Exhibit 10.26
AGREEMENT
AGREEMENT dated December 20, 1996 by and between DIV Natick, LLC,
a Massachusetts limited liability company ("Developer") and SystemSoft
Corporation, a Delaware Corporation ("SystemSoft").
Background
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SystemSoft has entered into a Purchase and Sale Agreement dated September
12, 1996 (the "P&S") with Argonaut Holdings, Inc., to acquire a certain parcel
of land known as and numbered 000-000 Xxxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
more particularly described on Exhibit "A" (the "Premises"). Developer and
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SystemSoft intend that Developer shall acquire the Premises and construct on the
Premises a building and related parking areas and site improvements ("Phase A")
to be leased and occupied by SystemSoft. Accordingly, Developer and SystemSoft
have entered into certain agreements dated August 30, 1996 and September __,
1996 (the "Pre-Development Agreements") concerning the acquisition and
development of the Premises, and simultaneously with this Agreement Developer is
entering into a lease with SystemSoft (the "Phase A Lease") pursuant to which
Developer (or its nominee) will construct a building and related site
improvements on the Premises and lease the building to SystemSoft for a term of
fifteen (15) years.
Developer and SystemSoft have further agreed that SystemSoft shall have
certain rights to require that additional office improvements and related
parking areas and site improvements ("Phase B") be constructed and leased to
SystemSoft as set forth in this Agreement. Phase B is to be constructed within
the portion of the Premises referred to as the "Development Land" on Exhibit
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"A." At such time as SystemSoft's rights under this Agreement with respect to
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Phase B expire, terminate or are satisfied, Developer shall have the right to
develop the Development Land for other parties. The agreements among the
Developer and SystemSoft concerning Phase B are being set forth in this separate
agreement as it is intended that Phase A and the Development Land may be
separately owned and financed.
Agreement
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1. Commencing on the date the Premises are acquired by Developer or its
nominee and continuing until the Phase B Carry Termination Date (as defined
below), SystemSoft shall pay Developer, in order to defray the cost of acquiring
and carrying the Development Land, an annual amount equal to One Hundred Ninety
Thousand Dollars ($190,000.00) per annum, which shall be paid in equal monthly
installments in advance on
the date the Premises are acquired and on the first day of each calendar month
thereafter (the first and last installment to be pro-rated for partial months).
In addition, (x) SystemSoft shall pay all real estate taxes allocable to the
Development Land during the period from acquisition of the Premises until the
commencement of the term of the Phase A Lease and (y) if, at any time after the
term of the Phase A Lease commences until the Phase B Carry Termination Date,
SystemSoft is not obligated to pay the costs of carrying the Development Land
under the Phase A Lease, then SystemSoft shall pay such costs to Developer as
set forth on Exhibit "B." The Phase B Carry Termination Date shall be (i) the
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date on which SystemSoft commences to pay rent under the Phase B Lease (as
defined below) if Phase B is developed for SystemSoft, (ii) if SystemSoft's
rights to lease Phase B under this Agreement are terminated and the Development
Land is developed for another tenant or occupant, six (6) months after the date
on which all permits and approvals for construction of such building have been
obtained by Developer or, if earlier, the date Developer commences construction
for the building or (iii) in any other event, the date on which the Phase A
Lease, as it may be extended by SystemSoft, is scheduled to expire. SystemSoft
shall have no obligation to make payments under this Section 1 on account of
time periods after the Phase B Carry Termination Date, but shall not be relieved
of its obligations to make payments for periods prior to the Phase B Carry
Termination Date which have not been paid as of that date. All payments shall be
made to Developer at c/o The Xxxxx Companies, Xxx Xxxxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx, 00000, or as may be otherwise directed by Developer in writing.
2. Developer shall have the right, at any time, to separate the Phase A
Site and the Development Land by way of a subdivision, long-term ground lease or
condominium in order to permit separate ownership and financing of all or any
portion of the Development Land, provided that SystemSoft's rights and
obligations under the Phase A Lease and this Agreement shall not be affected in
any material respect. In the event the Premises as originally defined is
subdivided or separated into separate leasehold lots, the Premises under the
Phase A Lease shall be deemed to exclude all portions of the Development Land
which is so separated or subdivided. In the event the Premises are submitted to
a condominium regime, the Premises under the Phase A Lease shall be deemed to be
the condominium unit consisting of the "Demised Premises" (as defined under the
Phase A Lease). SystemSoft agrees to enter into any instruments reasonably
requested by Developer in connection with the foregoing so long as the same are
not inconsistent with the rights of SystemSoft under the Phase A Lease and this
Agreement and are otherwise reasonably acceptable to SystemSoft. Without
limiting the generality of the foregoing, such instruments may include an
acknowledgment that SystemSoft has no rights under the Phase A Lease with
respect to the Development Land except for the use of any common walkways,
driveways, parking areas and other specifically designated parts of the Premises
serving the Demised Premises, and/or a subordination of the Phase A Lease to
documents creating a condominium on the Premises. SystemSoft shall have a right
to review and approve any proposed condominium, subdivision, or ground lease
documents, such approval not to be unreasonably withheld, and
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shall agree to bebound by and comply with the approved condominium, subdivision,
or ground lease documents.
3. (a) SystemSoft shall have the right to have Phase B developed for
its use and occupancy as set forth herein after the Construction Mortgage,
Assignment of Leases and Rents, Security Agreement and Fixture Financing
Statement given by Developer to Mellon Bank, N.A. and recorded herewith
("Construction Mortgage") is discharged and the Development Land is conveyed
pursuant to the Purchase Contract of even date between Developer and
Metropolitan Life Insurance Company ("Met Life") (or such contract is
terminated) or, prior to suchevents, with the written approval of the holder of
the Construction Mortgage and Met Life in their sole discretion. Developer
shall have no obligation to proceed with development of Phase B under this
Agreement until such events occur or such approvals are given. SystemSoft shall
notify Developer if it desires Developer to develop Phase B for SystemSoft's use
and occupancy. Such notice is referred to as a "Phase B Notice to Proceed."
