Execution Copy
AGREEMENT REGARDING LEASES
This Agreement Regarding Leases is made as of the 2nd day of November,
2000 between O.M. 00 X Xxxxxx LLC ("O.M.") having an address x/x Xxxxx, Xxxxx &
Xxxxxx xx Xxx Xxxxxxx, Inc., 00 Xxxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxx
X. Xxxxxxx, President, and Designs, Inc. having an address of 00 X Xxxxxx,
Xxxxxxx, XX 00000, Attention: Xxxxx Xxxxx, President and Chief Executive Officer
("Designs").
I. RECITALS
1. O.M. is successor Landlord and Designs is Tenant under that certain Lease by
and between the Trustees of the R.C.L. Trusts, the G.W.B. Trusts, and the A.C.F.
Trusts as Landlord and Designs as Tenant dated as of November 4, 1995 with
respect to that certain real property located within the New England Industrial
Center in Needham, Massachusetts known and numbered as 00 X Xxxxxx, Xxxxxxx,
Xxxxxxxxxxxxx, including the building thereon (the "Building") containing
approximately 80,170 rentable square feet (the "Existing Lease").
2. All capitalized terms not otherwise defined herein shall have the meanings
given to them in the Existing Lease.
3. O.M. and Designs wish to grant to O.M. the option to terminate the Existing
Lease and to provide for certain other agreements between O.M. and Designs, all
on, and subject to, the terms and conditions set forth herein.
NOW, THEREFORE, O.M. and Designs agree as follows:
II. LEASE TERMINATION AGREEMENT; ESCROW AGREEMENT, NEW LEASE
1. Consideration. Within three (3) business days after the date hereof, O.M.
shall pay to Designs, by certified or bank check, a non-refundable payment of
One Hundred Thousand ($100,000) Dollars in consideration of the execution and
delivery of this Agreement by Designs (the "Consideration Payment"). The
Consideration Payment shall be deemed to be earned upon the payment thereof.
2. Option to Terminate Existing Lease.
(a) At any time on or prior to February 2, 2002 (the "Outside Exercise Date")
(the period between the date hereof and the Outside Exercise Date being referred
to herein as the "Option Period"), O.M. may terminate the Existing Lease (the
"Termination Option") by giving notice of termination to Designs in the form of
Annex A hereto (the "Termination Notice"), with a copy thereto to First American
Title Insurance Company (or such other escrow agent upon which the parties
hereto shall reasonably agree if First American Title Insurance Company is
unable or unwilling to serve as escrow agent) ("Escrow Agent"), which notice and
termination shall be effective only if O.M. also tenders to Escrow Agent at the
time it gives the Termination Notice as aforesaid (i) in the form of a certified
or bank check payable to
Escrow Agent, or by wire transfer in immediately available funds, the sum of
Four Million Four Hundred Thousand ($4,400,000) Dollars (the "Termination Notice
Fee"), which shall be held and disbursed in accordance with the provisions of
this Agreement and the Escrow Agreement in the form of Annex B hereto, which
Escrow Agreement is to be entered into simultaneously with this Agreement by and
among O.M., Designs and Escrow Agent, and (ii) a letter of credit in the amount
of Four Million Five Hundred Thousand Dollars ($4,500,000) (the "O.M. Surrender
LC") in the form of Annex C hereto. The O.M. Surrender LC shall be issued by the
bank identified in Annex C or another bank reasonably acceptable to Designs.
(b) The "Termination Condition" shall mean that (i) O.M. shall have given the
Termination Notice to Designs and to Escrow Agent in accordance with the
provisions of this Section 2, (ii) O.M. shall have paid to Escrow Agent the
Termination Notice Fee and shall have delivered to Escrow Agent the O.M.
Surrender LC in accordance with the provisions hereof and (iii) either:
(A) the debis Mortgage (as hereinafter defined) and any other
mortgage encumbering the Premises (collectively referred to herein as
the "Mortgage") shall have been satisfied in full (as evidenced by
either the filing of a discharge of the Mortgage with the Norfolk
Registry District of the Land Court or by the issuance by a nationally
recognized title insurance company of a title insurance policy (or an
endorsement to O.M.'s existing title insurance policy) insuring that
the lien of the Mortgage no longer encumbers title to the Premises, a
copy of which discharge or title policy (or title policy endorsement)
shall be delivered to Designs simultaneously with the Termination
Notice), or
(B) the holder of the Mortgage shall have consented to the
termination of the Existing Lease and the execution and delivery of
the New Lease and shall have agreed in writing that the Existing SNDA
(as hereinafter defined) (in the case of the debis Mortgage) and any
other applicable subordination, non-disturbance and attornment
agreement executed by the holder of any other Mortgage and Designs
pursuant to the terms and conditions of the Existing Lease (an "Other
SNDA") shall apply to the New Lease with the same effect as it had
applied to the Existing Lease.
