UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549


FORM 8-K


CURRENT REPORT
Pursuant To Section 13 OR 15(d) Of The Securities Exchange Act Of 1934


Date of Report (Date of earliest event reported): October 22, 2019







THE DIXIE GROUP, INC.
(Exact name of Registrant as specified in its charter)


Tennessee
 
0-2585
 
62-0183370
(State or other jurisdiction of incorporation)
 
(Commission File Number)
 
(I.R.S. Employer Identification No.)

475 Reed Road Dalton, Georgia
 
30720
(Address of principal executive offices)
 
(zip code)

(706) 876-5800
(Registrant's telephone number, including area code)


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))






Item 1.01    Entry Into a Material Definitive Agreement.

The disclosure under Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.
Item 2.01.     Completion of Acquisition or Disposition of Assets.
On October 22, 2019, The Dixie Group, Inc. (NASDAQ: DXYN) filed a press release reporting completion of the sale of its Susan Street facility, and approximately 10 acres of surrounding property located in Santa Ana, California to the CenterPoint Properties Trust for a net purchase price of approximately $37.2 million. The sale will result in reducing debt under the Company’s Revolving Credit Facility by over 35% and increasing equity by over 50%. As previously disclosed, completion of the sale was a condition to the implementation of the Company’s stock repurchase program, pursuant to which the Company is authorized to purchase up to $5.9 million of its shares beginning with completion of the sale and ending March 2020.
As noted, TDG Operations, LLC, a Georgia limited liability company and a wholly-owned subsidiary of The Dixie Group, Inc. (“Dixie Group” or the “Company”), completed the sale of its Susan Street facility, and approximately 10 acres of surrounding property located in Santa Ana, California (the “Santa Ana Property”) to the Purchaser for a net purchase price of $37,195,406. Concurrent with the sale of the Property, Dixie Group and the Purchaser entered into a ten-year lease agreement (the “Susan Street Lease Agreement”), whereby Dixie Group will lease back the Property at an annual rental rate of $2,082,819, subject to annual rent increases of 2.0%. Under the Lease Agreement, Dixie Group has two (2) consecutive options to extend the term of the Lease by five (5) years for each such option (the “Susan Street Lease”).
As finally negotiated by the parties, and under the terms of the sale agreement and the Susan Street Lease Agreement, certain anticipated costs, including, among others, the full cost of roof repair, repaving of the facility’s parking lot, replacement of HVAC equipment and repair of the facility’s interior upon termination of the lease, are to be borne by the purchaser, instead of by the tenant, and, in exchange, the purchase price was set at the level described above, and the annual rental and escalator were adjusted to the levels described herein.
Simultaneously with the sale, the registrant paid down its credit facility by approximately $36.3 million. Prior to completing the Purchase and Sale Agreement, Dixie Group entered into that certain Consent and Thirteenth Amendment to Credit Agreement dated October 22, 2019, pursuant to which the Company’s lender consented to the sale of the Santa Ana Property. This amendment also adjusted the size of the credit facility to $120 million as well as other terms relative to the sale of the Santa Ana property. Certain terms of the facility were also amended, such that the “trigger level”, together with the “availability block”, (as defined in the Credit Agreement), which together operate to modify availability under the Credit Agreement from time to time, were set at a combined $20 million. The details of these changes are set forth in the amendment attached hereto as Exhibit 10.1.
In consideration of, and as an inducement to, the Purchaser’s agreement to enter into the above-described sale/lease back arrangement, the registrant concurrently executed a lease guaranty, pursuant to which it guaranteed the prompt payment when due of all rent payments to be made by TDG Operations, LLC under the Lease Agreement.
The Company expects to incur an after-tax gain of approximately $25 million. As of the date hereof, net accessible availability under the Company’s line of credit is approximately $22.0 million. Availability under the credit agreement varies from time to time based on the periodic changes to the qualified asset base, which consists of accounts receivable, inventory and fixed assets, and the levels of borrowing due to seasonal factors.








Item 7.01.     Regulation FD Disclosure.
As previously disclosed, on August 27, 2019, the Company entered into a Plan to facilitate repurchase of up to $5.9 million of its common shares pursuant to a repurchase authorization approved by its Board of Directors. Subject to the requirements of Rule 10b5-1, the repurchase Plan permits the purchase contingent upon the now completed sale of the Santa Ana Susan Street facility and continuing until March 2020. Any purchases made under the Plan will be structured to come within Rule 10b-18 and will be managed by Raymond James & Associates.
Item 9.01.     Financial Statements and Exhibits.
(d) Exhibits
            (99.1) Press Release, dated as of October 22, 2019.
            (10.1) Consent and Thirteenth Amendment to Credit Agreement.
            (10.2) Agreement For The Purchase and Sale of Real Property.
            (10.3) Form of Lease.













SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Date:    October 22, 2019
       
THE DIXIE GROUP, INC.
 
 
 
 
 
   /s/ Jon A. Faulkner
 
 
Jon A. Faulkner
 
 
Chief Financial Officer




Exhibit
10.1

CONSENT AND THIRTEENTH AMENDMENT TO CREDIT AGREEMENT

This CONSENT AND THIRTEENTH AMENDMENT TO CREDIT AGREEMENT (this “Agreement”), dated as of October 22, 2019, is entered into by and among THE DIXIE GROUP, INC., a Tennessee corporation (“Dixie”), CANDLEWICK YARNS, LLC, an Alabama limited liability company (“Candlewick”), TDG OPERATIONS, LLC, a Georgia limited liability company, formerly known as Masland Carpets, LLC and successor by merger to Fabrica International, Inc. (“TDG”; together with Dixie and Candlewick, are referred to hereinafter each individually as a “Borrower,” and individually and collectively, jointly and severally, as the “Borrowers”), the persons identified as the Lenders on the signature pages hereto (the “Lenders”), and WELLS FARGO CAPITAL FINANCE, LLC, a Delaware limited liability company, as administrative agent for the Lenders (in such capacity, together with its successors and assigns in such capacity, “Agent”).

W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement dated as of September 13, 2011, as amended by the First Amendment to Credit Agreement dated as of November 2, 2012, the Second Amendment to Credit Agreement dated as of April 1, 2013, the Third Amendment to Credit Agreement dated as of May 22, 2013, the Fourth Amendment to Credit Agreement dated as of July 1, 2013, the Fifth Amendment to Credit Agreement dated as of July 30, 2013, the Sixth Amendment to Credit Agreement dated as of August 30, 2013, the Seventh Amendment to Credit Agreement dated as of January 20, 2014, the Eighth Amendment to Credit Agreement dated as of March 14, 2014, the Ninth Amendment to Credit Agreement dated as of March 26, 2014, the Tenth Amendment to Credit Agreement, First Amendment to Security Agreement, and First Amendment to Guaranty dated as of September 23, 2016, the Consent and Eleventh Amendment to Credit Agreement dated as of January 14, 2019, and the Twelfth Amendment to Credit Agreement, dated as of October 3, 2019 (as the same may be further amended, restated, supplemented, or otherwise modified from time to time, the “Credit Agreement”), among Agent, the Lenders and the Borrowers, the Lenders have made loans and advances and provided other financial accommodations to the Borrowers;

WHEREAS, (a) TDG owns certain real property located at 3201 South Susan Street, Santa Ana, California 92704 (the “Susan Street Property”), as described in the Sale Leaseback Agreement (as defined below), along with improvements, equipment and related personal property located thereon, (b) TDG proposes to enter into the Purchase and Sale Agreement attached hereto as Exhibit A (the “Sale Leaseback Agreement”) with CenterPoint Properties Trust (the “Purchaser”) pursuant to which TDG will transfer all of its rights, title and interest in and to the Susan Street Property to the Purchaser, and will lease back the Susan Street Property from the Purchaser (such sale leaseback transaction, the “Sale Leaseback”), and (c) under the Credit Agreement, the consummation of the Sale Leaseback is prohibited as being a disposition of assets that does not constitute a Permitted Disposition;

WHEREAS, the Borrowers have requested that Agent and Lenders enter into this Agreement to (a) approve the Sale Leaseback as a Permitted Fixed Asset Disposition, and (b) make certain amendments to the Credit Agreement, and Agent and the Lenders are willing to do so, subject to the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the agreements herein contained and other good and valuable consideration, the parties hereby agree as follows:







I.    DEFINITIONS AND INTERPRETATION.

1.1.    Definitions and Interpretation. Unless otherwise defined herein or the context otherwise requires, terms used in this Agreement, including its preamble and recitals, have the meanings provided in the Credit Agreement.

II.        LIMITED CONSENTS.
2.1.     Consent to Sale Leaseback. Subject to the satisfaction of the conditions precedent set forth in Section IV of this Agreement, the Agent and the Lenders party hereto hereby approve of and consent to the Sale Leaseback as a Permitted Fixed Asset Disposition, so long as (a) such Sale Leaseback is consummated substantially on the terms set forth in the Sale Leaseback Agreement, (b) such Sale Leaseback shall be consummated on or before October 25, 2019, (or such later date as agreed upon by Agent and Lenders in writing in their sole discretion), (c) no Default or Event of Default shall exist at the time such Sale Leaseback is consummated, (d) the Net Cash Proceeds received by any Borrower from such Sale Leaseback shall be applied in accordance with Sections 2.4(e) and (f) of the Credit Agreement, (e) the Purchaser executes and delivers a Collateral Access Agreement with respect to the Susan Street Property in favor of Agent, and (f) TDG executes and delivers a collateral assignment of its rights under the Sale Leaseback Agreement in favor of Agent.
2.2.    Limited Consents. The consents described in this Agreement are limited to the matters expressly covered herein and shall be effective only under the specific circumstances described herein. The consents shall not entitle the Loan Parties to any other or further consent in any similar or other circumstances. The Credit Agreement remains in full force and effect in accordance with its terms.
III.        AMENDMENTS TO CREDIT AGREEMENT.
Subject to the satisfaction of each of the conditions precedent set forth in Section IV of this Agreement, the Credit Agreement is hereby amended as follows:
3.1.    Additional Definitions. Schedule 1.1 of the Credit Agreement is hereby amended by inserting the following new defined terms therein in appropriate alphabetical order:
Availability Block” means (a) from and including the Thirteenth Amendment Effective Date until the Availability Block First Reduction Date, $5,000,000, (b) from and including the Availability Block First Reduction Date until the Availability Block Second Reduction Date, $2,500,000, and (c) from and including the Availability Block Second Reduction Date, $0.
Availability Block FCCR” means, with respect to Borrowers and their Subsidiaries for any period of measurement, the ratio of (a) EBITDA for such period, minus Capital Expenditures (but excluding Capital Expenditures financed with the proceeds of Indebtedness for borrowed money other than Advances) made (to the extent not already incurred in a prior period) or incurred during such period, minus cash income taxes paid during such period (excluding cash tax payments (including taxes, penalties and fees) paid relative to tax years 2009 or prior, not to exceed $2,500,000), minus cash Restricted Junior Payments made during such period, to (b) Fixed Charges for such period, in each case as determined on a consolidated basis in accordance with GAAP.


2


Availability Block FCCR Measurement Period” means, (a) from and including the Thirteenth Amendment Effective Date until the one year anniversary of the Thirteenth Amendment Effective Date, the period of time from and including the Thirteenth Amendment Effective Date through and including the applicable date of determination, and (b) from and including the one year anniversary of the Thirteenth Amendment Effective date, and at all times thereafter, the trailing twelve month period ending on the applicable date of determination.
Availability Block First Reduction Date” means the date on which the Availability Block FCCR has been greater than 1.10 to 1.0 for three consecutive months (or such lesser period as consented to by Agent and all Lenders in writing in their sole discretion, which writing may be in the form of electronic mail), measured as of last day of the fiscal month occurring during the applicable Availability Block FCCR Measurement Period for which interim financial statements are then required to have been delivered to Agent in accordance with Section 5.1.
Availability Block Second Reduction Date” means that date on which the Availability Block FCCR has been greater than 1.10 to 1.0 for six consecutive months (or such lesser period as consented to by Agent and all Lenders in writing in their sole discretion, which writing may be in the form of electronic mail), measured, in each case, as of last day of the fiscal month occurring during the applicable Availability Block FCCR Measurement Period for which interim financial statements are then required to have been delivered to Agent in accordance with Section 5.1.
Payment Conditions Excess Availability” means, at any time of determination, the sum of Excess Availability plus the Availability Block.
Tax Distribution” means that if the Stock of a Loan Party are owned by a Person that is not a Loan Party and such Loan Party has been converted to a pass-through entity for tax purposes, distributions by such Loan Party solely for the payment of income taxes by any Person as a result of its direct or indirect ownership of the Stock of such Loan Party in an amount not to exceed the Federal and State income tax paid or to be paid by the owner of Stock in a Loan Party on taxable income earned by such Loan Party and attributable to such owner as a result of such Loan Party’s “pass-through” tax status, assuming the highest marginal income tax rate for Federal and State (for the State or States in which any equity owner is liable for income taxes with respect to such income) income tax purposes, after taking into account any deduction for state income taxes in calculating the federal income tax liability and all other deductions, credits, deferrals and other reductions available to such owners from or through such Loan Parties.
Thirteenth Amendment” means that certain Consent and Thirteenth Amendment to Credit Agreement dated as of October 22, 2019, by and among Borrowers, Lenders and Agent, as acknowledged and agreed to by the Guarantors.
Thirteenth Amendment Effective Date” means October 22, 2019.
3.2.    Susan Street Real Property Availability Amount Definition. Schedule 1.1 of the Credit Agreement is hereby amended by deleting the following definitions “Susan Street Term Loan”, “Susan Street Term Loan Documents”, “Susan Street Term Loan Guaranties”, and “Susan Street Term Loan Liens”.


3


3.3.    Borrowing Base Definition. The definition of “Borrowing Base” set forth in Schedule 1.1 of the Credit Agreement is hereby amended by restating clauses (b), (c) and (d) thereof in their entirety as set forth below, and adding new clause (e) thereto as set forth below:

(b)    the lesser of: (i) $95,000,000; and (ii) the sum of (A) the lesser of (1) 70% of the value (calculated on a blended basis across Inventory categories at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Eligible Landed Inventory, and (2) 85% times the most recently determined Net Liquidation Percentage times the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of Borrowers’ Eligible Landed Inventory, plus (B) the lesser of (1) $2,500,000 and (2) the lesser of (y) 70% of the aggregate undrawn amount of outstanding Qualified Import Letters of Credit, and (z) 85% times the most recently determined Net Liquidation Percentage times the value (calculated at the lower of cost or market on a basis consistent with Borrowers’ historical accounting practices) of the Eligible Inventory subject to such Qualified Import Letters of Credit, plus

(c)     the sum of the Fixed Asset Availability Amount, minus

(d)    the aggregate amount of reserves established by Agent under Section 2.1(c) of the Agreement, minus

(e)    the Availability Block;

3.4.    Eligible Real Property Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating clause (d) of the definition of “Eligible Real Property” in its entirety as follows:

(d)    any parcel of Real Property with respect to which Agent has not received an appraisal consistent with the requirements set forth in the definition of Fixed Asset Availability Amount.

3.5.    Fixed Asset Availability Amount Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating the definition of “Fixed Asset Availability Amount” in its entirety as follows:

Fixed Asset Availability Amount” means the lesser of (a) $11,446,296.75, and (b) the sum of (i) 85% of the net orderly liquidation value of Eligible M&E set forth in an appraisal of such Eligible M&E conducted by an appraisal company selected by Agent, plus (ii) 75% of the fair market value (as determined on the basis of a 12-month sale period) of Borrowers’ Eligible Real Property set forth in an appraisal of such Eligible Real Property conducted by an appraisal company selected by Agent, as such lesser amount is reduced on a monthly basis (on the first day of each calendar month) by $217,124.00, from and after the Thirteenth Amendment Effective Date. In no event shall any increase in the appraised value of any Eligible M&E or Eligible Real Property, as set forth in any appraisal obtained after the Tenth Amendment Effective Date, be taken into account in the calculation of the Fixed Asset Availability Amount.

3.6.    Maximum Revolver Amount Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating the definition of “Maximum Revolver Amount” in its entirety as follows:



4


Maximum Revolver Amount” means $120,000,000, as such amount may be increased by the amount of Additional Commitment Amounts in accordance with Section 2.2 of the Agreement or decreased by the amount of reductions in the Commitments made in accordance with Section 2.4(c) of the Agreement.
 
3.7.    Obligations Definition. Schedule 1.1 of the Credit Agreement is hereby amended by deleting the following sentence set forth in the definition of "Obligations" in its entirety: “For clarification purposes, it is acknowledged that the Obligations shall not include the Susan Street Term Loan.”
3.8.    Payment Conditions Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating the definition of “Payment Conditions” in its entirety as follows:

Payment Conditions” means, in the case of any applicable Restricted Payment or Investment (each, a “Payment”), the conditions precedent that:
(a)    Payment Conditions Excess Availability equals or exceeds $35,000,000 both (i) on a pro forma basis after giving effect to such Payment and any Advance made hereunder in connection therewith as to each of the 30 days immediately preceding the date of such Payment, and (ii) immediately after giving effect to such Payment and any Advance made hereunder in connection therewith, and
(b)    Borrowers shall have provided Agent a certificate of Administrative Borrower’s chief financial officer, in form and detail reasonably satisfactory to Agent, confirming the satisfaction of each condition precedent to the making of such Payment.

3.9.    Permitted Indebtedness Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating clause (k) of the definition of “Permitted Indebtedness” in its entirety as follows:

(k)    [Reserved],

3.10.    Permitted Investments Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating clauses (j), (m), (n), and (o) of the definition of “Permitted Investments” in thier entirety as follows:

(j)    non-cash loans to employees, officers, and directors of any Borrower or any of its Subsidiaries for the purpose of purchasing Stock in Administrative Borrower so long as (i) the proceeds of such loans are used in their entirety to purchase such stock in Administrative Borrower, and (ii) Agent has given its prior written consent to such loans, which consent may be given or withheld in Agent’s sole discretion,

(m)    (i) so long as no Event of Default has occurred and is continuing or would result therefrom, the ColorMaster Purchase, (ii) so long as no Event of Default has occurred and is continuing or would result therefrom, the Robertex Acquisition, (iii) so long as no Event of Default has occurred and is continuing or would result therefrom, the Atlas Acquisition, and (iv) so long as (A) no Event of Default has occurred and is continuing or would result therefrom, (B) the Payment Conditions have been satisfied, and (C) Agent has given its prior written consent with respect thereto, which consent may be given or withheld in Agent’s sole


5


discretion, any other Investments (including Acquisitions) other than Investments in Desso Masland Hospitality and Dixie Shanghai,

(n)    [Reserved]

(o)    Investments of the Borrowers in Desso Masland Hospitality so long as (i) such Investments do not exceed $500,000 in the aggregate, (ii) such Investments are made within 12 months following the Ninth Amendment Effective Date, (iii) Borrowers provide at least 10 Business Days’ prior written notice to Agent of each such Investment, and (iv) Agent has given its prior written consent to such Investments, which consent may be given or withheld in Agent’s sole discretion.

3.11.    Permitted Liens Definition. Schedule 1.1 of the Credit Agreement is hereby amended by inserting “and” immediately after clause (r), replacing the “and” after clause (s) with a “.”, and deleting clause (t) in its entirety.

3.12.    Susan Street Real Property Availability Amount Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating the definition of “Susan Street Real Property Availability Amount” in its entirety as follows:
Susan Street Real Property Availability Amount” means (a) as to any period ended on or before October 31, 2019, the lesser of (i) $20,250,000, and (ii) 75% of the fair market value (as determined on the basis of a 12-month sale period) of Borrowers’ Susan Street Real Property set forth in an appraisal of such Eligible Real Property conducted by an appraisal company selected by Agent, as such lesser amount is reduced on a monthly basis by $112,500.00 on the first day of each calendar month from and after October 1, 2016, and (b) as to any period ended after October 31, 2019, $0. In no event shall any increase in the appraised value of Borrowers’ Susan Street Real Property, as set forth in any appraisal obtained after the Tenth Amendment Effective Date, be taken into account in the calculation of the Fixed Asset Availability Amount.

3.13.    Susan Street Term Loan Lender Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating the definition of “Susan Street Term Loan Lender” in its entirety as follows:

Susan Street Term Loan Lender” means Wells Fargo and its successor and assigns.

3.14.    Trigger Level Definition. Schedule 1.1 of the Credit Agreement is hereby amended by restating the definition of “Trigger Level” in its entirety as follows:
Trigger Level” means $15,000,000.
3.15.    Amendment to Schedule C-1. Schedule C-1 of the Credit Agreement is hereby amended and restated in its entirety in the form of Schedule C-1 attached hereto.

3.16.    Amendment to Section 2.1. Section 2.1(c) of the Credit Agreement is hereby amended by restating clause (iii) thereof in its entirety as follows:



6


(iii)    without duplication of any reduction in the Fixed Asset Availability Amount, reserves with respect to downward adjustments (as reflected in an updated appraisal received by Agent in accordance with the terms hereof) in the appraised value of Eligible Real Property or Eligible M&E,

3.17.    Amendment to Section 2.11. Section 2.11(a) of the Credit Agreement is hereby amended by restating clause (ii) thereof in its entirety as follows:
(ii)    the Letter of Credit Usage would exceed $8,500,000, or
3.18.    Amendment to Section 6.9. Section 6.9 of the Credit Agreement is hereby amended and restated in its entirety as follows:

6.9    Restricted Junior Payments. Make any Restricted Junior Payment; provided, however, that, so long as it is permitted by law, Borrowers may make the following Restricted Junior Payments:

(a)    Administrative Borrower may make Restricted Junior Payments (other than Tax Restricted Junior Payments (as define below)) not to exceed $6,000,000 in the aggregate after the Thirteenth Amendment Effective Date so long as

(i)    all such Restricted Junior Payments have been made on or before March 31, 2020;

(ii)    no Default or Event of Default shall have occurred and be continuing or would result from any such Restricted Junior Payment; and

(iii)    the Payment Conditions shall have been satisfied with respect to each such Restricted Junior Payment.

(b)    So long as no Default or Event of Default shall have occurred and be continuing or would result therefrom, Borrowers may make Restricted Junior Payments consisting of Tax Distributions to Borrowers’ employees.

3.19.    Amendment to Section 17. Section 17 of the Credit Agreement is hereby amended by including the following new Section 17.15 in appropriate numerical order:
17.15    Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any Hedge Agreement or any other agreement or instrument that is a QFC (such support, “QFC Credit Support”, and each such QFC, a “Supported QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be


7


governed by the laws of the State of New York and/or of the United States or any other state of the United States):

(a)    In the event a Covered Entity that is party to a Supported QFC (each, a “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.

(b)    As used in this Section 17.15, the following terms have the following meanings:
BHC Act Affiliate” of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a “covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
Default Right” has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
QFC” has the meaning assigned to the term “qualified financial contract” in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).

IV.        AGREEMENT REGARDING CASH DOMINION.


8


Borrowers hereby acknowledge and agree that notwithstanding anything to the contrary set forth in the Security Agreement or any of the other Loan Documents, (a) Agent is entitled to provide an Activation Instruction (as defined in the Security Agreement) as to each Controlled Account, (b) any Activation Instruction provided by Agent before the date hereof was valid and is hereby approved by each Borrower, (c) Agent shall not be required to provide any Rescission (as defined in the Security Agreement) with respect to any Activation Instruction provided notwithstanding any satisfaction of the conditions set forth in the Security Agreement regarding the Agent’s agreement to so provide any Rescission, and (d) Borrowers shall take any and all other actions reasonably requested by Agent to ensure that Agent has and/or retains dominion with respect to each of Borrowers’ bank accounts.

V.        CONDITIONS PRECEDENT.

This Agreement shall become effective as of the date hereof, subject to the following conditions precedent having been satisfied or waived by Agent:

5.1.    Execution of Agreement. Agent shall have received fully executed counterparts of this Agreement, duly authorized, executed and delivered by each Borrower, Agent, and each Lender, and acknowledged by each Guarantor.

5.2.    Consummation of the Sale Leaseback. The Sale Leaseback transaction shall have been fully consummated and 100% of the Net Cash Proceeds of the Sale Leaseback shall have been paid to Agent for application to the Obligations in accordance with Section 2.4(f) of the Credit Agreement.
5.3.    Accuracy of Representations and Warranties. Each of the representations and warranties of the Borrowers set forth in Section 4 of the Credit Agreement shall be true and correct in all material respects (except that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof).

5.4.    Other Documents. Agent shall have received such other agreements, documents, instruments, officer’s certificates, and information executed and/or delivered by the Loan Parties as Agent may reasonably request.

5.5.    No Default or Event of Default. No Default or Event of Default shall have occurred and be continuing.

VI.        MISCELLANEOUS.

6.1.    No Additional Obligations. The Borrowers acknowledge and agree that the execution, delivery and performance of this Agreement shall not create (nor shall the Borrowers rely upon the existence of or claim or assert that there exists) any obligation of any of Agent or Lenders to consider or agree to any other amendment of or waiver or consent with respect to the Credit Agreement or any other instrument or agreement to which Agent or any Lender is a party (collectively, an “Additional Amendment” or “Consent”), and in the event that Agent and the Lenders subsequently agree to consider any requested Additional Amendment or Consent, neither the existence of this Agreement nor any other conduct of Agent or the Lenders related hereto, shall be of any force or effect on the Lenders’ consideration or decision with respect to any such requested Additional Amendment or Consent, and the Lenders shall not have any obligation whatsoever to consider or agree to any such Additional Amendment or Consent.



9


6.2.    Acknowledgments and Stipulations. In order to induce Agent and Lenders to enter into this Agreement, each Borrower acknowledges, stipulates and agrees that (a) the Loan Documents executed by each Borrower are legal, valid and binding obligations of such Borrower enforceable against such Borrower in accordance with their respective terms, except as enforcement may be limited by equitable principles or by bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or limiting creditors’ rights generally; (b) the Liens granted by each Borrower to Agent in the Collateral are valid and duly perfected, first priority Liens, subject only to Permitted Liens; (c) each of the recitals contained at the beginning of this Agreement is true and correct; and (d) prior to executing this Agreement, each Borrower consulted with and had the benefit of advice of legal counsel of its own selection and has relied upon the advice of such counsel, and in no part upon the representation of Agent, any Lender or any counsel to Agent or any Lender concerning the legal effects of this Agreement or any provision hereof.

6.3.    Additional Representations and Warranties of the Borrowers. Each Borrower hereby represents and warrants that on the date hereof and after giving effect to the amendments and waivers contained herein: (a) the representations and warranties contained in Section 4 of the Credit Agreement shall be correct in all material respects on and as of such date as though made on and as of such date, and (b) no Default or Event of Default exists under the Credit Agreement on and as of such date. Without limitation of the preceding sentence, each Borrower hereby expressly re-affirms the validity, effectiveness and enforceability of each Loan Document to which it is a party (in each case, as the same may be modified by the terms of this Agreement).

6.4.    Effect of this Agreement. Except as expressly amended pursuant hereto, no other changes or modifications to the Credit Agreement or any of the other Loan Documents are intended or implied, and in all other respects, the Credit Agreement and each of the other Loan Documents is hereby specifically ratified, restated and confirmed by all parties hereto as of the date hereof. To the extent that any provision of the Credit Agreement or any of the other Loan Documents is inconsistent with the provisions of this Agreement, the provisions of this Agreement shall control. All references in the Credit Agreement (including without limitation the Schedules thereto) to the “Agreement” and all references in the other Loan Documents to the “Credit Agreement” shall be deemed to refer to the Credit Agreement, as amended hereby.

6.5.    Further Assurances. The Loan Parties shall execute and deliver such additional documents and take such additional action as may be reasonably requested by Agent to effectuate the provisions and purposes hereof.

6.6.    Governing Law. THE VALIDITY OF THIS AGREEMENT, THE CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF, THE RIGHTS OF THE PARTIES HERETO WITH RESPECT TO ALL MATTERS ARISING HEREUNDER OR RELATED HERETO, AND ANY CLAIMS, CONTROVERSIES OR DISPUTES ARISING HEREUNDER OR RELATED HERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF GEORGIA.

6.7.    Binding Effect. This Agreement shall bind and inure to the benefit of the respective successors and permitted assigns of each of the parties hereto.

6.8.    Counterparts; Electronic Execution. This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the same agreement. Delivery of an executed counterpart of this Agreement by telefacsimile or other electronic


10


method of transmission shall be equally as effective as delivery of an original executed counterpart of this Agreement. Any party delivering an executed counterpart of this Agreement by telefacsimile or other electronic method of transmission also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.

[Continued on following page.]



11



Each of the parties hereto has caused a counterpart of this Agreement to be duly executed and delivered as of the date first above written.

BORROWERS:
THE DIXIE GROUP, INC.

By:
Name: Jon A. Faulkner 
Title: VP/CFO

 
CANDLEWICK YARNS, LLC

By:
Name: Jon A. Faulkner 
Title: President

 
TDG OPERATIONS, LLC

By:
Name: Jon A. Faulkner 
Title: President



[DIXIE—CONSENT AND THIRTEENTH AMENDMENT TO CREDIT AGREEMENT]




AGENT AND LENDERS:
WELLS FARGO CAPITAL FINANCE, LLC,
as Agent and as a Lender

By:
Name: Zachary S. Buchanan
Title: Authorized Signatory


[DIXIE—CONSENT AND THIRTEENTH AMENDMENT TO CREDIT AGREEMENT]




 
BANK OF AMERICA, N.A.,
as a Lender

By:
Name: Todd Tarrance
Title: Vice President

   

 
 
 

 
 


[DIXIE—CONSENT AND THIRTEENTH AMENDMENT TO CREDIT AGREEMENT]



EXHIBIT A
SALE LEASEBACK AGREEMENT
[SEE ATTACHED.]