Phase B shall have a minimum rentable area of 80,000 square feet. Following the
Phase B Notice to Proceed, SystemSoft and Developer shall consult from time to
time on the design and cost of Phase B and Developer shall prepare a site plan,
design plans, and preliminary base building specifications for Phase B (the
"Phase B Design Package") and a budget of the reasonably estimated costs to
develop Phase B (the "Phase B Budget") for SystemSoft's review and approval,
which approval shall not be unreasonably withheld. Developer and SystemSoft
shall cooperate with each other in preparing the Phase B Design Package and
Phase B Budget in order to accommodate SystemSoft's reasonable design requests
and minimize the costs of developing Phase B consistent with appropriate
standards for first-class suburban office buildings reasonably comparable to
Phase A which satisfy requirements for institutional financing. Developer may
designate a development manager or agent to perform some or all of Developer's
responsibilities under this Agreement.
(b) After the Phase B Design Package and Phase B Budget have been
approved, SystemSoft and Developer shall enter into a lease (the "Phase B
Lease") for Phase B. The Phase B Lease shall be upon all of the same terms and
conditions as the Phase A Lease, except that:
(i) the base rent for Phase B shall be determined as set forth in
Section 3(c) below,
(ii) the term of the Phase B Lease shall be for a minimum term
equal to the longest of (x) ten (10) years, (y) such longer period,
up to a maximum of fifteen (15) years, as is necessary to satisfy
then current institutional underwriting standards for a lease which
is financable on commercially reasonable terms, or (z) such longer
period as is necessary for the Phase B Lease to expire on the same
day as the initial term or an extension term expires under the Phase
A Lease (SystemSoft agreeing that, if requested by Developer
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prior to execution of the Phase B Lease, SystemSoft will exercise
sufficient extension terms under the Phase A Lease so that the term
of the Phase A Lease shall be at least as long as the minimum term
for the Phase B Lease under (x) or (y) above and the Phase A Lease
and the Phase B Lease are scheduled to expire on the same date),
(iii) SystemSoft shall have the same number of five (5) year
extension options under the Phase B Lease as will remain under the
Phase A Lease after any extension of the expiration date of the
Phase A Lease under (ii) above, provided that the rent for the
extension terms under the Phase B Lease shall be determined as set
forth in Section 3(c) below,
(iv) the security deposit amount under the Phase B Lease shall be
equal to four and one-half months' rent and reasonably estimated
additional rent amounts,
(v) Developer shall have the right to terminate the Phase B Lease
(without liability to either party) until the date thirty (30) days
after all permits and approvals (other than a building permit) are
obtained for the construction of Phase B, provided that in the event
of such termination SystemSoft shall have the right to acquire the
Development Land on the same terms set forth in Section 5(b) of this
Agreement,
(vi) SystemSoft shall have the right to terminate the Phase B Lease
(without liability to either party) and acquire the Development Land
on the same terms set forth in Section 5(b) of this Agreement as its
sole and exclusive remedy if Developer does not diligently seek all
permits and approvals necessary for construction of Phase B or if
construction of Phase B has not commenced within 4 months after the
date all permits and approvals for the construction of Phase B are
obtained by Developer,
(vii) the Outside Delivery Date under the Phase B Lease shall be
fifteen (15) months after the Phase B Lease has been executed and
delivered and Developer obtains all permits and approvals for the
construction of Phase B and, if the construction is being financed,
closes construction financing for Phase B, such date to be extended
up to three (3) months for delays in the development of Phase B for
reasons beyond Developer's reasonable control, and
(viii)the Phase B Lease shall incorporate such other modifications
as are reasonably necessary to satisfy then current institutional
underwriting standards for a lease which is financable on
commercially reasonable terms.
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(c) The base rent for the Phase B Lease shall be determined as
follows based on the Phase B Budget approved by SystemSoft. The annual base rent
for the first five (5) years of the initial term under the Phase B Lease shall
be equal to the Phase B Rent Factor (defined below) multiplied by the total cost
to develop Phase B as shown on the approved Phase B Budget. The annual base rent
during each subsequent five (5) year period during the initial term shall be
equal to 112.5% of the base rent during the last year of the immediately
preceding 5-year period. The base rent during any five (5) year extension term
under the Phase B Lease shall be equal to 112.5% of the base rent under the
Phase B Lease during the last year immediately preceding the extension term in
question. The Phase B Budget shall include all reasonable out-of-pocket third-
party costs previously incurred or anticipated to be incurred by Developer in
connection with the leasing, development, design, permitting, financing, or
construction of Phase B, including the purchase price paid for the Development
Land (which is agreed to be $1,520,000.00), financing fees and construction
period interest and taxes, plus a contingency of five percent (5%) of the
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foregoing costs and a fee to Developer of three percent (3%) of such costs. If
construction of Phase B is not financed, the Phase B Budget shall include
imputed amounts for financing fees and construction period interest at then
prevailing rates for a conventional first mortgage construction loan for a
comparable building and tenant, with a loan amount equal to the Phase B Budget.
Developer shall use reasonable efforts to obtain separate financing for Phase A
that allows for the development of Phase B without any change in the Phase A
financing, but if it is necessary to refinance Phase A in order to proceed with
Phase B, then the Phase B Budget shall include any prepayment premium or other
costs incurred to refinance Phase A and the annual amount of base rent under the
Phase A Lease shall be increased or decreased by the same amount as any increase
or decrease in the annual debt service costs under the new financing for Phase
A. The Phase B Rent Factor shall be equal to 12.5% adjusted as set forth below
for changes in interest rates. If the Benchmark Treasury Yield (defined below)
exceeds 6.78% then the Rent Factor shall be 12.5% plus the difference between
6.78% and the Benchmark Treasury Yield. If the Benchmark Treasury Yield is less
than 5.78%, then the Rent Factor shall be 12.5% minus the difference between
5.78% and the Benchmark Treasury Yield. The Benchmark Treasury Yield shall mean
the asked yield to call, at the close of business on the date Developer obtains
a commitment for permanent financing of Phase B (or, if no permanent financing
commitment has been obtained, the date a building permit is issued for Phase B),
on the United States Treasury Bond having a maturity closest to the date eleven
(11) years following the date on which the Benchmark Treasury Yield is
determined, as reported in the Wall Street Journal (by the designation "Ask
Yld.") on the next day. If not then reported in the Wall Street Journal, the
Benchmark Treasury Yield shall be determined using a comparable information
source reasonably selected by Developer and SystemSoft. An example of the
calculation of base rent for the Phase B Lease is attached as Exhibit "C."