(c) Upon satisfaction of the Termination Condition at any time on or prior to
the Outside Exercise Date, the Existing Lease shall terminate on the tenth
(10th) day after the satisfaction of the Termination Condition (the "Termination
Date"), as if the originally scheduled expiration date of the Existing Lease
were the Termination Date.
3. Initial Design Payment Condition. Designs shall be entitled to receipt of the
Termination Notice Fee immediately upon its providing to Escrow Agent two (2)
original counterpart executed copies of the "Confirmatory Acknowledgement of
Termination" in the form of Annex D hereto with changes to reflect appropriate
dates and a letter of credit in the amount of Four Million Four Hundred Thousand
($4,400,000) Dollars (the "Designs Security LC") substantially in the form of
Annex E hereto (or other form reasonably acceptable to O.M.) (collectively, the
"Initial Designs Payment Condition"), but the failure of Designs to satisfy the
Initial Designs Payments Condition shall not affect the validity of the
Termination Notice, it being expressly agreed that the Existing Lease shall
automatically and without further action terminate on the Termination Date upon
O.M.'s satisfaction of the Termination Condition on or prior to the Outside
Exercise Date. The Designs Security LC shall be issued by the bank identified in
Annex E or another bank reasonably acceptable to O.M.
4. Continuing Obligations Under Existing Lease.
(a) Except as provided in this Agreement, if O.M. exercises the Termination
Option, then, effective as of the Termination Date, neither O.M. or Designs
shall have any liability or obligation to the other under or with respect to the
Existing Lease, all of which obligations and liabilities shall be deemed to be
terminated, extinguished and waived as of the Termination Date; provided,
however, that neither the foregoing provisions of this sentence nor any other
provision of this Agreement shall be deemed to terminate, extinguish or waive
the respective liabilities or obligations of O.M. and Designs under Section 7.10
of the Existing Lease (but only in respect of third party (i.e. not the parties
hereto) tort claims made against the applicable indemnified party for bodily
injury, death or property damage to persons or entities, but specifically
excluding any claims with respect to Environmental Matters, as defined below),
which obligations and liabilities shall survive the termination of the Existing
Lease. Without limiting the foregoing, if O.M. exercises the Termination Option
in accordance with the terms hereof:
(i) The rights and obligations of Designs with respect to the
removal of FF&E, alterations and improvements from the New
Lease Premises (hereafter defined) shall be governed by the
terms of the New Lease (hereafter defined);
(ii) Designs shall have no obligation to remove, or cause any
subtenant or other occupant of the Premises to remove, any
FF&E, alterations, improvements or other property from any
portion of the Premises other than the New Lease Premises or
to vacate any such other portion of the Premises (provided,
however, that neither the foregoing provisions of this
clause (ii) nor any other provision hereof shall grant or
confer, or be deemed to grant or confer, any right to any
subtenant or other occupant to use or occupy any portion of
the Premises except as expressly provided in the respective
Occupancy Agreements);
(iii)The provisions of Section 7.13 of the Existing Lease shall
be of no force or effect from and after the Termination
Date;
(iv) The provisions of Section 11 of the Existing Lease shall be
of no force or effect from and after the Termination Date,
it being understood and agreed that Designs' occupancy of
the New Lease Premises shall be governed by the New Lease,
and to the extent specifically provided herein, this
Agreement, from and after the Termination Date; and
(v) Subject to the terms and provisions of the New Lease and
Section II (4)(c) below, Designs shall not have any
liability or obligation to O.M. with respect to the
condition of the Premises as of the Termination Date.
(b) Promptly after termination of the Existing Lease, O.M. and Designs shall
prorate, as of 11:59 p.m. on the day immediately preceding the Termination Date,
all Fixed Rent and Additional Rent under the Existing Lease which has been paid
in advance or is in arrears, and a balancing payment shall be made by or to
Designs, as the case requires, within ten days of O.M. providing to Designs a
reconciliation of the same. Without limiting the foregoing or any other
provision hereof, all income and other amounts payable under any Occupancy
Agreement (less an amount equal to $5.30 per square foot per annum of the
applicable sublease premises calculated on a per diem basis to the extent of any
prepaid operating expenses and taxes) that are attributable to the period from
and after the Termination Date shall belong to O.M. and all prepaid rents and
other charges (less an amount equal to $5.30 per square foot per annum of the
applicable sublease premises calculated on a per diem basis to the extent of any
prepaid operating expenses and taxes) under the Occupancy Agreements for the
period from and after the Termination Date shall be duly accounted for
simultaneously with the foregoing balancing payment (to the extent not already
paid to O.M.).
