SUB-SUBLEASE TERMINATION AGREEMENT
AGREEMENT made as of the 6th day of June, 2002, between ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ASSOCIATES, LLC, a Delaware limited liability company having its
principal office at c/o RFR Realty LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, as landlord (the "Landlord"), and EB2B COMMERCE, INC., a New Jersey
corporation having its offices at ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, as tenant (the "Tenant").
W I T N E S S E T H :
WHEREAS, pursuant to a lease dated April 1996 ("Prime Lease") by and
between Landlord and Sequent Computer Systems, Inc., as Lessee ("Sequent"),
Landlord leased to Sequent a portion of the third floor containing approximately
22,000 square feet (the "Premises"), in the building known as ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (the "Building"), which Premises is more particularly
described in the Prime Lease;
WHEREAS, Sequent merged into International Business Machines
Corporation ("IBM") and as a result thereof IBM was tenant under the Prime
Lease;
WHEREAS, pursuant to a sublease dated as of August 1, 2000 ("Sublease")
by and between IBM, as sublessor, and Landlord, as Sublessee, IBM leased to
Landlord the Premises;
WHEREAS, pursuant to a sub-sublease dated as of July 28, 2000
("Sub-Sublease"; and together with the Sublease, the "Subleases"; the Subleases
and the Prime Lease shall collectively be referred to as the "Lease") between
Landlord and Tenant, Landlord sub-subleased to Tenant the Premises; and
WHEREAS, Tenant now desires to terminate the Sub-Sublease and to vacate
and surrender to Landlord the Premises as of the date hereof and Landlord is
willing to accept such surrender, subject to the provisions of this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained the parties agree as follows:
1. Agreement to Terminate. (a) The Sub-Sublease shall terminate as of
June 30, 2002 (the "Surrender Date"), time being of the essence. Tenant
agrees to vacate and surrender to Landlord, broom-clean, free of all tenancies
and occupancies, the entire Premises, on or prior to the Surrender Date, as if
the Surrender Date was the date originally fixed for the expiration of the term
set forth in the Sub-Sublease, except that Tenant agrees to leave for the
Landlord all of the furniture which exists in the Premises. Tenant shall
absolutely and unconditionally surrender all of its right, title and interest in
and to the Premises, together with all equipment, improvements and appurtenances
attached to or built into the Premises and all furniture located in the Premises
on the Surrender Date.
(b) IT IS EXPRESSLY UNDERSTOOD AND AGREED THAT IF TENANT FAILS
TO VACATE THE PREMISES AS REQUIRED BY THIS AGREEMENT ON OR BEFORE THE
TERMINATION DATE, LANDLORD WILL SUFFER SIGNIFICANT DAMAGES, INCLUDING, WITHOUT
LIMITATION, THE LOSS OF PROSPECTIVE TENANTS. ACCORDINGLY, LANDLORD SHALL BE
ENTITLED TO HOLDOVER RENT EQUAL TO THREE (3) TIMES THE RENT AND ADDITIONAL RENT
PAYABLE IN RESPECT OF THE LAST MONTH OF THE SUB-SUBLEASE FOR EACH DAY THAT
TENANT HOLDS OVER AND IN ADDITION, ANY ADDITIONAL DAMAGES LANDLORD MAY SUFFER BY
REASON OF SUCH HOLDOVER, IT BEING UNDERSTOOD AND AGREED THAT LANDLORD'S DAMAGES
ARE DIFFICULT TO COMPUTE AND THAT THE FOREGOING REPRESENTS A REASONABLE ESTIMATE
OF SUCH DAMAGES. TENANT WAIVES ANY DEFENSES IN ANY SUMMARY PROCEEDING TO RECOVER
POSSESSION OF THE PREMISES IF TENANT HOLDS OVER AND LANDLORD SHALL BE ENTITLED
TO RECOVER REASONABLE ATTORNEYS' FEES AND COSTS INCURRED IN CONNECTION WITH ANY
EFFORTS TO RECOVER POSSESSION OF THE PREMISES.