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(d) SystemSoft shall have the right to withdraw any Phase B Notice
to Proceed by giving Developer a notice to that effect at any time before the
Phase B Lease is executed by SystemSoft (a "Phase B Withdrawal Notice"), in
which case Developer shall
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cease pre-development activities in connection with Phase B.Subject to Section
5(b) below, after a Phase B Notice to Proceed is given, Developer agrees to
pursue the design, permitting and financing for Phase B diligently and in good
faith unless and until a Phase B Withdrawal Notice is given.
(e) SystemSoft shall reimburse Developer for pre-development costs
incurred in connection with the design and permitting of Phase B and other pre-
development activities as set forth in this Section 3(e). Promptly after a
Phase B Notice to Proceed is given, Developer shall provide SystemSoft with a
preliminary budget for anticipated pre-development costs to be reimbursed under
this Section 3(e) ("Pre-Development Budget"). The Pre-Development Budget may be
revised from time to time by Developer. The Pre-Development Budget, and any
revisions thereto, shall be subject to SystemSoft's review and approval (such
approval not to be unreasonably withheld or delayed). Whether or not a Phase B
Notice to Proceed is withdrawn, SystemSoft shall reimburse Developer within
twenty (20) days after request from time to time for all out-of-pocket third
party costs incurred by Developer in accordance with the approved Pre-
Development Budget after the Phase B Notice to Proceed and prior to the
Reimbursement Cut-Off Date (defined below). Except as set forth in the next
sentence, the amounts paid by SystemSoft under this Section 3(e) shall be
included in the Phase B Budget and SystemSoft shall be reimbursed for such
amounts out of the proceeds of the construction loan for Phase B at the time
such loan is closed (or if the construction is not being financed, such amounts
shall be reimbursed by Developer when construction is commenced). However, if a
Phase B Notice to Proceed is withdrawn, all costs incurred in accordance with
the Pre-Development Budget prior to withdrawal of the Phase B Notice to Proceed
shall be borne by SystemSoft and shall not be included in the Phase B Budget or
reimbursed to SystemSoft. The Reimbursement Cut-Off Date shall be the earlier
of (i) the date SystemSoft withdraws the Phase B Notice to Proceed by giving a
Phase B Withdrawal Notice or (ii) the date on which the Phase B Lease has been
executed, all permits and approvals for the construction of Phase B have been
obtained by Developer and, if the construction is being financed, Developer has
closed construction financing for the construction of Phase B. In the event
SystemSoft gives a Phase B Withdrawal Notice, in addition to reimbursement for
pre-development costs in accordance with the Pre-Development Budget as set forth
in this Section 3(e), SystemSoft shall promptly pay Developer a fee for
Developer's pre-development efforts equal to twenty percent (20%) of the amount
of the out-of-pocket third party costs reimbursed or to be reimbursed by
SystemSoft in accordance with the Pre-Development Budget as set forth in this
Section 3(e).
4. SystemSoft agrees to cooperate with Developer in connection with the
development of the Development Land, whether for SystemSoft or another party,
and except as set forth below Developer shall have no liability to SystemSoft
with respect to any disruption, inconvenience, or interference caused by the
development of the Development Land. In particular, SystemSoft agrees that a
portion of the parking and related site improvements included in Phase A, but
not the building or access thereto, may be temporarily closed in connection with
the development of the Development Land and may be
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relocated or removed so long as equivalent parking is provided on the
Development Land upon completion of construction. Notwithstanding the foregoing,
Developer shall consult with SystemSoft and use reasonable efforts to minimize
disruption, inconvenience or interruption to SystemSoft during the development
of the Development Land, including by providing off-site parking areas and
shuttle bus service if necessary to replace on-site parking spaces needed by
SystemSoft which are temporarily closed. All costs of minimizing disruption,
inconvenience, or interruption shall be paid by Developer and included in the
Phase B Budget.