(c) Notwithstanding any provision of the Existing Lease or New Lease to the
contrary, if O.M. exercises its Termination Option, Designs shall not be liable
in any way for, and O.M. shall not exercise any rights or remedies against
Designs as a result of, and OM hereby releases, waives and agrees to make no
claim against Designs in connection with, any actual or alleged breach of any
representation, warranty, agreement or covenant set forth in the Existing Lease
or New Lease, or otherwise with respect to oil, chemicals, toxic substances,
hazardous waste or materials or other environmental matters (collectively,
"Environmental Matters") except to the extent that:
(i) (A) such breach was caused by Designs or any of its
contractors, agents or employees, and (B) O.M. gives written
notice to Designs of any applicable claim within five (5)
business days after the earlier of the Surrender Date or the
date that O.M. actually commences Material Construction Work
(as defined below), and O.M. commences suit with respect to
such claim within twelve (12) months after the earlier of
the Surrender Date or the date that O.M. actually commences
Material Construction Work, or
(ii) such breach is the result of the gross negligence or willful
misconduct of Designs or any of its employees, agents or
contractors.
The burden of proof in any action or proceeding under this Section 4 shall be
upon O.M. As used herein, the term "Material Construction Work" shall mean
demolition, excavation or construction work commenced by, or at the direction
of, O.M. in connection with the Land and/or the Building; provided, however,
that Material Construction Work shall not be deemed to mean or include
demolition or construction activity customarily associated with the fit up of
tenant space or remodeling of common areas, or ordinary and customary
maintenance and repairs of the Building or the Land. Notwithstanding any
provision hereof or the New Lease to the contrary, O.M. shall not have the right
to offset any amounts due or alleged to be due from Designs under this Section
against the Early Termination Fee. For purposes of clarification, nothing
contained herein shall be deemed to constitute or create any contractual
indemnification by O.M. of Designs with respect to any claim made by any
governmental authority or third party against Designs relating to any
Environmental Matter caused by Designs.
5. New Lease. As provided in the Escrow Agreement, immediately upon O.M.'s
satisfaction of the Termination Condition, Escrow Agent shall date the New Lease
as of the Termination Date and release from escrow to O.M. and Designs the lease
of a portion of the Building described on Annex F attached hereto (the "New
Lease Premises") in the form of Annex G hereto which is to be entered into
simultaneously with the execution of this Agreement by O.M. and Designs (the
"New Lease"). O.M. hereby covenants that it shall not intentionally interfere
(nor shall its affiliates that it controls intentionally interfere) with any
effort or attempt by Designs to vacate or yield up the Premises demised under
the New Lease. If O.M. shall not exercise the Termination Option in accordance
with the terms hereof on or before the Outside Exercise Date, then promptly
thereafter Escrow Agent shall destroy all counterparts of the New Lease
deposited with it and this Agreement shall be of no further force or effect. In
the event of any conflict between the provisions of the New Lease and the
provisions of this Agreement, this Agreement shall govern.
6. Early Termination Fee; Surrender Fee.
(a) Subject to the provisions of Sections II(6)(b) and (c) below, O.M. agrees
that if the Surrender Condition (hereafter defined) is satisfied by the Required
Surrender Date (hereafter defined), O.M. shall pay to Designs an "Early
Termination Fee" of Eight Million Nine Hundred Thousand ($8,900,000) Dollars,
consisting of the sum of the Termination Notice Fee (payable at the time the
Termination Condition is satisfied, as provided in Section II2 above) and an
additional sum of Four Million Five Hundred Thousand ($4,500,000) Dollars (the
"Surrender Fee"), payable to Designs on the date upon which the Surrender
Condition is satisfied in the form of a certified or bank check, or by wire
transfer in immediately available funds. The Early Termination Fee shall be in
addition to the Consideration Payment payable at the time of execution of this
Agreement. The "Surrender Condition" shall mean that the New Lease Premises
shall be free and clear of all tenants and occupants claiming by, through, or
under Designs (including, without limitation, Designs), and Designs shall have
given notice to O.M. in the form of Annex H attached hereto. The Surrender
Condition shall be considered to be satisfied regardless of whether Designs
abandons or removes its personal property from the New Lease Premises. The
"Required Surrender Date" shall mean the date on which the New Lease is
terminated or the Term thereof expires.