SCHEDULE C-1
COMMITMENTS
Lender
Amount
Wells Fargo Capital Finance, LLC
$60,000,000
Bank of America, N.A.
$60,000,000




Exhibit
10.2

PURCHASE AND SALE AGREEMENT
THIS PURCHASE AND SALE AGREEMENT ("Agreement") is made and entered into as of this ___ day of September, 2019 (the "Effective Date") by and between CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust ("Purchaser") and THE DIXIE GROUP, INC., a Tennessee corporation, and its wholly-owned subsidiary, TDG Operations, LLC, a Georgia limited liability company (collectively and jointly and severally, "Seller").
R E C I T A L S
A.Seller currently owns fee simple title to approximately 10 acres of certain real estate located in Santa Ana, California, legally described in Exhibit "A" attached to this Agreement ("Land").
B.    Purchaser desires to purchase from Seller and Seller desires to sell to Purchaser the Project (as hereinafter defined) in accordance with the terms and conditions hereinafter set forth.
C.    Purchaser and Seller have entered into that certain License and Exclusivity Agreement (the "Exclusivity Agreement"), dated August 7, 2019.
NOW, THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth, and of Purchaser's agreement to use due diligence in its inspection and review during the Inspection Period (as hereinafter defined), the receipt and sufficiency of which are hereby acknowledged by the parties hereto, the parties hereby agree as follows:
1.Agreement to Purchase. Subject to the terms and conditions of this Agreement and the above recitals which are by this reference incorporated into this Agreement, Seller agrees to sell to Purchaser and Purchaser agrees to purchase from Seller all of the following described property (collectively, "Project"):
A.    The Land and all rights, privileges, easements and appurtenances to the Land owned by Seller, including, without limitation, all mineral rights, easements, rights-of-way, gas and hydrocarbons, and other appurtenances used or connected with the beneficial use or enjoyment of the Land; and all right, title and interest of Seller in and to all streets, water courses or water bodies adjacent to, abutting or serving the Land.
B.    That certain building located upon the Land and containing approximately 204,000 square feet of net rentable interior floor area and identified with the common street address of 3201 S. Susan Street, Santa Ana, California, and all other improvements, structures, elevators, fixtures, parking areas and other improvements of any kind or nature whatsoever now or hereafter located on the Land (collectively, "Building") (the Land and Building are sometimes collectively, the "Real Property").
C.    All equipment, apparatus, machinery, cranes, appliances, furnishings, signs, site plans, surveys, soil and substrata studies, architectural renderings, plans and specifications, engineering plans and studies, floor plans and other plans or studies of any kind, and personal and tangible property owned by Seller and used exclusively in the base operation and ownership of the Building or the Land (collectively, "Personal Property"), but excluding all equipment, vehicles, trade fixtures, computers, software, boilers, tank tower (exclusive of its foundation below grade), and appurtenances thereto used by Seller in the operation of its carpet manufacturing business at the Project (the "Excluded Personal Property").
D.    All intangible property now or hereafter owned, controlled or held by Seller between the Effective Date and the Closing (as hereinafter defined), solely in connection with the Building

992507_9


and the Personal Property, including without limitation: (i) all guaranties and warranties, including guaranties and warranties pertaining to construction of the Building (collectively, "Warranties"); (ii) all air rights, excess floor area rights and other development rights relating or appurtenant to the Land or the Building; (iii) all rights to obtain utility service in connection with the Building and the Land; (iv) assignable licenses and other governmental permits and permissions relating to the Land, the Building, and the operation thereof (collectively, "Permits"); and (v) all contracts and contract rights identified on Exhibit "B" attached to this Agreement (collectively, "Project Contracts"), which are Assumed Contracts (as hereinafter defined) (all of the foregoing are collectively, "Intangible Property").
2.    Purchase Price. Subject to prorations and credits as provided in this Agreement, the Purchase Price ("Purchase Price") for the Project shall be THIRTY-SEVEN MILLION ONE HUNDRED NINETY-FIVE THOUSAND FOUR HUNDRED SIX AND NO/100 DOLLARS ($37,195,406.00), which shall be payable and allocated as follows:
A.    Earnest Money. Purchaser shall deliver to Chicago Title and Trust Company ("Title Company") the sum of FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($500,000.00) as earnest money (the "Initial Earnest Money") within five (5) days after the full execution and delivery of this Agreement. In the event Purchaser does not exercise its right of termination pursuant to Section 7D herein, then, within one business day following the expiration of the Inspection Period (as herein defined and as may be extended pursuant to Section 7A herein), Purchaser shall deliver to Title Company the sum of THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($300,000.00) as additional earnest money ("Additional Earnest Money" and collectively with the Initial Earnest Money including any and all interest accrued thereon, the "Earnest Money"). The Earnest Money shall be held in a joint order escrow to be entered into between Seller and Purchaser with the Title Company in the form of Exhibit "C" attached to this Agreement and shall be invested for Purchaser's benefit and all income earned thereon shall be paid to Purchaser. The Earnest Money shall be applied toward the Purchase Price at Closing. One Hundred Dollars ($100) of the Earnest Money shall be released by Title Company to Seller on the first business day following the deposit thereof by Purchaser, in payment of consideration by Purchaser to Seller for the right of Purchaser to purchase the Property in accordance with the terms of this Agreement (the "Non-Refundable Payment"). The Non-Refundable Payment shall be fully earned and retained by Seller immediately upon receipt and, notwithstanding any provisions of this Agreement to the contrary, the Non-Refundable Payment shall not be returned to Purchaser in any circumstance except if Closing fails to occur solely due to a material default by Seller under this Agreement. On the Closing Date, the amount of the Non-Refundable Payment, without interest, shall be applied to the Purchase Price. From and after the release of the Non-Refundable Payment to Seller, the Earnest Money shall mean and refer to the remaining Earnest Money amount then held by Title Company (and any payment or refund of the Earnest Money to be made pursuant to this Agreement shall not include such Non-Refundable Payment). Purchaser acknowledges that Seller would not have entered into this Agreement had Purchaser not made the bargained for Non-Refundable Payment to Seller on the terms set forth in this Section.
B.    Balance. On or before the Closing Date (as hereinafter defined), Purchaser shall deposit with the Title Company the balance of the Purchase Price, in cash, or by certified or cashier's check or Federal wire transfer, together with such additional funds for Purchaser's share of closing costs and prorations as may be required pursuant to this Agreement.

992507_9    2


3.    Closing. Subject to the terms and conditions contained in this Agreement, the consummation of the transactions contemplated in this Agreement ("Closing") shall take place on or before October 25, 2019 (the "Closing Date"). The transactions contemplated by this Agreement shall be closed through an escrow with the Title Company in Chicago, Illinois on the Closing Date, in accordance with the general provisions of the usual form of Escrow Agreement then in use by Title Company, with such special provisions inserted in such escrow agreement as may be required to conform with this Agreement ("Escrow"). Notwithstanding anything to the contrary in this Agreement, upon the creation of the Escrow, payment of the Purchase Price and delivery of the Deed (as hereinafter defined) and other documents to be delivered pursuant to Section 6 of this Agreement, shall be made through the Escrow. Seller and Purchaser shall execute gap undertakings in the form required by the Title Company if required by the Title Company.
4.    Documents to be Delivered by Seller Immediately. Seller hereby certifies to Purchaser that Seller has, on or before full execution and delivery of this Agreement, delivered to Purchaser, true and correct copies of all of the following pertaining to the Project within the possession or control of Seller:
A.    Certificates of occupancy and other necessary governmental licenses or approvals.
B.    "As-built" plans and specifications for the Building and any modifications or amendments thereto, and copies of any reports or studies (including engineering, soil boring and physical inspection reports of employees, principals, consultants, governmental authorities or insurance carriers) in Seller's possession or control in respect of the physical condition or operation of the Project or recommended improvements thereto.
C.    The bill or bills issued for the three (3) most recent years for which bills have been issued for all real estate taxes and personal property taxes and a copy of any and all notices pertaining to real estate taxes or assessments. If any taxes or assessments for said years have been appealed, Seller shall provide Purchaser with copies of all petitions for appeal and evidence of full payment of the cost of any such appeals including the full payment of attorneys' fees and costs.
D.    All insurance policies (or certificates thereof) carried by Seller together with copies of all claims and settlements on insurance policies within the past three (3) years.
E.    All Project Contracts, or if no such Project Contracts exist, Seller's written certification thereof.
F.    A schedule listing all Personal Property.
G.    Accounting books and records including financial statements of operations (the "Financial Statements") prepared by a certified public accountant for Seller for the years 2017 and 2018, as well as year-to-date operating statements for the Seller.
H.    A schedule listing all Excluded Personal Property.
I.    All guaranties, warranties and other documents or instruments evidencing or relating to the Building or Personal Property.
J.    All contracts for construction, repair or capital replacement to be performed at the Project or covering such work performed during the two (2) years immediately preceding the Effective Date.

992507_9    3


K.    A list of lawsuits, if any, pertaining to the Project, or if there are none, a written certification from Seller that there are no such lawsuits.
L.    A list of all employees of Seller engaged exclusively in the operation and maintenance of the Project, or if there are none, a written certification from Seller that there are no such employees.
M.    All other studies, reports, maps and documents related to the Project that are reasonably available to Seller, including without limitation, engineering reports, surveys, environmental reports, traffic circulation, operating methods, flood control and drainage plans, design renderings, shop drawings, feasibility studies, documents relating to any special use, conforming use or zoning variance and all correspondence with governmental agencies and their personnel concerning the same, but excluding market analyses.
N.    A Property disclosure report ("Disclosure Report") containing the natural hazard disclosures, if any, which may be required to be made by Seller under California Public Resources Code Section 2621.9(a) (Earthquake Fault Zone), California Public Resources Code Section 2694(a) (Seismic Hazard Zone), California Government Code Section 8589.3(a) (Special Flood Hazard Area), Public Resources Code §4291, Government Code §51178 et seq. §51183.5 (Fire Hazard), California Health and Safety Code §19211 (Water Heaters), Health and Safety Code §26140, et seq. (Mold) or Federal law, i.e. 42 U.S.C. §5154a or California Government Code Section 8589.4(a) (Area of Potential Flooding).
5.    Title and Survey.
A.    Conditions of Title. On the Closing Date, good and marketable fee simple title to the Real Property shall be conveyed by Seller to Purchaser or its nominee by a grant deed ("Deed"), subject only to the Permitted Exceptions (as hereinafter defined), in the form of Exhibit "J" attached hereto and made a part hereof.
B.    Title.
(i)    Title Insurance Commitment. On or before the date that is fifteen (15) days after the Effective Date, Seller shall deliver to Purchaser: (a) a commitment (the "Commitment") for an Owner's Policy of Title Insurance issued by the Title Company showing title to the Real Property in Seller, and (b) legible copies of all documents cited, raised as exceptions or noted in the Commitment (collectively, the "Title Documents").
(ii)    Title Review. Purchaser shall have until the date (the "Title Review Deadline") that is the later of (a) the last day of the Inspection Period (as hereinafter defined) or (b) the seventh (7th) business days after the latest of Purchaser's receipt of the Commitment, the Title Documents and the Survey (as hereinafter defined) to notify Seller in writing of any objections to any exception, item or issue in the Commitment, the Title Documents and/or any matters shown on the Survey, including, without limitation, any of the Exhibit D Exceptions (as herein defined) (collectively, the "Objectionable Exceptions"). Seller shall: (1) utilize good faith, commercially reasonable efforts to cure or insure over any Objectionable Exceptions on or before the date ("Title Cure Date") that is the later of (i) five (5) business days after the Title Review Deadline or (ii) the last day of the Inspection Period and (2) agree with Purchaser, on or before the Title Cure Date as to any Objectionable Exceptions which will be removed prior to Closing ("Removable

992507_9    4


Exceptions"), provided, however, Seller shall have no obligation to agree to cure any of the Exhibit D Exceptions. Seller shall remove all Removable Exceptions prior to Closing. If Seller fails to cure any of the Objectionable Exceptions on or before the Title Cure Date, or if Seller fails to agree with Purchaser, on or before the Title Cure Date, as to any Removable Exceptions, Purchaser shall have the right, in its sole discretion, to either: (A) terminate this Agreement by written notice to Seller on or before the Closing, in which event the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement; or (B) consummate the transaction contemplated by this Agreement in accordance with the terms of this Agreement, in which event, subject to Section 5.B.(iii) and Section 5.B.(iv) of this Agreement, all exceptions to title listed on Schedule B of the Commitment as of the expiration of the Title Review Deadline shall be deemed to constitute Permitted Exceptions.
(iii)    Monetary Liens. Notwithstanding anything to the contrary contained in Section 5B.(ii) above, Seller shall be required to discharge all mortgages, real estate taxes, assessments and other governmental levies, fees or charges imposed on the Land, all judgment liens, all mechanics' liens and similar liens for labor, materials or supplies, and other such monetary liens that may be removed solely through the payment of money prior to Closing (collectively, the "Monetary Liens"), and such matters shall be deemed Objectionable Exceptions, whether or not included in Purchaser's Objection Notice. If, at or prior to Closing, Seller fails to cure all Monetary Liens, in addition to all other remedies available to Purchaser under this Agreement, Purchaser shall have the right to proceed to Closing and deduct from the Purchase Price the amount necessary to cure such Monetary Liens.
(iv)    Unpermitted Exceptions. If an exception to title or other title defect other than a Permitted Exception is added to the Commitment after the Effective Date but prior to the Closing Date and/or if any matter is added to the Survey (each, an "Unpermitted Exceptions"), then, prior to the Closing Date, Seller shall be affirmatively obligated to cure any such Unpermitted Exception the failure of which shall constitute a default by Seller under this Agreement.
C.    Title Policy. On the Closing Date, Seller shall cause Title Company to issue to Purchaser an ALTA 2006 Owner's Policy of Title Insurance ("Title Policy") or irrevocable commitment to issue same covering the Project in the amount of the Purchase Price, showing fee simple title vested in Purchaser, with extended coverage over all general exceptions and containing the following endorsements: (i) an ALTA 3.1 zoning endorsement with parking, (ii) an access endorsement, (iii) a subdivision endorsement, (iv) a utility facility endorsement, (v) a restrictions endorsement insuring over removal of the Building for violation of the recorded covenants, conditions or restrictions of record, (vi) an endorsement insuring that the real estate tax bills relating to the Real Property do not include real estate taxes pertaining to any other real estate, (vii) a contiguity endorsement, if applicable, (viii) a CLTA 100.29 endorsement, if applicable, (ix) a CLTA 103.5 endorsement, if applicable, (x) encroachment endorsements, if applicable, and (xi) any other endorsement requested by Purchaser; and subject only to: (a) general taxes not yet due or payable, (b) any matters listed on Exhibit "D" attached to this Agreement (the "Exhibit D Exceptions"), (c) rights of Seller, as Tenant only, under the Leaseback (as herein defined) (d) matters created by, through or under Purchaser and (e) the standard printed exceptions (collectively, the "Permitted Exceptions").

992507_9    5


D.    Survey. On or before the date that is thirty (30) days after the Effective Date, Seller shall deliver to Purchaser a survey dated after the Effective Date, prepared by a land surveyor licensed in California and certified to have been prepared in accordance with the most recent ALTA Land Survey Standards for urban properties (and containing Table A, Nos. 1, 2, 3, 4, 6, 7(a), 7(b), 7(c), 8, 9, 10, 11, 13, 14, 15, 16 and 20(a)) for the benefit of Purchaser, Purchaser's lender as identified by Purchaser, if any, and the Title Company ("Survey"). The Survey shall show the location of the Building on the Real Property to be within its lot and setback lines and that the Building does not encroach upon any easements, that there are no encroachments of buildings or other improvements from adjoining properties, and the location of all easements affecting the Real Property. The Survey shall also state the legal description of the Land, the square footage of the Land and Building, the number and location of all legal parking spaces on the Land, and shall further state whether the Land is located in an area designated by an agency of the United States as being subject to flood hazards or flood risks.
6.    Documents to be Delivered by Seller at Closing.
A.    Seller's Closing Documents. Seller shall deliver to the Title Company, pursuant to the Escrow, on or before the Closing Date, the following documents, all of which shall be subject to Purchaser's prior review and approval as to form, scope and substance, the delivery of all of which shall be a specific condition to Closing:
(i)    The Deed;
(ii)    All documents required by the Title Company in order to issue the Title Policy;
(iii)    A bill of sale executed by Seller in the form of Exhibit "E" attached to this Agreement, covering the Personal Property;
(iv)    An original executed assignment and assumption of all Project Contracts which Purchaser elects, by written notice to Seller given prior to the Closing Date, to assume (collectively, the "Assumed Contracts"), in the form of Exhibit "F" attached to this Agreement ("Assignment of Contracts");
(v)    A fully-executed copy of an amendment to the existing lease between Seller and Cook Son (the "Cook Son Lease"), relating to use of a portion of the Land for storage of equipment converting such lease into a sublease, in form and substance reasonably acceptable to Purchaser and Seller; which includes restoration language acceptable to Purchaser and a provision whereby Cook Son acknowledges and agrees that the Cook Son Lease shall terminate, at Purchaser’s election, upon the expiration or earlier termination of the Leaseback (as herein defined);
(vi)    A non‑foreign certificate in accordance with the provisions of Section 20 of this Agreement;
(vii)    All insurance certificates required from Seller as tenant under the Leaseback;

992507_9    6


(viii)    A certificate from Seller in the form of Exhibit "G" attached to this Agreement stating that the representations and warranties set forth in Section 8 are true and correct as of the Closing Date;
(ix)    An original executed assignment of the Intangible Property (other than the Assumed Contracts) in the form of Exhibit "H" attached to this Agreement ("Assignment of Intangible Property");
(x)    A certificate of Seller, in the form of Exhibit "I" attached to this Agreement, certifying to Purchaser: (a) a copy of all keys to the Project, (b) originals or certified copies of the Assumed Contracts, and (c) copies of all Intangible Property were delivered to Purchaser on or before the Closing Date;
(xi)    An ALTA closing statement or California equivalent;
(xii)    A personal "GAP" undertaking of Seller;
(xiii)    Such proof of Seller's authority and authorization to enter into this Agreement and perform Seller's obligations under this Agreement as may be reasonably required by Title Company;
(xiv)    Estoppel certificates from (a) Seller and (b) all other parties to any reciprocal easement agreement benefiting or burdening the Real Property, to the extent required by the reciprocal easement agreement;
(xv)    An estoppel certificate from Seller and any owners' association with respect to any declaration of covenants, conditions and restrictions benefiting or burdening the Real Property;
(xvi)    A statement of documentary transfer tax due;
(xvii)    A Guaranty of Payment and Performance of Lease Obligations executed by The Dixie Group, Inc., a Tennessee corporation, one of the Sellers, in the form of Exhibit "L" attached to this Agreement; and
(xviii)    Such other documents as Purchaser may reasonably request to enable Purchaser to consummate the transaction contemplated by this Agreement; provided none of said additional documents imposes any cost or obligation upon Seller not otherwise specifically imposed upon Seller pursuant to the terms of this Agreement.
B.    Purchaser's Closing Documents. Purchaser shall deliver to the Title Company pursuant to the Escrow, on or before the Closing Date, the following monies and documents, the delivery of all of which shall constitute a specific condition to Closing.
(i)    The balance of the Purchase Price, plus or minus prorations, plus Purchaser's share of Closing costs pursuant to the terms of this Agreement;
(ii)    An original executed counterpart of the Assignment of Contracts;
(iii)    An original executed counterpart of the Assignment of Intangible Property;

992507_9    7


(iv)    Proof of Purchaser's authority and authorization to enter into this Agreement and perform Purchaser's obligations under this Agreement as may be reasonably required by Title Company; and
(v)    Such other documents as Seller may reasonably request to enable Seller to consummate the transaction contemplated by this Agreement, provided none of said additional documents impose any cost or obligation upon Purchaser not otherwise specifically imposed upon Purchaser pursuant to the terms of this Agreement.
C.    Joint Closing Documents. Each of Seller and Purchaser shall deliver to the Title Company, pursuant to the Escrow, and the parties hereby covenant and agree to deliver to the Title Company on or before the Closing Date, the mutual delivery of which shall be a specific condition to Closing:
(i)    Three (3) copies of a closing statement, prepared in strict accordance with Section 11 of this Agreement;
(ii)    To the extent required, State, County and Municipal transfer tax declarations;
(iii)    A joint direction to the Title Company to deposit the Earnest Money into the Escrow; and
(iv)    Two counterparts of the Lease ("Leaseback") in substantially the form attached to this Agreement as Exhibit "K". The parties agree to use commercially reasonable efforts to negotiate the remaining items marked "Open Issue" in Exhibit K during the Inspection Period and upon completion of the negotiation of the final form of Leaseback, the parties agree to amend this Agreement to attach the final form of Leaseback as Exhibit K. Notwithstanding the foregoing, the Leaseback shall have the following terms: (i) the term of the Leaseback shall be from the Closing Date for ten (10) years, with two 5-year renewal options at market rent, and shall be for the entire Real Property; (ii) the initial monthly base rent shall be $173,568.25 monthly on a triple net basis, with annual increases of 2%, and with each renewal term at then-market rates; and (iii) the security deposit shall be in the form of a letter of credit in the amount of $654,500.
7.    Inspection Period.
A.    Inspection Period. For purposes of this Agreement, "Inspection Period" means the period beginning on the Effective Date and ending on October 25, 2019.
B.    Basic Project Inspection. At all times prior to the Closing, including the Inspection Period and the period after the end of the Inspection Period and before Closing, Purchaser, its agents and representatives shall be entitled to inspect the Project (the "Basic Project Inspection"), which will include, but shall not be limited to, the right to: (i) enter upon the Real Property to perform inspections and tests of the Project, including the inspection, evaluation and testing of: the heating, ventilation and air-conditioning systems and all components thereof, the roof of the Building, the parking lots, all structural and mechanical systems within the Building, including the sprinkler systems, power lines and panels, air lines and compressors, automatic doors, tanks, pumps and plumbing, and all equipment, vehicles, and Personal Property; (ii) examine and copy any and all books, records, tax returns, correspondence, financial data, and all other contracts, agreements,

992507_9    8


documents and matters, public or private, in the possession or control of Seller or its agents and relating to receipts and expenditures pertaining to the Project for the past three (3) most recent full calendar years and the current calendar year to-date; (iii)make investigations with regard to zoning, environmental, building, code and other legal requirements including an environmental "Assessment" as specified in Section 7.C of this Agreement and/or an analysis of the presence of any asbestos, chlordane, formaldehyde or other Hazardous Materials (as hereinafter defined) in, under or upon the Project; (iv) make or obtain market studies and real estate tax analyses; and (v) analyze the financial feasibility of ownership of the Project.
C.    Assessment. During the Inspection Period, Purchaser and/or Purchaser's agent(s) shall have the right to employ one or more environmental consultants or other professionals to perform or complete a so-called "Phase I" and/or "Phase II" environmental inspection and assessment (each, an "Assessment") of the Project, and Seller hereby acknowledges and consents to such Assessment, including approval of boring in the dye house area and the former railroad spur area. Any additional invasive testing will require prior written approval of Seller. Purchaser, its agents, consultants and/or professionals shall also have the right to undertake or complete a technical review of all documentation, reports, plans, studies and information in possession or control of Seller, or Seller's past or present environmental consultants, concerning or in any way related to the environmental condition of the Project. In order to facilitate the Assessment(s) and such technical review, Seller shall extend its full cooperation (but without third party expense to Seller) to Purchaser, its agents, consultants and professionals, which cooperation shall include providing access to all files and fully and completely answering all questions. Any Assessment may evaluate the present and past uses of the Project, and the presence on, in or under the Land (and on, in or under land sufficiently proximate to the Project) of any Hazardous Materials.
D.    Purchaser's Right to Terminate. Purchaser acknowledges that it has completed its due diligence review of the Property, except for a limited Phase II environmental investigation of the soil beneath the dyehouse portion of the Property and in the prior railroad spur portion of the Property. Purchaser shall have the right to terminate this Agreement prior to the end of the Inspection Period if the results of such Phase II investigation are not acceptable to Purchaser, in its reasonable discretion, or if Purchaser’s investment committee does not approve the purchase contemplated hereunder, by written notice to Seller on or before the last day of the Inspection Period. In such event, the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement.
E.    Seller's Acknowledgement. Seller acknowledges and agrees that Purchaser will expend material sums of money in reliance on Seller's obligations under this Agreement, in connection with negotiating and executing this Agreement, furnishing the Earnest Money, conducting the inspections contemplated by this Section 7 and preparing for Closing, and that Purchaser would not have entered into this Agreement without the availability of the Inspection Period. The parties therefore agree that adequate consideration exists to support Seller's obligations under this Agreement, even before expiration of the Inspection Period. Notwithstanding anything to the contrary in this Agreement, the effect of any representations, warranties or undertakings made by Seller in this Agreement shall not be diminished, abrogated, or compromised by the Basic Project Inspection or any Assessment or other inspections, tests or investigations made by Purchaser.
F.    Duty to Repair; Indemnification. Purchaser hereby covenants and agrees that it shall cause all studies, investigations and inspections (including without limitation any Assessment)

992507_9    9


performed at the Project pursuant to this Section 7 to be performed in a manner that does not unreasonably disturb or disrupt the business operations of any occupants of the Project. If, as a result of Purchaser's exercise of its rights under Section 7, any damage occurs to the Project, then Purchaser shall promptly repair such damage, at Purchaser's sole cost and expense, so as to return the Project to substantially the same condition. Purchaser hereby indemnifies, protects, defends and holds Seller harmless from and against any and all losses, damages, causes of action, judgments, damages, costs and expenses that Seller actually suffers or incurs as a direct result of any damage caused at, to, in, or at the Project by the acts or omissions of Purchaser or its agents, consultants or professionals pursuant to this Section 7.
8.    Representations and Warranties of Seller.
A.    Seller's Representations and Warranties. In order to induce Purchaser to enter into this Agreement, Seller hereby represents and warrants to Purchaser as follows, and all of the foregoing and following representations and warranties shall be true and correct as of the Closing Date (and the truth and accuracy of which shall constitute a condition to the disbursement of the Purchase Price in accordance with the terms of the Escrow and this Agreement):
(i)    Seller is not a party to any contract, agreement or commitment to sell, convey, assign, transfer, provide rights of first refusal or other similar rights or otherwise dispose of any portion or portions of the Project other than the existing lease with Cook Son a copy of which has been provided to Purchaser. Neither Seller nor any person or entity claiming by, through or under Seller has or will have, at any time or times prior to the Closing, done or suffered anything whereby any lien, encumbrance, claim or right of others has been or will be created on or against the Project or any part thereof or interest therein, except for the Permitted Exceptions.
(ii)    As of Closing, except as created by this Agreement, there will be no obligations or liabilities of any kind or nature whatsoever, actual or contingent, including without limitation any tax liabilities, contract liabilities or tort liabilities for which or to which Purchaser or the Project will be liable or subject, except for non-delinquent obligations and liabilities accrued and thereafter accruing under the Permitted Exceptions.
(iii)    This Agreement has been duly authorized and executed on behalf of Seller and constitutes a valid and binding agreement, enforceable in accordance with its terms. Seller has obtained or will obtain prior to Closing all consents, releases and permissions and given all required notifications, including without limitation compliance with any applicable Bulk Sales Act, related to the transactions contemplated in this Agreement and required under any Applicable Law (as hereinafter defined) or required by any covenant or agreement to which Seller is a party or by which Seller is bound.
(iv)    The Project has adequate water supply, storm and sanitary sewage facilities, telephone, gas, electricity, fire protection, means of ingress and egress to and from public highways and, without limitation, other required public utilities. All streets and roads necessary for access to or full utilization of the Project or any part thereof have been completed and are public streets. No additional easements (other than those presently in effect and included in the Permitted Exceptions) are required for such access and utilization or in connection with any utilities. To the best of Seller's knowledge, no fact, condition or proceeding exists which would result in the termination or impairment of the furnishing of

992507_9    10


or an increase in rates for services to the Project of water, sewer, gas, electric, telephone, drainage and other such utility services. To Seller's knowledge, the facilities servicing the Project are in compliance with all Applicable Law.
(v)    To Seller's knowledge, the Building is being operated by Seller in accordance with all applicable federal, state, local and municipal laws, ordinances, rules, regulations, codes, licenses, permits, authorizations and orders, including without limitation all laws, ordinances, rules, regulations, codes, licenses, permits, authorizations and orders relating to building, zoning, the environment, health, safety and disabled persons (collectively, "Applicable Law"). To Seller's knowledge, the Building and the operation of the Building comply, in all material respects with, all Applicable Law.
(vi)    To Seller's knowledge: (a) All building permits, certificates of occupancy, business licenses and, without limitation, all other notices, licenses, permits, certificates and authority, required in connection with the construction, use or occupancy of the Project have been obtained and are in effect and in good standing; and (b) the leasing, operation and use of the Project is in compliance, in all material respects, with such notices, licenses, permits, certificates and authority.
(vii)    True and complete copies of all Project Contracts have been delivered to Purchaser. Seller is not aware that any of the Project Contracts or Permitted Exceptions violates any Applicable Law.
(viii)    Seller is not or will not at the Closing be in default in respect of any of its material obligations or liabilities pertaining to the Project (including without limitation any obligations and liabilities arising under the Permitted Exceptions or Project Contracts), and to the best knowledge of Seller, no event has occurred which, with the giving of notice or passage of time, or both, would give rise to any such default under any of the same.
(ix)    Seller, to the best of Seller's knowledge, is not aware of any default in respect of any obligations or liabilities of any other persons pertaining to the Project (including without limitation any obligations and liabilities of other persons arising under the Permitted Exceptions, and any obligations and liabilities of any of the other parties to any of the Project Contracts), and to the best knowledge of Seller, no event has occurred which, with the giving of notice or passage of time, or both, would give rise to any such default under any of the same.
(x)    There is no litigation (including without limitation proceedings for or involving collections, condemnation, eminent domain, alleged building code or environmental or zoning violations, or personal injuries or property damage alleged to have occurred on the Project or by reason of the condition, use of, or operations on, the Project) pending, or to the best of knowledge of Seller, threatened, against Seller or the Project.
(xi)    The Personal Property is all located on the Project and is all of the personal property used in the basic operation and maintenance of the Project.
(xii)    [Intentionally deleted.]
(xiii)    The Project, and the use and operation thereof, is in material compliance with all Applicable Law, and there are presently and validly in effect all licenses, permits,

992507_9    11


approvals and other authorizations necessary for the use, occupancy and operation of the Project as it is presently being operated, whether required of Seller or any occupant of the Project. Without limiting the foregoing, to seller's knowledge, the Project complies with all material and applicable requirements of the federal Americans With Disabilities Act, as amended. Seller has no knowledge that any heating or other burning equipment located at or used in connection with the Project violates any Applicable Law. The Project is zoned by the municipality in which it is located so as to permit the industrial, warehouse and distribution uses and structures thereon, in a manner that accommodates and is fully compatible with the Building and Improvements as they presently exist. The Project does not constitute a non‑conforming use or non‑conforming structure under applicable zoning laws, regulations or ordinances. The continued maintenance, operation and use of the Building and/or any portion of the Project, including any parking area, does not and will not, on the Closing Date, violate any Applicable Law and, to Seller's knowledge, no such violation has been issued by any governmental authority having jurisdiction over the Project that has not been cured to the satisfaction of such governmental authority.
(xiv)    The information with respect to Seller and the Project supplied to Purchaser in connection with, and as an inducement to entering into, this Agreement and the Financial Statements as of their respective dates do not and did not contain any untrue statement of a material fact or omit to state a fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(xv)    To Seller's knowledge, there are no pending, and Seller has received no notice of, any special assessments of any nature with respect to the Project or any part thereof, nor has Seller received any notice of any special assessments being contemplated.
(xvi)    To Seller's knowledge, the Project has not been reassessed by any governmental authority for the purposes of valuation for taxation during the twelve (12) months prior to the Effective Date.
(xvii)    No portion of any Building has flooded within the past five (5) years, and the Project is not in a designated flood insurance area or designated flood plain, except as may be shown in the Survey.
(xviii)    To Seller's knowledge, there are no pending or threatened requests, applications or proceedings to alter or restrict the zoning or other use restrictions applicable to the Project. To Seller's knowledge, the conveyance of the Project will include all rights to the use of any off‑site facilities necessary to ensure compliance with all Applicable Law. Seller has no knowledge and has not received any notice of any plan, study or effort by any governmental agency or authority which would materially adversely affect the present use or zoning of the Project or which would modify or realign any adjacent street or highway.
(xix)    Seller has not received any notice from any insurance carrier of, nor is aware of, defects or inadequacies in the Project which if not corrected would result in termination of insurance coverage, increase its cost or otherwise affect the insurability of the Project.
(xx)    There are no facts material to the use and operation of the Project which Seller has not disclosed to Purchaser.

992507_9    12


(xxi)    Seller is now solvent and will be solvent at the Closing. The transaction described in this Agreement is not part of a leveraged buy‑out or other transaction relating to the sale of Seller.
(xxii)    All documents made available to Purchaser are true, complete and correct copies of the documents received by Seller. There is not known to Seller any material documents relating to the Property that has not been disclosed to Purchaser.
(xxiii)    Except for the Leaseback and the sublease to Cook Son, there will be no other occupancy agreements affecting the Project which will survive Closing.
(xxiv)    If the Project is located within a delineated Earthquake Fault zone (a zone that encompasses a potentially or recently active tract of an earthquake fault that is deemed by the State Geologist to constitute a potential hazard to structures from surface faulting or fault creep), California Public Resource Code §2621 et seq. mandates that prospective purchasers be advised that the Project is located within such a Zone, and that its development may require a geologic report from a state registered geologist. In accordance with such law, Seller hereby represents and warrants to Purchaser that, to Seller's knowledge, the Project is not within a delineated Earthquake Fault Zone.
(xxv)    If the Project is located within a Seismic Hazard Zone as delineated on a map prepared by the California Division of Mines and Geology, California Public Resources Code §2690 et seq. mandates that prospective purchasers be advised that the Project is located within such a Zone. In accordance with such law, Seller hereby represents and warrants to Purchaser that, to Seller's knowledge, the Project is not within a Seismic Hazard Zone.
(xxvi)    If the Project is located within a designated State Responsibility Area as delineated on a map prepared by the California Department of Forestry, California Public Resources Code §4136 mandates that prospective purchasers be advised that the Project is located within a wildland area which may contain substantial forest fire risks and hazards, that the State may not be responsible to provide fire protection services, and that the Project may be subject to the requirements of Public Resources Code §4291 which requires the periodic removal of brush, the maintenance of firebreaks, and other similar activities. In accordance with such law, Seller hereby represents and warrants to Purchaser that, to Seller's knowledge, the Project is or is not within a designated State Responsibility Area.
(xxvii)    If the Project is located within an area designated as a Very High Fire Hazard Severity Zone. Government Code §51178 et seq. §51183.5 mandates that prospective purchasers be advised that the Project is located within such a zone and that the Project may be subject to various maintenance design and/or construction requirements and/or restrictions. In accordance with such law, Seller hereby represents and warrants to Purchaser that, to Seller's knowledge, the Project is not within a designated Very High Fire Hazard Severity Zone.
(xxviii)    If the Project contains one or more water heaters, Seller is required by California Health and Safety Code §19211 to certify to Purchaser that all such water heaters have been braced, strapped and/or anchored in accordance with the law. Seller hereby represents and warrants to Purchaser that, to Seller's knowledge, the required bracing, strapping and/or anchors have been installed.

