Document:

EXECUTION VERSION

 

SECURITIES AND RIGHTS PURCHASE AGREEMENT

 

AMONG

 

CAPLEASE INVESTMENT MANAGEMENT, LLC,

as a Seller,

 

EVA LLC,

as a Seller,

 

NRF CAP, LLC,

as the Purchaser,

 

AND

 

CAPLEASE CREDIT LLC,

as the Responsible Party

 

Dated as of August 1, 2011

  

  

  

Table of Contents

	  	  	
Page

	 	 	 
	
1.

	
Definitions

	
2

	 	 	 
	
2.

	
Purchase and Sale of the Purchased Securities and Assumption Agreement Rights; Fees

	
2

	 	 	 
	
3.

	
Conditions Precedent to Closing; Closing Deliverables

	
3

	 	 	 
	
4.

	
Representations and Warranties of the Sellers and the Responsible Party

	
7

	 	 	 
	
5.

	
Representations and Warranties of the Purchaser

	
9

	 	 	 
	
6.

	
The Deposit; Other Agreements of the Sellers, the Purchaser and the Responsible Party

	
11

	 	 	 
	
7.

	
Further Assurances

	
13

	 	 	 
	
8.

	
Termination

	
13

	 	 	 
	
9.

	
Indemnity

	
15

	 	 	 
	
10.

	
Confidentiality

	
16

	 	 	 
	
11.

	
Termination of Certain Representations

	
16

	 	 	 
	
12.

	
Limitation On Damages

	
17

	 	 	 
	
13.

	
Amendments

	
17

	 	 	 
	
14.

	
Notices

	
17

	 	 	 
	
15.

	
Successors and Assigns

	
17

	 	 	 
	
16.

	
Delegation

	
17

	 	 	 
	
17.

	
Applicable Law

	
17

	 	 	 
	
18.

	
Submission to Jurisdiction

	
18

	 	 	 
	
19.

	
Counterparts

	
18

	 	 	 
	
20.

	
Expenses

	
18

 

ANNEXES AND EXHIBITS

	
Annex A

	  	
Definitions

	 	 	 
	
Exhibit A

	  	
Knowledge Group

	
Exhibit B

	  	
Form of Collateral Manager Assignment and Assumption Agreement

	
Exhibit C

	  	
Form of Advancing Agent Resignation and Appointment Agreement

	
Exhibit D-1

	  	
Form of Transferee Certificate for Preferred Shares

	
Exhibit D-2

	  	
Form of Share Transfer for Ordinary Shares

	
Exhibit D-3

	  	
Form of Stock Power for Co-Issuer Stock

	
Exhibit E-1

	  	
Form of Collateral Manager Power of Attorney

	
Exhibit E-2

	
  

	
Form of Issuer Power of Attorney

  

  

- i -

  

  

SECURITIES AND RIGHTS PURCHASE AGREEMENT

 

THIS SECURITIES AND RIGHTS PURCHASE AGREEMENT, dated as of August 1, 2011 (this “Agreement”), is entered into among CapLease Investment Management, LLC, a Delaware limited liability company (“CapLease, LLC”), EVA LLC, a Delaware limited liability company (“EVA” and together with CapLease, the “Sellers”), NRF Cap, LLC, a Delaware limited liability company (the “Purchaser”) and CapLease Credit LLC, a Delaware limited liability company (the “Responsible Party”).

 

WITNESSETH:

 

WHEREAS, CapLease CDO 2005-1, Ltd. (the “Issuer”), CapLease CDO 2005-1 Corp. (the “Co-Issuer”), CapLease, LLC, as advancing agent (“Advancing Agent”), and U.S. Bank National Association (successor to Bank of America, National Association (successor by merger to LaSalle Bank National Association)), in its capacity as trustee, paying agent, calculation agent, transfer agent, custodial securities intermediary and notes registrar (“U.S. Bank” or the “Trustee,” in such capacity) are parties to that certain Indenture, dated as of March 10, 2005 (as amended, modified or supplemented from time to time, the “Indenture”), pursuant to which the Issuer and the Co-Issuer co-issued the Notes (as defined herein);

 

WHEREAS, the Issuer issued 15,000 preferred shares, with a par value of U.S. $0.001 per share (the “Preferred Shares”) and 250 ordinary shares, with a par value of U.S. $1.00 per share (the “Ordinary Shares” and together with the Preferred Shares, the “Issuer Share Capital”)), pursuant to the memorandum and articles of association and certificate of incorporation of the Issuer (the “Issuer’s Charter”) and certain resolutions of the Issuer’s board of directors (the “Resolutions”), and the Preferred Shares are subject to the terms and conditions of the Paying and Transfer Agency Agreement, dated as of March 10, 2005, by and among the Issuer and U.S. Bank, as the preferred share paying and transfer agent and share registrar (as amended, modified or supplemented from time to time, the “Paying and Transfer Agency Agreement”);

 

WHEREAS, the Issuer and CapLease, LLC are parties to that certain Collateral Management Agreement, dated as of March 10, 2005 (as amended, modified or supplemented from time to time, the “Collateral Management Agreement”), pursuant to which CapLease, LLC was appointed Collateral Manager (as defined herein) with respect to the collateralized debt obligation transaction contemplated under the Indenture;

 

WHEREAS, the Issuer, Wachovia Bank, National Association, as servicer, and the Trustee are parties to that certain Servicing Agreement, dated as of March 10, 2005 (the “Servicing Agreement”), pursuant to which Wachovia Bank, National Association was appointed as the servicer with respect to the collateralized debt obligation transaction contemplated under the Indenture;

 

WHEREAS, CapLease, LLC is the Auction Agent under the Indenture and the Collateral Management Agreement;

 

WHEREAS, CapLease, LLC is the Advancing Agent under the Indenture;

 

WHEREAS, EVA is the beneficial owner of the following Notes issued in the form of Global Secured Notes under the Indenture:

   

  

  

  

 

(a)           100% of the outstanding Class C Notes (as defined herein);

 

(b)           100% of the outstanding Class D Notes (as defined herein);

 

(c)           100% of the outstanding Class E Notes (as defined herein) (together with the Class C Notes and Class D Notes, the “Purchased Notes”;

 

WHEREAS, EVA is the beneficial and record owner of 15,000 shares of Preferred Shares and 250 shares of Ordinary Shares;

 

WHEREAS, EVA is the beneficial owner of 100% of the stock of the Co-Issuer (the “Co-Issuer Stock” and together with the Purchased Notes and Issuer Share Capital, the “Purchased Securities”);

 

WHEREAS, CapLease, LLC desires to assign to the Purchaser or its designee, and the Purchaser or its designee desires to accept such assignment of, CapLease’s rights and obligations as Collateral Manager under the Collateral Management Agreement and as Auction Agent under the Indenture and the Collateral Management Agreement, in each case, in accordance with the terms and subject to the conditions set forth in the Collateral Manager Assignment and Assumption Agreement;

 

WHEREAS, CapLease, LLC desires to assign to the Purchaser or its designee, and the Purchaser or its designee desires to accept such assignment of, CapLease’s rights and obligations as Advancing Agent under the Indenture, in accordance with the terms and subject to the conditions set forth in the Advancing Agent Resignation and Appointment Agreement;

 

WHEREAS, the Sellers desire to sell to the Purchaser, and the Purchaser desires to purchase from the Sellers, the Purchased Securities and Assumption Agreement Rights (as defined herein), upon the terms and subject to the conditions set forth in this Agreement; and

 

WHEREAS, upon its execution of this Agreement, the Purchaser has deposited (or caused to be deposited) the Deposit (as defined herein) with Chicago Title Insurance Company (the “Escrow Agent”), which Deposit shall be subject to the terms and conditions set forth herein.

 

NOW, THEREFORE, in consideration of the mutual agreements and subject to the terms and conditions herein set forth, the parties hereto agree as follows:

 

1.           Definitions.

 

For all purposes of this Agreement, except as otherwise expressly provided herein or unless the context otherwise requires, capitalized terms not otherwise defined herein shall have the meanings assigned to such terms in the definitions attached hereto as Annex A which is incorporated by reference herein.  All other capitalized terms used herein shall have the meanings specified herein.

 

2.           Purchase and Sale of the Purchased Securities and Assumption Agreement Rights; Fees.

   

(a)           In reliance upon the respective representations and warranties of the parties set forth herein, and subject to the terms and conditions of this Agreement, the Sellers agree to sell, convey and assign to the Purchaser (or if applicable, its designee), and the Purchaser agrees to purchase, or cause the purchase, from the Sellers, the Purchased Securities and Assumption Agreement Rights for an aggregate purchase price (the “Purchase Price”) equal to the sum of (i) TWENTY-THREE MILLION TWO HUNDRED THOUSAND DOLLARS ($23,200,000) and (ii) any Accrued Interest; provided, that, if the Closing of the transactions contemplated hereby occurs in accordance with the terms and subject to the conditions of this Agreement, then, at the Closing, (x) the Deposit that the Purchaser deposited (or caused to be deposited) with the Escrow Agent pursuant to Section 6(a) hereof plus (y) any fees, reimbursement for expenses or other payments, proceeds or cash of any kind received by the Sellers or any affiliate thereof as described in Section 2(c) hereof, shall be applied by the Sellers on a Dollar-for-Dollar basis toward the payment of the Purchase Price by the Purchaser.

   

  

- 2 -

  

 

(b)           Delivery of share certificates (if any) relating to the Issuer Share Capital and the documents relating to the transfer of the Issuer Share Capital, the delivery of the Co-Issuer Stock and the transfer of beneficial ownership in the Purchased Notes, and payment of (and application of the Deposit in respect of) the Purchase Price for the Purchased Securities and Assumption Agreement Rights, shall be made at 10:00 A.M. New York time, on the Closing Date at the offices of Clifford Chance US LLP, 31 West 52nd Street, New York, New York.  All payments to be made on the Closing Date under this Section 2(b) shall be made by wire transfer of immediately available funds to an account designated by the Sellers to Purchaser.

 

(c)           From and after the Closing Date, the Sellers shall not be entitled to any fees, reimbursement for expenses or other payments, proceeds or cash of any kind in connection with the CDO Documents, in each case, that are paid after July 29, 2011 and that are due and payable to, or exercisable by, (i) the Collateral Manager or Auction Agent pursuant to the Collateral Management Agreement or the Indenture and (ii) the Advancing Agent pursuant to the Indenture, and the parties shall provide direction to U.S. Bank (the “Trustee Direction Letter”), in form and substance reasonably acceptable to the parties, to cause such fees and reimbursements to be paid directly to an account as directed by the Purchaser.  The parties hereto agree that none of the Sellers nor any affiliate thereof shall be entitled to modify the directions to the Trustee regarding such payments of fees and reimbursements or revoke any such directions.  If the Sellers or any affiliate thereof shall receive any fees, reimbursements or other payments, proceeds or cash of any kind due and payable to the Purchaser in accordance with this Agreement, the Collateral Management Agreement or the Indenture, (x) prior to the Closing Date, then such amounts shall belong to the Purchaser and shall be retained by such Person and credited against the Purchase Price at Closing, and (y) from and after the Closing Date, then such Person shall promptly pay, or caused to be paid, such amounts or portion thereof that is payable hereunder to the Purchaser or its designee.  Any payments with respect to the Purchased Securities received by either Seller after the Closing Date shall be promptly forwarded to the Purchaser or its designee.

 

(d)           Except as otherwise specifically provided in this Agreement, all proceedings to be taken, and all documents to be executed and delivered by the parties, at the Closing shall be deemed to have been taken and executed simultaneously, and, except as permitted hereunder, no proceedings shall be deemed taken and no documents shall be deemed executed or delivered until all have been taken, executed and delivered.

 

3.           Conditions Precedent to Closing; Closing Deliverables.

 

(a)           The obligations of the Sellers under this Agreement are subject to the fulfillment (or waiver by the Sellers, which waiver, if any, shall be exercisable in the sole and absolute discretion of the Sellers), at or prior to the Closing, of each of the following conditions:

 

(i)           the representations and warranties of the Purchaser contained herein shall be accurate and correct in all material respects as of the Closing Date, and the covenants and agreements of the Purchaser contained herein to be complied with by the Purchaser at or prior to Closing shall have been complied with in all material respects;

  

- 3 -

  

 

(ii)            (1) the Issuer shall have received written confirmation from each Rating Agency that the assignment to, and assumption by, the Purchaser or its designee of the Collateral Manager Rights shall not cause the reduction or withdrawal of any of such Rating Agency's current ratings on the Securities, and (2) the written consent of the Issuer shall have been received with respect to such assignment and assumption;

 

(iii)           (1) the Rating Agency Condition with respect to the appointment of the Purchaser or its designee as the successor Advancing Agent pursuant to the Advancing Agent Resignation and Appointment Agreement and the Indenture has been satisfied, (2) the written consent of the Majority of the Preferred Shares shall have been received with respect to such appointment, and (3) the Issuer and Co-Issuer shall have appointed the Purchaser or its designee as the successor Advancing Agent by written instrument, in duplicate, executed by an Authorized Officer of each of the Issuer and the Co-Issuer and delivered to the required parties under Section 18.5 of the Indenture;

 

(iv)           the Rating Agency Condition with respect to the transfer of the Ordinary Shares to the Purchaser or its designee has been satisfied;

 

(v)           there shall not be in effect any order from a Governmental Authority enjoining or otherwise prohibiting the transactions contemplated by this Agreement;

 

(vi)           the Purchaser or its designee shall have delivered any investor representation or similar letter as may be required pursuant to the CDO Documents;

 

(vii)          the Purchaser shall have delivered, or caused to be delivered, to the Sellers each of the following deliverables, and such additional instruments, documents, certificates, amendments, opinions, consents and acknowledgments as are provided for by this Agreement, or that are required to consummate the transactions contemplated herein:

 

(1)           the Collateral Manager Assignment and Assumption Agreement, in the form attached hereto as Exhibit B (the “Collateral Manager Assignment and Assumption Agreement”), executed by the Purchaser or its designee;

 

(2)           a counterpart of the Collateral Management Agreement, executed by the Purchaser or its designee, naming the successor Collateral Manager;

 

(3)           the Advancing Agent Resignation and Appointment Agreement, in the form attached hereto as Exhibit C (the “Advancing Agent Resignation and Appointment Agreement”), executed by the Purchaser or its designee;

 

(4)           the Trustee Direction Letter, executed by the Purchaser or its designee; and

 

(5)           the transferee certificate required to be delivered by a transferee of the Preferred Shares pursuant to the Paying and Transfer Agency Agreement in the form attached hereto as Exhibit D-1, executed by the Purchaser or one of its designees;

 

(viii)        the Purchaser shall have obtained all consents and approvals from any Governmental Authority that are required to be obtained by the Purchaser in connection with the transactions contemplated by this Agreement and the Assumption Agreements, except where the failure to obtain any such consents or approvals would not be reasonably likely to result in a material adverse effect on the ability of the Purchaser (or if applicable, its designee) to consummate the transactions contemplated by this Agreement and the Assumption Agreements; and

  

  

- 4 -

  

 

(ix)           the Transferred Loans shall have been sold by the Issuer to CapLease, Inc. or its designee on terms acceptable to the Sellers in their sole discretion at a purchase price equal to not less than the then outstanding principal balance of the Transferred Loans and accrued and unpaid interest on the date of such sale.