(b) Within five (5) business days after the date of satisfaction of the
Surrender Condition (the "Surrender Date"), O.M. shall have the right to (X)
cause the New Lease Premises to be inspected by a property inspector listed on
Annex I attached hereto and incorporated herein by this reference or another
property inspector reasonably satisfactory to O.M. and Designs (a "Property
Inspector") and (Y) to cause such Property Inspector, within such five (5)
business day period, to issue a report to O.M., Designs and Escrow Agent setting
forth such Property Inspector's determination as to whether there is Material
Damage (as hereinafter defined) to the New Lease Premises, and, if so, the cost,
as reasonably estimated by the Property Inspector, to repair or restore the New
Lease Premises as a result of such Material Damage (which cost shall be deducted
from the Early Termination Fee). If O.M. exercises its Termination Option, the
right to cause such inspection to be performed, the issuance of such report
within such five (5) business day period and the deduction of such amount (if
any) from the Early Termination Fee shall be O.M.'s sole and exclusive remedy at
law or in equity against Designs for the physical condition of the New Lease
Premises. If the Property Inspector shall not inspect the New Lease Premises and
issue such report within such five (5) business day period, then O.M. shall be
deemed to have waived its sole and exclusive remedy. As used herein, the term
"Material Damage" shall mean and refer to any damage to:
(A) the interior of the New Lease Premises
occurring during the term of the New Lease
which exceeds the damage which would be
reasonably expected to occur as a result of
(i) normal wear and tear in connection with
Designs' use of the New Lease Premises
during the term of the New Lease, or (ii)
vacating the New Lease Premises and removing
Designs' personal property or the Enumerated
FF&E therefrom in accordance with
commercially reasonable custom and practice
and
(B) any other portion of the Building
(including, without limitation, the roof)
caused by the removal of any of the
Enumerated Property.
Within ten (10) days after the exercise date of the Termination Option, but in
any event, on at least two (2) business days' prior notice to Designs, O.M.
shall cause such Property Inspector to inspect the New Lease Premises for the
purpose of determining the physical condition thereof. Material Damage shall not
be deemed to include any damage to the physical condition of the New Lease
Premises existing as of the date of such inspection. The foregoing provisions of
this paragraph (b) shall not be deemed to limit, impair or expand the rights and
remedies of O.M. with respect to the environmental condition of the New Lease
Premises, which shall be governed exclusively by the provisions of Section II
(4)(c) hereof and the provisions of the New Lease.
(c) O.M. and Designs agree that if Designs does not satisfy the Surrender
Condition on or prior to the Required Surrender Date, but Designs satisfies the
Surrender Condition prior to the date which is thirty (30) days after the
Required Surrender Date (the "Outside Surrender Date"), a portion of the
Surrender Fee shall be payable to Designs on the date upon which it satisfies
the Surrender Condition, such portion to be calculated by reducing the Surrender
Fee by One Hundred Fifty Thousand ($150,000) Dollars for each day after the
Required Surrender Date that the Surrender Condition is not satisfied; provided,
however, that the date of commencement for such reduction of Surrender Fee shall
be subject to extension for Force Majeure but not to a date later than the date
which is fourteen (14) days after the Required Surrender Date. As used herein,
the term "Force Majeure" shall mean any or all of the following: strikes;
lock-outs; labor troubles; accidents; interference by O.M.; governmental
restriction, preemption, regulation or control; mechanical breakdown; inability
to obtain labor, fuel, steam, water, electricity or materials; acts of God;
enemy action; civil commotion; or fire or other casualty; provided, however,
that:
(i) Force Majeure shall not be deemed to mean or include lack of
funds; and
(ii) no event of Force Majeure shall extend the time for
commencement of reduction of the Surrender Fee as set forth
above to the extent that Designs could have exercised
commercially reasonable efforts to mitigate the applicable
delay and failed to do so; and
(iii)Designs shall endeavor to give notice to O.M. as soon as
reasonably practicable after obtaining actual knowledge of
the occurrence of any event of Force Majeure which Designs
reasonably believes may delay the surrender of the Leased
Premises beyond the Required Surrender Date; provided that
Designs' failure to give any such notice shall not in any
manner affect Designs' rights under the proviso contained in
the first sentence of this Paragraph 6(c).
Designs hereby covenants to use commercially reasonable efforts to mitigate any
delay resulting from any Force Majeure event which actually occurs. In no event
shall the Outside Surrender Date be extended as a result of Force Majeure or for
any other reason whatsoever. Subject to the provisions of Section II (6)(d)
hereof, no reduction of the Surrender Fee under this subsection shall effect
Design's right to retain the Termination Notice Fee. If O.M. exercises its
Termination Option, O.M.'s right to a reduction of the Surrender Fee under this
Section II (6)(c) and to repayment of the balance of the Early Termination Fee
under Section II (6)(d) hereof, and O.M.'s rights and remedies under the New
Lease, shall constitute O.M.'s sole and exclusive rights and remedies, at law or
in equity, in connection with any failure of Designs to vacate, surrender and
abandon the New Lease Premises on or before the Required Surrender Date.
