Exhibit 10.1
RIGHT OF FIRST REFUSAL AGREEMENT
This RIGHT
OF FIRST REFUSAL AGREEMENT made and entered into this 9th day of October, 2019 (the "Effective
Date"), by and between CMC DEVELOPMENT LLC, a New York limited liability company with a principal place of business located
at 4419 Third Avenue Bronx, New York, 10457 ("CMC") and SG Blocks, Inc., a publicly traded Delaware corporation with
a principal place of business located at 195 Montague Street, Brooklyn, NY 11201 ("SGBX").
WITNESSETH:
WHEREAS,
CMC is in the business of identifying, acquiring, developing and managing affordable residential and commercial properties
in the United States, with a focus on emerging urban markets (hereafter the "CMC Real Estate Projects"); and
WHEREAS, SGBX is a designer, innovator and fabricator
of container-based structures
("SGBX Container Structures"); and
WHEREAS,
CMC is desirous of utilizing and employing SGBX' s Container Structures in connection with current and future CMC Real Estate
Projects;
WHEREAS,
SGBX is desirous of offering and building Container Structures for the CMC Real Estate Projects;
NOW,
THEREFORE, in consideration of the mutual covenants, terms and conditions set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
1.
Definitions. For purposes of this Agreement, the following terms have
the following meanings:
"Affiliate"
means, with respect to any Person, any other Person who, directly or indirectly (including through one or more intermediaries),
controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control,"
when used with respect to any specified Person, shall mean the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person, whether through ownership of voting securities or partnership or other ownership interests,
by contract or otherwise; and the terms "controlling" and "controlled" shall have correlative meanings.
"Business Day"
means a day other than a Saturday, Sunday or other day on which commercial banks in the City of New York are authorized or required
to close.
"Design and Build Agreement" means the
agreement(s) executed by and between CMC
and SGBX wherein SGBX will
be engaged by CMC to build and design specified CMC Real Estate Projects utilizing the SGBX Container Structures.
2.
Right of First Refusal.
(a) Offered
CMC Real Estate Project. SGBX shall have a right of first refusal with respect to any and all CMC Real Estate Projects that
CMC has secured rights to develop in which CMC has greater than a 50% interest in the owner or developer entity and has the right
to select the builder (each a "Prospective CMC Project"), to build and design the Prospective CMC Project the
utilizing the SGBX Container Structures (the "Offered CMC Project") during the Term.
(b)
Offering. Each time CMC secures rights to develop a Prospective CMC Project, CMC shall, prior to offering to or agreeing
to develop the Prospective CMC Project with another builder, real estate developer or construction company, offer to SGBX the exclusive
right to build and design the Prospective CMC Project utilizing the SGBX Container Structures.
(c) Offer
Notice. CMC shall, within Ninety (90) Days of its securing of the right to build or develop a Prospective CMC Project,
give written notice (the "ROFR Notice") to SGBX stating that it has been offered the right to acquire, develop,
construct, and/or manage a CMC Real Estate Project and specifying and/or including:
(d)
Exercise of Right of First Refusal.
(i)
Upon receipt of the ROFR Notice and SGBX' s delivery of the ROFR Exercise Notice, SGBX shall have the exclusive right, for
a period of sixty (60) Business Days, to negotiate and enter into a Design Build Agreement with CMC whereby SGBX will be engaged
to be the
designer and builder of the Prospective CMC Project utilizing
SGBX Container Structures. CMC
agrees to cooperate with SGBX's
due diligence requests, time being of the essence, and shall promptly inform SGBX of any material developments or changes in the
Prospective CMC Project.
(ii)
The right of SGBX to be exclusive designer and builder of the Prospective CMC Project utilizing SGBX Container Structures
shall be exercisable with the delivery of a written notice (the "ROFR Exercise Notice") by SGBX to CMC within
ten (10) Business Days of receipt of the ROFR Notice (the "ROFR Option Period"). The ROFR Exercise Notice shall
be binding upon delivery and irrevocable by CMC.