 

(b)           The obligations of the Purchaser under this Agreement are subject to the fulfillment (or waiver by the Purchaser, which waiver, if any, shall be exercisable in the sole and absolute discretion of the Purchaser), at or prior to the Closing, of each of the following conditions:

 

(i)            the representations and warranties of the Sellers contained herein shall be accurate and correct in all material respects as of the Closing Date, and the covenants and agreements of the Sellers contained herein to be complied with by the Sellers at or prior to Closing shall have been complied with in all material respects;

 

(ii)           the Issuer shall have received written confirmation from each Rating Agency that the assignment to, and assumption by, the Purchaser or its designee of the Collateral Manager Rights shall not cause the reduction or withdrawal of any of such Rating Agency's current ratings on the Securities, and the written consent of the Issuer shall have been received with respect to such assignment and assumption;

 

(iii)           (1) the Rating Agency Condition with respect to the appointment of the Purchaser or its designee as the successor Advancing Agent pursuant to the Advancing Agent Resignation and Appointment Agreement and the Indenture has been satisfied, (2) the written consent of the Majority of the Preferred Shares shall have been received with respect to such appointment, and (3) the Issuer and Co-Issuer shall have appointed the Purchaser or its designee as the successor Advancing Agent by written instrument, in duplicate, executed by an Authorized Officer of each of the Issuer and the Co-Issuer and delivered to the required parties under Section 18.5 of the Indenture;

 

(iv)           the Rating Agency Condition with respect to the transfer of the Ordinary Shares to the Purchaser or its designee has been satisfied;

 

(v)           there shall not be in effect any order from a Governmental Authority enjoining or otherwise prohibiting the transactions contemplated by this Agreement;

 

(vi)          EVA shall have surrendered the share certificates relating to the Issuer Share Capital to the Issuer (or its transfer agent) along with the share transfer documents described under Section 3(b)(viii)(4) hereof, and shall have caused the Issuer to update its register of members to reflect the Purchaser or its designee as the new holder of the Issuer Share Capital and to issue new share certificates to such holder;

 

(vii)         EVA shall have surrendered the Co-Issuer Stock to the Co-Issuer (or its transfer agent) along with the stock power described under Section 3(b)(viii)(5) hereof, and shall have caused the Co-Issuer to update its stock registry or ledger to reflect the Purchaser or its designee as the new holder of the Co-Issuer Stock and to issue a new stock certificate (properly endorsed) to such holder;

  

  

- 5 -

  

 

(viii)        the Sellers shall have delivered, or caused to be delivered, to the Purchaser each of the following deliverables, and such additional instruments, documents, certificates, amendments, opinions, consents and acknowledgments as are provided for by this Agreement, or that are required to consummate the transactions contemplated herein:

 

(1)           the Collateral Manager Assignment and Assumption Agreement executed by CapLease, LLC and consented to by the Issuer;

 

(2)           the Advancing Agent Resignation and Appointment Agreement executed by CapLease, LLC;

 

(3)           the Trustee Direction Letter, executed by CapLease, LLC;

 

(4)           (a) the documents (if any) required to be delivered by the transferor of the Preferred Shares pursuant to the Paying and Transfer Agency Agreement executed by EVA as transferor, (b) the share transfer required to be delivered by a transferor of the Ordinary Shares pursuant to the Issuer's Charter in the form attached hereto as Exhibit D-2, executed by EVA in favor of Purchaser or one of its designees and (c) resolutions of the board of directors of the Issuer authorizing the transfer of the Ordinary Shares from EVA to the Purchaser or its designee;

 

(5)           the stock power required to be delivered by a transferor of the Co-Issuer Stock pursuant to the Co-Issuer Charter Documents in the form attached hereto as Exhibit D-3, executed by EVA in favor of the Purchaser or one of its designees;

 

(6)           a power of attorney from the Collateral Manager irrevocably appointing the Purchaser or its designee as its true and lawful agent and attorney-in-fact (with the power of substitution) in its name, place and stead, in the form of power of attorney attached as Exhibit E-1 hereto;

 

(7)           a power of attorney from the Issuer irrevocably appointing the Purchaser or its designee as its true and lawful agent and attorney-in-fact (with the power of substitution) in its name, place and stead, in the form of power of attorney attached as Exhibit E-2 hereto; and

 

(8)           a written notice from CapLease, LLC to the Issuer, the Co-Issuer, the Trustee, the Collateral Manager, each Hedge Counterparty, the Securityholders and each Rating Agency notifying such parties that CapLease, LLC is resigning as Advancing Agent, in form and substance reasonably acceptable to the parties hereto;

 

(ix)           the Sellers shall have taken all such actions, including procuring resignations, as may be required such that, effective upon the Closing, the board of directors of the Issuer shall be comprised solely of one or more individuals designated by the Purchaser and any independent third-party directors required under the Issuer's Charter; and

 

(x)            the Sellers shall have obtained all consents and approvals from any Governmental Authority, the Issuer, each Hedge Counterparty or the Trustee that are required to be obtained by the Sellers in connection with the transactions contemplated by this Agreement and the Assumption Agreements, except where the failure to obtain any such consents or approvals would not be reasonably likely to result in a Material Adverse Effect.

  

  

- 6 -

  

(c)           The respective obligations of the Sellers and the Purchaser under this Agreement are subject to the delivery to the Trustee of (or waiver by each of the Sellers and the Purchaser, which waiver, if any, shall be exercisable in the sole and absolute discretion of each such party), at Closing, the opinions of counsel set forth in Section 2(g) of the Collateral Management Agreement, unless this delivery condition shall have otherwise been satisfied.  For the avoidance of doubt, the failure to fulfill the condition in this Section 3(c) shall not result in any liability of any party to this Agreement or give rise to any claim by any party hereto against any other party hereto, unless such failure is due to a breach of this Agreement by a party.

 

4.           Representations and Warranties of the Sellers and the Responsible Party.

 

Each of the Sellers and the Responsible Party severally, with respect to itself, represents and warrants to the Purchaser, as of the date hereof and as of the Closing Date, as follows:

 

(a)           Each such Seller is a limited liability company, duly organized, validly existing and in good standing under the laws of Delaware.  The Responsible Party is a limited liability company, duly organized, validly existing and in good standing under the laws of Delaware

 

(b)           The execution and delivery of this Agreement and the Assumption Agreements to which such Seller is a party and such Seller’s performance of, and compliance with, the terms of and the transactions contemplated by this Agreement and the Assumption Agreements will not (i) violate the Organizational Documents of such Seller, or (ii) conflict with or violate any Law or Governmental Order applicable to such Seller, except where such violation or conflict would not have a Material Adverse Effect.  The execution and delivery of this Agreement and the Responsible Party's performance of, and compliance with, the terms of and the transactions contemplated by this Agreement will not (i) violate the Organizational Documents of the Responsible Party, or (ii) conflict with or violate any Law or Governmental Order applicable to the Responsible Party, except where such violation or conflict would not have a material adverse effect on the Responsible Party's ability to consummate the transactions contemplated hereunder.

 

(c)           Such Seller has the requisite power and authority to enter into and consummate all transactions to be consummated under this Agreement and the Assumption Agreements to which such Seller is a party; the execution, delivery and performance of this Agreement and the Assumption Agreements to which such Seller is a party have been duly authorized by such Seller and this Agreement and the Assumption Agreements to which such Seller is a party have been duly executed and delivered by such Seller.  This Agreement and the Assumption Agreements to which such Seller is a party, upon their execution and delivery by such Seller, will constitute a valid, legal and binding obligation of such Seller, enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered a proceeding in equity or at law).  The Responsible Party has the requisite power and authority to enter into and consummate all transactions to be consummated under this Agreement; the execution, delivery and performance of this Agreement have been duly authorized by the Responsible Party and this Agreement and have been duly executed and delivered by the Responsible Party.  This Agreement, upon its execution and delivery by the Responsible Party, will constitute a valid, legal and binding obligation of the Responsible Party, enforceable against it in accordance with the terms hereof, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered a proceeding in equity or at law).

   

(d)           Such Seller is the sole beneficial owner of the Purchased Securities and Assumption Agreement Rights, as the case may be, that such Seller is selling to the Purchaser pursuant to this Agreement free and clear of any Liens (other than Permitted Liens).

 

  

- 7 -

  

   

(e)           To such Seller’s Knowledge, the information contained in the Notes Valuation Report relating to the Payment Date occurring in July 2011, which has been delivered to the Purchaser, is correct in all material respects.

 

(f)           There are no actions, claims or proceedings pending against such Seller, the Responsible Party or the Issuer or affecting any of their respective assets (including, without limitation, any of the foregoing which are pending or threatened in writing) which, individually or in the aggregate, are related to the Issuer, the CDO Documents or the collateralized debt obligation transaction contemplated under the Indenture.

 

(g)           To such Seller's Knowledge, no consents or approvals from any Governmental Authority or third party are required to be obtained in connection with the transactions contemplated by this Agreement and the Assumption Agreements, except as provided in the CDO Documents.

 

(h)           To such Seller’s Knowledge, no breach of any representation or warranty with respect to any Collateral Security exists that could result in a cure or repurchase of any Collateral Security under the CDO Documents.

 

(i)           Such Seller has caused to be delivered to the Purchaser copies of all material CDO Documents and all material relevant documents relating to the CDO Documents and the Collateral Securities held by the Issuer that have been requested by the Purchaser, and such documents, data and other written information, when delivered, were accurate, complete and correct in all material respects and, to such Seller's Knowledge, there are no additional material CDO Documents or material relevant documents relating to the CDO Documents and the Collateral Securities that have not been delivered.

 

(j)           Neither such Seller, nor to such Seller’s Knowledge, any other party to the CDO Documents, is in material violation or breach of, or in material default under, nor does an event or condition exist that with the passage of time or giving of notice (or both) would reasonably be expected to constitute a material breach or default under, or permit the termination of (whether for cause or otherwise), the CDO Documents.

 

(k)           Each CDO Document is in full force and effect and constitutes a legal, valid, binding agreement, enforceable against such Seller and, to such Seller’s Knowledge, against the other parties thereto, in accordance with its terms, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered a proceeding in equity or at law).

 

(l)           Neither Seller nor the Issuer has taken, or permitted to be taken, directly or indirectly, any action to initiate, assist, solicit, receive, negotiate, participate in, facilitate, encourage or otherwise seek to procure the early redemption or cancellation of the Securities in any way whether in connection with a refinancing or otherwise.

 

(m)           The Issuer is the sole and lawful owner of each Collateral Security, has good and marketable title thereto, free and clear of all security interests, liens, pledges, charges, encumbrances or any interests of any other party, whatsoever other than those security interests, liens, pledges, charges, encumbrances and interests of other parties created or permitted pursuant to the CDO Documents.

  

  

- 8 -

  

  

(n)           Neither Seller has assigned or otherwise transferred any of its rights and obligations under the Collateral Management Agreement or the Indenture, or resigned as the Collateral Manager or Advancing Agent under the Collateral Management Agreement or the Indenture, as applicable.

 

(o)           Neither Seller nor any of its affiliates has amended, or consented to any amendment of any of the CDO Documents except as otherwise disclosed to the Purchaser.

 

(p)           As of the date of the Collateral Management Agreement and as of the date hereof, CapLease, LLC was and is exempt from registration as an investment adviser under the Investment Advisers Act of 1940, as amended.

 

(q)           Taxes:

 

(i)           No Tax Returns have been required to be filed by the Issuer through the Closing Date. No Taxes have been required to be paid or remitted by the Issuer on or before the date hereof. No claim has been made by a Governmental Authority in any jurisdiction that the Issuer is or may be subject to taxation by that jurisdiction. There are no liens for Taxes on any assets of the Issuer.

 

(ii)           For all periods through and including the date hereof, the Issuer was properly treated for U.S. federal income tax purposes, and applicable state and local income and franchise tax purposes, as a “qualified REIT subsidiary,” within the meaning of Section 856(i) of the Code of 1986, as amended (the “Code”).

 

(iii)           None of the assets of the Issuer are “United States real property interests” within the meaning of Section 897 of the Code and the Treasury Regulations thereunder.

 

(iv)           To each Seller's Knowledge, the Issuer is not a party to any understanding or arrangement described in Section 6662(d)(2)(C)(ii) of the Code or a “reportable transaction” within the meaning of Treasury Regulation Section 1.6011-4(b).

 

(v)           None of the outstanding Notes of the Issuer has been the subject of a “significant modification” within the meaning of Treasury Regulations Section 1.1001-3(b).

 

5.           Representations and Warranties of the Purchaser.

 

The Purchaser represents and warrants to, and agrees with, the Sellers, as of the date hereof and the Closing Date, as follows:

 

(a)           The Purchaser is duly organized, validly existing and in good standing under the laws of the jurisdiction of organization.

 

(b)           The execution and delivery of this Agreement and the Assumption Agreements by the Purchaser (and, if applicable, its designee) and its (and, if applicable, its designee’s) performance of, and compliance with, the terms of this Agreement and each Assumption Agreement will not (i) violate the Organizational Documents of the Purchaser (and, if applicable, its designee), or (ii) conflict with or violate any Law or Governmental Order applicable to the Purchaser (and, if applicable, its designee), except where such violation or conflict would not have a material adverse effect on the ability of the Purchaser (or, if applicable, its designee) to consummate the transactions contemplated under this Agreement or the Assumption Agreements.

  

  

- 9 -

  

  

(c)           The Purchaser (and, if applicable, its designee) has the full power and authority to enter into and consummate all transactions contemplated by this Agreement and each Assumption Agreement, has duly authorized the execution, delivery and performance of this Agreement and has duly executed and delivered this Agreement and each Assumption Agreement.  This Agreement and each Assumption Agreement, upon its execution and delivery by the Purchaser (and, if applicable, its designee) will constitute a valid, legal and binding obligation of the Purchaser (and, if applicable, its designee), enforceable against it (and, if applicable, its designee) in accordance with the terms hereof or thereof, as applicable, except as such enforcement may be limited by bankruptcy, insolvency, reorganization, receivership, moratorium or other laws relating to or affecting the rights of creditors generally, and by general equity principles (regardless of whether such enforcement is considered a proceeding in equity or at law).

 

(d)           The Purchaser understands that the Purchased Securities have not been, and are not being, registered under the Securities Act or any securities laws of any state of the United States of America or any other jurisdiction and are being transferred to it in a transaction that is exempt from the registration requirements of the Securities Act and any such laws, and that the Purchased Securities cannot be resold unless they are registered or qualified thereunder or unless an exemption from such registration or qualification is available.

 

(e)           The Purchaser (or, if applicable, its designee) is either (i) a “qualified institutional buyer” as defined in and pursuant to Rule 144A under the Securities Act and a “qualified purchaser” (for purposes of Section 3(c)(7) of the Investment Company Act) or (ii) a non-U.S. Person in an off-shore transaction in accordance with rule 903 or 904 of Regulation S of the Securities Act.

 

(f)           The Purchaser (and, if applicable, its designee) is not a Benefit Plan Investor.

 

(g)           The Purchaser or its designee that is purchasing the Issuer Share Capital and Co-Issuer Stock is a REIT or a qualified REIT subsidiary (within the meaning of Section 856(i)(2) of the Code).

 

(h)           The Purchaser has reviewed the CDO Documents and all documents and materials provided to the Purchaser by or on behalf of the Sellers in connection with the transactions contemplated under this Agreement and the Assumption Agreements and has had the opportunity to ask questions and receive answers from the Sellers concerning the CDO Documents and such other documents and materials.  The Purchaser acknowledges that except as otherwise expressly set forth herein, (i) none of the Sellers has made any representation or warranty, expressed or implied, as to the Purchased Securities, the Assumption Agreement Rights, the CDO Documents, the Collateral Securities or the accuracy or completeness of any information regarding the Sellers, the Issuer, the Co-Issuer, the Collateral Manager, the Advancing Agent, the Auction Agent or any other party to the CDO Documents furnished or made available to the Purchaser and its representatives, except as expressly set forth in this Agreement and the Assumption Agreements and the CDO Documents, (ii) the Purchaser has not relied on any representation or warranty from Sellers (other than any representation or warranty of the Sellers expressly set forth in this Agreement or in any Assumption Agreement or CDO Document) or any other person in determining to enter into this Agreement and the Assumption Agreements and (iii) none of the Sellers and any other person shall have or be subject to any liability to the Purchaser or any other person resulting from the distribution to the Purchaser, or the Purchaser’s use of any information, documents or material made available to the Purchaser in any “data rooms”, management presentations or in any other form in expectation of the transactions contemplated hereby, unless such liability is a result of the actual fraud of any Seller.  Accordingly, Purchaser hereby agrees that except as expressly set forth in this Agreement or the Assumption Agreements, the Purchased Securities and Assumption Agreement Rights are being transferred hereby and by the Assumption Agreements “AS IS,” “WHERE IS” AND, SUBJECT ONLY TO THE REPRESENTATIONS AND WARRANTIES EXPRESSLY CONTAINED IN THIS AGREEMENT AND THE ASSUMPTION AGREEMENTS AND THE CDO DOCUMENTS, WITH ALL FAULTS AND WITHOUT ANY OTHER REPRESENTATION OR WARRANTY OF ANY KIND OR NATURE WHATSOEVER, EXPRESS OR IMPLIED, ORAL OR WRITTEN.