(d) Without limiting the provisions of the foregoing clause (c), if the
Surrender Condition is not satisfied by the Outside Surrender Date, Designs
shall not be entitled to any portion of the Early Termination Fee, and Designs
shall repay to O.M. the entire Termination Notice Fee. If Designs shall not
satisfy the Surrender Condition on or prior to the Outside Surrender Date and
Designs shall not repay to O.M. the Termination Notice Fee on or before the
Outside Surrender Date, then O.M. shall be entitled to require Escrow Agent to
(x) if Escrow Agent shall not have theretofore drawn down the Designs Security
LC, draw down the Designs Security LC and pay to O.M., by a certified, bank
check or wire transfer of immediately available funds, the proceeds of the
Designs Security LC (i.e. funds in the amount of the Termination Notice Fee), or
(y) if Escrow Agent shall have therefore drawn down the Designs Security LC, pay
to O.M., by a certified, bank check or wire transfer of immediately available
funds, such portion of the proceeds of the Designs Security LC. If the Surrender
Condition is satisfied on or before the Outside Surrender Date, or the Surrender
Condition is not satisfied by the Outside Surrender Date but Designs has repaid
to O.M. the entire Termination Notice Fee on or before the Outside Surrender
Date, then, in either case, the Escrow Agent shall return the Designs Security
LC to Designs upon demand by Designs.
(e) If Designs satisfies the Surrender Condition on or before the Outside
Surrender Date, and O.M. fails or refuses to pay the Surrender Fee or so much
thereof as is due to Designs in accordance with the terms hereof, then Designs
shall be entitled to require Escrow Agent to (x) if Escrow Agent shall not have
theretofore drawn down the O.M. Surrender LC, draw down the O.M. Surrender LC
and pay to Designs, by a certified, bank check or wire transfer of immediately
available funds, so much of the proceeds thereof (i.e. funds in the amount of
the Surrender Fee) as is due to Designs in accordance with the terms hereof or
(y) if Escrow Agent shall have therefore drawn down the O.M. Surrender LC, pay
to Designs, by a certified, bank check or wire transfer of immediately available
funds, the Surrender Fee (or so much thereof as is due to Designs in accordance
with the terms hereof). If the Surrender Condition is not satisfied on or before
the Outside Surrender Date, or the Surrender Condition is satisfied by the
Outside Surrender Date and O.M. has paid to Designs the Surrender Fee (or so
much thereof as is due to Designs in accordance with the terms hereof), then, in
either case, the Escrow Agent shall return the O.M. Surrender LC to O.M.
promptly upon demand by O.M..
(f) Effective immediately upon the date of satisfaction of Surrender Condition,
Designs hereby conveys, transfers and sells to O.M. all of Design's rights,
title and interest in, to and under any FF&E, alterations, improvements and
personal property of Designs or any party claiming by, through or under Designs
remaining at the Premises all of which shall be deemed to have been abandoned by
Designs. The foregoing conveyance, transfer and sale shall be effective
automatically as of the Surrender Date without the need for any further action
by Designs. Without limiting the foregoing, Designs hereby agrees to execute
such documents, instruments and agreements as O.M. may reasonably request to
ratify and confirm such conveyance, transfer and sale.
III. OTHER AGREEMENTS; MISCELLANEOUS
1. This Agreement, which may be executed in counterpart copies, any of which
shall constitute a single original, shall be governed by Massachusetts law. O.M.
and Designs each hereby consent to jurisdiction of the courts of the
Commonwealth of Massachusetts in connection with any dispute relating to this
Agreement, the Escrow Agreement, the Existing Lease or the New Lease. This
Agreement shall be binding on and inure to the benefit of O.M. and Designs, and
their respective successors and assigns; provided, however, that O.M. shall not
assign this Agreement, or its interests, rights or obligations hereunder, to any
person or entity other than a transferee of O.M.'s interest in the Land and the
Building (including, without limitation, any transferee by reason of any sale,
foreclosure, deed in lieu of foreclosure, merger, consolidation or ground
lease). Any successor or assignee of O.M. with respect to O.M.'s interest,
rights or obligations in this Agreement shall agree directly with Designs by
written instrument in form and substance reasonably satisfactory to O.M. and
Designs, to be bound by all of the obligations of O.M. under this Agreement, the
Escrow Agreement, the Existing Lease and, if the Termination Option is exercised
by O.M. in accordance with the terms hereof, the New Lease. Without limiting the
provisions of the immediately foregoing sentence, in the event of any assignment
of O.M.'s interest, rights and obligations hereunder to any ground lessee, the
owner of the fee interest in the Land and the Building shall join such
instrument to evidence that it shall be jointly and severally liable with the
ground lessee for the obligations of O.M. hereunder. Nothing herein contained
shall be deemed to limit or impair the right of any member of O.M. to sell or
transfer any or all of its membership interests in O.M. to any other person or
entity. Notwithstanding the foregoing, Designs may not assign its interest,
rights or obligations in this Agreement without the consent of O.M., which
consent may be withheld in the sole discretion of O.M; provided, however, that
the foregoing provisions of this sentence shall not apply to, and O.M.'s consent
shall not be required with respect to, any assignment by Designs of its
interest, rights or obligations in this Agreement to any entity into or with
which Designs is merged or consolidated or to which substantially all of
Designs' assets are transferred, provided that (i) the successor to Designs has
a net worth computed in accordance with generally-accepted accounting principles
which is reasonably commensurate with, and sufficient to meet, the financial
obligations of Designs hereunder, (ii) proof reasonably satisfactory to O.M. of
such net worth shall have been delivered by Designs to O.M. at least ten (10)
days prior to the effective date of any such transaction, and (iii) the assignee
agrees directly with O.M., by written instrument in form and substance
reasonably satisfactory to Designs, to be bound by all of the obligations of
Designs under this Agreement, the Existing Lease and, if the Termination Option
is exercised by O.M. in accordance with the terms hereof, the New Lease,
including, without limitation, the covenant against further assignment.