(iii)
The failure of SGBX to deliver a ROFR Exercise Notice by the end of the ROFR Option Period shall constitute a waiver of
its right of first refusal with respect to the subject Prospective CMC Project, but shall not affect its respective rights with
respect to any future Prospective CMC Projects.
3. Ridge Avenue, Atlanta Project. The Parties acknowledge and agree that CMC has engaged SGBX to build and design,
in the aggregate, approximately one hundred (100) residential and commercial units utilizing the SGBX Container Structures at
1100 Ridge Avenue, Atlanta, Georgia (the "Ridge Avenue, Atlanta Project"), at a total project cost of $15,000,000,
the terms and conditions for which are set forth in a separate Design and Build Agreement.
4.
Consideration. In exchange for the rights of first refusal granted to SGBX hereunder during the Term, SGBX
has agreed to issue to CMC fifty thousand (50,000) restricted stock units (each a "RSU") of SGBX's common stock. The
RSUs will vest in two tranches; 25,000 on September 30, 2020, and 25,000 on September 30, 2021, unless this Agreement is sooner
terminated pursuant to Section 5 hereof. For avoidance of doubt, in the event that this Agreement is terminated prior to the Term
set forth in Section 5, then CMC shall be entitled to the amount of RSUs that have vested as of the termination date, but in no
event less than 25,000 RSUs.
5.
Term. The term of this Agreement commences as of the Effective Date and, unless this Agreement is terminated
earlier pursuant to any of its express provisions, will continue in effect for two (2) years (the "Term").
5.1
Termination.
(a)
Either party may terminate this effective upon written notice to the other party, if the other party materially breaches
this Agreement and such breach:
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(i)
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is incapable of cure; or
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(ii)
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being capable of cure, remains uncured fifteen (15) days after the breaching
party receives written notice thereof.
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6.
Indemnification.
6.1
CMC Indemnification. CMC shall defend, indemnify and hold harmless SGBX and its Affiliates, and each of their respective
officers, directors, employees, agents, successors and assigns (each, a "SGBX lndemnitee") from and against all
any and all losses, damages, liabilities, deficiencies, claims, actions, judgments, settlements, interest, awards, penalties, fines,
costs, or expenses of whatever kind, including reasonable attorneys' fees, fees and the cost of enforcing any right to indemnification
hereunder and the cost of pursuing any insurance providers that are incurred by a SGBX Indemnitee ("Losses") arising
out of or resulting from any third party claim, demand, suit, action or proceeding, whether civil, criminal, administrative or
investigatory in nature (each, an "Action") that arises out of or results from CMC's breach of any representation,
warranty, covenant or obligation of CMC under this Agreement.
6.2
SGBX Indemnification. SGBX shall defend, indemnify and hold harmless CMC and CMC 1s Affiliates, and each of their
respective officers, directors, employees, agents, successors and assigns (each, a "CMC lndemnitee") from and
against all any and all Losses arising out of or resulting from any Action that arises out of or results from SGBX's breach of
any representation, warranty, covenant or obligation of SGBX under this Agreement.
7.
Representations and Warranties. Each party represents and warrants to the other party that: (i) it is duly
organized, validly existing and in good standing as a corporation or other entity as represented herein under the laws and regulations
of its jurisdiction of incorporation, organization or chartering; (ii) it has the full right, power and authority to enter into
this Agreement, to grant the rights granted hereunder and to perform its obligations hereunder; (iii) the execution of this Agreement
by its representative whose signature is set forth at the end hereof has been duly authorized by all necessary corporate action
of the party; and (iv) when executed and delivered by both parties, this Agreement will constitute the legal, valid and binding
obligation of such party, enforceable against such party in accordance with its terms.
8.
Confidentiality.