  

  

- 10 -

  

  

6.           The Deposit; Other Agreements of the Sellers, the Purchaser and the Responsible Party.

 

(a)           On the date hereof, upon its execution of this Agreement, the Purchaser shall deposit (or cause to be deposited) with the Escrow Agent an amount equal to ONE MILLION DOLLARS ($1,000,000) (such amount, the “Deposit”) pursuant to an escrow agreement among the Sellers, the Purchaser and the Escrow Agent.  The Deposit will not earn interest.  In the event that the Closing of the transactions contemplated hereby occurs in accordance with the terms and subject to the conditions of this Agreement, then, at the Closing, the Deposit shall be applied toward the payment of the Purchase Price in accordance with the terms of Section 2 hereof.  In the event that this Agreement is terminated in accordance with Section 8(a) hereof, then, upon such termination, the Deposit shall be applied in accordance with the terms of Section 8(b) hereof.

 

(b)           Subject to the terms and conditions of this Agreement, each party shall use its commercially reasonable efforts to cause the Closing to occur as promptly as practicable and each of the parties hereto shall use their respective commercially reasonable efforts to take, or cause to be taken, all appropriate action, do or cause to be done all things required, necessary, proper or advisable under applicable Law, and execute and deliver such documents and other papers, as may be required to consummate the transactions contemplated by this Agreement (including satisfaction, but not waiver, of the conditions precedent to Closing set forth in Section 3 hereof), the CDO Documents and the Assumption Agreements.

 

(c)           From and after the date hereof, except in respect of the Transferred Loans, until the earlier of (i) the Closing Date and (ii) the date on which this Agreement terminates in accordance with Section 8(a), the Sellers shall consult with and obtain the written consent of the Purchaser, not to be unreasonably withheld, prior to (x) taking any material or discretionary action with respect to the investment in or management or servicing of the Collateral Securities in accordance with the CDO Documents and (y) prior to amending, or consenting to any amendment of, any of the CDO Documents, provided, that, in each case, such consultation or consent (or withholding of consent) does not cause the Collateral Manager to be in violation of the Collateral Management Agreement or Indenture; provided further, that, notwithstanding the exception above, the Sellers shall not amend or write down (or cause to be amended or written down) the principal balance of the Transferred Loans without consulting with and obtaining the written consent of the Purchaser, not to be unreasonably withheld.

 

(d)           Each Seller shall promptly deliver, or cause to be delivered, to the Purchaser any and all material CDO Documents and all material relevant documents relating to the CDO Documents and the Collateral Securities (including the related loan file), in each case, to the extent such items are in the possession of, or accessible by, such Seller.

  

(e)           From and after the date hereof, unless this Agreement terminates in accordance with Section 8(a), each of the parties hereto agrees to use its commercially reasonable best efforts to cause each of the Purchased Securities to be registered in the name of Purchaser or its designee at the earliest possible date.

 

(f)           From and after the Closing Date, neither Seller shall take any action or give any notice or direction that would contradict any instructions given to the Trustee regarding the payment of the Collateral Management Fee, the Advancing Agent Fee or any other fees due and payable to the Purchaser.

 

  

- 11 -

  

  

(g)           Neither Seller or any of their respective affiliates shall take, or permit to be taken, at any time after the date of this Agreement, directly or indirectly, any action to initiate, assist, solicit, receive, negotiate, participate in, facilitate, encourage or otherwise seek to procure the early redemption or cancellation of the Securities in any way whether in connection with a refinancing or otherwise.

 

(h)           From and after the date hereof until the earlier of (i) the Closing Date and (ii) the date on which this Agreement terminates in accordance with Section 8(a), neither Seller shall resign or otherwise vote, consent to or take any other action to terminate or otherwise remove the Collateral Manager or Advancing Agent under the Collateral Management Agreement or Indenture, respectively.

 

(i)            From and after the Closing Date, neither Seller will vote, consent to or take any other action to terminate or otherwise remove the Purchaser or its designee as Collateral Manager or Advancing Agent under the Collateral Management Agreement or Indenture, respectively.

 

(j)            From and after the date hereof, unless this Agreement terminates in accordance with Section 8(a), each Seller shall notify the Purchaser as soon as practicable upon such Seller becoming aware of any pending or threatened (in writing) regulatory or other investigation, examination, action, claim, suit or proceeding before or by any court or Governmental Authority or with respect to any communications with the Trustee relating to the Issuer, the Co-Issuer, the Collateral Manager or the Advancing Agent.

 

(k)           From and after the date hereof, unless this Agreement terminates in accordance with Section 8(a), each Seller shall (i) promptly forward to the Purchaser any and all notices, requests and other communications such Seller receives in connection with or relating to the CDO Documents, this Agreement or the Assumption Agreements, and (ii) notify the Purchaser of any defaults (without giving effect to any applicable grace period or waiver), or any event or condition that with the passage of time or giving of notice (or both) would reasonably be expected to constitute a default, in each case, that such Seller becomes aware of in respect of a Collateral Security or the CDO Documents.

 

(l)            From and after the date hereof until the earlier of (i) the Closing Date and (ii) the date on which this Agreement terminates in accordance with Section 8(a), the Sellers shall not, and shall not permit any of their affiliates, representatives, agents, lenders, counsel or other advisers to, directly or indirectly, initiate or continue discussions or enter into any agreement or understanding with, or otherwise provide any information to (including, but not limited to, by way of providing access to the Sellers' management) any person other than the Purchaser in furtherance of or to effectuate the purchase and sale of any of the Purchased Securities and/or Assumption Agreement Rights and shall not respond to any inquiry or proposal made to the Sellers or any of their affiliates, representatives, agents, lenders, counsel or other advisers by any person related to such purchase and sale.

 

(m)           From and after the date hereof, the Responsible Party shall maintain (or cause to be maintained) a demand note from its operating partnership in an amount at least equal to $25,000,000, and shall make a demand for payment under such demand note when and if necessary to satisfy its monetary obligations under Sections 8(b)(iii) and 9(a) hereof.

  

  

- 12 -

  

 

(n)           Cooperation; Tax Records:  After the Closing Date, the Sellers and the Purchaser shall:

 

(i)           cooperate fully in preparing for any audits of, or disputes with Tax Authorities relating to the Issuer and in administering this Agreement;

 

(ii)           make available to the other party as reasonably requested and to any Tax Authority all books and records, documents, financial, operating and accounting data and other information relating to the Issuer;

 

(iii)           provide timely notice to the other party in writing of any pending or threatened audits or assessments of the Issuer for taxable periods for which the other party may have a liability; and

 

(iv)           furnish the other party with copies of all correspondence received from any Tax Authority in connection with any Tax audit or information request with respect to any such taxable period.

 

Except as set forth in this Section 6, the provisions of this Section 6 shall survive the Closing.

 

7.           Further Assurances.

 

Each of the Sellers and the Purchaser shall, and shall cause its affiliates to, cooperate with, execute and deliver at the reasonable request of the other party such additional documents, legal opinions, amendments, instruments, notices, consent and acknowledgements as may be reasonably required to give effect to this Agreement and the transactions contemplated in this Agreement, to comply with the CDO Documents, and to manage or otherwise administer the Collateral Securities, and provide whatever documents or other evidence of ownership as may be reasonably requested by the other to confirm ownership of the Purchased Securities and the Assumption Agreement Rights to the Purchaser and its affiliates.  After the Closing, the Sellers and their affiliates shall reasonably cooperate with the Purchaser and any of its affiliates in any suit, action, investigation or proceeding relating to or arising in connection with the CDO Documents, the Collateral Securities or the transactions contemplated by this Agreement.  Any out-of-pocket expenses incurred by the Sellers in fulfilling their respective obligations under this Section 7 shall be paid by the Purchaser.

 

8.           Termination.

 

(a)         This Agreement may be terminated at any time prior to the Closing:

 

(i)            by the mutual written consent of each Seller, the Responsible Party and the Purchaser; or

 

(ii)           by the Sellers or the Purchaser if, notwithstanding the terminating party's use of commercially reasonable efforts to close, the Closing shall not have occurred within 120 calendar days after the date of this Agreement (the “Termination Date”); provided, however, that the right to terminate this Agreement under this Section 8(a)(ii) shall not be available to any party whose breach of, or failure to fulfill any obligation under, this Agreement shall have been the principal cause of, or shall have resulted in the failure of the Closing to occur on or prior to such date.

  

  

- 13 -

  

   

(b)           In the event of termination of this Agreement as provided in Section 8(a) hereof, this Agreement shall forthwith become void and there shall be no liability on the part of any party hereto; provided, however, that:

 

(i)            if such termination is a Non-Refundable Termination, then, upon such termination, the Sellers shall be entitled to unconditionally keep and retain, and shall become the sole legal owner of, the Deposit, as liquidated damages in compensation for the Sellers’ (and their affiliates’) costs, fees and expenses of marketing, structuring, documenting and negotiating the transactions contemplated hereby, lost revenues and opportunities and other damages; it being understood and agreed by the parties hereto that the Purchaser and the Sellers have carefully considered the issue of liquidated damages and after negotiation agree that the award of the Deposit as liquidated damages to the Sellers would constitute a reasonable compromise after attempting to estimate what the actual damages would be and assessing the risk of collection;

 

(ii)           if such termination is a Refundable Termination, then, upon such termination, the Purchaser shall be entitled to the return of the Deposit by the Escrow Agent;

 

(iii)           if such termination is a Refundable Termination and the Closing fails to occur as a result of:

 

(1)           a default by the Sellers in the performance of any of their material obligations to be performed prior to the Closing Date (and such default shall continue for five (5) days after notice to the Sellers) or if the Closing fails to occur by reason of the Sellers' failure to perform their obligations hereunder on the Closing Date, except for a failure to satisfy the condition set forth under Section 3(a)(ix) hereof, Purchaser shall receive upon such termination, in addition to the return of the Deposit by the Escrow Agent, an amount equal to $1,000,000 from the Sellers and the Responsible Party (jointly or severally), as liquidated damages in compensation for the Purchaser's (and its affiliates') costs, fees and expenses of structuring, documenting and negotiating the transactions contemplated hereby, lost revenues and opportunities and other damages; it being understood and agreed by the parties hereto that the Purchaser, the Sellers and the Responsible Party have carefully considered the issue of liquidated damages and after negotiation agree that the award of $1,000,000 as liquidated damages to the Purchaser would constitute a reasonable compromise after attempting to estimate what the actual damages would be and assessing the risk of collection; or

 

(2)           a failure to satisfy the condition set forth under Section 3(a)(ix) hereof, Purchaser shall receive upon such termination, in addition to the return of the Deposit by the Escrow Agent, an amount from the Sellers and the Responsible Party (jointly or severally) equal to the Purchaser's out-of-pocket costs incurred in connection with the transaction contemplated by this Agreement, not to exceed $150,000; it being understood and agreed by the parties hereto that the Purchaser, the Sellers and the Responsible Party have carefully considered the issue of liquidated damages and after negotiation agree that the award of out-of-pocket costs as liquidated damages to the Purchaser would constitute a reasonable compromise after attempting to estimate what the actual damages would be and assessing the risk of collection; and

 

(iv)           the remedies set forth in this Section 8(b) shall be the sole and exclusive remedies available to the parties in respect of any claim for breach of, or failure to fulfill any obligation under, this Agreement that results in the failure of the Closing under this Section 8 and the parties irrevocably release one another from any and all other liability whatsoever for any breach by such party of the terms and provisions of this Agreement prior to the Closing.

   

  

- 14 -

  

 

9.           Indemnity.

 

(a)           From and after the Closing, each of CapLease, LLC, EVA and the Responsible Party (each, a “Seller Indemnifying Party”) shall jointly and severally defend, indemnify and hold harmless the Purchaser, its affiliates and its respective successors and the respective shareholders, officers, directors, employees, members, partners, owners, attorneys, advisors and agents of each such indemnified Person (collectively, the “Purchaser Indemnified Parties”) from and against any and all out-of-pocket losses, liabilities, claims, damages, obligations, penalties, actions, judgments, suits, taxes, fees, costs, fines, or expenses (including the reasonable fees and expenses of legal counsel) of any kind (collectively, the “Losses”) that may be imposed on, paid, suffered or incurred by or asserted against any Purchaser Indemnified Party that, directly or indirectly, arise out of, result from, are based upon or in an way relates to (a) any inaccuracy in or any breach of any representation and warranty made by such Seller Indemnifying Party in this Agreement, the Assumption Agreements on or after the Closing Date or the CDO Documents prior to, on or after the Closing Date; provided, that, the sole remedy for a breach of any representation and warranty in respect of a Collateral Security is set forth in the related Collateral Purchase Agreement; (b) any failure by such Seller Indemnifying Party to duly and timely perform or fulfill any of its covenants or agreements required to be performed by such Seller Indemnifying Party under this Agreement, the Assumption Agreements, the CDO Documents to which it is a party or any Underlying Instruments, prior to, on or after the Closing Date; (c) fraud or intentional misrepresentation by such Seller Indemnifying Party in connection with the execution and the delivery of this Agreement, the Assumption Agreements, or any CDO Document, or any certificate, report, financial statement or other instrument or document furnished by such Seller Indemnifying Party to any Purchaser Indemnified Party prior to, on or after the Closing Date; (d) an involuntary bankruptcy or insolvency proceeding commenced against the Issuer or Co-Issuer in connection with which such Seller Indemnifying Party has colluded in any way with the creditors commencing or filing such proceeding; or (e) any violation of, non-compliance with or liability under any requirement or rule of law, except, in each case, for any Loss due to the gross negligence, bad faith, fraud or willful misconduct of any Purchaser Indemnified Party. To the extent that any Purchaser Indemnified Person obtains recovery from a third party of any of the amounts that any Seller Indemnifying Party has paid to such Purchaser Indemnified Person pursuant to the indemnity set forth in this Section 9, then such Purchaser Indemnified Party shall promptly pay to such Seller Indemnifying Party the amount of such recovery.  No Seller Indemnifying Party shall be liable for indemnification under this Section 9(a) until the aggregate amount of all Losses in respect of indemnification under this Section 9(a) exceeds $100,000, in which event such Seller Indemnifying Party shall be required to pay or be liable for all such losses payable by it under this Section in excess of such amount.  In no event shall the aggregate amount of all Losses payable by the Seller Indemnifying Parties hereunder exceed $10,000,000, except to the extent payable under clause (c) hereof.

   

 (b)          From and after the Closing, the Purchaser shall defend, indemnify and hold harmless each Seller and its respective affiliates and its respective successors and the respective shareholders, officers, directors, employees, members, partners, owners, attorneys, advisors and agents of each such indemnified Person (collectively, the “Seller Indemnified Parties”) from and against any and all Losses that may be imposed on, paid, suffered or incurred by or asserted against any Seller Indemnified Party that, directly or indirectly, arise out of, result from, are based upon or in an way relate to (a) any inaccuracy in or any breach of any representation and warranty made by the Purchaser in this Agreement or the Assumption Agreements on or after the Closing Date; (b) any failure by the Purchaser to duly and timely perform or fulfill any of its covenants or agreements required to be performed by the Purchaser under this Agreement, the Assumption Agreements or the CDO Documents pursuant to which it has assumed an obligation or duty to perform on behalf of any party thereto or is bound on or after the Closing Date; (c) fraud or intentional misrepresentation by the Purchaser in connection with the execution and the delivery of this Agreement or the Assumption Agreements, or any certificate, report, financial statement or other instrument or document furnished to any Seller Indemnified Party by the Purchaser prior to, on or after the Closing Date; or (d) any violation of, noncompliance with or liability under any requirement or rule of law, except, in each case, for any Loss due to the gross negligence, bad faith, fraud or willful misconduct of any Seller Indemnified Party. To the extent that any Seller Indemnified Person obtains recovery from a third party of any of the amounts that the Purchaser has paid to such Seller Indemnified Person pursuant to the indemnity set forth in this Section 9, then such Seller Indemnified Party shall promptly pay to the Purchaser or its designee the amount of such recovery.  The Purchaser shall not be liable for indemnification under this Section 9(b) until the aggregate amount of all Losses in respect of indemnification under this Section 9(b) exceeds $100,000, in which event the Purchaser shall be required to pay or be liable for all such losses payable by it under this Section in excess of such amount.  In no event shall the aggregate amount of all Losses payable by the Purchaser hereunder exceed $10,000,000, except to the extent payable under clause (c) hereof.

 

  

- 15 -

  

 

(c)           The remedies set forth in this Section 9 shall be the sole and exclusive remedies available to the parties in respect of any claim for Losses for acts or omissions occurring after the Closing Date and the parties irrevocably release one another from any and all other liability whatsoever for any such Losses not authorized under this Section 9.