992507_9    13


(xxix)    If the seller or transferor of property knows of the presence of mold that affects the property and the mold either exceeds permissible exposure limits or poses a health threat then Health and Safety Code §26140, et seq. mandates that prospective purchasers be advised in writing of such mold. In accordance with such law, Purchaser is hereby informed that Seller is not aware of the presence of such mold affecting the Project.
(xxx)    (a) Seller is not a Prohibited Person (as hereinafter defined), (ii) Seller is in compliance with Anti‑Terrorism Laws (as hereinafter defined), (iii) Seller does not conduct any business or engage in any transaction or dealing with any Prohibited Person, or deal in, or otherwise engage in any transaction relating to, any property or interests in property blocked pursuant to Executive Order 13224 (as hereinafter defined), and (iv) Seller has established policies and procedures designed to prevent and detect money laundering, including processes to meet all applicable anti-money laundering requirements of the USA Patriot Act (as hereinafter defined). For purposes of this Agreement:
(i)    "Anti-Terrorism Laws" means any laws related to terrorism or money laundering, including without limitation Executive Order 13224 and the USA Patriot Act, and any regulations promulgated under any such laws,
(ii)    "Executive Order 13224" means Executive Order 13224 on Terrorism Financing, effective September 24, 2001,
(iii)    "Prohibited Person" means any person or entity:
(A)    subject to the provisions of Executive Order 13224,
(B)    owned or controlled by, or acting for or on behalf of, an entity that is subject to the provisions of Executive Order 13224,
(C)    with whom Seller is prohibited from dealing by any of the Anti-Terrorism Laws,
(D)    that commits, threatens or conspires to commit or supports "terrorism" as defined in Executive Order 13224,
(E)    that is named as a "specially designated national and blocked person" on the most current list published by the U.S. Treasury Department's Office of Foreign Assets Control; or
(F)    person or entity that is affiliated with a person or entity described in the foregoing clauses (A) through (E); and
(iv)    "USA Patriot Act" means the Uniting and Strengthening America by Providing Appropriate Tools Requires to Intercept and Obstruct Terrorism Act of 2001, H.R. 3162, Public Law 107-56, as the same may be amended.
B.    Seller hereby agrees to indemnify, defend (with Purchaser having the right to retain counsel for the purpose of participating in such defense, at its sole cost and expense) and hold Purchaser, its affiliates, investment managers, property managers, partners, trustees, shareholders, beneficiaries, directors, officers, employees, agents and attorneys (collectively, the "Indemnified

992507_9    14


Parties") harmless from and against and with respect to any and all claims, demands, legal or administrative proceedings, losses (including loss of value of the Project or any part of the Project), liabilities, damages, penalties, fines, debts, causes of action, administrative orders or notices, liens, judgments, suits, obligations, payments, interest, accounts, encumbrances, personal injuries, costs and expenses (including but not limited to attorneys fees and costs, consultants fees and costs, courts costs, response and/or remedial costs and all other out-of-pocket expenses) known or unknown, foreseen or unforeseen, whether direct or contingent and no matter how arising (but specifically excluding obligations and liabilities for and to the extent Purchaser received a credit to the Purchase Price pursuant to the provisions of this Agreement) in any way related to or arising from: (i) the Project and arising or accruing on or before the Closing Date, (ii) any act, conduct, omission, contract or commitment of Seller, at any time or times on or before the Closing Date, (iii) any lawsuit or proceeding filed or pending against the Project (or any part thereof) prior to the Closing Date, and (iv) any material breach by Seller of this Agreement.
9.    Conditions Precedent to Closing.
A.    In addition to any conditions provided in other provisions of this Agreement, Purchaser's obligation to purchase the Project is and shall be conditioned on the following:
(i)    The due performance by Seller of each and every covenant, undertaking and agreement to be performed by Seller under this Agreement and the truth of each representation and warranty made in this Agreement by Seller at the time as of which the same is made and as of the Closing as if made on and as of the Closing.
(ii)    That at no time prior to the Closing shall any of the following have been done by or against or with respect to Seller: (a) the commencement of a case under Title 11 of the U.S. Code, as now constituted or hereafter amended, or under any other applicable federal or state bankruptcy law or other similar law; (b) the appointment of a trustee or receiver of any property interest; or (c) an assignment for the benefit of creditors.
(iii)    The existence of any Unpermitted Exception or of any violation of Applicable Law relating to the Project which is imposed by any governmental authority relating to the Project which is not remedied by Seller.
(iv)    That between the Effective Date and the Closing, Seller shall: (a) not, without first obtaining the written consent of Purchaser, enter into any contracts, agreements or leases pertaining to the Project; (b) not convey any Intangible Property or remove from the Project any of the Personal Property; (c) remedy all violations of Applicable Law relating to the Project or any portion of the Project, if any, and provide Purchaser evidence of same; (d) not cancel or permit cancellation of any hazard or liability insurance carried with respect to the Project or its operation; and (e) operate and maintain the Project free from waste and neglect, in substantial compliance with Applicable Law and in the same manner as the Project has been theretofore operated and maintained.
(v)    The physical condition of the Project shall be the same on the Closing Date as on the Effective Date, reasonable wear and tear excepted.
B.    Purchaser may at any time or times, at its election, waive any of the conditions to its obligations under this Agreement, but any such waiver shall be effective only if contained in a writing signed by Purchaser. No such waiver shall reduce the rights or remedies of a party by reason

992507_9    15


of any breach by Seller (but if a condition is waived, the party waiving the same may not rescind this Agreement on the basis of the failure of such waived condition). The failure of any of the conditions in Section 9.A shall entitle Purchaser, at its option, to cancel and terminate this Agreement by written notice to Seller, in which event the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement.
10.    Covenants of Seller. Effective as of the Effective Date, Seller hereby covenants with Purchaser as follows:
A.    New Leases. Seller shall not execute any new lease, license, or other agreement affecting the ownership or operation of the Project or for personal property, equipment, or vehicles, without Purchaser's prior written consent.
B.    New Contracts. Seller shall not enter into any contract with respect to the ownership and operation of the Project that will survive the Closing, or that would otherwise affect the use, operation or enjoyment of the Project, without Purchaser's prior written consent, except for service contracts entered into in the ordinary course of business which are terminable without penalty on not more than thirty (30) days' notice.
C.    Operation of the Project. Seller shall operate and manage the Project in a first class manner, maintaining present services, and shall maintain the Project in good repair and working order; shall keep on hand sufficient materials, supplies, equipment and other personal property for the efficient operation and management of the Project in a first class manner; and shall perform, when due, all of Seller's obligations under the Project Contracts and other agreements relating to the Project and otherwise in accordance with all Applicable Law. Seller shall deliver the Project at Closing in substantially the same condition as it is on the Effective Date, reasonable wear and tear excepted. None of the Personal Property or fixtures shall be removed from the Project, unless replaced by personal property or fixtures of equal or greater utility or value.
D.    Documents of Record. Seller shall not grant any easement or modify any covenant, condition or restriction affecting the Project.
E.    Change In Conditions. Seller shall promptly notify Purchaser of any change in any condition with respect to the Project, the financial condition of any of the tenants under the Leases or of the occurrence of any event or circumstance that makes any representation or warranty of Seller to Purchaser under this Agreement untrue or misleading, or any covenant of Seller under this Agreement incapable or less likely of being performed, it being understood that Seller's obligation to provide such notice to Purchaser shall in no way relieve Seller of any liability for a breach by Seller of any of its representations, warranties or covenants under this Agreement.
F.    Approvals. If the transaction contemplated hereby, or any component thereof, shall require authorization or approval of any governmental agency having jurisdiction, Seller shall obtain all such authorizations and approvals on or before the date (the "Approvals Deadline") that is five (5) days before the Closing Date. If such authorizations and approvals are not obtained and in full force and effect as of the Approvals Deadline, Seller shall promptly notify Purchaser in writing (the "Approvals Notice") and Purchaser, at its sole option, may elect to:
(1)    terminate this Agreement by written notice to Seller, in which event the Earnest Money shall be returned to Purchaser and, except as specifically

992507_9    16


provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement; or
(2)    extend the Closing Date by written notice to Seller, which extension shall not exceed thirty (30) days, in which event Seller shall continue to use good faith and diligent efforts to obtain the authorizations and approvals; or
(3)    notify Seller in writing that Purchaser has elected to proceed to Closing.
Purchaser's election to extend the Closing Date or proceed to Closing shall not relieve Seller of the obligation to obtain the authorizations and approvals. If Purchaser extends the Closing Date, and the authorizations and approvals have not been obtained as of the date that is five (5) days before the Closing Date, Purchaser, at its sole option, may elect to:
(1)    terminate this Agreement by written notice to Seller, in which event the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement; or
(2)    notify Seller in writing that Purchaser has elected to proceed to Closing.
All covenants made in this Agreement by Seller shall survive the Closing and shall not be merged into the Deed or any other instrument of conveyance delivered at Closing.
11.    Adjustments. Except as may be otherwise covered under the Leaseback:
A.    General. Proration of rentals, revenues and other income, if any, from the Project and taxes, assessments, and other expenses, if any, affecting the Project shall be prorated as of 11:59 p.m. on the day prior to the Closing Date ("Proration Date"). It is agreed that the Closing Date shall be an income and expense date for Purchaser. There shall be no proration of any insurance premiums with respect to the Project, nor any assumption of insurance coverage by Purchaser, unless Purchaser so elects in writing.
B.    Taxes. On or before the Closing Date, Seller shall pay all taxes and assessments, including without limitation all special assessments, on the Project which are due and payable prior to the Closing Date. Unpaid taxes and assessments on the Project shall be prorated on an accrual basis as of the Closing Date based upon the most recent ascertainable assessed valuation, tax multipliers and tax rate, but reproration thereof shall be made between Purchaser and Seller at such time as the actual amount of taxes for the applicable tax year shall become known, in order that actual real estate taxes for the periods before and after the Closing Date may be equitably prorated as of the Closing Date and paid between the parties when known. Seller shall be liable for any back tax bill which may be imposed by taxing authorities related to the period prior to the Closing Date, which obligation of Seller shall survive Closing.
C.    Operating Expenses. All utility services charges for electricity, heat and air conditioning service, other utilities, common area maintenance, taxes other than real estate taxes such as rental taxes, and all expenses incurred in operating the Project and any other costs incurred in the ordinary course of business of the management and operation of the Project shall be prorated

992507_9    17


on an accrual basis. Seller shall pay all such expenses that accrue prior to the Closing Date and Purchaser shall pay all such expenses accruing on and after the Closing Date. To the extent possible, Seller and Purchaser shall obtain billings and meter readings as of the Closing Date to aid in such prorations.
D.    Other Prorations. Seller and Purchaser shall make such additional adjustments as are normally made in connection with a purchase and sale of the type contemplated in this Agreement. At Closing, Seller shall pay to Purchaser (or credit against the Purchase Price), the security deposit and the first month's rent due under the Leaseback.
E.    Method of Proration. Except as expressly provided in this Agreement, all prorations shall be made in accordance with customary practice in Orange County, California. The parties agree to cause a schedule of tentative adjustments to be prepared prior to the Closing Date. Such adjustments, if and to the extent known and agreed upon as of the Closing Date, shall be paid by Purchaser to Seller (if the prorations result in a net credit to the Seller) or by Seller to Purchaser (if the prorations result in a net credit to Purchaser), by increasing or reducing the amount to be paid by Purchaser at Closing. Purchaser and Seller agree the intent of this provision is to allocate the income and expenses attributable to the Project in a fair, just and equitable manner, and the parties agree in the event of special circumstances not specifically covered in this Agreement, such equitable principles shall guide the parties in reaching a fair resolution. All prorations shall be final, unless otherwise expressly provided in this Agreement.
12.    Closing Costs. Seller shall bear the cost to record any instruments necessary to clear Seller's title, the cost of the Title Policy (with extended coverage and all endorsements), the cost of the Survey, all state and county transfer taxes and one-half the cost of the Escrow. Purchaser shall bear the cost of any recording fees with respect to the Deed and one-half the cost of the Escrow. The cost of any municipal transfer taxes applicable to this transaction shall be paid for the party made responsible for the payment of the same by the applicable ordinance. All other costs and expenses in connection with the transaction contemplated by this Agreement shall be borne by Purchaser and Seller in the manner in which such cost and expenses are customarily allocated between the parties at closings of real property similar to the Project in the Orange County, California area. Except as provided in Section 37 of this Agreement, each party shall pay its own attorneys' fees incurred with respect to the preparation and negotiation of this Agreement and the closing of the transaction contemplated hereby.
13.    Damage or Destruction to Project.
A.    If between the Effective Date and the Closing Date, all or any portion of the Project is damaged or destroyed by fire or other casualty, Seller shall notify Purchaser in writing of such damage or destruction (the "Casualty Notice"):
(i)    either Seller or Purchaser may elect to terminate this Agreement, in which event the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement; or
(ii)    both parties may elect to consummate the transaction contemplated by this Agreement, in which event Purchaser shall receive a credit against the Purchase Price in an amount equal to Purchaser's reasonable determination of the cost of restoring the Project.

992507_9    18


B.    Purchaser and Seller shall have until the date (the "Casualty Election Date") that is thirty (30) days after receipt of the Casualty Notice to elect whether to terminate or proceed with this Agreement. If either party fails to notify the other party of its election on or before the Casualty Election Date, then that party shall be deemed to have elected to terminate this Agreement.
C.    Notwithstanding the foregoing, Seller shall only have the right to terminate this Agreement pursuant to Section 13A above in the event that the cost to repair and restore any damage or destruction to the Project by fire or other casualty will exceed ten percent of the Purchase Price.
D.    If the Closing Date is a date prior to the Casualty Election Date, the Closing Date shall be extended to a date twenty (20) days after the Casualty Election Date.
14.    Condemnation.
A.    If between the Effective Date and the Closing Date any condemnation or eminent domain proceedings are initiated which might result in the taking of any part of the Building or the Land, Seller shall notify Purchaser in writing of such proceedings (the "Condemnation Notice") and:
(i)    either Seller or Purchaser may elect to terminate this Agreement, in which event the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement; or
(ii)    both parties may elect to consummate the transaction contemplated by this Agreement, in which event Seller shall assign to Purchaser at Closing all of Seller's right, title and interest in and to any award pertaining to the Real Property, but retain its rights to any award pertaining to its leasehold interest or moving expenses, made in connection with such condemnation or eminent domain proceedings.
B.    Purchaser and Seller shall have until the date (the "Condemnation Election Date") that is thirty (30) days after receipt of the Condemnation Notice to elect whether to terminate or proceed with this Agreement. If either party fails to notify the other party of its election on or before the Condemnation Election Date, then that party shall be deemed to have elected to terminate this Agreement.
C.    Notwithstanding the foregoing, Seller shall only have the right to terminate this Agreement pursuant to Section 14A above in the event that the value of the Project after such taking shall reduce by more than ten percent of the Purchase Price.
D.    If the Closing Date is a date prior to the Condemnation Election Date, the Closing Date shall be extended to a date twenty (20) days after the Condemnation Election Date.
15.    Remedies.
A.    If Seller should materially breach any of its covenants, conditions, representations or warranties contained in this Agreement or should fail to consummate the sale contemplated in this Agreement for any reason other than Purchaser's default, Purchaser may, upon five (5) days written notice to Seller, if such breach or failure is not cured within such five-day period, in addition to all remedies contained elsewhere in this Agreement: (i) terminate this Agreement, in which event

992507_9    19


the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement; (ii) rescind this transaction; (iii) collect money damages from Seller; or (iv) enforce specific performance of this Agreement.
B.    If Purchaser should materially breach any of its covenants contained in this Agreement (and Seller shall not be in default under this Agreement), Seller may, upon five (5) days written notice to Purchaser, if such breach is not cured within such five-day period, terminate this Agreement and retain the Earnest Money as liquidated damages, and not as a penalty, it being understood that Seller's actual damages in the event of such a breach are difficult to ascertain and that such Earnest Money represents the parties' best estimate of such damages. Seller shall not have any other remedy for any breach or default by Purchaser. BY INITIALING THIS SECTION 15.B, PURCHASER AND SELLER AGREE THAT IN EVENT OF DEFAULT BY PURCHASER: (A) IT WOULD BE IMPRACTICAL OR EXTREMELY DIFFICULT TO FIX ACTUAL DAMAGES; (B) AN AMOUNT EQUAL TO THE EARNEST MONEY WILL CONSTITUTE LIQUIDATED DAMAGES PAYABLE TO SELLER; (C) THE PAYMENT OF THE LIQUIDATED DAMAGES TO SELLER WILL CONSTITUTE THE EXCLUSIVE REMEDY OF SELLER; (D)SELLER MAY RETAIN THAT PAYMENT AS LIQUIDATED DAMAGES; AND (E) PAYMENT OF THOSE SUMS TO SELLER AS LIQUIDATED DAMAGES IS NOT INTENDED AS A FORFEITURE OR PENALTY WITHIN THE MEANING OF CALIFORNIA CIVIL CODE SECTIONS 3275 OR 3369, BUT INSTEAD, IS INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER PURSUANT TO SECTIONS 1671, 1676 AND 1677 OF THE CALIFORNIA CIVIL CODE.
Seller INITIALS: ____________    Purchaser INITIALS: _______________
16.    Brokers. The parties mutually warrant and represent to the other that neither has authorized any broker to act on its behalf in respect of the transactions contemplated hereby other than Stream Capital Partners (the "Broker"), who is representing Seller and will be paid a commission equal to one percent (1.0%) of the Purchase Price if and when the Closing hereunder occurs, and that neither has dealt with a broker, agent or finder in connection therewith other than the Broker. Each of the parties shall indemnify and save the other harmless from any claim by any broker or other person for commissions or other compensation for bringing about the transactions contemplated hereby where such claim is based on the purported employment or authorization of such broker or other person by such party. Seller shall pay the commission due Broker at Closing.
17.    Environmental Matters/Mutual Release.
A.    The term "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which is regulated by any local governmental authority, the State of California, or the United States Government, including without limitation any material or substance which is: (i) defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," or "restricted hazardous waste" under any provision of California or federal law, (ii) petroleum, (iii) asbestos and asbestos-containing materials, (iv) polychlorinated biphenyls ("PCBs"), (v) radioactive material, (vi) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. §1251 et seq., (33 U.S.C. §1317), (vii) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act, 42 U.S.C. §6901 et seq. (42 U.S.C. §6903), or (viii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. §9601 et seq. (42 U.S.C. 9601). The term "Environmental Law" shall mean all statutes specifically described

992507_9    20


in the foregoing grammatical sentence and all federal, state and local environmental, health and safety statutes, ordinances, codes, rules, regulations, orders and decrees regulating, relating to or imposing liability or standards concerning or in connection with Hazardous Materials.
B.    Seller represents and warrants that as of the Effective Date (which representation and warranty shall be remade as of the Closing Date), and except as listed on Schedule 17B attached hereto, to its actual knowledge: (i) the Project is in material compliance with all Environmental Law; (ii) no written notice, demand, claim or other communication has been given to or served on Seller, and Seller has no actual knowledge of any such notice given to previous owners, tenants or occupants of the Project, from any entity, governmental body or person claiming any violation of or liability under any Environmental Law or demanding payment, contribution, indemnification, remedial action, removal action or any other action or inaction with respect to any actual or alleged environmental damage or injury to persons, property or natural resources (each of the foregoing, whether now existing or hereafter brought, a "Claim"); (iii) no above ground or underground storage tanks are currently located on the Project, except for the exterior tank tower and the three cooling tanks; (vi) no Hazardous Materials have been discharged, dispersed, released, disposed of, or allowed to escape on, under or in the Project in violation of or at levels which have resulted in any liability under Environmental Law; and (vii) no investigation, administrative order, administrative order by consent, consent order, agreement, litigation or settlement is proposed or in existence or, to the best knowledge of Seller, threatened or anticipated, with respect to or arising from the presence of any Hazardous Materials with respect to the Project. In addition to any other remedies under this Agreement, if any of the foregoing representations or warranties are in any manner inaccurate or breached (collectively, "Breach"), and if such Breach gives rise to or results in liability or claim (including without limitation a response action, remedial action or removal action) under any Environmental Law or any existing common law theory based on nuisance or strict liability, or causes a significant effect on public health before Closing, Purchaser shall have the right to terminate the Agreement at any time before the Closing.
18.    Entire Agreement. It is understood and agreed that all understandings and agreements heretofore made between Seller and Purchaser are merged in this Agreement, the exhibits annexed hereto and the instruments and documents referred to in this Agreement, which alone fully and completely express their agreements, and that neither party is relying upon any statement or representation, not embodied in this Agreement, made by the other. Each party expressly acknowledges that, except as expressly provided in this Agreement, the other party and the agents and representatives of the other party have not made, and the other party is not liable for or bound in any manner by, any express or implied warranties, guaranties, promises, statements, inducements, representations or information pertaining to the transactions contemplated hereby. The preparation of this Agreement has been a joint effort of the parties hereto and the resulting documents shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.
19.    Exhibits. Exhibits A through L, and Schedule 17B, attached to this Agreement are, by this reference, incorporated in and made a part of this Agreement.
20.    Non‑Foreign Certificate. Seller shall provide Purchaser, not later than five (5) days before the Closing Date, with a non‑foreign certificate sufficient in form and substance to relieve Purchaser of any and all withholding obligations under federal law, which certificate shall be reasonably satisfactory to Purchaser and the Title Company. If Seller does not timely furnish Purchaser with said certificate, or if Purchaser has reason to believe that said certificate is or would be wholly or partially false if given and so notifies Seller, in writing, before the Closing Date, Purchaser shall be entitled to withhold up to ten (10%)

992507_9    21


percent of the Purchase Price in an escrow account to be held by Title Company until such time as Seller furnishes Purchaser with a qualifying statement from the Internal Revenue Service sufficient to relieve Purchaser of any and all withholding obligations under federal law, or until Purchaser is required to deliver said funds to the Internal Revenue Service, whichever first occurs.
21.    Modifications. No modification, amendment, discharge, waiver or change of this Agreement, or any of the provisions of this Agreement, shall be valid unless the same is in writing and signed by the party against which the enforcement of such modification, waiver, amendment, discharge or change is sought. Writings signed by the attorney for such party shall not be effective for the purposes of this Section 21. Failure by either party to explicitly retain any rights under this Agreement shall not be deemed a waiver of such rights.
22.    Notices. Unless otherwise provided herein, all notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be served on the parties at the following addresses:
If intended for Purchaser:
Mr. Ryan Dunlap
CenterPoint Properties Trust
7255 Figueroa Street, Suite 3005
Los Angeles, California 90017
and
Ms. Laura Petrucci
CenterPoint Properties Trust
1808 Swift Drive
Oak Brook, Illinois 60523‑1501

With a copy to:
Mark S. Richmond, Esq.
Richmond Breslin LLP
5215 Old Orchard Road, Suite 420
Skokie, Illinois 60077
Facsimile Number: 312‑258-0977

If intended for Seller:
Jon A. Faulkner
The Dixie Group, Inc,
475 Reed Road
Dalton, Georgia 30720
Facsimile Number: 251-706-6008

With a copy to:
Robert L. Dann
Miller & Martin PLLC
832 Georgia Avenue, Suite 1200
Chattanooga, Tennessee 37402
Facsimile Number: 423-785-8480

Any such notices shall be either (i) sent by certified mail return receipt requested, in which case notice shall be deemed delivered three (3) Business Days after deposit, postage prepaid, in the United States Mail, (ii) sent by overnight delivery using a nationally recognized courier, in which case notice shall be deemed delivered one (1) Business Day after deposit, with such courier, (iii) sent by facsimile, in which case notice shall be deemed delivered upon transmission of such notice as evidenced by the facsimile transmission report, (iv) sent

992507_9    22


by electronic mail by pdf, in which case notice shall be deemed delivered upon transmission, or (v) by personal hand delivery, in which case notice shall be deemed delivered at the time of the personal hand. Notices to be sent on behalf of Purchaser or Seller may be sent by their respective counsel.
23.    Governing Law and Interpretation. The validity, meaning and effect of this Agreement shall be determined in accordance with the laws of the State of California applicable to contracts made and to be performed in that state. The terms "hereby" and "hereto" and any similar terms shall refer to this Agreement, and the term "hereafter" shall mean after the Effective Date and the term "heretofore" shall mean before the Effective Date. Words of the masculine, feminine or neuter gender shall mean and include the correlative words of other genders, and the words importing the singular number shall mean and include the plural number and vice versa. Words importing persons shall include firms, associations, partnerships (including limited partnerships), trusts, corporations and other legal entities, including public bodies, as well as natural persons. The terms "include," "including" and similar terms shall be construed as if followed by the phrase "without limitation." This Agreement shall not be construed more strictly against one party than against the other merely by virtue of the fact that it may have been prepared by counsel for one of the parties, it being recognized that both Seller and Purchaser have contributed substantially and materially to the preparation of this Agreement.
24.    Survival. All representations, warranties and indemnities of Seller contained in this Agreement or in any of the documents to be delivered by Seller to Purchaser at Closing shall be deemed remade as of the Closing Date and survive the Closing. This Agreement shall not be canceled or merged into the Deed on the Closing. Each and every warranty and representation of Seller shall be deemed to have been relied upon by Purchaser, notwithstanding any investigation Purchaser may have made with respect thereto, or any information developed by or made available to Purchaser prior to the Closing and consummation of this transaction. After the Closing, Seller agrees to defend, indemnify and hold Purchaser and the Indemnified Parties free and harmless from and against any and all claims, demands, legal or administrative proceedings, losses (including loss of value of the Project or any part of the Project), liabilities, damages, penalties, fines, debts, causes of action, administrative orders or notices, liens, judgments, suits, obligations, payments, interest, accounts, encumbrances, personal injuries, costs and expenses (including but not limited to attorneys' fees and costs, consultants fees and costs, courts costs, response and/or remedial costs and all other out-of-pocket expenses) known or unknown, foreseen or unforeseen, whether direct or contingent and no matter how arising, in any way related to or arising from: (i) any inaccuracy in or breach of any representation or warranty of Seller; and (ii) any breach or default by Seller under any of Seller's covenants or agreements under this Agreement, provided that, if Purchaser has actual knowledge of a breach at or prior to Closing, then, upon consummation of the purchase and sale, Purchaser shall be deemed to have waived such breach. To the extent Seller elects to make any distribution to its stockholders, partners or members, as the case may be, after Closing, such that Seller has insufficient funds to satisfy the indemnity obligations of Seller contained in this Agreement, such indemnity obligations shall be deemed to be distributed with any such distributions to such stockholders, partners or members, as the case may be, and their respective successors and such stockholders, partners or members, as the case may be, receiving such distributions shall be deemed successors of Seller and to have assumed such indemnity obligations.
25.    Business Days. If any date herein set forth for the performance of any obligations of Seller or Purchaser or for the delivery of any instrument or notice as herein provided should be on a Saturday, Sunday or legal holiday, the compliance with such obligations or delivery shall be deemed acceptable on the next business day following such Saturday, Sunday or legal holiday. As used herein, the term "legal holiday" means any state or Federal holiday for which financial institutions or post offices are generally closed in the state where the Project is located.

992507_9    23


26.    Assignment. The terms, conditions and covenants of this Agreement shall be binding upon and shall inure to the benefit of the parties and their respective nominees, successors, beneficiaries and assigns; provided, however, no conveyance, assignment or transfer of any interest whatsoever of, in, or to the Project or of this Agreement shall be made by Seller during the term of this Agreement. Purchaser may assign all or any of its right, title and interest under this Agreement to any corporate or partnership entity affiliated with, or related to Purchaser ("Affiliate"). No such assignee shall accrue any obligations or liabilities hereunder until the effective date of such assignment. In addition to its right of assignment, Purchaser shall also have the right, exercisable prior to Closing, to designate any Affiliate, as the grantee or transferee of any or all of the conveyances, transfers and assignments to be made by Seller at Closing hereunder, independent of, or in addition to, any assignment of this Agreement. In the event of an assignment of this Agreement by Purchaser, its assignee shall be deemed to be the Purchaser hereunder for all purposes hereof, and shall have all rights of Purchaser hereunder (including, but not limited to, the right of further assignment), and the assignor shall be released from all liability hereunder. In the event that an Affiliate shall be designated as a transferee hereunder, that transferee shall have the benefit of all of the representations and rights which, by the terms of this Agreement, are incorporated in or relate to the conveyance in question.
27.    Waiver of Trial by Jury. The respective parties hereto shall and hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Agreement, or for the enforcement of any remedy under any statute, emergency or otherwise.
28.    Confidentiality. Seller and Purchaser acknowledge and agree that the transactions contemplated by this Agreement are of a highly sensitive and confidential nature and, except to the extent disclosure is required by law or is otherwise permitted by this Section 28, Purchaser and Seller agree that all documents and information concerning the Project, the subject matter of this Agreement, and all negotiations with respect hereto and the subject matter hereof shall remain confidential. Prior to and after the Closing, any release or disclosure to the public of information with respect to the transaction so closed, any matters set forth in this Agreement, or any of the terms and provisions of this Agreement shall be made only in the form approved by Purchaser and Seller and their respective counsels (which approval shall not be unreasonably withheld or delayed, and shall be deemed to have been granted if not expressly disapproved within one (1) Business Day after request for approval). Notwithstanding the foregoing to the contrary, this Section 28 shall not prevent either party from disclosing any information with respect to the transactions contemplated herein, any matters set forth in this Agreement, or any of the terms and provisions of this Agreement (a) if and to the extent that such disclosure is reasonably determined by such party to be required by applicable law or a court or other binding order or by applicable administrative rule or regulation or order of any regulatory or supervisory agency or authority with competent jurisdiction over such matter; or (b) to any of their respective current or prospective lenders, members, officers, directors, trustees, employees, consultants, attorneys, accountants, advisors, agents, representatives, partners, and/or shareholders and/or any parties whose consent is required (and any of the respective lenders, members, officers, directors, trustees, employees, consultants, advisors, agents, representatives, partners, and/or shareholders of any of such parties); provided that all of the foregoing to whom disclosure is made are advised of the confidential nature of such information, matters, terms and provisions. The provisions of this Section 28 shall survive the Closing or termination of this Agreement (whichever shall occur) without restriction or limitation.
29.    Further Assurances. Seller and Purchaser each agree to use commercially reasonable efforts to comply with all conditions set forth in this Agreement, to take all other reasonable action necessary to complete the transaction contemplated by this Agreement, to cause the Purchase of the Project to be consummated with all reasonable dispatch, and to refrain from any action that is inconsistent with that result.