2. Payment. Notwithstanding the termination of the Sub-Sublease
and the surrender by Tenant to Landlord of the Premises as of the Surrender
Date, and in consideration of Landlord's acceptance of the surrender of the
Lease and Premises by Tenant to Landlord, Tenant agrees to pay Landlord as
follows (the "Settlement Amount"):
(a) Landlord shall keep the full amount of the security
deposit (the "Deposit Amount") paid to Landlord by Tenant under the Lease
as security for the performance of Tenant's obligations under the Lease and
shall draw down an amount equal to the Deposit on that certain Letter of Credit,
dated July 2000, issued in favor of the Landlord by the Bank of New York
promptly following execution of this Agreement if not previously drawn on by
Landlord.
(b) Tenant shall issue to Landlord, on the Surrender Date, a
ten-year warrant (the "Warrant") to purchase 240,000 shares (the "Warrant
Shares") of the common stock, par value $.0001 per share ("Common Stock"), of
Tenant on the following terms and conditions:
(i) The exercise price of the Warrant shall be the lesser
of (x) $.45 per share or (y) the lowest price per share at which Common
Stock is sold by Tenant in its proposed private placement or in the next private
placement which is completed subsequent to the date of this Agreement in which
Tenant raises aggregate proceeds of at least $400,000. If the private placement
is completed in separate financings, the lowest price shall be used. If the
private placement includes both shares of Common Stock and warrants, Tenant
shall allocate 10% of the consideration to the warrants and the balance to the
Common Stock. If the private placement involves shares of preferred stock or
convertible debt, the price at which the preferred stock or convertible debt
securities are sold shall be the lowest conversion price of the preferred stock
or
2
convertible debt securities.
(ii) The Warrant shall have cashless exercise provisions
which enable the holder to convert the Warrant into such number of shares
of common stock determined (A) by multiplying (x) the amount by which the market
price on the date of exercise exceeds the exercise price by (y) the number of
shares of Common Stock as to which the Warrant is being converted and (B)
dividing the result by the market price on the date of exercise.
(iii) The exercise price shall be subject to the
following anti-dilution provisions.
(A) There shall be an adjustment to reflect any
stock split, distribution, dividend, reverse split, combination of shares
or other recapitalization.
(B) In the event that Tenant issues any shares of
Common Stock at price per share less than the exercise price then in effect
(other than upon exercise or conversion of existing convertible securities), the
exercise price of the Warrant shall be reduced on a formula basis to the price
at which shares of Common Stock are sold, as follows:
(I) In case Tenant shall, subsequent to the
date of this Agreement, issue rights or warrants to all holders of its
Common Stock entitling them to subscribe for or purchase shares of Common Stock
(or securities convertible into Common Stock) at a price (or having a conversion
price per share) less than the current market price of the Common Stock on the
record date mentioned below, the Exercise Price shall be adjusted so that the
same shall equal the price determined by multiplying the Exercise Price in
effect immediately prior to the date of such issuance by a fraction, of which
the numerator shall be the number of shares of Common Stock outstanding on the
record date mentioned below plus the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so offered (or the aggregate conversion price of the convertible securities so
offered) would purchase at the greater of the Exercise Price per share or the
market price per share of Common Stock on the applicable record date) and of
which the denominator shall be the number of shares of Common Stock outstanding
on such record date plus the number of additional shares of Common Stock offered
for subscription or purchased (or into which the convertible securities so
offered are convertible). Such adjustment shall be made successively whenever
such rights or warrants are issued and shall become effective immediately after
the record date for the determination of stockholders entitled to receive such
rights or warrants; and to the extent that shares of Common Stock are not
delivered (or securities convertible into Common Stock are not delivered) after
the expiration of such rights or warrants, the Exercise Price shall be
readjusted to the Exercise Price which would then be in effect had the
adjustments made upon the issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of Common Stock (or securities
convertible into Common Stock) actually delivered.