 

10.           Confidentiality.

 

The Sellers and the Purchaser acknowledge that the Confidentiality Letter is hereby superseded by and merged into the provisions of this Section, and this Section constitutes the confidentiality agreement of the parties hereto.  The Sellers and the Purchaser acknowledge that the information provided or to be provided to them in connection with the transactions contemplated hereby or by the Assumption Agreements is confidential and shall not be disclosed to any other party.  Notwithstanding anything to the contrary contained herein or in any Assumption Agreement, the parties and their respective affiliates shall be entitled to disclose any and all terms of this Agreement or the Assumption Agreements to their respective directors, employees, representatives, agents, lenders, counsel or other advisers, or if such party or its affiliates, in their sole discretion, deem it necessary or appropriate under the rules and regulations of the Securities and Exchange Commission and/or the New York Stock Exchange or under any other law, rule or regulation applicable to it.  Each party agrees not to publicly disclose any information relating to the terms of this Agreement or the Assumption Agreements except to the extent it determines, after consultation with counsel, that such disclosure is (i) required under any law, rule or regulation applicable to it and (ii) deemed necessary by a Seller or the Purchaser to facilitate or execute any transaction contemplated by this Agreement or any Assumption Agreement.  Notwithstanding the foregoing, without in any way limiting the above permitted disclosures, each party hereto agrees that each party hereto may disclose a description of transactions arising under this Agreement (x) in connection with the filing on Form 8-K or any other filing deemed necessary by such party, after consultation with counsel, to be made by such party by the Securities and Exchange Commission, (y) pursuant to a press release that conforms to the Form 8-K referenced in clause (x) of this sentence and (z) to the Trustee and the Escrow Agent in order to consummate the transactions contemplated under this Agreement.  This Section 10 shall survive any termination of this Agreement.

 

11.           Termination of Certain Representations.

 

The representations and warranties of any party set forth in this Agreement shall remain in full force and effect for a period of thirteen (13) months after the Closing Date, at which time such representations and warranties shall terminate and no longer be of any force or effect and no action or claim based thereon may be commenced after that period unless the factual basis of the claim was first identified with reasonable clarity in a written notice delivered to the Sellers, the Responsible Party or the Purchaser, as applicable, not later than thirteen (13) months following the Closing Date.

 

  

- 16 -

  

 

12.           Limitation On Damages.

 

Notwithstanding anything to the contrary contained herein, in no event shall any Seller, the Responsible Party or the Purchaser or any of their respective affiliates be liable for any punitive, special or consequential damages arising in connection with the execution and delivery of this Agreement or the transactions contemplated herein.

 

13.           Amendments.

 

This Agreement may not be modified, amended, altered or supplemented, except upon the execution and delivery of a written agreement by the Sellers, the Responsible Party and the Purchaser.  Any failure of a party to comply with any obligation, covenant, agreement or condition contained in this Agreement may be waived by the party entitled to the benefits thereof only by a written instrument duly executed and delivered by the party granting such waiver, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure of compliance.

 

14.           Notices.

 

All communications hereunder will be in writing and effective only on receipt, and, if sent to the Purchaser, will be mailed, delivered by hand or courier or sent by facsimile and confirmed to the Purchaser at 399 Park Avenue, New York, New York 10022; Attention:  General Counsel or such other address as the Purchaser shall designate for such purpose in a notice to the Sellers; if sent to the Sellers or the Responsible Party, 1065 Avenue of the Americas, New York, New York 10018, Attention:  General Counsel, or such other address as the Sellers or the Responsible Party shall designate for such purpose in a notice to the Purchaser.

 

15.           Successors and Assigns.

 

This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any person other than the parties hereto and their successors, assigns, heirs and legal representatives, any right or obligation hereunder. None of the rights or obligations of the Purchaser or the Sellers may be assigned, whether by operation of law or otherwise, without the written consent of all of the parties to this Agreement.

 

16.           Delegation.

 

The Purchaser may delegate to its affiliates and any investment funds managed by the Purchaser or any affiliate of the Purchaser any rights, benefits or obligations under this Agreement; provided, however, that the Purchaser shall not be relieved of any of its duties and liabilities hereunder as a result of such delegation.

 

17.           Applicable Law.

 

THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE TO PRINCIPLES OF CONFLICTS OF LAW (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW).

 

  

- 17 -

  

 

18.           Submission to Jurisdiction.

 

ANY LEGAL ACTION OR PROCEEDING BY OR AGAINST ANY PARTY HERETO OR WITH RESPECT TO OR ARISING OUT OF THIS AGREEMENT OR ANY ASSUMPTION AGREEMENT MAY BE BROUGHT IN OR REMOVED TO THE COURTS OF THE STATE OF NEW YORK, IN AND FOR THE COUNTY OF NEW YORK, OR OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK (IN EACH CASE SITTING IN THE BOROUGH OF MANHATTAN). BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS (AND COURTS OF APPEALS THEREFROM) FOR LEGAL PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY ASSUMPTION AGREEMENT.

 

19.           Counterparts.

 

This Agreement may be executed by the parties in multiple counterparts which may be delivered by facsimile or email (via PDF document) transmission.  Each counterpart when so executed and delivered shall be deemed an original, and all such counterparts taken together shall constitute one and the same instrument.

 

20.           Expenses.

 

Subject to Section 8(b)(iii)(2) hereof, all costs, fees and expenses, including fees and disbursements of counsel, financial advisors and accountants incurred in connection with this Agreement, the Assumption Agreements and the transactions contemplated hereby and thereby, including without limitation, fees of Rating Agencies and special tax counsel, shall be paid by the Purchaser, whether or not the Closing shall have occurred; provided, that, each of the Sellers and the Responsible Party shall be responsible for fees and disbursements of their own counsel incurred in connection with the negotiation and preparation of this Agreement, the Assumption Agreements and the other documents contemplated hereby and thereby.

 

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]

 

  

- 18 -

  

IN WITNESS WHEREOF, this Agreement has been entered into as of the date first written above.

 

	
CAPLEASE INVESTMENT MANAGEMENT,

	
LLC, as a Seller

	  	  
	
By:

	
/s/ Paul H. McDowell

	  	
Name: Paul H. McDowell

	  	
Title: Chief Executive Officer

	  	  
	EVA LLC, as a Seller
	  	  
	
By:

	
/s/ Shawn P. Seale

	  	
Name: Shawn P. Seale

	  	
Title: Senior Vice President

	  	  
	NRF CAP, LLC, as Purchaser
	  	  
	
By:

	
/s/ Albert Tylis

	  	
Name: Albert Tylis

	  	
Title: Co-President & Chief Operating Officer

	  	  
	CAPLEASE CREDIT LLC, as Responsible Party
	  	  
	
By:

	
/s/ William R. Pollert

	  	
Name: William Pollert

	  	
Title: President

 

  

- 19 -

  

 

ANNEX A

 

DEFINITIONS

 

“Accrual End Date” means the date that is the later of (i) 30 calendar days after the date of the Agreement and (ii) the date on which all of the conditions set forth under clauses (ii)(1), (iii)(1) and (iv) through (viii) of Section 3(a) of the Agreement have been satisfied.

 

“Accrued Interest” means an amount equal to (i) any and all interest (other than default interest) accrued or collected on the Collateral Securities from July 30, 2011 through and including the Accrual End Date, less (ii) the sum of any and all interest on the Class A Notes and Class B Notes, swap payments, management and other fees and expenses of the Issuer accrued from July 30, 2011 through the Accrual End Date.

 

“Advancing Agent” has the meaning ascribed to such term in the Indenture.

 

“Advancing Agent Fees” has the meaning ascribed to such term in the Indenture.

 

“Advancing Agent Rights” means the rights and obligations of CapLease, LLC, as Advancing Agent, as set forth in to the Indenture, which are to be assigned to, and assumed by, the Purchaser or its designee pursuant to the terms and conditions of the Advancing Agent Resignation and Appointment Agreement.

 

“Assumption Agreement Rights” means the Advancing Agent Rights and the Collateral Manager Rights.

 

“Assumption Agreements” means the Advancing Agent Resignation and Appointment Agreement and the Collateral Manager Assignment and Assumption Agreement.

 

“Auction Agent” has the meaning ascribed to such term in the Indenture.

 

“Benefit Plan Investor” has the meaning ascribed to such term in the Paying and Transfer Agency Agreement.

 

“Business Day” means any day other than (i) a Saturday or Sunday and (ii) a day on which commercial banks are authorized or required by applicable law, regulation or executive order to close in New York, New York.

 

“CDO Documents” means the Indenture, the Collateral Management Agreement, the Servicing Agreement, the Paying and Transfer Agency Agreement, the Notes, share certificates relating to the Issuer Share Capital, the Issuer's Charter, Resolutions, the Co-Issuer Stock, the Co-Issuer Charter Documents and all other Transaction Documents or agreements, documents or instruments contemplated by the foregoing.  For the avoidance of doubt, “CDO Documents” shall not include the Collateral Securities and the documentation governing the Collateral Securities.

 

“Class A Notes” means the Class A Senior Secured Fixed Rate Term Notes, due 2040, issued by the Issuer and the Co-Issuer pursuant to the Indenture.

 

“Class B Notes” means the Class B Second Priority Fixed Rate Term Notes, due 2040, issued by the Issuer and the Co-Issuer pursuant to the Indenture.

 

  

  

  

 

“Class C Notes” means the Class C Third Priority Fixed Rate Term Notes, due 2040, issued by the Issuer and the Co-Issuer pursuant to the Indenture.

 

“Class D Notes” means the Class D Fourth Priority Fixed Rate Term Notes, due 2040, issued by the Issuer and the Co-Issuer pursuant to the Indenture.

 

“Class E Notes” means the Class E Fifth Priority Fixed Rate Term Notes, due 2040, issued by the Issuer and the Co-Issuer pursuant to the Indenture.

 

“Closing” means the consummation of the sale of the Assumption Agreement Rights and the Purchased Securities in accordance with the terms and conditions of this Agreement.

 

“Closing Date” means the date on which the Closing is to occur, as set forth in a notice given to the Sellers by the Purchaser, which date shall be a Business Day that is not less than one (1) Business Days after the date of such notice and not later than the Termination Date, or any such other earlier or later date as may be mutually agreed to among the Sellers and the Purchaser.

 

“Code” means the United States Internal Revenue Code, as amended.

 

“Co-Issuer Charter Documents” means the Organizational Documents of the Co-Issuer (as amended from time to time).

 

“Collateral Management Fees” has the meaning ascribed to such term in the Indenture.

 

“Collateral Manager” has the meaning ascribed to such term in the Collateral Management Agreement.

 

“Collateral Manager Rights” means the rights and obligations of CapLease, LLC, as Collateral Manager, as set forth in to the Collateral Management Agreement, and as Auction Agent, as set forth in the Indenture and the Collateral Management Agreement, in each case, which are to be assigned to, and assumed by, the Purchaser or its designee pursuant to the terms and conditions of the Collateral Manager Assignment and Assumption Agreement.

 

“Collateral Purchase Agreements” means, the "Collateral Purchase Agreement" as such term is defined in the Indenture and any other purchase agreement pursuant to which the Issuer acquired a Collateral Security.

 

“Collateral Security” has the meaning ascribed to such term in the Indenture.

 

“Confidentiality Letter” means that certain email message, dated July 23, 2011, sent by Paul Hughes on behalf of the Sellers and its affiliates to Ron Lieberman on behalf of the Purchaser and its affiliates.

 

“Governmental Authority” means any United States federal, state or local or any foreign, governmental authority, agency or commission or any court or competent jurisdiction.

 

“Governmental Order” means, with respect to any Person, any binding order of any Governmental Authority applicable to such Person.

 

“Hedge Counterparty” has the meaning ascribed to such term in the Indenture.

 

“Holders” has the meaning ascribed to such term in the Indenture.

 

  

  

  

 

“Investment Company Act” means the Investment Company Act of 1940, as amended.

 

“Knowledge” means, with respect to any Seller, the actual knowledge of the individuals listed on Exhibit A.

 

“Law” means any federal, state, local or foreign statute, law, ordinance, regulation, rule, code, order, other requirement or rule of law.

 

“Lien” means any security interest, pledge, mortgage, lien, charge, option to purchase or lease or otherwise acquire any interest, conditional sales agreement, claim, restriction, covenant, easement, right of way, title defect, adverse claim of ownership or use, or other encumbrance of any kind, other than any obligation to accept returns of inventory in the ordinary course of business.

 

“Majority” has the meaning ascribed to such term in the Indenture.

 

“Material Adverse Effect” means with respect to each Seller, any material adverse effect on the ability of such Seller to consummate the sale of any of the Purchased Securities or, to the extent applicable, assign, or cause to be assigned, the Assumption Agreement Rights, as contemplated under this Agreement or the Assumption Agreements, but excluding any such effect caused by, resulting from or arising as a result of any fact, circumstance or condition that results from the execution of this Agreement or the Assumption Agreements, the announcement of this Agreement or the Assumption Agreements, the consummation of the transactions contemplated hereunder or under any of the Assumption Agreements.

 

“Non-Refundable Termination” means the termination of this Agreement upon a default by the Purchaser in the performance of any of its material obligations to be performed prior to the Closing Date (and such default shall continue for five (5) days after notice to the Purchaser) or if the Closing fails to occur by reason of Purchaser’s failure to perform its obligations hereunder on the Closing Date.

 

“Notes” means collectively, the Class A Notes, the Class B Notes, the Class C Notes, the Class D Notes and the Class E Notes.

 

“Notes Valuation Report” has the meaning ascribed to such term in the Indenture.

 

“Organizational Documents” means the charter documents, articles of incorporation and bylaws or certificate of formation, operating agreement, partnership agreement or other organizational documents, as applicable, of an entity.

 

“Payment Date” has the meaning ascribed to such term in the Indenture.

 

“Permitted Liens” means any Lien with respect to the Purchased Securities in the nature of a transfer restriction expressly created pursuant to the CDO Documents.

 

“Person” means an individual, corporation (including a business trust), partnership, limited liability company, joint venture, association, joint stock company, trust (including any beneficiary thereof), unincorporated association or government or any agency or political subdivision thereof or any other entity.

 

“Rating Agencies” has the meaning ascribed to such term in the Indenture.

 

“Rating Agency Condition” has the meaning ascribed to such term in the Indenture.

 

  

  

  

 

“Refundable Termination” means the termination of this Agreement for any reason other than a Non-Refundable Termination.

 

“REIT” means a real estate investment trust, as defined in Section 856 of the Code or any successor provision.

 

“Securities” means collectively, the Notes and the Preferred Shares.

 

“Securities Act” means the Securities Act of 1933, as amended.

 

“Tax Authority” shall mean any Governmental Authority or any quasi-governmental or private body having jurisdiction over the assessment, determination, collection or imposition of any Tax.

 

“Tax” shall mean any charges, fees, levies, imposts, duties or other assessments of a similar nature, imposed or required to be withheld by any Tax Authority including any interest, additions to tax or penalties applicable thereto.

 

“Tax Return” shall mean any return, report, certificate, form or similar statement or document (including, any related or supporting information or schedule attached thereto and any information return, amended Tax return, claim for refund or declaration of estimated Tax) required or permitted to be supplied to, or filed with, a Tax Authority in connection with the determination, assessment or collection of any Tax or the administration of any laws, relating to any Tax.

 

“Transaction Documents” has the meaning ascribed to such term in the Indenture.

 

“Transferred Loans” means, collectively, (i) Participation A in the loan in the original principal amount of $48,259,172.25 evidenced by that certain Amended and Restated Mortgage Note effective as of September 24, 2004 and secured by, among other things, a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of September 24, 2004 securing that real property located at 2100-2160 North Elston Avenue, Chicago, Illinois and leased to Kohl’s Department Stores, Inc., (ii) the loan in the original principal amount of $18,521,593.70 evidenced by that certain Second Amended and Restated Mortgage Note (A) effective as of August 4, 2004 and that certain Mortgage Note (B) dated as of May 9, 2005 and secured by, among other things, a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of August 4, 2004, as amended securing that real property located at 2100 North Elston Avenue, Chicago, Illinois and leased to Best Buy Stores, L.P. and (iii) the loan in the original principal amount of $4,476,058.00 evidenced by that certain Mortgage Note dated as of September 14, 2005 and secured by, among other things, a Mortgage, Security Agreement, Assignment of Leases and Rents and Fixture Filing dated as of September 14, 2005 securing that real property located at 2100-2160 North Elston Avenue, Chicago, Illinois and leased to Harris Bank N.A.