2. Subject to the provisions of Section III (5)(B) below, during the term of the
Existing Lease and during the term of the New Lease, Designs agrees that it will
not make any assignment thereof or enter into any Occupancy Agreement or modify
or amend any existing Occupancy Agreement, and Designs further agrees that,
notwithstanding anything to the contrary in the Existing Lease or the New Lease,
O.M. may withhold its consent to any request for consent to any assignment
thereunder or to any Occupancy Agreement or modification or amendment of any
existing Occupancy Agreement in its sole discretion. Nothing herein contained
shall be deemed to limit or impair the right of any shareholder of Designs to
sell or transfer any or all of its stock in Designs. For the purposes of this
Agreement, the term "assignment" shall exclude the merger or consolidation of
Designs with or into, or the transfer of substantially all of Designs' assets
to, any other entity and the assignment of the Existing Lease or the New Lease
to any such entity (provided that (i) the successor entity has a net worth
computed in accordance with generally-accepted accounting principles which is
reasonably commensurate with, and sufficient to meet, the financial obligations
of Designs under this Agreement, the Existing Lease and the New Lease, (ii)
proof reasonably satisfactory to O.M. of such net worth shall have been
delivered to O.M. at least ten (10) days prior to the effective date of any such
merger or consolidation, and (iii) the successor entity agrees directly with
O.M., by written instrument in form and substance reasonably satisfactory to
O.M. to be bound by all of the obligations of Designs under this Agreement, the
Existing Lease and the New Lease, as the case may be, including, without
limitation, the covenant against further assignment hereunder. This Paragraph
shall be null and void and of no force or effect if O.M. shall fail to exercise
the Termination Option in accordance with the terms hereof on or before the
Outside Exercise Date.
3. Simultaneous with the execution hereof, Designs shall provide to O.M. a
Clerk's or Secretary's Certificate of Vote certifying that the Board of
Directors of Designs has authorized the execution and delivery of this
Agreement, and all additional documentation contemplated pursuant thereto, by
Resolutions of the Board of Directors which remain in full force and effect, and
have authorized the signatories to this Agreement to enter into all such
documentation on behalf of Designs. Simultaneous with the execution hereof, O.M.
shall provide to Designs a member's certificate of vote certifying that the sole
member of O.M. has authorized the execution and delivery of this Agreement, and
all additional documentation contemplated pursuant thereto, by resolutions which
remain in force and effect, and has authorized the signatory to this Agreement
to enter into all such documentation on behalf of O.M.
4. Subject to the provisions of Section III (13) below, during the term of this
Agreement and during the term of the New Lease, if any, O.M., its agents and
representatives, shall be entitled to enter into discussions and negotiations
with existing subtenants under the Occupancy Agreement regarding, among other
things, the termination of subleases resulting from the termination of the
Existing Lease. Subject to the provisions of Section III(13) below, such
discussions and negotiations may include disclosure of the existence, nature and
effect of this Agreement, or portions thereof, but not the financial terms
hereof or provisions of Section III(6) below. Further, in the event that O.M.
and any subtenant reach any agreement regarding any sublease which requires the
action or consent of Designs, Designs will not unreasonably withhold its consent
to such action or consent, provided, however, that the foregoing shall not
obligate Designs to expend any sums, or forego any revenue, incur any obligation
or liability, or otherwise decrease Design's rights or increase its obligations
under any Occupancy Agreement or any other document or agreement.