(II) In case Tenant shall, subsequent to the
date of this Agreement, distribute to all holders of Common Stock evidences
of its indebtedness or assets
3
(excluding cash dividends or distributions paid out of current earnings and
dividends or distributions referred to in Section 2(b)(iii)(A) of this Agreement
or subscription rights or warrants (excluding those referred to in Section
2(b)(iii)(B)(I) of this Agreement), then in each such case the Exercise Price in
effect thereafter shall be determined by multiplying the Exercise Price in
effect immediately prior thereto by a fraction, of which the numerator shall be
the total number of shares of Common Stock outstanding multiplied by the current
market price per share of Common Stock, less the fair market value (as
determined in good faith by Tenant's board of directors) of said assets or
evidences of indebtedness so distributed or of such rights or warrants, and of
which the denominator shall be the total number of shares of Common Stock
outstanding multiplied by such current market price per share of Common Stock.
Such adjustment shall be made successively whenever such a record date is fixed.
Such adjustment shall be made whenever any such distribution is made and shall
become effective immediately after the record date for the determination of
stockholders entitled to receive such distribution.
(III) In case Tenant shall, subsequent to the
date of this Agreement, issue shares of its Common Stock (other than (x)
Excluded Shares, as hereinafter defined, or (y) shares issued in any of the
transactions described in Sections 2(b)(iii)(A) and 2(b)(iii)(B)(I) and (II) of
this Agreement, for a consideration per share less than the Exercise Price then
in effect, the Exercise Price shall be adjusted immediately thereafter so that
it shall equal the price determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding (including any Underlying
Shares, as hereinafter defined) immediately prior to the issuance of such
additional shares and the number of shares of Common Stock which the aggregate
consideration received (determined as provided in Section 2(b)(iii)(B)(V) of
this Agreement) for the issuance of such additional shares would purchase at
Computation Price (i.e., the greatest of the Exercise Price or the fair market
value of the Common Stock on the date of issuance or the fair market value on
the date on which Tenant entered into an agreement with respect to such
issuance), and the denominator of which shall be the number of shares of Common
Stock outstanding immediately after the issuance of such additional shares
(including any Underlying Shares). Such adjustment shall be made successively
whenever such an issuance is made. Excluded Shares shall mean shares of Common
Stock issuable pursuant to outstanding options, rights, warrants or convertible
debt or equity securities which are outstanding on the date of this Agreement
and any additional shares issuable pursuant to Tenant's existing stock option
plans as in effect on the date of this Agreement. "Underlying Shares" shall mean
shares of Common Stock which are issuable upon conversion of convertible
preferred stock and convertible debt securities, but not options, rights or
warrants; provided, however, that any additional shares of Common Stock or
convertible securities which are issuable pursuant to the terms of any full
ratchet anti-dilution adjustment shall not be deemed to be Underlying Shares..
(IV) In case Tenant shall, subsequent to the
date of this Agreement, issue any securities convertible into or
exchangeable for its Common Stock (excluding stock options granted pursuant to
Tenant's stock option plans as in effect on the date of this Agreement and
securities issued in transactions described in Sections 2(b)(iii)(A) and
2(b)(iii)(B)(I), (II) and (III) of this Agreement) for a consideration per share
of Common Stock
4
initially deliverable upon conversion or exchange of such securities
(determined as provided in Section 2(b)(iii)(B)(V) of this Agreement) less than
the Exercise Price in effect immediately prior to the issuance of such
securities, the Exercise Price shall be adjusted immediately thereafter so that
it shall equal the price determined by multiplying the Exercise Price in effect
immediately prior thereto by a fraction, the numerator of which shall be the sum
of the number of shares of Common Stock outstanding, including Underlying
Shares, immediately prior to the issuance of such securities and the number of
shares of Common Stock which the aggregate consideration received (determined as
provided in Section 2(b)(iii)(B)(V) of this Agreement) for such securities would
purchase at the Computation Price, and the denominator of which shall be the sum
of the number of shares of Common Stock outstanding, including Underlying
Shares, immediately prior to such issuance and the maximum number of shares of
Common Stock of Tenant deliverable upon conversion of or in exchange for such
securities at the initial conversion or exchange price or rate. Such adjustment
shall be made successively whenever such an issuance is made and whenever the
conversion or adjustment price is changed.
