time for performance of any obligation or act shall be deemed an extension of the time for performance of any other obligation or act.

 

21.        Successors and Assigns.  This Restated Agreement shall be binding upon and shall inure to the benefit of the respective successors and assigns of Buyer and Seller.  Except as otherwise provided in this Section 21, this Restated Agreement may not be assigned by Buyer without the prior written consent of Seller, and any such assignment or attempted assignment by Buyer shall constitute a default by Buyer hereunder and shall be null and void.  Notwithstanding the foregoing, after the Investigation Period Expiration Date, Buyer may assign its rights under this Restated Agreement to one or more entities affiliated with Buyer, provided that (a) Buyer gives written notice of such assignment to both Seller and Escrow Holder not later than two (2) business days prior to the scheduled Close of Escrow, and (b) pending Closing, such assignment shall not relieve Buyer of any covenant, representation, obligation or liability hereunder, and Buyer shall continue to be obligated for its assignee’s performance hereunder; provided that once Closing occurs, the assigning party (but not the assignee) shall be relieved of all of its obligations arising under this Restated Agreement.

 

22.        Liquidated Damages.  SELLER AND BUYER HAVE CONSIDERED AND DISCUSSED THE POSSIBLE CONSEQUENCES TO SELLER IN THE EVENT THAT THE ESCROW FAILS TO CLOSE.  SELLER AND BUYER HAVE DETERMINED AND AGREE THAT IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX THE ACTUAL DAMAGES TO SELLER OCCURRING IN THE EVENT OF BUYER’S DEFAULT UNDER THIS RESTATED AGREEMENT IN FAILING TO PURCHASE THE PROPERTY PURSUANT HERETO WHEN BUYER OR ITS ASSIGNEE

 

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IS OBLIGATED TO DO SO.  HAVING MADE DILIGENT BUT UNSUCCESSFUL ATTEMPTS TO ASCERTAIN THE ACTUAL COMPENSATORY DAMAGES SELLER WOULD SUFFER IN THE EVENT OF BUYER’S NONPERFORMANCE OF SUCH PURCHASE OBLIGATION UNDER THIS RESTATED AGREEMENT, THE PARTIES AGREE THAT A REASONABLE ESTIMATE OF THE DAMAGES IS AN AMOUNT EQUAL TO THE DEPOSIT, PLUS ANY INTEREST EARNED ON THE DEPOSIT DELIVERED BY BUYER TO ESCROW HOLDER HEREUNDER, AND IN THE EVENT OF BUYER’S DEFAULT IN ITS (OR ITS ASSIGNEE’S) OBLIGATION TO PURCHASE THE PROPERTY PURSUANT HERETO, BUYER AND SELLER AGREE THAT AS SELLER’S SOLE AND EXCLUSIVE RIGHT OR REMEDY, SELLER SHALL BE ENTITLED AT ITS ELECTION TO TERMINATE THIS RESTATED AGREEMENT AND RECEIVE AND RETAIN AS FULLY AGREED LIQUIDATED DAMAGES THE SUM OF (A) THE ENTIRE DEPOSIT, PLUS (B) INTEREST EARNED THEREON.  THE FOREGOING SHALL NOT, HOWEVER, LIQUIDATE OR LIMIT BUYER’S OBLIGATIONS OR SELLER’S RIGHTS AGAINST BUYER ARISING IN CONNECTION WITH BUYER’S OBLIGATIONS UNDER SECTION 5.2 OR SECTIONS 24 OR 25, OR ANY INDEMNITY PROVIDED BY BUYER PURSUANT TO THIS RESTATED AGREEMENT.

 

	
 
    	
 
    	
 
    
	
Buyer’s Initials
    	
 
    	
Seller’s Initials
    

 

As material consideration to each party’s agreement to the liquidated damages provisions stated above, each party hereby agrees to waive any and all rights whatsoever to contest the validity of the liquidated damage provisions for any reason whatsoever, including, but not limited to, that such provision was unreasonable under circumstances existing at the time this Restated Agreement was made, each party hereby expressly acknowledging the reasonableness of the liquidated damages provisions stated above.

 

23.        Waiver of Right to Trial by Jury. SELLER AND BUYER HEREBY EXPRESSLY WAIVE, TO THE MAXIMUM EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING ARISING UNDER OR WITH RESPECT TO THIS RESTATED AGREEMENT, OR IN ANY WAY CONNECTED WITH OR RELATED TO, OR INCIDENTAL TO, THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS RESTATED AGREEMENT OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND IRRESPECTIVE OF WHETHER SOUNDING IN CONTRACT, TORT, OR OTHERWISE.  TO THE EXTENT THEY MAY LEGALLY DO SO, SELLER AND BUYER HEREBY AGREE THAT ANY SUCH CLAIM, DEMAND, ACTION, CAUSE OF ACTION, OR PROCEEDING SHALL BE DECIDED BY A COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY OR PARTIES HERETO TO WAIVER OF ITS OR THEIR RIGHT TO TRIAL BY JURY.