(b)
In connection with this Agreement, each party (the "Disclosing Party") may disclose or make available Confidential
Information to the other party (the "Receiving Party"). As a condition to being provided with any disclosure of
or access to the Disclosing Party's Confidential Information, the Receiving Party shall:
(i)
not access or use the Disclosing Party's Confidential Information other than as necessary to exercise its rights or perform
its obligations under this Agreement;
(ii)
not use the Disclosing Party's Confidential Information, directly or indirectly, in any manner to the detriment of the Disclosing
Party or to obtain any competitive benefit with respect to the Disclosing Party;
(iii)
not disclose or permit access to Confidential Information other than to its representatives who: (A) need to know such Confidential
Information for purposes of the Receiving Party's exercise of its rights or performance of its obligations under and in accordance
with this Agreement; (B) have been informed of the confidential nature of the Confidential Information and the Receiving Party's
obligations under this Section; and (C) are bound by confidentiality and restricted use obligations at least as protective of the
Confidential Information as the terms set forth in this Section; and
(iv)
safeguard the Confidential Information from unauthorized use, access or disclosure using at least the degree of care it
uses to protect its similarly sensitive information and in no event less than a reasonable degree of care;
The Disclosing Party is responsible
for ensuring its Representatives' compliance with, and shall be liable for any breach by its Representatives of, this Section.
(c) "Confidential
Information" shall mean information in any form or medium (whether oral, written, electronic or other) that a party
(as a Disclosing Party) considers confidential or proprietary, including trade secrets, technology, information pertaining to
business operations and strategies, marketing and advertising, and information pertaining to participants in the Accelerator,
including but not limited to other cohort companies, mentors, sponsors or investors, in each case to the extent it is: (a) if
disclosed in writing or other tangible form or medium, marked "confidential" or "proprietary;" (b) is of
the nature that the Receiving Party should reasonably have understood it to be confidential, proprietary or sensitive at the
time of disclosure or at any time thereafter. With respect to each party, the terms of this Agreement are
Confidential Information of the other party
(d)
Confidential Information does not include information that the Receiving Party can demonstrate by written or other documentary
records: (i) was already known to the Receiving Party without restriction on use or disclosure prior to its receipt of or access
to such information in connection with this Agreement; (ii) was or becomes generally known by the public other than by breach of
this Agreement by, or other wrongful act of, the Receiving Party or any of its Representatives; (iii) was or is received by the
Receiving Party from a third party who was not or is not, at the time of such receipt, under any obligation to the Disclosing Party
or any other Person to maintain the confidentiality of such information; or (iv) was or is independently developed by
the Receiving
Party without reference to or use of any of the Disclosing Party's Confidential Information.
9.
General.
(a)
Upon a party's reasonable request, the other party shall, at the requesting/such other party's sole cost and expense, execute
and deliver all such documents and instruments, and take all such further actions, necessary to give full effect to this Agreement.
(b)
The relationship between the parties is that of independent contractors. Nothing contained in this Agreement shall be construed
as creating any agency, partnership, joint venture or other form of joint enterprise, employment or fiduciary relationship between
the parties, and neither party shall have authority to contract for or bind the other party in any manner whatsoever.
(c)
The parties agree to maintain the terms of this Agreement in confidence. Neither party shall issue or release any announcement,
statement, press release or other publicity or marketing materials relating to this Agreement except as expressly permitted under
this Agreement or with the prior written consent of the other party, which shall not be unreasonably withheld or delayed. For the
avoidance of doubt, the Parties have agreed to issue a press release substantially in the form of Exhibit A hereto.
(d)
During the Term of this Agreement and for a period of twenty-four (24) months thereafter, each party agrees that it will
not at any time make, publish, or communicate to any person or entity or in any public forum any defamatory or disparaging remarks,
comments, or statements concerning the other party, or the other party's business, or any of its employees, officers, and existing
and prospective customers, shareholders, suppliers, investors, and other associated third parties.
(e) All
notices, requests, consents, claims, demands, waivers and other communications hereunder must be in writing and addressed to
the parties as follows:
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If to CMC:
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CMC Development LLC
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4419 Third Avenue
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Bronx, New York, 10457
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E-mail: [sbelle@cmcdevelopmentnyc.com]
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Attention: Shaun Belle, Member
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If to SGBX:
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SG Blocks Inc.
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Attention: Paul Galvin,
CEO
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Facsimile:
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E-mail: pgalvin@sgblocks.com
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With a courtesy copy to:
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Steven Soulios, Esq.