992507_9    24


Each party agrees in good faith to execute such further or additional documents as may be necessary or appropriate to fully carry out the intent and purpose of this Agreement.
30.    Counterparts/Electronic Signatures. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Handwritten signatures to this Agreement transmitted by telecopy or electronic transmission (for example, through the use of a Portable Document Format or "PDF" file) shall be valid and effective to bind the parties so signing. It is expressly agreed that each party to this Agreement shall be bound by its own telecopied or electronically transmitted handwritten signature and shall accept the telecopy or electronically transmitted handwritten signature of the other party to this Agreement. The parties hereto agree that the use of telecopied or electronic signatures for the execution of this Agreement shall be legal and binding and shall have the same full force and effect as if originally signed.
31.    Captions. The captions and headings in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement of any of the provisions of this Agreement.
32.    Memorandum. Either party shall execute a memorandum of this Agreement at the request of the other party which may be recorded with the appropriate county authority.
33.    Binding Effect. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns.
34.    Partial Invalidity. Seller and Purchaser intend and believe that each provision in this Agreement comports with all Applicable Law and judicial decisions. Notwithstanding the foregoing, if any one or more provisions of this Agreement is for any reason held by a court of law to be invalid, illegal, unlawful, void or unenforceable in any respect, then:
A.    if the provision(s) are not materially related to: (i) the liability of Seller or Purchaser or (ii) the conditions to Purchaser's obligations under this Agreement, then such provision(s) shall be given force to the fullest possible extent that such provision(s) are valid, legal, lawful and enforceable, the remainder of this Agreement shall be construed as if such invalid, illegal, unlawful, void or unenforceable provision(s) were not contained in this Agreement and the rights, obligations and interests of Seller and Purchaser under the remainder of this Agreement shall continue in full force and effect; or
B.    if the provision(s) are materially related to: (i) the liability of Seller or Purchaser or (ii) the conditions to Purchaser's obligations under this Agreement, then each of Seller and Purchaser shall have the right, upon written notice to the other, to terminate this Agreement and upon such termination, the Earnest Money shall be returned to Purchaser and, except as specifically provided in this Agreement, neither party shall have any further rights or obligations to the other under this Agreement.
35.    California Income Tax Withholding. Prior to the Closing, Seller shall deliver to Purchaser a certificate as necessary such that the sale of the Property to Purchaser hereunder is not subject to withholding requirements, and does not subject Purchaser to liability under, California Revenue and Tax Code Section 18662.
36.    Time for Performance. Time is of the essence of this Agreement. Whenever under the terms of this Agreement the time for performance falls on a Saturday, Sunday or legal holiday, such time for

992507_9    25


performance shall be on the next day that is not a Saturday, Sunday or legal holiday. In computing any period of time pursuant to this Agreement, the day of the act or event from which the designated period of time begins to run will not be included.
37.    Professional Fees. In the event of the bringing of any action or suit by either party to this Agreement against the other party by reason of any breach of any of the covenants, agreements, obligations or provisions on the part of the other party rising out of this Agreement, then in that event the prevailing party shall be entitled to have and recover of and from the other party all costs and expenses of the action or suit, including actual attorneys' fees and costs, accounting and engineering fees, and any other professional fees resulting from the action or suit.
38.    Possession. Possession of the Project, subject to the rights of the Seller under the Leaseback, and Cook Son under its sublease with Seller, shall be delivered to Purchaser on the Closing Date.
39.    Marketing. Seller acknowledges and agrees that Purchaser will incur substantial expenses in performing its underwriting, studies, inspections and investigation concerning the Project and that in consideration thereof, Seller hereby agrees that it will not solicit, consider, entertain or accept any formal or informal, direct or indirect, written or oral, offers to purchase, sell, assign, lease, develop, transfer or acquire any right, title or interest in or to the Project, or any part thereof, or any interest therein, and Seller shall discontinue and will not enter into discussions with any and all third parties relating to the Project.
40.    Limitation of Liability. Upon the Closing, Purchaser shall neither assume nor undertake to pay, satisfy or discharge any liabilities, obligations or commitments of Seller and shall not assume or discharge any debts, obligations, liabilities or commitments of Seller, whether accrued as of the Effective Date or thereafter, fixed or contingent, known or unknown, other than those specifically agreed to between the parties and set forth in this Agreement.
[SIGNATURES FOLLOW ON NEXT PAGE]


41.    

992507_9    26


IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.
PURCHASER:
CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust
By:   
   Name:   
   Title:   

 
By:   
   Name:   
   Title:   



SELLER:


THE DIXIE GROUP, INC., a Tennessee corporation
By:   
Name:   
Title:   


TDG OPERATIONS, LLC, a Georgia limited liability company

By: ______________________________________
Name: ____________________________________
Title: _____________________________________

 
 



SIGNATURE PAGE


SCHEDULE OF EXHIBITS AND SCHEDULES
EXHIBIT "A"      Legal Description
EXHIBIT "B"     Project Contracts
EXHIBIT "C"     Earnest Money Escrow Agreement
EXHIBIT "D"     Permitted Exceptions
EXHIBIT "E"     Bill of Sale
EXHIBIT "F"     Assignment of Contracts
EXHIBIT "G"     Seller's Certificate Reaffirming Representations and Warranties
EXHIBIT "H"     Assignment of Intangible Property
EXHIBIT "I"     Seller's Certificate
EXHIBIT "J"     Form of Deed
EXHIBIT "K"     Form of Leaseback
EXHIBIT "L"    Form of Guaranty



SCHEDULE 17B    Exceptions to Environmental Representations.



992507_9    SCHEDULE OF EXHIBITS


EXHIBIT "A"    

LEGAL DESCRIPTION
That tract or parcel of land situated in the city of Santa Ana, county of Orange, state of California, and described as follows:

Parcel 2, in the city of Santa Ana, county of Orange, state of California, as shown on a parcel map filed in Book 106, Pages 42 and 43 of Parcel Maps, in the Office of the County Recorder of said county.

Except all oil, gas, hydrocarbon substances and minerals by whatever name known in, on or under the above described land, and the right of exploring for, boring, mining, drilling, removing, extracting or marketing said substances, together with the exclusive right to execute any and all leases for the purpose of extracting or recovering said substances, but without the right of entry upon any portion of the surface of the ground or within the upper 500 feet measured downward from the surface, as reserved in the Deed from Harold T. Segerstrom, et al., recorded November 2, 1972, in Book 10408, Page 517, Official Records.



992507_9    1


EXHIBIT "B"    

LIST OF PROJECT CONTRACTS

NONE




992507_9    1


EXHIBIT "C"    

EARNEST MONEY ESCROW AGREEMENT


 
 
 
 
 
 
 
 
 
RE: Escrow Trust No. ______________
 
DATE: _______________, 2019

I.
PARTIES
A.    Seller:        ________________________________
                    
                    
Attention:                 
B.    Purchaser:    CenterPoint Properties Trust
1808 Swift Drive
Oak Brook, Illinois 60523‑1501
Attention: James N. Clewlow
C.    Escrow Holder:    Chicago Title and Trust Company
10 S. LaSalle Street, Suite 3100
Chicago, Illinois 60603
Attention: Ms. Krystina Cozzie
II.
PRELIMINARY STATEMENTS
A.    Concurrently with the execution and delivery of this Earnest Money Escrow Agreement, Seller and Purchaser have executed and delivered a certain Purchase and Sale Agreement ("Agreement"). Under the terms of the Agreement, Seller has agreed to sell to Purchaser that certain parcel of land and improvements thereon located at 3201 S. Susan Street, Santa Ana, California.
B.    Pursuant to the Agreement, Purchaser is required to deposit with the Escrow Holder the sum of FIVE HUNDRED FIFTY THOUSAND AND NO/100 DOLLARS ($500,000.00) ("Initial Earnest Money") and solely in the event Purchaser does not terminate the Agreement pursuant to Section7D, Purchaser is required to deposit with the Escrow Holder the additional sum of THREE HUNDRED THOUSAND AND NO/100 DOLLARS ($300,000.00) ("Additional Earnest Money"; and collectively, with the Initial Earnest Money, "Earnest Money") to be held by Escrow Holder pursuant to the terms and provisions of this Earnest Money Escrow Agreement.

992507_9    1


C.    Pursuant to the Agreement, Purchaser has the right to terminate the Agreement and to have the Initial Earnest Money and interest earned thereon returned to Purchaser.
III.
DEPOSIT OF EARNEST MONEY; INVESTMENT DIRECTIONS
A.    Concurrently herewith, Purchaser has deposited the Initial Earnest Money with the Escrow Holder in accordance with the Agreement.
A.    Escrow Holder is hereby authorized and directed to invest the Earnest Money or any portion thereof in accordance with the written direction of Purchaser (or Purchaser's Counsel). Unless otherwise provided pursuant to the provisions of Section IV hereof, such investment shall be for the benefit of Purchaser. The Federal Taxpayer Identification Number of the Purchaser is _______________.
IV.
INSTRUCTIONS
A.    One business day after receipt of the Initial Earnest Money, Escrow Holder shall disburse One Hundred and No/100 Dollars ($100.00) of the Earnest Money to or as directed by Seller (or Seller's counsel).
B.    In the event Escrow Holder receives from Purchaser a certification in the form attached hereto as Schedule 1, then Escrow Holder is authorized and directed to return to Purchaser, within one (1) business day thereafter, the Initial Earnest Money, together with all interest earned thereon.
C.    Except as set forth in Paragraph IV.A. or Paragraph IV.B. above, the Escrow Holder is instructed to hold and invest the Earnest Money, together with all interest earned thereon, until the Escrow Holder is in receipt of (i) a joint written direction from Seller (or Seller's Counsel) and Purchaser (or Purchaser's Counsel) or (ii) an order, judgment or decree addressed to Escrow Holder which shall have been entered or issued by any court and which shall determine the disposition of the Earnest Money and all interest earned thereon.
D.    Any party delivering a notice required or permitted hereunder shall simultaneously deliver copies of such notice to all parties listed in Section I of this Earnest Money Escrow Agreement. All notices required herein shall be either personally delivered, sent by certified or registered mail, postage prepaid, return receipt requested, or sent by overnight courier and shall, in all instances, be deemed to have been received upon delivery thereof.
E.    Except as otherwise expressly set forth in this Earnest Money Escrow Agreement, Escrow Holder shall disregard any and all notices or warnings given by any of the parties hereto.
F.    In case Escrow Holder obeys or complies with any order, judgment or decree of any court with respect to the Earnest Money, Escrow Holder shall not be liable to any of the parties hereto or any other person, firm or corporation by reason of such compliance, notwithstanding any such order, judgment or decree be entered without jurisdiction or be subsequently reversed, modified, annulled, set aside or vacated. In case of any suit or proceeding regarding this Earnest Money Escrow Agreement to which Escrow Holder is or may be at any time a party, Seller and Purchaser shall each be liable for one-half of all such costs, fees and expenses incurred or sustained by Escrow Holder and shall forthwith pay the same to Escrow Holder upon demand; provided, however, that in the event Escrow Holder is made a party to any suit or proceeding between Seller and Purchaser, the prevailing party in such suit or proceeding shall have no liability for the payment of Escrow Holder's costs, fees and expenses.

992507_9    2


G.    Escrow Holder is not to be held responsible for any loss of principal or interest which may be incurred as a result of making the investments or redeeming said investment for the purposes o, this Earnest Money Escrow Agreement.
H.    In no case shall the above mentioned deposits be surrendered except (i) in the manner specifically described in this Earnest Money Escrow Agreement; (ii) on an order signed by the Seller (or Seller's Counsel) and Purchaser (or Purchaser's Counsel); or (iii) in obedience to the process of order of a court as aforesaid.
I.    All fees of Escrow Holder shall be charged one-half to Seller and one-half to Purchaser.
J.    Except as to deposits of funds for which Escrow Holder has received express written direction from Purchaser (or Purchaser's Counsel) concerning investment or other handling, the parties hereto agree that the Escrow Holder shall be under no duty to invest or reinvest any deposits at any time held by it hereunder; and, further, that Escrow Holder may commingle such deposits with other deposits or with its own funds in the manner provided for the administration of funds under Section 2‑8 of the Illinois Corporate Fiduciary Act 205 ILCS 620/2‑8 and may use any part or all such funds for its own benefit without obligation to any party for interest or earnings derived thereby, if any, provided, however, nothing herein shall diminish Escrow Holder's obligation to apply the full amount of the deposits in accordance with the terms of this Earnest Money Escrow Agreement.
K.    Any order, judgment or decree requiring the Escrow Holder to disburse the Earnest Money shall not be binding upon Purchaser or Seller as to the ultimate disposition of the Earnest Money unless and until a final, non‑appealable order, judgment or decree is entered by a court having jurisdiction thereof.

[THE REMAINDER OF PAGE INTENTIONALLY LEFT BLANK;
SIGNATUE PAGE FOLLOWS]

992507_9    3



L.    This Earnest Money Escrow Agreement and all provisions hereof shall be binding upon and shall inure to the benefit of the parties hereto and their respective legal representatives, successors and permitted assigns.
FOR SELLER:
 
____________________________________________
 
By:   
 
Attorney for Seller
 
FOR PURCHASER:
 
RICHMOND BRESLIN LLP
 
By:   
 
Attorney for Purchaser

Accepted this ______ day of
________________, 2019
 
Chicago Title and Trust Company
Escrow Holder
 
 
By:   
 
Name: Krystina Cozzie
 
Title: Joint Order Escrow Administrator


992507_9    4


SCHEDULE 1

CERTIFICATION
The undersigned hereby certifies to Chicago Title and Trust Company, as Escrow Holder under that certain Earnest Money Escrow Agreement dated _____________________, 2019, Escrow Trust Number _____________, that the undersigned has elected to terminate that certain Purchase and Sale Agreement dated ____________________, 2019 by and between CenterPoint Properties Trust, a Maryland real estate investment trust as Purchaser and _______________________ as Seller pursuant to Paragraph 7D of the Purchase Agreement.
CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust
By:    
Name:    
Title:    




992507_9    5


EXHIBIT "D"    

PERMITTED EXCEPTIONS
1.
Property taxes, which are a lien not yet due and payable, including any assessments collected with taxes to be levied for the fiscal year 2019-2020.
2.
The lien of any special tax resulting from the inclusion of the property in a Special Assessment District or Mello-Roos Community Facilities District in accordance with the codes, which may exist by virtue or Assessment Maps or Notices filed and/or recorded by any such district. Assessments, if any, arising from such Assessment Districts will be collected along with regular Orange County real estate taxes.
3.
The lien of supplemental taxes, if any, assessed pursuant to the provisions of Chapter 3.5 (Commencing with Section 75) of the Revenue and Taxation code of the state of California.
4.
Water rights, claims or title to water, whether or not disclosed by the public records.
5.
Easement(s) for the purpose(s) shown below and rights incidental thereto as granted in a document;
Granted to:        The City of Santa Ana, a municipal corporation
Purpose:        Drainage
Recorded:        May 19, 1961, Book 5726, Page 970, of Official Records
Affects:            The Southerly 10.00 feet of said land
6.
Easement(s) for the purpose(s) shown below and rights incidental thereto as granted in a document;
Granted to:        The City of Santa Ana, a municipal corporation
Purpose:        Storm drain
Recorded:        Book 10790, Page 576, of Official Records
Affects:            That portion of said land as more particularly described therein
7.
Covenants, conditions and restrictions (deleting therefrom any restrictions indicating any preference, limitation or discrimination based on race, color, religion, sex, handicap, familial status or national origin) as set forth in the document

Recorded:        Book 10408, Page 526, of Official Records
Said covenants, conditions and restrictions provide that a violation thereof shall not defeat the lien of any mortgage or deed of trust made in good faith and for value.
Modification(s) of said covenants, conditions and restrictions
Recorded:        March 5, 1977, Book 12105, Page 101, of Official Records
Modification(s) of said covenants, conditions and restrictions
Recorded:        May 27, 1977, Book 12217, Page 1821, of Official Records.
8.
Easement(s) for the purpose(s) shown below and rights incidental thereto as granted in a document;
Granted to:        Southern California Edison Company

992507_9    1


Purpose:
Wires, underground conduits, cables, vaults, manholes, handholes and including above-ground enclosures, markers and concrete pads and other appurtenant fixtures
Recorded:
June 15, 1976, Book 11773, Page 1090, of Official Records
Affects:
A strip of land 15.00 feet lying within said land as more particularly described therein
9.
The fact that said land is included within a project area of the Redevelopment Agency shown below, and that proceedings for the redevelopment of said project have been instituted under the Redevelopment Law (such redevelopment to proceed only after the adoption of the redevelopment plan) as disclosed by a document.
Redevelopment Agency:
Community Redevelopment Agency of the City of Santa Ana/Santa Ana Inter City Commuter Station Redevelopment Project
Recorded:
December 20, 2007, Instrument No. 2007000744244, of Official Records.



992507_9    2


EXHIBIT "E"    

BILL OF SALE
_______________ a _______________ ("Seller") having its principal place of business at ________________, _____________________, in consideration of TEN AND NO/100 ($10.00) DOLLARS, receipt of which is hereby acknowledged, does hereby sell, assign, transfer and set over to CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust ("Purchaser"), the following described personal property, to‑wit:
All equipment, apparatus, machinery, cranes, appliances, furnishings, signs, site plans, surveys, soil and substrata studies, architectural renderings, plans and specifications, engineering plans and studies, floor plans and other plans or studies of any kind, leasing brochures, market studies, tenant data sheets and other supplies, fixtures and personal and tangible property owned by Seller and used or usable in connection with the operation and ownership of the Building or the Land commonly known as 3201 S. Susan Street, Santa Ana, California (as hereinafter referred to as the "Personal Property").
Seller hereby represents and warrants to Purchaser that: (a) Seller is the absolute owner of the Personal Property, (b) the Personal Property is free and clear of all liens, charges and encumbrances, and (c) Seller has full right, power and authority to sell the Personal Property and to make this Bill of Sale. ALL WARRANTIES OF QUALITY, FITNESS AND MERCHANTABILITY ARE HEREBY EXCLUDED.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be signed and sealed in its name by its officers thereunto duly authorized this ___ day of ______________, 2019.
_______________, a _______________
By:    
Name:    
Title:    



992507_9    1


EXHIBIT "F"    

ASSIGNMENT AND ASSUMPTION OF CONTRACTS
_____________________, a _______________ ("Assignor"), in consideration of the sum of TEN AND NO/100 ($10.00) DOLLARS in hand paid and other good and valuable consideration, the receipt of which is hereby acknowledged, hereby assigns, transfers, sets over and conveys to CenterPoint Properties Trust, a Maryland real estate investment trust ("Assignee"), all of Assignor's right, title and interest in and to those service contracts and other agreements listed on Exhibit "A" attached hereto and made a part hereof (collectively, "Contracts"), all pertaining to the real property and improvements thereon commonly known as 3201 S. Susan Street, Santa Ana, California.
Assignor represents and warrants to Assignee that Assignor is the sole owner of all of the owner's right, title and interest in and to the Contracts.
Assignee hereby assumes all obligations of Assignor under the Contracts arising on or after the date hereof.
This Assignment shall be binding upon and inure to benefit of Assignor, Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor and Assignee have executed this Assignment of Contracts this _____ day of ________________, 2019, which Assignment is effective this date.
ASSIGNOR:
________________________, a _______________
By:    
Name:    
Title:    
ASSIGNEE:
CENTERPOINT PROPERTIES TRUST
By:    
Name:    
Title:    
By:    
Name:    
Title:    





992507_9    1


EXHIBIT "A"

LIST OF CONTRACTS




992507_9    F-2


EXHIBIT "G"    

REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES
THIS REAFFIRMATION OF REPRESENTATIONS AND WARRANTIES ("Re‑Affirmation") is made as of this ____ day of ______________, 2019 by ______________, a _______________ ("Seller").
W I T N E S S E T H:
WHEREAS, that certain Purchase and Sale Agreement dated as of ____________, 2019 ("Contract") was entered into between Seller and CenterPoint Properties Trust, a Maryland real estate investment trust, as purchaser ("Purchaser"), pertaining to the purchase and sale of the property commonly known as 3201 S. Susan Street, Santa Ana, California and legally described on Exhibit "A" attached hereto and made a part hereof ("Property"); and
WHEREAS, as a condition to the closing of the transaction contemplated in the Contract, Seller is required to execute and deliver this Re‑Affirmation.
NOW, THEREFORE, for Ten Dollars ($10.00) in hand paid, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller hereby certifies to Purchaser that all of the representations and warranties made by Seller in or pursuant to the Contract are true and correct as of the date hereof and are reaffirmed and remade as of the date hereof to Purchaser by Seller, except as shown on Exhibit "B" attached hereto and made a part hereof. This Affirmation has been delivered by Seller to Purchaser pursuant to the terms of the Contract and nothing herein contained is intended to modify the terms of the Contract.
IN WITNESS WHEREOF, Seller has executed and delivered this Re‑Affirmation as of the day and year first above written.
______________, a _______________
By:    
Name:    
Title:    



992507_9    1


EXHIBIT "A"

LEGAL DESCRIPTION




992507_9    G-2


EXHIBIT "B"

EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES




992507_9    G-3


EXHIBIT "H"    

ASSIGNMENT OF
INTANGIBLE PROPERTY AND OTHER RIGHTS
FOR VALUE RECEIVED, __________________, a _______________ ("Assignor"), hereby conveys, assigns, transfers, and sets over unto CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust ("Assignee") all the right, title and interest of Assignor in and to any and all intangible property now owned, controlled or held by Assignor, solely in connection with the Building and the Personal Property, including without limitation: (i) all guaranties and warranties (including guaranties and warranties pertaining to construction of the Building) (collectively, the "Warranties"); (ii) all air rights, excess floor area rights and other development rights relating or appurtenant to the Land or the Building; (iii) all rights to obtain utility service in connection with the Building and the Land; (iv) assignable licenses and other governmental permits and permissions relating to the Land, the Building, and the basic operation thereof (collectively, the "Permits"). The foregoing shall be collectively referred to herein as the "Intangible Property". All defined terms utilized herein without definition shall have the meaning ascribed to such terms in that certain Purchase Agreement dated __________________, ___________ by and between Assignor and Assignee.
This Assignment shall be binding upon and shall inure to the benefit of Assignor, Assignee and their respective successors and assigns.
IN WITNESS WHEREOF, Assignor has executed this Assignment of Intangible Property and Other Rights on this ____ day of ________, 2019, which instrument is effective this date.
ASSIGNOR:
___________________, a _______________
By:    
Name:    
Title:    
ASSIGNEE:
CENTERPOINT PROPERTIES TRUST
By:    
Name:    
Title:    
By:    
Name:    
Title:    




992507_9    1


EXHIBIT "I"    

SELLER'S CERTIFICATE
The undersigned hereby certifies to CenterPoint Properties Trust, a Maryland real estate investment trust ("CenterPoint") as follows:
1.    Copies of all keys, if any, to the building located at 3201 S. Susan Street, Santa Ana, California have been delivered to CenterPoint as of the date hereof; and
2.    Copies or originals of: (i) all Contracts assigned to CenterPoint pursuant to that certain Assignment of Contracts of even date herewith from the undersigned in favor of CenterPoint and (ii) all intangible personal property assigned to CenterPoint pursuant to that certain Assignment of Intangible Property and Other Rights of even date herewith from the undersigned in favor of CenterPoint have been delivered to CenterPoint as of the date hereof.
Dated as of:    ______________, 2019
___________________, a _______________
By:    
Name:    
Title:    



992507_9    1


EXHIBIT "J"    

FORM OF DEED
RECORDING REQUEST BY
WHEN RECORDED MAIL TO
Jerry Richman
Richmond Breslin, LLP
5215 Old Orchard Road, Suite 420
Skokie, Illinois 60077
_____________________________________________________________________________________
SPACE ABOVE THIS LINE RESERVED FOR RECORDER'S USE
GRANT DEED
THE UNDERSIGNED GRANTOR DECLARES:
DOCUMENTARY TAX IS $____________
COMPUTED ON THE FULL VALUE OF PROPERTY CONVEYED
THE PROPERTY IS LOCATED IN ________________, CALIFORNIA
APN: ___________________
FOR VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, _______________________ hereby GRANTS to CenterPoint Properties Trust, a Maryland real estate investment trust, the real property located in the County of _________, State of California, and more particularly described in Exhibit "A" attached hereto and made a part hereof, together with, all and singular, the tenements, hereditaments, easements, rights-of-way and appurtenances belonging or in anywise appertaining to the same, and the improvements thereon, subject to the matters set forth in Exhibit "B".
IN WITNESS WHEREOF, the undersigned hereby executes this instrument as of the _____ day of ___________, 2019.
                    
By:                    
Name:                    
Title:                    


992507_9    1


STATE OF _____________    )
)    SS.
COUNTY OF ___________    )
On __________________ before me, _____________________________ personally appeared ____________________________________, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.
I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.
WITNESS my hand and official seal.
Signature                         (seal)
EXHIBITS:
Exhibit A – Property Description
Exhibit B – Permitted Encumbrances

992507_9    2


EXHIBIT "A"
Property Description


992507_9    3


EXHIBIT "B"
Permitted Encumbrances



992507_9    4


EXHIBIT "K"    

FORM OF LEASEBACK
[IN SUBSTANTIALLY THE FORM ATTACHED WITH OPEN ITEMS TO BE FINALIZED WITHIN 21 DAYS OF THE EFFECTIVE DATE HEREOF]
[OPEN ITEMS HAVE BEEN RESOLVED AND ARE REFLECTED ON FINAL LEASE, ATTACHED HERETO AS EXHIBIT 10.3]




992507_9    1


EXHIBIT "L"    

FORM OF GUARANTY
[SEE ATTACHED]


992507_9    1


GUARANTY OF PAYMENT
AND PERFORMANCE OF LEASE OBLIGATIONS
THIS GUARANTY OF PAYMENT AND PERFORMANCE OF LEASE OBLIGATIONS ("Guaranty") is made as of the ____ day of ________, 2019, by THE DIXIE GROUP, INC., a Tennessee corporation ("Guarantor"), to and for the benefit of CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust ("Landlord").
R E C I T A L S
A.    TDG Operations, LLC, a Georgia limited liability company ("Tenant") and Landlord entered into a Lease dated ____________, 2019 ("Lease") for premises commonly known as 3201 S. Susan Street, Santa Ana, California ("Premises").
B.    Landlord is unwilling to enter into the Lease unless Guarantor enters into this Guaranty, and Guarantor desires to provide this Guaranty to Landlord, in order to induce Landlord to enter into the Lease.
C.    Guarantor has a financial interest in Tenant, and will be benefited by the agreement of Landlord to enter into the Lease.
D.    Guarantor has provided certain of its financial information to Landlord, and Landlord has relied upon such financial information in accepting this Guaranty in lieu of other security or guarantees of the Obligations and the Tenant's Obligations (hereinafter defined).
Now, therefore, in consideration of the foregoing recitals and for the purpose of inducing Landlord to enter into the Lease, Guarantor hereby agrees as follows:
1.    Definitions; Incorporation of Lease. All capitalized terms used in this Guaranty and not otherwise defined herein shall have the meanings ascribed to them, respectively, in the Lease. All terms and provisions of the Lease are hereby incorporated into this Guaranty as fully as though set forth herein in full.
2.    Guaranty of Payment and Performance.
(a)    Guarantor hereby guarantees, absolutely and unconditionally, the full and prompt performance, completion and observance by Tenant of each and all of the covenants and agreements required to be performed, completed and observed by Tenant under the terms and provisions of the Lease, including, but not limited to, the full and complete payment of all Rent and other money obligations of Tenant to Landlord under or pursuant to any provisions of the Lease (the "Tenant's Obligations").
(b)    In connection with the foregoing, Guarantor shall indemnify, defend and hold Landlord harmless from and against any and all costs, damages, losses, expenses, claims and demands of and liabilities to third parties, including reasonable attorneys' fees, incurred directly as a result of or arising directly out of the failure of Tenant to perform, complete or observe Tenant's Obligations and Guarantor's failure to perform or observe its obligations under this Guaranty. All obligations of Guarantor set forth in this Guaranty are collectively hereinafter referred to as the "Obligations".
3.    Standard Waivers and Agreements. Additional agreements and waivers of Guarantor that are usual and customary in a guaranty of payment and performance of the type provided for in this Guaranty are set forth in Exhibit "A" attached hereto, and are hereby incorporated in this Guaranty as fully as though set forth herein in full.

992507_9    2


4.    Termination. This Guaranty shall remain in full force and effect until all the Tenant's Obligations and the Obligations shall be finally and irrevocably paid in full or otherwise completed, performed or observed. Discontinuance of the obligations of any other guarantor shall not operate as a discontinuance as to performance, completion or observance of any of the Obligations or the Tenant's Obligations. If after receipt of any payment or performance of all or any part of the Tenant's Obligations, Landlord is for any reason compelled to surrender such payment to any Person or return any benefits received, because such payment or performance is determined to be void or voidable as a preference, impermissible set-off, or a diversion of trust funds, or for any other reason, this Guaranty shall continue in full force (as to any such surrendered payment or benefit returned) notwithstanding any contrary action that may have been taken by Landlord in reliance upon such payment or the receipt of such benefit, and any such contrary action so taken shall be without prejudice to Landlord's rights under this Guaranty and shall be deemed to have been conditioned upon such payment and benefit having become final and irrevocable. Upon satisfaction in full of the Tenant's Obligations, Landlord will, upon request by Guarantor, deliver to Guarantor written confirmation that this Guaranty has been satisfied in full and has terminated.
5.    Tenant's Financial Condition. Guarantor assumes full responsibility for keeping itself sufficiently informed as to the financial condition of Tenant and as to all other circumstances affecting Tenant's ability to perform, complete and observe each and all of Tenant's Obligations for the benefit of Landlord, and agrees that Landlord will have no duty to report to Guarantor any information Landlord receives about Tenant's financial condition or any circumstances bearing on Tenant's ability to perform.
6.    Expenses. Guarantor agrees to pay and reimburse Landlord, upon demand, for all losses and reasonable costs and expenses, including reasonable attorneys' fees that Landlord may expend or incur:
(a)    in the enforcement of this Guaranty or any one or more of the Obligations or the Tenant's Obligations; or
(b)    the performance by Landlord of any one or more of the Obligations or the Tenant's Obligations; or
(c)    as a direct or indirect result of the falsity in any material respect of any of the representations in warranties of Guarantor set forth in paragraph 7 of this Guaranty, determined as of the date hereof.
7.    Representations and Warranties. Guarantor hereby makes to Landlord the following representations and warranties, upon which Landlord specifically relies:
(a)    Authorization. Guarantor has full right, power and authority to enter into this Guaranty and carry out the Obligations.
(b)    No Conflict. The execution, delivery and performance by Guarantor of this Guaranty and the Obligations will not violate or be in conflict with, result in a breach of, or constitute a default under, any indenture, agreement or any other instrument to which Guarantor is a party or by which Guarantor or any of its assets or properties is bound, or any order, writ, injunction or decree of any court or governmental institution.
(c)    Litigation. There are no actions, suits or proceedings pending, or to the knowledge of Guarantor, threatened against or adversely affecting Guarantor at law or in equity or before or by a governmental agency or instrumentality that involve any of the transactions herein contemplated, or are reasonably likely to result in any judgment or liability that would have any material and adverse effect on

992507_9    3


the financial condition of Guarantor. Guarantor is not in default with respect to any judgment, order, writ, injunction, decree, rule or regulation of any court.
(d)    Enforceability. This Guaranty is a legal, valid and binding obligation of Guarantor, enforceable in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the rights of creditors generally.
(e)    Financial Statements. The financial statements and other financial information furnished by Guarantor to Landlord are, in all material respects, true and correct, fairly present the financial condition of Guarantor as of their respective dates, and do not contain any untrue statement of a material fact or omit to state a material fact. As of the date the respective financial statements are furnished by Guarantor to Landlord, the Guarantor furnishing the same will be deemed to have represented and warranted that no material adverse change has occurred in the financial condition of Guarantor since the date of said financial statements.
(f)    Corporate Affiliations. Guarantor acknowledges that it will derive a material benefit from the satisfactory and complete payment, performance and observance of the Obligations and the Tenant's Obligations. No subsequent change in the ownership or equity interest described above shall affect or impair in any way the continuing validity or enforceability of this Guaranty against Guarantor. Until such time as the Tenant's Obligations and the Obligations have been finally and irrevocably paid in full or otherwise completed, performed or observed, Guarantor will not divest itself or otherwise sell or transfer any of the foregoing equity or ownership interests in Tenant, to the extent that doing so would constitute a default or breach of the prohibitions on assignment contained in the Lease.
8.    Notices. All notices or other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered to the addressee thereof (a) when actually delivered at the address set forth below for such addressee, (b) three (3) days after deposit in any main or branch United States post office as registered or certified mail, postage prepaid, (c) one (1) day after deposit with a reputable overnight courier service providing delivery receipts, delivery charges prepaid, or (d) on the date on which the addressee refuses delivery by mail or by private courier service, in each case properly addressed to the parties, respectively, as follows:
Landlord:    CenterPoint Properties Trust
1808 Swift Drive
Oak Brook, Illinois 60523
Fax: (630) 586-8010
Attention: Executive Vice President, Asset Management
with a copy to:    Richmond Breslin LLP
5215 Old Orchard Road
Suite 420
Skokie, Illinois 60077
Fax: (312) 258-0977
Attention: Mark S. Richmond, Esq.
Guarantor:    The Dixie Group, Inc.
475 Reed Road
Dalton, Georgia 30720
Fax: (251) 706-6008
Attention: Jon A. Faulkner