5. (a) SystemSoft's rights under Section 3 to require Developer to
develop Phase B and lease Phase B to SystemSoft for its own use and occupancy
("SystemSoft's Phase B Rights") shall be null and void without further action of
the parties upon notice by Developer in the event that: (i) the Phase B Lease
is not executed on or before the date which is ten (10) years after the
commencement of the initial term under the Phase A Lease, (ii) the Phase A Lease
is terminated, a material default by SystemSoft exists under the Phase A Lease
continuing after any applicable notice and cure period under the Phase A Lease,
or a material default by SystemSoft exists under this Agreement continuing for
more than ten (10) days after notice (or, in the case of a non-monetary default,
such longer period as is reasonably required with the exercise of due
diligence), (iii) SystemSoft assigns its interest in the Phase A Lease or its
rights under this Agreement and the assignment is not to an affiliate controlled
by, controlling, or under common control with SystemSoft, and is not the result
of a merger, consolidation, sale of all or substantially all of SystemSoft's
assets or acquisition of any of the issued and outstanding capital stock of
SystemSoft, (iv) SystemSoft subleases more than one third of the Demised
Premises under the Phase A Lease for a term of more than five years to a
subtenant who is not an affiliate controlled by, controlling, or under common
control with SystemSoft, or the Phase A Lease is terminated for more than one-
third of the Demised Premises and a time period of more than five (5) years on
account of a proposed sublease under the Phase A Lease, or (v) SystemSoft has
not satisfied the Phase B Default Financial Requirements (defined in Section 6
below) for a period of one (1) year or more. This Section 5(a) shall be self-
operative upon notice from Developer, but promptly after a request by Developer,
SystemSoft shall execute and deliver an instrument in recordable form confirming
the termination of SystemSoft's rights with respect to Phase B. Any termination
of SystemSoft's Phase B Rights under this Section 5(a) shall not affect
SystemSoft's obligations under this Agreement (including, without limitation,
its obligations under Sections 1, 2 and 4), except that after the date of such
notice SystemSoft shall have no further obligations under Section 3 except to
pay for any costs incurred by Developer prior to the date of such notice and
SystemSoft shall have no further obligation to provide financial information
under Section 6. In the event Developer terminates SystemSoft's Phase B Rights
under this Section 5(a) and the Phase A Lease has not been terminated and
SystemSoft is not in material default under the Phase A Lease or this Agreement
continuing beyond any applicable notice and cure period, then SystemSoft shall
have the right, exercised by notice to Developer given within sixty (60) days
after Developer's notice under this Section 5(a), to acquire, for a price
determined as set forth below, Developer's rights to develop the
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Development Land, including all of Developer's rights in the Development Land
and all agreements, plans, specifications, reports, studies, permits, approvals
and other materials concerning the development of the Development Land (the
"Development Land Rights"). SystemSoft's notice exercising this right shall be
accompanied by a deposit in the amount set forth below to be valid, and
Developer shall be entitled to retain the deposit as its sole remedy if
SystemSoft fails to purchase the Development Land as set forth herein. The
amount of the deposit shall be equal to $150,000 if SystemSoft's notice
exercising this right is given in the first year following the date of this
Agreement, and the required amount of the deposit shall increase by 5% on each
anniversary of the date of this Agreement for a notice given thereafter. In the
event SystemSoft exercises this right, Developer shall convey all of the
Development Land Rights to SystemSoft, for an amount equal to the greater of (x)
One Million Five Hundred Twenty Thousand Dollars ($1,520,000.00) plus all out of
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pocket third-party costs then incurred by Developer in connection with the
acquisition or development of the Development Land which have not been
reimbursed by SystemSoft under Section 3(e), plus an amount equal to 20% of all
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such costs whether or not reimbursed by SystemSoft or (y) the fair market value
of the Development Land Rights (such fair market value being referred to as the
"Determined Property Value"). The Development Land Rights shall be conveyed
without warranty or recourse except for a warranty of title by Developer as to
its own acts and a representation that Developer has delivered copies of all
documents and written information in Developer's possession concerning the
physical condition of the Development Land, the status of Developer's title, and
governmental
permits and approvals required or obtained for development of the Development
Land. Developer shall not be required to make any representations or warranties
regarding the accuracy or completeness of any such documents or information or
the matters set forth therein. In the event of a dispute concerning the
Determined Property Value, it shall be determined in accordance with the
appraisal procedure set forth in Exhibit "D," provided that SystemSoft shall
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have no right to require a determination of Determined Property Value unless it
has unconditionally and irrevocably exercised its purchase right by timely
notice to Developer. The Development Land Rights shall be conveyed at a closing
within thirty (30) days after SystemSoft's exercise notice (or, if later, within
fifteen (15) days after completion of the appraisal procedure). If the
Development Land has not then been separated from the Phase A Site by a
subdivision, ground lease or condominium, Developer and SystemSoft shall enter
into a ground lease of the Development Land with SystemSoft as tenant for a
prepaid rent equal to the purchase price for the Development Land Rights and
otherwise on terms and conditions reasonably acceptable to Developer and
SystemSoft. The ground lease shall require SystemSoft to use reasonable efforts
to separate the Development Land from the Phase A site by subdivision, and upon
such subdivision the Development Land shall be conveyed to SystemSoft subject to
appropriate cross-easements for access, parking, utilities, and the like. The
ground lease (and any such subdivision) shall, in all events, provide for
continued compliance of the Demised Premises under the Phase A Lease and related
site improvements with applicable legal requirements and the terms of the Phase
A Lease. SystemSoft shall pay all of Developer's reasonable expenses in
connection with any transfer of the Development Land Rights under this Section
5(a), and shall indemnify Developer for any loss, cost, expense, or liability
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(including reasonable attorneys' fees) arising with respect to acts, omissions,
or conditions concerning the Development Land first occurring after the transfer
except to the extent caused by Developer's negligence or willful misconduct.
Developer shall indemnify SystemSoft for any loss, cost, expense, or liability
(including reasonable attorneys' fees) arising with respect to acts, omissions,
or conditions concerning the Development Land first occurring prior to the
transfer except to the extent caused by SystemSoft's negligence or willful
misconduct.