(V) For purposes of any computation respecting
consideration received pursuant to Sections 2(v)(iii)(B)(III) and (IV) of
this Agreement, the following shall apply:
1) in the case of the issuance of shares of
Common Stock for cash, the consideration shall be the amount of such cash,
provided that in no case shall any deduction be made for any commissions,
discounts or other expenses incurred by Tenant for any underwriting of the issue
or otherwise in connection therewith;
2) in the case of the issuance of shares of
Common Stock for a consideration in whole or in part other than cash, the
consideration other than cash shall be deemed to be the fair market value
thereof as determined in good faith by the board of directors of Tenant
(irrespective of the accounting treatment thereof), whose determination shall be
conclusive; and
3) in the case of the issuance of
securities convertible into or exchangeable for shares of Common Stock, the
aggregate consideration received therefor shall be deemed to be the
consideration received by Tenant for the issuance of such securities plus the
additional minimum consideration, if any, to be received by Tenant upon the
conversion or exchange thereof, the consideration in each case to be determined
in the same manner as provided in clauses 1) and 2) of this Section
2(b)(iii)(B)(V).
(C) Adjustments in the exercise price shall be made
to the nearest cent.
(D) In the event of an adjustment in the exercise
price of the Warrant pursuant to Sections 2(b)(iii)(A) or (B) of this
Agreement, the number of Warrant Shares issuable upon exercise of the Warrant
shall be adjusted by dividing the exercise price in effect prior to the
adjustment by the adjusted exercise price and multiplying the result by the
5
number of shares of Warrant Stock issuable prior to the adjustment.
(E) No fractional shares shall be issued. In the
event that, as a result of an adjustment in the number of Warrant Shares, a
fractional shall would be issuable, the number of Warrant Shares shall be
increased to the next higher integral number of shares.
(iv) Tenant agrees that it will amend its registration
statement of Form SB-2, File No. 333-54410, to include all of the Warrant
Shares (including any shares issuable pursuant to the antidilution provisions of
the Warrants). In the event that Tenant shall withdraw such registration
statement Landlord shall also have piggyback registration rights on any
registration statements which Tenant may thereafter file. In the event that, for
any reason, the registration statement does not remain current and effective
until all of the Warrant Shares shall have been sold or until holder of the
Warrant may sell all of the Warrant Shares without registration pursuant to Rule
144(k) or a subsequent rule which permits the sale of shares without regard to
volume or other limitations and without making any filings with the Securities
and Exchange Commission, then Landlord shall have piggyback registration rights
on any registration statement which Tenant may thereafter file. The piggyback
registration rights granted by this this Section 2(b)(iv) shall not apply to a
registration statement on Form S-8.
(v) The Warrant may be transferred by Landlord,
subject to compliance with applicable federal and state securities laws,
and any transferee shall be entitled to the same registration, indemnification
and contribution rights as Landlord.
(vi) Tenant agrees to execute any formal documents or
agreements reasonably requested by Landlord which set forth in greater
detail the registration, indemnification and contribution provisions described
in this Section 2(b).
(vii) The Warrant shall be in a form reasonably
acceptable to Landlord.
(viii) The general release provided in Section 6(a) of
this Agreement shall not apply to this Section 2(b) or to any formal
documents or agreements executed pursuant to Section 2(b)(vi), it being
understood that this Section 2(b) and such documents and agreements shall
survive the general release and continue in full force and effect.
3. Full Satisfaction. Landlord agrees that payment of the Settlement
Amount will be full and final satisfaction of any debts, liabilities or claims
by Landlord against the Tenant and Tenant shall be released from its obligations
under the Sub-Sublease accruing prior to and after the Surrender Date, except
for any third party claims and Tenant's obligations to surrender the Premises on
the Surrender Date in accordance with this Agreement.