992507_9    4


with a copy to:    Miller & Martin PLLC
832 Georgia Avenue
Suite 1200
Chattanooga, Tennessee 37402
Fax: (423) 785-8480
Attention: Robert L. Dann, Esq.
By notice complying with the preceding provisions of this paragraph, each party shall have the right to change the address or addresses, or both, for all future notices and communications to such party or for copies of notices provided for above (none of which shall be required to be sent via certified or registered mail), but no such notice of a change of an address or addressee shall be effective until actually received by the other party. Copies of notices to the those Persons to whom copies are to be provided, none of which are required to be sent via courier or other delivery service or by certified or registered mail, are for information purposes only; failure of any Person to send or receive any such copy shall not affect the validity of notice otherwise given to a party in compliance with the provisions of this paragraph.
9.    Affirmative Covenants. Guarantor covenants and agrees that from the date hereof and so long as any of the Obligations or Tenant's Obligations remain outstanding and unpaid, unperformed or unobserved Guarantor will furnish to Landlord as soon as available, but in any event not later than sixty (60) days after the end of each fiscal or calendar year of Guarantor, audited year-end financial statements of said Guarantor certified as true and correct by said Guarantor. In addition, Guarantor covenants and agrees that Guarantor shall furnish to Landlord not more than thirty (30) days following written request from Landlord such other reports, financial statements and other financial information concerning Guarantor as Landlord may from time to time reasonably request.
10.    Partial Invalidity. If any term of this Guaranty or the application thereof to any Person or circumstance shall, to any extent, be declared or found by a court of competent jurisdiction to be invalid or unenforceable, the remaining provisions of this Guaranty, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, but such provision or portion thereof shall be deemed stricken and severed from this Guaranty and the remaining provisions and portions hereof shall be interpreted, applied and enforced so as to achieve, as near as may be, the purposes and intent of this Guaranty to the greatest extent not prohibited by law.
11.    Amendments. This Guaranty may be amended, modified, revised, revoked or terminated only by a written instrument executed by Guarantor and Landlord.
12.    Terms. Whenever the context requires, all terms used in the singular will be construed in the plural and vice versa, and each gender will include each other gender. The term "Tenant" means both the named Tenant and any other person or entity at any time assuming or otherwise becoming primarily liable for performance of any of the Tenant's Obligations. The term "Person" means an individual, corporation, partnership, limited liability company, joint venture, association, joint stock company, trust, unincorporated organization or association.
13.    Governing Law. This Guaranty shall be governed by the laws of the State of California and the United States of America and enforced in the courts of that State or in the Federal District Court of the Southern District of California. Guarantor, in order to induce Landlord to accept this Guaranty and enter into the Lease, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, hereby acknowledges and agrees that for all purposes hereof all actions or proceedings in any way, manner or respect arising out of or relating to this Guaranty and the transactions contemplated

992507_9    5


herein shall be litigated, at Landlord's sole discretion and election, only in courts having situs in the County of Orange in the State of California or in Federal Court for the Southern District of California, and in connection therewith: (a) Guarantor hereby consents and submits to the jurisdiction of any local or State of California court located within Orange County or any Federal court in the Southern District of California; (b) Guarantor hereby waives any right Guarantor may have to transfer or change the venue of any litigation brought by or against the Guarantor; and (c) Guarantor hereby agrees that CT Corporation, at 818 West Seventh Street, Suite 930, Los Angeles, California  90017 is hereby appointed and designated the true and lawful attorney and the duly authorized agent of the Guarantor for acceptance of service of legal process in any litigation commenced by Landlord with respect to this Guaranty. Guarantor may change the designated agent to another person or entity located in the State of California upon fifteen (15) business day's advanced written notice to Landlord. This provision is a material inducement for Landlord to enter into the Lease.
14.    Section Headings. The headings, titles and captions of this Guaranty are inserted only as a matter of convenience and in no way define, extend, limit or describe the scope or intent of this Guaranty.
[SIGNATURES APPEAR ON NEXT PAGE]


992507_9    6


IN WITNESS WHEREOF, Guarantor has executed this instrument as of the day and year first above written.
GUARANTOR:
THE DIXIE GROUP, INC., a Tennessee corporation
By:     
Name:     
Title:     
Attest:
By:     
Name:     
Title:     



992507_9    7


EXHIBIT "A"

STANDARD GUARANTY WAIVERS AND AGREEMENTS
The following additional waivers and agreements by Guarantor have been and are hereby incorporated in full into the Guaranty of Payment and Performance of Lease Obligations (the "Guaranty") dated ______________, 2019.
(a)    Rights of Landlord. Guarantor authorizes Landlord and Tenant at any time in their discretion to alter any of the Tenant's Obligations, and further authorizes Landlord (i) to take and hold any security for the Tenant's Obligations, (ii) to accept additional or substituted security, (iii) to subordinate, compromise or release any security, (iv) to release Tenant of liability for all or any part of the Tenant's Obligations, (v) to release, substitute or add any one or more guarantors, (vi) to assign the Guaranty in whole or in part to an assignee of the Lease, and (vii) perform any of the Obligations or Tenant's Obligations. Landlord may take any of the foregoing actions upon any terms and conditions as Landlord may elect, without giving notice to Guarantor or obtaining the consent of Guarantor and without affecting the liability of Guarantor to Landlord under this Guaranty.
(b)    Continuing Guaranty. The Guaranty shall be a continuing guaranty, and shall not be discharged, impaired or affected by: (i) existence or non-existence, or the continuance or non-continuance, of any obligation on the part of Tenant with respect to the Lease; (ii) any forbearance or extension of the time of payment or performance of any of the Obligations or the Tenant's Obligations; (iii) any and all changes in the terms, covenants or conditions of the Lease or of any document evidencing or securing performance of the Obligations or Tenant's Obligations hereafter made or granted; (iv) the release or agreement not to sue without reservation of rights of anyone liable in any way for payment or performance of any of the Obligations or Tenant's Obligations; (v) the power or authority or lack thereof of Tenant to enter into, or to execute, acknowledge or deliver the Lease; (vi) the validity or invalidity of the Lease or any portion thereof; (vii) any defenses whatsoever that Tenant or any other Person may have to the performance or observance of any of the Obligations or the Tenant's Obligations; (viii) the existence or non-existence of Tenant as a legal entity; (ix) any limitation or exculpation of liability of Tenant that may be expressed in the Lease; (x) the transfer by Tenant of all, or any part of any interest in all or any part of the Premises described in the Lease; (xi) any sale, pledge, surrender, indulgence, alteration, substitution, exchange, release, partial release, modification or other disposition of any of the collateral or other security from time to time or at any time securing Tenant's Obligations, all of which Landlord is expressly authorized to make from time to time; (xii) the acceptance by Landlord of part of performance of the Tenant's Obligations, or any failure, neglect or omission on the part of the Landlord to realize on, preserve or protect any portion of the Premises, or any personal property of Tenant or to exercise any lien upon, or right of appropriation of, any monies, credits or property of Tenant toward liquidation of the Tenant's Obligations; (xiii) the failure by Landlord or anyone acting on behalf of Landlord to perfect or maintain perfection of any lien or security interest upon any collateral given at any time to secure the payment of the Obligations or Tenant's Obligations; (xiv) any right or claim whatsoever that Guarantor may have against Tenant or Landlord or the successors or assigns of any of them or any change in control, ownership or affiliation among any Guarantor and Tenant; or (xv) any defense (other than the payment, performance or observance in full of all of the Obligations and Tenant's Obligations) that Guarantor may have as to its undertakings, liabilities and Obligations hereunder, including any defenses based upon any legal disability of Tenant or any discharge or limitation of the liability of Tenant to Landlord, whether consensual or arising by operation of law or any bankruptcy, insolvency or debtor-relief proceeding, or from any other cause, each and every such defense being hereby waived by Guarantor.

992507_9    8


(c)    Waivers. Guarantor waives diligence, presentment, protest, notice of dishonor, demand for payment, extension of time of payment, notice of acceptance of this Guaranty, notice of intent to accelerate or notice of acceleration, non-payment or non-performance by Tenant and indulgences, grace periods and notices of every kind. It is the intention of this Guaranty that Guarantor shall remain liable as a principal, notwithstanding any act, omission or thing that might otherwise operate as a legal or equitable discharge of Guarantor, until all of the Tenant's Obligations and the Obligations shall have been fully performed or paid.
(d)    Performance Upon Default. Upon the occurrence of a Default on the part of Tenant in the performance of any of the Tenant's Obligations, Guarantor hereby agrees to perform each and all of the Obligations the non-performance of which constitute such Default: (i) without deduction by reason of any set-off, defense or counterclaim of Tenant or any other Person; (ii) without requiring protest or notice of non-payment or notice of default to Guarantor, to Tenant or to any other Person; (iii) without demand for payment or proof of such demand; (iv) without requiring Landlord to resort first to Tenant or to any other guarantor, guaranty or any collateral which Landlord may hold; (v) without requiring notice of acceptance of the Guaranty or assent to the Guaranty by Landlord; and (vi) without requiring notice that any Tenant's Obligations have been incurred by Tenant pursuant to the terms of the Lease or of the reliance by the Landlord upon the Guaranty. Guarantor hereby waives the requirement that Landlord comply with any of the foregoing demands, actions or notices and the right to assert Landlord's failure to so comply as a defense to the enforcement of the Guaranty.
(e)    Subrogation. Notwithstanding anything to the contrary elsewhere contained herein or in the Lease, until such time as the Obligations and Tenant's Obligations shall have been fully performed, observed or paid, Guarantor expressly waives with respect to Tenant and any other Person, any and all rights at law or in equity to subrogation, to reimbursement, to contribution, to set-off or to any other rights that could accrue to a surety against a principal, to a guarantor against a maker or obligor, to an accommodation party against the party accommodated, or to a holder or transferee against a maker, and that Guarantor may have or hereafter acquire against Tenant or any other Person in connection with or as a result of Guarantor's execution, delivery and/or performance of this Guaranty, the Obligations or the Tenant's Obligations. Guarantor agrees that it shall not have or assert any such rights against Tenant or its successors and assigns or any other Person (including any surety), either directly or as an attempted set-off to any action commenced against Guarantor by Tenant (as lessee or in any other capacity) or any other Person. Guarantor hereby acknowledges and agrees that this waiver is intended to benefit Tenant and shall not limit or otherwise affect Guarantor's liability hereunder or the enforceability hereof.
(f)    Independent Obligations. Landlord may enforce the Guaranty without first resorting to or exhausting any other remedy it may have under the Lease or other security or collateral, or without first having recourse to any of the Premises through forcible entry and detainer proceedings or otherwise; provided, however, that nothing herein contained shall preclude Landlord from suing Tenant under the Lease, from terminating the Lease, from exercising any other rights, remedies or powers under the Lease or from enforcing performance of the Obligations or the Tenant's Obligations, and if such rights, powers or remedies are availed of, only the net proceeds therefrom, after deduction of all charges and expenses of every kind and nature whatsoever, shall be applied in reduction of the Tenant's Obligations; and Landlord shall not be required to institute or prosecute proceedings to recover any deficiency as a condition of any payment or performance hereunder or enforcement hereof. At any sale of any security or collateral for the Tenant's Obligations, whether by foreclosure or otherwise, Landlord may, at its discretion, purchase all or any part of such security or collateral offered for sale for its own account, and may apply against the amount bid therefor the unpaid amount or any part thereof due it pursuant to the terms of the Lease.

992507_9    9


(g)    Effect of Bankruptcy. The Guaranty shall continue in full force and effect notwithstanding the institution by or against Tenant of bankruptcy, reorganization, readjustment, receivership or insolvency proceedings of any nature, or the disaffirmance of the Lease in any such proceedings, or otherwise. Guarantor shall not seek or have the right to obtain any relief or order from any bankruptcy or other court of any jurisdiction the effect of which is to enjoin, postpone, delay or otherwise prevent or hinder the enforcement of Landlord's rights under the Guaranty, and Guarantor shall be estopped from asserting and hereby waives any right to assert in any such liquidation or reorganization that Guarantor's financial contribution or efforts are necessary to the reorganization or liquidation of Tenant.
(h)    Right of Set-Off. Without limiting any other right of Landlord, whenever Landlord has the right to declare any of the Tenant's Obligations to be immediately due and payable (whether or not it has so declared), Landlord at its sole election may set off against the Tenant's Obligations any and all moneys then owed to Guarantor by Landlord in any capacity, whether or not the obligation to pay such moneys owed by Landlord is then due, and Landlord shall be deemed to have exercised such right of set-off immediately at the time of such election even though any charge thereof is made or entered on Landlord's records subsequent thereto.
(i)    Delay; Cumulative Remedies. No delay or failure by Landlord to exercise any right or remedy against Tenant or Guarantor will be construed as a waiver of that right or remedy. All remedies of Landlord against Tenant and Guarantor are cumulative.
(j)    Binding Effect. The Guaranty shall inure to the benefit of and may be enforced by Landlord, and shall be binding upon and enforceable against Guarantor and Guarantor's heirs, legal representatives, successors and assigns. In the event of the death of any individual Guarantor, the Obligations of such Guarantor shall continue in full force and effect against his or her estate, personal representatives, successors and assigns. Without limiting the generality of the foregoing, Landlord (or its successors and assigns) may from time to time and without notice to the undersigned, assign any and all of its rights under this Guaranty without in any way affecting or diminishing the Obligations of Guarantor hereunder, who shall continue to remain bound by and obligated to perform under and with respect to this Guaranty as though there had been no such assignment.
(k)    Time is of the Essence. Time is of the essence of the Guaranty as to the performance of the Guarantor and Tenant.
(l)    Multiple Guarantors, Joint and Several Liabilities. If more than one Person executes this Guaranty (whether concurrently or at any time in the future, or whether the same document or a different document guaranteeing the same Tenant's Obligations), the obligations of all such Persons shall be joint and several and Landlord, in its sole and absolute discretion, may (i) bring suit against Guarantor, or any one or more of the Persons constituting Guarantor, and any other person or Persons guaranteeing any or all of the Tenant's Obligations ("Other Guarantor"), jointly and severally, or against any one or more of them; (ii) compromise or settle with any one or more of the Persons constituting Guarantor or any Other Guarantor for such consideration as Landlord may deem proper; (iii) release one or more of the Persons constituting Guarantor or any Other Guarantor from liability; and (iv) otherwise deal with Guarantor and any Other Guarantor, or any one or more of them, in any manner, and no such action shall impair the rights of Landlord to enforce any of the Obligations or to collect from Guarantor any amount due from Guarantor under this Guaranty. Nothing contained in the Guaranty or any other guaranty shall in any way affect or impair the rights or obligations of Guarantor with respect to any Other Guarantor.

992507_9    10


SCHEDULE 17B

Exceptions to Environmental Representations

From 1998 Phase I and 1999 update:
As reported in the September 1998 Phase I ESA, an asbestos survey conducted at the subject property identified the presence of asbestos-containing material in the sprayed-on acoustical ceiling material in the front lobby and the two main office hallways. The facility has maintained these ceilings in good (non-friable) condition.
A neighboring property, located at 2727 South Susan Street, had a waste oil release that was discovered in August 1991, which impacted the ground water aquifer. As of June 4, 1999, the site had been remediated and was undergoing post-remedial action monitoring. [Note, the 2016 Phase II did not indicate any groundwater issues].

From Phase I (dated August 24, 2016) and Phase II (dated November 14, 2016):
Suspect asbestos-containing material due to the age of the building, but it appears to be in good condition.  
Presence of minor concentrations of VOCs where diesel UST was removed in 1999. Subsequent soil and groundwater investigation included the installation of four monitoring wells, and Santa Ana RWQCB issued a No Further Action letter on February 21, 2002.
A clarifier with three associated USTs is present at the northwest corner of the property that receives the wastewater from the carpet manufacturing operations on-site, and it is tied into the municipal sanitary sewer system.
Laboratory analytical reports indicated that various metals, VOCs, and GRO were detected above the laboratory detection limited in the soil samples collected. Concentrations of arsenic (8.94 mg/kg) were above the ESL of 1.5 mg/kg in the soil. However, GRS noted that the range of background arsenic in Southern California can be up to 12 mg/kg.  



992507_9    11
Exhibit

LEASE
THIS LEASE ("Lease") is made as of this _____ day of October, 2019 between CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust ("Landlord"), and TDG OPERATIONS, LLC, a Georgia limited liability company (the "Tenant").
ARTICLE I - LEASE TERMS
Section 1.1.    Definitions. In addition to any other terms defined in this Lease, the following terms, whenever used in this Lease shall have the definitions set forth in this Section 1.1, and only such definitions, unless such definitions are expressly contradicted, limited or expanded elsewhere in this Lease.
A.    Term: The approximately one hundred twenty (120) month term, commencing as of the Commencement Date and ending on the Termination Date, unless sooner terminated by Landlord as provided in this Lease.
B.    Commencement Date: October __, 2019
C.    Termination Date: October 31, 2029
D.    Base Rent Schedule:
Period
(by lease month)
Monthly Base Rent
01-12
$173,568.25
13-24
$177,039.62
25-36
$180,580.41
37-48
$184,192.02
49-60
$187,875.86
61-72
$191,633.37
73-84
$195,466.04
85-96
$199,375.36
97-108
$203,362.87
109-120
$207,430.13
E.    Initial Monthly Rent Adjustment Deposit: $42,557.00
(i)    Initial Tax Deposit: $34,000.00
(ii)    Initial Expense Deposit: $2,723.00
(iii)    Initial Insurance Deposit: $5,834.00
F.    Tenant's Proportion: 100%
G.    Letter of Credit Amount: $654,500

992596_11


H.    Use: Manufacturing and distribution of flooring products
I.    Landlord's Broker: NONE
J.    Tenant's Broker: NONE
K.    Tenant's Billing Address:
P.O. Box 2007
Dalton, Georgia 30722-2007
L.    Tenant's Notice Address:
Attention:     Jon A. Faulkner, C.F.O
Mail:        P.O. Box 2007
Dalton, Georgia 30722-2007
Physical:    475 Reed Road
Dalton, Georgia 30720
M.    Landlord's Notice Address:
CenterPoint Properties Trust
1808 Swift Drive
Oak Brook, Illinois 60523-1501
Attention: Executive Vice President, Asset Management
N.    Landlord's Address for Payment of Rent:
1808 Swift Drive
Oak Brook, Illinois 60523
O.    Guarantor: The Dixie Group, Inc.
Section 1.2.    Significance of Definitions. Each reference in this Lease to any of the definitions contained in Section 1.1 of this Article shall be deemed and construed to incorporate all of the terms provided under each such definition.
Section 1.3.    Enumeration of Exhibits. The exhibits listed in this Section and attached to this Lease are incorporated in this Lease by this reference and are to be construed as a part of this Lease.
Exhibit "A"    Legal Description
Exhibit "B"    HVAC Maintenance Service Contract Requirements
Exhibit "C"    Form of Estoppel Certificate
Exhibit "D"    Move Out Conditions
Exhibit "E"    Maintenance, Repair and Replacement Obligations
Exhibit "F"    Form of Memorandum of Lease

992596_11    2


Exhibit "G"    Form of Letter of Credit
ARTICLE II     – PREMISES
Section 2.1.    Lease. Landlord, for and in consideration of the rents herein reserved and of the covenants and agreements herein contained on the part of Tenant to be kept, observed and performed, does by these presents, lease to Tenant, and Tenant hereby leases from Landlord, the demised premises ("Premises") consisting of the building ("Building") located at 3201 S. Susan Street, Santa Ana, California, and the land ("Land") legally described on Exhibit "A" attached hereto. The Land and Building and all appurtenances thereto are sometimes collectively referred to as the "Premises" or the "Project". The lease of the Premises shall be subject to, and Tenant shall at all times during the Term comply with, all Applicable Law (hereinafter defined).
Section 2.2.    Restrictions. The Premises are leased to Tenant subject to all covenants, conditions, agreements, easements and restrictions of record affecting the Premises (collectively, the "Restrictions"). The lease of the Premises is subject to, and Tenant shall at all times during the Term comply with all Restrictions.
ARTICLE III – TERM
Section 3.1.    Term. The Term shall commence on the Commencement Date and shall end on the Termination Date, unless sooner terminated as set forth in this Lease.
Section 3.2.    Option to Extend.
A.    Grant and Exercise of Options. Provided that (i) no default has occurred and is then continuing, Tenant shall have the options (each an "Extension Option") to extend the Lease Term for two (2) additional periods of five (5) years each (each an "Extension Term"). The Extension Terms shall be upon the same terms and conditions contained in the Lease except (x) this provision giving the Extension Option shall be deleted after the second Extension Option is exercised, (y) any construction obligations, allowances, rent abatements or other concessions applicable to the Leased Premises under the Lease shall not apply to the Extension Terms, and (z) the Base Rent for each year of the Extension Terms shall be adjusted as set forth below (the "Base Rent Modification"). Tenant shall exercise the Extension Options by delivering to Landlord, no later than two hundred seventy (270) days prior to the expiration of the then existing Term or initial Extension Term, as applicable, and no more than three hundred sixty-five (365) days prior to the expiration of the then existing Term or Extension Term. Tenant's failure to timely exercise such option shall be deemed a waiver of the Extension Option(s).
B.    Base Rent Modification Determination. Landlord shall notify Tenant of the amount of the Base Rent Modification no later than one hundred fifty (150) days prior to the commencement of each Extension Term. Tenant shall have thirty (30) days following its receipt of Landlord's notice to notify Landlord in writing that Tenant objects to the Base Rent Modification and that Tenant elects to determine the Base Rent Modification through an appraisal process. If Tenant elects to determine the Base Rent Modification through an

992596_11    3


appraisal process, the Base Rent Modification shall be determined in accordance with the appraisal process set forth in subsection D below. If Tenant fails to notify Landlord of such election within said thirty (30) day period, Tenant shall be deemed to have accepted the Base Rent Modification set forth in Landlord's notice to Tenant.
A.    Rent Adjustment. The minimum annual Base Rent for each Extension Term shall be an amount equal to the Base Rent then being quoted on comparable buildings (e.g., buildings of comparable age, physical condition, number of stories, total size, comparable location) in the Orange County, California market, taking into account all financial terms, including without limitation, base rent, annual escalations and leasing and brokerage commissions; provided, however, that in no event shall the Base Rent during the first year of each Extension Term be less than 100% of the highest Base Rent payable during the immediately preceding Term or Extension Term, as applicable, with three percent (3%) increases on each anniversary of the first day of the applicable Extension Term ("Floor"). The monthly Base Rent shall be an amount equal to one-twelfth (1/12) of the annual Base Rent for the applicable Extension Term and shall be paid at the same time and in the same manner as provided in the Lease.
B.    Appraisal Process. If, pursuant to subsection A above, Tenant elects to determine the Base Rent Modification through an appraisal process, the Base Rent Modification shall be determined as follows:
(1)    Selection of Appraisers. Landlord and Tenant shall, within ten (10) days after Landlord's receipt of Tenant's election, each select an appraiser to determine the Base Rent Modification for the Premises. Each appraiser so selected shall be either an MAI appraiser or a licensed real estate broker, each having at least ten (10) years prior experience in the appraisal or leasing of comparable space in the metropolitan area in which the Premises are located and with a working knowledge of current rental rates and practices. If either party fails to appoint an appraiser within the ten (10) day period, the appraiser appointed by the other party shall make the determination of the Base Rent Modification within the subsequent fifteen (15) days and shall provide such appraisal to Landlord and Tenant, and in such event, such appraisal shall serve as a final determination of the Base Rent Modification.
(2)    Appraisal. Upon selection, Landlord's and Tenant's appraisers shall work together in good faith to agree upon the Base Rent Modification. The estimate chosen by such appraisers shall be binding on both Landlord and Tenant. If the two appraisers cannot agree upon the Base Rent Modification for the Premises for each year of the Extension Term within twenty (20) days after their appointment, then, within ten (10) days after the expiration of such twenty (20) day period, the two appraisers shall select a third appraiser meeting the above criteria. Once the third appraiser has been selected as provided for above, then such third appraiser shall within ten (10) days after appointment make its determination of which of the appraisers' two estimates most closely reflects Base Rent Modification for each year

992596_11    4


of the Extension Term and such estimate shall be binding on both Landlord and Tenant as the Base Rent Modification for the Extension Term. The parties shall share equally in the costs of the third arbitrator. If the Base Rent Modification determined by the appraisers is less than the Floor, Base Rent shall be the highest Base Rent payable during the immediately preceding term.
C.    Condition. Tenant agrees to accept the Premises to be covered by this Lease during each Extension Term in an "as is" physical condition, and Tenant shall not be entitled to receive any allowance, credit, concession or payment from Landlord for the improvement thereof or otherwise.
D.    Amendment. In the event Tenant exercises either or both of the Extension Options, then Landlord and Tenant shall mutually execute and deliver an amendment to this Lease reflecting the extension of the Term and the Base Rent for such Extension Term.
E.    Termination. The Extension Options herein granted shall automatically terminate upon the earliest to occur of: (i) the expiration or termination of this Lease; (ii) the termination of Tenant's right to possession of the Premises; (iii) any assignment of the Lease by Tenant or (iv)  the failure of Tenant to timely or properly exercise any Extension Option.
ARTICLE IV – CONDITION OF PREMISES
Section 4.1.    Disclaimer Regarding Premises. Landlord and Tenant shall arrange for an inspection of the Premises within five (5) business days after the Commencement Date to determine any defects in the condition of the Premises that are not set forth in Exhibit E attached hereto. In the event that Landlord and Tenant determine that there are any such additional defects in the condition of the Premises, they shall note same in an inspection report ("Move in Condition Report") to be prepared by the parties. Tenant agrees to accept the Premises in an absolutely "as is" condition, including, but not limited to, any conditions noted in the Move in Condition Report. Tenant acknowledges and agrees that Landlord, its agents, attorneys, representatives and employees have not and do not make any representations or warranties, express or implied, to Tenant regarding the Premises or the Project.
ARTICLE V     – RENT
Section 5.1.    Base Rent. Tenant agrees to pay to Landlord, monthly in advance, without offset or deduction, base rent for the Term ("Base Rent") in the amount of the Monthly Base Rent set forth in the Base Rent Schedule commencing on the Commencement Date and continuing on the first day of each month thereafter for the balance of the Term. In addition thereto, Tenant shall pay all such other amounts as are described in this Lease as "Additional Rent" in the manner and at the time specified in this Lease. The term "Rent" when used in this Lease shall include all Base Rent, as well as all Additional Rent. All Rent payable hereunder shall be payable to Landlord at Landlord's Address for Payment of Rent, or as Landlord may otherwise from time to time designate in writing by notice to Tenant. All bills sent by Landlord to Tenant shall be sent to Tenant at Tenant's Billing Address.

992596_11    5


Section 5.2.    Base Rent Adjustment. In addition to the Base Rent, commencing on the Commencement Date, Tenant shall pay to Landlord, as Additional Rent, the Rent Adjustments (hereinafter defined), without offset or deduction. Until such time as Tenant receives the first Adjustment Statement (hereinafter defined), Tenant shall, commencing on the Commencement Date and on the first day of each and every month thereafter, make the Initial Monthly Rent Adjustment Deposit.
A.    For the purposes of this Lease:
(1)    "Calendar Year" means each calendar year or a portion thereof during the Term.
(2)    "Declaration" means any recorded declaration of covenants, easements or restrictions, or similar recorded instrument, that may affect the Project.
(3)    "Expenses" means and includes all expenses paid or incurred by Landlord for owning, managing, maintaining, operating, replacing and repairing the Project and personal property used in conjunction therewith (provided all such shall be subject to the provisions set forth on Exhibit E attached hereto), a management fee in an amount equal to one and one-half percent (1.5%) of all Base Rent, Insurance Expenses and Taxes for the Project and any pass-throughs for maintenance and repair of roof, parking lot and HVAC by Landlord, whether the management services are performed by Landlord, an affiliate of Landlord, or by a third party, including any Park Expenses and any costs of enforcing Tenant's obligation hereunder.
(4)    "Insurance Expenses" shall mean and include all actual costs and expenses incurred by Landlord in connection with insuring the Project.
(5)    "Park" shall mean any real property of which the Project is a part as covered by any Declaration.
(6)    "Park Expenses" shall mean and include all actual and reasonable assessments and other expenses, including any management fee, actually charged or imposed relating to the Project pursuant to any Declaration.
(7)    "Rent Adjustments" means all amounts owed by Tenant as Additional Rent on account of Expenses, Insurance Expenses or Taxes.
(8)    "Rent Adjustment Deposit" means an amount equal to Landlord's estimate of Rent Adjustments due for any Calendar Year, which estimate may be made from time to time during the Term.
(9)    "Taxes" means any taxes, assessments, sewer rents, rates and charges, transit taxes, taxes based upon the receipt of rent, and any other federal, state or local governmental charge, general, special, ordinary or extraordinary, which now or hereafter accrue during the Term and are levied or assessed or become a lien against the Project or any portion thereof, this Lease or any Rent payable under this Lease

992596_11    6


in any Calendar Year and any tax in substitution of any of the foregoing. Taxes also include Landlord's reasonable costs and expenses (including reasonable attorney's fees) in contesting or attempting to reduce any taxes.
B.    Commencing on the Commencement Date, Tenant shall pay to the Landlord as Additional Rent Tenant's Proportion of Expenses, Insurance Expenses and Taxes attributable to each Calendar Year. The amount of Taxes attributable to a Calendar Year shall be the amount assessed for such Calendar Year, even though the assessment for such Taxes may be payable in a different Calendar Year. Notwithstanding the above, as long as Tenant is not in default hereunder, if Landlord decides not to protest the Taxes in any year, Tenant shall have the right to protest or appeal the amount of any property tax or assessment on the Premises as long as Tenant uses a consultant or attorney reasonably acceptable to Landlord and follows applicable procedures for doing so and as long as any required deposit is paid by Tenant during the pendency of such protest or appeal. In the event that Taxes are reduced as a result of a portion of the Building being vacant, Landlord may equitably adjust the Taxes payable by Tenant so that Landlord receives the full benefit of the vacancy factor relating to the portion of the Building that is vacant.
C.    As soon as reasonably feasible after the end of each Calendar Year, Landlord will furnish Tenant a statement ("Adjustment Statement") showing the following:
(1)    Expenses, Insurance Expenses and Taxes for such Calendar Year and the amount of Expenses, Insurance Expenses and Taxes paid by Tenant during such Calendar Year;
(2)    The total amount of Rent Adjustments due Landlord for such Calendar Year, less credits for Rent Adjustment Deposits paid, if any; and
(3)    The Rent Adjustment Deposit due in the current Calendar Year.
D.    Within thirty (30) days after Tenant's receipt of each Adjustment Statement, Tenant shall pay to Landlord:
(1)    The amount of Rent Adjustment shown on the Adjustment Statement as due to Landlord for the Calendar Year last ended; plus
(2)    The amount, which when added to the Rent Adjustment Deposit theretofore paid in the current Calendar Year, would provide that Landlord has then received such portion of the Rent Adjustment Deposit as would have theretofore been paid to Landlord had Tenant paid one-twelfth (1/12) of the Rent Adjustment Deposit, for the current Calendar Year, to Landlord monthly on the first day of each month of such Calendar Year.
Commencing on the first day of the first month after Tenant's receipt of each Adjustment Statement, and on the first day of each month thereafter until Tenant receives a more current Adjustment Statement, Tenant shall pay to Landlord one-twelfth (1/12th) of the Rent Adjustment

