SECURED PROMISSORY NOTE
$196,875.00 New York, New York
June 26, 2000
FOR VALUE RECEIVED, the undersigned, DAVID A. LEVIN (the
"Obligor"), hereby unconditionally promises to pay to the order of DESIGNS,
INC., a Delaware corporation (together with any such subsequent Holder of this
Note, the "Holder"), the principal sum of one hundred ninety-six thousand eight
hundred and seventy-five dollars ($196,875.00), together with simple,
uncompounded interest thereon from the date hereof on the principal amount from
time to time outstanding at the rate of six and fifty-three one-hundredths
percent (6.53%) per annum until the Maturity Date (as hereinafter defined) and
thereafter at the rate of six and fifty-three one-hundredths percent (6.53%) per
annum. Interest shall be calculated from (and including) the date hereof to (but
not including) the date of payment. This Note and all accrued but unpaid
interest thereon shall be due and payable on June 26, 2003 (the "Maturity Date")
or such earlier date as required herein.
Pursuant to the Security and Pledge Agreement (as amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Pledge Agreement") of even date herewith between the Obligor and the Holder,
the Obligor has pledged 150,000 shares (the "Shares") of common stock of the
Holder (including any other security into which such shares shall be converted
or for which such shares shall be exchanged in any recapitalization,
reorganization, merger, consolidation, share exchange or similar business
combination transaction, the "Collateral") as collateral to the Holder to secure
his prompt and full performance of his obligations hereunder and under the
Pledge Agreement. Any unpaid amounts due and payable under the Pledge Agreement
shall constitute principal amounts due under this Note. To the extent that the
Collateral (or the proceeds thereof) maybe insufficient to satisfy all of the
Obligor's obligations under this Note and the Pledge Agreement, the Obligor
shall remain personally liable for any such deficiency.
The Obligor and the Holder intend that the obligations
evidenced by this Note conform strictly to the applicable usury laws from time
to time in force. If under any circumstances whatsoever fulfillment of any
provision hereof, at the time performance of such provision shall be due, shall
involve exceeding the highest lawful rate of interest prescribed by law, then,
ipso facto, the interest due hereunder shall be reduced to such rate; and if
under any circumstances the Holder ever shall receive from or on behalf of the
Obligor an amount deemed interest, by applicable law, which would exceed the
highest lawful rate, such amount that would be excessive interest under
applicable usury laws shall be applied to the reduction of the principal owing
hereunder or of any other amounts owing hereunder and not to the payment of
interest, or if such excessive interest exceeds the unpaid balance of principal,
the excess shall be deemed to have been a payment made by mistake and shall be
refunded to the Obligor or to any other person making such payment on the
Obligor's behalf.
1. PAYMENT PROVISIONS. On the Maturity Date, the entire
outstanding principal amount of this Note, together with all accrued but unpaid
interest hereon, shall automatically become immediately due and payable without
protest, presentment, demand or notice (except the notices referred to herein),
all of which are expressly waived by the Obligor. All payments under this Note
shall be applied first to costs of collection, second to accrued but unpaid
interest and last to the payment of principal.
Principal, interest and all other amounts due hereunder shall
be payable in lawful money of the United States of America in immediately
available funds or by check. The principal and interest on this Note shall be
paid without setoff or counterclaim and free and clear of and exempt from, and
without deduction for or on account of, any present or future taxes, imposts,
duties, deduction, withholdings or other charges of whatsoever nature imposed,
levied, collected, withheld or assessed by any government or any political
subdivision or taxing authority thereof. Whenever any payment hereunder shall be
due on a day other than a Business Day (as defined below), such payment shall be
made on the next succeeding Business Day. For purposes of this Note, a "Business
Day" shall mean any day on which commercial banks are not authorized or required
to be closed in Boston, Massachusetts.
2. PREPAYMENT. The Obligor may, at any time and from time to
time, prepay the then unpaid principal balance of this Note in whole or in part
without penalty or premium, but with interest calculated as aforesaid to the
date of such prepayment.