4. Representations and Warranties of Tenant. Tenant represents and
warrants to Landlord that (a) Tenant is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of New Jersey;
(b) the execution, delivery and performance of this Termination Agreement and
the consummation by Tenant of the transactions contemplated hereby are within
Tenant's corporate powers and have been duly authorized by all necessary
6
corporate action; (c) this Termination Agreement constitutes the legal, valid
and binding obligation of Tenant, enforceable against Tenant in accordance with
its terms; and (d) Tenant has not done or suffered anything whereby the Premises
or the Sub-Sublease have been encumbered, assigned, sublet or pledged in any way
whatsoever.
5. Representations and Warranties of Landlord.
(a) Landlord represents and warrants to Tenant that (i) Landlord is
a limited liability company organized under the laws of the State of
Delaware; (ii) the execution, delivery and performance of this Termination
Agreement and the consummation by Landlord of the transactions contemplated
hereby are within Landlord's powers and have been duly authorized by all
necessary action; and (iii) this Termination Agreement constitutes the legal,
valid and binding obligation of Landlord enforceable against the Landlord in
accordance with its terms;
(b) Investment Intent. Landlord is acquiring the Warrant and the
Warrant Shares for its own account, for investment only and not with a view
to, or for sale in connection with, a distribution thereof or any part thereof,
within the meaning of the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations promulgated thereunder, or any applicable
state securities or blue-sky laws;
(c) Investor Status. Landlord is an accredited investor as
such term is defined under Rule 501 of Regulation D promulgated pursuant to
the Securities Act ("Regulation D");
(d) Intent to Transfer. Landlord is not a party to or subject to or
bound by any contract, undertaking, agreement or arrangement with any
person to sell, transfer or pledge the Warrant or the Warrant Shares or any part
thereof to any person, and has no present intention to enter into such a
contract, undertaking, agreement or arrangement;
(e) Offering Exempt from Registration; Tenant's Reliance.
(i) Tenant has advised Landlord that the Warrant and the Warrant
Shares have not been registered under the Securities Act or under the laws
of any state on the basis that the issuance thereof is exempt from such
registration;
(ii) Tenant's reliance on the availability of such exemption is, in
part, based upon the accuracy and truthfulness of Landlord representations
contained herein;
(iii) As a result of such lack of registration, none of the Warrant
or Warrant Shares may be resold or otherwise transferred or disposed of
without registration pursuant to or an exemption therefrom available under the
Securities Act and such state securities laws; and
(iv) In furtherance of the provisions of this paragraph (e), all of
the certificate(s) representing the Warrant and Warrant Shares shall bear a
Securities Act restrictive legend.
7
(f) Sophistication of Landlord. Landlord has such knowledge and
experience in financial and business matters as to be capable of evaluating
the merits and risks of acquiring the Warrant and Warrant Shares, is aware of
and has considered the financial risks and financial hazards of acquiring the
Warrant and Warrant Shares, and is able to bear the economic risk of acquiring
the Warrant and Warrant Shares. Landlord is able, without materially impairing
its financial condition, to hold the Warrant and Warrant Shares for an
indefinite period of time and to suffer complete loss on such investment; and
(g) Access to Information. Landlord is familiar with Tenant's
business, plans and financial condition. Landlord has received all
materials which have been requested by Landlord and has had a reasonable
opportunity to ask questions concerning Tenant and its representatives; and
Tenant has answered all inquiries that Landlord or its representatives have put
to it. Landlord has reviewed Tenant's filings with the Commission including,
without limitation, Tenant's Annual Report on Form 10-KSB for the year ended
December 31, 2001.