992596_11    7


Deposit shown on the then-current Adjustment Statement, as adjusted for any credit from overpayments during the prior year. During the last complete Calendar Year, Landlord may include in the Rent Adjustment Deposit its estimate of the Rent Adjustment which may not be finally determined until after the expiration of the Term. Tenant's obligation to pay the Rent Adjustment shall survive the expiration or termination of the Term, and Landlord's obligation to settle up and reimburse any overpayments shall survive the expiration or termination of the Term.
E.    If the Commencement Date is on any day other than the first (1st) day of January or if the last day of the Term is on any day other than the last day of December, then any Rent Adjustments due Landlord shall be prorated for the applicable calendar year. All Rent Adjustment Deposits may be commingled, and no interest shall be paid to Tenant thereon.
Section 5.3.    Interest Charge and Late Charge. Tenant acknowledges that its late payment of any Rent will cause Landlord to incur certain costs and expenses not contemplated under this Lease, the exact amount of which is extremely difficult or impractical to fix. Therefore, if any payment of Rent, or any portion thereof, is not received by Landlord when due, Tenant shall immediately pay to Landlord a late charge equal to five percent (5%) of the unpaid amount. In addition, if any overdue payment of Rent is not paid within one (1) month of the due date thereof, an additional late charge equal to two percent (2%) of the unpaid amount may be charged by Landlord, and Landlord may charge an additional two percent (2%) of any overdue and unpaid amount for each additional month, or fraction thereof, during which any such payment remains past due. Landlord and Tenant agree that the foregoing late charges represent reasonable estimates of costs and expenses incurred by Landlord from, and are fair compensation to Landlord for, its loss suffered by such late payment by Tenant.
Any amount due from Tenant to Landlord under this Lease, other than the payment of Rent, not paid when due shall bear interest from the date when the same is payable under the terms of this Lease until the same shall be paid at a rate of interest equal to eighteen percent (18%) per annum (the "Delinquency Rate").
ARTICLE VI – UTILITIES
Section 6.1.    Utilities. Tenant shall pay, directly to the appropriate supplier, all costs of natural gas, electricity, heat, light, power, sewer service, telephone, water, refuse disposal and other utilities and services supplied to the Premises. If at any time, any services or utilities are jointly metered, Landlord shall make a reasonable determination of Tenant's share thereof and Tenant shall pay its share, as Additional Rent, within fifteen (15) days after receipt of an invoice from Landlord. Tenant shall cooperate with Landlord and the utility service providers at all times and, as reasonably necessary, shall allow access to the Premises' electric lines, feeders, risers, wiring, and any other machinery within the Premises.
Landlord shall in no way be liable or responsible for any loss, damage, or expense that Tenant may sustain or incur by reason of any change, failure, interference, disruption, defect, unavailability or unsuitability in the supply or character of any utility or service furnished to the

992596_11    8


Premises, and no such change, failure, interference disruption, defect, unavailability, or unsuitability shall relieve Tenant from any of its obligations under this Lease.
Tenant shall provide Landlord monthly data relating to utility usage and service at the Premises on an annual basis within thirty (30) days after the end of each calendar year and at such other times reasonably requested by Landlord. Such information shall include, but shall not be limited to, information relating to the usage / consumption of electricity, natural gas, water, and waste generation and such other information to enable the assessment of the environmental, social and governance performance of the Premises. Tenant shall provide all relevant documents and information with respect to such matters relating to the Premises.
ARTICLE VII     – USE
Section 7.1.    Use. The Premises shall be used for the Use only, and for no other purpose. Tenant shall use and occupy the Premises and comply with all applicable federal, state, local and/or municipal law, statute, ordinance, code, rule, regulation, policy, common law, license, authorization, decision, order, injunction or ordinance (collectively, "Applicable Law").
Section 7.2.    Prohibited Uses. Tenant shall not permit the Premises, or any portion thereof, to be used in such manner which impairs Landlord's right, title or interest in the Premises or any portion thereof, or in such manner which gives rise to a claim or claims of adverse possession or of a dedication of the Premises, or any portion thereof, for public use. Tenant agrees not to drag, push or pull pallets, equipment or other property along, over or across the floor of the Building at any time during the Term. Tenant shall not take any action to materially and adversely affect the environmental performance of the Building at any time during the Term without Landlord's prior written consent. Tenant shall not use or occupy the Premises or permit the Premises to be used or occupied: (i) contrary to any Restrictions or any Applicable Law, and shall at all times comply with all Restrictions and Applicable Law, (ii) in any manner which would violate any certificate of occupancy, (iii) in any manner which would render any insurance maintained or required to be maintained by Landlord or Tenant void or the insurance risk more hazardous than on the Commencement Date, (iv) in any manner which would cause structural injury to the Building, (v) in any manner which would cause the value or usefulness of the Premises, the Building, or any part of the Premises or the Building to diminish other than ordinary wear and tear, or (vi) in a manner which would constitute a public or private nuisance or waste. Tenant agrees that it will, promptly upon discovery of any such use, immediately notify Landlord and take all necessary steps to compel the discontinuance of such use.
ARTICLE VIII - MAINTENANCE, REPAIR AND REPLACEMENT OBLIGATIONS
Section 8.1.    Tenant's Obligations.
A.    Subject to the Landlord's obligations set forth in Section 8.2 below, Tenant shall, at its sole cost and expense, promptly perform all maintenance and promptly make all necessary repairs and replacements, in and to the entire Premises, including, but not limited to, the floor slab, interior and demising walls, interior portions of exterior walls, windows, glass, window frames, entries, doors, overhead doors, truck doors, door frames,

992596_11    9


loading dock areas, dock bumpers, dock plates and levelers, signs, and all systems such as plumbing, heating, ventilating, air conditioning, electrical, fire sprinkler and fire protection, water and sewer serving the Premises. Landlord acknowledges that the prior railroad spur on the Property has been abandoned by Tenant and is not required to be replaced or maintained by Tenants.
B.    Tenant shall, at Tenant's sole cost and expense, procure and maintain service contracts, in form and substance and with a licensed firm reasonably satisfactory to Landlord, for (i) the semi-annual maintenance of the heating, ventilating and air conditioning , (ii) the annual (or more frequent if required by the local municipality) maintenance of the fire sprinkler and fire protection systems (including, but not limited to alarms, pumps and sprinkler heads) serving the Premises and (iii) the annual maintenance of the dock doors and levelers. The maintenance service contract of the heating, ventilating and air conditioning shall include the services set forth on Exhibit "B" attached hereto. Tenant shall provide copies of all such contracts to Landlord and, upon the request of Landlord, provide evidence, including reports, that the work and inspections to be performed pursuant to such contracts have been performed.
Section 8.2.    Landlord's Obligations. Landlord shall inspect, test, maintain, repair and replace the roof, the structural portions of the exterior walls (excluding interior portions of exterior walls, windows, glass, window frames, doors, overhead doors, truck doors, and door frames), the foundation of the Building (which foundation shall not include the floors or floor slabs) and the parking lots, parkways and driveways on the Premises. Notwithstanding the foregoing, Landlord's obligations relating to the parking lot, parkways and driveways shall not include snow removal, landscaping, removal of debris or safety issues. Tenant and Landlord acknowledge and agree that certain obligations of Landlord and Tenant relating to the maintenance, repair and replacement of portions of the Premises, and the payment and reimbursement of the costs thereof, shall be governed by the terms set forth on Exhibit "E" attached hereto. Otherwise, all costs incurred by Landlord in connection with any and all inspections, tests, maintenance, repairs and replacements shall be Expenses, and shall be paid by Tenant.
Section 8.3.    Damage Caused by Tenant's Neglect. Notwithstanding anything to the contrary in this Lease, if any damage, repair or replacement to the Premises, the Project or any equipment or appurtenance to the Project, results from any act or negligence of Tenant or any member of the Tenant Group (hereinafter defined), Tenant shall be liable therefor and, upon demand by Landlord, Tenant shall reimburse Landlord for all costs and expenses incurred in connection with such damages, repairs and replacements.
ARTICLE IX     - TENANT'S INSURANCE
Section 9.1.    Tenant's Insurance.
A.    Tenant shall procure and maintain, or cause to be maintained, at all times during the Term, at Tenant's sole cost and expense, and until each and every obligation of Tenant contained in this Lease has been fully performed, no less than the following insurance: (i) insurance covering all of Tenant's employees for Worker's Compensation, in statutory amounts, and Employer's liability coverage of: $1,000,000.00 for each accident, each

992596_11    10


employee and per policy and shall include a waiver of subrogation in favor of Landlord and Landlord's property manager; (ii) Commercial General Liability covering Tenant against any claims arising out of liability for bodily injury and death and personal injury and advertising injury and property damage occurring in and about the Premises, and/or the Building and otherwise resulting from any acts and operations of Tenant, its agents, contractors, invitees and employees, with combined single limit of $1,000,000.00 per occurrence and $2,000,000.00 annual general aggregate. Coverage shall include premises liability, products/completed operation liability, fire legal liability, host liquor liability and contractual liability including coverage for insured contracts; (iii) when any motor vehicles are used in connection with this Lease, Tenant shall provide Automobile Liability Insurance to include owned, non-owned or hired automobiles and automobile contractual liability with limits of not less than $1,000,000.00 combined single limit and such other coverages as required by the laws of the State where the Premises are located; (iv) Umbrella Liability Insurance to be excess and follow-form over the Commercial General Liability, Automobile Liability and Employer's Liability Insurance. The Umbrella Liability policy shall be written on an "occurrence" form with a limit of liability of $5,000,000.00 and a Self-Insured Retention no greater than $10,000.00; (v) property coverage provided under a Special Form or "All Risks" policy, in an amount of the full replacement cost value of the Tenant's Property (which shall include Alterations) and include an agreed amount endorsement waiving any coinsurance limitation; (vi) Business Income coverage with limits not less than an amount necessary to cover continuing expenses including Rent and extra expenses for at least one (1) year; and (vii) such other policy or policies as are deemed reasonably necessary by Landlord. If, pursuant to the provisions of Section 1.1 of this Lease, Tenant is in the business of manufacturing, selling, distributing, serving or furnishing alcoholic beverages, then Tenant shall obtain and maintain, throughout the entire Term, liquor liability and dram shop insurance, in such amounts as Landlord may require, and if no such amount is specified by Landlord, in amounts no less than the minimums required by Applicable Law. In addition to the aforementioned insurances, and during any such time as any alterations or work is being performed at the Premises (except that work being performed by the Landlord or on behalf of Landlord) Tenant, at its sole cost and expense, shall carry, or shall cause to be carried and shall deliver to Landlord at least ten (10) days prior to commencement of any such alteration or work, evidence of insurance with respects to (a) workers compensation insurance covering all persons employed in connection with the proposed alteration or work in statutory limits, (b) general/excess liability insurance, in an amount commensurate with the work to be performed but not less than $2,000,000.00 per occurrence and in the aggregate, for ongoing and completed operations insuring against bodily injury and property damage and naming all additional insured parties as outlined below and required of Tenant and shall include a waiver of subrogation in favor of such parties, (c) builders risk insurance, to the extent such alterations or work may require, on a completed value form including permission to occupy, covering all physical loss or damages, in an amount and kind reasonable satisfactory to Landlord, and (d) such other insurance, in such amounts, as Landlord deems reasonably necessary to protect Landlord's interest in the Premises from any act or omission of Tenant's contractors or subcontractors.

992596_11    11


B.    All of Tenant's insurance policies shall: (i) be written with insurance companies authorized to do business in the State where the Premises are located, acceptable to Landlord, with a minimum A.M. Best rating of A-VII; (ii) name Landlord, Landlord's mortgagee and other parties as designated by Landlord, as additional insureds and loss payees as their respective interests may appear and shall provide such additional insured status for on-going and completed operations, (iii) provide defense expense in addition to the limit of liability stated in the policy, (iv) be primary and non contributory and (v) provide a waiver of subrogation endorsement in favor of Landlord and other parties as required by Landlord. Tenant agrees and shall provide thirty (30) days advance written notice of cancellation or non-renewal for any reason (except ten (10) days for non-payment of premium) to Landlord with regard to any policies of insurance required herein above. Tenant shall furnish to Landlord, prior to the Commencement Date, and thereafter at least ten (10) days prior to the expiration of each such policy, certificates of insurance evidencing all required coverages, together with a copy of the endorsement(s), specifically but not limited to Waiver of Rights to Recover from Others, Additional Insureds (ongoing and completed operations) and Contractual Liability endorsements.
C.    Landlord and Tenant further agree any and all deductibles on insurance policies required to be provided by Tenant shall be borne by Tenant and shall be considered insurance for purposes of the Waiver of Subrogation obligation set forth below.
Section 9.2.    Landlord's Insurance. Landlord shall maintain (i) commercial general liability insurance covering the Project at limits no less than those required by Landlord's mortgagee, (ii) Special Form "All Risk" property insurance covering the full replacement cost of the Building (including Building Fixtures) with no coinsurance limitation and including all coverages and perils as required by Landlord and Landlord's mortgagee, if any and (iii) such other insurance deemed necessary by Landlord. The cost of all insurance described in this Section 9.2 and all deductibles paid thereunder shall be a part of Insurance Expenses.
Section 9.3.    Waiver. Landlord and Tenant agree to have all property insurance policies which are required to be carried by either of them under this Lease either endorsed to provide that the insurer waives all rights of subrogation which such insurer might have against the other party and Landlord's mortgagee, if any or to have such policies give permission for the respective Landlord or Tenant to waive recovery rights in writing prior to a loss. By this clause, the parties intend and hereby agree, that the risk of loss or damage to property shall be borne by the parties' insurance carriers. It is hereby agreed that Landlord and Tenant shall look solely to, and seek recovery from, only their respective insurance carriers in the event a loss is sustained for which Property Insurance is carried or is required to be carried under this Lease. If Landlord elects to self insure any of the insurance required of Landlord under this Lease, Landlord shall be considered an insurance carrier for purposes of this Section. Without limiting any release or waiver of liability or recovery contained in any other Section of this Lease but rather in confirmation and furtherance thereof, Landlord waives all claims for recovery from Tenant, and Tenant waives all claims for recovery from Landlord, and their respective agents, partners and employees, for any loss or damage to any of its property insured under the insurance policies required under this Lease. The provisions of this Section 9.3 will survive the expiration or termination of this Lease.

992596_11    12


ARTICLE X     - DAMAGE OR DESTRUCTION
Section 10.1.    Damage: Lease to Terminate. If the Project or any portion thereof is substantially damaged by fire or other causes, Landlord shall notify Tenant "Landlord's Notice") within ninety (90) days after the occurrence of such damage the length of time that Landlord estimates it will take to repair or restore the Project. If the repair or restoration of such damage will take more than three hundred sixty-five (365) days, either Landlord or Tenant shall have the right to terminate this Lease as of the date of such damage by giving written notice to the other within fifteen (15) days after the date the Landlord's Notice is delivered to Tenant.  In such event Rent shall be apportioned on a per diem basis and paid to the date of such termination.
Section 10.2.    Damage: Lease to Continue. If the Project or any part of the Project is damaged by fire or other causes and such damage can be repaired with three hundred sixty-five (365) days after such damage occurs, then Landlord shall proceed with reasonable diligence to repair and restore the Project within such three hundred sixty-five (365) day period, subject to Force Majeure Delay (hereinafter defined), at its sole cost and expense. In such event, provided that: (a) the fire or casualty was not caused by the act or neglect of Tenant, its agents or employees and (b) the fire or casualty rendered the Premises or a portion thereof unusable; then Rent shall abate beginning with the date of the fire or casualty and ending on the date Landlord tenders the Premises to Tenant. Such abatement shall be in proportion to the nonusability of the Premises during the period that Landlord's repair and restoration are in progress. Landlord's obligation to repair, restore or rebuild the Project shall be limited to restoring the Project to substantially the same condition in which the Project existed prior to the fire or casualty. In no event shall Landlord be required to repair or replace any Alterations or improvements made by Tenant or any of Tenant's Property (hereinafter defined). The term "Force Majeure Delay" shall mean any delay beyond the control of Landlord, including, but not limited to, a delay resulting from issuance of permits, any strike, lockout, labor trouble, civil disorder, inability to procure materials, weather conditions, failure of power, restrictive governmental laws or regulations, riots, insurrections, war, fuel shortages, accidents, casualties, acts of God, acts or delays caused directly or indirectly by Tenant, or by any member of the Tenant Group.
Section 10.3.    Insurance Proceeds. In the event of any casualty, all insurance proceeds under policies purchased by Landlord shall be payable to Landlord.
ARTICLE XI – LIENS
Section 11.1.    Lien Claims. Tenant shall not do any act which shall in any way encumber title to the Project or any part of the Project, nor shall any interest or estate of Landlord in the Project be in any way subject to any claim by way of lien or encumbrance, whether by operation of law or by virtue of any express or implied contract by Tenant. Any claim to or lien upon the Project arising from any act or omission of Tenant shall accrue only against the leasehold estate of Tenant and shall in all respects be subject and subordinate to the paramount title and rights of Landlord in and to the Project. Tenant will not permit the Premises or any other part of the Project to become subject to any mechanics', laborers' or materialmen's lien on account of labor or material furnished to Tenant or claimed to have been furnished to Tenant in connection with work of any character performed or claimed to have been performed by or at the direction or sufferance of Tenant. If any such lien

992596_11    13


so attaches and Tenant fails to pay and remove the same within the earlier to occur of: (a) thirty (30) days after Tenant has knowledge of the filing of the lien (or ten (10) days after written notice from Landlord if Landlord is in the process of selling or financing the Project) and (b) the date required under any mortgage encumbering the Project, then Landlord, at its election, and in addition to any other remedies available under this Lease, or pursuant to Applicable Law, may pay and satisfy the same and in such event the sums so paid by Landlord, with interest from the date of Landlord's payment thereof at the Delinquency Rate, shall be deemed to be Additional Rent due and payable by Tenant within fifteen (15) days after written notice from Landlord. Tenant agrees to indemnify, hold harmless and defend (with counsel approved by Landlord) Landlord from any loss, cost, damage or expense, including attorney's fees, arising out of any lien claim or out of any other claim relating to work done or materials supplied at Tenant's request or on Tenant's behalf.
ARTICLE XII - TENANT ALTERATIONS AND SIGNAGE
Section 12.1.    Alterations. Tenant shall not make any alterations, additions or improvements (each, an "Alteration" and collectively, "Alterations") to the Premises without, in each instance, the prior written consent of Landlord, which shall not be unreasonably withheld or delayed. Notwithstanding the foregoing, provided that Tenant first gives Landlord written notice, Tenant shall have the right to make Alterations to the Premises that: (i) are non structural, (ii) do not require penetrations or openings in the roof, foundation, floor or floor slab or exterior walls, (iii) do not affect the parking areas, landscaped areas or other common features of the Project, (iv) do not affect any utility or Building system, (v) do not compromise, limit, interfere with, invalidate, violate, weaken or otherwise affect any Engineered Barrier (hereinafter defined) or Institutional Control (hereinafter defined) in effect with respect to the Project, (vi) do not violate, invalidate, cause non-compliance with or otherwise affect the terms of any NFR Letter (hereinafter defined) which may be applicable to the Project, (vii) do not require a permit (viii) do not affect the roof and (ix) do not cost in excess of $25,000.00 in the aggregate in any twelve (12) month period. In addition, Tenant shall have the right to perform the following Alterations, without Landlord's prior consent, but upon prior notice to Landlord: (i) floor coring to sit deeper footings for machines typically pour a concrete pad of 25-28' wide by 7' long by 3-4' deep for each tufting machine, pad is level with floor, extra mass to eliminate vibration; and (ii) additional wiring and other utilities. Also, provided Tenant first provides PDF and CAD plans for such, Landlord shall review and respond within fourteen (14) business days to any request by Tenant to make Alterations required for installation or upgrading of equipment and fixtures used in Tenant's operations; provided that such 14-day period may be extended an additional ten (10) business days if Landlord is diligently pursuing responses from its engineers whose review is required. For purposes of this Lease: (i) "Engineered Barrier" means a physical measure for the purpose of preventing or minimizing exposure to Hazardous Material (hereinafter defined) including, but not limited to: fencing, capping, horizontal or vertical barriers, hydraulic controls, and alternative water supplies; and (ii) "Institutional Control" means a legal or administrative tool or action taken to reduce the potential for exposure to Hazardous Material including but not limited to: use restrictions, deed restrictions, environmental monitoring requirements, and site access and security measures.
Section 12.2.    Standards and Procedures. Any Alteration by Tenant shall be done in a good and workmanlike manner in compliance with all and subject to Applicable Law and

992596_11    14


Restrictions. Before commencing any Alterations requiring Landlord's consent: (a) plans and specifications for the proposed Alteration, prepared by a licensed architect, shall be submitted to and approved by Landlord (such approval shall not be unreasonably withheld or delayed); (b) Tenant shall furnish to Landlord an estimate of the cost of the proposed work, certified by the architect who prepared such plans and specifications; (c) all contracts for any proposed work shall be submitted to and approved by Landlord; (d) Tenant shall have furnished Landlord with a satisfactory certificate or certificates from an insurance company acceptable to Landlord reflecting insurance coverage reasonably acceptable to Landlord; and (e) Tenant shall either furnish to Landlord a letter of credit or other security, in form and substance satisfactory to Landlord, to Landlord to insure payment for the completion of all work free and clear of liens. Upon completion of any Alteration by Tenant, Tenant shall furnish Landlord with a copy of the "as built" plans covering such Alteration.
Section 12.3.    Ownership of Alterations. At Landlord's option, at the end of the Term, (A) all Alterations shall become the property of Landlord and shall remain upon and be surrendered with the Premises as a part thereof; or (B) any or all of the Alterations must be removed by Tenant and the Premises must be restored as close as reasonably possible to its original condition. When Tenant requests Landlord's consent to perform any Alterations, such request may contain a specific request of Landlord as to whether or not the Alterations will be required to be removed upon the end of the Term. In the event that the request contains such a request, Landlord shall in granting or denying its consent to the performance of the Alterations indicate whether or not the Alterations will be required to be removed upon termination of this Lease.
Section 12.4.    Signs. Tenant shall not place any additional signs on any part of the Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld. Landlord may also install signs reflecting Landlord's logo on the Premises.
ARTICLE XIII – CONDEMNATION
Section 13.1.    Taking: Lease to Terminate. If a portion of the Project shall be lawfully taken or condemned for any public or quasi public use or purpose, or conveyed under threat of such condemnation and as a result thereof the Premises cannot be used for the same purpose as before such taking, sale or condemnation, the Tenant's right to possession under this Lease shall end upon the date of the taking, sale or condemnation by the condemning authority. Tenant hereby assigns to Landlord, Tenant's interest, if any, in such award relative to the value of the Premises taken; provided that Tenant shall have the right to pursue compensation for the value of its leasehold interest in the Premises and for relocation costs. If any part of the Project shall be so taken or condemned, or if the grade of any street or alley adjacent to the Project is changed by any competent authority and such taking or change of grade makes it necessary or desirable to demolish, substantially remodel, or restore the Building, either Tenant or Landlord shall have the right to terminate this Lease upon written notice to the other given not less than sixty (60) days prior to the date of termination designated in such notice.
Section 13.2.    Taking: Lease to Continue. If a portion of the Project shall be lawfully taken or condemned for any public or quasi public use or purpose or conveyed under threat of such condemnation and neither Landlord nor Tenant terminates this Lease (nor has the Lease terminated on its terms) as permitted by Section 13.1 or as a result of such taking, sale or condemnation, the

992596_11    15


remainder of the Premises can be used for the same purpose as before such taking, sale or condemnation, this Lease shall not terminate. However, in the event the cost of restoring the Premises for such use will exceed the condemnation award, Landlord will advise Tenant of the estimated amount of such excess cost, and Tenant shall have fifteen (15) days to elect whether to terminate this Lease or pay the excess amount for restoration of the Premises. If Tenant elects to continue this Lease, Tenant shall deposit such excess funds with Landlord and Landlord shall promptly (subject to Force Majeure Delay and Landlord's receipt of condemnation proceeds) repair and restore the remainder of the Premises. Tenant hereby assigns to Landlord, Tenant's interest, if any, in such award for the value of the Premises; provided that Tenant shall have the right to pursue compensation for any costs of renovating or reconfiguring its operations within the Premises.
ARTICLE XIV - ASSIGNMENT AND/OR SUBLETTING BY TENANT
Section 14.1.    No Assignment, Subletting or Other Transfer. Tenant shall not assign this Lease or any interest hereunder, nor shall Tenant sublet or permit the use or occupancy of the Premises or any part thereof by anyone other than Tenant, or under the Cook Son Lease, without the prior written consent of Landlord, which consent shall not be unreasonably withheld or delayed. Consent by Landlord pursuant to this Article XIV shall not be deemed, construed or held to be consent to any additional assignment or subletting, but each successive act shall require similar consent of Landlord. Landlord shall be reimbursed by Tenant for any costs or expenses incurred pursuant to any request by Tenant for consent to any such assignment or subletting.
Section 14.2.    Operation of Law. Tenant shall not allow or permit any transfer of this Lease, or any interest hereunder, by operation of law, or convey, mortgage, pledge (except as pledged as collateral under current Wells Fargo loan) or encumber this Lease or any interest hereunder.
Section 14.3.    Excess Rental. If Tenant shall, with Landlord's prior written consent, sublet the Premises, fifty percent (50%) of the rental in excess of the Base Rent and any Additional Rent herein provided shall be paid by Tenant to Landlord promptly when due under any sublease as Additional Rent due hereunder.
Section 14.4.    Merger or Consolidation. If Tenant is a corporation whose stock is not publicly traded, any transaction or series of transactions (including, without limitation, any dissolution, merger, consolidation or other reorganization of Tenant, or any issuance, sale, gift, transfer or redemption of any capital stock of Tenant, whether voluntary, involuntary or by operation of law, or sale of any of its assets or any combination of any of the foregoing transactions) resulting in the transfer of control of Tenant, shall be deemed to be a voluntary assignment of this Lease by Tenant subject to the provisions of this Article XIV. If Tenant is a partnership or limited liability company, any transaction or series of transactions (including without limitation any withdrawal or admittance of a partner or member or a change in any partner's or member's interest in Tenant, whether voluntary, involuntary or by operation of law, or sale of any of its assets or any combination of any of the foregoing transactions) resulting in the transfer of control of Tenant, shall be deemed to be a voluntary assignment of this Lease by Tenant subject to the provisions of this assignment of this Lease by Tenant subject to the provisions of this Article XIV. Notwithstanding the above, as long as the Guarantor does not change, any merger of Tenant with another company controlled by Guarantor shall not be deemed an assignment of this Lease, provided Guarantor's net worth is

992596_11    16


at least the same as of the date of execution of this Lease. Also, in the event of a successor Guarantor, Landlord will not unreasonably withhold or delay approval of an assignment by Tenant as long as the net worth of such successor Guarantor is equal to, or greater than, $50,000,000. As used in this Section 14.4, the term "control" means possession of the power to vote not less than a majority interest of any class of voting securities and partnership or limited liability company interests or to direct or cause the direction (directly or indirectly) of the management or policies of a corporation, or partnership or limited liability company through the ownership of voting securities, partnership interests or limited liability company interests, respectively.
Section 14.5.    Notice and Information. Tenant shall notify Landlord in writing of Tenant's intent to assign this Lease or any right or interest hereunder, or to sublease the Premises or any part thereof. Such notice, and any request for Landlord's consent under this Article XIV, shall include the name of the proposed assignee or sublessee, the nature of the proposed assignee's or sublessee's business to be conducted on the Premises, the terms and provisions of the proposed assignment or sublease, a copy of the proposed assignment or sublease form, and such other information as Landlord may reasonably request concerning the proposed assignee or sublessee, including, but not limited to, net worth, income statements and other financial statements for a two (2) year period preceding Tenant's notice or request for consent, evidence of insurance complying with the requirements of this Lease, and/or an environmental questionnaire from the proposed assignee or sublessee.
Section 14.6.    No Release of Liability. No assignment or subletting shall relieve Tenant of its obligations hereunder, and Tenant shall continue to be liable as a principal and not as a guarantor or surety, to the same extent as though no assignment or sublease had been made, unless Tenant is released by Landlord in writing.
ARTICLE XV – FINANCIAL INFORMATION
Section 15.1.    Financial Information. Tenant agrees to timely provide financial information as requested by Landlord, including, but not limited to, annual financial statements (which may be consolidated statements of Tenant and the Guarantor) audited by independent certified public accountants within ninety (90) days after the end of each calendar year and any other financial information reasonably requested by Landlord (collectively, "Financial Information"). Tenant agrees that Landlord may deliver the Financial Information to any lender, prospective lender or prospective purchaser of the Premises. Tenant hereby further agrees that the Financial Information submitted by it to Landlord and by any guarantor of Tenant's performance under this Lease ("Guarantor"), whenever furnished to Landlord and whether or not requested by Landlord, are material inducements to the execution by Landlord of this Lease. Tenant represents and warrants that such Financial Information is, and all Financial Information, whenever furnished to Landlord and whether or not requested by Landlord, are true, correct and complete in all material respects and fairly present the financial condition of Tenant (and any Guarantor) for the respective periods covered thereby, and that since the date thereof there has been no material adverse change in such financial condition or operations of the applicable party. Tenant hereby authorizes Landlord to make credit inquiries with Tenant's bank(s) and trade references from time to time during the

992596_11    17


Term, and Tenant agrees to provide Landlord with current references upon Landlord's request and to authorize such references to release credit information to Landlord.
ARTICLE XVI - COSTS AND EXPENSES OF LITIGATION
Section 16.1.    Costs and Expenses of Litigation. Tenant agrees to pay to Landlord all costs and expenses (including reasonable attorney's fees) incurred by or imposed upon Landlord by or in connection with any litigation to which Landlord becomes or is made a party without fault on its part, whether commenced by or against Tenant, or any other person or entity or that may be incurred by Landlord in enforcing any of the covenants and agreements of this Lease with or without the institution of any action or proceeding relating to the Premises or this Lease, or in obtaining possession of the Premises after an Event of Default (hereinafter defined) or upon expiration or termination of this Lease. The foregoing notwithstanding, in the event of litigation initiated by either Landlord or Tenant against the other to enforce the terms of this Lease, the prevailing party shall be entitled to reimbursement of its costs of such litigation, including reasonable attorneys fees. The provisions of this Section 16.1 shall survive the expiration or termination of this Lease.
ARTICLE XVII - ESTOPPEL CERTIFICATES
Section 17.1.    Estoppel Certificate. Tenant agrees that on the Commencement Date and at any time and from time to time thereafter, upon not less than ten (10 business days' prior written request by Landlord, Tenant will execute, acknowledge and deliver to Landlord, Landlord's mortgagee, purchaser, or any other third party designated by Landlord, a statement in writing in the form of Exhibit "C" attached hereto. Tenant further agrees to certify to any prospective purchaser or mortgagee any other reasonable information specifically requested by such prospective purchaser or mortgagee.
ARTICLE XVIII - INSPECTION AND SIGNS
Section 18.1.    Inspections. Tenant agrees to permit Landlord and any authorized representatives of Landlord to enter the Premises at all reasonable times on reasonable advance notice for the purpose of inspecting the Premises, performing Landlord's obligations under this Lease or enforcing Landlord's rights under this Lease. Notwithstanding the foregoing, in the case of an Emergency Situation (hereinafter defined) or upon the occurrence of an Event of Default, no notice shall be required. Any such inspections shall be solely for Landlord's purposes and may not be relied upon by Tenant or any other person.
Section 18.2.    Signs. Tenant agrees to permit Landlord and any authorized representative of Landlord to enter the Premises at all reasonable times during business hours on reasonable advance notice to exhibit the same for the purpose of sale, mortgage or lease, and during the final twelve (12) month period of the Term, Landlord may display on the Premises customary "For Sale" or "For Rent" signs. Landlord may also install signs reflecting Landlord's logo on the Premises.