5. Designs represents and warrants to O.M. as follows:
A. The only subleases, licenses, occupancy agreements or other agreements
or instruments pursuant to which any person or entity has the right to occupy
the Premises demised under the Existing Lease which were executed or consented
to by Designs, or of which Designs has knowledge ("Occupancy Agreements"), are
as follows:
(i) Agreement of Sublease dated as of March 3, 1998 by and between Designs
and ZD Comdex & Forms, Inc. (now Key3Media Events, Inc.) (the "Comdex
Sublease");
(ii) Agreement of Sublease by and between Designs and Atreve Software, Inc.
dated as of July 1, 1998, the successor subtenant under which is
Inktomi Corporation, as amended by First Amendment to Sublease dated
as of September 11, 2000 (the "Inktomi Sublease"); and
(iii)Agreement of Sublease (the "Xyan Sublease") dated as of August 10,
2000 by and between Designs and Xxxx.xxx, Inc. ("Xyan"), including
that certain letter dated September 11, 2000.
B. The consent of O.M. shall not be required for Designs to terminate any
Occupancy Agreement This Paragraph shall be null and void and of no force or
effect if O.M. shall fail to exercise the Termination Option in accordance with
the terms hereof on or before the Outside Exercise Date.
C. Designs has delivered true, correct and complete copies of the foregoing
Occupancy Agreements to O.M., and the same have not been amended, orally or in
writing.
6. O.M. shall defend, with counsel reasonably acceptable to Designs, save
harmless, and indemnify Designs and all agents, directors, employees, officers
and shareholders of Designs (Designs and all such other parties being referred
to herein collectively as the "Indemnified Parties") from any and all
liabilities, claims, actions, suits, obligations, damages, proceedings, expenses
and costs (including, without implied limitation, reasonable counsel fees and
disbursements) which may be imposed upon, incurred by or asserted against any
Indemnified Party by, or for the benefit of, Xyan as a result of, by reason of,
or in any manner relating to, this Agreement, the New Lease and/or the
negotiation, execution, delivery and/or performance of this Agreement and/or the
New Lease by O.M. and/or Designs, including, without limitation, the exercise of
O.M.'s rights under Section III 4 hereof and/or the termination of the Xyan
Sublease.
7. Whenever any notice, approval, consent or request is given pursuant to this
Agreement, it shall be in writing. Communications, unless otherwise specified by
five (5) days' prior notice, shall be addressed to the parties addresses stated
in the header of this Agreement, with copies in the case of notices to O.M. to
Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxxx X.
X'Xxxxxx, Xx., Esq. and in the case of notice to Designs to Xxxxxxx Xxxxxxx,
Esq., Designs, Inc. 00X Xxxxxx, Xxxxxxx, XX 00000 and Xxxxxx, Xxxxx Naftalis &
Xxxxxxx, LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000-0000, Attention: Xxxxx Xxxxx,
Esq. Any communications so addressed shall be deemed duly served, (a) if mailed
by registered or certified mail, return receipt requested, postage prepaid upon
the earlier of (i) three (3) days after mailing within the Continental United
States, or (ii) receipt of same or refusal of delivery, (b) if delivered by
recognized overnight delivery service, upon the earlier of (i) one (1) business
day after deposit with such service, (ii) receipt of same, or (iii) refusal of
delivery, or (c) if delivered by hand, upon receipt of same or refusal of
delivery. Any party hereto may change its address for purposes of notices and
other communications by giving at least three (3) business days' prior notice to
the other party hereto as aforesaid.
8. No individual partner, member, trustee, stockholder, officer, director,
employee or beneficiary of O.M. or Designs shall be personally liable under this
Agreement. Designs shall look solely to O.M.'s interest in the Land and the
Building (as defined in the Existing Lease), including without limitation,
rents, income, profits and insurance related to the Land and the Building, but
not upon other assets of O.M. not related to the Land or Building, except in the
case of fraud or misapplication or funds, and to other security provided
pursuant to the terms hereof and the Escrow Agreement, in pursuit of its
remedies upon a default by O.M. hereunder, the general assets of the individual
partners, members, trustees, stockholders, officers, employees or beneficiaries
of O.M. and Designs shall not be subject to levy, execution or other enforcement
procedure for the satisfaction of the remedies of O.M. or Designs; provided that
the foregoing provisions of this sentence shall not constitute a waiver of any
obligation evidenced by this Agreement and provided further that the foregoing
provisions of this sentence shall not limit the right of either party to name
the other or any individual partner, member or trustee thereof as party
defendant in any action or suit in connection with this Agreement so long as no
personal money judgment shall be asked for or taken against any individual
partner, member, trustee, stockholder, officer, employee or beneficiary of O.M.
or Designs.
9. No consent or waiver, express or implied, by either party to or of any breach
of any agreement or duty shall be construed as a waiver or consent to or of any
other breach of the same or any other agreement or duty.
10. O.M. and Designs each hereby represents and warrants to the other that it
has not had any dealings with any broker in connection with the transaction
contemplated herein, and that it knows of no broker or agent who is entitled to
a commission in connection with the transactions contemplated herein. Each party
hereby agrees to indemnify, defend and hold the other harmless from and against
any all claims, demands, losses, liabilities, lawsuits, judgments, costs and
expenses (including, without limitation, reasonable attorneys' fees and
disbursements) with respect to any breach by such party of its representations
and warranties set forth in this Paragraph.