3. EVENTS OF DEFAULT. If any events specified in this Section
3 shall occur and continue uncured for a period of thirty (30) days following
notice from the Holder that such event has occurred (herein individually
referred to as an "Event of Default"), the Holder may declare the entire
outstanding principal amount of this Note, together with all accrued but unpaid
interest hereon and all other amounts payable hereunder and under the Pledge
Agreement, immediately due and payable, by notice in writing to Obligor:
3.1. Default in the payment of the principal of and unpaid accrued
interest on the Note when due and payable; or
3.2. Any material breach by the Obligor of any of his covenants
under the Pledge Agreement; or
3.3. (A) the Obligor shall commence any case, proceeding or other
action (x) under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief of
debtors, seeking to have an order for relief entered with respect to the
Obligor, or seeking to adjudicate him a bankrupt or insolvent, or seeking
arrangement, adjustment, liquidation, or other relief with respect to the
Obligor or his debts or (y) seeking appointment of a receiver, trustee,
custodian or other similar official for the Obligor or for all or any
substantial part of his assets, or the Obligor shall make a general assignment
for the benefit of his creditors; or (B) there shall be commenced against the
Obligor any case, proceeding or other action of a nature referred to in clause
(A) above which (x) results in the entry of an order for such relief or
appointment or (y) remains undismissed, undischarged or unbonded for a period of
sixty (60) days; or (C) there shall be commenced against the Obligor any case,
proceeding or other action seeking issuance of a warrant of attachment,
execution, distraint or similar process against all or any substantial part of
his assets, which results in the entry of an order for any such relief which
shall not have been vacated, discharged, stayed or bonded pending appeal within
sixty (60) days from the entry thereof; or (D) the Obligor shall take any action
in furtherance of, or indicating his consent to, approval of, or acquiescence
in, any of the acts set forth in clause (A), (B), or (C) above; or (E) the
Obligor shall generally fail to pay or admits in writing his inability to pay
his debts as they become due.
4. GOVERNING LAW AND ADJUDICATION; RELATED MATTERS. This Note shall be
governed by and construed in accordance with the internal laws of the
Commonwealth of Massachusetts applicable to contracts made and to be wholly
performed within such State, without reference to principles of conflicts of
laws. The Obligor hereby irrevocably consents that any suit, action or
proceeding against him or any of his assets or properties arising out of or in
any way connected with this Note or the Pledge Agreement may be instituted in
any Massachusetts, New York State or United States federal court located in the
City of Boston or the Borough of Manhattan in New York City, and by execution
and delivery of this Note, the Obligor hereby irrevocably submits to the
jurisdiction of the aforesaid courts in any such suit, action or proceeding. The
Obligor hereby irrevocably waives any objection which he may have at any time to
the laying of venue of any such suit, action or proceeding brought in any such
court, waives any claim that any such suit, action or proceeding has been
brought in an inconvenient forum and further waives the right to object with
respect to any such suit, action or proceeding that such court does not have any
jurisdiction over him. The Obligor irrevocably consents to the service of
process out of any of the above-mentioned courts in any such suit, action or
proceeding by the delivery of copies thereof in any manner prescribed in Section
5.4 hereof.
5. MISCELLANEOUS.
5.1. WAIVERS. The Obligor hereby waives diligence, presentment,
demand, protest and notice (except as herein noted) of any kind in the
enforcement of the Note.
5.2. COSTS AND EXPENSES. The Obligor agrees to pay on demand all of
the Holder's costs and expenses, including, without limitation, reasonable
attorneys' fees, in connection with the collection of any sums due to the Holder
and the enforcement, protection or perfection of its rights or interests
hereunder or under the Pledge Agreement.
5.3. ASSIGNMENTS. The Obligor may not assign or otherwise transfer
any of his rights or delegate any of his obligations under the Note or the
Pledge Agreement without the express prior written consent of the Holder. The
Holder may assign or otherwise transfer the Note and any or all of its rights,
interests or remedies hereunder, and may delegate any or all of its obligations
hereunder, to any person or entity, upon written notice to the Obligor.
5.4. NOTICES. All notices and other communications given or made
pursuant to the Note shall be in writing and shall be deemed to have been duly
given or made if (i) sent by registered or certified mail, return receipt
requested, postage prepaid, (ii) hand delivered, or (iii) sent by prepaid
overnight carrier, with a record of receipt, to the parties at the following
addresses (or at such other addresses as shall be specified by the parties by
like notice):
(A) If to the Holder:
Designs, Inc.
66 B Street
Needham, Massachusetts 02494
Attn: Secretary
with a copy (which shall not constitute notice) to:
Kramer Levin Naftalis & Frankel LLP
919 Third Avenue
New York, New York 10022
Attn: Peter G. Smith, Esq.
(B) If to the Obligor:
David A. Levin
150 Monadnock Road
Chestnut Hill, MA 02467
Each notice or communication shall be deemed to have been given on the date
received.
IN WITNESS WHEREOF, the Obligor has duly executed and
delivered this Note as of the date and year first written above.
/S/ DAVID A. LEVIN
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DAVID A. LEVIN
The undersigned, Ann Levin, wife of David A. Levin, has duly executed
and delivered this Note as of the date and year first written above, as co-maker
of and additional Obligor under this Note, and shall be liable for all of the
obligations of the Obligor under this Note and the Pledge Agreement to the same
extent as through named as the Obligor herein, provided that the liability of
the undersigned Ann Levin in respect of the Obligor's obligations under this
Note and the Pledge Agreement shall be limited to the right, title and interest,
if any, of the undersigned in and to the Collateral (and the proceeds and
products thereof) and shall be without personal recourse or personal liability
for any deficiency if such Collateral (or the proceeds or products thereof)
shall be insufficient to satisfy all of such obligations.
/S/ ANN LEVIN
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ANN LEVIN