(b) Developer shall have the right, in its discretion, to elect by
notice to SystemSoft not to proceed with development of Phase B after receiving
a Phase B Notice to Proceed or, if commenced, not to proceed further with
efforts to develop Phase B. If Developer shall so notify SystemSoft, Developer
shall have no further obligation to proceed with the development of Phase B. In
the event Developer notifies SystemSoft under this Section 5(b) that it is not
proceeding with development of Phase B, SystemSoft shall have the right,
exercised by notice to Developer given within ninety (90) days after Developer's
notice under this Section 5(b) to acquire the Development Land Rights for the
purchase price set forth below. If SystemSoft does not timely exercise such
right, SystemSoft's Phase B Rights shall be rendered null and void without
further action of the parties. SystemSoft's notice exercising this right shall
be accompanied by a deposit in the amount set forth below to be valid, and
Developer shall be entitled to retain the deposit as its sole remedy if
SystemSoft fails to purchase the Development Land as set forth herein. The
amount of the deposit shall be equal to $150,000 if SystemSoft's notice
exercising this right is given in the first year following the date of this
Agreement, and the required amount of the deposit shall increase by 5% on each
anniversary of the date of this Agreement for a notice given thereafter. In
the event SystemSoft exercises this right, Developer shall convey all of the
Development Land Rights to SystemSoft, at a closing within thirty (30) days
after SystemSoft's exercise notice, for an amount equal to One Million Five
Hundred Twenty Thousand Dollars ($1,520,000.00) plus all out-of-pocket costs
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then incurred by Developer in accordance with the Pre-Development Budget which
have not been reimbursed by SystemSoft under Section 3(e), plus an amount equal
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to 20% of all such costs whenever reimbursed by SystemSoft. The Development
Land Rights shall be conveyed without warranty or recourse except for a warranty
of title by Developer as to its own acts and a representation that Developer has
delivered copies of all documents and written information in Developer's
possession concerning the physical condition of the Development Land, the status
of Developer's title, and governmental permits and approvals required or
obtained for development of the Development Land. Developer shall not be
required to make any representations or warranties regarding the accuracy or
completeness of any such documents or information or the matters set forth
therein. If the Development Land has not then been separated from the Phase A
Site by a subdivision, ground lease or condominium, Developer and SystemSoft
shall enter into a ground lease of the Development Land with SystemSoft as
tenant for a prepaid rent equal to the purchase price for the Development Land
Rights and otherwise on terms and conditions reasonably acceptable to Developer
and SystemSoft. The ground lease shall require SystemSoft to use reasonable
efforts to separate the Development
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Land from the Phase A site by subdivision,and upon such subdivision the
Development Land shall be conveyed to SystemSoft subject to appropriate cross-
easements for access, parking, utilities, and the like. The ground lease shall,
in all events, provide for continued compliance of the Demised Premises under
the Phase A Lease and all related site improvements with applicable legal
requirements and the terms of the Phase A Lease. SystemSoft shall pay all of
Developer's reasonable expenses in connection with any transfer of the
Development Land Rights under this Section 5(b), and shall indemnify Developer
for any loss, cost, expense, or liability (including reasonable attorneys' fees)
arising with respect to acts, omissions, or conditions concerning the
Development Land first occurring after the transfer except to the extent caused
by Developer's negligence or willful misconduct. Developer shall indemnify
SystemSoft for any loss, cost, expense, or liability (including reasonable
attorneys' fees) arising with respect to acts, omissions, or conditions
concerning the Development Land first occurring prior to the transfer except to
the extent caused by SystemSoft's negligence or willful misconduct.
(c) SystemSoft shall, at any time, have the right by notice to
Developer to unconditionally and irrevocably waive and relinquish SystemSoft's
Phase B Rights (a "Phase B Waiver Notice"). A Phase B Waiver Notice shall not
affect SystemSoft's obligations under this Agreement (including, without
limitation, its obligations under Sections 1, 2 and 4), except that SystemSoft
shall have no further obligation under Section 3 except to pay for any costs
incurred by Developer prior to the date of the Phase B Waiver Notice and
SystemSoft shall have no further obligation to provide financial information
under Section 6. However, except as set forth below, upon a Phase B Waiver
Notice Developer shall commence and thereafter pursue diligent efforts to sell
or ground lease the Development Land or to develop the Development Land for
another tenant or occupant on commercially reasonable terms. SystemSoft shall
within twenty (20) days after request pay any out-of-pocket third-party costs
incurred in connection with efforts to market the Development Land for sale or
ground lease (subject to reimbursement out of any profit received by Developer
on the sale or ground lease), but all costs in connection with a proposed
development shall be paid by Developer. Developer shall have no obligation to
commence or pursue such efforts at any time that SystemSoft is in material
default under this Agreement or the Phase A Lease or if the Phase A Lease has
been terminated. Developer may also elect by notice to SystemSoft not to
commence such efforts or to cease such efforts at any time, provided that if
Developer makes such election, then in its notice Developer shall offer to
transfer the Development Land Rights to SystemSoft on the same terms and
conditions that would apply if SystemSoft's Phase B Rights were terminated by
Developer under Section 5(a). If Developer has not entered into a binding
agreement to sell, lease or develop the Development Land within one (1) year
after the Phase B Waiver Notice is given, and SystemSoft is not in material
default under this Agreement or the Phase A Lease and the Phase A Lease has not
been terminated, then SystemSoft shall have the right to market the Development
Land with a broker reasonably approved by Developer for sale or ground lease and
Developer shall cooperate with such efforts, but in no event shall Developer
have any obligation to sell or lease the Development Land on terms less
favorable than the terms
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which would apply if SystemSoft's Phase B Rights were terminated by Developer
under Section 5(a) (provided that SystemSoft shall have the right to make up any
payment shortfall).
6. SystemSoft acknowledges and agrees SystemSoft's financial condition
is essential to Developer's ability to obtain construction and permanent
financing for the development of Phase B. As set forth below, Developer and
SystemSoft have agreed on separate financial thresholds for Developer's
obligation to proceed with Phase B and for Developer's right to terminate
SystemSoft's Phase B Rights. SystemSoft shall promptly, from time to time upon
request by Developer, provide Developer full and complete information concerning
SystemSoft's financial condition certified by SystemSoft's chief financial
officer as well as all available financial statements reviewed or audited by
SystemSoft's outside public accountants. Developer shall have no obligation to
proceed with the pre-development activities for Phase B or enter into the Phase
B Lease at any time that SystemSoft's financial condition does not satisfy any
of the Phase B Development Financial Requirements, and as set forth in Section
5(a) above SystemSoft's rights with respect to the development and lease of
Phase B may be terminated if any of the Phase B Default Financial Requirements
remain unsatisfied for a period of more than one (1) year. The Phase B
Development and Default Financial Requirements are as follows:
Phase B Phase B
Development Default
Financial Financial
Requirement Requirement
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(a) Shareholders
Equity: $30 million $20 million
(b) Earnings (for
each of the 4
calendar
quarters then
most recently
ended): Positive, ----
excluding
one-time
charges
(c) Net Working
Capital (meaning
cash, cash
equivalents,
inventory valued
at cost, and
accounts
receivable of 90
days or less
minus accounts
payable): $15 million $10 million
SystemSoft shall promptly notify Developer if at any time any of the Phase B
Development or Default Financial Requirements are not satisfied.