 

24.        Attorneys’ Fees.  If either party becomes involved in litigation, arbitration, reference to a retired judge or other neutral referee, or other legal process arising out of this Restated Agreement or in connection with any bankruptcy proceeding relating to a party, the court in the litigation or arbitrator, retired judge or other referee in the arbitration or reference, or neutral party in such other legal process, shall award legal expenses (including, but not limited to reasonable attorneys’ fees and court costs) to the prevailing party.  The award for legal expenses shall not be computed in accordance with any schedule, but shall be as necessary to fully reimburse all reasonable attorneys’ fees and other legal expenses actually incurred in good faith, regardless of the size of the judgment, it being the express intention of the parties to fully compensate the prevailing party for all the reasonable attorneys’ fees and other legal expenses paid or incurred by it in good faith in connection therewith.

 

25.        Property Information and Confidentiality.

 

25.1      Confidentiality.  Buyer agrees that, prior to the Close of Escrow, all Property Information (as defined below) shall be kept strictly confidential (using the same degree of care that Buyer uses to prevent disclosure of its own confidential information) and shall not, without the prior consent of Seller, be disclosed by Buyer or Buyer’s Representatives, in any manner whatsoever, in whole or in part, and will not be used by Buyer or Buyer’s Representatives, directly or indirectly, for any purpose other than

 

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evaluating the Property, except for disclosure to governmental authorities in connection with evaluating the purchase and prospective use and/or development of the Property.  Moreover, Buyer agrees that, prior to the Close of Escrow, the Property Information will be transmitted only to Buyer’s Representatives and such governmental authorities who need to know the Property Information for the purpose of evaluating the Property, and who are informed by the Buyer of the confidential nature of the Property Information.  The provisions of this Section 25.1 shall in no event apply to Property Information which is a matter of public record and shall not prevent Buyer from complying with laws, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements, or prevent Buyer from pursuing its rights under this Restated Agreement in a legal or quasi-legal proceeding.  It is understood and agreed that the foregoing shall not preclude Buyer from discussing the substance or any relevant details of the transaction contemplated in this Restated Agreement, or preclude Buyer from sharing information relating to the Property, on a confidential basis, with Buyer’s members, shareholders, directors, officers, employees engineers, direct or indirect owners, affiliates, attorneys, accountants, professional consultants, advisors, rating agencies, potential co-investors, or potential lenders.

 

25.2 Publicity.  Buyer and Seller, for the benefit of each other, hereby agree that between the Original Effective Date and the Close of Escrow, they will not release or cause or permit to be released any press notices, publicity (oral or written) or advertising promotion relating to, or otherwise publicly announce or disclose or cause or permit to be publicly announced or disclosed, in any manner whatsoever, the terms, conditions or substance of this Restated Agreement or the transactions contemplated herein, without first obtaining the written consent of the other party hereto.  It is understood that the foregoing shall not preclude either party from discussing the substance or any relevant details of the transactions contemplated in this Restated Agreement, subject to the terms of Section 25.1, with any of its attorneys, accountants, professional consultants or advisors, rating agencies, or potential lenders or co-investors, as the case may be, or prevent either party hereto from complying with laws, including, without limitation, governmental regulatory, disclosure, tax and reporting requirements, or prevent either party from pursuing its rights under this Restated Agreement in a judicial or arbitration proceeding, but, in all cases, subject to the terms of this Section. After Close of Escrow, neither party shall publicly disseminate the terms and conditions of this Restated Agreement to the extent the same are not a matter of public record, and except as may be necessary to comply with applicable laws, including without limitation governmental regulatory, disclosure, tax, or reporting requirements, or to pursue its rights under this Restated Agreement in a legal or quasi-legal proceeding, provided, however, that each party may disclose the Closing of the transaction without disclosing the economics of the transaction or the other party (including any Buyer Party) to this Restated Agreement.  If the indirect parent of Seller determines that the filing of a Form 8-K or making other public disclosure is required in connection with the transaction contemplated by this Restated Agreement pursuant to the Securities Exchange Act of 1934, as amended, and/or the Securities Act of 1933, as amended, whether before or after Closing, Buyer agrees that such filing and disclosure shall constitute Seller’s disclosure in compliance with law and shall supersede any other provisions of this Restated Agreement.  Before Closing, any Form 8-K filing by CMCT shall be on the form of Form 8-K attached hereto as Exhibit K or other form reasonably approved by Buyer.  After Closing, any Form 8-K or other securities filing by CMCT may attach a copy of this Restated Agreement. Before either party makes a public announcement or disclosure (other than such Form 8-K filing or other securities filing) in connection with the transaction contemplated by this Restated Agreement, the party desiring to make such disclosure shall (a) provide the other party with a copy of the proposed disclosure at least five (5) days prior to making such disclosure and (b) cooperate in good faith to make such disclosure reasonably acceptable to the other party; provided, however, that no Seller shall use or reference the name of any direct or indirect owner of Buyer in any such disclosure  (but without limiting Seller’s right to file a Form 8-K or other securities filings after Closing, which will have an unredacted copy of this Restated Agreement and any amendments attached), without Buyer’s prior written consent.