992596_11    18


ARTICLE XIX – BUILDING FIXTURES AND TENANT'S PROPERTY
Section 19.1.    Building Fixtures. The Building and all other improvements located on the Land, including, but not limited to, all structural components of the Building, the foundation to the exterior tower tank, the underground water cooling tanks, all plumbing, heating, lighting, electrical and air conditioning fixtures and equipment, and other fixtures, equipment and articles of personal property used in the operation of the Premises, whether or not attached or affixed to the Premises (collectively, "Building Fixtures"), shall be and remain a part of the Premises and shall constitute the property of Landlord.
Section 19.2.    Tenant's Property. Except as otherwise expressly contemplated in Exhibit D attached hereto, all of Tenant's trade fixtures, including the boilers and the exterior tower tank (excluding its foundation), and other personal property brought onto the Premises by Tenant shall be and remain the personal property of Tenant, and the same are herein referred to as "Tenant's Property", but the boilers and exterior tower tank shall remain at the Premises upon the termination of the Lease.
ARTICLE XX – DEFAULT
Section 20.1.    Tenant's Default. Tenant agrees that the occurrence of any one or more of the following events shall be considered an "Event of Default" under this Lease:
A.    Entry of an order, judgment or decree shall be entered by any court adjudicating Tenant a bankrupt or insolvent, or approving a petition seeking reorganization of Tenant or appointing a receiver, trustee or liquidator of Tenant, or of all or a substantial part of its assets, if such order, judgment or decree shall continue unstayed and in effect for any period of sixty (60) days; or
B.    Tenant shall file an answer admitting the material allegations of a petition filed against Tenant in any bankruptcy, reorganization or insolvency proceeding or under any laws relating to the relief of debtors, readjustment or indebtedness, reorganization, arrangements, composition or extension; or
C.    Tenant shall make any assignment for the benefit of creditors or shall apply for or consent to the appointment of a receiver, trustee or liquidator of Tenant, or any of the assets of Tenant; or
D.    Tenant shall file a voluntary petition in bankruptcy, or shall admit in writing its inability to pay its debts as they come due, or shall file a petition or an answer seeking reorganization or arrangement with creditors or take advantage of any insolvency law; or
E.    A decree or order appointing a receiver of the property of Tenant shall be made and such decree or order shall not have been vacated within sixty (60) days from the date of entry or granting thereof; or

992596_11    19


F.    Tenant shall fail to make any payment of Rent or other payment required to be made by Tenant hereunder when due, and fails to cure such failure within five (5) days after notice from Landlord; or
G.    Tenant shall fail to carry all required insurance under this Lease; or
H.    Tenant, or any Guarantor, has made any material misrepresentation, or failed to disclose a material fact, under this Lease or in connection with any information (including, without limitation, Financial Information) submitted or furnished to Landlord by Tenant or any Guarantor; or
I.    Without Landlord's prior written consent, Tenant shall enter into any transaction of merger or consolidation in which it is not the surviving entity or sell, transfer or dispose of all or substantially all of its assets; or
J.    Tenant shall default under any other lease between Landlord and Tenant; or
K.    If Tenant fails to perform any covenant, promise or agreement on the part of Tenant contained in this Lease not otherwise specified in this Section 20.1 and such failure shall continue for thirty (30) days after notice thereof in writing by Landlord to Tenant, or if such failure or condition which gives rise thereto cannot with due diligence and good faith be cured within such thirty (30) day period, if Tenant shall not in good faith and within the period of thirty (30) days commence the curing of such failure and pursue the curing of such failure continuously and diligently and in good faith to the end that such failure shall be cured within such minimum period in excess of thirty (30) days as may be reasonably necessary to cure such failure through pursuing such cure promptly, diligently, continuously and in good faith; provided, however, that such additional period beyond thirty (30) days shall not apply to a failure that creates a clear and present danger to persons or property or materially adversely affects the Premises, or if the failure is one for which Landlord (or any officer or other agent or beneficial or other owner thereof) may be subject to fine or imprisonment.
The notices provided in this Section shall be in lieu of, and not in addition to, any notice required by Section 1161 et seq. of the California Code of Civil Procedure and any other statutory notice requirement as a condition precedent to the commencement of legal action against Tenant for possession of the Premises.
ARTICLE XXI – REMEDIES
Section 21.1.    Landlord's Remedies. Upon the occurrence of any Event of Default and at any time thereafter, Landlord may, at its election, exercise any one or more of the following described remedies, in addition to all other rights and remedies provided at law, in equity or elsewhere herein:
A.    Landlord shall have the immediate option to terminate this Lease and all rights of Tenant hereunder by giving Tenant written notice of such intention to terminate,

992596_11    20


in which event Landlord may recover from Tenant all of the following: (i) the worth at the time of award of any unpaid rent which had been earned at the time of such termination; plus (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss Tenant proves reasonably could have been avoided; plus (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that Tenant proves reasonably could be avoided; plus (iv) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease, including, but not limited to: attorneys' fees; brokers' commissions; the costs of refurbishment, alterations, renovation and repair of the Premises; and removal (including the repair of any damage caused by such removal) and storage (or disposal) of Tenant's Property, equipment, fixtures, alterations and any other items which Tenant is required under this Lease to remove but does not remove; plus (v) at Landlord's election, such other amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable California law. As used in (i) and (ii) above, the "worth at the time of award" shall be computed by allowing interest at the lesser of twelve percent (12%) per annum or the maximum lawful rate of interest permitted by applicable law. As used in (iii) above, the "worth at the time award" shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of San Francisco at the time of award plus one percent (1%).
B.    Landlord shall also have the right, with or without terminating this Lease, to re-enter the Premises and remove all persons and property from the Premises. Subject to the terms of any agreement between Landlord, Tenant and Tenant's lender, such property may be removed and stored in a public warehouse or elsewhere at the cost of and for the account of Tenant.
C.    In the event Landlord elects to re-enter the Premises under Section 21.1.B above or takes possession of the Premises pursuant to any proceedings or notice provided by law or Tenant vacates or abandons the Premises, but Landlord does not elect to terminate this Lease as provided in this Section 21.1, Landlord may from time to time without terminating this Lease either recover from Tenant all Rent as it becomes due (pursuant to California Civil Code Section 1951.4) and Landlord shall take commercially reasonable efforts to relet the Premises or any part thereof upon such terms and conditions as Landlord in its sole discretion may deem advisable, with the right of Landlord to make alterations and repairs to the Premises. In the event of any such reletting, rental and other charges received by Landlord therefrom shall be applied in the following order: (i) to the payment of any indebtedness other than Rent due hereunder from Tenant to Landlord, (ii) to the payment of all costs of such reletting, (iii) to the payment of the costs of any alterations and repairs to the Premises, and (iv) the payment of Rent and other charges due and unpaid hereunder. The residue, if any, shall be held by Landlord and applied in payment of future Rent and other charges due hereunder, as the same may become due, or returned to Tenant at the end of the Term. In the event the rental and other charges received by Landlord from all such reletting are at any time less than the then aggregate of (i) through (iv) above, Tenant

992596_11    21


shall pay such deficiency to Landlord immediately upon demand therefor, but not more often than monthly.
D.    No re-entry or taking possession of the Premises by Landlord pursuant to this Section 21.1 shall be construed as an election to terminate this Lease unless a written notice of such intention shall be given to Tenant or unless such termination shall be decreed by a court of competent jurisdiction and Landlord may enforce all of Landlord's rights and remedies hereunder, without limitation, the remedy described in California Civil Code Section 1951.4 (lessor may continue the lease in effect after lessee's breach and abandonment and recover rent as it becomes due, if lessee has the right to sublet or assign, subject only to reasonable limitations). Notwithstanding any reletting without termination by Landlord because of any default by Tenant, Landlord may at any time after such reletting elect to terminate this Lease for any such default.
E.    In any action for unlawful detainer commenced by Landlord against Tenant by reason of any Event of Default, the reasonable rental value of the Premises for the periods of the unlawful detainer shall be the amount of Rent reserved in this Lease for such period, unless Landlord or Tenant shall provide to the contrary by competent evidence. The rights and remedies reserved to Landlord herein, including those not specifically described, shall be cumulative, and except as otherwise provided by then applicable California law, Landlord may pursue any or all of such rights and remedies at the same time or otherwise.
No such re-entry or taking of possession of the Premises by Landlord shall be construed as an election on Landlord's part to terminate this Lease unless a written notice of such intention signed by or on behalf of Landlord is given to Tenant. Notwithstanding any such reletting without termination, Landlord may at any time thereafter elect to terminate this Lease for a previous Event of Default by Tenant. Should Landlord at any time terminate this Lease for any Event of Default, in addition to any other remedies Landlord may have, Landlord may recover from Tenant all damages Landlord may incur by reason of such default, including, but not limited to, the cost of recovering the Premises and reasonable attorneys' fees, all of which amounts shall be immediately due and payable from Tenant to Landlord. Pursuit of any of the foregoing remedies shall not preclude pursuit of any of the other remedies herein provided or any other remedies provided by law or in equity, nor shall pursuit of any remedy herein or otherwise provided constitute a forfeiture or waiver of any Rent due to Landlord hereunder or of any damages accruing to Landlord by reason of the violation of any of the terms, provisions or covenants herein contained. The loss or damage that Landlord may suffer by reason of termination of this Lease or the deficiency from any repossession and/or reletting as provided for above shall include the expense of repossession and any repairs or remodeling undertaken by Landlord following repossession. All interest and any late charges imposed pursuant to this Lease shall be considered Additional Rent due from Tenant under the terms of this Lease.
Section 21.2.    Survival of Tenant Obligations. No termination of this Lease and no taking possession of and/or reletting the Premises or any part thereof, shall relieve Tenant of its liabilities and obligations hereunder, except as specifically provided herein, and all of Tenant's

992596_11    22


liabilities and obligations under this Lease shall survive such expiration, termination, repossession or reletting except as otherwise specifically provided.
Section 21.3.    Tenant Waiver. To the extent not prohibited by Applicable Law, Tenant hereby waives and releases all rights now or hereafter conferred by statute or otherwise which would have the effect of limiting or modifying any of the provisions of this Article XXI. No failure by either party to insist upon the strict performance by the other party of any covenant, agreement, term or condition of this Lease or to exercise any right or remedy consequent upon a breach thereof, and no payment or acceptance of full or partial Rent during the continuance of any such breach, shall constitute a waiver of any such breach or of such covenant, agreement, term or condition. No covenant, agreement, term or condition of this Lease to be performed or completed with by either party, and no breach thereof, shall be waived, altered or modified except by a written instrument executed by the other party. No waiver of any breach shall affect or alter this Lease, but each and every covenant, agreement, term and condition of this Lease shall continue in full force and effect with respect to any other then existing or subsequent breach thereof.
Section 21.4.    Suits to Recover Damages. Suit or suits for the recovery of damages, or for a sum equal to any installment or installments of Rent payable hereunder or any other sums payable by Tenant to Landlord pursuant to this Lease, may be brought by Landlord at any time and from time to time at Landlord's election, and nothing herein contained shall be deemed to require Landlord to await the date whereon this Lease or the Term would have expired had there been no Event of Default.
Section 21.5.    Receipt of Payment after Termination. No receipt of moneys by Landlord from Tenant after the termination of this Lease or Tenant's right to possession, or after the giving of any notice of the termination of this Lease or Tenant's right to possession, shall reinstate, continue or extend the Term or affect any notice theretofore given to Tenant, or operate as a waiver of the right of Landlord to enforce the payment of Rent payable by Tenant hereunder or thereafter falling due, or operate as a waiver of the right of Landlord to recover possession of the Premises or any part thereof by proper remedy, it being agreed that after the service of notice to terminate this Lease or Tenant's right to possession or the commencement of any suit or summary proceedings, or after a final order or judgment for the possession of the Premises, or any part thereof or interest therein, Landlord may demand, receive and collect any moneys due or thereafter falling due without in any manner affecting such notice, proceeding, order, suit or judgment, all such moneys collected being deemed payments on account of the Tenant's liability hereunder.
Section 21.6.    Cumulative Remedies. No remedy contained herein or otherwise conferred upon or reserved to Landlord, shall be considered exclusive of any other remedy, but the same shall be cumulative and shall be in addition to every other remedy given herein, now or hereafter existing at law or in equity, and every power and remedy given by this Lease to Landlord may be exercised from time to time and as often as occasion may arise or as may be deemed expedient. No delay or omission of Landlord to exercise any right, remedy or power arising from any default shall impair any such right, remedy or power or shall be construed to be a waiver of any such default or an acquiescence therein.

992596_11    23


Section 21.7.    Landlord Default. If Landlord fails to perform any agreement on the part of Landlord contained in this Lease and such failure shall continue for thirty (30) days after notice thereof in writing by Tenant to Landlord or if such failure or condition which gives rise thereto cannot with due diligence and good faith be cured within such thirty (30) day period, if Landlord shall not in within the period of thirty (30) days commence the curing of such failure and pursue the curing of such failure diligently to the end that such failure shall be cured within such minimum period in excess of thirty (30) days as may be reasonably necessary to cure such failure through pursuing such cure diligently, then, as Tenant's sole remedy, Tenant may (i) undertake to cure such default on behalf of Landlord, and (ii) thereupon Landlord agrees to pay Tenant, within thirty (30) days after receipt of a demand from Tenant, all actual and reasonable costs and expenses (including reasonable attorneys' fees) incurred by Tenant in taking such remedial actions, as evidenced by invoices, lien waivers and other documentation reasonably requested by Landlord. Notwithstanding any other term or provision contained in this Lease, Tenant shall not have the right to terminate this Lease as a result of a default or breach of this Lease by Landlord
ARTICLE XXII - LANDLORD'S PERFORMANCE OF TENANT'S COVENANTS
Section 22.1.    Landlord's Right to Perform Tenant's Obligations. If Tenant shall fail to perform any of its obligations hereunder within the time period (if any) set forth herein, Landlord may (but shall not be obligated to do so), in addition to any other remedies available at law, in equity, or pursuant to this Lease and without waiving or releasing Tenant from any obligation of Tenant hereunder, make any payment or perform any other act which Tenant is obligated to make or perform under this Lease. All sums so paid and all liabilities so incurred by Landlord, together with interest thereon at the Delinquency Rate, shall be payable to Landlord upon demand as Additional Rent. Except in the case of an Emergency Situation, Landlord shall use reasonable efforts to give prior notice (which may be oral) of its performance, if reasonably feasible under the circumstances. Nothing contained herein shall be construed to require Landlord to advance monies for any purpose. The term "Emergency Situation" shall mean a situation which has caused or is likely to cause bodily injury to persons, contamination of or physical damage to the Park or Project (or any portion thereof) or adjoining property or economic liability or criminal jeopardy to Landlord.
ARTICLE XXIII - SUBORDINATION TO MORTGAGES
Section 23.1.    Subordination. Landlord may execute and deliver a mortgage or trust deed in the nature of a mortgage (both sometimes referred to as "Mortgage") against the Project or any portion thereof. This Lease and the rights of Tenant hereunder, shall automatically, and without the requirement of the execution of any further documents, but subject to the terms of any agreement among Landlord, Tenant and Tenant's lender, be and are hereby made expressly subject and subordinate at all times to the lien of any Mortgage now or hereafter encumbering any portion of the Project, and to all advances made or hereafter to be made upon the security thereto provided that the holder any such Mortgage shall not disturb the rights of Tenant hereunder so long as Tenant pays the rent and performs its obligations hereunder. Additionally, as a condition precedent to the future subordination of this Lease to a future Mortgage, Landlord shall be required to obtain a non-disturbance, subordination and attornment agreement from Landlord's mortgagee, and Tenant agrees to execute and deliver, such subordination, non-disturbance and attornment agreement in a form

992596_11    24


customarily required by institutional lenders as may be requested in writing by Landlord from time to time. Notwithstanding anything to the contrary contained herein, any mortgagee under a Mortgage may, by notice in writing to the Tenant, subordinate its Mortgage to this Lease.
Section 23.2.    Landlord Waiver. As a condition to this Lease, Landlord shall execute a Landlord's Waiver, in favor of Tenant's existing or future lender, in the form mutually agreed to by Landlord and Tenant's lender (the "Landlord Waiver").
ARTICLE XXIV - INDEMNITY AND WAIVER
Section 24.1.    Indemnity. Tenant shall indemnify, defend (with counsel approved by Landlord), protect and hold Landlord, Landlord's property manager, Landlord's mortgagees, if any, and their respective officers, directors, members, employees, agents, representatives, successors and assigns ("Landlord Parties"), harmless from any and all loss, cost, damage, expense and liability, including, without limitation, reasonable attorneys' fees (collectively, "Claims") incurred in connection with or arising from (i) the Use, (ii) Tenant's use of the Premises or the Project or from the conduct of Tenant's business or from any activity, work or thing which may be permitted or suffered by Tenant (or any member of the Tenant Group) in or about the Premises or the Project, (iii) any Event of Default or breach or failure to perform any obligation on Tenant's part to be performed under this Lease or arising from any actions or omissions of Tenant or any member of the Tenant Group, including, but not limited to, damages to property and injury to persons in or about the Premises or Project, and from any and all costs, attorneys' fees and costs (including costs and expenses associated with in-house counsel), expenses and liabilities incurred in the defense of any Claim or any action or proceeding brought thereon, including negotiations in connection therewith, and (iv) all damage to or theft of property or injury to persons in or about the Premises or Project from any cause. The provisions of this Section 24.1 will survive the expiration or termination of this Lease.
Section 24.2.    Waiver of Claims. Notwithstanding anything to the contrary contained in this Lease, Tenant shall not make any claim against Landlord for (a) any damage to, or loss of, any property of Tenant or any other person, (b) business interruption or special, indirect or consequential damages, or (c) any acts or omissions of any other tenants in the Building or on the Project, unless caused by the gross negligence or willful misconduct of Landlord, its employees, contractors, or agents. Tenant hereby waives all claims against Landlord with respect to the foregoing. The provisions of this Section 24.2 will survive the expiration or termination of this Lease.
ARTICLE XXV – SURRENDER
Section 25.1.    Condition of Premises. Upon the expiration or termination of this Lease, or upon the termination of Tenant's right to possession of the Premises, and subject to the provisions set forth on Exhibit "E" attached hereto, Tenant will at once surrender and deliver up the Premises to Landlord in good order, condition and repair, reasonable wear and tear excepted, and in compliance with the Move Out Conditions set forth on Exhibit "D" attached hereto and all Applicable Law. Notwithstanding the Move Out Conditions, at the time of the termination of this Lease, Tenant shall not be obligated to repair any items listed on the Move in Condition Report, except to the extent

992596_11    25


such item is not in the same condition it was in as of the time the Move in Condition Report was prepared.
Section 25.2.    Removal of Tenant's Property and Alterations. Upon the expiration or termination of this Lease, Tenant shall remove Tenant's Property and Alterations designated by Landlord. Tenant shall repair any injury or damage to the Premises which may result from such removal. If Tenant does not remove Tenant's Property or designated Alterations from the Premises prior to the end of the Term, however ended, Landlord may, at its option but subject to the terms of any agreement among Landlord Tenant and Tenant's lender, remove the same and deliver the same to any other place of business of Tenant or warehouse the same, and Tenant shall pay the costs of such removal (including the cost of repairing any injury or damage to the Premises resulting from such removal), delivery and warehousing to Landlord on demand, or Landlord may treat Tenant's Property and Alterations as having been conveyed to Landlord with this Lease as a Bill of Sale, without further payment or credit by Landlord to Tenant.
Section 25.3.    Holdover. If Tenant retains possession of the Premises or any part thereof after the expiration or termination of the Term, then Tenant shall pay to Landlord Rent, at one hundred fifty percent (150%) of the rate payable for the month immediately preceding said holding over (including increases for Additional Rent which Landlord may reasonably estimate), computed on a per month basis, for each month or part thereof (without reduction for any such partial month) that Tenant remains in possession. In addition thereto, if such retention of possession equals or exceeds thirty (30) days, Tenant shall pay Landlord all damages, consequential as well as direct, sustained by reason of Tenant's retention of possession. The provisions of this Section do not limit the Landlord's rights of reentry or any other right hereunder.
ARTICLE XXVI - COVENANT OF QUIET ENJOYMENT
Section 26.1.    Covenant of Quiet Enjoyment. Landlord covenants that Tenant, on paying the Rent and all other charges payable by Tenant hereunder, and on keeping, observing and performing all the other terms, covenants, conditions, provisions and agreements herein contained on the part of Tenant to be kept, observed and performed, all of which obligations of Tenant are independent of Landlord's obligations hereunder, shall, during the Term, peaceably and quietly have, hold and enjoy the Premises subject to the terms, covenants, conditions, provisions and agreement hereof free from hindrance by Landlord or any person claiming by, through or under Landlord.
ARTICLE XXVII - RECORDING
Section 27.1.    Recording. A Memorandum of this Lease, in the form attached hereto as Exhibit "F" shall be executed by each of Landlord and Tenant and Tenant may record the same in the Official Records of Orange County, California, provided Tenant has previously delivered to Landlord a fully-executed and notarized Termination of Memorandum of Lease in recordable form, which Landlord may execute and submit for recording upon termination of this Lease.


992596_11    26


ARTICLE XXVIII – NOTICES
Section 28.1.    Notices. All notices, consents, approvals to or demands upon or by Landlord or Tenant desired or required to be given under the provisions hereof, shall be in writing and shall be deemed properly given (i) on the date delivered, if delivered by hand, (ii) one (1) business day after the date such notice is deposited with a nationally recognized overnight delivery service; or (iii) on the date when received with proof of receipt to the party to whose attention it is directed or when such party refuses to accept receipt if sent, postage prepaid, by certified mail, return receipt requested, addressed, as applicable, to Tenant at Tenant' Notice Address or to Landlord at Landlord's Notice Address or such other address or to such other party which any party entitled to receive notice hereunder designates to the others in writing by a notice duly given hereunder. Absent notice of a change of address in the manner set forth above, any notices, consents, approvals to or demands upon or by Landlord or Tenant shall be deemed given if given as provided above to the Tenant at the Tenant's Notice Address or the Landlord at the Landlord's Mailing Address as set forth in Section 1.1 hereof.
ARTICLE XXIX - COVENANTS, SUCCESSORS AND ASSIGNS
Section 29.1.    Covenants. All of the covenants, agreements, conditions and undertakings in this Lease shall extend and inure to and be binding upon the heirs, executors, administrators, successors and assigns of the respective parties hereto, the same as if they were in every case specifically named, and shall be construed as covenants running with the Land, and wherever in this Lease reference is made to either of the parties hereto, it shall be held to include and apply to, wherever applicable, the heirs, executors, administrators, successors and assigns of such party. Nothing herein contained shall be construed to grant or confer upon any person or persons, firm, corporation or governmental authority, other than the parties hereto, their heirs, executors, administrators, successors and assigns, any right, claim or privilege by virtue of any covenant, agreement, condition or undertaking in this Lease contained.
Section 29.2.    Sale of Project by Landlord. Landlord shall at all times during the Term have the right to sell the Project or any part thereof and in connection therewith, to assign Landlord's rights and obligations under this Lease to any such purchaser. The term "Landlord", as used in this Lease, so far as covenants or obligations on the part of Landlord are concerned, shall be limited to mean and include only the owner or owners at the time in question of title to the Project, and in the event of any transfer or transfers of title to the Project or any part thereof, provided such purchaser assumes the obligations of Landlord in writing and Landlord assigns all rights to the Letter of Credit or cash deposit to such Purchaser, Landlord herein named (and in the case of any subsequent transfers or conveyances, the then grantor) shall be automatically freed and relieved of all liability as respects the performance of any covenants or obligations on the part of Landlord contained in this Lease to be performed.
ARTICLE XXX - ENVIRONMENTAL MATTERS
Section 30.1.    Tenant's Covenants with Respect to Environmental Matters. During the Term, Tenant, at its sole cost and expense, shall:

992596_11    27


A.    comply with all Environmental Laws relating to the Use, and/or to Tenant's use, operation and lease of the Premises;
B.    not handle, use, generate, treat, dispose of, or permit the use, handling, generation, treatment, storage, or disposal of any Hazardous Material in, on, under, around, or above the Project at any time during the Term, except for Permitted Hazardous Materials used in the ordinary course of Tenant's business in compliance with Environmental Laws and without resulting in a release to, on, at or affecting the Premises;
C.    comply with the terms of any NFR Letters issued with respect to the Project;
D.    not take actions that would in any way violate, invalidate, cause noncompliance with or otherwise affect the validity of any NFR Letter issued with respect to the Project;
E.    upon the discovery of an Environmental Condition: (i) promptly, but not later than three (3) business days after the discovery of the Environmental Condition, notify Landlord of the Environmental Condition; (ii) furnish a letter of credit, personal guaranty, escrow of funds, or other security reasonably acceptable to Landlord to secure performance of Environmental Remediation; (iii) prior to commencement of any Environmental Remediation, submit a proposed scope of work for the Environmental Remediation, together with a timetable and a cost estimate, to Landlord for review and approval; (iv) after obtaining Landlord's approval, diligently perform Environmental Remediation; (v) submit to Landlord in a timely manner for Landlord's review and comment the documentation and information required by Sections 30.3 and 30.5 of this Lease relating to each phase of the Environmental Remediation, and pay all costs of Landlord; and (vi) obtain an NFR Letter or comparable acknowledgment from each federal, state, or local governmental agency with jurisdiction over the Environmental Condition that the Premises and/or the Project have been fully remediated without reliance on Institutional Controls or Engineered Barriers;
F.    except for the exterior tower tank and underground water cooling tanks existing as of the Commencement Date which Tenant may continue to operate in compliance with this Lease and without allowing a release on, at or to the Premises, not install or operate any above or below ground tank, (including barrels and drums), sump, pit, pond, lagoon, or other storage or treatment vessel or device on the Project without obtaining Landlord's prior written consent and without the use of adequate secondary containment.
G.    Notwithstanding any other provision of the Lease, with respect to Hazardous Materials, Tenant shall not knowingly use or store chlorinated solvents, radioactive substances, or PFAS Substances at the Premises, and Tenant shall use best efforts to manage its business to prevent such chlorinated solvents, radioactive substances or PFAS Substances from being used or stored at the Premises including, but not limited to, reviewing Safety Data Sheets and other commercially available information to identify and prevent chlorinated solvents, radioactive materials or PFAS Substances from being used or stored at the Premises.

992596_11    28


Section 30.2.    Exacerbation. Tenant shall not be responsible for the remediation of a Pre-Existing Condition. Notwithstanding the foregoing, Tenant shall not exacerbate a Pre-Existing Condition. If Tenant or any member of Tenant Group exacerbates a Pre-Existing Condition during the Term, the provisions of this Article XXX shall apply to such exacerbation of the Pre-Existing Condition as if it were an Environmental Condition.
Section 30.3.    Assessment and Response Rights. In addition to Landlord's other rights of entry, access and inspection contained in this Lease, Landlord and its agents, representatives and consultants shall have a right of entry and access to the Premises at any time in Landlord's discretion for the purposes of (i) inspecting Environmental Records; (ii) ascertaining the nature of the activities being conducted on the Premises and investigating whether Tenant is in compliance with its obligations under Article XXX of this Lease; (iii) determining the type, kind, and quantity of all products, materials, and substances brought onto the Premises, or made or produced thereon, and (iv) performing such Environmental Investigations as Landlord may desire to perform. Tenant will cooperate with Landlord and Landlord's consultants and will supply, promptly upon request, any information reasonably requested to facilitate the completion of the Environmental Investigations. Landlord and its agents and representatives shall have the right to take samples in quantities sufficient for analysis of all products, materials, and substances present on the Premises.
Section 30.4.    Copies of Notices. During the Term, Tenant shall promptly provide Landlord with copies of all Environmental Notices. If any Hazardous Material is released: (a) by Tenant or any member of the Tenant Group or (b) on, to or from the Project or Premises during the Term, and such release requires reporting to any federal, state, or local agency or authority pursuant to any Environmental Law, Tenant shall promptly notify Landlord (in no event later than three (3) days after first discovering the commencement of a release) of the facts and the actions being taken to remediate and otherwise respond to the release. Tenant agrees to contemporaneously provide Landlord with copies of all documents submitted to any federal, state or local agency or authority related to such release.
Section 30.5.    Tests and Reports. Upon written request by Landlord, Tenant shall provide Landlord, at Tenant's expense, with: (i) copies of all environmental reports and tests prepared or obtained by or for Tenant or any occupant of the Premises; (ii) copies of transportation and disposal contracts (and related manifests, schedules, reports, and other information) entered into or obtained by Tenant with respect to any Hazardous Material; (iii) copies of any authorizations or permits issued to Tenant under Environmental Laws with respect to the Premises; and (iv) any other relevant documents and information with respect to environmental matters relating to the Premises. Tenant shall be obligated to provide such documentation only to the extent that the documentation is created by or on behalf of Tenant during the Term or within Tenant's possession or control.
Section 30.6.    Indemnification. Tenant shall reimburse, defend (with counsel approved by Landlord), indemnify, and hold Landlord and any Landlord Parties free and harmless from and against any and all Environmental Losses (hereinafter defined) arising out of or in any way connected with any or all of the following: (A) any Hazardous Material which is or was actually or allegedly generated, stored, treated, released, disposed of, or otherwise located on, at, under or migrating from the Project as a result of the act or omission of Tenant or any member of the Tenant Group

992596_11    29


(regardless of the location at which such Hazardous Material is now or may in the future be located or disposed of); (B) any actual or alleged illness, disability, injury, or death of any person, in any manner arising out of or allegedly arising out of exposure to any Hazardous Material or other substances or conditions present at the Project as a result of the act or omission of Tenant or any member of Tenant Group, regardless of when any such illness, disability, injury, or death shall have occurred or been incurred or manifested itself; and (C) any failure by Tenant to comply with any obligation under this Article XXX. The obligations of Tenant under this Section 30.6 shall survive any termination or expiration of this Lease.
Section 30.7.    No Liability of Landlord. Landlord shall not have any liability to Tenant, any member of the Tenant Group, or any of Tenant's agents, shareholders, officers or directors, or any other persons as a result of any Pre-Existing Condition or Hazardous Material now or hereafter located on the Premises unless caused by Landlord or its agents. Tenant hereby waives, and releases Landlord from, all Environmental Losses, known or unknown, arising from or relating to any Pre‑Existing Condition including without limitation any liability for contribution under the Comprehensive Environmental Response, Compensation & Liability Act, the Model Toxic Control Act (RCW Chapter 70.105D), or other equivalent governmental regulations.  This release includes claims of which Tenant is presently unaware or which Tenant does not presently suspect to exist in its favor which, if known by Tenant, would materially affect Tenant's release of Landlord. In connection with the general release set forth in this Section 30.7 Tenant specifically waives the provisions of California Civil Code Section 1542, which provides as follows:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR."

________________________

Tenant's Initials
Tenant hereby agrees, represents and warrants that it is familiar with, has read, understands, and has consulted legal counsel of its choosing with respect to California Civil Code § 1542 and the matters now unknown to it which may have given, or which may hereinafter give rise to actions, legal or administrative proceedings, claims, demands, debts, controversies, damages, costs, losses, liabilities and expenses which are presently unknown, unanticipated and unsuspected, and Tenant further agrees, represents and warrants that the provisions of this Section have been negotiated and agreed upon in light of that realization and that Tenant nevertheless hereby intends to release, discharge and acquit the Landlord from any such unknown causes of action, legal or administrative proceedings, claims, demands, debts, controversies, damages, costs, losses, liabilities and expenses which are in any way related to this Section 30.7.