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Notices sent in accordance with this Section will
be deemed effectively given: (a) when received, if delivered by hand, with signed confirmation of receipt; (b) when received,
if sent by a nationally recognized overnight courier, signature required; (c) when sent, if by facsimile or e-mail, in each case,
with confirmation of transmission, if sent during the addressee's normal business hours, and on the next business day, if sent
after the addressee's normal business hours;
and (d) on the 3rd
day after the date mailed by certified or registered mail, return receipt requested, postage prepaid.
(f)
This Agreement constitutes the entire agreement of the parties with respect to the Services , and supersedes all prior and
contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject
matter.
(g)
Upon the written consent of CMC, which shall not be unreasonably withheld, conditioned or delayed, SGBX may assign or otherwise
transfer any of its rights, or delegate or otherwise transfer any of its obligations or performance, under this Agreement. This
Agreement is binding upon and inures to the benefit of the parties hereto and their respective permitted successors and assigns.
(h)
This Agreement is for the sole benefit of the parties hereto and their respective permitted successors and permitted assigns
and nothing herein, express or implied, is intended to or shall confer upon any other person any legal or equitable right, benefit
or remedy of any nature whatsoever, under or by reason of this Agreement.
(i)
No amendment to or modification of this Agreement is effective unless it is in writing and signed by an authorized representative
of each party. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing
and signed by the party so waiving. Except as otherwise set forth in this Agreement, no failure to exercise, or delay in exercising,
any rights, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof
or the exercise of any other right, remedy, power or privilege.
G) If any
provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated
to the greatest extent possible.
(k)
This Agreement is governed by and construed in accordance with the internal laws of the State of New York without giving
effect to any choice or conflict of law provision or rule that would require or permit the application of the laws of any jurisdiction
other than those of the State of New York.
(1) Any
dispute, claim or controversy arising out of or relating to this Agreement or the breach, termination,
enforcement, interpretation or validity thereof, including the determination of the scope or applicability of this agreement
to arbitrate, shall be determined by arbitration in New York City, before one arbitrator. The arbitration shall be
administered by JAMS pursuant to its 4 JAMS STREAMLINED ARBITRATION RULES I JULY
1, 2014 Streamlined Arbitration Rules & Procedures (Comprehensive Arbitration Rules & Procedures). Judgment on the
Award may be entered in any court having
jurisdiction. This clause shall not preclude parties from seeking provisional remedies in aid of arbitration from a
court of appropriate jurisdiction. The arbitrator shall, in the Award, allocate all or part of the costs of the arbitration,
including the fees of the arbitrator and the reasonable attorneys' fees of the prevailing party.
(m) This
Agreement may be executed in counterparts, each of which is deemed an original, but all of which together are deemed to be one
and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission
is deemed to have the same legal effect as delivery of an original signed copy of this Agreement.
IN WITNESS WHEREOF, the
Parties have caused this Agreement to be executed by their duly authorized representatives as of the date first written above.
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SG BLOCKS, INC.
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CMC Development LLC
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By:
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/s/ Paul Galvin
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By:
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/s/ Shaun Belle
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Name: Paul Galvin
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Name: Shaun Belle
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Title: CEO
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Title: Member
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Exhibit 99.1
October 10, 2019
SG Blocks Partners with CMC Development
Group on a $15 Million Affordable Housing Project – The Ridge Avenue Project; Subject to the Recently Announced Licensing
Agreement
Announces first deal with CMC Development Group,
The Ridge Avenue Project, a 100-unit building in Peoplestown, Atlanta GA with Grimshaw performing schematic design
NEW YORK--(BUSINESS WIRE)-- SG Blocks, Inc.
(NASDAQ: SGBX), a leading designer, fabricator and innovator of container-based structures (“SG Blocks), today announced
that it has partnered with CMC Development Group/Creative Container and Spaces/Eco Development LLC (hereinafter referred to as
“CMC Development Group” or “CMC”) on a 100 unit building in Atlanta, known as The Ridge Avenue project
– a $15.0 million affordable housing project. Ridge Avenue is the first deal of a new partnership between SG Blocks and CMC,
which provides exclusive right of first refusal access to CMC’s deals and pipeline, subject to reasonable limits. In exchange
for access to CMC’s backlog and pipeline projects and recommendation of SG Blocks to other businesses, SG Blocks will provide
CMC 50,000 restricted stock units vesting over 2-years. The Ridge Avenue project is a residential project subject to SG Blocks’
recently announced license agreement with CPF MF 2019-1 LLC (“CPF MF”). As a result, CPF MF will arrange for the design
build of the container based modular building for the project and SG Blocks will be entitled to the related fees under the license
agreement.