-11-
7. All notices, requests, and other communications required or
permitted under this Agreement shall be made in writing and shall be sent,
unless otherwise provided herein, by registered or certified mail with postage
prepaid, or by hand delivery, or by a nationally recognized overnight courier,
as follows:
If to Developer:
Xxxxx Investment Ventures, Inc.
Xxx Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxxxxx X. Xxxxx and Xxxx X. Xxxxxx
with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Hill & Xxxxxx
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
If to SystemSoft:
SystemSoft Corporation
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
with a copy to
Xxxxx X. Xxxxxx, Esq.
Xxxxxx, Hall & Xxxxxxx
Exchange Place
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
or to such other place or to the attention of such other individual as a party
may from time to time designate by written notice to all other parties given as
herein required. Each party shall, within ten (10) days after request from time
to time by the other, furnish a certificate (stating that it may be relied on by
a lender, purchaser, or assignee) confirming factual matters concerning this
Agreement or the performance by either party of its obligations hereunder.
-12-
8. This Agreement contains the entire and only agreement between the
parties concerning the development and lease of Phase B, and no oral statements
or representations or prior written matter not contained in this Agreement shall
have any force or effect. This Agreement may not be modified or amended except
by written agreement duly executed by the parties hereto, and shall be governed
by and construed and enforced in accordance with the laws of the Commonwealth of
Massachusetts.
9. The covenants and agreements herein contained shall, subject to the
provisions of this Agreement, bind and inure to the benefit of Developer, its
successors and assigns, and SystemSoft, and its successors and assigns. The
term "Developer" in this Agreement shall mean the owner or owners at the time in
question of Developer's interest in the Development Land. The term "SystemSoft"
shall mean the SystemSoft and its permitted assigns under the Phase A Lease.
Upon any transfer of such interest, from and after the date of such transfer,
Developer named herein (and in case of any subsequent transfers, the then
transferor) shall be relieved of all liability for the performance of any
obligations on the part of Developer contained in this Agreement except for a
default by Developer prior to such transfer. None of the provisions of this
Agreement shall cause either party to be liable to the other party, or anyone
claiming through or on behalf of the other party for any special, indirect or
consequential damages, including without limitation, lost profits or revenues.
In no event shall any individual partner, officer, shareholder, trustee,
beneficiary, director or similar party be liable for the performance of or by
Developer or SystemSoft under this Agreement or any amendment, modification or
agreement with respect to this Agreement. SystemSoft agrees to look solely to
Developer's interest in the Premises or, if separately owned, the Development
Land only in connection with the enforcement of Developer's obligations under
this Agreement.
10. Neither party shall record this Agreement, and if recorded this
Agreement may, at Developer's election, be declared null and void. The parties
shall, however, record an instrument executed by both of them to give notice of
the rights of SystemSoft hereunder with respect to the development and lease of
the Development Land.
11. Each party agrees to furnish to the other, within ten (10) days
after request therefor from time to time, a written statement setting forth the
following information:
(i) That the party providing the statement is not aware of any
default or specifying any default;
(ii) That the party providing the statement is not aware of any
current claims or offsets against the other party, or
specifically listing any such claims;
(iii) The date through which amounts due under this Agreement have
then been paid, and any amounts then due but not paid;
-13-
(iv) Such other information relevant to the Agreement as the
requesting party may reasonably request; and
(v) A statement that any prospective mortgage lender and/or
purchaser rely on all such information.
12. Time shall be of the essence with respect to all dates and time
periods under this Agreement.
-14-
Executed as a Massachusetts instrument under seal.
DIV NATICK, LLC
By:[SIGNATURE APPEARS HERE]
------------------------
Manager
SYSTEMSOFT CORPORATION
By:/s/ Xxxxx X. Xxxxxxx
----------------------
Name: Xxxxx X. Xxxxxxx
Title: VP Finance & CFO
-15-
EXHIBIT A
Legal Description
That certain parcel of land with improvements situated thereon in Natick,
Middlesex County, Massachusetts, bounded and described as follows:
NORTHERLY by Worcester Street by two (2) lines measuring, respectively, one
hundred eighty-nine and 95/100 (189.95) feet and six hundred forty
and 69/100 (640.69) feet;
EASTERLY by land now or formerly of Xxxxxx X. Xxxxxxxx, by land now or
formerly of Xxxxx X. and Xxxxxx Xxxxxxx and by Walnut Avenue, two
hundred sixty-seven and 72/100 (267.72) feet;
NORTHERLY by said Walnut Avenue, twenty-five (25) feet;
EASTERLY by land now or formerly of Xxxx X. and Xxxx X. Xxxxx and Xxxxxxxx
X. Xxxxxxxxx, one hundred and ten and 21/100 (110.21) feet;
NORTHERLY by the same, ninety and 00/100 (90.00) feet;
EASTERLY by land now or formerly of Xxxxxxx X. and Xxxxx X. Xxxx, by
Carlisle Terrace, by land now or formerly by Xxxxxx X. and F.