 

25.3      Delivery of Property Information.  In the event this Restated Agreement is terminated, Buyer and Buyer’s Representatives shall promptly deliver to Seller or destroy (subject to Buyer’s record retention policies) all originals and copies of the Property Information referred to in clause (i) of Section 25.5 in the possession of Buyer and Buyer’s Representatives, without representation or warranty.

 

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25.4      Property Information.  As used in this Restated Agreement, the term “Property Information” shall mean (i) all information and documents in any way relating to the Property, the operation thereof or the sale thereof (including, without limitation, the leases and contracts) furnished to Buyer or Buyer’s Representatives, by Seller or any of Seller’s affiliates, or their agents or representatives, including, without limitation, their contractors, engineers, attorneys, accountants, consultants, brokers or advisors, and (ii) all analyses, compilations, data, studies, reports or other information or documents prepared or obtained by Buyer or Buyer’s Representatives containing or based, in whole or in part, on the information or documents described in the preceding clause (i), or the Buyer’s investigations, or otherwise reflecting their review or investigation of the Property.

 

25.5      Equitable Relief.  In addition to any other remedies available to Buyer and Seller, Buyer and Seller shall have the right to seek equitable relief, including, without limitation, injunctive relief or specific performance against the other in order to enforce the provisions of this Section 25 and Section 6.3.

 

25.6      Survival.  The provisions of this Section 25 shall survive the Close of Escrow or the termination of this Restated Agreement for any reason for a period of two (2) years.

 

26.          Entire Agreement; Amendment.  This Restated Agreement (including all exhibits attached, which are incorporated by reference) is the final expression of, and contains the entire agreement between, the parties with respect to the subject matter addressed in this Restated Agreement and supersedes all prior understandings with respect to that subject matter.  This Restated Agreement may not be modified, changed, supplemented or terminated, nor may any obligation under this Restated Agreement be waived, except by written instrument signed by the party to be charged or by its agent duly authorized in writing.  The parties do not intend to confer any benefit under this Restated Agreement on any person, firm or corporation other than Buyer and Seller.

 

27.          Time of Essence.  Seller and Buyer acknowledge and agree that time is strictly of the essence with respect to each and every term condition, obligation and provision of this Restated Agreement.

 

28.          Construction of Agreement. The parties hereby agree that the language of this Restated Agreement shall not be construed against any party, and neither party shall be deemed or determined to be the drafting party of this Restated Agreement for purposes of any generally applicable rule of construction to the effect that ambiguous provisions are to be construed in the manner less or least favorable to the drafting party, but rather in accordance with its fair meaning.  Headings at the beginning of each paragraph and subparagraph (if any) are solely for the convenience of the parties and are not a part of this Restated Agreement.  Whenever required by the context of this Restated Agreement, the singular shall include the plural and the masculine shall include the feminine and vice versa.  This Restated Agreement shall not be construed as if it had been prepared by one of the parties, but rather as if both parties had prepared it.  Unless otherwise indicated, all references to paragraphs and subparagraphs are to paragraphs and subparagraphs in this Restated Agreement.  All exhibits referred to in this Restated Agreement are attached and incorporated into this Restated Agreement by this reference.

 

29.          Governing Law. This Restated Agreement shall be governed by, interpreted under, and construed and enforced in accordance with the laws of the State where the Property is located.  Each party agrees to submit to the jurisdiction of the courts of the County, as necessary to effectuate the terms of this Restated Agreement, and that proper venue in any matter so litigated shall be in the County, San Francisco County or Los Angeles County.