 

The following terms shall have the meanings defined for such terms in the corresponding Sections set forth below:

 

	
Advancing Agent

	
Recitals

	
Advancing Agent Resignation and Appointment Agreement

	
Section 3(a)(vii)(3)

	
Agreement

	
Preamble

	
CapLease, LLC

	
Preamble

	
Code

	
Section 4(r)(ii)

	
Co-Issuer

	
Recitals

	
Co-Issuer Stock

	
Recitals

	
Collateral Management Agreement

	
Recitals

  

  

  

 

	
Collateral Manager Assignment and Assumption Agreement

	
Section 3(a)(vii)(1)

	
Deposit

	
Section 6(a)

	
Escrow Agent

	
Recitals

	
Investor LLC

	
Recitals

	
Issuer

	
Recitals

	
Issuer's Charter

	
Recitals

	
Issuer Share Capital

	
Recitals

	
Losses

	
Section 9(a)

	
Ordinary Shares

	
Recitals

	
Paying and Transfer Agency Agreement

	
Recitals

	
Preferred Shares

	
Recitals

	
Purchase Price

	
Section 2(a)

	
Purchased Notes

	
Recitals

	
Purchased Securities

	
Recitals

	
Purchaser

	
Preamble

	
Purchaser Indemnified Party

	
Section 9(a)

	
Resolutions

	
Recitals

	
Responsible Party

	
Preamble

	
Seller Indemnified Party

	
Section 9(b)

	
Seller Indemnifying Party

	
Section 9(a)

	
Sellers

	
Preamble

	
Servicing Agreement

	
Recitals

	
Termination Date

	
Section 8(a)(ii)

	
Trustee

	
Recitals

	
Trustee Direction Letter

	
Section 2(c)

	
U.S. Bank

	
Recitals

 

  

  

  

 

EXHIBIT A

 

KNOWLEDGE GROUP

 

The actual knowledge of only the individuals set forth below shall be considered in connection with the definition of Knowledge pursuant to the related Agreement:

 

Shawn Seale

 

Ted Swasey

 

Paul Hughes

 

  

  

  

 

EXHIBIT B

 

FORM OF COLLATERAL MANAGER ASSIGNMENT AND ASSUMPTION AGREEMENT

 

(attached)

  

  

  

 

EXHIBIT C

 

FORM OF ADVANCING AGENT RESIGNATION AND APPOINTMENT AGREEMENT

 

(attached)

 

  

  

  

 

EXHIBIT D-1

 

FORM OF TRANSFEREE CERTIFICATE FOR PREFERRED SHARES

 

(attached)

 

  

  

  

 

EXHIBIT D-2

 

FORM OF SHARE TRANSFER FOR ORDINARY SHARES

 

SHARE TRANSFER

 

EVA LLC (the "Transferor"), for value received, does hereby transfer to __________ (the "Transferee"), the 250 Ordinary Shares of US$1.00 par value each standing in the Transferor’s name in the undertaking called CapLease CDO 2005-1, Ltd. (an exempted company incorporated in the Cayman Islands), to hold the same unto the Transferee.

 

Signed by the Transferor

 _____________________

 

Dated this ____ day of _________ 2011

 

  

  

  

 

EXHIBIT D-3

 

FORM OF STOCK POWER FOR CO-ISSUER STOCK

 

STOCK POWER

 

FOR VALUE RECEIVED, EVA LLC hereby sells, assigns and transfers unto ________________________________, ____ shares of common stock of CapLease CDO 2005-1 Corp., (the “Corporation”), represented by Certificate No.__ herewith, and does hereby irrevocably constitute and appoint ________________ attorney to transfer the said stock on the books of the Corporation with full power of substitution in the premises.

 

Dated:

 

	  	
CAPLEASE CDO 2005-1 CORP.

	  	  
	  	
By:

	
     

	  	
Name:

	  	
Title:

 

  

  

  

 

EXHIBIT E-1

 

FORM OF COLLATERAL MANAGER POWER OF ATTORNEY

 

CapLease Investment Management, LLC, a Delaware limited liability company (“CapLease, LLC”), in its capacity as Collateral Manager under the Collateral Management Agreement hereby agrees, in furtherance of the assignment and assumption pursuant to that certain Collateral Manager Assignment and Assumption Agreement (the “Assignment Agreement”), dated as of _____, 2011, by and among CapLease, LLC and _____ and hereby appoints _____ and its officers, and any successor of it or them with full power of substitution, as CapLease LLC’s true and lawful representative and attorney-in-fact, and agent of CapLease, LLC, in its capacity as Collateral Manager, including without limitation the right to execute (under hand, under seal or as a deed) and deliver on behalf of CapLease, LLC any agreements, instruments, orders, notices, directions or other documents or agreements in connection with or pursuant to the Assignment Agreement, the Collateral Management Agreement, the Servicing Agreement or the Indenture, as applicable.  Capitalized terms used and not defined herein shall have the respective meanings given them in the Assignment Agreement or incorporated by reference therein.

 

It is further understood that _____ may deliver to third parties a copy of this document as evidence of the authority of _____ to act as agent and attorney-in-fact for and on behalf of CapLease, LLC to the extent such power is granted hereunder.

 

This power of attorney is coupled with an interest, is irrevocable and shall survive, and shall not be affected by, the subsequent death, disability, incapacity, incompetency, termination, bankruptcy, insolvency or dissolution of CapLease, LLC.

 

IN WITNESS WHEREOF, this power of attorney has been executed this ___ day of __________________, 2011.

 

	
NATURAL PERSON:

	  	
ENTITY:

	
       

	  	  
	  	  	
       

	
(Print Name of Individual)

	  	
(Print Name of Entity)

	  	  	  
	
By:

	
       

	  	
By:

	
       

	
(Signature)

	  	
(Signature)

	  
	  	  	  	  
	  	  	
Print Name:

	
       

	  	  	
Title:

	
       

	  	  	
By:

	
       

	  	  	
(Signature)

	  
	  	  	
Print Name:

	
       

	  	  	
Title:

	
       

  

  

  

  

 

EXHIBIT E-2

 

FORM OF ISSUER POWER OF ATTORNEY

 

Reference is made to the Collateral Management Agreement, dated as of March, 2010, by and between CapLease CDO 2005-1, Ltd. (the “Issuer”), and CapLease Investment Management, LLC (the “Collateral Manager”) (the “Collateral Management Agreement”).  Capitalized terms used and not defined herein shall have the respective meanings given them in the Collateral Management Agreement.

 

The Issuer hereby grants to _____ a revocable power of attorney and the power to execute and deliver all necessary and appropriate documents and instruments on behalf of the Issuer with respect thereto.  Capitalized terms used and not defined herein shall have the respective meanings given them in the Collateral Management Agreement or incorporated by reference therein.

 

It is further understood that _____ may deliver to third parties a copy of this document as evidence of the authority of _____ to act as agent and attorney-in-fact for and on behalf of the Issuer.

 

IN WITNESS WHEREOF, this power of attorney has been executed this ___ day of __________________, 2011.

 

	
NATURAL PERSON:

	  	
ENTITY:

	
       

	  	  
	  	  	
       

	
(Print Name of Individual)

	  	
(Print Name of Entity)

	  	  	  
	
By:

	
        

	  	
By:

	
       

	
(Signature)

	  	
(Signature)

	  
	  	  	  	  
	  	  	
Print Name:

	
       

	  	  	
Title:

	
       

	  	  	
By:

	
       

	  	  	
(Signature)

	  
	  	  	
Print Name:

	
       

	  	  	
Title:Exhibit 10.26

CONFIDENTIAL TREATMENT HAS BEEN REQUESTED AS TO CERTAIN PORTIONS OF THIS DOCUMENT. EACH SUCH PORTION, WHICH HAS BEEN OMITTED HEREIN AND REPLACED WITH AN ASTERISK [*], HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

PROMOTION AND DISTRIBUTION AGREEMENT

 

This Promotion and Distribution Agreement including all exhibits (collectively referred to as the “Agreement”), effective as of 1 August 2011 (the “Effective Date”), is made by and between Whitesmoke Inc., with registered offices/principle place of business at 501 Silverside Road, Suite 105, Wilmington DE 19809, USA, (“Distributor”), and Google Inc whose principle place of business is at 1600 Amphitheatre Parkway, Mountain View, CA 94043, USA (“Google”).

 

	
1.

	
DEFINITIONS

 

	
1.1

	
In this Agreement unless expressly stated otherwise:

 

“Bundle” means the Distribution Products bundled with the Distributor App(s).

 

“Chrome Browser” means the machine-readable binary code version of the Google Chrome browser provided to Distributor in connection with this Agreement, and any modifications or updates to it that Google may provide to Distributor.

 

“Chrome Browser Installer” means: (a) the machine-readable binary code version of the installer provided to Distributor in connection with this Agreement that installs the Chrome Browser, and any modifications, updates or upgrades to it that Google may provide to Distributor; and (b) the Chrome Browser Criteria Checker.

 

“Chrome Use Event” means an event that indicates an [* ] has occurred.

 

“Chrome Server Communication” means a communication that, as determined solely by Google, is sent for the purpose of indicating that an End User: (a) is [* ] to the [* ]; and (b) has kept the [* ] open for a minimum of [* ] during a [* ] (whether during the [* ] or a [* ] of the Chrome Browser).

 

“Criteria Checker” means a set of software routines (and any updates to them) provided to Distributor by Google, as part of a software library, that check certain criteria (as determined by Google and modified by Google from time to time) to determine if the Chrome Browser or Google Toolbar (as applicable) can be installed on an End User’s operating system. Accordingly, “Chrome Browser Criteria Checker” means the Criteria Checker provided by Google in respect of the Chrome Browser and “Google Toolbar Criteria Checker” means the Criteria Checker provided by Google in respect of the Google Toolbar.

 

“Distributor App(s)” means the following application (and successor versions of such software): the trial version of the WhiteSmoke Writer (currently called WhiteSmoke 2011) available on a worldwide basis, but for the avoidance of doubt shall not mean any other products of Distributor, including without limitation the full paid version of Whitesmoke Writer or any version of Whitesmoke “Translator” software, regardless of whether Whitesmoke Writer incorporates any translation functionality.

 

*Confidential treatment requested

Google Confidential

  

- 1 -

  

 

“Distribution Products” means:

 

	
  

	
(a)

	
as at the Effective Date, the Google Toolbar Installer and the Chrome Browser Installer; and

 

	
  

	
(b)

	
if Distributor notifies Google at any time after the Effective Date that it wishes to bundle the full Google Toolbar and Google provides its approval in writing (including email), the Google Toolbar; and

 

	
  

	
(c)

	
if Distributor notifies Google at any time after the Effective Date that it wishes to bundle the full Chrome Browser and Google provides its approval in writing (including email), the Chrome Browser.

 

“End User” means an end user customer of Distributor who is located in the Territory.

 

“EULA” means the end user license agreement applicable to a Product, which end user license agreement may be updated or modified by Google in its sole discretion from time to time.

 

“False” means a “false” response (or equivalent negative response) given by the Criteria Checker.

 

“Google Program Guidelines” means the policy and implementation guidelines applicable to the Products as updated by Google and provided to Distributor from time to time.

 

“Google Toolbar” means the machine-readable binary code version of the Google toolbar for Internet Explorer provided to Distributor in connection with this Agreement, and any modifications or updates to it that Google may provide to Distributor.

 

“Google Toolbar Installer” means: (a) the machine-readable binary code version of the installer provided to Distributor in connection with this Agreement that installs the Google Toolbar, and any modifications, updates or upgrades to it that Google may provide to Distributor; and (b) the Google Toolbar Criteria Checker.

 

“Google Trademarks” means all names, trade names, trademarks, and logos used by Google in connection with the Products.

 

“Group Company” means in relation to each of the parties:

 

	
  

	
(a)

	
any parent company of that party; and

 

	
  

	
(b)

	
any corporate body of which that party directly or indirectly has control or which is directly or indirectly controlled by the same person or group of persons as that party.

 

“Install Completed” occurs when an End User has completed the install process for a Bundle and the install completed screen is shown to the End User in accordance with Exhibit B.

  

- 2 -

  

“Intellectual Property Rights” means all copyright, moral rights, patent rights, trade marks, design right, rights in or relating to databases, rights in or relating to confidential information, rights in relation to domain names, and any other intellectual property rights (registered or unregistered) throughout the world.

 

“IPO” means an initial public offering of all or any of the shares in Distributor or securities representing those shares for the purposes of being publically traded or quoted on an investment exchange.

 

“Maximum Distribution Commitment” means [* ] , as may be increased by Google pursuant to Clause 4.2 (Maximum Distribution Commitment).

 

“[ * ]” means a [ * ] or [ * ] entered by the [ * ] into the [ * ] located at the [ * ] of the [ * ]. [ * ] do not include the events listed in Clause 3.9(c)(ii).

 

“Products” means the Google Toolbar, Google Toolbar Installer, Chrome Browser and Chrome Browser Installer.

 

“[ * ]” means the [ * ] received by a [ * ] that, as determined solely by [ * ]: (a) is [ * ] by a [ * ] obtained via a [ * ]; (b) is the next [ * ] that occurs following a [ * ]; and (c) includes the [ * ]. [ * ] only include those [ * ] which meet the requirements set out in Clause 3.9(c)(iii).

 

“[ * ]” means a [ * ] received by [ * ] that, as determined solely by [ * ]: (a) is [ * ] by a [ * ] obtained via a [ * ]; (b) is sent for the [ * ] of indicating that an [ * ]: (i) has opened [ * ] following installation of the [ * ], (ii) is [ * ] to the [ * ], and (iii) has [ * ] a [ * ] into the [ * ]; and (c) includes the correct [ * ]. [ * ] only include those [ * ] which meet the requirements set out in Clause 3.9(c)(i).

 

“Term” means the earlier of: (a) the end of the two year period from the Effective Date to 31 July 2013; or (b) the last day of the calendar month within which the Maximum Distribution Commitment is reached.

 

“Territory” means those countries listed in Exhibit A, excluding any territory or state prohibited under Clause 11.5.

 

“True” means a “true” response (or equivalent positive response) given by the Criteria Checker.

 

	
1.2

	
In this Agreement, the words “include” and “including” will not limit the generality of any words preceding them.

 

	
2.

	
LICENSE GRANTS AND RESTRICTIONS

 

	
2.1

	
Products License Grant. Subject to the terms and conditions of this Agreement, Google grants to Distributor a [* ] license during the Term to: (a) bundle the Distribution Products, in machine-readable binary code format only, solely with Distributor App(s); (b) distribute Bundles directly (or indirectly, subject to Clause 2.2 (Third Party Distribution)) to End Users in the Territory; (c) when indicated by the applicable Criteria Checker and requested by the End User in accordance with clause 3.2 (Form of Distribution Offering), install the Chrome Browser or the Google Toolbar (as applicable) on the End User’s system using the Google Installers; and (d) reproduce (or have reproduced by Third Party Distributors as defined in Clause 2.2 (Third Party Distribution)), the Distribution Products to the extent necessary to exercise the rights granted in (a), (b) and (c).

 

*Confidential treatment requested

Google Confidential

  

- 3 -

  

 

	
2.2

	
Third Party Distribution. Distributor may distribute Bundles to third parties solely for redistribution of such Bundles by those third parties directly to End Users (such third parties, “Third Party Distributors”); provided that: (a) in connection with any and all such offers or distributions, Distributor shall, and shall ensure that each Third Party Distributor shall, distribute Bundles in a manner that is no less protective of the Products and Google than the terms of this Agreement, and (b) Google in its sole discretion may direct Distributor to cease distributing Bundles to any Third Party Distributor that in Google’s sole discretion would either: (i) harm or devalue Google’s business, brand or name, or (ii) violate Google’s privacy policy, and Distributor shall cause any such Third Party Distributor to cease distribution of Bundles as soon as practicable but in no event longer than [ * ] following receipt of such request from Google. Distributor shall ensure that no Third Party Distributor bundles anything in or with Bundles without Google’s prior written approval, and if Google grants its approval, Distributor shall provide Google with information about any such bundling arrangements at Google’s request.

 

	
2.3

	
License Grant Restrictions. Distributor shall not, and shall not allow any third party to (except to the extent that such prohibitions are not permitted by law): (a) disassemble, de-compile or otherwise reverse engineer the Products or otherwise attempt to learn the source code or algorithms underlying the Products; (b) modify the Products, create derivative works from or based on the Products; (c) except as expressly set out in this Agreement, provide, sell, license, distribute, lease, lend, or disclose the Products to any third party; (d) use the Products for timeshare, service bureau, or other unauthorised purposes; or (e) exceed the scope of any license granted to Distributor under this Agreement.