Xxxxxxxx Xxxxx and by land now or formerly of Xxxxxx, Xxxx and
Xxxxx X. Xxxxx, by two (2) lines measuring, respectively, two
hundred seventy-three and 41/100 (273.41) feet and fifty-nine and
07/100 (59.07) feet;
SOUTHERLY by land now or formerly of Xxxxxxx X. III and Xxxxx X. Xxxxxx and
by land now or formerly of Xxxxx X. Xxxxx, one hundred and fifteen
and 46/100 (115.46) feet;
EASTERLY by land now or formerly of said Xxxxx, two hundred one and 49/100
(201.49) feet;
SOUTHERLY by land now or formerly of said Xxxxx and by land now or formerly
of Mill Xxxx Real Estate Corporation, three hundred four and
26/100 (304.26) feet;
EASTERLY by land now or formerly of said Mill Xxxx Estate Corporation, and
by land now or formerly of Xxxxx X. Xxxxxxx, by three (3) lines
measuring respectively, twenty-eight and 86/100 (28.86) feet,
sixty-eight and 62/100 (68.62) feet and four hundred fifty-three
and 38/100 (453.38) feet;
A-1
SOUTHERLY by land now or formerly of Xxxxxx X. and Xxxxx X. Xxxxxx, two
hundred twenty and 55/100 (220.55) feet;
EASTERLY by the same, one hundred forty-nine and 43/100 (149.43) feet;
SOUTHWESTERLY by land now or formerly of Xxxxx X. Xxxxxx, thirteen and 83/100
(13.83) feet;
WESTERLY by land now or formerly of Xxxxx X. Xxxxxxxx and by land now or
formerly of Xxxx X. and Xxxxxxx X. Xxxxxxxx, by two (2) lines
measuring, respectively, one hundred fifteen and 76/100 (115.76)
feet and one hundred ninety-five and 00/100 (195.00) feet;
SOUTHERLY by land now or formerly of said Sullivans, two hundred nine and
36/100 (209.36) feet;
EASTERLY by the same, sixty and 07/100 (60.07) feet;
SOUTHERLY by land now or formerly of Xxx X. and Xxxxx X. Xxxxxxx, one
hundred fourteen and 86/100 (114.86) feet;
WESTERLY by land now or formerly of Boston Young Women's Christian
Association, Inc. and by land now or formerly of Apple Hill
Associates, shown as Lot I on the hereinafter mentioned plan, by
two (2) lines measuring, respectively, three hundred thirty-
seven and 93/100 (337.93) feet and one hundred sixty-seven and
27/100 (167.27) feet;
NORTHERLY by land now or formerly of Apple Hill Associates, shown as Lot I
on the hereinafter mentioned plan, two hundred ninety-four and
54/100 (294.54) feet;
WESTERLY by the same, two hundred seventy and 57/100 (270.57) feet;
SOUTHWESTERLY by the same two hundred ninety-two and 68/100 (292.68) feet
along a curve having a radius of two hundred twenty-five and
00/100 (225.00) feet;
WESTERLY by the same, one hundred twelve and 65/100 (112.65) feet; and
NORTHWESTERLY by the same one hundred twelve and 96/100 (112.96) feet along a
curve having a radius of one hundred twenty and 00/100 (120.00)
feet.
Being shown as Lot II (containing approximately 16,000 acres), Area "A"
(containing approximately 0.903 acres), and "Conservation Land" (containing
approximately 5.683 acres) on a plan prepared by C. T. Male Associates, Inc.,
South Deerfield, Massachusetts, entitled "Plan of Land In Natick (Middlesex
County), Massachusetts, Prepared For Apple Hill Associates", dated May 6, 1985,
recorded with Middlesex South District Registry of Deeds in Book 16427, Page
459.
DEVELOPMENT LAND
EXHIBIT A TO PHASE B AGREEMENT
[MAP APPEARS HERE]
EXHIBIT B
---------
OPERATING EXPENSES AND TAXES
(a) SystemSoft shall pay to Developer all real estate taxes and other
municipal or public assessments allocable to the Development Land from the
acquisition of the Premises until the Phase B Carry Termination Date and all
operating expenses for the Development Land, if not paid under the Phase A
Lease, from the commencement of the term of the Phase A Lease until the Phase B
Carry Termination Date. Special assessments shall be paid over the longest
period permitted.
Amounts due hereunder shall be prorated should SystemSoft's obligation
hereunder commence or terminate before: (i) the end of any fiscal tax year for
that portion related to taxes; or (ii) the end of any calendar year for that
portion related to operating expenses. SystemSoft shall pay to Developer the
amounts due hereunder within fifteen (15) days after written notice from
Developer to SystemSoft. Upon request of Developer, SystemSoft shall make
monthly payments on the first of each month equal to one-twelfth (1/12) of the
annual amount reasonably projected by Developer to be due from SystemSoft (pro-
rated for any partial month). At the request of either party, the monthly
payments shall be reasonably revised from time to time so that the remaining
monthly payments shall equal the additional rent then projected to be due for
the year in question. A final accounting and payment for each real estate tax
and operating period shall be made within thirty (30) days after written notice
from Developer of the exact amount due for the fiscal tax year or calendar year
in question. In the event real estate taxes on the Development Land are
subsequently reduced or abated, SystemSoft shall be entitled to receive a rebate
of the amount abated, provided that the amount of the rebate allocable to
SystemSoft shall in no event exceed the amount paid by SystemSoft for such
fiscal year on account of real estate taxes, and further provided the rebate
allocable to SystemSoft shall be reduced by the reasonable cost of obtaining
such reduction or abatement not otherwise paid by SystemSoft. If the
Development Land is a separate tax lot, Developer shall seek a reduction or
abatement of real estate taxes for the Development Land at SystemSoft's
reasonable request, provided that all reasonable costs incurred by Developer in
seeking the reduction or abatement shall be reimbursed by SystemSoft within
thirty (30) days after request.
(b) Operating expenses shall include:
(1) All reasonable expenses incurred by Developer or its agents which
shall be directly related to employment in connection with the Development
Land of personnel (including amounts incurred for wages, salaries and other
compensation for services, payroll, social security, unemployment and
similar taxes, workmen's compensation, insurance, disability benefits,
pensions, hospitalization, retirement plans and group insurance, uniforms
and working clothes and the cleaning thereof, and expenses imposed on the
Developer or its agents pursuant to any collective
-17-
bargaining agreement), for services in connection with the ownership,
landscaping, drainage, fencing, maintenance, upkeep, and protection of the
Development Land in a manner customarily provided to undeveloped land in
first-class office parks in suburban Boston, including requirements imposed
by the Town of Natick Planning Board Decision 15-96 (collectively
"Carrying" the Development Land), and, subject to clause (c)(1) below,
personnel engaged in supervision of any of the persons mentioned above;
(2) The reasonable market rate cost of services, materials and
supplies furnished or used in Carrying the Development Land;
(3) The reasonable market rate cost of replacements for tools and
equipment used in Carrying the Development Land;
(4) Reasonable market rate insurance premiums in connection with the
Development Land;
(5) The reasonable market rate costs of plowing and snow removal,
landscaping, fencing, draining and maintaining the Development Land;
(6) Reasonable market rate amounts paid to independent contractors
for services, materials and supplies furnished for Carrying the Development
Land.