6. Mutual Releases.
(a) As a material inducement to Tenant to enter into this Agreement,
Landlord hereby irrevocably and unconditionally waives, releases, and
discharges Tenant, its subsidiaries and affiliates, and their respective
officers, directors, employees, agents, attorneys, successors and assigns, from
any and all manner of action, claims, liens, demands, liabilities, causes of
action, charges, complaints, suits (judicial, administrative, or otherwise),
damages, debts, demands, obligations of any other nature, past or present, known
or unknown, whether in law or in equity, whether founded upon contract (express
or implied), tort (including, but not limited to, defamation), statute or
regulation (State, Federal or local), common law and/or any other theory or
basis, from the beginning of the world to the date hereof, including, but not
limited to, any claim that Landlord has asserted, now asserts or could have
asserted. The foregoing release shall specifically exclude any third party
claims and any claims arising out of Tenant's breach of its obligations to
surrender the Premises on the Surrender Date in accordance with this Agreement.
(b) As a material inducement to Landlord to enter into this
Agreement Tenant hereby irrevocably and unconditionally waives, releases,
and discharges Landlord, its subsidiaries and affiliates, and their respective
officers, directors, employees, agents, attorneys, insurers, successors and
assigns from any and all manner of action, claims, liens, demands, liabilities,
causes of action, charges, complaints, suits (judicial, administrative or
otherwise), damages, debts, demands, obligations of any other nature, past or
present, presently known to the Tenant, whether in law or in equity, whether
founded upon contract (express or implied), tort (including, but not limited to,
defamation), statute or regulation (State, Federal or local), common law and/or
any other theory or basis, or the termination thereof, including, but not
limited to, any claim that Tenant has asserted, now asserts or could have
asserted.
(c) It is understood and agreed by the parties that the facts and
respective assumptions of law in contemplation of which this Agreement is
made may hereafter prove to be
8
other than or different from those facts and assumptions now known, made or
believed by them to be true. The parties expressly accept and assume the risk of
the facts and assumptions to be so different, and agree that all terms of this
Agreement shall be in all respects effective and not subject to termination or
recission by any such difference in facts or assumptions of law.
7. Entire Agreement. This Agreement constitutes the entire agreement
of the parties hereto respecting the subject matter hereof. Any prior
agreements, promises, negotiations, or representations concerning its subject
matter not expressly set forth in this Agreement are of no force and effect.
8. Counterparts. This Agreement may be executed in any number of
counterparts and when so executed all of such counterparts shall constitute
a single instrument binding upon all parties hereto.
9. Termination; Amendments; Waiver. This Agreement cannot be
terminated or amended except in writing executed by the parties. A waiver
or any provision of this Agreement must be in writing executed by the waiving
party.
10. Governing Law; Consent to Jurisdiction. This Agreement shall be
governed by the laws of the State of New York without giving effect to the
conflict of law principles thereof. Any litigation arising under or related to
this Agreement shall be instituted in the state or federal courts located in New
York County, New York and each party consents and submits to the jurisdiction of
such courts.
11. Binding Effect; Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties and their
respective heirs, executors, representatives, successors and assigns.
12. Assignment. This Agreement may not be assigned without the prior
written consent of the other party.
13. Notices. All notices under this Agreement must be in writing and
sent to a party at its respective address listed above or such other
address as a party may give notice of. Notices must be given in person with
receipt copy acknowledged, by certified mail return receipt requested or by
nationally recognized overnight mail service such as Federal Express. Notices
will be deemed given three (3) business days after deposit in a United States
Postal Service mail box, or one (1) business day after deposit with an overnight
mail service.
14. Broker. Tenant represents that Tenant has had no dealings with any
broker in connection with this Agreement except RFR Realty LLC. Tenant
shall indemnify and hold Landlord harmless from and against all claims, losses,
judgments, costs and expenses (including reasonable attorneys' fees and
disbursements) arising out of any claims for commissions or any breach of the
foregoing representation.
9
15. Severability. In case any one or more of the provisions contained
in this Agreement shall for any reason be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement, and this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
IN WITNESS WHEREOF, the parties have executed this Termination
Agreement as of the date first written above.
EB2B COMMERCE, INC.
By:
-----------------------------------------
Name:
Title:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES, LLC
By:
------------------------------------------
Name:
Title:
10