 

	
2.4

	
Trademark License and Use. Subject to the terms and conditions of this Agreement, Google grants to Distributor a limited, [ * ] license during the Term to use the Google Trademarks, in accordance with Google’s trademark usage guidelines, solely to market and promote the Products consistent with this Agreement, provided that all use of the Google Trademarks shall be subject to Google’s prior review and advance written consent. All uses of the Google Trademarks, and all goodwill associated therewith, shall inure solely to the benefit of Google.

 

	
2.5

	
Trademark Restrictions. Distributor shall not remove, modify, adapt, or prepare derivative works of any Google Trademarks or Google copyright notices, or other Google proprietary rights notices.

 

	
2.6

	
Updated Versions of Distribution Products. Google may request that Distributor distribute the latest version of the Distribution Products. Distributor shall begin such distribution within [ * ] following Google’s request.

 

	
3.

	
DISTRIBUTION AND OTHER OBLIGATIONS

 

	
3.1

	
Delivery. Google shall deliver the Distribution Products electronically to Distributor at a [ * ] following the Effective Date and prior to Launch (as defined in Clause 3.4 (Launch)).

 

*Confidential treatment requested

Google Confidential

  

- 4 -

  

	
3.2

	
Form of Distribution Offering. Distributor shall ensure that the form of any offering of the Products by Distributor, including the timing, relative and absolute placement, visual presentation to End Users, initial launch of the Products (and any modifications to them) and the presentation of any other applications or products offered with the Products, conforms to the Google Program Guidelines and to Exhibit B of this Agreement. Except as set out in Clause 2 (Licence Grant and Restrictions) and except for End Users as expressly set out in this Agreement, Distributor shall not offer or distribute the Products to any third party. If, during the Term, Exhibit B and the Google Program Guidelines conflict, Exhibit B will take precedence with respect to the conflicting terms.

 

	
3.3

	
Guidelines for Applications. Distributor shall comply, and shall ensure that each Third Party Distributor complies, with the Guidelines for Applications set out in Exhibit C.

 

	
3.4

	
Launch. Distributor shall begin distribution of Bundles in accordance with this Agreement (“Launch”) within [ * ] days following the Effective Date (the date of such Launch, the “Launch Date”). Beginning on the Launch Date and continuing throughout the Term, Distributor shall ensure that [ * ]Distributor App distributed by or on behalf of Distributor is bundled with the Distribution Products as set out in this Agreement.

 

	
3.5

	
Exclusivity.

 

	
  

	
(a)

	
[ * ]

 

	
  

	
(b)

	
[ * ].

 

	
3.6

	
EULA. In connection with Distributor’s distribution of the Products under this Agreement, and before the Google Toolbar or Chrome Browser can be installed by an End User, Distributor shall provide each End User with: (a) a clear statement inviting the End User to agree to the terms of the applicable EULA; (b) the opportunity for each End

User to review such EULA via a hyperlink to such EULA: and (c) a button on which each End User may click indicating agreement to the terms of such EULA. In the event that an End User does not affirmatively agree to install the Google Toolbar or Chrome Browser, by clicking on the button to agree to the terms of the applicable EULA, then the Google Toolbar or Chrome Browser (as applicable) shall not be installed on such End User’s computer.

 

	
3.7

	
Accurate Reproduction. Distributor agrees that in connection with its exercise of the right granted in Clause 2.1 (Products Licence Grant) it shall accurately reproduce the Distribution Products and shall not: (a) modify any Product (including modify the Chrome Browser or Google Toolbar configuration files or registry settings); or (b) insert into the Products any viruses, worms, date bombs, time bombs, or other code that is specifically designed to cause the Products to cease operating, or to damage, interrupt, or interfere with any Products or End User data.

 

	
3.8

	
[ * ]. During the Term and for a period of [ * ] following the expiration or termination of this Agreement, Distributor shall not, and shall not engage any third party to: (a) restrict, modify, or reconfigure in any manner any of the Products that have been installed by End Users (such End Users, “Installed Base End Users”) in connection with this Agreement; or (b) engage in activities that encourage Installed Base End Users to modify, uninstall or reconfigure any or the Products.

 

*Confidential treatment requested

Google Confidential

  

- 5 -

  

	
3.9 

	
Reporting.

 

	
  

	
(a)

	
By Distributor. During the Term, Distributor shall, on a [ * ] basis, no later than the [ * ] of the following [ * ], provide Google with a report identifying, on a country-by-country basis, the total number of: (i) Bundles distributed; (ii) Installs Completed; (iii) Google Toolbar offers presented to End Users; and (iv) Chrome Browser offers presented to End Users, in the preceding [ * ].

 

	 	
(b)

	
By Google. During the Term, Google shall on a [ * ] basis, provide Distributor with a report of the [ * ] of [ * ] and [ * ] in the preceding [ * ] broken down on a [ * ] basis and by the [ * ] in Exhibit A.

 

	
  

	
(c)

	
Parameters. Distributor acknowledges, and shall cooperate with Google to [ * ] that:

 

	
  

	
(i)

	
[ * ]: (A) are determined on a [ * ] (B) are only [ * ]; (C) do not include [ * ] from computers on which another [ * ] of the [ * ] is [ * ]; and (D) do not include use of the [ * ] in any [ * ] other than [ * ].

 

	
  

	
(ii)

	
[ * ] do not include: (A) [ * ] that has been [ * ], (B) [ * ] or [ * ] in any area other than in the [ * ], or (C) any other [ * ] of the [ * ] designed to artificially [ * ].

 

	
  

	
(iii)

	
[ * ]: (A) are determined on a [ * ]; (B) are only [ * ]; (C) are not sent in response to [ * ] from computers on which another [ * ] of the [ * ] is [ * ]; and (D) are sent only in response to [ * ] from computers that meet the [ * ] requirements as determined by the [ * ].

 

	
  

	
(d)

	
Records and Audit Rights. Distributor will keep and maintain complete and accurate books, records, and accounts relating to this Agreement. During the Term, and for a period of [ * ] thereafter, Google may audit Distributor’s relevant records to confirm Distributor’s compliance with this Agreement. Google’s auditor will only have access to those books and records of Distributor which are reasonably necessary to confirm such compliance.

 

	
4.

	
PAYMENT TERMS

 

	
4.1

	
Payments. Subject to Clause 4.2, during the Term on a [ * ] basis, Google shall pay to Distributor the applicable payment set out in Exhibit A for each [ * ] and each [ * ] that occurred during the previous [ * ]. Google shall determine the [ * ] in respect of which each [ * ] and [ * ] took [ * ] (using the relevant [ * ]). Notwithstanding the foregoing, in no event will the [ * ] of [ * ] by Google to Distributor for all [ * ] and all [ * ]  in respect of [ * ] (as set out in Exhibit A) exceed [ * ] ([ * ]) of the [ * ] to Distributor for such [ * ].

 

	
4.2

	
[ * ]. Notwithstanding anything to the contrary, in no event shall the [ * ] paid or payable to Distributor by Google pursuant to Clause 4.1 (Payments) exceed the [ * ]. Google shall have the right, at its sole option, to increase the [ * ] by providing written notice to Distributor no later than [ * ] prior to the end of the Term. The foregoing sentence shall not relieve Google of any payment obligations that have accrued prior to the achievement of the [ * ].

 

	
4.3

	
Payment Terms. All payments under this Agreement shall be made in [ * ] in the [ * ] following the [ * ] for which the payments are applicable. The party receiving payment will be responsible for any bank charges assessed by the recipient’s bank. In addition to other rights and remedies Google may have, Google may offset any payment obligations to Distributor that Google may incur under this Agreement against any product or service fees owed to Google and not yet paid by Distributor under any agreement between Distributor and Google. Google may also withhold and offset against its payment obligations under this Agreement, or require Distributor to pay to Google within [ * ] of any invoice, any amounts Google [ * ] overpaid to Distributor in prior periods.

 

*Confidential treatment requested

Google Confidential

  

- 6 -

  

 

	
4.4

	
Taxes. All payments under this Agreement are exclusive of taxes imposed by any governmental entity. Google shall pay any applicable taxes imposed by governmental agencies with respect to the transactions under this Agreement other than taxes based upon Distributor’s income. Google shall promptly provide to Distributor a copy of an official tax receipt or other appropriate evidence of any taxes imposed on payments made under this Agreement. When Distributor has the legal obligation to collect any applicable taxes, the appropriate amount shall be invoiced to and paid by Google unless Google provides Distributor with a valid tax exemption certificate authorised by the appropriate taxing authority.

 

	
4.5

	
Interest. Distributor may charge interest at the rate of [ * ] above the base rate of Barclays Bank PLC from time to time, from the due date until the date of actual payment, whether before or after judgment, on any payment pursuant to this Clause 4 (Payment Terms) which is overdue.

 

	
5.

	
TERM AND TERMINATION

 

	
5.1

	
Term. This Agreement shall commence on the Effective Date and, unless earlier terminated as set out in this Agreement, shall continue for the Term.

 

	
5.2

	
Termination for breach. A party may suspend performance and/or terminate this Agreement, with immediate effect, if the other party:

 

	
  

	
(a)

	
is in material breach of this Agreement where the breach is incapable of remedy; or

 

	
  

	
(b)

	
is in material breach of this Agreement where the breach is capable of remedy and fails to remedy that breach within thirty (30) days after receiving written notice of such breach.

 

	
5.3

	
Termination for insolvency. A party may suspend performance and/or terminate this Agreement with immediate effect, if:

 

	
  

	
(a)

	
the other party enters into an arrangement or composition with or for the benefit of its creditors, goes into administration, receivership or administrative receivership, is declared bankrupt or insolvent or is dissolved or otherwise ceases to carry on business; or

 

	
  

	
(b)

	
any analogous event happens to the other party in any jurisdiction in which it is incorporated or resident or in which it carries on business or has assets.

 

	
5.4

	
Change of Control. [ * ] may terminate this Agreement immediately upon written notice if there is a Change of Control of [ * ]. In this Clause the term “Control” shall mean the possession by any person(s) directly or indirectly of the power to direct or cause the direction of another person and “Change of Control” is to be construed accordingly. [ * ] expected to experience, or [ * ] is experiencing, such Change of Control shall notify [ * ] in writing of this before or within [ * ] after the Change of Control. If [ * ] has not exercised its right of termination under this Clause within [ * ] following the later of (i) the receipt of notice of [ * ] Change of Control or (ii) the Change of Control event, that [ * ]. The parties acknowledge that as at the Effective Date, [ * ] may [ * ] its [ * ]. [ * ] agrees not to exercise its termination right under this clause 5.4 if [ * ], provided that following [ * ]:

 

*Confidential treatment requested

Google Confidential

  

- 7 -

  

	
  

	
5.4.1.

	
no one person Controls [ * ]  (other than an[ * ] which is not a [ * ] of [ * ] (as determined by [ * ]in its sole discretion)); and

 

	
  

	
5.4.2.

	
no [ * ] of [ * ] (as determined by [ * ] in its sole discretion) holds a [ * ] or [ * ] in [ * ].

 

For the avoidance of doubt, if following [ * ] there is a transfer of shareholding or interests in Distributor to any existing or new shareholder(s) which results in any person or persons subsequently gaining Control of Distributor, then Google may exercise its right to terminate in accordance with this clause 5.4..

 

	
5.5

	
Additional Termination Rights. Google may terminate this Agreement immediately upon written notice to Distributor if: (a) Distributor breaches Clause 2 (License Grants and Restrictions), Clause 3.6 (EULA), Clause 3.7 (Accurate Reproduction), or Clause 6 (Confidential Information), (b) if Google believes, in good faith, that the Distributor has violated or caused Google to violate any Anti-Bribery Laws (as defined in Clause 8.5) or that such a violation is reasonably likely to occur, or (c) Distributor is in material breach of this Agreement more than [ * ] notwithstanding any cure of such breaches. Notwithstanding anything to the contrary, in the event that the government or controlling body of any country or territory in which Bundles are distributed imposes any law, restriction or regulation that makes it illegal to distribute the Products, or any portion of them, into such country or territory, or if any such law, restriction or regulation places a substantial burden on Google, where substantial is measured with respect to Google’s economic benefit under this Agreement, as determined by Google in its reasonable and good faith judgment (such substantial burden, a “Substantial Burden”) then either party or Google (in the case of a Substantial Burden) may require the suspension of all distributions of Bundles in such country or territory until such time as such law, restriction or regulation is repealed, nullified or modified such that it is no longer illegal or a Substantial Burden (in the case of Google), as applicable, for Bundles to be distributed in such country or territory (“Special Suspension”); provided, however, that Distributor’s obligations under Clause 3.5 (Exclusivity) shall not apply in respect of the relevant country or territory during any period of Special Suspension. If a period of Special Suspension extends for more than [ * ] may then terminate this Agreement (in part) in respect of the affected country or territory only, such termination to take effect upon written notice[ * ]. [ * ] will use its reasonable endeavours to provide [ * ] with [ * ] (to the extent it is practicable to do so) of the [ * ] or [ * ] (which was commenced by [ * ]).

 

	
5.6

	
Effect of Termination. Upon expiration or termination of this Agreement: (a) all rights and licenses granted under this Agreement shall immediately cease; (b) Distributor shall (and shall ensure that any Third Party Distributors shall) immediately stop reproducing the Products and offering or distributing Bundles; (c) Distributor shall return or destroy (and a duly appointed officer of Distributor shall certify to such destruction) all copies of the Products and any other Google Confidential Information in its possession; and (d) the fees payable to Distributor shall immediately cease accruing and Google shall within [ * ] following such expiration or termination pay to Distributor any undisputed amounts which have accrued from the time of the most recent payment to Distributor through the date of termination or expiration of this Agreement. Clauses 5.6 (Effect of Termination), 6 (Confidential Information), 7 (Proprietary Rights), 9 (Limitation of Liability), 10 (Indemnification) and 11 (General) shall survive the termination or expiration of this Agreement.

 

*Confidential treatment requested

Google Confidential

  

- 8 -

  

	
6.

	
CONFIDENTIAL INFORMATION

 

	
6.1

	
In this Agreement, “Confidential Information” means information disclosed by (or on behalf of) one party to the other party under this Agreement that is marked as confidential or, from its nature, content or the circumstances in which it is disclosed, might reasonably be supposed to be confidential, including the terms and conditions (including the Exhibits) of this Agreement. It does not include information that the recipient already knew, that becomes public through no fault of the recipient, that was independently developed by the recipient or that was lawfully given to the recipient by a third party.

 

	
6.2

	
The recipient of any Confidential Information shall not disclose that Confidential Information, except to Group Companies, employees and/or professional advisors who need to know it and who have agreed in writing (or in the case of professional advisors are otherwise bound) to keep it confidential. The recipient shall ensure that those people and entities: (a) use such Confidential Information only to exercise rights and fulfill obligations under this Agreement, and (b) keep such Confidential Information confidential. The recipient may also disclose Confidential Information when required by law, or the regulation or rule of a major US stock exchange or the United States Securities and Exchange Commission, after giving reasonable notice to the discloser, such notice to be sufficient to give the discloser: (i) the opportunity to seek confidential treatment, a protective order or similar remedies or relief prior to disclosure (if applicable) and (ii) (where any disclosure is necessary) time to consult on and approve the form and content of the relevant disclosure. The parties shall then promptly discuss and agree in good faith on the form and content of the disclosure (each acting reasonably).

 

	
7.

	
PROPRIETARY RIGHTS

 

	
7.1

	
Distributor acknowledges that Google and/or its licensors own all right, title and interest, including all Intellectual Property Rights in and to the Products and the Google Trademarks and all modifications to them. Distributor has, and shall acquire, no rights in the foregoing except those expressly granted by this Agreement. Google shall not be restricted from selling, licensing, modifying, or otherwise distributing the Products and/or the Google Trademarks to any third party.

 

	
7.2

	
Google acknowledges that Distributor and/or its licensors own all right, title and interest, including all Intellectual Property Rights, in and to the Distributor Apps and all [ * ] to [ * ]. Except as expressly set forth in this Agreement, Distributor shall not be [ * ]from [ * ], or otherwise [ * ]the Distributor App(s) or other products of Distributor to [ * ].

 

	
8.