(7) All other reasonable market rate expenses incurred in connection
with Carrying the Development Land, including any expenses in the nature of
common area charges for facilities shared with adjoining property to the
extent allocable to the Development Land, and any condominium common
expenses assessed against the Development Land under a condominium created
at the Premises.
(c) Operating expenses shall be computed on a cash basis and shall be
determined in accordance with generally accepted accounting principles
consistently applied. They may be incurred directly or by way of reimbursement
and shall include taxes applicable thereto. Developer shall use reasonable
efforts to obtain competitive prices for the goods and services provided in
Carrying the Development Land. Developer shall solicit at least three bids for
any maintenance or repair costs to be included in operating expenses which are
anticipated to be in excess of Five Thousand Dollars ($5,000.00), such amount to
be reasonably adjusted from time to time for inflation, using the Consumer Price
Index - All Urban Consumers for the Boston metropolitan area published by the U.
S. Department of Labor or a comparable index reasonably selected by Developer
and shall consult with SystemSoft before accepting a bid other than the lowest
bid. The following shall be excluded from operating expenses:
(1) Salaries and related benefits or any portion thereof for officers
and executives of the Developer above the level of property manager.
-18-
(2) Depreciation of the Development Land or any improvements thereon.
(3) Interest and amortization on indebtedness.
(4) Expenses which SystemSoft otherwise pays by the terms of Phase A
Lease or otherwise.
(5) Repairs or other work occasioned by the exercise of right of
eminent domain.
(6) Expenses, other than real estate taxes and third-party costs
incurred in Carrying of the Development Land, created under any ground or
underlying leases.
(7) Any expense for which Developer is compensated through proceeds
of insurance, condemnation or otherwise.
(8) Expenses for periods of time prior to commencement of the term of
the Phase A Lease or after the Phase B Carry Termination Date.
(9) Cost of removal, abatement or remediation of hazardous substances
or materials caused by Developer or persons other than SystemSoft.
(10) All operating expenses shall be reduced by the amount (net of
collection costs) of any insurance reimbursement, discount or allowance
received by Developer in connection with such costs.
(11) Costs incurred in the acquisition and development of the
Development Land, including leasing costs and costs to design or construct
improvements for use or occupancy by a tenant or other occupant.
It is intended that payments under this Exhibit "B" shall be a net return to
-----------
Developer throughout the term of Exhibit "B" free of all costs, except those
-----------
which this Exhibit "B" expressly makes Developer responsible for bearing; and
-----------
all provisions shall be construed in terms of such intent.
SystemSoft shall have the right for a period of ninety (90) days following
its receipt of Developer's statement of operating expenses to audit same. If it
is determined that the amount due was less than the amount paid by SystemSoft,
Developer shall either promptly refund to SystemSoft the difference or credit
same against the payments next due from SystemSoft. If it is determined that
the amount due was less than ninety-five percent (95%) the amount paid by
SystemSoft, Developer shall reimburse SystemSoft for the reasonable third-party
costs of any audit performed by SystemSoft.
-19-
EXHIBIT C
---------
PHASE B BASE RENT CALCULATION EXAMPLE
Assume that the total cost to develop Phase B as shown on the approved
Phase B Budget is $12,000,000. Further assume that the Benchmark Treasury Yield
is 7.28%. The Phase B Rent Factor is therefore equal to 13.0% (12.5% plus the
0.5% by which 7.28% exceeds 6.78%). The base rent during the first five years
of the initial term of the Phase B Lease is therefore $1,560,000 per year
($12,000,000 multiplied by 13.0%).
-20-
EXHIBIT D
---------
APPRAISAL PROCEDURE
At any time after SystemSoft has exercised a right to acquire the
Development Land Rights under Section 5(a) or 5(c) of the Agreement, either
Developer or SystemSoft may request that the other agree to the Determined
Property Value. If Developer and SystemSoft fail to agree on the Determined
Property Value within ten (10) days after any such request, the Determined
Property Value shall be determined by a single appraiser satisfactory to both
Developer and SystemSoft, if they are able to agree to such an appraiser within
such ten (10) day period. If no single appraiser is so selected, Developer and
SystemSoft shall each appoint an independent appraiser who is a member of the
Appraisal Institute and who has at least ten (10) years' experience appraising
commercial land development sites in the Greater Boston Area and who is not then
employed or anticipated to be employed, and who during the last three years has
not been employed, by the party selecting the appraiser, and in the case of the
third appraiser, either party. The two appraisers so appointed shall thereafter
appoint a third appraiser within seven (7) days of their appointment who meets
the same qualifications. If they fail to do so, Developer or SystemSoft may
request that the head of the Massachusetts Chapter of the American Institute of
Real Estate Appraisers (or any other recognized professional association of real
estate appraisers) designate a third appraiser with such qualifications. The
three appraisers so appointed shall within twenty (20) days thereafter render
their judgment as to the fair market value of the Development Land Rights. The
Determined Property Value shall be the numerical average of the two closest
appraisals or the one, if any, which is the numerical average of the other two.
In the event that Developer fails to select an appraiser within seven (7) days
of the request by SystemSoft that it do so, the Determined Property Value shall
be the fair market value of the Development Land Rights as determined by an
appraiser who meets the qualifications stated above and who is selected solely
by SystemSoft. In the event that SystemSoft fails to select an appraiser within
seven (7) days of a request made by Developer, the Determined Property Value
shall be the fair market value of the Development Land Rights as determined by
an appraiser who meets the qualifications stated above and who is selected
solely by Developer. SystemSoft shall pay the cost of the appraisers, provided
that the fees of Developer's appraiser are commercially reasonable.
-21-