 

30.          Effect of Delivery; Expiration.  This Restated Agreement shall not be binding or enforceable unless and until it is executed and delivered by both parties.

 

31.          Counterparts.       This Restated Agreement may be executed in counterparts each of which so executed and delivered shall be deemed an original, but all of which taken together shall constitute but one and the same instrument.

 

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32.          Business Day.  As used in this Restated Agreement, the term “business day” shall mean every day other than Saturdays, Sundays, all days observed by the federal or California government as legal holidays, and all days on which commercial banks in California are required to be closed.  Any reference in this Restated Agreement to a “day” or a number of “days” (other than reference to a “business day” or “business days” shall mean a calendar day or calendar days. In the event any deadline specified herein falls on a day which is not a business day, then the deadline shall be extended to the end of the next following business day.  Unless otherwise specified, in computing any period of time described herein, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period so computed is to be included, unless such last day is a business day, in which event the period shall run until the end of the next day which is not a business day.  Except as otherwise set forth herein, the last day of any period of time described herein shall be deemed to end at 5:00 p.m., San Francisco, CA time.

 

33.          Exhibits.  A number of the exhibits and schedules attached to this Restated Agreement contain references to a property located and known as 1333 Broadway, Oakland, California (“1333”) or The Ordway, Oakland, California (“Ordway”), which are not being conveyed pursuant to this Restated Agreement. All such references to 1333 and to Ordway shall be disregarded, and no obligations relating to 1333 or to Ordway shall create any liability on Buyer or Seller by reason of such reference.

 

[No further text; signatures appear on the following page]

 

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IN WITNESS WHEREOF, this Restated Agreement has been duly executed by the parties hereto as of the day and year first above written.

 

	
 
    	
Seller:
    
	
 
    	
 
    
	
 
    	
 
    	
CIM/OAKLAND 1901   HARRISON, LP
    
	
 
    	
 
    	
a Delaware limited   partnership
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By CIM/Oakland 1901   Harrison GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
CIM/OAKLAND 2353   WEBSTER, LP
    
	
 
    	
 
    	
a Delaware limited   partnership
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By CIM/Oakland Office   Properties GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
CIM/OAKLAND CENTER 21,   LP
    
	
 
    	
 
    	
a Delaware limited   partnership
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
By CIM/Oakland Center   21 GP, LLC, its general partner
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
By:
    	
 
    
	
 
    	
 
    	
 
    	
Name:
    	
 
    
	
 
    	
 
    	
 
    	
Title:
    	
 
    

 

Signature Page

 

 

	
 
    	
Buyer:
    
	
 
    	
 
    
	
 
    	
SOF-XI U.S. MAR   ACQUISITIONS, L.L.C.,
    
	
 
    	
a Delaware limited   liability company
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
 
    	
Sam Caven, Authorized Signatory
    

 

Signature Page

 

 

The undersigned accepts its appointment as Escrow Holder in accordance with the foregoing terms and conditions and confirms that it has opened an escrow upon those terms and conditions:

 

	
Escrow Holder:
    	
 
    
	
 
    	
 
    
	
FIRST AMERICAN TITLE   INSURANCE COMPANY
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
 
    	
Its:
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    

 

Signature Page

 

 

JOINDER

 

By execution hereof, the undersigned hereby joins the Agreement to which this page is attached for the purpose of agreeing to be jointly and severally liable (together with Seller), if Closing occurs, for the payment by Seller to Buyer of amounts owing by Seller under Sections 11, 12, 14.2.2 (subject to Section 14.2.3), 16 and 24. Such liability, if any, of the undersigned pursuant to the preceding sentence shall be subject to and limited by all of the terms and conditions set forth in the annexed Agreement (including, without limitation, the applicable limitations on the survival period for Seller’s obligations under Sections 11, 12, 14.2.2 (subject to Section 14.2.3), 16 and 24 (as applicable)) to the extent such terms and conditions apply to Seller’s liability under such the applicable Section (e.g., Seller’s liability under Section 14.2.2 (and, consequently, the undersigned’s liability under Section 14.2.2) shall be subject to the Maximum Recovery and the Survival Period, but neither the Maximum Recovery nor the Survival Period would apply to Seller’s and/or the undersigned’s liability under Section 12 of the Agreement). The undersigned expressly waives, to the extent permitted by law, any and all rights and defenses, including, without limitation, any rights of subrogation, reimbursement, indemnification and contribution, which might otherwise be available to the undersigned.

 

	
CIM COMMERCIAL TRUST   CORPORATION
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
By:
    	
 
    	
 
    
	
Name:
    	
 
    	
 
    
	
Title:

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