11. O.M. hereby represents and warrants that there is no mortgage encumbering
the Land and/or the Building in force or effect as of the date hereof other than
that certain mortgage held by debis Financial Services, Inc. ("debis") dated as
of March 17, 1999, filed for registration with the Norfolk Registry of District
of the Land Court as Document No. _________ on Certificate of Title No. ________
(the "debis Mortgage"), (ii) there is no ground lease encumbering the Land or
the Building in force or effect as of the date hereof, and (iii) that certain
Subordination, Nondisturbance and Attornment Agreement dated May 16, 1996 and
filed for registration with the Norfolk Registry District of the Land Court as
Document No. 738474, by and between Grove Bank and Designs, is no longer in
force or effect.
12. If any term, provision or condition contained in this Agreement shall, to
any extent, be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, provision or condition, to persons or circumstances
other than those with respect to which it is invalid or unenforceable, shall not
be affected thereby and each and every other term, provision and condition of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.
13. Confidentiality. Each party hereto agrees to maintain the confidentiality of
the financial and other material terms and conditions of this Agreement, other
than information that is available from public sources other than as a result of
such party's actions. Either party may, however, disclose any of such
information to its agents, directors, officers, employees, advisors, attorneys,
affiliates or representatives who require such information for the purpose of
performing or assisting in the performance of its obligations or services
hereunder, and to investors or lenders or proposed investors or lenders in or to
such party, and to purchasers or proposed purchasers of the Premises, provided
that in all such cases such parties shall be informed of, and agree (orally or
in writing) to abide by, the confidential nature of such information. In
addition, (i) Designs, as a public company, may disclose material terms and
conditions of this Agreement in a Form 8-K and/or other filings with the SEC
and/or by press release following the execution hereof, and (ii) either party
hereto may also disclose any such information (x) to the extent required by law,
regulation (including SEC regulations) or court order provided that such party
shall have first, to the extent reasonably practicable, advised the other of the
requirement to disclose such information and shall have afforded the other an
opportunity to dispute such requirement and seek relief therefrom by legal
process (each party hereby agreeing to cooperate, upon written request made by
the other party, with the other party in good faith to promptly respond to any
such notice of advice as to disclosure required by any applicable law,
regulation or court order), (y) in connection with any suit, action, arbitration
or other proceedings between the parties hereto or their respective related
parties, or (z) to the extent required in connection with the preparation or
filing of any tax returns or other filings required by applicable law.
Notwithstanding the foregoing or any other provision hereof to the contrary, (i)
O.M. shall have the right to inform subtenants and other occupants of the
Building, purchasers or proposed purchasers of the Premises, lenders or
investors or proposed lenders or investors to or in O.M., brokers, attorneys for
O.M., building departmental and other comparable governmental officials and such
other persons or entities as O.M. may reasonably deem appropriate or necessary,
that O.M. and Designs have entered into an agreement pursuant to which O.M. has
the right to terminate the Existing Lease and recapture the Premises in
accordance with the time periods herein set forth (provided, that, except as
permitted above in this Section 13, O.M. shall not disclose the financial terms
or other material terms or conditions of this Agreement to any such person or
entity), and (ii) neither party shall be liable to the other for any disclosure
of any information by any other person or entity which obtained such information
from a party hereto in accordance with the terms and conditions of this Section.
14. No obligation or right of any party hereto under this Agreement or any
provision of this Agreement shall grant or confer, or be deemed to grant or
confer, any rights or benefits to any person which is not a party hereto.
15. This Agreement may be executed in counterparts, all of which executed
counterparts shall be considered the same agreement, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended to,
any other counterpart.
[This Space Intentionally Left Blank]
EXECUTED under seal as of the date written above.
O.M. 66 B STREET, LLC, a Delaware
limited liability company
By: X.X. Xxxxxxx Holding Company,
LLC, a Delaware limited liability
company, its Sole Member
By: /S/ XXXXXXXX XXXXX
Name: Xxxxxxxx Xxxxx V
Title: President
DESIGNS, INC.
By: /S/ XXXXX X. XXXXX
Name: XXXXX X. XXXXX
President
By: /S/ XXXXXX X. XXXXXXXXX
Name: XXXXXX XXXXXXXXX
Treasurer
List of Attachments
Annex A - Termination Notice
Annex B - Escrow Agreement
Annex C - O.M. Surrender LC
Annex D - Confirmatory Acknowledgement of Termination
Annex E - Designs Security LC
Annex F - Description of New Lease Premises
Annex G - New Lease
Annex H - Surrender Notice
Annex I - List of Approved Property Inspectors
- h:\boulger_sean\legal\109167131\agmt_re_leases\11_01_00.doc