	
WARRANTIES

 

	
8.1

	
Each party warrants to the other that it will use reasonable care and skill in complying with its obligations under this Agreement. Distributor also represents and warrants that it will undertake commercially reasonable endeavours in good faith to comply with Google’s business partner due diligence process including providing requested information.

 

*Confidential treatment requested

Google Confidential

  

- 9 -

  

	
8.2

	
Google warrants that the Distribution Products will for a period of [ * ] from the date of their supply to Distributor be free from any defect which has a materially adverse effect on their use or operation.

 

	
8.3

	
If any of the warranties in Clause 8.1 or 8.2 is breached by Google, Distributor must tell Google as soon as possible. Distributor must give Google a reasonable time to fix the problem and (if necessary) to supply Distributor with a corrected or replacement version of the Distribution Product or a way to work-around the problem that is not materially detrimental to Distributor, or to re-perform any relevant services. This will be done without any additional charge to Distributor. If Google is able to do this within a reasonable time, Google will have no other obligations or liability in relation to that breach.

 

	
8.4

	
Google will not be liable for breach of any of the warranties or other terms in this Agreement to the extent that the breach arises from:

 

	
  

	
(a)

	
use of the Products other than in accordance with normal operating procedures;

 

	
  

	
(b)

	
any alterations or maintenance to the Products done by anyone other than Google or someone authorised by Google;

 

	
  

	
(c)

	
any problem with a computer on which the Products are installed, or with any equipment connected to that computer or any other software which is installed on that computer;

 

	
  

	
(d)

	
any abnormal or incorrect operating conditions; or

 

	
  

	
(e)

	
use of the Products in combination with any other hardware or software, unless this use has been approved by Google in writing.

 

	
8.5

	
Distributor will comply with all applicable commercial and public anti-bribery laws, including, without limitation, the UK’s Bribery Act 2010 and the U.S. Foreign Corrupt Practices Act of 1977 (“Anti-Bribery Laws”), which prohibit (amongst other things) corrupt offers of anything of value, either directly or indirectly, to a government official to obtain or keep business. ‘‘Government officials” include any government employee, candidate for public office, and employee of government-owned or government-controlled companies, public international organisations, and political parties. Furthermore, Distributor will not make any facilitation payments, which are payments to induce officials to perform routine functions they are otherwise obligated to perform.

 

	
8.6

	
No conditions, warranties or other terms apply to the Products, [ * ]  or to any other goods or services supplied under this Agreement unless expressly set out in this Agreement. Subject to Clause 9.1, no implied conditions, warranties or other terms apply (including any implied terms as to satisfactory quality, fitness for purpose or conformance with description).

 

	
9.

	
LIMITATION OF LIABILITY

 

	
9.1

	
Nothing in this Agreement shall exclude or limit either party’s liability for:

 

	
  

	
(a)

	
death or personal injury resulting from the negligence of either party or their servants, agents or employees;

 

	
  

	
(b)

	
fraud or fraudulent misrepresentation;

 

*Confidential treatment requested

Google Confidential

  

- 10 -

  

 

	
  

	
(c)

	
breach of any implied condition as to title or quiet enjoyment; and

 

	
  

	
(d)

	
misuse of confidential information.

 

	
9.2

	
Nothing in this Agreement shall exclude or limit either party’s liability under Clause 10 (Indemnities), or Distributor’s liability under Clause 2 (License Grants and Restrictions), Clause 3.5 (Exclusivity), Clause 3.6 (End User License Agreement) and Clause 3.7 (Accurate Reproduction) or Clause [ * ].

 

	
9.3

	
Subject to Clauses 9.1 and 9.2, neither party shall be liable under this Agreement (whether in contract, tort or otherwise) for any:

 

	
  

	
(a)

	
loss of anticipated savings;

 

	
  

	
(b)

	
loss of business opportunity (which for the avoidance of doubt shall not include loss of advertising revenue);

 

	
  

	
(c)

	
loss of or corruption of data;

 

	
  

	
(d)

	
loss or damage resulting from third party claims; or

 

	
  

	
(e)

	
indirect or consequential losses;

 

suffered or incurred by the other party (whether or not such losses were within the contemplation of the parties at the date of this Agreement).

 

	
9.4

	
Subject to Clauses 9.1 and 9.2, each party’s total liability under or in connection with this Agreement (whether in contract, tort or otherwise) arising in any Contract Year is limited to the greater of:

 

	
  

	
(a)

	
[ * ] Euros ([ * ] Euros); and

 

	
  

	
(b)

	
[ * ]% of the total payment due to the Distributor in the relevant Contract Year pursuant to Clause 4 (Payment Terms).

 

In this Clause 9.4, “Contract Year” means a period of one year starting on the Effective Date or the relevant anniversary of the Effective Date (as appropriate). If the amount referred to in (b) above cannot be calculated accurately at the time the relevant liability is to be assessed (the “Applicable Time”), it shall be calculated on a pro-rata basis as X/Y x Z. Where:

 

X = the total sum paid and payable to the Distributor pursuant to Clause 4 in the relevant Contract Year prior to the Applicable Time;

 

Y = the number of days elapsed in the relevant Contract Year prior to the Applicable Time; and

 

Z = 365

 

*Confidential treatment requested

Google Confidential

  

- 11 -

  

	
10.

	
INDEMNIFICATION BY GOOGLE.

 

	
10.1

	
Google [ * ] and will indemnify Distributor against all liabilities, costs, damages and expenses (including settlement costs approved in writing by Google and reasonable legal fees [ * ]) suffered or incurred by Distributor arising from any claim from a third party that any Products or any Google Trademark infringe(s) any copyright, trade secret or trademark of such third party (an “IP Claim”), provided that Distributor:

 

	
  

	
(a)

	
promptly notifies Google;

 

	
  

	
(b)

	
provides Google with reasonable information, assistance and cooperation in responding to and, where applicable, defending such IP Claim; and

 

	
  

	
(c)

	
gives Google full control and sole authority over the defence and settlement of such IP Claim. Distributor may appoint its own supervising counsel of its choice at its own expense.

 

	
10.2

	
Google will not have any obligations or liability under this Clause 10 in relation to any IP Claim arising from:

 

	
  

	
(a)

	
use of the Products or Google Trademarks in a modified form or in combination with materials not furnished by Google;

 

	
  

	
(b)

	
use of the Products or Google Trademarks other than in accordance with this Agreement; or

 

	
  

	
(c)

	
any content, information or data provided to Google by Distributor, End Users or any other third parties;

 

	
10.3

	
Google may (at its sole discretion) suspend Distributors distribution or use of the Products or the Google Trademarks which are alleged, or believed by Google, to infringe any third party’s Intellectual Property Rights, or modify such items to make them non-infringing. if any suspension under this Clause continues for more than 30 days, Distributor may, at any time until use of the distribution or use of the Products or the Google Trademarks is reinstated, terminate this Agreement immediately upon written notice. [ * ] will use reasonable endeavours to [ * ] with [ * ] (to the extent it is practicable to do so) of the [ * ] or [ * ].

 

By Distributor.

 

	
10.4

	
Distributor [ * ] and will indemnify Google against all liabilities, costs, damages and expenses (including settlement costs approved in writing by Distributor and reasonable legal fees [ * ]) suffered or incurred by Google or any Google Group Company arising from: (a) Distributor’s improper (ie not in accordance with the requirements of this Agreement including the Exhibits) or unauthorised, replication, packaging, marketing, distribution, or installation of the Products, including any breach of Clause 8.5 and any claims based on representations, warranties, or misrepresentations made by Distributor, (b) any claim from a third party that the Distributor App(s) infringe any third party copyright, trademark, or trade secret, or (c) any End

 

User claim arising out of or resulting from such End Users use of any Distributor App(s), including any actions or claims in product liability, tort, contract or equity.

 

*Confidential treatment requested

Google Confidential

  

- 12 -

  

	
10.5

	
The indemnification obligations set out in Clause 10.4(b) shall exist only if Google: (a) promptly notifies Distributor of such claim, (b) provides Distributor with reasonable information, assistance and cooperation in responding to and, where applicable, defending the lawsuit or proceeding, and (c) gives Distributor full control and sole authority over the defense and settlement of such claim. Google may join in defense with counsel of its choice at its own expense.

 

	
10.6

	
The foregoing Clauses 10.1 to 10.5 states the parties’ entire liability and exclusive remedy with respect to infringement of a third party’s Intellectual Property Rights.

 

	
11.

	
GENERAL

 

	
11.1

	
Publicity. Subject to clause 6 (Confidential Information), neither party may make any public statement regarding the relationship contemplated by this Agreement without the other’s prior written approval.

 

	
11.2

	
Notices. All notices of termination or breach must be in English, in writing, addressed to the other party’s Legal Department and sent to Distributor’s address set out at the head of this Agreement or to [ * ] (as applicable) or such other address as either party has notified the other in accordance with this Clause. All notices shall be deemed to have been given on receipt as verified by written or automated receipt or electronic log (as applicable). All other notices must be in English, in writing, addressed to the other party’s primary contact and sent to their then current postal address or email address.

 

	
11.3

	
Assignment. [ * ] may [ * ]any of its rights or obligations under this Agreement without the prior written consent of [ * ]. For the avoidance of doubt, a Change of Control shall be deemed an assignment hereunder unless [ * ] does not exercise its [ * ].

 

	
11.4

	
Force Majeure. Neither party shall be liable for failure to perform or delay in performing any obligation under this Agreement if the failure or delay is caused by any circumstances beyond its reasonable control.

 

	
11.5

	
Compliance with Export Laws. Distributor shall comply with all applicable export and re-export control laws and regulations (“Export Laws”), which the parties agree include: (a) the Export Administration Regulations maintained by the U.S. Department of Commerce, (b) trade and economic sanctions maintained by the U.S. Treasury Department’s Office of Foreign Assets Control, and (c) the International Traffic in Arms Regulations maintained by the U.S. Department of State. Unless Distributor obtains prior authorisation required by applicable Export Laws, Distributor shall not export any Product to Cuba, Iran, North Korea, Sudan or Syria.

 

	
11.6

	
No Waiver. Failure or delay in exercising any right or remedy under this Agreement shall not constitute a waiver of such (or any other) right or remedy.

 

	
11.7

	
Severability. The invalidity, illegality or unenforceability of any term (or part of a term) of this Agreement shall not affect the continuation in force of the remainder of the term (if any) and this Agreement.

 

	
11.8

	
No Agency. Except as expressly stated otherwise, nothing in this Agreement shall create an agency, partnership or joint venture of any kind between the parties.

 

	
11.9

	
No Third-Party Beneficiaries. Except as expressly stated otherwise, nothing in this Agreement shall create or confer any rights or other benefits in favour of any person other than the parties to this Agreement.

 

*Confidential treatment requested

Google Confidential

  

- 13 -

  

	
11.10

	
Governing Law. This Agreement is governed by English law and the parties submit to the exclusive jurisdiction of the English courts in relation to any dispute (contractual or non-contractual) concerning this Agreement save that either party may apply to any court for an injunction or other relief to protect its Intellectual Property Rights. If this Agreement is translated into any other language, if there is conflict the English text will take precedence.

 

	
11.11

	
Counterparts. The parties may execute this agreement in counterparts, which taken together will constitute one instrument.

 

	
11.12

	
Entire Agreement. Subject to Clause 9.1, this Agreement sets out all terms agreed between the parties in relation to its subject matter and supersedes all previous agreements between the parties relating to the same. In entering into this Agreement neither party has relied on any statement, representation or warranty not expressly set out in this Agreement.

 

Signed by the parties on the dates shown below.

 

	
DISTRIBUTOR

	  	
GOOGLE INC

	  	  	  
	
/[ * ]

	  	
/s/ [ * ]

	
By

	  	
By

	  	  	  
	
[ * ]

	  	
[ * ]

	
Name

	  	
Name

	  	  	  
	
[ * ]

	  	
[ * ]

	
Title

	  	
Title

	  	  	  
	
[ * ]

	  	
[ * ]

	
Date

	  	
Date

 

*Confidential treatment requested

Google Confidential

  

- 14 -

  

EXHIBIT A

 

Payments

 

	[ * ]	 	 	[ * ]	 	 	 	[ * ]	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]

	 	 	
[ * ]

	 	 	$	

[ * ]

	 
	
[ * ]**

	 	 	
[ * ]*

	 	 	$	

[ * ]

	 

 

*[ * ]

 

** [ * ].

 

*Confidential treatment requested

Google Confidential

  

- 15 -

  

EXHIBIT B

 

Process Flow

 

  

- 16 -

  

Form of Offering

 

1 - WhiteSmoke Welcome Screen

 

  

- 17 -

  

2-Toolbar offer

 

lf [ * ] Criteria Checker has returned “True”

 

 

*Confidential treatment requested

  

- 18 -

  

3-Chrome offer

 

If [ * ] Criteria Checker has not returned ‘True” AND [ * ] Criteria Checker has returned “True”

 

 

*Confidential treatment requested

  

- 19 -

  

4 - Installation Progress

 

 

Google Confidential

  

- 20 -

  

5 - Chrome First Launch

 

If Chrome has been installed

 

 

Criteria Checker

 

During the Term, for each End User who installs the Distributor App, Distributor shall use the    [ * ] Criteria Checker to determine if [ * ] can be offered to such End User. If the [ * ] Criteria Checker returns True, Distributor shall offer the End User the opportunity to install the [ * ] in conjunction with the Distributor App. If the [ * ] Criteria Checker returns False Distributor shall: a) not offer the End User the opportunity to install the [ * ] and b) use the [ * ] Criteria Checker to determine whether the [ * ] can be offered to such End User. If the [ * ] Criteria Checker returns True, Distributor shall offer the End User the opportunity to install the [ * ] in conjunction with the Distributor App. If the [ * ] Criteria Checker returns False, Distributor shall not offer such End User the opportunity to install the [ * ]. Prior to Launch, Distributor shall obtain Google’s approval of the parameters Distributor uses to call the [ * ] Criteria Checker and [ * ] Criteria Checker

 

Chrome Browser Auto Launch.

 

Distributor shall ensure that the first launch of the Chrome Browser following installation of the Chrome Browser complies with each of the following requirements (the “Chrome Launch Requirements”):

 

(a)           The Chrome Browser shall auto-launch immediately prior to the launch of the Distributor App, no earlier and no later.

 

*Confidential treatment requested

  

- 21 -

  

 

(b)           No advertisements, offers, or other communications shall appear between launch of a Distributor App and launch of the Chrome Browser.

 

(c)           Upon launch of the Chrome Browser, the Chrome Browser shall immediately appear on the End User’s computer desktop exactly as shown in this Exhibit B. Without limiting the preceding sentence, each of the following shall appear on the End User’s desktop exactly as shown in this Exhibit B: (i) the location and size of the Chrome Browser window and the Distributor App window, (ii) the z-order of the Distributor App and the Chrome Browser, and (iii) the number and content of the tabs in the Chrome Browser (i.e., the Chrome Browser shall contain exactly two (2) tabs, with the first tab set to google.com, and the second tab set to http://tools.google.com/chrome/intlfen-US/welcome.html (or such other url as Google may specify). In no event shall the Chrome Browser window be minimized. Notwithstanding the foregoing, Distributor may modify the content and design of the Distributor App window provided that Distributor complies with the other restrictions in this Agreement and obtains Google’s prior consent.

 

(d)           The tabs in the Chrome Browser and the Omnibox shall be clearly visible to the End User as shown in this Exhibit B, regardless of the resolution of the End User’s monitor. In no event shall the tabs in the Chrome Browser or the Omnibox be hidden behind a Distributor App.

 

(e)           Distributor shall implement (or, if implemented by Google, Distributor shall not modify) the six-month flag (i.e., the functionality that prevents an End User from receiving more than one (1) offer for the Chrome Browser within any six (6)-month period) unless Google has provided written confirmation (including by email) that the 6-months flag can be turned off. Note that this authorisation may be revoked at any time and Distributor shall then include the 6 months flag again in future builds.

  

- 22 -

  

EXHIBIT C

 

Guidelines for Applications Bundled with Google Applications

 

Google has observed a significant increase in the number of reports of software that is engaging in deceptive, malicious and other annoying practices that significantly diminish user perception and enjoyment of the internet. These practices include but are not limited to installing software on computers without obtaining informed end user consent (the so-called “drive-by download”), inundating end users with advertisements without adequate attribution or labeling, exposing users to pornographic material without obtaining informed end user consent, obtaining or transmitting personal information about an end user without obtaining informed end user consent, and interfering with an end user’s ability to easily uninstall applications the end user does not wish to be on his or her computer.