992596_11    30


Section 30.8.    Article XXX Defined Terms.
A.    "Environmental Claim" shall mean and include any demand, notice of violation, inquiry, cause of action, proceeding, orders, decrees, complaints, judgments, or suit for damages (including reasonable attorneys', consultants', and experts' fees, costs or expenses), losses, injuries to person or property, damages to natural resources, fines, penalties, interest, cost recovery, compensation, or contribution resulting from or in any way arising in connection with any Hazardous Material or any Environmental Law.
B.    "Environmental Condition" shall mean the existence of any Hazardous Material on the Project, other than a Pre‑Existing Condition.
(i)    in violation of or requiring cleanup under any Environmental Law or the provisions of this Article XXX, or
(ii)    in concentrations or at levels exceeding applicable federal, state, or local standards for soil, soil vapor, groundwater, or waste on industrial or commercial properties,
either of which subjects Landlord to liability for any Environmental Claim or which must be remediated to prevent Landlord from incurring loss of any kind.
C.    "Environmental Investigations" shall mean investigations, invasive sampling, testing, studies, assessments and corrective measures.
D.    "Environmental Law" shall mean any federal, state, or local law, statute, ordinance, code, rule, regulation, policy, common law (including without limitation, tort, toxic tort, negligence, trespass, nuisance, strict liability or ultra-hazardous activity), license, authorization, decision, order, injunction or ordinance which pertains to health, safety, or the environment (including, but not limited to, pollution, contamination, and underground or aboveground tanks) together with all rules, regulations, orders, guidance documents, and decrees now or hereafter promulgated under any of the foregoing, as any of the foregoing now exist or may be changed or amended or come into effect in the future.
E.    "Environmental Losses" means Environmental Claims, Environmental Remediation costs, response costs, Environmental Investigation costs, losses, liabilities, damages, liens, costs, and expenses, including without limitation loss of rental income, loss due to business interruption, diminution in value, and reasonable attorneys' and consultants' fees, costs and expenses.
F.    "Environmental Notices" shall mean summons, citations, directives, information inquiries or requests, notices of potential responsibility, Environmental Claims, investigations, letters, notices of environmental liens or response actions in progress, and other communications, written or oral, actual or threatened, received by Tenant or any occupant of the Premises, from any federal, state, or local agency or authority, or any other entity or individual (including both governmental and non‑governmental entities and

992596_11    31


individuals), concerning: (a) any actual or alleged release of any Hazardous Material on, to, or from the Premises or any part of the Project; or (b) any actual or alleged violation of or liability under Environmental Laws.
G.    "Environmental Records" shall mean documentation relating to any Hazardous Material(s) or environmental matters maintained by Tenant or any occupant of the Premises.
H.    "Environmental Remediation" shall mean any Environmental Investigation, response, cleanup, removal, containment, remediation, corrective or other action relating to an Environmental Condition and: (i) required pursuant to any Environmental Law, or (ii) necessary to prevent Landlord from incurring, or relieve Landlord from, loss of any kind as a result of an Environmental Claim.
I.    "Hazardous Conditions" shall mean any Hazardous Material or other substances or conditions present at the Premises or any other part of the Project as a result of the act or omission of Tenant or any member of the Tenant Group (including, but not limited to, ownership, operation, and disposal of any equipment which generates, creates, or uses electromagnetic files, x-rays, other forms of radiation and radioactive materials);
J.    "Hazardous Material" shall include but shall not be limited to any substance, material, or waste that is now or hereafter regulated by any federal, state, or local governmental authority because of toxic, flammable, explosive, corrosive, reactive, radioactive or other properties that may be hazardous to human health or the environment, including without limitation asbestos and asbestos-containing materials, radon, petroleum and petroleum products, urea formaldehyde foam insulation, methane, lead based paint, polychlorinated biphenyl compounds, hydrocarbons or like substances and their additives or constituents, pesticides, agricultural chemicals, PFAS Substances, and any other special, toxic, or hazardous substances, materials, or wastes of any kind, including without limitation those now or hereafter defined, determined, or identified as "hazardous substances," "hazardous materials," "toxic substances," "hazardous wastes," or "solid waste" in any Environmental Law.
K.    "NFR Letter" shall mean a "no further remediation" letter, no further action letter, certificate of completion, covenant not to sue, certificate of closure or any other similar environmental closure document issued by any regulatory body, including any such documents issued in connection with voluntary programs.
L.    "Permitted Hazardous Material" shall mean those Hazardous Materials used by Tenant in the ordinary course of Tenant's Use, in compliance with all Environmental Laws and terms of this Lease; provided, however, in no instance shall Permitted Hazardous Materials include Tenant's knowing or intentional use or storage of chlorinated solvents, radioactive materials, or PFAS Substances.
M.    "PFAS Substances" shall mean per and poly-fluoroalkyl substances including, but not limited to, perfluorooctanoic acid, and perfluorooctanesulfonic acid.

992596_11    32


N.    "Pre‑Existing Condition" shall mean the presence of any Hazardous Material in, on, under or at the Premises, to the extent such Hazardous Material was not: (i) introduced onto the Premises or any part of the Project by Tenant or any member of the Tenant Group or (ii) introduced onto the Premises on or after the Commencement Date.
O.    "Remediating Party" shall mean the party which has elected (or is deemed to have elected) to perform any Environmental Remediation.
P.    "Tenant Group" shall mean any or all of Tenant's agents, employees, representatives, contractors, workmen, mechanics, suppliers, operators, customers, guests, licensees, invitees, sublessees, assignees and all of their respective successors and assigns or any party claiming by, through or under any of them.
ARTICLE XXXI – LETTER OF CREDIT
Section 31.1.    Letter of Credit. Landlord requires that Tenant tender an unconditional, irrevocable letter of credit in a form and issued by a bank and in the form attached hereto as Exhibit "G" attached hereto ("Letter of Credit") upon Tenant's execution of this Lease. The amount of the Letter of Credit shall be that amount set forth in Article I. The Letter of Credit shall be held by Landlord during the Term in accordance with the provisions of this Section 31.1. The Letter of Credit shall be irrevocable for one (1) year and shall provide that it is automatically renewable for one (1) year periods ending not earlier than sixty (60) days after the expiration of the Term without any action whatsoever on the part of Landlord; provided that the issuing bank shall have the right not to renew said Letter of Credit on written notice to Landlord not less than sixty (60) days prior to the expiration of the then current term thereof (it being understood, however, that the privilege of the issuing bank not to renew said Letter of Credit shall not, in any event, diminish the obligation of Tenant to maintain such irrevocable Letter of Credit with Landlord through the date which is sixty (60) days after the date of such notice). In the event the issuing bank elects not to renew the Letter of Credit, Tenant shall, not less than thirty (30) days prior to the expiration of the then current term of the Letter of Credit, either provide Landlord with a substitute letter of credit which meets all of the criteria contained herein. In the event that Tenant fails to do so, it shall be an Event of Default and Landlord may immediately, and without notice to Tenant, draw on the Letter of Credit and retain the proceeds thereof. In the event that Landlord draws upon the Letter of Credit after an Event of Default arising out of a failure to provide a renewed or replacement letter of credit as set forth herein, such Event of Default shall not be cured by such draw, nor shall such Event of Default be otherwise curable without the explicit prior written consent of the Landlord. Landlord does not have, and shall not have, any obligation to provide such consent. In addition, in the event of a bankruptcy or insolvency proceeding by or against Tenant, Landlord may draw the full amount available under the Letter of Credit for application against rent payments or other amounts then due and owing to Landlord or which may become due and owing to Landlord.
Section 31.2.    [Intentionally deleted.]
Section 31.3.    Transfer of Letter of Credit. In the event of a sale of the Property, Landlord shall have the right to transfer the Letter of Credit or cash drawn on the Letter of Credit to the purchaser of the Property. Landlord shall thereupon be released by Tenant from all liability

992596_11    33


for the return of such Letter of Credit or cash, as the case may be, and Tenant shall look solely to such purchaser for the return of the Letter of Credit or cash, as the case may be. All fees and charges of the issuing bank to transfer the Letter of Credit or to re-issue the Letter of Credit in the name of the new beneficiary shall be paid by the new beneficiary. The provisions hereof shall apply to every transfer or assignment of the Letter of Credit made to a new landlord.
Section 31.4.    Application of Proceeds from Letter of Credit. If an Event of Default occurs, Landlord may use, apply or retain the whole or any part of any cash drawn on the Letter of Credit or present the Letter of Credit, as the case may be, for the payment of any sum then due hereunder or which Landlord may expend or be required to expend by reason of the Event of Default including, without limitation, any damages or deficiency in the reletting of the Premises, whether such damages or deficiency shall have accrued before or after reentry by Landlord. If any of the Letter of Credit shall be so used, applied, drawn down or retained by Landlord at any time or from time to time, Tenant shall promptly, in each such instance, within five (5) days of written demand therefore by Landlord, pay to Landlord such additional sums as may be necessary to restore the Letter of Credit to the original amount set forth in Article I, and Tenant's failure to timely do so shall be deemed an Event of Default. Tenant does not have, and shall not have, any interest in the Letter of Credit, or in any proceeds of any draw on the Letter of Credit, whether a partial or full draw. Tenant does not have and shall not have any right to require or request that proceeds of a draw on the Letter of Credit be used or not used in any way by Landlord, provided that the proceeds of a draw on the Letter of Credit shall be applied by Landlord to obligations of Tenant hereunder, including, without limitation, Rent..
Section 31.5.    Bankruptcy Proceeding. The Letter of Credit and any cash proceeds drawn therefrom shall not constitute property of the Tenant's estate in any present or future proceedings under title 11 of the United States Code, receiverships, or any other insolvency proceedings under applicable law.
ARTICLE XXXII - OFAC
Section 32.1.    OFAC. Tenant and each person or other party owning a direct or indirect interest in Tenant: (a) is not currently identified on the list of specially designated nationals and blocked persons subject to financial sanctions that is maintained by the U.S. Treasury Department, Office of Foreign Assets Control (currently is accessible through the internet website at www.treas.gov/ofac/t11sdn.pdf.) or any other similar list maintained by the U.S. Treasury Department, Office of Foreign Assets Control pursuant to any legal requirements (or if such list does not exist, the similar list then being maintained by the United States); (b) is not a person or party subject to any trade restriction, trade embargo, economic sanction, or other prohibition under federal law; and/or (c) is not in violation of Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, and relating to Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism and the Uniting and Strengthening America by Providing Appropriate Tools Required in Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56). Tenant shall indemnify and hold Landlord and each Indemnified Party harmless from and against any and all losses, damages, liabilities, fines, penalties, interest, costs and expenses (including, without limitation, attorneys' fees and court costs) suffered, paid or incurred

992596_11    34


by Landlord and/or any Indemnified Party if the representations, statements and certifications contained in this Article XXXII shall not be true and correct in all respects.
ARTICLE XXXIII – MISCELLANEOUS
Section 33.1.    Captions. The captions of this Lease are for convenience only and are not to be construed as part of this Lease and shall not be construed as defining or limiting in any way the scope or intent of the provisions hereof.
Section 33.2.    Severability. If any covenant, agreement or condition of this Lease or the application thereof to any person, firm or corporation or to any circumstances, shall to any extent be invalid or unenforceable, the remainder of this Lease, or the application of such covenant, agreement or condition to persons, firms or corporations or to circumstances other than those as to which it is invalid or unenforceable, shall not be affected thereby. Each covenant, agreement or condition of this Lease shall be valid and enforceable to the fullest extent permitted by Applicable Law.
Section 33.3.    Governing Law. This Lease shall be construed and enforced in accordance with the laws of the state where the Premises are located.
Section 33.4.    Amendments in Writing. None of the covenants, terms or conditions of this Lease, to be kept and performed by either party, shall in any manner be altered, waived, modified, changed or abandoned, except by a written instrument, duly signed, acknowledged and delivered by the other party.
Section 33.5.    Relationship of Parties. Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership, or of joint venture by the parties hereto, it being understood and agreed that no provision contained in this Lease nor any acts of the parties hereto shall be deemed to create any relationship other than the relationship of Landlord and Tenant.
Section 33.6.    Brokerage. Tenant warrants that it has no dealings with any real estate broker or agent in connection with this Lease other than Landlord's Broker and Tenant's Broker, if any, and Tenant covenants to pay, hold harmless and indemnify Landlord from and against any and all cost, expense or liability for any compensation, commissions and charges claimed by any other broker or other agent with respect to this Lease or the negotiation thereof arising out of any acts of Tenant. Landlord shall pay the brokerage commission due Landlord's Broker and Tenant's Broker, if any, pursuant to any written agreement between Landlord and such parties.
Section 33.7.    No Accord and Satisfaction. No payment by Tenant or receipt by Landlord of a lesser amount than the full amount stipulated herein as then required to be paid by Tenant in respect of Tenant's obligations under this Lease for Rent or any other payments shall be deemed to be other than on account, nor shall any endorsement or statement on any check or any letter accompanying any check or payment of any such amount be deemed an accord and satisfaction, and Landlord may accept such check or payment without prejudice to Landlord's right to recover the balance of such amount or pursue any other remedy provided in this Lease.

992596_11    35


Section 33.8.    Joint Effort. The preparation of this Lease has been a joint effort of the parties hereto and the resulting documents shall not, solely as a matter of judicial construction, be construed more severely against one of the parties than the other.
Section 33.9.    Counterclaims. If Landlord commences any proceeding for nonpayment of Rent or any other sum due to be paid by Tenant under this Lease, Tenant hereby agrees that Tenant will not impose any counterclaim of any nature or description in any such proceeding, provided however, that such agreement of Tenant shall not be construed as a waiver of the right of Tenant to assert such claim in a separate action or actions brought by Tenant.
Section 33.10.    Time. Time is of the essence of this Lease, and all provisions herein relating thereto shall be strictly construed.
Section 33.11.    Landlord's Consent. Landlord's granting of any consent under this Lease, or Landlord's failure to object to any action taken by Tenant without Landlord's consent required under this Lease, shall not be deemed a waiver by Landlord of its rights to require such consent for any further similar act by Tenant. Notwithstanding anything in this Lease to the contrary, with respect to any provision of this Lease which requires Landlord's consent or approval, Tenant shall not be entitled to make, nor shall Tenant make, any claim for (and Tenant hereby waives any claim for) money damages as a result of any claim by Tenant that Landlord has unreasonably withheld or unreasonably delayed any consent or approval, but Tenant's sole remedy shall be an action or proceeding to enforce such provision, or for specific performance, injunction or declaratory judgment.
Section 33.12.    Landlord's Liability. Notwithstanding anything to the contrary herein contained, there shall be absolutely no personal liability asserted or enforceable against Landlord or on any persons, firms or entities who constitute Landlord with respect to any of the terms, covenants, conditions and provisions of this Lease, and Tenant shall, subject to the rights of any mortgagee, look solely to the interest of Landlord, its successors and assigns in the Project for the satisfaction of each and every remedy of Tenant in the event of any default by Landlord hereunder; such exculpation of personal liability is absolute and without any exception whatsoever, except for fraud.
Section 33.13.    Landlord Rights. This Lease does not grant any rights to light or air over or about the Premises. Landlord specifically excepts and reserves to itself the use of the roof, the exterior and structural components of the Building, unimproved portions of the Land including landscaped areas, the land and improvements below the improved floor level of the Building, the improvements and air rights above the Building, the improvements and air rights located outside the demising walls of the Building, such areas within the Project required for installation of utility lines and other installations and to such other portions of the Premises necessary to access, maintain, repair or replace same. The foregoing reservation shall not in any way diminish Tenant's obligations under this Lease, including, but not limited to, its obligations to pay Rent and perform all of its obligations under this Lease.
Section 33.14.    Entire Agreement. It is understood and agreed that all understandings and agreements heretofore had between the parties hereto are merged in this Lease, the exhibits

992596_11    36


annexed hereto and the instruments and documents referred to herein, which alone fully and completely express their agreements, and that no party hereto is relying upon any statement or representation, not embodied in this Lease, made by the other. Each party expressly acknowledges that, except as expressly provided in this Lease the other party and the agents and representatives of the other party have not made, and the other party is not liable for or bound in any manner by, any express or implied warranties, guaranties, promises, statements, inducements, representations or information pertaining to the transactions contemplated hereby.
Section 33.15.    Net Lease. Except as otherwise expressly provided herein, this Lease shall be deemed and construed to be a "net lease" and Tenant agrees to pay all costs and expenses of every kind and nature whatsoever, ordinary and extraordinary, arising out of or in connection with the ownership, maintenance, repair, replacement, use and occupancy of the Premises during the Term, which, except for the execution and delivery hereof, would otherwise have been payable by Landlord.
Section 33.16.    Application of Payments. Landlord shall have the exclusive right to determine how, and in what amounts, payments received from Tenant (or any Guarantor) are applied to amounts due and past due hereunder, and such determination shall be conclusive upon the Tenant and any Guarantor.
Section 33.17.    Tenant Authority. Tenant represents and warrants that it is duly formed and in good standing, and has full corporate, partnership or limited liability company power and authority, as the case may be, to enter into this Lease and has taken all corporate, partnership or limited liability company action, as the case may be, necessary to carry out the transaction contemplated herein, so that when executed, this Lease constitutes a valid and binding obligation of Tenant enforceable in accordance with its terms.
Section 33.18.    Venue. TENANT AND LANDLORD AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING DIRECTLY, INDIRECTLY OR OTHERWISE IN CONNECTION WITH, OUT OF, RELATED TO OR FROM THIS LEASE SHALL BE LITIGATED ONLY IN COURTS HAVING A SITUS WITHIN THE COUNTY OF ORANGE, STATE OF CALIFORNIA. TENANT AND LANDLORD HEREBY CONSENT AND SUBMIT TO THE JURISDICTION OF ANY LOCAL, STATE OR FEDERAL COURT LOCATED WITHIN SAID COUNTY AND STATE. TENANT AND LANDLORD HEREBY WAIVE ANY RIGHT TO TRANSFER OR CHANGE THE VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY LANDLORD ON THIS LEASE IN ACCORDANCE WITH THIS SUBSECTION.
Section 33.19.    Waiver of Trial by Jury. The respective parties hereto shall and hereby do waive trial by jury in any action, proceeding or counterclaim brought by either of the parties hereto against the other on any matters whatsoever arising out of or in any way connected with this Lease, the relationship of Landlord and Tenant, Tenant's use or occupancy of the Premises, any claim of injury or damage, or the enforcement of any remedy under any statute, emergency or otherwise.

992596_11    37


Section 33.20.    Counterparts. This Lease may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
Section 33.21.    Electronic Signatures. Handwritten signatures to this Lease transmitted by telecopy or electronic transmission (for example, through the use of a Portable Document Format or "PDF" file) shall be valid and effective to bind the parties so signing. It is expressly agreed that each party to this Lease shall be bound by its own telecopied or electronically transmitted handwritten signature and shall accept the telecopy or electronically transmitted handwritten signature of the other party to this Lease. The parties hereto agree that the use of telecopied or electronic signatures for the execution of this Lease shall be legal and binding and shall have the same full force and effect as if originally signed.
Section 33.22.    Waiver of California Code Sections. In this Lease, numerous provisions have been negotiated by the parties, some of which provisions are covered by statute. Whenever a provision of this Lease and a provision of any statute or other law cover the same matter, the provisions of this Lease shall control. Therefore, Tenant waives (for itself and all persons claiming under Tenant) the provisions of: (i) Civil Code Sections 1932(2) and 1933(4) with respect to the destruction of the Premises; (ii) Civil Code Sections 1941 and 1942 with respect to Landlord's repair duties and Tenant's right to repair; (iii) Code of Civil Procedure Section 1265.130, allowing either party to petition the Superior Court to terminate this Lease in the event of a partial taking of the Premises by condemnation as herein defined; and (iv) any right of redemption or reinstatement of Tenant under any present or future case law or statutory provisions (including Code of Civil Procedure Sections 473 and 1179 and Civil Code Section 3275) in the event Tennant is dispossessed from the Premises for any reason. This waiver applies to future statutes enacted in addition to or in substitution for the statutes specified herein.
Section 33.23.    Disability Accessibility Disclosure. For purposes of Section 1938 of the California Civil Code, as of the date of this Lease, Landlord hereby discloses to Tenant, and Tenant hereby acknowledges, that the Project (including the Premises and the Building) has not been inspected by a Certified Access Specialist ("CASp"). Accordingly, "a CASp can inspect the Project and determine whether the Project complies with all of the applicable construction‑related accessibility standards under state law. Although state law does not require a CASp inspection of the Project, Landlord may not prohibit Tenant from obtaining a CASp inspection of the Project for the occupancy or potential occupancy of Tenant, if requested by Tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction‑related accessibility standards within the Project."
[Remainder of Page Intentionally Left Blank;
Signature Page Follows]



992596_11    38


IN WITNESS WHEREOF, the parties have executed this Lease as of the date set forth above.
TENANT:
TDG OPERATIONS, LLC, a Georgia limited liability company
By:
   Name:
   Title:

LANDLORD:
CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust
By:
   Name:
   Title:
By:
   Name:
   Title:





SIGNATURE PAGE


EXHIBIT "A"    

LEGAL DESCRIPTION
That tract or parcel of land situated in the city of Santa Ana, county of Orange, state of California, and described as follows:
Parcel 2, in the city of Santa Ana, county of Orange, state of California, as shown on a parcel map filed in Book 106, Pages 42 and 43 of Parcel Maps, in the Office of the County Recorder of said county.
Except all oil, gas, hydrocarbon substances and minerals by whatever name known in, on or under the above described land, and the right of exploring for, boring, mining, drilling, removing, extracting or marketing said substances, together with the exclusive right to execute any and all leases for the purpose of extracting or recovering said substances, but without the right of entry upon any portion of the surface of the ground or within the upper 500 feet measured downward from the surface, as reserved in the Deed from Harold T. Segerstrom, et al., recorded November 2, 1972, in Book 10408, Page 517, Official Records.



992596_11    1


EXHIBIT "B"    
HVAC MAINTENANCE SERVICE CONTRACT REQUIREMENTS
i.
Inspect Entire System
ii.
Lubricate all movable parts
iii.
Check operating temperatures and pressures
iv.
Check and adjust:
Motors and Starters
Valves
Gas Fired Units
Oil Burners
Safety Controls
Compressors
v.
Start up and pump down air conditioning
vi.
Start up and check heating
vii.
Cleaning of coil surfaces; fan impellers & blades; electrical contacts, burner orifices, passages & nozzles; pilot & igniter, etc.
viii.
Aligning belt drives; drive couplings; air fins, etc.
ix.
Replace fan belts when necessary
x.
Calibrating safety controls; temperature & pressure controls, etc.
xi.
Analysis of compressor oil, fuel, gas, etc.
xii.
Furnish proposals for any necessary work not covered by this agreement as requested by customer
xiii.
Check and record voltage and amp draws of all motors






992596_11    1


EXHIBIT "C"    

TENANT ESTOPPEL CERTIFICATE
_________________________ (the "Tenant") hereby certifies to CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust (the "Landlord") and ____________________________, a(n) ______________________ ("Purchaser/Lender") relating to ___________________________ (the "Project") as follows:
Pursuant to that certain Lease dated ______________, ______ (the "Lease") with Tenant, Tenant leases the portion of the Project commonly known as ____________________________ (the "Premises").
The Lease, as amended, modified and supplemented, is in full force and effect, and represents the entire agreement between Tenant and Landlord for the Property. There are no amendments, modifications or supplements to the Lease, whether oral or written except as follows (include the date of each amendment, modification or supplement): _____________________________________________________. A true and correct copy of the Lease, as amended, modified and supplemented, is attached hereto as Exhibit "A".
The term of the Lease began on _________________, ______ and will end on __________________, _______.
Except to the extent expressly provided in the Lease, Tenant does not have any right or option to renew or extend the Term of the Lease, to lease other space at the Property, nor any option or preferential right to purchase all or any part of the Premises.
Tenant has accepted possession of the Premises, and all items of an executory nature relating thereto to be performed by Landlord have been completed, including, but not limited to, completion of construction thereof (and all other improvements required by Landlord under the Lease) in accordance with the terms of the Lease and within the time periods set forth in the Lease. Landlord has paid in full any required contribution towards work to be performed by Tenant under the Lease, except as follows: ___________________________________________________.
Tenant has neither sent nor received any notice of default under the Lease which remains uncured and has no knowledge that either Landlord or Tenant are in default under the Lease except as follows: __________________________________________________.
Tenant is currently paying monthly Base Rent under the Lease in the amount of $___________________ and monthly Tax Deposits in the amount of $_____________, monthly Insurance Deposits in the amount of $_____________ and monthly Expense Deposits in the amount of $____________.
Tenant has not prepaid any rent or other charges under the Lease to Landlord except as follows: _______________________________________________________________.

992596_11    1


Except for a sublease to Cook Son, has not assigned, sublet, transferred, hypothecated or otherwise disposed of its interest in the Lease and/or the Premises, or any part thereof.
Tenant has no defense as to its obligations under the Lease and asserts no setoff, claim or counterclaim against Landlord; except __________________.
A [cash] [letter of credit] security deposit in the amount of $_____________ has been paid to and is presently held by Landlord under the Lease, and Tenant has not given Landlord any other security or similar deposit.
The undersigned is authorized to execute this Tenant Estoppel Certificate on behalf of Tenant.
The use of facsimile or electronic signatures for the execution of this Tenant Estoppel Certificate shall be legal and binding and shall have the same full force and effect as if originally signed.
Dated this _____day of _____________, 20___.

[NAME OF TENANT]
By:     __________________________________
Name:
Title:




992596_11    2



EXHIBIT "D"    

MOVE-OUT CONDITIONS
[SEE ATTACHED]


992596_11    1





992596_11    2





























    

992596_11    3


EXHIBIT "E"    




992596_11    E-1


EXHIBIT "F"
Form of Memorandum of Lease
MEMORANDUM OF LEASE
THIS MEMORANDUM OF LEASE is made and entered into to be effective as of the ______ day of ___________, 201__, between CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust ("Lessor"), and TDG OPERATIONS, LLC, a Georgia corporation (the "Lessee").
W I T N E S S E T H:
1.    Lessor has leased to Lessee, and Lessee has leased from Lessor, pursuant to a Lease Agreement dated ________________, 201___ (the "Lease"), certain real property and improvements located at 3201 S. Susan Street, Santa Ana, Orange County, California, being more particularly described on Exhibit "A" attached hereto and incorporated herein by reference (the "Premises").
2.    The initial term of the Lease commenced ________________, 2019 and expires ___________________, 2029; however, the Lease grants Lessee two (2) options to further extend the term of the Lease for five (5) additional years each upon the same terms and conditions in the Lease.
3.    The purpose of this Memorandum of Lease is to give notice to the public of the existence of the Lease. The Lease is incorporated herein by reference and all parties shall refer thereto for all terms and conditions thereof. In executing this Memorandum of Lease, the Lessor and Lessee hereby confirm and reaffirm the terms, rights, conditions and obligations imposed by and created pursuant to the Lease, all of which remain in full force and effect.

[SIGNATURES ON NEXT PAGE]




992596_11    F-1


IN WITNESS WHEREOF, the parties have executed this Memorandum of Lease to be effective as of the day and year first above written.

LESSOR:
CENTERPOINT PROPERTIES TRUST, a Maryland real estate investment trust
By:    _____________________________________
Name: __________________________________
Title: ___________________________________
By: _____________________________________
Name:___________________________________
Title: ____________________________________


STATE OF ___________)
COUNTY OF _________)
I, the undersigned authority, a Notary Public in and for said County in said State, hereby certify that _______________________________ and __________________________________, whose names as __________________ of Centerpoint Properties Trust, a Maryland real estate investment trust, are signed to the foregoing instrument and who are known to me, acknowledged before me on this day that, being informed of the contents of the instrument, each as such _______________ and with full authority executed the same voluntarily for and as the act of said entity on the date the same bears.
Witness my hand, at Office, this _____ day of ________________________, 20____.
________________________________
Notary Public
My Commission Expires: _________



992596_11    F-2


LESSEE:

TDG OPERATIONS, LLC,
a Georgia limited liability company

By: _______________________________
Title:    ____________________________
STATE OF ______________)
COUNTY OF ____________)

I, the undersigned authority, a Notary Public in and for said County in said State, hereby certify that______________________, whose name as __________________________ of TDG OPERATIONS, LLC is signed to the foregoing instrument and who is known to me, acknowledged before me on this day that, being informed of the contents of the instrument, he/she as such ____________________________ and with full authority executed the same voluntarily for and as the act of said company on the date the same bears.

Witness my hand, at Office, this _____ day of ________________________, 201___.

________________________________
Notary Public



EXHIBIT "A"

Description of Premises




992596_11    F-3


EXHIBIT "G"
FORM OF LETTER OF CREDIT

IRREVOCABLE LETTER OF CREDIT
Applicant:    __________________________________________________
__________________________________________________
__________________________________________________
Beneficiary:    CenterPoint Properties Trust
1808 Swift Drive
Oak Brook, Illinois 60523-1501
Attention: Executive Vice President, Asset Management
Amount:
__________________ AND NO/100 DOLLARS ($_________)
Ladies and Gentlemen:
We hereby establish our Irrevocable Letter of Credit No. _________, in favor of the above-described Beneficiary, for the account of the above-described Applicant, in an aggregate amount not exceeding ______________________ AND NO/100 DOLLARS ($_________) ("Letter of Credit"). This Letter of Credit shall automatically expire at 6:00 p.m. Chicago Time on ____________, 2019 ("Expiration Date") provided, however, that this Letter of Credit shall be automatically renewed for one (1) year periods thereafter ending not earlier than ___________. Notwithstanding the foregoing, we shall have the right not to renew this Letter of Credit on written notice to the Beneficiary sent by certified mail (return receipt requested) or by overnight courier not less than sixty (60) days prior to the then current Expiration Date.
Funds under this Letter of Credit are available to you against your sight drafts drawn on us, signed by you, stating on their face: "Drawn under Irrevocable Standby Letter of Credit No. ____________" and accompanied by this original Letter of Credit for endorsement. No other documentation, action or inquiry shall be required. Partial draws are permitted.
Beneficiary shall have the right to transfer this Letter of Credit.
In requesting the issuance of this Letter of Credit, the Applicant expressly acknowledges and agrees that any insolvency or related proceeding of the Applicant shall in no way alter or affect the Beneficiary's right to draw under the terms contained herein. We undertake that drafts drawn and presented in conformity with the terms of this Letter of Credit will be duly honored. This Letter of Credit is subject to the Uniform Customs and Practice for Documentary Credits, 2007 Revision, International Chamber of Commerce Publication No. 600 ("UCP 600") and as to matters not addressed by UCP 600 shall be governed and construed in accordance with the laws of the State of Illinois. The number of the Credit and the name of our Bank must be quoted on all drafts required.
        
By:    
Authorized Officer

992596_11    G-1
Exhibit


Exhibit 99.1



CONTACT:    Jon Faulkner
Chief Financial Officer
706-876-5814
jon.faulkner@dixiegroup.com

THE DIXIE GROUP REPORTS THE COMPLETION OF THE SALE OF ITS
SUSAN STREET FACILITY AND INITIATION OF ITS STOCK BUYBACK PROGRAM

DALTON, GEORGIA (October 22, 2019) --The Dixie Group, Inc. (NASDAQ: DXYN) reported the sale of its Susan Street facility, and approximately 10 acres of surrounding property located in Santa Ana, California to the CenterPoint Properties Trust for a net purchase price of approximately $37.2 million. The sale will result in reducing debt under the Company’s Revolving Credit Facility by over 35% and increasing equity by over 50%. As previously disclosed, completion of the sale was a condition to the implementation of the Company’s stock repurchase program, pursuant to which the Company is authorized to purchase up to $5.9 million of its shares between completion of the sale and March 2020.

On October 22, 2019, TDG Operations, LLC, a Georgia limited liability company and a wholly-owned subsidiary of The Dixie Group, Inc., completed the sale of its Susan Street facility located in Santa Ana, California for a net purchase price of $37.2 million. Concurrent with the sale of the Property, The Dixie Group and the CenterPoint entered into a ten-year lease agreement, whereby Dixie Group will lease back the property at an annual rental rate of $2.1 million, subject to annual rent increases of 2.0%. Under the lease, The Dixie Group has two (2) consecutive options to extend the term of the Lease by five (5) years for each such option.
As finally negotiated by the parties, and under the terms of the sale agreement and the Susan Street Lease Agreement, certain anticipated costs, including, among others, the full cost of roof repair, repaving of the facility’s parking lot, replacement of HVAC equipment and repair of the facility’s interior upon termination of the lease, are to be borne by the purchaser, instead of by the tenant, and, in exchange, the purchase price was set at the level described above, and the annual rental and escalator were adjusted to the levels described herein.
Simultaneously with the sale, the registrant paid down its credit facility by approximately $36.3 million. Prior to completing the Purchase and Sale Agreement, Dixie Group entered into that certain Consent and Thirteenth Amendment to Credit Agreement dated October 22, 2019, pursuant to which the Company’s lender consented to the sale of the Santa Ana Property. This amendment also adjusted the size of the credit facility to $120 million as well as other terms relative to the sale of the Santa Ana property.
The Company expects to incur an after-tax gain of approximately $25 million. As of the date hereof, net accessible availability under the Company’s Revolving Credit Facility is approximately $22.0 million, leaving an outstanding debt balance of $57.2 million under that Credit Facility.
As previously disclosed The Dixie Group entered into a 10b5-1 Plan to facilitate repurchase of up to $5.9 million of its common shares contingent upon the now completed sale of the Santa Ana Susan Street facility and continuing until March 2020. Any purchases made under the Plan will be structured to come within Rule 10b-18 and will be managed by Raymond James & Associates.
The Dixie Group (www.thedixiegroup.com) is a leading marketer and manufacturer of carpet and rugs to higher end residential and commercial customers through the Fabrica International, Masland Carpets, Dixie Home, Atlas | Masland Contract and Dixie International brands.


Statements in this news release, which relate to the future, are subject to risk factors and uncertainties that could cause actual results to differ materially from those indicated in such forward-looking statements. Such factors include the possibility that negotiations will not be successful, that contract terms will not be as expected, and that levels of demand for the products produced by the Company will change. Other factors that could affect the Company's results include, but are not limited to, raw material and transportation costs related to petroleum prices, the cost and availability of capital, and general economic and competitive conditions related to the Company's business. Issues related to the availability and price of energy may adversely affect the Company's operations. Additional information regarding these and other risk factors and uncertainties may be found in the Company's filings with the Securities and Exchange Commission.

- END -