Paul Galvin, Chairman and CEO of SG Blocks, commented,
“We believe this relationship with CMC provides substantial mutual benefit for SG Blocks and CMC. CMC has played a vital
role in bringing safe and affordable housing to Bronx residents for decades and we look forward to helping them scale their efforts.”
SG Blocks gains access to CMC’s substantial pipeline and backlog of mid-rise affordable housing developments located primarily
in the Bronx and Atlanta. In return, CMC receives upside opportunity in SG Blocks’ success in the form of restricted stock
units.
Shaun Belle of CMC stated “CMC gains access
to SG Blocks’ proprietary best-in-class container-based testing and modeling, and container preparation and building process.
Furthermore, there is no better way to start this relationship then to be partnering on The Ridge Avenue Project, a 100-unit building
in Atlanta. We expect Ridge Avenue to be the first of many deals SG Blocks and CMC does together. We are thrilled to have Grimshaw
bringing their reputation, talent and resources into the Atlanta affordable housing market.”
Grimshaw chairman Andrew Whalley
stated, “Grimshaw seeks to provide the very best in design excellence and sustainability in each of our projects. We are
committed to creating affordable housing that provides a setting for healthy, sustainable living and we look forward to bringing
these commitments to our partnership with SG Blocks and CMC Development.”
About CMC Development Group LLC
CMC Development Group’s goal is to improve
the economic and environmental conditions of emerging urban markets through the development, acquisition and management of affordable
residential and commercial properties. The core of CMC’s business is developing and managing residential and commercial real
estate in Metropolitan New York and Atlanta area markets. CMC supports positive growth of urban neighborhoods it develops in through
its Future Developers Program, Community Based Workforce and its Buy Local Construction Service Providers Program. CMC is focused
on capitalizing on economic opportunities in urban areas while developing properties that focus on solid economic return, affordability
and green building sustainability. CMC is a NYS Certified MBE.
About SG Blocks, Inc.
SG Blocks, Inc. is a premier innovator in
advancing and promoting the use of code-engineered cargo shipping containers for safe and sustainable construction. The firm
offers a product that exceeds many standard building code requirements, and also supports developers, architects, builders
and owners in achieving greener construction, faster execution, and stronger buildings of higher value. Each project starts
with GreenSteel™, the structural core and shell of an SG Blocks building, and then customized to client specifications.
For more information, visit www.sgblocks.com.
Forward-Looking Statements
Certain statements in this press release
constitute "forward-looking statements" within the meaning of the federal securities laws. Words such as
"may," "might," "will," "should," "believe," "expect,"
"anticipate," "estimate," "continue," "predict," "forecast,"
"project," "plan," "intend," “target,” “opportunity” or similar
expressions, or statements regarding intent, belief, or current expectations, are forward-looking statements. While SG Blocks
believes these forward-looking statements are reasonable, undue reliance should not be placed on any such
forward-looking statements, which are based on information available to us on the date of this release. These forward-looking
statements are based upon current estimates and assumptions and are subject to various risks and uncertainties, including
without limitation those set forth in SG Blocks' filings with the Securities and Exchange Commission. Thus, actual results
could be materially different. SG Blocks expressly disclaims any obligation to update or alter statements whether as a result
of new information, future events or otherwise, except as required by law.
View source version on businesswire.com: https://www.businesswire.com/news/home/20191010005241/en/
Media
Rubenstein Public Relations
Christina Levin
Account Director
212-805-3029
clevin@rubensteinpr.com
or
Investor
Relations
James Carbonara
Hayden IR
(646)-755-7412
james@haydenir.com
Brett Maas
Hayden IR
(646) 536-7331
brett@haydenir.com
Source: SG Blocks, Inc.