 

Google does not wish to be associated with these types of practices. Accordingly, Google has developed the Guidelines set forth below to prevent its trademark, other intellectual property, and services from being used in connection with these practices. Google believes that these Guidelines are necessary to protect Google from any allegation that it has contributed to practices that might be viewed as unlawful or actionable; to preserve the reputation of Google as a provider of trusted software and services in a manner that is beneficial and fair to users and other constituents; and to stem the rising incidence of practices that harm users and diminish the perceived value and reliability of the internet, which are essential to Google’s business.

 

With this objective in mind, Google has established the following Guidelines to apply to customer Applications that are bundled with any Google Application. Except to the extent Google has otherwise specifically agreed in writing, Google does not grant permission to, and you will not, bundle any Application with a Google Application unless you ensure that any such Application specified in the agreement between you and Google that incorporated these Guidelines complies with these Guidelines.

 

For the avoidance of doubt, by these Guidelines Google does not intend to, and does not, impose any restrictions on what you may do with any Application that is not bundled with a Google Application, bundled with an Application that accesses Google services, or used to access Google services; you remain free to sell any Application you wish (whether or not it complies with these Guidelines) so long as it is not bundled with a Google Application, bundled with an Application that accesses Google services, or used to access Google services.

 

In these Guidelines: (a) “you” and “your” refer to the legal entity(ies) that has entered into the contract with Google into which these Guidelines are incorporated, as well as any person or entity acting on your behalf; and (b) “Application” means any application, plug-in, helper, component or other executable code that runs on a user’s computer, examples of which include those that provide browser helper objects, instant messaging, chat, email, data, file viewing, media playing, file sharing, games, internet navigation, search and other services.

 

Google Confidential

 

  

- 23 -

  

 

Google welcomes input about these Guidelines from you and from other interested parties, and is always willing to consider revisions as appropriate to encourage innovation while protecting against deceptive, unfair and harmful practices. Accordingly, Google may update these Guidelines, including the Attachments, from time to time as provided in Section 10 below.

 

If you have any questions about these Guidelines, please do not hesitate to discuss them with your Google account manager.

 

Google Confidential

  

- 24 -

  

 

1.           General.

 

1.1           Approval and Ongoing Compliance. You may bundle Google Applications with Applications only to the extent permitted in the signed written agreement into which these Guidelines have been incorporated. In such instance, you must ensure that your Application both (1) has been approved by Google for the purpose of being bundled with Google Applications in writing in advance, and (2) complies at all times with the requirements outlined herein. To obtain Google’s approval for any Applications not expressly approved in your agreement, you must submit a written request.

 

1.2           No Google Branding or Attribution. Your Application, and any related collateral material (including any Web pages promoting your Application or from which your Application is made available), must not contain any Google branding, trademarks or attribution unless (and then only to the extent) Google expressly consents otherwise in writing. In addition, queries entered into Applications may not resolve to a results page that contains any Google branding, trademarks or attribution unless (and then only to the extent) Google expressly consents otherwise in writing.

 

2.           Prohibited Content. You may not bundle any Google Application with an Application that: (a) contains any viruses, worms, trojan horses, or the like; and (b) is distributed primarily for the purpose of (i) distributing pornographic, obscene, excessively profane, gambling-related, deceptive, fraudulent or illegal content, or (ii) distributing content related to “hacking” or “cracking.”

 

3.           Prohibited Behavior. You may not bundle any Google Application with an Application that engages in deceptive, unfair, harassing or otherwise annoying practices. For example, the Application may not:

 

	
  

	
(a)

	
use, or permit an unaffiliated person to use, an end user’s computer system for any purpose not understood and affirmatively consented to by the end user (including, without limitation, for purposes of consuming bandwidth or computer resources, sending email messages, launching denial of service attacks, accruing toll charges through a dialer or obtaining personal information from an end user’s computer such as login, password, account or other information personal to the end user);

 

	
  

	
(b)

	
intentionally create or exploit any security vulnerabilities in end user computers;

 

	
  

	
(c)

	
trigger pop-ups, pop-unders, exit windows, or similar obstructive or intrusive functionality, that materially interfere with an end user’s Web navigation or browsing or the use of his or her computer;

 

	
  

	
(d)

	
repeatedly ask an end user to take, or try to deceive an end user into taking, an action that the end user has previously declined to take (such as repeatedly asking an end user to change his or her home page or some other setting or configuration);

 

Google Confidential

  

- 25 -

  

 

	
  

	
(e)

	
redirect browser traffic away from valid DNS entries (except that your Application may direct unresolved URLs to an alternative URL designated by you, provided that the page to which the end user resolves adequately informs the end user that you and your Application are the source of that page);

 

	
  

	
(f)

	
interfere with the browser default search functionality (except that your Application may permit an end user to change his or her default search engine with proper disclosure, consent and attribution as provided below); or

 

	
  

	
(g)

	
engage in activity that violates any applicable Jaw or regulation.

 

4.           Disclosure and Consent.

 

4.1           Disclosure and Consent before Installation. You may not bundle any Google Application with any Application unless you (and your distribution and bundling partners, if applicable under the terms of the agreement between you and Google that incorporates these Guidelines) design the installation of any such Application in a manner that ensures that it is installed by end users in a knowing and willful manner — e.g., no “drive-by’ downloads or installs. By “distribution partner” we mean any third party who distributes your Application and by “bundling partner” we mean any third party who installs your Application in combination with or alongside one or more other Applications. At a minimum, compliance with this provision requires that, prior to installing your Application, you and any third party distributing or bundling your Application:

 

	
  

	
(a)

	
first, fully, accurately, clearly and conspicuously disclose to end users:

 

	
  

	
(i)

	
that they are installing an application,

 

	
  

	
(ii)

	
the name of the Application, identifying you as the entity responsible for it, and

 

	
  

	
(iii)

	
the principal and significant features and functionality of the Application; and

 

	
  

	
(b)

	
then, obtain the end user’s affirmative consent to install the Application.

 

4.2           Disclosure and Consent for Collection and Transmission of Personally Identifiable information. You may not bundle any Google Application with any Application that (1) collects or transmits to any entity other than the end user personally identifiable information, or (2) collects or transmits information related to a user’s computer or Internet usage or activity in a manner that could collect or transmit such user’s personally identifiable information (such as through keystroke logging), unless prior to the first occurrence of any such collection or transmission you:

 

	
  

	
(a)

	
first, fully, accurately, clearly and conspicuously disclose:

 

Google Confidential

  

- 26 -

  

 

	
  

	
(i)

	
the type of information collected (described with specificity in the case of personally identifiable information),

 

	
  

	
(ii)

	
the method of collection (e.g. by registration, etc.), and

 

	
  

	
(iii)

	
the location of (i.e., a link to) the privacy policy that governs the collection, use and disclosure of the information; and

 

	
  

	
(b)

	
then, obtain the end user’s affirmative consent to such collection and/or transmission.

 

4.3           Disclosure and Consent for Setting Changes. You may not bundle any Google Application with any Application that makes a change to any operating system or Application data setting which will impact the user experience of other Applications (e.g., changing the browser default home page or changing the default application for a file type, such as the default email, browser or media player application), unless prior to making such change you:

 

	
  

	
(a)

	
first, fully, accurately, clearly and conspicuously disclose the change in a manner that will explain the practical effect of such change; and

 

	
  

	
(b)

	
then, obtain the end user’s affirmative consent to make such change.

 

Notwithstanding the foregoing, (i) no disclosure and consent need be made for changes to operating system or Application data settings that have only a minor impact on user experience, such as adding a small number of bookmarks to the browser menu or adding an item to a start menu, and (ii) the disclosure and consent requirements of this Section 4.3 will not apply to those setting changes that may be made prior to sale to the end user.

 

4.4           Method of Disclosure and Consent. In order to satisfy the requirements above, the disclosure of the items specified above (a) must be provided in both (1) the End User License Agreement (EULA) or privacy policy (to the extent required by law or otherwise by industry custom) and (2) separately from the EULA and/or privacy policy (e.g. in installation screens or message boxes, as the case may be), and (b) must be designed so that it will be read by, adequately inform and evidence the consent of a typical Internet user. See Attachment 1 for sample disclosure and consent implementations that would satisfy certain of the requirements above.

 

4.5           EULA and Privacy Policy. You may not bundle any Google Application with any Application unless it conforms, and is distributed pursuant to a EULA that conforms, with all applicable laws and regulations. In addition, you and your Application must comply with the agreements and representations you make with your end users in your EULA and privacy policy. Your privacy policy must be accessible from your Application in an easily found location. If your Application collects or transmits any other information related to the user’s use of his or her computer, but not required to be disclosed and consented to pursuant to Section 4.2, then the collection and use of such other information must be disclosed in your privacy policy.

 

Google Confidential

  

- 27 -

  

 

5.           Transparency. Neither you nor any of your third party distribution or bundling partners may mislead end users or create end user confusion with regard to the source or owner of an Application or any portion of its purpose, functionality or features. For example, all elements of your Application that are visible to the end user must clearly identify their source through its branding and attribution, and that identification, whatever form it takes, must correspond to the identification of your application in the menu that permits end users to remove programs. You must clearly label advertisements provided by your Application (if any) as such and clearly identify your Application as the source of those advertisements. In addition, if your Application modifies the operation or display of other applications or Web sites (other than Web sites that you own), then in each instance you must clearly and conspicuously attribute the source of that modification to your Application (as distinct from the application or Web site modified) in a manner that will inform a typical Internet user; provided that this requirement will not apply to modifications for which you obtain disclosure and consent pursuant to Section 4.3. See Attachment 1 for examples of modifications that are clearly and conspicuously disclosed to end users.

 

6.           Deactivation. You may not bundle any Google Application with any Application that impairs an end user’s ability to change any preferences or settings set by the Application in accordance with the way that such preferences or settings ordinarily may be changed by the applicable Application. Once disabled by an end user, your Application may not be re-enabled without an affirmative action by the end user to explicitly re-enable your application. Accordingly, no use, update, installation or re-enablement of a separate Application, and no code downloaded as a result of browsing a Web site, may operate to re-enable your Application. Your Application must permit end users to uninstall it (in the customary place the applicable operating system has designated for adding or removing programs, e.g., Add/Remove Programs control panel in Windows) in a straightforward manner, without undue effort or skill. In addition, your Application, when running, must provide (in an easily found location) clear and concise instructions on how it may be uninstalled. Once uninstalled, your Application must not leave behind any functionality or design elements, and all setting changes made by the application, but not explicitly agreed to by the end user, should be reversed to the extent practicable.

 

7.           Bundling of Applications. In addition to the requirements set forth in the agreement between you and Google that incorporates these Guidelines, in order for you to bundle any Application with a Google Application must satisfy each of the following requirements:

 

	
  

	
(a)

	
the end user is made aware of all of the Applications included in the bundle prior to any installation;

 

	
  

	
(b)

	
all such Applications included in the bundle or download comply with the provisions of Section 2 through 6 of these Guidelines;

 

	
  

	
(c)

	
if Applications in a bundle in which you are participating are supported in part by revenue generated by advertising displayed in another independent Application included in that bundle and the continued use of the Application is conditioned on such other independent Application remaining installed and active on the end user’s computer, the end user must be made aware of that relationship; and

 

Google Confidential

  

- 28 -

  

 

	
  

	
(d)

	
either (1) the bundle must provide for a master uninstaller that will enable the end user to uninstall every Application in the bundle without undue effort or skill, or (2) if no master uninstaller is provided, the de-installation of any Application may not be dependent or conditioned upon the de-installation of any other Application included in the bundle.

 

8.           Information and Assistance. Subject to any confidentiality obligations owed to third parties, you must provide Google with such information as Google may reasonably request about the distribution of those of your Applications that are bundled with any Google Application. For example, we may ask you to share with us: (a) the means by and/or the locations from which your Applications are distributed; or (b) the identity of any applications included in any of your bundling relationships (and the entities responsible for such applications). In addition, you must provide such assistance as Google may reasonably request to investigate and stop potential violations of these Guidelines that may be connected to your Application, including by way of using such number of identifiers and other tracking parameters as Google may reasonably request. This would include providing Google with “golden masters” of any bundle or other distribution that includes your Application, or working with Google to stop any entities that may be financially benefiting from your Application from engaging in any of these proscribed practices. You understand, however, that Google has no obligation to provide support to end users of your Application. For the avoidance of doubt, these information and assistance rights do not extend to any of your Applications that are not used to access Google services, bundled with a Google Application, or bundled with an Application that accesses Google services.

 

9.           Legal. You must maintain ownership and control of your Application at all times to the extent required to practically and legally enforce the requirements of these guidelines. If you are seeking to permit a third party Application to be bundled with a Google Application, then you must also obtain Google’s written approval of that third party Application (in addition to the approval required for your Application). If Google approves the third party Application, you are responsible for ensuring that such third party Application also complies with these Guidelines. Special indemnity and other suspension and/or termination provisions may apply. These are addressed in your agreement with Google.

 

10.         Updates.

 

10.1           General. As mentioned above, Google may update these Guidelines, including the Attachments, from time to time; provided, however, that no updates will be effective until Google provides you with thirty (30) days’ written notice thereof. Once you receive that notice (the date on which you receive such notice, the “Update Notice Date”), you will be required to bring your Application into compliance within thirty (30) days

 

Google Confidential

  

- 29 -

  

10.2           Extended Compliance Period. If, solely as a result of an updated requirement, one or more of your Applications no longer complies with these Guidelines, as updated, and you are incapable of bringing such Application into compliance prior to the scheduled effective date of such update (the “Update Effective Date”), you agree to provide Google with written notice thereof as soon as reasonably practicable, but in any event no later than the Update Effective Date, identifying the Application and the reasons why it may not be brought into compliance prior to the Update Effective Date, and providing such other detail as Google may reasonably request with respect thereto (consistent in any event with your confidentiality obligations). Thereafter, the parties will consult, and you agree to will work, diligently and in good faith to develop and execute a plan to bring such Application into compliance with these Guidelines, as updated, as soon as reasonably practicable, but in any event within ninety (90) days of the Update Notice Date (the “Maximum Compliance Period”). You agree that you will provide Google with such information as Google reasonably requests during this period to keep Google apprised of your progress in bringing your Application into compliance. Notwithstanding the foregoing (but subject to the next sentence), in no event may a new requirement provided for in any update to these Guidelines require you to take any action which would violate the terms of any agreement between you and any unaffiliated third party that is in effect on the date that Google delivers notice of the proposed update. In any event, if you are unable to bring any Application into compliance during the Maximum Compliance Period, Google may elect, by providing at least thirty (30) days prior written notice, to require you to cease bundling either the specific non-conforming Application or those versions of the Application which are, or are distributed, in violation of the Guidelines, as updated; it being understood that, at such time, you will be entitled to procure services from an alternative source for those Applications (or versions thereof) with respect to which Google has exercised such election.

 

Google Confidential

  

- 30 -

  

Attachment 1

 

Prohibited Behavior and Content

 

The application may not impact the display of other applications unless you provide clear disclosure in each instance

 

Google Confidential

  

- 31 -

  

Google Confidential

  

- 32 -

  

Disclosure and Consent

 

Clear and conspicuous disclosure is required prior to download or install: what it is, what it does, and how it will be displayed to the end user

 

 

Disclosure and Consent

 

Describe type, method, and use of personal information, if applicable. Point user to privacy policy

 

Google Confidential

  

- 33 -

  

Google Confidential

  

- 34 -

  

Branding & Attribution

 

The visible elements of the application should be easily identifiable to the end user

 

Google Confidential

  

- 35 -

  

Implementation, Transparency and Deactivation

 

The Application must permit end users to uninstall it in the customary place the applicable operating system has designated for adding or removing programs (e.g., Add/Remove Programs control panel in Windows) in a straightforward manner

Google Confidential

  

- 36 -

  

Google Confidential

  

- 37 -

  

Implementation, Transparency and Deactivation

 

The Application must contain (in an easily found location) clear and concise instructions on how it may be uninstalled

 

Google Confidential

  

- 38 -

  

Bundling of Applications

 

When bundling, the end user must be made aware of all the applications included prior to installation.

 

Google Confidential

  

- 39 -

  

Bundling of Applications

 

When bundling, the end user must be made aware of advertising revenue relationships to other applications, if the continued use of the primary application is conditioned on the other applications being installed and active on the end user’s computer

 

 

Google Confidential

  

- 40 -

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00196-of-00352.parquet"}]]